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Blog Post by Sandra Gottlieb and David Swedelson from a CAI Alert

When it comes to the FHA and its lending guidelines, describing their guidelines as a moving target would not be an exaggeration. If you asked us two days ago regarding the FHA’s stance on rental percentages language in association governing documents,we would have told you that they were restrictive. FHA got the word and again revised their guidelines. The following comes from a Community Associations Institute report:

Attached are the new FHA guidelines which allow for a Waiver on Leasing Restriction provisions found in association CC&Rs. Although the new requirements do not give associations’ automatic guarantees to obtain FHA approval if your governing documents allow for rental restrictions for most associations, compliance has just become easier.”Leasing restrictions have been one area of the FHA condominium guidelines that has caused problems for associations seeking to get FHA approvals. Community Associations Institute (CAI) has brought this issue to FHA’s attention and has petitioned FHA to review these criteria. On March 18, 2011, FHA issued a waiver that will provide greater flexibility on leasing restrictions under the FHA condominium insurance program. This means that many condominium associations whose FHA approval was rejected due to rental restrictions may now qualify under the FHA waiver.
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A Blog Report By Association Lien Services and SwedelsonGottlieb

Many of our clients have been asking for our forecast as to when their assessment collection nightmares are going to end. While we don’t have a crystal ball, we do monitor what the experts are saying. And this very question was addressed in an article in the March/April 2011 edition of CAI’s Common Ground magazine. The article, entitled “Foreclosures, Rocky Road” (and thus the motivation for this blog post) states what we all know, that “the housing crisis has been a turbulent ride.” The article went on to state that “as we enter year four, experts predict we may finally hit rock bottom. That would be welcome news for homeowners and associations alike.” The problem is that rock bottom is so far down, it is going to take years to get back to normal.
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By David Swedelson, Esq. and Alyssa Klausner, Esq.

It should be no surprise to anyone that the Great Recession has caused a significant amount of people to fall into serious debt, and many have filed bankruptcy. This is having a significant impact on many community associations’ efforts to collect delinquent assessments.

Just how big of an issue is bankruptcy in California? The Central District of California (CDC) is among the busiest bankruptcy courts in the U.S. The CDC serves over 18 million people in southern and central California, the largest federal judicial district by population. The CDC’s mission statement is “To provide, efficiently, justice to all parties affected by bankruptcy in the most populous and diverse district in the country.” A whopping 142,407 bankruptcy cases were filed in the CDC In 2010 (a 31% increase from 2009), greatly outnumbering the 14,330 bankruptcy cases filed in the Southern District of New York in 2010. The percentage of bankruptcy filings increased nationally by 13.8% from 2009-2010. It is no wonder we are seeing so many requests from our clients seeking assistance with a bankruptcy matter of a delinquent owner and to obtain relief from the bankruptcy automatic stay so that the collection process can continue, something we were rarely asked to do before the recession. Because the recession is not really over for California community associations, as there is still a significant amount of homes that are or will be in foreclosure for some time to come, it is important that board members and association management understand the basics of what bankruptcy is all about.
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By David C. Swedelson, Partner, SwedelsonGottlieb

Community Association Institute’s (CAI) Fast Track News Bulletin reports that Florida condominium association residents who are delinquent on their assessments could run the risk of losing their cable and internet service if a new bill passes.

According to the March 1, 2011, edition of the Orlando Sentinel, the legislation, which would go into effect July 1, 2011, would give condominium associations the right to cut off cable and internet service of residents who are 90 days overdue. In Florida, associations are already allowed to ban delinquent residents from common amenities such as pools, gyms and the like, and the bill would have cable and internet counted as common amenities as well. While the list of what’s considered common amenities seems to keep growing, this proposal makes it clear that associations will not have the power to shut off residents’ water or electricity.
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By Sandra Gottlieb, Esq.

Understandably, service providers such as cable or satellite dish companies will regularly seek long-term contracts of five years or more with homeowner associations. They explain that this is because their up front costs related to getting their systems set up within the association are significant, and they want to be reasonably sure that they can earn a profit.

Long-term contracts can provide potential cost savings to many homeowner associations, and a proper contract prepared by an attorney experienced in common interest development law can ensure that the association gets what it pays for. However, some boards of directors are unaware of provisions in their governing documents that may limit the board’s ability to enter into long-term contracts. Sometimes, CC&Rs or Bylaws will not allow the board to enter into any contracts with a term in excess of a certain number of years (usually one year) without the vote and approval of the members (usually a majority of the voting power). Some more recent CC&Rs or bylaws provide for certain exceptions for laundry room leases or contracts, cable television or telecommunication services.

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From Community Association Management Insider

A community in El Dorado County, California has historically allowed some sport shooting. However, when one board member wanted to change that, he started the process to change the governing documents to completely ban the discharge of firearms and air-guns and eliminate all target and other shooting throughout the gated equestrian community.

One member of the community, who is also a National Rifle Association (NRA) member, brought this issue to the attention of the NRA’s California attorneys. And they assisted him and other neighbors in defeating the attempt to do away with shooting in the community.

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By David C. Swedelson, SwedelsonGottlieb Partner

There was an interesting article on new legislation in the March 6, 2011 edition of the Los Angeles Times about the 2,323 new bills that have been introduced in the California legislature, and this includes several that impact California community associations (more on that below). As reported in the Times:

In addition to addressing the state’s $25-billion deficit this year, the Legislature is making time for some other less-pressing matters: Caffeinated beer. Spaceships. How to properly describe a dog pound.

Proposals on those subjects are among the 2,323 bills lawmakers have introduced this year. Others would revise the definition of olive oil and regulate the reflectivity of pavement to help curb global warming. There’s a measure to create a “Parks Make Life Better” month.
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By Sandra L. Gottlieb, Esq.

Although the legal definition of what constitutes a “hostile work environment” is continually evolving, an employer has a general duty to protect its employees from a hostile work environment which can generally be defined as existing when an employee experiences ongoing workplace harassment and fears going to work because of the offensive, intimidating, or oppressive atmosphere generated by the harasser. Hostile work environments apply to community associations and their managing agents, whether they are directly employed by the association or through a management company. The harassers can be board members, owners, residents and even vendors. The association’s duty to provide a hostility-free work environment also extends to all association employees, and not just the manager(s), and to the employees of its vendors such as landscaping, maintenance and security personnel.
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By David C. Swedelson, Esq.

Many planned development community associations have built into their CC&Rs the obligation of the association to maintain property owned by some and often not all of the owners. Sometimes, they are called “Association Maintenance Areas” or “Association Easement Areas”. Sometimes, there is no special name for the area, but the association’s CC&Rs specify that the association will maintain a slope area or landscape area that benefits the association or the owners, typically for aesthetic reasons. And sometimes, disputes erupt over just how far the association’s maintenance responsibilities extend.
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By SwedelsonGottlieb, Community Association Attorneys

We recently assisted an association’s board of directors with addressing the question of whether the association has a legal obligation under its governing documents (or under applicable law) to install, or allow for the installation of, charging stations for homeowners’ electric cars. In this case, the homeowners’ parking spaces were exclusive use common area that were assigned to specific units under the association’s condominium plan and unit grant deeds. The owner at issue wanted to install the charging device in her exclusive use common area parking space.

The first issue we had to address was whether there were any association rules or architectural guidelines in effect that prohibited the storage or placement of items in parking spaces. We advised the Board that if there were, and if there was no specific exception to that rule that allows for the storage or placement of an electric vehicle charger in parking spaces, then the board would need to prepare and adopt a rule modification allowing for that installation, following the Civil Code requirements for operating rules.
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