New Civil Code Section 5450 Provides Requirements for Teleconference Board and Member Meetings During Government Declared States of Emergency

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By Dea C. Franck, Esq.

On September 23, 2021, Governor Gavin Newsom signed Senate Bill No. 391 (“SB 391”) into law as urgency legislation. SB 391 adds Section 5450 to the Civil Code, which allows California common interest developments (“CIDs”) to conduct board and member meetings via teleconference if gathering in person is unsafe or impossible because the CID is in an area affected by a declared federal, state, or local emergency.

Under current law, a board meeting can be conducted via teleconference (audio or video, or both) as long as all of the directors participating in the meeting are able to hear one another. (Civil Code section 4090(b).) For open board meetings conducted via teleconference, current Section 4090(b) requires that the notice of the teleconference meeting identify at least “one physical location where members of the association may attend and at least one director or a person designated by the board… be present at that location.” As we are all well aware, this in-person requirement proved difficult during the COVID-19 pandemic as gathering with persons outside of one’s immediate household could lead to the spread/transmission of the virus. Consequently, Civil Code section 4090(b) made it impossible for CID boards to simultaneously comply with State and local no-gathering orders and the Section 4090 requirement of providing a physical location where members could attend a board teleconference meeting in person.

The California Legislature recognized that the Civil Code did not effectively provide CID boards with a way to conduct business during a disaster or emergency so it passed SB 391 to add Section 5450 to the Civil Code in order to address this problem.

If your association is continuing to conduct board and/or membership meetings solely via telephone or web-conference platforms because of the ongoing pandemic, your association must immediately comply with the requirements of Civil Code section 5450(b). Be sure to note the notice requirements of (b)(1) and (b)(2) below.

Civil Code section 5450 provides as follows:

(a) This section only applies to a common interest development if gathering in person is unsafe or impossible because the common interest development is in an area affected by one or more of the following conditions:

(1) A state of disaster or emergency declared by the federal government.

(2) A state of emergency proclaimed by the Governor under Section 8625 of the Government Code.

(3) A local emergency proclaimed by a local governing body or official under Section 8630 of the Government Code.

(b) Notwithstanding any other law or the association’s governing documents, and except as provided in subdivision (d), a board meeting or meeting of the members may be conducted entirely by teleconference, without any physical location being held open for the attendance of any director or member, if all of the following conditions are satisfied:

(1) Notice of the first meeting that is conducted under this section for a particular disaster or emergency affecting the association is delivered to members by individual delivery.

(2) The notice for each meeting conducted under this section includes, in addition to other required content for meeting notices, all of the following:

(A) Clear technical instructions on how to participate by teleconference.

(B) The telephone number and electronic mail address of a person who can provide technical assistance with the teleconference process, both before and during the meeting.

(C) A reminder that a member may request individual delivery of meeting notices, with instructions on how to do so.

(3) Every director and member has the same ability to participate in the meeting that would exist if the meeting were held in person.

(4) Any vote of the directors shall be conducted by a roll call vote.

(5) Any person who is entitled to participate in the meeting shall be given the option of participating by telephone.

(c) If, as a result of the disaster or emergency, mail delivery or retrieval is not possible at any association onsite address and the address on file with the association for that member is the same association onsite address, then the association shall send the notice of the first meeting referenced in paragraph (1) of subdivision (b) to any email address provided to the association by that member, in writing, pursuant to paragraph (2) of subdivision (a) of Section 4040 or subdivision (b) of Section 4041.

(d) Subdivision (b) does not apply to a meeting at which ballots are counted and tabulated pursuant to Section 5120, unless both of the following conditions are met:

(1) The meeting at which ballots are to be counted and tabulated is conducted by video conference.

(2) The camera is placed in a location such that members can witness the inspector of elections counting and tabulating the votes.

(e) The remedies available pursuant to Section 4955 shall also be available to address violations of this section.

Again, please note that Civil Code section 5450 only applies if gathering in person is unsafe or impossible because your CID is in an area affected by a federal, state or local disaster or emergency declaration or proclamation.

Also, please note for purposes of Section 5450(b)(4) a “roll call” vote means the names of directors voting and how they voted are recorded in the minutes. For the purposes of Section 5450(c), Civil Code section 4040 defines “individual delivery” as the association delivering a document(s) to an owner or owners via personal delivery, certain specified methods of mail delivery, or by email (if the recipient has consented in writing or by email to receive association notices via email).

