ECHO Journal - July 2017

The War Of Reconstruction Has Many Small Battles p.10

Five Things New Condo Directors Need to Know Now p.18

Serving Community Associations

Nuisance, and Beyond p.22

Decision-Making in Community Associations p.28

Reviewing Bank Statements: The Key to Watching Your Association’s Money p.34

July/August 2017

echo-ca.org

How To Create a Master Reconstruction Plan. p. 10

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

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news from ECHO

News From ECHO July 2017 For those of you who attended our 45th Annual Seminar and Trade Show, I want to express our sincere appreciation. A lot of work goes in to making the day successful: asking great speakers to volunteer their time to inform you about key issues; asking professionals in the industry to invest their time and sponsorship to welcome you to our exhibit floor, answer your questions, and offer terrific prizes; organizing the event, registration, food and beverage service, and then reading all your evaluations, so we can do it again and make it even better next year!

For those of you who missed it, well, what can I say, you missed it.

There is no substitute for getting answers to your questions, or learning the basics of your fiduciary responsibilities in-person, directly from the experts. But stay tuned, because we’ll be announcing our line-up of seminars for next year this fall, and we still have one regional educational seminar in Monterey on October 28.

I want to recognize and thank our Volunteer of the year, John Garvic; our first ever Board Member of the Year, Ann Marquis-Fisher; and our first ever Association of the Year, The Villages in San Jose. Please take a look at page 6 for details of these dedicated volunteers.

I also want to recognize the 42 Board Members who participated in all four of our HOA University classes at the Annual Seminar. They are listed on page 9, and deserve the thanks of their homeowners for taking the time to learn how to better govern their associations.

Finally, I know it’s July. It’s hot, and vacation is on many minds. Mine too. But these slower times are excellent for getting ahead of budget season, which is right around the corner.

Best,

Brian Kidney Executive Director

July / August 2017 | ECHO Journal

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CONTENTS 10

18

28

22

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10

The War Of Reconstruction Has Many Small Battles Problems of reconstruction are similar no matter what the cause or need. When work is required to correct problems caused by defective construction, deferred maintenance, or major cosmetic changes, a similar approach is needed to properly complete the project smoothly.

18

Five Things New Condo Directors Need to Know Now Congratulations on getting elected to the condo board! Now the fun begins. For first-time directors, there is an overwhelming amount of new information to digest. While it may seem like everything has to be learned at once, it may be more realistic to take a gradual approach. Here are five need-to-know topics to get the journey started.

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Nuisance, and Beyond What is a “nuisance” anyway? The legal definition, made simple, would be when someone is causing (or allowing to be caused) an unreasonable interference with someone else’s use and enjoyment of their property. In short, nuisances and the principles that guide what boards do – or don’t do – when confronted with conflicting interests of property owners in their communities can be a true Hobson’s choice.

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Decision-Making in Community Associations.

Who Decides—the Board or the Members?

It has often been observed that community associations are actually “mini-governments.” The “citizens” (owners) elect “officials” (directors) to make both small and large decisions affecting their lives and assets. These decisions relate to property values, membership safety, long-term financial planning, use of property and maintenance of amenities.

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Reviewing Bank Statements: The Key To Watching Your Association's Money No great period of time passes without news of a fresh scandal involving an association whose cash assets have been mishandled by someone in a position of authority. Like automobile accidents, these statistics remind us that theft and fraud can happen at any time to any association. What is most distressing is that these situations could almost always have been prevented had the association's directors followed a few, simple rules about watching their association's money.

DEPARTMENTS

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News from ECHO ECHO’s 45th Annual Seminar & Tradeshow Wrap-up 2017 ECHO Educational Calendar Monterey Seminar — Saturday, October 28th, 2017

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Nominating Committee Seeks Candidates for ECHO Board of Directors ECHO Professional Directory ECHO Volunteers ECHO Event Calendar ECHO Bookstore Advertiser Index Legislation at a Glimpse

39 40 41 42 45 46

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 2017 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 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 Secretary Carly Melius Directors Sandra Bonato Karl Lofthouse Jerry L. Bowles Jeffrey Saarman Rolf Crocker Brian Seifert John Gill

Wanden Treanor David Levy

Executive Director Brian Kidney Director of Marketing & Membership Carly Melius Director of Communications Tyler Coffin Design and Production Design Site ECHO Mission Statement Serving Community Associations

July / August 2017 | ECHO Journal

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ECHO’s 45th Annual Seminar Wrap-up Hundreds of volunteers turned out for our Annual Seminar in Santa Clara to learn, meet other ECHO members, enjoy the food, and to honor our new award winners.

This is a special community, and we enjoyed meeting each of you. See you next year!

The Villages Association

Ann Marquis-Fisher

Homeowner Association of the Year

Volunteer of the Year

The Villages Association of San Jose joined ECHO in 1992.

Their board oversees 2,309 condominiums in 12 different “Villages” built at different times over the past 50 years.

They have responded to community challenges by committing to education for generations of board members.

Association representatives and members of staff have attended every ECHO Annual Seminar for the past 25 years.

John Garvic served on the ECHO Board of Directors longer than anyone: 40 years, retiring at the end of 2016. We are thrilled to finally recognize his numerous contributions.

The Villages Association

The Villages Association is an extraordinary community of dedicated homeowners and board members - deserving recipients of ECHO’s first Homeowner Association of the Year award.

Board Member of the Year Ann Marquis-Fisher

Ann Marquis-Fisher is the president of the Deer Oaks Association and has served on their board for the past 20 years. After bringing her association into ECHO in 2007 and attending multiple ECHO seminars every year, she now Chairs ECHO’s East Bay Resource Panel, helping to build it into a vibrant group.

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John Garvic, Esq.

John’s dedication has been remarkable. He has served as President (twice), Executive Vice President, Vice President and Director. He is currently Chair of the ECHO Legislative Committee, and has also Chaired the ECHO Legal Resource Panel. He has presented the Legislative Update at the ECHO Annual Seminar every year since 2006.

John has also been a leader in Sacramento on behalf of CIDs. He has provided testimony and given legislators insight into the day-to-day operations and issues handled by the thousands of volunteer board members.

ECHO is grateful for his unparalleled service.

John Garvic, Esq.

2017 ECHO educational calendar

2017 ECHO Educational Seminars If you’ve ever wished that ECHO would hold a seminar closer to your association, chances are that we’ll be nearby during 2017. 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!

Oct. 28 Monterey Educational Seminar (see page 16) Embassy Suites Seaside, CA

Register today!

Online: www.echo-ca.org;

By Phone: 408.297.3246 8 echo-ca.org

San Rafael

San Francisco

NEW HOA UNIVERSITY GRADUATES We award certificates to the dedicated board members who complete all four sessions of our HOA University program.

