Strategic Planning for Board Members p.8
How to Plan Your HOA’s Budget p.14
Insuring for Disasters: Budgeting and Planning p.20
Serving Community Associations
‘Tis the Season to Be Tolerant
p.24
Review Your Annual Disclosures p.28
New Laws for 2018
p.30
November/December 2017 echo-ca.org
How to Develop a Strategic Plan for Your HOA. p. 8
ECHO 1960 The Alameda STE 195 San Jose, CA 95126 Change Service Requested
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news from ECHO
News From ECHO November 2017 Dear Members, As I write this letter, the wildfires in Napa and Sonoma counties have destroyed thousands of homes and lives. Some of ECHO’s long-time members have been directly impacted, and the losses to the community are overwhelming. To those of you who are suffering in wake of this fire, ECHO will do what we can to help. While the first responders and restoration teams do their work, we are thinking about the next step: recovery. I have reached out to our Regional Panels in the North Bay, and we will work on resources and meetings to connect affected associations with each other, and with information about how to start rebuilding. To those of you who are unaffected, consider a donation to the Red Cross or a local charity, if you are able. A list of those charities is available here: echo-ca.org/blogs/north-bay-fires I encourage all of our members to use our online materials and upcoming events to learn about disaster preparedness. While no one can anticipate a disaster like the North Bay fires, you can do something to reduce risk and speed recovery. And finally, please consider attending a Resource Panel. These fun, informal groups of ECHO members meet for a brief presentation, and to talk about the problems confronting their communities. See page 34 to read about our most recent meetings. I wish all of you safety and joy throughout the upcoming holiday season, and I look forward to meeting more of you in the new year. Sincerely,
Tyler Coffin Executive Director
November/December 2017 | ECHO Journal
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CONTENTS
20 8
24
28
Projected income statement Current reserve study Current financial statements
Prior year financial statements
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Strategic Planning for Board Members Most successful businesses embrace the concept of strategic planning to drive the direction, resources, and decisions made in the daily course of doing business. An HOA board can use their plan to establish common goals that guide leadership and promote community health for decades.
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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.
How to Plan Your HOA’s Budget Budget planning isn’t easy, but it shouldn’t be overwhelming either. This article describes what information you’ll need to gather in order to accurately plan your budget, and how to follow California law. It also offers tips on anticipating mid-year problems.
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Insuring for Disasters: Budgeting and Planning The hurricanes in Texas and Florida, and now the fires in the North Bay have many of us thinking about what we would do in a catastrophe. For association boards, insurance is the front line of disaster preparedness. But it’s also expensive, and this article helps you to evaluate coverage and keep costs down.
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‘Tis the Season to Be Tolerant You want to allow a little holiday cheer, but the HOA keeps getting complaints about obnoxious lighting displays. Sound familiar? Here, the author offers some common sense tips on creating a reasonable holiday decoration policy that encourages fun and won’t upset (most of) the neighbors.
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Review Your Annual Disclosures Two annual reports must be distributed to your membership 30 to 90 days before the end of your fiscal year: the Annual Budget Report and the Annual Policy Statement. Review this table to make sure that you gather the correct disclosures.
30
New Laws for 2018 The Governor has already signed some 2017 legislation into law. The new regulations involve mechanics leans, escrow charges, management disclosures, and the political use of clubhouses; all will have a direct impact on associations. We encourage you to start preparing for 2018 now.
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 2017 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 Adam Haney Treasurer Diane Rossi Secretary Carly Melius
DEPARTMENTS
3 6 7 34 36 37 38 41 42
News from ECHO 2017 ECHO Educational Calendar San Rafael Seminar — Saturday, February 3rd, 2018 Check Out a Resource Panel! ECHO Volunteers ECHO Event Calendar ECHO Bookstore Advertiser Index Legislation at a Glimpse
Directors Sandra Bonato Karl Lofthouse Jerry L. Bowles Jeffrey Saarman Rolf Crocker Brian Seifert John Gill Wanden Treanor David Levy Executive Director Tyler Coffin Director of Marketing & Membership Carly Melius Design and Production Design Site ECHO Mission Statement Serving Community Associations
November/December 2017 | ECHO Journal
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2018 ECHO educational calendar
2018 ECHO Educational Seminars If you’ve ever wished that ECHO would hold a seminar closer to your association, chances are that we’ll be nearby during 2018. 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!
Feb. 3 San Rafael Educational Seminar (see page 7) Embassy Suites San Rafael, CA
Register today! Online: www.echo-ca.org; By Phone: 408.297.3246 6 echo-ca.org
San Rafael
San Francisco
FREE Attendance for ECHO HOA Members!
Join us at the San Rafael Educational Seminar Saturday, February 3rd, 2018
/
8:30 AM to 12:30 PM
Register online at www.echo-ca.org or fill out the form below.
SPEAKERS
TOPICS • New HOA Law for 2018 • Strategy & Vision: Plan for More than Maintenance • Gaining Compliance through Great Communication
David Feingold, Esq. Wanden Treanor, Esq. Glenn Youngling, Esq.
Yes, reserve ______spaces for the ECHO San Rafael Seminar Amount enclosed: $______(attach additional names) ADDRESS
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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
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8 echo-ca.org
Strategic Planning for
HOA Boards M
ost successful businesses embrace the concept of strategic planning to drive the direction, resources, and decisions made in the daily course of doing business. A strategic plan establishes common goals and objectives that guide leadership and unite employees and partners.
By Debra Warren
November/December 2017 | ECHO Journal
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By guiding your HOA with a strategic plan, you can: • Make the board’s actions more consistent • Schedule projects in a proactive manner to take advantage of pricing opportunities and timing • Place decisions required for implementation on an Annual Calendar to have adequate time to prepare • Allocate resources strategically to meet member needs Despite the benefits of strategic planning, many homeowner associations don't enthusiastically implement a plan. Some HOAs think that creating a plan is complicated and requires a lot of time and money while others incorrectly believe the 30-Year Reserve Study is their plan. According to Forbes, "A strategic plan helps business leaders determine where to spend time, human capital, and money." When determining where to spend time and money, a homeowner association should consider these factors:
• Changing demographics • Local economic conditions • Aging landscaping and design elements A complete plan will also consider the needs and wants of the individual community members. We can take the essence of the models used in the business environment to make a simple, three step process of strategic planning for HOAs: preparation, development, and implementation.
