Bills That Made It in Sacramento and Some Which Didn’t

Bills That Made It in Sacramento and Some Which Didn’t

September 30 was the last day for the Governor to sign or veto bills passed by the Legislature in 2018. Many bills affecting HOAs were signed, and two were vetoed. SB 261 This bill, signed by the Governor on September 27, amends Civil Code 4040 to allow homeowners to use email to request the HOA send communications via email to the homeowner, and amends Civil 4360 to require 28 days (instead of the current 30) notice to homeowners for proposed rule changes. SB 721 HOAs exempted. SB 721 requires multilevel residential properties to conduct inspections of balconies and other elevated elements every six years. Signed into law by the Governor on September 17, the final version of the bill exempts HOAs from its requirements. SB 1016 Time of Usage (“TOU”) Meters. SB 1016, signed by the Governor on September 13, adds a new Section 4745.1 to the Civil Code, protecting the installation of TOU meters for electric vehicle charging stations. HOAs may impose reasonable requirements on the requesting owner. AB 2912 New Association Financial Requirements. AB 2912 requires boards to review the HOA financials monthly instead of the current quarterly requirement. The new law, approved by the Governor on September 14, requires all HOAs to have fidelity (dishonesty) insurance in place. It also requires documentation of board authority for expenditures over $10,000 or 5% of the HOA’s budget, whichever is lower. SB 1128 and 1265 Vetoed. Two of the most troubling bills for California HOAs this year were Senate Bills 1128 and 1265. SB 1265 would have made it much harder for common interest development associations to preserve elections...
Your Meetings Are Raucous? YOU Might Be the Problem

Your Meetings Are Raucous? YOU Might Be the Problem

Board meetings should be efficient and business-like events, but can unfortunately often be tumultuous and disorganized. Ineffective meetings frustrate directors, managers, and even the audience. The directors set the tone for the meeting, and there are ways in which the HOA board can contribute to (or prevent) a chaotic meeting environment. Room configuration How is the board seated? If the directors are all seated in a line facing the audience, a subtle message is conveyed: The board is talking to the audience. It is not surprising that in such a seating configuration the audience believes it is their right to talk to the board in return. If the board sits more in a semi-circle, the directors can face each other, while the audience is able to listen to the board deliberate. Talking to the audience Some directors cannot resist “playing to the crowd” and speaking to the audience. This completely disrespects the other directors, and also can lead to raucous response from the audience. Directors should never grandstand to the audience and should confine their remarks to their board colleagues. No rules Very few associations have meeting conduct rules. Such rules can prohibit certain intolerable behaviors, such as shouting, physical intimidation, and profanity or hate speech. All members should be able to feel safe as they attend meetings. Should anyone disrupt the meeting, rules would empower the board to impose discipline. Meeting rules can also contain open forum guidelines, disciplinary hearing procedures, and other helpful information explaining the various meeting procedures. Undisciplined deliberation A disciplined board stays on the agenda item at hand and avoids straying into other side...

What Sacramento Did For (Or is it to?) HOAs in 2017

The California Legislature was quite active this year in creating laws affecting HOAs, as six bills take effect in 2018. SB 2 Senate Bill (SB) 2, known as the “Building Homes and Jobs Act”, was signed by the Governor on September 29 as an urgency statute, which means it took effect on the day it was signed. Its stated goal is to increase housing supply and reduce homelessness, and it creates a fund called the “Building Homes and Jobs Trust Fund. The new statutes are Government Code Section 27388.1 and Health and Safety Code Sections 50470 and 50470.5. The Fund will receive the proceeds from a new tax of $75 per document on documents recorded with County Recorders, except for documents recorded as part of a transfer of property ownership. Despite being called an urgency statute, it practically does not begin until January 1, 2018, when the County Recorders start collecting the $75 fee on recorded documents. In the future, various documents commonly recorded by HOAs will be subject to the $75 fee, such as amendments to CC&Rs, common area alteration agreements, and liens and lien releases. Delinquent members will now face an additional $150 cost, as the cost to the HOA of recording an assessment lien and later removing the lien will be passed along to the member as part of the delinquency. AB 534 A bill which brings some help to HOAs is Assembly Bill (“AB”) 534. Civil Code 4615 previously barred contractors from recording a mechanics lien (yes these in the future will also be subject to SB 2’s $75 fee) against an entire condominium project...

New Year, and New HOA Laws (in 2017)

2016 was a relatively quiet year for HOAs in Sacramento, with only three bills passing to become law in 2017, and another law taking effect in 2017 from a 2014 bill. Another significant new HOA law actually came from Washington D.C. – the Department of Housing and Urban Development. SB 918 Senate Bill (SB) 918 adds a new Civil Code section 4041(a), and at first glance appears to be innocuous. It requires all common interest development owners to annually and in writing provide the HOA their contact information for sending HOA notices, and to inform the association whether the residence is owner-occupied or rented. Associations are required to solicit these notices at least 30 days prior to the annual association disclosures. If an owner does not annually provide this notification, the association must deem the residence address as the address for notifications. There are at least two major issues here – HOAs and their managers now have an additional annual notification to owners which cannot be lumped in with the Annual Budget Report and Annual Policy Statement; and off-site owners now need to tell the HOA each year of the off site address or their notices will be sent to the tenant’s address. Thousands of future notices to landlords will be sent to the wrong location, because they do not annually notify their association as required. AB 2362 Assembly Bill (AB) 2362 adds a new Civil Code section 4777. Under this new section HOAs intending to have pesticides applied (without using a licensed pest control operator) in common area or a residence must post notice of the impending pesticide...

Border Protection: Observing Boundaries in the HOA

Advising associations was for many years occasionally quite stressful, as I would sometimes advise clients which would reject that advice. However, one of the defining moments in my HOA law career was when I realized that is my role is to provide the best advice, and not to take on the obligation of compelling the association to follow my advice. It is not my home, and I do not vote. Once I learned my boundary, the role became less stressful. Here below are the fundamental general boundaries toward more healthy operation of common interest associations. Managers Managers manage the association, giving important advice which helps boards comply with the Business Judgment Rule. Managers do not make decisions, except when the board specifically delegates something to the manager to handle. Managers stay out of association politics – managers, as any association service provider, may not meddle in the selection of directors. Boards The board of directors is the association’s decision-making body. It DIRECTS the management and other HOA vendors. Boards should not co-manage the HOA, but should allow the manager to carry out the board’s directives. Officers In non-profit mutual benefit corporations, individual officers (even Presidents) have little power. They have certain responsibilities under the bylaws, but sometimes confuse their non-profit officer role with the more powerful role given officers in for-profit corporations. Individual directors A single director, no matter how intelligent, wise, aggressive, and vocal, still only has one vote. Therefore the individual director has no power -the power rests in the board. Well-intentioned directors often take on responsibilities which are not theirs, usurping the board’s role. Other directors...