ECHO Journal - May 2016

Why Good Governance Requires Legal Protection p.8

Overcoming Resistance to Funding Reserves p.14

Speed Bumps

Major Reconstruction Projects

p.24

p.28

Pros & Cons to Maintaining Defibrillators in Homeowners Associations p.34

Serving Community Associations

ECHO Santa Clara 44th Annual Seminar & Trade Show

May/June 2016

echo-ca.org

2016 Davis Stirling Update Enclosed

p. 6

ECHO 1960 The Alameda STE 195 San Jose, CA 95126 Change Service Requested

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2016 ECHO educational calendar

2016 ECHO Educational Seminars If you’ve ever wished that ECHO would hold a seminar closer to your association, chances are that we’ll be nearby during 2016. Don’t miss an opportunity to get the education you need with guidance from some of California’s top HOA attorneys and professionals. Take a look and mark your calendar. We can’t wait to see you there!

May 14

June 4

Santa Cruz Educational Seminar (see page 19)

ECHO Annual Seminar (see pages 6 and 7)

Paradox Hotel, Santa Cruz

Santa Clara Convention Center

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San Rafael

San Francisco

news from ECHO

News From ECHO May 2016 It’s that time of the year again. On June 4, ECHO brings you our 44th Annual Seminar at the Santa Clara Convention Center. We will have a dozen educational sessions in three concurrent tracks offering experts across the spectrum of association living providing information and advice you need to know.

We will offer our HOA University track, with focused instruction on your legal obligations as a board member, your maintenance responsibilities, insurance requirements and financial duties. As a volunteer, you are responsible for governing a multi-million dollar corporation.

Our experts will help you know how to do that job. We’ll provide a Certificate of Completion to those board members who attend all four sessions, so you can demonstrate your commitment to independent board education.

We’ll offer a Legal track, featuring lawyers from up and down the State speaking on: CC&R Inspection Requirements; Get Out the Vote; XXX; and our Ask the Attorneys, where you get your specific questions addressed by one of three attorneys. You’ll never get a better legal v alue for your investment!

Finally, the Hot Topics track will address: After El Nino; Board Culture; Reserves and Assessments; and a Legislative Update. You’re sure to find the answers to your questions on this diverse array of topics from our industry experts.

Come for the educational sessions. Come to talk with over 100 exhibitors.

Come for continental breakfast and buffet lunch. Come share your experiences with fellow board members. Just come. Registration is open now, see pages 6 and 7 for details.

I look forward to seeing June 4!

Best,

Brian Kidney Executive Director

May/June 2016 | ECHO Journal

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CONTENTS

14 8

34 24

28 4 echo-ca.org

8

Why Good Governance Requires Legal Protection for Directors and How is it Provided?

The cases, laws and evolution of modern governing documents all reflect a tension between protection of individual rights and encouraging volunteerism by protecting directors and officers who act in good faith in carrying out their official association duties.

14

Overcoming Resistance to Funding Reserves When your property gets into an underfunded position, you’re on a slippery slope. Not only will a loan or a special assessment loom in the not-so-distant future, but the fundamental underfunding problem will not have gone away. A need to pay the loan, plus the need to raise fees at the same time, is the fate that awaits.

24

Speed Bumps Speed bumps are a necessary evil in many complexes because of the presence of inconsiderate divers. Once a board reaches the decision to place speed bumps in a complex, various difficulties often arise within the board, the residents and outside guests to the complex. Therefore it is a good idea for boards to follow a few guidelines.

28

Major Reconstruction Projects When an association has completed the first parts of a major reconstruction plan, the planning and communication phase, then it is ready to take the next step forward to implement the plan. At this time the roles of the people who were part of the “planning team” may change with the addition of the roles of construction administration and homeowner representation.

34

No Good Deed: Pros & Cons to Maintaining Defibrillators in Homeowner Associations Homeowner associations are faced with an increasingly difficult decision of whether to maintain automated external defibrillators (or “AEDs”), especially as their populations age. The potential health benefits to maintaining AEDs onsite are substantial.

DEPARTMENTS

2

2016 ECHO Educational Calendar

3

News from ECHO

6

ECHO Annual Seminar & Tradeshow — Saturday, June 4th

19

Santa Cruz Educational Seminar — Saturday, May 14th

23

ECHO Professional Directory

33

ECHO Event Calendar

37

ECHO Volunteers

38

ECHO Bookstore

41

Advertiser Index

42

Legislation at a Glimpse

The ECHO Journal is published bi-monthly by the Educational Community for Homeowners. The views of authors expressed in the articles herein do not necessarily reflect the views of ECHO. We assume no responsibility for the statements and opinions advanced by the contributors to the magazine. It is released with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service.

If legal advice or other expert assistance is required, the services of a competent professional should be sought.

Acceptance of advertising does not constitute any endorsement or recommendation, expressed or implied, of the advertiser or any goods or services offered. We reserve the right to reject any advertising copy.

Copyright 2016 Educational Community for Homeowners. All rights reserved. Reproduction, except by written permission of ECHO is prohibited.

The ECHO membership list is never released to any outside individual or organization.

ECHO 1960 The Alameda, Suite 195 San Jose, CA 95126 408-297-3246 Fax: 408-297-3517 www.echo-ca.org info@echo-ca.org Office Hours Monday-Friday 9:00am to 5:00pm BOARD OF DIRECTORS AND OFFICERS President David Hughes Vice President Karl Lofthouse Treasurer Diane Rossi Secretary Carly Melius Directors Jerry L. Bowles John Garvic Adam Haney Stephanie Hayes David Levy

Robert Rosenberg Jeffrey Saarman Brian Seifert Wanden Treanor Steven Weil

Executive Director Brian Kidney Director of Marketing & Membership Carly Melius Director of Communications Tyler Coffin Design and Production Design Site ECHO Mission Statement Serving Community Associations

May/June 2016 | ECHO Journal

5

Half Price for ECHO HOA Members!

ECHO ANNUAL SEMINAR 44th Annual Seminar & Trade Show Saturday, June 4, 2016

The Annual Seminar is now half price for ECHO HOA Members! We’re returning to the Santa Clara Convention Center for our 44th Annual Seminar. Take advantage of all the resources available to your HOA at the Annual Seminar: • 12 classes featuring top industry experts.

• Members-only HOA University & Certificate.

• Hundreds of fellow board members and HOA professionals.

• Up-to-the-minute information on new legislation and drought restrictions.

ECHO’s Annual Seminar is the only educational trade show designed for HOA Boards of Directors. Get your information straight from the source, and build a strong, healthy community.

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Visit the ECHO website or call ECHO for complete event details: Online www.echo-ca.org/events Phone 408.297.3246

EVENT INFORMATION

SESSIONS

LOCATION:

HOA UNIVERSITY

Santa Clara Convention Center 5001 Great America Pkwy Santa Clara, CA 95054

• 9:00-10:15

TIME: 8:00 am to 4:30 pm

FOOD: Continental breakfast in the morning, and a lunch buffet in the afternoon are included in admission.

PARKING: Plenty of free parking is available in the parking structure behind the Santa Clara Convention Center.

LODGING:

Finances

David Levy, CPA

• 10:45-12:00 Insurance

John Allanson

• 1:30-2:45 Maintenance

Rob Rosenberg, Lisa Esposito

• 3:15-4:30

Michael Hughes, Esq.

Legal

LEGAL • 9:00-10:15

Efficient Sandra Gottlieb, Esq. Board Meetings

• 10:45-12:00 Get Out

the Vote!

• 1:30-2:45

Steve Weil, Esq.

CC&R Inspection Julie Mouser, Esq. Requirements

The Santa Clara Convention Center is immediately connected to the Hyatt Regency Santa Clara. Special rates are available through the ECHO website, or by calling the Hyatt at (888) 421-1442.

• 3:15-4:30 Ask the

Attorneys

REGISTER:

• 9:00-10:15 After El Nino

Update

Will Countner, David Hughes, Marc Dunia

• 10:45-12:00 Board Culture

Julie Adamen, Rolf Crocker

Members: $50, Nonmembers: $100 Registration includes lunch and access to all sessions.

Register online, or return the form on this page.

