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By David Swedelson, Senior Partner at SwedelsonGottlieb, Condo Attorney and HOA Lawyer

I came across an interesting article with this title written by fellow community association attorney, Donna DiMaggio Berger, who practices in Florida. As Donna states in her article, “fraud is certainly nothing new but in today’s troubling economic climate, the chance that your community may be harmed by a fraudster, especially if you don’t have a series of checks and balances in place, rises dangerously.” This is so true. I track news articles that relate to condominiums and homeowners associations around the country, and I have not been surprised by the many news articles I have seen reporting on fraud and embezzlement committed by board members and association managers. And they go to jail!
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By David C. Swedelson and Sandra L. Gottlieb, Condo and HOA Legal Experts, Community Association Attorneys
As we maneuver our way through the end of this recession, the words “short sale” are being bandied about more than at any other time that we can remember. Lenders are apparently more receptive to considering a discount on a mortgage rather then taking the property back in foreclosure. We wrote about short sales back in May 2011 (follow this link). Wikipedia defines a short sale as “a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.”
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(and why condominium associations should be responsible for waterproofing on balcony decks)

By David C. Swedelson, Condo Lawyer and HOA legal expert; Senior Partner at SwedelsonGottlieb
I know that many boards contemplate the idea of making owners responsible for the waterproofing on the balconies or decks in condominiums (and yes, generally the association is responsible for repairing or replacing what is considered common area waterproofing). Bad idea. The reality is that owners will not do what is required, and the leaks will damage the common area and other units. One association client learned this the hard way. And while the end result was good for the association and we consider this an excellent result, the road was rocky and stressful. And the association had to finance our fees and the costs.

It all started with that association amending and restating its Governing Documents (through another firm). As a part of that process, their former attorney suggested that they make the homeowners responsible for the maintenance, repair and replacement of the waterproofing on each homeowner’s exclusive use balcony decks. Many associations tell me they would like to see the homeowners responsible for the waterproofing, as they claim that the association does not want to have to save or expend the money for that work. However, in practice this is not a good idea.
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Posted by David C. Swedelson,
Partner, SwedelsonGottlieb; Community Association Legal Expert
With the proliferation of electric vehicles comes a new law that limits and restricts California community associations’ ability to prohibit an owner from installing their own electric charging station. On July 25, Governor Brown signed Senate Bill 209, which adds new Civil Code Section 1353.9. The new law takes effect January 1, 2012.

New Civil Code Section 1353.9 will prohibit California condominium and other community associations from unreasonably restricting the installation of electric vehicle charging stations. Homeowners who place charging stations in the common areas will be responsible for costs associated with maintaining and repairing the station, as well as costs for damage to common areas and adjacent units resulting from installation and maintenance of the station. The new law will impose other responsibilities on the homeowner, including maintaining a liability insurance coverage of $1,000,000 that names the association as an additional insured.

Unfortunately, the new law allows individual owners to use or occupy common areas, contrary to existing statutes and case law. In his signing message, Governor Brown stated that the author of the bill plans to introduce legislation that protects the right of common interest developments to establish reasonable rules for any use of common areas for charging stations. Governor Brown recognized this issue in his signing message:
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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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By David Swedelson, California Condo and HOA Legal Expert and Community Association Attorney

I came across an interesting article from a law firm in Florida (by attorney Lisa Magill with Becker & Poliakoff) that addresses the fact that after a bank forecloses, many boards are writing off the debt without considering all of the association’s collection options.

Yes, it is true that trying to collect from some delinquent owners may be a waste of time. But a board should be cautious in making that assumption without knowing if the homeowner has or does not have money or other assets. Boards should consider evaluating collection options.
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By David Swedelson, Community Association Attorney and Partner at SwedelsonGottlieb

The Davis-Stirling Common Interest Development Act is the common name of the portion of the California Civil Code beginning with section 1350, which governs condominium, cooperative, and planned unit development communities in California. It was enacted in 1985 by the California State Legislature and has been amended over 45 times.

There are many homeowner associations that look like any other and collect fees and assessments, but in fact are not subject to the Davis-Stirling Act based on the holdings in Mount Olympus Property Owners Ass’n v. Shpirt, 59 Cal. App. 4th 885 (Cal. App. 2d Dist. 1997) and Comm. to Save the Beverly Highlands Homes Ass’n v. Beverly Highlands Homes Ass’n, 92 Cal. App. 4th 1247 (Cal. App. 2d Dist. 2001).

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The following is excerpted and edited by David Swedelson from an article prepared by Jan Frankel Schau Mediator/Arbitrator/Attorney. Jan was an associate at SwedelsonGottlieb several years ago.

How many times have you been in a meeting with the board and a homeowner regarding the owner’s violation of the rules, CC&Rs or addressing damage they have caused to the common area? Many, I bet. And how many times have you cringed because neither the board nor the owner could get to closure on a deal, a settlement of the dispute. Everyone danced around the issues, but no one knew how to close a deal. Many people educated in negotiation tactics or skills have some tools they use to make a deal. Jan Schau analogizes to the TV show, “Pawn Stars.”

She says that she hesitates to admit it, but she has learned a thing or two about negotiation from the TV show, “Pawn Stars”. She goes on to state that in this show (which I myself have enjoyed viewing), the owners of a Las Vegas Pawn Shop negotiate face to face to purchase used and unwanted “treasures” that have an unknown or uncertain value. Invariably, the “final offer” is accompanied by a smile, an extended hand and an expectation that the seller will accept that offer, even though it doesn’t meet his last demand. The owners of the pawn shop are adept at making every seller feel great about selling their junk/treasures and getting a great deal in exchange.

Here’s how it works in the context of a board and owner at a community association:
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By David Swedelson, California Condo and HOA Attorney, Senior Partner SwedelsonGottlieb

All too often we are called in to deal with a dispute over a contract that the association entered into with a contractor or vendor. And I am often surprised to learn that the board and management really do not understand what a binding contract is (and what it is not).
What needs to be understood is that the foundation of every legal transaction is the document known as a contract.
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On Tuesday, June 28, 2011, David Swedelson of SwedelsonGottlieb and Timothy Cline of Timothy Cline Insurance Agency will present their technology program, “Beyond Ctrl, Alt, Del (Taking your Tech to the Next Level)” at Community Association Institute’s Channel Islands Chapter.

Download this PDF page for a handy link reference to some of the cutting edge technologies covered in the program.

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