Page 1

2014 ECHO Seminars p.7

Fiduciary Responsibility of Association Directors: Practical Application of Legal Theory p.8

Under the Surface: Hidden Issues in Construction p.18

Happy Trees, Happy Homeowners: Planting the Right Tree in the Right Place p.22

Funding Litigation


February 2014

Serving Community Associations

Fiduciary Responsibility: Practical Application p.8

ECHO 1960 The Alameda STE 195 San Jose, CA 95126 Change Service Requested

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Fiduciary Responsibility of Association Directors The ability of volunteer directors to effectively perform their fiduciary duties will ultimately determine the success of common interest developments as a form of housing. The challenge to each director is to exercise good leadership to avoid such a downward spiral of economic and political self-destruction.


Under the Surface Buildings are always talking to us…it just may take a “building whisperer” to hear what they are saying. Of the many things buildings do, protecting us from the environment is key. Many exterior finishes will wear and weather from age and exposure, but different clues can indicate problems below the surface.


Happy Trees, Happy Homeowners Everyone loves a lush, green landscape filled with beautiful, healthy trees. However, sometimes trees seem like more trouble than they are worth. Constant building clearance pruning, messy sidewalks, pavement damage, dying trees… how can this all be avoided?


Funding Litigation The question of how a common interest development (CID) will pay for litigation must be decided by the board when the need for litigation arises. Various options may be available, depending on the situation: insurance, contingency, operating funds or temporary borrowing from reserve funds.

The ECHO Journal is published monthly by the Educational Community for Homeowners. The views of authors expressed in the articles herein do not necessarily reflect the views of ECHO. We assume no responsibility for the statements and opinions advanced by the contributors to the magazine. It is released with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. Acceptance of advertising does not constitute any endorsement or recommendation, expressed or implied, of the advertiser or any goods or services offered. We reserve the right to reject any advertising copy. Copyright 2014 Educational Community for Homeowners. All rights reserved. Reproduction, except by written permission of ECHO is prohibited. The ECHO membership list is never released to any outside individual or organization. ECHO 1960 The Alameda, Suite 195 San Jose, CA 95126 408-297-3246 Fax: 408-297-3517 Office Hours Monday-Friday 9:00am to 5:00pm Board of Directors and Officers President David Hughes



News from ECHO


2014 ECHO Educational Calendar


Marin Educational Seminar — Saturday, February 8th.


Santa Cruz Educational Seminar — Saturday, March 1st.


South Bay Educational Seminar — Saturday, March 15th.


Wine Country Educational Seminar — Saturday, March 22nd.


ECHO Bookstore


ECHO Event Calendar


ECHO Volunteers


NEW at


Advertiser Index


2014 Legislative Overview

Vice President Karl Lofthouse Treasurer Diane Rossi Secretary Vacant Directors Jerry L. Bowles Stephanie Hayes Robert Rosenberg Brian Seifert Steven Weil

John Garvic David Levy Kurtis Shenefiel Wanden Treanor

Executive Director Brian Kidney Director of Marketing & Membership Vacant Director of Communications Tyler Coffin Legislative Consultant Government Strategies, Inc. Design and Production Design Site ECHO Mission Statement Serving Community Associations

February 2014 | ECHO Journal


news from ECHO

News From ECHO February 2014 Our 2014 seminar season is getting under way. We had a great luncheon in San Francisco in January with Steve Weil, Esq., Berding | Weil LLP, Bruce Ratliff, Action Property Management, and Stephanie Hayes, Esq., Hughes Gill Cochrane P.C. They spoke about Managing the Manager and Managing the Lawyer, which really means how to get the most from your key professionals without breaking the bank. I am pleased that they have agreed to reprise the presentation at one of our Annual Seminars. Stay tuned for details. On February 8 we will host our Educational Seminar in Marin, at the San Rafael Embassy Suites, where we will hear from three veteran attorneys, David Feingold, Esq., Wanden Treanor, Esq. and Glenn Youngling, Esq. Their presentation will bring us “Back to the Basics” covering the New Davis-Stirling Act, issues stemming from Fiduciary Duty, the Open Meeting Act, new Case Law, and of course a lively Q&A Session. March 1st we will host our Santa Cruz Seminar at the Paradox Hotel, where we will break into groups to dive into “Troublesome Issues” with professional experts in three disciplines. This is where you can delve into real life problems facing your community and get real life suggestions on how to best resolve them. We will also hear about the impending drought situation that is particularly troublesome for Central Coast residents whose groundwater is being contaminated by sea salt. We will be in the South Bay on March 15, at the Campbell Community Center, where it’s all about the lawyers. For the price of a ten minute consultation, you will get three hours of legal advice on the issues you care most about and need to know. And on March 22 the Wine Country Seminar will be held at the Fountain Grove Inn in Santa Rosa. There we will hear from lawyers, landscapers and managers talk about laws, lawns and maintenance. New Davis-Stirling will be explained; learn how to keep your valuable trees and beautiful landscapes in this wacky weather year; and harmonizing expectations with your manager means a happier and healthier community. Finally, please save on your calendar our Annual Seminars in Oakland on May 17 and San Jose on August 23. We will once again bring you over a hundred professional exhibitors and expert speakers, delivering critical information and advice for you and your community. Our Educational Seminars are your best opportunities to become well informed about how to manage your association and promote a healthy community. I look forward to seeing you at one or more of our upcoming seminars. Best,

Brian Kidney Executive Director Brian Kidney Executive Director


2014 ECHO educational calendar

ECHO Seminars Now there’s one near you. If you’ve ever wished that ECHO would hold a seminar closer to your association, chances are that we’ll be nearby during 2014. Don’t miss an opportunity to get the education you need with guidance from some of California’s top HOA attorneys and professionals. Take a look and mark your calendar. We can’t wait to see you there!

Santa Rosa


Marin Walnut Creek

Register today!

Oakland San Francisco

Online:; By Phone: 408.297.3246

San Jose

Feb. 8

March 1

March 15

Marin Educational Seminar (see page 13)

Santa Cruz Educational Seminar (see page 17)

South Bay Educational Seminar (see page 29)

Embassy Suites, San Rafael

Hotel Paradox, Santa Cruz

Campbell Community Center, Campbell

March 22 Wine Country Educational Seminar (see page 33) Fountain Grove Inn, Santa Rosa

Campbell Santa Cruz

Fresno Monterey



May 16-17 May 31 June 14 August 22-23 October 4 October 18

ECHO Oakland Fresno Educational Seminar Sacramento Educational Seminar ECHO San Jose Monterey Educational Seminar Walnut Creek Educational Seminar

February 2014 | ECHO Journal



FIDUCIARY RESPONSIBILITY OF ASSOCIATION DIRECTORS Practical Application of Legal Theory By Jeffrey A. Barnett, Esq.


he law of fiduciary responsibility can be viewed as having two purposes. The first is moral or educational in nature. The law sets a standard for appropriate conduct of association directors. It is intended to guide proper conduct and avoid inappropriate actions. The other role of the law of fiduciary duty is to act as a practical tool for restitution. If a homeowners association is damaged because of a breach of fiduciary duty by the director, the law affords a remedy to recover the resulting damages.

February 2014 | ECHO Journal



wealth of resources are available to directors to assist in understanding and meeting their fiduciary responsibilities. Books, pamphlets, magazines and newsletters are one source of information. Professional advisors, including attorneys, accountants, reserve study consultants, engineers, architects, insurance brokers and community association management consultants are among the paid advisors who may be engaged to advise on either a narrow issue or more broadly to help directors understand and comply with their legal standard of care. The ability of volunteer directors to effectively perform their fiduciary duties will ultimately determine the success of common interest developments as a form of housing. While there are widespread examples of successfully run subdivisions, there are unfortunately also well known instances of leadership failures where homeowners associations are in political turmoil, financial collapse and physical deterioration. The challenge to each director is to exercise good leadership to avoid such downward spirals of economic and political self-destruction.