Yes, reserve ______spaces for the ECHO Annual Seminar 43rd Annual Seminar & Trade Show.

Amount enclosed: $__________ (attach additional names)

Sharon Pratt, Esq., Ann Rankin, Esq., Deon Stein, Esq.

HOT TOPICS

• 1:30-2:45 Reserves and Tyler Berding, Esq. Assessments • 3:15-4:30

Legislative Update

John Garvic, Esq.

Name: Email Address:

EDUCATION

FOOD

NETWORKING

HOA or Firm:

• 3 tracks, 12 topics • Professional instruction

• Huge buffet lunch • Prize-filled exhibit floor

• Over 300 HOA board members • 100 professional vendors

Address: City: State:

Zip:

Phone: Visa/Mastercard No.

SPONSORS

Exp. Date: Signature: Return with payment to: ECHO, 1960 The Alameda, Ste 195, San Jose, CA 95126 Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded. Phone: 408-297-3246; Fax: 408-297-3517

May/June 2016 | ECHO Journal

7

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Why

Good Governance Requires

Legal Protection for Directors and

How is it Provided?

By Steven S. Weil, Esq.

May/June 2016 | ECHO Journal

9

I

Background and Purpose of Article

E

very bus needs a driver; without one, the bus wouldn’t move and, if it did, collisions would result. Same with a Common Interest Development homeowners association (CID): while the association is, by law, required to manage a CID, it cannot be done without a Board of Directors: duties need to be identified and performed; funds need to be assessed and collected; disclosures need to be made; and the association must deal with many other things as expected

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by its members. This article discusses why volunteer CID directors may serve at personal legal risk and why and how it is in the association’s interest to minimize or eliminate that risk.

II

Volunteers at Risk

When a criminal assaults a CID resident in her home, can board members be personally and financially responsible for her injuries and mental distress?

In Francis T. v. Village Green Owners Association (1986) 42 Cal.3d 490, a case cited as precedent in over 2,000 appellate cases in our state and throughout the nation, the California Supreme Court said “yes.” The Court held that directors could be held liable for failing to take action to avoid foreseeable risks of

injuries to residents (in that case, by allegedly failing to keep the development adequately well-lit).

Directors expose themselves to getting “defamed” by angry homeowners with little recourse. For example, in Cabrera v.

Alam (2011) 197 Cal.App.4th 1077, the Court granted a “free speech” motion to dismiss a lawsuit brought by a director who was accused of committing fraud and theft of Association funds in connection with an election of directors. The Court held that the defamatory statements arose out of “protected activity” relating to Association governance and so dismissed the lawsuit.

In a “duty to repair” case, Ritter & Ritter v. Churchill Condominium Association (2008) 166 Cal.App.4th 103, the jury determined that the Association was liable for failing to make a fire-safety repair but the directors were not held liable based on the rule of judicial deference to decisions made in good faith by directors. On the other hand, since the plaintiff homeowners prevailed, they were entitled to an award of attorney fees and the Court held that the directors,

while avoiding liability, did not “prevail” and so were, like the Association subject to the attorney fee award. This unfortunate and illogical holding was made all the worse because the attorney fees exceeded $500,000.

At a much lower, but perhaps more typical level, the Davis-Stirling Common Interest Development Act at Civil Code section 5235 authorizes a Court (including a small claims Court) to impose a “civil penalty” of up to $500 for a wrongful refusal to permit an owner to inspect records. The statute does not say against whom the penalty would be imposed but it is not hard to imagine the Court imposing that “remedy” against a director involved in the decision to deny an owner records.

III

What might be the consequences?

When Given these scenarios, our first concern might reasonably be for the

May/June 2016 | ECHO Journal

11

directors who can be targets of alleged victims. Another casualty is good governance: without volunteers and legal protection, who would serve? If Board quorums weren’t met, decisions couldn’t be made and money couldn’t be spent to pay for repairs or bills. Property values could suffer; buildings not maintained will deteriorate; “violations” will not be addressed; and more. One solution (albeit not an easy one) might be a judicial rescue: the appointment of a Receiver to act as the Court’s agent as a sort of a super-manager with powers a Court believes are necessary to protect the Association’s assets, carry out its duties and other things (regardless of whether those powers were authorized in the governing documents). The Receiver might hire service providers (a manager, landscapers, roofers, etc.) and act as the Board and for these tasks the Receiver will receive a fee in an amount determined by the Court and paid by Association members. Assessments will increase to pay the Receiver’s fees (and that of its lawyer) and membership participation in decision making will diminish.

IV

Statutory Protections

It has long been the rule that directors who act in good faith and in the best interests of an incorporated association will not be held liable for the consequences of their actions; that is, directors who meet their “fiduciary duty” to the corporation will be protected (this being a corollary of the “business judgment rule” and the “doctrine of judicial deference.”) See Corporations Code §§ 7213 and 7231.5. But in the Francis T. assault case discussed above, the Court held that these defenses applied when a director was sued for breach of fiduciary duty but not for claims arising out of negligent maintenance of property (i.e. failing to keep the development well-lit in the face of previously known criminal activity).

The strong message of Francis T. was that directors could be personally liable for injuries resulting from allegedly

improper maintenance. The legislature was so concerned that this case would discourage volunteers from serving that it enacted an urgency measure to deal with the issue. An “urgency measure” is one deemed to affect the public peace, health or safety and its passage requires the approval of 2/3rds of the legislature and upon passage becomes effective immediately (instead of on January 1 of the year after signature by the Governor).

The law now numbered Civil Code section 5800 strikes a balance between providing immunity from claims for directors with compensation for victims hurt or damaged by improper conduct.

To take advantage of the “immunity defense,” the director (or officer) must have acted in good faith and within the scope of their duties and in a way that was not “willfully, wantonly nor grossly negligent.” The law only applies to volunteers (those who serve without compensation and who are not paid directly or indirectly by the developer or a bank which acquired property in the CID through foreclosure) and only in a limited way to investors: a director or officer who owns more than two separate interests in the CID is not protected by the law. Finally – and this was the balance the legislature sought to create – the immunity protection contained in section 5800 only applies if the association has insurance covering general liability (a so called “CGL” policy, standing for “Commercial General Liability”) and the individual liability of directors and officers (the “D&O” policy) with those policies being in effect at the time of the incident and when the claim is made.

(Two questions about this law are frequently asked: what is “gross negligence” and whether a director or officer lose their volunteer status if they are reimbursed for actual expenses incurred for board service. The second question is easier to answer: reimbursement of expenses does not change “volunteer” status so reimbursement for travel, attendance at CID conferences, photocopying, etc. does not turn a volunteer into a paid service provider or jeopardize their immunity.)

The law does not protect against “gross negligence.” This phrase means a “reckless” disregard for the safety and an almost conscious violation of another’s right to be safe. It is “worse” conduct

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than merely being careless which is another way of saying “negligence.”

Claims based on directors being “merely” careless are covered by section 5800.

V

Indemnification and Insurance

Indemnification principles are very complicated in practice and so are only summarized here. Under Corporations Code section 7237, a corporation has the power to indemnify its agents including its directors, officers and employees. This authority is typically included in the bylaws of a CID. The power to indemnify includes the power to pay for legal fees, expenses, arbitration awards, settlements and judgments incurred by or against the agent. Indemnification rules are complicated; for example, the Board cannot agree in advance to indemnify for any particular claim unless the agent provides an “undertaking” which can be a bond, cash, or might be a promise to reimburse the corporation should

reimbursement be necessary depending on how the claim against the agent is ultimately resolved. Also, under section 7237, an agent is entitled to indemnification if he/she prevails in a lawsuit which arose based on their “good faith” conduct even if the corporation refuses to provide indemnity; and, in fact, the agent might be entitled to indemnification even if they do not prevail.

The easiest way for a CID to indemnify its officers and directors is by obtaining adequate and proper insurance, especially Directors and Officers insurance.

Not all policies are the same and so the type of protection provided varies. For example, some policies may not cover claims arising out of alleged discrimination, violation of a statute or even noise disputes. If there is no insurance coverage for a claim against an officer or director the CID itself may have to “step in” with its own resources to provide protection. Almost always this extreme scenario raises numerous issues about control of a defense, cost, engagement of counsel and conflicts of interest. It is easier and better to get the best possible

insurance to avoid dealing with these issues.

