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MEDIEVAL TIMES
 QUESTION: In about 5% of my associations, recruiting a quorum of board members is no longer possible. A Berkeley professor who lived in one of my HOAs suggested
a lottery in which members would be drafted to serve as a director. He
said it was done in medieval times in Italian city-states where every
male citizen was subject to being drafted to sit on the city council. Do
you have any thoughts on this?
ANSWER:
Women might object to the "every male citizen" part but it may come to
that. With the legislature annually increasing the burden on
associations, it becomes ever more difficult to find volunteers to serve
on boards. Your solution sounds plausible if your bylaws are amended to
require it (and the HOA throws in a free helmet). I am curious to know
if it’s been tried by any HOAs in the United States. Perhaps some of our
readers will know the answer.
CONTINUING PROBLEMS WITH
FHA CERTIFICATION
 Every
time I mention the current administration by name, I get swamped with
emails from readers who love him and those who don't. So as to avoid any
controversy, I will be more circumspect. Readers should be aware that
the administration of "You Know Who" or "He Who Must Not Be Named"
continues to mishandle issues involving FHA certifications for
condominium projects.
Negative Impact. This is having a significant negative impact on an already damaged housing industry. Attached is an article
from the St. Petersburg Times describing why so few associations can
get certified and the potential legal jeopardy it creates for boards of
directors. Boards can be subjected to penalties up to $1 million and 30
years imprisonment if the certifications they submit are found to be
incorrect.
ASSIGNMENT OF RENTS
 QUESTION:
One of our owners, who rents out his unit, is $6,500 behind in paying
HOA dues. We were told we could require the delinquent owner's tenant
to pay his rent to the association rather than to the owner. Our
property manager says that this is theoretically possible but it should
be avoided because it would unduly expose us to a risk of lawsuit, given
that our CC&Rs do not contain an explicit "assignment of rents"
clause. Is this correct?
ANSWER:
Your manager is correct. I don't want to step on any toes but your
board should be getting its legal advice from an attorney not a manager.
Boards who rely on managers for legal counsel create unnecessary risk
for the manager and the board. Directors could lose the benefits of the
Business Judgment Rule in the event they were sued.
CC&R Provision.
Our firm routinely includes an assignment of rents provision in the
CC&Rs we restate for associations. We have successfully used it to
collect rent from delinquent owners (with renters) and we have
successfully defended it in court. As with anything the board does,
there is a risk of litigation. Amending your CC&Rs lowers (but does
not eliminate) the risk of litigation and increases the likelihood of
prevailing in the event you go to court. If you decide to amend your
CC&Rs, make sure the provision is drafted by an experienced HOA
attorney--there needs to be specific language in the provision.
MORE FEEDBACK
RE BOARD EMAILS
 Board Emails #1. I
personally love the new
law eliminating discussion between board members, in our community it
gets out of hand with so many emails going back and forth and so many
decisions being made via email. -Debbie S.
Board Emails #2. Don't
we need to apply just a tad of common sense to this issue? Surely, it's
OK to discuss and handle routine business matters by email. -Jim S.
Board Emails #3.
It seems that most HOA boards operate in accordance with the law and in
a positive manner towards their members. It is the few who want to
skirt the laws and take advantage of their members that cause
restrictive laws to be passed by the Legislature. -E.C.
Board Emails #4. If a board is worried about delegating too much authority to the president, they can form an Executive Committee (Corp. Code §7212)
with two or more directors, but less than the entire board, to handle
issues between board meetings. The board should carefully craft the
purpose and authority of the Committee so it can do what is intended and not run amok. -Richard Neuland, Esq.
FURTHER ANALYSIS
Emails between directors are not entirely precluded by the amended Open Meeting Act.
Minority of Directors.
The amended Act allows for fewer than a majority of directors to
discuss or comment on an item of business so long as the email exchange
does not become a "series" of emails involving a majority of the board.
Majority of Directors.
A majority of directors can also email each other, provided their
emails do not involve an "item of business." The amended Act defines
"meeting" as:
A
congregation of a majority of the members of the board at the same time
and place to hear, discuss, or deliberate upon any item of business
that is within the authority of the board. (Civil Code §1363.05(k)(2)(A))
An "item of business" is then defined to mean:any action within the authority of the board, except those actions that
the board has validly delegated to any other person or persons,
managing agent, officer of the association, or committee of the board
comprising less than a majority of the directors. (Civil Code §1363.05(k)(1), emphasis added.)
To
be an "item of business" the matter must be an "action" within the
authority of the board. Use of the word "action" twice in the amendment
suggests that the purpose of the communication must be to propose an
action or consider taking an action. If the necessity of this nexus
between the communication and a possible or proposed plan of action is
correct, then a majority of directors can exchange emails without
violating the Open Meeting Act, depending on the exchange.
For
example, a majority of directors can discuss the implications of the
changes in the Davis-Stirling Act or talk about the deteriorating
quality of food at the clubhouse restaurant without violating the
communication constraints imposed by amended Civil Code §1363.05. These
kinds of discussions are not at the level of an item of business and no
action is being proposed.
Thank you to Curtis C. Sproul, Esq. of Sproul Trost LLP for his input on this aspect of the amended Open Meeting Act.
MOBILE APP FEEDBACK
 Congratulations
on the well deserved award. I enjoy reading your newsletter--it is
well formatted and visually appealing. -Joe G.
Congratulations on
receiving the Silver Award for the Davis-Stirling website. In my
opinion the decision of the International Academy of Visual Arts and W³
Awards to select you as the recipient merely confirms what has clearly
been your place as the premier website for information about homeowner
associations in California. I view your selection as one that enhances
the credibility and importance of the actual award. -Bond S.
Congrats on the honors. They are well deserved! -Jim
RESPONSE: Thank you to these and the many others who sent a congratulatory note. This past week we added Android tablets to the list of mobile devices
(iPhones, iPads, Blackberries and Android phones). We will add more
devices as the marketplace shakes out winners and losers in the mobile
device wars. I will announce them as we add them. -Adrian
 NO NEWSLETTER
NEXT WEEK
There will be no newsletter next week. I will be on a hiking trip in Idaho.
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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Adams Kessler is growing. We seek a skilled HOA attorney. Contact Adrian Adams by email or 310-945-0282.
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 CC&Rs
To update documents, contact Azy Saghian.
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 Adrian Adams
is participating in a seminar in San Diego on Tuesday, November 4 for
highrise & midrise safety, mechanical oversight and legal/risk
mitigation.
For details and RSVP, see seminar flier.
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Resolve disputes before they become expensive, contact us!
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 Contact Tina Chu about limiting rentals.
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Articles may be used provided there are no changes and the following is included:
Reprinted from
Davis-Stirling.com by Adams Kessler PLC
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 Contact Nathalie Ross about legal services.
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