HOA Law Blog

Our country and most of the rest of the world are in an economic recession, and we are all suffering the fallout from the most significant and severe economic crisis since the Great Depression. Major corporations are filing bankruptcy and are going out of business, banks are being taken over by the government and record numbers of homeowners are losing their homes through foreclosure. It is no surprise that we are also seeing a steep rise in the number of delinquent homeowner’s assessment accounts and the loss of assessment income among California community associations.

While it is a fact of life that many community associations will not collect the unpaid assessments from those homeowners that cannot afford to keep their homes, or recover assessments from homeowners that have already lost their homes to foreclosure, there are some things that associations can and should do to maximize their chances of collecting and/or addressing the loss of that income.

Continue reading " Increasing Your Association’s Chance of Collecting Unpaid Assessments During the Economic Crisis " »

Community Associations Institute (CAI) has weighed in on the side of a Vail, Colorado condominium owner who won a costly and contentious, seven-year court battle with his association over who was responsible for resolving a water-intrusion issue. The court determined that the association should pay $550,000 in attorneys' fees and related costs in light of what the trial judge called the association's "stubborn refusal" to address the problem. What was that board thinking? To read the entire article click here.

July’s 5.4-magnitude Chino Hills Earthquake was a jolting reminder that we all need to prepare for the “big one”. It is no secret that California is riddled with earthquake faults. Click here for a map which shows seven of the faults with the probability of a magnitude 6.7 earthquake. Scientists have been reporting to us for some time now that we are due for a significant (big) earthquake. The southernmost section of the San Andreas Fault, which is just east of downtown Los Angeles, undergoes a major shift every hundred and fifty years or so. The last serious earthquake was about 100 years before Los Angeles was founded. So, Los Angeles is approximately 178 years overdue for the “big one”.

There is no doubt that when a serious earthquake strikes, and it is only a matter of time, millions of California citizens will be left without tap water, freeways and bridges will crumble and fall and hundreds of fires will likely break out. The 1994 Northridge earthquake registered a magnitude of 6.7, killed 57 people and caused over 20 billion dollars in damage.

To get our attention, geologists and others have developed the Great Southern California Shakeout, which is taking place this week.

As reported in the Wall Street Journal, at 10:00 a.m. on Thursday, November 13, 2008, geologists hope that more than five million people around Los Angeles will participate in a disaster drill built around a mock 7.8 magnitude earthquake along the San Andreas fault. The Great Southern California Shakeout is being billed as the largest earthquake preparedness event in U.S. history. For more information, go to Shakeout.org. The big question is whether or not your homeowner association(s) are prepared for the big one.

We really do not recommend that associations get in the position of taking responsibility for storing emergency supplies, etc. More likely then not, those supplies will not be available when the earthquake actually hits, and the association will likely be blamed for not making sure that things were taken care of.

There are other things that associations can do to be prepared for a major earthquake. Members of the board of directors and others at the association can make sure that they know where the gas turn off is, for example. This would apply to other utilities as well.

Someone at the association should know how to manually open any gates that are operated mechanically as there is a big possibility there will be no power to operate those gates.

Apartment style condominium associations and especially highrises can make sure that they have clearly marked where emergency exists are located, that fire sprinklers are working, etc.

And then there is the earthquake insurance issue!

As part of an association’s preparation for an earthquake, inevitably there is the “issue” of earthquake insurance. In 1994, at the time of the Northridge quake, less than half of all associations had earthquake insurance. I do not believe the statistics have changed much since 1994.

Earthquake insurance is not required or mandated by any associations’ governing documents or California Law. After the 1994 earthquake, it was not available and/or was too expensive. Many associations say they are relying on their homeowners to obtain their own earthquake insurance. However, homeowners cannot buy insurance to cover the damage to the common area. While they can obtain earthquake loss assessment coverage and other earthquake coverage that will cover their personal property, the reality is that community associations need to seriously consider whether earthquake insurance makes sense for their association.

