ECHO Journal - March 2018

Pets and Emotional Support Animals p.8

HOAs and Marijuana

New Disclosures are Required for HOAs and Management

p.14

p.22

Serving Community Associations

Top Five Reserve Planning Mistakes

p.28

The Costly Future of SB 721 and Deck Inspection Requirements p.32

March /April 2018 echo-ca.org

Service and Emotional Support Animal Laws Explained p. 8

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

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news from ECHO

News From ECHO March 2018 In February, I had the honor of hosting ECHO’s first educational seminar of the year in San Rafael. To the more than 150 board members who joined us: thank you! I’m grateful to you, to the members of our North Bay Resource Panel, and to our trio of attorney-speakers for helping us create a great event.

If you couldn’t be there in person, I hope you’ll check out the pictures on page 46 or on our Facebook page.

I’d like to draw your attention to the article in this issue about Senate Bill 721.

This bill is still in development, but it is likely to pass and may have a lasting impact on association maintenance procedures and finances. If you feel that this bill is likely to impact your association, please let us know.

We’ll be talking about new laws at all of our events in 2018. And if you’d like to bring your questions to the experts, please take a look at page 6 and mark your calendar for ECHO’s next seminar near you. In the next four months we’ll be in Santa Cruz, Rohnert Park, Concord, and Santa Clara.

Please find the promotional code on each event page in this Journal (or in our emails) to register at the member rate: free for most events.

Thank you for being volunteers, and I hope you’ll share with me how ECHO can support your work.

Sincerely,

Tyler Coffin Executive Director

March/April 2018 | ECHO Journal

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CONTENTS

22 8

32

14 28

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Pets and Emotional Support Animals Pets are delightful and, unfortunately, the source of many HOA board headaches. What you can regulate and what you can’t is increasingly unclear, especially when it comes to service and emotional support animals. But you do have options, and this article explains the law.

14

HOAs and Marijuana Most boards are familiar with the rules surrounding medical marijuana, but the legalization of recreational consumption adds a new wrinkle for California associations. Where the conflict between California and Federal law might keep you guessing, this article clears the air.

22

New Disclosures are Required for HOAs and Management In AB 690, transparency is the theme: HOAs are obligated to provide an itemized list of escrow documents and costs, and forbidden from charging more than those rates. And management companies must disclose potential conflicts of interest (like referral fees) to their clients.

28

Top Five Reserve Planning Mistakes Your reserve study is a guide to your association’s future. Next to the governing documents, the study may be the most important tool you have. But a few common misperceptions can lead some boards to make poor choices that jeopardize their association’s future financial health.

32

The Costly Future of SB 721 and Deck Inspection Requirements The collapse of an apartment balcony in Berkeley was shocking: six students killed, and obviously negligent maintenance was the culprit. Sacramento is now involved, and pending legislation could impose mandatory inspections and repairs upon associations.

The bill is likely to pass, and associations should prepare now.

DEPARTMENTS

3 6 7 25 27 37 38 39 40 41 42 45 46

News from ECHO 2018 ECHO Educational Calendar Santa Cruz Seminar — Saturday, March 10th, 2018 Wine Country Seminar — Saturday, March 24th, 2018 East Bay Regional Seminar — Saturday, April 28th, 2018 Legislation at a Glimpse 2018 Association Awards ECHO 46th Annual Seminar — Saturday, June 16th, 2018 ECHO Volunteers ECHO Event Calendar ECHO Bookstore Advertiser Index Check Out a Resource Panel!

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 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 Directors Sandra Bonato Jerry L. Bowles Rolf Crocker Sarah Dunia John Gill

David Levy Karl Lofthouse Sandra Long Jeffrey Saarman Wanden Treanor

Executive Director Tyler Coffin Marketing Communications Specialist Priscilla Ann Ornido Design and Production Design Site ECHO Mission Statement Fostering a better quality of life in community associations through education, advocacy, and networking.

March/April 2018 | ECHO Journal

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2018 ECHO educational calendar

2018 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 2018. 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!

San Rafael

Mar. 10

Mar. 24

Apr. 28

Santa Cruz Educational Seminar (see page 7)

Wine Country Educational Seminar (see page 25)

East Bay Regional Seminar (see page 27)

Hotel Paradox Santa Cruz, CA

DoubleTree Hotel Rohnert Park, CA

Hilton Concord, Concord, CA

June 16 ECHO Annual Seminar (see page 39) Santa Clara Convention Center Santa Clara, CA

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Register today!

Online: www.echo-ca.org;

By Phone: 408.297.3246

San Francisco

FREE Attendance for ECHO HOA Members!

Santa Cruz Educational Seminar Save the Date!

Saturday, March 10th, 2018 8:15 AM to 12:30 PM /

TOPICS AND SPEAKERS

New Laws for 2018 Sharon Pratt, Esq.; Rosalia Tapia, Esq. The Professional Board Meeting Diane Rossi, PCAM; Jennifer Stearns, CCAM Yes, reserve ______spaces for the Santa Cruz Seminar.

Amount enclosed: $______(attach additional names)

Decks, Damage, & Improving Inspections Brian Seifert

Name: Email Address:

ADDRESS

HOA or Firm:

Hotel Paradox 611 Ocean Street, Santa Cruz, CA 95060

Address: City: State:

Zip:

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 THANKS TO OUR HOST SPONSOR

March/April 2018 | ECHO Journal

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Service Dogs and Emotional Support Animals in Community Associations

Q

uestions often arise in our community associations regarding whether we need to permit owners to keep animals which might otherwise violate that community’s governing documents. This article addresses the important distinctions between “Service Dogs” and “Emotional Support Animals” which are treated very differently under the law. This article also provides guidance on how to deal with requests for reasonable accommodations to permit residents to keep animals which might otherwise violate the governing documents in the community association context.

Jennifer M. Jacobsen, Esq.

March/April 2018 | ECHO Journal

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A

Service Dog1 is defined by the Americans with Disabilities Act (“ADA”) as a dog which is trained to do work or perform tasks for the benefit of an individual with a disability. Such disabilities may be physical, sensory, psychiatric, intellectual, or mental. The tasks the Service Animal provides must be directly related to the person’s disability. Examples include guiding people who are blind, alerting people who are deaf, pulling a wheelchair, and alerting and protecting a person who is having a seizure.

Service Dogs are working animals, not pets, and dogs whose sole function is to provide comfort or emotional support do not qualify as Service Dogs under the ADA.

Because Service Dogs are considered to be “necessary medical equipment” under the ADA, a community association may not impose restrictions on the size or weight or breed. When inquiring about a Service Dog, associations may not ask for certification or identification to accommodate the Service Dog, nor may they ask for details about the person’s disability. The inquirer may only ask: (1) if the animal is required due to a disability, and (2) what tasks it is trained to perform.

By contrast, an Emotional Support Animal is not trained to perform specific acts directly related to an individual’s disability. Instead, it is the therapeutic value the pet’s owner derives in the form of a sense of well-being, safety, or calm from the animal’s companionship and physical presence. Emotional Support Animals may also offer emotional support to a person with a psychiatric disability, such as depression. One key differen10 echo-ca.org

tiation between Service Dogs and Emotional Support Animals is that the ADA does not require that Emotional Support Animals be given a right of access to public places as in the case with Service Dogs.

