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REPORTING HOA
LITIGATION
QUESTION:
Because litigation matters are reserved for private executive session
meetings, does the board have any liability if it informs the membership
of litigation involving the association?
ANSWER: If done properly, there is no liability. The Court of Appeals dealt with this issue in Healy v. Tuscany Hills.
Summary of Case.
In this 2006 case, homeowner Gloria Healy sued Tuscany Hills claiming
the Association had defamed her when it informed the membership that her
refusal to allow access through her
property for weed abatement resulted in increased costs to the
Association. Healy alleged she
suffered loss of reputation, shame, mortification and hurt feelings in
the amount of $250,000. She also sought punitive
damages. The offending letter stated in part:
Dear
Affected Tuscany Hills Member: . . . Please be advised that the [the
Association is in litigation because it is performing] weed abatement at
an additional cost to the Association, primarily because . . . ingress
and egress . . . is being prohibited by the owner of 6 Villa Scencero.
Decision.
Healy won her lawsuit at the trial level and the association appealed.
The Court of Appeals reversed the lower court decision. The Court
determined that the allegedly defamatory statements came within what is
known as the "litigation privilege" when the letter expressly referred
to litigation arising from Healy's refusal to allow ingress and egress
for weed abatement.
Litigation Privilege. The litigation privilege is a type of immunity given to statements in connection to litigation. The protections are found in Civil Code §47(b) and Code Civ. Proc. §425.16
which are construed broadly to protect the right of litigants to the
utmost freedom of access to the courts without the fear of being
harassed subsequently by derivative tort actions. Thus, a communication
is absolutely immune from any tort liability if it has some relation
to judicial proceedings. Healy v. Tuscany Hills.
RECOMMENDATION:
Members have an interest in knowing about litigation involving their
association and boards should keep them informed. However before
anything is released, legal counsel should review and approve the
wording of the disclosure. In addition, disclosure is a board function,
not the right of individual directors.
UNFAIR HARDWOOD
RESTRICTIONS
QUESTION:
Our condo development has 36 units--1/3 of the units are on the 1st
floor with wood flooring. Our CC&Rs require a vote to amend so that
2nd & 3rd floor units can install wood floors. It seems unfair and
possibly illegal to allow 1st floor units to have wood floors and not
the 2nd & 3rd floors.
ANSWER: There is
nothing illegal with the arrangement. Hardwood floors can create a great
deal of nuisance noise, hence the restriction on wood floors on
upper floors. The first floor
has no restriction because it is on the ground floor with no one underneath to disturb.
Amending CC&Rs.
This kind of arrangement is typical in older sets of CC&Rs. Since most owners today want the beauty of
hardwood and tile floors (and the increased property values that go with them), many
associations have amended their CC&Rs to allow for the installation of
hard-surfaced floors, provided they meet certain noise insulation criteria.
RECOMMENDATION:Before allowing hard-surfaced floors, associations must take
into account how their condos are constructed, the weight of the tile, the
noise insulation levels desired, and which areas in a unit can have hard
surfaces--typically, areas over
bedrooms must remain carpeted. Boards should work with an architect or acoustical engineer to
develop proper standards. Once standards have been prepared, legal counsel should prepare language for
the CC&R amendment.
BARKING DOGS
Earlier
this week the City of Los Angeles adopted an ordinance to fine owners
of dogs that bark excessively. The City defined excessive barking as
that which continues for 10
minutes or more, or intermittently for 30 minutes or more within a
three-hour period. Violators face fines
of $250 for a first offense, $500 for a second and $1,000 for a
third offense.
HOA Rules. HOAs need not rely on local ordinances to address excessive barking. Associations can adopt their own definitions for
nuisance barking and establish fines appropriate to their own associations. For sample definitions see nuisance barking.
FEEDBACK
FHA Certification #1. Why would a high-end complex need FHA certification?
RESPONSE:
If the market values of condominiums in your complex are over $729,750
(the loan limits for FHA), there is no need for FHA certification.
FHA Certification #2. "You Know Who" or "He Who Must Not Be Named". . . I literally laughed out loud! -A.S.
FHA Certification #3. Our bylaws are 30 years old. No one has a signed copy and I
understand there is no legal requirement for signed bylaws. We've been
told that signed bylaws are now one of the requirements for FHA
approval. Should the current board sign our bylaws and give them to the
FHA?
ANSWER: According to Scott Iden of US Approvals LLC, the Department of Housing and Urban Development (HUD), which
oversees the FHA, has always required a signed set of
bylaws. It has been his experience that if the board authorizes the
president to sign the bylaws, it should satisfy the FHA. The
authorization to sign the bylaws should be in recorded in the board's
minutes.
Assignment of Rents. Does the Davis-Stirling Act address the issue of assignment of rents you discussed in your newsletter?
RESPONSE:
The DSA does not mention assignment of rents. If an association wants
authority to collect rental income from a delinquent owner's tenant, the
association's CC&Rs need to be amended. It would be nice if
California's legislature enacted a statute similar to Utah's Title 57, Chapter 8, Section 53. Thank you to Scott Iden for information about Utah's statute.
Board Email #1. I'm
so glad I signed up for your newsletter. It has made me aware of many
new aspects of condo living, which is becoming increasingly more
complicated. One wonders if the legislators who have put unfair
restrictions on HOAs could survive with the same rules in their
day-to-day business. As an HOA President who works the night shift, I
depend on email to get small business done with other board members.
The internet is a valuable tool for our HOA. -Lew S.
RESPONSE:
The HOA
industry's best defense against onerous regulation is to educate our legislators. To that end, all
associations should be annually contributing money to CAI-CLAC via a line item in their HOA budget--even if it's only a few hundred dollars.
Board Email #2.
The new restrictions on board email communication has the biggest
impact on 3-member boards as any discussion between 2 directors is a
majority. Our solution will be to post daily, each week day (5 separate
posts in the common area) of a executive session meeting. This will give
us the freedom to continue our discussions. -Joseph L.
Medieval Times. Are you going to Medieval Times or do you work there part time? -Sandi S.
RESPONSE: I work there full time now. It looked like a good career move.
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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