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by Steven S. Weil, Esq.
Being on the board isn't easy. A newly elected director usually approaches the task with energy, enthusiasm, hope, a commitment to transparency and "getting things done." This last task requires learning how to govern. Governance entails an understanding of the frame within which directors make decisions and the powers and duties they have under California law.
Governing has many aspects. Some obvious ones include being receptive to membership input, flexibility; and having the courage to look at hard issues and make sound decisions. Good governance includes operating within the parameters of the law and in states which are heavily regulated by statute, that isn't easy. How much "law" does a director (or a manager) need to know? How can they "compete" with those who – active on the internet – quote legal chapter and verse to attack the board; how can directors assess the validity of legal challenges without always engaging counsel. How can they know how to operate within legal bounds?
A Board of Directors Orientation is a good way for directors to get exposed to the key legal concepts affecting their authority and its limits. An orientation can address broad outlines of issues without getting lost in the detail. It can be based on general principles or peppered with specific provisions of an association's own governing documents – about, for example architectural control, indemnification, insurance, cumulative voting and proxies and claims. An orientation typically takes 45 – 90 minutes depending on dialogue between counsel and the directors or managers attending, the complexity of the community or particular issues it is facing.
This article discusses the basic outline for a comprehensive and practical orientation for associations in California (other states have different laws and organizational schemes). Of course, each one should be tailored to the needs and wishes of the board or manager attending and some topics would be eliminated and others added. Some may be augmented by articles, forms or other visual aids but should always have a "Q&A" component. Here are some ideas:
By Gabriel P. Rothman
I am a member of my Association's Board of Directors. One of the members of our Association has been renting his unit and was recently forced to evict his tenant due to nonpayment of rent. After the unit owner posted the eviction notice the tenant packed up his belongings and vacated the unit within 24 hours, but in his rush to pack up his belongings he backed a moving truck into the garage gate, damaging the gate and surrounding wall. Can the Board assess the unit owner for the cost to repair the damage?
Yes. Most homeowners association declarations of conditions covenants and restrictions contain provisions which allow the Board to levy a reimbursement assessment against any unit owner who damages the common area. Such provisions often extend to the unit owner's family, friends, guests, agents or pets. For example, your CC&Rs may contain a provision which reads similarly to this one:
"6.5 Reimbursement Assessments. The Board shall have the authority to levy reimbursement assessments against one or more Condominium Owners to reimburse the Association for any costs incurred or to be incurred by the Association as the result of any act or omission of any Owner or occupant of any Condominium or their family members, guests, agents or pets . . . ."
In this situation, the unit owners could be held liable under the CC&Rs for damage caused by the tenant. It doesn't matter that the tenancy has been terminated. The reason that the tenant occupied the unit in the first place was because he was authorized by the owner to live there until the time of termination. Even though the legal relationship between the unit owner and the tenant has ended, the unit owner remains responsible under the CC&Rs for damage caused by the tenant until the tenant has vacated the premises. Accordingly, the first thing you should do is check your CC&Rs to see if it contains a provision like the one above. Courts are hesitant to meddle in the affairs of homeowners associations and will usually defer to a Board's sound judgment in interpreting the provisions of its own CC&Rs.
Can we use a reimbursement assessment if my CC&Rs don't contain a provision like the one above?
Probably not. According California Law, you may not be able to take advantage of a reimbursement assessment procedure if there is no provision in your CC&Rs to do so. The California Civil Code states that:
"A monetary penalty imposed by the association as a means of reimbursing the association for costs incurred by the association in the repair of damage to common areas and facilities for which the member or the member's guests or tenants were responsible may become a lien against the member's separate interest enforceable by the sale of the interest under Sections 2924, 2924b, and 2924c, provided the authority to impose a lien is set forth in the governing documents."
Thus, even if you were to levy an assessment for the damage, unless your CC&Rs specifically authorize it, you will be unable to enforce it with a lien on the owner's unit and will be left with little leverage to collect the assessment. Ultimately, without the benefit of a lien, you will have to go to small claims court to collect the assessment from the tenant so you might as well go that route from the start. The filing fees for small claims are relatively cheap and your case will most likely be heard within a month or two.
What if the owner's unit had been occupied by a squatter rather than a tenant?
Watch this space in two weeks for the answer!
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