Board Meetings

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Board Meetings Defined

Board “meetings” are defined in Civil Code section 4090[1] and must be open to members with limited exceptions for executive sessions (Civ. Code §§ 4090, 4900-4935.)

Board Action Not Permitted Outside of Board Meetings

Board meetings may not be conducted by email or other electronic transmissions except when very limited special criteria are met. (Civ. Code § 4910.)  Teleconferences are permissible, but everyone, including owners present, must be able to hear one another. (Civ. Code § 4090.) (See footnote 1.)

Executive Session Matters Noted in Minutes

Any matter discussed in executive session must be generally noted in the minutes of the immediately following meeting that is open to the entire membership. (Civ. Code § 4935(e).]

Notice of and Agendas for Board Meetings

Except for an emergency meeting and unless the bylaws provide for a longer time period, the association must give notice to members of board meetings at least four (4) days before an open meeting and two (2) days before an executive session. The board must post the agenda for the meeting with the notice. Notices of Board meetings may be given by “general delivery” as described in Civil Code section 4045. (Civ. Code § 4920.) The board may not consider items not listed on the agenda except for specified “emergencies.” See Civil Code section 4930 for details. However, the association must send notice by “individual delivery” as described in Civil Code section 4040 to any member who requests notice of board meetings by “individual delivery.” This may include delivery by email or other forms of electronic delivery if the member consents. (Civ. Code § 4045(b).)

Notice to Directors of Special Board Meetings

Special board meetings require four days’ notice to directors by first-class mail or 48 hours’ notice delivered personally or by electronic communication as defined in the Corporations Code. (Corp. Code §§ 20 & 7211.)

Emergency Board Meetings

Emergency board meetings, without required prior notice, are available only as specified in the law. (Civ. Code § 4923.) In an emergency, try to give the best notice possible under the circumstances. Even for an emergency that meets the statutory criteria, an open meeting must still be open for owners.

Board and Member Meeting Minutes

Minutes of member meetings and open board meetings must be made available to members as provided in our “Membership Rights Checklist.”

Board Agenda Required for Discussion and Action

Except as otherwise described in Civil Code section 4930 (b)-(e), the board may not discuss or take any action on any item at a nonemergency meeting unless the item was placed on the agenda.  Notwithstanding this requirement, the board may take action on any item of business not appearing on the agenda if concern conditions are met.  (See Civil Code section 4930(d) for more details.)

 

[1] “Board meeting” means either of the following:

(a) A congregation, at the same time and place, of a sufficient number of directors to establish a quorum of the board, to hear, discuss, or deliberate upon any item of business that is within the authority of the board.

(b) A teleconference, where a sufficient number of directors to establish a quorum of the board, in different locations, are connected by electronic means, through audio or video, or both. A teleconference meeting shall be conducted in a manner that protects the rights of members of the association and otherwise complies with the requirements of this act. Except for a meeting that will be held solely in executive session, the notice of the teleconference meeting shall identify at least one physical location so that members of the association may attend, and at least one director or a person designated by the board shall be present at that location. Participation by directors in a teleconference meeting constitutes presence at that meeting as long as all directors participating are able to hear one another, as well as members of the association speaking on matters before the board. (Civ. Code § 4090.)

Annual Disclosures, Mandatory

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  1. Annual Notice of Owner Information.

At least 30 days prior to the association mailing its required annual budget report and annual policy statement, an association must update certain owner information in its records.  [CC §4041(b)] To obtain this updated information, an association must solicit the following information from the owners: (1) the address(es) to which association notice are to be delivered; (2) an alternate or secondary address to which association notices are to be delivered; (3) the name and address of the owner’s legal representative, if any, including any person with the owner’s power of attorney or other person who can be contacted in the event of the owner’s extended absence from the separate interest; and (4) whether the separate interest is owner-occupied, rented out, if the parcel is developed but vacant, or if the parcel is undeveloped land.  [CC §4041(a)] For mixed-use associations where a portion of the association is subject to a time-share plan, the association must annually obtain from the time-share plan association a copy of the list of owners’ names and addresses and enter that information into its records. [CC§4041(d)] If an owner fails to provide their primary and alternate secondary address, if applicable, the last property address provided in writing by the owner, or if none, the property address within the association community shall be deemed to be the address to which association notices are to be delivered. [CC §4041(c)]

  1. Annual Budget Report.

Between 30 and 90 days before the new fiscal year begins, an association must prepare an annual budget report (“Report”) and distribute it to the owners. [CC §5300(a)] [As an alternative to distributing the full Annual Budget Report under CC §5300 or the Annual Policy Statement under CC §5310, the association may distribute only a summary of the items required by CC §5300 or CC §5310 [CC §5320. However, the members must be given a notice, in at least 10-point boldface type on the front page of each summary with instructions for how a member can request a complete copy of either report at no cost to the member. If a member requests a copy of the full report required by CC §5320, the association must mail a copy to the member presumably as provided for “individual delivery” under CC §4040.] Compliance with this requirement, except for the summary of the reserve funding plan required by CC §5300(b)(3) is necessary for associations to utilize the 20%/5% assessment increase provisions described, paragraph a, below. [CC §5300(b)(1)] This report must contain the information below. See the respective statutes for details.

