DECEMBER 1, 2000

A NEW LAW - AB 1823 - Dutra -

Notice of Disciplinary Actions In Common Interest Developments AND New Disclosure of Fines and Existing Violations With Sales

This new law which becomes effective January 1, 2001, tightens up some of the rules related to disciplinary action in common interest developments.

Notice of Hearing and Decision: The new law prescribes notice that must be sent to members of a common interest development (condominium, townhome, etc.) who are subject to disciplinary action. The member must be given written notice at least 10 days before a hearing or meeting at which discipline may be considered, either by personal delivery or first-class mail. The member has the right to attend the meeting, which may be held in executive session. After the hearing, the board is required to provide notification of the decision of the Board either by personal delivery or first-class mail, sent to the member within 15 days following the "decision". The disciplinary action will not be effective unless the board meets these requirements of the statute. (This may seem like a punishment for a board that has mistakenly failed to follow the technical requirements or know about the law, but obviously the legislator was apparently concerned with sloppiness in disciplinary actions).

Affect on Sales Disclosures: The new law also provides that in addition to existing requirements upon seller at time of sale, a notice of outstanding fines shall be provided to the potential buyer. Additionally, notice of violations that exist on the property (such as architectural matters) shall be given. The statute calls for a "summary" of any notice previously sent to the owner (seller) that describes the violation which remains unsolved at the time of the request shall be provided to the potential buyer by the seller under Civil Code Section 1368. (As always, the seller can ask the association for items to satisfy the statute and the Association must comply within 10 days.) The Bill specifically says that the notice is not to be deemed a waiver of the association's right to enforce the governing documents against the owner or prospective purchaser. This Bill specifically says that it does not impart a requirement that the association inspect an owners separate interest. It does appear to approve of the association's ability to submit, in conjunction with an escrow demand, information about fines and any existing CC&R violation. However, a word of caution - it seems to imply that prior notice must have been sent to the owner, because reference is made to the prior notice that was given to owner (seller) in passing the information on at the time of sale.


NOVEMBER 1, 2000 -

COMMON "RENTER" QUESTIONS - PART V - THIRD PART OF MYTHS AND MISUNDERSTANDINGS ABOUT SECTION 8 HOUSING AND RENTERS

This issue of the FYI continues the discussion on Section 8 tenants and leases that was interrupted to tell you about other important matters in September and October of this year.

In a perfect world, the process for complaints about Section 8 tenants would work such that when a complaint is made to the Housing Authority, the renter would receive an immediate call or personal visit from the department representative who will investigate the problem. Association representatives have reported varying degrees of satisfaction with review by the Housing Authority representatives. In areas where periodic inspections occur, naturally, there is a stronger likelihood of fewer problems because accountability is wrapped into the program. If people apply for the entitlement, they consent to being subject to the published standards.

Standardized Conditions. The Housing Authority has a standardized list of conditions that is used for Section 8 housing fund recipients. The standards provide information for those in and outside the program, including those who have complaints, as to what the Housing Authority can enforce. For example, the Section 8 applicant must state who will be living in the unit. The entitlement is based on criteria including that information. If an association representative or neighbors who complain have information on who is living in the unit and can verify that information somehow (through visual testimony, pictures or whatever), that maybe helpful to the Housing Authority if it is determined that different people are living in the unit than the applicant identified. Another requirement is that there are no drug convictions for applicant and no illegal activity occurring in the unit. If a complaint is made to the association of illegal activity, and it can be documented through police reports, visual, pictures, or other type of demonstrative evidence that would also be helpful to the Housing Authority. Keep in mind that the Housing Authority has the right to seek termination of entitlement to the program. However, for such a drastic remedy, the agency would need the same type of evidence that the association or any landlord would need to take drastic actions or pursue criminal charges.

