Articles of Incorporation

Articles of Incorporation (“Articles”) are the formation document for incorporated corporations and are a part of an association’s governing documents. Articles are filed with the Secretary of State. Articles spell out the name, basic corporate purposes and powers, and character of the corporation (i.e., common interest developments are nonprofit mutual benefit corporations). Articles can be amended in accordance with the requirements in the Articles and the Corporations Code.

Asbestos

An association must provide notice to owners and non-owner residents of the project of the presence of asbestos. See California Health & Safety Code Sections 25915 et seq. There is some ambiguity regarding the applicability of the statutes. Sections 25915 through 25919.7 are part of Chapter 10.4 of the Health & Safety Code. Section 25919.2 states in part that “‘Building,’ as used in this chapter, means all or part of any ‘public and commercial building,’ … except that ‘building’ shall not mean residential dwellings.” However, Section 25915.2(d), also part of this chapter, states in part that other subparagraphs in Section 25915.2 “shall not be construed to require owners of a building or part of a building within a residential common interest development to mail written notification to other owners of a building or part of a building within the residential common interest development,” if certain conditions are met. The implication is that these requirements do apply in residential developments if the conditions are not met, or that a community association must meet the conditions when there is asbestos in a common interest development. Although there may be an ambiguity, we believe associations are better protected by following the requirements of Section 25915.2.

Agenda

The Open Meeting Act requires each board meeting to contain the meeting agenda. (Civ. Code §4920(d)) This requirement applies to both executive and open session board meetings, with limited exceptions for emergency meetings. In general, the board may not discuss or take action on any item at a non-emergency meeting unless the item was placed on the agenda included with the notice for that meeting. (Civ. Code §4930(a)) Limited exceptions exist for cursory and/or emergency action on non-agenda items. (Civ. Code §4930(b)(c)(d)) Boards should especially exercise caution in determining an appropriate level of detail for the executive session agenda, so as not to publish confidential or privileged information. See each statute for specific requirements and limitations.

Assessments

Every member of an association is obligated to pay a share of common expenses through payment of assessments. As an association is funded and operates using assessment income, collection of assessments is one of the most important functions a board can undertake. When assessments go unpaid, associations can suffer from deferred maintenance and other problems that can ultimately affect the value of property in the community.

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.)

Annual Meeting

Associations are required to hold annual membership meetings to elect directors as set forth in the association’s bylaws. See also, Elections. If the board fails to hold an annual membership meeting within 60 days after the date designated in the governing documents or within 15 months of the association’s last regular meeting, any member can file a petition in superior court to have the court order a meeting. (Corp. Code § 7510(c)) The existing board members shall hold office until a successor has been elected and qualified. (Corp. Code §7220(b))

Association

This is the entity charged with the management and operation of a common interest development. (Civ. Code §4080) Associations are representative governments in which members typically have the right only to elect the board and make major decisions such as document amendments, imposing assessments that exceed statutory limits on the board’s power, etc. Otherwise, association boards typically have the right to make most day-to-day decisions. Also see Homeowners Association.