July, August, September 2013

Common FAll 2013

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

A n t i c i pat i n g t h e 2014 D av i s -S t i r l i n g A c t U p dat e NEW ANNUAL DISCLOSURE requirements for HOAs page 14 2013 Chapter Party in pictures page 20 Baker-Dolnick EDUCATION foundation page C o mshown m o n A to s s ebe s s effective m e n t Ma g a z i n 31 e |

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Page 22 Page 6

Features

Departments

6

Navigating The New Act

4

President’s Message

by Loren K. Shiu, Esq.

by Marie Donovan

10

Davis-Stirling 2014: Navigating the Changes to Association Governance

by Susan Hawks M c Clintic, Esq.

14

New Annual Disclosure Requirements for HOAs

By jeffrey a. french, Esq.

22

Special Delivery – Explicit Notice & Delivery Provisions in the New Act

by Lauri Croce, Esq

31 Baker-Dolnick Education Foundation For Homeowner Members Shown to be Effective

13

18 27

Platinum Business Partner Spotlight: Featuring Payne Pest Management New and Renewing Members Newsstand - News from CAI National

30 Around San Diego

Back Cover 2013 Marketing Plan Members

by Sam Dolnick

32 Understanding Options for Updating Governing Documents

by Laurie S. Poole, Esq.

38

Two Court of Appeals Decisions

by Jonathan D. Massie, Esq.

SPECIAL INSERT Quick Reference for the Davis-Stirling Act Revisions

Chapter News 20

28

April 18 Chapter Party April 5 CID Law Sponsor Thank You Find us on Facebook!

Don’t forget to “like” CAI San Diego!

Connect with us on LinkedIn: Search “Groups”: CAI San Diego

Get the latest from CAI San Diego on Twitter! @CAISanDiego 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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Common

President’s Message Tempus Fugit

H

ow fast times goes by! Already, we are three-quarters of the way through this year and fall is upon us. This makes it the perfect time to reflect on the objectives we have set for our chapter. How have things fallen into place? Where are we now with the ideas, goals and plans we made for the year?

During this past quarter, we again had something for everyone. We had an array of educational opportunities balanced by social events.

New this year, the Business Partners Committee held a Business Partners Appreciation Mixer in July, at the Rockin Marie Donovan has been Baja Lobster in Old Town. It received a great deal of positive involved with the CAI San Diego Chapter as a feedback. An advanced educational program for managers, homeowner volunteer Financial Audits and Reviews was presented in July, followed by since 2001 serving on the Educational Services another, Maintenance & Reserves in September.

Committee and is the 2013 Always fun, in August the Day at the Races had 136 Chapter President. attendees. August also saw District Attorney Bonnie Dumanis provide insight as to what is going on in San Diego with “White Collar” Crime and Embezzlement in the HOA industry.

Only those who will risk going too far can possibly find out how far one can go. ~ T.S. Eliot In September, the CAI San Diego Golf Classic at Coronado was a sell-out and its silent auction raised over $2500. In addition, our new website debuted in September. New and upgraded features provide members with expanded options in accessing information on educational and upcoming events and other resources.

Our Legislative Support Committee has been especially busy this quarter keeping us informed on pending laws in Sacramento.

The changes in the 2014 Davis-Stirling Act are the focus of Common Assessment magazine and an educational program. The entire Fall issue deals with clarifying the impact to homeowner associations, management companies and managers. On October 11, using interactive and internet components, the Davis-Stirling Act Legal Update educational program will provide a road trip through the new Act and tips to navigate it. Tablets and smartphones are welcome!

This year’s Strategic Planning Session produced a wealth of ideas and options to pursue. We continue to build on the chapter’s objectives of membership growth, quality education and improving communication. The working relationships and “can do attitude” of our committees have us stepping out of old comfort zones – looking at different ways to deliver and provide quality services and programs. As an example, the quarterly meetings of Committee Chairs have resulted in the Membership and Marketing/Public Relations committees collaborating on a joint project planned for 2014.

Rounding out 2013 are the always popular, “Almost Free Legal Advice” program and the Annual Awards Luncheon in December. Looking forward, in February 2014, our chapter will host its first ever, Business Partners Reverse Trade Show. Watch for it!

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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

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 Joanna Labahn-cornett.....................LaBahn’s Landscaping Rick Salpietra, Esq................. Law Offices of Richard Salpietra KARINA TATUM....................................................... Complex Realty

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 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 Lucas Sisneros....................................... NNJ, an Associa Company

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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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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By Loren K. Shiu, Esq.

As the conclusion of 2013 draws near, the upcoming year will usher in new information for us all to learn – courtesy of our legislature. Fortunately for everyone, the revised Davis-Stirling Common Interest Development Act (Act), effective January 1, 2014, has been rewritten to become more logical, simpler, and consolidated. The revision standardizes terminology in the Act and clarifies the meaning of provisions.

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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

A

long with this makeover comes a relocated home in the sections of the California Civil Code. The

current Act is numbered Civil Code §§1350 - 1378 but come the new year, the Act will

• Chapter 5 – Property Use and Maintenance, 4700 – 4790

Article 1 – Protected Uses

Article 2 – Modification of

Separate Interest

be renumbered to Civil Code §§4000 - 6150.

The Act has been reorganized to group

• Chapter 6 – Association Governance,

provisions by subject matter allowing the

Article 3 – Maintenance

4800 – 5405

reader to more easily locate a specific topic

Article 1 – Association Existence

under a broader but more logical category.

and Powers

Thus, the best way to begin understanding

Article 2 – Board Meeting

the changes and additions is to first

Article 3 – Member Meeting

conceptualize the layout of the revised Act.

Article 4 – Member Election

Article 5 – Record Inspection

covering important categories such

Article 6 – Recordkeeping

as Governing Documents (Chapter 3),

Article 7 – Annual Reports

Association Governance (Chapter 6),

Article 8 – Conflict of Interest

Assessments and Assessment Collection

Article 9 – Managing Agent

(Chapter 8), and Construction Defect

Article 10 – Government Assistance

Litigation (Chapter 11). For a complete list

• Chapter 7 – Finances, 5550 – 5735

of changes see the Quick Reference Booklet

Article 1 – Accounting

included with this issue, or download a copy

Article 2 – Use of Reserve Funds

section or in some cases, not defined at

at www.cai-sd.org.

Article 3 – Reserve Planning

all. However, the revised Act sets forth a

The Act has a total of 11 chapters

Below is a basic chart to help you picture the structure of the Act including

• Chapter 8 – Assessments and Assessment Collection, 5600 – 5735

Quick Re fere to the 20 nce Davis-Stir 14 ling A Changes ct

user-friendly version by placing all defined terms in a one conveniently located place,

chapter titles, articles, and code section

numbers:

Imposition of Assessments

In addition to consolidating the definitions

• Chapter 1 – General Provisions, 4000 –

Article 2 – Assessment Payment

into one location, the Act has defined terms

and Delinquency

previously left undefined. The following

Article 3 – Assessment Collection

is a list of newly defined terms with their

4190

Article 1 – Establishment and

Article 1 – Preliminary Provisions

Article 2 – Definitions

• Chapter 9 – Insurance and Liability, 5800

• Chapter 2 – Application of Act, 4200 – 4202

– 5810

4205 – 4365

Enforcement, 5850 – 5985

respective code section number: • Annual Budget Report – § 4076

• Chapter 10 – Dispute Resolution and

• Chapter 3 – Governing Documents,

each with their own specific code section.

Article 1 – Discipline and Cost

• Annual Policy Statement – § 4078 • Board – § 4085 • Condominium plan – § 4120

Article 1 – General Provisions

Reimbursement

• Director – § 4140

Article 2 – Declaration

• General notice – § 4148

Article 3 – Articles of Incorporation

Resolution

• Individual notice – § 4153

Article 4 – Condominium Plan

• Member – § 4160

Article 5 – Operating Rules

Resolution Prerequisite to

• Chapter 4 – Ownership and Transfer of Interests, 4500 – 4650

Article 1 – Ownership Rights and

Article 2 – Internal Dispute Article 3 – Alternative Dispute

Civil Action

Article 4 – Civil Action

• Person – § 4170 The broad application of the Act

• Chapter 11 – Construction Defect

remains the same. Chapter 2 reconfirms that the Act is applicable only to common

Interests

Litigation, 6000 – 6150

interest developments and not to those

Article 2 – Transfer Disclosure

One of the changes to the Act that

developments lacking common area.

