It's coming up on the HOLIDAYS, the most joyful time for some people, but the most stressful for others.  You will be called upon to exercise the most patience if you want to get through the holidays with a smile on. Perhaps a few pointers on handling "the difficult ones" will help.

First of all, remember that for many it is the outside "stressors" that are causing them to be short, rude, obnoxious, rushed or seemingly impossible to deal with, so if you add to that stress, you will get it back probably 5 times over.

Remember that some nasty people remain nasty even if you try to "kill them with kindness".  So don't waste too much time on these folks - just do the minimum needed to get the job done, whatever it is. 

Remember that a crazy person often remains a crazy. Belligerence is seldom curable. Selfish behavior is common in self-centered people. Stupidity, although it can be cured, takes a willing idiot.  

You may be expected to fix everything for everyone, but if you can just remember to do your best, and be proud of it, your side of the "house is clean".  Ghandi says that it is not important to be a masterful human being, but to be a "human being masterfully."

So what can you do when faced with a difficult question or person? Get help. Look for answers (the internet is an extraordinary resource), and take time for yourself too, this holiday season. How do you do that?

Learn some breathing exercises and take a few minutes every day to do them. Color up your desk with pens, pencils, decorations, a new coffee mug, a singing Santa, anything that can bring a smile each of the 30 days of December.

I wish I could offer a viable solution that could be applied to all difficult people situations. I have written about noise issues, irresponsibility in reporting leaks, confrontations by idiots and how to respond, people who get in your face, people who are scary, how I cope with stress, and the importance of being pragmatic when things get difficult. And keep in mind that you can be the greatest problem solver, still not every approach works in every situation. I found myself hanging up on someone the other day whom I believed was being really unreasonable, because I had no energy or desire to keep talking to someone who had an "I deserve it all at anyone else's expense attitude" going on. It was a very subtle hangup - not a slam-it-down-crash-in-the-other person's ear - but just a little "click". Did I feel good about it? KindaŠ..

If you leave your house tomorrow and every single day thereafter with a promise to yourself that you are going to treat every person that you come into contact as if they were your "best friend" (and be sincere), I am betting your stress will be less, and your life might very well change, not because of those around you, but because of you.               My best to you this holiday season!!!!!!!!!!!!!!!!!!!!!!!!!!  

The new law not only requires posting or providing an agenda with the meeting notices, it prohibits the Board from taking action on anything that is not on the agenda, ... except for the exceptions.

To be specific, first of all, it applies to board meetings, not membership meetings. The requirement for distributing the agenda is tacked on to the meeting notice requirements found in Civil Code Section 1365.05(f). Here is the scoop, in Q and A form.

  Question: What if the notice of meetings is in the Bylaws or Association newsletter and that comes out before the agenda is set?

Answer: Find a way to distribute or post the agenda at least 4 days before the meeting. That might be with the billing statements when they are mailed, in the newsletter if the timing works, or by posting in the common area. It would be a good idea to include another copy of the notice with it, even if it was already distributed. It may not be necessary, but it makes sense.

Question: What if the HOA does not have any common area to post in?

Answer: That is a little more difficult. You can mail the agenda, post it by the mailboxes if there are any clusters, put a kiosk up somewhere near a street if there are private streets, a parking area if there is any, on a street lamp, or anywhere there is space available, that you can get permission. Choose the place all owners are most likely to drive by. If you still cannot find a posting place, but you have a website, posting on the website. Use good faith to try and find a reasonable way to get the agenda before the members.

Question: What are the exceptions?

Answer:  

• The law applies to "nonemergency" meetings only.
• The law does not prevent the Board or its staff or agents from talking to the members about something not on the agenda. It is not muzzled by this law.
• The law allows Boards to communicate instructions to its management and staff.
• The new law allows for taking action on items that come up before/at the meeting that are not on the agenda if certain findings are made as follows (choose from any one of the following):

(1)      A majority of the board members present at the meeting determine that an emergency situation exists. [An emergency situation exists if there are circumstances that could not have been reasonably foreseen by the board, that require immediate attention and possible action by the board, and that, of necessity, make it impracticable to provide notice.]

