2017 New Laws
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2017 NEW LAWS

TERMINOLOGY
Enrolled: A bill that passes both houses is sent for proofreading for consistency before being sent to the Governor for approval. Chaptered: A bill is "chaptered" once it is signed by the Governor. It becomes law January 1 of the following year unless it contains an urgency clause (takes effect immediately) or specifies an effective date.

2017 BILLS

AB 534. Mechanics Liens (Chaptered). This prohibits a mechanics lien from being filed against other owners in all homeowner associations (not just condominiums) unless the owner consented to or requested the work subject to the lien, except in the case of emergency repairs. It would also authorize owners in all homeowner associations (not just condominiums) to remove their separate interest from a lien against two or more separate interests by either paying to the holder of the lien the fraction of the total sum secured by lien that is attributable to the owner’s separate interest or recording a lien release bond, as specified.

AB 634. Solar System Requirements (Chaptered) This bill allows owners to install solar panels on HOA roofs, carports and garages. HOAs cannot require membership approval. HOAs can, however, require:

  • an applicant notify each owner in the building on which the installation will be located,
  • liability insurance, require maintenance, repair, or replacement of roofs or other building components,
  • a site survey to determine allocation of roof area among all owners sharing the same roof, garage, or carport,
  • future owners of the panels be responsible for maintenance and damage, and
  • installers indemnify the association for damage.

AB 690. Documents and Manager Conflicts of Interest (Chaptered). Managers and management companies must facilitate the delivery of documents into escrow and also disclose conflicts of interest, including:

  • receiving any referral fee or other financial benefit that could be derived from a business or company providing products or services to the association;
  • ownership interests or profit-sharing arrangements with service providers recommended to, or used by, the association;
  • receiving a referral fee or other financial benefit from a third-party provider distributing documents pursuant to Civil Code §4528;
  • disclosing any business or company in which the common interest development manager or common interest development management firm has any ownership interests, profit-sharing arrangements, or other financial incentives provided to the management firm or managing agent.

AB 731. Personal Income Tax Deduction  (Two-Year Bill). This bill allows qualified taxpayers (HOA members whose income does not exceed $150,000) to deduct from their income taxes an amount not to exceed $1,500 for HOA assessments.

AB 786. Statements of Information (Two-Year Bill). This bill allows associations to file their required statements of information online with the Secretary of State.

AB 1412. Address for Notices; Director Liability (Chaptered). Current law only grants immunity from personal liability to board members of HOAs that are exclusively residential. The bill extends protections to mixed-use developments where the volunteer does not own more than two separate interests. It also allows and HOA to send notices to the last known mailing address of an owner, or his/her physical property if no address was provided.

AB 1426. Uncontested Elections (Two-Year Bill). This bill exempts associations from balloting requirements if the election is uncontested.

AB 1569. Disability Accommodation of Animals. (Dead). This bill requires verification of a disability and the need for a service animal to come from a reliable third-party source.

SB 2. Recordation Fees (Chaptered - takes effect Immediately). To provide funding for affordable housing, this bill imposes a fee of $75 on every real estate instrument, paper, or notice recorded per transaction per parcel of real property. Does the “per parcel” language mean that if a homeowner’s association records a request for notice of default against a delinquent owner with 500 condominium units, is the fee assessed once or 500 times? It is left to County recorders to interpret on their own. The bill clearly increases the financial burden on owners in foreclosure. In addition, becasue of the complex allocation scheme for the monies raised, the bill will significantly increase the state's bureaucracy.

SB 147Mobilehome Residency Law (Chaptered). This bill changes the requirements regarding caregivers allowing management to require written confirmation of from a licensed health care professional of the need for the care or supervision, only if the need is not readily apparent or already known to management. Written treatment plans are no longer required for caregivers.

SB 407. Political Gatherings & Flyers (Chaptered). This bill nullifies HOA restrictions on the distribution of flyers by residents to other residents. It permits any resident to use common area facilities for political purposes (including inviting public officials and candidates for office to speak). HOAs cannot charge fee or deposit, or require liability insurance. Organizers can invite guests but not the general public.

SB 451. Liability for Harassment (Two-Year Bill). This bill waives HOA liability if its governing documents do not contain a provision authorizing the association to stop harassment of a member by another member.

SB 522. Solar Energy Membership Approval (Dead). This bill makes it easier to get membership approval for solar energy systems.

SB 721. Inspection of Decks & Balconies (Two-Year Bill). This bill requires the inspection of decks, balconies, and elevated walkways more than six feet above ground level in a building containing three or more multi-family units by a person licensed to perform these inspections by the Department of Consumer Affairs. The bill would require the inspections and any necessary repairs to be completed by January 1, 2021, and would require subsequent inspections every five years, except as specified.

