Author: Rhonda Adato – Epsten, APC

New Year, New Documents: When Associations Should Consider Restating their Governing Documents

Published December 12, 2022

Boards of directors of community associations frequently wonder at what point they should restate their association’s Bylaws and CC&Rs. Many associations have older, outdated governing documents that could use a complete overhaul. At the same time, restating these documents typically requires membership approval. Restated documents should also be prepared by a qualified attorney, and must be approved in a secret, double envelope vote, so the project can be relatively costly. Below are some recommendations for when to pursue a restatement:

When portions of the governing documents are unenforceable. Older documents may have been superseded since their adoption by subsequent case law and statutes, rendering certain provisions unenforceable. Boards may want to restate their governing documents to bring them current with existing law (and thereby making them enforceable once again).

When the documents no longer fit the community’s needs. Communities change over time. A set of CC&Rs recorded in the 1970s may no longer reflect the owners’ preferences with respect to parking arrangements, architectural styles and more. Older documents also may not address innovations like solar panels and electric vehicle charging stations. Further, the board may wish to amend the governing documents to empower the board to address a specific problem in the community.

When the documents include discriminatory provisions. Civil Code section 4225 requires boards to amend out any provisions in a governing document which discriminate on the basis of a protected status. Such an amendment does not require membership approval. However, once this has been accomplished, boards may want to consider pursuing a complete document overhaul (a restatement), which does require membership approval. Documents old enough to include discriminatory provisions are likely due for an update in many other respects as well.

When the documents are just confusing. Not all Bylaws and CC&Rs are made equal. Some are better written than others. If your documents create more confusion than clarity, because of inconsistent or vague language, it may be time for a refresh. This need may be especially pressing given that vague or inconsistent language can give rise to lawsuits, as homeowners insist on interpreting the documents in one manner, and the board another!

To better protect the association’s interests. Original governing documents are typically written by the community’s developer. As one might expect, these documents frequently protect the developer’s interests rather than the association’s. The board may want to consider restating the documents to provide the board with more expansive authority, and/or insert provisions designed to minimize the association’s and individual directors’ potential liability.

No matter your association’s goals, boards should consult their community association counsel regarding the timing and procedure of restating their governing documents. Everyone deserves a makeover sometimes!

Rhonda R. Adato is an Associate Attorney in the Transactional Department of Epsten, APC, and can be reached at [email protected].

*This article was originally published in San Diego Community Insider in the Winter 2022 edition and was adapted from the original article, New Year, New Documents: When Associations Should Consider Restating their Governing Documents.

The New Normal

By Rhonda R. Adato

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

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

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

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

Associations may consider doing the following:

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

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

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

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

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

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

Use of Association Technology by Members

By Rhonda R. Adato, Esq.

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

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

Logging into Association-Owned Devices

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

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

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

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

Here’s to (safely) surfing the Web!

Term Limits are Back in Vogue

By Rhonda R. Adato, Esq.

Everyone has a change of heart sometimes, including, it seems, the California Legislature. By now, most people in the community association field are familiar with Senate Bill 323 (“SB 323”). SB 323 was chaptered into law in October 2019. It significantly amended Civil Code sections 5100, et seq., which govern community association elections. Among other things, SB 323 revised the law to only permit community associations to impose a few, specific qualifications on candidates running for an association’s board of directors. Term limits were not included among them, meaning that associations were effectively prohibited from disqualifying board candidates who had termed out.

That has now changed. The Governor signed Assembly Bill 502 (“AB 502”) into law in October 2021, which took effect on January 1, 2022. This new law added Section 5103 to the Civil Code, which permits elections by acclamation, provided certain requirements have been met. These requirements include:

(d) (1) The association permits all candidates to run if nominated, except for nominees disqualified for running as allowed or required pursuant to subdivisions (b) to (e), inclusive, of Section 5105.
(2) Notwithstanding paragraph (1), an association may disqualify a nominee if the person has served the maximum number of terms or sequential terms allowed by the association.
(3) If an association disqualifies a nominee pursuant to this subdivision, an association in its election rules shall also require a director to comply with the same requirements.

(Emphasis added.)

Section 5103(d)(2) effectively reintroduced the concept of permitting director term limits. Arguably, associations may now impose term limits on director candidates, so long as such term limit is clearly set forth in the association’s Election Rules.

