It seems as though the laws change as frequently as the tides. Some years see more legal changes than others – changes that greatly affect the way boards manage the association’s affairs. The laws governing community associations have experienced so much change within the past three to four years alone that it may make your community’s governing documents unreliable, especially as they relate to homeowner rights and the functions of the board, officers, and management. It only makes sense to have governing documents that are updated and reflect modern law. Moreover, relying on outdated, antiquated governing documents may expose associations, board members and even management to liability.
Step #1: Evaluate the Existing Governing Documents
The first step in amending or restating governing documents, whether the CC&Rs or Bylaws, is to review and evaluate the documents to determine whether any provisions are inconsistent with laws. To the extent there is any conflict or inconsistency between the law and the CC&Rs, the law will prevail. To the extent there is any conflict or inconsistency between the CC&Rs and Bylaws, the CC&Rs will prevail. This became California law on January 1, 2014 when Civil Code Section 4205 was adopted to establish a hierarchy amongst governing documents. Reliance on a provision of the CC&Rs or Bylaws that is inconsistent with the law exposes the association to liability.
Governing documents should also be evaluated for clarity and to ensure same meet the needs of the community. The most effective governing documents are those written in simple English. Let’s face it, what good are the governing documents if no one can understand them? One useful tool for clarifying maintenance responsibilities, a typical source of confusion, frustration and even dispute between associations and its members, is a maintenance responsibility matrix or checklist. The purpose of a responsibility matrix or checklist is to clearly set forth components within the community and allocate which party, the association or a homeowner, is responsible for maintaining same. Clear governing documents may help reduce future, unbudgeted expenses (i.e., attorney’s fees for legal opinions and even lawsuits).
Effective January 1, 2017, Civil Code Section 4775 now provides that associations are responsible for maintaining, repairing, and replacing the common areas and repairing and replacing the exclusive use common areas while the owners of each unit are responsible for maintaining, repairing, and replacing their units and merely maintaining the exclusive use common areas, unless the community’s CC&Rs provide otherwise. This recent change in the law may affect your community’s obligations pertaining to exclusive use common areas.
Reviewing your community’s governing documents with legal counsel is strongly recommended to ensure that the new Civil Code language does not change how your association assigns and budgets for maintenance duties. As many community’s governing documents do not clearly establish responsibilities for the repair and replacement of exclusive use common areas, associations may now be responsible for them, which could significantly impact your community’s budget.
Step #2: Understand Approval Requirements
In order to amend or restate CC&Rs, they must be approved by the percentage of members required by the CC&Rs and “any other person whose approval is required” by the CC&Rs. (Civil Code §4270.) In addition to a formal vote of the owners by secret ballot, many CC&Rs may also require approval of lenders, the city or county, or some other governmental entity. Generally, the method of obtaining lender or government approval is set forth in the governing documents. Otherwise, lender voting protocols are simpler than member voting: secret ballot procedures are typically not required, and lenders who do not respond within thirty days can typically be deemed to consent, provided the lender has been notified by certified mail (return receipt requested). (Fourth La Costa Condominium Owners Ass’n v. Seith, 159 Cal. App. 4th 563 (2008).) Most lenders simply do not concern themselves with the content of CC&Rs, so long as the CC&Rs do not affect their lien priority (which is provided by California law anyway).
Step #3: Be Proactive: Educate Members and Combat Voter Apathy
From the first distribution of documents to the owners for their review, until the ultimate meeting to tabulate the votes, the board may consider encouraging owners to vote in favor of an amendment or restatement by including reminders in newsletters, flyers, mailings or other forms of association media. That said, be aware that the law treats amendment votes like any other election, and issues like “campaign statements,” equal access to association media for opposing positions, and similar rights apply. (Wittenberg v. Beachwalk Homeowners Ass’n, 217 Cal.App.4th 654 (2013).) So, if the Board encourages a “yes” vote, rather than simply submitting the documents without particular encouragement, the board must be prepared to extend owners equal access to mailings and the like, even if they decide to campaign against the proposed documents.