It is important to note that the ADA is not always applicable to associations. In this regard, Title II of the ADA only applies to government services, while Title III of the ADA applies to public accommodations.

Therefore, as to the public places requirement for Service Dogs, the ADA is triggered only if an association allows members of the public (other than its residents and residents’ guests) to utilize its Common Facilities. Under the ADA, for these community associations that serve the public, the associations must allow Service Dogs to accompany people with disabilities in all areas of the facility where the public is normally allowed to go.

While the ADA does not always apply to

community associations, the Fair Housing Act (“FHA”) requires associations to make “reasonable accommodations” to handicapped persons in housing. Unlike the ADA, the FHA does not make a distinction between the definition of Service Dogs and Emotional Support Animals (together “Assistance Animals”). Thus, the FHA equally applies to all assistance animals, so long as the animal is necessary to provide equal opportunity for someone to use and enjoy their residence and the Common Areas and Common Facilities in the community association context.

All Assistance Animals are still subject to reasonable restrictions in an association’s governing documents. For example, an association may require that an animal be leashed and under its handler’s control when in the Common Area. The only exception to this would be with respect to Service Dogs which are not required

to be leashed if the leash interferes with the Service Dog’s work or the individual’s disability prevents using the leash. In that case, the individual must maintain control of the dog through voice, signal, or other effective controls. With respect to all Assistance Animals, a community association may require that the handler remain responsible for keeping the animal under control and clean up after the animal. Additionally, an association may recover damages from the handler for any damages caused by the Assistance Animal.

If an association receives a request for an Emotional Support Animals that otherwise violates the association’s restrictions, the association must grant the request as a “reasonable accommodation” under the FHA if: (1) the person has a physical or mental disability that limits one or more major life activities, and (2) the person making the request has a disability-related need for the Assistance Animal.

In granting a “reasonable accommodation” to an owner (to be exempt from an association’s pet restrictions, rules, or

Service Dogs are considered to be “necessary medical equipment” under the ADA, a community association may not impose restrictions on the size or weight or breed.

March/April 2018 | ECHO Journal

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policies), associations should follow certain rules. If a disabled person makes a “reasonable accommodation” request and the person’s disability is obvious (i.e. in a wheelchair, blind), then an association cannot request additional information to validate the disability. However, if the person’s disability is not obvious, then the association can request the following information, verified by a medical professional:

(a) The resident has a recognized disability under applicable law and the person making the request has a physical or mental impairment that substantially limits one or more major life activities;

(b) A description of the requested reasonable accommodation(s) to ameliorate the disability; and (c) An explanation of how the requested reasonable accommodation(s) will accommodate the disability.

Associations can deny an Assistance Animal if the animal endangers the health and safety of others, and the threat cannot be reduced by another reasonable accommodation.

As illustrated by the recent federal case Espinoza v. Gentry Courts Homeowners’ Association (2017 WL 2311310), associations must tread lightly when dealing with requests for reasonable accommodations. It is important to have a written paper trail documenting the request and the association’s timely responses and requests for further information. Thus, when faced with these requests make sure you engage the services of your attorney early on to ensure that the request is handled properly.

1. This article uses the term “Service Dog” as opposed to “Service Animals” as only dogs are recognized as Service Animals under the ADA except for a limited exemption for miniature horses that have been individually trained to do work or perform tasks for people with disabilities.

Jennifer M. Jacobsen, Esq. is a principal with the law firm of Baydaline & Jacobsen, LLP, and an ECHO member. Her firm focuses exclusively on general counsel representation to community associations, and may be found online at www.bayjaclaw.com.

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HOAs and Marijuana Understanding Recreational and Medical Uses

By Paul W. Windust, Esq.

March/April 2018 | ECHO Journal

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I

n 2011 we wrote an article discussing the use of Medical Marijuana and its impact on Community Associations. The landscape in California has changed dramatically since then. Adult use of cannabis is now legal in California under Proposition 64, the Adult Use of Marijuana Act (AUMA), approved by the voters on Nov 8, 2016. In general, AUMA allows adults 21 and over to possess, privately use, and give away up to one ounce of cannabis, and to cultivate no more than six plants for personal use at their residence. It also legalizes the commercial sale, distribution and production of cannabis for adult use at state-licensed facilities beginning January 1, 2018, under terms spelled out in the Medical and Adult Use of Cannabis Regulation and Safety Act (MAUCRSA) approved by the legislature in 2017.

The AUMA in a Nutshell Under AUMA, Cannabis users may NOT (Health and Safety Code sections 11362.3 -11362.4):

• Smoke, vaporize or ingest cannabis or cannabis products in any public place.

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• Smoke or vaporize cannabis in any non-smoking area, or within 1,000 feet of a school, day care or youth center while children are present, except privately at a residence.

• Consume cannabis or possess an “open container” of cannabis while driving or riding as a passenger in any motor vehicle, boat, or airplane.

(Open containers are defined to mean any receptacle containing cannabis or cannabis products that has been opened or has a seal broken, or loose cannabis flower not in a container, except when in the trunk of the vehicle.

Exception: Qualified medical marijuana patients carrying an ID card or recommendation may possess cannabis in a container that is closed or resealed (Vehicle Code section 23222.) It is also unlawful to use cannabis while in a car under Vehicle Code sections 23220 & 23221 even if you are a passenger. This is also true for cannabis edibles.

• Possess or use cannabis on the grounds of a school, day care or youth center while children are present.

• Manufacture concentrated cannabis with a volatile solvent (except

for state-licensed manufacturers).

Volatile solvents include explosive chemicals like butane but not ethyl alcohol.

AUMA does not repeal, affect or preempt:

• The rights of employers to maintain a drug and alcoholfree workplace, or to have policies forbidding use of cannabis by employees.

• The ability of landlords and other private parties from prohibiting or restricting use of cannabis on their privately owned property.

Federal Law Has Not Changed The Federal law known as the Controlled Substances Act makes it unlawful to manufacture, distribute, dispense, or possess any controlled substance. 21 U.S.C. 801. The federal government does not recognize any acceptable medical or recreational use for marijuana. 21 U.S.C. 812(b)(1). Therefore, under any version of Federal Law, marijuana use for any purpose is illegal.

Community Association Enforcement Overall, controlling or limiting cannabis use in a Community Association will take on the same character as controlling the use of cigarettes. Based on the nuisance provisions in CC&Rs, secondhand smoke, whether cigarette, cigar, marijuana or otherwise, that drifts into the windows of other units, balconies, or common areas can be restricted. Members have a right to the quiet enjoyment of their own units and should not have to endure the problems associated with secondhand smoke wafting into their units.

An association's power to prohibit medical and recreational marijuana use inside units is less clear. Health & Safety Code 11362.79 and AUMA implies that smoking marijuana in one's residence is allowed.

As a result, a board might have better success regulating marijuana use by focusing on the nuisance aspects. As long as the smoke does not create a nuisance, smoking it in a unit is probably allowed under California law. Specific to cannabis use however is the option for the unit owner to consume edibles or use non smoke-producing devices.

