Journal_07_06

June 2007

A Journal for Community Association Leaders

echo-ca.org

Painting for Protection and Appearance

ALSO INSIDE THIS ISSUE:

• Art of Communication • Transitions in New HOAs • Conversion Reform Change Service Requested ECHO 1602 The Alameda, Suite 101 San Jose, CA 95126

PRSRT STD U.S. Postage PAID Sundance Press 85719

Contents Barking Dogs on page 32

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Painting for Protection and Appearance

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.

Asking questions prior to a painting project and following the basic procedures in this article will help make your painting project as stress free as possible.

Copyright 2007 Executive Council of Homeowners, Inc. All rights reserved.

Reproduction, except by written permission of ECHO, is prohibited.

The Art of Communication

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

Effective communication is one of the most important areas in a common interest development, but it is an essential tool that many associations lack. This article gives suggestions about ways for boards to improve their ability to communicate with members.

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Jeffrey Barnett—Volunteer of the Year Association attorney Jeffrey Barnett was named the 2007 Volunteer of the Year by the ECHO board of directors, recognizing his outstanding service and support to advance ECHO’s objectives and influence.

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Transitions in New HOAs With many new condominium complexes built in recent years, major problems can emerge in making developer/owner transitions. This article examines the common transitions and ways to navigate them.

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Departments 28 Calendar of Events 29 Directory Updates 32 Association Affairs: Barking Dogs 33 2007 Legislation at a Glimpse 34 ECHO Bookstore 36 News from ECHO 38 ECHO Volunteers 38 About ECHO 41 ECHO Marketplace

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41 Advertiser Index

On the Cover Painting for Protection and Appearance Page 6

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June 2007 | ECHO Journal

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.

Executive Council of Homeowners, Inc. 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.

Board of Directors and Officers President David Hughes Vice President Karl Lofthouse 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

California Needs Condominium Conversion Reform L

ast year we wrote about the serious problems facing owners of condominiums that have been converted from old apartment houses.1 Developers of these older apartment communities often saddle the new owners with years of deferred maintenance and a wholly inadequate reserve budget to deal with it. The problem is gradually being uncovered as the new community associations begin to inspect their properties using reserve analysts and contractors working for the association. It’s not a pretty picture. Several of these conversions in the Sacramento area are so bad that they have begun to attract the attention of the news media. One project reports that of the almost 300 units in the project, 150 remain unsold and the converter has stopped paying assessments on all of them. But issues related to the soft housing market aside, the board of directors of that project has uncovered hundreds of thousands, perhaps millions, of dollars in deferred maintenance left behind by the converter with no funding whatsoever to address it.

Issues include massively deteriorated roof decks under several layers of old roofing that had been covered up by yet another roof overlay; rot behind the siding; landscaping that drains against the buildings resulting in more rot and mold. And the list goes on. Of course, what would you expect from a 25-year old apartment complex that has had most necessary maintenance deferred for over a decade? The association has no funds to deal with any of these problems and has been drawing on its reserves just to meet operating expenses.

Obviously, this situation is going to get much worse. And that project is not alone. Many other conversion projects are beginning to realize that they have similar problems. An informal survey of 1 Berding, Condominium Conversions: Owner Equity at Risk? ECHO Journal, June 2006

community association managers at a recent seminar indicates a high level of concern for this issue.

To date, most of the city ordinances and statutes regulating condominium conversions in California and other states have been directed to protecting the rights of tenants. That has been the “hot button” issue with conversions for many years and rightfully so. Groups who advocate for tenants’ rights have long contended that condominium conversions remove low and moderate cost housing from the market just when we should be building more rental properties.

Of course other groups argue that conversions provide the same low and moderate income people with the ability to own their own home—to get a piece of the “American Dream,” as it were. But just how affordable is a condominium when the true cost of ownership includes responsibility for ten or more years of bad maintenance and repairs?

There are 25-year old condominium projects in the San Francisco Bay Area with repair costs that exceed $50,000 per unit and higher! And those are not conversions. Those started life as new construction. Can you imagine how bad it will be when the present conversions are another ten or twenty years older? By then some of those old apartment projects will be approaching fifty! They probably won’t get that far, however, given that many presently exhibit conditions that raise concerns about basic habitability.

Few low or moderate income individuals could ever afford to pay a $50,000 special assessment on top of whatever they paid for the property in the first place. “Affordability” includes more than just the cost of entry and the size of the monthly mortgage payment. The long-term costs of ownership also have to be affordable, including maintenance Continued on page 37 ECHO Journal | June 2007

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By David L. Hughes

Planning and Preparation for a Successful Painting Project T

here are several questions an association should ask prior to beginning a painting project and setting up a schedule for future painting.

Why are we painting?

Hopefully it is obvious that you are painting to protect the assets of the association from the elements and for esthetic reasons, which enhance the living experience for homeowners, as well as maintaining or increasing the value of the property.

When do we paint?

Painting should be performed before the exterior surfaces show signs of deterioration.

How often do we paint?

It is very important for the long-term condition of substrates that they be painted based on a regular schedule. For wood that means every 4–6 years, and for stucco that means 7–10 years, depending on exposure and the condition of the property. Failure to maintain a regular schedule

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will cost much more in the long term because of siding failure or worse, dry rot of the structure behind siding materials.

Starting the Process Once these questions have been answered, there are three important steps that an association should take prior to entering into a bidding process with contractors. There are several ways to approach each of these issues, but we recommend using resources outside your association in order to expedite the process and simplify the work for the association.

Decide on a Color Scheme for Your Association If you are planning to change the color palette of your association, be prepared to spend a great deal of time on this aspect of the process.

Color is very personal, and individual homeowners generally have very strong feelings concerning the color choices that boards make. Choosing an outside consultant to help you arrive at your choices is a practical and probably prudent

Painting for Protection and Appearance

ECHO Journal | June 2007

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approach to the process. Many paint manufacturers offer this service for free with the use of their product. There are also many paid expert consultants with whom your association can contract to provide and help you with color choices. Remember to start this process early at least 6 to 12 months prior to the anticipated start date of the project.

Don’t plan to have a painter on the job before colors are selected. Your contractor did not bid the project that way; starting the job without colors will cost him money and may slow the job.

Have a Specification and Bid Package Prepared In order to have a method of evaluating the bids you will receive from painting contractors, you must provide bidders with accurate job specific specifications from which they can bid the project. A competent professional who is familiar with your project and has inspected the property thoroughly before preparing the documents should produce these specifications. It may be prudent to hire a consultant to provide these services depending on the size and complexity of the project. Most paint manufacturers will pro-

vide specifications for free if you agree to use their products on your project. It is important that whoever provides your specifications discusses budget issues, the condition of the project and their recommendations for properly painting your association. Your budget should be dictated by what you need and not by how much money you have.

Specifications and bid packages should include the following: • Surface preparation of all included substrates.

• Detail caulking and spot-priming instructions.

• Product specification by manufacturer name and number for specific substrates.

