Reader Questions – Assessment Payment

Reader Questions – Assessment Payment

Dear Kelly: Recently our board stopped dues collection for 6 months because they said some homeowners were experiencing financial hardship.  The board has no plans to ask owners to pay back dues. Is this legal? P.B., Marin County Dear P.B.: One of the HOA board’s fundamental responsibilities is to make sure the association’s bills are paid, and that means also collecting the money to pay those bills. Civil Code Section 5600 states that “the association shall levy regular and special assessments sufficient to perform its obligations…” A similar situation came up in the Great Recession of 2008-2009, when many owners were in financial distress and some boards struggled with whether to require such owners to pay their assessments. However, members who fail to pay assessments harm those who are paying their share of the HOA costs, so associations must insist that all members pay their assessments. The HOA’s bills do not stop during the pandemic so assessments cannot stop either. The board should be businesslike in its handling of HOA finances, which includes good stewardship of the HOA’s income – and not cutting it off! Best regards to your HOA, Kelly Mr. Richardson:  Our HOA over the last 20 years has used up its reserves because of increasing maintenance and irrigation costs. The CCRs forbid raising the annual dues and special assessments are only permitted for litigation emergencies. We have tried to modify the CCRs but we cannot get a majority of the homeowners to vote to OK a change. What would you suggest? A.B., Solana Beach   Dear A.B.: The law has a provision which allows HOA boards...
Reader Questions – HOA Elections – Related Inspection Firm, Candidacy Statement Limits, and Campaign Flyers

Reader Questions – HOA Elections – Related Inspection Firm, Candidacy Statement Limits, and Campaign Flyers

Dear Mr. Richardson: According to SB323 management is not allowed to participate in elections. But our management found a loophole – a spouse of one of the owners of the management company opened business as an Inspector of Election. Now this is our Inspector. Also according to Civil Code, candidates and members are allowed to check the election records, including signed envelopes. But now the management does not want to allow it because of Covid 19. Do you know a solution for these problems? L.R., Walnut Creek   Dear L.R.: Per Civil Code Section 5110(b), someone already under contract with the HOA cannot serve as Inspector of Election. However, even before the law changed, most managers (and lawyers) did not accept that role due to liability concerns. Small to mid-sized HOAs usually can handle their elections quite adequately with volunteers acting as Inspector, with assistence from the manager. If a management company has a relationship with (or will receive any benefit from) a vendor submitting a bid to the association, it must disclose any such relationships pursuant to Civil Code Section 5375.5. An Inspector related to management might appear be the best choice due to qualifications or cost, but if it raises concerns, it might not ultimately be the best choice. As to inspection of election records, the pandemic did not suspend the Davis-Stirling Act. HOAs and managers need to take reasonable steps to comply, even during these trying times. Thanks for your question, Kelly   Kelly: We had a situation where our submission form for board candidacy was limited to a stated length. Some incumbent directors sent much...
Reader Questions – Old CC&Rs – Expired Documents, and Who Owns the Yards?

Reader Questions – Old CC&Rs – Expired Documents, and Who Owns the Yards?

Kelly, I wanted to know if you have any information in regard to the expiration of California CC&Rs. I’ve heard 20 years from the time of the recorded filing of the CC&Rs.I ask because I live in a subdivision development of homes that has no common areas but does have an HOA in which the developer transferred the CC&Rs to the HOA and homeowners.The CC&Rs don’t show up in the San Mateo county recorder system and I can only find a single change in the CC&Rs back in 1986. I need to confirm whether the HOA should have renewed and recorded the revitalization of the CC&Rs as they are over 30 years old. Any information would be appreciated. O.M., S. San Francisco Dear O.M.: In past years, real estate attorneys included expiration dates in CC&Rs because of the “rule against perpetuities,” an old legal rule which required a termination date. Although the passage of the Davis-Stirling Act in 1985 may have eliminated that concern, lawyers these days typically write CC&Rs with periodic automatic renewal so the HOA is covered in case a future court rules that CC&Rs still must have termination dates. If CC&Rs expire, the association no longer falls under the Davis-Stirling Act, which could be a horrible problem particularly for a condominium property. To reimpose expired CC&Rs, one would need 100% written consent not only of all the owners but also all the mortgage lenders – a very difficult task indeed. Older HOAs (‘80s and earlier) should check their CC&Rs and ask members to vote to amend and include automatic renewal, to avoid the possible disaster of...
Reader Questions – Who Decides on the HOA Colors? And, A Neighbor Hates Mine.

Reader Questions – Who Decides on the HOA Colors? And, A Neighbor Hates Mine.

