Echo Journal Issue 4 2021 by Echo

FINDING THE RIGHT MANAGEMENT COMPANY

COMMUNITY MANAGEMENT RESOURCE DIRECTORY

A healthy balance between corporation and community

A task well worth an HOA board’s time and effort

The brightest and the best in California

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GETTING THE MOST FROM YOUR MANAGEMENT RELATIONSHIP

SERVING HOA BOARD MEMBERS & HOMEOWNERS

ISSUE FOUR 2021

Community A Valuable Management Resource for Showcase HOA Boards

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MISSION STATEMENT 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

DIRECTORS

David Hughes

Jerry L. Bowles

VICE PRESIDENT Adam Haney TREASURER

Rolf Crocker Sarah Dunia John Gill, Esq. Mark Guithues, Esq.

Karl Lofthouse

David Levy, CPA

SECRETARY

Katrina Solomatina, Esq.

Sandra Long

Wanden Treanor, Esq.

CHIEF EXECUTIVE OFFICER

David Zepponi dzepponi@echo-ca.org DIGITAL OUTREACH SPECIALIST

Connor Zepponi connor@echo-ca.org MEMBERSHIP & SALES ADMINISTRATOR

Jacqueline Price jprice@echo-ca.org

The Echo Journal is published bimonthly 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. Acceptance of advertising does not constitute any endorsement or recommendation, expressed or implied, of the advertiser or any goods or services offered. We reserve the right to reject any advertising copy or image.

Echo membership benefits you and your HOA. Join today! OUR MISSION STATEMENT Fostering a better quality of life in community associations through education, advocacy and networking.

© 2021 Executive Council of Homeowners (Echo) All rights reserved. Reproduction except by written permission of Echo is prohibited. Echo member information is never released to any outside individual or organization, unless agreed to by the member.

For more information visit www.echo-ca.org ECHO journal | ISSUE FOUR 2021

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Features

COMMUNITY MANAGEMENT RESOURCE DIRECTORY

ISSUE FOUR 2021 | ECHO journal

Getting the Most from Your Management Relationship

BY JEFF FARNSWORTH, CAMEx, CCAM-PM

How to Find the Right HOA Management Company

BY ERIN BAKER

The Self-Managed Association: Breaking Up Is Hard to Do

BY JOHN CLIGNY, AMS, PCAM, CCAM-HR

Making the Right Vendor Choice

BY DIANE MARIE ROSSI, CMCA, AMS, PCAM, CCAM

Happenings 6

Executive Director’s Message: Management Showcase: What’s It All About?

BY DAVID ZEPPONI

Welcome to Our New Professional Service Providers

Community Management Resource Directory

Echo Legislative Tracker

34 2021 Statute Books Are Available! 34 Annual Meeting Notice 36

August 28 Saturday Seminar: Keeping the Books

September 9 Ask the Experts Seminar: Wildfire Insurance and 2022 Market Forecast

WELCOME

2021

The GCM Family welcomes 1,000 homes from the Eagle Ridge Owners' Association, Santa Clara County We are pleased to have an opportunity to succeed in accomplishing our client’s goals! Your success is our success. We are your community’s partner.

 888.277.5580  graysoncm.com THE ALAMEDA, SUITE 625  1625 SAN JOSE, CA 95126

ECHO journal | ISSUE FOUR 2021

news from ECHO CEO’S MESSAGE

Raison d’Etre – The Reason for Bo

Management Showcase: What’s It All About?

What a beautiful phrase, raison d’etre (reason for being). It is a

Volunteers are members of the community he Management Showcase edition of the Echo board member should collectively who work for free consider to help the and association. These agree. Journal highlights the relationshipevery between volunteers may be board members assigned to act the management of an association, its board The phrase engenders humanity. The roll and from one’s tong on projects and tasks for the words association, they of directors, and the professional service providers. may be non-HOA homeowners skills stark with businessalso senses and adds the elementwho of have humanity to the It also explores how management interrelates or time and are willing to help without compensation. the community. The cover story by Jeff a Farnsworth board: Strategic planning, execution and evaluation; mission Employed managers are those who are hired discusses the intricate relationship between the management. The shouldpays be their reflective of com by thebusiness association.realities The association board and management. Other articles dive into of individuals in the community. employee costs, including benefits and withholdings. the management selection process, howcommon to handle values Employees have titles such as general manager, service provider relationships, and what to do if the Communities are imperfect because they are made of humans. H receptionist, and–maintenance supervisor. These relationship isn’t working. It is hoped that the reader contributors true employees, and the HOA must will have an insightful look at management and relating. Humans using. are Human living. Basically, humans being follow employment laws when they are hired. management practices. being human, communities sometimes forget that manageme Finally, most HOAs of size or with many amenities establish norms for a successful community. In through a sense, have contracted management. This can be a the bo Here are a few basic questions about HOA management company individual managers who management, with explanations following: the community. Its purpose is to or establish order and elevate o have an employment contract with the HOA. It is progress and pace by establishing norms and constraints to b important to have a CPA or attorney advise or make 1. What types of management are there? to benefit all. the determination as to whether the manager is truly 2. What is the difference between management a contractor or an employee of the association. activity and board work? seems apparent that board leadership must understand and 3. What is the distinction between a It property Management vs. HOA Boardof Work manager and a “community manager”? owners in order to orchestrate a sense community and gener The word management is derived from the 4. What does it mean to be a “certified” common and protect community values. The purpose of a board, therefore Latin word manus, meaning “hand.” The manager, interest development (CID) manager? build community based onperson common values forhands the good of all. therefore, is the who uses his/her to make sure tasks and projects are completed to Management Types It takes time to orchestrate a community. It of takes time to know yo the board’s satisfaction. The board directors, There are three basic types of managers: including the president and other officers, are the of comm time to listen to the voices and build a vision reflective 1. Volunteer, 2. Employed, and 3. Contracted strategic executives of the association. The (including management companies). and you will be more effective as a board memberboard and satisfied collectively provides direction to the management your reason forforbeing on the board.objectives and overarching executing its strategic goals. The board has an oversight role. It is ultimately ECHO is committed to helping homeowner boards and responsible for all actions whether performed by residents ing and advocacy – thisa is our “raison d’etre”.or a volunteer. the board, contractor, an employee, The board’s job is not to get into the day-to-day details of running an association but to provide direction through planning documents, metrics, and Continued on page 27

Good luck and stay safe, Sincerely,

ECHO CHIEF EXECUTIVE OFFICER 6

ISSUE FOUR 2021 | ECHO journal

David Zepponi Executive Director

SOUTH BAY | EAST BAY | NORTH BAY

COMMUNITY MANAGEMENT SHOWCASE ADVERTORIAL

NEXT STEP COMMUNITY MANAGEMENT Full Service Premier Community Management Services

We are a solution driven company with exceptionally qualified team members who truly understand the complexities of the HOA industry. Next Step Community Management is a full-service Management Company that customizes our services to meet the needs of the Community, not place you in a one size fits all process. We are a solution driven company with exceptionally qualified team members who truly understand the complexities of our industry. No matter the size of the Association, we partner with you to develop the best plan that will address your needs to make your community better today than it was yesterday. Our industry is constantly changing. Whether there is new legislation or newly elected Board members, we believe it is essential to provide not only staff training, but training for our clients as well. We offer Board orientation and Board trainings to ensure you are provided the most up to date information as well. Our team is comprised of Industry specialists with expertise in community management, accounting, and maintenance.

