My Guest Post on CAI CLAC Blog regarding Newly Enacted Legislation Affecting Community Associations

I recently submitted a guest post on the CAI California Legislative Action Committee (CLAC) blog regarding AB 1720, and the new requirment it imposes on California gated communities to provide access to licensed private investigators for the limited purpose of effecting service of process. You can read the post and the analysis of the impact of AB 1720 here.

Department of Justice Stays Implementation of Pool Lift Requirment

While the American with Disabilities Act (“ADA”) generally doesn’t apply to Homeowners Associations, for those who need it, the Washington Times reported that on March 15, 2012 the DOJ issued 60 day stay on the requirement for public pools to have two “accessible means of entry.

While the American with Disabilities Act (“ADA”)  generally doesn’t apply to Homeowners Associations, for those who need it, the Washington Times  reported that on March 15, 2012, the DOJ issued a 60 day stay on the requirement for public pools to have two “accessible means of entry,” at least one of which must be a ramp or wheel chair lift. Public spas must also be accessible under the new rules. The DOJ may also consider a full six month extension to give pool owners additional time to address issues surrounding compliance with these requirements.

Some vendors are pressuring Associations to purchase these lifts, and some Boards are unclear as to whether they are actually required to install lifts at common area pools. Any association which has a question as to whether these rules apply to their pools should consult with counsel to determine if the ADA applies to the Association, and if compliance with these rules is required.

2012 Legislative Update for Community Associations

With the end of year approaching, it is a good time to review some of the new laws enacted in California during 2011 that impact our local community associations.

It’s that time of year again. With the end of year approaching, it is a good time to review some of the new laws enacted in California during 2011 that impact our local community associations. This is not a complete list of all new legislation, but rather brief summaries of the statutes and cases that will likely have the biggest impact on California HOAs. Any community association or manager that has questions on the impact of a new law should consult with their corporate counsel for clarification and details.

1.    SB 563    Board Meetings

As many directors and managers already know, the time it takes to successfully run an association can be significant. One of the tools that boards have often used to efficiently handle issues that are not the subject of debate has been the Action Without Meeting, or “AWOM.” Well, no more. This amendment to the Open Meeting Act eliminates a board’s ability take action without a meeting.

SB 563 prohibits boards from acting via email with the very limited exception of emergency meetings. Emergency meetings may be called “if there are circumstances that could not have been reasonably foreseen which require immediate attention and possible action by the board, and which of necessity make it impracticable to provide notice” as would otherwise be required. However, before a board can hold an emergency meeting via “electronic transmission” all members of the board, individually or collectively, must consent in writing to that action (the consent can be transmitted electronically, such as in an email), and the written consent must be filed with the minutes of the meeting of the board.

In addition to eliminating the AWOM, AB 563 also requires that members of the association be given at least two days notice for a meeting that will be held solely in executive session, and changes the rules for holding a meeting via teleconference. Under the new law, if a board meets via teleconference, the association must specify a physical location where members can attend in person and listen to the meeting. In addition, at least one board member must be physically present at the identified meeting location.

Lastly, the statute broadens the current definition of a meeting of the board from “any congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business scheduled to be heard by the board” to “any congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business that is within the authority of the board,” and includes in the definition of meeting, meetings by teleconference in which a majority of the board members, in different locations, are connected by electronic means, such as audio, video, or both.   “Item of business” is defined as any action within the authority of the board, except those actions that the board has validly delegated to any other person or persons, managing agent, officer of the association, or committee of the board comprising less than a majority of the directors.

2.     AB 771    Escrow Documents Provided to Prospective Purchasers

Associations are currently required to provide certain documents and information when the documents are requested by an escrow agent upon the sale of a unit. Under the new law, if requested, sellers are also required to provide twelve months of board meeting minutes. In addition, in responding to a record request, associations must now use a specific form set forth in new Civil Code section 1368.2 in responding to the request.

New Civil Code section 1368.2 provides a form that associations must use in fulfilling a record request pursuant to Civil Code Section 1368.

Lastly, associations may charge a reasonable fee based on the actual costs incurred to provide the requested documents and information; however, no such fee is permitted if the documents and information are to be delivered electronically.