  • Annual Budget. The Report must include an annual budget prepared on an accrual basis. [CC §5300(b)(1)]
  • Reserve Summary. The Report must include a summary of the association’s reserves in boldface type and include the many details described in the statute [CC §§5300(b)(3) & 5565] and must disclose reserve study information in a specified format. [CC §§5300(e) & 5570] Where a community service organization (CSO) maintains major components of the association, the CSO must provide the association with information to do the reserve study. [CC §5580] Reserves include any funds received and not yet expended from a settlement or damage award arising out of any claim for construction or design defects. [CC §4177] Each association must report, as separate line items, either in the reserve study or in the annual review or audit, the amount of any such defect funds that have not yet been expended, and the expenditure or disposition of such funds, including any amounts expended for the direct or indirect costs for repairing construction or design defects. [CC §5565(b)(3)]
  • Reserve Funding Plan Summary and Full Reserve Study. The Report must include a summary of the reserve funding plan adopted by the Board [CC §5550(b)(5)] and include notice to members that the full reserve study, including the reserve funding plan, is available to members and that the association must provide it upon request. [CC §5565(b)(3)]
  • Statement of Decision(s) to Defer Repairs. The Report must include a statement of whether the board has determined to defer or not undertake repairs or replacement of any major component with a remaining life of 30 years of less, including a justification for the decision [CC §5300(b)(4)].
  • Statement of Possible Levy of Special Assessments. The Report must include a statement of whether the board has determined or anticipates the need to levy one or more special assessments to repair, replace, or restore any major component or to provide adequate reserves for doing so [CC §5300(b)(5)].
  • Statement of Method(s) for Funding Reserves. The Report must include a statement of the mechanism(s) by which the board will fund reserves [CC §5300(b)(6)].
  • Statement of Procedures Used to Calculate and Establish Reserves. The Report must include a statement addressing procedures used for calculation and establishment of reserves. The statement shall include reserve calculations made using the formula described in paragraph (4) of subdivision (b) of CC §5570, and may not assume a rate of return on cash reserves in excess of 2 percent above the discount rate published by the Federal Reserve Bank of San Francisco at the time the calculation was made [CC §5300(b)(7)].
  • Statement of any Outstanding Loans. The Report must include a statement of whether the association has any outstanding loans with an original term of more than one year. See statute for details. [CC §5300(b)(8)].
  • Summary of Insurance Policies. The Report must include a summary of the association’s (1) property, (2) general liability, (3) earthquake, (4) flood insurance and (5) fidelity policies, listing the carrier’s name, type of insurance, policy limits for each type and the deductibles. If the policy declaration page includes the required information, the association may use the declaration The Report must also include verbatim disclaimer language specified by the statute in at least 10-point bold type. [CC §5300(b)(9)] It may be worth adding to the insurance disclosures that the association policy (usually) does not cover alternate housing, moving and storage expenses, nor loss of owner’s personal property from fire and other losses, nor cover the owner’s liability for injuries on or in the owner’s separate interest.
  • Statement of FHA Certification Status by Condominiums. If the HOA is a condominium, the Report must contain a verbatim statement about whether the development is a condominium project and whether it is FHA certified. [CC §5300(b)(10)]
  • Statement of VA Certification Status by Condominiums. If the HOA is a condominium, the Report must contain a verbatim statement about whether the development is a condominium project and whether it is VA certified.  [CC §5300(b)(11)]
  • A Copy of Completed Charges for Documents Provided Disclosure. The Report must include a completed “Charges for Documents Provided” disclosure as described in CC §4528.  For purposes of the Report a “completed” “Charges For Documents Provided” disclosure means that the “Fee for Document” section of the form individually identifies the costs associated with providing each document listed on the form. [CC §5300(b)(12)]
  1. Issues Related to the Annual Budget Report
  • Assessment Limits. Without obtaining the approval of a majority of a quorum of members, pursuant to CC §4070, at member meeting or election, associations may not increase in regular assessments 20% above the regular assessment for the prior fiscal year and total special assessments at a rate of more than 5% of the association’s budgeted gross expenses during a given fiscal year. [CC §5605] Unless the association levied assessments based on taxable value in accordance with its governing documents before December 31, 2009, it may not do so thereafter, except where the association pays taxes on the separate interests and then only with respect to the taxes levied [CC §5625].
  • Increase in Assessments Disclosure. Associations must send notice of any increase in regular or special assessments, by individual notice, 30 to 60 days before the due date for the increase [CC §5615] and notify prospective purchasers of increases that have been approved but are not yet due. [CC §4525(a)(8)]
  • Detailed Reserve Study. At least every 3 years, conduct a reasonably detailed and competent visual inspection of the accessible components the association must maintain, repair, replace, or restore as part of a study of the association’s reserve account requirements (if the replacement cost of the components the association must maintain is at least one-half of the association’s fiscal budget for the last 3-year period, excluding reserves). Consult the statute for many detailed requirements. [CC §5550)]
  • Annual Reserve Study Adjustments. At least annually, review the reserve study and make any necessary adjustments. [CC §5550]
  • Reserve Procedures. In reserve studies, associations may not assume a rate of return in excess of 2% higher than the discount rate from the Federal Reserve Bank of San Francisco. [CC §5300(b)(7) & 5570]
  • Reserves Used for Litigation Expenses. At least quarterly, if the board uses any reserve funds to pay expenses for any litigation, make an accounting of all litigation expenses and make it available for inspection at the association’s office. Give the members written notice of (1) any decision to use reserves to pay for such litigation expenses and (2) the location of the accounting that is available for their inspection. [CC §5520; Corp. Code 5016]
  • Directors and Officers (D&O) Insurance. To obtain exemption from personal liability for volunteer directors, purchase both general liability and directors and officer’s liability insurance. The amount must be at least $500,000 for associations consisting of up to 100 separate interests and $1,000,000 for those associations consisting of more than 100 separate interests. [CC §5800]
  • Commercial General Liability (CGL) Insurance. If the association contains any property owned in common by the owners, then to prevent suit and joint and several liabilities against individual owners the association must purchase general liability coverage of $2,000,000 for associations consisting of 100 separate interests or fewer and $3,000,000 for those with more than 100 separate interests. [CC §5805]
  • Workers Compensation Insurance. Be sure that you have workers compensation insurance for employees and pay taxes withheld from employees pay when due.
  • Fidelity Bond Coverage. Associations are required to maintain fidelity bond coverage for its officers, directors and employees in an amount that is equal to or more than the amount of the association’s reserves plus total assessments for three months. The fidelity bond must also include computer fraud and funds transfer fraud. If your association uses a managing agent or a management company, your association’s fidelity bond coverage must be separate from the fidelity bond of the management company or managing agent and must also include dishonest acts by that person, entity and its employees. [CC §5806]
  • Notice to Members of Insurance Lapse, Non-renewal or Cancellation. Associations must also give “individual notice” to all members under CC §4040 of any lapse, non-renewal, or cancellation of coverage, or if there is a significant change in coverage, such as a reduction in coverage or limits or an increase in deductibles. If an association receives a nonrenewal notice for an insurance policy described in the annual budget report, then such association must immediately notify the membership if replacement coverage will not be in effect by the date the existing coverage lapses. [CC §5810] Carriers must provide a reason for any non-renewal of a policy. [Ins. Code §678].
  1. Annual Policy Statement.

