Neighbor to Neighbor Disputes and Balancing the Liability Line

By Jillian M. Wright, Esq.

Download pdf

Neighbor to Neighbor Disputes and Balancing the Liability Line

With more people working from home in the last year, you might have noticed an increase in neighbor disputes. Often, neighbors will turn to the association first to resolve the dispute. The board must determine when a neighbor-to-neighbor dispute becomes an association issue; which complaints are based merely on bad relations between the neighbors and which are based on substantial and documented violations of the governing documents? What to do if the complaints are substantiated?

When and How to Investigate

It can be tempting to write off neighbors’ complaints as outside the role of the association. However, the board is tasked with enforcing the governing documents. If an association fails to conduct an adequate investigation into a complaint which might involve a violation of the governing documents, an owner could sue the association for failure to enforce those governing documents. Typically, governing documents prohibit noxious, offensive behaviors and/or nuisances. One of the primary neighbor to neighbor disputes occurs when one or both parties are accusing the other of committing a nuisance – whether it be an offensive noise, sight, or smell.

When an association receives a nuisance complaint the first step should be to investigate the claim. In-person investigations by the manager or non-interested board member should be the first step, if at all possible as this is often the best way to determine if the alleged nuisance is offensive to a reasonable person.

If the offensive conduct happens late at night, seek other evidence to substantiate the complaint. Ask other neighbors about their experience. Ask for videos or pictures with time stamps.

If the dispute takes place solely online or on social media, then the association should not intervene. Governing documents typically define nuisance as actions affecting a residents’ ability to quiet enjoyment of the common area and separate interest property. As such, complaints of online conduct should be directed to the website host (such as Facebook or Nextdoor) or law enforcement as necessary. However, if the dispute takes place on the association’s own forum the board may need to institute codes of conduct and decorum or limit posting rights in order to avoid defamation claims.

Additionally, if a resident complains that their neighbor has discriminated against them based on their protected class (including race, color, religion, national original, sex, disability and familial status) federal law requires the association to investigate (See Code of Fed. Reg. §100.7(a)(1)(iii)). Failure to investigate and enforce quickly could result in liability for the association.

However, if an association acts too quickly, without investigating, it could also face liability. For example, if an association sends a violation letter to an owner who is a member of a protected class, that owner could allege that the association’s enforcement was based solely on the board’s discriminatory beliefs. If the association did not investigate or substantiate the neighbor’s complaint, it may not have enough evidence to disprove this allegation.

When and How to Enforce

If a complaint is substantiated, then the association needs to follow the enforcement procedure within the governing documents: send the violation notice and/or call the offending owners to a hearing at which the association can impose fines or suspend privileges. Alternatively, boards can request owners mitigate the alleged nuisance, for example, lay down rugs to dampen sound or insert insulation to lessen the transmission of smoke smell.

If basic enforcement does not garner results, the board may need to consider litigation (and mediation prior, if necessitated by Civil Code §5925 et seq.). However, while the board is dutybound to enforce the governing documents, the law does not necessarily require the association to see the matter through to the end. In Beehan v. Lido (1977) 70 Cal.App.3d 858, the court held that a board’s decision whether or not to file an action to enforce the CC&Rs is governed by the business judgment rule. If the board determines that filing suit is not in the best interest of the association after reasonable inquiry, then the complaining neighbor has the right to bring suit pursuant to Civil Code §5975.

Tools for Enforcement or Resolution

Common interest developments are seen as quasi-governmental organizations, so owners often assume associations’ power reach farther than it does. Associations should make clear to owners the limited scope of the association’s authority and offer tools to help neighbors address issues with each other directly.

One tool is law enforcement. An association cannot and should not guarantee a resident’s safety. Complaints of violence, harassment, or threats of violence should be directed to law enforcement. An association may have a corresponding role to law enforcement if the actions or threats are directed toward board members or vendors or violate the governing documents but an association’s ability to intervene to prevent or  stop someone’s behavior may not be effective remedies when someone is potentially committing a crime.