3.    SB 150    Rental Restrictions

SB 150 limits the ability to restrict rentals within community associations. Previously, community associations had the ability to amend their Governing Documents to restrict rentals so long as the amendment was reasonable and have the restriction apply equally to all owners. Under the new law, any amendment designed to prohibit renting of property in an association will only apply to owners who purchase the property after the amendment to the Governing Documents takes effect.

In dealing with the new law and rental restrictions one must first ask “does it apply?” The new law is “prospective.” This means the law only applies to rental restrictions adopted on or after January 1, 2012. Rental restrictions were established prior to 2012 are not affected.

What About Rental Restrictions Adopted After January 1, 2012?

All owners who already owned their property prior to the post January 1, 2012, rental restriction would be “grandfathered” in and would be able to rent anytime they want, until they transfer title to their property.

The new law will define types of transfers. Some will allow the new owner to keep the “grandfathered” status (for example, when an owner transfers title into his or her own living trust, or gives title to a child, or the property is inherited). For other transfers (routine sales of property), the new owner will not be “grandfathered” in and may or may not be able to rent, depending on how many other properties are rented in the community at the time.

What About Disclosures?

Disclosures in escrows will need to include clear information about limitations on rentals in each specific community beginning January 1, 2012. This will include then need to provide information about both whether the association has a restriction on rentals and information what rental limitations are in place.

Other Things to be Aware of

• The new law does not apply to commercial common interest developments. They may continue to enact rental restrictions without regard for the provisions of the new law.

• While it is not absolutely clear (and it won’t be until a court decides the issue), it appears that only “prohibitions” are outlawed; lesser restrictions, such as 30-day minimums or requirements that only the entire dwelling may be rented, might be permitted under the new law.

• The new law adds a requirement that, prior to renting or leasing a dwelling, an owner “shall provide the association verification of the date the owner acquired title and the name and contact information of the prospective tenant or the tenant’s representative.” How this will be enforced is yet to be seen.

4.    SB 209    Electric Vehicle Charging Stations

SB 209 restricts an association’s ability to prohibit the installation of electric vehicle charging stations (“EVCs”), and renders void and unenforceable any provision that prohibits or restricts the installation or use of an EVC. However, associations retain the right to impose “reasonable restrictions” on the installation of EVCs. Such “reasonable restrictions” are those that “do not significantly increase the cost of the [EVC] or significantly decrease its efficiency or specified performance.” In addition, the stations are required to meet applicable health and safety standards and to comply with the Building Code requirements.

Associations are required to process applications for approval for the installation of charging stations, if applications for architectural modification are required by the association’s governing documents, in the same manner as other applications for architectural modifications.  Approval or denial is required to be in writing, and the association’s approval cannot be willfully avoided or delayed.

Other requirements to installation of EVC’s include that owners wanting to install them hire a licensed contractor for the installation, provide a certificate of insurance in the amount of at least $1,000,000, which names the association as an additional insured. Additionally, the owner must pay the costs of electricity associated with the station, and  shall be responsible for all damage to the station, common areas, exclusive use common areas or units caused by the station. The owner must also be responsible for all maintenance, removal, repair and replacement of the station and must disclose the existence of the station to prospective purchasers.

5. SB 183 Carbon Monoxide Detectors

SB 183 requires the presence of carbon monoxide (“CO”) detectors in all “single family dwelling units intended for human habitation” and “…having a fossil fuel burning heater or appliance, fireplace, or an attached garage” beginning July 1, 2011 and for all other dwelling units by January 1, 2013. This law impacts any association which has taken title to property and is renting it out.

Click Here to Download a PDF version of our 2012 Legislative Update.

Governor Signs Bill Putting End to Actions Without Meeting

As many directors and managers already know, the time it takes to successfully run an Association can be significant. One of the tools that Board’s have often used to efficiently handle issues that were not the subject of debate has been the Action Without Meeting, or “AWOM”. Well, no more.

As many directors and managers already know, the time it takes to successfully run an Association can be significant. One of the tools that Boards have often used to efficiently handle issues that were not the subject of debate has been the Action Without Meeting, or “AWOM”. Well, no more. California Governor Jerry Brown has now signed, bill SB 563 which becomes effective January 1, 2012, and amends the Open Meeting Act to eliminate a Board’s ability take action without a meeting.

In addition to eliminating the AWOM, SB 563 also requires that members of the association be given at least two days notice for a meeting that will be held solely in executive session, and changes the rules for holding a meeting via teleconference. Under the new law, if a Board meets via teleconference, the Association must specify a physical location where members can attend in person and listen to the meeting. In addition, at least one Board member must be physically present at the identified meeting location.