Between 30 and 90 days before the new fiscal year begins, an association must distribute an annual policy statement to provide information to members about association policies. [CC §5310(a)] This report must contain the information below. See the respective statutes for details.

  • Official Communications to Association. The name and address of the person designated to receive official communications to the association as provided in CC §4035. [CC §5310(a)(1)]
  • Second Member Address. A statement explaining that a member may submit a request to have notices sent to up to two different specified addresses under CC 4040(b). [CC §5310(a)(2)]
  • Place for Posting a General Notice. The location, if any, designated for posting of a general notice under CC §4045(a)(3). [CC §5310(a)(3)]
  • Option to Receive Member Notices by Individual Delivery. Notice of a member’s right to receive general notices by individual delivery as provided in CC §4045(b). [CC §5310(a)(4)]
  • Right to Receive Meeting Minutes. Notice of a member’s right to receive copies of meeting minutes as provided in CC §4950(b). [CC §5310(a)(5)]
  • Assessment Collection Policies. The statement of assessment collection policies required by CC §5730. [CC §5310(a)(6)] This is the lengthy verbatim statement set forth in CC §5730 describing an association’s collection rights that must be printed in at least 12-point type. [CC §5730]
  • Policies for Enforcing Lien Rights. A statement describing the association’s policies and practices in enforcing lien rights or other legal remedies for default in the payment of assessments, in other words, its own “Collection Policy.” [CC §5310(a)(7)] The board must also notify the owners of the standards for payment plans, if any exist. [CC §5665(a)]
  • Association Discipline Policy. A statement describing the association’s discipline policy, if any, including any schedule of penalties for violations of the governing documents as provided in CC §5850. [CC §5310(a)(8)]
  • Summary of Dispute Resolution Procedures. A summary of dispute resolution procedures as required by CC §§5920 (IDR) and 5965 (ADR). [CC §5310(a)(9)]
  • Requirements for Architectural Approvals. A summary of any requirements for association approval of a physical change to property as provided in CC §4765, including the types of changes that require association approval and a copy of the procedure used to review and approve or disapprove a proposed change. [CC §4765] [CC §5310(a)(10)] If the governing documents require association approval of architectural changes, the association must provide a fair, reasonable and expeditious process for making architectural decisions. Associations may not impose fines or assessments against members for reducing or eliminating the watering of vegetation or lawns during any period for which the Governor or a local government has declared a state of emergency due to drought conditions. Governing document architectural requirements may not conflict with the water conservation requirements in CC §4735. They may no longer prohibit, or have the effect of prohibiting, artificial turf or other artificial surfaces resembling grass. [CC §4735]. Owners may use a “clothesline” or “drying rack”, as defined in the law, for drying clothes in the owner’s “backyard” (not defined). [CC §4750.01] Associations can no longer establish a general policy prohibiting the installation or use of a rooftop solar energy system for household purposes on the roof of the building in which an owner resides or a garage or carport adjacent to the building that has been assigned to an owner for his/her exclusive use.  [CC §4746]
  • Mailing Address for Overnight Payment. The mailing address for overnight payment of assessments as provided in CC §5655. [CC §5310(a)(11)]
  • Other Required or Optional Information. Any other information that is required by law or the governing documents. For items that require disclosure and that you may wish to include at the end of the Annual Policy Statement, see the paragraph, below, entitled “Other Mandatory Disclosure the Board May Wish to Disclose with the Annual Budget Report and Annual Policy Statement.” Some of these may require disclosure in a place other than the Annual Policy Statement. For optional items you may consider important to disclose to members but that may not be mandatory, also see the paragraph, below, entitled “Optional Disclosures the Board May Wish to Make with the Annual Budget Report and Annual Policy Statement.” [CC §5310(a)(12)]
  1. Issues Related to the Annual Policy Statement
  • Document Delivery Methods. The Board may deliver documents in any manner provided in CC §§4040 & 4045. [CC §§4040 & 4045]
  • Right to Annual Financial Report. The board must notify members (of incorporated associations) annually of their right to obtain an annual financial report upon written request. This report is similar to the auditor review required by CC §5300(b)(3), but it applies to corporations that have as little as $10,000 in gross annual receipts. [Corp. Code §8321]. Presumably the requirements of CC §5300(b)(3) are more extensive and control over Corp. Code §8321.
  • Monetary Penalty or Fine Disclosures. The board must distribute to all members any schedule of the monetary penalties adopted by the board to discipline members, whether committed by the owner, or the owner’s guests or invitees. The board must distribute it by individual delivery as provided in CC §4040. The board needs to do this only once per year pursuant to CC §5310(a)(8), although it must redistributed, if there are any changes. [CC §5850]
  • IDR and ADR Disclosures. Associations must have some procedure for informal, internal attempts to resolve disputes between the association and an owner. [CC §5900-5920] The board must also disclose its IDR (Internal Dispute Resolution) procedures in the annual policy statement. [CC §5920] If the board does not adopt its own IDR procedures, the statute contains default procedures in CC §5915 that will apply. Attorneys may assist either an association or a member at both ADR and IDR proceedings. [CC §§5910 & 5915] Associations must also include in the Annual Policy Statement at least a summary of the ADR (Alternative Dispute Resolution) procedures used under CC §5925-5965. It must contain the verbatim language found in CC §5965(a). This summary must also be disclosed in the annual policy statement. [CC §5965].
  1. Other Mandatory Disclosures the Board May Wish to Disclose with the Annual Budget Report and Annual Policy Statement
  • Preparation of an Annual Audit or Review. This statement or disclosure is not required, but it should help to alert the board of the need to get this task done within 120 days after the end of the fiscal year. An association must prepare at least a “review,” or possibly an “audit” if required by the governing documents, if its gross income for the year is $75,000 or more. [CC §5305]. The review or audit must be distributed to members by individual delivery within 120 days after the close of the fiscal year. If an incorporated association has at least $10,000 in income for the year, it must provide at least the information required by Corporations Code §8321 within 120 days after the end of the fiscal year. Also, if there are any disclosures required by Corp. Code §8322 (such as information about material financial interests, loans, guarantees, indemnifications, etc.) involving officers and directors as required by Corporations Code §8322, that must be disclosed annually as well.
  • Asbestos Disclosures. Under Health & Safety (H&S) Code Section 25915.2, associations must give or post notice about any asbestos known to exist in the project. See footnote 16 in CC §4525. [H&S Code §25915.2] Annual written notice and/or signs on the premises may be required to be posted. You should consult with legal counsel for assistance in preparing this disclosure for compliance with the requirements of the H&S Code.
