Attorney Guest Editor Fred Whitney, Esq. Whitney | Petchul
John Hansen, Esq. Baydaline & Jacobsen LLP
Fall 2024 Law Journal Committee Members
Maria Kao, Esq. Briscoe Ivester & Bazel LLP
Megan Hall, Esq. Adams | Stirling PLC
Jill Morgan, CCAM Allure Total Management
Fall 2024 Law Journal Editorial Committee Follow @CACMchat
Hamlet Vazquez, MCAM-HR Wilshire Terrace Co-op
Lorena Sterling, CAFM Community Association Financial Services
An archive of past issues can be found under Member Resources at CACM.org
The CACM Law Journal is a digital publication distributed four times per year to all members, in addition to supporters of the California Association of Community Managers.
DISCLAIMER: CACM does not assume responsibility for the accuracy of articles, events or announcements listed. Please be advised that the opinions of the authors who contribute to the Law Journal are those of the author only, and do not necessarily reflect the opinions of CACM and other industry attorneys. Please note that in a constantly evolving industry there are frequently multiple interpretations of the controlling statutes and case law. The information contained in these articles is of a general nature and not intended as legal advice. If you have any questions, please discuss them with your association’s legal counsel.
Interested in advertising in CACM’s Law Journal? Reach out to us at marketing@cacm.org
Letter from the Guest Editor
We often talk about liability, litigation, and appellate case law, but many managers have never experienced the actual litigation process, including knowing how these disputes play out in court.
Law Journal articles are centered on mastering the foundational areas of expertise applicable to community managers found in Business and Professions Code section 11502 and are the subjects that a certified common interest development manager must complete at least 30 hours of coursework in as part of the certification process.
Community managers must understand property maintenance and are often faced with questions about who should pay for damage from tree roots, what should be done about a lifted sidewalk, or how to respond to a small claims lawsuit over a water leak.
We talk about case law at seminars, but never know how a dispute got there and how that case law may apply in another dispute. This issue will cover these topics in a way that equips managers to understand how the litigation process works so that they can handle a dispute with knowledge of how it may transpire in court. There is always more to learn and ways we can sharpen one another.
John D. Hansen, Esq. is a Partner at Baydaline & Jacobsen LLP in Sacramento, which serves as general counsel to community associations. He has 15 years of experience in the industry.
The Rise of Binding Arbitration for HOA Construction Defect Claims
WHAT COMMUNITY MANAGERS SHOULD KNOW
By Aaron Ehrlich, Esq.
Over the past several years homeowners’ associations use of binding arbitration to resolve their construction defect claims has risen rapidly. There are two typical ways defect claims are resolved after completing the required SB 800 pre-litigation process: (1) a trial before a jury in the Superior Court; or (2) binding arbitration with an appointed arbitrator (either a retired judge or well-experienced attorney) through a private arbitration facilitation company (e.g., JAMS and AAA.)
It is the common opinion of HOA defect attorneys that jury trials are more favorable for associations than binding arbitration. Before the pandemic, associations could expect to wait around 1 and a half to 2 years for a jury trial after starting a civil action and around 1 year for an arbitration hearing after starting binding arbitration.
Since the pandemic, due to lingering delays and public underfunding of the judiciary, the wait time for a jury trial has increased to 2 to 3 years, whereas the wait time for an arbitration hearing has largely remained the same. Given the progressive nature of most common defects and the financial inability of associations to fund repairs, binding arbitration is now used far more frequently to resolve defect claims. Associations simply cannot wait 3 years for a decision to be made on their defect claims.
Almost all HOA defect claims settle before trial or arbitration hearing, and the trial or arbitration hearing date often influences when a settlement occurs. Builders/declarants (Builders) and their insurers do not like the unpredictability of a jury’s verdict or arbitrator’s award, so settlements routinely happen close to the start of a trial or
the arbitration hearing. Understanding that, associations are motivated to select a forum that will pressure the other side to promptly settle. That is now binding arbitration. Since arbitration hearings tend to occur sooner than jury trials, more cases will have the arbitration hearing completed versus a jury trial, though that continues to be a small, singledigit percentage of HOA defect cases.
When Can It Be Used
Binding arbitration is a private alternative dispute resolution method where the parties pay an arbitrator to resolve all disputed factual and legal issues. Binding arbitration can only be compelled when there is an agreement (usually in a written contract) between the parties to resolve their disputes through that process—there is no statutory right to binding arbitration. The modern trend is for builders to include a binding arbitration requirement in the HOA’s governing documents. That provision may be found either in the HOA’s CC&Rs or a separately recorded declaration (often called a “Title 7 Master Declaration”).
Almost all governing documents these days contain a binding arbitration requirement, though that provision is not self-executing. Rather, it is up to either the HOA or the builder to enforce the parties’ agreement to resolve their disputes by binding arbitration. Since the right to binding arbitration can be waived by inconsistent conduct, it is important that the HOA take appropriate action to timely enforce arbitration if it is desired—which is achieved through the service of a demand for arbitration on the builder and the arbitration company.
What Can Be Expected
The procedure and substance of binding arbitration is largely left to the parties’ contract so there may not be great consistency from one case to another. Associations can expect their governing documents to set forth the parameters for the binding arbitration process,
Associations should expect to wait around 2 to 3 years for a jury trial and around 1 year for an arbitration hearing.
including what arbitration company will be used, the number of arbitrators to be appointed and the selection process, the pre-arbitration hearing rights of the parties (including written discovery, depositions, witness and exhibit lists, and other information exchange), the conduct of the arbitration hearing, etc. Ordinarily, binding arbitration involves a more expedited process with fewer discovery rights than a typical civil action in Superior Court. Gaps in the contracted parameters are filled either by statute (California Code of Civil Procedure Section 1282 et seq.) or more frequently, by the rules adopted by the arbitration company (e.g., JAMS Construction Arbitration Rules and AAA Construction Industry Arbitration Rules).