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Board Member Preparation Before you can begin to initiate projects and programs, it is necessary that you have a general understanding of your homeowners association. To be completely prepared, you should have the answers to these five questions:
What are your HOA's governing documents? CC&Rs, Articles of Incorporation and Bylaws provide you with information about the structure of your community. CC&Rs define maintenance and financial responsibilities of the HOA and its members. All of the funding for the HOA comes from the members, and the CC&Rs hold the formulas and limitations on assessments.
Articles and Bylaws set forth the rules for operating the association as a corporation. These documents contain information about meetings, elections, and distributing information to the membership. You don’t need to memorize any of this information, but understanding the legal structure will help you fulfill your obligations as an HOA board member.
What is the financial condition of your HOA? There are four documents you need in order to see your HOA's financial big picture:
1 Most current month’s balance sheet - Tells how much cash your HOA has, how much money is owed to your association, and how much your association owes to vendors and/or lenders.
2 Revenue and expense report Tells if you are operating within budget for the current fiscal year. 3 Current year’s budget - Provides information on all the services and projects funded for this year. 4 Most recent reserve study Has a cash flow schedule that will inform you of the funding required over the next 30 years to keep your association’s common elements properly maintained.
What human resources are available to your HOA? In order to effectively allocate human resources, you must be aware of the services outsourced to professionals
versus the services absorbed by volunteers. If you aren't sure, do research on your homeowner association’s:
• Management company • Projects managed by volunteers
others in your community who share the same desire.
What conditions are present in your general community?
• Projects managed by professionals Conduct general research into your surrounding community to determine factors that will impact your HOA and its members.
What is important to your members? As a decision maker for the entire community, it is necessary to have some form of outreach to understand clearly the priorities and needs of all the members in your community. Ask your committee representatives for their perspective on needs, conduct an annual survey, or develop a task force to ask members what is important to them. For example, if improving the landscaping is important to you, it is likely that you will be most familiar with
Gather information about the status of the employment and housing market in your community. Keep track of plans for new development or other changes to property use in your area. Your board members should work to establish a process for sharing information with other community associations in your neighborhood. By investing time in the process of learning about your community, you will create a strong
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basis for service to the association and establish a solid foundation for the development of an effective strategic plan.
Developing the Plan Developing a strategic plan for your HOA will require a commitment of about 10 – 15 hours by the association's board and each of its members. The time commitment is divided into four specific tasks to help your HOA move through the process as steadily as possible.
Purpose and Values Set aside 1 to 2 hours to discuss the purpose of your HOA and its core values, which vary based on region, demographics, and size. There are many books and tools that can help with this process. During this phase, your HOA needs to decide what factors make it unique.
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.
Develop the Agenda for the Planning Session Select a time period when all board members can attend and a location that will minimize disruptions. The goal is to create 4 to 6 hours of uninterrupted time. Best practice is to try not to conduct this session in conjunction with a board meeting at the end of a long day. Instead, set aside time on a Saturday morning or on a weekday when you can begin by 1:00 in the afternoon. Your HOA will also need to decide if a facilitator will be used to help with the discussion. A facilitator is a neutral party responsible for keeping the discussions on point with an equal opportunity for each member to share their ideas and opinions. Your goal is to have a strategic plan that was developed by all board members, not just the strongest voice in the room. The most sustainable plans are developed by all members sharing ideas and opinions.
Brainstorming – The Master List The first part of the planning session involves all participants sharing ideas, priorities, and projects. You will want to make sure you have a current, mid-term and long-term perspective. What do you want to complete in the next year? Three years? Five years? Your HOA should have a master list that can be used for a detailed discussion. This portion of the planning session benefits the most from the services of a facilitator. By using a variety of tools, the facilitator can create a list that is manageable as the group moves into the next phase of the planning day.
Allocating Resources and Prioritization 12 echo-ca.org
In this final step of the planning session, the group talks about each item on the list, estimates the financial and human resources required, and assigns a priority to each item. Often times, some items will gather support during the discussion and others will be eliminated as more pressing matters are identified. The plan will be based on the final list of priorities and should be drafted after the session is completed. Don't get too attached to creating a perfect document to post in the Club House or on the community website. As author Patrick Lencioni, says “Don’t let the perfect be the enemy of the good.” First you have to finish the plan before you can experience the benefits. Once your HOA has established its strategic plan, you can move into the implementation phase where constant review, analysis, and modifications will take place as circumstances change.
Successful Implementation Implementing your HOA's strategic plan occurs over a fairly long period of time. You will need to incorporate the results of your plan into your reserve study and operating budgets for future years. Your HOA should begin to reevaluate its plan roughly 6 months before the beginning of your fiscal year in order to include the planning results into your next budget. If your association has funds available for the current year, consider it a bonus! Successful implementation requires regular review. Schedule a portion of every board meeting for reviewing progress, monitoring outcomes, and reallocating resources or deadlines. Complete the review by communicating the results to all stakeholders. By following this simplified process and adding your own sense of commitment and discipline, your community will have a guide for current and future leaders, members and partners. Adapted from information provided by Debra Warren. Debra is the Vice President of Development at Associa where she focuses on client education. She is a contributor to the ECHO Journal, a former management company owner and consultant, and she writes about current issues facing HOAs at Associa’s Living Better Blog.
Current reserve study Current financial statements
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Projected income statement
Prior year financial statements
How to Plan Your HOA’s Budget By Joelyn Carr-Fingerle
Budgeting for an HOA isn't an easy task. The process includes disclosures to association members, time restrictions, assessment limitations, and more - all necessary to remain compliant with Civil Code Section 5300 of the Davis-Stirling Act. This article explains each step of the budgeting process, breaking down the Civil Code requirements into a step-by-step process so you don't have to get tangled up in HOA law.
