Connect Magazine: 2023–Issue 2

continuing

education

Managers are required to recertify every 2 years and pay the maintenance fee each year.

16 hours

16 hours

of continuing education must be completed within this twoyear recertification cycle.

Managers are required to recertify every 2 years and pay the maintenance fee each year. of continuing education must be completed within this twoyear recertification cycle.

Credit hours must either:

Pertain to community association operations or management Contribute to the professional development of the CMCA

Pertain to community association operations or management Contribute to the professional development of the CMCA

1,000 Courses related to buying and selling real estate are not acceptable.

There are more than pre-approved continuing education courses.

There are more than pre-approved continuing education courses.

1,000 Courses related to buying and selling real estate are not acceptable.

No classes in your area? Online Courses can help you complete your requirement. Online courses must provide proof of participation.

WWW.CAI-GRIE.ORG

EXECUTIVE COMMITTEE

President

Ty Jaglowski, Environmental Concepts Landscape

Management, Inc.

President-Elect

Brian Henry, Park West Inc.

Vice President

Greg Borzilleri, Accurate Termite & Pest Control

Secretary

Betty Roth, CMCA, AMS, LSM, PCAM, Heritage Lake Master Association

Treasurer

Patrick Gabriele, Estates at Canyon Crest Riverside, Inc

Past-President

Gina Roldan, Bemus Landscape, Inc.

BOARD DIRECTORS

Pat King, Solera Oak Valley Greens

Darren Mandel CMCA, AMS, PCAM, Keystone Pacific Property Management

Nick Mokhlessin, Everthrive Landscape

Tim Peckham, CMCA, AMS, PCAM, Powerstone Property Management

Robert Riddick, CMCA, Sunnymead Ranch PCA

COMMUNICATIONS COMMITTEE

Committee Co-Chair and Editor in Chief

A.J. Jahanian, Esq., Beaumont Tashjian

Committee Co-Chair

Daniel C. Heaton, Esq., Nordberg | DeNichilo, LLP

Committee Members

Gina Fanizzi, FirstService Residential, AAMC

Kimberly Lilley, CMCA, CIRMS, Berg Insurance Agency

Tim Peckham, CMCA, AMS, PCAM, Powerstone Property Management

Eric Zarr, CMCA, AMS, FirstService Residential, AAMC

CHAPTER STAFF

Executive Director

Adam Ybarra, CAI-Greater Inland Empire

Administrative Assistant

Elda Pfitzinger, CAI-Greater Inland Empire

All articles and paid advertising represent the opinions of authors and advertisers and not necessarily the opinion of either Connect or the Community Associations Institute–Greater Inland Empire Chapter. Information contained within should not be construed as a recommendation for any course of action regarding financial, legal, accounting or other professional services and should not be relied upon without the consultation of your accountant or attorney.

Connect is an official quarterly publication of Greater Inland Empire Chapter of the Community Associations Institute (CAI–GRIE). The CAI–GRIE Chapter encourages submission of news and articles subject to space limitation and editing. Signed letters to the editor are welcome. All articles submitted for publication become the property of the CAI–GRIE Chapter. Reproduction of articles or columns published permitted with the following acknowledgment: “Reprinted with permission from Connect Magazine, a publication of the Greater Inland Empire Chapter of the Community Associations Institute.”

Copyright © 1998–2023 CAI-Greater Inland Empire Chapter.

CONTACT

Advertising, Articles or Correspondence

CAI-GRIE Chapter Headquarters

5029 La Mart Dr, Ste A • Riverside, CA 92507-5978 (951) 784-8613 • info@cai-grie.org

CAI-GRIE Chapter CAI-GRIE.org

The Recognized Authority in Community Association

PRESIDENT’S MESSAGE

TY JAGLOWSKI, CHAPTER PRESIDENT VICE PRESIDENT, ENVIRONMENTAL CONCEPTS LANDSCAPE MANAGEMENT, INC.

What an awesome start we have had to 2023 in our GRIE chapter. This chapter has seen quite a bit of change in past years and it amazes me how resilient and supportive our GRIE community has become. So far, our attendance at education and social events has been outstanding and we continue to see and welcome new faces to our CAI family as we continue to grow our membership each day. I am extremely proud of the way each of our committees has stepped up and created an avenue for raising funds for CLAC on behalf of our chapter. This would not be possible without the hard work and dedication of our outstanding chapter staff and committees who have stood up to challenges and continue to put forth amazing events for our members to enjoy. I just want to say thank you to everyone who has been a part of the chapter. Whether in person

at events or behind the scenes planning and discussing during committee meetings, this chapter has really felt like a FAMILY this year in many ways and has created great memories so far.

