REQUESTING MINUTES

QUESTION: My husband and I made a standing request for board minutes but management said we have to submit a new request EVERY month! This seems ridiculous.
ANSWER: I suspect a judge would agree with you. The Open Meeting Act states that minutes must be distributed to any member upon request. Civ. Code §1363.05(d). The statute does not state how often the request must be made, which means it is open to interpretation. A judge could deem the requirement for monthly requests to be an unreasonable barrier to a member's right to minutes. If so, the court could impose a $500 fine and order the association to produce the minutes. Civ. Code §1365.2(f).

Expenses. If the board is concerned about the expense of copying and mailing minutes, they can bill you for the cost. Civ. Code §1363.05(d). To avoid those costs, the minutes could be emailed each month once you give authorization for electronic delivery. Civ. Code §1365.2(h).

Transparency. To eliminate the problem altogether, your board canand should routinely post minutes (except for executive session minutes) on your association's website in a password protected area of the site. If your association doesn’t have a website, the board should (i) summarize its meetings in a newsletter, (ii) post minutes on common area bulletin boards and/or (iii) distribute the information each month in the billing statement.

Aide Ontiveros, Esq. Adams Kessler PLC

 Requiring members to submit a monthly request makes it look like the board is hiding something. That only creates distrust. Instead, the board should create openness and transparency by keeping members timely informed about the board's activities.

BANKRUPTCY
VOTING RIGHTS

QUESTION: Would taking away the voting rights of a delinquent homeowner who has filed bankruptcy be a violation of the automatic stay? This homeowner is currently in an accepted payment plan with the HOA.

ANSWER: Your question is a little unclear. If the owner is currently inbankruptcy, you cannot suspend his voting rights. If the owner is out of bankruptcy but delinquent in his payment plan, the association can suspend his voting rights. Your board should run this by legal counsel before taking any action.

HARASSMENT
OF BOARD MEMBERS

Homeowners who volunteer to serve on their boards quickly learn they cannot please everyone. Some owners have legitimate complaints, some complain because they love to complain, and a third category turns malicious. The board of a small association in Orange County had close encounters of the third kind and fought back.

The board suffered through years of abuse from a husband and wife. When the couple focused their attention on the president with unrelenting harassment that culminated in threats and 119 harassing telephone calls in less than two months, the president sued the couple.

The trial lasted five days. The twelve jurors were outraged by the couple's conduct and returned a unanimous verdict awarding the president $1 million in emotional distress and punitive damages. (Avetoom v. Fridman, Case No. 30-2010-00345490.)

SECRETARY OF STATE

QUESTION: According the the Secretary of State website, I cannot fileForm SI-100 online because a CID corporation must also file a SI-CID. For some reason the second form is not online. I submitted paper forms via snail mail only to find out 5 months later that one field was missing a +4 zip code. An online process with a credit card would be much more efficient and insure that forms are correctly filled out before submission. What can I do to help push this process into the computer age? 

ANSWER: California government is always behind the business community when it comes to new technology and customer service. As a rule, state agencies tend to be slow, inefficient and costly. Recent paleontological digs have found California’s seal mixed with dinosaur bones in the fossil record. Unlike dinosaurs, however, state agencies never die. They just get bigger.

RECOMMENDATION: Lobby your legislator.

FIDELITY BOND
REQUIREMENTS

The FHA adjusted an element of the certification requirement for condominium associations.

Previously, management companies had to provide a separate fidelity bond insuring the association as well as themselves (creating insurance problems for management companies). The FHA is dropping the requirement for those management companies named as additional insured on the association's policy.

But, as with most governmental agencies, the right hand does not know what the left hand is doing. Fannie Mae continues to require that  management companies carry their own fidelity coverage. Complying with FHA and Fannie Mae's shifting demands continues to be a drag on the housing industry.

RECOMMENDATION: Boards wanting to meet FHA and Fannie Mae requirements should talk to their association's insurance broker.

MANAGER NOT CERTIFIED

QUESTION: Are we in trouble? We just found out our manager (for the last 2 years) is not certified nor licensed. What should our board do?

ANSWER: There is no need to flee the country; you're not in trouble. There is no requirement that association managers be certified nor is their any licensing requirement (except for business licenses for management companies). There is, however, a requirement that managers make certain disclosures to the associations they manage. 

Certifications. Even though certifications are not required, they are important. Designations are offered through the California Association of Community Managers (CACM), the Community Associations Institute (CAI) and the National Board of Certification of Community Association Managers (NBC-CAM). 


RECOMMENDATION: Boards should look for professional designations when hiring a manager. They show that a manager has achieved certain levels of training in the management of common interest developments. If the manager is an employee of the association, boards should encourage and pay for the continuing education of their managers. It is worth the cost because knowledgeable managers help steer their associations through the maze of regulatory compliance thereby reducing potential liability and making it easier for volunteer directors to meet their fiduciary duties.

MANAGEMENT FEES

QUESTION: How much (in general) does a property management company charge a homeowner's association to manage the community?

ANSWER: Management fees will vary depending on (i) the location of the development (north, south or central California and inner city versus rural), (ii) the type of development (condo or single-family homes), (iii) the size of the community (500 units or 5), (iv) the level of service being sought (financials only or full management) and (v) the quality of managers assigned to the account (seasoned managers with professional designations or kids fresh out of high school). The best way to compare prices is to get management companies to bid (apples to apples) on the management services you desire.