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• Current financial statements • Projected income statement • Prior year financial statements After gathering the information from your last fiscal year, you can...
1 Estimate each operating expense (the cost of performing normal, day-to-day operations); 2 Apply an inflation factor to adjust for the next fiscal year (try the Bureau of Labor Statistics Inflation Calculator); 3 Discuss your major operating expenses (utilities, landscaping, pool service, insurance, etc.) with your providers to help you adjust accordingly.
Gather Your HOA’s Budget Information The budgeting process is a marathon, not a sprint, and your first step should be gathering the proper information for your budget. Knowledge is power for homeowners associations: the more knowledge and information gathered prior to starting the budgeting process, the easier and more accurate the process will be. You should begin researching and gathering information to prepare your next budget on the first day of your current fiscal year. Every month your HOA prepares financial statements that become the basis for the future budget. Use these financial statements to your advantage. Prepare them with enough specificity that associations can analyze the information months later during budget time. For example, 16 echo-ca.org
when your homeowners association has an unbudgeted expense, don't bury it in an inappropriate line item. It will only get lost at the next budget time. Try placing the expense in the appropriate category, regardless if there is an existing budgeted amount. When the new fiscal year comes around, you'll know where you need to adjust the budget.
End of the Fiscal Year Requirements Be aware if you're a part of a calendaryear ending homeowner association— the formal budget process starts roughly five months prior to the start of the new fiscal year. At this point you should gather all the documents necessary to complete a draft of the budget:
• Current reserve study
Planning for Industries with Radically Changing Rates Pay close attention to expenses that can shift dramatically from year to year. The most common culprits are utility and insurance expenses.
UTILITIES Utilities typically include:
• Water • Sewer • Garbage • Natural Gas • Electricity
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Insurance Insurance costs and policies vary greatly depending on the association and location. You should know which types of coverage are a requirement (or maybe just advisable) for your HOA. Unfortunately, low interest rates and stock prices have hurt the insurance industry. Over the last several years, HOAs have seen an increase of 30-60%.
Don't allow important coverage to lapse! Non-renewal forces HOAs to lesser known insurers (with low ratings by AM Best) at higher premiums—300% or more! If possible, stay "renewable" by keeping in regular contact with your broker. Find out if you need to increase deductibles or keep tighter control of open claims. Trying to budget for these industries is extremely difficult. When faced with an unbudgeted operating expense, most homeowners association boards "borrow" from reserves by not making the reserve transfer. While this may seem like the easy solution, it is not ideal and can quickly deplete the reserve fund. Instead,
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budget for a reasonable amount of miscellaneous contingency to cover a possible unexpected operating expense. The best option may be for your homeowners association to disclose the situation to the homeowners and special assess the necessary amounts to cover the unbudgeted expense.
Follow HOA Law Homeowners association law is contained in the Davis-Stirling Act - part of the California Civil Code. All board members and HOA managers need to understand this section, because it controls the annual pattern of planning and disclosure within homeowner associations.
Annual Disclosures To remain in accordance with HOA law, you must distribute to all owners two disclosures: the Annual Budget Report (§5300) and the Annual Policy Statement (§5310) within 30 to 90 days of your HOA's next fiscal year. The Annual Budget Report and Annual Policy Statement, replaced the old budget and disclosure requirements, commonly known as the "budget package." See page 30 for a list of the pieces that must be included in each report. The requirements for many of these statements continue to expand and
boards should review them annually. Failure to provide the required Annual Budget Report disclosures on time may prevent your association from raising assessments (up to 20%) without a vote of the membership.
Other Financial Disclosures Civil Code Section 5305 states that a California Board of Accountancy licensee review must be made for any fiscal year in which the HOA had a gross income of over $75,000 and distributed within 120 days after the end of the fiscal year.
Prepare for Mid-Year Problems Notwithstanding your diligent efforts in the budgeting process, things will happen requiring action outside that process — an elevator hydraulic cylinder unexpectedly fails, costing $40,000. Or the earthquake insurance renewal premium jumps by 50 percent. What to do?
Assessments Assuming the association has made all of the necessary disclosures, you can assess the membership to cover costs.
Just be sure to observe the limitation listed by Section 5605 in the Davis-Stirling Act. If a regular assessment is more than 20% greater than the regular assessment of the preceding year OR a special assessment exceeds 5% of the budgeted gross expenses for that fiscal year, then the association will need approval from the owners.
Reserve funds You can temporarily use reserve funds for operating purposes (as described by Section 5515 of the Davis-Stirling Act) for:
• Repair • Restoration • Replacement • Maintenance • Litigation involving all of the above However, your homeowner association is obligated to repair a component that needs maintenance, and the reserve funds must have been established for that component. To withdraw money from your reserves, “[t]he signatures of at least two persons, who shall be directors, or one officer who is not a director and one who is a director, shall be required” (Civi Code Section 5510). Ultimately, significant and unbudgeted expenditures must be recovered through assessments. Regular communication with homeowners through meetings and letters will help make major changes to the budget easier and more successful. Adapted from information provided by Joelyn Carr-Fingerle. Joelyn is recently retired from her large HOA accounting practice. She remains an active member of ECHO’s Accountants Resource Panel and the ECHO Legislative Committee.
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Insuring for DISASTERS
Budgeting & Planning By Wendy Weber
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he recent hurricanes in Texas and Florida have many of us thinking about what we would do in a catastrophe. For association boards, insurance is the front line of disaster preparedness. But it’s also expensive, and boards planning their budgets have to make tough choices. As insurance is usually one of the largest line items, boards should review this annual item for changes, accuracy and cost.
Most boards want “three comparison quotes” to be sure they aren’t paying too much for insurance.
H
aving comparison quotes and knowing what’s available in the market is responsible fiduciary activity. However, good coverage does not always come with the cheapest quote.
The board should consider what coverages the association has and what they might add for disasters such as floods and earthquakes. In many cases earthquake and flood coverage premiums seem exorbitant. But at the time of loss, paying a 10% deductible for a $10 million association loss ($1 million) will seem much better than paying the $10 million! Let’s take a look at what the association can plan for and how to review the coverage. Basic steps and a review can impact the budget positively.
