Community Association Update: Issue # 41
  • SB 323 Signed! The New State of HOA Election Laws
  • Navigating the Hidden Risks of Homeowner Security Devices
  • THOU SHALT NOT REMOVE THE MEZUZAH:  California Legislature Enacts SB 652 to Protect Displays of Religious Items on Doors and Doorframes
  • Vendor Relationships - Navigating Resident Interactions
  • The What and Why of Lender Rights, and How to Deal with Same
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,
Signature
Steven Tinnelly, Esq.
Tinnelly Law Group
SB 323 Signed! The New State of HOA Election Laws
*New Legislation
 
Governor Newsom recently signed into law Senate Bill 323 (" SB 323 "). SB 323 makes  substantive modifications  to the Civil Code's provisions governing HOA elections, effective January 1, 2020. Some of the more significant modifications require associations to amend their  election rules  to conform to new statutory requirements, limit the types of  candidate qualifications  an association may adopt, address the only circumstance for  elections by acclamation , place limitations on who may serve as an inspector of elections, and bolster the ability of members to overturn an election that is not conducted in accordance with proper procedures.
 
*We have published a detailed article on SB 323, entitled "   The New State of HOA Election Laws ."  The article is available for download,  here.

*Also included with the article is a "Director Election Timeline" that illustrates the new pre-election notice requirements imposed by SB 323.  The timeline is also available for download,  here.

Navigating the Hidden Risks of Homeowner Security Devices

As security technology becomes less expensive and more accessible to average consumers, homeowners are provided with an exponential increase in available options for exterior security devices. A cursory Amazon search reveals hundreds of such devices including motion sensor lights and home camera offerings that can be accessed remotely from the convenience of one's smart phone. Given the benefits and low cost, many homeowners have installed security systems in and around their residences to mitigate the risk of theft, property damage, and other criminal activity. As purchases and installations of these devices increase, associations and architectural committees are increasingly confronted with the conflict between the owners' interest in safety and security, and the association's interest in uniform aesthetics and neighborhood privacy...
THOU SHALT NOT REMOVE THE MEZUZAH:  California Legislature Enacts SB 652 to Protect Displays of Religious Items on Doors and Doorframes
*New Legislation
 
On July 30, 2019, SB 652 was signed into law by Governor Gavin Newsome in response to several incidents in which a homeowner's association (HOA) asked a resident to remove a mezuzah from their unit's entry door or doorframe.  A mezuzah is a small scroll that is affixed to the doorframe of Jewish homes to fulfill the mitzvah (Biblical commandment).  For observant Jews, this is not a choice, but rather, a religious duty.  Attempts to bar them from fulfilling this duty violated their religious freedom, argued Jewish residents.
 
While there were only a handful of instances nationwide in which a resident was asked to remove a mezuzah, the bill was designed to have a broader scope in protecting any displays of religious items on doors and doorframes so long as the display reflects "sincerely held religious beliefs."  Specifically, SB 652 prohibits a "property owner" (defined to mean an HOA, an HOA board, or landlord) from adopting or enforcing any rule that prohibits the display of one or more "religious items" on an entry door or doorframe.  The bill defines "religious item" to mean any item displayed "because of sincerely held religious beliefs."  The bill also identifies reasonable exceptions, such as allowing an HOA or landlord to prohibit the display of anything that threatens public health or safety, violates existing law, contains obscenities, hinders the opening or closing of any entry door, or is larger than 36" by 12" inches.  Also, an HOA may require a separate interest owner to remove a religious item as necessary to perform maintenance on a door or doorframe. 
 
SB 652, which takes effect January 1, 2020, will likely conflict with many HOA policies, which have aesthetic and architectural rules that bar hanging anything on an entry doorframe.  According to the author of the bill, such restrictions from HOAs leave the affected people unable to freely practice their religious obligations and in some instances are forced to leave their residence and seek another place to live.  By passing this bill, California's legislature has followed the recent trend in caselaw suggesting that the religious freedom of individuals should take precedence over the communal interests of homeowner's associations. 

