Journal_09_08 by Echo

August 2009

A Journal for California Community Association Leaders

echo-ca.org

To Foreclose or Not to Foreclose ALSO INSIDE THIS ISSUE:

• Small Claims Court Experience • Statutes of Limitation on Claims • Important Factors of Painting

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Contents Small Claims Court —page 12

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.

To Foreclose or Not to Foreclose This article answers questions regarding assessment collection when it appears that homes are likely to go to foreclosure. Should associations use the nonjudicial foreclosure or judicial foreclosure? Should associations foreclose or not foreclose?

My Small Claims Court Experience

Executive Council of Homeowners, Inc.

The author has presented collection information at Small Claims Court on behalf of two associations. In both cases, he was involved in the collection of monthly assessments. He writes about his experiences, which may provide helpful information to associations pursuing assessment collection.

1602 The Alameda, Suite 101 San Jose, CA 95126 408-297-3246 Fax: 408-297-3517 www.echo-ca.org info@echo-ca.org

Statutes of Limitation on Claims Statutes of Limitation are intended to protect defendants. They are also traps for the unwary claimant. Here’s a story about a developer’s attempt to deprive a community association of time it needed before the limitation periods ran out.

24 18

What’s Important in Painting? Good paint performance depends on good adhesion and paint adheres best to surfaces that are clean and sound. Read this article to get more tips on achieving the best possible paint job.

Departments 28 Special Report: Save Money, Save the Planet 29 Directory Updates 32 News from ECHO 33 Legislation at a Glimpse

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34 ECHO Bookstore 36 Events Calendar 38 ECHO Volunteers 38 About ECHO

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On the Cover To Foreclose or Not—page 6 4

August 2009 | ECHO Journal

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.

2010 ECHO Annual Seminar Yes, it’s already next year. The 2009 Annual Seminar is just behind us, but we are already preparing next year’s community association event. Do not forget to mark these dates in your calendar for the ECHO Annual Seminar: June 18 and 19, 2010. You will not want to miss California’s largest common interest development event.

August 2009 | ECHO Journal

By David C. Swedelson, Esq. and Tracy Neal, Esq.

To Foreclose or Not to Foreclose How to Collect Assessments in the Face of the Sub-Prime Crisis e get it. The sub-prime mortgage crisis of 2008 that resulted in thousands losing their homes in foreclosure evolved into a stock market crash that morphed into a recession that has resulted in the highest unemployment rates (over 11 percent in California) seen in more than 50 years. The problem seems to be growing as news reports indicate more owners defaulting

on their home loans with a significant number of owners owing more for their homes than they are worth. This crisis is not just affecting lenders and the many homeowners who may have had questionable creditworthiness to borrow money to purchase their homes in the first place; it is also negatively impacting their homeowner associations.

ECHO Journal | August 2009

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August 2009 | ECHO Journal

As assessments are typically the sole source of an association’s income, many homeowner associations are now finding that they are having trouble collecting thousands of dollars in delinquent assessments from owners who in some cases have no equity. We know this because we are getting the calls. This situation should not have been a surprise, as we have recommended for at least two years that associations get ready for the increase in defaults and factor the potential “bad debt” into their budgets. While for more than ten years we enjoyed a period of increased value in real estate that correlated with very few owners’ losing their homes (and thus paying their assessments), those good times, at least for now, are gone. With so many owners in default on their loans and not paying their assessments, many boards of directors are paralyzed and do not know what to do. To foreclose or not to foreclose seems to be the big question. Their anxiety is further compounded by government-ordered moratoriums on foreclosure by lenders (that does not impact association collection action), which only complicate the issues and delay the decisions that boards need to make. The purpose of this article is to answer questions regarding assessment collection when it appears that owners are likely to let their homes go to foreclosure sale. Should associations use the non-judicial foreclosure process or judicial foreclosure? Should associations foreclose or not foreclose? These are all good questions. We offer some answers in this article. First, non-judicial foreclosure still remains the fastest and least expensive method for collecting delinquent assessments. Experience (we have been collecting delinquent assessments for more than 20 years and have weathered prior real estate market downturns and increased defaults or foreclosures) tells us that most homeowners do not want to lose their homes and are eventually paying their delinquencies. One big benefit of the non-judicial process is that associations find out much sooner if the homeowner is going to pay or not. Utilizing judicial foreclosure, an association (or its legal counsel) must first find the homeowner, personally serve him or her with a lawsuit, wait for them to respond, and, if they do not respond, take their default. Upon default, the association will have to apply to the court for a default judgment, which may include an order to foreclose.

Then, the association can try to find an asset like a bank account to execute on or start the foreclosure process. With the non-judicial foreclosure process, the association records a lien, and if the owner does not pay, then the association records a notice of default, starting the foreclosure process. Using the non-judicial foreclosure method of assessment collection, the association does not receive a personal judgment, as there is no court action. But frankly, what good is a judgment if the owner has no money to collect? Let’s not forget that many owners who are considered “sub-prime” have questionable credit and likely have no other assets. In many cases they are unemployed and have no income or money. What if the homeowner refuses to communicate, indicates that they cannot pay the delinquent assessments they owe or tells the association’s board that they are going to let their home go into foreclosure? If the senior lien holder (their bank or lender) has started foreclosure, then the association can wait to see if the owner loses the home. If the association is at a point in the process where the owner has not paid and the next step is the actual foreclosure sale, the board needs to decide if it wants to proceed. Why is this a big decision? Because there is a possibility that a third party will not buy the property at the sale if there is no equity. In that event, the association may end up with the property, which has no value, as it is subject to the first trust deed. And, in many cases, boards will decide that they just want to foreclose, especially if the senior lender is not doing anything, so that the delinquent owner is not living off of the remaining owners. At this point in the process, the board should evaluate the owner’s equity in the property. Through the non-judicial foreclosure process, a title report is obtained that will show the amounts of liens, mortgages and deeds of trust in the senior position or otherwise ahead of the association’s lien and other encumbrances on the property. The board should have a good idea of the current value of the homes or condominiums at their association and should be able to determine if there is any equity in the property. If there is no equity, and the lender is foreclosing, it is likely that the association’s lien will be extinguished or “wiped out” (as the association’s lien is junior to the lender). The association can then decide to proceed through small claims court as the fastest and least ECHO Journal | August 2009

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expensive method of obtaining a personal judgment against the owner (considering the possibility that the judgment may not be collectable in any event). Although it has been many years since we have seen such a significant number of lender foreclosures, from our prior experience we believe that lenders generally take their time in foreclosing because they don’t really want the foreclosed properties in their portfolios. In addition, there have been government-mandated moratoriums on foreclosure by lenders to allow owners the opportunity to renegotiate their loans. Many lenders have too many borrowers in default, and it is taking them time to deal with their backlog. Lenders may be willing to talk to the association about taking over the loan or allowing the association to sell the property. If, however, the lender has recorded a default notice, it may only be a matter of time before they foreclose on the property. But, if there is no equity in the property, the association may not want to proceed with a non-judicial foreclosure sale, as it may end up with a unit that has more debt than value, or an “upside-down” unit. Because the owner may have no ability to pay the debt, as mentioned above, the best solution may be to obtain a judgment in small claims court. This will not cost the association attorneys’ fees (that may not be easily collected from the owner), and a judgment obtained in small claims court can be easily and inexpensively recorded as a judgment lien. If, over the next ten years, the owner sells any real property, the owner will have to satisfy the judgment lien plus interest at the rate of 10 percent per annum. If the association does foreclose and obtains the property through a non-judicial foreclosure sale, it is not automatically obligated to pay the lender on the underlying and senior encumbrance (the former owner’s trust deed). If the association determines there is value in the property and wants to keep it, once the statutory 90-day redemption period ends, it has to begin to pay the underlying mortgage. Otherwise, the association can just let the unit go back to the lender. In California, an association cannot both foreclose and then seek to obtain a personal judgment against an owner. This is what is called the “single action rule.” Associations only get one chance to collect the money. An association can proceed with the foreclosure process to compel the owner to pay, but it cannot proceed with the actual foreclosure

sale and then determine there is no equity and decide to pursue the owner for money (and not the property). We recommend that the association proceed nonjudicially to the point of sale and then make the decision because, in our experience, many owners will pay rather than lose their home.