2017 CASE LAW

Acqua Vista HOA v. MWI, Inc. Section 936 of the Civil Code contains an "explicit adoption of a negligence standard for claims" under the Building Standards Act against material suppliers. The Act does not apply to common law claims for strict liability against suppliers. Since the HOA's claim was brought under the Act, it was required to prove the defendant "caused, in whole or in part, a violation of a particular standard as the result of a negligent act or omission or a breach of contract."

Colyear v. Rolling Hills. Colyear sued a neighbor who asked the association to protect his views from Colyear's trees. The court dismissed Colyear's lawsuit concluding his neighbor's conduct was protected because view protections were of general concern to homeowners in the community.

In Re Guajardo. (2016 Bankruptcy case). This case had to do with priority of an assessment lien over a federal tax lien. A federal tax lien here has priority over a prior recorded HOA lien, except as to the itemized amount set forth in the NDA (Notice of Delinquent Assessment). For an HOA lien for future accruing delinquent assessments to have priority over a subsequent IRS lien, the CC&Rs should contain language that any lien on account of prior delinquencies shall be deemed to include subsequent delinquencies and amounts due on the account.

Marina Pacifica HOA v. SC Financial Corp. When unit owners purchased their units in the Marina Pacifica complex, they bought an ownership interest in their individual units and a share of an undivided leasehold interest in the land on which the complex was built. That leasehold interest included the obligation to pay monthly rent to the landowner and an assignment fee to the developers. Litigation erupted over the fee and the court ruled that a fee for assignment of ground lease interests to condominium owners, payable by individual condominium unit owners to the developers of the condominium project, is collectible if the recording requirements under Civil Code §§1098 and 1098.5 have been met.

Mashiri v. Epsten Grinnell & Howell. This is another in a series of cases where courts have found for a homeowner in a collection action because collection procedures were not strictly followed. In this case, the owner alleged the pre-lien letter contained language that conflicted with her Fair Debt Collection Practices Act (FDCPA) right to thirty days to dispute the debt. In particular, the notice sent to Mashiri demanded payment within thirty-five days of the date of the letter, which is inconsistent with a debtor’s right to dispute a debt within thirty days of receipt of the letter. By the time a debtor receives such a letter, there may be fewer than thirty days before payment is due. The court concluded the least sophisticated debtor, when confronted with such a notice, would reasonably forgo her right to thirty days in which to dispute the debt and seek verification. The infringement of the debtor’s right to thirty days in which to dispute the debt violates the FDCPA. In addition, if a homeowner disputes the debt and requests an informal dispute resolution proceeding, the HOA must participate in dispute resolution prior to recording a lien. (Civ. Code §5670.)

Revock v. Cowpet Bay West Condominium Assn. Walters suffered from disabilities and was prescribed an emotional support animal. Because her dog violated the “no dogs” rule of her association, Walters sought reasonable accommodation. Despite her doctor’s letter and a dog certification, the board imposed daily fines against Walters. In addition, one of the residents wrote a harassing blog about her. Walters filed suit under the Fair Housing Act. While her case was pending, Walters committed suicide. The district court dismissed Walters’ Fair Housing Act claims due to her death. The Third Circuit reversed, ruling that her claims survived her death.

Retzloff v. Moulton Parkway Assn. Former board members alleged the association was conducting business outside board meetings and sued alleging violations of Civil Code §4900 (board meeting procedures) and §5200 (records inspection procedures). Plaintiffs failed to attempt ADR as required by Civil Code §5950. The association demurred and the court granted without leave to amend. As prevailing party, the association moved for attorneys' fees. Plaintiffs appealed. The Court of Appeal reversed on the award of attorneys' fees concluding that Civil Code §5235 does not authorize a court discretion to award fees to a prevailing association. A plain reading of “any costs” as used in section 5235(c) does not support the inclusion of attorney fees as costs. Section 5235(c) entitles a prevailing association to costs, not attorney fees and costs.

Tract 7260 Ass'n v. Parker. Parker, a homeowner, requested a copy of the association's membership list and other HOA records. The association denied the request because they were being sought for an improper purpose--to be used against the HOA in a legal dispute. Parker filed a petition for writ of mandate to compel the association to allow him to inspect and copy the membership list and other books and records, as was his right as a member. The court agreed with the association that Parker was seeking the records for an improper purpose and denied his writ.

UNPUBLISHED DECISIONS

The following cases are unpublished decisions and are not binding precedent. However, they give insight on how future courts might deal with similar issues.

