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The Good, the Bad and the Ugly: Resolutions of Nuisance Disputes

When Maintenance is Not Enough

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Serving Community Associations

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Community Association Maintenance Manual Supplement p.26

HOA Newsletters: Switching to Email

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September / October 2016 echo-ca.org

Is Your Board Properly Addressing Nuisance Issues? p. 6

ECHO 1960 The Alameda STE 195 San Jose, CA 95126 Change Service Requested

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Resolving Disputes

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2016 ECHO educational calendar

2016 ECHO Educational Seminars

San Rafael

If you’ve ever wished that ECHO would hold a seminar closer to your association, chances are that we’ll be nearby during 2016. Don’t miss an opportunity to get the education you need with guidance from some of California’s top HOA attorneys and professionals. Take a look and mark your calendar. We can’t wait to see you there!

October 15 Monterey Educational Seminar (see page 29) Embassy Suites Monterey Bay Seaside, CA

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San Francisco

news from ECHO

News From ECHO September 2016 This edition of the Journal offers advice on two key areas of your job as a board member: maintaining the community assets and resolving disputes. The first of these is your most important job. Attorney Glenn Youngling advises how to deal with the situation when maintenance is not enough. And the firm of Berding|Weil provides a Community Association Maintenance Manual Supplement. Sadly, most of your time is probably taken up with the latter issue. If you apply the strategies offered by our experts, you’ll be better at both, and be able to spend your valuable time on the things that matter most. The two named partners of Swedelson Gottlieb team up to cover the most noxious nuisance issues you’ll have to face. Then, attorney Sharon Pratt guides you through the association’s options in resolving disputes. We are also bringing you some suggestions on communicating with owners, electronically. While conducting board business via email is prohibited by law, that doesn’t mean you shouldn’t use the technology to connect with members and residents. On October 15, we will hold our last Regional Seminar of the year in beautiful Monterey. If you live nearby, it’s a must attend event. And if you don’t, well, it’s a great excuse to visit the coast. Please see the flyer on page 29 for details. Finally, while we try to bring you the information we think you need in the ECHO Journal, we also encourage you to join over 20,000 visitors a month to our website: www.echo-ca.org. You’ll find hundreds of articles, the statutes that control associations, legislative updates, and a directory of professionals offering an array of services specifically for homeowner associations. Best,

Brian Kidney Executive Director

September/ October 2016 | ECHO Journal

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The Good, the Bad and the Ugly: Resolution of Nuisance Disputes Impacting California Community Associations Almost all California community association CC&Rs contain a “nuisance” section addressing the definition of nuisances and their prohibition. In this article, we address six common nuisances and the methods an association’s board of directors can use to address and resolve those nuisances.

Resolving Disputes Sometimes talk about dispute resolution sounds like alphabet soup. There’s ADR (alternative dispute resolution), IDR (internal dispute resolution), ENE (early neutral evaluation), RFR (request for resolution), conciliation, binding arb, non-binding arb, mediation, and various hybrids of the above.

When Maintenance is Not Enough When the buildings are found to have significant defects, fall into disrepair and/or sufficient funds have not been earmarked and accumulated, something has gone wrong. How a board should address this problem depends on many complex factors, but certain principles will help guide the way toward a realistic plan of action.

Community Association Maintenance Manual Supplement To aid understanding of how the Maintenance Manual prescribed duties dovetail with the protection of association rights we’ve created a Maintenance Manual Supplement listing potential building issues and the time limitations on actions that are brought to preserve those claims. Also listed are the Standards for Residential Construction which must be met by all developers of residential properties sold to the public.

HOA Newsletters: Switching to Email For decades, HOA Boards have communicated news and events to their members using a method developed by Johannes Gutenberg in 1439 – the hardcopy newsletter. But we aren’t in 1439 anymore, and there’s an alternative delivery system that is more timely, interactive, and modern – email newsletters.

DEPARTMENTS

2016 ECHO Educational Calendar

News from ECHO

Monterey Educational Seminar — October 15

ECHO Event Calendar

ECHO Volunteers

ECHO Professional Directory

ECHO Bookstore

Advertiser Index

Legislation at a Glimpse

The ECHO Journal is published bi-monthly by the Educational Community for Homeowners. 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. Copyright 2016 Educational Community for Homeowners. All rights reserved. Reproduction, except by written permission of ECHO is prohibited. The ECHO membership list is never released to any outside individual or organization. ECHO 1960 The Alameda, Suite 195 San Jose, CA 95126 408-297-3246 Fax: 408-297-3517 www.echo-ca.org info@echo-ca.org Office Hours Monday-Friday 9:00am to 5:00pm BOARD OF DIRECTORS AND OFFICERS President David Hughes Vice President Karl Lofthouse Treasurer Diane Rossi Secretary Carly Melius Directors Jerry L. Bowles John Garvic Adam Haney Stephanie Hayes David Levy

Robert Rosenberg Jeffrey Saarman Brian Seifert Wanden Treanor Steven Weil

Executive Director Brian Kidney Director of Marketing & Membership Carly Melius Director of Communications Tyler Coffin Design and Production Design Site ECHO Mission Statement Serving Community Associations

September/ October 2016 | ECHO Journal

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THE GOOD, THE BAD AND

THE UGLY: Resolution of Nuisance Disputes Impacting California Community Associations By Sandra L. Gottlieb, Esq., and David Swedelson, Esq.

September/ July/October August 2016 2016 | | ECHO ECHOJournal Journal

uisances are an issue that the attorneys at our firm regularly deal with. For those who might be unfamiliar with what exactly a nuisance is, a nuisance typically consists of one or more of the following issues:

(1) an activity that unreasonably interferes with the use or quiet enjoyment of another resident of their separate interest or exclusive use common area;

(2) a use that creates conditions that are hazardous, noxious or offensive; or

(3) a violation of a local, state or federal law. Common nuisances

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at homeowners associations include odors (e.g. cigarette smoke, garbage, pets and food), noise (e.g. loud conversations, yelling, musical instruments, home theatres and hard surface flooring), visual issues (e.g. clutter on balconies and patios) and health and safety issues (e.g. outdoor fires, pests/rodents, hoarding and smoking). Almost all California community association CC&Rs contain a “nuisance” section addressing the definition of nuisances and their prohibition. This is a catch-all provision that can address issues that are not expressly addressed in the association’s Governing Documents. Nuisance violations should be addressed by an association’s board

of directors in the same manner as other types of governing document violations. The question that a board will need to grapple with is the level of association involvement. Even if the alleged nuisance is only impacting one other owner, California law seems to require that the association attempt enforcement.

In this article, we address six common nuisances and the methods an association’s board of directors can use to address and resolve those nuisances. It is important to note that if an association does not act timely and decisively in enforcing nuisance covenants and rules, then the association may be barred from enforcing those governing document provisions against an offending owner (and possibly other owners). So, an association’s board of directors should systematically and uniformly review nuisance complaints and, if appropriate, enforce the nuisance provisions contained in the association’s governing documents.

Smoking on Balconies and Patios Over the last several years, we have seen secondhand smoke complaints become more and more common. As more people stop smoking (and they are), more and more people are vocally complaining about smoke that is wafting into their homes. If a balcony or patio (or terrace or deck) appurtenant to a residence is exclusive use common area, then an association’s board can likely adopt an operating rule banning smoking in the common area, which will apply to those appurtenant areas. And the association members can vote to approve a CC&R amendment banning smoking in common areas at the development, which would include exclusive use common area balconies and patios. The owners can also vote to amend the CC&Rs to prohibit smoking in yards, homes or units. Keep in mind that if the board will be taking action to enforce an operating rule, it is important

September/ October 2016 | ECHO Journal

to make certain the board’s actions do not exceed the authority given in the CC&Rs. There are limits to how far rules can go. If an owner violates the smoking restriction, then the board should call the owner to a properly noticed hearing before the board with an opportunity to be heard, and it can then impose discipline (e.g. possible suspension of membership rights and the imposition of fines, depending on the language of the CC&Rs) as permitted under the association’s governing documents. If an owner continually fails to comply with the association’s smoking restrictions, the board will need to meet with the owner in internal dispute resolution (IDR – often referred to as a “meet and confer”) and/or alternative dispute resolution (ADR – such as mediation or arbitration). If this is a neighbor-toneighbor dispute in which the association has become involved, the association would serve on the complaining and smoking owners a Request for Resolution, pursuant to Section 5900 of the Civil Code.