If the case proceeds to an arbitration hearing, the HOA can expect a quicker (often half the time of a jury trial), less formal, and more malleable hearing process than a jury trial, though extensive oral testimony by fact witnesses (including the community manager) and experts will be needed. Since broad discretion is given to the arbitrator and there are very limited rights to challenge an arbitrator’s award, arbitrators tend to more loosely conduct the arbitration hearing in terms of evidence and formality, to facilitate remote appearances by the attorneys and witnesses and other flexibilities for everyone’s convenience, and to ask many questions of the witnesses, all of which is in stark contrast to the routine rigidity of a jury trial.
Community Manager’s Role
A community manager’s role in binding arbitration is virtually the same as a jury trial and equally important. You can
expect to assist the HOA’s attorney in gathering relevant HOA records (governing documents, board minutes, reserve studies, repair invoices, maintenance records etc.) to support the defect claim, to have your deposition taken by the builder’s defense attorney before the arbitration hearing, and then to provide fact witness testimony during the arbitration hearing (usually about the governing documents and various HOA records, the history of reported defects in the community, prior repairs completed to address the defects, maintenance of the HOA’s common area, investigative costs, and similar management and operational topics).
Looking Ahead
Binding arbitration will assuredly continue to be used more often as the funding crisis and delays in the Superior Court system persist. Associations are fortunate to have an alternative to the long wait for a jury trial, and your communities should strongly consider whether binding arbitration presents a better option for resolving their defect claims. This introduction to binding arbitration gives you a preview of the topics your communities and their defect attorney will need to discuss in evaluating and understanding the binding arbitration process.
Aaron Ehrlich, Esq. is a Partner at Hennigh Law Corporation specializing in HOA construction defect litigation with 16 years of experience in the industry.
Tree Roots! Association Liability and Maintenance Guide
Sneaky and silent they slowly grow over time. Then, without warning, they strike! A pipe bursts and causes water damage to a residence. The culprit? Tree roots. How can an association combat this secret invasion? This article will provide some case law and guidance in dealing with tree roots and resultant damage.
Strict Liability or Negligence Standard?
There are a few older cases that address tree roots and branches and owner liability. The cases Grandona v. Lovdal (1886) 78 Cal. 611, Crance v. Hems (1936) 17 Cal. App. 2d 540, and Bonde v. Bishop (1952) 112 Cal. App. 2d 1 held that encroaching tree branches or roots are considered a nuisance. These cases further reasoned that if a neighbor sustains damage as a result of the encroaching roots, the neighbor can recover damages sustained from those
By Dyanne L. Peters, Esq.
roots. Finally, the cases held that the tree owner is liable for any actual damage caused by encroaching branches or roots, regardless of knowledge of the nuisance.
However, the case Lussier v. San Lorenzo Valley Water Dist. (1988) 206 Cal. App. 3d 92 clarifies in a footnote that Grandona, Crance, and Bonde “appear to impose nuisance liability in the absence of wrongful conduct.” Under this interpretation, it could be argued that tree owners would be subject to liability based on a negligence standard. This means that an owner has the duty to maintain trees so that they do not interfere with another’s free use and enjoyment of his property.
Furthermore, in Alpert v. Villa Romano Homeowners Assn. (2000) 81 Cal. App. 4th 1320, the court held that owners have a duty to act reasonably to protect adjoining owners from dangerous conditions and from the probability of injury.
Some of the older cases above (i.e., Grandona, Crance, and Bonde) hold that the owner of the tree may be held strictly liable for any actual damages caused by the encroaching roots. This means that the owner of the tree is responsible for all damages incurred by the encroaching roots, even if the owner of the tree did not have knowledge of the encroachment and ensured proper maintenance of the trees.
Conversely, the cases Lussier and Alpert suggest that tree owners are held to a nuisance liability or negligence standard. This means that if the owner of the tree did not have prior knowledge of the encroaching roots and can demonstrate that they were properly maintaining the trees, a court may find that such a tree owner was not negligent and therefore not liable.
While it seems that the law is not entirely settled on how to determine liability for encroaching roots, based on the footnote clarification in Lussier and the modern case law, most attorneys in the industry treat liability under a negligence standard.
This means a tree owner may be liable for a nuisance caused by encroaching tree roots only if the owner knows or should know of the condition and the owner failed to take reasonable steps to properly maintain the trees.
Liability Protection
Under the negligence standard, liability can attach for failure to act. This means that an association concerned with tree root invasions from common area trees into owner property needs to take steps to ensure performance of reasonable maintenance and to address tree root issues as they arise.
When making decisions related to common area maintenance, including tree maintenance, a board of directors is offered liability protection for their decisions under the legal doctrine known as the “Rule of Judicial Deference.” Where a board made a maintenance decision in good faith, in the best interests of the association, upon a reasonable investigation, and within the scope of its authority under controlling law, a court will defer to the board and generally uphold the decision. See Lamden v. La Jolla Shores Clubdominium HOA (1999) 21 Cal. 4th 249 at 253.
However, it is important to note that the court in Affan v. Portofino Cove HOA (2010) 189 Cal. App. 4th 930, found that while broad deference is granted to boards to determine how to maintain common areas, an association may still be held liable for its failure to investigate maintenance problems and to take reasonable action. The board still has a duty to investigate and take some action in response to a maintenance issue. For example, if the association has been informed of tree roots invading pipes and causing leaks to units, in order to reduce potential liability the board should take steps to ensure the issue does not recur.