Finally, Section 5450(d) is instructive as to how members may witness the counting and tabulation of ballots as required by Civil Code section 5120 should that process need to be conducted by teleconference pursuant to Section 5450.

Your board of directors should reach out to your association’s legal counsel for advice should the board have any questions regarding the application or mechanics of Civil Code section 5450.

Agenda Setting: Who, When, and How?

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By Jillian M. Wright, Esq. & Dea C. Franck, Esq.

Setting the agenda for a board meeting is an important parliamentary protocol as the agenda establishes what will be discussed at the upcoming meeting. Though an agenda is required by the California Civil Code, California law does not specify how to set the agenda and association governing documents are often silent on the issue.

California’s Open Meeting Act (“Act”) (Civ. Code §4900 et seq.) was established with the intent of increasing transparency of the conduct of board business in common interest developments in an effort to keep owners involved and aware of board business. The Act prohibits boards from discussing or acting on an item of board business outside of a board meeting (Civ. Code §4910(a)). Civil Code section 4930 also prohibits boards from discussing any board business which was not previously placed on the agenda prior to the meeting with some exceptions outlined in Civil Code section 4930 (b) through (d) and discussed below.  Thus, agendas are more than just a loose guide for meetings; they restrict what boards can discuss and act on. If an item of business is not on the agenda, then generally a board cannot act on that item unless certain criteria are met.

Agenda Setting Protocols – Determining The Who, When and How

Who May Set and Place Items on the Agenda?

Your association’s governing documents may expressly provide who may place items on board meeting agendas and how. However, if your association’s governing documents are silent on these issues, your board should consider adopting an agenda setting protocol. Such a protocol should provide which director sets the agenda (generally we see board presidents handling this task), who may place an item of business on the agenda, how that is accomplished, and any requisite deadlines.

Regarding who may place an item of business on the agenda, California law does not provide any guidance on this issue. However, Corporations Code section 7211(a)(1) states that meetings of the board may be called by the board president, vice president, secretary, or any two directors. If the Corporations Code gives these individuals the power to call a board meeting, then by analogy the board president, vice president, secretary, or any two directors should have the power to place an item on the agenda for that meeting. Therefore, we generally recommend that agenda setting protocols provide that the board president, vice president, secretary or two or more directors may place items of board business on the board meeting agenda. Non-board member owners should not be given the power to place matters on the agenda.

Agenda item requests may be emailed to the association’s community manager or the designated board member responsible for setting the agenda. Whatever method is used to set the agenda, be careful not to violate the Open Meeting Act by having a quorum of the board discussing or debating what to place on the agenda. Simply emailing a request for an item to be added to the agenda does not violate the Open Meeting Act.

When Must the Agenda be Finalized and Posted?

Agendas must be included with the notice of the meeting. Associations must give general notice of the meeting at least four days before a regular (open) session board meeting and at least two days before an executive session board meeting. (Civ. Code §4920). In order to meet these deadlines, the board adopted protocol should provide that requests for items to be added to the proposed agenda be sent to the person designated to prepare the agenda at least 24-48 hours prior to when the notice and agenda will be posted.

How Can Agenda Items be Added to an Agenda at a Meeting?

There are some instances where a board can add an agenda item at a meeting:

  1. If the board determines that an emergency situation exists (i.e., there are circumstances that could not have been reasonably foreseen by the board, which require immediate attention and possible action by the board which make it impracticable to provide requisite notice), then the board may add that emergency issue to that meeting’s agenda by a vote of the majority of the board. (Civ. Code §4930(d)(1).)
  2. If the board determines that there is a need to take immediate action on issue and that need for action came to the attention of the board after the agenda was posted, the board may, by a vote of two-thirds of the directors present at the meeting (or if less than two-thirds of the total membership of the board is present at the meeting, then my unanimous vote of the directors present), add that item to that meeting’s agenda. (Civ. Code §4930(d)(2).)
  3. If the item appeared on the agenda for a prior meeting that occurred not more than 30 days before the date of the current meeting and at that prior meeting action on that item was continued to the current meeting. (Civ. Code §4930(d)(3).)

If the proposed agenda item does not meet one of the above, then that item cannot be added to the agenda at the meeting. However, the board can direct the community manager or director designated to set the next meeting agenda to add that item to the agenda for that future meeting.

