Connect Magazine: Issue 2—2016

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 TWO 2016

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connect A PUBLICATION OF THE GREATER INLAND EMPIRE CHAPTER OF CAI

www.cai-grie.org

OFFICERS Dana Mathey, AMS, PCAM........................................................ President FirstService Residential Jeremy Wilson, MBA, CCAM, CMCA, AMS, PCAM ..........President-Elect Associa-PCM/Sun Lakes Country Club Linda Cooley........................................................................ Vice-President Rosetta Canyon Community Association Chet Oshiro................................................................................ Secretary EmpireWorks

Table of Contents

Features 4 Maintaining Common Roof Areas

Departments

11 President’s Message

By Dana Mathey, AMS, PCAM

By Charles Antis

8 The Pros & Cons of Organic Landscaping

12 Promenade Des Arts Photos

By Steven Schinhofen

By Brittany A. Ketchum, Esq.

Jackie Fromdahl.....................................................Painting Unlimited, Inc.

14 Power in Numbers

George Gallanes, CMCA...................................... Sunnymead Ranch PCA

By Robert Riddick, CMCA

18 New Board Member Spotlight Featuring Jackie Fromdahl

Phil Hakopian, CIRMS..................................................................Treasurer Cornerstone Commercial & Personal Insurance Services, Inc. Nancy I. Sidoruk, Esq............................................................Past President Epsten Grinnell & Howell, APC

15 Editor’s Link

BOARD DIRECTORS Greg Borzilleri............................................PCW Contracting Services, Inc.

Cyndi Koester, CMCA, AMS, PCAM....................................Sunwest Bank Kimberly Lilley, CMCA, CIRMS....................... Berg Insurance Agency, Inc. Robert Serdoz................................................ Elite Pest Management, Inc.

20 Ethics and the Community Management Industry

Christy Towner-Quesada, CMCA........................... FirstService Residential

By Jim McCarthy, Sr.

CHAPTER EXECUTIVE DIRECTOR

22 The Real Cost of “No Cost Collection”

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

DJ Conlon, CMCA ADMINISTRATIVE ASSISTANT Ginny Aronson-Hoke EDITOR IN CHIEF Brittany Ketchum, Esq..........................................Beaumont Gitlin Tashjian PUBLICATIONS COMMITTEE

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

26 What Your HOA Board Does for You and the Community

Linda Cooley...............................Rosetta Canyon Community Association Robert Riddick, CMCA......................................... Sunnymead Ranch PCA 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.”

Copyright © 1998–2016 CAI-Greater Inland Empire Chapter.

Advertisers Alliance Association Bank..........................16

Fiore Racobs & Powers APLC...................25

AMS Paving, Inc..............Inside Front Cover

Keystone Pacific Property Management, Inc....23

Association Reserves...................................6

Mutual of Omaha Bank............................11

Beaumont Gitlin Tashjian.............................6

NPG - Nelson Paving.... Outside Back Cover

Berg Insurance Agency, Inc.......................16

Steven G. Segal Insurance Agency, Inc.....24

Diversified Asphalt Products........................7

The Inspectors of Election.........................19

Elias Bros. Contractors, Inc........................19

Union Bank HOA Services........................21

Epsten Grinnell & Howell APC..................17

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 info@cai-grie.org

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 organization so as not to detract from the experience of others seeking to benefit from their membership in the Chapter.

CONNECT WITH GRIE • ISSUE TWO 2016

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BY CHARLES ANTIS

Maintaining Common Roof Areas While certain tasks are perfectly suited for the do-ityourself enthusiast, complex repairs are best left to experienced roofing professionals.

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ISSUE TWO 2016 • CONNECT WITH GRIE

High and Dry Lack of rainfall continues to convince millions of California property owners that there’s no hurry to fix or routinely maintain building exteriors such as rooftops. Particularly for members of communities governed by a homeowners’ association (HOA), it can be difficult for the board or management to justify maintenance costs for the roofing systems of shared spaces like covered parking decks, garages, pool houses and community buildings, which often end up on the bottom of a priority list.

But dry weather and intense UV rays may do more damage than property owners may think.

In temperate climates like Southern California, clay and concrete tile roofs are common. Though heavy and expensive, they offer resistance to insects, mold, decay and fire, but they can crack from age and continual exposure to high heat from sunlight. Once fractured, tiles slip, exposing the underlying roofing membrane to the ultraviolet light, which quickly dilapidates under the heat. Unmaintained tile roofs also allow even the smallest amount of rain to seep into cracks, through wood surfaces beneath and ultimately into interior ceilings.

