What Duties Does an Association Have to Maintain Video Recordings?

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Victor Valley Union High School District v. Superior Court (2022) 86 Cal. App. 5th 940.

What Duties Does an Association Have to Maintain Video Recordings?

By Joseph A. Sammartino, Esq.

 

Technology is advancing at an ever-increasing pace.  The cellphones in our pockets are not just phones, — they­­  take pictures, send email and text messages, provide GPS navigation, play music, run hundreds of apps that do almost everything, and they have better higher resolution video capability than movie studios had in the 1990s.  As technology improved and shrunk (and became much less expensive), video cameras for security surveillance have become so commonplace that most people do not notice them and go about their daily lives as if the cameras were not there.  But what happens when one of those cameras – in one of our communities – records activity that leads to an inquiry that does not get resolved which turns into a dispute and ultimately becomes a lawsuit?  What duties does an association have to maintain those video recordings or face possible sanctions under the Code of Civil Procedure for spoliation of evidence?

On December 22, 2022, the Fourth District Court of Appeal issued its opinion in the case of Victor Valley Union High School District v. Superior Court (Doe).  The court, in a different context, set forth the most current guidance on maintaining video recordings and other potential evidence.  The facts of the Victor Valley case are tragic and hopefully extraordinarily rare: two male high school students took a third male student, who was unsupervised, but who typically had full-time adult supervision both in and out of the classroom, from the cafeteria into a bathroom where they sexually assaulted him.  The school had video cameras in the cafeteria, and the assistant principal and a security officer reviewed the footage from the cafeteria cameras from a three-day period.  The third day of video included the recording of the two students taking the third student from the lunch table toward the locked bathroom.  Fourteen days later, because no one took any steps to preserve the video because each thought the other was saving it, the video was recorded over and lost forever.

Importantly, the court set forth the rules clearly and concisely: the safe-harbor provision of the California Code of Civil Procedure section 2023.030, subdivision (f), “shields a party from sanctions for the spoliation [meaning the loss or destruction] of electronic evidence only if the evidence was altered or destroyed when the party was not under a duty to preserve the evidence, and the duty to preserve relevant evidence is triggered when the party is objectively on notice that litigation is reasonably foreseeable, meaning litigation is probable and likely to arise from an incident or dispute and not a mere possibility.”

While the court’s words are clear, they leave an important practical question unanswered: when is litigation likely to arise from an incident or dispute and instead of being a mere possibility?  That is a question that could be argued and debated before courts for decades without a clear, simple answer.  From a lawyer to a client, the simplest and best answer to that question is the age-old advice: better safe than sorry.  If there is video footage (or other evidence) that relates to any incident, issue, or dispute, it would be much better to take the steps necessary to preserve that evidence until final resolution is reached rather than to take the chance that an appellate court might decide years later that litigation was likely to arise and, therefore, to impose monetary sanctions against an association for destroying evidence that should have been preserved.

 

Formation and Use of Executive Committees

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By Karyn A. Larko, Esq. and Christina S. Saad, Esq.

A committee is a group of persons appointed by an association’s board of directors to perform a specific task or tasks.

The scope of authority of a committee is largely dependent on its composition. A committee composed solely or partially of persons other than board members is generally tasked with advising the board on specific matters or exercising powers granted to that committee by the governing documents (e.g., some architectural review committees (“ARCs”).

Conversely, executive committees (“ECs”) are composed of two or more current directors and only current directors in accordance with California Corporations Code § 7212. ECs are given decision-making power that would otherwise be exercised by the board. An example of an EC is a litigation committee comprised solely of directors, established to communicate with the association’s legal counsel and make decisions pertaining to a lawsuit. Another example is an ARC comprised solely of directors tasked with exercising the board’s authority under the governing documents to approve or reject architectural applications.

Forming an EC

An EC should be formed when a board needs to delegate tasks for which it is responsible. This need may arise when a board is dealing with a complex, time-consuming matter that is ongoing and necessitates attention between board meetings. This need also exists when a dispute exists between a director and the association. In the latter example, the interested director (i.e., the director whose interests are contrary to the association’s interests) should not serve on the EC due to their conflicting interests.

