HOA boards should be aware that there are several unscrupulous management companies in Southern California that are locking-in their management contract by making it very difficult to terminate their contract when a board becomes dissatisfied due to poor performance. They do this by allowing boards only a very narrow window each year in which a board can terminate the contract. Knowing that the board is locked-in, the management company then reduces their service to a minimal level, spending as little management time as possible, thus maximizing their profit as long as possible. The standard in the industry is for associations and management companies to be able to terminate management contracts upon providing a 60 to 90 day notice. This is fair to both parties. Boards should check their contracts in order to protect themselves against such conduct.
The state legislature passed several new laws in 2017 that become effective January 1, 2018. Those laws that have the greatest impact on community associations are summarized below. Most of the new laws will make managing homeowner associations more challenging and time-consuming. They will also likely result in more litigation between homeowners and their associations.
AB 634, like most environmentally-based legislation renders void and unenforceable any governing document provision that prohibits the installation or use of a rooftop solar energy system on a common area roof (in which the owner resides, or on an adjacent garage or carport assigned to an owner as exclusive use.) The law allows an owner of a unit in a multi-unit condominium building to install solar panels on the common area roof, provided he or her meets the criteria for doing so. The new law amends Civil code 714.1 and Civil Code Section 4600, and adds Civil Code Section 4746 to the Davis-Stirling Act to allow an owner to place solar panels on the common area roof. The amendments to the Civil Code not only prohibit any general policy or provision that prohibits rooftop solar installations on multi unit condominium roofs, but also carves out an exception the 2/3 membership approval requirement of Civil Code Section 4600. Under this law as with electric vehicle charging stations, membership approval is not required to install and use a solar energy system on a common area roof provided the requirements of Civil Code 4746 are met. The new Civil Code Section 4746, similar to Section 4745 governing electric vehicle charging stations, contains specific requirements the solar installing owner must meet including. 1. notifying each owner in the building and, 2. maintaining owner's liability insurance. In addition, Civil Code Section 4746 allows an association to impose additional reasonable restrictions that require a solar site survey to determine usable solar roof area and equitable allocation of usable solar roof area among all owners sharing the same roof or area. Such restrictions also can require the owner and successive owners of the unit to be responsible for, 1. damage caused by the installation, maintenance of, repair, removal and replacement of the system, 2. cost of maintaining, repairing and replacing the system, and restoring the common area, and 3. disclosing to prospective buyers the existence of the system and the responsibilities stated above. AB 634 does allow an association to impose, per Civil Code Section 714.1, reasonable provisions that restrict installation in common areas, require maintenance, repair or replacement of roofs, or require installers to indemnify or reimburse the association for loss or damage caused by the installation, maintenance or use of the solar energy system.
SB 407 adds Civil Code Section 4515 to the Davis-Stirling Common Interest Development Act to permit community association members' and residents' ability to, 1. peacefully assemble or meet, 2. invite public officials, candidates and homeowners representatives to the community to speak on matters of public interest, and 3. canvass and petition the members, residents, and board about, or distribute or circulate information about common interest development living. The law establishes a resident's right to use common area facilities for an assembly or meeting about the above topics, subject to availability, without being required to pay a fee, make a deposit, obtain liability insurance, or pay the premium or deductible on the association's insurance policy in order to use the common area for the above purposes. The new law also imposes a civil penalty of $500 for each violation of the statute.
Effective January 1, 2018, SB 2 imposes a $75 fee on every real estate instrument, paper, or notice required or permitted by law per each transaction, not to exceed $225 per transaction. The fee does not apply to documents recorded in connection with real estate sales transfer. The fee does attach to grant deeds, deeds of trust, abstracts of judgement, notices of default and liens, and releases of liens. The law will greatly impact community association assessment collections by adding to the fees an association is charged for recorded documents, fees that will be passed on to the delinquent owner. On its face, the law is ambiguous as it relates to real estate sales.
