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May 2008

A Journal for Community Association Leaders

echo-ca.org

Hit the Jackpot! At the 36th ECHO Annual Seminar

ALSO INSIDE THIS ISSUE:

• Members in Good Standing • Workers’ Compensation Liability • Converting to Solar Energy Change Service Requested ECHO 1602 The Alameda, Suite 101 San Jose, CA 95126

PRSRT STD U.S. Postage PAID Sundance Press 85719


Contents Converting to Solar on page 14

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ECHO 2008 Annual Seminar

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.

The theme for 2008 is “Hit the Jackpot with ECHO.” Now is the time for board members and professionals to make advance reservations for this event.

Copyright 2008 Executive Council of Homeowners, Inc. All rights reserved. Reproduction, except by written permission of ECHO, is prohibited.

Good Standing Issues in HOA Elections

The ECHO membership list is never released to any outside individual or organization.

Many boards have a difficult time with “good standing” issues in their elections. What exactly is the definition of a member in “good standing”? This article will help you understand the meaning and give you guidelines for using “member in good standing” to implement your election rules.

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Options for Converting to Solar Energy Many associations are looking to solar energy to help keep their building competitive in a growing market, while also seeing the long-term benefit of increased reserves due to decreased energy bills. Going solar isn’t always easy but benefits the environment and may be a great financial decision for you as well.

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Liability in Workers’ Comp Case A recent California Court of Appeals case, Heiman v. Workers’ Compensation Appeal Board, sheds light on the potential liability that associations and their managers face when contracting for on-site service and repair. It highlights the importance for every association to obtain a workers’ compensation policy.

Departments 28 Calendar of Events 30 News from ECHO 31 Legislation at a Glimpse 34 ECHO Bookstore 38 ECHO Volunteers

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The ECHO Journal is published monthly by the Executive Council of 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 person should be sought.

38 About ECHO 39 Fair Housing Act 41 ECHO Marketplace 41 Advertiser Index

Executive Council of Homeowners, Inc. 1602 The Alameda, Suite 101 San Jose, CA 95126 408-297-3246 Fax: 408-297-3517 www.echo-ca.org info@echo-ca.org Office Hours: Monday–Friday 9:00 a.m. to 5:00 p.m.

Board of Directors and Officers President David Hughes Vice President Karl Lofthouse Treasurer David Levy Secretary Dorothy Kopczynski Directors Paul Atkins Lori Burger Robert Rosenberg Richard Tippett Steven Weil

Jerry L. Bowles John Garvic Diane Rossi Wanden Treanor

Executive Director Oliver Burford Communications Coordinator Tyler Coffin Legislative Consultant Government Strategies, Inc. Design and Production George O’Hanlon ECHO Mission Statement

On the Cover ECHO 2008 Annual Seminar Page 6 4

May 2008 | ECHO Journal

The mission of ECHO is to advance the concept, interests and needs of homeowner associations through education and related services to board members, homeowner members, government officials and the professionals in the industry.


ECHO Board of Directors

Nominating Committee Seeks Candidates for ECHO Board of Directors T

he Nominating Committee for the ECHO Board of Directors is seeking names of persons who are interested in being considered as candidates for positions 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 October. These positions are for threeyear terms. Current directors whose terms expire in 2008 are Lori Burger, Robert Rosenberg, Dianne Rossi, and Richard Tippett. Board members are expected to attend all of approximately six 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. These two activities involve a commitment of four to six hours per month plus travel time. In addition members are expected to attend the Annual Seminar, Annual Meeting and a

two-day board retreat each November. Board members receive no reimbursement for these activities. Nominees will also be expected to have been recent active participants in ECHO activities and to 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 July 15, 2008, to be considered by the nominating committee. Those requesting nomination may be requested to interview with the nominating committee. The committee will meet in August to prepare recommendations for board consideration. ECHO Journal | May 2008

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May 2008 | ECHO Journal


ECHO 36th Annual Seminar June 21, 2008 “Hit the Jackpot” is Theme for 2008

O

n-site registration at the 2008 ECHO Annual Seminar will begin at 7:30 a.m. on Saturday, June 21, in the main lobby at the Santa Clara Convention Center. Now is the time for homeowner association board members and professionals to make advance reservations for this event. Ask your fellow board members and your associates who live in other common interest developments to join you for a day of education and fun at this important event. Convince them that they need to hear updates about every important

CID responsibility and issue, to see new products and to share in the large number of prizes and favors distributed by 125 trade show exhibitors. Seminar Sessions Annual Seminar sessions this year as always will address many of the challenging concerns currently facing association board members. Just a few of the highlights of the 2008 program are listed below: • The HOA University track will review every major aspect of board duties and

ECHO Journal | May 2008

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responsibilities for beginning board members. Certificates will be awarded to those who complete the entire program. • Update on Proposed New Legislation that will affect community associations. • Discussion of Help for Associations in Crisis. • Review of the Secret Ballot Voting requirements. • Return of the popular Ask the Attorneys session. • Updates on Communications and Records and Delinquencies, Collections and Bankruptcy. The complete seminar program and registration information appear on page 43 in this issue. The 2008 Seminar and Exhibit will follow the same format as last year’s seminar. There will be one full day of educational sessions, a CACM manager education course addressing reserves on Friday afternoon and the usual 300-page program book. A Friday evening reception honoring exhibitors is planned as a part of the 2008 Seminar. The Trade Show will be open all day Saturday. ECHO publications will be on sale throughout the seminar. Accommodations Rooms are available at the Hyatt Regency Santa Clara adjacent to the Convention Center at the special ECHO rate of $105 single or double. Reserve directly with the Hyatt Regency (800-233-1234) to obtain the special rate, being sure to mention the Executive Council of Homeowners. This special rate is available only until May 30. 8

May 2008 | ECHO Journal


Scholarship Program A limited number of scholarships to cover the cost of Annual Seminar tickets are available, thanks to the generosity of a number of member businesses and professionals. These scholarships are generally reserved for board members or owners who are first-time attendees at the Annual Seminar or who are residents of smaller, poorly funded associations or associations with other sorts of serious operational problems. Preference will be given to representatives of ECHO member associations, but membership is not mandatory. Recipients are not required to be members of their association board.

You don’t want to miss the ECHO Annual Seminar— California’s largest annual homeowner association seminar and trade show. Awarding of scholarships will be handled by selected managers and the ECHO office. Anyone who wishes to be considered for a scholarship should apply, preferably in writing, to Oliver Burford, ECHO’s Executive Director, at the ECHO Office. Summary The ECHO Annual Seminar is the do-notmiss event of the year, and every ECHO member association should participate. The Seminar is the place to get all the up-to-date information about operating your association efficiently and legally. Complete the ticket order form on page 43 and mail or fax it to ECHO today. You may also reserve by telephone to the ECHO Office or on the ECHO website, using your Visa or MasterCard. Plan to attend all day to take full advantage of the information that will be available. You don’t want to miss this exciting event—California’s largest annual homeowner association seminar and trade show. No matter how many previous seminars you have attended, there will be plenty of new information in 2008 to hold your attention. We want to see you there!

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any boards are having a difficult time with “good standing” issues in their elections. Why is this? There are many possible reasons: • It might be because the documents of the association are unclear or confusing. • It might be because of rules that were prepared before or after the new law took effect (July 1, 2006), but before the cleanup amendments were signed into law (September 22, 2006), and they did not take into account the changes in the law.

• It might be because the person who prepared the rules misunderstood the new elections law and the changes that took place in the law. The new law has confused many. It is (to be kind) challenging! Attorneys who are informed about and have had experience in association elections do not even agree on all of the terms. For that reason, I want you to review the following and feel free to ask the questions to your own association attorney, but I do not encourage you to go back and say: “Beth Grimm says it is this way, and

therefore you are wrong.” I think the law as it changed made things pretty clear about qualifications and good standing issues for candidates, but some may not agree. One thing is clear about the statute (Civil Code Section 1363.03) and that is what it says, post revision on September 22, 2006: A board must adopt election rules and they must, among other things, “(3) Specify the qualifications for candidates for the board of directors and any other elected position, and procedures for the nomination of candidates, consistent with the governing documents. A

Member in Good Standing By Beth A. Grimm, Esq.

