Journal_07_04 by Echo

April 2007

A Journal for Community Association Leaders

echo-ca.org

Hats Off To Associations ALSO INSIDE THIS ISSUE:

• 2006 Case Law Update • Owner of Record • On Time and On Budget Change Service Requested ECHO 1602 The Alameda, Suite 101 San Jose, CA 95126

PRSRT STD U.S. Postage PAID Sundance Press 85719

The ECHO Journal is published monthly by the Executive Council of 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 person should be sought.

Contents 2007 ECHO Annual Seminar on page 12

2006 Statute and Case Law Update—Part 2 A summary of the new laws passed by the California Legislature and signed by the Governor in 2006.

ECHO 2007 Annual Seminar The theme for 2007 is “Hats Off to Associations.” Now is the time for board members and professionals to make advance reservations for this event.

Getting Your HOA On Time and On Budget Using an effective construction manager who has good communication skills, keeps the board informed, creates a cooperative environment, and is a friend and ally to the board is one good way to project success.

18 28

Owner of Record?

1602 The Alameda, Suite 101 San Jose, CA 95126 408-297-3246 Fax: 408-297-3517 www.echo-ca.org info@echo-ca.org Office Hours: Monday–Friday 9:00 a.m. to 5:00 p.m.

Vice President Karl Lofthouse

Departments

31 Legislation at a Glimpse 32 ECHO Bookstore 34 News from ECHO 38 ECHO Volunteer Honor Roll 38 About ECHO 41 ECHO Marketplace 41 Advertiser Index

On the Cover Can you afford not to attend? 2007 ECHO Annual Seminar Page 12

April 2007 | ECHO Journal

Executive Council of Homeowners, Inc.

Have Truck, Laptop, Cell Phone–Will Travel

27 Directory Updates

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

Board of Directors and Officers President David Hughes

26 Calendar of Events

Law and governing documents refer to “owner of record.” Learn just what that means.

The best service providers may not be locally available, so why should an association restrict itself to average quality service—simply because it is local.

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.

Treasurer David Levy Secretary Dorothy Kopczynski Directors Paul Atkins John Garvic Robert Rosenberg Richard Tippett Steven Weil

Jerry L. Bowles Robert Hood Diane Rossi Wanden Treanor

Executive Director Oliver Burford Communications Coordinator Tyler Coffin Legislative Consultant Government Strategies, Inc. Design and Production George O’Hanlon ECHO Mission Statement The mission of ECHO is to advance the concept, interests and needs of homeowner associations through education and related services to board members, homeowner members, government officials and the professionals in the industry.

CommonSense By Tyler P. Berding

The Contractural Community Why Community Associations Are Not Governments

rticles in this and other publications devoted to the science of community association operations and management often discuss the concept of “community association” as if it were just another subdivision of local government. It is a common perception because so much discussion about this unique housing type is devoted to questions of governance. We have boards of directors that, in some respects, appear to be like city councils. There are property managers who carry out many of the same functions as city staff. The property so governed has many of the same physical accoutrements as a town or city—streets, utilities, parking, recreation facilities, etc. There are controls that are seemingly analogous to municipal government, where ordinances such as zoning place restrictions on individual property rights in order to give effect to the paramount needs of the city or county, as determined by the elected policy-makers. But while these two governance systems may appear similar, their respective legal bases are really quite different. Understanding this difference may help to understand why the occasional characterization of community associations as “mini-governments” or “quasi-government agencies” is particularly inapt and can lead to false assumptions about community associations. The sovereignty of our political government is subject to the limitations imposed upon its authority by various constitutional provisions, but its continued existence, short of war or violent revolution, is assured. A community association is not a sovereign entity, even though in many cases and in many of its duties, it appears as one. Its continued existence is wholly dependent upon the collective will of the owners of the property, and it has no assurance whatever of perpetual life. Most of the law of community associations, both common and statutory, is based upon one fundamental concept—the interests of the individual and those of the community must function in a kind of consensual harmony in order for the com-

munity association to work. That is, virtually every operation of a community association, and all of its authority, is derived from a private, contractual relationship among the owners; and these agreements, while stated in the CC&Rs and in the bylaws, are nevertheless wholly dependent upon the collective will of the parties to that contract— the owners and others who may share an ownership interest, such as mortgage lenders. The entity exists only with their continuing acquiescence. At any time, these owners, by whatever voting percentage is required, could terminate the community association by the simple expedient of amending the governing documents to eliminate it. Of course, the voting percentage may, in some cases be as high as 100 percent of the owners. Also, the law of partition and corporate dissolution would have to come in to play in order to parcel out the common property, and the interests of lenders would have to be considered, but at least in theory, it could be done. The same is not true for public entities, which as subdivisions of federal and state government derive their right to exist from the authority of the “sovereign” to use an old but still valid concept, limited only by the rights granted to individuals by the Constitution of the United States, the Bill of Rights, and the various state constitutions. Even if 100 percent of the citizens of the United States voted to do it, they could not terminate this country’s existence. Only Congress, supported by a significant number of state legislatures, has the power to amend the Constitution. From this sovereign authority comes the police power with which all government entities enforce their authority to govern. The authority of the community association is not derived from constitutional law, per se, but rather from the common law of contract, as augmented by a few relevant statutes, and, as such, are completely at the mercy of the parties to the Continued on page 25 ECHO Journal | April 2007

By Jeffrey A. Barnett, Esq.

2006 Statute and Case Law Update Part 2—New Legislation

his summary of legislative developments distills the new law passed by the California Legislature and signed by the Governor in the 2006 calendar year. A wide range of topics is addressed by the new law. The full text of the bills discussed in this review may be read at www.leginfo.ca.gov/bilinfo.html. California law consists of the statutes enacted by the Legislature and also the common law, which is made by the courts in the form of published decisions of the Courts of Appeal and the California Supreme Court. Case law developments in 2006 were summarized in the March issue of the ECHO Journal. SB 1560 In September 2006, the California Legislature enacted “cleanup” legislation to address certain criticisms of SB 61, the election law that became effective July 1, 2006. The impact of SB 61 was described in my 2005 Statute and Case Law Update article published in March 2006. This cleanup legislation became effective on September 18, 2006, retroactive to July 1, 2006. The key changes made by SB 1560 can be summarized as follows: 1. Allows the inspector to appoint and oversee additional persons to verify signatures and to count and tabulate votes, on the condition that these assistants are independent third parties. 2. Added removal of members of the board as a category of votes that must be conducted by

7. 8.

secret written ballot, in addition to the election of directors, amendments to the governing documents, grants of exclusive use common area property and votes on assessments. Clarifies that the quorum requirements in the bylaws apply to secret ballot elections, and that each ballot received by the inspector is treated as a member present at a meeting for purposes of determining the quorum. Requires cumulative voting for the election of directors by secret ballot if cumulative voting “is provided for in the governing documents.” Note that the Corporations Code permits cumulative voting unless prohibited in the bylaws. If the bylaws do not mandate cumulative voting, but do not prohibit it either, cumulative voting may be required in the secret ballot process. Recognizes business entities as independent third parties who may be inspectors of election. Requires that the election inspector’s determination of the closing of the polls be consistent with the governing documents. Requires the inspectors to determine the tabulated results of the election. Clarifies that proxies are distinct from secret written ballots, and that proxies may be used if permitted by the bylaws and meet the requirements of the governing documents. Further clarifies that the association is not required to prepare or distribute proxies as part of the election process.

ECHO Journal | April 2007

9. Specifies that proxies may be revoked prior to receipt of the ballot by the inspectors. 10. Modifies the information required to be placed on the outer envelope by the voter. Specifically, the voter must sign his or her name, indicate his or her name, and indicate the address or separate interest identifier entitling him or her to vote. 11. Authorizes the inspector of election, or a designee, to verify that the member’s information and signature on the outer ballot prior to the meeting at which the ballots are tabulated. Further specifies that

ballots are irrevocable once received by the inspector of elections. 12. Requires the inspectors to maintain physical custody of the ballots until nine months after the election, at which time custody is transferred to the association. The inspectors must make the ballots available for inspection if there is a recount or other challenge to the election process. Recounts must be conducted in a manner preserving the confidentiality of the vote. The ballots must be stored by the association for at least one year after custody is transferred from the inspectors.

