ECHO Journal - January 2019

New 2019 Law Reflects Growing Concern Over Fraudulent Behavior and Board Responsibility p.8

Painted Surfaces Care and Maintenance Part 1 – Interior Surfaces p.16

Serving Community Associations

New 2019 Law Juggles Fiscal Responsibility with Burdensome Process p. 8

When is the Board wrong?

And When will a Court Defer? p.22

Unintended Consequences of New Public Assembly Laws for HOAs p.26

More Electric Vehicles Coming to a CID Near You p.30

January/February 2019 echo-ca.org

news from ECHO

A Wonderful Experience to Serve on the Board Becoming a community board member can be a rewarding and fulfilling experience. It is important not to allow the mundane to sap the energy of the board or to consume time unnecessarily. The board should focus on leading the community, managing risk and legal compliance.

Boards have a legal responsibility to manage and oversee the financial and business operations of the association. They also must create and enforce rules and regulations consistent with laws enacted by legitimate authorities and community CC&Rs (covenants, conditions and restrictions). It is essential for a board to find a balance between their required duties and the responsibility of setting and championing a community vision. Here are some ideas to manage and achieve balance: 1. First, the board must work on itself – building a trusting team of willing leaders working as one, to clarify and champion the purpose, mission and vision for the community. A strong team of board members builds confidence in decision-making and communicates a sense of collaboration which will be noticed and appreciated by the homeowners.

2. Second, knowledge is powerful - a programmatic approach to continued learning is a must for the board – it is also important for community management staff and service providers. The ever-evolving world of community management is complicated and, thus, staying on top of laws and regulations is essential for success. A knowledgeable board breeds community confidence in their decisions and minimizes the risk for conflict.

There are many ways to stay on top of changes in the industry. Reading the ECHO Journal and attending one or two of the many ECHO educational and networking events are always favorites of mine.

3. Finally, expand the team with HOA specialists, professional advisors and managers.

These include among others: Community managers and General Managers, legal counsel, banking professionals and financial advisors, reserve specialists, certified public accountants, construction managers, risk managers (such as an insurance broker or agent) and competent, trustworthy vendors of many types. These important specialists and professionals help to support the decisions of the board.

Interview and carefully select the extended team. Search for professionals with experience working with common interest developments. Ensure the team has appropriate certifications, licensing, experience and insurance – check, verify and relax.

With the team in place and up-to-date knowledge of running an association, the board can focus on community building rather than community management. The difference is subtle: The focus will be on the future rather than the urgent, empowering the volunteer directors to make wise and effective decisions. This is the key to building a board which feels the personal satisfaction of accomplishment and homeowner appreciation. The result: A wonderful, rewarding and fulfilling experience on the board.

Sincerely,

David Zepponi Executive Director

January/February 2019 | ECHO Journal

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CONTENTS

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8

22

16

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8

New 2019 Law Reflects Growing Concern Over Fraudulent Behavior and Board Responsibility Managing homeowner associations is a serious business fraught with significant risk. Due to several concerns regarding the financial management of communities, accentuated by a few high-profile cases of fraud, the California legislature has imposed additional requirements on HOA Boards. This article explains what’s new, what’s out, and how to protect your association.

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Painted Surfaces Care and Maintenance Part 1 – Interior Surfaces

As HOA communities age, care and maintenance of interior surfaces becomes an issue of major concern. This article provides the homeowner with practical care and maintenance information regarding painted surfaces.

It is a fast read with interesting new tidbit of information that will help homeowners maintain community aesthetics and property values.

22

When is the Board wrong? And When will a Court Defer?

It often is difficult to determine when the board has authority to make decisions and when an issue must be elevated to a judicial process. Recent case law has only served to muddy the waters a bit more. In a recent Ventura County trial court decision, board discretion on the interpretation of CC&Rs was challenged. The result was more concern about which body has authority to make decisions. Read this well-written brief to help board members better understand their authority for decision making.

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A Road Paved with Good Intentions:

Addressing Unintended Consequences of New Public Assembly Laws Affecting Homeowner Associations You don’t appreciate the current political climate – the rancor and brazen dissent. Well now you may find it on your doorstep with rally’s in the common areas of your community. The state enacted law in 2018 that allows access to the common areas of your community for “CID living or for social, political or educational purposes”. This is a must read for all boards. Learn what this means for you and your community and how you might better manage the situation.

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More Electric Vehicles Coming to a Common Interest Development Near You Clearly California is a leader in environmental ethics. The state is actively promoting the use of electric vehicles. This article reviews the practical realities of making an environment-friendly law practical for those in homeowner communities. In this easy to understand article, the authors address questions of placing charging stations in HOA communities and what is and isn’t allowed.

DEPARTMENTS

3 6 7 14 35 36 37 38 40 41 42

News from ECHO 2019 ECHO Educational Calendar East Bay Educational Seminar — Saturday, March 30th, 2019 47th Annual ECHO Annual Expo — Saturday, June 15th, 2019 Is Your Board Receiving ECHO Benefits?

ECHO Volunteers ECHO Event Calendar ECHO Bookstore New Professional Members Advertiser Index Legislation at a Glimpse

The ECHO Journal is published bi-monthly by the Educational Community for Homeowners. The views of authors expressed in the articles herein do not necessarily reflect the views of ECHO. We assume no responsibility for the statements and opinions advanced by the contributors to the magazine. It is released with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service.

If legal advice or other expert assistance is required, the services of a competent professional should be sought.

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 2018 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 1671 The Alameda, Suite 205 San Jose, CA 95126 408-297-3246 Fax: 408-297-3517 www.echo-ca.org info@echo-ca.org Office Hours Monday-Friday 9:00am to 5:00pm BOARD OF DIRECTORS AND OFFICERS President David Hughes Vice President Adam Haney Treasurer Diane Rossi Directors Sandra Bonato David Levy Jerry L. Bowles Karl Lofthouse Rolf Crocker Sandra Long Sarah Dunia Wanden Treanor John Gill

Executive Director David Zepponi Marketing Communications Specialist Priscilla Ann Ornido Sales Administrator Jacqueline Price Design and Production Design Site ECHO Mission Statement Fostering a better quality of life in community associations through education, advocacy, and networking.

January/February 2019 | ECHO Journal

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2019 ECHO educational calendar

Invite-a-Homeowner Individual members will receive a special annual membership dues rate of $50 (originally $95) if they are recommended by an existing HOA board member, vendor member, or professional manager member!

2019 ECHO Educational Seminars

Wine Country

Marin East Bay

If you’ve ever wished that ECHO would hold a seminar closer to your association, chances are that we’ll be nearby during 2019. 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!

Mar. 30

June 15

East Bay Seminar (see page 7)

Annual Expo (see page 14)

Pleasanton Marriott

Santa Clara Convention Center

Register:

bit.ly/echoEastBay2019

Register:

bit.ly/echoAnnual2019

Visit our website: www.echo-ca.org/events 6 echo-ca.org

FREE Attendance for ECHO HOA Members!

Promo Code: QCJKNU

Anyone from your HOA can use the promo code!

Event Link: bit.ly/echoEastBay2019

Join us at the

EAST BAY EDUCATIONAL SEMINAR

Saturday, March 30, 2019 • 8:00AM to 12:30PM

TOPICS

Legal Updates & Conflict Resolution

REGISTER ONLINE Event Link: bit.ly/echoEastBay2019 Promo code: QCJKNU As an ECHO member, you may register for free when you apply the promotional code.

