QUESTION: We have a number of condos owned by family trusts. If we have to pursue the owner for rules violations or unpaid assessments, who do we go after?
ANSWER: For fines and delinquent assessments, go after the trustee of the trust.
Trust Deed. You cannot go after the trust itself because it is neither an entity nor a legal person such as corporations are. A trust is a mechanism for transferring assets to a beneficiary without going through probate. As such, it cannot own property or be sued.
Because a trust cannot own property, a condominium in a living trust must be owned by a trustee on behalf of the trust. That person's name appears on a recorded deed similar to the following: "John D. Smith as Trustee of the John D. Smith Family Trust dated 1/1/15." Or, "Mary Jones as Trustee of the John D. Smith Family Trust dated 1/1/15."
Rules Violations. If the occupants of the unit violate the rules, you call the trustee in for a hearing and levy fines against the trustee.
Collections. For delinquent assessments, you can go into court for a money judgment against the trustee in his/her capacity as trustee of the trust. Or, if you decide to foreclose, you record a lien against the property. The lien can be foreclosed and the unit sold nonjudicially without going into court. Fines cannot be included in a nonjudicial foreclosure but they can be included if you pursue a judicial foreclosure through the courts.
RECOMMENDATION: Contact our office for more details on collection options.
LIMITED BY DAVIS-STIRLING
QUESTION: At our last board election, an attorney did a board orientation. Someone asked whether email communications beyond scheduling meetings were okay for board members. The attorney stated that since meetings are defined as a quorum of directors hearing, discussing, or deliberating on board business, emails are arguably "okay" since the directors wouldn't be "hearing" anything. A bunch of us in the audience were wondering... is this really true?
ANSWER: No it's not true. The Open Meeting Act does not state "hearing, discussing, and deliberating," it uses the word "or." If the board does any one of those things, it's a meeting. A meeting is defined as:
A congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business that is within the authority of the board. (Civ. Code §4090(a).)
Effective January 1, 2012, boards of directors "shall not conduct a meeting via a series of electronic transmissions, including, but not limited to, electronic mail" except for emergencies. (Civ. Code §4910(b).)
Administrative matters such as scheduling meetings and deciding what to include on the agenda are acceptable emails between directors. It is possible the attorney was referencing emergency meetings as an exception to email meetings by directors.
I am pleased to announce Troy Kennedy joined our Los Angeles office.
Experience. Prior to joining us, Troy gained valuable experience handling complex civil litigation involving breach of contract, fraud, trademark infringement, real estate disputes, intellectual property, and probate law.
Troy drafted agreements for cases that settled and took to trial those that did not. This included a class action lawsuit against lenders who inappropriately denied loan modifications and foreclosed on mortgages.
Education. Troy earned a Bachelors of Science in computer engineering from Syracuse University, Syracuse, New York and then received a Juris Doctorate, cum laude, from St. John's University School of Law, Jamaica, New York.
Troy is an outstanding addition to the firm and we are very happy to have him on the team. When your association needs legal services, contact us for a proposal.
LAUNCHED AT ADAMS|STIRLING
I am pleased to announce that law partners Jasmine Hale and Laurie Poole launched a "Women’s Attorney Initiative" (WAI) for the firm.
They created WAI to support the professional development of our women attorneys, to identify the unique challenges they face in their legal careers, to promote work/life balance, and to provide a network for advancing leadership opportunities in the firm as well as the legal community at large.
We have a diverse and growing pool of women attorneys who are invaluable to our operations. We believe the Initiative strengthens the culture of the firm and better serves our clients. Kudos to Jasmine and Laurie for putting it together.
Wildfires #1. Documentation of the pre-fire condition of the common areas may be important in processing insurance claims. The photographic inventory from an association's most recent reserve study may be useful. Often, reserve study providers shoot many more photos than actually appear in the reserve study.
I know if a client asked our firm for those photos, we would provide them at no charge. We did so in another fire and heard later that our photographs were instrumental in their insurance claim. -Robert Nordlund, Association Reserves, Inc.
Raising Dues. Your newsletter is invaluable for smaller associations who do not have funding to support hiring a stand-by attorney. If an association’s bylaws require a 70% affirmative membership vote to raise dues, does this supersede the law that allows boards to raise regular dues up to 20%? -Maggie L.
RESPONSE: No it does not.
Many older sets of CC&Rs, especially those from the 1970s and early 1980s, have significant limitations when it comes to raising the money needed to maintain the common areas. Some I've worked with over the years had a 3% cap on assessment increases. Others, like yours, required a super-majority approval by the membership for any increases--something that is virtually impossible to achieve.
These kinds of limitations crippled associations during the economic stagflation under President Carter (1977-1981). At that time, the country suffered a combination of stagnant economic growth, high unemployment, and high inflation. Inflation hit 13.5% during the Carter years. By contrast, today's inflation rate is 1.9%.
To address the problem, the 1985 bill (AB 314) authored by Assemblyman Larry Stirling created Civil Code §1366(b) which overrode CC&R limitations on assessment increases and allowed boards to increase regular assessments up to 10% without a vote of the membership. The provision was subsequently amended to 20%, which then transferred into the 2014 rewrite of the Davis-Stirling Act to become Civil Code §5605(b).
Accordingly, the 70% membership approval requirement in your CC&Rs is void and your board can increase regular assessments by up to 20% without membership approval.
RECOMMENDATION: You should consider amending your CC&Rs to bring them current with the law.