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13. Allows the election rules to provide for nomination of candidates from the floor, or by any other manner, and permits the rules to allow write-in candidates. 14. Clarifies that an election may be conducted entirely by mail unless otherwise specified in the governing documents. However, an open meeting of the board or members is still required to count the votes. 15. Resolves conflicts between the DavisStirling Act and the Corporations Code by specifying that the new election law for homeowners associations controls. 16. Clarifies that an association may deliver specifically identified records requested under a Civil Code Section 1365.2 by electronic transmission or machine readable storage media as long as those records can be transmitted in a redacted format that prevents the records from being altered. AB 2100 This new law makes material changes to the requirements for reserve studies and the disclosure of the results of the reserve studies. The annual summary of the reserves that must be included in the pro forma operating budget must now additionally include the following: 1. The current deficiency in reserve funding expressed on a per unit basis. This is determined by subtracting the amount of actual cash reserves from the estimate of the cash reserves necessary, and dividing the result by the number of residences in the community. If reserves are prorated, the proper adjustment must be made to reflect the per unit reserve deficiency. 2. The budget must disclose whether the board has determined to defer repair or replacement of any major component with a remaining life of 30 years or less. If deferral is occurring, a statement of justification is required. 3. More detail is required in the budget disclosures concerning anticipated special assessments. If a special assessment is anticipated, the disclosure must include the estimated amount, commencement date, and duration of the assessment. 4. The budget must describe the mechanism by which the board will fund reserves including assessments, borrowing, the use of other assets, deferral or alternative mechanisms. 5. Whether the association has any outstanding loans with an original term of more than one year, including the bank, interest

rate, amount outstanding, annual payment, and expected payoff date. 6. A statutory form summarizing reserve funding is now mandated. The form is found at Civil Code section 1365.2.5 (see page 76 of the ECHO Community Association Statute Book). The calculation of the reserves in this form may not assume a rate of return on reserves in excess of 2% above the Federal Reserve Bank discount rate. If the reserve study reflects that special assessments will be required to meet the associationâ&#x20AC;&#x2122;s repair and replacement obligations over the next 30 years, the approximate date and per unit amount of the anticipated special assessment must be disclosed. 7. Commencing January 1, 2009, a summary of the reserve funding plan adopted by the board must be included in the pro forma operating budget, with a disclosure to the members that the full reserve study plan is available upon request. 8. The reserve funding plan that is now required to be included in the reserve study must be adopted by the board at an open meeting. If the board determines that an assessment increase is necessary to fund the reserve funding plan, the assessment increase shall be approved in a separate action of the board. In other words, the board is still subject to the requirement for membership approval of special assessments in excess of 5% of the budgeted gross expenses (except for defined emergency assessments) or in excess of the 20% annual increase in the regular assessment.

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AB 2624 This bill made a number of technical changes relating to the collection of assessments by homeowners associations through nonjudicial foreclosure. These changes follow: 1. Authorizes the foreclosure trustee to receive fees for the cost of service of either a notice of default or the decision of the board to foreclose upon a residence. 2. Clarifies the parties who received the notice of default. This is the owner of record in the associationâ&#x20AC;&#x2122;s records, unless another person has been designated by the owner as his or her legal representative in a writing mailed to the association. 3. Requires the notice of sale in the nonjudicial foreclosure process to now include a statement that the property is being sold subject to a right of redemption. Owners ECHO Journal | April 2007

have 90 days after the foreclosure sale to repurchase the property for the amount of the delinquency plus accrued foreclosure costs. 4. Specifies that the nonjudicial foreclosure procedures associated with assessment liens are privileged communications, which protects the association and its agents from certain liabilities. AB 1881 This bill added Civil Code Section 1353.8 to the Civil Code. The new statute prohibits the architectural guidelines of a common interest development from prohibiting or including conditions that have the effect of prohibiting the use of low water-using plants as a group. Presumably, this means that the landscape standards for plantings in planned developments cannot include a blanket prohibition against succulents. AB 2210 This bill made a number of changes to the California Vehicle Code which impact towing from homeowners associations. Among these changes are the following: 1. The former separate statute concerning towing from common interest developments, Vehicle Code Section 22658.2 was repealed. Towing by common interest developments is now governed by Vehicle Code Section 22658. 2. Legislative findings were made which authorize local authorities to license and regulate towing truck companies. 3. Prohibits the immobilization of the vehicle with a device designed and manufactured for the immobilization of vehicles, except by police officers and traffic enforcement officers. 4. The signage requirements remain a precondition for towing from an association. 5. A vehicle cannot be towed unless 96 hours have elapsed from the issuance of a notice of parking violation. 6. Towing is permitted after 24 hour notice to the local traffic law enforcement agency, if the vehicle lacks an engine, transmission, wheels, tires, doors, windshield, or any other major part or equipment necessary to operate safely on the highways. 7. Tow truck operators are required to give specific written notices to the registered and legal owners of the vehicle. The association and operator are liable for storage or towing charges if there is a violation of the notice requirements. 10

April 2007 | ECHO Journal

8. A towing company may only charge onehalf of the regular towing charge if the owner of the vehicle or his agent returns to the vehicle after it is coupled to the tow truck but before it is removed from the property and is in transit. 9. Charges for towing and storage are limited. The penalty for violation is four times the amount charged and is a misdemeanor. Credit cards must be accepted for payment of towing and storage charges. 10. Vehicles cannot be towed from a common interest development without first obtaining written authorization from a representative of the association, who must be present at the time of the removal and verify the alleged violation. The written authorization must include the make, model, vehicle identification number, and license plate of the vehicle, the name, signature, job title, residential or business address and working telephone number of the person authorizing the removal of the vehicle, the grounds for removal, the time when the vehicle was first observed parked at the private property, and the time that authorization to tow the vehicle was given. 11. General authorization to remove a vehicle at the towing company’s discretion cannot be delegated to a towing company except in the case of the vehicle unlawfully parked within 15 feet of the fire hydrant, or in a fire lane, or in a manner which interferes with an entrance to, or exit from, and private property. That general authorization must be in a written agreement. The towing company must take a photograph of the vehicle that clearly indicates the parking violation prior to removing the vehicle.

Reserve Fund Essentials Reserve Fund Essentials is a “must” for everyone associated with coowned properties. Handling a property’s reserve fund is simply the single most important responsibility of all Boards of Directors. This 94-page book looks at virtually every aspect of reserve fund management—and some of them are areas that often get little or no attention. The authors don’t pontificate or conjecture. They explain in a tell-itlike-it-is style just what you must do to keep your reserve fund healthy. Available now from ECHO (see page 32 to order).

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AB 2618 This bill amended Civil Code Section 1369.520 to clarify that the request for resolution procedure applies only to enforcement actions that are solely for declaratory, injunctive or writ relief, or for that relief in conjunction with a claim for monetary damages not in excess of the Small Claims Court jurisdiction.

Jeffrey A. Barnett is an association attorney with legal offices in San Jose. He is a member of the Legal, Central Coast and South Bay Resource Panels, the ECHO Legislative Committee and a past member of ECHO’s board of directors. He also frequently speaks at ECHO seminars and writes for the ECHO Journal. ECHO Journal | April 2007

ECHO 35th Annual Seminar June 2, 2007 “Hats Off to Associations” is the Theme for 2007

n-site registration at the 2007 ECHO Annual Seminar will begin at 7:30 a.m. on Saturday, June 2, in the main lobby at the Santa Clara Convention Center. Now is the time for homeowner association board members and professionals to make advance reservations for this event. Ask your fellow board members and your associates who live in other common interest developments to join you for a day of education and fun at this important event. Convince them that they need to hear updates about every important CID responsibility and issue, to see new products and to share in the large number of prizes and favors distributed by 125 Trade Show exhibitors. Annual Seminar sessions this year as always will address many of the challenging concerns currently facing association board members. Just a few of the highlights of the 2007 program are listed below: • The “HOA University” track will review every major aspect of board duties and responsibilities for beginning board members. Certificates will be awarded to those who complete the entire program. • Update on Proposed New Legislation that will affect community associations.

