HOA Lawyer Blog

Short Sales and Delinquent Assessments

Published on: May 5, 2011 | by Steven J. Tinnelly, Esq.

*Asked & Answered

This economic downturn has dealt a serious blow to the assessment revenue of Associations throughout California. Almost every Association is dealing with several delinquent homeowners. One Board Member recently submitted a question on our site asking what happens to an owner’s delinquent assessments if the owner sells his property in a short sale.

In an effort to avoid foreclosure, an owner may elect to sell his property in a “short sale” by selling the property for less than is owed on the mortgage. Because the lender will take a loss on the property, the lender ‘s approval is required before the sale can take place.

Any outstanding liens on the property must be satisfied for the sale to proceed. Provided that the Association has liened property for the delinquent assessments, then it stands in a strong position to recoup at least some money.

Though the Association is under no obligation to release its lien, it should realize the benefit of having a new, dues-paying owner in the property. The Association should negotiate with the parties involved by seeking contribution from the lender, buyer, and realtors in exchange for the Association waiving some of the late fees and interest that may have accrued on the outstanding assessment amount. This type of reasonable approach will (1) help the Association recover at least some money, (2) provide the Association with a dues-paying owner, and (3) help prevent the new owner from harboring resentment for the Association.

Property Owners Entitled to Compensation from State

Published on: May 2, 2011 | by Steven J. Tinnelly, Esq.

Property owners in a partially-built Northern California subdivision may be compensated by the State for flooding damage to their properties.

A Sacramento County Superior Court ruling in April held that the state violated the constitutionally property rights of the property owners by allowing the local lake to flood the surrounding landscape. The California Coastal Commission and the state Department of Fish and Game were managing the lake’s water levels in such a way as to cause flooding to a significant portion of the property owners’ land.

The court ruled that, as a result of the management plan, the state had effectively seized the homeowners land without compensation. The second phase of the trial will require a determination as to the type and amount of damage each property owner will receive from the state.

To read the full story, click here.

It is important for property owners to understand how their private property rights interact with the rights and privileges of state and local municipal bodies.

Purchaser of Home Foreclosed by HOA Entitled to Recover Repair Costs from Redeeming Homeowner

Published on: April 27, 2011 | by Steven J. Tinnelly, Esq.

In an effort to collect unpaid assessments, Associations have the power pursuant to California Civil Code Sections 1367(a) and 1367.1 to record a lien on the offending property and subsequently enforce that lien through foreclosure. After the foreclosure sale, California Code of Civil Procedure § 729.035 states that “the sale of a separate interest in a common interest development is subject to the right of redemption…if the sale arises from a foreclosure by the association of a common interest development…” This right of redemption allows the delinquent homeowner to redeem the foreclosed property from its purchaser by paying the requisite “redemption price” within 90 days. California Civ. Code § 1367.4.

The recently decided case of Barry v. OC Residential Properties, LLC (2011), holds that if such a homeowner wishes to exercise her right of redemption, the redemption price should include any repair costs paid by the purchaser that were “reasonably necessary for the preservation of the property.”

In Barry, the Plaintiff redeeming homeowner challenged the redemption price because it included over $17,900 in expenses that the Defendant purchaser paid for maintenance and repair work on the unit after the foreclosure sale, an electric bill, and interest on the foreclosure sale price. In ultimately affirming the validity of the redemption price, the court in Barry relied on a declaration given by one of Defendant’s project managers that concluded that the unit was “in need of repair and rehabilitation” and that the “repairs made were necessary to prevent further damage to the property.”

To read the Barry case, click here.

Should your Association Permit the Installation of Cell Towers?

Published on: April 18, 2011 | by Steven J. Tinnelly, Esq.

A recent story in the Coast News highlights a situation faced by some HOAs: whether or not to permit the installation of cellular towers on Association property.

In Encinitas, a HOA Board is supporting a ballot measure that would grant Verizon a 20 year lease and allow a cellular tower to be placed on one of the Association’s greenbelts. The fees generated by the agreement would total $800,000 in new revenue for the HOA.

Regardless of the financial incentive, some of the HOA’s members fear that the cell tower would negatively impact their health and property values. Though the health-related argument is speculative, the members in opposition to the measure feel that maintaining property values is a legitimate concern.

To read the full story, click here.

Many of our HOA clients have permitted similar types of cellular installations on Association property without experiencing any negative impact on the community. A HOA Board should always take into consideration the views voiced by its membership when determining what is in the best interest of its community. However, HOA Boards and members should not discount how beneficial new revenue streams can be for an Association.

TLG Secures Injunctive Relief for HOA Client in Dana Point

Published on: April 8, 2011 | by Steven J. Tinnelly, Esq.

TINNELLY LAW GROUP has prevailed in an Architectural Control suit for one of our clients–a HOA in Dana Point, California. The Defendant homeowner installed a window in the second floor bedroom of his residence which overlooked his neighbor’s bathroom, patio and kitchen. Our client’s Architectural Control Committee (“ACC”) had already rejected two previous applications for the window; however, in 2008 the Defendant homeowner installed the window anyway without informing the HOA or submitting an application to the ACC.

As part of its evaluation process, the HOA’s Board of Directors (“Board”) conducted a hearing at which both the Defendant homeowner and his neighbor presented their cases. The Board then performed an on-sight inspection of both residences and concluded that the window did violate the neighbor’s privacy and, as a result, the Board denied the window application. The Board suggested in its denial that the Defendant homeowner submit another application with a modified window which takes the neighbor’s privacy concerns into consideration. When the homeowner refused, the lawsuit was filed and the bench trial was heard on March 10 and 11, 2011.

