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...
Keep the Lawyers at Bay [Ten Tips]

Keep the Lawyers at Bay [Ten Tips]

Serving as a volunteer director is often thankless, but it shouldn’t be risky. Here are ten ways to reduce if not prevent personal risk from your service. 1. Learn and follow the Business Judgment Rule Found at California Corporations Code 7231 and 7231.5 and contained in most bylaws, the Rule protects volunteers from liability while acting in good faith, for the association’s best interests, and upon reasonable inquiry. 2. Insurance is necessary Only serve if the association has directors and officers (“D&O”) insurance coverage. Civil Code 5800 protects directors from personal liability if the HOA with more than 100 memberships has $1,000,000 of D&O insurance or $500,00 if less members. 3. Refuse compensation Whether called a “stipend” or assessment reduction, reject any form of renumeration for board service. Upon receiving even one dollar of compensation the director is no longer a volunteer and loses all the immunities of volunteers. Reimbursement for a director’s time serving the HOA is not reimbursement – it is compensation. Reimbursements are repayments of out of pocket expenses. 4. Don’t get mad… or even “Good faith” doesn’t just mean a pure heart. However, it certainly does exclude any willful, malicious or retaliatory intent. The nastiest homeowner has the same rights as the saintly ones. Enforce the rules evenly. 5. Don’t take matters into your own hands HOA governance is a team sport, not an individual event. What you think is valid instruction may be viewed by the board (and the HOA’s attorney) as interference. A director (even the president) must use restraint and wait for the board to act. 6. Follow the corporate process Is...
Is Our HOA Now a Free Speech Zone?

Is Our HOA Now a Free Speech Zone?

Dear Kelly, Thank you for your always insightful columns. I have a question regarding the new state law supporting use of common facilities for political activities, and one on first amendment rights. The new law allows residents to use common facilities for political meetings without charge. May the HOA limit attendance to only residents, residents and guests according to its adopted policies, or may/must these programs be open to all? Can an HOA prohibit the display of political signage on front lawns? For example, must the HOA allow residents to have campaign signs? Are there limitations to this allowance like size, length of display time, etc. as established in the HOA rules and policies? With what promises to be a contentious election season this year, this information will be quite timely. B.S., Murrieta Dear B.S., The new law you mention is Civil Code 4515, which bars associations from charging a fee or requiring insurance as a condition of holding meetings which relate to “common interest development living, association elections, legislation, election to public office, or the initiative, referendum, or recall processes” (Civil 4515(b)(1)). That is a very broad (and vague) array of topics, but the association can still require a deposit or insurance for other uses of the common facilities. Also, while the statute says the association cannot bar the use (if the facility is available), that does not mean the HOA has to give carte blanche. For example, if someone wants to hold an event and serve alcohol, the association could reasonably allow the meeting, but not allow food or alcohol to be served without a deposit or...
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 SB 1265, 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...

Risk vs. Reward: How to Make Community Service Fair

It is a basic truth that the risk in any venture should match the reward. High risk investments should bring high yields, while low returns may be acceptable for very secure investments. The same principle should be applied to volunteer board service. Start with the reward – what is the compensation for board (volunteer) service? Of course, there is none – if the director receives any compensation, the director is not a volunteer. If there is no compensation, what is the amount of personal risk the volunteer leader should be expected to take on? If the “books are balanced” and things are fair, then the officers and directors should never be personally at risk for the volunteer service they provide to their neighbors. Fortunately, there are at least three very important legal protections California law provides to HOA volunteer leaders. However, too many volunteers are unaware of the critical importance of these protections, and all too often stray from their safety zones into areas where they are exposed to legal risk. Business Judgment Rule The first protection, the “Business Judgment Rule”, can be found at Corporations Code 7231. The Business Judgment Rule protects volunteers in the scope of their service so long as they act in good faith, in the best interests of the organization as a whole, and upon reasonable inquiry. Well-intentioned (and sometimes overly zealous) volunteers can step outside of these protections. Common mistakes include retaliatory action, favoring or disfavoring certain owners, or deciding without having a proper basis for the decision. Civil Code Section 5800 A second protection also comes from a statute, Civil Code Section...