A Rule About Rules

By Patricia Arnold

Every community association needs to have (and follow faithfully) this critical rule about its rules: Be consistent and be non-selective.

Well, OK, that sounds like two rules. But they’re related.

Important note: “traditional rules” or “unwritten rules” cannot be enforced. The rules that are to be enforced must have been duly adopted and distributed to the membership; expecting members to follow the rules requires that they be provided with a written copy of the rules.

If an association’s rule is to be enforced, it must be enforced in the same way every time (consistency), and it must be enforced for any unit or lot in the community that is not following that rule (nonselectiveness), absolutely without consideration for who owns the property, including board members or any other “revered” owners.

Being non-selective and consistent when enforcing association rules is crucial to a community’s compliance program.

The association manager or the board members responsible for enforcement of rules must have crystal-clear guidelines, and they must have authority to enforce regardless of who owns a property in the complex.

Consistent communication must be clear, factual, fair, and always respectful.

A courtesy notice, a violation notice, or an enforcement hearing notice must go to any individual

whose property is out of compliance, or any property whose residents are non-compliant. That might even include a member of the board (we are assuming here that a courtesy notice will be sufficient to restore conformance by a sitting board member).

Three-Step Notification

Unless the behavior of a resident or the condition of a property in a community is egregiously out of compliance, the association should start small with a courtesy notice. Often owners and renters move into a community blissfully unaware of the rules (unintentionally or otherwise). The courtesy notice should describe the noncompliance, quote briefly (or refer to) the section in the association’s governing documents that explains the rule, and provide a reasonable date for compliance (typically ten to thirty days, depending on the issue and the association’s rules), after which the property will be reinspected.

If the owner of the unit or lot has not made the correction by the deadline in the courtesy notice, a second letter, a violation notice, should be sent out, referencing the courtesy notice, citing the rule that has been violated, and providing a reasonable time to correct or conform, usually with a shorter time frame – ten days, for instance. The violation notice should include what happens if the owner does not make the needed corrections by the deadline stated in the letter. The violation notice should also include (1) the rule/s broken; (2) the date a courtesy notice was sent, (3) advisement that the next steps, if needed, will include a hearing in executive session and the possibility of the levy of a fine, and (4) the association’s schedule of fines. (Every association’s governing documents should provide the authority to assess fines, and every association should have a schedule of fines.)

If all efforts for getting an owner to bring the unit or lot into compliance have failed, a third letter goes out: the notice of a hearing in executive session with the board of directors. The third notice must repeat the basic information provided in the courtesy notice and the violation notice, along with the location, time,

Continued on page 28

A Rule About Rules Continued from page 27 and date of the hearing. A hard copy of the notice of the hearing should be mailed at least ten days in advance of the date of the hearing. The notice may also be sent via email if that owner has agreed, in writing, to receive communiqués from the association by electronic means.

At all times, from the first courtesy notice to the actual hearing in executive session with the board of directors, the owner must be treated with respect, his/her privacy must be protected, and whatever is discussed in the executive session with the owner (or discussed by the board after the member has left the meeting) must remain confidential.

Even if the owner “blabs” about the hearing, truthfully or otherwise, the board members must remain mum. That’s often a tough rule for board members to remember, but it is absolutely necessary for them to protect the confidentiality of the executive session, even if the owner does not.

Let’s go back to the part about egregious violations. How is a board to know what constitutes “egregious” and how or why are these situations to be treated differently? The board may not be able to specifically define an egregious violation, but to borrow a phrase, they will know it when they see it.

Egregious actions or conditions merit immediate attention from the board in an executive session. They are actions that simply cannot wait to be addressed in the time frame used for the three-notice process. The board needs to meet with the owner and develop an immediate plan for resolution or correction.

The following are a couple of example scenarios:

A. The Nighttime Swim Party: The teenage boy living in Building 5 was seen driving his Chevy pickup onto the common area by the swimming pool so he and his friends could picnic on the grounds. They used the bed of the pickup to step over the pool fence to swim after hours. The boy’s unit is a rental. The owner of the unit should be asked to attend a hearing to address the breach of parking rules and pool use rules and repairs to the landscaping.

