Common Assessment - Spring 2011

Common SPRING 2011

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

Recap

of the

2010 L e g i s l at i v e S e a s o n

FIGHT the blight – Senate Bill 1427 page 10 2010 Annual Awards LUNCHEON & TRADESHOW page 20 LAMDEN does not provide carte blancheC Oprotection M M O N A S Sto E Sassociations S M E N T M A G A Zpage I N E • 34 SPRING

2011

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2011 EVENT CALENDAR All dates, times and locations subject to change. Please visit our website, www.cai-sd.org, for an updated calendar.

J A NUARY

13-15

20-22

Community Association Law Seminar Las Vegas, NV

1 0-11 Legislative Day at the Capitol Sacramento, CA

PMDP M-100 Course The Essentials of Community Association Management

TBA Annual Educational Conference DoubleTree Hotel Mission Valley TopicsTBA

February 4 Trade Show Legal Update 2011 DoubleTree Hotel, Mission Valley 26

APRIL

Essentials of Community Association Volunteer Leadership – Courtyard by Marriott

M ARCH

2 Morning Educational Program: Earthquake Preparedness Courtyard by Marriott

2 Afternoon Educational Program: Earthquake Preparedness Sheraton, Carlsbad

11 Bowling Tournament Mira Mesa Bowl

MAY

4-7 CAI National Conference Boca Raton, FL

11 Morning Educational Program: ADR/IDR Courtyard by Marriott

J U LY

15 Morning Educational Program: Getting the Most Out of Your CAI Membership Courtyard By Marriott

AUGUST

TBA Day at the Races Del Mar Race Track

26 Trade Show Cybercrime and Embezzlement

SEPTEMBER

TBA CAI San Diego Golf Classic Location TBA

TBA Monte Carlo Night Location TBA

14-18 Large Scale Managers Workshop Seattle, WA

10 Trade Show Going Green in HOAs DoubleTree Hotel Mission Valley

JUNE

23-25 CEO-MC Retreat Salt Lake City, UT

25 CID Law Course Courtyard by Marriott 31-April 1 PMDP M-206 Course – Financial Management

23 Morning Educational Program Employment Law This course is part of a series of programs for experienced managers and management company CEOs Courtyard by Marriott

28 Morning Educational Program Hilton Garden Inn Carlsbad

30 CID Law Course Courtyard by Marriott

2

SPRING 2011 • COMMON ASSESSMENT MAGAZINE

OCTOBER

7 Trade Show New Technology: There’s an App for That!

DoubleTree Hotel, Mission Valley

22 Essentials of Community Association Volunteer Leadership Courtyard by Marriott

NOVEMBER

4 Morning Educational Program : Almost Free Legal Advice Courtyard by Marriott TBA Morning Educational Program: Almost Free Legal Advice North County location TBA

D E C E M B E R

1-2 PMDP Course: M-201 Facilities Management

9 Holiday Award Banquet Luncheon & Trade Show DoubleTree Hotel Mission Valley

Features 6

SB 1427 and Maintenance of Foreclosed Properties

BY JEFF FRENCH, ESQ. AND HOLLY AMAYA, ESQ.

12

SB 1221: Facilitating the Non-Judicial Foreclosure Process by Reducing the Potential for Delay

BY RICHARD SALPIETRA, ESQ. AND JEAN-MARIE SALVIA, PCAM

17

CLAC Success Story

BY KIMBERLY LILLEY, CMCA, CIRMS

22

Would You Like E-Mail Addresses With That Membership List?

BY CARRIE TIMKO, ESQ.

30

Do I Really Have to Shrink My House?

BY JAMES R. MCCORMICK, JR.

34

Lamden Does Not Provide Carte Blanche Protection to Associations

BY LAURI CROCE, ESQ.

Departments 2 4

Chapter Event Calendar President’s Message

BY CYNDI KOESTER, PCAM

16 24 26 27

CLAC Donations Honor Roll Newsstand Renewing Members Homeowners Corner: A Case Study – Another Perspective

BY SAM DOLNICK

29 New Members 37 Around San Diego 40 Service Directory Back Cover 2011 Marketing Plan Members

Chapter News

16 20 23 33

October 8 Trade Show December 3 Annual Awards Luncheon October 9 Vistans ROC November 5 Morning Program

COMMON ASSESSMENT MAGAZINE • SPRING 2011

3

Common

President’s Message Full Steam Ahead!

2011 is here and I am pleased to introduce myself as your new Chapter President. I would like to extend my gratitude to Chris Hodge for his leadership this past year. Like Chris, I too have been an active member of CAI since 1980, as an association manager and, for the past 10 years, Cyndi Koester, PCAM, is the Assistant Vice President, Southern California Regional Account Executive for Mutual of Omaha Bank/ CondoCerts. She is the 2011 CAI San Diego Chapter President.

as a Business Partner. It is this experience that will help me, together with our Board of Directors, lead this organization in the coming months.

We have a very active year planned and our committee chairs are diligently working with committee members on

fun and exciting events. There are a few changes that have been made this year as well. It has been decided by the board to have a Bowling Tournament on March 11, instead of our Annual Billiards event. In addition, we have added several North County Breakfast/ Education programs.

The theme selected for this year is “Unity and Community.” With that thought in mind, our Public Relations Committee is working on outreach projects that we can help to make our own community better. The Chapter has become members of the North San Diego County Association of Realtors to promote a better relationship between homeowner associations and Realtors.

We have recently updated our Manager Scholarship Program to promote CAI Designations and Education for Community Managers.

We are a very strong Chapter for CLAC and this year – as always – we must stay focused on what they are doing in Sacramento. Watch for the CLAC Quarterly Newsletters and E-Alerts when we need your support.

I look forward to serving the membership of the chapter and welcome your involvement and continued support. Here’s to a successful 2011!

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SPRING 2011 • COMMON ASSESSMENT MAGAZINE

EXECUTIVE COMMITTEE CYNDI KOESTER, PCAM....................................... PRESIDENT Mutual of Omaha Bank LOUISE STETTLER...................................... PRESIDENT ELECT Epsten Grinnell & Howell, APC TINA ROZYCKI, CMCA......................................... TREASURER Curtis Management MARIE DONOVAN................................................ SECRETARY Homeowner CHRIS HODGE, PCAM......................................... EX-OFFICIO Elite Community Management DIRECTORS KERRY BEATTY, PCAM......................Packard Management Group JIM FRAKER, PCAM..........Professional Community Management ELIZABETH FRENCH, ESQ................Green, Bryant & French, LLP ELAINE GOWER............................................................ Homeowner BECKY GROENEWOLD................................................................PCM CO-LEE GREV......................... Pacific Rim Property Management JASON PAYNE......................................Payne Pest Management RICK SALPIETRA, ESQ............. Law Offices of Richard Salpietra KARINA TATUM...........................SD Preferred Property Managers

CHAPTER EXECUTIVE DIRECTOR BARBARA OZENBAUGH, CMP 619-299-1376 MANAGING EDITOR BARBARA OZENBAUGH, CMP 619-299-1376, BARBARA@CAI-SD.ORG NEW & RENEWING ADVERTISING SALES BARBARA OZENBAUGH, CMP 619-299-1376 / BARBARA@CAI-SD.ORG DESIGN & PRODUCTION KRISTINE GAITAN REY ADVERTISING & DESIGN / THE CREATIVE DEPT. 760-746-8700 MAGAZINE EDITORIAL COMMITTEE LAURIE POOLE, ESQ. (CHAIR)............. Peters & Freedman, LLP SAM DOLNICK.......................................................... Homeowner ANY FERRELL........................................................ N.N. Jaeschke LESLEY FINCH............................................Lindsay Management JEFF FRENCH, ESQ....................... Green, Bryant & French, LLP CYNDI KOESTER, PCAM..... Mutual of Omaha Bank/CondoCerts JENNIFER LANDON........................... Allure Total Management KIMBERLY LILLEY, CIRMS........................Berg Insurance Agency BARBARA OZENBAUGH, CMP....... Chapter Executive Director TINA ROZYCKI............................................. Curtis Management JEAN-MARIE SALVIA.................................... Walters Management LOUISE STETTLER......................... Epsten Grinnell & Howell, APC All articles and paid advertising represent the opinions of authors and advertisers and not necessarily the opinion of either Common Assessment Magazine or the Community Associations Institute – San Diego Chapter.