I am looking forward to the next few months as we have quite a few educational and fun opportunities leading our way into summer:

Thursday: June 29th Family Baseball Night at Storm Stadium

Thursday: July 13th Top Golf Education Luncheon and Tradeshow

Friday: August 4th Day at The Races in Del Mar

CAI–GREATER INLAND EMPIRE

The CAI–Greater Inland Empire (GRIE) Chapter hosts educational, business and social events that provide the Chapter’s Business Partners various opportunities to promote their companies’ products and services to Community Association owners and managers serving the Community Association Industry. It is expected that all participants in Chapter events – whether they be educational, business or social – will conduct themselves in a professional manner representative of their business or service organization so as not to detract from the experience of others seeking to benefit from their membership in the Chapter. For more information, visit cai-grie.org

HAVE YOUR COMMUNITY ASSOCIATION BOARD MEMBERS CHANGED SINCE LAST YEAR?

BE

your board’s member names, titles (President, Vice President, Treasurer, Secretary, and Board Member), and contact information to ensure your board members receive all the latest CAI member benefits!

A.J. JAHANIAN, ESQ. BEAUMONT TASHJIAN

Summer is almost upon us, and it is hard to believe how quickly 2023 is flying by; although, some days can feel like an eternity, with day-to-day challenges and projects that are all too familiar. With this issue of Connect, we hope to provide you with additional tools to confront those community association challenges head-on. This includes a report from attendees of CAI-California Legislative Action Committee’s (CLAC) Advocacy Session held in April, which will help keep you in the loop with the latest and upcoming laws impacting your community.

Thanks to our esteemed volunteer authors, in this issue you will find educational pieces on the intricacies of handling insurance claims, subrogation (what is it?), and the differences between your typical HOA and homeowner policies. You will also see the all-too-familiar topic of neighborto-neighbor disputes and learn how to tackle those with internal dispute resolution and alternative dispute resolution practices. On that topic, a helpful article about the importance and practice of effective communication is also included (which may help keep those disputes from boiling up in the first place).

With this issue of Connect, we hope to continue to bring you content that strengthens your community and fosters the Greater Inland Empire’s growth and success. As always, none of this is possible without our volunteer contributors and you, the dedicated reader and member of our CAI-GRIE family.

A.J. Jahanian, Esq. is an associate attorney with Beaumont Tashjian who devotes his career to serving common interest developments. He can be reached at ajahanian@HOAattorneys.com

THE GREATER INLAND EMPIRE

OF CAI IS EXCITED TO RECOGNIZE Betty Roth as the CLAC Volunteer of the Year for 2022

As a Manager in 2010, Betty attended The GRIE Chapter Committee Strategic Planning meeting and became a member of the LSC Committee. Betty has not only been a member of the committee since that time, but has supported their legislative efforts continually in so many areas of the committee.

As a member of the LSC Committee, Betty assisted with Chapter CLAC wine events which were held yearly at different venues to raise money for the Greater Inland Chapter CLAC contribution. A lot of time and effort went into planning and executing these events. Local legislators were brought in to speak and mingle with the attendees to listen to their concerns. The events were a very successful due to the efforts of the LSC Committee.

Betty also attended the California South Legal Forums each year and would work the CLAC table as a representative for CLAC to explain the importance of the CLAC Committee to new managers and homeowner leaders.

Betty started attending the Legislative Day at the Capitol in 2011 and has not missed one since. She would also bring her homeowner board members as well as other management company members with her each year to acquaint them with the importance of advocating to the legislators for the benefit of their association as well as all the associations in the state. She would make sure that she, as well as her board members, would meet with the legislators and discuss the bills brought forward by CLAC.

She would also attend and support the North Chapter’s Casino and Corks for CLAC events when she attended Legislative Day at the Capitol. These events helped with the North Chapters contributions to CLAC.

Betty also assisted with the Registration table at Legislative Day at the Capitol which was so very enjoyable for her. She was able to

meet so many like-minded industry members who were as passionate about legislation as she was.

She then moved on to become a Liaison for the Greater Inland Empire to the CLAC Committee. She would bring back the information from the CLAC Committee meetings to her LSC Committee so they would be able to understand and bring the information back to the CAI GRIE Chapter at luncheons and Expos. She also served as a Delegate member of the CLAC committee as a manager member before retiring and becoming a homeowner leader still continuing on as a member of the LSC Committee.

Betty was appointed to the CLAC Executive Board of the CLAC Committee in 2020 as the treasurer. She also serves as a delegate for the GRIE Chapter.

As the treasurer of the CLAC committee, she prepares a report of the financials each month for the Executive and Delegate Board packet. She reports as needed at the meetings. Betty also, with the Executive Assistant, prepares the yearly budget for the CLAC Committee and presents it for approval.

