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DELEGATING FINES
 QUESTION:
At a recent board meeting, a director questioned the authority of the
architectural committee to send out violation notices. He felt it was
reserved exclusively to the board. Others argued that the board had
given the committee that authority and owners could always appeal their
fines to the board. Which is it?
ANSWER: Door number two. Boards can delegate the task of issuing violation notices, holding hearings and imposing fines.
Architectural violations can be allocated to the Architectural
Committee or they can be assigned to a Rules Committee to handle all
violations. The board can then hear appeals.
Delegating Duties.
By statute, boards are given authority to delegate many of their duties
to committees, provided the committee's activities are under the
ultimate direction of the board. Corp. Code §7210. There are some things that boards cannot delegate. Nondelegable duties include: (i) attending meetings and voting on motions, (ii) filing vacancies on the board, and (iii) staffing executive committees.
RECOMMENDATION:
Because there may be disagreement by some lawyers on this issue, boards
should consult with and follow the advice of their association's legal
counsel.
NOTICE OF
ANNUAL MEETING
 QUESTION:
Board meetings require posting, however the annual meetings do not,
that is how we interpret the Civil Code. Although it is great to post
the annual meeting, it is not required by law. Do you agree?
ANSWER:
I agree. Boards can, but are not required to, post notice of annual
meetings in the common areas. The requirement to post applies to board meetings. Annual meeting notices must be given by one or more of the following methods: (i) personally, (ii) electronically, or (iii) by mail or other means of written communication addressed to members at the addresses appearing on HOA's books. Corp. Code §7511(b). Even though posting membership meetings in the common area is not required, it is a good idea.
BOARD QUORUM AT
ANNUAL MEETING
QUESTION:
Is a board quorum needed at the annual meeting of the homeowners in
order to conduct business, e.g., elections, nominations from the floor,
etc.?
ANSWER: No, a board quorum is not needed at membership meetings. A quorum of directors is needed for board meetings
and a quorum of members is needed for membership meetings. The President, however, needs to be present to conduct membership meetings (or someone in the President's place).
CAR's RESPONSE TO
RENT RESTRICTION ARTICLE
 Following is a rebuttal to our article about legislation sponsored by the California Association of Realtors ("CAR").
Mr. Adams,
CAR crafted the foundational language for SB 150
for the safeguarding of the rights of all owners in CIDs. The bill had
nothing to do with protecting REALTOR'S® future sales of condos to
investors. Cases in point:
•
A Veteran condo owner is called to duty overseas and must rent
out his townhouse while serving his country. (Force him to sell?)
•
Your grandmother becomes ill, moving to long-term care facility
and needs income from renting her mobile home to continue paying her
bills (Force her to sell?)
• A senior dies wanting to leave his/her condo to children who already own a home. (Force the estate to sell?)
•
Bob and Mary, looking toward retirement, buy single-level patio
home in a PUD to rent out until they are ready to move in. (Force them
to sell?)
•
An investor buys a unit out of short-sale. The former owner had
not paid HOA dues for two years and is $7,000 in arrears; he files
bankruptcy. The investor buys it and begins paying dues in full and on
time. (Force her to sell?)
•
Dozens of other scenarios ... but consider this: You own units
in an HOA where bad jobs and housing markets have forced over 15% of
your owners to default on their loans. Many stop paying monthly dues.
Due to a critical shortage of revenues, your Board notices you that to
avoid bankruptcy, it is imposing a $2,500 assessment on your and every
other unit in your complex. Your regulations say that only
owner-occupants can buy, but due to the poor financial health of your
Association lenders will not loan to first-time buyers with low down
payments. Perhaps you would then welcome investor-owners to purchase
who would pay their HOA dues in full and on time.
In
crafting what would become SB 150, CAR and the California Legislature,
took great care to protect the autonomy of each and every HOA. HOAs may
still amend governing documents to exclude all but owner-occupants if
they believe that is what is in the best interest of their memberships.
Each new prospective buyer can read governing documents and simply
decide not to buy if that is a problem for them. But what the HOA may
not do is to strip an owner of the right to rent if that right existed
when he acquired title to the property. -Sten Bjernefalt, Member C.A.R. Housing/Common Interest Development Committee.
RESPONSE:
The fact that CAR would insert itself into another industry and over
the objections of that industry’s three trade organizations (CAI, CACM
& ECHO) push through legislation that damages that industry does not
speak well of CAR’s professionalism. There is no logical conclusion to
reach but that it was in CAR’s own self-interest that they pushed
through unwanted legislation which stripped away the rights of a
majority (and often a super-majority) of homeowners (the amount needed
to amend CC&Rs) to protect themselves from the harm created by
excessive rentals in their developments.
Moreover, the reasons
you cited for supporting the legislation are all routinely dealt with
through hardship exceptions. What CAR did was appalling, and the
negative consequences to many HOAs will be significant. FHA, Fannie Mae,
banks and insurance companies all red flag developments with excessive
rentals and either raise rates or refuse to do business with them. Smart
buyers will steer clear of high rental developments. This will put
marginal HOAs into a downward spiral with no chance at recovery thanks
to CAR's meddling. How does that possibly “help” homeowners? -Adrian Adams
HOW BAD BILLS
BECOME LAW
 The reason why Senate Bill 209
was not "fixed" before being sent to Governor Brown is that it was
jammed through both houses of the Legislature within 48 hours (July
5-7).
Warnings to Corbett. Senator Corbett plunged ahead
despite repeated cautions about the conflict in law her bill created and
its negative impact on HOAs. Senator Corbett did not heed the warnings.
CAI-CLAC's lobbyist Skip Daum was in cell phone contact with her staff
on the floor of the Assembly as this was occurring but Ms. Corbett was
too busy jamming it through the legislature to consider the bill's
glaring flaws.
Governor Alerted. Skip then alerted
Governor Brown's legal staff about the problems and recommended a veto,
but the Governor wants to be seen as an "environmentalist" and signed
the bill anyway. Knowing the bill was seriously flawed, Governor Brown
issued a "Signing Message" acknowledging the defects and the need for corrections.
Follow-Up.
Efforts to fix the statute before HOAs become entangled in
litigation were immediately commenced as Senator Corbett's staff
contacted Skip for draft language. Skip Daum is working to put language
in another bill by September 9 so it can be sent to the Governor for
signature.
RECOMMENDATION.
With Governor Brown signing everything that hits his desk, including the
flawed rental legislation pushed by CAR, I have no doubt the HOA
industry will get hit with more bad legislation. If boards aren't
already doing so, they should add a line item to their HOA budgets to
contribute to CAI's Legislative Action Committee.
Even if the amount is modest, HOAs need to back the Committee's efforts
to support good legislation and oppose bad legislation.
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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