How to apply the promo code to you order 1. Type the above link into your browser and select “Register” located in the top right.

2. Click the “Enter Promotional Code,” link in the top-right of the Register window.

3. Find “Enter Code,” type in the code and click “Apply Code.”

4. Confirm your entry was successful. You should see the “Price” and “Fee” update to reflect the discounted amount.

ADDRESS

Pleasanton Marriott 11950 Dubline Canyon Rd, Pleasanton, CA 94588 PRICE

FREE for Pre-registered ECHO HOA Members $50 Nonmembers and Walk-ins.

EMAIL REQUIRED You must provide a valid email address in order to register and receive updates, session materials & handouts. Please do not provide fake email addresses. If you are a manager registering a board member, please use their information when registering.

ATTENDANCE POLICY Property managers may invite clients. Only managers with clients in attendance are permitted to attend. If you are a manager registering a board member, please use their information when registering.

January/February 2019 | ECHO Journal

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NEW 2019

LAW

Reflects Growing Concern Over Fraudulent Behavior and Board Responsibility David Levy, CPA

S

ince the “birth� of the Davis-Stirling Act in the early 1980s, California community association Board members have had increasing responsibilities related to the production, review and dissemination of association financial information to member owners. The new laws enacted on January 1, 2019 makes one wonder whether the California legislature is trying to stack the Board with CPAs.

January/February 2019 | ECHO Journal

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L

et’s take a look at what Board was required to do in 2018 versus what they must do in 2019:

2018 OLD LAW Board Quarterly Financial Review (California Civil Code 5300) 1. Review bank reconciliations for all operating bank accounts.

2. Review bank reconciliations for all reserve bank accounts.

3. Review bank statements for all accounts.

4. Review comparison of actual to budgeted operating revenues and expenses.

5. Review comparison of actual to budgeted reserve revenues and expenses.

Under the old law, review of the foregoing documents was the discretion of the Board of Directors. Often the Board simply delegated financial review to one person – usually the Treasurer.

Things are quite different under the NEW LAW (keep reading).

NEW 2019 LAW Board Monthly Financial Review (California Civil Code 5500) Board members now are required to conduct monthly financial oversight including: 1. Review bank reconciliations for all operating bank accounts.

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2. Review bank reconciliations for all reserve bank accounts.

3. Review bank statements for all accounts.

4. Review comparison of actual to budgeted operating revenues and expenses.

5. Review actual operating income and expense statement.

6. Review actual reserve income and expense statement.

7. Review operating and reserve account checkbooks (registers).

8. Review owner delinquent assessment receivable reports.

9. Review operating and reserve account general ledger.

[Note: The general ledger will show all activity (entries) for each account during the month and is an excellent tool to help analyze income and expense fluctuations and to catch possible account miscoding errors.]

For some unknown reason, one item under the OLD LAW was dropped.

The requirement to “Compare actual

to budgeted reserve revenues and expenses”). Five (5) new items were added to the NEW LAW. While check registers and delinquent assessment receivable reports are probably well known to most Board members, understanding the importance of the monthly general ledger may take some explanation. Also, if the monthly Board package is routinely distributed to any (or all) owners who might ask for it, the Board needs to be careful to remove the names and unit numbers of delinquent owners.

If in doubt about the need to protect such personal information, the advice of legal counsel should be obtained.

NEW LAW Documenting Board Monthly Financial Review (California Civil Code 5501) 1. “… every individual member of the Board …” reviews all nine (9) of the documents in California Civil Code

2.

5500 and such review is (1) ratified at the next Board meeting and (2) recorded in the Board meeting minutes …”

amount is greater than $10,000 (even though it is less than 5% of the combined balances).

OR “a subcommittee of the Board consisting of the Treasurer and at least one other Board member” shall review all nine (9) of the documents in California Civil Code 5500 and such review is 1) ratified at the next Board meeting and 2) recorded in the Board meeting minutes.

For Boards that do not meet on a monthly basis, arrangements will have to be made to look at the foregoing monthly financial information.

Due to the newness of this law, questions dealing with implementation should be directed to your legal counsel and certified public accountant.

BEST PRACTICES NOT ADDRESSED IN LAW – Board Monthly Financial Review It is important that Boards regularly review and reconcile fund accounts.

Here are a few suggested Best Practices not currently in California Law: 1. Review actual operating fund balance sheet. (Assets, liabilities, and equity).

2. Review actual reserve fund balance sheet. (Assets, liabilities and equity).

3. Review the operating fund bank reconciliation, compare and insure that the cash balance per books matches the balance sheet and the balance per bank matches the bank statement.

4.

When reviewing the reserve fund bank reconciliation, compare and insure that the cash balance per books matches the balance on the balance sheet and the balance per bank matches the bank statement.

The critical importance of understanding how the bank reconciliation ties together cash balances and the beginning and end of month balance sheets tie together with the income and expense statement is illustrated in the chart on the following page:

NEW LAW Documenting Cash Transfers (California Civil Code 5502) Transfers of cash between operating and reserve bank accounts must be documented if: 1) the amount transferred is greater than ten thousand dollars ($10,000) or 2) if the transfer is five percent (5%) of total operating and reserve account cash balances, whichever is lower. The transfer may not be legal without prior written Board authorization and approval.

For example: Assume the operating and reserve account cash balances total $100,000 and the Board wishes to transfer $7,000.

Prior written Board approval would be required for the transfer because it is greater than 5% of the $100,000 in cash balances ($5,000).

If the combined operating and reserve cash balances total $250,000 and the amount to be transferred is $11,000, then prior written Board approval would be required because the transfer January/February 2019 | ECHO Journal

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These charts show how bank reconciliation ties together cash balances, and beginning and end of month balance sheets tie together with the income and expense statement

Bank Balance Income Statement Sheet (Loss)

Bank Reconciliation

$40,000 (A)

$40,000

BANK RECONCILIATION Bank balance (per bank statement)

Less outstanding checks (per detail listing)

(13,000)

Add deposits in transit (per detail listing)

2,000

Other reconciling items (per detail listing)

1,000

Bank balance (per “balance sheet”)

$30,000 (B)

$30,000 (B)

Questions:

A. Is the bank statement balance correct? Look at your books of record to determine.

B. Do these two numbers equal (balance) – “Book Balance” versus reconciled “Bank Balance”.

RELATIONSHIP BETWEEN FINANCIAL STATEMENTS Assets Cash

Other assets Total assets Liabilities and Fund Balances Fund balances, beginning of month

75,000 $105,000 (B) 75,000 $100,000 (A)

Income (loss) for the month

5,000

Fund balances, end of month

$105,000 (B)

Questions:

$30,000

A. Is this the correct balance?

B. Do these amounts equal (balance)?

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$105,000 (B)

WHY DILIGENCE IS IMPORTANT: One of the more significant (and recent) embezzlement cases in Northern California which was investigated by the FBI and is currently being prosecuted by the US Attorney involves a management company which only provided altered bank statements, and income and expense statements, to unwitting Board Directors – but no bank reconciliations and no balance sheets to connect the pieces and make things clear. The result in this example was that $40,000 was embezzled.

