CLAC CORNER - September 8, 2011

END of SESSION UPDATE

The first half of the biennial legislative session will have ended before you read this. Nevertheless, there are a few important bills for you to be aware of and plan to implement.

Perhaps most important are two bills that directly effect HOA operations. The first is Senate Bill 563 (by Mark DeSaulnier, Chairman of the Senate Transportation and Housing Committee). Essentially the bill, which takes effect January 1, 2012, prevents boards from meeting without notice to members. It was asserted in the hearings that some boards met without notifying the members of the time, place and agenda items and were therefor deemed to be less than transparent. Initially, the bill even prevented directors from even speaking to one another about association matters outside of a noticed meeting. However, CAI-CLAC lobbied the bill for months and it was finally changed to not only delete that provision but to allow for electronic consent on matters brought up in emergency meetings. While this measure is of concern to some, the larger issue of “secret meetings vs. transparent operations” prevailed. All boards should take notice!

Assembly Bill 771 (Betsy Butler) was sponsored by the California Association of Realtors and initially capped fees that may be charged by parties which provide documents upon sale or transfer of a separate interest. This bill was lobbied heavily as well and it was ultimately revised to remove the cap. In addition, the bill enumerates the items which are to be provided as well as an estimated fee for each. This bill improves existing law because it provides for better disclosures to all parties in a transaction. As finally amended, there was no opposition and the Governor quickly signed it.

Two bills have limited application but you need to know about them. Senate Bill 209 (Ellen Corbett) strongly encourages associations to allow and install electric vehicle charging stations upon a member’s request. There are numerous conditions which must be adhered to by the member including insurance covering the association’s common areas and damages to other property, electric bills to be paid by the member, and the member must disclose these conditions to buyers who shall also be responsible for them. As such, I expect few applications for such installations. (The bill, although signed, has serious flaws because it violates the constitution’s provisions regarding a “taking” of real property as well as a conflict with existing law which requires a ⅔ vote of the members to grant an exclusive use common area for such installations. We made these flaws known to the Governor who agreed and while signing SB 209 also penned a “signing message” intending to fix these flaws. SB 880 was amended on September 7 to do just that, but as I write this it is still pending a hearing.)

Senate Bill 561 (Corbett) requires delinquent owners’ payments to be credited to the HOA prior to the debt collector. This would essentially curtail the ability of the HOA to ever get the money it is owed because associations are not debt collectors and licensed collectors will not work for free which may happen if their fees are last to be paid. We opposed the bill and it has been made a “two year” bill meaning that it will be held in committee until January.

Senate Bill 150 (Lou Correa) deals with associations that attempt to limit the number of rental units. As signed into law, it is imperfect and associations may wish to review their governing documents in order to amend them to lawfully avoid some portions of SB 150; this should be done before January 1, 2012.

CAI-CLAC is continually on guard for you, helping to save you money, keeping your association liability minimal, and in general, helping your communities‘ market value remain as high as it can be while fostering harmonious communities. More next month.

Skip Daum
CAI-CLAC Legislative Advocate Since 1994
℅ Capitol Communications Group
________________________________________________________________________________________

May 23, 2011 - CLAC Moment

This week is a critical week for hundreds of pending legislative bills as they must pass or become “two year” bills which means they may be heard in committee after December 31.

Important bills for us are:

SB 561 … This bill requires all monies paid to debt collectors to go directly to the HOA. The problem is, once the debts to our associations are paid, the debt collector has no real chance to collect its fees from the debtor. So, the HOA (all owners) will be asked to pay them. The bill passed the Senate … no surprise as its author is the Senate Majority Leader.

CAI-CLAC opposes the bill.

SB 563 … Another bad bill. This one prohibits ALL actions by Boards without a 4 day notice inviting all members to the meeting. Obviously that would cripple operations and result in costly delays. This bill passed the Senate Housing Committee … no surprise again as its author Chairs that committee. We oppose this bill as well and are working on possible amendments.

SB 759 … another try at restricting an association’s right to prohibit the installation of artificial turf despite the problems of “turf toxicity” as proven during litigation headed up by former Attorney General Jerry Brown. We secured a veto on the bill (AB 1793) last year… but “it’s baaaaack”. We oppose for the reasons of toxicity and removal of an association’s right to govern itself.