Article 3 – Transfer Fee

makes the terminology more clear is

Furthermore, the provisions of the Act

Article 4 – Restrictions on Transfer

the definitions section under Article 2 of

that are not applicable to commercial and

Article 5 – Transfer of Separate

Chapter 1. Previously, some terms were

Interests

Continued on page 8

only defined in the body of the code 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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navigating the new act

room for additional circumstances. The

collection policies, lien enforcement

Continued from page 7

additional circumstances are exemptions to

policies, dispute resolution procedures,

industrial developments are expressly set

the 67% vote requirement of the separate

architectural application procedures, and

forth in § 4202.

interest owning members. The expansion

mailing address for overnight payment of

includes reasons based on disability

assessments.

When revisions are made to the Civil

Section 5350, relating to prohibited

Code, a common question to ponder is

accommodation, assigning a parking space/

the applicability to documents prepared

storage unit/other amenity that have been

actions by directors or committee

or actions taken prior to the effective date

designated in the governing documents

members, has also received some

of the Act. Do not lose sleep over this

but not yet assigned, installation and use of

helpful changes. The revised Act takes a

burning question and be rest assured,

an electric vehicle charging station, and to

further step at clarifying the provision by

§ 4010 states that if the document prepared

comply with governing law.

establishing a list of conflicts of interest as

In a more comprehensive change

or action taken was proper under the

to which a director or committee member

current law at the time the document was

to policy disclosures and notification

may not vote. Per the Section, a director or

prepared or the action was taken, it will still

requirements that were previously scattered

committee member is forbidden to vote on

be valid. However, the term “document”

throughout the Act, § 5310 consolidates

any matter involving their own discipline,

does not include a governing document.

them into the board’s annual policy

damage assessments, requests for a

The takeaway lesson here – a governing

statement. The board must distribute the

payment plan for overdue assessments,

document prepared prior to January 1,

annual policy statement to the members

foreclosure, remodel applications, and

2014, which has terms non-compliant with

within 30 to 90 days before the end of

exclusive use applications.

the requirements of the restructured Act will

its fiscal year. Such items required to be

be controlled by the restructured Act.

included in the annual policy statement

revised Act may seem like a daunting

now include: name and address of the

task to tackle, you are now well on your

to grant exclusive use of a portion of

designated person to receive notices for

way to understanding the pertinent

the common area to a specific member

the association, common area posting

changes. As 2014 approaches, be sure

(§ 4600) has also been revised to make

locations for general notices, assessment

to review the full provisions of the Act

The section relating to a board’s ability

While educating yourself on the

in order to hit the ground running. You can review the complete text of the Act at www.leginfo.ca.gov. Lastly, make sure to consult with legal counsel to ensure your associations’ documents such as the governing documents, annual budget report, and annual policy statement are in full compliance before the revised Act becomes effective.

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Loren Shiu. Esq., is an associate attorney with The Naumann Law Firm, PC., a law firm representing homeowners and homeowner association in Southern California.

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9

By Susan Hawks McClintic, Esq.

Davis Mapp D

avis-Stirling 2014 is almost here.

Are you ready? While most of the changes to Davis-Stirling are

executive session board meetings.

Some bylaws have a provision requiring a four-day notice of board

merely reorganization with the language

meetings and make no distinction

of many sections staying the same, there

between an open session board meeting

are some provisions that will change

and an executive session board meeting.

how a community association conducts

When the bylaws have this type of notice

business. The changes noted below range

requirement, a four-day notice is required

from notices of board meetings, voting on

for a non-emergency executive session.

restated documents, and board member

Remember that an emergency

conflicts. Some of the changes may be

meeting in either executive session or

seem small or not so different from what

an open session is exempt from the

we’ve all been doing but remember, the

notice requirements. An “emergency”

devil is in the details!

is defined in both the current law and Davis-Stirling 2014 as “circumstances that

Notice of Executive Session Board Meetings (Current Civil Code § 1363.05(f); 2014 Civil Code § 4920) In 2011, the law changed to require posting a notice and agenda for non-

could not have been reasonably foreseen which require immediate attention and possible action by the board, and which of necessity make it impracticable to provide” the four or two day notice otherwise required.

emergency executive session board meetings at least two days prior to the meeting. In Davis-Stirling 2014, this two day notice requirement is subject to any longer notice period provided in an association’s own governing documents for a board meeting. For some

Membership Votes On Amendments to Governing Documents (Civil Code § 1363.03; 2014 Civil Code §§ 5100 - 5145) For associations rewriting their

associations, this means that a four day

governing documents, new § 5115(e) may

notice will be required for non-emergency

be an expensive change. When voting Continued on page 12

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avis-Stirling 2014 ping the Changes to Association Governance

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Mapping the Changes Continued from page 10

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on any amendments of the governing documents, associations will be required to deliver the text of the amendments to the members with the ballot. Per § 5115(a), ballots must be mailed by first-class mail or “delivered by the association.”

Davis-Stirling 2014 includes detailed

Responsive.

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new provisions addressing delivery methods for notices between the association and its members. Notices from the association are divided into two categories – “individual notices or delivery” and “general notices or delivery.”

Section 5115(a) addressing delivery of ballots and the text of amendments does not use the defined delivery terms but it

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must mean individual delivery. This means that the ballot and text of the amendments must be delivered to every owner by firstclass mail or e-mail or other electronic means, if the owner has first consented, in writing, to receive the ballot and/or text of amendments by electronic means.

For a ballot and a simple one or two

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item amendment, first-class mail is not a problem. For a 60 to 100 page restatement of bylaws and CC&Rs, copying and mailing the entire text with the ballot may be very costly. Certainly, owners should be able to receive a complete text of the changes, but currently many associations provide the text by hand-delivery, which is not an option under the new law, or by posting on a website, providing a CD, or other similar means that are only an option with an owner’s prior written consent. Further, many associations provide the full text to the owners prior to the voting to allow owners’ an opportunity to review and comment prior to the voting and then just provide any changed pages with the ballot.

800.227.6225 • www.waltersmanagement.com SAN D I EGO • C H ULA VI STA • C A R LSB A D • MU R R IETA

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Inspection of Association Books and Records (Civil Code § 1365.2; 2014 Civil Code §§ 5200 - 5230) The new records inspection provisions are split into multiple sections, but there

are no substantive changes. The scope or list of association records or enhanced association records that a member may inspect and copy or the method of delivery, time frames to produce such documents,

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ability of an association to charge the requesting member for mailing, copies, and redaction (when applicable), or other existing document inspection procedures remain the same.

Board Member Conflicts of Interest (2014 Civil Code § 5350) This new law prohibits a director or member of a committee of the board from voting on the matters listed below. It is important to note that the new law does not prohibit a director from being present during any discussion of these matters, only that the director refrains from voting.

• Discipline of the director, • Imposing an assessment against the director, • Considering a request for a payment plan from the director, • Deciding whether to foreclose on a lien against the director’s property, • Reviewing an architectural request from the director, and • Granting exclusive use common area to the director or committee member.

The existing provisions of Corporations Code § 7233 relating to contracts or transactions in which a director has a material financial interest are still in effect.

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Company background

Payne Pest Management has been providing pest control services since 2006. After having worked with a large pest control company, founder Willie Payne set out to form a company that had a more handson and personal approach to pest management with accountability to the company’s customers.

How does the company instill a sense of team and camaraderie?

The staff at Payne Pest Management works hard, and the company takes pride in promoting camaraderie in a variety of ways including: sponsorship of youth sports teams, family outings, company trips and the promotion of a work-life balance among all employees. The company encourages innovation and the creation of a positive work environment.

What value does the company receive from being a CAI member?

Susan Hawks McClintic, Esq., is a shareholder at Epsten Grinnell & Howell, APC, attorneys with offices in San Diego, Coachella Valley and the Inland Empire.

CAI has been an integral part of Payne Pest Management’s operations since the company was founded. Much of the company’s commercial business is related to the servicing of the common interest development community, and CAI has consistently been a

great organization for connecting with community managers and homeowners.

What is the most memorable moment or highlight for the company?

The most memorable moment for the company was being recognized as being one of the top 100 pest control firms in the nation; an honor that Payne Pest Management continues to receive annually. With approximately 40,000 pest control companies in the United States, it is a tremendous honor to be recognized as one of the nation’s premier pest control companies year after year.

Any advice or recommendations you would make to board members, community managers and industry professionals?