Another little known tool to neighbors is mediation. Some dispute resolution centers offer low or no-cost mediation. California’s Department of Consumer Affairs has a list of mediators which offer these services and the local county bar association may offer more options as well. If owners seek mediation, the association is not obligated to participate.

In sum, this is a difficult balancing act. An association could face liability for both refusing to get involved and getting involved too soon, without a proper investigation. As always, consult legal counsel with questions.

This article was originally published by CACM in the Fall, 2021 Law Journal.

Enforcement of Short-term Rental Bans: Brown v. Montage at Mission Hills

Download pdf

By Jillian M. Wright, Esq.

Enforcement of short-term rental bans for common interest developments (“CID”) just got more complicated thanks to a recent California Court of Appeals decision.

In the recent case of Brown v. Montage at Mission Hills, Inc. (2021) 68 Cal.App.5th 124, the California Court of Appeal, Fourth District found that a CID cannot require a rental to be for a minimum term for homeowners who owned prior to the CID adopting that requirement pursuant to Civil Code section 4740. In this case, Brown purchased a unit for the express purpose of renting it out as a short-term rental. Montage at Mission Hills later adopted a 30-day minimum rental period. Brown sued on the basis that she was exempt from that requirement because Civil Code section 4740 provides that homeowners are not subject to governing document provisions that “prohibit[ ] the rental or leasing of any of the separate interests … unless that governing document, or amendment thereto, was effective prior to the date the owner acquired title to their separate interest.”

The appellate court sided with Brown and found that minimum rental terms are rental prohibitions and not rental restrictions. Therefore, a short-term rental ban would not apply to homeowners who purchased prior to the ban’s adoption. The appellate court noted that “[t]he legislative history indicates that the Legislature’s intention was to ensure that owners maintained all rental and leasing rights they had at the time of purchase.”

What does this mean for your association?

If you have a minimum rental term in your governing documents it may not be enforceable against all homeowners, depending on the language of the provision and when it was adopted. If you have questions about the enforceability of your association’s minimum rental term, please contact us or your association’s legal counsel for further guidance.

Agenda Setting: Who, When, and How?

Download pdf

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.

San Diego Small Claims Court Re-Opening

By Jillian M. Wright, Esq. & Dominique M. Morrow

The San Diego courts are reopening however, associations should expect delays, especially in Small Claims Court.

We are informed there are currently no Small Claims Court hearings going forward at this time. The Small Claims Court is tentatively looking into rescheduling the hearings that were set for March (when the court closed), beginning in August and then keep scheduling out from there. As an example, hearings originally set in April 2020 would now be for September 2020 and so on.

Associations can still submit brand new small claims filings but they will be set far out (possibly not until the end of this year) as they will have to be scheduled behind all the rescheduled hearings.

In addition, there are currently no walk-ins at the Small Claims Court business offices so in order to file a small claims complaint associations will have to mail the following items in, to the Clerk of the Small Claims Court:

  • the original signed complaint,
  • a copy of the complaint,
  • a self-addressed envelope, and
  • filing fees.

Our firm is assisting clients with any inquiries they may have regarding the preparation or filing of small claims complaints.

 

Keywords: COVID-19, Coronavirus

Solar Energy Systems: Civil Code §4746 and “Equitable Allocation”

Download pdf

By Jillian M. Wright, Esq.

Since January 1, 2018, California community interest developments have been required to allow members to install solar energy systems on common area roofs of the buildings in which their unit is located or on roofs of adjacent carports or garages (See Civ. Code §§ 714.1, 4600, and 4746). However, this does not mean a member can put as many solar panels as he or she wants up on the common area roof without consideration of neighbors in the building. The California Legislature fortunately included a provision into Civil Code section 4746(b) which states in part:

(b) When reviewing a request to install a solar energy system on a multifamily common area roof shared by more than one homeowner pursuant to Sections 714 and 714.1, an association may impose additional reasonable provisions that:

(1) (A) Require the applicant to submit a solar site survey showing the placement of the solar energy system prepared by a licensed contractor or the contractor’s registered salesperson knowledgeable in the installation of solar energy systems to determine usable solar roof area…

(B) The solar site survey shall also include a determination of an equitable allocation of the usable solar roof area among all owners sharing the same roof, garage, or carport.