Recipes for Success and Failure From the legal standpoint, directors incur liability when they breach the standard of care to which they are held under the statutory and case law which are discussed below. In reality, however, suits for breach of fiduciary duty can be viewed as arising from a lack of leadership and management skills by the board of directors. It is appropriate, therefore, to pause and consider the characteristics of successful leadership and management. 10

In successfully run homeowners associations, members of the board of directors possess good communication skills, carefully plan in advance for the association’s needs, make good judgments based on sound decision making practices, delegate work to qualified committees or advisors, exercise initiative and independent thinking, and work well together as a team. In contrast, political and fiscal failures often result from the acts or omissions of boards of directors lacking good communication skills, procrastinating necessary work, making bad judgments without seeking input from committees or advisors, stagnating for lack of initiative, and political stalemates caused by dysfunctional personal relationships among the board members. From this perspective, the exercise of fiduciary duty flows naturally from effective business management, and it is the breakdown of good management practices, and the lack of skilled leadership, that breeds claims for breach of fiduciary duty.

What is Fiduciary Duty Fiduciary duty is a standard of care which inheres in a legal relationship of trust and confidence between one in a position of power, dominance or authority, and another who is dependent on the proper exercise of that authority. For example, fiduciary duty exists in relationships between directors and their corporation, trustees and their trusts, and attorneys and their clients. Inherent in fiduciary duty is the responsibility to act in good faith and candor, the duty to act in the interests of another, the requirement to avoid self-dealing transactions, the prohibition against exerting undo pressure and the need to act with the knowledge and consent of the “beneficiary”. The law imposes fiduciary responsibilities to ensure that power is exercised responsibly. Directors must act in the best interests of the corporation, and not exploit their position of power for personal gain or advantage. No one argues with the soundness of these principles in the abstract. Experience demonstrates, however, that directors can become paralyzed in the stressful situation where the responsibility to act in the best interests of the corporation conflicts with personal or emotional needs, such as the basic

human need for personal approval from one’s neighbors and friends. Enforcing the governing instruments, properly funding the financial needs of the association, or pursuing causes of action for defective construction potentially place the director in the position of controversy and criticism. The good people who volunteer to serve their community through election or appointment to the board of directors are often unprepared for the emotional and political crossfires that can easily arise in the performance of these duties. Even the anticipation of such controversy is sufficient to keep many directors from taking difficult short term actions that are important to the long term well being of the homeowners association. The new Davis-Stirling Act effective January 1, 2014 recognizes the fiduciary responsibilities of directors as addressed in the Corporations Code and goes further in specifying specific instances in which a director must recuse himself from deliberations and voting on an issue. These are:

1 2 3 4 5 6

Discipline of the director or committee member. An assessment against the director or committee member for damage to the common area or facilities. A request, by the director or committee member, for a payment plan for overdue assessments. A decision whether to foreclose on a lien on the separate interest of the director or committee member. Review of a proposed physical change to the separate interest of the director or committee member. A grant of exclusive use common area to the director or committee member.

Non-Profit Corporations Under California Law California law varies from the strict trustee standard of care for directors of non-profit mutual benefit corporations. For example, certain transactions between the director and the homeowners association may be valid even though a seated director has a material financial interest in the transaction. Corporations Code Section 7233 imposes certain limitations on self-dealing transactions. However, self-dealing transactions are legally inadvisable although technically authorized under specific circumstances. They are also politically unwise and reflect poorly on the overall board of directors. California law specifies a standard of care for corporate directors of non-profit mutual benefit corporations. Under Section 7231(a) of the Corporations Code, a director must perform his or her duties, including duties as a committee member, in good faith, in a manner the director believes to be in the best interests of the

corporation, and with such care, including reasonable inquiry, as an ordinarily prudent person in like circumstances would use under similar circumstances. Compliance with this standard of care immunizes the director from legal liability for alleged failure to perform the individual’s duty as a director. California law does not require that directors make what ultimately proves to be the “right” decision, only that the action be undertaken in good faith, in the manner the director believes to be in the best interest of the corporation, following reasonable inquiry, all to the extent that an ordinarily prudent person would use under similar circumstances in the conduct of business. However, the business judgment rule is not a shield against all liability. A director may be liable for acts or omissions, regardless of the director’s honesty and good intentions, if the director acts in ignorance without exercising reasonable inquiry, or simply acts without the care and skill of an ordinarily prudent person. Beyond the business judgment rule incorporated in Section 7231, the Corporations Code provides further legal

protection under the “safe harbor” rule of Section 7231(b), if a director makes decisions in reliance on information, opinions, reports or statements by corporate officers or employees whom the director believes to be reliable and competent in the matter, or attorneys, accountants or others with respect to those matters in which the director believes such persons to be competent. Further protection is given to directors of homeowners associations under Civil Code Section 5800. This statute provides that volunteer directors and officers have no liability, in excess of insurance, for bodily injury, emotional distress, wrongful death or property damage, provided that the subdivision is exclusively residential, that the director has no developer or lender affiliation, that the director is either a tenant or owner of not more than two interests, that the director serves without compensation, that the act or omission was within the scope of the association duties of the officer or director, was performed in good faith, and was not willful, wanton or grossly negligent. A further condition for this immunity is that the association

February 2014 | ECHO Journal


maintains general liability and errors and omissions insurance policies of One Million Dollars ($1,000,000) or more if the subdivision has one hundred and one (101) interests or more, or alternatively at least Five Hundred Thousand Dollars ($500,000) if one hundred (100) or fewer interests are involved.

Meeting the Test of Leadership Underfunded Reserves Aristotle recognized 2,000 years ago that an individual must have the virtues of courage and temperance to achieve the welfare of others. He wrote that courage means facing pain. The challenge of leadership in difficult situations is confronting one’s neighbors and friends, imposing financial demands on oneself and one’s neighbors, assuming the risk of failure in the controversy, and avoiding the lure of procrastination. In the specific case of funding reserves, the director must remain focused on the best interests of the corporation. Loyalty

to the corporation means subordinating personal objectives and needs to the financial requirements of the association. In this regard, Civil Code Section 5600(a) explicitly provides that the homeowners association shall levy regular and special assessments sufficient to perform its obligations under the governing documents and the DavisStirling Act, California Civil Code Section 4000 and following. Where the financial needs of the association appear to be underfunded, directors may wish to engage a reserve study firm and a funding study preparer, to evaluate the major components which the association is obligated to maintain and repair, and determine appropriate sums for proper maintenance, repair and replacement in the future. Reliance on the advice of a committee, treasurer’s report, accountant or reserve study expert in this regard will bring the director within the “safe harbor” protections of Corporations Code 7231(b). The critical test of leadership is moving from the stage of reasonable inquiry and deliberation to concrete action. This requires formulating and implementing a plan, after due consideration of legal funding options and alternatives, which might include

regular assessment increases, considering special assessments with and without membership approval, and bank loans. The board must then educate the membership regarding the board’s decision making process, and actively advocate the membership vote necessary to implement the board’s plan.