She also serves on the Governance and Assessments Task Forces. The discussions at these meetings lead to recommendations to the CLAC Delegate Committee making the final decisions on bills to be presented to the legislators.

Betty has facilitated at the last two virtual Advocacy Day at the Capitol online meetings. She also give CLAC updates at the GRIE Chapter luncheons and expos as well as assisting in selling raffles tickets for donated items at the luncheons and expos to assist make the GRIE Chapter CLAC contribution.

Betty also personally contributed to the CLAC silent auctions at the GRIE Chapter Monte Carlo events the last two years to go toward the GRIE Chapter CLAC contribution.

CHAPTER

INSURANCE EXPECTATIONS FOR RAINY DAYS

BY: ANTHONY MENKE, CPCU CLINE AGENCY INSURANCE BROKERS

To kick off 2023, something unusual happened in California. It rained. It rained A LOT. In a place where sunny skies are the default and severe drought is our usual environmental concern, weeks of recurring rainstorms found many residents were unprepared for this abrupt change in weather. Not only were residents unprepared for the rain, but we quickly learned that our land and buildings were unprepared as well.

Flash flooding and high winds made us suddenly pay close attention to the weather reports, and we all quickly became familiar with terms like “atmospheric river” and “soil saturation.” In the aftermath of these unprecedented weather events, many people are also now becoming familiar with the limitations of their insurance policies.

Insurance coverage for water intrusion from rain is often problematic because the water intrusion is commonly caused by items that have worn out due to age. “Wear and tear” is specifically excluded under property insurance coverage. Another common exclusion to property coverage is defective construction, which applies to design, materials and workmanship. Since it rains so seldom and so mildly in Southern California, it is very easy for people to remain unaware that the waterproofing around windows and doors or roof materials has worn out until there is a heavy rain.

Property insurance usually contains some exclusionary language regarding water that denies exterior water sources whether flowing or seeping into the building. In some cases, rain is even excluded by name. However, It is important to note that if damage caused to the structure is first caused by a covered peril (for example, a heavy wind breaks a tree limb that falls on the roof creating a hole through which rainwater enters), there is a much greater chance of coverage for the claim.

The most recent storms have delivered such large amounts of water in short periods of time that many exterior barriers that had worn out over time could not withstand the force of the heavy rains. In some cases, the volume of water was so great that drains and entire drainage systems were overwhelmed and the water pooled, then snuck under doors or seeped through exterior walls. Unfortunately, most claims for damage related to the rains have been denied by insurance carriers. Adjusters

have not been swayed by insured comments like, “I have lived here for 18 years and never seen a rain like this.” or “This is an act of God, there was nothing we could do!” or even “But the roofer just installed this two years ago. This is not our fault!”

On the one hand, insurance carriers cannot be expected to cover items that failed due to negligent maintenance. If they did, no one would be motivated to maintain property and there would be so many claims paid that no one could afford property insurance. On the other hand, it is hard to describe the feeling that comes from learning about the limitations of insurance coverage through a claim denial letter.

The recent rains have shown the importance of understanding insurance coverage and its limitations. It is easy to maintain assumptions about coverage if a policy renews automatically each year or if one is in the habit of absently signing on the dotted line when your agent or broker sends the renewal proposal. The reality is that insurance is a conditional

contract of coverage and not all policies are created equal. It is important that insureds ask questions to understand that there are risks that may not be covered by an insurance policy and must be managed through other means. It reinforces the importance of regular maintenance, inspections, and consultations with experts when appropriate, as well as carefully researching contractors before hiring.

In the land of sunshine, it is easy to be lulled into a false sense of security, but we must all be prepared for bad weather. “Atmospheric river” is not commonly used in everyday conversation, but if I had an insurance claim costing thousands of dollars denied by my insurance after one occurred, I don’t think it’s a term I would easily forget.

Tony Menke has been managing HOA insurance claims for Cline Agency since 2005 and strives to make the complex jargon of insurance coverage and finance more accessible to the HOA community.

We Can’t Live Like This Forever . . . Or Can We?

BY: ANNEMARIE HERNANDEZ SOCAL BUSINESS DEVELOPMENT, EMPIREWORKS RECONSTRUCTION

As the market, economy and inflation fluctuate and struggle to balance out, and goods and services increase and continue to get held up enroute, the financial dilemma is real. So why are HOA boards still trying to be popular by not raising assessments?

The State minimum wage has increased, utility costs have jumped, inflation has been running at more than 7.6% (August), and wholesale prices have increased more than 9%. Something has got to give. With homeowners struggling to make ends meet through job loss, pandemic business changes and everyday life adjustments, it’s up to community managers and board treasurers to explain why assessment increases are in the best interest of their community associations.

