HOA Lawyer Blog

HOAs Required to Accept Partial Payments from Delinquent Homeowners

Published on: January 8, 2015 | by Steven J. Tinnelly, Esq.

*New Case Law

Collecting delinquent assessments remains one of the more challenging and frustrating aspects of a homeowners association’s (“HOA’s”) operations. Once a delinquent file is forwarded to a HOA’s collection company or law firm, industry practice has been to reject any partial payments made by the delinquent homeowner (i.e., to reject any payments that do not cover all of the delinquent assessment amount, including late fees, interest, collection costs, etc.) that have accrued on the homeowner’s account. That approach has been based upon the language set forth in Civil Code Sections 5655 and 5720. Civil Code Section 5720 allows for a HOA to foreclose on a delinquent assessment lien only where the delinquent assessment amount is $1,800 or greater, or are more than 12 months delinquent. Civil Code Section 5655, however, sets forth the way in payments made by a delinquent homeowner must be allocated (i.e., first to the delinquent assessment amount, then to collection fees, late charges, etc.).

Accordingly, if a homeowner is allowed to make a series of partial payments that must first be applied to the delinquent assessment amount, the homeowner could structure a way in which to avoid foreclosure of his property (i.e., through keeping the delinquent assessment amount under $1,800 or under 12 months delinquent), while not paying all or any of the amounts necessary to cover the HOA’s collection fees and costs it has incurred in connection with the homeowner’s delinquency. This would ultimately place the HOA in a difficult position of having to incur more collection fees and costs solely to collect the unpaid collection fees and costs which the HOA has already incurred. Thus, collection companies and firms have traditionally rejected partial payments in order to avoid this problem–especially in light of the absence of any language in the Civil Code explicitly requiring HOAs to accept partial payments. If the homeowner desires to provide partial payments, the only opportunity to do so would be pursuant to a payment plan executed between the homeowner and the HOA.

However, a recent decision from the Fourth District, Division Three, of the California Court of Appeal has indicated that HOAs do indeed have an affirmative obligation to accept partial payments notwithstanding the concerns referenced above…

AB 2188 Signed: Reducing HOA Authority to Restrict Solar Energy Systems

Published on: December 17, 2014 | by Steven J. Tinnelly, Esq.

*New Legislation

The California Solar Rights Act (“Solar Rights Act”), found at Civil Code Sections 714 and 714.1, provides certain protections for homeowners seeking to install solar energy systems (i.e., solar panels) on their properties. The intent of the Solar Rights Act is to prohibit homeowners associations (“HOAs”) from broadly banning solar energy systems for aesthetic reasons–whether through an explicit ban or through onerous architectural restrictions that greatly reduce the performance of solar energy systems, or increase their costs. To that end, the Solar Rights Act renders void and unenforceable any provision of a HOA’s governing documents that “effectively prohibits or restricts the installation or use of a solar energy system.” Civ. Code § 714(a).

The Solar Rights Act does, however, allow for a HOA to place “reasonable restrictions” on the installation or use of solar energy systems. “Reasonable restrictions” are those which do not “significantly increase the costs of the system or significantly decrease its efficiency or specified performance.” Civ. Code § 714(b). In determining what constitutes a “significant” increase in cost or a “significant” decrease in performance in the context of solar panels, the Solar Rights act currently sets those thresholds at a $2,000 and 20%, respectively. Civ. Code § 714(d)(1)(B). Thus, under the text of the current Solar Rights Act, if complying with a provision in a HOA’s governing documents would, for example, only result in a 14% decrease in the system’s performance, that provision would be valid and enforceable. This issue was addressed in the Tesoro case that we blogged about in 2011.

However, the passage of AB 2188 (Muratsuchi) will serve to cut those thresholds in half. Effective January 1, 2015, AB 2188 will amend the term “significantly” to mean an amount not exceeding $1,000 or deceasing the efficiency of the system by more than 10%. AB 2188 will also reduce the thresholds for other types of solar energy systems (i.e., solar heating systems) in a similar fashion. AB 2188 further shortens the timeline for a HOA to review and approve/disapprove a solar energy system application (from 60 days down to 45 days), as well as modify various certification requirements affecting proposed systems.

The current language of the Solar Rights Act severely limits the degree to which a HOA may restrict the installation and use of solar energy systems. However, as a result of AB 2188 and its reduced cost increase/performance decrease thresholds, the ability for HOAs to restrict solar energy systems will be effectively nullified. With the increasing prevalence of solar panels, HOA Boards of Directors and management professionals must be aware of the Solar Rights Act and the likelihood that any substantive architectural restriction on the use of solar panels may not ultimately be enforceable.

