Articles Posted in Uncategorized

By David Swedelson, Esq., Senior Partner at SwedelsonGottlieb, Community Association Attorneys

Directors and officers of an association are volunteers with enormous responsibilities, who put in countless hours to better their communities. Though directors and officers are appreciated by most of the community, they are sometimes blamed for their decisions and challenged in court. However, in the event that there is a challenge (a threatened or actual lawsuit), the law affords some protections to directors and officers.

What does the law say? California Civil Code Section 1365.7 and California Corporations Code Section 7231.5 set forth specific factors that can shield a director from liability. Specifically, these laws state that if a personal injury or property damage claim is brought against a director or officer, as a result of a tortious act or omission, and if the damage exceeds the amount of the association’s insurance coverage, the director or officer will not be personally liable in excess of the association’s insurance policy if:

1. The director or officer was acting within the scope of his/her duties;
2. The director or officer was acting in good faith;
3. The director or officer was acting in a manner which he/she believed to be in the best interest of the association;
4. The director or officer was acting with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use in similar circumstances;
5. The act or omission was not willful, wanton, or grossly negligent; and
6. The association maintained and had in effect an insurance policy at the time the act or omission occurred and at the time the claim was made, which meets the minimum requirements set forth in Civil Code Section 1365.7(a)(4).
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Blog post by David Swedelson, Condo Lawyer and HOA Attorney; Partner, SwedelsonGottlieb, Community Association Attorneys

In the latest example of courts’ unease with social media, a federal judge has refused a request by a bank to serve legal papers on an a defendant via Facebook. Why is this important? Because it is getting increasingly difficult to find some defendants, and in lawsuits, the law requires that the defendant be served with the lawsuit (service of process) or in the case of a delinquent owner, that they be served with notice of a board’s intent to foreclose. Sometimes we just can’t find the defendant (or delinquent owner) and this makes it difficult for associations to collect damages that the owner owes the association, delinquent assessments, seek a restraining order if the owner or their tenants violations of the governing documents etc.
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1368.2. The form for billing disclosures required by Section 1368 shall be in substantially the following form and in at least 10-point type:

Follow this link to download the required form.

Blog post by David C. Swedelson, California Condo Lawyer and HOA/ Community Association Attorney
We regularly handle cases where the owner has sued the association as a defense to their association’s claims against them. These cases sometimes go to trial as efforts to settle are not successful, and more often then not, the association prevails and recovers an award of attorneys’ fees. Often for substantial sums of money.

The case of Seltzer v. Eugene Burger Management Corp., an unpublished appellate court decision, is a perfect example as to why owners need to think twice before suing their association. Here, Seltzer filed a lawsuit against the association and its management. Seltzer, an attorney and owner of a condominium unit located in a Marin City condominium development known as The Headlands View Homes filed the lawsuit seeking, among other things, to enjoin what Seltzer alleged were unlawful actions on the part of the association’s management. The association then filed a cross-complaint alleging that Seltzer had damaged and destroyed trees without the association’s authorization (the trespass claims) and claims arising from Seltzer’s failure to pay assessments (the assessment claims).
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Blog posting by David Swedelson, California HOA and Condo Lawyer and Legal Expert
Interesting article and perspective regarding the Federal Housing Administration’s (FHA’s) new guidelines for condominium loan offers from fellow community association attorney Stephan Marcus (Massachusetts).

Steve notes that “the FHA published the first iteration of this guidance in June 2009, with little, if any, input from the community association industry. The FHA’s new Guidelines, unveiled in late June 2011, indicate that FHA officials listened to the concerns expressed by the Community Associations Institute (CAI) and others, and responded to at least some of them. Apparently CAI is challenging the latest guidelines arguing that FHA violated both the Administrative Procedures Act and its own rule-making procedures by failing to consult affected industries and interest groups.”

The new FHA Guidelines are available at this link.

