Connect Magazine: Issue 1—2018

CAI-GRIE’s mission is to advance the community association industry through positive image, professionalism, advocacy, education and networking.

connect A PUBLICATION OF THE GREATER INLAND EMPIRE CHAPTER OF CAI

ISSUE ONE 2018

Disaster Preparedness

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connect A PUBLICATION OF THE GREATER INLAND EMPIRE CHAPTER OF CAI

www.cai-grie.org

OFFICERS Robert Serdoz.............................................................................. President Elite Pest Management, Inc. Adam Armit.........................................................................President-Elect Park West, Inc. George Gallanes, CMCA..................................................... Vice-President Sunnymead Ranch PCA Bob Harvey, CMCA, AMS, PCAM............................................... Secretary Associa-PCM Phil Hakopian, CIRMS..................................................................Treasurer Cornerstone Commercial & Personal Insurance Services, Inc.

BOARD DIRECTORS Tom Freeley..................................................Packard Management Group Jackie Fromdahl.....................................................Painting Unlimited, Inc.

Table of Contents Features

Departments

4 Five Things to Do Before an Earthquake Strikes

7 President’s Message

By Manon Rinsma, MSC

8 Wildfire Season is a Good Time to Make Sure Your Emergency Kit is Ready

By Brittany A. Ketchum, Esq.

Brian Henry.........................................................................Park West, Inc. Valerie Hernandez...............................................Villa Park Landscape, Inc. Pat King..............................................................Solera Oak Valley Greens Robert Riddick, CMCA......................................... Sunnymead Ranch PCA Eric Zarr, CMCA, AMS............................... FirstService Residential, AAMC

10 Fire Safety Tips

By Robert Serdoz

10 Editor’s Link

By Brittany A. Ketchum, Esq.

12 Educational EXPO Experience Photos 23 Day at the Races Photos

14 Be Prepared for Disasters

CHAPTER EXECUTIVE DIRECTOR DJ Conlon, CMCA MEMBER RELATIONS COORDINATOR Ginny Aronson-Hoke ADMINISTRATIVE ASSISTANT Elda Pfitzinger-Thomas EDITOR IN CHIEF Brittany Ketchum, Esq...................................................Beaumont Tashjian

16 A Step-by-Step Approach to Amending and Restating the Governing Documents

By Brittany A. Ketchum, Esq.

20 Foreclosure Strategies for California Community Associations

By Brian D. Moreno, Esq., CCAL

PUBLICATIONS COMMITTEE Kevin Leonard, RS...............................................Association Reserves, Inc. Gina Roldan.......................................................... ProTec Building Services DESIGN & PRODUCTION Kristine Gaitan....................Rey Advertising & Design/The Creative Dept.

All articles and paid advertising represent the opinions of authors and advertisers and not necessarily the opinion of either Connect or the Community Associations Institute – Greater Inland Empire 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.

Connect is an official quarterly publication of Greater Inland Empire Chapter of the Community Associations Institute (CAI–GRIE). The CAI–GRIE 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 the CAI–GRIE Chapter. Reproduction of articles or columns published permitted with the following acknowledgment: “Reprinted with permission from Connect Magazine, a publication of the Community Associations Institute of Greater Inland Empire Chapter.”

Advertisers AMS Paving, Inc..............Inside Front Cover Beaumont Tashjian......................................6 Berg Insurance Agency, Inc.......................21 Elias Bros. Contractors, Inc........................14 Fiore Racobs & Powers APLC...................18 FirstService Residential, AAMC.................15 Keystone Pacific Property Management, Inc......................................22

Kriger Law Firm.........................................22 Mutual of Omaha Bank............................15 NPG - Nelson Paving................................19 ProTec Building Services............................19 Steven G. Segal Insurance Agency, Inc.......7

Copyright © 1998–2018 CAI-Greater Inland Empire Chapter.