VI

Conclusion

The cases, laws and evolution of modern governing documents all reflect a tension between protection of individual rights and encouraging volunteerism by protecting directors and officers who act in good faith in carrying out their official association duties. As a practical matter, the protection provided by a good insurance policy will be enough to alleviate the stress a volunteer might otherwise feel and, if insurance doesn’t quite fit the claim, there will frequently be the immunity statute, business judgment rule defenses and the right to indemnity.

Steve Weil, Esq. is one of the founding principals at Berding|Weil LLP in Walnut Creek. He has practiced community association law since 1984 and has dealt with virtually every kind of challenge facing directors, managers and community association members. He is a member of the ECHO board of directors.

May/June 2016 | ECHO Journal

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Overcoming Resistance to Funding Reserves

By Graham Oliver

One of the most famous books of the last century is Dale Carnegie’s “How to Win Friends and Influence People.”

Published in 1937, it has sold millions of copies (and it’s still selling) and was on the New York Times best-seller list for 10 years.

I

t addresses two things we all want to do better in our family relationships, among our neighbors, with our staff and our bosses. But almost nowhere is winning friends and influencing people more important than when matters connected with your condominium or planned development association arise.

The way we live and interact together in these communities is a vital part of our everyday lives. Plus, it’s worth reminding ourselves that our personal views on how our association should be run and what the “rules” should be are not simply incidental issues that are easily dealt with. Quite the contrary.

May/June 2016 | ECHO Journal

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A

s you may have already guessed, I’m “going somewhere” with this. And where I’m going is into the reserve fund area, drilling down to a specific element —funding—and from there going one layer deeper right into bed rock…the matter of setting monthly contributions amounts.

A huge mistake. When your property gets into an underfunded position, you’re on a slippery slope. Not only will a loan or a special assessment loom in the not-so-distant future, but the fundamental underfunding problem will not have gone away. A need to pay the loan, plus the need to raise fees at the same time, is the fate that awaits. And that’s a very tough row to hoe.

What to do? We have a suggestion. It’s not infallible. It will succeed sometimes, but not always.

First, a startling statistic— consider that a 2006 study of representative condominiums in California found that, on average, common-ownership properties were only 44 percent funded. That means that (again, on average) properties had less than half the funds required to carry out the major repairs and replacements called for in their reserve plans.

Why? In some cases we might surmise that the plan itself was poorly put together —the funding schedule was incorrectly worked out. In other cases, there may have been delinquencies, i.e., uncollected (or uncollectible) assessments payable by the unit owners. But it seems much more likely the most prevalent reason is that funding required to meet a 100 percent-funded level was consciously rejected by the boards and by the owners.

How come? We think it’s because two powerful forces are at work: One of them is the reluctance of individuals, be they owners-at-large or individual board members, to agree to higher monthly payments for all the usual reasons. The other one is that the boards, even when they know that the need for an increase is real, are loathe to get into a predictably unpleasant hassle with owners at the Annual General meeting. It’s easier to say “Let’s deal with it later,” or “Let the next board deal with it.”

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Before we get into that let’s describe what we mean by “resistance to funding plans.”

Well, what’s the first step to increasing unit owner’s monthly fees in order to get more money into the reserve fund?

It’s usually initiated by a reserve plan submitted by a Reserve Specialist (RS).

The RS has found that in order to meet anticipated expenditures for repairs and replacements, the projected balances in the fund will have to be higher. And to attain these higher balances the RS would have recommended a level of monthly contributions from owners high enough to bring the reserves up to where they should be.

Simple enough, isn’t it? Well, yes, as long as all the board members agree with the higher amounts, and as long as the owners, when presented with those numbers, all nod their heads in agreement.

First let’s deal with the problem of one or more board members who try to roadblock the resolution to raise

contributions. Seems to us there may be two reasons for it. One is that they themselves, personally, don’t like the idea of paying higher fees. The other is that, while they themselves, personally, aren’t against it, they know that some of the unit owners will be; and they don’t want to get involved in a potentially unpleasant free-for-all with their neighbors.

If the majority of the board buys into the fee increase, well, the majority rules and motion passed. But if you and other like-thinking board members are in the minority, what then? You’re on the receiving end of other board members’ arguments that paint a picture of the hue and cry the board will face. (They have a point, by the way. The owners won’t like it. But we’ll deal with that later in this article.) Your colleagues suggest that the board should fiddle with the recommended amounts to bring them down to a more acceptable level or what they think will be a more acceptable level.

They try to persuade you that the upcoming Annual Meeting will run along like a schooner going before the wind.

The board will score again! Or will it?

Consider that the board has already bought into the notion that the reserves will, by their decision, become (or remain) underfunded. If that scenario isn’t distasteful to you, it should be. Look at what a highly respected accounting institute says.

The American Institute of Certified Public Accountants’ Audit and Accounting Guide for Common Interest Realty Associations (CIRA) recognizes the need for funding of reserves stating that “Above all, boards of directors need to be aware that the goal of whatever policies they set should enable them to meet their fiduciary duties to maintain and preserve the common property.” 1 We might say, therefore, that when board members are tempted to fiddle with the recommended numbers, one of the members should put the above quote on the table. Our hope is that the recalcitrant members would audibly “gulp” and surrender—all at the same time!

The above, folks, is what I might call the “techno-legal” approach. But we promised to pull Dale Carnegie out of our hat to use the winning friends and influencing people strategy. Let’s introduce one

or two of his widely-accepted teachings right here.

One in particular that we think would work well here is anticipation. That is, anticipating that some of your fellow board members may want to fiddle; i.e., water down the recommended level of contributions. If you anticipate, you can prepare. And you’ll be following Dale Carnegie’s advice…”Dramatize your ideas.” Here’s how.

Before your board meeting, use a copy of your Reserve Specialist’s spreadsheet that provides the recommended funding level and water it down yourself. Reduce the planner-recommended contributions increase by, say 50 percent. And see what happens. (This means reducing the increase by 50 percent, not the entire reserve fund contribution amount).

What you’ll arrive at is a string of annual reserve balances that are inadequate.

With those numbers in your pocket you can confidently demonstrate that the watering-down idea should be quickly dismissed. Dale Carnegie advocates ”Throw down a challenge.” What could be more challenging than asking your

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fellow members if they really want to go to the Annual Meeting knowing that their watered down plan is decidedly dangerous.

Game over? By no means. We’ve had our little skirmish at the Board level. Now we start the next world war—getting the plan approved by the owners. Let’s look at tactics that could help to reduce owners’ objections to a required contributions increase. We’ll see how we can win friends and influence people.

Let’s first explore what reasons people give when they do not want to see the plan adopted; i.e., in order to escape the dreaded passing of a motion to demand higher monthly payments.

•

The favorite. “I may move some day and I won’t be able to recoup the money I’ve paid into the reserve fund.”

•

Or…“I just can’t afford it.

Everything gets more expensive, and this is one increase we can avoid.”

•

“How do we know the plan is a good one? Who’s to say all the repairs on your computer spreadsheets are actually going to be required?”

•

“Last year they put new carpeting in the South Wing but did nothing where I live.

I keep paying for improve- ments that benefit others”.

• “What’s the worst that can happen if we don’t raise the fees?”

• “The Board is incompetent, dishonest, careless or unintelli gent. Or all of the foregoing.”

Let’s take them, one at a time in the above order. An effective2 response to the first one might be something like this: It’s true, as the saying goes, “You can’t take it with you,” whether it’s about moving or dying. But there is an

FREE Attendance for ECHO HOA Members!

Santa Cruz Educational Seminar Saturday, May 14th, 2016 8:30 AM to 12:30 PM /

SPEAKERS • John Allanson • Jeffrey Barnett, Esq. • Diane Rossi, PCAM • Brian Seifert • Sharon Pratt, Esq. • Rosalia Tapia, Esq.

Yes, reserve ______spaces for the Santa Cruz Seminar.