• Number of coats required and application guidelines, which should include back rolling of at least one coat.

• Insurance requirements for the contractor • Contractor’s license requirements.

• Realistic warranty requirements.

• Reference requirements.

• An agreement to follow the provided specification.

Have a General Contractor Inspect and Repair Substrates It is not possible to overemphasize how important surface repair is to the integrity of your painting project. You do not want to be surprised by the problems present with your substrates when the painting contractor begins power washing and these problems reveal themselves. Wood repair must be part of the budget for painting because some work will inevitably need to be done.

Painting over dry rot will not solve the problem, and your contractor and paint manufacturer will not stand behind any identified problem areas.

Bidding the Job Once you have your bid package in hand, you can begin the process of choosing a painting contractor. The telephone book will probably not be your best recourse in this regard. Painting contractors that work with associations have experience working with multi-family housing and individual homeowners. They will meet the higher standards for insurance and communication necessary for your association’s job.

A maximum of four or five contractors should be invited to bid the project; any more bidders will make it unlikely that all those bidding will spend the time to provide a competitive proposal because the chances of getting the job is minimized. Your man-

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agement company, consultant or paint manufacturer can provide you with a list of qualified painting contractors and will assist in facilitating a mandatory job walk for all those interested in bidding the project.

A job walk will insure that all bidders understand the specifics of your job and what is required. The job walk also provides an opportunity for bidders to bring up any concerns they have about your project. If any changes result from the job walk, all participating contractors should be notified in writing in the form of an official addendum from the association. Bidding should not be a hurried process, and you should give the participating contractors time to put together an accurate proposal. Two weeks is probably more than adequate.

Construction Project Management and Architecture for Home Owners Associations

Hiring Your Contractor

Construction administrative services including bidding process

You have received all your proposals from the painting contractors who attended your job walk and now must choose one for your project. Unfortunately, all too often the choice is made to accept the lowest bid. Price is a prime concern, but it should not be the total determining factor. All proposals should be carefully read to insure that each contractor’s proposal accurately reflects the specifications in terms of preparation, number of coats and application. For example, it would seem that asking for two coats would be easily defined; however different contractors define coats differently, depending on their working methods. In general manufacturers define two coats as one application allowed to dry followed by a second application. Some contractors will define it as two coats crosshatched wet (spray technique) or sprayed and back rolled with the back roll being considered the second coat. Because these are competitive perspectives and may or may not be appropriate or specified for your project, it is important to compare such aspects of the several proposals.

Pre-construction consulting & coaching Over 25 years experience in architecture, construction and engineering environments

GE BAYRID GROUP INC

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In the end, most professionals recommend that you interview the contractor you are contemplating hiring at a minimum and preferably the top two or three bidders. This is particularly worthwhile if the bids are close.

The selected contractor will be on the association’s property for several months or more and will be interacting with homeowners on a regular basis. You need to feel comfortable and confident in your decision.

Continued on page 11 ECHO Journal | June 2007

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Painting for Protection Continued from page 9

Interviewing Contractors The process for interviewing contractors should be the same for each interviewee to get a proper comparison. Putting together a group of questions to ask will speed your decision process. The following is a sample list of questions to aid you in your interviews: • With whom do we communicate and how?

• Will a job foreman be on site at all times when work is being done?

• Do you have a clear process for us to communicate with you?

• Can you be contacted after hours and on weekends?

• What are your proposed working hours?

• Where will you store painting materials?

• Are you providing your employees an onsite restroom?

• How will you maintain a clean and safe job site?

• Do you hold weekly safety meetings per SB 198?

• What is your estimated completion date?

• How many employees will you have on the job?

• When would be your proposed start date?

• How will you notify homeowners for power washing, preparation and painting?

• What is your procedure for painting front doors?

• How long have you been in business?

• Will you add the association as an additional insured on your policies for the project?

• With which organizations are you associated? (CAI, CACM, ECHO, CAA) • Do you have a Maintenance Program?

(Your association should have one.)

• Do you provide a closeout binder on job completion?

You can and should add to this list. By asking these questions, you will have a much better picture of how the painting contractor will perform on your job and confidence in the choice you make.

Following these basic procedures should help make your painting project as stress free as possible.

David Hughes is the Painting Division Manager at Draeger. He is president of the ECHO board of directors, a participant in several Resource Panels, and a participant in many ECHO seminars.

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By Beth A. Grimm, Esq.

Surviving Each Other:

The Art of Communication T

he word “communication” often connotes a pleasant feeling of community. Fellowship, a sense of common purpose, and a sharing of common possessions and interests are experiences that are inextricably linked to communication.

Unfortunately, effective communication is the essential tool that many “common” interest developments lack.

If you believe everything that is reported in the newspapers, you might think that homeowner associations are secret societies, police states, and nasty places to live. The reason is that most of these stories revolve around the emotional side of living in an HOA. Emotions cause people to act out and do irrational things.

Homeowners with a “my-home-is-my-castle” mentality often react to HOA regulations with hostility and intense emotion. Whether these homeowners violate the rules out of ignorance or spite, they are bound to clash with the board.

And, when the inevitable confrontation occurs, the board reacts in kind. Mutual defiance creates a pattern of compounding offenses that can cause the situation to spin quickly out of control.

One of the biggest problems that boards have with homeowners is this inability to communicate “artfully.” Board members and managers alike find a significant void of people skills in the course of their daily work with owners, vendors and professionals. Many of these people are busy, anxious and short tempered. Actually, there are days when we find ourselves in that position. So it’s time to pause, breathe, and remember to communicate.

Here are some tips that might help you:

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Take a class on dealing with difficult people.

Courses are offered through local community colleges, web courses, and any institution that teaches mediation skills. You may also check out relevant books in your city or county libraries.

Learn more about “active listening.” Look at the person with whom you are speaking. Make sure that they know you are listening. Try asking questions or giving audible acknowledgments while they speak.

Visualization techniques. One silly but effective method is to visualize an angry person as a balloon that is blown up to capacity; it cannot take any more pressure without popping. Now imagine letting some of that air out. Even though the long squeaking noise may be painful, once the balloon is void of some of its air, it becomes more pliable. This is a common technique that mediators use to help clients work through pentup anger. Once you get past the initial outburst, people often seem much less tense. Once people feel that they have “had their say,” they are more willing to communicate.

Don’t make assumptions. Assuming that someone is right or wrong based on secondhand

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information or personal bias can cause them to close down or make them angrier.

Failing to communicate can lead to big problems. For example, ignoring communications from an angry owner can lead to more correspondence, stronger demands, and even personal attacks. This also leaves the board and the manager without any evidence showing that they acted promptly and reasonably.

Every action leads to a reaction. Make sure that your communications (verbal or otherwise) are planned to elicit the reaction that you want; if you approach someone when you are angry, you can expect an angry response. Also, rather than sending out a letter demanding that owners supply their contact information, try sending out an information card asking for a means of contacting them in case of emergency.

Take a breath. Count to ten, take a walk, do whatever is necessary to avoid “reacting.”