In most instances, non-judicial foreclosure is simply the right answer, when other methods are a waste of time and money. In most instances, non-judicial foreclosure is simply the right answer, when other methods are a waste of time and money. For example, in one association we recently assisted, an evaluation of the title report showed that there was no equity in the property and the homeowner had several judgment liens pending against him. The lender had not started foreclosure, but the association decided that it was not in the best interest of the association for the owner to remain living in the unit without paying assessments. The association proceeded with non-judicial foreclosure, eventually acquired title to the property and removed the owner from the unit. In conclusion, the current “sub-prime crisis” and resulting increase in defaults by owners is going to require that associations and their boards realize that they may have some bad debt. It is also going to require that boards of directors and managing agents for community associations be more diligent about assessment collection. They are going to have to keep a closer eye on the status of their delinquencies and be prepared to make the evaluations and decisions that we described above. More importantly, it is likely that associations will encounter situations where they are just not going to be able to collect an owner’s delinquent assessments. Be prepared!

David C. Swedelson is one of the founding partners in the community association law firm of Swedelson & Gottlieb and one of the principals of Association Lien Services, with offices throughout Northern and Southern California. Tracy Neal is an attorney with Swedelson and Gottlieb.

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By Michael J. Gartzke, CPA

My Small Claims Court Experience 12

August 2009 | ECHO Journal

n the past year, I have had the â&#x20AC;&#x153;opportunityâ&#x20AC;? to present collection information at Small Claims Court on behalf of two associations. In each of these cases, I had been involved in the billing and collection of monthly assessments including sending late notices, statements of account, etc. While many others, especially managers, have much more experience in small claims than I have, perhaps there is something in my experience that will be helpful as you pursue assessment collection.

Situation One Owner purchases unit and immediately falls one month behind. In addition, the owner pays less than the monthly assessment when payments are received. Late notices and statement of account are sent by the association. No response is received from the owner. A second month is missed and when the association assessment changes at the first of the year, no adjustment is made to the payment when the owner makes it. Still no response from the owner. The

ECHO Journal | August 2009

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association is more than patient. This goes on for over a year. The association files a small claims case. The owner is livid. He makes calls berating the manager, the board president and me, the accountant. Both parties arrive at the small claims hearing. The association presents its accounting and the owner provides a response. The owner tells the judge that he doesn’t read mail that he receives from the association. This owner is highly educated and holds a professional license granted by the State of California. So the judge chastises the owner for not being responsible and then disallows the collection costs incurred by the association (manager time and accountant time) involved in collecting the debt. The judge makes this finding contrary to Civil Code 1367.1(d), which allows “reasonable” costs of collection. In making this finding, the judge requires that all responsible members of the association pay for the collection costs of those who are not responsible. As one of our manager members noted, going to Small Claims is a crapshoot—you have no idea how the judge will rule. The owner was dancing in the court house on his way out. He beat the association out of its collection costs. On the plus side, perhaps he has learned his lesson. He now pays the correct assessment on the first of every month and has been current for over a year. Situation Two Owner stops paying assessment after being consistently on time during the three years that he owned the property. A pre-lien letter is filed after owner is delinquent for two months. It is determined that the owner purchased the unit with no money down in 2004 and with the subsequent decline in real estate values, there is immediate concern in this 20-unit association that 5 percent of its income is no longer being received. After 4 months, some puzzling correspondence was received from the lender. It appeared that the owner had filed for bankruptcy, but the association had not been notified by the bankruptcy court. Calls and correspondence to the bankruptcy attorney and trustees went unanswered. I was trying to determine when the creditors’ meeting was. This meeting is where the creditors (such as the HOA) meet with the owner, attorney and trustee to discuss the owner’s financial situation, who is owed money and how the bankruptcy will affect debts owed. Though I had contacted the attorney and trustee before the creditor’s meeting, they did not respond and so the

August 2009 | ECHO Journal

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association was not represented at the meeting. After numerous calls, it was determined that a “clerical error” that no one would take responsibility for was the cause of the lack of notification. A P.O. Box number was misstated. In order to get any information about the bankruptcy, I had to go down to the US Bankruptcy Court in Santa Barbara and research the status myself. My understanding of bankruptcy is that for an association with unsecured assessments, “pre-petition” assessments (those assessed prior to bankruptcy) are wiped out but “post-petition” assessments (those assessed after the bankruptcy filing) are still valid and owed by the owner while he owns the property. These assessments are the debt of the individual former owner if the property is transferred without the payment of past assessments. The lender had removed the condominium from the bankruptcy proceeding. The lender proceeded with a foreclosure, but that did not occur until 13 months after the bankruptcy started. Lenders have been reluctant to foreclose HOA units because they become responsible for the assessments once foreclo-

sure is complete. So, in this case, the association lost the four months’ assessments prior to the bankruptcy filing but there remained the 13 months’ assessments prior to foreclosure. A small claims case was filed after the foreclosure against the former owner. The bankruptcy attorney called me and stated that, since his client was bankrupt, the judge would dismiss the case and that his client would owe no money. It would be a waste of the association’s time to lose the case. I pointed out the difference between pre- and post-petition assessments to him to no avail. The judge in this case was a “judge protem”. A judge pro-tem is one of the area attorneys who provides this service to the court. This attorney has done so for 20 years. He listened to the association’s case and then asked the former owner for his position. The former owner stated that since he filed for bankruptcy and the bank had foreclosed, he owed nothing. The judge received documentation showing the bankruptcy date, the write-off of pre-petition assessments and date that the property was transferred back to the bank, leaving the 13-month post-petition

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ECHO Journal | August 2009

period of ownership. The association won its case and now has a judgment. The fun part will be collecting the amount owed from the former owner. While I was at the last hearing, there was another case involving an association collecting unpaid assessments. (I wasnâ&#x20AC;&#x2122;t a party to this hearing.) The owner complained that the association had imposed a special assessment and that since she didnâ&#x20AC;&#x2122;t see what the association had done with the special assessments, she wasnâ&#x20AC;&#x2122;t going to pay it (along with several months of regular assessments). The judge was not swayed and told her she owed the assessments.