Amount enclosed: $______(attach additional names) Name: Email Address: HOA or Firm:

TOPICS • Interactive Sessions • Anatomy of a Water Intrusion Crisis • Making the Tough Decisions

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Visit echo-ca.org/events for the latest information and online registration.

ADDRESS

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Return with payment to: ECHO, 1960 The Alameda, Ste 195, San Jose, CA 95126 Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded. Phone: 408-297-3246; Fax: 408-297-3517

May/June 2016 | ECHO Journal

19

obligation to pay our way as we go through our lifetimes. During the occupation of your unit, you have been responsible for part of the wear-out that constantly occurs.

You have walked on the carpets, used the elevators, and been around while the winds blew and the rain came down and the sun shone, affecting the paint, the brickwork and the driveways. You have been cooled by the air-conditioning, warmed by the heating system, and showered by the hot water from the boilers. Money is required to bring all the elements of the property up to scratch, and to keep them that way. All that money is spent for your contentment and for maintaining resale values. Besides, if reserve contributions aren’t collected you would walk away some day and leave behind a community that had deteriorated and that had no money to pay for restoring it. Is that really what you’d like to do?

The second one — simply can’t afford it — is a toughie. It’s not easy for people, at a public meeting, to say it, but if the property has a disproportionate number of senior owners, someone stating this might evoke a lot of sympathy. You might, then, want to say something like…

“Yes, on a fixed income, all price increases are hard to take. But the reality is that even though inflation has been relatively low lately, much of what the property spends its money on has seen more rapid cost increases. Some workers’ costs have risen by 15 percent over the last two years. We were in danger of losing our caretaker by not paying the going rates.

The driveway repaving uses oil-based tar; so it’s much more expensive.

You know that certain items in your personal budget have zoomed upward lately—gasoline being a prime example.

The alternative is to not do the repairs, to get less qualified help, to put up with an axle-breaking driveway. Then what happens? Your community begins to look shabby, selling a unit becomes difficult, the people who would have agreed to pay for better upkeep move out, and the spiral continues, downward.

The end result is that your investment— possibly your biggest single investment— goes into a nose-dive. The increase we’re recommending isn’t really an option. It’s a must.”

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Our third item (the plan may not be good) should be easy to answer. If the board has engaged a reputable planner with professional qualifications and an impressive client roster, this criticism should be put to rest quickly. But how, exactly, do you do it?

It depends. If you get the chance to meet with the dissenter one-on-one you can trot out the specialist’s detailed plan. Point out the exhaustive list of components. Describe how each one is individually analyzed regarding its life expectancy and the costs of repairing or replacing it. Show how the predicted opening and closing balances are computed, including the interest on money percentage. And, most importantly, demonstrate that if the recommended funding amounts were watered down the balances would become perilously low—maybe even “negative.”

If this objection surfaces at a general meeting, you won’t have the time to go into this much detail but (unless you’ve prepared a flip chart or PowerPoint presentation beforehand) you’ll just have to do it with well-rehearsed words. In fact, why not even do a “What if…” that uses lower funding numbers?

That would convincingly illustrate what the balances would look like.

Here’s another idea. Have the reserve planner attend the meeting to explain how he or she went about creating the plan. This idea assumes the planner is a reasonably good speaker and can hold his or her own with the audience. And it assumes as well that the planner’s presentation has been thought through ahead of time. It’s not the place for ad-libs or fancy-footwork. One downer… the planner may charge a fee for attending the meeting if that task wasn’t part of the contract with him or her. It would be money well-spent, we believe.

Now we come to the fourth and fifth items on our list, above. Both of them can be handled easily. The notion of paying for someone else’s benefits— well, it happens all the time. The community a mile down the road gets a new park. Bus service in the south end of town is improved and you live in the north end. Your kids have finished school but you still pay school taxes.

Our point? Your association is a “community” just like a town, a county, a state

or indeed a nation. The argument that every payment must bring direct benefits to the payer is indefensible. Case closed.

The question about the worst that can happen? The answer is…your community will face a quickening downward spiral.

Dilapidated buildings and grounds, more renters and absentee unit owners. Lower resale values, and in time virtually valueless assets. These scenarios are, regrettably, not fictional. But they don’t “just happen.” They happen precisely because when the need for adequate contributions is incontrovertibly demonstrated, people still prefer to go into denial.

Finally, the last “beef.” And a nasty one it is.

On a purely technical note, the answer to attacks on the board of directors could simply be that rules are in place in the association’s charter, (or CC&Rs or constitution or by-laws) that explicitly describe the processes related to the election and removal of directors. These should be at hand and referred to if necessary at the appropriate time.

But quoting from the constitution is not nearly as good as winning over, or at least mollifying, complainers with the kinds of approaches that Dale Carnegie proposes. There’s a long list of them and they include…

• Using the person’s name when you address him or her.

• Listening. Demonstrating that the person’s opinions merit your attention, at least.

•

Admitting it, when the board has indeed blundered, and adding what you intend to do to ensure it won’t happen again.

• Making the other person feel important and do it sincerely.

•

Asking questions. Making sure you understand exactly what the complaint is about. Asking what your complainer would have done under the same circumstances.

May/June 2016 | ECHO Journal

21

•

Dramatizing your ideas with examples, analogies, charts, and quotes from authorities.

We previously covered this fully where we stressed the need to anticipate questions and objections. If you anticipate, you can prepare!

•

Referring to the more agreeable parts of the grievance before explaining why the other parts may not be justified.

Not to be overly “touchy-feely” about it all; there are times when you must close down a debate and state that the parties

must finally “agree to disagree.” A board must walk the line between acquiescence and dictatorship. The board has been elected to head up a democratic, republican society (if we can use the two words in the same sentence)—not a kingdom.

The board members’ constituents are also their neighbors, and a happy community isn’t possible where over-the-fence battles prevail.

Graham Oliver is an author and a contributor to reserve fund evolution. He is a past board president and now calls himself a Reserve Fund aficionado. Graham is the co-author of the book “Reserve Fund Essentials,” from which some of the above ideas were taken.

1 We are grateful to Diversified Facility Services, Inc. of California, from whose website we have excerpted this paragraph.

2 We really mean “relatively” effective. That is, if one does the things we suggest, it’s likely that the outcomes will be more effective than if one does not do them. “Absolute” effectiveness is the result of a number of factors. In the context of our attempts to win over the other side to our point of view, these factors might include the real or perceived experience of the speaker, the natural intransigence of the complainer, the preparedness of the presenter and his or her ability to address the other party in a clear and objective manner. And so on.

How Do You Join ECHO? Over 1,700 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for the membership, sign up online at www.echo-ca.org.

For more information about membership and ECHO, call us at 408-297-3246 or visit the ECHO website.

22 echo-ca.org

ECHO Professional Directory

Need Expert Help? Check Out ECHO’s Directory All of our Professional ECHO Members specialize in services for HOAs. Choose from more than 250 companies in over 50 categories including: 73 MANAGEMENT COMPANIES 30 ATTORNEYS 21 ACCOUNTING FIRMS VISIT THE PROFESSIONAL DIRECTORY ON THE ECHO WEBSITE!

www.echo-ca.org

Accountants/CPAs Animal Control Services Arbitrators & Mediators Architects/Architectural review Asphalt Repair & Paving Assessment Collection Services

Attorneys Banking Services Community Association Consulting Concrete Products & Services Concrete Repair Construction Manage- ment Consultants Consulting Electrical Services Fencing Gates & Doors Financial Services Fire Alarms Fire Sprinklers General Contractors Gutters Insurance Services Janitorial & Cleaning Services

Landscape Design Services Landscape Maintenance Leak Detection Maintenance & Repairs Management Company Services Masonry Other Paint Manufacturer & Consultant Painting Contractors Pest Control Services Plumbing & Boiler Repairs Pool Maintenance & Services Pool Repair & Resurfacing Services

Power Washing & Steam Cleaning Reserve Study Firms Restoration & Remediation Services Retaining Walls Roofing Contractors Roofing Products Security Services & Systems Sprinkler Repair Towing & Parking Services Tree Services Utility Auditors Water Conservation Water Management & Services Waterproofing Window

May/June 2016 | ECHO Journal

23

Speed Bumps

By Wayne Scott

S

peed bumps are a necessary evil in many complexes because of the presence of inconsiderate divers.