If the nuisance issue is not resolved after these enforcement actions are taken, the board will need to decide if the nature of the dispute, its impact on the community and the cost in terms of money and time warrant the association filing an enforcement action/lawsuit against the owner. The relief sought from the court in that action would be the issuance of an injunction against the owner to bar them from smoking on their balcony/patio. If the balcony or patio is an element of the unit/lot (rather than exclusive use common area) and only one neighbor/ owner is complaining about smoking in that area, then the complaint should generally be dealt with as a neighbor-toneighbor dispute (more on neighbor-toneighbor disputes below). However, if multiple owners are complaining about smoking on the balcony or patio or yard, this is not a neighbor-to-neighbor issue or dispute. Some cities have adopted ordinances that prohibit smoking on balconies and patios in multi-dwelling unit residential buildings (whether the balconies and patios are exclusive use common area

or an element of a unit). For example, the City of Santa Monica adopted an ordinance in 2010 that prohibits smoking within 15 feet of any window or door of an apartment or condominium unit; this ordinance effectively prohibits smoking on balconies and patios at any condominium project in Santa Monica. Some cities, like Pasadena, have even adopted ordinances prohibiting smoking within residences in multi-dwelling buildings, which would include owners’ units in an association’s development. Should an owner fail to comply with such a city ordinance, that failure to abide by the law would likely be considered a nuisance violation under the association’s CC&Rs, and the board could pursue IDR and/or ADR and, if unresolved, a court action related to that violation. With respect to smoking within an owner’s separate interest (home or unit), if smoking within a unit/lot causes a nuisance to another owner, the offending/smoking owner can be required to take steps to minimize the impact of his/ her smoke on other units to avoid the creation of a smoke nuisance (e.g. use air circulators/fans/cleaners, not smoke near open windows, seal air ducts). However, in many instances, as stated above, smoking complaints between units are considered a neighbor-to-neighbor dispute that may not affect the community as a whole. The above said, boards and managers should keep in mind that the smoking conduct needs to be evaluated with respect to the impact it would have on a person of ordinary and reasonable sensibilities, not a hypersensitive person.

Home Businesses Many people have started businesses from their homes, or have been asked by their employers to work from home in order to save the employer overhead costs. If there is a blanket ban on commercial activities in an association’s governing documents, then technically it is possible that no home office is permitted. Reasonably speaking, however, a teacher grading papers, a lawyer reviewing documents, an accountant preparing tax returns, etc., would not be 10 echo-ca.org

a commercial activity. The issue is whether the use of a home for commercial purposes will impact the residential character of the community. If home offices are permitted, the following should be prohibited to protect the common area and avoid the creation of a nuisance: no items should be manufactured, stored or sold from or in the unit/ lot in a manner that is visible from the common area; no employees should work in the unit/lot; and no clients, customers, messengers, delivery personnel or other individuals should regularly visit the unit/lot or cause a nuisance at the development. These are the types of activities that can impact the residential character of the property. We have been called upon to address home offices where there are multiple employees, refrigerator repair with people coming into the association to drop off refrigerators, car repair, piano lessons, tutoring of groups of kids, hair cutting, and the list goes on. If an owner violates an association’s restrictions on commercial use of their unit or home, the association can levy fines, engage

in IDR, ADR or an enforcement action against the owner. Generally speaking, a court would be more likely to enforce an association’s commercial use restrictions if there is actual commercial activity, such as employees, customers or clients visiting the owner’s residence, deliveries being made to the owner’s residence and/or an impact on the residential character of the community.

Noise From Units Above In buildings with stacked units, there are often issues related to impact noise complaints involving activities in upstairs units. The most common of these complaints relates to hard surface flooring, in that the presence of hard surface flooring (such as wood, tile or stone) amplifies noises related to walking, moving furniture, exercise regimens and play activities. Many associations’ CC&Rs or other Governing Documents, especially those that are older, do not prohibit hard surface flooring, but most cities have ordinances that

require a low threshold for required sound attenuating materials (e.g. floor surface padding, underlayment). In the event a nuisance violation exists with respect to hard surface flooring installed that purportedly does not comply with an association’s governing documents, it is a good idea for someone from the board to go and visit the complaining owner’s unit to determine if there is really a nuisance issue. An association’s enforcement options are generally limited to two actions: (1) the filing of a lawsuit seeking removal of the noncompliant flooring and the installation of compliant flooring materials; and (2) requiring proper sound attenuating materials under the floor covering, the placement of area rugs with appropriate sound attenuation materials and thickness padding in high traffic areas and the placement of felt cushions under furniture legs to help reduce noise. If an upstairs flooring violation/noise nuisance is alleged, testing can be done to determine the decibel level of flooring noise, and this testing should be paid for and conducted by the complaining

September/ October 2016 | ECHO Journal

owner and submitted with their complaint/violation notice to the association. As for complaints about loud noises unrelated to the type of flooring in a unit above, such as noise nuisances related to music, televisions and home theaters, parties, bedroom activities and vibrational energy (from speakers and other noise devices), those complaints need to be investigated and/or evaluated on a reasonable basis by the board. Following are three considerations the board should keep in mind: if there is only one owner making the noise complaint, then this matter could be a neighbor-to-neighbor dispute; nuisance issues need to be addressed with deference to the sensibilities of an average person, not a hypersensitive person; and noise nuisance complaints are always fact specific, and may need to be dealt with differently depending on whether the noise issue is ongoing or was a one-time event. With respect to these types of nuisances, which tend to be more technical to deal with than other types of nuisances, it is advisable for a board to contact association legal counsel to formulate a plan to address the dispute and confirm the association’s responsibility (if any) to resolve the dispute.

Children’s Behavior We are often contacted by managers or board members regarding nuisance complaints related to children. Typically, we hear that owners are complaining about kids playing in the common area, claiming that there is too much noise. State and federal fair housing laws do not allow an association to discriminate on the basis of a resident’s or guest’s age, and an association should not adopt or enforce any governing document provision that treats children differently or refers to them separately. For example, a rule that limits children’s activities in the common area is going to be found to be discriminatory. Even a rule that limits recreational activity in the common area may be found to be discriminatory. In fact, several associations have been fined by Fair Housing authorities for these types of rules. And a pool rule regarding incontinency should require that all 12 echo-ca.org

persons using the pool who are incontinent must wear swimwear specifically designed for incontinent persons while in the pool, rather than the rule providing that children should wear swim diapers while in the pool (or, worse yet, only allow potty-trained children in the pool). An owner’s family members, cohabitants, guests, tenants and invitees are all required to comply with the association’s governing documents, no matter their age. So, if an owner’s child, or a guest’s child, violates the association’s governing documents by, for example, yelling, running or skateboarding in the common area, the board needs to address that violation in the same manner as if an adult committed the violation. Most nuisance issues involving children relate to noise nuisances, which are discussed above. When addressing these complaints, always refer to children as persons (which they are) to avoid the slippery slope of fair housing violation complaints.

Renters’ Bad Behavior An owner is ultimately responsible for the actions of their tenants (as well as the owners’ family members, cohabitants, guests and invitees), so the owner is the person who would be subject to a hearing and discipline for their tenants’ violations. Many associations’ CC&Rs require an owner to provide the CC&Rs and other governing documents to a tenant before the tenant moves into the owner’s property, and some CC&Rs require owners to include a reference to the CC&Rs and other governing documents in the tenant’s lease with a statement that a violation of the association’s governing documents is grounds for immediate termination of the lease. These types of provisions are important to help ensure that tenants are familiar with the association’s covenants, restrictions, rules and regulations and comply with same. If a tenant violates the governing documents, the owner should be advised of the violation and called to a hearing, as appropriate (the association has no authority or right to discipline a tenant, as the tenant is not a member/owner).

The board can discipline the owner for his/her tenant’s violations, and require the owner to ensure that the tenant commits no further violations; as necessary, the association can pursue legal action to obtain a court order to enjoin the owner and the owner’s tenant from committing ongoing violations. If the association’s CC&Rs include a provision that allows the association to seek removal/eviction of the tenant in the owner’s name for governing document violations, that may be a viable option for the board; the cost of that legal action would likely be chargeable to the owner as a cost of the enforcement action. Further, a useful enforcement tool (which can be imposed after a properly noticed hearing with an opportunity to be heard before the board, and subject to governing document authority) is to suspend the owner’s and the tenant’s right to use the association’s common area amenities as the result of a governing document violation by the tenant.