Continue reading " EARTHQUAKE INSURANCE; ARE YOU COVERED? " »

I, along with over 70% of other California citizens, have or will vote today (11/4/08). And then, not wanting to pass up a good deal, I went to my local Starbucks for my free cup of joe. That's right, Starbucks offered a free cup of coffee to anyone that came in with proof that they voted. Then I saw an article on the Internet indicating that the prize offer was a violation of federal election laws and I had a brainstorm. While it may be a violation of federal law to give someone a gift or prize for voting, it is not a violation of law for a community association to offer free food or some other incentive to get owners to vote. However, unless written into your governing documents (and even then I question whether it's enforceable), community associations cannot fine or penalize a homeowner for not turning in their ballot or voting. Why? Because most CC&Rs provide associations with the power to make rules regarding use of a common area and there is nothing in California law or in any governing documents I've seen which would give a Board of Directors the power or authority to penalize a homeowner for not voting. If you are having difficulty getting owners to vote and cannot make a quorum, offer free food or maybe even a certificate for a free cup of copy at a local coffee house (and make sure it is in the budget).

As a reminder, Tuesday, November 4th is Election Day, and it is important that you exercise your right and duty as a citizen to vote. We are not voting on just who will be our next President, but there are a number of other initiatives on the ballot that are worthy of your consideration.

The polls will be open from 7 a.m. to 8 p.m. Despite the unprecedented number of voters who cast their ballots early, experts are forecasting long lines.

Employees are entitled to take off two hours (under California law) to vote, without losing any pay if they are working during that time period and will not have sufficient time outside of working hours to vote. Employees may take off as much time as they need to vote, but only two hours of that time will be paid. An employee can take time off for voting only at the beginning or end of their regular work shift, unless they make other arrangements with their employer. If an employee believes that they will need time off to vote, they must have notified their employer at least two working days prior to the election (California Elections Code Section 14000).

How Does the Electoral College Affect Voting Results?

While community associations don't have an Electoral College, they often have cumulative voting. Cumulative voting is not the same as the Electoral College, but sometimes it is just as complicated. Cumulative voting is designed to allow the minority in a community association the opportunity to place their candidate on the Board of Directors.

The Electoral College was established to maintain each individual state's power. This means that the President of our country, as in 2004, is elected by the Electoral College of State Representatives, rather than a direct vote by all of the individual citizens.

I read an interesting article on the Electoral College. California is not a battleground state. It is considered a "blue" state, and even though it is projected that a significant majority of California voters will vote for the "blue" candidate, the Electoral College has rendered those votes almost meaningless.

Even though California has more electoral votes than any other state, 55, and even though our 36 million population is by far the largest, about 12% of the entire country (or almost 1 out of every 8 Americans), California is considered a nonentity in this Presidential election. Texas has the second-highest population, with almost 8% of the country's population and 34 Electoral College votes. It is considered a "red" state.

The article by California attorney Mark Neubauer states that this election, "like so many before, will be decided by a handful of far smaller states, such as Missouri, which has less than 6 million inhabitants, under 2% of the population, and only 11 electoral votes."

He goes on to state, "the reason for this undemocratic election of a democratic President lies in a system designed more than two centuries ago. In its infancy, the United States was a collection of separate state governments, each jealous of the other. To maintain each individual state's power, they set up a system where the President of our country is elected by an Electoral College of State Representatives, rather than a direct vote by all of the individual citizens. Only Nebraska and Maine divide their Electoral College delegates between the candidates. Margins of victory in individual states become irrelevant if the state is already clearly predicted in one political camp or the other."

This means that despite California's millions of voters who will likely vote overwhelmingly for the "blue" candidate, that margin of victory will have no impact on the final decision "compared to the close races in the Midwest and Southeast." California, Texas and "blue" state New York, with approximately 25% of the nation's population, are effectively watching this election from the sidelines.

You may download Mr. Neubauer's full article here.

And all this time you thought that the 2006 amendments to the Civil Code changing the way associations held elections was complicated.