April May June 2013 by CAI San Diego

Common summer 2013

The professional provider of education, advocacy and resources for Community Associations

Things You Didn’t Know You Needed to Know Music to your Ears? We Think Not page 14 2013 Bowling Tournament Highlights page 22 don’t fear Mechanics’ C o mLiens m o n Apage s s e s 36 sment

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Features

Departments

6 It’s the Law, Not an Option

by Cindy Collins, CCAM, PCAM

by Marie Donovan

10 Meeting Minutes or Community Soap Opera?

16 24

by Jean-Marie Salvia, CCAM, PCAM

14 Music To Your Ears? We Think Not

By Jodi Konorti, Esq.

18 Running It Past Legal: Why Association Legal Counsel Should Review Contracts

President’s Message Platinum Business Partner Spotlight: Featuring Bald Eagle Security New and Renewing Members

26 Newsstand Back Cover 2013 Marketing Plan Members

by Deborah M. Kornheiser, Esq. and Craig L. Combs, Esq.

30 Don’t Fear Mechanics’ Liens

Chapter News

by Stephen M. Kirkland, Esq.

36 Seeking Protection from Creditors in Bankruptcy Court

By Cheryl L. Stengel, Esq.

40 Cause for Celebration!

By Lucas Sisneroz, CCAM, CMCA

22 33

Bowling Tournament Highlights

February 8 Trade Show Sponsors

Thank You To Our Sponsors: March Morning Educational Program

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Common

President’s Message Living Up to the Meaning of Community Our actions evidence who we are as a “community.” As we go through the year, our programs and outreach activities reflect this concept. Our aim is helping others while achieving chapter goals. This year, San Diego was the site of the 2013 CAI National Conference April 17-20. In conjunction with the Conference, on April 18, we hosted a fantastic Chapter Party at the San Diego Air and Space Museum. The event was emblematic of San Diego being a military, aviation and seaport town: from an emotional and stirring national anthem with Marine Color Marie Donovan has been Guard, the red, white and blue decor, to the California/Mexican involved with the CAI cuisine themed buffet, and the lively entertainment and San Diego Chapter as a homeowner volunteer dancing music provided by a local band, “Atomic Groove.” The since 2001 serving on entire museum was ours for the evening. All exhibits, interactive the Educational Services Committee and is the 2013 and simulator rides were also available for attendees to explore Chapter President. and test their skills. Fly an F-35 or Transport 6 anyone? We had over 600 attendees and they all enjoyed the evening. The chapter donated a portion of the party’s proceeds to the San Diego Armed Services YMCA. This non-profit organization provides comprehensive, ongoing services to military service members and their families.

Volunteers are unpaid, not because they are worthless, but because they are priceless. - Anonymous A number of innovative ideas and projects now are in progress, with more planned for next year to – increase membership, program attendance, educational options, volunteer opportunities and communication throughout the chapter. Marketing/Public Relations is working with “Rebuild Together,” a community service project to rebuild a house in CAI’s name this summer. Membership and Marketing/Public Relations have teamed to do a Mini Trade show membership drive in a park. The Golf committee is including a food drive as part of the Golf Classic. The Business Partners committee has planned an appreciation event just for Business Partners and is planning a Reverse Trade show for 2014. Education Services’ May Education Conference had something for everyone: a keynote session on staying positive and productive in a changing workplace, an advanced architectural review process presentation and roundtables with experts on multiple topics. Committee Chairs are meeting quarterly to foster information sharing and collaboration between committees. In addition, your Chapter Executive Director and I are meeting with management company CEOs to confirm their educational needs. I am pleased to announce that our Chapter Executive Director, Barbara Ozenbaugh recently earned the Certified Association Executive credential. The CAE is the highest professional credential in the association industry. Only four other CEDs have earned this designation. I am also pleased to announce that at the 2013 CAI National Conference the Chapter received a Chapter Achievement Award for our 2012-2013 Membership Directory. Through their efforts, our volunteer committee members, managers and business partners continue to demonstrate how they are “Living up to the Meaning of Community.” 4

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EXECUTIVE COMMITTEE Marie Donovan................................................ President Homeowner Jason Payne............................................ president elect Payne Pest Management Shannon SMith.........................................VICE PRESIDENT Reconstruction Experts Bruce Rosenblatt........................................... treasurer Manager Elaine Gower.................................................... secretary Homeowner Louise stettler................................................ ex-oFficio Epsten Grinnell & Howell, APC DIRECTORS Kerry Beatty, PCAM........................................................Manager Co-LEE GREV, PCAM.....................................................Manager Rick Salpietra, Esq................. Law Offices of Richard Salpietra

CHAPTER Executive DIrector barbara ozenbaugh, CMP, CAE 619-299-1376 Managing editor and New & Renewing Advertising sales barbara ozenbaugh, CMP, CAE 619-299-1376, barbara@cai-sd.org design & production Kristine GAITAN Rey advertising & design / The Creative Dept. 760-746-8700 Magazine EDITORIAL committee Laurie S. Poole, Esq. (CHAIR)............... Peters & Freedman, LLP Lauri Croce, Esq. .................................. Anderson & Kriger, APC Sam Dolnick............................................................... Homeowner Jeff French, Esq.............................. Green, Bryant & French, LLP Elaine Gower.................................................................. Homeowner Yvette Huffman...................................... DC Property Management Brian Kalmenson, CCAM...........Michael Abdou Insurance Agency Jodi Konorti, Esq. ........................ Epsten, Grinnell & Howell, APC Cyndi Koester, PCAM.................................... CommerceWest Bank Jeff Morin................................Global Disposal Reduction Services Jean-Marie Salvia, CCAM, PCAM................ Walters Management Lucas Sisneros.......................................NNJ, An Associa Company Louise Stettler................................ Epsten Grinnell & Howell, APC All articles and paid advertising represent the opinions of authors and advertisers and not necessarily the opinion of either Common Assessment Magazine or the Community Associations Institute – San Diego Chapter. Information contained within should not be construed as a recommendation for any course of action regarding financial, legal, accounting or other professional services and should not be relied upon without the consultation of your accountant or attorney. Common Assessment Magazine is the official quarterly publication of the San Diego Chapter of the Community Associations Institute. CAI San Diego Chapter encourages submission of news and articles subject to space limitation and editing. Signed letters to the editor are welcome. All articles submitted for publication become the property of CAI San Diego Chapter. Reproduction of articles or columns published permitted with the following acknowledgement: “Reprinted with permission from Common Assessment Magazine, a publication of the Community Associations Institute San Diego Chapter.” © 2013 CAI - San Diego Chapter