1

Enforcement Under the Nuisance Provision

A typical nuisance provision might provide as follows: “No noisy, hazardous, noxious, illegal, or offensive activity shall be allowed on or emanating from any Lot or portion of the properties, nor shall anything be done or kept on Lots or Common Area which may be or become an annoyance, a disturbance, a nuisance, or safety hazard to the neighborhood, or which shall unreasonably interfere with the quiet enjoyment of the other residents. . . .�

The law recognized two types of nuisances: (1) a private nuisance, and (2) a public nuisance. A private nuisance affects one or a few property owners. A public nuisance affects an entire community or neighborhood. A nuisance is “anything that is injurious to health . . .

ECHO Journal

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or is indecent or offensive to the senses, or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property.” Civil Code § 3479. To constitute a nuisance, the invasion of the owner’s interest in the use and enjoyment of his or her property must be substantial, based on proof of significant harm judged by an objective standard. San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th 893. The legal test for determining whether an owner has suffered an unreasonable interference with the use and enjoyment of his or her property is whether the gravity of the harm outweighs the social utility of the offending conduct.

In the usual CID context, the conduct complained of would be a private nuisance. If only a few owners complain about the smell of marijuana plants or marijuana smoking, it really is not a community issue. Because it is a private nuisance, both the affected owner and the Association have standing to enforce the nuisance provision. If the Association determines that this is an issue that it should enforce, the Association will need to determine whether the claimed invasion of complaining owner’s property right is substantial. This is based on an objective standard. That means that it is determined by what a “reasonable person” should reasonably have to endure living in close proximity to others. It is not judged by what the complaining owners considers substantial. Cases dealing with this issue have held that a nuisance can exist where fumes, odors, or smoke are unreasonably offensive to persons of ordinary sensibilities, even though they do not cause material injury to property or endanger health and safety. So, an owner does not have to be hyper-sensitive or allergic to claim a private nuisance.

When an issue arises, the Association should investigate the claimed odors and smells emanating from the marijuana plants and determine if the smell is unreasonably offensive to persons of ordinary sensibilities. If it so concludes, the Association may take action to abate the nuisance by requiring the removal of the plants from the Lot or Unit. The Association may also require the owners to install negative air or

HEPA filters to ensure that odors do not proceed outdoors.

The procedure in enforcing the nuisance provision can be taken administratively or judicially. The administrative procedure involves noticing a hearing with the offending owner per the rules set forth the Bylaws and having the Board make a determination that a nuisance exists.

The Board would order the owner to take some measure to abate the nuisance, such as installing air filters or using vaporizers. The owner’s failure to abide by this decision would result in the Board issuing a fine to the offending owner.

Judicial enforcement involves a two-step process. First, the Association would serve a Request for Resolution on the owner demanding that the owner attend mediation of the dispute. If mediation does not result in the desired change in behavior, then the Association could initiate a lawsuit seeking a court order that the owner cease and desist from the

nuisance activity. If the Association prevails in this action, the offending owner would be required to pay the Association’s legal expenses.

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Enforcement Under an Amendment to the CC&Rs

Another potential enforcement tool is an amendment to the CC&Rs. Many cities and counties currently have in place provisions prohibiting smoking in public places such as restaurants, public meeting places, and office buildings. Many associations have amended their governing documents to include anti-smoking provisions prohibiting smoking in common areas.

The issue for an Association is whether to enact an anti-smoking provision as an Association rule or to amend the CC&Rs. Generally speaking, an amendment to the CC&Rs prohibiting smoking March/April 2018 | ECHO Journal

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in the common area and outdoors would be more enforceable than adopting an operational rule. Restrictions in a recorded declaration are presumed reasonable and can only be overcome when it is shown that the restriction violates some public policy or infringes on an important property right. The California Supreme Court has held as follows: “Under the holding we adopt today, the reasonableness or unreasonableness of a condominium use restriction that the Legislature has made subject to section 1354 is to be determined not by reference to facts that are specific to the objecting homeowner, but by reference to the common interest development as a whole. As we have explained, when, as here, a restriction is contained in the declaration of the common interest development and is recorded with the county recorder, the restriction is presumed to be reasonable and will be enforced uniformly against all residents of the common interest development unless the restriction is arbitrary, imposes burdens on the use of lands it affects that substantially outweigh the restriction's benefits to the development's residents, or violates a fundamental public policy.”

This standard presents a formidable hurdle for anyone challenging a provision in an association’s CC&Rs. This is contrasted with an operational rule, which is not entitled to a presumption of reasonableness. To enforce an operational rule, the burden is on the Association to show that the rule is reasonable and should be enforced.

The Association would need to provide evidence that the anti-smoking rule is reasonable and would need to show this with evidence, testimony, and likely expert testimony if the rule is ever challenged in court.

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A second issue is whether to target marijuana smoking or smoking in general. The problem with targeting only marijuana smoking is that, at least under California State law, there are legitimate health reasons that endorse marijuana smoking. If the rule or CC&R amendment focuses only on marijuana smoking, a person with a valid medical marijuana smoking card could claim prejudice or bias based on his or her health issue or disability. Therefore, we consider adopting an anti-smoking provision restricting smoking of any kind to be more likely to withstand scrutiny. Again, we consider a CC&R amendment preferable to an operational rule. In either case, the Association would not be able to restrict smoking inside the residential structure, although it could require an owner to use negative air or HEPA filters to ensure that smoke does not proceed outdoors.

Frequently Asked

Questions

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1

Should the Board consider a no smoking policy? If the Board determines that the community would not pass a CC&R amendment, then yes. As discussed above, an amendment to the CC&Rs would more easily withstand a challenge because it would be presumed reasonable. However, voter apathy or disapproval may prevent passage of a CC&R amendment. Targeting only marijuana plants and marijuana smoking could pose a problem for the reasons discussed above. That is why we favor a general smoking restriction. However, the issues raised by a complaining owner can also be addressed under the nuisance provisions of the CC&Rs

2

Should the Board amend the CC&Rs with an anti-smoking provision? As discussed

above, a CC&R amendment would be presumed reasonable and would be a better option. The issue is whether the Association could obtain approval from a majority of the owners. Again, a related issue is whether the amendment would prohibit only marijuana smoking or all smoking because targeting only marijuana smoking opens the Association up to claims of bias and prejudice.

3

Should the Board Adopt an Anti-Smoking Policy Now pending a CC&R Amendment? Yes, if the Board determines that immediate action is required short of enforcing the nuisance provision. The Board will need to follow the procedures set forth at Civil Code §4360 which requires a 30-day comment period and a 15-day notice period following adoption by the Board.

4

Should the Board meet with the offending owners? Yes. The Board should verify the nuisance and meet with the offending owner either in a hearing or Informal Dispute Resolution to explore ways to abate the nuisance while still preserving the owner’s legal right to use cannabis.

5

Should the Board meet with the complaining owner? Yes. The Board needs to determine if the marijuana use emits an odor that is unreasonably offensive to persons of ordinary sensibilities. If the Board does not feel qualified to make this determination, then it should consider hiring an expert or consultant to advise the Board on what level of odor is considered unreasonably offensive.

Paul W. Windust, Esq. is a principal at the law firm of Berding | Weil. He participates regularly in the activities of the ECHO Legal Resource Panel, speaks frequently at ECHO seminars and is a regular contributor of articles to the ECHO Journal.

