HOA Frequently Asked Questions

The attorneys at Epsten Grinnell & Howell believe that it is important that clients have an understanding of the topics and news that can impact them on a day-to-day basis. To that end, we offer the answers to these frequently asked questions.

Senior & Fair Housing

1. Must we exclude children from the community?

   Under federal law, the community must show (1) at least 80% of the occupied units are occupied by at least one person 55 years of age or older, (2) that the community publishes and adheres to written policies and procedures which demonstrate and intend to provide housing for older persons, and (3) the community must verify the ages of occupants in compliance with rules to be published by HUD (the Department of Housing and Urban Development). California law imposes different requirements, and also distinguishes between housing in Riverside County and housing in other areas in California. California Law regulates both the design of senior communities, and the ages and relationships of persons residing in senior communities.

2. What must a community do to show or prove it is a senior community?

   What a senior community must do is enforce the age restrictions in its CC&Rs. Typically children do not qualify to reside permanently in 55+ communities though occasionally a disabled child may qualify. Further, children may visit for periods of up to 60 days.

Employment Law

3. Who enforces the injury and illness prevention programs and what are the components of the Division’s evaluation?

   The Division of Occupational Safety and Health (CAL-OSHA) enforces the program. The primary components of the Division’s evaluation of effectiveness are: (1) Responsibility, (2) Compliance, (3) Communication, (4) Hazard Assessment, (5) Procedure for Accidents/Exposure Investigation, (6) Hazard Correction, (7) Training and Instruction, (8) Records Keeping and (9) Labor/Management Safety and Health Committees.

4. How do I find out how to implement an injury and illness program?

   The California Division of Occupational Safety and Health (CAL-OSHA) publish model programs for employers with seasonal workers or employees in non-high-hazard job classifications. The model plans are currently available from CAL-OSHA, along with a list of non high-hazard industries.

5. Our organization only employs an onsite manager and several office workers. Does our organization have to have an injury and illness prevention program?

   Yes. However, in 1993, Governor Wilson enacted reforms to make the law less burdensome on low-hazard industries with a low number of employees. Thus, businesses with 20 or fewer employees, who are not on the list of high-hazard industries will be relieved of many of the burdensome record keeping requirements. Those employers will be required to keep only limited written records such as the name of the person or persons responsible for implementing the program, records of periodic inspections and records of employee training.

6. What is the purpose for the injury and illness prevention program?

   The law was enacted to ensure that all employees comply with safe and healthful work practices as set forth in the employer’s written injury and illness program.

7. I have heard that California employers should have an injury and illness program. Is this true and what is the authority for such a program?

   Yes. In 1989 the California legislature enacted Senate Bill 198 which became effective in July 1991. The authority for the injury and illness prevention program is found in California Labor Code section 6401.7 and Title 8, California Code of Regulations section 3203.

8. Is this an exhaustive list of the types of things that can or should be in an employee handbook?

   No. It is important to tailor your employee handbook to the size of your workforce and the job classifications of your employees. Additional policies such as orientation periods, performance evaluations, “open-door” policies, employment classifications, personnel records, punctuality and attendance, bulletin boards, jury duty, conflicts of interest, dress codes, trade secrets and confidentiality requirements, drugs/alcohol policies and bonus programs are often desirable to be included in employee handbooks, depending on your “audience.” It is also important to have employees acknowledge separately and sign for some policies such as sexual harassment, confidentiality and trade secrets and arbitration outside the parameters of the handbook. However, it is permissible to also discuss these topics within the employee handbook.

9. My organization does not provide benefits such as medical benefits or a pension plan. Since we do not provide such benefits, do we really need to have an employee handbook?

   Yes, Even though you may not provide those types of benefits, it is likely that you have policies concerning holidays, sick leave and other leaves of absences which are proper topics for an employee handbook. Additionally, topics such as equal employment opportunity, work schedules, breaks, meal periods, work week and work day requirements, overtime pay, work safety rules and employee conduct in the workplace are all valid topics for an employee handbook. Other policies, such as those covering sexual harassment and prohibiting retaliation for complaining or assisting another to complaint about unlawful workplace practices are required by law.

10. I have both exempt and non-exempt employees in my work force. Should I have separate handbooks for each type of employee?

