Changes to Statutory Default Procedure
(a) This section applies to an association that does not otherwise provide a fair, reasonable, and expeditious dispute resolution procedure. The procedure provided in this section is fair, reasonable, and expeditious, within the meaning of this article.
(b) Either party to a dispute within the scope of this article may invoke the following procedure:
(1) The party may request the other party to meet and confer in an effort to resolve the dispute. The request shall be in writing.
(2) A member of an association may refuse a request to meet and confer. The association may not refuse a request to meet and confer.
(3) The board shall designate a director to meet and confer.
(4) The parties shall meet promptly at a mutually convenient time and place, explain their positions to each other, and confer in good faith in an effort to resolve the dispute. The parties may be assisted by an attorney or another person at their own cost when conferring.
(5) A resolution of the dispute agreed to by the parties shall be memorialized in writing and signed by the parties, including the board designee on behalf of the association.
(c) A written agreement reached under this section binds the parties and is judicially enforceable if it is signed by both parties and both of the following conditions are satisfied:
(1) The agreement is not in conflict with law or the governing documents of the common interest development or association.
(2) The agreement is either consistent with the authority granted by the board to its designee or the agreement is ratified by the board.
(d) A member shall not be charged a fee to participate in the process.
In Huntington Continental v. J.M. Trust (Cal. App. Sup. Ct.; January 13, 2014)(222 Cal. App. 4th Supp. 13.) the Appellate Division of the Orange County Superior Court held that the Davis-Stirling Act compels associations to accept partial payments from homeowners to reduce the amount of the homeowner’s unpaid assessments. Associations are concerned that this decision will allow homeowners to avoid foreclosure by keeping their delinquent account under the $1,800 Civil Code requirement. As collection counsel for associations, my question is this: is this really such a bad decision for associations?
It has long been industry practice by associations or their management companies to reject partial payments from homeowners once the account has been turned over for collection to a collection agency or law firm. Some collection agencies or law firms also reject those partial payments. A better practice is accept the partial payments and advise the homeowner that in doing so, the association is not waiving any of its legal rights or remedies in collecting the remainder of the debt. The benefits: 1) collecting money for the association for the benefit of all owners; and 2) avoiding criticism from the court for not accepting partial payments from financially struggling owners.
On Feb. 24, 2014, the Court of Appeal ordered the case transferred for rehearing and decision. While we await the Court’s decision, it is important to note that Huntington Continental is only binding in Orange County at this time. Therefore, it is still the board’s decision whether to accept partial payments in other counties. It makes sense to accept money owed and offered by a homeowner, when the association needs that money, as long as it can continue to pursue the remainder of the debt in an action for money damages. Associations interested in developing a policy for the acceptance of partial payments should consult with their association’s legal counsel.
Steven Roseman, Esq. is the founder and managing partner in the law firm of Roseman & Associates, APC. During the past nineteen (19) years, Mr. Roseman has represented homeowners associations and their boards. His representation includes legal guidance, enforcement and compliance with their governing documents, fiduciary duty responsibilities, updating governing documents, contract drafting and negotiation, loss prevention, and director and officer defense and representation. Mr. Roseman is a specialist in the field of Construction Defect litigation and is a well-seasoned trial lawyer with a number of jury trials to his name. He has obtained hundreds of millions of dollars in recoveries for clients in complex litigation, ranging from insurance bad faith, construction defect litigation, and enforcement of governing documents.
Mr. Roseman is an active member of the two most prominent trade groups – CAI and CACM. Mr. Roseman lectures extensively on behalf of these groups, including CAI’s ABC Essentials Course, and is on the faculty of CACM’s CCAM manager certification and High Rise manager certification. In addition, he serves on the Mediation Steering committee for CAI-GLAC, the Education committee for CAI-OC, the Legal Steering Committee for CACM Law Journal, and finally serves as a delegate for CAI’s California Legislative Action Committee (CLAC).
