Connect Magazine: Issue 4—2017

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 FOUR 2017

Legislative Update & New Case Law for 2018

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connect A PUBLICATION OF THE GREATER INLAND EMPIRE CHAPTER OF CAI

www.cai-grie.org

OFFICERS Jeremy Wilson, MBA, CCAM, CMCA, AMS, LSM, PCAM ........ President Associa-PCM Robert Serdoz......................................................................President-Elect Elite Pest Management, Inc. Linda Cooley........................................................................ Vice-President Rosetta Canyon Community Association Chet Oshiro................................................................................ Secretary EmpireWorks Phil Hakopian, CIRMS..................................................................Treasurer Cornerstone Commercial & Personal Insurance Services, Inc. Dana Mathey, CMCA, AMS, PCAM................................... Past-President FirstService Residential BOARD DIRECTORS

Table of Contents Features

Departments

4 Managing Those Millennials

7 President’s Message

By Julie Adamen

8 Dividing Up the Pie: Maintenance Responsibility and the Elusive “Matrix”

By Brittany A. Ketchum, Esq.

Adam Armit........................................................Park West Tree Care, Inc. Jackie Fromdahl.....................................................Painting Unlimited, Inc. George Gallanes, CMCA...................................... Sunnymead Ranch PCA Bob Harvey, CMCA...............................................................Associa-PCM Brian Henry.........................................................................Park West, Inc. Pat King..............................................................Solera Oak Valley Greens Valerie Reyes.......................................................Villa Park Landscape, Inc. Christy Towner-Quesada, CMCA........................... FirstService Residential CHAPTER EXECUTIVE DIRECTOR DJ Conlon, CMCA MEMBER RELATIONS COORDINATOR Ginny Aronson-Hoke ADMINISTRATIVE ASSISTANT Elda Pfitzinger-Thomas

12 Case Law Updates

By Steven Tinnelly, Esq.

By Jeremy Wilson, MBA, CCAM, CMCA, AMS, LSM, PCAM

14 TOPS Awards Winners 26 Editor’s Link

By Brittany A. Ketchum, Esq.

27 Golf Tournament Booth Contest Winner & Sponsors

18 A Busy 2017 for Sacramento

By Kelly G. Richardson, Esq., CCAL

22 Educated Business Partner Class at Legal Forum

By Gina Roldan

23 LED Lighting Has Come Home to Stay

By Kimberly Weiss

EDITOR IN CHIEF Brittany Ketchum, Esq..........................................Beaumont Gitlin Tashjian PUBLICATIONS COMMITTEE Jeff Baker, AMS.............................................Packard Management Group Chris Branuelas.........................................Rainbow Canyon Villages HOA Kevin Leonard............................................................ Association Reserves 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 All Counties Fence & Supply.......................6 Alliance Association Bank..........................26 AMS Paving, Inc..............Inside Front Cover Beaumont Gitlin Tashjian...........................20 Berg Insurance Agency, Inc.......................10 Cardinal Property Management................11 CBCI Construction....................................17 Elias Bros. Contractors, Inc........................22

Epsten Grinnell & Howell APC..................25 Fiore Racobs & Powers APLC...................10 Keystone Pacific Property Mgmt., Inc.......16 Mutual of Omaha Bank............................24 NPG - Nelson Paving.... Outside Back Cover Steven G. Segal Insurance Agency, Inc.....21 The Inspectors of Election.........................11 Union Bank HOA Services........................17

Copyright © 1998–2017 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 FOUR 2017

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BY JULIE ADAMEN

Managing Those Millennials “They have no work ethic.” “They want everything right now.” “They need a lot of hand-holding.” “They can’t write.” “They aren’t loyal.” … And these are just a few of the complaints I hear about Millennials (those born between 1980 and 2000 or so) from their Baby Boomer (born after 1943 to about 1962) and GenX bosses (early 60s to 1980). On the surface, I can’t say the observations are actually wrong, especially from the perspective of someone over 50. But from the perspective of the Millennial, or the Millennial subset of iGens (those born between 1992 and 2000), the complaints reflect the fact that Millennials simply have a different relationship to work than we of the previous generations.

That difference in relationship, or attitude, towards work between Millennials and Boomers/GenXs creates much consternation among management company executives, who fight to get those Millennials onboard with “how we do things!” Well, listen up, Sisyphus: The first thing to do is to stop pushing that rock uphill, because you will get nowhere; you must meet your Millennials where they are – not where you think they should be.

Let’s unpack our collective Boomer angst about Millennials and examine how we can better understand, and be more effective in our management and training of them; because, let’s face it, they are and will be growing members of our work force. We need them, and so do our clients.

Unpacking the Angst: Maybe the Bad is Actually for the Good

“They have no work ethic.” Actually, they just don’t have your work ethic. The Boomer mindset – born of Greatest Generation parents, is work-work-work. Do whatever it takes. Come in early. Go home late. Go

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ISSUE FOUR 2017 • CONNECT WITH GRIE

the extra mile. Achieve the American Dream (and note than many have done so in the industry). These are foreign concepts to (comparatively) prosperous Millennials, who view work as something they have to do to afford time off, precisely because they saw us work-work-work (and we already achieved the basics of the American Dream for them?).

The Millennial wants a real worklife balance; they don’t want to work the 54 hours per week that portfolio managers usually have to put in to get the job done. They’ll do 40 hours, but beyond that they feel robbed of

their time. Maybe this is a good thing: Millennials, over time, may force the industry to change in ways those of us close to retirement always wished for: Better and faster technology to create efficiencies, fewer night meetings, fewer accounts per manager, and, to support that salary – higher paying contracts.

If not, our industry will be populated mainly by those now over age 45.