(2)      Two-thirds of the members present at the meeting, or, if fewer than two-thirds of the board members are present, by unanimous vote of the members present, determine there is a need to take immediate action.  The Board must find that the "need" arose after the agenda was prepared and posted or distributed, OR

(3)      The item was on an agenda for a prior board meeting and did not get put on the agenda for the meeting when it comes up again. The statute says on an agenda for a prior meeting that took place "not more than 30 days before", and that the item "was continued to this subsequent meeting." This language is confusing and undermines the point. If the prior meeting was 31 days prior, and/or the minutes from that meeting do not say that the matter was continued, does this apply? One could argue it practically does apply, given the apparent intent to tie two meetings together, without the understanding that they can easily occur 30-35 days or so apart, even when held monthly. It does not appear that Boards that meet quarterly can stretch things to tie in a prior meeting held the prior quarter. 

  In this day and age of increasingly short tempered people, threats of legal actions and lawsuits, and general disrespect, many board members are faced with the question as to whether or not the association should have some obligation in a neighborhood dispute. The basic thing that the association directors should understand is that in any situation that constitutes a possible violation of the CC&Rs, an "it's not our problem" attitude can lead to serious consequences.  If a homeowner is harassing another homeowner, and it only seems to be happening between those two people, the usual advice is (and should be if it's serious): "call the local police." In less egregious situations the common advice coming from the board (and often the Association attorney) is "work it out between yourselves because no one else is involved."  However, this proved to be the wrong answer for an association on the East Coast a few years ago when one of the owners demanded that the Association get involved. The Association did not get involved nor did it address the "misbehaving neighbor" (allegedly a "white supremist"). The owner (a black lady) served papers on the other owner for harassment and discrimination, and brought the association into the legal claim too. The association tried to get out of the lawsuit stating it was not responsible for the harassment and discrimination (and it certainly would never have been able to control the offensive member who was probably guilty of those things).  However, the association failed to get out of the lawsuit, mainly because it "did nothing."  The Bylaws of the Association said that the Board had the power to address violations of the governing documents and said that illegal activities were prohibited. This is pretty common for association regulatory documents. This was enough for the court to say: "Stay in and defend yourself." I do not believe the Association's insurance covered discrimination claims so the risk exposure and costs of defense would be staggering. The association was forced to stay in the litigation and the rumor was that the ultimate settlement (which was confidential) involved the association purchasing the unit of the complaining owner to avoid litigation costs and the risk of extensive damages. Harassment is a fairly common complaint in HOAs. So are noise issues, conduct, acting out, and pets and parking complaints. These often involve neighbors, grudges and emotions.

  At the very least, seek good legal advice in any neighbor to neighbor dispute. Do not assume that the matter is just a fight between two parties. Often there is a bona fide violation of the rules involved. Conduct (such as swearing, staring, glaring, threatening words or gestures, door slamming, and name-calling) can be considered a nuisance.  Most CC&Rs prohibit nuisances. If the two parties are slinging it back and forth, that is one thing. If one side is trying to live peacefully in their home and not instigating the neighbor's wrath, that is another. Board members can receive some protections in the law from Corporations Code Section 7231 and Civil Code Section 1365.7 which provide a "safe harbor" and some immunity for volunteer board members ... if they act in good faith. In these cases, that could easily include: (1) reviewing matters to see if there is a CC&R or rule violation that should be addressed and (2) seeking the right kind of expertise to help with the situation. Threatening either party with gestures or the threat of physical action of any kind would not be "good faith". Simple words like "I am a peace officer. I own a gun ..."could be construed as a threat of physical violence. Threats like: "If you leave your cat out at night I cannot be responsible for what happens to it," sounds more like a threat than a reasonable statement of a rule. Common sense is the key, and case law, while it provides guidance, cannot provide day to day answers to the questions that come up for board members.  If an owner brings a complaint to the Board that involves their neighbor, review it, and get enough information to determine whether either party should be subject to any warnings or disciplinary conduct, or they should be referred to local low cost mediators. Either response could be correct in the right circumstances, and could satisfy the Board's obligations of proper leadership, assertion of power and response to a duty imposed by the position.

