SOCAL SEMINAR
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SELF-MANAGED HOAs
THE GREAT DEBATE
Legal Focus: HOA Education & Management
Practical steps for board elections
Best practices for vendor and contractor agreements
Hire construction management or DIY?
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SERVING HOA BOARD MEMBERS & HOMEOWNERS
SEPTEMBER / OCTOBER 2019
PAGE 14
Avoiding Board Burnout
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Education that builds stronger communities. MISSION STATEMENT Fostering a better quality of life in community associations through education, advocacy and networking.
ECHO 1671 The Alameda, Suite 205 San Jose, CA 95126 408.297.3246 | info@echo-ca.org www.echo-ca.org
BOARD OF DIRECTORS & OFFICERS PRESIDENT
DIRECTORS
David Hughes
Jerry L. Bowles Rolf Crocker Sarah Dunia John Gill David Levy Diane Rossi Katrina Solomatina Wanden Treanor
VICE PRESIDENT
Adam Haney TREASURER
Karl Lofthouse SECRETARY
Sandra Long
EXECUTIVE DIRECTOR
David Zepponi MARKETING COMMUNICATIONS SPECIALIST
Priscilla Ann Ornido SALES ADMINISTRATOR
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Jacqueline Price The ECHO Journal is published bi-monthly by the Executive Council of Homeowners (ECHO). The views of authors expressed in the articles herein do not necessarily reflect the views of ECHO. We assume no responsibility for the statements and opinions advanced by the contributors to the magazine. It is released with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought.
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www.echo-ca.org ECHO journal | September/October 2019
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Monterey Educational Seminar Saturday | October 19 7:30 am -12:30 pm
TOPICS Understanding Reserve Studies as an HOA Board Member Capital Budgeting and Reserve Studies: The Importance to a Community’s Appreciation A Community of Caring Addressing Mental Health Issues in HOAs New HOA Case Law That Impacts Your Community
Embassy Suites 1441 Canyon Del Rey Blvd. | Seaside Event Link: bit.ly/echoMonterey19 Promo Code: RFVTBX As an ECHO member, registration is free when you apply the promo code! Apply the promo code to your order: 1. Type the event link above into your browser and select “Register” located at the top right. 2. Click the “Enter Promotional Code,” link in the top right of the Register window. 3. Find “Enter Code,” type in the code and click “Apply Code.” 4. You should see the “Price” and “Fee” update to reflect the discounted amount.
www.echo-ca.org 4
September/October 2019 | ECHO journal
Features 8
A Step By Step Guide to HOA Board Elections
SANDRA L. GOTTLIEB, ESQ. & STEPHEN T. BRINDLE, ESQ.
14
Avoiding Board Burnout
DEREK MOBRAATEN
22
The Great Debate: Hiring Construction Management or Doing It Yourself
THERESA OSTRANDER
26
Do HOAs Need to Follow Government Contracting Procedures?
THERESA OSTRANDER
8
28 Avoiding Fair Housing Claims in Your HOA
MARK T. GUITHUES, ESQ. AND LAURIE F. MASOTTO, ESQ.
18
Happenings 4
Monterey Educational Seminar – Seaside
6
Executive Director’s Message: Echo’s Mission Resonates in Southern California
BY DAVID ZEPPONI
7
Legal Focus: Southern California HOA Board Education & Management Seminar
18
The Self-Managed HOA: Essentials of Vendor & Employee Agreements
JOHN CLIGNY, CAMEX, CCAM-HR, AMS
21
Echo Annual Meeting Announcement & Call for Board Nominations
27
Catch Up On the 2019-2020 Legislative Session!
31
Resource Panel Calendar
33
Welcome to Our New Professional Members
34
Echo Bookstore Offerings
28
ECHO journal | September/October 2019
5
news from ECHO EXECUTIVE DIRECTOR’S MESSAGE
Raison d’Etre – The Reason for
Echo’s Mission Resonates in Southern California
What a beautiful phrase, raison d’etre (reason for being). every board member consider andEcho collectively agre here did the summer go?! Echo has been when the newsshould got out last Spring that was
W
extremely busy working to improve and considering expanding to Southern California, several engenders humanity. words roll from one’s add to our processes and services forThe phrase professional service membersThe reached out to give our members. In August, our board affirmed an us encouragement and support the program. stark business senses and adds thefor element of humanity expansion strategy into Southern California. On We currently have five founding sponsors who have a board: Strategic execution and evaluation; m November 9, we will be hosting our first Southern generously planning, agreed to underwrite the program. We California educational seminar at the Sea Country hope to see business you there! realities should be reflective o management. The Community Center in Laguna Niguel – the Echo HOA So, what does this mean to our already loyal common Northern values of individuals in the community. Board & Management Seminar will be presented California members? A successful from 7:30 a.m. to 12:30 p.m. expansion will allow us to better serve the entire Communities are imperfect – because are made of hum With this offering, Echo will expand its Seminar membership. This growth gives us they economies of Programs to six per year: four offered in Northern scale and the opportunity to find and work with humans relating. Humans using. Human living. Basically, California, one on the Central Coast and now in boards throughout the state on issues of general being human, communities sometimes forget that mana Orange County. The Southern California Seminar will concern. The expansion will bring in more members establishand norms forequate a successful In a sense, follow the successful format of our other programs. that will to a more community. stable association If you would like to attend one of our Fall offerings, with solidly funded programs and services. the community. Its purpose is to establish order and elev please register at www.echo-ca.org/events. In The inclusion of Southern California members pace by norms and addition to the Southern California seminar onprogress and will increase ourestablishing clout in Sacramento as well. In constraint fact, November 9 (see page 7), the Monterey Seminar many of the most significant legislation originates to benefit all. (see page 4) will be held in Seaside on October from situations and connections in Southern 19. Please use the special promotional codes for California. We nowboard will have standing to discuss It seems apparent that leadership must understan members when you register! these with local HOA board members, legislators and order to orchestrate a sense of community and We are excited about the expansion of our owners inother policy makers. geographical reach – which came principally from mission values. is to serveThe HOA boards and and protect Echo’s community purpose of a board, the member and prospective member requests – urging engaged homeowners in common interest build community based common values support for the good o us to provide educational opportunities in Southern developments. We on appreciate the continue California. Its interesting to note: many of the calls from so many HOA associations and individual HOA It takes time to orchestrate a are community. takes time to kn to our office are from south of Bakersfield. They members. HOA boards the primary It membership have regularly requested Echo to grow into their of Echo of our membership are managed time to listen to and the88% voices and build a vision reflective of region and provide networking and educational or self-managed HOA board and HOA homeowner and you will be more as a board member and sat opportunities. members. Theseeffective board members and homeowners It is heart warming to hearyour reason are for the focal point Echo. They are the principal being on of the board. the requests and to be able financial supporters of our efforts and the primary to launch a program ECHO is committed beneficiary oftoour programs and services.boards We greatly helping homeowner and resid to help homeowners appreciate the confidence placed in us by our ing and advocacy and board members members! – this is our “raison d’etre”. be successful. In fact,
Sincerely,
Sincerely,
ECHO EXECUTIVE DIRECTOR 6
September/October 2019 | ECHO journal
David Zepponi Executive Director
SOUTHERN CALIFORNIA
Legal Focus: HOA Board Education & Management Seminar TOPICS How New Laws Affect the Financial Management & Health of Your Association PRESENTED BY DAVID LEVY, CPA
Five Techniques to Avoid Fair Housing Claims PRESENTED BY MARK GUITHUES, ESQ.
