RISEN FROM THE FILES
QUESTION: While sifting through the files of a prior management company, we discovered a set of election rules for our HOA. The document is unsigned, undated & has no reference to any board meeting so we have no idea when these rules were written or passed. Our legal counsel recommended we accept them. They are pretty generic so there is no argument with the contents. What concerns me is accepting these rules without corroborating evidence of their having been properly passed. What do you make of this?
ANSWER: By statute, your association is required to have election rules. (Civ. Code §5105.) Fortunately, the law affords a presumption of genuineness when it comes to business records. If your management company had your election rules in its files, it is reasonable to assume they were duly adopted by a prior board.
RECOMMENDATION: I side with your legal counsel. Your board can use the newly discovered rules until such time as you decide to revise them.
QUESTION: Can a board decide not to fill a vacant seat? If so, should the decision be made in executive or open session?
ANSWER: It is not uncommon for a director to vacate his/her seat prior to the end of their term. A heavy workload at the office, personal health issues, sale of their unit, a recall by the membership, and a dozen other reasons could create a vacancy on the board.
Recalls. If the vacancy occurred because the membership called a special meeting and removed the director, the board cannot fill the vacancy. Despite anything to the contrary in their governing documents, only the membership can fill a seat created by a recall.
Pending Annual Meeting. When a seat becomes vacant, boards must make a decision. If the vacancy occurs too close to the next annual meeting, the board might decide to leave the seat empty and let the membership fill it.
Bylaws & Corp Code. If the vacancy occurs shortly after an annual meeting and the board decides not to appoint a replacement, look to your bylaws--they might require an election. If the bylaws are silent and the board fails/refuses to fill the seat, the membership may call for a special election. (Corp. Code §7224(b).) The process is initiated by filing a petition with the board.
Open Meeting. The discussion and vote by the board to fill or not fill a seat should take place in open session. Voting on this issue does not fall into any of the approved categories for an executive session.
JOINS ADAMS STIRLING
I am pleased to announce that attorney Nick Hoban joined the team.
Nick earned his Juris Doctorate from Santa Clara University School of Law where he focused on high-tech law and earned numerous awards and scholarships.
Nick then interned in Munich, Germany where he reviewed patents and trademarks applications for companies such as Microsoft and Warner Brothers.
Nick works out of our Northern California office with Nathan McGuire providing legal services for our growing portfolio of commercial, residential, and mixed-use associations throughout the state. If your association needs legal counsel, contact us for a proposal.
RIGHT OF ENTRY
I will be speaking at CAI's San Francisco Educational Luncheon later this week on the topic "Enter at Your Own Risk--Issues Related to an HOA's Right of Entry." I will be joined by Eron Kaylor, VP of Seabreeze Management.
We will cover whether an association has a right to enter a member’s unit. If so, under what conditions? If there is potential liability, how can an association protect itself? What about preventing others from entering because of a restraining order? There will be a Q&A at the end plus a raffle.
Date: Friday, August 25th
Time: 11:30pm – 1:30pm
Location: JW Marriott, 515 Mason Street, San Francisco
Register: To register, go online.
Elections. If inspectors of election may verify signatures on envelopes, how is it done? Do we have to have everybody's signatures on file? Thank you! -Anna D.
RESPONSE: Yes, you need signatures on file so you can compare them. If something is questionable, the inspector also has the option of contacting the person to find out if they submitted the ballot. If the answer is "No," the envelope is marked "Void." It means someone tampered with the election--likely the Russians.
Cable TV. In response to your section on fiber optics, AT&T is spending a good deal of money and we even get $35 per unit from them to pay for a security guard to accompany the technician. They are not doing it out of the goodness of their hearts. When they took over Direct TV, the FCC made wiring homes with fiber optics a condition of the purchase. -Kingsley M.
Officers. If our bylaws state that officers need not be a director, that does not necessarily mean that they don't need to be a member--would it? Thanks for your newsletter and dedication to the often confusing world of HOA governance. -Carol C.
RESPONSE: If the bylaws are silent on officer qualifications, the board can choose anyone to be president, secretary and treasurer. Those individuals could be members or non-members. They could be residents or non-residents. They could be homeless persons or prison inmates. That's why most associations add language that officers be members of the board (or of the association) when they restate their bylaws.
Escrow Inquiries. Our board was recently warned to be cautious when our management company responded to escrow inquiries. It was explained that if the sale is canceled by the buyer, the seller might sue the HOA citing the disclosure. -Jim L.
RESPONSE: If there are uncorrected violations and unpaid fines, escrow is the best time to address them. The seller is usually anxious to sell and will normally take steps to correct them rather than lose the sale. In my experience, disgruntled owners occasionally threaten to sue but never do. If they were to file suit, it would tie up their property, require disclosures to potential buyers, and cost them legal fees. Sometimes, we run into a psychotic owner the association is anxious to get rid of. When that happens, we tell escrow the association hired a moving van to facilitate the move.
Property Values. Property values in our community have been stagnant. Our community is roughly 50% renters due to the low selling price of our units. Investors pray on the community as it's a great investment. Is there anything we can do to prevent low listings? Can we make it harder for investors to rent out units? -Mark J.
RESPONSE: Your options are quite limited and very difficult to implement. You can (i) amend your CC&Rs to require that buyers live in their units for at least two years before renting (that keeps investors at bay and slowly reduces your rental population as units sell), (ii) amend your CC&Rs to require a minimum one-year lease when units are rented (which eliminates disruptive short-term renters), and (iii) increase property values by spending money on maintenance and common area upgrades (which requires raising your dues).
Open Forum. Our board's policy has been to hold open forum at the end of board meetings and allow each speaker three minutes. This evening, our president announced that open forum will be at the beginning of the meeting and only one topic could be discussed per person addressing the board. Is this within the rules for condominiums? -Mary B.
RESPONSE: Boards can set open forums at the beginning, middle, or end of their meetings. It's entirely at their discretion. They can also set a reasonable time limit on how long someone talks (three minutes is common). They cannot, however, limit the number of topics to one. Directors should politely listen as owners list their grievances, make recommendations on how to improve the community, and chastise the board for their lack of transparency. Owners often make good recommendations, so it's worth the extra time it takes.
Adrian J. Adams, Esq.
Founder & Managing Partner
ADAMS | STIRLING PLC
Boards can contact us for friendly and professional HOA legal advice.