Fostering a better quality of life in community associations through education, advocacy and networking.
Echo 5669 Snell Ave., #249 San Jose, CA 95123 408.297.3246 | info@echo-ca.org www.echo-ca.org
BOARD OF DIRECTORS & OFFICERS
PRESIDENT
Adam Haney
VICE PRESIDENT
Mark T. Guithues, Esq.
TREASURER
Karl Lofthouse
SECRETARY
Brian Campisi
DIRECTORS
Rolf Crocker
Sarah Dunia
J. Spencer Edgett, Esq.
John Gill, Esq.
David Levy, CPA
Nathan McGuire, Esq.
Ali Nekumanesh
Louis J. Sarmiento, Esq.
Lisa Triplett
Kelly Zibell
BENEFACTOR MEMBER
Donald W. Haney, CPA CID Consortium, LLC
CHIEF EXECUTIVE OFFICER
David Zepponi | dzepponi@echo-ca.org
OPERATIONS MANAGER
Connor Zepponi | connor@echo-ca.org
MEMBERSHIP & SALES MANAGER
Jacqueline Price | jprice@echo-ca.org
PUBLICATIONS EXPEDITOR
Pam Grove | pgrove@echo-ca.org
MEMBER ENGAGEMENT COORDINATOR
Jared Giguere | jared@echo-ca.org
The Echo Journal is published quarterly by the Executive Council of Homeowners (Echo). The views of authors expressed in the articles herein do not necessarily reflect the views of Echo. We assume no responsibility for the statements and opinions advanced by the contributors to the magazine. It is released with the understanding that the publisher is not engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought.
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Echo member information is never released to any outside individual or organization, unless agreed to by the member.
HOA Education On Demand!
Get more from your Echo membership
Echo members have exclusive access to our entire library of HOA-focused educational programming including Community Conversations, Educational Seminars, Workshops, Ask the Attorneys, and Ask the Experts.
The presentations referenced below are a sampling of what is available to our valuable members. Click a title to watch!
Selecting and Working with an HOA Attorney
Elections: Notices, Ballots and Legal Requirements
Governing Documents: Is It Time to Update?
Community Crime – Prevention and Safety
Ask the Experts: Construction and Maintenance
Discrimination: Cultural Sensitivity & Reasonable Accommodations
All Things Paving
Privacy, Cameras, & Recordings ... What Can We Do?
Gift Giving and Acceptance Policies for Associations
Raison d’Etre – The Reason for Boards
Should HOAs consider giving gifts? This topic might be a bit late for the 2024 gift giving / year-end season, but it’s not too late for you to consider a policy for the 2025 season. Gift giving can be a bit of a sticky wicket in HOAs, which emphasizes why a policy would be a good idea.
Gift Acceptance Policy: According to the National Council of Nonprofits, a gift acceptance policy is a best management practice for nonprofits. This is especially true when the nonprofit accepts inkind gifts, gifts with “strings attached,” or large gifts to board members when they are reviewing or will review a contract for services.
What a beautiful phrase, raison d’etre (reason for being). It is a every board member should consider and collectively agree. The phrase engenders humanity. The words roll from one’s tongue. stark business senses and adds the element of humanity to the a board: Strategic planning, execution and evaluation; mission management. The business realities should be reflective of community common values of individuals in the community.
Optics matter. HOA boards are political bodies. As trustees with a constituency of homeowners, accepting gifts of lavish dinners, ski excursions, or even a simple coffeehouse gift card can create real or perceived ethical and political problems for the recipient. Here are a few thoughts on policies:
1. Transparency is most important.
2. Establish reasonable standards for gift value and type.
3. Consider reporting requirements, especially at open board meetings.
Communities are imperfect – because they are made of humans. relating. Humans using. Human living. Basically, humans being being human, communities sometimes forget that management establish norms for a successful community. In a sense, the board the community. Its purpose is to establish order and elevate or progress and pace by establishing norms and constraints to balance to benefit all.
4. The motivation for the gift matters. Protect the association.
5. Perception is often reality and, unfortunately, some may jump to the wrong conclusion, whether it exists or not.
6. To reduce the risk of liability, consider a “no gifts” policy, as many large corporations do.
7. Decide what the consequences of violations will be, ensure all board members and professional service providers are aware of these policies, and fairly and rigorously enforce violations.
It seems apparent that board leadership must understand and owners in order to orchestrate a sense of community and generate and protect community values. The purpose of a board, therefore, build community based on common values for the good of all.
It takes time to orchestrate a community. It takes time to know your time to listen to the voices and build a vision reflective of community and you will be more effective as a board member and satisfied your reason for being on the board.
A gift acceptance policy is considered a best management practice, but getting to a meaningful and workable policy is often challenging. For this reason, it is highly recommended that an attorney be involved with the development and review of any policy.
Gift Giving Policy: The complement of a gift receiving policy is a gift giving policy. This is much easier. Generally, it is a nice gesture to give a simple gift of appreciation to contractors, employees, and perhaps individuals who
ECHO is committed to helping homeowner boards and residents ing and advocacy – this is our “raison d’etre”.
Continued on page 28
ECHO CHIEF EXECUTIVE OFFICER
David Zepponi Executive Director
2025 IN-PERSON & ONLINE
2025 IN-PERSON & ONLINE EVENT CALENDAR
- Managing a Well-Maintained
- Managing a Well-Maintained
Handling Noncompliant Boards in Homeowners Associations
BY JEFFREY BEAUMONT
Ahomeowners association is only as strong as its board of directors.
An HOA board is entrusted with managing and operating the HOA, and it owes its members the fiduciary duties to act in good faith and in the best interests of the corporation. When HOA boards fail to comply with their obligations and do not perform these duties, significant liability exposure arises, and great risks emerge. To mitigate the harms created by noncompliant HOA boards, it is incumbent upon the HOA’s membership, as well as the board itself, to utilize available processes and resources to resolve the noncompliance.
The first step in remedying a noncompliant HOA board is to create a written record reporting the noncompliance to the HOA board itself. HOA residents (as well as board
members) seeking to correct noncompliance must write to the HOA board, documenting what type of noncompliance is occurring and demanding that it be corrected. Sometimes, a written demand for compliance is enough. When it is not, the next step is to escalate the demand to the HOA’s legal counsel. Involving the HOA’s legal counsel early puts them on notice of the board’s noncompliance, and it also triggers counsel’s ethical responsibility to bring these issues to the board’s attention and provide legal guidance. The HOA’s legal counsel may recommend to
the board that they take whatever action is necessary to come into compliance.
However, the board may reject or ignore the advice provided by counsel. This typically results in legal counsel writing back to the complaining member, stating that the board will not take further action on the complaints made. While it may appear to the complaining resident or complaining board member that they are out of luck, there are additional resources at their disposal to compel compliance.