If the proposed agenda items meet a Civil Code section 4930 exception, then the board should first vote to add the item to the agenda. Once the board votes to add the item to the agenda, then further board discussion and action may be taken on the agenda item.

In sum, if your governing documents do not address the who and how of setting board meeting agendas, your board should consider adopting a protocol in order to clearly provide a procedure as to how board meeting agendas are handled.

Be forward-thinking and consider preparing and adopting such a protocol to prevent future unnecessary strife amongst board members. Please contact our office if your association needs assistance in preparing an agenda setting protocol.

AB 3182 (Rental Restrictions) Chaptered!

By Dea C. Franck, Esq.

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

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

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

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

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

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

 

Keywords: ADU, JADU

COVID-19 Waivers

By Dea C. Franck, Esq.

If your community association is interested in either:

1. Utilizing liability waivers for the users of open (and soon to be reopened) common area facilities to sign, or
2. Posting assumption of risk notices at common area facilities,

…please be aware that there are pros and cons to both options.

We are happy to consult with you regarding both options and on the best way to accomplish this in your particular association. Just let us know.

Keywords: COVID-19, Coronavirus

June 12th Sector Reopenings

By Dea C. Franck, Esq. & Jacquelyn E. Quinn, Esq.

Starting no sooner than June 12, 2020, and only upon the approval of your county‘s health officer, certain specific amenities in your community may be allowed to reopen. As of the date of this newsletter Riverside, San Diego, San Bernardino, Orange, Los Angeles and Kern Counties have approved additional reopening.

The State has issued guidelines to reopen fitness facilities (including pools) and outdoor recreational facilities. Community associations should only reopen those amenities specified in the State’s industry guidelines and should follow the applicable State guidelines, CDC guidelines, and any requirements/guidelines issued by your county and city.

  • CDC guidelines can be found here.
  • State guidelines can be found here.
  • San Diego County reopening guidelines can be found here.
  • Riverside County reopening guidelines can be found here and then scroll down to Toolkits and click on the box marked “Business.”
  • San Bernardino County reopening guidelines can be found here.
  • Orange County announced that it will reopen various sectors starting June 12, 2020, but as of the date of this newsletter no updated guidelines from Orange County have been posted. We anticipate that such guidelines will be posted here.
  • Los Angeles County announced that it will reopen various sectors starting June 12, 2020, but as of the date of this newsletter no updated guidelines from Los Angeles County have been posted. We anticipate that such guidelines will be posted here.
  • Kern County reopening guidelines can be found here.

This is a rapidly evolving topic, so boards and community managers should review these various governmental guidelines and talk to your association’s experts regarding implementation of these guidelines, e.g. HVAC professionals, janitorial/cleaning professionals, pool maintenance professionals, and legal counsel.

Additionally, please be aware that stagnant or standing water in a plumbing system may carry a risk of Legionnaires’ disease. Because common area amenities have been shut down, associations need to ensure that the water systems for these facilities are safe to use. You should review the CDC guidelines on this issue and follow the recommendations therein. Those CDC guidelines and training can be found here and here.

Reminder: The guidelines and other regulations change frequently. Be sure to keep up to date by checking the state and county websites on a regular basis and monitoring press alerts for new announcements.

Keywords: COVID-19, Coronavirus

Emergency Rules – Discretionary or Not Discretionary? That is the Question

By Susan M. Hawks McClintic, Esq. & Dea C. Franck, Esq.

We are all being forced to address issues and make decisions that even a month ago, we did not imagine. Boards of directors and managers are put in the position of responding to Federal, state and local government orders that impact their communities while trying to make decisions for the overall well-being of the residents of their communities.

In responding to these government orders and the COVID-19 pandemic, does the board need to adopt rules to address changes in common area use, conduct of meetings and other related issues? We believe the answer depends on whether the board is responding to mandatory government orders or taking discretionary actions.

Since the shelter-in-place order from Governor Newsom went into effect on Thursday, March 19, 2020 and the various orders from counties and cities have been issued, some California community associations have either elected or been ordered to close some or all of their common area amenities during this pandemic.

If your county has ordered your community association to close some or even all of your association’s common area amenities, then we do not believe that your community association is required to adopt emergency rules to comply with these closures because they are required by law and the board has no discretion regarding those closures. (Civil Code section 4355(b)(4)). Note that if the board wants to adopt rules to address the closures, the board can do so under Civil Code section 4360(d) without following the usual process of notifying the owners of the proposed rules and allowing a comment period.

