January 7, 2015

Summary of New Legislation Effective January 1, 2015

By Sandra L. Gottlieb and David C. Swedelson, Partners and Community Association Attorneys at SwedelsonGottlieb

new_legislation_-_Google_Search.pngThere was not a lot of new legislation in 2014 impacting California Community Associations, and what changes there were seemed to be focused on dealing with the drought. There were also changes to the law relating to solar energy systems, the ability of residents to grow fruits and vegetables in their backyards, to bring their attorney to an IDR meeting, and defining responsibility for the repair and/or replacement of exclusive use common area.


The New Davis-Stirling Act:

The big story for 2014 was implementation of the complete rewrite of the Davis-Stirling Act (signed into law prior to 2014 and effective as of 1/1/14). If you have not been made aware of this by now, you likely live in a cave, as the Davis-Stirling Act has been rewritten and renumbered to Sections 4000 through 6150 of the California Civil Code and specifically excludes commercial associations, which now have their own set of laws that are much more abbreviated then the Act. Many association attorneys have prepared conversion charts for their clients which reference the old code sections and the applicable new sections. Contact your association’s legal counsel now if this is your first time hearing about the new Davis-Stirling Act.

Continue reading "Summary of New Legislation Effective January 1, 2015" »

January 6, 2015

New Law (Effective January 1, 2017) Clarifies Responsibility for Maintenance and Repair of Exclusive Use Common Area

By David Swedelson, Partner and Community Association Attorney at SwedelsonGottlieb

balcony%20copy.jpgSince the inception of the Davis-Stirling Act in 1985, there has been confusion regarding owner vs. association responsibility for the repair or replacement of exclusive use common area. AB 968, legislation sponsored by the Educational Community for Homeowners (ECHO), signed into law by the Governor on September 18, 2014, brings us long-needed clarification. We strongly supported this legislation (surprisingly, as will be explained below, many others did not), as it clears up some of the ambiguities created by what was formerly Civil Code Section 1364, now Civil Code Section 4775.

Civil Code Section 4775 currently states that unless otherwise provided in the CC&Rs, a community association is responsible for repairing, replacing, or maintaining the common area, other than exclusive use common area. The homeowner of each separate interest is responsible for maintaining their separate interest (their unit or home) and any exclusive use appurtenant (attached or next to) their separate interest.

So, while Civil Code Section 4775 has addressed who is responsible for the maintenance, repair, and replacement of the common area, this code section only dealt with the responsibility for maintenance of the exclusive use common area, or so that is how many interpreted the code section.

Continue reading "New Law (Effective January 1, 2017) Clarifies Responsibility for Maintenance and Repair of Exclusive Use Common Area" »

January 5, 2015

Legislature Says Homeowners Can Bring Their Attorney to Internal Dispute Resolution (IDR) Meetings (and we all thought that IDR was supposed to be an informal process)

By David Swedelson, Esq. and Cyrus Koochek, Esq.; Community Association Attorneys at SwedelsonGottlieb

Benefits_of_Alternative_Dispute_Resolution___Lawyers_com.pngAB 1738 is new law that amends Civil Code Sections 5910 and 5915 and makes two major changes to the requirements of internal dispute resolution (IDR) meetings held between an association’s board and its members. We opposed the adoption of AB 1738 (like just about everyone else who works with California HOAs) and discussed the reasons why in our September 3, 2014 blog article. AB 1738 has since been signed into law and became effective California law as of January 1, 2015.

Here are the big changes – first, any agreement between the parties during IDR must be in writing and signed by both parties. This is a common sense requirement and will prevent any complaints about what was actually agreed to between an association and owner. More problematic, however, is the addition of language that now permits members to be represented by an attorney (or another person explaining the member’s position). The new changes that now allow members to bring an attorney will, without a doubt, end up costing community associations more money for legal fees, as more members may decide to be represented by their attorney, which will in turn require the association to have its attorney present.

