Articles Posted in Homeowners Association Law

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blueprintCalifornia real estate development involves numerous potential risks, ranging from lost money on an investment to legal liability for injuries caused by hazards or defects. Determining who is liable for an injury often requires an extensive examination of ownership and any improvements made to the property. The owner of a piece of real estate might be liable for an injury caused by a hazard on their property under the theory of premises liability. Injuries—both personal injuries and financial losses—could also be a result of negligence by someone hired to work on the property. In 2014, the California Supreme Court ruled on a dispute between a homeowners association (HOA) for a San Francisco condominium project and two architectural firms involved in designing the project. The plaintiff alleged, on behalf of all of the homeowners, that negligent architectural designs led to defects that “made the condominium units uninhabitable and unsafe during certain periods due to high temperatures.” Beacon Residential Community Assn. v. Skidmore, Owings & Merrill LLP, 59 Cal.4th 568, 572 (2014). The court ruled in the plaintiff HOA’s favor.

One of the fastest growing forms of residential property is the “common-interest development,” in which separately owned residential units share common areas such as elevator lobbies, fitness centers, and pools. Developers create HOAs as private nonprofit organizations to handle the management and maintenance of common areas. An HOA has a legal duty, under premises liability law, to maintain common areas that are reasonably free of defects or hazards, and to warn residents, their guests, and others of known hazards on the premises. The Beacon case, in contrast, was about duties owed to an HOA with regard to defects on the property.

The plaintiff in Beacon was the HOA created for a 595-unit residential condominium project in San Francisco. The developer hired the defendants to “provide architectural and engineering services.” Beacon, 59 Cal.4th at 571. The defendants were aware “that the finished construction would be sold as condominiums.” Id. The plaintiff’s lawsuit alleged negligent design, which caused “several defects, including extensive water infiltration, inadequate fire separations, structural cracks, and other safety hazards.” Id. at 572. The allegation of uninhabitability during summer months arose from “solar heat gain” caused by a lack of ventilation and substandard windows. Id.

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common areaCalifornia real estate law allows the creation of homeowner associations (HOAs) to govern certain types of properties, known as “common interest developments” (CIDs). An HOA is responsible for maintaining a CID’s common areas, and it has the authority to collect fees from homeowners to pay for maintenance. When an HOA negligently fails to maintain a common area, the HOA may be liable for injuries that occur as a result. A recent appellate court decision from New Jersey addressed HOAs’ duty of care to residents and others. It is worth revisiting California law on this issue.

Determining a property owner’s liability for an injury occurring on their premises involves two important distinctions:

– First, did the injured person have permission to be on the property? A property owner owes a minimal duty of care to a trespasser, meaning someone who enters their property without permission.

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Palm DesertFrom the point of view of a resident, a homeowners’ association (HOA) in California operates much like a government entity. It has the authority to enact legally binding rules and to assess and collect fees for a variety of purposes, such as maintenance of common areas and community-wide utility services. Ongoing drought conditions throughout California have strained the ability of many HOAs to maintain various requirements and services. As just one example, an ongoing dispute in the Coachella Valley area involves a water district’s efforts to maintain water service in the face of water shortages and new state standards for water quality.

More than 1,000 water districts provide services to cities, counties, and other communities throughout California. These districts may bill consumers directly for services, or they may contract with HOAs to provide services to a community. The HOA would then bill individual residents. Increases in fees require a vote by the members of a water district’s board after a public meeting. A 1996 voter initiative, Proposition 218, limits the amount of fee increases to actual increases in a water district’s cost of providing water service. Any increase in fees ultimately falls on consumers, or on HOA members through the HOAs.

New water quality standards established by the California Department of Public Health (DPH) have reportedly led to substantial expenses for many water districts. DPH proposed new standards in 2013 regarding the amount of hexavalent chromium, also known as chromium 6, in drinking water. The consensus among public health officials is that chromium 6 is carcinogenic when consumed above certain amounts. This is the substance made famous by the events depicted in the film Erin Brockovich, in which the residents of a small town in the Mojave Desert experienced high rates of cancer due to chromium 6 in the groundwater. The DPH recommended a cap on chromium 6 of 10 parts per billion (ppb), considerably lower than the federal cap of 100 ppb. Ten ppb became the state standard in May 2014.

