Why Community Property Management Is Good for Home Value p.6
The Makings of a Great Board Member p.12
Fines, Fees, and HOA Liens p.16
Serving Community Associations
Effective Strategies for Handling Mold in Your Community p.20
Banning Criminals from Associations
p.28
November / December 2016 echo-ca.org
Why Does Your Community Need to Work With a Property Managment Company? p. 6
ECHO 1960 The Alameda STE 195 San Jose, CA 95126 Change Service Requested
PRSRT STD U.S. Postage PAID Modern Litho 210
2016 ECHO educational calendar
2016 ECHO Educational Seminars
San Rafael
If you’ve ever wished that ECHO would hold a seminar closer to your association, chances are that we’ll be nearby during 2016. Don’t miss an opportunity to get the education you need with guidance from some of California’s top HOA attorneys and professionals. Take a look and mark your calendar. We can’t wait to see you there!
February 4 Marin Educational Seminar (see page 25) Embassy Suites San Rafael, CA
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San Francisco
news from ECHO
News From ECHO November 2016 As we approach the end of 2016, I expect many will be relieved. No more political debates and debasements. Budgets on their way to homeowners. Holidays approaching and hopefully gatherings with family and friends. We at ECHO have much to be thankful for, and that includes the loyalty and support from our members…you. We do our very best to bring you news and information on a myriad of topics, through this Journal, our website, our bi-weekly email newsletter, and regional seminars throughout the year. Mostly, those topics are ones of our choosing, in an effort to be timely and relevant. We hope we hit the mark more often than not. But we also could use your help, and so could your fellow board members from associations far and wide. Ever wanted to know what an association of similar size and location pays: for management, in assessments, for a new roof or paint job? Curious how a project went elsewhere? Have a story about a success (or failure) at your community you’d like to share? We at ECHO would like to facilitate sharing of experiences. We’d like to be more engaged with you, our members, about what matters in your community. Over the next several months, we’ll be developing mechanisms to ease information exchange. But in the meantime, I invite you to drop me a line, with an experience, a question, or an idea. My email address is bkidney@echo-ca.org. I look forward to hearing from you. Best,
Brian Kidney Executive Director
November/ December 2016 | ECHO Journal
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CONTENTS
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12 28
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Why Community Property Management Is Good for Your Home Value HOA board members are volunteers and may not be experts on the nuances of effectively running a corporation with strict legal oversight. While it is possible to provide effective guidance for your community without the aid of a property management company, we wouldn’t recommend it due to the complex legal requirements and specific knowledge required to properly manage the day to day operations in a homeowners association.
12
The Makings of a Great Board Member Great board members understand that a team approach made up of the board, community members and great management is the proven way for their community to thrive!
16
Fines, Fees, and HOA Liens While many management companies and/or financial accountants help Boards with the collection of HOA dues (Assessments), the Board must themselves take documented action against members of their HOA who violate the Conditions, Covenants, and Restrictions (CCRs) and the Rules and Regulations (Regulations) adopted by the HOA.
20
Effective Strategies for Handling Mold in Your Community Mold has become a problem affecting many associations, both young and old. Knowing how to handle a mold complaint and having a plan in place could save your association significant money and minimize exposure to personal injury claims. This article sets forth some strategies for practically addressing mold in your community.
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Banning Criminals from Associations Associations can amend their governing documents to restrict certain types of criminals. If an association wants to amend their documents, boards should work with legal counsel to draft a provision that is narrowly tailored to prohibit those who represent a risk to the safety of residents or the safety of the association’s property.
DEPARTMENTS
2
2016 ECHO Educational Calendar
3
News from ECHO
25
Marin Educational Seminar — February 4th, 2017
27
ECHO Event Calendar
32
ECHO Volunteers
33
ECHO Professional Directory
34
ECHO Bookstore
37
Advertiser Index
38
Legislation at a Glimpse
The ECHO Journal is published bi-monthly by the Educational Community for Homeowners. The views of authors expressed in the articles herein do not necessarily reflect the views of ECHO. We assume no responsibility for the statements and opinions advanced by the contributors to the magazine. It is released with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Acceptance of advertising does not constitute any endorsement or recommendation, expressed or implied, of the advertiser or any goods or services offered. We reserve the right to reject any advertising copy. Copyright 2016 Educational Community for Homeowners. All rights reserved. Reproduction, except by written permission of ECHO is prohibited. The ECHO membership list is never released to any outside individual or organization. ECHO 1960 The Alameda, Suite 195 San Jose, CA 95126 408-297-3246 Fax: 408-297-3517 www.echo-ca.org info@echo-ca.org Office Hours Monday-Friday 9:00am to 5:00pm BOARD OF DIRECTORS AND OFFICERS President David Hughes Vice President Karl Lofthouse Treasurer Diane Rossi Secretary Carly Melius Directors Sandra Bonato Jerry L. Bowles Rolf Crocker John Gill Adam Haney Stephanie Hayes
David Levy Robert Rosenberg Jeffrey Saarman Brian Seifert Wanden Treanor
Executive Director Brian Kidney Director of Marketing & Membership Carly Melius Director of Communications Tyler Coffin Design and Production Design Site ECHO Mission Statement Serving Community Associations
November/ December 2016 | ECHO Journal
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Why Community Property Management Is Good for Your Home Value By Joe Winkler, CMCA
November/ December 2016 | ECHO Journal
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W
hile there is no legal requirement for a community to have a homeowners association, communities that are not in an association can have issues that cause property values to sink fast. Homes in disrepair, unconventional design choices, badlymaintained landscaping, abandoned cars in driveways‌ these issues all drive property values down. By living in a homeowners association, you and your neighbors have a reliable mechanism to encourage residents to maintain attractive homes that benefit everyone.
