Adams Stirling PLC
  California's Leader in Community Association Law January 24, 2021

QUESTION: What penalties can be imposed if we don’t comply with the new balcony inspection requirements and repairs?

ANSWER: Civil Code §5551 does not impose penalties for noncompliance. However, the association and its board would likely be sued if they ignore the statute and a balcony collapses and someone is injured or killed. In addition to significant monetary damages in a wrongful death lawsuit, criminal penalties could be imposed.

Criminal Negligence.
A district attorney could prosecute an action for criminal negligence. Criminal negligence is defined as conduct where a person ignores a known or obvious risk to the life and safety of others. It involves a gross deviation from a reasonable standard of care that causes grievous bodily harm.

Ford Pinto. In 1971, the Ford Motor Company knew it had a problem with the gas tanks in their new Pinto vehicles. Ford crash-tested the car more than forty times before it went on the market and the fuel tank ruptured every time at speeds over 25 miles per hour. Ford could have fixed the problem but it would have added $11 to the cost of the vehicle and slowed production. Ford chose to do nothing.

Lawsuits. When people bought Pintos and predictably suffered rear-end collisions that resulted in exploding gas tanks that maimed and killed passengers, Ford was sued. The first lawsuit resulted in an award of $2.5 Million in compensatory damages and $125 Million in punitive damages. Another 75 lawsuits followed. In addition, Ford became the first American corporation to be criminally prosecuted for reckless homicide.

Cost of Inspections. Directors cannot credibly claim their association does not have enough money to inspect and repair their balconies. Boards can use reserves, raise dues, impose a 5% special assessment without a vote of the membership, impose an emergency special assessment, and borrow money from a bank. If a board fails or refuses to comply with the law and someone is injured or killed when a balcony collapses, compensatory and punitive damages imposed by a jury could be significant. Punitive damages would not be covered by insurance. In a worst case scenario, directors could find themselves personally liable for monetary damages, not to mention jail time.

RECOMMENDATION. Condominium associations with three or more units are required by law to inspect elevated load-bearing structures supported substantially by wood. The inspections must be conducted by a licensed structural engineer or architect who must submit a report to the board describing the physical condition and remaining useful life of the structures and their associated waterproofing systems. Associations must complete their first inspection before January 1, 2025. We provided a list of inspectors in our December 8, 2020 Newsletter. Boards should contact their reserve analysts for additional recommendations.
For more information, see Elevated Structure Inspections.

The Foundation for Community Association Research, which our firm supports, retained Zogby Analytics to conduct a nationwide survey of homeowners who live in community associations. Zogby found that:

89% of residents rate their overall community association experience as very good or good (70%) or neutral (19%).

89% say members of their elected governing board “absolutely” or “for the most part” serve the best interests of their communities.

74% say their community managers provide value and support to residents and their associations.

94% say their association’s rules protect and enhance property values (71%) or have a neutral effect (23%); only 4% say the rules harm property values.
For more information, see the Foundation's 2020 Homeowner Satisfaction Survey.

2-Minute Videos. Well done again. Thanks. These are very informative and clear! –Steve A.

RESPONSE: If anyone missed our first two videos, links can be found in our sidebar under "2-Minute Video Library." We will release two more next month.

Rentals Impact Loans. Love love love your newsletter. My association is doing major (much needed) upgrades to the facilities. Does the percentage of rentals affect an Association's ability to get a commercial loan? -Peggy H.

RESPONSE: Yes, too many renters can affect an association's ability to get a loan. Lenders have long recognized that the greater the percentage of rentals in a community, the greater the risk of default if they loan money to an association. That's one reason why AB 3182 is so harmful. It made unenforceable most of the rent restrictions imposed by associations. Our Legislators and Governor are negligent when it comes to laws affecting community associations. Converting owner-occupied units into investor-owned rentals does not increase the State's housing supply. Instead, it destabilizes neighborhoods. Boards should have legal counsel review their rent restrictions and put in permissible restrictions to protect their communities.

Boards of Directors. Does the new California law that corporations must have at least one board member who is a racial or sexual minority apply to HOA boards? –Kristi H.