Costs to replace rotted, rain-soaked wood escalate quickly when

compared to the cost of a simple replacement of a few tiles.

Flat rooftops common in beach communities and throughout California also become compromised if not maintained.

Exposed to a hot baking sun, these types of roofs take on an alligator appearance, with surface cracks and splits occurring due to continual expansion and contraction. When rain penetrates this surface, moisture can spread over the entire rooftop, as there is no slope to encourage runoff. Even asphalt shingles, which come in varying levels of durability, are vulnerable to wind and sun, with the side most exposed wearing 40 percent faster than the others.

Knowledge is Power

Prep, Seal and Encapsulate – To protect roofs, as well as transitions and flashings, air-conditioning ducts and window sills, have them professionally prepped, sealed and encapsulated every year to prevent expansion and contraction, as well as cracks and breaches.

Clean and Clear – Have gutters and roofs cleaned at least once a year and keep drains and scuppers clear to prevent debris from choking waterways and clogging ducts.

Buildup of debris not only causes blockages but also results in rust if wet debris becomes lodged or trapped within metal rainspouts or gutters.

For any roof that is over five years old, maintenance is extremely vital but it doesn’t have to be costly, especially when following these preventative steps:

Repair and Replace – Note any areas on the roof where water collects or pools and replace or repair any slipped or broken shingles, as well as cracked skylights.

Proactively Address Potential Problems – At least once a year, schedule an exterior inspection with a reputable, licensed roofing contractor who understands the multi-tenant housing space, including requirements of HOAs, which can vary from community to community.

Make Safety a Priority – Dry rot – which can be hidden from sight, compromises the strength of wood and can cause roofs to collapse. Even with slight pressure, individual

Continued on page 6 CONNECT WITH GRIE • ISSUE TWO 2016

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Maintaining Common Roof Areas Continued from page 5

planks can fail. To protect wood and ensure personal safety, schedule maintenance checks annually, and protect and seal the wood with durable paint or a protective coating.

Hire a Professional Roofer – While certain tasks are perfectly suited for the do-it-yourself enthusiast, complex repairs are best left to experienced professionals with robust experience working with HOAs. A roofer who documents and memorializes every project can prevent huge liabilities in the future for HOA communities.

Los AngeLes orAnge County InLAnd empIre Kern County CentrAL CoAst

Charles Antis is the founder and president of Antis Roofing & Waterproofing, Inc. Charles is a member of the Greater Inland Empire, Orange County, and Los Angeles chapters of CAI and has served on the Orange County Education Committee for 20 years. (www.antisroofing.com)

A FuLL ServiCe Community ASSoCiAtion LAw Firm General Legal Counsel Governing Document Amendments Enforcement Legal Opinions Contracts Dispute Resolution

BGT Team: Tara Radley, Calvin Rose, Lisa Tashjian, Jeff Beaumont, Brittany Ketchum, Tracy Neal & Lawrence Waldinger

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ISSUE TWO 2016 • CONNECT WITH GRIE

Civil Litigation Enforcement Insurance Bad Faith

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CONNECT WITH GRIE • ISSUE TWO 2016

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BY STEVEN SCHINHOFEN

The Pros and Cons of Organic Landscaping here is a growing concern today over the use of insecticides, herbicides and synthetic fertilizers on community landscapes.

Are neonic pesticides and glyphosate herbicides killing off the global bee population? Do the nitrates and phosphates in synthetic fertilizers harm the environment? How do insecticides impact children and pets who may play in areas recently treated by these poisons?

The debate is ongoing as scientists research these and other issues. And, while the verdict is still out on many of these products, concerned residents are frequently turning to their HOA board members, property management and landscape maintenance companies for answers.

There is no one answer to fit the needs of all communities. But, this general information should help to provide some basic facts concerning the effectiveness and costs of synthetic versus organic treatments for landscaping.

Soil Management

Sustainable landscape management encourages natural ecosystems and the idea that healthy soils support healthy plants. It’s a holistic but time-consuming “bottom-up” approach that lost popularity over the last several generations as applied “top-down” synthetic fertilizers for a quick-fix to make our gardens greener became more popular.