This raises a question as to whether term limits only apply in elections by acclamation. It is curious that the Legislature reintroduced the concept of imposing term limits in the context of elections by acclamation, rather than simply stating that associations may impose this candidate qualification in all elections. Hopefully, the Legislature will clarify this issue with some clean up legislation in the coming years.

Another question is whether term limits in Bylaws are now enforceable again. We believe they likely are, but the association’s Election Rules will need to be amended accordingly.

Please reach out to your community association counsel if you have any questions regarding imposing term limits in your association’s board elections, the enforceability of term limits in Bylaws, or the procedure to amend Election Rules.

Is it Smoky in Here? What associations can do to address smoking in common areas and inside units.

By Rhonda R. Adato, Esq.
(As published in The Law Journal by CACM, Summer 2020)

Associations are often faced with the question of how to deal with smokers and the secondhand smoke they create. If secondhand smoke drifts from a residence or common area into a neighbor’s home, is that a nuisance? Or do residents generally have a right to enjoy a cigarette in peace? How can associations deal with this issue in a fair, even-handed way, and what legal tools do they have at their disposal?

First, the facts. According to the Center for Disease Control’s (“CDC”) website, cigarette smoking is the leading cause of preventable disease and death in the United States, accounting for more than 480,000 deaths every year. In 2018, nearly 14 of every 100 U.S. adults, aged 18 years or older, smoked cigarettes. However, cigarette smoking has significantly declined in recent years: smoking is down from 20.9% of American adults in 2005 to 13.7% in 2018.

Statistics also suggest that cigarette smoking is generational: current cigarette smoking is lowest among those aged 18 to 24 years old, at 8.4%.

So what does this mean for associations? Smoking rates are declining in the U.S. Research conducted in recent years has also brought the harmful effects of tobacco smoke to light, and local, state and federal governments have made a concerted effort to inform the public of these harmful effects. However, smokers are still out there. As a result, non-smokers appear to be increasingly less tolerant of smokers because they are more aware than ever of the harmful effects of secondhand tobacco smoke. Non-smoking residents are now demanding that association boards take action.

Is an association obligated to respond? As a general matter, associations are required to enforce nuisance provisions set forth in their CC&Rs. Secondhand tobacco smoke traveling into a residence can be reasonably interpreted to be a nuisance. Associations should enforce their CC&Rs, as appropriate, against owners when secondhand smoke from their residence constitutes a nuisance to other residents.

An association can face steep penalties for failing to enforce its CC&Rs. By way of example, in Chauncey v. Bella Palermo Homeowners Association et al, (2013) Orange County Superior Court Case No. 30-2011-00461681, the defendant association’s CC&Rs included a standard nuisance provision. Plaintiff homeowners complained to the association about their neighbors’ incessant smoking, which caused secondhand smoke to constantly enter their unit and aggravated their son’s asthma. Plaintiffs filed suit against both the neighbors and the association, alleging in part that the association failed to enforce the CC&Rs nuisance provision. The jury found that the association breached its CC&Rs. Plaintiffs were awarded damages and the association was required to pay plaintiffs’ attorneys’ fees.

There are challenges, however, associated with enforcing a nuisance provision. What is or is not a nuisance is a subjective standard. After all, what is a nuisance to one person may not be a nuisance to another. Further, it may be difficult for an association to determine if smoke is really transferring, or where the smoke is coming from. For that reason, an outright ban on smoking may be easier to administer, since it is an objective standard.

But do associations have authority to enact an outright ban against smoking tobacco in the community? And will a court uphold such a ban as enforceable? Unfortunately, we are not aware of a published California case regarding enacting a total smoking ban. However, in Birke v. Oakwood Worldwide et al. (2009) 169 Cal.App.4th 1540, a residential apartment complex banned smoking in all indoor common areas and indoor units, but permitted smoking in all outdoor common areas. The plaintiff, a resident with asthma, sued the apartment complex, alleging that the failure to abate the tobacco smoke in the outdoor common areas was a nuisance. The trial court granted the apartment complex’s demurrer to plaintiff’s first amended complaint without leave to amend. Plaintiff appealed. The appellate court ruled that plaintiff alleged a valid nuisance claim. Birke is helpful for California associations who wish to prohibit smoking. It underlines the concept that landlords may have an affirmative obligation to mitigate/address secondhand smoke as part of their existing “duty to take reasonable steps to maintain its premises in a reasonably safe condition.” Community associations are not landlords per se, but California courts have treated them like landlords in cases such as Frances T. v. Village Green Owners Assn. (1986) 42 Cal. 3d 490.