Technically, the California civil code allows HOA boards to raise assessments up to 20 percent, and implement a special assessment up to 5 percent, without seeking approval from membership. Managers and board treasurers have a fiduciary duty to recommend an assessment amount that is sufficient to operate, maintain, and sustain the association’s assets. However, they also recognize that board members may not want to impose a significant increase in the current financial atmosphere. So how do you maintain the quality of your association’s components?

Reserve studies help us plan for the future, but what happens when there are unexpected expenses that were not included in a previous reserve study? For example, the California SB 326 balcony inspection law and adding roofing weatherproofing underlayment to the reserve line items? Communities that have not added these components to the reserve study are not adequately funded for the large project costs these tasks will trigger.

Maintaining a healthy reserve and conducting maintenance when required or on schedule – including annual operational maintenance – is vital to reducing damage to infrastructure and extending component useful life. Insurance companies frequently require maintenance and repair of components to maintain coverage. So how do you plan for these unexpected hiccups?

The best plan is to actually PLAN.

Take a look at your community and be honest about what is failing, what is aging and what is in great shape and just needs periodic maintaining. Be realistic about your projects and engage a reserve analyst on the financial health of your community and budget as your first step. When was the last time the board checked the reserve study components against the actual infrastructure and reserve-maintained inventory? If the board is spending reserve funds to maintain components but not funding those items, the study needs an update. Based on that analysis, engage trusted vendors for an honest and deeper investigation into the cost of needed repairs and provide these estimates to the reserve study analyst to improve current actual costs to project future costs. Stay on top of CLAC (California Legislative Action Committee) legislative updates so you aren’t blindsided by upcoming new laws and bills. Start planning immediately for new regulations like SB 326, instead of deferring decisions until action is required, or when demand is high and costs increase. This will help you determine how to approach assessment increases with your board members and homeowners.

What should a community manager and treasurer do if your board members are not in agreement with this approach? How

{This article was originally published in the CAI-Orange County Regional Chapter's OC View magazine, Nov/Dec 2022 issue, and is reprinted with permission.}

does a manager and board treasurer do their part to protect the community’s best interest and keep the board focused on their fiduciary duties?

Managers and treasurers need to keep their board members and association members educated and informed. They need to explain and interpret the budgets they have developed for their community and let the financials do the talking. The cost of contracts, supplies, services, and reserve funding speaks for themselves. The community manager and treasurer should explain to the board and members what they have done to eliminate costs, reduce costs, and manage costs while keeping the owners’ property values as high as possible. Other options you might have to keep costs low – conducting annual preventative maintenance, phasing projects, spreading out loans, or considering special assessments where all else has failed. Reach out to those trusted industry vendors for help. Your trusted vendors are your association’s business partner. Their guidance and recommendations are valuable for boards making decisions to maintain compliance with the business judgement rule.

Homeowners want the homes they purchased with their hardearned money to be safe, comfortable, and beautiful. But keeping

the buildings, streets, landscaping, etc., up to date doesn’t just happen and it isn’t free. Owners should participate in protecting their investment for it to be of value in the future. We are familiar with the saying: Penny Wise – Pound Foolish. Every maintenance task that the association completes helps keep costs down in the long run. The more something deteriorates, the more it will cost to repair or renovate.

The best example of saving short term funds but causing a very large future repair bill is in deferring maintenance of annual or bi-annual tasks. Deferred maintenance can have a large and costly impact on homeowners. If communities are continually postponing necessary annual maintenance or repairs because they are trying to save money, it will cost the association more in the long run. Keeping assessments artificially low ultimately leads to lower property values, higher maintenance and sustainment costs, and may deter sales because of inadequately funded reserves and association member future liabilities.

Board members depend on their management company, community managers, and board treasurers to help guide them through it all. What conversations are you having with association members?

SUBROGATION SMARTS: HOW ASSOCIATIONS CAN PROTECT THEIR INSURABILITY AND RECOVER DAMAGES

BY: PATRICK PRENDIVILLE, CIRMS, PRENDIVILLE INSURANCE AGENCY

The California insurance market has not seen such a poor climate in decades. Savvy boards know that in order to protect their budget, insurability is critically important. Fundamental to this goal is controlling the rate of claims, but once the claim is filed, what can be done? At the heart of this answer is a very nuanced concept called subrogation. This article addresses that concept and when it can be applied.

