ON THE BALLOT
QUESTION: What happens when there are no names on the ballot sent to members? Our management company did not ask current directors if they wanted to be on the board and sent out ballots with no names. –Anon
RESPONSE: You have a couple of options. If your election rules don't allow write-ins and floor nominations, sending out ballots was unnecessary and current directors remain in place. If write-ins or floor nominations are allowed, directors could write-in their names on their own ballots and vote for themselves. If you want to eliminate any confusion and uncertainty, you can restart the election process.
PROPOSITION 15. Do you have an opinion on whether Proposition 15 will have any direct or indirect effect on residents of HOA communities? -Leonard S.
RESPONSE: If it passes, Proposition 15 will have no direct effect on residential associations. It will, however, indirectly impact HOAs since many business owners will likely lose their businesses and employees lose jobs. That, in turn, will lead to delinquencies and foreclosures in associations around the state. Negative effects will be more direct in commercial and industrial associations because Prop 15 will dramatically raise taxes on businesses as well as the rents they pay, which will drive more of them out of California or out of business altogether.
California Exodus. California businesses are already leaving the state in large numbers. In 2018 to 2019, 765 commercial businesses left California. They are relocating to states with lower taxes. For example, Texas imposes a 0.75% franchise tax on business margins, compared to California’s 8.85% corporate tax. If Prop 15 passes, businesses will be hit with an estimated $11.5 billion in new taxes annually. I expect the flow of businesses and citizens out of California will accelerate. From July 2018 to July 2019, California saw a net loss of 197,594 people to other states. People are voting with their feet. Our current politicians seem to be blind to the concept that their actions have consequences.
Independent Contractor? Our association has one individual performing manager duties and another one performing maintenance. Is the manager, who is currently treated as an independent contractor, in fact an employee? It is much cheaper for the association to treat them as independent contractors. -Annie C.
RESPONSE: Yes, it's cheaper to treat employees as independent contractors because you don't pay all the required employee withholdings and worker's comp insurance. It's also illegal. If the two individuals only work for the association, they are your employees. See Employee vs Independent Contractor. Since there could be significant legal consequences plus penalties for treating employees as independent contractors, you need to address the situation. If your management company is willing, it can take them on as employees. If not, you will need to make them direct employees of the association. You should talk to legal counsel about how best to handle the situation.
Proxies. We have an election but some homeowners are abroad. They are afraid that the proxy procedure might delay their votes. Can they have someone mail the ballot to them out of the country and they will complete it and mail it back? –Lily C.
RESPONSE: Yes, the ballot package can be mailed or sent by FedEx (or some other expedited means) to the individuals. Once ballots are voted, they can be returned directly to the Inspector of Elections in the same manner.
Amending Bylaws. To amend our bylaws do we need a majority of the voting power of the association? Do we need secret ballots? Since we use cumulative voting for elections, do we need to have cumulative voting for amendments? –Rebecca B.
RESPONSE: Your bylaws should have a provision describing the approval requirement for amending your bylaws. Most require a majority of the membership but I've seen some use a majority of a quorum. Yes, you need secret ballots for a membership vote. "No" on using cumulative voting. It's only used in the election and recall of directors.
Leaky Shower. If a unit has a leaking shower pan (causing damage to the common areas and unit below), what can the board do to force the owner to fix it? -Michael I.
RESPONSE: Start with a hearing and fines. If that doesn't work, have legal counsel send a letter threatening a lawsuit and offering pre-litigation ADR. If the owner still refuses, head to court for an order that the owner repair the leak (or step aside and allow the association to make repairs and bill the owner for those repairs). If the leak is serious, you can bypass all the above and go straight into court on an ex parte basis. You should talk to legal counsel and decide which option is best.
Sub-Association Separation. Do you know of any sub-association successfully separating from the master association? If possible, how difficult was it? -Nick K.
RESPONSE: Theoretically, you can separate associations and you can also merge them into a single association. We've done both, but they are rare and can take years to accomplish. It requires (i) approval by the master association's membership and amendment of the master documents; (ii) approval by the sub-association and amendment of their documents; and (iii) may require approval by lenders. There is a great deal of legal work involved. Also, the physical layout must lend itself to the separation. If the sub-association shares roads and amenities with the master association, separation becomes untenable. In my experience, merging associations is much easier than separating them.
Recall Elections. Does SB 323 have any bearing on recall elections? Any insight would be most appreciated! -Susie M.
RESPONSE: The bill sponsored by Marjorie Murray's organization made a complete mess of recall elections. The timelines for each no longer match up.
