FDIC

The Federal Deposit Insurance Corporation (FDIC) preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $250,000; by identifying, monitoring and addressing risks to the deposit insurance funds; and by limiting the effect on the economy and the financial system when a bank or thrift institution fails.

An independent agency of the federal government, the FDIC was created in 1933 in response to the thousands of bank failures that occurred in the 1920s and early 1930s. Since the start of FDIC insurance on January 1, 1934, no depositor has lost a single cent of insured funds as a result of a failure.

The FDIC receives no Congressional appropriations – it is funded by premiums that banks and thrift institutions pay for deposit insurance coverage and from earnings on investments in U.S. Treasury securities. The FDIC insures trillions of dollars of deposits in U.S. banks and thrifts – deposits in virtually every bank and thrift in the country.

The standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category. The FDIC’s Electronic Deposit Insurance Estimatorcan help you determine if you have adequate deposit insurance for your accounts.

The FDIC insures deposits only. It does not insure securities, mutual funds or similar types of investments that banks and thrift institutions may offer. (Deposit Insurance: What’s Covered distinguishes between what is and is not protected by FDIC insurance.)

The FDIC directly examines and supervises about 4,000 banks and savings banks for operational safety and soundness, more than half of the institutions in the banking system. Banks can be chartered by the states or by the federal government. Banks chartered by states also have the choice of whether to join the Federal Reserve System. The FDIC is the primary federal regulator of banks that are chartered by the states that do not join the Federal Reserve System. In addition, the FDIC is the back-up supervisor for the remaining insured banks and thrift institutions.

The FDIC also examines banks for compliance with consumer protection laws, including the Fair Credit Billing Act, the Fair Credit Reporting Act, the Truth-In-Lending Act, and the Fair Debt Collection Practices Act, to name a few. Finally, the FDIC examines banks for compliance with the Community Reinvestment Act (CRA) which requires banks to help meet the credit needs of the communities they were chartered to serve.

To protect insured depositors, the FDIC responds immediately when a bank or thrift institution fails. Institutions generally are closed by their chartering authority – the state regulator, or the Office of the Comptroller of the Currency. The FDIC has several options for resolving institution failures, but the one most used is to sell deposits and loans of the failed institution to another institution. Customers of the failed institution automatically become customers of the assuming institution. Most of the time, the transition is seamless from the customer’s point of view.

The FDIC is headquartered in Washington, D.C., but conducts much of its business in regional and field offices around the country.

The FDIC is managed by a five-person Board of Directors, all of whom are appointed by the President and confirmed by the Senate, with no more than three being from the same political party.

 

For more information, visit: https://www.fdic.gov/

Licenses

A license is an authorization given by the owner of land to another to perform an act or acts on the owner’s property. The owner’s permission may be expressed or implied. The license is a personal privilege; it is not an interest or right in the land. Generally, licenses are revocable at will by the land owner. The classic license is personal to the license holder and cannot be transferred, assigned, conveyed, or inherited. Written license agreements frequently blur the line between easements and licenses.

Mediation

Disputes large and small are a regular part of life in homeowner associations. While always prepared to litigate, Epsten believes it is preferable to settle many disputes through quicker and less costly methods, including negotiation and mediation. Experience has shown that the results of mediation can be effective and satisfying. Mediation can be the fastest, most-effective solution to conflicts between homeowners and homeowners in conflict with their association.

In mediation, the disputing parties present their problem to a neutral third person who is an experienced mediator. Investigation and documentation of the complaint is made and the mediator conducts meetings to openly explore the opposing positions and guide negotiation between the parties. If the parties do not reach a compromise on their own, the mediator presents a resolution of the dispute that the parties can either accept or reject. While mediation is non-binding, studies have documented a success rate of 85% when a mediator is employed to settle a dispute.

Alternative Dispute Resolution

This process is designed to resolve disputes without litigation. ADR can take the form of internal dispute resolution (also known as informal dispute resolution), mediation or arbitration. Under the Civil Code, an association must generally offer and, if accepted, participate in ADR prior to filing a lawsuit against a member.

Assignment of Rent

CC&Rs may provide that if a member becomes delinquent in assessments, that member is deemed to have assigned rental income from their association property to the association. (Civ. Code §2938) In the absence of such a provision, if the association has a judgment against a member, it may seek a court order for an assignment of rents to be paid toward satisfaction of that judgment. (Code Civ. Proc. §708.510 et seq.)

Borrowing Money

California Corporations Code §7210 provides that a corporation shall have a board of directors who shall manage and exercise all corporate powers on behalf of the corporate entity. Additionally, Corporations Code §7140 provides that, subject to any limitations contained in its articles or bylaws, a corporation shall have the power to:

“(i) Assume obligations, enter into contracts, including contracts of guarantee or suretyship, incur liabilities, borrow or lend money or otherwise use its credit, and secure any of its obligations, contracts or liabilities by mortgage, pledge or other encumbrance of all or any part of its property and income.” [Emphasis added.]

However, many association governing documents impose limitations upon a board of director’s ability to borrow money or incur indebtedness without the approval of the membership. Accordingly, an association should review its governing documents prior to executing any loan documents.

Classes of Members

Membership classes are memberships that differ in their voting rights. They typically exist in developer-controlled associations and different and usually greater voting rights for developers than members in board elections and votes to amend the governing documents. Developers are typically entitled to three votes for each property owned until one of several triggering events occurs. Owners are typically called Class A members and developers are Class B members. When a specified triggering event happens, Class B members become Class A members with one-for-one voting rights. See Bureau of Real Estate (“BRE”) Reg. 2792.18. In master associations, there may be Class C members under which the developer is entitled to elect a majority of the board until a specified triggering event occurs. See BRE Reg. 2792.32.

Conference Calls

Board meetings may be held by conference call provided all attendees are able to simultaneously hear and be heard by all other attendees. Pursuant to Civil Code section 4925, if an open session meeting is held via telephone conference, at least one director or designated association representative must be present at a designated location so members can attend the meeting at that location.

Declarant

A Declarant is, typically, an individual or entity who establishes a residential or commercial project and creates an association to manage it. A Declarant will draft and record a set of CC&Rs against the property comprising the project and will usually reserve certain rights to itself as a Declarant including the right to appoint a majority of directors and make unilateral (i) amendments to the governing documents and (ii) annexations of additional property into an association. A Declarant may also exempt itself from certain provisions in the governing documents including architectural control. A Declarant may also be a homeowner-controlled association that restates its CC&Rs and/or bylaws (i.e., completely replaces its existing CC&Rs and/or bylaws with a new set). A Declarant may also be a developer.

Dogs

Domesticated dogs are included within the definition of “pet” in Civil Code section 4715. Associations can adopt reasonable rules or CC&R amendments on the number, breed, behavior, and size of permissible dogs. Insurance companies typically have a list of aggressive dog breeds. Dog owners are liable for the behavior of their dogs and are subject to civil suit for bites and creating a nuisance (e.g., barking).