CAI-GRIE’s mission is: To make a positive contribution to the Common Interest Development Community through education and networking.
connect A PUBLICATION OF THE GREATER INLAND EMPIRE CHAPTER OF CAI
ISSUE THREE 2015
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connect Table of Contents A PUBLICATION OF THE GREATER INLAND EMPIRE CHAPTER OF CAI
www.cai-grie.org
OFFICERS Nancy I. Sidoruk, Esq................................................................. President Epsten Grinnell & Howell APC Dana Mathey, AMS, PCAM..............................................President-Elect Euclid Management Company Linda Cooley...................................................................... Vice-President Rosetta Canyon Community Association Lana Hamadej, LSM, PCAM..................................................... Secretary Avalon Management Group, AAMC Jeremy Wilson, MBA, CCAM, CMCA, AMS, PCAM ................ Treasurer Associa-PCM/Sun Lakes Country Club Kimberly Lilley, CMCA, CIRMS...........................................Past President Berg Insurance Agency, Inc. BOARD DIRECTORS Greg Borzilleri......................................... PCW Contracting Services, Inc. George Gallanes, CMCA....................................Sunnymead Ranch PCA Cyndi Koester, CMCA, AMS, PCAM................................. Sunwest Bank Cang Le, Esq..............................................................Adams Kessler, PLC Nick Mokhlessin...............................ValleyCrest Landscape Maintenance Brian D. Moreno, Esq................................................. SwedelsonGottlieb Chet Oshiro.........................................................................EmpireWorks Shelly Risbrudt............................................Pilot Painting & Construction Kristie Rose, CMCA, AMS, PCAM........................ FirstService Residential CHAPTER EXECUTIVE DIRECTOR DJ Conlon, CMCA ADMINISTRATIVE ASSISTANT Ginny Aronson-Hoke EDITOR IN CHIEF Cang Le, Esq. ............................................................Adams Kessler, PLC PUBLICATIONS COMMITTEE Linda Cooley.............................Rosetta Canyon Community Association Gary Kessler, Esq........................................................Adams Kessler, PLC Robert Riddick, CMCA.......................................Sunnymead Ranch PCA Betty Roth, CCAM, CMCA, AMS, PCAM.............. Avalon Management Group, AAMC Nancy I. Sidoruk, Esq. .............................Epsten Grinnell & Howell, APC
Features 4 Loose Lips Might Sink Ships By Jeffrey A. Beaumont, Esq.
8 Leadership as Service
By Kimberly Lilley, CIRMS
18 Elegance: The Art of Being an Association Leader By Rosy Amlani, AMS, PCAM, CCAM
19 Member Record Review Rights By Dennis Burke, Esq.
10 Information, Resources & Education for All of California – CAI Legal Forum: California Communities
22 Webinars: A Great Way to Learn! By Kevin Leonard, RS
By Robert DeNichilo. Esq.
15 CAI’s Valuable Resources for Members
Departments
By Norma Zermeno, AMS, PCAM
7 President’s Message
16 What to Do If Your Association’s Corporate Status Has Been Suspended By Denise D. Iger, Esq. & Michael Berg, CIRMS
By Nancy I. Sidoruk, Esq.
12 Monte Carlo Night Highlights 14 Editor's Link By Cang Le, Esq.
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.” Copyright © 1998–2015 CAI-Greater Inland Empire Chapter. Advertising, articles or correspondence should be sent to: CAI-GRIE Chapter
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 —
5029 La Mart, Suite A • Riverside, CA 92507-5978 (951) 784-8613 / fax (951) 848-9268 info@cai-grie.org
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 THREE 2015
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Loose
Revealing Sensiti
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BY JEFFREY A. BEAUMONT, ESQ.
