Restricted by the Amended Open Meeting Act? Learn to Delegate

Restricted by the Amended Open Meeting Act? Learn to Delegate

Civil Code Section 4900 et. seq. (a.k.a., the Open Meeting Act) leaves very little breathing room to handle an association’s business outside of a properly noticed board meeting. Therefore, in order to deal with these new legal requirements boards must find efficient ways to handle business in between meetings. One such tool is delegation. The Open Meeting Act allows boards to delegate duties to other persons, including the association’s managing agent, officers and committees of the board. As a result, tasks that require action in between board meetings can and should be delegated to officers, executive committees, or management depending on the task and authority required. The delegation should be made in a board meeting and reflected in the minutes (or preferably in a board resolution) that documents the purpose, scope and duration of the delegation. When delegating to an executive committee of the board, make sure the number of directors does not comprise quorum. Create a charter for the executive committee that identifies such items as the types of matters to be decided by the committee, the length of the committee’s duration (i.e., for a specific project or ongoing). Also, the tasks or decisions delegated to each committee are not already delegated to someone else by contract or the association’s governing documents (or are prohibited from being delegated by state statute). Many boards may now be inclined to delegate more tasks or projects to management. For example, it may be more efficient to set or increase spending authority for managers so that day-to-day maintenance decisions can be made in between board meetings. Both the board and management should...
Need To Appoint Replacement Members To The Hoa Board?

Need To Appoint Replacement Members To The Hoa Board?

It should come as no great surprise that when filling vacancies on the board created by resigning or disqualified directors, the role of filling those vacancies is left to the remaining board members. California Corporations Code Section 7224 provides: “(a) Unless otherwise provided in the articles or bylaws and except for a vacancy created by the removal of a director, vacancies on the board may be filled by approval of the board.” This means that a vacant director seat is filled by the appointment of a member who is approved by a majority of the Board. But imagine you are the only director left? What then? Fortunately, the Corporations Code provides a solution. Of course, one must always first look to the association bylaws to see if another method of filling vacancies is provided. But in the great majority of situations, your bylaws will be consistent with the Corporations Code, or Corporations Code Section 7224 will be your guide. Corporations Code 7224 (a) tells us that where the number of directors remaining in office is less than a quorum, the vacancies may be filled by: The unanimous written consent of the directors then in office; The affirmative vote of a majority of the directors then in office; or, A sole remaining director. Thus, if you are the last director standing, you are in luck. You have the right (if not the obligation) to fill the vacancies left by the resigned or disqualified directors. Indeed, it is wise to do so if you are the remaining director. Proceeding to conduct association business on your own may leave you vulnerable to...
A Widespread Drought: Legal and Other Challenges of the Association

A Widespread Drought: Legal and Other Challenges of the Association

Water conservation is not new to California communities. But the declared statewide drought emergency coupled with water conservation legislation aimed specifically at community associations leaves no doubt that water conservation will remain in our vocabulary. And while the emergency requires short term action to conserve water, it also provides a rare opportunity to make long term reductions in our communities’ water consumption, provided your community can negotiate through the challenges presented by its Governing Documents and human nature. Engage your residents Community-wide change requires owner buy-in. Look for ways to involve the owners in the process. For example, form a water conservation committee tasked with surveying the Association’s water use and identifying ways to reduce water consumption. If owners are part of the solution, you are more likely to build community-wide acceptance of water reduction measures. Guide the committee with a charter that identifies specific tasks such as: Identify areas suitable for drought tolerant plants. Locate areas for irrigation modification or reduction. Identify areas of poor drainage or excessive water run-off. Amend rules or adopt policies to reduce water use Associations subject to local water restrictions will have to conform to watering schedules and other limitations. Unregulated communities can be proactive by voluntarily adopting policies to reduce community-wide water use. Policies should limit watering to certain times of the day or certain days of the week. For sub-metered communities, boards can work with their local water utility to determine acceptable per owner water use standards and adopt policies to limit water use per owner. A fine schedule or surcharge would serve to motivate owners to monitor their own water...
Managers Are Not Contractors