Advertising & Correspondence should be sent to: Common Assessment Magazine CAI - San Diego Chapter 1081 Camino del Rio South, Suite 109, San Diego, CA 92108 619-299-1376 / fax 619-299-1377 / www.cai-sd.org

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By Cindy Collins, CCAM, PCAM

SUMMER 2013

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Why do we have to follow all these stupid laws?

Who cares about the DavisStirling Act? If there are no condo police and no one ever shows up for our meetings anyway, why do we have to do all those silly things like post

agendas, send out secret ballots with two envelopes, mail all those documents with the budget and the annual financial review that no one reads? What a waste of time and money! The simplest answer is: it’s the law and you have to. The intent of the DavisStirling Act was to establish laws that govern how homeowners associations are to be operated. They are designed to protect owners. Protect them from what? Volunteers that give up countless hours of their time to make decisions to better their communities and safeguard the value of the homes? Or from managers that work well over 40 hours a week trying to make everyone happy, meet expectations and retain accounts so they can make a living and feel some sense of satisfaction for a job well done? Those aforementioned volunteers and managers are the majority. The unfortunate reality in the HOA world is that many laws are created based on the experiences of the minority. The minority consists of board members that may have a hidden agenda or seek power at the expense of their communities, or the ill-informed or inadequately prepared manager. It only takes a few people to feel that they have been slighted or to suspect that something not quite appropriate took place during an election to lead to an outcry of corrupt election practices, ballot box stuffing, and all the things unfair and unjust in this world. They feel disenfranchised. When a person feels that they are not valued, are violated or treated unjustly, changing his or her perspective is difficult. Since compliance with the law is not optional, and we must do certain things that may seem to betray all logic and common sense, perhaps it is time to take a step back and consider a different, more productive approach. Instead of dwelling on how ridiculous and expensive some of these laws may be for our communities, let’s try shifting our mind set. A shift in perspective and thinking can make these laws work to the benefit of the community, enhance the image of the board and manager to help make everyone’s role more fulfilling. How about coupling a healthy dose of the ‘Golden Rule’ with a bit of the “what’s in it for me” approach? Instead of viewing these requirements as simply Continued on page 8

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minority may have experienced and relayed to

Since it is the law and not an option, take time to check the documents for your associations and ensure you have the following: Election Rules – These have been required since 2006, yet many associations still have not adopted formal Election Rules. If your management company has been acting as the inspector of elections, the Election Rules must specifically contain such authorization.

our elected officials, voter fraud does not run rampant in HOA elections. However, this is not to say that there have never been any incidents of someone making a decision on a ballot with bias or campaign efforts to get their candidate elected. Instead of fighting the negative impressions which lead to these laws, how about approaching the process as an opportunity to instill trust in the fair election system? Hire a third party inspector of elections to take all the subjective emotion out of the election and see if folks do not accept the results with less suspicion. The annual budget packet mailer with the

Filings with the Secretary of State – Associations are routinely required to file certain documents with the California Secretary of State. Failure to timely file these documents can result in imposition of monetary penalties and even suspension of the corporation. If the corporation is suspended, it may not take any action.

countless legally required disclosure documents most likely overwhelms the average homeowner. Most readers probably go straight to the sentence that tells them if the assessment rate for the next year will be going up and never read the other documents. Speculating that folks will

Filing Tax Returns – It goes without saying that filing tax returns on time is essential for any association in order to avoid substantial monetary penalties and possible suspension.

only read and care about the first paragraph of the cover letter, why not use this opportunity to provide information and capture their attention. Instead of just saying something generic like, “after a thorough review of the operating expenses and reserve allocations needed, the

expensive and burdensome tasks, how about considering them as

board has determined the assessment rates need

tools to help restore and maintain the trust and confidence of our

to be increased (or decreased) by…”, why not take just a bit more

owners?

time and space to inform them of exactly what has caused the

Posting the meeting agenda is an opportunity to keep folks informed about the business of the association and to engage

need for increase or the reason for a decrease? This would be a perfect opportunity to let owners know the

them, to make them a part of the process, thus working towards

types of expenses that are on the top of the list and continue to

eliminating the “us against them” attitude that many times

increase. An example might be “the board has determined the

develops. Approach the board meeting as a business meeting

need to raise the assessment rate by 5% due to the 12% increase

with shareholders that have a large stake in the company. After all,

in water costs, increased vandalism and graffiti in the community

they do. For the majority, their home is their largest investment.

which resulted in expense of $15,000 last year, and a 10% increase

Be respectful and fair; treat people the way you would like

in insurance premiums.” Or if you were able to decrease the

to be treated. Maintain an objective perspective while making

assessment rate, this is a good platform to showcase the good

decisions that are in the best interest of the entire community.

work of the board or manager with cost containment efforts,

Those that do attend the meetings will come to appreciate the

negotiating new contracts or implementing more cost effective

fairness and professionalism in which you handle the community

measures of maintaining the common areas. Use this legal

business. Those that don’t choose to attend the meeting will

requirement as a vehicle to celebrate your successes and show

have eyes on the business from the agenda posting, hopefully

your struggles on behalf of the owners.

feeling that the board is taking care of the important business of safeguarding their investments. The election process has become one of the most

While these are just a few of the top legal requirements you face daily, try approaching your daily association activity with a different perspective and see if it doesn’t yield a different

administratively laborious and expensive examples of legislators

outcome. To build trust and confidence, be transparent in your

trying to protect the rights of owners to ensure dirty politics do

actions and decisions. There should be less focus on cost and

not prevail in our backyards, with no regard to financial impact

more focus on the investment you are making in the community

of the secret ballot, double envelope system. Despite what the

by engaging your owners in a positive way.

