2010 STATUTES
AB 2016. Notification of Trustee Sales. Gives HOAs the ability to record a single “blanket” request (covering all parcels) to be notified of foreclosure sales; enables HOAs to commence billing new owners for assessments much sooner.
SB 1427. Foreclosed Property Maintenance. Existing law requires a legal owner to maintain vacant residential property purchased at a foreclosure sale. SB 1427 adds Sections 2929.4 and 2929.45 to the Civil Code requiring governmental entities to give owners notice of a violation before imposing fines.
AB 1726. Reduced Quorum. Would automatically reduce quorum to 40% and then to 33% for membership meetings if HOA failed to meet quorum. Vetoed
AB 1793. Artificial Turf. Would have prohibited HOAs from restricting installation of artificial turf by homeowners. Vetoed
AB 1927. Rental Restrictions. Would have made it more difficult for HOAs to limit renters by requiring a majority of all owners to vote to approve rental restrictions. Vetoed
AB 2502. Delinquency Collection Restrictions. Would have made collection of delinquent assessments extremely difficult and put increased financial strain on associations. Significant opposition killed the bill.
AB 1975. Submetering. Would have required new multi-family developments to have one master water meter and individual sub meters for each dwelling but would have prohibited HOAs from charging owners for their water usage. Died in Committee.
2010 CASE LAW
Affan v. Portofino Cove Homeowners Association (2010) 189 Cal. App.4th 930. Two owners (Mr. and Ms. Affan) sued their homeowners association and its managing agent for damages after their unit was flooded with sewage.
The Affans claimed that the Association and its manager breached their respective duties to maintain and repair the common area plumbing, thereby resulting in a sewage blockage that caused the flooding. The association and its manager argued that they were not liable to the owners because all decisions relating to the maintenance of the common area plumbing were protected by the rule of judicial deference recognized in the California Supreme Court case of Lamden v La Jolla Shores Homeowners Assn.
The appellate court ruled in favor of the homeowners. With regard to the management company, the court held that the Lamden judicial deference rule applies only to HOAs and does not protect management companies. As to the Association, the court emphasized the “narrow scope” of the Lamden rule, explaining that it only applies to “ordinary maintenance decisions”:
It is a rule of deference to the reasoned decisionmaking of homeowners association boards concerning ordinary maintenance. It does not create a blanket immunity for all the decisions and actions of a homeowners association. The Supreme Court's precise articulation of the rule makes clear that the rule of deference applies only when a homeowner sues an association over a maintenance decision that meets the enumerated criteria.
Since the basis of the Affans’ case was the association’s ten year failure to undertake any maintenance of the condominium complex’s main plumbing lines, despite knowledge of a recurring plumbing problem in its first floor units, the court held that Lamden did not apply:
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.
Chapala Management Corporation v. Stanton (2010) 186 Cal.App.4th 1532. Stanton, a homeowner, replaced windows in his condominium with sandtone colored windows knowing the color was not allowed and after the association denied his application on grounds it was not an approved color. The court ordered Stanton to comply with the association's color scheme and awarded attorneys' fees to the HOA.
Clear Lake Riviera Community Association v. Cramer (2010) 182 Cal.App.4th 459. The appellate court ordered a homeowner who knowingly built a home in violation of the Association’s height restrictions to fully comply with the HOA’s architectural guidelines, even though reducing the height of the owner’s house “will be expensive and inconvenient, and its cost may exceed the amount of economic harm inflicted…on the neighboring properties, at least as measured by the diminution in market value of those properties.”
The court ruled that the non-conforming house must be reconstructed to comply with the Association’s height restrictions, reasoning that:
1) The violation of the height restriction was not “innocent” because the offending homeowner was aware of the restriction, his neighbors had raised the height issue before the foundation was poured, and he made no good faith effort to comply with the restriction.
2) The height violation caused irreparable harm to neighbors because the new construction blocked their unobstructed views of the lake. Additionally, the neighbors suffered a loss of privacy, since the new house looked onto these residences.
3) The $200,000 cost of correcting the violation was not “grossly disproportionate” to the hardship caused to the Association because the height violation caused the value of one neighbor’s home to be diminished by over $75,000.
Diquisto v. County of Santa Clara (2010) 181 Cal.App.4th 236. Plaintiffs sued the County, its Board of Supervisors, and two county officials, asserting that the County improperly spent public funds for partisan electoral purposes by "campaigning" against a measure on the ballot. The court noted that boards can express an opinion about a ballot measure, i.e., they are allowed to take sides on ballot measures. Moreover, boards are allowed to distribute information about ballot measures without it constituting prohibited campaign activity
Dover Village Association v. Jennison (2010) 191 Cal.App.4th 123. The court examined Civil Code 1364(a) which states that owners are responsible for exclusive use common areas "unless otherwise provided in the declaration." Because the statute defers to an association's CC&Rs, the court turned to the Dover Village governing documents. It found that the CC&Rs were silent as to maintenance duties involving exclusive use sewer lines. The CC&Rs did, however, specifically designate patios and garages as exclusive use common areas to be maintained by owners. By expressly assigning maintenance duties for these exclusive use areas, the court concluded that all other exclusive use areas were the responsibility of the Association. Accordingly, the court found for Jennison and against Dover Village.
Harrison v. Sierra Dawn Estates Homeowners Assn. (2010). An unpublished decision that describes the problems associated with renters.
Mansouri v. Superior Court (2010) 181 Cal.App.4th 633. An arbitration provision in an association's CC&Rs is different from the Davis-Stirling Act's ADR requirements. If an association demands arbitration pursuant to its CC&Rs, it must meet the procedural requirements of the Code of Civil Procedure §1281.2.
Myrick v. Mastagni (2010). An ordinance requiring retrofitting of hazardous buildings does not insulate owners from negligence occurring prior to the compliance date.
Wolf v. CDS Devco (2010) 185 Cal.App.4th 903. A former director did not have the right to inspect corporate records, even though he was a sitting director both at the time that his inspection demand was made and at the time he filed a lawsuit to compel production of the records. The court explained:
[The former director] has no authority to support his argument that his inspection rights continue simply because he was still in office when he made the inspection requests and when he filed suit. Despite his public policy arguments promoting corporate accountability, he has not been transformed into an ombudsman or freelance investigator, for purposes of inspecting corporate records. When he lost his seat on the board, he lost standing to assert recognized inspection rights, since they are intended to promote the appropriate exercise of a director's fiduciary duties.
Worldmark v. Wyndham Resort Development Corp. (2010) 187 Cal.App.4th 1017. Worldmark is a California nonprofit mutual benefit corporation which has over 260,000 members. It owns vacation time share resorts throughout North America, and is not subject to the Davis-Stirling Act. One of Worldmark members, Robin Miller, demanded that Worldmark produce its’ membership records (including the email addresses of its members) for the purpose of distributing Miller’s petition to amend the corporate bylaws.
The court of appeals held that Worldmark was obligated to turn over all of its members’ email addresses pursuant to Corporations Code section 8330(a)(1). The court reasoned that:
[T]he term “members' ... addresses,” in section 8330, subdivision (a)(1), which a corporation is required to disclose, is sufficiently broad to encompass email addresses in light of the section's purpose and in light of allied sections that allow a corporation to communicate with its members for the purpose of the corporation's business….
Thus, the corporation may either give the list of member email addresses to a requesting member for a proper purpose, or propose an alternative in which it sends the requested information to the membership via email, without disclosing the email addresses to the requesting member.
The Worldmark case does not directly apply to homeowner associations which are subject to the Davis-Stirling Act, and consequently arguments can be made that it’s holding should not extend to HOAs.
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