April 2007 | ECHO Journal

• Discussion of Earthquake Insurance in today’s market. • Review of the Secret Ballot Voting requirements. • Management of Member Discipline, featuring Attorney Adrian Adams, author of davisstirling.com. • Do you need to Amend Governing Documents? The complete seminar program and registration information appear on page 37 in this issue. The 2007 Seminar and Exhibit will follow the same format as last year’s seminar. There will be one full day of educational sessions, a CACM manager education course (see the course description on page 36 in this issue) on Friday afternoon and the usual 300-page program book. A Friday evening reception honoring exhibitors is planned as a part of the 2007 Seminar. The Trade Show will be open all day Saturday. ECHO publications will be on sale throughout the seminar. Rooms are available at the Hyatt Regency Santa Clara (formerly the Westin) adjacent to Continued on page 15

Hats Off to

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ECHO Journal | April 2007

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ECHO 35th Annual Seminar Continued from page 12

2006 ECHO Annual Seminar

the Convention Center at the special ECHO rate of $114 single or double. Reserve directly with the Hyatt Regency (408-200-1234 or 800-233-1234) to obtain the special rate, being sure to mention the Executive Council of Homeowners. This special rate is available only until May 4. Scholarship Program A limited number of scholarships to cover the cost of Annual Seminar tickets are available, thanks to the generosity of a number of member businesses and professionals. These scholarships are generally reserved for board members or owners who are first-time attendees at the Annual Seminar or who are residents of smaller, poorly funded associations or associations with other sorts of serious operational problems. Preference will be given to representatives of ECHO member associations, but membership is not mandatory. Recipients are not required to be members of their association board. Awarding of scholarships will be handled by selected managers and the ECHO office. Anyone who wishes to be considered for a scholarship should apply, preferably in writing, to Oliver Burford, ECHO’s Executive Director, at the ECHO Office. Summary The ECHO Annual Seminar is the do-notmiss event of the year, and every ECHO member association should participate. The Seminar is the place to get all the up-to-date

Exhibitors and Oliver Burford, Executive Director of ECHO, at last year’s ECHO Annual Seminar

information about operating your association efficiently and legally. Complete the ticket order form on page 37 and mail or fax it to ECHO today. You may also reserve by telephone using your Visa or MasterCard. Plan to attend all day to take full advantage of the information that will be available.

You don’t want to miss this exciting event—California’s largest annual homeowner association seminar and trade show. No matter how many previous seminars you have attended, there will be plenty of new information in 2007 to hold your attention. We want to see you there! ECHO Journal | April 2007

April 2007 | ECHO Journal

Getting Your HOA to “On Time and On Budget” The Right Construction Management Firm Offers Financial Savings and Community Unity By Hermann Novak

n effective construction manager will display great strength through respectful and clear communication skills; will keep the HOA board informed; will create and maintain a cooperative environment; and will be a respected friend and ally to the HOA board. Often home owners in community associations wonder why they can’t just call three general contractors, parade them through the project, and then pick the cheapest bid and get the work done on time, on budget and without problems? Here are four reasons why: Why Use a Construction Manager? Many years of litigation, especially in the HOA arena, taught professionals how complex construction is and that everyone on the project must collaborate effectively. When the team hits the deadline on budget together, it is because the architect, engineering and construction components have been effectively managed—a tall task. In my experience, projects typically start off with a subtle breakdown of communications. Why? Often because of the lack of clearly

defined goals, professional job and material specifications and clear communications. And you will find that many of these “crashed projects” have been started, run and organized by well meaning volunteer home owners who were coerced into “managing” the HOA project. Effective people management, meticulous planning and strategy, and ethical decisions are vital components of a successful project management team and, by adding a quality project and construction manager to the team money, conflict and time will be saved. In my experience, one person on the board has to step up to make a commitment to tackle the issues. Remember, he or she is dealing with a neighbor or even a friend in the association. Some effective techniques for leading this change include: 1. Acknowledge the work done by volunteers 2. Find something positive 3. Stay away from finger pointing Continued on page 22

ECHO Journal | April 2007

Owner of Record What Does That Mean? By Sandra L. Gottlieb, Esq.

April 2007 | ECHO Journal

t comes up all the time. A resident wants to attend and participate at a board meeting or wants to serve on the board of directors. That resident may be a tenant or the significant other of an actual owner of that property, or perhaps the beneficiary of a trust or shareholder of a corporation that owns the property. Often governing documents state that only an “owner of record” can serve on the board, and the Open Meeting Act states that “any member of the association may attend a meeting of the board of directors of the association…” Electing a non-owner to the board of directors, when the governing documents require ownership as a qualification, could jeopardize the legality of the board’s decisions, and perhaps even insurance coverage. Black’s Law Dictionary defines an “owner” of real property as a person who is vested with title to property and has a right to enjoy

that property and do with it as he or she pleases. The “Record Owner” is usually defined in the CC&Rs as the “owner of the Title” at the time of notice. But does this mean that the association is required to go out and check Title? Not necessarily. Typically, the owner of record at a community association is the owner on the association’s records based on the information that was provided, perhaps through escrow when the unit was sold.

record keeping by requiring that the manager keep not only a list of the homeowners, but rather a “current list.” This rather innocuous phrase could actually place an ongoing obligation on the manager to verify correct ownership. If that’s your intention, great; if not, contracts should be rephrased. The association is entitled to rely on its records, unless it is provided proof by way of a recorded deed, that ownership (in whole or in part) has been transferred to someone new. A resident may present the association with a copy of a quit claim deed, showing that he or she may own all or a portion of the property, but that deed may not have been recorded. Then that person would not necessarily be the “owner of record,” at least not recognized by the County Recorder’s Office as the owner, and thus should not be considered by the association to be an owner.

Some management company agreements obligate the manager to a higher level of ECHO Journal | April 2007

Record Owner It is important to determine who the owner of the property is because many activities (read most) at common interest developments require the owner to be the Record Owner of the property. Only a Record Owner can make decisions on behalf of a unit/lot as it relates to association matters. Association disputes over ownership generally arise over the issue of “legal ownership” and are usually easily resolved by determining identity of the property owner as listed on the recorded grant deed. Prior planning and organization should allow a board or manager to ascertain who the true Record Owner of the property is prior to mailing ballots or holding official meetings of the members. Most CC&Rs require homeowners to provide the association with the names and addresses of the Record Owners. In fact, Corporation Code Section 8320 places the obligation on the corporation or unincorporated non-profit association to maintain a list of all homeowners and their addresses. It is the association’s obligation, even prior to the annual meeting, to ascertain who is the record owner for the purpose of collecting assessments and enforcing the governing documents. Because state statute provides that the levy of assessments is a debt of the owner at the time the assessment was levied, going after the correct owner for payment is important, not only to the association’s financial health, but also to limit the association’s liability for proceeding against the wrong person or entity for a debt. Under California law, a recorded interest has priority over an unrecorded interest. What that means is, if two owners claim a right of ownership to a piece of property, the association should treat the Record Owner, the person listed on the recorded grant deed, as the true owner. The same holds true even where a homeowner acquires title to their unit/lot by a quick claim deed, provided, of course, that the deed is recorded. When an unrecorded grant deed is involved or if more than one person claims a right of ownership under a separate recorded grant deed or a representative of a trust claims the ownership, the issue can become murky. If no recorded deed exists or more than one recorded deed is discovered, management should, based on the Davis-Stirling Common Interest Development Act, refer to recorded interests only. Other statutes, not specific to homeowners associations, provide that a grant deed is valid and enforceable even if 20