ADA POOL COMPLIANCE

QUESTION: We are a gated community of private detached homes. If we allow rental of of our community park (including the pool) for weddings, parties and fundraisers where non-residents attend is the HOA subject to the new ADA pool requirements?

ANSWER: This question keeps popping up. You are referring to the new ADA "public accommodation" pool requirements under Title III that go into effect January 1, 2013. The new regulations state that swimming pools open to the public must have at least two accessible means of entry. "Accessible" is defined as swimming pool lifts, sloped entries, transfer walls, transfer systems and pool stairs. Such requirements do not apply to private organizations such as homeowners associations. However, there are exceptions.

Renting to the Public. Renting your pool facilities to the public is one of the exceptions. If you are renting to the general public and the "weddings, parties and fundraisers" you referred to involves swimming, you will need handicap access at least for the duration of the events. That can be accomplished with a portable chair lift. If guests accidentally swim in the pool (somebody falls or is pushed into the pool)--you don't need to provide handicap access. However, other facilities, such as bathrooms, may need to be modified for handicap access under other provisions of Title III.

Renting to Members. If your association rents its facilities to members only, ADA requirements do not apply. If your members invite guests who are not members, ADA rules might apply but it is unclear. I can tell you from experience that handicap advocates tend to be aggressive and look for excuses to chase associations and businesses through the courts. That does not mean they would prevail but the association would have to endure the expense and uncertainty of a lawsuit.

RECOMMENDATION: Even if not required, boards should plan on making all facilities ADA compliant. This not only benefits handicapped members of the association, it avoids potential litigation. In the long run, it's cheaper to upgrade your facilities than to litigate over them. In the meantime, when it comes to renting out your facilities, boards should talk to legal counsel about how best to reduce their risk.



 
Adrian J. Adams, Esq.
Adams Kessler PLC

Bill Seeks Relief for Property Owners Forced to Correct Damaged Sidewalks Trees are a desirable amenity and a way for property owners to add value and beauty to an apartment community. However, in a number of cities and counties throughout California, the sidewalks around rental properties that are located on city property are severely damaged and in need of repair due to overgrown trees. Many of these trees were planted decades ago by the city or county. Assembly Bill 2231 authored by Felipe Fuentes (D-Los Angeles) is supported by the California Apartment Association (CAA) and will require a city/county to repair any sidewalk that is damaged as a result of trees that the local entity had planted. It prohibits the local entity from imposing a fee on the property owner for the repair. Most local governments do not accept responsibility for sidewalk repair. AB 2231 would only apply to cities (in particular Los Angeles) that passed an ordinance years ago, requiring them to pay for the sidewalk repairds. Other cities that will be affected by AB 2231 include Oakland, Berkeley, Half Moon Bay, Placentia, Burlingame and Redlands. This bill would also ensure that the local entity, not the property owner, is held liable for any injury resulting from the damaged sidewalk. Rental property owners will be shielded from frivolous trip-and-fall claims filed because of damaged sidewalks. CAA argues that property owners should not be held liable or responsible for something they had no control over. The bill has successfully passed out of the Assembly on a 48-9 vote with support split evenly among Democrats and Republicans. It now goes to the State Senate for consideration.

Go Green!

The Greene Realty Group team strongly believes in reducing our carbon footprint and that every act of going green, no matter how big or small, makes a difference. Support the "green" movement and spread the word with the use of "go green" stamps from your local post office.  

BORROWING FROM RESERVES

QUESTION: I went to a recent board meeting where it was discussed that instead of charging residents a special assessment to pay for an insurance deductible, they would suspend reserve deposits for three months. Is that legal and if so do they need homeowners' approval to suspend reserve deposits? 

ANSWER: Without a vote of the membership, boards are allowed to borrow from reserves to meet short-term cash-flow problems or other expenses. Civil Code §1365.5(c)(2). Suspending reserve deposits, in my opinion, qualifies as borrowing from reserves. Monies allocated to the reserve account are pledged in the reserve funding plan annually published to the membership, as well as the pro forma budget mailed to all members prior to the start of the fiscal year. Those funds are then collected from the membership for that purpose. Intercepting reserve monies before they are deposited into the reserve account or waiting until after they are deposited is a distinction without meaning. The result is the same--reserve monies are being used for non-reserve expenses. Such actions are allowed if done properly.

Notice of Intent to Borrow. Boards who plan to use reserve funds for non-reserve expenses must give notice to the membership of their intent. The notice must include the reasons why reserve monies are needed, the options for repayment, and whether a special assessment may be considered. Discussions by the board must take place in an open, noticed meeting of the board.

Notice of Decision. If directors authorize the borrowing of reserve funds, the board must issue a written finding, which is recorded in the minutes, explaining the reasons for the borrowing and describing when and how the money will be repaid. Civil Code §1365.5(c)(2).

Repayment Obligation. The borrowed money must be repaid to the reserve fund within one year of the date of the initial transfer, except that the board may, after giving the same notice required for considering a transfer, and, upon making a finding supported by documentation that a temporary delay would be in the best interests of the association, temporarily delay the repayment. Civil Code §1365.5(c)(2).

RECOMMENDATION: Reserve funds are important to the financial health of an association. Accordingly, boards must make every effort to build and preserve the association's reserves. Failure to do so will inevitably result in deferred maintenance, deteriorating facilities, damage to common areas and owner's units, painful special assessments, and potential litigation.



 
Adrian J. Adams, Esq.
Adams Kessler PLC

Welcome to Greene Realty Group's blog where you'll find information pertaining to real estate, the management of real estate, CA legislation updates, tips on going "green" and so much more!