ECHO Journal - January 2016 by Echo

Trust Building and Keeping— Part II p.8

Charging Ahead— The ABC’s of EVCS’s p.20

Rediscovering Community in the CID Environment p.24

Serving Community Associations

Trust Building and Keeping p. 8

Unleashing an Association’s Power p.30

Construction Contract Remedies: Arbitration, Mediation and Litigation p.34

January/February 2016 echo-ca.org

news from ECHO

News From ECHO January 2016 Happy New Year! I hope, like me, you are approaching the New Year with a fresh perspective, and perhaps some residual goodwill from the Holidays. To help you maintain that positive force, check out the collection of articles in this edition of the ECHO Journal. First up is the continuation of Beth Grimm’s article on trust building. Beth is a lawyer with years of practical experience counseling boards on doing their duty by working together for their communities. Next, the notion of “Community” is explored by long time community manager Larry Pothast in this revival of an article he penned some time ago that is as relevant now as ever. Extending the theme is an article by lawyer David Larsen on uniting to influence public policy that affects community associations. You have a real voice and lawmakers will listen if you communicate in unison. We round out this edition with articles on contract remedies by attorney Jeffrey Barnett and s quick primer on electronic vehicle charging stations by attorney Matt Haulk. We are indebted to our contributing experts for sharing their knowledge and experience with our membership. We hope you find their contributions helpful. Stay tuned for our next edition in March, as we move to a bi-monthly format. In the meantime, go to our website for the information and advice you need: www.echo-ca.org. Thanks for your continued support for ECHO.

Best,

Brian Kidney Executive Director

Jan/Feb 2016 | ECHO Journal

CONTENTS 8 20 34

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Trust Building and Keeping-Part II There is absolutely no doubt that in order for owners to trust a board, the directors must appear knowledgeable, direct, firm, no nonsense, responsive, interested, attentive and sincere. Trust is not bred through closed meetings, secret proceedings, offensive behavior or anonymous communications.

Charging Ahead – The ABC’s of EVCS’s It seems complicated, but the law regarding EVCS’s can be boiled down to three simple points. We call them the ABC’s of EVCS: Allowed, Be Flexible, Create a Common Area EVCS.

Rediscovering Community in the CID Environment We are in the unique position of creating the future in any image we, as an industry, choose. I suppose it may be an overstatement to suggest that the spirit of “community” dwells as much in the heart as in the organization. We should all hope to listen closely to the sound of that heart beating in this new millennium.

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.

Unleashing an Association’s Power to Influence Local Policies and Decisions

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

As an association, you have a tremendous opportunity to influence local policies and decisions because, as a block of voters, you can potentially determine the political destiny of your elected officials. These people are keenly aware of your potential, which is why there is nothing more powerful than 50 to 100 local constituents speaking in unison on a particular matter.

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

Construction Contract Remedies: Arbitration, Mediation and Litigation

Office Hours Monday-Friday 9:00am to 5:00pm

Notwithstanding the care exercised by the association in negotiating a construction contract, and despite the reputation and quality of the contractor, disagreements can arise. It is important for the association to anticipate such disputes at the time of contracting and to make a considered election concerning the method by which the disputes will be resolved.

DEPARTMENTS

The ECHO Journal is published 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.

News from ECHO

2016 ECHO Educational Calendar

Featured at echo-ca.org

San Rafael Educational Seminar — January 23rd.

ECHO Professional Directory

Wine Country Educational Seminar — March 19th.

ECHO Bookstore

Advertiser Index

ECHO Event Calendar

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 Legislative Consultant Mazzoni and Associates Design and Production Design Site ECHO Mission Statement Serving Community Associations

Jan/Feb 2016 | ECHO Journal

2016 ECHO educational calendar

ECHO Announces it’s first 2016 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!

January 23

March 19

San Rafael Educational Seminar (see page 15)

Wine Country Educational Seminar (see page 29)

Embassy Suites San Rafael, CA

DoubleTree Sonoma Wine Country, Rohnert Park, CA

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San Rafael

San Francisco

featured at echo-ca.org

Timely tips, fresh insights, and legislative updates — always find what you need by visiting our website. To gain access to all of ECHO’s articles, sign up for a free account: email ECHO at newaccount@echo-ca.org.

Articles Are HOAs Allowed to Tow? Parking Enforcement Rules and Rights

When vehicles are in clear violation of the HOA’s governing documents or the Vehicles Code, towing can be the most sensible option. But the laws governing how and when an HOA can cause a vehicle to be towed off the property have become more complex. Find out what you need to know before towing. Educational Topic: Towing

5 Policies You Should Consider When Hiring a Contractor

Managing contract work is difficult and fraught with potential liability. Boards (or their managers) should take care that every contractor hired by the HOA is skilled, eligible to perform the necessary work, and prepared to handle problems that will arise during large projects. This article suggests 5 policies that your contractor should have in place. Educational Topic: Contractors

What Happens When Boards Violate the Davis-Stirling Act

By now you’ve probably realized that there is no elite squad of special operations condo police dedicated to enforcing the Davis-Stirling Act. So what really happens when a board violates the Act? This article looks at different types of violations and their unique consequences Educational Topic: Violations

HOA Records Security: Protecting Homeowner Personal Information Information storage is quickly shifting to the cloud, and nearly everyone is now comfortable conducting business through internet-based tools. The internet presents a new security challenge for associations and every HOA should have a plan to deal with existing personal information and a potential data breach. Educational Topic: Records

Facebook Want to see pictures from recent events? Comment on our legislative activity? We only put the latest news up on Facebook, and we’d love to hear from you. Share your experiences, read important and amusing HOA news, and connect with your fellow HOA owners on ECHO’s Facebook page. facebook.com/echoorg

ECHO Journal Read the ECHO Journal on the ECHO website before it arrives at your door. We often post the latest issue on or before the beginning of each month. Log in to browse the latest articles, or read from a huge library of past issues. Find in: echo-ca.org/journal Jan/Feb 2016 | ECHO Journal

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TRUST BUILDING

and KEEPING PART II

HANDLING DIFFICULT MEETINGS By Beth A. Grimm, Attorney

What not to do.

he best way to illustrate what NOT to do at a meeting is to present a real life story illustrating a worst case scenario - a board that “allows” (which might mean enables, supports, fears, or is apathetic) an irrational and offensive board president to take over a meeting and act badly. At the heart of grievance in my illustration were serious concerns about spending association funds (squandering the owners would say).

