Sign, Sign, Everywhere a Political Sign

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By Kieran J. Purcell, Esq.

As the 2020 political season gears up it is not uncommon to see political signs popping up in community associations which often leads to questions like: “Do homeowners have the right to display political signs?” “If so, where can they post political signs? “How soon after the election can we make them take down their signs?”  Chances are your association’s governing documents have a sign provision, and the city or county your association is located in likely has an ordinance governing political signs too.  However, the answers to these questions are found in your association’s governing documents and/or the California Civil Code.  Spoiler alert-you may not like the answers.

An Association May Prohibit an Owner From Posting Political Signs in the Common Area, But Not On or In Their Separate Interest Property. Generally, an association’s CC&Rs provide its board of directors has the sole and exclusive right manage and control the common area.  Some CC&Rs may also provide no signs may be erected or displayed in the common area without permission from the board. Or the CC&Rs may allow specific signs, e.g. one (1) sign of customary and reasonable dimensions offering a condominium for sale or lease.  If so, that means the board does not have to allow an owner to put political signs on the common area, right? And if an owner does place a political sign in the common area and refuses to timely remove it, the association can remove it, right? The answer to both questions is yes. Here’s why.

Civil Code section 4710 provides:

(a) The governing documents may not prohibit posting or displaying of noncommercial signs, posters, flags, or banners on or in a member’s separate interest, except as required for the protection of public health or safety or if the posting or display would violate a local, state, or federal law.

(b) For purposes of this section, a noncommercial sign, poster, flag, or banner may be made of paper, cardboard, cloth, plastic, or fabric, and may be posted or displayed from the yard, window, door, balcony, or outside wall of the separate interest, but may not be made of lights, roofing, siding, paving materials, flora, or balloons, or any other similar building, landscaping, or decorative component, or include the painting of architectural surfaces.

(c) An association may prohibit noncommercial signs and posters that are more than nine square feet in size and noncommercial flags or banners that are more than 15 square feet in size.

Therefore, a homeowner may post political sign(s) not larger than nine (9) square feet, made of the statutorily permitted materials in or on his or her separate interest property, but Civil Code section 4710 does not grant a homeowner the right to post signs-political in nature or otherwise-in the common area.

How Long Can a Political Sign Be Displayed Before/After An Election?  While CC&Rs rarely contain similar provisions, it would be reasonable for an association to adopt a rule with similar time limitations for owners to post political signs within their association, right?  Maybe. Many cities and counties have ordinances establishing time limits for when political signs may be posted, e.g. ninety (90) days before, and ten (10) days, after an election.  Civil Code section 4710 allows an association to prohibit the posting or displaying of noncommercial signs on an owner’s separate interest if the posting or display would violate a local, state, or federal law. Consequently, an association may be able to adopt rules which mirror the same time limitations set out in local ordinances.

Okay, So We Have To Let Someone Post a Political Sign, But Just One Right?

Maybe.  Civil Code section 4710(a) says governing documents may not prohibit noncommercial signs, posters, flags or banners, plural.  Unless prohibiting the sign(s), etc. protects public health or safety or if the posting or display would violate a local, state, or federal law.  Some examples of this would be: (a) if an owner displayed so many flags close to the street it impaired drivers from seeing other cars, (b) the city requires a permit for a flag pole over a certain height and the owner has no permit, or (c) the city limits how many signs can be displayed at one time on private property.

Census Taker Access

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By Jacquelyn E. Quinn, Esq.

It’s almost time for the 2020 Census to begin and associations may find census takers seeking access to the community or information regarding its occupants.  Households will receive an invitation to respond to the 2020 Census between March 12-20. If a household does not respond to the 2020 Census, a census taker may follow up in person to collect their response. This will occur between May-July.

Then comes the question – must associations grant census takers access to the community to gather information from occupants?  In short, yes.

13 U.S. Code Section 223 provides:

Whoever, being the owner, proprietor, manager, superintendent, or agent of any hotel, apartment house, boarding or lodging house, tenement, or other building, refuses or willfully neglects, when requested . . . to furnish the names of the occupants . . . or to give free ingress thereto and egress therefrom to any duly accredited [census taker] . . . shall be fined not more than $500.

An association is required to cooperate with census takers and cannot deny access into the community or giving the names of the occupants of the premises to any census taker who has shown proper identification.  Failure to grant access to the community or furnish names of occupants requested by a census taker may result in substantial fines.  The association may utilize whatever security measures it has in place (e.g., call resident and announce visitor).  It will be up to an individual resident if they choose to open their door or not.