A recent report by Harvard University showed that organic gardening can be implemented over time with phenomenal results. This requires patient cultivation of the soil, feeding it with rich organic materials 8 |

ISSUE TWO 2016 • CONNECT WITH GRIE

Nursery

like mulch, manure and compost that promote the symbiotic relationship between the microorganisms living in the soil and the roots of the plants. The following are a few of the benefits of organic gardening: • This complex ecosystem promotes a healthy system of growth and decay, it enriches the soil’s capacity to retain water, which in turns promotes growth.

• Organic fertilizers, such as manures, compost and products such as PAR 4, (a manufactured organic fertilizer), nourish the soil and feed microorganisms that create long-term, sustainable benefits and can reduce water use.

• Nematodes, fungi, bacteria and protozoa are all necessary components of a healthy soil.

• Protozoa feed on bacteria and fungi, excreting nitrogen, which is absorbed by plants.

Mulch in pots

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CONNECT WITH GRIE • ISSUE TWO 2016

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The Pros and Cons of Organic Landscaping Continued from page 9

Synthetic fertilizers, on the other hand, leach salt and kill microorganisms in the soil. Many contain chemicals, such as phosphorus, that can poison animals, are toxic to fish and invertebrates, and can make their way into our groundwater basins. Synthetic fertilizers are affordable and produce quick results, but do little to enhance the landscape’s long-term health.

Pest and Weed Control

Many of the ingredients that make up organic pesticides and herbicides are items you may find in your kitchen: vinegar, soap, borax, garlic, hot pepper, spearmint, even rhubarb. They are not toxic to humans or pets, but they are also not as effective as synthetic treatments at controlling unwanted weeds and pests that can damage a landscape.

Other organic treatments might include: • Monitoring moisture because inadequate moisture levels can weaken plants and make them susceptible to pest problems.

• Mulching to control weeds, which can also significantly reduce water use.

• Introducing and cultivating beneficial insects which prey on destructive insects.

• Manually removing infected tree and shrub branches.

• Manually removing weeds.

• Organic products Azatrol (a pesticide) and Avenger (an herbicide) have been found to be among the best value in terms of cost and effectiveness.

Cost Comparisons

Many associations, while interested in adopting these and other organic approaches, have been deterred by the added costs, which, depending on the size of the property, can range from between $40,000 to $60,000 a year more.

Organic treatments can cost more than three times the amount of synthetic equivalents on an ounce-perounce basis. Adding to the expense is the fact that organic treatments cannot be diluted, so much more of the product is needed for just one application. Some examples of cost comparisons are as follows: • Pesticides: Azatrol ($270 per gallon) versus Talstar ($70 per gallon) • Herbicides: Avenger ($260 per 5 gallons) versus Roundup ($100 per 5 gallons) • Fertilizers: PAR 4 ($33 for 50 lbs.) versus 16-6-8 ($22 for 50 lbs.)

Other considerations include the following: • Organic treatments do not generally kill weeds to the roots and need to be sprayed more frequently, which adds more costs in both product and manpower.

• Manual treatments, such as weeding, are laborintensive.

• Organic treatments provide a weaker defense against weeds and pests that can harm or destroy trees and other landscaping. This can result in costly long-term damage.

The Right Approach

The numbers can be discouraging, but converting to organic materials doesn’t have to happen all at once.

Sustainable landscape companies will work with their clients to develop a plan that uses both organic materials in high-traffic areas and spot treatments of synthesized pesticides and herbicides only as needed. (The synthesized treatments are generally not considered a health threat after they are dry.)

If you’re interested in adopting organic treatments for your properties, seek out a landscape maintenance company with a history in sustainable landscape practices. They will understand the science behind both organic and synthetic treatments and should be able to create a balanced approach to landscaping to suit everybody’s needs: minimizing the use of toxic chemicals while keeping your landscape budget in the black.

Steven Schinhofen is President of Harvest Landscape Enterprises, Inc., a sustainable landscape maintenance company serving communities in the Inland Empire and Orange County. Visit www.hlei.us.

