Joel M. Kriger, APC · Community Association Law · Second Quarter Newsletter, 2012

New Case Addresses Court Approval of Amendments to CC&RsINDIVIDUAL OBJECTIONS MUST BE RAISED IN A TIMELY MANNER

By Garrett Wait, Esq.

Our attorneys and collection specialists are committed to providing you with professional and personal service.

Homeowners associations looking to take initiative in changing their covenants, conditions and restrictions earned a big victory in the Third Appellate District’s ruling in Quail Lake Owners Association v. Kozina, Case No. C066835. The court has reaffirmed the law set forth in Civil Code §1356 which states the six necessary steps to

petition the court for changes to an association’s CC&R’s and provides guidance to association members when opposing a §1356 petition.

In Quail Lake Owners Association v. Kozina the homeowner, Vladimir Kozina, attempted to argue that the association had not provided the homeowners in its development proper notice of the association’s attempt to amend the CC&Rs voting requirement. In that particular instance, the board attempted the supermajority voting requirement to a simple majority voting requirement following a failed attempt to amend the CC&Rs. Kozina argued that he was not given

enough time to properly respond to the association’s proposal, though he raised his objections within the court-designated time period. The court of appeals rejected this line of reasoning, to which Kozina responded by trying to step into the shoes of his neighbors by raising due process claims on their behalf. The court again struck down this line of reasoning, stating that Kozina had no standing to raise those claims for his neighbors. The takeaway from all of this is that each member of a homeowners association must raise his or her own objections in a timely manner in order for the trial court to consider their objections.

Though it may seem like common sense that homeowners are responsible for their own claims when a controversial petition is brought by an association, the case was a matter of first impression when discussing common interest developments. Both homeowners and associations stand to benefit from the court’s guidance in Quail Lake Owners Association v. Kozina. �

In This Issue:• Save Money and Trees using

Emailed Documents

• CC&R Amendments Ruling Outlines Six Necessary Steps

• The Trayvon Martin Case and HOA Liability

• Collections Corner

• New Bank Foreclosure Laws

• Our New Voice on the Web

Distributing Documents by E-MailHOMEOWNERS ASSOCIATIONS

SAVING MONEY (AND TREES) BY EMAILING DOCUMENTS TO MEMBERS

Would you like to save money on postage by e-mail-ing documents to members? If so, this article will explain how to do

that. California Corporations Code Sections 20 and 21 dis-cuss the use and distribution of documents to members of a corporation via electronic mail. Associations can e-mail certain documents and notices to members if the members consent, in writing, to receiving the documents by e-mail.

Corporations Code Section 20 allows corporations like homeowners associations to electronically transmit certain

documents once written consent is received. In order for associations to obtain their members’ consent, the associations need to inform the members who are consenting of three items: 1.) The member can receive the document(s) on paper; 2.) The member must indicate the scope of his/her consent. This means the member should indicate whether he/she is consenting to receive all documents electronically, only specific documents electronically or specific categories of documents. For example, the member can tell the association that he/she is consenting to receive only board meeting minutes

electronically but wants to receive all other documents from the association on paper, via regular mail. Another example is the member can consent to electronic transmission of all documents that the law allows associations to send by e-mail; and 3.) The manner in which the member can withdraw consent. Consent may be withdrawn by the member if the member sends the association a revocation of consent that is signed by the member.

Associations can save money in mailing costs for annual disclosures such as the assessment and reserve

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By Jamie Schwartz, Esq.

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2 Anderson & Kriger Quarterly Newsletter · Second Quarter, 20122 Anderson & Kriger Quarterly Newsletter · Second Quarter, 2012

HOA Required to Provide Security?

If Trayvon Martin’s family sues over his death, a likely defendant will be the homeownersassociation thatappointed

George Zimmermanas head of its neighborhood watch program. According to the Associated Press, the HOA published a news-letter in February, the same month as the shooting, indicating Zimmerman was the “go to person” for residents who had been victims of crimes. He was also designated by the HOA as the head of the community’s Neighborhood Watch program. Residents were also told first to call police regarding security concerns, and then “please contact our captain, George Zimmer man... so he can be aware and help address the issue with other residen ts. It is this endorse- ment of Zimmerman that

exposes the HOA to possible legal action by Martin’s parents. This may be viewed as the HOA’s action enabling the occurrence or loss in this case. According to the

Associated Press, Zimmer-man admitted to fatally shooting Martin during a confrontation on February 26th, but claimed self- defense. Zimmerman spotted Martin from his truck as the teen was returning to the house of his father’s fiancee from a

convenience store before, making contact, Zimmerman first called the police dispatcher.