Jan/Feb 2016 | ECHO Journal

fter trying various approaches to “drive” the board toward transparency - a group of homeowners seriously concerned and yet fearful of retaliation (see why below) created an anonymous website where owners could post their questions and concerns. That thoroughly enraged some of the board members. Things don’t normally rise to this level of desperation if a board engages in transparency and considers “trust” a valuable asset worthy of some effort. There is much more to the story of course as the problems festered for a long time. Some of the concerned owners in this scenario

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actually served on the board but were driven off by closed doors and abuse from other directors because of disagreements with the President.

Openness, pragmaticism, transparency and the courage to tackle issues head on makes for a better board. That was made clear in Part I with the Ventura County debacle and the way some of the council members stayed on to help effect resolution, even though under siege, and even though it took a long time. To unhappy owners I would advise exactly the same approach, i.e., openness, pragmaticism, transparency, staying power, and the courage to tackle issues head on. For both, I would add, “in a respectful way.” I am not in favor of secrecy, anonymity, hiding behind email or the internet, or surprise. There is great benefit in shooting straight. If going into an unknown situation, it is always good to know where the arrows are coming from. Problems

cannot be resolved until they are acknowledged and brought to the forefront. With this kind of philosophy in mind, the most straightforward advice for any director or any owner trying to make a positive difference would be to attend a board meeting and raise their concerns, either during the business portion of the meeting (if a board member) or during the homeowner forum time (if an owner). Either could provide a written communication as well, to create a written record. Written records can engender accountability. In my illustration, there was a terrible history of conduct at meetings. Apparently, at a prior meeting, they [the board] had brought in the HOA attorney to speak. According to information provided, she just smiled, silently, and witnessed an owner being treated with public disrespect and hostility. The owner raised her hand to be acknowledged at the homeowners’ forum and the president went ballistic, nearly vaulting over the table to get in her face and commanded, “Shut up! I don’t like your body language. You will not speak.” Then he followed that up with, “You are messing with the wrong person, I am telling you”.

What then happened after was that there was a collective gasp in the room while the attorney sat by and did nothing. The rest of the board members sat by and did nothing. What is wrong with this picture? *** I would like to think this kind of thing does not happen. But I know it does. This kind of aggressiveness needs to be addressed, and shut down. There are ways for a frustrated or angry board member to handle contact with owners they don’t like. If a board suspects problems with any owner at a meeting-it has choices, including adjournment and/or other disciplinary actions. In this case, the meeting could have been halted after the President’s outburst for a time out or cooling period, the attendees could have taken a break, and the attorney might even have called the Board into a short executive session to deal with the obvious “personnel” issue -i.e., the offensive conduct of a board member. The President should have apologized. To head off such quandaries, a board could be advised to adopt a meeting policy that, aligned with the governing

Jan/Feb 2016 | ECHO Journal

documents, carries some disciplinary action for any attendees who misbehave at meetings, including directors. Directors can be warned through censure and other means, and officers (like the President) can have their office stripped. Owners can be disciplined for misbehavior with fines and even possibly be suspended temporarily from meetings if there are serious behavioral issues to deal with. But observing verbal abuse and threatening behavior without trying to diffuse the situation is not something an HOA attorney or other board members should do. The attorney could warn the board before the next meeting to address the open and aggressive confrontation to take steps to make sure it does not happen again. The President could be unseated and prohibited by board action from addressing members directly. How can anyone trust a board when the President is out of control, the attorney is silent, and the other directors fail to intervene? At some point the outrageous

conduct of the President needs to be addressed.

retaliation. This is not surprising considering the conduct of the President.

Disagreeing with a board and criticizing fiscal spending is not a crime. It is not misbehavior. The approach of owners who are concerned, or fearful, or outraged may be appropriate, or it may be misguided, but a Board needs to take the higher road of acting “professionally” as if it were a government or business that wants to remain successful and does so by keeping an open mind and properly handling complaints. Really, why go on the offensive in an aggressive and disturbing way? It only adds fuel to the fire. It makes the board look bad, or worse, useless. It erodes trust.

For purposes of this subject -how to avoid destruction of trust - this is a graphic example of one of the worst things a board can do i.e., let the President (or any other board member) abuse the power and act out in an irrational way that makes the whole board look absolutely terrible. This kind of childish outrageous behavior speaks volumes.

TIME FOR SOME INSIGHT NOW THAT YOU KNOW WHAT NOT TO DO!

I touched on this in the first newsletter on trust - whichever side you are on, do not respond in like conduct to offensive, threatening behavior. It just escalates the problem.

A Challenging-Meeting Is Coming Up.

Owners in this kind of scenario might be driven underground to address real fiscal complaints behind a veil of anonymity because of fear of retribution and

Do You (as a Board): - Throw Your Hands Up? - Steel Yourselves for a Storm? - Go Into Hiding? None of these things breeds any trust. Instead, it’s time to come up with a plan to address concerns before trouble erupts.

Here are some common examples of difficult meetings: • You know chaos could erupt at an upcoming meeting because of a proposed large special assessment. • 12 echo-ca.org

•

A difficult board election is occurring and you expect trouble at the ballot counting meeting.

• An anti-Board contingent continually disrupts meetings.

Prepare ...prepare ...prepare ...

YOU CANNOT PREPARE TOO MUCH! •

A comfortable room, size, temperature, fresh air/snacks if possible, water at the least, sufficient chairs.

• If no good orator on the board, consider a good script to help overcome nervousness. • Avoid having the manager do the talking, except when asked questions.

• Have copies of the Agenda to pass out. •

Have on hand a properly approved (under the Davis Stirling Act on approving rules) homeowner forum / meeting policy.

•

For homeowner forum time, have an egg timer with a loud ring on hand (while it’s easy to argue with a person, it’s hard to argue with an egg timer).

•

Try to open the meeting with positive comments answering pressing questions and concerns that you know are out there.

•

Provide as many answers as possible either with fact sheets / “experts” presentations / and/or promise of informational followup if there is going to be an opportunity.

• Be sure to provide attendees an opportunity to ask, present, or submit questions. •

Exhibit positive body language, active listening posture, reasonable boundaries, respectful behavior towards all, even the “pain” in the room.

• Maintain emotional control [leave baggage at the door] •

At all times remember there is important business-at hand to be conducted and sometimes parties have to agree to disagree and move on. If any meeting is unsuccessful, the Board simply needs to go “back to the drawing board” and explore options for a Plan B.

