committee-300x300Does your board table decisions because you can’t get through all of the discussion? Is there a big project that your association needs to complete, but the minutia of it is overwhelming the board? Don’t let the added work hold you back. Recruit volunteers from the membership to assist the board through the creation of a committee.

Under Corporations Code § 7212, the board of directors of a community association may, subject to the association’s governing documents, vote to form one or more committees that serve at the pleasure of the board. There are two basic types of committees: committees with decision-making authority—such as an executive “committee of the board” made up entirely of directors to which the board has delegated certain powers, or an architectural review committee—and advisory committees, which merely provide the board with non-binding information and advice regarding specific issues, such as a social committee.

A special type of committee, applicable only to community associations, is a “subcommittee” of the board consisting of the treasurer and at least one other board member that performs the required monthly review of the association’s finances, which is required under Civil Code § 5500, independent of a board meeting. When this subcommittee performs this financial review, the board must ratify that review at the next open board meeting and note that ratification in the meeting minutes.

preliminary-notice-300x300Under California law, most licensed contractors or suppliers that provide labor, services, equipment, or materials on projects involving the common area of a community association are entitled to record a mechanic’s lien or issue a stop payment notice if they are not paid for their work or materials. Associations involved in such projects often receive 20-day “preliminary notices” from vendors and wonder what they are and what, if anything, they are supposed to do with them. Contractors are required to send these preliminary notices to associations to preserve their rights to record mechanic’s liens or issue stop payment notices. The preliminary notice must contain certain information, including a description of the nature and estimated cost of the work, the identities of the parties, and the location of the property in question, as well as a boldfaced “Notice to Property Owner” statement. Contractors that are under direct contract with an association (such as a “general” contractor that hires subcontractors aka “subs” for a project) are not required to serve a preliminary notice on the association, because the association is presumably already aware of all of the information that a preliminary notice would otherwise contain. Direct contractors are instead required to serve preliminary notices on the actual or reputed construction lender for the project.

On the other hand, contractors that are not under direct contract with an association, such as subcontractors, must serve a preliminary notice on the association, the actual or reputed direct contractor for the project, and any actual or reputed construction lender. Therefore, most preliminary notices that associations receive will be from subcontractors. Generally, preliminary notices are sent via first-class registered or certified mail, express mail, or overnight delivery. As long as an association recognizes the information in the preliminary notice, generally speaking there is nothing special that it needs to do, as serving a preliminary notice on an association does not change a contractor’s rights, it merely preserves them. Sometimes, contractors request that an association acknowledge in writing that they received a preliminary notice. While signing such a preliminary notice is generally unnecessary, an association may choose to do so anyway, as a courtesy and to keep the project moving.

Inclusive_Progressive_Pride_flag-300x186The United States Equal Employment Opportunity Commission (“EEOC”) recently created a new webpage with helpful practical information to guide employers and employees about employment discrimination based on sexual orientation and gender identity. This new webpage provides additional clarity about sexual orientation and gender identity protections based on the 2020 Supreme Court decision in Bostock v. Clayton County (decided on Jun. 15, 2020). In Bostock, the Supreme Court held that those firing individuals because of their sexual orientation or transgender status violated Title VII’s prohibition on discrimination because of sex. Title VII is part of the Civil Rights Act of 1964, a national law that prohibits employment discrimination based on protected classes of people such as race, color, religion, sex, and national origin.

The new webpage is intended to function as one comprehensive resource to educate employees, applicants, and employers about the rights of all employees, including lesbian, gay, bisexual, and transgender workers, to be free from sexual orientation and gender identity discrimination in employment. In addition, the new webpage includes information on related topics of harassment and retaliation. Although Title VII and Bostock only apply to employers with 15 or more total employees and does not generally apply to independent contractors, associations with any employees can still learn best practices from these new EEOC resources to prevent discrimination (and liability) in the workplace.

We share below some important reminders and takeaways from the recently published resources:

Did-You-Know-300x300When SB 323 took effect on January 1, 2020, it greatly modified the Davis-Stirling Common Interest Development Act’s election procedures, including timelines for conducting an election. In the process, it inadvertently created a conflict in the law regarding recall elections that community associations have been struggling with ever since.

Corporations Code §§ 7510 and 7511 state that when 5% of the members of a nonprofit mutual benefit corporation submit a written petition to the board of directors to request a special meeting of the members (which is basically the process for initiating a recall election), the board is required, within 20 days after it receives the petition, to schedule the special meeting on a date that is not fewer than 35 and not more than 90 days after the date it received the petition.

