Is It My Parking?

Is It My Parking?

Good morning Mr. Richardson, I discovered a problem with my deeded garage. Long story short my deed does not reflect the garage I was given. I have been fighting to retrieve what I paid for at the beginning. After a unit above my current located garage sold, I lost all power to the garage. HOA was contacted and they discovered the problem. Shouldn’t somebody have caught this issue before the sale? There is a whole mess here and all we want is what we paid for at the beginning. I look forward to your reply. Thank you, T.M., Brea Dear T.M., The first question is, do you own the garage or is it common area owned by all? Normally this is established when the condominium project is created. Sometimes, parking spaces or garages are designated by the Condominium Plan, an underappreciated but important document. Sometimes garages are designated by the Condominium Plan as part of the unit or described as exclusive use common area. CC&R’s unfortunately rarely include a parking list specifying which spaces are assigned to which units. If the Condominium Plan did not create a legal interest in the garage, the seller may have “sold” something which the seller never owned in the first place. Another problem arising from the lack of specificity regarding parking is that owners over the years will trade spaces or cede parking rights to another owner – without any documentation as to how this was done. The problem often surfaces when an association member claims they “acquired” a parking space from another owner, despite the fact that parking spaces are common area...
They Won’t Pay, Now What?

They Won’t Pay, Now What?

When a homeowner fails to pay their share of the association expenses, the board is duty-bound to pursue the unpleasant but necessary task of compelling the member to pay. The association has three options – small claims court, non-judicial foreclosure and judicial foreclosure. In each approach, collection costs are added to the debt. Small Claims Court In small claims court associations can sue for a limited amount – up to $5,000 twice each year and each additional claim is limited to $2,500 per claim, under Code of Civil Procedure Section 116.231(a). Small claims court is fast, filing fees are low, and attorneys are not allowed to represent parties in small claims court trials. Plaintiffs cannot appeal the outcome, while defendants can appeal, sending the case to a retrial before a Superior Court Judge, under Code of Civil Procedure 116.710. Nonjudicial Foreclosure Nonjudicial foreclosure involves a series of notices and waiting periods, after which the property is taken away from the owner without court supervision. The goal of non-judicial foreclosure is simply for the HOA to take ownership of the property if the member does not pay the arrearage. If the property does not have enough net value to cover the debt, HOAs may not after a nonjudicial foreclosure pursue the member for more money. If the member is already in foreclosure from a lender, foreclosure is not a helpful option for the association. Prior to completing a foreclosure sale to take the property, consult legal counsel to confirm foreclosure is in the HOA’s best interests, because sometimes it isn’t. The foreclosure threat does not always compel owners to pay....
Can’t We Have a Satellite Dish?

Can’t We Have a Satellite Dish?

Dear Kelly, I am in an HOA of free-standing homes. Our CC&Rs require that satellite dishes cannot be visible from common areas or HOA streets. Yet, several members have installed small dishes, less than 36” across, on their own property, visible from common areas and HOA streets. I registered my complaint, but the management company maintains that FCC regulations stipulate that they are allowed and that FCC regulations supersede CC&Rs and that our CC&Rs are outdated. What is the current situation regarding FCC regulations in this matter? A.D., San Diego Dear A.D., The FCC “Over The Air Receiving Devices (OTARD) Rule” and California Civil Code Section 4725, protect the right of residents to have satellite dishes not more than one meter (OTARD rule) or 36 inches (Civil 4725) in diameter. The state law allows restrictions based on visibility but the FCC rule does not allow such restrictions. Under the Constitution’s Supremacy Clause, the FCC regulation controls, so dishes can be visible. Therefore, your HOA’s visibility restriction standard might be invalid, and that may be why the other owners have installed visible antennae. Hopefully, your association’s legal counsel has been consulted and has weighed in on this issue, and that is why the Board is not enforcing the antennae visibility ban in the CC&Rs. Under the current satellite television technology, disputes about dishes seem to be less frequent, maybe because they now are significantly smaller (typically eighteen inches across). Thanks,Kelly Kelly, My HOA has a CC&R section proscribing outdoor antennas (other than those satellite dishes covered by the federal mandate). I assume that what legitimately concerns the HOA are large...
Transparency – Great for Windows (HOA Boards Too)

