Never in more than 20 years has ALS experienced a time when assessment collection has been as complicated and difficult as it is today. Many boards of directors are unsure as to what to do when an owner is not paying their association or the senior lien holder/lender is not prepared to foreclose. David Swedelson has prepared an article setting out the analysis that is required to assist boards in making what is truly a difficult decision. Follow this link to read this article, and feel free to share this with your board of directors and/or other managers.
HOA Members Reveal Their Biggest Fears (Regarding Unpaid Assessments)
This economic downturn and the significant increase in the number of delinquent homeowners are impacting all community associations. To be sure, some are facing more delinquencies than others. But even the most affluent communities have homeowners that bought their homes at the height of the market with adjustable rate loans that they now cannot refinance, and they are losing their properties. They are also not paying their assessments.
The website HOALeader.com (created to provide support and information to board members and other HOA leaders) recently conducted a survey of HOA leaders on how they were dealing with the problem. Comments from HOA leaders regarding their fears and feelings of helplessness on how this is impacting their communities is interesting; they show that owners are concerned as to how their neighbors’ foreclosures are going to impact the amount of assessments they pay. Follow this link to read the article.
Stop Your Complaining//Nitpicking in Paradise?
Click here to read an interesting article from the Wall Street Journal about complaining entitled “From Attitude to Gratitude.” We all do it. And we know that homeowners at community associations like to complain a lot. They complain about management. They complain about the board. Heck, sometimes they even complain about the association’s legal counsel. They complain about the landscaping, the paint color, the temperature of the pool and the list goes on (and on and on). The attached article talks about owners complaining as “nitpicking in paradise.”
Many of us complain we have so many calls or e-mails to deal with; we complain because there is so much work to do. Some board members complain about the homeowners, about all the delinquencies, about the high cost of insurance, etc., and the list goes on.
How about this: instead of complaining, why not say (or feel) how grateful we are for what we have. If you are employed, stop complaining because 10% of Californians are out of work. If you still have some money in the bank or invested in stocks, stop complaining because some people invested their money in Ponzi schemes.
SANDRA L. GOTTLIEB RECEIVES MAY RUSSELL HALL OF FAME AWARD
On Friday, February 27, 2009, the Orange County Chapter of Community Associations Institute (CAI) held its annual awards dinner. We are pleased to announce that our very own Sandra Gottlieb was presented with the Chapter’s coveted May Russell Hall of Fame Award.
Each year, the Orange County Chapter of CAI recognizes an outstanding individual who has been instrumental in the success of the Chapter. The Chapter’s most prestigious award is named after May Russell, a former Irvine Company Executive who helped form CAI and was its first president (CAI started in Orange County). Recipients of this Award were first announced in 1988 at the Chapter’s very first awards dinner. The Award is presented to an individual who has proved exemplary leadership and demonstrated the ideals and objectives of CAI through active participation at the local, regional and/or national level.
Congratulations to Sandra Gottlieb!
Condominium Association Duty of Care
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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COURT ORDERS HOMEOWNER TO LOWER HEIGHT OF HOME
When an association discovers that an owner has made substantial alterations or modifications to their home that were not approved (often after the work has been done and a neighbor complains), we often hear board members or community association managers suggest that a judge is not going to make the homeowner remove an extensive modification of a home just because that modification violates the Association’s Governing Documents. While that is certainly a consideration that a court must make, we received a report (in the Daily Journal legal newspaper) that one judge did the right thing and ruled in favor of the Association under these circumstances.
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NEW LEGISLATION UPDATE (FOR NEW LAW THAT BECAME EFFECTIVE JANUARY 1, 2009)
2008 was remarkable for the fact that the California Legislature did not pass much in the way of new legislation impacting or affecting California Community Associations. We are providing a summary of two changes to the California Civil Code regarding fines/assessments and solar energy that became effective as of January 1, 2009.
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2008 U.S. Foreclosure Market Report – Foreclosure Activity Increases 81% in 2008
2008 was a banner year and for all of the wrong reasons. Foreclosure activity was way up, and the experts project that we will not see a decline in foreclosures in the near future.
RealtyTrac® (realtytrac.com), the leading online marketplace for foreclosure properties, released its 2008 U.S. Foreclosure Market Report™, which shows a total of 3,157,806 foreclosure filings – default notices, auction sale notices and bank repossessions – were reported on 2,330,483 U.S. properties during the year, an 81 percent increase in total properties from 2007 and a 225 percent increase in total properties from 2006. The report also shows that 1.84 percent of all U.S. housing units (one in 54) received at least one foreclosure filing during the year, up from 1.03 percent in 2007.
Foreclosure filings were reported on 303,410 U.S. properties in December, up 17 percent from the previous month and up nearly 41 percent from December 2007. Despite the spike in December, foreclosure activity for the fourth quarter was down nearly 4 percent from the previous quarter but still up nearly 40 percent from the fourth quarter of 2007.
Pool Safety Subject of New Federal Law
On December 16th, we posted a blog entry regarding the new the Virginia Graeme Baker Pool and Spa Safety Act (“Act”). The Act is a federal law that took effect December 20, 2008. It requires owners of “public” pools (the Act refers to spas as well) with submerged suction drains to retrofit the drains in order to limit and prevent drowning deaths caused by people becoming ensnared in a pool’s drain.
The Act defines “public” to include multi-family residential dwelling common areas and their (community) associations.
This new law has created a lot of controversy as many California community associations debate whether compliance is required or not, as this is a federal and not state law. Perhaps the real issues here are the potential risk of injury to children and others that use the pool or spa and potential exposure to the Association. As this new law impacts community associations, it is a big issue. It was the subject of a January 20, 2009 article in the Wall Street Journal. It has been reported that some boards of directors at community associations are delaying the appropriate retrofits because they believe that no one is really going to penalize their association for not taking the appropriate action. While it is true that no governmental authorities are (at least as of going to cite or penalize an association for not complying with the new law, and while it is likely that most associations’ insurance carriers will defend and indemnify associations from injury claims, those insurance carriers will not indemnify the association or the individual board members if they are sued for intentional wrongdoing (knowing of the danger and the new law and intentionally deciding not to take action). As the Wall Street Journal article points out (quoting an official with State Farm insurance): (community associations that keep their pools open and do not retrofit) “will probably have a more difficult time proving they are not liable.”
SANDRA GOTTLIEB AWARDED SPEAKER OF THE YEAR
SANDRA GOTTLIEB AWARDED SPEAKER OF THE YEAR BY THE SACRAMENTO CHAPTER OF COMMUNITY ASSOCIATIONS INSTITUTE
On December 4, 2008, Sandra Gottlieb (and other members of her panel) was awarded the coveted Speaker of the Year Honors by the Sacramento Chapter of Community Associations Institute (CAI) for her role in a panel program “Managing Foreclosures”.
This is what the Sacramento Chapter had to say about Sandra Gottlieb (the panel) and this award: