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San Diego Condo Q and A
Condominium Questions and Answers
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Condo Q and A directors and their responsibilities and liabilities, permissible and impermissible restrictions in CC&Rs, the ability of a homeowners’ associations to sue or be sued, special rules that apply when a unit in a common interest development is transferred, and selected other topics. Q 1. What is the law that governs common interest developments? A The law governing common interest developments is called the "Davis-Stirling Common Interest Development Act" (The "Act"). It is codified in California Civil Code (Civ. Code) Sections 1350 through 1376. In addition, common interest developments organized as nonprofit mutual benefit corporations are also governed by California Corporations Code Sections (Corp. Code) 7110 through 8910. The following is a chart summarizing some of the statutory definitions found in the Act.
Q 2. What are the "governing documents"? A The "governing documents" are the declaration of covenants, conditions and restrictions (commonly known as the CC&Rs), bylaws, operating rules of the homeowners’ association, articles of incorporation, articles of association and any other documents which govern the operation of the common interest development or its homeowners’ association. (Civ. Code § 1351(j).) Q 3. What are the CC&Rs? A This is a document which contains, among other things, a legal description of the common interest development, the nature of the development (i.e., condominium project, stock cooperative or other type), the name of the homeowners’ association, and the restrictions on the use or enjoyment of any portion of the development. The CC&Rs usually also contain the basic rights and obligations of the owners and the homeowners’ association with respect to dues, assessments, maintenance, and other basic items. (Civ. Code §§ 1351, 1353.) Q 4. What is a community association"? A A community association is a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development. Other names for this type of association are "owners’ association" or "homeowners’ association" and this Q&A will use the term "homeowners’ association" or "association" interchangeably. The Civil Code requires that all common interest developments must be managed by a homeowners’ association. See Part III for the duties and responsibilities of the association and its directors. (Civ. Code § 1363.) Q 5. What is a condominium plan? A A "condominium plan" is a plan consisting of:
Q 6. What is the common area? A The "common area" is the entire common interest development except the separate units of the individual owners. Typical examples of common areas include pools, spas, and gardens. (Civ. Code § 1351(b).) Q 7. What is an exclusive use common area? A An "exclusive use common area" is a portion of the common area designated by the CC&Rs for the exclusive use of one or more, but fewer than all, of the owners of the separate interests. It is "appurtenant" to a separate interest, which means a transfer of the owner’s separate interest will also transfer the exclusive use common area. Examples include the right to use parking spaces, a patio, or balcony, and external and internal telephone wiring. (Civ. Code § 1351(i).) Q 8. What does the owner of a separate interest or unit possess? A The term "separate interest" has the following meanings: 1) In a community apartment project, separate interest means the exclusive right to occupy an apartment. 2) In a condominium project, separate interest means an individual unit. 3) In a planned development, separate interest means a separately owned lot, parcel, area, or space. 4) In a stock cooperative, separate interest means the exclusive right to occupy a portion of the real property. (Civ. Code § 1351(l).) II. Creation of Common Interest Developments Q 9. How is a common interest development created? A 1) The recording of a declaration of covenants, conditions and restrictions (CC&Rs); 2) The recording of a final subdivision map or parcel map, if mandated by the Subdivision Map Act; and 3) The recording of a condominium plan for a condominium project, if applicable. 4) In addition, compliance with the requirements of the Subdivided Lands Act and local ordinances may be necessary. (Civ. Code § 1352.) Q 10. Must a homeowners’ association be incorporated? A No, although most of them are. In fact, many of them are incorporated as nonprofit mutual benefit corporations. Even if an association is not incorporated in any way, however, the association automatically retains the powers of a corporation, unless the CC&Rs provide otherwise. (Civ. Code § 1363.) A An amendment to the CC&Rs requires: 1) The approval of the percentage of owners required by the governing documents; 2) A writing executed either by the officer designated in the governing documents or by the association, or by the president of the association if no one is so designated, acknowledging the owners’ approval of the amendment; and 3) Recording the document in each county in which a portion of the common interest development is located. (Some county recorders take the position that the names of the owners of property in the amendment must be the same names as those in the original recording.) (Civ. Code § 1355, Gov't Code § 27288.1.) However, if the CC&Rs require more than a 50 percent vote in favor of an amendment, the association, or any owner of a separate interest, may petition the superior court of a county in which the common interest subdivision is located for an order reducing the percentage of the affirmative votes necessary for an amendment. (Civ. Code § 1356.) Q 12. What are the powers and duties of a homeowners’ association? A A homeowners’ association manages the common interest development. The association, whether incorporated or unincorporated, may exercise many of the powers granted to a nonprofit mutual benefit corporation. The powers and duties are typically enumerated in the governing documents (e.g., bylaws, articles of incorporation or association, CC&Rs). (Civ. Code § 1363.) duty to maintain the common areas, financial planning duties, architectural control, duty to protect and insure the association assets, duty to enforce the CC&Rs, duty to collect assessments, and duty to conduct meetings. (Civ. Code § 1365.5.) Q 13. What is the principal source of income for a homeowners’ association? A The principal source of income for a homeowners’ association is assessments levied on its members who own interests in the development. Ordinarily, the CC&Rs provide procedures for calculating and collecting regular assessments. (Civ. Code § 1366.) Q 14. How are these regular assessments allocated among the association members? A The governing documents of a homeowner’s association must establish a system for allocating the assessments. For example, in a condominium project, a large unit may be more expensive for the association to maintain than a small unit. Therefore, if provided in the governing documents, the owner of a larger unit may find him/herself paying a higher assessment than the owner of a smaller unit. (10 Q 15. May regular assessments be increased each year? A Yes. Even if the governing documents indicate otherwise, however, the homeowners’ association may not increase the annual regular assessment by more than 20 percent over the regular assessment for the preceding fiscal year without the approval of owners constituting a quorum (more than 50 percent of the owners of the association). (Civ. Code § 1366(b).) However, the limits stated above do not apply to defined "emergency situations." (See Question 16.) Q 16. What "emergency situations" would allow an association to increase assessments without complying with the restrictions specified in Question 15? A "Emergency situations" are defined to be any one of the following:
Q 17. May a homeowners’ association levy assessments for special expenses? A Yes. An association may periodically levy special assessments to make improvements to the structure of a building (e.g., a clubhouse roof), to pay for extraordinary expenses, or to make up for a shortage in the association’s reserves. The homeowners’ association may not impose special assessments amounting to more than 5 percent of the association’s budgeted gross expenses for that year without the approval of a majority of the owners. (Civ. Code § 1366.) Q 18. Must a homeowners’ association hold membership meetings? A Yes. According to regulations of the Department of Real Estate (DRE), the CC&Rs or the bylaws must provide for such meetings, at least annually. These membership meetings must be held within the development itself or as close to it as possible. However, once the developer has sold his/her last unit and the DRE no longer is regulating the development, regular meetings must be held with the frequency and at the times and dates that are in accordance with the bylaws. In any event, a meeting must be held in any year in which directors are to be elected at a regular membership meeting. The meeting location may be at a place "within or without the state" as stated in the bylaws. If none is stated, then the meeting must be held at the corporation’s principal office. (10 Cal Code Regs § 2792.17(a), Corp. Code § 7510.) Any member of an association may petition the local superior court for an order to hold a meeting if the association fails to call one within 60 days of the meeting date provided for in the governing documents. The petitioner must give the corporation adequate notice and a reasonable opportunity to be heard, however. (Corp. Code § 7510(c).) right to speak but are subject to any reasonable time limit imposed by the association. consider litigation, matters that relate to the formation of contracts with third parties, member discipline, personnel matters, or to meet with a member, at the member's request, regarding the member's payment of assessments. However, all matters discussed in the closed meeting must be recorded in the minutes of the subsequent open meeting and made available to the unit owners. (Civ. Code § 1363.05.) Q 20. Must owners have voting rights in the homeowners’ association? A Yes. The governing documents (such as articles of incorporation or bylaws) must provide for member voting rights. (Corp. Code § 7610.) Q 21. What rights does a homeowners’ association member or governing body member (i.e., officer or director of the association) have to inspect