Managers Are Not Contractors

Governor Brown provided a degree of certainty to community association managers by signing Senate Bill (SB) 822 into law, excluding community association managers from the definition of construction consultants for purposes of Section 7026.1 of the Business and Professions Code (regarding construction contractors). SB 822 adds the following language to Section 7026.1 of the Business and Professions (B&P) Code relating to contractors: “(b) The term “contractor” or “consultant” does not include a common interest development manager, as defined in Section 11501, and a common interest development manager is not required to have a contractor’s license when performing management services, as defined in subdivision (d) of Section 11500.” By way of background, last year Section 7026.1 of the B&P Code was amended by the passage of AB 2237 mandating that a consultant overseeing home improvement construction projects have a contractor’s license. This amendment caused concern among some community association managers who were involved in common area maintenance and repair projects or bid compilation for their communities. If community association managers were considered “consultants,” then they too would have to have a contractor’s license under Section 7026.1. The Contractor’s State Licensing Board (CSLB) responded to the community manager concerns raised by clarifying that the intent of last year’s amendment (AB 2237) was not to include community association managers within the definition of a “consultant.” The CSLB accepted the proposed amendment to Section 7026.1, leading to its inclusion into SB 822. SB 822 does not become law until January 1, 2014. Therefore, community managers still should exercise caution in any construction project oversight, involvement or undertaking. Written by Matt D. Ober Matt...
Election Rules: Equal Access to Media and Common Area

Election Rules: Equal Access to Media and Common Area

As with many provisions of the Davis-Stirling Act, we look to judicial decisions interpreting the statutes for guidance in applying them in our own communities. With respect to community association voting and election laws, however, the Courts have steered clear of published decisions leaving us to rely upon our own interpretation or that of legal counsel, until now. In Wittenberg v. Beachwalk Homeowners Association the Court of Appeals gave us a welcome interpretation of two provisions of the elections law, albeit an interpretation that to many seems obvious. The Wittenberg v. Beachwalk Homeowners Association opinion leaves no doubt that Civil Code Section 5105 requires equal access to association media and common area. But the opinion provides an important message to association boards in community association election matters: when the board advocates for or against a particular election position, it is treated no differently than any individual member. Equal access is required. Despite the best intentions, boards sometimes overstep their authority when purporting to act in the best interest of the community. This is particularly the case when an association incurs significant expense to amend its governing documents. The board will be compelled to advocate in favor of passing the amendment through town halls, campaigning and letter writing urging support for the proposed amendment. But under the Beachwalk opinion, such action will trigger the obligation to allow a member with an opposing view the right to hold his or her own town hall or use of the association media to advocate their views. In Beachwalk, the board conducted three election campaigns over a period of time to amend the association’s...
Court Provides Guidance on Who Can Attend Board Meetings SB Liberty v. Isla Verde Association Inc.

Court Provides Guidance on Who Can Attend Board Meetings SB Liberty v. Isla Verde Association Inc.

A longstanding issue of ambiguity and occasional dispute arises when a member tries to designate someone to attend a board meeting for them. Civil Code § 4925 (“Open Meeting Act”) states that “any member of the association may attend meetings of the board of directors of the association.” A dispute often arises when a homeowner wants to bring an attorney to a board meeting, or have their attorney attend a board meeting in their place. The Court of Appeals took a big step toward resolving such disputes when it issued its opinion in SB Liberty LLC v. Isla Verde Association. The SB Liberty Court was concerned with whether an attorney was the proper representative of an LLC in order to attend a board meeting. But the opinion has broader impact in other areas of community association governance including whether that LLC member can serve on the Board and the authority of the board to determine how to conduct its own meetings. What is clear from the opinion is that a member cannot send a “representative of its own choosing” to a board or members meeting and that the board has the authority to exclude nonmembers from its meetings. Isla Verde is an association of 87 homes in Solana Beach, into which Gregg and Janet Short bought a residence in 2006. They put ownership of the property first in a family trust, and later in an LLC called “SB Liberty LLC.” For reasons unexplained in the appellate decision, the Shorts sought to have their attorney attend a board meeting on their behalf. The Shorts executed a “Specific Power of Attorney”...

The Advantages of Judicial Foreclosure in Collecting Delinquent Association Assessments

Four Methods Of Response Associations in California have four basic options in dealing with delinquent assessments: Inaction, small claims court, non-judicial foreclosure, or judicial foreclosure. Inaction: The drawbacks of inaction are self-evident. Until the association pursues the debt, most often it will not be collected. Small claims court: This method involves no attorneys, and is quick. However, the association can only pursue claims of $2,500 to $5,000 twice a year. Also, small claims court can be unpredictable, and the results are not appealable if the judge (often a volunteer) gives the plaintiff association a bad decision. On the other hand, the defendant debtor can appeal. Non-judicial foreclosure: This method involves no attorneys. The association takes away the debtor’s property, without court supervision. The foreclosure process involves various notices to the owner and waiting periods, and concludes with the association owning the property. The Association cannot pursue any deficit if the property does not have enough equity to cover the debt. Judicial foreclosure: This method involves filing a lawsuit. In this lawsuit, the association pursues both ownership of the property (judicial foreclosure) and an award of money damages. Advantages Of Judicial Foreclosure The advantages of the judicial foreclosure process are numerous and substantial: 1)   In a declining or flat real estate market, the threat of foreclosure is less significant – many properties are “upside down” with no equity, so members have less reason to pay. 2)   In the current economy and real estate market, the association often should not take over ownership, but with non-judicial foreclosure that is the only option. If the association decides not to take the property,...