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What’s in it for you? Peace of mind and harmony within the community. A utopian perspective, perhaps, but we find what we look for in life. Look for the positive and the negative will diminish. Do it because it is required by law but most importantly, do it because it’s the right thing to do, and because it’s the responsible and reasonable thing to do to help build a cohesive and pleasant community.

Cindy Collins, CCAM, PCAM, is Vice President of Community Management for Merit Property Management, LLC, a First Service Residential Management Company.

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Meeting Minutes or Community Soap Opera? By Jean Marie Salvia, CCAM, PCAM

magine yourself on a board of

member was playing on his phone

directors and sitting in a deposition

while two others were eating pizza

or in a courtroom. One of the

and a fourth appears to be taking a

homeowners in your community

nap.

is suing the board for not taking appropriate action or investigating

Scenario 2: Detailed meeting

his concerns. The plaintiff’s attorney

minutes submitted as plaintiff’s

accuses you of not taking his client

evidence.

seriously, not allowing him to be heard and putting the association at

Board Member: We take our position

risk. Review the scenarios below and

and all homeowners seriously. We

decide which one would you prefer to

listened attentively to your client but

be involved in.

did not believe his claims warranted further action.

Scenario 1: Video tape submitted as plaintiff’s evidence.

Plaintiff attorney: Oh really? The minutes state that when my client

Board Member: We take our position

brought this issue to your attention,

and all homeowners seriously. We

“several owners agreed it was an

listened attentively to your client but

issue. John and Sara debated the

did not believe his claims warranted

matter. Sam interjected stating that

further action.

this was a waste of time and he was hungry. The board unanimously

Attorney: Oh really? Let’s watch the

agreed and ended the meeting so

video of your meeting…When my

that they could get pizza.”

client raised the issue, one board

SUMMER 2013

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C o m m o n A s s e s s m e n t Ma g a z i n e

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Meeting Minutes

criticize the board for its process rather

some heartache and keep the minutes

Continued from page 10

than its decisions.

brief. Document the meeting time,

Scenario 3: Meeting minutes submitted

training or extensive practice, recording

or decisions, and leave the gossip and

as defense’s evidence.

meetings is strongly discouraged. If

heated debates in the boardroom.

If board members have not had media

you find yourself on a board and the Board Member: If you review our

those present, and the actual actions

Court drama can be entertaining

Other problems are often related to

Many vendor supplied contracts also have provisions by which the contract is automatically renewed absent some formal

payment terms. You do not want your

notice by the association within a set period

When the vendor is signing off on a

association to pay for the entire contract

of time. The renewal language is often

contract prepared by legal counsel there is

prior to the satisfactory completion of the

buried in the fine print and doesn’t leap out

less risk than when the vendor supplies their

work. On the other hand you want to avoid

to the nonlegal eye. Whenever the board is

own contract for the association to sign.

mechanic’s liens for nonpayment of services

thinking of switching vendors at the end of a contract, you may want to remember to tell them “Consult Your Attorney” well before the term of the contract ends in order to avoid automatic renewal of the that contract. You have a lot to think about when managing your communities. A hurriedly executed contract may end up giving you even more to think about – and not in a good way. When it comes to contracts for your clients, when in doubt send it out to legal.

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SUMMER 2013

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Deborah M. Kornheiser is a partner in the law firm of Wasserman Kornheiser, LLP. Wasserman Kornheiser’s practice is focused exclusively on the representation of community associations.

Craig L. Combs is an associate attorney with Wasserman Kornheiser. The emphasis of Craig’s practice is community association dispute resolution and litigation.

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SUMMER 2 0 1 3

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C o m m o n A s s e s s m e n t Ma g a z i n e

SUMMER 2 0 1 3

New & Renewing Members Welcome new chapter members!! Thank you to our chapter members that have renewed their CAI membership. We appreciate your continued support and participation in our chapter.

New Members Aaron Levine..................................................... 3/13 Access Professional Systems, Inc.................... 1/13 Allison Lucy....................................................... 2/13 Andrew Sheldon............................................... 3/13 Anne Perez........................................................ 1/13 Annie Vongphosy............................................. 2/13 Becky Camp...................................................... 3/13 BELFOR Property Restoration......................... 3/13 Black Diamond Paving, Inc.............................. 1/13 CDW.................................................................. 2/13 Christian Raymundo......................................... 2/13 Christine Gonzales........................................... 2/13 Clayton M. Anderson & Associates................ 2/13 Daria Veliz.......................................................... 2/13 David Demoranville.......................................... 1/13 Deena Arvizu..................................................... 3/13

Eli Whitney........................................................ 3/13 Erik Runsvold..................................................... 2/13 Erin Lindley........................................................ 2/13 First Citizens Bank............................................ 1/13 Golden State Reserves Studies, LLC.............. 1/13 Hanni Andersen................................................ 2/13 Iris Andrade....................................................... 2/13 Jennifer Patstone.............................................. 1/13 Jimmy Nevarez................................................. 3/13 Jocelyn Harris.................................................... 3/13 Joel Kownacki................................................... 2/13 John Doria......................................................... 3/13 Kami Goldstein................................................. 2/13 Marina Chavez.................................................. 2/13 Maura Eisele...................................................... 2/13 Melissa Vaughn................................................. 3/13

