Connect Issue 4

CAI-GRIE’s mission is: To make a positive contribution to the Common Interest Development Community through education and networking.

connect A Publication of the Greater Inland Empire Chapter of CAI

ISSUE FOUR 2012

Legal Wrap Up A Potpourri of New Legislation Legislation: A Contractor’s Point of View The Legislative Process – An Anecdote CAI’s Legal Forum – California Communities: Impressions from a Homeowner Board Member Attendee Case Law Wrap Up

In the Spotlight: Meet Our New PCAMs State of the Chapter 2012 – A Look Back 2012 CLAC Accomplishments CLAC Interview with Dick Fiore

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connect Table of Contents A Publication of the Greater Inland Empire Chapter of CAI

www.cai-grie.org

OFFICERS Robert Riddick, CMCA.............................................................. President Sunnymead Ranch Planned Community Association Lana Hamadej, LSM, PCAM..............................................President-Elect Avalon Management Group, AAMC Kimberly Lilley, CMCA, CIRMS......................................... Vice-President Berg Insurance Agency, Inc. Linda Krebs ............................................................................... Secretary Flower Lighting & Electric Gina Roldan . ............................................................................ Treasurer Vista Paint Corporation Ken Carteron .................................................................... Past-President Seacoast Commerce Bank

Features 4 A Potpourri of New Legislation

Departments

7 Legislation: A Contractor’s Point of View

6 President’s Message

By Tom Carrasco

By President Robert Riddick, CMCA

Weldon L. Brown . ...................................... Weldon L. Brown Company Linda Cooley.............................Rosetta Canyon Community Association Dana Mathey, CMCA, AMS, PCAM....... Euclid Management Company Matt D. Ober, Esq., CCAL ........................Richardson Harman Ober, PC Tiffani Reynolds....................................... Rodent Pest Technologies, Inc.

12 Legislative Process – An Anecdote

By Peter E. Racobs, Esq.

Shelly Risbrudt.............................................. Pilot Painting & Construction

14 Case Law Wrap Up

Kristie Rose, CMCA, AMS, PCAM, CCAM... Merit Property Management

By Jasmine Fisher, Esq.

Alisa Toalson, CMCA, AMS, CCAM

Professional Community Management

Gwen Wertz.......................................................... CommerceWest Bank Chapter Executive Director DJ Conlon, CMCA Administrative assistant Christy Hilditch Editor in Chief Betty Roth, CMCA, AMS, PCAM...Avalon Management Group, AAMC Publications Committee

17 In the Spotlight – New PCAMs 20 CAI’s Legal Forum: California Communities: Impressions from a Homeowner Board Member Attendee

11 Editor's Link

By Betty Roth, CMCA, AMS, PCAM

24 History of CAI-CLAC Series Interview with Dick Fiore, Chair 1991-1994

30 Looking Forward: What’s in Store for 2013

By Lana Hamadej, LSM, PCAM

31 Golf Tournament Highlights

22 2012 CLAC Accomplishments 26 Davis-Stirling Act Reorganized, Relocated in 2014

Jan Hickenbottom, PCAM, CCAM . ........................................ First Bank

By Kelly G. Richardson, Esq.

Cang Le, Esq. . ........................................ Fiore Racobs & Powers, A PLC

By Robert Riddick, CMCA

By Skip Daum & Kelly Richardson, Esq.

Lana Hamadej, LSM, PCAM ...................... Avalon Management Group

Tom Carrasco . ..Environmental-Concepts Landscape Management, Inc.

By Jay Hansen, Esq.

By Nancy I. Sidoruk, Esq & Susan M. Hawks McClintic, Esq.

8 State of the Chapter – 2012 BOARD DIRECTORS

28 What is a Claim?

Kimberly Lilley, CMCA, CIRMS............................ Berg Insurance Agency Robert Riddick, CMCA....Sunnymead Ranch Planned Community Assn.

Mahendra Sami .................................................................... Union Bank Nancy I. Sidoruk, Esq. . ...........................Epsten Grinnell & Howell, APC Jasmine Fisher, Esq............................................ Beaumont Gitlin Tashjian Sheeba Yaqoot, Esq. ................................ Fiore Racobs & Powers A PLC DESIGN & PRODUCTION Kristine Gaitan..................Rey Advertising & Design/The Creative Dept.

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 Community Associations Institute of Greater Inland Empire Chapter.”

The Greater Inland Empire Chapter of CAI 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

Copyright © 1998–2012 CAI-Greater Inland Empire Chapter.

Advertising, articles or correspondence should be sent to: CAI-GRIE Chapter 5029 La Mart, Suite A • Riverside, CA 92507-5978 (951) 784-8613 / fax (951) 848-9268

organization so as not to detract from the experience of others seeking to benefit from their membership in the Chapter. connect with grie • issue FOUR 2012

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by Nancy I. Sidoruk, Esq. & Susan M. Hawks McClintic, Esq.

A Potpourri of New Legislation In 2012, Californians saw nearly nine hundred bills signed into law. Obviously, only a fraction of these directly impact community associations. Yet, in this single issue of Connect, we are still unable to list every new law having possible relevance to CAI-GRIE member associations, managers and business partners. This article and the other legal update materials contained in this issue nevertheless provide an initial overview of select changes to the laws affecting California community associations.

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Housing Omnibus Act AB 2697 – Teleconference Board Meetings & Notice of Rental Prohibitions. Existing law defines the term “meeting” to include a teleconference in which a majority of the members of the board, in different locations, are connected by electronic means. Existing law further requires notice of such a meeting to identify at least one physical location so that association members may attend, and requires at least one board member to be present there.

This bill instead requires that at least one member of the board or a person designated by the board must be present at the specified location. Thus, the new law allows for the board to designate the community association manager or other person to be present at the location of the teleconference meeting.

Existing law also requires the owner of a separate interest to provide various items to a prospective purchaser, including a statement describing any prohibition (and its applicability) against rental or leasing contained in the governing documents.

This bill eliminates the requirement to describe the applicability of the rental prohibition.

Private Investigators AB 1720 – Private Investigator Access to Gated Communities. Existing law, applicable to gated communities staffed by a guard or other access control personnel, requires that registered process servicers be allowed access to a gated community under certain circumstances. AB 1720 extends this requirement to grant such access to persons displaying evidence of licensure as a private investigator. Such access shall be granted for a reasonable time, for the sole purpose of performing lawful service of process or service of a subpoena. The person seeking access must identify to the guard the person to be served, and must either provide a badge or other confirmation to show that he or she is acting as a representative of a county sheriff or marshal or display evidence of current registration as a process server or licensure as a private investigator.

Discrimination & Accessibility AB 1964 – Discrimination in Employment; Reasonable Accommodations. This bill includes a religious dress practice or a religious grooming practice (including all forms of head, facial, and body hair that are part of the observance by an individual of his or her religious creed) as a belief or observance covered by the protections against religious discrimination.

AB 2386 – Employment and Housing Discrimination; “Sex” Includes Breastfeeding. Under the California Fair Employment and Housing Act (“Act”), it is unlawful to engage in specified discriminatory practices in employment or housing accommodations on the basis of sex. Under existing law, “sex” for the purposes of the Act, includes gender, pregnancy, childbirth and medical conditions related to pregnancy and childbirth. This bill adds that, for the purposes of the Act, the term “sex” also includes breastfeeding or medical conditions related to breastfeeding.

SB 1186 – Accessibility Claims. This bill changes the procedures and requirements for filing a demand on a building owner in a construction related accessibility claim.

And There’s More

This year also brought multiple changes to the laws governing mobile homes. Readers who own or manage property in mobile home communities, particularly residentowned mobile home communities in which the association rents out spaces, should contact legal counsel for more information. Issues addressed by these changes include, but are not limited to, gas line inspections, governance of tenancies and rental agreements, and water service charges.

There is also new law regulating anti-entrapment devices for swimming pools and spas. Community associations are encouraged to contact their pool experts to verify the technical applicability of new legislation to their particular facilities, especially those having suction outlets in any location other than the bottom of the pool.