California Civil Code § 5350 requires directors to recuse themselves from voting on certain matters. In some instances, it may also be prudent to form an EC to address these matters.

ECs should not be formed to exclude a director from generally participating in board discussions and votes. However, if a director is jeopardizing the interests of the association by, for example, revealing confidential or privileged information to others, it may be appropriate to form an EC to exclude that director from meetings whereat the Board discusses matters that, if made public, might expose the association to liability or disadvantage the association in a dispute. Your boards should consult with their association’s legal counsel before forming an EC for this purpose as taking this action can also create legal issues for the association.

Why Form an EC?

There are benefits to having ECs. An EC comprised of directors willing and able to volunteer more time to the association can address complex, time-consuming matters more quickly than the entire Board. Additionally, since an EC has fewer members, scheduling meetings and coming to a collective decision on matters is often easier. Finally, if less than a quorum of directors serves on an EC, the EC meetings are not subject to the Open Meetings Act (i.e., the meetings are not subject to the same notice and agenda requirements as board meetings).

In the event of a dispute involving a director, especially a dispute that could lead to litigation, there are important additional benefits to establishing an EC of disinterested directors (i.e., directors not adverse to the association in the matter) to handle the dispute. By establishing the EC, the board can prevent the interested director from obtaining privileged or confidential communications and documents related to the matter (e.g. correspondence between the EC and the association’s legal counsel, expert findings), thereby better protecting the association’s attorney-client privilege and its interests. The board can also avoid the appearance of impropriety and better protect the association and directors individually against potential liability.

In order to preserve the association’s attorney-client privilege, however, all EC meetings pertaining to the director dispute must be held in executive session and all legal guidance, EC discussions, meeting minutes and other documents and information related to the dispute cannot be disclosed to persons outside of the EC, including other directors.

Forming an EC

Have your boards review their governing documents prior to establishing an EC. The governing documents may already establish the EC, grant the board committee-making authority or, conversely, limit the board’s committee-making authority, as well as impose requirements on how ECs are formed or who may serve on them.

Unless otherwise provided for in the governing documents, ECs may be formed by a resolution or charter adopted by a quorum of the board pursuant to Corporations Code § 7212. A resolution is an official expression of the opinion or will of the board that includes the reasons for that opinion or will. A charter is a founding document that is typically more detailed than a resolution and outlines the EC’s responsibilities and authority.

When forming an EC, your boards should consider: 1) whether any directors have conflicts of interest that disqualify them from appointment or perceived conflicts that make appointment unwise; 2) whether certain directors have knowledge and experience that would benefit the EC; 3) the time commitment needed to serve on the EC; 4) whether the governing documents dictate which directors serve on the EC (e.g. based on the offices they hold); 5) whether California law dictates the composition of the EC (e.g. Civil Code § 5501 requires the treasurer to serve on an EC that reviews the association’s financials); and 6) the willingness of directors to serve on the EC.

The board should also keep in mind that if the EC is composed of a majority of the board, the same notice and agenda requirements for board meetings will apply to EC meetings. Having said this, the authority of an EC composed of a quorum of the Board is less likely to be challenged. Thus, ECs established to handle controversial matters should generally include a quorum of the board.

 

Multiple Choice Questions (correct answers in bold)

An executive committee may be composed of two or more:

a) current and former directors.

b) current directors and general members.

c) current directors and non-member experts on the matter.

d) current directors only.

 

Which of the following is not an appropriate reason for a board to form an executive committee?

a) a complex, time-consuming matter has arisen for the association

b) a majority of directors do not like the personality of another director

c) a dispute exists between a director and the association

d) the governing documents have granted the Board the authority to do so

 

Which of the following statements pertaining to executive committees is accurate?

a) An executive committee must be formed by a quorum of the board, and all executive committee meetings must be properly noticed pursuant to the Open Meetings Act.

b) An executive committee may be formed by a quorum of the board, in which case the executive committee meetings must be properly noticed pursuant to the Open Meetings Act.

c) An executive committee may be formed by a quorum of the board, but, in either case, notice of executive committee meetings should not be provided to the membership.

d) An executive committee may not be formed by a quorum of the board, and notice of executive committee meetings should not be provided to the membership.