Logs to mulch

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ISSUE TWO 2016 • CONNECT WITH GRIE

PRESIDENT’S MESSAGE Team CAI has been working hard to achieve our mission statement. Our mini trade shows have shown great enthusiasm from our members in our sold-out attendance, along with our sold-out education Board Essentials classes. In March, our speaker gave us insight and steps to take to protect Dana Mathey AMS, PCAM A Regional Director for FirstService Residential and 2016 CAI-GRIE Chapter President.

you and others in our communities and the work place, if there is a hostile environment. In April, an attorney panel provided answers to questions and issues that come up daily in community associations.

pick the right tools for

Arts, showcased the Great Gatsby era, local artisans, live entertainment, cigar

your next project.

lounge, hors d’oeuvres, and dancing. It was enjoyed by all. All I can say is

With community association

“wow” to the committee for putting on a very successful first time event. I

lending expertise like ours,

The Business Partner Committee put on a wellorganized IE Olympics at Dave & Busters. Attendees were very creative in their “theme your team.” Everyone enjoyed shooting hoops, horse racing, trivia questions and networking. Our new event this year, Promenade des

am looking forward to next year.

Our chapter was congratulated at the National conference in Florida, for being selected to receive an Achievement Award for its 25th Anniversary President’s Theme submission in the Chapter

Unity is strength … when there is teamwork and collaboration, wonderful things can be achieved.

you’ll get the job done right.

take that to the bank.

– Mattie Stepanek

Management & Development category. I’m sure you all know this was past President Nancy Sidoruk’s 25th anniversary theme for 2015. Go Greater Inland Empire Chapter!

I encourage everyone to stay connected with our chapter by liking us on Facebook and saving GRIE’s website in your “favorites.” Our PR Committee posts weekly, keeping us informed on upcoming events, current events, and more.

This issue of Connect Magazine is in color! We are featuring articles on organic landscaping, preventative maintenance, Leg Day in Sacramento, and more. Our Magazine Committee is at work keeping us educated about our industry.

Brendan Concannon Regional Account Executive 619-261-6643 Toll Free 866-800-4656, ext. 7480 brendan.concannon@ mutualofomahabank.com

Our chapter membership increases monthly and we are at an all-time high. We need your feedback on your membership experience and how we can improve the chapter. Reach out to us through the chapter office or look for the board members at events and trade shows. Thank you for your

mutualofomahabank.com

participation in the chapter.

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CONNECT WITH GRIE • ISSUE TWO 2016

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THIS YEAR’S LEGISLATIVE DAY AT THE CAPITOL

Power in Numbers

By Robert Riddick, CMCA

The visits by our members reaped valuable feedback as well as engaged dialogue from our legislators and staff.

O

n April 17-18, members of all eight California chapters of CAI met in Sacramento to participate in this year’s CAI-California Legislative Action Committee’s Legislative Day at the Capitol (Leg Day). And, as goodfortune would have it, I was one of those chapter members who made the journey there this year as part of the Greater Inland Empire chapter.

Looking back on those two days, I now realize that there really is “power in numbers” (which I’ll explain later) when it comes to raising collective voices in support, or in opposition to, the consideration of pending bills before the State’s legislative bodies.

But, before I get ahead of myself in describing how this year’s event went, let me first describe (and, especially for those members who weren’t able to attend this year) some 14 |

ISSUE TWO 2016 • CONNECT WITH GRIE

of the activities that always make this journey to the Capitol more than just a “visit.”

As background, our annual event (this year being the twenty-third time we’ve done this) encompasses several elements that all culminate with our in-person visits to the offices of our legislators. This year there was an even stronger emphasis on educating attendees before our visits, about those specific pending bills that were identified as having a significant impact on the qualityof-life for those of us who identify as residents, managers and business partners within the common interest communities that make up the over 50,000 (and counting) associations within California.

That first element of Leg Day involved going through an important and equally beneficial education

process regarding what bills we needed to concentrate our efforts on.

Led by our legislative advocate, Skip Daum, we were all taken through the process of analyzing, understanding and ultimately arriving at taking a position on how we would advocate for certain bills that were currently being considered for adoption by our legislators. Of particular interest, and where we concentrated our efforts, were two bills, AB 1720 (sponsored

by Assemblyman Don Wagner), and AB 1799 (sponsored by Assemblyman Chad Mayes).

The first bill, AB 1720, deals with allowing association members to bring a non-member with them to speak for, or represent them at, association board meetings. This could result in anyone, even an attorney, showing up at a board meeting, and then being given the right to address the

board on behalf of the member being represented.