Subrogation is a legal term that describes how associations, or insurance companies, can recover the amount of a paid claim. Take the example of an association that had three units suffer severe fire damage. The HOA opens a claim with its own insurance. However, upon investigation, it was discovered that the fire was started by a plumber that caught the building insulation on fire while using a welding torch. Fortunately, the plumber is also insured, and it is expected that their insurance company will pay for the full damage. So, even though the HOA’s property insurance pays to rebuild the units, it is able to subrogate and recover its expense from the plumber’s insurance.

Sounds great for the insurance company, but what about the HOA that initially was forced to pay a deductible? First, assuming full recovery, the full deductible is returned. But, more impactful, the loss is also wiped off the association’s loss run, which helps to protect its insurability and keep premiums low. In this insurance environment, this impact cannot be overstated.

Subrogating against contractors is rather fundamental and straightforward, but what happens if an owner or tenant causes damage or financial loss to the association? Can the insurance company or association subrogate against an individual? This answer is a little more nuanced due to the governing documents of the association.

Many governing documents contain wording that protects owners from subrogation. One common provision reads: “All of the association’s insurance policies insuring against physical damage must provide for waiver of subrogation of claims against owners and tenants of the owners.” This type of wording increases the challenges of successfully recovering damages. However, a fair amount of associations do not contain these limiting provisions and if they do, they may only apply to an owner and not a tenant.

Another example comes from an association with detached garages. A chatty resident was talking to his neighbors about his car’s alternator which had been causing problems. He was trying to fix it himself until it caught on fire and burned the garage structure down. The association took the expected step of filing a property claim and upon rebuilding, the

insurance company subrogated (sued) the vehicle owner. In this case, the association’s CC&Rs prevented subrogation against owners, but because the vehicle owner was a renter . . . game on. Fortunately, the renter also had insurance, which paid the entire cost, removing the loss from the claims record and returning the association’s property deductible.

Regardless of the target of a subrogation, the following are some important reminders that may dictate the success of any subrogation efforts:

• Check with legal counsel about any limitations in the governing documents in advance of any claim, to better avoid mistakes and save time when it matters most.

• Take photos of the damage: the more, the better.

• Save the parts: insurance companies often send broken parts in to be tested. If faulty, it is not out of the ordinary to also have a subrogation claim against a parts manufacturer.

• Talk to witnesses: who knows what?

• Collect information on all vendors that may have been working on the item at issue, or even in the surrounding area.

• Take copious notes on all of the above items because the subrogation efforts may start months later and memories may fade, witnesses may move, etc.

Understanding subrogation is critical for proper insurance policy management. Associations that can improve their insurance loss ratio will experience better budgets and community harmony while avoiding the pain of expensive insurance premiums.

Patrick Prendiville, CIRMS of Prendiville Insurance Agency can be reached at Patrick@PrendivilleAgency.com

Subrogation is a legal term that describes how associations, or insurance companies, can recover the amount of a paid claim.

ADVOCACY WEEK CAI-CLAC Report

CAI GRIE Chapter Session

BETTY ROTH, CMCA, AMS, LSM, PACM HERITAGE LAKE MASTER ASSOCIATION

Iwas honored to be the CAI-CLAC Executive Committee Host as well as the facilitator for the virtual CAI GRIE Advocacy Session on Monday April 24, 2024. This is the biggest advocacy meeting that CLAC sponsors all year. All chapters meet with their legislators to discuss CLAC’s positions on upcoming bills and ask for their support whether it be for or against a particular bill.

I have been fortunate to participate in all of the last four years of virtual sessions. I believe that this year was more satisfying than ever because of the strides that were made in the previous years, as well as the very put together legislative meetings and support from the tech team, advocate team, PR Committee, CLAC Administrator, and well-prepared speakers for each bill: Daniel Heaton (AB 572), Robert Riddick (AB 1458), and Fred Bartz (AB 648). Kimberly Lilley

was also very well-versed in speaking on the State’s ongoing insurance concerns.

We met directly with Assembly Member Bill Essayli, as well as staff representatives from the offices of Senators Ochoa Bogh and Roth and Assembly Member Kate Sanchez. Each of the individuals that joined us were already very well versed on CLAC and CAI in general, so each of the meetings were full of information on CLAC’s positions on the bills at hand. Our legislative guests were all very receptive and supportive as they listened to each of our speakers, and many wanted to get more involved in our ongoing insurance efforts.

The bills continue to go in and out of different Assembly and Senate committees, so our job of advocating is not finished. Should you receive a grass roots request to contact your legislator to support CLAC’s position on a bill, please take the time to answer the call. It only takes a moment, and it has a significant impact!