Continue reading "Legislature Says Homeowners Can Bring Their Attorney to Internal Dispute Resolution (IDR) Meetings (and we all thought that IDR was supposed to be an informal process)" »

December 12, 2014

New Law Impacting the Installation of Solar Energy Systems Effective January 1, 2015 - Is Your Community Association Prepared?

By the Community Association Attorneys at SwedelsonGottlieb

screen-capture-53.pngUnder Civil Code Section 714, a California community association can restrict its members’ installation and use of solar energy systems so long as the restrictions do not significantly increase the cost of the system or significantly decrease its efficiency or specified performance. “Significantly” used to be defined (through 12/31/14) as increasing the costs of the system by 20% (or $2,000 for photovoltaic systems) or decreasing the efficiency of the system by 20%.

AB 2188, effective January 1, 2015, redefines what reasonable restrictions an Association can require and amends Civil Code Section 714. Specifically, the new law has cut by half an association’s ability to restrict solar energy systems installed by members. A significant increase in the costs of a system will now mean an increase of 10% (or $1,000 for photovoltaic systems), and a significant decrease will now mean a reduction in the efficiency of the system by 10%. An association must now be even more careful with the conditions or limitations it places on an owner who wants to install a solar energy system.

The new law also reduces the time period an association has to approve or deny an application for the installation of a solar system. Formerly, the Civil Code stated that if an application is not denied in writing within 60 days of the submission by the member, the application will be deemed automatically approved. That time period has been reduced to 45 days. As a result, boards and architectural committees must be even more diligent in their review and consideration of applications for new solar energy systems.

It is also worth noting that AB 2188, as reflected in Government Code Section 65850.5, prohibits a city and/or county from conditioning the approval of any solar energy system permit on approval of that system by an association. Because the city/county no longer needs to review association approval prior to issuing a permit, this could have the effect of speeding up the approval process in addition to the 15 less days an association has to make a decision. We recommend that boards and managers tread carefully and consult legal counsel as necessary with respect to solar energy system approvals, because in any action to enforce violations of the solar energy system statute, attorneys’ fees will be awarded to the prevailing party.

For more information regarding solar energy systems and California community associations, please follow this link to our article which has been updated to reflect the new 10% limitations.

December 12, 2014

Condo/HOA Transfer Document Disclosure Fees: Changes You Need to Know

By the Community Association Attorneys at SwedelsonGottlieb

solicitor-meeting.jpgMost associations have provided transfer disclosures/documents to an escrow at some point when an owner is selling his or her unit/home or property in a community association to a prospective purchaser. This task is usually completed by the association’s managing agent. Sections 4528 and 4530 of the Civil Code govern the requirements for complying with an Association’s escrow disclosure requirements. AB 2430, which amends Civil Code Sections 4528 and 4530 and is effective as of January 1, 2015, now provides some helpful points of clarification and one major affirmation of California case law.

First, AB 2430 now provides that it is the responsibility of a seller to compensate the association, person, or entity that provides the required documents to the prospective purchaser. This is the first time the Davis-Stirling Act has expressly made clear that the fees charged by an entity other than the association (e.g., management companies) are the responsibility of the seller. This change now makes the Civil Code on par with California case law. See our previous article to learn about the California cases which paved the way for this new legislation.

The revised law changes the statutory disclosure form (Civil Code Section 4528) which must now itemize and separately state the cost for providing each document to a selling owner or a recipient authorized by the owner. AB 2430 also clarifies that the written estimate of fees for providing the requested documents must be sent prior to processing the request. Associations will also be prohibited from bundling documents not required by Section 4530 with the documents that are required under the statute. The new law also requires that the fees for any statutorily required documents be distinguished from, separately stated, and separately billed from all other fees, fines, or assessments billed as part of the transfer or sales transaction.

These changes to the Civil Code may seem innocuous; however, if an association and its managing agent are not on the same page when it comes to disclosure procedures, the association could be liable for all actual damages, all attorneys’ fees incurred by an owner, and a civil penalty for noncompliance. Board members and managers need to have a discussion now regarding the association’s compliance with the new law.

Have questions regarding transfer disclosures? Follow this link to our Annual Disclosure Checklist, which includes a checklist for transfer disclosures beginning on page 10.