Jan/Feb 2016 | ECHO Journal

SOME SPECIFIC TIPS ON PREPARING FOR AND HANDLING PARTICULARLY DIFFICULT MEETINGS. You know chaos could erupt at an upcoming meeting because of a proposed large special assessment. Few things are more distressing for a board of directors then having to tell owners about an impending large special assessment. But there are times the board just has to bite the bullet and do it. Offering the owners a meeting is the only way to really build trust. Some boards just send out a ballot with or without sufficient information for the owners to understand exactly what is going on and hope it passes. At the least owners need to know why the money is needed, what led up to it, and what the board is going to do to make sure it gets put to good use. In my experience, setting up a town hall meeting to discuss the problem and the solution is the best way to get the community on board. If the community is not on board as a group, the directors will be likely be facing much more stressful events in the coming months. If you cannot get the majority of the community on board, then it’s

time to look at providing a reality check, either for the board, or for the owners and figuring out what the alternative options are. To prepare for such a meeting, put together a written communication with all of the information it can provide in the way of facts, circumstances, options, and solutions. Armed with such communication, the board can address not only those who will attend the meeting, but those who will not or cannot. Sending the communication out ahead of the meeting is one option and the benefit of that is to get everyone on the “same page” with a full understanding of what is going on, like it or not. Even if the choices aren’t desirable, understanding why they are the only choices being offered is critical to the process. The other option is for the board to pass out the written communication at the meeting and go over the information in it and then send a summary of any new information gained at the meeting out to all of the owners after the meeting is held. Waiting until after the meeting will give the board the benefit of being able to identify the particular “direction from which the arrows might come” which I noted earlier was something good to know and tweaking the communication in a good way to educate, deflect and explain. If you know where the problems might arise, you can take measures to address the concerns in some responsible way. Having a full written presentation/ communication prepared also helps the directors by increasing their level of knowledge, cohesion, and

understanding so that they can present better at the meeting. This is a great opportunity for trust building. If the board is prepared to answer questions, and is respectful in addressing attendees, it gives the owners confidence the board knows what it is talking about and if owners believe the board has done its homework, and is striving for the best solution, it is can keep difficult solutions on track. Attorneys at such meetings can provide answers to questions of a legal nature such as the legality of the special assessment, the collection options, and the reality that all owners are responsible collectively for the communities’ debts and expenses. The HOA’s insurance carrier, the construction team, the construction manager, and/or the accountant can help present, an answer pertinent questions the members might have. The special assessment might be needed for some construction work; or for legal fees or to pay a judgment, or it might be needed to fund reserves that have been depleted. There are many possibilities of a need for a special assessment but the bottom line is that unless the board can logically explain to the owners the need, the purpose, and the plan, any such meeting, or the election process that is required to pass the special assessment could easily erupt in chaos. In that case, the Board has much more than one problem to deal with. So, the key things to preparing for a difficult assessment meeting are to put together a respectable written communication, plan for a comfortable meeting setting, invite the right people there to provide whatever type of support is needed, and to be open to questions. If you have the right people there to help you answer them, it won’t be so scary. But keep in mind - someone on the board needs to be the chairperson of the meeting. Don’t turn to the manager or attorney or other presenter. This is about building the trust that good leadership is in place, supported by the fact that the right team has been assembled. If as a board you have determined that you do not want to spend the legal fees or any other fees to get the right kinds of experts at the meeting, then I suggest setting it up as an opportunity for the board to present

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FREE Attendance for ECHO HOA Members!

Join us at the San Rafael Educational Seminar Saturday, January 23rd, 2016

8:30 AM to 12:30 PM

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Jan/Feb 2016 | ECHO Journal

the situation, again with a written communication and oral remarks, and to invite attendees to ask their questions, with a commitment to taking written notes or accepting written concerns and questions to be presented to the appropriate Association vendors for a written response following the meeting. If you invite the owners to present their questions and commit to providing them with a response, it is less likely that the board will be pummeled for answers to questions they are not capable of answering. One other suggestion is to limit the meeting attendance to owners as opposed to allowing family members, guests, spouses, or any kind of outsiders - so that the board wonâ&#x20AC;&#x2122;t have to have the fear of anticipation of some lawyer or overbearing relative trying to take control of the meeting. If you have an attorney in your membership, you may need a counter point and determine having the HOA counsel present is a must. You as a board do not want to be shouted down by an aggressive attorney spouting legal theories and threats you have no way of dealing with. If this ever does happen, tell the attorney member

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you are not attorneys and not trained to respond, so write a letter and tell him or her that you will present it to the HOA counsel for a response.

You know that difficult questions will come up at a meeting because you have heard that there are owners who oppose a document update/amendment project and have seen some of the negative opposition messages being circulated. In a situation where the board has presented draft documents in an update/ amendment project with or without a ballot and has heard that one, a few, or some of the owners are grumbling, scheduling a meeting to find out what

is going on and confront the issues headon (and find out where the arrows are going to come from when you send out the ballot) can be a good idea. Pre-preparation for this kind of meeting is the same as for the difficult special assessment meeting. In other words, the board needs to gather all the information it can, present a helpful written communication, and determine whether to send it out prior to or after the meeting to make sure that not only those persons who attend the meeting are privy to the information, but all of those who canâ&#x20AC;&#x2122;t attend the meeting receive it as well. The appropriate team for this meeting might include the HOA attorney, and sometimes the HOA insurance carrier, if there are questions about the insurance obligations in the documents, and any changes. A board usually sees communications being circulated if there are any negative ones. These communication are gold because they provide specific information to the board about what needs to be addressed with the membership. Often a board will discount the reach of such communications and assume

that since there is only one or a few, that most of the owners are satisfied, content, or trusting of what the board does since they never make any noise or come to meetings. It can be a mistake to simply ignore negative communications being circulated. I’ve seen this approach backfire. I’m not suggesting that a board has to air any dirty laundry in front of members. I’m suggesting that a pragmatic approach to any known problem is the best course of action and reiterate that sticking your head in the sand hoping the problem will go away or approaching it on the offensive by aggressively abusing or threatening the source of the complaints isn’t the best course of action.

A difficult election is occurring and you expect trouble at the ballot counting meeting.

The most important thing I can say here is that taking the pulse of the trust level can be critical. If there is any erosion occurring, having the manager or anyone paid by the Association act as the inspector of elections can be a very bad idea. It is best to hire a completely independent company or inspector to count the ballots in any election. I know that most boards and managers believe that they are doing everything above board and no owner has a right to distrust the process. In many cases, the managers do act as the inspector of election to count ballots and there is no question or problem because no one has raised an issue about bias. Managers can act as the inspector of elections for the Association if the election rules so provide but the law in California says that paid vendors cannot act as inspectors of the election unless the election rules authorize it - so it is best to get that potential hurdle out of the way before the election by having election rules that are consistent with California law and the governing documents before an important election.

If any question comes up during the counting of ballots the inspector of elections has to make a decision and depending upon his or her confidence level, might make one of two choices: complete the count at the meeting and declare the election or defer the decision and ask the Board to secure a legal opinion on whatever question arose that caused the inspector to raise questions. What the board or manager cannot and should not do is decide a recount is in order or override the inspector’s decision, without having any legal guidance as to what the right thing is to do about the situation.

