Reader Question – HOAs and Pets

Reader Question – HOAs and Pets

Who doesn’t love pets? Sometimes, your neighbor! According to the American Pet Products Association, an estimated 67% of American households have a pet. Presumably, that means about 2/3 of HOA residents have pets, and sometimes they create problems. California law provides a unique (and limited) protection for pets. Civil Code Section 4715 says HOAs must allow a member to keep at least one pet and protects homeowners from having to remove existing pets because they are beyond a newly-imposed lower limit. The interesting part is that “pets” are defined in this statute only as a “domesticated bird, cat, dog, aquatic animal in an aquarium, or other animal as agreed to between the association and the homeowner.” (4715(b)). Consider all the common pets that are not protected by this law, including rabbits, mice, reptiles, and hamsters, to name a few. [I have been advocating for years that hamster owners rise up and oppose this law… “Hamster Liberation Front,” anyone?] Also, the law allows HOAs to limit aquatic animals to one. I have not yet heard of a board counting fish to make sure someone does not violate the limit and (until this law was enacted) never thought the number of fish was important! Fair Housing laws allow for assistance animals to help persons with their disabilities. This refers to trained “service animals” or untrained “support animals.” The law does not consider such animals to be “pets,” and bars any requirement of deposits or insurance from a resident with an assistance animal. The law is extremely vague on what species of animal may be assistive. The federal Housing and Urban Development...
Reader Question – Keeping Watch On Funds

Reader Question – Keeping Watch On Funds

Mr. Richardson: Are there laws governing the responsibilities and obligations of HOA boards, especially those related to limits on raising the monthly assessments that each resident in the community pays? Thank you, C.G., San Diego Dear C.G.: Most CC&Rs limit boards to the assessment increases allowed by Civil Code Section 5605(b), permitting boards to increase assessments up to 20% annually, and to impose special assessments up to 5% of the HOA’s gross budgeted annual total expenses. These powers must be exercised in an open meeting, and care should be taken to explain to the members the reasons why the action was taken. Civil Code Section 5600 requires the HOA to collect sufficient assessments to “perform its obligations.” Thanks, Kelly. Hello Mr. Richardson: Are there any suggested or mandatory statements board members must enter into the minutes of board meetings when complying with Civil Code §5500 & §5501? Thank you. E.A., Redondo Beach Dear E.A.: Civil Code Section 5500 requires boards to perform a monthly review of the HOA’s operating and reserve accounts current reconciliation, latest bank account statements, and income and expense statements. The board must also review monthly the current year’s actual operating revenues and expenses compared to the current year’s budget, the check register, monthly general ledger, and delinquent assessment receivable reports. Per Civil Code Section 5501, the requirement may be satisfied by the entire board or a board subcommittee consisting of the treasurer and at least one more director. Those reviewing the financial information should confirm in writing or orally in each open board meeting that the review has been completed for the months since the...
Reader Question – That Tree is a Problem!

Reader Question – That Tree is a Problem!

Dear Kelly: Our condominium association CC&Rs state that plumbing problems that service only a single unit are the responsibility of the unit owner. If the main drain servicing multiple units is blocked it is the responsibility of the association. My question is about damage caused by tree roots. The association has repaired driveways and sidewalks that service only a single unit that were lifted or cracked due to tree roots coming from the common area. The board considered these to be trip hazards. Recently a unit had a toilet drain clog under the slab that was caused by tree roots from a tree in the common area. It was the opinion of the board that the toilet served only one unit, so it was the unit owners responsibility. Were we correct in our assessment? T.E., Santa Barbara Dear T.E.: It’s hard to wade through all the many sometimes conflicting legal principles in governing HOAs. Here is one example. The common area tree grew due to nobody being negligent, but that does not end the discussion. The tree still has damaged property which otherwise would be an individual owner repair responsibility. That tree could be characterized as a nuisance, making it HOA responsibility. Boards and sometimes lawyers focus upon whether negligence exists but miss the possibility of nuisance. I can’t say definitively you were wrong or right, and that is for the HOA’s legal counsel to determine. Best, Kelly Mr. Richardson: Our board put together a committee to look at ways to amend our CC&Rs to safeguard or restore views that have been lost over the many years that this...
Reader Question – Who Watches HOAs?

Reader Question – Who Watches HOAs?