Please keep in mind that Section 8 is not a dirty word. It would be thoughtful to avoid spreading rumors about actual Section 8 renter problems and to avoid jumping to conclusions and blaming all renter problems on Section 8 housing. There are plenty of problems arising from non-Section 8 landlord renter situations. And if you are experiencing problems with a renter on the entitlement, or persons involved with someone that is, address CC&R and rules violations immediately. Communicate with the renter by asking for compliance, at the same time or before you contact the owner. Preserve relations if possible. Try to prevent excuses by landlords by circulating information and suggesting better communications and lease addendum language. Contact the local Housing Authority (if contacts with the owner don't help) and keep after the person(s) in charge. If you suspect illegal activities, call the police and report problems. Ask for information from the local Housing Authority so you can understand what the limitations and incentives are for Section 8 recipients. Information is always helpful.


OCTOBER 1, 2000

PETS BILL PASSES - BOARDS MUST PAY ATTENTION!

AB 860 - Thomson - Pets Bill: Existing law allowed private restrictions on property from the keeping of pets, except for guide dogs, signal dogs, or service dogs, for persons with disabilities. In other words, people with disabilities that needed dogs were protected of owning pets. AB 860 provides that no lease agreement in mobile home park entered into, modified, or renewed on or after January 1, 2001, and no governing documents of a common interest development entered into, amended, or otherwise modified on or after that date may prohibit the owner of a separate interest from keeping at least one pet within the development, subject to reasonable rules and regulations. This bill amends Civil Code Sections 798.33 (existing in the "Mobile Home Residency Law") and 1360.5 (which is in the Davis Stirling Act).

Pets are defined to include "Any domesticated bird, cat, dog, aquatic animal kept within an aquarium, or other animal as agreed to between the management and the homeowner."

This law becomes operative on January 1, 2001, and "shall apply to governing documents entered into, amended, or otherwise modified on or after that date." It seems reasonable to interpret this phrase to mean that if any amendment is made to any of the existing association's governing documents that contain pets restrictions after that date, that the association would no longer be able to enforce any absolute prohibition pets. There is debate as to whether Associations could enforce a "no dogs" or "no cats" rule if it allowed other defined pets.

The bill goes on to say that "If the Association implements a rule or regulation restricting the number pets an owner may keep, the new rule or regulation shall not apply to prohibit an owner from continuing to keep any pet that the owner currently keeps in his or her separate interest if the pet otherwise conforms with the previous rules or regulations relating to pets." This means that an association has to grandfather any pets being kept by an owner if the rules change, and is not really anything new. Of course, issues are likely to arise around the implications of the words "Subject to reasonable rules and regulations of the Association." Battles over what are "reasonable rules" is an age old problem, and will continue.


SEPTEMBER 1, 2000

COMMON "RENTER" QUESTIONS - PART IV - SECOND PART OF MYTHS AND MISUNDERSTANDINGS ABOUT SECTION 8 HOUSING AND RENTERS.

This issue of the FYI continues the discussion on Section 8 tenants and leases.

Oversight of Section 8 Participants. The Department of Fair Housing is the "oversight agency" for Section 8 recipients. If there is a complaint, concern, or question about a Section 8 tenancy situation, the local Housing Authority could be contacted. However, the first question an association board should ask is whether the problem can be dealt with without going to the local Housing Authority. For CC&R or rules violations, the Board or manager should first work with the Owner to get compliance from the renters. If problems persist, it may be necessary to apply more pressure (calling the Owner to a hearing, threatening to fine, and/or threatening legal action). Sometimes dealing with the owner isn't productive because the owner does not feel they have the right to terminate the lease. The reason: the HUD approved lease doesn't provide for termination or breach of the agreement for CC&R or rules violations. When there are suspicions of activities that are more dangerous (appearing to be criminal or drug related), the association's contact might be with the Owner, but it might also involve contact with the police. However, one has to be very careful about accusing someone of committing a crime - in most cases it is better to report suspected criminal behavior to the police. As for contact with the owner, it is usually best to recite the activities that are the problem (for which complaints have been made (stated in terms that "complaints have been made", or "the Board has received reports of ...", etc. If you confront the owner with suspicions about criminal behavior (example: "We received reports that they are dealing drugs"), you may find the association saddled with a slander or libel lawsuit.

For particularly persistent and serious problems, the landlord and/or the association can contact the local Housing Authority and talk to a representative assigned to the geographic area. Criminal and drug activity, and serious disturbances of the neighbors are grounds for termination of the lease, and for revocation of the Section 8 entitlement. Hopefully, you can get the attention you need to assure that the problem is reasonably investigated.