Should the board levy a fine or a series of fines for the violations? It will depend on the association’s policies and guidelines. It might also depend on the unit owner’s statements to the board. Should the board levy an assessment for reimbursement of the costs of landscape repairs (ruts in the lawn made by the truck’s wheels, damage to the shrubs and flower beds, etc.)? Yes.

The board of directors scheduled a hearing in executive session to meet with the unit owner. The hearing letter was mailed to the owner two days following the violation and 17 days before the date of the hearing.

B. The Shade Tree Mechanic: The owner of a home in a planned development was observed working on his vehicle in his assigned covered parking space. Reports were that he was changing the oil and relining the rear brakes. The association’s rules specifically limit vehicle repair to changing a flat tire or charging a battery, in either case to allow the vehicle to be driven to an off-site garage for mechanical service.

The owner accidentally spilled most of the oil he had drained out of the vehicle. The spilled oil streamed down the private street and created a nasty mess. The owner immediately went to a store, purchased ten bags of clay-based cat litter, spread it over the oil spill, and then left with his family for a long weekend.

The association had to hire a third party to clean up the mess. The board scheduled a hearing in executive session to address the breach of rules and the cost to clean up the mess the owner had created.

The Hearing Letter

The hearing letter spells out why the owner is being asked to attend the hearing. The notice informs the owner of their right to have witnesses and/ or legal counsel present, but requires the owner to advise, at least ten days in advance, if they intend to have counsel or witnesses attend. If the renter in the unit is the “culprit,” it is still the owner who must answer to the board. The owner may not send the renter to the hearing in their place. The hearing letter informs the owner about the possibility of the levy of a monetary fine and includes (or refers to) the schedule of fines.

Let’s Go to the Hearing!

Whether a board is following the three-notice process, or the hearing is scheduled immediately following an egregious action or condition, the process from beginning to end should be consistent and non-selective.

SEVEN STEPS TO A SUCCESSFUL BOARD/HOMEOWNER HEARING

SCENARIO: The board and the owner are seated at a table. The seating arrangement, preferably, will not have the entire board sitting on one side, staring down the lone owner on the other side. Boards must keep in mind that the owner is a neighbor and a fellow association member, not a mini-criminal. Civility and cordiality should remain the order of the day.

STEP ONE: (a) The board president greets the owner and thanks them for attending the hearing and participating in the community’s governance process. (b) The board president reads the body of the letter sent to the owner asking them to attend the hearing [essentially, a review of the association’s known facts of the matter]. (c) The board president explains to the owner that they will now have an opportunity to present their side of the matter (usually the owner is given five minutes to speak uninterrupted); then board members will have an opportunity to ask clarifying questions; then the owner will be excused; then the board will weigh the facts presented and will inform the owner, in writing in approximately ten days’ time, what decisions the board has made regarding the matter, if a fine has been levied, if an assessment for reimbursement has been levied, and whatever other stipulations have been made.

STEP TWO: The board members listen politely to the owner’s reply (no eye rolling, no audible sighs or snorts, no shouts of “liar, liar, pants on fire”). Nothing but polite, patient listening and, possibly, calm notetaking.

STEP THREE: When approximately five minutes have passed (or less if the board president perceives that the owner has finished their statement of response to the matter), the board president asks each board member in turn if there are any clarifying questions. The directors’ clarifying questions should not be veiled rebuttals of the owner’s statement.

STEP FOUR: When there are no additional clarifying questions, the board president should thank the owner for attending the session and bid them good day or good evening.

STEP FIVE: When the owner has left the meeting, the board should discuss the reason for the hearing and the owner’s response and then make motions and vote on the board’s findings in the matter.

STEP SIX: The minutes should reflect who participated in the hearing (board members by name, owner by name, and the actions the board voted to take). A “blow-by-blow” account of the discussion does not need to be recorded.