Information contained within should not be construed as a recommendation for any course of action regarding financial, legal, accounting or other professional services and should not be relied upon without the consultation of your accountant or attorney.

Common Assessment Magazine is the official quarterly publication of the San Diego Chapter of the Community Associations Institute. CAI San Diego Chapter encourages submission of news and articles subject to space limitation and editing. Signed letters to the editor are welcome. All articles submitted for publication become the property of CAI San Diego Chapter. Reproduction of articles or columns published permitted with the following acknowledgement: “Reprinted with permission from Common Assessment Magazine, a publication of the Community Associations Institute San Diego Chapter.” © 2011 CAI - San Diego Chapter

ADVERTISING & CORRESPONDENCE SHOULD BE SENT TO: Common Assessment Magazine CAI - San Diego Chapter 1081 Camino Del Rio South, Suite 207, San Diego, CA 92108 619-299-1376 / fax 619-299-1377 / www.cai-sd.org

COMMON ASSESSMENT MAGAZINE • SPRING 2011

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SPRING 2011 • COMMON ASSESSMENT MAGAZINE

Senate Bill 1427 and Maintenance of Foreclosed Properties

BY JEFF FRENCH, ESQ. & HOLLY AMAYA, ESQ.

S

ince 2008, the Civil Code has

property with an opportunity to be heard,

required property owners to

and allow an opportunity to correct the

maintain vacant residential

violation within thirty days unless a specific

property purchased at a

condition of the property endangers

foreclosure sale or acquired through

public health or safety. However, Civil

foreclosure of a mortgage or deed of

Code Section 2929.3(c) also provides that

trust. However, in the recent real estate

these provisions could not preempt any

downturn, the volume of foreclosures

local ordinance. In other words, cities and

has been so great that maintenance of

other local government entities could

foreclosed properties languished and

elect to fine property owners pursuant to

blighted areas started to appear. In

either local ordinances or by tapping into

response, cities started to go after the

the $1,000 per day mechanism set forth

owners with fines and assessments aimed

in the Civil Code. Armed with the Civil

at getting properties cleaned up.

Code and local ordinances, cities started

Civil Code Section 2929.3 permits a

to aggressively pursue monetary penalties

governmental entity to impose fines of

and fines against owners that failed to

up to $1,000 per day for a maintenance

maintain the foreclosure properties (mainly

violation, but requires that the entity give

banks).

proper notice, provide the owner of the

Senate Bill 1427 (Price), which Continued on page 8

COMMON ASSESSMENT MAGAZINE • SPRING 2011

7

FIGHTING BLIGHT Continued from page 7

corrected. However, it still provides that

passed the Legislature earlier this year

notice is not required if the governmental entity determines that a specific condition

and was signed into law by Governor

of the property threatens public health or

Schwarzenegger on September 30, 2010,

safety.

sought to provide some uniformity to the

The legislation further provides that

due process procedures afforded among

an assessment or lien to recover the

local governments, even if the period

costs of nuisance abatement taken by a

to correct is not the thirty-day period

governmental entity shall not exceed the

mandated by state law. It establishes that

actual and reasonable costs of nuisance

as a matter of state law, a local entity

abatement, and states that a government

must provide notice and an opportunity

entity may not impose an assessment or

to correct maintenance violations.

lien to recover nuisance abatement costs

Specifically, the legislation provides that

unless those costs are adopted by a body of

prior to imposing a fine or penalty for

elected officials at a public hearing. Arguing

failure to maintain a vacant property that

in support of the legislation, Senator Price

is subject to a notice of default, purchased

noted that many local ordinances fail to

at a foreclosure sale, or acquired through

provide adequate notice of violations

foreclosure of a mortgage or deed of trust,

to owners, and maintained that some

a governmental entity must provide the

local government entities may impose

owner of the property with a notice of,

assessments that exceed the actual costs of

and opportunity to correct, a maintenance

abatement.

violation. In contrast to prior law, SB

Early versions of SB 1427 would have

1427 does not impose a time frame on

required cities to adopt a schedule of

the period in which violations must be

nuisance abatement costs so property owners will know the potential cost of failing to maintain properties. It also sought to prohibit cities from imposing liens against properties for nuisance abatement prior to the adoption of this cost schedule at a public hearing. The League of California

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Cities opposed the inclusion of these provisions, arguing that abatement measures may take a variety of forms, and thus it would not be feasible for cities to develop a schedule that contemplates every potential cost. In the face of this opposition, Senator Price agreed to remove those provisions.

In a position statement regarding the finalized legislation, the California Association of Realtors (CAR) stated that the bill provides necessary clarity and due process regarding assessment and collection of nuisance abatement costs, and noted that “selling the home

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to an individual that will maintain the property is the best solution to the blight problem which can devalue homes in a neighborhood.” The net effect of this legislation is to cause cities to jump through a few more hoops when going after nuisance-type properties. As to Continued on page 10

8

SPRING 2011 • COMMON ASSESSMENT MAGAZINE

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FIGHTING BLIGHT Continued from page 8 association efforts to control these same issues, there is no impact on associations other than to slow down some of the cities that have been working hand in hand with associations to go after derelict owners.

The new legislation, which was sponsored by CAR and the California Association of Retired People, has been chaptered as new sections 2929.4 and 2929.45 to the Civil Code.

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COMMON ASSESSMENT MAGAZINE • SPRING 2011

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Senate Bill 1221 Facilitating the Non-Judicial Foreclosure Process by Reducing the Potential for Delay

BY RICHARD SALPIETRA, ESQ., CCAL AND JEAN-MARIE SALVIA, PCAM, CCAM

B

oards of directors are spending an increased amount of time and money to collect the assessments needed to maintain their communities. When all else fails, boards must consider foreclosing on a property

in order to remove a non-paying member and capture the funds needed to keep the lights on. This process is lengthy and leaves little room for error. With one missed deadline, the association may be required to start the process over again, further delaying the collection of assessments from an owner of a distressed property. Fortunately, with the passing of Senate Bill 1221, the risk of missing the deadline associated with recording the Notice of Sale is reduced. However, it is important to keep in mind that the total period of time associated with the foreclosure process does not change.

The Non-Judicial Foreclosure Process As is commonly known, a non-judicial foreclosure is the preferred method used by associations to foreclose on a property when the assessments are not paid. The procedural requirements for non-judicial foreclosures are set forth in the law and are very specific. After specific notices and the filing of a lien, if the homeowner continues to fail to pay his or her assessments, the association files a Notice of Default. For the next three months, there is a redemption period in which the homeowner may attempt to pay the late assessments. If the homeowner is unsuccessful, then a Notice of Sale is recorded and the process culminates in a Trustee’s Sale where the property is sold to the highest bidder. An auctioneer conducts this sale as instructed by the association and reports the results back to the association.

The Impact of SB 1221 Existing law requires that when a homeowner fails to pay his or her common-interest development assessments, the 12

SPRING 2011 • COMMON ASSESSMENT MAGAZINE

association must record a Notice of Default and mail it to the owner. In the case of a non-judicial foreclosure, the association is then required to record a Notice of

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Sale not less than three months after the Notice of Default is filed, stating the time and place of the sale. The purpose of SB 1221 is to alleviate a potential unintended consequence arising from the current law, specifically, a possible delay of the foreclosure sale that could arise from innocent delays in the recording of the Notice of Sale. This is especially important if those delays create technical violations of the non-judicial foreclosure law. This new bill permits the Notice of Sale to be filed up to five days earlier than allowed under current law; however, it does not move the actual sale date of the property or otherwise shorten the foreclosure process.

The author of the bill states that prior to the enactment of the current law, SB

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prior to the sale. SB 306 conformed these dates so that Notices of Sale must now be published and recorded at least 20 days prior to the sale, but not less than 90 days from the recording of the Notice of Default. The change is intended to give the public and those relying on the recording process as much advance notice

We know the difference between getting the job done

of sales as possible.