These board members have demonstrated a commitment to education and to their communities. This year, we recognize the following volunteers: Christine Androtti

Alexandra Matarrese

Bud Armstrong

Demetrios Mavrikis

Irene Barcinas

Mark McKenna

Darshan Bath

Patricia McKenna

Katerina Blazer

Sean McMillan

Diana Burt

Jignesh Mehta

William Campbell

Eugene Moore

Thomas Chak

Patricia Neel

Victoria Cohen

Errol Pryce

Shantae Curran

Monique Pryor

Sophia Delacotte

Deep Rastogi

Dan Ebbesen

Louis Sciupac

Ann Fok

Melanie Smith

Helen Goldsmith

Diania Soto

Sue Hagan

Louis Stephan

Heidi Jakobsen

Brett Stutz

Suzanne Kissinger

Teresa Tong

Mary Koch

Teresa Wann

Franny Lee

William Whipple

Kirpal Malhi

Patricia White

Karen Malik

John Wilson

Thank you for your service to your communities!

March/ April May/ June 2017 2017 || ECHO ECHO Journal Journal July / August

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The War Of

RECONSTRUCTION Has Many Small Battles P

roblems of reconstruction are similar no matter what the cause or need.

When work is required to correct problems caused by defective construction, deferred maintenance, or major cosmetic changes, a similar approach is needed to properly complete the project smoothly.

By David Kuivanen, AIA

July / August 2017 | ECHO Journal

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How and where should you begin?

N

ot by immediately hiring a contractor to make the repairs or changes that individual homeowners have been complaining about the loudest.

Instead the HOA board of directors is responsible for executing a master plan that details how repairs will be made—how the money from a settlement or reserves will be spent—over a period of years.

The master plan should focus on several things: • Establish the scope of the work, including the issues requiring repair, and the extent and location of the problems.

• Prioritize the repairs, beginning with all safety problems that must be corrected to comply with the codes, any issues relating to building integrity or water leaking, and lastly any cosmetic or other improvements that may be desired by homeowners.

• Set the time line for the planning the work, including the times required for identification of the problem, selection of the project team, estimating the value of the work, preparation of the construction documents, bidding the work and contractor selection.

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• Schedule the work, taking into account the time of year (weather), access and sequencing on the site, homeowner inconvenience, inter-relationships of different parts of the work, (to be sure overlapping work is properly sequenced), and scheduling of the money, to allow the work to proceed within given financial constraints of settlement funds, reserves, assessments or loans.

Establish the Scope For reconstruction work, an accurate scope of work is required, both to be sure that the desired and necessary work is completed and also to be sure that bids received are comparable.

The investigation done during any litigation is by its very nature incomplete, as information on overall repairs was based

on “extrapolation” of the limited testing done. To perform reconstruction, an accurate appraisal of the actual field conditions is required at all locations where work is required on the project.

This means that some additional investigation may be required to determine the proper repair methods and scope.

The same is true of repairs needed without prior litigation. The required work must be accurately identified before bids can be received and work begun. This will most likely require some testing and survey work at the project, as part of determining the scope of repairs. If the scope of cosmetic changes is uncertain, or the maintenance repairs have not been adequately identified and solutions proposed, a budget and scope of work will be hard to come by.

Part of the process of determining the scope of work is to prioritize the repairs. The most important issues to address are Life Safety issues; those things that could affect the health

and safety of the project occupants and owners.

For example, if decks are failing or dry-rotted beams need replacing, if major code violations are present in building exiting or fireproofing systems or materials, or if key structural components are missing. The master plan should call for correction of these types of safety problems as soon as possible.

Second, the buildings must be protected from damages that can be caused by failure of components, most often waterproofing systems. If left unrepaired, these failures can cause damages far beyond the cost of replacing or maintaining the systems themselves.

Also, if these types of issues have been identified, the board has the responsibility to deal properly with these issues to protect the safety of the owners and the integrity of the buildings. Any problems identified as “life-safety” issues must be repaired, or possibly addressed by hiring another consultant who could offer a different opinion, mitigating the issue.

Manage the Costs After litigation, even if you’ve won millions of dollars, you may not have enough money to make the repairs identified in the lawsuit. You can stretch your settlement dollars by challenging the experts who were originally involved in the lawsuit.

Typically the defendant’s experts will have provided testimony to support the claim that repairs will cost significantly less money than the association was seeking. After the settlement you may be able to go to these experts and ask them to back up their claims by detailing how reconstruction work can be accomplished for the lesser amount. If that scope of work is judged acceptable, it can be pursued.

At the same time you should include in your master plan how your association will manage the money received from the settlement in conjunction with money you may have already accumulated in reserves.

For example, if you have a roof reserve that has been accumulating for 10 years and is earmarked to be spent five years from now, and you receive settlement funds for roof work, how will the roof reserve be extended or used to augment funds for the repair work? Will the reserve amounts remaining after the work is complete be adequate to maintain the new systems?

If major repairs are in excess of the available funds in current or anticipated reserves or settlement amounts, alternate funding sources will have to be identified. Special assessments, increased dues over time, or loans are options available. By developing your funding sources and scope of work in parallel, you can schedule your work by dollars to match your anticipated cash flow.

Selecting the Reconstruction Team

July / August 2017 | ECHO Journal

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Another challenge is to select a qualified team to perform the reconstruction work.

When a board is selecting a contractor, the best bargain may not be going with the low bidder. After all, the bid system may have been the source of the original problems. However, it is good to solicit bids from a variety of qualified contractors in order for the board to fulfill its fiduciary responsibility.

Performing condominium reconstruction work is not the same as building new homes. With occupied condos the contractor is faced with public relations and security issues not present in new construction, and he or she must select and train crews qualified to work in these surroundings.

Some associations utilize the same experts or contractors who testified during the lawsuit to perform the reconstruction work, but this is not the only approach. During the lawsuit the plaintiff and defense cost estimators provide opinions on the cost of reconstruction work. This number may not reflect current market conditions at the time of reconstruction. Thus, when it’s time for the actual work to begin you still will need to solicit bids from contractors qualified to perform the work. These companies will be bidding in the current market for construction, which will provide more accurate costs and timetables for the work. Also, the estimates for repairs during litigation were based on the extrapolated scope of work. The actual scopes must again be bid to get accurate costs for the work.

You also will want to seek proposals from design professionals who actively practice day today in the highly specialized field of preparing documents for reconstruction work. Many times, the experts who testified on behalf of the association may have the best knowledge of the conditions at the project, and their information may be the most complete.

It is precisely this understanding of the complex nature of the problem that may increase their proposal fees over others.

Some projects will benefit from the services of a Construction Manager. This is a person who will assume many of the day-to-day tasks that might otherwise fall to the homeowners or property manager, who may be ill-equipped to handle the 14 echo-ca.org

extra, specialized workload. Aside from assistance in scope identification and bidding, the CM will be involved in contractor selection, schedule coordination, homeowner communication, quality control and verification of completion of the work, to insure payments to the contractors are justified.

