Epsten APC, Author at Epsten, APC

Management Company Duties Checklist

Disclosure Statement to Board before Contracting

The management company must give a written statement to the board, no earlier than 90 days before entering a contract, containing the following: (a) Names and business address of the owners or partners of the management company. If the management company is a corporation, it must include: (a) the names and business addresses of the directors and officers plus shareholders who hold more than 10% of the shares; (b) A statement containing the names of any of the above persons who hold relevant California licenses in areas such as architecture, construction, engineering, real estate or accounting, the licenses they hold and the dates the licenses are valid; (c) A statement containing the names of any of the above persons who hold relevant professional certifications or designations in areas such as architecture, construction, engineering, real estate or accounting, which certifications or designations are held, what that certification or designation is and who issued it and the dates the certifications or designations are valid; (d) A statement disclosing any business or company the manager or management company has any ownership interests, profit-sharing arrangements, or other monetary incentives provided to the management company or manager; and (e) A statement as to whether or not the manager or management company receives a referral fee or other monetary benefit from a third party provider distributing documents pursuant to CC §§4528 & 4530. [CC §5375] A manager or management company shall also disclose, in writing, any potential conflict of interest when presenting a bid for service to a board. “Conflict of interest” is defined as (1) any referral fee or other monetary benefit that could be derived from a business or company providing products or services to the association or (2) any ownership interests or profit-sharing arrangements with service providers recommended to, or used by, the association. [CC §5375.5] [CC §5375]

Professional Certification Disclosures

On an annual basis, an association manager must disclose to each association board, (a) whether or not the manager is “certified,” as defined in the statute, (b) the name, address, and telephone number of the professional association that certified the manager, the date the manager was certified, and the status of the certification, (c) the location of the manager’s primary office, (d) whether the fidelity insurance of the manager or the manager’s employer covers the current year’s operating and reserve funds of the association, and (e) whether the manager possesses an active real estate license, (f) disclose information required in Section 5375 of the Civil Code, (g) Whether or not the common interest development manager receives a referral fee or other monetary benefit from a third-party provider distributing documents pursuant to Section 5300 of the Civil Code, (h) An affirmative written acknowledgment that the disclosure provided to a member or potential member pursuant to Sections 4528 and 5300 of the Civil Code, and all documents provided thereunder, are the property of the association and not its managing agent or the agent’s managing firm. See statute for more details. [B&P Code §11504]

Unfair Business Practices

It is an unfair business practice for a manager or management company to hold oneself as “certified” without meeting the requirements of B&P Code §11504, to state or advertise that the person is certified, registered, or licensed by a governmental agency to perform the functions of a certified common interest development manager, to state or advertise a registration or license number, unless the license or registration is specified by a statute, regulation, or ordinance, or to fail to disclose or misrepresent any item to be disclosed under B&P Code §11504. [B&P Code §11505]

Separate Bank Accounts

The management company must deposit all funds belonging to the association either into: (1) an escrow account with a bank, savings association or credit union, or (2) an account under the control of the association, or (3) a trust account with a bank, savings association or credit union located in California, insured by the federal government or is a guaranty corporation subject to Financial Code §14858, and held there until disbursed according to the association’s instructions. [CC §5380(a)]

Interest-bearing Accounts

Upon the association’s written request, the management company must deposit all funds it accepts or receives on behalf of the association into an interest-bearing account in a bank, savings association or credit union located in California that is insured by the Federal Deposit Insurance Corporation, National Credit Union Administration Insurance Fund or a guaranty corporation subject to Financial Code §14858. (1) The account must show the management company as trustee for the association, (2) the fund must be insured by an agency of the federal government, (3) The funds must be kept separate from the management company’s own funds and from other funds the management company holds in trust, (4) Disclose the nature of the account and any interest, service charges, notice requirements, and early withdrawal penalties, (5) Interest cannot benefit management company or employees, (6) Transfers from operating or reserves require Board approval unless the transfers are less than $5,000 or 5% of estimated income for associations with 50 or fewer separate interests, or less than $10,000 or 5% of estimated income for associations with 51 or more separate interests. In no event may those funds be invested in stocks or high-risk investment options. [CC §5380(b)]