the books, records, and physical properties of the association? A A governing body member has a right to inspect, at any reasonable time, all the books, records, and physical properties of the association. Such a member (director/officer) is not required to present a written demand for inspection. (Corp. Code § 8334, 10 Cal Code Regs § 2792.23(c)). In a 1995 case, the court held that a director did not have an absolute right of inspection and the rights of inspection must be balanced against members’ "legitimate expectations of privacy." (Chantiles v. 4th 914 (the director wanted to determine who voted against him)) On the other hand, an association member who is not on the governing body (i.e., not on the board of directors) has the right to review the association documents only if the inspection is "related" to his/her interest as a member. In addition, written notice must be given to the association before this type of inspection may occur. (Civ. Code § 1363(f), Corp. Code § 8333.) Q 22. May a homeowners’ association discipline a member who violates a provision of a governing document? A Yes. In order to do so, however, the governing documents must include specific provisions authorizing the governing body to impose a fine, suspend common area use rights, or otherwise discipline a member for failing to abide by its provisions. Further, before actually imposing a particular penalty, such as a fine, the board of directors must adopt a schedule of fines or penalties and must distribute it personally or by first class mail to each member. (Civ. Code § 1363(g).) Q 23. May a homeowners’ association impose or collect an unreasonable fee or assessment? A No. An association cannot impose or collect a fee or assessment that exceeds "the amount necessary to defray the costs" of levying. (Civ. Code § 1366.1.) Q 24. May a homeowners’ association impose late charges? A Yes. A homeowners’ association may impose late charges not exceeding 10 percent of the delinquent regular or special assessment, or $10, whichever is greater, if the assessment remains unpaid 15 days after it is due. If the CC&Rs specify a longer period of time or a lower fine for delinquent payments, the CC&Rs will apply. Associations may also recover "reasonable" collection costs, including attorney’s fees. In addition, if an assessment remains unpaid 30 days or more after the due date, the association can collect interest on "all sums," including the delinquent assessment, reasonable costs of collection and late charges, limitations. (Civ. Code § 1366(e).) Q 25. Under what circumstances may a homeowners’ association impose a lien on a member’s interest? A An association has the authority to impose a lien on the property of a member who fails to pay regular or special assessments. However, the assessment, costs of collection, late charges, and interest do not become a lien on the owner’s separate interest until the association records a notice of delinquent assessment. Penalty assessments for violation of association rules cannot become a lien. (Civ. Code § 1367.1.) must contain various statements. The list of items can be found in Civil Code Section 1367.1. Q 26. What are the collection choices available to a homeowners’ association if a unit owner refuses to pay assessment dues in response to a notice of delinquent assessment? A An association may elect any of the following alternatives:
Q 27. Must a homeowners’ association board of directors oversee the financial affairs of the association? A Yes. And unless the governing documents impose more stringent standards, such overseeing by the board of directors must include a review, on at least a quarterly basis, of the following:
The requirement of quarterly reviews of financial material does not apply in some circumstances where an association does not have a "common area." (Civ. Code § 1365.5.) Q 28. Is the homeowners’ association responsible for repairing, replacing, or maintaining the common areas? A Yes. Unless provided otherwise in the CC&Rs, the homeowners’ association is responsible for repairing, replacing or maintaining the common areas, other than the exclusive use common areas. (Civ. Code § 1364.) The Court has held in Lamden v. La Jolla Shores Clubdominium Homeowners Ass’n, (1999), 21 homeowner disagrees with the association’s decisions on how to handle maintenance decisions, the courts will defer to the authority and presumed expertise of a homeowner’s association in making those decisions. Q 29. Must the homeowners’ association prepare and distribute financial statements? A Yes. Unless the CC&Rs impose more stringent standards, the association must prepare and distribute to its members a "formal operating budget" not less than 45 days nor more than 60 days before the beginning of the fiscal year. The budget must contain all of the following information: B. A summary of the association’s reserves based on a recent review or study done under including in bold type all of the following: 1) The current estimated replacement cost, estimated remaining life, and estimated useful life of each major component; 2) At the end of the fiscal year: a) The current estimate of the amount of cash reserves necessary to repair, replace, restore or maintain the major components; and