Each of our members offers a wealth of information and provides unique solutions for our clients. Our seasoned team of certified managers is here to serve you and the community. We also believe it is important to stay on top of technology. Our state-of-theart technology package offers a safe and secure, cloud environment that is accessible 24/7. Through our website, homeowners can access their accounts to see their account information, obtain copies of Association documents and request work orders, all in real time. We also offer a Board portal that allows Board members to see the pertinent information of the community in real time as well. If you are a self-managed community, we offer consulting services to address specific issues your Association is facing. This includes financial, budgeting, delinquency and collection, effective Board meetings and violation management to name a few.

Our Mission is to provide premier management services through our offerings of superior management and maintenance, on-time and accurate accounting, and professional and courteous customer service. Please feel free to contact us at your earliest opportunity 800-562-3885. We are happy to set up a meeting with your Board of Directors to share how we can relieve you from the day-to-day stress of Community Management.

Tasha Parmelee, CCAM-PM, AMS 101 Cooper Street Santa Cruz, CA 95060 800-562-3885 info@nextstepcommunities.com www.nextstepcommunities.com ECHO journal | ISSUE FOUR 2021

M A N A G I N G A N A S S O C I AT I O N A T WO - PA R T S E R I E S

GETTING THE MOST FROM

Your Management Relationship

ISSUE FOUR 2021 | ECHO journal

BY JEFF FARNSWORTH, CAMEx, CCAM-PM

Being on the board of directors for a common interest development can be as challenging as it is rewarding. Many bring their own unique set of skills to the position and quickly realize there is more to the job than they had ever expected.

Continued on page 10

ECHO journal | ISSUE FOUR 2021

Getting the Most from Your Management Relationship Continued from page 9

Running a real estate corporation that is responsible for most of its residents’ largest investment is a massive responsibility. This is a voluntary, unpaid, fiduciary position where most of the decisions that are made directly affect the property values and quality of life of the residents, who may also be close neighbors or friends. It is for these reasons that many knowledgeable board members seek professional management to assist them in the day-to-day operations of the association. Availing themselves of a professional who specializes in community association management will give the board access to resources they may not have time to nurture independently. Common interest developments in California are subject to more than 600 laws; a professional community association manager receives ongoing education from the legal community and from other professionals who practice in these areas daily. An effective management company has a good relationship with a pool of vendors and can expose a board to many different choices so that they can receive the help they need with the projects they face.

The relationship between an HOA board of directors and a community association manager is the same as any board of directors in private enterprise. The board is elected by the homeowners. It then identifies, interviews, and contracts with the management firm or hires a general manager. Once hired, the board sets strategic direction and objectives. They establish projects and tasks and delegate most of these to the manager. The board is responsible for the generation of a budget, oversight of funds, the well-being of the community, and overall effectiveness of management including customer service. Management works for the board of directors pursuant to the terms and conditions in their agreement. Here are some key factors that contribute to a positive relationship when working with professional management.

Set the Stage The best practice of all is to hold an organizational meeting of the board after each election. This allows the board to determine their philosophy and communicate it to the manager. If policies are needed, this is a great time to clarify process and procedure. Continued on page 12

Running a real estate corporation that is responsible for most of its residents’ largest investment is a massive responsibility.

ISSUE FOUR 2021 | ECHO journal

COMMUNITY MANAGEMENT SHOWCASE ADVERTORIAL

Pulling from 45 years of business, CIDC has accumulated a wealth of experience and expertise through a relentless pursuit of perfection.

Since its inception, CID Consortium, LLC (CIDC) strives to provide excellent financial and operational guidance to communities, board members, managers, and owners of communities big and small in an everchanging environment. We believe in building relationships by doing our business transparently and keeping our clients informed. Before sending a proposal, we take the time to uncover what success looks like for your community. Once we are aligned, we will propose a combination of Governance, Finance, and Organizational services specific to your unique needs. Owners and operators Donald (“Don”) W. Haney, CPA, and Adam P. Haney, CPA, are well known for their role in developing homeowner association industry standards and technology. Don originally started in the industry in 1979 when he formed two corporations: CEO, Inc. and Haney Accountants, Inc. Both organizations laid the foundation for CIDC led by Adam P. Haney, CPA. Today, CID Consortium, LLC has grown into a team armed with passion and expertise for improving the community living experience of its members. Pulling from 45 years of business, CIDC has accumulated a wealth of experience and expertise through a relentless pursuit of perfection. Fueled by technology and incessant process improvement, the team engages with members on a rich platform, ensuring the community living experience continues to be exceptional. For more information about the services we provide, please visit our website at cidcllc.us.

919 Reserve Drive Roseville, CA 95678 (888) 786-6000 cidcllc.us ECHO journal | ISSUE FOUR 2021

STATEWIDE

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Getting the Most from Your Management Relationship Continued from page 10

The manager can educate new board members on how the association functions and make the board aware of any new legislation that may affect the way they work. Boards should review the new budget in line with the reserve study early on and plan out the most needed projects for the year. They should create a list of goals and schedule each major project so that everyone has a clear idea of what needs to be accomplished before the year’s end. This should be a living document that is updated and shifted around as new information is received. This process will allow the manager to solicit proposals and gather information proactively in preparation for the intended projects. The association should look for positive ways to engage the membership and schedule these as well. As the United States gets closer and closer to a sense of normalcy, associations can consider forming a social committee to hold events and find ways to keep members in the loop about upcoming projects. They can celebrate things like exterior aesthetics, landscaping, or volunteer participation and highlight these in the association newsletter or on their website.

Knowledge is Power A strong board and membership must educate themselves. The governing documents of a common interest development define the type, structure, voting rights, and maintenance responsibilities of the association. The primary 12

ISSUE FOUR 2021 | ECHO journal

documents are the Articles of Incorporation; the Covenants, Conditions and Restrictions (often referred to as the CC&Rs or Declarations); and the Bylaws. Other important documents are the rules and policies of the association, the budget package and policy statement, and the reserve study. Having a solid understanding of these documents will help with understanding the makeup of each unique community. A strong management candidate will be certified with a reputable organization and receive ongoing education and experience in the field. They will also perform research and develop a good understanding of the governing documents for the communities they serve. In this industry, something new occurs almost every day and the opportunity to learn is neverending.

Time is Precious There are typically two types of management services available to common interest developments: general management and portfolio management. General management offers a dedicated individual who often will work on the premises and focus on a single association. Portfolio management is more common and is a cost-effective solution for many communities that have active boards and residents. A portfolio manager is assigned several associations, and each client pays for a portion of that manager’s time. Boards should never be afraid to ask questions and clarify expectations. More time is usually available if needed, but it may come at a price. A typical management fee for

professional services is set using an estimation of the time needed for routine, day-to-day services that the association requires. This may or may not include financial services such as bookkeeping and reporting. Intermittent projects, such as participation in large reserve projects, litigation proceedings, insurance claims, governing document revisions, and additional meetings of the board, members, and/or committees, require more of the manager’s time and may be subject to additional fees, because these items cannot be easily predicted or defined. Many boards solicit volunteers from the community and form committees to assist in keeping management fees down, while also raising awareness within their membership as to how the association functions.