Lips Might Sink Ships
ive Board Business Creates Risk to the Association uring World War II, Americans were implored to refrain from speaking about sensitive information that could be used by the enemy to sink warships belonging to the U.S. and its allies through campaigns using the phrase “loose lips sink ships.” Today, the idiom is a poignant reminder to an association’s board of directors that disclosing confidential, sensitive association business may lead to significant liability. Disclosing sensitive information by an individual director creates risk to the association, as well as the individual director. Each individual board member owes fiduciary duties to the association: the duty of reasonable care; the duty of loyalty; and the duty of confidentiality. A fiduciary obligation arises out of a relationship wherein one person (the board member) has the legal obligation to act for another’s (the association and its members) benefit, specifically to manage and protect another’s property and money. This is one of the highest levels of duty recognized by law and the implications and consequences of breaching the same can be severe. This legal obligation is governed by statute, case law, and the association’s governing documents, all of which require board members to act in good faith, in a manner the director believes to be in best interests of corporation, and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. (Corporations Code Section 7231, which is often referred to as the “Business Judgment Rule”). If this fiduciary duty is satisfied, directors will enjoy immunity from liability claims. Also, as to repair and maintenance decisions, Courts will give the board’s decision judicial deference even if a reasonable person
would have acted differently. Lamden v. La Jolla Shores Clubdominium Association (1999) 21 Cal.4th 249. Corporations Code Section 7210 requires an association’s affairs to “be exercised by or under the direction of the board.” In other words, boards have one voice and must act as a whole, not unilaterally. Civil Code Section 5800 protects board members from personal liability when its decisions are made: (1) within its scope of authority; (2) performed in good faith; (3) the act was not negligent; and (4) the association maintained the requisite liability insurance. This is akin to the protections afforded under the Business Judgment Rule. So long as directors make decisions consistent with the association’s governing documents, law and the Business Judgment Rule, the action taken will be protected as will the individual directors. When boards make decisions outside of meetings, or when board members take unilateral action, including disclosing confidential information, the association and individual board members are exposed to liability, which may result in the possibility of no insurance coverage for any claims resulting therefrom. The conduct and statements of board members always have the appearance of being “officially sanctioned by the board”. Therefore, board members must be careful when addressing association business with members, third parties, or otherwise outside of a duly noticed board meeting (or an emergency meeting pursuant to Civil Code Section 4923). Members of the board are often privy to information that, if publicized, could damage the association, and their fiduciary duty requires them to keep such information confidential. This duty of confidentiality survives directors’ terms. To satisfy these duties, directors must not disclose Continued on page 6
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Loose Lips Might Sink Ships Continued from page 5
information obtained from executive session (such as member discipline), attorney-client privileged communications (unless otherwise authorized by the board) and other sensitive information not authorized by the board. For example, while a lawsuit is pending, an individual director must not disclose the association’s litigation strategy to members or third parties; otherwise, the association’s position can be prejudiced and its attorney-client privilege can be waived. However, board members are free to discuss information that is public knowledge, information from open meetings of the board, and information authorized to be disclosed by board. Properly educating directors on their fiduciary duties may help reduce risks. Associations are also wise to establish a carefully drafted code of conduct that requires directors follow proper procedure and protocols. Additionally, setting
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forth qualifications for individuals serving on the board in the governing documents are effective tools to limit eligibility to serve on the board to only members in “good standing.” “Good standing” may be defined to include remaining current in the payment of assessments, having no outstanding fines or other enforcement penalties for violations of the governing documents, not be in litigation against the association or disqualification of directors who fail to attend a certain number of consecutive meetings. Requiring directors to remain in good standing helps the board to operate efficiently, effectively and in the best interest of the community. In the event a director discloses confidential information, the rest of the board doesn’t have to go down with the ship. Consulting legal counsel and disciplining the rogue board member are lifebuoys available to minimize exposure to liability. If necessary, problem board members may be formally censured or stripped from office. Should the foregoing
measures fail, the board member may be requested to resign, or recalled by the members. At the end of the day, the members have placed the utmost trust and confidence in the board to manage and protect property and money. The law recognizes the fiduciary obligations of managing another person’s assets as the highest level of duty. The board must satisfy its fiduciary duties and ensure association business is conducted efficiently and effectively without disruption from renegade board members. Jeffrey A. Beaumont, senior partner with Beaumont Gitlin Tashjian, has over fifteen years of experience representing common interest developments. Mr. Beaumont serves his clients from the firm’s Los Angeles and Newport Beach offices, focusing his practice on general counsel, litigation and risk management for the firm’s clients.