STEP SEVEN: A letter informing the owner about the outcome of the hearing is mailed via U.S. mail and may be sent electronically as well, if previously agreed to by the owner.

Patricia Arnold is a career professional providing management services to Greater Bay Area common interest developments. Patricia currently manages medium to large scale communities. Patricia’s firm provides interim management, as well as board and committee leadership training and consulting to small and self-managed community residential and mixed-use associations. Arnold Management & Consulting is based in Windsor, CA.

The Echo Legislative Tracking Report

For more information, visit the HOA Advocacy section at the Echo website, www.echo-ca.org/article/hoa-advocacy/

the Echo perspective. Please email inquiries or comments to David Zepponi, CEO, at dzepponi@echo-ca.org. We are always grateful to hear from the membership.

The 2021–2022 legislative session began slowly with a wait-and-see atmosphere in Sacramento as legislation pent up during the pandemic was prepared to move swiftly through Sacramento once it was safe. By February, things were back to normal, and bills were introduced in a flurry. Our March report placed several newly introduced bills relevant to common-interest developments (CIDs) on the tracking report.

As of this writing, many bills are still very much alive and winding their way through the legislative process. These are listed on the tracking report. However, due to the delay in circulation of the Journal, our positions and/or the legislation may have changed by the time of this reading. For the most up-to-date information, please visit the official California legislative website at https://leginfo.legislature.ca.gov/faces/home.xhtml

Legislation is also discussed from time to time in the Echo Insight e-newsletter. This free resource connects homeowners with the HOA industry from

2021 Legislation

SB-391

AUTHOR: Min SUBJECT: Meetings and Teleconferencing Procedures During an Emergency STATUS: Assembly Floor Process. POSITION: Support – Sensible solution as learned from the COVID-19 pandemic.

SUMMARY: This bill would establish alternative teleconferencing procedures for a board meeting or a meeting of the members if the common-interest development is in an area affected by a federal, state, or local emergency.

SB-392

AUTHOR: Archuleta SUBJECT: Email Delivery of Documents STATUS: Assembly Floor Process. POSITION: Support – Requirement for association to have a website if more than 50 units could be a problem for some. Adds to cost of running the association.

SUMMARY: This bill would allow associations to deliver specified documents by email unless a member opts out of email delivery. It requires members to provide their physical or email address annually, among other requirements. And it requires that associations with at least separate interest to maintain a website, with certain exceptions. It specifies that documents posted to the association website would satisfy the general delivery requirement.

SB-432

AUTHOR: Wieckowski SUBJECT: Disqualification of Candidates due to term limits in governing documents. STATUS: Assembly Floor Process. POSITION: Support

SUMMARY: This bill disqualifies termed-out board members of CIDs from running for reelection and requires an individual who is appointed to count and tabulate votes in a CID election to meet specified requirements.

AB-502

AUTHOR: Davies SUBJECT: Election by Acclamation STATUS: Senate. Judiciary Committee. POSITION: Support – Reasonably streamlines the election process and saves money for HOA.

SUMMARY: This bill would allow commoninterest developments of any size to vote by acclamation. It would delete the requirement that the association include 6,000 or more units. And it would specify that this acclamation procedure applies notwithstanding any contrary provision in the governing documents of the common-interest development.

AB-611

AUTHOR: Quirk-Silva SUBJECT: Confidential Addresses – Safe at Home Program exception. STATUS: Senate. Judiciary Committee. Hearing June 29, 2021. POSITION: Watch

SUMMARY: When an association member is a participant in the Safe at Home program – an address confidentiality program that protects victims of violence, assault, stalking, trafficking, or abuse – this bill would require that the association use their designated substitute address, upon the member’s request. Additionally, it would require that the association withhold or redact information that would reveal the name and address of the Safe at Home participant in specified communications.