Building Valuations When it comes to property insurance, the building insurance limits (“valuation”) are based on the cost to rebuild the structure(s). Building valuations should be updated every three years at a minimum, and ideally every year. The association should have current replacement cost coverage on their policy at the time of loss. If they do not have an updated valuation, they may not have enough coverage for the damage and will have to pay out of pocket to make up the difference. This cost can be avoided easily with an updated valuation at the insurance renewal. 22 echo-ca.org
Most brokers can update the valuation through a program like Marshall Swift. It is never a good idea to guess at the cost or to estimate the annual increase. Ask your association’s broker to provide an updated building valuation each year.
Earthquake and
based on the valuation, not a flat fee choice, changing the deductible based on millions of dollars of coverage can make a big difference to the individual owners. Remember: A 10% deductible on a $10 million association limit means the owners will be assessed for a $1 million deductible. If there are 10 units, that’s $100,000 per owner. A 5% deductible would cut that in half.
Flood Insurance It Doesn’t Hurt to Ask!
Has the association had these coverages in the past? Does it have any of these coverages now? It doesn’t cost anything to get a quote for an umbrella policy, an earthquake policy, or flood coverage. Why say no to coverage if you’re not sure what it costs? Do your members know what the building valuation is and how much they will be assessed with and without coverage? If your association does have these coverages, review the deductibles. Ask your broker what he or she suggests. Higher deductibles usually mean lower premiums. Have you had the same deductible for 20 years? Are your members going to pay a 25% earthquake deductible instead of a 5% deductible because nobody asked the broker for options? It costs $0 to ask. As earthquake insurance deductibles are
What Can You Do? Associations can take a few preventative steps to lower personal and financial risk after a disaster.
Basic Maintenance Associations should do all they can to help prevent a disaster. Have a professional assess your association’s property and follow up the assessment with a regular maintenance plan. Stay current with the following steps and you will make your insurance carriers happy:
• Cut all brush back to several feet from the property line.
• Keep gutters and drains cleaned out. • Have the roof and retaining walls inspected. • Have chimneys professionally swept and inspected. • Put screens on chimney openings to keep animals and debris out.
Disaster Plans Board members can collaborate on a disaster plan for the association. A good plan will outline for members the processes during and after an event. The association’s insurance policies, vendor information, building plans and specifications should be kept safe in a separate location. The board and Community Manager can create a statement for the members that includes information regarding emergency supplies, responders and vendors. Once the event has passed the board should compile information as soon as possible on the damage to common areas and buildings and submit the insurance claim(s). The board and membership should also review security policies ahead of time to help manage the property situation after an event. The board has a duty
to take care of the association’s assets. Having a plan in place to follow at the time of an event will help everyone know what to do and in what order. Quick action can help to reduce your loss!
Member Education Invite your members to a discussion with your insurance broker to explain what coverages are included in the association’s policies. Make sure the members understand that even with earthquake or flood coverage in place, they will be responsible for an assessment for the deductible. Having this discussion on a regular basis helps manage expectations at the time of a catastrophic event and special assessment. All of these items - valuations, maintenance & inspections, disaster planning and deductible choices - can impact insurance costs both in the budget and after a disaster. When you discuss and review your coverage and property regularly, you can keep your board and members informed, and avoid the backlash against unexpected emergency costs.
Wendy Weber of Pacific Unified Insurance is a commercial property insurance broker and a specialist in homeowner association insurance. She has HOA clients throughout California and regularly speaks at ECHO’s educational events. She may be found online at www.pacificunified.com/hoa-insurance.
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’TIS THE SEASON By Sandra L. Gottlieb, Esq., CCAL
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TO BE TOLERANT Building a Sense of Community in Spite of Holiday Decoration Rules
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F
rom November through December of each year we greet each other with the phrase “Happy Holidays,” focusing on both words “Happy” and “Holidays.” During this time, people of all ages, religions, faiths and ethnic backgrounds will join in celebrating everything from Thanksgiving, Hanukkah, Kwanzaa, Christmas, New Years and beyond. But, just as one homeowner takes pleasure in untangling and displaying holiday lights, another homeowner may find the same holiday decorations offensive or annoying. Though homeowners’ personal tastes are not within the association’s realm to regulate, it is within the association’s control when decorations violate use restrictions found in the association’s governing documents, including its rules and regulations. Even when decorations are not in violation of an association’s governing documents, many residents
find that holiday decorations detract from the community’s aesthetics, and boards are stuck in the middle, not able to make either side happy.
Who creates the rules? To assist the board in developing rules that will hopefully foster communitywide support, a board may want to consider appointing a Holiday Committee to develop and recommend decorating rules and regulations. Written surveys or forums can be used to obtain homeowners’ input before presenting potential new rules to the board of directors for their review and approval. Including members in the rule making process will likely result in individual issues being addressed, leaving less room for potential discrimination or disparate treatment claims.
What are the rules? Most CC&Rs do not contain restrictions that apply to holiday decorations specifically (nuisance provisions are arguably applicable). However, adopting a complete set of rules and regulations can help associations preserve the community’s aesthetic value while encouraging seasonable celebrations. Consider the results that you are trying to achieve before completely prohibiting holiday decorations. Holidays can and should be viewed as
opportunities to embrace homeowner individuality. Remember the phrase, “Happy Holidays”. Therefore, rather than advocate a wholesale prohibition, an association should establish dates for installation and removal of holiday decorations, as well as definitive, but reasonable guidelines for certain types of decorations.
What are reasonable restrictions? An example of a reasonable rule is one that requires that holiday lights be turned off by 10:00 p.m. during weekdays and possibly a later time on weekends. With regard to removing decorations, associations should be reasonable as well; for example, a rule requiring decorations to be removed by mid-January would likely be reasonable whereas a rule requiring decorations to be removed by January 2nd may not be reasonable. The association's rules may allow homeowners to apply for an extension due to extenuating circumstances. The health and safety of homeowners and the community should be a primary consideration when adopting rules. For example, to guard against the risk of fire in hillside communities, heavily wooded areas or areas where there is extensive dry brush, an association could require that all holiday lights hung on the roofline be UL rated or specified for outdoor use only. Similarly, during periods of drought, or in communities with wooden structures, an association may prohibit installation of electrical decorations on trees and bushes. It should also be noted that in condominium associations, the association can generally prohibit homeowners from affixing decorations to the common area (patios, balconies, etc.). But prohibiting all decorations not attached to the common area would likely be unenforceable pursuant to Civil Code Section 4710.