Castillo v. Cinnamon Tree HOA. Castillo was attacked and injured in his condo complex. He sued his HOA for failing to provide adequate security to prevent the attack. The court ruled in favor of the association because Castillo failed to present any evidence that showed an attack by Castillo’s assailants was foreseeable and the association had no duty to prevent random, unprovoked attacks against its members. An association is not an insurer of its residents' safety as against third party criminal conduct.

Although a landlord generally must maintain its property in a reasonably safe condition, a landlord only has a duty to take reasonable steps to prevent foreseeable criminal acts by third parties that are likely to occur. To establish the existence of a duty, a plaintiff therefore must identify a specific precautionary step the landlord should have taken that would have prevented the criminal conduct, and also show the foreseeable criminal conduct required imposing on the landlord the social and financial burdens associated with taking that specific action. The greater the burden placed on the landlord, the more foreseeable the criminal conduct must be. When one tenant commits a third party criminal act against another tenant, as opposed to a random outsider committing a criminal act, foreseeability turns on whether the landlord had notice of the tenant’s violent propensity.

Lingenbrink v. Del Rayo Estates HOA. When CC&Rs contain unambiguous view protection language, the association is obligated to enforce it. When trees grow and unreasonably block another owner's view, the trees must be trimmed, even if it means the trees must ultimately be removed. Boards do not have the discretion to deem a restriction "ambiguous" and change its meaning when the restriction's meaning is perfectly clear.

Lobel v. Woodland Golf Club of Auburndale. Woodland Golf Club is a private club. Lobel is disabled and cannot walk without crutches. He plays golf with the aid of a special cart that lifts and swivels him toward the ball. Lobel is not a member of the Woodland Golf Club but is a frequent guest. The Club banned his cart from the greens because it would cause expensive damage. Lobel sued under the Americans with Disabilities Act. The court ruled against Lobel because ADA requirements do not apply to private clubs.

Ocean Windows Owners Association v. Spataro. The association restated its CC&Rs to, among other things, restrict short-term rentals. Owners had complained about noise and public drunkenness by renters and property damage to elevators, lobbies, and hallways. Some owners had difficulty refinancing their units because lenders perceived the project as a “condotel.” The association could not meet the 75% approval required by its existing CC&Rs but exceeded the 50% required by the Davis-Stirling Act. The board petitioned the court for approval under Civil Code §4275 which was granted. An owner who rented her unit for short-term rentals appealed and lost. The court found the rental restriction protected property values, facilitated unit financing, and reduced wear and tear to the common areas from tenant move-ins and move-outs.

Presidio Community Assn v. Dulgerian. Dulgerian opposed a project to replace grass with drought-resistant plants and ran the association's landscape contractors off the property. The association sued and Dulgerian moved to dismiss the complaint with an anti-SLAPP motion. The court denied his motion and he appealed. The court of appeal affirmed the lower court decision. The court determined that interfering with an association's vendors or contractors is not a form of protected speech.

SUPERIOR COURT CASES

Superior court cases cannot be cited for precedent. However, they provide a window into how courts might view particular issues.

George v. First Service Management. (Los Angeles) Lance Sandman, an onsite manager of a condominium association, drove one of his board members to a pub for an evening of drinking. He then drove the board member home and on the way collided with another car on the freeway. The board member suffered severe injuries, including the near amputation of his right arm. He endured 30 surgeries but regained only partial use of his arm. He suffered pain, problems walking, cognitive issues and a host of emotional issues. Plaintiff contended that Sandman was acting within the scope of his employment because his employer, FirstService Management, permitted/encouraged Sandman to mix business with pleasure with clients. Plaintiff also contended that FirstService was negligent in the hiring, retention and supervision of Sandman because Sandman had a prior DUI while working for FirstService. The jury awarded $12 million in damages.

Pasternack vs. Fidelity National Title Insurance (Orange Co.). The owner of a lot in Palm Desert built a large home, pool and other amenities for the purpose of selling at a profit. The home overlooking a golf course had large open space areas around the house with berms on the property lines to act as noise and privacy buffers from adjacent properties. The home was bought by Pasternack. A survey revealed the seller had overbuilt the lot. Improvements and structures sold to Pasternack spilled over onto adjoining lots and the common area in violation of the CC&Rs. Litigation erupted with claims and cross-claims. Pasternack made a demand on his title insurance company, Fidelity National, to defend him. They denied his claim arguing its policy covered use rights as defined in the CC&Rs and the CC&Rs conferred no use rights--CC&Rs restricted an owner's rights, nothing more. The court ruled against Fidelity National when it determined that restrictions such as setback requirements, open areas, and berms created rights to views and privacy. The desirability and attractiveness of Pasternack’s property were damaged when the association failed to enforce its CC&Rs. Fidelity was ordered to pay the substantial legal bills Pasternack incurred defending himself in the first action.

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