Associations can and should require evidence that the person is an official census taker.  All census takers will be issued a census badge, which includes their name, photograph, Department of Commerce watermark, and an expiration date. Community Association Managers, patrol staff, or homeowners may ask to see a census taker’s badge. When in doubt, contact the nearest Regional Census Center to verify a census taker’s status. https://www.census.gov/about/regions/los-angeles/contact/identify.html

In order to comply with federal regulations, make sure your Community Association Managers, patrol staff, and gate and lobby attendants (if any) understand that access must be granted to census takers. They are allowed to knock on doors, ring doorbells, use call boxes, etc.  Also, census takers are within their rights to ask associations to verify occupancy information (e.g., name and address). While you’re not expected to supply the information immediately, you should provide the requested name and address within a reasonable amount of time.

Please be aware that there is no requirement to provide any information to a census taker over the phone.  If the association receives a phone call from a person claiming to be a census taker requesting occupancy information the association should not provide such information over the phone.

SB 323 and SB 754: Elections as of January 1, 2020

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This new law makes many changes to election laws, director qualification and records inspection and affects Civil Code §§ 5100, 5105, 5110, 5115, 5125, 5145, 5200 and 5910.  These changes include all of the following:

Timing and Distribution of Materials for Elections:

An election for the board of directors must be held at the end of each director’s expiring term and at minimum every four years.

  • At Least 90 Days Before the Election: Amend election rules (Section 5105(h))
  • 30 Days Before Deadline to Submit Nominees for a Director Seat: Give general notice of procedures and deadline for submitting a nomination for a Director seat (Section 5115(a)).
  • 30 Days Before Ballots are Distributed: Give membership general notice of the following (Section 5115(b)(1)-(4)):
    • The date, time and physical address where ballots are to be returned by mail or handed to inspector of elections.
    • The date, time, and location of the meeting at which ballots will be counted.
    • A list of all candidates who will appear on the ballot.
    • Prepare the candidate registration list and voter list and allow members to verify the accuracy of their information on both lists. (Section 5105(a)(7)). Any reported errors on the voter list must be corrected by the Inspector of Election within two business days.
  • 30 Days Before Election: Inspector of Election must deliver, or cause to be delivered, the following to each member (Section 5105(g)(4)):
    • The ballot(s).
    • A copy of the election operating rules. Election operating rules may also be delivered by posting them on internet website and providing members the website on the ballot together with the phrase, in at least 12-point font: “The rules governing this election may be found here:___.”

Association Ability to Disqualify a Nominee for the Board:

An Association’s bylaws or election operating rules may only disqualify a nominee for the following reasons:

  • Nominee, if elected, would be serving on a Board at the same time as another person who holds a joint ownership interest in the same separate interest as the nominee and the other person is also a nominee for the current election or an incumbent director;
  • Nominee has been a member of the Association for less than one (1) year;
  • A nominee discloses, or the association is aware or becomes aware of, a past criminal conviction that would, if the nominee was elected, either prevent the association from purchasing the fidelity bond coverage required by Section 5806 or terminate the association’s existing fidelity bond coverage;
  • Nominee is not current in payment of regular and special assessments (does not include nonpayment of fines, fines renamed as assessments, collection charges, late charges, or costs levied by a third party). (If an Association requires a nominee be current in their payments, then it must also require a director be current in their payments.)  The nominee may not be disqualified for failure to be current in payment of regular and special assessments if either the following circumstances is true:
    • The person has paid the regular or special assessment under protest pursuant to Section 5658; or
    • The person has entered into a payment plan pursuant to Section 5665.

A nominee must be disqualified for not being a member of the Association at the time of the nomination.

An association shall not disqualify a person from nomination if the person has not been provided the opportunity to engage in internal dispute resolution.

If title to a separate interest parcel is held by a legal entity that is not a natural person, the governing authority of that legal entity shall have the power to appoint a natural person to be a member for purposes of being nominated as a candidate.

Election Operating Rules Must Include:

  • A prohibition on denying a ballot to a member for any reason other than not being a member at the time when ballots are distributed;
  • A prohibition on denying a ballot to a person with general power of attorney for a member; and
  • A requirement the inspector or inspectors of elections deliver, or cause to be delivered, at least 30 days before an election, to each member both of the ballot and a copy of the election rules. Delivery of the election operating rules may be accomplished by posting the election operating rules to an internet website and including the corresponding internet website address on the ballot together with the phrase, in at least 12-point font: “The rules governing this election may be found here:” or Individual delivery.

Association Records:

  • Membership lists subject to inspection by members now include members’ email addresses.
  • “Association election materials” has been added to the definition of association records which must be retained by the Association. These materials include the returned ballots, signed voter envelopes (signed voter envelopes may be inspected but may not be copied), the voter list, voters to whom ballots were to be sent, proxies, and the candidate registration list.
  • The voter list must include the voter’s name, voting power, and either (a) the voter’s physical address of their separate interest, (b) the parcel number, or (c) both. The voter’s mailing address must also be listed if only the parcel number is used.

Inspector of Elections:

The inspector of elections may not be a person, business entity, or subdivision of a business entity that is employed or under contract to the association for any compensable services.  The election rules may no longer make an exception.