  • Disclosure and Accounting of Reserves Borrowed for Litigation. When the Board temporarily borrows reserve funds to pay for litigation under CC §5510(b), the association must make an accounting of expenses related to the litigation on at least a quarterly basis. The accounting must be made available for inspection by members of the association at the association’s office. [CC §5520] A statement to this effect is not required, but if an association discloses this, it is more likely to do the accounting each quarter.
  • Rental/Lease Restriction Disclosures. If an association’s governing documents prohibit the rental or leasing of any separate interest to a renter, lessee or tenant [CC §4740], an owner is required to disclose this to prospective purchasers [CC §4525(a)(9)], but the association is required to provide that information to the owner on request to provide to the prospective purchaser. [CC §4528]. If the information is disclosed with the annual disclosures, the annual disclosures and budget documents are part of the documents that a prospective purchaser is required to be given.
  • Disclosure of Senior Community (55+) Status. This option is required by CC §4525(a)(2) only if there are differences between the CC&R requirements and the requirements of CC §51.3. While not specifically required for the annual policy statement, this disclosure is required if a prospective purchaser requests documents and disclosures for escrow as required by CC §4525(a)(2), AND if there is any difference between the CC&R provision on senior housing and the senior housing requirements in CC §51.3. There may also be some differences if an association is a mobile home community (that is subject to the Federal Fair Housing Act) or an association in Riverside County (that is subject to CC §51.11). Obviously the association must be a senior (55+) community in the first place. By including the disclosure in escrow packages as part of the annual budget disclosures, it helps to ensure that this disclosure will be distributed to the prospective purchaser under CC §5300 as required by CC §4525(a)(3). It is probably helpful to have a disclosure that the association is a senior community as part of the annual budget package that would go to a prospective purchaser who requests the documents, including the annual disclosures, under CC §4525.
  • Community Service Association Disclosure. Include this section only if there is a community service organization whose funding comes from the association, and it exceeds 10% of the association’s annual budget. [CC §5580] It is likely to apply to few associations. The association can disclose that it is subject to the disclosure requirements of the law, but it also needs to prepare and provide the accounting described in CC §5580 when it is required.
  • Emergency Preparedness and/or Evacuation Plans. Mobile home communities [H&S Code §§18603 & 18871.8] and high-rise buildings [H&S §§13210-13234] are required to have emergency preparedness and/or evacuation plans. Such associations may also wish to include them in their annual policy statements. However, there are other requirements, such as posting these in conspicuous common areas or conspicuous areas of a high rise, as required by the applicable statutes.
  • Any Other Disclosures that May be Required by Law or the Governing Documents. An association may include any other disclosure in its annual policy statement that is required by law or the governing documents.
  1. Optional Disclosures the Board May Wish to Make with the Annual Budget Report and Annual Policy Statement.
  • Architectural Modifications or Other Accommodations Made for Persons with Disabilities. This is an optional disclosure, but it is helpful for some associations. Such a disclosure would inform owners that they may observe some architectural changes or some other apparent violation of the association’s governing documents, but the changes or other apparent “violations” are actually “accommodations” that were permitted to enable the association to comply with state and/or federal fair housing laws requiring accommodations to be made for persons with disabilities. This disclosure can point out that these may be needed to give disabled residents an equal opportunity to use and enjoy the premises. This disclosure also can point out the many different types of disabilities may require many different types of accommodations. However, owners should recognize that this does not mean the association is lax about enforcing community standards and rules. Rather it is mindful of its legal duty to comply with disability protection laws.
  • Distribution of Mailing List to Owners. An association is required by CC 5200(a)(9), under the circumstances covered by the statute, to provide members with the name, property address, and mailing address of all members. However, association members may opt out of sharing their contact information by notifying the association that the member prefers to be contacted via the alternative process described in Corporations Code §8330(c). CC §5200(a) does not require this disclosure, but it may be useful for owners who wish to opt out of providing their name and other contact information to an owner who requests and is entitled to the information on the membership This disclosure would inform owners of their right to opt out, but if some do opt out, it will not exempt them from receiving the materials. It probably requires the association to disclose to the requesting party that X owners opted out, and if the requesting party wants to distribute information to them, the requesting owner will need to provide sealed and stamped envelopes with the return address of the sender, and the association will have to add mailing labels to mail out that information to those specific owners.
  • Security Disclaimer by Gated Communities and Associations with Locked Entry Doors, Security Cameras or Patrols. Associations may wish to consider a disclaimer to state explicitly that owners are ultimately responsible for their own security, and the fact that there may be gated entries, staffed entry gates, periodic patrols, the use of security cameras, etc., do not provide a guarantee of security on which any residents may rely.
  • Requirements for Owners to have Smoke and Carbon Monoxide Detectors in their Units. These are not mandatory disclosures, but they are important to remind owners about smoke detectors and carbon monoxide detector requirements, and some HOA insurance companies are also requiring the associations they insure to provide written notice to owners about these obligations. Owners are required by law to have operational smoke detectors and carbon monoxide Carbon monoxide detectors were required by July 1, 2011, in most single-family dwelling units with a fossil fuel-burning heater or fireplace. The deadline was January 1, 2013, for all other dwelling units intended for human occupancy. [H&S Code §§17926-17926.2] Also, smoke alarms have been required as far back as January 1, 1986. [H&S Code §13113.8).] Associations may wish to remind owners that it is common for many detectors to last no longer than 10 years, to test their detectors regularly, to follow the manufacturer’s instructions about replacement and to replace them when their useful life ends.
  • Water Shutoffs. It may be helpful to identify the location of all water main shutoffs in association buildings to be sure everyone knows where they are. This information is critical to find a shutoff to stop a major pipe leak or a fire sprinkler that is accidentally damaged or fails. This is important even if all residents are one floor and even more so if the association has a building that is two or more stories high.
  • Any Other Disclosures that an Association May Wish to Add. An association may add any other information in this section that it believes is appropriate.