The problem is that while publication dates can be coordinated very precisely between the association and the newspapers, the recording process is

and getting it done right.

subject to greater opportunity for error. If the recorder closes early on a given day due to budget cutbacks, or if the Notice

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Continued on page 14 COMMON ASSESSMENT MAGAZINE • SPRING 2011

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SENATE BILL 1221 Continued from page 13

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of the Notice of Default. The interaction of these two rules leaves the association no room for error. It must record the Notice of Sale no less than 20 days before the sale, and no less than three months after the recording of the Notice of Default.

Therefore, if there is a one- or two-day delay in the recording of the Notice of Sale, the foreclosure sale may also have to

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Continued Challenges for Associations While SB 1221 should help reduce timing errors associated with the recording of a Notice of Sale, it does not address a significant problem associated with delinquent owners. There are homeowners who choose to simply give

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SAN DIEGO 2010 CAI-CLAC HONOR ROLL

By Sam Dolnick, CAI-CLAC Delegate-at-Large

This is the second year that the CAI-CLAC Honor Roll is being presented.

All individuals involved in common interest communities, whether they are associations, homeowners, professionals, managers or business partners who have contributed funds to CAI-CLAC in 2010 on behalf of common interest communities to assure that our voice is heard in the halls of the California legislature are to be congratulated. CAI-CLAC monitors legislation regarding common interest developments (condominiums, planned developments, stock cooperatives and community apartment projects) that the legislators are asked to deliberate and vote upon each year. The San Diego Chapter reached its 2010 goal of $28,528. Thanks to all contributors.

Each issue of Common Assessment features the names of the contributors and those individuals responsible for obtaining the contribution.

ABSOLUTELY NO FUNDS are given to any political party or to any candidate.

All funds are used solely for issue oriented legislation affecting CIDs. However, our legislative advocate must be paid and items like stamps, stationery, phone calls, rent, maintenance of web site and other similar expenses must be paid.

Our congratulations and thanks to the following contributors from January 1 to December 3, 2010.

2010 Goal = $28,528

CONGRATULATIONS: GOAL REACHED!!!

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Ocean Hills Summit HOA Mike Mazur

Anderson & Kriger, Joel Kriger

Ocean Terrace/Spinnaker Ridge Frank Lombard

Association Reserves San Diego LLC Matthew Swain Brookfield HOA, Jim Martin CAI San Diego Chapter Barbara Ozenbaugh, CMP

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You Made a Difference in 2010!

CALIFORNIA LEGISLATIVE ACTION SUCCESS STORY

By Kimberly Lilley, CMCA, CIRMS

association (i.e., all of their neighbors), to decide that they would pay $5 toward their obligation, and then be done… that was a bit too much. I was not alone in my angst, however, as the Legislative Action arms of all eight chapters of California’s CAI worked together to send over 900 letters to Brownley to let her know that this kind of bill was not a help at all, but a major financial fiasco for associations state-

I don’t know if you’ve heard, but in 2010 Community Associations

wide. Brownley heard us and gutted the bill; and eventually the bill

Institute (CAI) members from all over California made a huge

died. AB 2502 is the perfect example of how we can (and did!) make

difference in the legislative process, including the impact some

a difference in how the state of California governs associations.

legislation has (or could have had) on associations throughout the state.

Let me take you back to a bill called AB 2502 authored by

AB 2016 (authored by Torres) was a bill that CAI sponsored.

In other words, we realized there was a need for the bill, got the language for the bill drafted, found an “author” in the legislature,

Brownley. This was initially set up as legislation that would help

and then helped in any way we could as the bill made its way

out homeowners who were in need of payment plans. It also had

through both houses of the legislature (attended hearings, educated

the goal of preventing unethical collections procedures. Not a bad

other legislators about the bill’s

plan, right? The reality of the bill hit, however, when we discovered

impact, etc.). AB 2016 allows

that not only would these “payment plans” have to be discussed

Homeowners’ Associations to

in open session (most likely embarrassing the homeowner who

record a single “blanket”

needed the plan), but the amount of the payment could be anything

request (covering all

the homeowner chose. Anything! As the treasurer on my board I

parcels within the

practically fainted when I found that out. It is hard enough to budget

association) to be

for the current water cost increase, but to add onto that a law that

notified within

would allow a homeowner who owed thousands of dollars to the

Continued on page 18 COMMON ASSESSMENT MAGAZINE • SPRING 2011

17

YOU MADE A DIFFERENCE...

demanding that a form be filed for EACH

stepped in and made a difference in how

Continued from page 17

parcel or lot within an association (and that

an association functions on a day-to-day

meant a fee for each parcel or lot within

basis – for the better.

15 days of foreclosures. This allows

the association), creating a strategic (and

Some other bills that CAI spent time

the association to begin collecting

financial) nightmare for associations. The

tracking, and discussing with legislators,

assessments much more quickly than in

“blanket” adjustment to the law allows

were AB 1793 (Saldana) Mandatory

the past, because the association is able

associations to file just once for all of their

Artificial Turf Approval, AB 1927 (Knight)

to identify where to send the bill, and to

parcels or lots, saving time, money and

Limitations on Rental Restrictions and

whom they should be directing it. The

some sanity as well. AB 2016 passed both

AB 1975 (Fong) Water Sub-Metering.

“blanket” aspect was added with AB

houses and was signed into law by the

With AB 1793 (Saldana), this was an

2016 as a “clean up” to last years’ bill.

governor. It took effect in January 2011.

attempt to expand upon AB 1061 from

Some county recorders offices had been

Once again, with AB 2016, CAI (i.e., you)

the year before. AB 1061 provided that an association cannot disallow low-waterusing plants as an entire class. While the association can determine which plants to allow through their architectural guidelines, they must allow SOME low-water-using plant life in the association. AB 1793 wanted to make approval for artificial turf mandatory. Since each association determines its own “look” (which is part of the reason that unit owners buy into that association) to have the state require mandatory approval of something that is addressed in the association's architectural guidelines seemed to over-step the state’s authority. It was discovered in our

PETERS ATTORNEYS AT LAW

investigations that in addition to the initial

&

problems we had with the bill, there were

FREEDMAN,L.L.P.

quite a few artificial turf products with unhealthy levels of lead, which made mandatory approval of these products a liability nightmare. There was also a

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question regarding the impact of run-off from artificial turf that has yet to be fully explored, and the case was made. This bill was vetoed by the governor.

AB 1927 (Knight) placed limitations on rental restrictions. It proposed that if an association wanted to limit rentals within their complex they would have to meet some very high quorum requirements that, given today’s apathy at voting time, would be practically impossible to meet. As we are all discovering, high owner-occupancy rates are important in getting loans for the association (among other things), so there is a financially-sound reason to limit rentals. This law would have made

18

SPRING 2011 • COMMON ASSESSMENT MAGAZINE

it practically impossible. Our team of

happy. Thanks to all of the associations who contributed to the California Legislative Action

advocates explained this to the legislators

Committee in 2010 to help us do this amazing work. You are making a difference.

in Sacramento. Our opposition made it

Thanks to all who help make associations in California better places to live!

necessary for the sponsors of the bill to change the language to such an extent

Kimberly Lilley is the Chair of the California Legislative Action Committee Roundtable in San

that any common interest development

Diego, a Delegate to the state-wide Legislative Action Committee and serves on the Executive

that currently existed would no longer be

Committee for state-wide CLAC. She can be reached at Kimberly@berginsurance.com.

affected by the bill, even if it had passed.

While it did pass through both houses, it was vetoed by the governor.

AB 1975 (Fong) was a bill that you probably never heard about. It was proposed legislation that would require that all associations be sub-metered. Not such a big deal, right? Many associations who aren’t sub-metered WANT to be sub-metered. But here, as Shakespeare might say, is the rub: the association would not be able to recoup the costs of sub-metering from the members of the association. Homeowners are the only possible source of funds to do the submetering! CAI was the ONLY opponent to this bill when it went to hearing. We spoke against it, explained that in the “real” world it would not work as proposed, and it died in the Senate Appropriations Committee. Yet ANOTHER wonderful example of why CAI works so hard to write, track and educate about legislation

Professional. Capable. Friendly.

that impacts associations.