PRESIDENT’S MESSAGE In July, CAI-GRIE executive director DJ Conlon, presidentelect Dana Mathey and I attended the Nancy I. Sidoruk, Esq., is an attorney with Epsten Grinnell second annual & Howell, APC, and the 2015 CAI California CAI-GRIE Chapter President. leadership meeting, a gathering of California and national CAI leaders. California chapter presidents, presidents-elect, executive directors and legislative action committee representatives from Sacramento to San Diego were joined by CAI Chief Executive Officer Thomas M. Skiba, and CAI Vice President of Membership & Chapter Relations Crystal L. Wallace, to discuss all things CAI. We enjoyed Mr. Skiba’s “State of CAI” update, in which we learned our organization has achieved record high levels of membership retention and has 33,550 members worldwide. When Mr. Skiba then commented that CAI is “giving people the opportunity to connect,” I couldn’t help but smile and think fondly of this magazine. That’s not only because of our magazine title. It’s also because I knew this issue of Connect would again feature key facets of advancing the community association experience which are essential to establishing the connective bonds between us – as community and business leaders, educated and ethical professionals, active and enthusiastic volunteers, and accomplished, dedicated community members. In this issue, you’ll read about the variety of information and resources available through CAI – from national webinars and other online materials to regional in-person seminars and conferences. You’ll learn about leadership from different perspectives, and you’ll receive education on the always-pertinent issues of community association corporate status, respecting community association member rights,
and preserving confidentiality while minimizing risk. In celebrating the 25th anniversary of CAI-GRIE this year, we reflect on our chapter’s longevity and success, and look forward to ensuring that years from now, we will remain vital, important and meaningful to the communities we serve. Similarly, our national organization is exploring the evolution of community association living, governance and management. As you may have read in a recent issue of our national publication, Common Ground, CAI launched “Community Next: 2020 and Beyond,” an initiative focusing on envisioning the future of community associations and on finding answers to questions like these: • How will community associations evolve? • How will best practices in community association management and governance change? • How will decisions by legislators, regulators and the courts impact the functioning of community associations? These and other critical questions are being examined, and we look forward to learning the results of this important investigative research initiative. It is exactly this kind of information that we need to help better plan for the future of our communities, businesses, professions and personal growth through community association service. It is exactly this type of foresight and dedication geared toward increasing our relevance, building upon our strengths and continuing our pattern of successful growth that takes us, as an organization, as connected communities and as individuals, from good…to great! To obtain the free CAI publication, “From Good to Great: Principles for Community Association Success,” visit www.caionline.org or contact the chapter office.
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Leadership as Service BY KIMBERLY LILLEY, CIRMS
“Real leadership is leaders recognizing that they serve the people that they lead.” ~Pete Hoekstra
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Often people step into positions of leadership and think that they are supposed to be the “boss.” (Read: “bossy”) They think they need to tell people what to do, when to do it and how to do it, and they have to come up with all of the ideas on their own. Aside from being a rather large burden to the leader, it also leaves us with only one perspective, one set of experiences, and one set of skills to draw upon. Imagine, now, a world where being a leader doesn’t mean having to come up with all of the rules, ideas and policies on your own. Wikipedia states, “The servant-leader shares power, puts the needs of others first and helps people develop and perform as highly as possible.” What a relief! When we put others’ needs first and help those in our sphere to execute their tasks better than they ever have before, we have an entire sphere of people coming up with ideas, perspectives and inspiration, as well as many experiences to draw from concerning when and how to accomplish this vision.
What Gets in the Way of Being a Servant Leader?
First, the concept (stated above) that the leader has to do it all. A leader might tell themselves “The buck stops here,” so they feel they have the responsibility to make it all happen. Teaching and mentoring others to successfully perform tasks is a way of giving back long-term to the organization you are serving. You will not always be around to lead, and the best thing you can do is to prepare the next generation of leaders. You might start by giving them simple tasks to execute and then following up with them. You might incorporate one of their ideas and ask for input on how to execute it. You might even put them in charge of a sub- or ad hoc committee, and then mentor them on how to manage the other committee members successfully. And all of this takes much more time to do than if you just did it yourself. Which leads us to the next thing that hinders being a servant leader.
Lack of Participation. Sometimes, you feel like you have nobody to lead! You ask for input and you never get it. You suggest a sub-committee to further develop an idea, and no one will step up to chair it. You put together an entire set of policies and procedures for your organization but no one has a single comment. This often occurs in situations where things are running relatively smoothly, and people think they aren’t needed. Finding a way to communicate, either individually, or en masse, the fact that each person is important and makes a difference often helps to increase dedication and participation. Leaders, you don’t have to do it all yourselves. In fact, it’s better when you don’t. Take the time to develop participation in the organization and then truly listen and incorporate everything you can. It will only make your organization better!