FRAUD SCHEME

Bank Balance Income Statement Sheet (Loss)

Bank Reconciliation

BANK RECONCILIATION Bank balance (per bank statement)

$80,000 (is an altered balance)

Less outstanding checks (per detail listing) Add deposits in transit (per detail listing) NO Other reconciling items BALANCE SHEET (per detail listing) PROVIDED Bank balance (per “balance sheet”)

NO BANK RECORD PROVIDED

RELATIONSHIP BETWEEN FINANCIAL STATEMENTS Assets Cash

$70,000

Other assets

75,000

Total assets

$145,000

Liabilities and Fund Balances Fund balances, beginning of month

Income (loss) for the month

$140,000 (is an altered balance)

Fund balances, end of month

$145,000

$145,000

5,000

BOARD TAKEAWAY: Understanding Board financial review is an essential skill of Board directors. The Board should regularly review financial statements against actual bank balances and reconciliations. The NEW LAWS have been enacted to demand certain practices; however, if Boards are practicing Best Practices many laws and burdensome requirements would be unnecessary saving communities a great deal of grief, money, and possibly avoiding the embarrassment of criminal activity. It is highly recommended that you discuss the new law with your management, Board members, your association’s Certified Public Accountant (CPA) and, if appropriate, your association’s attorney.

David Levy, CPA is a partner at Levy, Erlanger & Company, CPAs, in San Francisco. He is a current member of the ECHO board of directors and a frequent speaker at ECHO seminars. His firm may be found online at www.hoa-cpa.com.

January/February 2019 | ECHO Journal

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40$ off for ECHO HOA Members!

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Register Online TODAY: bit.ly/echoAnnual19 Promo Code: N3F43C. Anyone from your HOA can use the promo code!

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EMAIL REQUIRED You must provide a valid email address in order to register and receive updates, session materials & handouts. Please do not provide fake email addresses. If you are a manager registering a board member, please use their information when registering.

Network with Exhibitors during Breakfast and Lunch.

Hundreds of fellow board members and HOA professionals.

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ATTENDANCE POLICY Property managers may invite clients. Only managers with clients in attendance are permitted to attend. If you are a manager registering a board member, please use their information when registering.

EVENT INFORMATION

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Santa Clara Convention Center 5001 Great America Pkwy Santa Clara, CA 95054

TIME: 8:00 am to 4:30 pm

FOOD: Admission includes breakfast in the morning and a lunch buffet in the afternoon.

PARKING: Free parking is available in the parking structure behind the Santa Clara Convention Center.

• Finances • Legal

• Management • Insurance

LEGAL • Election Politics, New Legislation / PAC • Implementation Strategies for New Laws - What to Advise Your Clients • Case Law • Contracts with Management, Maintenance, Etc.

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REGISTER ONLINE Event Link: bit.ly/echoAnnual19 Promo code: N3F43C As an ECHO member you may receive $40 off your registration when you apply the promo code above.

HOT TOPICS • Fraud Cases, What Happening, How to Discover, What to Do and How to Prevent • Managing Through Recessions and Tragedy • Managing Your Banker and Banking Relationships • Bench Players - The Pros You Need on Your Team

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4. Confirm your entry was successful. You should see the “Price” and “Fee” update to reflect the discounted amount.

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Questions? Email events@echo-ca.org January/February 2019 | ECHO Journal

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Painted Surfaces Care and Maintenance

PART ONE:

Interior Surfaces

By Judy O’Shaughnessy

January/February 2019 | ECHO Journal

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W

ith all the advancements in science and technology, painted surfaces still need to have appropriate care and maintenance. In this two-part series, the importance of proper care and maintenance of interior and exterior surfaces will be discussed. It is hoped that some of the practical suggestions will help maintain and extend the life of painted surfaces at home and in your community.

PART 1 INTERIOR PAINTED SURFACES Cleaning Interior Surfaces Interior painted surfaces typically get dirty as a result of many situations.

Hand prints around switches, door knobs and/or pulls. Splashes or spills in the kitchen or bathrooms. Marks on wall or trim surfaces of hallways, corridors and other living areas within the home. Spot or discoloration above electric lamps, around heater or air conditioning vents, fireplaces and other heat sources. Removing dirt and/or soil before it accumulates not only improves appearance, it reduces the changes of these contaminates becoming permanently embedded in the paint film. Follow these simple steps to clean and maintain your interior surfaces:

Please be advised that alkaline and ammonia cleaners can yellow the finish and dull the sheen or gloss of oil base enamels. Abrasive cleaners and pads should never be used. They will burnish and/or remove the paint film; may have an adverse effect on the substrate; and can dull gloss, satin, semi-gloss, or stain sheet paint coatings.

Check for dirt periodically. Generally, it will be present in and near cooking areas, and wall or trim areas at hand level.

Once properly washed, the surfaces should be rinsed thoroughly to remove all residues potentially left by the cleaner. If residues are not removed, it can interfere with the adhesion of coatings that are applied in a touch-up or fullcoat application at a later time.

Initially, always clean your painted surfaces with a mild detergent and a sponge or soft cloth. Let the detergent do the work! Clean the surface in a circular motion rather than rubbing back and forth. Resort to harsher cleaners as needed and commercial cleaners only when necessary.

Painted surfaces with stains such as ink, food and oil, graffiti, or lipstick that cannot be removed with the recommended cleaning procedures should be repainted.

It is advised that the stained surfaces be coated with a stain blocking primer made especially for this purpose or a commercially available solvent borne stain block-

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ing primer, prior to the application of a finish coat.

Lacquer Wood finishes Conventional nitrocellulose clear lacquer coatings dry very hard and are available in a range of sheens. Although these coatings are hard, they are also brittle, which means the lacquer film can be chipped or damaged easily.

Avoid hard contact with any interior substrate coated with lacquer. By nature, nitrocellulose lacquers do not perform well when exposed to moisture conditions, i.e., water or other liquids spilled from counter tops and running down the face of lacquered cabinets, or moisture and steam discharge around built-in dishwashers. When spills occur, dry those areas immediately with a dry, soft cloth.

After the lacquer coating system has been properly applied and cured, routine

cleaning can be achieved based on the following recommendations.

• Dust these surfaces with a soft cloth. Never use oiled or treated cloths on lacquered surfaces.

• Use a mild form of detergent mixed with warm water.

• Clean the surfaces with a soft sponge or cloth. Never use abrasive type cleaning tools and/or cleaning solutions.

• Rinse surface well with clean warm water. This will help to remove any surfactants (such as detergents) and other contaminants from the surface.

• The surface should be immediately and thoroughly dried with a soft towel.

The use of ammoniated cleaners will discolor and yellow the lacquer finish, and abrasive or harsh solvents will adversely affect the integrity of the coating.

If heavier cleaning is required for soiled surfaces, a furniture cleaner may be suitable. Always test the cleaner in an inconspicuous area to ensure that the lacquered surfaces are not adversely affected. Commercial wood polishes can be used on occasion to protect the lacquer finish and maintain gloss.

Touch Up In most cases, the painting contractor will leave touch-up paints in the garage area of a home. These usually contain the colored paints that were applied to the interior and/or exterior surfaces of the home.