As with many governmental agencies, you may find that the Housing Authority is short-handed. You may find that the "squeaky wheel gets the grease." A persistent follow-through may be the only way to assure that the matter is getting the appropriate attention. Some jurisdictions require periodic inspections of Section 8 housing renters' dwellings. In other districts, the workers may wait for complaints. Some representatives are extremely backlogged. It is my experience that written requests engender more accountability, and a letter from an attorney expressing concerns (with supported accusations) may get the attention of the Department where other efforts failed. The same is true for communications with the owner. A letter from the attorney stating that the owner will be held responsible if any of the neighbors are disturbed, injured or hurt often gets an immediate response. In fact, it is only through communications with the owner that the information comes out that the renter is a Section 8 renter. Often, the landlord is feeling helpless about the Section 8 lease situation and decides to ignore it, until he or she realizes the liability is personal.


SEPTEMBER 1, 2000 -

LEASE LIMITATION AMENDMENTS - ARE THEY A GOOD IDEA?

When associations ask me to prepare lease limiting amendments, I provide the following discussion of the legal considerations. Attemping to limit the number of units in the development that can be leased has some ramifications. Some industry people have questioned the legality of the lease and rental limitations in California. The courts have not yet officially approved nor disapproved restrictions on leasing in wholly private common interest developments. However, the CC&R amendments I write are to specifications that have been tested in courts in other states with success. Additionally, there is a past decision in California relating to a public housing development that allowed a complete ban on leasing. I believe the authority found in cases dealing with the issue (in California and outside California) provides good legal argument that lease limitation provisions should be upheld. Lease limitation provisions in documents certainly do tend to deter leasing of units, since they discourage pur-chase by investors or others who want the ability to lease their units.

There are many developments in California that want to look at lease limitation provisions. A lease limitation provision which is carefully drafted has a chance of surviving legal challenge. The provisions might never be challenged. Having one might be enough to achieve your ultimate goal of limiting leases and rentals in your development.

What is the California standard?

There is a statute in California which prohibits unreasonable restraints on alienation (sale or transfer) of property (Civil Code ¤711). "Reasonable" restrictions are those that are rationally related to the problem you are trying to address, such as preserving the residential quality of the neighbor-hood and the ability to finance sales. When choosing a percentage for the restriction, relying on standards set by the secondary lending industry (FNMA, etc.), is a good objective guide. These guidelines regulate obtaining loans on and refinancing properties. You may already be aware that many lenders have tightened up on approving loans in high rental percentage developments. "Grand-fathering" and "provisions for hardship" are matters that need to be addressed in such an amend-ment to make it "reasonable".

What are the advantages to a lease limitation provision?

What are the disadvantages of a lease limitation provision?

What does it take to pass an amendment?

The CC&Rs should specify a percentage needed for approval of an amendment. Generally, you can count on opposition from those persons already leasing properties in the development, unless there is a "grand-father" clause which excludes those people from the limitations. Thus, at the very least, I usually suggest a "grand-father" clause exempting those people with current leases.

Some CC&Rs require lender approval in addition to membership approval. If lender approval is required, you may get mixed opinions from the lenders.


SEPTEMBER 1, 2000

MODIFICATIONS TO SB 1148 - REMOVAL OF DISCRIMINATORY LANGUAGE

Cover Sheet For Deeds and Deed Restrictions Changes: You may recall from earlier FYIs that SB 1148, the "Burton Bill" required that a certain statement be sent covering any governing documents or deeds that were sent out by any persons or associations. The cover sheet had to be typed in 20-point boldface type, red ink, containing a specific statement. Those requirements have been changed slightly. The statement now may be 14-point boldface black type, and the statement has been modified to eliminate reference to the County Recorders participation in the process. [Obviously, the lifting of the red 20-point boldface type will make it easier and less costly for associations to reproduce the statements.] The new statement (immediately effective) must say:

"If this document contains any restrictions based on race, color, religion, sex, familial status, marital status, disability, national origin, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to Section 12956.1 of the Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status."

