HOA Election Processes Much More Difficult in 2020 – SB323

HOA Election Processes Much More Difficult in 2020 – SB323

An extensive overhaul of HOA election procedures takes effect in 2020 after passage of the controversial SB 323. Here is a recap of the many changes: The law at Civil Code 5100(g) will finally allow votes by acclamation when, at the close of nominations, there are not more candidates than open seats. Unfortunately it only applies to HOAs of over 6,000 members. Associations will be required by a new Civil Code 5100(a)(2) to hold board elections at least every four years. This will affect few HOAs, since most have board terms which are one or two years in length. In the past, many HOAs have held hearings to suspend the voting rights of members delinquent in their assessments, and others have bylaws barring such homeowners from voting. The new Civil 5105(g)(1), however, requires HOAs to give ballots to all association members. So, delinquent members may vote on HOA matters, even though they are not paying their share of the HOA expenses. Although some HOAs allowed managers to serve as the Inspector of Election, under the new Civil Code 5110(b) this is prohibited. Some HOA Bylaws do not require directors to be an association member, but the new Civil 5105(b) disqualifies non-members from serving. The new Civil 5105(c) allows associations in bylaws or election rules to disqualify candidates if the member: Is delinquent in assessments (without a payment plan in place); Has not been a member for at least a year; Is co-owner with another director; or Has a felony conviction which would harm the HOA’s ability to obtain fidelity (dishonesty) insurance. The law does not specifically state that these...
Protection for ADUs and Doorway Icons Coming in 2020

Protection for ADUs and Doorway Icons Coming in 2020

Two new laws are coming in 2020, which provide protection for HOA owners in regard to accessory dwelling units and religious decorations on doorways. One of the most basic elements of residential CC&Rs is the requirement that residences are limited to “single-family” use. However, at least in California planned developments, that requirement is partially overridden through Assembly Bill 670. That bill, recently approved by the governor, creates a new Civil Code 4751 taking effect on Jan. 1, 2020. Under this law, a planned development lot owner can add a second smaller residence attached to the primary residence, so long as applicable building and zoning codes are satisfied. Accessory dwelling units have been increasing in priority with the state Legislature in recent years. In 2016 SB 1069 passed, creating a requirement that local building departments allow construction of ADU’s that meet minimal standards (Government Code Section 65852.2(e)). This year AB 670 passed, adding a new Civil Code Section 4751 to the Davis-Stirling Act. Starting in 2020, planned developments may not have an outright prohibition against ADUs, but may impose “reasonable” restrictions so long as they do not unreasonably increase the cost or effectively make ADU’s impossible. The law only applies to planned developments and does not apply to condominiums, stock cooperatives, or community apartments. Homeowners should check their CC&Rs before seeking an ADU on their property. Some detached home communities actually are not planned developments but are condominiums. Even if the condominium has a “yard,” it is not covered by this law. Planned developments often involve “townhouse” construction, in which homes are attached side by side but still are wholly...
“Elevated Elements” Must Be Inspected Under New Law

“Elevated Elements” Must Be Inspected Under New Law

A balcony collapsed in Berkeley in 2015, causing six deaths and injuring seven. Consequently, Senate Bill (“SB”) 721 passed in 2018 and took effect in 2019, creating Health and Safety Code 17973. This law now requires inspection of elevated balconies, stairways, walkways, and other “exterior elevated elements” every six years. The new law exempts Davis-Stirling Act associations but applies to non-residential common interest developments. SB 326, introduced and passed this year, addresses Davis-Stirling Act common interest developments by adding a new Civil Code Section 5551 to take effect on January 1, 2020. HOAs must hire a licensed structural engineer or architect to perform a reasonably diligent visual inspection on a sample of exterior elevated elements. The first inspection must be completed by 2025 and repeated every nine years afterward. It applies to balconies, walkways, and other above-ground elements attached to the buildings which are at least six feet above ground level and which the HOA are responsible for maintenance or repair. The law applies to multi-unit buildings consisting of at least 3 or more units and so would not apply to condominium projects consisting solely of detached single or duplex structures. The inspection is “visual,” meaning the inspector will not be required to dismantle the exterior elevated elements, but the inspector is required to generate a random list of locations to inspect prior to beginning. The inspector must generate a written report, and if the report indicates immediate threat to safety, the inspector must provide the report to the HOA immediately upon completion and to the building and safety department within 15 days. The HOA is then required to...
We Can’t Seem to Get Copies