Kelly: Who has oversight of HOAs in California if someone wants to file a complaint against their HOA or management company?  Thanks, J.H., Lakeside.   Dear Mr. Richardson: I am amazed by the lack of training or basic knowledge that is required of HOA directors before they get elected. You would think just the basic understanding by directors of employee rights, relations  and what creates a hostile work environment are to be expected. In one of your future columns could you include any Civil Codes, Davis-Stirling Act requirements related to employee rights and how a board should interact with employees? G.H., Fallbrook Dear J.H. and G.H.: There is only one statewide mandatory qualification to serve as a director in one’s HOA – one must be a member. Someone can participate in making HOA Board decisions involving hundreds of thousands of dollars with no training or experience whatsoever. Also, there is no agency supervising compliance by HOAs or their directors with the Davis-Stirling Act. Certain law enforcement agencies enforce crimes or Fair Housing law violations, for example, but no state agency is charged with general oversight of HOA operations or governance. Some states have at least minimal requirements for board service. Florida since 2013 requires a director to certify within 90 days of starting board service that they have either completed an HOA certification course or have read the entire HOA governing documents. The Community Associations Institute (“CAI”) proposed a bill about 13 years ago to require just 3 hours of low cost HOA orientation for directors, but the bill was watered down during the legislative process so much that...
Insurance – Does Your HOA Have ALL It Needs?

Insurance – Does Your HOA Have ALL It Needs?

The previous column discussed considerations regarding property insurance, but that is only one of many insurance types which most HOAs should have in place. First and foremost is liability insurance. This is the insurance which covers claims of negligent damage or injury affecting persons (owners, tenants, or visitors) on the property. Civil Code Section 5805 protects the individual members of the HOA from being sued personally just because they are HOA members, so long as the HOA has at least $2,000,000 (100 or less members) or $3,000,000 (over 100 members) in liability coverage. HOAs should discuss with their insurance broker and legal counsel what amount of liability insurance is appropriate, since an allegedly injured party could seek damages beyond the limits of the insurance, and that financial impact on the HOA could still later be passed along to all the members in the form of a special assessment. Directors and Officers Insurance adds a layer of protection for the unpaid volunteer directors who are making important decisions each year, and who are exposed to lawsuits from unhappy homeowners. Civil Code Section 5800 provides for immunity for HOA directors so long as the HOA carries at least $500,000 (100 or less residences) or $1,000,000 (over 100 residences). This should really be a non-negotiable item for every HOA director in California – make sure the HOA has that insurance in place before joining the board. Just like with general liability insurance, discuss with the broker and legal counsel the recommended coverage levels, as many HOAs may find larger limits of coverage more desirable. Individual owners should have their own homeowner insurance...
HOA Insurance – Is The HOA’s Coverage Sufficient?

HOA Insurance – Is The HOA’s Coverage Sufficient?

Insurance brokers are one of an HOA’s most important vendors, yet they are often ignored until claims arise. This mistake can be costly. Insurance is a contract in which the insurer accepts a fee (“premium”) and in return agrees to pay for certain incidents of damage (property insurance) or claims of liability (casualty insurance). Because insurance is a contract, it is critical to understand the contract’s limitations. Here are six questions to carefully consider.  Is there a deductible, and how much is it? The deductible must be paid by the insured HOA before the insurance company pays the first dollar of damage reimbursement. Also, what are the limits of the insurance? Is there enough insurance to cover the amount of the damage?  What are the exclusions in the insurance contract, where the insurer states that it will not pay on certain kinds of damage incidents? Mold, mildew, or dry rot damage are commonly excluded. It is important to understand the exclusions, as there is contractually no insurance for the items excluded from the insurance policy. How much of the HOA property is covered by the insurance for damage to the property? Does it cover all the buildings and improvements? One HOA discovered to its shock during the wildfires two years ago that its asphalt streets, heavily damaged by the conflagration, were not included in the definition of “covered property.” Pay close attention to which elements of the property are covered by the insurance. How much insurance does the HOA have? Particularly with a condominium association, in which the HOA is normally responsible to rebuild the structures, it is important...
Be Ready When Amending CC&Rs (It’s Hard Enough)

Be Ready When Amending CC&Rs (It’s Hard Enough)

Amending CC&Rs is not easy. Here are some tips to avoid making it harder. Check with the members.  Amending CC&Rs usually takes a supermajority (i.e., more than simply a majority of the quorum), so a good idea isn’t enough – it still needs widespread support. A great proposed amendment is meaningless if the homeowners will not vote for it. Avoid controversial amendments. Be aware of subjects which could be very upsetting to some members. Avoid issues on which a widespread consensus cannot be achieved, such as changing assessment allocations or unpopular use restrictions. The board can pass some amendments. Certain amendments can be approved in an open meeting by the board such as amendments deleting developer marketing provisions (Civil Section 4230), removing illegal discriminatory restrictions (Section 4235), or changing the old Civil Code references to the current (Section 4235).  Get out the vote. Many members think abstaining is OK if they don’t have time to read everything, but that hurts the amendment’s chances. Divide the community into sectors and assign each sector to volunteers.  Apathy is usually the greatest frustration to amendments. Didn’t meet the number? Don’t give up. Civil Code 4275 allows HOAs to file a court petition seeking judicial approval so long as over 50% of all members voted in favor.  These petitions really should be viewed as a last resort, due to the legal, mailing, and copying cost involved. The EXACT text of the amendment must be sent out with the ballots, per Civil 5115(e) – even if it was already previously distributed.  Help members by sending TWO versions – one “redlined” showing what is being...
Are There Surprises In Your CC&Rs?

