Journal_11_04

April 2011

A Journal for California Community Association Leaders

echo-ca.org

Is Lamden Unraveling?

ALSO INSIDE THIS ISSUE:

• 2011 ECHO Annual Seminar • When is an Association Like Wisconsin?

• Spring into Maintenance

Change Service Requested ECHO 1602 The Alameda STE 101 San Jose, CA 95126

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Is Lamden Unraveling?

This pivotal case provides firm affirmation from the California Supreme Court that owners who challenge board decisions regarding maintenance will fail, so long as a board had an appropriate plan. Over the past year, the courts have tightly defined what is meant by an appropriate plan. This article reviews the decisions based on Lamden.

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How Simple Jobs Can Get Out of Control The simplest undertaking can turn into an exasperating experience when clear communication has not been established. Miscommunication often occurs during maintenance and repair, and it is usually not recognized until a job begins to go wrong. Read how one such situation occurred.

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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.

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 2011 Executive Council of Homeowners, Inc. All rights reserved.

Reproduction, except by written permission of ECHO, is prohibited.

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Board of Directors and Officers

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When is an Association Like Wisconsin?

Wisconsin Democrats employed a clever technique— denying a quorum—to prevent the legislature from adopting an anti-labor law. Republicans responded by reframing the law to eliminate the quorum and got it passed without the Democrats. Can such politicking be used in the context of association votes? You bet. Read this article.

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Departments 32 News from ECHO 33 Legislation at a Glimpse 34 Directory Updates 36 ECHO Bookstore 38 Events Calendar

Secretary Dorothy Kopczynski Directors Paul Atkins John Garvic Robert Rosenberg Richard Tippett Steven Weil

Jerry L. Bowles David Levy Kurtis Shenefiel Wanden Treanor

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

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ECHO Mission Statement

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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.

On the Cover April 2011 | ECHO Journal

Treasurer Diane Rossi

40 ECHO Volunteers

Is Lamden Unraveling?—page 6 4

Vice President Karl Lofthouse

Spring Into Maintenance Now that winter is passed, it’s time to perform your first biannual maintenance inspection. Early inspections reveal how the winter has affected your building’s exterior. Steve Saarman discusses how biannual inspections can help you plan your association’s maintenance.

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President David Hughes

PRESENTING 2011 ECHO Seminars

April 16

June 17 & 18

September 24

October 24

South Bay Seminar

Half-Day Seminar

Campbell Community Center 1 W Campbell Ave., Campbell, CA

8:00 a.m. to 1:00 p.m.

ECHO Annual Seminar

Two-Day Seminar

Santa Clara Convention Center Santa Clara, CA

8:00 a.m. to 4:30 p.m.

Central Coast Fall Seminar

Half-Day Seminar

Hilton Santa Cruz, Scotts Valley 6001 La Madrona Dr., Santa Cruz, CA

8:00 a.m. to 1:00 p.m.

Peninsula Fall Seminar

Half-Day Seminar

Crowne Plaza Hotel 221 Chess Dr., Foster City, CA

8:00 a.m. to 1:00 p.m.

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April 2011 | ECHO Journal

By Beth A. Grimm, Esq.

Is Lamden Unraveling? pivotal case for common interest developments was decided in California in 1999. Although hotly contested and with some chilling turns (in the appellate court), the result was that a standard was established that favored deferring to board decisions in HOAs regarding maintenance decisions. This was not a new standard—it was consistent with the statutory “Business Judgment Rule” applicable to incorporated associations, which told courts to defer to business judgments made in good faith and

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with the interests of the shareholders in mind. The case decision presented firm affirmation from the Supreme Court of California that owners who wished to challenge the decisions of HOA boards regarding maintenance would fail, so long as the board acted consistently with the BJR and had a “plan” for fulfilling its maintenance responsibilities. But over the past year or two, the courts have more tightly defined what is meant by an appropriate “plan.”

ECHO Journal | April 2011

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April 2011 | ECHO Journal

Business Judgment Rule Affirmed for All HOAs In Lamden v La Jolla Shores Clubdominium Homeowners Assn., 21 Cal.4th 249, 980 P.2d 940, 87 Cal.Rptr.2d 237, Aug. 9, 1999, a condominium unit owner brought action seeking a court order that the association fumigate the entire building for termites. The board was “spot-treating” areas. The Supreme Court held that the board’s “decision to use secondary, rather than primary, treatment in addressing the development’s termite problem was subject to deferential review.”

It is important to remember that the common law business judgment rule has two components; one immunizes corporate directors from personal liability if they act in accordance with its requirements, and the other insulates from court intervention those management decisions that are made by directors in good faith in what the directors believe is the organization’s best interest.

Read a much quoted passage from the decision: “Where a duly constituted community association board, upon reasonable investigation, in good faith and with regard for the best interests of the community association and its members, exercises discretion within the scope of its authority under relevant statutes, covenants and restrictions to select among means for discharging an obligation to maintain and repair a development’s common areas, courts should defer to the board’s authority and presumed expertise.

Thus, we adopt today for California courts a rule of judicial deference to community association board decision-making that applies, regardless of an association’s corporate status, when owners in common interest developments seek to litigate ordinary maintenance decisions entrusted to the discretion of their associations’ boards of directors.”

When Can You Rely on Lamden?

In Calemine et al. v. Jared Court HOA, 2009, the association diligently pursued a solution to a difficult and elusive problem—adopted a fix (even though it was much less expensive and extensive of two recommendations) and ultimately advised owners of its (association’s) less than 100 percent responsibility position: [Note that this case is not certified for publication, meaning it cannot be cited as controlling law, but it is indicative of how a higher court judges homeowner associations under Lamden.]

In this case, some very frustrated owners brought suit against the association to repair damages caused by water intrusion. The

board had undertaken many measures to try and resolve the issues. It sued the developer and got a judgment. With the proceeds, the board hired a company (Westar) to repair and waterproof the interior of the belowgrade surfaces of the garages and bonus rooms. When these repairs proved defective, the board sued Westar and used the proceeds to make more expensive repairs based on one of two experts’ opinions of what was needed. One of these opinions involved $1.1 million in costs, which was nearly 50 percent more than the Westar lawsuit proceeds; this repair called for extensive trenching and disruption to common areas. The other opinion proposed a less expensive/extensive repair ranging in cost from $305,000 to $119,800.

The HOA board chose the less expensive repairs and utilized part of the proceeds of the Westar lawsuit settlement; then the board used the remaining money for other common area repairs and improvements unrelated to water intrusion. The board was advised that the repair company would “not take responsibility” for the below grade areas because of issues not within their control.

The board notified owners that it had determined it to be “in the best interests of the association to assert the position that it is not and will not be responsible for any water intrusion into the below grade portions of the units …or to pay to repair or abate damage to construction materials or personal property in these areas resulting from such water intrusion.”

All of this background, including the final position of the board, was enough for the court to give deference to the board’s decision, based on Lamden.

What Then Takes Associations Out of the Lamden Protection?

In Ritter v. Churchill Condo Assn., 166 Cal.App.4th 103, 82 Cal.Rptr.3d 389, 2008, the association tried to pass liability for a building-wide defect in common area that was a fire and safety hazard on to an owner.

In this case, the homeowners sued the association and the directors for damages and court order to fill unfilled slab penetrations in the building. The HOA sought to require the owners to fill penetrations adjacent to their units and for fines for failure to do so. The court found in favor of owners except for liability of board members—they were absolved based on Lamden deference standard but the association was not.

The dispute in this case arose over the existence of these slab penetrations and the

duty, if any, of the Churchill HOA to repair the condition, which arose because the penetrations were not properly finished during the initial construction of the building. The Ritters hired their own expert engineer who conducted his own investigation. He reported that the source of nuisance odors (including offensive cigarette smoke) reported by Ritters was due to the slab penetrations and opined that these holes constituted a fire hazard and should be filled or fire-stopped. The board hired a professional engineer and a ventilation system expert to investigate; they agreed the problem was caused, in part, by the slab penetrations in the Ritter’s unit floor and also concluded that slab penetrations posed a significant fire safety risk.

The board concluded, based on the 1999 Building Code, that the Ritters should have filled any floor penetrations that were exposed while remodeling their unit, and that doing so would have abated the odor problem. The board believed that the Ritters were responsible for making the holes in the slabs and after a hearing imposed daily fines of $200 per day on the Ritters. The board said all fines would be waived if the Ritters filled the holes within 30 days after the order.