13 Legal Cases That Define HOA Law & Why You Need to Know Them PRESENTED BY MARK GUITHUES, ESQ. & SANDRA GOTTLIEB, ESQ.
Saturday | November 9, 2019 7:30 a.m. - 12:30 p.m. Sea Country Community Center 24602 Aliso Creek Rd. Laguna Niguel, CA 92677 Individual Homeowners: $25 + transaction fee Register Online: bit.ly/echoSoCal2019
Special Discount for HOA board members and homeowners! Contact Echo or any of our sponsors to
discuss our promotional pricing. You may be able to attend this event for free!
Ask-the-Professionals Open Forum
A special interactive session with the expert speakers to answer audience questions in an open forum!
www.echo-ca.org | 408.297.3246 THANK YOU TO OUR SOUTHERN CALIFORNIA FOUNDING SPONSORS
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ECHO journal | September/October 2019
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September/October 2019 | ECHO journal
BY SANDRA L. GOTTLIEB, ESQ. & STEPHEN T. BRINDLE, ESQ.
A Step-By-Step Guide to
HOA Board Elections Elections require a review of governing documents and state statutes to ensure the association’s compliance with the multitude of procedural requirements. If you miss any steps, your election may be challenged and if invalidated, decisions made after the board’s election could also be challenged. To avoid that potentially catastrophic outcome, make sure that you carefully follow the procedures outlined here and in your documents.
Approximately 90-120 days Before the Election Preparing for an Election The first step in preparing for an election is reviewing your association election rules and other governing documents containing provisions regarding elections. These documents outline certain qualifications, timeframes, and other requirements for the election process. If you do not have election rules, STOP HERE. Adopt election rules before you continue. Election rules are required by Civil Code § 5105. Without election rules, your election may be challenged and invalidated. Election rules should supplement your association’s bylaws (and, in some cases, CC&Rs), which contain election procedural guidelines. When preparing these rules, you will need to review these documents and the California statutes to ensure compliance with all of these authorities. Note: Elections rules require a 28-day member comment period, which may delay your election plans. Continued on page 10
ECHO journal | September/October 2019
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Depending on the size of the association, consider sending ballots earlier than the 30 day requirement. This provides for a mail-in deadline the day before the meeting, which ensures receipt of all ballots prior to the meeting.
A Step-By-Step Guide to HOA Elections
Continued from page 9
Scheduling an Election
• Select a meeting date that is about 60-90 days out to provide you with enough time to get through nominations and balloting being mindful of the statutory requirement that the ballots must be sent to members at least thirty days prior to the meeting at which they are opened • Select either one or three independent third parties as the inspector(s) of election (IOE) according to qualifications and processes provided for in your governing documents and election rules
NOTE: Civil Code § 5125 requires ballots to be in the custody of an IOE at all times or in a location designated by the IOE; however, Corporate Code § 7614 allows for appointment of the IOE at the meeting where the ballots will be opened and the votes tabulated. We recommend following the Civil Code, but in the event the IOE selected before the meeting cannot perform, follow the Corporate Code and designate a replacement(s). IOEs may enlist designees to help with their duties.
60 Days Before the Election
NOTE: Any nomination or election procedure that prevents any member from nominating him or herself is invalid under Civil Code § 5105(a)(3).
30-45 days before the Election Sending Notice of Meeting
• Determine which seats are up for election and the corresponding term, if the term is variable • Set nomination deadline that gives you at least 30 days for balloting • Review procedures in the association election rules for accepting nominations
• Check if documents require different timing for notice of meeting and ballot mailing. If not, they can be sent together • Notice should include the date, time, place of meeting, candidates’ names, whether write-in candidates are allowed and whether nominations can be made from the floor
Sending Ballots
Nominations
• Send out a Call for Candidates which includes director qualifications and the association rule for accepting write-in candidates • If sitting board members are eligible to rerun, inquire about their intent
• Determine who is eligible to vote • Review bylaws for record date procedure to determine which members are eligible to vote or, if none, the Board may establish a record date (in either case no more than 60 days before the first ballot is mailed) • Alert IOE of any suspension of voting rights and revise quorum and approval requirements accordingly • Review governing documents for required language to be included in the balloting materials or meeting notice such as quorum requirements and approval requirements • Include deadlines for both voting by mail and in-person Continued on page 12
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September/October 2019 | ECHO journal
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to be acceptable in a court of law. Clarify what your association accepts in the election rules
A Step By Step Guide to HOA Elections Continued from page 10
• Advise owners not to make identifying marks on their secret ballot • Include cumulative voting requirements, if any (may/may not be applicable in your HOA) • Identify how seats are filled for staggered terms (may/may not be applicable in your HOA)
TIP: Around the 15th day of the voting period, send a reminder notice to all members to send in their ballots. Proxies
TIP: Depending on the size of the association, consider sending ballots earlier than the 30 day requirement. This provides for a mail-in deadline the day before the meeting, which ensures receipt before the meeting. Secret Ballot Contents The ballot mailing must contain the following items, and any additional items required by your governing documents: • Ballot • Voting instructions explaining how to cast and return the ballots, including notice of what may invalidate a ballot • Inner envelope • Outer envelope with designated area for the owner’s signature, printed name, and address/ unit number at the property May also include: • Notice of meeting • Meeting agenda • Candidate statements • Prior year’s minutes
1-45 Days Before the Election
• If a member submits a proxy, check if governing documents allow/prohibit them • Proxies are not voted but rather are exchanged for a secret ballot • Civil Code Section 5130(a)(1) - only members may be proxy holders • A proxy form should not indicate how to vote; that direction needs to be on a separate page that can be detached and retained by the proxy holder • Proxies may be submitted to the secretary or IOE until the deadline for voting • Proxies are valid for 11 months unless otherwise stated on the proxy, with a maximum of 3 years • Proxy must be signed and dated by member authorizing proxy NOTE: Proxies are not automatically revoked if proxy giver merely attends the meeting; they must be revoked in writing or through the member attending the meeting and submitting a ballot at the meeting. Proxies are not automatically revoked by the death of the member unless written notice of the death is received by the association before the votes are counted.
Campaigning
Ballot Handling
12
• Once a ballot is received, it is irrevocable • Ballots may not be opened until they are ready to be tabulated (if quorum is required but not met, ballots are not opened) • IOE may invalidate any ballot with improperly completed outer envelopes (Clark v. McCann), i.e., member must sign, association property must be listed, etc. There are different opinions as to what constitutes a proper “signature” – some say it has to be in ink, others say that a written name is acceptable. In these modern times, any mark by the owner may be found September/October 2019 | ECHO journal
• If any candidate or member has access to advocate a point of view through association media, then the association must ensure equal access for all candidates • Ensure access to common area meeting space at no cost to the candidates and members advocating a point of view
Election Day
• Register attendees (proxy holders must sign in for all proxies) • Call meeting to order • IOE to confirm quorum (if required)
If quorum is required and met, proceed • Call for nominations from the floor, if allowed in association governing documents • IOE closes polling • IOE(s) to tabulate votes in an open area allowing attendees to view • IOE completes certificate of election • Adjourn If quorum is required and not met, set next meeting (or not) and adjourn • The current board remains seated until successors are elected • If reconvening, send notice of the new date, time & place to all members entitled to vote • If an association has a reduced quorum for reconvened meetings, it is recommended that they schedule the reconvened meeting NOTE: Corporate Code requires reconvening within 45 days, but governing documents may have other requirements.
