TREASURER FAILED TO
INVEST IN A CD
 QUESTION: Our Treasurer refused to instruct our management company to invest the reserve funds in CDs after the board passed a motion. This led to a $15,000 loss of interest income. The Treasurer stated that she didn’t believe in CDs. Should she be recalled? –Janet L.
ANSWER: If the board voted to invest funds in a CD, the Treasurer was obligated to do so, whether she believed in CDs or not. If she felt strongly about the issue, she should have resigned as Treasurer. Because she did not, the board can remove her as Treasurer and appoint someone else. The membership also has the option of removing her from the Board.
WILDFIRE HAZARD
SEVERITY ZONES
 QUESTION: Since our HOA is located in a Very High Wildfire Hazard Severity Zone, is the Board required to enforce Zone 0 violations that are visible from the street (such as builder-installed wooden gates attached to main structures)? -April M.
ANSWER: No, there is no legal requirement that the board do so. Nor does it have the jurisdiction to enforce fire codes unless there is authorizing language in your CC&Rs.
However, for the safety of the community, the Board can and should ask the Fire Department to inspect all properties in the association and issue citations. The Board can also go a step further and adopt rules related to fire safety. Once rules are in place, it can enforce them and levy fines exceeding $100 against those who violate them because they involve a safety issue.
SPEAKING SPANISH
IN BOARD MEETINGS
 QUESTION: Is a board required to speak English to conduct the monthly board meeting when our members all speak Spanish? -Sandra M.
ANSWER: No, you are not required to conduct them in English. As a practical matter, if everyone on the Board and everyone in the meeting speaks Spanish, then Spanish should be spoken. However, if you have any residents who speak only English, you must have a Spanish-to-English interpreter present at no cost to the attendee.
If the community speaks English, but a member does not, associations are not required to provide an interpreter. Article III, Section 6 of the California Constitution provides that “English is the official language of the State of California.” However, if the person wants to bring an interpreter to meetings, they may do so at their own expense.
IRS TAX
RESOLUTION
 QUESTION: What are the options if the Board tries multiple times to get a quorum of the membership for voting on the IRS resolution, and still can't do it? Can they vote on it themselves? Should they just count the votes they're able to obtain (at less than quorum)? Or do they just have to drop it? –Lara
ANSWER: Because associations are nonprofit corporations, their budgets should zero out at the end of each fiscal year. Since income and expenses are projected when annual budgets are adopted, associations are sometimes over budget at year-end and sometimes under budget. Any excess income at the end of the fiscal year must be returned to the membership or applied to the following year's budget as required by Revenue Ruling 70-604 and 75-371. Otherwise, it will be taxed.
If an association files Tax Form 1120-H, Revenue Ruling 70-604 does not apply, and no excess income tax resolution is needed. If Tax Form 1120 is filed, any excess income at the end of the fiscal year (a budget surplus) must be applied to next year's assessments or refunded to the membership.
If the association cannot achieve a quorum at its annual meeting, the Board has two choices: file Tax Form 1120-H, which makes the issue moot, or record in its minutes that those who attended the meeting voted for the tax resolution. The first option is probably the better of the two.
HOW AI IS CHANGING
THE HOA INDUSTRY
 Adrian Adams, Adams Stirling PLC, and Brad Perry, Chief Information Officer for Action Property Management, will be hosting a webinar titled "How AI Is Changing the HOA Industry."
They will discuss the practical application of artificial intelligence and how it will change the way HOA boards and managers do business.
The webinar will be held on Tuesday, April 28, 2026. You can register for the webinar here.
HIRING
ATTORNEYS
Our firm is growing. We are looking for a litigation attorney, a litigation paralegal, and two HOA attorneys. 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 needing legal advice should have an attorney review the facts and law for their particular situation. We serve as corporate counsel to California associations.
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