How do you adopt the rules? Don’t forget about Civil Code Section 4360. The Civil Code requires that rules 26 echo-ca.org
be discussed in open session, forwarded to the homeowners for a 30-day comment period, approved in open session, and distributed to the homeowners within 15 days of the approval date. Ideally, associations should begin considering holiday decoration rules in early October to allow for enough time to adopt rules in accordance with the Civil Code, if not already adopted. If an association already has applicable rules, a good way to remind homeowners of the rules is to publish the rules on the association’s website and/or in the association's newsletter.
Now you have rules… how do you encourage participation? Awarding prizes for the best decorated home or the most effective use of holiday lights can motivate participation from homeowners who would otherwise choose not to decorate. And contests involving children are an excellent way to involve their parents. Contests can also be an effective way to encourage homeowners to fulfill their ongoing maintenance obligations. Residents who decorate their home during the holidays may become more aware of the condition of their property and may take a more proactive maintenance role throughout the year. Beware! Not all holiday contests can lead to nirvana. Instead of building a sense of community or preserving the aesthetic value of the community, what begins as an innocent community holiday decorating contest can escalate into a holiday war. We have all seen the 20-foot, illuminated Christmas tree extending from the neighbor’s chimney so bright as to cause a traffic jam on the overlooking highway. If there is a prize to be had and egos are involved, the creative possibilities are seemingly endless. In Dallas, Texas, a block of neighbors living in a cul-de-sac adopted a “Twelve Days of Christmas,” theme, and each home was decorated to represent one of the twelve days. You can just imagine the home with the partridge in a pear tree next to the home with two giant illuminated turtledoves. News of the
contest quickly spread, congesting the neighborhood with looky loos. Of course, if the entire community embraces this idea and is not bothered by the increased viewing traffic, this type of contest may well help to build community spirit. However, decide in advance how far your community is willing to go. Although less restrictive rules and regulations will not necessarily satisfy the community’s grinch, reasonable rules are an effective way to balance competing emotionally charged interests during the holidays.
Happy Holidays! Sandra L. Gottlieb, Esq., CCAL is the managing partner and head of the transactional division of SwedelsonGottlieb, a law firm that exclusively represents community associations throughout California. Sandra Gottlieb can be contacted at 415-762-1889 or via email: slg@sghoalaw.com
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ANNUAL REPORTS By ECHO
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wo annual reports must be distributed to your membership 30 to 90 days before the end of your fiscal year. At a minimum, both reports should contain the disclosures listed below. The reports must be provided by
“individual delivery” (typically by mail or, if consented to in writing, by email). Rather than the full reports, you can also send out a summary. The summary should generally describe the con-
tent of the report, and instructions on how a member can obtain a complete copy (at no cost). However, if a member has requested to receive all reports in full, you must deliver the full reports to that member. See Civil Code Section 5320.
ANNUAL BUDGET REPORT : Civil Code Section 5300 DISCLOSURE DESCRIPTION Pro Forma Budget
The operating budget, prepared on an “accrual” basis, showing estimated expenses and revenues.
Reserves Summary
Must include the cash balance of the reserves, the estimated replacement cost of each major component, the reserve deficiency, and more. See Civil Code Section 5565.
Reserve Funding Plan Summary
A summary of how the association’s plan to fund the reserves. See Civil Code Section 5550.
Deferred Maintenance Statement
States whether or not the board has decided not to repair or replace a major component, and why.
Anticipated Special Assessment Statement
An announcement of any anticipated special assessments, including the estimated amount, date, and duration.
Mechanism of Reserve Funding Statement
A statement as to the mechanisms that the board will use to fund reserves, including assessments, borrowing, etc.
Reserve Calculation Procedures
A description of the procedure used to calculate and establish the reserves.
Outstanding Loan Statement
Insurance Coverage Summary
Discloses if the association has any outstanding loans with a term of more than one year. Includes details like payee, interest rate, outstanding amount, etc..
A summary of each of the association’s insurance policies, including insurer, type of insurance, policy limits, and deductible.
FHA Statement
If the association is a condominium project, a statement as to whether the project is FHA-approved.
VA Statement
If the association is a condominium project, a statement as to whether the project is VA-approved.
Assessment and Reserve Funding Disclosure Summary
The completed Assessment and Reserve Funding Disclosure Summary form. See Section 5570.
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ANNUAL POLICY STATEMENT : Civil Code Section 5310 DISCLOSURE DESCRIPTION Authorized Recipient
States the name and address of the person designated to receive communications to the association.
Option to Receive Information at Two Addresses
Informs members that they may receive information at two different addresses.
Location for Posting of General Notices
Designates the location, if any, for posting general notices.
Right to Receive a General Notice by Personal Delivery
Informs members that they may elect to receive general notices by personal delivery.
Right to Receive Copies of Minutes
Informs members of their right to receive copies of meeting minutes.
Assessment Collection Policies
The association’s current assessment collection policies.
Discipline and Penalty Policies
The association’s discipline policy, including the schedule of penalties (e.g. fines), for violations of the governing documents.
Summary of Dispute Resolution Procedures
Summarizes the association’s dispute resolution procedures.
Architectural Change Request Procedure
Describes the process the association employs to approve physical changes to the property.
The information above contains an informal summary of the required disclosures. For detailed information, please review Civil Code Sections 5300 and 5310.
Check your disclosure packages! These reports are typically due by the end of November.