This cover sheet must still be placed on all governing documents (and any deeds transferring property) that are sent out by the association or any owners in a common interest development, or any county recorders, title insurance companies, escrow companies, real estate brokers, or agents, who sends out these documents.

Applying To Have Documents Changed: SB 1148 allowed any person to apply to the County Recorder's Office in their County to have discriminatory language stricken from deeds or deed restrictions for properties in which they held an interest. That has been changed. AB 1493 allows any person (except for a person who owns property in a common interest development) to apply to the Department of Employment and Fair Housing (DEFH) if they feel that their documents or deed restrictions contain discriminatory clauses. The DEFH then has 90 days to respond. Owners in CIDs are supposed to be exempt from the section allowing the DEFH to rule. They are expected to bring attention to the discriminatory language and any request for removal to their Board of Directors. They may not understand this. You should immediately involve a knowledgeable attorney if you receive any notification that someone has involved the DEFH in a request to rule on alleged discriminatory language. You do not want the process to progress without legal protection.

As far as the other requirements for a common interest development, they still are in place. Boards of Directors of common interest developments should still have documents reviewed for discriminatory clauses or they may face an automatic discrimination claim after January 1, 2001. That is because the existence of such language after that date constitutes discrimination under the Government Code.

And under the Davis Stirling Act, if any person, City or County or the DEFH applies to the Association Board to have language removed from the documents, the Association has 30 days to remove the language and restate the CC&Rs without it. If the language is not removed, the Association is subject to a lawsuit seeking removal of the language from any of the parties requesting removal. Associations should consult legal counsel immediately if they receive such a request.

The "governing documents" include the rules and policies, as well as the Articles of Incorporation, Bylaws, and CC&Rs.


AUGUST 1, 2000

COMMON "RENTER" QUESTIONS - PART III - MYTHS AND MISUNDERSTANDINGS ABOUT SECTION 8 HOUSING AND RENTERS

How many times have you heard (or asked) these questions? Can we exclude Section 8 renters? ... Can we evict Section 8 renters?... How do we control Section 8 renters? ... Can we screen Section 8 renters?

The answer [most likely] ... every single time the subject of renters comes up!

There are many negative presumptions floating around about Section 8 renters, especially it seems, within the realm of common interest developments and community associations. You can pretty well predict that any educational program about enforcement of rules will engender questions and concerns about how to control renters - specifically Section 8 renters. Section 8 is not a four-letter word -- however, all it takes is a bad apple here and there to spoil the whole barrel. When issues about renters come up, and someone makes a statement that "it's because of those 'Section 8' people", I sometimes ask the question - How do you know they are Section 8 renters? More often than not, the answer I get is - "Well, they must be, they are a problem." Certainly, some associations have had bad experiences with Section 8 renters. I know, because I have been asked to intervene in many situations over the years. I have spoken with managers and board directors who are thoroughly frustrated, and I have spoken with landlords who feel "paralyzed" by the situation when their Section 8 renters "act up." People feel there is no remedy. That is simply not true. Perhaps the following will help dispel the myths and misunderstandings about Section 8 renters and the program itself.

THE SECTION 8 HOUSING SUBSIDY PROGRAM. The Section 8 Housing Program offers an opportunity for the less fortunate to locate and live in decent housing conditions. It gives many the hope and strength they need to pull themselves out of poverty and off of the welfare rolls, while living in a decent neighborhood. It helps many single mothers move ahead in life, while being able to offer their children housing and schooling in a safe place.

The Program offers a monetary supplement (in the form of a rental subsidy) to people in need. Most of the applicants are not "bad people;" most are simply less fortunate than you or I. Sure, there are some "bad apples" in the Program, but generally the Program is "positive" and self-regulating, and that is something the general public does not always understand.

The Application Process. People who apply for Section 8 certificates or rental vouchers to be applied towards their cost of housing must complete a fairly extensive application. They are subject to a screening process that is more "invasive" than anything most landlords can do legally. The people have often endured considerable time lapses after having been placed on a waiting list. They sometimes have to wait months or years for their entitlement to come to fruition. Most do not want to lose the subsidy. They are subject to more ongoing scrutiny than most non-subsidized renters. Once they complete the application process and are approved, and receive the entitlement, they are thereafter held to a list of standards and if they violate those standards they are subject not only to eviction, but to losing their entitlement. This is a very serious risk for a Section 8 applicant, and not to be taken lightly. It provides incentive for good behavior and responsible tenancy.