    No. A properly drafted employee handbook can cover both exempt and non-exempt employees. However, there is nothing wrong with having separate handbooks for exempt and non-exempt employees.

11. How do I avoid the employee handbook becoming a contract of employment?

    The best and simplest way is to have each employee sign an acknowledgment for receipt of the handbook in which the employee agrees that the handbook is not a contract of employment and reaffirming the “at-will” employment relationship. Although an employee handbook is a valuable tool to set forth important policies and procedures in the workplace, it is important that any signed acknowledgment of the receipt of the handbook by the employee establish the handbook is not a contract of employment so as not to erode the “at-will” employment relationship presumed under California Labor Code section 2922. Additionally, having employees sign an employment application at the time they are seeking employment with an organization with “at-will” language would further solidify the “at-will” employment relationship.

12. What is wrong with an employee handbook being a contract of employment?

    If the handbook is determined to be a contract of employment, the employees may claim that they are not “at-will” employees, and that they can only be terminated pursuant to the policies contained in the employee handbook. In other words, they may claim there must be just cause to terminate them. Moreover, the organization’s hands will be tied when it wants to change policies or benefits outlined in the handbook.

13. The president of our organization, a lawyer, is insisting on an employee handbook, and he wants the handbook to contain a mandatory arbitration clause for employment disputes. Is this a good idea?

    Because submission to arbitration in an employment dispute is by its very essence contractual, such a mandatory arbitration provision should be set forth in a separate agreement between the employee and the employer. Placing the arbitration clause in the employee handbook will likely result in the provision being ruled unenforceable due to the fact that as an employer, you do not want your employee handbook determined to be a contract of employment.

14. Our organization employs between five and seven employees annually. With so few employees, why would I ever need an employee handbook?

    Under California law, any employer with five or more employees is subject to the California discrimination statutes. As such, the employee handbook is a valuable tool in setting forth an organization’s non-discrimination policies. Even if an organization has fewer then five employees, an employee handbook setting forth non-discrimination policies is a good idea due to the fact that an employer can be sued for discrimination pursuant to the California Constitution for various types of discrimination including race and sex discrimination.

15. I have several employees who are paid a monthly salary. At the time of hire, each employee agreed to be paid on this basis. Recently one of the employees informed me that if she was again required to work weekends or after closing hours during the week, she would expect to be paid overtime. Since she agreed to be a salaried employee, do I have to pay her overtime?

    Employees who are not exempt from the overtime laws are entitled to be paid a premium for all overtime hours worked. Whether an employee is exempt is determined by the duties performed and qualifications of the employee, not the fact that the employee is paid on a salary basis. Employees and employers cannot agree to avoid the payment of overtime wages to which the employee is entitled. Employers who misclassify employees face significant and expensive consequences.

16. Our company and one of our managers were sued by a former female employee for sexual harassment. Must the company pay for an attorney to represent the manager even though we think the manager behaved egregiously?

    Your company is required to indemnify the manager for any losses resulting from the performance of his duties. If you feel his behavior was outside the scope of his duties and contrary to company policy, you could take the position that he must retain his own attorney. However, this may not be wise if you need his cooperation in defense of the company.

General Counsel

17. How should an Association memorialize these restrictions?

    The restrictions on the number of occupants in units (both non-rental and rental) should be memorialized in the CC&Rs. Since an amendment to the CC&Rs requires the consent of the owners, the arguments of dissenting owners are less forceful than would be the case if the restrictions were solely within an Association’s rules. Moreover, the CC&R amendments are recorded, providing notice to incoming owners of the limitations on their ability to rent units within the Association.

18. Can an Association limit the number of occupants in a rental unit?

    Yes. Recent cases concerning this issue suggest that the Association ought to be able to play an active role here. The major stumbling block is the Federal Fair Housing Act, which prohibits restrictions discriminating against families with children. Restrictions on the number of occupants within a unit may have a disparate impact on families with children, though the Association is cautioned never to concede this point. On the other hand, the Act accords a presumption of reasonableness to local occupancy restrictions such as municipal ordinances limiting the number of residents in housing. In 1996, the court in Pfaff v. HUD indicated that “reasonable occupancy restrictions: by a private lessor are presumptively valid. In general, local ordinances take the form of “two per bedroom, plus one” types of restrictions. If the governing documents track such restrictions, they are likely to be upheld.

