HOA Lawyer Blog

Governor Lifts 25% Mandatory Water Reduction & Directs Local Water Suppliers to Regulate Water Conservation

Published on: May 19, 2016 | by Steven J. Tinnelly, Esq.

hoa-water-usage In April of last year Governor Brown ordered mandatory water use reductions for the first time in California’s history in order to address the prolonged California drought crisis. That order directed the State Water Resources Control Board (SWRCB) to impose a twenty-five percent (25%) reduction on the state’s 400+ local water supply agencies. Complying with these mandated reductions caused communities throughout the state to immediately and drastically address their water usage and conservation practices, and to incur significant expense in doing so. This order was issued amidst a string of legislative and regulatory changes aimed at addressing the historic drought. For example, legislation was enacted to prohibit homeowners associations (HOAs) from fining homeowners for failing to water their lawns during the drought, and the SWRCB adopted emergency regulations that subject HOAs to fines of $500 per day for failing to comply with the SWRCB’s restrictions on potable water use.

In an apparent policy reversal, yesterday the Governor lifted the 25% mandated statewide water reduction. The Governor’s new executive order directs the SWRCB and the Department of Water Resources (DWR) to work with water suppliers to develop rules and water use targets that are tailored to the unique conditions of their respective regions.

Under the new rules, which take effect on June 1, communities would set water reduction guidelines based on their own projection of water supplies with the assumption that the next three (3) years in California will be uncommonly dry. The state would then review the projections and impose restrictions on communities it determines are being unrealistic. These rules and restrictions are consistent with legislation proposed earlier this year (SB 814) that, if adopted in its current form, would require water suppliers to establish their own methods to identify and restrict excessive water use.

These rules may lead to a significant reduction, or even an elimination, of water reduction mandates that have compelled HOAs to drastically alter their water usage and watering practices at substantial costs to the HOAs and their membership. The $500 daily fine to which HOAs are subject remains in effect; however, allowing for water reduction mandates to now be established at local levels will hopefully result in more sensible water reduction targets.

New Client: Esencia Neighborhood Corporation

Published on: May 17, 2016 | by Steven J. Tinnelly, Esq.

Esencia We are proud to announce that Esencia Neighborhood Corporation has selected Tinnelly Law Group as their associations’ legal counsel.

Esencia is a brand new master planned community located in Rancho Mission Viejo. It is expected to include approximately 2,700 attached and detached homes within 33 distinct neighborhoods. Residents will enjoy trails, parks, indoor and outdoor retreats, a sports park, Esencia Farm, Oak Canyon, The Canyon House, The Hilltop Club, and Canyon Coffee.

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

New Client: Country Road Homeowner’s Association, Inc.

Published on: May 10, 2016 | by Steven J. Tinnelly, Esq.

Country-Road We are proud to announce that Country Road Homeowner’s Association, Inc. has selected Tinnelly Law Group as their associations’ legal counsel.

Country Road is a planned community situated over 35 acres within the City of Brea. Residents enjoy a clubhouse complete with kitchen, fireplace and conversation area, fitness room, two pools, spa and wading pool, BBQ, and greenbelt.

Our HOA attorneys and staff look forward to working with Country Road’s Board and management.

Could Assessments Become Tax Deductible?

Published on: May 5, 2016 | by Steven J. Tinnelly, Esq.

Taxes-Picture A bi-partisan group of the House of Representatives would like to think so. According to the Community Associations Institute (CAI), more than 66 million Americans live in homeowners associations across the country, with an estimated 13 million of them living in California. These homeowners pay assessments to cover the costs of road maintenance, street lighting, street cleaning, snow removal and other municipal services. However, they also pay for these services through their local, county, or state property taxes. U.S. Representatives Anna G. Eschoo (D-CA) and Mike Thompson (D-CA) have introduced H. R. 4696, the “Helping Our Middle-Income Earners (HOME) Act” to correct this double-taxation. The bill is co-sponsored by US Representative Barbara Comstock (R-VA).