Transparency – Great for Windows (HOA Boards Too)

Nothing should be more important to volunteer boards than the trust of their neighbors. However, trust is not automatic and can be easily destroyed. Making good decisions for the association’s best interests is not enough. Decisions must be made in a manner which is above reproach and displays integrity and openness. These “baker’s dozen” tips may help to build and preserve the trust of the membership in its association governance. Initial Attitude Begin the board term with an attitude of service and not control. Directors with the right frame of mind are less likely to take offense when someone questions board decisions.  Board Meetings Other than the very few permissible closed session items, board discussion should be in open session. While it is easier for boards to work in closed sessions or “working meetings”, this violates the law and destroys the legitimacy of the open board meetings. Members will not trust a board which acts in secret on matters which should be in open session. Board actions taken due to emergencies or other circumstances outside of a board meeting should be disclosed in the next board meeting, and the reasons noted why the matter could not wait for the next meeting. A ratification motion can then further disclose the action in the minutes. Introduce each agenda item before discussing it. Attending members do not have the board packet, and a brief introduction of each item helps attendees to follow (not join) the discussion. Abstaining on a vote which uniquely affects one’s building and not the entire community, or otherwise concerns a director individually, is not enough – step away...
Tips Regarding HOA Committees

Tips Regarding HOA Committees

Most associations find committees helpful. Here are some tips to maximize their value to the HOA: 1. Committees can be “ad hoc,” i.e., temporary, or ongoing Committees typically address a major ongoing area of concern or take on the study of larger or complicated issues. 2. A committee is a group A committee should have at least 3 or 4 members. When a committee dwindles down to one or two persons, it is no longer a committee and should be restocked with volunteers or disbanded. 3. Appointments in the open Committee appointments (or removal) should occur in open meetings. Committee members are not “personnel” and so discussions about committee rosters are not eligible for closed session. 4. Committee service not perpetual Committees normally serve at the pleasure of the board. If a committee is not performing well, committee members can be replaced, and if the committee is not required by the governing documents, it can be disbanded by board vote. 5. Have committee charters Each committee should have a clear written charter adopted by the board. A clear charter informs the committee (and potential volunteers) what is the committee’s role, helping keep the committee on target. A charter also can indicate the minimum and maximum number of members. 6. No interference with vendors or management Committees and their chairs often need to be reminded that decisions are made by the board, that committees make recommendations, and that the committees and their chairs are not authorized to instruct management, association vendors, or other residents. 7. Have directors on committees if possible, but not too many One director on committees helps...
Investing, Growing, and Withdrawing Reserve Funds

Investing, Growing, and Withdrawing Reserve Funds

Kelly, I am a member of my HOA board. Our prior management company had done all of our investments (from our direction) for our reserve funds. FDIC insured CD’s were used as we understood that they were required by California law only to invest our funds in FDIC insured funds. We saw that the interest rate income from FDIC insured funds did not cover inflation increases and considered utilizing a financial firm to assist us to find some other opportunities that better protected our reserve assets using a combination of FDIC and SIPC insured securities. We have had some questioning from homeowners if it legal for us to utilize an SIPC insured fund (versus an FDIC fund). What type of investment opportunities are legal for HOA reserve funds? Thank you, C.W., Oceanside Dear C.W., As a fiduciary of the association funds, the board must keep the members’ money secure and not subject to reduction. In the world of financial fiduciaries, if the fund shrinks, the fiduciary could be “surcharged,” meaning held personally liable for the reduction in the fund due to loss of funds. Loss of funds is not a risk with deposits in banking institutions insured by the Federal Deposit Insurance Corporation (FDIC), so long as no more than $250,000 is in any one institution. Many associations spread their reserve funds across multiple banks to keep their funds all insured within the limit. The Securities Investor Protection Corporation (SIPC, www.sipc.org) protects against a stock brokerage becoming insolvent or taking a client’s funds – but it expressly does not protect against declining investments. Associations are often tempted to place...
What Amount of Reserves Does the Law Require?

