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ADAMS|STIRLING
2024 LEGAL UPDATE
 With the 2024 legislative year wrapping up, attorneys Jamie Handrick, Rob Ward, Alison Greiner, and Karen St. Onge will discuss new statutes and cases passed into law this year.
They will cover their impact on California's community associations as we head into 2025. This timely webinar is open to everyone at no cost.
We are seeking continuing education credits for managers and will let everyone know once we have approval.
Date & Time: Tuesday, October 8, from 12 to 1 p.m.
REMOVING FUNDS
FROM RESERVES
QUESTION:  We will completely remove a jungle gym for which we have a $30,000 reserve. Since it will no longer exist, can we move the money into the operating account or must it stay in the reserve account? –Michael M.
ANSWER: The general rule is that once monies are in your reserve account, they can only be used for reserve items. You can borrow them for operations but you must pay them back within a year.
It makes more sense to redistribute the money among other line items in your reserve study. There is always something that fails prematurely, or is somehow underfunded. The other problem with current reserve funding is the corrosive effect of inflation. Everything costs more to repair or replace. Keeping the money in reserves gives you a better cushion against unexpected special assessments.
MINIMUM
RESERVE LEVELS
QUESTION: Is there any law which requires a minimum amount in a reserve fund in order to provide and upkeep the myriad of continuing maintenance problems and issues of a condo building? –R.W.
ANSWER: There should be, but there is not. Associations are, however, required to fund their reserves sufficient to perform their obligations under the governing documents. (Civ. Code § 5600(a).) Associations that underfund their reserves will, at some point, need to impose special assessments. Keeping healthy reserves minimizes, or avoids altogether, the threat of a special assessment.
HARDWOOD FLOORS
QUESTION:  Is “sound,” “noise,” or “hardwood flooring” addressed in the Davis-Stirling Act? –Archibald M.
ANSWER: No, this topic is not covered in the Davis-Stirling Act. Acoustical standards are covered in local building codes. However, they are minimum standards for construction, which can be too noisy for many owners.
Many associations have adopted higher standards in their governing documents which owners are required to meet whenever they install hard-surfaced flooring in their units. For more information, see "Hard-Surfaced Flooring."
ZINSCO
ELECTRICAL PANELS
QUESTION:  Many of the units in our 50-year-old condo building still have their original Zinsco electrical panels. Electricians say the panels should be replaced due to high failure rates. Replacement cost is around $2,000-$3,000 per condo. Can we require all owners to upgrade their panels? –Jim C.
ANSWER: Yes. Because of their propensity to fail, Zinsco electrical panels are dangerous, and failure to replace them is a safety threat to everyone in the complex.
Fire Hazard. The main concerns are with (i) circuit breakers not tripping and overheating, and (ii) connections at bus bars becoming loose, which causes arcing inside the panels. Arcing could cause metal bus bar components to fuse together.
Potential Liability. Because the panels are a known fire hazard, failure to replace them is a safety threat to everyone in the complex and a potential liability to the association. For this reason, many insurance carriers are requiring condominium associations with Zinsco panels to replace them with a safer product. Failure to do so could make your complex uninsurable.
Options for Replacement. You have two options. The first is to make a demand on everyone to hire an electrician to replace their panels. The second option is for the association to hire an electrician to do the work and impose a special assessment to pay for the materials and labor. In your case some owners have already replaced their panels. That means you would impose a reimbursement assessment on those who have not yet replaced their panels.
Each option has its pros and cons. Making everyone hire an electrician may result in owners finding the cheapest possible electrician who may or may not be licensed and insured. Also, you may have to threaten some owners with lawsuits if they refuse to do the work. It's an administrative headache.
The second option ensures that a properly vetted licensed and insured electrician does the work. In addition, it may be cheaper due to economies of scale. And it will be easier to get the work done in a timely manner. The downside is getting some people to open their doors for the work to be done. In addition, there is always someone who will claim that their unit was somehow damaged as a result. To minimize the risk, have someone accompany the electrician into the unit, Also, take a picture of the panel before and after the work is done.
HIRING
EXPERIENCED ATTORNEYS
 We are looking for experienced HOA attorneys for our offices in Los Angeles and Northern California.
If you are interested, or know someone who may be a good candidate, you can contact Adrian Adams confidentially by email or by phone at (800) 464-2817.
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DISCLAIMER. Our newsletter provides commentary, not legal advice. Boards need to retain an attorney to review the facts surrounding their particular situation before providing a legal opinion. We serve as corporate counsel to California associations only. Request a proposal to represent your association.
PAST NEWSLETTERS. Readers can find current 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, however, is kept updated with current information which can be found via the "Index" or through our website's internal "Google Search" feature.
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