Community Association Update: Issue # 43

  - Annual Legislative & Case Law Update (2020)

Happy New Year!
Below you will find an overview of the 2019 legislation and case law impacting California HOAs as we head into 2020. The material below is not meant to be an exhaustive list of all new legislation and case law; we have summarized what we believe is the most important to the majority of our HOA clients and the industry professionals who service them.

If you have any questions regarding the items below, please feel free to contact our offices anytime!

Steven Tinnelly, Esq.
Tinnelly Law Group

(Effective January 1, 2020)

SB 323 makes  substantive modifications  to the Civil Code's provisions governing HOA elections, effective January 1, 2020. Some of the more significant modifications require associations to amend their  election rules  to conform to new statutory requirements, limit the types of  candidate qualifications  an association may adopt, address the only circumstance for  elections by acclamation , place limitations on who may serve as an inspector of elections, and bolster the ability of members to overturn an election that is not conducted in accordance with proper procedures.
*We have published a detailed article on SB 323, entitled "   The New State of HOA Election Laws ."  The article is available for download,  here.

(Effective January 1, 2020)

AB 670 was adopted among several bills designed to address California's housing crisis by promoting the construction of affordable accessory dwelling units (ADUs) and junior accessory dwelling units (JADUs) that are used for rentals of terms longer than 30 days.  It adds new Section 4751 to the Davis-Stirling Act to invalidate governing document provisions that effectively prohibit or unreasonably restrict the construction of ADUs or JADUs on a lot zoned for single-family residential use, subject to certain limitations. 

(Effective January 1, 2020)

SB 326  accomplishes 3 main objectives: 1) it requires associations to conduct mandatory inspections for exterior elevated elements, such as decks, balconies, and walkways; 2) it invalidates and prohibits provisions in an association's governing documents that restrict the board's authority to initiate a legal proceeding against a developer for substandard construction; and 3) it requires an association to discuss with the membership the potential impacts of a construction defect action against the developer prior to the initiation of such an action.

(Effective January 1, 2020)
SB 234 permits large daycare homes, which provide care for up to 14 children at one time, to operate within HOA communities regardless of contrary language in their CC&Rs.  The purpose of SB 234 is to increase the availability of childcare for families across the state by making it easier for daycare homes to operate in residential neighborhoods.   HOAs across the state should be aware that Owners have the right to open large daycare homes within the community, regardless of restrictions against commercial use or for single family use.  

(Effective January 1, 2020)

SB 652 was signed into law by Governor Gavin Newsome in response to several incidents in which a homeowner's association (HOA) asked a resident to remove a mezuzah from their unit's entry door or doorframe.   SB 652 prohibits a "property owner" (defined to mean an HOA, an HOA board, or landlord) from adopting or enforcing any rule that prohibits the display of one or more "religious items" on an entry door or doorframe.  The bill defines "religious item" to mean any item displayed "because of sincerely held religious beliefs."  The bill also identifies reasonable exceptions, such as allowing an HOA or landlord to prohibit the display of anything that threatens public health or safety, violates existing law, contains obscenities, hinders the opening or closing of any entry door, or is larger than 36" by 12" inches.  Also, an HOA may require a separate interest owner to remove a religious item as necessary to perform maintenance on a door or doorframe.   

Sands v. Walnut Gardens Condominium Ass'n (2019)
Takeaway: CC&R provisions may dictate standard of maintenance to be performed and failure to investigate and conduct maintenance issues may constitute a breach of contract by the HOA.

In  Sands v. Walnut Gardens Condominium Association, the California Appellate Court held the HOA could be responsible for damages sustained by a homeowner as a result of a plumbing leak originating from a pipe on the roof of the condominium building (i.e., HOA common area). In  Sands, the HOA repaired the pipe and the roof, but did not compensate the homeowners for the damages they sustained to the interior of the unit and their personal property. The homeowners sued the HOA for breach of contract and negligence.

In addressing the the breach of contract claim, the Court of Appeal noted that the HOA had a contractual obligation under the CC&Rs to maintain the common area in "a first-class condition." A jury could find that the HOA breached that contract by failing to perform preventative maintenance, and by failing to periodically inspect the pipes and roof. The Court dismissed the HOA's argument that "no evidence showed [that] the [HOA] was 'on notice that it needed to make repairs or do something to the roof or the pipes.'" Rather, it was sufficient that the HOA knew that no maintenance was being performed, which a jury could find as a breach of the CC&Rs' requirement that the common area be maintained in a first-class condition.