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Even with an enthusiastic and well-meaning HOA, handling the many complicated aspects of property management places an undue burden on members of the board, which can lead to frustration and quick burnout. HOA board members are volunteers and may not be experts on the nuances of effectively running a corporation with strict legal oversight. As board members are replaced over time, the institutional knowledge they have individually gained disappears with them, requiring many boards to start again from scratch.
One of the most common questions we hear from residents is: Why, exactly does my community need to work with property management company? Can’t we just manage our neighborhoods ourselves? While it is possible to provide effective guidance for your community without the
aid of a property management company, we wouldn’t recommend it due to the complex legal requirements and specific knowledge required to properly manage the day to day operations in a homeowners association.
• Fiduciary accounting expertise
So, what does a property manager do, exactly?
• Managing the general ledger
Property management companies provide both on-site community management services and behind-the-scenes duties that increase the home values in your community and protect your HOA from liability. A management company also allows your HOA to offload legal responsibility onto experts with years of effective community management experience. Here are some of the core duties most management companies provide:
Financial Management
Your property manager handles the big-picture and day-to-day financial responsibilities that help grow your investment through careful management of community funds and fiduciary responsibilities. These include:
• Budget advice and first draft completion. • Escrow services • Accounts payable & receivable
Vendor & Project Advice Your property management company will save your association from headaches and wasted revenue by helping your board find the most appropriate
November/ December 2016 | ECHO Journal
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vendors and keeping your projects on track. In addition to providing advice on project expenditures, your property management company will vet vendors for appropriate licenses and insurance coverage. Your property management company will also manage vendors to ensure that they are providing excellent service to your community.
On-Site Community Management An effective property management company helps communities fulfill their potential as pleasant places to
live. This includes building community spirit and buffering the relationship between residents and the board. Some of these day-to-day community management tasks include:
• Preparing information for monthly board meetings
• Enforcing community rules, including aesthetics and conduct in common areas
• Making sure the board is properly advised regarding business issues
• Listening to upset residents and providing guidance for next steps • Building community spirit by suggesting and organizing events
Operations Assistance Many operational details are not just issues of organization; they are required by law. A property management company can assist in managing the logistical details required of the HOA so board members aren’t overwhelmed. This includes:
• Keeping the record of transactions at Board of Directors meetings
• Providing liability guidance and recommendations as to when to involve legal counsel • Generating legal communications such as the community’s audit mailer, reserve study and budget mail-out • Ensuring that the association is certified by the Secretary of State • Providing multiple ways for residents to communicate with the board, including an online presence Though every community has the right to manage themselves in whatever way they please, to do so places the community at risk financially and legally. When something as valuable as your home’s worth is on the line, take every protection possible. Just as you wouldn’t invest millions of dollars without a financial adviser, we recommend that you work with professionals who understand the impact your decisions will have on the value of your community in the immediate future and over time. By working with a property management company, you can rest assured that are doing everything in your power to preserve your investment for years to come. Joe Winkler, CMCA is an accomplished and creative marketing executive with proven success in marketing projects, public relations, operations and sales with over 10 years of professional community management experience. As Vice President of Marketing for HOA management company Keystone Pacific Property Management, Joe is responsible for building and maintaining relationships with industry professionals.
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September/ October 2016 | ECHO Journal
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The Making Board Mem
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gs of a Great mber
By Clint McClure, CCAM
November/ December 2016 | ECHO Journal
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W
hat are the characteristics that make for a great board member? There isn’t a prescribed checklist of skills, expertise or experience. There are no absolute requirements to look for on a resume. So, what factors should be included in putting together a description of the dream candidate for an association board?
Professional community managers are uniquely positioned to answer that question. As managers, we work closely with our community association boards and help facilitate many functions on their behalf. We see first-hand what qualities are key to success and what factors get in the way. We count on excellent board members as the recipe for our own success.
How Do You Join ECHO? Over 1,700 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for the membership, sign up online at www.echo-ca.org. For more information about membership and ECHO, call us at 408-297-3246 or visit the ECHO website.
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Whether you are already on a board or considering throwing your hat into the ring, there are a number of important character traits that can lead you to success as a community board member. Read on to understand what your community and community manager look for in board members and ultimately count on to achieve great outcomes.
Be Committed Community managers experience the best results when working with board members that show commitment to their role on the board. Board members that commit to their role take their board meetings very seriously – taking the time to become truly informed on the issues of the agenda, preparing in advance to ask questions of the manager and coming prepared to make informed and timely decisions. Your meeting time is precious. If your community holds one meeting per month that lasts two hours, that is a total of 24 meeting hours for the entire year.
Your community manager and community rely on the board’s commitment to attend the meeting well prepared and to execute critical decisions.
Problem Solve with a Positive Attitude Associations in California have to meet many challenges head on, such as working with the drought, aging common area elements, complaint-driven communication and ever changing legislation. Managers depend on board members with a problem-solver approach powered by a positive attitude to help the community win and overcome these challenges. Deep within a professional community manager’s DNA is a true desire to help everyone and problem solve for the community. Managers come back meeting after meeting to better the community, and when those managers are supported by problem-solver board members with a positive attitude and that make informed and timely decisions, the sky is truly the limit!
Respect Manager’s Time Great board members respect the manager’s time and the professional relationship. A professional relationship between the board members and
management means the board understands that the association has delegated many tasks to the manager to service the community. Take a moment and think of the many tasks your manager accomplishes for your community, every day, every week, every month. Great board members realize unnecessary tasks, interference with association vendors or unnecessary e-mails to their manager interferes with their community manager effectively executing their duties. Community managers completely understand and support that board members have the ultimate responsibility for their community. To ensure you are receiving only the best management service for the association and its’ members, work with your manager to establish check-in times to discuss service and give your manager relationship-building feedback.
