Posts Tagged ‘California’

Post-Bankruptcy Assessments

September 11, 2014

We sometimes have to have a difficult conversation with a former owner who has gone through both bankruptcy and foreclosure but still owes assessments. The conversation usually goes something like this California attorney’s article from the U-T San Diego.  I still run into bankruptcy attorneys that want to debate the point, soit is good to see at least one other HOA lawyer taking this view of it.

http://www.utsandiego.com/news/2014/aug/30/hoa-assessments-bankruptcy/

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Kelly G. Richardson CCAL is Managing Partner of Richardson Harman Ober PC, a law firm known for community association advice.

Right Stuff For An HOA?

February 15, 2014

I have to admit, I would shy away from a fight with Chuck Yeager. I mean the guy is just so tough!

But apparently the general is not paying his assessments, so he was heading for a conflict with his neighbors at characteristically high speed.

http://www.foxnews.com/us/2014/02/07/famed-pilot-chuck-yeager-sued-by-homeowners-group/

Gen. Chuck Yeager, the first pilot to break the sound barrier in the Bell X-1 "Glamorous Glinnis" in..

Nice Quick Update on “New Davis Sterling” Act

June 25, 2013

Nice Quick Update on “New Davis Sterling” Act

Where Your California Bar Membership Won’t Get You…

June 19, 2013

In a week marked by an interesting US Supreme Court ruling on “the right to remain silent”, California’s Fourth District Court of Appeal has found that an owner’s right to attend an HOA meeting does not equate to the right to bring counsel along.

I find this especially interesting as the owner is an LLC, not your average Joe.

http://www.metnews.com/articles/2013/sb061913.htm
http://www.leagle.com/xmlResult.aspx?xmldoc=In%20CACO%2020130522049.xml&docbase=CSLWAR3-2007-CURR

From Sacramento: Tweaking Davis-Stirling

August 30, 2012

Apparently, California has signed into law a revision to its Common Interest Development Act.  California, unlike Idaho and a shrinking handful of other jurisdictions, recognizes the important role played by HOAs and other common interest ownership associations.  One California Court said:

Indeed, the homeowners associations function almost ‘as a second municipal government, regulating many aspects of [the homeowners’] daily lives.’ [Citation.] ” ‘ “[U]pon analysis of the association’s functions, one clearly sees the association as a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government.

Wikipedia(citing Villa Milano Homeowners Association v. Il Davorge).  

On the surface, the new California laws, Assembly Bills 805 and 806 simply simplify the existing common interest ownership law:

In response to concerns that the Davis-Stirling Act is not well organized or easy to use, the California Law Revision Commission (CLRC) recommended that the existing Davis-Stirling Act be repealed and replaced with a revised version that would continue the substance of existing law in a more logical and user-friendly form.

Senate Rules Committee Digest.  In the judicial committee hearing  minutes regarding AB 806, arguments in favor were summarized as follows:

…this bill and its companion measure, AB 805, will bring much needed logical order to the Davis-Stirling Act, making it much easier for board members and practitioners to navigate and clarifying the relative authority of statutory law, by-laws, and different types of governing documents.

However, at least one commentator identifies 16 substantial changes.  CAI promises to educate its members on the changes before the law goes into effect.

 

Rather than dive into legal analysis of another state’s statutes, I would just like to point out that Idaho has an opportunity to learn from the experiences of other states.  Idaho could adopt a nice, clear, concise statute from the start, number its sections in a clear way for ease of use, and avoid overhauls like California is undertaking.  But first, Idaho needs to recognize the the value and service that HOAs, Condo associations and other CIDs provide.

-Jeremy

P.S.

If, like me, you try to follow news relating to homeowner associations, you no doubt have noticed that there is not much of it.   If you live somewhere like Idaho, relevant news is even more thin.  Only occasionally do we see an embezzlement scandal or a flare-up about American flags or the like.

This blog is going to try to avoid taking the route of mindless content farming.  I’ll try to comment on  a real event.  Or a real issue that has really stuck in my craw.  So, out of necessity, I’ll have to watch national, as well as Idaho, news. Anyway, that’s a long way to apologize for talking, again, about California law.

Arbitration Clauses Binding On HOAs In California (!?)

August 23, 2012

Courts: The Judicial Branch of California

On August 16, the California Supreme Court issued a ruling in Pinnacle Museum Tower Association v. Pinnacle Market Development (US), LLC, et al.  that could affect Idaho HOA cases and others here in the Ninth Circuit as well.  It could effectively strip the right to jury trial from condominium owners and associations.