Communication is Key Accessibility is desirable, but expectations must remain realistic. A general manager, for example, will have certain working hours when they are available and will expect privacy when they are enjoying their personal time. A portfolio manager may be away from their phone or computer while on a site visit for one of their clients or attending a board meeting or a vendor walk. A strong management company will return communication timely, even when they cannot be accessible in the moment. Most management companies will have after-hours emergency services. These services are typically billed to the association as additional work and should be limited to actual property-threatening emergencies that cannot wait until the next business day.

The board needs to be honest about how it wants its manager to communicate with its members. Some boards want the manager to deliver difficult messages and reinforce the board’s position in a positive way with supportive comments. Other boards prefer strong language and substantial fines to gain compliance. It is up to each board to determine the style they believe to be most effective and educate the manager as to their expectations for communication and process. Questions are a good thing. Boards and residents who ask questions show an interest in their community, and this should be nurtured. Managers may not have the answers instantaneously, but they have many resources at their fingertips and can research Continued on page 14

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Continued on page 12 ECHO journal | ISSUE FOUR 2021

Getting the Most from Your Management Relationship Continued from page 13

and respond effectively if given the time to do so. A board should never hesitate to ask questions in a professional and respectful manner, and if they receive resistance from the manager, it could be a hint that there is a larger problem.

Teamwork The management company is a team of professionals who live, breathe, and dream common interest. A board of directors is a unique group of personalities with a vested interest in their community. Together, they work as a team to nurture and care for the residents they serve. Difficult personalities, disagreements, and

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debate are all part of working with large groups of people. Remaining professional at all times and respecting others’ points of view will allow both sides to focus on the issues that are important to making decisions in the best interests of the whole. The board should use the manager as a resource, and the manager should use the board as a conduit to the membership. At the end of the day, the board and the manager are running what is, in many instances, a multimillion dollar real estate corporation. The primary purpose of the corporation is to maintain, preserve, and enhance the common area. However, a common interest development also presents a unique opportunity to utilize the personalities and experience of the residents who live there. A healthy balance between corporation and community is dependent on the relationship between the board and the management company. Handling rule enforcement is important, but it is the financial health of the association that should take priority. Remain proactive, communicate often, and never stop learning.

Jeff Farnsworth, CAMEx, CCAM-PM, is President/CEO of Steward Property Services. He graduated from Humboldt State University and began working for Steward Property Services in 2006. Jeff and his wife Jennifer purchased the company from its founder, Mrs. Helen M. Loorya, in January 2017 and strive to maintain the high level of service for which their company is known.

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Board members might envision late nights and long hours spent looking for the right management company for their association. But it doesn’t have to be that way. Finding the right company can be a challenging and lengthy process, but, if planned correctly, it can also be rewarding and worth the time and effort. When a board of directors finds the right management company, the benefits are countless. Good management companies can take on day-to-day administrative, maintenance, and financial duties, leading to reliable operations, increased stability, a unified community, and much more. This article explores the steps in choosing the right management company, key factors to consider, and best practices for working with the new company. Continued on page 18

ISSUE FOUR 2021 | ECHO journal

How to Find the Right HOA Management Company BY ERIN BAKER

ECHO journal | ISSUE FOUR 2021

KEY FACTORS TO CONSIDER Conducting interviews with potential management companies is essential to finding the right one. These interviews give board members the opportunity to get to know the management company representatives personally, see what sets their company apart, and learn how they can improve and enhance the community. To make the most of these interviews and have productive conversations, board members should ask the following questions:

What is the history of the company?

Get background information, like how long the company has been in business, the number of employees they have, and what areas they serve, to see if they are qualified to manage the community.

How many communities do they currently manage?

Ensure that the company is available and has the resources to take on another client without sacrificing quality of service and attention to detail.

What products, services, and additional resources do they offer?

Confirm that products and services are within the budget and can fulfill the community’s needs and goals. Discover whether they have additional resources, such as ongoing board member training, environmental programs and initiatives, or exclusive discounts and savings from vendor partners.

Do they value customer service?

Great management companies should value prompt service, have trained professionals accessible during standard business hours, and provide 24/7 emergency response services.

What technology do they provide?

Look for companies with technology platforms that enable users to make payments, submit requests, vote, and communicate online. These solutions not only drive efficiency, but also promote transparency.

What does the data storage, fidelity bond, fraud coverage, and security look like?

Security should be a top priority. The right management company will give board members and residents peace of mind that data and assets are protected.

Are there multiple departments in the company or just the community manager?

Management companies with dedicated specialists and departments to handle things like inspections, collections, delinquencies, maintenance, accounting, and vendor contracts can be valuable.

Are they licensed, certified, and insured?

The management company should meet state and local requirements, including business licensing and insurance requirements. In addition, they should be accredited, and the specific community manager assigned to the community should be certified by a recognized industry association. Asking these questions will reveal crucial information and lead to fruitful discussions that will help board members decide whether to eliminate or move forward with a company. 18

ISSUE FOUR 2021 | ECHO journal

How to Find the Right HOA Management Company Continued from page 16

Starting the Search The first step in finding the right management company is understanding why new management is desired. Before beginning the search, the board of directors must identify the community’s needs and what they hope to gain from the partnership. From wanting an experienced staff or more consistent communications with residents to better financial management or advanced technology, there are many reasons why a community may want to hire a management company. Determining these requirements early on will clarify expectations, streamline the process, and make evaluating companies easier. After identifying needs and allocating a budget, the search for management company candidates can start. To find options, board members can do online research or ask neighboring communities for recommendations, taking online reviews, industry affiliations, and Better Business Bureau (BBB) ratings into account. A company’s website can say a lot about how it operates. Inspect the functionality of the website and ensure that it includes information like how to contact the company, what services are offered, and specific location data. Once a list of potential management companies has been created, the board should request a proposal from each. Whether an association is hiring a management company for the first time or switching from one to another, a proposal pinpoints how a company can best serve an association long term and meet any immediate needs as it transitions to a new management structure. Board members can then use details from the proposals to compare prospects and ultimately schedule formal interviews with the companies they believe will be the best fit. Hot tip: The management companies need adequate time to present their services and answer

questions – no less than 30 minutes should be scheduled.

Best Practices for Working with a New Management Company After a management company is selected and contracts are signed, the work has just begun. Board members must be proactive and take steps to build a long and thriving relationship. Here are five ways to maintain a strong partnership with a new management company: ESTABLISH CLEAR

community manager works with multiple clients and cannot be available to one community 24/7. It is important to be patient, be respectful of deadlines, and honor work/life balance to minimize burnout. EDUCATE RESIDENTS. Believe it or

not, many residents do not have a clear understanding of how an association operates. Ensure that residents know the roles and duties of the board of directors and the community management company to avoid unnecessary conflict and frustration.

COMMUNICATION GUIDELINES.

Good communication is the foundation of a successful community. All parties should know the chain of command, use appropriate channels, and adhere to agreed-upon deadlines and response times.

Careful Consideration Leads to Success Finding and transitioning to a new management company can feel like a tedious process, but with a strong transition procedure, it doesn’t have to be hard. It can be tempting to speed

UTILIZE TECHNOLOGY. If the

management company offers technology platforms and solutions, board members and residents should take advantage of them. These tools create transparency, increase security, and usually save everyone time and money. PREPARE FOR MEETINGS. Board

members are typically required to meet consistently to make decisions and confirm smooth operations. This meeting time is precious for both board members and management staff, so attendees must come prepared and implement strategies to improve efficiency.