Mr. Richardson: Help!  During a monthly meeting, I presented a petition signed by many homeowners concerning the color that they were going to paint the complex – we wanted a newer look. They wouldn’t consider the petition, saying that the subject had already been decided. Shouldn’t the board take into consideration what a goodly number of owners want?  T.W., Anaheim   Dear Kelly: In my complex, we’ve had the same color of exterior paint for all the years the complex has existed.  Our board is proposing/attempting to change the color. Can the board to do that without input from the homeowners? M.S., Anaheim   Dear T.W. and M.S.: On the question of whether a board must seek member input on keeping or changing the color scheme there is a “yes and no” answer. Normally, decisions about maintaining the association property are made by the HOA board of directors. Those decisions can occasionally be limited by the HOA governing documents, such as if a rule specifies the approved exterior building colors. Without some other specific restriction in the governing documents limiting board discretion regarding colors, technically, yes, the board could make the decision without seeking member input. However, even if a board is not required to present the issue to the community for member input, it should do so. If the board abruptly decides to completely change the HOA’s color scheme, it could be very upsetting to the membership and result in bad feelings against the board and even association upheaval. There are times when a board should pause and take time to present its plans to the community before forging ahead, and...
Reader Questions – Surprised by Assessments – are they Legal?

Reader Questions – Surprised by Assessments – are they Legal?

Hi Kelly, There is going to be an assessment at my condo and we are being told that we all must pay equally even though a number of us will have no benefit from the work being done. Is there anything we can do? P.M., San Diego   Dear P.M.: Condominiums consist of two elements, 100% ownership in the unit (aka “separate interest”) and an undivided interest in everything else (aka the “common area”). The HOA has a duty to maintain and repair all parts of the common area, including parts of the association complex which are not near your home. You along with all other members each own a fractional share of the common area and so its care concerns all the members. This is one of the tradeoffs of shared ownership, in that while you receive the benefits of shared ownership and shared costs, some HOA funds will be expended on the other homes within the project. However, the day your roof leaks and causes repair expense, someone on the other side of the project could ask how your roof repair benefits them – but it does, if it’s common area. Thanks for your question, Kelly.   Dear Mr. Richardson,  A month after I became owner of my condominium, I received a letter and bill from the HOA board for a large special assessment fee. I don’t feel I should be responsible to pay this fee because nobody disclosed this special assessment to us prior to purchasing the property and the decisions were discussed and made prior to us purchasing the property. The assessment was discussed shortly before...
Reader Questions – Tenants With Criminal Backgrounds, and Are Drying Racks OK?

Reader Questions – Tenants With Criminal Backgrounds, and Are Drying Racks OK?

Dear Kelly, Apparently my HOA made a change in the CC&Rs. The HOA requires that any prospective tenants must be approved by the board, and that no applicant who has a criminal record will be approved. The amendment says nothing about buyers of any of the units. Can they make these demands for just rental units and not units being sold? Wouldn’t criminal records be just as important about a potential buyer? Thank You, J.S., San Pedro Dear J.S.: Leaving aside whether a condominium board can approve prospective tenants, this HOA is taking on potential liability for alleged discrimination. In this instance, if the HOA is banning anyone with a criminal record from renting in the building, the HOA appears to be violating the new Fair Housing Regulations, which took effect at the beginning of 2020. Regulations Article 24, Section 12265 prohibits owners of housing accommodations from applying blanket bans against anyone with a criminal record. According to the Regulations, HOAs are considered a “housing accommodation” and the board and manager of the HOA are considered the “owner” for purposes of enforcement action. Owners may use criminal background information, but not in a blanket fashion. Only relevant information may be used. The past criminal history of a prospective tenant must relate to being a bad tenant. For example, someone who previously had a drunk driving felony or securities fraud conviction, would be treated differently than someone who had convictions for violent crimes or arson. This is a new requirement in California and goes beyond the federal H.U.D. regulations upon which much of the California regulations were based. Thanks for...
Reader Questions – Fair Housing Violations? Restrictions on Hard Floors and Outside Play

Reader Questions – Fair Housing Violations? Restrictions on Hard Floors and Outside Play

Mr. Richardson: I enjoy reading your column. I recently bought a condo and was in the process of replacing the carpet with laminate flooring because of allergies. The HOA informed me that there is a rule prohibiting hard flooring to be installed in condominiums above another condominium. I asked the management company for the definition of “hard flooring” but have been ignored. Is there a legal definition?  Would vinyl flooring or linoleum be considered “hard flooring” or is carpet my only option? This is a health issue. I am hoping you can provide some direction.  Thanks, R.N., Los Angeles Dear R.N.: California Fair Housing laws and regulations require that the HOA make “reasonable” accommodations upon request to deal with your allergy issue (a disability). Have you provided the HOA with documentation that your allergies do not permit you to have carpeted floors? However, if you have documented the health necessity of the hard floor, that does not end the discussion. The purpose of a restriction against hard floors above the ground floor is to protect the lower neighbor from noise nuisance. The accommodation of a non-carpeted floor could be unreasonable if it creates a disturbance for the lower neighbor. So, your HOA and you should dialogue in what the regulations call “interactive process” to agree upon reasonable measures to buffer the floor. That may require the advice of an acoustic expert to specify an installation providing a reasonable amount of buffering. Since the cost of accommodation is normally paid by the requestor, you may be asked to pay for the consultation. The HOA may also ask you to promise...
Reader Questions – The Reserve Fund – How Much Is Too Much?

