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ASSESSMENT REFUND?
 QUESTION:
Our CC&Rs say the board can raise our yearly dues. However, our
rules were changed to state that our dues cannot be raised above our
current $36. The board raised our dues in violation of the rules. Does
the board have to reimburse homeowners for the increased money ($11), as
what they did was illegal?
ANSWER: The board did not do anything illegal nor does it need to refund the
assessment. The restriction in your rules is void for two reasons: (i) rules must be consistent with the CC&Rs (Civ. Code §1357.110) and (ii) the Davis-Stirling Act gives boards the power to raise annual assessments by 20% and impose special assessments up to 5% despite anything to the contrary in your rules (Civ. Code §1366(b)).
SUSPEND MEETING
ATTENDANCE
 QUESTION: If a member is delinquent, can we suspend their right to attend board meetings?
ANSWER: Not really. Boards can suspend "privileges"
such as use of the recreational facilities, but the right to attend
meetings is not the same as using the swimming pool. Meeting attendance
is a right conferred by the Davis-Stirling Act: "Any member of the
association may attend meetings of the board..., except when the board
adjourns to, or meets solely in, executive session..." Civ. Code §1363.05(b). The statute makes an exception for executive sessions but not for delinquent owners.
On December 28, 2011, the Federal National Mortgage Association
(Fannie Mae) announced new condominium insurance requirements. The
changes are effective for mortgage loans with application dates on or
after January 1, 2012.
Fannie Mae is the nation's largest player in the secondary mortgage market. It is related to but operates
differently than the FHA. Instead of insuring loans, it buys FHA insured loans from lenders. Accordingly, any change in Fannie Mae policies can significantly impact the housing market in California.
Walls-In Coverage.
Fannie Mae is eliminating “walls-in” insurance coverage terminology. In
addition, it is changing HO-6 coverage from no less than 20% of the
unit’s appraised value to an amount sufficient to repair the
condominium to its condition prior to a loss whether the claim is paid
by the association's property insurance, by the homeowners HO-6 policy
or some combination of both. Does this mean HOAs need to insure the
improvements in a unit? That is unclear. What about owner upgrades
(hardwood floors, granite counter-tops, walnut cabinets, etc.)? It seems
unlikely that HOA property insurers will want to be responsible for any
and all improvements & betterments in a member's unit. These
problems need to be resolved before the market can fully recover.
Selling Guide.
In addition, Fannie Mae is updating its Selling Guide to permit master
or blanket insurance policies that combine insurance coverage for
multiple condominiums or other residential or substantially residential
projects that are unaffiliated as long as the coverage meets certain
specific criteria. See Fannie Mae Servicing Guide Announcement SVC-2011-23.
RECOMMENDATION:
If associations want to maximize the marketability of units in their
developments, boards should talk to their insurance brokers about Fannie
Mae's requirements and determine whether any changes need to be made to
their current insurance coverage. Because Fannie Mae's requirements may
conflict with CC&R provisions, boards should include legal counsel
in their evaluation.
Thank you to Clifford Treese of Association Information Services, Inc. for his assistance with this update.
CONFERENCE CALL
BOARD MEETING
 QUESTION:
Under the new law regarding conference calls, our president believes we
cannot have meetings with call-in by the board members without allowing
members to speak during the meeting. Is this true?
ANSWER:
The new law does not change how meetings are conducted. The revised
Open Meeting Act allows directors to call into the meeting via
teleconference if at least one member of the board is at a physical
location where homeowners can attend. Civ. Code §1363.05(k)(2)(B).
Your president may think that new rights are being conferred because of
language that is a little misleading: "Participation...constitutes
presence at that meeting as long as all board members...are able to hear
one another and members of the association speaking on
matters before the board." Civ. Code §1363.05(k)(2)(B).
The italicized language is not giving members the right to speak on
matters as they are raised during the course of the meeting, it is
referring to the Open Forum.
Board members attending via conference phone must be able to hear
homeowners who are addressing the board during the Open Forum portion of
the meeting (and owners must be able to hear the board as it conducts
the meeting).
DOG LEASH
QUESTION: Can the board issue fines for not having dogs on a leash?
ANSWER: Yes, provided (i) the violation and fines are in the governing documents and (ii) due process is given.
 NEXT WEEK.
I'm not sure there will be a newsletter next week. I'm in trial for one
association and providing expert testimony for another. (I have to work
from time to time so I can pay for these newsletters.)
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