Tag: CC&Rs

What Does it Take to Amend the CC&Rs?

One of the questions that we are often asked is “What is required to amend the CC&Rs?” Civil Code section 1355 (Civil Code section 4270 starting in 2014) provides that an amendment to CC&Rs is effective after all of the following requirements have been met . . .

amendmentsOne of the questions that we are often asked is “What is required to amend the CC&Rs?” Civil Code section 1355 (Civil Code section 4270 starting in 2014) provides that an amendment to CC&Rs is effective after all of the following requirements have been met:

  • The requisite approval of the percentage of owners as required by the governing documents has been obtained,
  • Written certification of the approval by an officer of the association, and
  • Recordation of the amendment

While the specific approval required must be determined by looking at the specific set of CC&Rs, most such documents require the approval of a super-majority of owners, typically 67% of the total voting power. If the CC&Rs are silent on the required percentage of owner approval necessary to amend the CC&Rs, then Civil Code section 1355 provides that an amendment may be approved by a majority of all members.

If there are multiple classes of membership, it is not uncommon for the CC&Rs to require the approval of a super-majority of each class of members to also be required. In addition, certain types of amendments may require the approval of first mortgagees (the banks who hold the mortgages on the various units or residences in the association), or even the city. The types of amendments which require the approval of the first mortgagees are spelled out in the CC&Rs, and typically are limited to amendments which could adversely impact the security interest of the mortgagee, such as amendments changing the manner in which assessments are imposed or allocated among the various owners.

How Do We Vote?

Once the required approval percentage is determined, the Davis-Stirling Act requires that voting on the proposed amendment must be done by the double envelope secret ballot process set forth in Civil Code section 1363.03(b) (Civil Code section 5115 starting in 2014), with the votes counted at an open meeting so that the vote counting can be observed by the members. The ballot must contain the proposed amendment to be voted on by the members.

Continue reading “What Does it Take to Amend the CC&Rs?”

Time to Update Your CC&R Cover Sheets

AB 887, which was signed by Governor Brown in October of 2011, provides civil rights protection on the basis of “gender identity” and “gender expression.” It also amended California Government Code section 12956.1 to require Community Associations to place the following, in at least 14 point boldface type, on a cover page or stamp on the first page of their CC&Rs:

I recently received a question regarding AB 887, and its impact on community associations. AB 887, which was signed by Governor Brown in October of 2011, provides civil rights protection on the basis of “gender identity” and “gender expression.” It also amended California Government Code section 12956.1 to require Community Associations to place the following, in at least 14 point boldface type, on a cover page or stamp on the first page of their CC&Rs:

“While this requirement does not apply to anyone submitting a document to a county recorder’s office, it does apply to any association who “provides a copy of a declaration (CC&Rs) to any person.” “If this document contains any restriction based on race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, familial status, marital status, disability, national origin, source of income as defined in subdivision (p) of Section 12955, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to Section 12956.2 of the Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status.”

So, what this means for community associations is that it is time to update the coversheet or stamp on your CC&Rs to include the new language. In addition, while it is unlikely a set of CC&Rs contains any language which discriminates on the basis of “gender identity” or “gender expression,” if any such language exists in an association’s CC&RS or rules, that language should be removed. Pursuant to California Civil Code section 1352.5, boards are required to delete discriminatory restrictions, and can do so without obtaining the approval of homeowners.

Click Here to download a cover sheet which complies with the requirements of AB 887.

Homeowner Cannot Withhold Assesments in Dispute with HOA

I received a call today from a manager of an HOA telling me she had just gotten off the phone with a homeowner who was refusing to pay his assessments because he felt the association was not properly maintaining the common area in front of his residence. He stated until the HOA did its “job,” he would not be paying assessments. “Can he do that?” the manager asked.

I received a call today from a manager of an HOA telling me she had just gotten off the phone with a homeowner who was refusing to pay his assessments because he felt the association was not properly maintaining the common area in front of his residence. He stated until the HOA did its “job,” he would not be paying assessments. The manager asked, “Can he do that?” The answer, I told her, was “No!”

This issue was addressed by the court in Park Place Homeowners Association, Inc. v. Naber (1994) 29 Cal.App.4th 427. Under California law, an owner’s obligation to pay assessments is not subject to offset. As the court in Naber recognized, homeowners associations would cease to exist without the regular payment of assessment fees by its members. In fact, the need for an HOA to regularly and collect assessments from the owners is so important that the legislature has created procedures for associations to quickly and efficiently seek relief against a nonpaying owner in the form of liens and foreclosure. Permitting an owner to assert the homeowners association’s conduct as a defense or offset to an enforcement action would “seriously undermine” those rules and procedures.

That does not mean an owner is left without a remedy if the association is violating the CC&Rs. In California an owner has two options. One is the option recognized by the court in Nabor. The owner can file legal action against the association.

