HOA Lawyer Blog

What Does Legalized Marijuana Mean for Your HOA?

Published on: February 15, 2017 | by Steven J. Tinnelly, Esq.

hoa-marijuana-plants

Adult possession and use of marijuana for recreational purposes is now legal in California as a result of the passage of Proposition 64 (“Prop 64”) in 2016. Prop 64 is comprised of sixty-two (62) pages of detailed, complicated, and at times confusing regulations and statutory revisions to various California codes. We have been asked by various homeowners association (“HOA”) clients about the significance of Prop 64 and what impact, if any, it has on their ability to regulate marijuana within their private communities.

Restrictions on Marijuana Smoking
Virtually every set of HOA governing documents contains a provision that prohibits activities which serve as a nuisance to residents within the HOA’s development (i.e., the transmission of “noxious odors”). These provisions have been relied upon by HOAs to restrict smoking (i.e., cigarettes, pipes, cigars, vaporizers, etc.) in common areas and, in some instances, within the separate interests (i.e., the lots or units) that are owned by each of the HOA’s members. Fortunately, Prop 64 has not altered a HOA’s regulatory authority with respect to the smoking of marijuana. Section 4.6 of Prop 64 (adding Section 11362.3 to the California Health & Safety Code) provides in relevant part that nothing in the statute permitting personal use, possession, cultivation, etc. of marijuana shall be construed to permit any person to “[s]moke marijuana or marijuana products in a location where smoking tobacco is prohibited.” Thus, valid and enforceable HOA restrictions against tobacco smoking may still be used to restrict marijuana smoking as well. Notably, the term “smoke” as used in Prop 64 also includes the use of electronic smoking devices and vaporizers.

Restrictions on Marijuana Cultivation
One of the more interesting issues that HOAs may encounter in the wake of Prop 64 relates to the growing or “cultivation” of marijuana plants. In 2015, new Civil Code § 4750 was enacted to grant homeowners within HOAs the right to use their backyards for “personal agriculture.” Civil Code § 1940.10 was enacted at the same time to clarify that “personal agriculture” as used in Section 4750 means the use of land where an individual cultivates “edible plant crops for personal use or donation,” and that the term “plant crop” does not include “marijuana or any unlawful crops or substances.” Thus, prior to Prop 64’s passage, a HOA’s authority to prohibit backyard marijuana gardens was relatively clear.

Prop 64 appears to have muddied this issue. It added Section 11362.1 to the Health & Safety Code which provides in relevant part that, “notwithstanding any other provision of law,” it is lawful for persons 21 years of age or older to “[p]ossess, plant, cultivate, harvest, dry or process not more than six living marijuana plants.” Some may interpret this language as overriding the Civil Code’s restrictions on the type of “personal agriculture” which may be cultivated in a homeowner’s backyard—especially in light of the fact that marijuana is technically no longer an “unlawful crop or substance.”

Prop 64 also added Section 11362.2 to the Health & Safety Code to allow for restrictions to be imposed on the outdoor cultivation of marijuana. It provides in relevant part that a “city or county” may “enact and enforce reasonable regulations” on the cultivation of marijuana, provided, however, that such regulations may not be used to completely prohibit the cultivation of marijuana “inside a private residence, or inside an accessory structure to a private residence located upon the grounds of a private residence that is fully enclosed and secure.” However, this language appears to empower only cities or counties to prohibit outdoor marijuana cultivation, and does not adequately address whether such prohibitions may also be enacted and enforced by HOAs.

Prop 64 does provide that the rights to cultivate marijuana do not preempt the “ability of an individual or private entity to prohibit or restrict…[the cultivation of marijuana]…on the individuals’ or entity’s privately owned property.” Thus, a HOA’s ability to prohibit the cultivation of marijuana on its “privately owned property”—meaning the HOA’s common area—is relatively clear. What is less clear is whether a HOA that exists within a city or county that does not restrict outdoor marijuana cultivation may nevertheless impose such restrictions on a homeowner’s separately owned residential lot. In other words, may a HOA restrict the outdoor cultivation of marijuana on property within its development that the HOA technically does not own? For HOAs that exist in cities or counties that do not already restrict the outdoor cultivation of marijuana, there is no clear statutory answer to this question. However, we have encountered instances in HOAs where the smell from marijuana plants and blooms are so strong that they rise to the level of a nuisance which is prohibited under the CC&Rs, and may therefore be restricted on those grounds. HOAs dealing with this issue should seek guidance from their legal counsel.