Confirm, Lead and Direct Board members need to know what is expected of managers and not assume the manager takes care of everything. Great board members have the leadership skills to recognize what is required in the contractual relationship with their professional management team. Community managers can do almost anything, but they can’t do everything. Therefore, board members need to confirm the community manager’s responsibilities and lead the community to be focused on the issues within the association’s bandwidth of responsibility. Community managers rely on strong boards to keep their focus on what needs to get done and what is the best for the community, even when it is unpopular. Successful board members understand this and direct accordingly. Board members, your managers rely on you to remain strong and steadfast with the conviction to lead by selflessly caring for the needs of the community above all. Great board members understand that a team approach made up of the board, community members and great management is the proven way for their community to thrive! Clint McClure, CCAM is President & CEO of MMI-McClure Management Inc. in Carlsbad. Reprinted with permission from California Association of Community Managers, Inc. (CACM) Vision Magazine (Copyright, 2016, CACM) .
November/ December 2016 | ECHO Journal
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FINES, FEES, HOA LIENS AND
The Difference Between Fines and Fees when Collecting Under a Lien By Cameron Day, Esq.
November/ December 2016 | ECHO Journal
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T
he Board of Directors (Board) for a Homeowners Association (HOA) faces the unenviable balancing act of managing the HOA’s finances, protecting the HOA’s assets, and enforcing the governing documents.
While many management companies and/or financial accountants help Boards with the collection of HOA dues (Assessments), the Board must themselves take documented action against members of their HOA who violate the Conditions, Covenants, and Restrictions (CCRs) and the Rules and Regulations (Regulations) adopted by the HOA. Typically, a Board will use a monetary sanction (Fine) or other non-monetary sanctions, as allowed by their CCRs and/or Regulations through a formal hearing, to coerce a non-conforming member into compliance with the governing documents. These HOA Fines can be assessed for a variety of non-conforming member behaviors ranging from violating Regulations and/ or CCRs, such as smoking, loud noise, after-hours use of amenities, abuse of parking privileges, and just about every other violation imaginable. All goes smoothly for the Board when the initial warning or Fine(s) works and the member comes into compliance. But what happens when a member ignores the Fines and continues their non-conforming behavior? Typically a Board continues to hold additional enforcement hearings and assesses more Fines hoping that the accumulation of Fines will reach a high enough dollar amount forcing the member to come into compliance. A similar situation occurs with members who are delinquent in paying their HOA Assessments. This routinely happens with both regular monthly assessments as well as one-time special assessments. When a member falls behind in paying their Assessments they generally incur additional costs, usually in the form of flat late fees, and interest on their outstanding balance (Fees), in an attempt
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to compel payment from the member. The member may also be responsible for attorney’s fees in the HOA has involved its attorney in the collection process. Note that these Fees incurred as a result of nonpayment of Assessments are separate from the Fines imposed for violating the governing documents. This is an important distinction as explained below. What can a Board do if a member simply will not pay their Fines and/or Assessments and associated Fees? The most common step taken by a Board is to record a lien on the member’s property, which is a legal claim against the member’s property that ensures that the outstanding money owed to the HOA is paid upon the sale or refinance of the property. However, while a Board may place a lien on a member’s property for non-payment of HOA Assessments and its associated Fees they may NOT use a member’s unpaid Fines stemming from violations of Regulations and/or CCRs as a basis for a lien. California Civil Code § 5725(b) is the controlling law on H.O.A. defined penalties or Fines, which are legally distinct from H.O.A. Assessments and associated Fees, and how those Fines may be enforced. Cal. Civ. Code § 5275(b)states:
A monetary penalty imposed by the association as a disciplinary measure for failure of a member to comply with the governing documents, except for the late payments, may not be characterized nor treated in the governing documents as an assessment that may become a lien against the member’s separate interest enforceable by the sale of the interest under Sections 2924, 2924(b), and 2924(c).
The statutes make it clear that Assessments and any late Fees or interests stemming from unpaid Assessments are separate from Fines arising from failure to comply with governing documents. Specifically, the code reads any and all penalties (Fines) levied against an owner of a unit in an H.O.A. may not be characterized as “against the member’s separate interest enforceable by the sale of the interest”.
What this statute, and it counterparts, means in non-legalese is that any Fines for failure to adhere to CCRs and/or Regulations may NOT be enforced against the member’s property interest and cannot become a lien, force a foreclosure, or be paid by the sale of the property interest. This is because the law plainly states that Fines cannot be characterized as against the member’s separate interests, rather they are against the member’s personal interest. Conversely, any delinquent H.O.A. Assessments including any associated Fees can be enforced against the owner’s property interest by way of a lien, or foreclosure sale, or payment upon the sale of the property interest.
While the law is clear that a Board may not use Fines as a basis for placing a lien on a property, some Boards endeavor to do so nonetheless. This begs the question, what are the consequences if a Board proceeds with a lien based on unpaid Fines?
The simple answer is that the Board could be liable for slander of title resulting in liability for their HOA. Both the direct damages caused by the slander of title as well as attorney’s fees associated with defending their title could be far greater than any unpaid Fines and Fees. The direct damages could be very high due to the slander of title affecting whether or not the member’s property pending sale goes through and it could affect subsequent, related real property transactions as well. Likewise the HOA could be liable for any attorney’s fees associated with the slander of title which can often be as much or more costly than the direct damages. Given the complexities of the law and the potential liability of an HOA, it is strongly recommended that boards seek legal advice before placing liens. Cameron Day, Esq. is an associate attorney with Pratt & Associates, a law firm in San Jose that focuses on Common Interest Developments, and long-time member of ECHO. November/ December 2016 | ECHO Journal
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Effective Strategies for
Handling Mold in Your Community By Julie M. Mouser, Esq.