Kimberly Lilley, CIRMS, CMCA is Director of Marketing for Berg Insurance Agency, Past-President of CAI-GRIE, and may be reached at kimberly@ berginsurance.com
Impatience. Mentoring others, including all viewpoints, even when they seem impossible to achieve, takes time and patience. Ultimately, we get better results by bringing in the thoughts, suggestions, and willingness of others to reach our goals. Our product is better when we take the time to really listen to and explore what the other members of the team have to contribute. But what if the other members of the team aren’t contributing? That is our next hindrance to servant leadership.
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CONNECT WITH GRIE • ISSUE THREE 2015
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17, 2014& | San Diego, CAfor All of California Information,Oct. Resources Education
CAI
Legal
Forum CALIFORNIA COMMUNITIES
A one-day event for California community managers, association board members and other homeowners from Community Associations Institute—the leader in HOA education, advocacy and professional development.
A Great Opportunity for Learning & Participation Critical updates on important legal requirements that impact how you work. Essential information on key legal developments that impact where you live.
Any member of CAI knows thatFor eventofdetails most awkward scenarios involving the programs. As a speaker at the and registration, visit www.caionline.org/events/CALaw the best benefits of membership are difficult Legal Forum you gain exposure on a (M–F, 9–6:30 or call CAI Member Services at (888) 224-4321 ET). board members. the varied and regular educational state wide level as the Legal Forum opportunities which are available. From draws attendees from across the state, • Are You Ready for the monthly educational luncheons put Arbitration Arena? – This session and you have the opportunity to on by each chapter, to the advanced went beyond the introductory level co-present with industry professionals classes for managers and community to cover comprehensive arbitration from areas you would not normally be association volunteer leaders, CAI issues related to association able to work with since many of the promotes and provides education enforcement, contractual disputes speakers are from across the state. And for all those interested in learning and CC&R provisions. as a sponsor, you can demonstrate your more about our industry. Many of support of the community association these educational programs provide • Risky Rules: The Hidden industry and provide information to credit toward professional credentials. Liability Lurking in Your Rules participants about your products and However, certain events bring together – This session helped managers services, depending upon your selected members and industry professionals and board members identify the sponsorship level. from across the state – one of these is traps and pitfalls to modern-day the annual CAI Legal Forum: California Attendee Benefits & Legal rule writing and to learn to draft Forum Program Communities being held at the Long rules that are legal, effective and Beach Hilton in Long Beach on For attendees, the Legal Forum enforceable. October 16, 2015. presents many opportunities to hear the opinions and thoughts of industry • The Four E’s: Elephants in the professionals on a wide variety of Realm of Board Meetings – Presenter & Sponsor Benefits topics. The following is just a sample Another great session that went As both a past attendee and speaker of the varied programs that have been into how board decisions should at the Legal Forum, I can share the presented over the last several years: be made, how meetings should experience of being at the event be conducted, and how the law from both perspectives. I know that • Handling Bad Boy Board applies in complicated situations. speakers work very hard to provide Members – This program The session looked at executive relevant presentations in entertaining provided advice and commentary sessions, emergencies, e-mails and and engaging formats that appeal to on how to deal with “sticky” ethical issues and provided advice varied experience levels, including disciplinary situations and how to to handling a variety of issues. advanced professionals. This comes deal effectively with some of the • Balancing the Three S’s: Safety, through in the quality and variety 10 |
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Security and Surveillance – This session addressed balancing the desire to provide safety and security against exposing boards and associations to liability. The program provided tips for dealing with threats between homeowners and against board members. Each of these programs provided attendees with valuable knowledge and advice for handling some of the variety of situations which can arise in the community association arena. This year’s Legal Forum promises to offer just as varied and valuable presentations by some of the most knowledgeable professionals in our industry. The presentations this year include several unique cutting edge topics, including the following: • Water, Water, Everywhere, Nor Any Drop to Drink – This session will address the legal and practical aspect of turning a water-consuming community into a water-conscious, droughttolerant one, using a real-life example from a community association success story. • Oh, the Horror! Scary Situations for Managers to Avoid – This session will address 13 “horror stories” that community managers can find themselves in and how to deal with those situations. Topics will include social media exposure, hostile work environments, failing to enforce governing documents, and hoarding. • What to Do When Homeowner Requests Become Abusive – This session will provide community managers with the tools to handle demands for documents and records that become burdensome and draining on an association’s resources and management’s time. Continued on page 14