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New Laws T for 2018
he bills below have been signed into law by Governor Brown and will become effective in January. The Governor must act on all bills by October 15th, so check ECHO’s website to find out what happened with each of the bills on our watch list (see page 42): Echo-ca.org/advocacy In an association, mechanics liens can be complicated. After all, questions about who authorized the work, who owns the property, who didn’t pay (and why), whether the lienor understands the property issues before recording the lien – all are difficult to answer. Current law addresses the issues of mechanics liens recorded against common area in a condominium project, where most difficulties arise. But as of January 2018, the law will cover all types of common interest developments. And it will add two new concepts:
AB 534 – Mechanics Liens Mechanics liens don’t sound particularly exciting, but they can have a remarkable impact on associations and their members. To those unfamiliar, a contractor will typically place a mechanics lien on a property when they have not been paid for their work. These liens are easy to record and allow the contractor to foreclose on the property through the courts.
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1 Associations must notify members (by individual delivery) within 60 days after it has been served with a mechanics lien on common area. 2 The association is “deemed” to be the agent of the owners with respect to any work being done on common area, whether being done by owners or the association, and for purposes of service of the mechanics lien.
If your association is served with a mechanics lien, the board should consult its attorney promptly.
AB 690 – Escrow Charges and Management Disclosures Beginning in January 2018, an association must provide escrow package costs to its members in its annual budget package and policy statement. Also, a management company must disclose potential conflicts of interest to its clients. Escrow Package Costs The law will require an association to include in its annual disclosures the “Charges for Documents Provided” form with a cost breakdown of individual escrow package items. The form must state clearly that owners need not buy all of the documents on the list. Previously,
associations had to provide this information only upon request. The clear intent of the law is to educate owners (and boards) about the actual costs that management companies and, for those who use them, third party document providers charge for escrow documents. Gone are the days when escrow packages came with one price, compelling selling owners to buy it all. Management Conflicts of Interest The law will also require new disclosures of managers and their companies, both upon submitting a bid for management services and, presumably, upon contract renewal. These disclosures include: (1) disclosure of any business or company in which the manager or management company has an ownership interest or profit-sharing arrangement, or receives “other monetary incentives”; (2) whether the manager or management company receives a referral fee or “other monetary benefit” from a third-party document provider; (3) disclosure of any potential conflict of interest, including referral fees or “other monetary benefit” from a business or company providing products or services to the association; and (4) whether the manager or management company has any ownership interests or profit-sharing arrangements with service providers it recommends to or are used by the association. While not specifically required by AB 690, boards may wish to require ongoing
disclosure of these potential areas of conflict to the association by writing the requirement into the management contract.
SB 407 – Political Use of Clubhouses This new law is particularly troubling for associations, providing liability-free access to common areas for public events, and allowing members to solicit neighbors about certain subjects. Clubhouse Use Beginning in January 2018, any member or resident in a CID with a clubhouse or other common area space suitable for gatherings will be permitted to sponsor meetings and invite the public to assemble inside the development to discuss “common interest development living, association elections, legislation, election to public office, or the initiative, referendum, or recall processes.” This can include, but is not limited to, inviting public officials, candidates for public office, or representatives of homeowner organizations to meet with members, residents, and those they invite in, to speak on matters of public interest. The association may not charge the member or resident a usage fee, demand a deposit, require any insurance, or require
payment of the association’s insurance deductible or premium. By including the last item – the deductible – the law suggests that the owner may have no financial liability even if there is an injury or damage to the common area. The association’s insurance (or its members) will have to bear the brunt. Neighbor Solicitation Associations must also allow owners and residents to go door to door soliciting their neighbors and distributing pamphlets and other material involving all of the permitted subjects. While associations may require these permitted activities take place “during reasonable hours and in a reasonable manner” and that they involve “peacefully assembling,” one can see trouble on the horizon: in the current climate of political polarization, associations may struggle to ensure for owners the peaceful use and enjoyment of their property. Violations of the new law can be enforced in small claims court, with injunctions available to aggrieved owners or residents, and civil penalties of up to $500 for each violation. We recommend that associations develop policies for compliance, while considering what is permitted under the requirement that assemblies be peaceful and held within reasonable parameters. There is also the potential for legal challenges to the enforceability of some portions of this new law.
ECHO Journal
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Check out a Resource Panel! ECHO Panels are informal meetings of ECHO members and industry professionals who share experiences and find ways to improve life for California associations. Check out upcoming Panel meetings on ECHO’s event page, or read more about past ones on our blog.
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1. East Bay Resource Panel
The Parth Case and Director Liability Attorney Mark Wleklinski and Farmers agent David Stompe described the recent court ruling against Erna Parth, a board member who was sued by her HOA. This case affects California boards by (gulp) limiting the protection of the Business Judgment Rule. It also has implications for Directors & Officers coverage. The quick takeaways were that boards must read and know their governing documents, investigate problems, and make formal decisions. Also, boards should check to make sure that their D&O coverage is adequate. Read more about the Parth case and our discussion on ECHO’s blog.
2. North Bay & Central Coast Resource Panels Insurance Review
Farmers agent Kevin Boland and insurance broker John Allanson lead discussions about reviewing insurance policies, paying special attention to Directors & Officers coverage. Both professionals urged boards to make sure that their policies included coverage for harassment, defamation, and attorney fees. They also warned against some common exclusions, and talked about when to submit a claim.
3. Wine Country Resource Panel Starting Your Painting Project Now
Pam Marsh of Benjamin Moore Paints (and a board member in her own HOA) lead a great discussion about paint projects. She noted that, to avoid trouble, boards should start planning a year in advance! By starting early and forming a paint committee, the 34 echo-ca.org
board has enough time to interact with the community, select colors and styles, schedule a contractor, and fix potential surface problems that will cause delays.
4. Accountant’s Resource Panel Fraud Detection
Geri Kennedy of Heritage Bank of Commerce talked to the Accountant’s Panel about how to protect their HOA clients from fraud. Although accountants are not responsible for detecting fraud, they can make recommendations to help reduce the likelihood of theft. Geri’s recommendations included using “positive pay,” limiting who has online (even read-only) account access, locking up check stock, sending a paper statement to the board, and more.