(Civ. Code § 4746(b))

While this provision prohibits the first owner in a building who wants to install a solar energy system from taking all the usable space on the roof, it unfortunately fails to define what an “equitable allocation” is. Does it mean each member in the building gets an equal amount of square footage of the usable roof[1] or does it mean each owner should get a proportion of the usable roof space that would result in an equal amount of energy output? We interpret it to mean the latter.  This interpretation promotes solar ownership as it theoretically allows all owners in a building an equal opportunity to the same quantity of solar energy, whereas the former interpretation rewards only the first installers of solar energy systems who utilize the most energy efficient square footage available on the shared roof.      Even if equitable allocation is based on a proportional share of potential energy production, as technology evolves and energy output for solar energy systems improves, equitable allocation may change over time. If this happens, the Board may need to reconsider existing determinations of equitable allocation.

Another quandary arises when a building contains different sized units or members in a building pay variable assessments based on unit size. The Board must then determine if “equitable” means “equal/identical proportions” or “fair/reasonable.”  For example, one could argue that if a member pays more in assessments, then it would be fair for that member to  use a larger share of the usable common area roof space based on the owner’s assessment to common area ratio for the building.  In situations where assessments are variable, this is a reasonable interpretation; however, where assessments are equal for all units, it becomes more difficult for an owner to argue he is entitled to more roof space based on unit size alone.

Ultimately it is up to the board to decide what is fair and reasonable when determining the equitable allocation of a common area roof. Each association and each building is different, and unfortunately there is no black and white answer that applies in every situation.  If you require further guidance in making such a determination, Epsten, APC can assist you in the process.

 

[1] This is another term the legislature failed to define. Since the legislature appears to leave the preparation of a solar site survey in the hands of the solar installer, it might be necessary to obtain the opinion of the solar installer on what portion of the roof is considered “usable” on a case-by-case basis.   Generally, we believe the definition of “usable roof” to be those portions of the roof that get sun (are not shaded by trees or vents) and can feasibly support an energy system.

 

Keywords: Solar Panels

Q&A.  How do you collect fines? What options do you have legally?

A. Civil Code prohibits an association from characterizing a fine as an assessment that may become a lien against the property. Therefore, the only way to collect would be to sue an owner. We recommend a lawsuit to recover fines be brought while the amount is within the jurisdiction of small claims court (max $5,000 per claim for associations) to minimize legal costs. Before suing, make sure the association has afforded the owner due process in accordance with Civil Code section 5855 (i.e. a properly noticed hearing and hearing results letter).  – Jillian M. Wright, Esq.

Q&A: Trusts are becoming more common. Can you speak to:

Q. Trusts are becoming more common. Can you speak to:
  • Who can serve on the board?
  • Who can be served and fined?
  • Who can authorize access to a residence?
A.  The trustee(s) of the trust listed on title should be treated as the owners who are members. Those trustees on title can serve on the board, can be sent violation notices/fined, and can authorize access to a residence. Beneficiaries of a trust are not owners or members.   —Jillian M. Wright, Esq.

 

Solar Panels and Solar Energy Systems: The Association’s Ability to Regulate Owners’ Installation on Common Area

Download pdf

By Jillian M. Wright, Esq.

On October 15, 2017, California Governor Brown signed Assembly Bill No. 634 into law, which revised Civil Code §§ 714.1 and 4600 and created Civil Code §4746. With AB 634 being signed into law, community interest developments are now required to allow owners to install solar energy systems1 on certain common areas as of January 1, 2018. However, the new law allows associations to impose reasonable requirements to guide solar energy system installation and protect the association from liability. With the increasing prevalence of homeowners wanting to install solar energy systems, associations should be aware of the new law’s implications and how best to craft compliant guidelines and regulations. Below, we summarize the new law’s provisions and how to remain compliant with the new law in a manner that best protects the interests of the association.

1. An association may not establish a general policy prohibiting the installation or use of a rooftop solar energy system for household purposes on the roof of the building in which the owner resides, or a garage or carport adjacent to the building that has been assigned to the owner for exclusive use. (Cal. Civ. Code §714.1(b)(1).)