RESPONSE: Last year, Governor Newsom signed legislation establishing quotas for corporate boards.
By the end of 2021, corporations now must have at least one person on their board who identifies as African-American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native  Hawaiian, Native Alaskan, gay, lesbian, bisexual or transgender. Corporations that don’t comply face fines of $100,000 for first violations and $300,000 for repeated violations. Currently, the law only applies to publicly traded corporations headquartered in California, not HOA boards of directors.

NEWSLETTERS. Readers can find current year and prior year newsletters posted here. Older newsletters are not posted since the information they contain can change over time with new statutes and case law. The website itself is kept updated with current information which can be found via the "Index" or through our website's internal "Google Search" feature. You can find the search line in the upper right corner of the website under our ADAMS|STIRLING logo.

Statewide Updates. The following counties changed Tiers: Trinity County (Purple Tier to Red). The CDPH issued a 1/15/21 Amended Hospital Surge Order.

Northern California. Alameda County issued a 1/14/21 Press Release re: Who Can Get Vaccinated.

Calaveras County issued a 1/15/21 Press Release re: Updates and Vaccination.

Contra Costa launched a Vaccine Dashboard.

Fresno County issued a 1/14/21 Vaccine Schedule.

Lake County issued a 1/15/21 Press Release re: Lake County Surge.

Madera County issued a 1/20/21 Press Release re: Vaccine Clinic Cancellations Due to Vaccine Shortage. The County issued a 1/15/21 Press Release re: Next Phase of Vaccination.

Mendocino County issued a 1/18/21 Press Release re: Vaccine Event For Second Pfizer Vaccine. The County issued a 1/18/21 Press Release re: Moderna Vaccine.

Monterey County issued a 1/14/21 Press Release re: Vaccine Portal. The County issued a 1/18/21 Press Release re: COVID-19 Variant in Monterey County. The County issued a 1/19/21 Press Release re: Food Facility Compliance Form.

Napa County issued a 1/15/21 Press Release re: Vaccine Administration.

Sacramento County issued a 1/14/21 Press Release re: Vaccine Status.

San Francisco County issued a 1/15/21 Press Release re: Vaccination Sites.

San Joaquin County issued a 1/19/21 Press Release re: Vaccination Administration. The County has a Vaccine Dashboard.

San Mateo County issued a 1/14/21 Press Release re: Vaccination. The County issued a 1/21/21 Press Release re: Being Alert for COVID-19 Vaccine Scams.

Santa Clara County issued a 1/15/21 Press Release re: Vaccination Efforts. The County issued a 1/17/21 Press Release re: COVID-19 Variant. The County issued a 1/21/21 Press Release re: Resuming Moderna Vaccine Administration.

Santa Cruz County issued a 1/20/21 Press Release re: Vaccine Partnership.

Shasta County issued a 1/14/21 Press Release re: Expanded Vaccine Options.

Sonoma County issued a Vaccine Information Site.

Stanislaus County issued a 1/18/21 Press Release re: Vaccine Clinics Reopening.

Sutter and Yuba Counties issued a 1/14/21 Update re: Vaccination Available to 65 Age Group.

Southern California. Imperial County opened eligibility for residents 65 and older. Currently pending due to vaccine availability.

Kern County expanded vaccine availability to residents aged 65 years and older.

Los Angeles County vaccine eligibility opens to residents aged 65 years and older.

Orange County expanded vaccines to residents aged 65 years and older.

Riverside County vaccine clinics continue.

San Bernardino County opened eligibility for vaccine to residents 65 and older.

San Diego County expanded vaccination availability to ages 75 and up.

Santa Barbara expanded vaccine availability to residents aged 75 and older.

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 1-21-21. The chart is also posted on our website.

Boards can contact us for friendly,
professional advice.

Adrian J. Adams, Esq.
Founder & Managing Partner
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. Keep in mind we are corporate counsel to California associations only. Request a proposal to represent your association. It's okay, we're friendly.

I join Adrian in inviting you to contact us for your association's legal needs.

Hon. Lawrence W. Stirling, Senior Partner and author of the Davis-Stirling Act
Conflicts of Interest
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Contact us to amend your governing documents to comply with rent restrictions required by AB 3182.

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