It sounds elementary, but it is imperative that you be outwardly calm when dealing with a stressful situation.

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Putting Your Skills into Practice: How to “Spill the Beans” One of the biggest challenges for managers and boards of directors is to deal with both mundane and serious situations on a daily basis. If the board discovers a large problem that will require substantial funding, it must figure out how to proceed by analyzing the problem, approaching the solution pragmatically, and figuring out how to communicate with the owners. This can involve many approaches.

Board Meetings These are important and basic methods of communication with owners. Many boards prefer to meet in secret when any matter comes before them that is difficult. The manager should guide them by pointing out what they are legally entitled to discuss in private.

Sometimes feedback is needed from an attorney and it is frequently up to the manager to determine when a question goes beyond the board’s expertise. Civil Code Section 1365.05 (Common Interest Development Open Meetings Act) requires that meetings be open except for specific subjects, including contract negotiations, personnel matters, dis-

ciplinary matters, matters that could adversely affect someone’s privacy, or attorney-client privileged matters.

The manager generally helps set the agenda for a meeting and often provides management reports outlining the action items the board will need to consider. The manager also usually prepares the financial reports. All of these things are communications that help the board to do a better job.

Manager Reports For the Board These are among the most important of all communications . Through this reporting, the manager can accomplish the following: 1. Provide an organized method for the directors’ review of and handling all matters, especially if the order in the report corresponds to the agenda.

2. Provide a summary of reports, bids, contracts, letters, reported problems, owner complaints, architectural recommendations, and other documents that board members might have failed to read.

3. Propose fixes, solutions, suggestions and recommendations for the board to consider, culled from resources to which only the manager may have access.

4. Organize financial reporting, copies of bank statements, reconciliations, income statements, balance sheets and other documents that the board members are required to review.

One shortcoming that the author often observes is a failure to segregate manager reporting on executive session-qualified items and non-qualified items. This can lead to problems if there is a demand for review of association records by an owner or there is a legal claim involving litigation and discovery. It is easy to overlook portions of management reports that deserve confidentiality when records inspection is arranged or records are turned over to the other party because of a request for production in a legal proceeding.

Minutes Managers often prepare the minutes of board meetings, a task that involves a lot of responsibility to make these communications suitable to serve their purpose. Finding the balance between saying too much and too little can be precarious. Experience is the best teacher. In other words, using too many words of “he-said, she-said” statements or individual comments can easily backfire.

Minutes should include the a record of those attending (board members for a board meeting, homeowners for a homeowner meeting); whether a quorum is established; the old business and new business discussed; motions and action items; reports given at the meeting by any committee or board members or any vendor of the association (such as the accountant or investment manager); and the

motion to adjourn. Minutes should not include individual statements made during a homeowner forum, personal attack statements or verbatim recitation of discussions or comments by attendees.

Any manager who has been involved with a board that has been sued for defamation or discrimination probably has some experience with how seemingly innocent statements made by board members that were included in the minutes of the meeting can be used against the association.

Some associations distribute minutes of board meetings to the members. Some post them on association bulletin boards or websites. Some send them out via email. One of the easiest ways to create a contingent of complainers is to leave some group out of the loop. In California, boards are required to make minutes of open meetings available for inspection and copying within 30 days of the meeting if an owner requests them. Some associations make them available for inspection or copying by owners without any mandate to do so. With the advent of, and excitement over, the use of the web, many communication doors have been opened— some successfully and some not so.

When a property sells in a common interest development, it is common practice for an escrow demand to include a request for association meeting minutes for the past 12 months. Boards and managers should consider carefully the picture that may be painted for a potential buyer if these minutes include “he-said, she-said” statements, personal attacks, typing errors, poor grammar and

structure, disorganized thoughts or offensive remarks. Such communications have a face that can become the “face” of the community.

When a board is confronted by angry owners about one of their issues that has been festering a long time unknown to the board, the board can become defensive. This is often a time when a manager should step in to remind both the board and the owners that the board will take a pragmatic approach and, as information becomes available, will make available to the members what it can. This very important process often occurs at the beginning of discovery of a difficult situation. The reason it is so critical is that the board and management need to be concerned from the very start when they are facing any very difficult issue. If the board and management try to move forward without giving due regard to what the members deserve to know, it can be the digging of a hole that will eventually become very difficult to climb out of. On the other hand, if too much is said without verifiable back-up information, a panic or onslaught of unanswerable questions can be started. Remember that when there are no answers to questions, trust tends to slip away.

And one more thought. In California, the court in Moran v. Oso was deciding whether an owner, whose demand for 10-years worth of association minutes was refused, was entitled to recover attorneys fees for having to bring a legal action to get the review of the Continued on page 17 ECHO Journal | June 2007

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Jeffrey Barnett 2007 ECHO Volunteer of the Year J

effrey Barnett has been selected as the ECHO Volunteer of the Year for 2007 by the ECHO board of directors. This award recognizes the outstanding service and support he has contributed in advancing ECHO’s objectives and influence.

Jeff, an attorney with offices in San Jose, has been an active member of ECHO since the late 1970s. He has served as a member of the board of directors from 1981 to 1983 and from 2002 to 2005. He is currently a member of the Legal Resource Panel, which he chaired for a number of years, the South Bay Panel and Central Coast Resource Panel. He serves on the ECHO Legislative Committee. His presentations before various homeowner and professional groups and his ECHO Journal (and before, ECHO Newsletter) articles are too numerous to count.

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He is an honors graduate of the University of California in Berkeley and received his legal training at the University of Santa Clara School of Law. He was admitted to the State Bar of California in 1974. He is a member of the Santa Clara County Bar Association, ECHO, CAI and CACM. Jeff and his family live in Los Gatos. He is a real Francophile, continues his studies of the French language and visits France regularly.

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Art of Communication

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minutes she wanted to see. The court noted disdain for the board’s attempt to charge $200 in costs to dig through old association records to provide several years worth of minutes. An expert witness for the owner testified that standard industry practice was that minutes should be kept in a manner such that a board can retrieve them readily, and that an owner should not have to pay for the time-consuming task of going through poorly organized association records as important as minutes. Keep a minute book!

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Town Hall Meetings: How To Use Them Effectively A town hall meeting is a good way to communicate face-to-face with owners and pass on and/or receive important information.

It’s a good way to get a finger on the pulse of the community. Some examples are to hold one during a document update/restatement project to answer questions the members have and to alleviate concerns. The format can be very good for presenting the “team� of professionals being used in a major rehabilitation or reconstruction project (such as the architect, contractor, banker, and attorney); or it can be used to meet with neighbors in a neighborhood watch situation when there is criminal or drug activity in the community.