The board also attached a bid from a contractor offering to complete the work adjacent to their two units for approximately $2,700 per unit. The Ritters declined the board’s offer. The Ritters prevailed over most of their claims although they took a 25 percent hit on liability.

What hurt the association the most in this case? The court focused on the “protection” aspect, seeing the association as akin to a landlord in this situation (for HOAs a dangerous perspective liability-wise but which had been done years ago in a pivotal liability case Frances T. v. Village Green HOA). The court in Ritter said: “Courts have repeatedly declared the existence of a duty by landowners to maintain property in their possession and control in a reasonably safe condition.”

And “Landlords’ duty to maintain property in their possession and control in a reasonably safe condition requires them to act toward their tenants as reasonable persons under all of the circumstances, including the likelihood of injury, the probable seriousness of such injury, the burden of reducing or avoiding the risk, and their degree of control over the risk-creating defect.”

The duty of a landlord is commonly higher with regard to liability than a “mini-government,” which is another way of viewing ECHO Journal | April 2011

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HOAs as has been done in crucial HOA cases. The court required the association to fill the slab penetrations in the Ritters’ units but not all units in the building as the Ritters had asked.

Interestingly, the Court found: “The rule of judicial deference providing protection from personal liability for the individual directors of a non-profit condominium homeowner association does not provide cover to the association itself in the remedial context, such as injunction and rescission cases.” [This seems incongruous but the court said, no. Still, it is in direct conflict with the Lamden case where the owner sought an injunction for the board to do a specific thing and the association prevailed.]

Owners received reimbursement of substantial attorneys fees even though they did not win on all counts and even though the actual judgment (under $5000 for the slab repairs, taking into account their 25 percent liability factor) was insignificant.

An Association May Not Use Lamden to Supplant the Law and/or Governing Documents’ Definition of Responsibilities.

In Dover Village Vs. Jennison, 191 Cal.App.4th 123, 119 Cal.Rptr.3d 175, 2010, the HOA board charged an owner for sewer repairs to lines that ran under the condominium. In this case, the association attempted to use Lamden as a sword instead of a shield, claiming it supported the argument that the board’s decision on maintenance responsibility should be accepted by the court. The HOA opined that the sewer pipes were “exclusive use common area.” The court in Dover Village called this attempt to use Lamden as: “a nice illustration of matters genuinely within a board’s discretion,” but didn’t find it controlling. (emphasis added) Why? Because the court found the sewer pipes to be common area and the association’s responsibility, finding that: “Under a natural reading of the CC&Rs, the sewer pipe was a genuine common area to be maintained and repaired by the association, as distinct from ‘an exclusive use common area appurtenant’ to an individual owner’s separate interest.” The court examined Civil Code Section 1364 of the Davis-Stirling Act, which defines “exclusive use common area [as]... a portion of the common areas designated by the declaration for the exclusive use of one or more, but fewer than all, of the owners of the separate interests and which is or will be appurtenant to the separate interest or interests.” And went on pointing out:

“(1) Unless the declaration otherwise provides, any shutters, awnings, window boxes, doorsteps, stoops, porches, balconies, patio, exterior doors, doorframes, and hardware incident thereto, screens and windows or other fixtures designed to serve a single separate interest, but located outside the boundaries of the separate interest, are exclusive use common areas allocated exclusively to that separate interest.” (emphasis added) The court also reviewed the CC&Rs and found that although there were some areas designated “exclusive use common area,” the sewer pipes were not. Thus, the judges decided: “There is no question under the CC&R’s that sewer pipes are not within any individual owner’s separate interest. Article I, section 6 of the CC&Rs for Dover Village says: ‘The following are not a part of the Unit: roofs, foundations, below finished pad elevation, pipes, ducts, flues, chutes, conduits, wires and other utility installations wherever located, except the portions thereof located within the physical boundaries of the Unit,” (emphasis added) and said “A sewer system is a series of interconnected pipes which ultimately feed into one common line. Differentiating parts of that interconnected system is unreasonable.

The portion of piping coming from one unit is no more affixed to that unit than it is to the sewer system and other pipes or piping within that system. ...Some pipes—for example, drain pipes exclusively servicing one unit and not connected to any other system of piping—might indeed come within the category, because they can be said to be, like shutters and window boxes, “designed to serve a single separate interest.” But a piece of a system of interconnected sewer piping does not fit: It is, literally, physically connected to every other piece of the system.”

So here, the use of Lamden was misplaced.

The court’s bottom line: “There is an obvious difference between a legal issue over who precisely has the responsibility for a sewer line and how a board should go about making a repair that is clearly within its responsibility. But we know of no provision in the Davis-Stirling Act or the CC&Rs that makes the association or its board the ultimate judge of legal issues affecting the development.”

Neither Association Nor Management Did Enough Due Diligence to Identify and Try to Resolve a Chronic Problem.

In Affan et al., V. Portofino Cove HOA and Huntington West Properties, Inc., 189 Cal.App.4th 930, 2010, the owners of condo-

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April 2011 | ECHO Journal

minium unit brought action against the homeowner association and its managing agent for failure to maintain and repair the common area plumbing, which resulted in a sewage blockage that caused flooding of plaintiffs’ condominium unit, and for failure to remediate the resulting damage and contamination. [The trial court found the HOA responsible to indemnify owner plaintiff for casualty loss of $33,800 but denied all parties recovery of attorney fees because it found that the association was not negligent based on Lamden deference standard.] The Appeals court found Lamden did not protect the board because the board (in simple terms) did not really have a plan for dealing with the chronic problem! The association eventually did hire Rescue Rooter on an annual “routine” maintenance contract and Rescue Rooter did hydrojet the lines but shortly thereafter, there was a major backup—and so added to the question was whether that work was done negligently (it was not done in the way that one of the trial experts opined needed to be done). The court found that simply reacting to several complaints over a 10 year period by snaking drains instead of consulting a master plumber and arranging for the correct fix was not a plan worthy of the Lamden defense.

The Court of Appeal held the following: • The Lamden judicial deference standard applicable to the ordinary maintenance decisions of homeowner associations did not apply to condominium association’s managing agent, and • Evidence did not establish a maintenance decision by defendant condominium association, as a predicate for association’s assertion of the Lamden judicial deference standard.

The problems of this case or the “take away” of what an association can do to avoid this kind of situation follow: • HOA knew about the evidence of many backup problems (sewage residue found in the sink and tub when owners returned to the unit periodically) and failed to investigate for 10 years.

• HOA couldn’t show that it had even compared costs and benefits to individual snaking as opposed to clearing mainline.

• HOA stuck to handling things piecemeal.

• HOA did too little too late.

Here is an important finding from this case: “The judicial deference doctrine does not shield an association from liability for ignoring problems; instead, it protects the

association’s good faith decisions to maintain and repair common areas.�

And perhaps a hint from the court (going back to the Jared board’s challenge of being “caught between a rock and a hard place� but perhaps inconsistent with Ritter): “There may be some rare situations in which an association’s decision to do nothing to address a common area maintenance issue deserves judicial deference. For example, we can envision a scenario in which an association faces two extreme choices: doing nothing or adopting a prohibitively expensive course of action. A court may decide to extend judicial deference to an association’s choice of inaction in that narrow context, if the choice stemmed from deliberations that carefully weighed the alternatives and gave primacy to the best interests of the association and its members. The present case, however, does not present that scenario. As already noted, the association’s inaction was not the result of any deliberative process.�

Finally, the following situation, though not about Lamden, may suggest something associations should consider seriously, i.e., considering the efficacy of self-help before resorting to expensive attorneys and the courts to resolve a situation.

Chapala Case (Owner installed white vinyl windows contrary to association’s requirement of brown frames and refused to paint.)

The Court affirmed an attorneys’ fees award (begrudgingly) in favor of the association, which prevailed against the owner who ignored window frame color standards of the association. But the court wondered why the association did not, instead of using expensive court remedies (spending over $80,000 on its attorney), use self-help instead—spend about $300 to paint the window frames and charge costs to the owner (as allowed by the CC&Rs). The same “wonderment� could be asked of the owners! Why pay an attorney to defend all the way to trial and appeal when $300 would have solved the problem?

It’s definitely food for thought.