All bills specifically cited above are effective January 1, 2013. The above list is not a complete recital of all significant changes in the laws governing community associations. It also does not repeat those bills discussed in the “2012 CLAC Accomplishments” also published in this issue of Connect. Community association managers, volunteer leaders, homeowners and business partner members should consult with legal counsel regarding specific impacts of changes in California law upon a particular community or business.

Nancy I. Sidoruk is an attorney with Epsten Grinnell & Howell, APC, and serves as CAI-GRIE Legislative Support Committee chair and delegate to CLAC. Susan M. Hawks McClintic is a shareholder with Epsten Grinnell & Howell, APC, and is a frequently featured speaker on new legislation and past co-chair of the Common Interest Development subsection of the Real Property Section of the California State Bar.

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PRESIDENT’s MESSAGE

Greetings once again, to all of our members and interested readers.

As always, we’re hopeful that you will enjoy reading this issue’s articles Robert Riddick, CMCA that were written by our members for our members, and especially for those community association volunteers who receive a copy of this issue.

As it has been for the past three quarters now, the last quarter of 2012 turned out to be just as busy a period (if not, in fact, even busier) Chapter activity wise, as the first nine months.

And, with the new year planning now under way, and a whole new set of Chapter goals and objectives already defined by Lana and her crew, there are no signs of a slowdown any time soon.

When I look back over the last quarter of 2012, it was easy remembering all the hard work and effort put forth by everyone in this Chapter, not only during that quarter but for the entire year as well. And in doing so I realized that there are a lot of folks I want to give a warm and heart-felt “thank you” to, for all of their unselfish help and support in making my tenure as your President one that I will never forget and one that I will always be proud of.

Starting with my fellow Executive Committee members, I can only say that I was fortunate in the selection (and, your acceptance) of each of you to be a part of it, and I was constantly impressed by how well we were able to work as a ‘fine-tuned machine’ in handling all of the issues that came before us for deliberation, and equally as impressed by the collaborative spirit we always displayed with one 6 | ISSUE FOUR 2012 • Connect with grie

another. To each of you, thank you.

To my fellow Board of Directors, what can I say? With fifteen of us gathering once a month in order to take care of the business of the Chapter, combined with all of us coming from varied backgrounds representing the three membership classes, I initially thought it would be quite a challenge reigning in all of the diversity we represented, and channeling it in a direction that would produce lasting Chapter

results. Man, oh man, was I wrong! It quickly became obvious to me that the only ‘challenge’ was determining by how much this Board wanted to exceed all expectations it was tasked with accomplishing. Having had experience with other boards in my past, I can truly say that this Board is one that I believe anyone involved in organizational governance would appreciate and enjoy being a part of. It goes without saying that your support over the past year made my job that much easier to execute, and for that I am forever indebted to each of you. Thank you all.

And then there were the committees. You guys were the ‘blood stream’ of the Chapter in that all of our activities were driven by your untiring efforts to exceed what previous committees had accomplished in the past, and succeed you did! No matter what the event, be it social, educational, or any combination of both, you

guys ROCKED! We were most fortunate in not having had a single unproductive event this past year, and for that you guys have to take the responsibility for. To all of the Chairs, the Co-Chairs, and every single committee member who sacrificed so much for our Chapter through their unselfish work during 2012, I salute you all and say thank you.

Finally, I can’t end by not mentioning our incredibly supportive Membership. No matter what the event, no matter where it took place, no matter what the costs, and no matter the date, you were there for the Chapter, and you were willing to support me in my role as your President. I can’t even begin to tell you all how gratifying that was to know that you “had my back” this past year, as I pushed my agenda of trying to bring more Community Association Volunteers into the fold of our Chapter. To all of you, thank you, thank you, and thank you. And, I hope that the support you’ve all so generously extended to me during the past year will now be extended to my successor, Lana Hamadej, as she begins her term of office.

In closing out my final President’s Message I’d just like to add that it has been both an honor and a pleasure serving as your Chapter President this past year. I can’t imagine having worked with, nor for, a better organization than CAI-GRIE, and I only regret that we get to serve in this capacity for a single year. Thank you ALL, for the support, respect, advice and assistance you unselfishly gave to me during this past year, and just know that I would do it all again, in a heartbeat. This Chapter is and all of its members are AMAZING!

By Tom Carrasco

Legislation: A Contractor’s Point of View bi·par·ti·san (b-pärt-zn, -sn) adj.

Of, consisting of, or supported by members of two parties, especially two major political parties

A

s an individual running a business in California, legislation is very important to me. Unfortunately, like many people in my position, I feel that California continues to pass legislation that is not friendly to businesses. The laws and regulations that are passed and/or lobbied for many times do not truly benefit the person, place or thing that they were originally designed for, but become agendas for the politicians. Hidden items in the back of thousand page bills, that have nothing to do with the Title of the Bill, and lobbyists spinning the focus of the bill based on the needs of the groups that they represent. Not every politician or lobbyist falls under this category of course, but many do.

Every year thousands of businesses leave California to go to more business friendly states like Colorado or Arizona, due to partisan legislation.

What California needs, what California employers need, is bipartisan legislature. There has to

be a happy medium between laws and regulations that benefit the few and hurt the majority and those that benefit the majority and hurt the few. I am the first to say that I am a plant geek, nature loving, peaceful guy, but I am also willing to hear the other side of the story and make the decision that benefits the most people around me. I also understand business finance and capitalism. Our legislators and politicians need to do the same.

If they do not, and we continue down the path that we have taken, not only with our laws, but our over-regulation, our state and way of life will change dramatically. I will get off my soap box now, but I will also leave you with one last definition.

Tom Carrasco is President & CEO of Environmental Concepts, PCA #72805 QAL#108311, Arborist# WE-8259A.

em·pa·thy (mp-th) n.

1. Identification with and understanding of another’s situation, feelings, and motives.

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PRESIDENT’s MESSAGE

State of the Chapter

S

tarting 2012 off by stepping into the footsteps of my predecessor, Ken Carteron, I have to admit that I was more than a little apprehensive about the task awaiting me, namely of leading our Chapter through the next twelve months, and all the while hoping that I wouldn’t make too many mistakes along the way. And yet, in spite of my own concerns, and especially based on how the year went, they were all for naught. Members of the Greater Inland Empire Chapter, I am happy to announce that we had a phenomenal year!

And now, with the new year 2013 upon us, I thought it would be good to take a moment and do a quick review of all that our Chapter has accomplished over the past year, keeping in mind that none of it would have been possible 8 | ISSUE FOUR 2012 • Connect with grie

A Look Back without the support and efforts of our Board of Directors, our Committees and their respective Chairs, our Executive Director DJ Conlon, and yes, every single member of our Chapter. First, our events during the year.

January

Hockey – Even at the start of the year we already sensed that it was going to be a great one, as we kicked off the first of our social events with our night at Citizens Bank Arena in Ontario, where we were entertained by the Ontario Reign Hockey team. The Business Partner Committee set the bar for what the rest of the committees had to at least meet (and, they did), let alone exceed.

Great turnout and a profitable venture for the Chapter.

PCAM Reception – The historic

Mission Inn was the setting for our annual PCAM Reception, where we honored our latest recipients by being acknowledged for their achievement.

The event was Chapter-sponsored, and the participation was nothing less than impressive.

February

Host Chapter Efforts – We began lobbying to be the host-chapter for two significant events scheduled to take place in California this year: the PCAM Case Study, and the Annual Legal Forum: California Communities.

We were up against Orange County for the Case Study, and, we were not given much of a chance for the Legal Forum, after the L.A. Chapter’s very successful hosting of it last year. The lobbying efforts continued for the next two

months until the hosting of both events was announced.

March

Pechanga & Mini-Trade Show – This month marked the return to Pechanga for the first of several events that were held there. Like each of the first-quarter education programs that were linked to the trade shows, this event was wellattended, and signaled the beginning of a solid relationship developing between our Chapter and Pechanga.

Spring Billiards – Deborah and her crew picked up where they left off back in 2011 by hosting and managing the continuation of their “low-cost/ high-return” event, with more teams participating than ever in the past.