April 2007 | ECHO Journal

not recorded as long as the grant deed gives notice to all. However, what is more commonly found is that the notice of ownership has not been given to all prospective buyers and does not provide legal notice as required by law. First In Time, First In Right If there is an ownership dispute between record owners and management does not know who to allow to vote (who gets the ballot), management should rely on Civil Code Sections 1213 through 1220, which provide, when more than one grant deed exists, the â&#x20AC;&#x153;Record Ownerâ&#x20AC;? will be the person(s) whose grant deed was recorded first. For example, if a homeowner were to record her or his deed to a unit/lot in 2002 and a subsequent grant deed for that same unit/lot was recorded by another person in 2003, without their being a chain of title that satisfies the transfer of property, the Record Owner would be the homeowner who recorded first. Trust Ownership A problem occurring more and more frequently arises when property is owned in trust. When conducting check in at an official meeting or sending out a written ballot, if a trust ownership is presented, the association should require official verification that the person who wants to vote on behalf of the trust is authorized to do so. The individual is usually the trustee of the trust. Interestingly, although the trustee does not own the property, the trustee has the same legal rights to act on behalf of the property as those who would be afforded any other ownership rights of the association. It is incumbent upon associations to advise homeowners that, if they are a trustee of a trust, they need to provide trust documentation to establish that they have the authority as referenced above. Most times it seems the ownership issue is a problem only in contested elections or when certain members of the association have an agenda. Managementâ&#x20AC;&#x2122;s agenda is to make sure the right owners are representing the memberships in the association. Following the above guidelines will guarantee your success.

Sandra L. Gottlieb is a partner in the community association law firm of Swedelson & Gottlieb, and a principal of Association Lien Services, the assessment lien foreclosure specialists, with offices throughout Northern and Southern California. ECHO Journal | April 2007

On Time and On Budget Continued from page 17

4. Use a “what worked” scenario as the foundation for change 5. Sell the other board/committee members on the value of hiring a professional To re-start your project on the right track, you will probably need to sell the board a new strategy: that a professional management service will yield sustainable results. This will allow the directors involved in the crashed project to keep face! And, do not yield to misguided “give me a second chance” pressure. The board members may now approach you with questions like: “What service do we need?” “How do we qualify those professionals?” and “How do we manage those services after they are hired?” Great questions and by adjusting your approach, these issues will be easy to solve. After a project crash, fear naturally surfaces in meetings. Here is how you help other decision makers reduce their anxiety by asking the questions, “To date, we have done it our way—a way that we felt was cheapest. How has it been working for us? Is there room for a new approach?” For you who have a quality property manager managing your property, you should find them very helpful and a great referral source. But, I suggest that you do not use your property manager also as your construction manager if they are not licensed contractors or engineers.

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April 2007 | ECHO Journal

Your HOA financial expert. That’s us For additional information, please contact: Ms. Christine Lucas Vice President HOA Division 866 375 8617

Take Inventory When the decision to hire a consultant is made, the HOA board should organize a meeting and record it. In brief, the purpose of the “Taking Inventory” meeting is to identify critical modifications in the project schedule, budget, legal matters, and in the overall project status. Unfortunately, associations’ politics and personalities can tangle in this meeting. Use a detailed agenda and have a suitable moderator run the meeting. Finding and Qualifying a Project/Construction Manager Since the construction and project manager should have the expert knowledge the HOA board needs to make better decisions, we do not recommend going to the yellow pages or search among friends and family members. Quality consultant are known to and respected by attorneys, architects, engineers

and general contractors. We suggest that you start off by asking your property manager for referrals. In addition, read the ECHO magazine articles, go to HOA related trade shows, and look for advertisers in the specialty magazines. Here is a partial list of questions and “must-meet” standards when qualifying a project/construction manager: • How many years involved with construction (not in business)? • Is the licensee’s history clean? • In addition to the basic insurance, do they have HOA coverage? • How tainted or clean is their claims record? • Check their references AND • Meet face-to-face • Is the new consultant on time and returns calls promptly? • Are they willing to meet you on your schedule or on theirs? • Do they have long scheduling and bidding times? • How thorough is their qualifying process of services and contractors? • Will they be on the job site frequently enough to be effective? • How much knowledge do they have of new materials & systems? • Are they skilled diplomats creating collaborations or dictators? Back Your Construction Manager as Long as He is Maintaining a Collaborative Environment Much of the recent years of litigation have been the result of many HOAs choosing under-qualified consultants; accepting “cheap bids” over better qualified contractors; approving mediocre specifications or no specifications at all; selecting inferior materials and so on. Construction has evolved substantially over the last several years and many new products will last many years longer than before. The established HOA contractors have matured and have an expertise that a small contractor can not match. Therefore, I strongly caution you not to just invite anybody to bid on your project.

Hermann Novak has extensive experience as an effective liaison for factions within multicultural environments. He has over 25 years of experience in the architectural, engineering, and construction world. He is a California licensed general contractor, a certified mediator and a director on the board of the American Institute of Ethics. ECHO Journal | April 2007

April 2007 | ECHO Journal

CommonSense Continued from page 5

contract, usually the owners of the separate interests. Government agencies are founded upon the principal of government supremacy—that while they must recognize and obey the constitutional rights and liberties of the individual, the public interest, where it has been clearly defined, is always paramount, and the rights of individuals must give way to it when a conflict in authority arises. There are no better examples than the right of the government to tax its citizens and the right of Eminent Domain. To the extent of its authority to levy taxes on individuals, the government’s authority is clearly superior to that of any individual citizen. Similarly, where the public need for property exists, the government may acquire it (with ade-

The legal underpinning of an association is a mere contract quate compensation to the owner) for such public good as rights of way or redevelopment. Now of course, each of these governmental powers is limited by certain constitutional guarantees such as the rights to equal protection and due process, but when those requirements are satisfied, the government is free to act without further restraint. The importance of the public, or “community,” interest as it relates to government is clearly carved into stone; and in this democracy, little doubt of the supremacy of the public interest, as defined and limited by the Constitution, exists. Such assumptions are based upon hundreds of years of democratic political history. We may think that similar assumptions apply to the common interest in a community association, but clearly, they do not. The legal underpinning of a community association is a mere contract, one that depends upon the continuing mutual obligations of the owners to function. For example, the power of an association to assess its members is not analogous to the power of the government to tax. The power to tax is limited only

Continued on page 39 ECHO Journal | April 2007

Calendar of Events

Plan Ahead for ECHO Seminars Wednesday, April 4 Maintenance Resource Panel 12:00 Noon ECHO Office 1602 The Alameda, Ste. 101, San Jose Friday, April 6 East Bay Resource Panel 9:30 a.m. Angius & Terry 1990 N. California Blvd., Suite 950, Walnut Creek Wednesday, April 18 Wine Country Resource Panel 11:45 a.m. Lanahan & Reilley 600 Bicentennial Way, Suite 300, Santa Rosa Wednesday, April 18 Legal Resource Panel 6:30 p.m. Scott’s, Jack London Square Oakland Contact ECHO Office

Thursday, May 3 North Bay Resource Panel 9:30 a.m. Contempo Marin Clubhouses 400 Yosemite Rd., San Rafael Friday, May 4 East Bay Resource Panel 9:30 a.m. Angius & Terry 1990 N. California Blvd., Suite 950, Walnut Creek

Monday, May 14 Accountants Resource Panel 6:00 p.m. Francesco’s Restaurant, Oakland Wednesday, May 16 Wine Country Resource Panel 11:45 a.m. Lanahan & Reilley 600 Bicentennial Way Suite 300, Santa Rosa

Tuesday, May 8 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz

Thursday, May 17 San Francisco Luncheon 11:45 a.m. St. Francis Yacht Club San Francisco

Wednesday, May 9 South Bay Resource Panel 12:00 Noon Il Fornaio 302 South Market St., San Jose