 


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*This article was originally published in The Law Journal Winter, 2022 and was adapted from the original article, Formation and Use of Executive Committees, as authored by Karyn A. Larko, Esq. and Christina S. Saad, Esq.

 

The New Normal

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By Rhonda R. Adato

We are now entering the third year of the COVID-19 pandemic. Summertime Is approaching, and with the new season comes questions regarding how associations should manage their common area recreational facilities during the current phase of the pandemic.

Governor Newsom declared a State of Emergency on March 4, 2020, quickly followed by a Stay at Home Order on March 19, 2020. The State of California and local municipalities began Issuing COVID-19 regulations soon after, including regulations, restricting gatherings, mandating mask-wearing, limiting the use of pools, gyms, and playgrounds, setting forth cleaning protocols, and more. These regulations often arrived and changed at rapid-fire pace. Association managers, like many Californians across a wide swath of Industries, struggled to keep up with the changes.

The COVID-19 regulations in place during the last two summers provided some sense of structure (albeit and often onerous and confusing one) as associations were required to follow the law. What other option was there?

Now, many COVID-19 regulations have been rolled back, but California’s State of Emergency remains in place. The pandemic, unfortunately continues, mutating into different strains that dominate the news and bring more uncertainty. We have not entirely returned to a pre-COVlD world, as much as we wish to do so. So how, to approach the upcoming summer?

Associations may consider doing the following:

Defer to the law. New governmental restrictions, such as mask mandates, may come into place in the event of new surges. Associations can consider adopting rules that mirror existing governmental restrictions verbatim in order to bolster the reasonableness of those rules. Or, associations can simply refer residents to the governmental regulations for a more hands-off approach.

Address clashes. At least anecdotally, it seems that confrontations are on the rise as Americans enter the third year of a difficult, stressful pandemic. Associations should Investigate and appropriately address any governing document violations, including nuisances, harassment violations, or hostile environment harassment based on a protected status.

Clean smarter. Hopefully, the longer the pandemic goes on, the more we learn about how COVID-19 and its mutations spread. Associations should rely on their cleaning and janitorial professionals regarding best practices for maintaining common area facilities in as reasonably safe a condition as possible.

Continue to rely on experts. Associations can and should continue to rely on qualified experts like cleaning professionals, legal counsel, and Insurance representatives to minimize the associations’ liability, Including with regard to managing the common area and holding meetings and events.

With these steps, associations can ready themselves for the upcoming summer, as we settle into the “new normal” of the post-shutdown world.

 

 


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* This article was originally published in CAI San Diego  Community Insider  Magazine in the Summer  2022 edition and was adapted from the original article, The New Normal as authored by Rhonda R. Adato, Esq.

Meet The CAI Coachella Valley Programs Committee Chair – Tiffany L. Christian

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By Marilyn Ramos

This article is part of a series featuring CAI-CV Board members and committee chairs. In June, we profile Programs Committee Chair Tiffany L. Christian.

Tiffany joined Epsten, APC in January of 2015. She is their Director of Marketing & Client Relations. With over 20 years of business operations and marketing experience, Tiffany handles all aspects of the firm’s marketing, client relations, social media, graphic design, advertising, event planning and coordination, corporate branding and team building. She spends much of her time focusing on education for clients, colleagues, attorneys and staff – including educational programs for CAI.

Tiffany was born and raised in San Diego, CA. She obtained her AA degree and then received her BS degree in Business Marketing from the University of Phoenix. She initially went to school to be a teacher, doing graphic design on the side until the early 2000’s when she decided marketing was the perfect career for her. It offered a creative outlet and countless opportunities. Before landing at Epsten, APC, her marketing career included the jewelry, fashion and gift industries, the automotive industry and even the architectural engineering and construction (AEC) industry.