April

IE Olympics – Once again, the Business Partner committee outdid what they had produced the year before when they again hosted this year’s Inland Empire Indoor Olympics at Dave and Buster’s in Ontario. The venue, as expected, was great, and the competition

was nothing short of fierce, with everyone who participated leaving with a sense of having thoroughly enjoyed themselves.

CA Legislative Day – This year we were represented by more chapter members than ever in the past, with all of us who went participating in the twoday process that included educational opportunities as well as in-office visits with many of our elected State representatives.

Chapter Hosting Awarded – After all of our intense lobbying efforts, we found out this month that we had been officially chosen as the host Chapter for both important events sponsored by CAI National: the PCAM Case Study and the 2012 Annual Legal Forum: California Communities event. Our efforts at achieving enormous success in those roles would be culminated in the coming months when the events actually took place.

May

CAI National Conference – With this year’s conference being held in nearby

Las Vegas, it was easy to see why our Chapter was one of the most visible chapters in attendance. Let’s just say that we “represented” and all those who couldn’t make it would have been proud of our presence there.

CLAC Wine Reception – This year’s prestigious fundraiser was held at Wiens Family Cellars in Temecula’s beautiful wine country, and even with a new venue, the attendance was amazing, as well as the entertainment and the overall program. Nancy and her crew helped make this year’s event the bestattended as well as best fundraiser so far in the history of this event. At mid-year we were already close to satisfying our annual obligation for funds raised by our Chapter, and, in fact, by years-end we ultimately exceeded our goal.

June

Monte Carlo Night – What more can we say about this year’s premier social event, except that Marianne and Jan, along with their incredible committee, pulled off what everyone that was there that night recognized as a classy and Continued on page 10

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State of the Chapter Continued from page 9

stylish evening of glamour, sophistication and downright FUN. The venue being Pechanga only lent itself to heightening the extraordinary enjoyment of the evening by all who were fortunate to have obtained tickets.

Mini-Trade Luncheons – All three of the major committees tasked with developing and presenting our Educational programs were more than successful this past quarter with providing quality and professionallevel programs that were geared toward continuing to educate our membership.

July

PCAM Case Study – The first of two CAI National events that our Chapter hosted took place and by all accounts, it was one of the best Case Study’s ever conducted on the West Coast by any chapter. It was reported that every attendee who turned in their final exam was ultimately rewarded by being notified by National that they

had, in fact, earned their new PCAM designations.

August

Bowling Tournament – Playing off of this year’s Chapter theme of “Going Back To The Future,” Michael and his committee took us on a journey of revisiting Woodstock, circa 1969, where we showed up in tie-dyed shirts, headbands, flower-power appliqués, and all to bowl while listening to the music of Hendrix, Joplin and Jefferson Airplane, just to name a few. Another fun night, well-attended, and profitable as well.

September

Annual Golf Tournament – Our premier fundraising event of each year, the tournament, held at the challenging Champion’s Golf Course, located in Corona, continued the tradition of bettering each previous year in total funds raised for the Chapter. This year, an amazing $33,000+ was raised from this one event.

Annual Meeting and Election – Our second year of using electronic balloting, and as previously demonstrated, electronic voting is the way to handle elections. And, as a result of our Elections, we were able to fill the four Director-seats that were available, retaining two incumbents, and welcoming two new members to our Board.

Event Planning Session – This was Lana’s opportunity to introduce her theme for the new year, and to identify her committee chairpeople, as well as setting the agenda for her incoming administration. From what she presented, I can only believe that her year will be another memorable one for all of us.

October Legal Forum: California Communities – The second of two CAI National events that our Chapter won the right to host took place at one of our favorite venues, Pechanga. And, as expected, it went off extremely well. It

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Waterproofing Deck Coatings Roofing Stucco ~ Siding Pools & Spas Maintenance

was facilitated by the Executive Directors of the eight California Chapters, and was lead by our own DJ Conlon. Without a doubt, it was the most successfully-staged Legal Forum that I’ve had the opportunity to be a part of or attend. Our chapter should be proud of how it was facilitated and of the prestige that was attached to our chapter as a result of our hosting-role.

Fall Billiards – Once again, Deborah and the Billiards committee pulled together an evening of fun and competition that resulted in yet another great event. And, as always, it was another profitable event for the Chapter.

Strategic Planning Session for 2013 – We were treated to having our Strategic Planning Session facilitated by CAI National’s Crystal Wallace, as we created and analyzed our own chapter SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis. The session proved to be an excellent tool for allowing the Board of Directors to identify and implement strategies that are designed to allow for smoother governance of the Chapter, while capitalizing on the Chapter’s strengths.

November

Thanksgiving – As tradition goes, we were “dark” this month, but still enjoyed the Thanksgiving holiday after a successful Mini-Trade Show Luncheon.

December

Annual TOPS Award Breakfast – The year’s Awards breakfast was yet another opportunity for the Chapter membership to come together in celebration of completing another successful Chapter year, of acknowledging those members of our Chapter who had excelled in their efforts and contributions as Chapter members, and to gracefully “pass the baton” on to our incoming Chapter President, Lana Hamadej. Everyone who was honored at our 2012 TOPS Awards Breakfast not only deserved the recognition, as the best at what they do or represent, but as members of our Chapter, we all also shared in their accomplishments that led to their recognition.

In closing, just a few more things to report for 2012.

Finances – We started out the 2012 year with a reasonably healthy balance sheet and ended the year with a very financially sound chapter.

Membership – We started out 2012 with a high 400-count, membership wise, and held the status of “medium-sized” chapter. We ended the year with 500+ members, and are now recognized as a “large-sized” chapter.

And finally, I am happy to report that the Chapter ended the year 2012 with having produced a diverse and world-class professional level of educational programs for our members; it provided social and networking events that helped raise the Chapter’s level of awareness to many more communities; we increased significantly the size of our membership; helped stimulate a Chapter attitude of support and unselfish contribution as volunteers; and, we ended the year in the best financial shape that the Chapter has seen in a very long time. For the CAI-GRIE Chapter, 2012 was indeed, a very GOOD year.

Robert Riddick, CMCA, Chapter President, CAI-GRIE, Board Member, Sunnymead Ranch PCA.

Editor’s LINK Fall is here; however, it is a little warmer than expected.

The CAI-GRIE Golf Tournament in September was such a great success. The volunteers worked hard Betty Roth so that the participants CMCA, AMS, PCAM had the time of their lives. We held our TOPS awards on December 13, 2012. As always, it was a very festive event and honored very worthy members of our chapter. The Business Partner Committee is already preparing for the Hockey Game in January, starring the Ontario Reign. Look for more information in this issue.

This issue presents a series of articles focusing on the legal wrap up for this year. Several articles on new legislation; the legislative process; case law wrap up; a special article on the PCAM designees from Fall 2011 and the state of the chapter at the end of 2012.

We hope you will find the information in this issue of Connect useful and we appreciate your continued support of the GRIE Chapter and CAI. The topic for our next issue is Banking and Finance. We will be bringing you articles on how to qualify for a loan; what happens after an association owns a home through foreclosure; the importance of choosing a bank and the association’s relationship with the bank in the future; reevaluating bank services and funding projects involving major expenditures. We will also bring an article from our 2012 GRIE chapter PCAM recipients on their experience and perspective of their PCAM case study.

We would like your input as well. The deadline for submitting articles for the next issue is February 1, 2013. It is very rewarding to have an article published and can also serve for points in achieving your accreditations. If you are interested in submitting an article, our policy and guidelines are available on the chapter website or feel free to email me at manager@mysunnymead.com and I will be happy to send you a copy.

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by PETER E. RACOBS, Esq.

Legislative Process – An Anecdote

D

ictionary.com defines “anecdote” as “a short account of a particular incident or event, especially of an interesting or amusing nature.” Anecdotes regarding homeowners’ associations are of particular importance in the State Legislature, as demonstrated by a short account of the origins of Civil Code Section 1363.03, the secret ballot voting statute, which will morph into Civil Code Sections 5100-5145 on January, 2014.

On January 14, 2005, Senator Jim Battin, Republican from La Quinta, Riverside County, introduced Senate Bill 61. SB 61 was amended a number of times in both the Senate and the Assembly, passed both houses in September, 2005, and on October 3, 2005, Governor Arnold Schwarzenegger approved the bill and Civil Code Section 1363.03 and companion statutes, Sections 1363.04 and 1363.09, became law effective July 1, 2006.