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14483258916_9c251023c2_z.jpgCalifornia Governor Jerry Brown declared a State of Emergency in January 2014 because of a severe drought that has persisted for several years. Since then, the state government has mandated widespread restrictions on water use, including restrictions on the ability of local governments and homeowners’ associations (HOAs), during emergency drought conditions, to enforce rules requiring residents to water their lawns. These water conservation efforts, however, continue to come into conflict with some HOAs around the state.

Governor Brown signed AB 2104 into law in September 2014. The bill amends the Davis-Stirling Common Interest Development Act (DSCIDA), the main law governing California HOAs, to restrict the enforcement of certain regulations during a state of emergency, as declared by the governor or a local government, related to drought. HOAs may not penalize their members “for reducing or eliminating the watering of vegetation or lawns.” Cal. Civ. Code § 4735. The bill responded to several situations in which HOAs imposed fines or assessments against residents who were responding to Governor Brown’s calls for water conservation.

In April 2015, Governor Brown issued Executive Order B-29-15 (PDF file), which instituted a wide range of water-saving measures. The order directs the State Water Resources Control Board to implement restrictions with a goal of a 25 percent reduction “in potable urban water usage” across the state by February 2016. It directs the Department of Water Resources to lead an effort “to collectively replace 50 million square feet of lawns and ornamental turf with drought tolerant landscapes.” Among many other provisions of the executive order are a ban on watering grass in public street medians and increased use of water-saving technologies.
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Sprinkler04.jpgCalifornia is experiencing a severe drought, which has resulted in substantial restrictions on water usage. This has led to a wide range of responses from homeowners looking to conserve water in regard to their landscaping. Some homeowners are replacing their lawns with hardier plants, gravel or sand, and other methods of xeriscaping. Other homeowners are simply allowing their lawns to go brown. A few homeowner associations (HOAs) around the state, however, have continued to enforce rules regarding lawn care and maintenance. HOAs can enforce their own rules, provided that they do not conflict with other laws. A bill recently signed by the governor brings these HOA restrictions into direct conflict with state law, undoubtedly to the relief of homeowners with dead lawns all over the state.

The drought has left millions of people across California and neighboring states without sufficient water. Many rivers and reservoirs reportedly reached their lowest points in recorded history this year. At least one town lost water entirely as its wells ran dry. Governor Brown declared a state of emergency in January 2014. State officials announced a few weeks later that they would not release water from the state’s reservoir system, choosing to focus on conservation instead.

Despite these dire conditions, a few HOAs are reportedly still enforcing rules regarding lawn maintenance. In one case, a homeowner in San Ramon replaced her lawn with native, drought-resistant plants. This earned her a rebate from the public water utility, but her HOA attempted to fine her $50 per month until she restored sod to her front yard. Homeowners in a development in Indio, in the Coachella Valley, reportedly received a notice from their HOA stating that they had to add grass to their lots by a specified deadline, or they could face a hearing before the HOA board of directors and a fine.
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unique-3-1098685-m.jpgIn the state of California, homeowners associations (“HOAs”) are governed by both bylaws, which establish how the association will be run, and by a declaration of covenants, conditions, and restrictions (“CC&Rs”). In addition, California HOAs must also adhere to several laws, including the Davis-Stirling Common Interest Development Act. A recent court decision and amendments to the Davis Stirling Common Interest Development Act represent expanded authority for Board Members in some instances.

Friars Village Homeowners Association v. Hansing

Following an October 9, 2013 decision by the Court of Appeal in San Diego County, the hurdles for enacting new director qualifications for a HOA may become less onerous. Prior to this decision, HOAs were traditionally required to formally amend their bylaws to establish, clarify, or expand director qualifications, which required a formal vote and approval of the membership. In Friars Village, association member Hansing challenged a rule that prevented two members from the same household serving on the board.

Rejecting Hansing’s argument that the rule established a new qualification that was inconsistent with the bylaws, the Court of Appeal found the rule was reasonable and supported the HOA’s rationale for adopting the rule. Based on the court’s decision here, a Board may adopt a qualification for election to the Board beyond what is set forth in the bylaws as long as the qualification is reasonable and consistent with the HOA’s governing documents and is reasonable. Importantly, this decision may open the door to a potentially broad grant of authority to HOA Boards relating to the adoption of qualifications by rule as opposed to formal votes.
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