Are There Surprises In Your CC&Rs?

Among the association governing documents including articles of incorporation, recorded map or plan, bylaws, operating rules and covenants, conditions, and restrictions (“CC&Rs”), the CC&Rs document is arguably the most important. Here are eleven things about CC&Rs which might surprise you, before you read them. CC&Rs are: Public documents.  When filed with the County Registrar/Recorder (aka, “recorded”), CC&Rs become a public document and anyone can see a copy. Binding all owners. CC&Rs bind all owners, regardless of whether they read it, understood it, or received a full copy of it.  As a recorded document, CC&Rs are a “covenant running with the land,” meaning a legal commitment attaching to the land and therefore its owners. Typically not reviewed until too late.  Most buyers regard CC&Rs as boilerplate to be reviewed eventually.  Even though they don’t sign it, buyers should read it as carefully as the purchase agreement. Your covenants, not just the association’s. CC&Rs place rights and responsibilities on the association as well as upon each member.  If a neighbor violates the covenants, you have the same right to deal with the problem. Often distributed in draft or unrecorded format.  “Official” CC&Rs will have a recording number from the County Recorder on each page.  Associations often mistakenly distribute unrecorded copies originally received from the developer.  Obtaining a copy of the official document is easy. Normally enforced by courts, even if they seem unreasonable. The California Supreme Court ruled in 1994 that CC&Rs are presumed enforceable, with some narrow exceptions (such as if they contradict a law). Often not written with your HOA in mind. Original developer-supplied CC&Rs often are boilerplate with...
Reader Questions – Termite Fumigation Part 2

Reader Questions – Termite Fumigation Part 2

Hi Kelly, our board is resolved to resume fumigation of the buildings in our community and has voted to obtain quotes for the next phase of fumigation but has not voted yet to schedule the work. The president does not consider that to move out of one’s home and into a hotel or another person’s home is a COVID risk. Does the board have the right to push through with the fumigation work and force people out of their homes during COVID times? What do you recommend happens? Thank you for your help, C.P., Huntington Beach Dear C.P.: If the association has confirmed a termite infestation in the framing, that can affect all of the HOA owners. Effective treatment can protect the building’s structural integrity, thereby protecting residents’ safety and protecting owners from long-term major repair costs. Civil Code Section 4785 allows the HOA to temporarily remove an occupant from a residence slated for termite treatment if the HOA meets certain specified conditions. The HOA must mail or personally deliver written notice to the owner with specific information at least 15 but not over 30 days before the date the residence must be vacated. If the HOA finds it necessary to invoke this statute, it should consult its legal counsel before beginning the removal of a resident, and the lawyer will most likely suggest a court order is obtained on an emergency basis. HOAs should not try to force residents out of their home without appropriate legal process being invoked, and residents should cooperate with this important preventative work. Best, Kelly  Dear Mr. Richardson: My building has confirmed termite...
Reader Questions – Who Handles Those Termites?

Reader Questions – Who Handles Those Termites?

Dear Kelly: I live in a townhouse. My neighbor had termites and my other neighbor on the other side suspects them as do I.  We were told by the association that it is our responsibility to take care of them.  It just seems to me that termites come from the outside in and should be the responsibility of the association.  Could you shed some light on this for me.  M.N., San Clemente Dear Mr. Richardson: Does the association have any responsibility to handle a termite problem originating from trestles (wood patio overhangs) that were originally installed by the builder and are part of the architectural design of the townhouses? Termites are entering the home due to infestation of dry rot and termites in these structures. R.M., Coto De Caza Dear M.N. and R.M.: Termite infestations in attached housing affect not only those living in affected buildings but potentially affect all assessment-paying members if the damage requires expensive repairs to common area framing. Allocation of responsibility is provided by Civil Code Section 4780(a) which states that in condominium, stock cooperative, or community apartment associations, the association is responsible for repair and maintenance of common area termite issues, unless the CC&Rs say otherwise.  You each describe your homes as “townhouses,” but that describes the homes’ architectural configuration, not the type of property ownership you have. A townhouse could be a planned development, condominium, stock cooperative or community apartment property. If the CC&Rs are silent and your association is a condominium (you own a “unit”), stock cooperative (you own a share of stock) or community apartment (you own an undivided equal fractional...