November/ December 2016 | ECHO Journal
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M
old has become a problem affecting many associations, both young and old. Knowing how to handle a mold complaint and having a plan in place could save your association significant money and minimize exposure to personal injury claims. This article sets forth some strategies for practically addressing mold in your community.
1 Take Mold Complaints Seriously Many Boards and managers make the mistake of trivializing mold complaints from homeowners. While the idea of “toxic� mold has not garnered much support in the scientific community over the years, mold can certainly have allergenic effects on certain people. Young children and the elderly with compromised immune
systems may be particularly susceptible to mold. Asthmatics or people with chronic lung disease can also exhibit severe symptoms. We urge Boards and managers to not be dismissive of mold complaints. Taking these complaints seriously can prevent potentially significant damage to common area and protect the health of residents.
2 Pre-Select Vendors Assessing mold complaints is a timesensitive issue. We recommend that an association pre-select the vendors it will use. Typically, you will need a certified industrial hygienist and licensed mold remediation contractor. A hygienist can assist in formulating the remediation plan and the contractor performs the actual remediation work. Other professionals may be needed later in the process to determine the source of water causing the mold and to recommend the appropriate repair to prevent further water intrusion. Pre-selecting vendors will also allow an association to undertake whatever due diligence it normally would in selecting a vendor. We recommend an association request the vendor’s standard contract and have it reviewed by counsel. We also recommend the association confirm the
vendors are licensed, if required, and that the vendor has appropriate insurance in place.
3 Have a Plan While pre-selecting vendors is important, it is also crucial that an association promptly respond to a mold complaint. If a Board meets monthly, or even less frequently, it becomes difficult for an association to address mold complaints in a timely fashion. Mold problems do not improve with time. They get worse and even more expensive to handle. For this reason, we recommend that the Board discuss and delegate certain authority to the manager so that mold complaints can be assessed without undue delay. This way, associations are not hamstrung in promptly dealing with mold complaints that occur between meetings. Of course, if a mold complaint reveals a significant problem outside of the authority delegated to the manager, we recommend that an emergency meeting be called.
4 Remediate the Mold Immediately and Without Regard for Who is Responsible After an owner reports mold in their home, many Boards want to debate where the mold came from and whose responsibility it is to clean it up. Unless the association is a planned unit development where the association has no responsibility for any
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September/ October 2016 | ECHO Journal
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remediation and relocation costs. If the association turns out to be responsible, the problem has already been resolved and the owner is thrilled with the association for being responsive and proactive. Plus, by prompt removal of the mold, the association is eliminating the basis for any future personal injury claim. Whether meritorious or not, defending mold personal injury claims is incredibly costly for an association.
6 repair or maintenance of components suspected in the water intrusion that caused the mold, rarely are those debates fruitful. While the Board and homeowner go back and forth, the mold problem grows worse. Leaving mold in a home while you argue with the homeowner about responsibility only allows the damage to get worse and you may be creating a personal injury claim where none existed before. Do not conduct tests to determine the type of mold prior to remediation. If you can see or smell mold, it needs to be remediated. Remediation methods are the same regardless of the type of mold. Further, testing for mold will not tell you where the mold is or where the moisture is coming from. In the best case, the test results are meaningless. In the worst case, the test results convince an owner that they should make a personal injury claim against the association.
5 Consider Relocating the Owners We also urge associations to consider relocating the owners affected by the mold. The mold remediation process can be very disruptive in that large plastic 24 echo-ca.org
sheeting containment enclosures are erected within the affected areas. Sometimes this means entire rooms are closed off and unable to be used by a homeowner. When a kitchen or bathroom is involved, questions of habitability are raised. Further, most remediation protocols require the establishment of negative air which involves the use of HEPA (High Efficiency Particulate Air) air scrubbers. The high powered air filtration machines can be noisy and disruptive. Sometimes mattresses, pillows, clothing and other furniture need to be removed for cleaning or in extreme cases, disposal. All of these factors can be quite stressful to a homeowner. An offer of relocation also becomes important should an owner subsequently make a personal injury claim. It is of great benefit to the association’s defense to demonstrate that it offered to relocate the owners to a hotel during the mold remediation. If an owner refuses and later claims injury due to exposure to mold, the association has a good argument that the owner failed to mitigate his damages by refusing to accept the offer of relocation. If relocation is necessary, select a residence type hotel with a kitchen so the association can avoid a request for meal reimbursement. Many Boards balk at remediation and relocation. However, it is important to keep in mind that the vast majority of governing documents contain provisions for reimbursement assessments. If it turns out the water source which lead to the mold growth is the owner’s responsibility, the association can impose a reimbursement assessment for both the
Perform Clearance Testing After the Remediation After the mold has been remediated, but before any repairs are performed, have the industrial hygienist return to do clearance testing. Clearance testing involves taking air samples inside the containment enclosure, outside the containment enclosure, and often times, outside of the unit entirely. Clearance testing establishes that the mold has been fully remediated. Think of it as a kind of insurance policy.
7 Identify the Source of Water or Moisture and Correct It Mold requires a water or moisture source to grow. Remediating the mold but failing to correct the source or water or moisture is a waste of money as the mold will just come back. If the source of the moisture is readily apparent and the repair is simple, the mold remediation contractor may be able to take of the repair. If there
FREE Attendance for ECHO HOA Members!
Join us at the San Rafael Educational Seminar Saturday, February 4th, 2017
/
8:30 AM to 12:30 PM
Register online at www.echo-ca.org or fill out the form below.
AGENDA SPEAKERS DAVID FEINGOLD, ESQ., WANDEN TREANOR, ESQ., AND GLENN YOUNGLING, ESQ. WILL OFFER UPDATES AND INSIGHTS WITH A COMPLETELY NEW PROGRAM DESIGNED JUST FOR NORTH BAY ASSOCIATION BOARD MEMBERS.