The best advice is to get involved and stay involved, because there is always something to learn and improve upon. Involvement in organizations like CAI allows for continuing education in an industry that is changing year after year.

The company is a long standing CAI business partner and member. Payne Pest Management is an industry leader and attentive firm. To contact Payne Pest Management, please visit their website at www.paynepestmgmt.com.

Thank you to Payne Pest Management for being a 2013 Platinum Sponsor of CAI San Diego, and for your ongoing support of our programs and activities.

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New An Disclosu Require for HOA

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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

By jeffrey a. french, Esq.

nnual ure ements As

S

ince its adoption in 1985, the Davis-

resolution process, assessment collection

Stirling Common Interest Development

policy, summary of insurance coverage,

Act (Act) has been amended in a

assessment and reserve summary, dispute

piecemeal fashion, such that it has become

resolution requirements, and architectural

disorganized and not very user friendly. As a

review procedure.

result, the California Law Review Commission

The Revised Act will organize the annual

undertook the arduous and thankless task

disclosure information into three annual

of redrafting the Act to replace it with a new

reports, based on subject matter:

statutory scheme, California Civil Code §§

• An Annual Budget Report, which would

4000-6150 (Revised Act), that will become

include only the budget and related

effective January 1, 2014, and continue the substance of existing law in a more logical and user friendly form (we hope).

financial disclosures; • An annual financial statement review, if required; and

Article VII of Chapter 6 of the Revised

• An Annual Policy Statement, which would

Act addresses the issue of Annual Reports

aggregate all other information disclosures

to the owners. Existing law requires that an

that an association is required to make

association distribute specified information

each year.

to its membership on an annual basis. This

The ultimate goal of these changes is

information includes:

to locate all annual reporting requirements

• A pro forma operating budget that must

in one place. Further, the goal is to provide

be delivered from 30 to 90 days before the

greater flexibility on how these materials are

end of the fiscal year;

distributed to the owners. It is hoped that the

• In an association with $75,000 or more in

attendant flexibility should lead to cost savings

annual gross income, a CPA review of the

for many associations when doing their

association’s financial statement must be

required annual disclosures.

distributed, within one hundred twenty

New Civil Code § 5300 introduces the

(120) days after the end of the fiscal year;

concept of the “Annual Budget Report”

and

and details what it must contain. Like past

• Numerous other pieces of information

distributions of an association’s pro forma

that must be included with the pro

budget and related documents, the Annual

forma operating budget, e.g., dispute

Budget Report shall be distributed 30 to 90 Continued on page 16

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ANNUAL BUDGET REPORT CHECKLIST (California Civil Code § 5300)

• Pro Forma operating budget (§5300) • Summary of the association’s reserves (§5565) • Summary of reserve funding plan (§5550) • Statement as to whether the association will defer or not undertake repairs or replacement of any major component (§5300) • Statement as to whether a special assessment is expected (§§ 5300 & 5560) • Statement as to how the board will fund reserves (§5300) • Statement addressing calculation and establishment of reserves (§§ 5300 & 5570(b)(4)) • Statement as to whether the association has any outstanding loans with an original term greater than one year (§5300) • A summary of the association’s insurance coverage (§5300)

New California Civil Code § 5310 introduces the concept of the “Annual Policy Statement” and details what this separate disclosure must contain. Like the Annual Budget Report, the Annual Policy Statement must also be distributed within 30 to 90 days before the end of an association’s fiscal year.

Section 5310 mandates that the board shall distribute an Annual Policy Statement that provides the members with certain

New Annual Disclosure requirements for HOAs Continued from page 15

days before the end of the association’s fiscal year. Unless the association’s governing documents impose more stringent standards, the Annual Budget Report must contain all of the following: • A pro forma operating budget, showing the estimated revenue and expenses on an accrual basis; • A summary of the association’s reserves (prepared pursuant to § 5565); • A summary of the reserve funding plan adopted by the board and notice to members that the full reserve study plan is available upon request; • A statement as to whether the board has determined to defer or not undertake repairs or replacement of any major component with a remaining life of 30 years or less, including a justification for the deferral or decision not to undertake repairs or replacement; • A statement as to whether the board, consistent with § 5560, has determined or anticipates that the levy of one or more special assessments will be required; • A statement as to the mechanism or mechanisms by which the board will fund reserves to repair or replace major components; • A general statement addressing the procedures used for the calculation and establishment of those reserves to defray the future repair, replacement, or 16

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additions to those major components that the association is obligated to maintain; • A statement as to whether the association has any outstanding loans with an original term of more than one year; and • A summary of the association’s insurance coverage.

The Annual Budget report must be made available to the members pursuant to the notice requirements of the new § 5320 (Notice of Availability). Section 5320 provides that when a report is prepared pursuant to § 5300 (Annual Budget Report) or § 5310 (Annual Policy Statement), the association shall deliver one of the following documents to all members, by individual delivery pursuant to § 4040 (individual notice): • The full report; or • A summary of the report.

The summary shall include a general description of the content of the report and instructions on how to request a complete copy of the report at no cost to the member. These instructions shall be printed in at least 10 point boldface type on the first page of the summary. However, if a member has requested in advance to receive all reports in full, the association shall deliver the full report to that member, rather than a summary of that report. Also, and very important, no matter which form of the Annual Budget Report is sent out, it must contain the full Assessment and Reserve Funding Disclosure Summary form (§ 5570).

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

information about association policies. The Annual Policy Statement shall include all of the following information: • The name and address of the person designated to receive official communications to the association (presumably the community association manager); • A statement explaining that a member may submit a request to have notices sent to up to two different specified addresses; • The location, if any, designated for posting of a general notice (common area bulletin board); • Notice of a member’s option to receive general notices by individual delivery; • Notice of a member’s right to receive copies of meeting minutes; • The statement of assessment collection policies (Collection Policy Statement); • A statement describing an association’s policies and practices in enforcing lien rights or other legal remedies for default on a payment of assessments; • A statement describing the association’s discipline policy, if any, including any schedule of fines for violations of the governing documents; • A summary of dispute resolution procedures; • A summary of any requirements for association approval of a physical change to property; • The mailing address for overnight payment of assessments; and • Any other information that is required by law or the governing documents, or

that the board determines to be appropriate for inclusion.

Like the Annual Budget Report, the Annual Policy Statement shall be made available to members pursuant to § 5320. As noted above, § 5320 provides that the association may send either the full report or a summary of the report to the owners, but if a member has requested to receive all reports in full, the association shall deliver the full report to that member.

Arguably, compliance with §§ 5300 and 5310 should begin this year for those associations that have a fiscal year starting January 1, 2014, but you may want to confirm this with legal counsel as there are plausible arguments on both sides of this issue. While the lists set forth above are fairly comprehensive, there are still some additional compliance requirements set forth in the statutes, which merit a quick review before mailing to the owners. While §§ 5300 and 5310 introduce some new vocabulary and organization to the

ANNUAL POLICY STATEMENT CHECKLIST (California Civil Code § 5310) • Name and address of designee to receive official association communications (§ 5310) • Statement that association members can receive notices at up to two different addresses (§§5300 & 4040(b)) • The location within the development, if any, for posting of a “general notice” (§§ 5300 & 4045(a)) • Notice of member’s option to receive general notices by individual delivery (§§ 5300 & 4045(b)) • Notice of member’s right to receive meeting minutes (§ 4950(b)) • Statement of the association’s collection policies (§5370) • Statement describing the association’s policies and practices in enforcing lien rights or other legal remedies for delinquent assessments (§ 5310) • Statement of the association’s discipline policy and schedule of fines (§§ 5300 & 5850) • Summary of dispute resolution procedures (§§ 5920 & 5965) • Summary of architectural approval process (§ 4765) • Mailing address for overnight payment of assessments (§5655) • Other information that is required by law or the governing documents or that the board determines to be appropriate for inclusion (§ 5300)

required annual disclosures for associations, they do not greatly change the actual list of written disclosures that associations are accustomed to making each year. Moreover, even though there are some new disclosure requirements, these requirements should not be viewed as too burdensome for associations. Finally, the ability to distribute summary reports, as opposed to full reports (except when an owner specifically demands a full report), should generate some efficiencies and economies for most associations.

Not to mention, distribution of the summary report is more environmentally friendly as the need for large scale copying of documents greatly diminishes. So, while some of the labels may have changed, §§ 5300 and 5310 do a good job of consolidating the various disclosure requirements and detailing what is required of associations on a going forward basis.