New Client: McKinley Village Community Association

Published on: February 14, 2017 | by Steven J. Tinnelly, Esq.

McKinley-Village We are proud to announce that McKinley Village Community Association has selected Tinnelly Law Group as their associations’ legal counsel.

McKinley Village by The New Home Company is a progressive urban village set in East Sacramento that connect residents to where they want to be, and how they want to live – modern design and amenities foster connectivity and healthy living with village parks, paths, pools, spa and clubhouse.

Our HOA attorneys and staff look forward to working with McKinley Village’s Board and management.

‘No Cost’ Collections Can Prove Very Costly

Published on: February 7, 2017 | by Steven J. Tinnelly, Esq.

hoa-assessment-collection-house The collection practices of HOA collection vendors have come under increased scrutiny over recent years. For example, we have written about how California courts have struck down a vendor’s ability to reject partial payments. Those actions resonated throughout the HOA industry and resulted in significant changes to the approaches taken by collection vendors when pursuing the debt owed to their HOA clients. The most significant changes however have come in response to attacks made against collection vendors that operate under a “no cost” collection model. We have also written about this issue and how the “no cost” collection model results in liability exposure for violations of the California Civil Code as well as applicable state and federal fair debt collection laws. To our surprise, despite the actions that collection vendors have wisely taken to shift away from the “no cost” model, we are still seeing instances where a HOA has opted to utilize the services of a “no cost” collection vendor without understanding the substantial risks of doing so.

As nonprofit corporations with fixed budgets, the idea of a “no cost” collection model is certainly attractive to HOAs. Under a “no cost” model, the collection vendor does not charge the HOA any upfront fees or costs for the collection services it performs, but rather collects those amounts directly from the delinquent homeowner. However, in doing so, the United States Bankruptcy Court in California first noted how this approach violates applicable provisions of the Civil Code, and further “opens the door to all sorts of mischief, as an HOA has no incentive whatsoever to question costs for which it is not liable and no incentive to search for services charging more reasonable costs.” (In re Cisneros, (Bankr. N.D. Cal. 2012), (“Cisneros”).) That rationale was underscored in the most recent attack on “no cost” collection models put forth in the case of Hanson v. JQD, LLC d/b/a Pro Solutions, (N.D. Cal., 2014) (“Hanson v. Pro Solutions”).

In Hanson v. Pro Solutions, a HOA hired a collection vendor (“Pro Solutions”) operating under a “no cost” model. California Civil Code § 5650 allows for a HOA to recover reasonable costs and attorney’s fees “incurred” by the HOA in collecting delinquent assessments. However, Pro Solutions’ “no cost” model did not result in the HOA incurring any fees or costs for Pro Solutions’ services. Rather, the fees and costs charged for Pro Solutions’ services were never billed to the HOA but were instead billed directly to the delinquent homeowner. The plaintiff homeowner alleged that this practice violated the Civil Code and federal and state fair debt collection laws, relying in part on the rationale underlying the Court’s decision in Cisneros.

The Court in Hanson v. Pro Solutions agreed with the homeowner and waived an even bigger red flag to collection vendors operating under a “no cost” model:

“Although no California appellate court has directly addressed whether, as here, a third-party vendor acting on behalf of a HOA can lawfully charge a delinquent homeowner fees not incurred by the HOA, the aforementioned authorities prompt a conclusion that Pro Solutions’ right to impose debt collection fees against Hanson extends no further than the [HOA’s] right to do the same…Pro Solutions’ fees apparently are neither incurred nor paid by the HOAs that contract for the company’s “no cost” services. If California law nonetheless entitled Pro Solutions to impose the fees of its choosing against homeowners like Hanson, the company would wield unchecked power to extract a cascade of fees and costs from a HOA’s delinquent members.”

Hanson v. Pro Solutions was settled and therefore did not result in any precedential court decision on the issue of “no cost” collection models. However, the Court’s language was strikingly clear, as was the warning it sent to HOAs and collection vendors. Even though the HOA was not named as a defendant in Hanson v. Pro Solutions, there is nothing to prevent a HOA utilizing a “no cost” collection vendor from being named as a defendant in a similar suit and thus exposed to significant liability.

HOA Boards and management professionals must recognize that, regardless of what type of entity a HOA uses to collect delinquent assessments (an attorney, third party collection agency, etc.), there will be fees and costs associated with their collection services, and that the HOA must pay for those services in order for them to be incorporated into the debt that is recovered from the homeowner. This incentivizes collection vendors to provide services that are not only effective, but cost-efficient, and in doing so helps protect the financial interests of HOAs as well as homeowners who may fall behind on their assessment payments.