Following the Election Announcing Results
• IOE immediately certifies results to the board
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• Board must send notice of results within 15 days to all members • Results should be notated in next meeting minutes NOTE: Officers are appointed by the board at the next regular session board meeting.
Record Retention The following items should be kept by the IOE (or in a location designated by the IOE) for one year, then returned to the association, where they can be destroyed (or, if you err on the side of caution, until the next board is elected): • Ballots • Outer envelopes • Sign-in sheet • Tabulation sheet • Certificate of election • Proxies • Complete set of mailed notices, agendas, balloting materials Sandra L. Gottlieb, Esq. is a founding partner at SwedelsonGottlieb. Stephen T. Brindle, Esq. is a senior associate at the firm.
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ECHO journal | September/October 2019
13
BY DEREK MOBRAATEN
AV O I D I N G
Burnout is a very real phenomenon whether a stay-at-home mom or dad, teacher, plumber or web developer. In the association world burnout happens at an even faster rate than other jobs because of the demanding personal nature of the work as a volunteer or committed manager. The truth of the matter is, participation in running a homeowner association is forever on an upward sliding scale, meaning the demand for participation is at an all-time high and increasing as society becomes more diverse and complex. This is especially true in California. Board burnout manifests in many ways. It is important to identify the signs. Here is an example of the consequences and loss of a very valuable board member to burnout. The director was excellent: intelligent, caring, mindful of fiscal responsibilities and the importance of objective decisions for the good of the entire community. The President for five years had stewarded the association through some very difficult times and controversial decisions advancing the community and mitigating risk. In one final heated board meeting, the hostilities which had built up over weeks, months – possibly years, had reached the boiling point. A member of the board, disagreeing with the President, and after a heated salvo of uncomplimentary words, stomped out of a meeting. In a state of fury, the President helped him out the door by loudly unleashing a torrent of inexcusable slurs and derogatory comments. The President resigned. The situation had stewed without release for Continued on page 16
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Avoiding Board Burnout Continued from page 14
some time and finally exploded in a barrage of personal attacks, emotions and irreconcilable feelings. The President and the board member had reached the point of no return: burnout. How did this happen and what signs could have predicted the outcome resulting in burnout? It is important to notice the escalation of emotions during the meeting. In this case, growing signs of antagonism had pushed beyond legitimate business disagreements to personal and emotional attacks. Yelling at fellow board members is certainly a sign that the situation is becoming toxic and ultimately will result in hard feelings and an unpleasant experience on the board. Following are some solutions to this very common and troubling problem.
the funneling of homeowner correspondence through one member of the board can more efficiently manage correspondence and provide for the vetting and sorting of
By educating community members and the board about decision processes, board members can better manage situations which might otherwise lead to destructive emotions and ultimately leadership burnout.
DIFFUSE CONFLICTS BY SENDING ALL HOMEOWNER CORRESPONDENCE THROUGH THE ASSOCIATION MANAGEMENT COMPANY. If the association
does not have a management company, then homeowner correspondence should first be reviewed by a designated board member. Self-managed associations may utilize an officer of the corporation to do this task, for example the President or Secretary. The job of the intervenor is to review and relay correspondence to the rest of the board and to give them time to consider the issue, check emotions and appropriately discuss and respond to the issue presented. Properly explained to the community and board members, 16
questions and concerns of members. After all, a board consists of board members working for the good of the community. If there is a process in place for the management of correspondence, the board will have created a system of efficiency, transparency and trust between the board and homeowners helping to dissipate mounting concerns and more effectively responding to individual issues.
September/October 2019 | ECHO journal
BOARD DECISIONS SHOULD NOT BE MADE OUTSIDE OF A BOARD MEETING. If a board
member speaks with a neighbor in a parking lot, some might misconstrue this as making a ‘decision’ between meetings. Caution should be practiced particularly if a homeowner asks for a decision outside of the board meeting when it should be addressed by the board in a properly called meeting. Directors must be particularly mindful of homeowners who have been antagonistic to the board and attempt to separate and manipulate board members. It is a common tactic. Board members must know and stay within the safe boundaries of official meetings and decision protocols as provided by the governing documents of the HOA. Homeowners should be regularly advised to use proper channels (the liaison for example) to have requests heard by the entire board. In the case of an emergency, exceptions should be made. Procedures for emergency situations should be addressed in the HOA governing documents. The Davis-Stirling Act also provides for the holding of emergency board meetings. It may be appropriate for the board to consider giving the President latitude to address urgent or emergency issues, setting a ceiling on expenditures and allocating a small fund for such needs. Some boards allow the President to spend up to $500 between board meetings for miscellaneous items (e.g., light bulbs, garage lights, sprinkler leaks, etc.). This improves operational efficiency between formal board meetings.
HIRE PROFESSIONALS WHO ARE NEUTRAL THIRD PARTIES. It goes
without saying that a common practice among associations is to utilize the wealth of knowledge within the community. For example, an attorney living in the HOA might be asked to advise on legal matters. Of course, utilizing a member of the community should be carefully thought through and done sparingly. Also, some professionals are strong-willed and may forget their place in the decision processes. This is especially true of homeowner professionals within the HOA. Nonetheless, utilization of professionals who live in the community or are hired from outside of the community is an important component in HOA management to streamline decisions. Bringing in professionals to inform decisions is an important expression of proper investigation and use of expert judgment by the board. CREATE AS MANY COMMITTEES AS CAN BE MANAGED; SHARE THE WEIGHT AND EMPOWER HOMEOWNERS. Often, after a
homeowner serves in a voluntary capacity, they become more sensitive to the challenging role of board members and the duties of the board. Member engagement through committees helps quiet the noise and garner appreciation for volunteer directors. Governing documents should provide for committees, including the formation of the committee, delegation of duties and leadership. Committee charters should provide clear direction for the committee, but never should the committee be allowed to conduct business
without oversight by the board. Rules should be set and overseen, and the board shall always remain the authority under which the committee has been formed. Board burnout is a common phenomenon and certainly a problem for many associations. It is important to be mindful of the signs of burnout such as an emotional attachment to issues and the escalation of differences in personal affronts and heated argument. Attempts at manipulation and political maneuvering should be squelched immediately deferring to a well-defined, transparent and objective decision process within board meetings. By educating community members and the board about decision processes,
We deliver
board members can better manage situations which might otherwise lead to destructive emotions and ultimately leadership burnout. By addressing the situation before it becomes acute, board members can enjoy long, healthy and effective terms on the board.
With over seven years’ experience, Derek and his wife, Kaley, operate Hudson Management out of Pleasant Hill, California. He was named 2018 Law Seminar Speaker at the California Association of Community Managers and holds the CCAM-PM accreditation from CACM, while managing a staff of association management veterans.
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ECHO journal | September/October 2019
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THE SELF-MANAGED HOA
PART ONE
Essentials of Vendor & Employee Agreements
18
September/October 2019 | ECHO journal
S
elf-managed HOAs are diverse: From fourunit buildings in a city to thousands of units, including sub-associations, in a rural country club setting. The options for self-management are equally diverse. An HOA may choose to limit their activities to those of oversight and governance and hire a General Manager and/or award contracts or agreements to third party vendors for day-to-day management of operations, tasks and projects. The self-managed HOA should have management and employee agreements and contracts as best management practices. Management agreements may be for specific management tasks such as finances and bookkeeping, common area maintenance, consulting agreements with or without dedicated “on-site” management. If the HOA hires an employee, that employee should have a management agreement or at least a clear job description and an “at-will” employment agreement. In this two-part series, vendor agreement guidelines will be addressed in Part 1 and employee agreement recommendations in Part 2.
