2014 Laws
Adams Stirling PLC
Menu

2014 CHANGES IN THE LAW

2014 BILLS

AB 569. Housing Cooperatives. Current law exempts a limited-equity housing cooperative or a workforce housing cooperative trust from provisions of existing law governing subdivided land transactions that are applicable to stock cooperatives if the limited-equity housing cooperative or workforce housing cooperative trust complies with specified conditions. This bill would revise the conditions for the exemption to, among other things, require that each party that executes a regulatory agreement with the cooperative satisfy itself that the rights of the cooperative members are provided adequate protection, as specified. This bill contains other related provisions and other existing laws.

AB 968. Maintenance & Repairs. It clarifies maintenance obligations for exclusive use common areas. Unless otherwise provided in the CC&Rs, associations are responsible for maintaining, repairing, and replacing common areas. Homeowners are responsible for maintaining, repairing, and replacing their separate interests and for maintaining the exclusive use common areas appurtenant to their separate interests. Associations are responsible for repairing and replacing exclusive use common area. The change takes effect 2017.

AB 1738. Internal Dispute Resolution. This unfortunate piece of legislation authorizes a member and an association to be assisted by an attorney or another person in explaining their positions in an internal dispute resolution hearing. It moves IDR from its original no-cost meet and confer status to more pre-litigation footing without the benefit of mediation confidentiality, which makes everything that occurs in IDR admissible in court. Since no warning is required when an owner brings his/her lawyer to IDR, associations may feel compelled to have their legal counsel involved in all IDRs (which drives up the cost).

AB 2100. Yard Maintenance, Fines and Drought. Prohibits HOAs from imposing a fine or assessment against a member of a separate interest for reducing or eliminating watering of vegetation or lawns during any period for which the Governor has declared a state of emergency, or a local government has declared a local emergency, due to drought. This bill contains other related provisions.

AB 2104. Water Efficient Landscapes. Prohibits an association from fining or assessing owners for reducing or eliminating watering of vegetation or lawns during any period which the Governor has declared a state of emergency or the local government has declared a local emergency due to drought.

AB 2188. Solar Energy. Existing law prohibits HOAs from restricting solar energy system. HOAs can adopt reasonable rules that do not significantly increase the cost of the system or significantly decrease its efficiency. “Significantly” means a cost exceeding 20% or decreasing the efficiency of the solar energy system by 20% or an amount not to exceed $2,000. This bill redefines “significantly” to mean 10% instead of 20% and reduces the dollar amount from $2,000 to $1,000.

AB 2317. Execution: Sale of Property. Existing law provides that a sale of property pursuant to specified statutory provisions regarding enforcement of judgments is absolute and may not be set aside for any reason. The judgment debtor may recover from the judgment creditor the proceeds of a sale pursuant to the judgment with interest if the judgment is reversed, vacated, or otherwise set aside. If the sale was improper because of irregularities in the proceedings, because the property sold was not subject to execution, or for any other reason, the judgment debtor, or the judgment debtor’s successor in interest, may commence an action within 90 days after the date of sale to set aside the sale if the purchaser at the sale is the judgment creditor.

AB 2430. Transfer Disclosures. Civil Code §4528 and §4530 currently require associations provide an owner or his/her designee with certain transfer disclosure documents in connection with a prospective transfer of the owner’s separate interest, and authorize the association to collect a reasonable fee based upon its actual costs for providing those documents. The Legislature amended these sections to do the following:

  • The association must collect its reasonable fee only from the seller of the separate interest; 
  • The association cannot charge an additional fee for electronically delivering the documents in lieu of a hard copy; 
  • The association must provide an estimate of the fees it will be charging for the documents on the statutory form upon receipt of a written request and “prior to” processing the request for documents; 
  • Any fees which are charged for the documents must be “separately stated, and separately billed from all other fees, fines, or assessments billed as part of the transfer or sales transaction”;
  • Any documents which are not “expressly required” to be disclosed in Civil Code section 4525 “shall not be included in the document disclosure;”
  • The seller must provide the purchaser “at no cost” with current copies of all documents specified in section 4525 that are in the seller’s possession;
  • The fee for each document provided to the seller must be “itemized” in the seller’s disclosure statement to the purchaser; and 
  • The seller must compensate the association, person or entity which provides the disclosure documents to the prospective purchaser.

AB 2561. Personal Agriculture. Allows owners to plant personal use food gardens in their exclusive use backyards regardless of any restrictions in the governing documents. The bill does not authorize crops to be grown for commercial purposes or to be sold on the property. Nor does it authorize the growing or marijuana or other non-food crops. Associations can adopt reasonable rules and regulations related to the placement and maintenance of the gardens.