Melodie Nickell................................................. 2/13 Nancy Dobson-Villarreal.................................. 2/13 Pacific Premier Bank................................................. 2/13 Pro Pacific Pest Control.................................... 3/13 Project Approval Services................................ 2/13 Rayco, Inc.......................................................... 2/13 Sean Sutton....................................................... 2/13 Star Towing........................................................ 2/13 Suzanne Bryant CPA......................................... 1/13 Tasha Martinez-Dettmer................................... 3/13 The Edward Group General Contracting Corporation....................................................... 3/13 The Lazarus Group Internet Services, LLC..... 3/13 Thomas Normoyle............................................ 3/13 Thomas Peterson.............................................. 2/13

Jeff Greene...................................................... 2008 Jerry Bice, CMCA............................................ 2007 Jim Osborn...................................................... 2013 Joel Owens...................................................... 2013 John LaBlanc, CMCA..................................... 2010 Karen Medley.................................................. 2009 Kasdan, Simonds, Weber & Vaughan, LLP.. 2011 Katheryn Padilla............................................... 2013 Katy Camp, CCAM......................................... 2008 Kelley Brewster................................................ 2009 Pernicano Realty Management Company... 2000 LandGraphics Landscape & Arborcare Management................................................... 2012 Landsystems.................................................... 2013 Leanne Ardilla, CMCA.................................... 2008 Linda Hill, CCAM, CMCA............................... 2007 Lisa Isaacson, CCAM, PCAM......................... 2007 Lloyd Pest Control.......................................... 2012 Lohse2.............................................................. 2013 Lori Graham, CCAM, CMCA, AMS, PCAM. 2006 Mark Albert...................................................... 2013 Maureen Coobatis.......................................... 2009 Melanie Hudson.............................................. 2010 MeterNet......................................................... 2011 A1 All American Roofing................................ 1997 Michael Zumbahlen........................................ 2011 Mike Lutz.......................................................... 2006 Monique Douglas........................................... 2012 Morning View Associates, LLC...................... 2006 Nelson Paving/Goldstar Asphalt................... 2012 Nicolas Brennan.............................................. 2009 Nina Stanley..................................................... 2010 Orange Coast Building Services, Inc............ 2006 Pacific Rim Property Management............... 2011 Pamela Kindig................................................. 2010 Patio Guys........................................................ 2012 Patrick McNamara........................................... 1992 Paul Polowski................................................... 1991 PCM of California, Inc., CMF......................... 2009 Personal Touch Cleaning & Maintenance, Inc....2012

Peter Penzes, PCAM....................................... 2005 Popular Association Banking......................... 2005 R&D Pest Services, Inc.................................... 2009 Randy Hegwood, CMCA............................... 2010 Rebecca Groenewold..................................... 2013 Richard Cavanaugh......................................... 1992 Rita Petrekova.................................................. 2012 Robert Dolry.................................................... 2009 Robert Donaldson........................................... 1992 Robin Fennell, CMCA..................................... 2009 Romy Brown..................................................... 1991 Roy Palacios Insurance Agency, Inc.............. 2005 Russell Buckley................................................ 2011 Community Archives, Inc............................... 2008 Sam Dolnick..................................................... 1990 San Diego Roof Doctor.................................. 1990 SHE Manages Properties............................... 2013 Sherri Medlin................................................... 2005 Sky Security Services....................................... 2013 Smart Property................................................ 2008 Steven Bennett, CMCA, AMS....................... 2013 Steven Cassleman........................................... 2003 Susan Christian................................................ 2010 Tara Graviss...................................................... 2010 The Forestry Group Tree Care Services....... 2012 The Naumann Law Firm................................. 2012 Three Phase Electric, Inc................................ 2003 Tom Larkin........................................................ 2008 Tracy Mays....................................................... 2010 Transpacific Management Service................ 2012 Villa Park Landscape....................................... 2012 Vista Paint Corporation.................................. 1991 Vita Tarantino................................................... 2013 Western Gardens Landscaping, Inc.............. 2006 William Kiel...................................................... 2013 William Stewart, PCAM.................................. 2005

RENEWING Members 4-Points Management Agency...................... 2004 Adam Robinson............................................... 2010 Agricultural Pest Control................................ 2013 Albert Pryde..................................................... 1992 Alicia Loyd........................................................ 2007 AlliedBarton Security Services, Inc................ 2009 Amber Korody................................................. 2013 Animal Pest Management Services, Inc....... 2004 Asael Sandoval, CMCA, AMS........................ 2006 Association Reserves San Diego, LLC.......... 2009 Associations Insurance Agency, Inc.............. 2009 Bald Eagle Security Services, Inc.................. 2009 Brinks Services, Inc.......................................... 2006 CertaPro Painters, Ltd.................................... 2003 Christina Mercer.............................................. 2012 Christine Salas................................................. 2013 Cori Shipp, CMCA, AMS................................ 2006 Curtis Management Company, Inc............... 1984 Cynthia Van Cleave......................................... 2009 Deborah Griffiths............................................ 2006 Don Kerl........................................................... 2012 Donald Michaels............................................. 2006 Donna Walters................................................. 2007 Dorothy Champange...................................... 2009 Eagle Glen Master Homeowners Assn........ 2009 Emercon Construction, Inc............................ 2013 G.R.G. Management Inc................................ 2009 Gary Schwertly................................................. 2010 Glen Johnson.................................................. 1977 Green Bryant & French, LLP.......................... 2005 Greg Montulli.................................................. 2010 Haney Accountants, Inc.................................. 2009 Heaviland Enterprises, Inc............................. 2011 Houston Burnside........................................... 2013 Interiors: By Design......................................... 1996 Ivey Engineering, Inc...................................... 2012 Jamie Kim, CCAM, CMCA, AMS.................. 2007 Janet Wagner, CCAM, CMCA....................... 2012 Janice Liese, CMCA, AMS............................. 2005 Janis Russell..................................................... 2013