Of course, town hall meetings can backfire if there is no planning or organization to them. If the board and management appear disorganized or unable to handle hecklers or important questions, the meeting can be very detrimental and cause owners to lose their trust in either or both. On the other hand, a manager and an attorney with experience in crowd control can help a board prepare for the worst. Organizing the order of things to happen, setting the agenda, and giving thought as to how to keep things moving, preparing question and answer handouts— these are all things a manager can do, with the help of the association attorney when there is the propensity for a really “lively� or “rowdy� crowd or the need of legal explanations of processes. Craziness and disorganization or a room too small, overheated or chilled can engender distrust in the body (or manager) that organized the meeting. Do everything you can ahead of time to make sure that attendees will be comfortable in their surroundings.

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ECHO Journal | June 2007

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Letters, Packets to Owners, Direct Mailings Obviously, letters are a means of communicating with the owners. Some people are very good writers, but the majority of people are not. This is another skill that a manager would do well to develop. The better a writer that the manager is, the better he or she can communicate ideas and helpful suggestions to the board of directors. Many boards generally rely on a manager to supply them with form letters or suggested letters in the event of any disciplinary actions or communication with vendors about services. A manager who has good writing skills can help write for or with the board a summary of ongoing events or problems, in preparation for a town hall or other meeting requiring action on the part of the homeowners. A good writer knows what kind of words create tension and engender defensive responses and what words to use as an alternative. For example, any use of the word “but” will commonly engender resistance to any statement containing the word. But in the alternative, the use of the word “however” will instead tend to evoke a more sympathetic understanding.

Use of the words “No” or “Prohibited,” where alternative positive choices, such as “not allowed” or “cooperation is encouraged,” is another instance of “fighting words” versus “inviting” words.

Personnel Contact/Telephone Call Some managers do not want to be bothered making telephone calls or would prefer to have a written record in any situation. In this day and age, some managers have come to expect negative reactions more commonly than positive reactions, especially if they are calling to let someone know about a pending or potential violation of the governing documents. On the other hand, we often hear owners complain that getting a letter is offensive, when the manager could have picked up the telephone and let them know what is happening. Managers certainly can create a written record of telephone calls, including the date, time and place, and what they said, and what the owner said. Adding this personal touch in many cases allows the owner to avoid the stigma attached to getting the nasty letter. Truthfully, it does not really matter how nice a letter a manager writes on behalf of the board, or a board writes, even if, or maybe more because, the owner is guilty of the violation. The most common reaction is that the owner is hurt, embarrassed or angry in a “how-dare-they” mindset. A simple call 18

June 2007 | ECHO Journal

saying something like “there is a report of...” and “although you may not be aware, the association has a rule on that...” and “...if you are in fact doing that would you stop,” it would resolve things without requiring a written “citation” (or whatever the association uses).

Newsletters and Flyers These can be a great way of communicating with the owners. Likewise, they can be idiotic and useless drivel. When prepared by people who do not have any design sense, creative genes, or writing skills, they can read like newsprint or a gossip rag. Of course, as a manager it’s hard to challenge someone’s “perceived” creative energy gracefully. It is a good thing, we think, that most associations defer to management to create the newsletter. It’s extra work, yes, but it is also a tool that can make your job a lot easier. Let’s take a look as to how that may occur. A newsletter can be used for many purposes: 1. To satisfy statutory requirements to announce meeting dates as required in many states.

2. To broadcast committee reports, officer reports, surveys, questionnaires, emergency information requests.

3. To satisfy disclosure requirements for some things, possibly some of the required financial reporting requirements, news and progress reports of association projects, policies of the association and proposed rules.

4. To provide important reminders to owners about requirements for making changes to property, purchasing individual insurance coverage to cover gaps left from the master coverage (if any), days to put out and bring in garbage cans, speed limits in the complex, and important people, parking or pet rules. It can remind owners of prohibited activities, laundry room or swimming pool hours, etiquette, clubhouse use requirements.

5. To bring the personal touch by featuring on a regular basis an article about an owner, board member, committee member, board/owner liaison, or anyone that is worth introducing.

6. To remind owners that there is a written form available upon request, if there are any complaints.

7. To report on contest rules and results, such as landscape maintenance award of Continued on page 21 ECHO Journal | June 2007

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June 2007 | ECHO Journal

Art of Communication Continued from page 19

the month, best holiday display, or other contests that some associations have.

Rules, Policies and Procedures These can be used for many purposes.

They are much more likely to be read than deed restrictions, the CC&Rs, or any of the other governing documents. They can and should be simply stated and, as much as possible, be positive rather than negative. For example, compare: “There shall be no parking in the guest parking by residents,” or “Residents are not allowed to park in...” to “Guest parking is reserved for guests. Please park your own vehicles in your assigned spaces.” Or, another example of poor wording: “Dog waste must be picked up by hand” (this is not made up; it’s a rule a board actually came up with) to “Dog droppings are harmful to the common area vegetation, unsightly and hazardous to health. Owners are responsible to pick up after their pets.”

Rules are an important tool for tenants, too. What tenant is ever going to read a stack of papers an inch thick?

Opening the rules with the following paragraph sets the stage for a cooperative response: “Please review the following items. We have adopted some simple rules based on our association documents so that we can all do our part to make this community a better place to live. We ask for your cooperation with the following…”

Email Email is a blessing and a curse at the same time. Some managers keep their email addresses very closely guarded. Others give it out freely to homeowner board members. It can seem overwhelming to sit down and see that there are 25–50 emails waiting to be answered. On the other hand, if you had 25–50 telephone messages to return, would that be more appealing? Responding to telephone calls can take all day and still be unproductive. Many people use email pretty freely. In this age of busy people, busy schedules, busy phones and voicemail, telephone tag can become a time-consuming bore.

Being able to get information and respond without having to wait to talk to someone can really minimize wasted time. On the other hand, sitting at the computer is a very passive means of communicating and does little to build relationships. Do you need to build ECHO Journal | June 2007

21

relationships or get business done? That’s a question that could bring mixed responses.

Everyone has his or her own management style and either method can work for specific reasons.

Email can be very dangerous. Because emails are likely to be discoverable in any lawsuit, care must be taken to make sure that damaging statements, admissions and offensive, legally actionable comments are not made. Homeowners and managers have to be constantly reminded to attach confidentiality statements to emails they want to “try” to protect from discovery in the event there ever is a legal action where someone demands review or production. This comes naturally to attorneys because attorneys are trained to remember to mark anything confidential they intend to be confidential, like letters. But neither board members nor managers have this kind of training, generally.

But even with a confidentiality statement, discussion via email of what kind of a person Smith or Jones is or how much or how little they are liked can come back to haunt a board or manager. Calling someone a drunk, a crook, or carrier of a contagious disease 22

June 2007 | ECHO Journal

can lead to an indefensible defamation claim (unless you can prove the truth of the defamatory statement). Discriminatory statements can lead to “big bucks” lawsuits. Talking about owners for all the wrong reasons is a common occurrence.

Websites can be a blessing and a curse Even without the threat of litigation, emails sent in haste can prove to be a great embarrassment. Reacting in anger without a cooling period can lead to very hard feelings and alienation. Hitting the wrong button and sending something meant for one person to another can constitute a huge faux pas. Say you are an attorney and you have your client contacts and the opposing attorney next to each other in the address book. So you compose a letter for your client telling them of potential problems caused by their actions,

and then hit the wrong address book address and the letter goes to the attorney instead. A very careless and possibly harmful “faux pas.”