Standard of Care
The first step an association should take is to review their governing documents. The standard of maintenance may be controlled by the language within the association’s CC&Rs. For example, some CC&Rs have provisions that require pipes to be inspected and/or cleared at least once per year to help prevent root blockages. An association who fails to perform basic maintenance pursuant to the governing documents may be considered negligent or even in breach of contract.
Next, an association should develop a plan for implementing preventative maintenance measures and for immediately addressing any issues that are reported by owners or vendors. The association should perform an investigation prior to implementing these measures. Part of this investigation should include coordination with the association’s vendors, such as the landscaping and plumbing professionals. These professionals can assist the association with the development of a plan that can implement preventative maintenance and regular inspections by association vendors, for example, regular pipe inspections and tree trimming and inspection. The association should keep records of any expert reports/inspections and all the steps taken to implement reasonable care in the inspection and maintenance of tree roots and branches. An association should also document and keep records of any owner complaints related to tree encroachment issues.
Finally, an association should consider adopting policies to address these issues. For example, the association may consider adopting a tree maintenance policy or water intrusion policy. Such policies put the onus on owners to report any issues to the association immediately and may offer steps an owner can take to help mitigate damages.
If an association follows and implements these steps, it may offer a defense in the event an owner files a lawsuit against the association for damage related to tree root invasion.
The tree owner may be liable for a nuisance caused by encroaching tree roots.
Dyanne L. Peters, Esq. is an attorney at Tinnelly Law Group with 7 years of experience in the industry throughout California. Peters specializes in providing common interest developments with corporate counsel and litigation services.
A MANAGER’S GUIDE TO SMALL CLAIMS COURT
Small claims court can be simple if you are prepared. You should ask a lawyer for advice before you go to court, but you cannot have a lawyer with you in court. Owners can sue associations for claims up to $12,500 and associations are limited to $6,250. ADR is not required before a small claims case is filed.
By Stephen Levine, Esq.
TYPES OF CASES:
HOMEOWNERS AS PLAINTIFFS
Homeowners typically file cases related to elections, records, and/or property damage.
ELECTIONS
Homeowners file small claims election lawsuits (i) if the association has restricted access to association resources, (ii) regarding issues concerning receipt of ballots, (iii) concerning the counting, tabulation, reporting of, or access to ballots for inspection, (iv) concerning review of ballots after tabulation and (v) concerning alleged violations of election rules.
RECORDS INSPECTION
Homeowners file small claims lawsuits to enforce their right to inspect and copy the association’s records.
PROPERTY DAMAGE
Homeowners sue associations for damage to their property caused by association property (e.g., pipe bursting, roof leaks). Many courts attempt to “bend over backwards” to accommodate homeowners against associations even where negligence is absent. Therefore, even though the association may be legally correct and not liable, there is a possibility that the association could lose in court. PRACTICE TIP: The association may wish to reach a settlement with a release so that it does not become involved in litigation over a relatively minor matter.
ASSOCIATION AS PLAINTIFF
Associations may file a case if a homeowner fails to pay properly levied fines. Similarly, if assessment debt is less than $1,800 the association may not collect the debt through judicial or nonjudicial foreclosure but can file a small claims lawsuit to collect that debt. (Civil Code §5720(b).)
WHO MAY APPEAR
Associations may appear and participate in small claims trials through an agent, property manager, bookkeeper, officer or director. If the case is fact intensive, where a homeowner claims disparate treatment or association is acting unreasonably, board members with knowledge of such facts should attend. The board should not simply delegate the association’s defense to the manager as it is the board that makes the association’s binding decisions.
CASE PREPARATION
Consult with counsel regarding applicable laws and preparation for trial. Counsel can assist with drafting direct and cross-examination questions, a script, bullet points for arguments and preparing witnesses. Distill the essential elements of your case and how you will prove them. Then present them to the court in a clear and concise manner. Many courts require that trial evidence be submitted to the opposing side and courtroom at least 10 days before trial and indexed on a court filing (i.e., LA Superior Court Form Civ 278.) Failure to comply could result in evidence
being excluded, or a trial continuance.
PRACTICE TIP: Have counsel check the local court rules and provide advice and any required forms.
You must be prepared with all your witnesses and evidence to prove your case. If your witnesses are unwilling to come to court, you can request the court clerk issue a subpoena. If you require records or papers from a third party, you may request the court clerk issue a subpoena duces tecum, which orders the documents be brought to court for the trial. PRACTICE TIP: Counsel can assist in the preparation of these subpoenas.
POSTPONING THE TRIAL DATE
Continuances may be requested for good cause by either party. It must be requested on a court form but does not guarantee the continuance will be granted. If the judge grants the request, the clerk will send out notice of the continuance. If the judge denies the request, the parties must appear on the scheduled trial date.
PRACTICE TIP: Request a continuance at least two weeks before the trial; if the request is submitted too close to trial date, the judge will decide whether to grant the request on the day of trial. The parties should be prepared to proceed with the case if the continuance request is denied.
JUDGE PRO TEM/COMMISSIONER
Small claims courts frequently use pro tem judges, who are lawyers trained to hear and
decide small claims cases. A small claims commissioner is a step above a pro tem and a step below a judge. Commissioners are hired full-time to hear small claims cases.
The court clerk will ask you to stipulate to the judge pro tem or commissioner.
