Delinquent Landlord

Source: Adrian J. Adams Esq. 

QUESTION: Our board is frustrated with delinquent homeowners who collect rent on their units but refuse to pay their dues. Is there anything we can do?

ANSWER: There is a very effective provision I added to CC&Rs 20 years ago to address this issue. It’s called a supplemental lease agreement or lease addendum.

Lease Terms. Whenever an owner leases his unit, both the owner and the tenant are required to sign a lease addendum supplied by the association that requires, among other things, (i) the lease be for the entire unit; (ii) no assignments or subleases are allowed; (iii) the lease is for not less than one year; (iv) tenant agrees to comply with the association’s governing documents and be subject to the its disciplinary procedures; (vi) owner assigns rents from his unit to the association in the event he becomes delinquent; and (vii) tenant agrees to pay the owner’s assessments should he become delinquent.

Effective Tool. The agreement provides a tool that associations need to hold both the homeowner and the tenant accountable since they are parties with the association to the agreement. When I go into court with CC&Rs and a signed agreement, neither the owner nor the tenant have a defense. Normally, a demand letter from my office with the relevant documents enclosed and a threat of litigation is sufficient to get prompt payment of the delinquent assessments. Only once have I had to go into court to enforce the lease addendum.

Rules Enforcement. The addendum is also effective in bringing a wayward tenant into compliance with the rules. Per the signed agreement, the owner andthe renter are subject to disciplinary action. Both can be fined and, if necessary, sued. Moreover, the agreement gives the association the power to evict the tenant for violation of the terms of the lease addendum.

RECOMMENDATION: If your association has problems with delinquent landlords and/or problems with rules enforcement involving tenants, a lease addendum may solve both problems. If you have questions about implementing this in your association, contact me.

E-Cigarettes

Source: Adrian J. Adams Esq. 

QUESTION: My HOA wants to adopt a complete smoking ban–no smoking in the common areas and no smoking inside units. Can we also ban e-cigarettes?

ANSWER: Good question. Electronic cigarettes are battery-powered devices that deliver nicotine in a vapor to the user. According to advocates, they have fewer toxins than regular cigarettes and none of the tar, making them less harmful to users than traditional cigarettes. Moreover, there is no second-hand smoke, no carcinogens in the vapor and no odors; therefore, no problem. Not everyone agrees.

Airlines. The Department of Transportation adopted a policy that passengers cannot smoke e-cigarettes on commercial aircraft. When proposing the ban, the DOT stated:

In light of the unknown health risks with the use of electronic cigarettes by individuals who ‘smoke’ them or the people around them and the growing availability and use of electronic cigarettes, the Department is proposing this amendment … to explicitly ban the use of electronic cigarettes aboard aircraft.

Governments. Two weeks ago, the European Parliament issued strong regulations requiring health warnings on e-cigarettes. Tuesday, the second largest city in the country, Los Angeles, voted to prohibit them in all workplaces as well as parks, city beaches and outdoor dining areas. Contra Costa County, Richmond and Carlsbad have already banned them and other cities around the state are taking steps to either regulate or ban them.

Universities & Businesses. The University of California banned e-cigarettes on all its campuses. It did so because many of the elements in their vapor “are known to cause respiratory distress and disease.” According to the U.S. Food and Drug Administration samples of the nicotine liquid they tested had “detectable levels of known carcinogens and toxic chemicals. The National Business Group on Health issued a “Fact Sheet” on why businesses should consider banning them in the work place.

HOA Common Areas. It is clear from the growing number of regulatory agencies, municipalities and business organizations that associations have sufficient basis to ban e-cigarette use in the common areas. Boards can do so with a simple rule change. The rationale for banning them inside condos, however, is less clear.

Inside Condos. Because condominiums (and most stock cooperatives) have shared walls, ceilings and floors where cigarette smoke can drift into adjoining units, the annoying odors and carcinogens give associations a solid basis for banning smoking inside units, and many already have done so. Banning e-cigarettes, however, may be more difficult to justify since they are not a fire hazard and their vapors might not create detectible odors in adjoining units or cause harm to neighbors.

RECOMMENDATION: If associations decide to completely ban all smoking, including e-cigarettes, they should do so via an amendment to the CC&Rs. If the ban is a recorded restriction, it is presumed reasonable and the burden is on the challenger to prove it is not.