19. Do Community Associations have to pay taxes on common areas?

    No. Revenue and Taxation Code (“R&T Code”) Section 2188.5 provides that the value of any common area owned by an Association is presumed to be part of the value of each owner’s home in the development, so it should not be separately assessed. We have found a surprising number of Associations that are still paying taxes on their common areas, some for many decades. Based on this statute, we have been successful in eliminating the taxes on a number of Associations in various counties around Southern California. Usually we have been able to get refunds of taxes paid, but a statute limits recovery to the four years prior to the date of challenging the taxes.

20. If the son of an owner harasses another owner of a condominium unit, doesn’t the association have a duty to intervene? Should the owner be notified that his son’s behavior will not be tolerated? Should the association obtain a temporary restraining order, since the individual being harassed has already successfully obtained one?

    The Board of Directors has a duty to enforce the association’s governing documents. Most governing documents contain provisions prohibiting nuisances or annoyances and stating that violations of laws or codes are violations of the CC&R’s. Under these types of provisions, the courts have found that a community association has a duty to try to intervene when one resident unlawfully harasses another. The steps the association must take will vary depending upon the individual situation. At a minimum, the owner of the unit should be notified of the problem and asked to take steps to stop the harassing behavior. Depending upon the circumstances, the association may need to attempt to mediate the dispute between the residents. If the circumstances support obtaining a temporary restraining order, this is certainly one option available to the association. Keep in mind, however, that the fact that the individual being harassed is able to successfully obtain a temporary restraining order does not necessarily mean that the association will have the same success. The association is in a different position in the situation than the individual being harassed and the court will look at the association’s petition differently than that of the individual. The association’s ability to obtain a temporary restraining order will depend on the specific facts and circumstances of the situation. It may be much easier for the owner being harassed to obtain the restraining order than for the association to do so.

21. If an owner does not appear for a hearing, should the Board hold the hearing and impose a fine?

    When imposing a fine or any other discipline, the Board must provide a hearing notice and an opportunity for a hearing. Then, regardless of whether the owner appears, the Board should hold the hearing, consider any evidence presented to it, by the owner, by witnesses to the incident or violation, and any other information provided. After considering any and all information submitted, the Board should then make a decision whether to impose a fine. As long as the owner was properly notified of the hearing, the Board of Directors may proceed to hold the hearing, even if the owner does not appear. Civil Code section 1363 contains specific notice and hearing requirements the Board of Directors must follow prior to considering or imposing any discipline against a member. Two notices to the member are required. First, the Board must notify the member, in writing, by either personal delivery or first class mail, at least 10 days prior to the meeting where the Board will consider discipline against the member. This notice must contain at least the date, time and place of the meeting, the nature of the alleged violation, and a statement that the member has a right to attend the meeting and address the Board. Second, if the Board decides to impose discipline against a member, the Board must also provide notification of the disciplinary action within 15 days following the hearing. Disciplinary action is not effective unless the Board follows these requirements. Please remember also that prior to imposing any fines, Civil Code section 1363 requires that the Board of Directors adopt a fine schedule and distribute it to the Association members.

22. May a homeowner force our association to move a tree which he claims is blocking his view when in fact his view is reduced by a large piece of furniture in his unit? Also, his second window facing the tree is completely covered inside the unit.

    The right to a view, also called an “easement for light and air,” is enforceable only, if set forth in a recorded instrument. If no right to a view is provided in such an instrument, the association need not act upon the request. If the owner does have a protected right to a view, the Association is faced with the task of making a subjective determination of the degree of impairment. Frequently the view obstruction must be “material” or “substantial” to be prohibited. Accordingly, the Board of Directors will need to develop written guidelines which (1) define exactly what “view” will be protected (i.e., the view of what), and (2) what constitutes, for example, “material interference.” Dealing with such a subjective issue is difficult, but it can be accomplished, as long some standards are developed. The Board must utilize those standards, along with the facts regarding the piece of furniture and the covered second window, to determine whether the particular tree is what is “materially” interfering with the view.