Beth Grimm is an attorney in Pleasant Hill. She is a member of ECHO and various other industry organizations in California and nationally. She is the author of many helpful community association publications, the host of the website www.californiacondoguru.com and two Blogs— California Condominium & HOA Law Blog and Condolawguru.com Blog.

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By John R. Schneider

How Simple Jobs Can Get Out of Control Lessons from the Field ccasionally, the simplest undertaking can turn into an exasperating experience, especially when clear communication between parties involved has not been established. The dynamics of miscommunication often occurs during the maintenance and repair of a complex, and it is usually not recognized until a job begins to go wrong.

Problems can develop when requests for work are not properly defined, communicated, and supervised. Yet many associations

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April 2011 | ECHO Journal

and managers forget to take simple precautions to ensure repairs are properly defined and carried out.

As with any job, it is important to make certain the services to be provided are necessary, that they are done in a workmanlike manner and resolve the issue at hand.

Ultimately, the responsibility for this oversight falls on the association through its board of directors. This article will illustrate the need for associations and managers to

ECHO Journal | April 2011

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understand why the work needs to be defined and understood clearly.

In my work with associations I have seen numerous examples of requests for repairs turn into frustrating experiences coupled with unnecessary work, time delays and escalating costs. The reasons jobs get out of control can always be traced back to assumptions being made by both the association and the vendor and the lack of proper review and oversight of the work being requested by the association.

Recently, an association decided to replace the failing address lights located on the unit garages. The job was simple enough; it basically involved the removal and replacement of the address light fixtures and connection to the low voltage wiring. In fact, the job was assumed to be so simple that the bidding contractors never looked inside the garages to verify how the address lights were connected to the electrical system.

In this complex, like most, the address lights are low voltage, meaning the wiring for the lights is connected to a 12-volt transformer (wired to a 110-volt circuit) and always on. These transformers supply power to two devices, the address lights and the front door bell.

The management company obtained bids from several contractors without a detailed description of the work to be done, and the bid was awarded to a general contracting firm. The general contractor proudly asserted to the association that the new address lights would be an upgrade to the existing fixtures because they were larger and illuminated with four bulbs instead of the existing two bulb fixtures. The bid for replacing 96 address lights was approximately $8,500.

The job was scheduled and went smoothly until half of the units were completed.

Surprisingly, complaints were reported to the association that the new address lights were flickering, dimming and burning out. The contractor was contacted and asked to investigate and correct the problem. At first the contractor thought the address lights were defective and consulted with the manufacturer. He quickly found out the light fixtures were not defective; but they were being powered by an undersized transformer.

The manufacturer’s installation instructions clearly required the fixture to be connected to a 16-volt transformer, not to a 12volt transformer as existed. Since the contractor did not perform a site investigation prior to bidding the job and did not 16

April 2011 | ECHO Journal

review the installation instructions, he was now faced with wiring a new junction box and a new 16-volt transformer in each garage. However, not knowing how to deal with this, the association allowed the contractor to take advantage of the situation.

The contractor argued that installing a transformer was not in his original contract and, that in order to do so, would require a change order. He justified the cost of the change order by stating that purchasing new transformers and gaining access to the electrical panels to turn off the power would greatly increase his costs in performing the job. The change order was for approximately $8,000, almost as much as the original estimate.

The contractor would not continue the job until a change order was signed and full payment was made for the light fixtures. With the work only partially done, the association felt pressured to complete the job. Not wanting to change contractors, the association agreed to the change order but did not agree to reimburse additional monies before further work was performed by the contractor.

At this point the job stopped, and the contractor refused to continue.

Frustrated, the association requested that I review the installation with the contractor, work out a solution, and negotiate payment owed to have the work continue. Since the old transformers were still powering the front door bells, new 16-volt transformers needed to be installed. This could easily be accomplished by tapping off the existing 110-volt circuit supplying the 12-volt transformer. The contractor agreed to perform the work in this manner, and we negotiated that he would receive partial payment once all the new transformers were ordered and delivered to the job.

As it turned out, the contractor never intended to install an additional electrical outlet for the 16-volt transformer. Instead, he decided to install a “plug in” transformer.

The manufacturer offers a “plug in” 16-volt transformer as an option for homeowners who do not want to hire an electrician to wire the transformer to an electrical circuit. By using the plug in type of transformer, the contractor reasoned he could minimize his losses by not having to access to the electrical panels and not having to tap into the electrical system.

Unfortunately, he never communicated the change in job scope to the association. It wasn’t until the new transformers were being ECHO Journal | April 2011

17

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installed that owners began making numerous complaints that the address lights were still not working. I was asked to come back and check the new installation and discovered unit owners were either unplugging the new transformers to get access to the garage outlet, or because the transformers were falling out or being dislodged from the electrical outlet.

When the association confronted the contractor about deviating from the agreed-upon scope of work, the contractor took the position that using a plug-in transformer was appropriate, and it was not his fault that the transformers were being unplugged or dislodged. Yet, in reality it was his fault. Industry standards require essential devices such as address lights to be continuously on in order to assist emergency responders.

Associations and managers can best protect themselves from unwanted surprises by consulting with a construction specialist, project manager or architect to review the work.

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So how did this job eventually work out?

Initially, the address light replacement was scheduled to take one to two weeks, but it ended up taking four months to complete.

Instead of accessing each unit one time, it was necessary for the contractor to schedule access to all units three times over the course of the replacement. This created a logistical nightmare. The final cost to the association was almost twice the original bid, and the association was forced to deal with the delays and inconvenience of working with this contractor and numerous complaints from the unit owners.

Now let’s look at what the association should have done to make this work.

First, the association did not have a clear understanding of what was involved in the replacement of the address lights, nor did they prepare a clear description of the work

they were requesting. The association manager merely asked the contractors for a price to “replace the existing address lights.” It was assumed that the persons bidding the work would know what to do and that the job would be done correctly. Had the association understood what was involved in changing the address lights or had the description of work included language such as, “work to match existing installation” or “according to industry standards or manufacturer’s installation instructions,” they would have limited liability.

Secondly, someone should have checked the licenses of the contractors bidding work.

Doing so is as simple as making a phone call to the Contractors State License Board or going to their website. In this case, the contract was awarded to a general contractor who was technically not licensed to perform just electrical work (installing the address lights). Contractor License Law states that a general contractor can only do work involving more than two trades. Technically, this job should have been performed by a licensed electrical contractor and not a general contractor. An electrical contractor would have known to check what type of power supply was needed for the new address lights before even bidding the job.

Thirdly, the work was not walked or reviewed with the contractor prior to the start of the job. Reviewing the work to be performed on a site walk with the contractor and representative for the association is a good opportunity to generate a clear understanding of what needs to be done, and how work will be performed. A site walk should be performed on every job request—large or small.

Associations and managers can best protect themselves from unwanted surprises by consulting with a construction specialist, project manager or architect to review the work to be done on a complex and to create an appropriate description of the work along with general expectations of the association.

This is often done in the form of a request for proposal (RFP). Spending a few hours with a construction professional prior to starting any job has the potential of substantial cost savings and reduction in avoidable delays during the repairs or maintenance to a complex.

Associations and management companies should be developing relationships with construction specialists, tax advisors, and attorneys when any work is being planned or funds are to be spent. These professionals

can answer questions, review documents, anticipate problems and provide advice and assistance necessary to make sure you are getting what you want and need.

John R. Schneider is a licensed general building contractor and certified code specialist. Since 1985, he has been president of All About Homes, Inc., an East Bay consulting company

As simple as these steps sound, they work and can limit liability exposure for boards and associations. Whether the job is big or small, make sure you and the vendor understand what is to be done and what it will cost.

It’s always easier to resolve questions and uncertainties before work begins.

that specializes in the investigation of construction related deficiencies, the management of projects, and the facilitation of disputes between owners, associations, and vendors. Mr. Schneider is a member of the ECHO Maintenance Panel. Questions can be directed to Mr. Schneider at jrschneider@allabouthomes.com.

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ECHO Journal | April 2011

19

By Steven S. Weil, Esq.

When is a Homeowner Association Like Wisconsin? he Democrats in the Wisconsin State Legislature employed a clever technique—denying a quorum— to prevent the legislature from adopting an anti-labor law. The Wisconsin Republicans responded with their

T

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April 2011 | ECHO Journal

own smart bag of tricks— they reframed the law to eliminate the quorum requirement and got it passed without the Democrats participating. Can this sort of politicking be used in the context of homeowner

association votes? You bet.

