Law Requires Report to All Owners

QUESTION: The board of directors has not distributed an annual financial report for our homeowners association. I requested a copy but have not received a response from the board. I spoke with the management company about this but I was told that the board had not authorized sending the report to everyone. I believe that California law requires that an annual report be sent each year.

Can I file a complaint with the California Department of Real Estate? Do I have to file a lawsuit to force the board to comply with the law?

ANSWER: By April 30, 1991, the association board should have distributed your annual financial report if the fiscal year ended Dec. 31, 1990. If your declaration of covenants, conditions and restrictions (CC&Rs;) is more restrictive, then the board must comply with the CC&Rs.;

The Department of Real Estate (DRE) will respond only if your association is still under developer control. If your association has completed transition to homeowner control, then the DRE will probably be unable to assist you.

You have the right to file a lawsuit against the board if they are not complying with the state law. However, that should be unnecessary. You should be able to speak with the board president to find out if they are uninformed or just lax about complying with the deadline.

Many homeowners are very frustrated that even though there are laws that govern community associations, there are no penalties that would encourage boards to comply.

Assemblyman Daniel Hauser has introduced Assembly Bill 1251 that would establish a California Bureau of Community Assns. under the supervision of the Department of Corporations. If the bill is adopted, the new bureau would regulate associations and managers. The bill would authorize the implementation of arbitration or mediation services to encourage the resolution of conflicts without homeowners having to resort to legal action in situations like yours.

Exterior Neglect Cited for Interior Damage

Q: We live in an eight-unit condominium association. During recent rainstorms, we had water damage that included soaked carpet, damaged interior drywall and interior wood shutters. We have been told that the repairs are not covered under the condominium association’s insurance or our homeowner policy.

The damage resulted from clogged rain gutters, lack of rain gutters in some areas and improper drainage of the driveway. The association’s legal documents state that the association is responsible for all exterior maintenance. Who is responsible for the internal repairs when damage results from poor exterior maintenance?

A: Relying upon the information you have provided, I would expect the association to pay for the repairs. Since the damage resulted from lack of maintenance of the rain gutters or lack of proper drainage of the roof and driveway, the association should be responsible. If the association’s insurance company accepts the claim, the association should pay the deductible. If the insurance company denies the claim, then the association should pay for all the repairs.

Board Member Irked by Apathetic Owners

Q: I live in a five-unit condominium that was built nine years ago. we have some rusting gates and other deferred maintenance. I have advocated increasing assessments to take care of some repairs and build up the reserve funds.

I am one of the three owners who form the board of directors. The current president has her unit listed for sale and has been transferred out of town. The other board member seems rather apathetic about repairs, termite treatment and other association responsibilities. In fact, none of the owners seems to care about the condition of the property.

What can I do to get the association on track? Should I resign?

A: Read your association bylaws to find out how the board vacancy should be handled. If the board president has resigned, the remaining board members may be able to appoint a replacement. However, your bylaws may require an election.

I don’t think you should resign unless you have a lack of support and cooperation from the rest of the owners. All of the owners should be willing to help by serving on the board when needed. That is the best way to preserve their investment. The owners should support the board in adopting a budget that adequately maintains the property.

If apathy has completely taken over, then perhaps you should not only resign from the board. I would also recommend that you sell your condominiums as soon as possible before the lack of maintenance begins to affect the market value of your unit.

Absent Owners Can’t Be Charged Higher Fee

Q: The bylaws of our condominium association say that an “absentee landlord must pay a maintenance fee of $125 a month beginning Oct. 1, 1980.” At that time, the regular assessment paid by owners residing in their units was $85.

The reasons for higher fees for non-residents are many. We feel that it discourages rentals. Since non-resident owners do not help with the management of the complex, we feel that the charge is justified.

Now, one of the new absentee owners is questioning the legality of the higher fee. So far, he has not paid the higher amount.

What advice can you give us?

A: Even though you have used this procedure for more than 10 years, it may not be legal. The new owner that is challenging the association may be the first one to bring up a valid grievance. The association should consult legal counsel, but before you do so, I urge you to read your association’s legal documents.

Does the declaration of covenants, conditions and restrictions (CC&Rs;) state that every owner pays an equal amount? If so, the higher fee is illegal. Is the amount of the annual assessment calculated to be commensurate with the square footage of the unit or the percentage of the common area owned by the individual unit owners? Then charging a higher fee from the non-resident owners is illegal.

The CC&Rs; supersede the bylaws. Specific assessment amounts should not be put into the legal documents since it is likely that the amount will change over a period of time. Haven’t your assessments increased since 1980? If assessments have increased, then you are not operating in compliance with your bylaws since the bylaws state a specific amount. This needs to be corrected.

In my opinion, your board would have a difficult time justifying a higher fee of almost 50% from the non-resident owners. It appears to be punitive and unfair. It’s time for the association to seek the advice of an attorney who specializes in community association law to see how this can be resolved.