5. Maintenance Resource Panel Positive Vendor Relationships
Paul Polk, owner of ACE Property Services in Sunnyvale, spoke to our panel of maintenance professionals about preserving working relationships with both managers and boards. Since maintenance professionals work for the association but often come through management, it’s important that they know how to serve the needs of both groups. Paul pointed out several practices that create problems for HOA boards, and recommended some best practices for vendors. Join us! See page 37 for Panel information and contacts. Or contact the ECHO Office: info@echo-ca.org.
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John Garvic, Esq.
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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 Sandy Bonato, Esq. Geri Kennedy David Levy, CPA Melissa Ward, Esq. Wendy Weber
September/October 2016 Sandra L. Gottlieb, Esq. David Swedelson, Esq. Sharon Glenn Pratt, Esq. Glenn H. Youngling, Esq. Berding | Weil Rich Ellenson
Central Coast Panel John Allanson 831-685-0101 East Bay Panel Ann Marquis-Fisher amarquisfisher@yahoo.com Legal Panel Mark Wleklinski, Esq. 925-280-1191 Maintenance Panel Judy O’Shaughnessy 408-839-6926 North Bay Panel Kevin Boland 415 898-4370 South Bay Panel Tyler Coffin 408-297-3246 x4 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 Jeffrey Barnett, Esq. Tyler Berding, JD, PhD. Tyler Coffin Alan Crandall Rolf Crocker, CCAM Derek Eckert, RS John Garvic, Esq. John Gill, Esq. Sandra Gottlieb, Esq. David Levy, CPA Alex Noland, Esq. Deon Stein, Esq. Amy Tinetti, Esq. Wendy Weber Krishna Yalamanchi
November/December 2016 Joe Winkler, CMCA Clint McClure, CCAM Cameron Day, Esq. Julie M. Mouser, Esq. Adrian Adams, Esq. Wayne Louvier, Esq. January/February 2017 Sandra L. Gottlieb, Esq., CCAL Burt Dean Cameron Day, Esq. Jo Pope David Levy, MBA, CPA Wayne Louvier, Esq. March/April 2017 Steven Saarman, Jeff Saarman, and David Saarman Dave Heiligenthal Erin Kelly Pat Crosscombe May/June 2017 Brian Seifert Robert M. Nordlund, PE, RS Colletta Ellsworth-Wicker, PCAM Tim Bosveld Richard Tippett July/August 2017 David Kuivanen, AIA Pat Crosscombe Sandra M. Bonato, Esq. Steven S. Weil, Esq. Steven T. O’Brien September/October 2017 David C. Swedelson, Esq. Bob Gourley Berding & Weil LLP Cagwin & Dorward Julie Adamen
36 echo-ca.org
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
LOCATION
RSVP
TOPIC
Nov 2, 11:45 a.m.
North Bay Resource Panel Contempo Marin Clubhouse 400 Yosemite Dr., San Rafael
Denise Wolford, CCAM 415-458-3537
Special Assessments & FHA Updates
Nov 14, 12:00 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 16, 11:45 a.m.
Wine Country Resource Panel Serv-Pro 377 Blodgett St., Cotati
Pam Marsh 415-686-9342
Legal Update
Dec 7, 11:30 a.m.
East Bay Resource Panel Massimo Restaurant 1604 Locust St., Walnut Creek
Ann Marquis-Fisher amarquisfisher@yahoo.com
Holiday Party
Dec 13, 12:00 p.m.
South Bay Resource Panel ECHO Office, 1960 The Alameda San Jose
Tyler Coffin 408-297-3246 x4
TBD
Dec TBD, 11:30 a.m.
Wine Country Resource Panel DoubleTree, Rohnert Park
Pam Marsh 415-686-9342
Holiday Party
Jan 4, 11:45 a.m.
North Bay Resource Panel Contempo Marin Clubhouse 400 Yosemite Dr., San Rafael
Denise Wolford, CCAM 415-458-3537
TBD
Jan 9, 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 18, 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 2017 | ECHO Journal
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BOOKSTORE The ECHO Bookstore is your source for great information on the duties of HOA Board Members. Order online or fill out the form on the facing page. 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.
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2017 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 2017 Edition Member Price: $17.00 Non-Member Price: $25.00 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.
2017 Digital Downloads Free for ECHO Members
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
Bookstore Order Form
EDUCATIONAL COMMUNITY FOR HOMEOWNERS 1960 THE ALAMEDA, STE 195, SAN JOSE, CA 95126 PHONE: 408-297-3246, FAX: 408-297-3517
TITLE
QUANTITY AMOUNT
2017 Statute Book Board Member Handbook Owner Information Form SUBTOTAL
Clubhouse Usage Policy
CALIFORNIA SALES TAX (Add 8.75%)
and Reservation Form HOA Investment Policy
TOTAL AMOUNT
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Log in to download from our online store. Don’t have an account? Email us: account@echo-ca.org
Signature
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November/December 2017 | ECHO Journal
39
directory updates
All current listings may be found in our Professionals Directory available online at www.echo-ca.org.
New Professional Members Brook Construction Management
6475 Camden Ave. Suite 202 San Jose, CA 95120 Contact: Cassidy Rajkovich Tel: (408) 398.6421
Westco Equities Inc.
1625 W. Shaw Ave. Suite 116 Fresno, CA 93710 Contact: Dwayne Welch Tel: (559) 228.6788
Weathermatic
3301 W. Kingsley Rd. Garland, TX 75041 Contact: Jamie Hahn Tel: (888) 484.3776
Barrera and Company, Inc. 600 B Street, #300 San Diego, CA 92101 Contact: Damian Esparza Tel: (800) 543.8670
Sail Internet
2225 E. Bayshore Rd. Suite 200 Palo Alto, CA 94303 Contact: Javier Quezada Tel: (844) 438.8484
Become an ECHO Professional Member and receive the benefits of membership. To learn more, visit our membership page at www.echo-ca.org 40 echo-ca.org
advertiser index
about ECHO
WHAT IS ECHO? Ace Property Management..................23 www.acepm.net
Eugene Burger Management Co.........11 www.ebmc.com
Affirmative Management Services.....19 www.thehoamanager.com
Heritage Bank of Commerce. .............19 www.HeritageBankofCommerce.com
Applied Reserve Analysis....................23 www.appliedreserveanalysis.com
Levy, Erlanger & Company..................17 www.hoa-cpa.com
Barcode Automation, inc. ...................13 www.Barcode-Automation.com
PML Management................................27 www.pmlmanagement.com
Benjamin Moore Paint & Company...........................................26 www.benjaminmoore.com
R.E. Broocker Co...................................23 www.rebroockerco.com
Berding Weil..........................Back Cover www.berding-weil.com Cornerstone Community Management.........................................16 www.cornerstonemgt.biz
Rebello’s Towing....... Inside Front Cover www.rebellos.net White & MacDonald, LLP....................27 www.wm-llp.com
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.