Reader Questions – The Reserve Fund – How Much Is Too Much?

Mr. Richardson: Something has been bothering me for a while regarding the reserve funding level that is appropriate for a given association. Many associations strive (and set the dues) to achieve 100% funded. Do they really need to carry such high balances? Wouldn’t it be enough to carry only sufficient balances to meet the future projected reserve expenses (with a sufficient contingency cushion for uncertainties)? Why should we be paying dues to maintain an unnecessarily high reserve fund balance? Wouldn’t a lower percent funded objective of say 50% be more than adequate? Thanks. B.G., Huntington Beach Dear B.G.: Your question refers to comparing the amount of money in the HOA’s capital replacement reserve fund to the recommendation of the HOA’s most recent reserve study, and by “100% funded” you refer to the situation, also known as “fully funded,” in which the HOA has fully accumulated the recommended amount. I relayed your question to leading reserve study experts, and two well-known experts, each holding CAI’s “Reserve Specialist”(RS) designation, responded. Scott Clements RS, CEO of Reserve Studies Inc, said, “the questioner mentions two important points, ‘appropriate’ and ‘adequate’. However, there is another element to consider- equitable. Maintaining at or near 100% funded means that everyone owning a unit is paying their share of usage of all the common area components based on their period of ownership. It is unnecessary go above the 100% level, but anything below is a deferral to future owners”. Robert Nordlund RS, CEO of Association Reserves, Inc., said “the reserve fund provides for the predictable upcoming capital element replacement projects at the association. But life does not always occur...
Reader Questions – Can Non-Residents Run? Why Can’t Spouses of Directors?

Reader Questions – Can Non-Residents Run? Why Can’t Spouses of Directors?

Mr. Richardson: Can a non-resident owner be on the board? A board member moved but still stayed on the board while he rented his unit. Several homeowners opposed, but the manager said it’s a new law that just came in effect, however our bylaws state that board members need to be resident owners. What would be correct – bylaws, CC&Rs, or this new law? Is there a new law? Thank You, L.S., Anaheim Dear L.S.: Yes, there is a new law in effect this year. Civil Code section 5105 contains new board eligibility standards. HOAs can adopt four optional eligibility standards – candidates can be required to be owner for at least a year before running, to not have a co-owner already on the board, to not be delinquent in their assessments and to not have been convicted of a felony which could affect the HOA’s dishonesty insurance. It is unclear if these optional eligibility standards are the ONLY eligibility requirements HOAs can adopt. Most lawyers are taking the conservative interpretation, that these four are the only optional standards -and residency is not among that list. I think HOAs should be able to adopt their own eligibility standards, but this is now the law. Best regards, Kelly Dear Kelly: One of our directors has been on the board for a long time. A few years ago, a director resigned and the board voted the director’s wife as a board member. They have both been re-elected to the board. I have no objection to either of them being on the board as they are nice well-intentioned people. There is nothing...
Reader Questions – Our HOA Stopped Meeting – Is That OK?

Reader Questions – Our HOA Stopped Meeting – Is That OK?

Dear Mr. Richardson: Our board says that due to the pandemic they are suspending board meetings “until further notice.” Our bylaws state board meetings must be held at least every 3 months. They said if they do hold a meeting they will limit attendance to 10 members, but the Open Meeting Act says it must be open to all eligible members. The board refuses to hold a meeting outdoors because it’s “too much trouble.” Is Covid-19 a valid excuse for these restrictions?  Has the board overstepped its authority and what can we do about it? Thank you, G.B., Lakeside Dear Kelly: Is it legal for an association to not hold meetings for months because of the pandemic? There’s been no attempt by the board to hold a Zoom or any other kind of general session meeting in months. D.L., Mission Viejo Hi Kelly, Since the shelter in place orders, our HOA has had two monthly Zoom board meetings, but when members attempted to dial in they were denied access.  In my mind this is a serious violation of the Davis-Stirling act.  What action can homeowners take to rectify this matter? Sincerely, A.P., Irvine Dear G.B., D.L., and A.P.: Sorry, your concerns are currently typical of hundreds if not thousands of HOAs in California. The Davis-Stirling Act, and the Open Meeting Act contained within it has not been suspended by the pandemic. In fact, HOAs can quite easily adapt and hold board meetings (and most have) while still obeying the health department restrictions on groups of people meeting indoors. Civil Code Section 4090(b) specifically allows California HOAs to conduct board...