  The question keeps coming up - " ... why would we (condominium board members or owner members) want to keep earthquake insurance when it costs so much and promises so little?

  This is part of it: the insurance "pendulum" swings back and forth, meaning it goes from being affordable and desirable to expensive with decreased coverages, and back again. Rumor has it that the pendulum might begin to swing back again the other way as early as later this year.

  Another point: The ultimate benefit is not necessarily 100% coverage. That is not feasible to get these days. The ultimate benefit is having at least enough coverage so that the members are not devastated by such an event ... at least enough coverage that owners are encouraged to stay and rebuild, even if a loan is needed to bear the uninsured portion of the damage costs.

  Another point: If your HOA steps out of the market intending to come back in when the prices go down, you might be sorely disappointed. Carriers limit their risks by limiting inventory as to geographic areas, building types, etc., and even if the cost goes down, you are not guaranteed of getting back into the market in as favorable position as you once were because the carrier you used before may no longer have any room to add you back in.

  Another point:  The California Earthquake Authority (CEA) says, and probably rightfully so, that there is no area of "low risk" in the state. There are only areas of "higher" risk and "lower" risk. Living in California is a choice. Living in California is expensive. Living in California is living in "earthquake country".  Earthquake insurance can be very expensive. Where is that surprise in that?

  Another point: Much of the real estate in California has appreciated providing very beneficial return in the form of increased appreciation for property owners. But the amazing thing is that those owners who are benefiting from these [inflated] property values aren't willing to pay a lot more for whatever insurance protections are available. That is the real surprise.

  Another point: keep in mind what Boards are normally duty-bound to do .... to protect property values . Dropping earthquake insurance coverage does not seem consistent with that stated purpose.

  And last, but not least: In a perfect world all owners in the HOA would carry individual earthquake insurance through the CEA and all would share the cost of a reasonable level of master coverage for the buildings, whatever the cost was. But Owners have to know that it is available, and be encouraged to buy it. This may be the best protection for EQ that association members can get, whether or not the Association carries the master policy. Owners can procure a private EQ policy through the CEA of up to $50,000 loss assessment coverage (coverage that would qualify to pay for the special assessments imposed by the HOA for earthquake building damage).

  There are two articles on the guru web and several blogs on this subject. Wake up and smell the roses. In short, and in plain English, instead of throwing up your hands, gather information that helps members fully understand the adverse ramifications of dropping the EQ coverage and helps them get educated as to how to protect themselves to the extent possible,  albeit expensive. Understand that by dropping EQ coverage, Boards are letting owners with little or no equity "off the hook". Dropping insurance coverage puts everyone at risk, even those who have considerable equity. Why shouldn't every member of the community contribute a fair share for insurance to protect property values in the community? If those without equity do not contribute to premiums and carry individual insurance, the special assessments to rebuild will be much higher, and those without equity will walk away - how do we know this?  One word - Northridge.  And every owner that walks away leaves  those with equity holding all the bills.  

Hit With A Request for a Reasonable Accommodation for a Disability?

How much money are you willing to spend?  But before you answer  ... I should add ... to avoid paying $1 million in damages after-the-fact.

What am I saying? That you should just "give in" if someone asks for something like a van accessible parking space, or hand railings, or a ramp? That you should ignore the impact on the other owners? Not exactly.  First and foremost, consult with your own attorney. We don't all analyze these things the same way. What I am saying, more or less, is that if there a way you can reasonably make the accommodation, even if there is a cost, or grumbling by other residents or owners, give it strong consideration. Without having to think about it too long or too hard, consider doing it as quickly as possible.

SMOKING IN HOAS - HOW FAR CAN YOU GO TO PROHIBIT IT?

May we ban smoking in the common areas?
May we ban smoking in the units?
                                          or, from the smokers:
How can they prevent us from smoking? It's a free country!