New Disclosures are

Required for HOAs and Management

By Andrea L. O’Toole, Esq.

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March/April 2018 | ECHO Journal

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T

he California legislature approved AB 690 which became effective on January 1, 2018. This bill modified existing statutes and additionally created two new sections of the Davis-Stirling Common Interest Development Act (Civil Code §§ 4000 et seq.). As a result, associations have an additional annual disclosure obligation regarding escrow packages and their associated costs. And community association managers (and their firms) must

disclose conflicts of interest to their association clients.

AB 690 is intended to better educate members and provide transparency regarding costs charged to obtain documents in escrow, and to increase transparency between associations and the firms who manage them.

Bills marketed as protecting homeowners and which require community associations (and the firms that manage them) to be more transparent in their opera-

tions are popular with lawmakers. Like it or not, these types of laws are likely to continue. As such, associations should consider internal policies and protocols to help them become more effective and efficient in their disclosure obligations, and management firms should consider their own internal business models to get ahead of the competition.

New Annual Disclosure Requirements Relating to Escrow Disclosures and Associated Fees Prior to AB 690, Civil Code Section 4530 required a community association to provide an itemized breakdown of documents that the association would provide to the seller in connection with the sale of a residence to a buyer (or in a refinance of an existing loan). This breakdown would include a list of those documents which the association was obligated to provide to an owner if requested in writing, as well as the cost to obtain those documents. Civil Code Section 4528 provided a form for the itemized breakdown and costs. The owner would then select which documents to obtain.

Some owners opted to not purchase all of the available documents either because they already had copies or because the buyer’s lender did not require such documents in the transaction. Some management firms established a process by which the owner had to select the documents on an all or nothing basis, rather than allowing documents to be purchased à la carte. The cost to purchase these escrow document packages were frequently in the range of $250 to $500. This all or nothing process and its costs to members raised concerns which ultimately lead to AB 690.

An association’s annual budget report must now include a disclosure that identifies the charges for each document in an escrow package. Specifically, the disclosure must provide a copy of the form identified in Civil Code Section 4528 and the form must individually identify the costs associated with providing each document listed on the form. (Civil Code

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§ 5300(b)(12) It must include an affirmative statement that notifies association owners that they need not buy all the documents listed. It would be prudent for association boards to start working on this now and work with the managing agent to prepare the disclosure. Because the amounts charged for these escrow packages are largely retained by the management firms, the manager’s input will be necessary in preparing the disclosure.

An association is permitted to collect a reasonable fee from the owner based upon the association’s actual cost for the procurement, preparation, reproduction, and delivery of the escrow disclosure documents. (Civil Code § 4530(b)). It is important to remember, however, that the fees charged by management firms could exceed an amount that would be considered reasonable. It has long been the case that the statute which places limits on what associations may charge places no limits on what management firms may charge for such documents.

(Berryman v. Merit Property Management, Inc. (2007) 152 Cal.App.4th 1544) Thus, only associations are subject to the reasonable fee limitation. Managers, management firms (or other third party agent) must facilitate the delivery of the escrow disclosures if contractually responsible for doing so. (Civil Code § 5376) In those cases where the amounts charged by the management firm to respond to these escrow disclosure requests exceeds a reasonable amount, the additional amounts charged must be paid by the association. As such, prudent boards will ensure that their association’s written management agreements specify the amounts to be charged to the association and those amounts should be consistent with what the association can legally charge the owner to comply with the document request. That way, the association will not be subsidizing individual owners’ document requests.

New Disclosure Requirements for Community Managers to their Association Clients 26 echo-ca.org

In addition to the annual escrow package disclosure, AB 690 also created new mandatory disclosure requirements for community managers and their firms.

The bill amended Section 11504 of the Business & Professions Code, Section 5375 of the Civil Code, and added new Section 5375.5 to the Civil Code. These changes require managers and management companies to disclose:

(1) any business or company they have an ownership, profit-sharing, or other monetary incentive relationship with; (2) any referral fee or monetary benefit they receive from a third-party document provider; (3) any potential conflicts of interest, including referral fees, from any business or company that provides products or services that benefit the association; and (4) any ownership interests or profit sharing arrangements it has with vendors it recommends or with vendors used by the association.

These disclosures must be made when submitting bids for manage ment services and at the time of contract renewal.

AB 690 reflects the legitimate public policy goal and intent of the legislature to promote ethical management of community associations across the state. Increased transparency is in the best interests of every community association and their members, professional managers and their companies, and the community association industry. Boards and their associations would be well-served to include contractual language in the management agreement that includes an affirmative obligation for management to update its disclosures that develop while the agreement is in effect.

Andrea O’Toole, Esq. is a principal with Berding & Weil LLP. Berding & Weil is a longstanding member of ECHO and has been advising community associations for 30 years. Ms. O’Toole can be reached at 925/838-2090; aotoole@berdingweil.com.

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New Laws for 2018 Andrea O’Toole You Have to Intervene: The FHA and Accommodations Additional Topics To Be Announced

ADDRESS Yes, reserve ______spaces for the ECHO East Bay Seminar Name: Email Address:

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HOA or Firm:

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

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Signature: Return to: ECHO, 1960 The Alameda, Ste 195, San Jose, CA 95126 Phone: 408-297-3246; Fax: 408-297-3517

March/April 2018 | ECHO Journal

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Top Five Reserve Funding Mistakes

By Derek Eckert

Outside of major reconstruction, Reserve expenses are the largest expenses an association will face. Too often, more immediate tasks are on the desk of an association manager, and the important task of preparing the community for inevitable major expenses is neglected. Whether the manager, staff, or the board likes it or not, every day the association is slowly approaching its own future.

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March/April 2018 | ECHO Journal

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E

Mistake

1

It’s just another accounting task.

Often managers and directors associate Reserve planning with an accounting task. While both involve the finances of the association, any direct comparison is flawed. Accounting is a field that fundamentally looks backwards in time in to bring order and clarity to a business or association’s finances. Reserve planning, on the other hand, fundamentally looks forwards into the unknown. One is based on the concept of accuracy and confidence, the other on predictions about future events that may or may not occur as planned. To prepare a successful Reserve Plan, one needs to be comfortable about creating the future, leading and planning. This is not a task for someone who is comfortable only when documenting the past. Creating a successful Reserve Plan involves strategic thinking, perhaps some market research, and trend analysis. Assigning the preparation of the Reserve Study to the wrong volunteers or staff dooms the project from the start.

Mistake

2

Confusing Red Letter Information with Red Herring Information

and special assessments, and no correlation between Reserve Fund cash balance and special assessments. 0-30% Funded means a high chance of a special assessment, while over 70% Funded means a very low chance. Knowing Reserve Fund cash (“We have $1.25 million dollars…”) without knowing the Percent Funded is a mistake.

Mistake Special Assessment risk can be measured. Choices can be made, and plans implemented, that direct an association towards or away from special assessments. Special assessments are financially disruptive and politically destabilizing, and unfair to those owners hit by the special assessment (for deterioration that occurred years before they became owners). The “red letter” information is the association’s Percent Funded. This is a parameter that measures the strength of the Reserve Fund. The “red herring” information is the association’s cash balance. Focusing on the cash balance without knowing the Percent Funded is a tremendous oversight.

