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CARBON MONOXIDE
DETECTORS
 Anything
in the home that burns a fossil fuel can create carbon monoxide--a
colorless, odorless gas that can be lethal. As a result, carbon monoxide
detectors are now required in every dwelling unit where the home has a
gas burning furnace, cook stove, water heater, fireplace, wood burning
stove, or attached garage (auto exhaust).
Installation Deadline.
Single-family homes must install them by no later than July 1, 2011.
Condominiums and townhomes must install them by no later than January 1,
2013. The requirements are found in Health & Safety Code §§17296,
17926.1, and 17926.2. For more
information, see Senate Bill 183.
RECOMMENDATION:
For most associations, the responsibility will fall on individual
owners to install the devices. However, depending on how governing
documents are written, that duty may fall on the association. To be
safe, boards should have legal counsel review their documents and advise
them on this issue.
CPA PEER REVIEW
REQUIREMENT
 Associations with a gross income over $75,000 are required to annually prepare a financial statement on an accrual basis and distribute it to the membership. That statement must be independently reviewed by a California licensed certified public accountant (unless the governing documents call for an audit instead of a review). The financial statement must be distributed to members within 120 days of the close of the fiscal year. Civil Code §1365(C).
Grading CPAs.
Starting July 1, 2011, California CPAs are subject to mandatory review
of their auditing and accounting practices. Think of it as analogous to a
restaurant getting a letter grade (A, B, C . . .) posted in their
window for their food preparation practices. The peer review report is
then available to clients who request it. Accordingly, boards of
directors should request a copy of their CPA's Peer Review Report.
Review Points. So as to provide a meaningful financial statement, CPAs who review HOA financials should do the following:
- inquire about the board's quarterly review of the HOA’s funds. Civil Code §1365.5(1)-(5).
- review the HOA’s reserve study and related disclosures. Civil Code §1365.2.5.
- inquire about whether the management company has been examined (if required).
- review the association's insurance, including workers’ compensation coverage. Civil Code §1365.7 & §1365(e),(f)(1)-(D)(4).
- offer to meet or correspond with the board of directors, especially when significant issues occur.
- inquire if the HOA performed an annual inspection of the major components that the association must repair and replace. Civil Code §1365.5(e).
Information. For more information about CPA peer reviews, see California's Board of Accountancy website. In addition, see Replacing SAS 70 in the August 2010 edition of the Journal of Accountancy.
IMPACT:
The change in law for CPAs will trickle down to HOAs in two ways. First
it will result in a closer look at HOA financial practices, which now
includes a review of the internal practices and controls of the
management companies handling HOA funds. Second, it may significantly
drive up the cost of annual reviews/audits.
Thank you to
Robert West, CPA of Robert Garrett West & Co. for providing this
information. Mr. West is a peer reviewer of CPAs and can be reached at
866-838-8400 or at rwestcpa@sbcglobal.net.
ELECTRIC CHARGING
STATIONS
 On July 25, Gov. Brown signed Senate Bill 209, which takes effect January 1, 2012.
Major Points.
The bill prohibits HOAs 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 bill imposes other responsibilities on
the homeowner, including maintaining an umbrella liability coverage
policy of $1,000,000 that names the association as an additional
insured.
Major Flaw. Unfortunately, the new statute allows
individual owners to use or occupy common areas contrary to existing
statutes and case law. 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. See Gov. Brown's signing message.
Thank you to Skip Daum, President of Capitol Communications Group, for this update. Mr. Daum works with CAI's Legislative Action Committee.
FEEDBACK
 Rent Restrictions #1.SB 150 will kill HOAs. We are an 8 unit complex with 4 rentals. As it
is none of the rental owners want to change our CC&Rs and one more rental and we can all kiss goodbye our
ability to sell or refinance. CAR was very short-sighted in sponsoring
this type of legislation. -D.R.
Rent Restrictions #2.
SB 150 seems to provide that any CC&R rental restrictions in place
prior to Jan. 1, 2012, would remain effective for all owners, regardless
of whether they were originally effective before or after an owner
acquired title. Do you agree?. -Tom H.
RESPONSE:
That is correct. SB 150 grandfathers existing rent restrictions. It
only affects those adopted by associations after January 1, 2012.
Accordingly, if any HOAs want to adopt rental restrictions, they should
amend their CC&Rs (and record the amendment) before that date.
Small Claims. I don't know what part of the State Don H is in but we went to small claims several times here in San Diego. These pro tems
are in their own fiefdoms. Our HOA has never won a small claims case,
at best, rulings have split the baby resulting in the HOA losing half.
One time we had pictures of the incident showing the resident damaging
the common area property. The pro tem merely ignored the proof stating
the resident could not afford the repairs as easily as the HOA and
should only have to pay half. Is that justice? Those of us that actually
have attempted to recover our rightful money know better than to rely
on small claims rulings. We have never lost in superior court and have
attorneys fees by statute in our CC&Rs. -Gary V.
Superior Court Delays.
The ability to seek delinquent dues in superior court may change due to
funding cutbacks by the state. This week, San Francisco Superior Court
was forced to close 60% of the Civil Courts, terminating 190 court
staff, two who live in our HOA. As a board member it now concerns me how
we will handle our delinquent units. I work for the Sheriff's Office in
SF and we have even removed 32 of our staff from those courts and back
to other divisions. It's now projected any civil case filed in SF won't
be heard for 2 years. -J.L.
Low Turnout a Good Sign. I
don’t fret if members don’t show for board meetings. To me it is
indicative of satisfaction. Board meetings are not social events,
they’re business meetings. How many attend city council meetings in
their free time? One thing for sure, if an agenda item is of interest,
people will show. You want attendance? Announce you are considering a
$1,000 special assessment or you are planning on banning children from
the pool or you will be considering new parking prohibitions. Then
they’ll show . . . and they won’t be apathetic. -Ed V.
Newsletters are for advertising & general information by
Adams Kessler PLC. Readers should not act on issues raised in our newsletters or website without consulting legal counsel. |
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