More and more associations are incurring losses as a result of uncollected assessments. More and more associations are incurring losses as a result of uncollected assessments. As noted earlier, more homes and units were purchased with no money down or with very limited funds. Many of these owners have no ability to pay assessments or simply have no desire to pay assessments, resulting in increased legal/collection and management costs and a redistribution of costs to the remaining owners. There is currently a 90day moratorium on foreclosures by lenders in California from June 1 until September. This will delay the assumption of properties by banks and lenders, resulting in more losses for associations because this will most likely add three more months of delinquent payments to the totals already owed by owners nearing foreclosure.

Michael Gartzke, an ECHO member, is a Certified Public Accountant with a large homeowner association practice in the Santa Barbara area. He is also the coordinator of the South Bay Homeowners Group with a membership of about 120 associations. He is a frequent contributor to the ECHO Journal. 16

August 2009 | ECHO Journal

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STATUTES OF LIMITATION ARE INTENDED to protect defendants from stale claims. They are also traps for the unwar y claimant. If the time period expires before an appropriate claim is made, legal rights can be permanently lost. Hereâ&#x20AC;&#x2122;s a story about an artful attempt by a developer to deprive a new community association of some valuable time that it needs to evaluate the condition of the project before the limitation periods run out.

August 2009 | ECHO Journal

By Tyler P. Berding, Esq.

When Do Statutes of Limitation Begin to Run on Construction Claims? A Developer Lays a Trap for the Unwary ou just moved into a new condominium project. You bought one of the first units sold in the second phase. Sales in that phase are just about done and then the project will be sold out. The project is just a little over two years old, so you are satisfied that any warranty items will get fixed. How hard could it be with the developer still on the board and with a few units left to sell? Everything seems to be going as expected. But not all is perfect. The iron fences around the project are corroding badly. And the common area landscaping has many dead spots where the irrigation system apparently doesn’t reach. There are places where rain and irrigation water pond for days and mosquitoes are breeding. You’ve also noticed that some of the wood fences in the project appear to be leaning. You went to the board meeting last night. Two owners are on the board along with three developer representatives. You raised those issues with the board, and one of the developer representatives told you that it was

not the developer’s problem any longer, that it was the association’s responsibility to fix those particular defects. You argued that the developer is responsible for defects for ten years.1 You also pointed out that you only noticed these problems a few months ago. So how could it no longer be the developer’s responsibility to fix clearly defective components?

1 That is not exactly a true statement. California Code of Civil Procedure Section 337.15 is actually a “statute of repose,” which sets the outside limit of the developer’s liability for new construction at ten years from a specific date determined in accordance with the statute. There are many considerably shorter such periods in the law, such as those discussed in this article that will cut off a developer’s responsibility much sooner, depending upon the type of claim made and as we discuss here, the type of building component that is the subject of the claim. A complete list of components and the time limits for bringing claims can be found at www.berdingweil.com.

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Some of the Section 896 limitation periods accrue (start to run) on a fixed date, “close of escrow;” and certain fence, irrigation and drainage claims are among that group. But how does that apply to a community association with dozens of escrows closing at different times? The statute provides that for a claim filed by a community association, the phrase, “close of escrow,” actually means something very different. With respect to claims by a community association, California Civil Code 895(e) defines “close of escrow” as: “...the date of substantial completion, as defined in Section 337.15 of the Code of Civil Procedure, or the date the builder relinquishes control over the association’s ability to decide whether to initiate a claim under this title, whichever is later.”3 Obviously, this is not the day some owner went down to the title company and signed closing documents.4 2 Title 7 of the California Civil Code (also known as SB800) commencing with Section 895, was enacted to give builders a right to repair defects in new construction. It also set into law a number of construction “standards” to which builders must adhere and for some of those standards enacted specific limitations on bringing actions, some as short as one or two years.

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It not only could be, but it actually was, no longer the developer’s responsibility. As to those components, its legal liability had lapsed. How did this happen? First of all, Title 7 of the California Civil Code specifies standards for residential construction, commencing at Section 896.2 In the same section it also lists special, shorter, periods for bringing actions on certain building components. A deteriorating manufactured product like iron fences and irrigation and drainage problems has a very short one-year limit on claims. Wood fence post claims expire after two years. But you just found out about it, and you came to the board meeting a couple of days later, certainly, a year (and definitely not two) hasn’t passed. Or has it?

3 The statute of limitations for damage to property is three years from the date of “discovery” of the facts constituting a cause of action. (California Code of Civil Procedure Section 338.) The referral to CCP 337.15 to establish a fixed trigger date makes it clear that the legislature intended for these new periods of limitation to be shortened “statutes of repose” for specific building components. This makes it irrelevant when the issue was “discovered” at least when dealing with limitation periods as short as one to two years. 4 That definition of “close of escrow” still applies, however, to actions against the developer brought by individual owners on their own behalf.

If you go to Section 337.15, you will find the definition of “substantial completion.” There are four options: 1) The date of final inspection by the applicable public agency. 2) The date of recordation of a valid notice of completion. 3) The date of use or occupation of the improvement. 4) One year after termination or cessation of work on the improvement “...whichever first occurs.” Among that group, options (1) and (2) would probably be candidates for the first occurring event, and whichever one it was, it probably happened well over a year ago, probably two years ago, when the project was completed. But what difference does that make? The developer still has three out of five seats on the board of directors, clearly controls the association, and is not likely to relinquish control until the last units are sold; so “close of escrow” hasn’t happened yet, and no periods of limitation have started to run, right? Wrong. This particular development has a unique set of bylaws that may not be as unique as we think. Subsection 1.6 of the bylaws states: “The sole and exclusive authority to initiate claims on behalf of the Association in connection with (Title 7 claims) shall rest with the Board members elected solely by Class A members (those elected by the members other than the developer)...The decision of a majority of the non-declarant board members shall control...” (Emphasis added) The result? This provision effectively surrenders the developer’s control over the decision to make a construction defect claim as of the date that the non-developer board members were appointed, and if that event occurred over a year ago, it is quite likely that these shorter limitation periods (and perhaps other, longer periods) have already expired. Why? Do you remember the language of Section 895(e)? The period in which to make a claim for certain of the building standards in Title 7 commences on: “...the date of substantial completion, as defined in Section 337.15 of the Code of Civil Procedure, or the date the builder relinquishes control over the association’s ability to decide whether to initiate a claim under this title, whichever is later.”5 (Emphasis added)

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In this case, both of those events occurred over a year ago and maybe as long as two years ago. By inserting this provision into the bylaws of the association, the developer has effectively compressed what would normally be a one or two-year period of limitations into a much shorter timeframe. What it has done is to essentially eliminate the length of the entire sales period from the time an association would normally have to evaluate a project by starting the clock â&#x20AC;&#x153;tickingâ&#x20AC;? as of the date that the first non-developer board members took office. For some components, like electrical and plumbing systems, concrete, and paint, longer limitation periods on new claims apply, so this is not as crucial,6 but for those components with one and twoyear cutoffs the time to file a claim could expire before the project is sold out!