Lease Agreement and Standards of Behavior (Section 8 Requirements.) The Department of Fair Housing has an approved form of lease which Section 8 applicants must execute, and the landlords must execute, that assures the Department of Housing that their minimum required standards will be met. Any of the parties can terminate the lease, after one year, for good cause. Prior to the expiration of the year term, the lease may be terminated for serious or repeated violations of the lease provisions or tenancy obligations under state and local law, or commission of a crime or fraud in connection with an application or entitlement. After the year is up, the landlord can terminate the lease (or refuse to renew) for something as simple as economic reasons (such as the fact that he or she can get more rent in the private market). Section 8 renters are held to standards of compliance that don't always come in to play in private lease situations: They must

These activities constitute grounds sufficient to cause termination of the lease. Some constitute grounds for revocation of the subsidy (especially criminal activity, fraud and drug use, sale or possession).

Landlord Rights, Obligations and Participation. It would be very helpful if HUD's lease form (or an alternate version for common interest developments (CIDs)) had a requirement that renters must follow the governing documents (which include the CC&Rs and rules), and if they do not, that serves as grounds for termination of the lease. Although I have discussed this possibility with some HUD representatives, it doesn't appear likely that this is going to happen by HUD's initiative. However, a landlord is entitled to have a separate lease "addendum" which contains provisions in addition to those required by the Housing Authority. Acknowledgement of and adherence to the CC&Rs and rules can be addressed in such an addendum. I believe that requiring the renter to sign an addendum to the lease or separate agreement with a clause that makes violation of the governing documents a breach of the lease and grounds for termination would be legally enforceable. If landlords did this, when their renters caused disturbances that would constitute a nuisance, or otherwise violated the CC&Rs or rules, the landlord would have a remedy. And when the association went after the Owner of the unit (landlord) for the violations of the renter, the landlord would not feel paralyzed.

However, in many cases when Section 8 renters are placed or find a home or apartment through HUD, the landlord never actually meets the renter. The renter might end up signing with the property manager directly. When this happens, it eliminates the opportunity for the landlord to personally discuss with the renter his or her expectations and to require the "additional" lease provisions (in a lease addendum) that would contain the protective language. As you can see, at this point the communication system may have already begun to break down.

As Usual, Information and Communication are the Keys To Success. An association can help its members by circulating helpful information. Information is the key to better success in resolving issues relating to and involving Section 8 renters. The community association can help owners who may become landlords understand the process, understand their role and responsibility, and understand that they have rights in the process. A simple newsletter article suggesting that owners who are considering leasing their homes include provisions as described (stating that a violation of the governing documents constitutes a breach of the lease) would help all landlords, not just those taking Section 8 renters. An association could provide a sample clause for leases (approved by the association attorney of course!). See next issue of FYI for more on Section 8 tenants and landlords.


JULY 1, 2000

COMMON "RENTER" QUESTIONS - PART II

As part of a continuing series on questions about renters in CIDs, I offer the following ...

Question: May the association fine a tenant, and how are fines imposed for repeated infractions of the rules without holding more than one hearing?

Answer: As stated above, an association must have a fining policy that has been circulated to the owners to fine any owner. The association may fine owners, but there is no authority to fine renters. The association has no legal relationship with the renter (the rights to suspend use of the common area facilities flow through the owner). An association should schedule at least one hearing for a violation of the rules or governing documents. If the conduct is conducive to continuing or recurring violations, the association could note in the meeting notice that the hearing will be held to determine if discipline should be imposed, and that the discipline being considered is a fine for each similar or same violation, or a daily, monthly, or weekly fine is being considered where the activity constitutes a continuing violation. That way, fines for continuing or recurring violations could be imposed after a hearing without holding an additional hearing each time the same activity occurs. Important tips: it's best if the association's policy includes language addressing con-tinuing or recurring violations for same, similar or repeat violations. All notices to the owner should do the same. The written decision should also note the specific point that fines of the same nature will be automatically imposed without future hearing, if that is the decision of the Board.

