Updated Guidance on All Tier Restrictions Issued by State

Today, we are providing you with another update which truly highlights the fluid nature of living during this coronavirus pandemic, as well as the ever-changing guidelines established by public health officials in an effort to keep the public safe.

Some of the information provided to our Riverside County contacts in the email update earlier this week has already become outdated based on changes made late Tuesday afternoon by the State’s Department of Public Health.

As a reminder, the tiers are:

  • Tier 1 – Widespread (purple)
  • Tier 2 – Substantial (red)
  • Tier 3 – Moderate (orange)
  • Tier 4 – Minimal (yellow)

The tier your county has currently been assigned will determine what reopening restrictions are imposed on various businesses and activities. Please be aware that no matter the tier, all applicable industry guidance issued by the State, your local county and city officials, and the CDC must continue to be followed.

As of October 20, 2020, the State has assigned these tiers to the following counties*:

  • San Diego County (no change): Tier 2, Substantial (red)
  • Riverside County: Tier 1 – Widespread (purple)
  • San Bernardino County (no change): Tier 1, Widespread (purple)
  • Los Angeles County (no change): Tier 1, Widespread (purple)
  • Orange County (no change): Tier 2, Substantial (red)

Riverside County has been reassigned from the red tier to the purple tier and affected businesses must change operations by Friday, October 23. For information regarding the tier assigned to your county visit the California COVID-19 Safer-Economy webpage.

The State has updated its guidelines on the various sectors as follows:

POOLS

Widespread (purple):
  • Outdoor pool operations may remain open.
  • Outdoor hot tubs may open only for use by one household group at a time or in cases where six feet of distancing can be maintained.
  • Indoor pools, saunas, hot tubs and steam rooms remain closed.
  • Associations must follow all applicable “Additional Considerations for Swimming Pools / Aquatic Venues” found in the State’s Industry Guidance for Gyms and Fitness Facilities.
Substantial (red):
  • Outdoor pool operations may remain open.
  • Outdoor hot tubs may open only for use by one household group at a time or in cases where six feet of distancing can be maintained.
  • Indoor pools, saunas, hot tubs and steam rooms remain closed.
  • Associations must follow all applicable “Additional Considerations for Swimming Pools / Aquatic Venues” found in the State’s Industry Guidance for Gyms and Fitness Facilities.
Moderate (orange):
  • Outdoor pool operations may remain open.
  • Outdoor hot tubs may remain open only for use by one household group at a time or in cases where six feet of distancing can be maintained.
  • Indoor pools may open when physical distancing can be maintained for non-household groups.
  • Indoor saunas, hot tubs and steam rooms remain closed.
  • Associations must follow all applicable “Additional Considerations for Swimming Pools / Aquatic Venues” found in the State’s Industry Guidance for Gyms and Fitness Facilities.
Minimal (yellow):
  • Outdoor pool operations may remain open.
  • Outdoor hot tubs may remain open only for use by one household group at a time or in cases where six feet of distancing can be maintained.
  • Indoor pools, saunas, hot tubs and steam rooms may open when physical distancing can be maintained for non-household groups.
  • Associations must follow all applicable “Additional Considerations for Swimming Pools / Aquatic Venues” found in the State’s Industry Guidance for Gyms and Fitness Facilities.
GYMS & FITNESS CENTERS

Widespread (purple):
Substantial (red):
Moderate (orange):
Minimal (yellow):

LIBRARIES

 Widespread (purple):
Substantial (red):
Moderate (orange):
Minimal (yellow):

OUTDOOT RECREATIONAL FACILITIES

In all Tiers:

RESTAURANTS

Widespread (purple):
Substantial (red):
  • Restaurants may open indoor with modifications. Capacity must be limited to 25% or 100 people, whichever is less.
  • Associations must follow all applicable provisions of the State’s Industry Guidance for Dine-In Restaurants.
  • Bars where no meals are provided must remain closed.
Moderate (orange):
Minimal (yellow):

HAIR SALONS

In all Tiers:

OUTDOOR GATHERINGS

In all Tiers:
Some outdoor private gatherings are permitted. Read more details in the State’s Private Gatherings Guidance. Such gatherings must meet the following conditions:
  • Attendees must be from no more than 3 separate households, including hosts and guests.
  • Host should collect names of all attendees and contact information
  • Duration should be 2 hours or less.
  • Wear a mask, practice physical distancing, and wash your hands frequently
  • Do not attend if you have COVID-19 symptoms .
  • Do not attend if you are at high risk for serious illness from COVID-19 (seniors, those with certain medical conditions).