Friday & Saturday June 1 & 2, 2007 ECHO Annual Seminar Santa Clara Convention Center Santa Clara

Saturday, May 12 Marin County Spring Seminar 8:00 a.m. to 1:00 p.m. Embassy Suites 101 McInnis Parkway, San Rafael

Wednesday, June 6 Maintenance Resource Panel 12:00 Noon ECHO Office 1602 The Alameda, Suite 101, San Jose

Wednesday, June 20 Wine Country Resource Panel 11:45 a.m. Lanahan & Reilley 600 Bicentennial Way Suite 300, Santa Rosa Thursday, July 19 San Francisco Luncheon 11:45 a.m. St. Francis Yacht Club San Francisco Thursday, September 20 San Francisco Luncheon 11:45 a.m. St. Francis Yacht Club San Francisco Saturday, September 22 Central Coast Fall Seminar 8:00 to 1:00 p.m. Seacliff Inn, Aptos

Regularly Scheduled Resource Panel Meetings Resource Panel Maintenance North Bay East Bay Accountants Central Coast South Bay Wine Country Legal 26

April 2007 | ECHO Journal

Meeting

Location

First Wednesday, Even Months First Thursday, Odd Months First Friday, Monthly Second Monday, Odd Months Second Tuesday, Odd Months Second Wednesday, Odd Months Third Wednesday, Monthly March, May, August, October

ECHO Office, San Jose Contempo Marin Clubhouse, San Rafael Angius & Terry, Walnut Creek Francesco’s Restaurant, Oakland Pasatiempo Inn, Santa Cruz Il Fornaio Restaurant, San Jose Lanahan & Reilley, Santa Rosa Varies

Directory

UPDATES Updates for the business and professional members listed in the 2005 ECHO Directory of Businesses and Professionals.

Additions John D. Beatty & Company 111 Deerwood Rd., Ste. 380 San Ramon, CA 94583 Contact: Catherine Malaspina Tel: 925-831-1803 Fax: 925-831-2493 www.jdbeatty.com Email: info@jdbeatty.com

Serving the CID industry since 1981, John D. Beatty & Company is Northern Californiaâ&#x20AC;&#x2122;s leading provider of HOA consulting services including: Reserve studies, construction management, DRE budgets, maintenance manuals and expert testimony. Bell Plaza, Inc. 1040 E. El Camino Real Sunnyvale, CA 94087 Contact: Tom Madruga Tel: 408-246-7220 Fax: 408-246-7200 www.bellplaza.com Email: re@bellplaza.com

Since 1985, Bell Plaza Financial Group has been the preferred choice for clients looking for a single source of financial services, including financial planning, insurance, real estate sales and financing and property management.

Continued on page 30 ECHO Journal | April 2007

The Best Firm to Serve Your Needs May Not be Local By Richard Tippett

April 2007 | ECHO Journal

he homeowner association service market is a very specialized market. The typical unit owner is very particular about what he or she expects in the way of service. Boards are increasingly reluctant to part with hard reserved cash for anything less than exactly what they want. And well they should be. When one takes pride in the ownership of one’s unit and in the complex in which one is a member, there is a complementary pride in retaining service providers of a caliber of which one can be equally proud. Yet, a strange thing sometimes happens on the way to the service contract. We who provide these services are painfully accustomed to the plaintive cry, “We want someone local!” This is the age of home offices, faxes, the Internet and telecommuting for purposes of efficiency, better parenting and the benefit of the environment. Therefore, why should an association restrict itself to what may be only average quality service—simply because it is locally available when, within a hundred mile radius, the best service providers in any given field may be available? Few of us would want to hire (or work for) a manager in our field of endeavor whose principal asset or contribution to the project was only that he or she was locally available. Some of the most skilled people in Silicon Valley come here from other parts of the country, even from outside the country, and we compete to work with them. Most of us sought colleges or professional schools that were the best that we could afford or qualify for. If they were in the local neighborhood, that was just an added benefit. Those of us who enjoy wine very probably prefer varieties that are not locally grown and, in some cases, not even locally sold. Our favorite shirts or blouses may well have come from the other side of the Pacific Basin. Even our favorite cuisines may bear names connoting other cultures, other countries. From another perspective, some service providers who may be hired locally, but are limited in experience with homeowner associations, may treat you as a species of apartment dwellers. The result can be the lack of consideration of your personal needs that most associations desire. From my perspective, unless one lives in the Napa area, the most creative CID insurance attorney is not “local.” Only in the East Bay are the largest property management firms “local.” If one lives in Monterey, or Napa, or Sacramento, the best construction ECHO Journal | April 2007

litigation attorneys are definitely not “local.” The most experienced roofing consultants are neighbors only to residents of San Mateo or the Monterey/Santa Cruz corridor. The progenitors of CID construction loan services are only “local” if your association is in San Francisco. East Bay associations may be surprised to learn that there are almost no insurance firms specializing in HOA insurance that are “local.” The only licensed, insured condominium reconstruction management firms are based at opposite ends of the Bay. And, here and there, at remote seeming addresses, are general and specialty contractors, property managers, CPAs, insurance specialists, landscape maintainers, reserve preparers and many others whose service to associations is far above the local competition.

We service providers who serve this market truly believe we are the best in our field. Those of us who have served the market for many years do not see distance as an obstacle, any more than we view after hours or weekend telephone calls as an intrusion. We are a small, dedicated group. Many of us worked diligently to develop the laws, standards and building codes that help define the CID universe. Please don’t rule us off your bid list just because our office or shop seems to be a distance away. E-mail and cell phones make us as accessible as if we were across the street. The Bay Area may seem large; more than a two hour’s drive from end to end. Yet, the same building codes, accounting rules, landscape plantings and management guidelines that are used in Santa Rosa apply in Walnut Creek, San Jose and Monterey. Please, when you seek service, don’t just shop locally. There’s a wide wonderful pool of talent available to you in this, our little piece of the global village.

Richard Tippett of ERTECH, Inc. is the past chair of the Central Coast Resource Panel and the ECHO Maintenance Resource panels, currently serves on ECHO’s Board of Directors and is a regular contributor to these pages.

Business/Professional Updates Continued from page 27

Landscape Management Services 2598-C Wyandotte St Mountain View, CA 94043 Contact: Zachary Smith Tel: 650-428-1801 Fax: 650-428-1802 www.landscsapemanagement.com Email: zsmith@landscapemanagement.com

Changes I.W. Bison Company 5053 Tesla Rd. Livermore, CA 94550 Telephone and fax number remain the same Egger Realty, Inc. 7751 Mill Creek Rd., #A Healdsburg, CA 95448 Telephone number remains the same

April 2007 | ECHO Journal

Legislation at a Glimpse

2007 Legislative Update Bill No.

Author

Subject

Status

Position

Summary

AB 567

Saldana

Office of CID May Be Ombudsperson Heard in Committee March 24

Watch

Would make legislative findings and declarations regarding problems associated with disputes in common interest developments. The bill would state the intent of the Legislature to enact legislation creating a common interest development ombudsperson to provide a neutral, non-judicial forum for resolution of common interest development disputes.

SB 948

Wyland

Mandatory Board Member Training

Hearing in Senate Housing April 17

Support

As of January 1, 2009, would require every member of the board of directors of an association to complete at least one 3-hour course during every term of office relating to decisional and statutory law regarding common interest developments. The bill would require such a course to be approved by the Department of Real Estate.

AB 952

Mullin

BMR Owner Assessment Restrictions

May Be Heard in Committee March 25

Oppose

Would prohibit the board of directors from imposing a special assessment, including an emergency assessment, or an increase in the regular assessment of more than 2% on units that are required by law to be provided to low- or moderate-income purchasers without a vote of the owners of those units in accordance with specified procedural requirements.

SB 528

Aanestad

Topic Restrictions in Board Meetings

Hearing in Senate Housing April 17

Oppose

Would prohibit the board of directors from considering any subject matter at a meeting unless the subject matter was placed on the agenda when the meeting was announced.