However, Civil Code § 5100 states that notwithstanding any other law (including the Corporations Code), community association elections legally requiring a member vote, including election and removal of directors, must be held by secret ballot in accordance with the Davis-Stirling Act’s election procedures, and Civil Code § 5115 provides a timeline for such elections that is at least 90 days.

insurance_crisis_-_Google_Search-300x107Many California community associations are dealing with massive and significant increases in their insurance premiums. These increases were not anticipated and as a result they are unbudgeted requiring that boards levy emergency special assessments, borrow from reserves or otherwise find the money to pay the increased cost of insurance.

It is estimated that about 14+ million Californians live or own a home or unit in a community association. All of their associations are required to obtain insurance coverage. Insurance professionals are reporting that the trend to decrease coverage and increase assessments and fees are not sustainable and will soon become prohibitive.

Some communities have had their policies canceled or not renewed and have been unable to find coverage.

Disclosure_-_Overview__How_It_Works__Importance__Limitations-300x198It is fall, and for most California community associations, it is budget season and boards and managers are in the process of preparing budgets for the 2022 fiscal year. Along with the next fiscal year’s budget, boards and managers need to be thinking of all of the disclosures that California law requires be made. That is why SwedelsonGottlieb annually publish this Checklist. The good news is that there are no major changes in the law relating to disclosures. But that does not mean that there are no other issues or disclosure requirements to consider.

There are issues that we discussed last year that need to be considered, if the association has not already taken action, including the now required balcony inspections, election rules, rental restriction changes, and accounting for bad debt associated with COVID-19.

In addition, economists are projecting inflation to hit associations in the coming year. We have already seen increased cost for materials, utilities, and insurance. Employees all over the state are demanding higher wages to return to work, which will have a trickle-down effect in every service the association receives, be it janitorial, landscape, management, or pool. Associations really need to contact their service providers, contractors and insurance broker to discuss potential increases in next years fees and costs. To respond to homeowner outcry that usually follows an increase in assessments, boards should be prepared to educate homeowners on the rising costs and the plan to keep the association financially stable.

Sometimes you do not even know there is an issue until someone raises a question.  Special thanks to Ryan Gesell from Cline Agency and to the managers that asked Ryan if Civil Code §§ 1102.6f and 1102.19, as added by AB-38 (2019), apply to homeowners’ associations; teaser alert:  they do!

We reviewed Civil Code §§ 1102.6f and 1102.19, Government Code § 51182 which relates to the aforementioned Civil Code sections, and all related material from the Office of the State Fire Marshal who is responsible for this fire prevention program. Civil Code §§ 1102.6f and 1102.19 and Government Code § 51182 do not contain limitations or exclusions as they relate to condominiums or lots; therefore, it appears that these laws apply to both condominiums and lots/planned developments.  Uggg!

Seller Disclosure Requirements

service-dogPlease catch Sandra L. Gottlieb’s article Dealing with Assistance Animals regarding processing reasonable accommodation requests for assistance animals featured in the CACM Fall Law Journal. In the article, Sandra discusses different types of requests, animal rules, and planning for accommodations. To read the full article, click here.

 

By David Swedelson, Esq. Partner and Community Association Attorney at SwedelsonGottlieb

Today, June 14th is Flag Day. So, why not a blog post on flags.

Banner_Banners_on_the_Condo_Board_-_WSJ-300x203I was forwarded an article on flying the American flag at community associations that appeared in the Wall Street Journal which motivated this blog post. According to the article, Flag Day commemorates the adoption in 1777 of the U.S. flag. The article (follow this link) goes on to say that “for condominium dwellers, celebrating could prove challenging. On account of condo by-laws dictating the appearance of units, it isn’t always Yankee Doodle Dandy when members wish to fly the American flag. Courts have addressed disputes of all stripes.” Spoiler alert, and as I will explain below, California has a statute that protects the right of an owner to fly a flag. But there are limits.

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Does your community association have a Membership List Use Policy and Agreement for when it grants a request for the association’s member contact list? In order to limit unrestricted use of the list, it should.

When a homeowner makes a demand for the association’s membership and contact list, aka its mailing list, it does not mean they get a free pass to use the association’s mailing list on an ongoing basis even if the owner was previously given the membership/mailing list for another purpose. That’s not the way the statute is written, and giving carte blanche would really invite abuse. If every owner could just request the membership list once for  a specific purpose, which then enabled them to use it whenever they wanted indefinitely into the future, this would create nuisances and potential privacy concerns for those owners who later opted out of providing their information.

According to Civil Code Section 5225, “A member requesting the membership list shall state the purpose for which the list is requested which purpose shall be reasonably related to the requester’s interest as a member. If the association reasonably believes that the information in the list will be used for another purpose, it may deny the member access to the list. If the request is denied, in any subsequent action brought by the member under Section 5235, the association shall have the burden to prove that the member would have allowed use of the information for purposes unrelated to the member’s interest as a member.” This language, on its face, implies that a member must request to use the membership list each time they wish to make use of it, as the provision of the list requires board approval of such use and the board to make a determination that the use of the list will be association related.

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