PRACTICE TIP: You do not have to stipulate to use a judge pro tem or commissioner. Many of the judge pro tems and commissioners do not understand CID law. You can request that a sitting judge hear the case. If a sitting judge is unavailable, you may have to come back another day.
ERRONEOUS RULING
Even though a losing plaintiff cannot appeal, either party can move to vacate a small claims judgment on the basis of clerical error or an incorrect or erroneous legal basis.
WHAT HAPPENS AFTER THE JUDGMENT IS ENTERED?
The defendant has 30 days to appeal a small claims decision. The plaintiff has no right to appeal. Enforcement of the judgment is stayed (postponed) until after the time for appeal ends or until after the appeal is decided.
If a small claims decision is appealed, the matter is heard in Superior Court and each side may be represented by an attorney. The case is heard de novo, i.e., brand new as if it had not been heard before. There is no right of discovery and the matter is heard without a
“ You should ask a lawyer for advice before you go to court, but you cannot have a lawyer with you in court.
jury. The decision by the Superior Court judge is final and binding with no right to appeal.
HOW CAN THE ASSOCIATION ENFORCE ITS JUDGMENT?
An abstract of judgment form is prepared and issued by the court, to be recorded in any county where the losing party owns or may own property. This creates a lien against the property. The judgment may be satisfied by levying against bank accounts, garnishing wages, selling personal property (vehicles, boats), levying any rental income, and recording a judgment lien against real property.
Stephen M. Levine, Esq., of The Judge Law Firm in Irvine has 25 years of experience in community association and real estate law.
How to Handle Personal Injury Lawsuits in Your Association
BeyondJokes
How many lawyers does it take to screw in a lightbulb? … Three: One to hold the ladder; a second to screw in the bulb; and a third to sue the ladder company when one pulls the ladder away from the second.
Better hope the association was not responsible for that light bulb! Jokes aside, no manager or board wants anyone to be injured on the association property, even if the injured person was a lawyer. An injury usually means a lawsuit and a lawsuit usually means time and money expense for the association. When there is a personal injury lawsuit, the association’s manager will have to know about insurance and litigation, preserving evidence, and reacting to and repairing the condition that led to the injury. That’s what you will learn here.
When a personal injury lawsuit gets filed and served, the manager should immediately “tender” (hand over for handling) the lawsuit to the association’s third-party liability insurer and contact your association counsel.
Just like no one likes lawyers, nobody likes to talk about insurance. When a personal injury lawsuit gets filed and served, the manager should immediately “tender” (hand over for handling) the lawsuit to the association’s third-party liability insurer and contact your association counsel. If you have concerns about the impact on insurance premiums, discuss them with your association counsel. Call your broker if you don’t know how or exactly to whom to tender. That insurer will decide if there is insurance coverage and if so, pay for attorneys to defend the association in the lawsuit. These attorneys usually are very busy in-house attorneys who report to the insurer’s “adjuster.” They work together with the association, which is the “client” and “defendant” in the lawsuit, to gather information for the defense of the case and to decide if, when and for how much to settle the case.
By Colin McCarthy, Esq.
While they do most of the lawsuit-related work and case evaluation, the manager will offer important support, providing facts, documents, and information to the assigned attorney so they can do their job.
Did you hear that my dog cannot read MRI findings? Not a problem because my cats can.
Having deposed many doctors, I learned that they had a saying about documents: if you did not write it down, it did not happen. Medical records are life and death important, so that makes sense. Documents are also important to have for the personal injury lawsuit and the manager will have to track them down for the attorney. The parties have to produce documents to each other, and the manager helps the insurance attorney do that. To facilitate production of important documents, including unfavorable documents, the parties have a duty to preserve all evidence related to the issues in the case. If they fail to preserve the records, the personal injury plaintiff may be allowed to tell the jury that the association was hiding things – “there must have been something bad in those records otherwise they would have kept them, as required.” That makes it important for the manager to make sure the right records are kept for the lawsuit.
THE ASSOCIATION GETS SERVED, OR MIGHT, NOW WHAT?
So, when the association gets served with a lawsuit, or you have notice that there might be a lawsuit, you should do two things. First, set up a separate “lawsuit folder” and put every document that is related to the issue condition/ improvement in that folder: reports, photographs, minutes, vendor contracts, historical records, correspondence and emails. These you will turn over to the lawyer for her to decide if they should be produced to the other side or protected from disclosure. Second, distribute a written communication to all persons at the association who may have documents related to the case (board members, management team members, employees) instructing them to preserve all of their records that might relate to the incident.
Consult your legal association or insurance defense counsel about which documents, the wording and to whom to direct the instruction. The case can be lost if you fail to preserve needed and known records for the case.
In theory, board members will not have many records to produce, unless they are conducting board meetings and association business by email instead of at duly noticed board meetings. When the board conducts meetings by email, every word, thought, consideration, insult, pejorative, and argument is part of the record to be kept for litigation. When the board conducts meetings at a duly noticed meeting, the minutes are the only real record of the occurrence, and the only record that would really be expected for official board action. Even thoughtful email discussions can be taken out of context and used against the association. With minutes, the board is able to still make a record but control the amount of information about a particular topic which will be in the record.
Lastly, when someone is injured as a result of a common area condition or improvement and there is a risk of further injury, you will want to make sure no one else gets hurt. Fix the problem! Do not worry about it looking bad in the lawsuit. There is an evidence rule that keeps your remediation out of evidence so it cannot be used against the association. If you cannot fix it right away, you should secure it and give notice to members about such conditions so they can take their own precautions.
What do you call 50,000 lawyers at the bottom of the sea? … A good start.