Temporary Restraining Orders & Preliminary Injunctions for the Protection of Association Workers and Board Members

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In response to escalating violence in the workplace across the country, California enacted a statute that enables employers to better protect their employees in the workplace by permitting employers to obtain an injunction or restraining order on behalf of their employees. This law was enacted to establish parallel provisions to the civil harassment statute set forth in California Code of Civil Procedure section 528.6to offer protection to “employees” of community associations in certain specific situations. “Employees” include association board members, community association managers, vendors and others for purposes of these restraining orders.

Purpose of the Statute

The purpose of the statute is to provide employers with a fast and relatively inexpensive means of protecting its employees from people who are violent or who threaten acts of violence against employees. In the association context, this protection allows employees to perform association business free of the fear of violence from those who seriously disrupt an otherwise peaceful community.

Often tempers will flare and disagreements will occur within an association when an unpopular decision is made. Residents sometimes show anger against board members, committee members, officers of the Association, management or maintenance people who are carrying out the decisions of the Board. These residents may try to stop a project or say inappropriate things to association employees. When these actions or comments consist of a violent act or a credible threat of violence, CCP Section 527.8 can be used to protect the employees. Unless the conduct escalates into violence or threats of violence, however, mere anger or inappropriate language do not constitute the type of conduct which calls for court action under this statute.

Who is Defined as an “employee” Under this Statute?

An association need not have traditional paid employ­ees to obtain the benefit of the statute. The following people qualify as “employees” under CCP Section 527.8:

  1. Board members, officers, committee members, and volunteers of an association;
  2. Paid employees of an association, such as maintenance workers and grounds keepers or other persons employed at the workplace;
  3. Most independent contractors and vendors, including Community Association Managers and those who work for association management companies;
  4. Anyone whose job it is to go onto association property to perform work of any kind, whether paid or on a volunteer basis; and
  5. All household members of an “employee.” There does not have to be a specific threat or act of violence toward each family member to obtain this additional protection.

Prerequisites to Obtaining the Injunction

  1. There must be: (1) an actual violent act; (2) a credible threat of violence; or (3) stalking of the “employee.” Mere harassment cannot be enjoined under this statute unless the harassment involves a course of conduct that serves no legitimate purpose and causes the employee to fear for his/her personal safety or the safety of his/her immediate family members. Often, the threatening conduct has gone on for months or years, but becomes increasingly more frequent and threatening over time. One extremely violent or threatening act or episode, however, may be sufficient for an injunction to be granted.
  2. The person to be protected must be an “employee” of the Association. Homeowners and tenants, who are not classified as employees under the statute, are not covered and must obtain their own restraining orders.

The Process for Obtaining the Temporary Restraining Order

Obtaining a permanent order protecting the employee is a two-step process. First, the association completes the necessary forms or paperwork and files it with the court to try to obtain a Temporary Restraining Order (“TRO”) from the local superior court. This order is what the name implies; it is temporary, is granted on very short notice if the association shows that the employees has suffered unlawful violence or a credible threat of violence, and provides almost immediate protection to the employee. Once the TRO is granted, it must be personally served on the respondent for the order to be enforceable. After the TRO is granted by the judge, the court will hold a future hearing to determine whether to make the order more permanent. This hearing is generally held within 25 days after the TRO is granted. At that time, the association must be prepared to prove with credible evidence including witness testimony that the order should be made permanent or for a specific period of time up to a maximum of three years.

What Can TROs and Injunctions do for an Association and its Employees?

The kinds of protection that can be included in these orders include the following:

  1. All TROs and injunctions under Section 527.8 include the following standard language:

Violation of this order is a misdemeanor, punishable by a $1,000 fine, one year in jail, or both, or may be punishable as a felony. This order shall be enforced by all law enforcement officers in the State of California. Any person subject to a restraining order is prohibited from obtaining or purchasing or attempting to obtain or purchase a firearm by Penal Code Section 12021. Such conduct may be a felony and punishable by a $1,000 fine and imprisonment.