Maintaining Accounting Records

The management company must keep a separate record of all funds received and disbursed from any account described in CC §5380, including any interest earned on the funds. [CC §5380(c)]

Commingling Funds

The management company may not commingle association funds. [CC §5380(d)]

Lien and Foreclosure Actions

If a management company undertakes lien and foreclosure work on behalf of an association, there are significant, technical requirements to follow. [CC §5650 et seq. & §5700 et seq.] If a lien is recorded in error, there can be significant economic costs and delays to an association to correct the error. [CC §5685]

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Developer Transition Checklist

Necessary Documents

Developer Maintenance Agreement(s)

Subsidy Agreement(s)

DRE Budgets

All recorded documents affecting property

Executed copy of Bylaws and filed Articles of Incorporation

Deeds for all common area Lots

Developer's Participation on the Board

Determine Board-approved directors and terms

Verify required number of non-developer owners to be elected

Track first and subsequent annual meeting dates

Obtain all Board meeting minutes and corporate minute book

Establish Architectural Committee if CC&Rs call for one

Architectural Control

Who is in charge… sales office, construction, superintendent, management?

Retain consultant

Establish tracking procedure

Turnover Walk-Throughs

Determine annexable area

Create punch list during walk-through

Determine maintenance periods

Establish utility transfers/notify insurance carriers

Obtain warranty information

Turnover letters/bond releases

Review/Creation of Association Contracts During/After Transition

Attorney

Management

Insurance

Utilities (including cable/internet)

Landscaping

Pest Control

Janitorial

Courtesy Patrol/Parking Enforcement

Utilities (Cable/Internet)

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Board Meetings Checklist

Board Meetings Defined

Board “meetings” are defined in Civil Code section 4090[1] and Civil Code section 5450 and must be open to members with limited exceptions for executive sessions (Civ. Code §§ 4090, 4900-4935, & 5450.)

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 & 5450.) Teleconferences are permissible, but everyone, including owners present or attending via teleconference or video, must be able to hear one another. (Civ. Code §§ 4090 & 5450.) (See footnote 1.) A board meeting or meeting of the members may be conducted entirely by teleconference, without any physical location being held open for the attendance of any director or member, except for a meeting at which ballots are counted and tabulated pursuant to Civil Code section 5120. (Civ. Code § 4926.)

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 posting the notice on the association’s internet website in a prominent location, or delivery by email or other forms of electronic delivery if the member consents. (Civ. Code § 4045(b).) For virtual meetings, additional notice requirements are set forth in Civil Code section 4926.

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 certain 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.)

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Bidding Checklist

In every bidding situation, consider the following issues:

Has the board defined its goals and objectives in this bid process?

Are there any bidding requirements in the Association’s governing documents that the board should follow (i.e., a requirement to obtain at least 3 bids)?

Will professional assistance be needed to draft the specifications for the job, and/or to evaluate the bids? Have complete plans and specifications been written to specifically define the scope of work to be performed?

Is the bid due date clearly stated? Have the bidders been given enough time to submit complete and accurate bids?

Should a pre-bid job walk be scheduled? Mandatory or optional?

Have interviews with the bidders been scheduled? What questions will be asked?

Who will check the bidder’s references and what questions will be asked of the references?

Who will check that the bidder has an active California Secretary of State registration?

Who will check the bidder’s Contractor’s State License Board profile for any prior complaints/violations? If there are any complaints/violations, does the bidder have a good explanation?

What special requirements does the association have? Are these listed in the bidder’s information materials?

Are bids to be submitted sealed or open?

Will unsuccessful bidders be told why they were not awarded the job?

Are the following forms included in the bid package? Invitation to Bid; Bid Form; Contractor’s Qualification Form; Designation of Subcontractors; Insurance and Licensing Information Form; Contractor’s Certification of Applicability of Specifications; Special Instructions; Contract Form

Does the Contractor’s Qualification Form ask for all of the following? Form of company and company principals; Years in business; Number of employees; Number of previous lawsuits/claims; References for similar jobs; Bonding capacity/surety information; Financial information; Dollar volume of business in past year(s) and value of current work in progress

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Attorneys Recognized in The Best Lawyers in America® 2025

The 31^st edition of The Best Lawyers in America^® recognized Epsten, APC’s attorneys Jon H. Epsten, CCAL^®, Shareholder and Founder of Epsten, APC, and attorney Mary M. Howell, CCAL^®. Both attorneys were acknowledged for their contributions to the legal field in the practice of Community Association Law.