Advertising, articles or correspondence should be sent to: CAI-GRIE Chapter 5029 La Mart, Suite A • Riverside, CA 92507-5978 (951) 784-8613 / fax (951) 848-9268 info@cai-grie.org

The Greater Inland Empire Chapter of CAI hosts educational, business and social events that provide the Chapter’s Business Partners various opportunities to promote their companies’ products and services to Community Association owners and managers serving the Community Association Industry. It is expected that all participants in Chapter events — whether they be educational, business or social — will conduct themselves in a professional manner representative of their business or service organization so as not to detract from the experience of others seeking to benefit from their membership in the Chapter.

CONNECT WITH GRIE • ISSUE ONE 2018

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Five Things to Do Before an Earthquake Strikes A sharp jolt shakes up the house, a coffee mug spills on the table, while a wall mirror falls onto the ground and shatters into a million pieces.

Being in an earthquake can be frightening, especially because it is impossible to predict what will happen to us, our house and our community.

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ISSUE ONE 2018 • CONNECT WITH GRIE

BY MANON RINSMA, MSC

W

ith the different tectonic plates constantly flirting with each other and the San Andreas fault causing a continuing danger for our neighborhoods, California is a high-risk earthquake zone. With this knowledge, it is essential to be prepared for when an earthquake strikes. Here are five things to help you prepare today.

scout the house for potential hazards. Where possible, attach furniture to the walls and make sure there are no large objects that can cause injuries above a bed. It is also recommended to always have a pair of shoes nearby in every room, since broken windows and objects might be shattered all over the floor. Also, imagine what the easiest and most accessible storage place is for the emergency kit, it will be needed.

Build a Kit

Have a Plan

Start by gathering imperative supplies for an emergency kit and store it in a safe place that is easily accessible. Prepare on being self-sufficient for at least ten days. The following list contains several necessities that can help you and your loved ones survive after a natural disaster, like an earthquake, strikes.

• Family and emergency contact information • Copies of identification • Water (1 gallon a person, per day) • Non-perishable food • Manual can opener • Medication and medical equipment • First aid kit • Personal hygiene items • Toilet paper • Sturdy shoes • Work gloves • Warm and dry clothes • Blankets and towels • Battery-operated radio • Battery-operated flashlight • Extra batteries • Cell phone with charger • Fully charged portable charger • Multi-purpose tool • Fire extinguisher • Cash (small bills) • Map of the area • Extra set of car and house keys • Two-way radios • Whistle • Pet supplies • Entertainment

Prepare the House

There are many stories about people who were injured by furniture or loose objects during a powerful earthquake, which is why it is of great importance to

Once everything is set in place when it comes to earthquake preparedness, ask yourself: “Do I have a plan?” Most of us have been taught to ‘duck, cover, hold on and evacuate,’ but there are often only a few seconds to make an executive decision. Scout all rooms of the house for potentially safe cover places and discuss them with your family. If there are more people in your household, also plan when to regroup, how to communicate, and what the designated meeting area will be. Your community association might provide a designated meeting area and directions in case of an earthquake as well. Be aware of emergency plans in your neighborhood, this could possibly strengthen your family’s earthquake plan.

Enhance Your Skills

Some basic skills can be of great help or even lifesaving during an emergency situation. First, be aware of where utility controls are located in and around the house, and how to operate the controls to shut everything off. Water can be scarce for a while and gas can be extremely dangerous after an earthquake, potentially causing explosions and fires. A second skill to enhance would be fire suppression. If a small fire breaks out, know where the fire extinguisher is located and how to immediately react to put the fire out. Last, but not least, it can be crucial to gain basic knowledge about first aid. Enhancing this skill could help you, your family, and your community pull through a natural disaster.

Keep It Safe

While gearing up for a potential natural disaster in California, it is important to prepare for life after an earthquake as well. Store all important documents protected in a fireproof and water resistant safe. This will help everybody get their lives back in order much quicker.

Continued on page 6 CONNECT WITH GRIE • ISSUE ONE 2018

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Five Things to Do Before an Earthquake Strikes Continued from page 5

The following list contains examples of what to store safely protected.