Read on…

Quorum Rules Generally, official bodies, like a homeowner association non-profit mutual Continued on page 22

ECHO Journal | April 2011

21

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benefit corporation or its board of directors, cannot take action unless a quorum of its members participates in the meeting or vote at which the action is proposed.

The “default” for quorums for membership meetings and votes under the Corporations Code is one third of the members. Most homeowner association bylaws say the quorum is a majority (of members voting in person, by proxy or secret ballot). Some also say that if the quorum isn’t met, it “drops down” to one third of the members.

Quorum requirements for board action are different and have their own twists.

Under Corporations Code section 7211 a quorum is a majority of the number of directors authorized in the articles or bylaws. They can provide for a different quorum with a few quirky rules, including a new one that 22

April 2011 | ECHO Journal

says that if a specified person is required for a quorum (it would typically be a representative of the project “declarant”) the absence of that person means the quorum doesn’t exist even if all other directors attended the meeting. And, conversely, if there is only one director, she or he can appoint another and those two can appoint a third and in a board of five, those three can then appoint the fourth and fifth directors (but usually vacancies created by a membership recall can only be filled by a vote of the members). Unlike membership meetings and votes, quorums for board action cannot be made by use of ballots or proxies. Personal attendance, including attendance by telephone, is required.

Wisconsin Roulette Here’s what happened in Wisconsin. The rules of their Senate required that any law involving spending money could not be approved unless a quorum of Senators was present for the vote. The Democrats’ gambit was to scoot over to Illinois and camp out— thus denying the Republicans the quorum they needed to “do business.”

Could this scenario play out in the world of homeowner associations? Absolutely. Here are some examples: The Authorized Number of Directors Challenge If the bylaws authorized five directors but only three are serving, all three would need to be present to establish a quorum so the board could lawfully act. So, if one director opposed a decision supported by the other two, the opposing director could simply not attend the meeting and no action could be taken since the quorum wasn’t met. (There are a number of remedies for this situation but a discussion of them is beyond the scope of this article).

Special Assessment?

Under Civil Code section 1366, approval of a large special assessment requires the “yes” vote of a majority of ballots cast once quorum has been met. Under this law, a quorum is more than 50 percent of the membership. Thus, the fewest number of votes needed to authorize a large special assessment is about 26 percent of the members. When a vote only needs a majority of a quorum of members, we say the requirement is for a “simple majority” (and this is contrasted with votes requiring a majority of all owners, which is called an “absolute majority”).

ECHO Journal | April 2011

23

Erratum 2011 Wine Country Seminar Program Book A correction is needed on page 6, in the first line of the first paragraph under “Small Claims Court.”

The correction deletes “$7,000” and replaces it with “$5,000,” as follows: If the amount of the assessments and collection costs does not exceed $7,000 $5,000, the association may also file a claim against the delinquent owner in Small Claims Court.

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April 2011 | ECHO Journal

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Tele-Entry & Access Control Emergency Exit Lighting Automated Gates Fire-Rated & Rollup Doors For Information please call: 650 988-9508 or 888 988-9508 or e-mail info@statcomm.com Lic # 675521 Underwriters Lab #UUFX.S8915 Diamond Certified

Removal of Directors Generally, it takes a “simple majority” of members to cast ballots in favor of removal of a board for the recall effort to succeed (for incorporated associations of 50 or more separate interests). This is standard stuff but add these two wrinkles: if the recall is against less than the whole board and the bylaws permit “cumulative voting” for the election of directors, removal of any particular director will take far more than a simple majority of members; in fact, in a typical case involving a 100 lot planned development, it would take about 84 percent of all members to approve the recall of one or more (but fewer than all) directors for the vote to succeed.

These last two examples mirror what the Republicans achieved in Wisconsin. The careful study of applicable voting rules can guide an association and its members and leaders in framing votes to achieve desired results. For a board, these rules may be used to help achieve goals believed to be in the association’s best interest. For others, the rules may be used to oppose those goals or the timing, manner or conditions by which they would be achieved. In all cases, how an issue is framed may be among the most important decision made.

Steven Weil is one of the founding principals at Berding|Weil LLP in Alamo. He has practiced community association law since 1984 and has dealt with virtually every kind of challenge facing directors, managers and community association members. He is a member of the ECHO board of directors.

How to make your investment safer Condos, townhomes, homeowner associations and other “shared expenses” housing is the wave of the future in the United States and around the world. But to make it a sustainable investment, new buyers, owners and volunteer board members need to understand “best practices basics” of how this form of housing works and have more realistic expectations of this form of “carefree, maintenance free” living.

The new book, Condos, Townhomes, Home Owner Associations—How to Make Your Investment Safer, provides essential training and checklists for • Association Board Members • Owners in Associations • Prospective Buyers of Association Property The book answers vital questions that can help to keep your association from financial ruin: • What overview training should board members have before beginning their service?

• What critical financial and mechanical information should board members track each month?

• What information should a buyer look for before buying in an association?

The author provides lessons that help you to: • Protect property values • Gain peace of mind • Lessen the need for large, unexpected special assessments Patrick Hohman, author of the book and a 22-year association president, compiled these userfriendly, colorful lessons with the help of industry experts throughout the United States.

The paperback, Condos, Townhomes, Home Owner Associations—How to Make Your Investment Safer, is now available from ECHO for only $29 for members and $45 for nonmembers. Order today by calling (408) 297-3246 or order online at www.echo-ca.org.

Spring Into Maintenance

26

April 2011 | ECHO Journal

By Steven Saarman

A Guide to Sleuthing inter is passed; now it’s time to get out and perform your first bi-yearly maintenance inspection.

Early inspections will reveal how winter conditions have impacted the components of your building’s exterior envelope. Then later on, your fall inspection will reveal how the intensity of longer sun exposure and greater daily temperature fluctuations affected these same components. Diligent twice a year inspections allow you to stay ahead of the curve by gathering additional information and being proactive and knowledgeable in planning your maintenance “To Do” list.

W

ECHO Journal | April 2011

27

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In the course of general maintenance, one is occasionally confronted with solving the mysteries of isolated building component failure. These areas can simply be the result of “higher exposure” to the elements. An increased frequency of general maintenance procedures is generally adequate to solve these issues. Sometimes the problems go deeper and are caused by poor design and/or poor construction, requiring more extensive intervention.

As a sleuth, equip yourself with a notepad, binoculars, a moisture meter and a camera to document what you find. Photos are an unparalleled way to capture the passage of time and monitor how quickly an issue is evolving. Binoculars allow you to see details missed by an eye scanning from a distance.

Slow your scanning down. Some signs or symptoms of deterioration are hard to spot by an “untrained” eye. Have patience. By slowing down and focusing on the details, you get to know and understand your building. Each inspection will add cumulatively to your knowledge base.

A moisture meter is another important sleuth’s tool. Elevated moisture levels in any 28

April 2011 | ECHO Journal

(reason= www.varsitypainting.com/camille)

material are the first sign of problems ahead.

A moisture meter can allow you to pinpoint a water intrusion source or define the boundaries of a problem. Remember, “An ounce of prevention is worth a pound of cure.” So, slow down, focus and get to know your building. Think Sherlock Holmes. Such attention will pay off hugely in preserving the value of your asset and give you the personal satisfaction of solving the mystery puzzle.

Remember, each building is a unique blend of building materials situated in its own environmental niche. Each material reacts differently when it is exposed to varying degrees of sun, shade, wind and rain, as well as its interaction with other building envelope components. When this is overlaid with poor waterproofing design details, poor choice of existing materials and/or substandard construction coupled with building age, a complex puzzle is waiting to be solved.

The first rule in maintenance sleuthing is to be consistent and systematic in your approach. Create a checklist that is specific to your building. Solicit the advice of some trained experts (i.e., architect, engineer, general contractor, paint representative, roofer)

to glean pertinent information to educate yourself on your building. Apply this knowledge with a watchful eye; you want to address the following areas: • Site drainage and hardscapes; • Landscaping and trees; • Stairs and decks; • The wall system including windows and doors; • The roof system.

The following paragraphs offer some general “best practice” sleuthing guidelines to help you formulate the backbone of your exterior maintenance checklist.