When the membership submits a recall petition, the date for a special meeting cannot be less than 35 nor more than 90 days from receipt of the petition. (Corp. Code §7511(c).) Before SB 323, the vote to
recall sitting directors and elect new ones could be done on a single ballot in ~60 days, start to finish.
Longer Timeline. Unfortunately, Ms. Murray's bill extended the timeline for electing replacement directors to ~120 days with a lot of built-in delays, which means the election of new directors cannot be on the same ballot as the recall of sitting directors. Now, it's a 2-step process. Members first vote to recall the board, which remains in place until another set of ballots are circulated to elect a new board. Inspectors of election are retained for each election.
More Expensive. Because of SB 323, recalls are now more expensive and take ~7 months to complete. Ms. Murray's anti-consumer legislation harmed homeowners. SB 323 should be rescinded in its entirety so we can return to reasonable timelines and procedures.
Driving with Eyes Closed. “To avoid stress, drive with your eyes closed." It is a sign of the times and an indication of our level of national contention that the reader did not see the obvious humor. Your dry and pointed humor trying to bring some sanity to absurd and ridiculous situations is one of the delightful features of the newsletter. -Leland B.
Trump-Biden Signs. Readers are now sending me photos of "offensive" Biden signs. I thought about adding them to the newsletter but decided against it. Those who are easily offended would be up in arms and I would have to go into hiding. Thank goodness the election will soon be over.
55+ Communities. I realize last week's feedback by Ron G. could have meant “occupancy” instead of “purchase.” However, in case he was accurately recounting his association’s current practices, it should be clarified that an individual of any age can purchase in a senior association...it’s just all about who actually resides in the home that the law cares about. -David B.
RESPONSE: Thank you for the clarification. Anyone can buy into a senior community but not everyone can reside in one. The age restriction applies to residents. For a good explanation of the subject, see the DRE Real Estate Bulletin from Spring 2019.
Kudos #1. I don't write as much as years ago, but I do thank you often silently. I still enjoy all the emails and posts. I have learned so much by way of the short yet powerful emails we have exchanged in the past. I tell anyone who will listen about your law firm, newsletter, website, and app. God knows, all folks can learn so much by just investing a little bit of time. THANK YOU AGAIN FOR ALL THAT YOU DO!!! -Masud O.
Kudos #2. Great and constant and well needed information in your Newsletter.....Boards need your vital and current information.......Keep up the needed, and valuable and most appreciated work in the Newsletter. –Sheldon S.
Kudos #3. Many thanks for having the best HOA legal newsletter in the country! -Chris
Kudos #4. Great newsletter...you are an awesome lawyer –David C.
Kudos #5. Your newsletter is AWESOME! Good information. –Nick K.
Kudos #6. Thank you for the terrific newsletter. You’ve helped our HOA in so many ways by keeping us up-to-date on changes in the law, making laws understandable to the lay person, suggesting practical solutions, and citing examples. We really appreciate your time and effort that goes into the maintenance of the Davis-Stirling.com website. -Netti
Statewide Updates: The State issued new guidance for Theme Parks, Sporting Events at Outdoor Stadiums, and Personal Care Services:
CDPH Amusement Park/Theme Park Guidance: Smaller parks with a capacity of 15,000 or less can open in the Orange Tier at a limited capacity of 25% or 500 people, whichever is less. Outdoor attractions only may open and ticket sales are limited to those residing in the same County that the park is located in. All parks can open at 25% capacity in the Yellow Tier. The Guidance provides further measures that must be taken to operate.
CDPH Sporting Events at Outdoor Stadiums and Racetracks Guidance: Professional sports operations (not youth, adult recreational, amateur, semi-pro or collegiate) can open in the Orange Tier with a limited capacity of 30% and in the Yellow Tier at 25% capacity. Tickets can only be sold to those traveling within a 120‑mile radius. The Guidance provides further steps that must be taken to open.
CDPH Expanded Personal Care Services Guidance: Personal care services including esthetic, skin care, electrology, body art professionals, tattoo parlors, piercing shops and massage therapy may open for indoor operations in all Tiers.
NorCal Counties. The following Counties changed Tiers: Butte (Red Tier to Orange); Napa (Red Tier to Orange); Riverside (Red Tier to Purple); San Francisco (Orange Tier to Yellow); Shasta (Red Tier to Purple).