b) The current amount of accumulated cash reserves necessary to repair, replace, restore or maintain the major components; 3) The percentage that the current amount of accumulated cash reserves to repair the major components is of the current estimate of what such cash reserves should be. C. A statement as to whether the board of directors has determined or anticipates that the levy of special assessments will be required to repair or restore any major component or to provide adequate reserves therefor; D. A general statement addressing procedures used for the calculation and establishment of those reserves to defray future repair, replacement, or additions to those major components that the association must maintain; E. A review of the financial statement done in accordance with "generally accepted accounting principles" by a licensee of the California State Board of Accountancy and distributed within 120 days after the close of any fiscal year in which the gross income to the association exceeds $75,000. (Civ. Code §§ 1365(a)(b).) Summary of the pro forma operating budget Instead of the "formal operating budget," an association may instead distribute a summary of the pro forma operating budget accompanied by a written notice in at least 10-point bold type that the complete statement is available at the business office e of the association or other location and copies can be made, if requested, at the association’s expense. If a member requests a copy of the budget by mail the association must send it by first-class mail within 5 days after receipt. (Civ. Code § 1365(c).) Policies and practices enforcing liens Furthermore, the association must annually provide during the 60-day period before the beginning of the fiscal year a statement describing its policies and practices in enforcing lien rights or other remedies for default in the payment of its assessments against its members. (Civ. Code § 1365(d).) Summary of association insurance policies Finally, the association must provide a summary of the association’s property, general liability, and earthquake and flood insurance policies, which must be distributed within 60 days prior to the beginning of the association’s fiscal year. (Civ. Code § 1365(e).) Q 30. What powers do architectural review boards possess? A The governing documents of most common interest subdivisions require an architectural committee or review board to be formed. Its goal is to maintain the appearance and value of the project by establishing architectural standards and reviewing all proposed changes in relation to those standards. Q 31. Are there any limits on an architectural review board’s authority? A Architectural review boards in general have a great deal of freedom to make decisions concerning the architectural design or aesthetics of homeowners’ units. However, the board may not exceed the authority provided in the governing documents. (Clark v. Rancho Santa Fe Ass’n, (1989) 216 Cal. App. 3d 606.) Q 32. Should a homeowners’ association carry an insurance policy for its directors and officers? A Yes. Association directors and officers who fail to obtain adequate insurance may be exposed to personal liability. Q 33. What other types of insurance coverage should an association have? A An association should carry a master policy covering all the common areas. Specific risks to be insured against should be discussed with the association’s attorney and/or insurance broker. Coverage to consider includes: fire, and vehicle. Association directors and officers have a fiduciary duty to insure and protect association assets. Failure of their duty to procure insurance is not typically covered by Errors and Omissions ("E&O") or Directors and Officers ("D&O") insurance. In order for a director or officer to have the statutory protection against tort liability, the association must carry general liability insurance (covering the association and the individual directors and officers) in the following amounts (at a minimum): $500,000 coverage if there are 100 or fewer separate units in the development or $1,000,000 coverage if there are more than 100 separate units in the development. (Civ. Code § 1365.7.) In addition, in order for the homeowners to have statutory protection against tort liabilities (accidents in the common areas), the association must carry general liability insurance in the following amounts (at a minimum): $2,000,000 if development has 100 or fewer units and $3,000,000 if development has more than 100 units. (Civ. Code § 1365.9.) Q 34. Should individual unit/lot owners obtain their own insurance? A Yes. Each unit/lot owner should obtain insurance covering risks that are not covered by the association’s policies. Each unit/lot owner should consider an emergency shelter rider to cover additional living expenses in the event of damage to his/her unit. In addition, the individual unit/lot owner should have coverage for his/her own "tortious" injuries to other persons or property, including the unit owner’s negligence and that of members of his/her family, household, and pets. Owners should also consider fire and extended coverage for the interior and contents of their units. Q 35. Should a homeowners’ association and its members obtain the services of an insurance expert? A Yes. Because of the specialized nature of condominium insurance, the association should utilize the services of an experienced insurance broker. IV. Directors’ Duties, Liabilities and Insurance Q 36. What are all the duties of a director of a homeowners’ association? A Directors have the following duties:
Q 37. What is the standard of care to determine a director’s liability? A A director must perform his/her duties:
On occasion, the courts have imposed a greater duty of care on the association and its’ governing board equivalent to the duty of a landlord. In Francis T. v. Village Green Owners Ass’n, (1986) 42 iable for the rape of a homeowner in her unit when it had knowledge of a dangerous lighting problem (lack of sufficient lighting) and refused to do something about it in a timely manner. In Lamden v. La Jolla Clubdominium Homeowners Ass’n, (1999) 21 held that the courts should give judicial deference to maintenance decisions made by the board of directors on behalf of the homeowners’ association. This standard is equivalent to the prudent business judgment rule. Q 38. May a director rely on the reports or opinions of staff or outside experts when discharging his/her duties? A Yes. A director can rely on the reports or opinions of staff or outside experts when discharging his/her duties unless there are circumstances or conditions necessitating further inquiry. (Corp. Code § 7231(b).) Q 39. Are there any limitations on the personal liability of a volunteer officer or director for injury to a third party? A Yes. Subject to the following limitations, a state statute provides immunity for injuries caused by a volunteer officer or director:
In addition, another statute gives volunteer directors and officers of specified nonprofit organizations protection against claims of negligence within the scope of the person’s duties. The organizations covered under this statute must be organized to provide charitable, educational, scientific, social or other types of public service and be exempt from federal income taxation. Some attorneys argue that because some homeowners’ associations are entitled to file for a federal tax exemption, therefore directors of all such associations are protected. However, other attorneys argue that the protection coverage is not that broad. (Code Civ. Proc. § 425.15.) Another statutory provision provides that no claims can be made against volunteer directors and officers who perform their duties in accordance with the "business judgment rule." This section is limited, however, to trade, professional and labor organizations incorporated as mutual benefit corporations and operated for fraternal, educational and other nonprofit purposes; so homeowners’ associations probably aren’t covered under it. In any event, it is not clear what this section adds to the general protection for director’s or officer’s liability already given by still another statutory provision which immunizes all directors and officers (not just volunteers) from liability based upon an alleged failure to discharge their duties. (Corp. Code §§ 7231(c), 7231.5.) Q 40. Are individual homeowners who are neither officers nor directors liable for injuries suffered by someone in the common area of a common interest development? A No, provided that the association carries the required statutory insurance. In 1992, the in Ruoff v. Harbor Creek Community Ass’n, (1992) 10 association officers and directors from tort liability but did not protect individual homeowners who were sued on the basis that they were owners as tenants-in-common of the common areas. Subsequently, the legislature passed Civil Code Section 1365.9 which shielded the individual homeowners from tort liability when being sued simply because of their ownership interest in the common areas. The statute provides that the injured person must sue the association and not the individual owners. In addition, the association must maintain general liability insurance in the following amounts: $2,000,000 for developments of 100 or fewer separate units and $3,000,000 for developments with over 100 separate units. (Civ. Code §1365.9.) Q 41. May the CC&Rs or homeowners’ association restrict the rental of units in a common interest development? A Maybe. There is no clear answer as to whether the CC&Rs or homeowners’ association may restrict the rental of units. The prevailing California law since 1872, Civil Code Section 711, states, "Conditions restraining alienation, when repugnant to the interests created, are void." Essentially, courts have interpreted this to mean that unreasonable restrictions on the transferability of real property, whether found in CC&Rs or elsewhere, are void. Leasing of real property is a form of transfer. One test which courts have used to determine whether a restriction is unreasonable is to weigh the justification for the restriction against the "quantum of restraint" it causes. This means that courts balance the needs and interests of both sides to determine which is more compelling. There is a 1989 case where a California Court of Appeal upheld the CC&Rs of a publicly subsidized condominium project which did not permit the leasing of the condominium units for a period of ten years. The facts of this case are