Election by Acclamation for Associations of 6,000 or More Units:

When the number of director nominees at the close of the nomination period is not more than the number of vacant director positions on the board, the director nominees may be considered elected by acclamation if all of the following is true:

  • The Association includes 6,000 or more units;
  • The association provided individual notice of the election and the procedure for nominating candidates at least 30 days before the close of nominations; and
  • The association permits all candidates to run if nominated, except those disqualified for not being a member of the association at the time of the nomination and those disqualified for other reasons specified in Civil Code Section 5100.

Legal Actions:

  • Existing law authorizes a member of an association to bring a civil action for declaratory or equitable relief for a violation of the election law requirements by the association within one year from the date the cause of action accrues. This new law sets the time limit to file the action at one year from the date that the inspector of elections notifies the board and membership of the election results or the date the cause of action accrues, whichever is later.
  • The new law requires the court, if a member establishes by a preponderance of the evidence that election provisions or operating rules were not complied with, to void the election results unless the association establishes, by a preponderance of the evidence, that the association’s noncompliance with the election provisions or operating rules did not affect the election results.
  • An association may not file a civil action regarding a dispute in which the member has requested dispute resolution unless the association has complied with internal dispute resolution procedures.

Records to Keep

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By Karyn A. Larko, Esq.

There are few laws that say exactly what records a community association should keep and for how long.  Some of these laws are clear and some are not. For this reason, much of this article is based on the author’s experience and opinions, with input from experts in other legal and financial disciplines. Please note, there are undoubtedly some categories of records not addressed in this article that may be as important as those addressed below.

Member Meeting, Board Meeting and Committee Meeting Minutes

An association’s minutes constitute the official record of its acts. Both incorporated and unincorporated associations must keep minutes and must allow members to inspect them (see Corp. Code § 8320 and § 8333; Civ. Code § 4950 (board meetings), § 5200 and § 5210).  The original minutes should be kept forever, including minutes of membership meetings, regular board meetings and executive sessions (kept separately from regular board meeting minutes). The same applies to minutes of any committee that is empowered to exercise any board powers. If you don’t have originals, keep what you do have, signed or unsigned.

Ballots, Outer Balloting Envelopes and Proxies

The law provides direction on the retention of candidate registration lists, voter lists, ballots, proxies, sign-in sheets, signed voter envelopes and other election records. For Board elections and member votes to amend the governing documents, increase regular assessments, impose special assessments, and grant the exclusive use of common area, Civil Code sections 5105, 5125, 5200 and 5210 require that candidate registration lists, voter lists, ballots, signed voter envelopes, proxies and sign-in sheets be stored by the inspector(s) of elections or at a location designated by the inspector(s) for one year from the date the cause of action accrues.  This can be a challenging date to identify.  Depending on the nature of the claim, the date of the cause of action can be prior to the date the ballots are opened and counted, the day the ballots are opened and accounted, or a later date. Thereafter, these records must be held by the association until a total of three fiscal years have elapsed.  (For example, if an association’s fiscal year is January through December and the election is held in June 2020, these records must be retained until January 2023.)

Remember to note the election results in the relevant meeting minutes (see Corp. Code § 8325).

Contracts

Civil Code sections 5200 and 5210, which became effective January 1, 2014, require associations to make executed contracts that are not privileged under law available to the owners (which is the same as saying they must “retain” these records) for the current and prior two fiscal years.  Having said this, an association should not destroy these documents at the end of this period.

California has a 4-year statute of limitations for lawsuits arising out of contracts or other written documents (Code Civ. Proc. § 337).  Therefore, even if you signed a contract more than four years ago, you should keep the document for at least 4 years after the contractual relationship ended.  For example, if you have an automatically renewing management or landscape maintenance contract, you should keep that contract for at least 4 years from the date the contract was terminated.

To keep track of contracts, you should keep a file or notebook containing all active contracts and a separate file for contracts that have expired or have otherwise been terminated.

Records Related to Taxes

Civil Code sections 5200 and 5210 also require associations to make many tax related records available to owners for the current and prior two fiscal years.  (The tax-related records subject to section 5200 include, without limitation, state and federal tax returns, invoices, statements, receipts, canceled checks, approved purchase orders, reimbursement requests and credit card statements.)  However, an association should not destroy these records at the end of this period.

We are informed that the IRS generally has a 3-year rule and that the California Franchise Tax Board has a 4-year rule for conducting tax audits (absent fraud). However, if a claim of loss from worthless securities is made or a deduction is taken for a bad debt, the statute of limitations (i.e., the timeframe within which the IRS can challenge the claim or deduction) is 7 years.  Furthermore, there is no limit on when these agencies can pursue a claim if a tax return wasn’t filed. We have had clients whose corporate status was suspended for allegedly not filing a tax return more than fifteen years before. If the IRS has no record of a tax return or the tax payments, it will be impossible to show that you filed or paid the taxes without the return and the canceled checks.  Using this knowledge, it would be wise to keep all original financial documents for at least 4 years after filing the tax return (7 years if the return included a bad debt deduction or claim of loss) and to keep the tax returns and any tax payment checks forever.