Case law from other states is also helpful, although not controlling in California. In the Colorado case Christiansen v. Heritage Hills 1 Condo. Owners Ass’n, Case No. 06CV1256 (Colo. Dist. Ct. Nov. 7, 2006), the defendant association amended its CC&Rs to ban smoking within the boundaries of the project. The court evaluated the ban under the standard of whether the association’s actions were reasonable, made in good faith, and not arbitrary or capricious (which is very similar to the California business judgment rule standard). The court found that the structure of the association’s building allowed smoke to migrate, and that residents had tried other means of mitigating the smell. The court also noted that the smoking ban was reasonably investigated and passed by 3 out

of 4 owners after trying other options to solve the issue. The court further stated that the Colorado legislature had recently passed bills regulating secondhand smoke, and that citizens do not have a fundamental right to smoke. As such, the ban neither violated public policy nor infringed on any of the owners’ fundamental rights. The court additionally held that the plaintiff smoker’s actions negatively affected the remainder of the community. Hopefully, a California court ruling on a community-wide smoking ban would apply similar reasoning as in Christiansen.

So what options does an association have to address smoking? As stated above, an association should enforce any nuisance provision set forth in its CC&Rs. We also believe associations are on firm ground to ban smoking in common areas. Associations typically have the right to control their common areas.

An association’s governing documents may additionally grant it authority to take action in the interest of protecting the health and safety of residents. The tide of public opinion is also turning against tobacco, meaning fewer homeowners may challenge such a ban.

Note that a community-wide ban on smoking is riskier than just banning smoking in common areas. While an association might be heralded for being health conscious and innovative, it also risks being a test case in the California courts regarding the enforce-ability of such a ban. However, some associations may be willing to take that risk. Associations should keep in mind that banning smoking in the entire community should most likely be done via a CC&Rs amendment, rather than an operating rule change. Adopting a ban within residences via an operating rule change might result in a challenge from a homeowner on the grounds that the rule is unreasonable and exceeds the board’s authority. Associations can also mitigate the risk of a homeowner challenge by implementing a grandfathering provision. That is, by drafting a community-wide ban to only apply to members who buy their homes in the community after the CC&Rs amendment has been recorded.

That way, all new members will be on record notice of the ban, and existing owners will be less likely to raise a challenge. However, a grandfathering provision will not resolve any nuisance claims resulting from any smoke transmission between residences, and might even make such claims more likely since all new owners will presumably be non-smokers.

In sum, associations should tread carefully and consult their legal counsel no matter which course of action they choose. Tobacco smoking may also decrease with time since younger people tend to smoke less, statistically. However, associations may face a new set of challenges in coming years. A November 6, 2019 NPR article reported that the proportion of high school students vaping nicotine has grown to 1 in 4. Young people have moved on to a newer, hipper trend: vaping and e-cigarettes. There is much less research regarding the harmful effects of these devices than traditional tobacco cigarettes, including their secondhand smoke effects, and the legislature has been slow to address the trend. Community associations’ next challenge might be regulating the negative effects of these devices rather than traditional tobacco cigarettes.

About the Author
Rhonda R. Adato is an Associate attorney at the law firm of Epsten, APC, where she handles transactional matters. She is based in Epsten’s San Diego office and joined the firm in August, 2018.

Q&A. The board is thinking about making some changes to the common area. How do we determine if those changes count as capital improvements requiring membership approval?

A: To give everyone’s favorite attorney answer, it depends! California courts haven’t really supplied us with a bright line distinction between a necessary repair and a capital improvement. The board should likely begin with the association’s governing documents. Do the CC&Rs and/or Bylaws define the term “capital improvements”? Do they require a certain percentage of the homeowners to approve a capital improvement? Do they require approval of capital improvements that cost over a certain amount? Do the governing documents require a certain kind of vote to approve capital improvements? Generally, the board should determine (with the help of legal counsel, if needed) the answer to these questions and comply accordingly. Also note that not all documents contain a capital improvement limitation.

We can also look to out-of-state law for guidance. In one Illinois case, the court defined capital improvements as betterments of a long lasting nature which adds to the capital value of the property. The court considered even roof and gutter replacements to be capital improvements. Florida courts have applied a more balanced approach. Generally, the Florida courts have held that if a change is necessary for protection of the Common Area, or association membership, it is a repair or replacement. If it is more of a significant change to the property or an addition, it is a capital improvement.