Every year we receive reports of fraud, embezzlement, and misuse of funds by small management companies, management company employees, and directors of homeowner associations. Sometimes the funds can be recovered, but not always. Millions of dollars have been lost by associations resulting in extreme financial hardships. While such acts are not common, they do occur, and homeowner association boards can and should take precautions to avoid them. Most of the people who embezzle money don’t look like criminals and there is always a first time for each person who crosses the line into criminal activity. Some of the things your HOA board should know: 1. An accounting system that requires a conspiracy of two or more people to embezzle funds minimizes the chance of theft. Most people inclined toward theft are afraid to approach another person to discuss the theft of funds knowing that it could lead to the discovery of their plan. While this principle works very well with unrelated people, it does not work well when the people in control of HOA funds are related to each other such as a husband and wife or father and daughter, etc. When HOA funds are controlled by two close relatives, the danger of embezzlement is much higher than if two unrelated people are involved in handling funds. 2. The person who is given responsibility for issuing checks should not be the same person responsible for reconciling the bank statements. When the same person does both without constant and careful oversight, fraud can easily go undetected. 3.Bank statements should be reconciled promptly in order to ensure that the check signers are not the same people who reconcile the bank account. 4. The person assigned to be contacted by the bank (if required) should be someone other than a check signer or person assigned to bank account reconciliations. 5. Any working supplies of checks should be maintained in a secured location, accessible only to authorized personnel. Any reserve supplies of checks should be in a separate secured location, accessible only to authorized personnel. 6.Any employee authorized to verify the issuance of a check, should ask for the amount on the check, the date issued, check number, and the name of the payee.7. All canceled checks and bank statements should be in a locked location accessible only to authorized personnel. 8.Never use a "rubber stamp" to sign checks and make certain that all check signers clearly sign their name. Illegible signatures and / or initials should not be permitted. The signer must be able to absolutely determine whether a signature is his or hers if required to do so at a future date.9. Immediately review check orders when they arrive to verify the accuracy of account numbers and to make certain that all checks are in consecutive order. 10. Immediately notify the bank when an employee who is authorized to transact business with the bank leaves. 11.Make certain that all cash is kept in a safe location under dual control by unrelated personnel until it is transferred to the bank. 12.Facsimile signature machines should not be used. 13.Require that all accounting personnel take vacations, during which time, their responsibilities are assigned to another person. 14.All mail should be opened and distributed by someone other than the accounting personnel. 15. All disbursements should be made by numbered, printed checks in sequence. 16.All letters to the bank authorizing a person to receive information, authorize transactions, cash checks, or discuss over-drafts should be as specific and limiting as possible. Blanket letters of authorization should be avoided. 17.Make certain that the math is checked on every invoice to be paid and that any balance forward numbers are accurate.18. All checks received should be deposited daily. 19.All correspondence addressed to the accounting department should be reviewed by an authorized person before it is distributed. Every accounting system should have a system of checks and balances which requires a clear separation of duties between people who are not related to each other. Separation of duties is one of the key concepts to internal control. It has as its objective not only the prevention of fraud, but the elimination of errors. Board members can protect their association's funds by making certain that their management company complies with the basic principles outlined above.
Unpaid internships have become common in California, but are often illegal. Michael T. Chulak & Associates represents both plaintiffs and defendants in unpaid internship claims. In order for an unpaid internship to be legal, all of the following six criteria must be satisfied: 1. Even though the internship involves the operation of the business, it must be similar to training that would be offered in an educational environment; 2. The intern experience must be for the benefit of the intern, not the business; 3. The intern cannot displace a regular employee, and must work under the close supervision of an employee; 4. The employer cannot derive any immediate advantage from the relationship, and its activities may be impeded; 5. The intern cannot be entitled to a job at the conclusion of the internship; and 6. Both the employer and intern must understand that the intern is not entitled to wages during the internship. Call us for unpaid internship claims whether you are making a claim or defending a claim or for any other employment or legal matter. Initial consultations are available at no cost.
