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One of the more difficult and confusing issues that boards and association management often have to deal with is determining who is responsible for the maintenance and repair of common area plumbing, ventilation and other utility components, especially those that serve only one unit. Even attorneys sometimes get it wrong and believe that merely because the pipe, duct or wiring serves only one unit, the affected owner is responsible for same. Just because a common area component serves or benefits only one unit does not by itself make that component that owner’s repair and/or replacement responsibility.
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Don’t you wish that you could utilize e-mail or other new technology to disseminate important association documents? Maybe you can! Effective January 2010, Civil Code Section 1350.7 was amended to allow community associations to send certain documents to the owners via e-mail or other methods of electronic delivery. Our Senior Partner, Sandra Gottlieb, has prepared an article regarding electronic delivery and the amendment to Civil Code Section 1350.7. This article was published in the March/April 2010 edition of the O.C. View, the bi-monthly publication of the Orange County Chapter of the Community Associations Institute. Follow this link to read this important article.

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By Alyssa Klausner, SwedelsonGottlieb Senior Associate

In the case of Villa Vicenza Homeowners Association V. Nobel Court Development (follow this link to see the entire decision), the developer of a condominium project recorded a Declaration of Covenants, Conditions and Restrictions (CC&Rs) which required a homeowners association to arbitrate any construction defect claim the association might have against the developer. The Court ruled that the CC&Rs are not an effective means of obtaining an agreement to arbitrate a homeowners association’s construction defect claims against a developer.

The basis of the Court’s decision was that the recorded CC&Rs, standing alone, are not a contract between the developer and the homeowners association, which only came into existence after the CC&Rs were recorded, and therefore there has been no showing the association entered into a binding arbitration agreement.

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As we reported in April, Assemblymember Julia Brownley had proposed AB 2502, which would have made assessment collection in California even more difficult than it already is. We have great news. Because of all of the opposition she received (your letters and emails were acknowledged) and because some of those that backed the bill withdrew their support when Brownley amended parts of the bill, Brownley likely realized that compromise was impossible, the bill never made it out of committee and it did not advance to the floor for a vote. This legislation would have imposed new and unwarranted restrictions on the assessment collection process for California community associations.

Brownley had agreed and did amend the bill to eliminate the requirement that associations wait until the delinquent owner owed $3,600 or was 18 months delinquent before foreclosing. But she had left in the proposed prohibition on a waiver of the provisions of Civil Code Section 1367.1 relating to the allocation of payments, as well as the proposed prohibition on not accepting partial payments, and we learned that these issues were not only misunderstood by the legislator, but by others in the community association industry as well.

And why did the Community Association Institute’s California Legislative Action Committee (CLAC), which had originally opposed the bill, then decide to support this flawed legislation?

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Where a homeowner paid an unlicensed contractor for landscaping work at his home, his knowledge that the contractor was not licensed when work commenced did not bar an action for full reimbursement under Business and Professions Code Sec. 7031(b), and the homeowner was entitled to recover the total amount paid even though the contractor was licensed during a portion of the work. The homeowner was also entitled to recover payments for materials retained by him, in addition to payments for labor.

This applies to California Community Associations who hire contractors and then find out they are not licensed. This may sound unfair, but the penalty is designed to discourage unlicensed contractors from performing contracting work.

Click here for the full text of the Alatriste v. Cesar’s Exterior Designs, Inc. case recently decided by the California Court of Appeal.

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By the Community Association Attorneys at SwedelsonGottlieb
So the board has done its due diligence, investigated its options and decided that chasing down the owner who has not paid their assessments for many months is likely to be a waste of time, money and association resources. The board has considered the options and opted to complete the non-judicial foreclosure process with the actual foreclosure sale on its lien. (See our prior article entitled, “To Foreclose or Not to Foreclose, That Seems to be the Question”) Because the senior lien or lien/trust deed securing the original purchase loan for the property is in an amount that exceeds the current (2010) depressed value of the property, no third party bid at the foreclosure sale and the association ended up with the property (unit/lot) after the 90-day redemption period.

Assuming that the ninety (90) day redemption period has ended (see our previous post on the homeowner’s right of redemption) and the trustee’s deed upon sale has been issued and recorded, the association is now the owner of the unit, lot/home (subject to the senior encumbrances). The board has lots of questions. We’ve got answers.
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When it comes to enforcing obligations secured by California real estate, California is a “single action” or “one-action” state. Civil Procedure Code Section 726(a) provides in part that “[t]here can be but one form of action for the recovery of any debt or the enforcement of any right secured by a mortgage upon real property.” This “one-action” rule applies when a California community association secures, as it should, the delinquent owner’s assessment obligation by recording a lien and then exercises its remedies to recover that debt. The purpose of the one-action rule is to protect the delinquent owner from being harassed by a lot of different actions filed against it by the association.
 

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As we make our way through the “Great Recession”, we find that many owners are still upside down in their units/homes, owing more to their lender than the current potential sales price. In many cases, the owners cannot afford to pay the bank and are looking to get out from ownership of their home or unit. Many owners are trying to do short sales, where they take an offer to buy their property for less than the loan amount and try to obtain their lender’s agreement to take less than the amount that is owed on their loan/trust deed. We are getting calls from community association managers and board members who are asking what to do when faced with the prospect of a short sale, where the owner is also asking their association to discount the amount that is owed for delinquent assessments, late fees, interest, collection fees and costs.
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When property is sold through non-judicial foreclosure on an assessment lien, buyers (third parties or the association) take ownership subject to a 90-day right of redemption, which allows the foreclosed owner to recover the property if the owner pays the delinquency and any fees and costs (Civil Code §1367.4(c)(4); Code of Civil Proc. §729.035).

This right of redemption is unusual in that it does not apply to non-judicial foreclosure on trust deeds; it was added to the law for community associations several years ago to help owners so they do not lose their homes because they did not pay their associations assessments or fees. Owners rarely take advantage of this right.
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Sandra L. Gottlieb, Esq. and Alex Noland, Esq. of SwedelsonGottlieb have had two new articles published in the O.C. View, the official magazine for the Orange County Regional Chapter of the Community Associations Institute.

Sandra’s article, Electronic Delivery, describes a recent amendment to Civil Code Section 1350.7 and the positive benefits for community associations when statutes are updated to reflect advances in technology. In this case, the legislature has streamlined the process for confirming a homeowner’s consent to electronic delivery of documents.

 

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