Jeffrey A. French, Esq. is a partner with Green Bryant & French, L.L.P., a law firm that focuses on homeowner association law with offices in San Diego and Palm Desert.

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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 Andy Mendoza................................................ 5/13 Anne Carter..................................................... 6/13 Barbara Day.................................................... 5/13 Barrera and Company.................................... 5/13 Becky Colgan.................................................. 4/13 Best Security Products................................... 5/13 Brenda Jones.................................................. 5/13 Buckstar Property Management................... 4/13 Caralrose Schueler......................................... 4/13 Cena Martin.................................................... 5/13 Cerro De Acala Homeowners Association... 4/13 Cole Warner.................................................... 5/13

Courtney Parviz............................................... 4/13 Erin Jones........................................................ 4/13 Gloria Giorella................................................. 6/13 Irina Bondareva-Glass.................................... 5/13 Jacqueline Hicks............................................. 6/13 Jennifer Figgers.............................................. 5/13 Jo Lyons........................................................... 5/13 Kimberly Hand, CMCA................................... 4/13 Lance Bonin.................................................... 5/13 Lois Deguire.................................................... 5/13 Lori Gollaher................................................... 6/13 Mark Simmons................................................ 5/13

Nigro Construction Company, LLC............... 5/13 Patricia Chandler, CMCA............................... 4/13 Private Security............................................... 5/13 Rob Hussey..................................................... 4/13 Russell Carlson................................................ 5/13 San Luis Rey Homes, Inc................................ 5/13 Shawna Morales.............................................. 5/13 Sheila Parker................................................... 4/13 Stephanie Schnurr.......................................... 4/13 T.J. Elliot.......................................................... 6/13 Timothy Kilcourse........................................... 4/13 William Beasley............................................... 4/13

Helen Yakely, CCAM.......................................2006 Heritage Landscape Services, Inc.................2011 Howerton Management Services..................2007 Hudson Management Services.....................2009 Hugh Kratz......................................................2000 J & M Keystone Restoration & Cleaning......2004 James Timmons..............................................2012 Jennifer Ojeda, CCAM, CMCA.....................2007 Joanne Diaz....................................................2008 John Alioto......................................................2010 JW Cleaning & Restoration...........................2010 Kathleen Morgan............................................2012 Kerry Beatty, CCAM, AMS, PCAM................2010 Keystone-Inland, Inc.......................................1991 Kimberly Johnson, CMCA.............................1977 KR Landscape Maintenance, Inc...................2007 LaBahn’s Landscaping....................................1985 Landcare Logic...............................................2009 Landmark, Inc..................................................2012 Law Offices of Richard Salpietra...................2001 Leak Control Services, Inc..............................2006 Legacy Protective Services, Inc.....................2009 Linda Boisvert, CMCA....................................2010 Liz Beiner, CMCA............................................1999 Lucas Sisneroz, CMCA, AMS.........................2012 M & M Business Enterprises..........................2003 McCaffery Reserve Consulting......................2005 Michael J. Ferrara, CPA..................................1989 Miramar Wholesale Nurseries, Inc................1997 MSE Landscape Professionals.......................2011 Mutual of Omaha/Condo Certs....................2000 Newman & Associates, Inc., CPA..................2010 Nicole Bargas, CMCA....................................2010 Nissho of California, Inc.................................1996 O’Connell Landscape Maintenance.............1999 Oaks North Villas Condominium Association......................................................1991 Pacific Backflow Company Inc.......................2009 Pacific Western Painting, Inc.........................2010 Pacifica Real Estate Services, Inc..................2004 Palm Terrace....................................................1998 Park Central Towers HOA..............................1997 Park West Landscape Maintenance, Inc.......2010 Patio Shoppers...............................................2011 Paul Miller Company......................................1990 Penasquitos Townhomes Owners Association......................................................2010 Peters & Freedman, LLP................................1997 Pilgrim Creek Estates HOA...........................2005 Preferred Property Managers........................1995 Pro-Tech Painting Co.....................................1992 Professional Real Estate Management.........1988

PWLC 1, Inc.....................................................2012 Rancho Carlsbad Owners Association..........2000 Rebecca Soto, CMCA....................................2012 ResCom Services, Inc.....................................2004 Rick Cremin, CMCA, AMS.............................2011 Robert Fowler, PCAM.....................................2002 Rodent Pest Technologies.............................1998 RSI Roofing......................................................2002 Samuel Williams.............................................2012 San Diego Private Bank.................................2012 San Elijo Hills Community Association ........2002 Seascape Surf Management Corp................1984 Sheri Griswold, CMCA...................................2010 Sheryl Sharp, CMCA, AMS............................2007 Sigvard Anderson...........................................1992 Silldorf & Levine, LLP.....................................2004 Stacy Cabrera, CMCA, AMS, PCAM.............2005 Steven Bennett, CMCA, AMS.......................2003 Stratus Management......................................2006 Sue Barnett.....................................................2006 Sullivan Construction Management..............2007 Summit Property Management, Inc..............1994 Sunset Hills Terrace Homeowners Association......................................................2003 Sunset Painting...............................................2002 Susan Schwartz...............................................1990 Suzanne Dixon, CMCA..................................2007 Tammy Edwards, CMCA, AMS......................2009 The Brickman Group......................................2005 Tierra Verde Resources, Inc...........................2011 Tina Rozycki, CMCA.......................................2008 Tony Easton, CMCA, AMS, PCAM................2002 Trip Wilson Insurance Agency.......................2006 Trudy Stambook..............................................2012 Union Bank......................................................2008 Union Bank HOA Services.............................2004 Valerie Gullicksen...........................................2006 Varsity Painting...............................................2009 Ventana HOA..................................................2001 Village Park Townhome Corp., #3.................1999 Village Square HOA.......................................2001 Vista Del Verde of Santee..............................1988 Wasserman & Kornheiser, LLP.......................1990 Wayne Hanson, CCAM, PCAM.....................2006 Western Exterminator Company...................2010 Western Towing..............................................2000 Western Tree Service......................................1988 William Haifley, CMCA, AMS, PCAM...........2006 Woodridge Estates Homeowners.................2012

RENEWING Members A-1 All American Roofing..............................1997 Action Property Management, Inc................2012 Advanced Painting & Wood Repair..............2007 Advanced World Concepts, Inc....................2009 Advantos Systems, Inc...................................2001 Amanda Amezcua..........................................2011 American Geotechnical, Inc..........................1992 Associated Professional Services..................1984 AV Builder Corp..............................................2006 Aztec Paving, Inc............................................1990 Barrier Reef HOA............................................2002 Bay Alarm Company......................................2012 Bemus Landscape, Inc...................................2004 Benchmark Landscape, Inc............................1997 Blue Skies Landscape Maintenance.............2006 Bonney Wikkering..........................................2008 Bonny Bruner, CCAM.....................................1999 Bruce Rosenblatt............................................2010 Bruner & Rosi Management, Inc...................1999 California Construction Concepts.................2012 Caminito Grove HOA.....................................2010 Candace Shannon, CMCA, AMS..................2011 Carefree San Carlos........................................1977 Carl Weise.......................................................2012 Carlsbad-Woodridge HOA............................1988 Christy Gonzales, CMCA...............................2010 Christy White Associates ESP........................2011 CINC Systems.................................................2008 Clinkenbeard Insurance/Farmers Agency....2011 Co-Lee Grev, CMCA, AMS, PCAM...............2009 Country View Condominium Association....1986 Courtney Parviz...............................................2013 Debra Weikel, AMS, PCAM...........................2005 Dunn-Edwards Corporation...........................1989 Eagle Paving Company, Inc...........................2012 East Lake ll Community Association.............2010 Ed Roth, AMS, PCAM....................................1998 Eichman Insurance Agency - Farmers............2011 Elaine Jeter.....................................................2012 Epsten Grinnell & Howell, APC.....................1986 Farmers Insurance Group..............................2006 Feist, Vetter, Knauf & Loy...............................1978 First Bank ........................................................1993 FirstService Residential California, LLC........2007 Frazee Paints...................................................2012 GB’s Fence Co................................................2011 George Carrera...............................................2012 Glidden Professional Paint/PPG....................2003 Grand Pacific Resort Services, LP..................2009 Greco Traficante Schulz & Brick....................2009 Har-Bro Construction and Consulting..........2011 Hauser Contract..............................................2006 18

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April/May/June 2013

SAVE THE DATE!