The California Civil Code allows any HOA member to request
internal dispute resolution (IDR) or alternative dispute resolution (ADR) to resolve disputes, including bringing the board into compliance with their obligations and responsibilities. Typically, IDR will precede ADR, as it is a more informal mechanism for resolving disputes. Any HOA member can request IDR with the HOA, and the HOA is obligated to accept the member’s IDR request. IDR will be held between the requesting member and the HOA board, where the member must be afforded an opportunity to present their grievances to the
Handling Noncompliant Boards...
Continued from page 9 board. IDR is a great opportunity for a complaining member to directly address an HOA board, and oftentimes, IDR does result in a resolution. However, the board is not obligated to reach a resolution or compromise with the complaining member during an IDR. In that case, the parties can proceed with an ADR.
An ADR is invoked with a “request for resolution” demand in which the complaining member requests that the HOA respond to its demand for an ADR within 30 days. Unlike in an IDR, an HOA is not obligated to accept a complaining member’s ADR request. However, if they reject it, the HOA can be liable for the complaining member’s attorneys’ fees should that member file a
lawsuit to resolve the dispute. This is why, in many cases, HOA boards do accept ADR requests and would likely be advised by their legal counsel to do so.
Once a request for an ADR is accepted by the HOA, the parties have 90 days to complete the ADR. An ADR can be in the form of either mediation or arbitration. In either case, the complaining resident or the HOA board member making the ADR request is afforded the opportunity to present their findings regarding the board’s alleged noncompliance to a neutral factfinder. In mediation, the neutral mediator will attempt to find common ground and bring resolution between the parties. In arbitration, the factfinder (usually a retired judge) will issue a ruling on how the dispute should be
resolved. Regardless of what form of ADR is used, the process often compels HOA boards to come into compliance or compromise, especially since the HOA itself must pay half the costs of the ADR (skin in the game!).
When an ADR is unsuccessful, the complaining resident’s or board member’s final recourse is through litigation. In suits to enforce an HOA board’s compliance with either the HOA’s governing documents or the California Civil Code, attorneys’ fees are typically recoverable by the prevailing party. In a suit to compel an HOA board’s compliance with their obligations and responsibilities, the complaining party will prevail if a court (a judge or jury) finds that the board breached a legal duty and/or must take some action to
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come into compliance with the governing documents or the law. Any lawsuit comes with risks, and there is no guarantee of success or an award of attorneys’ fees. Nevertheless, the California Civil Code grants homeowners the ability to seek recourse against noncompliant HOA boards through litigation when other processes prove unsuccessful.
Members of an HOA who make complaints against their noncompliant boards do so of their own volition. HOA board members, however, are obligated to correct noncompliance when it occurs as part of their fiduciary responsibilities to the HOA and its members. Of course, the whole dispute between an HOA member and the HOA board rests on each party’s interpretation of whether noncompliance exists. If an HOA board member is aware of
noncompliance by the board and does not want to be complicit, the HOA board member must take steps to compel compliance, even if that means breaking from the board’s majority consensus. HOA board members may follow all of the above-described steps that any member at large has at their disposal to compel the full board’s compliance. It is in a board member’s best interests, as well as the best interests of the community, to promote compliance using all available dispute resolution processes and resources.
Correcting an HOA board’s noncompliance can be a challenging process. However, legal mechanisms are available to any member to encourage or compel the board’s compliance with their legal and ethical responsibilities. Becoming
familiar with these tools can be a powerful way to deter a board’s failure to comply with their obligations and responsibilities, ultimately serving to protect the best interests of the HOA and the homeowners.
Jeffrey A. Beaumont, Esq., is the senior partner of Beaumont Tashjian, a fullservice community association law firm providing general counsel, litigation, and assessment collection services to its clients, with offices throughout California. Mr. Beaumont has been representing community associations for over 25 years and is involved in HOA industry organizations serving in a variety of volunteer leadership capacities such as faculty member, speaker, article author, magazine editor, and board of directors and committee chair, as well as on a legislative level at the California State Capitol.
TINNELLY LAW GROUP, PC
There is no substitute for Expertise. HOA Law is what we do. Representing California HOAs exclusively for over 30 years.
We pride ourselves on being sensitive to our clients’ interests and being able to craft sensible and effective solutions to their problems. The trust we have earned has resulted in client relationships that span decades.
Tinnelly Law Group is devoted entirely to the unique legal landscape that HOAs and their Boards of Directors face. Virtually all of our efforts are directed toward the representation of HOAs. Our firm prides itself on being sensitive to the interests of HOAs and being able to craft pragmatic, sensible and effective solutions to their problems.
Our firm believes there is no substitute for expertise. We have been representing HOAs exclusively since our founding in 1989. Our firm has developed a special expertise in the areas most important to Boards of Directors in their efforts to manage the affairs of their HOA: general
counsel, governing document interpretation and enforcement, assessment recovery, alternative dispute resolution (ADR) and litigation. We also dedicate a substantial amount of time and resource to publishing educational whitepapers, blog posts and newsletters addressing trends in HOA law and popular issues encountered by our clients and their management.
We are constantly looking for ways to expand upon the value we add for our clients. One of our websites, FindHOALaw. com, is a comprehensive library of HOA law and legal information. Its thousands of pages of content and easy-to-use interface provides our clients and their management
with a powerful tool for learning about the unique body of law governing HOAs in California.
We understand the importance of responsive and accessible attorneys and staff. Our technology and office policies ensure open and immediate lines of communication with our clients and their management. Our firm understands that cost-efficiency should be a central tenet of every professional services firm. We have made significant investments in cutting edge, cloud-based technology to improve our efficiency and to provide significant cost savings for our clients. This technology drastically improves the efficiency with which we access, manage, store and secure our clients’ files and information, while expanding the ability of our clients to communicate with our attorneys. The result is more effective handling of client matters at a reduced expense to our clients.
Our firm believes that excellence requires a commitment to continued improvement—both in the way we service our clients’ needs and in our knowledge of the changing laws which relate to the representation of HOAs. We pride ourselves on being sensitive to our clients’ interests and on being able to craft sensible and effective solutions to their problems. The trust we have earned has resulted in client relationships that span decades.
27101 Puerta Real, Suite 250 Mission Viejo, CA 92691 (949) 588-0866 | tinnellylaw.com
BY RACHEL M. MILLER
CONSTRUCTION DEFECT CLAIMS Understanding the SB-800 Process
There is one thing new homeowners associations can rely on in the first decade of a building or project completion: an SB-800 claim will be necessary. Budget season and the rainy season tend to highlight needs for financial stability, and it’s the builder’s insurance that can carry the weight of expenses and fixes resulting from common area construction defects. With over 50,000 HOAs in the state of California alone, and with most new construction belonging to a common interest development like a homeowners association, the role of an HOA board director in navigating these claims is more important than ever.