unique, however, because the project was part of a downtown redevelopment effort to provide replacement dwellings for persons of low and moderate income and the condominiums were sold far below fair market value. Since the intent of the redevelopment effort was to create a stabilized community of owner-occupied dwelling units and to avoid artificial inflation of prices caused by resales by speculators, the court’s ruling in this particular case was in support of a specific public policy. (City of Oceanside v. McKenna,(1989) 215 Cal. App. 3d 1420.) It’s not clear that the holding would be the same if the facts were different, and as yet no court has ruled on the validity of restrictions against the rental of units in the CC&Rs of a common interest development which was not a publicly subsidized project. Q 42. May the CC&Rs contain racial and other unenforceable restrictions? ace, color, religion, gender, sexual orientation, marital status, natinal origin, ancestry, familial status, source of ncome or disability. Such amendments are effective even without the owners' approval and do not otherwise change the CC&Rs. If the unenforceable restrictions are not removed, a unit owner may sue the association. (Civ. Code § 1352.5; Gov. Code § 12955.) Q 43. May the CC&Rs or homeowners’ association restrict the rights of renters or nonresident owners to use the facilities in a common interest development? A Yes, under certain circumstances. In a 1992 case, a California court of appeal held that the nonresident owners (a husband, wife and two sons) of a condominium had a right to use the recreational facilities in the common area since the occupant/tenant (82 year old senile mother of the wife) was not able to use the facilities. (MaJor v. Miraverde Homeowners Ass’n, (1992) 7 Cal. App. 4th 618.) Part of the court’s rationale was that the homeowners’ association could not exclude the nonresident owners from using the recreational facilities while simultaneously requiring them to pay all the fees for the common area’s use and improvements. Following this same rationale, it could be argued that the court was essentially holding that omeone is entitled to use the recreational facilities (i.e., either the nonresident owner or the resident/tenant) since the owner is paying for the use of the facilities. It would follow, then, that if the owner relinquishes the right to use the facilities, arguably the tenant should retain this right. In 1995, the case of Liebler v. Point Loma Tennis Club, (1995) 40 Cal. App. 4th 1600, made it clear that the CC&Rs can restrict non-resident owners from using the facilities (tennis courts) if the tenants retain the right to use the facilities. Q 44. May the CC&Rs or homeowners’ association restrict ownership of pets in a common interest development? A Yes. Associations, who have not created or amended any governing documents on or after January 1, 2001 may completely restrict the keeping of pets within the development. may restrict, but not prohibit, the keeping of pets within the development. Owners of a separate interest may have one domesticated pet, subject to the associations's reasonable rules. New rules that limit the number of pets may not prohibit any pets that the owner already had under the previous rules. (Civ. Code § 1360.5.) Q 45. May the CC&Rs contain age restrictions (i. e., no one under the age of 18 or no one under the age of 62 may live in a unit)? A Generally no, but there are exceptions. That is, under state and federal anti-discrimination statutes, it is unlawful to refuse housing to any family with children under the age of 18, including women who are pregnant, unless the housing qualifies as senior citizen housing. (42 U.S.C. § 3604.) Thus, housing providers are required to admit families with children unless the housing fits into the definition of housing for older persons. The federal Fair Housing Act defines three types of housing that meet this definition. The first type includes all housing that is provided under state and federal programs specifically for the purposes of accommodating elderly persons. (42 U.S.C. § 3607; 24 C.F.R. § 100.302.) occupied by persons 62 years of age or older." No conditions are attached as long as every resident is of this age. In other words, residency by a couple, one aged 62 and the other younger, would nullify that project’s designation as senior citizen housing. (42 U.S.C. § 3607; 24 C.F.R. § 100.303.) The third type is what is commonly known as a retirement community. The threshold age is 55, and the owner or manager must meet additional requirements in order to exclude families with children from residing in the housing. To qualify, the following criteria must be met:
Q 46. May the CC&Rs or homeowners’ association of a common interest development prohibit or restrict children from using the swimming pools? A No, the CC&Rs or homeowners’ association cannot totally prohibit children from using the swimming pools; however, the CC&Rs or homeowners’ associations may impose reasonable restrictions. As noted above, both the state Civil Rights Act and the federal Fair Housing Act prohibit "unreasonable, arbitrary or invidious discrimination" against families with hildren, which includes limiting the use of privileges, services or facilities to families with children. However, differential treatment of adults and children in the use of the recreational facilities based on differences in their needs may be acceptable. Case law and an Attorney General Opinion indicated that a development that had two swimming pools could restrict children one of the two pools. (75 Ops. Cal. Atty Gen 219 (1992).) However, a federal regulation arguably prohibits projects in which some areas are designated for families and some for adults only. (24 C.F.R. § 100.70(a).) Therefore, any restrictions which distinguish simply on the basis of age, other than for verifiable safety reasons, may violate federal law. Q 47. May the CC&Rs or homeowners’ association of a common interest development restrict owners from installing solar energy systems on their roofs?? A The CC&Rs may not prohibit the installation or use of solar energy systems whether they are to be installed on the private roof of a house in a planned development or on the common area roof of a condominium or other common i nterest development. However, homeowners’ associations may impose reasonable restrictions on these systems. Reasonable restrictions are those which do not significantly increase the cost of the system or significantly decrease its efficiency or performance. Whenever the CC&Rs require approval for the installation or use of solar energy systems, the application for approval must be processed and approved in the same manner as an application for approval of an architectural modification. When the solar energy system is to be installed in a common area, the homeowners’ association may require (1) a system approved by the association, (2) provisions for the maintenance, repair, or replacement of roofs or other building components, and (3) installers of solar energy systems to indemnify or reimburse the association for loss or damage caused by the installation, maintenance, or use of the system. (Civ. Code §§ 714, 714.1.) Q 48. Is the homeowners’ association subject to any sanctions if it refuses to comply with the law regardin solar energy systems? A Yes. Violations of California law regarding solar energy systems by homeowners’ associations may subject the associations to actual damages not to exceed $1,000, plus reasonable attorney’s fees (which may exceed $1,000). (Civ. Code § 714.) Q 49. May the CC&Rs or the homeowners’ association ban the use of a satellite dish anywhere within a planned development community? A No. The federal Telecommunications Act of 1996 has preempted this field. Satellite dish and antenna restrictions are limited by federal law. A satellite dish of one meter or less in diameter located on property under the "exclusive use or control" of the homeowner cannot be prohibited. Therefore, the association can prohibit satellite dishes on the common areas. Satellite dishes cannot be prohibited from exclusive-use common areas, but associations can reasonably regulate them (e.g., prohibit drilling in walls, enforce safety standards). Any restrictions regarding the location of the dish are invalid if the required placement would interfere with the reception. (47 C.F.R. § 1.4000.). Q 50. May the CC&Rs or homeowners’ association legally prevent or restrict individual owners from posting "for sale" signs? A No. Neither the CC&Rs nor the homeowners’ association may totally prohibit the posting of "for sale" signs; however, they may put reasonable restrictions on their placement. Under California law, any unreasonable restraint upon the ability to transfer property is void. California also has a specific sign ordinance. Civil Code Section 713 states that an owner of real property or his/her agent may display a "for sale" sign on his/her real property or on real property owned by another (with that person’s consent) in plain view of the public and of reasonable dimensions and design if the advertising involves a sale, lease, or exchange. The sign may contain:
Furthermore, there are city ordinances which regulate the placement of signs on private property. Failure to comply may result in fines and confiscation of the signs. Finally, a total prohibition on "for sale" signs, or "sold" signs located on private property is an unconstitutional violation the First Amendment to the United States Constitution. (Linmark Assoc., Inc. v. Willingboro, 431 U.S. 85 (1977)) For additional information, see the C.A.R. legal memorandum, "Signs: Can They Be Regulated and to What Extent?" the common areas? A Maybe. Any restrictions must be reasonable and the reasonableness of a particular restriction depends upon the individual circumstances. In one case, the CC&Rs banned all trucks, campers, boats, and recreational vehicles from the common area of a condominium project. The restriction was applied to a new pickup truck used for personal transportation. The court held that this application of the restriction was unreasonable, since the parking of the truck in the carport was not aesthetically "unpleasant" to reasonable persons and did not interfere with the other owners’ use and enjoyment of their property. The court stated, "One person’s Bronco II is another’s Rolls-Royce." (Bernardo Villas Mgmt. Corp. v. Black, (1987) 190 Cal. App. 3d 153.) However, subsequent