New Client: Jacaranda I & II Maintenance Corporations

Published on: November 25, 2014 | by Steven J. Tinnelly, Esq.

We are proud to announce that Jacaranda I & II Maintenance Corporations have selected Tinnelly Law Group as their associations’ legal counsel.

Jacaranda is a brand new neighborhood in the city of Stanton being developed by MBK Homes. The community features five versatile floor plans with classic Spanish architecture and an urban park area. Residents will enjoy proximity to major employment centers, recreation destinations, shopping, dining, and more.

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

Owner Held Liable for Property Damage on ‘Nuisance’ Grounds

Published on: November 20, 2014 | by Steven J. Tinnelly, Esq.

Most every set of Homeowners Association (“HOA”) CC&Rs contain a provision prohibiting conduct which constitutes a “nuisance.” That conduct often includes “noxious, illegal or offensive activities,” anything which “unreasonably interferes with a resident’s right to quiet enjoyment” and/or “endangers their health or annoys or disturbs” them. We have blogged about how such nuisance provisions may be employed to resolve issues such as the conduct of tenants, activities in the common area, and second-hand smoke transmission. However, a recent unpublished ruling of a California appeals court indicates how nuisance provisions may also extend to situations involving improvements constructed or maintained by a homeowner.

In PGA West Residential Association, Inc. et al., v. Mork (2014) Cal. Ct. App. No. E054276 (“PGA West“), the Defendant homeowners (the Morks) and the Plaintiff homeowners (the Wyatts) owned adjacent, freestanding condominium units within the PGA West Residential Association (“Association”). In 2008, the Wyatts discovered the presence of mold and moisture damage within the interior of their unit. The Wyatts concluded that the water had entered into their unit through an exterior common area wall (“Common Wall”) separating their unit and the Morks’ patio (“Patio”). The Wyatts then sued both the Morks and the Association for violating the restrictive covenants set forth in the Association’s CC&Rs. The Association also sued the Morks for breach of the CC&Rs, breach of contract, and negligence–alleging that the Morks had altered the drainage in the Patio and, as a result, caused water to flow under the Common Wall and into the Wyatts’ unit.

At trial, both the Wyatts and the Association presented evidence that the Morks had altered the original grade of the Patio in the Morks’ course of constructing a swimming pool, sprinkler system and other improvements in the Patio area. The Morks’ conduct resulted in surface water which drained away from the Morks’ unit ultimately collecting into a 2′ wide planter (“Planter”) that extended the length of the Common Wall. In their defense, the Morks argued, among other things, that they were not responsible under the CC&Rs for maintaining the Patio or the Planter–that those areas were designated as “Limited Common Areas” under the CC&Rs to be maintained by the Association…

Tinnelly Law Group Accolades – November 2014

Published on: November 18, 2014 | by Steven J. Tinnelly, Esq.

accolade ribbon-blog.png We are privileged for the opportunities we have to build relationships with our HOA clients throughout the state of California. We are humbled when board members and managers take the time to express their appreciation for the work we provide to their communities:

“Thank you for such a thorough response to our questions. Your opinion is understandable and contains excellent background material supporting your opinion and appears to support nearly all of the recommendations should we decide to go forward with them. Every HOA should have the kind of professional service we get from you and your team.”
(Board President, Master Association in Victorville)

“You go above and beyond the call of duty, as always.”
(Board President, Luxury Homes Association in Burbank)

“We are very grateful for the work Tinnelly Law Group has done. Your direction and advice has been very valuable to us and will continue to be.”
(Board President, Condominium Association in Claremont)

“I wanted to tell you that the Board was very complimentary of the Rules and Regulations as drafted. Great job.”
(Community Manager, Condominium Association in Anaheim)

“This is exactly what we needed. Thank you for the fast response. I am so pleased we are now using your firm for our legal issues. Outstanding work.”
(Board President, Gated Community in Laguna Niguel)

Our firm strives to serve our clients with the utmost care and attention. We are committed to building lasting relationships with our clients and to advancing the professional standards of our industry.

AB 968 Signed: Clarifying Repair/Replacement of Exclusive Use Common Area

Published on: November 7, 2014 | by Steven J. Tinnelly, Esq.