TRADESHOW & LUNCHEON

Davis-Stirling Act Revisions for 2014 October 11, 2013

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www.cai-sd.org www.arborwell.com 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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CAI San Diego Airlines

To see more pictures log on to our website www.cai-sd.org and click on Picture Gallery.

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EXPLICIT DELIVERY IN THE N

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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

By Lauri croce, Esq.

T NOTICE & Y PROVISIONS NEW ACT

T

he common interest development industry is abuzz with the advent of Assembly Bill 805, effective January 1, 2014. Enacted during the 2011-2012 legislative session, AB 805 comprehensively reorganizes and recodifies the Davis-Stirling Common Interest Development

Act (Act), former Civil Code §§ 1350-1378, by revising and restating its provisions regarding notices and their delivery, standardizing terminology, establishing guidelines on the relative authority of governing documents, and establishing a single procedure for amendment of a common interest declaration, among other things. The new Act will be set forth in new Civil Code §§ 4000 through 6150.

One of the more noteworthy changes to the Act is the addition of Civil Code §§ 4035 through 4055 regarding notice and delivery of documents and information to owners and associations. The notice and delivery statutes constitute new additions to the Act or substantive modifications of previously codified provisions of the Act. What these provisions all have in common is that they provide standardized definitions to the Act regarding basic but important concepts utilized routinely during the day-to-day operations of all homeowners associations.

The New Notice and Delivery Provisions Civil Code § 4035 establishes how documents otherwise required by the Act to be delivered to the association must be delivered. This is a new definition that any document to be delivered to the association is to be delivered to the person designated in the Annual Policy Statement pursuant to new Civil Code § 5310. Email, facsimile or other electronic means of delivery are expressly allowed with the owner’s consent. Personal delivery is permitted if an association consents. Consent to personal delivery requires the association to provide a written acknowledgment of receipt of the delivered document.

If the association fails to designate to whom document delivery is to be made in its Annual Policy Statement, delivery is to be made to the president or the secretary of the association.

Individual notice and individual delivery are defined and explained by new Civil Code § 4040.

Individual notice or delivery are what an association provides to a specific owner. Section 4040 requires delivery by first class mail (postage prepaid), registered or certified mail, express mail, or overnight delivery; or by email, facsimile, or other electronic means if the recipient has consented in writing to that Continued on page 24 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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Special Delivery

otherwise permitted to be delivered by general notice, then the

Continued from page 23

association must use the individual notice method of delivery. For

method of delivery. The consent may be revoked (again, in writing).

example, sending items ordinarily posted on the community bulletin

In addition to these provisions of § 4040, the new statute also

board to the requesting homeowner by first class mail.

provides that a homeowner may designate a secondary address

Civil Code § 4050 provides that if a document is delivered by

for the delivery of certain documents. Interestingly, the statute

mail, delivery is deemed to be complete on deposit into the United

expressly provides: For the purposes of this section, an unrecorded

States mail; and if a document is delivered by electronic means,

provision of the governing documents providing for a particular

delivery is complete at the time of transmission.

method of delivery does not constitute agreement by a member to that method of delivery.

Civil Code § 4055 provides that e-mail must be capable of being retained to satisfy written notice requirements under the Act, and

General notice and delivery, as opposed to individual notice

defines what being capable of being retained means.

and delivery, are defined and explained in new Civil Code § 4045, which pertains to notice by the association to the entire association as a group. This section allows for general notice or delivery by

Notice and Delivery Throughout the New Davis-Stirling Act

(1) first class mail; (2) email, facsimile, or other electronic means

Individual notice and delivery apply in the new Act most notably

upon written consent by the recipient; (3) notice included in a

to disciplinary hearings under new Civil Code § 5855. As in existing

billing statement, newsletter or similar document; (4) posting in a

law, before disciplining a member of the association for a violation

designated location prominent and accessible to all members; and

of the governing documents, the association must give the member

(5) through broadcast media or the like. Section 4045 provides for

notice of the violation in question and an opportunity to be heard.

a new method of posting in a prominent location accessible to all

Section 5855 clarifies that such notice must be given by individual

members if the location has been designated for the posting of

delivery as defined by Civil Code § 4040. Section 5855 also explains

general notices by the association in its Annual Policy Statement,

that the association must give by individual delivery notice of the

again under Civil Code § 5310 as in Civil Code § 4035. Note that

association’s intention to impose a charge against the member for

if a homeowner requests in writing individual delivery of notices

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General notice and delivery apply in the new Act to a number of notices by the association. For example, new Civil Code § 4920 provides that notice of board meetings is to be given by general delivery (a change from the current law which provides that the posting of notice in the common area is sufficient). So too, Civil Code § 5120, one of the new provisions in the Act regarding member election procedure, states that the results of a member election be provided by a general delivery method described in Civil Code § 4045. This change clarifies existing law which somewhat ambiguously requires only that the results of member elections be provided in a communication directed to all members. Under new Civil Code § 5520, the association may also provide the required disclosure of expenditures for construction defect litigation by general delivery.

Lastly, the provisions requiring notice to the association are a welcome change from

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ambiguous current law. The Annual Policy Statement defined in new Civil Code § 5310 adds to the required annual disclosures the name and address of the person within the association designated to receive official communications to the association under Civil Code § 4035, and the location for posting general notice under Civil Code

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§ 4045. This is important for, among other things, the mechanics of member requests for the provision of documents. New Civil Code § 5260 provides that requests from an owner shall be in writing, and delivered to the association, under § 4035, to the person designated in the Annual Policy Statement.

Under the new law, other documents

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required to be delivered to the association under § 4035 include a member’s request to change his information on the membership list or to opt out of it; addition or removal of a secondary address for delivery of individual notices; a request for individual delivery, or cancellation of a previously made request for individual delivery; and requests for complete copies of the Annual

©2013 Union Bank, N.A. All rights reserved.

Budget Report, Annual Policy Statement, Continued on page 26 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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Notice & Delivery

Special Delivery

New Civil Code § 4148 defines general notice and § 4153 defines individual notice. Below is a table of the provisions which reference either general notice or individual notice by statute.

General Notice or Delivery Under Civil Code § 4045 4360 (a) - general notice of proposed rule change.

4360 (c) - general notice of adopted rule change.

4365 (g) - general notice of membership vote on rule.

4920 (c) - general notice of non-emergency board meetings.

5120 (b) - general notice of election results.

5310 - designate location of posting general notices.

5520 - general notice of decision to use reserve funds for litigation.

Individual Notice or Delivery Under Civil Code § 4040

4320 (c) - individual notice of amendment to governing documents.

4275 (g) - individual notice of recorded amendment.

4785 (c) - individual notice or personal delivery of notice of summary removal (termite treatment) 5205 (e) - individual delivery of requested documents.

5260 - request for individual notice to secondary address.

5300 (c) - individual delivery of annual reports.

5305 - individual delivery of copy of review of financial statement (see ‘5320).

5320 - individual delivery of Annual Policy Statement and other annual reports.

5615 - individual notice of increase in assessments or imposition of special assessment.

5650 et seq. - individual notice of collections.

5710 - individual notice of foreclosure.

5810 - individual notice of insurance lapses or cancellation.

5855 (a) - individual notice of member discipline.

Continued from page 25

and reports referenced in new Civil Code § 5320.

While these codifications of individual and general notice and delivery, and notice and delivery to the association, seem new, they are really not at significant variance from current practice. The great benefit of these new provisions is clarity and standardization: the express definition of specific notice and delivery methods for everyone to reference and use with ease.

Lauri Croce, Esq. has opened her own law office in Del Mar and will continue to represent homeowners associations, as well as individuals and businesses.

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Newsstand: News from CAI National Community Leadership Course Now Available Online

is approved for 12 hours of continuing

(M-300)

education for CMCA recertification. The

Except for Ethics and the Community

cost of the M-203 is $445 for members,

Manager, which is available only online,

popular course designed to provide

$545 for nonmembers. Students who

these courses continue to be available via

managers with the skills to motivate and

register for the course receive a manual via

classroom instruction.

guide board and committee members to

mail.

Community Leadership (M-203), a

“Learning in the classroom has many

achieve management goals, is the seventh

The following CAI professional

professional development course offered

development courses also are available

interaction between the participants and

online by Community Associations Institute

online:

instructor and among the participants

(CAI).

• The Essentials of Community

themselves,” said David Jennings, CAE,

Strategies covered in the course provide participants with the tools to build better

Association Management (M-100) • The Essentials of Community

advantages, especially the value of the

CAI’s vice president of education. “Still, because of the distance to a particular class

relationships, prepare for and run more

Association Management (M-100)

or time constraints, online courses enable

efficient meetings, encourage committee

California Edition

industry professionals to get the training

participation, organize community records

• Facilities Management (M-201)

they need in the convenience of their

and develop election procedures.