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May 2008 | ECHO Journal


nomination or election procedure shall not be deemed reasonable if it disallows any member of the association from nominating himself or herself for election to the board of directors. (4) Specify the qualifications for voting, the voting power of each membership, the authenticity, validity, and effect of proxies, and the voting period for elections, including the times at which polls will open and close, consistent with the governing documents.” Notice, I emphasized the words “consistent with the governing documents.” This

represented a change from the first go-round of the law. And it is important. I would like to establish that I am not in favor of people serving on the boards of their association if they are not in “good standing.” By “good standing,” I mean current with assessments and in compliance with the governing documents and rules. But neither my opinion nor that of any other person controls this issue—the documents of the association control the issue. Therefore, do your HOA documents say that a board member must be “in good standing” to serve? (This

could be in the Articles of Incorporation, the bylaws or the CC&Rs). If they do, then obviously a board member must be in “good standing” to serve. And it makes sense to suggest the leap of logic that if a candidate for the board is not in “good standing,” he or she will not be able to serve if still not in “good standing” when elected. So how do you handle this? My suggestion is that you first check the governing documents. In this case, I am referring to the specific documents listed above. Although rules are part of the

Issues in HOA Elections

ECHO Journal | May 2008

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governing documents, I do not believe a board can adopt good standing requirements without substantiation in one of the big three documents listed. You would be checking to see if there is a hearing requirement in order to find a member is not in good standing. If there is, then of course it makes sense, and is safest, to schedule and hold the hearing before the election is finalized, and preferably, if time, before the ballots go out. If there is no hearing requirement in order to declare an owner not in good standing, then the next best thing, in my view, is to give the candidate notice 1) that they have to be in good standing to serve, and if they are not by the time it is time to count ballots, 2) that no ballots for this candidate will be counted. In order to avoid this stress and complication, some attorneys say to boards: “Just tell the candidates they cannot run at all because they are not in good standing.” Sometimes rules state that candidates who are not in good standing cannot run for the board. That makes it easy but is not very often the case. This latter view (just telling candidates they cannot run for the board because they 12

May 2008 | ECHO Journal

As for allowing owners to vote, or not, based on good standing, the governing documents are critical. are not in good standing) does eliminate the problems that might arise if members are allowed to vote for a candidate that might not be in good standing by the time the votes are counted. However, if a hearing is required by the documents and none is held, then that leaves the election open to chal-

lenge. Honestly, I do not know how a challenge by an owner who is prevented from running for the board would resolve before a hearing officer, but I presume that failure of simple due process could work against an association. Thus, I am in favor of at least some kind of notice to the candidate and opportunity to cure the defect. As for allowing owners to vote, or not, based on good standing, again, the governing documents are critical. If there are requirements such as a hearing to determine an owner is not in good standing, by all means, follow them. Sometimes documents simply say that owners’ voting rights are automatically revoked if the owner is not in good standing. Some associations are vigilant in declaring members not in good standing. Others don’t even go through the motions or try to keep any members from voting. Pay attention to what the documents say. And I do not recommend commencing an election, sending everyone ballots, and then, half way through, deciding to start disqualifying owners for various (what the owners would probably believe were bogus) violations. I have seen such actions done and, for me, they do


not pass the “taste” test. I believe that leaves the election open to challenge. Of course, I do not have a string of cases to recite because the law is too new, but this is something to think about. Good faith could have a lot to do with surviving any election challenge. Where do you find the definition of “good standing”? It could be in the Articles of Incorporation, the bylaws or the CC&Rs. Many forget to check the Articles of Incorporation but they are an important document. I recently advised on an election where the board member “good standing” requirement was in the Articles of Incorporation, not the bylaws or CC&Rs, but the definition of good standing was in the bylaws. Sometimes “good standing” is limited to nonpayment of assessments and does not include other violations. If it is not defined specifically, then a reasonable definition would likely be paid up with assessments and in compliance with the governing documents. The question of fines might come up. What if the owner has corrected the violation and does not owe any back assessments but owes fines? This is just a toss up. I have not had this question come up yet, but if it did I would certainly want to know the circumstances around the fines, whether they were justified and handled properly, and whether they were being paid and especially whether it was likely that they would be paid in full by the time the ballots are to be counted. And remember that other areas of California law may factor into the whole process as well. In order to impose disciplinary action in California in any matter other than assessment delinquencies, there are various requirements including: notice to owner, a hearing or board meeting, and written decision, and it is very possible that suspending someone’s right to vote or right to run for the board without going through this process to identify the violation and/or to determine whether the rights should be suspended could be found improper under the law. It’s a lot to think about. Directors should proceed with caution and with plenty of advice from knowledgeable professionals.

Beth Grimm is a community association attorney in California. She is a member of the East Bay Resource Panel and the Legal Resource Panel and is author of various publications and books about condominium living and the law and a frequent contributor to the ECHO Journal. You can take advantage of free information on her website at www.californiacondoguru.com.

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By Lise K. Ström, Esq. and Meghan Connolly Haupt

Options for Converting to Solar Energy T

here are more than 41,000 common interest developments in the state of California comprising nearly 4 million dwellings. Of these, there are approximately 1.5 million condominiums. Rising housing costs, the scarcity of land available for development in urban areas, and the number of baby boomers opting for smaller homes requiring less maintenance are just a few of the reasons why condominiums are an appropriate option for many individuals and families in California. However, many existing—and even new— condominium developments fail to incorporate environmentally-conscious development practices and have not recognized the myriad

of benefits associated with emerging green alternatives. “Going green” can range from the simple, like installing double-paned windows that reduce heating costs through enhanced insulation, to the more complex, like using a solar energy system to provide electricity or to heat water. These measures can often lead to dramatic cost savings and increased health, while at the same time, minimizing the environmental impact. With overwhelming evidence that carbon emissions are a major contributor to global warming, people are now looking at home improvement as one way that they can decrease the amount of carbon they are

responsible, both directly or indirectly, for emitting. Electricity use is the primary source of carbon emissions associated with our homes. By switching to renewable forms of energy, we are able to decrease our dependence on foreign oil, protect ourselves against rising energy costs and drastically reduce our environmental footprint. Solar energy is rapidly becoming a viable and popular energy alternative for businesses and property owners alike. Continued on page 17


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Converting to Solar Energy Continued from page 14

This article discusses the options and obstacles faced by condominium homeowner associations considering whether it makes sense to go solar. Condominium developments vary by size, shape, zoning, and other factors that determine how conducive the building may be for alternative energy. With regard to electrical metering, buildings may be set up one of two ways: 1. Each unit is separately metered for electricity and/or hot water; 2. Units are not individually metered for electricity and/or hot water. Instead, there is either one meter for the entire complex, or perhaps one meter that supplies electricity and/or hot water for the common areas and one meter that provides electricity and/or hot water for all of the building’s units. It is easier to convert to solar energy if the condominium building falls into the latter category—one meter tracking the entire buildings energy usage. However, associations should be aware that any individual owner of a condominium unit wanting to go solar has the legal right to do so. Converting to solar can save thousands of dollars annually but requires a significant initial cash outlay. This means that solar is a big expenditure that brings big benefits: you’re not just reducing your carbon footprint, you’re also ultimately increasing the property’s value and the value of individual units and reducing the property’s energy bills, forever. Additionally, a solar energy system can extend the life of the roof by protecting it from harmful ultraviolet rays and inclement weather. Commonly, solar systems are installed in conjunction with a new composition shingle roof as both have an average useful life of approximately 25–30 years. Should the roof need to be replaced after the system has been installed, the system can be dismantled and re-installed, but the costs of doing so could range from $20,000 to $50,000, depending on the size of the system. This cost would be the responsibility of the association. As such, it makes economic sense to go solar when a new roof is installed. The Process Before discussing the various financing models available to homeowner associations, let us first outline the process, from the per-

For-profit

Nonprofit

Gross system cost

$ 781,998

$ 781,998

PBI incentive

$ 194,941

$ 277,415

Federal tax credit

$ 234,599

None

Federal depreciation

$ 270,838

None

Net system cost

$ 81,620

$ 504,583

First year utility savings

$ 17,439

$ 17,439

25-year total savings

$ 833,327

$ 915,802

Increase in property value

$ 258,651

$ 258,651

15.3

21.9

2,970

2,970

50.9

50.9

9,664,872

9,664,872

Payback (in years) 25-year carbon dioxide reduction (in tons) Equivalent to number of trees planted Equivalent to reducing miles driven

Solar Energy Cost Analysis spective of the association, of converting to solar energy. Step 1: Select a Solar Company It seems that every construction company, window installer and roofer now claims expertise in solar energy system installation. Indeed, they have many transferable skills to bring to this arena but are probably not as experienced as you will want—and need. There are many companies dedicated to solar energy that have been around for a number of years focusing on nothing but solar installations. Experience in the installation and ongoing maintenance of solar energy systems is important. Perhaps equally important for an association is selecting a solar energy company that has access to significant resources. Some solar companies are backed by major corporations, thereby allowing them to offer better financial options than the smaller companies. Larger, betterestablished solar companies are able to offer an association a project bid that already reflects any available rebates or incentives. Larger companies can offer the discount in advance, out of their own resources. This means that the association doesn’t have to wait months for a rebate to come through the government or utility company; the solar company does.

