by Sandra M. Bonato, Esq. and Melissa Bauman Ward, Esq.
Governor Brown signed a new law this summer -- SB 150 -- about rental restrictions. There are four things that directors and managers need to know about it.
1. It doesn't affect rental restrictions in place before January 1, 2012.
2. Associations have a short window of time to adopt or amend rental restrictions before the end of the year, if they don't want the new law to apply.
3. For future rental restrictions, it will grandfather in all current owners at the time and for longer periods, but will provide good clarity.
4. New escrow disclosures about rental limitations start January 1, 2012 for all associations.
Does It Apply?
The new law is prospective. This means it contains a provision that says it only applies to rental restrictions adopted on or after January 1st. Pre-2012 rental restrictions are not affected by it. Rental restrictions adopted on or after January 1st will be governed by its terms. Amendments to pre-2012 rental restrictions will have the amended portions be subject to the new law.
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?
Recap - If your CC&Rs have a reimbursement provision that extends to the unit owner's family, friends, guests, agents etc., then yes. If the CC&Rs contain no such provision, then most likely no; the Association will have to sue the unit owner in small claims to recover for the damage.
What if the owner's unit had been occupied by a squatter rather than a tenant?
Whether you will be able to take advantage of the reimbursement assessment procedure in your CC&Rs in this instance will depend on the language in the reimbursement assessment provision. Some provisions, like the one quoted above, require that the damage to the common area be the fault of the Owner or occupant of any Condominium or their family members, guests, agents or pets, whereas other provisions may simply require that the owner's unit be the genesis or origin of a loss or damage. In this latter case, it might be possible to hold the unit owner responsible for damage to the common area arising out of the owner's unit, even if it was caused by squatter's actions.
In the absence of an applicable CC&R provision, you will have to show that the unit owner violated some duty to the Association that allowed the squatter to obtain access and that the damages that resulted were foreseeable. For example, if the unit owner not only routinely failed to lock his unit or knew that a squatter was living in the unit and did nothing to remedy the problem for several months, you might be able to convince a judge that the unit owner should cover the loss.
Like with the tenant above, your best bet might be to pursue the squatter in small claims court for compensation, but for obvious reasons, collecting would be a challenge. In all of these examples the Board should carefully consider the risks vs. the rewards of pursuing the unit owner for damage caused by a squatter. It is a virtual certainty that the unitowner is going to be furious about being assessed for damage caused by someone who illegally gained access to his unit, which could create a messy situation. It is important to recognize that just because a given course of action is legal doesn't necessarily make it ideal or the smartest. The best course might be to simply submit an insurance claim and negotiate with the unit owner to split the cost of the deductible.
Ok, so whose policy, the association's or the unit owner's, should get the claim in this case?
Watch this space in two weeks for the answer!
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