Homeowners Association Management since 1994

Question: Who can change the rules or policies of a HOA?
Answer: The board may make changes, but only after the homeowners: 1) have had at least 30 days to consider the rule change; and 2) after owners are given an opportunity at a board meeting to give their opinions about the rule change (Section 4365).

Question: Who can change the CC&Rs?
Answer: Only a certain percentage of the homeowners of the HOA by voting can do that (check CC&Rs for the percentage).

 

Question: How are decisions made by a board at a board meeting?
Answer: By parliamentary procedure. One board member makes a motion and another one seconds it. The motion is then discussed by a board.  After a board is through discussing a motion, a board then votes on that motion.  The majority vote of a board either approves or disapproves a motion (Section 1363(d)).

 

Question: May any matter be discussed by a board at a board meeting?
Answer: Only those matters that are on the agenda may be discussed at a board meeting. The agenda must be completed at least 4 days before the meeting (Section 5000(a)).
 

Question: Before an owner is called to a hearing by a board, how many days’ notice must be given?
Answer: A notice must be sent to an owner at least ten days before the hearing. If a board acts against a homeowner at a hearing, that owner must be notified in writing within 15 days (Section 4820).
 

Question: May homeowners attend board meetings?
Answer: Yes. (Sections 4925(b) and 5000(b)).
 

Question: What meetings may homeowners not attend?
Answer: Owners may not attend an executive sessions of a board concerning emergencies, litigation, contracts, member discipline, personnel matters, or meetings with delinquent owners (Sections 4925(a) and 4935(a)-(b)).
 

Question: If a homeowner is called to a hearing, may she do it with only a board in executive session?
Answer: Yes. (Section 4925(a) and 4935(a)-(b)).
 

Question: How soon are the minutes of a board meeting supposed to be made available to homeowners?
Answer: A draft copy within 30 days. (Section 4950(a)).
 

Question: How soon must notice of a board meeting be given?
Answer: A notice must be posted in the common area at least four days before a board meeting. (Section 4920).
 

Question: May a homeowner speak at a board meeting?
Answer: Yes, for a “reasonable time limit” set by a board. (Sections 4925(b) and 5000(b)).
 

Question: If a homeowner and a board can’t work out a dispute at a hearing, what can they do to try to resolve the issue?
Answer: If a hearing does not resolve a matter, then the 1st step is for one board member to meet privately with an owner to discuss how to settle the matter.  This 1st step is called “meet and confer” or “IDR” (Internal Dispute Resolution; Section 5915).  If the 1st step is unsuccessful, then the 2ndstep is to try and resolve the matter through mediation or arbitration.  This is called “ADR” (Alternative Dispute Resolution; Section 5925).  The homeowner and the association split the cost of the mediation/arbitration.  If “ADR” does not solve the matter, then either party is now free to file a suit against the other party to compel compliance with the CC&Rs, State Law, etc.  The counsel for an association should send a letter to the other party saying that unless the matter is resolved, the HOA will have no other alternative but to file a suit.  

 

Question: Does a homeowner or the HOA pay to eradicate termites?
Answer: If an owner lives in a condominium, the HOA pays for termite eradication. But, if he lives in a PUD (Planned Unit Development), the homeowner pays. Check the CC&Rs to determine if you live in a condominium or PUD (Section 4780).
 

Question: In a condominium, the HOA pays to tent a building to treat for termites.  A resident may not live in their home while it is tented because of the poisonous gas.  Does the Association pay for a resident to live elsewhere while the building is tented?

Answer: The resident pays to live elsewhere while their home is tented (Section 4775(b)).
 

Question: How does a homeowner know what percent the financial reserves are funded?
Answer: Ask the HOA for a copy of the current reserve financial disclosure for future repairs (Section 5570).
 

Question: After the HOA’s annual operating budget is approved, how much may a board raise the assessments without a vote of the homeowners?
Answer: Five percent (Sections 5605(b) and (c)).
 

Question: When a board approves the operating budget each year, how much may they raise the assessments without a vote of the homeowners?
Answer: Twenty percent (Sections 5605(b) and (c)).
 

Question: When are assessments due?
Answer: Assessments are delinquent 15 days after they come due, unless the CC&Rs give a different deadline (Section 5650(b)).
 

Question: May a homeowner install a satellite dish?
Answer: In a Planned Unit Development (PUD), an owner may install a dish with the input of the HOA. In a condominium, an owner may only install a dish on their exclusive use common area (their deck/balcony).  Installation anywhere else is prohibited without the written approval of the HOA (Section 4725).
 

Question: May a homeowner make an architectural, landscape, etc. change to the exterior of their home without the approval of the HOA?
Answer: No, in most cases. It is best to ask the HOA before proceeding with any exterior change (Section 4765).
 