She loves the diversity in her position with Epsten, APC, the opportunity to volunteer in the industry, to provide a service to someone else, and the ability to make a difference.

Tiffany has been married for 22 years to husband, Aaron. They have two children in college, Fletcher (21 – Valparaiso University, IN, Civil Engineering Major) and Madison (19 – Point Loma Nazarene University, Nursing Major). Outside of work, she enjoys walking, hiking, camping and traveling with family and friends and is an active participant in the local community as a former Girl Scout troop leader and executive board member for her local Little League.

She says that her greatest professional achievement was obtaining her Bachelor’s Degree as a new wife, with a one-year-old and a three-year-old toddler.

Tiffany is a Certified Digital Marketing Professional via the Digital Marketing Institute (DMI) and a Professional Certified Marketer in Digital Marketing via the American Marketing
(AMA). As a participating member of the DMI, AMA, Legal Marketing Association (LMA), Community Associations Institute (CAI) and the California Association of Community Managers (CACM), Tiffany remains active in the legal, marketing and community association industry as a member and/or chair of multiple committees. Tiffany obtained the CAI Educated Business Partner distinction in 2013 and has received numerous awards, including CAI San Diego’s 2015 Committee Volunteer of the Year Award, CAI Greater Inland Empire’s 2016 Committee of the Year Award, CAI Coachella Valley’s 2017-2021 Above and Beyond Awards, CAI-Greater Inland Empire’s 2018 Committee Chair of the Year Award, and CAI Coachella Valley’s 2020 Educated Business Partner of the Year Award.

Tiffany is a results-oriented, high-energy, big picture person who enjoys the technical and analytical side of business operations. She is a natural leader and a team player who enjoys collaborating with others, working to improve efficiencies, and working together with a team to achieve a common goal. She is a stickler for details and professionalism, so she doesn’t like to cut corners. She believes that if you’re going to do something, do it right, or at least do it to the absolute best of your abilities. Her motto is “Always strive for perfection, but know that it doesn’t really exist.”

Tiffany joined CAI-CV to network with others and be of service to our community. She believes that CAI-CV is excellent in offering countless educational programs to managers and board members alike. She says that before she joined CAI, she didn’t know what an HOA was but after joining Epsten, APC she knows more about “governing” an HOA than she ever wanted to know!

Her advice to those reading this is, “Get involved! CAI is a great organization and if you are committed to a career in this industry, CAI is a great place to build contacts, build business and build a future.”

Thank you, Tiffany, for your invaluable contribution to our organization and for your continued service to CAI-CV.


Marilyn Ramos is a paralegal for Guralnick & Gilliland, LLP. She can be reached at (760) 340-1515 or by email at [email protected]

Use of Association Technology by Members

By Rhonda R. Adato, Esq.

 

  • Does your community have a media room?
  • Does your community offer computers for use by residents?

If so, this article is for you! Stay safe and ensure your community has a record of who is using association technology and how.

Logging into Association-Owned Devices

Some community associations allow residents to access the internet on association-owned devices, such as tablets or computers located in a community clubhouse or business center. However, it is important for such associations to consider implementing safeguards to keep residents accountable for their online activity and restricting accessing to certain websites and content, or in some unusual cases completely restricting access to the internet.

One method of monitoring and restricting access is requiring each resident to log in to association-owned devices using a unique, association-assigned username and password. This will make it easier for the association to track the activity of each resident, if needed. The association may also want to consider blocking specific residents from using its devices at all. For example, certain residents may be barred from accessing the internet as a result of prior criminal activities.

Our firm is not an expert in cybersecurity or information technology (“IT”). Therefore, we recommend consulting with a qualified expert regarding securing an association’s devices, implementing resident log-in requirements, restricting access to undesirable websites, etc. We also recommend consulting with association counsel regarding the type of digital safeguards each community is authorized to implement.

Finally, associations may want to consult with their insurance broker and legal counsel to ensure they’re adequately protected from potential liability in connection with a homeowner’s misuse of an association-owned device.

