Giving Our Board a (Financial) Break

Giving Our Board a (Financial) Break

Dear Mr. Richardson, We just received a set of amended bylaws and CC&Rs presented to us for a vote. One section concerns us, it says that the board can vote itself a waiver of monthly assessments if the HOA is self-managed. The board states that the documents have been approved by an attorney they hired to help them with updating these documents. You wrote previously that if an association has no professional manager, it is probably innocently violating many laws. Your column is awesome! Sincerely, D.W., Goleta Dear D.W., The Davis-Stirling Common Interest Development Act has become so complicated and changes so often that it is quite difficult for associations to operate without a qualified and competent professional manager (either general managers on-site or portfolio managers working through a company). To operate completely in compliance with the law and its extensive disclosures and procedures, a volunteer in a self-managed association will normally work so many hours that it seems unfair. Indeed, when I see associations having great difficulty filling seats on their board, it is usually because one or two directors work 20 or more hours a week on HOA business and potential board candidates are unable or unwilling to commit to that amount of time. One idea which comes up occasionally is to give the directors a financial break since they are working for free for the community. Nothing in the Davis-Stirling Act specifically says the HOA cannot compensate volunteers. So, paying volunteers is not illegal. Most HOA bylaws have a provision banning HOAs from compensating a director for board service but allowing it to reimburse the director...
Kelly G. Richardson, Esq. CCAL quoted in CAI National Magazine, Common Ground

Kelly G. Richardson, Esq. CCAL quoted in CAI National Magazine, Common Ground

In the most recent issue of Common Ground, Kelly Richardson weighs in on the issues surrounding community associations and the risk of injury from wild animals in common areas. “The key is to respond reasonably to known issues.” He also recommends “contacting an appropriate service provider” to recommend expert solutions to the problems, looking at the association’s rules and having “ample liability insurance.” Community Association Institute publishes a bimonthly magazine titled Common Ground and provides education for community association homeowners, managers and those affiliated with HOAs....
Boards Barking About Dogs

Boards Barking About Dogs

Dear Mr. Richardson, Our CC&R’s limit the number of pets a homeowner can have to a “reasonable” number. City law states a resident outside of an HOA can have up to 4 dogs. Our association manager insists we have to abide by city law. Is that right? Thanks, F.D., San Pedro Dear F.D., Per Civil Code Section 4205, governing documents cannot conflict with state law. Unless your city in its ordinance exempts HOA residents, your association must, like any homeowner in that city, follow the law. The association could adopt a stricter standard, but it cannot be less strict than the city, as the public law sets the floor below which associations may not go. Also, it is the city’s job to enforce ordinances, so the board might not have to become involved (except for a call to the animal control department). Most homeowners do not research city ordinances, so if a pet limitation is important to your community, it is better to state it clearly in the governing documents. Pet limits are probably best placed in CC&Rs, so they are more permanent and cannot be changed from one board to the next. Thanks,Kelly Dear Kelly, Several residents used to take our dogs to an enclosed common area to play. The area was not designated for any specific purpose. One day the HOA president announced that dogs would no longer be allowed in that area. The board then invited residents with grandchildren to take advantage of that common area for play. Wouldn’t each resident who takes their dog to the area be covered through each individual homeowners insurance? D.S., Cherry...

Electronic Business.. But Not For HOAs?

This week, many of you have purchased airline tickets, paid bills, and even registered for traffic school using your cellular phone, tablet or computer. If you are a member of various non-profit organizations, from churches to private schools, from associations of Realtors® to unions, you may have also cast a vote electronically. One of the more interesting anomalies in current California corporate law is that under the Corporations Code, ALMOST any corporation can vote via the internet or other electronic means, so long as members have the opportunity to opt out and use a written ballot. However, HOAs cannot do so, because the Davis-Stirling Common Interest Development Act requires that votes only be by secret written ballot (Civil Code 5115), which means electronic voting is illegal for California common interest development associations. For small associations, this may not be a problem, since elections are less costly and it is easier to contact neighbors and collect ballots. However, larger associations commonly struggle with participation, and often cannot manage the logistics of “knocking on doors” to ask members to participate. Larger communities often spend thousands of dollars on mailers, only to have meetings fail for lack of quorum- requiring the association to send yet another mailer to all the members, asking for ballots to be returned. The Act now acknowledges many ways in which an association or its members can choose to receive communications electronically- annual disclosures, specific notices, and other announcements (Civil Code 4035(b)(1), 4040(a)(2), and 4055, for example). However, that “green” and economical approach is prohibited with HOA ballots. Instead of receiving an electronic ballot, logging into a secure...