Keywords: Coronavirus, COVID-19

Riverside County Purple Tier Restrictions

As you may be aware the State’s Department of Public Health assesses indicators weekly (including each county’s rate of new cases and positivity) on Mondays and releases updated tier assignments on Tuesdays for each of its counties, as part of its “Blueprint for a Safer Economy.”

As of October 20, 2020, the State has assigned these tiers to the following counties*:

  • San Diego County (no change): Tier 2, Substantial (red)
  • Riverside County: Tier 1 – Widespread (purple)
  • San Bernardino County (no change): Tier 1, Widespread (purple)
  • Los Angeles County (no change): Tier 1, Widespread (purple)
  • Orange County (no change): Tier 2, Substantial (red)

Riverside County has been reassigned from the red tier to the purple tier and affected businesses must change operations by Friday, October 23.

  • How does this reassignment to the purple tier affect community associations located in Riverside County with respect to amenities that must now be closed?
  • What can remain open?

Riverside County
Community Associations are subject to the following guidance while in the purple-tier:

GYMS AND FITNESS CENTERS

RESTAURANTS

  • Restaurants may serve patrons outdoors only.
  • If associations have reopened indoor dining within restaurants with limited occupancy, they must now be closed. Associations must follow all applicable provisions of the State’s Industry Guidance for Restaurants providing outdoor dining, takeout, drive-through and delivery.
  • Bars where no meals are provided must remain closed.

LIBRARIES

HAIR SALONS

OUTDOOR POOLS

  • Outdoor pool operations may remain open. Outdoor spas/hot tubs must remain closed.
  • Associations must follow all applicable “Additional Considerations for Swimming Pools/Aquatic Venues” found in State’s Industry Guidance for Fitness Facilities.

OUTDOOR RECREATIONAL FACILITIES

*There are four (4) tiers which include Widespread (the most restrictive), Substantial, Moderate and Minimal (the least restrictive). For information regarding the tier assigned to your county please visit https://covid19.ca.gov/safer-economy/.

Keywords: COVID-19, Coronavirus

AB 3182 Q&A

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On September 28, 2020, Governor Gavin Newsom signed into law Assembly Bill 3182 (“AB 3182”). AB 3182, among other things, amends Civil Code section 4740 and adds new Civil Code section 4741. AB 3182 may substantially change the way in which community associations address rentals. These changes take effect on January 1, 2021.

The ultimate effects of AB 3182 are currently unknown and the community association legal community is grappling with how to interpret this new law and its impacts.

Our firm, however, endeavors to provide timely information on such important legal matters impacting community associations so we are sending this update now although the full implications of this new law are presently unknown.

As such, we have prepared the below Q&A as an educational tool only. Please note:

  • Nothing below should be construed as legal advice.
  • Discussions surrounding AB 3182 are ongoing and as our understanding of this new law evolves the answers below are subject to change.
  • Contact your community association’s legal counsel for further information.

Q1.  If my community association has a minimum rental period of 30 days or less in its governing documents, what must we do in light of the new law?

A. Nothing. A minimum rental period of 30 days or less does not violate the new law. Section 4741(c) specifically states, “This section does not prohibit a common interest development from adopting and enforcing a provision in a governing document that prohibits transient or short-term rental of a separate property interest for a period of 30 days or less.”

Q2. If my community association has a minimum rental period of more than 30 days in its governing documents, does the new law require us to amend our governing documents?

A. Section 4741(c) is ambiguous on this point. The community association legal community is currently split as to how to interpret this provision. The most conservative reading of subsection (c) is that minimum rental periods longer than thirty (30) days are unenforceable. If your community association’s governing documents contain a provision which has a minimal rental period longer than 30 days, please contact your legal counsel for additional guidance.

Q3. What if my community association has a rental cap of less than 25% of the separate interests?

A. If your community association’s governing documents place a limit on the total number of separate interests that may be rented at one time, and the limit is less than 25% of all separate interests, then that governing document must be amended to comply with the new law. If the document is not amended, the rental cap would be completely unenforceable.