Once a board reaches the decision to place speed bumps in a complex, various difficulties often arise within the board, the residents and outside guests to the complex. Therefore it is a good idea for boards to follow a few guidelines.

24 echo-ca.org

May/June 2016 | ECHO Journal

25

Notification

A

dvise all concerned of the board’s intention to install speed bumps. It usually helps to reduce resistance of reasons for the installation, such as protection of playing children or reduction of accidents, are clearly laid out to all residents.

Number This is usually determined by the situation in each complex and deals with problems like excessive speeds between intersections, turns, lengths of streets, etc. Also budget constraints can enter into the decision.

Placement We usually advise a walk-through with a board member to pinpoint the location for each speed bump. Another good method is to have members of the board walk the site and paint a dot on the edge of the street where they want a speed bump located. They can then supply the contractor with a site map (when possible) showing the general location of each.

The contractor will then visit the site and determine if these locations are satisfactory. He will recommend an exact location for each. Many factors are involved such as driveways, utility boxes, drains, angle of contact, and paths of travel that motorists may use to avoid driving over these bumps.

Because of water drainage considerations, some speed bumps may have to be made in two parts to allow water to pass through.

After deciding on an exact location for each bump, the contractor should paint the street to mark these locations.

26 echo-ca.org

Some boards will notify the residents of the planned locations to give the residents time to voice any concerns.

If the complaints are justified, then a speed bump can be eliminated or moved.

Most residents want speed bumps when necessary – but not in front of their own residence.

Height Speed bumps are usually 3 to 3-1/2 inches in height. This standard height allows vehicles to travel at 10-15 miles per hour without a problem.

Angle Try to keep speed bumps quite straight across a street or driveway (90 percent).

When a speeding vehicle strikes a speed bump at a slant, the driver can lose control and hit a parked car, building or landscaping.

Entrances Try and have a speed bump within at least 30 to 40 feet of each entrance into the complex. This will give an early indication to all drivers that speed bumps are present on site, hopefully causing them to slow down upon entry.

Guests and delivery trucks are usually not familiar with the site and most will react by slowing down – which is the real purpose for installing the speed bumps.

Painting Have speed bumps painted as soon as possible to help drivers see that they are present. We recommend using white vertical striping. Try to avoid painting the speed bumps solid.

Wayne Scott is vice president at ReNew Sealers, San Jose, CA. He is a member of the ECHO maintenance Resource Panel.

MAJOR RECONSTRUCT

Preparation for Construction

ION PROJECTS

By Steve Saarman

W

hen an association has completed the first parts of a major reconstruction plan, the planning and communication phase, then it is ready to take the next step forward to implement the plan. At this time the roles of the people who were part of the “planning team” may change with the addition of the roles of construction administration and homeowner representation.

The architectural firm often executes Construction Administration, but it does not act as the Homeowner Representative. The association may wish to hire a Construction Manager, who has a more encompassing role, as the title suggests.

Construction Management incorporates the following duties:

1

Most importantly, serving as the hub for communication between the association’s construction committee, the Architect, the Engineer(s), and the contractor along with the property manager and the homeowners.

2

Actively documents the contractor’s progress benchmarked by the project construction schedule.

3

Monitors the work performed for adherence to the plans and specifications.

4

Monitors the contractor’s quality control procedures and documentation program.

5

Attends all job site construction meetings and construction committee meetings.

30 echo-ca.org

6

Validates and processes any changes to the contract Scope of Work or contract cost (i.e. change orders).

7 8

Processes construction billings with appropriate lien releases.

Focuses and draws together all work and documentation from each party of the construction team for job completion.

9

Ends the project with no litigation.

The architectural firm often wants to perform most of these tasks under Construction Administration; to ensure that the intent of their construction documents is being adhered to because of legal liability issues. This is only a part of the whole Construction Management picture. Coupled with Construction Administration, it is also necessary to hire a Homeowners Representative who deals specifically with all homeowner issues and coordination in executing the Scope of Work. An independent and separate Construction Manager, generally incorporating both these roles, should act as an unbiased third party who objectively reviews and monitors the execution of the construction teams’ work and reports directly back to the association’s construction committee.

The construction committee needs to focus and resolve the responsibilities and duties of each construction team member, the protocol or lines of command for all communication between members and what their “acceptable” response times are. Depending on the pace and stage of the construction project and its complexity, this response time envelope may vary. The construction committee should also be cognizant that expanded duties for team members and “unreasonable” response times will cost the association additional fees. Therefore, thoroughly review your goals and expectations for each member of your construction team and convey that information up front, so it is part of their base fee and not an extra service.

When the contractors are ready to commence construction, their construction site needs often conflict with the association’s wishes to experience as little inconvenience as possible. Generally, most associations do not have “extra” space on site for the contractor’s operational needs. A major reconstruction project generally requires an office trailer, metal storage containers, debris box, toilets and a material storage area, at a minimum. Additionally, subcontractors often have their own storage needs that must be considered. All these issues and costs, including supervision, are incorporated under the term “General Conditions.”

Parking for workers and subcontractors is another issue to be dealt with. Traditionally, workers in the trades prefer to start their day early. This may present a morning parking overlap problem with residents who have not yet left for work.

Even daytime parking considerations must be agreed upon for residents who operate daily from their homes. The contractors’ office and site operations areas often acquisition guest parking spaces along with individual unit designated spaces to achieve an adequate space. Also, as a project progresses, additional material lay-down areas closer to areas of work are often requested.

Since parking spaces are so proprietary and tie into a person’s daily routine, a comprehensive master plan to handle these issues must be conceived and negotiated with all parties to avoid problems.

There is a direct correlation between the General Conditions’ cost of site operations and site imposed constraints.

With every project there is the contractor’s “optimum” site space and a “bare minimum” requirement. An optimum space takes into consideration:

1

Distance to a power source to operate the office and machinery. The same applies to telephone line access.

2

Easy access and flow through of large trucks delivering materials with no bottlenecks or dead ends.

3 4

Adequate space to drop off and pick up debris boxes.

The material storage area must be large enough to allow quick access to needed materials, without over-stacking, which requires the multiple handling of materials before they are used.

5

A painting and prefabrication area is also desirable.

6

Machinery parking for forklifts, trucks, golf carts etc.

7

Ability to enclose the field site within a secure fence.

General Conditions are the daily sitespecific costs incurred by the contractor to run the operation of that project. This incorporates everything that is necessary to support the execution of the Scope of Work. The largest cost component of general conditions is supervision. Supervision duties are traditionally split between the Field Superintendent and the office Project Manager. A project’s total cost of General Conditions is directly correlated to the duration of construction or the project schedule.

General Conditions average approximately ten percent of the costs to perform the Scope of Work. This becomes a significant element in the overall cost of any major project. Since general condition costs are time dependent, ways of decreasing a project’s duration have an immediate impact on the bottom line. Schedule manipulation of activities to shorten the “critical path” and increasing manpower for certain activities are two well-utilized methods to accomplish this.

Once a construction schedule has been finalized and published, it becomes a construction document and a formidable tool to monitor a contractor’s progress, evaluate any changes in the Scope of Work and to allow the association along with individual homeowners to plan other events of their lives. Monthly updates are generally recommended.

Allowing the final completion date to shorten or extend is an owner’s prerogative. Since there is always the fear of a project taking longer than first scheduled, Liquidated Damages are a vehicle to compensate the owner, if this

should happen. Liquidated Damages are specified daily fines imposed and are deducted from the final funds due to the contractor when the project is completed.

Coupled with the penalty fines is a predetermined bonus amount for each May/June 2016 | ECHO Journal

31

day saved from the published schedule.

Preparing an association for construction is a vital task worthy of intense planning.

Anticipating and realizing the impact of construction, both interior and exterior, is critical and imperative to impart to the homeowners. Devising methods to pass on this information, along with feedback/ question loops, is essential. Communication is the best vehicle to head off rebellion. Some common homeowner concerns are:

1

Unit access during construction

2

Temporary lighting and pathways through the construction site

3

Security issues with workers’ identification, workers within units and vulnerability to burglary with erected scaffolding

4

Emergency procedures and contact phone numbers

5 6

Scheduling work on “their” unit

Compensation for owner upgrades disturbed by construction.