The Best Lawyers in America^® awards are gathered through exhaustive peer-review surveys in which notable lawyers are evaluated and spotlighted for their legal excellence. In addition, this designation reflects the esteem earned by an attorney among their colleagues for their high standards of professionalism, proficiency, and unwavering ethical conduct.

Mary M. Howell. Esq., CCAL

Jon H. Epsten, Esq. CCAL

Pickleball and Associations

Pickleball is one of the fastest growing sports in the United States. It offers a plethora of benefits and adds significant value to associations, in the ways described in this article. By introducing pickleball, associations can enhance the quality of life for their residents, foster community spirit, and boost property values. The sport’s accessibility, social benefits, and health advantages make it an ideal addition to any residential community.

First and foremost, pickleball is highly accessible and inclusive. It combines elements of tennis, badminton, and ping-pong, and it is played on a smaller court with a lower net, making it less physically demanding than other racket sports. This accessibility allows individuals of all ages and fitness levels to participate, from children to seniors. The ease of learning the game ensures that new players can quickly pick up the basics and start enjoying themselves, which encourages widespread participation within the community. Additionally, the relatively low cost of equipment—primarily a paddle and a few balls—makes it an affordable option for all residents.

The social benefits of pickleball are substantial. The sport naturally lends itself to doubles play, promoting teamwork and interaction among players. By providing a shared interest and a gathering place, pickleball courts can help break down social barriers and foster new friendships among neighbors. Regularly scheduled games or tournaments can create a sense of tradition and camaraderie within the community, enhancing the overall social fabric. These interactions are particularly valuable in an association setting, where fostering a strong sense of community can lead to a more harmonious living environment.

Health benefits are another significant advantage of incorporating pickleball into a community. The game provides a full-body workout, improving cardiovascular health, coordination, balance, and agility. Regular physical activity is crucial for maintaining a healthy lifestyle, and pickleball offers an enjoyable way to achieve this. For older adults, in particular, the sport provides a low-impact exercise option that can help improve mobility and reduce the risk of chronic diseases. The social nature of the game also contributes to mental well-being, reducing stress and promoting a positive outlook.

From an economic perspective, the installation of pickleball courts can enhance property values within the community. Prospective homeowners often look for amenities that support an active and engaging lifestyle, and the presence of pickleball courts can be a significant selling point. Well-maintained recreational facilities reflect positively on the community, suggesting that the association is invested in providing a high quality of life for its residents. This perception can make properties more attractive to potential buyers, thereby increasing demand and property values.

Furthermore, pickleball can serve as a versatile amenity in community event planning. Association boards can organize clinics, leagues, and tournaments, providing structured opportunities for residents to engage with the sport. These events can attract participation from various demographic groups within the community, promoting inclusivity and ensuring that everyone feels welcome to join in the fun.

The Arguments Against Pickleball

On the other hand, while pickleball has gained popularity for its accessibility and social benefits, there are reasons some people argue it should be banned from community associations, primarily due to noise and other nuisance related complaints. Some of those reasons may be compelling.

The primary issue with pickleball in communities is the noise generated during play. The distinct “pop” sound of the ball hitting the paddle can be surprisingly loud and persistent to some residents. Given that pickleball games often last 60-90 minutes and are usually played as doubles, the noise can become a disruption to some. Residents living near pickleball courts often report disturbances, especially when games are played early in the morning or late into the evening. It is reasonable to argue that such noise disturbances may lead to stress, interrupted sleep, and a general decline in the quality of life for nearby residents.

Additionally, the noise nuisance can exacerbate tensions within a community. Disputes over pickleball noise can lead to conflicts between resident players and non-players, fostering division rather than unity. The very presence of pickleball courts can become a contentious issue at association meetings, consuming valuable time and resources that could be better spent addressing other community concerns.