If the Franchise Tax Board has no record that you filed or paid taxes and you do not have the records to prove otherwise, your corporation can be suspended.  The state will not revive the corporation or allow you to terminate the existing corporation unless and until the Franchise Tax Board acknowledges that all returns have been filed and taxes paid.

A few publications from the IRS provide additional guidance on the retention of tax related records. Publication 17 (2014) “Your Federal Income Tax” and Publication 583, “Starting a Business and Keeping Records,” are both available on request or can be accessed and printed from the Internet at http://www.IRS.gov. Also, an article in Smart Money Magazine[1], citing an H&R Block tax specialist, gives suggestions for individuals.  The specialist suggests keeping all tax-related items for seven years. It should be noted that the suggestions for what not to keep seem more applicable to individuals than businesses.

Since we are not tax attorneys, our best advice is that you obtain the advice of your association’s CPA or a tax attorney before discarding any tax related records.

Employee Related Records

For associations with employees, retaining payroll and employment records is more difficult to address. There are different statutes of limitations for state and federal wage claims, age and sex discrimination claims, and benefit claims, etc.  Some run from the date of the first breach and others from the date of the last violation. Depending on the claim raised, you may need time cards, hourly rates and annual salary data paid to different employees, evaluations and other personnel file records, and employee manuals and amendments.  You should probably retain the records on an employee for at least six years after the employee’s employment with the association ends.  Certainly, you should retain all records for current employees for at least six years and you should retain all personnel file information including benefit information for at least six years after the employer/employee relationship is terminated.

Unfortunately, it is far more difficult to say how long you should keep these records to defend against claims that current employees might raise in the future.

When you discard employee records, be sure to shred them to prevent both identity theft and the access of personal and confidential information by unauthorized persons.

Association Records Subject to Owner Inspection Pursuant to California Law

Civil Code section 5200 specifically identifies a number of other association records that must be made available to owners for inspection (and therefore, must be retained) for the current and prior 2 fiscal years.  Excluding minutes, contracts and tax related documents, which we addressed separately, these records include: (1) all governing documents; (2) documents required pursuant to Civil Code sections 4525, 5300, 5305, 5310 and 5565; (3) interim financial statements which include a balance sheet, income and expense statement, budget comparison or a general ledger; (4) written board approval of contracts or vendor bills; (5) reserve account records and records of payments made from reserve accounts; (6) the agendas for membership meetings, board meetings and meetings of committees established by the board pursuant to Corporations Code section 7212; (7) membership lists; and, (8) check registers.

The retention period required by Civil Code section 5200 is the minimum retention period.  These records should be kept longer if another rule or category applies that mandates a longer retention period.

Legal Documents

Legal documents, especially those that are not recorded in the official records of the county the association is located in, including settlement and mediation agreements, releases and maintenance agreements should be retained indefinitely – or at least until the association’s legal counsel confirms that it is safe to destroy them.

Any time there is a dispute involving the association and either a claim is made or a lawsuit is threatened, all documents pertaining to that matter must be preserved until litigation has concluded or the matter has otherwise been fully resolved, and legal counsel has confirmed that is safe to destroy them.  Additionally, all electronically saved communications, documents and video related to that dispute must be preserved, including without limitation, all emails, facsimiles, website and blog postings, voice-mail and text messages.

Other Association Records

There are records that an association is not required by law to retain, but we recommend doing so (at least for a substantial period of time) as a matter of good practice.

Annual audits or reviews are among the most important association financial records. These documents, which typically come in a small booklet, summarize an entire fiscal year.  It seems reasonable to keep them indefinitely.

You should maintain an inventory list, at least for items having a significant value.  This list should include a description of each item purchased, the purchase date, the amount paid and the check number. If you have a casualty loss, you will need to provide the association’s insurance carrier with a copy of the applicable purchase invoice(s) or canceled check(s).  Accordingly, you should keep these documents for as long as you own the property.

If you have an uncollected judgment, it is good for an initial 10 year period and can be renewed for an additional 10 year period.  Judgments and recorded abstracts of judgment can pop up years later, usually when a former owner wants to pay off the judgment to obtain new credit.  While a copy of these documents may be available in court files or attorney records, they may have been archived or even destroyed.  Even if they can be obtained, it may take some time to obtain them from storage.  Therefore, it is wise to keep these records while the judgment is valid.

Liability claims and certain property casualty claims can arise years after the incident(s) leading to such claims occurred and the association may have changed carriers one or more times in in the interim. The association will need to find the applicable insurance carrier to obtain insurance defense. A file should be kept for each insurance carrier and its policy(ies).  Each year’s declarations page, as well as any changes and endorsements that take effect during the life of the policy, should be added to the file.