So imagine a world without the Legislative Action Committee of the Community Associations Institute… an association would be forced to record 280 separate forms with the county recorder to be notified of foreclosures, forced to pay 280 fees, forced to re-file (and re-pay) 280 times if any of our information changed, it would never be able to get a loan, it would be required to approve any artificial

Year after year our list of satisfied, well-managed communities grows. Our team of accredited, certified community managers offers unparalleled credibility and integrity. Call Curtis Management today for the highest caliber, hardest working professionals to manage your community. Toll Free 877.587.9844.

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turf requests (on the roof… really?), and it would be having perpetual bake sales to try to pay the sub-metering company for all of the work we were required by law to have them do… Sounds like a nightmare.

While living in an association may not be “heaven,” it is still “home” and we will do everything we can to keep that home

COMMON ASSESSMENT MAGAZINE • SPRING 2011

19

Thank you to our Award Banquet Exhibitors Able Restoration Animal Pest Management Antac Pest Control Artistic Maintenance Association Reserves San Diego LLC AV Builder Corp Bald Eagle Security Services Berg Insurance Agency Bob Piva Roofing California Sub-Meters Clean Earth Restorations Easyturf, Inc. Emercon Construction Inc. Epsten Grinnell & Howell APC Green Valley Landscape & Maintenance Interiors: By Design Jon Wayne Construction & Consulting JW Cleaning & Restoration LaBahn’s Landscaping Landsystems Mt. Helix Pest & Termite Control, Inc.

Annual Awards Luncheon & Trade Sho

Mutual of Omaha Bank/CondoCerts New Way Landscape & Tree Service O’Connell Landscape Pacific Green Landscape, Inc. Pacific Western Bank Payne Pest Management Popular Association Banking Premier Roofing CA, Inc. PrimeCo Painting, Inc. Pro-Tech Painting Reconstruction Experts ResCom Services, Inc. Restoration Management Company RSI Roofing S.B.S. Lien Services

Emerald Sponsors Bald Eagle Security Services Epsten Grinnell & Howell, APC JW Cleaning & Restoration Restoration Mangagement Company ValleyCrest Landscape Maintenance

San Carlos Cleaning Services, Inc. Service Master by Rapid Response Servpro of La Jolla Sky Security Services Summit Security Transport Data Systems Urban Tree Care, Inc. US Bank Valley Crest Landscape Maintenance Wells Fargo Westturf Landscape Management 20

SPRING 2011 • COMMON ASSESSMENT MAGAZINE

Sapphire Sponsors Anderson & Kriger, Frazee Paint Green Valley Landsc Paul Davis Restorati Peters & Freedman

ow

s LLP

cape & Maintenance, Inc. ion & Remodeling n, LLP

OUTSTANDING COMMITTEE PERSON OF THE YEAR Public Relations Matthew Swain Membership Marie Vasilieff Magazine Tina Rozycki Education Services Shannon Smith Monte Carlo Night Louise Stettler Golf Classic Chris DiNino Billiards Karina Tatum CLAC Lisa Isaacson

2010 CHAPTER AWARD WINNERS RECRUITER OF THE YEAR Tina Rozycki, CMCA Curtis Management COMMITTEE MEMBER OF THE YEAR Jim Fraker, PCAM Billiards Tournament, Public Relations PCM BUSINESS PARTNER OF THE YEAR Shannon Smith Artistic Maintenance COMMUNITY MANAGER OF THE YEAR Karina Tatum SD Preferred Property Managers HOA OF THE YEAR Canyon Woods HOA PRESIDENT’S AWARD Barbara Ozenbaugh, CMP

COMMON ASSESSMENT MAGAZINE • SPRING 2011

21

Would You Like E-Mail Addresses With That Membership List?

BY CARRIE M. TIMKO, ESQ.

In Worldmark v. Wyndham Resort Development

Worldmark also claimed that it complied with Corporations Code section 8330 because it provided Miller with a “reasonable

Corporation (2010) 187 Cal.

alternative” to producing the membership list. Worldmark would

App.4th 1017, the Third

have allowed Miller to submit a copy of the documents he wished

District Court of Appeal held

to distribute to the membership, and if Worldmark determined the

that a California non-profit

material to be appropriate, it would have forwarded the documents

mutual benefit corporation

to a mailing house for mailing at Miller’s expense. Worldmark

is required to provide e-mail

later agreed to cover 50% of the cost of mailing. The court found

addresses maintained by

this alternative to be unreasonable, since the cost to Miller would

the corporation in response

have totaled around $1 per member, or $260,000. Moreover, Miller

to a member’s request for a membership list.

Worldmark is a California nonprofit mutual benefit corporation owned by over 260,000 members. The corporation owns timeshares across the country.

One of Worldmark’s members, Robin Miller, requested that

requested the membership’s e-mail addresses so that his materials could be distributed in time for the annual meeting. Mailing would have taken much longer.

Corporations Code section 8330 also governs common interest developments (see Civil Code section 1363(f)), so the Worldmark decision is controlling with regard to homeowner requests for membership lists from an association. However, there are options

Worldmark provide the corporation’s membership with petition

under the Davis-Stirling Act that would restrict homeowners’ access

to amend its bylaws. Worldmark refused Miller’s request, and in

to member e-mail addresses. Civil Code section 1365.2(a)(1)(I)(iii)

response Miller demanded that Worldmark allow him to inspect

allows a homeowner to “opt out” of sharing his name, property

and copy the corporation’s membership records, including e-mail

and mailing address if he notifies the association in writing that he

addresses, so he could distribute his own petition. Worldmark told

would prefer to be contacted by an alternative mailing process that

Miller that he could not have access to the e-mail addresses, and

would qualify as “reasonable” under Corporations Code section

then petitioned the court to set aside Miller’s demand.

8330. Additionally, there is no statutory requirement that member

Worldmark claimed that Miller was not entitled to the

e-mail addresses be maintained by the association. Nevertheless,

membership’s e-mail addresses because there was no statutory

where e-mail addresses are maintained, they are subject to

authority requiring it to provide such information. Further,

membership inspection.

Worldmark was concerned with protecting the privacy of its

So, what’s the bottom line for homeowners associations? Where

membership, and considered its e-mail roster to have “tremendous

an association maintains e-mail addresses to communicate with

commercial value.” California Corporations Code section 8330(a)

its members, such information must be provided to homeowners

(1) provides that unless the corporation provides a “reasonable

requesting a membership list unless the addressee specifically

alternative,” it must allow a member to “inspect and copy the

requests to “opt out.” Associations may also consider offering a

record of all members’ names, addresses and voting rights…”

“reasonable alternative” for mailing owners’ messages, such as

so long as the proper procedures are complied with. Worldmark

sending the e-mail itself.

contended that the term “members’ addresses” did not encompass e-mail addresses. The Court of Appeal disagreed, holding that the language of Corporations Code section 8330 was broad enough to include e-mail addresses.

22

SPRING 2011 • COMMON ASSESSMENT MAGAZINE

Carrie M. Timko, Esq. is an associate attorney with the law firm of Epsten Grinnell & Howell, APC.

CAI ROCKS!

UBM071_Jan26W_SanDiego_4.75x7.5_4C

CAI volunteers were proud to participate in Vistans ROC, an annual event in Vista, where homes are painted and re-landscaped by volunteers. This year’s Vistans ROC (Restore Our Community) was held on Saturday, October 9th, and over 30 homes received an exterior makeover.

CAI sponsored one home, and Jim Fraker coordinated the makeover for this house.

CAI volunteers included Christy Gramann of Four Season Tree Care, Lisa Sandie and staff from Silverado Management, Shaun Marie Daly and two landscapers of KR Landscape Services, and Dmitriy Todorov of Bald Eagle Security Services, Inc..

One of your most valuable business relationships starts here.

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To put our HOA Banking expertise to work for you, visit us at HOAbankers.com or call us today.