Aside from fulfilling a long-awaited dream, most owners of new condos experience defects, from wall cracks and plumbing leaks to leaking doors, windows, and roofs causing extensive water damage. Most of these issues fall within common area building components for which the HOA board has a right to present claims to the builder and its insurance companies outside of litigation.
Fortunately, there is clear recourse that protects the interests of California associations and helps them secure the assistance needed for necessary repairs: construction defect liability laws. These laws are designed to protect homeowners from bearing the costs of repairing construction defects in newly built condos, and all defect claims are subject to SB-800. Senate Bill 800 (SB-800) establishes a pre-litigation process of presenting repair needs to the builder. California Civil Code Section 895 also defines 150 types of defects for which the developer is responsible, including a catchall.
Also known as the “Builder’s Right to Repair Law,” SB-800 allows for homeowners to demonstrate that the developer violated construction standards and therefore allows homeowners to shift the burden to the developer and its insurance to show they met those standards. It also prescribes the time frame in which associations have to bring construction defect-related claims. Depending on the affected building component, a claim must be brought within one, two, four, five, or ten years from the completion date of construction or when the builder relinquished control over the association.
So what should an HOA board director know about construction defect claims, and what are their responsibilities? Here are some key considerations for HOA board members:
1. The process specified by SB-800 is not a formal claim or litigation. The process is as follows:
• A letter is written to the builder parties;
• The builder(s) must respond in writing within 14 days, and;
• Within 14 days of their response, the builder is invited for a visual inspection of the community to evaluate the common area conditions that warranted the notice of construction defects.
2. Board members should be on the lookout for signs of defects.
Board members and homeowners should look out for certain warning signs of defects, such as water leaks, rot, uneven floors, foundation cracks, flickering lights, frequent circuit breaker trips, and drainage issues. Other indicators include microbial growth, spongy decks, loose railings, corrosion, or efflorescence (a powdery white residue on concrete or stone surfaces). Noticing these issues early and addressing them promptly can prevent more extensive damage and ensure the community’s safety and integrity. Board members should also monitor the following:
• Excessive service calls
• Homeowner complaints
• Excessive budget expenditures
• Inadequate reserves
• Shortened life expectancy / premature deterioration
• Resultant damage of components of the structure
3. Board members should know their obligations as a board member.
California Civil Code Section 1365.7 makes it a fiduciary duty for each board member to investigate alleged construction defects and pursue them in a timely manner. It is therefore important for board members to become and stay informed of their obligations to their respective associations in navigating construction defect claims and what the association’s rights may be. In California, it is the responsibility of the HOA board of directors to investigate and, if a defect does exist, bring a builder claim within the time allotted under the law. If the time limit expires, responsibility for potentially exorbitant repairs is shifted from the builder to the Continued on page 16
• Noise (from original occupancy of adjacent unit)
• Irrigation and drainage
• Fit and finish warranty
• Manufactured products
• Plumbing and sewer
• Corrosion of steel fences
• Cracks in exterior hardscape, driveways, landscape, sidewalls, sidewalks, patios
• Electrical
• Air conditioning in living spaces
• Balconies and balcony systems
• Ceramic tile and tile backing
• Ceramic tile and tile countertops
• Decks and deck systems
• Doors
• Exterior stairs and stair systems
• Exterior stucco, siding, walls, framing, finishes, and fixtures
• Fire protection
• Foundation systems and slabs
• Foundations, load-bearing components, slabs, and underlying soils
• Landscape, paths, patios, irrigation systems, landscape systems, and drainage systems
• Decay of untreated wood posts
• Landscaping systems
• Deterioration of building surfaces due to paint or stain
association, threatening the association’s reserves and creating the possibility for costly special assessments on unit owners.
4. Time is of the essence, so important time limits need to be understood.
California Civil Code Section 941 defines the statute of limitations, or time limits, for which a homeowners association may bring a claim against the builder as “no more than 10 years after substantial completion of the improvement, but not later than the date of recordation of a valid notice of completion.”
While the outside time limit for building deficiencies is 10 years, shorter time limits exist for select building elements at one-, two-, four-, and fiveyear intervals (see figure 1).
• Heating
• Plumbing lines, sewer lines, and utility lines
• Retaining and site walls, associated drainage systems
• Roofing materials
• Roofs, roofing systems, chimney caps, and ventilation
• Shower and bath enclosures
• Soils and engineered retaining walls
• Structures
• Windows, patio doors, deck doors, and related systems
Figure 1
5. Review covenants, conditions, and restrictions (CC&Rs).
The kind of defect claim filed will depend on the type of property ownership and what kind of dispute resolution is prescribed in the CC&Rs. Typically, when a condominium is purchased, the homeowner is responsible for components inside the air space, that is, “walls in.” The association, on the other hand, is responsible for the common areas of the building and community. The CC&Rs will inform the board on the division of ownership in a given complex and who is responsible for the repair and maintenance of those elements. This information is often summarized in a responsibility matrix typically located as an exhibit in the CC&Rs.
The CC&Rs will also inform the board if the developer has opted to draft its own alternative
Continued on page 18
GARCIA | MARSALLI LLP
Our paramount goal is helping Boards meet these obligations, particularly the investigation and timely pursuit of construction defect claims against negligent developers.
The attorneys at Garcia | Marsalli, LLP have successfully represented community associations and thousands of individuals in construction defect actions throughout California for over twenty years. We have a deep appreciation for the challenges faced by property managers and association boards, and we greatly respect the board’s primary and fundamental responsibility to protect, maintain and enhance the assets of the association. Our paramount goal is helping boards meet these obligations, particularly the investigation and timely pursuit of construction defect claims against negligent developers.
Evaluating a property for construction defects and poor workmanship requires professional expertise, and obtaining compensation or repairs from the
responsible parties through the legal process for any deficiencies requires knowledgeable, tenacious, and experienced legal guidance. We have spent decades representing homeowners and HOAs in complex litigation, for a diverse array of construction problems, ranging from improperly waterproofed balconies and roof leaks to severe soil subsidence (just to name a few). We also work with a variety of construction experts, and our staff will coordinate all required inspections for your community. Most importantly, we represent clients on a contingency-fee basis, with no out-of-pocket costs for our services.
We have recovered hundreds of millions of dollars for our clients, enabling them to undertake critical repairs and preserve the
value of their property and communities. Below are a few comments from past clients:
“I want to extend my sincere gratitude for your tenacity on this litigation and for a job well done! (We) appreciate how difficult these last couple of years must have been on you, representing so many folks on this critical crusade! And you came through with flying colors, achieving more than we EVER expected!” – Jim & Kimberly A.