Percent Funded tells a board member, owner and manager the Reserve Fund strength, and therefore the risk of an upcoming special assessment. Percent Funded reveals how the cash Reserve balance matches against the fractional deterioration of community’s assets.

Twenty years of experience over thousands of associations has revealed a direct match between Percent Funded

3

Failure to Update But we just did a major review two years ago! We had a Reserve Study done three years ago; should we do one again? Both these statements reveal a misunderstanding about different types of Reserve Studies, and how they can be used to an association’s advantage. Due to physical issues (deterioration due to weather or owner usage and wear, damage, defects, or unexpected failures) or financial issues (Reserve contributions not made, interest different than planned, inflation higher than planned, some unplanned expenditures or expenses higher than planned), your Reserve Study becomes inaccurate months after it is completed.

It is a plan, after all, and as the association moves forward in time the plan needs to be updated. Continuing to use an outdated plan for financial guidance is foolish.

Special Assessment Risk Funding Strength

very day major association assets are deteriorating and drawing closer to their replacement date, whether the association is financially prepared or not.

Reviewing the operating and management behavior of our clients, we have a few suggestions to help associations understand and avoid the top Reserve Funding mistakes.

Risk

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To help an association plan effectively, there are three different “types” of Reserve Studies. An association can select the right “type” of Reserve Study to select the right level of service needed to gather or update their Reserve plan.

1) Full Reserve Study: a comprehensive top-to-bottom inventory and evaluation of the entire physical facility.

2) Update With-Site-Visit Reserve Study: a physical inspection performed to update projections about how many years each major common area asset will serve the needs of the association, and how many of those years are left.

3) Update No-Site-Visit Reserve Study: a financial update where costs are updated, the starting balance is updated, and information on recent projects/expenditures are updated without a physical site inspection.

A Reserve Study comes in three types.

Select the “type” needed by the association to update the association’s plan.

Reserve contributions are large. A Reserve Study update doesn’t have to be a big deal. There are different Reserve Study types to fit an association’s different planning needs from year to year. If you use a credentialed Reserve Study professional, you’ll find Reserve Study updates significantly less expensive than a “Full” Reserve Study.

Mistake

4

Doesn’t Interest Equal Inflation?

Probably the classic mistake is that too often our clients fail to appreciate and acknowledge that interest and inflation are very real effects, very influential to the Reserve plan. Because inflation has its effect on the total value of an associa-

tion’s asset (the roof system), while interest only has its effect on the fraction of roof replacement funds actually on-deposit, inflation is a much more powerful effect than interest. For instance, a 1% fluctuation in the assumed inflation rate requires a 13% change (on average) in the size of Reserve contributions. For associations maintaining a low Reserve Fund balance, this effect is even more pronounced. Interest does not equal inflation. Using a rough or bad estimate for interest and inflation is more accurate than choosing to neglect the influence of these powerful economic factors.

Mistake

5

Confusing Trivia with Significance Within a Reserve Study, the Reserve Component List contains life and cost estimates for the major assets the association is obligated to maintain.

Typically, this list gets longer and more complicated as stray projects got added to the Reserve Study, making the Reserve Study gradually more unwieldy, unworkable, and unimportant. This can be avoided with a Reserve Study that specifically focuses on the objective of helping the association plan ahead for the repair and replacement of major components instead of becoming an inventory and history of every asset that has been purchased.

Fundamentally, a Reserve Study is a budget preparation guide and forward planning tool. There are and always will be, exceptions to every well-laid plan.

The wisdom is in knowing when the plan needs to be adjusted by excluding projects that are the exception and can be better served outside the Reserve Study. Time is saved, and money is saved, when projects can be accomplished with economies of scale and in a consistent, repeatable manner. The opposite is what we call “checker-boarding.” This is when exceptions are allowed to become the norm, and uniqueness becomes commonplace. The association becomes more difficult to manage because

replacements begin to occur at different points in time, styles don’t match, and economies of scale are lost. Fundamentally, it begins to take more time to manage the assets, and it begins to take more money to replace the assets.

Accidents will always happen. A chair will be broken, roof tiles will break, a water leak will stain a wall and a carpet.

Memorializing an exception by adjusting the Reserve plan is a mistake. Make the repair, make the room usable and attractive, and move on. Yes, the newer carpet will not need to be replaced when it is time to replace the carpet in all the other rooms, but go ahead and replace the still “fair” condition carpet in the formerly water-damaged room. When an exception is made, that does not mean you should revise the Reserve Study or your plan to replace all assets as one project at the next opportune cycle.

This is where you choose to control the Reserve assets, instead of letting them begin to control you. The Reserve Study is a budget plan. Let exceptions remain exceptions. Keep the integrity of the plan.

The key is seeing the Reserve Study as a planning guide, not a record-book. And this brings me back to my first point, confusing Reserve planning with an accounting or asset-tracking task.

Summary Reserve planning can be simple, if you know what you are trying to accomplish.

Any athlete will tell you that avoiding errors or turnovers is a key to success.

Avoiding Reserve planning mistakes helps to keep an Association on the path to success.

Derek Eckert is president of Association Reserves–San Francisco, LLC. The San Francisco office handles Reserve Studies in the Northern California region. Association Reserves, Inc. is a national Reserve Study company, specializing in the preparation of Reserve Studies and Disclosures for its residential and association client base in 43 states and internationally. Association Reserves is a long-time member of ECHO.

March/April 2018 | ECHO Journal

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32 echo-ca.org

The Costly Future of

SB 721 and Deck Inspection Requirements

By John P. Gill, Esq.

O

n June 16, 2015, a 4th floor balcony collapsed at the Library Gardens Apartments in Berkeley, resulting in the deaths of six college students and the serious injury of seven others.

An investigation performed by the California Contractors State License Board concluded that the cause of the failure was severe wood rot to the joists supporting the balcony and to the adjacent wall sheathing. Significant original construction defects had resulted in long-term water intrusion and saturation of the balcony supports, leading to its ultimate collapse. The apartment complex was just nine years old at the time of the tragic event.

March/April 2018 | ECHO Journal

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T

wenty-eight days after the collapse, the Berkeley City Council approved an emergency ordinance mandating the periodic inspections and destructive testing of all balconies and other weather-exposed, elevated walking surfaces in all multi-unit buildings in the City of Berkeley. The Berkeley Housing Code now requires inspections every five years of “all projecting exterior elevated wood and metal decks, balconies, landings, stairway systems, guardrails, handrails, or any parts thereof in weather-exposed areas” of multi-unit buildings.

The California Legislature is following the lead of the Berkeley City Council with the introduction of SB 721 during the 2017 legislative session. This two-year bill would create a new Civil Code Section 4776 to apply specifically to condominium common interest developments with three or more separate interests (units). SB 721 specifically excludes planned developments and an individual condominium owner's "separate interest" from the requirements of the bill.