Your building rests on concrete foundations. Any vertical displacement or shifting movements will telegraph into the structure, possibly influencing how windows and doors open or close, how decks or roofs drain and how siding handles the movement by cracking, warping or buckling. Damage may also be seen on the interior finishes.

What can cause foundation movement?

Soils, especially those with high clay composition, will expand and shrink according to moisture content. General soil moisture content is directly influenced by controlling the

drainage flow of water off and around the building (unless you have an underground spring). All water needs to drain away from the building. Make sure water from roof downspouts is directed well away from the foundations, preferably into a contained storm sewer system. Look at your landscaping. Mature trees can lift foundations, crack them and plug up perimeter subsurface drainage systems. Growing roots can also raise the soil level around the tree or shrub, which may eventually cause a reverse slope back toward the foundations and block drainage flow patterns. Water ponding or slow draining around the foundation perimeter may allow water to seep below the foundations and rise into crawl spaces, thereby increasing interior moisture levels that may cause floors to buckle or foster mold growth.

This is not a healthy situation. There should never be standing water in a crawl space.

It’s also not a good idea to let vegetation grow tight against the building. This situation restricts airflow; thus your siding stays moist without drying out, and the paint surfaces can become moldy. The plants also tend to abrade the paint finish during windy condi-

tions and may conceal termite tubes leading from the soil up into the building.

As a general rule, maintain at least 6 inches clearance between the soil and the bottom of the siding. Don’t let planter mulch build up too high. Siding is usually installed to overlap an inch or so below the actual wood structural framing of your building. If soil or mulch touches or covers the bottom edge of siding, water can wick up into the framing, causing wood rot, and again termite tubes can be concealed.

Decks and stairs create horizontal surfaces adjacent to the building’s wall system.

Horizontal solid surfaces accumulate rainwater, which must then be controlled and directed away from the building. Always look under decks and stairs for signs of water leakage—stain marks, mold or rust streaks from bolt attachments. These are warning signals that deeper issues need to be solved. Use your moisture meter to test moisture levels of materials, especially if the areas are supposed to be dry. Any cellulose material with mois-

Continued on page 31

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 | April 2011

29

ECHO 39th ANNUAL SEMINAR June 18, 2011 Theme: “Exploring the Future” n-site registration at the 2011 ECHO Annual Seminar will begin at 7:30 a.m. on Saturday, June 18, 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.

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 2011 program are listed below: • The “HOA University” track will review every major aspect of board duties and 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.

• Cyber Crime: Learn who may be lurking over your shoulder in using the Internet.

• Understanding Receiverships • Another special presentation by superexciting speaker Julie Adaman.

The complete seminar program and registration information appear on page 43.

The 2011 Seminar and Exhibit will follow the same format as last year’s seminar. There will be one full day of educational sessions, a CACM course manager education (See the course description on page 43 in this issue.) on Friday afternoon and the usual 300-page program book. A Friday evening reception honoring exhibitors is planned as a part of the 2011 Seminar. The Trade Show will be open all day Saturday. ECHO publications will be on sale throughout the seminar.

Rooms are available at the Hyatt Regency Santa Clara adjacent to the Convention Center at the special ECHO rate of $89 single or double. Reserve directly with the Hyatt Regency (800-233-1234) to obtain the special

O

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April 2011 | ECHO Journal

rate, being sure to mention the Executive Council of Homeowners. This special rate is available only until June 3rd.

Scholarship Program A limited number of scholarships to cover the cost of Annual Seminar tickets are available, thanks to the generous sponsorship 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.

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. Take advantage of the earlybird registration rates and save $10 on every ticket. 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 2011 to hold your attention. We want to see you there!

Nominating Committee Seeks Candidates for ECHO Board of Directors THE NOMINATING COMMITTEE for the ECHO Board of Directors is seeking expressions of interest from 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 three-year terms.

Current directors whose terms expire in 2011 are Dianne Rossi, Robert Rosenberg, Richard Tippett and Kurtis Shenefiel.

Board members are expected to attend all of approximately six threehour 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 twoday 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, 2011, to be considered by the nominating committee.

Those requesting nomination may be requested to interview with the nominating committee. The committee will meet in late July to prepare recommendations for board consideration.

Spring Into Maintenance Continued from page 29

ture content greater than 20 percent becomes very susceptible to rot and mold.

With your binoculars, slowly scan the elevations of your building. What you are looking for are protruding nails (which will actually funnel rain water into your building), any stains or discoloration coming from cracks (signs of possible dry rot), buckled or warped siding (water is getting in behind the siding at some point above these areas), trim that is puckered, cracked or shrunken dimensionally (sure signs of wood rot) and the overall condition of the paint surface.

Look for peeling, blisters, open caulk joints or a chalky surface (paint will rub off onto your fingers) that indicates a paint job is needed. Remember, paint will weather differently on different elevations depending on exposure to the elements. This may ultimately require separate painting schedules for different elevations.

The reward is less crisis maintenance and the associated high costs of unplanned repairs.

There is no standard rule for when to repaint a building. A “well-prepared” paint job should last between 5 and 12 years. Why such a wide variance? A paint job is only as good as the substrate’s preparation and stability. Paint is a thin film with a finite ability to span cracks. It needs a clean, dust-free, non-peeling surface to adhere to. Substrate stability reflects a material’s expansion and contraction coefficient and its moisture content. For instance, stucco is cementitious and much more stable than wood siding, even when wet. A paint job will generally last longer on stucco than on wood. When wood siding expands and contracts during diurnal temperature fluctuations, caulk joints are stressed, eventually fail and water enters in behind the siding. This infiltrated water is absorbed by the wood siding, causing it to expand, crack, buckle, decay or force the paint to debond from the substrate (peeling or blisters). This is why wood-sided buildings need more TLC and a more intensive maintenance program to continue performing

well over time. Therefore, when a building needs to be repainted is strictly driven by the material substrate, the surface preparation prior to painting, a quality detailed caulking job and the building’s exposure to the elements—not to a standard length of time.

When checking out your roof system, remember that the roof’s waterproofing integrity is a function of the condition of the roof membrane and the essential integration of metal flashings at transitions. As a system, when these parts are correctly melded together, your roof system will function in a superior fashion, keeping you dry and protecting the other building envelope components. Environmental exposure, age and lack of periodic maintenance all lead to different rates of roof system deterioration.

Roofs, as a horizontal surface, are meant to stop water from entering a building and direct it to specific drainage points. Always make sure the path of flow and exit points are unobstructed by leaf litter, tennis balls, new skylights and the like. Ponding water tends to accelerate roof material deterioration; check for tell-tale evaporation ring stains. Blisters, caused by expanding water vapor, are generally a sign that water has gotten between roofing layers. When these faults are coupled with surface cracks, alligatoring of the surface asphalt, bare patches that allow exposure to deteriorating UV rays, cracks between the metal flashings and the roof material or ceiling stains at top floor rooms, it is time to call a good roofer. Roofs don’t last forever, but periodic maintenance and tune-ups will definitely extend a roof’s service life.

Sleuthing creates a spin from simply performing routine generalized maintenance to having fun solving and unraveling the intricacies of how to achieve sustainable long-term performance from all your building envelope components. The reward of that job well done is less crisis maintenance and the associated high costs of unexpected unplanned repairs to a more controlled flow of maintenance dollars.

Superior sleuthing keeps money in your pocket till you are ready to spend it! Get your sleuthing tools together and move into your first maintenance inspection of this year.

Good luck!

Steven Saarman is a principal at Saarman Construction, San Francisco, CA. The firm is a member of ECHO. He is a frequent ECHO seminar speaker and contributor to the ECHO Journal.

ECHO Journal | April 2011

31

News from ECHO coupled with unnecessary work, time delays and escalating costs.

The reasons jobs get out of control can always be traced back to assumptions being made by both the association and the vendor and the lack of proper review and oversight of the work being requested by the association.

When is a Homeowner Association Like Wisconsin?

The Democrats in the Wisconsin State Legislature employed a clever technique— denying a quorum—to prevent the legislature from adopting an anti-labor law. The rules of their Senate required that any law involving spending money could not be approved unless a quorum of Senators was present for the vote. The Wisconsin Republicans responded with their own smart bag of tricks— they reframed the law to eliminate the quorum requirement and got it passed without the Democrats participating. Can this sort of politicking be used in the context of homeowner association votes? You bet. Read on…

The careful study of applicable voting rules can guide an association and its members and leaders in framing votes to achieve desired results. For a board, these rules may be used to help achieve goals believed to be in the association’s best interest.