Relationship Manager: Julie Marquez, CTP, 866-679-6764 Jolen Zeroski, CMCA®, 800-669-8659, x4 Mahendra “Sammy” Sami, CTP 877-839-2947 Team Leaders: Pamela Hazard, CMCA®, 800-669-8659, x1 Michelle Hill, 800-669-8659, x2

National Sales: Mickel Graham, PCAM®, 866-210-2333, x1 Industry Manager: Mark Reider, CMCA®, 800-846-5821

HOAbankers.com ©2010 Union Bank, N.A.

COMMON ASSESSMENT MAGAZINE • SPRING 2011

23

NewsStand N E W S F R O M C A I N AT I O N A L Pointe Community Association, Inc., in Boca Raton, FL, will serve as CAI’s 2011 president-elect.

Brumfield and Danella will be joined by 12 new or reelected members of the Board of Trustees and 15 newly elected or reelected members of CAI’s three Membership Representation Groups (MRGs).

“I’m honored and excited to serve as CAI president, especially during this time of growth and opportunity,” says Brumfield.

“There’s much that the board and I are eager to accomplish, and I’m confident we will reach these goals with the help of our dedicated member volunteers and our national and chapter staff.

Working together as a team, there is nothing we can’t accomplish on behalf of our members and those who serve and make their

Find it Fast While our website, www.caionline.org, has a search function and site map, a new web page, Find It Fast should help members and others locate top pages on our website, e.g., designations, events, G&PA, specific periodicals, member logos, PMDP courses, address changes and so on. The page also includes hyperlinks for the staff members who are the contacts for the content on those pages, e.g., Sondra Frank for Chapter Contacts. The page is linked on the homepage under Quick Links.

New CAI Leaders Take Office January 1 Steven Y. Brumfield, CMCA, AMS, PCAM, vice president of operations for the National Lifestyle Division of Wentworth Property Management, will begin his one-year term as the 38th national president of Community Associations Institute (CAI) January 1. Headquartered in Eatontown, NJ, Wentworth operates in 14 states.

This will be Brumfield’s sixth year on the CAI Board of Trustees.

He has also served on the board of directors for CAI’s Pennsylvania and Delaware Valley chapter. His professional experience includes serving as the assistant director of community associations for a nationwide home builder and working for property management firms in Virginia and Florida.

Prior to his career in association management, Brumfield spent several years as vice president of a family-owned, custom-home building company. He is a veteran of the United States Marine Corps, having served in Operations Desert Shield and Desert Storm.

Kathryn C. Danella, CMCA, LSM, PCAM, manager of Boca 24

SPRING 2011 • COMMON ASSESSMENT MAGAZINE

homes in common-interest communities.”

“We’re happy to have someone as knowledgeable and passionate as Steven leading our Board of Trustees as we continue to build on past successes,” says CAI Chief Executive Officer Thomas M. Skiba, CAE. “Beyond his extensive industry experience and great insight, Steven brings people together to achieve common goals. His leadership will prove invaluable to CAI and our 30,000-plus members.”

CAI’s 2011 Board of Trustees includes five new members: Victoria A. Cohen, Lake Murray Terrace, San Diego, CA Henry A. Goodman, Esq., Goodman & Shapiro, LLC, Dedham, MA Cathy S. Kelly, CMCA, AMS, PCAM, Ocean Ridge Management, Boynton Beach, FL Lori Loch-Lee, CMCA, AMS, PCAM, Brown Community Management, Mesa, AZ Kelly G. Richardson, Esq., Richardson & Harman, PC, Pasadena, CA The following members return to the 14-member board (*appointed to an additional two-year term): Dennis C. Abbott, CMCA, AMS, PCAM, Abbott Enterprises, Inc., Charlotte, NC Ted S. Herrle, CMCA, AMS, LSM, PCAM, Admiral’s Cove Master Property Owners Association, Jupiter, FL *Julie McGhee Howard, Esq., Weissman, Nowack, Curry & Wilco, PC, Atlanta, GA John McInerney, AMS, LSM, PCAM, Talis Management Group, Inc., AAMC, Raleigh, NC Drew Regitz, AssociationVoice, LLC, Denver, CO Richard Salpietra, Esq., Law Office of Richard Salpietra, Rancho Santa Fe, CA

Michael Wm. Shiflett, InterNeighborhood

reelected):

LLC, Plymouth, MA

Council of Durham, Durham, NC

Drew Regitz (chair), AssociationVoice, LLC,

*Thomas C. Engblom, CMCA, AMS, PCAM,

Denver, CO

Community Association Banc/CondoCerts,

constituencies are represented by the

Henry A. Goodman (chair-elect), Esq.,

Oak Lawn, IL

Association of Professional Community

Goodman & Shapiro, LLC, Dedham, MA

Mickel Graham, PCAM, Union Bank – HOA

Managers (APCM) Board, Business Partners

*Robin L. Barlow, CIRMS, ADP Barlow

Banking Services, Atlanta, GA

Council (BPC) and Community Association

Insurance, Easton, PA

*Bruce R. Gran, CMCA, AMS, PCAM,

Volunteers Committee (CAVC). Members of

Jennifer Brick, Stark & Stark, Lawrenceville,

HomeWiseDocs.com, Scottsdale, AZ

each MRG are elected by CAI members of

NJ

*Thomas W. Larson, RS, Facility

that corresponding membership group.

*Heather L. Cozby, CPA, Cozby & Bruno,

CAI’s three primary member

Continued on page 26

The 2011 APCM Board (*newly elected or reelected): Dennis C. Abbott (chair), CMCA, AMS, PCAM, Abbott Enterprises, Inc., AAMC, Charlotte, NC *Lori Loch-Lee (chair-elect), CMCA, AMS, PCAM, Brown Community Management, Mesa, AZ Pamela D. Bailey, CMCA, AMS, PCAM, Chaparral Management, AAMC, Spring, TX *Kara Cermak, CMCA, AMS, PCAM, Rowell, Inc., Elgin, IL *Michael A. Feltenberger, CMCA, AMS, PCAM, Legum & Norman, Inc., Alexandria,

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VA Staci M. Gelfound, CMCA, AMS, PCAM,

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*Barbara Barron Herndon, CMCA, AMS, PCAM, Professional Community Management, San Antonio, TX Ted S. Herrle, CMCA, AMS, LSM, PCAM, Admiral’s Cove Master Property Owners Association, Jupiter, FL *Marge Imfeld, PCAM, I & I Property

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Management, Fresno, CA Cathy S. Kelly, CMCA, AMS, PCAM, Ocean

HOA Banking HOA Loans Internet Cash Management Online Payment Systems Dedicated Customer Service

Ridge Management, Boynton Beach, FL Jared McNabb, CMCA, PCAM, Crowninshield Management Corporation, AMO, Peabody, MA Steven Shuey, PCAM, Personalized

Cyndi Koester

Property Management, Cathedral City, CA

AVP / Regional Account Executive

*Gregory G. Smith, CMCA, AMS, PCAM, Springs, CO

949.235.8498 Toll Free 866.800.4656, ext. 7494 cyndi.koester@mutualofomahabank.com

Robin Steinkritz, CMCA, AMS, PCAM,

mutualofomahabank.com

Colorado Association Services, Colorado

Heritage Property Management Services, Inc., Atlanta, GA The 2011 BPC (*newly elected or

Z4746

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COMMON ASSESSMENT MAGAZINE • SPRING 2011

Equal Housing Lender

25

NEWSSTAND Continued from page 26

Engineering Associates, P.C., Fairfax, VA *Hayden Miller-Luczka, CMCA, PCAM, Community Association Banc/CondoCerts, Vienna, VA *Caroline Record, Esq., Berman, Sauter,

Renewing Members

Record & Jardim, P.C., Morristown, NJ *Jeffrey Van Grack, Esq., Lerch, Early & Brewer, Chartered, Bethesda, MD The 2011 CAVC (*newly elected or

Thank you to our chapter members that have renewed their CAI membership. We appreciate your continued support and participation in our chapter.

reelected): Michael Wm. Shiflett (chair), InterNeighborhood Council of Durham, Durham, NC Victoria A. Cohen (chair-elect), Lake Murray Terrace, San Diego, CA Marilyn Brainard, Wingfield Springs Community Association, Sparks, NV *Julie Hardy Cramer, Westmont, IL Fred Mellenbruch, Lake Mission Viejo Association, Mission Viejo, CA *Robert Riddick, Moreno Valley, CA *Robert Rothwell, Henderson, NV

