Epsten, APC

Initially, we note there are tax and payroll reporting implications arising from an association’s decision to hire employees as opposed to independent contractors. These are issues that are best addressed by association’s CPA. Additionally, there are insurance and liability implications. If any persons are allegedly injured or property damaged by an employee of the association, there is a greater likelihood the association will be held liable for that injury or damage than if the damage or injury was caused by an independent contractor. Merely having an agreement entitled “Independent Contractor Agreement” is not sufficient to establish ones status as an independent contractor; the authorities will look to several factors in making this determination.

The federal and state statutes and cases that define the rights, duties and obligations of employers and employees to each other. See also Employees. Associations with employees should always have an Employer’s Liability Insurance policy to protect against possible liability arising from the employment relationship.

Association boards have the duty to enforce governing documents. To be enforceable, enforcement must comply with the due process procedures in the governing documents (Civ. Code §5855 and Corp. Code §7341). This includes, minimally, providing at least 10 days’ advance notice to an owner of a hearing to consider whether to impose discipline (governing documents may require a longer notice period). Associations can be held liable for failure to enforce the governing documents.

When obligations and restrictions imposed in deeds and certain other written agreements meet strict statutory requirements, they are said to “run with the land” and bind successors to the original parties. Other deeds and written agreements that do not meet those statutory requirements are nevertheless enforced as “equitable servitudes” under certain circumstances. The CC&Rs of common interest developments are routinely enforced as equitable servitudes, because the Davis-Stirling Common Interest Act provides that the covenants and restrictions in the declaration shall be enforceable equitable servitudes, unless unreasonable.

The term assigned by the Davis-Stirling Act to those portions of the common area reserved for the use of one or more, but less than all, owners within the community. (Civ. Code §4145) The Act states that unless the CC&Rs otherwise provide, any shutters, awnings, window boxes, doorsteps, stoops, porches, balconies, patios, exterior doors, doorframes, and hardware incident thereto, screens and windows or other fixtures designed to serve a separate interest, but located outside the boundaries of the separate interest, are exclusive use common area allocated exclusive to that separate interest. Ibid. Unless the governing documents otherwise provide, the homeowner is responsible for the maintenance of the exclusive use common area. (Civ. Code §4775(a))

Executive session meetings of the board (i.e., closed session meetings, not open to the membership) may only be held to consider litigation, matters relating to the formation of contracts with third parties, member discipline, personnel matters, or to meet with a member, upon the member’s request, regarding the member’s payment of assessments. Any matter discussed in executive session must be generally noted in the minutes of the next open meeting. (Civ. Code §4935)

See “Electric Vehicle Charging Stations”

California has no statute that specifies the type or types of insurance that associations must carry. Almost all governing documents allow associations to obtain earthquake insurance coverage, but relatively few associations actually mandate such coverage.

An easement is an incorporeal interest in the land of another that gives the easement holder the right to use the other’s land or to prevent the other person from using the land. Easements can be created in many ways, including by deed, agreement, CC&Rs, through necessity, hostile use (prescription), and through petitioning the court to exercise it equitable powers. The owner of the land usually retains the right to use the land encumbered by the easement to the extent that such use does not unreasonably interfere with the easement holder’s use. Easements frequently give rise to disputes concerning what may be done in the easement by the easement holder and the land owner, whether the easement is being overburdened, who must maintain and repair the easement area, and who must share in the cost of that work.

Voting in community association elections involving specified issues must be done using a secret ballot, double-envelope system (Civ. Code §5115), pursuant to duly-adopted election rules. (Civ. Code §5105) The specified issues are elections regarding assessments legally requiring a vote, election and removal of directors, amendments to the governing documents and grant of exclusive use of common area property pursuant to Civil Code section 4600. This list therefore covers most matters brought before the membership for vote. Among other things, election rules must specify candidate and voting qualifications and specify a method for selection of independent inspectors of election. See the statute, Civil Code section 5100 et seq., for detailed requirements.