Alameda County has a new Health Order that is effective October 23, 2020. Under the new Order, Alameda has allowed the following activities: indoor family entertainment centers that are naturally socially-distanced at 25% capacity; indoor dining at 25% capacity or 100 persons, whichever is less; indoor worship services at 25% capacity or 100 people, whichever is less; indoor movie theaters at 25% or 100 people, whichever is less; indoor retail and malls up to 50% with indoor food courts; indoor gyms and fitness centers at 25% capacity, no indoor pools; outdoor non-contact fitness classes up to 20 people including the instructor; and wedding and funeral services up to 25% of venue or 100 people, whichever is less. They have also aligned their social gathering requirements to the State, allowing three households (no more than 20 people).
Butte County moved from the Red Tier to Orange Tier and issued a press release regarding the Butte County Move to Tier 3 and the impact of this move.
Madera County issued a press release indicating that they are On the Way to Red Tier. Currently the County meets the requirements, and must sustain the metrics for another week to make the move. They also issued notice of the updated CDPH Expanded Personal Care Services.
Marin County has issued Tools to Assist with Reopening of Marin Schools.
Mendocino County has a new Order. The Order clarifies that the 3‑household gatherings allowed by the State are not allowed while the County remains in the Purple Tier.
Napa County moved from Red Tier to Orange Tier and issued new Business FAQs indicating the changes in openings as a result of the Tier change.
San Francisco moved to the Yellow Tier and issued a Press Release re Yellow Tier Openings. The press release indicates that effective October 27, non-essential offices can open at limited capacity; indoor climbing gyms can reopen at 25% capacity; indoor fitness centers can increase capacity to 25% without cardio or aerobic classes; some indoor personal services requiring limited face covering removal can open; and higher education can increase capacity of outdoor classes to 25 people and request an exception to the 2 hour limit. The timeline for future openings was updated as follows: November 3 indoor pools; indoor bowling alleys; indoor fitness can open locker rooms and showers; indoor dining can increase to 50% or up to 200 people with a 3-hour maximum per table; indoor worship can expand to 50% or up to 200 people; outdoor worship or protests can expand to 300 people; indoor museums, zoos and aquariums can increase to 50% capacity; movie theaters can increase capacity to 50% up to 200 people without concessions; some live performers in drive-in settings; film productions can expand indoor activities and outdoor activities up to 50 people. Mid-November they hope to open bars not serving food for outdoor operations. San Francisco schools are being opened as their applications are approved.
Shasta County moved from Red Tier to Purple Tier. By October 23: bars/breweries/distilleries with no meals must close; restaurants, museums, zoos, aquariums, places of worship, movie theaters, gyms and fitness centers, wineries, family entertainment centers and card rooms can only open outdoors; retail and shopping centers can open indoors at 25% capacity; personal care services can open indoors.
Sonoma County issues an Amendment to the Health Order related to Residential Care Facilities Visitation. The County provided information related to the opening of personal care services and Halloween and Dia de los Muertos Guidance.
Tehama County issued Halloween Guidance.
Yolo County issued guidance indicating that gatherings are limited to 3 households with a maximum of 16 people, for two hours only, and only outdoors.
SoCal Counties. Imperial County amended its health order to align with the state’s gathering guidance allowing private gatherings of up to three (3) households with a maximum of 16 individuals. It also amended its order to align with state’s modification of expanded personal care services to all tiers.
Los Angeles County amended its health order to align with State’s guidelines for private gatherings for up to three households outdoors. Persons over the age of 65 or persons of any age that have active or unstable preexisting health conditions should continue to avoid gatherings.
Riverside County moved back to the purple tier on 10/20. Indoor operations for industries such as restaurants and gyms that were allowed in the red tier will need to move operations outside or close.
San Diego County amended its health order to include compliance with the state gathering guidelines, though San Diego county still limits gatherings to one household, with exceptions listed in paragraph 15 of the order.
Santa Barbara County continued its order to wear face coverings in high risk situations to November 15, 2020.
READING THE CHART. Because the chart is large and the text small, you can easily make it larger for viewing by holding down the "Ctrl" key on the left side of your keyboard and then using your finger to scroll forward or backwards with the wheel on your mouse. You will see the text grow larger or smaller as you move the wheel. For a list of county restrictions and links to health department orders, see County Chart 10-22-20. The chart is also posted on our website.
|DISCLAIMER. Our newsletter provides commentary based on sketchy information we receive from readers. From time to time, we add a little humor. Some find it amusing. Others are appalled. Some readers are excited when they score free legal advice. Not so. Our newsletter provides commentary only, not legal advice. You need to pay real money for an attorney to review all the facts and give you a legal opinion. We do that too, but you have to hire us. It's okay, we're friendly. Keep in mind we are corporate counsel to California associations only. Ask us for a proposal to represent your association.|| |