A word of caution: associations are most commonly organized as nonprofit mutual benefit corporations. Therefore, associations are not eligible for the numerous tax credits, deductions, and other incentives available because the vast majority of these incentives are aimed at for-profit commercial properties and single-family homes. Thus, the project bids may make the whole proposal seem, at first blush, unaffordable. The table above illustrates the advantages that for-profit entities have over non-profit entities in converting to solar energy. The information provided in the table is based on a 40-unit, live-work condominium complex using the OnGrid Solar Energy System Assessment Tool and reflects incentives and rebates as of February 2008. The system outlined would offset 35.7%t of the building’s total energy usage. You will want to work with a solar company that has experience or is eager to gain experience working with an association. As the solar industry takes off, many companies are focused on the “low-hanging fruit” of forprofit commercial properties and single-family homes and will not devote the necessary attention to ensuring your association project is a success. Do your research, interview companies that have worked in your area ECHO Journal | May 2008

17


previously and select one that is eager to work with an association. Step 2: Conduct the Assessment From the perspective of an association, this is the easiest step in the process. The assessment simply requires that you set up a time for the solar specialist from the company you have selected to come out for a site visit. During that visit, the specialist will complete your assessment by asking a series of questions about your current energy use, examine electric bills, photograph the property and determine the usable space available for solar modules. (Note that the terms modules and panels are used synonymously.) This information will allow the company to prepare one or more project bids for your review.

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Step 3: Review the Project Bids Typically, within a week of the assessment, your specialist will provide you with project bids that outline the proposed system including the amount of energy to be off-set, the system specifications, and the financial analysis. It is important that you carefully review the proposal and understand the projected results of the system. In some cases, you will receive more than one bid as there are several factors that will significantly affect the recommendation. For example, if the proposed system is to be owned by a for-profit entity, after rebates and incentives, the cost of the system may be as little as 20% of the cost of that same system for a nonprofit entity. An association of mixed-use condominiums may want to approach the owners of the commercial units in the building to take title to the solar energy system on behalf of the association. In so doing, the associationâ&#x20AC;&#x2122;s non-profit status would not be compromised, but the building would be able to take advantage of the rebates and incentives available to for-profit entities. Residential-only associations may opt to have the owners separately form a for-profit entity that could take title to the solar energy system. The resident-owned company would then lease the system back to the association, thereby allowing the association to obtain the financial benefits afforded to for-profit entities. Step 4: Arrange Financing and Installation Because the issue of financing is discussed in detail later in this article, we will just say here that your solar company should be able

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May 2008 | ECHO Journal


to help you determine the best financial option as part of their comprehensive project management services. The solar company will manage the process from proposal through installation and maintenance, including assistance securing financing. Their expertise in managing the project will be invaluable, as it will mean that they handle the government applications, scheduling inspections, and coordinating installers. It sounds easy, right? Well, certainly if you have the funds available and choose an experienced solar company, it is. But, what if an association doesn’t have significant funds onhand that can be tapped up front to pay for the system? Unfortunately, no universal solution exists, but here are a few options. Financing You have your project bid in hand. You may also have some financing options from the solar company. As an association, there are certain restrictions that apply to funding of which you should be aware: restrictions on how association money can be spent, and when a vote of the membership needs to be conducted. Special Assessment or Reserve Funds The association can pay for the solar energy system by levying a special assessment against all owners in the association or by tapping into the association’s reserve account. Special assessments, unlike reserves, may be used for any legitimate association purpose. Reserves, however, are generally restricted to pay for deferred maintenance, repair, or replacement of so-called “major components” of the condominium building. The only other reason an association may tap its reserve monies occurs when an association is in dire need of money for its day-to-day expenses and must therefore move funds from its reserve account to its general operating account, with a repayment plan. Limitations on Using Special Assessments In any given fiscal year, special assessments can be levied under certain conditions. If the total amount of the special assessment needed to pay for the solar energy system is greater than 5% of that year’s budgeted gross expenses, then the special assessment needs to be voted on and approved by all owners. If the owners need to vote and approve the special assessment, the vote needs to be conducted by secret ballot and the requisite number of owners needs to approve the special assessment before it can be levied (the

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May 2008 | ECHO Journal

number of affirmative votes needed is defined in the association’s governing documents). While unlikely, if the total amount of the special assessment needed to pay for the solar energy system is 5% or less than that year’s budgeted gross expenses, no vote is required and the association can simply levy the special assessment. Limitations on Using Reserves Alternatively, if your association is lucky enough to have substantial reserves, this money can possibly be used to pay for the solar energy system. Reserves are intended for deferred maintenance or replacement of “major components” of the condominium building. “Major components” are largely defined by the association’s board of directors. California Civil Code Section 1365 states that reserves may only be used for “major components,” but it does not provide a specific definition of the term. Instead, major building components are generally identified in the association’s reserve study. Such items typically include the building roof, the sanitary sewer system, the potable water system, and the electrical system, among other things. The list of major components in need of repair or replacement should be regularly updated by the board (often done in conjunction with a reserve study preparer). Therefore, if your association determines that one of your building’s “major components” in need of repair or replacement is the building’s electrical system or the building’s hot water system, the association may use reserve monies to pay for the installation of a solar energy system. An association should discuss this plan with its budget preparer, reserve study preparer and/or its accountant to ensure the prudent use of reserve monies. Bank Loan An association may also take out a loan from a bank to pay for the solar energy system. Most banks serving homeowner associations provide loans at reasonable rates. Your solar company may also have relationships with emerging lending institutions established to promote alternative energy. Compared to levying a special assessment or tapping into reserves, taking out a loan may be a preferable way of paying for a solar energy system. The amount of the special assessment needed from each owner to fund a solar energy system may be disagreeable to property owners and may be perceived as


imposing a substantial financial hardship. Further, special assessments require the association to conduct a vote of the membership (although a vote may still be required to pay back the loan; see below for further explanation) and to collect the special assessment from each owner, which may present administrative challenges and costs. Collection of the special assessment may require significant time. You risk not being able to generate the full funds needed if even a few property owners refuse to pay. If the existing electrical system or hot water system is in critical need of replacement, deferring the installation of the solar energy system could have serious implications and the quality of the life in the building could be jeopardized until the situation is resolved. By contrast, a loan makes funds immediately available; thus, an installation can occur immediately and be completed in a timely manner. Further, the amount needed to repay the loan is spread over time, allocated among the owners, and included as part of the regular monthly assessment. So long as the increased regular monthly assessment is 20% or less of what the regular monthly assessment was for the preceding fiscal year, the association can simply provide owners with notice and an explanation of the increase and then levy the new regular monthly assessment amount. A vote by the property owners is only necessary if the increased regular monthly assessment is more than 20% what the regular assessment was in the previous fiscal year. While regular assessments would increase to service the loan, the increase is more manageable for owners than if the system purchase required a lump sum special assessment. Of course, the two finance options discussed assume that the association is ready to move forward with the project as bid by the solar company. In some cases, neither option will garner enough support to convert to solar energy. Mitigating the financial concerns is the single greatest obstacle that an association will face in its efforts to go solar.