“They get bored fast and they want everything right now.”

Millennials have been raised in an instant gratification and information

society, and it shouldn’t come as a shock to us that they want things to happen quickly, including feedback, recognition and promotions. We’ll talk about the feedback and recognition next, but let’s address the promotion issue. The truth is that our companies often don’t have a lot of room for promotions, but what they do have a lot of room for is opportunity for learning and development; i.e., new information and experiences.

Millennials aren’t happy on the treadmill; they crave new experiences and are the perfect candidates for company cross-training. Need

someone to learn the new software package and teach others? Your Millennial can do it. Creating a pod of managers? Your Millennials will be the first to hop on board.

“They need a lot of handholding.” Millennials were not raised with “come home when the street lights come on,” or by “look it up yourself (in a book)!” or by having to actually be the best to win a trophy.

They were raised to play on certain dates and times and with certain kids (all arranged by their parents (us)), never leave the house without Continued on page 6

CONNECT WITH GRIE • ISSUE FOUR 2017

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Managing Those Millennials Continued from page 5

sunscreen and a helmet and receive trophies for simply showing up.

Juxtapose this against the rough-andtumble, no-safe-space-anywhere world of community management. Yes, your Millennials need “hand-holding” in the sense they need direct instruction on expectations and job parameters, as well as feedback and recognition for their achievements. They’ve been micromanaged all their lives and it doesn’t end the day they walk in to your office. Feedback is how they gauge what you are thinking of them, and how they feel about themselves.

The upside is that Millennials will force executives and HR departments to be far more in touch with individual staff members. More contact means more information for executives; more information means more opportunities to be proactive, to see problems and issues coming up, not after they become crises. The end result could be better overall staff management.

“They can’t write.” This one is true, even if they have a college degree. There are many reasons, but let me state the obvious: 1) School ain’t what it used to be, and 2) They don’t read much, especially not something long (like books). They spend their time on YouTube, Twitter, Snapchat and Instagram (Facebook is for old people) where communication is passive (watching video) or short with pictures. You become a good writer by doing two things Millennials generally don’t do: Read and write. A lot.

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ISSUE FOUR 2017 • CONNECT WITH GRIE

As an industry we’ve already moved to standardized form letters for violations and others notices. What’s left isn’t chopped liver, it’s the daily emails between managers and clients or business partners, and spell-check doesn’t begin to cover an inability to write a coherent paragraph. More to the point, communications having to do with items of a sensitive nature (such as a notice to the membership of special assessment, or pertaining to complex litigation) will have to be carefully supervised by an executive to ensure the right tone (reassuring, empathetic, informational and not-toolong). Having them write first- and second-drafts of such correspondence can be useful as a training tool. The good news is – the industry will ensure your Millennials are forced to read and digest a lot more material than they are used to: governing documents, contracts, RFPs and legal opinions, to name just a few. With some time, they will get better, especially if emphasis is placed on how crucial good writing skills are to being a top-notch manager.

“They aren’t loyal.” It is true that Millennials don’t think a lot about leaving one job for another, but as I talk to them, the thoughtful ones (i.e., the ones you want to keep) leave for very specific reasons, most having to do with their view of some of the items listed above, such as a work-life balance, what they perceive as lack of ability to move up or learn new things, or a lack of feedback from supervisors leaving them feeling lost and/or unappreciated. Couple that with

the fact that most Millennials don’t yet have children or a mortgage, the result is they can leave quickly and move on to new employment. Our bad if we have not done what we can to make their professional life satisfying enough to stay.

The Flip Side: Millennials Possess Traits that Fit Right into Community Management Millennials are entrepreneurial.

A majority of Millennials say they would one day like to run their own business and this is great for our industry as managers must spend a lot of time working independently, making decisions and solving problems. That’s entrepreneurial.

Your Millennials may need a lot of ongoing input, but that entrepreneurial streak indicates that (hopefully) once they become confident in their role, they can be encouraged (cheered on?) to take on tougher problems, find creative solutions and share their successes with co-workers. From there, your Millennial can begin mentoring others. This is a natural pattern of and for professional and personal growth, learning and development, something all Millennials look for.

Millennials are tech-savvy and always connected. Is your Millennial out of the office? No big deal. They are on a walk-through, shooting out violations letters via an app while texting with a vendor about wasp nests. Your Boomer managers, on the other hand, may still be writing down (by hand) violations and transporting them back to the office for input in to the system. Both methods have value, but one is much, much faster.

And the Millennial can teach the more seasoned workforce how to use that app – achieving two goals at once for you: Getting the old folks to learn new stuff, and providing your Millennial with the new challenge she needed.

They want work to have meaning. Our work? Meaning? Really?

Just do the job! For those of us who have been around a long time, we can be somewhat… cynical… After a

PRESIDENT’S MESSAGE Colleagues – hard to believe the year has come and gone already. I would first and foremost like to thank you all for your support of the Chapter, the staff and the board this past year.

We have had a year for the books; truly legendary. Our programs, education, events and shows have been wellJeremy Wilson, attended, well-run and well-received; all MBA, CCAM, CMCA, AMS, LSM, PCAM because of your support and dedication with Associa-PCM and to our LEGENDARY mission.

2017 CAI-GRIE Please join me in welcoming the Chapter President. incoming 2018 board of directors, committees and volunteers. I am very excited to see what our 2018 Chapter President Robert Serdoz has in store for us this next year. My ask of you – please support him and the Chapter in the same manner in which you have supported me. If we can all engage and carry on with our LEGENDARY calling, 2018 will be even better than 2017 was.

while, it’s all poop, people and parking, right? Take a step back, realize and consistently convey to your Millennials this job has a lot of meaning, because what we do and how we do it can have a profound effect on not just hard assets, but individuals – actual people. Always, always stress this unabashed truth to your Millennials: Their work, their contribution has VALUE not only today, but well beyond what they can see at any one moment. It’s not a bad reminder for your more seasoned workers, as well.