However, as to the second cause of action for negligence, the Court sustained the trial court's judgment of nonsuit (i.e., the homeowners failed to present sufficient evidence to conclude that the HOA was negligent). The Court noted that "the [HOA] had no independent duty as to the pipes and roof arising from tort law." In other words, absent a showing of a duty independent of the CC&Rs, an HOA cannot be held liable for the tort of negligence for its maintenance failures. 

Orchard Estate Homes, Inc. v. the Orchard Homeowner Alliance (2019)
Takeaway: Voter apathy need not be demonstrated in a court petition to reduce approval requirements for CC&R amendments. 

In Orchard Estate Homes, Inc. v. The Orchard Homeowner Alliance, the California Court of Appeal rejected an argument brought by a group of homeowners (The Orchard Homeowner Alliance) objecting to the HOA's petition to reduce the percentage of affirmative votes necessary to amend their CC&Rs. The homeowners argued that, in order to prevail on their petition, the HOA must demonstrate that the CC&R amendment failed due to "voter apathy." 

The Court in Orchard Estate rejected this argument, noting that the statutory language contained in Section 4275(c) clearly and unambiguously identified the "elements required to be established to authorize a reduction in the required voting percentage to amend a provision of the governing CC&Rs." As such, the Court was unwilling "to imply an element that was not expressed by the Legislature" based on off-hand statements made in appellate decisions. 

Basave De Guillen v. Highland Greens HOA (2019)
Takeaways: An assessment lien recorded by a HOA does not automatically incorporate and secure assessments that are levied and that go unpaid after the lien is recorded.

The Federal Court in Highland Greens applied a strict interpretation of the Davis-Stirling Act's lien provisions and ruled that an assessment lien MAY NOT automatically secure assessments that go unpaid by the homeowner after the date the lien is recorded. The Court recognized that its ruling would impose a burden on HOAs, but held that such a burden is to be resolved by the California Legislature (e.g., a law needs to be passed to amend/clarify the Davis-Stirling Act's lien recording provisions with regard to this issue).

This case will result (and has resulted) in immediate changes to the HOA lien recording and collection practices. Our collection affilliate, Alterra Assessment Recovery, has already implemented several process changes in order to conform to the ruling in De Guillen. If your community has any questions regarding this new case just let us know. 


New TLG Attorney! Corey L. Todd, Esq. 

We are excited to welcome Attorney Corey Todd to TLG's growing team of skilled attorneys! Before joining Tinnelly Law Group, Mr. Todd completed an externship with the United States Bankruptcy Court for the Central District of California, where he clerked for the Honorable Erithe Smith. Mr. Todd also spent several years working for a civil litigation firm that built its core business on the representation of financial institutions in the servicing of both commercial and residential property portfolios. Throughout his career, Mr. Todd has gained extensive experience in a diverse range of legal topics that he has carried over to his current practice with our firm. 

New Carlsbad Office Now Open! 

We are thrilled to announce the opening of our new office in Carlsbad off Palomar Airport Road! 

TLG Senior Attorney  Carrie N. Heieck, Esq.  will lead the Carlsbad team as we continue to grow our family of San Diego county clients. 

A Banner Year of Growth! 

We were privileged in 2019 to welcome over 130 new communities to TLG's client family! Some of the more recent clients to sign on board include:

Lake Forest
Hidden Crest Homeowners Association
Turtle Rock Ridge Association
Pacific Landing Community Association
El Segundo
Del Sur Community Association
San Diego
Fringe Neighborhood Association
Modo Neighborhood Association
Verge Neighborhood Association
Nova Community Association

Alterra Surpasses $8 Million in Debt Recovery! 

TLG is proud to provide HOAs throughout the state with access to highly-advanced, comprehensive collection services through our affiliate company, Alterra Assessment Recovery. Alterra was founded with the goal of providing efficient and effective collection services, utilizing the best technology available and a skilled team of professionals. 

Having completed its sixth year of operation, Alterra has already recovered over $8 million  in assessment debt for its clients, with approximately $2 million in debt recovered just in 2019.  Alterra was also privileged to welcome 38 new communities to its growing family of clients.

2020 Edition of Board Member Basics! 

Now in its seventh year of publication, our Board Member Basics guidebook provides board members with a basic understanding of the important role they play, as well as the various legal obligations they must fulfill in managing their association's affairs. Inside, we've included pertinent Code sections and case law excerpts, along with real world, practical guidance for board members from all types of associations. We update Board Member Basics annually to reflect changes in the law, industry trends and association best practices. The 2020 Edition includes changes relating to SB 323 and its impact on HOA election laws. To request a copy, click here
Your Community. Your Counsel. TM