Make a Target! Goals for 2019

Make a Target! Goals for 2019

The late and legendary coach John Wooden said “The most important key to achieving great success is to decide upon your goal and launch, get started, take action, move.” Your association might benefit from setting a few goals, and then moving to achieve them. Here are some ideas for goals in the coming year: Increase the association’s reserve funds by 15%. The closer the association is to a fully funded reserve account, the more financially secure it is. Reduce assessment delinquencies by 20%. Make sure the association has all the Annual Budget Report (Civil 5300) and Annual Policy Statement (Civil 5310) items and annually provides them to owners. Improve member communication and save money by encouraging members to accept communications by email. The law now allows such a consent to be sent by electronic mail. Update the association CC&Rs and bylaws if they are the original documents or are at least 15 years old. Make sure the documents use the current Civil Code references which have been in effect since 2014. Updating the statutory references can be accomplished by board motion (in an open meeting) under Civil 4235. Review and update the rules. Remove rules discriminating against children or which are outdated and no longer enforced. Make sure the HOA has all the legally required rules. Hire an independent consultant to provide a comprehensive assessment of association maintenance and repair needs, to discover any overlooked problems before they become more expensive later. The consultant should NOT be a candidate for the work, so there is no mixed motive in their recommendations. Re-evaluate and update the association web site (or...
Tighter Protection of HOA Funds in 2019

Tighter Protection of HOA Funds in 2019

Assembly Bill 2912 The most important new legislation changing how HOAs will operate is Assembly Bill 2912. AB 2912 began with the statement that its purpose is to “take important steps to protect [HOA members] from fraudulent activity by those entrusted with the management of the association’s finances.” Sponsored by the Community Associations Institute and the California Association of Community Managers, the bill received no credible opposition and passed both houses of the Legislature on unanimous votes. Civil Code 5380(b)(6) and 5502 One very significant change is the new Civil Code 5380(b)(6) and 5502. These new statutes are identical in substance and so appear to be redundant. They require that before any transfer of $10,000 or 5% of total association combined reserve and operating deposits (whichever is smaller), there must be prior written approval from the association board. This slows down the overly active board officer or lazy manager who would pay bills or transfer funds without bothering to obtain explicit board approval. One question is whether a manager could obtain permission in advance to pay certain larger recurring bills, but the intent of the statute seems to argue against this and require express permission for each individual transfer. Association boards should already be preparing for this additional step and talking to their managers about how compliance will occur. This statute does not only reference payments, but controls any “transfer” of association funds. So, advance written authorization is required not only for payments and withdrawals but also deposits and transfers between association accounts. Civil Code 5500 Civil Code 5500 has for years required boards to at least quarterly review...
Preparing for and Dealing with Disaster

Preparing for and Dealing with Disaster

An unfortunate reality is that occasionally communities can be confronted with disaster, when earthquake, wildfire, or other calamity can transform a community within a few hours. Planning for the unthinkable can improve the association’s recovery prospects. Preparedness: Enhance communication. Embark upon an aggressive campaign to build email contact points for every association resident or owner. The ability to flash bulletins to owners is critical in emergencies and saves labor and postage and increases communication in normal times. Check the association insurance. Does the association have replacement cost or code upgrade coverage? What is covered? Some years ago an association sustained hundreds of thousands of dollars of landscaping and irrigation equipment destroyed in a major brush fire. Fortunately, their policy covered landscaping and the insurance paid to restore common area hillsides. Does the association have earthquake coverage? Check the deductible and inform members of the amount that will be association responsibility in the event of major seismic damage. A meeting with your broker may reveal gaps or inadequacies in the association’s insurance protection. Create emergency policies and plans. The manager should be empowered to respond to emergencies, and each director should know association policy regarding who makes emergency calls to vendors if the manager is not available. Risk management. Is the association adjacent to any hillsides or other brush areas? When was heavy vegetation last cleared from the association perimeter? Your local fire department or a consultant may provide a risk assessment. The Emergency: Immediate Actions. Call first responders. Call management. Issue an update via email and bulletin board, avoiding unsubstantiated reports or anything promoting panic. If evacuation is not...
Bills That Made It in Sacramento and Some Which Didn’t