SB 127

Kuehl

CID Sale Disclosure Deadlines

In Senate Judiciary Committee

Watch

Would require, in the case of a sale of real property, or a sale or a lease with an option to purchase of a mobilehome or manufactured home, that the required disclosures be made within 3 days of the execution of an offer to purchase. The bill would require, in the case of a sale of a separate interest in a common interest development, that the necessary disclosures be made within three days of the execution of an offer to purchase title to the separate interest or the execution of an offer to enter into a real property sales contract.

February 23rd was the deadline for Sacramento legislators to introduce new legislation. As expected, the arrival of that deadline was accompanied by a swarm of new bills, and it will take some time to determine their possible effect on common interest developments. Expect additions to this list in future months. For updates about these and additional bills, check the ECHO web site regularly (echo-ca.org).

ECHO Journal | April 2007

Books and DVDs from ECHO

Working With Your HOA $22.00 2005 ECHO Business & Professional Directory $10.00 This directory lists all business and professional members of ECHO as of September 2005. Current addresses, telephone and fax numbers, email addresses, and a short description are included. This directory is an invaluable tool for locating service providers that work with homeowner association.

Condominium Bluebook 2007 Edition $18.00 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 frequently-asked questions about associations, along with succinct answers.

Robert’s Rules of Order $7.50 Homeowners Associations— How-to Guide for Leadership $35.00* This well-known guide and reference is written for officers and directors of homeowner associations who want to learn how to manage and operate the affairs of their associations effectively.

Questions & Answers About Community Associations $18.00 For 12 years, Jan Hickenbottom answered homeowners’ questions in her Los Angeles Times column on community associations. Now collected in one volume, readers can find answers to almost any question about CIDs.

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.

This is a valuable guide to all aspects of community association living designed as a practical problem solving guide. Written by two long-time association residents, it uses easily readable language and provides an insightful overview of community living from the viewpoint of experienced owners.

The Uncertain Future of Community Associations $10.00 For 30 years, attorney Tyler Berding has had a unique vantage point in observing new, aging and “evolving” community associations confront the issues they face. The basic premise is: without clarity, wisdom and “tough love,” community associations are doomed to failure.

Home and Condo Defects— A Consumer Guide to Faulty $10.00 Construction

Finding the Key to Your Castle—Revised 2005 $12.50*

This guide is prepared by attorneys Tom Miller and Rachel Miller for anyone having problems with faulty construction on a home or condominium. It explains the various technical aspects of determining who is at fault and who to go after to rectify the situation.

An easy-to-read guide to cooperative living in common interest housing developments, this book covers key points relating to member rights, member responsibilities, association finances, and even to rentals. Answers to many frequently-asked questions about CID operations are included.

Community Association Statute Book—2007 Edition $10.00 This booklet contains the 2007 version of the Davis-Stirling Common Interest Development Act, the Civil Code sections that apply to common interest developments, and selected provisions from the Civil, Corporations, Government and Vehicle Codes important to community associations.

California Building Performance Guidelines for Residential Construction $52.50* This easy-to-read manual is an excellent tool to understand a new home. It contains chapters covering more than 300 conditions that have been sources of disputes between homeowners and builders, offers homeowner maintenance tips, and defines the standards to which a residence should be built.

CID Leadership Two-Disc DVD set

$30.00

Board—An orientation for new board members and a refresher for current members. Meetings—How to conduct effective meetings that stay focused and achieve results. Reserves—How adequately-funded reserves prevent problems in associations. Insurance—Considers insurance to protect multi-million dollar community assets.

Dispute Resolution in Homeowners Associations $20.00 Available late Spring 2007. This publication is being revised to reflect new requirements resulting from passage of SB 137.

Publications to answer your questions about common interest developments Publication Order Form Executive Council of Homeowners 1602 The Alameda, Suite 101, San Jose, CA 95126 Phone: 408-297-3246 Fax: 408-297-3517

Board Memberâ&#x20AC;&#x2122;s Guide for Contractor Interviews $20.00 This report is a guide for directors and managers to use for interviews with prospective service contractors. Questions to find out capabilities and willingness of contractors to provide the services being sought are included for most of the contractor skills that associations use.

TITLE

QUANTITY

SUBTOTAL (Tax included in prices)

SHIPPING COST:

*Add $3.00 per copy for mailing **Add $10.00 per set for mailing

SHIPPING AND HANDLING TOTAL AMOUNT

Board Memberâ&#x20AC;&#x2122;s Guide for Management Interviews $10.00 This guide for use by boards for conducting complete and effective interviews with prospective managers takes the guesswork out of the interview process. Over 80 questions covering every management duty and includes answer sheets matched to the questions.

Yes! Place my order for the items above. q Check q Visa q Mastercard Credit Card Number Exp. Date

Signature

Name (please print) Association (or company) Address City Daytime Telephone

State

Zip

AMOUNT

News from ECHO ECHO 35th Annual Seminar On-site registration at the 2007 ECHO Annual Seminar will begin at 7:30 a.m. on Saturday, June 2, in the main lobby at the Santa Clara Convention Center. “Hats Off to Associations” is the theme for 2007. Now is the time for homeowner association board members and professionals to make advance reservations for this event. Annual Seminar sessions will address many of the challenging concerns currently facing association board members and owners. Several highlights of the 2007 program are listed below: • An “HOA University” track will cover board duties and responsibilities for beginning board members, with certificates for those who complete the program. • Update on New Proposed Legislation. • Discussion of Earthquake Insurance today. • Review of the Secret Ballot Voting requirements. • Why Amend Governing Documents? The complete seminar program and registration form appear on page 37 in this issue. A limited number of scholarships to cover the cost of Annual Seminar tickets are available, thanks to the generosity of a number of member businesses and professionals. Recipients are not required to members of their association board. Awarding of scholarships will be handled by the ECHO office. Anyone who wishes to be considered for a scholarship should apply, prefer34

April 2007 | ECHO Journal

ably in writing, to the ECHO Office. Community Associations Are Not Governments Articles in this and other publications devoted to the science of community association operations and management often discuss the concept of “community association” as if it were just another subdivision of local government. It is a common perception because so much discussion about this unique housing type is devoted to questions of governance. They have boards of directors that, in some respects, appear to be like city councils. There are property managers who carry out many of the same functions as city staff. The property so governed has many of the same physical accoutrements as a town or city—streets, utilities, parking and recreation facilities. There are controls that are seemingly analogous to municipal government, where ordinances such as zoning place restrictions on individual property rights in order to give effect to the paramount needs of the city or county, as determined by the elected policy-makers. But while these two governance systems may appear similar, their respective legal bases are really quite different. Understanding this difference may help people understand why the characterization of community associations as “minigovernments” or “quasi¬-government agencies” is particularly inapt and can lead to false assumptions about community associations. Community associations are anything but “mini-governments” or “quasi- governmental agen-

cies.” They have no power outside of that conferred upon them by the contracts among the owners. They have no “sovereign” or “constitutional” right to exist independent of those contracts, and they exist only until the parties to the “contract” agree otherwise. As such, community associations are not “governments” at all, but merely real property with a management and organizational scheme imposed upon it. They cannot print money. Their continuing existence is completely reliant upon the owners adhering to the contract and continuing to supply the necessary operating capital. They are also quite capable of becoming obsolete. When they do, there will be no constitutional precedent to save them; only the laws of economics will ultimately govern their fate.

with hard reserved cash for anything less than exactly what they want. And, they want to retain service providers of a caliber of which they can be proud. Yet a strange thing sometimes happens on the way to the service contract. Those who provide services are painfully accustomed to the plaintive cry, “We want someone local!” This is the age of home offices, faxes, the Internet and telecommuting for purposes of efficiency, better parenting and the benefit of the environment. Therefore, why should an association restrict itself to what may be only average quality service— simply because it is locally available when, within a hundred mile radius, the best service providers in any given field may be available? When you seek service, don’t just shop locally. There’s a wide wonderful pool of talent available to you in the Bay area. Don’t rule service providers off a bid list just because their office or shop seems to be a distance away. E-mail and cell phones make them as accessible as if they were across the street. Upcoming Events Saturday, May 12 Marin County Spring Seminar 8:00 a.m. to 1 p.m. Embassy Suites, San Rafael

Have Truck, Laptop and Cell Phone—Will Travel The best firm to serve the needs of your association may not be local. The homeowner association service market is a very specialized market. Boards are increasingly reluctant to part

Thursday, May 17 San Francisco Luncheon 11:45 a.m. St. Francis Yacht Club Saturday, June 2 ECHO Annual Seminar Santa Clara Convention Center Santa Clara

ECHO Journal | April 2007

2007 ECHO Annual Seminar

Hats Off to

Associations Saturday, June 2, 2007 8:00 a.m.–4:30 p.m. Santa Clara Convention Center Santa Clara, California 125 Booths in Trade Show, Hundreds of Prizes, New CACM Course, Buffet Luncheon, Ice Cream Social and much more!