Aging America: Drawing a Line Between Community Living and Assisted Living

Many of today’s seniors believe they can forego assisted-living centers and age in place instead. That’s something community associations can’t ignore. Roughly 40 million Americans, or 13 percent of the population, are 65 or older. By 2030, the U.S. Census Bureau projects that number will rise to 72 million, or 20 percent of the population. Community association leaders need to take note of these numbers because seniors increasingly are choosing to remain in their homes rather than move to adult-care or assisted-living facilities. In addition, the supply of family caregivers, who provide the majority of long-term services and support, is unlikely to keep pace with future demand, according to AARP. As people live well into their 80s and 90s, that will put increased pressures, obligations and potential liabilities on associations. The following article contains information and perspectives from community association stakeholders who have handled aging-in-place concerns professionally and personally. If your association hasn’t started talking about how it will handle its aging residents, it’s time. Aging residents have specialized needs and present unique challenges that board members and community managers aren’t trained or necessarily skilled to handle. Association governing documents are being tested by the aging population too. Hoarding, disorientation and physical limitations that prevent access to common areas are just some of the problems association leaders increasingly will face. These issues pose a threat to the safety and welfare of the individual resident, but they also present risks for the community and its other residents. Managers and board members must be mindful of how to recognize and respond to these issues without unnecessarily assuming liability or invading an...
A Proactive Approach to Controlling Short-Term Rentals in Your Community

A Proactive Approach to Controlling Short-Term Rentals in Your Community

Whether through the Courts, the Legislature or human nature, from drought restrictions to email prohibitions, community associations are often forced to adapt quickly to change in order to govern effectively. In the case of the short-term rental craze, this change seems harder to tackle. Indeed, the short-term rental market is having an increasing impact on community associations. Residents often complain that short-term renters – who are transient by definition – do not treat association common areas with the same regard as resident owners. Most are unaware of association rules and contribute to mounting security, trash removal, parking, and noise related concerns, not to mention the increased common area expenses that come with the increased burden of handling short-term renters. On an emotional level, residents are often uncomfortable with the fact that their neighborhoods are filled with unfamiliar faces, many of whom are on-site for only a few days at a time. The idea of transient rentals in our communities seems at odds with the objective of maintaining the residential character of our neighborhoods. We all have seen provisions in our communities’ documents that prohibit “non-residential” use of a unit, or that restrict use of property for “private single-family residential purposes.” While many associations have adjusted to an increase in tenant occupied residences in their communities, this “business” use of a residence, where unfamiliar groups of people share the common area and facilities for brief periods of time, never to be seen again, is incompatible with everything we’ve come to know and understand about community associations. The short-term use of a residence only adds to the resentment towards tenants who...
Improve Your Board Meetings: Drafting a Code of Conduct for the Board of Directors

Improve Your Board Meetings: Drafting a Code of Conduct for the Board of Directors

A common frustration for managers and association boards of directors is dealing with issues that arise out of conflict with individual board members. At some point we have all heard of the board member who is hostile, disagreeable or the proverbial “loose cannon.” Other boards have struggled with how to rein in the director who consistently advances his or her own agenda without regard to the best interests of the association. Finally, there are directors elected, for whatever reason, who feel compelled to reveal confidential information about the association to third parties. Unfortunately, the Corporations Code does not yet contain a provision allowing the board to remove a director for behaving badly. The slap on the wrist that follows improper disclosure or misconduct does little to undo the damage already done. There are, however, viable options available to managers and boards to address misconduct. In most cases, the most direct option to control improper behavior is censure. There is no more effective method of controlling improper behavior than by confrontation by one’s own peers. Like any disciplinary hearing, the director should be advised of the improper conduct committed and be provided with an opportunity to explain his or her actions. The director should also be cautioned that continued misconduct will result in further disciplinary action by the board to protect the association and could include obtaining a court order seeking to enjoin their conduct detrimental to the association. If the conduct committed is improper disclosure of confidential information, the best option is to exclude that board member from executive session meetings, or from receiving executive session material or both....