The Myths about Mold, Like Mold, Just Won’t Die [Part 1]

The Myths about Mold, Like Mold, Just Won’t Die [Part 1]

In 2000, right after we survived “Y2K,” a new “toxic mold” panic swept the country, and twenty years (of lawsuits and billions of dollars) later, major myths persist, frightening property owners and managers.  The myths all too often cause exaggerated repairs, unduly frighten residents, and create unnecessary conflict. This and the next column will address thirteen pervasive myths. Mold is new. Mold, one of the earliest and simplest life forms, has existed for thousands of years.  In 1928, mold was the basis of the discovery of penicillin.  Mold is ever-present, as is dust or pollen. The scientific and medical communities confirm mold’s many dangers.  In 2004, the National Institute of Medicine published its comprehensive study on indoor mold exposure, called “Damp Indoor Spaces and Health.” A central finding of this book was: “Scientific evidence links mold … to asthma symptoms in some people with the chronic disorder, as well as to coughing, wheezing, and upper respiratory tract symptoms in otherwise healthy people… However, the available evidence does not support an association between … mold and the wide range of other health complaints that have been ascribed.”  That sounds like mold is no more dangerous than dust or pollen, which also can severely affect those with respiratory sensitivities.  The book did not receive much attention – stories of frightened people living in tents are more interesting. One must know what kind of mold it is.  Mold consultants and injury attorneys often describe some molds as worse than others.  Their star is stachybotrys chartarum, a black mold reported to produce infinitesimal quantities of a toxin. It sounds frightening, but the scientific community long ago debunked...
Reader Questions – They Aren’t Enforcing The Rules!

Reader Questions – They Aren’t Enforcing The Rules!

Kelly: Residents in our HOA are encouraged to report rule violations. I and others have reported violations directly to the manager, primarily because the phone numbers and email addresses for any of the board members are not public for the residents.  How do we follow up on reports of violations and/or obtain statuses? Some of these reported violations have not been taken care of in over a year.  When I asked our manager and our president, they each said they could not divulge this information.  What can we do? E.R., Chula Vista Dear Kelly: I live in a small HOA and each homeowner is responsible for home exterior maintenance.  The current board will not enforce any of the community rules because they do not want to offend any of the residents with violation letters. What are my options since our neighborhood is beginning to look shabby? Thank you, J.M., Newport Beach Dear Mr. Richardson: Our board members do not adhere, follow, or enforce any of the HOA policies.  What can we do about them not fulfilling their obligation? J.D., Yorba Linda Dear E.R., J.M., and J.D.: Enforcement of association operating rules is a basic function of the board. Per Civil Code Section 5975(b), only the association can enforce rules. Homeowners can enforce CC&Rs against their neighbors, but not rules. It can be frustrating when it appears the association is not acting against violators. Associations should keep their disciplinary actions confidential. So, once a complaint is received of a CC&R or rule violation, the complaining party needs to trust that the HOA is handling it appropriately. Typically, if there is...
Reader Questions – Meetings During A Pandemic

Reader Questions – Meetings During A Pandemic

Dear Kelly: Our association cancelled the March meeting and then April’s meeting was held by a teleconference with just the board members. Is this legal? We have not received any information about what was discussed in this meeting. Thank you, S.V., Portola Hill Dear S.V.: Associations are finding that virtual web-based platforms work well for board meetings. Civil Code Section 4090 allows for telephone or video meetings so long as all persons can hear and/or see the open session deliberations. The problem is that the statute also requires a physical location to be established where members can physically attend. During the “stay at home” orders, HOAs are unable to accommodate a meeting of many persons in one place, so under unprecedented circumstances that requirement cannot be met. Boards should learn to conduct proper virtual or telephonic board meetings. Also, minutes of that April meeting should have been made available within 30 days of the meeting, per Civil Code 4950. The Open Meeting Act is still in effect, even during the pandemic. Sincerely, Kelly Good Evening Kelly: I read in a recent column that an officer can be replaced without reason at any time by a board majority. Can a board also fire, by majority vote, a board member without cause?  Our governing documents are silent on this and we have a divided and feuding board split on every decision. Thanks for the public service you perform. Best, J.W., Huntington Beach Dear J.W.: Normally, HOA bylaws provide that officers serve at the pleasure of the board and can be replaced in an open meeting (after agenda notice) for any reason....
Don’t Be Reserved About Reserve Accounts