courts rejected the Bernardo analysis. In 1994, the Supreme Court in Nahrstedt v. Lakeside Village Condominium Ass’n, (1994) 8 Cal. 4th 361, placed the burden on the homeowner to prove that the restriction was unreasonable. The court in Bernardo had placed the burden on the association to prove that its restriction was reasonable. It is unclear if the Bernardo outcome would be the same or different. However, courts will permit associations to use aesthetic criteria in their decision making. (Clark v. Rancho Santa Fe Ass’n, (1989) 216 Cal. App. 3d 606.) is located in an "airport influence area"? or future airport-related noise, overflight, safety, or airspace protection factors may significantly affect land uses or necessitate restrictions on those uses as determined by an airport land use commission. If the development is located in such an area, the CC&Rs must contain the following notice: reason, the property may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (for example: noise, vibration, or odors). Individual sensitivities to those annoyances can vary from person to person. You may wish to consider what airport annoyances, if any, are associated with the property before you complete your purchase and determine whether they are acceptable to you. (Civ. Code §1353.) VI. Liens, Lawsuits, ADR and Liability Q 53. What is ADR? A ADR stands for Alternative Dispute Resolution. California law requires ADR prior to the filing of a civil action by a homeowner or the association regarding any dispute that would require declaratory relief, injunctive relief, and/or monetary damages not in excess of $5,000 and related to the enforcement of the governing documents. The aggrieved person(s) must make a mandatory offer of ADR called a "Request for Resolution" stating whatever terms they want for ADR (binding or non-binding, type of arbitration or mediation, number of arbitrators, etc.). The responding party has 30 days to respond. If there is no response, then the aggrieved party may file a civil action accompanied by a Certificate of ADR Compliance indicating that the other party failed to respond (or that ADR was conducted but there was no resolution--i.e. with non-binding ADR). Failure to use the ADR procedure may be grounds for a demurrer or motion to strike. In addition, failure to respond t o the Request for Resolution can impact attorneys’ fees even if the party prevails in the civil action. The exemptions from mandatory ADR are: the statute of limitations would run in 120 days, the claim for monetary damages exceeds $5,000, the dispute is over assessments (with one exception--See Question 26), or the issue is not related to enforcement of the governing documents. (Civ. Code §1354.) Q 54. May any injured person sue the homeowners’ association directly? A Yes. A homeowners’ association for a common interest development can be sued in its own name as the real party in interest. The injured person need not sue the individual homeowners. (Code Civ. Proc. § 383.) Q 55. Does a homeowners’ association have the right to sue a homeowner or anyone else in its own name without adding the individual homeowners as plaintiffs? A Yes. A homeowners’ association has the legal right to sue in its own name as long the issue involves one of the following:
Q 56. May an owner of a separate interest sue another owner who violates a covenant or restriction in the CC&Rs? A Yes. Unless the CC&Rs state otherwise, the CC&Rs may be enforced by any owner of a separate interest or by the homeowners’ association. In addition, the prevailing party is entitled to reasonable attorney’s fees and costs . (Civ. Code § 1354.). Q 57. May an owner sue the homeowners’ association of a common interest development for violation of a covenant or restriction in the CC&Rs? A Yes. Unless the CC&Rs state otherwise, the CC&Rs may be enforced by any owner of a separate interest or by the homeowners’ association. In addition, the prevailing party is entitled to reasonable attorney’s fees and costs. (Civ. Code § 1354.) In addition, the association may be liable to a homeowner for failure to enforce the CC&Rs. (Cohen v. Kite Hill Community Ass’n, (1983) 142 Cal. App. 3d 642.) Q 58. May the homeowners’ association of a common interest development sue the owner of a separate interest who violates a covenant or restriction in the CC&Rs? A Yes. Unless the CC&Rs state otherwise, the CC&Rs may be enforced by any owner of a separate interest or by the homeowners’ association. In addition, the prevailing party is entitled to reasonable attorney’s fees and costs. (Civ. Code § 1354.) Q 59. May a contractor or subcontractor file a mechanic’s lien against the owner of a unit in a common interest development for work done on someone else’s unit? A No. Unless an owner has given his/her consent to the work, a contractor or subcontractor cannot place a lien against one owner’s unit for work done on someone else’s unit. However, if emergency repairs are needed on the owner’s own unit, then an owner will be deemed to have given his/her consent. (Civ. Code § 1369.) Q 60. May a contractor or subcontractor file a mechanic’s lien against the owner of a unit in a nterest development for work done on the common area? A Yes. Labor performed o | ||||||||||||||||||