This means an owner cannot place solar panels or equipment on whatever common area he or she chooses, but rather is limited to the buildings or structures in which he or she owns. Also note, if a carport is adjacent to the building but is not assigned, the association is not required to allow an owner to place solar energy equipment on that carport. Additionally, we note that this provision provides for the “installation or use” of solar energy systems, meaning the owner is not required to own the equipment and may lease it (which is a popular option).

2. The new law prohibits an association from requiring approval by a vote of members owning separate interests in the common interest development to allow this exclusive use of the common area by an owner. (Cal. Civ. Code §714.1(b)(2) and Cal. Civ. Code §4600(3)(J).)

Prior to the new law, an association was required to seek membership approval to grant exclusive use to common area for the installation of solar energy systems, which is a huge undertaking for most associations. With the passage of the new law, this burden is removed.

3. When reviewing a request to install a solar energy system on a multifamily common area roof shared by more than one homeowner, the association must require an applicant to notify each owner of a unit in the building on which the installation will be located of the application. (Cal. Civ. Code §4746(a)(1).)

We suggest any association with common area roofs create solar energy system guidelines and include this requirement to notify all owners in the same building. We recommend those associations require the requesting owner to provide the association with signatures from the notified owners or certified mail receipts showing the notification was sent. That way, if a neighboring owner challenges their neighbor’s solar installation, the association has proof that it complied with this requirement.

4. The association must also require the requesting owner and each successive owner of that unit to maintain a homeowner liability coverage policy and provide the certificate of insurance within fourteen days of approval and annually thereafter. (Cal. Civ. Code §4746(a)(2).)

Unfortunately, the California Legislature did not clarify what an association can or should do if an owner does not comply with this requirement. We believe the Legislature would not force an association to permit the solar energy system to be installed if there is no proof that it is insured, so we think revocation of approval is appropriate in that instance. We also believe the Legislature intended to permit an association to require that a solar energy system be removed if an owner cannot provide proof that it is insured. However, if the system is already installed and the owner does not provide proof of insurance coverage, must the association undertake efforts to see that the solar energy system is removed, even if it means the association will incur significant legal costs? Will the association be liable if it does not follow up annually to ensure that proof is received? Unfortunately, there are no answers to these questions at the moment. If this new law applies to your association, we suggest calendaring a follow up with the applicable owners each year for this request to avoid liability.

5. When reviewing a request to install a solar energy system on common area, the association may impose additional reasonable requirements, including a requirement to submit a solar site survey showing the placement of the solar energy system. If the association requires this solar survey, it must “include a determination of an equitable allocation of the usable solar roof area among all owners sharing the same roof, garage, or carport.”(Cal. Civ. Code §4746(b)(1).)

This means the association can impose guidelines and restrictions regarding aesthetic standards, so long as the restrictions do not “significantly increase the cost of the system or significantly decrease its efficiency or specific performance…” as described in Civil Code §714 (see discussion below). For example, an association can provide that the preferred location for all solar energy systems is one that results in the least visual impact to owners of the association and, if possible, that the system equipment not be visible from street view. However, if in this example, the only feasible location for solar panels to be placed is on a roof which directly faces the street and any other location would significantly decrease the system’s efficiency, the association cannot prohibit an owner from placing the solar panels on the roof that faces the street.

Additionally, this provision provides that an association “may” require that an owner provide a solar site survey showing the usable area of the rooftop and the proposed placement of the solar energy system.2 We recommend every association with common area roofs require this with their solar guidelines. Alternatively, the association, in its sole discretion, may perform its own solar site survey.

As for the “equitable allocation,” we interpret this provision to mean the association may require the owner to then abide by the equitable allocation as called for in the survey by using only the owner’s share of the rooftop so the remainder will be available for other owners of units in the building. This will greatly affect whether owners in mid-rise and high-rise buildings seek out solar energy systems; it may not be cost effective to install a solar energy system if an owner in such a building is required to abide by the equitable allocation determination given so many people are sharing a common roof.