Most associations keep a file for each owner’s property containing all correspondence and other records relating to that property or its owners. If an owner changes, routine correspondence can be archived and probably discarded following the general guidelines at the end of this article. However, for the reasons described below, you should probably retain indefinitely those documents relating to the property itself, such as architectural applications and recorded maintenance and indemnity agreements.

If architectural applications and approvals are discarded, it becomes impossible for the association to confirm which lot alterations had been approved. It also become impossible to confirm which improvements had been owner rather than developer constructed.

There is another benefit to retaining architectural decisions. Prior architectural decisions can provide guidance to architectural committees and boards by providing a record of what alterations did and did not work in the past and why. These records can also assist an association in the event an owner challenges its approval for denial of a proposed alteration. (Courts have allowed associations to change their minds based on the lessons of experience.)

Civil Code section 4765 requires architectural decisions to be in writing, and if a proposed change is disapproved, the written decision must explain why. Although you may keep the originals in separate files for each separate interest, you may find it more helpful to have at least a summary of each decision well-indexed in one or more files or notebooks. The summary should identify the improvements proposed and the reasons why they were or were not approved. This summary should also identify any regrets or complaints that followed an approval.

A general rule would be to say that, apart from the discussion above, most records can be discarded after five years, with the exception of employee benefit data/records, which must be kept for six years. However, even a five-year guideline cannot be applied categorically, and once a unique document is discarded, it is gone forever. If you are in doubt, you probably should err on the side of keeping the document, or at least get specific advice from someone with special expertise in the area that may be affected by the disposal before deciding whether to discard it.

Effective Record Retention

Records seem to disappear over the years. Thus, it is a good idea to consider using either a professional document storage company or a commercial self-storage unit just for your association’s records.  You should also develop a numbering system for the boxes and keep an index of what is in each box so that you can readily find documents many years later.

Records that you plan to keep forever should probably be kept with like documents in date order to make locating them easier (e.g., tax returns). It also makes sense to keep all records in the association’s active files that are to be kept forever in a separate drawer or banker’s box marked “KEEP FOREVER” to reduce the risk of them being inadvertently discarded. If you do not separate out these records at the time of their creation or receipt, they will become commingled with other records that may later be inadvertently discarded.  Waiting until you are ready to discard records to separate out those that should be kept will likely be significantly more difficult and time consuming than filing them separately in the first place.

If you have large quantities of documents that you think you should keep, but you don’t have the room, you may consider storing the records in computer form, either with software data files or scanned images. While this will take far less physical space than paper, it is important that you develop a plan on how you will access the documents in the future. Just as floppy disk drives have disappeared, making it difficult to pull data stored on such disks, it is important to realize that technology commonly used today may become obsolete or fail.  Therefore, unless you are using the most common software and hardware available now to store your records, know that it may not be readable in 10 to 15 years.  In fact, even using the most common software and hardware available now will not ensure that you will be able to access your electronically stored records a decade or so from now.  Additionally, hackers, ransomware, malware and viruses have all become commonplace. As a result, the security and protection of electronically stored records is becoming increasingly challenging. Built in storage redundancy, frequent document backups, and the use of current virus and malware protection software can significantly reduce the risk of loss. However, these measures are not foolproof.  For these reasons, keeping paper records may still be the safest option.

 

[1] April 2000 edition, page 88.

Record Retention: Meet the New Board, Same as the Old Board

By David A. Kline, Esq.

Often I hear members and directors distinguish between events that took place “under the old board” and those that take place “under the new board.” The implication of this distinction is that the election that brought in “the new board” somehow wiped the slate clean or that a new entity was somehow formed.  In reality though, a community association is a single entity that continues despite changes in its membership, officers, directors and management.

There is no legal distinction between decisions made by “the old board” and those made by “the new board.” Rather, the business and affairs of community association are conducted by one body – the board.

Although the board may change its mind from time-to-time, it is important to recognize that decisions made by the board may continue to affect the association into the future, regardless of any changes that may occur in the composition of the board or management.

A recent decision by a Federal District Court in Florida illustrates the problems that can occur when a community association fails to recognize decisions made by “the old board.” (Peklun v. Tierra Del Mar Condo. Ass’n, 2015 U.S. Dist. LEXIS 163554 (S.D. Fla., Dec. 7, 2015), “Tierra Del Mar.”)

In February of 2015, Sergey Peklun took his own life. He had been living with his dog, Julia, at Tierra Del Mar Condominium Association in Boca Raton, Florida. In 2011, he received a notice from the association that his dog’s presence violated the association’s pet restrictions.  He responded to that notice explaining that his doctors recommended keeping Julia as an emotional support animal due to his anxiety and depression. His assertion that Julia was an emotional support animal was supported by letters from two doctors. In September of 2011, the association’s board of directors granted Mr. Peklun a reasonable accommodation to keep his emotional support dog. Then, the composition of the association’s board changed and the association changed management companies.  Can you see where this is headed?

