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...

New Year’s Resolutions [Part 2] – The HOA Member

I, the HOA member, resolve to: Number one: Follow the Golden Rule: treat others as you would like to be treated. My attitude: Not refer to the HOA or board as “they,” since it is all “us.” The directors are also members who pay assessments and give their time to benefit us all. Be neighborly, because shared ownership fails without cooperation. Assume our directors are doing their best as volunteers, and give them the benefit of the doubt. Not first assume the board is incompetent or dishonest when I believe it is overspending. Avoid the “my home, my castle” attitude. We share the benefits of common interest ownership, which means we also agree to share the control of our property. Ask questions before making statements, criticizing, or even accusing. Acknowledge the board may have more information than me. This doesn’t mean the board is right, but it does mean my opinion might not be fully informed. Take the long view of our association property, supporting growth of our capital reserves fund and maintaining our buildings. Be knowledgeable: Read the information the HOA sends to me. Be familiar with the CC&R’s, bylaws, and rules. I will reduce confusion and disputes by understanding the use restrictions and rules. Read the association budget and reserve study. I will ask informed questions, particularly about deviations from budget. If I ask to review financial documents, I will not ask for “everything,” and request only documents which I really need, acknowledging my manager is not a librarian. Help board meetings: Insist the board follow the Open Meeting Act, and only handle in closed session the...
No Kangaroo Courts Allowed: Disciplinary Hearings

No Kangaroo Courts Allowed: Disciplinary Hearings

If everyone followed the Golden Rule (“do unto others…”), association disciplinary hearings would be rare. Unfortunately, hearing are a necessary, regular, and unpleasant board responsibility. These hearings are governed by Civil Code 5850 and 5855, which establish a simple system. The process begins with a written notice to the homeowner at least ten days before the hearing, informing the homeowner of the date, time, and place of the meeting, the nature of the alleged violation (or the nature of the damage to the common area), and notification that the member may address the board at the meeting. Within 15 calendar days, the association must in writing inform the member of any discipline imposed. The process must be followed, because procedural violations invalidate the disciplinary action (Civil Code 5855(d)). *Note: Since 2014, this process must also be followed when associations seek to charge a member for the cost of repairing common area damage caused by the member (or member’s guest or tenant). Sometimes “due process” is erroneously invoked regarding HOA hearings. The required “process” is simply that specified in the statute. So, homeowners do not have the right to be represented by counsel (HOA counsel often also isn’t attending), cross-examine witnesses, confront their accuser, or have a jury of their peers. These are not public court proceedings, but are private meetings between neighbors addressing a community problem. Homeowner rights in these hearings are what the statute says they are. Sometimes hearings are canceled because the accused member is unable to attend the hearing, and the board erroneously thinks the member must be present. The law requires homeowners have an opportunity...

Membership Quorum

Although most HOA decisions are made the board, some of the most important ones must be by membership vote. However, an amazing number of associations struggle to attain quorum, so no decision can be made. “Quorum” is the minimum number of members participating (in person, by ballot cast in advance, or by proxy) so that a vote can be taken. Quorum insures that a membership vote is truly a decision of the community. Certain decisions can only be made by members, such as election or recall of directors, major assessment changes, or amending CC&R’s or bylaws. Without quorum, associations can be paralyzed in these important decisions. Membership quorum pertains to decisions in which the deciders are not the board, but the entire community. Minimum Quorum Usually the bylaws will specify the required membership quorum, but if the governing documents are silent, Corporations Code 7512(a) applies a one third quorum. The most common quorum is 51% or a majority of the voting power. “Voting power” is the number of members entitled to vote. Should some members be ineligible under the bylaws or as the result of suspension of voting rights, the voting power decreases. Unfortunately, many associations have not been able to attain quorum for years, and so cannot elect directors. In such associations, the boards simply appoint to fill vacancies as directors leave. One of my client associations received a recall petition demanding election of a new board. The board, having been unable to achieve a quorum in over five years, agreed, and asked the petitioners for help! Tips toward meeting quorum Some associations make their annual meeting a...

Twenty Thoughts at the 200 Mark

Dear Readers, This marks the 200th column since it was revived in early 2012; may I share 20 thoughts with you on this milestone? Common interest communities involve shared ownership, which is not possible without an organization to facilitate that sharing. Some people are unwilling to play well with others, and often are the ones who want to ban the HOA. Unless someone invents more land, HOAs are vitally necessary. Could Realtors® treat CC&Rs with the same importance as the Residential Purchase Agreement? Both documents are binding contracts, but only one is usually reviewed by buyers during escrow. Successful HOA governance requires setting aside the vertical chain of command we all learn during our education and employment lives. Common interest developments use a horizontal power structure, in which the power rests in the board, not in any individual. Most boards do too much business in closed session which should be conducted in open session. If homeowners allow the board to deliberate the agenda without interruption, and directors avoid interrupting homeowners during their open forum remarks, meetings would be dramatically more productive and professional. Too many managers without credentials are managing associations, because too few associations insist on hiring only managers holding credentials from a recognized organization. If someone is a Certified Common Interest Development Manager, qualified to use that label by the Business and Professions Code, they hold at least one such credential. Board meetings are too long in most associations. Exclusive use common area is still common area – the association can indeed control how it is used. Most associations spend too little time telling their members what...