The genesis of Section 1363.03 was anecdotes received

by Senator Battin’s office from constituents complaining about unfair HOA elections. These constituents were apparently members of one or more associations in the Coachella Valley who did not like the then prevailing means by which HOAs voted using proxies.

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The constituents focused on the fact that instructed proxies were not anonymous. The member issuing the proxy instructed the proxy holder as to how the member’s votes were to be cast, and the member signed his or her name on the proxy form itself.

Although not anonymous (the election inspector or inspectors could see both the member’s instructions and the member’s name), it was already established under California law that these proxies were protected by a right of privacy under the California Constitution. (Chantiles v. Lake Forest II Master Homeowners Assn. (1995) 37 Cal.App.4th 914.)

Senator Battin’s constituents were concerned that the lack of anonymity of instructed proxies left the homeowners vulnerable to coercion.

Thus, based on anecdotal evidence, it came to be that California HOA elections were mandated to use the now well-known double-envelope secret ballot voting system.

Proxies were still permitted, but the new statute required that only the proxy holder could be privy to the member’s instructions and that instructions had to be on a separate tear-off sheet which the proxy holder would keep and the inspector of the election would not see. The designated proxy must cast votes by secret ballot.

The double-envelope system was mandated during a period of time when almost all publicly traded forprofit corporations in the United States had implemented electronic voting via instructed proxies. Electronic voting eliminated hundreds of millions of printed paper proxies and resulted in very substantial savings in paper, printing and postage costs and eliminated extra staff time required for paper proxies.

At the time SB 61 was adopted, the Legislature was apparently unaware of the requirement of California corporation law and the bylaws of HOAs throughout the State which mandated minimum quorum requirements.

Under then existing law, a quorum was established by members present “in person or by proxy.” SB 61 made no provision for the double-envelope secret ballots to be counted towards quorum.

After the quorum problem was pointed out to the Legislature, a “clean-up” bill, SB 1560, was introduced on February 23, 2006, by Senator Battin, and that bill, which was signed by the governor on September 18, 2006, as an

“urgency statute,” became effective immediately and permitted a ballot received by the inspector to be treated as a member present for purposes of quorum.

The anonymity introduced by double-envelope secret ballot voting certainly protected the privacy of members in HOAs but, unfortunately, reduced the ability to verify the legitimacy of the votes cast. Under the old system, a signed, instructed proxy from a member was difficult to alter or substitute with another proxy. The anonymous secret ballots once separated from the signed outer envelope became untraceable and unverifiable. Proxy votes today may or may not be cast in accordance with the tear-off instructions.

Proxies are now rarely used in California HOAs. As a result, associations that met quorum for years thanks to door-to-door proxy solicitation now often fail to meet quorum at their annual meetings. The double-envelope secret ballot system has actually reduced homeowner participation in many associations.

Anecdotal evidence is more than sufficient in the Legislature to change California law and impose substantial financial obligations on California homeowners. In an electronic age, California HOAs are mandated to use paper and postage for elections.

This story is a reminder to everyone in the HOA industry.

CLAC’s educational efforts and letters from CAI members to legislators are vital to explain how HOAs really work and why many legislative “fixes” actually do more harm than good.

(For a civics textbook-type discussion of the legislative process in California, go to www.leginfo.ca.gov and click on “Overview of Legislative Process.”)

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By jasmine Fisher, Esq.

Case Law Wrap-up While the Legislature has been busy this past year with the re-write of the DavisStirling Act, the courts have been hard at work on issues ranging from solar panel installation to arbitration agreements.

Tesoro del Valle Master Homeowners Assn. v. Griffin (2011) 2011 WL 5142962

Griffin applied, unsuccessfully, to install solar panels on their slope. They eventually installed the solar panels despite the lack of approval. The association sued, and won a judgment requiring Griffin to remove the solar panels.

Pursuant to Civil Code §714, while owners have the unequivocal right to install solar energy systems, it’s tempered with an association’s right to pass “reasonable” rules regulating the matter. The court held the association’s solar system installation rules were reasonable and that the association properly followed its CC&Rs in enforcing this issue. Griffins were required to remove the solar panels.

Tesoro’s actions demonstrate several important recommendations all associations should keep in mind regarding solar energy applications: (1) adopt a solar energy policy beforehand; (2) follow the governing documents and ensure denials are timely mailed; and (3) have an expert review the application. Had the Tesoro Board not taken the steps that it did, the outcome of this case may have been different.

14 | ISSUE FOUR 2012 • Connect with grie

Lewow v. Surfside III Condominium Owners Assn., Inc. (2012) 203 Cal.App.4th 128

Lewow lost his underlying case against the association and then filed for bankruptcy. The association, as the prevailing party, filed its motion for attorneys’ fees 32 days after Lewow’s bankruptcy was adjudicated. The association did not file during the bankruptcy due to the automatic toll imposed by his bankruptcy filing. Lewow appealed on the basis the association’s motion was not timely filed. While the association’s filing was ultimately late by 2 days, the court held the bankruptcy laws are complex and the association’s lateness was excusable.

This case demonstrates the critical importance of filing motions for attorneys’ fees in a timely manner. Simply being the prevailing party does not assure an association will recover its legal fees in gaining an owner’s compliance. Had the court not exercised judicial discretion in this matter, the association’s motion for attorneys’ fees would have been denied.

Pinnacle Museum Tower Association v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223

The developer sued to enforce the binding arbitration provision in the CC&Rs despite the fact that the courts had previously overturned such provisions. The court reversed its prior position and upheld the binding arbitration provision despite the fact that the provision was drafted by the developer and owners had no say in whether or not to accept it.

That v. Alders Maintenance Corp.

(2012) 206 Cal.App.4th 1419

That first filed a small claims case contesting recall election results. When it was not successful he filed a writ of mandate and then a civil action. Ultimately he lost on all cases and the association was awarded attorneys’ fees as the prevailing party. Upon appeal, the association lost its attorneys’ fees award on the basis that Civil Code §1363.09 does not specifically include a fee award in it for prevailing associations.

While the next cases are unpublished opinions and therefore not citable or binding precedent upon associations, they are illustrative of judicial trends and serve as important reminders on issues of governing document enforcement.

Girardi v. San Rafael Homeowners Assn.

(2012) Unpublished Opinion

This case demonstrates that associations are frequent targets for litigation when thefts occur within the premises.

Despite the fact that the Girardi’s experienced several breakins, the court held that they did not establish the association was the cause of the break-ins because the identity of the criminals was not known. Associations are cautioned that upon receipt of information regarding crimes in the community, the board should take the following steps: (1) notify owners of the issue; (2) recommend remedial steps owners can take to protect themselves; and (3) reaffirm that the association is not a guarantor of one’s safety and security. In addition to providing timely notice of crimes in the community, associations should also send out a security disclaimer statement in the association’s annual disclosure package as another means by which to reaffirm the concept: the association is not the guarantor of your safety.

Cathedral Hill Tower Condominium Assn. v. Garbar (2012) Unpublished Opinion

Garber initiated unapproved architectural improvements to her new condo which included raising her ceiling among other things. The effect of her raised ceiling was an Continued on page 16

Continued on page 16

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Case Law Wrap Up Continued from page 15

encroachment onto the association’s common areas. While the court found the raised ceiling encroached into the common areas, they did not require the removal of it because it was not deemed a “willful” encroachment.

When dealing with architectural enforcement it is critical to not only

communicate with offending owners in writing but to also fully outline each governing document violation.

Had the association possessed more clear documentation that identified the raised ceiling was an unauthorized encroachment; the court likely would have required its removal instead of permitting it to remain as an “unintentional” encroachment.

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In reflection, 2012 demonstrates that nothing is certain or permanent, vis a vis the court’s reversal of its prior position regarding mandatory construction defect arbitration provisions, and that associations can face uphill battles even when they’re deemed the prevailing party. While we cannot account for these aberrations, savvy boards will take time to adopt policies, document their decisions, and send written correspondence as opposed to conducting business verbally as the best way by which to position their associations and ensure they are able to enforce their governing documents.