November 19, 2014

California Community Associations Cannot Deny or Reject an Architectural Application Merely Because the Owner Failed to Obtain Prior Approval

By David Swedelson, Esq., SwedelsonGottlieb, Community Association Attorneys

Home.pngA manager at a planned development community association we represent contacted me regarding a dispute with an owner. The board was refusing to allow the owner to make a change to the common area solely because the owner had made a change without first submitting a plan and obtaining the required prior approval. I was informed that the board was refusing to provide approval as punishment for the owners’ actions. And the board was doing this despite the fact that the owner had come to them with two options that would have minimal impact on the common area and/or the aesthetics of the association, and the cost for the owner to bring the property back to its prior conditions would have been very expensive. The owner was not happy, and there were some rumblings of a lawsuit. I had to tell the manager and the board that their approach was not appropriate and that there was a possibility that the association could lose if a lawsuit were to be filed.

What I describe above is not an atypical board response to an owner’s failure to seek prior approval for a modification. It is not the correct response, and it can lead to lawsuits that associations may lose. We know this because the Court of Appeal has decided a similar case and told us that California community associations must consider the plans and approve or disapprove the proposed modification based on the usual and customary factors, such as impact on the common area, on the community, neighboring owners, etc. Boards need to show that their actions were regular, fair, and reasonable as a matter of law. Refusing to consider an owner’s plans for a modification because the owner had already made the modifications without approval is not a fair or reasonable response.

In the case of Ironwood Owners Association IX v. Solomon [(1986) 178 Cal.App.3d 766], the Court held that the association was not entitled to a mandatory injunction on summary judgment requiring the Solomons to remove palm trees they had planted in their yard without seeking the required prior approval. The denial was on the basis that the association did not establish that its actions were fair and reasonable as a matter of law.

An association that is seeking to enforce its governing documents must demonstrate that it has followed its own standards and procedures and that those procedures were fair and reasonable. The association must also show that the substantive decision was reasonable, not arbitrary or capricious, and made in good faith.

Follow this link to view our entire printed article.

November 6, 2014

Senior Partner Sandra Gottlieb Nominated for CAI-GLAC's Award for Excellence in Education

IMG_1482%20copy.pngSwedelsonGottlieb Senior Partner Sandra Gottlieb was recently honored by the Greater Los Angeles Chapter of the Community Associations Institute with a nomination for the chapter's award for Excellence in Education. Sandra was nominated as a result of her January 2014 presentation, Hoarders, Board Member Hostility & Controlling Rental Tenants. Slides from Sandra's presentation appear below (if you are reading this post via email, click through to see the presentation).

If your homeowners association is located in the Greater Los Angeles area, be sure to get involved with CAI-GLAC and take advantage of all the terrific educational programs that they offer, some of which are free to board members and managing agents. Our attorneys are frequent speakers at their events, so be sure to watch for when we'll be there. And if you're in a different area of California, find your local chapter on CAI's national website.

[Pictured: Left, Joan Urbaniak, CAI-GLAC Executive Director; Right, Sandra L. Gottlieb]

October 23, 2014

How Much Can a Community Association Management Company Charge for Escrow Transfer Disclosure Documents? Whatever the Competitive Forces of the Market Will Allow

Brown v. Professional Community Management, Inc.,
Berryman v. Merit Property Management, Inc., and
Fowler v. M & C Association Management Services, Inc.

hoa_escrow_fees_california_-_Google_Search.pngA question that we are often asked is, "How much can the association or its management company charge for the work done to complete the association’s escrow disclosure requirements?" The Davis-Stirling Act, which governs California community associations, specifically covers document transfer disclosure when an association member is selling his or her property. The Code does not specify any limits on what can be charged for providing hard copies of all of the documents and disclosures. This has led to disputes. Fortunately, we have three appellate court decisions that have come down over the last decade that have clarified and confirmed what fees can be charged to owners and by whom.

Download our full article on this subject by SwedelsonGottlieb attorneys David Swedelson and Cyrus Koochek.

