The HOA Board Quarterly Fall 2012 Issue #4

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TERM LIMITS

QUESTION : How long should a board member remain on an HOA board ? We have a couple of members who have been on the board for several years and refuse to leave .

ANSWER : Refuse to leave ? As long as the membership keeps electing them to the board , directors properly occupy their seats . Having long-term directors can be good or bad depending on the particular directors . Good directors bring institutional memory and a steady hand to the association ’ s business . Their experience saves money for the membership . One director I work with has been on his board for over 20 years . He has consistently been one of the best business-minded directors I ’ ve ever dealt with . On the other hand , some long-term directors start out sharp and then turn autocratic over time and slow to adjust to changing circumstances . When that happens , they need a nudge to step down and let someone else serve on the board .

Term Limits . To encourage “ new blood ” on the board , some associations amend their bylaws to implement term limits along with staggered twoyear terms . The best term limits are those that allow directors to serve two consecutive terms and then step down for one year--provided someone else is willing to serve . If no one else runs for the board , the limit is lifted and the director can continue to serve .

ATTORNEYS ’ FEES

A recent appellate court decision dealt with attorneys ’ fees in a dispute over an election . A homeowner brought a challenge to an election and the association prevailed in the action . The court found some of plaintiff ’ s actions , including filing a complaint barred by the statute of limitations , “ frivolous .” The association sought attorneys ’ fees under Civil Code § 1363.09 ( b ), which provides :

A prevailing association shall not recover any costs , unless the court finds the action to be frivolous , unreasonable , or without foundation .

The court awarded the association $ 15,000 in attorneys ’ fees . Plaintiff appealed . The appellate court agreed with the lower court that plaintiff ’ s lawsuit was frivolous . Even so , it reversed the fee award . The court decided that the statute cited above did not explicitly authorize recovery of attorneys ’ fees . However , the court left open the door that an association could recover its fees under their own CC & Rs . See That v . Alders Maintenance Corp .

WHO PAYS FOR   BALCONY DAMAGE ?

QUESTION : Who is responsible for paying for the deck when the owner tiled it without approval ? The HOA or the owner ?

ANSWER : The owner . However , the owner could have some defenses depending on the situation . To minimize any defenses ( or avoid the problem altogether ), boards should adopt written rules and regulations regarding the tiling of balconies and then strictly enforce those restrictions . Associations should either ( i ) ban tile altogether or ( ii ) implement tough installation guidelines pursuant to a consultant ’ s specs written specifically for the association . In addition , the association should record a covenant making the owner ( and future owners ) responsible for all maintenance and damage that may arise from the installation of the tile .

CAN HOA CONTRACTOR   BUY A UNIT ?

QUESTION : Can a contractor hired by the HOA buy in the same complex ? Would this constitute a conflict of interest ?

ANSWER : Yes he can buy into the complex . No , it ’ s not a conflict of interest . . . unless he is elected to the board and votes on his own contracts . Contractors are generally good to have around ; it ’ s the lawyers you have to watch out for .

SMALL HOAs

QUESTION : My daughter is president of a 9-unit HOA . With so few units , are they held to the same standards of larger associations ? Do they have to send out annual disclosures ?

ANSWER : Unfortunately , they are held to the same standards and subject to all compliance expenses even though small associations have very little money and are usually self-managed .    During its rewrite of the Davis- Stirling Act , the California Law Review Commission recognized the burden the Act imposed on small HOAs . The CLRC looked at how to lighten the load and started by trying to define “ small ” HOAs . The project proved to be difficult and was tabled . The CLRC might take up the issue again at a later date , but I doubt it .

Adrian J . Adams , Esq . Adams Kessler PLC

The HOA Board Quarterly Fall 2012 Issue #4 | Page 10