Say you start to compose a message, and then decide the better of it, and instead of closing the message you accidentally hit send instead. Say that you hit “forward” to send someone a message that you have just read, and do not realize that there is a long string of emails attached to and from the person who sent the message to you, or an embarrassing board dialogue attached. Board members seem often to have no conscience about what they say in emails.

You need to be very careful with email!

Websites Websites can be a blessing and a curse.

Associations are finding it very helpful to have a website for posting documents, notices, suggestions, rules, and important messages. Posting recorded documents and filed articles of incorporation are posting of public records, not a problem. But posting of bylaws, rules, minutes of meetings, and posting of socials or town hall meeting subject matter constitutes posting of private information and, if there is no effort to protect entry,

can lead to problems. Associations that open up their websites to “chatting” by owners or residents sometimes wish they hadn’t. If owners are respectful, honest and kind people, there probably won’t be a problem, but when vindictive, mean-spirited, unhappy residents get into the chatting mode, things can go downhill fast. The “chat” room can become a place to criticize, ostracize and condemn.

And, last but not least…

Presentation of a Ballot and Ballot Package on an Important Issue Sending out a written ballot without any information attached or conducting an election at a meeting without a full explanation of what people are voting on can turn out to be an exercise in futility. A well-drafted, organized communication with a ballot package can make the difference between success and failure in the voting measure. Make sure your ballot is legally correct, because California has specific requirements in the Corporations Code. The information needed is the voting measure, an opportunity to approve or disapprove it (giving one possible answer only is not wise), names, signatures, dates, and the voting requirements, such as how many votes it takes to approve the measure.

The materials leading up to the balloting can be just as important. Owners will generally balk at approving a very large assessment if they have no historic documents setting the stage. Even if you have arranged a town hall meeting, you need to make sure that you have also prepared a fully informative package that can be given out at the meeting and/or mailed to everyone, or at the very least, those that did not attend. Some owners may even crow loudly claiming a lack of history when there has been a considerable course of communication. Of course, it is better to be in the position of having sent out communications along the way as things evolved, even if the owners are not reading them. At some point, the timing, clarity, frequency, and completeness of disclosures might become very important.

Overall, communications are one of the most important functions of the board, management and the owners in an HOA. Put some time into thinking about how they might improve in your association.

Beth A. Grimm is a frequent contributor to the ECHO Journal, is a Bay Area attorney that authors books, writes articles and newsletters, is active in ECHO and other groups that serve the public who live in CIDs. ECHO Journal | June 2007

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TRANS New HOA Boards Have Their Problems

By Tom Douma

W

ith the large number of new condominium complexes that have been built in the last several years, major problems can emerge in making the transitions from condominium developer to owner. Since every transition is a source of potential problems for the association, we bring them to your attention in this article.

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June 2007 | ECHO Journal

First Transition: Substantial Completion In the beginning of a development, the developer hires a general contracting company to construct the buildings and site improvements. When the project is nearing completion, the builder usually issues a Notice of Substantial Completion, and this will start a warranty period. It is very impor-

tant that the developer make an inspection at this time to verify the facilities were built according to the plans and specifications and file any exceptions that may need to be corrected by the contractor. It will be important later on in this process that these documents are made available to the homeowner association as part of the records of the complex.

SITIONS Second Transition: Board Elections The initial board of directors of a new association is typically populated by professionals that work for or with the developer (usually someone from the developer’s company, an attorney and/or a CPA that works with the developer). This initial board of directors of the new non-profit corporation

(the Association) tends to represent the interests of the developer from the period of Substantial Completion until the new owners take possession of their units and elect their own board of directors. The point at which the owners elect their own board of directors is usually specified in the bylaws and typically happens when a majority of the units are

sold. It is important that good records are kept and given over to the new board of directors, especially those regarding construction defects and warranty issues.

Third Transition: Management of New Complex A board of directors elected by the new owners may hire a managing agent or the ECHO Journal | June 2007

25

complex can be self-managed; but in either case the board needs to set policies and procedures for the managers to carry out. This is a crucial period of transition for the new board because they should not assume that a new complex is without construction and management issues. In fact, they must carefully monitor the status of any construction issues remaining with the developer and contractor and work with the property managers to keep the property in good condition over time.

The author has observed that some major problems can emerge at each of these three transitions. Most of these problems come from a lack of quality construction along with a lack of awareness of how construction warranties work. The recent boom in residential construction has diluted the number of qualified contractors and vendors, and construction defects have become a major problem for all new complexes. However, a new homeowner association does not typically anticipate that its first two years will be devoted largely to the handling of construction and management problems.

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June 2007 | ECHO Journal

To help new homeowner associations, some consulting companies are offering to provide consulting help that is crucially needed. This help is called transition consulting, and it consists of three key elements.

Most problems come from a lack of quality construction and a lack of awareness of how construction warranties work Start Early—Many developers are now retaining a construction inspection company to inspect not only the individual units but also the complex itself. This starts at the end of the construction period, and the construction inspection company prepares a list of items that need to be corrected or completed

before the developer will accept the project from the contractor. By being a third party, the construction inspection company can help find problems before the warranty periods can expire and circumvent difficult relationships with the new buyers by delivering a well-constructed unit. This type of inspection can also be performed for the common area facilities—pools, clubhouse, roof, plumbing, electrical, heating and air conditioning systems, parking, drainage, etc.

Board Awareness—A new homeowner association board of directors needs to be educated about the potential problems they will face in governing a new complex. Most important here is the status of the contractor warranties and the initial operating and reserve budgets. This board must receive all the warranty information from the contractors and vendors and help insure that claims and warranty work is correctly carried out.

The new board also needs to scrutinize the operating and reserve budget provided by the developer. Many times these budgets are unrealistic, but the implications of such budgets may not be felt for several years of underfunding. Having these budgets profes-

sionally reviewed by an outside company is a very prudent step for a new board of directors.

Attention to Management—The new property manager, whether reporting to the board or to a managing agent, will need to develop a good working relationship with the board. Many boards at new complexes become complacent, not realizing that the effects of under-management or funding will not show up for years and can be very difficult to correct later. Some boards tend to micro-manage rather than focuse on policy, procedures, and performance reviews. Again, using the services of an association managing consultant to help set the direction of the new complex is a significant help. Such consultants bring many years experience and will share their knowledge learned from a large number of complexes.

Tom Douma is the president of SBI, an ECHO member company that performs reserve studies in California and Hawaii. He is a certified Reserve Analyst and a frequent speaker at ECHO seminars.

ECHO Journal | June 2007

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Calendar of Events

Participate in Resource Panels Wednesday, June 20 Wine Country Resource Panel 11:45 a.m.

Lanahan & Reilley 600 Bicentennial Way Suite 300, Santa Rosa Thursday, July 5 North Bay Resource Panel 9:30 a.m.