26

4-Points Management Agency............... 2004 7 Oaks Mgmt Corp #4............................. 2005 A. McKibbin & Co. . .................................1997 Alante/MCS Insurance Services .............2009 Alliance Association Financial Services . ...............................................2008 Andrew Jager ...........................................2007 Angelic Luna . ...........................................2009 Aquaspecs, Inc. ........................................2001 Arborwell ..................................................2008 Artistic Maintenance, Inc. .......................2005 Association Reserves San Diego, LLC . 2008 Bald Eagle Security Services, Inc. ..........2009 Berg Insurance Agency ...........................2003 Bill Greenlee, CMCA ...............................2009 Bob Piva Roofing .....................................2009 Bonita Vista Community Association ....1982 Bruce Becker, CCAM, CMCA, AMS ............1980 Byron Mettler, CMCA ..............................2009 California West Patrol . ............................2010 CertaPro Painters..................................... 2003 Christy Gonzales ......................................2010 Clean Earth Restorations ........................2008 Coral Tree Plaza Owners Association . ..2008 Daniel Goodrich, CCAM, CMCA, AMS . ............2004 DAPA Janitorial Service ..........................2007 David Abrams . .........................................2005 Debra Weikel, CMCA, AMS, PCAM . ...........2005 Del Mar Pacific General Contractors, Inc. . .....................................1997 Donald Michaels ......................................2006 Dunn-Edwards Corporation ...................2002 Equity Management ................................2010 First California Bank . ...............................2000 Frazee Paints ............................................2009 G.R.G. Management Inc. ........................2009 Green Valley Landscape & Maintenance, Inc. . ...............................2008 Hidden Ridge at Carlsbad ......................2001 HOA Elections of California, Inc. .............2009 Hugh Maynard, CMCA............................ 2005 Ian H. Graham Insurance ........................2009 Janet Wagner, CCAM, CMCA ...............2006 Jessica McKenzie .....................................2010 Jill Bronk ...................................................2005 Jon Wayne Construction & Consulting .1990 Julie Bigelow, PCAM ...............................2009 Karina Tatum............................................. 2006 Katy Camp, CCAM ..................................2008 Kimberly Johnson, CMCA ......................2005 La Mesa Colony Homeowner Assn .......2007 LaBarre/Oksnee Insurance Agency .......2001 Lakeridge Park Condo Association .......2006 Landscapes USA, Inc. ..............................2010 Law Office of Laura Kwiatkowski . ..........1993 Le Parc Chateau .......................................1999 Linda Strom, PCAM .................................2005

SPRING 2011 • COMMON ASSESSMENT MAGAZINE

Lloyd Pest Control ...................................2006 Loren Fisk, CMCA, CCAM ......................2009 Lori Graham, CMCA, AMS, CACM . .......2006 Management Resource Center . ............2009 Marie Donovan ........................................2000 Mario Trejo, AMS .....................................2005 Mary-Anne Monck ...................................2003 MC Builders Corporation .......................2010 Melanie Hudson . .....................................2010 Mike Lutz . .................................................2006 Ned Heiskell, PCAM . ..............................2009 Nicholas Brennan . ...................................2009 Nina Stanley .............................................2008 Orange Coast Building Services, Inc. . ..1999 Pacific Green Landscape, Inc. ................1988 Patricia Ginger.......................................... 2006 Patrick Morrisey, CMCA.......................... 2009 Park West Landscape Maintenance, Inc. ...2010 Prater Architects, Inc. ..............................1998 R&D Pest Services, Inc. ...........................2009 Rancho Del Mar Association ..................2009 Renaissance La Jolla Community Assn ...2002 Richard Johnson ......................................2005 Robin Fennell, CMCA .............................2009 Rolling Hills Ranch Community Assn......1999 Ronald Phipps, CMCA, AMS, LSM, PCAM . ............2011 Roy Palacios Insurance Agency, Inc........2005 S.D. Preferred Property Managers . .......1995 Sabrina Afkhami, CCAM, PCAM.............2006 SCT Reserve Consultants, Inc................. 1994 Seabreeze Management Company, Inc. ...2009 Shannon McMurray, CMCA, AMS .............2008 SHE Manages Properties ........................2005 Silverado Community Management Service .........................1996 Site Plan Advantage ................................1993 Sky Security Services................................ 2008 SmartStreet a Division of RBC Bank . ...2004 Summit Security Guard & Patrol ............2003 Sunrise Pointe Homeowners Assn .........2008 Sunset Hills Terrace HOA .......................2003 Susan Fakhouri .........................................2009 Susan Thrasher .........................................2009 The Golden Girls at MPM Realty ...........2004 Three Phase Electric, Inc. ........................2007 Traci Mays .................................................2010 Tracy McGuffin, CMCA, AMS .................2010 Treebeard Landscape . ............................2010 Varsity Painting .........................................2009 Victoria Cohen .........................................2005 Westwood Townhomes 11-12 Corp.......2009 WICR .........................................................2000 William Cozza . .........................................2010 William Stewart, PCAM ...........................2005 Zelma Hall, CMCA ...................................2005 October/November/December 2010

Homeowners’ Corner

Case Study: Another Perspective

T

he Fall 2010 issue of Common

“review”) was brought to the attention

Assessment, in the Homeowners’

of the management firm and the board

Column, was about a case study

of directors, an “audit” of the financial

of an association that violated many of

statements was immediately made and

the precepts of its governing documents

this new “audit” was mailed to each

and state statutes.

member.

It is interesting to note that

Effect: The management firm and

homeowners from six different

board of directors took their fiduciary

associations called stating that the

duties seriously and when notified of an

article must have referred to their

error took corrective action.

association and wanted verification.

Items 5 & 6 (Membership

These homeowners were wrong, the

Meetings): The governing documents

article did not refer to their associations.

stated that annual membership

However, no calls were received from

meetings shall be held between seven

the homeowners that were members

days prior to seven days after the date

of the association that the case study

of the first annual meeting called by the

described. Is there a lesson to be

Declarant.

learned from this?

But there is another perspective on

Effect: In the over twenty years that this association has been in existence,

Readers of this column are encouraged to send their opinions on the above and suggestions for future columns to samdolnick@ juno.com or by phone, 619-697-4854.

Sam Dolnick has served as president of his association, is a former homeowner representative of the San Diego Chapter Board of Directors, former homeowner trustee of CAI National, and former director of the CAI Foundation for Community Association Research. He is currently homeowners’ delegate on the California Legislative Action Committee, and president of the Baker/Dolnick Education Foundation.

Guest articles are always welcome!

the original case study — an association

the annual membership meetings

that attempts to its best ability to

were always held within the time limits

do everything correctly, to follow

stated. The owners have the satisfaction

the governing documents and state

of knowing that their attendance was

directors nor the management firm are

statutes; and the board, when notified of

desired and welcomed.

hiring contractors, professionals, friends

errors or misinterpretations, makes every attempt to take corrective action.

The format of this article will follow that of the previous case study.

Item 7 (Conflict of Interest): The board members sign a code of conduct which prohibits conflict of interest

or relatives to obtain compensation improperly.

Item 8 (Federal/State Income

between vendors and employees. The

Taxes): Federal and State income taxes

Items 1, 2, 3 & 4 (Audit/Review):

management contract has some clauses

are always filed in a timely manner. In

The association’s governing documents

that prohibit a conflict of interest by the

addition FICA taxes are also filed in a

called for a mandatory external audit of

manager as an agent of the association.

timely manner.

the financial statements by a certified

So far, to anyone’s knowledge, there has

public accountant for each fiscal year

never been a violation of the conflict

penalties and interest are not charged

with copies going to the owners. The

of interest portion of the governing

by the governmental agencies and

members received copies of a “review”

documents.

therefore their assessments are used

of the financial statements. When this error, (an “audit” was needed and not a

Effect: The owners have the confidence that neither the board of

Effect: The homeowners know that

wisely.