When Zimmer man got out of his truck and

started following Martin, the dispatcher admonished him that

such action was not necessary. Moments

later, residents of the HOA heard

screaming and at least one gunshot.

Police officers arriving at the

gated community found Martin shot dead in the chest. If your associa tion

has a Neigh borhood Watch pro gram, make

sure that the volun- teers are familiar with

the USAonWATCH.orgguidelines. Further, be sure that all association volunteers are covered under the association’s director and officers policy. These steps can help mitigate potential liability from a claim arising from their actions. �

By Joel Kriger, Esq.

For Those Who Don’t Know

Every quarter Joel M. Kriger, APC distributes the A&K Quarterly News to members on the boards of community associations which retain our legal services under the fi rm’s retainer program.

The newsletter presents news and insights on current developments in Community Association Law. We hope you fi nd the articles to be both stimulating and helpful.

If you would like to request a topic for a future article, please contact jwilcox@a-khoa.com.

Court Faces Drastic Changes

Thanks to looming budget cuts, the San Diego Superior Court may be forced to dramatically alter the way it does business in the coming fiscal years.

San Diego has long been the premier court in California, at the cutting edge of fast-track and court consolidation. Fast-track is the system created by state laws enacted some twenty years ago to streamline the civil litigation process. Most cases which once took 3-4 years to reach trial now must now be completed through trial within 12 to 18 months. Court consolidation occurred a dozen years ago when all counties closed their municipal courts and the superior courts were divided into “jurisdictional” units: small claims (under $5,000 for companies and under $10,000 for individuals), limited jurisdiction (under $25,000) and unlimited jurisdiction (injunctions, or cases with damages over $25,000). San Diego was a forerunner in the state in implementing swift and cost-effective structural changes to the system, with other counties barely keeping up into the 21st century.

With the recent announcement of a 21% reduction in the San Diego Superior Court’s budget, this model institution will be severely hampered. �

appointed George Zimmerman

neighborhood watch program. According

the same month as

the “go to person”

also designated by the HOA as the head of the community’s Neighborhood

case. According to the

Associated Press, Zimmer-

Martin, the dispatcher admonished him that

such action was not necessary. Moments

later, residents of

screaming and at least one gunshot.

gated community found Martin shot dead in the chest. If your associa tion

has a Watch

sure that the volun- teers are familiar with

the USAonWATCH.orgguidelines. Further, be sure

The Trayvon Martin shooting in Florida raises the question for all homeowners associations: when, if ever, is an HOA required to provide security guards to patrol association grounds? In 2007, the California Supreme Court explained in a mobile-home park case, Casteneda v. Olsher, 41 Cal.4th 1205, that a landlord may have an obligation to employ heightened security measures if there is a history of violence suggesting the likelihood of future violence. The court stopped short of requiring security guards per se. That same year, a California Court of Appeal held that appropriate security measures will usually include something less than security guards. The Barber v. Chang (2007) 151 Cal. App. 4th 1456, case involved gun violence in an apartment building.

As the Florida tragedy demonstrates, hiring armed security guards can expose an HOA to unexpected liability. It is important for the HOA to examine carefully the association’s history, the trend in surrounding neighborhoods, as well as the potential ramifications of undertaking any type of heightened security measure before implementing them. �

HOA Liable in Martin Case?ENDORSEMENT EXPOSES HOMEOWNERS ASSOCIATION TO LIABILITY

Anderson & Kriger Quarterly Newsletter · Second Quarter, 2012 3 Anderson & Kriger Quarterly Newsletter · Second Quarter, 2012 3

Collections CornerDON’T DELAY! HELP US HELP YOU INCREASE COLLECTIONS

AFTER JUDGMENT.

Legislative Update

NEW BANK FORECLOSURE LAWS

Swift post-judgment enforce ment action by a board significantly increases an associ ation’s likelihood of collect ing on the judgment. It means the board collects from the debtor’s assets before other creditors get there and before the debtor

either files for bankruptcy or is foreclosed upon or both.