Contempo Marin Clubhouse 400 Yosemite Rd., San Rafael Friday July 6 East Bay Resource Panel 9:30 a.m.

Angius & Terry 1990 N. California Blvd., Suite 950, Walnut Creek Monday, July 9 Accountants Resource Panel 6:00 p.m.

Francesco’s Restaurant, Oakland Tuesday, July 10 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz

Wednesday, July 11 South Bay Resource Panel 12:00 Noon Il Fornaio 302 Market St., San Jose Wednesday, July 18 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 Wednesday, August 1 12:00 Noon Maintenance Resource Panel ECHO Office 1602 The Alameda, Ste. 101, San Jose Friday, Friday, August 3 East Bay Resource Panel 9:30 a.m.

Angius & Terry 1990 N. California Blvd., Suite 950, Walnut Creek

Wednesday, August 15 Wine Country Resource Panel 11:45 a.m.

Lanahan & Reilley 600 Bicentennial Way, Suite 300, Santa Rosa Thursday, September 6 North Bay Resource Panel 9:30 a.m.

Contempo Marin Clubhouse 400 Yosemite Rd., San Rafael Friday, September 7 East Bay Resource Panel 9:30 a.m.

Angius & Terry 1990 N. California Blvd., Suite 950, Walnut Creek Monday, September 10 Accountants Resource Panel 6:00 p.m.

Francesco’s Restaurant, Oakland

Wednesday, September 12 South Bay Resource Panel 12:00 Noon Il Fornaio 302 Market St., San Jose Wednesday, September 19 Wine Country Resource Panel 11:45 a.m.

Lanahan & Reilley 600 Bicentennial Way, Suite 300, Santa Rosa 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

Tuesday, September 11 Central Coast Resource Panel 12:00 Noon Pasatiempo Inn, Santa Cruz

Regularly Scheduled Resource Panel Meetings Resource Panel Maintenance North Bay East Bay Accountants Central Coast South Bay Wine Country Legal 28

June 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 Frazee Paint 17915 Woodland Avenue Morgan Hill, CA 95037 Contact: Deborah Randazzo Tel: 408-315-6488 Fax: 408-294-2276 www.frazeepaint.com Email: drandazzo@frazee.com

Hydropoint Data Systems, Inc. 1726 Corporate Circle Petaluma, CA 94954 Contact: John Barnett Tel: 707-769-9696 Fax: 707-769-9695 www.weathertrak.com Email: jbarnett@hydropoint.com

Manufacturer of smart irrigation controllers.

Weathertrak is the only proven technology to reduce runoff, lower water consumption and lower water bills.

Oliver Management 7806 Madison Ave., #150 Fair Oaks, CA 95628 Contact: Susan Oliver Tel: 916-965-8964 Fax: 916-965-0325 www.olivermanagement.com Email: susan@olivermanagement.com

Continued on page 31 ECHO Journal | June 2007

29

Specialized Banking Services

for community associations and management professionals

Association Bank Services

Association Deposit Services

30

• Free Checking

FDIC Insured CD Placement Services (CDARS)*

• Reserve Savings

Automated Lockbox Service

• Premium Interest Rates

Automatic Assessment

Loans for Associations

Payments

Home Equity Loans for Unit

Business Online Banking

Owners

Cash Management Services

June 2007 | ECHO Journal

*CD Inte up

Business/Professional Updates Continued from page 29

Reserve Analysis Consulting, Inc. 3030 Bridgeway, #330 Sausalito, CA 94965 Contact: Tom O’Neill Tel: 415-332-7800 Fax: 415-332-7801 Email: reserveanalysis@gmail.com Spina Insurance Agency 530A Alameda Del Prado Novato, CA 94949 Contact: Christi Spina Tel: 415-382-9714 Fax: 415-382-9027 www.farmers.com Email: cspina@farmersagent.com

Full service insurance brokerage specializing in HOAs. Hazard, general liability, earthquake, workers compensation, and directors and officers, with over 20 years experience in the industry.

David Stompe Insurance Agency 1127 Grant Ave., #1 Novato, CA 94945 Contact: David Stompe Tel: 415-892-5289 Fax: 415-898-8040 Email: david.stompe@mindspring.com Full line insurance broker representing Farmers Insurance Group and other major markets.

The Ultimate Coatings Company 3020 Bridgeway, Ste. 150 Sausalito, CA 94965 Contact: Pam Marsh Tel: 415-726-0551 Fax: 415-460-9811 www.ultimatecoatings.net Email: Michael@ultimatecoatings.net

The Ultimate Coatings Co. manufactures heat-reflective, Title 24 compliant architectural coatings for roofs (tile and flat) and walls (stucco, concrete or wood). Our “green” paints are technologically superior 21st century roof technology for walls with 10–12 year warranties.

Continued on page 40 ECHO Journal | June 2007

31

Association Affairs

By Adrian Adams, Esq.

Barking Dogs H

ow much barking is too much? What constitutes a nuisance? Is the neighbor’s complaint legitimate or is he or she hypersensitive? Boards need a basis for differentiating valid complaints from unreasonable ones. To that end, boards should adopt definitions in their Rules and Regulations regarding nuisance animals.

Nuisance Defined The definition can be limited to excessive barking or expanded to include other issues. Following are some examples: Example 1 Nuisance noise from a dog is defined as barking, yelping or whining for more than five minutes in any one-hour period.

Example 2 Excessive barking is barking that is persistent and occurs for an extended period of time or on a repeated basis. When determining if barking is a violation, consideration will be given to the time of day, duration and frequency of barking.

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June 2007 | ECHO Journal

• Any dog that chases, runs after, or jumps at vehicles moving on streets and alleys.

• Any dog that attacks, bites or injures a person, or snaps, growls, snarls, jumps upon or otherwise threatens persons without provocation.

These acts shall be considered a violation whether or not the dog is confined by fence, chain or leash, or under the voice control of a responsible person.

• Any animal that howls, yelps, whines, or barks in such a manner as to unreasonably disturb any person.

• Any animal that feeds from, turns over, or otherwise disturbs garbage containers.

• Any animal that scratches or digs in flowerbeds or otherwise damages the property of another owner.

• Any dog or cat that goes onto the property of another or onto common areas to attack another animal or fowl.

• Cats or dogs that crawl upon, sleep on, scratch or otherwise soil the property of another.

Example 3 No animal shall be allowed to annoy residents unreasonably, to endanger the life or health of other animals or persons, or to substantially interfere with the quiet enjoyment of others. Pet owners shall be deemed in violation if their pets: • Consistently or constantly make excessive noise; • Cause damage to or destruction of another’s property; • Cause unsanitary, dangerous or offensive conditions, including the fouling of the air by offensive odor emanating from excessive excrement; • Create a pest, parasite or scavenger control problem that is not effectively treated.

Enforcement Most associations require owners to put their complaints in writing, either in a letter or by filling out a form created by the association. They will then send a letter to the dog owner to let him/her know that neighbors have complained about the nuisance. Since the letter is a warning only, there is no requirement to identify the source of the complaint.