Continued on page 28

COMMON ASSESSMENT MAGAZINE • SPRING 2011

27

HOMEOWNERS' CORNER Continued from page 27

Item 9 (Water Damage/Laundry

Item 10 (Corporate Status): Civil Code 1363.6 Required Filing of Biennial Statement has always been filed in a timely

Machines): Whenever water damage or

manner with the Secretary of State and

water stains on ceilings and walls are

thus the corporate status of the association

reported to management, a work order

has never been suspended. As fees were

is immediately filled out. An employee

also paid no penalties were ever assessed.

comes to the unit, assesses the amount

Effect: Since the corporate status

of damage and whether or not it is the

remains valid the homeowners are

association’s or owner’s responsibility

protected and not placed in jeopardy.

to take corrective action. If it is the

Conclusion: This “A Case Study:

association’s responsibility, repairs are

Another Perspective” is presented to

undertaken.

show that although there are some

The governing documents do not allow

associations that continually violate their

laundry machines in the units. Separate

governing documents and state statutes,

rooms are provided which contain laundry

there are also many associations that are

machines and dryers. Whenever an owner

run efficiently and honestly. These board

requests permission from the board for the

members are aware of their fiduciary

installation of washing machines in the unit,

responsibilities and make every effort to

the request is always denied.

uphold the integrity of their associations.

Effect: The owners are aware that

Homeowners should be alert to the actions

everyone is being treated equally and

their board members are taking and should

the governing documents apply to all

be vigilant in confronting them when the

consistently.

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29

Do I Really Have to My House?

SHRINK

BY JAMES R. MCCORMICK, JR.

C

lear Lake Riviera Community Association has architectural guidelines in place that limits the

heights of homes within the development.

In March 2005, homeowner Robert Cramer, a general contractor, submitted plans to the association’s architectural committee for construction of a new home. The plans were approved subject to the height restriction, and on each page of the plans the following statement was stamped: “structure height not to exceed 17 feet from control point of lot.” The Cramers were notified of this height restriction several times during the course of their construction and they acknowledged the limitation on the approved plans.

During the construction of their home, the Cramers were further notified by the architectural committee that their house deviated from the approved plans and that the completed building would violate the height restriction. Despite this notice, the Cramers proceeded with construction and when the house was completed it exceeded the 17-foot height restriction by nine feet, impinging severely on the views from at least two neighboring homes.

Thereafter, the Cramers unsuccessfully requested a variance from the committee seeking a ratification of their violation of the height restriction.

In June 2006, the association filed suit against the Cramers requesting declaratory relief of violation of the guidelines and the approved construction plans, an injunction to require compliance with the approved 30

SPRING 2011 • COMMON ASSESSMENT MAGAZINE

CONTACT YOUR PROS FOR A FREE ESTIMATE TODAY 1-800-399-3199 plans and the height restriction, and monetary damages. The trial court found for the association, rejecting the Cramers’

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various arguments that the height restriction was invalid or unenforceable, and ordered them to bring the house into compliance with the guidelines. The Cramers appealed.

On appeal, the Cramers challenged the validity of the height guideline, the validity of the architectural committee, and the grant of injunctive relief. The Appellate Court affirmed the injunctive relief, ultimately determining that the trial court applied appropriate standards of review

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properly constituted committee. The association produced evidence showing that the height restriction guideline had been enforced since at least 1995. The Cramers argued, however, that since there was no direct evidence presented (i.e., minutes of meetings, tabulation of votes, etc.) showing that the guidelines had been adopted, the association could not enforce the guidelines. The Appellate Court found “no legal support” for the Cramers’ claim that the association was required to provide direct, rather than circumstantial, evidence to show that its use restrictions were properly adopted.

The Appellate Court further stated that simply because the association was unable to locate a document reflecting the adoption of the guidelines does not necessarily support a finding they were never properly adopted.

The Cramers further contended that forcing them to bring their home into compliance with the height restriction was effectively ordering them to “tear down Continued on page 32

COMMON ASSESSMENT MAGAZINE • SPRING 2011

31

What Boards and Managers Can Learn from this Case Boards and managers should document adoption of architectural guidelines and should document how and when owners are advised of these regulations and requirements. Additionally, owners’ violations of the regulations and requirements should always be documented in writing. Owners living by the adage, “seek forgiveness instead of permission” subject themselves to being compelled to expend significant sums bringing their homes into compliance with an association’s architectural guidelines. Assuming all of the facts support such a determination, owners who build or modify their residences in violation of their association’s architectural guidelines cannot after the fact seek a variance based on a claim that it would be too expensive to bring the home into compliance.

DO I REALLY HAVE TO SHRINK MY HOUSE? Continued from page 31

their house,” and that the court should have awarded damages instead.

In reviewing whether to uphold the decision of the trial court, the Appellate Court applied a three-part “hardship doctrine” that is applicable to encroachment cases. Under this doctrine, to determine whether to grant or deny an injunction requiring removal of an encroaching structure, three factors must be considered: 1. The defendant must be innocent.

That is, his or her encroachment must not be willful or negligent. The court should consider the parties’ conduct to determine who is responsible for the dispute.

2. Irreparable injury. Unless the rights of the public would be harmed, the court should grant the injunction if the plaintiff will suffer irreparable injury regardless of the injury to defendant.

3. Hardship to defendant. The hardship to defendant from granting the injunction must be greatly disproportionate to the hardship caused plaintiff by the continuance of the encroachment and this fact must clearly appear in the evidence and must be proved by defendant.

The Appellate Court upheld the injunction order, relying on the trial court’s findings that Mr. Cramer knowingly violated the height regulation and that his actions were not innocent and, at best, negligent.

Furthermore, the evidence supported a finding of irreparable harm to the surrounding neighbors such as loss of view, loss of privacy and diminution in value.

Importantly, the Appellate Court stated: If the Cramers were permitted to use the fait accompli of their home’s completion to avoid enforcement of the height guideline, the association would effectively lose the ability to enforce any of its guidelines. Members could build their homes in any manner they pleased, arguing afterward in response to an action to enforce the guidelines that compliance

32

SPRING 2011 • COMMON ASSESSMENT MAGAZINE

ssl_CAI_0210:Layout 1

would be unreasonably expensive.

Evidence presented by the Cramers’ expert showed that the house could be

1/19/10

10:23 AM

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Improving more than just your property.

brought into compliance for approximately $200,000. The Appellate Court found that the economic damage to Cramers of $200,000 was not grossly disproportionate to the $75,000 in diminished value of one of the surrounding homes and the loss of value to the other homes and other damages difficult to quantify.

S TEVEN S MITH L ANDSCAPE I NC .

On the basis of the record before it, the Appellate Court determined that the trial court had not abused its discretion in directing the Cramers to bring their home into compliance with the height restriction.

James R. McCormick, Jr. is a partner with the law firm of Peters & Freedman, LLP, with offices in Encinitas and Palm Desert and can be reached at jmccormick@ hoalaw.com.

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COMMON ASSESSMENT MAGAZINE • SPRING 2011

33

Lamden Does Not Provide Carte Blanche Protection to Associations

BY LAURI CROCE, ESQ.

T

he rule of judicial deference announced by the Supreme Court in Lamden v. La Jolla Shores Clubdominium Homeowners

Association (1999) 21 Cal.4th 249 (Lamden) has been used for the past decade by association boards throughout California as a shield against liability for negligence and good faith mistakes detrimentally affecting homeowners. Division Three (Orange County) of the Fourth Appellate District of the California Court of Appeal explains in Affan v. Portofino Cove Homeowners Association (2010) 189 Cal.App.4th (Portofino Cove), that Lamden is not the super-shield some boards would like to believe it to be.

It is necessary to recount the specific facts of the Portofino Cove case in detail to understand the decision’s importance. For some ten years the board ignored its maintenance obligations with respect to common area plumbing including sewer and drain lines servicing a three story stacked condominium building situated over an underground parking garage. The Affans purchased their Portofino Cove condominium in 1986 as a vacation home and suffered sewage back-ups into their kitchen sink and the sink and bathtub in the master bathroom six times over a nine-year span. They made a written complaint to the association and its management company, but their complaint did not result in a remedy of the situation.