Under the Home Act, association members with annual incomes of $115,000 or less (or $150,000 in the case of joint returns) would be eligible for a tax deduction of up to $5,000 for qualifying assessments. To qualify, assessments must be mandatory and regularly occurring, apply to the taxpayer’s principle residence, and benefit the taxpayer’s principle residence. The obligation to pay assessments must also arise out of the taxpayer’s automatic membership in the association. Under these provisions, special assessments and rental properties would not qualify for the deduction.

Homeowners associations would be required to provide a statement to each member showing the name, address, and tax ID number of the homeowner, the amount of qualified assessments received from the homeowner during the calendar year, and the name, address, and phone number of the contact person for the association. The statement must be provided annually by January 31st.

“The Home Act recognizes that millions of middle class homeowners are struggling to keep up with rising household expenses like child care, college tuition, health care, mortgage and community assessments,” says Rep. Eschoo. “The Home Act can go along way by providing relief from this tax burden on millions of middle class families.”

“Congress needs to do all that it can to reduce barriers to homeownership for hard-working middle class families,” said Thompson. “By helping to alleviate the cost of community association fees this legislation is an important step.”

The Home Act has been referred to the House Committee on Ways and Means, but may have trouble moving forward during an election year. CAI has taken a “support” position on the bill, and has issued a Call to Action to seek additional sponsors. Even if the bill does not pass in 2016, it sends a message to the legislative committees working on tax code changes, that it’s an initiative whose time has come.

Blog post authored by Tinnelly Law Group’s Director of Business Development, Ramona Acosta.

New Client: Mallorca Condominium Association

Published on: April 6, 2016 | by Steven J. Tinnelly, Esq.

We are proud to announce that Mallorca Condominium Association has selected Tinnelly Law Group as their associations’ legal counsel.

Mallorca is an exclusive private guard gated community located in the city of Mission Viejo, overlooking Mission Viejo Lake. Residents enjoy views of the lake, mountains and city lights, a private sandy beach, private docks with boat slips, fishing pier, two community pools, and a private beach walk and promenade trails.

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

Sober Living Homes in your HOA?

Published on: March 30, 2016 | by Steven J. Tinnelly, Esq.

*Asked & Answered

Asked – We have seen several sober living homes surface within our community. What can our HOA do to prohibit these facilities? Aren’t they businesses which violate the commercial use restrictions in our CC&Rs or other HOA laws?

Answered – Regardless of how you feel about sober living homes, it is certainly a hot issue that numerous communities are dealing with–particularly coastal communities. HOA CC&Rs often contain provisions that prohibit the non-residential uses of properties or the use of properties for anything other than “single family” residential purposes. However, the California Legislature has, through the Health & Safety Code, mandated that a sober living home (an “alcohol or drug abuse recovery or treatment facility“) which services six (6) or fewer persons to be deemed “a residential use of property and a use of property by a single family, notwithstanding any disclaimers to the contrary.” (H&S Code § 11834.25.) This was done in order to immunize sober living homes from City, County and HOA restrictions (i.e., CC&Rs restrictions) on the use of properties for non-residential purposes. The Legislature has even declared it to be the public policy of California to “encourage” the development of sober living homes. To learn more about the law in this area, click here to read our article on FindHOALaw.com.

In situations where a HOA could potentially take action against a sober living home, it is usually because the home is continually violating some other provision of the CC&Rs which the HOA can enforce. However, in our experience, sober living home operators are savvy; they know the playing field and how to keep themselves out of trouble. Moreover, these facilities are generating substantial amounts of monthly revenue from insurance companies and private parties who cover the costs for patients to stay at the home. That revenue dwarfs any potential fines that a HOA might be able to impose for other CC&R violations which may stem from the home’s operations.

Efforts which have been taken by cities against sober living homes have also proven ineffective, largely because recovering addicts are a protected class under the Americans with Disabilities Act (ADA) and other Federal statutes. For example, the City of Newport Beach in 2015 settled a lawsuit brought against the City by several sober living home operators. The operators sued the City over an ordinance it adopted which sought to restrict the facilities’ operations. The operators asserted that the ordinance violated anti-discrimination and fair housing laws. In addition to spending $4 million in legal fees, the City had to pay the sober living home operators $5.25 million as part of the settlement.