  1. In addition to the automatic order above, the orders may prohibit the respondent from:
  1. assaulting, battering or stalking the employee and other protected persons;
  2. attending any board meetings or annual meetings of the Association;
  3. following or stalking the employee to or from their place of work;
  4. following the employee during hours of employment;
  5. telephoning or sending communications to the employee by any means including but not limited to the mail, interoffice mail, fax, e-mail; or entering the workplace of the employee.
  1. The orders will often require the respondent to “stay away” from the employee. For example, the order may require that the respondent stay 100 to 300 yards away from the association’s community (if a non-resident), the employee or the employee’s family members, the employee’s workplace, and/or the school and workplace of the employee’s family members.

Conclusion

This legal tool should be utilized in appropriate cases after consultation with counsel. It is an important tool that can be used by an association to stop violent and abusive people from harassing, intimidating and threatening employees within the Association that serves no legitimate purpose and causes the employee to fear for his/her personal safety or the safety of his/her immediate family members. Utilizing this statute in the appropriate manner can assist in trying to maintain a safe working environment for an association’s workers, community association managers, and board members.

Employment Law Duties

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Associations that have their own employees have numerous obligations for compliance with state and federal labor laws and regulations. The checklist items in this section mention only a few specifics. Seek legal advice to be sure your association complies with all employment laws. We cannot include all of the employment related duties in this publication. However, we have included some important duties:

Workers Compensation Insurance

Be sure that you have workers compensation insurance for employees and pay taxes withheld from employees pay when due. Most insurance professionals advise associations that have no employees to have at least a basic workers compensation policy for defense and indemnification from unfounded claims that someone who was injured was an association employee.

Fidelity Bond Coverage

Associations are now required to maintain fidelity bond coverage for its officers, directors and employees in an amount that is equal to or more than the amount of the association’s reserves plus total assessments for three months. The fidelity bond must also include computer fraud and funds transfer fraud. If your association uses a managing agent or a management company, your association’s fidelity bond coverage must be separate from the fidelity bond of the management company or managing agent and must also include dishonest acts by that person, entity and its employees. [CC §5806]

Independent Contractor or Employee?

Be sure you know whether your independent contractors are truly independent contractors and not employees. The penalties under workers compensation laws and unemployment compensation laws for failure to pay overtime and the Labor Code for misclassifying an employee as an independent contractor can be severe. [Labor Code §§226.8, 2750.3, 2753, 2775-2787]

Security Service Personnel

Associations that have security service personnel directly employed by the association must register those private security officers with the Department of Consumer Affairs. [Bus. & Prof. Code §7574 et seq.]

Discriminatory Employment Practices

Associations must avoid numerous unlawful or discriminatory employment practices. [Gov. Code §12940]

Injury, Illness & Prevention Program

Associations must have an effective Injury, Illness and Prevention program if it has employees. [Cal. Code Regs., tit. 8, §3203(a)]

Paid Sick Leave

Associations must provide paid sick leave to all employees who work for the association for 30 or more days within a year from the commencement of employment. [Cal. Labor Code §246]

Membership/Owner Duties

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Resale Disclosure Statement

Owners must provide a completed statutory disclosure form to purchasers before reselling residential property. This also must be completed by a real estate agent, if any. The form is extensive and detailed and found in the statute. [Civ. Code §1102 et seq.; see e.g., §1102.6]

Smoke Detectors in Owner Units

Each owner must supply and install smoke detectors in accordance with the manufacturer’s instructions in any unit intended for human occupancy. Each smoke detector must be operable at the time that any tenant occupies a unit and must be repaired if the tenant reports a problem. The association is responsible for installing, maintaining and testing smoke detectors in hallways, common stairwells, etc. [Health & Saf. Code §§13113.7 & 13113.8]

Carbon Monoxide Detectors in Owner Units

Owners must install an approved carbon monoxide detector by July 1, 2011, in any single-family dwelling unit intended for human occupancy that has a fossil fuel burning heater or fireplace. For all other existing dwelling units intended for human occupancy, the deadline is January 1, 2013. [Health & Saf. Code §§17926-17926.2] Selling owners must disclose in the required form whether the unit being sold has a carbon monoxide detector. [Civ. Code §1102.6]

Low-Flow Plumbing Fixtures

Caution for associations and owners: all single-family dwellings must replace noncompliant plumbing fixtures no later than January 1, 2014 or January 1, 2017, depending on factors specified in the statute. The date is January 1, 2019 for multi-family residential properties and commercial properties. Failure to provide proof of compliance could prevent the issuance of building permits. It is not clear if multi-family residential includes condominiums and attached planned development housing. See statute for details and disclosure duties. [Civ. Code §§1101.1 – 1101.9 and 1102.155] Flow rates of noncompliant fixtures are in California Civil Code section 1101.3. It may take additional legislation for clarification and for how an HOA that does not maintain, repair or replace plumbing fixtures could compel owner compliance.

Membership Meetings

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Nomination and Election Procedures

Associations must adopt election rules [CC §5105(a)], but the requirements of §5100-5145 do not apply if the governing documents provide that one member from each separate interest is a director. [§5100(f)] Every corporation must have reasonable nomination and election procedures given the nature, size and operations of the corporation. Certain specific requirements apply in corporations with 500 or more members and in corporations with 5000 or more members. [Corp. Code §7520-7525] Consult the statutes for details. There are a multitude of additional requirements on election rules, requirements for independent inspectors of election and other detailed requirements that are stricter or different from the requirements in the Corporations Code. Association funds may not be used for campaign purposes in board elections or in other membership votes. Consult the relevant statutes for requirements. [CC §§5100-5145]

Parliamentary Procedure Adoption

Adopt a recognized system of parliamentary procedure and/or other parliamentary rules for conducting membership meetings. It’s a good idea, but not mandatory for board meetings. [CC §5000] Some governing documents require use of a specific system of parliamentary procedure (like Robert’s Rules of Order) for member meetings, but most do not specify the system of procedure. Even if Robert’s Rules is specified, there are numerous books entitled Robert’s Rules of Order, so if Robert’s Rules is specified, it is best to identify which title, publisher and date you are using.