Question: If a renter refuses to maintain the property, may the association intervene, enter the property, and clean up the property and bill the owner?

Answer: The owner is responsible to maintain the property. If it is not maintained to reasonable standards, chances are the CC&Rs allow the association some remedy. Most CC&Rs allow right of entry and most that I have seen allow a reimbursement assessment. Most association documents require giving the owner reasonable notice and an opportunity to cure the problem before taking action. If there is no such language in the documents, at least 15 days notice of hearing is indicated by Corporations Code Section 7341 as adequate notice for suspension of membership and that is a good guide. Practically, speaking, "self-help" remedies (such as cleaning up or maintaining property that is the responsibility of the owners) should only be arranged sparingly, if there is a way to do it without having a confrontation with the owner or renter. If you are picking up trash or garbage to be taken away, then there is less of a chance of confrontation. If the association is arranging to have landscaping or yard maintenance done which will take more time, there is more chance of a confrontation, and these factors should be taken into consideration when the Board is trying to determine what remedy is best.

Any situation involving violations of the rules or standards by renters must also involve the owners, that is, unless the association communicates with the renters and they voluntarily resolve the problem. One way that associations can involve renters is to have a renter liaison to report to and work with and/or report to the board. But having input makes renters feel a part of the community and represented. If you include renters in your newcomer welcomes, allow them to come to meetings, and include them in social events, you will find that most will be good members of the community.


JUNE 1, 2000

COMMON RENTER QUESTIONS

I have received many questions relating to problems with renters. Problems are not uncommon in developments with a high percentage of rentals. Some of the problems come from the renters, some come from the landlords, and some come from the association. Some renters are just unwilling to live by any rules or keep the property in good shape. Some landlords fail to "educate" the renters by telling them there are some rules. Some associations treat renters like lepers.

Many associations have good results by interacting with the renters directly. If the renter acts involve serious threats to residents, management or the Board, it makes sense to avoid personal contact and deal only with the owner. However, if the renter is friendly, then personal contact and giving the renter the opportunity to cure the violation before contacting the owner is more likely to start things off on the right foot. How do you tell when the renter is friendly? If you have a telephone number, a phone call is a good clue. If you get the brush off then that's a pretty good indication that more assertive communications will be necessary.

You can strengthen the association's enforcement policies by pursuing violations vigorously and consistently, by noting violations, giving the owners and the renters notice, giving the renters the opportunity to cure, and then holding a hearing and setting up the fining process. In order to fine any homeowner, in a CID (per Civil Code Section 1363), the Board needs to have circulated a policy relating to fines to all of the owners.

The following are some other common questions I am asked about renter situations.

Question: May an association evict a renter?
Answer: An association does not have the right to evict renters; that is up to the Landlord (owner of the property), unless the CC&Rs authorize the association to evict. Even then, it is risky for the association to take over the responsibility to evict a troubling renter. The legal liability is increased when the association steps into the landlord's shoes. And if the association assumes any responsibility at all, the owner is likely to step aside and wait for the association to do the work. I do not believe this is healthy for the association.

Question: May the association suspend rights for the renter to use the clubhouse or other facilities for violations or late or non-payment of assessments?
Answer: So long as the CC&Rs or Bylaws allow it, the association can suspend the rights of an owner or renter to use the common area for nonpayment of assessments or any other violation of the governing documents. To do so notice must be given at least 15 days before the Board is going to hear the matter (more notice is required if the documents require more notice). Some documents limit the suspension period to 30 days, but some specify that the suspension period may be for the period of the violation. If the party violating the rules or CC&Rs is interested in using the common area facilities, this remedy might help.

I will continue with more questions and answers in the next FYI.


APRIL 1, 2000

HARASSMENT CASES - SHOULD AN ASSOCIATION GET INVOLVED?

Homeowner association boards of directors have been grappling with neighbor-to-neighbor disputes forever. Boards may choose not to get directly involved in a neighbor-to-neighbor petty disputes or other moderately thorny issues. However, the emergence of harassment cases makes it difficult to ignore threats or obnoxious, offensive, or despicable behavior (harassment) related to any of the protected classes of citizens which include race, ethnicity, age, gender, and disability, which are by and against residents.