The trial court ultimately ruled that: (1) the HOA acted within the authority granted to it by its CC&R’s, (2) the HOA’s denial was made after a reasonable investigation, (3) the HOA’s denial was made in the best interests of the community, and (4) the HOA’s denial was made in a non-arbitrary manner. The court ordered that the window be removed and the wall of the residence be returned to its original condition. The court then found that the HOA was the prevailing party and that it was entitled to recover its attorney fees and costs.

We congratulate Bruce Kermott on securing another success in court.

“Bruce Kermott did an excellent job and is to be commended on his thoroughness, marshaling of the records and evidence, and presenting our case to the Judge” – (Client Board Member)

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.

HOA Not Liable for Injuries Sustained by Independent Contractor

Published on: April 4, 2011 | by Steven J. Tinnelly, Esq.

A recently decided case held that the California Occupational Safety and Health Act (Cal-OSHA) did not impose on a Homeowners Association (HOA) any duty to an independent contractor who was injured in a fall while servicing AC units on rooftops at the HOA complex.

In Iversen v. California Village Homeowners Association, 2011 WL 1034261 (“Iversen“), an independent contractor brought premises liability and negligence causes of action against a HOA seeking damages for injuries he sustained in a falling from a ladder while servicing the HOA’s AC units. The independent contractor alleged that the HOA failed to provide a ladder that complied with Cal-OSHA regulations–a set of provisions that are “intended to assure safe and healful working conditions” for workers in California. The HOA moved for summary judgment by contending that it was not required to comply with Cal-OSHA because the plaintiff was an independent contractor and could not establish that the HOA owed him a duty of care or breached a duty of care.

Complaining about your HOA is a Constitutionally Protected Activity

Published on: March 28, 2011 | by Steven J. Tinnelly, Esq.

A recently decided case underscores the fact that speaking out against the action of a HOA’s Board of Directors, agents and/or management is a constitutionally protected activity. In Country Side Villas Homeowners Association v. Susan Ivie, 193 Cal.App.4th 1110 (2011) (“Country Side“), a homeowner (“Ms. Ivie”) was upset at the Association’s newly elected Board and newly hired Attorney for their new interpretation of a maintenance provision in the CC&Rs concerning balconies. Ms. Ivie was concerned about the lack of funding for the new maintenance obligation and also that the decision was being made by the Board for self-serving reasons. The case ultimately went to trial where the Association sought a judicial determination as to the interpretation of the CC&Rs and also sought damages in the form of attorneys’ fees from Ms. Ivie.

The most interesting aspect of the holding is that the appellate court ultimately affirmed the trial court’s granting of Ms. Ivie’s anti-SLAPP motion. “SLAPPs” (“Strategic Lawsuits against Public Participation”) are civil complaints or counterclaims in which the alleged injury was the result of petitioning or free speech activities protected by the First Amendment of the US Constitution. California has an anti-SLAPP statute (Civil Procedure Section 425.16) that provides for a special motion to strike a complaint where the complaint arises from conduct that falls within the rights of petition and free speech.

HOA Members Concerned Over High-Speed Rail Plans

Published on: March 21, 2011 | by Steven J. Tinnelly, Esq.

The Problem of Suspended Homeowners Associations

Published on: March 18, 2011 | by Steven J. Tinnelly, Esq.

California Homeowners Associations (“HOAs”) primarily exist as California Nonprofit Mutual Benefit Corporations. We have recently encountered some instances where smaller and/or self-managed HOAs have failed to file and pay their state corporate taxes and/or make certain corporate filings. The unfortunate result for these HOAs is that their California corporate status is being suspended.

The exercise of corporate powers, rights and privileges may be suspended both under California Revenue and Taxation Code Section 23301 for a HOA’s failure to pay taxes and under California Corporations Code Section 5008.6 for the HOA’s failure to file certain corporate statements. Once a HOA is suspended, so too are its powers, rights and privileges which are outlined in its governing documents.

These powers, rights and privileges are essential to the effective management and functioning of its community. Should directors or agents of a suspended HOA even attempt to carry out the powers of the HOA during the period of its suspension, California Revenue and Taxation Code Section 19719 may punish them “by a fine of not less than $250 and not exceeding $1,000, or by imprisonment not exceeding one year.”

City Held Responsible for Maintaining Berm Supporting HOA Property

Published on: March 14, 2011 | by Steven J. Tinnelly, Esq.

In Coronado Cays Homeowners Association v. City of Coronado (2011), the City of Coronado (“City”) appealed a judgment in which the court determined the City, rather than the Coronado Cays Homeowners Association (“Association”) is responsible for the maintenance of a berm that provides lateral support to bulkheads located on Association property.

The original developer of the project had placed concrete bulkheads along “Lot 90” of the development to act as a retainer for the waterway that was to be dredged on the adjoining lot, “Lot C”. The developer then dedicated “Lot C” to the City for public recreational use while reserving a 55′ wide easement for docks and related structures for the exclusive use of the Association’s residents.

The gradual erosion of the supporting berm in which the bulkheads are embedded resulted in the failing of several bulkheads. Though the Association conceded that it is responsible for maintaining the bulkheads, the Association sought a judicial determination that the City is responsible for maintaining the berm since it is located in the waterway.

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