Dogs/Pets Pet nuisances are a regular issue at many associations, particularly with respect to dogs. Loud and/or continuous barking (and other animal noises), soiling in the common area, damage to common area property and unleashed/uncontrolled animals in the common area are all examples of common pet violations. Owners are required to ensure that their pets are in compliance with governing document provisions related to animals, and owners can be disciplined (after notice and hearing) for pet violations. In certain cases, an association can force the removal of a pet that becomes a nuisance, and the association in such a case can seek reimbursement of its attorneys’ fees when prevailing in that enforcement action. It is important to note that while the association may have to make a reasonable accommodation under state and federal fair housing laws to allow an owner to keep a service or companion animal in their unit/lot that may violate type, size, weight or breed restrictions contained in the association’s governing documents, that service or companion animal is not permitted to

create or cause a nuisance at the association’s development.

Neighbor-to-Neighbor Disputes There are some cases where a complaint raised by an owner or owners is in actuality a neighbor-to-neighbor dispute that does not involve the community interest, meaning that only one unit is being affected by the alleged nuisance and no other residents have complained of the alleged nuisance (typically a noise or odor issue). In that case, the board may determine that the association has no obligation to address or resolve the issue. A board should always check with association legal counsel if it is considering making this determination to ensure it is in a defensible position to make that determination. Even if a board determines that the association does not have a duty to resolve a nuisance issue between owners, it is possible (or perhaps likely) that the association will be dragged into a lawsuit involving the matter. A board might consider engaging in a three-way mediation with the two owners and the association, with the board or the association’s legal counsel acting as facilitator, to try and help resolve the issue and avoid the association being named, and having to defend itself, in a lengthy and expensive enforcement action/lawsuit. If this informal mediation is unsuccessful, it may be necessary for the board to pursue a formal mediation between the two owners and the association, with the cost of the mediation split evenly three ways between the two owners and the association. A board should confer with association legal counsel before undertaking such mediation to ensure that it is following proper protocols and adequately protecting the association.

violations. If permitted by the governing documents, fines and suspension of membership rights (voting and use of common area recreational facilities) can be imposed after a properly noticed hearing with an opportunity to be heard by the board. If an association does not have a formal violation and/or hearing policy, the association’s board should adopt one to ensure compliance with Civil Code Section 5850. When determining how to resolve a nuisance violation, an association’s board of directors needs to consider the level of board intervention required, whether the board should engage in IDR or ADR with the owners and whether legal action seeking injunctive relief is required. A board that does not act timely and decisively to enforce nuisance restrictions can expose the association to court-imposed penalties (and the board could be subject to a breach of fiduciary duty claim). And, boards should not be vague, arbitrary or unreasonable in their enforcement of nuisance provisions

– nuisance provisions in governing documents can backfire. To ensure that a board’s actions with respect to nuisance issues are defensible, and that the association is properly addressing the situation and protected, an association’s board should always confer with association legal counsel when dealing with nuisance issues that may involve: possible legal action against an owner, resident or the association; statutory protections; complicated facts; and/or fair housing laws. Have questions about nuisance disputes at your association? Contact SwedelsonGottlieb Senior Partner David Swedelson at dcs@sghoalaw.com. Sandra L. Gottlieb, Esq., and David Swedelson, Esq. are the founding partners of Swedelson Gottlieb, a full service community association law firm that provides legal counsel to condominium, townhouse, stock cooperative and planned development homeowner associations (HOAs) throughout California. They can be found at http://lawforhoas.com.

Enforcement and Resolution Considerations Nuisances can be dealt with in the same manner as other governing document September/ October 2016 | ECHO Journal

n Resolvi g

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i D sputes By Sharon Glenn Pratt, Esq.

September/ October 2016 | ECHO Journal

ometimes talk about dispute resolution sounds like alphabet soup. There’s ADR (alternative dispute resolution), IDR (internal dispute resolution), ENE (early neutral evaluation), RFR (request for resolution), conciliation, binding arb, non-binding arb, mediation, and various hybrids of the above. The general term “ADR” can be used as a catch-all for anything that is an alternative to the court system, and is often used to generally describe all of the above methods. However, in the world of homeowner associations, ADR and IDR are distinguishable.

How Do You Join ECHO? Over 1,700 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for the membership, sign up online at www.echo-ca.org. For more information about membership and ECHO, call us at 408-297-3246 or visit the ECHO website.

Internal Dispute Resolution IDR is an internal process, that is typically less formal and less expensive than ADR. It is most often employed without the assistance of a neutral third party, and often without the assistance of attorneys, i.e. one board member meets in person with one owner, and they try to work things out and come up with an agreement. It applies to disputes between an association and one of its owners, involving rights and duties as defined in the governing documents or by statutes such as Davis-Stirling and the Corporations Code. Associations are required to have a fair and reasonable IDR process in place, and it must be described to the owners in the annual policy statement. (5905, 5910) It should permit either side to invoke the IDR process by making a written request, and it should provide for prompt deadlines and particularly a maximum time

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for the HOA to respond. The procedure must allow each side to explain their position. If an association does not have an IDR procedure in place, there is a default procedure in Davis-Stirling. If IDR is requested by an owner, the association must participate in good faith. If it is invoked by the association, the owner does not have to participate. An owner cannot be charged a fee to participate. An agreement reached through IDR is binding on the parties. It should be written up and signed so that there is no confusion.

Alternative Dispute Resolution ADR is more formal than IDR and typically involves the services of a neutral third party, such as a mediator or arbitrator. Those neutrals charge for their time, unless one can be found through a locally sponsored program. ADR typically involves attorneys as well, although there is no requirement that attorneys be used. Although IDR is often a precursor to ADR, it does not take the place of ADR, which is a pre-litigation requirement for many HOA lawsuits. ADR is required when a dispute may lead to an “enforcement action”. If an HOA refuses ADR, it may not file an enforcement action, (5930) and it risks giving up its right to recover attorney’s fees in the subsequent lawsuit. (5960) ADR is initiated by serving a Request for Resolution (RFR), which must contain specific things such as a copy of the code section for ADR and a notice to respond within 30 days, as well as a description of the dispute. (5935) Once it is served on the other party, they have 30 days to respond and 90 days to complete the ADR process. Service of the RFR tolls the statute of limitations for filing an enforcement action. The parties who choose ADR can stipulate on what type of ADR process they prefer, such as mediation, arbitration, non-binding arbitration, binding arbitration, or early neutral evaluation. These processes are quite different from one another.

In mediation, the parties use a mediator, usually a retired judge or attorney, who helps them come to a negotiated settlement. The mediator does this by trying to effect a compromise. He or she does not normally issue orders or make decisions, although some mediators will recommend a certain settlement as a tool for getting the case resolved. The goal is conciliation rather than binding decisions on the facts and law. The pros of mediation are that if it is effective in resolving a dispute, then the matter is resolved. It is usually less costly and less adversarial than arbitration, as there is no putting on evidence and no formal rules. All of the features of mediation that can be considered pros can also become cons if the case is not resolved, i.e. the time has been spent without any resolution, the parties have not had the satisfaction of having someone issue orders, decisions, or judgments, and nobody has testified or been crossexamined. In a binding arbitration, the case for each side is presented much like in a trial, with witnesses testifying and cross-examination taking place, and the attorneys arguing their respective cases. However, the parties can stipulate to short-cuts such as presenting evidence through declarations, and the rules of evidence are often relaxed. The arbitrator makes binding decisions, like a judge. Non-binding arbitration is conducted in the same way as binding arbitration, but the decision can be rejected by either side. Even a rejected non-binding arbitration award can be an important tool in eventually bringing about a settlement, as the parties get an idea of what a judge or jury might do with the case. Of course one of the cons of arbitration is that there is a loser and a winner, rather than a compromise. As litigation is an expensive and lengthy process, engaging in good faith in both IDR and ADR is almost always advisable, in addition to being statutorily required, before filing a lawsuit. Sharon Glenn Pratt is the managing partner of Pratt & Associates in San Jose, California. She is a specialist in common interest development law and litigation, and has been practicing in the San Jose area for 30 years. She can be reached at 408-369-0800

September/ October 2016 | ECHO Journal

When Maintenance

Construction Defects, Worn Out Systems . .

By Glenn H. Youngling, Esq.