Sometimes we all get lost in the weeds.

Millennials like being mentored and trained. Maybe this is the best news of all, because our industry calls for certain skill-sets that many Millennials don’t possess: The ability to communicate face-to-face, the ability to write relatively well and to have the patience and perseverance the job takes. Mentoring, training and guiding Millennials in developing these skills will make all the difference in their success and ours in the industry. What does this mean? It means we actually HAVE to develop a form of standardized on-boarding and training for everyone as it will give them confidence so eventually, they will feel the abject satisfaction that comes from being a really good community manager.

The Wrap

We helicoptered these kids into adults who, unfortunately, lack certain adult-attributes that are sorely

On a personal note: my deepest thanks to you for your support of me and my family as we have navigated the worst year of our lives. I hesitate to say it, but this year has been legendary for me… but not in a good way. When we look back in history we find legends, but not for the right reasons; this past year has been one of those for me. I am deeply moved in the manner in which you reached out and supported me. In fact, many of you carried me when I was not able to walk or even stand this past year. I will forever look back at 2017 and remember the year that everything I knew came crashing down; the year I knew what true loss and pain is. However, those bad memories are made a little better by reflecting on your generosity, kindness and caring as you reached out to me and helped in so many different ways. I am a changed and different man than who I was when I started the year.

My greatest and most profound thanks for shedding light on a dark time in my life. CAI-GRIE members, you have and will forever be held in the inner-most chambers of my heart. Thank you. Here’s to a fabulous 2018!

needed by community managers. They need and want explicit instruction, training, and a lot of feedback and recognition for achievements. We may find this ludicrous, but it’s really not. All staff members will benefit from what the Millennials are forcing us to do.

Now the question becomes, “Are Millennials pointing out our shortfalls in management?” I think, to a point, they are.

Millennials can and will become competent, independent managers who find satisfaction in an industry that can give them just about everything they want. After all, we did. The funny thing is that by changing our ways to meet those Millennials, we will be changing our companies for the better. Maybe we should thank them. And that, my friends, is the upside you can’t deny.

Julie Adamen in the principal of Adamen Inc., a consulting and employment firm specializing in the community management industry. Julie Adamen is a nationally recognized expert in community management, community management compensation and association and management company operations. She is a prolific author, educator, motivational speaker and trainer for community managers and Boards of Directors. Julie has been speaking to and training community managers and Boards of Directors for 25 years. In the past three years alone she has spoken to hundreds of attendees on over 35 separate occasions, from Hawaii to Miami.

CONNECT WITH GRIE • ISSUE FOUR 2017

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Dividing Up the Pie: Maintenance Responsibility and the Elusive “Matrix”

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ISSUE FOUR 2017 • CONNECT WITH GRIE

BY BRITTANY A. KETCHUM, ESQ.

W

e’ve all experienced it: coming home from a long day’s work to see a sink full of dirty dishes and a roommate and/or loved one who you think should have handled it by now. Of course, your counterpart feels the same way, and this diffusion of responsibility goes on and on, aimlessly. In a community association, diffusing responsibility of substantial maintenance obligations can pose far more damaging risks than our unwashed dishes and the eager flies hoping to come buzzing in for some scraps of food.

A maintenance responsibility matrix or checklist allows homeowners, board members and management to view, at-a-glance, in great detail, and componentby-component, the respective duties of the association and homeowners to maintain, repair and replace components within the community, whether common area, exclusive use common area or the separate interest (i.e., unit or lot). Matrices, which should be drafted in accordance with the community’s declaration of covenants, conditions and restrictions (CC&Rs), are a surefire way to avoid confusion, limit future disputes as to the party responsible for repair, (i.e., the association or the owner) and eliminate the need to seek a legal opinion for interpretation of vague maintenance provisions, thereby reducing future legal fees.

A craftily-drafted matrix will set forth the applicable components for the community, especially with respect to components that are commonly the source of repair disputes. A good matrix will list, in detail, building components (e.g., balconies and railings, air conditioning and heating systems, plumbing fixtures, water and drain lines, exterior doors and related hardware, window frames, as well as screens and glass, etc.), landscaping (e.g., trees and other plantings, as well as hardscapes and monuments, etc.) and other features of the community (e.g., porches, patios, walkways, driveways, etc.). Naturally, the matrix will also identify the owners’ or associations’ respective duty to maintain, repair and replace the component in a “checklist” fashion.

Does Your Community Need a Maintenance Responsibility Matrix?

The first step is to evaluate the existing governing documents and ensure they meet the needs of the

community. Given that the CC&Rs typically consist of paragraphs of text in which information can be lost or glossed over, a simple matrix or checklist, written in plain English, is the best way to ensure that maintenance responsibilities are understood by all owners and the association alike. A well-drafted matrix can also assist the board and management in efficiently and effectively preparing the budget.

Furthermore, the matrix should be drafted to meet the community’s specific goals and requirements.

If the governing documents already set forth the allocation of maintenance responsibilities, the matrix must be consistent with same. It is essential that the matrix/checklist is custom-tailored so that it will assist in achieving success for the community.

Adopting the Matrix: Understanding Approval Requirements

A matrix can be adopted either by: (1) An amendment to the existing CC&Rs, which requires a vote of the membership by secret ballot pursuant to Civil Code Section 5100; or (2) Via rule change, subject to Civil Code Section 4340 et seq.