Erin Baker has spent the last nine years with Associa, advancing her career through six promotions for both operations and business development across three states. She has worked in multiple roles including assistant, community manager, CAM director, and, most recently, regional sales director for international and central US. She has received numerous awards in the company, both individually and through her team leadership. She attended Oklahoma State University to pursue a BA in hospitality. She grew up in Austin, Texas, has been to 35 countries, and loves her dog.

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through and choose the cheapest or most convenient option, but that can end up hurting the community in the long run. When board members take their time, complete all necessary steps, carefully weigh their options, and remain proactive, they will be able to select and maintain a partnership with the right company and set their community up for a thriving future.

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ECHO journal | ISSUE FOUR 2021

THE SELF-MANAGED HOA

Breaking Up is Hard to Do “All good things must come to an end.” “The honeymoon is over.” “Too much water under the bridge.” If there is an absolute certainty in HOA governance, it is that at some point, the board of directors will choose to terminate the current management agreement or manager relationship. The relationship between an association and its management company (operating as an agent of the association) or general manager (operating as an employee of the association) is often adversarial and not complementary. Tensions arising from confusing expectations or ambiguous contracts and service level expectations manifest as collective dissonance and unaligned expectations and objectives. Once 20

ISSUE FOUR 2021 | ECHO journal

board and/or member dissatisfaction with the manager or management company sets in, it’s almost impossible to maintain the relationship and be optimistic about moving forward. Inevitably, the board of directors will determine that it’s best to end the contract or employment agreement and go in a new direction. Managing a breakup successfully is critical for the continuity of the HOA in the areas of finance, compliance, and governance. For boards considering breaking up with their manager or management company, here is a checklist of activities to ensure a smooth breakup and easy transition to a new company.

BY JOHN CLIGNY, AMS, PCAM, CCAM-HR

TAKE STOCK AND OWN THE BREAKUP. With few

exceptions, the board of directors will most likely be the party to initiate the termination of the management employment contract or agreement. By the time a board has gotten to the point of writing and delivering the notice of termination, chances are good that they have been dissatisfied with the management company for some time. It is a critical governance step for the board to schedule an executive session to openly, objectively, and honestly evaluate what has led to the disconnect and dissatisfaction. What is the basis of the termination? Did the manager or management company fail to meet its contractual obligations? Did it not meet service level expectations or key performance indicators? Was there some dysfunction in the board of directors’ dynamic that may have contributed? Were management company evaluations done regularly? When breakups occur, blame gets tossed around. HOA boards have the fiduciary duty to manage the affairs of the association, including the hiring of the managing agent and the delegation of management activities to the managing agent. Boards must also own and manage the termination of the manager or management company, but only after thoughtful review. PLAN THE BREAKUP CAREFULLY. This is no time to let emotion get in the way. The manager or management company fulfills most, if not all, of the HOA’s compliance and annual operating activities. Before composing and delivering the notice of termination, the association’s compliance requirements and calendar should be reviewed. Are there critical deadlines and activities scheduled (e.g., elections, budgets, projects) that depend on the current manager or management company? Can they be rescheduled or postponed? Depending on the size and complexity of the association, it is wise for the board to plan for their two- to three-month search for a new management company to overlap or run concurrently with the notice of termination. In all cases, separation from the manager or management company requires a formal notice of termination. For a management agreement that autorenews annually, a notice of nonrenewal may also be required. The notice must be in writing, must be dated, and must state the board’s expectations during the transition period. The notice can be emailed

but should also be mailed via certified mail or hand delivered. The notice of termination starts the clock for the association’s transition to new management. Concurrent with the delivery of the notice of termination, the association’s members should be notified of the termination and transition to new management and assured that during the transition period the association will continue to function as expected and comply with its governing documents and relevant state laws. REVIEW THE MANAGEMENT AGREEMENT AND SET TRANSITION EXPECTATIONS. The board is responsible

to act objectively and deliberately, in accordance with the sound business judgment rule. They should review the manager employment contract or agreement and identify termination clauses, requirements, potential costs, and risks. If the documents are unclear or confusing, the association’s attorney can be consulted. This review should include the development of a list of the board’s expectations for the current management company during the transition period. They should not assume that the manager or management company will carry on with their activities. It is necessary that they clearly identify in writing the board’s expectations for manager or management responsibilities during this period, especially for any projects underway or about to commence. CONDUCT THE EXIT INTERVIEW. The exit interview

is a critical governance activity. Many professional management companies advertise their low turnover and high client retention rates, but the data suggest that, on average, HOAs seriously consider changing their management companies within three to five years of executing a new agreement. A professionally conducted exit interview with the outgoing company representative can inform the board and provide important feedback about what worked and what didn’t and what were contributing factors in the professional relationship that led to board dissatisfaction. The point of the exit interview is not to blame or disparage or lay out a laundry list of management company failures, but for the board to demonstrate its ownership of the relationship and to understand how to better oversee its future management partnership. Continued on page 22 ECHO journal | ISSUE FOUR 2021

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The Self-Managed HOA Continued from page 21

HOA boards are charged with governance and provide critical strategic leadership and oversight to their associations. Managers and management companies manage the dayto-day operational affairs of the association and implement board policies. This relationship is fundamental to the successful operation of community associations. The following are warning signs that may lead the board to consider breaking up with the manager or the management company: • Noncompliance with state regulations and filing deadlines • Not meeting agreed-upon operational expectations and/or key performance 22

ISSUE FOUR 2021 | ECHO journal

• Governing Document Interpretation • Governing Document Revisions • CC&R and Rules Enforcement

indicators • Increasing micromanagement of the management company by board members • Changes in trends of member and board management satisfaction and dissatisfaction • Unusually high turnover of assigned management company personnel • Lack of follow-through or proactive communication from the management personnel about scheduled activities and unplanned or emergency conditions • Manager or management company fatigue Board oversight includes being aware of these warning signs, which may indicate that the board and the management company are not in alignment.

Warning signs should trigger an in-depth analysis by the board to determine the causes and potential consequences. The causes of dissatisfaction can often be determined through effective communication, and board and management expectations can be realigned. If not, a carefully thought-out and well-orchestrated breakup may be the best and only solution. Breaking up doesn’t have to be hard, but it does need to be deliberate and planned. John Cligny, AMS, PCAM, CCAM-HR, is a veteran portfolio manager and community association management executive. As co-founder of Association Consulting Group, John is a trusted advisor primarily focused on educating and advising community association board members on effective governance to promote a positive public opinion of homeowner associations and community management. John is a frequent speaker and panelist on a wide range of community association topics and issues.