23. What do you recommend to minimize an association’s liability for a steep common-area slope which is not conducive to walking, but is accessible by residents and non-residents?

    It must be remembered that every homeowner also owns the common area, or has an easement for its use. Accordingly, the association has no power to prohibit these “owners” from using their own property or their own easements. Liability can be minimized only through the use of warning signs in the steep area, and written warnings directly to all residents through, for example, newsletters or billing inserts. Without the right to prohibit access, warnings are the only reasonable alternative.

24. Relative to requested architectural approvals, does the fact that a similar request had been approved (either by the failure of the Architectural Review Committee to act within a defined time period or by a previously-elected Committee’s action) require the Board or Committee to approve the current request, if they do not wish to do so?

    To allow one homeowner to install an improvement, and to disallow another homeowner to do so suggests either discrimination or arbitrariness. To defend against these charges, the Board would have to find some logical and reasonable basis to distinguish between the two requests, and thereby justify a different decision.

    If there is no way to distinguish the two situations, the Board could assert either (1) there has been a change in the architectural rules (which it would have to prove), or (2) there has been a mistake. While this latter “excuse” has no legal authority, it would seem logical for a court to recognize that mistakes can be made, and that it is unfair to force the Association to adhere to a given policy just because of a mistake. Of course, there would have to be some proof that a mistake was in fact made, such as an oversight in calendaring the deadline for making a decision.

25. May a Board institute litigation without submittal to a vote of the owners?

    In most cases, the Board of Directors may institute a lawsuit without obtaining the approval of the association members. Such decisions are entirely within the discretion of the Board of Directors. The association has standing to bring a lawsuit in its own name without joining with it the individual owners of the lots or unit under Civil Code Section 1368.3. Section 383 states that an association has standing to bring a lawsuit in its own name in matters pertaining to (1) enforcement of the governing documents; (2) damage to the common areas; (3) damage to the separate interests, which the association is obligated to maintain or repair; and (4) damage to the separate interests which arises out of, or is integrally related to damage to the common areas or separate interests, that the association is obligated to maintain or repair.
    If a lawsuit to be brought by the association is a suit against a declarant or other developer of the project for construction defects, the Board of Directors has certain obligations under the Civil Code to hold a meeting of the association members to discuss the problems that may lead to the filing of a civil action. Please note also that prior to the filing of certain types of civil actions related to the enforcement of the governing documents, the association or any other persons wishing to bring that civil action, have an obligation to comply with the requirements of Civil Code sections 1369.510-1369.590 by offering to mediate or arbitrate the dispute.

Assessment Collection - Liens

26. Is it necessary to record liens to secure delinquent assessment accounts?

    We understand with the new laws in effect now requiring that Association Boards of Directors specifically authorize the recordation of liens, that some Boards may be hesitant to authorize liens. For example, Boards may instead wish to contact delinquent owners via telephone and in writing to encourage them to pay their assessment accounts. It is fine to send preliminary notices to encourage homeowners to bring their delinquent assessment accounts current prior to recording liens. However, this alone will not protect the Association in the event a homeowner files bankruptcy or transfers title to the property. If the homeowner files bankruptcy and a lien has already been recorded against the property, the Association will be classified as a secured creditor, and has a better chance of being paid through the bankruptcy. In the absence of a pre-bankruptcy lien, the Association would be an unsecured creditor, and the debt may be discharged by the bankruptcy, without payment to the Association. Additionally, if an owner transfers title to the property, the new owner would only be responsible for assessments from the date they took title forward, unless a lien had been recorded against the property. If a lien had been recorded, the new owner would take title subject to the lien and would be responsible for paying all assessments and other charges secured by the lien, if they wish to avoid foreclosure or want the lien released. It may not be desirable or possible to proceed with foreclosure of the recorded liens immediately. However, as set forth above, recording liens will secure the Association. Thus, when an assessment debt reaches a point where the Board would not be comfortable writing it off, we recommend authorizing recordation of a lien. As set forth above, it is fine to send preliminary notices, encouraging homeowners to pay their assessment accounts, in order to avoid recordation of a lien. Generally, we recommend that such communications be in writing. When communications are verbal, Board members and Association managers must be especially careful not to run afoul of the fair debt collection laws, which govern communications regarding debt collection.