An anti-Board contingent continually disrupts meetings. Once again, the best thing a board can do to be prepared for disruptions is to have a good meetings policy in place. Any attendees at a

Jan/Feb 2016 | ECHO Journal

board meeting who come through the door could be handed an agenda and a copy of the meetings policy and then, the board can easily refer to either or both if an owner or a director tries to disrupt the process. Sometimes the other members at the meeting will exert peer pressure to get someone to shut up or stand down because the disruption is preventing the meeting from going forward. If the board has steps in place to take to address an outburst or disturbance, it will be much

more confident about proceeding. As I mentioned earlier, a board might have to take a time out, adjourn the meeting, and if the problem child is a director, address the conduct in a followup executive session hearing to address is as a personnel issue. If the board simply cannot get business done because of disruptions you need some professional advice. I hate to leave you with that particular thought so in closing, consider this:

There is absolutely no doubt that in order for owners to trust a board, the directors must appear knowledgeable, direct, firm, no nonsense, responsive, interested, attentive and sincere. Likewise, there is absolutely no doubt that any owner or group of owners that has concerns about board conduct will have better luck proceeding in an open, factual based, pragmatic presentation of good information - even if that means going door to door to solicit support. Trust is not bred through closed meetings, secret proceedings, offensive behavior or anonymous communications. Beth Grimm is a community association attorney in California. She has served as East Bay Resource Panel chairperson, author of various publications and books about condominium living and the law, is a frequent contributor to the ECHO Journal, and has spoken at various HOA industry groups functions. Visit her at www.californiacondoguru.com for the latest and hottest issues HOAs and homeowners face every day.

How Do You Join ECHO? Over 1,700 members benefit each year from their membership in ECHO. Find out what theyâ&#x20AC;&#x2122;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.

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ECHO Professional Directory

Need Expert Help? Check Out ECHOâ&#x20AC;&#x2122;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

Jan/Feb 2016 | ECHO Journal

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CHARGING AHEAD the ABC’s of EVCS’s By Matt Haulk, Esq.

Jan/Feb 2016 | ECHO Journal

n 1899, race car driver Camille Jenatzy broke the land speed record, traveling at speeds upwards of 65 miles per hour in “La Jamais Content” (“The Never Content”) – one of the first, and the fastest, electric vehicles. In 1901, Ferdinand Porsche (yes, that Porsche) released the first gasolineelectric hybrid.

Over a century later, the rising price of gasoline and growing environmental concerns have brought electric cars back into the mainstream. The buzz has created not only an uptick in sales for Tesla, but also an increase in homeowner requests for electric vehicle charging stations, EVCS’s for short.

In 2012, California passed into law Civil Code section 1353.9 (renumbered as Civil Code section 4745) to promote, encourage, and remove obstacles to the use of electric vehicles throughout California Common Interest Developments. This statute limits an Association’s ability to restrict or prohibit EVC’s, allows owners to use exclusive use common area or license common area to install EVCS’s, and imposes responsibilities on homeowners when it comes to installing EVCS’s. It seems complicated, but the law regarding EVCS’s can be boiled down to three simple points. We call them the ABC’s of EVCS.

Allowed:

The Association must allow EVCS’s; however, it can impose “reasonable restrictions.” For Associations, a

reasonable restriction is one that does not significantly (1) increase the costs of installing the EVCS, (2) significantly decrease the efficiency of the EVCS, or (3) significantly decrease the specified performance of the EVCS.

Be Flexible:

The Association will have to be flexible, as the law provides that the Association must permit a homeowner to install and use an EVCS in common area if it would be impossible or otherwise unreasonably expensive to install the EVCS in the homeowner’s designated parking space. It is important to note that common area stays common area; the Owner simply has a limited license to use it to charge his or her vehicle.

Create a Common Area EVCS:

The law encourages Association’s to act proactively, expressly authorizing Associations to create new parking spaces for EVCS purposes, or to simply install an EVCS in a pre-existing common area space for all residents to share. If the Association does install an EVCS in common area, the statute specifically requires the Association to develop and adopt terms of use for the EVCS.

So don’t forget your ABC’s of EVCS’s, and as always, an ounce of prevention is worth a pound of cure. A well drafted policy (adopted before a dispute arises) coupled with a solid license agreement will keep even the most “Jamais Content” residents happy, charged, and ready for the road.

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Matt Haulk is an attorney with Ragghanti Freitas LLP in San Rafael. He provides general counsel on issues of contract negotiation, fiduciary duties, and governance issues for homeowners associations. He can be reached at MHAULK@RFLAWLLP.COM.

REDISCOVERING COMMUNITY Thoughts On The CID Paradox In The New Millennium 24 echo-ca.org

IN THE CID ENVIRONMENT By Larry J. Pothast, PCAM, CCAM

Jan/Feb 2016 | ECHO Journal

“C

ommunity” is a word as indelibly etched in the American psyche as “freedom” or “liberty.” Ours is a nation founded on principles of individual freedoms, self-expression and individuality. Indeed, at the root of the American experience is a fundamental belief in the kind of rugged individualism that challenged a monarchy, settled a continent and now pushes us further into the heavens.

Yet, underlying this desire for individual freedom and expression has always been the basic human need for social identity. A seemingly primal drive to belong to a greater whole, to be a member of the

“tribe.” In short, a tradition of “community” has grown progressively stronger with each generation of Americans. One need only look at a demographic map of the country to see that a vast majority of Americans live within 500 miles of either coast. Early settlement and family tradition maintaining populations in the east, with weather and opportunity drawing us to the west. This sense of community is so strong that when we meet a new person most of us usually find out about where they are from within a few moments of polite conversation. We identify people with the communities from which they hale. I am a native Nebraskan but often refer to myself as a Minnesotan (having spent many years of my adult life there). Pressed further on the subject I would tell you I was a Lincolnite or Minneapolitan. Pressed still further I would tell you I was from the Russian Bottom in Lincoln or the community of Robbinsdale in Minneapolis. All of this serves to illustrate how attached we, as a culture, are to our