“Thank you for all your efforts settling the construction defect lawsuit on our behalf. You and your staff were ever so courteous but steadfast in your endeavors and we convey our heartfelt thanks... Thank you, and we will certainly refer your services to anyone in need!” – Jose & Cindy M.
“Once again, thank you, your partners, and staff for doing a five-star job. I will recommend your firm to any family and friends who need legal representation. THANK YOU ALL…You have exceeded my expectations.” – James K.
Contact our office at the information below or scan the QR code to learn how we can assist your association.
3478 Buskirk Avenue, Suite 1000 Pleasant Hill, CA 94523 (888) 377-3633
jerod@garciamarsalli.com www.garciamarsalli.com
Israel Garcia, Esq.
Jerod Marsalli, Esq.
experienced firm to get the best possible representation for their most important asset.
Continued from page 16
dispute resolution, the purpose of which is to allow the builder to not only notify them of the defect but also inspect and ultimately repair the issue. These documents can be difficult to analyze, which is why the board should consult legal counsel.
6. Consult qualified legal counsel.
Navigating a construction defect claim can be a complex and, if not handled carefully, difficult process for a board to deal with. From statute
of limitations analysis, to the investigation of building performance standards violations, to properly commencing the pre-litigation claims process, to analyzing the builder’s insurance policies, to guiding the community through the reconstruction and repair process, it is imperative for an HOA board of directors to turn to qualified legal counsel that specializes in the field of SB-800 and construction defect litigation. Boards can turn to their professional management company or reputable CID resources like Echo to locate an
Rachel M. Miller, Esq., has proudly practiced law with The Miller Law Firm for nearly 30 years in the primary and unique role of senior partner with a focus on client connection and providing immediate contact and communication to current and prospective clients, board members, and community association managers.
Rachel is co-author of a consumer handbook on the subject: Home and Condo Defects: A Consumer Guide to Faulty Construction (1st Edition 2001; 2nd Edition 2012; 3rd Edition 2022). She is also the co-author of Handling Construction Defect Claims: Western States (3rd Edition, 1999; Annual Supplement, 2009–2012), and the 4th Edition published in 2013 by Wolters Kluwer Law & Business (Annual Supplement 2014–2024). Additionally, Rachel is the editor and moderator of various industry education courses as they relate to building performance standards.
Construction Defect Claims: Understanding the SB-800 Process
100+ board members attended the Echo Legislative Update Educational Seminar in Walnut Creek.
caught
THE MILLER LAW FIRM
The Best Representation for Your Most Important Asset
Celebrating 40 years of practice, The Miller Law Firm continues to be California’s construction defect authority and leading resource for Bay Area homeowners, Boards of Directors, and community management.
We have dedicated the last four decades to representing California homeowners associations, protecting the rights and interests of urban, mid-rise, high-rise, and mixed-use associations with construction defect claims. We help communities rebuild their homes and restore their investments by skillfully guiding Boards of Directors in meeting their fiduciary duties, pursuing recoveries against builders’ insurance policies, and reconstructing communities statewide.
“Having a firm that literally wrote the book on construction defect claims, with current experience against the very same builder, was extremely beneficial to our community. The Miller Law Firm kept the board and our owners informed while the claim was pending. That was important to us as a community and eased the burden on the board.”
– Peninsula HOA Board of Directors
Request your free copy of the newly released 3rd edition of: Home and Condo Defects: A Consumer Guide to Faulty Construction, written to aid and assist homeowners, board members and HOA management companies in the SB 800 claims process.
Rachel M. Miller, Esq. 595 Pacific Ave., Fourth Floor San Francisco, CA 94133 415-437-1800 | 800-403-3332
Don’t miss an opportunity to get the education you need – and the networking and connection you want. Register today!
Educational Seminars
Learn from an acclaimed faculty delivering essential knowledge for HOA boards and homeowners.
• Ask your questions of on-site attorneys
• Visit with industry experts at exhibit tables
• Meet and connect with board members from neighboring communities
See the 2025 Event Calendar (page 7) for the dates of upcoming Educational Seminars.
Click a button or use the link to sign up to receive information on Resource Panel meetings near you!
Come and reconnect with your peers and attend an upcoming Resource Panel in your region. These events are held in a casual atmosphere to enable homeowners, board members, managers, and other professionals to hear about important topics presented by experts in the HOA industry. Click a Resource Panel meeting location below to sign up to receive information.
The Echo Club at Rossmoor (TECAR)
1/21 Sacramento Resource Panel 11:30 am – 1:30 pm
1/22 TECAR – The Echo Club at Rossmoor 9:30 am – 11:30 am
1/23 East Bay Resource Panel 11:30 am – 1:30 pm
1/28 Los Angeles Resource Panel 11:30 am – 1:30 pm
1/29 Orange County Resource Panel 11:30 am – 1:30 pm
1/30 San Diego Resource Panel 5:30 pm – 7:30 pm
2/11 Wine Country Resource Panel 11:30 am – 1:30 pm
2/12 North Bay Resource Panel 11:30 am – 1:30 pm 2/12 San Francisco Resource Panel 5:30 pm – 7:30 pm
2/25 San Pablo Bay Resource Panel 11:30 am – 1:30 pm
2/26 South Bay Resource Panel 11:30 am – 1:30 pm
2/27 Central Coast Resource Panel 11:30 am – 1:30 pm
THREE PART SERIES
How to Resolve Differences Within HOAs
PART 3 of 3
This is the third of a three-part series of articles outlining the roles and responsibilities of the volunteer board of directors in a homeowners association (HOA) community, the role of the homeowner, and processes for resolving differences that can arise between the two entities.
BY ALPA AGARWAL AND MARK T. GUITHUES, ESQ.
Volunteer HOA directors can make mistakes. They’re always well-intentioned, but their decisions may be uninformed, poorly determined or communicated, sometimes petty, and even potentially illegal. Many of these mistakes can be avoided through knowledge of roles and responsibilities; familiarity with governing documents; or simply good, honest, and respectful communication. This article series provides a look at the duties expected of directors and some of the tools available to resolve differences and conflict within HOAs.
The first article of this three-part series focused on the duties expected of directors and some of the tools available to resolve differences and conflict within HOAs. The second article focused on “pretrial” remedies available to homeowners. This third and final article in the series focuses on conflict resolution and various legal remedies.