If your community association has taken a proactive approach and closed common area facilities that are not required to be closed under a government order or made other changes in use of the common area in an attempt to protect the health and well-being of the community’s residents, then we recommend adopting an emergency rule regarding those discretionary common area closures or changes in use. This same approach should be applied to any other discretionary emergency rules your board makes in response to this COVID-19 pandemic.

Civil Code section 4360(d) of the Davis Stirling Common Interest Development Act allows community associations to adopt emergency rules without first receiving member comments if “an immediate rule change is required to address an imminent threat to public health or safety or an imminent risk of substantial economic loss to the association.” The caveat is that an emergency rule is only effective for 120 days (unless the rule provides for a shorter period) AND the emergency rule cannot be readopted under the same procedure.

If your community association is contemplating adopting such a discretionary emergency rule, then the board should meet (via emergency meeting procedures, if necessary) to determine whether the proposed rule must be adopted to address an imminent threat to public health and safety. If the answer is “yes”, then the rule must be drafted and the community notified of the new emergency rule. If the board anticipates that the emergency rule must be effective for longer than 120 days, then during that 120-day period, the association should readopt the emergency rule using the rule-making procedures outlined in Civil Code section 4360(a)-(c). (See below.)

Civil Code §4360. Rule-Making Procedures

(a) The board shall provide general notice pursuant to Section 4045 of a proposed rule change at least 28 days before making the rule change. The notice shall include the text of the proposed rule change and a description of the purpose and effect of the proposed rule change. Notice is not required under this subdivision if the board determines that an immediate rule change is necessary to address an imminent threat to public health or safety or imminent risk of substantial economic loss to the association.

(b) A decision on a proposed rule change shall be made at a board meeting, after consideration of any comments made by association members.

(c) As soon as possible after making a rule change, but not more than 15 days after making the rule change, the board shall deliver general notice pursuant to Section 4045 of the rule change. If the rule change was an emergency rule change made under subdivision (d), the notice shall include the text of the rule change, a description of the purpose and effect of the rule change, and the date that the rule change expires.

(d) If the board determines that an immediate rule change is required to address an imminent threat to public health or safety, or an imminent risk of substantial economic loss to the association, it may make an emergency rule change, and no notice is required, as specified in subdivision (a). An emergency rule change is effective for 120 days, unless the rule change provides for a shorter effective period. A rule change made under this subdivision may not be readopted under this subdivision.

Keywords: COVID-19, Coronavirus

Riverside County Q&A

By Dea C. Franck, Shareholder

On March 24, 2020, the Riverside County Department of Public Health issued an update to its prior “COVID-19: Frequently Asked Questions Concerning State and Local Orders” (“Q & A”).

The Q & A can be found here.

Among other things, the Q & A answers a lot of questions that community associations located in Riverside County may be asking while the State’s Executive Order (the Governor’s shelter-in-place order) and the County’s orders and directives remain in place.

Here is a list of some of the answers provided in the Q & A that may affect your community association:

  • Private shared neighborhood pools must close.
  • Private golf courses must be closed to golf course play. We interpret this to mean golf course “ancillary use areas” as well, which include but are not limited to: parking areas, clubhouses, driving ranges, practice putting areas, and food and beverage carts. If a clubhouse also includes restaurant or other food services, it is likely that these services can continue so long as food is made available for pick-up or delivery only; in clubhouse dining should be prohibited.
  • Golf course landscaping and maintenance can continue. We interpret this as preserving and protecting the course. Work that is not needed to preserve and protect the course, such as improvements or modifications should be delayed.
  • Fitness centers, exercise gyms, recreational centers, and tennis clubs are not allowed to operate. We interpret this to mean common area recreational facilities, e.g. tennis courts, pickleball courts, dog parks, gyms, etc. should be closed
  • Parks may remain open, but the use of playground equipment is discouraged because they include high-touch surfaces and maintaining social distancing (i.e., a space of at least six (6) feet between individual) is difficult.
  • Short-term rentals are permitted under very limited circumstances:
  1. for COVID-19 mitigation and containment measures: “A. Lodging to protect the homeless population B. Lodging for persons who have been displaced and cannot return to their residence because there is a person residing at the residence that must isolate or quarantine or is at a higher risk of severe illness C. Lodging for persons who need to isolate or quarantine” and
  2. to house essential workers.
  • Restaurants or other foodservice locations are closed except for food pick-up or delivery.
  • Landscaping services may continue as they are “essential” public works because they are “necessary to protect the safety, sanitation, or operation of essential businesses, such as weed abatement and other fire prevention, tree trimming to prevent a dangerous condition, or clearance of irrigation infrastructure.”
  • Janitorial services are allowed to continue as they are essential to health and sanitation.
  • Construction projects are permitted to begin or continue as construction is considered an essential function under the State’s Executive Order.
  • Daycare/childcare facilities may continue operate, but only if they comply with the mandatory conditions in the Q & A and only if they provide daycare to the children of essential employees.
  • Home service workers may provide services to residences if essential to health, safety, sanitation or are necessary for the operation of the residence, e.g. plumbing maintenance and pest control. Non-essential home services should be deferred.