Construction Project Management and Architecture for Home Owners Associations Construction administrative services including bidding process Pre-construction consulting & coaching Over 25 years experience in architecture, construction and engineering environments

B

AYRIDGE GROUP

INC

1777 Borel Place Suite # 314 San Mateo, CA 94402

Phone: (650) 345-2744 Fax: (650) 292-4926 www.bayridgegroupinc.com

A third alternative has recently become a popular solution for associations. Power Purchase Agreement Depending upon the size of the proposed system, a power purchase agreement (â&#x20AC;&#x153;PPAâ&#x20AC;?) Continued on page 23 ECHO Journal | May 2008

21


Converting to Solar Energy Continued from page 21

may be your best option and should be discussed with your solar company. A PPA is a private agreement between a solar energy company and an association. The system is installed on association property but is owned by the solar company. All electricity generated by the system is sold by the solar energy company to the association at a pre-determined per kilowatt rate, which generally increases by a set percentage amount each year.

Going solar isn’t always easy... The overall cost of electricity provided by the PPA system is generally less than the cost of electricity provided by the local utility company and carries other benefits of solar energy such as increased resale value for property owners and decreased environmental impact. A PPA is generally a long-term agreement (20 years or more) that, at the end of its term, allows an association to purchase the system outright. Often, available roof or common area space where panels can be installed is insufficient to meet at least 80% of the association’s electricity needs; thus, solar energy companies may be disinclined to offer this option. The assessment will determine the size of system needed to offset total energy usage and the largest possible system that can be accommodated. Many associations are looking to solar to help keep their building competitive in a growing market, while also seeing the longterm benefit of increased reserves due to decreased energy bills. Going solar isn’t always easy but does have a significant impact on the environment and may be a great financial decision for you as well.

Lise K. Ström is an attorney in the Law Offices of Ann Rankin in Oakland, California who specializes in common interest development law, with a focus on green development and green conversions. Meghan Connolly Haupt is a sustainability consultant and principal of C5 Company, a fine jewelry company specializing in sustainable metals and gem stones.

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© 2008 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. (114914_8095) ECHO Journal | May 2008

23


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By Garth Leone

Association and Management Company found Liable in Workers’ Compensation Case A

recent California Court of Appeals case, Heiman v. Workers’ Compensation Appeals Board, has shed new light on the potential liability that associations and their managers face when contracting for on-site service and repair. Specifically, it highlights the importance for every association, whether it has employees or not, to obtain a workers’ compensation policy. The Case For those of you unfamiliar with the case detail, the “cliff notes” version is this: Pegasus Management (Heiman), the manager for the Montana Villas Homeowners Association, hired the Hruby Company on behalf of the association to install rain gutters on the association’s common area. An employee of Hruby was electrocuted

and seriously injured on the job. Hruby was uninsured (and unlicensed); so, the injured worker pursued the association and its management company for workers’ compensation benefits. The absence of a policy to provide benefits for the injured worker left the Workers’ Compensation Appeals Board assigning payment obligation equally to the contractor (Hruby), the association (Montana Villas) and the management company (Heiman and Pegasus Management). The management company took the Comp Board to court, arguing they should be excused from liability because they were merely acting as an “agent” on behalf of the association. Unfortunately for Pegasus (and potentially all other community association managers), the court upheld the Comp Board’s findings (Heiman

v. Workers’ Compensation Appeals Board) and ruled that the management company could not escape liability simply because they were acting as the “agent” on behalf of the “principal” (Montana Villas). More detailed information about this case can be located on the Internet, using the case name for the search. The interesting thing for a manager to consider is that had the association carried its own workers’ compensation policy, the Comp Board would have likely stopped there and closed the case because benefits would have been available for the injured worker. The manager could have protected himself simply by insisting that his client carry the appropriate insurance. Continued on page 27 ECHO Journal | May 2008

25


26

May 2008 | ECHO Journal


Worker’s Compensation Liability Continued from page 25

The Recommendations The obvious first recommendation is to hire only licensed and properly insured contractors. While professional managers are generally very good about that, it is important for association board members to draw a line in the sand when it comes to this issue. Do not allow any type of contract for on-site services without verification of proper licensing and appropriate insurance for workers’ compensation and for the work performed. The case also highlights the importance of the association’s having a “backstop,” if the workers’ comp policy carried by the contractor fails. Unfortunately, verification of coverage sometimes isn’t enough. Even if the man-

The way to be certain that your association will not bear the risk of a contractor’s insurance failure is to obtain your own workers’ compensation policy. ager and the board are diligent in checking licensing and verifying coverage as reported on the certificate of insurance, a lapse could occur, exposing both the association and the manager. The only way to be absolutely certain that your association will not bear the risk of a contractor’s insurance failure is to obtain your own “if-any” workers’ compensation policy. Additional Exposure In addition to the “if-any” exposure addressed in this case, the association (and now potentially its management company) are at risk of owing workers’ comp benefits to volunteers who perform “work” on behalf of the association. Imagine these scenarios: an association member volunteering at a “Saturday Community Clean-up Day” is

Continued on page 32 ECHO Journal | May 2008

27


Calendar of Events

Check out these ECHO events Thursday, May 1 North Bay Resource Panel 9:30 a.m. Contempo Marin Clubhouse 400 Yosemite Rd., San Rafael

Saturday, May 17 Marin Seminar 8:00 a.m. to 1:00 p.m. Embassy Suites 101 McInnis Pkwy., San Rafael

Wednesday, June 18 Wine Country Resource Panel 11:45 a.m. Eugene Burger Management Co. 6600 Hunter Drive, Rohnert Park

Wednesday, July 16 Wine Country Resource Panel 11:45 a.m. Eugene Burger Management Co. 6600 Hunter Dr., Rohnert Park

Friday, May 2 East Bay Resource Panel 9:30 a.m. Angius & Terry 1900 N. California Blvd., Suite 950, Walnut Creek

Wednesday, May 21 Wine Country Resource Panel 11:45 a.m. Eugene Burger Management Co. 6600 Hunter Dr., Rohnert Park

Saturday, June 21 2008 ECHO Annual Seminar Santa Clara Convention Center Santa Clara

Thursday, July 17 San Francisco Luncheon 11:45 a.m. to 2:00 p.m. St. Francis Yacht Club San Francisco

Monday, May 12 Accountants Resource Panel 6:00 p.m. Francesco’s Restaurant, Oakland Tuesday, May 13 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz Wednesday, May 14 South Bay Resource Panel 12:00 Noon Il Fornaio 302 Market St., San Jose

Thursday, May 22 San Francisco Luncheon 11:45 a.m. to 2:00 p.m. St. Francis Yacht Club San Francisco Wednesday, June 4 Maintenance Resource Panel 12:00 Noon ECHO Office 1602 The Alameda, Ste. 101 San Jose Friday, June 6 East Bay Resource Panel 9:30 a.m. Angius & Terry 1900 N. California Blvd., Suite 950, Walnut Creek

Thursday, July 3 North Bay Resource Panel 9:30 a.m. Contempo Marin Clubhouse 400 Yosemite Rd., San Rafael Tuesday, July 8 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz Wednesday, July 9 South Bay Resource Panel 12:00 Noon Il Fornaio 302 Market St., San Jose Monday, July 14 Accountants Resource Panel 6:00 p.m. Francesco’s Restaurant, Oakland

Friday, August 1 East Bay Resource Panel 9:30 a.m. Angius & Terry 1900 N. California Blvd., Suite 950, Walnut Creek Wednesday, August 6 Maintenance Resource Panel 12:00 Noon ECHO Office 1602 The Alameda, Suite 101, San Jose Wednesday, August 20 Wine Country Resource Panel 11:45 a.m. Eugene Burger Management Co. 6600 Hunter Dr., Rohnert Park

Regularly Scheduled Resource Panel Meetings Resource Panel Maintenance North Bay East Bay Accountants Central Coast South Bay Wine Country Legal 28

May 2008 | ECHO Journal

Meeting

Location

First Wednesday, Even Months First Thursday, Odd Months First Friday, Monthly Second Monday, Odd Months Second Tuesday, Odd Months Second Wednesday, Odd Months Third Wednesday, Monthly Quarterly

ECHO Office, San Jose Contempo Marin Clubhouse, San Rafael Angius & Terry, Walnut Creek Francesco’s Restaurant, Oakland Pasatiempo Inn, Santa Cruz Il Fornaio Restaurant, San Jose Eugene Burger Management Co., Rohnert Park Varies


Directory

UPDATES Updates for listings in the 2008 ECHO Directory of Businesses and Professionals.