Q4. What if my community association has a rental cap of 25% or more of the separate interests?

A. If your community association’s governing documents place a limit on the total number of separate interests that may be rented at one time, and the limit is 25% or more of all separate interests, then that governing document complies with the new law and no amendment is necessary.

Q5. If my community association has a percentage rental cap, does a rented ADU or JADU count towards the rental cap?

A. No. The rental cap refers to “separate interests” which section 4741(d) makes clear does not include ADUs or JADUs. This means that if an owner resides in either the primary residence, ADU, or JADU none of these may be counted as rented or leased for purposes of the community association’s rental cap (Civil Code section 4741(e)).

Q6. If my community association’s CC&Rs do not comply with the new law, do we have to amend the CC&Rs?

A. Amending the CC&Rs is the most conservative approach. However, there is a split in the legal community as to whether adopting a rule to comply with the new law would suffice (see question 9 below for further discussion on this point). Please contact your legal counsel for additional guidance.

Q7. If my community association must amend its CC&Rs in light of the new law, does that amendment require a membership vote, or can our board record a CC&R amendment without the consent of the members?

A. If our firm prepared your community association’s restated CC&Rs, it is possible those documents already include language that permit a board to record CC&R amendments to comply with the new law without the consent of members. However, in the absence of such language in your CC&Rs giving the board the power to make amendments, we believe the members would have to vote to approve the CC&R amendments.

Q8. If a membership vote is held to approve CC&R amendments, what happens if the members and/or lenders (if required) reject amendments to the CC&Rs to conform with the new law?

A. Under certain circumstances a community association may seek court approval of those proposed amendments through Civil Code section 4275 or Corporations Code section 7515 based on the actual outcome of the vote (although, seeking court approval might not be necessary). Civil Code section 4741(g) states, “A common interest development that willfully violates this section shall be liable to the applicant or other party for actual damages, and shall pay a civil penalty to the applicant or other party in an amount not to exceed one thousand dollars ($1,000).” If a community association puts the matter up for a vote of the members and the members do not approve it, arguably the association will not have willfully violated the law. If a community association does not seek judicial approval of the amendment, see #9 below for a possible option.

Q9. Could my community association simply adopt rules that comply with the new law instead of amending the CC&Rs?

A. It’s unclear. It would appear that existing rental provisions which violate the new law would become unenforceable under the new law. There is an argument that the board could simply enact a rule to clean up the existing provisions to regulate rentals in compliance with the new law, however, section 4741(g) states that an amendment is required. We believe boards should attempt a membership vote to approve any required CC&R amendments. Then, if that fails, boards could enact rules that comply with the new law. Whether a rule is sufficient to comply with the law is questionable. There is a body of law that suggests that members must vote on the issue of rental restrictions, so a rule might not be sufficient (and the association could not enact new rental restrictions without member consent). Further, existing law (Civil Code section 4740(a)) might make those new rental restrictions inapplicable to existing members.

Q10.  If members approve amendments to conform with the law, which members are bound by the amended provisions?

A. It’s unclear. The answer to this question may depend upon whether language in the current document “prohibits” or “unreasonably restricts” rentals in violation of either Civil Code section 4740 or 4741. If an existing rental provision (e.g., a cap of 25% or less) is construed as either a prohibition or an unreasonable restriction, it would be unenforceable and an amendment would be necessary to conform to the new law. In that case, it is possible the amendment may only apply to new purchasers after adoption of the amendment. Hopefully, the Legislature will adopt clean-up legislation next year to address this issue. In the meantime, please contact your legal counsel for additional guidance.

AB 3182 (Rental Restrictions) Chaptered!

By Dea C. Franck, Esq.

Today Governor Gavin Newsom signed into law Assembly Bill 3182 (“AB 3182”) which will become effective January 1, 2021.