SUMMER 2013

C o mm o n A ssessme n t M a g a z i n e

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Newsstand Trigiani, Dyekman Among Members and Chapter Leaders Honored by CAI Lucia Anna “Pia” Trigiani, Esq., a principal with the Virginia-based law firm MercerTrigiani, received one of CAI’s most prestigious honors April 19 at the organization’s 2013 Annual Conference and Exposition. Given at the discretion of CAI’s immediate past president, Kathryn C. Danella, CMCA, LSM, PCAM, the President’s Award was presented to Trigiani in recognition of her exemplary service to CAI and the instrumental role she has played to support CAI and the 63-million-plus Americans who live and work in community associations. Donald E. Dyekman, Esq., a member of the Central Arizona

chapter and a past president of both CAI and the College of Community Association Lawyers, received the prestigious Distinguished Service Award for long-standing and extraordinary contributions to CAI. Among other activities, Dyekman prepared case law update materials for the Community Association Law Seminar attendees for more than a decade. Trigiani has been a major contributor to CAI for 20 years, providing her talents as an advocate, advisor and educator on both the chapter and national levels. She is a member of CAI’s College of Community Association Lawyers (CCAL); served on the Foundation for Community Association Research’s

Board of Directors from 2006-2012; and acted as chair of CAI’s National Government and Public Affairs Committee from 1996-2008. Trigiani is also the author of Reinventing the Rules (Community Associations Press, 2002) and in 2009 received CAI’s Distinguished Service Award. Trigiani and Dyekman were among eight CAI member leaders, three chapter executive directors, 21 chapters and a state legislative action committee recognized for excellence, achievement and leadership during CAI’s Annual Conference, April 17–20 in San Diego. The event attracted attendees from all over the globe— including Australia, the Bahamas, Brazil, Canada, Dubai, Saudi Arabia and South Africa. More than 1,400

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conference participants—including 23 past national presidents—also celebrated CAI’s 40th anniversary during the event.

Other Award Recipients The following members also received 2012 awards at this year’s conference: • Stephen R. Bupp, CMCA, AMS, PCAM (Washington Metropolitan), Educator of the Year • Dana Davidson, CMCA, AMS (Orange County Regional– California), Recruiter of the Year • Linda Van Gelder (Central Arizona), Award of Excellence in Membership • Bruce R. Gran, CMCA, AMS, PCAM (Central Arizona chapter), Award of Excellence in Chapter Leadership • Stephen M. Marcus, Esq.

(New England), Outstanding Volunteer Service Award • Earl “Dick” Pruess (Greater Los Angeles), Award of Excellence in Government and Public Affairs The California Legislative Action Committee (CLAC) was named the LAC of the Year for its advocacy efforts and successes in the state legislative arena. CLAC successfully advocated many difficult bills, including executing a grassroots campaign to support a foreclosure notification bill (AB2273). “In 1973, a group of passionate volunteers had the foresight to realize the importance of providing advocacy and education for community associations, and from their grassroots efforts CAI was born,” says CAI Chief Executive Officer Thomas M. Skiba, CAE. “Today, that same spirit lives on in our members—many of whom volunteer on 61 chapter boards,

educate their peers and work through 35 CAI legislative action committees to help ensure appropriate public policies affecting common-interest communities. I can only imagine all of the ways our members will help shape CAI over the next 40 years.”

Chapter Awards Several CAI chapters and chapter executive directors (CEDs) were also honored during the Annual Conference. Michelle Leary, the Washington State chapter’s CED, was named the Chapter Executive Director of the Year, while Stacey Drayer (Central Virginia) and Vicki Hancock, CMCA, AMS, PCAM (Michigan), were named Chapter Executive Director Rising Stars. The following chapters were recognized for their excellence in various categories of achievement: Central Arizona (three awards); Central Virginia; Connecticut; Gold Continued on page 28

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10 percent) Orange County Regional (very large chapter, 16 percent) The membership growth of all chapters helped CAI surpass the 32,000-member mark in 2012. Chapters recognized for the highest net membership retention in 2012 were: • San Antonio (small chapter, 89 percent) • California North (medium chapter, 94 percent) • Chesapeake (large chapter, 91 percent) • Connecticut (very large chapter, 90 percent) CAI’s national member retention rate for 2012 exceeded 85 percent. With more than 32,000 members dedicated to building better communities, CAI works in partnership with 60 domestic chapters, a chapter in South Africa and housing leaders in a number of other countries, including •

Continued from page 25

Coast; Greater Inland Empire; Greater Los Angeles; Heartland; Illinois (two awards); Jacksonville Metropolitan; Orange County Regional; Oregon; Pennsylvania/Delaware Valley; San Antonio; San Diego; Southeast Florida; and Wisconsin (two awards). “Year after year, our CEDs and chapter member volunteers continue to play an invaluable role for CAI,” says Crystal L. Wallace, IOM, CAE, CAI’s vice president of membership and chapter relations.

Chapter Growth and Retention The following chapters were recognized for having the highest net membership growth in 2012: • Southern Arizona (small chapter, 19 percent) • Austin (medium chapter, 26 percent) • South Carolina (large chapter,

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Australia, Canada, the United Arab Emirates and the United Kingdom. CAI provides information, education and resources to community associations and the professionals who support them. Visit www.caionline.org or call (888) 224-4321.

CAI Annual Report Outlines Member-Driven Accomplishments Community Associations Institute (CAI) set yet another membership record, expanded its professional development programs and achieved key accomplishments in critical regulatory and legislative venues in 2012, according to CAI’s Annual Report, Collective Success. The report is published beginning on page 48 in the March-April issue of Common Ground, CAI’s flagship magazine. Below are just a few 2012 accomplishments: • Membership reached a record of 32,059, an increase of more than 500 in one year. • CAI elevated its role as a major influence in mortgage and condominium certification issues. • More than 2,500 members attended four of CAI’s major events, including the Annual Conference and Exposition. • Almost 3,800 students took CAI professional development courses in the classroom and online. • More than 800 professionals earned CAI designations. • CAI Press, the publishing division of CAI, sold more than 36,000 books and brochures. • Almost 300,000 people visited CAI’s website for information and resources. “When we succeed as individuals, we gain respect and recognition, accelerate our careers, strengthen our professions and grow our businesses,”

said 2012 CAI President Kathryn C. Danella, CMCA, LSM, PCAM. “When we succeed collectively, we fulfill our mission of supporting and strengthening communities and serving the people who call them home.” CAI’s achievements, she added, “reflect an organization with members and leaders who understand the importance of both our individual responsibilities and our collective contributions.” Added Chief Executive Officer Thomas M. Skiba, CAE: “With the help and support of countless CAI member volunteers, we will continue to provide information, education and representation that support you, your associations, your residents, your careers and your professions.”