Listing Additions Biota Tech Services, Inc. 1807 Pruneridge Ave., Ste. A Santa Clara, CA 95050 Contact: Denise Hutson Tel: 408-248-3266 Fax: 408-248-7713 www.treecarepro.com Email: office@treecarepro.com

BTSâ&#x20AC;&#x201D;A professional arboricultural company currently managing large treescapes throughout the greater Bay Area. 25 plus years experience. International Society of Arboriculture. Certified Arborists & Tree Workers. Commercial Gutter, Inc. P.O. Box 1808 Fremont, CA 94538 Contact: Baljinder Bal Tel: 510-979-1123 Fax: 510-979-1124 Email: bbal@commercialgutter.com Never worry about cleaning your gutters again with our Gutterglove gutter guard. We also provide gutter installation, repair, and cleaning. In business since 1996. We are fully licensed and insured. Jeff Atkinson Construction 115 Helen Avenue Santa Cruz, CA 95065 Contact: Jeff Atkinson Tel: 831-359-9376 Fax: 831-454-8171 Email: jeffatkinson@comcast.net

Continued on page 33 ECHO Journal | May 2008

29


News from ECHO

2008 Annual Seminar Begins June 20 The 36th ECHO Annual Seminar is now a short six weeks away. Many exciting presentations and outstanding speakers are lined up for this year’s seminar. It is time for homeowner association board members and residents to order seminar tickets. Call the ECHO office or send in your reservation for California’s largest CID conference. HOA University, ECHO’s training course for new directors, will be repeated this year in its condensed one-day version. The basic responsibilities and duties of homeowner association board members will be explained by a full range of experts. This series of sessions is a “must” for all new or potential board members and also will provide an excellent review for any board members. Those who attend this entire track will receive a special certificate, recognizing their participation and completion of the program. The 2008 Seminar also includes full-day tracks addressing legal and legislative, association financial and management, and major facility maintenance 30

May 2008 | ECHO Journal

concerns. As usual there will be a presentation and status report on the legislative bills affecting common interest developments that that are now moving through the California Legislature. The full program of educational presentations and a registration form can be found on page 43 of this issue. The 2008 Seminar and Trade Show will be an exciting, highpaced event. Morning and afternoon educational sessions, a full program book with handouts from all speakers, continental breakfast and an afternoon ice cream social are all included in the Seminar ticket price.

HOA, Management Co. Liable in Workers’ Comp Case A recent California Court of Appeals case, Heiman v. Workers’ Compensation Appeal Board, has shed new light on the potential liability that associations and their managers face when contracting for on-site service and repair. Specifically, it highlights the importance for every association, whether it has employees or not, to obtain a workers’ compensation policy. Here is the short version of the case: Pegasus Management

(Heiman), the manager for the Montana Villas HOA, hired the Hruby Company on behalf of the association to install rain gutters on the association’s common area; Hruby was both uninsured and unlicensed. An employee of Hruby was electrocuted and seriously injured on the job, and he pursued the HOA and its management company for workers’ compensation benefits. The absence of a policy to provide benefits for the injured worker left the Workers’ Compensation Appeals Board assigning payment obligation equally to the contractor, the association, and the management company. The management company took the Comp Board to court, arguing they should be excused from liability because they were merely acting as an “agent” on behalf of the association. Unfortunately for Pegasus (and potentially all other community association managers), the court upheld the Comp Board’s findings and ruled that the management company could not escape liability simply because it was acting as the “agent” on behalf of a “principal.” Detailed information about this case can be located on the Internet, using the case name for the search. The interesting thing is that had the association carried its own Workers’ Comp policy, the Comp Board would have likely stopped there and closed the case because benefits would have been available for the injured worker. The manager could have protected himself simply by insisting that his client carry the appropriate insurance.

The obvious first recommendation is to hire only licensed and properly insured contractors. While professional managers are generally very good about that, it is important for association board members to draw a line in the sand when it comes to this issue. Do not allow any type of contract for on-site services without verification of proper licensing and appropriate insurance for workers’ compensation and for the work performed. The case also highlights the importance of an association’s having a “backstop” if the workers’ comp policy carried by the contractor fails. The only way to be certain that your association will not bear the risk of a contractor’s insurance failure is to obtain your own “if-any” workers’ compensation policy.

Important Upcoming Events Saturday, May 17 Marin County Spring Seminar 8:00 a.m. to 1 p.m. Embassy Suites, San Rafael Thursday, May 22 San Francisco Luncheon 11:45 a.m. St. Francis Yacht Club San Francisco Friday & Saturday June 20 & 21, 2007 ECHO Annual Seminar Santa Clara Convention Center Santa Clara


2008 Legislation at a Glimpse As of April 28, 2008 Bill No.

Author

Subject

Status

Position

Summary

AB 567

Saldana

Common Interest Development Bureau

Senate Trans. & Housing

Oppose Unless Amended

This bill would, until January 1, 2014, establish in the Department of Consumer Affairs the Common Interest Development Bureau. The Bureau would, among other things, provide board member education and training resources, investigate and impose fines for Davis-Stirling Act violations, and compel associations to disclose those violations.

AB 952

Mullin

BMR Owner Assessment Restrictions

Senate Inactive File

Oppose

Would prohibit the board of directors from imposing a special assessment or an increase in the regular assessment greater than 20% unless separately approved by owners of low- or moderate-income units in accordance with specified procedural requirements. Requires board to provide those owners with a one year, interest free payment plan. It is unlikely that this bill will be revived.

AB 1892

Smyth

Solar Energy Equipment Restrictions

Amended. Oppose Assm Housing Hearing April 2

This bill would render void and unenforceable any restriction in the governing documents of an association that effectively prohibits or restricts the installation or use of a solar energy system.

AB 1921

Saldana

Statutory Revision of CID Law

Assembly Housing Hearing April 2

Watch

This bill would renumber, consolidate, make minor changes to, and remove discrepancies in those sections of California law that govern common interest developments. If passed, the bill would replace the existing Davis-Stirling Act.

AB 2180

Lieu

Solar Equipment Approvals

Assembly Local Gov. Hearing April 2

Oppose Unless Amended

This bill would compel associations to provide written approval or denial of an application to install a solar energy system. The approval or denial must be given within 45 days of the receipt of the application, or the application is deemed approved, unless the delay is the result of a reasonable request for additional information.

AB 2259

Mullin

Rental Restrictions

Assembly Housing Hearing April 2

Oppose Unless Amended

This bill would prevent common interest developments from imposing rental or lease restrictions upon an owner, unless that owner consents in writing to the impairment of that right at the time of purchase.

AB 2806

Karnette

Board Member Education

Assembly Housing Hearing April 16

Oppose

This bill would require every member of a board of directors serving at least 12 consecutive months to disclose whether or not they have completed a course dealing with the laws that govern common interest developments. Only courses costing $25 or less would be approved by the Department of Real Estate. Associations may not reimburse directors more than $25 for the course, or more than $100 for travel expenses.

AB 2846

Feuer

Dispute Resolution Procedures

Assembly Housing Hearing April 30

Oppose Unless Amended

This bill would permit homeowners who are involved in a dispute over assessments with their association to request alternative dispute resolution or to pay under protest and commence an action in small claims court, provided the amount of the dispute does not exceed the courtâ&#x20AC;&#x2122;s jurisdiction.

SB 127

Kuehl

CID Sale Disclosure Deadlines

Assembly Third Reading

Support

This bill would impose disclosure deadlines for the seller of a unit in a common interest development. Unless the parties agree otherwise in writing, it would require that all disclosures be made no later than 20 calendar days after the execution of a purchase agreement or the opening of escrow, whichever is later. An association must continue to provide documents to the seller within 10 days. The bill affects both mobile home and CID owners.

SB 1511

Ducheny

Super Liens

Senate Judiciary Hearing April 8

Support

Affecting only mortgages initiated on or after January 1, 2009, this bill would require any entity that causes a judicial or non-judicial sale of a separate interest to pay up to six months of delinquent assessments to the association, provided certain conditions are met.