The second bill, AB 1799, would allow for the bypassing of the need to distribute election related voting material, i.e., ballots and envelopes, when there is a presumed “uncontested” (where there is an equal number of or fewer candidates than there are open seats) board election.

Both bills were discussed, including most importantly, how their passage would or could impact residents of common interest communities. Skip, along with members of the CLAC task forces that were assigned to doing the critical legislative analysis of the bills, presented to all of us the recommendations and guidance on the positions to take on each bill.

This was critical to the success of our own lobbying efforts we would employ when we made our actual visits to our legislator’s offices. And, driven primarily by the exhaustive work of CLAC, Skip, and the CLAC task forces, we were well-equipped to “make our cases” before our representatives at the Capitol. And that’s exactly what we did.

Each member of the CAI chapters present had the opportunity to meet with their individual state representatives, or their staff members, if the representative was not able to meet personally. Everyone did exactly that, and everyone explained CAI’s position on both the targeted bills (AB 1720 and AB 1799). Without exception, the visits by our members, reaped valuable feedback as well as engaged dialogue from our legislators and staff.

The second element of our visits centered on the sharing of feedback and dialogue that took place with our legislators. Meeting back at our host hotel – Hyatt Regency Sacramento – after we all returned from our visits at the Capitol building, Skip polled all of us on how each visit went. The information shared among us proved to be invaluable to him in his being

EDITOR’S LINK Change may be the only constant in life.

Community leaders are constantly faced with the task of confronting ongoing changes within their community associations, and tackling them headon. This issue of Connect magazine takes a look into the challenging decisions and compromises that community leaders are faced with in anticipating and confronting changes in the law and to the Brittany A. Ketchum, Esq., an associate attorney with environment. In this issue, we discover the costs and Beaumont Gitlin Tashjian, benefits of using organic landscaping treatments, as has devoted her career to representing common well as the benefits of being proactive in protecting interest developments.

She can be reached at our rooftops against this summer’s sun rays. We also bketchum@bgtlawyers.com. dive into some of the legal challenges community associations are facing, with respect to the “no cost collection” model.

In keeping with our Chapter’s 2016 motto, “Team We Can,” we hope that the know-how and array of particularized experiences from our unique authors will give our readers insight into some of the common concerns of community association populations, and how to conquer them. With these articles, our readers can learn from both the mistakes and expertise of the authors, and apply them effectively and efficiently to their own lives.

It is my sincere pleasure to serve as your 2016 Editor of Connect magazine.

As part of our team, we invite you to continue to participate by sharing ideas for magazine content or contributing articles on vital issues. Our goal is to give you the answers to the issues that mean the most to you. Together, we can improve our individual committees and bring positive change to our industry as a whole.

able to fine tune his lobbying efforts even more on the two targeted bills.

We were also, as chapter members, able to take that same information with us to be shared back with our individual chapters, and then using it to encourage “grassroots” responses from them, on an as-needed basis in the future, especially regarding the two bills in-question.

The third element of Leg Day for almost everyone is the opportunity to network with the people who work ‘behind the scenes” on behalf of our legislative advocacy efforts. That was accomplished by CLAC sponsoring what is known as our annual “Meet the Delegates” dinner. Attending the dinner provided all of us the chance to personally meet each of the Delegates of CLAC, all of the chapter Liaisons,

all of the chapter Executive Directors, and of course, our on-site advocate, Mr. Skip Daum, set in an informal environment that lent itself to creating a lasting sense of determination for sustained association advocacy. The fact that every single homeowner, manager and business partner present participated on a voluntary basis only underscored the true dedication and commitment undertaken by all in attendance towards doing everything possible to assure the best quality-oflife for those millions of us who reside in common interest communities throughout our great state.

I mentioned at the beginning of this article that there is “power in numbers,” and that I’d explain what I meant by that. Here it is: as a result of Skip’s persistent efforts at

Continued on page 16

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Power in Numbers Continued from page 15

lobbying on our behalf, along with the heightened visibility of our interests capped by our personal visits to our legislators on Leg Day, and with the help of the outreach by several of our business partners in facilitating the ability to respond quickly to “grassroots” calls for action, as of this writing we have seen the defeat of AB 1720, and the success of AB 1799.

Both outcomes we can only consider another extraordinary example of the expression “power in numbers.” Truly amazing!