Turning Common Interests Into Common Ground

General Legal Counsel Governing Document Amendments Legal Opinions Contracts Dispute Resolution

Civil Litigation Enforcement Insurance Coverage/ Bad Faith Construction

ISSUE ONE 2018 • CONNECT WITH GRIE

Hopefully, these five actions help us prepare for when an earthquake strikes. Gather supplies, eliminate potential hazards in the house, build a plan, communicate with family and community members, enhance crucial skills, and keep all your important documents safe. There is no way to predict what is coming – but we can be prepared.

By Manon Rinsma, MSc

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• Passports • Birth certificates • Medical record (allergies, medication) • Family and emergency contact information • Insurance policies • Phone numbers of all utility companies • Phone number property manager • Ownership certificates (automobile, boat) • Bank records and phone numbers • Wills • Household inventory • Photographs of high value items • External hard drive (photos, documents)

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PRESIDENT’S MESSAGE With winter winding down and the first quarter almost gone, it’s amazing how fast time flies!! The first two events we’re a huge success with the first Educational EXPO Experience on the books, I think this will be the new rage for other chapters to follow. We had a great turnout, with many new and Robert Serdoz is the returning members all excited to receive owner of Elite Pest Management, Inc. their CEUs and see the changes that will and 2018 CAI-GRIE set the pace for years to come. DJ, that President. macaroni bar was the hit of the show!!

Twice for me!! Many thanks to all those who worked so hard to make the event possible, as well as those who made the long trip down to Pechanga.

Day at the Races was an equal success with over 100 attendees. Great food, ponies running and a beautiful location all made for a great time. We had fun visiting with everyone, as well as placing a bet or two on the races. Great fun for all!!

Special thanks to our sponsors and especially the attendees who support by taking the time to come out!

By the time you read this we’ll have had our NEW Spring

Golf Tournament, and what a tournament it was!! As predicted, the much-needed rains came and greened up the hillsides making for a wonderful setting. As many already know, we had a full field of expert golfers (well, expert by my standards) who came, saw and conquered the course (stop laughing). This event has always been all about having a good time and I don’t think anyone would argue that point. I’m glad to have been part of bringing a smile to your faces as well as a little much needed time away from the office. Can’t wait till next year!!

On a serious side, Legislative Day at the Capitol just took place as well and many of you took the time and incurred some expenses to take the trip up to Sacramento. We have important issues like AB1760 (parking bill), SB1265 (elections bill), and the heated and greatly debated SB721 (balcony bill). This is a big one that if passed will greatly affect many of the communities around all of California. These important issues require all of your voices, opinions, and concerns. If I didn’t see you up there, I hope to hear your voices in the coming months.

That’s about it for now, so thank you all once again for the opportunity to lead the chapter and I look forward to seeing you all again soon.

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For more information, visit www.redcross.org/prepare/location/home-family/get-kit

Wildfire Season is a Good Time to Make Sure Your Emergency Kit is Ready

A

ccording to the American Red Cross being prepared for an emergency means having a survival kit available. Because of the drought, anyone living near open or natural spaces now has to be increasingly concerned about wildfire.

Water within your local regulations to prevent creating fuel near your home for a wildfire, and please take a look at the American Red Cross suggested list of items for a survival kit.

At a minimum, you should have the basic supplies listed below: • Water – one gallon per person, per day (3-day supply for evacuation, 2-week supply for home) • Food – non-perishable, easy-toprepare items (3-day supply for evacuation, 2-week supply for home) • Flashlight • Battery-powered or hand-crank radio (NOAA Weather Radio, if possible) 8 |

ISSUE ONE 2018 • CONNECT WITH GRIE

• Extra batteries • First aid kit – Anatomy of a First Aid Kit • Medication (7-day supply) and medical items • Multi-purpose tool • Sanitation and personal hygiene items • Copies of personal documents (medication list and pertinent medical information, proof of address, deed/lease to home, passports, birth certificates, insurance policies) • Cell phone with chargers • Family and emergency contact information • Extra cash • Emergency blanket • Map(s) of the area

Consider the needs of all family members and add supplies to your kit. Suggested items to help meet additional needs are:

• Medical supplies (hearing aids with extra batteries, glasses, contact lenses, syringes, etc.)