Among other things, AB 3182 amends Civil Code section 4740 and adds a new section 4741 to the Civil Code. The new section 4741 provides that an owner of a separate interest in a common interest development (“CID”) will not be subject to a governing document provision that prohibits, has the effect of prohibiting, or unreasonably restricts the renting or leasing of a separate interest, accessory dwelling units (“ADU”), or junior accessory dwelling unit (“JADUs”) to a renter, tenant or lessee. section 4741 will allow CIDs to adopt or enforce governing document provisions which prohibit transient occupancy or short term rentals of separate interests for 30 days or less. However, section 4741 will prohibit CIDs from:

  • Adopting or enforcing a governing document provision that restricts the rental or lease of separate interests in the community to less than 25% of the separate interests regardless of when the provision was adopted (adopting or enforcing governing document provisions authorizing a higher percentage of separate interests to be rented or leased are allowed).
  • Treating ADUs and JADUs as separate interests.
  • Counting a residence as being occupied by a tenant, if the separate interest, ADU or JADU is also occupied by the owner.

Section 4741 will require CIDs to comply with the new law on and after January 1, 2021, regardless of what their governing documents provide. However, CIDs are required to amend their governing documents to conform to the requirements of this new law no later than December 31, 2021. This new law does not provide an exception to the membership approval requirements for any CC&R amendments necessary to comply with this new law. Section 4741 also states that a CID which “willfully violates” this law, including the governing document amendment requirements, shall be liable to the applicant or other party for actual damages and shall pay a civil penalty to the applicant or other party in an amount not to exceed $1,000.

In addition to the above, AB 3182 also requires local agencies to magisterially approve an application for a building permit within a residential or mixed use zone to create one ADU and one JADU per lot so long as certain building requirements are met. Moreover, AB 3182 provides that if a local agency has not acted upon a completed application for the creation of an ADU and/or a JADU within sixty (60) days, the application is deemed approved.

AB 3182 may cause sweeping changes to your community. Please consult with your community’s legal counsel for additional guidance regarding how AB 3182 may affect your community and what your community needs to do to comply.

 

Keywords: ADU, JADU

Congratulations William “Bill” S. Budd, Esq., Shareholder

Effective, September 1, 2020, the Shareholders of Epsten, APC, are pleased to announce the promotion of William “Bill” S. Budd, Esq. to Shareholder.

Bill became an attorney in 2000 after being a community association manager holding the prestigious PCAM designation. Bill has been involved with the local San Diego Community Association Institute (CAI) as well as the California Association of Community Managers (CACM). His experience as a community association manager provides a unique insight to a niche industry. While a community association manager, Bill was designated as an expert witness in Superior Court cases on community association issues.

As an attorney for Epsten, APC, Bill provides transactional and civil litigation legal advice to his clients. He has successfully represented many clients in litigation, including prevailing in six cases before the Court of Appeal; three of which resulted in published opinions that are now binding authority in California. SB Liberty, LLC v. Isla Verde Assn., Inc. (2013) 217 Cal.App.4th 272, 280 (Board’s right to exclude non-members from board meetings); Trilogy at Glen Ivy Maintenance Assn. v. Shea Homes, Inc. (2015) 235 Cal.App.4th 361, 372 (Successful defeat of an Anti-Slapp motion brought by Shea Homes); and, Golden Eagle Land Investment, L.P. v. Rancho Santa Fe Assn. (2018) 19 Cal.App.5th 399 (Prevailed in an Anti-Slapp motion, resulting in Court dismissing the entire lawsuit against the Association). Clients enjoy Bill’s personality and fun demeanor along with his passion, professionalism and understanding of his clients’ needs.

In addition to continuing his existing responsibilities, Bill will also support the firm with a new leadership role as a Shareholder. The attorneys and staff at Epsten, APC look forward to Bill’s contributions to the continued success of the firm. Together, it is our mission to provide professional, quality legal services and peace of mind to our clients.

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To contact or congratulate Bill Budd, please use the following contact form:







    Association Employee is Diagnosed with COVID-19… Now What?

    By Jacquelyn E. Quinn, Esq.

    If your association has employees, it may have certain responsibilities if one of them is suspected of having or diagnosed with COVID-19.

    The State of California’s COVID-19 Employer Playbook for a Safe Reopening provides guidance on what to do if there is a case of COVID-19 in the workplace and actions employers may consider when reporting cases to local health departments and communicating with employees and vendors.

    The California Department of Fair Employment and Housing also published guidance to assist employers and employees with frequently asked questions about how to address employees diagnosed with COVID-19 while upholding an employee’s rights. The State’s FAQ can be found here.

    In addition, the Centers for Disease Control and Prevention (“CDC”) has issued a FAQ for businesses when suspected or confirmed cases of COVID-19 occur in the workplace.