Meeting the Test of Leadership Construction Defects Civil Code Section 5800(f )(1) specifically provides that the scope of duties of a director includes the decision concerning whether to conduct an investigation of the common area for latent defects prior to the expiration of the statute of limitations, and whether to sue the developer for defects in the design or construction of the project. The board’s decision whether to investigate the common area for latent defects is one that should be made after exercising reasonable inquiry as required by Corporations Code Section 7231(a), and in reliance on the advice of special consultants, such as a forensic architect or engineer, and experienced legal counsel, as contemplated by Corporations Code Section 7231(b). The Calderon pre-litigation alternative dispute resolution process, which is embodied in Civil Code Section 6000, and the Right to Repair Act at Civil Code Section 895 and following are important toosl allowing the board to address design and construction problems and toll the statute of limitations without stigmatizing the subdivision with litigation. Under Civil Code Sections 6000 and 5985, the board does have a duty to inform the membership of design and construction problems known in the development, and alternatives available to address these problems. Importantly, the Davis-Stirling Act does not allow the board of directors to delegate to the members the ultimate decision concerning whether or not to file a lawsuit against the project developer for defects in design or construction. This remains the sole duty and responsibility of the board of directors as acknowledged in Civil Code Section 5800.


Join us at the Marin Educational Seminar Saturday, February 8th, 2014


8:30 AM to 12:30 PM

It’s Back to Basics. Hear from our trio of veteran attorneys about New Davis-Stirling, Fiduciary Duty, New Case Law, Open Meeting Act, Rules, and engage them with your Questions. Register online at or fill out the form below.

Yes, reserve ______spaces for the ECHO Marin Seminar Amount enclosed: $______(attach additional names)



Embassy Suites San Rafael 101 McInnis Parkway San Rafael, CA 94903

Email Address: HOA or Firm:


Address: City: State:


Phone: Visa/Mastercard No. Exp. Date: Signature: Return with payment to: ECHO, 1960 The Alameda, Ste 195, San Jose, CA 95126 Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded. Phone: 408-297-3246; Fax: 408-297-3517

$49 Members $59 Nonmembers Prices go up on January 27! speakerS David Feingold, Esq., Wanden Treanor, Esq. and Glenn Youngling, Esq. February 2014 | ECHO Journal


Documenting the Exercise of Fiduciary Duty The importance of maintaining good sets of minutes of directors’ meetings is generally understood. Nevertheless, critical decisions of the board of directors which involve potential legal liabilities for the association or board, should be given particular attention when the minutes are drafted and approved. The board has an opportunity through the minutes to carefully record its exercise of fiduciary duty. For example, a resolution of the board of directors can specifically record the inquiry made by the board, the findings received, the qualifications of the consultants contacted, the board’s reliance on the consultant’s advice and recommendations, and considerations for and against the action which were evaluated by the board of directors. The following resolution illustrates the types of findings which a board of directors may choose to make and record as part of a resolution to levy a special


assessment to fund reserves through an emergency special assessment. The resolution acts as a road map to document the board’s compliance with the business judgment rule under Corporations Code Section 7231.

a termite inspection service to evaluate the common area for termites and dry rot; and

Sample Resolution 14-01 of the Board of Directors of Green Acres HOA

Whereas, the Board of Directors has discussed the findings of AAA Reserve Study Preparers with AAA Reserve Study Preparers’ structural engineer and believes that AAA Reserve Study Preparers has the experience, skill, and judgment to make the findings and recommendations contained in its report; and

Whereas, the Board of Directors retained AAA Reserve Study Preparers to conduct a visual examination of the components of the subdivision which the Association is responsible to maintain, repair and replace, as required by Civil Code Section 5550; and Whereas, AAA Reserve Study Preparers issued a written report on January 13, 2014 which identified a potential collapse hazard on five decks located in Phase 1 of the Green Acres condominium project; and Whereas, the Board finds on the basis of advice received from AAA Reserve Study Preparers that the cause of the collapse hazard is a severe termite infestation which occurred during the last three (3) years since the Association last engaged

Whereas, the report of AAA Reserve Study Preparers is signed by a California licensed structural engineer; and

Whereas, the Board has appointed a committee of the Board to further inquire concerning the condition of these decks and received a written report of the committee dated January 30, 2014, agreeing with the recommendations of AAA Reserve Study Preparers; and

Whereas, the Board is responsible to maintain and repair deck structures under Article VI, Section 6.01(c) of the CC&Rs; and Whereas, the Board of Directors has received advice from the Association’s legal counsel concerning the circumstances under which the Board of Directors may levy an emergency assessment under California Civil Code Section 5610 and the Board has found that there is a threat to personal safety on the common area as a consequence of the potential collapse hazard of these decks; and Whereas, Green Acres Homeowners Association does not have operating or reserve funds sufficient to repair said decks; and Whereas, the Board has retained John T. Square, AIA & Associates to develop plans and specifications for the repair of the decks and said firm has a structural engineer in its employment and said

architect and engineer have received stamped plans from the City approving proposed repair plans for the decks; and Whereas, J. Able Construction Managers were retained by the Association to secure competitive bids for the repair of the decks, and competitive bids in the range of $100,000 to $150,000 were received by the Association through J. Able Construction Managers; and

Notice of Levy which is to be mailed to the members; and Be it further resolved that the Notice of Levy be mailed by Quality Management Company on behalf of the Board of Directors no later than February 15, 2014.

Now, therefore, the Board of Directors hereby levies a special assessment against the members of Green Acres Homeowners Association in the sum of One Thousand Dollars ($1,000) per unit payable in full forty-five (45) days after the mailing of the notice of levy of the special assessment; and

A resolution of this type documents the board’s good faith in the decision, the basis for the action, the exercise of reasonable inquiry, and the reliance on the board of appropriately qualified consultants. It also specifies the legal basis for the board’s action, which is particularly helpful in instances where the association’s governing instruments are not current with applicable and superseding California statutory law. Please note that this resolution example is presented for discussion purposes only and the content of actual resolutions used by an association under these circumstances should be reviewed by the association’s legal counsel.

Be it further resolved that a copy of this Resolution shall be included in the

The actions of the board must be taken at a duly noticed meeting at which a

Whereas, it is also the opinion of the Board’s consulting architect and engineer that the balconies must be repairedimmediately,

February 2014 | ECHO Journal


quorum is present. Civil Code Section 4900, the Common Interest Development Open Meeting Act, requires that members be allowed to attend and speak at all board meetings, except for executive session meetings which are limited to considerations of litigation, the formation of contracts with third parties, member discipline or personnel matters. This statute requires that members receive at least four (4) days advance notice of meetings, except for emergency meetings. The emergency meeting exception and executive session authorization are carefully circumscribed by the Davis-Stirling Act. The general labels of “executive session” and “emergency meeting” cannot be used to evade the rights of members to attend, observe and speak at director meetings, except in the limited instances authorized by the statute. Although the Davis-Stirling Act does not explicitly define the consequences of violating the Common Interest Development Open Meeting Act, arguably any action taken by the board at such a meeting is void or voidable.

Conclusion By implementing good business management practices, boards of directors reduce the risk of legal claims for breach of fiduciary duty. Good leadership, planning, and team work are fundamental ingredients for a successful homeowners association. Claims for breach of fiduciary duty arise where a board procrastinates in taking necessary action to avoid the “unpleasantness” of the difficult decision confronting the board. The legal standards of conduct must be carefully followed, and the ultimate business judgment of the board should be documented in detail in a resolution with specific findings. Industry professionals and consultants can play key roles in guiding the board through challenging circumstances, such as underfunded reserves and the resolution of construction defects. Jeffrey Barnett, Esq., is an association attorney with law offices in San Jose. He is a past member of ECHO’s Board of Directors and a current member of the Legal Resource Panel and Legislative Committee. He is a frequent contributor to the ECHO Journal and ECHO Seminars. 16

Santa Cruz Educational Seminar Saturday, March 1st, 2014 8:30 AM to 12:30 PM /

Join our professional team of experts in break-out sessions to learn how to resolve “Troubling Issues” in your Association. Then hear about the impending water crisis in the Central Coast, and how you can help.