The answer is "yes", in some localities under some conditions, homeowner associations can ban smoking in common areas, and perhaps even in units. There is no constitutionally-based right to smoke. One would think the seminal cases might happen in a state like California, where smoking is banned in many jurisdictions in restaurants, bars, office buildings and public places. Legislation has been introduced (but failed before it came to fruition) that would have allowed homeowner associations to ban smoking in the common areas and that would have allowed certain actions to be taken against residents/owners who allowed smoke to "waft" between walls. However, other states have been more progressive (from the point of view of the courts finding against those who came with complaints about second hand smoke coming from a unit in a condominium). For two examples:

In Boston, in 2005, a jury found that heavy smoking was grounds for eviction of the tenants. When this judgment came down in 2006, the news story by Ralph Ranalli and Jonathan Saltzman, of the Boston Globe reported the following: "In a case that tobacco law specialists say is one of the first of its kind in the nation, a Boston Housing Court jury ruled that a South Boston couple could be evicted from their rented water-view loft for heavy smoking, even though smoking was allowed in their lease."




In November of 2006, in Golden, Colorado, a story was reported that illustrates some courts are willing to go a step further. "The Denver Channel.com" reported: "A judge has upheld a homeowners association's order barring a couple from smoking in the town house they own. Colleen and Rodger Sauve, both smokers, filed a lawsuit in March after their condominium association amended its bylaws last December to prohibit smoking.... In a Nov. 7 ruling, Jefferson County District Judge Lily Oeffler ruled the association can keep the couple from smoking in their own home...Oeffler stated "smoke and/or smoke smell" is not contained to one area and that smoke smell 'constitutes a nuisance.' She noted that under condo declarations, nuisances are not allowed.

This kind of litigation activity across the country, although not binding in any court in other jurisdictions, indicates a trend. Do not take this FYI as legal advice as to what you can do in your own HOA. But you may wish to pose the question to your own legal counsel - and discuss the ramifications of amending the documents to ban smoking. Don't expect a cake walk if you decide to clamp down on smoking. There are still some die hard smokers around. In most cases it would be important to try other measures before getting drastic, to deal with a wafting smoke issue.

RESERVES DISCLOSURE SUMMARY CHART - NEW REQUIREMENTS EXPLAINED

Last month I presented you with the new reserves requirements per AB 2100 (to Civil Code Sections 1365 and 1365.5). As promised, this FYI has the new Summary Chart and provisions.  Please note that you can also find this information on the website under the HOA ANNUAL DISCLOSURES ­ Checklist link. I have added some commentary to help you catch the nuances of the changes. Chaio...

Assessment and Reserve Funding Disclosure Summary
[Must be distributed to members annually, with the budget package.]

  (1)  The current regular assessment per ownership interest is $________ per ______. Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be found on page _____ of the attached summary.    [Ex.: when special assessments are based on square footage or ownership interest in Common Area and the like - then you need to attach a separate page - this information is usually in the CC&Rs.]

  (2)  Additional regular or special assessments that have already been scheduled to be imposed or charged, regardless of the purpose, if they have been approved by the board and/or members:

  Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be found on page ____ of the attached report.

(3)  Based upon the most recent reserve study and other information available to the board of directors, will currently projected reserve account balances be sufficient at the end of each year to meet the association's obligation for repair and/or replacement of major components during the next 30 years:

Yes _____      No_____  [Comment: Here is where you have to be careful - although your reserve study may give ending balances that coincide with the past or present year's budget showing intended reserve allocations to be taken from the regular or an existing special assessment, make sure that the monthly or other incoming assessment portion is actually being deposited into the reserve fund accounts. Some boards have discovered this is not the case only to be told by management that "there was not enough money in the operating funds to make the transfer to reserves because of other expenses." Sometimes the reserve allocation or a portion of it is being diverted to pay off a loan and that may not show up until the end of the year when adjustments are made. And sometimes, a recent disaster like Hurricane Katrina has resulted in increased costs in shipping and materials for all building construction and the Board knows that the estimates of cost of projects needs to be adjusted upwards either in the present or future years. All of these factors can be listed as part of the Board's answer "yes" or "no".]

