QUESTION: Is it possible to set up a mechanism by which older homeowners could leave their assets to their association when they pass? I have friends who are well off but have no family to leave their money to.
ANSWER: Yes, both the living and the dead can transfer assets to their associations--one more easily than the other.
Estate Planning. An association's ability to receive donations of cash and property is sometimes found in their governing documents. Even if not explicitly spelled out, they still have that authority as corporations. That means they can receive cash and property via someone's will. As part of their estate planning, owners can simply name their HOA as a beneficiary in their will or trust. When they pass, their assets transfer to the association. The transfer would be taxable since homeowner associations are not 501(c)(3) charitable organizations.
Charitable Organizations. Homeowners can also make transfers while they are living. The transfer would, however be subject to taxation. Even though homeowner associations are nonprofit, they are not tax deductible organizations. If an association wants to make the gifts tax deductible, they could set up a separate tax exempt Community Service Organization (CSO) with its own board of directors.
Limitations. The independent CSO could then oversee fund-raising and charitable services. A significant limitation is that the recipient association cannot receive a direct benefit from the CSO--the funds raised cannot be used for maintenance of the common areas or to supplement their reserves. . To ensure compliance with the laws governing charitable organizations, the CSA must register with the Attorney General's Registry of Charitable Trusts which oversees them. In addition, it must annually file tax returns with the IRS and the Franchise Tax Board showing that its funds are being used for charitable purposes.
Charitable Services. For a senior community, charitable services might include transporting seniors to their doctors, changing the batteries in smoke alarms in their homes, or holding educational classes.
Thank You. Many thanks to the members of our CID lawyers organization--a group of over 70 HOA lawyers from around the State who share ideas on novice or difficult legal issues that arise from time to time. Some have experience setting up Community Service Organizations and shared their expertise on this issue.
NOTE: If readers have wealthy friends with no heirs, I'm available for adoption. It's one of the many services we offer. -Adrian
6th ANNUAL DRM
Free Legal. Desert Resort Management will be holding its annual education symposium for board members and homeowners. I will host one of their round table discussions where attendees will be briefed on new laws and their impact on associations.
Future of HOAs. In addition, there will be two keynote speakers. Andrew Brock, Senior VP of Associa, will discuss the future of community association living and what it means for boards of directors.
Battlefield Lessons. Scott McGaugh, New York Times Bestselling Historian and Marketing Director for the USS Midway Museum, will be sharing some lessons from the battlefield such as training, building trust, and using teamwork to help unite communities.
Date & Location. The Symposium will be held at the Agua Caliente Casino Resort Spa in Rancho Mirage this Tuesday, February 7 from noon to 6 p.m. For more information and to RSVP, go to their Symposium Website.
CHIEF TECHNOLOGY OFFICER
I am pleased to announce that Erica Greathouse joined ADAMS | STIRLING as Chief Technology Officer (CTO). Prior to joining our firm, Erica spent 25 years overseeing implementation of technology for other law firms.
For fourteen of those years, Erica served as Director of Information Technology for Cox, Castle & Nicholson, a nationwide real estate law firm.
As CTO, Erica will work with our Technology Committee to improve our firm's legal services through technology.
Among other things, Erica will develop and oversee our e-discovery procedures, telecom operations, video conferencing, social media policies, and risk management. Erica is an exciting addition to the team.
View #1. In 1990 my HOA was sued over a view issue. I was on the ARC and a principal witness (we won). At the depo, the opposing attorney asked me to define “view.” I responded by asking her to define view in the context of the instant case. After a minute of contemplation she blurts out, “it’s difficult to define view.” To which I added, “let the record show that opposing counsel cannot define view, so therefore, I won’t.” Semper Fi -Bob P.
RESPONSE: You highlight the problem with views--everyone has trouble defining them.
View #2. Haven't the courts already defined a view in Ekstrom v. Marquesqa? It says a view is defined as "a view of the ocean or neighboring golf course visible in any direction from anywhere on a homeowner's lot, inside or outside one's house." Further, it says "The word (obstruct) means to block from sight or be in the way of (and thus even one palm frond would block some portion of a view) and the term (view) means that which is visible to the naked eye while standing, sitting or lying down anywhere in one's home, or anywhere on one's lot, looking in any direction one wishes." -Bob I.
RESPONSE: The court took an extreme position which will likely be tempered in subsequent decisions. Some lower court decisions have already shied away from that definition. I’m reluctant to join the court’s overbroad definition since it would only encourage more litigation. Will a palm frond obscuring 1% of a corner of a 180% view justify a lawsuit and a favorable decision? I don’t think so. The court’s intemperate language is too broad to be equitable in its application.
I was involved in an action where an owner sued his neighbor over view obstruction from two windows—a guest bedroom where you had to stand in a corner with your back flat against the closet to see a partial view, and a guest bathroom where you had to stand on the toilet to see the view. Under Ekstrom’s sweeping definition, the plaintiff should have won. He didn't.
View #3. Trees should be pruned based on the health concerns of the trees, not the view concerns of the condo association. In many cities, it is illegal to top trees, as you suggested for height restrictions (as well it should be, because topping creates poor structure from defensive growth, and ultimately more cost to the association in upkeep). I want trees in my view. They create lower cooling costs, shade, and privacy. But in most cases, it seems HOAs should just plant nothing, since the plants are rarely appreciated for their natural beauty, treated for their health, nor considered worth financial investment. -Colleen M.
RESPONSE: In a perfect world, trees would only be pruned to maintain their health. Unfortunately, that is hard to balance against the rights of owners who paid a fortune for a view of the ocean. Somewhere there is a happy medium but I'm not sure anyone has found it yet.
Congrats #1. Just saw your announcement that Nathan joined your firm. Great recruit!!! I had the pleasure of working with him in Sacramento a couple years back and hold him in high regard. -Bruce R.
RESPONSE: Nathan is an outstanding attorney. Not only that, he's a good man. I'm very happy to have him. His email address didn't appear in last week's newsletter. If people would like contact Nate, see his Contact Information.
Congrats #2. Congratulations on your growth! Glad however to have you back in the game. Missed your often satirical, missive/musings. -Liz D.
Congrats #3. No apologies necessary. I get so much from your newsletter that I don't mind waiting for it. Thank you for all you do. -Diana H.
Congrats #4. Good luck to a terrific company....you have always been helpful. -Ruth H.
Congrats #5. Woo-hoo! Glad to see you're back. Thought I'd been dropped from your list. -Robert M.
Congrats #6. Congratulations... I quite often refer to your site for general knowledge! Oh, how I wish we had someone like you in Reno, NV. -Caroline K.
Adrian J. Adams, Esq.
ADAMS | STIRLING PLC
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