AB 572 (Selective Assessment Caps)

DANIEL C. HEATON, ESQ. NORDBERG|DENICHILO, LLP CAI-GRIE LSC COMMITTEE

The Davis-Stirling Act requires community associations to impose and collect assessments to fund its various obligations, including community maintenance and repairs. Existing law prevents a board from increasing the amount of regular assessments by more than 20% and caps the aggregate amount of special assessments that may be imposed at 5% of the annual budget, unless either is first approved by a majority of a quorum of the members.

AB 572 proposes to amend Civil Code § 5605 to further prohibit any increase of a regular assessment that is more than 5% for any owner of deed-restricted affordable housing, unless all the units in the community are subject to such deed-restrictions.

While the bill certainly has good intentions in trying to make housing more affordable, in practice, it is likely to create a host of unintended problems.

At the outset, most associations will have incredible difficulty determining which units are subject to the provision. Many members

are not aware if their community contains deed-restricted affordable housing units, and when they do, the CC&Rs generally will not identify the specific properties. Instead, a board will likely be required to seek the assistance of legal counsel at significant cost to review each of the underlying deeds to identify which properties are impacted.

More significantly, the bill actively sets up affordable housing as a separate class of homeowners within the community, who would pay less than their fair share of association expenses than their neighbors. Such unfair distribution of financial burdens can result in division within a community, when the primary premise of choosing to live in an association is just that: the shared cost of a community.

In circumstances where an already burdened association needs to increase assessments by even the full amount permitted without a membership vote, or 20%, approval of the bill would mean that the board would have to determine which below-market units to cap at 5%, while everybody else would be required to absorb that 15% at significant increased cost. Now imagine the disparity that could potentially result in the community after years of repeating this same process.

As of May 1, 2023, AB 572 has been ordered to a third reading in the Assembly Housing Committee. Given the above repercussions, CLAC urges all members to contact their legislators to urge that they vote against this bill.

CONTINUED ON PAGE 18

AB 1458 (Quorum Requirement)

ROBERT RIDDICK, CMCA HOMEOWNER LEADER; CAI-CLAC DELEGATE

This bill, once enacted into law, would drop the quorum requirement to 20% of the total membership, even if the governing documents impose a higher quorum. A majority of current CID governing documents set quorum at a minimum of 50% +1 of the total membership. That requirement is not only often difficult to achieve, but it prevents CIDs from being able to function as intended by the Davis-Stirling Act, including conducting fair and open annual elections for board members.

Too often, governing documents “set the bar” unreasonably high for satisfying quorum. As a result, those associations that fail to satisfy quorum are prevented from conducting annual member meetings and board elections. This unfortunate dilemma has significant unintended consequences, including making it difficult for an association to conduct member meetings and hold elections, depriving interested members from being able to run for board positions, and preventing currently serving board members from stepping down, because elections are not able to be held for their replacements.

AB 1458 makes all the sense in the world and will set a much more realistic quorum requirement that significantly aids associations in being able to conduct business as the legislation intended when the Davis-Stirling Act was originally adopted.

AB 648 (Virtual Meetings)

FRED BARTZ

HOMEOWNER LEADER; CAI-CLAC DELEGATE

CAI-CLAC is sponsoring AB 648 which would allow community associations to have the option of conducting most board meetings virtually instead of in person, except

for those that involve elections. This would be similar to what was previously allowed under Civil Code § 5450 during a state of emergency. As many associations have experienced, virtual meetings allow for greater availability and participation by members in board meetings. The bill already has wide support and has passed the Assembly Housing Committee. We hope you will contact your Assembly and Senate members and let them know you support the need for permitting this alternative form of board meetings.

California Insurance Crisis

KIMBERLY LILLEY, CIRMS, CMCA, EBP DIRECTOR OF BUSINESS DEVELOPMENT, BERG INSURANCE AGENCY CHAIR OF CAI-CLAC’S INSURANCE TASK FORCE

We are in an insurance crisis in California. This is mainly impacting condominiums which are often our state’s supply of affordable housing and the access point for firsttime home buyers, as well as retirement communities. This crisis has begun to expand and shows no indication of stopping.

Since all homeowners share the costs of the community association, insurance increases impose a financial burden on every owner within the community. Some associations are increasing monthly assessments, some are levying special assessments, and some are even taking out loans in order to afford the insurance that they are required to have by their governing documents. And since these costs will most likely be the same or even MORE next year, this course is simply not sustainable.

The crisis is no longer simply due to wildfire losses. Many communities are experiencing a jump in premiums due to having the wrong kind of electrical panels, or roof, or a variety of other reasons. Some communities cannot even FIND insurance, and some cannot find insurance up to the full value of their buildings. This means that, aside from being in violation of their own governing documents, federally backed loans are no longer available. Since Fannie Mae and Freddie Mac underwrite approximately 70% of all loans, most banks will not write a loan for these associations. Those who NEED to sell due to the increased cost are now stuck.