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Monte Carlo Night
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EDITOR’S LINK
Information, Resources and Education... Continued from page 11
CID Law Course During the infancy of my community association legal career, I crawled around CAI events not knowing anyone and not fully grasping the full CAI world and all its offerings. Little did I know that CAI would play such a vital role in my maturation into the seasoned community association legal scholar and professional I am today. This issue will focus on some of the educational resources that CAI provides: from online materials, webinars, seminars and courses to the local luncheons. But what I believe is the most valuable learning tool that CAI provides is the people. The business partners, managers, and community volunteers I’ve met in the thousands of CAI events I’ve attended and spoken at have provided invaluable knowledge and insight. As a community association attorney, one’s world view can easily become myopic through the lens of statutes, case law, and legal analysis. Spending day-in day-out in an office reviewing legal materials and writing legal opinions and court documents (or if you’re a manager, answering homeowner complaints and questions) you could lose sight of the larger context of the community world. What CAI provides is an avenue to that world by bringing together all the people who serve community associations to share in ideas, knowledge, and experiences. Learning is best done through pooling and pulling from others. As a lawyer, I may advise on the legal requirements for running a board meeting, but it is only by meeting and talking with managers do I gain insight to the actual experiences and issues facing boards and manager. I may advise on what an association may legally do concerning pests and rodents or common area landscaping, but it is only in meeting the business partners who serve association will I understand the actual procedures and issues associations deal with when acting on my advice. It has been CAI and the people I’ve meet through CAI that I was able to learn and grow as a community association attorney. Getting out of that office and attending CAI events, engaging in discussions with other members, and learning from their experiences, is the most valuable learning tool for any person in the community association industry. So I urge you to not only make use of the tangible tools and resources that CAI provides, but take time to attend CAI events and talk with those that serve community associations.
Cang N. Le is a managing attorney for the law firm of Adams Kessler PLC. He can be reached at cle@adamskessler.com or 1-(800) 464-2817.
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Also available to those who want additional educational opportunities, the day prior to the Legal Forum, on Thursday, October 15, CAI will offer the California Common-Interest Development (CID) Law Course. This session is an in-depth legal course for community managers, board members and attorneys in California. This is the most comprehensive legal course available covering California and federal laws affecting community associations. Topics covered include: conflict of interest, governance, board members’ fiduciary duties, operations, homeowners rights and responsibilities, finances, reserves and assessment collections, meetings (notices and voting), rules enforcement and disclosure requirements and CID and board liability.
Supporting CLAC
Lastly, but not any less important, attendees will have the opportunity to network and dine with the delegates to CAI's California Legislative Action Committee (CLAC) at an exciting evening of eating, drinking and networking with peers while benefitting CLAC at the same time. The CLAC Benefit Fundraiser dinner will be held at The Federal Bar, which promises to provide a unique experience in the basement level of the 1924-built Security Pacific Bank. From networking, education, and sponsorship opportunities, the annual statewide CAI Legal Forum: California Communities provides many reasons to attend. There is something for you no matter what your level of experience, whether you are a board member, service provider or manager for a community association.
Mr. DeNichilo is partner in the law firm Nordberg|DeNichilo, LLP, specializing in representing community associations throughout Southern California, and is a frequent speaker at industry and management company educational events.
CAI’s Valuable Resources for Members
H
ave you ever sat at a program or looked at emails from CAI and said, “This is a waste of time, I’m never going to use this.” Well, never say never. Many resources are on the CAI website, www.caionline.org that may help. There are several publications, which if implemented, may assist in running successful board meetings, as well as writing specifications and contracts. By visiting the Members Only Content, you will find the “Board Member Tool Kit.” The kit provides to an association board, an overview of their duties and responsibilities, as well as information on what the role of each member is and how an association works. Next, is assuring the meeting package is organized and provided at least a week before a meeting in order for the board to be prepared to discuss and vote on matters. If you are not familiar with what to include in a meeting package, the website includes samples such as: agendas, management reports, action lists and minutes. Also on the website, there are many more resources to assist or you can sign up to receive an email containing copyright-free newsletter articles you can tailor to your community.
Norma Zermeno, AMS®, PCAM® is Senior Association Manager with Avalon Management, AAMC® and has previously chaired the CAI-GRIE Manager Committee.