With all the parties involved in reconstruction, it is important that everyone agree at the outset on the scope of work, the priorities and schedule, and the methods to be employed. The work can be complex and time consuming for an association and the board members, and the complexities will only be multiplied if too many individuals with differing points of view, or their own agendas, are involved in the process.

Establish A Committee What can work best is for the board to establish a small building committee separate from the board and for the chairperson of that committee to be designated as the association’s representative during reconstruction, acting as the liason between the construction manager, contractor, design professionals, and others involved. It will streamline the effort if there is only one source and conduit for information during the process.

If the association employs a professional property management firm, the association manager should provide support to the building committee by executing its orders.

The reconstruction effort will more than likely span many months, even years, and will tax the patience of board members and homeowners alike. Nonetheless, the process will be made far less painful if those involved in a leadership role do their homework consulting the appropriate experts before jumping in and starting repairs.

David Kuivanen, AIA, is an architect and longtime ECHO member.

FREE Attendance for ECHO HOA Members!

Monterey Educational Seminar Saturday, October 28, 2017 8:30 AM to 12:30 PM

Yes, reserve _____spaces for the ECHO Monterey Seminar Amount enclosed: $______(attach additional names) Name: Email Address:

Visit echo-ca.org/events for the latest information and online registration.

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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

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

Nominating Committee Seeks Candidates for ECHO Board of Directors

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he Nominating Committee for the ECHO Board of Directors is seeking expressions of interest from persons who are interested in serving on the ECHO Board of Directors. Four positions on the board will be up for election at the ECHO Annual Meeting that will be held in November. These positions are for three-year terms. Current directors whose terms expire in 2017 are Adam Haney, Diane Rossi and Brian Seifert.

Board members are expected to attend four three-hour board meetings held each year, generally at the ECHO office in San Jose. Each board member also serves on one or more committees that hold regular meetings

throughout the year. In addition board members are expected to attend the Annual Meeting and a two-day board retreat each November. Board members receive no reimbursement for these activities. Nominees must also be members of ECHO, either through their homeowners association or business and have thorough familiarity with the organization and the CID industry.

Persons interested in being considered for nomination should obtain and complete a nomination and qualifications form, available by request from the ECHO office.

Every potential candidate, including incumbents, must submit a full form. All completed forms must be submitted to the ECHO office no later than August 15, 2017, to be considered by the nominating committee. Those requesting nomination may be requested to interview with the nominating committee. The committee will meet in late August to prepare recommendations for board consideration.

July / August 2017 | ECHO Journal

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Five Things New Condo Directors Need to Know Now

By Pat Crosscombe

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Preserve the corporate record Act in the corporation’s best interests Review the Transfer Disclosure regularly Manage the corporation’s money responsibly

Follow the governance hierarchy July / August 2017 | ECHO Journal

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What Do New Condo Directors Need to Know Right Away?

C

ongratulations on getting elected to the condo board! Now the fun begins. For first-time directors, there is an overwhelming amount of new information to digest. While it may seem like everything has to be learned at once, it may be more realistic to take a gradual approach. Here are five need-to-know topics to get the journey started:

1

Preserve the Corporate Record

This might seem like a bizarre idea, but consider the homeowners association like a living being; the records serve as its memory. No living being can survive without a memory; the association likewise cannot function effectively without complete records.

Directors and property managers are the key creators of the corporation’s memory, but change on a regular basis. Directors leave at the end of their term, resign because of ill-health or sell their unit and move. In some cases, an entire board gets removed by a vote of the owners. Relying completely on property management companies and their managers is not a good idea, either. Managers may similarly leave, get replaced or retire.

It is the board’s responsibility to make sure the corporate memory is always up-to-date. Property managers have an 20 echo-ca.org

important role to play in creating and preserving corporate memory, but the board must provide oversight and make sure this memory is created and immediately accessible. Start preparing now because changes are difficult to predict!

If directors and managers wait until these events occur, it may be too late.

Memories fail, emails remain in personal inboxes, and handwritten notes get misplaced.

spend money on a special assessment at this point in time.

New directors and managers rely on good records to provide this memory.

Poor or missing records leave directors and managers floundering in the dark, wasting time trying to understand why a particular decision was made and wasting money because a high-value renovation contract has gone awry.

2

Act in the Corporation’s Best Interests

From the very first meeting new directors attend, they must make decisions based on the principle of fiduciary responsibility. What does this mean? Simply put, directors must act in the best interest of the association and not in their own self-interest.

This is an incredibly important distinction to understand. It’s normal for people to act in their own self-interest. However, for directors, the corporation’s interest replaces self-interest. The corporation is like a living entity and continues to exist as directors and property managers come and go. Directors serve the corporation and must ensure that the corporation stays financially and physically healthy.

An example will help explain.

The board of Green Condos is preparing to undertake a much-needed window replacement project. After reviewing finances, the board realizes that a special assessment will be needed to pay for the work.

One of the directors votes against the project because he does not have the money to pay for the special assessment.

Another director also votes against the project because she is planning on selling her condo and doesn’t want to have to

The decision has been made; the window replacement project is postponed for another year. This is a very poor decision for the condominium corporation as a whole and a good example of directors failing in their fiduciary responsibility.

3

Review the Transfer Disclosure Regularly

After making an offer to purchase a condominium, potential buyers receive lots of documents to review. One of them is the Transfer Disclosure, as described in California Civil Code Section 45254545. It includes copies of all governing documents, the most recent budget report and annual policy statement, along with a host of disclosures regarding assessments and defects.

Potential condo buyers usually leave the review of this document to their lawyer. Most condo buyers, especially first-time buyers, are unlikely to fully understand the implications of this document. However, it is critical for directors to understand now exactly what the Transfer Disclosure represents and how to use it to mitigate risk for the corporation.

Associations are required to provide the Transfer Disclosure on request of an owner. The association usually delegates this task to its property management company. However, because the association remains responsible for the content, it’s good practice to review the Transfer Disclosure documents regularly. This ensures that the Transfer Disclosure stays up-to-date and incorporates any new issues as the board addresses them.

Potential buyers need to know any financial or physical problems facing the association. If these details are missing from the current Transfer Disclosure, the association is at risk of unhappy new condo owners who could sue the association if they find out, for example, that a substantial special assessment is due. Ensuring

that the content of the Transfer Disclosure is up-to-date helps mitigate this risk.

4

Manage the Corporation’s Money Responsibly

Looking after money is obviously very important. New directors need to know how the association’s finances have been managed in the past and consider whether this is an acceptable process to continue. Just because a board has done it in a certain way before doesn’t mean that it is the right way or that it can’t be improved.