Filing a Small Claims Court Action
Although an attorney can help prepare arguments, in small claims court, homeowners get to face their board in front of a judge. The small claims judge can provide three types of remedies: 1) addressing a violation by the HOA of the Open Meeting Act (making the HOA notice and hold their meetings correctly); 2) addressing a violation of the elections process (making the HOA notice and hold their elections in accordance with California Civil Code and the governing documents); or 3) awarding money homeowners believe is owed to them by the HOA or by a neighbor. To prepare a winning case for violations of the Open Meeting Act, see Civil Code 4900 to 4955 and Civil Code 5000. For violations of the elections process, see Civil Code 5145. Small claims actions against the HOA are limited to $12,500; actions against (noncorporate) neighbors are limited to $6,500. Homeowners can fill out the online form, pay the fee, and get a trial date.
ADR helps both sides zero in on the basis of the claim and review the supporting documents and other evidence...
Neither HOAs nor homeowners are allowed to hire an attorney to speak in front of the judge in a small claims action. HOAs can send non-lawyer representatives such as a manager, an employee, or a duly appointed or elected officer; homeowners are self-represented. If a small claims matter is appealed in superior court, homeowners and the board may then represent themselves or hire an attorney to represent them. Small claims court is a chance to resolve differences in court at a very modest cost.
Participating in Alternative Dispute Resolution
The California Civil Code requires that parties to a dispute over the HOA’s governing documents (other than assessment disputes) participate in ADR prior to filing a lawsuit in superior court. This is an out-of-court procedure that involves a neutral decision-maker, commonly a retired attorney or judge. There are two types of ADR: mediation and arbitration. Both can provide declaratory and monetary relief. With either, the HOA and homeowners share the costs of hiring the neutral decision-maker. Both the HOA and/or homeowners can hire an attorney for representation, in which case each party would pay their own attorney costs.
For example, in small claims court, homeowners can claim the cost to repair an HOA-responsible building component with the HOA’s continued and documented negligence. Or, if the HOA has levied improper or excessive fines, homeowners can ask a small claims judge to reverse them. If the HOA has held an election or meeting without complying with the notice requirements of its governing documents and the California Civil Code, a court may require a new meeting or election – and could award the homeowner $500 for their time and effort in bringing the claim. An alternative dispute resolution (ADR) is not required prior to filing a claim in small claims court. Small claims actions are not confidential, and homeowners can band together to file claims jointly, sharing the cost and/or the awarded amount.
Requesting ADR signals a willingness to file a lawsuit in superior court. It is a low-cost trial run of the legal validity of a case. It helps both sides zero in on the basis of the claim and review the supporting documents and other evidence, such as the credibility or scope of a witness’s testimony. If a case is found to be without basis during an ADR, it is a good signal that the case will be lost in superior court. Although the HOA is not legally obligated to accept a request for an ADR, failing to do so may make the HOA responsible for homeowner legal fees if the matter proceeds to superior court – and so HOAs generally will accept the request. Homeowners can also band together to engage in an ADR and share the cost. Unless they have signed a confidentiality agreement, homeowners are able to talk to neighbors about the mediation and/or arbitration itself and its outcome. California Civil
Continued on page 24
Code §§ 5925 through 5985 has more information on this.
The following are the steps when requesting ADR:
1. Homeowners should send a certified letter and email to the management company or board president requesting ADR pursuant to California Civil Code 5930. A copy of Civil Code Section 5900 should be attached. Details about the dispute, the ask, and the names of three local neutral decisionmakers should be provided for the board to choose from.
2. If the board counters with its own list of neutral decision-makers, homeowners may choose a person from the board’s list based on the decisionmaker’s qualifications. The homeowner’s attorney can help select a neutral decision-maker with experience in the subject matter of the claim.
More About Mediation
Mediation is non-adversarial in nature and works best when both parties act to resolve the matter in good faith. A mediator
works to assist the parties to sort through the issues and develop methods or ideas for a mutually agreeable resolution. In order to develop recommendations for a settlement, the mediator may conduct joint and separate meetings with the parties. Generally, the parties sign a confidentiality agreement that the information disclosed by them cannot be given to the other party or used in court without the permission of the party making the disclosure. Neither party is obligated to accept a mediated solution, and either party can leave the mediation at any time. If the parties are cooperative and compromising, mediation generally tends to result in successful outcomes for both parties. If so, the final step is to sign a settlement agreement.
Pro Tip Regarding Mediation: A written settlement agreement, signed by all the parties, that is not in conflict with the California Civil Code or the HOA’s governing documents, binds the parties and is judicially enforceable.
Arbitration
Arbitration is a private trial where the arbitrator makes a decision after reviewing evidence, hearing sworn testimony, and
taking into account relevant documentation. Unlike mediation, where the goal is to find a happy compromise, arbitration results in a winner and a loser. Arbitration can be either binding or nonbinding. If it is binding, the arbitrator’s decision must be complied with by all parties; it ends the dispute, and its resolution can be enforced contractually in superior court. If it is nonbinding, the decision can be seen as a very good predictor of the likely outcome in a superior court trial.
Pro Tip Regarding Arbitration:
Homeowners should consider agreeing to binding arbitration as a means to end the dispute without going to a superior court trial.
When to Reconsider Hiring an Attorney
With the obligation to share the cost with the HOA of hiring a neutral decision-maker during an ADR, homeowners may want to consider hiring an attorney. An attorney will analyze the legal validity of the case, create talking points, represent the homeowner(s) during the ADR, and counter the HOA’s legal posture. Many homeowners focus on their emotions or something they read on the web and miss the true HOA wrongdoing. Having an attorney avoids loss of an ADR because of a lack of knowledge of the relevant laws and legal precedence and procedures.
Superior Court Lawsuit
Following an ADR, the next option is filing a lawsuit in superior court. Superior court action can provide relief that provides a monetary award to
Continued on page 26
How to Resolve Differences Within HOAs Continued from page 23
COMMUNITY LEGAL ADVISORS, INC.
Community Legal Advisors provides guidance to HOA board of directors, helping them to navigate the complex legal landscape surrounding homeowner association law.
an action they are about to undertake is consistent with the association’s governing documents and California law.
Our general counsel work encompasses the following:
• Architectural Matters
• Alternative Dispute Resolution (ADR) and Informal Dispute Resolution (IDR)
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Community Legal Advisors provides legal services to homeowners associations throughout San Diego, Orange County, and the Inland and Coachella Valleys.
Members of our legal team have served as association managers, created residential and commercial community associations on behalf of developers, negotiated terms and conditions of CC&Rs with the California Department of Real Estate, advised the State Legislature regarding the new legislation, taught industry education courses, advised community associations in their daily operations
and litigated conflicts between associations and their vendors, insurers and members.
We provide guidance to HOA board of directors helping them to navigate the complex legal landscape surrounding homeowner association law.
The proverbial “ounce of prevention” can save hundreds of thousands of dollars of “cure.” We so completely believe this, that we have implemented a policy of free telephone calls for clients who enter a retainer agreement with our firm. We want our clients to “make a quick call” to confirm that
“We wanted to thank you so much for how you handled our case. We were both very impressed with your demeanor, tactics and execution.
