Beaumont Tashjian Law Blog

Tuesday, October 15, 2019

2019/2020 LEGAL UPDATE

The following is a summary of enacted legislation, court decisions, news, and current events from this past year, which impact common interest developments. 

ENACTED LEGISLATION
The bills below have been signed and approved by Governor Gavin Newsom and will take effect January 1, 2020, as “New Law.”

SB 323 & 754: Election Rules and Director Qualifications

Most significantly, these bills amend Civil Code Section 5100 to, among other things, disqualify a person from being a candidate for the board if he/she is not a member at the time of the nomination. These bills also effectively handicap boards’ abilities to set qualifications for candidates and suspend voting rights as a disciplinary measure.  These bills also require associations to send out pre-election notices while including qualifications for candidates, list of candidates, deadline for returning ballots and time and place of annual meeting.

This, and other significant changes to the election rules, mean that boards should revise their rules to make sure they are in compliance with the law. These new laws render most communities’ Bylaws, CC&Rs and Election Rules out of date, so amendments to these documents are essential.

SB 326: Inspect Your Balconies!

This law requires associations to inspect their exterior elevated elements, such as balconies, and prepare a written report, every nine years. Associations are also no longer required to obtain owners’ approval before bringing a construction defect lawsuit. Boards can now make this decision on their own.

Boards and their managers should work diligently to ensure that they are performing the inspection and submitting the required report to local code enforcement in a timely fashion. Budgets may also need to be revised to factor in these costs.

AB 5: Employees and Independent Contractors

This law expands the definition of “employee,” which means that more independent contractors (as previously defined) will be entitled to employee benefits, etc.

Boards must work with their associations’ vendors, especially community managers, to define their relationship and most importantly, have ironclad contracts in place, to protect the Association.

AB 670: Protecting the “Granny Flat”

This law voids any rule in an association’s governing documents that prohibits the construction of an accessory dwelling unit on a single-family lot. Reasonable restrictions are permitted.

Boards should review their governing documents including architectural guidelines with legal counsel for any such prohibitions and consider amendments if necessary to ensure they contain reasonable restrictions.

SB 234: Family Daycare Homes

Owners are now given greater flexibility in running large daycares (7-14 children) out of their homes. Large daycares will be considered a “residential use” and local governments cannot require special permits for operating them.

Boards and managers should work with legal counsel to ensure they are enforcing the governing documents carefully, and without infringing on owners’ rights to operate daycares. Daycare operators cannot cause a nuisance and must continue to provide proof of insurance and the proper licensing.

SB 652: Displays of Religious Items

This law prohibits associations from enforcing or adopting restrictions that ban a resident from displaying religious items on their entry doors and door frames.

This law requires associations and managers to sensitively navigate between the community’s aesthetic concerns, and the religious freedoms/rights of their residents. Consult with legal counsel to explore adopting reasonable regulations on the display of religious symbols. 

AB 684: Electric Vehicle Charging

In another push by our state to reduce reliance on fossil fuels, this law requires the Department of Housing and Community Development to research and develop building standards regarding future EV charging infrastructure for parking spaces in multifamily buildings.

Be on the lookout for more laws and regulations impacting your community and its EV infrastructure. If you have not already, adopt rules and regulations for the installation of EV charging stations!

SB 638: Insurance Coverage for EV Charging Stations

Under this law, lessees of units must maintain personal liability coverage in an amount up to 10 times the annual rent for the unit. Coverage must include property damage and personal injury caused by the installation.

Make sure your governing documents, including EV charging station policies, are up to date and require the appropriate insurance levels. 

AB 1680: Coastal Lands Public Access - Hollister Ranch

This bill impacts only the Hollister Ranch coastal community in Santa Barbara, and seeks to expand on protections of public access to the state’s coastline/beaches, by requiring Hollister Ranch to grant access to the State Coastal Conservancy and other agencies, in order to develop a public access plan.

Living in California, coastal access is regulated by the Coastal Act by the Coastal Commission.  All boards of coastal communities should be aware of the Coastal Act’s provisions and consult with legal counsel to ensure compliance.

PENDING LEGISLATION

AB 1731: Short Term Rentals in “Eligible Areas”

In “Eligible Areas” (San Diego County Coastal zones), residential hosting platforms, such as Airbnb, are restricted as to how they can approve short-term rental bookings.