sense of community. For all the complaining, grousing and outright electoral rebellion we subject our political leaders to, we will always hearken back to a place we call “home.” The great anthropologist Margaret Mead once observed that, “An individual member of any society can accomplish anything with the help and support of the group, but left alone to his own devices he will accomplish only half as much and it will mean little without anyone to share it with.” The desire to be accepted and belong, to be part of a greater whole, is not only a matter of personal orientation but necessary for societal and individual development. So here we are. After more than 200 years of experience with the American experiment we are engulfed in the single greatest sociological change since World War II. People are coming together into ever smaller and more tightly knit communities we call common interest developments. In 1965 there were approximately 500 CIDs nationwide. Today it is estimated that there are nearly 300,000. Millions of people have come together in these mutual benefit communities out of either personal choice or economic necessity. How then do we resolve the deeply ingrained issues of self-expression and individualism with the seeming paradox of architectural (and often behavioral) homogeneity demanded by most CID governing documents? As someone who has made a living nearly all his adult life from the progenation of common interest developments, I grow increasingly aware of this paradox. When I first entered the association management business more than 30 years ago I, like most of my colleagues, were strict constructionists regarding architectural control, covenant and rules enforcement. Enforcement, and indeed the covenants and rules themselves, were born out of a perception that “maintaining the value of the asset” required somehow limiting the self expression of individuals within the community. “Maintain, protect and enhance the value of the asset” grew to be a mantra of sorts within the CID industry. Rightly or wrongly it has brought us to the place we find ourselves, often more concerned with conformity than personal contentment.

26 echo-ca.org

In many CIDs the paint is perfect and the lawns are as finely manicured as a European palace. Guests are strictly regulated regarding where they can park while they visit, and for how long. Picket fences within many communities can be painted by the individual members any one of 50 or so shades of white to retain a homogenous appearance. Pets are routinely regulated for type and size. Behaviors of members and guests have become the purview of association policy rather than common sense, reasonable thought and personal responsibility. Litigation and dispute resolution are permeating our mutual benefit communities and directors often find themselves making decisions out of a fear of reprisal or litigation rather than out of a sense of fairness or of building a strong community fabric. In his book “Privatopia” the author, Evan McKenzie, points out that in many ways the proliferation of “walled, gated communities” is symbolic of the deeper divisions seen in society as a whole. Those “who have” increasingly feel the need to protect and isolate themselves from those “who have not” or those who are somehow different. The need to minimize “the threat” has lead us deeper into personal isolation from our neighbors. This “isolationism” often carries beyond the walls and gates of the CID to the very doorsteps of the members of the communities themselves. We are probably all poorer for listening to the sound of shrill voices telling us to be physically and financial afraid of each other’s tastes and behaviors. Growing up in the little town of Alma, Nebraska, we knew and visited frequently with all of our neighbors. It was considered a noble enterprise in those days to reach out to anyone in the community who might be struggling or need help. Transgressions were quickly forgiven and tolerance of individual eccentricities or sometimes odd behaviors, however manifested, was commonplace. These things were viewed as enrichments to the lives of the community rather than violations of some codified standard of behavior. They are the kinds of things that added value and character to every small town in America, and they may be in danger of being lost forever in the new community models that pock the modern urban landscape.

In today’s world of planned communities and high-rise condominiums it is a rare thing for neighbors to even know each other, let alone reach out in time of need. Instead, if someone is in trouble in one of our community associations we threaten to lien their home and then foreclose. Neighbor helping neighbor has never been so far removed from our collective consciousness. Tolerance and forgiveness are words that seem to be missing in the lexicon of CIDs. Perhaps this is how it should be. After all, many community members have no desire to meet their neighbors or become part of the fabric of a larger community. They are content to “live and let live” and do not welcome or desire the community to encroach on their lives. We have come to this point after a long journey that taught hard lessons along the way. It is difficult to imagine we have summated this peak. The journey continues and lessons of the past need to be reexamined for their current and future appropriateness. Common sense needs to be resuscitated in the realm of

CIDs with added emphasis given to the “community” aspect of community governance. To remain vital and viable, CID leaders and managers may need to become less focused on the physical plant and become more focused on the human characteristics of CID living. Associations without a sense of community are merely shells populated by replaceable components rather than friends and neighbors cooperating to enrich and improve the quality of their lives. Nurturing this sense of community will become the greatest challenge of the next 25 years. Striking the balance between the value represented by the bricks and sticks and the sense of “quality of life” is daunting. However, if we should ignore the difference, we may find ourselves facing a political and economic climate that renders the entire concept of CIDs untenable. How then should we start moving toward this idyllic sounding governance Jan/Feb 2016 | ECHO Journal

concept? Perhaps one way might be to begin focusing on “quality of life” issues within the community. We need to begin asking ourselves hard questions regarding covenants, rules and their enforcement. For example, when architectural variances are requested we might ask, “Will this change really negatively impact values?” When faced with frequent violations of a particular rule, we may need to evaluate whether the rule makes sense relative to its impact on value and the enjoyment of people’s homes. Clearly, in our ever more litigious society we need to be diligent against arbitrary enforcement of rules and covenants. However, should the fear of litigation force people to abandon common sense? If it does we will become more and more captive of a system that takes decision making and personal responsibility out of the hands of individuals and places them into the hands of the CID boards. As attorney and association legal expert Wayne Hyatt states in the California Association of Community Managers’ video Community Associations, Can We Talk?, “It is not true that one need to abandon common sense when enforcing rules and covenants. A waiver or special circumstances do not necessarily create a precedent or affect future enforcement.” It may be time to act out of a heightened sense of fairness rather than blindly following the rules without consideration of community and “quality of life” consequences. Grappling with

this concept has proven as much a challenge for the industry as anything we have faced. Time alone will answer the questions about how much of a home’s value is based on the enjoyment of the neighborhood versus the pristine, homogenous look and maintenance of the structures. I suppose, in the end, we would all be well served by becoming a little more “generous of spirit” when dealing with each other inside our communities. Newsletters probably need more emphasis on individuals in the community. Common sense tells us that if you know about your neighbor you will be more likely to think of him or her as someone who acts out of good intentions rather than malice. We as a society have lost the sense of grace that motivated us to walk across and meet the neighbors. Many of us prefer to be left alone. I wonder how much richness and value we leave on our doorsteps because we fail to feel comfortable approaching the people next door or across the street and making them friends as opposed to “strangers living down the way.” Another key element might involve associations making an effort to build a sense of identity in the larger community. Newsletters about the people who live in the association, who make up the fabric of the community can contribute a great deal to raising the awareness about a community’s identity and help galvanize feelings of belonging by the members.