Benefits of Association Membership • Subscription to bi-monthly magazine • Members-only online education • Updates to the Association Statute Book • Frequent educational seminars • Special prices for CID publications • Legislative advocacy in Sacramento
ECHO Membership Dues Association Membership HOA 2 to 25 units...........................$130 HOA 26 to 50 units.........................$180 HOA 51 to 100 units.......................$275 HOA 101 to 150 units.....................$375 HOA 151 to 200 units.....................$450 HOA 201 or more units..................$575 Professional Membership.................$500 Association Management Membership.......................................$500 Individual Membership.......................$75 Journal Subscription............................$15
How Do You Join ECHO?
Office 1960 The Alameda, Suite 195 San Jose, CA 95126-2308
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.
August2014 2013 || ECHO ECHOJournal Journal February Journal
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legislation at a glimpse
The HOA-related selections below come from our review of thousands of bills introduced in Sacramento this year. The complete list is available on our website. That list – and the impact of each bill – will change as authors amend the language in their bills. www.echo-ca.org/hoa-advocacy
Current Legislation Bill Information
Summary
AB 534
Mechanics Liens on HOA Owners
Watch Status: Signed by Governor
In a common interest development, would prohibit a mechanics lien from being filed against another owner in the common interest development unless that consent was provided or that request was made, except in the case of emergency repairs.
AB 634
Solar Energy System Placement
Oppose
Specifies that an association may not establish a general policy prohibiting the installation or use of a rooftop solar energy system for household purposes on the roof of the building in which the owner resides, or a garage or carport adjacent to the building that has been assigned to the owner for exclusive use. This bill would allow a single owner to control the roof space over multiple units.
Author: Gallagher
Author: Eggman Status: Signed by Governor
AB 690
Document Charges & Manager Conflicts of Interest
Watch
Position
If a management company is contracted to facilitate the delivery of documents, requires the company to inform a seller that he or she is not required to purchase all of the documents on a specified form. Additionally requires the association to disclose any conflicts of interest, as defined.
AB 731
Tax Deduction for HOA Assessments
Watch
This bill, for taxable years beginning on or after January 1, 2017, and before January 1, 2023, would allow a deduction in computing adjusted gross income for an amount paid or incurred by the qualified taxpayer during the taxable year, not to exceed $3,000, for qualified homeowners’ association assessments.
Author: Quirk-Silva Status: Signed by Governor
Author: Chen Status: In Assembly Appropriations. Two-year bill.
AB 786
Statements of Information – Online Filing
Support
Would allow common interest developments to submit the biennial statements of information to the Secretary of State online.
Author: Kiley Status: In Assembly Banking & Finance. Two-year bill.
AB 1079
Annual Policy Statement Deadlines
Watch
Current law requires requires the association to distribute an annual policy statement between 30 to 90 days before the end of the fiscal year. This bill would change the time requirements for distribution to be within 31 to 91 days before the end of the fiscal year.
Author: Cunningham Status: Introduced. Two-year bill.
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legislation at a glimpse
Current Legislation (continued) Bill Information
Summary
AB 1239
Building Standards for Electric Vehicle Charging
Watch Status: Vetoed
Requires the Department of Housing and Community Development and the Building Standards Commission to research, propose, and adopt mandatory building standards regarding electric vehicle capable parking spaces for multifamily housing.
AB 1412
Address Disclosure & Personal Liability for Volunteer Officers
Support
When an owners fails to provide the required notice of their current mailing address, this bill authorizes the association to use the last address provided in writing by the owner. It also extends the current limitation on the personal liability of directors to volunteer officers or directors in mixed use developments when they are a tenant of a residential separate interest or own no more than 2 separate interests and their ownership in the common interest development consists exclusively of residential separate interests.
Author: Holden
Author: Choi Status: Signed by Governor
AB 1426
Uncontested Elections
Support
Would provide an exception to current HOA election requirements when the number of directors running for the board does not exceed the number of available positions. Provides procedures to ensure that members may run for the board, and to declare the election uncontested.
Author: Irwin Status: In Assembly Housing & Community Development . Two-year bill.
SB 407
Owner Noncommercial Solicitations
Oppose Unless Amended Status: Signed by Governor.
Prevents an association from prohibiting a member or resident from contacting any other owner or resident for the purpose of providing information about a candidate for public office, or for an office within the association, or on any issue that is the subject of a public or association election or pending public or association legislation or rulemaking. Requires associations to permit residents to peacefully assemble for purposes relating to activities, and prohibits the association from requiring a fee, deposit, or liability insurance, or to pay the premium or deductible on the association’s insurance policy to use the association’s common area for these activities.
SB 451
Liability for Harassment
Watch
Would prevent an association from being liable for the harassment of a member by another member where the association’s governing documents do not contain a provision to authorize the association to stop the harassment.
Author: Wieckowski
Author: Stone Status: In Senate Judiciary. Two-year bill.
SB 721
Deck & Balcony Inspection Requirement
Oppose Unless Amended
Requires an inspection of building assemblies and associated waterproofing elements, including decks and balconies, for buildings with more than a certain number of multifamily dwelling units by a licensed architect, civil or structural engineer, or building inspector or official at certain intervals. Requires certain notifications. Imposes requirements on boards of directors of common interest development.
Author: Hill Status: In Senate Judiciary. Two-year bill.
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 November/December 2017 | ECHO Journal
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