BY JOHN CLIGNY, CAMEx, CCAM-HR, AMS
At some point in the process of drafting, negotiating and finalizing a management agreement, it is advisable to consult competent legal counsel to review final documents before signing and executing the agreements. Until then, here are some essential components and best practices for ensuring agreements are fair to both parties, accomplish the HOA’s goals and objectives, and minimize risk to the HOA if the wheels come off. Third party agreements for specific HOA management tasks whether it be financial management, common area maintenance, consulting or full-service management must have the following critical components (legal counsel may recommend additional provisions as necessary): • The legal names of the parties to the agreement and the date when the contract is signed. This sounds obvious, but vendors and HOA boards can be lazy when it comes to using correct legal names of corporations and remembering to date a contract. If in doubt about the legal name, use the California Secretary of State’s business search tool on the web to find it. • Expectations and limitations consistent with the HOA’s measurable goals and objectives. It is easier to set limitations than try to think of everything that should be included. More agreements are being written as “performance-based” agreements with language articulating how performance is measured and how often it is evaluated and monitored. • Term of the agreement. Again, a simple task but a properly binding contract should have a performance timeframe. Many vendors are leaning toward multi-year contracts but check governing documents, especially CC&Rs, to ensure multi-year agreements or contracts are permitted by the HOA. Many HOAs do not permit multi-year agreements. • Indemnification provisions and insurance requirements. Indemnification is a legal and risk management concept and depending on the type of third-party agreement, the attorney will need to craft language that is fair to both the vendor and the HOA.
According to HOA insurance experts, insurance requirements for both the HOA and vendor should be clearly listed and may include general liability, property (business continuity coverage), workers compensation, employment practices liability, professional liability (errors and omissions coverage), fidelity insurance, cyber liability insurance, data loss protection, and computer fraud and funds transfer coverage. • Proper licensing and insurance/bonding requirement. Make sure the agreement has a clause requiring proper licensing and insurance/bonding for the work to be done, if necessary. Make sure these are current and active. • Termination notification process and procedures. Because termination of third-party vendors can be disruptive to the HOA and its members, many agreements now use a 60day notice with or without cause. Be sure to be clear about expectations for service during the termination period and be mindful of the consequences of terminating a contract early. • Agreement review and renewal processes and cost adjustment expectations. HOA boards should consider whether the agreement will be automatically renewed through a socalled “evergreen clause”. If so, the contract automatically renews when the old contract ends. An evergreen clause avoids disruption of service, promotes continuity and gives the vendor ongoing security. Alternately, the agreement could be reviewed during a specific, stated period at the end of the contract. For example, the agreement might say that 60 days before the agreement ends, the contract will be reviewed and renegotiated by each party. Another solution is to simply state that the contract will end at a certain time and the work will be put out for bid as a matter of course – HOA policy. The vendor may be encouraged to bid along with other vendors. Competitive bidding is a good practice, especially for large contracts, since much can change over time and the board has Continued on page 20 ECHO journal | September/October 2019
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The Self-Managed HOA: Essentials of Vendor & Employee Agreements Continued from page 19
a fiduciary responsibility to find the best vendor for the work. If the vendor knows of this provision when entering into the agreement, there should be no surprises or hard feelings about the process when the board invites competitors to bid at the end of the agreed contract term. • Articulate in writing the scope of costs for services, and process for change orders. Be specific in the agreement as to when and how payment is to be made and include a detailed schedule of fees or additional charges for services not included or considered. If needed,
make sure to discuss and incorporate a well-defined process for changes including who is authorized to approve changes for the HOA (and, thereby, who is not). Stipulate that all changes must be in writing. • Consideration – payment for goods and services. How and when payments are to be made should be included in the agreement. The HOA board should understand and plan for expected payments to the vendor, including any holdbacks for performance. Approve payments in advance especially if reserve fund transfers will be used. Make sure everyone is aware of the expected cash flows so that the project or program
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ACE Property Management, Inc. • 1290 Kifer Road, Suite 309, Sunnyvale, CA 94086 Office: 408-217-2882 • Info@acepm.net • www.acepm.net
can remain on schedule and be executed according to plan. If payments are made on schedule, then the vendor is expected to deliver according to expectations spelled out in the agreement. Ultimately the vendor is accountable to the board for meeting agreement expectations and limitations. The HOA has the responsibility to ensure the work was completed according to the terms of the contract and to compensate the contractor in a timely manner according to the agreed payment terms. The third-party vendor agreement for critical HOA management tasks is a legally binding document and can be an effective tool for monitoring vendor performance and meeting the HOA’s operational goals. Follow these simple guidelines when preparing or reviewing contracts and help to eliminate contract misunderstandings in the future. The above are management guidelines. It is suggested all contracts be reviewed by legal counsel to ensure the business is clearly and legally articulated.
(408) 345-4000 http://wm-llp.com We counsel: • Condominium Associations • Planned Unit Developments
• Mixed Use Associations • Commercial Associations
We provide general counsel to Associations including the following services: • Construction Defect and Civil Litigation • Dispute Resolution 20
September/October 2019 | ECHO journal
• Governing Document Interpretation • Governing Document Revisions • CC&R and Rules Enforcement
John Cligny, CAMEx, CCAM-HR, AMS, is the co-founder of Association Consulting Group and is a veteran portfolio manager and industry thought leader. John advises and educates HOA clients and management companies on a wide range of community management topics and provides expert testimony in litigation.
Echo Annual Meeting Announcement & Call for Board Nominations
Are You Candidate Material? The ECHO Nominating Committee is soliciting names of candidates for positions on the ECHO Board of Directors for the term 2020 to 2022. You are encouraged to submit as much information as possible to enable the committee to evaluate the candidate’s qualifications. Supplemental information about candidates may be attached to this form. Applications will be open through September 30 and elections will be held immediately thereafter via proxy. Ballots will be counted at the annual meeting, November 14, 2019. The new terms begin January 1, 2020. The Board Nomination Form can be found on the website www.echo-ca.org/blogs/2019-echoboard-nominations-form.
For more information please contact David Zepponi, Executive Director dzepponi@echo-ca.org or 408-297-3246, ext. 4.
2019 Echo Annual Meeting and Election of Board Members The Echo Board of Directors has set the Annual Meeting for 9:00 a.m., November 14, 2019 at the Echo office: 1671 The Alameda, #205, San Jose. . The agenda will include: 1. Review and approval of prior year minutes 2. A count of proxy votes for the election of board members 3. Count of votes of those present at the meeting for election of the board members 4. Announcement of the newly elected board members, and 5. A brief financial review. The voting period for the election of Echo board of director members will begin on October 7, 2019 and continue until 9:15 a.m. on November 14, 2019. All proxies and votes must be received by Echo within this period. “A “Voting Member” shall mean and refer to a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development...” [emphasis added]. In essence, the HOA board as a whole is the only membership class permitted, under the Echo Bylaws, to vote for the board of directors.
