QUESTION: Can the board continue raising dues, without ever asking the individual homeowners to vote about such an issue in these very difficult economic times???

ANSWER: As long as the board stays within limits set by Civil Code §1366 (5% special and 20% regular assessments), it can raise dues without a membership vote. Even though board members are owners just like everyone else in the association, legal duties are imposed on them as soon as they are elected to the board. They may not want to raise dues any more than you do but they face potential liability if they fail to repair the common areas.

Spending. Boards have narrow budgets with little or no discretionary spending. At best, they can defer some maintenance and implement limited reductions on a few expenses. Maintenance deferrals can, however, pose considerable risk if a leaky roof results in significant water damage, mold, and litigation. In the end, the deferral may be much more expensive than the original repair.

Easy Answers? There are no easy answers. Boards can defer what is reasonable to defer, squeeze every penny out of the budget, and limit dues increases. But associations still have to pay their utilities, buy insurance, update reserves, collect assessments, prepare financial statements, mow the lawns, and make repairs. If service providers raise their rates, boards may have no choice but to raise dues.

10% Ownership. No more than 10% of the units in the development may be owned by a single entity.

Delinquency Rate. No more than 15% of the total units in may be 30 days or more past due on their HOA dues. For example, a 100-unit project may not have more than 15 units that are 30 days or more delinquent.

HOA Master Policy. The following insurance is no longer permitted: (i) blanket policies that cover multiple unaffiliated condominium associations, and (ii) self-insurance arrangements whereby associations are self- insured or have banded together with other unaffiliated associations to insure all of the general and limited common elements of the various associations. NOTE: This means that management company "pool" programs (as well as programs such as CIBA and CAASA) where unaffiliated homeowner associations share a single property limit on a blanket basis no longer qualify for Fannie Mae financing.

Unit Coverage. Buyers will now be required to purchase an HO-6 insurance policy, also known as “walls-in” coverage, unless the association's master policy provides equivalent coverage. This means insurance must cover all unit improvements, not just original construction.

Fidelity Insurance. Condominium projects with 20 or more units require fidelity insurance.

Developer Control. There are additional requirements for developments still under developer control or in transition to owner control, and mixed-use developments with more than 20% percent of its space devoted to non-living areas.

QUESTION: Our pool only has one drain. We called the Los Angeles County Department of Public Health’s Bureau of Environmental Protection Swimming Pool Program. We were advised that we will not have to have another drain installed until such time as we resurface, renovate or drained for any reason. Since we currently do not plan to resurface, renovate, or drain the pool, are we still required to close the pool and lock the gate?

ANSWER: Ask the LA Public Health Bureau the following question, "Does our pool comply with the Virginia Graeme Baker Act?" If the answer is "Yes," get it in writing and open the pool. If the answer is "No," close the pool until your are in conformity with the Act. If you are not in compliance and someone dies in your pool, in addition to having a death on your conscience, you face crippling lawsuits and massive fines.

Very truly yours,

Adrian Adams, Esq.
Adams Kessler PLC