Election Rules

Associations must adopt election rules [CC 3.§5105(a)], but the requirements of CC §§5100-5145 do not apply if the governing documents provide that one member from each separate interest is a director. [CC §5100(f)]

Election Inspectors

Appoint one or three election inspectors, preferably in advance of the annual meeting and any membership vote by secret ballot to perform the duties specified in the statute. Civil Code controls over Corporations Code. [Civ. Code §5110; Corp. Code §7614] Bylaws or election rules may set the number of inspectors at 1 or 3 and specify the qualifications for the inspector(s). The association’s manager may only be an inspector if allowed by the election rules.

IRS Revenue Ruling Needed?

Consult with the association’s accountant regarding the appropriate resolution, if needed, to adopt at the annual meeting for the treatment of any surplus income over expenses from the current fiscal year. [IRS Revenue Rulings]

Secret Ballots-Double Envelopes

Use a secret ballot and a double envelope system mailed to all owners at least 30 days in advance for all elections and removal of the board, membership votes regarding assessments, votes on amending the governing documents or the grant of exclusive of common area under CC §4600. There are a multitude of additional requirements on election rules, requirements for independent inspectors of election and other detailed requirements that are stricter or different from the requirements in the Corporations Code. Association funds may not be used for campaign purposes in board elections or in other membership votes. Consult the relevant statutes for requirements. [Civ. Code §§5100-5145] There is a maximum of one year to file an action for a violation of the article on elections. [Civ. Code §5145; Compare with Corp. Code §7527.]

Written Ballots in Lieu of Meeting (not Secret Ballots)

Written ballots to members (used in place of a meeting) must meet many specific requirements to be valid. [Corp. Code §7513] Written ballots are signed and dated by the voter and cannot be used when the Davis-Stirling Act requires a secret ballot.

Timing of Member Meeting Notices

Give written notice of membership meetings at least 10 and not more than 90 days before the meeting date. If notice is given by mail, and the notice is not mailed by first-class, registered, or certified mail, notice must be given at least 20 days before the meeting. Notice of meetings at which directors are to be elected must include the names of all those who are nominees at the time notice is given to members. [Corp. Code §7511] Corporations with more than 5000 members must have articles or bylaws that set a date for the close of nominations for the board. The date must be no less than 50 and no greater than 120 days before the election, and no nominations are permitted after that date. [Corp. Code §7522]

Topics Specified in Notice

Specify matters intended to be presented at the meeting in the notice of the meeting. [Corp. Code §7511(a)]

Special Meeting Petition

When a special meeting is called by a petition signed by the specified percentage of the members [Corp. Code §7510(e)], the Board must set the date, time and place of the meeting between 35 and 90 days after receipt of the petition and send notice within 20 days after receipt of the petition, or the persons signing the petition may give the notice. [Corp. Code §7511(c)]

Maximum Adjournment

No membership meeting may be adjourned for more than 45 days. [Corp. Code §7511]

Proxies

Any proxy distributed to 10 or more members in a corporation with 100 or more members must include the chance to specify a choice between approval or disapproval of each matter or group of related matters intended to be presented at the meeting. [Corp. Code §7514] Proxies may not be used in lieu of a secret ballot. Any proxy holder must complete a secret ballot. Any instruction in a proxy that directs the manner of voting must be set forth on a separate page of the proxy that can be detached.

Proxy Validity

Consult the statute for details on proxy validity. [Corp. Code §§7517 and 7613]. IMPORTANT: Under California Corporations Code section 7613(g), a proxy cannot be used for certain types of votes, including recalls, unless it generally mentions the nature of the transaction for which it will be used. Many associations do not use proxies any longer after the secret ballot, double envelope system took effect. Under California Corporations Code section 7613(f), proxies can be prohibited only if the members amend the Bylaws or Articles to do so.

Cumulative Voting

Cumulative voting is authorized in all new associations and many older associations. The Corporations Code and many bylaws state that no one may vote cumulatively unless the candidate’s name was placed in nomination before the voting, and someone gives notice prior to the voting of the intention to cumulate votes. As such, we recommend that the board give such notice before sending or with any proxies used for the election that provide for cumulative voting. [Corp. Code §7615]

Election Results

The results of any election (not just for the board), must be reported to the board, recorded in the minutes and published within 15 days to all members. [Civ. Code §5120(b)] Election materials must be kept for a minimum of one year. [Civ. Code §§5125 & 5145(a)] There is a maximum of one year to file an action for a violation of the article on elections. [CC §5145; Compare with Corp. Code §7527.]

Senior Housing Duties and Rights

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Protecting Senior Status

The legal issues pertaining to senior housing developments are extremely complex and have been changing constantly as the laws change. Any association interested in preserving its senior status needs to consult regularly with legal counsel.