For others, the rules may be used to oppose those goals or the timing, manner or conditions by which they would be achieved. In all cases, how an issue is framed may be among the most important decision made.

32

April 2011 | ECHO Journal

How Simple Jobs Can Get Out of Control Occasionally, the simplest undertaking can turn into an exasperating experience, especially when clear communication between parties involved has not been established. The dynamics of miscommunication often occurs during the maintenance and repair of a complex, and it is usually not recognized until a job begins to go wrong. Problems can develop when requests for work are not properly defined, communicated, and supervised.

Yet many associations and managers forget to take simple precautions to ensure repairs are properly defined and carried out.

As with any job, it is important to make certain the services to be provided are necessary, that they are done in a workmanlike manner and resolve the issue at hand.

Ultimately, the responsibility for this oversight falls on the association through its board of directors. Associations and managers should understand why the work needs to be clearly defined and understood.

There are numerous examples of requests for repairs that turn into frustrating experiences

Associations and managers can best protect themselves from unwanted surprises by consulting with a construction specialist, project manager or architect to review the work to be done on a complex and to create an appropriate description of the work along with general expectations of the association. This is often done in the form of a request for proposal (RFP). Spending a few hours with a construction professional prior to starting any job has the potential of substantial cost savings and reduction in avoidable delays during the repairs or maintenance to a complex.

Associations and management companies should develop relationships with construction specialists, tax advisors, and attorneys when any work is being planned or funds are to be spent.

These professionals can answer questions, review documents, anticipate problems and provide advice and assistance necessary to make sure you are getting what you want and need. As simple as these steps sound, they work and can limit liability exposure for boards and associations.

Whether the job is big or small, make sure you and the vendor understand what is to be done and what it will cost. It’s always easier to resolve questions and uncertainties before work begins.

ECHO Nominating Committee Seeks Candidates The Nominating Committee for the ECHO Board of Directors is seeking expressions of interest from persons who wish to be 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 three-year terms. Interested persons should obtain and complete a nomination and qualifications form, available by request from the ECHO office. Completed forms must be submitted to the ECHO office no later than July 15, 2011, to be considered by the nominating committee.

Important Upcoming Events Saturday, April 16 South Bay Seminar 8:00 a.m. to 1:00 p.m.

Campbell Community Center 1 W. Campbell Ave., Campbell Thursday, May 19 San Francisco Luncheon 11:45 a.m. to 2:00 p.m.

St. Francis Yacht Club, San Francisco Friday and Saturday June 17 & 18, 2011 ECHO Annual Seminar Santa Clara Convention Center Santa Clara

Legislation at a Glimpse As of April 1, 2011 Bill No.

Author

Subject

Status

Position

Summary

AB 19

Fong

Submetering

Amended Support if 3/23.

Amended In Assembly Housing.

Hearing 4/27.

For new construction of multi-unit structures, requires the installation of water sub-meters.

AB 20

Halderman

Construction Defect Disclosure

In Assembly Judiciary.

Oppose

Requires that an attorney make certain written disclosures to a client in a potential construction defects action. Failure to disclose would constitute cause for professional discipline.

AB 579

Monning

Mobilehome Attorneys Fees

In Assembly Judiciary.

Hearing cancelled.

Support

Would permit the award of attorney's fees to local governments in an action brought by the owner of a mobilehome park to challenge the validity of a local ordinance.

AB 771

Butler

Sale Disclosure In Assembly Oppose Documents Housing.

Hearing 4/27.

Provides that the time frame and fee limitation for providing specified documents to an owner of a separate interest apply to an agent of the association.

AB 805

Torres

Davis-Stirling Revision Part 1

In Assembly Housing.

Hearing 4/6.

Support

This is the first of two bills from the California Law Revision Commission that restate and clarify the Davis-Stirling Act.

AB 806

Torres

Davis-Stirling Revision Part 2

In Assembly Housing.

Hearing 4/6.

Support

This is the second of two bills from the California Law Revision Commission that restate and clarify the Davis-Stirling Act.

SB 209

Corbett

Electric Vehicle Charging Stations

Amended 3/22.

Passed Senate Housing.

Support if Amended

Makes void and unenforceable any prohibition by an association that restricts the installation or use of an electric vehicle charging station. Requires homeowner to pay for all charges and damages associated with installation and maintenance.

SB 561

Corbett

Third Party Collections

In Senate Judiciary.

Hearing 4/5.

Oppose

Would require any 3rd party acting to collect payments or assessments on behalf of an association to comply with the same requirements imposed on the association. Makes statement of legislative intent.

SB 563

Transportation & Housing Committee

Electronic Meetings

Amended 3/30.

In Senate Housing.

Hearing 4/5.

Support

Prohibits electronic meetings except for emergencies.

Prohibits boards from taking action outside of a meeting.

Requires boards to provide agendas of executive sessions. Requires boards to give notice two days before an executive session.

SB 759

Lieu

Artificial Turf

Amended 3/22.

In Senate Housing.

Oppose

Voids provisions in governing documents that prohibit artificial turf. Allows associations to establish design and quality standards.

ECHO Journal | January 2011

33

Directory UPDATES Updates for listings in the ECHO Directory of Businesses and Professionals, now available online at www.echo-ca.org.

New Members Bertolino Insurance Agency, Inc. 2985 Fulton Avenue Sacramento, CA 95821 Contact: David Crowley Tel: 707-837-5175 Fax: 707-837-5178 www.bertolinoins.com Email: david@bertolinoins.com

6 6(59,1* &20081,7,(6 7+528*+287 1257+(51 &$/,)251,$ 672&.721 +4 ‡ )5(0217 (59,1* &20081,7,(6 7+528*+287 1257+(51 &$/,)251,$ 672&.721 +4 ‡ )5(0217 PLE PLEASANTON ‡ &233(5232/,6 ‡ 02'(672 ‡ 6$17$ &/$5$ ASANTON ‡ &233(5232/,6 ‡ 02'(672 ‡ 6$17$ &/$5$

M & C Association Management Services provides community association management and developer services to Fremont, Pleasanton, Santa Clara, Stockton, Modesto, Copperopolis and the surrounding foothills.

Since 1990, our sole focus has been to deliver performance that enriches communities and enhances the lives of the people we serve. M & C is proud to be an Accredited Association Management CompanyŽ (AAMCŽ), which is the Community Associations Institute’s highest GHVLJQDWLRQ DZDUGHG WR PDQDJHPHQW ÀUPV

3 3OHDVDQWRQ ‡ )UHPRQW ‡ 6DQWD &ODUD OHDVDQWRQ ‡ )UHPRQW ‡ 6DQWD &ODUD S Stockton tockton 209.644.4900 209.644.4900 ‡ ‡ 0RGHVWR ‡ &RSSHURSROLV 0RGHVWR ‡ &RSSHURSROLV For management proposal information, please visit www w.mccommunities.com or email inffo@mccommunities.com 34

April 2011 | ECHO Journal

Capital Lumber Co. 13480 Old Redwood Hwy. Healdsburg, CA 95448 Contact: Kim Garrigan Tel: 800-221-7671 Fax: 707-433-1018 www.capital-lumber.com Email: kgarrigan@capital-lumber.com Capital Lumber Co. is dedicated to being the leading distributor of specialty building materials in the western United States. We carry many different products including decking, siding and trim.

Fast Forward Property Management 620 E. Washington St., # 100 Petaluma, CA 94952 Contact: Jade Powell Tel: 800-671-9615 Fax: 707-766-7778 www.fastforwardpm.com Email: contact@fastforwardpm.com With over 40 year’s experience, we are a full service property management firm servicing the San Francisco Bay Area and the Sacramento area. We offer a free analysis of your property. Call today and experience the Fast Forward difference!

LaBarre/Oksnee Insurance 30 Enterprise, Ste. 180 Aliso Viejo, CA 92656 Contact: Linda Litavis Tel: 949-215-9808 Fax: 949-215-9815 www.hoains.com Email: lindal@hoa-insurance.com LaBarre/Oksnee Insurance was founded in 1987 by Curt LaBarre and Scott Oksnee.