ECHO Journal | May 2008

31


Worker’s Compensation Liability Continued from page 27

injured, or a board member slips and falls during a site inspection. While the General Liability (GL) policy provides “bodily injury” coverage, bodily injury to an “employee” is specifically excluded; so, the exposure can be pushed to a workers’ compensation policy. A volunteer performing work on behalf of the association could easily be construed as an “employee” by the GL carrier, especially if the injuries are significant. If the association carries the right type of workers’ compensation policy, this exposure can be covered, too. Coverage Availability Until recently, this type of complete workers’ compensation policy for common interest developments has been tough to come by. While some carriers offer coverage for the “ifany” exposure, they do not offer coverage for volunteers. Other policies provide “if-any” coverage and only offer coverage for board members, recommending that you simply extend the definition of “board” via appointed committee. It is important that the policy obtained offer coverage for both the “if-any” exposure and all volunteers working at the direction of the board. One company has recently released a product at a very reasonable premium in a number of key states. Premiums range from $575 to $960 depending on the state, and coverage can be purchased through your local broker or agent. Summary This case demonstrates that simply being diligent about insurance and licensing verification for contractors that provide on-site service for your association is no longer enough. While those are by far the most important first steps to protect your association, you must insist that your association have the backstop of its own workers’ comp policy for “if-any” and volunteer coverage.

Garth Leone is the managing member of CAIS, LLC. CAIS is a specialty Retail Broker and national wholesale Managing General Agent and is the National Program Administrator for the OneBeacon Community Association Workers’ Compensation program. He maintains his Certified Insurance Counselor designation. For additional information regarding this article, he can be reached via e-mail at garth@caislive.com. 32

May 2008 | ECHO Journal


BusinessProfessional Directory Continued from page 29

Looking different isn’t enough. Being different is. With a team that brings over 60 years of experience specializing in HOA management, Compass has the resources and depth of understanding to address the issues facing your association. Compass Management Group tackles our clients’ challenges head-on, always delivering creative solutions, clarity of vision and technologies that simplify management tasks and communication for everyone. Through our proven strategies, we’ve earned our clients’ trust and loyalty and solidified long-term working partnerships. Discover what being different really means.

Parkview Property Management, Inc. 530 Oak Grove Ave., Ste. 101 Menlo Park, CA 94025 Contact: Joan Latu Tel: 650-323-0126 Fax: 650-323-0121 Email: jl@parkviewproperty.com Silicon Valley Builders Group 1961 Old Middlefield Way Mountain View, CA 94043 Contact: Chris Maune Tel: 408-627-4177 Fax: 650-887-2263 www.svbuildersgroup.com Email: chris@svbuildersgroup.com

COM PA S S MANAGEMENT GROUP

408.226.3300 | 650.563.9900 | 831.583.9900

See our demo at www.gocompass.com today!

General contractor specializing in multi-unit exterior repairs including balconies, decks, siding, trim, staircases, fences, concrete, wrought iron and waterproofing. White Magic Cleaning & Restoration, Inc. 124 Shary Ct. Concord, CA 94518 Contact: Paul Hayward Tel: 925-935-4449 Fax: 925-356-2444 www.whitemagic.com

Listing Changes Jensen Landscape Services, Inc. 1983 Concourse Drive San Jose, CA 95131 Tel & Fax remain the same Medallion Landscape 10 San Bruno Ave. Morgan Hill, CA 95037 Tel: 408-782-7500 Fax: 408-779-8698

Detailed on-site inspections, inventories and asset descriptions • Spreadsheet report format now available on request 30-year threshold and components models • 16 years of reserve study experience • Call today for a free proposal

2008 Edition Community Association Statute Book Contains the 2008 version of the DavisStirling Common Interest Development Act, the Civil Code sections that apply to common interest developments, and selected provisions from the Civil, Corporations, Government and Vehicle Codes important to community associations.

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10 ECHO Journal | May 2008

33


Books and DVDs from ECHO

Homeowners Association and You $13.00 2008 ECHO Business & Professional Directory $20.00

Condominium Bluebook $18.00 2008 Edition

This directory lists all business and professional members of ECHO as of December 2007. Current addresses, telephone and fax numbers, email addresses, and a short description are included. This directory is an invaluable tool for locating service providers that work with homeowner association.

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

Homeowners Associations— How-to Guide for Leadership $35.00 This well-known guide and reference is written for officers and directors of homeowner associations who want to learn how to manage and operate the affairs of their associations effectively.

Questions & Answers About Community Associations $18.00 For 12 years, Jan Hickenbottom answered homeowners’ questions in her Los Angeles Times column on community associations. Now collected in one volume, readers can find answers to almost any question about CIDs.

This is a valuable guide to all aspects of community association living designed as a practical problem solving guide. Written by two long-time association residents, it provides an insightful overview of community living from the viewpoint of experienced owners in readable language. Recently revised and expanded.

Robert’s Rules of Order $7.50

The Uncertain Future of Community Associations $10.00

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.

For 30 years, attorney Tyler Berding has had a unique vantage point in observing new, aging and “evolving” community associations confront the issues they face. The basic premise is: without clarity, wisdom and “tough love,” community associations are doomed to failure.

Home and Condo Defects— A Consumer Guide to Faulty Construction $10.00

The Condo Owner’s Answer Book

This guide is prepared by attorneys Tom Miller and Rachel Miller for anyone having problems with faulty construction on a home or condominium. It explains the various technical aspects of determining who is at fault and who to go after to rectify the situation.

Community Association Statute Book—2008 Edition $10.00 This edition contains the 2008 version of the Davis-Stirling Common Interest Development Act, the Civil Code sections that apply to common interest developments, and selected provisions from the Civil, Corporations, Government and Vehicle Codes important to community associations.

California Building Performance Guidelines for Residential Construction $52.50 This easy-to-read manual is an excellent tool to understand a new home. It contains chapters covering more than 300 conditions that have been sources of disputes between homeowners and builders, offers homeowner maintenance tips, and defines the standards to which a residence should be built.

CID Leadership Two-Disc DVD set $15.00

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

$30.00

Board—An orientation for new board members and a refresher for current members. Meetings—How to conduct effective meetings that stay focused and achieve results. Reserves—How adequately-funded reserves prevent problems in associations. Insurance—Considers insurance to protect multi-million dollar community assets.


Dispute Resolution in Homeowner Associations $20.00 This publication has been completely revised to reflect new requirements resulting from passage of SB 137.

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

Bookstore Order Form

Board Memberâ&#x20AC;&#x2122;s Guide for Contractor Interviews $20.00 This report is a guide for directors and managers to use for interviews with prospective service contractors. Questions to find out capabilities and willingness of contractors to provide the services being sought are included for most of the contractor skills that associations use.

Executive Council of Homeowners 1602 The Alameda, Suite 101, San Jose, CA 95126 Phone: 408-297-3246 Fax: 408-297-3517 TITLE

QUANTITY

SUBTOTAL CALIFORNIA SALES TAX (Add 8.25%) TOTAL AMOUNT

Board Memberâ&#x20AC;&#x2122;s Guide for Management Interviews $20.00 This guide for use by boards for conducting complete and effective interviews with prospective managers takes the guesswork out of the interview process. Over 80 questions covering every management duty and includes answer sheets matched to the questions.