*New Legislation

A common legal issue affecting Homeowners Associations (“HOAs”) deals with determining the extent of the HOA’s maintenance and repair responsibilities versus those of its homeowners. Most sets of HOA CC&Rs address the maintenance and repair responsibilities for HOA common areas, the individual units/lots (“separate interests”) owned by the homeowners, and any common areas reserved for a particular homeowner’s exclusive use (“exclusive use common areas”). In the event that the CC&Rs are inadequate or ambiguous in this respect, Civil Code Section 4775(a) sets forth the following default structure:

Unless otherwise provided in the CC&Rs:
(1) the HOA is responsible for “repairing, replacing, or maintaining the common area, other than exclusive use common area”; and
(2) the homeowner is responsible for “maintaining [the homeowner’s] separate interest and any exclusive use common area appurtenant to the separate interest.”

However, there is an ambiguity within this language with regard to exclusive use common area. While “maintaining” exclusive use common area is the homeowner’s responsibility, Section 4775 fails to state who exactly is responsible for “repairing” or “replacing” the exclusive use common area. This ambiguity is often problematic for condominium developments that may have numerous exclusive use common areas, such as exterior windows, reserved parking spaces, patios, balconies, etc.

Industry practice has held that the homeowner is only responsible for the basic upkeep/maintenance of the exclusive use common area’s usable surfaces, while the HOA would be responsible for any major or structural repairs to the exclusive use common area. We previously blogged about this issue in response to a question on balcony repairs within a condominium development.

Fortunately, the passage of AB 968 (Gordon) will serve to codify industry practice. Effective January 1, 2017, Section 4775 will be amended to read, in part, that:

“Unless otherwise provided in the [CC&Rs] of a common interest development, the owner of each separate interest is responsible for maintaining the exclusive use common area appurtenant to that separate interest and the association is responsible for repairing and replacing the exclusive use common area.”

HOA Boards and management professionals must still be aware of the fact that Section 4775’s default structure does not supersede any conflicting provisions in the CC&Rs. Moreover, even when an exclusive use common area is to be repaired or replaced by the HOA, there may be instances where a homeowner should be held responsible for the repair or replacement costs. For example, if damage to common area or exclusive use common area is sustained as a result of the acts of a homeowner, his guests or tenants, most CC&Rs contain provisions allowing (and even requiring) the HOA to levy what is commonly known as a “reimbursement” special assessment against the homeowner to recover the HOA’s repair costs. The authority for a HOA to take such action is also supported by Civil Code Section 5725(a).

New Client: Tuscany at Porter Ranch Community Association

Published on: October 21, 2014 | by Steven J. Tinnelly, Esq.

We are proud to announce that Tuscany at Porter Ranch Community Association has selected Tinnelly Law Group as their association’s legal counsel.

Tuscany is a private gated community in Porter Ranch which includes Cortile. It consists of single family homes ranging from 900-1600 sq. ft.

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

AB 1738 Signed: HOAs Set to Incur Greater Attorney’s Fees to Resolve Member Disputes via IDR

Published on: October 14, 2014 | by Steven J. Tinnelly, Esq.

*New Legislation

Provisions of the Davis-Stirling Common Interest Development Act (Civ. Code §§ 4000 – 6150) currently require homeowners associations (“HOAs”) to “provide a fair, reasonable, and expeditious procedure for resolving a dispute” between a HOA and its members. Civ. Code §§ 5900, 5905. This procedure is commonly referred to as “Meet and Confer” or “Internal Dispute Resolution” (“IDR”). Its purpose is to provide a non-adversarial forum where a HOA member and a HOA Director can meet informally to see if a resolution to the dispute can be secured short of involving attorneys and taking legal action.

However, the passage of AB 1738 (Chau) will upset this non-adversarial and informal structure through providing a member with the right to have the member’s attorney present at the IDR meeting. While this may not seem problematic, HOAs and industry professionals that are familiar with the IDR process understand that AB 1738 will undoubtedly result in HOAs incurring greater attorney’s fees to resolve member disputes. CAI’s California Legislative Action Committee’s (CAI-CLAC) “Call to Action” on AB 1738 illustrated its inherent problems:

“AB 1738 encourages members to bring attorneys and others to their first meeting with a single board member who has volunteered to help work out the member’s problem or concern. These simple ‘meet-and-confer’ conversations over coffee most often resolve an issue. When they occasionally don’t, either party may pursue a more formal Alternative Dispute Resolution (ADR) process that does involve lawyers. Nothing in law prevents lawyers from attending IDR right now, but AB 1738 actually promotes having them present to argue the issue(s). This will invariably make the discussion adversarial…

…If a member brings an attorney [to IDR], the HOA will very likely bring an attorney. At $300 per hour, each IDR will cost HOAs a minimum of $900 when one considers the lawyer’s time preparing, attending and any follow-up actions. [AB 1378] will end up increasing assessments.”

