HOA Lawyer Blog

FHA Releases Revisions to Condominium Approval Guidelines

Published on: September 13, 2012 | by Steven J. Tinnelly, Esq.

The Community Associations Institute (CAI) has just reported that the Federal Housing Administration (FHA) has released revisions to its condominium approval guidelines. In response to recent market and industry pressure, the FHA has determined to modify the existing rules and standards regulating the eligibility of condominiums to acquire FHA financing. CAI’s initial review of the revisions indicate that the substantive changes are as follows:

Delinquencies: No more than 15 percent of units may be more than 60 days delinquent. Previously the threshold involved a 30 day limitation.
Employee Dishonesty Insurance: All new and established condominium projects with more than 20 units will be required to obtain and maintain employee dishonesty insurance covering all directors, officers, employees and agents of the Association.
Project Certification: Individuals submitting a condominium project for approval under the new rules will be required to certify that (a) all information is true and correct, (b) they have reviewed the project application and it meets all applicable state and local laws and (c) they have no knowledge of circumstances that would adversely affect the project (litigation, operational issues, etc.)
Commercial Space Limits: FHA will consider approving projects with commercial space between 25% and 35% through the HRAP process. Mixed use projects up to 50% will also be considered subject to substantial documentation.

For a further analysis and review of the updated FHA condominium guidelines, click here to access CAI’s recent member article.

The Tinnelly Law Group serves as legal counsel to community associations, homeowners associations, and condominium developments throughout California.

New Client: Foothill-Vineyard Inc. (“Pacific Trails”)

Published on: August 28, 2012 | by Steven J. Tinnelly, Esq.

HOA attorney

We are proud to announce that the Foothill-Vineyard Inc. condominium association (aka “Pacific Trails”) has retained Tinnelly Law Group as its new legal counsel.

Located in the City of Rancho Cucamonga, the Pacific Trails project will ultimately consist of 92 condominium homes at build out. The community is designed to be a “walking community” in close proximity to nearby shopping and recreation areas, including the Red Hill Country Club.

Outdoor sports enthusiasts can also take advantage of an easy drive to Mt. Baldy for skiing, snowboarding, and hiking.

Our HOA lawyers and staff look forward to working with Pacific Trails throughout its construction phase and thereafter once complete. We enjoy helping new communities establish solid operational foundations that ensure their continued success.

TLG Secures Favorable Settlement and Obtains a 100% Attorneys’ Fees Award for HOA Client in Fullerton

Published on: August 22, 2012 | by Steven J. Tinnelly, Esq.

The Tinnelly Law Group has secured a favorable settlement in a breach of contract case for one of our HOA clients located in Fullerton, California.

The Defendant security company entered into a contract with the HOA to install an integrated entry gate system for several streets leading into and out of the community. Shortly after the installation was completed, the HOA began experiencing severe mechanical problems with the gate operators and other aspects of the integrated gate entry system. When the Defendant refused to take the appropriate action to repair the system and ensure it’s permanent functionality, the HOA filed suit for breach of contract.

The terms of the settlement required a judicial determination as to the prevailing party and the “reasonable” attorneys’ fees amount to be awarded with respect thereto. After arguing those issues via a motion for attorneys’ fees, the court declared our client the prevailing party and found that all of our client’s attorneys’ fees (nearly $200,000) were reasonable. Such 100% attorneys’ fees awards are incredibly rare.

Our client’s Board of Directors and management praised attorney Bruce Kermott and the entire TLG team for their efforts in securing such a fantastic outcome for the HOA and its membership:

“This is truly great news! Thanks Bruce for all your hard work on this case!”
“Thanks again for your dedication and hard work!”
“Your thoroughness, communication and responsiveness throughout this process was fantastic. Thank you!”

The Tinnelly Law Group strives to resolve its clients’ disputes through non-judicial means wherever possible. However, when issues do result in litigation, our clients take comfort in knowing that our attorneys provide the highest quality representation available and that our entire team remains committed to securing the best possible outcome.

Davis-Stirling Reorganization Bill Signed! Effective Jan. 2014

Published on: August 20, 2012 | by Steven J. Tinnelly, Esq.

*New Legislation hoa laws

On August 17, 2012 California Governor Jerry Brown signed into law Assembly Bills 805 and 806 and thus ended the California Law Revision Commission’s trek to reorganize the Davis-Stirling Common Interest Development Act (“the Act”). AB 805 effectively relocates the Act to a new Part 5 (commencing with Section 4000) to Division 4 of the Civil Code, while AB 806 cleans up numerical references to the Act contained in various California statutes.