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BY DENISE D. IGER, ESQ. & MICHAEL BERG, CIRMS
What to Do If Your Association’s Corporate Status Has Been Suspended
T
he suspension of an association’s corporate status can be a very serious situation with substantial consequences. In California, the Franchise Tax Board and the Secretary of State have the authority to suspend the association’s corporate status. The most common reasons for suspension are failure to file annual Statement of Information and payment of related fees, failure to pay the minimum taxes, failure to pay any other taxes owed, or failure to file a tax return even if the association is not doing business. When suspended, an association loses all rights and privileges as a corporation and cannot legally operate. Technically, the association should stop all business immediately. A suspended corporation cannot initiate legal action or defend itself in court, and is at risk of having contracts voided that were entered during the time of suspension. There is also a danger that the association’s name will be taken by another entity during the time of the suspension. Besides the legal ramifications of a suspended corporate status there are insurance issues. Although, an organization 16 |
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need not be incorporated to obtain insurance, an insurance carrier provides the coverage to an entity – the named insured – this means the community association. From an insurance perspective, without active corporate status there is no entity to insure. In a property claim, the carrier will have difficulty identifying the party entitled to receive a claim payment. As for liability insurance, the carrier technically has no entity to defend if the named insured does not exist. These matters can be cleared up, but it will cause significant and unnecessary delays in the coverage investigation and claim process if the association is suspended. Immediately upon receiving notice of its suspension, the association should start the process of having the corporate status revived or reinstated. Depending on which entity suspended the association’s status, and why, will guide the association’s next step. If the suspension was based upon the association’s failure to timely send in the annual Statement of Information, the association must provide the Secretary of State with: 1) a letter to the Secretary of State, 2)
the Statement of Information form, and 3) payment of any overdue fees and/or penalties. Once received, the Secretary of State will send the association a “Notice of Reviver” and notify the Franchise Tax Board that the association’s corporate status has been revived. This process should be done quickly to avoid another entity taking the association’s name. If the association’s name is taken, the association must amend its Articles of Incorporation and change its name before the association’s corporate status can be reinstated. Should the association’s corporate status be suspended by the Franchise Tax Board, it will be necessary for the association to pay all of its outstanding taxes, penalties, interest and fees, file all delinquent tax returns and statements and apply for a Certificate of Reviver with the Franchise Tax Board. However, before the Franchise Tax Board will
issue the Certificate of Reviver, the Secretary of State must approve the association’s name and verify it has not been taken by another entity during the time of the suspension. The consequences of a suspended corporate status, though serious, can be lessened by expeditiously sending in all the documents and paying all fees to the appropriate State agencies. More importantly, the association should address the systems in place to maintain the association’s corporate status to prevent the suspension of the association’s corporate status from recurring.
Michael Berg, CIRMS, CMCA, MBA – CEO and President – has been a licensed insurance agent and member of the Berg Insurance Agency for over ten years. He is very active in CAI and CACM, currently co-teaching the insurance section of CAI Orange County’s Community Leadership Training Program, and serving on the board as PresidentElect. Denise D. Iger, Esq. has served as general legal counsel to hundreds of homeowners associations throughout Southern California for almost twenty years. She is currently serving her sixth year as a volunteer director and fourth year as Vice President for the Community Associations Institute, Orange County Chapter. Denise has served on the Chapter’s Publication Committee for over fifteen years and formerly chaired the Committee for many years.