    Your local county or city may have also issued further guidance that your association should be familiar with. San Diego, for instance, in accordance with paragraph 16 of the San Diego County public health order, requires that employers notify the County Department of Public Health when an employee is diagnosed with COVID-19 and cooperate to identify and provide contact information for any person exposed by the employee at the workplace. San Diego County also recently instructed that employees are not required to undergo COVID-19 testing before being permitted to go back to work, as found here.

    If an association employee is diagnosed with COVID-19, contact your legal counsel to discuss appropriate next steps.

    Keywords: COVID-19, Coronavirus

    Epsten, APC Blood Drive

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    WHAT: Epsten, APC is hosting a blood drive in partnership with San Diego Blood Bank.

    WHEN: August 28, 2020 from 10:00 AM – 3:00 PM

    WHERE: Epsten, APC, 10200 Willow Creek Road Suite, 100 San Diego, CA, 92131.

    NOTES: Anyone 17 and older who weighs at least 114 pounds and is in good health may be eligible to donate blood. A good meal and plenty of fluids are recommended prior to donation. All donors must show picture identification. Donors are encouraged to schedule an appointment to donate, but walk-ins are welcome.

    Sign Up/Schedule: https://www.mysdbb.org/donor/schedules/drive_schedule/67084

    Donor Information: https://www.sandiegobloodbank.org/donors/blood-donor-requirements

    For more information, visit www.sandiegobloodbank.org or call 1-800-4MYSDBB (1-800-469-7322).

    Epsten, APC & CAI San Diego Joins the Fight to End Hunger in San Diego

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    CAI is asking our community to help the Jacobs & Cushman San Diego Food Bank and their North County Food Bank chapter provide emergency food to vulnerable families affected by the COVID-19 Coronavirus pandemic. These Food Banks comprise the largest hunger-relief organization in San Diego County, and distribute food to those in need at 200 distribution sites across the county as well as through 500 nonprofits with feeding programs.

    Monetary donations received by the North County Food Bank will be used to purchase food items to be given to those in need. Actual product mix and quantities purchased may vary. Donations are tax deductible to the extent allowed by law. The North County Food Bank is a chapter of the Jacobs & Cushman San Diego Food Bank which is a 501(c)(3) organization. Tax I.D. number: 20-4374795.

    Sign ups for the August 8th volunteer shifts open on July 9th via sdfb.volunteerhub.com/account/signin using join code: cail

    California Has Issued Updated Fitness Facility Guidelines

    Yesterday, July 1, 2020, the State issued revised guidelines for gyms and fitness facilities. These revised guidelines can be found here.

    One of the changes in the revised guidelines is that gym users must wear face coverings at all times while inside indoor fitness facilities. However, if people are exercising outdoors, then face coverings are optional so long as a distance of at least six feet from non-household members can be maintained.

    Additionally, face coverings must be worn while at pool areas if maintaining a physical distance of at least six feet from non-household members is not feasible, but never while in the pool.

    Certain individuals are exempt from wearing a face covering pursuant to California Department of Public Health Guidance for the Use of Face Coverings.

     

    Keywords: COVID-19, Coronavirus

    Request To Inspect and/or Copy Association Records (Civ. Code § 5200, et seq.)

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    By Rian W. Jones, Esq.

    Homeowners associations are routinely faced with members and directors who request the right to inspect association records.  There are penalties prescribed for an association’s wrongful failure to timely and fully comply with the request.  While the Davis-Stirling Common Interest Development Act (“Act”) and the Corporations Code set forth specific requirements and procedures for responding to a request to inspect and copy association records, there are exceptions and limitations spelled out in the Code and in case law.  If there is litigation or potential litigation associated with the request, the association is well advised to immediately seek counsel from its attorneys before acting on any such request.

    The following is a summary of the applicable code sections and procedures.

