What Are HOA Lawyers Saying About Solar Installations In HOA?

In today’s world, owners are, by their own initiative, seeking to be environmentally conscious. Outside clothes drying is coming back strong. See my blog link (California Condo & HOA blog) to read more on that subject. Energy savings is in vogue. Solar installations are in vogue. The general public (and lots of industry vendors and professionals for that matter) are not very well informed about rights of owners and rights of the HOAs. The California legislature has ruled on this subject and they push solar installations. (Civil Code Section 714 and 714.1 ­ note, this is not in the Davis Stirling Act but can be pulled up on the California government website at www.ca.gov ­ navigate to Law and Legislation and the 29 California Codes.)

The easy part: one can place anything on their own home or in their own yard, but in an HOA where architectural approval is needed for changes to the exteriors of the buildings or erection of things on the roof or common area or other areas, one needs to know what the limits are. And an HOA that is proactive on this subject and works to achieve a fair and rational policy, will ward off more problems than an HOA that sits and waits for an owner to set a standard by installing something that is not what the Board would have chosen.

This “couch potato” kind of thinking is exactly what occurred for many HOAs with satellite dishes. The legislature (federal in that case) pushed HOAs into allowing satellite dishes, and those with a policy tended to avoid legal battles, where other HOAs were left with the question of whether to spend association funds to fight the installations, look the other way, or accept the sales/owner driven practices. Don’t let that happen with solar installations. If your owners aren’t given any guidance, they may go out and sign a contract for an expensive system, which makes them fight harder to install it, which fight (even if “win-able”) adds cost to the HOA budget, which, in these times, cannot be stretched very well to fight these kind of fights. So get a policy together!

And, let owners know (newsletter articles and website highlights are good for this) if, in your condo association, a solar installation on the roof is prohibited, or, if solar is allowed or even encouraged, that if they purchase a solar system without checking first with the HOA Board and getting approval for the type of system and placement of it, they may be wasting money chasing after something that would not be allowed. Tell them the installer will probably recommend a roof system, and the HOA will have to give its blessing before any system cannot be installed. And let them know that the HOA has important concerns, and what those are. Let them know that although a townhome or Lot may own the roof of his or her dwelling (and sometimes the garage), the owner in a condo only owns a “share” of the roof and that complicates the ability of the HOA to allocate it for solar installations. Explain what the situation is, so that owners can understand the need for a policy.

And here is the rub in California:

  • There are attorneys who say solar panels may not be placed on roofs that are maintained by the HOA, even if the owner owns the Lot upon which the dwelling and garage are placed. (I do not agree with this position, bit it’s out there.)
  • There are attorneys that take the position that no owner may have a solar installation in a condo because they do not own the roof.
  • There are attorneys that would believe the law allows for a solar installation even on a condo roof.
  • There is a statute that requires 2/3 membership approval for any grant of exclusive use of common area to any owner (see Civil Code Section 1363.07).
  • There are attorneys that believe the 2/3 member voting requirement trumps the solar statutes and those that believe the solar statute carries more weight.

It is difficult to say which of these positions might fall, if challenged, because to the best of my knowledge, there is no defining case authority in California. However, I can say that I do not believe an HOA can ban solar installations on roofs in a PD (Planned Development where the owner owns the Lot, the building and the roof.) And as for the condo situation, it’s a toss up. I could in good conscience write a policy and give an opinion letter in either case scenario for a condo, but it would have to be qualified to say that the law is not unequivocal in favor of either point. And one important point is that if a Board in a condo association grants an owner the right to install solar panels on the roof without putting it to a vote of the members, it might be found to be acting outside its legal authority.

This puts a Board in a “damned if you do” and “damned if you don’t” say yes to solar – in a condominium development.

In a townhouse or “planned development” situation where the owner owns the Lot, I can say with confidence that the owner voting statute does not apply. And, that, even when the association maintains the roof, the owner has stronger and more fully defined rights than in a condo situation. But on the HOA side, HOA certainly does have an interest on what might be placed on the roof aesthetically, and, if it maintains it, construction-wise. So, the Board in this scenario cannot say “no”, but it can say “wait, there are some parameters and restrictions.”

So what is the overall answer to these dilemmas? The answer is in policy setting (or should I say setting policy)! A condo HOA could (always do some research so you can provide owners accurate and helpful information first) put a voting measure to the members of the condo association to see if they want to allow individuals to have solar energy systems placed on the roofs, or, if you think there will be more requests than space available, a condo board might look at (or appoint a committee to look at) some system that could serve more than one owner.

If you are not a condo association, policy setting is still a must. Look at all possible systems for your developments, look at what exclusive use areas might work, look at the roofs, at the roof warranties, at all conditions and various systems, and come up with a policy that would allow owners to install solar panels if they want to bear the expense (and sign an agreement taking responsibility) of installation, maintenance, removal and replacement at the time of re-roofing, responsibility for any water or other damage that occurs during installation and the time the solar panels are on the roof. You should provide for rights on the part of the HOA to demand removal of the system and restoration of the area if the system becomes dilapidated or is disconnected, or when an Owner moves away. You might check with your insurance agent or broker and see if there is a policy that might be available to owners for these installations, or if the HOA insurance would cover bursting solar water carrier installations. You might do as I commonly recommend for things like installation of skylights or other installations on the buildings and require owners who are allowed solar installations to sign a recordable agreement that accepts these responsibilities, and that makes it clear in any title transfer process that any successor owner has the same responsibilities.

For any HOA situation, you might look to see if panels or systems on a stand could be used on balconies or backyards, as an alternative to roof panels. If you do not want to publish a policy to give owners some parameters, adopt the standards as part of an architectural review process. [Remember, if passing rules that affect owners, pre-adoption circulation is required by law. See Civil Code Section 1357.100 etc.]

Here are two more important points:

  • Very briefly, in a situation where you must allow an owner to have solar installations, you have less bargaining power, but the standard very generally is that you cannot require a system that is more than 20% more expensive or 20% less efficient than the system the owner wants to install.
  • And, since at this point there does not seem to be attorney consensus on the issues, get a legal opinion letter from your attorney that backs the position you are taking. It may not save you from getting challenged on your policy, but it will provide some insulation for board members from liability as it serves as a “good faith” component the decision making process. For that matter, getting an opinion letter from a solar installation expert on what system is best for your conditions would not hurt!

There is so much more to be said on this and you can check out my website (blog and articles) for more information about the statute, the extent of the Board’s ability to impose restrictions, and what kinds of controls are available to the HOA.

Be ready. Owners will come calling. And you can set the “tone.”

Copyright © 2009 Beth A. Grimm, All Rights Reserved