Robert is the current President of the Sunnymead Ranch PCA, and past GRIEChapter President as well. He is also a past member and Chair of the CAI National CAVC committee, and is a past CAI National Board of Trustees member. He is also a past member of the GRIE-Chapter Board of Directors, and currently serves as the CAI-GRIE chapter CLAC Liaison.

AAB_Innov_CAI-GRIE_HalfPg_Cardoza_120215.pdf 1 12/2/2015 5:59:37 PM

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CONNECT WITH GRIE • ISSUE TWO 2016

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New Board Member Spotlight Jackie Fromdahl, Business Partner

T

he 2015 annual election resulted in four new members being elected to the Chapter board of directors. Welcome to the board Jackie and thank you for being so gracious

to take the time to answer these questions so our readers will get to know more about you.

Linda – Thank you for the opportunity to ask you a few questions. Why did you decide to run for our chapter Board?

Jackie – Although I have not served on another board of directors before, I have filled other roles in other chapters. This is the next step in my involvement for the chapter. I have learned so much since joining the chapter and would like to continue learning and grow in this chapter by volunteering my time and efforts. Without the chapter I would not have been able to meet some of my best clients.

This is the only chapter and organization that I have a desire to serve on. My role as a board member will contribute to the chapter by adding valuable input, positive ideas and a voice for all other members to be heard.

Linda – Now that you are elected to the board, what would you like to see accomplished on your watch, as a whole and for our chapter?

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Jackie – During my term as a board member, I would like to see continued growth of the chapter as a whole and help develop ideas that will take the Greater Inland Empire Chapter to an even higher level by being instrumental in bringing about growth and change and by bringing a fresh, new perspective. In addition, some small changes could be made in the chapter, being open-minded and not set in my ways is instrumental in bringing changes and ideas to light. I would like to see the communication channels between board members and other leadership roles of the chapter more open and clear as well.

Linda – What do you bring to the board and how will that not only benefit the chapter, but overall help you to accomplish the goals you mentioned earlier.

Jackie - I have been a member of Community Associations Institute – Greater Inland Empire chapter for four years as a business partner.

In 2013, I was our chapter’s Rising Star. I have also been a committee chair for the golf and PR committee and served on the Business Partner, PR, Golf, Monte Carlo and Billiards committees. I am currently the Director of Operations for my company, so looking at the larger

picture and making tough decisions, as well as managing many different ideas and people, is also in my day to day responsibilities. I am very creative and feel I can contribute to help the chapter advance in many areas by bringing a fresh, new perspective. I have always been in a leadership position in any aspect of my life.

Linda – What do you see as the biggest challenge for the new board?

Jackie – Membership can always be increased. I would like to see more members of the companies who do support the chapter in attendance.

In addition, taking opinions back to the board is my responsibility as members opinions are important, however, most members don’t understand the logistics of the chapter.

Linda – Thank you for your time today Jackie, and for your time and dedication to the chapter. We look forward to supporting you in your efforts to reach your goals!

Linda Cooley, Vice President Rosetta Canyon Community Association and CAI-GRIE, Board of Directors.

Jackie is the Director of Operations at Painting Unlimited, Inc., Committee Chair and active member of multiple CAI California chapters.

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CONNECT WITH GRIE • ISSUE TWO 2016

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Ethics and the Community Management Industry

By Jim McCarthy

Business Ethics can be defined as the critical, structured examination of how people and institutions should behave in the world of commerce.

In particular, it involves examining appropriate constraints on the pursuit of self-interest, or profits, when the actions of individuals or firms affect others.

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ISSUE TWO 2016 • CONNECT WITH GRIE

T

he issue of ethics in the community association management industry is often talked about. This seems to be the result of a large number of instances of a lack of ethics or outright fraud that has taken place in the community association industry. It is likely that everyone has heard of some type of infraction that has been committed by a homeowner association board member, a manager, or management company for violating the trust of its community association members or association client. These are the types of situations that garner the most headlines and become the lead stories on the evening news. Such violations are another black mark against homeowner associations and/or association management companies.