Education Advocacy Connection ECHO journal | September/October 2019
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BY THERESA OSTRANDER
The Great Debate HIRE CONSTRUCTION MANAGEMENT OR DO IT YOURSELF?
M
ajor repairs, replacement or enhancement of common areas is an essential duty of HOA boards. These projects can be some of the most taxing and risky business dealings a board member undertakes. Construction projects often involve fiduciary responsibility, community risk, and politics. Done properly the board can be perceived as heroes, prudent with funds and cautious with risk. Projects improperly managed puts at risk significant sums of money, property and community harmony. It also invites criticism, financial challenges and potential litigation. So great care should be exercised when considering the execution of a major repair, replacement or enhancement project. It is easy to envision a project completed – a newly lined pool, the addition of an electric vehicle charging station, or a freshly repainted community – but what happens if the project goes awry? Boards should be extremely circumspect about their ability to manage a project or whether they should outsource it to a construction management firm. Weighing the upsides and downsides is the duty of the board. A remodeling project or window replacement on private property is not the same as a repair, enhancement or replacement project in a community of multiple owners. The standard of care is much different for private projects than common interest projects, and the ramifications can be far reaching and expensive for the community and the board collectively and individually. Continued on page 24
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ECHO journal | September/October 2019
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THE SCOPE OF WORK IS WHAT IS WANTED BY THE BOARD, AND THE RFP IS THE CONTRACTOR’S RECIPE TO ACHIEVE SUCCESS.
The Great Debate Continued from page 22
What is Required to Successfully Execute a Project? Managing a construction project, whether it is a repair, replacement or an enhancement involves agreement by a board on what is wanted in the project. The board will create a scope of work and develop a Request for Proposals (RFP). Then find, interview, review responses, and select qualified practitioners. Next, the board must manage and oversee the project, project close and manage payments and cash flows. These are all time consuming and frequently complex items to undertake. A board might consider whether the investment in time, added risk and wherewithal to complete the project is best done by the board or whether a construction 24
management company should be engaged. The RFP is foundational to the project and must be carefully designed. It should express expected behaviors, activities, timetables and deliverables for the project. The scope of work is what is wanted by the board, and the RFP is the contractor’s recipe to achieve success. An RFP, if not properly written and managed, will quickly jeopardize a community’s vision, project scope, budget, schedule and deliverables. Whether the project is managed by the board or a construction manager, the RFP process is vital to the success of the project. When reviewing proposals, plan the process carefully. It is critically important not to fall into the trap of nepotism, favoritism and biased sole source selection. The selection process should
September/October 2019 | ECHO journal
disqualify family members from projects. It should steer clear of hiring a board member’s friend or friend-of-a-friend which could be perceived as an impropriety. The acceptance of gifts or promises of gifts (tickets, drinks, etc.) should be unacceptable and potentially disqualify a contractor. Simply, the vendor selection process should be clear, objective and ethical. Multiple bids should be received and compared. Rarely should a sole source be selected, but if so, the reason for selecting a sole source should be well documented and available to the community upon request. One of the most important aspects of the board review is to ensure that the prospective contractors are properly licensed and bonded for the work. Too often this simple step is overlooked or undervalued. It is the duty of the board to check the licenses and insurances of the contractors coming onto the property. Of course, the license does not guarantee the contractor has the necessary skills and work quality needed to deliver as expected. Boards will have a difficult time assessing the qualifications of bidders. It helps if a board member or a volunteer member of the community has experience in the trades and can provide unbiased and expert opinions about the candidates. It is at this critical qualifying stage when a construction manager, working on behalf of the board, may prove extremely valuable. A construction manager will ensure this step is completed professionally and objectively. Bidder licenses, skills, qualifications and experience will be checked to make sure the
contractor can do the work, on time and to the satisfaction of the board. Their reputation relies on it.
The Informal RFP Process The advantage of the RFP process is that: • It can be used as a cost reimbursable contract • It gives the board or construction management firm the ability to negotiate with the respondents • It provides for additional flexibility when awarding the contract The term bid or bids may be used in the RFP process when developing components of the project scope, such as the project quantities or elements of work to be performed along with a proposed cost and timeline. Sending out an RFP is a relatively standard operating procedure which requires creating a scope of services, assessing the timeline and budget available, working with vendors, and asking them to propose a solution and price which best meets/matches the criteria. RFPs should include the following items: 1. Brief overview of the project 2. Stakeholders 3. Association information 4. Project goals & vision 5. Sitemap(s) 6. Scope of work & deliverables 7. Desired schedule 8. Technical requirements 9. Principal point of contact 10. Budget parameters 11. Ongoing support of project team 12. Project milestones
13. Criteria for selection / scorecard 14. Communication to bidding general contractor resulting from the Request for Proposal
Typically, an RFP follows an agreed upon scope of services as determined by the Board of Directors. The board stipulates expectations in the RFP. The proposal is returned to the board or management with a comprehensive construction plan including milestones and deliverables.
Developing a Scope of Work Phase 1 - The RFP Pre-Construction It is important to develop the project scope, identify specific project requirements
or processes, develop concise and accurate documentation to share with all vendors, oversee vendor clarification and translate technical terminology to negotiate final scope and budget. The following steps are typically part of the RFP negotiations: • Stakeholder meetings and conversations • Site evaluations to gain special context • Meet with stakeholders to discuss what has been heard and seen as the ultimate vision • Develop the technical scope for the project • Secure vendor material and service bids • Evaluate and decide on vendors Continued on page 26
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A Bay Area Original for 28 years Call (877) 783-9884 or visit www.CommonInterest-NorCal.com Campbell • Danville • Novato • San Mateo • Stockton ECHO journal | September/October 2019
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The Great Debate Continued from page 25
Do HOAs Need to Follow Government Contracting Procedures? There is a general misconception that HOAs are government entities and therefore must follow government contracting laws and regulations. STOP: That is not the case. This is simply an urban myth. HOAs are private businesses owned by the homeowners in the community. The myth that a HOA construction project should be approached as a public bid or an invitation to bid (ITB) as conducted for government entities across the country is incorrect. Purchasing laws for jurisdictions and public entities are drafted through ordinances and charters. They commonly utilize acceptable bidding procedures that require formal open bids with a very strict adherence to contract procedures and procurement. Often the procedures require a certified Purchasing Agent to review the project bids. This individual is usually a bonded city employee with specialized training. This is not the requirement for HOAs and, although the board or construction manager might borrow from these processes, a far less complex and more flexible (and less costly) Request for Proposal (RFP) process can and should be utilized.
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• Agree on the final deliverable for each vendor and contractor • Evaluate proposals resulting from the RFP • Award the project The project is awarded after a significant amount of conversation and negotiation. Clarity is essential and building bonds between teams of workers and vendors is paramount for a successful project. There are many moving parts to effectively manage a construction project. This is only the pre-construction phase of the project.
Phase 2 - Construction Oversight The second phase includes the following and is equally extensive: oversight services during construction, including field reviews and reporting, change order validation, applications for payments, etc. • Project mobilization • Progress management and quality control • Communication flow • Project financial management • Project closure • Updated reserve study It is the responsibility of the board of directors in a HOA to maintain and enhance the properties in their communities. This eventually will require complicated projects to repair, enhance and maintain the property. Construction projects are unquestionably some of the most complicated, potentially time consuming and expensive projects facing a volunteer board. Simply scoping the project and developing the criteria for
September/October 2019 | ECHO journal
selection can put the association at risk. Choosing contractors and vendors can create a nightmare scenario to those without construction management experience. Liability, politics and technical and legal requirements tend to fog a project. These challenges are often not obvious to lay-persons wading into a significant construction project and all could have dire consequences for the community if not executed properly. Without question, boards can manage projects. Nothing forbids this in Davis Stirling or other code(s). The question is whether it is prudent to do so given the challenges of pulling all the pieces together. It is the intention of this article to inform the reader of the complexities of construction management, the anatomy of an RFP and the resulting necessary oversight of projects. Duly informed, the “Great Debate” can be argued and decided upon by the board given the size and specifics of projects before them.