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Zip

AMOUNT


Learn how today’s laws affect your homeowner association Don’t leave your association to fate. Learn how today’s laws affect you and your association by attending the Marin Spring Seminar. Seminar Agenda 8:00 a.m. Registration and Breakfast 8:45 a.m. Welcome, Oliver Burford 9:00 a.m. Legislative and Case Law Update David Feingold, Esq. 9:45 a.m. Funding: Keep it Flowing Glenn Youngling, Esq. 10:30 a.m. Break 10:50 a.m. Two Sides of the Same Coin Stephany Charles, CCAM, Diane Kay, CCAM 11:30 a.m. Trends, Tricks and Tips Glenn Youngling, Esq., David Feingold, Esq. 12:15 p.m. Questions and Answers 12:40 p.m. Drawings for Door Prizes 1:00 p.m. Adjourn

Marin Spring Seminar Saturday, May 17 8:00 a.m. to 1:00 p.m. Embassy Suites, 101 McGinnis Ave., San Rafael Registration Cost: $40 Yes, reserve _____ spaces for the Marin Spring Seminar. Amount enclosed: $__________ (attach additional names) Name: ______________________________________________________ HOA or Firm: ________________________________________________ Address: ____________________________________________________ City: __________________________ State: _____ Zip: ____________ Phone: ______________________________________________________ Visa/Mastercard No. _____________________ Exp. Date: ________ Signature: ___________________________________________________ Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded. Return with payment to: ECHO, 1602 The Alameda, STE 101, San Jose, CA 95126 Telephone: 408-297-3246; Fax: 408-297-3517


Find the Answers to your Questions on Condo Ownership

An excellent guide to understanding the rights and responsibilities of condo ownership and homeowner associations operation. The question-and-answer format responds to more than 125 commonly-asked questions in an easy to understand style. A great resource for newcomers and veteran owners. Order today from ECHO! Call 408-297-3246 Fax 408-297-3517 Email: info@echo-ca.org ECHO Journal | May 2008

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Honor Roll

About

ECHO Honors Volunteers 2007 Volunteer of the Year Jeffrey Barnett ECHO Resource Panels Accountant Panel William Erlanger, CPA, 415-981-9350 Central Coast Panel Jim Harmon, 831-425-3622 East Bay Panel Scott Burke, 408-536-0420 Legal Panel Mark Wleklinski, Esq., 925-691-1191 Maintenance Panel Mike Muilenburg, 408-996-3897 North Bay Panel Diane Kay, CCAM, 415-846-7579 Stephany Charles, CCAM 415-458-3537 San Francisco Panel Jeff Saarman, 415-749-2700 South Bay Panel Geri Kennedy, CCAM, 650-348-2691 ext. 1006 Kimberly Payne, 408-200-8470 Wine Country Panel Ron Hamann, 707-584-4788

Legislative Committee Paul Atkins Jeffrey Barnett, Esq. Sandra Bonato, Esq. Jerry L. Bowles Joelyn Carr-Fingerle, CPA John Garvic, Esq., Chair Geri Kennedy, CCAM Wanden Treanor, Esq.

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May 2008 | ECHO Journal

2007 Annual Seminar Speakers Adrian Adams, Esq. John Allanson Dan Angius, Esq. Frank Arms Jeffrey Barnett, Esq. Tyler Berding, Esq. Sandra Bonato, Esq. Timothy Cline Karen Conlon, CCAM Burt Dean Bill Erlanger, CPA Tom Fier, Esq. John Gachina Michael Gartzke, CPA John Garvic, Esq. Beth Grimm, Esq. Geri Kennedy, CCAM Karl Lofthouse Kerry Mazzoni Hermann Novak Dan Rottinghaus, Esq. Steven Weil, Esq.

SF Luncheon Speakers John Allanson Tyler P. Berding, Esq. Ronald Block, PhD. Doug Christison Karen Conlon, CCAM Rolf Crocker Ross Feinberg, Esq. David Feingold, Esq. Tom Fier, Esq. Kevin Frederick, Esq. John Garvic, Esq. Beth Grimm, Esq. Brian Hebert, Esq. Roy Helsing Julia Lave Johnston Garth Leone Nico March

Larry Russell, Esq. Steve Saarman Nathaniel Sterling, Esq. Debra Warren Steven Weil, Esq. Mark Wleklinski, Esq. Glenn Youngling, Esq.

Recent ECHO Journal Contributing Authors December 2007 Daniel E. Angius, Esq. Jeffrey A. Barnett, Esq. Tyler P. Berding, Esq. Michael Biel Larry Mesplé January 2008 Business-Professional Directory February 2008 Jeffrey A. Goldberg, Esq. Sandra L. Gottlieb, Esq. Stephen Marcus, Esq. Ann Rankin, Esq. David C. Swedelson, Esq. Dick Tippett March 2008 Jeffrey A. Barnett, Esq. Tyler P. Berding, Esq. Carole Murphy, PCAM Dick Tippett April 2008 Frank Arms Michael Biel Tom Fier, Esq. Walt Grady, CPA Michael Hardy, Esq.

ECHO

What is ECHO? ECHO (Executive Council of Homeowners) is a California non-profit corporation dedicated to assisting community associations. ECHO is an owners’ organization. Founded in San Jose in 1972 with a nucleus of five owner associations, ECHO membership is now 1,525 association members representing over 150,000 homes and 325 business and professional members.

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. If your company wants to reach decision makers at over 1,525 homeowner associations, you can become an associate member and join 325 other firms serving this important membership.

What are the Benefits of ECHO Membership? • Subscription to monthly magazine for every board member • Yearly copy of the Association Statute Book for every board member • Frequent educational seminars • Special prices for CID publications • Legislative advocacy in Sacramento

ECHO Membership Dues HOA Size 2 to 25 units 26 to 50 units 51 to 100 units 101 to 150 units 151 to 200 units 201 or more units Business/Professional

Rate $120 $165 $240 $315 $390 $495 $425

ECHO Journal Subscription Rates Members $50 Non-members/Homeowners $75 $125 Businesses & Professionals

How Do You Join ECHO? Over 1,800 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for membership, call ECHO at 408-297-3246 or visit the ECHO web site (echo-ca.org) to obtain an application form and for more information.


New Guidance on “Reasonable Modifications” Under the Fair Housing Act N

ew guidance was released in early March by the Departments of Housing and Urban Development (HUD) and Justice (DOJ) that reinforced the right of persons with disabilities to make “reasonable modifications” to their dwellings if a structural change to their dwelling or to a common area of the building or complex in which they live is needed so that they can fully enjoy the premises. A reasonable modification is a structural change made to existing premises, occupied or to be occupied by a person with a disability, in order to afford such person full enjoyment of the premises. Reasonable modifications can include structural changes to interiors and exteriors of dwellings and to common and public use areas. A request for a reasonable modification may be made at any time during the tenancy. The Fair Housing Act makes it unlawful for a housing provider or homeowner association to refuse to allow a reasonable modification to the premises when such a modification may be necessary to afford persons with disabilities full enjoyment of the premises. While the housing provider must permit the modification, the Act provides that the tenant is

responsible for paying the cost of the modification. To show that a requested modification may be necessary, there must be an identifiable relationship, or nexus, between the requested modification and the individual’s disability. Further, the modification must be “reasonable.” Examples of modifications that typically are reasonable include widening doorways to make rooms more accessible for persons in wheelchairs; installing grab bars in bathrooms; lowering kitchen cabinets to a height suitable for persons in wheelchairs; adding a ramp to make a primary entrance accessible for persons in wheelchairs; or altering a walkway to provide access to a public or common use area. These examples of reasonable modifications are not exhaustive. The guidance is designed to help housing providers and homeowner associations better understand their obligations and help persons with disabilities better understand their rights regarding the “reasonable modifications” provision of the federal Fair Housing Act (FHA). “The right to reasonable modifications is essential to ensuring that persons with disabilities can fully enjoy the homes in which

they live,” said Grace Chung Becker, Acting Assistant Attorney General for the Justice Department’s Civil Rights Division. “This guidance will help housing providers understand their obligations under this important component of the Fair Housing Act.” “Persons with disabilities have a right to have the place they call home altered in a way that will enable them to fully enjoy it,” said Kim Kendrick, HUD’s Assistant Secretary for Fair Housing and Equal Opportunity. “This guidance is a major step toward enforcing that right today, and for generations to come.” The FHA prohibits discrimination in housing based on disability, race, color, religion, national origin, sex and familial status. HUD and DOJ share responsibility for enforcing the FHA. HUD is the agency with the primary responsibility to investigate individual complaints of discrimination. The Secretary of HUD, on his own initiative, may file complaints alleging discrimination. In addition, the Attorney General may commence a civil action in federal court when he has reasonable cause to believe that Continued on page 40 ECHO Journal | May 2008