If the board, from past experience, anticipates that voter apathy will be a problem, some boards find it beneficial to offer incentives during the voting campaign to encourage owners to submit ballots. For example, many boards have offered raffle tickets to those who return ballots, and after the meeting to tabulate the votes conduct a drawing for door prizes, such as gift cards. Tickets and prizes can be donated by local business establishments. (Of course, the raffle cannot be tied to “yes” votes – only to submitting ballots.) Another tool, if the board expects that quorum will be very hard to meet, is to include a “quorum only” option on the secret ballot, which can help obtain ballots from undecided voters. This will not help to pass the documents immediately, because it naturally dilutes the “yes” votes, but this at least allows you to count the votes to determine whether the project is generally approved by members or if additional revision or meetings are needed.
Perhaps the most useful tool is a “town hall meeting” of the members, where members have the opportunity to ask questions and voice concerns regarding the proposed amendments to the governing documents. Best practice is to schedule a town hall meeting at least thirty days after the members have been provided with the text of the amendments to ensure they have ample opportunity to review and formulate questions prior to the meeting. The board should also consider having legal counsel attend the meeting to explain the amendment process, the purpose of the amendment and to answer any questions.
Our experience has shown that the more educated members are about an amendment or restatement, and its purpose, the more likely they are to support it. The board members, as the elected representatives for the community, are in the best position to know what approach may resonate best with the membership.
Step #4: Don’t Give Up!
Recall that elections to amend governing documents must be held by secret ballot in accordance with the procedures set forth in Civil Code Sections 5100 et seq. The board may, in its discretion, extend the deadline to return secret ballots and reschedule the meeting to open secret ballots, count and tabulate the votes, provided the secret ballot reserves this right. The secret ballot itself should include language reserving the board’s right to extend the deadline, such as: “Any secret ballot not received on or before these deadlines cannot be counted, however, the board reserves the right to extend the deadline for return of secret ballots.” If quorum is not met, and the board determines to extend the deadline, timely notice should be provided to the membership.
The board should listen to the member’s concerns and evaluate the likelihood of a successful vote if the member’s requested (feasible) changes are made. If the vote fails, the board may decide to make viable changes based on member comments or concerns and attempt a second vote.
Should the vote(s) fail, pursuant to California Civil Code Section 4275, the Association may petition the superior court of the county in which the common interest development is located for an order reducing the percentage of the affirmative votes necessary for such an amendment, provided, among other things, more than fifty percent (50%) of the members voted in favor of the proposed amendment or restatement and the existing CC&Rs require approval by a supermajority of members. Before the Court may grant the petition, the association must also demonstrate, among other things:
(1) Balloting was conducted in accordance with the governing documents and applicable law; and
(2) A reasonably diligent effort was made to permit all eligible members to vote. The petition must include copies of any notice and solicitation materials utilized in the solicitation of member approvals.
At the end of the day, governing documents that clearly and effectively set forth the rights, duties and responsibilities of the association and its members, address the community’s unique and specific needs, and are consistent with the law will surely serve as a necessary vehicle to lead the association down the road to success. Comprehensive and clear governing documents are critical to the successful operation of a community association. Take the first step down the road to success today!
Brittany A. Ketchum
Brittany A. Ketchum is an associate attorney with Beaumont Gitlin Tashjian, where she counsels the firm’s clients on all areas of community association law. Ms. Ketchum works closely with managers and board members to evaluate risk to the association at all steps with the objective of avoiding and reducing liability, including internal conflict and liability claims.
Today Governor Brown signed an executive order declaring that effective immediately the “Drought State of Emergency” is terminated in all of California counties, except Fresno, Tulare, Kings and Tuolumne. The executive order also had the effect of rescinding a previous emergency proclamation and four executive orders regarding the drought. And, the newest executive order affirmed one previous executive order regarding the drought. So what does it all mean?
Some of the additions to the Civil Code over the last few years were contingent on a declaration of a state of emergency due to drought. For example, the law that provided that an association could not fine an owner for reducing or eliminating the watering of vegetation or lawn was written to be effective only during a declaration of a state of emergency due to drought. Likewise, the law that stated that the governing documents could not require pressure washing of the exterior of a home was also dependent on a declaration of a state of emergency due to drought. These laws are no longer in effect (except in counties excluded from the Governor’s executive order).