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Signature: Return with payment to: ECHO, 1960 The Alameda, Ste 195, San Jose, CA 95126 Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded. Phone: 408-297-3246; Fax: 408-297-3517
November/ December 2016 | ECHO Journal
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are multiple sources of moisture, the source is not readily apparent or the repair is more involved, the Board may wish to retain an architect or other design professional to evaluate the problem, develop a repair protocol, and oversee the work.
8 Make the Interior Repairs Once the source of the moisture has been corrected, it is time to repair the interior of the home. If the cause of the mold was a homeowner responsibility, the Board may want to consider insisting that the homeowner perform any repairs. Since there is no longer any health issue, there is less risk to the association from engaging in a dispute with the homeowner at this point.
Other Considerations Should the association tender the mold complaint to its insurance carrier? Many insurance policies now exclude coverage for mold damage to common areas (some policies refer to this as limited fungi or bacteria coverage). In the past, damage to
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homeowner property and personal injury claims were covered but it is now quite common for policies to exclude all claims related to mold. We have seen some insurance companies cancel or refuse to renew policies for associations who make mold claims—whether or not the claim was covered. Therefore, it is important to consider the likelihood of coverage and the amount of coverage after the deductible before submitting a claim. Should the association amend its governing documents to include a Marie Antoinette clause? Such a clause essentially makes water damage to a homeowner’s property the responsibility of the homeowner unless the association has been grossly negligent. Such a provision can eliminate disputes between the association and the homeowners and can reduce insurance premiums for the association. What if my association was built before 1980? If your association was built before 1980, you may have asbestos in the ceilings or walls. If so, you should make sure that the mold remediation contractor is aware of the asbestos and that any disturbance of the asbestos is done under the direction of a licensed asbestos abatement consultant. Absent the appropriate protocols, stiff fines can be imposed if sheetrock containing asbestos materials in cut into or disturbed. Julie Mouser, Esq., is a partner with the law firm Angius & Terry, LLP, attorneys specializing in construction defect litigation and general counsel assistance for community associations throughout California, Nevada and Florida.
ECHO event calendar
RESOURCE PANEL CALENDAR ECHO Resource Panels meet during lunch on weekdays to enable managers, professionals and board members to hear about important topics presented by experts in the industry, and share experiences and issues. The meetings are open to all ECHO members, and those interested in learning about ECHO, offered in a casual atmosphere where the cost of attendance is the price of your lunch. The sessions last about an hour and a half. Check-in with the ECHO Panel Secretary for details and to register.
Please join us: DATE
PANEL LOGISTICS
PANEL SECRETARY
TOPIC
Nov. 3, 11:45 a.m.
North Bay Resource Panel Contempo Marin Clubhouse 400 Yosemite Dr., San Rafael
Denise Wolford, CCAM 415-458-3537
Collections
Nov. 8, 11:45 a.m.
Central Coast Resource Panel The Back Nine Grill, 555 Hwy 17 (Pasatiempo Exit), Santa Cruz
Anne Thomas 800-537-4098 ext.7530
TBD
Nov. 17, 11:45 a.m.
Wine Country Resource Panel Serv-Pro 377 Blodgett St., Cotati
Pam Marsh 415-686-9342
Law Update
Dec. 9, 11:45 a.m.
East Bay Resource Panel Massimo Restaurant 1604 Locust St., Walnut Creek
Cindy Wall, PCAM 925-830-4580
Case Law Update
Dec. 14, 11:45 a.m.
South Bay Resource Panel Heritage Bank of Commerce Kiosk 150 Almaden Blvd, San Jose
Susan Hoffman, PCAM 510-683-8614
Holiday Lunch
Dec. 22, 11:45 a.m.
Wine Country Resource Panel Serv-Pro 377 Blodgett St., Cotati
Pam Marsh 415-686-9342
Holiday Lunch
Jan. 5, 11:45 a.m.
North Bay Resource Panel Contempo Marin Clubhouse 400 Yosemite Dr., San Rafael
Denise Wolford, CCAM 415-458-3537
TBD
Jan. 10, 11:45 a.m.
Central Coast Resource Panel The Back Nine Grill, 555 Hwy 17 (Pasatiempo Exit), Santa Cruz
Anne Thomas 800-537-4098 ext.7530
TBD
Jan. 19, 11:45 a.m.
Wine Country Resource Panel Serv-Pro 377 Blodgett St., Cotati
Pam Marsh 415-686-9342
TBD
REGULARLY SCHEDULED RESOURCE PANEL MEETINGS PANEL
MEETING
LOCATION
Maintenance
First Wednesday, Even Months
ECHO Office, San Jose
North Bay
First Thursday, Odd Months
Contempo Marin Clubhouse, San Rafael
East Bay
Second Friday, Even Months
Massimo Restaurant, Walnut Creek
Accountants
Second Monday, Odd months
Scott’s Seafood Restaurant, Oakland
Central Coast
Second Tuesday, Odd months
The Back Nine Grill, Santa Cruz
South Bay
Second Wednesday, Even Months
TBD
Wine Country
Third Thursday, Odd months
Serv-Pro, Cotati
Legal
Quarterly
Varies November/ December 2016 | ECHO Journal
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BANNING Criminals FROM
Associations By Adrian Adams, Esq. and Wayne Louvier, Esq.
November/ December 2016 | ECHO Journal
29
Q
UESTION: We are concerned about criminals living in our association and serving on our board. Is there anything we can do about it? ANSWER: You raise a good topic. Several years ago, I drafted language for an association in Beverly Hills to ban felons from residing in their community. The membership passed it with lightning speed because convicted felon and accused murder Robert Durst had moved into their development.