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Premium reserve products are for new money only (money not currently held by CIT Bank, N.A.) Funds in excess of FDIC insurance coverage limits are covered by a third-party issued surety bond. Such excess funds are not subject to FDIC deposit insurance. The surety bond providing excess coverage over FDIC insurance may be cancelled at any time upon 30 days’ written notice. Should a notice of cancellation be given, CIT will contact the client to discuss alternatives to provide for the continued safety of funds. May not be available in every state. ©2020 CIT Group Inc. All rights reserved. CIT and the CIT logo are registered trademarks of CIT Group Inc. Deposit and loan products are offered through CIT Bank, N.A., the FDIC-insured national bank subsidiary of CIT Group Inc. MM#7870

ECHO journal | ISSUE FOUR 2021

Making the Righ O

ne responsibility of a board of directors is to identify, hire, and supervise vendors to perform repairs and maintenance in their community. The first step is to identify which items are to be maintained by the association and which by the unit owner. This information can be found in the governing documents and the reserve study. Some planned developments have minimal common areas and may be responsible for maintenance of only a few small areas of landscaping. Others may provide maintenance of the common buildings, including painting and re-roofing of the homes. The association might be responsible for landscaping and tree care only in the common areas or for all plants and trees in all areas. Some communities have extensive recreational facilities including pools, spas, tennis courts, and common-area restrooms. Hiring the right vendor is essential. Some vendors will be retained to provide ongoing maintenance. Examples are the landscape contractor and the pool maintenance service provider. Periodic maintenance will require hiring a vendor for a specific contract. Examples are a painting contractor, a general contractor, and a roofing contractor. If the association is working with a professional management firm, they will likely maintain a list of approved vendors. What is an “approved vendor”? • A vendor needs to be vetted. The vetting procedure includes verification and documentation of specific information. A W-9 with the vendor’s federal tax ID is needed for 1099 reporting if they are not incorporated. Also needed are their license number and contact information for office hours and afterhours emergencies. • Is the vendor licensed? This information can be found on the Contractors State License Board website: www.cslb.ca.gov. The website will show when they were licensed, what type of license(s) they have, and when it will expire. 24

ISSUE FOUR 2021 | ECHO journal

• Do they have insurance? Not all insurance is the same. Some policies have exclusions for working in a homeowners association. Do they have any employees? If so, they are required by law to carry workers’ compensation insurance. The association must ask the vendor for a certificate of insurance (COI) to be issued by their insurance agent and provided directly to the association. Some vendors try to submit a certificate that shows evidence of insurance. This

ht Vendor Choice certificate merely lists the types of coverage and does not specifically put the insurance carrier on notice that the vendor plans to work in a homeowners association. Sometimes the vendor will provide a copy of a certificate that was prepared for another client. This is not acceptable. The association must be provided with a certificate that states their specific association’s name. The expiration dates of the policies should be noted; if the job will extend beyond the expiration date, a new certificate will be needed confirming that coverage is still active.

• References need to be requested and checked. It’s a good idea to ask for references that are current (work done within the last one to two years) and older (work done three to five years ago). The references should be for work done in a homeowners association. Painting the home of a single homeowner is not the same as painting 50 homes in a multi-unit development. The contractor will need to identify a staging area and work out logistics for parking for their employees and where they will store their supplies and equipment. The contractor will need to be skilled in communicating with multiple residents, scheduling, notifications, and possible relocation of resident vehicles during the job. To a contractor, painting 50 homes can feel like having 50 bosses. In a self-managed association, who will notify the residents? Who will the residents call with questions? Some associations hire a construction manager to prepare the scope of work, put the project out to bid, and manage the project for them. It can be valuable to talk to the property manager or a member of the board of directors of that association about their experience. Was the contractor easy to work with? Did they communicate with the board throughout the job? Were there any problems? If so, how did they handle them? How they handle a problem is usually more important than what the specific issue was. • The contract (and the payment schedule) should be reviewed by an attorney. Is there a down payment requested at the signing of the contract? If so, is the amount too high – there is a limit of 10% or $1,000, whichever is greater. The association should make sure the vendor is always ahead of what they are asking to be paid for, so that in the event the contractor walks off the job, they will not have been paid for more work than they actually performed. Continued on page 26 ECHO journal | ISSUE FOUR 2021

Making the Right Vendor Choice Continued from page 25

Before making the final payment, the vendor should be asked to provide an Unconditional Release of Lien. This will protect the association in the event the contractor does not pay the supplier. Most work requires a licensed contractor. A non-licensed vendor, such as a handyman, has limitations on what type of work they can legally do in an association. They cannot do work that exceeds a value $600 for labor and material combined. Using a handyman for work that requires a licensed contractor is against California law and can put an association’s general liability coverage at risk of cancellation. Exposing an insurance carrier to

ISSUE FOUR 2021 | ECHO journal

risks not anticipated by the policy is just not worth it! Hiring a board member (or a friend or relation of a board member) is not recommended, even if they are qualified, insured, and licensed to do the work. There could be potential problems with a claim of conflict of interest or unsatisfactory work. With an independent contractor these issues are much simpler to resolve. Developing a good working relationship with a vendor is paramount. Any complaints or concerns should be communicated promptly and professionally. If necessary, have a private meeting during a closed session and candidly resolve issues. When the contractor does a good job, they should be told! When the vendor satisfactorily completes the job, they should

be paid on time. If a vendor is available to work after hours or on weekends, keep them close and covet their contact information. In the end, vendors love happy clients and happy clients appreciate and respect the right contractor. Diane Marie Rossi, CMCA, AMS, PCAM, CCAM is the founder and president of Shoreline Property Management Inc., AAMC®. Shoreline was established in 1994 and operated for 27 years before being acquired by The Manor Association, Inc. Shoreline manages condominiums, planned unit developments, professional associations, and cooperatives in Northern California.Diane has also served as a longtime member of the Echo board of directors.

CEO’s Message Continued from page 6

milestones; making significant decisions (such as the need for a special assessment); establishing the budget (for management to execute); and other important activities or decisions per the governing documents or law. In California, HOAs have been given some tasks by the legislature that normally, in the corporate world, would be managerial or administrative in nature. Notwithstanding these instances, the board should delegate authority to the manager to execute the strategic direction of the board. The board should track the progress of this work and ensure that the manager has the support and authority to do their job. It’s a balancing act: managers do, and boards direct, oversee and support.

Property Manager vs. Community Manager

Property managers and community managers are not the same thing, at least not in recent years. The distinction is that property managers manage property – that is, rentals. Community managers manage common areas in a common interest development. They report to the board of directors, which is comprised of homeowners. Property managers often work for large corporations and are accountable only to the corporation and its bottom line. Community managers are responsible to the board of directors, duly elected by homeowners, and their obligation is to build a strong community and maintain property values for all within the community as directed by the board (notice, not the homeowners).

To be fair, the terms are widely misunderstood due to the history of the industry. In the beginning, property managers were predominantly used because there just weren’t enough distinguishing features to create the term “community manager.” As HOA numbers grew and specialized laws (like the Davis-Stirling Act) were needed, advocacy groups and states, like California, started to promote a distinction between the two terms. The major development that made permanent the nuanced split was the addition of Section 11502 in the California Business and Professions code, where the profession of “certified common interest development manager” was established in law, finally clarifying the distinction between a common interest development “community” manager and a rental “property” manager.

Certified vs. Non-Certified Managers

The HOA industry is largely self-regulated. Credentialing industry associations have established professional ethics and standards of practice for those who are “certified common interest development managers.” California put into law that only certain managers may call themselves “certified.” Generally, the requirement is to complete at least 30 hours of education in CID management and pass a rigorous test on coursework mandated by statute. Then, the certified manager must maintain the certification by taking continuing education classes and conducting themselves according to industrydeveloped professional ethics and standards of practice.

than a dozen disciplines and successfully pass a test affirming competency. For a list of the course requirements, please visit the California Legislative Information website at: https://tinyurl.com/55x8x3ae Becoming a certified community manager is a significant undertaking, and it’s challenging. However, an HOA is not required to hire a certified manager. Many of the skills can be learned from other business management experiences in a reasonably short time and with dedication. The specialized knowledge of the industry certainly can be learned, but only with an investment in legitimate industry-specific education. Furthermore, in the complex and dynamic field of CID management, one must become a continual learner to simply stay abreast of the rapidly changing laws and practices in HOA management. If a community is complicated or has challenging issues, it might be best to engage a trained and certified professional in the field. The practice of managing an HOA is getting more complicated and complex. The legal exposure is incredibly high and legal compliance is becoming more challenging. This Management Showcase edition of the Echo Journal is an outstanding resource for boards to learn about community management and help them manage their HOAs. At Echo, the mission is to build community through education, networking, and advocacy. With this Management Showcase edition, Echo has taken another proud step in accomplishing its mission.