CLAC is working with the Department of Insurance, the CA FAIR Plan, and legislators, to identify and implement both short and longterm solutions. You may have heard that the CA FAIR Plan increased property limits to $20 million. That is due to our working hand in hand with the interested parties, but IT IS NOT ENOUGH. We are not done, and we continue to seek solutions and are thankful to the legislative representatives who expressed their strong desire to partner with us in these efforts.

COMMUNICATING with CLARITY

BY: KELLEY GRIMES, MSW

Communication is one of the most important skills we can develop for our health and wellbeing. Misunderstandings and a lack of clarity cause so much stress in our lives and lead to conflicts in our personal and professional relationships. Learning to communicate effectively can empower us to improve all our relationships, including the relationship we have with ourself.

I love this quote from Brene Brown: “Clarity is kindness.” I share it often when I am teaching communication and boundary setting skills. Transforming your mindset about “clarity is kindness” is critical for effective communication, especially if you were taught that it is not polite to speak up or share how you feel or what you need. Recognizing that it is an act of kindness to communicate with clarity can inspire us to feel more empowered when sharing our authentic experience. Sharing our experience provides others an opportunity to understand what is important to us, how we feel, and what we need. Understanding that it is kind to communicate with clarity can give us the permission we need to speak up.

Once you have embraced a “clarity is kindness” mindset, it is essential to identify how you feel and what you need in order to communicate with clarity. This step may require that you first spend time reflecting. Some strategies for becoming clear on how you feel or what you need are writing about the situation, speaking to someone you trust, or taking a walk and tuning into your feelings. Once you become clear, you can use the “I Message” format to communicate in an assertive way. The structure is to share how you feel and give a specific example from the situation and then include a need request for something to be different. You can end your statement with, “Is this something you would be willing to do?”

An example of using an “I Message” is: If I was upset someone did not respond to my email asking for help, I might say, “I felt upset when you did not respond to my email when I asked you for help. In the future could you follow up with me within a day when I ask you for help, so I know if you are available? Is that something you would be willing to do?”

When you share how you feel, you take responsibility for your emotions; when you share your need request, you give others an opportunity to understand what you are asking for. At that point, they can respond if they are willing to do what you ask, providing even

more clarity. Not sharing how we feel and what we need leads to resentment, more intense feelings, and leaves the conflict unresolved. When we have the courage to communicate with clarity, we deepen trust leading to more authentic and healthy relationships with others.

When we value how we feel and what we need by choosing to communicate with clarity it also improves our relationship with ourself. Over time our trust in ourself grows and our self-confidence and self-worth increases, making it easier to embrace a “clarity is kindness” mindset. As a result, we model healthy communication in all our relationships and demonstrate that clarity is kindness means kindness for all.

Clarity is kindness.

– Brene Brown

Remember embracing a “clarity is kindness” mindset and communicating effectively is an ongoing practice. When we recognize that communication is about progress not perfection, we can honor each step we take to have more healthy and empowered communication with others. Becoming clear about how we feel and what we need provides the foundation of communicating effectively and expressing our authentic self. Committing to the practice of communicating with clarity will improve all your relationships and your health and wellbeing.

May you be inspired to embrace a “clarity is kindness” mindset and nurture peace in the world from the inside out.

Sending you peace, love, and gratitude.

Kelley Grimes, MSW is a Counselor, Author and Speaker and may be reached at kelley@cultivatingpeaceabdjiy.com

Won’t You Be My Neighbor?

How to Use IDR and ADR to Resolve Neighbor-to-Neighbor

Disputes

BY: A.J. JAHANIAN, ESQ., BEAUMONT TASHJIAN

When living in a homeowner’s association, conflicts are bound to happen. Whether conflicts are between homeowners or between homeowners and members of the Board, resolution will be required in order to maintain good relations within the community. While some conflicts will warrant initiating litigation, others can be resolved much quicker and without great expense through either internal dispute resolution (IDR) or alternative dispute resolution (ADR). Both carry different procedures and requirements, and can both be effective tools to curb smaller conflicts before they escalate into bigger problems.

IDR

IDR is used when an association wishes to resolve a conflict internally in an informal process between its representatives and those of the adverse party. An association can also facilitate IDR between two adverse parties and act like a third party neutral that seeks to diffuse the conflict for everyone’s benefit. California Civil Code section 5910, part of the Davis Sterling Act, governs the requirements for IDR in associations. Such requirements include providing for a fair, reasonable, and expeditious dispute resolution procedure that allows both sides to explain their positions, a member’s right to invoke such procedure

and compel an association’s participation in same, and for the procedure to have prompt deadlines both an association and its members must follow. It is important to note if an association requests IDR, a member can refuse to participate without any repercussions. Also, a member who participates in IDR cannot be charged a fee to do so. Additionally, should a resolution be reached in the IDR proceedings, when it becomes a signed writing by all parties, it shall be judicially enforceable.