Yes, reserve ______spaces for the Santa Cruz Seminar. Amount enclosed: $______(attach additional names) Name:

SAVE THE DATE! John Allanson, Allanson Insurance Diane Rossi, PCAM, Shoreline Property Services Jeffrey Barnett, Esq.

Email Address: HOA or Firm:



Hotel Paradox 611 Ocean Street Santa Cruz, CA 95060

City: State:


Phone: Visa/Mastercard No.


Exp. Date:

$59 $49 – Members $69 $59 – Nonmembers Prices go up after February 17!

Signature: Return with payment to: ECHO, 1960 The Alameda, Ste 195, San Jose, CA 95126 Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded. Phone: 408-297-3246; Fax: 408-297-3517

February 2014 | ECHO Journal



UNDER THE SURFACE: Hidden Issues in Construction By David Kuivanen, AIA


uildings are always talking to us…it just may take a “building whisperer” to hear what they are saying. Of the many things buildings do, protecting us from the environment is key. And in protecting us from rain, cold, heat and sun, the materials used in constructing buildings can wear out.

February 2014 | ECHO Journal



hile surface wear from responding to these elements is easier to evaluate, the clues to what is happening underneath the surface are sometimes harder to see. Many exterior finishes will wear and weather from age and exposure, but different clues can indicate problems below the surface. One characteristic of many building envelope systems is that the protection from the sun and protection from water intrusion are provided by different materials, and at different parts of the system. While much of the water hitting the surface is deflected at the surface, that is often not the primary water-repellant material. Keeping water out of the building is often the chore of materials behind the surface, on the backside of the exposed finish. These materials that best repel water are hidden inside the walls, mainly because the properties that make them water resistant leave them more vulnerable to sun damage. Exterior plaster (known as stucco) often cracks, but it is the location of those cracks that can indicate a hidden problem. Routine plaster cracks occur in the field of the walls, extend diagonally from windows or doors, or happen at changes in wall planes (surfaces). These cracks should be monitored for any changes, and repaired and sealed during routine maintenance of the building. Changes in these cracks can indicate improper attachment of the plaster, inadequate structural connections in the framing behind, or improper plaster mixing or application. These issues can result in excessive movement of the materials. Left untreated, cracking will introduce additional water to the membrane layer behind. The paper behind the plaster is meant to manage routine water, but will have a reduced useful life if exposed to extraordinary water. Some cracking can indicate other hidden problems below the surface. Cracking on the underside of arches, or over openings, can be the result of water collecting behind the plaster at the opening or the arch. 20

Without a proper weep molding at the arch, water within the plaster can be held inside the flat underside of an opening, swelling the wood within the wall and contributing to rotting the framing. Anytime plaster is used on a horizontal surface, either on the topside or the underside, clues in the surface can indicate problems below. Plaster on a upward-facing horizontal surface, often known as a “potshelf �, can be source of problems. These should be monitored throughout the life of the building, as the actual waterproofing material of the potshelf is hidden below the plaster. Leaking at these surfaces can be hidden within the walls, with damage only becoming apparent after worsening over time. Plaster on the underside of a deck or exposed surface above can give clues to issues above. Any damp areas not created by run-off from the adjacent vertical surfaces (isolated from the edges) can indicate water intrusion from a roof or deck above. Further investigation should be performed to find the source of the moisture. It is the dual location of protection from the elements (sun and water) that makes some repairs to walls more difficult. Application of a surface coating, which may reduce water absorption of the plaster itself, often will not tie into the actual flashings and water resistant material. Without a proper transition, water will breach the applied coating at windows, doors, pipes and other penetrations and become trapped within the plaster. Typically, flashings at windows, doors and other components of the water protection system are tied into the hidden materials. Trying to tie a surface-applied repair into these hidden components often results in a failed repair. The best approach is to identify the actual breach of the water-repellant membrane, and fix the system at that layer. Often, in older projects, plaster was continued into the ground at the base of the walls. This will not allow for the required drainage of the plaster assembly. The resulting moisture retained in the plaster can damage the building paper and cause surface damage (spalling) of the plaster. In any location, where the ground level has been allowed to creep upwards and bury the plaster and

any base screed, there can be hidden damages from this water not allowed to drain from the plaster. These conditions should be investigated to determine the underlying conditions and any required repairs, and the ground conditions modified to eliminate the buried wall. Similar issues occur at wood, hardboard and other composite material siding systems. The actual water-resistant layer usually occurs behind the siding, and similar to plaster systems, the repair must occur at and tie into the hidden water management layer. While surface flashings may deflect the bulk of rainwater, flashing transitions must occur at the hidden protection layer. The lack of continuity of these layers will contribute to continuing damages. In wood detailing, look for the management of water that may bypass the surface. Conditions where wood stacks upon itself, as with applied trim with no flashing visible, or wall top trim that may not allow for proper drainage off the wall, are susceptible to damage from this unmanaged water. Paint on these surfaces, while important to protect the wood, may not keep water out of the wall assembly. Of most concern is where different materials and systems come together. Typically, where walls, roofing, decking, windows, doors and other components meet, there should be a transition zone, material, and detail that allows for a proper seal. Seldom do different materials naturally seal to each other. Of particular suspicion is when plaster mysteriously stops, without a trim, molding or termination flashing, at adjacent roof and deck surfaces or other components. When plaster stops flush to a deck system, or there is no trim or sealant joint at a connection to siding or roofing, there may be no transition of the hidden water resistant material behind the plaster. These conditions should be monitored, or tested, to determine how they are performing. Walls are only one component that may conceal hidden damages. The ceiling below a deck above can reveal problems with the deck system. Stains can indicate failure of the decking system. Surfaceapplied deck membranes show distress more readily, and can be repaired quickly. Cracking, visible plywood decking seams or blisters in the coating will indicate a failure. Systems with hidden membranes, as with walls, don’t tell their story so

clearly. Concrete topped deck systems often have a hidden membrane below the surface. If this membrane fails, it may not be apparent for some time. Often, construction of these systems resulted in a poor bond of the membrane to the perimeter flashing, resulting in leaking to the framing. Keep an eye on the adjacent surfaces, the walls and ceiling below the deck, for clues to any failures. Roofs are typically the largest “horizontal” building systems. Steeper sloped roofs of tile or asphalt shingles are usually more reliable, as bulk water sheds off them rapidly, lessening the chances of leaking. Pay attention to the perimeter details and penetrations in these roof systems, for any discontinuity of the flashing or tie-in to the roofing material. With roofing, transitions are usually the weak point, and merit attention during annual roof inspections. Most often, routine maintenance is all that is required on steep sloped roofs, at least until the material is worn out and the useful life is reached.

topped decks, or below-slab or concealed plumbing systems. Some plumbing systems can prematurely deteriorate due to poor pipe joint installation during construction, excessive water velocity during operation, or the pipe interaction with corrosive soils when below grade. Similarly, reserve amounts for replacement of one system may not account for a failure of an adjacent system, which may require related work. The price of routine painting will not include repair of rotted wood or trim due to fundamental failure of a detail of installation.