Remote Denial

Source: Adrian J. Adams Esq. 

QUESTION: Can the board deny a homeowner entry and exit by not allowing them to purchase a remote?

ANSWER: They can’t deny ingress and egress but they can deny a remote, depending on the circumstances. If you’re delinquent in your assessments, the association can suspend your privileges. One of those privileges may be the use of a remote to open the front gate. As long as you have another means to open the gate such as a keypad, the loss of the remote is a mere inconvenience. Those who pay for the convenience, receive it. Those who don’t, don’t.

Street Parking. If, however, there are no other means of opening the gate, the denial of a remote becomes murky. You can still park on a public street and walk to your unit (assuming you have a key to the pedestrian gate). That means you still have ingress and egress. You just can’t drive on the association’s streets because you no longer contribute to the maintenance of those streets (or the maintenance of the gates or anything else). This is more aggressive and its enforceability less clear. By analogy, California won’t suspend your drivers license for unpaid taxes but they will ground your car for unpaid registration fees and fine you if you drive it.

Reckless Driving. If your driving has endangered the safety of other residents, the board can suspend your driving privileges for an appropriate period of time. You still have the right of ingress and egress via taxi, bicycle, walking, etc. You just can’t drive. That’s no different than the State of California suspending your license for recklessly driving on public streets. Driving is a privilege not a right. Following due process, your driving privileges can be suspended.

RECOMMENDATION: If your board suspended your privileges because they don’t like the tie you wear, it’s time to call a lawyer. If you’re delinquent, stop whining and pay your bills. If you’re a reckless driver, stay out of my neighborhood; I would prefer not to get run over.

Drought Emergency & Reserves

Source: Adrian J. Adams Esq.

QUESTION: In light of the drought emergency, can reserve funds be used for drought-friendly landscape renovations?

ANSWER: I checked with Robert Nordlund, President of Association Reserves, Inc. to see what he thought. Following is his response:

Existing Landscape Reserves. Many associations already have landscape-related projects in their reserve study, the most common being tree trimming. Many others have periodic landscape renovation projects to freshen up the appearance and health of their greenscape. If an association has a landscape renovation reserve component, those funds could be used for replanting and redesigning with drought-tolerant plants.

Borrowing. If they don’t have funds already set aside, another strategy is to borrow from reserves with these borrowed funds expected to be recouped by savings from lower water usage. While borrowed reserve funds must be repaid within twelve months, the following allows for the delay of repayment:

…the board may, after giving the same notice required for considering a transfer, and, upon making a finding supported by documentation that a temporary delay would be in the best interests of the common interest development, temporarily delay the restoration. (Civ. Code 5515(d).)

Savings. If you find that a $50,000 landscape renovation project would result in a projected $50,000 water savings over three years, and if your reserve balance can support the expense without delaying necessary reserve projects, an updated reserve study can provide the necessary documentation. The result is a zero-interest loan from reserves to implement the project.

Additional Points. Make sure the project meets your architectural requirements. You don’t want to replace grass in your greenbelts with artificial turf if you’ve been denying homeowner requests for similar projects in their front yards. If you are installing artificial turf (or something else that will need renovation or replacement), remember to add it to your reserve component list.

Policies vs. Rules

Source: Adrian J. Adams Esq.

QUESTION: What is the difference between a policy and a rule? When we create a policy, do we need to send it to the membership for thirty days for review and comment?

ANSWER: The difference confuses a lot of folks, so much so that rules are sometimes mislabeled as policies and vice versa. Rules tell residents what they can and cannot do, a violation of which can result in penalties. A policy or procedure describes how things are done. For example,

It is the policy of the Architectural Committee to only review signed, written applications submitted through the management office. The procedure, for submitting a written application is to obtain a form from the management office, fill it out completely, sign it, and return the application to the management office so it can be logged in. As part of our architectural rules, no work may commence without the prior written approval of the Architectural Committee. Violation of thisrule may result in a $500 fine.

Adopting Policies & Procedures. Unlike proposed rules, the adoption of policies and procedures, whether by management, committees or boards, does not require a 30-day waiting period for member input. The reason for the difference is that rules have penalties attached to them, whereas policies and procedures do not.

RECOMMENDATION: If you’re not sure, have legal counsel review your rules, policies and procedures.