From the Community Association Attorneys at SwedelsonGottlieb

Is_It_Finally_Time_To_Buy_A_Condo_-300x174The U.S. Department of Housing and Urban Development (HUD) has finally published the long-awaited final revisions to the Federal Housing Administration’s (FHA) condominium project approval rules. The FHA does not originate loans for purchasing condos, but rather insures these loans for borrowers who might not otherwise qualify for traditional financing requiring a 20% down payment. In practice, these changes will give more people access to FHA-insured financing, which should in turn provide many Californians with a better chance of purchasing a condo. The new rules go into effect on October 14, 2019.

Some of the most significant changes in the FHA regulations include:

• The FHA is once again authorized to approve and insure up to 10% of individual loans in a condo project (formerly called “spot,” and now called “single-unit” approval), as long as the condo association as a whole is financially stable.  The FHA may also insure these loans if the condo project itself has not obtained FHA approval, which can be an expensive and cumbersome process for many condo associations.

From the Community Association Attorneys at SwedelsonGottlieb new_laws_2019_rev_pdf_-_Google_Drive-2-300x141

It is no secret that community associations are often targets for embezzlement. But they are not alone. Newspaper articles tell us that it happens to various types of businesses and organizations, even attorneys and lawyer/bar organizations. Fraud and embezzlement seems more likely to occur when no one is watching those that control the checkbooks. And unfortunately, many many condominium, stock cooperative and planned development boards of directors become too trusting and they don’t keep an eye on what their manager or treasurer are doing.

To ensure that community associations are better protected, the California legislature passed AB 2912, acknowledging that associations are susceptible to fraud and embezzlement, and that more is needed to completely achieve the goal of protecting community association funds. Pay close attention as there are new requirements for both managers and boards amending two sections of Civil Code and adding three new ones. AB 2912 made the following changes to the law:

By the Community Association Attorneys at SwedelsonGottlieb new_laws_2019_rev_pdf_-_Google_Drive-3-300x147

Through SB 261, the California Legislature fixed some issues with prior legislation dealing with delivery of notices and related matters and generally fixed some issues that had come up after prior legislation was adopted. This bill became effective in January 1st and amends the following existing sections of the Civil Code as stated:

• Email Consent to Document Delivery — Civil Code §4040 (Individual Notice), which allows for individual delivery of notices and other documents by email if an owner consents to this in writing was amended to allow an individual owner to permit/revoke consent to allow individual notice by email. While most attorneys thought that an email was considered a writing, this amendment eliminates any confusion.

Stupid-lawA senate bill seeking to prohibit California community associations from establishing qualifications for candidates to run for their boards of directors among other changes and requirements (including possible invasion of owner privacy) is a dumb idea that would create bad law.

On April 5th, Los Angeles Times’ Sacramento columnist George Skelton noted that the California legislature passed nearly 1,000 bills in 2017: “A few were important. Most were not. Many were frivolous, some dumb – a waste of politicians’ time and public money. . . There are many bills pending in the legislature again this year that the state could do just fine without.”

One bill I think the State could do just fine without is SB1265. And if you live in a California community association, I think you’ll agree. You should IMMEDIATELY let the legislature know that this legislation is unnecessary, and that the State could do just fine without SB1265. Let me explain how I and many others in the industry came to this conclusion.

By Joseph L. Gilman, Esq., Associate at SwedelsonGottlieb, Community Association Attorneys

peaceful_assembly_-_Google_Search-300x211 Effective January 1, 2018, Civil Code Section 4515 was added to the Davis-Stirling Act to protect certain rights of political speech and peaceful assembly within the boundaries of a common interest development.

Senator Bob Wieckowski originally presented new Civil Code Section 4515 to California’s legislature as Senate Bill 407. Remarking on his proposed legislation, Senator Wieckowski stated that it “will prevent HOA boards and management from denying basic rights to their residents” as “Boards have fined and threatened legal action against homeowners for simply exercising basic political free speech rights. Millions of Californians live in these associations and SB 407 is needed to prevent these abuses.” While we have no experience with these types of “abuses,” we understand the basis for this new legislation.

As enacted by California’s legislature, Civil Code Section 4515 (which became effective January 1, 2018) protects political speech and assembly rights by invalidating any provision of an association’s governing documents (which includes rules) that prohibits the following:

• Peacefully assembling or meeting, at reasonable hours and in a reasonable manner, for purposes related to common interest development living, association elections, legislation, election to public office, or the initiative, referendum or recall process.

• Inviting public officials, candidates for public office, and representatives of homeowner organizations to meet with members and residents and speak on matters of public interest.

• Canvassing and petitioning the members and residents for purposes related to the topics listed above.

• Distributing or circulating, without prior permission, information about the topics listed above or other issues of concern to the members or residents, at reasonable hours and in a reasonable manner.