Theresa Ostrander is Director of Client Relations at CM Squared Inc. She has more than 20 years’ experience working with community association management, municipal government and special districts. Theresa was born and raised in a family of residential builders in Carmel. She has worked in construction management – specifically in the last two years for CM Squared. CM Squared Inc. is a full-service construction management business with a specialization in HOA construction management projects and construction projects.
Catch Up On the 2019-2020 Legislative Session! The list below features important legislation for California community associations. This list, and the impact of each bill, will change as authors amend the language in their bills. The final day for the Governor to sign or veto bills for the first half of the 2019-2020 Legislative Session is October 13.
Current Legislation AB 670 AUTHOR: Friedman SUBJECT: Accessory Dwelling
Units
STATUS: Signed by Governor POSITION: Watch SUMMARY: Would void
provisions in common interest development governing documents that effectively prohibits or unreasonably restricts the construction or use of an accessory dwelling unit or junior accessory dwelling unit on a lot zoned for single-family residential use that meets the minimum standards established for those units. However, the bill would permit reasonable restrictions that do not unreasonably increase the cost to construct, or effectively prohibit the construction of these units.
SB 323 AUTHOR: Wieckowski SUBJECT: Elections: Felons, Inspectors, Email Disclosure STATUS: Assembly Third Reading POSITION: Oppose SUMMARY: Requires an association to disqualify a person from nomination as a candidate for not being a member of a common interest development at the time of nomination or for being convicted of certain felonies. Authorizes an association to disqualify a person from being nominated or from serving on the board for specified reasons, including the failure to pay regular assessments. Defines email addresses as association records for the membership list.
Would not allow the rules of an association to permit association employees or contractors to serve as inspectors of election. Allows members to sue over violations of bill provisions in superior court.
SB 326 AUTHOR: Hill SUBJECT: Inspection of Elevated Components STATUS: Signed by Governor POSITION: Watch SUMMARY: Requires the association to cause a reasonably competent and diligent visual inspection of the load-bearing components and associated waterproofing systems to determine whether the exterior elevated elements are in a generally safe condition and performing in compliance with specified standards. Would require the inspector to issue a report, and the association to take immediate action if the exterior elevated element poses an immediate threat to the safety of the occupants.
SB 434 AUTHOR: Archuleta SUBJECT: Managing Agent: Production of Records STATUS: In Senate Inactive File POSITION: Watch SUMMARY: Requires a managing agent whose management agreement has been terminated to produce client property and client records within a specified period of time pursuant to a written request by a common interest development association, except as specified.
SB 652 AUTHOR: Allen SUBJECT: Right to Display Religious Items STATUS: Signed by Governor POSITION: Watch SUMMARY: Would prohibit the governing documents of a common interest development from prohibiting the display of religious items, as defined, on the entry door of a common interest development member’s separate interest. The bill would make an exception during the time that maintenance, repair, or replacement work is performed.
SB 754 AUTHOR: Moorlach SUBJECT: Election by Acclamation STATUS: Assembly Third Reading POSITION: Support SUMMARY: Requires, when the number of director nominees at the close of the nomination period is not more than the number of vacant director positions on the board, that the director nominees be considered elected by acclamation if the association includes 6,000 or more units, and the board complies with specified notice requirements, and the board disqualifies a candidate for specified reasons.
Join the Discussion!
To read more about HOA legislation, visit our website or our Facebook page and join the discussion. www.echo-ca.org/hoa-advocacy facebook.com/echoorg
ECHO journal | September/October 2019
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S
an Diego’s Palomar Observatory measured 10.10 inches of rainfall last Valentine’s Day, providing the wettest day on record and breaking the record set in 1901. Brenda Bumble made a video of the rainwater, pushed by winds in excess of 80 mph through her window’s “weep” (drainage) holes into her high-rise unit, darkening portions of the painted drywall interior window ledges. While it was still raining, Brenda forwarded her video to the association along with an e-mail explaining that the rain had or would soon cause mold and demanded immediate replacement of the “defective” windows. Somewhere in the 63rd line of her ongoing transmittal, the manager spotted Bumble’s
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mention that she was a 5-year cancer survivor. The next day the manager contacted legal counsel, the window manufacturer and a third-party window expert. None disputed that water should generally be on the outside, but the experts quickly concluded that the window had performed remarkably and well in excess of design parameters. Following discussion with legal counsel, the association promptly invited Bumble to come to a meeting to “engage in a meaningful dialogue regarding the water entry, her health concerns and to discuss how the association might reasonably accommodate them.” Bumble accepted. The association shared the expert’s opinions and offered to dry
September/October 2019 | ECHO journal
out the common area (drywall) and test for mold beneath her windows. Four days later, Bumble denied access to the industrial hygienist (mold tester) and the remediation (dry-out) expert. Her attorney wrote shortly thereafter, demanding replacement of the windows. The association suggested IDR (Internal Dispute Resolution), where it again shared the expert’s findings along with a newly obtained $15,000 proposal for window replacement. Minutes show that the association offered Bumble the opportunity to use the association’s (licensed, insured and approved) window vendor at her own expense, but suggested the association should first be allowed to enter, investigate and address Bumble’s renewed
Avoiding Fair Housing Claims in YOUR HOA By Mark T. Guithues, Esq. and Laurie F. Masotto, Esq.