A 1999 federal East Coast case of Reeves vs. Carrollsburg Condominium Unit Owners Association clarifies for us that Associations could be liable for failing to take action in a harassment situation. This case is before the Fair Housing Council (FHC) of Greater Washington. A recent interim procedural decision suggests that homeowner associations must take some action when harassment by one resident is reported by another. The claim involved allegations of severe racial and sexual harassment by Ms. Reeves in her living situation, by another resident owner. Ms. Reeves formally lodged her complaint against the other resident (an owner in the condo complex), and the association. The FHC joined her in complaining against the Association. The Association tried to extricate itself from the litigation by filing a motion for summary judgment claiming the discrimination claims of the FHC and Ms. Reeves could not be pursued against the Association. The Association could not get out of the lawsuit and will be a defendant in adjudication of the claims, and if the elements of discrimination are proved, will have some liability. The decision raises some salient points. The Bylaws for the Association provided that violation of the law constituted violation of the association documents. The Court said that language, (which is fairly common) imposed a duty on the Board to take some kind of action to abate the problem. The specific action that would be expected is not clear, but the fact that the Association took no action and "tolerated the behavior" was criticized. What follows is a brief description of cases already tried on the merits. They provide guidance as to the possible outcome for an Association finding itself in the position of the Carrollsburg Condominiums.

October 15, 1996, Federal Case, Williams vs. Poretsky Management (DC Court, Maryland, Civil Action CCB-95-2051): This case involves a tenant who was harassed by the handyman. The handyman made unwanted sexual advances to the tenant on two occasions. The tenant complained to management, and management said they would terminate the handyman. However, the handyman denied complaints and the management continued to send handyman to the woman's apartment to make repairs. Tenant sued through the Fair Housing Council of Greater Washington (FHC) claiming discrimination. Before discussing the merits, the court had to determine if the FHC had standing to bring a sexual discrimination claim under the Fair Housing Act. The court had to determine if the tenant had the right to recover for sexual harassment under the Fair Housing Acts Prohibition Against Sex Discrimination. The court recognized that courts generally rely upon three grounds in finding that sexual harassment claims are actionable under the Fair Housing Act.

This DC Circuit Court did recognize that sexual harassment is actionable under Title VII and Title VIII. (Finding it specifically under Title VII, and finding Title VIII analogous.)

Under Title VII, courts have recognized two types of sexual harassment claims, quid pro quo and hostile environment. The tenant was making claim of "hostile housing environment" sexual harassment. The court in the Williams case did find the sexual harassment conduct imputable to the landlord if: "The landlord knew or should have known of the harassment, and took no effectual action to correct the situation."

Brown vs. Smith (55 Cal. App. 4th 767, 64 Cal. Rptr. 2nd 301: This is a sexual harassment case in California. A former tenant and her husband brought an action against landlord and wife, alleging that landlord sexually harassed tenant in violation of FEHA (Federal Employment and Housing Act) and under the Civil Rights Act. The tenant's husband sued for loss of consortium. The trial court awarded judgment on jury verdict to tenant of $110,000 for general damages, $68,000 punitive damages, attorneys fees of $50,000, and costs and awarded the tenants husband $500 in damages for loss of consortium the landlord and wife appealed.

The Appeals Court held that sexual harassment is a variety of "sex discrimination" within the scope of FEHA. But the appellate court found that trial court erred in failing to instruct the jury as to the required elements of severe and pervasive conduct continuing after request to stop, that conduct had to be directed at tenant because of her gender, and that sufficient connection was required between harassment and landlord's status as landlord.

The Appeals Court found that the Civil Rights Act, prior to January 1, 1995, did not afford a cause of action for sexual harassment of tenant by landlord. This is somewhat of a procedural issue case, but does confirm that tenants can now sue landlords for sexual harassment under the California Fair Housing Laws. The case suggests considerable damages against the landlord, which could be likewise seemingly be adjudged against an association in a similar position, if the Board did not take sufficient action against harassment by one resident of another resident.