• Baby supplies (bottles, formula, baby food, diapers) • Games and activities for children • Pet supplies (collar, leash, ID, food, carrier, bowl) • Two-way radios • Extra set of car and house keys • Manual can opener

You are welcome to reprint this article in your association newsletter at your discretion. We do ask, however, that if you plan to make changes to it, including the title or subtitle, you contact prchair@ caiclac.com so that we may obtain approval from the author and CLAC’s PR Committee, in accordance with CLAC’s Reprint Policy.

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EDITOR’S LINK With the devastating losses caused by California wildfires, it is important for communities to consider how to prepare for fires, flooding, earthquakes and other natural disasters. While we are unable to prevent and foresee all natural disasters, a heightened awareness of these issues can help us prepare our homes and our community associations by taking precautions and planning ahead.

This issue of Connect offers considerations and suggestions to enable communities and individuals to be prepared in the face of a natural disaster. With these articles, our Brittany A. Ketchum, Esq., readers can expect to see practical tools and ideas they can utilize to prepare and create a an associate attorney with Beaumont Tashjian, has comprehensive plan to respond to an emergency. devoted her career to representing common Among other tools in this toolbox called Connect, we offer insight into new laws on interest developments.

She can be reached at the horizon and some new perspective on common association issues, like maintenance, bketchum@HOAattorneys.com. collections of assessments and amending governing documents.

As always, it my sincere pleasure to serve as Editor of Connect Magazine. With these articles, the Connect Magazine Committee hopes to assist and support associations by educating about important current issues communities may face. As always, I encourage you to share your stories and ideas. Please contact me at BKetchum@HOAattorneys.com if you are interested in contributing content.

Fire Safety Tips Unattended cooking is the leading cause of home fires in the United States, according to the National Fire Protection Association. When cooking for guests, don’t let yourself be distracted. Keep an eye on those pots.

Smoking is another leading cause of home fire deaths. If you smoke, smoke outside. Keep a small bucket of water outside and drop cigarette butts in directly. If you or your guests smoke indoors, provide plenty of large, deep, sturdy ashtrays and check them frequently. Douse cigarette butts with water before discarding them in the trash where they can smolder and cause a fire. After a party, always check on, between and under upholstery and cushions and inside trash cans for cigarette butts that may be smoldering. Keep matches and lighters up high, out of sight and reach of children (preferably in a locked cabinet). When smokers visit your home, ask them to keep their smoking materials with them so young children do not touch them.

And, don’t forget to let your guests know what your fire escape plan is. For more information on fire safety, visit www.nfpa.org 10 |

ISSUE ONE 2018 • CONNECT WITH GRIE

2018 Membership Directory Updates and Changes BANKING & FINANCIAL SERVICES First Citizens Bank Mr. David Dizon 41520 Ivy St Murrieta, CA 92562 Phone: (951) 461-6684 Email: david.dizon@firstcitizens.com Website: www.firstcitizens.com GENERAL CONTRACTORS WATERPROOFING CBCI Construction, Inc. Mr. Jonathan Reeves 10015 Muirlands Blvd Ste E Irvine, CA 92618-2528 Phone: (949) 542-7265 Fax: (949) 305-4653 Email: jreeves@cbciconstruction.com Website: www.cbciconstruction.com FOUNTAIN SERVICES California Waters Mr. Jeffrey Barman 23311 E La Palma Ave Yorba Linda, CA 92887 Phone: (949) 528-0900 Fax: (949) 528-0910 Email: rfp@californiawaters.com Website: www.californiawaters.com SIGN MANUFACTURING Give Me A Sign Mrs. Alysha Stichter 41083 Sandalwood Circle, Suite O Murrieta, CA 92562 Phone: (909) 696-0020 Email: info@givemeasign.com TOWING SERVICES Mac Towing Services, Inc. Hector Renteria 1284 E. 3rd Street Pomona, CA 91766 Phone: (909) 723-0621 Email: mactowingservicesinc@yahoo.com TREE CARE SERVICES Tree Pros, Inc. Mr. George Olekszak PO Box 1066 Chino, CA 91708-1066 Phone: (909) 763-6263 Fax: (909) 606-2107 Email: treeprosrep@treepros.com Website: www.treepros.com COMMUNITY ASSOCIATION MANAGEMENT MGR Property Management Mr. Michael Rademaker 3800 Concours St., #100 Ontario, CA 91764 Phone: (909) 581-6600 Fax: (909) 981-0881 Email: mrademaker@mgrmgmt.com Western Regional Management Co., LLC Mrs. Terry Ortiz 5405 Arrow Hwy, Suite 106 Montclair, CA 91763-1664 Phone: (909) 608-7020 Fax: (909) 608-7024 Email: westernregmgt@gmail.com