The phrasing of Civil Code §4746(b)(1) seems to indicate that the requesting owner may choose where the solar energy system shall be placed, so long as the owner lives in the building on which it will be placed, has complied with the association’s reasonable regulations (if the association has adopted any), has performed the site survey (if the association requires that), and is not exceeding his or her equitable allocation of the roof. This means, for example, even if there are multiple units within a building, the requesting owner is not required to place the solar energy system directly over his or her unit, but can place the panel anywhere on the building’s roof, the garage, or adjacent, assigned carport.

6. The association may also require the owner and each successive owner to be responsible for costs of any damage to the common area, exclusive use common area or unit; costs for the solar energy system; and disclosures to prospective buyers. (Cal. Civ. Code §4746(b)(2).)

We highly recommend each association require a requesting owner to take on these responsibilities within the solar energy system guidelines and require the owner to sign a license, maintenance, and indemnity agreement stating the same. This agreement can then be recorded on title so all prospective buyers are put on constructive notice of the agreement. This agreement should also include language which clarifies that the owner may be required to remove the solar energy system, at his or her own cost, to allow for common area maintenance or repair and that the owner is responsible to replace the system at his or her own cost.

7. The association must still abide by Civil Code §714.

This new law specifically requires associations to allow owners to place solar panels on common area roofs. However, though AB 634 altered Civil Code §§714.1 and 4600 and created Civil Code §4746, an association is still required to abide by Civil Code §714 as well when crafting its solar energy system guidelines.
California Civil Code section 714(a) prohibits any declaration and other governing document provision(s) from prohibiting or restricting the installation of solar energy systems outright. Civil Code section 714(b) states that it is the public policy of the State of California to promote and encourage the use of solar energy systems. As such, any restrictions on the installation of these systems are declared invalid if the restrictions “significantly” increase the cost of the system or “significantly” decrease the efficiency of the system. A “significant increase” in the cost of a solar domestic water heating system or solar swimming pool heating system that complies with state and federal law is one that increases the cost more than 10% over the cost of the system, but in no case more than $1,000. A “significant increase” in the cost of a photovoltaic system3 that complies with state and federal law is a cost increase of more than $1,000. A “significant decrease” in the efficiency of the system is one that decreases the efficiency by more than 10% over the efficiency of the owner’s originally proposed system. Restrictions on system placement are generally valid if they allow for an “alternative system of comparable cost, efficiency, and energy conservation benefits.”4
The penalty for willful non-compliance with Civil Code section 714 is $1,000, plus the amount of any actual damages suffered by the owner. (Civ. Code § 714(f).) Attorney’s fees are also recoverable by the prevailing party. (Civ. Code § 714(g).)

The statute also mandates that review of an application cannot be “willfully avoided or delayed.” An application is to be reviewed and approved in writing in the same manner as an application for any other architectural application. “If an application is not denied in writing within 45 days from the date of the association’s receipt of the application, the application shall be deemed approved, unless that delay is the result of a reasonable request for additional information.” However, if an association’s governing documents include a shorter response time frame, we suggest the association provide its written decision on a proposed solar energy system application within the time frame stated in the governing documents to avoid any potential risk of the application being “deemed approved” by a court.

In summary, though associations are required to permit owners to install solar energy systems on common area now, it need not be at the association’s expense. An association can adopt reasonable restrictions on the placement and maintenance of the systems and require the owner to take on the liability involved with any damage caused by the system, as described above. We suggest an association consult with its legal counsel to ensure compliance with the new law when creating solar energy system restrictions and guidelines.

1 For purposes of these Guidelines, the term “solar energy system” refers to both solar domestic water heating systems and/or photovoltaic systems, as applicable to an Owner’s request.
2 The cost to perform this survey shall not be deemed as part of the cost of the system as used in Civil Code §714. See discussion below.
3 A “photovoltaic system” is one that generates electricity.
4 California Civil Code section 714(b)

Solar Panels and Solar Energy Systems: The Association’s Ability to Regulate Installation on Separate Interest Property

By Jillian M. Wright, Esq.