Moreover, the nuisance extends beyond noise. Increased traffic and parking congestion around pickleball courts can disrupt the normal flow of the community. The solution to all of these problems is thoughtful rule-making with lots of input from the community. Enacting reasonable, concise operating rules, including putting in place limits on hours of play, types of paddles allowed to be used, and guest use of courts can significantly (and at no cost to the association) eliminate most potential issues or concerns.

Conclusion

In conclusion, the incorporation of pickleball by an association into a community offers numerous benefits that enhance the overall living experience for residents. Its accessibility and affordability make it an inclusive sport suitable for all ages, while its social and health benefits contribute to a stronger, healthier community. Economically, the presence of pickleball courts can boost property values and attract prospective homeowners. By fostering community spirit and providing a versatile recreational amenity, pickleball may prove to be a valuable addition to a community, promoting a vibrant, active, and cohesive living environment. While some boards may be tempted to ban pickleball outright, all of the benefits discussed above may certainly outweigh the potential for complaints regarding the noise nuisances pickleball allegedly creates.

The decision about whether or not to permit pickleball is not a one size fits all solution and should be considered by each board on a community-by-community basis. To avoid as many issues and complaints as possible, and rather than banning pickleball completely, boards should perform a reasonable inquiry into the benefits and possible detriments of adding pickleball to their communities. To perform such an inquiry, a board should consult with its management team, legal counsel, and other relevant experts to determine whether permitting pickleball is within the best interest of the association. If the board determines that pickleball is a worthwhile investment for their association, the association should follow an open, input-driven rule-making process to help ensure that pickleball play remains in harmony with the community. If the board decides that pickleball should not be allowed in the community, the board should work closely with legal counsel on the implementation of its ban.

Susan M. Hawks McClintic Included in ‘Women of Influence in Law’ for 2024

Epsten, APC Shareholder and Board Member, Susan M. Hawks McClintic, has been recognized as a 2024 Women of Influence in Law by the San Diego Business Journal (SDBJ). The Women of Influence in Law Award celebrates female trailblazers by highlighting their legal careers and accomplishments.

“Sue is an example of dedication and leadership, marked by more than 30 years of experience in community association law and legal education,” said Kieran J. Purcell, CCAL, Managing Shareholder.

Sue has been an active member of the San Diego chapter of the Community Associations Institute “CAI” for the past 30 years, serving as Treasurer, member and co-chair of the Education Committee, and now President-Elect of the 2024 Board of Directors. She has also served CAI nationally on the Board of Directors for the CAI Foundation for Community Association Research, is a member of the CAI Diversity, Equity & Inclusion Committee and a Task Force assisting in the development and presentation of an M400 course, and is a past member of the Case Law Review Committee. Sue also regularly participates with HOALeader.com to provide national educational webinars and articles for common interest development homeowners.

“I am grateful to my family and fellow shareholders, attorneys and staff at Epsten, APC who have supported me and helped me grow and develop throughout my career,” said Sue.

Sue has over three decades of experience in community association law, developing a unique expertise in document interpretation, amendments, and restatements. She speaks regularly throughout the Community Association industry and is a fellow of the College of Community Association Lawyers (CCAL).

Published by San Diego Business Journal, June 24, 2024, Page 28: https://images.sdbj.com/wp-content/uploads/2024/06/SDBJ-Women-of-Influence-in-Law-2024-1.pdf

The Importance of Having All the Facts at the Outset of Representing a Client in Litigation

In the intricate and high-stakes world of litigation, thorough preparation is a cornerstone of effective legal representation. Central to this preparation is the necessity of gathering absolutely all the facts about a situation at the outset. This comprehensive understanding is crucial for several reasons: it informs the development of a robust legal strategy, ensures ethical conduct, enhances the credibility of the attorney, and ultimately increases the likelihood of a successful outcome for the client.

Developing a Robust Legal Strategy

A well-informed legal strategy is built on a foundation of complete and accurate facts. At the outset of representing a client, obtaining all necessary information allows an attorney to assess the strengths and weaknesses of the case comprehensively. To initiate the fact-finding process in a new case, the client must promptly share with the attorney all of the facts about the dispute, regardless of how old, indirectly related, or seemingly insignificant those facts may be. When in doubt err on the side of overinclusion, and let your attorney determine whether a fact is or is not relevant.

