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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David C. Swedelson, Esq., CCAL joins Timothy Cline, CRIMS and Tony Menke, CPCU of Cline Insurance to discuss tendering insurance claims for your association, including when you should tender losses to the carrier for various lines of coverage. This is great advice for community association managers and board members alike. It makes a world of difference if you understand your policies, how and when to file insurance claims or put a carrier on notice, and what can happen when you don’t. Catch the podcast here:
https://www.hoashow.org/episode-when-to-tender-claims-to-the-insurance-carrier/

From the Community Association Attorneys at SwedelsonGottlieb.

Screenshot_5_25_21__5_49_PM-300x215Most California community association common area recreational amenities like pools, gyms, and tennis courts remain closed since March 2020, even though some restrictions have lifted. As the number of people who have been vaccinated increases, schools reopen, the state reopens, and more counties are opening throughout California, many associations wonder if it is time to revisit opening their amenities.

Does your community association have a plan? Does your community association need one? The answer is YES! In fact, it is required.

vote-by-acclamation-300x300California community association attorneys, managers and others in the industry have differing opinions on how to properly and legally proceed with uncontested elections — elections in which the number of candidates is less than or equal to the number of board positions needed to be filled.  Prior to 2020 when the election process and procedures were changed, the civil code did not expressly address voting by acclamation. Since 2020, the law has changed, permitting a vote by acclamation in narrow circumstances. Specifically, if an association is over six thousand units. We have heard that some attorneys are telling clients that they can still hold a vote by acclamation if their association has less than 6,000 units. We disagree.

The California Civil Code requires, despite contrary provisions in an association’s governing documents or election rules, that all board member elections, including uncontested elections other than for associations that are 6,000 units or more, be conducted utilizing secret balloting.  Associations must abide by these statutory requirements, including holding an election meeting and counting the ballots even if the number of candidates running is equal to or less than the number of board positions to be filled.

The primary, and perhaps most legally sound reason for abiding by formal procedure requirements is the language found in CA Civil Code 5100, which states that “(n)otwithstanding any other law or provision of the governing documents, elections regarding…election and removal of members of the association board of directors….shall be held by secret ballot in accordance with the procedures set forth in this section.” Surprisingly, however, not all community association attorneys agree that the word “shall” is mandatory, requiring that associations hold an election when, in their opinion, deeming the board voted in by acclamation as appropriate. But, there is strong legal precedent to the contrary and association’s would be remiss to follow this advice.

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