In order to amend or restate the CC&Rs to include a maintenance responsibility matrix, it 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 Section 4270.) In addition to a formal vote of the owners by secret ballot, the 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 are 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).)

Adopting the matrix via amendment to the CC&Rs reduces the risk of challenge by members, since the amendment requires approval by secret ballot vote.

Moreover, a matrix by amendment would allow for allocation of responsibility based on the community’s needs and practices. Alternatively, a matrix adopted as a rule or policy would, in essence, be a legal opinion CONNECT WITH GRIE • ISSUE FOUR 2017

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Dividing Up the Pie Continued from page 9

based on the provisions of the governing documents and applicable law.

Civil Code Section 4340 et seq. provide, in pertinent part, that a “rule change” is valid and enforceable as long as: • The rule is in writing.

• The rule is within the authority of the board conferred by law, CC&Rs, bylaws or articles of incorporation.

• The rule is not in conflict with governing law, CC&Rs, bylaws or articles of incorporation.

• The rule is adopted in good faith and in substantial compliance with the requirements of the law.

• The rule is reasonable.

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Accordingly, a matrix adopted as a rule or policy cannot conflict with the allocation of responsibility set forth in the CC&Rs. Any inconsistent provision in the matrix would be unenforceable to the extent it is determined to be in conflict with the governing documents.

Where the CC&Rs are vague or silent on maintenance, repair and replacement responsibilities, statutory defaults will control. (See Civil Code § 4775.)

At the end of the day, the purpose of a maintenance responsibility matrix or checklist is to effectively clarify maintenance responsibilities, which are a typical source of confusion, frustration and even dispute between associations and its members. A successful community tackles this confusion, headon and as soon as possible, so as to avoid future disputes.

Brittany A. Ketchum is an associate attorney with Beaumont Gitlin 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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CONNECT WITH GRIE • ISSUE FOUR 2017

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Case Law Updates Pre-Lien Demands and FDCPA Concerns

Recovering assessment debt is one of the more complicated issues that associations face. Fortunately, the Civil Code grants associations with powerful remedies to recover assessment debt, including the ability to record assessment liens and to enforce those liens through foreclosure. However, the legal requirements governing these remedies are complex, and a string of court decisions in recent years have illustrated the necessity for associations to strictly comply with these legal requirements. The holding in Mashiri v. Epsten Grinnell & Howell (2017) 845 F.3d 984 (“Mashiri”) is another example.

Civil Code § 5660 requires associations to provide delinquent 12 |

ISSUE FOUR 2017 • CONNECT WITH GRIE

owners with notice of the association’s intent to record an assessment lien (i.e., to send a “pre-lien letter”) at least thirty (30) days prior to recording the assessment lien. Therefore, most pre-lien letters demand that payment be made within this thirty (30) day period. However, according to the holding in Mashiri, which was a case of first impression for the court on this issue, such a demand for payment within this timeframe may violate the Fair Debt Collection Practices Act (“FDCPA”).

In Mashiri, an owner became delinquent in the payment of assessments to the association. As a result, the association, through its legal counsel, sent the homeowner a pre-lien letter. The pre-lien letter stated in part: “Failure to pay your assessment account in full within

thirty-five (35) days from the date of this letter will result in a lien being recorded against your property…

Unless you notify this office within 30 days of receiving this notice that you dispute the validity of the debt or any portion thereof, this office will assume the debt is valid. If you notify this office in writing within thirty (30) days of receiving this notice that the debt, or any portion thereof, is disputed, we will obtain verification of the debt….”

The Court in Mashiri concluded that this language violated the FDCPA in two (2) respects. First, the FDCPA requires the written notice (here, the pre-lien letter) to provide the debtor with thirty (30) days to dispute the debt. While the pre-lien letter demanded payment within thirty-five days of the date of the

BY STEVEN TINNELLY, ESQ

letter, such language is inconsistent with the FDCPA requirement that it be upon receipt of the letter. The Court pointed out that, “[b]y the time a debtor receives such a letter, there may be fewer than thirty days before payment is due.” Therefore, the “least sophisticated debtor, when confronted with such a notice, would reasonably forego her right to thirty days in which to dispute the debt and seek verification.”

Second, the FDCPA requires a debt collector to cease all collection efforts “until the debt collector obtains verification of the debt … and a copy of such verification … is mailed to the consumer by the debt collector.” (Mashiri at p. 992; quoting 15 U.S.C. § 1692g(b).) The prelien letter in Mashiri simply stated that a lien would be recorded if the debtor failed to pay. Thus, the “least sophisticated debtor would likely (and incorrectly) believe that even if she disputed the debt,” and the debt collector had not mailed the verification of debt to the debtor, the debt collector would nevertheless record a lien against the property.

This was a violation of the FDCPA because it communicated a confusing message as to the effect of disputing the debt.

In the wake of Mashiri, associations should consult with their managing agents and collection firms to ensure that all necessary revisions are made to their pre-lien letters to comply with FDCPA requirements.

Access to a Membership List Must be for a “Proper Purpose”

Every association must prepare and maintain certain “association records.” Most of these records must be made available for inspection by the association’s members.

However, a member’s right to inspect association records is not absolute, as some records may be withheld from the member for confidentiality concerns, as well as in situations where the request for inspection is for an improper purpose. (Civ. Code § 5230; Corp. Code §§ 8330, 8333.)

Requesting records for an improper purpose was the focus of a challenge brought by an association member who was denied inspection of the association’s membership list.

In Tract No. 7260 Association, Inc. v.

Parker (2017) 10 Cal. App. 5th 24 (“Parker”), the Court of Appeal held that the association was justified in withholding the membership list despite the member’s offering of a facially valid reason for his request. The member was involved in a corporation that the association was suing, called “Fix the City.”