The Portofino Cove association changed managing agents in 2004 to Huntington West 34

SPRING 2011 • COMMON ASSESSMENT MAGAZINE

Properties (Huntington), also a defendant

its failure to prevent the sewage eruption

in the lawsuit. In 2005, the Affans again

and provide for a complete repair of the

complained about the very chronic situation

unit.

of sewage backing up into their unit, and

After a bench trial, the trial court found

Huntington finally addressed the issue

in favor of the association without even

after gaining the board’s approval to do

making a determination on the elements

so. Unfortunately, the plumber’s attempt

of negligence or breach of the CC&Rs,

to jet-clean the mainline resulted in a

despite compelling expert testimony of

massive sewage eruption into the Affans’

each. The trial court simply stated that the

condominium, rendering it uninhabitable.

judicial deference rule of Lamden meant

The association hired an emergency clean-

the association and Huntington were not

up company to perform the necessary

negligent and did not breach the CC&Rs

remediation, but the association neglected

with respect to their respective duties to

to restore the Affans’ unit to an undamaged

maintain the sewage system. The trial

condition when the association’s insurers

court also determined, however, that the

became embroiled in a coverage battle. The

association was contractually liable under

Affans had enough, and filed suit against the

the CC&Rs to pay for restoration of the

Portofino Cove Association for negligence,

unit following the sewage eruption. Finally,

private nuisance, and breach of the CC&Rs

the trial court determined there was no

because of its years-long failure to maintain

prevailing party, and therefore each party

the sewer system, and its more recent

was to bear its own attorneys’ fees and costs

failure to restore the damage to the Affans’

of suit.

unit. The Affans also sued Huntington for negligence and private nuisance based on

The Court of Appeal reversed the trial Continued on page 36

COMMON ASSESSMENT MAGAZINE • SPRING 2011

35



     



 



Continued from page 35

court on all issues except the issue of the association’s contractual liability to pay to restore the Affans’ condominium. The Court

  

LAMDEN DOES NOT PROVIDE CARTE BLANCHE PROTECTION TO ASSOCIATIONS

  

of Appeal emphasized that Lamden is not an automatic protection against liability, and analyzed the Portofino Cove association’s acts and omissions in detail to illustrate its point. First, the Court of Appeal explained that Lamden’s judicial deference rule, under which the court may not substitute its judgment for that of a board making a decision in consultation with experts, in good faith, and in the best interests of the entire community (even if that decision is erroneous), applies only when an actual decision-making process is undertaken and a conscious decision is made.

The judicial deference doctrine does not shield an association from liability for ignoring problems: instead, it protects the Association’s good faith decisions to maintain and repair common areas. In Lamden, the Supreme Court recognized the essence of an association’s duty to maintain and repair is a duty to act based on reasoned decision-making. [189 Cal.App.4th 930, 942. Italics original.]

The Portofino Cove association failed to act for some ten years demonstrating the opposite of action required for Lamden to apply.

Second, the Court of Appeal explained there must be findings of fact made to apply the Lamden judicial deference rule, including findings of a competent investigation, good faith on the part of the

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board, and an analysis of the best interests of the community. The most important finding missing in this particular case was that of a deliberative process of decisionmaking on the part of the board. Quoting from Lamden, the Court of Appeal stated: Finally, the association did not meet its burden of proving its decision not to engage in maintenance was an exercise of its discretion ... to select among means for

discharging an obligation to maintain and repair common areas. (Ibid.) The record contains no evidence the board selected Aamong means when it responded to each of the Affans’ nine sewage eruptions by simply hiring a plumber to snake their drain.

[189 Cal.App.4th 930, 943.]

In addition to the foregoing, the Court of Appeal swiftly dispensed with the erroneous conclusion by the trial court regarding Huntington by a terse explanation that Lamden applies only to

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associations and not to managing agents.

And the Court of Appeal did not even discuss the attorneys’ fees issue. It simply stated that as to the appeal and crossappeal challenging the trial court’s decision not to award attorneys’ fees to either party, the judgment is reversed. 189 Cal.App.4th 930, 945.

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The Portofino Cove case is instructive for associations, their lawyers, and community managers. It clarifies the extent and limits of the Supreme Court’s Lamden decision. It provides clear guidance for

APRIL 10-11, 2011

pleading and proving application of Lamden’s judicial deference rule as an affirmative defense. And it illustrates the judiciary’s intolerance for gross mismanagement. Throughout the Portofino Cove decision, the court’s disdain for the reckless series of Portofino Cove boards shirking their responsibilities was palpable.

Expert testimony based on investigation undertaken some three years after the Affans filed suit was treated as too little, too late (not to mention that the expert testified the association took the wrong steps in 2005 to address the situation when it finally did do so at Huntington’s urging.) The Court of Appeal did not appear to blame Huntington for the years of neglect by the association preceding its tenure. Rather, Huntington’s fate in the litigation was simply left for retrial.

Lauri Croce, Esq., is the Senior Associate with Joel M. Kriger, APC, the Community Association Division of Anderson & Kriger LLP.

CAI California Legislative Action Committee 5355 Parkford Circle, Granite Bay, CA 95746 Phone: (916) 791-4750 caiclac@aol.com www.caicalif.org COMMON ASSESSMENT MAGAZINE • SPRING 2011

37

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fax 858-569-1088

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www.goprotec.com

RAINGUTTER/DOWNSPOUT CLEANING ProTec Building Services, Inc. Julie Villeli.................................. 858-569-1080

fax 858-569-1088

jvillelli@protecbsi.com

www.goprotec.com

RESERVE STUDIES Association Reserves San Diego LLC Matthew Swain, RS................... 619-567-5239

fax 619-568-3564

mswain@reservestudy.com

www.reservestudy.com Sonnenberg & Company Leonard Sonnenberg................ 858-457-5252

fax 858-457-2211

lens@sonnenbergcpas.com

www.sonnenbergcpas.com

2011 Annual Educational Conference & Trade Show Wednesday, April 6, 2011 DoubleTree Hotel Mission Valley

COMMON ASSESSMENT MAGAZINE • SPRING 2011

39

1081 Camino del Rio South Suite 207 San Diego, CA 92108

CAI-SAN DIEGO Marketing Plan MeMbers

2011 Marketing Plan MeMbers Bronze

PLATINUM

Peters attOrneYs at LaW

&

Freedman

, L.L.P.

GOLD Anderson & Kriger Animal Pest Management Landsystems, Inc. Mutual of Omaha Bank/CondoCerts Park West Landscape Maintenance Inc. Premier Roofing CA, Inc. RSI Roofing Services, Inc. Western Towing

Anderson & Kriger Artistic MAintenAnce AssociAtion reserves sAn diego, LLc Av BuiLder Berg insurAnce Agency cLeAn eArth restorAtions BRONZE eMercon construction FeinBerg grAnt MAyFieLd KAnedA & Litt LLPControl Accurate Termite & ,Pest interiors: By design Arborwell LABAhn’s LAndscAPing Artistic Maintenance LAndsysteMs, inc. Association Reserves San Diego, LLC LAw oFFices oF richArd sALPietrA AV Builder Corp.

MAster PLuMBing & LeAK detection Bald Eagle Security Services Mt. heLix Pest And terMite controL Berg Insurance Agency new wAy LAndscAPe & tree service Clean Earth Restorations o’conneLL LAndscAPe Emercon Construction PAciFic green LAndscAPe Fenceworks, Inc. PAtio guys Fenton Grant Mayfield Kanada & Litt, LLP reconstruction exPerts First Bank Association Services rodent Pest technoLogiesFirst California Bank sBs Lien services LaBahn’s Landscaping serviceMAster By rAPid LawresPonse Offices of Richard Salpietra sKy security services Master Plumbing & Leak Detection us BAnK Mt. Helix Pest & Termite Control westturF LAndscAPe MAnAgeMent New Way Landscape & Tree Service

O’Connell Landscape Maintenance Payne Pest Management Personal Touch Cleaning & Maintenance, Inc. Popular Association Banking ProTec Building Services Pro-Tech Painting Reconstruction Experts SBS Lien Services ServPro of La Jolla Sullivan Construction Management Summit Security Union Bank US Bank