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  California's Leader in Community Association Law September 3, 2018
CALL THE GOVERNOR
TO VETO SB 1265!

SB 1265 (Wieckowski) is the anti-consumer bill sponsored by the Center for California Homeowner Association Law (CCHAL).

If passed, it will increase the cost of elections and jeopardize homeowner privacy. It prohibits homeowners from adopting standards for who can serve on their boards.

If the bill is signed by the Governor, you will be forced to accept felons, delinquents, those in violation of the CC&Rs, and litigants on your boards and give them access to homeowner records.

To SEND AN EMAIL to Gov. Brown to veto the bill, click the following link, and THEN click on "Contact Your Legislator Now" https://caiclac.com/current-campaigns/

Also, CALL THE GOVERNOR at 916-445-2841, choose option #6 to speak to a person, and then ask the staffer who picks up for a VETO on Senate Bill 1265. They will ask for you zip code. That's it. It only takes a few minutes to send an email and make the call.

ASSOCIATION FINANCES
AB 2912

Many of you have expressed frustration with the constant stream of bad legislation from Sacramento. Bad legislation is due in large part because those drafting and sponsoring it don’t understand associations or are biased against them.

CLAC. Fortunately, CAI’s California Legislative Action Committee (CLAC) has been working to defeat negative legislation or make it less bad. In addition, it sponsored Assembly Bill 2912 which seeks to protect association finances.

Common Sense Protection. Because homeowner associations are targets of fraud and embezzlement, the bill provides boards with guidance on common sense protection of their finances.

AB 2912, introduced by Assembly Member Jacqui Irwin, requires simple measures to protect association finances. It will:

• require fidelity bond insurance in an amount equal to or exceeding current reserves, plus three months of assessments;

• require a monthly review of financial statements rather than quarterly; and

• prohibit electronic transfers of funds without board approval.

Boards are not required to meet monthly to review financials. They can designate a board member or board members to review the financials monthly and ratify them at their next meeting.

Support. Protecting association finances is critically important. AB 2912 passed out of the Assembly and is making its way through the Senate (next stop is the Senate Judiciary Committee). For more information about AB 2912, or to find out how you can support AB 2912, check out CLAC’s recently renovated website as well as the Davis-Stirling website for new laws.

Thank you to Nathan McGuire, Vice Chair of CLAC, for this legislative update.

DIRECTOR/REALTOR
ESCROW DISCLOSURES

QUESTION: I am a real estate agent and currently have a listing of a condo. The title of this condo is under my husband's name and is in a family trust that involves me. Both my husband and I are board members.

We are aware of the repairs needed to be done in this complex that could cost nearly $4 million, and the reserve budget is only $1 million. Hence, future special assessments. Are we to disclose all this to potential buyers? As a licensed real estate agent, I would like to make sure I am doing the right thing and am not being deceitful to the buyer.

ANSWER: In real estate it's all about location, location, location. There is a second, lesser known imperative: disclose, disclose, disclose.

Potential Exposure. You and your husband have double exposure. You have special knowledge as board members and you have fiduciary obligations as Realtors. Put yourself in the shoes of young first-time buyers sinking their last penny into buying a condominium. Would it be important to them to learn the association was badly under-reserved and likely faced a large special assessment?

Jury Sympathy. Withholding information from the young couple could get you sued. A jury would not be sympathetic that you steered the couple into buying a condominium they would lose as soon as an assessment dropped into their laps.

RECOMMENDATION: Realtors on boards face disclosure dilemmas--which is why they should either step off the board or not list and sell units in the association while on the board. If you stay on the board, you should steer fellow directors into raising the dues to increase funding of the reserves and clearly explain to the membership the underfunding problem. It puts the association on the path of healthy finances and reduces your exposure as directors.

 

SB 1265. The author of the response to the question on black water was outstanding; Clear, complete, succinct, and valuable, as the author went on to advise as to what to do in an emergency.

Too bad such a clear message was not available regarding SB 1265. You failed to state that passage of SB 1265 will disallow open nominations for election to the board, permit the cancellation of future elections for a board, and remove fiscal control of the HOA from the owners and give it to a partnership of a self-perpetuating, unelected board and the property manager. -Marilyn H.

RESPONSE: Thank you for the kudos on the black water article. Regarding the train wreck known as SB 1265, you must have missed my newsletters where I discussed the bill at length in main articles and the Feedback section on June 3, 2018; June 10, 2018; June 17, 2018; July 8, 2018; July 22, 2018; August 5, 2018; and August 19, 2018.

The bill sponsored by the Center for California Homeowner Association Law (CCHAL) takes away your right as homeowners to regulate who sits on your board. CCHAL found a willing accomplice in Sen. Wieckowski to force you to accept felons, delinquents and litigants on your boards of directors.

CCHAL managed to push their bill through the Assembly and Senate. It now sits on Gov. Brown's desk awaiting signature. Hence, our request that everyone immediately write and call Governor Brown and ask him to VETO this dreadful bill.

Adrian J. Adams, Esq.
 
Boards should contact us for friendly, professional advice.

Adrian J. Adams, Esq.
Founder & Managing Partner
ADAMS|STIRLING PLC

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Reprinted from
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Hon. Lawrence W. Stirling, Senior Partner ADAMS|STIRLING
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