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ISSUE ONE 2018 • CONNECT WITH GRIE

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Be Prepared I for Disasters

f you think hurricanes, wildfires, tornadoes and floods won’t happen to you or that you don’t need to insure against these disasters, you’re among the nearly half of U.S. homeowners and renters who lack the insurance coverage to deal with potential losses, according to the National Association of Insurance Commissioners (NAIC).

In a recent NAIC national survey, about 48 percent of homeowners and renters said they did not have an inventory of their possessions. Of those who reported having a checklist, 32 percent had not taken any pictures and 58 percent had no receipts validating the cost of their possessions. In addition, 44 percent of respondents acknowledged that they had not stored their inventory in a separate location.

Here are some tips from the NAIC to help you prepare for disasters: Take an inventory of your valuables and belongings. This should include taking photographs or a video of each room. This documentation will provide your insurance company with proof of your belongings and help to process claims more quickly in the event of disaster.

To enable filing claims more quickly, keep sales receipts and canceled checks. Also note the model and serial numbers of the items in your home inventory.

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ISSUE ONE 2018 • CONNECT WITH GRIE

As you acquire more valuables such as jewelry or antiques, consider purchasing an additional floater or rider to your policy to cover these special items. These types of items typically are not covered by a basic homeowner’s or renter’s insurance policy.

Remember to include in your home inventory those items you rarely use such as holiday decorations, sports equipment and tools.

Store copies of all your insurance policies in a safe location away from your home that is easily accessible in case of disaster. You may want to store your policies and inventory in a waterproof, fireproof box or in a safe location such as a bank safe deposit box.

Consider leaving a copy of your inventory with relatives, friends or your insurance provider and store digital pictures in your e-mail or on a website for easy retrieval.

Know what is and is not covered by your insurance policy. You might need additional protection depending on where you live. Make sure your policies are up to date.

Contact your insurance provider annually to review and update your insurance policy.

Keep a readily available list of 24-hour contact information for each of your insurance providers.

Find out if your possessions are insured for the actual cash value or the replacement cost. Actual cash value is the amount it would take to repair or replace your home and possessions after depreciation, while replacement cost is the amount it would take to repair or replace your home or

possessions without deducting for depreciation. Speak with your insurance provider to determine whether purchasing replacement coverage is worth the cost.

Speak with your insurance provider to find out if your policy covers additional living expenses for a temporary residence if you are unable to live in your home due to damage from a disaster.

Appraise your home periodically to make sure your insurance policy reflects home improvements or renovations.

Contact your insurance provider to update your policy.

For more information, visit www.InsureUonline.org

CAI-GRIE Chapter office July 20, 2018

CONNECT WITH GRIE • ISSUE ONE 2018

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A Step-by-Step Approach to Amending and Restating Governing Documents

I

t seems as though the laws change as frequently as the tides. Some years see more legal changes than others – changes that greatly affect the way boards manage the association’s affairs.