AB 2755. Directors. A person who doesn’t have authority to vote as a member of the governing body of a corporation is precluded from being a director of that corporation. (Corp. Code, § 5407.)

SB 992. Recycled Water. Exempts associations that use recycled water for landscape irrigation from prohibitions against fines against members.

SB 1243. Manager Certification. Standards for certification of managers which were to expire January 1, 2015 were extended to January 1, 2019.

2014 CASE LAW

Beacon Residential Community Assn. v. Skidmore, Owings & Merrill LLP (2014) 59 Cal.4th.568. The Supreme Court of California held that an architect owes a duty of care to future homeowners where the architect is a principal architect on the project, even if the architect does not actually build the project or exercise ultimate control over construction decisions. Here, the association brought a construction defect action against the developer and architect and it was determined that the architect designed the homes in a negligent manner and, thus, owed a duty to the future homeowners and was liable for such negligence.

Ennabe v. Manosa. Charging admission to an event where alcohol is served can create liability for injuries or deaths that result from alcohol consumption.

Holland v. Assessment Appeals Board. The Santa Barbara County Assessor reassessed property taxes on two stock cooperative mobilehome parks following the sale of mobilehomes in the parks. The assessor used a valuation method recommended by the State Board of Equalization ("SBE") pursuant to Section 62.1 of the Revenue and Taxation Code which extracts from the reported purchase price of a space the value of the mobilehome and then assigning the remainder of the purchase price to the interest in the park.The mobilehome parks argued for a different method of valuation and litigated the case to the California Supreme Court. The Court deferred to SBE's interpretation of the law.

Huntington Continental Townhouse Association v. Miner. Previously, once an association initiated foreclosure it could refuse partial payments so as to ensure full payment of all monies owed including collection costs. The court decided that homeowners associations must accept partial payments from owners who are in the lien or foreclosure stages of collection. If the partial payment reduces the owner's delinquent assessments to less than $1,800, the association cannot foreclose (judicially or non-judicially) unless the remaining overdue assessments are more than twelve months delinquent.

Market Lofts Community Assn v. 9th Street Market Lofts, LLC. Associations have standing to sue developers to resolve disputes arising from parking license agreements. The developer built a parking structure for the membership with significant rights reserved to the developer for the next 99 years that were detrimental to the association and while in control of the HOA board took actions that benefited the developer and harmed the association. Once the board came under membership control, the association sued the developer for breach of fiduciary duty, breach of the license agreement, concealment, unfair business practices, and rescission of the sub-license agreement. The developer argued the association did not have standing to sue. The Court of Appeal disagreed. It held that the as beneficiary to the license agreement, the association was an interested party and had standing to protect the membership's rights.

Sabal Palm Condominiums of Pine Island Ridge Assn, Inc. v. Fischer, No. 12-60691-Civ-SCOLA (S.D. Fla. March 19, 2014). The association restricted residents to one cat or fish. Resident Deborah Fischer suffered from multiple sclerosis and notified the association that she was bringing home a trained service dog. The association acknowledged her request and asked for (i) documentation of her disability, (ii) copies of medical records, (iii) documents relating to the nature and species of the dog, (iv) documents regarding any training the dog received, and (v) evidence of a medical need for a dog weighing more than 20 pounds. Deborah responded that she did not have to provide medical records and to enclosed a picture of herself in her wheelchair. The association stated the information was insufficient and asked for more. Deborah provided medical history from her doctor showing that she had multiple sclerosis. The board denied Deborah’s request and sued the Fischers. The Fishers counter-claimed against the association and the president personally.

The court determined that the materials Deborah submitted clearly established she was disabled and needed a service dog, and the association could not restrict as to size pursuant to a published HUD policy that breed, size and weight limitations cannot be applied to an assistance animal. The court concluded that the association violated the Fair Housing Act and that the board president could be held personally liable for contributing to the association’s refusal to accommodate the Fishers.

Seahaus La Jolla Owners Association v. Superior Court. The Seahaus HOA sued the Developer over construction defects. To keep the membership informed, the HOA scheduled a number of meetings where the association's attorneys updated the membership and answered questions. Through discovery, the Developer tried to find out what was said in those meetings. The association objected, claiming attorney-client privilege. The trial court ruled against the association because homeowners were not clients of the association's law firm. Therefore, the privilege did not apply. The association immediately filed a petition with the court of appeals. Upon review, the appellate court reversed the lower court because (i) the Davis-Stirling Act obligates associations to inform homeowners in a membership meeting about proposed common area construction defect litigation and (ii) the association's CC&Rs require written notice to the members of the intent to file suit and approval by more than 50% of the membership. Accordingly, information distributed to the membership was not discoverable by the Developer.