TESTING AND INSPECTION REQUIREMENTS As currently drafted, SB 721 would require all condominium associations to meet periodic inspection and testing requirements by January 1, 2024, as follows: 34 echo-ca.org

• Inspection at least once every six years “of the load-bearing components and associated waterproofing elements of exterior elevated elements”; • Inspections by a licensed architect, registered civil or structural engineer, or “an individual certified as a building inspector or building official” from a recognized state, national, or international association, as determined by the local jurisdiction (presumably by the local building department); • “Exterior elevated element” means “common area and exclusive use common area balconies, decks, porches, stairways, walkways, entry structures, and their supports and railings that extend beyond the exterior walls of the building, have a walking surface that is more than six feet above ground level, and are designed for human occupancy/use, and that rely in at least substantial part on wood or wood-based products for structural support or stability”; • “Associated waterproofing elements” include “flashings, membranes, coatings, and sealants that protect the load-bearing components of the exterior elevated elements from exposure to water and the elements”; • “Load-bearing components” are “components that extend beyond the exterior walls of the building to deliver structural loads from the exterior elevated elements to the building”; • The purpose of the inspections is to determine that the exterior elevated elements and associated waterproofing “are in a generally safe condition, adequate working order, and free of any hazardous condition caused by fungus, deterioration, decay, or improper alteration to the extent that the life,

limb, health, property, safety or welfare of the public or occupants is not endangered"; • The inspector must assess the load-bearing components and associated waterproofing elements of the exterior elevated elements “using methods allowing evaluation of their performance by direct visual examination or comparable means of evaluating their performance” – this requires destructive testing (the removal of exterior components) to allow the inspector to visually evaluate the physical condition of the exterior elevated elements, including their structural supports; • At a minimum, a sample of at least 15% of each type of exterior elevated element shall be inspected.

REPORTING REQUIREMENTS The inspector's assessment must include the current condition of the exterior elevated elements, expectations of future performance and projected service life (for reserve funding purposes), recommendations for further inspection (beyond the minimum 15% threshold), and recommendations for repair or replacement of damaged building components. This assessment must be incorporated into a written report that is signed and stamped by the inspector and presented to the association's Board of Directors within 45 days of completion of the inspection. If the inspector recommends further inspections prior to the recommendation and commencement of repair work, a subsequent report similarly would be required.

The reports must include photographs, test results, and a narrative "sufficient to establish a baseline of the condition of the components inspected that can be compared to the results of subsequent inspections" every six years. Moreover, the report must advise whether any exterior elevated element "poses an

immediate threat to the safety of occupants" and "whether preventing occupant access or conducting emergency repairs, including shoring, are necessary."

The inspector must provide to the association and to the local enforcement agency (typically the building department), within 15 days of completion, a copy of any report that either recommends immediate repairs or advises that any exterior elevated element poses an immediate safety threat, or that preventing occupant access or emergency repairs, including shoring, are necessary. Local enforcement agencies are then authorized to require additional information and the submission of additional reports as they deem appropriate.

REPAIRS Any exterior elevated element that is found to be in need of repair or replacement by the inspector must be corrected by the association, with permits required to perform the repair work. Repair and replacement work must be performed by a “qualified and licensed contractor” in compliance with the inspector's recommendations, or in compliance with alternative recommendations by a separate professional that similarly would qualify to serve as an inspector.

Repair work also must comply with any applicable product manufacturer’s specifications and with the California Building Standards Code.

Any exterior elevated element that the inspector advises may pose “an immediate threat” to the safety of building occupants, or where the inspector finds that preventing occupant access or emergency repairs, including shoring, or both, are necessary, must be reported to the local enforcement agency. Either determination “shall be considered an emergency condition and the association shall perform required preventive measures immediately.” Otherwise, where repairs are required to correct a condition that does not pose an immediate threat to the safety of occupants, the association must apply for a permit within 120 days of receipt of the inspection report and must make repairs within 180 days of permit approval.

FUNDING OF INSPECTIONS AND REPAIRS The scope and cost of inspections and destructive testing will be difficult to budget accurately, because the scope of testing may expand significantly based on initial test results and because construction testing costs can be highly variable under the best of circumstances.

Moreover, the potential cost of unknown repairs cannot accurately be budgeted at all, because the need for such repair (along with the repair scope and cost) will not be understood until the inspections are completed, after which the narrow time window for completion of repairs will not provide an adequate opportunity to budget for such work.

SB 721 resolves these budget challenges by legislating that "all costs and fees associated with accomplishing the inspections and repairs" shall be considered an "emergency situation" pursuant to Civil Code Section 5610(b), which permits an emergency assessment without a member vote.

OTHER SIGNIFICANT PROVISIONS SB 721 has other significant provisions, including the following:

• The association's initial inspection must be completed no later than January 1, 2024, and every six years thereafter; • Following the completion of repairs, the inspector must also prepare and submit a final report indicating that any required repairs have been completed; • All inspection reports must be maintained as permanent records by the association, for evaluation in conjunction with future testing and inspection programs;

• If exterior elevated elements require repair or replacement, or have a projected service life of less than 30 years, the reserve study must consider that opinion in preparing its reserve funding evaluation; • For condominium conversions proposed for sale after January 1, 2019, all required inspections must be conducted before the first close of escrow of the separate interest and thereafter every six years, with the condominium conversion inspection report and written confirmation of repairs by the inspector submitted to the Bureau of Real Estate and to the local jurisdiction (where the project is located) by the converter and included in the converter's written disclosure to all unit buyers pursuant to Civil Code Section 1134; and • For the protection of managers, the statute makes clear that the association’s obligation to comply with the statutory inspection and repair obligations specifically are not the responsibility of the association's managing agent or its employees.

IMPACT ON CONDOMINIUM ASSOCIATIONS

1 Scope of testing and expert team

The destructive testing and repair of exterior elevated walking surfaces every six years will have a significant impact on condominium operations. SB 721 requires the destructive testing and inspection of at least 15% of such elevated walking surfaces; however, the discovery of deficiencies or damage in any of the tested building assemblies March/April 2018 | ECHO Journal

35

almost certainly would result in an inspector’s recommendation for additional inspections and testing (at increased costs). Moreover, each inspection and testing program typically would require the participation of multiple construction professionals, including the following:

• An architect or other waterproofing specialist/inspector (to analyze water intrusion conditions that may result in damage to exterior elevated elements); • A structural engineer (to address the load-bearing capability of exterior elevated elements and their supports that may be damaged); and • A general contractor (to perform destructive testing – the removal and replacement of exterior components – at the direction of the inspector).

2 Budget Challenges The performance of work by the abovereferenced professionals at 15% or more of all exterior balconies, elevated walkways, stair landings, and other elevated exterior walking surfaces every six years will present tremendous budgeting challenges to condominium associations.

In some fashion, the projection of likely

costs to meet the initial 15% destructive testing threshold could be incorporated into reserve budgets for completion every six years. Thereafter, however, it will be extremely difficult to predict the cost of additional testing and inspections that might be recommended by the inspector based on the results of the testing of the original 15% testing scope, with similar difficulties in predicting the cost of unknown (and perhaps unforeseeable) repairs. In order to avoid budgetary shocks, associations will need to grapple with the uncomfortable (but increasingly necessary) option of significant annual assessment increases to spread the financial burden of known and potential cost obligations over a longer period of time, to prevent situations where a significant number of members cannot afford a large "emergency" assessment when such costs come due.

3 Age of Develop-

ment Considerations Condominium developments that are less than 10 years old will have the option to recover unanticipated inspection, testing and repair costs from the original builders pursuant to SB 800.