The other option, pursuant to California Civil Code section 1367.6, is that if an owner disagrees with the amount of an assessment, fine, penalty, late fee, collection cost, or monetary penalty imposed as a disciplinary measure, and the amount in dispute is within the jurisdictional limit of the small claims court, the owner may, in addition to pursuing dispute resolution, pay the disputed amount and all other amounts levied under protest and commence an action in the small claims court. This allows the association to meet its financial obligations by allowing for the regular payment of assessments, and still allows an owner to avoid the unpleasant option and uncertainty of facing foreclosure as a result of failing to pay their assessments while providing protection that if there is a error on the part of the association, there are several methods to bring that error to the attention of the association, or if necessary, to a judge.

Governator Terminates HOA Bill Allowing Boards to Enter into Long Term Conservation Contracts

Gov. Schwarzenegger recently vetoed California’s AB 1328. AB 1328 would have provided that a homeowners association could enter into a contract for a water or energy efficiency program, for a term of up to five years, if the board of directors reasonably anticipated that the contract would result in verifiable savings to the association.

vetoGov. Schwarzenegger recently vetoed California’s AB 1328. AB 1328 would have provided that a homeowners association could enter into a contract for a water or energy efficiency program, for a term of up to five years without owner approval, if the board of directors reasonably anticipated that the contract would result in verifiable savings to the association. This would have allowed HOAs to take advantage of long term savings and actively engage in energy conversation which is essentially mandated by California’s AB 32.  However, the Governator vetoed the bill claiming that it was unnecessary and would override the requirement that most contracts which are longer than one year obtain homeowner approval.

AB 1328 would have allowed HOAs, and by extension homeowners, the ability to obtain long term savings if they were able to locate vendors to provide extended water and energy conservation programs for their community. Boards are required to use sound business judgment and protect the assets of an Association.  Further, under the bill homeowners were to be notified of the terms of the contracts and provided an opportunity to be heard at an open meeting prior to the Board’s execution of any such contracts. It seems that there were sufficient protections in place to allow Boards to explore and enter into these types of long term contracts. Remember, Boards would not be required to enter into such contracts. The bill just would have given Boards the flexibility to enter into longer term contracts if sufficient savings could be found.

It is disappointing that while California’s State government continues to impose regulations on local entities such as HOAs, it also deprives them of tools which would allow them to meet the requirements at a reduced cost.

The California Association of Community Managers (CACM) and the California Association of Realtors (CAR) both supported the bill. The Executive Council of Homeowners (ECHO) was neutral.

HOA Boards Need not be Afraid to Enforce CC&Rs.

“Enforcement-Phobia” is the chronic fear of the political, financial and social costs of taking action to enforce an Association’s governing documents.

The “disease” starts when directors and managers are blind to the real conditions of properties overgrown with weeds, cluttered with unapproved architectural changes and overrun with over-sized vehicles parking on too narrow, private streets.

Roger Wood of Carpenter Hazelwood in Arizona, just posted an article about a common problem facing Homeowners Association Boards in the current economic climate. This is an issue we have experienced here in California as well. He calls it “Enforcement-Phobia”.  According to Roger, “Enforcement-Phobia” is the chronic fear of the political, financial and social costs of taking action to enforce an Association’s governing documents.

The “disease” starts when directors and managers are blind to the real conditions of properties overgrown with weeds, cluttered with unapproved architectural changes and overrun with over-sized vehicles parking on too narrow, private streets.  The neglected home may be the source of great frustration in the neighborhood, but the Board responds with lackluster empathy and empty pockets. The deeper the disease digs into communities the less inclined an Association and its leaders are to take any action. Symptoms of owner neglect and Association ignorance of that neglect lead only to more neglect.

The key to treating the “Enforcement Phobia” is to realize that the CC&Rs, as well as the rules and regulations, are in place to uphold property values.  Failing to enforce them is a disservice to the community. As Roger points out, a Board has the power (and in Arizona and California at least, the legal obligation) to enforce the express terms of the association’s governing documents.  The disease can be stopped and the vicious spread of unresolved CC&R violations curtailed.  The cure for this phobia is simple to enforce the association’s documents.  Roger offers some good prescriptions for helping your community properly enforce its restrictions and to gain an owner’s compliance. Among them are:

  1. Be fair and consistent in your approach to inspecting properties and notifying owners about their violations;
  2. Have a comprehensive enforcement policy and follow it;
  3. If a particular CC&R provision is troublesome or universally unenforceable, amend it;
  4. Think about increasing fine amounts to levels that would deter owners from continuing CC&R violations;
  5. Communicate well and often with homeowners about violations and about the path to compliance; and
  6. Use self-help (if allowed by the CC&Rs) thoughtfully.

You can read the full article here.