2008 Laws
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2008 CHANGES IN THE LAW

2008 STATUTES


Solar Energy Restrictions
. AB 1892. Existing law (Civil Code §714) provides that restrictions on the installation or use of a solar energy system are void and unenforceable. This bill amends the provision to include the governing documents of associations.

Solar Energy Approvals. AB 2180. This bill requires an association’s approval or denial of solar energy systems to be in writing; and deems an application approved unless it has been denied in writing within 60 days from receipt of the application (unless the delay is the result of a reasonable request for additional information). If approvals are willfully avoided or delayed, an association could be required to pay penalties up to $1,000 to the applicant.

Solar Shade Control Act. This was signed into law in 1978 by Jerry Brown. It was designed to protect homeowners’ investments in solar panels by requiring the trimming of neighbors’ trees that block the sun from more than 10% of the solar panels. It provided for fines of $1,000 per day if an owner refused to trim their trees and made it a misdemeanor. When a judge convicted a couple in Sunnyvale for violating the law, the legislature decided to decriminalize the Act and make it enforceable in civil court. Starting 2009, anyone who plants trees and shrubs after their neighbor installs solar panels, can be sued if they impair the efficiency of the solar panels.

Disputes Re Fines and Fees. AB 2846.Section 1367.6 will be added to the Civil Code providing that if there is a dispute between an owner and the association regarding an assessment, fine, fee, or penalty levied against the owner, the owner may pay the disputed amount under protest and then commence an action in small claims court, as long as the amount in dispute does not exceed the jurisdictional limit of the court ($7,500 for owners, $5,000 for associations). Civil Code §1635.1 will be amended state, in pertinent part: “An owner may, but is not obligated to, pay under protest…” NOTE: Associations must give owners notice of this dispute resolution procedure.

Request for Notice of Sale. SB 1511.Often lenders sell the property in a foreclosure sale and fail to inform the association that the interest was sold and to whom. This amends Civil Code §2924b to require lenders to mail associations a copy of the trustee’s deed upon sale of an owner’s separate interest in the development. Notice must be given to the association within fifteen (15) business days following the date the trustee’s deed is recorded (Civil Code §2924b(f)). RECOMMENDATION: For this provision to apply, associations must record a proper request. All associations should file requests when the new law goes into effect on January 1, 2009.

Maintenance of Foreclosed Property. SB 1137. Requires the owners of vacant properties (usually bank foreclosures) to maintain the property or face penalties up to $1,000 per day. The bill amends, adds and/or repeals provisions in Civil Code §§2923.5, 29236, 2924.8, 2929.3 and Code Civ. Proc. §1161(b).

Freedom of Religious Expression in the Home Act. HR 6932. Bill was introduced because of a lawsuit in Chicago, Bloch v. Shoreline Towers HOA. The Association banned all “mats, boots, shoes, carts or objects of any sort” in the hallways. The ban included all religious symbols. Lynn Bloch was an Orthodox Jew and kept a Mezuzah on her doorpost. She sued in federal court and lost. As a result of the litigation, a bill was introduced in Congress to amend section 804 of the Fair Housing Act (42 U.S.C. 3604) that allows condominium owners to display religious objects or decorations on their doors unless the objects create a public safety problem or nuisance. PROBLEM: Does that mean Wiccans (witches) can paint pentagrams on their garage doors? We should expect more litigation.

Security Services.
(Passed in 2007). Beginning 2009, a private security officer who is uniformed, unarmed and employed exclusively by one employer must complete training in security officer skills.

Reserve Funding Plans. (Passed in 2007, Civil Code §1365(b)). Beginning January 1, 2009, associations must distribute a reserve funding plan (“RFP”) to all members along with the association's annual operating budget. The RFP must (i) describe how the association will pay for repairs and replacements of reserve items, and (ii) provide a schedule of special assessments, including size and duration of the special assessment, and increased regular assessments needed to sufficiently fund the RFP.

Virginia Graeme Baker Pool & Spa Safety Act. 15 USC 8004.To reduce drownings from pool filter suction, every public pool and spa in the United States must be equipped with anti-entrapment devices by December 20, 2008. No pools or spas are grandfathered by the Act. Public pools have been defined to include common interest developments.

Safety Vacuum Release. A vacuum release system capable of providing vacuum release at a suction outlet caused by a high vacuum occurrence due to a suction outlet flow blockage.

Suction-Limiting Vent System. A suction limiting vent system that utilizes a collector tank.

Gravity Drainage. A gravity drainage system that utilizes a collector tank (This device would have been installed during pool construction and cannot be added to an existing pool, only to new construction).

Automatic Pump Shut Off System. An automatic pump shut off system; or a device or system that disables the drain.
FANNIE MAE LOAN REQUIREMENTS. Owners in financially unstable associations may find it impossible to sell their units. Because of recent underwriting changes by Fannie Mae, the federally chartered company that buys home mortgages and sells them as securities, lenders are now required to examine an association's finances before making loans. For loan approval, Fannie Mae requires the following:
Delinquencies. No more than 15% of association's dues can be more than one month delinquent. [Need written collection policies and consistent enforcement.]

Insurance. The operating budget provides adequate funding for insurance deductibles. [Should add a line item to budget for insurance deductibles.]