Directors are responsible for making independent decisions and not simply following along with past practices. Ask about the process of signing checks. Who signs? It’s best practice to require more than one signature. What is the process for approving quotes on small projects and more formal processes for larger

projects? ECHO’s website has a host of useful articles on these subjects.

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Follow the Governance Hierarchy

The California Davis-Stirling Common Interest Development Act and association governing documents are long, complicated and difficult to read. Understanding the content and intent of these documents is a core requirement for directors. Directors are not expected to understand the full legal implications of these documents, as this type of expertlevel knowledge is the responsibility of their lawyer. However, there are a few key points directors should understand.

Associations are governed by state statute. In California, associations are subject to the Davis-Stirling Act and a host of other state and federal codes and regulations. Remember that there

is a hierarchy: federal law comes first; state law second; followed by the association’s declaration, bylaws, and rules. This is just a quick introduction to what new condo directors need to know now.

To recap: Begin the habit of creating the association’s memory; always act in the best interests of the association; review the Transfer Disclosure regularly; manage the association’s funds responsibly; and follow the governance hierarchy. If a new director does these five things well, he or she is off to a good start in becoming an effective director.

Pat Crosscombe is the founder and CEO of BoardSpace, a company that provides software for condo boards and property managers in Canada. She is back on her condo board as president after a three-year break. She can be reached at 613-790-0225 or pat@boardspace.ca. The preceding article originally appeared in the October 2016 issue of CondoBusiness and has been adapted to reflect California association law.

July / August 2017 | ECHO Journal

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NUISANCE, AN

By Sandra M. Bonato, Esq.

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D BEYOND Pets

Smoking Trash Drones Unsafe Prac Vandalism Noise Parking Drug use Weapons

July / August 2017 | ECHO Journal

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What is a “nuisance” anyway?

T

he legal definition, made simple, would be when someone is causing (or allowing to be caused) an unreasonable interference with someone else’s use and enjoyment of their property.

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.echo-ca.org.

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

This question is germane for common interest developments and the associations established to manage them, for several reasons. CIDs are composed of real property – both common area and units or lots – the use and enjoyment of which can be unreasonably interfered with. Moreover, the CC&Rs recorded for CIDs will frequently contain a provision prohibiting conduct by anyone that constitutes a nuisance. Association boards can get into trouble for involving themselves in a nuisance between two neighbors when doing so is not appropriate. Conversely, association boards can get into trouble for not involving themselves in a nuisance when doing so would be appropriate.

In short, nuisances and the principles that guide what boards do – or don’t do – when confronted with conflicting interests of property owners in their communities can be a true Hobson’s choice.

Added to the mystery are new federal fair housing rules that mandate Association involvement in stopping nuisances – those in the form of hostile environment and harassment between residents – when the problem stems from unlawful discrimination against a member of a protected class.

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Examples of Sources of Nuisance Here are some common examples of what might be a nuisance in a CID:

• • • • • • • • • • • •

• • •

Noise Smoking Cooking smells Drones Harassment Skateboarding Pets Usurping available parking Drug use Weapons Unsafe practices Encroachments onto easements Architectural changes Trash Vandalism

What is a common thread? Everyone expects their association board to do something about “it” when “it” negatively affects them.

What is the board’s role, anyway?

A. No Role Some would say – the board has no role.

Nuisance is a neighbor-to-neighbor issue and the Association needs to stay out of it. There is an art to determining whether this is the case, depending on what issue is creating the collision of interests.

It is true that CC&Rs may be equally enforced by owners as by their associations. It is only modernly that associations have been given standing to enforce recorded private use restrictions. Traditionally, only owners of property bound by a covenant were entitled to the benefit of enforcing it against a violating owner.

Today, thanks to the standing given to associations, expectations are quite different. Modernly, the mental shift is to expect one’s association to bear the burden, the risk and the cost of taking up one’s side over a nuisance.

Some associations, when it’s time to revise and update their CC&Rs, propose eliminating the standard nuisance provision altogether. This is done, perhaps, in the wishful hope that, once the nuisance provision is out, no other legal principles will force the board to step into the fray.

Other principles about nuisance do exist, however, whether expressed in the CC&Rs or not.

B. An Affirmative Role For those who get involved (and have the skills), de-escalation is the right approach. Open, positive communication with the parties to the issue can halt problems and lead to solutions before open warfare breaks out. Creative ideas for finding compromises between colliding interests can be effective. Any time a problem can be defused early on, the Association wins. Legal expenses are kept to a minimum. Harmony is restored.

Board meetings are no longer overcome with complaints.

For those who don’t wish to get involved, feel it isn’t appropriate to get involved, or have (oftentimes legitimate) concerns about retaliation – both against them and their families – or when getting involved hasn’t worked, other ideas can be available.

Rather than let a problem fester until it is totally out of control and legal threats arise, thinking through alternatives

– including whether the community manager or the Association’s attorney has the communication skills needed to resolve the problem – has its advantages.

C. An Indirect Role July / August 2017 | ECHO Journal

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New Federal Fair Housing Rule Not everyone has the innate ability to confront a problem that has grown serious with the degree of diplomacy and/or firmness that will lead to success.

However, when you can find that ability and decide to employ it, not only might legal challenges be diffused, but creative compromises can often be found, without the board itself having to take a frontline, overt, obvious role. Delegating an issue to someone with the talent and experience to handle it can be extraordinarily beneficial.

Abating Nuisances A. The Usual Approaches It is certainly true that sometimes the tried and true process of hearing, fines and reimbursement assessments are the best way to persuade someone to stop creating a nuisance and/or stop perpetuating it.This is a relatively harsh approach, one whose potential effectiveness will best be evaluated based on the issue at hand, its gravity, the players, and what alternative resources might be explored.

B. Alternative Resources

Matters just got a lot more complicated.

The federal Department of Housing and Urban Development late last year promulgated new rules for hostile housing environment and harassment situations in the housing context, when one party is acting out of animus for another because of that person’s race, color, ethnicity, religion, marital status, sex, disability, etc. The new rules apply first to landlords of multi-family housing and then, expressly, to associations that manage CIDs. Three things have to be in place:

What and who are potential alternative resources?

• Building departments • Local law enforcement • City officials, including electeds • Animal control • Tow companies • Filtration equipment • Noise deadening flooring products • Security companies

When these three things exist, then an association, per the rule, must address it and will have liability for an unlawful discrimination claim if it does not.

As for the third criterion, i.e., that associations almost by definition can confront an unlawful act of discrimination, it is not difficult to see that associations can lawfully make rules, can lawfully enforce CC&Rs and rules, can be charged with a role in finding nuisances and enforcing the prohibition against such conduct in recorded CC&Rs, and have many tools (“legal ability”) to address hostile housing environment and harassment claims.