Often when an HOA gets sued, the insurance company for the HOA agrees to defend the homeowner association under a reservation of rights. This means the insurance company reserves its right to later deny the claim should facts be discovered that would justify the denial of coverage. The minute a homeowner association defendant receives a reservation of rights letter from the insurance company, the HOA has a conflict of interest with both its insurance company and the law firm they have hired. In the landmark 1984 Cumis decision, the California Court of Appeal Stated: We conclude the Canons of Ethics impose upon lawyers hired by the insurer an obligation to explain to the insured and the insurer the full implications of joint representation in situations where the insurer has reserved its rights to deny coverage. If the insured does not give an informed consent to continued representation, counsel must cease to represent both. Moreover, in the absence of such consent, where there are divergent interests of the insured and the insurer brought about by the insurer's reservation of rights based on possible noncoverage under the insurance policy, the insurer must pay the reasonable cost for hiring independent counsel by the insured. The insurer may not compel the insured to surrender control of the litigation: Disregarding the common interests of the two diverge to such an extent as to create an actual, ethical conflict of interest warranting payment for the insureds' independent counsel. The law firm of Michael T. Chulak & Associates is available to act as Cumis Counsel for homeowner associations that are defending lawsuits where they have received a reservation of rights letter from their insurance company. Call attorney Michael T. Chulak for a no cost initial consultation regarding any legal matter
1. You dislike your children and want them never to talk to each other again after dealing with the probate of your estate. 2. You hate your spouse and want him or her to suffer the agonizing process of probate. 3. Your family doesn't need the money so probate fees and taxes are no object. 4. You prefer to have your minor children experience foster care while the court decides what relative will receive custody. 5. You have absolute knowledge that you will live forever. Obviously, we are being dramatic in making our point. However, the point is critically important. Some people die unexpectedly and their families suffer. Ask yourself this question - Will your loved ones remember how much you cared after you are gone? Initial consultations are at no cost.
Partition is a legal action in which a co-owner of real property files a lawsuit in order to obtain a court order forcing one or more of the following: Sale of the real estate Division of the property, and/or Division of the profits from the property. Generally, a partition order by the court provides for an appraisal of the property which establishes either the sale price of the property or the price at which one co-owner can purchase the interest of another co-owner. Partition suits or actions rarely result in court trials. Partition suits usually result in forcing the co-owners to either voluntarily sell the property or work out a purchase-sale between them. Partition actions are most common in the following situations: Partnership disputes including Palimony - Marvin Claims, Corporate dissolutions. Property is inherited by people having different objectives. One wants to sell the other wants to retain the property. Destruction of a condominium building or other co-owned building (by fire, earthquake, landslide, mudslide or otherwise) where the issue of reconstruction is at issue. For additional information on partition litigation or any real estate matter, please contact us for a no cost initial consultation.
Under California law, sellers of both attached and detached homes must disclose to the buyer all conditions, including construction defects, that would affect the buyer's decision to purchase or not purchase, or to pay a higher or lower price for the property. The requirement to disclose is based upon what the seller knew or reasonably should have known about the conditions of the property being sold. Thus, the legal duty to disclose is extremely broad. With a few exceptions, in California residential real estate transactions, the sellers are required to sign a Transfer Disclosure Statement (TDS), stating in writing, all of the defects of the property and other specific existing conditions designed to permit the buyer to make a fully informed decision. The failure of a seller to make the required legal disclosure can result in the buyer making a claim for nondisclosure. This will generally include a claim for negligent misrepresentation, intentional misrepresentation, or possibly fraud. If a buyer makes such a claim, and prevails in court, the defendant sellers will be liable for damages which may include: The cost to make the needed repairs; Compensation for loss of use; and Costs of litigation including court costs, jury fees, court reporter fees and expert witness fees. In addition, a seller defendant may be required to reimburse the buyer for his or her attorney's fees, and in the case of fraud, may be liable for substantial punitive damages. As you can see, non-disclosure residential real estate claims are serious claims. The failure to disclose a $10,000 defect can result in a claim, that if unresolved, could result in a judgment exceeding ten times the cost of the repair. Consequently, sellers should make full and complete disclosures to potential buyers. The real estate attorneys with Michael T. Chulak & Associates represent buyers, sellers, and real estate brokers-agents in non-disclosure real estate disputes and other litigation.