We strongly suggest that any owner on a new project board of directors carefully read the associationâ&#x20AC;&#x2122;s bylaws... This places an enormous fiduciary responsibility on the non-developer board members who may not appreciate their obligations or have sufficient expertise or experience to initiate an inspection of a project that is still being sold, maintained and managed by the developer and the developerâ&#x20AC;&#x2122;s employees and subcontractors. The non-developer board members may have the bare legal authority to initiate a claim, but do they have the authority to hire attorneys to advise them? Will the developer representatives on the board permit them to retain the services of an architect or engineer to investigate the 6 In larger projects, with longer build out periods, where the developer has effective, if not legal, control for a much longer period, the longer limitation periods for other components could also expire.

August 2009 | ECHO Journal

project? If not, the authority to initiate a claim is illusory. So, what we have is a very clever effort by the developer’s attorneys to truncate the rights of the owners. The average owner would never notice this provision, and even if they did they would have no idea of its consequences. The California Department of Real Estate, the “guardian” of the rights of real estate consumers, has permitted this sleight of hand. The only real protection against the operation of a similar bylaw provision is for the new board of directors to immediately file an appropriate notice of commencement of legal proceedings pursuant to Civil Code Section 1375 (b), a claim under Title 7, or request that the builder execute a tolling agreement.7 Of course, the average new owner/board member will be completely unaware of the need for this strategy and, in the unlikely event that they actually were aware of the provisions of CCP 337.15, they would no doubt interpret the developer’s continuing majority control of the board as control of the claims process as well. The developer’s representatives or attorneys would not likely

point out these specific bylaw provisions or suggest anything that might otherwise compromise the rights of the developer. And even if these owner/board members were aware of the consequences, their lack of authority to obtain expert advice and support renders meaningless whatever authority they do have. We strongly suggest that any owner on a new project board of directors carefully read the association’s bylaws and, if there is anything that would indicate a potential for early 7 A “Notice of Commencement of Legal Proceedings” is not a lawsuit and does not involve the courts. It is sent to a developer pursuant a statutory provision that allows an association to toll the running of any applicable statutes of limitation for 180 days by the simple expedient of this notice. A claim filed pursuant to Title 7 has a similar tolling provision, but the tolling is for a shorter period. A tolling agreement is a consensual agreement with the developer (or other participants in the construction of the project) to suspend the operation of the statute of limitations, usually for a limited and defined period. If you have any questions regarding the applicability of these tolling provisions, or their necessity, you should consult with an attorney specializing in construction defect claims on behalf of community associations.

surrender of a builder’s authority to initiate a claim such as the language above, outside counsel should immediately be consulted. Any delay could potentially sacrifice valuable claims. We tend to think of a developer relinquishing control over an association as a good thing. But in this case, it’s not an altruistic gesture. It is specifically intended to shorten the period that a new association has to evaluate the project and determine whether construction issues exist. There is no other explanation for this unique provision in an association’s bylaws. Be aware of it. What you don’t know can hurt you.

Tyler Berding is a founding partner of Berding | Weil, LLC, a community association law firm located in Alamo, CA. He has taught real estate and community association law at California State University East Bay and is the immediate past president of ECHO. Questions or comments can be directed to Dr. Berding at www.berdingweil.com or www.condoissues.com. ECHO Journal | August 2009

GOOD PAINT PERFORMANCE DEPENDS on good adhesion and paint adheres best to surfaces that are clean and sound. Read this article to get tips on achieving the best possible paint job.

ood paint performance depends on good adhesion, and paint adheres best to surfaces that are clean and sound. That’s why contractors make sure the surface is in this condition before they start. Taking shortcuts on surface preparation can cause even the highest quality paints to fail prematurely. In fact, according to experts at the Paint Quality Institute, inadequate surface preparation is the single greatest cause of premature exterior paint failures. Thus, just as a builder needs a solid foundation to construct a house that lasts, so too must a painting contractor start with a sound sur-

August 2009 | ECHO Journal

face. It is the first step to a durable, long-lasting exterior paint job. Benefits of a Properly Prepared Surface • Better adhesion—the paint is less likely to blister, flake or peel. • Better uniformity—the paint has a more consistent color and sheen or gloss. • Better hiding—no show-through from the surface that is being painted. • Increased mildew resistance—the paint won’t be marred by unsightly black or brown fungal growth. • Increased corrosion resistance, in the case of painting metal— results in a longer-lasting paint

job because of better protection against rusting. Using Top Quality Paint When doing exterior or interior painting, an important decision is the quality of paint to be used. Top quality paints are designed to produce the best-looking and longestlasting results. And even though quality paints may cost a little more, they provide a smoother, more uniform appearance, and can last more than twice as long as ordinary paints; therefore, they are really more economical in the long run. Here are some of the specific benefits of using top quality paints, compared with using an “economy” paint:

By Judy O’Shaughnessy

What’s Important in Painting?

ECHO Journal | August 2009

Application Properties Associated with Quality in Paint

Benefits of Top Quality Exterior Paint • Better adhesion, thus less likely to blister, flake or peel. • Better chalk resistance for excellent color retention. • Better dirt resistance so that the paint remains fresh looking. • Better mildew resistance to reduce marring by unsightly black or brown blotches. • Overall superior durability. Benefits of Top Quality Interior Paint • Goes on smoothly and evenly, without showing brush or roller marks. • Minimal spattering during application. • More hiding power, thus requiring less touch-up and, possibly, fewer coats. • Surfaces have less tendency to stick to each other, so that freshly painted surfaces won’t bond to one another. • Better resistance to dirt and stains, which facilitates cleaning and maintenance. What is Quality in Paint? No matter what kind of paint you choose, you’ll find a variety of prices and a wide range of quality. You’ll pay less per gallon for lower quality paints, but don’t let that fool you. You generally get more for your money, and a much better value, with a higher quality paint. How Paint Ingredients Affect Quality Pigments • Provide color or whiteness and hiding • Top quality paints have higher levels of high-hiding pigments. • Top quality exterior paints have more durable pigments that resist chalking and fading better. Binders • “Bind” the pigment into a tough, continuous film and help the paint adhere to the surface. • Top quality flat paints have a higher binder to pigment ratio. 26

August 2009 | ECHO Journal

Feature

Benefit

Excellent Flow and Leveling

Smoothness for Good Appearance

Superior Hiding

Appearance; Speed of Application; May Need Fewer Coats

Low Spatter when Rolling

Less to Clean Up; Speedier Job

Performance Properties Associated with Quality in Paint Interior Paint Feature

Benefit

High Degree of Adhesion

Less Chance of Blistering, Peeling; Stands Up Better to Dampness, Washing

Scrub Resistance

Stands Up to Cleaning

Burnish Resistance

Won’t Get Shiny When Rubbed or Cleaned

Stain Resistance

Won’t Adsorb Dirt; Easy to Keep Clean

Block Resistance

Won’t Stick When Surfaces Touch

Exterior Paint Feature

Benefit

High Adhesion

Less Chance of Blistering, Peeling

Chalk Resistance

Retention; No Run-down over Dark Surface; Slow Erosion Rate

Mildew Resistance

Little or No Mildew to Mar Appearance

Color Retention

Maintains Color, Appearance

Alkali Resistance

Resists Deterioration on Fresh Masonry

Dirt Resistance

Won’t Pick Up and Hold Airborne Dirt

• Many top quality exterior latex paints are based on 100 percent acrylic binders to maximize: 1) Adhesion when wet for resistance to blistering and peeling; 2) Resistance to mildew and dirt; 3) Alkali resistance over fresh masonry.

water. Top quality paints have less liquid and more solids (pigment and binders). Additives • Ingredients are added at low levels to provide key properties found in quality exterior paints, such as mildew resistance, flow and leveling, and splatter resistance.