Clearly, this is not a problem that is restricted to community associations or management companies. Over the last few years, we have all seen numerous occasions where ethics were not applied by mortgage lenders, Wall Street brokers and major American corporations. It is unfortunate that it has become more common place for individuals to put themselves ahead of their client or the company which employs them. This sense of entitlement that we have seen develop in many of our business practitioners sends the wrong message to current and future community association managers who look to this as a true profession, not just a job. It is

relationships that the interests important to remember In order for our industry to continue of our clients are placed first. that ethics are what define to move forward and to have all Today’s community us as individuals. The association manager faces a relationship of a community community association managers be very difficult task in managing association manager to a considered professionals, they must the community association’s homeowners association is adopt professional standards. needs and requests. In order as the managing agent of for our industry to continue to the not-for-profit corporation move forward and to have all (association) and as such, your own personal ethics is always a community association managers be it is important to remember in these good thing; therefore, keeping the considered professionals, they must agency relationships that the interests concept of ethical behavior in the adopt professional standards.

Those of the clients are to be placed first. forefront of your thinking. standards include conducting the Even in some cases where it might As a child, you were probably business of the association in a very be detrimental to the individual, the taught the difference between ethical manner. clients’ interests always come first. right and wrong and by now have CAI offer classes on ethics, not only established your own moral code. To for the purpose of teaching ethics, but put it simply, “If it does not feel right also to remind managers of several in your gut, more often than not, it examples that can be utilized as is not right.” This is a very simple Jim McCarthy is bench marks in applying ethics. To be barometer to use in determining the President of reminded specifically of those things Condominium whether an action is ethical or not.

Management Services. that are considered to be unethical Managers must remember that as well as to be reminded of those being responsible for someone else’s things that are considered to be ethical money is probably the most sacred is a good idea. A refresher course on trust that can be placed upon him or situations that can bring into question her. It is important in these agency

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CONNECT WITH GRIE • ISSUE TWO 2016

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THE REAL COST OF “NO COST COLLECTION”

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

Under a “no cost collection” model, a collection company assists an association with collecting delinquent assessments, while the collection costs and fees charged by the collection company are billed directly to the delinquent owner.

T

he “no cost collection” model has come under attack in recent years, culminating most recently in the collection

case, Hanson v. JQD, LLC d/b/a Pro Solutions, (N.D. Cal., 2014) (Hanson v.

Pro Solutions). California community associations and the common interest development industry at large have watched this case unfold, beginning with a homeowner filing a lawsuit against an assessment collection 22 |

ISSUE TWO 2016 • CONNECT WITH GRIE

services provider, and culminating in takeaways that will undoubtedly resonate throughout California.

Assessments have been termed the “lifeblood” of an association.

Assessments are the sole source of income for associations, from which association expenses are paid, including daily operating expenses to common area maintenance and repairs. Boards have a fiduciary duty to levy and collect assessments.

Like most businesses, community associations and the boards that run the day-to-day business of an association seek out services at the best price, which in some cases may mean the lowest price. As a result, delinquent assessment collection services at no cost have appealed to community associations since they are non-profit corporations operating on a zero budget. Hanson v. Pro Solutions,

however, has shown the potential real cost of “no cost collection.”

In Hanson v. Pro Solutions, a Northern California association hired Pro Solutions, an assessment collection company, to assist with collecting delinquent assessments under a “no cost collection” model.

Under a “no cost collection” model, a collection company assists an association with collecting delinquent assessments, while the collection costs and fees charged by the collection company are billed directly to the delinquent owner.

Collection fees and costs are incurred at varying stages throughout the collection process. California Civil Code Section 5650 allows an association to recover reasonable collection costs including attorney’s fees incurred in collecting delinquent assessments. If and when the owner pays the delinquent assessments, he/ she also pays the collection company’s fees and costs. The collection process is essentially at “no cost” to the association. There may be instances, where, if the collection company does not collect, then the association may not be responsible for paying any collection costs and fees. Homeowner Hanson sued Pro Solutions alleging, among other things, that she was charged collection fees and costs for which the association did not incur, nor pay, pursuant to the “no cost collection” model.

Critical in the Hanson v. Pro Solutions case was what collection costs, if any, were incurred by the association.

Under a literal interpretation of the “no cost collection” model, if no collection fees and costs are incurred by the association, then it would follow that there would be no collection fees and costs for which a delinquent owner would be billed. The Hanson court stated: “the HOA incurs no costs by hiring Pro Solutions to collect from delinquent homeowners like Hanson.”

The court also stressed: “Pro Solutions offers its collection services free of charge.” Again, it would follow

that free to associations must mean free to delinquent homeowners. If this is true, can “no cost collection” be expected to continue?

