|
REVISING RULES
QUESTION: The board
announced that it does not have to post new rules they plan to adopt
or amend for our pool, park area, and tennis courts. The president
claims the rules are line item rules and not general operating rules so
members are not allowed to comment on them before the board approves
them. Is he right?
ANSWER:
If the board is making non-substantive changes (grammatical corrections
or renumbering), there is no need for membership comment. If
substantive changes are made, such as modifying existing rules, adding
new regulations, eliminating restrictions or altering the fine
structure, it needs membership input.
Rules Defined. I
don't know what your President means by "line item rules." That term
does not exist in the Davis-Stirling Act. The rules you described
are operating rules. Operating rules are defined as any regulation that
applies to the management and operation of the association or the
conduct of its business and affairs. Civil Code §1357.100.
This includes pets, parking, the common areas (such as use of pools,
parks and tennis courts), member discipline, architectural standards,
election procedures, monetary penalties, etc. Civil Code §1357.120(a).
Notice of Change. If the board changes any of the association's
operating rules, it must mail the proposed changes to the membership
along with an explanation of their purpose and effect at least 30 days
before voting on the change. Civil Code §1357.130(a).
Adoption of Changes. After the 30-day period, the board may adopt
the changes at a duly noticed open meeting of the board, taking into
consideration any comments made by the membership. Civil Code §1357.130(b).
Within 15 days of voting on the rules, the board must notify the membership of the results of the vote. Civil Code §1357.130(c). Members have a limited right to veto any new rules and rule changes.
MASTER PLANNED
COMMUNITIES
 Kudos to attorney Helene Fransz who just completed a new chapter for the Continuing Education of the Bar's treatise on Forming California Common Interest Developments.
The two volume CEB manual serves as a reference guide for lawyers. Her
new chapter on "Master Planned Communities" explains the many legal
issues attorneys must consider when representing developers of master
planned communities.
Ms. Fransz is also author of the chapter
"Financing Sales of Units in Common Interest Developments" which
discusses current FHA, Fannie Mae and Freddie Mac lending guidelines for
common interest developments. Ms. Fransz represents both residential
and commercial developers. She is also Of Counsel to Adams Kessler PLC, representing clients in connection with special projects.
THE BROWN ACT
QUESTION. Does the Brown Act apply to homeowners associations?
ANSWER. No. The Brown Act regulates the meetings of public
agencies, not private associations. The Brown Act specifically covers
(i) counties, cities, school and special districts, (ii) legislative
bodies of each agency, (iii) standing committees of a covered board, and(iv) governing bodies of nonprofit corporations formed by a public agency (Government Code §§54951-54952).
Instead of the Brown Act, community associations in California are regulated by the "Open Meeting Act" found in Civil Code §1363.05.
Azedeh Saghian, Esq.
NEW REVENUE STREAMS
QUESTION:
The board is looking for new revenue streams instead of raising
assessments. They want to allow business advertising in the laundry
rooms. I thought that funds could only come from assessments. Wouldn't
advertising revenue cause problems with the association's nonprofit
status?
ANSWER:
No, the outside revenue will not cause problems. Instead of being "tax
exempt" like charities, most HOAs are nonprofit mutual benefit
corporations. There are a number of ways that tax exempt entities can
lose their tax exempt status none of which apply to HOAs.
Tax Filing.
Whether an HOA files its tax returns under Internal Revenue Code (IRC)
§528 (1120H) or as a non-exempt entity operating within the rules of IRC
§277 (1120), there are provisions to deal with non-member user fees and
revenue streams. An HOA may end up paying an income tax on such
non-member income. However, most CPAs familiar with the HOA industry can
minimize this potential tax.
Thanks to Donald W. Haney, CPA, MBA, MS(Tax) of Haney Inc. for his assistance with this question.
FEEDBACK
 Following
is a sampling of the emails I received about the Navy SEAL team. Sorry I
could not print them all; I ran out of ink. -Adrian
I don't know what lending a hand means in the case of the Seals, but it sounds interesting. -Norm K.
Tell us more. Are you serious? -Don A.
Can you say where they are? Thought they were in Pakistan. -Trudy M.
Wow! We'd love to hear more! -Marjorie L.
RESPONSE: I could tell you more but then I'd have to wrap you in a sheet and drop you over the side of an aircraft carrier.
You are not really in Afghanistan... -Jill S.
Your credibility might have just gone out the door! :) -Helgo J.
Thanks for helping the Seals....Great Job!! -Deana K.
RESPONSE: Condo duty is the toughest in the world. That's why they called me.
Really! -Paul P.
WHAT!!! I'm going through withdrawals!! Looking forward to the next letter. -Helene S.
I
read your reason for no newsletter this week to my son the Chief EOD
type and his only reply was to tell you “BEADED WINDOW”. -Marc P.
RESPONSE: Uh-Oh. Sounds like another secret mission.
Thank you for your help on the Seals Team; you're my hero! -Maxine C.
You are awesome!!! -Diane R.
RESPONSE: I keep telling my wife but she's not buying it.
I was wondering if you could ask those Navy Seals if they could recover my lost equity? -Cynthia
RESPONSE: Hey, they're only human.
BRAVO on your service to our Country! :) -Lisa D.
How about bringing your SEAL 6 friends back with you to enforce our
CC&Rs? Some of our homeowners need to mow their lawns and some
actually park on the street. -Alan O.
RESPONSE: That may require a weapons upgrade.
I thought I saw the same intrepid characteristics in your letters as in the SEALS. -Lynda S.
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. |
|
|
|