Investigation of these systems, and the project overall beyond what may be the mandated minimum, can prevent funding shortcomings and allow for proper project maintenance. David P. Kuivanen, AIA, is an independent architect and ECHO member, offering architectural and forensic consulting services, specializing in site investigations, destructive testing, repair recommendations and litigation services since 1980. He can be reached at 818.571.7711 or

Low-Slope, or “flat” roofs can have additional problems. The less water directed off the surface quickly, the greater the chance for failure. At lowslope roof systems, pay attention to the edge conditions, penetrations, changes in slope, and any valleys or crickets that direct water to the drains. There are several issues that may be visible, including blisters or open seams, and delamination from perimeter flashings, which can indicate water intrusion. Also be aware of any soft spots in the surface, which can occur over damaged sheathing below the roofing. As with wall systems, if the roofing meets an adjacent wall or other surface without a transition detail or material, it may indicate a lack of continuity with the adjacent hidden water resistant materials. A further concern with “hidden systems” is that often these systems, if not visible, are not required to be included for eventual repair or replacement in a mandated reserve study. Even if not included in the funding plan, these systems do have a useful life, and may eventually need attention. Reserve study inspections may not suggest funding for what appear to be permanent components of the building. Examples include the waterproofing membrane in concrete February 2014 | ECHO Journal


By Elizabeth Lanham, Certified Arborist


Planting the Right Tree in the Right Place.


veryone loves a lush, green landscape filled with beautiful, healthy trees. However, sometimes trees seem like more trouble than they are worth. Constant building clearance pruning, messy sidewalks, pavement damage, dying trees…how can this all be avoided? T his can usually be avoided by planting the right tree in the right place! While it may seem that any tree could be planted in any location, it really takes much thought and consideration to make sure that the right trees are planted in the right areas in order to cultivate the most attractive and healthiest landscape possible.

February 2014 | ECHO Journal


Trees near Buildings When selecting trees to be located near buildings, it is important to think of the eventual size of the tree canopy, and best to plan for the tree reaching its full maximum height and spread. When planting a tree, it is easy to forget that this little 15-gallon or 24-inch box tree is not going to stay small forever. It is a good idea to reserve trees with large or rounded eventual canopies for open spaces away from buildings, and plant trees that will remain narrow and upright in close quarters. Some examples are the Skyrocket Oak (Quercus robur ‘Fastigiata’), the Armstrong Maple (Acer rubrum ‘Armstrong’) and the Skyrocket Juniper (Juniperus scopulorum ‘Skyrocket’). Please also remember that in very tight spaces, sometimes the best tree to plant is no tree, as even a narrow, upright tree needs room for its roots!

Trees near Hardscape Trees that are planted near hardscape (walkways, driveways and roads, for example) need special consideration. Certain trees have a tendency to develop surface roots, such as the Liquidambar (Liquidambar styraciflua), and should not be planted too close to hardscape. Also, larger trees tend to have larger root structures, and need to be planted in areas with adequate space. Smaller stature trees are better for confined areas in parkstrips, planting medians in parking lots, and other locations close to hardscape. After selecting the appropriate tree, it is always wise to deep root


water trees during establishment in order to prevent the development of surface roots. Another major consideration when selecting a tree to plant near hardscape is whether or not it produces fruit that will drop and lead to messy pavement. Two prime examples are the European Olive (Olea europaea) and Purple-Leaf Plum (Prunus cerasifera). While these trees both can be quite beautiful, if planted too closely to sidewalk, they can produce stained, slippery and often odorous messes that will leave homeowners unhappy. Once again, Liquidambar trees are a huge offender when planted near hardscape, as their spiky seed pods present both a dangerous slip hazard as well as a dangerous toy for young children to throw at each other. A tree like the Eastern Redbud (Cercis canadensis) produces beautiful flowers and seed pods, but the seed pods are not usually dropped from the tree.

Trees near Utilities According to PG&E, trees should remain at least 10 feet away from powerlines, which means trees planted near powerlines should achieve a maximum height of 25 feet. Planting larger trees near lines can create a fire and safety hazard, and results in need for frequent pruning, which creates added cost for maintenance, and results in unattractive, often unhealthy V-pruned trees. Trees should also be planted at a distance from underground utilities. Tree roots very rarely damage pipes, but are likely to be advantageous. If a water line or sewer line has a crack, tree roots will likely find their way in. While this can be hard to avoid, planting a tree at the appropriate distance from underground utilities will help eliminate the need to remove a tree or damage its roots if an underground utility requires repair.

February 2014 | ECHO Journal



Right Tree, Right Climate Selecting the proper tree for the climate is a wise way to help maximize the health of a community forest. A few of the most common trees that are struggling based on their location in an inappropriate climate (the San Francisco Bay Area) are Coast Redwood (Sequoia sempervirens), Monterey Pine (Pinus radiata), the Callery Pear (Pyrus calleryana) and the Evergreen Pear (Pyrus kawakamii). While the climate in this area may not seem like it is so different from Santa Cruz or Monterey, it usually is. Both the Coast Redwood and the Monterey Pine are sensitive enough that the warm summer weather and lack of coastal fog affects the health of the trees. Both species of Pear are susceptible to a fungal infection caused Fireblight, which is rampant in the area because of the seasonal rains, followed by warm springs and summers. The infection is usually made worse when the trees are located in or near lawn areas, since the mist from the sprinklers causes the infection to spread faster. One helpful tool is the Sunset Hardiness Zones. These are zones assigned to a plant species that indicate in which climate or geographical region that plant is most likely to thrive. Once a plant’s hardiness zone is determined, a little research can help determine whether that plant is suffering any afflictions or diseases in the area, or if it is a good choice for the community.

Selecting the proper tree for the climate is a wise way to help maximize the health of a community forest.

February 2014 | ECHO Journal


Keeping the Landscape and Homeowners Happy


electing the right trees for a site is an important step toward a beautiful, thriving plant palate, as well as satisfied homeowners and residents. While many considerations should be taken when selecting the appropriate trees, these four are a great starting points. It is always beneficial to include an ISA-Certified Arborist in your tree selection, and to inspect the trees before installation to ensure that you are planting good quality nursery stock. Remember, happy trees lead to happy homeowners!




Image 1: Section – Trees near Buildings This tree is too large to be planted this close to the building. Image 2: Section – Trees near Hardscape This Purple-Leaf Plum has stained the sidewalk and creates a slip hazard.


Image 3: Section – Trees near Buildings This Armstrong Maple is appropriate for narrow spaces. Image 4: Section – Right Tree, Right Climate These Coast Redwood trees are showing signs of climate-induced drought stress at the tops.


Elizabeth Lanham, is Certified Arborist #WE-9234A with Serpico Landscaping Tree Care Division, an ECHO member. She can be reached at 866-282-0341 or

South Bay Educational Seminar Saturday, March 15th, 2014 8:30 AM to 12:30 PM /

Yes, reserve ______spaces for the ECHO South Bay Seminar Amount enclosed: $______(attach additional names) Name:

AGENDA TOPICS It’s all about the lawyers! Hear about New Davis-Stirling, What’s Going on in Sacramento, Meeting Essentials, and Q&A.

Email Address: HOA or Firm:



Campbell Community Center Orchard City Banquet Hall 1 W Campbell Ave Campbell, CA 95008

City: State:


Phone: Visa/Mastercard No. Exp. Date: Signature: Return with payment to: ECHO, 1960 The Alameda, Ste 195, San Jose, CA 95126 Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded. Phone: 408-297-3246; Fax: 408-297-3517

Price $59 $49 – Members $69 $59 – Nonmember Prices go up on March 3rd! February 2014 | ECHO Journal



FUNDING LITIGATION By Sharon Glenn Pratt, Esq.


he question of how a common interest development (CID) will pay for litigation must be decided by the board when the need for litigation arises. When the association is served as a defendant in a lawsuit, there is of course no choice but to be involved in litigation, as the corporation must be defended to avoid a default judgment. It is likely that there is insurance coverage to pay for the defense of the association, as well as the defense of the board, in most circumstances.