Don’t Be Reserved About Reserve Accounts

Unfortunately, too many HOA boards overlook or disregard the reserve fund as unnecessary. This is unwise, because the reserve fund is a critical component of the healthy HOA. Don’t fall for the myths. MYTH  – Funding is not expressly required by law, so it is less important. California law does not expressly require associations to accumulate money in reserve accounts.  However, the law requires that such an account exist, that the board review it monthly, that the association every three years obtain an analysis (“Reserve Study”) of the funds needed, and make detailed disclosures annually to members and to prospective buyers.  While state law does not require funding, federal lending guidelines since 2009 do require it.  For condominium projects to be eligible for FanniMae or FHA loans, they must confirm that 10% of the annual budget is deposited into the reserve account. California Realtors® have long been concerned that HOA residence prices were unaffected by the level of the HOA’s reserve funding, despite that logic would dictate that homes in well-funded HOAs should be worth more than in poorly funded HOAs.  This led to several new laws sponsored by the California Association of Realtors expanding disclosure requirements, requiring more detailed disclosure of the money it has actually accumulated for each building component (Civil Code 5570) and requiring boards to have a plan regarding how it will accumulate the money recommended by its reserve study (Civil Code 5550(b)(5)). MYTH – We can’t afford it.  Many associations suspend reserve fund deposits, based on the belief that this helps hold assessments down and protects the members.  However, the project components (roofs, paint,...
Reader Questions – Are Our Reserves Being Handled Properly?

Reader Questions – Are Our Reserves Being Handled Properly?

Mr. Richardson, hello: Is there a formula for the reserve funds that are necessary, or at least advisable, for a HOA? Also, can an assessment be collected from each homeowner and put in reserve and then returned to them after a reasonable time if it’s not needed? Respectfully, B.K., San Diego Dear B.K.: HOAs in California are required by Civil Code Section 5550 to obtain a reserve study every three years and to review it annually. That reserve study informs the HOA as to how much money needs to be set aside each year to offset the ongoing deterioration of the common area elements included in the reserve study. There are many fine companies specializing in preparing reserve studies for HOAs. Without a good reserve study, the HOA has no roadmap for its financial security. As to assessing for money beyond that prescribed by the budget and reserve study, Civil Code Section 6600 requires that associations only assess for actual anticipated expenses. Assessing for a “rainy day fund” is not allowed. Best regards, Kelly Dear Kelly, Our board has not raised assessments for four years. The reserve budget is less than 7%. If the board raised assessments as recommended by the reserve study and the management company, it ought to be higher this year. Can I pursue the board for failing in their fiduciary capacity? E.Y., Pacoima Dear E.Y.: Budgets should follow the HOA’s projected actual expenses and the reserve fund contribution prescribed by the HOA’s reserve study. Budgets should reflect reality, not wishes. Some boards err by refusing to adopt realistic budgets which allow for the normal increases...
Wait for the Board to Act

Wait for the Board to Act

In community associations, corporate formalities seem to interfere with efficiency. Some argue that if someone is making good decisions, why wait for board meetings and motions which might delay the action? Although most clients view corporate procedures as a bother to be avoided as much as possible, the process is an important protection for volunteers. Corporations are a legal fiction recognized by law as a “person” with rights to own property, to sue, and be sued. The requirements of board action and written minutes are evidence that a legal responsibility is the corporation’s and not the volunteer’s. If these steps are skipped, how does the volunteer prove that the commitment was corporate and not personal action? Failing to follow corporate process could result in an obligation thought to be corporate being imposed upon the volunteer who failed to obtain corporate approval. Obviously, that would be a nightmare for the volunteer, but it can easily be avoided by waiting to sign a contract until the board approves it in a meeting. Corporations are legal fictions recognized by law as “persons” that act through authorized agents, normally a board of directors. Actions outside the corporate authority are called “Ultra Vires,” a Latin term meaning “outside the powers.” In business corporations, officers often act as the primary agents, but in HOAs, the primary decision-maker is the board. If an officer acts outside those powers and without board approval, it is not corporate action. Proper minutes are a critical part of the corporate process. If the minutes don’t record it, then the corporation didn’t do it. Minutes document corporate decisions, including any authority...
Nine Tips To Reduce HOA Conflict

Nine Tips To Reduce HOA Conflict

Handling conflict is a regular part of governing, managing, or advising HOAs, which are corporations but also neighborhoods. Unlike clubs or churches, when things get unpleasant, a member cannot simply resign, because it is one’s home. Disagreement is normal but is a problem when it becomes destructive. So, it is important to learn how to “disagree without being disagreeable” and how to respond when someone else is behaving disagreeably. DISAGREEMENT IS OK Some boards feel that all votes must be unanimous, confusing unanimity with teamwork. A nay vote is not disloyal nor is it any reflection upon the motion-maker. Allow board colleagues the freedom to disagree, because every director’s view is valuable, even when in the minority. Teamwork takes over after the vote is done. After the board votes, the corporation has decided, and the directors move forward. While the dissenting voters are free to express their opinions without retribution, they must support the corporation’s completed decision under their fiduciary duty of loyalty to the corporation. FIND THE SEED Some puzzles involve objects hidden in a larger background, where the task is to find the object camouflaged amid the distraction, and the challenge in reducing conflict is identical. A member may be seething and spewing rude remarks, but there may be a legitimate concern hiding in all that upset. An unpleasant way of expression does not negate the factual complaint expressed – perhaps anyone might be upset by their situation. Find the seed within the upset and respond to that instead. Responding emotionally in like kind simply escalates conflict. FORGET HISTORY When dealing with a disagreeable fellow director or...
Reader Questions – Pandemic Questions Continue