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S U MME R 2 0 1 3

ost of us understand

Supplies, who has not been paid

the concept of

for the roof tiles he supplied

a “lien” as an

to Jack’s Roofing, may record

encumbrance recorded against

a mechanic’s lien against Mr.

the title to real property in

and Mrs. Smith’s condominium

order to secure payment of a

unit even though there is no

monetary obligation, such as

contractual relationship between

the all too familiar “Notice of

Bob and the Smiths.

Delinquent Assessment Lien.” A

Fast forward to the next

mechanic’s lien is no different.

board meeting attended by

Pursuant to a specific

the Smiths and every one of

procedure provided by statute,

their neighbors whose units are

California law allows any person

subject to a mechanic’s lien and

or entity who furnishes labor

are now unable to refinance or

or supplies materials for a

sell the same through no fault

construction project or work

of their own, or through no

of improvement to record a

fault of the association or the

mechanic’s lien against real

board. Despite the association

property to secure payment for

having paid the contractor,

that labor or those materials.

the supplier is threatening to

The right to record a mechanic’s

foreclose on the mechanic’s lien.

lien extends to any contractor,

In order to avoid that action,

subcontractor, material supplier

the association may have to pay

or laborer regardless of whether

Bob for the same materials it

they have direct contractual

has already paid Jack. Of course

relationship with the owner of

the association would have

the real property.

legal recourse against Jack’s

So, while an association

Roofing but whether or not the

involved in such a construction

association is ultimately made

project or work of improvement

whole depends on Jack staying

may have diligently remitted

in business and being solvent.

timely payment to its contractor,

So how does an association

if the contractor does not in

minimize its exposure to the

turn pay the subcontractor,

risk that its contractor may not

that subcontractor may record

pay their subcontractors and

a mechanic’s lien against the

suppliers? Not surprisingly, the

property improved by the labor

best protection is through the

or with the materials supplied,

written contract between the

including the homeowners’

association and the contractor.

separate interests. In other

Have the association’s legal

words, Bob’s Roofing Material

counsel prepare the contract Continued on page 32

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C o mm o n A ssessme n t M a g a z i n e

The right to record a mechanic’s lien extends to any contractor, subcontractor, material supplier or laborer regardless of whether they have direct contractual relationship with the owner of the real property.

Don’t Mec

Fear

chanicâ&#x20AC;&#x2122;s Liens By Stephen M. Kirkland, Esq.

Continued on page 20

C o m m o n A s s e s s m e n t Ma g a z i n e

S U MME R 2 0 1 3

Don’t fear... Continued from page 30

because the typical contractors’ document does not contain provisions requiring them to indemnify and hold the association harmless from claims for mechanics’ liens. More often than not, a contractor’s “contract” is simply a proposal, bid or scope of work containing none of the provisions necessary to adequately protect the association. In addition to express provisions in the contract, an association can further minimize its exposure to mechanics’ liens by requiring a “waiver and release” from the contractor of its right to record or to foreclose on a mechanic’s lien. The waiver and release can be either “conditional” when the contractor has not yet been paid, or “unconditional,” when the contractor has been paid. The “unconditional” waiver and release should state on its face that by signing the same, the contractor is acknowledging receipt of that payment and that the payment covers the work performed under the

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Prior to issuing progress payments to the contractor, associations should require that the contractor provide waivers and releases for not only the contractor, but all subcontractors and suppliers. In fact, the contract should state that waivers and releases are required prior to issuance of any payments. Another layer of protection is to record a “notice of completion” with the county recorder’s office within ten (10) days of completion of the work. Doing so can shorten the period within which a subcontractor or supplier is required to record its mechanic’s lien. While the

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association can require a provision in the underlying contract obligating the contractor to record a notice of completion, the prudent practice is for association to record the same to ensure that this occurs within the required ten (10) days in order to be effective. So what should an association do upon learning that a mechanic’s lien or liens

SUMMER 2013

C o mm o n A ssessme n t M a g a z i n e

have been recorded against the project? First, DON’T PANIC, but immediately refer the matter to the association’s legal counsel. The statutory procedures governing mechanic’s liens contain very specific, short time constraints and require strict compliance. It is not uncommon for contractors, subcontractors or suppliers to fail to comply with the requirements. Any such deviation from those procedures and time constraints by the contractor, subcontractor or supplier may give the association leverage in negotiating a resolution of the dispute. The association’s legal counsel can also concurrently pursue the remedies against the contractor expressly set forth in the underlying contract.

Stephen M. Kirkland is a partner with the law firm of Peters & Freedman, LLP specializing in representing common interest developments throughout Southern California with offices in Encinitas and Palm Desert.