Hey! That is a bad way to end this article. Lawyers, including this author, are people too and we don’t like that joke.
Colin McCarthy, Esq., has 25 years of experience practicing law. He is a Partner with the firm Angius and Terry, LLP, with locations in Walnut Creek and San Jose.
MANAGING ENFORCEMENT DISPUTES
Balancing Reasonableness and Rules
The Davis-Stirling Common Interest Development Act (the “Act”) defines enforcement actions to include lawsuits to enforce the Act, certain provisions of the Corporations Code, and the governing documents. Examples of such disputes include architectural modification disputes, assessments disputes, election disputes, the imposition of fines, or broader claims stemming from allegations of improper association governance.
By Nicholas Rogers, Esq.
Acommon enforcement action arises from equitable servitudes memorialized in a recorded declaration (i.e., “CC&Rs”). The servitudes are enforceable if reasonable. Trial courts presume recorded servitudes are reasonable because they reflect community expectations and approval. In court, that means the party avoiding enforcement has the burden of demonstrating it is unreasonable. It sounds simple, but in practice it’s often more complicated.
For example, what if a member constructed solar panels in their backyard, but the CC&Rs also contain servitudes that require members to construct solar panels on roofs? And what if that same member can prove he or she is unable to construct rooftop solar panels due to some design or efficiency issues? This presents a real issue as California has statutes that void any servitude that unreasonably restricts or prohibits the construction of solar energy systems on real property. In that circumstance, and applied to that homeowner, a straightforward “reasonableness” analysis becomes far more complicated.
The concept of reasonableness applies differently to operating rules. Unlike CC&Rs, operating rules are typically adopted at the sole discretion of the board. As such, courts place the burden of demonstrating the rules are reasonable on the association. Ordinarily, this would not be an onerous burden, but directors and managers must ensure the rules do not inadvertently conflict with provisions of the CC&Rs or they are unenforceable. Attempting to enforce an unenforceable rule can create additional liability for the association.
Concepts sounding in reasonableness, like good faith as opposed to arbitrary, capricious, or selective enforcement are also asserted as defenses in virtually every enforcement case I have litigated. It is very difficult if
not impossible to eliminate potential defenses sounding in reasonableness as reasonable minds can most certainly reach different conclusions based on undisputed facts. For instance, I think it’s unreasonable for anyone to put ketchup on hot dogs, but alas many others conclude otherwise.
Often, the more problematic defenses arise from procedural mistakes made by the board during the administrative enforcement process. The Act and governing documents have many procedural requirements to protect members from unfair enforcement practices including deadlines to notice hearings and sanctions, demands for internal dispute resolution (IDR) and alternative dispute resolution (ADR), and requirements for proper handling of same. Suffice to say, it’s not easy to balance time consuming enforcement matters with other association business. Despite such burdens, it is critical to note that when an association enforces, it must show that it followed its own standards and procedures in reaching its decisions and that those decisions and procedures were, you guessed it, reasonable!
If a letter memorializing an enforcement decision was delinquent, or a decision that should have been made by the architectural committee was made by the board, or the board rejected a request to sit down and discuss the dispute before filing suit, you can bet the judge or jury will hear more about those errors than the improperly installed solar panels that should have been installed on the member’s roof. Keep these issues in mind and take these tips to heart when presented with an enforcement dispute:
Be Reasonable
This states the obvious, but also the not so obvious. Managers and directors should take the time to review the CC&Rs or operating rule at issue, ensure compliance with procedures, and objectively reflect on the strengths and weaknesses of the association’s position from the perspective of the membership as a whole.
Business Judgment
Exercise prudent decision making which includes consulting qualified experts including lawyers, design professionals, CPAs, or other professionals who may have specialized training, knowledge, or experience in particular subject matters implicated by enforcement efforts. Volunteer directors should not exercise discretionary decision-making in the absence of such consultations under the misplaced good faith belief that they are saving the association money.
Patience and Reconsideration
Enforcement actions are easy to file, but difficult to resolve for a host of factors including the fact that emotions run high in neighbor disputes and the losing party is exposed to paying the prevailing party’s attorney fees and costs. If a procedural mistake occurred during the administrative enforcement process, do not be afraid to take corrective action such as redoing a hearing.
Look for Off-Ramps
Courts interpreting the Act have held it reflects the Legislature’s intent to encourage parties to resolve their disputes without resorting to litigation by effectively mandating IDR and ADR of enforcement disputes. In general, associations are not designed for litigation, volunteers have limited time, they are non-profit corporations that do not reserve for costly lawsuits, and members often oppose the use of association funds on lawyers (no offense taken). Remember, associations don’t have feelings, so directors and managers should not let their emotions guide prudent decision making.
Effective enforcement requires time and commitment. Hearings, IDRs, ADRs, and executive sessions with attorneys create burdens for volunteers and managers. Often, this results in lapses that allow a violating member to focus court proceedings on procedure as opposed to substance. Slow down, take a breath, and if you think a violation could end in litigation, consult an attorney as most enforcement actions are won or lost before a lawsuit is even filed.
Nicholas A. Rogers, Esq. is an attorney specializing in HOA litigation with O’Toole Rogers, LLP. Rogers is based out of Lafayette with 13 years of experience in the industry.
NAVIGATING IMPASSES
Legal Tools for CC&R and Bylaw Amendments
California Civil Code (“CC”) §4275 provides a way for community associations with a super-majority approval requirement to amend their CC&Rs to obtain court approval for amendments when they cannot obtain sufficient member votes to pass the amendments.