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THE ART OF BEING AN ASSOCIATION LEADER BY ROSY AMLANI, AMS, PCAM, CCAM
Being a leader for your association is a difficult and challenging role. Each individual leaves behind a legacy: an impression of themselves. Do you wish to be remembered with respect or will the community be grateful that you are no longer on the board? What constitutes a great leader? Would it be: • Allowing everyone who complains to have their way? • Waiving penalties and fees for your neighbors? • Wanting to be liked? • Not enforcing the rules because you may be disliked? OR
Would it be: • Advocating fairness? • Listening and actually hearing? • Effectuating decisions for the good of the entire community? • Being genuine? True friends who respect you would not place you in a compromising situation. If one does not understand your position and role, one may wish to rethink the relationship. How does one graduate from being a neighbor and friend to serving in a leadership capacity? It is all about you. You have the choice. You must chose to invest in the service of your new role, regardless of your background and prior experiences. Your investment is simple – time. No
excuses! All the necessary resources are available to you. You cannot be great at anything without learning what is expected of you and investing your time. Failing to properly learn your responsibilities and expectations is failing as a volunteer. If one simply chooses to self-serve, and make decisions purely for their own benefit, they are performing a grave injustice to themselves and their community. Volunteering is a large and sometimes difficult undertaking with serious responsibilities, which can produce significant consequences if not properly orchestrated. You will never be able to please everyone and must remember not to react to the few. A family does not always get along, and neither will a board. However, the board can consistently agree to disagree. How does one understand their obligations? • Familiarize oneself with the governing documents. • Ask your manager. • Inquire on the current and ongoing issues of the community. • Solicit advice and information from professionals. • Invest in CAI Board Essential workshops. • Work with, not against, your manager. • Remember: You are now part of a team. No one has ever looked smarter by making someone else look incompetent. These juvenile antics simply make one appear unprofessional, insecure and tyrannical. Cultivating essential knowledge and seeking information from association professionals is key to a volunteer’s success and legacy. Treating all, including the owner who tests your patience, with respect and dignity, regardless of the situation, makes one elegant. Rosy Amlani, PCAM inaugurated her career in the mortgage insurance industry in 1987. She established S & L Property Management in 1987 and subsequently S & L Association Management Inc. She loves the challenges of the CID industry.
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T
he Davis-Stirling Act contains a list of records association members may inspect or copy or have their designated representative inspect or copy. (Civil Code sections 5200(a) and (b).) The association must make available the records specified in the list (except for minutes) from the current fiscal year and two previous fiscal years. The current fiscal year and two previous fiscal year time limits do not apply to requests to inspect and copy annual meeting minutes and open session board and committee meeting minutes. The list of records is both helpful and a burden. The burden comes into play because the list is extensive and an association can incur significant expenses in assembling and preparing the documents for inspection and copy. But, the list is helpful when a member demands a document not on the list, the association can point out that the requested document is not one that members have a right to inspect or copy. Also, the list is helpful in responding to members that "demand" the association create a custom document or report, or comb through years of records looking for specific types of documents. The existence of Civil Code section 5200 gives the association the authority for denying such a request, if the association elects to do so. There are other records not included in the list that members may have a right to inspect or copy, such as ballots (if a timely request is made). So the Civil Code section 5200 list is not exhaustive or exclusive. It is the list that most members seeking records base their inspection demands upon. A brief caution about passing through costs of assembling records – such costs are an association expense, a cost of doing business. The statute limits the costs that can be passed through to the requesting member at: (1) the direct and actual costs of copying and mailing
Member Record Review Rights By Dennis Burke, Esq.
Continued on page 20
CONNECT WITH GRIE • ISSUE THREE 2015
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Meeting Record Review Rights Continued from page 19
requested documents; and (2) a charge for the time actually and reasonably spent redacting any requested Enhanced Association Records at a rate of no more than ten dollars ($10) per hour, up to a two hundred dollar ($200) cap per written request. Other costs, such as the cost for the manager's time to track down and assemble all the documents, are not recoverable from the requesting owner.
List of Records Per Civil Code Section 5200
• Annual Budget Report (and all the documents required to be included, e.g., pro forma operating budget, summary of the association's reserves, summary of the Board adopted reserve funding plan and a summary of the association's insurance policies). • Assessment and Reserve Funding Disclosure Summary form. • Financial Statement Review.
Steven G. SeGal InSurance aGency, Inc. Over 35 years of experience specializing in: Condominium Associations • Planned Unit Developments • Hard to Place Associations Earthquake Coverage • High Rise Condominiums • Workers Compensation Toll Free: 800-345-8866 • Toll Free Fax: 800-262-0973 Email: steve@segalins.com • www.farmersagent.com/ssegal License No. 0E24660
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ISSUE THREE 2015 • CONNECT WITH GRIE
• Notice of change in insurance coverage (if any). • If the association has a restriction on occupancy, residency or use of a separate interest based on age, the statement required by Civil Code section 4525(a)(2) (arguably). • Written statement from the association on the current amount of the association's regular and special assessments and fees and any approved changes in the regular or special assessments that have not yet taken effect. • If a provision in the governing documents prohibits the rental or leasing of any of the separate interests, the statement describing that prohibition required by Civil Code section 4525(a)(10) (arguably). • Interim financial statements, including balance sheet, income and expense statement, budget comparison and general ledger. • Executed contracts not otherwise privileged under law. • Written board approval of vendor or contractor proposals or invoices. • State and federal tax returns. • Reserve account balances and records of payments made from reserve accounts. • Agendas and minutes of meetings of the members, the board, and any board committees (but excluding minutes and other information from executive sessions). • Membership lists, including name, property address, and mailing address (but excluding information for members that have opted-out under Civil Code section 5220). • Check registers. • Governing documents. • If reserve funds were used for litigation, a copy of the accounting of expenses related to the litigation required by Civil Code section 5520(b). • Compensation information for employees set forth by job classification or title. • Architectural plans, excluding any interior plans or security features.