Jasmine Fisher is a Senior Associate attorney at Adams Kessler PLC and specializes in representing common interest developments in general counsel matters. She also serves as a committee member for the CAI Inland Empire Connect magazine.

IN THE SPOTLIGHT

Our New PCAMs®

BY JAN HICKENBOTTOM, CCAM, PCAM

T

he Professional Community Association Manager (PCAM) designation is the pinnacle of manager achievement, the highest national recognition for managers. The prerequisites that one must achieve in order to attain the PCAM designation are: five years of direct community association management experience, successful completion of the Certified Manager of Community Associations® (CMCA) examination and successful completion of all six of the M-200 level courses. Then the manager must earn the required points to qualify to submit the PCAM application and then apply for the PCAM Case Study, an in-depth learning experience focused on the inner workings and day-to-day issues of one particular association.

The four recipients all participated in the case study at the Lake Forest I Association in Lake Forest, CA in July 2011.

After the Case Study, they had thirty days to submit their written responses to essay questions about the association.

The submission is much like a college thesis, which is graded by CAI instructors and then the attendees learn whether they have passed this final step in a long journey.

In this 30th year since CAI National started awarding the PCAM designation, the Greater Inland Empire Chapter is pleased to recognize the four individuals who have recently attained this prestigious designation: Lisa

Locke, president and chief executive officer of Equity Management, an Associa company, located in Temecula; Betty Roth, general manager of Sunnymead Ranch Planned Community Association in Moreno Valley, which is managed

by Avalon Management Group; Jon Sabo, general manager and chief operating officer of Canyon Lake Property Owners Association in Canyon Lake; and Vanessa Wuestewald, a broker associate at Empire Management Group, LLC, in Redlands.

Lisa Locke has been in the association management industry for 15 years. She is married with two children. She also holds the Certified Manager of Community Associations® and the Association Management Specialist (AMS) designations.

When asked why getting her PCAM was important to her, Lisa responded, “Obtaining the PCAM means you have achieved the highest designation in the industry. It’s important in any career to continually seek education and work toward achievements that further your knowledge base and career.”

Lisa enjoyed the case study. “I really enjoyed getting to know the community inside and out and diving into the Continued on page 18

connect with grie • issue FOUR 2012

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In the Spotlight Continued from page 17

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problem-solving aspect.” She said that the time limitation for the case study submittal made the process difficult.

“It was hard to find the extra time to research and focus on this one task,” she said. However, she was able to reschedule meetings during the first couple of weeks so that she could gain the time needed to work on her final submission.

Betty Roth enjoys managing Sunnymead Ranch where she is in charge of office and custodial staff, boat and pool monitors, and patrol staff. She has been in the association management industry for 12 years and also holds the Certified Community Association Manager designation from the California Association of Community Managers, as well as the CMCA and AMS designations from CAI. Betty stated, “The process of the PCAM case study was much easier than I anticipated. Beforehand, I had read all that I could about what was needed to make it a great learning experience. Once I had the actual case study questions in hand, I found that I had so many resources and my own experiences to draw from that the questions were not difficult to answer.

They did take time to research.” She said that though working toward her PCAM was a five-year process, it has been very rewarding and she feels that the classes “help me to give my association the best of my knowledge to help them to be a great association.”

In their spare time, Betty and Michael, her husband of 33 years, enjoy the beach, barbeques and Charger football games with family and friends. Their daughter Amy will be presenting them with their first grandchild in December.

Jon Sabo has been in the association management industry for 13 years. In addition to the PCAM

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ISSUE FOUR 2012 • Connect with grie

designation, he also has the Certified Community Association Manager® designation from CACM and the CMCA and AMS and Large Scale Manager® (LSM) designations from CAI. When asked about the personal significance to getting this designation, Jon responded, “It says that I have been able to live through all of the issues we [managers] face and despite all of that, I was able to retain sufficient brain cells to accomplish the goal of achieving my PCAM.” Regarding the case study, Jon enjoyed “the onsite exploration as a detective, if you will. It forced me to sharpen pencils that may not have been used as often as I would like to admit.” Though the journey to the PCAM is lengthy, Jon feels that the process was “far too easy.”

Jon has been married to his wife, Tracy, for 23 years and they have three children. In their spare time, since Tracy and Jon are “foodies”, they enjoy eating out and writing reviews about their experiences. They also enjoy collecting art and antiques.

Vanessa Wuestewald is a portfolio manager with 8 years of experience. She also holds the CMCA and AMS designations and she is a California real estate broker.

When asked why this newest achievement was important to her, she said, “Obtaining my PCAM was essential to my dedication to the industry as well as my personal goals of continuing my education in all aspects of property management.”

These are her thoughts about the experience: “The learning process was enjoyable as I was able to learn everything to successfully manage my communities by taking the required 200-level courses. During the case study, I was able to meet new people who shared my aspirations and commitment to the industry. It was exciting exchanging thoughts and ideas during those couple of days. In addition, it was interesting to sit on the other side and see how others operate their communities and what challenges

they face day to day.”

About the difficulty of the process, Vanessa said, “After talking to several associates in the industry, I knew what I was facing. By no means was it a “walk in the park”; it took a commitment to the industry as well as my communities.

The most difficult part would have to be completing the case study report, but it was all worth it!”

Vanessa is single. She loves being outdoors, especially cycling and day trips to the beach or the mountains or other travels. She also enjoys all types of music and attending concerts.

These four individuals are shining stars in our CAI chapter. They are an inspiration to others who might want to join the ranks of ethical, professional, experienced community association managers.

Jan Hickenbottom, PCAM®, CCAM®, is a Vice President at First Bank in its Association Bank Services division. She is a member of the Greater Inland Empire Chapter and serves on its publications committee. She has been a member of CAI for more than 33 years.

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CAI’s Legal Forum – California Communities: Impressions from a Homeowner Board Member Attendee

By Robert Riddick, CMCA Chapter President, CAI-GRIE

T

he day started off like any other day, except that I knew it was going to be a long one. Make no mistake, what was about to happen today had been in the planning-stages literally since the first part of the year, going back to February. And here it was now the morning of October 19, and that meant only one thing: this year’s day-long CAI-sponsored 2012 Legal Forum - California Communities was finally ready to start.

I remember looking around my surroundings as I tried to acclimate to where I was. At first it didn’t look familiar at all, until I realized that I was in my room at the Pechanga Resort, in Temecula, having checked in for the night the day before. I remembered that I had convinced myself earlier in the month that it made more sense to check into the hotel here at Pechanga the night before rather than fight the traffic trying to get here at a reasonable time 20 | ISSUE FOUR 2012 • Connect with grie

this morning. I was glad about my decision. And, after fixing a cup of in-room coffee I was really glad about my decision.

I headed on down to the Opening Session breakfast that was waiting for all of us attendees, and took the opportunity to “meet and greet” with my fellow Chapter members and others, who were trying their best to get “mind-ready” for the rest of the day’s planned sessions. I remember remarking to one of my fellow HOA board members, George Gallanes (CMCA), who was sitting at my table along with my association’s onsite manager, Ms. Betty Roth (AMS, CMCA, PCAM), that the already gathered group of attendees looked larger than last year’s group.

They both agreed as we finished our breakfast and prepared to head up to our first session.

Now, just so you know what’s going on here today, let me give you a little insight. CAI being a

National organization composed of approximately sixty chapters located geographically around the entire United States as well as overseas now, conducts this annual Legal Forum that is tailored specifically for California participants. It focuses on California-centric HOA and CID laws and how they are both interpreted as well as implemented within the state of California, hence the addition of “California Communities” being appended to the name of the event.

In any case, the Forum is a National program, but it is also a program that is resourced primarily by a designated “host Chapter”, with that particular Chapter being assisted by the other seven chapters that are currently chartered within California.

This year’s “host” was my Chapter, the Greater Inland Empire, aka, CAIGRIE, and our lead “driver’ for the Chapter was our Executive Director, Mrs. D.J. Conlon. In addition, D.J. was joined by her seven counterparts in the other California chapters, and together all eight Executive Directors facilitated the organization and running of today’s event.