IS NOT ENOUGH

. . And Components And Other Surprises . . .

s a general rule, there is no higher duty required of community associations than to properly care for the buildings under the association’s control. In a condominium complex, the duty is pervasive through nearly all of the project improvements. In a planned development, the association is typically responsible for all exterior building systems such as roofing, stucco and siding. In either case, the CC&Rs and the Davis-Stirling Common Interest Development Act (Davis-Stirling Act) require the Association to anticipate what maintenance, repair and replacement will be necessary over the life of the project. That work must then be funded and performed as required to keep the project in good repair.

When the buildings are found to have significant defects, fall into disrepair and/or sufficient funds have not been earmarked and accumulated, something

has gone wrong. How a board should address this problem depends on many complex factors, but certain principles will help guide the way toward a realistic plan of action. The purpose of this article is to provide you with those principles, as well as an understanding of how they should be applied. It is important to stress at the outset that the following principles should be applied nearly simultaneously.

• Examine whole building systems • Build the right team of professionals • Consider all funding options • Identify applicable statutes of limitation • Communicate with your members Examine Whole Building Systems With the advent of mass produced housing, great economies of scale were achieved. Unfortunately, where proper care is not taken in the design and construction of mass produced housing, those same economies of scale can turn into repetitive integration of defects in large

numbers of homes. All too many associations responsible for the maintenance and repair of building components start out believing defects are isolated occurrences, but later find they are part of an overall pattern of repetitive defects on a large scale. Failure to properly diagnose a defect as systematic may permit additional damage, cause under-budgeting for repairs and may even cause statutes of limitations on the larger problem to expire. There are innumerable ways a construction project can go bad at the outset. It may be inadequate design, lack of supervision, lack of coordination between trades and/or inexperienced subcontractors. Introduction of new products and materials in the construction industry can also leave a ripple effect for years as they mature and in some cases fail prematurely. Examples include failures of ABS plastic pipes (often used in waste lines), failures in polybutylene plastic pipes (often used as water supply lines), two ply tar and gravel roof systems (“dual-80”), exterior textured coating systems (“tex-cote”) and oriented strand board known as OSB (used in siding and other applications), asbestos (in textured ceilings, floor tiles, roofing, heating ducts and more), lead paint and prestressed and post tension concrete structural members. Not all small problems end up to be large ones, but typically all large ones start out seemingly small. How does an association tell the difference? It’s not always easy. Once an association has determined that a problem exists that has the potential to grow, it must begin the investigative process. This starts with assembling the right team.

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Build the Right Team of Professionals Successful troubleshooting on a large scale requires building the right team of experienced professionals. Directors are expected (and are entitled) to rely on the advice of competent professionals. Architect and/or Engineer. The role of the architect or engineer is to investigate symptoms of problems, define the problems, propose repair options and provide at least an “order of magnitude” of the costs of repair. It is important that this licensed professional have significant experience troubleshooting existing construction and be qualified to act as an expert if necessary in any related defective construction litigation. Depending on the nature and extent of problems, this person may bring in other consultants who have expertise in specialty areas such as soils, structural engineering, roofing, estimating and electrical systems. Attorney. Particularly if there is likely to be litigation, the attorney assumes the role of “quarterback.” The attorney must be flexible and may be called upon to act as educator, advocate, negotiator, problem solver, spokesperson, decision maker and drafter and/or team coordinator. The more experience with community associations and familiarity with applicable statutory and case law, the better. The attorney evaluates the potential claim and potential statutes of limitations, coordinates experts, advises the directors, assists with member communications, and prosecutes the litigation.

If litigation is not an option, an experienced attorney will be necessary to assist in proper disclosures, governing document and statutory compliance, insurance analysis, drafting of repair contracts and implementation of a funding plan. Others. Depending on the association’s circumstances, a reserve study consultant, banker, contractor and others may

be called upon to render advice and provide assistance. Once these professionals are assembled, the association can move forward and determine the full nature and scope of the problem. Typically, this process results in a determination of the “order of magnitude” of the problem in terms we all understand - how much will it

September/ October 2016 | ECHO Journal

cost to fix these problems? That brings us to the next step, funding options.

Consider All Funding Options In the simplest sense, there are two ultimate sources of funding for repairs: from outside the association (where there is insurance coverage and/or someone who has been negligent or otherwise is liable for injuring or damaging the association), or from within the association (i.e. members’ pockets).

Funding From Outside the Association Insurance is a traditional source of repair funds that comes from outside of the

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association. When thinking about fire or storm damage, this is a source which naturally comes to mind. Yet the interplay between third party and first party coverage and the category of loss assessment coverage often yields strong arguments for coverage where none may be apparent on the surface. For unusual defects or damage or where a claim has been denied, the association should consult with counsel experienced in insurance coverage and claims. If the association is addressing defects or damage for which others may be liable, litigation may be a viable source of funds. In this context, litigation really is a funding option, no more and no less. A shortsighted view would see litigation solely as a funding drain. But with proper perspective, it should be viewed as a funding option that requires significant investment of funds in the “short run” with the longer term goal of collecting much more than invested. The “short run” investment funds typically come from within the association, so this funding option actually requires a

working knowledge of funding from within the association.

Funding From Within the Association: Assessment Options Regular and Special Assessments. Regular Assessments may be increased by the Board of Directors up to 20% annually without a vote of the membership (where there has been compliance with applicable financial reporting requirements). Special Assessments may be imposed up to an annual total of 5% of the budgeted aggregate gross expenses of the association for that fiscal year. In order to raise either regular or special assessments over the amount imposed on the Board’s discretion, the matter must be put to the membership for approval. A quorum of the membership must participate in the vote. A quorum is defined as more than 50% of the owners.

A majority of the quorum must approve any increase over the discretionary limits placed on the Board. Emergency Assessments. Another category of assessment is known as an emergency assessment. There are virtually no restrictions on the Board’s discretionary ability to raise assessments where an “emergency situation” is present. An emergency situation is any one of the following: (1) an extraordinary expense required by an order of a court, (2) an extraordinary expense necessary to repair or maintain the common interest development or any part of it for which the Association is responsible where a threat to personal safety on the property is discovered, (3) an extraordinary expense necessary to repair or maintain the common interest development or any part of it for which the association is responsible that could not have been reasonably foreseen by the Board in preparing and distributing the pro forma operating budget. In order to impose an emergency assessment, the Board must pass a resolution containing written findings as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process. The resolution must be distributed to the members with the notice of the assessment. Experience shows, however, that imposition of an emergency assessment on an unsuspecting membership will cause political turmoil that can overshadow the pressing need for which the funds are being raised.

Funding From Within the Association: Non-Assessment Options In recent years, some associations, by necessity, have become quite creative in managing their cash flow and making their finances meet pressing needs. An obvious resource that is often the first utilized is reserves. An association may borrow (“in-house”) from reserve funds. (You must comply with Civil Code Section 5515). Another source of funds may be a conventional loan secured by reserves. This has the effect of freeing up cash in the form of a loan and locking up some

reserves for the longer term. Typically there is a shortfall between the amount paid for the loan and the amount earned on the reserve, so this option is not widely used. Another resource which is now gaining wider acceptance is a conventional loan secured by the association’s future assessment stream.

Identify Applicable Statutes of Limitations When dealing with a potentially large construction related problem, the association must ask itself what legal rights may be involved and how long those legal rights will survive while other information is gathered and a plan implemented. The period of time in which an association retains the option of enforcing legal rights is subject to time constraints called statutes of limitation. Statutes of limitation are “window periods” in which an injured or aggrieved party must file suit or be forever barred from seeking recourse in the courts. Generally speaking, these periods commence when the party knows or should have known of the

wrong or injury. Depending on the legal theory applied, these windows close at anywhere from one to four years. The frequently used legal theories of negligence and strict liability lapse three years after the injured party knew or should have known of the problem. Some statutes of limitations are less. The subject of construction defect statutes of limitations (whether original construction or subsequent work) generally requires sorting out a myriad of facts and applying them to complex legal principles. For example, facts which may evidence that the clock has started to run may be found in: (1) references to problems or unbudgeted expenses in the board minutes or manager reports, (2) letters to the developer or builder complaining of problems that should be fixed by them, (3) reports from contractors performing maintenance or repairs for the Association stating that further problems should be addressed, (4) complaints from owners to the association, and (5) meetings with an attorney to inquire as to legal rights. For every general rule, there are nearly always exceptions. Factors which may extend the existing statutes of limitation or start them over again are often

September/ October 2016 | ECHO Journal

narrowly construed by the courts but may include: (1) builder repairs or other work performed to the problem areas, (2) promises by the developer or contractor to repair which are not fulfilled, (3) faulty repairs by the contractor or developer and/or (4) developer control or management of the association over a significant period of time. There may even be different time frames applicable to different problems and to different parties. It is also not at all clear when an association as an entity has notice of a problem, as opposed to members, a manager or a minority of directors. To make matters more complicated, regardless of what “window periods” may have existed earlier on a new project, one general rule for which there are few, if any, exceptions is the ten year cut off for actions for injury to real or personal property arising out of latent defects in the design, planning, or construction of improvements to real property. This ten year time frame does not automatically give an association ten years in which to bring an action, it

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acts to cut off all other rights on the tenth anniversary. This is true whether or not the defects have manifested themselves. Once you are aware of a problem, it is your duty to obtain sufficient information to make informed decisions and act. The legislature and courts have little or no “sympathy” for those who fail to act in a timely fashion, regardless of the reason. Even if your project is more than ten years old, there may be legal rights that need evaluating. For example there may be premature failure of work performed for the association, such as reroofing or other reserve component expenditures. The bottom line is that evaluation of legal rights and how long those rights survive requires the assistance of experienced legal counsel.