The main takeaway is that this is an unsettled area of law. Neither Illinois nor Florida law is controlling in California, just persuasive. The answer to the above question is also dependent on the association’s governing documents. The association may want to consult with legal counsel to determine whether a specific change constitutes a capital improvement, and if so, what approach to take. – Rhonda R. Adato, Esq.

Q&A: If a homeowner continues to trim trees and shrubs on a common area slope to preserve his/her view, after being asked to stop, what is the HOA’s recourse?

Q. If a homeowner continues to trim trees and shrubs on a common area slope to preserve his/her view, after being asked to stop, what is the HOA’s recourse?

A. A homeowner should not be altering common area without authorization. One option is to speak to your current legal counsel regarding sending a cease and desist letter. The homeowner can be responsible for damages to landscaping and the law allows for treble damages for damaged trees. Civil Code section 3346 provides for doubling the damages incurred for harm caused to timber, trees, and underwood, and trebling it if the harm is intentional. Code of Civil Procedure section 733 also allows trebling the damages for harm to trees. —Rhonda R. Adato, Esq.

Property Service Workers Protection Act: New Law that May be Applicable to Homeowners Associations

By Rhonda R. Adato Esq.

The California legislature recently enacted the Property Service Workers Protection Act, which potentially subjects homeowners associations to new regulations regarding janitorial services contracts.

Background

The Act is designed to protect janitorial service workers. Studies have shown that such workers are more vulnerable to harassment, discrimination and wage theft because they (a) often work in isolated conditions at night, (b) they may belong to a minority group, or in some cases be and undocumented immigrants who are less likely to report issues, (c) layers of contracting and subcontracting reduce employer accountability, and (d) the industry’s culture has historically featured poorly trained managers, inadequate or nonexistent sexual harassment policies, unfair investigations, and retaliation.

“Employers” are defined under the Act as “any person or entity that employs at least one employee and one or more covered workers and that enters into contracts, subcontracts, or franchise arrangements to provide janitorial services.” “Covered workers” are, in turn, defined as “a janitor, including any individual predominantly working, whether as an employee, independent contractor, or a franchisee, as a janitor, as that term is defined in the Service Contract Act Directory of Occupations maintained by the United State Department of Labor.”

New Requirements and Applicability to Homeowners Associations

Effective July 1, 2018, Employers are required to register with the Labor Commissioner of the Division of Labor Standards Enforcement of the California Department Industrial Relations on an annual basis. They are also required to keep certain records on file, and provide sexual harassment training to workers. The Department of Industrial Relations will maintain a public database of property service employers on its website, which will include entity names, addresses, registration numbers, and effective dates of registration.

The law also requires the state to develop a sexual violence and harassment prevention training program for janitorial employers and their workers, effective Jan. 1, 2019. This program will include input from an advisory panel, formed by the state’s director of industrial relations. The training must be conducted every other year.

Homeowners associations may also be subject to the Act. Under Labor Code section 1432(b), “[a]ny person or entity that contracts with an employer who lacks a current and valid registration, as displayed on the online registration database at the time the contract is executed, extended, renewed, or modified, under this part on the date the person or entity enters into or renews a contract or subcontract for janitorial services with the employer is subject to a civil fine of” between $2,000 and $10,000 for a first violation, and between $10,000 and $25,000 for a subsequent violation. Under the Labor Code, homeowners associations that contract with a janitorial services company subject to the Act which is not properly and publically registered with the Department of Industrial Relations could be subject to significant fines.

What Can Associations Do?

Associations may want to consider incorporating provisions requiring janitorial services vendors to comply with the Act in any contractual agreements for cleaning services. They may also want to consider incorporating an indemnification clause into any janitorial services contracts shifting liability onto the janitorial services provider for any violations of the Act. Association should also check the Department of Industrial Relations’ public database before contracting with any janitorial services company prior to executing any type of agreement.

Associations with any specific questions regarding their liability under, or compliance with the Act, should consider reaching out to their legal counsel.

Further resources:

https://www.shrm.org/resourcesandtools/legal-and-compliance/state-and-local-updates/pages/california-law-aims-to-protect-janitors-from-harassment.aspx (Article)
https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB1978 (the Act)
https://www.dir.ca.gov/dlse/Janitorial_Providers_Contractors.html (Department of Industrial Relations website)