• Risk Management (M-205)

homes or offices.”

A course requirement for the PCAM designation, Community Leadership

• Financial Management (M-206) • Ethics and the Community Manager

CAI’s professional development program features 17 courses, beginning Continued on page 28

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in those communities.

Newsstand Continued from page 27

CAI had urged FHA to offer another

lease with a term of less than 30 days. It is also common for condominium associations

with The Essentials of Community

option to condominiums in which owners

to provide an exception to the transient

Association Management (M-100). In

were unable to sell units due to a recent

leasing prohibition to lenders taking

addition to eight 300-level courses, the

FHA interpretation of its certifications

possession of a unit after a foreclosure.

curriculum includes six 200-level courses,

guidelines.

the PCAM Case Study and Contemporary

Under FHA’s new guidance,

It has been reported that Fannie Mae had required this language in

Issues in Community Association

condominium associations that don’t

condominium governing documents in

Management (M-400).

comply with FHA prohibitions on transient

the mid 1980s. While FHA had previously

leasing are offered two compliance options:

approved condominium projects with

• The association may amend its

this language, the agency abruptly, and

More than 4,500 students took advantage of CAI classroom and online professional development courses in 2012.

CAI Applauds New Condo Certification Guideline Community Associations Institute

governing documents to remove bank-

without explanation, started rejecting the

owned property exemptions from

language in April 2013, which required the

transient leasing prohibitions.

condominium associations to amend their

• The association may provide a dated

governing documents. That prevented

and signed statement on association

many condominiums from gaining and

(CAI) is applauding a just-released Federal

letterhead affirming that no units within

renewing FHA certification. The agency

Housing Administration (FHA) statement

the condominium community are leased

interpreted the transient prohibitions as

that should provide relief to Americans

for a term of less than 30 days and

violations of the National Housing Act,

trying to obtain FHA-insured mortgages

that tenants are not provided services

which strictly prohibits the use of FHA

to purchase condominiums. The FHA

commonly associated with a hotel.

mortgage insurance to support transient or

Condominium governing documents

hotel housing.

guidance allows condominium associations to qualify for FHA certification, thus giving

often restrict leasing units for hotel or

buyers the opportunity to purchase homes

transient purposes, normally defined as a

The new statement gives condominiums the two ways to comply with FHA

Thank you to the April CID Law Seminar Sponsors Trip Wilson Insurance Agency First Bank

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regulations.

“I commend FHA for showing regulatory restraint and working proactively to find a solution to an issue that was critical for many CAI members,” said Tom Skiba, CAE, CAI’s chief executive officer. “FHA’s new policy preserves the integrity of association governance while ensuring full compliance with federal law.” CAI is working with FHA on standard language that may be used to satisfy the required statement regarding transient or hotel leasing.

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Oh Baby!

all aspects of association management.

Born March 2,

Candidates undertake significant lengths

2013 at 7:37pm

of study in preparation for the exam, and

in Scripps

only those who are able to achieve the

Encinitas, William

designated examination score earn the

Donald McClure is

credential. Once earned, the certification

the son of Clinton

must be renewed every three years

Thomas and Lea

through additional studies and leadership

Countryman McClure (MMI, Inc.). He

activities. Barbara is one of less than

came out chubby and happy at 8 lbs., 23”

4000 to earn this credential nation-wide,

long. Congratulations Clint and Lea!

including 1 of 9 CAI National or Chapter staff.

Congratulations to Co-Lee Grev (Eugene Burger Property Management) and her husband, on the birth of Cannan Scott Dell on Wednesday June 19 at 10:44am.

He weighed 9 lbs, 6 oz. Congratulations Co-Lee!

New faces TVRI is delighted to announce and welcome Eric Shepard to our management staff. Eric brings 32 years of experience in the landscape maintenance and construction industry. He holds CLCA certifications in both maintenance and irrigation, and has extensive experience with drought-tolerant and California native plants. TVRI is excited to utilize Eric’s considerable knowledge to enhance the customer service TVRI prides itself on.

Please help us welcome Eric Shepard to the TVRI family.

She’s certifiable!

The Certified Association Executive (CAE) Commission of the American Society of Association Executives recently conferred the CAE credential on our Executive Director, Barbara Ozenbaugh, CMP, CAE. The CAE is the highest professional credential in the association industry.

To earn the CAE credential, candidates must first submit an application satisfying professional experience and education requirements. Successful applicants must next pass a challenging examination on 30

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New PCAMs

Susan Fakhouri, CMCA, AMS, PCAM Professional Management Consultants Dan Goodrich, CMCA, AMS, PCAM Sierra Dawn Estates Deborah Griffiths, CMCA, AMS, PCAM Associa/NN Jaeschke, Inc. Kristin Griggs, AMS, PCAM Lindsay Management Cori Shipp, CMCA, AMS, PCAM Walters Management

Baker-Dolnick Education Foundation for Homeowner Members Shown to be Effective

By Sam Dolnick

T

he Baker/Dolnick Education

to expedite Civil

Foundation is an outgrowth of

Code 1363.001

the educational function of the

regarding

Community Associations Institute – San

education courses

Diego Chapter (CAI-SD). It was created in

for homeowners

1991 by the Chapter’s board of directors

and offers the

and was converted to a tax-exempt

opportunity for

Foundation in 1999 under Section 501(c) (3)

board members

of the Federal Revenue Code.

and homeowners,

The five directors of this tax-exempt

who are not

Foundation are the Chapter president

current members,

and president-elect, an attorney and

to receive a one-

receive contributions. As noted above,

two homeowners. All directors must be

year individual homeowner membership

as the Foundation is a 501(c)(3) entity,

members of CAI. However, it should

in order to participate in all the benefits

contributions made to it are tax-exempt.

be noted that to prevent any conflict of

of CAI. . It is the hope of the Foundation

A business contributing to the Foundation

interest between the Chapter and the

that after a person has been a member

may get a tax-exempt contribution

Foundation, a majority of the directors,

of CAI for one year they will be aware of

under Section 170(c) (2) of the Internal

three, are not directors of the Chapter.

the value of membership and will renew

Revenue Code. The Federal I.D. number is

for a second and future years. In order

33-0830054.

The Foundation was incorporated in the State of California as a Nonprofit

to encourage continue membership, the

Public Benefit Corporation for public,

Foundation board of directors voted to pay

believe that homeowners need to be

charitable and education purposes. The

the membership dues when the member

educated in governance of common

specific purpose for which the Foundation

reaches the sixth (6th) year renewal subject

interest communities make your tax

is organized is to promote, teach and

to Foundation funds being available.

deductible contribution to the Baker/

disseminate educational material to

Current CAI members are also invited

Dolnick Education Foundation, c/o CAI-

the public, including but not limited to,

to attend these educational functions to

San Diego Chapter, 1081 Camino Del Rio

information on living in common interest

upgrade their skills.

South, Suite 109, San Diego, CA 92108.

communities by understanding governing

The Baker/Dolnick Education

documents, state and local laws, the

Foundation has borne fruit and

volunteer nature of serving on the board

will continue to do so. However, in

of directors and committees of their

order to continue giving homeowner

associations.

memberships to those who comply with

The Foundation and CAI-SD is helping

Keep the Foundation alive! If you

Thank you for your dedication to educating the CID homeowner.

Excerpted from an articled originally printed in 2007.

the requirements, the Foundation must 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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By laurie s. poole, Esq.

Under Davis Mapp Optio for Up Gover Docum

A

s the year movers closer to the start of the “new” Davis-Stirling Common Interest Development Act (Act), a common question presented by managers and homeowners is how to update associations’ governing documents to comply with

the revamped Act. By understanding the options that are available to incorporate the reorganizational and substantive changes of the revised Act into the governing documents, associations and managers can make informed decisions.

Impact of Changes on Governing Documents The new Act will impact associations’ governing documents in several respects. Perhaps the most obvious impact of the new Act on documents is the re-numbering of code sections. The new Act is moving from the 1300 block of the Civil Code to sections 4000 – 6150. Since many governing documents contain references to the code section numbers, those documents will be affected by the changes. For all of us, learning the new numbers will be like studying a new language.