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Seeking Protection from Creditors in Bankruptcy Court By Cheryl L. Stengel, Esq.

ost homeowners associations are non-profit mutual benefit corporations. When an association’s assets dip below its liabilities, an association can find itself in the

kind of trouble only a Chapter 11 bankruptcy can fix. An association has one primary asset: the sum total of assessments it collects monthly and accumulates in its operating and reserve accounts. When an association runs low on cash, it can specially assess its members. But what happens when an extraordinary situation arises? The usual option for the association is to decrease discretionary services and limit repair and maintenance projects to “emergencies” only. Furthermore, as a “pass-through” corporation owned and funded by its shareholders (the homeowner members), an association is expected to impose a special assessment to put its financial picture into balance. Assuming the

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association membership cannot make up the shortfall, negotiation with creditors is the next logical step. But negotiations can take too long without yielding net positive

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administration by scrutinizing the actions and business affairs of the association preand post-filing. Association management must meet with the OUST, attend court hearings, respond to document and information requests, and prepare and file monthly financial reports. Court approval

of many actions will be needed, including employment of professionals, payments to insiders, borrowing, sale of any assets and use of any revenues generated by a secured creditor’s collateral. The likelihood of a successful Chapter 11 case is dependent on many factors, including the association’s post-Chapter 11 management

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assess operations, restructure contracts, restructure debt and, if necessary, obtain financing to pay mounting unpaid bills. The filing of a bankruptcy petition invokes the Bankruptcy Code’s “automatic stay” under 11 USC §362. The automatic stay operates as an injunction to stop all acts to collect or enforce a debt against the debtor or its property. The stay stops lawsuits, judgment enforcement, foreclosure, repossession, creation or enforcement of a lien, and asset Continued on page 38

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the creditor’s interest or lack of equity in property. The court will grant relief from stay to an unsecured creditor under very limited circumstances. When an association files for bankruptcy protection under Chapter 11, it remains in control of operations as a “debtor in possession” unless mismanagement or mishandling of its duties results in the appointment of a trustee. During the

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in the future. Sales in the community or refinancing transactions could grind to

bankrupt association as too high a risk to their personal financial well-being, and lenders become skittish or downright hostile towards an association in apparent – even if only temporary – disarray. Lastly, as a corporate entity, a homeowners’ association cannot obtain a discharge in bankruptcy the way individuals can. In other words, corporate obligations are not eliminated by the filing of a bankruptcy proceeding. Successful reorganization is the only acceptable outcome. Bankruptcy for a homeowners’ association is probably most beneficial in a situation that is a one-time urgent event: a balloon payment due on a loan, a large repair bill, an expiring land lease the debtor hopes to re-negotiate or a lease with unfavorable terms which the debtor wishes to reject altogether and limit damages. The time afforded an association to restructure the deal could make it worth the cost of the “bankruptcy” label, and eventually allow the organization to reorganize and move onto a brighter, less distressed future.

It’s amazing what good community management will do.

Cheryl L. Stengel, Esq., practices in San Diego with the Law Office of Michael T. O’Halloran. She is a Certified Specialist in Bankruptcy Law by the State Bar of California Board of Legal Specialization.

800.227.6225 • www.waltersmanagement.com SA N DIEGO • CHU LA VISTA • CA R LSB A D • MU RRIETA C o m m o n A s s e s s m e n t Ma g a z i n e

S U MME R 2 0 1 3

By Lucas Sisneroz, CCAM, CMCA

here are pivotal moments in

throwing the party, the association

every person’s life that deserve

or individual member, there are a

recognition. Whether it’s the birth

few checklist items that need to be

of a child, a graduation, a new job or

considered:

What happens if things get out of hand? Associations should have a reservation system in place along with rules for

retirement, there is always a reason and

•

What kind of celebration?

the type of events that can be held.

season to celebrate. While not every

•

What is the maximum capacity?

These guidelines will communicate to

party will be reminiscent of a ticker tape

•

What does the association’s

homeowners what is allowed and what

insurance cover?

is not permitted. If homeowners know

Is there a risk factor (does the

the rules ahead of time, the odds of the

recreation room connect to the

event going south are much less. These

pool area)?

guidelines also apply when the association

parade, homeowners associations have much more to lose when the good times

•

go awry. As a community manager or board member, a request to reserve

•

Will there be a need for security?

hosts a community event such as a holiday

the recreation room, the pool or the

•

Is there a deposit?

party, summer picnic, annual meeting or

park may come as an everyday task

•

What other parts of the common

movie night.

that may be as simple as putting up a sign that says “Reserved.” However,

area may be affected? •

sometimes ”simple” turns into downright complicated. Regardless of who is

SUMMER 2013

•

Unfortunately, disaster can strike at

Will other homeowners be

any time and there are many underlying

affected?

factors that can lead to catastrophic

What time will the festivities end?

events. Some examples are:

C o mm o n A ssessme n t M a g a z i n e

•

Serving of alcohol. Associations should never sponsor an event where alcohol is served, including at holiday parties or annual meetings.

•

Uninsured outside vendors that cause damage, such as a catering van that plows into a house.

•

An injury or death occurring on association property.

•

An association sponsored event where something goes awry such as an assault, fire or property damage.

•

Lack of child supervision. No one wants a lost child.

•

Catered events that may lead to food issues such as allergies or spoiling. Make sure you clearly state what ingredients are in the food being served.

•

Bounce houses can lead to a child with a broken limb. Yes, it happens and someone will inevitably blame the association.

•

Live animals, such as when Dolly the pony gets spooked and causes harm or damage to people and property.

•

Misappropriation of association funds and theft. Ensure that if association funds are involved, the association has the authority to spend funds on social events. If so, it is necessary to keep track of all expenditures, stay within budget and by all means, do not go over the top.

What happens when the worst case scenario happens? In community management, we are always putting out fires so arm yourself and prepare for the worst. “Murphy’s Law” states that if anything bad can happen, it probably will. Good luck and remember to have fun at your next association event.

Lucas Sisneroz, CCAM, CMCA is a Community Manager with N.N. Jaeschke, Inc.

