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TEAR IT DOWN!
A recently decided case makes clear the dangers of ignoring an association's restrictions.
Despite
warnings from neighbors and the Architectural Committee, Robert Cramer
built a 2-story house that violated architectural height restrictions
and blocked views. As a result, the HOA sued. Cramer defended by, among
other things, claiming it would be too expensive to comply with the rule
(at least $200,000). The court was not sympathetic and ordered Cramer
to reduce the height of his house by nine feet. Following are reasons
given by the court:
- It was not an innocent error; Cramer was aware of the restriction and had been warned before his foundations were poured.
- Neighbors were harmed because Cramer's house blocked their views and invaded their privacy by looking into their houses.
- Allowing
Cramer to keep his violation would cause irreparable harm to the HOA
since the association would effectively lose the power to enforce its
CC&Rs.
Another
important outcome was the court's ruling that circumstantial evidence
was sufficient to establish that the association's rules were validly
adopted. To read the entire decision, see Clear Lake Riviera v. Cramer.
CHRISTMAS GIFTS
 QUESTION:
On the subject of giving gifts to our property manager either from the
board or from members, I was under the impression that this is not
allowed. The reason being that even homeowners wanting to say “thank
you” with a nice houseplant for the property manager could be
misinterpreted as buying favors.
ANSWER:
The association and its members can give gifts of appreciation to
vendors and employees. There is nothing illegal with the practice. Some
associations allow gift-giving in keeping with the spirit of the season
while others discourage it for fear it may influence the manager’s
objectivity in dealing with owners. The particular practice for your
association is a business decision for the board to make.
SEWAGE BACKUP
 Another important case this year involved an association's failure to investigate the cause of repeated sewer back-ups.
Over
the course of 10 years, sewage flooded the Affan’s unit eight times.
Each time it happened, the association cleaned it up but failed to
investigate the cause. The ninth time sewage flooded their unit the
Affans sued the HOA claiming it breached its duties to maintain and
repair the common area plumbing.
The association argued that it was protected by the Lamden decision
which established the principle that courts defer to the maintenance
decisions of associations. The court disagreed and ruled against the
association. It pointed out that Lamden did not apply because:
The
judicial deference doctrine does not shield an association from
liability for ignoring problems; instead it protects the Association’s
good faith decisions to maintain and repair common areas . . . Put
simply, the clogged drain lines and resulting sewage eruption do not
implicate any decision by the Association [based upon reasonable
investigation], but rather reflect the Association’s abiding indecision
and inattention to plumbing maintenance issues. [Affan v. Portofino Cove HOA] RECOMMENDATION:
Whenever a board has evidence of an underlying maintenance problem, it
should investigate the issue and make appropriate repairs. Fixing a
problem is much less expensive than litigating the issue (and then
fixing it under court order). Avoid the aggravation and legal fees by
fixing problems before they erupt into a messy ones.
FHA FINANCING
 As a reminder, the Federal Housing Administration (FHA) adopted rules that will decertify condominium
developments throughout California. When that happens, owners who want
to refinance or sell their condominiums will be cut off from a major
source of financing. That means market prices may fall in affected
associations, which could lead to more foreclosures as distressed owners
find it difficult to sell their units.
Unless they were recently certified, condominium associations need to be recertified and then again every two years thereafter. There are a number of companies, such as FHA Pros,
that specialize in helping condominium projects get FHA certification.
Boards should explore the costs and benefits of certification to see if
it is appropriate for their development. To find out if your association
has approval, go to FHA's website.
FEEDBACK
Trash Collection.
Our HOA has been in operation for almost 5 years and each owner has
been paying for city services (trash collection) in their property taxes
every year since then, even though the HOA pays for a private company
to collect trash. -John R.
RESPONSE:
Attorney Richard Brooks of Marcus, Errico, Emmer & Brooks, a law
firm near Boston, tackled this same problem in Massachusetts. He worked
with HOAs to lobby city councils throughout the state and convinced 39
towns to provide trash services to HOAs.
Lavish Pensions? I
agree with Tom N's comments taking issue with your use of "lavish
pensions" as a cause of current governmental budget problems. -James S.
RESPONSE:
Unfortunately, government employee pensions have been a significant
contributing factor to California’s massive deficit. It’s been widely
reported in the press from the L.A. Times to the Wall Street Journal
about how government employee pensions helped plunge California into a
deep hole. Recent reports have highlighted Governor-elect Brown’s
meetings with the unions on this issue. By all reports, the pensions
appear to be out of step with the private sector. I suspect it will be
an ongoing topic of news coverage as the state grapples with the
problem. California could take lessons from HOAs on how to run a lean
government. 
NOTE: I'm taking time off over Christmas to be with family. Newsletters will resume in January.
Merry Christmas,
Adrian J. Adams, Esq.
Adams Kessler PLC
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