A little more info regarding the event would include that it is made up of a series of one-hour sessions primarily geared towards providing current and topical information specifically for CAI member-group presentation. For instance, there were sessions geared towards community association volunteers, and there were sessions geared towards managers and management company participants.

And, there were sessions that were geared towards both groups.

The topics included such issues as

how to avoid recall elections, taking the guesswork out of liability, and HUD approval and recertification.

There were also sessions that dealt with how better to implement social media tools for associations, as well as how to utilize an association’s governing documents so that they are allies and not foes.

Back to my day. After leaving breakfast I went to my first session, which was a community association volunteer-type of session. It was also geared towards association managers as well, as was evidenced by the significant number of managers who also decided to attend. The session went well, and the presenters, Jamie Hackwith (CMCA, AMS, PCAM) and Steven Roseman, Esq. covered the material as experts on their subject and the audience rewarded them with warm applause at the conclusion. That scenario repeated itself for the rest of the sessions I was able to attend, and I later found out that at the sessions I wasn’t able to attend, the presentations were just as professional as well as encompassing, and all were met with appreciative applause much like those that I attended.

And, having now participated in each of the previous Legal Forums conducted here for us Californians, with this being the third one, I’m convinced that each one gets better and better than the previous one, and each keeps the content and material both fresh as well as interesting.

This event, for it being an intense and educationally driven day of enlightenment, was well-worth both the time to attend and the effort to glean as much from the sessions as possible. Everything that was presented was based upon real-life and real-time examples, and the presenters were prepared to answer as many questions as were given them.

The first three hours sped by before I knew it, and by noon I was back in the Grand Ballroom (where breakfast was served, along with where the Business Partner exhibits were) waiting for lunch

and the arrival of our special guest, California Assembly woman Norma Torres (D). With her eventual arrival, lunch was preceded by Ms. Torres being presented a beautiful plaque

by Ms. Nancy Sidoruk, Esq., as a show of appreciation by the California Legislative Action Committee for all her advocacy in the California State Legislature on behalf of HOA communities throughout the State.

Afterward, we were treated to a motivational presentation entitled ‘The Seven Powers of Success,’ by Charles Marshall.

I resumed my attendance at the remaining sessions that were geared towards community association volunteers, and pretty much continued to be impressed by the content of each, as well as by the quality of the presenters. By the time I arrived at my last session, Social Media for HOAs, I thought I couldn’t be impressed anymore.

Besides, I was beginning to feel the energy leaving me at a faster rate than I had planned, and didn’t want to end up falling asleep in the middle of my final session for the day. But, as luck perhaps would have it, this was a session that brought me back to full strength. It was interesting, entertaining in its presentation (thanks to Lori Albert (CCAM) and James McCormick, Esq.), and it ended up being more a working session than one where we all just listened. These two were really on their 'game’ with the presentation, and I had a feeling that everyone in the room knew it as well.

By now it was time to take a much-needed final break, and were we ever treated to a good one.

The hotel had an area across from the Grand Ballroom that had been converted into an over-sized lounge area that was outfitted with several food-stations. Each was serving just what everyone needed at the end of a long and almost exhausting day of receiving educationally 'good stuff’!

By nature, everyone gravitated to the lounge area, had their plates piled

reasonably-high with their favorite goodies, headed over to the nearest bar, ordered their again-favorite drink (Associa-sponsored), and moved out to the outdoor patio area to network with colleagues and friends before considering the journey for each of us back home that evening.

At the end of the day, as is so colloquially said now-a-days, this is an event that should not be missed when it happens here in our State, and is by far (IMHO) the best event that CAI National is tasked with presenting, short of the annual National Conference. It is what it is, as the name implies, and anyone attending it will leave that much more aware of what makes California law, as it applies to the HOA communities, different and unique when compared to the rest of the country. Kudos being given when deserved, as I drove out of the parking lot of Pechanga heading home, I felt immense pride in how well the Executive Directors from all the California chapters came together and presented nothing less than a class act of an event for all of us lucky enough to have attended.

And, I felt equally as proud of all the members of CAI (managers, community association volunteers and business partners) who had clearly demonstrated the commitment to furthering their own educational foundation by attending the Forum this year. Now, if I can just beat the rush-hour traffic I’m about to drive into. Yikes!

Robert Riddick, CMCA, Chapter President, CAIGRIE, Board Member, Sunnymead Ranch PCA.

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By Skip daum & Kelly Richardson, ESQ.

2012 CLAC Accomplishments

AB 2273 (Wieckowski) – Required Documents

As Introduced: Would require notification by a foreclosing lender to association within 30 days of a transfer of title.

POSITION: Co-sponsor FINAL POSITION: Support RESULT: Bill passed; signed by Governor September 7, new law effective 1-1-13.

Industry Impact: Helps associations to hold financial institutions accountable for assessments after foreclosure. The recordations required by this new law will help common interest developments more quickly correct its records and send assessment billings to the correct owner of the separate interest after a foreclosure sale.

22 | ISSUE FOUR 2012 • Connect with grie

AB 805 (Torres) – DavisStirling Common Interest Development Act Rewrite Legislation

As Introduced: Drafted by California Law Revision Commission (CLRC), it reorganized and relocated the CID Act. Substantive changes were minimal and non-controversial.

POSITION: Support RESULT: Bill passed; new law effective 1-1-14.

Industry Impact: CAI-CLAC had major input and comment upon the bill, which had in an earlier version been controversial in the previous legislative session. The relocated and reorganized Act also makes a number of substantive changes which were more clarifying in nature. California associations have the full year of 2013 to acquaint themselves

with the new law, and CAI will take a leading role in providing associations and their managers with education regarding the subject.

AB 806 (Torres) – Technical Amendments Due to DavisStirling Common Interest Development Act Relocation and Reorganization

As Introduced: Sponsored and drafted by the CLRC, this bill contains many amendments which update a myriad of other California statutes which refer to the Act. POSITION: Support RESULT: Bill passed; new law effective 1-1-14.

Industry Impact: This bill makes the various changes to update other statutes to the new Act’s sections.

AB 2314 (Carter) – Blight

As Introduced: Removes the termination date of anti-blight laws, which empowered governmental entities to fine owners of vacant foreclosure properties up to $1,000 per day. Also gives the new owner after foreclosure sixty days before governmental entity can commence enforcement actions against owner.

POSITION: Support RESULT: Bill passed; new law takes effect 1-1-13.

Industry Impact: This law will help associations by continuing the empowerment of local, county and state authorities to penalize the foreclosing owner if the property is not maintained.

CAI-CLAC in 2011’s SB 209.

Industry Impact: This resolves a contradiction created by the passage of SB 209, by confirming that the permitting of an electric vehicle charging station did not require a 2/3 vote of the membership, but could be granted by the board of directors.

Skip Daum has been serving CAI’s California Legislative Action Committee as its Lead Advocate since 1994 and can be reached at caiclac@aol.com.

Kelly Richardson from the law firm of Richardson Harman Ober is immediate Past-Chair of CAI-CLAC and can be reached at KRichardson@rh4law.com.

AB 1838 (Calderon) – Association Records

As Introduced: The document fee disclosure required by Civil Code Section 1368.2 must be in at least 10 point type font. As amended and passed, associations may not charge a cancellation fee if documents are ordered for transmittal to a prospective buyer, if the work on the document order had not commenced prior to cancellation of the order. Further, the association must refund all fees, except those fees for services rendered prior to the cancellation of the request.

POSITION: Support RESULT: Bill passed, to become law 1-1-13.

Industry Impact: No negative impact, since fees being returned were not earned.

SB 880 (Corbett) – Electric Vehicle Charging Stations

As Introduced: Would permit Boards to grant exclusive use common area rights in connection with the installation by an owner of an electric vehicle charging station in the common area.

POSITION: Support as amended by CAI-CLAC. RESULT: Bill passed as urgency statute becoming immediately effective 2-29-12. This bill was rushed through on an urgency basis to correct problems which were identified by

connect with grie • issue FOUR 2012

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History of CAI-CLAC Series Interview with dick fiore, chair 1991-1994

How did you first get involved with the California Legislative Action Committee?

administrative services – organizing monthly telephonic meetings, preparing written agendas, arranging for a room for our meetings in Sacramento, etc., which helped CLAC to become more organized.