Hanson v. Pro Solutions has since been settled, which means there was no court decision on the “no cost collection” model. However, the Hanson court did caution: “California courts would likely find such charges to be unlawful, meaning Pro Solutions had no right to attempt to collect these fees . . ..” If and when subjected to another challenge, the “no cost collection” model may likely be found to violate provisions of the California

Civil Code, and applicable federal and state fair debt laws. Where does this leave the “no cost collection” model? After analyzing the Hanson case, it would be hard to imagine an association actively seeking out delinquent assessment collection services on a “no cost collection” basis. Sure, the association was not named as a defendant in Hanson v. Pro Solutions, but in a subsequent lawsuit, an association may be sued thereby exposing the association to liability.

Boards must come to understand, whether the association hires Continued on page 24

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The Real Cost Continued from page 23

a collection company, an attorney, or contracts for its management company to perform delinquent assessment collection services, there will be collection fees and costs associated with collecting delinquent assessments.

With this said, there are alternatives to the “no cost collection” model, such as:

• “Pay-as-you-go,” whereby collection fees and costs are paid by an association as they are incurred. The contract between an association and the delinquent assessment collection services provider should clearly indicate that fees and costs are incurred and due and payable when billed; or

• No upfront collection fees and costs, in which collection fees and costs are advanced on the association’s behalf by the delinquent assessment collection services provider, and paid at the conclusion of the collection process. The services provider may first look to the delinquent owner for payment of the collection fees and costs (as allowed by statute), but if not paid by the delinquent owner, then the collection fees and costs are paid by the association.

In either case, the association is ultimately responsible to pay fees and costs that have been incurred. This means that even if the association does not recover any of the delinquent assessments from the delinquent owner, the association must pay for collection fees and costs that have been incurred on behalf of the association. Under the alternative pricing models, the association does have the ability to seek reimbursement from delinquent owners after the association has paid collection fees and costs to the services provider, whether billing the collection fees and costs back to an owner’s assessment account or suing the owner.

There are unfortunately very few things in life that are free, and “no cost collection” is not one of them.

Calvin S. Rose, Esq. and Tracy R. Neal, Esq. are senior associate attorneys with the law firm Beaumont Gitlin Tashjian.

Beaumont Gitlin Tashjian represents common interest developments (homeowner associations) throughout California in all aspects of community association law.

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ISSUE TWO 2016 • CONNECT WITH GRIE

Oct. 21, 2016 Indian Wells, CA

CAI

Legal

Forum CALIFORNIA COMMUNITIES

A one-day event for California community managers, association board members and homeowners sponsored by Community Associations Institute (CAI)—an international organization that provides information, education, and resources to the homeowner volunteers who govern communities and the professionals who support them.

Critical updates on important legal requirements that impact how you work.

Essential information on key legal developments that impact where you live.

Hosted by CAI’s eight California chapters and the California Legislative Action Committee

CAI Members $135 | Register by Sept. 30 $155 | Register after Sept. 30 ($25 off for the 3rd and additional registrant from same association or company) Registration is open visit www.caionline.org and click on Learning Center

CONNECT WITH GRIE • ISSUE TWO 2016

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What Your HOA Board Does for You and the Community

Y

our community has a board of directors to help your HOA run smoothly. The board consists of volunteers who execute a wide variety of tasks you may not be aware of; however, their work affects every single resident.

One of the most important things the board does is create and enforce the association rules. While some residents may not like being told what they can and can’t do, ultimately the board is looking out for the greater good. By enforcing the rules, the board is doing its best to keep property values up and conflicts down. Of course, the board wants to make sure the rules are beneficial for the majority – and hopefully all – residents. You are welcome to raise concerns about the rules at open board meetings.

Another major responsibility of the board is to collect assessments from homeowners. Collecting this money is important for the stability of the association, because the assessments pay for the common elements enjoyed by all residents. Assessments also help to replenish the reserve funds, which pay for any major repairs the association may need. The board is responsible for the association’s finances, and collecting assessments is how it ensures that the association remains solvent.

Finally, the board acts on behalf of the association by hiring managers, attorneys, contractors and other professionals who help better the association. Board members also help conceive and lead many of the projects that will improve the HOA. While it’s a big job, board members are happy to serve the residents and make the community a great place to call home. So why not learn more about what these volunteers do by talking to your board members, attending an open board meeting or even running for a seat on the board during the next election? The more people looking out for the greater good of the community, the stronger it will be.

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