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Fair Housing Act Continued from page 39

person(s) are engaged in a pattern or practice of discrimination or that a group of persons has been denied rights protected by the FHA. One type of discrimination prohibited by the FHA is the refusal by housing providers or homeowner associations to permit a reasonable modification, e.g., a structural alteration, of existing premises, occupied or to be occupied by a person with a disability, when the modification may be necessary to afford the person full enjoyment of the premises. Although the housing provider or homeowner association must permit the modification, the tenant (or prospective tenant) is responsible for paying the cost of the modification. Examples of reasonable modifications include widening doorways to make rooms more accessible to persons who use wheelchairs or installing a ramp to provide access to a public or common use area, such as a clubhouse. The new guidelines, issued in the form of questions and answers, cover such topics as: • What is a reasonable modification? • Who must comply with the reasonable modification requirement? • Who is responsible for expenses associated with the upkeep or maintenance of a reasonable modification? • When and how should an individual request permission to make a modification? • What types of documents and assurances may a housing provider require regarding the modification before granting the modification? • What procedures are available to a person wishing to challenge a denial of a requested modification? The new guidelines are available online at both www.usdoj.gov/fairhousing and www.hud.gov/offices/fheo/disabilities. Since January 2001, HUD and its Fair Housing Assistance Program partners have investigated and either conciliated or charged nearly 10,000 cases that alleged discrimination based on disability. Since January 1, 2001, the Justice Department’s Civil Rights Division has filed 244 cases to enforce the Fair Housing Act, 115 of which have alleged discrimination based on disability. 40

May 2008 | ECHO Journal


ECHO Marketplace

Advertiser Index

The place to find business and professionals for your association Access Association Services . . . . . . . .26 Advance Construction Technology . . .20 Affirmative Management Services . . . .9 Alpha Restoration and Waterproofing 18 American Management Services . . . .20 Angius & Terry . . . . . . . . . . . . . . . . . . .3 Applied Reserve Analysis . . . . . . . . . .33 A.S.A.P. Collection Services . . . . . . . .23 Association Reserves . . . . . . . . . . . . .32 Bayridge Group . . . . . . . . . . . . . . . . .21 Berding & Weil . . . . . . . . . . . . . . . . . .44 Cal Bay Builders . . . . . . . . . . . . . . . . .27 Collins Management . . . . . . . . . . . . . .8 Community Association Banc . . . . . . .29

Your Ad Seen Here You read this, didn’t you? Thousands of officers and directors of homeowner association boards also read the ads each month in the ECHO Marketplace.

M & C Association Management Services provides community association management and developer services to Fremont, Santa Clara, Stockton, Modesto, Copperopolis and the surrounding foothills. Since 1990, we’ve enriched communities and enhanced the lives of the people we serve. M & C is proud to be an Accredited Association Management Company® (AAMC®), which is the Community Associations Institute’s highest designation awarded to management firms.

1341 W. Robinhood Drive, Suite B7 Stockton, CA 95207 Tel: 209.644.4900 Fax: 209.644.4930

1171 Homestead Road, Suite 280 Santa Clara, CA 95050 Tel: 408.241.0023 Fax: 408.241.0093

37161 Niles Blvd. #A Fremont, CA 94536 Tel: 510.795.8308 Fax: 510.795.8422

Community Management Services . . .29 Compass Management . . . . . . . . . . .33 Cool Pool Service . . . . . . . . . . . . . . . .29 Cornerstone Community Mgmnt . . . .18 Corum Painting . . . . . . . . . . . . . . . . . .2 County Bank . . . . . . . . . . . . . . . . . . .22 Draeger . . . . . . . . . . . . . . . . . . . . . . .19 Ekim Painting . . . . . . . . . . . . . . . . . . .26 ERTECH . . . . . . . . . . . . . . . . . . . . . . .26 First Bank Association Bank Services . .39 Flores Painting . . . . . . . . . . . . . . . . . .32 Helsing Group . . . . . . . . . . . . . . . . . .21 Hill & Company. . . . . . . . . . . . . . . . . .27 Jeff Atkinson Construction . . . . . . . . .39 M&C Association Services . . . . . . . . .41 M. L. Nielsen Construction . . . . . . . . .37 Massingham and Associates . . . . . . .16 Pelican Management Group . . . . . . .32 PML Management Corp. . . . . . . . . . .19 Pollard Unlimited . . . . . . . . . . . . . . . .13 Pratt & Associates . . . . . . . . . . . . . . .21 Professional Gutter Service . . . . . . . . .37 R. E. Broocker Co. . . . . . . . . . . . . . . .13 Rebello’s Towing Service . . . . . . . . . .16 REMI Company . . . . . . . . . . . . . . . . .37 Saarman Construction . . . . . . . . . . . . .8 Statcomm . . . . . . . . . . . . . . . . . . . . .13 Steve Tingley Painting . . . . . . . . . . . .12 Steve’s Painting Services . . . . . . . . . . . .9 Wells Fargo . . . . . . . . . . . . . . . . . . . .23

171 Town Square Road, Suite 2C 1209 Woodrow Ave., Suite C6 Copperopolis, CA 95228 Modesto, CA 95350 Tel: 209.785.6700 Tel: 209.576.7800 The Leader in Community Association Management Fax: 209.785.6701 Fax: 209.576.2209

For management proposal information, please visit www.mccommunities.com or email info@mccommunities.com The nation’s leader in community association management M&C_ECHOad_apr07.indd 1

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ECHO Journal | May 2008

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Hit the Jackpot at the 2008 ECHO Annual Seminar Saturday, June 21, 2008 Santa Clara Convention Center Santa Clara, California


Saturday, June 21, 2008

The 2008 CACM Course

8:00 a.m.– 4:30 p.m. Santa Clara Convention Center Santa Clara, California

Reserves—What, Why and How

125 Booths in Trade Show, Hundreds of Prizes, New CACM Course, Buffet Luncheon, Ice Cream Social and more!

Join the Friday Night Gala! Annual Seminar Reception Friday, June 20, 5:00–7:30 p.m. Food, Music, Socializing, Prizes Cost: $40—See Registration Form

Friday, June 20, 2008, 2:00 p.m. Course Fee: $109.00 The California Legislature has put a microscope on reserve studies during the past several years and more attention is likely to continue to be placed on the process. Managers may not need to be a reserve specialist but they do need to know when to call in the specialist, what information to gather, and what to expect. How do you use a reserve study as a planning tool?

How does it drive the association’s budget? What if the association does not have reserves needed for a project? These questions and much more are discussed. (3 hours CEU credit). For reservations, call the ECHO Office.

Special Hotel Rates Don’t miss out on the special room rate of $105 single or double at the Hyatt Regency adjacent to the Santa Clara Convention Center. Call the Hyatt Regency at 800-233-1234 and mention the Executive Council of Homeowners. The special rate is available until May 30.

Educational Program Session Tracks

Saturday Morning 9:00 to 10:10

Saturday Morning 10:50 to 12:00

Saturday Afternoon 1:30 to 2:40

Saturday Afternoon 3:20 to 4:30

BOARD BASICS Rooms 208 and 209

Administration (Include Disclosures)

Legal

Financial (Include Disclosures)

Insurance

LEGAL Rooms 203 and 204

Legislative Update

Governing Documents Improvements & Updates

Looking into the Future

Ask the Attorney

MANAGEMENT & FINANCIAL Ballroom H

Help for Associations in Crisis

Self-Managed Associations

Introduction to Policy Governance

Delinquencies, Collections & Bankruptcies

MAJOR MAINTENANCE Ballroom G

Legal Considerations

Management Considerations

Finance & Funding

Construction Panel

R E GIS T R AT ION FOR M

June 21, 2008 Do not miss this great educational opportunity. Reserve this date on your calendar.

Yes! Please reserve my space at the 2008 ECHO Annual Seminar. Name ___________________________________________________________________ Association/Organization ___________________________________________________ Address _________________________________________________________________ City __________________________________________ State _____ Zip____________ Daytime Phone ___________________________________________________________ Names of Additional Attendees: 1. _________________________________________ 2. ________________________________________ Please reserve tickets for: No. Amount Seminar Only (members) $75 ___________ $___________ Seminar Only (non-members) $90 ___________ $___________ Seminar Buffet Lunch $40 ___________ $___________ Friday Reception $40 ___________ $___________ TOTAL $___________ VISA/MasterCard No. ______________________________________________________ Expiration Date ___________________________________________________________ Cardholder’s Signature_____________________________________________________

Reserve Now Tickets are non-refundable Order will not be processed without full payment Return with payment to: ECHO 1602 The Alameda, Ste. 101 San Jose, CA 95126 Tel: 408-297-3246 Fax: 408-297-3517



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