Articles

Boards are continually faced with trying to turn lemons into lemonade. The most common “lemons” boards are faced with are neighbor-to neighbor disputes. What should boards do when faced with these types of owner disputes which are never pleasant and almost always adversarial?  Does the Board of Directors have a duty to step in and, if so, what authority does it have to act in such situations? How does the Board make lemonade from these lemons?

Many neighbor-to-neighbor disputes arise from smoking complaints and noise violations.   Owners often complain when smoke, loud music or other noise emanates into their units from a neighbor, either through the interior of the units, common areas, or exclusive use common areas, such as patios and balconies.  The board’s duty to act in these types of situations depends on the specific provisions contained in the association’s governing documents and the specific facts regarding each violation.  Each is unique, and each should be analyzed separately. If these matters are not resolved at the inception they can escalate exposing the association to liability.

By Calvin S. Rose, Esq. and Tracy R. Neal Esq.

Published in the CAI-Greater Inland Empire Chapter's
Connect 2016 2nd Quarter Magazine 

The “no cost collection” model has come under attack in recent years, culminating most recently in the collection case, Hanson v. JQD, LLC d/b/a Pro Solutions, (N.D. Cal., 2014) (“Hanson v. Pro Solutions”). California community associations and the common interest development industry at large have watched this case unfold, beginning with a homeowner filing a lawsuit against a assessment collection services provider, and culminating in takeaways that will undoubtedly resonate throughout California.

Assessments have been termed the “lifeblood” of an association. Assessments are the sole source of income for associations, from which association expenses are paid, including daily operating expenses to common area maintenance and repairs. Boards have a fiduciary duty to levy and collect assessments. Like most businesses, community associations and the boards that run the day-to-day business of an association, seek out services at the best price, which in some cases may mean the lowest price.  As a result, delinquent assessment collection services at no cost have appealed to community associations as they are non-profit corporations operating on a zero budget. Hanson v. Pro Solutions, however, has shown the potential real cost of “no cost collection”.

Section 4775 of the Civil Code currently holds associations responsible for maintaining, repairing, and replacing common areas while owners are responsible for maintaining their units and any attached exclusive use common areas, unless the community's governing documents state otherwise. However, the current law fails to delineate whether associations or owners are responsible for the repairs and replacements of exclusive use common areas if the community's governing documents do not clearly establish same. In trying to clarify the current code's language, the legislature recently passed Assembly Bill No. 968 to amend Section 4775.

Effective January 1, 2017, associations will be responsible for maintaining, repairing, and replacing the common areas and repairing and replacing the exclusive use common areas while the owners of each unit are responsible for maintaining, repairing, and replacing their units and merely maintaining the exclusive use common areas, unless the community's CC&Rs provide otherwise.

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

ENACTED STATE LEGISLATION

AB 349 (Gonzalez) Property Use and Maintenance – Artificial Turf

Effective immediately as an urgency statute, AB 349 amends Civil Code Section 4735 to make any provision of a governing document or policy, including architectural or landscaping guidelines, void and unenforceable if it prohibits, or includes conditions that have the effect of prohibiting, the use of artificial turf or other synthetic surface resembling grass. AB 349 was enacted to reduce outdoor water use to help meet the Governor’s mandated 25-percent statewide water use reduction in a time of drought.

This bill also amends Civil Code Section 4735 to prohibit associations from requiring a member to remove or reverse water-efficient landscaping measures, installed in response to a declaration of a state of emergency, once the state of emergency due to drought is lifted.

AB 596 (Daly) Annual Budget Report – FHA/VA Certification

Beginning July 1, 2016, the annual budget report of a condominium project must include a separate statement describing the status of certification by the Federal Housing Administration (FHA) and the federal Department of Veterans Affairs (VA).
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