A neighbor complained about the dog’s presence and the association demanded that Julia be removed from the premises. When Mr. Peklun asserted that Julia was a service dog, the association sought evidence of the dog’s certification as such. In 2013, when Mr. Peklun failed to provide that evidence, the association denied Mr. Peklun’s request to keep his dog and demanded its removal.  Importantly, the board focused its attention on whether the dog was trained to provide a service for Mr. Peklun rather than on whether he continued to need the dog as an emotional support animal.

Meanwhile, the complaining neighbor sued Mr. Peklun for an injunction ordering the dog’s removal. The judge issued that injunction based on an affidavit from the association’s president stating that there was no record the board of directors had ever granted Peklun an accommodation. Mr. Peklun took his own life on the day he was to appear in court on a contempt motion for his willful disregard of that court order.

Mr. Peklun’s widow and son sued the association, its president, and the neighbor for intentional infliction of emotional distress and for violations of the Fair Housing Act, among other causes of action. The Court refused to grant the association’s motion for summary judgment on the Fair Housing Act claim. The Court explained that the association was within its rights to inquire whether Mr. Peklun continued to need his dog as a reasonable accommodation.  However, the Court continued, “Because knowledge of the 2011 accommodation…was imputed to [the association’s] current board and also brought to its attention again in 2013, it had an obligation to open a dialogue regarding Julia’s purpose before denying the request.” (Tierra Del Mar, at 48.)

The above case is just one example of the problems that can occur when a community association fails to retain adequate records through a change in management.

  • Are your association’s records maintained in a way that would alert future directors and managers of decisions the board makes today?
  • Does your document retention policy adequately ensure that minutes will not be destroyed?
  • Does your association maintain minutes in a format that is easily searchable?
  • If a new management company has taken over, were the old records reviewed and incorporated into the association’s current files? Or, were they placed in a file box and stored in archives without a second thought?
  • When corresponding with a homeowner, what steps do you take to ensure that the association’s “institutional memory” is as good as that homeowner’s? Does your association maintain an individual file for every unit or lot?

When associations change management companies, it is understandable that emotions may run high.  Rather than simply transferring disorganized boxes from one office to another, it is well worth the association’s efforts and expense for the old management company to index its files and records and to meet with the board and the new management company to explain how those records are organized.

  • What could the Tierra Del Mar board have done in 2011 to ensure that its decision in 2011 would be known by the board in 2013?
  • If you were the old manager, how would you have ensured a smooth transition of association records?
  • If you were the new manager, how would you have incorporated the association’s old records into your own records-management system?

If you have suggestions or best-practices that you would like us to share in our next newsletter, please e-mail us.

SB 616: New Law Blocking Bank Account Funds from Levy

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By Elisa M. Perez, Esq.

Under new California Code of Civil Procedure section 704.220, effective September 1, 2020, bank levies will be automatically exempt in the amount of California’s minimum basic standard of adequate care (“MBSAC”) for a family of four, which is currently set at $1,724.00.

This is the monthly amount necessary to provide a family of four with basic needs as established by the California Department of Social Services. As this amount is subject to increase annually with inflation, it could be higher once the new law takes effect next year.

The new exemption on bank levies limits a community association’s ability to collect on a money judgment because the first $1,724.00 in a judgment debtor’s bank funds would be completely protected from the levy, and only amounts above that figure would be made available for payment on a judgment.

The $1,724.00 automatic exemption applies per person, and not per account, so judgment debtors that are joint owners of a bank account could be entitled to double the amount of the automatic exemption.

Given this new law, it is now more important than ever for a Board to ensure it has information on how much funds a judgment debtor has in the bank before attempting a bank levy. Depending on the circumstances, a Board may want to narrowly focus on the bank account itself and authorize a bank account investigation, or it may want to take a broader approach and obtain information through a debtor’s examination, where the judgment debtor is called into court to testify about his or her finances.

Whatever route a Board chooses to take, it should work with its legal counsel for assistance in determining whether a bank levy would now be worthwhile.

ADU Q&A after AB 670

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By Jacquelyn E. Quinn, Esq.

Can my association prohibit Accessory Dwelling Units (“ADU”) or Junior Accessory Dwelling Units (“JADU”) construction?

If your association is a planned development, no.

If your association is a condominium project, for now, yes.

On January 1, 2020, Civil Code section 4751 (a new provision of the Common Interest Development Act) will take effect and will prohibit planned development associations from effectively prohibiting or “unreasonably” restricting the construction or use of an ADU or JADU on a lot zoned for single-family residential use. By contrast, condominium associations are permitted to prohibit the construction of an ADU or JADU.

Therefore, any restriction in the CC&Rs, rules and regulations, or any other governing document, of a planned development will be superseded by Section 4751.  For example, a requirement that garages must be used solely to park vehicles and may not be kept in a manner that interferes with the ability to park vehicles will no longer provide grounds for prohibiting the conversion of a garage to an ADU.