The member claimed that he sought the membership list “for possible communication with the [association’s] members to ascertain whether there had been corporate misdeeds.”

The association denied the request, arguing that the member was seeking the membership list to give Fix the City an unfair advantage in the association’s lawsuit. The trial court agreed, stating that “a reasonable conclusion is that [the member] is using his membership status to aid Fix the City in [the] lawsuit.”

This aspect of the trial court’s ruling was affirmed on appeal. The Court in Parker noted that, while the association has the burden of demonstrating that the member will use the record for an improper purpose, and that mere speculation of an improper purpose is insufficient to justify withholding records, the association provided sufficient

evidence that the member did indeed seek the information for an improper purpose: to aid Fix the City’s defense in the lawsuit.

Parker highlights the importance of evaluating the purpose for a member’s request for records, especially when that member may be involved in adverse proceedings against the association. If the purpose is improper, and that conclusion is supported by more than simple conjecture, the association may (and in some instances should) lawfully deny the request.

No Attorney’s Fees Recovery when an Association Prevails in a Record Inspection Challenge

The holding in Retzloff v. Moulton Parkway Residents’ Association No. One (2017) (“Retzloff”) provides an interesting segue from Parker, as it highlights another important issue associated with record inspection rights. While an association may lawfully deny a member’s request for records under certain circumstances, a legal challenge to that decision will result in financial consequences for the association even if the association prevails. Civil Code § 5235 grants a member the ability to file a lawsuit against her association to enforce the member’s record inspection rights. If the court “finds that the association unreasonably withheld access to association records, the court [must] award the member reasonable costs and expenses, including reasonable attorney’s fees...” (Civ. Code § 5325(a).) However, what about if the association acted reasonably in withholding the records and thus prevails against the member? One would expect the association to be able to recover its costs and attorney’s Continued on page 16

CONNECT WITH GRIE • ISSUE FOUR 2017

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2017 Association of the Year XL Category Wolf Creek Maintenance Corporation

2017 Association Volunteer of the Year Bill Cooper

2017 Business Partner of the Year Epsten Grinnell & Howell APC

Portfolio Manager of the Year Rosy Amlani AMS, PCAM

S&L Association Management

2017 Industry Innovation of the Year Management Company Avalon Management Group, AAMC

2017 Portfolio Manager of the Year Rosy Amlani, AMS, PCAM

2017 Community Outreach Volunteers of the Year Suzanne Bolton, CMCA, Kelly Hurtado, CMCA

2017 Up & Comer Cherri Hairston, CMCA

2017 On-Site Manager of the Year Bob Harvey, CMCA, AMS

2017 Committee Chair of the Year Brittany A. Ketchum, Esq. (Pictured Jeff Beaumont accepting on her behalf)

Article of the Year

Hall of Fame

Kevin Leonard, RS

Timothy Cline

Association Reserves, Inc.

CIRMS

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2017 Hall of Fame Timothy Cline, CIRMS Cline Agency Insurance Brokers

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ISSUE FOUR 2017 • CONNECT WITH GRIE

“Six Ways to Minimize Your Reserve Contributions”

2017 Committee of the Year Billiards Committee

2017 Article of the Year Six Ways to Minimize Your Reserve Contributions

By Kevin Leonard, RS

2017 Outgoing President Jeremy Wilson, MBA, CMCA, AMS, LSM, PCAM

2018 Board Members in Attendance

2017 Board Appreciation

2017 President’s Award Robert Serdoz

2017 Rising Star Jason Ewals, CMCA, AMS

Staff Appreciation

2017 TOP Recruiter Jeremy Wilson, MBA, CMCA, AMS, LSM, PCAM 2017 Board Essentials Graduates CONNECT WITH GRIE • ISSUE FOUR 2017

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Case Law Updates Continued from page 13

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fees, just as is typically the case when an association prevails in an action to enforce its governing documents. However, with regard to record inspection challenges, Civil Code § 5325(c) states that a “prevailing association may recover any costs if the court finds the action to be frivolous, unreasonable, or without foundation.” (Italics added.) Absent from this language is any reference to a prevailing association’s ability to also recover its “attorney’s fees” from the member.

The Plaintiffs in Retzloff filed a lawsuit against their association to enforce their record inspection rights. The trial court found the Plaintiffs’ lawsuit to be frivolous, and pursuant to Section 5235(c), awarded the association $13,750 in attorney’s fees and $1,688.60 in costs. The Plaintiffs appealed, arguing that Section 5235(c) does not entitle an association to recover attorney’s fees even when it prevails. The Court of Appeal agreed with the Plaintiffs. The Court noted that, under relevant California law, a prevailing party’s right to recover attorney’s fees must be specifically provided for by statute. (CCP § 1021.) Section 5235(c) does not specifically provide for a prevailing association’s recovery of attorney’s fees, and its use of the words “any costs” does not support the inclusion of attorney’s fees as “costs.” In other words, even when an association prevails in a challenge brought by a member to enforce her record inspection rights, the association will nevertheless have to “eat” its attorney’s fees. Notably, this is not the only circumstance where an association faces this inequity; the same result is possible when an association prevails in an election challenge (Civ. Code § 5145(b); That v. Alders Maintenance Corporation (2012) 2016 Cal. App.

4th 1419), as well as when it prevails in a challenge to a grant of exclusive use common area (Civ. Code § 4605). Some may argue that Retzloff highlights the need for legislative changes; that an association’s membership should not have to subsidize their association’s legal defense to frivolous record inspection challenges. Others may argue the merit of the current state of the law; that it requires an association to be especially vigilant in responding to record requests for fear of defending a costly lawsuit. You decide which argument should “prevail.”