Homeowner Associations can seize the rent due from tenants who occupy homes owned by owners who are behind on their assessments or dues, if their CC&Rs permit the action. If your association's CC&Rs do not permit the seizure of tenant rents, your CC&Rs can be amended to permit this highly effective collection method. Call us for a no-cost consultation and additional information.
With the rapidly expanding economy, we are seeing many new condominium buildings and custom homes being constructed all over Southern California. Unfortunately, many of these new homes are being constructed by developers who are taking short-cuts resulting in defects which result in water intrusion, landslides, subsidence, major plumbing problems, and other serious defects. Whether it is one house or an entire condominium or other housing community, call us if you have suffered damages from significant defective construction. We represent California homeowners in making claims against developers. Your initial consultation is absolutely free.
Unlike most HOA law firms, we represent individual owners of condominiums who have claims against their community association. We also represent homeowner associations, so we understand both sides of HOA disputes. Call us today if your HOA refuses to repair your roof or you have been subjected to long-term water intrusion or some other form of negligence that has caused you financial harm.
Before your HOA hires a management company or extends its contract, call us to find out whether the company or any of its managers have been sued for something serious. The service is free to both board members and non-board members. Don't regret your decision.
The firm will be offering free homeowner association law seminars in several locations in the Coachella Valley in November. Dates and locations will be announced very soon. Please send us an email to be included on our Seminar announcement list or check our website: LegalSeminars.net
The firm has now expanded its services into the Coachella Valley in Riverside County. Please contact Michael Chulak if you need a no-cost initial consultation. Appointments can be arranged in Palm Desert or nearby, or the corporate office.
While most of our HOA assessment collection practice involves collecting unpaid assessments for associations, we also represent homeowners who have been subjected to wrongful collection actions by trustee companies and attorneys who have failed to comply with the law. If you believe you have been the victim of an unlawful collection action by your homeowner association, call us today for a free initial consultation.
We have updated our website regarding frequently asked questions about estate planning, living trusts, and probate. We recommend that you review it before your no-cost initial consultation because it helps most people develop a list of questions. If you own a home or other real estate, and/or have minor children, you should have a living trust.
If you own a profitable business and have ever thought it was a good candidate to franchise, you should talk to us. Our firm has the ability to joint venture the development of a franchise with you if you have the right business and the ability to train others on how to operate your type of business. We supply the cash investment, all legal services, and the marketing of the franchises. Call us if you qualify. There is no cost or obligation.
The firm is in need of a paralegal with personal injury and litigation experience in the San Gabriel Valley. Please send resume to managing partner, Michael Chulak.
MTC Law is now providing HOA Assessment Collection Services throughout California. For additional information please visit: HOAAssessmentCollections.com.
Our schedule of Free HOA Law Seminars is now available on our website LegalSeminars.net for the period February 2017 to April 2017. The first group of homeowner association seminars will be held in various areas of Los Angeles County and Ventura County. Later in the year, free HOA seminars will be offered in Orange County. This will be our 17th year of offering these seminars. Please make a reservation early and bring one or more of you neighbors.
The 2017 updated Davis - Stirling Act is now available on our website: HOAQandA.com. It is free and fully searchable, making it very user-friendly. You can type in a keyword and it will be underlined throughout the entire document.
Given the growth of our HOA law practice, we now have a need for an additional attorney with HOA and litigation experience. Contact Michael Chulak for details.
Our firm is in need of an attorney who speaks Mandarin Chinese and English, to work in our Agoura Hills office or in the San Gabriel Valley. A Minimum of three years of litigation experience is required. Please contact Michael Chulak for details.