Please be advised that touch-up paint properties are affected by many things including the original method of application, amount of material applied, surface texture, profile and porosity. For exterior

surfaces, touch-up will be affected by the length of time the original coating has been on the surface, environmental conditions, exposure to and/or dirt adhesion.

Listed below are some helpful hints to maximize the results of the touch-up process:

The same holds for sheen paints. Thin the paint with an appropriate solvent if needed. Using a brush, apply a light coat of material to the affected areas.

• Use the same batch of paint for touch-up application.

• Note that flat paints touch up much better than sheen paints.

Blocking

• For best results when touching up wall areas, always apply a full coat of paint from corner to corner.

To minimize the possibility of a color variations when performing touch-up

on small areas on a wall, it is recommended that you slightly thin the waterbased flat wall paint with water and apply a light coat with a brush to the affected areas. Apply paint from the center of the soiled area, feathering the material outward.

On occasion, painted surfaces will stick to each other. For example, a door and door jamb, cabinet doors or drawers and stile. Generally, this is a result of putting painted surfaces back in service before the coating has fully dried and/or cured.

January/February 2019 | ECHO Journal

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How Do You Join ECHO? Over 2,000 HOA residents benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today.

To apply for the membership, sign up online at www.echo-ca.org.

For more information about membership and ECHO, call us at 408-297-3246 or visit the ECHO website.

Paint coatings tinted to dark colors tend to ‘block’ more than white, off-white or light colors. In addition, glossier paints block more than flat paints. Warm and damp conditions can increase blocking.

Added layers of coatings will increase the tendency for coatings to block.

Here are some easy methods to deal with the problem:

• Always allow ample time for paint coating to thoroughly dry before putting the painted object back into service.

• If blocking becomes an issue, rub talcum powder onto both surfaces.

This procedure will alleviate surface tack and/or sticking.

• Be mindful that certain plasticizers used in weather stripping for doors, windows, etc., can soften latex and/or acrylic paints, resulting in the sticking together of the two dissimilar surfaces.

Treating Mildew Conditions Mildew is an airborne, fungus-type organism. The spores will attach to most surfaces. Warm and damp environmental conditions are conducive to its growth with the most likely places being laundry rooms, bathrooms, kitchens and base20 echo-ca.org

ments. Never paint over mildew! Mildew should be treated and removed with the use of commercially available removers or with the procedure outlined below:

• Apply a 3:1 mixture of water/ household bleach to the mildewed area using a sponge or soft rag. Safety precautions should include eye and skin protection and the use of a respirator. With colored paints, it is recommended that you first do a small test area to ensure that the color will not be affected by the bleach. Protect floor areas and nearby furnishings.

• Allow the mixture to remain on the surface for approximately 20 minutes.

• Rinse off treated area thoroughly.

Proper care and maintenance of the interior painted surfaces will improve the aesthetic of the interior space while properly protecting the surfaces from wear and tear. In the next issue of the ECHO Journal, we explore Painted Surfaces Care and Maintenance Part 2 - Exterior Surfaces.

Judy O'Shaughnessy is a Property Management Specialist with Kelly-Moore Paint Co. She has 10+ years of experience within the industry and provides assistance with product recommendation, specifications, color selection and color rendering to homeowner associations.

November/December 2018 | ECHO Journal

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When is the Board And When 22 echo-ca.org

Court of Appeal Defers to HOA Board’s Interpretation of CC&R Provision Precluding Use of Property as a “Business” Against a Commercial Vineyard.

By Ann Rankin

wrong? will a Court Defer?

January/February 2019 | ECHO Journal

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S

ometimes the courts work in mysterious ways.

The newest case on “judicial deference” may create even more confusion.

A Lamden and Judicial Deference: How Far Does It Go? Recently, the Second District Court of Appeal agreed with the Ventura County trial court that the common interest development association that was a defendant in the case of Eith v. Ketelhut (Second Dist., 2018) Cal. App. LEXIS 1162 was not liable to plaintiffs, who were dissident homeowners, on account of its refusal to prohibit other owners from operating a vineyard and using the grapes to make wine which was then sold over the internet. Plaintiffs contended that the vineyard use violated a CC&R provision prohibiting business and commercial uses within the development. The board said there was no CC&R violation. The Court of Appeal agreed.

The court in the Eith case relied on the California Supreme Court decision in Lamden v. La Jolla Shores Clubdominium

Homeowners Assn. (1999) 21 Cal. 4th 249 in making its decision. In Lambden, the California Supreme Court held that elected HOA boards are in a better position than the courts to decide how to maintain the common areas of a common interest development. So, the Supreme Court said the courts should “defer” to the board’s business judgment on such matters; the courts shouldn’t substitute their own opinions for the opinions of an elected board concerning how to take care of the community. The Lambden case involved a lawsuit by owners of separate interests in a condominium who contended that the Board should abate termites in the buildings by “tenting” and fumigating the buildings. The Board decided not to “tent” the buildings but to “spot treat” the termites instead (which was cheaper).

The Supreme Court in Lambden made it clear that the HOA board was elected to decide on things like how to kill termites, and the courts shouldn’t get involved where the board made a reasoned decision after using due diligence.

B But Courts, Not Boards, are Supposed to Interpret CC&Rs! However, after discussing the Lamden case, the Eith court acknowledged, in its

opinion, that “The judicial deference rule does not encompass legal questions that may involve the interpretation of the covenants, conditions and restrictions (“CC&Rs”) of a homeowners association.

Courts decide legal questions.” In other words, courts “defer” to the Board of Directors when it comes to decisions about how to maintain buildings, kill termites, and such, but NOT on how to interpret CC&Rs and other legal documents; interpreting documents is the province of the courts, not the boards.

But then, the Court of Appeal in the Eith case turned around and held that the trial court properly deferred to the Board about how to interpret the CC&R provision prohibiting business and commercial uses. The CC&Rs prohibited “any business or commercial activity.” The Court of Appeal in the Eith case had just finished saying that courts don’t defer to boards about how to interpret CC&Rs because “courts decide legal questions.”

The majority of the Court of Appeal justices discussed in the opinion certain facts: that the board members had studied the activities of the vineyard owners, and had determined that: the vineyard was aesthetically “amazing,” the owners did not grow a whole lot of grapes on their land; the owners harvested the grapes in a few hours and sent them to another location to be made into wine and then to be bottled; and they then sold the wine over the internet, not from a showroom within the development.

The Board members had decided that this land use was no different from the activities of other owners who raised fruit trees or who grew avocados within the development. (Which is interesting; there was no evidence that these other owners sold the fruit or the avocadoes that they grew.) The trial court and the Court of Appeal both deferred to the Board’s decision not to crack down on the vineyard owners.

One of the justices disagreed in a published dissent. The dissenting justice wrote that it didn’t matter that the vineyard was aesthetically pleasing, or that the wine was sold over the internet. The dissenting justice read the CC&Rs and looked at what the vineyard owners were doing and said it was clearly a “business or commercial use.” He agreed with the majority that courts, not boards, are supposed to interpret CC&Rs and other

24 echo-ca.org

legal documents. He wrote, “This is a straightforward legal question to be decided by the courts, not members of the Board who lack legal expertise.” The dissenting opinion cites cases including Dover Village Assn. v. Jennison (2010) 191 Cal. App. 4th 123, a case where the issue was whether a sewer pipe was ordinary “common area to be maintained and repaired by the Association” or “an exclusive use common area designed to serve a particular homeowner who would be responsible for its maintenance”. The board thought the sewer pipe was exclusive use common area because it served only one owner’s land.