Communicate With Your Members

It is extremely important that the association maintain good communications with members. One difficulty is the lack of full information at any particular point in time, especially early in the problem evaluation process. It is often not fully appreciated that informing members of what you do not know can be as important or more important than telling them what you do know. The following could be used to provide you with a structure for your communication memo to owners:

Tell them what you know.

Tell them what you don’t know.

Tell them what you are doing about what you don’t know.

Tell them when you expect to have sufficient information and when the association is

likely to act on the information. As an example and in greatly abbreviated form, such a communication might look like the following: The Association has received complaints from many owners about leaks. Temporary efforts are underway to stop active leaks, but the Association does not know what the underlying problem may be or how widespread it is. The Association has retained an architect to investigate the waterproofing systems. The Association has retained counsel to advise it of what legal rights it may have and how long litigation will remain a funding option. A report from the architect is anticipated in about ninety days. Thereafter, the Association will examine the recommendations and it hopes to act on them at that time. To report a leak, please contact the manager. If you are offering your home for sale, you should consult with your real estate agent regarding appropriate disclosures. The Association will periodically provide you with additional information as it becomes available.

What We Can Do For You:

Providing accurate general information in a timely manner is important to building community and forming the support necessary to see through whatever problem is facing the association. Also, with many associations being targeted by disgruntled buyers for nondisclosure issues, consistent and accurate communication will serve as the best defense against those lawsuits.

In Conclusion Following these five basic principles should give you the tools necessary to develop and implement a course of action which will ultimately result in safe and maintainable buildings that hold their value, as well as provide an attractive and desirable community in which to live. Glenn H. Youngling , Esq. is an attorney with offices in San Rafael whose practice includes a sizeable number of common interest developments. He is a member of the ECHO Legal Resource Panel and a frequent speaker at ECHO seminars. September/ October 2016 | ECHO Journal

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Community Association

Maintenance Manual Supplement: Standards for Residential Construction and Outside Time Limits By Berding | Weil

September/ October 2016 | ECHO Journal

On the one hand, the manual provides some guidance for maintenance, but on the other hand the failure to follow the dictates of the manual can create defenses in favor of the developer when construction defect claims arise. Every member of a board of directors should be aware of not

only these specific duties, but also of the time limits imposed on claims for construction issues. To aid understanding of how the Maintenance Manual prescribed duties dovetail with the protection of association rights we’ve created a Maintenance Manual Supplement listing potential building issues and the time limitations on actions that are brought to preserve those claims. Also listed are the Standards for Residential Construction which must be met by all developers of residential properties sold to the public.

TIME LIMITATION

BUILDING COMPONENT/SYSTEM

STANDARD

1 YEAR from “close of escrow,” defined as either substantial completion or when Developer relinquishes control of Board.

Irrigation Systems and Drainage

Shall operate properly so as not to damage landscaping or other external improvements.

1 YEAR, unless manufacturer has specified longer warranty period.

Manufactured Products

Shall be installed so as not to interfere with the product’s useful life or utility.

1 YEAR from occupancy of adjacent unit.

Noise Transmission

Shall comply with applicable government codes, ordinances and regulations.

2 YEARS from “close of escrow,” defined as either substantial completion or when Developer relinquishes control of Board.

Dryer Ducts

Shall be installed and terminated pursuant to manufacturer installation requirements.

Landscaping Systems

Shall be installed in such a manner so as to survive for not less than one year.

istorically, the CC&Rs for a community association development would simply say that the Association is responsible for “maintenance” of common area. Newer CC&Rs are far more specific and impose detailed (and sometimes costly) inspection and maintenance

obligations on the association; some are also spelled out in a lengthy and complex “Maintenance Manual”.

Wood Posts (untreated) 4 YEARS from “close of escrow,” defined as either substantial completion or when Developer relinquishes control of Board.

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Shall not be installed in contact with soil so as to cause unreasonable decay to wood.

Electrical

Shall operate properly and shall not materially impair the use of the structure by its inhabitants.

Exterior Pathways, Driveways, Hardscape, Sidewalls, Sidewalks and Patios

Shall not contain cracks that display signiﬁcant vertical displacement or that are excessive.

Plumbing and Sewer

Shall be installed to operate properly and shall not materially impair the use of the structure by its inhabitants.

Steel Fences (untreated)

Shall be installed so as to prevent unreasonable corrosion.

FREE Attendance for ECHO HOA Members!

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Monterey Educational Seminar

Landscaping After the Drought Banking for HOAs Short Term Rentals in HOAs

Saturday, October 15, 2016

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Rob Rosenberg and Ian Scott Teresa Powell Melissa Ward, Esq.

Yes, reserve _____spaces for the ECHO Monterey Seminar Amount enclosed: $______(attach additional names) Name: Email Address:

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Phone: Visa/Mastercard No. Exp. Date: Signature: Return with payment to: ECHO, 1960 The Alameda, Ste 195, San Jose, CA 95126 Orders will not be processed without payment in full. Fees for cancelled registrations will not be refunded. Phone: 408-297-3246; Fax: 408-297-3517

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TIME LIMITATION

BUILDING COMPONENT/SYSTEM

STANDARD

5 YEARS from “close of escrow,” defined as either substantial completion or when Developer relinquishes control of Board.

Paint and Stains

Shall be applied in such a manner so as not to cause deterioration of building surfaces for the length of time speciﬁed by the manufacturer.

10 YEARS from substantial completion, or recording of a Notice of Completion, whichever is earlier.

Air Conditioning in Living Spaces

Shall be consistent with the size and efﬁciency design criteria speciﬁed in Title 24 of California Code of Regulations.

Ceramic Tile and Tile Backing

Shall be installed in such a manner that the tile does not detach.

Ceramic Tile and Tile Countertops

Shall not allow water into the interior of walls, ﬂooring systems or other components so as to cause damage.

Decks, Deck Systems, Balconies, Balcony Systems, Exterior Stairs and Stair Systems

Shall not allow unintended water to pass within the systems themselves and cause damage. Shall not allow water to pass into adjacent structures.

Doors

Shall not allow unintended water to pass beyond, around or through the door or its moisture barriers.

Exterior Stucco, Siding, Walls, Framing, Finishes and Fixtures

Shall not allow unintended water to pass into the structure or to pass beyond, around, or through the moisture barriers. Shall not allow excessive condensation to enter the structure and cause damage to another component. Shall not contain signiﬁcant cracks or separations.

Fire Protection

Structure shall be constructed to comply with design criteria of applicable government building codes, regulations and ordinances. Fireplaces and chimneys shall not cause unreasonable risk of ﬁre. Electrical and mechanical systems shall not cause unreasonable risk of ﬁre.

Foundation Systems and Slabs

Shall not allow water or vapor to enter into the structure so as to cause damage to another component. Shall not allow water or vapor to enter the structure so as to limit the installation of ﬂooring material.

Foundations, Load Bearing Components and Slabs

Shall not contain signiﬁcant cracks or signiﬁcant vertical displacement. Shall not cause the structure to be structurally unsafe.

Foundations, Load Bearing Components, Slabs and Underlying Soils 30 echo-ca.org

Shall be constructed so as to materially comply with design criteria set by government building codes, regulations and ordinances for chemical deterioration or corrosion resistance.

