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BOARD MEMBER
ON A LEASH
 QUESTION:
Our board tells everyone that we are a self-policing community. I was
told that if i had a complaint about a dog off its leash I should take a
photo so there would be no denial from the dog owner. I did take a
photo and was screamed/cursed at and flipped off by the dog owner. The
problem is the dog owner is a board member. What is my recourse?
ANSWER: The director's behavior was clearly inappropriate. Since
board members are tasked with enforcing the association's rules, they need
to set a good example by carefully following those rules. If they
don't like a particular rule, they have the power to change it. Until that happens, they should follow the rules.
Rules Enforcement.
When it comes to enforcing rules, I'm not a fan of owners running
around taking pictures of each other. It creates too much animosity. The better approach is to
privately and politely talk to the person who is violating the rules to
persuade him to follow them. If that fails, two or three
should quietly meet with the director. If he still refuses to listen, you should file a formal complaint
with the board at which point the board can hold a hearing and levy fines.
The board does not need a picture of the violation before taking
disciplinary action, it can make a decision based on the testimony of
witnesses.
NOTICE OF DEFAULT
QUESTION:
If a delinquency is less than $1,800 and less than 12 months, can an
HOA record a NOD? A board member stated we can record a notice of
default 30 days after recording a lien. Isn't a notice of default the
start of foreclosure?
ANSWER:
Good question. There appears to be some disagreement in the industry as
to when a foreclosure starts. A few argue that a “Notice of Default”
(NOD) is only a preliminary notice and the foreclosure process does not
begin until a "Notice of Sale" is sent. Most take a more conservative
approach that the NOD actually starts the foreclosure process. They
argue that the Davis-Stirling Act makes it clear that anything following the recording of a delinquent assessment lien initiates the foreclosure process. As provided for in Civil Code §1367.4(b)(2), associations may collect debt:
By recording a lien on the owner's separate interest upon which the association may not foreclose
until the amount of the delinquent assessments secured by the lien,
exclusive of any accelerated assessments, late charges, fees and costs
of collection, attorney's fees, or interest, equals or exceeds one
thousand eight hundred dollars ($1,800) or the assessments secured by
the lien are more than 12 months delinquent.
Since
a Notice of Default follows the lien, it starts the foreclosure
process. NODs are mailed to delinquent owners by certified mail and
recorded to let them (and the rest of the world) know that the owner is
in default and the association has decided to sell the property.
RECOMMENDATION:
Until the legislature or the courts sort out the issue, the safer approach is
to wait until the $1,800/12 month threshold has been met before recording a Notice
of Default. Boards should review the matter with their legal counsel and trustee
service before making any changes to their existing collection policy.
Thank you to attorney Richard Witkin of the collection service Witkin & Neal, Inc. for his assistance with this question.
FEEDBACK
 Dissolving an HOA. What I found very interesting about the County Letter
was the Supervisor's lament about who would pay for the upkeep of the
association's roads should the County take over the assets of the
association. One might assume that property taxes would do this.
Governmental entities have become so used to off-loading their duties
onto associations while still collecting taxes that should (or might) be
paying for these things that they can be aghast at having to pay for
them. -Clifford Treese
RESPONSE:
You hit the nail on the head--their property taxes should already be
paying for road maintenance. But that’s not the way local agencies see
it. Municipalities love to collect taxes while shifting all their duties
onto HOAs.
Bank of America. This is interesting as BofA
denied our HOA eligibility for the same reasons Wells Fargo just did.
They want our association to waive its rental restriction (which reduces
speculative buying). They also take the opposite position that if too
many units are rented, they will not refinance or lend, and the
insurance premiums often rise. The second issue was that our reserves
are only 40% funded (as a result of our spending $4 million on major
projects over 4 years). I'm with you, I think Carolina hasn't informed
California. -J. Leake
RESPONSE: BofA's
right hand does not know what its left hand is doing. I think that may
be true for most banks. It's a wonder they stay in business.
BofA Underwriter.
I suspect the BofA underwriter was reviewing the project under DELRAP
(Direct Endorsement Lender Review and Approval Process). Under DELRAP,
it is the lender who reviews the project for approval (or rejection),
and a lender’s underwriting criteria may be more stringent, or
misinformed. -Scott Iden, US Approvals
Contract Terms. Our CC&Rs have
multi-year allowances on specific types of contracts. -J.L.
RESPONSE:
Once a developer turns over control of the association to the
membership, the HOA is no longer under the jurisdiction of the Dept. of
Real Estate. At that point, the membership can amend the CC&Rs to
allow for contract terms longer than one year.
Evergreen Clauses.
Since there is usually no maximum time to notify vendors that you don't
want an automatic renewal of a contract, I send a letter as soon as the
contract is executed that I don't want the contract to renew without
renegotiation and a new signature. I attach a copy of the letter to the
contract. That provides me an out if I don't want to renew the
contract and puts the onus on the vendor to contact me if they want to
continue the agreement. -Al P.
Tickler File. In the binder
and tickler file for contracts there should also be attention to
insurance coverage, indemnity and dates when that may expire. That to me
is as important in protecting the HOA & property owners. -Rose C.
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