Join the Friday Night Gala! Annual Seminar Reception Friday, June 1, 5:00–7:30 p.m. Food, Music, Socializing, Prizes Cost: $35—See Registration Form

The 2007 CACM Course Assessment Collection and Bankruptcy Friday, June 1, 2007 Course Fee: $109 You will leave with a better understanding of the assessment collection process and the remedies that may be used to compel payment and assessments. In order to give you collection tools you can use right away, the complexities of bankruptcy law will be explained, as will judicial and non-judicial foreclosure and requirements of the Federal Fair Debt Collection Practices Act. (3 hours CEU credit) For reservations, call the ECHO Office.

Special Hotel Rates Don’t miss out on the special room rate of $114 single or double at the Hyatt Regency adjacent to the Santa Clara Convention Center. Reserve your hotel room now. Call the Hyatt Regency at 800-233-1234 and mention the Executive Council of Homeowners. The special rate is available until May 4.

Educational Program Saturday Morning 9:00 to 10:10

Saturday Morning 10:50 to 12:00

Saturday Afternoon 1:30 to 2:40

Saturday Afternoon 3:20 to 4:30

HOA University

Administration

Legal

Financial

Insurance

Legal

Amending Governing Documents

2007 Legislative Update

New Voting Law Redux

Handling Defects in Recent Construction

Management and Financial

Establishing a Good Banking Relationship

A Review of Association Financial Status

Effective Approaches to Dispute Resolution

Management of Member Discipline

Maintenance and Facilities

Landscape Updates at Community Associations

Making Major Contracts

Earthquake Insurance in 2007

New Requirements for Towing

June 2, 2007 Do not miss this great educational opportunity— reserve this date on your calendar.

R E GIS T R AT ION FOR M Yes! Please reserve my space at the 2007 ECHO Annual Seminar. Name ___________________________________________________________________ Association/Organization ___________________________________________________ Address _________________________________________________________________ City __________________________________________ State _____ Zip____________ Daytime Phone ___________________________________________________________ Names of Additional Attendees: 1. _________________________________________ 2. ________________________________________ Please reserve tickets for: No. Amount Seminar Only (members) $75 ___________ $___________ Seminar Only (non-members) $90 ___________ $___________ Seminar Buffet Lunch $35 ___________ $___________ Friday Reception $35 ___________ $___________ TOTAL $___________ VISA/MasterCard No. ______________________________________________________ Expiration Date ___________________________________________________________ Cardholder’s Signature_____________________________________________________

Reserve Now Tickets are non-refundable Order will not be processed without full payment Return with payment to: ECHO 1602 The Alameda, Ste. 101 San Jose, CA 95126 Tel: 408-297-3246 Fax: 408-297-3517

Honor Roll

About

ECHO Honors Volunteers 2006 Volunteer of the Year Jerry L. Bowles

ECHO Resource Panels Accountant Panel Edward Riback, CPA, 510-865-5865 Central Coast Panel Darrel Louis, 831-212-0300 East Bay Panel Scott Burke, 408-536-0420 Legal Panel Mark Wleklinski, Esq., 925-691-1191 Maintenance Panel Mike Muilenburg, 408-996-3897 North Bay Panel Diane Kay, CCAM, 415-883-7827 Stephany Charles, CCAM 415-458-3537 San Francisco Panel Jeff Saarman, 415-749-2700 South Bay Panel Ann Philipp, 408-536-0420 Wine Country Panel Ron Hamann, 707-584-4788

Central Coast Winter Seminar Speakers Jeffrey Barnett, Esq. Ronald Block, PhD. Assemblyman John Laird Larry Russell, Esq. Richard Tippett 38

April 2007 | ECHO Journal

Maintenance Fall Seminar Speakers

Recent ECHO Journal Contributing Authors

Bob Booty Rick Hanson David Hughes Mike Muilenburg Brian Seifert Wayne Scott

November 2006 Tyler Berding, Esq. Sandra Bonato, Esq. Michael Gartzke, CPA Susan Green Ann Krilanovich David Levy, CPA

Legislative Committee Paul Atkins Jeffrey Barnett, Esq. Sandra Bonato, Esq. Jerry L. Bowles Joelyn Carr-Fingerle, CPA John Garvic, Esq., Chair Geri Kennedy, CCAM Wanden Treanor, Esq.

SF Luncheon Speakers John Allanson Tyler Berding, Esq. Doug Christison Karen Conlon, CCAM Rolf Crocker Ross Feinberg, Esq. David Feingold, Esq. Tom Fier, Esq. Kevin Frederick, Esq. John Garvic, Esq. Brian Hebert, Esq. Roy Helsing Julia Lave Johnston Garth Leone Nico March Steve Saarman Nathaniel Sterling, Esq. Glenn Youngling, Esq.

December 2006 Adrian Adams, Esq. Jeffrey Barnett, Esq. Tyler Berding, Esq. Gerald Bowden, Esq. Beth Grimm, Esq. Pete Sacco Glenn Youngling, Esq. January 2007 Tyler Berding, Esq. Michael Gartzke, CPA John Paul Hanna, Esq. Paul McLaughlin Lin M. Meyer, Esq. Larry F. Russell, Esq. Mark E. Terman, Esq. February 2007 Tyler Berding, Esq. Michael Gartzke, CPA Beth A. Grimm, Esq. Geri Kennedy, CCAM Gene Simpson Steven S. Weil, Esq. March 2007 Jeffrey A. Barnett, Esq. Tyler Berding, Esq. Robert Booty Michael Gartzke, CPA

ECHO

What is ECHO? ECHO (Executive Council of Homeowners) is a California non-profit corporation dedicated to assisting community associations. ECHO is an owners’ organization. Founded in San Jose in 1972 with a nucleus of five owner associations, ECHO membership is now 1,525 association members representing over 150,000 homes and 325 business and professional members.

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. If your company wants to reach decision makers at over 1,525 homeowner associations, you can become an associate member and join 325 other firms serving this important membership.

What are the Benefits of ECHO Membership? • Subscription to monthly magazine for every board member • Yearly copy of the Association Statute Book for every board member • Frequent educational seminars • Special prices for CID publications • Legislative advocacy in Sacramento

ECHO Membership Dues HOA Size 2 to 25 units 26 to 50 units 51 to 100 units 101 to 150 units 151 to 200 units 201 or more units Business/Professional

Rate $120 $165 $240 $315 $390 $495 $425

ECHO Journal Subscription Rates Members $50 Non-members/Homeowners $75 $125 Businesses & Professionals

How Do You Join ECHO? Over 1,800 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for membership, call ECHO at 408-297-3246 or visit the ECHO web site (echo-ca.org) to obtain an application form and for more information.

