Distributing Assets to Members

A member receiving cash or other distribution of assets from the association generally receives an adjustment in the member’s basis in the separate interest rather than taxable income. As association is not permitted to distribute its assets to its members when the association is dissolved – in this instance, an association must distribute its assets to another non-profit organization formed for religious, charitable or other public purpose.

Enforcement

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.

Flags

The Civil Code and the U.S. Constitution protects owners’ rights to display the American flag within an owner’s separate interest or within their exclusive use common area. The display of other flags is subject to reasonable rules and regulations established by the board, but oftentimes cannot be banned all together if they do not exceed 15 square feet in size.

Interest

If an assessment is delinquent, an association may recover interest on (1) the delinquent assessments; (2) reasonable fees and costs of collection; and, (3) reasonable attorney’s fees, at up to 12% per annum, commencing 30 days after the assessment becomes due. If the declaration specifies interest at a lesser rate, the lesser rate of interest applies. (Civ. Code §5650(b))

Maintenance Duties

One vital aspect of association life is maintenance duties. These duties are generally described in the association’s CC&Rs. The CC&Rs will generally describe what components the association and owner, respectively, are responsible for maintaining, repairing and replacing. Many associations also have a maintenance matrix that clearly identifies components and who bears the responsibility.

Motorized Scooters

Any two-wheeled device that has handlebars, has a floorboard that is designed to be stood upon when riding, and is powered by an electric motor. This device may also have a driver seat that does not interfere with the ability of the rider to stand and ride and may also be designed to be powered by human propulsion. This definition is taken from Vehicle Code Section 407.5, which goes on to exclude the following from the definition: an electric personal assistive mobility device, a motorcycle, a motor-driven cycle, or a motorized bicycle or moped.

Opt Out

Associations must keep membership lists containing members’ name, addresses and other information used to contact individual members. Members may request copies of the membership list, if the purpose for requesting the list is reasonably related to the requester’s interest as a member. Pursuant to Civil Code section 5220, members may opt-out of being included on the membership list.

Pools

Pools are often a vital part of association living and represent a nexus for community activities. They are, however, subject to a plethora of regulations and often a source rife with potential liability. In order to protect the association, contact your attorney regarding sign, fencing and liability requirements that may change on a yearly basis.

Removal of Directors

“Removal” rather than “recall” is the term used in the Corporations Code for involuntarily removing one or more directors from a board. Board recalls are frequently started by a petition signed by members calling for a special meeting to remove one or more board members. For incorporated associations, Corporations Code section 7221 provides that removal of the entire board in associations having more than 50 members requires a majority vote with a quorum represented and a majority of all members voting in associations with 50 or fewer members. If a recall seeks removal of one or more but less than all directors, and an association’s governing documents authorize cumulative voting in elections, whether it was actually used or not to elect any of the directors, it requires a substantially higher vote of all owners to remove a director.