Here’s to (safely) surfing the Web!

Use of Timers to Stay on Schedule During Board Meetings

By Tiffany L. Christian, CDMP, PCM

One of the key components to running an efficient board meeting is to start on time and end on time. Easy enough, right? Well, we know that is not always the case.

Although most of us are meeting experts, the one challenge many of us face is when discussion goes on too long. Whether it’s discussion on an agenda item, homeowner forum or otherwise – it is difficult to interrupt someone when they are passionate about their topic and wont allow you or anyone else to get a word in edgewise.

So, here is an age-old pro-tip, with a techy twist… Use a (web) TIMER!

Meeting virtually? Even better! Open your web browser, search “Google Timer,” (or any other web browser you like), enter your time limit for the discussion at hand, click on the full-screen icon and share your screen via the virtual meeting platform.

As long as you notify your participants in advance that timers will be used to stay on schedule, you are golden. When the timer goes off their time is up.

If the meeting is virtual and they continue to speak, give them a courtesy 5 seconds and then take advantage of the “mute” audio feature.

You’re welcome. We are always here to help!
– Epsten, APC

Potential Liability for Non-Employee COVID-19 Infections: See’s Candies, Inc. v. Superior Court

By Christina S. Saad, Esq.

Employers may be held liable for COVID-19 (“COVID”) infections of non-employees, as evidenced by a recent California Court of Appeal decision.

In the recent case of See’s Candies, Inc. v. Superior Court, (Dec. 21, 2021, No. B312241) [2021 Cal. App. LEXIS 1076], the California Court of Appeal, Second District, found that an employer that has not taken adequate measures to prevent the spread of COVID in the workplace may be held liable if an employee contracts COVID at work and spreads it to a third-party, such as a spouse, if the third-party suffers a resulting injury. The court did not resolve the extent to which the employer’s duty of care reaches, however.

In See’s Candies, Matilde Elk caught COVID in March 2020 from working in close proximity to others on a packing line for her employer, Elk quarantined in her home, where her husband resided. Her husband subsequently caught COVID and died a month later.

Elk and her daughters sought wrongful death damages, including for loss of love and care. Elk claimed her husband’s death results from her employer’s failure to implement adequate safety measures, such as social distancing in the packing line room and restrooms.

Under the California Worker’s Compensation Act, Labor Code §§ 3200-6002, an employer’s liability for an employee’s workplace injury is generally limited to worker’s compensation. California courts had long established that this restriction on workplace injury remedies also applies to injuries collateral to or derivative of a workplace injury. See’s Candies argued that this rule, known as the “derivative injury doctrine,” should therefore limit its remedies to Ms. Elk’s family members to worker’s compensation, rather than open the door to widespread civil liability and remedies.

The court disagreed with See’s Candies. The court paralleled the circumstances in this case to a 1997 California Supreme Court Case, Snyder v. Michael’s Stores, Inc. (16 Cal. 4th 991) in which a minor with cerebral palsy and other disabling conditions claimed such conditions were a resulting injury of her exposure to toxic levels of carbon monoxide while in utero. This exposure occurred because her mother, while pregnant, was working as an employee at Michael’s when an incident involving carbon monoxide occurred. The Court found that the derivative injury doctrine did not remove the company’s civil liability to the baby because the harm to the baby was not dependent on, or derivative of, the harm to the mother. Rather, the harm to the baby was a result of her own exposure to carbon monoxide as a fetus.

In See’s Candies, the appellate court held that the derivative injury doctrine only applies when the third-party’s injury is derivative of the employee’s injury in the purest sense, meaning the injury to the third-party would not have happened in the absence of the injury to the employee. The court explained that, like the mother in Snyder, Elk merely served as a conduit of a pathogen and whether she had been harmed by the pathogen itself was irrelevant to the claims of her family members.

What Does this Mean for Your Association?
This case serves as a reminder that the best way your Association can protect itself from COVID liability is to follow the applicable governmental orders designed to help prevent the spread of COVID. As we all know, these orders change from time to time.