While the new Act did not make a plethora of substantive changes, the ones that were made are not in current governing documents. These changes include new defined terms such as “director,” “individual notice and delivery,” general notice and delivery,” “annual budget report,” and “annual policy statement.” These new terms will be part of every association’s vocabulary. Other substantive changes that were made to the Act include delivery methods, annual disclosures, hierarchy of governing documents and board member conflicts.

Continued on page 34

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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

erstanding avis-Stirling 2014 ping the Changes to Association Governance ons pdating rning uments

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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33

understanding options...

Association Bank Services

Continued from page 32

Specialized Banking Services For Community Associations and Management Professionals

The following documents are the most likely to be impacted by the new Act: • Declaration of Covenants, Conditions and Restrictions (CC&Rs)

Operating and Reserve Checking With No Monthly Service Charges Automated Lockbox Services, Online Payments, ACH Business Online Banking Remote Deposit CDARS* Placement Services Association Loans Simplified Association Signature Cards Experienced Association Bankers

• Bylaws • Operating Rules • Election Rules • Architectural Guidelines • Annual Disclosure Documents • Policies (e.g., collection policy, enforcement/fine policy, etc.)

Option #1 - Changing Code Section References Only

Jan Hickenbottom

PCAM, CCAM Vice President 4301 MacArthur Blvd.

Newport Beach, CA 92660 (800) 848-6771

In recognizing that many of the above documents contain references to the current code section numbers, the legislature added a new provision into Member FDIC

the Act which allows boards to update code section references in their governing

www.FirstBankHOA.com

*CDARS is a service mark of Promontory Interfinancial Network, LLC. FDIC Insured up to $50 million per Tax ID.

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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

documents by resolution (no membership vote). Civil Code § 4235(a) states:

Notwithstanding any other provision

documents” are defined as the declaration

CC&Rs in an electronic, editable format

of law or provision of the governing

and any other documents, such as bylaws,

(e.g. Wordperfect or Word) so that the

documents, if the governing documents

operating rules, articles of incorporation,

code section references can be located,

include a reference to a provision of

or articles of association, which govern

replaced and the document re-signed/

the Davis-Stirling Common Interest

the operation of the common interest

notarized and re-recorded along with the

Development Act that was repealed and

development or association. Therefore,

board resolution.

continued in a new provision by the act

if there are other association documents

that added this section, the board may

that are not considered “governing

changes? For those governing documents

amend the governing documents, solely to

documents,” such as annual budgets,

that are not available in electronic, editable

correct the cross-reference, by adopting a

audits, etc., then those documents can be

formats, an alternative is to create a

board resolution that shows the correction.

changed to reflect the new code section

table, showing the location of the code

Member approval is not required in order

numbers without a board resolution.

section reference (e.g., Article I, Section

to adopt a resolution pursuant to this

Since the CC&Rs are recorded

section.

The key components to understand regarding new § 4235 are: documents • Only changes are to code section references • Board resolution is required • Membership approval (e.g., vote or

and the corresponding “new” number.

guidance:

The table can then be incorporated governing document and attached to a

form and recorded, provided that a copy

board resolution in order to comply with

of the board resolution authorizing the

4235(a). In the case of CC&Rs, the table/

corrections is recorded along with the

amendment can be recorded along with a

restated declaration.

copy of the board resolution.

As a practical matter, the option provided by subsection (b) may only be

Under new § 4150, “governing

available to associations that have their

ATTORNEYS AT LAW

encinitas office

760 436 3441

&

into an amendment to the respective

this section may be restated in corrected

prior review) is not required.

PETERS

5), and then listing the “old” number

documents, § 4235(b) provides further A declaration that is corrected under

• Applies to just the governing

How can associations effect the § 4235

Many of the old code sections have been broken down into new code Continued on page 36

FREEDMAN, L.L.P.

desert office

760 773 4463

www.hoalaw.com • mail@hoalaw.com

A FULL SERVICE LAW FIRM Experience you can rely on People you can trust 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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understanding options...

Continued from page 35

Landscape Maintenance & Enhancements

sections. Therefore, associations that are

Irrigation Maintenance & Installation

their governing documents should confer

considering utilizing § 4235 to change with legal counsel.

Water Conservation & Management

Since § 4235 does not become effective until January 1, 2014, boards

Turf Management

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Brush Management Tree Care Management

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should not execute the resolution and, in the case of CC&Rs, record the new document or amendment, until after this year. However, it is not too early to start the process of determining which documents contain the code section references, whether they are available in electronic format, and deciding whether to make the code section corrections.

Option #2 – Incorporating Substantive Changes The Act’s new substantive provisions, such as additional defined terms, document delivery methods and annual

800.439.9962 • 619.390.9962

disclosure requirements, will be widely used after January 1, 2014. Therefore, associations may find it advantageous to include such modifications into their governing documents.

For associations whose CC&Rs and Bylaws are more than ten years old, this may be a good time to consider completely restating the documents.

Not only can the Act’s new code sections and substantive provisions be incorporated, but other benefits can also be accomplished, such as deleting obsolete provisions (i.e., those relating to the declarant), clarifying ambiguous issues and incorporating current trends.

Associations should be aware that making substantive changes to the CC&Rs and Bylaws is more time consuming and expensive than simply changing the code section numbers since approval of the membership is likely required. For other governing documents (e.g., rules and regulations, election rules, architectural guidelines, fine/enforcement policies, etc.) depending on the scope of the substantive change, a 30 day prior review

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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

period to the owners may be required before boards can adopt such changes.

Is It Necessary to Update?

While there is no legal requirement for associations to update or amend their

Effective General Counsel

current governing documents, due to the change in code section references and the

Successful Assessment Collection • • • •

Timely Status Reports Responsive Paralegals Collectibility Analysis Judicial or Non-Judicial Foreclosures • Money Judgment Lawsuits • Small Claims Assistance • Post Judgment Recovery

addition of substantive modifications, if the governing documents are not updated, then the interpretation of the documents may be more confusing and can result in more frequent legal consultation. At a minimum, changing the code section references may aid in learning the Act’s new language.

Laurie S. Poole has been an attorney with Peters & Freedman, L.L.P. since 1993. Peters & Freedman, L.L.P. has offices in Palm Desert and Encinitas.

• • • • • • •

ADA & DEFH Compliance Amendments to CC&Rs & Bylaws Architectural Matters Contracts & Insurance Elections & Recalls Employment Law Legal Opinions San Diego: 760.529.5211 • Fax 760.453.2194 Orange County: 949 322 6838 • Fax 949 766 4712 www.AttorneyforHOA.com

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ken Carteron

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• Lockbox Services • ACH Origination • HOA Financing • Online Dues Program

allison disarro

Assistant Vice President HOA Banking Division 619-988-6708 Mobile 858-312-7030 Fax adisarro@sccombank.com

11939 Rancho Bernardo Rd, Suite 200 San Diego CA 92127 www.sccombank.com 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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Two of Ap Dec

Recovery o and Requir

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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

By jonathan D. Massie, Esq.

o Court ppeals cisions

of Mediation Fees red Notice After Foreclosure

In Grossman v. Park Fort Washington

2007 and November 26, 2008, in connection

Association (2012) 212 Cal.App.4th 1128,

with the mediation. The Grossmans’ motion

the California Court of Appeals addressed

requested $875 paid as one-half of the cost

the issue of whether a prevailing party

of mediation. The association opposed the

could recover its attorney’s fees and costs

motion and argued the time spent on pre-

incurred in mediating a dispute prior to filing

litigation mediation was not authorized by Civil

litigation in Superior Court. This suit involved

Code § 1354, subdivision (c). The trial court

a dispute between a homeowners association

granted the Grossmans’ motion and awarded

(association) and owner regarding an allegedly

$112,665 in attorney fees which included

unapproved architectural modification.

the 38.1 hours incurred in the pre-litigation

The homeowners’ association argued the

mediation. The association appealed.

Grossmans built a cabana and fireplace in

During the appeal, the association argued

their backyard without obtaining approval

the statutory language in subdivision (c) of

from the architectural committee, and the

Civil Code § 1354 authorized only recovery

CC&Rs prohibited installation of a cabana

of fees and costs incurred in the action to

or fireplace. Following rejection of their

enforce the governing documents. The

architectural plans, the Grossmans attempted

association asserted the Grossmans were not

to obtain a variance. The association denied

entitled to recover fees and costs incurred in

the request for a variance which then resulted

pre-litigation ADR.

in both parties participating in mediation. The mediation failed and Grossmans filed suit.