AB-1101

AUTHOR: Irwin SUBJECT: Funds Transfers, Mandatory HOA Insurance, Limitations on Investments STATUS: Senate. Judiciary Committee. Committee Process. POSITION: Watch. AB-1101 has obvious advantages, mainly protecting less engaged communities and especially boards, and clarifying recently passed law. However, Echo continues to have concerns (especially for small associations). The legislation would mandate certain insurances which would add unnecessary or unwanted cost to the administration of the association. Furthermore, the bill would require funds to be invested only in secure and insured accounts. This aspect of the legislation could force a community to lose money if the interest rates received were less than inflation rates. This bill would remove valuable financial tools for association boards. It is better that these limitations be placed in governing documents instead of in law and that the boards be entrusted with managing the association.

On the other hand, AB-1101 would protect communities from poor management and give managing agents of CIDs the leverage to help HOA boards understand their fiduciary responsibilities. And in the unlikely situation of malfeasance or fraud, the legislation has protections and insurance in place to minimize the risk. The bill also addresses some needed technical amendments to existing law. There are several good, clarifying concepts in the bill; however, there are also some significant challenges that have driven us to a “watch” position.

SUMMARY: This bill would require that certain association funds be deposited into a bank, savings association, or credit union with specific insurance. It also prohibits transfers of $10,000 or more without prior written approval from the board. And it requires that an association maintain specified coverage for itself and its managing agent or management company.

SB-9

AUTHORS: Atkins, Caballero, Rubio, and Wiener SUBJECT: Land Use: Lot-Splitting and possible requirement for duplexes STATUS: Assembly. Re-referred to Committee on Appropriations. POSITION: Oppose unless amended. This bill could have a major negative impact on communities zoned for single-family residences and those neighborhoods with CC&Rs that restrict the community to singlefamily housing only.

SUMMARY: This bill would allow lots to be split regardless of HOA governing documents, to make room for additional homes in the community. It would delegate ministerial (local government) approval for development of one or two-unit development (a duplex would be included in this definition). Furthermore, the language in the bill must be clarified to disallow duplexes if governing documents (CC&Rs) of an HOA preclude them. Clarification that the bill is not intended to affect HOAs is needed.

© 2021 Echo - Executive Council of Homeowners

2021 EDITION The Statute Book & Legal Directory

THE DAVIS-STIRLING ACT AND OTHER STATUTES GOVERNING CALIFORNIA COMMUNITY ASSOCIATIONS

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The 2021 Statute Book is now available in an expanded version to include the Davis-Stirling Act and other laws and case citations governing California community associations.

This comprehensive reference provides the legal framework for HOA board members, homeowners, and professionals in an easy-to-use coil-bound format.

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AB-1410

AUTHOR: Rodriguez SUBJECT: Restrictions on Rules Enforcement STATUS: Assembly. Housing and Community Development. Stalled in committee process. POSITION: Oppose – This bill is far-reaching, covers many issues. Not focused enough for good policy.

SUMMARY: This bill would prohibit an association from restricting a homeowner’s right to rent or lease their separate interest, or any portion thereof. It would also extend, to the entire separate interest, a homeowner’s right to use their backyard for personal agriculture. It would further require every director and association employee to complete a course in ethics and harassment prevention. And it would prohibit any restrictions on discussions critical of the association. It would also prohibit the association from enforcement actions during certain specified conditions. And finally, it would require specific standards for evidence of rules violations and mandate that evidence be made available to the accused.

SB-10

AUTHOR: Wiener SUBJECT: Land Use, Expedited Housing Development and Increased Density STATUS: Assembly. Re-referred to Committee on Local Government. POSITION: Oppose. Allows ministerial increase in housing density despite zoning for 10 units or fewer. The bill would void language in governing documents limiting development in CIDs.

SUMMARY: Authorizes a city or county to pass an ordinance that is not subject to the California Environmental Quality Act (CEQA) to upzone any parcel for up to 10 units of residential density if the parcel is located in a transit-rich area or an urban infill site.

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