SB 209 … We have been very successful in amending this bill which promotes the use of electric vehicles. The installation of charging stations was the key problem for us but we have greatly reduced its impact on our rights to restrict installing them in inappropriate locations; we also amended the bill to require that the owners be responsible for all costs, including installation, utility bills, and removal. We also secured an amendment that the charging station be disclosed to prospective buyers. As such, we may soon remove our opposition to the bill as originally written.

More later… but for now, to receive our free email alerts, go to www.CAIcalif.organd sign up for free CLACTRAC alerts under the “Legislative Resources” tab.

CLAC appreciates your being involved in law making ... it’s to our common good to do so!

February 25, 2011 - CLAC Corner
Proposed HOA Legislation

            As of today, there are 2,431 bills and resolutions in the legislative meat grinder.  About three dozen effect up to 40,000 homeowners associations (HOA) and therefor one of every four Californians who own property or reside in them.  Presumably, this means you!

Sellers' Disclosures to Buyers

            Sellers of residential property (including unimproved lots) are required to provide buyers a raft of documents including the HOA's bylaws, covenants-conditions-and restrictions (CCRs), the HOA's budget, assessment and fine schedules, verification of any pending lawsuits, reserve account status, and other items.  Sellers, or their agents, request these documents to be provided and associations have 10 days to do so in order to not delay escrow closing.  All that seems fair.

            However, actually procuring the documents can be very tedious, especially for HOAs that aren't professionally staffed or managed.  Very typically, associations ask 3rd parties to round up the recorded documents and reports.  Law requires that the HOA may only charge a fee that is based on 'actual costs' and is 'reasonable'.  The law does not apply to 3rd parties that provide the numerous documents and so they also charge a fee.  In fact, the Berryman v. Merit case solidified the law by ruling that 3rd parties are not governed by the HOA statutes and they may charge whatever fee they wish, as independent businesses.  These fees can be paid by sellers, buyers and real estate agents.

            The California Association of REALTORS is sponsoring a bill that would effectively cap the fee charged by 3rd parties, eliminating their business profit.  Result:  the independent document providers go out of business and sellers are at risk of not properly disclosing.   

            This bill would also require an association or an agent of the association to provide a written estimate of the fees that will be assessed for the provision of the documents.

Electric Charging Stations for Vehicles

            Another bill provides that any covenant, restriction, or condition contained in any deed, contract, or governing document that effectively prohibits or restricts the installation or use of an electrical vehicle charging station is void and unenforceable. The bill would authorize an association to impose reasonable restrictions on those stations, and requires that the approval process follow the HOA's architectural approval process.  An association that violates the bill's provisions would be liable for damages and a civil penalty of $1,000 per occurrence.  

            Numerous issues arise:  a) who shall pay for installing these stations?   b) who is liable for injury from installation and use of the plug receptacles?   c) who shall pay the electric bill?   d) shall the bill apply to both separately owned units and common areas?  

Delinquent Assessment Collection Fees

            One bill requires any 3rd party acting to collect payments or assessments on behalf of an association to comply with the same requirements imposed on the association; i.e., the agreements between the owner and the HOA to pay past due assessments may not be altered by the debt collector. This is an attempt to stop the debt collector from requiring owners to nullify their agreement obligations and allow the collector to be paid first out of any payments. The bill specifies that a waiver by an owner of his or her rights and a waiver by an association of its responsibilities are void as contrary to public policy, and would also prohibit a foreclosure proceeding from being initiated or proceeding if it is based on an agreement that is void. The bill would prohibit a third party from acting as a trustee in a foreclosure proceeding.