Enforcing quality conscious work is largely the responsibility of your Architect, Engineer and Construction Manager.

A good part of this enforcement is setting up quality-focused construction procedures. These start with a detailed submittal process of all materials and shop drawings to be used during construction for review and approval.

Developing a systematic quality control program, implemented by the contractor with an appropriate level of documentation, is very helpful to achieving a quality work product. Setting up frequent job site meetings structured toward accountability of all parties is prudent. Also, continually working on a set of as-built construction drawings, as the project progresses, increases its level of accuracy when questions arise in the future.

The complete set of as-built construction drawings becomes a major component

of the project’s closeout documents.

Closeout documents also incorporate all product warranties in conformance with the construction documents along with specific maintenance requirements necessary to keep these warranties in place. Insurance certificates from all contractors who performed work on the project are also helpful. Assembling all this information in an orderly manner is one of the last tasks of the contractor’s Project Manager. This becomes the association’s “bible” should construction problems develop in the future.

Though major reconstruction projects may be a nightmare that no one looks forward to living through, foresight and planning allows excellent quality and value to prevail. When the construction dust finally settles, there is comfort and peace of mind in knowing that significant proactive steps forward have been taken to preserving your homes. Diligence and tenacity do pay off.

Steve Saarman is retired executive vice president at Saarman Construction, Ltd., an ECHO Member firm.

ECHO event calendar

RESOURCE PANEL CALENDAR ECHO Resource Panels meet during lunch on weekdays to enable managers, professionals and board members to hear about important topics presented by experts in the industry, and share experiences and issues. The meetings are open to all ECHO members, and those interested in learning about ECHO, offered in a casual atmosphere where the cost of attendance is the price of your lunch. The sessions last about an hour and a half. Check-in with the ECHO Panel Secretary for details and to register.

Please join us: DATE

PANEL LOGISTICS

PANEL SECRETARY

TOPIC

May 5, 11:45 a.m.

North Bay Resource Panel Contempo Marin Clubhouse 400 Yosemite Dr., San Rafael

Denise Wolford, CCAM 415-458-3537

Fire Safety

May 10, 11:45 a.m.

Central Coast Resource Panel Michael’s on Main 2591 S Main St., Soquel

Ann Thomas 800-537-4098 ext.7530

TBD

May 19, 11:45 a.m..

Wine Country Resource Panel Serv-Pro 377 Blodgett St., Cotati

Pam Marsh 415-686-9342

Fire Hazards

June 8, 11:45 a.m.

South Bay Resource Panel Heritage Bank of Commerce Kiosk 150 Almaden Blvd, San Jose

Geri Kennedy 408-398-4227

Fraud

June 10, 11:45 a.m.

East Bay Resource Panel Massimo Restaurant 1603 Locust St., Walnut Creek

Cindy Wall, PCAM 925-830-4580

TBD

July 11, 11:45 a.m.

Central Coast Resource Panel Michael’s on Main 2591 S Main St., Soquel

Ann Thomas 800-537-4098 ext.7530

TBD

July 14, 11:45 a.m.

North Bay Resource Panel Contempo Marin Clubhouse 400 Yosemite Dr., San Rafael

Denise Wolford, CCAM 415-458-3537

Before You Paint

July 21, 11:45 a.m.

Wine Country Resource Panel Serv-Pro 377 Blodgett St., Cotati

Pam Marsh 415-686-9342

Pools

REGULARLY SCHEDULED RESOURCE PANEL MEETINGS PANEL

MEETING

LOCATION

Maintenance

First Wednesday, Even Months

ECHO Office, San Jose

North Bay

First Thursday, Odd Months

Contempo Marin Clubhouse, San Rafael

East Bay

Second Friday, Even Months

Massimo Restaurant, Walnut Creek

Accountants

Second Monday, Odd months

Scott’s Seafood Restaurant, Oakland

Central Coast

Second Tuesday, Odd months

Michael’s On Main, Soquel

South Bay

Second Wednesday, Even Months

Flames Eatery, San Jose

Wine Country

Third Thursday, Odd months

Serv-Pro, Cotati

Legal

Quarterly

Varies May/June 2016 | ECHO Journal

33

+

+

NO GOOD DEED: Pros & Cons to Maintaining Defibrillators in Homeowner Associations

By Jordan M. O’Brien, Attorney at Law

H

omeowner associations are faced with an increasingly difficult decision of whether to maintain automated external defibrillators (or “AEDs”), especially as their populations age. The potential health benefits to maintaining AEDs onsite are substantial. Data suggest that prompt and proper application of an AED to someone suffering a sudden cardiac arrest greatly increases that person’s chances of survival.

+ 34 echo-ca.org

+

May/June 2016 | ECHO Journal

35

R

ecognizing this, the California legislature has encouraged the use of AEDs by enacting California Civil Code Section 1714.21.

Subsection (c) of that provision provides,

Any person who, in good faith and not for compensation, renders emergency care or treatment by the use of an AED at the scene of an emergency is not liable for any civil damages resulting from any acts or omissions in rendering the emergency care.

Thus, Section 1714.21 protects individuals who use an AED to render emergency care from civil liability. However, this protection does not extend to a person or entity that acquires an AED for emergency use. Instead, a party acquiring an AED for emergency use must fulfill a plethora of statutory requirements in order to be protected from civil liability.

These requirements are set forth in California Health and Safety Code Section 1797.196, and include the following: (A) Comply with all regulations governing the placement of an AED. (B) Notify an agent of the local EMS agency of the existence, location, and type of AED acquired.

(C) Ensure that the AED is maintained and tested according to the operation and maintenance guidelines set forth by the manufacturer.

(D) Ensure that the AED is tested at least biannually and after each use.

(E) Ensure that an inspection is made of all AEDs on the premises at least every 90 days for potential issues related to operability of the device, including a blinking light or other obvious defect that may suggest tampering or that another problem has arisen with the functionality of the AED. (F) Ensure that records of the maintenance and testing required pursuant to this paragraph are maintained.

In addition to the foregoing, when a building owner installs an AED, it must further: (A) At least once a year, notify the tenants as to the location of the AED units and 36 echo-ca.org

provide information to tenants about who they can contact if they want to voluntarily take AED or CPR training.

(B) At least once a year, offer a demonstration to at least one person associated with the building so that the person can be walked through how to use an AED properly in an emergency. The building owner may arrange for the demonstration or partner with a nonprofit organization to do so.

(C) Next to the AED, post instructions, in no less than 14-point type, on how to use the AED. These are onerous requirements. A homeowner association’s failure to fully implement each of these requirements may result in fines or, even more importantly, expose the association to potential liability. One scenario involving such exposure would be if a person were go into cardiac arrest and then suffer brain damage or die because of any alleged negligence by the association, its experts or even third parties with regards to the use or installation of an AED kept onsite by the association. A plaintiff ’s attorney could point to any and all failures by the association to fully implement any of these requirements, no matter how small or temporary, in favor of holding the association liable for those injuries.

The burden on an association to observe all of the requirements set forth is not only substantial, but also continuing. As with any industry, there is often turnover with association employees, managers, directors and other staff. The failure of an association to fulfill training and maintenance requirements for all new personnel promptly, even once, could also expose the association to liability.

Even if an association successfully defended against such a suit, doing so would most likely involve significant legal fees and costs that the association could not recover. Considering this, it is probably preferable to avoid, rather than win, any litigation relating to an association’s use and installation of an AED. As California case law currently stands, it does not appear that associations have a legal obligation to provide AEDs. The operative authority is the case of Verdugo v. Target Corp. (2014) 59 Cal.4th 312 (“Verdugo”), in which the California Supreme Court held that a private business did not have any duty to make an AED available to its customers. In rendering its decision, the court specifically cited the onerous maintenance and training requirements related to

an AED device that would be placed on the business if it did have such a duty.