Download pdf

More and more homeowners are turning to solar panels and solar energy systems (collectively, “solar energy systems”) as a way to save on energy costs. The State of California, ever at the forefront of conservation and renewable energy, has incentives and statutes which are meant to encourage “going green.”  One such statute provides that common interest developments (or “associations”) may regulate the placement of solar energy system equipment, but must do so within strict parameters. With the increasing prevalence of homeowners wanting to install solar energy systems, associations should be aware of the parameters discussed below.

Impact of California Law: Civil Code Sections 714 & 714.1 and the Tesoro Case

In September 2014, the California legislature passed AB 2188 altering the definition of what constitutes a “reasonable restriction” on solar energy systems.  In sum, conditions listed in an association’s governing documents are valid and enforceable only to the extent the conditions do not conflict with the provisions in California Civil Code sections 714 and 714.1.  These statutes override conflicting covenants in an association’s governing documents and limit the scope of authorized regulation by an association.  California Civil Code section 714(a) states:

Any covenant, restriction, or condition contained in any deed, contract, security instrument, or other instrument affecting the transfer or sale of, or any interest in, real property, and any provision of a governing document, as defined in Section 4150 or 6552, that effectively prohibits or restricts the installation or use of a solar energy system is void and unenforceable.

In no uncertain terms, this section prohibits any declaration and other governing document provision(s) from prohibiting or restricting the installation of solar energy systems outright.  Civil Code section 714(b) states that it is the public policy of the State of California to promote and encourage the use of solar energy systems.  As such, any restrictions on the installation of these systems are declared invalid if the restrictions “significantly” increase the cost of the system or “significantly” decrease the efficiency of the system.  A “significant increase” in the cost of a solar domestic water heating system or solar swimming pool heating system that complies with state and federal law is one that increases the cost more than 10% over the cost of the system, but in no case more than $1,000.  A “significant increase” in the cost of a photovoltaic system[1] that complies with state and federal law is a cost increase of more than $1,000.  A “significant decrease” in the efficiency of the system is one that decreases the efficiency by more than 10% over the efficiency of the owner’s originally proposed system.  Restrictions on system placement are generally valid if they allow for an “alternative system of comparable cost, efficiency, and energy conservation benefits.”[2]

The penalty for willful non-compliance with Civil Code section 714 is $1,000, plus the amount of any actual damages suffered by the owner. (Civ. Code § 714(f).)  Attorney’s fees are also recoverable by the prevailing party. (Civ. Code § 714(g).)

An association may require an owner to apply for and obtain prior architectural approval for a solar energy system pursuant to Tesoro Del Valle Master Homeowners Assn. v. Griffin (2011) 200 Cal.App.4th 619.[3]  In Tesoro, the court upheld a restriction requiring prior approval of a solar energy system to allow the association the opportunity to determine if a more aesthetically pleasing option for the solar energy system was available that fell within the parameters afforded under Civil Code section 714.  In that case, the owner actually installed the solar energy system without prior approval from the association.  The association sued the owner, and the owner argued approval was not necessary because he was entitled to install the system under Civil Code section 714.  The court upheld the prior approval restriction because the association presented an alternative that would have been more aesthetically pleasing and was still within the cost and efficiency parameters.  The court further held the association did not have a burden to propose a comparable alternative system. It held that once the owner’s application was denied, the owner had the burden to reapply for approval with a comparable system which addressed the association’s aesthetic concerns.

The statute also mandates that review of an application cannot be “willfully avoided or delayed.”  An application is to be reviewed and approved in writing in the same manner as an application for any other architectural application.[4]  “If an application is not denied in writing within 45 days from the date of the association’s receipt of the application, the application shall be deemed approved, unless that delay is the result of a reasonable request for additional information.”[5]  However, if an association’s governing documents include a shorter response time frame, we suggest the association provide its written decision on a proposed solar energy system application within the time frame stated in the governing documents to avoid any potential risk of the application being “deemed approved” by a court.