The laws governing community associations have experienced so much change within the past three to four years alone that it may make your community’s governing documents unreliable, especially as they relate to homeowner rights and the functions of the board, officers, and management.

It only makes sense to have governing documents that are updated and reflect modern law. Moreover, relying on outdated, antiquated governing documents may expose associations, board members and even management to liability.

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Step #1: Evaluate the Existing Governing Documents The first step in amending or restating governing documents, whether the CC&Rs or Bylaws, is to review and evaluate the documents to determine whether any provisions are inconsistent with laws. To the extent there is any conflict or inconsistency between the law and the CC&Rs, the law will prevail. To the extent there is any conflict or inconsistency between the CC&Rs and Bylaws, the CC&Rs will prevail. This became California law on January 1, 2014 when Civil Code Section 4205 was adopted to establish a hierarchy amongst governing documents. Reliance on a provision of the CC&Rs or Bylaws that is inconsistent with the law exposes the association to liability.

Governing documents should also be evaluated for clarity and

to ensure same meet the needs of the community. The most effective governing documents are those written in simple English. Let’s face it, what good are the governing documents if no one can understand them? One useful tool for clarifying maintenance responsibilities, a typical source of confusion, frustration and even dispute between associations and its members, is a maintenance responsibility matrix or checklist.

The purpose of a responsibility matrix or checklist is to clearly set forth components within the community and allocate which party, the association or a homeowner, is responsible for maintaining same.

Clear governing documents may help reduce future, unbudgeted expenses (i.e., attorney’s fees for legal opinions and even lawsuits).

Effective January 1, 2017, Civil

BY BRITTANY A. KETCHUM, ESQ.

Reviewing your community’s governing documents with legal counsel is strongly recommended.

Code Section 4775 now provides that associations are responsible for maintaining, repairing, and replacing the common areas and repairing and replacing the exclusive use common areas while the owners of each unit are responsible for maintaining, repairing, and replacing their units and merely maintaining the exclusive use common areas, unless the community’s CC&Rs provide otherwise. This recent change in the law may affect your community’s obligations pertaining to exclusive use common areas.

Reviewing your community’s governing documents with legal counsel is strongly recommended to ensure that the new Civil Code language does not change how your association assigns and budgets for maintenance duties. As many community’s governing documents do

not clearly establish responsibilities for the repair and replacement of exclusive use common areas, associations may now be responsible for them, which could significantly impact your community’s budget.

Step #2: Understand Approval Requirements

In order to amend or restate CC&Rs, they must be approved by the percentage of members required by the CC&Rs and “any other person whose approval is required” by the CC&Rs. (Civil Code §4270.)

In addition to a formal vote of the owners by secret ballot, many CC&Rs may also require approval of lenders, the city or county, or some other governmental entity. Generally, the method of obtaining lender or government approval is set forth in the governing documents. Otherwise,

lender voting protocols are simpler than member voting: secret ballot procedures are typically not required, and lenders who do not respond within thirty days can typically be deemed to consent, provided the lender has been notified by certified mail (return receipt requested).

(Fourth La Costa Condominium Owners Ass’n v. Seith, 159 Cal. App. 4th 563 (2008).) Most lenders simply do not concern themselves with the content of CC&Rs, so long as the CC&Rs do not affect their lien priority (which is provided by California law anyway).

Step #3: Be Proactive: Educate Members and Combat Voter Apathy

From the first distribution of documents to the owners for their review, until the ultimate meeting Continued on page 18

CONNECT WITH GRIE • ISSUE ONE 2018

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where members have the opportunity to ask questions and voice concerns regarding the proposed amendments to the governing documents. Best practice is to schedule a town hall meeting at least thirty days after the members have been provided with the text of the amendments to ensure they have ample opportunity to review and formulate questions prior to the meeting. The board should also consider having legal counsel attend the meeting to explain the amendment process, the purpose of the amendment and to answer any questions.

Our experience has shown that the more educated members are about an amendment or restatement, and its purpose, the more likely they are to support it. The board members, as the elected representatives for the community, are in the best position to know what approach may resonate best with the membership.