Any meaningful restrictions to curb the growth of these facilities within private residential communities will likely need to be enacted at the State level (and potentially the Federal level). California HOAs are virtually powerless to do anything and the current options available to cities in regulating/licensing these facilities are relatively weak.

To submit questions to the HOA attorneys at Tinnelly Law Group, click here.

New Client: The Orchards Condominium Association

Published on: March 21, 2016 | by Steven J. Tinnelly, Esq.

The-Orchards We are proud to announce that The Orchards Condominium Association has selected Tinnelly Law Group as their associations’ legal counsel.

Located in Upland, The Orchards presents two brand new neighborhoods by William Lyon Homes. Residents will enjoy a private recreation center, swimming pool and tot lot, plus a great location near historic downtown Upland.

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

Properly Vetting a HOA’s Vendors & their Contracts

Published on: March 15, 2016 | by Steven J. Tinnelly, Esq.

hoa vendors One of the primary purposes of any homeowners association (HOA) is to manage, maintain and repair the common areas throughout the HOA’s development. This naturally requires the HOA to contract with third-party vendors to furnish goods or services to the HOA (e.g., landscaping, construction, remediation, painting, plumbing, etc.). We are consistently surprised at how some Board members and management professionals fail to recognize how the HOA’s use of improperly vetted vendors can result in potentially significant legal and financial implications for the HOA, among other problems. Therefore, the need to properly vet vendors—and their contracts—is critical before the Board executes any vendor’s contract on behalf of the HOA.

We previously drafted a library article entitled “HOA Concerns in Contracting with Vendors” that provides some guidance as to how a HOA’s Board and Managing Agent can protect the interests of the HOA and its members. This blog post touches on some of the information contained in that article, and sets forth some recommended procedures which should be utilized before any vendor begins work at the HOA’s development.

Click below to continue reading…

New Client: The Crossings of Mountain View Homeowners Association

Published on: February 22, 2016 | by Steven J. Tinnelly, Esq.

We are proud to announce that The Crossings of Mountain View Homeowners Association has selected Tinnelly Law Group as their associations’ legal counsel.

The Crossings is a master planned community located in the city of Mountain View, 30 miles south of San Francisco. It was awarded the Outstanding Planning Award by the American Planning Association in 2002. Residents enjoy a transit-friendly neighborhood, close to retail shops, parks, a daycare center, and the Caltrain commuter rail station.

Our HOA attorneys and staff look forward to working with The Crossings of Mountain View’s Board and management.

House Passes Bill to Simplify FHA Recertification Process

Published on: February 17, 2016 | by Steven J. Tinnelly, Esq.

fha We have previously blogged about the Federal Housing Administration’s (FHA) revisions to its condominium approval guidelines. Recently, the Community Associations Institute (CAI) announced that progress was made towards reasonable reforms to the FHA approval process. On February 2, 2016, the US House of Representatives passed H.R. 3700 the “Housing Opportunity through Modernization Act of 2015” (Act).

The bill is now referred to the Senate for review and approval. If passed, the Act would:

streamline the recertification process,
allow the Department of Housing and Urban Development (HUD) to grant commercial or nonresidential space requirement exemptions, and
reduce the minimum owner occupancy requirement from 50% to 35%.

If this bill becomes law, the recertification process for condominium projects would become substantially less burdensome, allowing associations to maintain their FHA approval status, thereby making homeownership more affordable.

For further analysis of the bill, click here to read CAI’s blog post and letter to US Representative Leuketmeyer, Chairman of the Housing and Insurance Subcommittee.

Association boards and managers can verify the status of a condominium project’s FHA approval at the Official HUD Directory.

Blog post authored by Tinnelly Law Group’s Director of Business Development, Ramona Acosta.

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