PENDING LEGISLATION ON RENTAL AMENDMENTS and PAYMENT PLANS ­ AND A SCARY NEW CASE DECISION ON HOA JUDGMENT ABOUT MAINTENANCE - WATCH OUT FOR THESE!

Whether you are an activist of passivist when it comes to watching what happens in Sacramento or the Courts of California as they "rule" on issues affecting HOAs, you may want to write to the Governor on the following pending bills, and keep an eye out for news on recent appellate case decisions.

LEASE AND RENTAL LIMITATIONS. AB 2259 has made its way through the legislature and is "enrolled" (meaning the Governor's desk is the next stop). His ruling on proposed bills has been held up unconventionally by the State Budget issues, but once the Budget is passed, watch out. He will have thousands of bills to approve, veto, or let "slide through" to law. AB 2259 is just such a bill. What it would do basically is:

(1) prohibit HOAs from enforcing any rental or lease limitation prohibitions that are passed by the members after January 1, 2009, against any member who does not formally (via a writing) consent AND

(2) require HOAs and sellers to disclose the rental limitations upon sale, along with the rest of the info that is required to be provided.

It is not retroactive to previously approved measures (that is the "good" news), and there is time to "beat" the statute between now and the end of the year if your HOA gets on the stick. Why are these measures important to HOAs? See earlier E-Newsletter of June 2008 ...And look at the E-Newsletter Archives link and the link about Lease Limitation Restrictions-Legal in California.

The California courts are in the process of reviewing cases on the issues and one recent appellate court has already ruled as follows (again, this is some good news):

(1) An amendment passed via a valid election of the members to restrict leasing to a minimum of 30 days (to prevent vacation rental leasing) was found to be reasonable; and

(2) The mortgage holders security was found not to be jeopardized by the amendment; and

(3) A challenge by the owner based on arguments to the contrary failed.

The case is MISSION SHORES ASSOCIATION v. PHEIL, 2008 WL 4097269 (Cal.App. 4 Dist.). The point here is that the courts examine the issues fully - the legislature does not. AB2259 is flawed and would prevent HOA Boards and owners from effectively limiting leasing in a manner fair to all owners within the confines of their developments, a basic right that has been established through case law all over the country. This is worthy of a letter to the Governor, if you are inclined to write (which I would suggest doing if you want to have a voice). The statement could be as simple as:

"Dear Governor: "AB 2259 prevents our association from choosing to limit rentals in a manner that (1) protects the marketability of our units, (2) protects the residential quality of our development, and (3) eliminates our right to choose what is best for our development. I/we request that you veto the bill."
You could precede with a statement about who you are and how many in your development are affected by the law. You could embellish with arguments in the materials from my website. However, time is of the essence, and the number of letters the Governor gets are probably more meaningful than the depth of the concern noted.

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PAYMENT PLANS - AB 952 is also on its way to the Governor, if not already on his desk. This bill started out as a protection plan for owners of "Affordable" units in HOAs, and at one time would have allowed the BMR (below market rate) owners to veto assessments set out for approval of HOA members. It changed "spots". It is now a bill that would require an HOA to accept a payment plan based on an owner's limited evidence of inability to pay the full assessment. As the law now stands, boards must notify owners about the option of payment plans and meet with owners who want to request a payment plan for any assessment. However, forcing a board to accept a payment plan from any owner who "demands" one could set HOA budgets into a tizzy and punish those Californians that have avoided getting themselves into a financial bind. If an HOA which is already reeling from the foreclosures by lenders due to the subprime mortgage crisis and credit card debacle is forced to offer every owner who requests a payment plan the option to pay over the long term, it could be disastrous. And the bias in the law shows ­ HOAs cannot ask for particular evidence of the economic position, they can only consider what the owner offers, which could be only a part of the real financial picture. If an investor, say, got in over their head via a subprime loan and wanted to draw out the assessment payments so that the lender would take the property back before he or she had to cover the special assessment obligation, that would be patently unfair to the other homeowners. If a homeowner became saddled with credit card debt purchasing "things" and could not pay the assessment, they could stretch it out over time, possibly with the same motive as the investor. In the meantime, the responsible owners have to pick up the slack for the money that is not there.

This is another bill worthy of a letter. The bias is for those owners who are suffering, whether by their own hands or the economic crisis, and not for those who deal with debt responsibly. So, for an example of language for a brief letter:

"Dear Governor - I am/we are___________ . We request that you veto AB 952. While we are not against the Board giving consideration to owners who are struggling, forcing the HOA to allow payment plans for assessments to those owners who have gotten themselves into debt or purchased with the greedy intent of making a profit at our HOA expense is not fair to the rest of us, who will have to cover extra sums needed during the time payments for important assessments are drawn out over time. This is simply unfair to the masses who are responsible homeowners."

Again, quantity rules ­ depth and quality of letters is nice, but not as effective as numbers.

You can pull the bills and watch the progress by logging onto the following URLs for the state go to www.legislature.ca.gov/

OR (to go right to the bill search page) http://www.legislature.ca.gov/the_state_legislature/bill_information/bill_information.html

NEW CASE FOR DISCUSSION AT APTOS AND OTHER UPCOMING SEMINARS ­ THIS WILL BE A HOT TOPIC!           RITTER V. CHURCHILL - 2008 WL 2807618 (Cal.App. 2 Dist.), 08 Cal. Daily Op. Serv. 11, 2008, #192 ­ this recent appellate case court decision (meaning binding on California courts) threatens to turn on its head (not sure to what depth yet) the premise that the courts will defer to the business judgment of the Board and HOA about maintenance decisions for the HOA. Open up your eyes and minds to the coming discussions of this case in upcoming seminars.

ANNOUNCEMENTS: IMPORTANT UPCOMING programs of interest ...

ECHO ­ Seminar with info about cases, legislation and dealing with difficult people. September 20, 8-1pm, Aptos California. For information on program material, agenda and place, link to
http://www.echo-ca.org/news/events/index.php?com=detail&eID=10376

CAI ­ Seminar in Fresno on October 11 on Lease Limitation Provisions and the Law, Dealing with Abandoned Property, and other pertinent subjects, details should be posted soon at
http://www.echo-ca.org/news/events/index.php?com=detail&eID=10376

CAI ­ Luncheon Program in Stockton on October 15 on Meetings.
http://www.echo-ca.org/news/events/index.php?com=detail&eID=10376

And last but not least ... having fun is important too ..

FOR INFORMATION ON TAHOE VACATION RENTAL CONDO AVAILABLE (Ski Season is coming) ­ visit http://www.vrbo.com/202322

My best to you! Beth