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ARSON
QUESTION: We had an arson at our
clubhouse.  The prime suspect is living next door to me. The suspect was expelled
from school for arson and killing a classroom bird. He is now enrolled in an
outpatient mental health program. Are board members acting properly by being secretive about the arson? The only ones that have shown any concern about my
safety have been the guards.
ANSWER: What you described is scary both for you and the board. Boards have a duty to exercise due care when it comes to
the membership's safety. That includes protecting members from foreseeable
criminal activity. The association's duty is not unlimited; members must also be
vigilant to protect themselves from harm. In this case, your board should at a
minimum notify the membership that a possible arson occurred in the clubhouse and ask everyone to be alert to any suspicious
activity.
Disciplinary Hearing. If the board has
evidence that your neighbor set the fire, it should hold a
disciplinary hearing and make a good faith determination as to whether he
committed the deed. If there is sufficient evidence, your neighbor can be fined and specially
assessed to pay for repairing the fire damage (unless insurance has already paid).
Obligation to Warn? If the board
determines that your neighbor set the fire, it may have an
obligation to alert the membership of the person's identity. Doing so allows
members to take appropriate steps to protect themselves. Unlike municipalities,
associations do not have governmental immunities and can be held liable for injuries
and damage caused by their negligence. The courts have likened associations to
landlords and have increasingly imposed liability for criminal activity. Consequently, if the
board knows of a threat to the community and does nothing to protect
the membership, it could be liable for any subsequent injuries or
damage.
Juvenile Arsonist. If the arsonist is a juvenile, boards should be cautious about
reporting his name to the membership. Not even courts or newspapers publicly
disclose a minor's name when they commit non-homicidal crimes.
RECOMMENDATION:
There are no easy answers when boards are faced with potential threats to the
membership's safety. To protect themselves from personal liability, directors need to follow the
Business Judgment Rule.
To that end, boards should consult legal counsel and follow their advice when faced with these kinds of
situations. For an excellent discussion about an association's duties related to criminal activity, see Curt Sproul and Katherine Rosenberry's Advising California Common Interest
Communities published by the Continuing Education of the Bar.
EXTRA LEGAL
ADVICE
QUESTION: Legally can a board president
seek generic information from an outside attorney instead of using the HOA legal
counsel?
ANSWER:
Yes but he does so at his own expense (unless the board approved the
consultation).
NO EXPERIENCE
NO TRAINING
COMMENT:  Qualifications for being on the board are simply that they want to do a good
job. That's it. They are volunteers. They are not trained to be on the board,
there are no requirements or experience in legal issues, property management,
executive experience, some of them don't even hold jobs. This is a travesty.
-Pauline B.
RESPONSE:
Two years ago voters elected someone with no training, no management skills,
and no executive experience to run the United States. If the most powerful man in the world can get
on-the-job training, it's reasonable to expect that condo board members can as well.
Legislation. There have been attempts in
recent years to push legislation requiring board members to take classes in HOA law. Such
attempts have failed. It is already difficult enough to recruit volunteers to
serve on boards. Forcing them to take classes in addition to working without pay and taking abuse from their neighbors would further discourage anyone from
volunteering. Most boards are conscientious and do a good job managing their
associations. The travesty is when members elect disruptive, self-serving
directors and let them stay in power year after year.
MAKING
LENDERS
PAY
QUESTION: In some transactions, a
"Condominium Rider" is recorded along with the grant deed. One
paragraph of the rider states "If borrower does not pay condominium dues and
assessments when due, then lender may pay them." Can HOAs force lenders to pay
the delinquent amounts?
ANSWER:
The rider states that lenders “may,” which is permissive not
mandatory. As a result, lenders can choose to pay an owner’s delinquent
assessments if they feel generous but their generosity cannot be forced.
UNINCORPORATED ASSOCIATION
QUESTION:  We have a small unincorporated
HOA built in the 1960s. I recently ran across the instructions for filing form
SI-SID with the Secretary of State. However, the board is questioning
whether we are actually required to file. While we meet the State's definition
of a CID, some board members have taken the position that because our HOA was
formed BEFORE Davis Stirling came into existence, we were not formed under it
and therefore the requirement for filing does not apply to us.
ANSWER: I
like the logic. I bet it works with the IRS . . . only income taxes enacted before I was born apply to me;
higher tax rates passed after I was born do not apply to me because I was formed
before they came into existence.
Not to lobby for lawyers but your board really needs
to talk to one. The Davis-Stirling Act applies to your association. Moreover,
as required by
Civil Code §1363.6, every association, whether incorporated or
unincorporated, must file
Form SI-CID. The
instructions on the Secretary of State's website affirm that "every unincorporated
association . . . shall file a Statement . . . biennially, in the month of July."
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