New Client: Tustin Field II Community Association

Published on: February 7, 2017 | by Steven J. Tinnelly, Esq.

Tustin-Field-II We are proud to announce that Tustin Field II Community Association has selected Tinnelly Law Group as their associations’ legal counsel.

Tustin Field is a planned development located in the city of Tustin on the former Marine Corps Air Station El Toro. Residents enjoy community pools, spa, clubhouse, barbecue, picnic area, green park and playgrounds.

Our HOA attorneys and staff look forward to working with Tustin Field II’s Board and management.

AB 2362: Association Notice Required Prior to Pesticide Application Without a Licensed Pest Control Operator

Published on: January 31, 2017 | by Steven J. Tinnelly, Esq.

pest-control Once again the first of the year brings new legislation impacting common interest developments. The passage of Assembly Bill 2362 adds Civil Code section 4777 to the Davis Stirling Common Interest Development Act effective January 1, 2017. The intent of this bill was to require the same written notification of pesticide application to separate interests and common areas of common interest developments by a non-licensed pest control operator (i.e., the association’s general landscaper) as residents would receive under the existing law for pesticide application by a licensed pest control operator.

You may recall in 2014 California Code of Regulations (CCR) Sections 6000 through 6619 were adopted to govern pesticides and pest control operations. Under Section 6618(b)(1) association vendors that perform pest control services are required to provide associations with certain information concerning the application of pesticides, and associations are required to distribute that information to their residents on a regular basis.

The new Civil Code section 4777 requires associations applying pesticides to a separate interest or the common area by an unlicensed pest control operator to notify the owner and tenant of the affected separate interest, and if the operator will be using a broadcast application (spreading pesticide over an area greater than two square feet) or using total release foggers or aerosol sprays, to notify the owner and tenants of adjacent separate interests that could reasonably be impacted by the pesticide use. The notice must contain the pest(s) to be controlled, the name and brand of the pesticide product to be used, the date, time and frequency of application (stating that the date, time and frequency are subject to change), and a healthy and safety statement to be copied into the notice. A copy of the written notice must also be attached to the minutes of the next association board meeting.

Where pesticides are to be applied to a separate interest, at least forty-eight (48) hours prior written notice must be given to the owner and tenant of the separate interest, along with any adjacent impacted owners and tenants. For applications to the common area, notice must be posted in a conspicuous place near the area to be treated, if practicable, otherwise, individual notice must be given to the owner(s) and tenant(s) of the separate interests adjacent the common area to be treated. Notice to tenants may be accomplished using first-class mail, personal delivery to a tenant at least 18 years old, or electronic delivery if the tenant has provided an electronic mailing address.

Section 4777 also provides helpful definitions for terms including pest, pesticide, licensed pest control operator, and broadcast application, and the statute authorizes owners and tenants to agree to immediate pesticide application when necessary.

Blog post authored by TLG attorney, Terri A. Morris.

New Client: Robertson Ranch West Village Owners Association

Published on: January 24, 2017 | by Steven J. Tinnelly, Esq.

Robertson-Ranch We are proud to announce that Robertson Ranch West Village Owners Association has selected Tinnelly Law Group as their associations’ legal counsel.

Toll Brothers at Robertson Ranch is a master planned community in the highly desired coastal village of Carlsbad and is made up of four different collections of single-family, luxury homes. Amenities include five unique pocket parks and a resort-style recreation center with a sparkling pool and spa, covered cabanas and an outdoor fireplace. Surrounded by permanently protected open space, Robertson Ranch is located in a coveted location less than 3 miles from the beach.

Our HOA attorneys and staff look forward to working with Robertson Ranch’s Board and management.

SB 814: Penalties for Excessive Water Use

Published on: January 17, 2017 | by Steven J. Tinnelly, Esq.

sb-814-california-water-usage-hoa-e1484179755582 California is experiencing the worst drought in over a century. As a result, the California Legislature has enacted a number of laws aimed at water conservation. Existing law requires the Department of Water Resources and the State Water Resources Control Board to take appropriate actions to prevent unreasonable water use. To further the goal of preventing unreasonable water use, Governor Jerry Brown signed into law new legislation prohibiting excessive water use by residential customers during a drought (SB 814).