Liquids • Liquids carry the pigment and binders. In oil-based and alkyd paints, the liquid is a paint thinner. In latex paints, the liquid is

Judy O’Shaughnessy is the Bay Area Coordinator for homeowner associations for Frazee Paints. She is a member of the Maintenance and South Bay Resource Panels.

By Damon Burk and Patrick Hendry

Save Money, Save the Planet f you own a home in today’s unstable financial marketplace, you are vulnerable. Fortunately, each dollar we spend on energy efficiency upgrades adds $20 to the value of our home, according to the Appraisal Institute. High efficiency homes are also worth more at the time of resale because it is increasingly harder to sell out-of-date homes whose owners are burdened with high utility costs. Energy efficiency in our homes also has environmental implications. In the U.S., energy consumption of our buildings account for at least 40 percent of our total energy use, with about half of that attributed to residential structures. Every year, the energy consumed by a typical American home is responsible for the release of at least 20,000 pounds of carbon dioxide, a potent greenhouse gas that contributes to climate change.

August 2009 | ECHO Journal

Home Performance with ENERGY STAR, a national program from the U.S. Environmental Protection Agency and the U.S. Department of Energy, offers a comprehensive, whole-house approach to improving energy efficiency and comfort at home, while helping to protect the environment. Home Performance takes your entire home into account—from heating and cooling systems to weatherization—to show how your house uses energy and what improvements will help your home work at peak performance, using the least energy. The figure on page 31 illustrates the many aspects of a home that need to be considered in upgrading its energy performance. Using state-of-the-art diagnostic equipment, a Home Performance contractor will test and evaluate all components of your home’s interior and exterior.

A Home Performance contractor can answer questions such as: 1. Are there pollutants, allergens or gas leaks contaminating my indoor air quality? 2. Why is my bedroom cold while the rest of my home is warm? 3. My utility bill seems too high in the summer and winter months for the size of my house. What’s causing this? Following a home assessment, you can expect a plan of action to identify which improvements are most cost effective to reduce energy costs, improve your indoor air quality, and how they’ll enhance the comfort of your home.

Continued on page 31

Directory UPDATES Updates for listings in the 2008 ECHO Directory of Businesses and Professionals.

Additions to Member Listings Clancy’s Precision Painting 631 Webster St. Martinez, CA 94553 Contact: Patrick Clancy Tel: 925-370-0931 Fax: 925-957-0355 Email: clancysprecisionpainting@comcast.net Dan Davis Insurance Agency 595 Park Ave., # 300 San Jose, CA 95110 Contact: Dan Davis Tel: 877-600-3199 Fax: 408-998-5600 Email: dan@dandavisinsurance.com Judge by results! Get covered by a friendly broker who relates to your concerns. Former HOA owner, Architectural Committee member, Certified Property Manager. Together we’ll review options and create a solution that fits. The Miller Law Firm 2310 Hyde St., # 2 San Francisco, CA 94109 Contact: Rachel Miller Tel: 415-403-3332 Fax: 415-346-5504 www.constructiondefects.com Email: Rachel@constructiondefects.com Since 1981 The Miller Law Firm has recovered over $500 million for home and condo associations with construction defects and is a nationally recognized leader. Free initial consultations are welcomed.

M & C Association Management Services provides community association management and developer services to Fremont, Santa Clara, Stockton, Modesto, Copperopolis and the surrounding foothills. Since 1990, we’ve enriched communities and enhanced the lives of the people we serve. M & C is proud to be an Accredited Association Management Company® (AAMC®), which is the Community Associations Institute’s highest designation awarded to management firms.

1341 W. Robinhood Drive, Suite B7 Stockton, CA 95207 Tel: 209.644.4900 Fax: 209.644.4930

1171 Homestead Road, Suite 280 Santa Clara, CA 95050 Tel: 408.241.0023 Fax: 408.241.0093

37161 Niles Blvd. #A Fremont, CA 94536 Tel: 510.795.8308 Fax: 510.795.8422

171 Town Square Road, Suite 2C 1209 Woodrow Ave., Suite C6 Copperopolis, CA 95228 Modesto, CA 95350 Tel: 209.785.6700 Tel: 209.576.7800 The Leader in Community Association Management Fax: 209.785.6701 Fax: 209.576.2209

For management proposal information, please visit www.mccommunities.com or email info@mccommunities.com The nation’s leader in community association management

Continued on page 30 M&C_ECHOad_apr07.indd 1

ECHO Journal | August4/23/08 2009 2:35:1729 PM

Directory UPDATES Continued from page 29

The Siding Specialists 8146 Greenback Ln., # 102 Fair Oaks, CA 95628 Contact: Trudi Dick Tel: 916-726-1154 Fax: 916-722-5394 www.thesidingspecialists.com Email: trudi@thesidingspecialists.com We are a full service General Contractor specializing in the exterior renovation of large multi family and commercial projects. We can save you $$$—a lot of $$$. Serving all of California and Nevada. Law Offices of Lise K. Strom P.O. Box 3664 Santa Clara, CA 95055 Tel: 408-247-8026 Contact: Lise K. Strom, Esq. www.lkstromlaw.com Email: lks@lkstromlaw.com Assist associations with governing document enforcement and interpretation; drafting and amendment of governing documents; and drafting and implementation of “green” policies and projects for associations (e.g., solar energy system policies and use of reclaimed water for irrigation purposes).

Changes to Member Listings AWS Consultants, Inc. 7737 Fair Oaks Blvd., Ste. 245 Carmichael, CA 95608 Contact: Casey Conway, Dist. Mgr. Tel: 916-949-6860 Reserve Analysis Consulting, LLC Email: tomo@reserveanalysis.com

August 2009 | ECHO Journal

Save Money, Save the Planet Continued from page 28

So what can Home Performance do for you? Lower energy usage and costs: Enjoy using less energy, while saving 30 up to 50 percent on energy costs, when you make recommended home improvements. Increased comfort: By making your home work as a system, you can stay cooler in summer and warmer in winter, and eliminate drafty rooms all together. Safety: Know your home is safe when the contractor tests the carbon monoxide levels of all your combustion appliances— stoves, furnaces and water heaters. Your contractor will also inspect any known problems in the home—water leaks, moisture build-up—that could lead to mold issues. Long-term home investment: The investments you make to improve the energy efficiency of your home today will increase the overall value of your home for years to come. Federal and State Incentives: Receive Federal and State cash incentives and tax rebates to offset the cost of your energy-saving home improvements. For Do-It-Yourselfers: Five Energy Saving Tips 1. Replace standard light bulbs with Compact Fluorescent Bulbs (CFLs) to reduce lighting energy consumption by 75 percent. 2. Unplug energy vampires: 75 percent of a TV’s energy use comes from when it is turned off. 3. Insulate yourself against rising energy costs: Well-installed insulation is the biggest bang-for-your-buck improvement you can make. 4. Get your ducts in order: In California, duct leakage accounts for a loss of 30 percent of heating and cooling energy. 5. Reduce, then produce: Before installing an expensive solar array, make your home a lean, efficient machine. Then you will pay a lot less for your sun collectors.

