California HOAs can be notified when bank Forecloses on a Property

One of the issues many homeowners associations are dealing with in light of the recent rise in foreclosure is not knowing when a bank takes over ownership of a property following foreclosure. Without this information, associations often go months without knowing who is liable for the payment of monthly assessments, and where to send monthly assessment bills.

The California legislature provided some limited assistance to California homeowners associations earlier this year . . .

One of the issues many homeowners associations are dealing with in light of the recent rise in foreclosure is not knowing when a bank takes over ownership of a property following foreclosure.  Without this information, associations often go months without knowing who is liable for the payment of monthly assessments, and where to send monthly assessment bills.

The California legislature provided some limited assistance to California homeowners associations earlier this year when it amended Civil Code Section 2924b(f) to permit homeowners associations in California to record a document requesting a copy of a Trustee’s Deed Upon Sale recorded by anyone authorized to record a Notice of Default against real property. Once an HOA records the request, a lender is supposed to provide notice to the address contained in the request within 15 days after recording the deed.

While an association that files the proper form may receive earlier of a bank having taken over a property, unfortunately no penalties for not providing the required notice to the association. Nevertheless, homeowners associations in California should avial themselves of this relatively cost effective option to improve the likelihood they will receive timely notice when a bank takes over a property within the development.

California Bill Which Would Void CC&Rs Gathers Steam

Assembly Bill 1061 bill sailed through its first test Tuesday with unanimous approval from the Assembly Water, Parks and Wildlife Committee. Under the bill, homeowner association rules would be “void and unenforceable” if they restrict compliance with local landscaping ordinances or conservation measures.

low-water-landscapeAssembly Bill 1061 bill sailed through its first test Tuesday with unanimous approval from the Assembly Water, Parks and Wildlife Committee. Under the bill (previously covered here), homeowner association rules would be “void and unenforceable” if they restrict compliance with local landscaping ordinances or conservation measures.

While the goals of the bill may be admirable, it is written so broadly it could disrupt homeowner groups’ authority to review an individual homeowner’s landscaping plans that spell out the type, number and placement of plants.

Many people chose to live in developments with association rules because they like the appearance of common landscaping, architectural design and colors.  While the state may have an interest in conservation, it is hoped that the legislature will amend the bill to need to protect the interests of homeowners who purchase in a common interest development because they like the fact that the uniform rules help preserve property values, and improve the general appearance of a community.

I still suspect that the bill is largely unnecessary and disputes over the installation of drought tolerant plants are rare.  I would love to hear if anyone has been involved or is aware of such disputes within their association.

Proposed California Bill Lets Water Agency Trump Homeowners Association Rules

California’s AB 1061, introduced on February 27 by Assemblyman Ted Lieu would repeal a portion of the Davis-Stirling Act as it relates to water efficient plants.

landscaping-with-drought-tolerant-plants-2California’s AB 1061, introduced on February 27 by Assemblyman Ted Lieu would repeal a portion of the Davis-Stirling Act as it relates to water efficient plants.  Currently, the Davis-Stirling Act provides that the architectural guidelines of a common interest development shall not prohibit or include conditions that have the effect of prohibiting the use of low water-using plants as a group.  AB 1061 would enforce a model conservation ordinance that state officials plan to complete next year. Local water districts would be able to use the model ordinance as a blueprint for their own conservation rules.  As long as the water districts obey the model ordinance guidelines, anything in the rules of a community association development that conflicts with local water district’s regulations or restrictions would be “void and unenforceable.”

Water wholesaler Metropolitan Water District is sponsoring the legislation claiming the bill clarifies how homeowners can install water-efficient landscaping without running afoul of association rules. With California in a drought and rationing under way or looming in many districts, the agency claims it is looking for any way to stretch out its supplies. However, one has to wonder whether the bill is even necessary since there have only been isolated instances of conflicts between homeowner members eager to save water and associations that outlawed particular types of water-efficient landscaping.

Nevada Bill Limits Restrictions on Solar Energy Systems

The Nevada Senate voted Monday for an alternative energy bill that would limit a homeowner association’s ability to restrict the installation and use of solar energy systems.

Solar Energy System

The Nevada Senate voted Monday for an alternative energy bill that would limit a homeowner association’s ability to restrict the installation and use of solar energy systems.

Sen. Mike Schneider, author of SB 114, says the bill strengthens existing laws that already prohibit homeowner associations from interfering with installation of solar energy systems. Currently, a homeowners’ association in Nevada can impose restrictions that, while not prohibiting solar energy systems, could make them so much more costly and so much less efficient that the restrictions effectively act as a prohibition.

Under the bill, the director of the Nevada Office of Energy would have final say as to whether a restriction imposed by a homeowner association violates the rights of a homeowner to use or install a solar energy system.

The proposed bill also deems any restrictions that reduce efficiency of solar energy systems by more than 10% to be unreasonable.

Coupled with California’s Climate Change Solutions Act, a clear trend is emerging requiring HOAs to focus more attention on all aspects of energy efficiency.

L.A. Times Gets it Wrong. Homeowners Do Not Have a Right to Review an HOA’s Legal Bills.

The Times got it wrong recently when their HOA advice column recently responded to a homeowner who had been denied a request to review the association’s legal bills.

With this level of quality advice, it’s no wonder the L.A. Times‘ readership is declining.  The Times got it wrong recently when their HOA advice column responded to a homeowner who had been denied a request to review the association’s legal bills. In their question the homeowner stated that they had asked to review the association’s legal bills and received a response from the association’s attorney denying the request on the basis that the legal bills were subject to the attorney client privilege, and that a member’s right to review association documents does not extend to documents subject to the privilege.  The association’s counsel even provided a cite to Smith vs. Laguna Sur Villas Community Assn. (2000) 79 Cal.App.4th 641.  In that case, the court discussed how, as a corporation, it is the association who is the client not the individual members.  The Court went on to deny homeowners their request to review the association’s attorney bills in that matter.

The Times correctly notes that California Civil Code Section 1365.2 states, “Except as provided by the attorney-client privilege, the association may not withhold or redact information concerning the compensation paid to employees, vendors or contractors.”  However, the Times gets it terribly wrong in claiming that “the association may not withhold or redact information concerning the compensation paid to employees, vendors or contractors, including attorneys, who are just another vendor hired by the association.”

Attorneys are not “just another vendor.”  Communications with a painter, landscaper, maintenance company or manager are not subject to a privilege that makes them confidential.  Communications with attorneys are.  This is an important distinction. Civil Code Section 1365.2 specifically excludes documents which are subject to the attorney client privilege from a member’s right of review

The Times relies on Civil Code Section 1365.2(d)(1)(E)(iv) to support their answer that homeowners are entitled to review attorney bills.  However, that section only states that, for the purposes of that section, contracts for legal services are not privileged and cannot be withheld from members on the grounds that they are subject to the attorney client privilege.  However, a contract for legal services is not the same as a billing statement, which is what the homeowner wanted to review.

Contracts for legal services are simply retainer agreements. They describe the services the attorney will perform and the rate to be charged for such services. Attorney billing statements contain detailed descriptions of the work performed by the attorney.  If they were revealed, such statements could be used against the association in any pending litigation or other matters.  As the Laguna Sur Villas Community Assn. Court points out, unlike directors, residents owe no fiduciary duties to one another and may be willing to waive or breach the attorney-client privilege for reasons unrelated to the best interests of the association.

The association’s attorney was correct in responding to the homeowner’s request to review the billing statement. The Times just got it wrong.