    Documents Subject to Inspection

    Absent different provisions in the governing documents, only “association records” may be inspected and copied.  The Act defines “association records” (Civ. Code §5200) as follows:

    • Financial documents (a summary of the association’s reserves, the reserve study, insurance and loan information, notices of expiration of insurance policies (if any), documents required to be produced in response to a seller’s request pursuant to section 5235, including notices of hearings for uncured violations (if any), a copy of construction defect notices (if any), notices of pending assessment changes (if any), the annual budget report, and financial statement reviews (if any));
    • Interim financial statement containing a balance sheet, income and expense statement, a budget comparison and/or a general ledger;
    • Executed contracts that are not privileged ;
    • Written board approval of vendor or contractor proposals or invoices;
    • State and federal tax returns ;
    • Reserve account balances and records of payments made from reserve accounts;
    • Agendas and minutes of meetings of the members, the board and committees appointed by the board, excluding minutes and other information from executive sessions of the board;
    • Membership lists, including name, property address, mailing address, and email address (but not records and/or information for members who have opted out pursuant to Civ. Code §5220). Note that a request for membership list requires a statement of the purpose for which the list is proposed to be used by the requester. (Civ. Code §5225.);
    • Association check registers;
    • The governing documents;
    • Reserve studies;
    • Enhanced association records. “Enhanced association records” means invoices, receipt and cancelled checks for payments made by the association, purchase orders approved by the association, credit card statements for credit cards of the association, statements for services rendered and reimbursement requests submitted to the association; and
    • Association election materials. “Association election materials” means returned ballots, signed voter envelopes, the voter list (including name, voting power, and either the physical address of the voter’s separate interest, the parcel number or both. The mailing address for the ballot must also be listed if it differs from the physical address of the voter’s separate interest or if only the parcel number is used.), proxies, and the candidate registration list. Signed voter envelopes may be inspected by may not be copied.

    If there is a challenge to an election, members may also request to inspect ballots. (Civ. Code §5125.)

    Time Limits for Keeping Records

    The association must maintain records for the current fiscal year, plus two previous years. However, minutes of member board meetings, and meetings of committees with decision-making authority (such as architectural committees) must be kept permanently. (Civ. Code §5210(a).)

    Time Limits for Providing Records

    The association must produce records prepared during the current fiscal year within 10 business days following receipt of a written request. (Civ. Code §5210(b)(1).)

    The association must produce any records prepared during the previous two years within 30 calendar days of a written request. (Civ. Code §5210(b)(2).)

    Minutes (or a summary or proposed draft minutes) of board meetings must be produced within 30 days of the meeting. (Civ. Code §4950.)  Minutes of committees with decision-making authority (such as architectural committees) must be made available with 15 calendar days following approval of the minutes by the committee.

    Membership lists must be produced within five days, unless the association elects to provide a reasonable alternative, such as agreeing to transmit the requester’s communication to the members directly. (Corp. Code § 8330.)

    Withholding or Redacting Records

    The association may withhold or redact information from a document if information in a document is likely to lead to identity theft of an individual or to any fraud in connection with the association such as:

    • Documents that are privileged or confidential (subject to attorney-client privilege, litigation, or confidential settlement agreements);
    • A release that is likely to compromise the privacy of a member;
    • Information that contains disciplinary actions taken against other members;
    • Collection activities or payment plans of other members, or any personal identification Information (i.e., social security number, tax identification number, driver’s license number, credit card number, bank account number or bank routing number);
    • Minutes and other information from an executive session;
    • Personal records;
    • Interior architectural plans of individual homes or units, including security features (Civ. Code §5215(a)).

    If information is withheld or redacted, the association must provide a written explanation of why the information is being withheld or redacted. (Civ. Code §5200.) The association may charge a fee for the cost of redacting enhanced association records, in any amount not in excess of $10 per hour, and not to exceed $200 total per written request., . (Civ. Code §5205(g).)

    Note that the association may not withhold or redact information concerning compensation paid to employees, vendors, or contractors (except as provided by the attorney-client privilege). However, information regarding compensation paid to employees shall be set forth by job classification or title, not by the employee’s name, social security number, or other personal information. (Civ. Code §5215(b).)  Note that where an association contracts with an outside management company to provide management services, the manager and other related employees are the employees of the management company, not the association.

    Member/Owner Rights To Inspect

    A member or any member’s designated representative may inspect an association’s records.  (Civ. Code § 5205(a).)  Records and minutes may only be inspected for a purpose reasonably related to the member’s interest as a member. (Civil Code section 5200(a)(9).)

    A member also has a right to request the email addresses of other members who have not opted out. (See Worldmark, The Club v. Wyndham Resort Dev. Corp. (2010) 187 Cal.App.4th 1017; the Court held that “address” was broad enough to include e-mail addresses if the corporation routinely used email addresses to communicate with its members.)