Buildings Share of U.S. Primary Energy Consumption (2006)

Industry 33%

Residential 21% Buildings 39%

Transportation 28%

Commercial 18%

Damon Burk and Patrick Hendry are co-founders of Renewable Real Estate, Inc., a Green Home retrofitter and real estate firm located in the San Francisco Bay Area, specializing in energy-efficient upgrades for residential property. For more information visit www.renewable-re.com. ECHO Journal | August 2009

News from ECHO Save Money, Save the Planet If you own a home in today’s unstable financial marketplace, you are vulnerable. Fortunately, each dollar spent on energy efficiency upgrades adds $20 to the value of a home, according to the Appraisal Institute. High efficiency homes are also worth more at the time of resale; it is increasingly difficult to sell outof-date homes whose owners are burdened with high utility costs. Energy efficiency in our homes also has environmental implications. In the U.S., energy consumption by our buildings account for at least 40 percent of our total energy use, with about half of that attributed to residential structures. Every year, the energy consumed by a typical American home is responsible for the release of at least 20,000 pounds of carbon dioxide, a potent greenhouse gas that contributes to climate change. Home Performance with ENERGY STAR, a national program from the U.S. Environmental Protection Agency and the U.S. Department of Energy offers a comprehensive, wholehouse approach to improving energy efficiency and comfort at home, while helping to protect the environment. Home Performance takes your entire home into account—from heating and cooling systems to weatherization—to show how your house uses energy and what improvements will help your home work at peak performance, using the least energy. A Home Performance contractor will test and evaluate all components of your home’s interior and exterior using state-of32

August 2009 | ECHO Journal

the-art diagnostic equipment. The contractor can answer many questions: • Are there pollutants, allergens or gas leaks contaminating my indoor air quality? • Why is my bedroom cold while the rest of my home is warm? • What causes my utility bill to be too high in summer and winter months for the size of my house? Following a home assessment, you can expect a plan to identify which improvements are most cost effective to reduce energy costs, improve your indoor air quality, and how they’ll enhance the comfort of your home. So what can Home Performance do for you? • Lower energy usage and costs: Enjoy using less energy, while saving 30 to 50 percent on costs, when you make recommended home improvements. • Increase comfort: Stay cooler in summer and warmer in winter; eliminate drafty rooms. • Increase safety: Know your home is safe when the contractor tests the carbon monoxide levels of all your combustion appliances—stoves, furnaces and water heaters. Identify other problems— water leaks, moisture buildup—that could lead to mold. • Enhance long-term home investment: Any investments you make to improve the energy efficiency of your home today will increase the overall value of your home. • Identify Federal and State Incentives: Receive Federal and State cash incentives and tax rebates to offset the cost of

your energy-saving improvements.

To Foreclose or Not to Foreclose With so many homeowner association owners in default on their loans and not paying their assessments, many boards are paralyzed and do not know what to do. To foreclose or not to foreclose seems to be the big question. Their anxiety is further compounded by governmentordered moratoriums on foreclosure by lenders (that does not impact association collection action), which only complicate the issues and delay the decisions that boards need to make. Non-judicial foreclosure still remains the fastest and least expensive method for collecting delinquent assessments. Experience tells us that most homeowners do not want to lose their homes and are eventually paying their delinquencies. One big benefit of the non-judicial process is that associations find out much sooner if the homeowner is going to pay or not. Utilizing judicial foreclosure, an association, or its legal counsel, must first find the homeowner, personally serve him or her

with a lawsuit, wait for them to respond, and, if they do not respond, take their default. Upon default, the association will have to apply to the court for a default judgment, which may include an order to foreclose. Then, the association can try to find an asset like a bank account to execute on or start the foreclosure process. In California, an association cannot both foreclose and then seek to obtain a personal judgment against an owner. This is what is called the “single action rule.” Associations only get one chance to collect the money. An association can proceed with the foreclosure process to compel the owner to pay, but it cannot proceed with the actual foreclosure sale and then determine there is no equity and decide to pursue the owner for money (and not the property). Upcoming Events Thursday, September 17 San Francisco Luncheon 11:45 a.m. St. Francis Yacht Club San Francisco Saturday, September 19 Central Coast Fall Seminar 8:00 a.m. to 1:00 p.m. Best Western Seacliff Inn, 7500 Old Dominion Ct., Aptos Saturday, October 10 Sacramento Seminar 8:00 a.m. to 1:00 p.m. Marriott Hotel Rancho Cordova Saturday, October 24 Peninsula Fall Seminar 8:00 a.m. to 1:00 p.m. Sofitel Hotel Redwood Shores

2009 Legislation at a Glimpse As of July 21, 2009 Bill No.

Author

Subject

Status

Position

Summary

AB 49

Feuer

Water Reduction

Amended; In Assembly Conference Committee

Watch

Would state the intent of the Legislature to enact legislation to establish a 20% water efficiency requirement for the year 2020 for agricultural and urban water users.

AB 121

Hernandez

Judgment Lien Extension

Passed Assembly. In Senate, Second Reading

Watch

Under certain conditions, this bill would allow creditors to extend judgment liens on specified personal property by filing a continuation statement in the office of the Secretary of State. The statement must be filed no earlier than six months before the lien is scheduled to expire.

AB 313

Fletcher

Tax-based Assessments

Amended; Passed Assembly. In Senate, Third Reading

Oppose

After December 30, 2009, would prohibit associations from levying assessments based upon the taxable value of the separate interests within the association. Associations that levied assessments based upon taxable value on or before December 30, 2009 would be exempted.

AB 566

Nava

Mobilehome Conversion Approval

Amended; Passed Assembly. In Senate, Second Reading

Support

In deciding whether to approve or disapprove a subdivision map, would allow a legislative body or advisory board to consider whether a majority of the residents in a mobilehome park approve conversion of the park to resident ownership.

AB 869

Mendoza

Mobilehome Park Managers

Failed passage

Support

Defines “Park Manager” and “Certified Mobilehome Park Manager.”

AB 899

Torres

Disclosure Documents Index

Amended; In Senate, Third Reading

Support

Would require associations to distribute a list of all legally mandated disclosures to their members annually, if requested. Clarifies and improves provision allowing the electronic distribution of records.

AB 927

Calderon

Construction Defect Claims

Signed by Governor

Watch

Deletes expiration date of provisions regulating the filing of a complaint for damages, by an association, against a developer for construction defects.

AB 1061

Lieu

Low WaterUsing Plants

Amended; Passed Assembly. In Senate, held at desk

Watch

Would render void and unenforceable any provision in the governing documents of an association that has the effect of prohibiting low water-using plants or prohibits or restricts compliance with local conservation ordinances. Allows associations to enforce landscaping rules and regulations.

AB 1108

Fuentes

Master Meter Regulations

Amended; Oppose In Senate Unless Appropriations Amended

Establishes new guidelines for master meter customers, including requirements that master meter customers maintain all submeter facilities and limits fines for late payments.

AB 1328

Salas

Contract Restrictions

Amended; In Senate, Third Reading

Neutral

Extends to 5 years contract length restrictions for water or energy efficiency programs for associations when the board reasonably anticipates verifiable savings to the association. Requires the board to provide notice of the contract length before approving it.

