Change in HOA email protocol

BETH A GRIMM,
P.L.C.(Attorney)3478 Buskirk Ave. #1000Pleasant Hill, Ca.
94523OFFICE: (925) 746-7177FAX:
(925) 215-8454EMAIL: Califcondoguru@aol.com
FAX: (925) 609-9135

People have been talking for years about the upsides and downsides of email. One of the downsides - too many directors have found it to be a great and easy way to conduct business. So let's talk about an important new law, namely a bill that was signed by the Governor about a month ago. It's controversial, for sure. It's about board meetings - and increasing transparency in HOAs.

NOTICE OF OPEN MEETINGS is still 4 days: Senate Bill 563 which has been signed into law tightens up the notice requirements for meetings, and puts an end to email meetings. Owners upset with their boards about secret meetings have nowhere to go, really, to complain, so they go to their legislators. Owners get upset when they want to attend board meetings and cannot find out when or where they are. And it irks owners who want to know what is going on when they see board members out and about walking in the development, or hanging out at the pool or at the local pizza parlor talking about association matters and then coming into meetings with a full consent calendar (meaning decisions have already been made). Whether the problems are real or perceived, the squeaky wheel often gets the grease in Sacramento, especially when it points to bad HOA conduct. Most years it seems to be a very hot topic.

The new law, which takes effect January 1, 2012, will amend Sections 1363, 1363.05, and 1365.2 of the Civil Code (part of the Davis Stirling Act). Notice of the time and place of open board meetings isn't new. For years there has been a legal requirement to notify members at least 4 days prior to the meeting of the date and time of the meetings, except for executive sessions or emergency meetings. This notice could be given by posting in the common area, newsletter, by specification in the Bylaws, or by letter, or any method geared to reach the members.

NOTICE OF EXECUTIVE SESSION MEETINGS: This new law requires notice to be given at least 2 days prior to a meeting "solely" for an executive session (meaning it is not held the same time as a board meeting I suspect). At least it allows for meeting notices by email for any owners that consent. The law changes the rules for considering action items that were not on the meeting notice for a regular board meeting.

The new law permits meetings of the board to be conducted by teleconference - not previously in the Davis Stirling Act, but the Corporations Code has allowed for telephone or video conference meetings for a few years now. Most practitioners had already figured out that if a board met this way in an open meeting, it would have to make arrangements for owners to also "attend" by telephone, or video conference thus protecting the rights of members. The new law also requires that the notice of a teleconference meeting identify at least one physical location so that members of the association may attend and requires that at least one member of the board of directors be present at that location.

THE END OF EMAIL MEETINGS with exception (emergency meetings): The new law also prohibits the board from taking action on any item of business outside of a board meeting, and doing business by email. It was bound to happen! I imagine there were a lot of complaints about this. Good HOA lawyers have been discouraging business by email for years. It's just been too tempting, too easy, for directors to communicate that way, often leaving an incriminating "paper trail" even when they claim to not have done business. This doesn't mean the board cannot communicate via email but watch out to avoid any email that says something like: " Do you agree that we should ???" or "I talked to Bill today and he definitely is a 'yes'. What about you?"

Email is a quick and easy way to share information and circulate downloads and items the board needs to review, but watch for that fine line between passing information and setting up a consent calendar.

There is an exception and that is for matters that require an emergency meeting: "... the board of directors shall not conduct a meeting via a series of electronic transmissions, including, but not limited to, electronic mail, except as specified in subparagraph (B). ... (B) Electronic transmissions may be used as a method of conducting an emergency meeting if all members of the board, individually or collectively, consent in writing to that action, and if the written consent or consents are filed with the minutes of the meeting of the board. Written consent to conduct an emergency meeting may be transmitted electronically."

OTHER CHANGES IN THE LAW

RECORDS INSPECTION LAW - ACCESS TO EXECUTIVE SESSION AGENDAS. There are also some changes to the records inspection law (Civil Code Section 1365.2); owners will now be entitled to inspect an agenda for an executive session. So how do you protect the privacy of the subject matter? Keep it generic - otherwise the idea of confidentiality is lost. List the "purpose" on the agenda that puts it within the category appropriate for executive session meetings. Those would be discussions about pending or threatened litigation, disciplinary action, contract negotiation, and personnel matters. Suggested sample language: "Discuss disciplinary matter with owner" or "Discuss threat of litigation (or attorney letter regarding litigation)," rather than "Discuss Kim Jones' disciplinary matter with Ms. Jones" or "Discuss litigation threatened by Oleg Stanyon." If the matter to be discussed is pending litigation, the court papers are a matter of public record so you could in that case say "Discuss Dixon v. Association litigation." And the statute does exclude inspection of "... minutes and other information from executive sessions of the board of directors as described in Section 1363.05."

RIGHT TO ATTEND TELECONFERENCE MEETINGS: Added to 1363.05(b) - a member of the association shall be entitled to attend a teleconference meeting or the portion of a teleconference meeting that is open to members, and that meeting or portion of the meeting shall be audible to the members in a location specified in the notice of the meeting.

NEW DEFINITIONS: Here are some of the new definitions:


(1) "Item of business" means any action within the authority of the board, except those actions that the board has validly delegated to any other person or persons, managing agent, officer of the association, or committee of the board comprising less than a majority of the directors.
•(2) "Meeting" means either of the following:

•(A) A congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business that is within the authority of the board.