In the early 1980s interest developed in providing legislative advocacy for CAI’s members in California. This was due, in part, to the California Association of What made this organization something that you considered Realtors introducing a bill in the legislature valuable enough to spend your that would have required all association time and energy on? property managers to be licensed as real estate brokers. CAI was strongly opposed, as As a lawyer interested in the legal process, the skill set for being a realtor and being a I found that, of the various opportunities property or association manager were quite for involvement in CAI, legislation was the different, and CAI did not feel a real estate one that interested me the most, and the one Richard Fiore is the President, licensing requirement would ultimately serve where I felt I could make the most significant Founder and Managing Director its members. However, no organizational contribution. I also enjoyed working with other of Fiore Racobs & Powers law firm, specializing in providing legal structure existed to respond to that bill leaders in CAI – some of whom were members services to community associations. as a unified front. Informally, leaders of of CLAC and leaders in their Chapters.

CAI in California went to Sacramento to My firm began the practice of community association law in the 1970s. I found I really enjoyed being oppose the bill, and were successful – the bill did not pass. In this involved in an industry that included a variety of people from process it became apparent that while the legislators were aware of various occupations, not just lawyers. I liked the environment and HOAs, it was usually from a negative perspective – the perceived the industry. CAI was the only formal organization at the time problems and ills of community associations. In the mid 1980s, promoting the growth of the community association industry as a CAI leaders in California decided to organize a group that could whole, and I felt it was a good organization to participate in as be more cohesive in responding to legislation introduced in the it focused on education and programs designed to enable all its California legislature. They met in the San Fernando Valley to members to improve their own skills and better serve their clients. discuss the formation of an organization that ultimately became the CAI California Legislative Action Committee (CLAC). Its initial organizational structure remains largely in place today, with two What were your “dreams” for the organization at that point? delegates from each chapter and additional at-large delegates.

Though not yet very active in CAI, I attended the organizational As CLAC’s Chair, I had an overall goal to “beef up” the meeting, and later became a delegate. finances and organizational structure of CLAC. We prepared a California formed CAI’s first Legislative Action Committee. position paper and presented it to CAI National in 1991, which An initial role of the committee was to educate legislators about proposed that each member of CAI in California contribute $15 community associations – especially the benefits. We offered per year to support CLAC and legislative action, and that if CLAC ourselves as a resource. We were not in a position at the time to could receive $15 per member, then it would not need the $3,000 propose legislation, but were able to have some input on pending annual stipend from National. The proposal was approved by the legislation. The delegates would go to Sacramento annually and Board of Trustees so we were able to develop additional funding walk the halls and talk to legislators. Term limits had not yet been for CLAC and its legislative activities in Sacramento. enacted, so many of the legislators had been there for years (some Realizing that we needed a stronger administrative staff, as on the all-important Housing Committee). CLAC began to make well as someone who could provide advocacy in Sacramento, an impact with these once-a-year visits as well as communications we prepared an RFP and sent it to several administrative and with legislators in the interim. advocacy firms in Sacramento. Skip Daum, CLAC’s current National was originally not sure how to react or interact advocate, was one of those who received and responded to the with CLAC. Initially, National gave CLAC an annual $3,000 request for proposal. stipend which was used to retain a firm in Sacramento to provide 24 | ISSUE FOUR 2012 • Connect with grie

Many things in Skip’s initial proposal appealed to us: costs, availability, and how interested and excited Skip was about CAI and CLAC on paper. I interviewed Skip in San Francisco at a CAI law conference, and felt that he could provide the administrative services that CLAC needed as well as be an effective advocate for CLAC. Skip saw CLAC as a client that had the opportunity for long-term growth and purpose. He made us feel like we were not just another client.

Skip helped to provide input on pending legislation while CLAC committee members were spread out over the state.

He provided organization in grassroots letter-writing and getting the word out to California’s CAI members. Skip also helped with marketing CLAC to legislators by pointing out that HOAs represented 6 million homeowners… who vote!

Which of those dreams were easier to fulfill than others?

Why? Once we obtained approval of the $15 per member contribution from National to fund CLAC, and Skip Daum came on board, we were able to improve our finances, organization, marketing, and communication with legislators regarding community associations, and our goal of being an effective resource to legislators became much more of a reality. Without membership funding and Skip’s support, those things would have been much harder to accomplish.

Which of those dreams were harder to fulfill than others?

Why? A challenge we had at the outset was getting CAI National to recognize the importance of legislative action at the state level. While National, through its Public Policy Committee and Board of Trustees, had adopted and published public policies, it really had no effective structure in place to pursue those policies at the state level.

Today, legislative action at the state level is a cornerstone of what CAI offers its members across the country.

Another challenge early on was to convince each of the eight California CAI chapters to approve the $15 per member

per year CLAC contribution, which National required before it would give its approval.

A challenge that will probably always exist is that it is harder to have the “ear” of legislators in Sacramento because CAI and CLAC do not contribute to their campaigns. Early on, CLAC provided information and educational material to legislators about homeowners associations, but it was not as easy to get them to turn to CLAC for counsel on pending legislation as it would have been if it had contributed to their campaigns. With the development of CLAC’s stature and presence in Sacramento over time, this has become less of a challenge in recent years.

How has the path diverged from your previous vision?

Why do you think it changed course?

It hasn’t really diverged… it has merely expanded along the path I had pretty much envisioned. CLAC activities that have been added in more recent years, like the educational programs for CAI members at the Legislative Day at the Capitol, are part of what we had hoped would come from CLAC’s growth and increasing importance in CAI and in Sacramento.

What is the one main thing you think will help this organization move forward from where it is today, and continue to be a strong voice for homeowners, managers and business partners in the community association industry?

I think CLAC will benefit by working together with other organizations as much as possible. Maintaining open communications is important to building partnerships that can make a difference in Sacramento.

Looking back and forward, I can truly say: CLAC is effective – it should continue to do what it is doing.

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Davis-Stirling Act Reorganized, Relocated in 2014

BY KELLY G. RICHARDSON, ESQ.

On Friday, August 17, 2012, Governor Brown concluded the long journey of the California Law Revision Commission (“CLRC”) multi-year project to reorganize the Davis-Stirling Common Interest Development Act, when he signed into law Assembly Bills 805 and 806.

The bills were officially authored by Assembly Member Norma Torres (CAI -CLAC’s 2011 Legislator of the Year) but written by the CLRC. AB 805 relocates the Act to a different part of the California Civil Code, while AB 806 updates the many references to the Act in other California statutes to reflect the new statute numbers.

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There is no need to panic, but attorneys, managers and boards need to get ready. The law does not take effect until January 1, 2014, which gives managers, boards and attorneys over one year to familiarize themselves with the reorganized Act. Currently found at Civil Code Sections 13501378, the Act will move to Civil Code Sections 4000-6150. Until the law becomes effective on that date, it will still be found within 2011’s AB 805, which can be found at www.leginfo. ca.gov under “bill information.”

The CLRC’s primary stated purpose was to reorganize and clarify the law without making substantive

changes. However, the new law does in fact enact approximately 16 substantive changes, none of which are believed to be controversial.

Here are some highlights of the substantive changes, which for the most part are logical and noncontroversial (with the new sections noted for reference): • Open forum required for membership meetings, not only board meetings (4925) • Consolidation of various disclosures into “Annual Budget Report” (5300) • Consolidation of various disclosures into “Annual Policy Statement” (5310) • Requirement of disciplinary process (notice, hearing) also applied to reimbursement assessments (5855) • Membership votes not required for grants of exclusive use rights to accommodate a disability, assign parking or storage, or to comply with law (4600) • Definitions of “conflict of interest” for directors (5350) One of the comments already circulating is that many associations are reluctant to update or otherwise amend their governing documents, due to the coming new law in 2014.