Bills That Made It in Sacramento and Some Which Didn’t

September 30 was the last day for the Governor to sign or veto bills passed by the Legislature in 2018. Many bills affecting HOAs were signed, and two were vetoed. SB 261 This bill, signed by the Governor on September 27, amends Civil Code 4040 to allow homeowners to use email to request the HOA send communications via email to the homeowner, and amends Civil 4360 to require 28 days (instead of the current 30) notice to homeowners for proposed rule changes. SB 721 HOAs exempted. SB 721 requires multilevel residential properties to conduct inspections of balconies and other elevated elements every six years. Signed into law by the Governor on September 17, the final version of the bill exempts HOAs from its requirements. SB 1016 Time of Usage (“TOU”) Meters. SB 1016, signed by the Governor on September 13, adds a new Section 4745.1 to the Civil Code, protecting the installation of TOU meters for electric vehicle charging stations. HOAs may impose reasonable requirements on the requesting owner. AB 2912 New Association Financial Requirements. AB 2912 requires boards to review the HOA financials monthly instead of the current quarterly requirement. The new law, approved by the Governor on September 14, requires all HOAs to have fidelity (dishonesty) insurance in place. It also requires documentation of board authority for expenditures over $10,000 or 5% of the HOA’s budget, whichever is lower. SB 1128 and 1265 Vetoed. Two of the most troubling bills for California HOAs this year were Senate Bills 1128 and 1265. SB 1265 would have made it much harder for common interest development associations to preserve elections...
California Now Has Fair Housing Regulations: Sexual Harassment is Illegal

California Now Has Fair Housing Regulations: Sexual Harassment is Illegal

The federal Housing and Urban Development Department (“HUD”), adopted regulations in September 2016 which for the first time prohibited sexual harassment within housing accommodations. “Housing accommodations” in this context includes homeowner associations. These regulations have thus far not received widespread attention, but in California this will change soon. In August 2018 the California Fair Employment and Housing Council approved Fair Housing regulations, providing the first written enforcement guidelines to help associations comply and avoid exposure to state or private discrimination claims. The new state regulations will take effect on January 1 or April 1, 2019, after some further rule-making process, and will be found at California Code of Regulations 12000-12271. The inaugural regulations do not address all Fair Housing issues but are informative regarding accommodation of disabilities and assistance animals, and also bring a new requirement by echoing the HUD regulations (as California must) by requiring housing providers to reasonably respond to sexual harassment against residents. Sexual harassment was previously considered only as an employment issue, and its two varieties – unwanted sexual advances and hostile environment- have both long been illegal in the workplace. Under the new regulations, associations must protect residents from unwanted advances not only from vendors or management, but also from other residents. If a resident complains against a neighbor, what should associations do, since they can’t relocate or evict residents? Kevin Kish, Director of the Department of Fair Employment and Housing, said “an HOA can’t be liable for failure to take an action it doesn’t have the power to take.” Under section 12010(c) a violation exists where the person knew or should have known...
13 Surefire Steps to Guarantee Board Meetings Will Be Longer [Satire]

13 Surefire Steps to Guarantee Board Meetings Will Be Longer [Satire]

If board service is not difficult enough, you can crank it up a notch by making board meetings much longer. If people aren’t dozing by meeting’s end and if you’re done after 90 minutes you haven’t tried hard enough. Follow these steps to increase your chances: 1. Do not plan ahead Include everything you can think of on the agenda. Make sure you pack multiple major issues in simultaneously – don’t wait for the next meeting. 2. Avoid reading the board packet (if ever) until you arrive at the meeting Ask lots of questions about things that are in the packet or in reports attached to the packets – that way you can prove that you did not prepare and make the whole board wait while you catch up. 3. Open forum remarks should be unlimited Some HOAs have 3 minutes per speaker limits. Let people talk as much as they want (that will give you time to read your board packet). 4. Never use consent calendars Everything must be a separate motion and discussed, no matter how minor, routine, or non-controversial. 5. If other directors disagree with you, keep talking – you might wear them down Sometimes if you drone on long enough, people will occasionally back off their positions and you can delay a board vote… again and again. 6. Repetition is great Repetitious arguments or revisiting previous decisions lengthens meetings. If it’s worth saying once, it might be worth saying many times. If it’s worth saying once, it might be worth saying many times. It it’s worth saying once… 7. Push for unanimous votes and complete...
Before Amending CC&Rs, Avoid “Ready, Fire, Aim!” [10 Tips]

Before Amending CC&Rs, Avoid “Ready, Fire, Aim!” [10 Tips]

First, check with the members Amending CC&Rs usually takes a supermajority (i.e. more than simply a majority of the quorum), so strong membership support is essential. Drafting a great amendment is meaningless if the homeowners will not vote for it. Avoid controversial amendments Amendments changing assessments so that some members pay a higher or lower amount or unpopular use restrictions should be avoided. Some amendments do not require a membership vote Under the Civil Code, amendments deleting developer marketing provisions (Section 4230) or removing illegal discriminatory restrictions (Section 4235), or simply changing the old Civil Code references to the current (Section 4235), are all amendments which can be adopted by the board of directors in an open meeting. Get out the vote Explain to the members that the failure to vote (abstaining) is the same as a “no” vote. Divide up the community into sectors and divide those sectors among volunteers. CC&R amendments are not often very interesting, and apathy is usually their greatest enemy. Missing supermajority If you cannot meet the supermajority required by your CC&Rs, Civil Code 4275 allows the HOA to file a court petition to seek judicial approval – however, to petition, more than 50% of all members, not just a majority of the quorum, must vote in favor. These petitions really should be viewed as a last resort, due to the legal, mailing, and copying cost involved. Verbatim The EXACT text of the amendment must be sent out with the ballots – even if it was already previously distributed. This is required by Civil Code 5115(e). When sending amendments to members, help them by...
More Bills of Interest to Help (or Harm?) HOAs in 2018