February 2014 | ECHO Journal



he lawsuit papers should be sent (“tendered”) to the insurance carrier as soon as possible, so that the insurance company can either hire an attorney to defend the interests of the CID or agree to reimburse the CID’s counsel. It is the date of tender which typically triggers the insurance company’s obligation to reimburse, so it is best to tender the defense first, or have your counsel do so, before incurring costs and expenses connected with the defense, even when you are dealing with a large deductible. When the board has voted to bring a lawsuit against another party, the lawsuit will not be funded by insurance, so the board needs to determine how to pay for the litigation. If it is filing a lawsuit against a developer for construction defects, for example, there are attorneys who will take the case on a contingent fee basis, which means that the attorney’s fees paid will be contingent on winning or settling the case, and the amount of fees will be a percentage of the amount recovered for the association. In contingent fee cases, there are still costs to be considered, which may have to be paid for up front, such as filing fees, consultant and expert costs, and deposition expenses. If the association is bringing a lawsuit that is not a contingent fee suit, the attorney’s fees can be paid from the legal budget for the CID, using monies in the operating account. Because litigation is expensive, and sometimes not anticipated when the budget is prepared, there may be insufficient funds available in the operating account. In those cases, funds may be borrowed from the reserve fund account, but only temporarily. Under the new California Civil Code sections which went into effect on January 1, 2014, (see Civil Code sections 5515


and 5520), the board, after proper notice, may authorize a temporary transfer of moneys from a reserve fund to the association’s general operating fund to meet short-term cashflow requirements. The money must be repaid to the reserve account within one year of the date of the initial transfer, unless the board meets again on the subject, makes new written findings, and gives notice that a temporary delay in the repayment is in the best interests of the CID. Section 5515 pertains to any type of litigation, as it authorizes temporary transfers for any short-term cashflow needs. The board must always exercise prudent fiscal management in maintaining the integrity of the reserve account. Pursuant to Section 5520, when reserve funds are borrowed to pay for litigation that involves major association components for which the reserves were established, the board may decide to simply use reserve funds or to temporarily transfer from the reserve funds to pay for this type of legal fees. The board must give proper notice of its expenditure of reserve funds in either event. The board must also give notice of the availability of an accounting of the funds. Unless the governing documents of the CID impose more stringent standards, the association must do an accounting of the litigation expense on at least a quarterly basis when it is using or borrowing reserve funds under Section 5520. Any time that the moneys are being borrowed from reserves, the board must issue a written finding in its minutes explaining why the transfer is needed, and what the plan is for repayment. Under Section 5515 (e), if the board is unable to repay the reserve account within the time limits of one year or the temporarily extended time period, it should levy a special assessment to recover the full amount of the expended funds. Sharon Glenn Pratt, Esq. is the managing partner of Pratt & Associates in San Jose, California. She is a specialist in common interest development law and litigation, and has been practicing in the San Jose area for 25 years. She can be reached at 408-369-0800.

Wine Country Educational Seminar Saturday, March 22nd, 2014 8:30 AM to 12:30 PM /

Yes, reserve _____spaces for the ECHO Wine Country Seminar Amount enclosed: $______(attach additional names)



Hear from lawyers, landscapers and managers talk about laws, lawns and maintenance.

Email Address: HOA or Firm: Address:



Fountain Grove Inn 101 Fountaingrove Pkwy Santa Rosa, CA 95403



Phone: Visa/Mastercard No. Exp. Date: Signature: Return with payment to: ECHO, 1960 The Alameda, Ste 195, San Jose, CA 95126 Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded. Phone: 408-297-3246; Fax: 408-297-3517

Price $59 $49 – Members $69 $59 – Nonmember Prices go up on March 10th! February 2014 | ECHO Journal


Beyond Privatopia Member Price: Non-Member Price:

The Board’s Dilemma $20.00 $25.00

The rise of residential private governance may be the most extensive and dramatic privatization of public life in U.S. history. In Beyond Privatopia, attorney and political science scholar Evan McKenzie explores emerging trends in private governments and competing schools of thought on how to operate them, frm state oversight to laissez-faire libertarianism.

Condominium Bluebook 2014 Edition Member Price: Non-Member Price:

$17.00 $25.00

This well-known compact guide for operation of common interest developments in California now includes a comprehensive index of the book and a chapter containing more than 200 frequently-asked questions about associations, along with succinct answers.

In this essay, attorney Tyler Berding confronts the growing financial problems for community associations. Mr. Berding addresses board members who are struggling to balance their duty to protect both individual owners and the corporation, and gives answers to associations trying to avoid a funding crisis.

2014 Condominium Greenbook Member Price: Non-Member Price:

$17.00 $25.00

This companion to the Condominium Bluebook is an in-depth guide to all aspects of association finances, including accounting methods, financial statements, reserves, audits, taxes, investments and much more. Not for the accounting novice, this is a tool for the treasurer or professional looking for specific information about association finances.

Questions & Answers About Community Associations

Member Price: Non-Member Price:

Member Price: Non-Member Price:

$29.00 $45.00

$18.00 $25.00

To make these a sustainable investment, new buyers, owners and board members need to understand “best practices basics” of how this form of housing works and have more realistic expectations of this form of “carefree, maintenance free” living.

For 12 years, Jan Hickenbottom answered homeowners’ questions in her Los Angeles Times column on community associations. Now collected in one volume, readers can find answers to almost any question about CIDs.

Community Association Statute Book—2014 Edition

Board Member Handbook

$15.00 $25.00

Contains the current version of the Davis-Stirling Common Interest Development Act, the Civil Code sections that apply to common interest developments and selected provisions from other codes important to associations.

Home and Condo Defects Member Price: Non-Member Price:

$12.95 $17.95

Construction defect litigation can be confusing, expensive and fraught with legal pitfalls. This eye-opening guide, written by accomplished construction-defect attorneys, is an essential tool for board members who need to understand the legal process.

Robert’s Rules of Order Member Price: Non-Member Price:

$7.50 $12.50

A step-by-step guide to the rules for meetings of your association, the current and official manual adopted by most organizations to govern their meetings. This guide will provide many meeting procedures not covered by the association bylaws or other governing documents.


$10.00 $15.00

Condos, Townhomes and Homeowner Associations

Member Price: Non-Member Price:


Member Price: Non-Member Price:

Member Price: Non-Member Price:

$15.00 $25.00

This publication is the essential guidebook for HOA Board members, dealing with governance, finances, insurance and maintenance issues. Revised and updated in June 2012.

Reserve Fund Essentials Member Price: Non-Member Price:

$18.00 $25.00

This book is an easy to read, must-have guide for anyone who wants a clear, thorough explanation of reserve studies and their indispensable role in effective HOA planning. The author gives tips to help board members mold their reserve study into a useful financial tool.

The Condo Owner’s Answer Book Member Price: Non-Member Price:

$15.00 $20.00

An excellent guide to understanding the rights and responsibilities of condo ownership and operation of homeowner associations. The question-and-answer format responds to more than 125 commonly-asked questions in an easy to understand style. A great resource for newcomers and veteran owners.

ciation o s s A unity Book Comm Statute dition 2014 E

Dispute Resolution in Homeowner Associations Member Price: Non-Member Price:

$15.00 $25.00

This publication has been completely revised to reflect new requirements resulting from passage of SB 137.