Keep in mind that the law provides that when water-efficient landscaping measures have been installed in response to a declaration of a state of emergency, the owner shall not be required to reverse or remove the water-efficient landscaping measures upon the conclusion of the state of emergency.
Certain activities are still prohibited. These include:
- Hosing of hardscape, including driveways and sidewalks.
- Washing vehicles with a hose that is not equipped with a shut-off nozzle.
- Using non-circulated water in a fountain, or similar decorative water feature.
- Causing water run-off from watering lawns within 48 hours of measurable precipitation.
- Irrigating ornamental turf on public street medians.
Christopher J. Bonkowski has significant experience in the areas of general civil litigation including property law, casualty litigation, business/commercial litigation, and products liability law. He now focuses his practice primarily in the areas of real estate, corporate law and the comprehensive representation of community associations throughout California.
Mr. Bonkowski has published several articles on various topics concerning common interest subdivisions.
Mr. Bonkowski is licensed to practice in the State of California as well as in the United States District Court for the Central District of California. He is a member of the Orange County Bar Association and successfully completed the LACBA Trial Advocacy Program.
CAI-CLAC has prepared a great first day for attendees of our legislative trip. We’re bringing you insider’s knowledge on how Sacramento works and how we lobby for the benefit of community associations. Also covered on Sunday is an overview of short-term rentals, and what boards, managers, and residents should know about this ongoing issue. Then we take a look at the Case Laws that have shaped our industry.
Finally, what are the hot bills of 2017-18? Our advocate, Louie A. Brown gives us the rundown on what we’re focused on this legislative session, and which bills will help or hurt our community associations.
11:00 a.m. – Noon – Welcome!/How a Bill Becomes a Law
Amy K. Tinnetti, Esq. with Hughs Gill Cochrane Tinetti, P.C. and Laurie Poole, Esq with Peters and Freedman, LLP
12:00 p.m. – 1:00 p.m. – Lunch Roundtable
Boxed Lunches will be provided with roundtable-style introductions of Education Session attendees.
1:00 p.m. – 2:15 p.m. – Short-Term Rentals – The Arguments for Them, Against Them and Unintended Consequences of Rental Restrictions
Natalie Stewart with FHA Review
- Does a City or other governmental body have the authority to restrict an HOA’s right to rent on a transient basis? Who supersedes who?
- Can the Coastal Commission dictate the rights of your owners?
- Is the Board obligated to meet FHA or VA criteria to help owners with financing options?
- What restrictions can we use with the least amount of consequences to our owners?
2:30 p.m. – 3:45 p.m. – AB’s & SB’s: What About CL’s? Case Laws That Have Shaped the Industry
Jeremy S. Wilson with Associa PCM
4:00 p.m. – 5:00 p.m. – Hot Bills
Louie Brown, CAI-CLAC Advocate
About our speakers:
Amy Tinetti joined Hughs Gill Cochrane Tinetti, P.C. in 2007. In 2017, Ms. Tinetti became a shareholder at which time the name of the firm changed to Hughes Gill Cochrane Tinetti, P.C. She has been representing homeowners associations since 2004 in all aspects of their corporate operations, including governing document analysis, interpretation, revision and enforcement, elections, real property and title issues, planning and collection of large special assessments, analyzing and drafting agreements with vendors, and member disputes and litigation.
Laurie S. Poole, Esq. has been a community association law attorney with Peters & Freedman, L.L.P. since 1993. Laurie is a Fellow of CAI’s College of Community Association Lawyers (CCAL). Experienced in all aspects of community association representation, Laurie’s practice emphasizes interpretation and enforcement of governing documents, governing document amendments, restatements and petitions brought under California Civil Code Section 4275. She has published numerous articles concerning legal issues for community associations and currently serves as President of the Board of Directors for CAI-San Diego and is on CCAL’s Amicus Review Committee.
Natalie Stewart is the President of FHA Review by a|v|s, which is a division of Association Vendor Solutions. She has been completing FHA Approval packages since the initiation of the new approval procedure. Natalie has actively participated in several CAI chapters as committee member and chair of several committees in the past. She was also nominated as Speaker of the Year for the Orange County chapter in 2009.
