Community Association Update

Community Association Update: Issue # 34

- AB 690 Signed! New Management Disclosures and Changes to the Escrow Document Disclosure Form

- AB 534 Signed: Associations to Provide Notice to Members of Lien Claims

- Court Concludes Rental Restrictions are Reasonable

- Business Judgment Rule Doesn't Apply When the Board Acts Outside its Authority

- Swallows Nests are Protected by the Migratory Bird Act

- Governor Brown Declares the End of the Drought

This Community Association Update is part of our commitment to providing the highest quality legal services to our clients and industry partners. If your company or Association would like to see a topic or issue covered in future editions, feel free to call our offices, email us, or submit a question online!

Sincerely,

Steven Tinnelly, Esq.
Tinnelly Law Group

AB 690 Signed! New Management Disclosures and Changes to the Escrow Document Disclosure Form

The Governor has signed AB 690 into law, which modifies several Code sections and adds two new Civil Code sections to the Davis Stirling Common Interest Development Act. Here is what you need to know about the new requirements:

New Civil Code Section 5376 provides that the manager, management firm, or third-party contractor must facilitate the delivery of escrow documents pursuant to Civil Code Section 4530, as required by the management contract.

New Requirements: Escrow Document Disclosure Form

The "Charges for Documents Provided" form described in Civil Code Section 4528 must be modified to include the following:

AB 534 Signed: Associations to Provide Notice to Members of Lien Claims

Vendor professionals frequently provide a variety of services on behalf of community associations and individual homeowners. Under California's Constitution, unpaid vendors possess a legal right to lien the property upon which they work for the value of their rendered services or furnished material.

AB 534 (Gallagher), effective January 1, 2018, seeks to clarify how mechanic's liens are to be used in common interest developments by amending Civil Code Section 4615 and by adding new Civil Code sections.

Under existing law, if a vendor intends to preserve the ability to impose a mechanic's lien at a later time for work performed at a property, then such entity must first secure advance authorization from the property owner. Similarly, under existing law, a vendor seeking to enforce its claim to payment by way of a mechanic's lien must notify the owner of the property which will be subject to a lien.

Court Concludes Rental Restrictions are Reasonable

*Unpublished Case

Recently, many residential common interest developments have experienced an influx in the number of short-term rentals within their community. This problem is exacerbated by the increased popularity of websites such as Airbnb and HomeAway. Although profitable, short-term rentals have a significant negative impact on community associations, such as increased damage to common area and violations of the Association's governing documents. To address these concerns, many associations are amending their CC&Rs to include restrictions imposing a minimum lease period (e.g., thirty days). In a recent unpublished opinion, the California Court of Appeal upheld such a restriction as reasonable.

In Ocean Windows Owners Association v. Spataro, the Court affirmed the decision of the trial court granting the Association's petition to reduce the requisite approval necessary to amend their CC&Rs pursuant to Civil Code section 4275. The proposed amended CC&Rs included, among other things, a provision imposing a minimum lease term of "thirty (30) consecutive days in any one (1) calendar year...." A homeowner filed an objection to the petition stating that the record was void of any facts sufficient to support a conclusion that the amendments "were necessary for the good of the community." The Court of Appeal rejected this argument for two reasons.

Business Judgment Rule Doesn't Apply When the Board Acts Outside its Authority

*Unpublished Case

ISSUE:

Is an HOA Board of Directors ("Board") entitled to protection under the Business Judgment Rule ("BJR") when it applies an unambiguous view restriction contained in the governing documents in a manner other than written?

RULE:

No. In Lingenbrink v. Del Rayo Estates Homeowners Association, 2017 WL 1075062 ("Lingenbrink"), the Court of Appeal concluded the BJR only applies to matters that are within an HOA Board's discretion. A Board does not have the discretion to interpret or re-write a restriction where the meaning of the restriction is perfectly clear.

Swallows Nests are Protected by the Migratory Bird Act

*Asked & Answered

Asked - I'm receiving calls regarding swallows nests. Folks want them removed. Pest control is reminding everyone they are protected and removing is punishable by law. We are in high time for swallow activity! Is there anything our HOA can do to address this issue?

Answered - All swallows and their nests are fully protected under the "Migratory Bird Treaty Act of 1918" by state and federal regulations. It is illegal for any person to intentionally kill, injure, take, possess, transport, sell, or purchase them or their parts. It is illegal to intentionally destroy the nest, eggs or young of a swallow without a permit. If an adult swallow is occupying a half-built nest, or a fully built nest without eggs, then the law protects it. A permit is not required to remove swallow nests under construction that do not contain an adult, any new eggs or young, or nests abandoned after the breeding season. Permits to kill swallows or destroy swallow nests are only issued by the U.S. Fish and Wildlife Service, and only in very extreme cases. An example would be concerns for aircraft safety from a nesting colony at an airport. In most cases a permit for lethal control of swallows will not be issued for swallows nesting on a residence or other buildings and causing aesthetic damage.

Governor Brown Declares the End of the Drought

On April 7, 2017, Governor Brown signed Executive Order B-40-17 , ending the drought state of emergency in most of California. Drought restrictions will remain in effect in Fresno, Kings, Tulare, and Tuolomne counties, which continue to face drinking water shortages and diminished groundwater supplies. The new Executive Order rescinds the emergency proclamations from January and April 2014, along with four drought-related executive orders.

Over the last few years, the California legislature has passed several bills aimed at water conservation within community associations. AB 2100 amended Civil Code Section 4735 to prohibit associations from fining or threatening to fine an owner for failing to water vegetation or lawns during a state or local government-declared drought. SB 814 also authorized penalties for excessive residential water use during periods of government-declared droughts. Now that the state of emergency has been lifted, these laws are no longer in effect, provided the local jurisdiction has not declared a local drought.