This initial fact-finding phase is essential for identifying the key legal issues, potential defenses, and the most compelling arguments to present. It enables the attorney to foresee possible challenges or weaknesses of the case and to plan accordingly, avoiding certain pitfalls that could arise from unforeseen evidence or aspects of the case.

Moreover, a detailed understanding of the facts aids in the effective allocation of resources to litigate the case. It helps the legal team decide where to focus investigative efforts, which expert witnesses to consult, and what evidence needs to be meticulously scrutinized or gathered. By having a clear picture from the beginning, an attorney can work more efficiently and strategically, ensuring that no critical detail is overlooked.

Ensuring Ethical Conduct

Ethical considerations are paramount in legal practice. An attorney is ethically bound to represent their client zealously while also maintaining integrity and honesty. Having all the facts of the case at the outset ensures that the attorney can provide candid advice to the client, outlining both the strengths and weaknesses of the case. This transparency is vital for managing the client’s expectations and for making informed decisions about whether to pursue litigation, negotiate a settlement, or explore alternative dispute resolution methods.

Additionally, complete knowledge of the facts prevents ethical breaches such as the inadvertent presentation of false or misleading information to the court. It also safeguards the attorney against potential conflicts of interest and ensures the attorney’s compliance with the duty of candor towards the tribunal.

Enhancing Credibility

An attorney’s credibility is a critical asset in litigation. Judges and juries are more likely to be persuaded by an attorney who demonstrates thorough knowledge of the case and presents well-substantiated arguments. Complete mastery of the facts at the outset allows the attorney to argue more confidently and persuasively. It also minimizes the risk of being caught off-guard by opposing counsel, which could undermine the attorney’s credibility and, by extension, the client’s position.

When an attorney is well-prepared and knowledgeable, it fosters trust not only with the court but with the client as well. Clients are more likely to have confidence in their legal representation when they see that their attorney has a deep understanding of their case and is prepared to advocate effectively on their behalf.

Increasing Likelihood of a Successful Outcome

Ultimately, the goal of litigation is to achieve a favorable outcome for the client. Having all the facts at the outset significantly enhances the chances of success. It allows the attorney to craft a coherent and compelling narrative, anticipate and counter opposing arguments, and present evidence in the most favorable light. Comprehensive preparation reduces the likelihood of surprises during the litigation process, such as unexpected testimony or newly discovered evidence that could adversely affect the case.

Conclusion

The importance of having all the facts at the outset of representing a client in litigation cannot be overstated. It is fundamental to developing a sound legal strategy, ensuring ethical conduct, enhancing the attorney’s credibility, and increasing the likelihood of a successful outcome. Thorough fact-finding at the beginning of a case sets the stage for effective advocacy and is a hallmark of professional and competent legal representation.

Epsten, APC Relocates its Coachella Valley Office

Epsten, APC, a leading law firm specializing in providing legal solutions to community associations, is pleased to announce the relocation of its Coachella Valley office from Indian Wells to Palm Desert. The new office is located in One Paseo Plaza, 74-199 El Paseo Drive, West Building, Suite 201A, Palm Desert, CA 92260. The firm’s phone numbers and email addresses will remain the same. For more information, email us at [email protected].

Susan M. Hawks McClintic New President-Elect of CAI – San Diego

Epsten, APC’s Shareholder and Board Member, Susan M. Hawks McClintic, is the new President-Elect for the Community Association Institute – San Diego Chapter (CAI-SD) 2024 Board of Directors. CAI-SD provides homeowner association professionals and leaders with the information, education, and support they need to ensure their communities can thrive. Sue follows the footsteps of other Epsten attorneys who led the CAI – San Diego Chapter in the past.

Sue has been an active Board Member for CAI-SD for the past 30 years, serving as Treasurer and member of the Education Committee. She has also served CAI National on the Board of Directors for the CAI Foundation for Community Association Research, is a member of the CAI Diversity, Equity & Inclusion Committee, including working on a committee to develop an M400 course, and is a past member of the CAI Case Law Review Committee.

Sue has over three decades of experience in community association law, developing a unique expertise in document interpretation, amendments, and restatements. She speaks regularly throughout the Community Association industry and is a fellow of the College of Community Association Lawyers (CCAL).