If the problem continues, the board must hold a hearing with the owner and make a determination that a nuisance exists. Once that is done, penalties can range from fines to muzzling aggressive dogs to banishing nuisance animals from the association.

Example 4 Animals will be deemed a nuisance that commit acts including, but are not limited to, the following:

Adrian Adams is a principal in the Los Angeles firm of Adams Kessler LLP. This article is reprinted from the Davis-Stirling.com Newsletter.

2007 Legislation at a Glimpse As of May 24, 2007 Bill No.

Author

Subject

Status

Position

Summary

AB 567

Saldana

Common Interest Development Bureau

Amended April 10; Hearing cancelled in Assm. House Committee; Two year bill

Oppose Unless Amended

This bill would, until January 1, 2013, establish in the Department of Consumer Affairs the Common Interest Development Bureau. The Bureau would, among other things, provide board member education and training resources, investigate and impose fines for Davis-Stirling Act violations, and compel associations to disclose those violations.

SB 948

Harman

Mandatory Board Member Training

Amended May 1; On Senate Floor

Oppose

As of January 1, 2009, would require every member of the board of directors of an association to complete at least one course during his or her first full term of office, and at least one course every three calendar years after becoming a member of the board, relating to decisional and statutory law regarding common interest developments. Approved courses may not be offered at a cost higher than $25 and association reimbursement may not exceed $25.

AB 691

Silva

Certified Common Interest Development Managers

Amended May 1; On Assembly Consent Calendar

Support

Existing law requires a person to meet certain requirements in order to be called a “certified common interest development manager” and imposes other requirements with regard to common interest development managers. Under existing law, the provisions regulating certified common interest development managers become inoperative and are repealed on January 1, 2008. This bill would extend the operation of these provisions to January 1, 2012. The bill would modify the requirements in order to be called a “certified common interest development manager.” The bill would also revise various definitions.

AB 952

Mullin

BMR Owner Assessment Restrictions

Amended May 10; Passed Assembly, In Senate

Oppose

Would prohibit the board of directors from imposing a special assessment, or an increase in the regular assessment of more than 3% 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 Amended Restrictions in April 26; Board Meetings Passed Senate, In Assembly

Oppose

Would require notices of board meetings to include an agenda for the meeting. 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 (emergency meetings are excluded). The bill would also make technical changes.

SB 127

Kuehl

CID Sale Disclosure Deadlines

Amended May 1; On Senate Floor

Support if Amended

This bill would impose disclosure deadlines for the seller of a unit in a common interest development. It would require that all disclosures be made no later than 10 calendar days after the execution of a purchase agreement.

Upon the seller’s request, it would also require an association to provide documents to the seller within 7 days. This bill affects both mobilehomes and CIDs.

AB 1173

Keene

Mandatory Submeter Installations

Amended April 24; On Assembly

Watch

This bill, with a certain exception, would require every water purveyor who furnishes water service to any person residing in a multiunit residential structure for which a construction permit has been issued on or after January 1, 2008, to require the installation of submeters as a condition of new water service to that person. The bill would authorize the owner or operator of a multiunit residential structure without water submeters to charge tenants separately for water service as determined by a prescribed allocation formula.

Appropriations

Committee Suspense File

For updates about these bills, please visit the ECHO web site regularly (echo-ca.org).

ECHO Journal | June 2007

33

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 Homeowner Associations $20.00 This publication has been completely revised to reflect new requirements resulting from passage of SB 137.

Publications to answer your questions about common interest developments Publication Order Form

Board Member’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.

Executive Council of Homeowners 1602 The Alameda, Suite 101, San Jose, CA 95126 Phone: 408-297-3246 Fax: 408-297-3517 TITLE

QUANTITY

SUBTOTAL CALIFORNIA SALES TAX (Add 8.25%) TOTAL AMOUNT

Board Member’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

Surviving Each Other: the Art of Communication The word “communication” often connotes a pleasant feeling of community. Fellowship, a sense of common purpose, and a sharing of common possessions and interests are experiences that are inextricably linked to communication. Unfortunately, effective communication is the essential tool that many common interest developments lack.

If you believe everything that is reported in the newspapers, you might think that homeowner associations are secret societies, police states and nasty places to live. The reason is that most of these stories revolve around the emotional side of living in an HOA. Emotions cause people to act out and do irrational things.

Homeowners with a “myhome-is-my-castle” mentality often react to association regulations with hostility and intense emotion. Whether these homeowners violate the rules out of ignorance or spite, they are bound to clash with the board.

And, when the inevitable confrontation occurs, the board reacts in kind. Mutual defiance creates a pattern of compound36

June 2007 | ECHO Journal

ing offenses that can cause the situation to spin quickly out of control.

One of the biggest problems that boards have with homeowners is the inability to communicate artfully. Board members and managers alike find a significant void of people skills in the course of their daily work with owners, vendors and professionals. Many of these people are busy, anxious and short tempered. Actually, there are days when we all find ourselves in that position. So it’s time to pause, breathe, and remember to communicate. All in all, communication is one of the most important functions of a board, management and the owners in an association. Put some time into thinking about how it might improve in your complex.

Barking Dogs How much barking is too much? What constitutes a nuisance? Is the neighbor’s complaint legitimate or is he or she hypersensitive? Boards need a basis for differentiating valid complaints from unreasonable ones. To that end, boards need to adopt definitions in their

Rules and Regulations regarding nuisance animals.

The definition of nuisance can be limited to excessive barking or expanded to include other issues such as the following examples: 1. Nuisance noise from a dog is defined as barking, yelping or whining for more than five minutes in any one-hour period.

2. Excessive barking is barking that is persistent and occurs for an extended period of time or on a repeated basis. When determining if barking is a violation, consideration is given to the time of day, duration and frequency of barking.

3. No animal should be allowed to annoy residents unreasonably, to endanger the life or health of other animals or persons or to substantially interfere with the quiet enjoyment of others. Violations are consistent or constant excessive noise; damage to or destruction of another’s property; unsanitary, dangerous or offensive conditions; or creation of a pest, parasite or scavenger control problem that is not effectively treated.

Most associations require owners to put complaints in writing before sending a letter to an owner about neighbor complaints of a nuisance. Since the letter is a warning only, there is no requirement to identify the source of the complaint. If the problem continues, the board must hold a hearing with the owner and make a determination that a nuisance exists. Once that is done, penalties can range from fines to muzzling aggressive dogs to banishing nuisance animals from the association.

Nominating Committee Seeks Candidates For ECHO Board Of Directors The Nominating Committee for the ECHO Board is seeking expressions of interest from persons who are interested in being considered as candidates for positions on the ECHO Board.

Four positions on the board will be up for election at the ECHO Annual Meeting that will be held in October. Board members are expected to attend approximately six three-hour board meetings each year and serve on one or more committees that hold regular meetings. These activities involve a commitment of four to six hours per month plus travel time. There is no reimbursement for these activities. Nominees are also expected to have been recent active participants in ECHO activities and to have thorough familiarity with ECHO and the CID industry.