C o m m o n A s s e s s m e n t Ma g a z i n e

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Associated Professional Services Neal Chazin......................619-299-6899 x101 fax 619-299-8242 nchazin@apsmanagement.com www.apsmanagement.com Please see our ad on page 43 Curtis Management Company, Inc. Patrick S. Campbell, CCAM....... 877-587-9844 fax 858-587-9972 pcampbell@curtismanagement.com www.curtismanagement.com Please see our ad on page 25 Professional Community Management Jim Fraker.................................. 760-918-8040 fax 760-603-9156 jfraker@pcminternet.com www.pcminternet.com Please see our ad on page 9

AMS Paving Liz WIlliams................................ 800-357-0711 Walters Management fax 888-357-0715 Joe Farinelli, PCAM.................. 858-495-0900 liz@amspaving.com fax 858-495-0909 www.amspaving.com jfarinelli@waltersmanagement.com Please see our ad on page 21 www.waltersmanagement.com Please see our ad on page 39

Attorneys Community Legal Advisors Inc. Madeline Orey ......................... 760-529-5211 fax 760-453-2194 madeline@AttorneyforHOA.com www.AttorneyforHOA.com Please see our ad on page 29 Epsten Grinnell & Howell, APC Jon H. Epsten, Esq. ................. 858-527-0111 fax 858-527-1531 jepsten@epsten.com www.epsten.com Please see our ad on page 5 Greco Traficante Schulz & Brick, APC Peter Schulz, Esq. ..................... 619-234-3660 fax 619-234-0626 pjs@gtlaw.cc www.gtlaw.cc Please see our ad on page 13 Peters & Freedman, LLP David M. Peters, Esq. .............. 760-436-3441 fax 760-436-3442 www.hoalaw.com Please see our ad on page 27 42

SUMMER 2013

Consulting Curtis Management Company, Inc. Patrick S. Campbell, CCAM....... 877-587-9844 fax 858-587-9972 pcampbell@curtismanagement.com www.curtismanagement.com Please see our ad on page 25

Financial Services Curtis Management Company, Inc. Patrick S. Campbell, CCAM....... 877-587-9844 fax 858-587-9972 pcampbell@curtismanagement.com www.curtismanagement.com Please see our ad on page 25 First Bank Jan Hickenbottom, PCAM....... 800-848-6771 fax 949-477-0255 Jan.hickenbottom@fbol.com www.FirstBankHOA.com Please see our ad on page 38

C o mm o n A ssessme n t M a g a z i n e

brendan.concannon@mutualofomahabank.com

www.mutualofomahabank.com Please see our ad on page 32

Pacific Western Bank Susan Abubo............................. 760-432-1335 fax 760-432-1339 sabubo@pwbonline.com www.pwbonline.com Please see our ad on page 35 Popular Association Banking Larry Hooper.............................. 714-864-5171 fax 714-864-5190 lhooper@bpop.com www.bpop.com Please see our ad on page 37 Seacoast Commerce Bank Ken Carteron............................. 760-803-9541 fax 760-301-0046 kcarteron@sccombank.com www.sccombank.com Please see our ad on page 26 Union Bank Jolen Zeroski............ 800-669-8659, option 4 jolen.zeroski@unionbank.com www.unionbank.com Please see our ad on page 9

Insurance Berg Insurance Agency Kimberly Lilley, CMCA, CIRMS 800-989-7990 ext. 230 fax 949-540-0218 kimberly@BergInsurance.com www.BergInsurance.com Please see our ad on page 39

Landscape Maintenance and/or Construction Landscapes USA Charlie Carter............................ 858-386-9820 fax 858-625-0656 ccarter@landscapesusa.com www.landscapesusa.com Please see our ad on page 35 Pacific Green Landscape, Inc. Stephanie Lundstrom............... 619-390-9962 fax 619-390-0865 stephanie@pacificgreenlandscape.com www.pacificgreenlandscape.com Please see our ad on page 37

Landscape Maintenance and/or Construction Steven Smith Landscape Gigi Golden-Smith.................... 760-745-9916 fax 760-745-1982 ggolden@stevensmithlandscape.com www.stevensmithlandscape.com Please see our ad on page 38 TVRI Mimi Cortez............................... 760-696-0687 mimi@TVRI.com www.TVRI.com Please see our ad on page 32

Security Services Bald Eagle Security Dmitriy Todorov......................... 619-230-0022 fax 619-230-6610 dmitriyt@baldeaglesecurity.com www.baldeaglesecurity.com Please see our ad on page 20

Towing Western Towing Kathy Tighe................................ 619-297-8697 fax 619-296-2822 denisetb@westerntowing.com www.westerntowing.com

Please see our ad on page 34

Tree SERVICE Pest Control Mt. Helix Pest & Termite Control Robert Bacon............................. 619-584-6794 fax 619-584-3864 mthelixpc@yahoo.com www.mthelixpestcontrol.com Please see our ad on page 12 Payne Pest Management Jason Payne............................... 858-277-2228 fax 858-277-2212 jpayne@paynepestmgmt.com www.paynepestmgmt.com Please see our ad on page 13

Arborwell Kimberly Taylor.......................... 888-969-8733 Fax 510-881-5208 ktaylor@arborwell.com www.arborwell.com Please see our ad on page 33

Water Submetering California Sub-Meters Robert Anaya............................. 858-571-8999 fax 858-571-4470 robert@calsubmeter.com www.calsubmeter.com Please see our ad on page 29

SAVE THE DATE!

TRADESHOW & LUNCHEON

Davis-Stirling Act Revisions for 2014 October 11, 2013

Reserve Studies

Associated Professional Services

Sonnenberg & Company Leonard Sonnenberg................ 858-457-5252 fax 858-457-2211 lens@sonnenbergcpas.com www.sonnenbergcpas.com Please see our ad on page 41

The Management Alternative

Providing cost-effective, efficient Accounting Services for: • Self-Managed Homeowners associations • Associations Employing an On-Site Manager

Roofing Premier Roofing CA, Inc. Sid Scott..................................... 619-667-4565 fax 619-667-1281 sids@premierroofingca.com www.premierroofingca.com Please see our ad on page 28 RSI Roofing James Adams............................ 858-278-7200 fax 858-278-7203 jadams@thinkrsi.com www.thinkrsi.com Please see our ad on page 21

• Portfolio Managers

Call Neal Chazin

(619) 299-6899

FerraraAd11.5.12_Ferrara Ad 7/8 11/7/12 8:21 AM Page 1

MICHAEL J. FERRARA Certified Public Accountant

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