In the Williams case, the court suggested that sexual harassment in the home place could be even more severe than sexual harassment in the work place. The possibility of punitive damages being assessed was also discussed. Punitive damages can be awarded in "federal question" cases when a defendant "has acted with actual knowledge that he was violating a federally protected right or with reckless disregard of whether he was doing so." The same could be applied to an employer or landlord.

These cases suggest that good legal advice is warranted if a resident reports harassment which includes (1) knowing and willful (2) continued course of conduct involving (3) offensive, annoying, or threatening behavior, (4) directed against an individual which (5) serves no legitimate purpose.



MARCH 1, 2000

SB 1148/ AB 1493

Elimination of Discriminatory Language In Documents

This seems to have been the major subject of the year, at least to date. There are still efforts being made to clean up SB 1148. As you may recall, homeowners associations are, by the passage of this bill, required to eliminate certain discriminatory language from their governing documents within a year from January 1, 2000. If any city, county, individual, or representative of The Department of Fair Employment and Housing (DEFH) made a demand upon an association to remove specific language from the governing documents, the association is required to respond within 30 days. "Responding" does not necessarily mean changing your documents. Your response might be (with the help of legal counsel) that you do not believe the clause is discriminatory.

If you (with the help of legal counsel) determine that the language is or may well be discriminatory, than you may end up deciding to remove it. If you do that, after removing the language, you will need to "restate" the document and re-record it at the county recorders office. You will need to submit copies of the re-recorded document to all of your owners. If you, along with the assistance of your attorney, determine that the language is not discriminatory, and send a letter back to the person who requested the change, that person (or entity) has the right to bring a lawsuit against the association to have the language removed.

With a clean up bill having been proposed, (AB 1493) there may be some changes in the definition of "forbidden" language and there may be some changes to the "red sheet" notices. At the present time, realtors, title company officers, real estate brokers and agents, homeowner associations and their agents (including managers) are required to send out a specified "red sheet notice" that says:

{SEE SEPTEMBER 2000 UPDATED FYI FOR CORRECT LANGUAGE}

This "message" is subject to change if AB 1493 is enacted which could happen as early as this spring.

Compliance would encompass is a review of the documents to find out if there is any blatant racial discriminatory language or any other "blatant discriminatory language" of any other kind. I am not advising removal of restrictions relating to occupancy and other areas that may be the subject of controversy at some point in the year. I am advising immediate removal of language discriminating against children (most often found in pool rules), language discriminating on the basis of race, and obvious limitations on property that would prevent someone from exercising established rights under Federal and California Law. Removal of other clauses at this time would, in my opinion, be premature.

For the associations asking me to review the documents, I will write the letter specifying whether there is or is not language that needs to be removed, and giving the opinion "conditional" upon the possibility of things changing later on in the year. I will keep a list of the associations for which I write these letters, and in mid year, review the situation to determine if there have been any significant changes because of this clean up bill, or because of complaints that are being brought to associations. There are a number of equal practitioners like myself that are networking throughout the state on these matters to see what follow up "shakes down on this bill." By arranging this follow up, associations will be assured that I will not be rendering an opinion based on what the law is now, without consideration as to how the law might change.

Associations may choose to wait until later in the year to have their documents reviewed, at which time any proposed clean up legislation will probably be completed. The disadvantage in that is there won't be as much communication out in the public about this need to have the documents reviewed, and associations may well forget to do anything before the end of the year and if an attorney does not have a follow up program in place, the Association may be at a disadvantage. As the law now stands, if there is discriminatory language in the association documents, and a demand is made upon the association to eliminate that language, the party making the demand can sue if the association does not do it. After the year is up, a lawsuit can be brought based on the existence of discriminatory language in documents without any prior notice to the association. This, I believe, suggests that associations should get on board and seek review, involving a knowledgeable attorney, and this would be considered prudent action. A letter in your files signifying the review would be protective for the Board.


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By Beth A. Grimm, Attorney. A "service oriented" attorney and member of ECHO and CAI and various other industry organizations in California and nationally, host of the website www.californiacondoguru.com; two Blogs: California Condominium & HOA Law Blog, and Condolawguru.com Blog, and author of many helpful community association publications which can be found in the webstore on her site.