Age Verification

Senior associations should have adopted procedures for age verification no later than October 30, 1999, and, at a minimum, must perform age verification surveys or update age verification survey information at least once every two years and get forms completed by any new occupants as soon as possible. [24 C.F.R. 100.307(b)]

What To Do When Your Association And/Or Board of Directors is Served With A Lawsuit

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  • Note Service Date, Time and on Whom
    • Make a written note immediately of the name of the person who was served with the papers, the time and the date. Your attorneys and insurance carrier will need to know this information, as you have only 30 days in which to file a response in State Court and 21 days if the lawsuit is in Federal Court.
  •  Act Promptly
    • Do not take a lawsuit lightly. Do not put the legal papers in a drawer or someone’s mail slot and wait for the person to see it. If you fail to protect your rights, the courts may not help to save you from your own mistakes, or, more likely, it will cost you a great deal more to undo the errors.
  • Notify Attorneys and Insurance
    • Immediately send a copy of the lawsuit to your attorneys and your insurance carriers noting the name of the person served, and the date and the time when they were served. Depending on your insurance policies and the nature of the claim, there may or may not be insurance coverage. Your attorneys may have to take the initial steps to protect your rights in the lawsuit.
  • Preserve Evidence
    • Your Association, all members of the Board of Directors, the Community Association Manager, and any employees of the Association have a legal duty to preserve evidence related to the lawsuit. Do not delete any emails or other electronically stored information, nor destroy any hardcopies of documents, letters, photographs, etc. If in doubt, ask your attorneys for guidance.
  • Preserve The Attorney/Client Privilege
    • Do not discuss the lawsuit with anyone other than your attorneys and other board members in executive session. Do not forward emails or other correspondence from your attorneys to anyone who is not a member of the board of directors, or the Community Association Manager.

Contracting Checklist

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In every contracting situation, from the smallest everyday project to the largest construction project, consider the following issues:

☐           Does the contractor have a valid California contractor’s license for the relevant specialty?

☐           Does the contractor have minimally acceptable levels of general liability insurance, automobile insurance and worker’s compensation insurance?

☐           Has the association been named as an additional insured on all of the contractor’s insurance policies?

☐           Have all the subcontractors submitted proof of their contractor’s licenses and insurance policies?

☐           Have all HOA and insured versus insured exclusion and contractor’s condition endorsements been deleted?

☐           Has the contractor complied with all of the association’s bidding requirements?

☐           Has the contractor supplied references and have the references been checked?

☐           Is there a written contract?

☐           Has the scope of the work to be performed been clearly defined?

☐           Does the association have to pay start-up costs to the contractor? Is the amount of the start-up costs reasonable (less than 10% of the total contract price)?

☐           Are progress payments required at reasonable intervals? Have payment obligations such as “upon delivery” been deleted?

☐           Have the payment provisions been written so that the association only pays for work that has been satisfactory completed?

☐           Is the contractor required to submit mechanics’ lien releases before each payment?

☐           Should the association write joint checks to the contractor and subcontractors if unconditional lien releases are not provided?

☐           Can the association hold retention from each progress payment until the end of the contract?

☐           Is final payment required after all mechanics’ lien rights have been expired?

☐           Are the starting and completion dates clearly specified?

☐           Is there a liquidated damages (predetermined monetary payment) provision in the contract?

☐           Would a performance bonus provision provide incentive to the contractor to finish earlier than required?

☐           Can the association terminate the contract “without cause?” If “cause” is required, is it clear under what condition the contract can be terminated?

☐           Has the contractor clearly indicated the warranties being given? Are there any materials manufacturer’s warranties?

☐           What exclusions are there in the warranties? Are these exclusions reasonable?

☐           Will the contractor be required to supply a performance bond or labor & materials bond?

☐           Is the contractor required to indemnify the association for its negligent acts and omissions?

☐           Have all obligations of the association to indemnify the other party been deleted from the contract?

☐           Have limitation of liability clauses been deleted?

☐           Does the contract require some form of Alternative Dispute Resolution mediation or arbitration) prior to or in lieu of litigation?

☐           Is there an attorneys’ fee provision in the contract?

☐           Has the contract been reviewed by legal counsel?

 

Rian Jones Defeats $2 Million Claim Against a Homeowners Association

Epsten represented a homeowners association in a lawsuit filed by Plaintiff, a former owner and President of the Association. The Plaintiff claimed that he was owed $2 million as compensation from the Association for his work in securing the agreement of the City of Oceanside to sell land to the Association. The Association’s buildings were constructed on land leased from the City of Oceanside for a term of 50 years. While the Plaintiff was serving as President of the Board of Directors, the Association entered into negotiations with the City to purchase the land. The Plaintiff acted as the point man for the Association in the negotiations with the City. The Association retained lawyers and other professionals to assist in the negotiations. The Plaintiff owned 5 units at the Association and, prior to the finalization of the deal with the City, he lost all 5 units in foreclosures and owed the Association more than $80,000.00 in past due assessments. Plaintiff resigned from the Board and was removed from his role as the point man in the negotiations. The Association was able to complete the deal with the City and purchased the land for $10 million. The Plaintiff sued the Association for fraud, misrepresentation, breach of contract, breach of fiduciary duty, and other claims. After prior counsel for the Association did not obtain the dismissal of the lawsuit, our firm took over as the attorneys for the Association. Attorney Rian Jones filed a successful motion for summary judgment and all of the Plaintiff’s claims were found to be without merit. The court has entered judgment in favor of the Association and the Association’s motion for determination of attorneys’ fees is pending.

The lawyers of the Civil Litigation Department of Epsten handle all litigation matters for our clients (except for construction defect litigation). Our attorneys work hard to obtain the best possible results for our clients. The above information describes just one of our results.

The above informational update is provided by the Epsten general civil litigation department, courtesy of its supervising attorney, Rian W. Jones. Rian has over 29 years of experience as a litigator and has tried over 50 Superior Court jury trials.

Results achieved in any given case depend upon the exact facts and circumstances of that case. Epsten cannot guarantee a specific result in any legal matter. The results discussed in this advertisement are dependent on the facts of the cases, and those results will differ if based on different facts. View our entire disclaimer.