As the Court summarized:

Petition for review after the Court of Appeal affirmed an order denying a motion to compel arbitration in a civil action. This case presents the following issues: (1) Is a homeowners association bound by an arbitration provision contained in the covenants, conditions and restrictions for a common interest development that were executed and recorded prior to the time the association came into existence? (2) Did the Court of Appeal err by applying the state law doctrine of unconscionability only to the arbitration provision, and not to other provisions in the covenants, conditions and restrictions, in light of federal law prohibiting the application of state law to treat arbitration provisions differently from other provisions of the same agreement? (See Allied-Bruce Terminix Cos. v. Dobson (1995) 513 U.S. 265.)

Historically, many have argued against the application of arbitration clauses to HOAs.  A developer creates the HOA, after all, and drafts the CC&Rs, representing both his own interests and (to a much lesser extent) those of the future HOA.  The future owners and future association have little or no say in any of the terms that the developer inserts into the CC&Rs.  As a result, many courts have found that it would be unconscionable to enforce arbitration clauses against the party that had no representation in the drafting of the documents.

The Pinnacle opinion held, to the contrary:

…even though the association did not exist as an entity independent of the developer when the declaration was drafted and recorded, it is settled under the statutory and decisional law pertaining to common interest developments that the covenants and terms in the recorded declaration reflect written promises and agreements that are subject to enforcement against the association.  We conclude that the arbitration clause binds the association and is not unconscionable.

What is interesting for those of us outside of the Golden State is that the California Supreme Court based its opinion on provisions in the Federal Arbitration Act.  The same federal provisions would apply to any state.  In particular, the Court held:

…the FAA pre-empts state laws which ‘require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration…Likewise, the FAA precludes a court from construing an arbitration agreement “in a manner different from that in which it otherwise construes nonarbitration agreements under state law.  Nor may a court rely on the uniqueness of an agreement to arbitrate as a basis for a state-law holding that enforcement would be unconscionable, for this would enable the court to effect what . . . the state legislature cannot.

I will leave it to the courts and legal scholars to analyze the strength of California’s analysis.  However, if the arguments relied on by this Court are seen as persuasive, we may be seeing a major shift in how condominium and association construction defects are handled across the country.

Thanks to California’s Miller Law Firm for summarizing the decision.

The Unspoken Rule: Discrimination in Unenforced Covenants

August 9, 2012

Can something discriminatory written and recorded in your Idaho CC&Rs decades ago still pose a liability for your association today?  Today, a blog for the Orlando Sentinel discusses the state of the law in Florida, and recommends a professional review of governing documents to find and remove offending restrictions. Not surprisingly, in Florida’s litigious society, there are municipal and county fair housing regulations.  Florida associations have been found liable for discrimination for “publishing” rules and regulations that caused a tenant “emotional distress,” even where those rules are not enforced.  That 1997 decision is online here.

The question remains how to regard that decision and legal advice here in Idaho, where the legal climate is as different from Florida’s as Idaho’s high desert climate is different from Florida’s coastal humidity.  Certainly the federal fair housing laws still apply, even if we do not see much additional municipal and county fair housing regulations.

Idaho’s Supreme Court found in a 2002 case, D & M Country Estates v. Romreill, that Idaho statutes restricting discrimination in zoning laws do not apply to covenants.   The Court found that because the governing documents in question were specific and unambiguous in limiting housing use to two “families,” the Idaho association was acting within its rights to prohibit use of a house by eight unrelated adults in a group home setting.  Unfortunately, in that case, claims based on the Idaho Human Rights Act were not properly before the Court, and so did not factor into the decision.  Indeed, the Human Rights Commission no doubt would urge Idaho courts to follow the Florida ruling that recorded “published” governing documents indeed can have a discriminatory effect.

In my experience, unenforced clauses in Idaho governing documents have not led to court liability.  However, I have seen such unenforced clauses lead to discrimination charges against associations and their boards.  Even unsuccessful fair housing claims require legal representation and defense.  Rather than face that uncertainty and expense, a preemptive review and amendment of governing documents is still as good an idea here in Idaho as in Florida.  But it may not be the only option.

An option that has not been explored here in Idaho is the use of a recorded cover sheet, as is required in California.  This would involve recording a statement that any discriminatory language in the remaining covenants is to be ignored.  The cover sheet would explicitly void any discriminatory covenants.

Either amending covenants to change language or to add a cover sheet would require the same supermajority vote by the owners.  In Idaho, we have no uniform common interest ownership act to make the process any easier than it sounds.  At the moment, either approach would require legal assistance and membership participation.