Lastly, Boards will be prohibited from acting via email with the very limited exception of emergency meetings. Emergency meetings may be called “if there are circumstances that could not have been reasonably foreseen which require immediate attention and possible action by the board, and which of necessity make it impracticable to provide notice” as would otherwise be required. However, before a Board can hold an emergency meeting via “electronic transmission” all members of the board, individually or collectively, must consent in writing to that action (the consent can be transmitted electronically, such as in an email), and the written consent or consents must be filed with the minutes of the meeting of the board.

Read the full text of the new law here.


2009 California HOA Legislative Update

With the end of year upon us, I thought it would be a good time to post a summary some of the laws enacted in California during 2009 that impact our local homeowners associations. This is not a complete list of all new legislation, but rather brief summaries of the statutes I believe will have the biggest impact on California HOAs. The full impact of 2009 California legislation on an HOA will require a more detailed analysis. Any HOA that has questions on the impact of a new law should consult with their corporate counsel.

Just a BillWith the end of year upon us, I thought it would be a good time to post a summary some of the laws enacted in California during 2009 that impact our local homeowners associations. This is not a complete list of all new legislation, but rather brief summaries of the statutes I believe will have the biggest impact on California HOAs. The full impact of 2009 California legislation on an HOA will require a more detailed analysis. Any HOA that has questions on the impact of a new law should consult with their corporate counsel.

1. AB 313 (Fletcher) Assessments

This statute will allow those HOAs whose declarations allow assessments to be based on the assessed value of the individual separate interests to continue to assess in this fashion, but will prohibit other existing and newly formed HOAs to do so.

2. AB 899 (Torres) Disclosures

This statute imposes three new requirements on HOAs. The first requirement is that the title of the Assessment and Reserve Funding form disclosure must now include the ending date of the fiscal year for which it was prepared, and the form must disclose the rate of return and inflation rate assumptions used by HOA in its reserve planning.

The second requirement this statute places on HOAs relates to agreements by members to receive delivery of documents via email, facsimile or other electronic means.  Such agreements must now comply with consumer consent and disclosure requirements of California Corporations Code section 20, and the Federal E-Sign Statute, 15 U.S.C. section 7001(c)(1).

Lastly, this statute adds a new section to the Davis-Stirling Act, Civil Code, section 1363.005, which requires every Association to distribute, upon request by a member, a document disclosure index identifying the disclosures provided by the HOA, along with a reference to the Civil Code section requiring that disclosure.

3. AB 1061 (Lieu) Water-Efficient Landscapes

This statute is one I have written about before here on HOA Brief. This statute amends section 1353.8 of the Davis-Stirling Act, and restricts an HOA’s architectural standards and other governing documents from prohibiting or providing conditions that hinder or prohibit use of low-water usage plants. In addition, this statute requires compliance with local water ordinances.

4. AB 1233 (Silva)

AB 1233 amends the Non-Profit section of the California Corporations code relating to nonprofit mutual benefit corporations (most HOAs in California are non-profit mutual benefit corporations). Subject to certain limitations, AB 1233 authorizes the articles or bylaws to require the presence of one or more specified directors in order to constitute a quorum to transact business. In addition, this statute prohibits a committee exercising the authority of the board from including as members persons who are not directors of the corporation. However, the statute does not prevent a committee which is not exercising the authority of the board from including a non-board member on the committee.

In my opinion, this statute is also the most troubling for HOAs. This statute also alters the protections afforded directors where the HOA had appropriate insurance in place. Prior to the passage of this statute, existing law prohibited a cause of action for monetary damages from arising against any director or officer of a nonprofit corporation, who served without compensation, on account of any specified negligent act or omission if the HOA had a general liability insurance policy in a specified amount in force both at the time of the injury and at the time the claim was made. With the enactment of this bill those causes of action now are only prohibited if the HOA maintains a liability insurance policy that is applicable to the claim. That means that if a claim is not covered, the directors may face liability, despite the fact that there is a general liability policy in place. I fear this will have a negative impact on the ability of HOAs to get people to volunteer and serve as directors. This is already difficult enough. There are many communities where people refuse to serve, and there are perpetual openings on the board. Now people who already hesitate to serve will have another reason to refuse to do so.