Anyone interested in being considered for nomination must obtain and complete a nomination and qualifications form, available by request from the ECHO office, to be submitted no later than July 15, 2006.

CommonSense Continued from page 5

assessments; and raising the monthly assessment by 100 or 200% is just not an option.

No, what must happen is that would-be “converters” should be required to pay the cost of all of that deferred maintenance as a condition to approval.

Several conversions in the Sacramento area are so bad that they attracted the attention of the news media Nevada has already started down that road and they should be commended for their foresight. Nev. Rev. Stat. Ann. § 116.310395 (2007) reads as follows: 116.310395. Deliver to association of converted building reserve deficit.

1. At the time of each close of escrow of a unit in a converted building, the declarant shall deliver to the association the amount of the converted building reserve deficit allocated to that unit.

2. The allocation to a unit of the amount of any converted building reserve deficit must be made in the same manner as assessments are allocated to that unit.

3. As used in this section, “converted building reserve deficit,” means the amount necessary to replace the major components of the common elements needing replacement within 10 years after the date of the first sale of a unit.

This statute needs some expansion to better define the operative terms, but it is a good start. What it requires is a better definition of exactly which components are included and what standards are to be applied in determining their condition and the cost of the projected repair or replacement. There are “reserve studies” and then there are reserve studies. Their accuracy depends a great deal on who does the reserve study and what their objectives are. But that’s a topic for another article. For now, let’s just agree that “reasonable minds may differ” when it comes to the condition of a building component, how to repair it, and the potential cost of that repair. What is important however is Continued on page 39 ECHO Journal | June 2007

37

Honor Roll

About

ECHO Honors Volunteers 2007 Volunteer of the Year Jeffrey Barnett

ECHO Resource Panels Accountant Panel William Erlanger, CPA, 415-981-9350 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, 415-846-7579 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

Marin Spring Seminar Speakers David Feningold, Esq. Ken Kosloff Wanden Treanor, Esq. Glenn Youngling, Esq.

38

June 2007 | ECHO Journal

San Francisco Seminar Speakers Beth Grimm, Esq. Stephanie Hayes, Esq. Geri Kennedy, CCAM Karl Lofthouse Steven Saarman

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 P. Berding, Esq. Ronald Block, PhD. Doug Christison Karen Conlon, CCAM Rolf Crocker Ross Feinberg, Esq. David Feingold, Esq. Tom Fier, Esq. Kevin Frederick, Esq. John Garvic, Esq. Beth Grimm, Esq. Brian Hebert, Esq. Roy Helsing Julia Lave Johnston Garth Leone Nico March Larry Russell, Esq. Steve Saarman Nathaniel Sterling, Esq. Glenn Youngling, Esq.

Recent ECHO Journal Contributing Authors January 2007 Tyler P. 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 P. 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 P. Berding, Esq. Robert Booty Michael Gartzke, CPA April 2007 Jeffrey Barnett, Esq. Sandra L. Gottlieb, Esq. Hermann Novak Richard Tippett May 2007 Julie Adamen Tyler P. Berding, Esq. Graham Oliver Dick Tippett

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 37

the underlying objective of this legislation, which is to prevent a converter from passing on to unsuspecting buyers the near-term cost of major component replacement—in other words, to even the playing field and perhaps prevent some of the worst projects from being converted in the first place.

This should not to be considered as a substitute for owner contributions to reserve capital. Those should be factored in also; but taken together an immediate cash contribution from the converter coupled with the ongoing reserve contributions by owners would certainly be a major improvement in a condominium conversion project’s financial picture.

Also, if the potential profits from conversion were impacted heavily by the projected cost of properly rehabilitating the buildings, as we suspect they would be, the incentive to convert many of the worst projects would be lost and their owners would have no choice but to make them habitable for renters if they wanted to keep the project financially viable.

Over the next couple of months, we will explore bringing a bill similar to Nevada’s law before the California legislature. If you have any suggestions or comments, you can reach me at tberding@berding-weil.com.

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

ECHO Journal | June 2007

39

ECHO Announcement

Business/Professional Updates Continued from page 31

Changes

Nominating Committee Seeks Candidates for ECHO Board of Directors

T

he Nominating Committee for the ECHO Board of Directors is seeking names of persons who are interested in being considered as candidates for positions on the ECHO Board of Directors. Four positions on the board will be up for election at the ECHO Annual Meeting that will be held in October. These positions are for threeyear terms. Current directors whose terms expire in 2007 are John Garvic, David Levy, Karl Lofthouse and Wanden Treanor.

Board members are expected to attend all of approximately six three-hour board meetings held each year, generally at the ECHO Office in San Jose. Each board member also serves on one or more committees that hold regular meetings throughout the year. These two activities involve a commitment of four to six hours per month plus travel time. In addition, members are expected to attend the Annual Seminar, Annual Meeting and a two-day board retreat each November. Board members receive no reimbursement for these activities. Nominees will also be expected to have been recent active participants in ECHO activities and to have thorough familiarity with the organization and the CID industry.

Persons interested in being considered for nomination should obtain and complete a nomination and qualifications form, available by request from the ECHO office. Every potential candidate, including incumbents, must submit a full form. All forms should be submitted to the ECHO office no later than July 15, 2006, to be considered by the nominating committee. Those requesting nomination may be requested to interview with the nominating committee. The committee will meet in August to prepare recommendations for board consideration.

40

June 2007 | ECHO Journal

Association Reserves 268 Bush St., #3434 San Francisco, CA 94104 Contact: Derek Eckert Tel: 415-694-8931 Fax: 415-762-3663 Email: deckert@reservestudy.com Construction Services, Inc. P.O. Box 54190 San Jose, CA 95154 Tel: 408-210-6344 Fax: 408-369-9621 Owens Corning 639 Washington St. San Jose, CA 95112 Contact: William Byrd Tel: 408-283-0405 Fax: 419-325-6256 www.owenscorning.com Email: williambyrd@owenscorning.com

Professional Association Services 42612 Christy St. Fremont, CA 94538-3235 Tel: 510-683-8614 Fax: 510-683-8994

Visit ECHO online at www.echo-ca.org for the most current news and information on homeowner associations

ECHO Marketplace

Advertiser Index

The place to find business and professionals for your association

Your Ad Can Be Here You read this, didn't you? Thousands of officers and directors of homeowner association boards will also read your ad each month in the ECHO Marketplace. Your ad can be here for as little as $60 per month.

Marketplace Ads must run a minimum of six consecutive issues.

To place your ad in the ECHO Marketplace and for more information about other advertising opportunities, please call 408-297-3246 or visit the ECHO web site at echo-ca.org/media_kit.php Reserve Studies and Mold Sampling Foundation and Drainage Analysis

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ECHO Journal | June 2007

41

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San Francisco Luncheon Thursday, July 19 St. Francis Yacht Club

Policies for People, Pets and Parking Problems Speaker: Glenn Youngling, 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