    Director Rights

    A director has the “absolute” right, at any reasonable time, to inspect and copy all books, records, and documents of the association. (Corp. Code §8334.) This “absolute right” is subject to a director’s fiduciary duty to act in the best of interests of the association to restrain directors from exercising these rights for personal gain, or to further interests contrary to the interests of the association. (Corp. Code §7231(a).)

    The courts have carved out exceptions to this “absolute” right.  The individual privacy rights of members of the association trump the director’s right to inspect ballots cast in an election.  “We hold that homeowners association members have a constitutional privacy right in their voting decisions, even when conducted by proxy ballot. A homeowners association director’s statutory right to inspect the records of the association must be balanced against this privacy right”. (Chantilles v. Lake Forest II Master Homeowners Association (1995) 37 Cal.App.4th 914, 926.)

    A director who is a party to litigation with the association does not have the right to inspect records in order to “advance the director’s personal interest in obtaining damages against the corporation.” (Tritek Telecom, Inc. v. Superior Court (2009) 169 Cal.App.4th 1385, 1391.)  “Although corporate directors have an ‘absolute right’ to ‘inspect and copy all [corporate] books, records and documents of every kind’ (Corp. Code §1602), including documents protected by the attorney-client privilege, we conclude that a corporate director does not have the right to access documents covered by the attorney-client privilege that were generated in defense of a suit for damages that the director filed against the corporation.” (Id. at 1387.)

    A director does not have the right to inspect records if that director’s stated purpose for inspecting those records is to breach his fiduciary duty (e.g., by disclosing attorney-client privileged documents).  The absolute right, however, is subject to exceptions and may be denied where a disgruntled director announces his or her intention to violate his or her fiduciary duties to the corporation. (Havlicek v. Coast-to-Coast Analytical Services, Inc. (1995) 39 Cal.App.4th 1844, 1852.)

    Documents May Be Inspected In Person, Copied, or Produced Electronically

    In-Person Inspection:  Inspection or copying of records may be done at the association’s business office within the association or at a place agreed to by the requesting member and the association. (Civ. Code §5205(c) and (d).)

    Paper Copies:  If a written request is made, the association may deliver copies to the member in lieu of an inspection. (Civ. Code §5205(e).)

    Electronic Copies: The member requesting the inspection can request that he/she receive records by electronic transmission or machine-readable storage media so long as the records can be transmitted in a redacted format that does not allow the records to be altered. The association can charge for this cost. (Civ. Code §5205(h).)

    Costs Associated With A Request For Documents

    Copying and Mailing: The association may bill the requesting member for the actual cost of copying and mailing. The association shall inform the member of the actual amount and this must be paid prior to copying and mailing. (Civ. Code §5205(f).)

    Redacting:  The association may bill the member requesting an enhanced record up to $10.00 per hour, not to exceed $200.00 per written request, for the time involved in redacting an enhanced record. The member making the request must agree to pay these costs before the redaction is done. (Civ. Code §5205(g).)

    Remedy For Failure to Produce Records

    If the association fails to comply with a valid request from a member to produce association records, the member has the right to sue the association to force compliance.  That member may hire an attorney and sue the association in Superior Court to obtain a mandatory injunction ordering the association to produce the records.  If the member prevails in this lawsuit and the court finds that the association unreasonably withheld the records, the court must award the member his/her reasonable costs and expenses, including attorney’s fees, and may assess a $500 penalty for each denial of a written request to inspect/copy records.  (Civ. Code §5235(a).)  If the association prevails, it is not entitled to recover its attorneys fees and can only recover its costs of litigation if the court finds the member’s lawsuit to be frivolous, unreasonable or without foundation. (Civ. Code §5235(c); see also Retzloff v. Moulton Parkway Residents’ Association (2017) 14 Cal.App.5th 742.)

    The member may also elect to bring suit in small claims court and the small claims court has jurisdiction to issue a mandatory injunction ordering the association to produce the records as well as award the statutory penalty ($500) for each denial of a written request, up to the jurisdictional limits of the court ($10,000).  No attorneys fees are awarded in a small claims case, but the court can award other reasonable costs such as filing fees and costs of serving the summons and complaint.  (Civ. Code §5235(b).)