More Bills of Interest to Help (or Harm?) HOAs in 2018

Last week’s column discussed SB1265, a terrible bill for HOAs. There are several other bills which, if passed, would make major and minor changes to HOAs in 2019, and they are a mixed bag. SB 1016 Senate Bill (“SB”)1016, authored by Senator Allen, would add Civil Code 4745.1 to the current 4745 (regarding electric vehicle charging stations). Civil 4745.1 would require associations to cooperate with owners who wish to install “time of use” (“TOU”) meters on their electric vehicle charging stations. So long as members meet the requirements, encouraging electric vehicles is a good thing, and SB 1016 helps that good thing in HOAs. SB 1016 was approved by the Senate, and is pending in the Assembly. SB 1128 SB 1128, authored by Senator Roth from Northern Riverside County, would reduce wasted motion in HOA elections. If passed, this bill would create Civil Code 5100(g), which would allow an association to declare candidates elected by acclamation if, after the period for nominations has closed, there are no more candidates than openings on the board. The bill would also allow homeowners to elect to notify the HOA via email (instead of a “hard” copy) that the homeowner wishes to receive notifications via email rather than postal mail. The bill passed the Senate Transportation and Housing Committee and is awaiting hearing by the Senate Judiciary Committee. The bill is practical, a quality sorely needed in the HOA governance world. SB 721 Senate Bill 721 is a major bill applying to both apartment and condominium buildings. SB 721 arises from the 2015 tragedy in Berkeley in which 6 persons died and 7...

Potentially Disastrous Bill Pending in Sacramento [SB 1265]

The California Legislature continues to try to “fix” California common interest developments, yet elected representatives still do not understand the dynamic of volunteer run communities or what they need. Senate Bill 1265 is the latest example. SB 1265, authored by Senator Wieckowski from Fremont, seeks to revamp the HOA election process for the second time in 13 years. This bill would bar any HOA board candidacy eligibility requirements, except that candidates must be members. Many associations ban delinquent members, non-resident members, or members suing the HOA, from serving as directors. Other HOAs ban two co-owners from running. Should this bill pass, all those sensible limitations on eligibility would be illegal. The bill also dramatically increases the technical requirements which must be followed during the election process, and would change Civil 5145(a) to REQUIRE courts to overturn an election if they are shown an error (the current statute says a judge MAY overturn the election). The bill also begins with a declaration that HOAs are quasi-governments, just like cities, functioning like cities “in almost every way.” This is a dangerous and false statement. Try to tell the 24 unit building in Whittier that they are just like a city! HOAs are neighborhoods which have been given via covenants simple tools to enable shared living. They don’t have courts, or large staffs of dozens of full time employees, and their job is not to enforce all applicable laws – just to make sure neighbors are good neighbors and the governing documents are followed, and the community preserved. The bill also would require HOAs to store outer ballot envelopes, which are signed...
Bad News for Beachfront HOAs Regarding Vacation Rentals

Bad News for Beachfront HOAs Regarding Vacation Rentals

While short term rentals present an opportunity for members to make a profit on their home when not in use, such rentals also present many potential problems for both the municipality and the association. Weekender occupants are more likely to be less courteous and responsible to neighbors. Many will argue short term rentals to be “non-residential” use of the residence, more akin to a hotel. Cities may wish to limit hotel-type usage in this context, where they have no control nor collect bed tax. Many associations amend their governing documents to ban rentals shorter than one year, ban subletting, or just specifically banning vacation short term rentals. Short term rentals are often perceived as a “non-residential” or business usage of the common interest development residence, and are therefore deemed inconsistent with most residential HOA CC&Rs. An Oxnard association of homeowners was surely quite disappointed with a Court of Appeals ruling announced on March 27, 2018 in the case of Greenfield v. Mandalay Shores. The Mandalay Shores Community Association, formed in 1959, consists of 1,465 detached home lots on public streets. There are recorded CC&Rs but no common area. Its board of directors adopted a resolution banning rentals shorter than 30 days. The resolution proved to be controversial, and a group reported to consist of about 60 homeowners supported a lawsuit by a homeowner named Greenfield to challenge the policy. After an adverse finding at the trial court level, Greenfield appealed. There have been other recent legal challenges to short term rental bans in beach areas, but this appears to be the first case in which the opinion was published....