Associations have great latitude to determine their IDR policies and procedures, so long as it conforms with the Civil Code’s requirements. Associations should encourage IDR in smaller conflicts that don’t implicate their larger communities, such as neighborto-neighbor disputes. Since these types of conflicts are typically not of great urgency for associations to directly intervene in, IDR procedures can be used to bring disputing neighbors together to discuss and resolve their conflicts as an alternative to a board initiating disciplinary proceedings against the disputing neighbors. By using IDR to resolve neighbor-to-neighbor disputes, associations can more expediently resolve these conflicts and save an association money from avoiding costs in pursuing disciplinary and/or legal action against conflicting neighbors.

ADR

ADR is another process an association can use to resolve a conflict, but instead of relying on participants to cooperatively resolve their conflicts voluntarily, ADR involves a third party neutral that assists the parties in resolving their conflicts. ADR takes on different forms, including mediation, arbitration, conciliation, or another nonjudicial procedure. The two most popular forms of ADR are mediation and arbitration. Mediation is when a third party neutral helps guide the parties towards a resolution they create while arbitration involves a third party neutral who hears both sides and then makes a determination on how the conflict should be resolved.

California Civil Code section 5930 governs the procedures associations must take when initiating and participating in ADR. The requirements are more stringent than IDR since ADR is a more formal process that involves cost sharing between the participating parties. The first requirement under the Civil Code is that members and associations must participate in ADR before filing enforcement actions against one another in the superior court. This requirement does not apply to small claims court actions, assessment disputes, and claims for monetary damages in excess of

the jurisdictional limits stated in Civil Code sections 116.220 and 116.221.

Upon initiating ADR, there are procedures that must be followed. This includes serving a request for resolution to the party who is being requested to participate in ADR. Unlike IDR, an association is not required to accept a member’s request for resolution to participate in ADR, meaning any party that receives a request for resolution does not need to accept it.

Upon receiving a request for resolution, a party has 30 days to accept the request. Should more than 30 days lapse without an acceptance, that request for resolution is deemed rejected, and ADR will not proceed. However, should a party accept the request for resolution, the parties have 90 days to complete ADR, whether it be mediation, arbitration, or any other process. Allowing this 90-day window gives the parties time to fully consider their claims and reflect on how the overarching conflict can be resolved. Like IDR, ADR can too be an effective tool to resolve neighbor-to-neighbor disputes, as those who feel they have a say in the resolution proceedings will usually be more likely to cooperate and want to resolve the conflict. It is important to remember that the parties to ADR are to split the costs of such

evenly in a usual arrangement, which gives the parties more of a stake in the efforts to resolve the conflicts because if they do not come to a resolution, they will have wasted time and resources with nothing to show for it. Another point to keep in mind is that any time spent in ADR, which includes both the timeframes to complete ADR and accept ADR, are tolled periods, meaning the statute of limitations will not run on any claims that arise from the ADR proceedings during these two timeframes. This preserves the parties’ right to pursue such claims in litigation should ADR fail.

IDR or ADR?

Both IDR and ADR can offer needed resolution to large and small conflicts in an association. Because IDR is a more informal process that usually does not involve outside parties, it is more suited towards smaller conflicts that can be easily resolved without extensive fact finding and adjudication of claims. Many neighbor-to-neighbor disputes fall under this category of conflicts, and those involved in these disputes should be encouraged to pursue IDR with the association’s board and/or management to resolve these disputes.

ADR requires more time and some expenses, so it should be used more sparingly. ADR

should be reserved for neighbor-to-neighbor disputes that cannot be resolved through IDR and are disruptive to an association’s larger community. These disputes will likely require third party intervention, which is where ADR can come into play. Associations should initiate ADR proceedings when these types of neighbor-to-neighbor disputes arise. By pursuing ADR in this context over litigation, the conflict can be resolved much faster and with significantly less expense.

Associations should consider what IDR and ADR will entail when it comes to conflict resolution and weigh the benefits versus costs of employing these dispute resolution processes. Associations should seek advice from legal counsel before commencing any dispute resolution action against homeowners.

This article, including all of its written contents, does not constitute legal advice nor does this article establish an attorney client relationship between the reader and the article’s author.

A.J. Jahanian, Esq. is an associate attorney with Beaumont Tashjian who devotes his career to serving common interest developments. He can be reached at ajahanian@ HOAattorneys.com

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