In California, a certified common interest development manager must be educated in more ECHO journal | ISSUE FOUR 2021

WELCOME TO OUR

New Professional Service Providers All Bay Construction Solutions was established in 2018 and is based out of Northern California. We service the Bay Area, Sacramento, and Central Valley locations, while specializing in Common Interest and Multi-Family Developments. We offer inspections identifying property maintenance and potential life safety issues. From conception to end, we work with management and owners to provide a plan and schedule for what lies ahead. All Bay Construction Solutions offers consultation and recommendations to owners on the best practical approach. Keeping the budget and job duration in mind, while identifying and minimizing any potential hidden issues is our goal. Keeping the community, residents, board and management informed of the schedule and any potential changes that may arise during the project is our mission. With over 30 years of experience in the industry, we work with a team of experts and help to develop a comprehensive scope for bids. All Bay Construction Solutions is dedicated to our clients’ needs. Christopher Davis, Owner (925) 206-2374 chris@allbayconstruction.com allbayconstruction.com

ISSUE FOUR 2021 | ECHO journal

C & A Painting is a family-run business. It was started by a father and son with thirty-five years and counting combined painting experience. We paint anything from HOAs to commercial to apartments and more throughout the Bay Area. C & A Painting strives for customer satisfaction and has always operated under strong values which exceed client needs. We offer color rendering and specification and our materials and work are always first quality. We provide weekly progress reports to keep clients updated. We post our work schedule for homeowners and tenants advising them when and where we will be working. Materials comply with the Environmental Protection Agency, air pollution control and all other local, state, and federal agencies. We take extra Covid-19 precautions. Before their first day in the field, every new employee is required to take the OSHA Safety Training Course. Our relationship with our clients begins on the first day of contact and only ends once they are fully satisfied with our work. We maintain a $5 million umbrella insurance policy to ensure you are protected. Our skills, knowledge and attention to detail goes above and beyond. Painting Done Right! Curtis Schaper Sales & Marketing (408) 712-9674 | curtisschaperpro@gmail.com candapainting.com

KDV is a nationally recognized, AV-rated® law firm offering legal counsel to insurance carriers and businesses operating across a wide variety of industries. We understand our clients’ operations and are wellpositioned to serve their diverse legal needs, from the simplest to the most complex cases. Our attorneys are leaders in their fields of practice and have achieved numerous professional awards and achievements throughout the course of their legal careers. The lawyers at KDV are regularly sought out to share their legal knowledge and insight at national business meetings and professional conferences. Jane Grove, Esq., Managing Partner of Sonoma Office, CoChair of Real Estate Practice Group (415) 926-7640 jgrove@kdvlaw.com kdvlaw.com

Jon Takata, Restoration Management Company’s Founder and President not only believes in earning the trust of his customers, but in earning the trust of his employees. To do so, RMC is sure to keep the safety of their employees and clients at the top of the priority list. Daily life at all RMC locations includes education and physical preparedness designed to keep RMC one of

PAINTING & GENERAL CONTRACTOR • LICENSED, BONDED & INSURED

the safest restoration companies to work for in the region. Our technicians and project managers are IICRC certified in water damage restoration, fire & smoke damage restoration and asbestos abatement to ensure that our clients’ restoration projects are handled as precisely as possible. As a result, we are able to provide customers not only with unsurpassed service, but the benefits of using state-of-theart technology to deliver quality restoration, quickly. Give us a call today! Sarah Dunia – Account Executive (925) 708-0985 sdunia@rmc.com rmc.com

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ECHO journal | ISSUE FOUR 2021

2021 COMMUNITY MANAGEME 5th Avenue Real Estate Services

1024 Iron Point Road, Suite 1062 Folsom, CA 95630 (888) 823-4304 www.5thaveinc.com

Ace Property Management, Inc.

1290 Kifer Road, Suite 309 Sunnyvale, CA 94086 (408) 217-2882 www.acepm.net

Affirmative Management Services P.O. Box 477 Campbell, CA 95008 (408) 244-0909 www.thehoamanager.com

AllPro Association Management

5201 Great America Pkwy., Suite 320 Santa Clara, CA 95054 (877) 255-7761 www.AllProHOA.com

American Management Services, Inc.

1190 South Bascom Avenue, Suite 242 San Jose, CA 95128 (408) 225-7380 www.amspcam.com

Anderson & Company

783 Rio Del Mar Blvd., Suite 59 Aptos, CA 95003 (831) 688-1090 www.acomgt.com

Ascendant Association & Property Management, LLC P.O. Box 15446 San Francisco, CA 94115 (415) 877-7689 www.ascendantmgmt.com

Associa Northern California 4305 Hacienda Drive, Suite 140 Pleasanton, CA 94588 (800) 843-3351 www.associaonline.com/locations/ associa-northern-california

Bay Area Property Services

Carrick & English

P.O. Box 629 Burlingame, CA 94011 (650) 401-3688 www.carrickandenglish.com

Charles Property Services, Inc. 35 Mitchell Avenue, Suite 5A San Rafael, CA 94903 (415) 458-3537 www.charlesps.com

Christison Company

7901 Stoneridge Drive, Suite 222 Pleasanton, CA 94588 (925) 371-5700 www.christisoncompany.com

CID Consortium LLC Brenda Lynch 919 Reserve Drive Roseville, CA 95678 (888) 786-6000 blynch@cidcllc.us www.cidcllc.us

CitiScape Property Management, Inc.

3450 Third Street, Suite 1A San Francisco, CA 94124 (415) 401-2000 www.citiscapesf.com

CN Management, LLC

100 South Murphy Avenue, Suite 200 Sunnyvale, CA 94086 (888) 780-0355 www.cnmanagement.us.com

Collins Management Company

500 Alfred Nobel Drive, Suite 250 Hercules, CA 94547 (510) 262-1795 www.collins-mgmt.com

Common Development Management 1220 Diamond Way, #130 Concord, CA 94520 (925) 682-6012 www.cdmgmt.net

1661 Tice Valley Blvd., Suite 200 Walnut Creek, CA 94595 (925) 746-0542 www.bayservice.net

ISSUE FOUR 2021 | ECHO journal

Common Interest Management Services

Grayson Community Management

Community Association Management

Hill & Co. Property Management, LLC

Community Management Services

Homeowners Management Co., LLC

Compass Management Group, Inc.