Vendor Relationships - Navigating Resident Interactions

Our industry depends on a close network of skilled industry professionals who are dependable and responsive.  Emergencies are common, particularly in condominium developments where breaks in shared or common water lines can lead to disaster.  Quick action by association vendors can extinguish the root cause of the emergency and potentially reduce, if not eliminate, thousands of dollars of damage.  Ideally, the vendor's scope of work should be limited to those actions only; however, vendors occasionally wade into dangerous waters when they (albeit innocently) strike up conversations with residents about damage responsibility

When working at a residence, vendors should try to limit resident dialogue except as necessary to perform the work that they were hired to perform.  Why? Vendor opinions regarding fault or responsibility may not be correct.  Responsibility likely depends upon a review of the association's governing documents, among other things.  Most vendors are not trained to analyze the responsibility allocations set forth in the association's declaration; indeed, a responsibility allocation in one context may not necessarily be the same in another situation because governing documents usually differ.  Second, vendor statements can create public relations challenges for management and board members when they try to explain to an upset resident why the vendor's in-field statements are not accurate.  Most significantly, vendor representations could potentially bind the association under a legal theory called ostensible agency.

How do management professionals and board members avoid the possibility of binding statements by an unassuming vendor?  Click the link below to read more...
The What and Why of Lender Rights, and How to Deal with Same
*Asked & Answered

Asked - We are trying to obtain a loan to conduct much needed, overdue repairs and remediation work within the Association. However, the CC&Rs requires us to obtain a 75% vote by the First Mortgagees to obtain the loan because it exceeds 5% of our budgeted expenses. Firstly, why are there provisions in the CC&Rs that protect First Mortgagees (such provisions seem to create unnecessary and nuanced obstacles for the Association)? Secondly, given the urgency of the repairs, how can we expedite the process of obtaining the First Mortgagees' approval? In other words, what can we do if they do not respond?

Answered - Most, if not all, CC&Rs (" Declaration") dedicate a section to first mortgagees ("Lenders") often titled "Lender Rights." These rights are provided by the Declaration to protect the interests of the Lenders by giving them voting rights in areas that potentially impact the Lenders' security interests in a property within the homeowners' association ("HOA"). For instance, many Declarations require Lender approval to amend "material provisions" or make "material amendments" of the Declaration and/or bylaws.

For the same reason, most Declarations, if not all, require HOA's to obtain Lender approval (in addition to membership approval) for an HOA to pull out a loan in excess of a certain threshold (generally loans in excess of 5% of the prior fiscal year's budgeted expense). This is because if an HOA is able to pull out a loan from a financial institution without Lender approval and subsequently defaults on the loan, it puts the Lenders at risk of not being able to recoup their respective debts owed by the homeowners.

Understandably, many HOA's are frustrated with the additional obstacle of obtaining Lender approval as it increases cost and time to approve certain actions.  In   Fourth La Costa Condominium Owners Association v. Barbara Seith (2008) 159 Cal.App.4th 563, the Appellate Court ruled that the HOA's ballot measure to Lenders that indicated their failure to return an executed ballot within thirty (30) days shall be deemed "consented" to, was an acceptable method of obtaining "written consent" from the Lenders. (Seith, at 573.) In particular, the Court found that the Lenders' "written consent" was effectively obtained by the Lenders' signatures on the return-receipt coupled with the "30-day verbiage," indicating Lenders' silence as consent.
FIRM NEWS

Celebrating 30 Years!

 
Thank you to everyone who came out for the Firm's 30th Anniversary Party!  We had a great time celebrating with you. Event photos have been posted to  Facebook.  Please feel free to tag yourselves, print or share them at your pleasure.    
 
Thanks, again, for your business, partnership, and making this such a great event!


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