claims of mold. Unsuccessful at IDR, the association followed up with quarterly “stand ready” letters to Brenda, reiterating the Association’s offer to enter, investigate and repair. Months later, California’s Department of Fair Employment & Housing (“DFEH”) sent a housing discrimination questionnaire, alleging discrimination based on the association’s failure to timely respond to Bumble. After interviewing the property manager and directors, DFEH offered that the association could pay $10,000 to Bumble and have its directors attend several hours of Sexual Harassment and Abusive Conduct Prevention Training to “avoid” potential DFEH prosecution of the matter. The embattled association respectfully
declined, held its breath, and was rewarded by DFEH’s “decision not to prosecute.” Subsequent discussion with DFEH revealed: the association responded timely (quickly), appropriately (hearings and expert investigations), and consistently (multiple “stand ready” reminders). Here are 8 lessons on avoiding claims based on discrimination, cultural sensitivity & reasonable accommodations: 1) CLAIMS MAY ARISE FROM ALLEGED VIOLATIONS OF MANY ACTS. The Federal Americans
with Disabilities Act, the Federal Fair Housing Act, California’s Fair Housing Act, the Unruh (civil rights) Act (see O’Connor vs. Village Green prohibiting landlord’s blanket exclusion
of children), and even local municipality requirements to construct ADA bathrooms or enhanced access can be the basis of claims. Because managers and directors are already familiar with handicap accommodation requests, the biggest claim risk to associations or directors arises from newly enacted 24 CFR §100.7 (“Liability for Discriminatory Housing Practices”) which imposes “Direct liability… for… (iii) Failing to take prompt action to correct and end a discriminatory housing practice by a third-party, where the person knew or should have known of the discriminatory conduct and had the power to correct it…” In short, this imposes a responsibility on managers and directors to be on the lookout for conflicts, such as neighbor-to-neighbor disputes, which might find their foundation in race, creed, color, ethnicity, national origin, religion, sex, sexual orientation, gender expression, age, height, weight, physical or mental ability, veteran status, military obligations, and marital status. 2) CLAIMS CAN BE MADE BY MANY DIFFERENT “PROTECTED” PEOPLE. In Revock vs. Cowpet Bay, a federal court upheld a deceased owner’s claims against her association, its management, certain directors and fellow owners whom she felt discriminated against her by discussing her need (or lack thereof) for a therapy dog on the association’s intranet. Associations also need to be on the lookout for discriminatory actions by or against an owner’s guests, its employees and its vendors, all of Continued on page 30
ECHO journal | September/October 2019
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Avoiding Fair Housing Claims Continued from page 29
Avoiding Fair Housing Claims in Your HOA Continued from page 29
whom have standing to bring separate legal actions, or to petition the DFEH to bring action on their behalf. Boards should take an extra minute to make sure its on-site manager isn’t receiving discriminatory treatment by its residents. 3) THE VICTIM DOESN’T HAVE TO “PROVE” DISCRIMINATION. Fair Housing will take action, or at
least launch a comprehensive investigation (at no cost to the complainant) in situations where the victim merely feels discriminated against. For example, a recent DFEH claim was pursued on behalf of a gentleman who believed the association’s denial of his architectural request arose because the architectural committee member allegedly saw his rainbow flag and frowned during a walk-through. The association was then placed in the position of establishing to Fair Housing that the requested improvements were unacceptable regardless of who made the request. 4) DFEH PROSECUTION IS UNDERTAKEN IN HINDSIGHT. The most important takeaway is that 30
September/October 2019 | ECHO journal
Potential fair housing claims could be opportunities for meaningful investments in a community’s future. DFEH prosecutions are based almost entirely on whether the association prospectively identified a discriminatory situation and took appropriate action to address it, often even before the complainant realized they had a potential claim. Such was the case above, where Brenda Bumble’s DFEH claim came months after she spent thousands on her attorney’s representation pursuing a water-entry window replacement claim. The manager’s early identification of a potential fair housing issue, and subsequent diligence in following an accommodation protocol, saved the community tens of thousands of dollars defending a future DFEH claim. 5) ASSOCIATIONS HAVE TOOLS TO ADDRESS POTENTIALLY DISCRIMINATORY BEHAVIOR. Once identified, an association is required to address a third party’s discrimination when it has the power to correct the situation. Like a handicap accommodation, this is generally done using the hearing process – except it should be separate hearings, held at different times. Even if neither of the parties attend, the association gains important immunities to a DFEH Continued on page 32
ECHO EVENT CALENDAR
RESOURCE PANEL CALENDAR ECHO Resource Panels are offered in a casual atmosphere to enable managers, professionals and board members to hear about important topics presented by experts in the industry, and share experiences and issues. The meetings are open to all ECHO members and those interested in learning about ECHO. If you have any general questions please contact events@echo-ca.org
Register Online at www.echo-ca.org/events We ask that you register online to provide ECHO with an accurate headcount.
Register Online
You must register online to provide ECHO with an accurate headcount. DATE
PANEL NAME
ORGANIZER
ORGANIZERS DATE PANEL NAME Wednesday Maintenance Panel Cassidy Rajkovich October 2 maintenancepanel@echo-ca.org *Professional Service Providers Only Cassidy Rajkovich Maintenance Panel 11:45 a.m. – 1:00 p.m. Wednesday maintenancepanel@echo-ca.org August 7 Friday East Bay Panel Cynthia Heskett 11:45 am to 1:00 pm October 11 11:45 a.m. – 1:00 p.m. Friday August 9 Wednesday 11:45 am – 1:00 pm
East Bay Panel
eastbaypanel@echo-ca.org Ann Marquis-Fisher eastbaypanel@echo-ca.org
Legal Panel
October 16 6:30 p.m. – 8:30 p.m. Tuesday
*Professional Service Providers Only
August 20 Thursday 11:00 am – 12:30 pm November 7 11:30 a.m. – 1:00 p.m. Wednesday
Central Coast Panel
North Bay Panel
North Bay Panel September 9 Tuesday Central Coast Panel 11:30 am to 1:00 pm November 19 11:45 a.m. – 1:00 p.m. Wine Country Panel Thursday September 19 Thursday Wine Country Panel 11:45 am to November 211:00 pm 11:45 a.m. – 1:00 p.m. Maintenance Panel Wednesday October 2 11:45 am to 1:00 pm
Mark Wleklinski legalpanel@echo-ca.org
REGISTRATION LINK
REGISTRATION bit.ly/mapanel-oct19 LINK bit.ly/mapanel-aug2019
bit.ly/ebpanel-oct19 bit.ly/ebpanel-aug2019 bit.ly/lepanel-oct19
bit.ly/ccpanel-aug2019 Laura Yelland centralcoastpanel@echo-ca.org Stephanie Charles & Diane Kay bit.ly/nbpanel-nov19 northbaypanel@echo-ca.org Stephanie Charles, & Diane Kay northbaypanel@echo-ca.org Laura Yelland centralcoastpanel@echo-ca.org
bit.ly/nbpanel-sep2019
Pam Marsh & Sarah Dunia winecountrypanel@echo-ca.org Pam Marsh & Sarah Dunia
bit.ly/wcpanel-sep2019
Cassidy Rajkovich maintenancepanel@echo-ca.org
bit.ly/mapanel-oct2019
winecountrypanel@echo-ca.org
bit.ly/ccpanel-nov19
bit.ly/wcpanel-nov19
bit.ly/ebpanel-oct2019 Friday East Bay Prices willPanel increase at the door!Ann Marquis-Fisher October 11 eastbaypanel@echo-ca.org Registering online and paying by credit card is the fastest way to ensure your spot is reserved. If 11:45 am – 1:00 pm REGISTER
ONLINE & SAVE!
you are paying by check, please continue with online registration and select “Pay by Check” so we can get an accurate headcount. Checks must be payable to ECHO and received two weeks prior to the event date. Echo Mailing Address: 1671 The Alameda, Ste. 205, San Jose, CA 9512
Prices will increase at the door! Registering online and paying by credit card is the fastest way to ensure your spot is reserved. If you are paying by check, please continue with online registration and select “Pay by Check” so we can get an accurate headcount. Checks must be payable to ECHO and received two weeks prior to the event date. ECHO Mailing Address: 1671 The Alameda, Ste. 205, San Jose, CA 95126
ECHO journal | September/October 2019
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Avoiding Fair Housing Claims in Your HOA
6) ASSOCIATIONS MUST HAVE
Continued from page 30
MADE THE CORRECT RESPONSE.
action by having exercised its authority. More often, one or both of the parties attend, providing the complainant a venue to be heard, and the community a real opportunity to communicate genuine compassion for what occurred and to shine light on the behavior of the protagonist. Generally, earnest discussion with legal counsel is enough to redirect the behavior of the protagonist.
