Delinquent Assessments
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  California's Leader in Community Association Law April 15, 2020
DELINQUENT ASSESSMENTS
LATE FEES & INTEREST
 
I received a number of messages from readers arguing against the suspension of late fees and interest on delinquent assessments. They made the following points:

Wrong Signal. Suspending late fees and interest removes incentive for owners to pay their assessments. It sends a signal that it is okay not to pay regardless of whether they can afford to pay.
 
Bills to Pay. If no one pays their assessments, associations cannot meet their ongoing expenses, including management, insurance, utilities, repairs, pest control, security, etc. Unlike the Federal government, associations cannot print money.
 
Stimulus Bill. Starting this week, the economic stimulus package signed by the President is pushing cash to American households so individuals can pay their bills. Most adults will get $1,200, plus $500 per child. In addition, persons who were laid off will receive unemployment checks plus an additional $600 per week. Members should pay their assessments since the money is used to protect their homes.

Case By Case. Homeowners who can't pay their assessments can be addressed individually and enter into payment plans. If the person sticks to the plan, the board can waive late fees accrued for the period after March 20 when the Governor shut down the state's economy.


COMMENT:  Even though I favor the temporary suspension of late fees and interest, the above arguments have merit. Boards should pay close attention to their expenses and cash on hand, and then decide whether or not to temporarily suspend late fees and interest or keep them in place and deal with delinquent owners on a case-by-case basis.
 
INCREASED MEETING
ATTENDANCE

Successful Meeting. We hosted a very successful open board meeting last night via Zoom. We had better attendance than usual! Thank you for your support and recommendations to use Zoom.

In light of the success of Zoom and similar platforms for meetings, how soon will we see the law updated to allow for this permanently? I believe that hybrid meetings where some people meet in person and others meet remotely would engage more members to participate. -Marie W


RESPONSE: What you describe is already provided for in the Davis-Stirling Act. If all directors attend an open meeting by teleconference or video conference, notice of the meeting must identify at least one physical location where owners can attend and listen to or observe the board's meeting. (Civ. Code §4090(b).) That means a conference phone or monitor must be at that location so members can observe directors conduct the meeting. The arrangement must allow members to participate in open forum.

Under the Governor's current Stay At Home order, social distancing, and no gatherings, the public gathering option is not feasible. Hence, the recommendation that boards use Zoom or similar platforms where everyone can attend meetings without leaving home. I believe the statute should be amended to eliminate the physical location requirement since many associations do not have access to one. With current video and teleconferencing platforms, one is not needed — everyone has access to the internet and/or a telephone.


Profane Director. Can a board member be removed from office due to his profane, unacceptable and threatening behavior toward another board member in the common area? Do standard recall measures have to be followed? -Ben

RESPONSE: If the threatening behavior is related to board business, the board can use association monies to obtain a restraining order against the director. The board can also censure him in the minutes. As for removal, only the membership can remove the director via a recall election.

At the next election, if the profane director's seat is up for election, board members can campaign against him. I had one instance where four directors sent a letter to the membership (at their own expense) signed by all four directors telling members director #5 was impossible to work with and they would all resign if the membership reelected him to the board. The membership got the message and director #5 was not reelected.

 
PUT OUT TO PASTURE
WITH TERM LIMITS

QUESTION: I'm curious why you're so gung-ho on term limits. We have 3,400 members and rarely get a competitive ballot. And what about the experienced director who is put out to pasture with term limits? I would like to hear your reasoning. -Tracy C.

RESPONSE: Many (most?) associations do not have term limits for the reason you stated. Other associations are active and want to ensure turnover on their boards via term limitations. It works fine, until it doesn't. The problem with term limits is the loss of experienced directors if seats suddenly cannot be filled. 

For those associations that want term limits, we draft language that directors serve two full terms and then step down for one year unless there are not enough candidates to fill all seats, at which point term limitations are suspended.

Unfortunately, SB 323, which was sponsored by the Center for California Homeowner Association Law, knocked out term limits. That option should not have been taken away from associations. Fortunately, CAI's California Legislative Action Committee is working to restore the option to associations that want it. However, it's unlikely the legislature will approve anything this year. See Memo to Senate Committees.

 

Architectural Applications. When architectural applications are submitted and the work is not considered essential, should we deny these applications or tell applicants to resubmit once shelter-in-place orders are lifted? -Christel

RESPONSE
: Neither. It is better to process the application and let the person know if his/her application has been approved or disapproved. If it's approved, the person can make arrangements for work to commence once the Governor's order is lifted. If an architectural application is disapproved, the committee's decision must include both an explanation of why it was disapproved and a description of the procedure for reconsidering the disapproval. (Civ. Code §4765(a)(4).)

Emergency Rules. in the common areas of the building, some people are wearing masks, while others are not. Members are looking to the board or management to enforce wearing masks. I'm not sure that's in our scope. I know outside, in public, it's the law. But what about inside the building? -Helene S.

RESPONSE: Wearing masks is not a law passed by the legislature, it's an executive order from the Governor. Counties and cities issued similar executive orders. Boards can adopt their own emergency rules requiring all residents wear masks in the common areas, such as hallways, lobbies and elevators. Violations can be dealt with by issuing warning letters, holding hearings and levying fines.

Hopefully, that will not be necessary. If you adopt an emergency rule regarding face masks and post signs, most people will comply. Occasionally, someone who has no business living in an association will ignore all social norms and put other people's lives at risk. Those are the ones that need a letter from your association's lawyer.


 
Boards can contact us for friendly,
professional advice.


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

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