TIME LIMITATION

BUILDING COMPONENT/SYSTEM

STANDARD

10 YEARS from substantial completion, or recording of a Notice of Completion, whichever is earlier. (continued)

Hardscape, Paths, Patios, Irrigation Systems, Landscape Systems and Drainage Systems

Shall not be installed in such a way as to cause water or soil erosion to enter into or come in contact with the structure so as to cause damage to another component.

Heating

Shall be installed so as to be capable of maintaining a room temperature of 70 degrees Fahrenheit at a point three feet above the ﬂoor in any living space.

Plumbing Lines, Sewer Lines and Utility Lines

Shall not leak. Shall not corrode so as to impede useful life. Shall be installed in such a way as to allow the designated amount of sewage to ﬂow through system.

Retaining and Site Walls, Associated Drainage Systems

Shall not allow unintended water to pass beyond, around, or through its moisture barriers. Shall only allow intended water to pass beyond, around or through the areas designated by design.

Rooﬁng Materials

Shall be installed so as to avoid materials falling from the roof.

Roofs, Rooﬁng Systems, Chimney Caps and Ventilation

Shall not allow water to enter the structure or pass beyond, around or through its moisture barriers.

Shower and Bath Enclosures

Shall not leak water into the interior of walls, ﬂooring systems, or interior of other components.

Soils

Shall not cause the land upon which no structure is built to become unusable for the purpose represented or for the purpose for which that land is commonly used.

Soils and Engineered Retaining Walls

Shall not cause damage to the structure built upon it. Shall not cause the structure to be structurally unsafe.

Structure

Shall be constructed so as to materially comply with the design criteria for earthquake and wind load resistance set forth in the applicable government building codes, regulations and ordinances. Shall be constructed in such a manner so as not to impair the occupants’ safety because they contain public health hazards.

Windows, Patio Doors, Deck Doors and Related Systems

Shall not allow water to pass beyond, around or through the component or its moisture barrier. Shall not allow excessive condensation to enter the structure and cause damage.

September/ October 2016 | ECHO Journal

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HOA Newsletters: Switching to Email F

or decades, HOA Boards have communicated news and events to their members using a method developed by Johannes Gutenberg in 1439 â€“ the hardcopy newsletter.

By Rich Ellenson

ECHO Journal

ften delivered monthly to the doorstep of every resident, the paper newsletter has reliably provided a snapshot of information for your neighborhood. But we aren’t in 1439 anymore, and there’s an alternative delivery system that is more timely, interactive, and modern

– email newsletters. Why Email Newsletters? In my community of more than 1,000 single-family homes, a monthly, eightpage newsletter is delivered to every home doorstep. While a convenient delivery method for residents, the information may already be as much as two weeks old! Consider our publication timeline for a typical issue.

34 echo-ca.org

Less Design Required

Your production process may be slightly different but the timeline should look familiar: long. In our community, a cadre of volunteers delivers newsletters when time allows, often a week after the issues are given to them. One week for editing and one week for printing/distribution yields a two-week-old newsletter. These baked-in delays can make the newsletter useless for meeting notices, community events, and RSVP requests. No matter the size of your HOA, emailing your newsletter or placing it online can eliminate most of the delays in your publishing schedule and reduce your costs at the same time.

An email newsletter is typically built using a simple vertical template (perhaps you’ve seen ECHO’s) with article placeholders that ask for a headline, article text, and an optional picture or graphic. Time consuming layout work is virtually eliminated because you are not hamstrung to 8.5x11” paper; instead one article simply follows another in a vertical list. The template also formats the headline and article font too. This also allows less computer-savvy community members to assist with design and production – instead of the local MS Publisher, Adobe, or Quark expert shouldering the burden.

No Printing Necessary When the editor has finished adding and editing newsletter content, production is complete. Gone is the delay that stems from sending it to the printer, waiting for copies to be made, and having it delivered to your HOA office. The editor simply presses the send button and off it goes!

Quick Corrections The removal of printing time means if there’s an error in the issue, say the wrong date for a Board meeting, you can instantly email a correction to the community. Also, because you are not tied to a paper format, there’s no minimum article requirements for any issue. For example, if a newsletter is emailed on Monday and then you discover there will be emergency tree trimming on Wednesday, you simply send another newsletter that only discusses tree trimming and voila! – Your community is informed by a one-article newsletter.

Instant Delivery... With a Catch With a finished newsletter in hand, the editor emails it to everyone in the community and everyone is informed instantly. Almost. While a hardcopy lands on every doorstep or appears in every building’s bulletin board, not everyone will see an email newsletter at first. The greatest challenge in adopting email newsletters is gathering residents’ email addresses.

Encourage your HOA’s members to share their email addresses using a few techniques:

If residents are hesitant to go online at all, you could allow them to ask for mailed copies of the newsletter noting the added delay and cost this brings.

• Emphasize how current this newsletter format is, and that it will eventually replace the hardcopy edition entirely.

Interactive Advantages

• Remind residents that their email addresses will not be shared or sold to any outside organization; addresses are solely used for HOA information and emergency notifications. • Provide easy means for signing up such as a form on your HOA’s website or allowing residents to call the newsletter editor to add their addresses for them.

The benefits of publishing an online newsletter go beyond the convenience of quicker editing and faster delivery. An online newsletter allows you to provide hyperlinks for members to make their experience interactive. For example, members could click links to get more information about an event or take them directly to a cited rule. Members may also click the HOA manager’s email address to instantly compose a message instead of having to type out the address printed in a hardcopy version; even the

Some residents may refuse to share their email addresses, so it is a best practice to also post the newsletter on your website. Publishing online removes hardcopy design and delivery delays, but also removes the easy notification of email.

September/ October 2016 | ECHO Journal

smallest steps may stop someone from otherwise sending a message. Depending on your electronic newsletter provider, you may also learn a lot of information about who is viewing the newsletter, what links are clicked, and what methods members are using to get their information. For example, we found members were clicking the HOA manager’s email link at the newsletter’s footer often so we added it to the header for their convenience. We also added links to meeting minutes, our community calendar, emergency services, and annual reports. The amount of feedback about information placement is simply not possible with a hardcopy. When choosing a template, find one that is mobile-friendly. Doing so ensures the information will format to fit on a smartphone’s screen, making all phone numbers and mailing addresses automatically tap-enabled for dialing or mapping directions. We have found that 52% of all electronic newsletter views in our community are done through mobile devices; a number that has grown since changing to a mobile-friendly template.

What Will This Cost? Your savings or costs will vary by the systems already in place for your community. If you already have a website that is updated regularly, you could create your newsletter and post it there in PDF in the hope that members will check it on occasion. If you also collected email addresses, you could attach the newsletter to a regular email and send it to a very long list of addresses, being sure they are in a mailing group listed in the BCC line; however, this is tedious to manage in the long run. The most cost and time effective method is to work with an email newsletter provider (Constant Contact and Mail Chimp are popular choices). Professional newsletter sites enable HOA members to add their addresses through any number of methods, and you simply create and send the newsletter. These sites take care of all distribution needs, allow you to schedule send times, and can provide readership statistics. After a free introductory period, these sites cost about $20 per month and may increase in cost based on your readership size, file storage needs, advanced design requirements, social media integration features, and improved technical support.

Legal Requirements An Association is not required by law to send a newsletter to homeowners, but newsletters do help members stay informed of events, remind them of 36 echo-ca.org

community rules, and offer neighborhood updates that can’t be found in the meeting minutes. Plus, most people view newsletters as friendly and more accessible than dry meeting minutes or long Board meetings. Do not automatically rely only your email newsletter to provide notices required by the Davis-Stirling Act. Meeting notices and annual disclosures may be provided by email only if the recipient consents in writing.

Long-term Communications Plan Using an electronic newsletter instead of a hardcopy edition is one of several steps you can take to improve and update communications between the HOA Board and homeowners. Other avenues to explore include social media (and necessary best practices), improving your website design and use, offering official Board member email addresses, online posting of meeting minutes and agendas (not to replace legally required public posting), and establishing publication and advertisement policies. Improved HOA communication yields greater Board transparency that results in a more involved and aware community. And a more involved and aware community is best for everyone.

Rich Ellenson is an ECHO Member, Communications Chairperson, and Board member for an HOA with more than 1,000 homes in Concord, CA. He consults and advises HOAs on improving communications between their Boards, management, and residents.