(4)  If the answer to (3) is no, what additional assessments or other contributions to reserves would be necessary to ensure that sufficient reserve funds will be available each year during the next 30 years that have not yet been approved by the board or the members. [Again, this takes a thought process based on past, current and future events and expectations. It pays to spend some brainpower on this section and also to keep some documentation supporting it in the records of the association, in case later on the conjecture (which is really all it is) proves inadequate or to be an overstatement of needs. All one has to know to avoid personal liability is that due diligence is the one of the best mechanisms of defense in a "negligence" claim. Due diligence does not include pleading ignorance of the law, though. ]

All major components are included in the reserve study and are included in its calculations. [Note that this statement is different from the prior form and seems to imply that all major components must be included in the funding calculations. Yet 1365 says that the Board must list the major components that are not included in the funding plan and say why they are not being funded. So don't miss this requirement.]

Based on the method of calculation in paragraph (4) of subdivision (b) of Section 1365.2.5, the estimated amount required in the reserve fund at the end of the current fiscal year is $____, based in whole or in part on the last reserve study or update prepared by ____ as of ____ (month), ____ (year). The projected reserve fund cash balance at the end of the current fiscal year is $____, resulting in reserves being ____ percent funded at this date. If an alternate, but generally accepted, method of calculation is also used, the required reserve amount is $____. (See attached explanation) [Here it is up to the Board to provide an explanation of the percent funded. It is easier to express, at least as I understand it, if the straight line method of funding is used. If another method is used, the simple answer to disclosure is have your reserve study preparer help calculate the funded percentage of the reserves. I hear different speakers focus on different things for this disclosure. Some tout depreciation as a key factor. Others do not mention depreciation of existing components. Seek out the correct expertise on this - that is a component of defending any claim based on breach of fiduciary duty. Seeking the correct expertise is a defined element of good faith and good faith is a key element in defense of such a claim.]

Based on the method of calculation in paragraph (4) of subdivision (b) of Section 1365.2.5 of the Civil Code, the estimated amount required in the reserve fund at the end of each of the next five budget years is $______, and the projected reserve fund cash balance in each of those years, taking into account only assessments already approved and other known revenues, is $______, leaving the reserve at ______ percent funding. If the reserve funding plan approved by the association is implemented, the projected reserve fund cash balance in each of those years will be $______, leaving the reserve at ______ percent funding. Note: The financial representations set forth in this summary are based on the best estimates of the preparer at that time. The estimates are subject to change.

[Again, let your professional help you answer this question correctly, and note those expert(s) consulted for your records. And do not let the word "required" - which I have highlighted but which is NOT highlighted in the actual statute - throw you. It does not mean there is any written "requirement" for the amount that should be in reserves. You can see that in (b)4 of the statute (see below, which is also highlighted by me but is not highlighted in the actual statute books). ]

  [Note that there is no requirement of a date or signature on this form. I have seen the form disclosed with no indication whatsoever of what date or by whom it was prepared. I think this is a mistake .... but if no one wants to sign it, at the very least, the record needs to reflect the names of those involved in preparing it and what documentation was used. Nothing is more maddening in attempting to figure out how to avoid making the same mistake over again than not knowing how it happened before.]

    There are various restrictions (mostly involving notice) for borrowing from reserves as well. It is important to know these. Visit the Articles on the website for the latest one on borrowing from reserves. It discusses the new requirements.

FYI - February, 2007

New Budget and Reserve Requirements

Last month I seeded the well with notes about the new reserves borrowing requirements. Now, it is time to get serious and point out some of the new reserves requirements per AB 2100. A copy of the new summary chart will be in the March FYI. You can find this information under the HOA ANNUAL DISCLOSURES ­ Checklist link, if you misplace this FYI. I have added some commentary to help you catch the nuances of the changes. Chaio....