An association may file a 4275 petition if it has conducted a member vote to approve the amendments that comply with California law and the governing documents, and obtained the approval of at least a majority of the members (i.e., over 50%).
To succeed in a 4275 petition, an association must demonstrate to the court that a reasonably diligent “effort” was made to obtain the required member votes. While the only legal requirement in this regard is that the member vote be conducted in accordance with California law and the governing documents, there are additional efforts that improve the likelihood of a court granting the petition. These efforts include extending the voting deadline at least twice to give members more time to vote; mailing, emailing or posting notices reminding members to vote; and calling or going door-to-door to encourage members to vote.
California Corporations Code (“Corp. Code”) §7515 provides a similar mechanism by which associations can petition the court to approve bylaws or other governing
document amendments when insufficient member votes are received regardless of the approval requirement. As with CC §4275, the association must show that it conducted the member vote in accordance with California law and the governing documents. Unlike CC §4275, however, §7515 does not require the association to obtain the approval of at least a majority of the members to file the petition. Having said this, if the approval of a super-majority of the members is required to amend the bylaws, the court could, on its own volition, impose this requirement.
WHAT YOU NEED: DOCUMENTATION TO PREPARE AND FILE THE PETITION(S)
A petition to amend the CC&Rs or bylaws requires a large amount of documentation to be submitted to the court, including copies of the association’s governing documents, the proposed amendments, an explanation of the reason(s) for the amendments, all documents sent to members regarding the amendments and/or vote, a copy of the ballot packet, any official report on the results of the vote, including the signed minutes from the meeting where the votes were tabulated and the certification of the inspector(s) of elections as to the outcome of the vote. Because it can help get the petition granted, a statement describing the actions taken to encourage members to vote should also be submitted. This statement should include
By Karyn A. Larko, Esq.
a description of the actions taken, the approximate date(s) of these actions and the person(s) involved.
Finally, if the association has a history of struggling to achieve quorum for member meetings or obtain sufficient member participation in other votes, a statement describing these difficulties should also be submitted to the court.
HOW IT WORKS: THE PETITION PROCESS
The association’s legal counsel will prepare and file the petition with the court, along with an ex parte hearing application to obtain a hearing date. The ex parte hearing (i.e., a hearing where only the association appears) is frequently held within a week or so following the filing of the application. At this hearing, the court will decide how the association must notify the membership of the hearing to consider the petition (“petition hearing”), and will generally set the hearing date.
The date for the petition hearing, which depends on the court’s availability, is usually set at least six weeks from the filing date so the association has time to prepare and send out the hearing notices. CC §4275 requires the association to give members notice of the petition hearing no less than 15 days prior to the hearing date. If any other parties are entitled to notice of the petition hearing
under the CC&Rs, such as lenders, the city or county, notice must also be provided to these parties by this same deadline.
Once the petition hearing notices are sent out, members and, if applicable, other parties with the right to approve or disapprove the amendments, may file letters or declarations of opposition to the court. It is also not uncommon for members to simply show up at the petition hearing to contest the petition. If this occurs, the court could continue the hearing to give the association an opportunity to respond to the opposition.
The court is often lenient with any members appearing in pro per at the petition hearing (i.e., without legal counsel) to oppose the amendments.
Even when there is opposition, CC §4275 and Corp. Code §7515 petitions are routinely granted, although sometimes the court will exclude any amendments it deems unreasonable.
If a CC §4275 petition is granted, the amendments must be signed by the person designated in the CC&Rs or by the association for that purpose, or if no one is designated, by the president with their signature notarized, and the signed and notarized amendments along with the court order granting the petition must be recorded in the County Recorder’s Office. Upon recordation, the amendments become effective.
Within a reasonable time after the amendments are recorded, a copy of the amendments with a statement that the amendments have been recorded must be provided to all members via individual delivery, as set forth in CC §4153.
Corp. Code §7515 is silent as to what actions must be taken once a petition is granted. In the absence of any statutorily imposed notice requirement, it is reasonable for the board secretary to promptly sign the courtapproved amendments, and for the signed amendments to be sent to all members. It is not necessary to record bylaws amendments.
PRACTICE TIPS
To maximize the likelihood that a court will grant your association’s petition(s), ensure the vote to approve the amendments strictly complies with CC §5100 et seq., extend the voting period at least twice, and take additional actions to encourage members to vote (e.g. send out reminder mailings and email blasts, post signs in the common area, mobilize volunteers to call members and/or knock on doors, offer gift card draws for members who vote by a specified date), and keep a detailed record of the efforts made to encourage members to vote to provide to the court.
Consult with the association’s legal counsel at the beginning of the amendment process to ensure the member vote is conducted in strict compliance with California law and the governing documents, as well as to ensure that no other parties, such as the developer, city, or county are required to approve the amendments.
If insufficient member votes are received to potentially approve the amendments, consult with the association’s legal counsel before conducting the meeting to open and count the ballots for guidance on how to improve the association’s ability to pursue a CC §4275 and/or Corp. Code §7515 petition.
at Epsten APC based out of San Diego, California. Larko specializes in community association counsel with 16 years of experience in the industry.
2024-2025 LEGAL DIRECTORY
ASSESSMENT COLLECTION SERVICES
ALLIED TRUSTEE SERVICES
Assessment Collections
Stefan Murphy Serving All of California 1601 Response Rd., Ste. 390 Sacramento, CA 95815 (800) 220-5454
smurphy@alliedtrustee.com www.alliedtrustee.com
ALTERRA ASSESSMENT RECOVERY
Assessment Collection Services
Steven J. Tinnelly Esq., President Advanced, Efficient, Effective HOA Assessment Recovery 27101 Puerta Real, Ste. 250 Mission Viejo, CA 92691 (888) 818-5949
ramona@tinnellylaw.com www.alterracollections.com
AXELA TECHNOLOGIES, INC.