These enforcement tools range from the ability to conduct formal hearings, levy fines and reimbursement assessments, suspend membership rights and common area use rights, mediation, arbitration and litigation. With these tools available to associations, declining to intervene between neighbors in serious circumstances would come with the risk of considerable jeopardy of a fair housing claim.

Sandra Bonato is a principal in Berding & Weil LLP. She is a current member of the ECHO Board of Directors and ECHO Legislative Committee, a frequent speaker at ECHO seminars and contributor to this publication. She was named the ECHO Volunteer of the Year in 2001.

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January/ February 2017 | ECHO Journal

13

DECISIONS

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Decision-making in Community Associations Who Decides— the Board or the Members?

By Steven S. Weil, Esq.

July / August 2017 | ECHO Journal

29

I

t has often been observed that community associations are actually “minigovernments.” The “citizens” (owners) elect “officials” (directors) to make both small and large decisions affecting their lives and assets. These decisions relate to property values, membership safety, long-term financial planning, use of property and maintenance of amenities.

Sometimes, the members disagree with the decisions made by directors and call special meetings to remove the board, to challenge its authority or to reverse its decisions. CID attorneys are often called upon to analyze these challenges and

determine a question that goes to the very heart of how a community operates: who has the authority to make decisions for a community association—the board or the members. Actually, a better question is: which decisions are made by the board, which by the members, and which by either. This article discusses these issues.

Decision-Making Authority—The Basics

To put the issue in perspective, it is useful to consider Corporations Code §7210. In part, that section says that, subject to any limitations in the articles of incorporation or the bylaws relating to actions required to be approved by the members, “the activities and affairs of a corporation shall be conducted and all corporate powers shall be exercised by or under the direction of the board.”

This provision, or one similar, is frequently found in community association bylaws. These legal principles mean that, unless the members are given the specific right to vote on an issue, all decisions of a community association should be made by, and solely by, the board.

Governing Documents and Statutory Law — Specific Allocations of Authority Most bylaws and CC&Rs identify which decisions are to be made by the board and those which are to be made by the members. The Corporations Code and the Davis-Stirling Common Interest Development Act also allocate certain voting rights as between the board and the members.Typical (but not universal) examples of each are

Authority vested in the board • Entering into contracts of less than one year relating to goods or services for the common area

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• Painting in direct sunlight, especially if the paint is a dark color

• Entering into management contracts • Acquiring certain types of insurance • Incurring expenditures for capital expenditures up to five percent (5%) of the association’s budgeted gross expenses for a fiscal year • Approving, preparing and distributing financial information (budgets, etc.)

• Conducting board meetings and electing officers • Approving regular assessment increases of up to twenty percent (20%) and imposition of “emergency” and “unforeseen maintenance assessments”

Authority vested in the members (require a membership vote)

• Electing and removing directors

• Approving regular assessment increases greater than 20 percent of an existing assessment

July / August 2017 | ECHO Journal

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There are times when a board may perceive its fiduciary duty requires an action with which the members may vehemently disagree. In those cases, it takes a fair amount of political courage for directors to stand firm and resist the temptation to “put the matter up for a vote.” Indeed, I believe there are times when a board breaches its fiduciary duty by asking the members to vote on an issue that clearly falls within the sole authority and obligation of the board.

• Approving special assessments greater than 5 percent of budgeted gross expenses • Amending governing documents

Areas of Dispute Associations sometimes encounter controversies that trigger strong emotions among directors, the members, or both. These controversies sometimes turn political—the board will try to force the members to accept a decision, or maybe a petition signed by at least five percent (5%) of the members demands a special meeting to reverse the decision or to compel the board to do something else. These competing views of how an association operates often turn on how the board and the members believe decisions should be made and implemented in their community.

In our practice, we routinely encounter these disputes in many contexts. They include disputes relating to the commencement, continuation or settlement of construction litigation; a change in roofing material or paint color; pursuing CC&R violations; selecting, retaining or terminating management companies; the disclosure or distribution of “sensitive” association records; and decisions whether to make large scale renovations to the common areas, at what price and by which contractors. Each of these situations requires a careful legal analysis and a realpolitik calibration of what actions really must, can or should be taken or approved by the board, the members, or both.

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A Case in Point— Earthquake Insurance In the last few years, multiple natural catastrophes in California and throughout the nation (earthquakes, floods, landslides) have increased an awareness of the need to protect association members and assets from harm. At the same time, the strangely fluctuating earthquake insurance market—with often astronomical premiums, decreased coverage, higher deductibles and real financing implications—have made acquiring earthquake insurance more problematic.

These “real world” concerns, however, exist in the context of governing document provisions that either require the board to obtain earthquake insurance, allow it to obtain “any other insurance deemed prudent,” state that the issue should be voted upon by the members or, finally, are completely silent on whether the board can, should or must obtain earthquake coverage.

Where the board must obtain earthquake insurance Many bylaw provisions are precise in their requirement that a board must obtain earthquake insurance. This can pose very real practical and political problems for the board. It may be unable to obtain bids (sometimes required), the coverages available may be of little value because the limits are too low and the deductibles too high, or, simply, the cost may be prohibitive. On the other hand, if

buildings are damaged when the “Big One” strikes, do any of us doubt that lawsuits will be filed against directors who failed to obtain earthquake insurance when the governing documents required it?

Where the board may obtain earthquake insurance More typically, a bylaw provision will allow the board to obtain “such other insurance as it deems prudent” or will not address the issue at all. Does this take the board “off the hook”? Sad to say, some boards believe this type of provision is a “free pass” to avoid completely dealing with earthquake coverage. As discussed below, such boards are, it seems to me, as much at risk as directors who ignore a bylaw provision requiring the acquisition of this type of coverage.

Where the members decide Finally, every now and then, we encoun-ter a bylaw provision that states that earthquake insurance may be obtained, but only with the approval of the membership.

Resolving the Dilemma!

Let’s not be wishy-washy. In my opinion, the duty imposed on each director to use good faith and to make decisions that he or she believes are in the best interest of the community requires all boards to research earthquake coverage and determine whether, and at what price, it is available. The level of analysis may be higher or lower, depending on each development’s unique facts—location, known structural deficiencies, and so forth.

If the governing documents require a board to obtain earthquake coverage

but none can be obtained, a record of that fact should be maintained and communicated to the membership.

The board should then seek an amendment to the governing documents to eliminate the provision requiring the board to obtain the coverage.

If the governing documents allow the board to obtain earthquake insurance “as deemed prudent,” the board should determine whether it is, in fact, reasonable to obtain and pay for the coverage.

If the premium can be paid without an increase in assessments (or without an increase beyond 20 percent of the existing budget), no membership vote is required. The board should, however, advise the membership of its decision and the reasons therefor.