Publications to answer your questions about common interest developments Order Online at

Bookstore Order Form Board Member’s Guide for Contractor Interviews Member Price: Non-Member Price:




$15.00 $25.00

This report is a guide for directors and managers to use for interviews with prospective service contractors. Questions to find out capabilities and willingness of contractors to provide the services being sought are included for most of the contractor skills that associations use.


Yes! Place my order for the items above. Check

Board Member’s Guide for Management Interviews Member Price: Non-Member Price:

$15.00 $25.00

This guide for use by boards for conducting complete and effective interviews with prosp ective managers takes the guesswork out of the interview process. Over 80 questions covering every management duty and includes answer sheets matched to the questions.



Credit Card Number Exp. Date


Name (please print) Association (or company) Email Address City



Daytime Telephone

February 2014 | ECHO Journal


directory updates

All current listings may be found in our Professionals Directory available online at

New Members Common Sense Association Management 15650 Vineyard Blvd. Suite A #188 Morgan Hill, CA 95037 Contact: Greg Ivarson Tel: (800) 996.7644 Association Management Company 6601 Knoll Center Parkway #135 Pleasanton, CA 94566 Contact: John Cligny Tel: (925) 895.2484 Skuba Construction Services, Inc. 5356 Clayton Road Suite 125 Concord, CA 94521 Contact: Dave Skuba Tel: (925) 689.5900

Association Capital Bank 33 Grand View Dr. Lebanon, CT 06249 Contact: Alan Seilhammer Tel: (860)942.7902 California Stone Coating, Inc. 2000 McKinney Ave. Suite 700 Dallas, TX 75201 Contact: Denis Gerasimov Tel: (510) 284.2554 Ocean Beach Management 798 Great Hwy #3 San Francisco, CA 94121 Contact: Suzan Rollins Tel: (415) 221.6151

Become an ECHO Professional Member and receive the benefits of membership. To learn more, visit our membership page at 36

ECHO event calendar

RESOURCE PANEL CALENDAR Wednesday, February 5 Maintenance Resource Panel 12:00 Noon ECHO Office, 1960 The Alameda, Suite 195, San Jose

Thursday, March 6 North Bay Resource Panel 11:45 a.m. Contempo Marin Clubhouse, 400 Yosemite Dr, San Rafael

Wednesday, April 9 South Bay Resource Panel 12:00 Noon Buca Di Beppo 1875 S. Bascom Ave., Campbell

Wednesday, February 12 South Bay Resource Panel 12:00 Noon Buca Di Beppo 1875 S. Bascom Ave., Campbell

Tuesday, March 11 Central Coast Resource Panel 12:00 Noon Michael’s On Main, 2591 S Main St., Soquel

Friday, April 11 East Bay Resource Panel 12:00 Noon Massimo Restaurant, 1603 Locust St., Walnut Creek

Friday, February 14 East Bay Resource Panel 12:00 Noon Massimo Restaurant, 1603 Locust St., Walnut Creek

Wednesday, March 19 Wine Country Resource Panel 11:45 a.m. Serv-Pro, 373 Blodgett St., Cotati

Wednesday, April 16 Wine Country Resource Panel 11:45 a.m. Serv-Pro, 373 Blodgett St., Cotati

Wednesday, February 19 Wine Country Resource Panel 11:45 a.m. Serv-Pro, 373 Blodgett St., Cotati

Wednesday, April 2 Maintenance Resource Panel 12:00 Noon ECHO Office, 1960 The Alameda, Suite 195, San Jose

Wednesday, April 16 Legal Resource Panel 6:30 p.m. Porterhouse, 60 E. Third Ave., San Mateo





First Wednesday, Even Months

ECHO Office, San Jose

North Bay

First Thursday, Odd Months

Contempo Marin Clubhouse, San Rafael

East Bay

Second Friday, Even Months

Massimo Restaurant, Walnut Creek


Second Monday, Odd months

Scott’s Seafood Restaurant, Oakland

Central Coast

Second Tuesday, Odd months

Michael’s On Main, Soquel

South Bay

Second Wednesday, Even Months

Buca Di Beppo, Campbell

Wine Country

Third Wednesday, Monthly

Serv-Pro, Cotati




February 2014 | ECHO Journal


ECHO honor roll

ECHO HONORS VOLUNTEERS ECHO Resource Panels Accountant Panel Marco Lara, CPA 650-632-4211 Central Coast Panel John Allanson 831-685-0101 East Bay Panel Beth Grimm, Esq. 925-746-7177 Cindy Wall, PCAM, CCAM 925-830-4580 Legal Panel Mark Wleklinski, Esq. 925-280-1191 Maintenance Panel Brian Seifert 831-708-2916 North Bay Panel Diane Kay, CCAM 415-846-7579 Stephany Charles, CCAM 415-458-3537 South Bay Panel George Engurasoff 408-295-7767 Wine Country Panel Pam Marsh 415-686-9342

Regional Seminar Speakers Wine Country Carra Clampitt Bill Gillis, Esq. David Hughes Ken Kosloff Tom O’Neill Steve Weil, Esq. South Bay Derek Eckert Stephanie Hayes, Esq. Robert P. Hall Jr., Esq. Fresno Geri Kennedy David Levy, CPA Michael J. Hughes, Esq. Walnut Creek Stephanie Hayes, Esq. Lisa Esposito, CCAM Rob Rosenberg, CCAM Beth Grimm, Esq. Monterey John Allanson Diane Rossi, PCAM, CCAM Sandra Bonato, Esq. Sacramento Ian Brown, CCAM Bill Erlanger, CPA Don Haney, CPA Deon Stein, Esq.

Legislative Committee

ECHO San Jose Speakers September 24, 2013

Paul Atkins Jeffrey Barnett, Esq. Sandra Bonato, Esq. Jerry Bowles Oliver Burford Joelyn Carr-Fingerle, CPA Chet Fitzell, CCAM John Garvic, Esq., Chair Geri Kennedy, CCAM Wanden Treanor, Esq.

Board Essentials Tyler Coffin Lisa Esposito, CCAM Pat Falconio Brian Kidney Mike Muilenberg Rob Rosenberg, CCAM Brian Seifert Wanden Treanor, Esq.


Hot Topics Anton Bayer Ian Brown, CCAM Don Danmeier Glenn Kenes Nico March Steve Saarman Steve Weil, Esq.

Legal Tyler Berding, JD, PhD John Garvic, Esq. Michael Hughes, Esq. Julia Hunting, JD, SE Kerry Mazzoni Alex Noland, Esq. Paul Windust, Esq. Recent Contributing Authors August 2013 Julie Adamen Stan Malos, JD, PhD Sharon Glenn Pratt, Esq. John R. Schneider September 2013 Kevin Canty, Esq. Beth Grimm, Esq. Judy O’Shaughnessy Diane Rossi, PCAM, CCAM Steve Saarman October 2013 Beth Grimm, Esq. Debra A. Warren, PCAM, CCAM Richard Tippett Sharon Glenn Pratt, Esq. Geri Kennedy November 2013 Tyler Berding, JD, PhD John R. Schneider James H. Ernst, CPA, MS-Tax Tom Fier, Esq. Burt Dean December 2013 Sandra M. Bonato, Esq. Katherine Naegele Derek Eckert Ann Rankin, Esq. Burt Dean January 2014 Douglas Christison, PCAM Barbara Ellen William S. Erlanger, CPA Joelyn K. Carr-Fingerle, CPA Tyler P. Berding, JD, PhD



We’re adding new information to our website every day. Log in to read the articles below. If you need help logging in, find it on our website or email ECHO at

Articles You made it through budget season, and now the real work begins. Here are some articles to help you clean up old processes, and start thinking about working smarter: How to Improve Your Meeting Minutes

Every association keeps meeting minutes – it’s the law! But great minutes are an art form: boards should avoid providing too little or too much information in their minutes, so how do you strike a balance? Educational Topic: Board Meetings

Making Accommodations

Don’t be put off by a resident’s request for a modification. California and Federal laws protect certain classes, and you have an obligation to respond to reasonable requests. Learn about those obligations. Educational Topic: Disabled

Approaching Governing Document Amendment

With the new Davis-Stirling Act finally in effect, many association may consider updating their governing documents. What is the best way to undertake this difficult process? Educational Topic: Governing Documents

Is Your Corporate Status Suspended?