Community Associations Collections
Welcome to the Future of Collections 7215 NE 4th Ave., Unit 101 Miami, FL 33138 (800) 875-9221
luis@axela-tech.com www.axela.com
COMMUNITY LEGAL ADVISORS, INC.
General Counsel & Assessment Collections
Mark Guithues, Esq., Laurie Masotto, Esq., Jeffrey Speights, Esq., Jay J. Brown, Esq.
Inland Empire, Orange County, San Diego County 509 N. Coast Highway Oceanside, CA 92054 (760) 529-5211 • Fax (760) 453-2194 mark@attorneyforhoa.com www.attorneyforhoa.com
FELDSOTT, LEE & NICHTER, ATTORNEYS AT LAW
General Counsel, Community Association Law
Stanley Feldsott, Martin Lee, and Austin Nichter
Laguna Hills, California 23161 Mill Creek Dr., Ste. 300 Laguna Hills, CA 92653 (949) 729-8002 • Fax (949) 729-8012 feldsott@gmail.com www.cahoalaw.com
UNITED TRUSTEE SERVICES
Trusted Partners In Assessment Collections
Lisa E. Chapman
HOA Assessment Collection Services 696 San Ramon Valley Blvd., Ste. 353 Danville, CA 94526 (925) 855-8554 • Fax (925) 855-8559 lisa@unitedtrusteeservices.com www.unitedtrusteeservices.com
ATTORNEYS
BERDING | WEIL
Construction Defect Litigation, General Counsel Services
Steven Weil, Tyler Berding, Chad Thomas, Daniel Rottinghaus, Andrew Baugh, Paul Windust
Walnut Creek, San Diego, Orange County, Sacramento 2175 North California Blvd., Ste. 500 Walnut Creek, CA 94596 (800) 838-2090 • Fax (925) 820-5592 jjackson@berdingweil.com www.berding-weil.com
CHAPMAN & INTRIERI, LLP
Construction Defect Litigation
John W. Chapman, Esq. Alameda, Roseville, San Diego, Orange County 2236 Mariner Square Dr., Ste. 300 Alameda, CA 94501 (510) 864-3600 • (510) 864-3601 spencer@cnilawfirm.com www.cnilawfirm.com
COMMUNITY LEGAL ADVISORS, INC.
General Counsel & Assessment Collections
Mark Guithues, Esq., Laurie Masotto, Esq., Jeffrey Speights, Esq., Jay J. Brown, Esq. Inland Empire, Orange County, San Diego County 509 N. Coast Highway Oceanside, CA 92054 (760) 529-5211 • Fax (760) 453-2194 mark@attorneyforhoa.com www.attorneyforhoa.com
DELPHI LAW GROUP, LLP
Community Association Law
Christina Baine DeJardin, James McCormick, Jr., Kyle Lakin, Zachary Smith Carlsbad, Indian Wells 5868 Owens Ave., Ste. 200 Carlsbad, CA 92008 (844) 433-5744 • Fax (760) 820-2696 info@delphillp.com www.delphillp.com
EPSTEN, APC
Association Counsel, Civil Litigation, Construction Defect Litigation Commercial CID Counsel, Senior Housing & Assessment Recovery
Jon Epsten, Esq. & Susan Hawks McClintic, Esq. San Diego | Coachella Valley | Inland Empire 3111 Camino del Rio North, Ste. 560 San Diego, CA 92108 (858) 527-0111 • Fax (858) 527-1531 info@epsten.com www.epsten.com
FIORE RACOBS & POWERS, A PLC
Community Association Law and Assessment Collections
Jacqueline D. Foster, Esq.
Peter E. Racobs, Esq.
John R. MacDowell, Esq. The Recognized Authority in Community Association Law
Orange County | Inland Empire | Coachella Valley l San Diego County (877) 31-FIORE • Fax (949) 727-3311 dweissberg@fiorelaw.com www.fiorelaw.com
GURALNICK & GILLILAND, LLP
Association Law, Assessment Collections, General Counsel
Wayne S. Guralnick, Robert J. Gilliland Jr. Serving Community Associations for Over 30 Years 40004 Cook St., Ste. 3 Palm Desert, CA 92211 (760) 340-1515 • Fax (760) 568-3053 wayneg@gghoalaw.com www.gghoalaw.com
HICKEY & ASSOCIATES, P.C. Community Association Law
David E. Hickey, Esq. 27261 Las Ramblas, Ste. 120 Mission Viejo, CA 92691 (949) 614-1550 • Fax (949) 748-3990 dhickey@hickeyassociates.net www.hickeyassociates.net
HUGHES GILL COCHRANE TINETTI, PC Community Association & Construction Defect Law
John P. Gill, Esq. l Amy K. Tinetti, Esq. 1350 Treat Blvd., Ste. 550 Walnut Creek, CA 94597 (925) 926-1200 • Fax (925) 926-1202 atinetti@hughes-gill.com www.hughes-gill.com
THE JUDGE LAW FIRM
HOA Law
James Judge, Esq. Providing General Counsel & Collection Services Throughout CA for Over 20 Years 300 Spectrum Center Dr., Ste. 100 Irvine, CA 92618 (949) 833-8633 • Fax (949) 833-0154 info@thejudgefirm.com www.thejudgefirm.com
Continued from page 19
LOEWENTHAL, HILLSHAFER & CARTER, LLP
Community Association Law I Construction Defect Litigation
David A. Loewenthal I Robert P. Hillshafer
Los Angeles, Ventura & Surrounding Counties 5700 Canoga Ave., Ste. 160 Woodland Hills, CA 91367 (866) 474-5529 • Fax (818) 905-6372 info@lhclawyers.net www.lhclawyers.net
THE NAUMANN LAW FIRM, PC
Attorney and Construction Defect Analysis
William H. Naumann I Elaine Gower Over 40 Years of Excellence 10890 Thornmint Rd. San Diego, CA 92127 (844) 492-7474 elaine@naumannlegal.com www.naumannlegal.com
PRATT & ASSOCIATES, APC
Community Association Law
Sharon Glenn Pratt Los Gatos, CA 634 North Santa Cruz Ave., Ste. 204 Los Gatos, CA 95030 (408) 369-0800 • Fax (408) 369-0752 spratt@prattattorneys.com www.prattattorneys.com
RAGGHIANTI FREITAS LLP
Community Association Law Construction Defects & Mediation
David F. Feingold, Esq.