Following a three-day trial, the court

The Court of Appeals disagreed and ruled that the text of Civil Code § 1354 does not explicitly limit recovery of attorney fees and

required the fireplace to be modified,

costs to those items incurred in the lawsuit

concluded a variance was not needed for the

itself. The Court noted the Grossmans’ lawsuit

cabana and vacated the continuing fine. Most

was an effort to enforce the CC&Rs and that

important, the court ruled the Grossmans

the Grossmans were the prevailing party, a

were the prevailing party in the litigation for

determination not challenged on appeal.

determining the amount of attorney’s fees to

The only issue to decide was whether the

be awarded.

attorney’s fees awarded were reasonable

The Grossmans filed a motion requesting

considering the circumstances of the case,

attorney fees for 331.9 hours that their

which in this case, the appellate court

attorney worked on their behalf which

found the trial courts award of $112,665 was

included 38.1 hours incurred between July 12,

reasonable.

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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Article title Continued from page 39

What can we take away from this case? This ruling removes any doubt that costs incurred in mediating a dispute are recoverable. The potential to recover the costs of mediation will lessen the sting of paying mediation costs and help to encourage parties to engage in alternative dispute resolution procedures.

However, this case also stresses the importance of properly evaluating disputes prior to filing suit. Utilize mediation to evaluate the strengths and weaknesses of your case given the feedback of the mediator and the opposition.

Forewarned is forearmed. In the long run,

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properly evaluating the potential for either a positive or negative award could prevent the type of fee award issued in the case.

Foreclosure Gone Wrong In Afshan Multani v. Witkin & Neal (2013) 215 Cal. App. 4th 1428, the Court of Appeals reviewed the obligation to provide notice to a

License No. PPO 15264

delinquent owner of their right to redemption following the foreclosure sale. In this case, Castle Green Homeowners Association (HOA)

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were delinquent in the payment of assessment fees. The Multanis disputed the debt and the HOA foreclosed on the Multani’s condominium unit. The Multanis then sued to set aside the foreclosure arguing that the HOA and its agents committed tortious acts during the foreclosure including but not limited to irregularities in sale and notice procedures.

The HOA filed a motion for summary judgment arguing the court should dismiss the suit because the Multanis had actual knowledge of the foreclosure proceedings and failed to exercise their post foreclosure right of redemption by not properly calculating when the redemption period expired. The trial

Brendan Concannon

Member FDIC Equal Housing Lender

notified Afshan and Rahim Multani that they

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

court granted the HOA’s motion and entered summary judgment in favor of the HOA. The Multanis then appealed.

The Court of Appeals reversed the trial court ruling, noting that although the HOA produced evidence it had sent a pre-sale notice and the owners had other information to calculate the redemption period, the owners

ssl_CAI_0210:Layout 1

had no duty to make such a calculation since the HOA failed to notice the owner of their right of redemption following the sale

1/19/10

10:23 AM

Page 1

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and the lack of notice excused the owner from the requirement of tendering the full amount of the debt in order to have the foreclosure set aside.

Trustees conducting non-judicial foreclosure sales must provide notice of the right of redemption following the sale.

Pre-sale notices do not eliminate the post-

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sale statutory duty to notify a homeowner of the 90-day redemption period. Failure to provide post-sale notice of the right of redemption may be grounds to set aside the foreclosure sale.

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Lic No. 456160

41

Service Directory

Attorneys cont’d.

Financial Services

Law Offices of Richard Salpietra Rick Salpietra, Esq. .................. 858-756-2233

fax 858-759-9938 rsalpietra@salpietra.com www.salpietra.com

Please see our ad on page 29

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 34

Display advertisers receive a complimentary listing in the Service Directory.

Emergency Restoration Services

Accountants Sonnenberg & Company Leonard Sonnenberg................ 858-457-5252

fax 858-457-2211 lens@sonnenbergcpas.com www.sonnenbergcpas.com

Please see our ad on page 36 Michael J. Ferrara Michael Ferrara......................... 619-698-4291

fax 619-698-3937 mjfcpa@juno.com

Please see our ad on page 43

www.mutualofomahabank.com

Please see our ad on page 40

Community Association Management

Popular Association Banking Larry Hooper.............................. 714-864-5171

fax 714-864-5190 lhooper@bpop.com www.bpop.com

Please see our ad on page 26

Associated Professional Services Neal Chazin......................619-299-6899 x101

fax 619-299-8242 nchazin@apsmanagement.com www.apsmanagement.com

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Curtis Management Company, Inc. Patrick S. Campbell, CCAM....... 877-587-9844 AMS Paving

fax 858-587-9972 Liz WIlliams................................ 800-357-0711 pcampbell@curtismanagement.com

fax 888-357-0715 www.curtismanagement.com liz@amspaving.com

Please see our ad on page 5 www.amspaving.com Please see our ad on page 24

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 37 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 9 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 41 Peters & Freedman, LLP David M. Peters, Esq. .............. 760-436-3441

fax 760-436-3442 www.hoalaw.com

Please see our ad on page 35 42

FA L L 2 0 1 3

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brendan.concannon@mutualofomahabank.com

Carini’s Cleaning & Restoration Louie Carini 3230 Curtis Street San Diego, CA 92106.............. 619-804-8525 cariniclean.com cariniclean@gmail.com

Please see our ad on page 30

ASphalt REPAIR/PAVING

Mutual of Omaha Bank / CondoCerts Brendan Concannon................. 619-961-6346

fax 888-493-1973

Walters Management Joe Farinelli, PCAM.................. 858-495-0900

fax 858-495-0909 jfarinelli@waltersmanagement.com www.waltersmanagement.com

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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 5

Pacific Western Bank Susan Abubo............................. 760-432-1335

fax 760-432-1339 sabubo@pwbonline.com www.pwbonline.com

Please see our ad on page 12

Seacoast Commerce Bank Ken Carteron............................. 760-803-9541

fax 760-301-0046 kcarteron@sccombank.com www.sccombank.com

Please see our ad on page 37 Union Bank Jolen Zeroski............ 800-669-8659, option 4 jolen.zeroski@unionbank.com www.unionbank.com

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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 28

Landscape Maintenance and/or Construction 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 5

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

Landscapes USA Charlie Carter............................ 858-386-9820

fax 858-625-0656 ccarter@landscapesusa.com www.landscapesusa.com

Please see our ad on page 29

Landscape Maintenance and/or Construction 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 36 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 41

Security Services

Tree SERVICE

Bald Eagle Security Dmitriy Todorov......................... 619-230-0022

fax 619-230-6610 dmitriyt@baldeaglesecurity.com www.baldeaglesecurity.com

Please see our ad on page 40

Arborwell Kimberly Taylor.......................... 888-969-8733

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Towing

Water Submetering

Western Towing Kathy Tighe................................ 619-297-8697

fax 619-296-2822 denisetb@westerntowing.com www.westerntowing.com

California Sub-Meters Robert Anaya............................. 858-571-8999

fax 858-571-4470 robert@calsubmeter.com www.calsubmeter.com

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TVRI Mimi Cortez............................... 760-696-0687 mimi@TVRI.com www.TVRI.com

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Pest Control Mt. Helix Pest & Termite Control Robert Bacon............................. 619-584-6794

fax 619-584-3864 mthelixpc@yahoo.com www.mthelixpestcontrol.com

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Associated Professional Services The Management Alternative

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Reserve Studies Sonnenberg & Company Leonard Sonnenberg................ 858-457-5252

fax 858-457-2211 lens@sonnenbergcpas.com www.sonnenbergcpas.com

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Roofing Premier Roofing CA, Inc. Sid Scott..................................... 619-667-4565

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CAL Society of CPAs

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Platinum

GOLD Mt. Helix Pest & Termite Control, Inc. Premier Roofing CA, Inc. RSI Roofing

Animal Pest Management Arborwell Artistic Maintenance, Inc. AV Builder Corp.

Berg Insurance Agency, Inc. California Tree Services, Inc. Fenton Grant Mayfield Kaneda & Litt, LLP First Bank Green Valley Landscape Maintenance Landscapes USA Law Offices of Richard Salpietra Mutual of Omaha Bank/CondoCerts

BRONZE

Seacoast Commerce Bank The Termite Guy Western Towing

The Naumann Law Firm Nautilus General Contractors O’Connell Landscape Maintenance Pacific Green Landscape, Inc. PrimeCo Painting and Construction Popular Association Banking US Bank Union Bank Universal Protection Services Varsity Painting Vista Paint