October 21, 2014

Updated Disclosure Checklist for 2014-2015

checklist.jpgIt's that time of year again — time to get the community association's budget together and ensure you're making all the proper disclosures under the Annual Budget Report and Annual Policy Statement, as required by the California Civil Code. In order to assist you with this process and other required notices and disclosures, we have again updated our disclosure checklist reference.

Download the new 2014-2015 disclosure checklist here.

Not much has changed in the most recent legislative session with regard to community association disclosures, other than some clarifying language that was added regarding property transfer disclosures. To review our prior blog post regarding that legislation, follow this link.

October 9, 2014

San Francisco’s “Airbnb Law” Does NOT Control Over A Condo/HOA Association’s Governing Documents

By: W. Alexander Noland, Esq., Partner, SwedelsonGottlieb, Community Association Attorneys

On October 7, 2014, the San Francisco Board of Supervisors voted to legalize the use of residences in San Francisco for short-term vacation rentals, by passing what has been dubbed as the San Francisco “Airbnb law”. Follow this link to a news article. This new law has been more than two years in the making, and removes San Francisco’s long-standing ban on residential rentals of less than 30 days. The new legislation, integrated into the San Francisco Administrative Code, now allows short-term rentals of homes, imposes certain restrictions and requirements on that controversial and unregulated practice, and will take effect in February of 2015.

The stated goal of the legislation is to balance the preservation of affordable housing (by making sure landlords can’t convert permanent units to more lucrative vacation rentals) with allowing residents to earn extra income by renting to travelers for short-term vacation and business purposes. The Airbnb law allows only permanent residents to offer their homes for short-term rentals, establishes a new city registry for hosts, mandates the collection of hotel tax, limits entire-home rentals to 90 days per year, requires each short-term rental listing to carry $500,000 in liability insurance, and establishes guidelines for enforcement by the San Francisco Planning Department.

Continue reading "San Francisco’s “Airbnb Law” Does NOT Control Over A Condo/HOA Association’s Governing Documents" »

October 7, 2014

Does your condominium, cooperative or HOA board know if and when it is appropriate to grant a hardship exemption, a variance from the restrictions in the CC&Rs?

By David Swedelson, Partner, SwedelsonGottlieb, Community Association Attorneys

In a blog post by Donna DiMaggio Berger, a Florida Community Association Attorney, she discuses exceptions or variances granted to owners. Apparently in Florida they deal with some of the same issues we do. As Donna states, many boards want the leeway to grant exceptions when it comes to certain restrictions in their association’s CC&Rs, such as leasing or altering units or exclusive use common area, performing maintenance and allowing certain types of architectural changes or improvements. We see the same thing here in California.

But often boards grant exemptions or variances without thinking about all of the ramifications. As Donna states, what many boards fail to understand is that any time an exemption or exception is granted, they are creating a precedent which may render their restrictions unenforceable in the future.

Continue reading "Does your condominium, cooperative or HOA board know if and when it is appropriate to grant a hardship exemption, a variance from the restrictions in the CC&Rs?" »

October 1, 2014

Successfully Maneuvering Through Post Foreclosure Evictions and Rentals

By Sandra Gottlieb and Cyrus Koochek, SwedelsonGottlieb, Community Association Attorneys

screen-capture-15.pngMany California condominium and homeowner associations end up with units and homes after foreclosing on assessment liens with no third-party bidders at the foreclosure sales. With increased equity, we are seeing more third-party bidders at sales. But that still leaves a lot of associations in the position of being landlords. And many boards do not know the first thing about being a landlord.

This summer, firm partner Sandra Gottlieb and associate Cyrus Koochek wrote an article that was published in CACM’s Law Journal entitled "Successfully Maneuvering Through Post Foreclosure Evictions and Rentals". Their article provides guidelines for dealing with issues such as compliance with legal requirements, preparing for tenants, lease terms and rent skimming laws. Follow this link to read their informative article, especially if your association owns or may be in the process of taking ownership of any unit or home.

Sandra Gottlieb can be contacted via email: slg@sghoalaw.com