Reserves. At least 10% of budget is allocated to funding reserves. [This does not mean reserves are 10% funded; it means at least 10% of the budget is allocated to reserves each year.]

Rentals. At least 51% of the total units in the project must have been conveyed to owner-occupant principal residence or second home purchasers. [Associations should amend their CC&Rs to include reasonable rent restrictions.]

Investors. No entity or person may own more than 10% of the units in the project. [Should amend CC&Rs to limit ownership.] ·Facilities Ownership. All facilities must be owned by the membership or the association, not by the developer.

Construction. The project must be substantially complete and a certificate of occupancy issued.

Separate Metering. Units should be separately metered. [If master metered associations have not already done so, they should start budgeting for sub-metering.]
2008 CASE LAW

Fourth La Costa Condominium Ass’n v. Seith (2008)159 Cal.App.4th 563. An owner challenged the association’s petition to amend the CC&Rs arguing the amendment was unreasonable because it restricted “For Sale” and “For Rent” signs in the common areas. He also argued the vote was invalid because (i) it was by mail-in ballot without a membership meeting, and (ii) lender signatures on return receipts were counted as “yes” votes. The court disagreed and found for the association.

Mission Shores Ass’n v. Pheil (2008) 166 Cal.App.4th 789. An owner challenged the association’s petition to amend the CC&Rs. The owner argued that the amendments were unreasonable because they (i) prohibited short term rentals and (ii) gave the association the power to evict tenants that breached the CC&Rs. The court disagreed and approved the petition. LESSON: Rent restrictions that are fair and nondiscriminatory are enforceable.

Ritter & Ritter v. Churchill Condominium Ass’n (2008) 16162 Cal.App.4th 103. The Ritters remodeled their unit and failed to fire-stop the floor unit as required by the building code. When cigarette smoke from a lower unit entered the unit, Ritter demanded the association fire-stop her unit and the entire building. The board refused, claiming she caused the problem and she should fix it. The jury decided the association should fire-stop her unit but not the building. It awarded $3,500 in damages to Ritter ($4,620 reduced by 25% due to Ritters’ negligence). The court then awarded ~$600,000 in attorneys’ fees to the Ritters. LESSON: Make repairs and then go to small claims court.

Treo @ Kettner Homeowners Ass’n v. Sup. Court (2008) 166 Cal.App.4th 1055. The developer recorded a set of CC&Rs that waived owners’ rights to a jury trial in the event of a dispute with the developer. The court held that it was unenforceable. Buying a home with the developer’s CC&Rs is not a contractual waiver of the right to a jury trial.

Harvey v. The Landing Homeowners Ass’n (2008) 162 Cal.App.4th 809. An owner sued the association for allowing members exclusive use of attics above their units. The CC&Rs allowed the board to grant exclusive use to the common areas if it was nominal, adjacent to the unit, and did not interfere with rights of other owners. The court held upheld the association’s approval of exclusive use and its authority to determine what is nominal use.

Pacific Hills Homeowners Ass’n v. Prun (2008) 160 Cal.App.4th 1557. The association brought action against Prun for installing a fence because it violated setback requirements in the architectural guidelines. Prun argued that since the guidelines were not recorded, the action was barred by the statute of limitations. The court disagreed. Civil Code §336(b) provides for a five (5) years statute of limitations for violations of restrictions and architectural guidelines qualified as restrictions. NOTE: Rules now have the same 5-year statute of limitations as CC&Rs.

Brutocao v. The Hunt Club Community Ass’n (2008) unpublished. Brutocao submitted remodeling plans to the architectural committee. After the plans were approved, he submitted changes that were rejected. The association claimed that since the changes were rejected, the original plans were now rejected. The court found for the homeowner because the CC&Rs did not state that approved plans were revoked if a second set was denied. LESSON: Committees cannot exceed the power given to them by the CC&Rs.

Ekstrom v. Marquesa at Monarch Beach HOA (Nov. 3, 2008) Cal.App.4th. Certain homes had ocean and/or golf course views. Over time, the views were blocked by palm trees on neighboring lots. The CC&Rs required that all trees be trimmed so they don’t exceed the height of the house. When owners complained that the association was not enforcing the CC&Rs, the board passed a rule excluding palm trees from the restriction. Owners sued and the association lost. LESSON: Rules must be consistent with the CC&Rs.

Golden Rain Foundation v. Franz (2008) 163 Cal. App.4th 1141. The Golden Rain Foundation is a private trust created to operate Leisure World in Seal Beach. Owners demanded access to records. Golden Rain refused claiming it was not covered by the Davis-Stirling Act. The court found that the Golden Rain Foundation was governed by the Act and ordered production of records. LESSON: Do not withhold records unless clearly provided for by statute.

Autry v. Villa Riviera Condominium Association
(November 26, 2008). The Corporations Code states that directors may be removed by a majority of a quorum. The bylaws provided that a director could not be removed except by a super majority of 60% of the membership. When the membership recalled Autry from the board, the association used the Corporations Code’s formula rather than the higher one in the bylaws. Autry sued and lost. She appealed and lost. LESSON: Unless statutes defer to an association’s governing documents, the statute will prevail.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

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