Civil Code Section 4515 also invalidates any provision requiring a member or resident to pay a fee, make a deposit, obtain liability insurance, or pay the premium or deductible on the association’s insurance policy, in order to use a common area for any of the meetings described above. Continue reading

By Nicholas Marfori, Esq. and David Swedelson, Esq., Community Association Attorneys at SwedelsonGottlieb

ugly_solar_panels_on_roof_-_Google_Search-300x224As you may have heard, the Governor signed into law new legislation that now changes a California condominium’s associations ability to prohibit an owner from installing a solar energy system on the common area roof. AB 634, which went into effect on January 1, 2018, amended several provisions of the California Civil Code to set forth language that further clarifies what condominium associations can and cannot do with respect to the installation of an owners own solar energy system on a common area roof and exclusive use common.

As originally enacted, Civil Code § 714 and § 714.1 already prohibited associations from imposing unreasonable restrictions against the installation of solar energy systems on common areas and on a separate interest owned by another owner. AB 634 amends Civil Code § 714.1 to further clarify that associations are prohibited from doing the following:

equitable_foreclosure_-_Google_Search-300x180By Brian Moreno, Senior Associate at SwedelsonGottlieb, Community Association Attorneys

In the assessment collection arena, there have been a number of pro-homeowner court decisions that affect a community association’s ability to collect unpaid HOA/Condo assessments. First, courts have held that associations must accept partial payments, which has allowed homeowners to attempt to avoid foreclosure by paying only delinquent assessments reducing the assessment balance below the $1,800 (or 12-month) threshold. Second, courts have held that an association must strictly comply with the Davis-Stirling Act with regard to imposing an assessment lien against a delinquent owner’s property and foreclosing that lien. These rulings create additional challenges for an association attempting to collect delinquent assessments.

Consequently, in recent years, community associations have attempted to adjust their collection policies and procedures in response to these court decisions; however, owners are continuing to take advantage of these new laws for purposes of challenging assessment liens and tendering partial payments to reduce their assessment balance, leaving attorney fees, costs, interest and trustees fees unpaid. Homeowners are becoming more savvy in challenging assessment liens and obstructing the association’s attempts to foreclose.

Given this, what are an association’s options if a seemingly defective lien has been recorded? What if an owner pays only assessments in an attempt to avoid paying the collection fees? What are the association’s options?

Continue reading

By Sandra Gottlieb, Esq. CCAL, Senior/Managing Partner, SwedelsonGottlieb, Community Association Attorneys

The_Communicator_-_Volume_10__Issue_1-300x185Recent legal Developments affect community association interests in a variety of ways. In 2017, the California Court of Appeal decided several cases concerning such issues as title to common area and board member liability. These cases may be instructive to board members and managers. Meanwhile, on the legislative front, new and pending laws affect association interests in the areas of governance, business dealing, FHA certification, annual notifications and use restrictions. Though not a complete or authoritative guide, we hope this article (published in the Winter 2017 Volume 10, Issue 1 of the Communicator, Community Association Institute/Bay Area/Central California Chapter’s news magazine) can be a useful resource for the most relevant legal updates this year. Follow this link or click here to download the article.

Sandra Gottlieb is a community association legal expert who has devoted her practice and that of SwedelsonGottlieb to the representation of California CIDs and HOAs. She can be contacted via email at slg@sghoalaw.com

checklist_-_Google_SearchSwedelsonGottlieb annually updates and publishes its Disclosure and Notice Checklist as a resource for Managers and Board Members of California Community Associations. The updated Checklist is 14 pages (there are a lot of things that California community associations are required to give notice of or disclose) and sets out what disclosures and notices California community associations are to provide to homeowners, when and how they are to be provided, as well as other considerations. Included is information regarding the Code requirements for the Annual Budget Report, the Annual Policy Statement, Fiscal Year End Disclosures, and other Additional Disclosures/Notices. We have included information regarding the recent changes to Civil Code Section 4041 relating to the solicitation of owner mailing addresses, etc. and the required New Management Disclosures. Follow this link to download your copy of this important resource.

balcony_waterproofing_-_Google_Search-300x232By David C. Swedelson, Community Association Attorney at SwedelsonGottlieb

Many California community association’s CC&Rs, particularly those in older communities, do not clearly state who is responsible for the repair or replacement of exclusive use common area. This typically relates to the waterproofing of patios and balconies at most condo associations. That is the exclusive use area defined in the CC&Rs that requires repair and/or replacement (for most condominium associations, exclusive use common area is limited to balconies, patios and parking spaces). Before January 1st of 2017, there was some uncertainty as to who is responsible for the repair or replacement of exclusive use common area which led to disputes between associations and owners.

Fortunately, amended Civil Code Section 4775 helps clarify this issue. If the CC&Rs are not clear, we look to Civil Code Section 4775. That section, like former Civil Code section 1364, its predecessor, had since the mid 1980s provided that the association is responsible for repairing, replacing, or maintaining the common area, other than exclusive use common area, and the owner of each separate interest is responsible for maintaining that separate interest and any exclusive use common area appurtenant to the separate interest.

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