If you have any questions regarding the current orders or how to implement them, please contact us. We are here to help!

Governor Newsom Expands Drought Emergency Statewide

By Dea C. Franck, Esq.

On October 19, 2021, California Governor Gavin Newsom declared a drought emergency statewide authorizing the ban of wasteful water use and boosting conservation efforts.

California residential community associations should refer to Civil Code sections 4735(c) and (e) and 4736(a) which are triggered by the Governor declaring a state of emergency due to drought. Those sections provide as follows:

Civil Code §4735 (c):

  • “…an association, shall not impose a fine or assessment against an owner of a separate interest for reducing or eliminating the watering of vegetation or lawns during any period… [during which] …The Governor has declared a state of emergency due to drought…”

Civil Code §4735 (e):

  • “An owner of a separate interest upon which water-efficient landscaping measures have been installed in response to a declaration of a state of emergency described in subdivision (c) shall not be required to reverse or remove the water-efficient landscaping measures upon the conclusion of the state of emergency.”

Civil Code §4736 (a):

  • “A provision of the governing documents shall be void and unenforceable if it requires pressure washing the exterior of a separate interest and any exclusive use common area appurtenant to the separate interest during a state or local government declared drought emergency.”

Please contact us or your association’s legal counsel should your community have any questions regarding compliance with the Civil Code during a statewide drought emergency.

Prepping for Summer Gatherings

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By Jacquelyn E. Quinn, Esq.

KEEPING INFORMED

In August 2020, the State of California released the Blueprint for a Safer Economy (“Blueprint”) to permit the gradual reopening of certain businesses and activities. As part of the Blueprint, every county is assigned to a tier each week based on its positivity and case rates. Since August 2020, the Blueprint has governed what businesses and activities can reopen and what restrictions must be followed in order to reopen.

However, in April of this year, Governor Newsom announced expanded gathering and private event guidelines and that California is looking to move beyond the Blueprint. On June 15, 2021, tentatively, it is anticipated that all industries across California will be permitted to return to usual operations with common-sense risk reduction measures such as masking, increased cleaning and vaccinations. Local counties and cities may choose to impose additional or more restrictive requirements.

This announcement certainly appears to be the light at the end of the tunnel that we’ve all been waiting for. However, if this last year has taught us anything it is just how quickly things can change. Something that is permitted one day can be prohibited the next without any warning. Therefore, while it might seem impossible to keep up to date with the ever-changing restrictions and guidelines, it is imperative for associations to do so. Associations must take steps to fight “pandemic fatigue” and remain vigilant and informed regarding government guidelines and mandates pertaining to reopening and gathering during COVID-19.

Boards and association managers should routinely check state and any local restrictions and guidance, even as California moves beyond the Blueprint. Boards should rely on association experts, such as management and legal counsel, to advise regarding what activities are and are not permitted and how to reopen permitted common area facilities or hold permissible gatherings in compliance with government guidelines and mandates.

POTENTIAL LIABILITY AND INSURANCE

While everyone is eager to get back to a sense of normalcy, failing to follow guidelines issued by government authorities or take common-sense precautions could make it very challenging to demonstrate an association acted reasonably in its duty to exercise care in governing the common areas under its control and could expose the association to liability. If following guidelines in a meaningful manner is not feasible for an association (including following cleaning protocols, ventilation requirements, and capacity restrictions), then the reasonable action may be to leave common area facilities closed until such measures can be complied with.

One potential source of liability community associations could face are claims by residents or guests who contract COVID-19 and allege that the community association failed to exercise reasonable care in guarding against, or warning of, the risk of exposure to the COVID-19 virus. Such a claim would likely be based on the fact that community associations have a duty to exercise due care for the safety of residents and guests in those areas under the association’s control (Frances T. v. Village Green Owners Ass’n. (1986) 42 Cal.3d 490). A person making such a claim may ultimately have a difficult time proving they caught COVID-19 at the association’s facilities and not, for example, the grocery store they recently visited. Nevertheless, any such claims brought against a community association should immediately be tendered to the association’s insurance companies under the general liability, directors & officers, and any umbrella policies.