The appellate court disagreed and said it was common area and that this was a legal issue for the court to decide, not an issue on which the court should defer to the board.

The majority opinion also cited several cases in which courts deferred to boards, and others in which they did not.

Neither the majority nor the dissent cited Ekstrom v. Marquesa at Monarch Beach Homeowners’ Association (2009) 168 Cal. App. 4th 1111. In that case, owners sued to enforce a CC&R provision requiring all trees to be trimmed to a level that was no higher than the roof line, unless the tree didn’t obstruct the neighbor’s view. The Board said that the CC&R provision didn’t apply to “palm trees,” because trimming the top of a palm tree would kill the tree.

The Court of Appeal begged to differ and ruled that a “palm tree” is still a “tree” and ordered the association to trim the palms trees just like all the other trees.

The court said judicial deference didn’t apply “to justify a direct violation of the CC&Rs;” rather, it applied to discretionary decision making in such matters as maintenance and repair.

C So, what Do We Do Now? Even the courts are confused about how far to take the concept of “judicial discretion.” Perhaps the California Supreme Court will clear up this confusion in another published decision.

?

Until then, associations and their attor-

neys must proceed cautiously, as acting in a manner that a trial court or reviewing court decides was “wrong” can subject an association to expensive attorneys’ fees. Judicial deference clearly applies to issues involving discretionary maintenance decisions and the like. In theory, it doesn’t apply to interpretation of CC&Rs and other legal documents. But in the Eith case, the majority cited the law that says no deference to a board’s legal interpretation, and then proceeded to defer to the board’s interpretation of the CC&Rs. Go figure and be careful.

This article is not a substitute for qualified legal advice. If you have a specific legal question, consult qualified counsel with expertise in common interest developments.

Ann Rankin has over 30 years experience representing property owners, real estate investors and developers in disputes and transactions involving both residential and commercial real property. She has owned and managed her own law firm for over 24 years.

January/February 2019 | ECHO Journal

25

A Road Paved with Good Intentions: Addressing Unintended Consequences of New Public Assembly Laws Affecting Homeowner Associations

By Katrina E. Solomatina

26 echo-ca.org

January/February 2019 | ECHO Journal

27

• distributing information, without prior permission, about matters of general public political concern and matters relating specifically to life in the CIDS. The statute does say that such member assembly should take place “at reasonable hours and in a reasonable manner,” however, neither the statute nor the legislature provides any guidelines for “reasonable hours or in a reasonable manner.”

The Legislature took it a step further.

Pursuant to section 4515, homeowner association’s governing documents also may not prohibit the use of association’s common area (including, community or recreation halls, and club houses) for such political or CID assembly purposes.

In addition, an association cannot charge a fee for such use.

It All Starts With Good Intentions.

A

s the California legislature expressed in the stated legislative objective behind Civil Code section 4515: “The homeowners’ associations that operate the common interest developments (CIDs) are quasi-governmental entities with great power over the lives and property of their residents, including powers exceeding those of local governments.

Unfortunately, those powers have too often been used to control their residents and squelch opposing views with very little regulation or oversight.”

28 echo-ca.org

So the legislature, taking matters into its own hands, enacted section 4515 effective January 1, 2018, which clarifies the rights of homeowners (and residents) in CIDs to engage in politically expressive activities within the CID and freely communicate with others concerning CID living or for social, political or educational purposes having nothing at all to do with their community.

What The Law Prohibits Specifically, this law makes it unlawful for a CID’s governing documents to prohibit homeowners or residents from:

• assembling peacefully, inviting public officials, candidates for public office, and representatives of homeowner organizations to meet with homeowners and residents as well as their invitees and guests; • using common areas for political meetings; canvassing and petitioning other CID members and residents; and

During the process leading up to enactment of the law, the Assembly considered but rejected provisions of the bill that would have allowed homeowner associations (HOAs) to require deposits or insurance for the use of common areas for political activities. Instead, the law prohibits an HOA from charging a deposit or requiring insurance as preconditions for use of a common area for political activities. An association can be subject to a fine of $500.00 for violation of the law.

Associations Impacted First-Hand The primary impact of these provisions will be upon associations with indoor common area meeting rooms or clubhouses, although other associations without common area buildings could also be potentially affected if they have outdoor areas easily used for meetings.

How The Associations Could Be Impacted

The legislature clearly decided that homeowners in a community should bear the cost and some degree of risk associated with hosting political meetings.

In addition, this law might expose an association to claims that it has not properly accommodated the disabled under the Americans with Disabilities Act. While the ADA does not generally apply to associations it can if they are deemed to provide public accommodations. This can occur for example if a meeting room is leased to the public for a fee or if the association hosts events attended by the public (swim meets are a common example). If the ADA does apply, an association might have a duty to have suitable restrooms (doors that swing wide, grab bars, etc.), proper signage, widened gates, curb cuts and other physical changes needed to accommodate those with mobility impairments.

Protections For The Associations The law does permit associations to adopt some regulations and limitations on the use of common areas for public assembly purposes. These include requiring: 1) a use agreement that contains, among other things, a broad indemnity/hold harmless in favor of the Association; 2) use of common area to comply with currently operative time and occupancy limitations; 3) hiring patrol if same is required for paid use; and 4) clean up, “no damage” and other use restrictions and requirements not expressly prohibited by the statute. Additionally we believe – although this has not been tested – that the association can prohibit admission to members of the public responding to advertisements or signage in public places (i.e., downtown) promoting a particular event.

We understand some might wish to impose a “cover charge” for attendees.

We doubt this would be enforceable

since this could be characterized as prohibited limitation on someone’s right to attend a meeting; also, charging a fee could make it harder to argue that the meeting was not “open to the public” thus increasing the chance of ADA exposure.

Finally, while the association cannot require the “host” to have insurance, the association can strongly encourage it by reminding the host that if damage or claims ensue they could personally be held responsible.

Conclusion

There is obviously no “one-size-fits-all” solution to potential issues with implementation of the new right to assembly law in the HOAs. Only time will tell and hopefully the legislature could provide a more clear guidance on the restrictions HOAs could place to protect themselves and ultimately their members and our liberties which we all hold dear.

Katrina Solomatina is an attorney with our corporate and business law department.

Ms. Solomatina has a background in Real Estate and construction law. Katrina advises clients on compliance with association, board, and member duties under the Davis-Stirling Common Interest Development Act as well as other state and federal laws.

January/February 2019 | ECHO Journal

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30 echo-ca.org

More Electric to a Vehicles Coming Common Interest Development Near You

By William M. Scherer, Esq., and Louis J. Sarmiento, Esq.

January/February 2019 | ECHO Journal

31

I. New Year, New EV Law

L

awmakers recently passed Senate Bill 1016, which is a clear statement by the California Legislature that it wants more electric vehicles (“EVs”) on the road. The new law went into effect on January 1, 2019, prohibiting common interest developments (“CIDs”) – which include condo projects, planned developments, stock co-ops, and community apartment projects – from effectively prohibiting or “unreasonably restricting” the installation or use of electric meters used in connection with EV charging stations (“EV Meters”).