Steven Tinnelly, Esq. is managing partner of Tinnelly Law Group, is president of Alterra Assessment Recovery, and is a member of the Greater Inland Empire Chapter.

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CONNECT WITH GRIE • ISSUE FOUR 2017

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A Busy 2017 for Sacramento Six Major New Laws Taking Effect in 2018

he California Legislature was quite active this year in creating laws affecting common interest developments, with at least six bills becoming law. CAI CLAC had its hands full, to say the least.

SB2 – A New Tax on Real Estate

Senate Bill (SB) is known as the Building Homes and Jobs Act. It was signed by the Governor on September 29, 2017 as an urgency statute, which means it took effect on the day it was signed. The stated goal of the Act is to increase housing supply in the state, and it creates a fund, called the “Building Homes and Jobs Trust Fund” (“Fund”). The purpose of the Fund is to award money to local governments to promote affordable housing and to reduce homelessness. The new laws are Government Code Section 27388.1 and Health and Safety Code Sections 50470 and 50470.5. The Fund will receive the proceeds from a new tax of $75 per document on documents recorded with the County Recorder, except for documents recorded as part of a transfer of ownership.

Despite being called an urgency statute, it really does not begin until January 1, 2018, when the new fee begins.

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ISSUE FOUR 2017 • CONNECT WITH GRIE

This means that various documents commonly recorded by HOAs will be subject to the $75 fee, such as amendments to CC&Rs, common area alteration agreements, and liens and releases of liens. Associations will need to plan on including in their fees to members, the cost of the new recording fee, if they require members to sign an agreement regarding alterations of common area, for example. Delinquent members will now face an addition $150 cost, as the cost of recording an assessment lien and then removing the lien will cost the HOA $150 which will be passed along to the member as part of the delinquency. Associations which use common area alteration agreements as part of their architectural approval process will need to amend their application fees to make sure the new recording fee is covered.

Sorry Contractor, You Can’t Lien the Whole Project – AB 534

A bill which brings some help to HOAs is Assembly Bill (“AB”) 534. The main part of the bill appears to be in response to recommendations from the California Law Revision Commission in 2016. Civil Code 4615 previously barred contractors from recording a mechanics lien (yes,

BY KELLY G. RICHARDSON, ESQ., CCAL

To read legislation or laws online, visit the official California Legislature site, www.leginfo.legislature.ca.gov.

CAI Members: Support CAI’s California Legislative Action Committee, visit www.caiclac.com.

these in the future will also be subject to SB2’s $75 fee) against an entire condominium project unless the contractor was hired by the HOA to work on common area. Contractors working on a condominium unit could only lien the unit if they were unpaid.

AB 534 now will broaden Civil Code 4615 to cover not only condominiums, but all four varieties of common interest developments (condominiums, planned developments, stock cooperatives and community apartments). A new statute, Civil 4620, will require HOAs to notify all owners in writing if a mechanics lien is filed on common area. Also, Civil Code 6658 adds the same limitations on mechanics liens to the Commercial and Industrial Common Interest Developments Act (Civil Code 6500-6876, applying to purely non-residential associations).

Broadening the scope of Civil Code 4615 probably will not make a huge difference to HOAs other than condominiums.

It may help stock cooperatives, since the owner does not own any part of the property. It is unclear how the statute would apply to community apartments, since each owner owns an undivided share of the property, and the concept of “common area” may be differently applied. Planned developments typically have common area, but it is not normally connected

to residences. While the change in the law is well intended, it probably will not make a significant change for those other three types of common interest developments.

Hey, They Listened! AB 1412 Corrects Two Problems.

AB 1412 makes some helpful technical changes to the Davis-Stirling Act. Civil Code Section 4041, which was created by last year’s SB918, is improved by allowing associations in 2018 to use the last mailing address indicated by an owner, if the owner does not respond to the annual solicitation for mailing address updates required by the statute.

The bill also corrects a gap in fairness previously in immunities granted by the law to volunteers. Civil Code Section 5800, which provides immunity for volunteer directors in HOAs with the prescribed minimum directors and officers insurance limits, previously only applied to exclusively residential associations. With the growing establishment of “mixed use” associations, this left the volunteer directors in those associations unprotected. Starting in 2018, the immunity is expanded to also protect volunteer Continued on page 20 CONNECT WITH GRIE • ISSUE FOUR 2017

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A Busy 2017 for Sacramento Continued from page 19

directors in mixed use associations.

However, the immunity is expressly limited to residential owners and tenants. A commercial owner serving as a director will not be protected by Civil Code Section 5800.

It is important to remind homeowners that this immunity can be lost if the director is not a volunteer - meaning they receive any stipend or compensation or assessment discount for their service, and that owners of more than two residences in an association are also ineligible for immunity.

I and My Tenants Will Invite Speakers, We Will Use the Community Room, We Will Canvass and Hand Out Fliers and You Can’t Stop US! SB407

Los AngeLes orAnge County InLAnd empIre Kern County CentrAL CoAst

Senate Bill (“SB) 407 adds a new Civil Code Section 4515, which has the expressed intent of protecting the

right of HOA members and residents to “peacefully assemble and freely communicate” regarding HOA living or “for social, political or educational purposes.” The statute protects the right of members or residents to hold meetings regarding HOA issues, legislation, or public elections, and to invite public officials or candidates or homeowner organization representatives to speak in the association common area if the area is available. The statute also protects the right of members and residents to reasonably canvass or petition other members or residents and to distribute information regarding public or HOA legal or political concerns. A member or resident using the common area for this purpose is not to be charged a fee or deposit for use of the common area.