One process that often gets owners piping mad is architectural approval. Here our experts offer seven tips for making your HOA’s architectural approval process transparent, fair, and as speedy as possible.
1. Educate home owners on the committee’s role. “Educate home owners on the reason for the architectural review committee,” says Steven Parker, president of RMI Management in Las Vegas, which manages 286 community associations. “You might say, ‘You bought in this community because you liked the way it looked, and it’s the ARC’s job to maintain those standards that appealed to you.’ I’ve seen associations where owners were mad at ARC decisions and considered them unfair, and that was because the board hadn’t adequately explained the reason for the ARC process to home owners in the first place. Where that’s done and owners’ requests are declined, they’re less likely to be angry.”
2. Create written standards. “The first thing you need is written criteria,” explains Robert Galvin, a partner at Davis, Malm & D’Agostine PC in Boston who specializes in representing condos and co–ops. “For example, if somebody wants to put in a dormer, what are the criteria for that so it’s not left completely up to the architectural review committee?
“You could promulgate specific criteria for specific renovations,” adds Galvin. “For example in the condo where I live, the windows are owned by the owners and aren’t common. The association has issued a list of windows you can use. You can buy them anyplace, but the windows you buy must meet these specifications. Then there are balcony criteria: This is what you can do to your balcony.
“Then there can be general criteria,” says Galvin. “You could state that alterations have to fit in with the existing architecture, so they must be art deco or American colonial style, whatever your style. Otherwise, there are no guidelines, and it would be very difficult for the committee to know what the criteria would be. That’ll make the process fair, and not only that, people will believe it’s fair.”
3. Take tons of decisions out of the committee’s hands. “Have as many decisions taken out of the subjective realm as possible,” advises Parker. “Rather than saying, ‘No, you can’t choose that paint color,’ create a list of paint colors that are acceptable and let owners choose from the list.”
4. Create a transparent system. “It should be an open process,” says Galvin. “There should be a hearing before the ARC members, and there’s no reason it can’t be public. There should be a written decision, and it should include the committee’s reasons for the decision. And the process should be speedy. It doesn’t have to be done in a few days, but an ARC review shouldn’t take months.”
5. Document your process. “Have a process that ensures that all requests should be on an application, and create a form application that owners must use so that people just don’t send a letter,” advises Brad van Rooyen, a partner at Home Encounter, a Tampa, Fla., company that manages 15 community associations totaling about 3,000 owners. “Also tell owners that if their application isn’t done correctly, it won’t be processed until it’s correct. Then you keep the process fair for everybody. Likewise, ensure that every step of the ARC review process is documented in writing by someone on the committee.”
6. Remind the committee of the stakes involved. “Whether the management company or the HOA’s attorney brings this up, we always remind our ARCs that disputes can end up in court or arbitration, and the committee might be asked to explain everything they’ve done,” explains van Rooyen. “Keeping that in the back of their minds hopefully keeps things moving along in a fair and consistent manner.”
7. Be open to change. “When ARCs are developing architectural guidelines, they need to be responsive to the needs of the community,” says van Rooyen. “A lot of things have changed, especially in older communities. Sometimes, 25 years have gone by since the creation of the guidelines. What was written when the community was founded isn’t likely to be applicable today.
“For example, some condos are extremely specific on the roofing material type, ” adds van Rooyen. “But there have been so many advancements in roofing types that there are probably better solutions that are longer lasting and more affordable than what’s specified in the governing documents. Also, my association has very specific guidelines governing the coach lights in front of our garages. But we can’t find the replacement lights, and we also can’t get a majority of our community to show up or send in proxies to change the governing documents on that issue.”
Why go through all this hassle to strengthen your ARC process? So you’re ready and your actions are defensible when owners challenge you—which is something you can count on.
“If you treat differently and upset one owner who’s retired and has a little time on his hands,” says van Rooyen, “with owners’ access to the Internet today and how quickly people can find out how to challenge things, it’s not if they’ll challenge you but when.”
Originally published October 2012 by HOALeader.com