The SB 800 process (within Civil Code Sections 895 through 945.5) gives younger condominium associations the legal authority to offer the builders the right to perform necessary repairs and to reimburse the association's investigation and testing expenses. Alternatively, the builders can be compelled to pay the

Association the cost to perform necessary repairs using the Association's own construction professionals. Boards of younger condominium associations (less than 10 years from substantial completion of original construction) should consult and work closely with the association’s legal counsel to ensure that the association properly complies with its SB 800 obligations to preserve the association’s SB 800 legal rights with respect to the builders.

On the other hand, communities that are more than 10 years from substantial completion of original construction will bear the expenses and challenges of compliance with SB 721 on their own, with necessary increases in reserve budgets and through an expected, but unpredictable, levy of emergency assessments to obtain the cost of necessary inspections and repairs for which their budgets are simply inadequate.

Conclusion:

SB 721 has not yet been formally approved by the Legislature and signed into law by the Governor, and may continue to undergo revisions until it ultimately becomes law. As of the date of publication, the bill has been passed by the Senate and forwarded to the Assembly for consideration and approval. While its passage is not a foregone conclusion, it does appear likely to be signed into law this year.

This significant legislation undoubtedly will be the subject of future articles, presentations, and related advocacy by industry professionals as the 2018 legislative process unfolds. Managers and Board members should continue to monitor the progress of the bill, and should work closely with their association’s legal and construction professionals to develop a long-term plan for compliance with its provisions. Moreover, managers and Board members should work with their reserve study professionals to take a serious look at the adequacy of their reserve budgets, and should consider raising annual assessments more consistently to help diminish the burden of likely inspection testing and repair expenses over the next several years.

John P. Gill, Esq. is a principal with Hughes Gill Cochrane Tinetti LLP in Walnut Creek. He is a frequent speaker and writer on CID issues, and a current member of the ECHO Board of Directors.

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legislation at a glimpse

The Legislative Session has begun!

The list below features important bills that carried over from 2017 and new bills introduced this year. This list and the impact of each bill will change as authors introduce more legislation and 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 1760

Emergency Vehicle Parking

Watch Status: In Assembly Judiciary

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 2912

Fidelity Coverage and Electronic Transfers

Watch

Requires an association of a common interest development to maintain fidelity bond coverage, prohibits electronic transfers of funds belonging to the association in and out of the account without prior approval from the board. Also prohibits any electronic transfer from the operating and reserve accounts of the association without prior board approval.

Author: Frazier

Author: Irwin Status: Introduced

AB 3156

Electric Vehicle Charging Stations

Watch Status: Introduced

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.

SB 721

Deck & Balcony Inspection Requirement

Oppose Unless Amended Status: Passed Senate.

To Assembly.

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.

SB 1016

Electric Vehicle-Dedicated Meters

Watch

Provides that any covenant or restriction affecting the transfer or sale of any interest in a common interest development, that effectively prohibits or restricts the installation or use of an electric charging station within an owner’s unit or of an EV-dedicated TOU meter, as defined, is void and unenforceable.

Author: Mullin

Author: Hill

Author: Allen Status: In Senate Housing

SB 1265

Election Qualifications and Procedures

Oppose Unless Amended

Deletes a requirement that the rules specify the qualifications for candidates for a common interest development board and any other elected position and the qualifications for voting. Establishes that a nominations procedure may not be deemed reasonable if it disallows a member from being nominated for any reason other than not being a member at the time of the nomination. Adds other requirements to election rules.

Author: Wieckowski Status: Introduced

What Do You Think?

Read more about HOA legislation on our website or visit our Facebook page and join the discussion.

On the web: echo-ca.org/hoa-advocacy, On Facebook: facebook.com/echoorg

ECHO Journal

37

2017 Homeowner Association of the Year THE VILLAGES ASSOCIATION

2017 Board Member of the Year ANN MARQUIS-FISHER

2018 Association Awards We’re accepting nominations for ECHO’s 2018 Association Awards. Do you know an amazing board member or association? Tell us! ECHO will announce the 2018 Association Awards winners at the ECHO Annual Seminar on June 14th.

individual board member who demonstrates outstanding leadership in his or her HOA community, commitment to education, and works actively to support ECHO's mission.

The Homeowner Association of the Year award recognizes an outstanding ECHO Member Association whose board demonstrates continuing commitment to education and excellence in governance.

2017 HOMEOWNER ASSOCIATION OF THE YEAR The Villages Association

The Board Member of the Year Award recognizes an 38

Visit the ECHO Blog to find the online nominations form. All nominations are due by May 1st. echo-ca.org/blogs

2017 BOARD MEMBER OF THE YEAR Ann Marquis-Fisher President, Deer Oak Association

January/February 2018 | ECHO Journal

33

Half Price for ECHO HOA Members!

Promotional Code: BC9SD4

ECHO ANNUAL SEMINAR 46th Annual Seminar & Trade Show Saturday, June 16, 2018 TOPICS WILL INCLUDE:

HOA University: Legal, Finance, Insurance, Management Recruiting New Board Members, Ask the Attorney, Aging in Place, New Laws & Legislation, and more…

The Annual Seminar is now half price for ECHO HOA Members! We’re returning to the Santa Clara Convention Center for our 46th Annual Seminar. Take advantage of all the resources available to your HOA at the Annual Seminar: • • • •

12 classes featuring top industry experts.

Members-only HOA University & Certificate.

Hundreds of fellow board members and HOA professionals.

Up-to-the-minute information on new legislation.

Visit the ECHO website or call ECHO for complete event details: Online www.echo-ca.org/events Phone 408.297.3246

ECHO’s Annual Seminar is the only educational trade show designed for HOA Boards of Directors. Get your information straight from the source, and build a strong, healthy community.

Join us! Register soon - prices go up on May 19th.

March/April 2018 | 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

Annual Seminar Jeffrey Barnett, Esq. Tyler Berding, JD, PhD. Tyler Cffin 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

January/February 2017 Sandra L. Gottlieb, Esq., CCAL Burt Dean Cameron Day, Esq. Jo Pope David Levy, MBA, CPA Wayne Louvier, Esq.

Central Coast Panel John Allanson 831-685-0101 East Bay Panel Ann Marquis-Fisher amarquisfisher@yahoo.com Legal Panel Mark Wleklinski, Esq. 925-280-1191 Maintenance Panel Cassidy Rajkovich cassidy@brookcm.com North Bay Panel Stephanie Charles & Diane Kay (415) 458-3537 South Bay Panel Tyler Coffin 408-297-3246 x4 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.

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Monterey Sandra Bonato, Esq. Melissa Ward, Esq. Wendy Weber

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

San Rafael David Feingold, Esq. Wanden Treanor, Esq. Glenn Youngling, Esq.

July/August 2017 David Kuivanen, AIA Pat Crosscombe Sandra M. Bonato, Esq. Steven S. Weil, Esq. Steven T. O’Brien

Santa Cruz Sharon Pratt, Esq. Diane Rossi, PCAM, CCAM Brian Seifert Jennifer Stearns, CCAM Rosalia Tapia, Esq.