You may be asking your- self, “I know about the EV charging station laws.

What’s so special about this new law?”

The answer is that the legislation’s author believed that the existing law, found at California Civil Code § 4745 (“Section 4745”), while covering the installation and operation of EV charging stations, did not specifically extend its protections to EV Meters, which are a necessary additional piece of equipment for a efficiently-functioning EV charging station. In addition, the law's proponents believed existing insurance requirements, described below, were onerous and should be abolished due to the lack of available options in the insurance market, which was an obstacle to the installation of EV charging stations.

32 echo-ca.org

Thus, this new law amends Section 4745 and adds a new Civil Code section by specifically extending the protections concerning EV charging stations to EV Meters and creating new benefits for owners – and additional oversight obligations for CID boards.

II. Existing Law Existing law voids any part of a CID’s governing document that prohibits or unreasonably restricts the installation or use of an EV charging station within an owner’s unit or designated parking space, which might either be in the owner’s exclusive use common area or an assigned parking space; provided, that CIDs can enact “reasonable restrictions” on EV charging stations that do not greatly increase the cost of the station or decrease its efficiency.

For CIDs that have a process for approval of architectural modification, existing law states that applications for installing an EV charging station must be processed substantially in the same way.

It also provides that an application to install an EV charging station that is not denied in writing within 60 days is deemed approved, unless there was a reasonable request for additional information.

Section 4745, as it existed before the start of 2019, placed the following financial obligations on owners of EV charging stations:

and repair, etc. of the EV charging station; • ongoing costs of maintaining and repairing the EV charging station itself until it is removed; and to life in the CIDS. • costs of maintaining liability coverage of at least one million dollars ($1,000,000).

CIDs have the following potential financial obligations:

• Any CID that intentionally violated Section 4745 were potentially liable to the applicant for costs incurred by the applicant by such violation and payment to the applicant of up to $1,000 in penalties.

• Also, if the applicant pursued legal action to enforce Section 4745, the CID potentially would be liable for the applicant’s legal fees.

III. How It Is Now

• costs of electricity used by their EV charging station;

In order to remove what the new law’s author saw as an obstacle to more EVs garaged in CID lots, SB 1016 made some changes to Section 4745 and added a new Civil Code section – Civil Code Section 4745.1 (“Section 4745.1”) – which specifically extended Section 4745’s protections to EV Meters.

• costs for damage caused by the installation, lack of maintenance

The amendment to Section 4745 with potentially the biggest impact is the removal of the heavy insurance require-

ments, including the required million dollars of insurance coverage. Instead, EV charging station owners are merely required to provide their HOA with proof of insurance covering the charging station. Section 4745 was also amended to clarify that EV charging station owners would be responsible for the costs associated with the installation of their charging station, as opposed to just the electricity used by the charging station.

The remaining financial obligations found in Section 4745, as outlined above, remain intact.

New Section 4745.1 mirrors many of the charging station protections and is intended to prevent CIDs from distinguishing between the EV charging stations, which must in most cases be permitted, and the accompanying EV Meter, which, while impliedly covered within Section 4745, was not specifically covered.

Thus, new Section 4745.1 makes any provision in a CID’s governing document that effectively prohibits or unreasonably restricts the installation or use of EV Meters unenforceable, but permits CIDs to make reasonable restrictions on the installation of the EV Meters based on space, aesthetics, structural integrity, and equal access for all homeowners.

In sum, your CID board must generally attempt to find a reasonable way to accommodate the installation request.

In addition, an owner who desires to place an EV Meter in common area or exclusive use common area must coordinate and pay for the utility company and a licensed contractor to install needed wiring. The other financial obligations of the owner recited above have been extended to costs associated with the EV Meter – of course, with the noted exception of the insurance coverage minimum.

IV. What Does This Mean for Associations and Boards?

This new law means that boards should take a look at their governing documents and ask themselves a few questions:

• Do our governing documents have rules that would apply to EV charging stations or EV Meters?

• Do any of our rules prohibit or unreasonably restrict EV charging stations or EV Meters?

• Do any of our restrictions on EV charging stations significantly increase the cost of a station or significantly decrease its use?

• Are any of our restrictions on EV Meters based upon space, aesthetics, structural integrity, and equal access to those services for all homeowners?

• Do our governing documents provide a process for review and approval for architectural modification, alteration, etc.?

• Does our process require that an application be reviewed and approved/denied, in writing, within 60 days from the receipt of the application?

V. Conclusion As more EVs hit the road, they will need to be parked – and charged – somewhere.

If your board receives an application from an owner asking to install or use an EV charging station or a dedicated electric meter, check with your association’s attorney to confirm that your process is in compliance.

William M. Scherer, Esq., is a founding partner of Scherer Smith & Kenny LLP, a business, real estate, and litigation firm.

He has nearly 30 years of experience advising homeowners associations, stock co-ops, and entrepreneurial companies.

Louis J. Sarmiento, Esq., is a real estate and business law attorney at Scherer Smith & Kenny LLP, where he advises homeowners associations, stock co-ops, and entrepreneurial companies.

January/February 2019 | ECHO Journal

33

In Memoriam James Ernst - 1945 to 2018

Our small community lost one of its greats last December when Jim Ernst passed away. Jim was well-respected for serving communities throughout California since the early 1990s, providing high quality financial services for Associations and educational courses to community managers. His infectious smile and easy demeanor made it impossible not to like him. He stumbled into our industry by accident and turned his twist of fate into a light for so many of us who knew him and had the privilege of learning from him. His is a legacy we should all strive to carry on.

A friend to homeowner associations and a valued contributor to ECHO.

34 echo-ca.org

Is Your Board Receiving ECHO Benefits?

Members receive the ECHO Journal, free training, and digital downloads from the ECHO website.

Boards change frequently, so keep your HOA’s information up to date! Send us: 1. Board Names 2. Mailing Addresses 3. Email Addresses Send everything to account@echo-ca.org or ask your property manager to do so on your behalf. Thanks for being an ECHO member!

Questions? We can help: Email: account@echo-ca.org. Phone: 408-297-3246

January/February 2019 September/October 2018 November/December 2018 || ECHO ECHO Journal Journal

35 25 31

ECHO honor roll

ECHO HONORS VOLUNTEERS Resource Panel Chairs

Seminar Speakers

Recent Contributing Authors

Accountant Panel Adam Haney, CPA 888-786-6000 x317 ahaney@cidcllc.us

Annual Seminar Lisa Black, Esq. Jeffrey Cereghino, Esq. Rolf Crocker, CCAM Lisa Esposito David Feingold, Esq. John Garvic, Esq. John Gill, Esq. Sandra Gottlieb, Esq. Adam Haney, CPA Matt Haulk, Esq. Susan Hoffman, PCAM Michael Kennedy, Esq. Cindy Koester, PCAM David Levy, CPA Julie Mouser, Esq. Rob Rosenberg Amy Tinetti, Esq. Wanden Treanor, Esq. Wendy Weber Steve Weil, Esq.