Board Actions Between Meetings

            Based on only 2 reported complaints, this bill was introduced.  It permits meetings of the board of directors to be conducted by teleconference but would require that a teleconference meeting be conducted in a manner that protects the rights of members of the association. The bill would require that the notice of a teleconference meeting identify at least one physical location so that members of the association may attend and would require that at least one member of the board of directors be present at that location. The bill would prohibit the board of directors from hearing, discussing, deliberating, or taking action on any item of business outside of a meeting or an emergency meeting, and would provide that a meeting is not a series of electronic transmissions, such as e-mail, except to conduct an emergency meeting. The bill would repeal provisions that generally allow the board of directors to consider any proper matter at a meeting even if it has not been properly noticed as an action item for the meeting.

            Obviously this impacts almost every HOA board as decisions need to be made expeditiously.  Minor and emergency decisions would be delayed; snow birds living in cold climates who own units in sunny California and who only convene their board meetings twice per year would now have to meet more frequently as a board, and only at scheduled times. 

            I'll keep an eye on these bills, and dozens of others for you as they are amended and voted upon.  But be sure to attend CAI's Legislative Day in the Capitol and other educational seminars on April 10-11!  Go here for the details and registration form:  http://www.caicalif.org

Author Skip Daum lives in a homeowners association in Truckee, and has been retained to represent the Community Associations Institute (CAI) in the State Legislature for the last 17 years. He started Capitol Communications, a legislative advocacy firm, in 1974. CAI's California Legislative Action Committee (CLAC) web site is www.CAICalif.org.

_________________________________________________________________________________________
January, 2011 CLAC Corner
Look Out!  The Legislators Are Back

          Although only a few hundred bills have been introduced thus far there will be upwards of 2,000 by February 18, the deadline for introduction of bills. 

          Here's what we expect to see:

          1.       A bill that would limit the fees charged by third parties for retrieval, production and delivery of documents upon sale or transfer.  Sponsored by the CA Association of REALTORS ®, it is in reaction to an alleged incident where a firm charged $1,000.  Current law (Civil Code 1368.1) already limits what community associations may charge for these services and documents to "actual and reasonable" costs.  This bill would extend that definition to all others.

          2.       A bill that completely rewrites the Davis Stirling Act.  This product has been in the making for several years and was drafted by the California Law Revision Commission.  We have been integrally involved in the process by attending the CLRC's meetings and submitting numerous opinions over the years.  We expect to support the measure as it is intended to make the Act more readable and understandable.

          3.       Water� ahh yes, there's always a flood of water conservation bills.  Last year we stopped a bill that would have required meters for total water use by  association members but failed to allow the HOA to bill owners for their individual usage.  We also aided in securing a veto on a bill that prohibited an association from restricting installations of artificial turf.  This bill will probably be reintroduced as its sponsor is a group of municipal water agencies.

          4.       Assembly Bill 20 (Dr. Halderman) requires plaintiff attorneys that are soliciting clients in construction defect cases to disclose that there is no guarantee that there will be any financial recovery, and further that any recovery must first go toward satisfying any liens on the property.  It also requires the attorneys to disclose all the current requirements for disclosures that sellers must provide to buyers before transferring a property.  It also provides for attorney licensure discipline if the attorney fails to provide this information.    

          5.       Foreclosure issues will command attention especially in regard to the degradation of communities as assessments are not timely paid; this may bleed into the old "super lien" or "priority lien" issue.  Obviously lenders, title companies, escrow agents, REALTORS ®, seniors, and trustees� as well as CAI-CLAC� will be very much involved. 

          I'll keep you posted monthly on these bills and issues.  You may also get instant alerts by signing up for our FREE email.  Simply go to www.caicalif.org and scroll down under "Legislative News" to subscribe to our "CLAC-TRAC" news.  Your email address will NOT be used for any other purpose nor sold to others so this is both safe and confidential.

          Finally, MARK YOUR CALENDARS to be sure to participate in person on April 10 and 11� our annual gatherings at the Capitol.  Educational seminars are on Sunday and our Citizen Lobby day is Monday.  There you will get briefings on the bills and help me lobby your Assembly Member and Senator. 

          The California North Chapter of CAI is hoping you'll also attend its party on Saturday night, April 9.  Always a blast!  I'll see you there!

          Thank you for supporting CAI-CLAC� the largest association of associations in California and the nation.      

Author Skip Daum, President of Capitol Communications Group, has been the lobbyist for CAI-CLAC since 1994.