PROBLEM
LEGISLATION
WILL INCREASE FORECLOSURES
On
April 5, Assemblywoman
Julia Brownley
changed an existing bill on summary judgments to one that restricts the collection
of delinquent assessments. The
modified bill raises the threshold for foreclosure from $1,800/12 months to
$3,600/18 months.
Good Intentions. Ms. Brownley
undoubtedly has good intentions--protecting financially stressed owners from
foreclosure. Unfortunately, she is doing so at the expense of everyone else. If
associations cannot collect delinquent assessments, their budgets will fall
short. To compensate for the drop in revenues, boards have only two options, (i)
delay much-needed repairs or (ii) raise dues to make up for lost revenue.
Law of Unintended Consequences.Boards already face threats of litigation from owners impacted by deferred
maintenance. If they cut back on maintenance to avoid raising dues, damage from
increased roof leaks and plumbing backups will result in expensive litigation
and higher insurance premiums. If boards raise dues to pay for higher
legal/insurance expenses or alternatively raise dues to avoid litigation, they
risk pushing more owners into foreclosure/bankruptcy. Ms. Brownley's good
intentions will have the unintended consequence of actually increasing
foreclosures.
Embarrassing Owners. Ms.
Brownley did two more things I find troubling. She requires that payment plans
for financially stressed owners be (i) negotiated with the entire board rather
and (ii) approved in open session. Requiring a meeting with the full board instead of a
representative will delay approval of plans since boards meet monthly and not
everyone is always available. Moreover, the already embarrassed owner must
explain to a panel of five or more neighbors (depending on the size of the
board) why they cannot pay their bills. Finally, the payment plan
must then be approved by the board in open session in front of even more
neighbors. The embarrassment of the process may deter owners from seeking payment plans,
thereby increasing foreclosures.
RECOMMENDATION.
There are better ways to deal with this problem than pushing even more owners
over a financial cliff and increasing the litigation risk to associations. I
recommend contacting Assemblywoman Julia
Brownley and politely asking her to withdraw AB 2502. In addition, use CLAC's sample letter on your own letterhead and fax it to Assembly Housing
Committee members, by close of business Tuesday (April 20) if you want to be
listed as an opponent.
For those with an interest in this and other
association legislation, subscribe to the California Legislative Action
Committee
newsletter.
SUSPEND
PARKING
PRIVILEGES
QUESTION:
We have owners in default. One of my fellow board members is so frustrated that
he wants to suspend an owner's parking privileges. Our attorney told us that his
parking space is recorded as part of his unit so we cannot do that. Part of each
member's dues goes to support operation of garage. Why can't we pass a rule
stating if you are delinquent you lose your parking
privileges?
ANSWER:
Your attorney is right. If your delinquent member owns the parking space, you
cannot suspend rights to that space.
Civil Code ยง1361.5. However, you can suspend their guest parking privileges.
HEAD
OF LITIGATION
I am pleased to announce that
attorney Sherry Stroble has joined our firm to head up our litigation
department. Prior to joining Adams Kessler, Sherry practiced as a litigator with
one of the largest insurance defense firms in the country.
Sherry is a graduate of Vassar
College and earned her law degree in New York before moving to California. Her
bio is posted on our website.
As
part of our litigation service to clients, we set up password protected litigation calendars through our website. It allows clients to easily view
upcoming hearing dates and deadlines affecting their litigation.
RULES
EXPLAINED
QUESTION: Will you please explain the "rules" for me? I
understand that the CC&Rs are cast in concrete (almost) and must be
enforced. We have a booklet of rules made up by the board,
such as no screen doors, no lace curtains, no dog houses, no basketball hoops,
no Super Bowl parties, on and on. Can they enforce rules they make up as they
go along?
ANSWER:
Yes, boards can adopt and enforce rules. However, the rules must be reasonable. Rules without reasonableness
leads to rebellion.
Explanation. Your CC&Rs are like
California's constitution--only voters can
amend the State's constitution and only members can amend the CC&Rs. Your
rules are like state laws. Just as legislators
in Sacramento pass laws consistent with the constitution, boards may
adopt rules consistent with the CC&Rs. For example, if your CC&Rs allow owners to
have a dog, boards can pass rules requiring that dogs be on a leash and not make a
nuisance by barking excessively.
Adopting Rules. As provided
for in the Davis-Stirling Act, boards must give written notice to the membership
of proposed rule changes and a 30-day period so the membership can
comment on those changes. If the board adopts a rule despite membership
objections, there is a process whereby the membership can
veto the rule.
SUNTAN LOTION
AT THE POOL
QUESTION: I live in a gated
over 55 adult community. One of the rules is that no one using the pool is
allowed to use any kind of suntan oil/lotion. Is this legal?
ANSWER:
Yes, it's legal. The board is probably concerned about oil
transferring from swimmers to the water and then to the pool filters. Some types
of filters are degraded by tanning oils and the cost and frequency of cleaning
them goes up. On the other hand, not using protective lotions can lead to skin cancer. Your
board may want to rethink its policy. Maybe a more frequent cleaning of the
filters can be budgeted or perhaps the association can install a more expensive filtration system
that is not affected by suntan lotions.