September/October 2017 David C. Swedelson, Esq. Bob Gourley Berding & Weil LLP Cagwin & Dorward Julie Adamen November/December 2017 Debra Warren Joelyn Carr-Fingerle Wendy Weber Sandra L. Gottlieb, Esq., CCAL January/February 2018 Robert DeNichilo, Esq. John P. Gill, Esq. Oliver Diaz Rolf Crocker

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

LOCATION

INQUIRIES

TOPIC

Mar 1, 11:45 a.m.

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

Denise Wolford, CCAM 415-458-3537

Water Usage & Irrigation

Mar 15, 11:45 a.m.

Wine Country Resource Panel TBD

Pam Marsh 415-686-9342

TBD

Mar 27, 12:00 a.m.

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

Tyler Coffin 408-297-3246 x4

Reserve Study Work Group

April 13, 11:30 a.m.

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

Ann Marquis-Fisher amarquisfisher@yahoo.com

TBD

May 3, 11:45 a.m.

North Bay Resource Panel TBD

Denise Wolford, CCAM 415-458-3537

Fire & Earthquake Preparedness

May 8, 12:00 a.m.

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

Tyler Coffin 408-297-3246 x4

Water Conservation

May 17, 11:45 a.m.

Wine Country Resource Panel TBD

Pam Marsh 415-686-9342

TBD

Sign up online: echo-ca.org/events

REGULARLY SCHEDULED RESOURCE PANEL MEETINGS PANEL

MEETING

LOCATION

Maintenance

First Wednesday, Even Months

ECHO Office, San Jose

North Bay

First Thursday, Odd Months

Charles Property Services

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

TBD

Legal

Quarterly

Varies

March/April 2018 | 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.

2018

2018 Condominium Greenbook Member Price: Non-Member Price:

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:

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

$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.

Home and Condo Defects Member Price: $12.95

$17.00 $25.00

2018

Condominium Bluebook 2018 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.

2018 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

TITLE

QUANTITY AMOUNT

2018 Statute Book Board Member Handbook Owner Information Form SUBTOTAL

Clubhouse Usage Policy

CALIFORNIA SALES TAX (Add 8.75%)

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March/April 2018 | ECHO Journal

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new professional members

Welcome to our

NEW PROFESSIONAL MEMBERS

Barrerra & Company Barrera & Co is a second-generation, family-owned company specializing in Reserve Studies for over three decades. They’ve worked with communities of every size, who value collaboration to provide the best customer service possible. Barrera’s mission is to provide the most accurate study, for the best price and the least amount of time.

Contact: Damian Esparza • Tel: (800) 543.8670 Email: info@barreraco.com • Web: www.barreraco.com

Brook Construction Management Brook Construction Management provides consulting & construction management services for Homeowner's Associations (HOAs). Our goal is to work for your HOA to make the construction process effortless & smooth by providing the following services: develop a comprehensive project scope of work; create competitive bidding with licensed & qualified contractors; regular & detailed communication between the HOA & the contractor; monitor construction costs & schedule; conduct regular inspections for quality control; obtain lien releases & warranties from contractors; prepare project closeout folders for HOA archives.

Contact: Cassidy Rajkovich • Tel: (408) 398.6421 Email: cassidy@brookcm.com • Web: www.brookcm.com

Sail Internet Sail Internet is bringing fast, fiber-caliber internet at an affordable price to condominium complexes in the Silicon Valley. Sail will have your condominium complex up and running with blazing fast internet within 30 to 45 days. Sail Internet was founded on the premise that everyone should have the freedom to choose the best internet service available that fits their needs without hassles or limitations.

Contact: Javier Quezadah • Tel: (844) 438-8484 Web: www.sailinternet.com

Weathermatic Weathermatic is the world's leading provider of smart irrigation and water management products and services since 1945.

Driven by a simple purpose of saving water, our SmartLink platform is the most intelligent, affordable, cloud-based irrigation system that dramatically reduces water usage, maximizes landscape beauty and increases property values.

With over 450,000 installations across 85 countries, Weathermatic is the solution of choice for communities, businesses and schools. Our commitment to sustainability extends beyond water conversation solutions with our Save Water I Give Life initiative that gives back one gallon of water for every gallon saved to improve lives around the world.

Contact: Jamie Hahn • Tel: (888) 484.3776 Web: www.weathermatic.com

Find all of ECHO’s Professional Members Online.

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

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advertiser index

about ECHO

WHAT IS ECHO? Ace Property Management..................24 www.acepm.net

Heritage Bank of Commerce. .............17 www.HeritageBankofCommerce.com

Applied Reserve Analysis....................26 www.appliedreserveanalysis.com

IQV Construction & Roofing................17 www.iqvinc.com

Barcode Automation, inc. ...................13 www.Barcode-Automation.com

Levy, Erlanger & Company..................18 www.hoa-cpa.com

Benjamin Moore Paint & Company...........................................24 www.benjaminmoore.com

Marlarkey Roofing Products...............21 www.malarkeyroofing.com

Berding Weil..........................Back Cover www.berding-weil.com Common Interest .................................19 www.commoninterest.com Cornerstone Community Management.........................................12 www.cornerstonemgt.biz

R.E. Broocker Co...................................26 www.rebroockerco.com Rebello’s Towing....... Inside Front Cover www.rebellos.net Satellite Painting, Inc. .........................12 maurizio@satpainting.com White and MacDonald.........................36 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 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 1,400 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.

August2018 2013 ||| ECHO ECHOJournal Journal February 2014 ECHO Journal March/April

45 45

Check out a Resource Panel!

ECHO Panels are informal meetings of ECHO members and industry professionals who share experiences and find ways to improve life for California associations. Check out upcoming Panel meetings on ECHO’s event page, or read more about past ones on our blog.

North Bay Panel

Open Meeting Act Thank you to all who came to our North Bay meeting to discuss the Open Meeting Act, a California law requiring all HOA boards to post agendas, allow member input at meetings, and prohibiting “email” meetings. Attorney Barrett Schaefer led a discussion about the Act, focusing on how board members can stay compliant with the law while staying on top of important association business.

Marin Seminar It wasn’t a panel, but we had a great time in Marin. At this event, our trio of attorneys addressed a variety of hard hitting issues. In 2018, weed is legal, owners have the right to place solar panels on common area roofs, and associations must allow residents to use their clubhouses for political events. David Feingold broke down what has been happening in the courts and Sacramento. Glenn Youngling explored how associations can best prepare for a catastrophic event and examined how different types of losses may require a unique approach. Finally, Wanden Treanor provided a new set of proactive communication tools to improve

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compliance and build a happier community. Thank you to the 150+ attendees who came out, asked questions, and made this event a blast!

East Bay Panel

What You Should Know: Repercussions of the Berkeley Balcony Collapse At this meeting Michael Kennedy, an attorney and specialist in construction defects, discussed what boards should know and how to prepare for the repercussions of the 2015 apartment balcony collapse in Berkeley, which killed six students. The consequences of that accident reached Sacramento, and a bill before the Legislature would require regular inspections and repairs to HOA common area decks. Michael invited attendees to share their professional insights and discuss the potential far-reaching impact on HOA maintenance and budgeting.

Join us! See page 41 for Panel information and contacts.

Or contact the ECHO Office: info@echo-ca.org.

John Garvic, Esq.