SwedelsonGottlieb 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.
By David Swedelson, Partner at SwedelsonGottlieb, Community Association Attorneys
As we previously reported, (follow this link) Section 5300 of the Civil Code was amended in 2015 and becomes effective as of July 1st of 2016. The changes to section 5300 of the Civil Code requires California community associations to include statements in their annual budget reports disclosing whether the Association is certified by the Federal Housing Administration (FHA) and Veterans Affairs (VA).
If an Association’s fiscal year runs on or after July 1, 2016, it will be required to include the FHA and VA required information in the Annual Budget Report.
By Sandra L. Gottlieb, Esq., Senior Partner and Mark Petrie, Marketing Coordinator at SwedelsonGottlieb
On August 12, 2015, Governor Brown signed AB 596, which adds the following two new required disclosures to the Annual Budget Report for California condominium associations (this does not include planned developments or other common interest developments).
(10) When the common interest development is a condominium project, a statement describing the status of the common interest development as a Federal Housing Administration (FHA)-approved condominium project pursuant to FHA guidelines, including whether the common interest development is an FHA-approved condominium project. The statement shall be in at least 10-point font on a separate piece of paper and in the following form:
“Certification by the Federal Housing Administration may provide benefits to members of an association, including an improvement in an owner’s ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.
This common interest development [is/is not (circle one)] a condominium project. The association of this common interest development [is/is not (circle one)] certified by the Federal Housing Administration.”
(11) When the common interest development is a condominium project, a statement describing the status of the common interest development as a federal Department of Veterans Affairs (VA)-approved condominium project pursuant to VA guidelines, including whether the common interest development is a VA-approved condominium project. The statement shall be in at least 10-point font on a separate piece of paper and in the following form:
“Certification by the federal Department of Veterans Affairs may provide benefits to members of an association, including an improvement in an owner’s ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.
This common interest development [is/is not (circle one)] a condominium project. The association of this common interest development [is/is not (circle one)] certified by the federal Department of Veterans Affairs.”
Yes, it’s true, California now requires associations with 25 or more separate interests that have a “public pool” must follow new (2015) daily and monthly testing requirements for the pool water. (Associations with less than 25 separate interests still have to test at least two times per week and at intervals no greater than four days apart.) There are no exceptions for homeowners associations; rather, the statute includes homeowners associations in the definition of “public pools”. Although associations of all sizes should ensure compliance with the entirety of the Pool Maintenance and Operation requirements of the California Code of Regulations, the big ticket obligations are as follows:
1. New parameters for water characteristics 2. Strict monitoring of public pool facilities (daily if 25 or more separate interests) and requirements for written records 3. Enforcement of specific safety and first aid equipment 4. Requirements that newly constructed public pool enclosures have at least one keyless exit and self-closing latches 5. Imposition of health restrictions for employees or pool users.
As mentioned above, associations with 25 or more separate interests are now obligated, on a daily basis, to test pool and spa/jacuzzi water and to keep a log of the testing daily. Testing can be done automatically if local enforcing authorities allow for same; otherwise, the manual test results must be maintained onsite as part of the association’s written records for at least a two-year period.
By Sandra L. Gottlieb, Partner at SwedelsonGottlieb, California Community Association Attorneys
A regular question posed by the board members of our community association clients is, “Can or should Board meetings and/or meetings of members be recorded by audiotape or videotape?” While some members may advocate taping meetings in order to promote transparency, taping of association Board meetings and meetings of members is illegal, unless each and every attendee, including the Board members, approves of the recording, in advance. Regardless, it is our opinion that the Board should not allow taping of any association meetings.
California Penal Code, Section 632, states that it is a crime to record a conversation that would be expected to be confined to the parties present without the consent of those present. This statute makes exceptions to public gatherings that one would expect to be overheard, including any legislative, judicial or executive proceedings open to the public. But homeowners associations, unlike many other quasi-governmental agencies, are not required to have meetings open to the public. In fact, meetings are generally open only to members of the association. Thus, the statute supports the argument that there is an expectation of privacy among those in attendance at those meetings. Although minutes of meetings are to be made available, upon request, to homeowners within thirty (30) days after a meeting of the Board, thereby leading some to believe that the discussions are also intended to be made available to those attending the meeting, that is not the case. Minutes are only supposed to include brief descriptions of items of business, motions and resolutions, not discussion. Therefore, a recording of any meeting would include discussions, as well as back and forth banter and comments, not just resolutions. Further, free speech is inhibited if people know that their every word would be on the record. If a member insists on recording after being told to stop such recording so that the Board can conduct the business of the association, the Board should adjourn the meeting.
Brown v. Professional Community Management, Inc.,
Berryman v. Merit Property Management, Inc., and
Fowler v. M & C Association Management Services, Inc.
It’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.
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.
By Mark Petrie, Paralegal/Marketing Coordinator and David Swedelson, Partner, SwedelsonGottlieb, Community Association Attorneys.
New legislation amending two of the transfer disclosure sections of the Davis-Stirling Act, Sections 4528 and 4530, will be effective January 1, 2015. Follow this link to review the changes and new language that will be effective next year.
As you may be aware, Section 4530 establishes the responsibility of an association to provide copies of governing documents, certain financial disclosures and other documents to an owner, or any other recipient authorized by the owner, within 10 days of receipt of a written request for same. The requirement to provide documents and information applies to the sale of a unit (in a condominium building), lot (in a planned development) or stock (in a co-op). We would have liked to have seen a change here to delete “any other recipient authorized by owner”, as there are issues raised by the association providing transfer disclosure documents directly to parties other than owners, e.g., the association has no privity of contract with those parties. But for now, the current language will remain.
We regularly advise our association clients to include a disclaimer when directed by an owner to provide transfer disclosure documents directly to a third party: “These documents are being provided to you in the limited scope of complying with a request of the owner of the unit/lot for same in accordance with Civil Code Section 4525, et seq. The delivery of these documents to you shall not constitute establishment of privity between you and the association, and such delivery shall not create any further responsibility for the association with respect to further disclosure of documents to you.”
The body of statutory law (as opposed to case law) governing California Community Associations, known as the Davis-Stirling Common Interest Development Act, went into effect on January 1, 1986. As the industry developed and matured over the last 27 years, approximately 50 changes and amendments were made to the Act. While those adjustments were well-intended, the net effect yielded a disorganized and confusing body of law. To address this problem, a multi-year effort was launched to rewrite the Davis-Stirling Act. This “new” Davis-Stirling Act, signed into law in 2012, becomes the guiding law for California residential community associations on January 1, 2014. So you are probably asking what are the major changes and how does the re-write affect reserve funding issues? The answer is no major changes have been made regarding reserve funding. For the most part, the new updated law amounts to new set of Civil Code references for reserve funding matters. Fortunately, the majority of the changes are just re-organization and renumbering. But there have been changes made to the Act as it applies to reserves.
To read the article prepared by David Swedelson and Robert Nordlund, follow this link.
Have you seen our videos from our recent event, “What’s New in the Davis-Stirling Act?” SwedelsonGottlieb Senior Partner Sandra Gottlieb explains it all for you – we’ve edited some video into sweet bite-sized sections. Follow the link below to access our videos and enjoy!