Unfortunately, not many, if any, community association insurance policies provide coverage for claims related to sickness or bodily injury caused by COVID-19. However, even if a community association’s policies contain these exclusions, the insurance company may have a duty to provide a defense for the association against any lawsuit filed, while reserving the right to not pay any uncovered claims. Boards should review their association’s insurance policies with the association’s insurance expert to understand levels of coverage, any exclusions, and what is considered a covered claim in the association’s specific policies.

NEXT STEPS AND CLEAR COMMUNICATION WITH RESIDENTS

Before reopening any common area facility or amenity, associations should consider consulting with its facility experts (janitorial, engineering, plumbing) to prepare facilities that have been shut down or inactive for prolonged periods for reopening. Boards should also discuss whether amending operating rules for the use of these areas is needed to ensure compliance with the various government restrictions and guidance. Consider whether a reservation system is necessary to manage capacity limits or ensure proper social distancing is maintained at reopened facilities or permitted gatherings. Discuss with association legal counsel whether residents can be asked to sign a waiver to use common area facilities permitted to reopen or if vaccine or testing verification can be requested to attend association gatherings or private events. Remember, failing to have and follow proper protocols could expose the association to liability.

Residents are understandably eager to use the common area facilities and socialize with the community at association events again. Frustrations are likely at an all-time high. That’s why clear communication with residents is key in these uncertain times. Associations should aim to provide residents with updates regarding the status of common area facilities and events and issue clear rules and expectations for holding or attending those activities when they are permitted to return. Staying up to date on the state’s guidance and mandates and how those impact association activities and facilities will allow boards and management to develop timely and informed plans and protocols that can easily be communicated to the community.

Everyone is looking forward to getting back to a time where clubhouses, social gatherings and community events are permitted free of restrictions, and California seems to be taking a step in that direction. However, it is reasonable to anticipate that this may merely be a small step on a much longer road back to “normal.” Associations and residents should expect certain restrictions and common-sense measures to continue to be required at common area facilities and association gatherings and private events for the foreseeable future in what might be our “new normal.”

 

This article was originally published in the Summer 2021 Issue of The Law Journal by the California Association of Community Managers (CACM).

Helpful Suggestions to Avoid Construction Contracting Mistakes

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* Originally Published in the CAI-CV April, 2021 Edition of Quorum Magazine

By Jon H. Epsten, Esq. CCAL
Founding Member and Co-Managing Shareholder at Epsten, APC

I have been fortunate to represent common interest developments for close to thirty-eight years.  At the onset of my career I became involved in assisting associations with contracting for repairs, including major renovations and many post litigation reconstruction projects in the millions of dollars.  The basic rules of contracting for this type of work have not changed much over the years. What has changed is the complexity of the work and the insurance issues.

Our cottage industry has expanded over the years from cookie cutter “stick-built” homes constructed over hundreds of acres to much smaller foot prints and to more vertical construction with complex and ever-changing construction methodologies integrated with construction materials that oftentimes equally complex to install and repair.

To assist community managers and boards of directors through the contracting process I have put together some issues for the Board to consider which address problems I have encountered over the years. These issues are not exhaustive but touch upon the obvious issues which are often over-looked and can result in even a simple project failing.  Not every project will go well no matter how much work is put into the selection of the contractor. The goal is to minimize risk and when things aren’t going well have a good exit strategy or resolution process in the construction contract.

Here is an analogy. I grew up working on boats in San Diego. I learned that the process of painting a boat is a monumental task. But, it’s not spraying the paint on the hull that is difficult, rather it is preparing the hull for the paint that takes the most work.  Planning and preparation for your construction project is the difficult part of the project not necessarily the actual work being performed.