Hudson Management Company

Condominium Financial Mgmt., Inc., CMF

Infinity Property Management, LLC

Eugene Burger Management Corp., AMO

KemperSports Management

1682 Novato Blvd., Suite 204 Novato, CA 94947 (415) 321-8283 www.commoninterest.com

6088 Sunol Blvd., Suite 100 Pleasanton, CA 94566 (925) 417-7100 www.hoasmanagement.com

1935 Dry Creek Road, Suite 203 Campbell, CA 95008 (408) 559-1977 www.communitymanagement.com

77 Las Colinas Lane San Jose, CA 95119 (408) 226-3300 www.gocompass.com

1001 Galaxy Way #200 Concord, CA 94520 (925) 566-6800 www.condofinancial.com

6600 Hunter Drive Rohnert Park, CA 94928 (707) 584-5123 www.ebmc.com

Fairmont Heritage Place (Ghirardelli Square)

900 North Point Street, Suite D100 San Francisco, CA 94109 (415) 292-1000 fairmontatghirardelli.com

Focus Real Estate & Investments, Inc. 3936 Mayette Avenue Santa Rosa, CA 95405 (707) 544-9443 www.focus-re.com

Frontier Property Management P.O. Box 444 Newark, CA 94560 (510) 490-7314 www.frontierone.com

1625 The Alameda, Suite 625 Santa Clara, CA 95126 (888) 277-5580 www.graysoncm.com

832 Sansome Street, 3rd Floor San Francisco, CA 94111 (415) 292-1777 hillpm.com

2151 Salvio Street, Suite 250 Concord, CA 94520 (925) 937-1011 www.hmcpm.com

425 Gregory Lane, Suite 101 Pleasant Hill, CA 94523 (925) 827-2200 www.askhudson.com

1245 S. Winchester Blvd., Suite 222 San Jose, CA 95128 (408) 248-4765 www.infinitypropertymanagement.com PO Box 386 Bodega Bay, CA 94923 (707) 875-3519 www.kempersports.com

M. B. Homeowners’ Management

1210 S. Bascom Avenue, Suite 220 San Jose, CA 95128 (408) 871-9500 www.mbhm.net

Maynard Rich Management, Inc.

2 Townsend Street San Francisco, CA 94107 (415) 541-9911 www.mrmsf.com

Miramonte Company

1225 Alpine Road, #206 Walnut Creek, CA 94596 (925) 932-7100 www.miramonteco.com/miramonte/ outside_home.asp

ENT RESOURCE DIRECTORY Mulqueeney & Associates

P.O. Box 4726 Foster City, CA 94404 (650) 574-3835

Next Step Community Management

Professional Community Management

An Associa Company 27051 Towne Centre Drive Lake Forest, CA 92610 (949) 465-2260 www.associaonline.com/locations/ professional-community-management/ foothill-ranch

Property Pro Ltd.

Tasha Parmelee, CCAM-PM, AMS 101 Cooper Street Santa Cruz, CA 95060 800-562-3885 info@nextstepcommunities.com www.nextstepcommunities.com

14127 Capri Drive, Suite 8 Los Gatos, CA 95032 (408) 378-1730 www.propertyproltd.com

OMNI Community Management, LLC

1757 Tribute Road, Suite H Sacramento, CA 95815 (916) 564-2115 www.reliable-association.com

9807 Fair Oaks Blvd. Fair Oaks, CA 95628 (925) 283-4900 www.omni-mgt.com

Peachtree Community Association Services

4670 Willow Road, Suite 100 Pleasanton, CA 94588 (800) 547-3224 www.peachtreecas.com

PML Management Corporation

655 Mariners Island Blvd., Suite 301 San Mateo, CA 94404 (650) 349-9113 www.pmlmanagement.com

Powerstone Property Management 6655 Clark Avenue Newark, CA 94560 (510) 513-0001 www.powerstonepm.com

Premiere Property Services 3392 Mendocino Avenue Santa Rosa, CA 95403 (707) 544-2005 premierpsinc.com

Professional Association Services 42612 Christy Street Fremont, CA 94538 (510) 683-8614 www.pas-inc.com

Reliable Association Management, Inc.

Robert L. Jensen and Associates 2160 N. Fine Avenue Fresno, CA 93727 559-252-4525 www.robertljensen.com

Robertson Property Management

Sordi Properties

Wakefield Sharp

Steward Property Services, Inc.

Walsh Property Management

The Bridgeport Company

Westco Equities, Inc. Property Management

The Helsing Group

Willis Management Group, Inc.

2370 W. Cleveland Avenue, #189 Madera, CA 93637 (559) 479-9266 sordiproperties.com

1465 N. McDowell Blvd., Suite 120 Petaluma, CA 94954 (707) 285-0600 www.stewardprop.com 2303 Camino Ramon, Suite 201 San Ramon, CA 94583 (925) 824-2888 www.bridgeportco.com

4000 Executive Parkway, Suite 100 San Ramon, CA 94583 (925) 355-2100 www.helsing.com

The John Stewart Co.

104 Whispering Pines Drive, Suite 200 Scotts Valley, CA 95066 (415) 345-4400 www.jsco.net

The Management Alternative

1550 Tiburon Blvd.,Suite 4 Tiburon, CA 94920 (415) 789-5952 robertsonmgt.com

1932 W. Orangeburg Avenue Modesto, CA 95354 (888) 862-3335 www.tmamulti.com

S.L. Kindt Management, LLC

The Management Trust PO Box 552 Fairfield, CA 94533 (707) 345-1130 www.managementtrust.com

Shoreline Property Management, Inc.

The Manor Association, Inc.

Silvercreek Association Management

2950 Buskirk Avenue, Suite 300 Walnut Creek, CA 94597 (925) 690-5332 www.sc-manage.com

1800 Gateway Drive, Suite 100 San Mateo, CA 94404 (650) 637-1616 www.manorinc.com

The Masters Group

P.O. Box 20094 San Jose, CA 95160 (408) 445-4455 www.emastersgroup.com

Verdant Community Association Management 755 Baywood Drive, Suite 205 Petaluma, CA 94954 (425) 381-6866 www.verdantcam.com

20401 Santa Maria Avenue Castro Valley, CA 94546 (510) 888-8965 www.walshpm.com

1625 E. Shaw Avenue, Suite 116 Fresno, CA 93710 (559) 228-6788 www.west-co.com

3180 Crow Canyon Place, Suite 100 San Ramon, CA 94583 (925) 901-0225 www.willismg.com

Wyman Property Management 2010 Jefferson Street Napa, CA 94559 (707) 637-7923 www.wymanpm.com

COMING NOVEMBER 2021

5880 Commerce Blvd., Suite 103 Rohnert Park, CA 94928 (707) 588-8698 www.slkindtmanagement.com

1100 Water Street, Suite 1A Santa Cruz, CA 95062 (831) 426-8013 www.shorelinepropertymanagement.com

P.O. Box 1173 Novato, CA 94948 (415) 382-1100 www.wakefieldsharp.com

Echo Journal 2022 Legal Showcase & Member Directory Feature your law firm in the premier publication for California Homeowners’ Associations and HOA Boards Contact jprice@echo-ca.org

ECHO journal | ISSUE FOUR 2021

The Echo Legislative Tracker For more information, visit the HOA Advocacy section at the Echo website, www.echo-ca.org/article/hoa-advocacy/ The dog days of summer are upon us and particularly in Sacramento. The 2021–2022 legislative session began slowly with a wait-and-see atmosphere. Things have heated up and bills are meeting their fate to become law or get hung up in committee. The post July 4th break signifies the homestretch for the legislative calendar. It is time that bills move or die. It is also time for tough battles and thoughts of the next political cycle as politicos start tallying scores for “The Record.” The Echo Legislative Tracker is continuing to follow bills of interest to HOA members. This is a good snapshot of a given time but there will surely be changes and amendments, unless the legislation has died by the time of this reading. For the most up-to-date information, please visit the official California legislative website at www.leginfo.legislature.ca.gov/faces/home.xhtml. Email dzepponi@echo-ca.org if you have any questions, comments or input. We are always grateful to hear from the membership.