When participating in hearings, the association’s response should be based on processes instead of decisions. That is, the association often need not reach conclusion on whether or what extent poor behavior is impeding a complainant’s full use and enjoyment of their property. But it does have to undertake hearings and, where expressly evident, prosecution of violations of its governing documents. Directors will be protected by exercising business judgement (See Reeves vs. Carrollsburg and Lawrence vs. Courtyards) in discussing and determining an appropriate response to a situation.
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7) USE THE RIGHT WORDS. In
retrospect, DFEH will want to see evidence that a board “engaged in a meaningful dialogue with the complainant.” Focus on questions like: “What do you need in order to have full use and enjoyment of your unit?” and “What would you like the association to do?” and “What sort of evidence or documentation do you have which would help us address this situation on your behalf.” Less talking and more listening are key. Be sure that somebody in the meeting documents the requests
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8) LOOK FOR OPPORTUNITIES TO BE CREATIVE. It is difficult
for boards not to dislike these claims, but a board should fight against this bias because what the complainant asks may be a small portion of what the community needs. Standing up to a bigot makes the community better for everyone. Replacing stairs with a ramp or installing a handicap parking space provides equal access to aging residents and broken teens alike. Potential fair housing claims could be opportunities for meaningful investments in a community’s future. Conclusions. The way to avoid DFEH claims is to prospectively identify conflicts which may find their basis in discriminatory behavior – even claims the complainant may not initially see themselves. Then, promptly, engage in “meaningful dialogue” during an “interactive process” to compassionately learn what the person needs to fully use and enjoy their home. If that involves another owner, hold another hearing with that person and discuss the allegations. Document the board’s exercise of business judgement. Fair Housing based issues can and should be viewed as an opportunity to improve the community.
Mark T. Guithues, Esq. and Laurie F. Masotto, Esq. are attorneys at Community Legal Advisors Inc., a law firm providing general counsel and collections services to over 400 homeowners associations in Southern California.
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and the association’s responses if needed in the future.
4/12/17 8:39 AM
NEW PROFESSIONAL MEMBERS
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Mr. Lightfoot has over 25 years’ experience handling real estate matters. He represents homeowners’ associations, residential and commercial landlord and business owners in cases involving breaches of governing documents and leases, construction defect, premises liability, toxic exposure (mold, asbestos) landslide/earth movement and property line/easement disputes. In addition to his litigation practice, Mr. Lightfoot handles real estate, commercial and construction transactional and corporate governance matters. He is admitted to practice before all California State and Federal District Courts and the U.S. Court of Appeals for the Ninth Circuit. Mr. Lightfoot is a member of the California State Bar (Real Property and Litigation Sections); the Bar Association of San Francisco; the Marin County Bar Association; the Apartment Owners Association of California and Echo. Stephen Lightfoot, Esq. slightfoot@lightfootlawfirm.com • (415) 945-9998 www.lightfootlawfirm.com
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Find all of ECHO’s Professional Members Online. Visit the Professional’s Directory at www.echo-ca.org ECHO journal | September/October 2019
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The ECHO Bookstore is your source for great information on the duties of HOA board members. Find these and other informative publications, including FREE downloads, online at www.echo-ca.org.
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2019 2019 Condominium Condominium Greenbook Greenbook Member Price: Member Price:$17 $17 Non-Member Non-MemberPrice: Price:$25 $25 This companion toto the This companion the Condominium Bluebook Condominium Bluebookis is anan in-depth guide toto allall in-depth guide aspects ofof association finaspects association finances, including accounting ances, including accounting methods, financial methods, financialstatestatements, reserves, audits, ments, reserves, audits, taxes, investments and much taxes, investments and much more. Not forfor the accounting more. Not the accounting novice, this is is a tool forfor the novice, this a tool the treasurer oror professional looktreasurer professional lookinging forfor specific information specific information about association finances. about association finances.
2019 Civil Code Sections Governing California Community Associations Member Price: $20 Non-Member Price: $25 This publication includes the current version of the DavisStirling Common Interest Development Act, the FREE Civil Code sections DOWNLOAD that apply to common FOR interest developments MEMBERS and selected provisions from other codes important
to associations.
BoardMember Member Board Handbook Handbook Member Price:$20 $20 Member Price: Non-Member Price:$25 $25 Non-Member Price: This publication the This publication is is the essential guidebook HOA essential guidebook forfor HOA Board members, dealing Board members, dealing with governance, finances, with governance, finances, insurance and maintenance insurance and maintenance issues. issues.
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September/October 2019 | ECHO journal
2019 2019
Condominium Condominium Bluebook Bluebook 2019 2019Edition Edition Member MemberPrice: Price:$17 $17 Non-Member Price: Non-Member Price:$25 $25 This Thiswell-known well-knowncompact compact guide guidefor foroperation operationofofcomcommon moninterest interestdevelopments developments ininCalifornia Californianow nowincludes includesaa comprehensive comprehensiveindex indexofofthe the book bookand andaachapter chaptercontaining containing more morethan than200 200frequentlyfrequentlyasked askedquestions questionsabout about associations, associations,along alongwith with succinct succinctanswers. answers.
Construction ConstructionDefect DefectClaims Claims Member MemberPrice: Price: Non-Member Non-MemberPrice: Price:
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New Newbuildings buildingscan canconceal concealextensive extensivefaults. faults.It’s It’s a aboard’s board’sworst worstnightmare—rainstorms nightmare—rainstormsdamage damage buildings buildingsand andbring bringowner ownercomplaints. complaints.IsIslegal legal action actionnecessary? necessary?With Withthis thisnew newbook, book,you’ll you’lllearn learn about aboutthe theresolution resolutionprocess processfor forconstruction construction problems, problems,and andhow howtotohandle handlecomplex complexclaims. claims.
Home Homeand andCondo CondoDefects Defects Member MemberPrice: Price: Non-MemberPrice: Price: Non-Member
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Constructiondefect defectlitigation litigationcan canbe beconfusing, confusing, Construction expensiveand andfraught fraughtwith withlegal legalpitfalls. pitfalls.This This expensive eye-openingguide, guide,written writtenby byaccomplished accomplished eye-opening construction-defectattorneys, attorneys,isisan anessential essentialtool tool construction-defect forboard boardmembers memberswho whoneed needtotounderstand understand for thelegal legalprocess. process. the
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step-by-stepguide guidetotothe therules rulesfor formeetings meetings AAstep-by-step yourassociation, association,the thecurrent currentand andofficial official ofofyour manualadopted adoptedby bymost mostorganizations organizationstotogovgovmanual erntheir theirmeetings. meetings.This Thisguide guidewill willprovide providemany many ern meetingprocedures proceduresnot notcovered coveredby bythe theassociaassociameeting tionbylaws bylawsororother othergoverning governingdocuments. documents. tion
LEADING WITH EXCEPTIONAL LEGAL TALENT EXTENSIVE RESOURCES AND DECADES OF EXPERIENCE ` Comprehensive Representation for Community Associations ` Complementary Construction Defect Investigation ` Construction Law and Dispute Resolution ` Business and Real Estate Law Our law professionals are highly experienced community association and construction law attorneys, and bring a thorough understanding of our clients’ issues and creative solutions for their legal needs. In addition to dealing with the legal problems of condominium and homeowners associations, we also defend associations and their boards of directors against third party claims for personal injury and property loss as well as directors’ and officers’ liability, and we assist our clients in maximizing insurance claims for damages to buildings and common area. Call us for more information on our Free No-Cost Community CheckUp and our Complimentary Construction Defect Investigation.
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