Question: May a homeowner make an architectural change to the interior of their home without the approval of the HOA?
Answer: Yes, if nothing structural is going to be changed. It is best to read CC&Rs before proceeding with any interior change; and, to ask the HOA for input.
 

Question: How many votes does it take to approve a special assessment?
Answer: First, it takes fifty-one percent of the homes to return a ballot to make a quorum to vote on approving a special assessment. Once the HOA has fifty-one or more percent of the ballots, it takes fifty-one percent of that fifty-one percent (or whatever the number ends up being) to approve a special assessment.  For example, if a HOA had one hundred homes.  At least fifty-one of the homes would have to return a ballot to make quorum.  If that association received just fifty-one ballots.  Then, at least 51% of those fifty-one ballots (= 26 ballots) must vote to approve a special assessment.  

 

Question: How many board members must be present at a board meeting to call it to order and conduct business?
Answer: The bylaws indicate how many board members there are to be.  If the bylaws say there are to be five board members, then at least three board members must be present to call a board meeting to order.  A majority of the total number of board members is required to call a board meeting to order (Section 7211(7)).  
 

Question: If a board is made up of five people and it takes three people to call a meeting to order to conduct business. If one of the three permanently leaves the meeting, can the two board members continue to conduct business?
Answer: Yes (Section 7211(a)(8).
 

Question: May a board make a decision outside of a board meeting?
Answer: A board is not supposed to discuss association matters outside of a board meeting (Sections 4900-4955).  A board must make decisions at a board meeting, unless there is an emergency.  Making decisions at board meetings in front of homeowners enables a HOA to operate in a transparent manner.  

 

Question: How is a board member removed from the board?
Answer: A board member may resign in writing and the board may appoint a homeowner to serve out her term. If a board member misses a specified number of meetings mentioned in the by-laws, he may be removed. A homeowner can call for an election to remove a board member by having five percent of the homeowners sign a petition. A board member may be removed for being found to be of unsound mind, a felon, or breach certain duties (Sections 7221 and 7222).
 

Question: If a board member can’t make a meeting in person, can he participate in the board meeting by making a conference call?
Answer: Yes, as long as the board is able to hear one another (Section 7211(6)).
 

Question: May I be personally sued for being on the board?
Answer: Yes (Section 7231).
 

Question: How does a board member avoid being found liable in a lawsuit?
Answers:

     1.Make decisions in good faith. “This means that the action of each director must be genuinely directed towards those purposes set forth in 

       the governing documents. There should be no ulterior reasons or motives” (Section 7231(a)). *

    2.Make decisions that are in the best interest of the HOA, even if that decision is not in their personal best interest (Section 7231(a)).

    3.Make decisions like another board member living in a different HOA would (Section 7231 (a)).

    4.Making a decision after consulting one or more of the following: 

        a. Legal advice (Section 7231(2)).

        b. Reports from reliable and competent architects, engineers, etc. (Section 7231(2)).

        c. Financial input from accurate financial reports, and a CPA (Section 7231(b) and (2)).

        d. Committee reports (Section 7231(3)).

        e. Reports from management (Section 7231(1)).

 

Question: Does the HOA carry insurance to protect board members from being sued personally?
Answer: Yes, it is called Directors and Officers Insurance.
 

Question: Why does a board member need the HOA to carry Directors and Officers Insurance?
Answer: Without insurance to pay for an attorney to defend a board member, he would have to spend his own money to hire an attorney. In addition, if a board member lost a lawsuit and the court decided that she owed a certain amount of money. That board member, rather than the insurance company, would have to pay the amount the court decided.
 

Question: Is there any reason why the Directors and Officers Insurance may not provide coverage for a board member?
Answer: Please go back and read the question, “How does a board member avoid being found liable in a lawsuit?” 
 

Question: What is the “fiduciary” responsibility of the board?
Answer: It is when a board member makes a decision that is in the best interest of a HOA, even if that decision is not in his personal best interest (Section 7231(a)).
 

Question: Can the HOA tow my car at my expense?
Answer: Yes, if the streets (parking spaces, etc.) are private HOA streets.  And, the car sits and does not move for 96 hours, after being tagged.  Or, the rules and signage indicate the streets are fire lanes and cars will be towed immediately.  Or, the rules indicate a car must display a sticker, etc. or it will be towed immediately.  Or, a HOA notifies residents that parking is not allowed during construction or a vehicle will be towed immediately.  Or, a vehicle violates particular sections of the parking and guest parking rules (Section 22658).
 

* Legal Obligations and Potential Liabilities of Association Directors. John Garvic, Esq.