Leveraging its extensive expertise, LaBarre/Oksnee clients benefit from the coverage flexibility of an insurance broker, superior risk management counsel, and an enhanced level of professional service that is unmatched within this industry.

Neumann Sloat Architects LLP 1854 Fourth Street San Rafael, CA 94901 Contact: Austin Sloat Tel: 415-578-4800 Fax 866-591-0614 www.neumannsloat.com Email: Austin@neumannsloat.com Neumann Sloat Architects LLP are building envelope consultants and technical architects offering many services, including durable waterproofing and building envelope design solutions, investigation of failed systems and components, negative pressure fenestration testing and expert testimony.

Member Changes Baskin & Grant, LLP 331 Soquel Ave., Ste. 100 Santa Cruz, CA 95062 Telephone & Fax remain the same S. L. Kindt Management 5880 Commerce Blvd., #103 Rohnert Park, CA 94928 Tel. & Fax remain the same

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

To learn more, visit our membership page at: www.echo-ca.org/member/

ECHO Journal | April 2011

35

n ditio E 1 e l 201vailab A

2008 ECHO Business & Professional Directory $20.00 Non-Member Price: $25.00

Condominium Bluebook 2011 Edition $18.00 Non-Member Price: $25.00

Condos, Townhomes and Homeowner Associations $29.00 Non-Member Price: $45.00

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 associations.

This well-known compact guide for operation of common interest develop ments 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.

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

Robert’s Rules of Order $7.50 Non-Member Price: $12.50

The Board’s Dilemma $10.00 Non-Member Price: $15.00

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.

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

Community Association Statute Book—2011 Edition $15.00 Non-Member Price: $25.00 Contains the 2010 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, Govern ment and Vehicle Codes important to associations.

New e Pric

Homeowners Associations— How-to Guide for Leadership New Member Price: $15.00 Non-Member Price: $25.00 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.

California Building Guidelines for Residential Construction $52.50 Non-Member Price: $60.00 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.

Be an HOA Survivor

Questions & Answers About Community Associations $18.00 Non-Member Price: $25.00 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.

Reserve Fund Essentials $18.00 Non-Member Price: $25.00 This book is an easy to read, musthave guide for anyone who wants a clear, thorough explanation of reserve studies and their indispensable role in effective HOA planning. The author gives tips to help board members mold their reserve study into a useful financial tool.

2010 ECHO Annual Seminar Program

The Condo Owner’s Answer Book $15.00 Non-Member Price: $20.00 An excellent guide to understanding the rights and responsibilities of condo ownership and operation of homeowner associations. The question-and-answer format responds to more than 125 commonly-asked questions in an easy to understand style. A great resource for newcomers and veteran owners.

This Program Book is suppor ted through a generous sponsorship from Management Solutions.

2010 ECHO Annual Seminar Program Book $35.00 Non-Member Price: $45.00 This 300+ page reference book contains the presentation outlines, text and handouts from the sessions at the 2010 ECHO Annual Seminar held on June 19, 2010. It also contains vital information for association directors, such as assessment collection policies, internal dispute policies, and much more.

Dispute Resolution in Homeowner Associations $20.00 Non-Member Price: $25.00 This publication has been completely revised to reflect new requirements resulting from passage of SB 137.

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

Bookstore Order Form Board Member’s Guide for Contractor Interviews $20.00 Non-Member Price: $25.00

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

QUANTITY

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.

SUBTOTAL CALIFORNIA SALES TAX (Add 9.25%) TOTAL AMOUNT

Yes! Place my order for the items above.

Board Member’s Guide for Management Interviews $20.00 Non-Member Price: $25.00 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.

q Check q Visa q Mastercard Credit Card Number Exp. Date

Signature

Name (please print) Association (or company) Address City Daytime Telephone

State

Zip

AMOUNT

ECHO Events Calendar

Important dates to save Wednesday, April 6 Maintenance Resource Panel 12:00 Noon ECHO Office 1602 The Alameda, Ste. 101, San Jose Friday, April 8 East Bay Resource Panel 12:00 Noon Massimo Restaurant 1604 Locust St., Walnut Creek Wednesday, April 13 South Bay Resource Panel 12:00 Noon Il Fornaio 302 S. Market St., San Jose Saturday, April 16 South Bay Seminar 8:00 a.m. to 1:00 p.m.

Campbell Community Center 1 W. Campbell Ave., Campbell Wednesday, April 20 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt. Co. 6600 Hunter Dr., Rohnert Park Thursday, May 5 North Bay Resource Panel 11:45 a.m.

Contempo Marin Clubhouse 400 Yosemite Rd., San Rafael

Monday, May 9 Accountants Resource Panel 6:00 p.m.

Francesco’s Restaurant Oakland

Friday, June 10 East Bay Resource Panel 12:00 Noon Massimo Restaurant 1604 Locust St., Walnut Creek

Wednesday, July 20 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt. Co. 6600 Hunter Dr., Rohnert Park

Tuesday, May 10 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz

Wednesday, June 15 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt. Co. 6600 Hunter Dr., Rohnert Park

Thursday, July 21 San Francisco Luncheon 11:45 a.m. to 2:00 p.m.

St. Francis Yacht Club San Francisco

Friday and Saturday June 17 & 18, 2011 ECHO Annual Seminar Santa Clara Convention Center Santa Clara

Wednesday, August 3 Maintenance Resource Panel 12:00 Noon ECHO Office 1602 The Alameda, Ste. 101, San Jose

Wednesday, May 18 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt Co. 6600 Hunter Dr., Rohnert Park Thursday, May 19 San Francisco Luncheon 11:45 a.m. to 2:00 p.m.

St. Francis Yacht Club San Francisco Wednesday, June 1 Maintenance Resource Panel 12:00 Noon ECHO Office 1602 The Alameda, Ste. 101, San Jose Wednesday, June 8 South Bay Resource Panel 12:00 Noon Il Fornaio 302 S. Market St., San Jose

Thursday, July 7 North Bay Resource Panel 11:45 a.m.

Contempo Marin Clubhouse 400 Yosemite Rd., San Rafael Monday, July 11 Accountants Resource Panel 6:00 p.m.

Francesco’s Restaurant Oakland Tuesday, July 12 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz

Wednesday, August 10 South Bay Resource Panel 12:00 Noon Il Fornaio 302 S. Market St., San Jose Friday, August 12 East Bay Resource Panel 12:00 Noon Massimo Restaurant 1604 Locust St., Walnut Creek Wednesday, August 17 Wine Country Resource Panel 11:45 a.m.

Eugene Burger Mgmt. Co. 6600 Hunter Dr., Rohnert Park

Regularly Scheduled ECHO Resource Panel Meetings Resource Panel Maintenance North Bay East Bay Accountants Central Coast South Bay Wine Country Legal 38

April 2011 | ECHO Journal

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

Location Draeger Construction, San Jose Contempo Marin Clubhouse, San Rafael Massimo Restaurant, Walnut Creek Francesco’s Restaurant, Oakland Pasatiempo Inn, Santa Cruz Il Fornaio, San Jose Eugene Burger Management Co., Rohnert Park Varies

New election rules: $500 In today’s economic crisis, there may be some items that associations can cut to reduce costs. ECHO membership is not one. Let’s face it, educated board members are better fiduciaries, which helps them to avoid costly law suits and possibly personal liability.

ECHO is the premier resource in California for board member education. ECHO offers new articles each month with practical and easy to understand advice about current California requirements, and what may be on the horizon. ECHO staff is available by phone or E-mail to answer members’ questions about association problems or to recommend competent professional services when necessary.

And with discounted member rates at more than a dozen educational events throughout the year, ECHO is simply the best educational resource for California homeowners.

Avoid Litigation Each year, as a member benefit, ECHO sends every board member a copy of the updated Community Association Statute book. Every issue of the ECHO Journal and every seminar examine one or more aspects of compliance with association law, because one of the major causes of expensive litigation is ignorance of the law.

Mailing ballots: $200 Make Better Financial Choices Many associations struggle to understand reserve funding requirements and strategies, the benefits and disadvantages of using special assessments, proper collections practices, and even how to determine what components the association is required to maintain.

At a time when wise financial planning is essential, ECHO members have access to a wealth of articles about reserve funding, budgeting, insurance, collections, and much more.

Fight Costly Regulation Every year, Sacramento legislators introduce more legislation that confuses the job of California board members and increases the costs of compliance. ECHO is committed to fighting unnecessary regulation in California and promoting the interests and welfare of common interest developments.

