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MONTHLY FINANCIAL
REPORTS
 QUESTION:
I asked the board to include the treasurer's report in the minutes
posted on the association's website. They refused because homeowners are
only untitled to a yearly report and the treasurer's report contains
private information. Is that true?
ANSWER: It's true that owners are entitled to an annual financial report and it's true that monthly financials may contain private information related to delinquencies. However, monthly reports are part of the books and records of the association. As such, members have a right to view and copy them. Any private information in the reports can be redacted.
Modified Accrual Reporting. The board might also be reluctant to release monthly reports if they were prepared on a modified accrual
basis, which can be misleading if owners are not familiar with this
form of accounting. While I understand the concern, it is not justified.
Withholding financial information only fuels suspicion the board is
hiding something.
RECOMMENDATION: Boards
should routinely include full financial reports or at a minimum a
summary "Treasurer's Report" in their minutes and then post them for
membership review. If the association has a website, the minutes and
financial reports should be displayed in a members-only portion of the
website.
GRANDFATHERING PETS
 QUESTION: Our CC&Rs carry a 15-pound pet weight restriction. This statute has not been enforced for over fifteen years and more than 50% of the homeowners have dogs over 15 pounds.
A new board is enforcing the restriction and grandfathering pets
currently here. Has enough time elapsed to make this rule unenforceable?
ANSWER: Enough time has
elapsed to make the restriction unenforceable against those owners who
already have large dogs, which is why the board properly grandfathered
those pets.
Restarting the Restriction. However,
associations can reestablish restrictions by giving written notice to
all owners that no new violations will be allowed. It's like hitting a
reset button. Over time, existing violations will disappear as
grandfathered pets die and replacement pets comply with the restriction.
RECOMMENDATION:
Reestablishing the pet restriction will be difficult since anyone
wanting a large dog will point to existing violations and argue that
they should have one too. Accordingly, current and future boards must
consistently and even-handedly enforce the restriction. If the
membership does not like the pet limitation, it should amend the
CC&Rs to establish a higher weight limit or eliminate it altogether.
NO ANNUAL ELECTION
QUESTION:
My HOA had an annual meeting but could not reach quorum. So the current
board stayed in place til next year's election. Is this the proper way
to handle this situation?
ANSWER:
Maybe. Boards need to make a good faith effort to achieve quorum. More
often than not that means making multiple appeals for ballots and
extending the annual meeting date to continue collecting ballots until
quorum has been achieved.
Petition the Court. If quorum cannot be achieved, the board can petition the court to reduce the association's quorum to the number of votes cast.Corp. Code 7515.
If the court approves, the ballots can be opened and a new board seated.
Unfortunately, that means spending money on lawyers. If lack of quorum
is a chronic problem, that means petitioning the court after every
election. That also means raising dues to cover the annual legal
expense.
Do Nothing. If despite the board's best efforts
turnout is especially low, it is understandable that a board might take
no further action. Very low turnouts usually means the membership is
satisfied with the existing board and sees no reason to vote. When
members are unhappy, they turn out in large numbers. Accordingly, doing
nothing under these circumstances may be a viable option.
Owner Petition. If balloting was close to quorum but the board failed to extend voting and did
nothing to encourage turnout, the current directors may be purposely
sitting on their hands so they can stay in office. If so, members can
seek a court order. In Samii v La Villa Grande HOA,
the Court of Appeal noted that if an association refuses to hold an
election as required by the governing documents, any association member
can petition the court for an order that the election be held.
RECOMMENDATION. Rather than spend money on lawyers filing court petitions, associations should spend their money amending their documents to eliminate quorum for the election of directors. Once this requirement has been eliminated, elections become fairly routine.
FEEDBACK
 Speed Bump Gas Bogus. The
greenhouse gas argument is bogus. A 15 mph speed limit usually
accompanies speed bumps/humps. Drivers are not supposed to race and
slow repeatedly through a street with these safety devices. Cruising
slowly at 15 mph does not require acceleration after each bump/hump.
-Glenn B.
Heart Problems. I'm a 67-year-old guy with heart
problems and a family history of the same. When the inevitable
paramedic call is made for me, seconds will count. Can my widow sue the
association because the speed bumps held up the emergency equipment?
Hurry and answer because I feel a chest pain and she needs the money.
-David A.
RESPONSE: Sorry, you don't have a case if the City's Department of Building and Safety or the Fire Department approved the speed bumps. You better get an insurance policy quick.
Street Paving.
I failed to mention in last week's question that the board is paving
entire streets with no access for 24-48 hours. The only streets being
paved in halves(?)
are the main access routes. Even at that, there is no traffic control
and not enough room to maneuver safely. Most of the residents here are
in their 70's and 80's. Not a safe situation. -Michael M.
RESPONSE:
The additional facts completely change my opinion. Industry practice is
to pave one side of the street at a time so as to allow for resident
and emergency access. If entire streets are being closed, then the board
is needlessly exposing the association to potential liability. If
they're doing it to save money, the decision is ill-advised.
Lookey-Loos.
BODs should not impede potential buyers from doing their due diligence.
In this tough real estate market, many Orange County management
companies are charging potential buyers for HOA docs just to review! I
understand there is a cost to produce these documents but we should look
for opportunities to help buyers acquire property, not make it tougher.
Many of the buyers are replacing a delinquent account, best for all
members! How about posting minutes, CC&Rs, Rules, etc. online? -Len
M.
Hurt Feelings. Since you seem to have a great sense of humor, I'll pass along the attached form
that an attorney friend of mine, who is a colonel in the Army JAG
Corps, sent to me for modification and possible use when responding to
certain types of homeowners. -Wayne W.
RESPONSE: I always liked the JAG Corps. Your form brings back fond memories of my days in the Marine Corps.
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