When judgment is entered, we send the board a letter that lists the principal legal options available for the board to choose from and request that the board “check the boxes” approving a skip trace search, employment search, bank account search, filing of an Abstract of Judgment, a bank levy, a rent levy, a

wage garnishment and/or judg ment debtor examination. We can counsel the board when it makes these selections.

We find that if the Board delays in taking action, the debtor’s financial condition typically worsens as time marches on and other creditors start taking action against the debtor by obtaining additional judg ments for credit card debt, or unpaid bills. These other creditors then also start garnishing wages or levy on bank accounts. For example, in a recent judgment debtor’s examination, we found out that the debtor had significant employment income and a lot of credit card debt. The credit card companies had filed suit, but had not yet obtained judgments against the debtor.

Based on this information, we moved quickly and garnished the debtor’s wages before the credit card companies obtained any judgments. The association is being paid a portion of the debtor’s wages every pay period and should continue to do so until the debt is paid.

For these reasons, we want to encourage managers and their boards to act promptly after judgment is entered. In the post-judgment enforce-ment world, timing is everything. �

By Kathy Mills, Esq.By Lauri Croce, Esq.

Bank foreclosures can wreak havoc in associa-tions as properties are abandoned or fall into disrepair. Two new laws will affect foreclosures by banks.

Assembly Bill 2273 requires a bank to take record title within thirty days of the foreclosure sale. This requirement would be a significant improvement for homeowner associations. The foreclosed owner stopped paying assessements – and usually has moved out of the property – but the bank has delayed recording the trustee’s deed upon sale to transfer title, thereby avoiding the obliga-tion to begin paying monthly assessments. As we go to print, this proposed law has moved from the State Assembly to the Senate Judiciary Committee, which voted in favor of sending this bill to the full Senate for a vote.

Another new law recently passed by the legislature as AB 278 and SB 900 and signed by Governor Brown is known as the “Homeowners Bill of Rights.” The new law includes consumer protections such as re quiring banks to provide of a single point of contact at for the homeowner; prohibiting what is known as “dual tracking” – fore-closing and negotiating a loan modification at the same time; and creating penalties and rights in court when the bank fails to follow the law. The Homeowners Bill of Rights does not directly affect homeowners associations, but it does provide a benefit to distressed homeowners by giving them the fiscal breathing room necessary for them to save their properties, catch up on unpaid dues, and pay future assessments. �

HOABlogTo read more and get the most current and relevant HOA news fromJoel M. Kriger, APC, go to a-khoa.com/blogVisit and be part of the conversation!

Can a bank be forced to foreclose on a delinquent owner? Banks are recording Notices of Default in record low numbers. For homeowners associations, this means that upside down properties exist in limbo. The owner has abandoned the property, literally or figuratively. “No one” owns the property, as a practical matter, and therefore assessments are not being paid...

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funding disclosure summary, annual operating budget or budget summary, and assessment collection policy. For a complete list of documents that can be transmitted via e-mail (after written consent by the member), see Civil Code Section 1363.005.

Civil Code Section 1350.7(b)(3) allows any documents listed in Civil Code Section 1363.005 to be delivered to mem-bers via e-mail, facsimile or other electronic means, if the member has agreed to that method of delivery. If a document is delivered by electronic means, the association will save time because the documents are considered delivered at the time of transmission.

If your association would like to use this method of deliv-ery of documents, the attorneys in our can prepare a consent form for the member(s) to sign. Please note, the members may ask if signing the consent form will preclude them from requesting particular documents be provided in paper form. Signing the consent form will not prevent the members from requesting that certain documents be mailed to them. If your association needs a consent form, please contact our office and we will prepare one for your association. If you plan to e-mail documents to the members, make sure to get the con-sent forms signed 30-90 days before the end of the associa-tion’s fiscal year so that the association can save money on postage and copying costs by electronically sending the docu-ments to the members before the year ends.

Some members may ask if electronic transmission of docu-ments can be use for annual elections or amending the CC&Rs and Bylaws. The answer is no because Civil Code Section 1363.03, et seq. requires the use of secret written bal-lots for these items. �

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