Specifically, SB 814, which adds Chapter 3.3 to Division 1 of the California Water Code, requires “urban water suppliers” to “establish a method to identify and discourage excessive water use.” (Water Code § 366(b).) Accordingly, a water supplier may adopt one of the following methods: (1) a rate structure using block tiers, water budgets, penalties for prohibited uses, and rate surcharges, or (2) an ordinance, rule or tariff (collectively, “Ordinance”) that defines the procedure by which water suppliers are to recognize and deal with excessive water use. A violation of an Ordinance is punishable by a fine of at least $500 per one hundred (100) cubic feet of water, or seven hundred forty-eight (748) gallons, above the established threshold.

In light of the foregoing, Associations should be mindful of the new prohibition against excessive water use, especially in condominium projects where the units are not separately metered.

Blog post authored by TLG attorney, Matthew T. Plaxton.

New Client: Wallis Ranch Owners Association

Published on: January 12, 2017 | by Steven J. Tinnelly, Esq.

Wallis-Ranch We are proud to announce that Wallis Ranch Owners Association has selected Tinnelly Law Group as their associations’ legal counsel.

Wallis Ranch is a gated master planned community of 800 new homes in 8 distinctive neighborhoods in Dublin. Recognized by Builder and Developer Magazine as the “2016 Community of the Year,” over half of its 184 acres has been dedicated to parks, open space and a water-quality basin. Residents enjoy an edible garden, fitness center, pool, spa, and a mile of trail systems.

Our HOA attorneys and staff look forward to working with Wallis Ranch’s Board and management.

AB 1978: Janitorial Service Providers Must be Registered

Published on: January 9, 2017 | by Steven J. Tinnelly, Esq.

janitorial-e1483995561223 AB 1978 creates the Property Services Workers Protection Act. Adding Part 4.2 (commencing with Section 1420) to Division 2 of the Labor Code, it requires every janitorial business within the State of California to register yearly with the Commissioner of the Division of Labor Standards Enforcement (“DLSE”) and pay a yearly fee of $500.00. “No employer may conduct any janitorial business without a valid registration.”

It requires employees and employers of janitorial businesses to participate in a biennial in-person sexual violence and harassment prevention training course. The course is to be developed by the DLSE by January 1, 2019.

Any janitorial business which does not have a current and valid registration is subject to a fine of $2,500.00. Additional fines may be imposed including a fine of $100.00 for each calendar day that the business is unregistered with a maximum fine of $10,000.00.

Businesses (including Homeowner Associations) which contract with unregistered and unlicensed janitorial businesses are subject to fines of $2,000.00 to $25,000.00.

How will you know if the janitorial business is registered?

The DLSE is required to maintain an online Janitorial Contractor Registry which is to be a public database of property service employers on the website of the Department of Industrial Relations (“DIR”) including the name, address, registration number, and effective dates of registration of all janitorial businesses.

AB 1978 was signed into law on September 15, 2016, and becomes effective on July 1, 2018.

Be proactive: Verify online through the Janitorial Contractor Registry that your janitorial workers are employed by a licensed janitorial business. If you don’t, your Association may be subject to fines of $2,000.00 to $25,000.00.

Blog post authored by TLG attorney, Bruce R. Kermot.

The California Air Resources Board Has Established Regulations Regarding Heavy-Duty Diesel Vehicles that Directly Impact Homeowners Associations

Published on: January 9, 2017 | by Steven J. Tinnelly, Esq.

street-sweeper The California Air Resources Board (“ARB”) passed a regulation (“Regulation”) that requires diesel trucks and buses that operate in California to be upgraded to reduce emissions. The Regulation has a direct impact on HOAs and requires them to take steps to verify that certain vehicles they hire are properly certified with the State. The Regulation requires lighter and older heavier trucks to be replaced starting January 1, 2015. By January 1, 2023, nearly all trucks and buses will need to have 2010 model year engines or equivalent.

The Regulation requires that any party (including HOAs, board members, and managing agents) that hires or directs the operation of any vehicle subject to the Regulation, must verify that each hired company is either in compliance with the regulation or has reported compliance to the ARB. The Regulation does not apply where the party does not hire or direct the operation of any vehicle subject to the Regulation. The types of vehicles that an HOA or its managing agent may encounter include but are not limited to the following: street sweepers, dump trucks, pumper trucks, crane trucks, charter buses, lift trucks, concrete pump trucks, and tow trucks.

HOA Lawyer BLog