Step #4: Don’t Give Up! A Step-by-Step Approach...

Continued from page 17

to tabulate the votes, the board may consider encouraging owners to vote in favor of an amendment or restatement by including reminders in newsletters, flyers, mailings or other forms of association media.

That said, be aware that the law treats amendment votes like any other election, and issues like “campaign statements,” equal access to association media for opposing positions, and similar rights apply.

(Wittenberg v. Beachwalk Homeowners Ass’n, 217 Cal.App.4th 654 (2013).)

So, if the Board encourages a “yes” vote, rather than simply submitting the documents without particular encouragement, the board must be prepared to extend owners equal access to mailings and the like, even if they decide to campaign against the proposed documents.

If the board, from past experience, anticipates that voter apathy will be a problem, some boards find it beneficial to offer incentives during 18 |

ISSUE ONE 2018 • CONNECT WITH GRIE

the voting campaign to encourage owners to submit ballots. For example, many boards have offered raffle tickets to those who return ballots, and after the meeting to tabulate the votes conduct a drawing for door prizes, such as gift cards. Tickets and prizes can be donated by local business establishments. (Of course, the raffle cannot be tied to “yes” votes – only to submitting ballots.) Another tool, if the board expects that quorum will be very hard to meet, is to include a “quorum only” option on the secret ballot, which can help obtain ballots from undecided voters. This will not help to pass the documents immediately, because it naturally dilutes the “yes” votes, but this at least allows you to count the votes to determine whether the project is generally approved by members or if additional revision or meetings are needed.

Perhaps the most useful tool is a “town hall meeting” of the members,

Recall that elections to amend governing documents must be held by secret ballot in accordance with the procedures set forth in Civil Code Sections 5100 et seq. The board may, in its discretion, extend the deadline to return secret ballots and reschedule the meeting to open secret ballots, count and tabulate the votes, provided the secret ballot reserves this right.

The secret ballot itself should include language reserving the board’s right to extend the deadline, such as: “Any secret ballot not received on or before these deadlines cannot be counted, however, the board reserves the right to extend the deadline for return of secret ballots.” If quorum is not met, and the board determines to extend the deadline, timely notice should be provided to the membership.

The board should listen to the member’s concerns and evaluate the likelihood of a successful vote if the member’s requested (feasible) changes are made. If the vote fails, the board may decide to make viable changes based on member comments or

concerns and attempt a second vote.

Should the vote(s) fail, pursuant to California Civil Code Section 4275, the Association may petition the superior court of the county in which the common interest development is located for an order reducing the percentage of the affirmative votes necessary for such an amendment, provided, among other things, more than fifty percent (50%) of the members voted in favor of the proposed amendment or restatement and the existing CC&Rs require approval by a supermajority of members. Before the Court may grant the petition, the association must also demonstrate, among other things: (1) Balloting was conducted in accordance with the governing documents and applicable law; and (2) A reasonably diligent effort was made to permit all eligible members to vote. The petition must include copies of any notice and solicitation materials utilized in the solicitation of member approvals.

At the end of the day, governing documents that clearly and effectively set forth the rights, duties and responsibilities of the association and its members, address the community’s unique and specific needs, and are consistent with the law will surely serve as a necessary vehicle to lead the association down the road to success. Comprehensive and clear governing documents are critical to the successful operation of a community association. Take the first step down the road to success today!

Brittany A. Ketchum is an associate attorney with Beaumont Tashjian, where she counsels the firm’s clients on all areas of community association law. Ms. Ketchum works closely with managers and board members to evaluate risk to the association at all steps with the objective of avoiding and reducing liability, including internal conflict and liability claims.