One of the most common mistakes is not defining the scope of work in enough detail. The absolute key to a good contract is a solid definition of the scope of work. By way of example, it is prudent to have an arborist define the scope of tree trimming while it may be prudent to have an architect define the scope of a roof repair or replacement.  Attorneys do not define scopes of work. The scope should be defined by the professional in the discipline. For you do-it-yourselfers there are resources on the web that contain plans and specifications for work (e.g. asphalt paving, painting, landscaping and irrigation). No matter what methodology you undertake to arrive at the scope of work you must always have a clearly defined scope of work in the contract.

I recently had a contractor argue successfully that their scope did not include painting the siding after the siding installation. He understood when bidding that the association was painting the siding. He referred back to the scope of work and while not specifically excluded, painting was not specified in the contract. Spend time understanding the scope, read and re-read the scope and incorporate all the scope documents (plans and specifications) into the contract and consider incorporating illustrative diagrams or photographs into the scope that show the site conditions. The scope needs to clearly define what is being repaired, the locations, the means and methods of repair and the material specifications, including warranties.

A very basic and old school approach to contracting is to interview contractors prior to selecting a contractor to perform work. This basic rule can bring out a lot of issues and calm nervous board members concerns.  That said, interview with a purpose. Just recently, I suggested to a board they interview a plumbing contractor.  I was not asked to attend. I called the manager the next day and asked how the interview went and she replied, the board only had two questions and they weren’t even sure what to ask. Take interviewing the contractor seriously.

  • A list of questions should be developed so you are always comparing apples to apples when interviewing a contractor for the job.
  • Check out their references.
  • Speak to other association boards of directors of similar sized communities the contractor has performed similar work for in the past.

I have found that a board interviewing contractors and taking the time to speak to other communities who used the same contractor(s) yields good information to make informed decisions. Do not just speak with the associations on the contractor’s reference list. They have typically been chosen because they will give the contractor a glowing review. Use your industry contacts to see if there are other projects not on the contractor’s list and get their input too. For example, when a problem arose on the project did the contractor deny responsibility or did it acknowledge the issue and work with the association to find a solution.

Many of us have to visually observe things to understand them. For me, it is no different with construction. By way of example, I need to see the paint colors, how the flashing will lay up against the fascia, and how the new windows compare to the windows that remain in place. I encourage my clients when possible, to have the contractor perform prototype repairs or illustrative mock-ups. Mock-ups and prototype repairs allow the board to better understand the work, adjust the work prior to formally committing to it and use the prototype or mock-up to explain the work to the owners or other contractors who may have to integrate their work with others.

Prior to starting work it is important to communicate with the owners and residents about what they can expect. Ideally, the contractor will assign a liaison to assist management and the board with communications with the residents and owners.  Good communication leads to a successful project. Regular communications between the contractor and the board is also important. Consider inviting the contractor to your regular board meetings to answer owners’ questions and address the board on the progress of the work.

Your Community Association Manager is your consultant, but do not assume the manager has the time and/or expertise to handle a construction project. These projects can be time consuming and can take away from day to day association issues that need to be addressed. Always discuss with your manager their role in any construction project; set expectations early. It is possible you may need to hire a third party to administer the work. If the management of the work is being delegated to a committee make sure the members are knowledgeable in construction or willing to learn about the work to be performed – don’t take the first volunteer who raises their hand.

I am often asked, does an attorney need to review the construction contract? Answering, yes, appears self-serving, but in fact oftentimes these contracts are fraught with poison pills such as antiquated insurance provisions, indemnity language and limitation of liability provisions. Those provisions need to be reviewed by counsel and understood by the board. Another key consultant is your association’s insurance agent. Make sure your agent reviews the insurance provisions in the construction contract.

It’s difficult for me to conclude this article when I have so much more to say! Let me leave you with some closing thoughts.

  • Take the time you need to get the contract that gets the work done properly.
  • Don’t overly complicate or delay the process.
  • Use professionals, and board members remember, what you may do if you were the contracting party is not necessarily what the association should do (e.g. offering cash incentives to a contractor).
  • And lastly, always keep in mind that price variances in bids are a signal that bidders may not be bidding the same scope.