Reader Questions – Pandemic Questions Continue

Kelly, I am on the board and we are having our first HOA virtual meeting next week because of Covid-19. Do we need to have a quorum for that meeting? I appreciate your help and enjoy your HOA Homefront each week. R.S., Garden Grove Dear R.S.: The declared state of emergency in California does not mean the Open Meeting Act or your bylaws have been suspended. Many HOA boards are mistakenly thinking that everything now is an emergency, and thereby dispense with the required transparency under the law. Quorum, notice to members, and openness are still the requirements, even during this emergency. Civil Code Section 4923 defines “emergency” as “circumstances that could not have been reasonably foreseen” requiring immediate action. There are few topics which cannot wait four days for proper notice to members. Also, meetings can still be in the open. Telephonic or electronic meetings are permitted by Civil Code 4090(b) and 4925(a) – so there is no reason to hold improper closed or emergency meetings. Even in times such as these, proper association governance is not suspended – there is no “HOA martial law” in effect. Best regards, Kelly Dear Mr. Richardson: Our residents are concerned about cases of Covid-19 in our HOA. Our manager told us that legal counsel said because of HIPAA rules they are not obligated to report if there are or have been any active Covid-19 cases. We are not asking for names, just a knowledge of whether there are or have been Covid-19 cases. What is our HOA responsibility in this matter? E.K., Oceanside Dear. E.K.: I have had many association clients...
Reader Questions – Are HOA Board Term Limits Allowed?

Reader Questions – Are HOA Board Term Limits Allowed?

Mr. Richardson: I appreciate your column in the [paper]. Many of your topics are extremely helpful. According to our election rules and bylaws, no director shall serve more than two consecutive terms. The president now claims that SB323 has done away with term limits and she can run again and continue to serve on the Board for a third consecutive term. She also claims our attorney said there are no longer term limits, however, no board member has been allowed to see that correspondence. Please, would you help to clarify this? I’m hoping you can provide some direction. L.K., Westchester Dear Kelly: First I’d like to thank you for all the great articles I read in the [paper]. Our HOA does not have term limits for board members. There are plenty of us that would like to have term limits and I’m shocked that when the HOA was created that this was excluded. Thanks, A.T., Beaumont Dear L.K. and A.T.: Many HOAs find term limits useful to ensure a healthy turnover of the board and have bylaws which limit consecutive terms of service. On the other hand, HOAs having difficulty in filling their board seats may find term limits to be undesirable. The key is for each association to adopt a system which works for its community. However, a change in the law this year may take that option away from California common interest developments. The new law now in force from last year’s SB323 appears to have eliminated term limits from HOAs in California. Civil Code Section 5105(b) lists one mandatory disqualification for board candidacy – non-membership –...
Harassment and Handicapped Parking Questions

Harassment and Handicapped Parking Questions

Hi Kelly, Perhaps you have an answer to the following case. A homeowner in our HOA (he might have a form of mental illness) is said to have harassed a new homeowner couple based on his objection to their interracial marriage.Some homeowners are asking the board to take action against the harassment, they claim cases like this have been ruled to be a HOA responsibility. I am looking at it as a dispute between two homeowners, a case for the police to settle or by dispute resolution. K.N., Santa Barbara Dear K.N.: HOAs must do what they can to respond to harassment of residents because of their membership in a protected class. This has been part of the regulations issued by the U.S. Department of Housing and Urban Development since the Fall of 2016. As of January 2020, it is also a requirement under California’s Fair Housing Regulations. Associations, their boards, and their managers may not stand idly by as residents are harassed because of their having one of the many of the characteristics protected by law. The law requires associations to investigate the allegation, try to determine what happened, and to do what they have the power to do to try to stop the harassment. The failure to properly respond to discriminatory harassment could subject the HOA, its board and its manager to enforcement action as well as a civil lawsuit and request for damages by the aggrieved resident. All residents in homeowner associations deserve to live their lives free of the fear that someone may abuse them solely because of their skin, language, gender, or other characteristic...