Can the board ask the members to approve an assessment to pay for earthquake coverage when the documents give the board discretionary authority to purchase the insurance or not? This is probably the most sensitive issue of all because it invites the board to avoid its obligation to make its own judgment by foisting the issue on the membership.

Even worse, the outcome of the vote can be manipulated since a vote to approve an assessment to pay for the insurance would require the vote of only a majority of a quorum of members while, in many cases, a membership vote on the decision to acquire the insurance itself could require a majority of the total membership. In other words, if the vote is posited as an assessment increase, it would require less membership approval than if the vote were only on the pure issue of whether the coverage should be obtained.

In reality, there is no simple answer to the question of whether the board has breached its fiduciary duty by putting the matter to a membership vote. A “clean” way of dealing with the issue is to secure a governing document amendment that puts the burden on the members, not the board. Short of that, asking the members to vote on an issue that should be decided by the board definitely raises the specter of post-earthquake claims for breach of fiduciary duty even if the members rejected the insurance proposal.

Finally, where the governing documents do allow the members to decide, it will

usually be true that the board’s duty is limited to acquiring relevant information and then candidly and reasonably submitting the matter to a membership vote.

In extreme cases, the board’s general fiduciary duty to operate the development in the best interests of the community might require it to obtain earthquake insurance even where the membership refuses. However, this will be the exception and not the rule.

Conclusion As a practical matter, the most important “vote” the members make is for the

directors who represent them. That is because almost all decisions affecting a community are made by the association’s directors and not the members. The members’ right to vote is always spelled out in the governing documents; if not found there, such a right usually does not exist. In certain cases, a board will be able to look to the members to make the final decision on particularly important matters but, where the authority to make a decision clearly rests with the board, its failure to exercise that authority could subject it to future claims.

Steven Weil is a founding partner and the current managing partner at the law firm of Berding & Weil, Walnut Creek , CA. He is a former member of the ECHO Board of Directors.

July / August 2017 | ECHO Journal

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34 echo-ca.org

REVIEWING BANK STATEMENTS The Key To Watching Your Association’s Money

N

o great period of time passes without news of a fresh scandal involving an association whose cash assets have been mishandled by someone in a position of authority. Like automobile accidents, these statistics remind us that theft and fraud can happen at any time to any association.

What is most distressing is that these situations could almost always have been prevented had the association's directors followed a few, simple rules about watching their association's money.

By Steven T. O'Brien

July / August 2017 | ECHO Journal

35

N

o great period of time passes without news of a fresh scandal involving an association whose cash assets have been mishandled by someone in a position of authority. Like automobile accidents, these statistics remind us that theft and fraud can happen at any time to any association. What is most distressing is that these situations could almost always have been prevented had the association’s directors followed a few, simple rules about watching their association’s money.

Bank Statements One of the simplest means of watching the money is to review reconciled bank statements for each of the association's bank accounts. In California, the board is required by law to review reconciled bank statements for both the operating and reserve bank accounts at least quarterly. Prudence dictates that this should be done monthly.

Why is a bank statement so important?

An association's assets are managed by only a few individuals—typically the manager, the treasurer, or a combination of these two. An accounting of this management is given monthly in the association's financial statements: payments received, checks written, etc.

However, the association’s cash assets are stored in a bank. The bank account statement represents a separate and independent declaration of the association's funds. Put another way, bank statements allow you to compare what your banker is telling you about your money with what the money managers are telling you in the financial state36 echo-ca.org

ments. Bank statements allow you to verify bank balances, check payees and amounts, and deposits. Even in long term certificates of deposit, a statement will verify that the cash is indeed where it's supposed to be. While this does not seem to be a strong deterrent, consider that fraud is often accomplished by altering the payee on a signed check. Likewise, in the absence of a bank statement, sums of money can be "borrowed" from long term savings and "repaid" at a later date without the loss even being noticed.

Merely the knowledge that account balances and cash transactions are being responsibly reviewed every 30 days significantly inhibits fraudulent activity.

At a time when watching the association's money is foremost among the board's fiduciary responsibilities, banks are reducing statement services to cut their operating costs. Ironically, it is for an association's largest accounts (especially long term certificates of deposit accounts) that monthly statements are often not provided. If a board receives statements only upon the maturity of large replacement reserve CDs, as much

as a year can pass without verification of those account balances. This is both unlawful and unwise. And, if you're a director, it should be unacceptable.

Some banks, recognizing the special needs of homeowner associations, have developed special programs tailored to those needs. These banks typically provide monthly statements for virtually all types of accounts. However, many banks do not. When deciding on where to deposit the association's cash assets, boards must take into consideration more than just the interest rate. Monthly bank statements represent a form of insurance for association's assets and must be considered together with the interest those assets might earn.

Reviewing Bank Statements: What to Watch For Bank statements should not be sent

directly to nor reconciled by the same person who writes the checks. Statements and especially canceled checks ideally should be reviewed first by someone other than the check handlers.

Reconciling the bank statement means accounting for all the activity reported by both the bank and the financial statements. Checks which are reported in the financial statements may not have cleared the bank by the end of the statement period and may still be outstanding. Likewise, deposits may have been recorded in the financial reports which do not show on the bank statement.These are called "deposits in transit" and should be accounted for carefully. The reconciliation explains the differences between the bank statement and the financial reports.

Adjustments stemming from those differences should bring the reconciled bank statements into "balance" with the financial statements.

Reconciliation adjustments and their explanations may not be clear or easy to understand but, as a director, it is your job to understand them. Ask questions

until you are satisfied that all differences have been reconciled. Don't worry about appearing uninformed or hurting the manager's or bookkeeper's feelings. A great deal of effort goes into keeping a good set of books and those responsible are usually pleased to have directors take an interest in their work. And remember, reviewing bank reconciliations may not be the most glamorous job a director has but it is one of the most important. All directors should be involved, not just the treasurer!

Electronic Windows for Watching the Money Most banks have used rapidly changing technology to provide homeowner associations with additional tools to help them watch the money. Among these are phone and computer-based inquiry systems by which a director may check account balances 24 hours a day, seven days a

week. While these services are most commonly available for demand-deposit accounts, the ability to verify all the association's bank account balances on demand is a valuable service. Consider this when selecting a bank in which to deposit your association's funds.

Other Measures for Safeguarding the Association’s Money In addition to reviewing reconciled bank statements, a number of other simple rules can help you watch your association's money. Among these are:

• Require two signatures on all checks, not solely on replacement reserve account checks.

July / August 2017 | ECHO Journal

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• Periodically check the signature cards for the association's accounts to ensure that they are current and correct. By altering or resubmitting modified signature cards, an unauthorized person can easily gain access to your association’s money.

• Verify that the association’s checkbooks are in a secure place and subject to restricted access.

Checkbooks readily available to a large office staff invite abuse, especially if canceled checks for those same accounts are lying about to provide sample signatures.