There are many questions about this new law which will bedevil association managers and attorneys for some time. For example, what if a tenant wants to hold a meeting in favor of a political issue, and the landlord

Here Comes the Sun (Power) – AB 634

Assembly Bill (“AB”) 634 spotlights a policy preference for solar energy by expanding Civil Code Section 714.1 and creating a new Section 4746. The changes make it clear that homeowners may, with reasonable limitations by the HOA, install solar systems on common area roofs over their residence or garage. Associations may require the homeowner keep the system insured, and that the owner and subsequent owners take responsibility for any damage, repair, or maintenance costs caused by the system. The most novel part of the new law is that it opens the door to solar systems on apartmentstyle HOA building roofs, in which condominium units are stacked so that multiple units “share” the same roof.

The HOA may require the homeowner

A FuLL ServiCe Community ASSoCiAtion LAw Firm General Legal Counsel Governing Document Amendments Enforcement Legal Opinions Contracts Dispute Resolution

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opposes that meeting? Do both get to hold separate meetings in the community room, or does the manager listen to the owner over the tenant?

ISSUE FOUR 2017 • CONNECT WITH GRIE

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The Community Association Lawyers 866.788.9998 www.bgtlawyers.com

to create a “solar site survey” to show they are not taking more than their fair share of the roof.

Ultimately, this new law probably will not change much, as most multistory HOA building roofs do not have sufficient usable area to allow a meaningful amount of solar installation per unit. The law reinforces the importance to associations of reasonable solar installation policies in architectural rules as well as the importance of common area alteration agreements before installations.

the association any businesses which give the management a referral fee or other financial benefit or which are partly owned by the management.

When presenting any bid or proposal for services from a vendor to the association, managers or management companies must in writing disclose any conflict of interest, whether by result of a referral fee to the management from the prospective vendor or because the manager or company owns or shares profits with the prospective vendor.

Managers Disclosing Conflicts – AB690

More Coming?

AB 690 primarily increases required disclosures by HOA managers, by adding a new subpart “f” to Business and Professions Code 11504, expanding Civil Code 5375, and adding new Civil Code Sections 5375.5 and 5376. Per Civil Code 5375 new subparts “d” and “e,” a manager or company must, no later than 90 days after being hired, disclose in writing to

A handful of significant common interest development bills are still pending before the Legislature as “2-year bills” and may be considered in 2018 along with any new bills that may be authored. Also, in the coming months the state Fair Employment and Housing Council is expected to issue regulations about sexual harassment and assistive animals in housing.

The Bottom Line

The idea of the state staying out of micro-managing California common interest developments has gone the way of the woolly mastodon and dodo bird. CAI members can expect continued state tinkering with HOAs. Grow CAI, support CLAC and help increase CAI’s contribution to educate the Legislature about what associations truly need in California.

Kelly G. Richardson, Esq. is a former President of CAI, former Chair of CLAC, a Fellow of the College of Community Association Lawyers, and Senior Partner of Richardson Ober PC. All rights reserved®.

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Educated Business Partner Class

By Gina Roldan

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ISSUE FOUR 2017 • CONNECT WITH GRIE

The CAI Legal Forum, that was held at the end of October, was such a great event. The weather was a little overcast but the hotel was beautiful.

Even though the Universal Sheraton was under-going some construction areas we hardly noticed. We gathered together like one big family and accomplished a lot.

One of the classes offered was becoming an Educated Business Partner. As I entered the room to catch some candid shots, I immediately felt the excitement and eagerness to

learn. The class was taught by Cyndi Koester, and Cat Carmichael. There were about 30 business partners in attendance, which was great to see. It makes me see that we as a community are seeing the value in what CAI offers.

Big shout out to all the Executive Directors, DJ Conlon, Leah Ross, Joan Urbaniak, Cal Lockett, Richard Ybarra and Kelvin Nanney who put together such an incredible event. I am proud to say I am a part of such an awesome group.

LED Lighting Has Come Home to Stay

By Kimberly Weiss

ED lighting has made metric tons of CO2 emissions and Local Jurisdictions with a home for itself in saved $1.4 billion in energy costs.

Lighting Ordinances California, and is here Soon the California Title 24 light to stay. Supporting bulb efficiency requirements will San Diego County Imperial Beach California’s reputation be the law of the land, since the City of San Diego La Mesa for leading the country and the EPA passed a rule in January of this Carlsbad Lemon Grove world in environmental progresses, year that will go into effect in 2020, Oceanside National City the new 2016 California Title 24 creating minimum efficiency levels Chula Vista Poway updates create lighting efficiency for general purpose lamps that are Coronado San Marcos requirements that can currently currently only attainable by LED. Del Mar Santee only be met by LED technology.

It is clearly inevitable that El Cajon Solana Beach Manufacturers have also played virtually all HOA lighting will be Encinitas Vista a role in the faster-than-expected converted to LED before long. It Escondido adoption of LED lighting in has been an enormous effort for California, with companies like lighting designers to determine new GE ceasing shipments of spiral fluorescents to California best practices customized for LED sources, but the endeavor due to the exceptional performance and falling cost of LED has been worthy as the lessons of yesterday can maximize equivalents, and Ruud Lighting no longer shipping metal the benefits that communities can realize today. To take halide fixtures or components to California due to stringent advantage of the lessons learned, it is highly recommended metal halide requirements and superior LED equivalents. that communities use the services of an experienced and Indeed, LED lighting will be historically documented as responsible lighting consultant since there are many factors one of the top advancements of the 2000’s as evidenced by and considerations that are unique to each situation, which the award of the 2014 Nobel Prize in physics going to three can make or break an installation. To get started, take a peek scientists for the invention of LED lighting. The EPA reports at the current hot topics in LED conversions. that in 2014 alone, LED installations prevented 7.1 million Continued on page 24

CONNECT WITH GRIE • ISSUE FOUR 2017

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LED Lighting Has Come Home to Stays Continued from page 23

Local Outdoor Lighting Ordinances are a tool used by local governments to promote responsible lighting practices. They can be used to control light pollution such as glare, light trespass and skyglow. Most lighting ordinances require things like fully shielded fixtures, no light above the horizontal plane, maximum lumen levels, and more. Before undertaking any lighting improvement project, check to see if your area has an ordinance and be sure to verify that the proposed project meets the requirements.