Jeremy Wilson serves as Regional Vice President of Associa-PCM. His expertise focuses on the operational aspects of the community association and education of community leaders as well as managers. Development of preventative maintenance programs, conducting operational audits, and redefining staffing models are a few of his many areas of responsibilities within Associa-PCM. He currently serves as the President for the Community Association Institute’s (CAI) Greater Inland Empire Chapter board of directors, and is a member of CAI national.
Louie A. Brown Jr. is a partner with Kahn, Soares & Conway, LLP. He manages the firm’s Government Relations Team representing clients before the California State Legislature and various state administrative agencies. Louie specializes in providing clients with expert advice in maneuvering through California’s complex legislative and administrative process. He testifies regularly in the Capitol before many legislative committees on behalf of clients and has written numerous laws and played key roles in many of the Legislature’s major accomplishments and budget negotiations over the last decade.
It’s that time of year again!
It’s time for CAI-California Legislative Action Committee (CLAC) members to come together in Sacramento for the 2017 Legislative Day at the Capitol. It’s also time to recognize outstanding chapter volunteers for service to CLAC above and beyond the call of duty.
CLAC is pleased to announce seven nominations were received from the California Chapters. The CLAC Award and Scholarship Selection Subcommittee is comprised of the CLAC Chair, CLAC Vice-Chair and CLAC Past Chair as voting members. CLAC Advocate and CLAC Administrative Coordinator also participated in the discussion. The winner will be selected based upon the nominees’ work in promoting CLAC within his or her chapter.
This year’s nominees include Chapter Legislative Support Committee (LSC) Chairs and members, a Board President, a Management Company Executive, CLAC Subcommittee members, as well as CLAC Delegates and Liaisons. Accomplishments among this exceptional group of volunteers include embracing and promoting the Buck-A-Door program, presenting the CLAC Moment at chapter events, encouraging member participation at fundraising and chapter events and leading the chapters’ grassroots efforts, including scheduling and attending local legislator appointments.
Additional accomplishments include initiating chapter LSC’s, complete with organizing consistent meeting schedules and encouraging chapter members to participate in the committee. Many of these outstanding volunteers are regulars at Legislative Day at the Capitol and support the event by obtaining sponsorships and encouraging attendee registration.
2016 Volunteer of the Year Award nominees are:
Janet Quinn Dennis with Pro Solutions – Bay Area & Central California Chapter
Jasmine Hale, Esq. with Adams|Stirling, PLC – Channel Islands Chapter
Clint Atherton, PCAM with Outdoor Resort Palm Springs – Coachella Valley Chapter
Robert Riddick, CMCA with Sunnymead Ranch PCA – Greater Inland Empire Chapter
Matthew Plaxton, Esq. with Tinnelly Law Group – Greater Los Angeles Chapter
Marcie Hvinden with Accell Property Management, Inc., AAMC – Orange County Regional Chapter
Kelly Mercado with BDS General Contractors – San Diego Chapter
Duncan McPherson Scholarship Recipient
In addition to these hardworking volunteers, last year CLAC established a scholarship opportunity for a Community Volunteer Leader or Association Manager to attend the 2017 Legislative Day at the Capitol. This scholarship was created in memory of Duncan McPherson, for his longstanding commitment to California legislation and CLAC.
While the 2016 Volunteer of the Year winner will remain a secret until it is announced at Legislative Day at the Capitol, CLAC is pleased to announce that Patrick Morrisey with the San Diego Chapter was selected among many deserving applicants, to receive the Duncan McPherson Scholarship. Mr. Morrisey has served as the board President of Yacht Club Condominiums HOA for eight years and also serves on the San Diego Legislative Support Committee.
Please join CLAC in thanking these outstanding nominees and scholarship recipient. We look forward to seeing you all at the 2016 Legislative Day at the Capitol on April 23rd and 24th in Sacramento to congratulate these awesome volunteers in person. The 2016 CLAC Volunteer of the Year will be named during Monday’s Award Ceremony.
These Labor Code provisions will prohibit employers from providing janitorial services without the required registration (which can be revoked by the Labor Commissioner under various circumstances). The referenced registration process imposes a number of obligations upon the employer. Among them are mandatory sexual violence and harassment prevention education.