• Mail checks to the recipients immediately upon signing rather than sending them back to an office for further processing.

Remember that, once signed, the payee's name can be altered.

The majority of agents who assist associations in handling their money are trustworthy. But by attending to the steps outlined above and incorporating them into the duties of your association's future directors, you gain the additional assurance that your cash assets will be safeguarded.

Like seat belts they provide the extra margin of safety that can prevent your association from become another dismal statistic.

Steve O’Brien is a principal of Digital Accounting Services. He is a former member of the ECHO board of directors and the North Bay Resource Panel.

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ECHO Professional Directory

Need Expert Help? Check Out ECHO’s Directory All of our Professional ECHO Members specialize in services for HOAs. Choose from more than 250 companies in over 50 categories including: 73 MANAGEMENT COMPANIES 30 ATTORNEYS 21 ACCOUNTING FIRMS VISIT THE PROFESSIONAL DIRECTORY ON THE ECHO WEBSITE!

www.echo-ca.org

Accountants/CPAs Animal Control Services Arbitrators & Mediators Architects/Architectural review Asphalt Repair & Paving Assessment Collection Services

Attorneys Banking Services Community Association Consulting Concrete Products & Services Concrete Repair Construction Manage- ment Consultants Consulting Electrical Services Fencing Gates & Doors Financial Services Fire Alarms Fire Sprinklers General Contractors Gutters Insurance Services Janitorial & Cleaning Services

Landscape Design Services Landscape Maintenance Leak Detection Maintenance & Repairs Management Company Services Masonry Other Paint Manufacturer & Consultant Painting Contractors Pest Control Services Plumbing & Boiler Repairs Pool Maintenance & Services Pool Repair & Resurfacing Services

Power Washing & Steam Cleaning Reserve Study Firms Restoration & Remediation Services Retaining Walls Roofing Contractors Roofing Products Security Services & Systems Sprinkler Repair Towing & Parking Services Tree Services Utility Auditors Water Conservation Water Management & Services Waterproofing Window

July / August 2017 | ECHO Journal

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ECHO honor roll

ECHO HONORS VOLUNTEERS Resource Panel Chairs

Seminar Speakers

Recent Contributing Authors

Accountant Panel Adam Haney, CPA 888-786-6000 x317

East Bay Sandy Bonato, Esq. Geri Kennedy David Levy, CPA Melissa Ward, Esq. Wendy Weber

May/June 2016 Steven S. Weil, Esq. Graham Oliver Wayne Scott Steve Saarman Jordan M. O’Brien

Central Coast Panel John Allanson 831-685-0101 East Bay Panel Brian Kidney 408-297-3246 Legal Panel Mark Wleklinski, Esq. 925-280-1191 Maintenance Panel Judy O’Shaughnessy 408-839-6926 North Bay Panel Kevin Boland 415 898-4370 South Bay Panel Brian Kidney 408-297-3246 Wine Country Panel Pam Marsh 415-686-9342 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.

Annual Seminar Jeffrey Barnett, Esq. Tyler Berding, JD, PhD. Tyler Coffin Alan Crandall Rolf Crocker, CCAM Derek Eckert, RS John Garvic, Esq. John Gill, Esq. Sandra Gottlieb, Esq. David Levy, CPA Alex Noland, Esq. Deon Stein, Esq. Amy Tinetti, Esq. Wendy Weber Krishna Yalamanchi

July/August 2016 Joel W. Meskin, Esq., CIRMS Victoria Cohen Mary Anne Sayler Richard Tippett Tom Fier, Esq. September/October 2016 Sandra L. Gottlieb, Esq. David Swedelson, Esq. Sharon Glenn Pratt, Esq. Glenn H. Youngling, Esq. Berding | Weil Rich Ellenson November/December 2016 Joe Winkler, CMCA Clint McClure, CCAM Cameron Day, Esq. Julie M. Mouser, Esq. Adrian Adams, Esq. Wayne Louvier, Esq. January/February 2017 Sandra L. Gottlieb, Esq., CCAL Burt Dean Cameron Day, Esq. Jo Pope David Levy, MBA, CPA Wayne Louvier, Esq. March/April 2017 Steven Saarman, Jeff Saarman, and David Saarman Dave Heiligenthal Erin Kelly Pat Crosscombe May/June 2017 Brian Seifert Robert M. Nordlund, PE, RS Colletta Ellsworth-Wicker, PCAM Tim Bosveld Richard Tippett

40 echo-ca.org

ECHO event calendar

RESOURCE PANEL CALENDAR ECHO Resource Panels meet during lunch on weekdays 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, offered in a casual atmosphere where the cost of attendance is the price of your lunch. The sessions last about an hour and a half. Check-in with the ECHO Panel Secretary for details and to register.

Please join us: DATE

PANEL LOGISTICS

PANEL SECRETARY

TOPIC

July 6, 11:45 a.m.

North Bay Resource Panel Contempo Marin Clubhouse 400 Yosemite Dr., San Rafael

Denise Wolford, CCAM 415-458-3537

Community Websites

July 20, 11:45 a.m.

Wine Country Resource Panel Serv-Pro 377 Blodgett St., Cotati

Pam Marsh 415-686-9342

Vehicle Charging Stations

Aug 9, 11:45 a.m.

South Bay Resource Panel ECHO Office, 1960 The Alameda San Jose

Brian Kidney 408-297-3246

TBD

Aug 11, 11:45 a.m.

East Bay Resource Panel Massimo Restaurant 1604 Locust St., Walnut Creek

Brian Kidney 408-297-3246

Parth Case

Sept 7, 11:45 a.m.

North Bay Resource Panel Contempo Marin Clubhouse 400 Yosemite Dr., San Rafael

Denise Wolford, CCAM 415-458-3537

Insurance

Sept 12, 11:45 a.m.

Central Coast Resource Panel The Back Nine Grill, 555 Hwy 17 (Pasatiempo Exit), Santa Cruz

Anne Thomas 800-537-4098 ext.7530

TBD

Sept 21, 11:45 a.m.

Wine Country Resource Panel Serv-Pro 377 Blodgett St., Cotati

Pam Marsh 415-686-9342

Painting

REGULARLY SCHEDULED RESOURCE PANEL MEETINGS PANEL

MEETING

LOCATION

Maintenance

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

Accountants

Second Monday, Odd months

Scott’s Seafood Restaurant, Oakland

Central Coast

Second Tuesday, Odd months

The Back Nine Grill, Santa Cruz

South Bay

Second Wednesday, Even Months

TBD

Wine Country

Third Thursday, Odd months

Serv-Pro, Cotati

Legal

Quarterly

Varies

July / August 2017 | ECHO Journal

41

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

Order online or fill out the form on the facing page.

Robert’s Rules of Order Member Price: $7.50 Non-Member Price: $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.