If you have any questions concerning whether your association is a planned development please contact your legal counsel.

What is an ADU?

An ADU is defined by California Government Code section 65852.2(j)(1) as an attached or detached residential dwelling unit located on the same legal lot as the proposed or existing single-family residence, which provides complete independent living facilities for one or more persons.  An ADU must have permanent provisions for living, sleeping, eating, cooking, and sanitation.

A detached ADU is most commonly a separately constructed structure in a back or side yard.  An attached ADU is often times an addition to the primary dwelling.  Garages, carports or existing accessory structures (e.g., pool houses or work sheds) located on the same legal lot as a single-family may also be converted to an ADU. In addition, an efficiency unit and a manufactured (i.e., mobile home) are also included in the definition of an ADU.

What is a JADU?

A JADU is defined by California Government Code section 65852.22 as a unit that is contained entirely within an existing primary single-family structure, and includes an existing bedroom. A JADU must not exceed five hundred (500) square feet. In addition, a JADU must include a separate entrance apart from the main entrance to the primary dwelling, and an interior entry to the main living area.

A JADU must include an efficiency kitchen, and may include separate sanitation facilities (i.e., a bathroom), or may share sanitation facilities with the existing dwelling.

What sorts of restrictions can a Board enforce against ADU construction?

Civil Code section 4751 allows an association to place “reasonable restrictions” on ADUs and JADUs. For purposes of section 4751, a “reasonable restriction” is one that does not unreasonably increase the cost to construct an ADU or JADU, or effectively prohibit the construction of, or extinguish the ability to otherwise construct, an ADU or JADU consistent with Government Code sections 65852.2 or 65852.22.

The new law offers little guidance as to what sort of restrictions are “reasonable,” but the law does not require an association to follow the same exact standards that the city or county has adopted concerning ADUs or junior ADUs.  In our view, that leaves open the option for an association to adopt its own “reasonable restrictions” that may differ from or be more restrictive than those of local agencies.

Such “reasonable restrictions” may include requirements related to aesthetics and design of the new unit, submitting and receiving approval of an architectural application, size of the new unit, use of shared facilities in the community, and parking.

Can ADUs be rented?

Generally, yes.  The Legislature’s stated intent when adopting Section 4751 was to permit the rental of ADUs for a period of more than 30 days (e.g., no short-term rentals). Associations with rental restrictions in its CC&Rs may impose the same rental restrictions on ADUs. If an association does not currently have rental restriction in its CC&Rs it may not impose such rental restrictions on ADUs in the community without first amending its CC&Rs.

Also, effective January 1, 2020, local agencies may no longer impose a requirement that an ADU or primary dwelling be owner-occupied.  Therefore, a situation may arise where both the primary dwelling and ADU are occupied by non-owner residents. However, a requirement that either the primary dwelling or JADU be owner-occupied is still permitted.

Can ADUs be sold separately from the primary dwelling?

Generally, no.  Under the vast majority of circumstances, an ADU must never be sold separately from the primary dwelling.  However, local agencies may adopt an ordinance that allows a very limited and narrow exemption to this prohibition.  When a property (both ADU and primary dwelling) is built or developed by a qualified non-profit corporation to be sold to qualified low-income buyers for purposes of owner-occupancy only, a local agency may adopt an ordinance that allows the ADU to be sold or conveyed separately from the primary dwelling.  As a condition of the sale, the buyers of both dwellings must enter into a recorded tenancy in common agreement with provisions that ensure the property will be preserved as low-income housing and will be owner-occupied. This very limited exemption should not impact established communities.

What kind or size restrictions can be imposed on ADUs?

Local agencies may establish minimum and maximum unit size requirements for both attached and detached ADUs.  However, beginning January 1, 2020, local agencies may not establish a minimum square footage requirement that prohibits an efficiency unit or a maximum square footage requirement that is less than eight hundred and fifty (850) square feet, or one-thousand (1,000) square feet for an ADU that provides more than one (1) bedroom.

In addition, any other size requirement set by a local agency, (or size based up on a percentage of the primary dwelling, floor area ratio, open space, and minimum lot size) must allow for at least an eight hundred (800) square foot ADU that is at least sixteen (16) feet in height with four (4) foot side and rear year setbacks.

By definition, JADUs must not exceed five hundred (500) square feet.

What parking requirements may be imposed on ADUs?

Parking is a challenge for many associations even without ADU construction and may require request specific inquires to determine the best solutions.

Local agencies are permitted to require one parking space per ADU or per bedroom, whichever is less.  These spaces may be provided as tandem parking on a driveway.

However, a local agency may not impose parking requirements for an ADU when (1) the ADU is located with one-half mile walking distance of public transit; (2) the ADU is located within an architecturally and historically significant historic district; (3) the ADU is part of the primary residence or a permitted accessory structure; (4) on-street parking permits are required but not offered to the ADU occupant; and (5) a car share vehicle is located within one block of the ADU.