Labor Code §1432 (b) provides that any person or entity (including a community association) that contracts with a janitorial services business that lacks current and valid registration will be subject to substantial civil fines of $2,000-$10,000 for a first offense and $10,000-$25,000 for subsequent violations.
Associations that contract with janitorial service providers will be able to verify the registration of the janitorial employer in a public database that will be provided by the Department of Industrial Relations in the Labor and Workforce Development Agency.
The referenced Labor Code provisions are not effective until 2018. However, many associations enter into one year contracts with service providers and many contracts automatically renew under various circumstances. Consequently, well in advance of the effective date of this new law, associations should carefully evaluate the terms of any janitorial-related contract executed, extended, renewed or modified. In that process, they should consider requiring provisions (in the body of the agreement or in an addendum), that require the janitorial service provider not only to complete its registration by July 1, 2018 (and thereafter maintain that registration through the entire term of the agreement), but also require that it defend and hold the Association harmless from any fines/detriment arising from a failure to do so. Associations should also consider including a right to immediately terminate the contract if, at any time on or after July 1, 2018, the service provider is indicated as being not properly registered for any reason.
Mr. Petchul is a Partner in Berding | Weil and serves as General and Litigation counsel to California community associations. His General Counsel work encompasses a full breadth of issues including preparation of opinion letters, disciplinary proceedings, governing document amendment, contract review, preparation and negotiation, election proceedings and strategic legal planning. Mr. Petchul has lived and practiced real estate and corporate law in southern California since 1991. For 15 years prior to joining Berding | Weil, Mr. Petchul, was a founding partner of the law firm of Hickey & Petchul, LLP, practiced almost exclusively within the community association industry, and in so doing, served as General and Litigation counsel to an extensive array of community associations and building owners.
Hundreds of bills heard each year in Sacramento can affect California’s community associations. But how do our legislators know what’s best for homeowners? In addition to CAI-CLAC’s advocacy, it’s emails and phone calls from members like yourselves that have the greatest impact on elected officials. Enter our “Who’s Your Legislator?” contest and find your local legislators at CAICLAC.com!
Simply visit the site and choose Contact Your Legislator from the Get Involved drop-down menu. Then search by address.
A $50 gift card will be randomly awarded to an eligible winner who correctly identifies their Assembly, Senate, and Congressional representatives. Email the name of your chapter, your address, and the names of your elected officials to PRchair@caiclac.com.
All entries must be emailed no later than Friday, February 10, 2017. The gift card will be mailed or presented at a chapter meeting. All decisions regarding winners are the PR Chair’s. All decisions are final. Rules are subject to change. No cost or purchase necessary. An unknown number of people may participate. You must be over 18 to enter.
California is experiencing the worst drought in over a century. While recent rains bring good news for our water supply, the California Legislature has enacted a number of laws aimed at water conservation that still stand. Existing law requires the Department of Water Resources and the State Water Resources Control Board to take appropriate actions to prevent unreasonable water use. To further the goal of preventing unreasonable water use, Governor Jerry Brown signed into law new legislation prohibiting excessive water use by residential customers during a drought (SB 814).
Specifically, SB 814, which adds Chapter 3.3 to Division 1 of the California Water Code, requires “urban water suppliers” to “establish a method to identify and discourage excessive water use.” (Water Code § 366(b).) Accordingly, a water supplier may adopt one of the following methods: (1) a rate structure using block tiers, water budgets, penalties for prohibited uses, and rate surcharges, or (2) an ordinance, rule or tariff (collectively, “Ordinance”) that defines the procedure by which water suppliers are to recognize and deal with excessive water use. A violation of an Ordinance is punishable by a fine of at least $500 per one hundred (100) cubic feet of water, or seven hundred and forty-eight (748) gallons, above the established threshold.
In light of the foregoing, Associations should be mindful of the new prohibition against excessive water use, especially in condominium project where the units are not separately metered.
Matthew T. Plaxton, Esq. is an attorney at Tinnelly Law Group, PC, a law firm which has been devoted exclusively to providing legal representation to California community associations for more than 25 years. He serves as the CLAC Liaison to the Greater Los Angeles Chapter of CAI, and is Chair of its Legislative Support Committee.