Home and Condo Defects Member Price: $12.95 Non-Member Price: $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.

42 echo-ca.org

2017 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.

Board Member Handbook 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.

Construction Defect Claims 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.

Condominium Bluebook 2017 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.

2017 BOOKS

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

TITLE

QUANTITY AMOUNT

SUBTOTAL CALIFORNIA SALES TAX (Add 8.75%) TOTAL AMOUNT

Yes! Place my order for the items above.

Check

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Credit Card Number Exp. Date

Signature

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

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July / August 2017 | ECHO Journal

43

directory updates

All current listings may be found in our Professionals Directory available online at www.echo-ca.org.

New Members Bay Area Tree Specialists 541 W. Capitol Expy #287 San Jose, CA 95136 Contact: Mark Pappakostas Tel: (408) 836.9147

Elliot Katzovitz Insurance, Inc. 5657 Wishire Blvd. Suite 340 Los Angeles. CA 90036 Contact: Elliot Katzovitz Tel: (310)945.3000

Broadband Agreements by MFC 4178 Arenzano Way El Dorado Hills, CA 95762 Contact: Morgan Fussell Tel: (916) 939.5026

California Stone Coating, Inc. 37909 Von Euw Common Fremont, CA 94536 Contact: Adeline Farrer Tel: (510) 284.2554

Become an ECHO Professional Member and receive the benefits of membership.

To learn more, visit our membership page at www.echo-ca.org 44 echo-ca.org

advertiser index

about ECHO

WHAT IS ECHO? Applied Reserve Analysis....................24 www.appliedreserveanalysis.com

Malarkey Roofing Products.................27 www.malarkeyroofing.com

Barcode Automation, inc. ...................15 www.Barcode-Automation.com

Morris & Sons Towing..........................21

Benjamin Moore Paint & Company...........................................26 www.benjaminmoore.com Berding Weil..........................Back Cover www.berding-weil.com The Bridgeport Company....................33 www.bridgeportco.com Eugene Burger Management..............13 www.ebmc.com IQV Construction & Roofing, Inc. .......37 www.iqvinc.com Levy, Erlanger & Company....................2 www.hoa-cpa.com

Pacific Utility Audit, Inc.......................25 www.pacificutilityaudit.com PML Management................................30 www.pmlmanagement.com R.E. Broocker Co...................................14 www.rebroockerco.com Rebello’s Towing...................................31 www.rebellos.net Silicon Valley Civil & Structural Engineers............................14 www.Qengineers.com White & MacDonald, LLP....................31 www.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 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 • 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.................$500 Association Management Membership.......................................$500 Individual Membership.......................$75 Journal Subscription............................$15

How Do You Join ECHO?

Office 1960 The Alameda, Suite 195 San Jose, CA 95126-2308

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. echo-ca.org.

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

/ August August2014 2013 ECHO Journal JulyFebruary 2017 ||| ECHO ECHOJournal Journal

45 45

legislation at a glimpse

The HOA-related selections below come from our review of thousands of bills introduced in Sacramento this year.

The complete list is available on our website. That list – and the impact of each bill – will change as authors amend the language in their bills.

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 534

Mechanics Liens on HOA Owners

Watch Status: In Senate Judiciary

In a common interest development, would prohibit a mechanics lien from being filed against another owner in the common interest development unless that consent was provided or that request was made, except in the case of emergency repairs.

AB 690

Document Charges & Manager Conflicts of Interest

Watch Status: Passed to Senate Judiciary

If a management company is contracted to facilitate the delivery of documents, this bill would require the company to inform a seller that he or she is not required to purchase all of the documents on a specified form. Additionally requires the association to disclose any conflicts of interest, as defined.

AB 731

Tax Deduction for HOA Assessments

Watch

This bill, for taxable years beginning on or after January 1, 2017, and before January 1, 2023, would allow a deduction in computing adjusted gross income for an amount paid or incurred by the qualified taxpayer during the taxable year, not to exceed $3,000, for qualified homeowners’ association assessments.

Author: Gallagher

Author: Quirk-Silva

Author: Chen Status: In Assembly Appropriations. Held in Committee.

AB 786

Statements of Information – Online Filing

Support

Would allow common interest developments to submit the biennial statements of information to the Secretary of State online.

Author: Kiley Status: In Assembly Banking & Finance

AB 797

Solar Thermal Systems

Watch Status: Introduced

Makes changes concerning a specified program to promote the installation of solar water heating systems in homes, businesses, and buildings or facilities of eligible customer classes receiving natural gas service.

AB 1079

Annual Policy Statement Deadlines

Watch

Current law requires requires the association to distribute an annual policy statement between 30 to 90 days before the end of the fiscal year. This bill would change the time requirements for distribution to be within 31 to 91 days before the end of the fiscal year.

Author: Irwin

Author: Cunningham Status: Introduced

46 echo-ca.org

legislation at a glimpse

Current Legislation (continued) Bill Information

Summary

AB 1239

Building Standards for Electric Vehicle Charging

Watch Status: Passed Assembly

Requires the Department of Housing and Community Development and the Building Standards Commission to research, propose, and adopt mandatory building standards regarding electric vehicle capable parking spaces for multifamily housing.

AB 1412

Address Disclosure & Personal Liability for Volunteer Officers

Support Status: Passed Assembly to Senate Housing

When an owners fails to provide the required notice of their current mailing address, this bill would authorize the association to use the last address provided in writing by the owner. It would also extend the current limitation on the personal liability of directors to volunteer officers or directors in mixed use developments if they do not own more than two residential units.

AB 1426

Uncontested Elections

Support

Would provide an exception to current HOA election requirements when the number of directors running for the board does not exceed the number of available positions. Provides procedures to ensure that members may run for the board, and to declare the election uncontested.

Author: Holden

Author: Choi

Author: Irwin Status: In Assembly Housing & Community Development

SB 407

Owner Noncommercial Solicitations

Oppose Unless Amended

Would prevent an association from prohibiting an owner from contacting any other owner or resident for the purpose of providing information about a candidate for public office, or for an office within the association, or on any issue that is the subject of a public or association election or pending public or association legislation or rulemaking.

Author: Wieckowski Status: Passed Assembly.

To Senate

SB 451

Liability for Harassment

Watch

Would prevent an association from being liable for the harassment of a member by another member where the association’s governing documents do not contain a provision to authorize the association to stop the harassment.

Author: Stone Status: In Senate Judiciary.

Not Heard

SB 721

Deck & Balcony Inspection Requirement

Oppose Unless Amended

Requires an 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.

Requires certain notifications. Imposes requirements on boards of directors of common interest development.

Author: Hill Status: In Senate Judiciary

What Do You Think?

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On the web: echo-ca.org/hoa-advocacy, On Facebook: facebook.com/echoorg July / August 2017 | ECHO Journal

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