ECHO event calendar

RESOURCE PANEL CALENDAR ECHO Resource Panels meet during lunch on weekdays to enable managers, professionals and board members to hear about important topics presented by experts in the industry, and share experiences and issues. The meetings are open to all ECHO members, and those interested in learning about ECHO, offered in a casual atmosphere where the cost of attendance is the price of your lunch. The sessions last about an hour and a half. Check-in with the ECHO Panel Secretary for details and to register.

Please join us: DATE

PANEL LOGISTICS

PANEL SECRETARY

TOPIC

Sept. 1, 11:45 a.m.

North Bay Resource Panel Contempo Marin Clubhouse 400 Yosemite Dr., San Rafael

Denise Wolford, CCAM 415-458-3537

TBD

Sept. 13, 11:45 a.m.

Central Coast Resource Panel The Back Nine Grill, 555 Hwy 17 (Pasatiempo Exit), Santa Cruz

Ann Thomas 800-537-4098 ext.7530

Vendor Relationships

Sept. 15, 11:45 a.m.

Wine Country Resource Panel Serv-Pro 377 Blodgett St., Cotati

Pam Marsh 415-686-9342

Roofing/Insulation

Oct. 12, 11:45 a.m.

South Bay Resource Panel Heritage Bank of Commerce Kiosk 150 Almaden Blvd, San Jose

Ann Thomas 800-537-4098 ext.7530

Building Community

Oct. 14, 11:45 a.m.

East Bay Resource Panel Massimo Restaurant 1604 Locust St., Walnut Creek

Cindy Wall, PCAM 925-830-4580

Drones

Nov. 3, 11:45 a.m.

North Bay Resource Panel Contempo Marin Clubhouse 400 Yosemite Dr., San Rafael

Pam Marsh 415-686-9342

TBD

Nov. 8, 11:45 a.m.

Central Coast Resource Panel The Back Nine Grill, 555 Hwy 17 (Pasatiempo Exit), Santa Cruz

Ann Thomas 800-537-4098 ext.7530

TBD

REGULARLY SCHEDULED RESOURCE PANEL MEETINGS PANEL

MEETING

LOCATION

Maintenance

First Wednesday, Even Months

ECHO Office, San Jose

North Bay

First Thursday, Odd Months

Contempo Marin Clubhouse, San Rafael

East Bay

Second Friday, Even Months

Massimo Restaurant, Walnut Creek

Accountants

Second Monday, Odd months

Scottâ€™s Seafood Restaurant, Oakland

Central Coast

Second Tuesday, Odd months

The Back Nine Grill, Santa Cruz

South Bay

Second Wednesday, Even Months

TBD

Wine Country

Third Thursday, Odd months

Serv-Pro, Cotati

Legal

Quarterly

Varies

38 echo-ca.org

ECHO honor roll

ECHO HONORS VOLUNTEERS Resource Panel Chairs

Seminar Speakers

Recent Contributing Authors

Accountant Panel Adam Haney, CPA 888-786-6000 x317

East Bay Marion Aaron, Esq. Charlotte Allen William Countner Marc Dunia Stephanie Hayes, Esq. David Hughes David Levy, CPA Alex Noland, Esq. Jordan O’Brien, Esq.

August 2015 Tyler P. Berding, Ph.D., J.D. Chris Sigler, B.S.C.E., C.D.T. Charlotte Allen Julie Adamen Robert Booty

Central Coast Panel John Allanson 831-685-0101 East Bay Panel Cindy Wall, PCAM, CCAM 925-830-4580 Legal Panel Mark Wleklinski, Esq. 925-280-1191 Maintenance Panel Judy O’Shaughnessy 408-839-6926 North Bay Panel Diane Kay, CCAM 415-846-7579 Stephany Charles, CCAM 415-458-3537 South Bay Panel Susan Hoffman, PCAM 510-683-8614 Wine Country Panel Pam Marsh 415-686-9342 Legislative Committee Paul Atkins Jeffrey Barnett, Esq. Sandra Bonato, Esq. Jerry Bowles Oliver Burford Joelyn Carr-Fingerle, CPA Chet Fitzell, CCAM John Garvic, Esq., Chair Roy Helsing Geri Kennedy, CCAM Wanden Treanor, Esq.

Annual Seminar Julie Adamen John Allanson Tyler Berding, JD, PhD William Countner Rolf Crocker Marc Dunia Lisa Esposito John Garvic, Esq. Sandra Gottlieb, Esq. David Hughes Michael Hughes, Esq. David Levy, CPA Julie Mouser, Esq. Sharon Pratt, Esq. Ann Rankin, Esq. Rob Rosenberg Deon Stein, Esq. Steven Weil, Esq.

September 2015 Charlotte Allen Brenda L. LeClair, CMCA Debra J. Oppenheimer, Esq. Steve Castle, CMCA, PCAM John Schneider October 2015 Karl Lofthouse Susan Green Thomas J. Connelly Adrian Adams, Esq. Julie M. Mouser, Esq. Nov/Dec 2015 Beth A. Grimm, Attorney Karl lofthouse James H. Ernst, CPA, MS-Tax Tim Polk Julie Mouser, Esq. Jan/Feb 2016 Beth A. Grimm, Attorney Matt Haulk, Esq. Larry J. Pothast, PCAM, CCAM David J. Larsen, Esq. Jeffrey A. Barnett, Esq. March/April 2016 Julie Adamen Neal Back, CPA Harvey Radin David Kuivanen, AIA Joel Meskin, Esq., CIRMS, CCAL May/June 2016 Steven S. Weil, Esq. Graham Oliver Wayne Scott Steve Saarman Jordan M. O’Brien July/August 2016 Joel W. Meskin, Esq., CIRMS Victoria Cohen Mary Anne Sayler Richard Tippett Tom Fier, Esq.

40 echo-ca.org

ECHO Professional Directory

Need Expert Help? Check Out ECHOâ€™s Directory All of our Professional ECHO Members specialize in services for HOAs. Choose from more than 250 companies in over 50 categories including: 73 MANAGEMENT COMPANIES 30 ATTORNEYS 21 ACCOUNTING FIRMS VISIT THE PROFESSIONAL DIRECTORY ON THE ECHO WEBSITE!

www.echo-ca.org

Accountants/CPAs Animal Control Services Arbitrators & Mediators Architects/Architectural review Asphalt Repair & Paving Assessment Collection Services

Attorneys Banking Services Community Association Consulting Concrete Products & Services Concrete Repair Construction Manage- ment Consultants Consulting Electrical Services Fencing Gates & Doors Financial Services Fire Alarms Fire Sprinklers General Contractors Gutters Insurance Services Janitorial & Cleaning Services

Landscape Design Services Landscape Maintenance Leak Detection Maintenance & Repairs Management Company Services Masonry Other Paint Manufacturer & Consultant Painting Contractors Pest Control Services Plumbing & Boiler Repairs Pool Maintenance & Services Pool Repair & Resurfacing Services

Power Washing & Steam Cleaning Reserve Study Firms Restoration & Remediation Services Retaining Walls Roofing Contractors Roofing Products Security Services & Systems Sprinkler Repair Towing & Parking Services Tree Services Utility Auditors Water Conservation Water Management & Services Waterproofing Window

September/ October 2016 | ECHO Journal

BOOKSTORE The ECHO Bookstore is your source for publications providing essential information for HOA Board Member service obligations. Order online at echo-ca.org or fill out form on the facing page.

NEW ON TI I D E

Robert’s Rules of Order Member Price: $7.50 Non-Member Price: $12.50 A step-by-step guide to the rules for meetings of your association, the current and official manual adopted by most organizations to govern their meetings. This guide will provide many meeting procedures not covered by the association bylaws or other governing documents.

Home and Condo Defects Member Price: $12.95 Non-Member Price: $17.95 Construction defect litigation can be confusing, expensive and fraught with legal pitfalls. This eye-opening guide, written by accomplished construction-defect attorneys, is an essential tool for board members who need to understand the legal process.

42 echo-ca.org

2016 Condominium Greenbook Member Price: Non-Member Price:

$17.00 $25.00

This companion to the Condominium Bluebook is an in-depth guide to all aspects of association finances, including accounting methods, financial statements, reserves, audits, taxes, investments and much more. Not for the accounting novice, this is a tool for the treasurer or professional looking for specific information about association finances.

Board Member Handbook Member Price: Non-Member Price:

$15.00 $25.00

This publication is the essential guidebook for HOA Board members, dealing with governance, finances, insurance and maintenance issues. Revised and updated in June 2012.