Typically, when a builder constructs and sells a community he/she will spend hundreds of thousands of dollars on advertising to entice buyers to believe the new community is just this side of Valhalla. The builder creates a strong sense of community in order to sell the homes. Once they are sold the builder goes away, the advertising goes away and after a time, the larger community’s awareness of the association goes away as well. There are exceptions of course. There will always be the Rossmoors, Woodbridges and Leisure Worlds that are so large they can not be ignored. However, if the association uses its newsletter properly and distributes it to local Real Estate brokers and appraisers, the local town council, grocery stores, dry cleaners, etc. it might very well become the best advertising vehicle ever to enhance the general market’s perception of the association as a community. In the final analysis, CIDs are about people as much as they are about structures and perfect landscaping. People have personal interests that can be well served by the association. Having evolved somewhat over the years from that strict constructionist described above, I now think that perhaps the small town that dwells somewhere in the heart of each of us, that spirit of neighborliness that was an underpinning of liberty, just might be able to be recaptured inside the CID industry. It will require the effort, rethinking and retooling of volunteer board members and industry professionals but in the end may be the best chance to rekindle the spirit that made communities warm and friendly places where we could count on each other for help, friendship and a resolve just to “do better.” We are in the unique position of creating the future in any image we, as an industry, choose. I suppose it may be an overstatement to suggest that the spirit of “community” dwells as much in the heart as in the organization. We should all hope to listen closely to the sound of that heart beating as we move into the new millennium. Good luck to us all. Larry Pothast was a manager and banker in the community association industry before his retirement several years ago. He was a member of the ECHO board of directors and of several ECHO resource panels.

28 echo-ca.org

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30 echo-ca.org

Unleashing an Associationâ&#x20AC;&#x2122;s Power to Influence Local Policies and Decisions By David J. Larsen, Esq.

Has your homeowners association faced any of the following:

1. A landslide caused by city property? 2. Unpopular land use restrictions? 3. Intrusive neighborhood development? 4. Vehicles speeding through residential streets? 5. Abandoned vehicles on association property?

hether they involve public works, land use, traffic or public nuisance issues, all have one element in commonâ&#x20AC;&#x201D;they are governed by policies and decisions adopted by elected members of local government, namely your city council.

Jan/Feb 2016 | ECHO Journal

The Good News

s an association, you have a tremendous opportunity to influence local policies and decisions because, as a block of voters, you can potentially determine the political destiny of your elected officials. These people are keenly aware of your potential, which is why there is nothing more powerful than 50 to 100 local constituents speaking in unison on a particular matter. Mobile home associations are an excellent example. They have united locally in a number of cities to lobby for adoption of rent control ordinances. They have also mobilized statewide to address related issues of common interest to their members.

Effectively Unleashing the Power You may have heard the saying: “It is more important to be effective than to be right.” Being effective in communicating with elected officials is especially important. If you or your members are written off as ‘gadflies’ or malcontents, it will be extremely difficult to regain credibility. The information in this article is intended to be an outline, not a road map, of how to unleash effectively your power to influence local policies and decisions. The precise road map you follow in a particular instance will depend on the nature of your issue, the process involved and the predisposition of the staff and city council. 32 echo-ca.org

1. MAKE SURE YOUR ISSUE IS WITHIN THE CITY’S JURISDICTION Nothing is more embarrassing than appearing before city council, during ‘public comment’ for example, armed to the teeth with petitions, outlines, exhibits and half the neighborhood, only to find your issue is not within the city’s jurisdiction. It happens! Determine in advance whether you have a school, state, county, special district or city issue. Do not assume every local issue is a city issue.

2. LEARN HOW THE LOCAL AGENCY CONDUCTS BUSINESS You need to get the following information:

• With whom you should speak; • How to get an item on the agenda • What existing policies and political concerns bear on your issue With whom you should speak depends on your issue. Generally speaking, city staff prefers that you bring all issues to them first, not to city council. This may be a good idea because staff may be able to resolve your issue quickly. As a rule of thumb, it is advised to begin with the responsible department head, or in the event more than one department is involved, with the city manager. In the ‘council-manager’ form of government, the city manager reports to city council, and the department heads report to the city manager. On a human note, most city staffers are dedicated civil servants doing thankless jobs for critical citizens. Convince staff members you understand the pressures they face, and you will have a better chance of accomplishing your objective.

I have observed with amazement the change in attitude when I reveal to city staff that I was an in-house city attorney for eighteen years. All of sudden they are dealing with someone who understands, and the question becomes how we can solve the client’s problem, not how staff can get it off their desks. Assuming your problem cannot be solved by city staff, your item may need to be agendized. Getting your item agendized may occur in two ways. Under the Ralph M. Brown Act, entities are required to designate a time at each meeting for public comment on any item within the city’s jurisdiction. This may be a good way to bring a time-sensitive matter to city council’s immediate attention. However, the Brown Act also provides that no action can be taken on matters raised for the first time during public comment. Therefore, the matter will have to be reagendized for future action. Council members and staff typically frown on items being introduced for the first time during public comment because they do not like to be surprised in public by items they are not prepared for. It is generally smarter to start with staff and request that your item be agendized through the city manager’s office. Depending on your item, it may go to a subordinate body. In that event, you will want to find out whether the decision of the subordinate body is final, or whether it is merely a recommendation to city council. If the decision is final, you will want to know how long you have to file an administrative appeal. The period can be as short as 10 days. Recognize that your item may involve long-standing policies and political concerns, which are not to be taken lightly, however silly they may seem. For example, many cities utilize what is referred to as a ‘warrants system’ to determine whether stop signs should be installed at proposed locations. You will be far better off acquiring an understanding of that system than assuming it will not apply in your case. Also, you should become aware of political concerns that may impact your issue, (i.e. a much greater showing may be required to widen a road in a ‘no growth’ rather than a ‘pro-growth’ environment). Simply put, make an effort before the hearing to learn about pertinent policies and relevant political concerns that bare on your issue.

3. DEVELOP AN EFFECTIVE PRESENTATION It is also important to develop an effective presentation. In order to do so, you must strategize, and adhere to some simple ‘dos and don’ts.’ The strategy you adopt will depend on several things. One of the most important is the type of action required to address your issue. City councils take two principal actions: (1) legislative (or ‘quasi-legislative’) actions such as enacting laws and adopting policies; and (2) adjudicatory (or ‘quasi-adjudicatory’) actions such as determining whether to issue a land use permit or approve a subdivision map. The first involves the adoption of laws and policies applicable to all. The second is more like a courtdecision, constituting a ruling with respect to a particular applicant. If your issue is legislative, there is generally less need to hire professionals. The city council does not want to hear from your attorney, they want to hear from you. Therefore, while you may want to consult with professionals in advance, you will want to create the impression at the hearing that a ‘grassroots’ uprising by deeply concerned citizens is occurring. Because of what is known as the ‘separation of powers’ doctrine, legislative decisions are difficult to overturn in court, so the city council’s decision at the hearing will likely be the last word on the subject. If, however, your issue is adjudicatory in nature, there are a variety of legal issues that may arise. While it is easier to challenge adjudicatory decisions in court, you may be precluded from doing so unless you first present your legal points at the hearing. This requirement to ‘exhaust your administrative remedies’ may necessitate legal guidance. It is common to have legal representation at the hearing itself, when the issue is adjudicatory in nature. Things to do to assure an effective presentation include the following: Select one or two group representatives to speak; prepare a well-organized presentation lasting no longer than 10-15 minutes; indicate group support by presenting a petition to city council signed

by the association members; and have as many of your members attend the meeting as possible. Use a ‘win-win’ approach. Be prepared to explain why your proposal is good for the city as a whole, not just your group. An effective approach to resolving challenging issues is outlined in the book, Getting to Yes by Roger Fisher and William Ury, as follows:

• Separate the people from the problem • Focus on interests, not positions • Invent options for mutual gain • Insist on the use of objective criteria. I recommend this book as well as The 7 Habits of Highly Successful People by Steven Covey, because both emphasis concrete ways to transcend competing interests. Things not to do include: employing “NIMBY” tactics (“Not-In-My-Backyard” arguments); making personal attacks, however well disguised; threatening recalls; and parading dozens of speakers to the dais to say essentially the same thing over and over again during the course of several hours. Assume decorum is in order and, at all cost, do not argue with council.

Summary In summary, by recognizing the tremendous power you have and effectively unleashing it, you will be able to influence local policies and decisions to a greater extent than you ever thought possible. David Larsen, Esq. is a sole practitioner in the law Offices of David J. Larsen. His general practice emphasizes real estate, estate planning and municipal law. Dave can be reached at 925.331.8124.

ority of the board has approved it. No board member will prevail on

every matter that comes up; when you are on the minority side, accept it graciously.

Contract Remedies:

Arbitration,

Mediation and

Litigation

Jeffrey A. Barnett, Esq.

34 echo-ca.org

Jan/Feb 2016 | ECHO Journal

otwithstanding the care exercised by the association in negotiating a construction contract, and despite the reputation and quality of the contractor, disagreements can arise. Some of the factors that give rise to these disputes are well known: • In the bidding process, the contract

Alternative Dispute Resolution Negotiation, mediation and private arbitration are forms of alternative dispute resolution (“ADR”). Parties to a contract may obligate themselves to conduct alternative dispute resolution in the event of a claim of breach of contract because of perceived advantages of ADR. These include the following:

price is driven down to a point where the work cannot be completed without change orders. Change orders are then disputed.

• The proceedings are private—in

• There are inconsistencies between the

• Depending on the structure of the

contrast to litigation in the Superior Court where the pleadings are a matter of public record.

plans and specifications that cause conflict between the owner and contractor.

contract clause, the proceedings may be voluntary.

• Job delays occur, and a dispute arises

concerning whether liquidated dam ages may be assessed.

• The contractor becomes insolvent and mechanics liens are recorded against the property.

• Again, depending on the structure

of the dispute resolution clause in the contract, the alternative dispute resolution process may be scaled to the magnitude of the dispute.

• The ADR process may be faster

and less expensive than litigation.

• ADR affords the opportunity for a It is important for the association to anticipate such disputes at the time of contracting and to make a considered election concerning the method by which the disputes will be resolved. These can include negotiation, mediation, arbitration and litigation. The following sample clause requiring mediation before litigation is illustrative: Recognizing the expense and time associated with litigation, the parties mutually agree that in the event of any dispute or controversy arising out of or connected with this agreement, the parties will participate in mediation to be conducted by John Jones, Mediator Extraordinaire. The parties further agree that, in the event either party files suit prior to submitting the dispute to mediation as provided herein, the Superior Court may issue an order staying or dismissing the proceeding until mediation has been completed, and the party failing to participate in mediation shall not be entitled to attorney’s fees in any subsequent litigation. 36 echo-ca.org

resolution that is more flexible than litigation. Instead of “winner takes all,” a business solution can be reached that has advantages to both sides.

Negotiations The construction contract may contain a clause requiring that, in the event of a dispute between the parties, the parties meet and confer in good faith in an effort to resolve the issues. The following language is illustrative: Recognizing the time and expense associated with litigation, the parties agree that in the event of any dispute or controversy arising out of or in connection with this agreement, the parties shall first endeavor to resolve the controversy or dispute through good faith negotiations. In the event such negotiations are unsuccessful, the parties further agree as follows:... The successful resolution of a construction dispute through negotiation requires

careful preparation. The parties should develop a careful understanding of the facts, chronology of events and pertinent contract clauses. For example, in a dispute concerning whether a roofing contractor is entitled to a change order for extra labor and materials because the job was larger than specified in the bid, each side must have good factual information concerning the actual size of the project. The parties must also understand whether the contract provisions allow for a change order under these circumstances or, instead, whether the contract price was fixed based on the actual size of the project, which was available for inspection and measurement by the contractor before he bid. Contract dispute negotiations benefit from the presence of not only legal counsel for each side, but representatives from the board and the contractor. In addition, the construction manager and/or project architect may be helpful in providing information and recommendations concerning the issues. There are volumes written on the process of negotiation. Experience has shown that a mastery of the facts and honesty and integrity are the key factors in successful persuasion. A good negotiation is a process of mutual education, and from this platform of information a better business judgment will be made by each side, recognizing the potential positive and negative consequences of resolving the claim or proceeding to another form of alternative dispute resolution or litigation. California law encourages parties to be candid in their settlement negotiations. An evidentiary privilege extends to offers of compromise made in the negotiation. [Evidence Code Section 1152(a)]. Settlements consummated through a negotiation should be confirmed in writing immediately. An interim record should be made and signed by the parties pending the completion of a formal settlement agreement. The settlement agreement should be specific and comprehensive since the parties disputed the terms of their original contract. It is often helpful to attach to the settlement agreement relevant documents. For example, the contractor and association may attach a change order to the settlement agreement, identifying it as one that will be issued; but the settlement agreement may also state that there will be no other change orders on the project concerning the issue that has been resolved.

• The mediation process can

Mediation The parties to a construction contract may agree that, in the event of a dispute, they will submit their matter to mediation. Mediation is a settlement negotiation facilitated by a neutral third party. The mediation agreement may specify that if negotiations and/or mediation are unsuccessful, the dispute will then be resolved through binding arbitration. Alternatively, the agreement may provide that under those circumstances the parties are free to litigate their dispute in the Superior Court. The parties also can agree in advance that if the mediation is not successful, the mediator will make a binding decision. The mediator does not have the ability to decide the dispute between the parties. Instead, the mediator exercises a unique skill set which enhances the prospect of a resolution of the dispute between the parties through a negotiation process. In construction contract disputes, the mediation will typically be attended by representatives of the association and the contractor, as well as attorneys for both sides. The mediator often will meet with both sides jointly and then have the parties break out into separate areas where the mediator can meet privately with each, to assist in the evaluation of the claim. The mediator generally has a neutral role in the mediation, but in some instances may provide his or her opinion concerning the valuation of the claim. Mediation has been highly successful in the resolution of contract disputes. Some of the reasons that mediation is favored for this purpose are:

• The parties have control over the outcome.