Last year, HBO aired a documentary about him called “The Jinx, the Life and Deaths of Robert Durst.” During the filming, Durst took a break to use the bathroom where he muttered to himself (unaware his lapel mic was still live), “What the hell did I do? Killed them all, of course.” Durst is believed to have murdered his wife Kathie, his neighbor Morris Black, and his friend Susan Berman. He is currently in jail in New Orleans on a weapons charge awaiting extradition to California for the murder of Susan Berman. Robert Durst’s existing felony conviction is for evidence tampering, i.e., dismembering the body of Morris Black and throwing the parts into Galveston Bay. When limbs and torso washed ashore, the trail of blood led to Durst. At his trial, Durst described how he used a paring knife, two saws, and an axe to dismember his neighbor. The Beverly Hills HOA was understandably alarmed and wanted Durst out of their association. In addition to being terrified, would they have to disclose to potential buyers that he lived in the
development? If so, property values and sales could plummet. I used the newly adopted CC&R amendment to force Robert Durst out of the community, so your question about prohibiting criminals is relevant.
Board of Directors Barring felons from serving on boards is not uncommon (see Felons on Boards). However, a ban on “criminals” living in an association is a different matter. I will start with arrest records and move up from there.
Arrest History Amending your CC&Rs to ban residents on the basis of their arrest history is too broad. Getting arrested does not make one a criminal. I have no doubt a court
would strike down such a restriction as overbroad and unreasonable.
Criminal History Also too broad is a prohibition of residents with a criminal conviction. It’s a bit unsettling but nearly one-third of the population in the United States has a criminal record of one kind or another. Most of them are misdemeanors. Someone who smoked pot or shoplifted 30 years ago as a teenager should not be barred from buying into an association— he/she does not represent a danger to their neighbors. HUD guidelines specifically address this issue.
Housing Act standards to the use of criminal histories by housing providers. (HUD - Criminal History.) Although an association is not a housing provider, it is often viewed as such by HUD and the courts. HUD deems denial of housing based on a generic criminal history as a violation of the Fair Housing Act. According to HUD’s Office of General Counsel: [a] housing provider that imposes a blanket prohibition on any person with any conviction record--no matter when the conviction occurred, what the underlying conduct entailed, or what the convicted person has done since then— will be unable to meet this burden [that the restriction is legitimate and nondiscriminatory].
Felony Conviction HUD Guidelines In April 2016, the U.S. Department of Housing and Urban Development (HUD) issued a guide on how to apply Fair
However, a restriction on felons is enforceable if done properly. HUD guidelines provide that: A housing provider with a more tailored policy or practice that excludes individuals with only certain types of convictions must still prove that its policy is necessary to serve a “substantial, legitimate, nondiscriminatory interest.” To do this, a housing provider must show that its policy accurately distinguishes between criminal conduct that indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not. That means white collar felons and perjurers present a low risk to resident safety whereas a recently released violent criminal, arsonist, registered sex offender, or drug dealer could be deemed a threat.
Drug Dealers Section 807(b)(4) of the Fair Housing Act specifically allows for denial of housing to someone convicted of the
illegal manufacture or distribution of a controlled substance. The exception requires a conviction, not merely an arrest, and does not apply to other drug-related convictions, such as possession.
RECOMMENDATION Associations can amend their governing documents to restrict certain types of criminals. If an association wants to amend their documents, boards should work with legal counsel to draft a provision that is narrowly tailored to prohibit those who represent a risk to the safety of residents or the safety of the association’s property. Adrian Adams, Esq. is the founding Partner of Adams Stirling, PLC, a law firm representing over 2,000 common interest developments in California and the creator of DavisStirling. com. Wayne Louvier, Esq., is Senior Counsel of Adams Stirling, PLC.
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ECHO honor roll
ECHO HONORS VOLUNTEERS Resource Panel Chairs
Seminar Speakers
Recent Contributing Authors
Accountant Panel Adam Haney, CPA 888-786-6000 x317
East Bay Marion Aaron, Esq. Charlotte Allen William Countner Marc Dunia Stephanie Hayes, Esq. David Hughes David Levy, CPA Alex Noland, Esq. Jordan O’Brien, Esq.
September 2015 Charlotte Allen Brenda L. LeClair, CMCA Debra J. Oppenheimer, Esq. Steve Castle, CMCA, PCAM John Schneider
Central Coast Panel John Allanson 831-685-0101 East Bay Panel Cindy Wall, PCAM, CCAM 925-830-4580 Legal Panel Mark Wleklinski, Esq. 925-280-1191 Maintenance Panel Judy O’Shaughnessy 408-839-6926 North Bay Panel Diane Kay, CCAM 415-846-7579 Stephany Charles, CCAM 415-458-3537 South Bay Panel Susan Hoffman, PCAM 510-683-8614 Wine Country Panel Pam Marsh 415-686-9342 Legislative Committee Paul Atkins Jeffrey Barnett, Esq. Sandra Bonato, Esq. Jerry Bowles Oliver Burford Joelyn Carr-Fingerle, CPA Chet Fitzell, CCAM John Garvic, Esq., Chair Roy Helsing Geri Kennedy, CCAM Wanden Treanor, Esq.
Annual Seminar Julie Adamen John Allanson Tyler Berding, JD, PhD William Countner Rolf Crocker Marc Dunia Lisa Esposito John Garvic, Esq. Sandra Gottlieb, Esq. David Hughes Michael Hughes, Esq. David Levy, CPA Julie Mouser, Esq. Sharon Pratt, Esq. Ann Rankin, Esq. Rob Rosenberg Deon Stein, Esq. Steven Weil, Esq.
