HOA Law Blog

September 13, 2012

FHA Releases Condo Update

Community Associations Institute (CAI) reported today that the FHA has released Updated Condo Guidelines addressing many of CAI’s Areas of Concern. CAI issued the following statement (and provided this link for more information).
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The Federal Housing Administration released a long-awaited revision of its condominium project approval guidelines on September 13th. The revisions to FHA condominium guidelines are contained in Mortgagee Letter 2012-18 and expire on August 31, 2014. FHA states it is making temporary adjustments to its condominium standards in response to market conditions.
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August 31, 2012

What You Need to Know About Small Claims Court

by David C. Swedelson

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

There are certain claims where small claims court may be the appropriate venue, as opposed to superior court. Typically, this includes claims against owners for unpaid assessments, fees and/or fines that do not exceed $5000, which is the limit that a California community association can recover in small claims court. When it comes to assessment collection, we generally only recommend small claims court where the association has already exhausted its other remedies, such as non-judicial foreclosure, and is trying to collect from a former owner who has lost their unit or lot to a senior lienholder/the bank. Starting a small claims court case is relatively easy. Many courts have small claims forms online which can be completed online or downloaded from the internet. However, knowing what to allege in the complaint form and how to present the case is not always that easy.

A small claims complaint (form SC-100 for Los Angeles Small Claims Court) requires the association to provide the name(s) and address of the delinquent owner(s) and to briefly describe the nature of the dispute (which includes (1) why the owner owes the association money, (2) when the obligation to pay became due, and (3) how the amount was calculated).
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August 17, 2012

Could Relief for Condo Associations that Seek FHA Approval Be Coming?

by David C. Swedelson

Blog Post by David Swedelson, Partner SwedelsonGottlieb; Condo lawyer and HOA Attorney
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According to a blog post on The Maintenance Manager , the FHA may be revising the requirements for FHA approval. Maintenance Manager suggests, quoting the LA Times, that “many HOA boards have not sought approval from the FHA because of three major barriers. However, things could be changing. According to the LA times, ‘the Federal Housing Administration is readying changes to its controversial condominium rules that have rendered large numbers of units ineligible for the agency’s low-down-payment insured mortgages.'”
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August 16, 2012

The “Art” of Taking Minutes at Your Association’s Meeting

by David C. Swedelson

By Sandra L. Gottlieb, Esq., Condo and HOA Legal Counsel

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Detailed minutes can prove troublesome for your association. Minutes are required at any association or board meeting. They serve as a record of the actions and decisions made at a meeting; however, they are not meant to be a transcript of everything that was said or done at the meeting. The more unnecessary, superfluous detail that is included in board meeting minutes, the more likely the board’s actions will fall under unnecessary scrutiny by homeowners.

Certain widely accepted guidelines will help your association take appropriate meeting minutes.
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August 15, 2012

Condo/HOA Owners Opting Out Of Having Their Name/Address Provided To Other Owners

by David C. Swedelson

By SwedelsonGottlieb Associate, Community Association Attorneys

We are often asked by California community association board members and managers as to the records members have the right to inspect and copy. One record request that can prove problematic is when a member requests a list of an association’s members. Under Civil Code Section 1365.2(a)(1)(I), an association’s member can request a membership list for the association, including the association’s members’ names, property addresses at the association’s development and mailing addresses (if different than the property address), if (1) the member requesting the membership list states the purpose for the request, (2) that purpose is reasonably related to the member’s interests as a member of the association and (3) the association reasonably believes that the information on the membership list will be used for the purpose stated.

If the association reasonably believes that the membership list will be used for a purpose other than the member’s stated purpose, the association can deny the request. However, if the requesting member brings an action against the association for that denial, the burden will be on the association to prove that the member would have allowed use of the information for purposes unrelated to the member’s interest as a member of the association (which may be difficult to prove). We suggest that any board considering such a denial consult with association legal counsel before denying the request.
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August 14, 2012

Can the Board Have Vehicles Towed if They are in Violation of the Rules? Maybe. It’s Complicated.

by David C. Swedelson

By David C. Swedelson, Esq., and Ryan D. Barrett, Esq., SwedelsonGottlieb; Condo Lawyers and HOA Attorneys

We are often asked if a California condo or homeowners association has the ability to tow vehicles from the association if they are violating the association’s Rules and Regulations. The answer is that an association does have the right and ability to tow vehicles, assuming that the towing is appropriate, does not conflict with the applicable California Vehicle Code (including having the required signage), and that the association’s Rules allow for same. Follow this link to our prior blog post regarding the basics relating to towing of vehicles from a California common interest development. This post will address when and if a California condo or HOA can tow a vehicle based on its Rules.

For the Rules to be effective, they cannot conflict with the association’s CC&Rs, and the Rules must have been properly adopted pursuant to the Civil Code. For several years, the Civil Code has required that before the board can adopt Rules, it must first send them out to all homeowners and allow thirty (30) days for homeowner comment. I would not want to see the board go through the effort of enforcing the Rules only to have a homeowner complain that the Rules were not properly adopted (as homeowners often do).
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August 14, 2012

What the Heck is Directors and Officers (D and O) Liability Insurance and Why is it so Important? A Primer on Board Member and Officer Liability Exposure

by David C. Swedelson

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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August 12, 2012

Smoke Free Housing Toolkit

by David C. Swedelson

Blog Post by David Swedelson

I recently spoke at a program on secondhand smoke issues at California community associations. And I posted an article that dealt with second hand smoke and how condo and HOA associations can deal with the issue, The Smoker Next Door: Secondhand Smoke + Condominiums = Trouble

A new “Smoke-Free Housing” tool kit for owners and residents of multifamily housing, including condo associations, is available from the U.S. Department of Housing and Urban Development. The toolkit includes a guide for implementing no-smoking policies, sample resident survey and educational and research materials.

August 12, 2012

Common Scents Often Become A Condo Issue

by David C. Swedelson

Blog post by David Swedelson

We hear these types of complaints all the time. While secondhand cigarette, pipe or marijuana smoke are the biggest sources of complaints, we are often asked to help associations deal with smells from other sources including cleaning products, paint and lack of ventilation, food and even perfume. I was reminded about this issue from an article that appeared in the Chicago Tribune newspaper.

As the article points out, “[w]ith many kids being asthmatic or allergic, and increasing numbers of people claiming chemical sensitivities, whether real or imagined, products that could become the trigger for an attack can become quite a hot button issue in certain associations.”

August 9, 2012

Is a Provision In a California Community Association’s CC&Rs Requiring That Construction Defect Claims Against The Developer Be Adjudicated Via Binding Arbitration Unconscionable And Therefore Unenforceable? Yes Says the Court Of Appeal

by David C. Swedelson

By David Swedelson, Partner, SwedelsonGottlieb

So here is the question. Is a provision in the CC&Rs requiring that an association submit claims against the developer for construction defects to binding arbitration unconscionable and therefore unenforceable? This is what the Court of Appeal found in the Pinnacle case, holding that such provisions are procedurally unconscionable because neither the individual purchasers, nor the association, have any alternative but to accept the terms of the CC&Rs, and substantively unconscionable because they are unfair and one-sided.

This case is now before the California Supreme Court, and we are awaiting its decision.
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