Hire Competent Professionals ECHO offers a variety of articles and publications to help members evaluate their service providers, including questions to ask prospective management firms and contractors. All ECHO Journal articles are available to members at no cost, and publications are sold to members at a discount.

Avoiding a lawsuit: Priceless.

Spend a Little, Get a Lot The cost of ECHO membership is minimal. In a worsening economy, associations are looking to cut big expenses from their budgets. Yet, ECHO membership is as little as 25¢ per unit each month. For that small cost, here’s what every board member receives as part of being a member of ECHO: • A subscription to the ECHO Journal • An annual copy of the current Community Association Statute book • Unlimited access to ECHO’s library of past articles • Telephone consultations with ECHO staff about their problems • Reduced fees for ECHO events • Discounted prices on publications • And much more…

In These Tough Economic Times, ECHO Membership is a Necessity As the only California organization devoted exclusively to board member and homeowner education, ECHO is a one-of-a-kind resource that your association can’t afford to lose.

ECHO Honor Roll

About

ECHO Honors Volunteers Diane Kay 2010 Volunteer of the Year ECHO Resource Panels Accountant Panel Richard Schneider, CPA 707-576-7070 Central Coast Panel John Allanson 831-685-0101 East Bay Panel Beth Grimm, 925-746-7177 Mandy Newton, 415-225-9898 Legal Panel Mark Wleklinski, Esq. 925-280-1191 Maintenance Panel Brian Seifert, 831-708-2916 North Bay Panel Diane Kay, CCAM, 415-846-7579 Stephany Charles, CCAM 415-458-3537 San Francisco Panel Jeff Saarman, 415-749-2700 South Bay Panel Toni Rodrigues, 408-848-8118 Kimberly Payne, 408-200-8730 Wine Country Panel Maria Birch, CCAM, 707-584-5123

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

40

April 2011 | ECHO Journal

SF Luncheon Speakers John Allanson Jeffrey Barnett, Esq. Tyler Berding, Esq. Ronald Block, PhD. Wendy Buller Doug Christison, PCAM, CCAM Karen Conlon, CCAM Rolf Crocker, CCAM Ross Feinberg, Esq. David Feingold, Esq. Tom Fier, Esq. Kevin Frederick, Esq. John Garvic, Esq. Beverly Gordon, CCAM Sandra Gottlieb, Esq. Beth Grimm, Esq. Brian Hebert, Esq. Roy Helsing Stephen Johnson, CFP Julia Lave Johnston Garth Leone Nico March Kerry Mazzoni Thomas Miller, Esq. Larry Pothast Larry Russell, Esq. Steve Saarman Jim Shepherd Nathaniel Sterling, Esq. Debra Warren, PCAM, CCAM Steven Weil, Esq. Mark Wleklinski, Esq. Glenn Youngling, Esq.

Seminar Speakers April 17, 2010 South Bay Spring Seminar Tyler Berding, Esq. Sandra Bonato, Esq. John Garvic, Esq. Robert P. Hall, Esq. Geri Kennedy, CCAM Jan A. Kopczynski, Esq.

Kurtis Shenefiel, PCAM, CCAM Richard Tippett September 25, 2010 Central Coast Fall Seminar John Allanson Beverlee Gordon Stephanie Hayes, Esq. Teresa Powell Brian Seifert Steve Weil, Esq October 23, 2010 Peninsula Fall Seminar Jeffrey A. Barnett, Esq. Tom Fier, Esq. Linnea Juarez, PCAM, CCAM Paul Windust, Esq.

Recent ECHO Journal Contributing Authors January 2011 Janet O. Aronson, Esq. Jeffrey A. Barnett, Esq. Marilyn Lincoln Jesse R. Mattson, Esq. Deon R. Stein, Esq. Steven S. Weil, Esq. February 2011 Jeffrey A. Barnett, Esq. Burt Dean Christine E. Evans, PCAM Teresa Powell Brian Seifert March 2011 Julie Adamen Sandra M. Bonato, Esq. Gene Ebertowski Karl T. Lofthouse Loura K. Sanchez, 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 1,450 homeowner associations, you can become an associate member and join 350 other firms serving this important membership.

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 Non-members/Homeowners Businesses & Professionals

$50 $75 $125

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 408-2973246 or visit the ECHO web site (www.echo-ca.org) to obtain an application form and for more information.

ECHO Marketplace

Advertiser Index

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Advertise your business to thousands of association directors in California in the ECHO Journal.

Ace Property Management . . . . . . . .13 American Asphalt . . . . . . . . . . . . . .35 American Management Services . . . .8 Angius & Terry . . . . . . . . . . . . . . . . .3 A.S.A.P. Collection Services . . . . . . .18 Association Reserves . . . . . . . . . . .22 Berding | Weil . . . . . . . . . . . . . . . . .44 Capital Lumber . . . . . . . . . . . . . . . .19 Collins Management . . . . . . . . . . . .13 Common Interest Mgmnt Services . . .9 Community Management Services . .10 Compass Management . . . . . . . . . .11 Cool Pool Service . . . . . . . . . . . . . .16 Cornerstone Community Mgmnt . . . .16 Draeger . . . . . . . . . . . . . . . . . . . . .11 Ekim Painting . . . . . . . . . . . . . . . . .23 First Bank Association Bank Srvcs . .35 Flores Painting . . . . . . . . . . . . . . . .34 Focus Business Bank . . . . . . . . . . . .8 Gachina Landscaping . . . . . . . . . . .31 Hill & Company . . . . . . . . . . . . . . . .23 M & C Association Services . . . . . . .34 M. L. Nielsen Construction . . . . . . .24 Massingham and Associates . . . . . .22 Mutual of Omaha Bank . . . . . . . . . .12 Oliver Management . . . . . . . . . . . . .22 Pelican Management Group . . . . . . .16 PML Management Corp. . . . . . . . . .12 Pollard Unlimited . . . . . . . . . . . . . .24 R. E. Broocker Co. . . . . . . . . . . . . .13 Real Estate Property Management . .41 Rebello’s Towing Service . . . . . . . . .29 REMI Company . . . . . . . . . . . . . . . .17 Saarman Construction . . . . . . . . . .18 Scuba Pool Repair . . . . . . . . . . . . .10 Statcomm . . . . . . . . . . . . . . . . . . .24 Steve’s Painting Services . . . . . . . .17 Steve Tingley Painting . . . . . . . . . . . .2 Varsity Painting . . . . . . . . . . . . . . . .28

ECHO Journal | April 2011

41

Saturday, June 18, 2011 8:00 a.m.–4:30 p.m.

Santa Clara Convention Center Santa Clara, California Visit 125 exhibits in the 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 17, 5:00–7:30 p.m. for food, music and socializing. Cost: $40—See the Registration Form.

Special Hotel Rates Don’t miss out on the special room rate of $89 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 June 3rd.

CACM Course Ethics for Community Managers Friday, June 17, 2011 2:00 p.m.

Integrity is the number one quality that employers and clients value. During this interactive course, you will have the opportunity to explore a variety of scenarios calling into play the need to understand the official rules of conduct for community managers. The course will review CACM’s Code of Professional Ethics and Standards of Practice for all CACM manager

members and will discuss ethics complaints, disciplinary action and the appeals procedure. This Ethics course is required for all managers seeking initial CCAM certification, and it is also required for recertification every three years. This course provides four hours of DRE credit for individuals who possess a real estate license.

Course Fee CACM Members $99 CACM Non-Members $130

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

HOA UNIVERSITY Rooms 203–204

Administration

Legal Considerations

Finances

Insurance

LEGAL Rooms 209–210

They are at it Again in Sacramento: 2011 Legislative Update

Understanding Receiverships

Cyber Crime—Don’t Get Caught in an Electronic Net

OPEN

MANAGEMENT & FINANCIAL Ballroom G

The Three Pillars of Community Strength

Updating Governing Documents

Delinquencies and Collection

Ask The Attorneys

FACILITIES MANAGEMENT Ballroom H

Top Things That Drive You Crazy About Insurance

Remaking a 1960s Condo

Making Your CID Investment Safer Through Sound Reserve Practices

OPEN

Exploring the Future ECHO Annual Seminar and Trade Show

REGISTRATION FORM Yes! Please reserve my space at the 2011 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