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the prevailing party, or it can provide declaratory or injunctive relief, which upholds the rights of the winning party, restrains a party from doing certain acts, and requires a party to act in a certain way. Attorneys will craft a complaint that describes the wrongdoing and asks the superior court to rule in favor of their client(s). Conflicts that proceed
to superior court are generally subject to “prevailing party fees.” This means that the loser pays both their own attorney’s fees and those of the opposition. This high-stakes game often creates fee-driven disputes that dwarf the value of the underlying dispute. Homeowners are encouraged to make effective and efficient use of the tools herein to avoid this step when possible.
Conclusion
Volunteer directors can make mistakes. Their decisions can be petty, poorly determined, and sometimes even illegal. This three-part series of articles has provided an overview of what to expect from directors, and all the tools available to homeowners to resolve differences and disputes in HOAs. Use of these tools gives HOA homeowners and boards a greater possibility of success in resolving differences and disputes amicably.
Alpa Agarwal is a product line manager at the U.S. Department of Veterans Affairs and has worked at Microsoft, eBay, Intuit, and American Express in various technology roles. She is a legislative advisor to Echo and serves as a director for her HOA. She has an MBA and an undergraduate degree in economics.
Mark T. Guithues, Esq., is the founding attorney of Community Legal Advisors Inc., a six-attorney law firm providing general counsel and assessment collection services to homeowners associations throughout Southern California. Mark serves on the board of directors of Echo.
HUGHES GILL COCHRANE TINETTI, PC
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have particularly helped the association. Avoid giving gifts to board members altogether, and, when given, gifts should be of nominal value. There may be some exceptions, so this policy should be developed with the help and oversight of an attorney.
A few items to consider when creating a gift giving policy:
1. Gifts should be given to reinforce appreciation for an action, behavior, or commitment. It should be given freely, without strings, and with gratitude to underscore a job well done, or simply to underscore the value placed on the relationship.
2. Consider the unintended consequences.
a. What are the implications for those who are not receiving the gift?
b. Is the association creating an expectation?
c. Is the gift value/type worthy of the action/efforts of the person?
d. Will a gift demotivate? Is the gift too much or too chintzy?
3. Be transparent but smart. The topic of gift giving may be an item better suited for an executive session dealing with personnel or a contractor.
4. Make sure any policy is reviewed carefully by an attorney to ensure a good and smart policy.
Somewhere along the way, gift giving became difficult as people looked closer at the motivations for the gifts and the value of them. Expectations were established, and some gifts have become quite lavish; however, most are meaningful acts of appreciation. The impact of a gift is sometimes perceived inappropriately, and the gift may have demotivating consequences. But overall, showing appreciation to contractors, employees, and others who support the association with either extraordinary work or a lifetime of consistently good work is an important part of good management.
Outside of regular demonstrations of appreciation for good work, a board should consider generating a gift policy – for both receiving and giving gifts. Because giving gifts can have unintended consequences, it is important for a board to follow a policy. This policy can give them the needed consistency of implementation and help avoid transgressions and appearances that may be construed as self-serving.
A final thought: Gift giving is good and can build stronger relationships and convey a sense of humanity and goodwill toward those with whom the board works. It is always appropriate and kind to express sincere appreciation with a gift – its also simply good business.
Echo 2024 Board of Directors Election Results
Echo is pleased to have received applications from a total of six individuals interested in serving on the Echo board of directors, including three new applicants and three incumbents. David Hughes, long-time director and past board president, has decided not to run for another term. He is now an Echo director emeritus. Per the Echo bylaws, the board of directors has set the number of directors at 13. There were five qualified candidates for the five positions available, with one of the six applicants withdrawing. Accordingly, the election is uncontested, and the five candidates will be elected to the board by acclamation, pursuant to the Echo bylaws.
Please join us in welcoming the following directors to the class of 2025–2028:
• John Gill, Esq. (incumbent), Northern California
• Mark Guithues, Esq. (incumbent), Southern California
• Nathan McGuire, Esq. (incumbent), Central California
• Ali Nekumanesh (HOA community member), Central California
• Louis Sarmiento, Esq., Northern California
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A. Jeanne Grove, Esq.
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WELCOME TO ECHO’S
New Professional Service Providers
We are an HOA financial management organization. Our commitment is to provide operationally streamlined financial services while meeting all required checks and balances.
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The HOA Election Team provides simple, secure, and trusted HOA election services that meet California’s stringent election rules for associations and communities.
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As experienced inspectors of elections, we have more than 20 years of experience as an HOA board member and officer, and 30+ years’ experience as a homeowner and investors in multiple HOAs, and we manage elections across the state, from San Diego and Los Angeles to the Bay Area and Sacramento.
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ECHO LEGISLATION TRACKER
2024 End of Session
BY NATHAN McGUIRE, ESQ.
The 2023-2024 legislative session in California has concluded. After returning from recess on August 5, legislators worked feverishly right up until the August 31 deadline to pass bills. Governor Newsom had until September 30 to sign or veto bills.
Democrats held majorities in both the Assembly (62-18) and Senate (32-8), making California one of 17 states with a government trifecta. The legislature’s priorities included housing, climate change, economic investment, big oil industries, the opioid crisis, healthcare, systemic racism, and public transportation. Over 2,000 bills were introduced in the second half of the session (2024), of which around 1,200 made it to Governor Newsom’s desk. He signed 1,017 into law and vetoed 189. Except for those passed as an “urgency” measure, those that he signed will take effect on January 1, 2025.
Overall, it was a great year for HOAs, highlighted by AB-2149, which finally brings the option of electronic voting to HOAs. And unlike many recent years, we are not struggling to determine how to cope with any misguided bills that override governing documents or add overly burdensome or unnecessarily costly mandates. In the future, I wouldn’t be surprised to see bills addressing Open Meeting Act issues (the LNSU case), affordable housing (no more ADU bills, please!), the insurance crisis, structural integrity, and mandatory reserves.
On the federal side, two bills related to the Corporate Transparency Act (CTA) are pending, but likely going nowhere. One would exempt HOAs from the CTA and the other would push back the filing deadline.
As a reminder, please visit the advocacy section on the Echo website (www.echo-ca.org/echolegislation-tracker/) for updates as they become available.
NEW BILLS (PASSED)
AB-2114 (IRWIN), INSPECTION OF ELEVATED STRUCTURES: This bill amends the law (SB-326) to add “licensed civil engineers” to the list of professionals authorized to conduct inspections of
exterior elevated elements in a condominium project for which an association has maintenance or repair responsibility. Existing law requires the inspection to be conducted by a licensed structural engineer or architect. These inspections must be completed by January 1, 2025, and every nine years thereafter.