What Amount of Reserves Does the Law Require?

Dear Kelly, Is there any legal requirement for the reserves to be at any levels or is it a recommendation by the state? Can an HOA be taken over by the state if it is underfunded and if so, at what percentage? Thank you, S.P., Newport Beach Mr. Richardson, Please tell me if there is a Civil Code requiring a certain percentage of funds to be kept in the HOA reserve fund? Also, would you know if there is an average or median level that is known for California HOA’s.? Ours is over 100 percent. J.D., El Cajon Dear S.P. and J.D., The Davis-Stirling Act contains several requirements regarding reserves. Civil Code Section 5550 requires a full study be performed every three years, with annual reviews in-between. Civil 5550(b)(5) requires a long-term funding plan, and Civil 5560 requires that plan include scheduled assessment increases and be adopted in an open board meeting. Civil 5565 requires a detailed written disclosure of the status of each common area component in the reserve study, which disclosure must be in the form prescribed by Civil 5570. This disclosure, per Civil 5300(b)(2) is part of the Annual Budget Report, and so is distributed annually to members and to prospective buyers. Civil 5510(b) requires that reserve funds be spent only on the items they are reserved for, and per Civil 5515 any other withdrawal of reserve funds is considered borrowing which must be disclosed to the members per Civil 5520. The Davis-Stirling Act does not specify any minimum funding of reserve accounts and does not specify a percentage the fund must be in comparison to...
Can I/They Keep My/Their Exclusive Use Area Change?

Can I/They Keep My/Their Exclusive Use Area Change?

Dear Mr. Richardson, Many years ago, I was allowed by the board to raise the height of my deck. I paid for the architectural change. No board member or manager since has ever inquired about it. Most people don’t even see the change. Do I have legal standing to keep my patio the way it is or at some time could I be forced to put it back the way it was originally built? J.H., Huntington Beach Dear J.H., When you modify an exclusive use common area, it is still not owned by you. Common areas are normally defined by a recorded plan or map. I am assuming from your question that you have no documentation proving the modification was approved. If you cannot prove the alteration was with HOA permission, the HOA might deny that the alteration was approved. If the association decided for some reason to renege on the permission, it might have to pay for the revision and possibly reimburse you for the original modification expense. Your situation illustrates why it is a good idea for both HOA and homeowner to document approved changes to an exclusive use common area, in a written agreement signed by the homeowner and the HOA. With a written agreement in hand, you would be able to prove you had permission. Such agreements are also helpful to the HOA because they can document the homeowner’s agreement to be responsible for the changed item’s maintenance and repair. To make sure that future owners of the lot or unit are notified of this agreement, the agreement can be filed with the County Registrar/Recorder....
Open Forum: Drudge or Jewel?

Open Forum: Drudge or Jewel?

The “Open Meeting Act” (Civil Code Sections 4900-4955), requires at Section 4925(b) that all membership meetings and board meetings have a time set aside for members to speak. This time is often called “open forum.” In open forum, a member can speak on topics on or off the agenda. Some associations avoid open forum and others have unrestricted open forum, but both extremes are unhealthy. The time for homeowners to contribute to the meeting is not during deliberations – that is the board’s role – but during open forum. Open forum is an important element of a healthy association. If members have a fair opportunity to address an attentive board, they will have a more positive view of their association, and directors will be better connected with the community they serve. Consider these guidelines: Directors: Establish reasonable time limits to protect participation by all. Most associations allow 2 or 3 minutes per speaker. Have a timekeeper and consider giving members a “30 second warning” to help them. Do not interrupt, argue with, or respond to the speakers during their time. Listen to the speakers and take notes. Show attentiveness to their concerns – you just might learn something new. Do not record open forum comments in the meeting minutes – comments are not actions. Some speakers may disagree with the board or criticize. Deal with it — you are in a position of service, and they might sometimes be right! After open forum concludes, the chair should inquire if any item from open forum should be referred to a committee or management. If an answer to a question is...