• Enhanced association records, comprising invoices, receipts and canceled checks for payments made by the association, purchase orders approved by the association, credit card statements for credit cards issued in the name of the association, statements for services rendered, and reimbursement requests submitted to the association.
Mr. Burke is a Senior Shareholder and member of the Board of Directors of Fiore, Racobs & Powers, and a senior attorney in the Firm's Inland Empire office in Riverside. Mr. Burke is a past member of the Board of Directors for the Inland Empire Chapter of the Community Associations Institute (CAI) and is the past Chair of its Legislative Action Committee and liaison to the CAI California Legislative Action Committee.
CONNECT WITH GRIE • ISSUE THREE 2015
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BY KEVIN LEONARD, RS
Webinars
A Great Way to Learn!
M
anagers and board members can gain important industry information and knowledge from the convenience of their homes, offices, or favorite coffee shops or anywhere they happen to be with their laptop, tablet or smartphone! For those who don’t know, a webinar is a web-based seminar. An attendee can watch the webinar on a screen, and listen via headphones or a device’s speakers. Webinars are often broadcast “live” and recorded for convenient playback at a later time for anyone who could not attend. Depending on the hosting organization, the webinar may be open to all by simply clicking on a link during the broadcast. Most professional webinars require advance registration and some webinars (particularly those providing continuing education credit – CEUs) may involve a registration fee. Let’s explore this interesting comparison: Each month you have an opportunity to attend a CAI luncheon hosted by your local chapter to hear an industry expert speak on a particular topic. You are required to register and pay in advance. On the morning of the luncheon, you organize your day around attending the event. You might choose an appropriate outfit, budget some time to check traffic, drive to the venue, park your car and get settled. After the speaker has completed their presentation, you might appreciate the insights gained during the Q&A session. You may even elect to go up afterwards and ask the speaker a question yourself. All in all, it’s a great experience and professionals in our industry have been participating in this type of learning opportunity for years. Now remove the dress requirements, eliminate the traffic, disappear the drive time and the hassle of finding a parking place, but keep all of the educational benefits. You can understand why webinars continue to gain popularity! Most webinars allow the attendees to submit questions to the speaker in advance or in real-time, and in some webinar formats attendees can interact with one another. The one downside of webinars is that you miss out on the catered lunch. But the best benefit of all is that a 35-minute webinar takes only 35 or 40 minutes of your time.
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ISSUE THREE 2015 • CONNECT WITH GRIE
In 2013, National hosted a webinar and presented “Saving Smart – Best Practices for Reserve Funds.” Even though the webinar was produced by CAI with an emcee based in Alexandria, VA, the presenter could stay put in his California-based office. Participation didn’t require speakers or attendees to get on a plane, rent a car, or stay at a hotel. It was a very effective and efficient way to educate a national audience. One of the many fascinating characteristics of our industry is that the multi-million dollar, not-for-profit community associations we serve are run by a revolving door of volunteer board members. It’s a role that comes with significant responsibilities and little or no prior training. We know from experience that responsible leaders will keep the financial health and future of their communities in mind when they make decisions. New board members and managers need to learn reserve funding decision points and how to avoid missteps. Most seasoned board members and managers want to stay up-to-date on the latest reserve legislation and trends, learn how to save time or get answers to pointed questions, and explore topics of special interest. Webinars offer a great, effective, efficient, inexpensive, and easily accessible resource library. With a webinar, schedule and geography are no longer a limiting factor for managers and board member education. Everyone, anywhere, has access to national-class speakers on a variety of topics. Recorded versions are available to watch “on demand” at each person’s own convenience. Webinars promote community association success, because managers and board members can learn about reserves, or any other topic, from the convenience of their home or office! Kevin Leonard, RS is a Project Manager at Association Reserves, responsible for Inland Empire and Coachella Valley clients. Kevin joined Association Reserves after graduating from California Lutheran University with a BS in Business Administration.
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