The Community Association’s Institute (“CAI”) is an organization dedicated to providing “information and education to community associations and the professionals who support them.” CAI’s California Legislative Action Committee (“CAI-CLAC”) had a substantial amount of input in the legislative process over the past two years and ultimately supported AB 805 in its final form.

The law does not become effective until January 1, 2014 to provide HOA industry professionals, homeowners, Board Members and attorneys some time to become acquainted with its new reorganized form.

The reorganization purported to clarify current provisions of the Act without making any substantive changes. There are, however, some changes that have been made. Our firm looks forward to assisting our clients and their management in 2013 with understanding those changes and the ways in which they may impact the day to day operations of their communities.

Click here to read CAI-CLAC’s blog post on AB 805.

Arbitration Provisions Rise Again in Construction Defect Disputes

Published on: August 17, 2012 | by Steven J. Tinnelly, Esq.

*New Case Law hoa law firm

On August 16, 2012 the California Supreme Court announced its decision in a case that will undoubtedly impact homeowners associations (“HOAs”), developers, owners and insurers in disputes arising from construction defects. The ruling in Pinnacle Museum Tower Association v. Pinnacle Market Development (US) LLC sets the stage for construction defect disputes to be resolved via binding arbitration as opposed to jury trials.

The Court’s ruling in Pinnacle reverses the lower courts’ decisions which previously hampered the enforceability of arbitration provisions contained in recorded Declarations of Covenants, Conditions and Restrictions (“CC&Rs”). Central to the Court’s ruling was its recognition that CC&Rs constitute a contract and that there is strong public policy favoring arbitration/alternative dispute resolution over litigation–a public policy which is embodied in various Civil Code provisions pertaining to HOAs.

In reaching its conclusion, the Court reasoned that “the Davis-Stirling Act ensures that [CC&Rs]–which manifest the intent and expectations of the developer and those who take title to property in a [HOA]–will be honored and enforced unless proven unreasonable. Here, the expectation of all concerned is that construction disputes involving the developer must be resolved by the expeditious and judicially favored method of binding arbitration.” Accordingly, unless an arbitration provision contained in the CC&Rs is deemed “unreasonable,” a developer is entitled to rely on the terms of the contract and the enforcement of the arbitration provision.

The ruling in Pinnacle will create far-reaching and immediate impacts in the HOA industry. Depending on the terms of the CCRs, HOAs and owners seeking to pursue claims against the original developer may now be contractually obligated to forego litigation for binding arbitration. However, Developers wishing to compel binding arbitration may be precluded from doing so to the extent that the binding arbitration provision at issue fails to meet the “reasonableness” test implied by the Court.

HOA’s Ability to Impose Assessments for Maintaining Exclusive Use Common Areas?

Published on: August 10, 2012 | by Steven J. Tinnelly, Esq.

*Asked & Answered hoa law firm

Asked – My condominium association is imposing a special assessment against all owners to reimburse it for costs incurred in repairing the structure of an owner’s leaking balcony. Because the balcony is “exclusive use common area” to be maintained by the individual owner, is my association in compliance with Civil Code §1364?

Answered – Yes, your association is in compliance with Civil Code §1364 due to the nature of the damage/maintenance at issue. Civil Code §1364 states that “the association is responsible for repairing, replacing, or maintaining the common areas, other than exclusive use common areas, and the owner of each separate interest is responsible for maintaining that separate interest and any exclusive use common area appurtenant to the separate interest” (emphasis added).

However, the scope of the owner’s maintenance obligation for her “exclusive use common area appurtenant to [her] separate interest” (in this case, her balcony) extends primarily to the basic upkeep of the balcony’s usable surfaces (e.g., the surface of its flooring). Section 1364 is not intended to require the owner to undertake major structural repairs to the balcony or to otherwise ensure its structural integrity. This interpretation of Section 1364’s requirements is premised upon the recognition that (1) major maintenance decisions/efforts with respect to exclusive use common areas can have a substantial impact on neighboring units, and (2) owners typically retain no ownership interest in exclusive use common areas, despite their exclusive use rights with respect thereto.

However, if the damage was in any way caused or exacerbated by the owner’s negligence, then your association may be able to seek reimbursement for at least some of the repair costs from the negligent owner. Your condominium association’s lawyer can assist your Board in seeking reimbursement from the appropriate parties to the extent permitted under your association’s governing documents and the California Civil Code.