Be proactive about your corporate status! Don’t wait until you need to sign a contract before you try to fix this important problem. Learn all about corporate suspension and reinstatement. Educational Topic: Corporations

Legislation 2013 Legislative Review

Review what happened in Sacramento during 2013, and bookmark this page for the latest information about current bills. The Legislature reconvenes on January 6th! Find in:

The Law Did you receive your 2014 Statute Book? We recently mailed the brand new, updated David-Stirling Act to all of our member association board members. Use the book together with our website to locate information quickly: use our search function to find specific terms, or log in and to jump back and forth between the new and old laws. Find in:

February 2014 | ECHO Journal



advertiser index

about ECHO

American Management Services........40

Focus Business Bank ...........................16

Angius & Terry.......................................3

Neighborhood Association Management.........................................16

A.S.A.P Collection Services.................14 Association Reserves...........................40 Benjamin Moore Paint & Company...25 Berding|Weil .........................Back Cover Collins Management............................25 Community Association Financial...............................................14 Compass Management........................27 Condominium Financial Management.........................................32 Cornerstone Community Management.........................................24 Ekim Painting.......................................24 Eugene Burger Management Co.........15

PGS; Professional Gutter Service, Inc. ..........................................12 PML Management................................16 R.E. Broocker Co...................................16 Rebello’s Towing..................................26 Saarman Construction.........................21 Union Bank...........................................11

WHAT IS ECHO? Serving Homeowners to Build Strong Community Associations The Educational Community for Homeowners (ECHO) is a nonprofit membership corporation dedicated to assisting California homeowner associations. ECHO provides help to homeowner associations on many fronts: finances, legal issues, insurance, maintenance and management. Members receive help through conferences, trade shows, seminars, online education, a monthly full-color magazine and discounted publications.

Who Should Join ECHO? If your association manages condominiums or a planned development, it can become a member of ECHO and receive all of the benefits designated for homeowner associations.

Benefits of Association Membership • Subscription to monthly magazine • Access to members-only online education • Updates to the Association Statute Book • Frequent educational seminars • Special prices for CID publications • Legislative advocacy in Sacramento

ECHO Membership Dues Association Membership HOA 2 to 25 units...........................$130 HOA 26 to 50 units.........................$180 HOA 51 to 100 units.......................$275 HOA 101 to 150 units.....................$375 HOA 151 to 200 units.....................$450 HOA 201 or more units..................$575 Professional Membership.................$499 Association Management Membership.......................................$499 Individual Membership.......................$75

How Do You Join ECHO? Over 1,700 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for the membership, sign up online at www. For more information about membership and ECHO, call us at 408-297-3246 or visit the ECHO website.

February August2014 2013 || ECHO ECHO Journal Journal

41 41

2014 legislative Overview

Enacted Bills Bill Information


SB 298 Watch

Contracts with Private Parking Enforcement

SB 510 Watch

Resident Surveys in Mobilehome Conversions

SB 745 Watch

New Davis-Stirling Clean-Up

SB 752 Watch

Davis-Stirling for Commercial CIDs

This region-specific bill authorizes the Orange County Board of Supervisors to contract for supplemental law enforcement services for homeowners’ associations to enforce Vehicle Code on the association’s owned and maintained roads. While this bill does not directly impact associations in other regions, it may lay the groundwork for future legislation.

This bill provides that a local agency is required to consider the results of a survey in making its decision to approve or reject a map related to the conversion of a rental mobilehome park to resident ownership.

This annual housing omnibus bill contains non-controversial provisions that clean up mistakes within the new Davis-Stirling Act, effective in January 2014.

This bill establishes a new body of law, separate from the Davis-Stirling Act, that governs exclusively commercial and industrial CIDs. Mixed commercial and residential associations are not affected.

Two-Year Bills Bill Information


AB 968 Support

Elections in Small Associations

AB 1360 Support if Amended

Electronic Voting in CIDs

SB 391

Document Recording Fees

This bill seeks to carve out specific exemptions for small associations from existing law governing CID elections. In certain cases, the bill would allow small CIDs to forego the mailing of ballots, and permit both nominations and voting at the election meeting. The size of a “small” association changed several times, and currently stands at 15 units. While the bill moved through the Legislature with bipartisan support, concerns from the Senate Housing and Transportation committee pushed the bill into a two-year process. ECHO is working with the author to refine the bill and address some lingering concerns.

This bill authorizes an association to conduct elections or other membership balloting by electronic voting. It also requires an association to provide each member with an opportunity to indicate that he or she will be voting electronically and to provide a member who did not indicate so with a paper ballot. ECHO is seeking additional clarification, including a definition of an “electronic balloting service provider.”

In order to fund affordable housing, this bill would impose a fee for all documents that must be recorded in California, including governing documents. This bill poses several concerns for associations. While it is dead for 2013, it may return in another form next year.


2014 legislative Overview (continued)

Unapproved Bills Bill Information


AB 126

Address Lists in Time-Shares This bill requires a time-share association to maintain a complete list of the names and postal addresses of all owners of time-share interests in the time-share plan and to update the list at least every 12 months. The bill did not meet legislative deadlines and is dead for this year.

AB 746

Smoking Ban in Multi-Family Dwellings This bill proposed to ban smoking in all multi-family dwellings in California. The sweeping nature of the legislation stirred up a predictable backlash, and the bill did not make it out of the Assembly Housing and Community Development committee. However, reconsideration was granted, and the bill may return in a new form next year.

AB 1205 Oppose Unless Amended

Mobilehome Residency Law Mediation Act

SB 125 Watch

Fire Prevention Fees

SB 750 Oppose Unless Amended

Mandatory Submetering

This bill would create a mediation program for alleged violations of the Mobilehome Residency Law, and would impose financial assessments to maintain the program. ECHO is seeking an amendment that would exempt mobilehome parks that are governed by the Davis-Stirling Act.

This bill exempts a property owner of a structure that is both within a state responsibility area and within the boundaries of a local fire district that provides fire protection services in the district from the payment of the fire prevention fee.

This bill deals with water sub-meters and meters. While the bill intended to address landlords and tenants, the language did not exempt common interest developments.

Learn More Don’t want to wait for the Journal to hear the latest news? We publish regular updates about HOA legislation on our website. Learn more about all the bills on our watch list, including those that don’t make the cut for the ECHO Journal. Find out more about ECHO’s activity, and what you can do to improve legislation for California HOAs. For all of this information and links to the text of each bill, visit ECHO’s HOA Advocacy pages at

February 2014 | ECHO Journal


ECHO Journal - February 2014  

A Journal for California Community Associations

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