However, associations do not need to avoid amending their governing documents until 2014, because the new law at Civil Code Section 4235 will specifically provide for associations to update their governing documents (CC&Rs and Bylaws) by a board vote to correct the old Civil Code references and insert the new ones. Of course, as with most board actions, that must be in an open meeting and properly announced in advance in an agenda.

In my view, the non-partisan Commission did a commendable job

on this project. The reorganization adds clarity, making the law more “user friendly,” and the substantive changes are relatively few and commonsensible.

The CLRC is not concluding work on common interest development law. While its stated intention on the current project was to minimize substantive changes during the reorganization of the law, it has stated that substantive changes to current CID law will be explored once this law is in place. For information on the Commission, visit www.CLRC.ca.gov.

In fact, the Commission is already exploring modifications to the Act regarding non-residential common interest developments. Hopefully, examination will be made not only of non-residential but also mixed use residential projects, in which homes and businesses coexist.

There may also at some point be

an attempt to explore modifying the Act to accommodate small CIDs. Small associations that generally do not have legal counsel and often do not have professional management, can have great difficulty tracking, let alone complying with, the Act’s myriad legal requirements. However, there has been difficulty developing any consensus on what is a “small” CID, and so it appears at this point that topic is being placed behind the non-residential CID issues.

California associations, managers and lawyers need not wait until January 2014 to begin complying with the new law. There is no reason why all cannot begin implementing the substantive changes earlier. Management firms would be well-advised to learn the new disclosure format of the “Annual Budget Report” (in future Civil Code Section 5300) and the “Annual Policy Statement” (in future Civil Code

Section 5310) and begin using that format sooner, to insure full compliance with the new law. When budget season starts (for most in October), why not prepare the association’s first “Annual Budget Report”? CIDs can also start having open forum at their membership meetings now. Nothing prevents a board from beginning this year to conduct reimbursement assessment hearings using the same procedure as for discipline. So, why wait?

CAI will continue to be closely monitoring the work of the CLRC, and will continue to be a resource for CLRC as it works to improve state law for CIDs.

Kelly G. Richardson is Managing Partner of Richardson Harman Ober PC, and a National Trustee of CAI.

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What is a Claim?

By Jay Hansen, Esq.

M

any people know instinctively when there is a claim that needs to be reported (i.e., “tendered”) to an association’s insurance carrier, such as when an owner breaks a leg after tripping over a broom left in a common area stairway, or a fire causes serious damage to the common area.

These incidents occurred at a specific point in time, and when the general liability policy or property policy in effect at the time of the occurrence is responsible for such claims, these policies are known as “occurrences” policies.

Even when an association doesn’t learn about a particular occurrence until after an occurrences policy has elapsed, the policy in effect when the incident occurred will still be the policy to respond to the claim. If the board, manager or any agent of an association learns of an occurrence, the association should give notice of the claim or potential claim to the carrier. Sometimes occurrences may continue over a longer period of time or the actual time of the occurrence may be difficult to pinpoint. In such cases, all the carriers that might be responsible for the claim should be notified.

However, not all policies are occurrences policies. A directors and officers liability (or D&O) policy may be the most common type an association will encounter that is not an occurrences policy. These are usually known as “claims made” policies because they require that a claim must be tendered to the carrier during the policy period when the claim is made (or at least within some, usually short, time period after the policy lapses). If not tendered during the claims made policy period, there is 28 | ISSUE FOUR 2012 • Connect with grie

no coverage for the claim.

So what constitutes a claim under a claims made policy? Some things, like a lawsuit, are unmistakably claims that require notifying a carrier. However, other claims may not be as obvious.

Assume an owner (i) files a complaint with a state or federal agency or California’s Attorney General, (ii) sends an email or a letter threatening the association with a lawsuit, (iii) sends a letter proposing alternative or internal dispute resolution (ADR or IDR) about a grievance or (iv) makes a verbal complaint or threat to seek legal remedies directed to the board or association. Each one alleges some type of wrongful act by an association or one or more of its officers, directors or other agents. Are these claims? In at least some cases they are, or they are close enough that a claim may be denied later, unless the carrier is notified during the policy period.

How a claims made policy defines a claim is important, because policies differ, but most such policies consider any written demand seeking money or other relief for some alleged wrongful conduct to be a claim once received. Many policies consider receipt of notice of any administrative proceeding (e.g., from the Equal Employment Opportunity Commission, HUD, or other governmental body that can impose liability) to be a claim. We have also seen insurance carriers treat requests for ADR and IDR as claims.

Some letters or verbal threats may not be claims as defined in a policy, but these should set off alarms for boards and managers that these are potential claims.

Associations will invariably be asked by a new carrier and often by a renewing carrier, to complete an

application. A typical application questionnaire asks if the association is aware of any “facts and circumstances that may give rise to a claim.” This is not a question to answer quickly and without careful thought. If an association marks “NO” to the question, when such facts and circumstances exist, it is providing grounds for a carrier to deny a claim later.

Board members and managers change, they can forget what seemed like a minor problem ten months ago, they may think that a problem has been solved, and then to their surprise a big claim suddenly arises from the ashes like a phoenix and at the worst possible time as predicted by Murphy’s Law. The moral is that it is very risky to postpone notifying a carrier of a claim or potential claim when there is any kind of written or verbal threats or notice from an owner or any kind of public agency that may lead to something more serious. If you are unsure whether something is a claim, it is best to report it, in writing, especially when a D&O or other claims made policy is involved.

Jay W. Hansen is an attorney with Epsten, Grinnell & Howell, APC in San Diego.

He has been a community association attorney since 1979 and has received the CCAL designation for membership in CAI’s College of Community Association Lawyers.

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connect with grie • issue FOUR 2012

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Looking Forward: What’s in Store for 2013

BY Lana Hamadej, LSM, PCAM

L

ooking toward 2013, as the incoming Chapter President, I am excited at the opportunities for the members of our chapter. We are off to a good start with 2013 just around the corner. On October 23, 2012, the Board held a Chapter Strategic Planning Session. We were fortunate to have Crystal L. Wallace, Vice President of Membership and Chapter Relations from CAI National as our facilitator. Prior to our meeting, Crystal distributed a SWOT Analysis Form to the board members asking that we provide input on the Strengths, Weaknesses, Opportunities and Threats of our chapter. The responses involved specifying the objectives of the organization and identifying the internal and external factors that are favorable and unfavorable to achieving the objective.

Using the responses and encouraging us to “Think Big,” Crystal was able to lead us in a thought provoking discussion with the end result being a renewed mission statement and specific goals to be addressed during the upcoming year.

As a result of our efforts, we are proud to set forth our newly adopted mission statement, “To be positive leaders and advocates in the Community Association industry through education and networking for the mutual benefit of our members.”

We will continue to review and monitor our goals in the upcoming year.

I would also like to take this opportunity to introduce our two newly elected members of the board following our

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ISSUE FOUR 2012 • Connect with grie

successful Annual Meeting held in September.

Dori Kagan, CMCA, CCAM-Emeritus is Vice President/Relationship Manager for the HOA Division of US Bank. Dori has been a member of the community association industry for 30 years serving as a community manager and currently in her banking role. Dori previously served on the CAI-GRIE board and is Past President of the Orange County Chapter. When asked what her goals are, Dori stated, “I hope to bring my experience as manager, business partner and past CAI Board President to the chapter to help create policy governance and continue the Board and Committee's great work in elevating the level of educational classes and programs.”

Nick Mokhlessin serves as a Business Developer for ValleyCrest Landscape Maintenance. Nick was a community manager for five years and has been a business partner for two years. His service to CAI-GRIE includes participation on the Business Partner Committee and the Monte Carlo Committee. He has been appointed as Co-Chair of the 2013 Monte Carlo Committee.

When asked what his goals are, Nick stated, “I would like to increase education for the managers on legislation that governs the industry and create an Ethics Committee. I feel that I can offer different perspectives based on my experience as a manager, business partner and board member where I live.”

My excitement for 2013 is increasing and I feel privileged to welcome Dori and Nick to our board.

Lana Hamadej, LSM, PCAM is Vice President at Avalon Management Group, AAMC and is the 2013 PresidentElect for the Greater Inland Empire Chapter of CAI.

GOLF TOURNAMENT 2012

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