Boards should consult with their association’s legal counsel to determine if their community is in an “Eligible Area” and if this law gives them greater teeth in enforcing against short-term or vacation-like rentals.

AB 1424: EV Charging Stations Open Access Act

This bill would amend the law to require each EV charging station to display credit card payment capacity and a toll-free phone number for processing payments.

If your community provides EV charging stations, or if owners are allowed to install same within exclusive use common areas, this would require bringing their displays up to code with the pertinent information.

SB 434: Managers’ Responsibilities

This bill would amend the Civil Code to require managers who are no longer employed or contracted by the association to turn over the association’s records within a specified time and in a specified format.

If this law is enacted, managers should be up to speed on the document-turnover requirements and comply with the statutory timeframe.

CALIFORNIA CASE LAW

“Published” court decisions are law, and binding, while “unpublished’ court decisions are not law. Although not law, unpublished decisions are extremely valuable as they illustrate how courts address various issues commonly faced by common interest developments.

Orchard Estates Homes, Inc. v. The Orchard Homeowner Alliance (2019) 32 Cal.App.5th 471Published

The association sought member approval of a CC&R amendment, which did not pass. The association filed a petition pursuant to Civil Code Section 4275, seeking to reduce the percentage of votes necessary to adopt the amendment.

The court found that voter apathy is not an element that must be alleged or proven to obtain relief under Civil Code Section 4275 and an association can petition the court for relief regardless of whether the amendment failed due to voter apathy or a successful opposition. If looking to amend your governing documents, this ruling may make it easier!

Harbor Island Condominium Owners Association v. Alexander (2019) WL311447 Unpublished – May Not be Cited (Not Law)

The association obtained a preliminary injunction against tenants for nuisance conduct and the tenants appealed stating, among other reasons, that the tenants were unfairly denied an opportunity to challenge the violation notices at the disciplinary hearings.

The case reinforces that only the owner, not the tenant, is entitled to due process prior to the imposition of discipline for a tenant’s violations of the governing documents. If the owner invites the tenant as a witness, he/she can be heard, but the board does not need to engage in dialogue. Confirm your governing documents are clear on due process and discipline procedures.

Kim v. Kim, No. B277997, 2019 WL
Unpublished – May Not be Cited (Not Law)

Following a successful recall vote, the recalled director sued other members of the board for fraud, conspiracy to defraud and breach of fiduciary duty (among other things), for promising to support him as president.

Following years of intense litigation, the court ultimately ruled that the board member could not prove his case, and the defendant board members owed him no duty to protect his political interests. This case shows how time consuming, contentious and expensive recall elections can be.  Associations fraught with discord should consider other avenues of conflict resolution, whenever possible.

Obduskey v. McCarthy & Holthus LLP, 139 S.Ct. 1029 (2019)
Published

The law firm was hired to carry out a nonjudicial foreclosure and sent correspondence to the owner related to their delinquent account.  The owner disputed the debt, however the law firm did not stop its collection attempts.

The court ruled that a law firm engaged in only nonjudicial foreclosure proceedings is not considered a debt collector subject to the main coverage of the Fair Debt Collection Practices Act. If management handles certain aspects of the collections process, consult with legal counsel to make sure you are not violating collections laws!

Curto v. A Country Place Condo Ass’n., Inc., 921 F. 3d 405 (2019)
Published

Residents brought an action against the association alleging that the association’s policy of gender- segregated swimming hours at the community pool violated the Fair Housing Act (“FHA”).

The court found that the pool schedule discriminated against women in violation of the FHA because although the schedule allotted equal time to men and women, the schedule had few time slots for women outside of conventional work hours.

When considering rules that may directly impact a protected class, associations should work with legal counsel to ensure their rules are not discriminatory or violating any State or Federal laws, to avoid liability.

Windham at Carmel Mountain Ranch Assn. v. Lacher Case No. D071799
Unpublished – May Not be Cited (Not Law)

The owners appealed a preliminary injunction obtained by the association to vacate the premises to allow for fumigation of termites and an award of attorney’s fees. This was after the owners did not turn over the key to their residence to the fumigation company, despite multiple requests and notices from the association.

The court held that the association met the notice requirements of Civil Code Section 4785 to temporarily vacate the premises. The association was also awarded its attorney’s fees. This case reaffirms that associations may require owners to vacate the premises for termite fumigation, and owners must comply. However, boards, with management, should ensure they are complying with all of the proper notice requirements to protect against any challenge by a resistant owner.


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