SB 23

Padilla

Mobilehome Safety Plan

Amended; Passed Senate. In Assembly Housing

Watch

Would require all owners or operators of mobilehome or manufactured home parks to adopt an emergency preparedness plan. Requires that the plan be posted and that an enforcement agency determine park compliance.

SB 259

Benoit

Board Elections In Senate Judiciary, Hearing cancelled

Support If Amended

In the event that the results of an election are invalidated for violation of the elections law, this bill provides that decisions of the improperly elected board shall not be invalidated unless those decisions violate the law or governing documents.

ECHO Journal | August 2009

2008 ECHO Business & Professional Directory $20.00 Non-Member Price: $25.00

Condominium Bluebook 2009 Edition $18.00 Non-Member Price: $25.00

Homeowners Association and You $13.00 Non-Member Price: $20.00

Community Association Statute Book—2009 Ed. $15.00 Non-Member Price: $25.00

This directory lists all business and professional members of ECHO as of December 2007. 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 associations.

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.

A practical problem solving guide to all aspects of community association living. Written by two long-time association residents, it provides an insightful overview of community living from the viewpoint of experienced owners in readable language. Recently revised and expanded.

Contains the 2009 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 associations.

Robert’s Rules of Order $7.50 Non-Member Price: $12.50

The Board’s Dilemma $10.00 Non-Member Price: $15.00

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.

In this essay, attorney Tyler Berding confronts the growing financial problems for community associations. Mr. Berding addresses board members who are struggling to balance their duty to protect both individual owners and the corporation, and gives answers to associations trying to avoid a funding crisis.

California Building Guidelines for Residential Construction $52.50 Non-Member Price: $60.00

Homeowners Associations— How-to Guide for Leadership $35.00 Non-Member Price: $45.00 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 Non-Member Price: $25.00 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.

Reserve Fund Essentials $18.00 Non-Member Price: $25.00 This book is an easy to read, musthave guide for anyone who wants a clear, thorough explanation of reserve studies and their indispensable role in effective HOA planning. The author gives tips to help board members mold their reserve study into a useful financial tool.

The Condo Owner’s $15.00 Answer Book Non-Member Price: $20.00 An excellent guide to understanding the rights and responsibilities of condo ownership and operation of homeowner associations. The question-and-answer format responds to more than 125 commonly-asked questions in an easy to understand style. A great resource for newcomers and veteran owners.

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.

2009 ECHO Annual Seminar Program Book $35.00 Non-Member Price: $45.00 This 300+ page reference book contains the presentation outlines, text and handouts from the sessions at the 2009 ECHO Annual Seminar held on July 13, 2009. It also contains vital information for association directors, such as assessment collection policies, internal dispute policies, and much more.

Dispute Resolution in Homeowner Associations $20.00 Non-Member Price: $25.00 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 Now Order Online at echo-ca.org

Bookstore Order Form Board Memberâ&#x20AC;&#x2122;s Guide for Contractor Interviews $20.00 Non-Member Price: $25.00

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

QUANTITY

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.

SUBTOTAL CALIFORNIA SALES TAX (Add 9.25%) TOTAL AMOUNT

Yes! Place my order for the items above. Board Memberâ&#x20AC;&#x2122;s Guide for Management Interviews $20.00 Non-Member Price: $25.00 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.

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

Events Calendar

Make a note of these dates Wednesday, August 5 Maintenance Resource Panel 12:00 Noon ECHO Office 1602 The Alameda, Suite 101 San Jose

Friday, September 11 East Bay Resource Panel 9:30 a.m. Angius & Terry 1900 N. California Blvd. Suite 950, Walnut Creek

Saturday, October 3 Sacramento Seminar 8:00 a.m. to 1:00 p.m. Marriott Rancho Cordova 11211 Point East Dr., Rancho Cordova

Saturday, October 17 Peninsula Seminar 8:00 a.m. to 4:00 p.m. Sofitel Hotel 223 Twin Dolphin Dr., Redwood Shores

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

Monday, September 14 Accountants Resource Panel 6:00 p.m. Francesco’s Restaurant Oakland

Wednesday, October 21 South Bay Resource Panel 12:00 Noon Il Fornaio 302 S. Market St., San Jose

Friday, August 14 East Bay Resource Panel 9:30 a.m. Angius & Terry 1900 N. California Blvd. Suite 950, Walnut Creek

Wednesday, September 16 Wine Country Resource Panel 11:45 a.m. Eugene Burger Mgmt. Co. 6600 Hunter Dr., Rohnert Park

Wednesday, October 7 Maintenance Resource Panel 12:00 Noon ECHO Office 1602 The Alameda, Suite 101 San Jose

Wednesday, August 19 Wine Country Resource Panel 11:45 a.m. Eugene Burger Mgmt. Co. 6600 Hunter Dr., Rohnert Park Friday, September 3 North Bay Resource Panel 11:45 a.m. Contempo Marin Clubhouse 400 Yosemite Rd., San Rafael

Thursday, September 17 San Francisco Luncheon 11:45 a.m. St. Francis Yacht Club San Francisco Saturday, September 19 Central Coast Fall Seminar 8:00 a.m. to 1:00 p.m. Best Western Seacliff Inn, 7500 Old Dominion Ct., Aptos

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

Friday, October 9 East Bay Resource Panel 9:30 a.m. Angius & Terry 1900 N. California Blvd., Suite 950, Walnut Creek

Friday and Saturday June 18 and 19, 2010 ECHO Annual Seminar Santa Clara Convention Center Santa Clara

Wednesday, October 14 Wine Country Resource Panel 11:45 a.m. Eugene Burger Mgmt. Co. 6600 Hunter Dr., Rohnert Park Friday, October 16 Annual Membership Meeting 10:00 a.m. ECHO Office 1602 The Alameda, Suite 101 San Jose

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

August 2009 | ECHO Journal

Meeting First Wednesday, Even Months First Thursday, Odd Months Second Friday, Monthly Second Monday, Odd Months Second Tuesday, Odd Months Second Wednesday, Even Months Third Wednesday, Monthly Quarterly

Location ECHO Office, San Jose Contempo Marin Clubhouse, San Rafael Angius & Terry, Walnut Creek Francesco’s Restaurant, Oakland Pasatiempo Inn, Santa Cruz Il Fornaio, San Jose Eugene Burger Management Co., Rohnert Park Varies

408-295-7767 or 877-295-FLOW

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Tele-Entry & Access Control Emergency Exit Lighting Automated Gates Fire-Rated & Rollup Doors

Complete Service and Repair Plumbing Copper Repipes AquaTek Plumbing, Inc. has been servicing residential and commercial customers faithfully since 1982. Call us today for more information about AquaTek and the full spectrum of plumbing services we provide.