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

New Client: 1001 Laurel Residential Association

Published on: August 7, 2012 | by Steven J. Tinnelly, Esq.

california hoa

We are proud to announce that the 1001 Laurel Residential Association has selected Tinnelly Law Group as its new legal counsel.

Located in the City of San Carlos, the 1001 Laurel Residential condominium project was built in 2009 and consists of 90 ultra luxury condominium homes and several street-level commercial spaces.

In addition to an expansive central courtyard, the 1001 Laurel residents enjoy great restaurants and shopping all conveniently within walking distance.

The 1001 Laurel Residential Association is the newest homeowners association to join Tinnelly Law Group’s Bay Area client portfolio. Our HOA attorneys and staff look forward to working with 1001 Laurel’s Board and management.

HOA Concerns in Contracting with Vendors

Published on: July 31, 2012 | by Steven J. Tinnelly, Esq.

*New Resource

Every Homeowners Association (HOA) will at some point hire a vendor to perform certain tasks on behalf of the HOA, or to furnish services to the HOA and its members. In doing so, a HOA may be exposed to liability brought about by vendor actions and/or the terms of the vendor contracts. Because such liability may substantially impact the financial interests of the HOA and its members, HOA Boards of Directors and community managers must understand how to properly protect the HOA when hiring a vendor. This blog post addresses three issues that are key to doing so: (1) the necessity for hiring properly licensed, bonded and insured vendors, (2) the employment status of a vendor as an “independent contractor” or an “employee” of the HOA, and (3) the importance of having proposed vendor contracts reviewed by legal counsel prior to execution.

Our HOA lawyers have also published this information in our new resource entitled “HOA Concerns in Contracting with Vendors,” available for download from our library.

New Client: Bay Ridge Heights Condominium Homeowners Association

Published on: July 26, 2012 | by Steven J. Tinnelly, Esq.

northern california hoa lawyer

We are proud to announce that the Bay Ridge Heights Condominium Homeowners Association has selected Tinnelly Law Group as its new legal counsel.

Located in the City of San Mateo, Bay Ridge Heights consists of 40 charming condominium homes surrounded by lush landscaping.

Bay Ridge Heights’ residents enjoy a quiet neighborhood, a community pool, and some of the best weather in all of the Bay Area.

Our HOA lawyers and staff welcome Bay Ridge Heights to Tinnelly Law Group’s expanding Bay Area client portfolio. We look forward to working with the Bay Ridge Board and to developing another lasting relationship with a HOA client.

HOA Prohibiting Single Owners from Renting Out Multiple Units?

Published on: July 23, 2012 | by Steven J. Tinnelly, Esq.

*Asked & Answered

Asked – Can the Board amend the HOA’s CC&Rs to limit a homeowner who owns multiple units from renting more than one unit unless they live within the HOA?

Answered – Yes. Provided that the requisite procedures are followed and membership approval is obtained, the Board of Directors does have the authority to amend your HOA’s CC&Rs to include such a rental prohibition. However, because the amendment serves to effectively prohibit a homeowner’s ability to rent out a unit (as compared to a less-severe, reasonable restriction on rentals), the California Civil Code limits the degree to which current homeowners would be bound by the prohibition.

Senate Bill 150 added Section 1360.2 to the California Civil Code to insulate certain homeowners from any “provision in a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests” that was adopted by the HOA on or after January 1, 2012. The only homeowners who may be bound by such rental prohibitions are those who bought their homes after the prohibition had already been adopted and in effect, as well as those who consent to being bound by it.

In your situation, an interesting question becomes how would the Civil Code treat enforcement of such a prohibition against a particular homeowner who owned one unit within the HOA before the prohibition was adopted (“Unit A”), and then later, after the prohibition is adopted, purchases another unit in the HOA (“Unit B”)? The language of Section 1360.2 seems to suggest that the rental prohibition would indeed be valid and enforceable against Unit B. However, a thorough assessment of the facts at issue as they relate to the legislative intent behind Section 1360.2 would be necessary to make a more complete determination.

If your Homeowners Association is contemplating the adoption of a new provision to restrict or prohibit rentals, careful consideration must be given to how the Civil Code’s limitations will impact the enforcement of the new provision and whether those limitations will frustrate the homeowners’ goals in adopting it. Consulting with your Homeowners Association attorney will assist in crafting a provision that serves the interests of the homeowners while also preventing costly legal challenges to its enforcement.

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

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