These sentiments were echoed by the Educational Community for Homeowners (ECHO) in its opposition to AB 1738: “By default, associations will bring their attorneys to IDR. In order to protect themselves, owners will also bring their attorneys. This increases the expenses for both parties, and encourages an adversarial atmosphere.”

IDR is not mediation, but an informal meeting between the member and at least one (1) HOA Director. As such, the communications during the IDR meeting are generally not subject to the confidentiality requirements that cover the more formal “Alternative Dispute Resolution” (“ADR”) process. AB 1738 could allow for the communications and documents discussed at IDR to be admissible in future litigation, and thus serve as a significant problem for the HOA. This is one reason why our office, along with the majority of HOA attorneys, are advising our HOA clients engaged in IDR with a member to close and reschedule the IDR meeting if the member unexpectedly brings their attorney to the IDR meeting. If the member is represented by an attorney, the HOA should ensure that it is as well. Rescheduling the IDR meeting so that the HOA’s attorney can also be present is vital to protecting the HOA’s interests.

Despite overwhelming HOA industry opposition to AB 1738, it was signed into law by Governor Brown on September 18, 2014, and will take effect January 1, 2015. To read the text of AB 1738 and how it will amend the current provisions of Civil Code Sections 5910 and 5915, click here.

AB 1738 represents a tremendous setback for HOAs and their members in their efforts to resolve disputes in a quick and cost-effective manner. Where those efforts fail, the parties are free under current law to move to ADR (a form of mediation) in order to involve attorneys and see if a resolution can be secured short of litigation. As a result of AB 1738, HOA Boards of Directors and management professionals must be cognizant of the problems that could arise if a member’s attorney attends the IDR meeting without the HOA’s attorney also being present. HOAs seeking specific guidance and recommendations on this issue should consult their legal counsel.

New Client: Heritage Ranch Maintenance Association

Published on: October 7, 2014 | by Steven J. Tinnelly, Esq.

We are proud to announce that Heritage Ranch Maintenance Association has selected Tinnelly Law Group as their association’s legal counsel.

Heritage Ranch is a brand new neighborhood in the city of Winchester being developed by Beazer Homes. Located minutes from Temecula, Heritage Ranch in the French Valley offers the best of the Temecula Valley. Residents will enjoy spending the day strolling through old town Temecula or touring the wineries in the area.

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

AB2104 Signed: Low-Water Using Plants; Watering During Droughts

Published on: September 30, 2014 | by Steven J. Tinnelly, Esq.

*New Legislation

We have previously blogged about several bills being considered by the California Legislature relating to drought relief. Among them was AB2104 (Gonzales), which has now been signed by Governor Brown and will take effect January 1, 2015. In sum, AB2104 will expand upon the limitations placed upon Homeowners Associations (“HOAs”) in their efforts to regulate “low water-using plants,” as well as incorporate an Executive Order signed by Governor Brown in April of 2014 that prohibits HOAs from fining homeowners for reducing/eliminating the watering of lawns during declared drought periods.

Section 4735 of the California Civil Code previously stated that any provision of a HOA’s governing documents is void and unenforceable to the extent that it “prohibits, or includes conditions that have the effect of prohibiting, the use of law-water using plants as a group.” AB2104 will expand on this language by also voiding any governing document provision (including those contained in a HOA’s architectural or landscaping guidelines) that “prohibits, or includes conditions that have the effect of prohibiting, the use of low-water using plants as a group or as a replacement for existing turf.” (Emphasis added.) Additionally, the inability for HOAs to fine homeowners for failing to adequately water vegetation or lawns during state or local government-declared drought periods will be codified under new subpart (c) to Section 4735.

To read the chaptered text of AB2104 and the portions of Section 4735 which will be amended, click here.

In the wake of AB2104, questions have surfaced regarding the extent to which HOA’s may still restrict or prohibit the installation of artificial turf. We have previously blogged about this issue, and how artificial turf likely does not constitute a “plant” within the meaning of Section 4735. Additionally, bills which have been proposed by the California Legislature in the past to require HOAs to permit the installation of artificial turf have been vetoed by California governors and ultimately never made it into law. It is unlikely that AB2104 addresses this issue or will otherwise limit the authority of HOAs to regulate or restrict the installation of artificial turf within their communities.

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