•(B) A teleconference in which a majority of the members of the board, in different locations, are connected by electronic means, through audio or video or both. A teleconference meeting shall be conducted in a manner that protects the rights of members of the association and otherwise complies with the requirements of this title. Except for a meeting that will be held solely in executive session, the notice of the teleconference meeting shall identify at least one physical location so that members of the association may attend and at least one member of the board of directors shall be present at that location. Participation by board members in a teleconference meeting constitutes presence at that meeting as long as all board members participating in the meeting are able to hear one another and members of the association speaking on matters before the board."
As usual, there will be some bristling and complaining about this new law, but the associations that are professionally managed will conform - and there is no telling what the "self-managed" associations will do. It seems that many turn a blind eye to difficult legislation, and there is plenty of it.

Later this month - maybe I will get the opportunity to cover the new small claims court limits, the veto of the turf bill, the results of the transfer fee bill and and other legislation affecting HOAs and Condos. All bills should be final by now. Also watch my blogs for interim information - they are accessible on the main page of this website. Get your friends on the list for the free E-News now! It's never too late.

Beth A. Grimm is an attorney who serves homeowner associations and homeowners alike. She is a frequent contributor to the Echo Journal and other similar publications in the State of California and on a national level. She provides several publications written in plain English to help people who need information about California law as it relates to homeowner associations. She posts a wealth of information on her website. And she was named the Volunteer of the Year in June by the Executive Council of Homeowners.

Check out the Main and Resource Pages at www.californiacondoguru.com.

Check out my new book called "THE CONDO OWNER'S ANSWER BOOK" and my new blog

Liability in the Bargain? The Dangers of Hiring an Unlicensed Contractor:

By Timothy J. Smith Esq.


Homeowners and homeowners' associations often face expenses to maintain or repair their property. It makes sense to look for the most affordable contractor available to do the work. Many times, through friends or relatives, a homeowner will come across an unlicensed contractor during their search for a person to do the work. The unlicensed contractor will provide a bid that is much lower than bids from licensed contractors and promises to do the same work. It sounds so appealing to save money but still get great workmanship that many people fall into the trap and hire the unlicensed contractor. However, the cheapest contractor available might be the one that will cost the most in the long run.

2010-2011 ANNUAL DISCLOSURE AND NOTICE CHECKLIST FOR CALIFORNIA COMMUNITY ASSOCIATIONS

Not less than thirty (30) days nor more than ninety (90) days prior to the beginning of the fiscal year:

Pro Forma Operating Budget Civil Code §1365(a)

The association must distribute its “pro forma” operating budget within the “60-day window” to retain its ability to increase assessments without seeking an approval of the membership. If this requirement is not met, the members must approve any increase to the regular assessments.

Newsflash: Tough Secondhand Smoke Laws for Contra Costa County Condominiums

By Andrea L. O'Toole, Esq

The Contra Costa County Board of Supervisors has just passed an ordinance that bans smoking in all areas of new multi-unit residences. This follows a recent trend in the Bay Area as several cities and counties are more aggressively regulating secondhand smoke in multi-unit residential buildings. See article regarding San Francisco’s recently-enacted secondhand smoke regulations at:www.berding-weil.net/articles/legislative-alert-for-sf-condos.php.The Contra Costa ordinance further limits where persons may smoke within existing multi-unit residences.

A multi-unit residence is a building having four or more dwelling units and, as such, would include most residential condominium buildings and many mixed-use residential/commercial buildings. Three cities in Contra Costa County - Richmond in 2009, and more recently, Pinole and Pleasant Hill - have already passed similar regulation of secondhand smoke.

Dealing with Difficult People

By Julie Adamen: Julie Adamen is president of Adamen Inc., a consulting and placement firm specializing in the community management industry. Julie can be reached via email at julie@adamen-inc.com or through her website www.adamen-inc.com.

Few new community managers walking in on their first day have the slightest inkling what is in store for them unless they have extensive customer-service experience. Without scaring everyone too much let me say in no uncertain terms that some of the people with whom you will deal will be very difficult. Why is that? Largely it is because of three things:

• We deal in situations that affect people’s living arrangements, making even the smallest of issues seem very, very personal to the resident.
• People find community associations a perfect place to enact personal agendas.
  
• There are no repercussions for bad behavior.

FDIC Insurance Coverage * Permanently Increased *

On July 21, 2010, the FDIC Insurance coverage was permanently increased to $250,000 per tax ID number, per institution. We previously reported to you the insurance had been increased to $250K from $100K in late 2008. The increase was temporary as part of the financial bailout bill signed by the President. This increase has been made permanent... fantastic news given the last standard had been in effect since 1980.

Is the lifeblood of the association bleeding out?

The association lives on assessments. Many CID’s are facing major financial difficulties due to the failure of a high percentage of members to pay their monthly obligation. Late fees are assessed, interest calculated, and notices of delinquency mailed. At some point the account is sent to a collection firm or attorney to begin the process of preparing an assessment lien.

All of these actions are based on the CC&R’s, Delinquency Control Policy and California Civil Code. The management team should implement the policy of the board in the timely application of each step of collection of the assessment.

Now, under Civil Code section 1367.1 (c) (2), any lien recorded on or after January 1, 2006 requires a decision by the board of directors. “The board shall approve the decision by a majority vote of the board members in an open meeting. The board shall record the vote in the minutes of the meeting.”

After the recording of the lien, what happens? Following the recording of the lien, it may be enforced by any manner permitted by law. This may include Judicial Foreclosure or Non-Judicial Foreclosure.

Many boards are reluctant to take this next step. This reluctance is due to both misinformation and prudence. There are pros and cons to foreclosure which must be considered by the board before taking this action.