The ruling in Verdugo was limited to deciding, in the negative, the question of whether a retail business has a common law obligation to maintain an AED. On the other end of the spectrum, California Health & Safety Code Section 104113 requires health studious to acquire and maintain AEDs. Between these two extremes, there is currently a lot of uncertainty. Verdugo seems to suggest that there may be a common law duty to maintain an AED in situations where there is a heightened foreseeability of sudden cardiac failure. California courts have not determined where or how this “heightened foreseeability” may apply. They have not determined whether such a common law duty may attach to homeowner associations, in general, or even senior living communities in particular. However, at this point, California courts have not imposed a common law duty to acquire and maintain AEDs upon either group.

In conclusion, there are serious risks that each homeowner association should consider in determining whether to install, or continue to maintain AEDs. Should an association determine to install, or continue to maintain AEDs, it should ensure that it does so in strict compliance with the statutory provisions discussed above that allow for liability protection. It should also put in place a long-term plan that ensures that turnover in homeowner association staff or boards of directors will not result in any failure to meet ongoing maintenance and training requirements.

On the other hand, should an association determine to remove previously-installed AEDs, it should do so in a reasonable manner to avoid any potential liability based on member reliance on the previously available devices. This may include notifying all members by letter and/or newsletter, and making note of the decision at the next board meeting (and in the Board minutes) and the reasons for doing so.

Above all else, Boards of Directors should consult their legal counsel in making this determination.

Jordan O’Brien, Esq. is an an attorney with Angius & Terry, LLP, attorneys specializing in construction defect litigation and general counsel assistance for community associations throughout California, Nevada and Florida.

ECHO honor roll

ECHO HONORS VOLUNTEERS Resource Panel Chairs Accountant Panel Adam Haney, CPA 888-786-6000 x317 Central Coast Panel John Allanson 831-685-0101 East Bay Panel Cindy Wall, PCAM, CCAM 925-830-4580 Legal Panel Mark Wleklinski, Esq. 925-280-1191 Maintenance Panel Judy O’Shaughnessy 408-839-6926 North Bay Panel Diane Kay, CCAM 415-846-7579 Stephany Charles, CCAM 415-458-3537 South Bay Panel Susan Hoffman, PCAM 510-683-8614 Wine Country Panel Pam Marsh 415-686-9342 Legislative Committee Paul Atkins Jeffrey Barnett, Esq. Sandra Bonato, Esq.

Jerry Bowles Oliver Burford Joelyn Carr-Fingerle, CPA Chet Fitzell, CCAM John Garvic, Esq., Chair Roy Helsing Geri Kennedy, CCAM Wanden Treanor, Esq. Seminar Speakers East Bay Marion Aaron, Esq. Charlotte Allen William Countner Marc Dunia Stephanie Hayes, Esq. David Hughes David Levy, CPA Alex Noland, Esq. Jordan O’Brien, Esq. Annual Seminar John Allanson Tyler Berding, JD, PhD Ricky Chu John Garvic, Esq. Sandra Gottlieb, Esq. Matthew Harrington, Esq. Stephanie Hayes, Esq. Julia Hunting, Esq. Zer Iyer, Esq. Ken Kosloff David Levy, CPA Kerry Mazzoni John Neal

Andrea O’Toole, Esq. Terin Reeder Amy Tinetti, Esq. Chad Thomas, Esq. Wanden Treanor, Esq. Steven Weil, Esq. David Zepponi Recent Contributing Authors July 2015 Jeffrey A. Barnett, Esq. Kurtis Shenefiel, PCAM, CCAM Tom Fier, Esq. Bob Gourley Tyler P. Berding, J.D., Ph.D. Ann Thomas August 2015 Tyler P. Berding, Ph.D., J.D. Chris Sigler, B.S.C.E., C.D.T. Charlotte Allen Julie Adamen Robert Booty September 2015 Charlotte Allen Brenda L. LeClair, CMCA Debra J. Oppenheimer, Esq. Steve Castle, CMCA, PCAM John Schneider October 2015 Karl Lofthouse Susan Green Thomas J. Connelly Adrian Adams, Esq. Julie M. Mouser, Esq. Nov/Dec 2015 Beth A. Grimm, Attorney Karl lofthouse James H. Ernst, CPA, MS-Tax Tim Polk Julie Mouser, Esq. Jan/Feb 2016 Beth A. Grimm, Attorney Matt Haulk, Esq. Larry J. Pothast, PCAM, CCAM David J. Larsen, Esq. Jeffrey A. Barnett, Esq. March/April 2016 Julie Adamen Neal Back, CPA Harvey Radin David Kuivanen, AIA Joel Meskin, Esq., CIRMS, CCAL May/June 2016 | ECHO Journal

37

BOOKSTORE The ECHO Bookstore is your source for publications providing essential information for HOA Board Member service obligations. Order online at echo-ca.org or fill out form on the facing page.

NEW ON TI I D E

Robert’s Rules of Order Member Price: $7.50 Non-Member Price: $12.50 A step-by-step guide to the rules for meetings of your association, the current and official manual adopted by most organizations to govern their meetings. This guide will provide many meeting procedures not covered by the association bylaws or other governing documents.

2016 Condominium Greenbook Member Price: Non-Member Price:

$17.00 $25.00

This companion to the Condominium Bluebook is an in-depth guide to all aspects of association finances, including accounting methods, financial statements, reserves, audits, taxes, investments and much more.

Not for the accounting novice, this is a tool for the treasurer or professional looking for specific information about association finances.

Reserve Fund Essentials Member Price: Non-Member Price:

$18.00 $25.00

This book is an easy to read, must-have guide for anyone who wants a clear, thorough explanation of reserve studies and their indispensable role in effective HOA planning. The author gives tips to help board members mold their reserve study into a useful financial tool.

The Condo Owner’s Answer Book Member Price: Non-Member Price:

$15.00 $20.00

An excellent guide to understanding the rights and responsibilities of condo ownership and operation of homeowner associations. The question-and-answer format responds to more than 125 commonly-asked questions in an easy to understand style. A great resource for newcomers and veteran owners.

Construction Defect Claims Member Price: Non-Member Price:

$19.95 $25.00

New buildings can conceal extensive faults.

It’s a board’s worst nightmare—rainstorms damage buildings and bring owner complaints. Is legal action necessary? With this new book, you’ll learn about the resolution process for construction problems, and how to handle complex claims.

Home and Condo Defects Member Price: Non-Member Price:

$12.95 $17.95

Construction defect litigation can be confusing, expensive and fraught with legal pitfalls. This eye-opening guide, written by accomplished construction-defect attorneys, is an essential tool for board members who need to understand the legal process.

38 echo-ca.org

Condominium Bluebook 2016 Edition Member Price: $17.00 Non-Member Price: $19.95 This well-known compact guide for operation of common interest developments in California now includes a comprehensive index of the book and a chapter containing more than 200 frequentlyasked questions about associations, along with succinct answers.

ciation o s s A unity Book Comm Statute dition 2014 E

Publications to answer your questions about common interest developments Order Online at www.echo-ca.org

Bookstore Order Form TITLE

Board Member Handbook Member Price: Non-Member Price:

EDUCATIONAL COMMUNITY FOR HOMEOWNERS 1960 THE ALAMEDA, STE 195, SAN JOSE, CA 95126 PHONE: 408-297-3246, FAX: 408-297-3517

QUANTITY AMOUNT

$15.00 $25.00

This publication is the essential guidebook for HOA Board members, dealing with governance, finances, insurance and maintenance issues.

Revised and updated in June 2012.

SUBTOTAL CALIFORNIA SALES TAX (Add 8.625%) TOTAL AMOUNT

Yes! Place my order for the items above.

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Dispute Resolution in Homeowner Associations Member Price: Non-Member Price:

$15.00 $25.00

This publication has been completely revised to reflect new requirements resulting from passage of SB 137.

Signature

Name (please print) Association (or company) Email Address City

State

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May/June 2016 | ECHO Journal

39

directory updates

All current listings may be found in our Professionals Directory available online at www.echo-ca.org.