CommonSense Continued from page 25

by the vote of the legislature or Congress, and except for a few constitutional limitations, there is virtually no limit on that power other than those imposed by political considerations. The power of a community association to assess is limited both by the contract itself and by statute, and any such limitation cannot be set aside by the board of directors acting alone but must come from a consensus of the individual owners—a true “grass roots” democracy. The right of individual property ownership is clearly paramount to the common interest in a community association. There is no mechanism, in the absence of severe damage or destruction, even by a vote of the members, whereby a typical community association could take possession of an individual’s separate interest, no matter how pressing the need, unless it were the result of non-payment of assessments, for example. There is no community association equivalent to “Eminent Domain.” So, while we sometimes describe them as “mini-governments” or “quasi- governmental agencies,” community associations are anything but. They have no power outside of that conferred upon them by the contracts among the owners. They have no “sovereign” or “constitutional” right to exist independent of those contracts, and they exist only until the parties to the “contract” agree otherwise. As such, community associations are not “governments” at all, but merely real property with a management and organizational scheme imposed upon it. They cannot print money. Their continuing existence is completely reliant upon the owners adhering to the contract and continuing to supply the necessary operating capital. They are also quite capable of becoming obsolete. When they do, there will be no constitutional precedent to save them; only the laws of economics will ultimately govern their fate.

Tyler Berding is a founding partner of Berding & Weil, a construction defect and homeowner association law firm ands a former member and the immediate past president of the ECHO board of directors. ECHO Journal | April 2007

San Francisco Luncheon Thursday, May 17 St. Francis Yacht Club

Policies for People, Pets and Parking Problems Speaker: Beth A. Grimm, Esq. Luncheon Price: $55 Advance Reservations Required for this Event

Yes, reserve _____ spaces for the ECHO San Francisco Luncheon. Amount enclosed: $__________ (attach additional names) Name: HOA or Firm: Address: City:

State:

Zip:

Phone: Visa/Mastercard No.

Exp. Date:

Signature: Return with payment to: ECHO, 1602 The Alameda, Ste 101, San Jose, CA 95126 Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded. Telephone: 408-297-3246; Fax: 408-297-3517

ECHO Marketplace

Advertiser Index

The place to find business and professionals for your association All Seasons Roofing . . . . . . . . . . . . . .10 Alpha Restoration & Waterproofing . .25 American Management Services . . . .20

Reserve Studies and Mold Sampling Foundation and Drainage Analysis

SBI, LLC

Looking for Directors Interested in Networking in Napa

Angius & Terry . . . . . . . . . . . . . . . . . . .3 Applied Reserve Analysis . . . . . . . . . .27 AquaTek Plumbing . . . . . . . . . . . . . .10 A.S.A.P. Collection Services . . . . . . . .29 Arborist Onsite . . . . . . . . . . . . . . . . . . .9

Emergency repairs? Underfunded reserves? Disgruntled homeowners? Sleepless nights for Directors? We are directors of a 34-unit “Self Managed” homeowners association located in the city of Napa, California who believe that networking with fellow directors of neighboring associations is a win–win situation. If you share the view that such networking can help solve problems, save time and money, and ultimately add value for your members, please call David at 707- 265-8609.

Association Reserves . . . . . . . . . . . . .39 Bayridge Group . . . . . . . . . . . . . . . . . .9 Berding & Weil . . . . . . . . . . . . . . . . . .44 Community Association Banc . . . . . . .27 Community Management Services . . .29 Cool Pool Service . . . . . . . . . . . . . . . .39

800-710-3774 • www.sbiusa.net

You don’t know what the day will bring. That’s why you need Russell & Mallett, LLP. We’re experts in all aspects of community association law, construction defect litigation and general corporate matters, including rewriting governing documents. You’ll find us accessible, resourceful, afford-

Cornerstone Community Mgmnt . . . .20 Corum Painting . . . . . . . . . . . . . . . . . .2 Draeger Construction . . . . . . . . . . . .22 Ekim Painting . . . . . . . . . . . . . . . . . . .15 First Bank Association Bank Services . .14 Flores Painting . . . . . . . . . . . . . . . . . .35 GET Insurance . . . . . . . . . . . . . . . . . . .9 Greater Bay Bancorp . . . . . . . . . . . . .23 Helsing Group . . . . . . . . . . . . . . . . . . .9 M&C Association Services . . . . . . . . .14 M. L. Nielsen Construction . . . . . . . . .35 Nature First Tree Care . . . . . . . . . . . .21 Pelican Management Group . . . . . . .29 PML Management Corp. . . . . . . . . . .25 Pollard Unlimited . . . . . . . . . . . . . . . .35 Pratt & Associates . . . . . . . . . . . . . . .21 R. E. Broocker Co. . . . . . . . . . . . . . . .14 Rebello’s Towing Service . . . . . . . . . .24 REMI Company . . . . . . . . . . . . . . . . .39 Russell & Mallett LLP . . . . . . . . . . . . .41 Saarman Construction . . . . . . . . . . . .11 Statcomm . . . . . . . . . . . . . . . . . . . . .35 Steve Tingley Painting . . . . . . . . . . . .24 Steve’s Painting Services . . . . . . . . . . .27 US Bank . . . . . . . . . . . . . . . . . . . . . . .22 Varsity Painting . . . . . . . . . . . . . . . . .42 W. E. Lyons Construction Co. . . . . . . . .8

able and very, very effective. Call us today at 925.947.4915 to see how our practical, expert advice can work for you.

Russell & Mallett, LLP 2900 Camino Diablo, Suite 200, Walnut Creek, CA 94596 • 925.947.4915 • Fax 925.947.4920

We believe you’re better served when you’re better informed. Call today for your free copy of the Russell & Mallett, LLP Law Library. Everything you need to know about community association law. ECHO Journal | April 2007

Peace of Mind Painting. Peace of mind Painting includes: •

A detailed, comprehensive bid outlining all job and product specifications

•

Color consultation with Dr. Color and Digital Color renderings of your project.

•

Communication throughout the project outlining weekly progress. We tailor every job to minimize the disruption to you and to maximize the benefit you receive from the Varsity Painting experience.

•

Our experienced craftsmen painters are uniformed, on time and are respectful of people and property.

•

A 5 year guarantee ( on 2 coat paint jobs ) that includes our Paintenance program. We come out annually and maintain the beauty of the project.

“I have used Varsity Painting now on 2 large projects in the Oakland area. For me, using Varsity means I don’t have to worry about anything. Our painting project had unique challenges that Varsity addressed. Their painters clearly make the difference.” Tulio Mello, Property Supervisor, Fairmount West Development

Serving Northern California since 1993

Face

Learn to

CID Challenges

at the ECHO

Marin Spring Seminar

Saturday, May 12, 2007 Embassy Suites, 101 McInnis Parkway, San Rafael

Hot Topics for 2007 8:00 8:45 9:00 9:40 10:20 10:40 11:20 12:00 12:30 12:50 1:00

Seminar Agenda Registration and Continental Breakfast Welcome Diane Kay, Stephany Charles, North Bay Panel Chairs Oliver Burford, Moderator Statutes 2007: Elections and Beyond Glenn Youngling, Esq. What you thought you knew! Major Construction: Handling the Big Stuff Ken Kosloff What you want to know! Break Pandoraâ&#x20AC;&#x2122;s Box: aka People, Pets and Parking Dave Feingold, Esq. What you need to know! Controversy: ADR, Litigation and Frustration Wanden Treanor, Esq. What you wish you knew! Hot Topics: Pet Peeves from the Legal Panel Dave Feingold, Esq., Wanden Treanor, Esq. Glenn Youngling, Esq. Questions and Answers All Speakers Award Prizes Adjourn Yes, reserve _____ spaces for the ECHO Marin Spring Seminar. Amount enclosed: $__________ (attach additional names)

Hot Topics for 2007

Name:

This year you will face some of these issues. Get informed so you can avoid others!

Address:

HOA or Firm: City:

State:

Zip:

Phone: Visa/Mastercard No.

Exp. Date:

Signature:

Ticket Price: $35

Return with payment to: ECHO, 1602 The Alameda, Ste 101, San Jose, CA 95126 Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded. Telephone: 408-297-3246; Fax: 408-297-3517