2021 LEGISLATION AB-502 AUTHOR: Davies SUBJECT: Election by Acclamation STATUS: Senate. Floor process. POSITION: Support – Reasonably streamlines the election process and saves money for HOAs SUMMARY: This bill would allow common interest developments of any size to vote by acclamation. It would delete the requirement that the association include 6,000 or more units. And it would specify that this acclamation procedure applies notwithstanding any contrary provision in the governing documents of the common interest development. SB-391 AUTHOR: Min SUBJECT: Meetings and Teleconferencing Procedures During an Emergency STATUS: Senate. Concurrence in Assembly amendments pending. POSITION: Support – Sensible solution as learned from the COVID-19 pandemic. SUMMARY: This bill would establish alternative teleconferencing procedures for a board meeting or a meeting of the members if the common interest development is in an area affected by a federal, state, or local emergency. 32

ISSUE FOUR 2021 | ECHO journal

SB-392 AUTHOR: Archuleta SUBJECT: Email Delivery of Documents STATUS: In Senate. Concurrence in Assembly amendments pending. POSITION: Support – Requirement for association to have a website if more than 50 units could be a problem for some. Adds to cost of running the association. SUMMARY: This bill would allow associations to deliver specified documents by email unless a member opts out of email delivery. It requires members to provide their physical or email address annually, among other requirements. And it requires that associations with at least separate interest to maintain a website, with certain exceptions. It specifies that documents posted to the association website would satisfy the general delivery requirement. SB-432 AUTHOR: Wieckowski SUBJECT: Disqualification of Candidates due to term limits in governing documents STATUS: Assembly. Ordered to third reading. POSITION: Support SUMMARY: This bill disqualifies termed-out board members of CIDs from running for reelection and requires an individual who is appointed to count and

tabulate votes in a CID election to meet specified requirements. AB-611 AUTHOR: Quirk-Silva SUBJECT: Confidential Addresses – Safe at Home Program exception STATUS: Assembly. Concurrence in Senate amendments pending. May be considered pursuant to Assembly Rule 77. POSITION: Watch SUMMARY: When an association member is a participant in the Safe at Home program – an address confidentiality program that protects victims of violence, assault, stalking, trafficking, or abuse – this bill would require that the association use their designated substitute address, upon the member’s request. Additionally, it would require that the association withhold or redact information that would reveal the name and address of the Safe at Home participant in specified communications. AB-1101 AUTHOR: Irwin SUBJECT: Funds Transfers, Mandatory HOA Insurance, Limitations on Investments STATUS: Senate. Floor process. Ordered to third reading. POSITION: Watch. AB-1101 has obvious advantages, mainly protecting less engaged communities and especially boards, and clarifying recently passed law. However, Echo continues to have concerns (especially for small associations). The legislation would mandate certain insurances which would add unnecessary or unwanted cost to the administration of the association. Furthermore, the bill would require funds to be invested only in secure and insured accounts. This aspect of the legislation could force a community to lose money if the interest rates received were less than inflation rates. This bill would remove valuable financial tools for association boards. It is better that these limitations be placed in governing documents instead of in law and that the boards be entrusted with managing the association. On the other hand, AB-1101 would protect communities from poor management and give managing agents of CIDs the leverage to help HOA boards understand their fiduciary responsibilities. And in the unlikely situation of malfeasance or fraud, the legislation has protections and insurance in place to minimize the risk. The bill also addresses some needed technical amendments to existing law. There are several good, clarifying concepts in the bill; however, there are also some significant challenges that have driven us to a “watch” position.

SUMMARY: This bill would require that certain association funds be deposited into a bank, savings association, or credit union with specific insurance. It also prohibits transfers of $10,000 or more without prior written approval from the board. And it requires that an association maintain specified coverage for itself and its managing agent or management company. SB-9 AUTHORS: Atkins, Caballero, Rubio, and Wiener SUBJECT: Land Use: Lot-Splitting and possible requirement for duplexes STATUS: Assembly. Re-referred to Committee on Appropriation. POSITION: Oppose unless amended. This bill could have a major negative impact on communities zoned for single-family residences and those neighborhoods with CC&Rs that restrict the community to singlefamily housing only. SUMMARY: This bill would allow lots to be split regardless of HOA governing documents, to make room for additional homes in the community. It would delegate ministerial (local government) approval for development of one or two-unit development (a duplex would be included in this definition). Furthermore, the language in the bill must be clarified to disallow duplexes if governing documents (CC&Rs) of an HOA preclude them. Clarification that the bill is not intended to affect HOAs is needed. AB-1410 AUTHOR: Rodriguez SUBJECT: Restrictions on Rules Enforcement STATUS: Assembly. Re-referred to Housing and Community Development. (Not moving) POSITION: Oppose – This bill is far-reaching, covers many issues. Not focused enough for good policy. SUMMARY: This bill would prohibit an association from restricting a homeowner’s right to rent or lease their separate interest, or any portion thereof. It would also extend, to the entire separate interest, a homeowner’s right to use their backyard for personal agriculture. It would further require every director and association employee to complete a course in ethics and harassment prevention. And it would prohibit any restrictions on discussions critical of the association. It would also prohibit the association from enforcement actions during certain specified conditions. And finally, it would require specific standards for evidence of rules violations and mandate that evidence be made available to the accused. Continued on page 34 ECHO journal | ISSUE FOUR 2021

ALL NEW FOR 2021!

2021 EDITION

The Statute Book & Legal Directory THE DAVIS-STIRLING ACT AND OTHER STATUTES GOVERNING CALIFORNIA COMMUNITY ASSOCIATIONS

SB-10 AUTHOR: Wiener SUBJECT: Land Use, Expedited Housing Development and Increased Density STATUS: Assembly. Ordered to third reading. POSITION: Oppose. Allows ministerial increase in housing density despite zoning for 10 units or fewer. The bill would void language in governing documents limiting development in CIDs. SUMMARY: Authorizes a city or county to pass an ordinance that is not subject to the California Environmental Quality Act (CEQA) to upzone any parcel for up to 10 units of residential density if the parcel is located in a transit-rich area or an urban infill site.

www.echo-ca.org

Education Advocacy Connection

The 2021 Statute Book is now available in an expanded version to include the Davis-Stirling Act and other laws and case citations governing California community associations. This comprehensive reference provides the legal framework for HOA board members, homeowners, and professionals in an easy-to-use coil-bound format. Available to Echo HOA members for download from the online store or as a printed booklet. Order your copies today! MANAGEMENT FIRMS & PROFESSIONAL SERVICE PROVIDERS: A customized, co-branded cover with your logo and contact information is available for management companies and professional service providers. For more information and pricing, contact jprice@echo-ca.org.

VISIT THE ONLINE STORE www.echo-ca.org

ISSUE FOUR 2021 | ECHO journal

Annual Meeting Notice November 18, 2021 9:00 - 9:15 am • Approval of 2020 Annual Meeting Minutes • Election • Financial Review If you are interested in applying for a seat on the board, please send your resumé to dzepponi@echo-ca.org and it will be presented to the board for review.

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