Steve states that although improved in some areas, the revised guidelines are still problematic and believes that in some cases, they are even more problematic than before.
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Lately, a number of our firm’s clients have contacted us regarding disputes they are having with vendors or their management regarding termination of their relationships. One association was very dissatisfied with the laundry room service/equipment provider, and when they went to terminate that relationship, they received a letter from the laundry company’s attorney advising that the contract had recently renewed for an additional five-year term. To make matters worse, there was no provision in the agreement for terminating the contract for cause.

Another client wanted to get out of their contract with their management company, wrote a letter of termination, and was then advised that the contract had renewed for another year (and the manager never told the board when the deadline was to terminate). And this was after the board had been asking the management company for a copy of their contract. The management company denied that it had any obligation to advise the association as to when the contract term ended or when or if there was a deadline for termination.
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Governor Arnold Schwarzenegger signed Assembly Bill 2016. Assembly Member Norma Torres (Dem, Pomona; she chairs the Assembly Housing Committee) authored this bill and her press release is set out below.

AB 2016 relates to the notice that can be recorded on a property in a community association that tells a foreclosure trustee that they are required to provide certain information to the association. This bill will allow California community associations to record a single “blanket” recordation for all homes or units at an association rather then the one notice per property under prior law.

The recorded notice requests a foreclosure trustee to mail a notice to the association of:

1) The name and mailing address of the successor in interest that acquired title to a property that was foreclosed on; and
2) The date the sale of the property took place.

While there is not much an association can do if a foreclosure trustee fails to comply, the hope is that when they do provide the information requested, that will make finding the new owner easier and sooner for purposes of giving them notice of the assessments and other obligations and of course will hopefully make collecting assessments easier as well. This new legislation takes effect January 1, 2011.

AB 2016 is a follow up bill to Senate Bill 1511 (Ducheny, Dem, San Diego) from 2007 that allows California community associations to find out who the new owner is sooner then was possible previously.

Below is the the press release from the author of this bill, Assembly Member Norma Torres.
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Going legally broke has made a big comeback, especially in California, despite major revisions to the US bankruptcy code intended to curb filings. The number of Californians seeking bankruptcy protection is booming. The amount of personal bankruptcy filings rose 75% in 2009 (from the 2008 filings). With many Californians continuing to lose jobs or those unemployed failing to find jobs, we can only assume that bankruptcy filings will continue to increase through 2010.

The attorneys at SwedelsonGottlieb have prepared two articles regarding bankruptcy, one on the bankruptcy process and what you need to know, and another on bankruptcy stays – what they are and how they impact the assessment collection process. They are available for download here and here.

A Building Component Does Not Become Common Area Just Because It Was Placed or Built On The Common Area; Homeowner Cannot Escape Maintenance Responsibility Based Upon Developer’s Mistake. Chen v. Fairmont Terrace Homeowners Association (2001) 2001 WL 1191483 (Cal.App.4 Dist.) Not Officially Published
This is a case that was handled through appeal by SwedelsonGottlieb Partner David Swedelson.

Owners will often insist that their association is responsible for maintaining or repairing a building improvement or component that would normally be their responsibility merely because of where it is located. Nathan Chen found out the hard way that where the component is located is not the criteria.
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The California Court of Appeal recently came down with a decision in the case of Ritter & Ritter Inc. v. The Churchill Condominium Association dealing with (among other things) the responsibilities and duty of care of a condominium association and its directors. We will address other issues relating to this case in a future article.

In this case, the homeowner requested that the association seal a hole in the slab which had been made as part of the original construction for pipes to pass-through from one unit to the other. There was no question that the hole should be filled in, as it constituted a fire danger. Somehow, the board incorrectly concluded that this hole was the homeowner’s responsibility to deal with, and the homeowner disagreed and sued the Association. The work would have cost the association approximately $2,500 (for that unit); instead, the case cost the Association hundreds of thousands of dollars for attorneys’ fees and costs. The Court of Appeals decision (click here) provides an excellent discussion on a homeowner’s versus the condominium association’s repair responsibilities and the director’s duty of care as well. The Court’s discussion on this issue follows:
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