• The business relationship between the parties can be preserved.

• Mediation encompasses a solution that is focused on resolution, not designating blame.

• Mediations are private and

confidential. [Evidence Code Sections 703.5, 1115 and 1152].

avoid problems inherent in direct negotiations.

• Mediations are considered faster and cheaper than litigation.

Mediations generally begin with a confidentiality agreement confirming the private and confidential nature of the process. If the mediation is successful, the settlement agreement specifies that it is admissible in evidence, is enforceable in a court of law, and may be disclosed outside of mediation.

Contractual Arbitration The parties to the construction contract agree that disputes will be resolved through an arbitration process. That process may be binding or non-binding. It may involve one or more than one arbitrator. It may refer to the rules of an arbitration service, such as the Construction Industry Rules of the American Arbitration Association or the Comprehensive Arbitration Rules and Procedures of JAMS/Endispute. Contractual arbitration shares many of the advantages of mediation. These include:

• Potentially faster results than

through Superior Court litigation.

• Potentially less costly dispute

resolution than in Superior Court.

• Privacy. • Control in the selection of a

decision maker or decision makers who may have more specialized knowledge of the industry. Although arbitration of construction disputes is often successful from the perspective of both sides, there are distinct disadvantages to the process. These include the fact that some arbitrations have proven to be slower and more expensive than traditional litigation. Also, arbitrators are not obligated to follow the law and instead may make a decision based upon their own sense of justice and fair play. Even if the arbitrator makes a clear mistake, it may be impossible to set aside an arbitration award. There may be no right to discovery, so

preparation for the hearing is limited. In general, third parties who did not sign the agreement are not bound by it. Therefore, a dispute involving a third party, such as a subcontractor, is difficult to resolve in an arbitration between the homeowners association and general contractor only. Finally, there is anecdotal information that arbitrators tend to make compromise decisions, rather than issue a decisive award in favor of a party who is entitled to it. The limited grounds to vacate or correct an arbitrator’s award include exceeding the arbitrator’s power, fraud, failure of the arbitrator to disclose matters indicating possible bias, actual bias, evident partiality, failure to determine necessary issues, and prejudicial refusal to continue the arbitration or hear evidence. Therefore, the inclusion of a mandatory arbitration clause in a construction contract should be carefully considered. Many lawyers routinely advise against binding arbitration clauses. They reason that when a dispute arises, the parties can always mutually agree to binding arbitration. However, at that time they will know the scope and character of the controversy, so an intelligent decision can be made regarding whether or not to waive the rights of discovery, the right to a jury trial, the right to appeal, and other important legal rights. If binding arbitration is included in the construction contract, in contrast, those rights will all be waived regardless of the size and importance of the dispute.

Conclusion It is apparent that the parties to a construction contract have significant choices in their approach to prospective disputes under the agreement. It is advisable that homeowners associations confer with their legal counsel concerning the advantages and disadvantages of each approach before committing to a particular method of dispute resolution.

Jeffrey A. Barnett, Esq. is an association attorney with legal offices in Los Gatos. He is a member of ECHO’s Legislative Committee and the Legal Resource Panel. Jan/Feb 2016 | ECHO Journal

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.

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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.

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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

2016 Condominium Greenbook

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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.

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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.

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

New Members Elliot Katzovitz Insurance Agency 5701 W. Slavson #108 Culver City, CA 90230 Contact: Elliot Katzovitz Tel: (310) 945.3000

Reliable Pavement Services, LLC 7226 Golf Course Lane San Jose, CA 95139 Contact: Rick Scheibley Tel: (408) 225.8940

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about ECHO

Ace Property Management..................14 www.acepm.net

Heritage Bank of Commerce...............17 www.heritagebankofcommerce.com

Associa Northern California M & C Association Management Services...........................2 www.mccommunities.com

Levy, Erlanger & Company..................23 www.hoa-cpa.com

Benjamin Moore Paint & Company...28 www.benjaminmoore.com Berding Weil..........................Back Cover www.berding-weil.com Community Management Services....16 www.communitymanagement.com Cornerstone Community Management.........................................12 www.cornerstonemgt.biz Eugene Burger Management..............10 www.ebmc.com Forster Management............................18 www.forstermanagement.com

Mutual of Omaha Bank.......................18 www.mutualofomahabank.com PML Management Corporation..........26 www.pmlmanagement.com R.E. Broocker Co...................................33 www.rebroockerco.com Rebello’s Towing..................................13 www.rebellos.net Silicon Valley Civil & Structural Engineers................33 www.Qengineers.com Union Bank...........................................11 www.HOAbankers.com White & MacDonald, LLP....................27 www.wm-llp.com

WHAT IS ECHO? Serving Homeowners to Build Strong Community Associations 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.

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............................$30

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. August2016 2013 || ECHO ECHO Journal Journal Jan/Feb February 2014

41 41 41

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

Jan. 7, 11:45 a.m.

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

Denise Wolford, CCAM 415-458-3537

TBD

Jan. 8, 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

Jan. 21, 11:45 a.m.

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

Pam Marsh 415-686-9342

TBD

Feb. 10, 11:45 a.m.

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

Cindy Wall, PCAM 925-830-4580

TBD

Feb. 12, 11:45 a.m.

South Bay Resource Panel Flames Eatery 88 S. 4th Street, San Jose

Geri Kennedy 408-398-4227

TBD

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

42 echo-ca.org

ECHO honor roll

ECHO HONORS VOLUNTEERS Resource Panel Chairs

Seminar Speakers

Recent Contributing Authors

Accountant Panel Adam Haney, CPA 888-786-6000 x317

East Bay John Gill, Esq. Beth Grimm, Esq. David Levy, CPA Andrea O’Toole, Esq. Alex Noland, Esq. Ann Rankin, Esq. David Stompe Mark Wleklinski, Esq.

May 2015 John Allanson Sharon Glenn Pratt, Esq. Tom Del Conte Helen Loorya, PCAM, CCAM, CMCA Hanh Pham, Esq.

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.

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

June 2015 Ken Kosloff Tom Fier, Esq. Alex Guy and Rob Rosenberg David Larsen, Esq. Steven S. Weil, Esq. 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 | ECHO Journal