COMPANY OWNED UNITS

COMPANY OWNED UNITS

QUESTION: I serve on the board of a townhome association. We have a potential buyer of a unit that is a limited liability company. If the LLC becomes an owner and the LLC has 50 members, will all 50 members have rights to use the common area facilities?

ANSWER: Good question. Because of the uncertainty and to avoid potential litigation over the issue, we address it when we restate CC&Rs and bylaws for our clients. We define who does and does not hold voting and common area usage rights for (i) those who merely hold a security interest in the property, (ii) tenants, (iii) trusts, (iv) corporations, (v) partnerships, and (vi) other ownership entities. Doing so eliminates the problem. Your association should consider doing the same. If you have questions, contact us. 

NOTICE OF RULE CHANGE

QUESTION: We are changing several rules. May we send only the rules that are changing to homeowners? Our manager says we must send out all the rules for the 30-day homeowner comment period, not just the ones being changed or added. I do not read Civil Code 1357.130 that way. Who is correct?

ANSWER: You're correct. The statute only speaks to proposed changes not the entire package.

The board of directors shall provide written notice of a proposed rule change to the members at least 30 days before making the rule change. The notice shall include the text of the proposed rule change and a description of the purpose and effect of the proposed rule change. (Civ. Code 1357.130(a).)

Once the rule change has been approved by the board, notice of the approval must be given to the membership before the change can take effect. Ideally, changes are incorporated into the rule book and a full set is mailed or delivered to the membership. For some associations that can be quite costly. An alternative is to mail the changes to the membership and post a full set of revised rules on the association's website.