TERM LIMITS

TERM LIMITS

QUESTION: How long should a board member remain on an HOA board? We have a couple of members who have been on the board for several years and refuse to leave.

ANSWER: Refuse to leave? As long as the membership keeps electing them to the board, directors properly occupy their seats. Having long-term directors can be good or bad depending on the particular directors. Good directors bring institutional memory and a steady hand to the association's business. Their experience saves money for the membership. One director I work with has been on his board for over 20 years. He has consistently been one of the best business-minded directors I've ever dealt with.
On the other hand, some long-term directors start out sharp and then turn autocratic over time and slow to adjust to changing circumstances. When that happens, they need a nudge to step down and let someone else serve on the board.

Term Limits. To encourage "new blood" on the board, some associations amend their bylaws to implement term limits along with staggered two-year terms. The best term limits are those that allow directors to serve two consecutive terms and then step down for one year--provided someone else is willing to serve. If no one else runs for the board, the limit is lifted and the director can continue to serve.

ATTORNEYS' FEES

A recent appellate court decision dealt with attorneys' fees in a dispute over an election. A homeowner brought a challenge to an election and the association prevailed in the action. The court found some of plaintiff's actions, including filing a complaint barred by the statute of limitations, "frivolous." The association sought attorneys' fees under Civil Code §1363.09(b), which provides:

A prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation.

The court awarded the association $15,000 in attorneys' fees. Plaintiff appealed. The appellate court agreed with the lower court that plaintiff's lawsuit was frivolous. Even so, it reversed the fee award. The court decided that the statute cited above did not explicitlyauthorize recovery of attorneys' fees. However, the court left open the door that an association could recover its fees under their own CC&Rs. See That v. Alders Maintenance Corp.

WHO PAYS FOR
BALCONY DAMAGE?

QUESTION: Who is responsible for paying for the deck when the owner tiled it without approval? The HOA or the owner?

ANSWER: The owner. However, the owner could have some defenses depending on the situation. To minimize any defenses (or avoid the problem altogether), boards should adopt written rules and regulations regarding the tiling of balconies and then strictly enforce those restrictions. Associations should either (i) ban tile altogether or (ii) implement tough installation guidelines pursuant to a consultant's specs written specifically for the association. In addition, the association should record a covenant making the owner (and future owners) responsible for all maintenance and damage that may arise from the installation of the tile.

CAN HOA CONTRACTOR
BUY A UNIT?

QUESTION: Can a contractor hired by the HOA buy in the same complex? Would this constitute a conflict of interest?

ANSWER: Yes he can buy into the complex. No, it’s not a conflict of interest . . . unless he is elected to the board and votes on his own contracts. Contractors are generally good to have around; it's the lawyers you have to watch out for.

SMALL HOAs

QUESTION: My daughter is president of a 9-unit HOA. With so few units, are they held to the same standards of larger associations? Do they have to send out annual disclosures?

ANSWER: Unfortunately, they are held to the same standards and subject to all compliance expenses even though small associations have very little money and are usually self-managed. 

During its rewrite of the Davis-Stirling Act, the California Law Review Commission recognized the burden the Act imposed on small HOAs. The CLRC looked at how to lighten the load and started by trying to define "small" HOAs. The project proved to be difficult and was tabled. The CLRC might take up the issue again at a later date, but I doubt it.