New Members The Bridgeport Company 2303 Camino Ramon Suite 201 San Ramon, CA 94583 Contact: William Bavelas Tel: (925) 824-2888

DaVinci Roofscapes 13890 W. 101st Street Lenexa, KS 66215 Contact: Chris Marshall Tel: (913) 599.0766

Community Associations Managers International Certification Board (CAMICB) 6402 Arlington Blvd., Suite 510 Falls Church, VA 22042 Contact: Sara B. Duginske M.S. Tel: (800) 845.4394

Frank Bonetti Plumbing, Inc. 20878 Rutledge Road Castro Valley, CA 94546 Contact: Dan Bonetti Tel: (510) 582.0934 HMI Enterprise, Inc. 320 Turtle Creek Court, Suite B San Jose, CA 95125 Contact: Stan McIntyre Tel: (408) 781.1412

Become an ECHO Professional Member and receive the benefits of membership.

To learn more, visit our membership page at www.echo-ca.org

40 echo-ca.org

advertiser index

about ECHO

Ace Property Management..................22 www.acepm.net

Hughes Gill Cochrane, P.C....................21 www.hughes-gill.com

WHAT IS ECHO?

Applied Reserve Analysis....................20 www.appliedreserveanalysis.com

Levy, Erlanger & Company..................17 www.hoa-cpa.com

Serving Homeowners to Build Strong Community Associations

Benjamin Moore Paint & Company...37 www.benjaminmoore.com

Malarkey...............................................27 www.malarkeyroofing.com

Berding Weil..........................Back Cover www.berding-weil.com

Pacific Utility Audit, Inc. .....................31 www.PacificUtilityAudit.com

Community Management Services....10 www.communitymanagement.com

PML Management Corporation..........22 www.pmlmanagement.com

Cornerstone Community Management.........................................12 www.cornerstonemgt.biz

R.E. Broocker Co...................................20 www.rebroockerco.com

The Educational Community for Homeowners (ECHO) is a nonprofit membership corporation dedicated to assisting California homeowner associations. ECHO provides help to homeowner associations on many fronts: finances, legal issues, insurance, maintenance and management. Members receive help through conferences, trade shows, seminars, online education, a monthly full-color magazine and discounted publications.

Eugene Burger Management..............26 www.ebmc.com Forster Construction Management.....21 www.forstermanagement.com Heritage Bank of Commerce...............32 www.heritagebankofcommerce.com

Rebello’s Towing..................................18 www.rebellos.net Statcomm..............................................13 www.statcomminc.com Union Bank...........................................11 www.HOAbankers.com White & MacDonald, LLP....................31 www.wm-llp.com

Who Should Join ECHO? If your association manages condominiums or a planned development, it can become a member of ECHO and receive all of the benefits designated for homeowner associations.

Benefits of Association Membership • Subscription to monthly magazine • Access to members-only online education • Updates to the Association Statute Book • Frequent educational seminars • Special prices for CID publications • Legislative advocacy in Sacramento

ECHO Membership Dues Association Membership HOA 2 to 25 units...........................$130 HOA 26 to 50 units.........................$180 HOA 51 to 100 units.......................$275 HOA 101 to 150 units.....................$375 HOA 151 to 200 units.....................$450 HOA 201 or more units..................$575 Professional Membership.................$500 Association Management Membership.......................................$500 Individual Membership.......................$75 Journal Subscription............................$15

Office 1960 The Alameda, Suite 195 San Jose, CA 95126-2308

How Do You Join ECHO? Over 1,700 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for the membership, sign up online at www. echo-ca.org.

For more information about membership and ECHO, call us at 408-297-3246 or visit the ECHO website.

May/June August2016 2013 ||| ECHO ECHOJournal Journal February 2014

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legislation at a glimpse

Catch up on 2016 Legislative Session!

The bills below represent the ECHO Legislative Committee’s review of the 2500 bills introduced in Sacramento this year. The list – and the impact of each bill – will change as authors amend the language in their bills. We anticipate major changes in the months ahead.

For the most up-to-date information, visit the HOA Advocacy section at the ECHO website: www.echo-ca.org/hoa-advocacy

Current Legislation Bill Information

Summary

AB 587

Mobilehomes – Nonpayments or Late Payments

Support Status: In Senate Transportation and Housing

For certain applicants who wish to register or transfer registration of a manufactured home or mobilehome prior to December 31, 2018, and meet other requirements, would require the department to waive all outstanding charges assessed by the department prior to the transfer of title of the manufactured home or mobilehome, release any lien imposed with respect to those charges, issue a duplicate or new certificate of title or registration card, and amend the title record.

AB 1720

Homeowner Attorneys at Board Meetings

Watch Status: In Assembly Housing and Community Development

Current law requires the board to permit any member to attend and speak at any meeting, except for executive session meetings. This bill would require the board to permit a person who represents a member to attend board meetings, and would require written notice to be given, as specified. ECHO recognizes the potential pitfalls of attorney involvement at board meetings, and we are watching this bill very closely.

AB 1736

Tax Deduction – Homeownership Savings Accounts

Support

This bill would provide that a qualified taxpayer may withdraw amounts from a homeownership savings account to pay for qualified homeownership savings expenses, and would provide that any amount withdrawn from that account that is not used for these expenses would be included as income for that taxpayer.

Author: Chau

Author: Wagner

Author: Steinorth Status: In Assembly Housing and Community Development

AB 1799

Elections by Acclamation

Support Status: In Assembly Housing and Community Development

Current law requires an association to use an inspector of elections and secret ballots (among other requirements) for assessments legally requiring a vote, election and removal of directors, amendments to the governing documents, or the grant of exclusive use of common area. This bill would additionally except from those election requirements an election of directors if the election is uncontested, as defined.

AB 1963

Construction Defect Claim Conditions

Watch

Current law specifies conditions to be met before an association may file a complaint for damages against a builder, developer, or general contractor based upon a claim for defects in the design or construction of the common interest development. The law is set to expire on July 1, 2017. This bill would delete the inoperative and repeal dates of the above described requirement.

Author: Mayes

Author: Calderon Status: In Assembly, Consent Calendar

42 echo-ca.org

legislation at a glimpse

Current Legislation (continued) Bill Information

Summary

AB 2362

Pesticide Application & Notice

Watch

This bill would expand upon the 2016 law concerning notice requirements for the application of pesticides in common interest developments. It would require an association to provide notice to an owner or tenant of a separate interest, and under certain circumstances to owners or tenants of adjacent separate interests, if pesticide is to be applied without a licensed pest control operator.

The bill would also authorize an owner or occupant to agree to immediate pesticide application.

Author: Chu Status: In Assembly Environmental Safety and Toxic Materials

SB 477

Mobilehomes – Property Tax Postponement

Support

This bill would authorize an owner of a mobilehome , who is a qualified person, to seek postponement of ad valorem taxes under provisions similar to other owners of real property.

Author: Leyva Status: In Assembly Appropriations

SB 944

Housing Omnibus Bill

Support

The Annual Housing Omnibus Bill cleans up errors and makes non-substantive changes in the law. ECHO has proposed several amendments to correct errors and improve clarity within the statute.

Author: Committee on Transportation & Housing Status: In Senate Transportation and Housing

SB 1106

Mobilehomes – Violations Enforcements

Support Status: In Senate Transportation and Housing

This bill would authorize the Director of Housing and Community Development or a local enforcement agency that has assumed jurisdiction to issue citations that assess additional civil penalties to any owner or operator, or both, of a mobilehome park, special occupancy park, or registered owner of a manufactured home, mobilehome, or recreational vehicle, or other responsible party when he or she has permitted the continuation of a violation for at least 30 days after the expiration of a notice to correct the violation or violations from the enforcement agency.

SB 1431

Service of Summons or Subpoena

Support Status: In Senate Judiciary

This bill would require an investigator who is employed by a government entity, upon the display of proper identification, to be granted access to a gated community for the sole purpose of performing lawful service of process or service of a subpoena.

SB 419

Sale Signs in Mobilehomes

Watch

Amended 4/27. This bill would permit the use of yard-arm style “for sale” signs in mobilehome

Author: Leyva

Author: Morrell

parks, some whichabout are common interest developments.

What Do You Think?

Readofmore HOA legislation on our website or visit our Facebook page

Author: McGuire

Status: In Senate Judiciary

and join the discussion. On the web: echo-ca.org/hoa-advocacy, On Facebook: facebook.com/echoorg

May/ June 2016 | ECHO Journal

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