We Can’t Seem to Get Copies

Dear Kelly, Do I, as a homeowner, have a right to see the contract between the HOA and a vendor? I have no desire to stir up problems. I appreciate your weekly column in the paper, I wish all my neighbors would read it and understand what the board goes through on our behalf. Thank you, M.L, Dana Point Dear M.L., Yes, you have the right under Civil Code 5200(a)(4) to see executed contracts. You must make the request in writing, which should be a paper document unless your HOA accepts notices vie email. Under Civil Code 5210, that copy must be provided to you within ten business days of the request. The association may require you to reimburse the reasonable copy cost of the document. Make sure you request a specific document – a request that asks the HOA to go hunt for “any maintenance-related contracts” is not asking for a specific document but asks the HOA to research for you, and the HOA is not required to do that. Hoping this is helpful,Kelly Kelly, Does the HOA manager or board have the responsibility to provide me with a copy of the minutes (signed/unsigned) and an update of the financial status from the previous meeting? I attended our meeting the other day and requested that members be provided a copy of the latest financial status and expenditures and copies of the previous meeting minutes, that way we can follow the agenda of the meeting. I was informed that I am provided a copy of the financial status at the end of the year and the budget for the year....
Shaken Up About Earthquake Insurance

Shaken Up About Earthquake Insurance

Hi Kelly, I live in a 100+ unit condo complex without HOA earthquake insurance. I have CEA earthquake insurance for my home. Have you written any articles I could read on how to cover myself if my building suffers structural damage? Thank you, R.M., San Diego Mr. Richardson, Is a planned development HOA required to maintain earthquake coverage insurance? Our association is considering dropping this coverage in order to save money. B.W., Huntington Beach Kelly, My daughter recently purchased a condominium. The financial reserves of the HOA seemed strong, good property management, no obvious area of neglect. However, the HOA does not carry earthquake insurance and on its website suggests you get your own. I can’t find an insurance company that will issue earthquake insurance for just one unit particularly since the fire and general casualty insurance is with the HOA. Any suggestions? L.M., Fountain Valley Dear Mr. Richardson, Our condominium HOA board decided to make common area upgrades rather than obtain earthquake insurance. They feel it is too expensive. I think this is foolish, if not negligent, as it puts the equity of all owners at risk. Do you feel obtaining earthquake insurance is an obligation of the board? Thank you, J.H., Laguna Hills Dear R.M., B.W., L.M. and J.H., Most HOA and residential insurance policies contain an exclusion for damage resulting from earth movement. Owners can purchase an amendment to that insurance, commonly called “earthquake insurance,” in which the insurer agrees to pay for a certain amount of earthquake damage. Many LA County HOAs learned in 1994 after the Northridge Quake how helpful it can be to have earthquake...
Is it Exclusive Use Common Area? Part 3

Is it Exclusive Use Common Area? Part 3

Hi Kelly, I was interested in your recent answer that a club’s storage space would not be considered exclusive use common area. Statewide there are thousands of HOAs with swim teams, tennis teams, bridge clubs, etc using HOA facilities. Surely this is also permissible if the board gives its blessing?  Regards, L.Q., Concord Dear L.Q., Exclusive use areas are defined by Civil Code 4145 as areas serving one or more members and are appurtenant to the interests of those members. A club storage room or closet space may be allocated by the HOA board, but since it is not dedicated to a single home or group of homes, it would not be “exclusive use” under the statute. Therefore, the Civil Code 4600 vote requirement would not apply to that allocation. Thanks for your question,Kelly Hi Kelly, We were told by a board member that the patio attached to our unit is “common area with exclusive use rights” for us, but no one seems to have any documentation. The neighbor behind us disputes this and is now asking for documents showing that the patio is ours (or is for our exclusive use), but we cannot locate anything saying so. We asked the management company for documents related to this, but they don’t have anything, and I couldn’t find anything in the CC&Rs. How can I prove that we are the only ones who can use the patio (or is it possible to show that we own it?)? Thank you, L.G., Beverly Hills Dear L.G., Exclusive use common areas are hopefully defined by the CC&Rs and Condominium Plan, but if they...
How Exclusive is Exclusive Use Area? Part 2

How Exclusive is Exclusive Use Area? Part 2

Hi Kelly, I live in a condo complex in which the restricted common area is the front and back yards of each unit. The board says it has the authority to grant permission to an owner to make room additions in the backyard. I do not believe they have such authority as it would be “giving” ownership of the restricted common area which would then be enclosed in his unit. Do you believe the owner can build an addition to his unit? Thank you, P.W., San Diego Dear P.W., First, the unit is not defined by what the board says, but by the condominium plan. That recorded document is part of the legal description of the condominium. If one adds living space to the unit, that new living space, outside the boundaries of the original unit, is still common area. This could create a significant disclosure problem for members, who surely will want to disclose the larger square footage even though they do not own that space. If such a modification to a home were to be allowed, a written agreement between the HOA and the homeowner is essential. Such agreement should, at a minimum, reflect that the homeowner is responsible for the new structure, the HOA has no responsibility to insure, repair or maintain it, and it still is common area. Another issue is whether the board violated Civil Code 4600, which requires a 2/3 vote of the membership before the HOA allows a homeowner to convert “pure” common area to exclusive use. Some may argue that the area already was exclusive use. There are also some exceptions to...
What and Where Is “Exclusive Use Common Area”? Part 1