In addition, starting January 1, 2020, a local agency may not require that parking lost by conversion of a garage or carport to an ADU be replaced.

What are the next steps to manage ADU and JADU requests?

Section 4751 allows associations to adopt “reasonable restrictions” concerning ADU and JADU construction.  If your association is a planned development, we recommend you contact your legal counsel to discuss options and prepare ADU guidelines.  Once ADU guidelines have been prepared the Board will need to provide general notice of the proposed guidelines and allow for member comment pursuant to Civil Code section 4360.

Election Process Timeline (Effective January 1, 2020)

Now that SB 323 has passed… What do you need to do and when?

Your election process just got a lot more complicated – and, the truth is, calculating your important dates and deadlines to adhere to the new laws effective January 1st, is like trying to hit a moving target.
To assist our clients (beyond attending our Legal Symposium), we have compiled an Election Process Timeline to help you understand the laws,identify when you need to start planning your next election and to help you set your Association’s own election deadlines.

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AB 670: Accessory Dwelling Units (ADUs)

By Jacquelyn E. Quinn, Esq.

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In recent years, the California Legislature has enacted several laws aimed at limiting the authority of local agencies to restrict accessory dwelling units (“ADUs”) and junior ADUs and streamlining the construction of ADUs and junior ADUs.  Up until now, state law hasn’t addressed private restrictions on ADUs, such as in an association’s CC&Rs.

However, effective January 1, 2020, AB 670 adds section 4751 to the Common Interest Development Act that will prohibit associations from “unreasonably” restricting the construction of an ADU or junior ADU on a lot zoned for single-family residential use.  (An association’s governing documents may continue to prohibit the construction of an ADU on a lot zoned for multi-family residential use. )  The intent of the Legislature in passing this bill is to encourage the construction of ADUs or junior ADUs that are either owner-occupied or are used for rentals for longer than thirty (30) days.

An ADU, sometimes referred to as mother-in-law units or granny flats, is a dwelling unit designed to serve as independent living quarters for at least one person. These dwelling units can be both attached and detached from the primary dwelling unit. A junior ADU is simply a unit that is 500 square feet in size or less, attached to the home, and has entrances from within the primary dwelling unit as well as from outside.  A garage, carport or covered parking structure on the lot may also be converted to an ADU or junior ADU.

AB 670 makes any governing document void and unenforceable to the extent that it prohibits, or effectively prohibits, the construction or use of ADUs or junior ADUs.  However, AB 670 does allow an association to place “reasonable restrictions” on ADUs and junior ADUs in common interest developments, as long as the restrictions do not discourage or effectively prohibit ADU or junior ADU construction or unreasonably increase the cost to construct them.

Although the new law does not define what sort of restrictions are “reasonable,” the law does not require an association to follow the same exact standards that the city or county has adopted concerning ADUs or junior ADUs, leaving open the option for an association to adopt its own “reasonable restrictions” that may differ from those of local agencies.  Such “reasonable restrictions” may include requirements related to aesthetics and design of the new unit, submitting and receiving approval of an architectural application, size of the new unit, use of shared facilities in the community, and parking.

There are bound to be disagreements over what constitutes a “reasonable restriction.”  What constitutes a “reasonable restriction” for one association may not qualify as “reasonable” for another. Therefore, it is important for associations to conduct a diligent inquiry into what restrictions are truly reasonable for their community and members before adopting ADU guidelines for members to follow.

With respect to new provisions that local agencies must follow, sections 65852.2 and 65852.22 of the Government Code set forth specific standards that local agencies must follow in adopting local ordinances related to ADUs and junior ADUs.  For instance, local ordinances cannot establish a maximum square footage requirement for an ADU that is less than 850 square feet, or 1,000 square feet if the ADU contains more than one bedroom.  The local ordinance also cannot require a property owner who built an ADU to occupy the primary home on the property or the ADU. In addition, a local ordinance may not impose a requirement to replace lost parking spaces somewhere else on the property when converting a garage to an ADU.  While an association may adopt ADU restrictions that differ from local regulations, it is important and helpful for associations to be aware of their city’s or county’s local ordinances concerning ADUs and the ways in which the association’s restrictions vary, as residents are bound to raise comparisons.

Membership & Voter List Opt-Out Form

Civil Code section 5200 currently requires associations to disclose membership names, property addresses, and mailing addresses to other members upon request unless a member opts-out of sharing their information.

A new law mandating the disclosure of member email addresses to requesting members will go into effect on January 1, 2020. As such, we have updated our “Disclosure of Member Information Opt-Out Form” template, which is available upon request.

Associations may send updated opt-out forms to their membership now in anticipation of the change in the law. After January 1, 2020, member email addresses on file with the association must be disclosed to requesting members unless a member completes and submits a form to the association opting-out of having their information shared.

Note: Some of our clients may already provide member email addresses to requesting members. For those clients, their current opt-out form may be adequate.