We anticipate that this Q & A will be updated as the governments’ orders change. We will do our best to provide you additional updates as we become aware of them. Additionally, the city where your community association is located may impose additional orders and directives.

Our clients may contact us if they have any questions about the County’s Q & A or any other community association legal issue.

We are here for you. Please stay healthy.

Keywords: COVID-19, Coronavirus

When was the Last Time Your Board Met with Your Insurance Agent?

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By Dea C. Franck, Esq.

Your association insurance agent’s knowledge and expertise can be critical to the health and longevity of your community. Yet, association boards of directors often forget to consult with them.

Meeting with your association’s insurance agent every year not only allows your board to get to know your agent personally, but it gives your agent the opportunity to explain the association’s insurance coverages, recommend any changes in coverage, and answer any insurance questions your board may have.

Your fellow homeowners may also be surprised to find out that the association’s master policy does not provide the broad coverage they think it does.  Homeowners usually make this discovery when their home has been damaged and they find out there is a gap in coverage between the association’s master policy and their individual policy.  In an effort to prevent such an unwelcome surprise, boards should ask their association’s insurance agent to prepare a letter to the homeowners which explains what the association’s master insurance policy will and will not cover.  The association’s agent should review and update the letter annually.  While not legally required, this letter can be included in your association’s annual budget report and policy statement and would supplement the association’s insurance information that must be disclosed to the homeowners yearly.

Finally, every year the association’s insurance agent will likely ask the association to fill out insurance applications in order to renew or purchase insurance coverage.  The information provided by your association on these applications is extremely important because your association’s insurance policies will be underwritten based on the information provided therein.  Upon receipt, your board should review and fill out these applications to the best of its knowledge.  If your association contracts with a professional management company and your community manager fills out these applications on your board’s behalf, the board should review the responses provided for accuracy and thoroughness.  Failing to disclose or providing inaccurate information as requested on the application could result in the insurance carrier either refusing to provide coverage for certain claims or rescinding or cancelling the policy.  Any questions about how to fill out an insurance application should be directed to your association’s insurance agent.

Your association’s insurance agent is the expert when it comes to your association’s insurance policies.   When in doubt, do not hesitate to contact them for advice or clarification.  This is part of the service they provide.

Epsten, APC promotes Dea C. Franck, Esq. to Shareholder

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Jon H. Epsten, Esq., Susan Hawks McClintic, Esq. and the Shareholders of Epsten, APC are pleased to announce the promotion of Dea C. Franck, Esq. to Shareholder, effective July 1, 2019.

Dea joined the firm in July of 2013, and her contributions to the firm and leadership in our Indian Wells office are unprecedented. In the six years since Dea has been a part of our team, she has maintained and established numerous key relationships and clients throughout the Coachella Valley and is well-known throughout the community association industry. Dea plays an active role in producing the firm’s annual Community Association Law Resource Book, speaks at the firm’s annual Legal Symposia and has developed and taught countless educational programs for community association board members and managers.

As a member of the Coachella Valley Chapter of the Community Associations Institute since 2015 and currently a member of the Chapter’s Board of Directors, Dea is an Educated Business Partner and has received many awards for her commitment to the Chapter. During her free time, Dea is also on the Board of Directors for Animal Samaritans, an animal welfare organization in the Coachella Valley.

As a Shareholder, Dea will lead the firm’s Indian Wells office, with plans for continued growth in the Coachella Valley, while providing the quality legal services for which our firm is known.