November/December 2017 Debra Warren Joelyn Carr-Fingerle Wendy Weber Sandra L. Gottlieb, Esq., CCAL

Central Coast Panel John Allanson 831-685-0101 East Bay Panel Ann Marquis-Fisher eastbaypanel@echo-ca.org Legal Panel Mark Wleklinski, Esq. legalpanel@echo-ca.org Maintenance Panel Cassidy Rajkovich maintenancepanel@echo-ca.org North Bay Panel Stephany Charles & Diane Kay northbaypanel@echo-ca.org South Bay Panel David Zepponi 408-297-3246 x4 Wine Country Panel Pam Marsh & Sarah Dunia winecountrypanel@echo-ca.org Legislative Committee Paul Atkins Jeffrey Barnett, Esq. Sandra Bonato, Esq. Jerry Bowles Oliver Burford Joelyn Carr-Fingerle, CPA Chet Fitzell, CCAM John Garvic, Esq., Chair Roy Helsing Geri Kennedy, CCAM Wanden Treanor, Esq.

East Bay Charlotte Allen Susana Cendejas, Esq. Andrea O’Toole, Esq. Monterey Sandra Bonato, Esq. Melissa Ward, Esq. Wendy Weber San Rafael David Feingold, Esq. Wanden Treanor, Esq. Glenn Youngling, Esq. Santa Cruz Sharon Pratt, Esq. Diane Rossi, PCAM, CCAM Brian Seifert Jennifer Stearns, CCAM Rosalia Tapia, Esq. Wine Country Carra Clampitt, CCAM Susan Hoffman, PCAM Amy Tinetti, Esq.

36 echo-ca.org

January/February 2018 Robert DeNichilo, Esq. John P. Gill, Esq. Oliver Diaz Rolf Crocker March/April 2018 Jennifer M. Jacobsen, Esq. Paul W. Windust, Esq. Andrea L. O’Toole, Esq. Derek Eckert John P. Gill, Esq. May/June 2018 Susan L. Hoffman Thomas Connelly Kevin Boland Rolf Crocker, AMS, CCAM July/August 2018 Carra Clampitt, CCAM Pat Wendleton, Esq. and Sharon Glenn Pratt, Esq. Andrea L. O’Toole, Esq. and Burt Dean Jeffrey A. Barnett, Esq. John P. Gill, Esq. September/October 2018 Katrina Solomatina, Esq. Charlotte Allen Pete Pearson Robert DeNichilo, Esq. Scott Swinton November/December 2018 Tyler Berding, Esq. David Levy, CPA Sandra Long, CCAM, CMCA, AMS, PCAM Jan A. Kopczynski, Esq. Sherry Harvey, PCAM January/February 2019 David Levy, CPA Ann Rankin Katrina E. Solomatina William M. Scherer, Esq. Louis J. Sarmiento, Esq. Judy O’Shaughnessy

ECHO event calendar

RESOURCE PANEL CALENDAR ECHO Resource Panels are offered in a casual atmosphere to enable managers, professionals and board members to hear about important topics presented by experts in the industry, and share experiences and issues. The meetings are open to all ECHO members and those interested in learning about ECHO. If you have any general questions please contact events@echo-ca.org

Register Online

Registration will open four weeks prior to the panel date.

You must register online to provide ECHO with an accurate headcount.

DATE

PANEL NAME

ORGANIZERS

REGISTRATION LINK

Thursday, March 7, 2019 11:45am to 1:00pm

North Bay Resource Panel

Stephany Charles & Diane Kay northbaypanel@echo-ca.org

bit.ly/nbpanel-march19

Thursday, March 21, 2019 11:45am to 1:00pm

Wine Country Resource Panel

Pam Marsh & Sarah Dunia winecountrypanel@echo-ca.org

bit.ly/wcpanel-march19

Wednesday, April 3, 2019 11:45am to 1:00pm

Maintenance Resource Panel

Cassidy Rajkovich maintenancepanel@echo-ca.org

bit.ly/mapanel-apr19

Wednesday, April 24, 2019 6:30pm to 8:30pm

Legal Resource Panel

Mark Wieklinski legalpanel@echo-ca.org

bit.ly/lepanel-apr19

Prices will increase at the door!

Paying by Credit Card is the fastest way to ensure your spot is reserved. If you are Paying by Check then please continue with online registration and select "Pay by Check" so we can get an accurate headcount.

Checks must be payable to ECHO and received two weeks prior to the event date. ECHO Mailing Address: 1671 The Alameda, Ste. 205, San Jose, CA 95126 1671 The Alameda, Ste. 205, San Jose, CA 95126 Find this table in the Excel “ECHO Events”

Contact Us PANEL

MEETING

LOCATION

East Bay

eastbaypanel@echo-ca.org

Ann Marquis Fisher

Legal

legalpanel@echo-ca.org

Mark Wleklinski

Maintenance

maintenancepanel@echo-ca.org

Cassidy Rajkovich

North Bay

northbaypanel@echo-ca.org

Stephany Charles & Diane Kay

Wine Country

winecountrypanel@echo-ca.org

Pam Marsh & Sarah Dunia

January/February 2019 | ECHO Journal

37

BOOKSTORE

2019

2019 Condominium Greenbook Member Price: $17.00 Non-Member Price: $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.

2019

Condominium Bluebook 2019 Edition Member Price: $17.00 Non-Member Price: $25.00 This well-known compact guide for operation of common interest developments in California now includes a comprehensive index of the book and a chapter containing more than 200 frequentlyasked questions about associations, along with succinct answers.

Construction Defect Claims

The ECHO Bookstore is your source for great information on the duties of HOA Boaard Members.

Order online at www.echo-ca.org or fill out the form on the facing page.

Member Price: Non-Member Price:

$19.95 $25.00

New buildings can conceal extensive faults. It’s a board’s worst nightmare—rainstorms damage buildings and bring owner complaints. Is legal action necessary? With this new book, you’ll learn about the resolution process for construction problems, and how to handle complex claims.

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

Board Member Handbook Member Price: $15.00

$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.

Non-Member Price: $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.

38 echo-ca.org

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.

2019 Digital Downloads Free for ECHO Members

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

Publications to answer your questions about common interest developments Order Online at www.echo-ca.org

Bookstore Order Form

EDUCATIONAL COMMUNITY FOR HOMEOWNERS 1960 THE ALAMEDA, STE 195, SAN JOSE, CA 95126 PHONE: 408-297-3246, FAX: 408-297-3517

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January/February 2019 | ECHO Journal

39

new professional members

Welcome to our

NEW PROFESSIONAL MEMBERS

The Management Trust As the only 100% employee owned community association management firm in the country, The Management Trust is here to do things differently. “Inspiring each other to take ownership of our potential” is in our mission statement and something that we are motivated by every day. You and your neighbors deserve to feel confident in your management firm and know that you are getting our best efforts to achieve the positive results you seek. Even though we have offices throughout the Western United States; we still recognize the need for a local, personalized approach customizing a management plan to fit your community and putting you on a roadmap to success. We offer a Leadership Management process, proprietary insurance program and Trust Risk Assessment and Compliance Program for community reserve projects as well as in-house reserve study capability. We look forward to sharing our mission with your community.