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Foreclosure Strategies for California Community Associations

By Brian D. Moreno, Esq., CCAL

I

n the assessment collection arena, there have been a number of pro-homeowner court decisions that affect a community association’s ability to collect unpaid HOA/ condo assessments. First, courts have held that associations must accept partial payments, which has allowed homeowners to attempt to avoid foreclosure by paying only delinquent assessments reducing the assessment balance below the $1,800 (or 12-month) threshold. Second, courts have held that an association must strictly comply with the DavisStirling Act with regard to imposing an assessment lien against a delinquent owner’s property and foreclosing that lien. These rulings create additional challenges for an association

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ISSUE ONE 2018 • CONNECT WITH GRIE

attempting to collect delinquent assessments.

Consequently, in recent years, community associations have attempted to adjust their collection policies and procedures in response to these court decisions; however, owners are continuing to take advantage of these new laws for purposes of challenging assessment liens and tendering partial payments to reduce their assessment balance, leaving attorney fees, costs, interest and trustees fees unpaid. Homeowners are becoming more savvy in challenging assessment liens and obstructing the association’s attempts to foreclose.

Given this, what are an association’s options if a seemingly defective lien has been recorded? What if an owner

pays only assessments in an attempt to avoid paying the collection fees? What are the association’s options?

One option may be “Equitable Foreclosure.” What is Equitable Foreclosure?

In general, even if an HOA assessment lien is defective, equity (i.e., fairness) will sometimes create a lien on property when necessary to accomplish substantial justice and protect creditors (i.e., a community associations). For example, a court may sometimes throw a life-line to mortgage lenders if a deed of trust is improperly recorded or recorded against the wrong property. Courts will construe the existence of equitable liens where lenders have erroneously created a defective deed of trust or

mortgage. In fact, California courts may impose an equitable lien in the following circumstances:

should consider implementing the following options if a suspected error has occurred or defect noticed:

1. The parties have clearly attempted or intended to make real property security for an obligation.

2. Despite the lack of any formal mortgage or deed of trust it is apparent that the parties intended to create a security interest in property.

3. Where the parties have otherwise clearly attempted or intended to make real property security for an obligation.

4. In the absence of any agreement, where it is necessary to prevent unjust enrichment.

California court decisions have held that the business of the courts is to administer justice as nearly as may be in accordance with fixed rules of law and procedure, aided wherever and whenever proper and necessary by established and governing principles which relate to equity jurisprudence.

(Estate of Kline (1934).) Foreclosure is an equitable action, and a trial court, sitting in equity, has broad, flexible power.

Applying these concepts to community associations, it stands to reason that if an association violates the Davis-Stirling Act or records a defective assessment lien, a court may nonetheless be able to permit an association to foreclose on the property even if a minor violation has occurred.

Likewise, the equitable foreclosure claim may also allow the Judge to permit the association to foreclose despite a last-minute partial tender of unpaid assessments.

Obviously, association boards, community managers and collection service providers should be meticulous with respect to the assessment collection process and following all of the procedural requirements. However, if an association finds itself in a difficult situation, the equitable foreclosure remedy may still be available to rescue an association. That said, associations

1. Consult with legal counsel to determine if the mistake is significant and needs to be corrected.

2. Consider re-recording the assessment lien to cure the defect.

3. Consider entering into a payment plan agreement where the owner agrees to waive defenses, agrees to the validity and enforcement of the assessment lien.

4. Consider pursuing “Equitable Foreclosure” as a cause of action in the collection lawsuit.

5. Consider restarting the collection process or a portion of the process prior to proceeding with foreclosure.

While a delinquent owner may be able to challenge an assessment lien that is procedurally defective or seek to prevent an association from

pursuing foreclosure if the assessment balance is below the $1800 (or 12 month) threshold, depending on the circumstances, a court’s equitable powers may kick-in at some point to aid the association in creating a lien against the property or allowing an association to foreclose the lien of an owner that continues to cheat the system by making repeated partial payments for assessments only. An association may be able to argue that despite the DavisStirling Act, fairness dictates that the association should be entitled to a lien and to foreclose that lien to accomplish substantial justice.

Brian D. Moreno, Esq., CCAL is a Senior Attorney at SwedelsonGottlieb, specializing in the legal representation of community. He can be contacted at bdm@sghoalaw.com.

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