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 Remove rules discriminating against children or which are outdated and no longer enforced.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...
Ramped Up Assessments, Where To Pay

Ramped Up Assessments, Where To Pay

Mr. Richardson, This year our HOA dues increased 20%. The reason given was plumbing issues due to sewage backups. When I asked about just having a special assessment to cover the plumbing issues, I was told a special assessment would require a vote by association members. What can homeowners do to prevent this from continuing? J.L, Newport Beach Dear J.L., Most CC&R’s or bylaws limit increases in regular assessments by boards to no more than 20% per year. Per Civil Code 5605(b), governing documents cannot impose any smaller assessment limits to board power. Some boards, discouraged by lack of participation, address major expenditures by using the maximum increase in assessments for a few years, eliminating the need for a special assessment. While expedient, this does create a few issues. Since members are not voting on it, boards often skip the critical step of having “town hall” meetings and newsletter bulletins to inform the members the reasons for the expenditure. Also, once the need for the increase ends, will the board remember to reduce the assessment amount? Members really should be more involved in their associations, and it is discouraging for a board to try to have to avoid member votes simply because the members won’t vote. Thanks,Kelly Hello Kelly, Recently, I signed up for e-statements, by which my monthly statement is available online. I asked my HOA if I could still receive my monthly assessments through mail as well as being signed up for e-statements. Their reply to me was that I could only chose one way or the other. Is this allowed? J.K., Irvine Dear J.K., The Civil Code does...
We Have Unwritten Rules

We Have Unwritten Rules

Dear Mr. Richardson, Our board frequently adopts new rules, generally following the required process of providing 30-day notice to homeowners prior to voting at an open board meeting. The new rules are documented only in the board meeting minutes. Consequently, many of these rules have been “lost” throughout the years as homeowners come and go and memories fade. New homeowners moving in have no knowledge of these undocumented rules and naturally they are upset when the board enforces them. So, where should new and/or modified rules be documented? D.W., Cerritos Dear D.W., If the rule change is not published in writing, it is not a rule, per Civil Code 4350(a). Once the board has completed the rule-making process, the final steps are sending notice of adoption of the change and amending the rules document to include the change. If a new owner is not provided a copy of the rule, it might not be enforceable against that owner. Also, per Civil Code 4525(a)(1), all governing documents are to be provided to a member upon request so that they can be given to a prospective buyer. Rules are part of the association governing documents, per Civil Code 4150. Hoping this is helpful,Kelly Dear Kelly, I showed our president your article which said Civil 5850 requires associations to have a list of fines and that the list is part of the Annual Policy Statement packet. He said that there is no annual list of fines as we have an Assessment and Collection policy in place, and that the board is not empowered to change it. Our C.C.& R’s on two pages mentions...

Myths Regarding the New Acts

The reorganized and relocated Davis Stirling Common Interest Development Act will become law on January 1, 2014 (Civil Code 4000-6150). On the same day, another California Law Revision Commission product, the Commercial and Industrial Common Interest Development Act (SB 752) also will become law (Civil Code 6500-6876). Some myths are already circulating about these Acts and, unfortunately, some of them are being circulated by lawyers. Myth #1 HOAs must immediately prepare completely new documents, the “Annual Budget Report (ABR)” and “Annual Policy Statement (APS)”. The new Act refers to the ABR and APS as new disclosures, which starting next year, HOAs must distribute annually to members. However, the ABR and APS are primarily collections of documents HOAs already distribute. One collection, the ABR, consists of items which likely change each year, while the APS collection consists of items which typically will not change much from one year to the next. If your HOA has not yet distributed its budget package from 2014, would it be a good idea to get a jump on things and prepare the ABR and APS this fall? Sure, but that is very different from saying it is required. Also, you don’t need a lawyer to prepare this! The competent manager should know how to prepare these two items for your association- and, since it is basically what your manager already is doing, it should not cost extra. Myth #2 HOAs must amend their governing documents to update all statutory references. I very recently learned of a lawyer who is saying that the relocation of the Davis Stirling Act “forces” HOAs to update statutory references...

Getting Ready for 2014

While January 2014 seems a long time away, now is the time for prudent boards, managers and attorneys to begin preparing for the reorganized and relocated Davis-Stirling Common Interest Development Act. A previous column (HOA Homefront #57), summarized the changes in the law. There are some things your HOA can do to be more ready. Begin collecting consents to receive notifications by e-mail. The new law will permit associations to give electronic notices to members who agree to accept such method of communication. In a large association the savings of cutting down on postage and paper could be very substantial, but even small associations will benefit. Encourage your members to sign an “opt in” notification. Your association can include it in the next assessment mailing, and have them available at the management office and at board meetings. Remind owners that this will not only save them space and clutter, but will help keep the budget (and therefore assessments) under control. Review your disciplinary hearing policies (or create some). The new law will require that when the association imposes a reimbursement claim against a member, that claim must be handled using the same process as for member discipline. The law currently does not provide much guidance to boards as to how to conduct these hearings, and unfortunately that is not going to change in the new year. In my experience, boards, having little guidance in the law about how to conduct these hearings, often take far too long. The increase in these hearings in the future means your HOA closed sessions are going to become much longer. Consider adopting policies...