Construction Defect Claims Member Price: Non-Member Price:

$19.95 $25.00

New buildings can conceal extensive faults. It’s a board’s worst nightmare—rainstorms damage buildings and bring owner complaints. Is legal action necessary? With this new book, you’ll learn about the resolution process for construction problems, and how to handle complex claims.

Condominium Bluebook 2016 Edition Member Price: $17.00 Non-Member Price: $19.95 This well-known compact guide for operation of common interest developments in California now includes a comprehensive index of the book and a chapter containing more than 200 frequentlyasked questions about associations, along with succinct answers.

ciation o s s A unity Book Comm Statute dition 2014 E

Publications to answer your questions about common interest developments Order Online at www.echo-ca.org

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September/ October 2016 | ECHO Journal

directory updates

All current listings may be found in our Professionals Directory available online at www.echo-ca.org.

New Members K&D Landscaping, Inc. 62-C Hangar Way Watsonville, CA 95076 Contact: Justin White Tel: (831) 728.4018

Barcode Automation, Inc. 207 N. Moss Rd., Suite 105 Winter Springs, FL 32708 Contact: Ryan Waxberg Tel: (407) 327.6172

Become an ECHO Professional Member and receive the benefits of membership. To learn more, visit our membership page at www.echo-ca.org

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advertiser index

about ECHO

Ace Property Management..................17 www.acepm.net

Heritage Bank of Commerce.................9 www.heritagebankofcommerce.com

Applied Reserve Analysis....................16 www.appliedreserveanalysis.com

Hughes Gill Cochrane, P.C....................17 www.hughes-gill.com

Barcode Automation, inc. ...................39 www.Barcode-Automation.com

Levy, Erlanger & Company..................37 www.hoa-cpa.com

Benjamin Moore Paint & Company...21 www.benjaminmoore.com

Pacific Utility Audit, Inc. .....................25 www.PacificUtilityAudit.com

Berding Weil..........................Back Cover www.berding-weil.com

PML Management Corporation..........21 www.pmlmanagement.com

Bridgeport Co........................................13 www.bridgeportco.com

R.E. Broocker Co...................................36 www.rebroockerco.com

Community Management Services......8 www.communitymanagement.com

Rebello’s Towing...................................24 www.rebellos.net

Cornerstone Community Management.........................................10 www.cornerstonemgt.biz

Statcomm..............................................11 www.statcomminc.com

Eugene Burger Management..............22 www.ebmc.com Forster Construction Management.....20 www.forstermanagement.com

Union Bank.............................................9 www.HOAbankers.com White & MacDonald, LLP....................25 www.wm-llp.com

WHAT IS ECHO? Serving Homeowners to Build Strong Community Associations The Educational Community for Homeowners (ECHO) is a nonprofit membership corporation dedicated to assisting California homeowner associations. ECHO provides help to homeowner associations on many fronts: finances, legal issues, insurance, maintenance and management. Members receive help through conferences, trade shows, seminars, online education, a monthly full-color magazine and discounted publications.

Who Should Join ECHO? If your association manages condominiums or a planned development, it can become a member of ECHO and receive all of the benefits designated for homeowner associations.

Benefits of Association Membership • Subscription to bi-monthly magazine • Members-only online education • Updates to the Association Statute Book • Frequent educational seminars • Special prices for CID publications • Legislative advocacy in Sacramento

ECHO Membership Dues Association Membership HOA 2 to 25 units...........................$130 HOA 26 to 50 units.........................$180 HOA 51 to 100 units.......................$275 HOA 101 to 150 units.....................$375 HOA 151 to 200 units.....................$450 HOA 201 or more units..................$575 Professional Membership.................$500 Association Management Membership.......................................$500 Individual Membership.......................$75 Journal Subscription............................$15

How Do You Join ECHO?

Office 1960 The Alameda, Suite 195 San Jose, CA 95126-2308

Over 1,700 members benefit each year from their membership in ECHO. Find out what they’ve known for years by joining ECHO today. To apply for the membership, sign up online at www. echo-ca.org. For more information about membership and ECHO, call us at 408-297-3246 or visit the ECHO website.

August2014 2013 || ECHO ECHOJournal Journal February ECHO Journal

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legislation at a glimpse

Catch up on 2016 Legislative Session! The bills below represent the ECHO Legislative Committee’s review of the 2500 bills introduced in Sacramento this year. Check the website for the latest developments, as all bills must pass out of both houses by August 31st. September 30th is the deadline for the Governor to sign or veto legislation. For the most up-to-date information, visit the HOA Advocacy section at the ECHO website: www.echo-ca.org/hoa-advocacy

Current Legislation Bill Information

Summary

AB 587

Mobilehomes – Nonpayments or Late Payments

Support Status: In Senate Appropriations

For certain applicants who wish to register or transfer registration of a manufactured home or mobilehome prior to December 31, 2018, and meet other requirements, would require the department to waive all outstanding charges assessed by the department prior to the transfer of title of the manufactured home or mobilehome, release any lien imposed with respect to those charges, issue a duplicate or new certificate of title or registration card, and amend the title record.

AB 1720

Homeowner Attorneys at Board Meetings

Oppose

Current law requires the board to permit any member to attend and speak at any meeting, except for executive session meetings. This bill would require the board to permit a person (including an attorney) who represents a member to attend board meetings, and would require written notice to be given, as specified. ECHO recognizes the potential pitfalls of attorney involvement at board meetings, and we are watching this bill very closely.

Author: Chau

Author: Wagner Status: In Assembly Housing and Community Development, Failed Passage.

AB 1736

Tax Deduction – Homeownership Savings Accounts

Support

This bill would provide that a qualified taxpayer may withdraw amounts from a homeownership savings account to pay for qualified homeownership savings expenses, and would provide that any amount withdrawn from that account that is not used for these expenses would be included as income for that taxpayer.

Author: Steinorth Status: In Assembly Appropriations, 2-Year Bill

AB 1799

Uncontested Elections

Oppose Unless Amended

Current law requires an association to use an inspector of elections and secret ballots (among other requirements) for assessments legally requiring a vote, election and removal of directors, amendments to the governing documents, or the grant of exclusive use of common area. This bill would additionally except from those election requirements an election of directors if the election is uncontested, as defined.

Author: Mayes Status: In Senate Judiciary

AB 1963

Construction Defect Claim Conditions

Watch

Current law specifies conditions to be met before an association may file a complaint for damages against a builder, developer, or general contractor based upon a claim for defects in the design or construction of the common interest development. The law is set to expire on July 1, 2017. This bill would delete the inoperative and repeal dates of the above described requirement.

Author: Calderon Status: Signed by Governor

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legislation at a glimpse

Current Legislation (continued) Bill Information

Summary

AB 2362

Pesticide Application & Notice

Watch

This bill would expand upon the 2016 law concerning notice requirements for the application of pesticides in common interest developments. It would require an association to provide notice to an owner or tenant of a separate interest, and under certain circumstances to owners or tenants of adjacent separate interests, if pesticide is to be applied without a licensed pest control operator. The bill would also authorize an owner or occupant to agree to immediate pesticide application. The bill would also permit the notice to be posted, as specified, after the pesticide application if the pest poses an imminent threat to health and safety.

Author: Chu Status: Senate Third Reading

SB 477

Mobilehomes â€“ Property Tax Postponement

Support

This bill would authorize an owner of a mobilehome , who is a qualified person, to seek postponement of ad valorem taxes under provisions similar to other owners of real property.

Author: Leyva Status: In Assembly Appropriations

SB 918

Member Contact Information for Notices

Support

This bill would require the owners of the separate interests of a common interest development to annually provide the association with specified written information for the purpose of receiving notices from the association.

Author: Vidak Status: Assembly Second Reading, Consent Calendar

SB 944

Housing Omnibus Bill

Support

The Annual Housing Omnibus Bill cleans up errors and makes non-substantive changes in the law. ECHO has proposed several amendments to correct errors and improve clarity within the statute..

Author: Committee on Transportation & Housing Status: In Assembly Appropriations

SB 1431

Service of Summons or Subpoena

Watch

This bill would require an investigator who is employed by an office of a district attorney or a public defender, upon the display of proper identification, to be granted access to a gated community for the sole purpose of performing lawful service of process or service of a subpoena.

Author: Morrell Status: Signed by Governor

What Do You Think? Read more about HOA legislation on our website or visit our Facebook page and join the discussion. On the web: echo-ca.org/hoa-advocacy, On Facebook: facebook.com/echoorg

September/ October 2016 | ECHO Journal