Summary
An association can require that solar panels generating home electricity (i.e., photovoltaic panels) and solar panels heating pools/spas be placed in an area of an owner’s separate interest property that is more aesthetically pleasing from the street view, if the association can demonstrate that the association’s preferred location does not “significantly increase the cost” or “significantly decrease the efficiency” of the system.  Keep in mind, the burden of proving that the association’s preferred location does not violate these standards rests with the association, not the homeowner.  Thus, if an association requests a different location over the location preferred by the homeowner, the association must be prepared to show that the association’s proposed alternative location does not violate the standards set forth in Civil Code section 714.  However, as volunteer board or committee members are not typically in the business of designing solar energy systems, it is ultimately up to the owner to propose a comparable system which addresses the association’s aesthetic concerns.


[1]   A “photovoltaic system” is one that generates electricity.
[2]   California Civil Code section 714(b)
[3]   Tesoro was decided before AB 2188 was signed in 2014.  AB 2188 reduced the maximum allowable parameters of §714 from 20% cost and efficiency to 10%.
[4]   California Civil Code section 714(e)(1)
[5]   California Civil Code section 714(e)(2)(B)

Emergency vs. Special Meetings: When the Board Needs to Act Fast

Download pdf

By Jillian M. Wright, Esq.

It happens all the time: something important suddenly comes up that needs to be resolved quickly but the next regularly scheduled board meeting isn’t for weeks! The board president copies you, the manager, on an e-mail to the entire board explaining the problem asking everyone, “What should we do?!”

This article will discuss the difference between an emergency meeting and a special meeting of the board and the requirements for both so that the next time you are copied on that frantic email you will know, after assessing the facts of the situation, whether you should stop the e-mail chain immediately or reply with your opinion.

What is a “board meeting?”

Whenever a majority of the board is meeting at the same time and place (or via telephone conference) to “hear, discuss, or deliberate” upon matters within the board’s authority that is a board meeting. (Civ. Code §4090(a) and (b).)

What is an emergency?

Civil Code §4923 defines an emergency as (1) something that could not have been reasonably foreseen, (2) which requires immediate attention and possible action, and (3) for which it is impracticable to provide notice. So, if in the hypothetical above, your board president is emailing about a burst pipe currently flooding a vacant unit, that satisfies all three requirements and is likely an emergency. If the email, instead, is about a maintenance item that needs attention quickly but is not a life safety threat and can wait for a few days to be addressed, then the email chain should cease and the board should instead call a special meeting.

Special Meetings: for items than can wait a few days.

Civil Code §4920 discusses the requirements for a special meeting. If the board meets to discuss an executive session issue the association need only give two-days’ notice to the members with an agenda via general delivery (Civil Code §4920(b)(2).) Recall, however, that there are only a few items allowed to be discussed in executive session: litigation, forming third party contracts, member discipline, personnel matters, etc. (See Civ. Code §4935 for the entire list.)

If the board is discussing anything other than those limited issues then Civil Code §4920(a) requires four-days’ notice of the meeting, including an agenda, be sent via general delivery (unless your governing documents have a longer notice requirement [Civ. Code §4920(b)(3)]).

Board action v. board discussion

“But wait,” a board member might argue, “we won’t make a decision in this e-mail, we are just discussing the issue. How is that illegal?” True, Civil Code §4910 states that a board may not take any “action” outside of a board meeting and makes no specific prohibition of discussion of board matters outside a meeting. However, as mentioned above, the definition of “board meeting” includes when the board meets to hear, deliberate or discuss. Indeed, the purpose of the Open Meeting Act (§4900 et seq.) is for the membership to be invited to see the deliberative process by which decisions are made for their community. We suggest erring on the side of caution; just call the meeting.

When are emails allowed?

Sometimes, in an emergency, emails are the most efficient way to take care of board business.  So, in those cases the board must act within a few set rules: (1) it must be an emergency, as defined above, (2) all directors must consent in writing to act by email in an emergency situation, and (3) written consent must be filed with the minutes of the next board meeting. So if you forward the board a settlement offer with a response due a week from now and a board member excitedly replies asking everyone’s opinion, that email thread should be stopped.

If your board is quick to define  everything as an emergency, kindly remind it of the requirements noted above and remind the board that a member may bring civil action against the association (and potentially be entitled to attorneys’ fees and costs) for a board’s acts outside of the Open Meeting Act.