Talega Maintenance Corporation v. Standard Pacific Corporation (2014) 225 Cal.App.4th 722. The Fourth District Court of Appeal denied a developer’s anti-SLAPP motion filed to defeat an association’s action against the developer, and developer’s appointed members of the board. The association alleged fraud, negligence, and breach of fiduciary duty against the developer and its two appointed representatives on the board concerning their failure to repair certain common area trails and claims at board meetings that the association was responsible for the repairs. The developer brought an anti-SLAPP motion to strike the causes of action claiming the matters arose out of constitutionally protected statements made at board meetings. The Court determined that the alleged fraudulent statements concerning the common area repairs made by the developer’s appointed members on the board did not satisfy the requirements for granting an anti-SLAPP motion, since such statements were not matters of a “public interest” or “official proceeding” under the SLAPP statutes which are meant to apply to constitutionally protected speech. 

Washington and Sandhill Owners Assoc. v. Bank of America, U.S. District Court (D. Nev. Sept. 25, 2014). Under the principle of federal preemption, an association cannot foreclose on HUD-owned property. If an association's foreclosure were allowed to stand, it would impede the implementation of federal policies and programs. Accordingly, any foreclosure against HUD owned property is void.

UNPUBLISHED OPINIONS


The following cases are unpublished opinions and are not binding precedent.

Guttman v. Glen Towers Owners Association, Inc. (2014) 2d Civ. No B239938 (Super. Ct. No SC110813). Glen Towers prohibited owners of First-floor "maids units" from renting them to nonmembers. Guttman sued claiming the restriction was unreasonable. The Association presented a number of reasons why the restriction was both reasonable and rationally related to the Association's concerns over safety, security and the impact on the common area facilities. The court agreed with the Association and upheld the restriction.

Bel Air Glen HOA v. Dowlatshahi (2014) No. B243549. The Bel Air Glen CC&Rs require that unit leases be in writing and copy provided to the association. The Dowlatshahis conveyed their unit to Escandari via an unrecorded deed. The HOA thought it was being rented to Escandari and asked for a copy of the lease and was told there was none. The association held a hearing and fined the Dowlatshahis. The Dowlatshahis sued the association and the association sued the Dowlatshahis. The association argued that the unrecorded deed was fraudulent and Escandari was actually leasing from Dowlatshahis. The court made a distinction between occupancy pursuant to a lease and occupancy by quitclaim deed. The court also noted that the when the board was told that no lease existed, it failed to inquire if the occupancy was pursuant to some other arrangement. Since Escandari's occupancy was not pursuant to a lease, the Dowlatshahis could not be held liable for breach of the CC&R requirement that they provide the association with a lease. Accordingly, the court found in favor of the Dowlatshahis.

Harper v. Canyon Hills Community Association, No. G048445 (Cal. Ct. App. Aug. 19, 2014). Canyon Hills adopted architectural guidelines that required neighbors be made aware of any proposed alterations. The Valentines submitted an application to tear down their existing house and build a new one. The association approved the project. Harper, a next door neighbor, complained and the board investigated. The board did not find merit in her complaint and allowed construction to proceed. Harper sued. She alleged the association did not follow its own application process and was not protecting her home value. Ruling in the association's favor, the court decided Harper did not have standing to enforce the Architectural Guidelines.

PGA West Residential Association, Inc. v. Mork, No. E054276 (Cal. Ct. App. Oct. 21, 2014). An owner who alters drainage patterns is liable for the water damage that results. With HOA approval, the Morks built a swimming pool, sprinkler system and other improvements. They also altered the original grade of their yard which caused water to flow into their neighbor's unit. Their neighbor and the HOA both sued the Morks. The Morks argued that the HOA was responsible for maintaining the common area and it had approved the swimming pool (and by extension the change in the drainage pattern). The court disagreed. It held that the Morks assumed the duty to maintain their property in a way that did not create a nuisance. It ruled for the association and awarded damages.

Reynolds v. Auburn Country Villa Homeowners Association (Jan. 16, 2014). Reynolds challenged a CC&R amendment that limited the number of rental units in the community to six. The amendment was approved to protect the value of the homes in the development and to retain eligibility requirements for secondary financing. The restriction prevented Reynolds from renting her unit. The court ruled the rental restriction was reasonable and did not violate public policy.

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

Adams Stirling PLC