October 2015 Karl Lofthouse Susan Green Thomas J. Connelly Adrian Adams, Esq. Julie M. Mouser, Esq. Nov/Dec 2015 Beth A. Grimm, Attorney Karl lofthouse James H. Ernst, CPA, MS-Tax Tim Polk Julie Mouser, Esq. Jan/Feb 2016 Beth A. Grimm, Attorney Matt Haulk, Esq. Larry J. Pothast, PCAM, CCAM David J. Larsen, Esq. Jeffrey A. Barnett, Esq. March/April 2016 Julie Adamen Neal Back, CPA Harvey Radin David Kuivanen, AIA Joel Meskin, Esq., CIRMS, CCAL May/June 2016 Steven S. Weil, Esq. Graham Oliver Wayne Scott Steve Saarman Jordan M. O’Brien July/August 2016 Joel W. Meskin, Esq., CIRMS Victoria Cohen Mary Anne Sayler Richard Tippett Tom Fier, Esq. September/October 2016 Sandra L. Gottlieb, Esq. David Swedelson, Esq. Sharon Glenn Pratt, Esq. Glenn H. Youngling, Esq. Berding | Weil Rich Ellenson
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ECHO Professional Directory
Need Expert Help? Check Out ECHO’s Directory All of our Professional ECHO Members specialize in services for HOAs. Choose from more than 250 companies in over 50 categories including: 73 MANAGEMENT COMPANIES 30 ATTORNEYS 21 ACCOUNTING FIRMS VISIT THE PROFESSIONAL DIRECTORY ON THE ECHO WEBSITE!
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Accountants/CPAs Animal Control Services Arbitrators & Mediators Architects/Architectural review Asphalt Repair & Paving Assessment Collection Services
Attorneys Banking Services Community Association Consulting Concrete Products & Services Concrete Repair Construction Manage- ment Consultants Consulting Electrical Services Fencing Gates & Doors Financial Services Fire Alarms Fire Sprinklers General Contractors Gutters Insurance Services Janitorial & Cleaning Services
Landscape Design Services Landscape Maintenance Leak Detection Maintenance & Repairs Management Company Services Masonry Other Paint Manufacturer & Consultant Painting Contractors Pest Control Services Plumbing & Boiler Repairs Pool Maintenance & Services Pool Repair & Resurfacing Services
Power Washing & Steam Cleaning Reserve Study Firms Restoration & Remediation Services Retaining Walls Roofing Contractors Roofing Products Security Services & Systems Sprinkler Repair Towing & Parking Services Tree Services Utility Auditors Water Conservation Water Management & Services Waterproofing Window
November/ December 2016 | ECHO Journal
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BOOKSTORE The ECHO Bookstore is your source for publications providing essential information for HOA Board Member service obligations. Order online at echo-ca.org or fill out form on the facing page.
NEW ON TI I D E
Robert’s Rules of Order Member Price: $7.50 Non-Member Price: $12.50 A step-by-step guide to the rules for meetings of your association, the current and official manual adopted by most organizations to govern their meetings. This guide will provide many meeting procedures not covered by the association bylaws or other governing documents.
Home and Condo Defects Member Price: $12.95 Non-Member Price: $17.95 Construction defect litigation can be confusing, expensive and fraught with legal pitfalls. This eye-opening guide, written by accomplished construction-defect attorneys, is an essential tool for board members who need to understand the legal process.
34 echo-ca.org
2016 Condominium Greenbook Member Price: Non-Member Price:
$17.00 $25.00
This companion to the Condominium Bluebook is an in-depth guide to all aspects of association finances, including accounting methods, financial statements, reserves, audits, taxes, investments and much more. Not for the accounting novice, this is a tool for the treasurer or professional looking for specific information about association finances.
Board Member Handbook Member Price: Non-Member Price:
$15.00 $25.00
This publication is the essential guidebook for HOA Board members, dealing with governance, finances, insurance and maintenance issues. Revised and updated in June 2012.
Construction Defect Claims Member Price: Non-Member Price:
$19.95 $25.00
New buildings can conceal extensive faults. It’s a board’s worst nightmare—rainstorms damage buildings and bring owner complaints. Is legal action necessary? With this new book, you’ll learn about the resolution process for construction problems, and how to handle complex claims.
Condominium Bluebook 2016 Edition Member Price: $17.00 Non-Member Price: $19.95 This well-known compact guide for operation of common interest developments in California now includes a comprehensive index of the book and a chapter containing more than 200 frequentlyasked questions about associations, along with succinct answers.
ciation o s s A unity Book Comm Statute dition 2014 E
Publications to answer your questions about common interest developments Order Online at www.echo-ca.org
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directory updates
All current listings may be found in our Professionals Directory available online at www.echo-ca.org.
New Members OnView Security 46750 Fremont Blvd. Suite 210 Fremont, CA 94538 Contact: Joel Anaya Tel: (408) 677.6429
Barcode Automation, Inc. 207 N. Moss Rd., Suite 105 Winter Springs, FL 32708 Contact: Ryan Waxberg Tel: (407) 327.6172
Vista Paint 11043 Folsom Blvd. Rancho Cordova, CA 95670 Contact: Bryan Jerolaman Tel: (916) 241.6637
K&D Landscaping, Inc. 62-C Hangar Way Watsonville, CA 95076 Contact: Justin White Tel: (831) 728.4018
Noland Law PC 100 Pine Street, Suite 2150 San Francisco, CA 94111 Contact: Alex Noland Tel: (415) 481-0825
Become an ECHO Professional Member and receive the benefits of membership. To learn more, visit our membership page at www.echo-ca.org 36 echo-ca.org
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about ECHO
Ace Property Management..................15 www.acepm.net
Forster Construction Management.....22 www.forstermanagement.com
Applied Reserve Analysis....................14 www.appliedreserveanalysis.com
Heritage Bank of Commerce.................8 www.heritagebankofcommerce.com
Barcode Automation, inc. ...................11 www.Barcode-Automation.com
Hughes Gill Cochrane, P.C....................15 www.hughes-gill.com
Benjamin Moore Paint & Company...21 www.benjaminmoore.com
Levy, Erlanger & Company..................23 www.hoa-cpa.com
Berding Weil..........................Back Cover www.berding-weil.com
R.E. Broocker Co...................................31 www.rebroockerco.com
Bridgeport Co........................................21 www.bridgeportco.com
Rebello’s Towing.....................................9 www.rebellos.net
Cornerstone Community Management.........................................10 www.cornerstonemgt.biz
White & MacDonald, LLP....................26 www.wm-llp.com
WHAT IS ECHO? Serving Homeowners to Build Strong Community Associations The Educational Community for Homeowners (ECHO) is a nonprofit membership corporation dedicated to assisting California homeowner associations. ECHO provides help to homeowner associations on many fronts: finances, legal issues, insurance, maintenance and management. Members receive help through conferences, trade shows, seminars, online education, a monthly full-color magazine and discounted publications.