The Management Trust 1739 Creekside Drive Suite 100 Folsom, CA 95630 Web: www.managementtrust.com Tel: (916) 985-3633 x 5103 Contact: Lori Storm – Client Development Email: Lori.storm@managmenttrust.com

Silvercreek Association Management Our guiding principle is to deliver exceptional customer service as a homeowners association management company. We value our relationships with each of our clients and will go above and beyond what is expected of us in order to ensure that your association gets the service and attention it needs. We also understand that customer service is important to our residents, which is why we always take the time to understand all the relevant facts and circumstances of any situation that arises to ensure that all the needs of your community are met. By focusing our company’s resources entirely on association management services, Silvercreek is able to consistently deliver premium quality services to homeowners’ associations throughout northern California. Our management team’s knowledge and experience is the backbone of our company, which not only helps your association operate at peak efficiency, but also helps your association avoid pitfalls that less experienced management teams fall prey to. Above all, we strive to make your community a place where people want to live. Learn more about our services by giving us a call today.

Silvercreek Association Management 2950 Buskirk Avenue Suite 300 Walnut Creek, CA 94597 Web: www.sc-manage.com Tel: (925) 690-5332 Contact: Trevor Shea Email: trevor@sc-manage.com

Find all of ECHO’s Professional Members Online.

Visit our Professionals Directory at www.echo-ca.org.

40 echo-ca.org

advertiser index

about ECHO

WHAT IS ECHO? Applied Reserve Analysis....................20 www.appliedreserveanalysis.com

Common Interest .................................11 www.commoninterest.com

Barcode Automation, inc........ Inside Front Cover www.Barcode-Automation.com

IQV Construction & Roofing................29 www.iqvinc.com

Benjamin Moore Paint & Company...........................................24 www.benjaminmoore.com Berding Weil..........................Back Cover www.berding-weil.com Cascade Building, Inc. .........................25 www.cascadebuildinginc.com

Kelly-Moore Paints...............................33 www.kellymoore.com Levy, Erlanger & Company..................21 www.hoa-cpa.com Mutual of Omaha Bank.......................19 www.mutualofomahabank.com White and MacDonald.........................29 http://wm-llp.com

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

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

Benefits of Association Membership • Subscription to bi-monthly magazine • Members-only online education • Updates to the Association Statute Book • Frequent educational seminars • Special prices for CID publications

ECHO Membership Dues

New Office 1671 The Alameda, Suite 205 San Jose, CA 95126

Association Membership HOA 0 to 25 units...........................$150 HOA 26 to 50 units.........................$195 HOA 51 to 100 units.......................$295 HOA 101 to 150 units.....................$395 HOA 151 to 200 units.....................$495 HOA 200+ units..............................$595 Professional Membership.................$500 Association Management Membership.......................................$500 Individual Membership.......................$95 Journal Subscription............................$15

How Do You Join ECHO? Over 2,000 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for the membership, sign up online at www. echo-ca.org.

For more information about membership and ECHO, call us at 408-297-3246 or visit the ECHO website.

August2014 2013 || ECHO ECHOJournal Journal February ECHO Journal

41 41

legislation at a glimpse

Read the 2018 Legislative Session Wrap-Up The bills below represent the ECHO Legislative Committee’s review of the 2500 bills introduced in Sacramento this year. Watch an upcoming issue of the ECHO Journal for our analysis of those bills that become law on January 1st, and how they may affect your community. For the most up-to-date information, visit the HOA Advocacy section at the ECHO website: www.echo-ca.org/hoa-advocacy

Current Legislation Bill Information

Summary

AB 1760

Emergency Vehicle Parking

Watch Status: Died

Makes a prohibition or restriction in the governing documents of a common interest development relating to parking, including, but not limited to, onstreet parking, void and unenforceable with respect to an emergency vehicle owned or under the control of a member.

AB 1917

Extension of Declaration

Watch

Allows for extensions to the terms of the declaration, as specified. Prohibits extension of the terms of the declaration from exceeding the initial term of the declaration or 25 years, whichever is less.

Author: Frazier

Author: Steinorth Status: Died

AB 1943

Manufactured Housing Title Ownership

Watch

Specifies that a registered owner of a manufactured home in a mobilehome park that is converted or proposed to be converted to a resident-owned subdivision, stock cooperative, or condominium project, may submit written evidence of that owner’s resident ownership in order to comply with this requirement.

Author: Waldron Status: Signed by Governor

AB 2141

Annual Statement Deadlines

Watch

Changes the time requirements for the distribution of the annual policy statement to members of a common interest development to be within 31 to 91 days before the end of the fiscal year.

Author: Cunningham Status: Died

AB 2912

Fidelity Coverage and Electronic Transfers

Watch

Requires an Association to maintain fidelity bond coverage, as specified. Prohibits transfers greater than a specified amount or a certain percentage of an Association's total combined reserve and operating account deposits, whichever is lower, without prior written approval from the Board. Requires the Board to review financial documents and statements on a monthly basis.

Author: Irwin Status: Signed by Governor

AB 3041

Prohibition of Transfer Fees

Watch

Prohibits the creation of a transfer fee, other than excepted transfer fee covenants, as defined, with respect to real property as a fee payment requirement imposed in any covenant, restriction, or condition contained in any deed, contract, security instrument, or other document affecting the transfer or sale of real property. Excepts certain transfer fee covenants from a notice requirement.

Author: Cunningham Status: Signed by Governor

AB 3156

Electric Vehicle Charging Stations

Watch

Clarifies that equipment that meets the definition of "electric vehicle service equipment" is electric vehicle service equipment whether or not it is necessary to tether the equipment to a vehicle to permit the transfer of electric energy.

Author: Mullin Status: Died

42 echo-ca.org

legislation at a glimpse

Current Legislation (continued) Bill Information

Summary

SB 721

Deck & Balcony Inspection Requirement

Watch Status: Signed by Governor

This bill would have required regular inspection and repairs inspection of building assemblies and associated waterproofing elements, including decks and balconies, for buildings with more than a certain number of multifamily dwelling units by a licensed architect, civil or structural engineer, or building inspector or official at certain intervals. Amendments have removed common interest developments from the scope of this bill.

SB 1016

Electric Vehicle-Dedicated Meters

Watch

Requires, with respect to an electric vehicle charging station placed in a common area, the homeowner to agree to pay costs associated with installation. Requires the owner of a charging station, wherever located within a subdivision, to maintain a liability coverage policy, and provide the association with a certificate of insurance, as specified.

Author: Hill

Author: Allen Status: Signed by Governor

SB 1128

Consent to Email, Election by Acclamation

Watch Status: Vetoed by Governor

Authorizes the recipient of a document sent by a common interest development association to consent to or revoke consent to electronic delivery by email. Requires at least 28 days general notice by an association before making a rule change. Requires the director nominees of an association to be considered elected by acclamation in certain circumstances. Makes other changes to elections provisions.

SB 1173

Time Share Exemption from Notifications

Watch

Exempts from notice requirements under the Davis-Stirling Common Interest Development Act, interests regulated in the Vacation Ownership and Time-Share Act of 2004.

Author: Roth

Author: Vidak Status: Signed by Governor

SB 1265

Election Qualifications and Procedures

Oppose Unless Amended

Regulates how association governing documents may specify the qualifications for candidates for a common interest development board and any other elected position, and the qualifications for voting. Requires the association to disqualify candidates for specified reasons. Deletes exception that allows associations to use a paid third party as inspector of elections. Adds other requirements to election rules.

Author: Wieckowski Status: Vetoed by Governor

What Do You Think?

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January/February 2019 | ECHO Journal

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