Matthew A. Haulk, Esq. Serving Bay Area Communities Since 1986 1101 Fifth Ave., Ste. 100 San Rafael, CA 94901 (415) 453-9433 • Fax (415) 453-8269 dfeingold@rflawllp.com www.rflawllp.com
RICHARDSON | OBER LLP
Community Association Law, Assessment Collection
Kelly G. Richardson | Matt D. Ober Throughout California (877) 446-2529 info@roattorneys.com www.roattorneys.com
SWEDELSONGOTTLIEB
Community Association Law Construction Defect Assessment Collection
David C. Swedelson, Esq., Sandra L. Gottlieb, Esq., Cyrus Koochek, Esq.
Los Angeles | Orange County | Palm Desert | San Francisco l Ventura 11900 W. Olympic Blvd., Ste. 700 Los Angeles, CA 90064 (800) 372-2207 • Fax (310) 207-2115 slg@sghoalaw.com www.lawforhoas.com
TINNELLY LAW GROUP
Community Association Law
Steven J. Tinnelly, Managing Partner & Richard A. Tinnelly, Senior Partner Orange County | Los Angeles | San Diego | Coachella Valley | Northern CA 27101 Puerta Real, Ste. 250 Mission Viejo, CA 92691 (949) 588-0866 ramona@tinnellylaw.com www.tinnellylaw.com
WHITE LAW GROUP, INC.
Community Associations, Real Property Disputes
Steven M. White, Esq. 1530 The Alameda, Suite 215 San Jose, CA 95126 (408) 345-4000 • Fax (408) 345-4020 info@whitelginc.com whitelginc.com
WHITNEY PETCHUL APC
Community Association Attorneys
Fred T. Whitney, Esq. / Dirk E. Petchul, Esq. From Inception To Build-Out And Beyond 27 Orchard Rd. Lake Forest, CA 92630 (949) 766-4700 • Fax (949) 766-4712 dpetchul@whitneypetchul.com www.whitneypetchul.com
WOLF, RIFKIN, SHAPIRO, SCHULMAN & RABKIN, LLP
Community Association Law
Michael W. Rabkin, Esq. 11400 W. Olympic Blvd., 9th Floor Los Angeles, CA 90064 (310) 744-4100 • Fax (310) 479-1422 mrabkin@wrslawyers.com www.wrslawyers.com
CONSTRUCTION DEFECTS
BERDING | WEIL
Construction Defect Litigation, General Counsel Services
Steven Weil, Tyler Berding, Chad Thomas, Daniel Rottinghaus, Andrew Baugh, Paul Windust Walnut Creek, San Diego, Orange County, Sacramento 2175 North California Blvd., Ste. 500, Walnut Creek, CA 94596 (800) 838-2090 • Fax (925) 820-5592 jjackson@berdingweil.com www.berding-weil.com
FENTON GRANT KANEDA & LITT, LLP
Construction Defect Litigation and CID Law
Charles R. Fenton, Esq. & Joseph Kaneda, Esq.
Servicing California and Nevada Communities for Over 25 Years 2030 Main Street, Ste. 550 Irvine, CA 92614 (949) 435-3800 • Fax (949) 435-3801 cfenton@fentongrant.com www.fentongrant.com
THE MILLER LAW FIRM
Construction Defect Analysis & Litigation
Thomas E. Miller, Esq. Rachel M. Miller, Esq.
The Authority in California Construction Defect Claims for 40 Years 19 Corporate Plaza Dr. Newport Beach, CA, 92660 (800) 403-3332 • Fax (929) 442-0646 rachel@constructiondefects.com www.constructiondefects.com
ELECTION ADMINISTRATION
THE INSPECTORS OF ELECTION
Providing Superior Election Support for California HOA’s Since 2006
We Make Association Voting Management Easy 1900 Camden Ave. San Jose, CA 95124 (408) 482-9659 deanna@hoaelection.com www.hoaelection.com
RESERVE STUDY FIRMS
ASSOCIATION RESERVES
Reserve Studies
Paige Schauermann Rely on the Experts to Budget Responsibly with a Reserve Study 2945 Townsgate Rd., Ste. 200 Westlake Village, CA 91361 (800) 733-1365 pschauermann@reservestudy.com www.reservestudy.com
THE HELSING GROUP, INC.
Reserve Study Firm
Ryan Leptien Serving All of California 4000 Executive Pkwy., Ste. 100 San Ramon, CA 94583 (925) 355-2100 • Fax (925) 355-9600 reservestudies@helsing.com www.helsing.com