What and Where Is “Exclusive Use Common Area”? Part 1

The typical condominium project consists of three categories of property – the “separate interest” (normally called the “unit”), the common area, and a subset of common area called “exclusive use common area.” Misunderstandings regarding exclusive use area lead to many disputes. Simply put, exclusive use areas are not “your” property, but a part of the commonly owned property set aside for one member’s use. A better understanding of exclusive use area, what it is, who controls it, and who takes care of it can help prevent disputes in condominium associations. The unit is normally described in the “notes” portion of the condominium plan, a recorded (but often overlooked) document. There are many portions of a normal condominium project which are outside of the unit boundaries but intended for the use and enjoyment of a single unit owner. These parts are called “exclusive use common area”. The description of some exclusive use common areas might be found in the Condominium Plan or CC&Rs. Civil Code Section 4145 provides the default definition if the governing documents do not fully cover the topic, including: “shutters, awnings, window boxes, doorsteps, stoops, porches, balconies, patios, exterior doors, doorframes, and hardware incident thereto, screens and windows or other fixtures designed to serve a single separate interest, but located outside the boundaries of the separate interest…”. Fixtures serving a single unit but existing outside of the unit boundaries may include water heaters or air conditioning equipment, for example. Many condominiums are bought with the mistaken belief that the exclusive use area, such as, for example, a balcony, is “theirs” and the HOA cannot dictate how it...
Changes in Condominium Lending Rules

Changes in Condominium Lending Rules

The Department of Housing and Urban Development (HUD) has issued revisions to its condominium lending rules, effective October 15, 2019. In 2009 HUD began predicating FHA condominium loans on the entire project being approved by meeting certain minimum guidelines. HUD slightly liberalized its rules in 2012, which were modified again by Congress in 2018 through the enacted H.R. 3700. Here are some highlights of the new changes. The most significant change is that individual unit buyers will be able to obtain FHA loans even if the HOA is not HUD-approved. In non-HUD-approved HOAs, up to 20% of its members could qualify individually for FHA loans if the HOA meets certain criteria. The new rules also will liberalize the renewal process, as approved associations will now renew every three years instead of the current two-year cycle. Henceforth, renewals will be simpler, by updating the information on file rather than the current full reapplication process. One aspect of this update is negative, at least for “site condominiums,” condominiums consisting of individual detached dwellings. Although the previous rules excluded “site condominiums” the new rules include them, meaning that FHA loans in this unusual type of condominium now will also require project approval. Regarding project owner occupancy, HUD rules will permit granting special exceptions from the normal minimum of at least 50% owner-occupied condominiums to as low as 30%. Homes occupied part-time by their owners will be counted as “owner-occupied.” While the general HUD rule is that a maximum of 25% of the floor space in a project can be non-residential units, with exceptions granted up to 35%, under the new rule HUD...
Recall Questions: Part 2

Recall Questions: Part 2

Kelly, Our HOA recently had a total board recall and election. The new (self- appointed) president handed out terms based on votes received, with three two-year and two one-year terms. Our bylaws specify a procedure for the first election, namely drawing of lots to determine terms, to be two (two-year) and three (one-year). Subsequent elections should be for two-year terms, for a staggered election pattern. Should the president have followed the bylaws’ first election procedure, as the situation is identical, or should the president have given more two-year terms than is specified? I can’t find the answer anywhere on the Internet. J.T., San Jacinto Dear J.T., First, president does not appoint offices or board terms and is one vote out of the five who should be making that decision. Having not seen your association governing documents, I cannot say exactly what was required to happen. Normally, when an association begins to use staggered terms, the first election will have directors with the higher vote totals receiving the longer terms. We normally draft such bylaw provisions or amendments that way. If everyone received two-year terms the staggering would be destroyed so your suggested approach makes sense, if it does not violate the governing documents. Best regards,Kelly Dear Mr. Richardson, We had a five-member board. Two of the members did not like the others, organized a total board recall election, recalled the entire board, and then ran again and won. Is this legal besides being unethical? E.F., Temecula Dear E.F., Directors are also members and at election time can personally support or oppose who they choose as directors. What directors cannot...