For Information please call: 650 988-9508 or 888 988-9508 or e-mail info@statcomm.com Lic # 675521 Underwriters Lab #UUFX.S8915 Diamond Certified ECHO Journal | August 2009

Honor Roll

About ECHO

ECHO Honors Volunteers Tyler Berding 2009 Volunteer of the Year ECHO Resource Panels Accountant Panel Richard Schnieder, CPA 707-576-7070 Central Coast Panel John Allanson 831-685-0101 East Bay Panel Scott Burke, 408-536-0420 Mandi Begley, 925-937-0434 Legal Panel Mark Wleklinski, Esq. 925-280-1191 Maintenance Panel Brian Seifert, 408-536-0420 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 Geri Kennedy, CCAM 650-348-2691 ext. 1006 Kimberly Payne, 408-200-8470 Wine Country Panel Maria Birch, 707-584-5123

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

August 2009 | ECHO Journal

SF Luncheon Speakers John Allanson Jeffrey A. Barnett, Esq. Tyler P. Berding, Esq. Ronald Block, PhD. Doug Christison, PCAM, CCAM Karen Conlon, CCAM Rolf Crocker, CCAM Ross Feinberg, Esq. David Feingold, Esq. Tom Fier, Esq. Kevin Frederick, Esq. John Garvic, Esq. Beverly Gordon, CCAM Sandra Gottlieb, Esq. Beth Grimm, Esq. Brian Hebert, Esq. Roy Helsing Stephen Johnson, CFP Julia Lave Johnston Garth Leone Nico March Kerry Mazzoni Larry Russell, Esq. Steve Saarman Nathaniel Sterling, Esq. Debra Warren, PCAM, CCAM Steven Weil, Esq. Mark Wleklinski, Esq. Glenn Youngling, Esq.

Marin Seminar Speakers David Feingold, Esq. Linnea Juarez, PCAM, CCAM Wanden Treanor, Esq. Glenn Youngling, Esq.

Association Finances Seminar Speakers Joelyn Carr-Fingerle, CPA Bill Erlanger, CPA James Ernst, CPA John Garvic, CPA Donald Haney, CPA

North Bay Winter Seminar Speakers Sandra Bonato, Esq. Robert Hall, Esq. Diane Kaye, CCAM David Kuivanen, AIA Steve Lieurance, CCAM Steven Saarman Robert Smylie Barbara Zimmerman, Esq.

Recent ECHO Journal Contributing Authors April 2009 Julie Adamen Colletta Ellsworth-Wicker, PCAM Tom Fier, Esq. Steven Weil, Esq. May 2009 Tyler P. Berding, Esq. Kim Goldsworthy Richard Tippett Glenn H. Youngling, Esq. June 2009 James O. Devereaux, Esq. Hermann Novak Steven O’Brien Debra J. Oppenheimer, Esq. Allen F. Schafer Dean Williams, PCAM July 2009 Andrew Baugh, Esq. Melanie J. Bingham, Esq. Matt Malone, Esq. Marjorie Jean Meyer, PCAM Matt D. Ober, Esq. Carole Robinson Brian Seifert

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.

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 Non-members/Homeowners Businesses & Professionals

$50 $75 $125

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 408-2973246 or visit the ECHO web site (echo-ca.org) to obtain an application form and for more information.

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Adver tiser Index

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American Management Services . . .10 Angius & Terry . . . . . . . . . . . . . . . . .3 Applied Reserve Analysis . . . . . . . . .21 AquaTek Plumbing . . . . . . . . . . . . .37 A.S.A.P. Collection Services . . . . . . . .9 Association Reserves . . . . . . . . . . .17 Bayridge Group . . . . . . . . . . . . . . . .14 Berding | Weil . . . . . . . . . . . . . . . . .44 Coastal Termite Control . . . . . . . . .14 Collins Management . . . . . . . . . . . .21 Community Association Banc . . . . . .22 Community Management Services . .16 Community Reconstruction Solutions 37 Compass Management . . . . . . . . . .39 Cool Pool Service . . . . . . . . . . . . . .17 Cornerstone Community Mgmnt . . . . .8 Draeger . . . . . . . . . . . . . . . . . . . . .11 Ekim Painting . . . . . . . . . . . . . . . . .31 First Bank Association Bank Services30 Flores Painting . . . . . . . . . . . . . . . .29 Focus Business Bank . . . . . . . . . . .21 Helsing Group . . . . . . . . . . . . . . . .14

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ECHO Journal | August 2009

New election rules: $500 In today’s economic crisis, there may be some items that associations can cut to reduce costs. ECHO membership is not one. Let’s face it, educated board members are better fiduciaries, which helps them to avoid costly law suits and possibly personal liability. ECHO is the premier resource in California for board member education. ECHO offers new articles each month with practical and easy to understand advice about current California requirements, and what may be on the horizon. ECHO staff is available by phone or E-mail to answer members’ questions about association problems or to recommend competent professional services when necessary. And with discounted member rates at more than a dozen educational events throughout the year, ECHO is simply the best educational resource for California homeowners. Avoid Litigation Each year, as a member benefit, ECHO sends every board member a copy of the updated Community Association Statute book. Every issue of the ECHO Journal and every seminar examine one or more aspects of compliance with association law, because one of the major causes of expensive litigation is ignorance of the law.

Mailing ballots: $200 Make Better Financial Choices Many associations struggle to understand reserve funding requirements and strategies, the benefits and disadvantages of using special assessments, proper collections practices, and even how to determine what components the association is required to maintain. At a time when wise financial planning is essential, ECHO members have access to a wealth of articles about reserve funding, budgeting, insurance, collections, and much more. Fight Costly Regulation Every year, Sacramento legislators introduce more legislation that confuses the job of California board members and increases the costs of compliance. ECHO is committed to fighting unnecessary regulation in California and promoting the interests and welfare of common interest developments. Hire Competent Professionals ECHO offers a variety of articles and publications to help members evaluate their service providers, including questions to ask prospective management firms and contractors. All ECHO Journal articles are available to members at no cost, and publications are sold to members at a discount.

Avoiding a lawsuit: Priceless. Spend a Little, Get a Lot The cost of ECHO membership is minimal. In a worsening economy, associations are looking to cut big expenses from their budgets. Yet, ECHO membership is as little as 25¢ per unit each month. For that small cost, here’s what every board member receives as part of being a member of ECHO: • A subscription to the ECHO Journal • An annual copy of the current Community Association Statute book • Unlimited access to ECHO’s library of past articles • Telephone consultations with ECHO staff about their problems • Reduced fees for ECHO events • Discounted prices on publications • And much more… In These Tough Economic Times, ECHO Membership is a Necessity As the only California organization devoted exclusively to board member and homeowner education, ECHO is a one-of-a-kind resource that your association can’t afford to lose.

Condominium Conversions Did You Get What You Paid For?

Condo conversions are not new condominiums. They are older rental apartments that were converted to condos. So, what’s wrong with that? Nothing, if the financial plan that came with your condo is up to the task of maintaining a building with 20-30 years of deferred maintenance. How do you know? You probably don’t unless someone

has taken a close look at the homeowner association’s budget and compared it to the actual condition of the buildings. The fact is, very few condominium conversions were sold with repair budgets that are adequate to meet the needs of the project. What does this mean to you? If the budget is inadequate, it will mean either increased homeowner assessments or a gradually deterio-

rating condominium project. Or both. In either case, you didn’t get what you paid for. If you’d like to know the truth now about what you bought, call us. If you want to wait and see what happens, ok, but either way, we’ll be here when you need us. Berding | Weil, LLP 3240 Stone Valley Road West Alamo, California 94507 925-838-2090 www.berding-weil.com