Who Should Join ECHO? If your association manages condominiums or a planned development, it can become a member of ECHO and receive all of the benefits designated for homeowner associations.
Eugene Burger Management..............26 www.ebmc.com
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How Do You Join ECHO? Over 1,700 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for the membership, sign up online at www. echo-ca.org. For more information about membership and ECHO, call us at 408-297-3246 or visit the ECHO website.
August2016 2013 ||| ECHO ECHOJournal Journal February 2014 ECHO Journal November/ December
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legislation at a glimpse
Catch up on 2016 Legislative Session! It’s over! The 2016 legislative year ended on September 30th, the final day for Governor Brown to sign or veto bills. The bills below represent the ECHO Legislative Committee’s review of the 2500 bills introduced in Sacramento this year. Watch an upcoming issue of the ECHO Journal for our analysis of those bills that will become law on January 1st, and how they may affect your community.. For the most up-to-date information, visit the HOA Advocacy section at the ECHO website: www.echo-ca.org/hoa-advocacy
Current Legislation Bill Information
Summary
AB 587
Mobilehomes – Nonpayments or Late Payments
Support Status: Signed by Governor
For certain applicants who wish to register or transfer registration of a manufactured home or mobilehome prior to December 31, 2018, and meet other requirements, would require the department to waive all outstanding charges assessed by the department prior to the transfer of title of the manufactured home or mobilehome, release any lien imposed with respect to those charges, issue a duplicate or new certificate of title or registration card, and amend the title record.
AB 1720
Homeowner Attorneys at Board Meetings
Oppose
Current law requires the board to permit any member to attend and speak at any meeting, except for executive session meetings. This bill would require the board to permit a person (including an attorney) who represents a member to attend board meetings, and would require written notice to be given, as specified. ECHO recognizes the potential pitfalls of attorney involvement at board meetings, and we are watching this bill very closely.
Author: Chau
Author: Wagner Status: In Assembly Housing and Community Development, Failed Passage.
AB 1736
Tax Deduction – Homeownership Savings Accounts
Support
This bill would provide that a qualified taxpayer may withdraw amounts from a homeownership savings account to pay for qualified homeownership savings expenses, and would provide that any amount withdrawn from that account that is not used for these expenses would be included as income for that taxpayer.
Author: Steinorth Status: In Assembly Appropriations, 2-Year Bill
AB 1799
Uncontested Elections
Oppose Unless Amended
Current law requires an association to use an inspector of elections and secret ballots (among other requirements) for assessments legally requiring a vote, election and removal of directors, amendments to the governing documents, or the grant of exclusive use of common area. This bill would additionally except from those election requirements an election of directors if the election is uncontested, as defined.
Author: Mayes Status: Hearing Cancelled, 2-Year Bill
AB 1963
Construction Defect Claim Conditions
Watch
Current law specifies conditions to be met before an association may file a complaint for damages against a builder, developer, or general contractor based upon a claim for defects in the design or construction of the common interest development. The law is set to expire on July 1, 2017. This bill would delete the inoperative and repeal dates of the above described requirement.
Author: Calderon Status: Signed by Governor
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legislation at a glimpse
Current Legislation (continued) Bill Information
Summary
AB 2362
Pesticide Application & Notice
Watch
This bill would expand upon the 2016 law concerning notice requirements for the application of pesticides in common interest developments. It would require an association to provide notice to an owner or tenant of a separate interest, and under certain circumstances to owners or tenants of adjacent separate interests, if pesticide is to be applied without a licensed pest control operator. The bill would also authorize an owner or occupant to agree to immediate pesticide application. The bill would also permit the notice to be posted, as specified, after the pesticide application if the pest poses an imminent threat to health and safety.
Author: Chu Status: Signed by Governor
SB 477
Mobilehomes – Property Tax Postponement
Support
This bill would authorize an owner of a mobilehome , who is a qualified person, to seek postponement of ad valorem taxes under provisions similar to other owners of real property.
Author: Leyva Status: 2 -Year Bill
SB 918
Member Contact Information for Notices
Support
This bill would require the owners of the separate interests of a common interest development to annually provide the association with specified written information for the purpose of receiving notices from the association.
Author: Vidak Status: Signed by Governor
SB 944
Housing Omnibus Bill
Support
The Annual Housing Omnibus Bill cleans up errors and makes non-substantive changes in the law. ECHO has proposed several amendments to correct errors and improve clarity within the statute..
Author: Committee on Transportation & Housing Status: Signed by Governor
SB 1431
Service of Summons or Subpoena
Watch
This bill would require an investigator who is employed by an office of a district attorney or a public defender, upon the display of proper identification, to be granted access to a gated community for the sole purpose of performing lawful service of process or service of a subpoena.
Author: Morrell Status: Signed by Governor
What Do You Think? Read more about HOA legislation on our website or visit our Facebook page and join the discussion. On the web: echo-ca.org/hoa-advocacy, On Facebook: facebook.com/echoorg
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