OUTCOME: We expected this bill, as an “urgency” measure with no opposition, to move quickly. We were right. It passed out of the Senate and Assembly and was signed by the governor on July 15, 2024, taking effect immediately.
AB-2159 (MAIENSCHEIN), ELECTIONS: This bill authorizes an association to conduct most types of elections under the Davis-Stirling Act by electronic secret ballot. In order to have the option of using electronic voting, an association will first need to amend their election rules to authorize the use of electronic voting and either:
1. Establish electronic voting as the default, and allow members to “opt-out” in order to receive a paper ballot, OR
2. Establish paper ballots as the default and allow members to “opt-in” to receive an electronic ballot.
Additionally, the bill requires an association that conducts an election by electronic secret ballot to ensure, among other things, that the electronic secret ballots provide a method to authenticate the member’s identity to the online voting system and a method for the member to confirm that their electronic device can successfully communicate with the online voting system at least 30 days before the voting deadline. The online voting system must be able to authenticate the member’s identity, authenticate the validity of each electronic vote, and transmit a receipt to a member who casts an electronic vote.
An electronic secret ballot is effective when transmitted and is not revocable once transmitted.
Electronic voting may not be used for levying regular or special assessment increases. The tally sheet of votes cast by electronic secret ballot must remain in the custody of the inspector of elections and be made available for inspection or review by an association member upon request.
OUTCOME: This bill was signed by the governor and takes effect on January 1, 2025.
WHAT YOU NEED TO KNOW: Associations wishing to be able to use electronic voting must amend their election rules and decide whether to use electronic voting as the default. Gathering and maintaining email lists will be even more important now to ensure that all members have the opportunity to vote. Also, each HOA using electronic balloting should check with their inspector of elections to ensure that the inspector offers this service.
AB-2460 (TA), ELECTIONS/QUORUM: This cleanup bill (to last year’s AB-1458) corrects some terminology and clarifies the process of a reduced quorum “reconvened” meeting for director elections, at which the quorum is reduced to 20% of the members. This bill does not apply if the association already has a lower quorum or reduced quorum threshold.
OUTCOME: This bill was signed by the governor and takes effect on January 1, 2025.
WHAT YOU NEED TO KNOW: This bill will help associations move essential membership decisions forward when a vote would not otherwise be valid due to a lack of quorum. For example, if an association has a 50% quorum requirement, and only 30% of the eligible members vote, then the issue cannot be decided due to a lack of quorum. After the first such vote, the state now, through AB-2460, reduces the quorum to 20%, allowing the question to be validly resolved.
SB-477 (HOUSING COMMITTEE), ACCESSORY DWELLING UNITS: Existing law provides for the creation by local ordinance (or by ministerial approval if a local agency has not adopted an ordinance) of accessory dwelling units in areas zoned for single-family or multifamily dwelling residential use in accordance with specified standards and conditions. Existing law also provides for the creation of junior accessory dwelling units
by local ordinance or (if a local agency has not adopted an ordinance) by ministerial approval in single-family residential zones in accordance with specified standards and conditions. This bill made non-substantive changes and reorganized various provisions relating to the creation and regulation of accessory dwelling units and junior accessory dwelling units (including the provisions described above) and included related non-substantive conforming changes.
OUTCOME: This bill, first introduced in 2023, was signed into law by the governor on March 25, 2024. As an urgency measure, it became effective immediately.
SB-900 (UMBERG),
REPAIR AND MAINTENANCE:
This bill makes associations responsible for repairs and replacements to restore interruptions to gas, heat, water, or electrical services that begin in the common area, even if the matter extends into another area, as specified. These repairs or replacements must commence within 14 days. The bill permits financing or levying an emergency assessment, without member approval, for needed repairs if insufficient reserve funds are available. Finally, the bill amends the definition of “major components” (for an association’s reserves) to include “gas, water, and electrical service to the extent the association is required to repair or replace these components.”
OUTCOME: This bill was signed by the governor and takes effect on January 1, 2025.
PRIOR LEGISLATION
SB-326 (HILL), BALCONY INSPECTIONS: This bill, passed in 2019, requires condominium associations to inspect certain elevated structures (like decks and balconies) every nine years. It is mentioned here because the deadline for the first inspection is rapidly approaching – January 1, 2025. It applies to load-bearing components (six feet above ground, supported entirely or substantially by wood) and associated waterproofing systems.
SB-428 (BLAKESPEAR), WORKPLACE VIOLENCE RESTRAINING ORDERS: This bill was passed last year but takes effect in 2025. Existing law permits workplace violence restraining orders to be obtained for “unlawful violence or a credible
Continued on page 34
threat of violence.” Starting January 1, 2025, a workplace violence restraining order can additionally be obtained for “harassment.” Harassment will be defined as “a knowing and willful course of conduct directed at a specific person that seriously alarms, annoys, or harasses the person, and that serves no legitimate purpose. The course of conduct must be that which would cause a reasonable person to suffer substantial emotional distress and must actually cause substantial emotional distress.”
WHAT YOU NEED TO KNOW: This will give associations more options when it comes to protecting directors, employees, volunteers, etc., from harassment.
FAILED
We tracked a number of bills this year that didn’t make the cut. They are mentioned here because, like zombies, bills can rise from the dead and be reintroduced.
AB-2149
(CONNOLLY), GATES STANDARDS/ INSPECTION:
This bill would require a regulated gate (defined as any gate that weighs more than 50 pounds and is more than 48 inches wide or more than 84 inches high), including neighborhood/ HOA gates, to meet certain standards. The bill would require each building department to update, on or before July 1, 2026, its code requirements to ensure that any newly installed regulated gate in its jurisdiction meets those standards. The bill would require the owner of a regulated gate to have it inspected on or before July 1, 2026, or upon installation, and have it reinspected at least once every 10 years thereafter. The bill would require an owner to maintain a written report regarding the regulated gate’s compliance with the specified requirements for at least 10 years and make the report available to the building department upon request. The bill would require the owner of a regulated gate that is determined to pose an immediate threat to safety to immediately stop the use of the gate until necessary repairs are completed and to engage a contractor or qualified employee to perform the repairs necessary to mitigate the emergency condition. The bill would authorize civil and criminal penalties for violations.
OUTCOME: This bill is dead. After being amended on July 3, 2024, the bill was sent to the suspense file for the fiscal impact to be considered, where it was held under submission.