Light Poles/Street Lights. Replacing HID street lights with LED lamps can be done but isn’t the best solution, unless your pole uses a vertical lamp with no fixture distribution, such as a standard acorn fixture. Otherwise, you may be undermining the optics, light spread and overall engineering of the original fixture. There are engineered retrofit modules that are designed for specific fixtures, which are often a good compromise. Better yet, complete fixture replacement will provide the best light distribution and output with little glare or pollution, a whole new updated look, and about twice the life expectancy at only slightly higher pricing than a retrofit.

Engineering. Remember that when your community was built, the lighting was designed by a licensed engineer, according to accepted principles. Considerations such as transitional light, ingress/egress, lumen levels, traffic patterns and placement were likely all considered. Changing your lighting to LED will change the lumen levels and light

spread, even if you use the existing fixtures. Depending on the age and demographic shift of your community, needs may or may not be different now from when it was originally designed, but acknowledgment needs to be given to the original engineering with the decision to either re-design the lighting to conform to modern light sources and types or to accommodate the light levels provided in the original engineering.

Return on Investment: A good LED conversion project will allow you to recover the investment with ample time to accumulate the funds to replace it again at the end of the useful life.

LED Lights LED Fixtures

Investment Recovery

Replacement Interval

2 Years 4 to 4.5 Years

4 Years 10 Years

Palomar and Mount Laguna Observatories. Orange colored low-pressure sodium light is still the observatory favorite, but it is admissible to replace the low pressure sodium lamps with white LED, as long as the lumen levels are low enough and the fixture is fully shielded (depending on fixture type, use, and proximity). The good news is that LED is the best option to meet the requirements because the excellent color rendering of white light and the design advantages of LED means that fewer lumens are required to do the same job. However, see your lighting consultant for advice because switching from low-pressure sodium to a lowlumen LED may mean that you need to add fixtures due to light spread considerations.

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ISSUE FOUR 2017 • CONNECT WITH GRIE

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LED Light Bulbs have become very popular and are a great, low-cost solution for many applications, such as the wallmounted fixtures at front doors. If you do convert your front door fixtures to LED, it is recommended to upgrade all the fixtures in the community at once, rather than one at a time when the existing lamps burn out. This is because the end-of-life for LED lighting is indicated in part by color shift. The lamp doesn’t burn out, it just develops a pink or green cast (depending on manufacturing) and becomes dim. If LED light bulbs are installed at varying times, they will begin to shift colors in a few years and the community will be rainbow colored! In addition, there are minor variations in LED lamp colors of the same specification, made by different manufacturers or made in different batches. These variances can be subtle or blatant but any variation in light color – down a row of lights – is noticeable.

Therefore, the best practice is to convert the entire community at once, using products from one manufacturer, and plan to do a complete replacement at 80% of the rated life.

Utility Rebates. There are currently SDG&E rebates available for many LED lamp replacements but they are productspecific and can often be surpassed, using a higher quality product, by the competitive bidding process. There are also utility rebates available for smart lighting controls.

Pool Lights. If you haven’t upgraded these to LED yet, what are you waiting for? The rate of return is less than two years, and the light quality is superior.

Lamp Ratings. Make sure you are working with a contractor that will purchase the right product for the job.

An improperly installed lamp not rated for installation in an enclosed fixture could potentially catch on fire.

Controls. These days, any lighting renovation project that doesn’t consider controls is remiss. Electricity consumption can be reduced by as much as 25% or more with advanced lighting controls. There are rebates available for smart lighting controls, and the new

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CONNECT WITH GRIE • ISSUE FOUR 2017

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EDITOR’S LINK On behalf of the Magazine Committee, we hope that you enjoy this issue of Connect, that you learn something new and that you are able to implement the tools and strategies suggested by our authors in your own communities.

With the new year comes new laws. This Brittany A. Ketchum, Esq., issue seeks to provide your associations with an associate attorney with Beaumont Gitlin Tashjian, an update on changes in the laws impacting has devoted her career to representing common community associations. Through the enclosed interest developments.

She can be reached at articles, we hope to bring you guidance and bketchum@bgtlawyers.com. a glimpse of what is on the horizon for your communities in the new year.

Thank you for allowing me to serve as your 2017 Editor of Connect. As always, it is a pleasure working together with board members, managers and business partners alike to educate and support associations by confronting the important issues facing our communities.

I wish you all health, happiness and prosperity in the New Year.

Happy holidays!

AAB_Innov_CAI-GRIE_HalfPg_Cardoza_with Bleed_031417.pdf 1 3/14/2017 10:08:51 PM

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LED Lighting Has Come Home to Stays Continued from page 25

Title 24 regulations have specific requirements for outdoor lighting, depending on the type and area.

The bottom line is that it’s an exciting time for energy efficiency.

The technological advancements made in the prior decade are now helping our economy, environmental footprint, local security, energy independence, and quality of life. How lucky are we all to have the opportunity to make such a difference?

Kimberly Weiss is President/CEO of Three Phase Electric, Inc.

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