AB-2996
(ALVAREZ), INSURANCE/FAIR PLAN:
The California FAIR Plan Association is a joint reinsurance association in which all insurers licensed to write basic property insurance participate in administering a program for the equitable apportionment of basic property insurance for persons who are unable to obtain that coverage through normal channels. Existing law establishes the California Infrastructure and Economic Development Bank and authorizes it to issue bonds upon request by a state entity. This bill would authorize the FAIR Plan Association to request the California Infrastructure and Economic Development Bank to issue bonds and would authorize the bank to issue those bonds. This bill is an urgency measure which, if passed, would take effect immediately.
OUTCOME: This bill is dead. It did not move from the suspense file.
SB-1055 (MIN), ACCESSORY DWELLING UNITS:
This bill would prohibit a qualifying local agency from imposing height limitations that would prohibit an attached accessory dwelling unit from attaining a height of 16 feet, as specified. The bill would define “qualifying local agency” as a local agency that the Department of Housing and Community Development has determined that the number of housing units that have been entitled by the local agency (as shown on its most recent annual progress report) is greater than the local agency’s share of the regional housing need, for the low- and very low-income categories, prorated for that annual reporting period.
OUTCOME: This bill is dead. The bill was set for a March 19, 2024, hearing in the Senate Housing Committee, but the hearing was cancelled at the author’s request and was never rescheduled.
SB-1212 (SKINNER), HOUSING INVESTMENTS:
This bill would prohibit an investment entity, as defined, from purchasing or acquiring an interest, as defined, in a single-family dwelling or other dwelling that consists of one or two residential units within this state. The bill would provide that a purchase or acquisition of an interest in housing in violation of this prohibition is void. The bill would define “investment entity” as a real estate investment trust or an entity that manages funds pooled from investors and owes a fiduciary duty to those investors. The bill would exempt nonprofit organizations, entities primarily engaged in the construction of housing, and governmental entities from the definition of “investment entity.” The bill
would absolve a seller of housing from liability under these provisions if the seller obtained a written release signed by the buyer stating that the buyer was not an investment entity.
OUTCOME: This bill is dead. It was referred to the Senate Housing Committee and was set for a hearing on April 30, 2024. The hearing was cancelled at the request of the author and was never rescheduled.
INSIGHT: This was going to be a hotly contested bill, with plenty of support and opposition lining up. The author points out that the share of adults who own their own home in California is 15 percentage points lower than in the rest of the country. A significant decline occurred during the Great Recession, when thousands of California homes were acquired by large corporations and investment firms. Some predict that by 2030, Wall Street will control 40% of the single-family home rental market nationwide.
SB-1470 (GLAZER), CONSTRUCTION DEFECT
CASES: Existing law sets forth standards for determining liability in an action seeking the recovery of damages arising out of, or related to, deficiencies in residential construction, design, and related issues, and specifies the characteristics of those deficiencies. This bill would require a deficiency in the specific standards described above to materially affect the habitability or usefulness of the residential dwelling unit and to be a result of a failure to meet the standard of care for the builder to be liable, as specified. The bill would define “standard of care” as the level of care that is standard in an industry for similar work performed in the state. This bill would provide for the participation of a special inspector in the inspection and approval of repair work performed pursuant to these procedures and require the builder to obtain and pay for a building permit to perform such work. The bill would instead authorize a builder to obtain a release or waiver upon completion of repair work. This bill would require a local permitting authority to issue a building permit for these purposes within 30 days of receipt of an application for a permit, thereby creating a state-mandated local program. The bill would provide that a claimant’s rejection of an offer to repair is not inadmissible in an enforcement action.
OUTCOME: This bill is dead. A hearing before the Senate Judiciary Committee was scheduled for April 23, 2024, but was cancelled at the request of the author and never rescheduled.
FEDERAL LEGISLATION
H.R. 9045 (MCCORMICK), CORPORATE
TRANSPARENCY ACT: This federal bill would exempt entities like HOAs (and any entity subject to taxation under IRS Code Section 528) from the requirements of the Corporate Transparency Act. The Corporate Transparency Act, enacted in 2021, requires reporting of certain information to the Financial Crimes Enforcement Network. For HOAs, this would mean directors and officers would be required to provide information (including birth date, home address, and some form of ID) by January 1, 2025. Updates are required to be made within 30 days of any changes. Penalties for noncompliance could include $500 daily fines, up to $10,000, and up to 24 months in prison.
S. 3625 (SCOTT), CORPORATE TRANSPARENCY
ACT: This bill would delay the implementation of the Beneficial Ownership Information (BOI) reporting requirement. It is the Senate companion of H.R. 5119, which was approved by the House on December 12, 2023, by a vote of 420–1.
INSIGHT: Unfortunately, these bills are not likely to move. The Corporate Transparency Act is intended to protect national security by preventing money laundering, terrorist financing, corruption, tax fraud, and other illicit activities in the guise of corporations; it does not make sense to apply it to HOAs. One court decision, from the Federal Court in the Northern District of Alabama, which does not have broad application, determined the act to be unconstitutional. It is not clear whether these bills, or other court challenges, will result in exemption of HOAs at some point. Associations should be prepared to meet the filing deadline of January 1, 2025.
Nathan McGuire, Esq., is a founding partner of McGuire Schubert Sohal LLP, a law firm specializing in representing community associations of all types. He has been engaged in legislative advocacy for HOAs for most of his career and serves on the board of directors for Echo. He was named Super Lawyers magazine’s “California Rising Star” for six years running; Super Lawyer in 20212024; and is the recipient of an AV Preeminent Peer Review designation from Martindale-Hubbell, which signifies the highest level of excellence in the attorney profession.
ARBITRATION & MEDIATION
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LAND USE
Briscoe Ivester & Bazel
Maria C. Kao
235 Montgomery St., Ste. 935 San Francisco, CA 94104 (415) 402-2712 mkao@briscoelaw.net www.briscoelaw.net
RESERVE STUDIES
Association Reserves, Inc. 1278 Indiana St., Ste. 400 San Francisco, CA 94107 (415) 694-8931 www.reservestudy.com
The Helsing Group 4000 Executive Pkwy., Ste. 100 San Ramon, CA 94583 (925) 355-2100 www.helsing.com
8 REASONS TO CHOOSE LEVY, ERLANGER & COMPANY LLP
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Almost of our clients are homeowners associations, planned unit developments, condominiums, condominium conversions, COOPs, tenancies in common and timeshare projects ...
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Which enables our professional sta of
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including 6 CPAs and 6 CPA candidates (growing to almost 20 professionals during “tax season” from January to April) to ...
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Including some
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150
Working with approximately management companies in Northern California out of a total of 300 serving community associations
Provide a wide range of
to community associations including …
• Financial statements and income tax returns — audits, reviews and compilations
• Comparative 2-year financial statements— more meaningful to readers
• Reserve funding plans, or updates
• 2020 Condominium Greenbook™, the 290-page financial reference book for Association treasurers
• 2020 Community Association Financial Survey of over 1,500 associations
