Blog

What’s Best for Your HOA Reserve Funds? 
By Lisa Beaty & John Polovick

For HOAs, financial stability and long-term planning are crucial. Funds often sit idle in low-yield accounts due to a lack of proactive investment plans and challenges from regulations like the Davis-Stirling Act. An effective strategy should prioritize both security and growth. U.S. Treasuries, especially T-Bills, provide excellent liquidity, allowing for quick access to funds. This is crucial for funding emergency projects or complying with California’s SB 326. Investing in T-Bills helps HOAs not only protect their funds, but also may increase yields over other available alternatives. This approach ensures that funds set aside for SB 326 are secure while generating higher returns, balancing reliable income with the immediate liquidity needed for urgent financial needs.

THE APPEAL OF U.S. TREASURIES AND CDS

U.S. Treasuries: Introduced in 1913, U.S. Treasuries are considered one of the safest investments, backed b...

By Maria C. Kao & Matt Meadors  Note: This article first appeared in the Summer 2024 Edition of The Communicator Magazine.

EVERY DEVELOPMENT GOES through a transition where the original developers hand over the management and operations to the homeowners. Such a transition will include the finances of the association. Here, we focus on an association’s legal obligations, but also offer real-life advice from a professional manager experienced in turning over a community.

The finances should not be overlooked during the transition phase, and it is of utmost importance to make sure the basics are set up correctly. They should include assessment calculations, reserve studies, a thorough investigation into the operating budget and many, more discreet issues. Let’s synthesize the legal obligation information together with operational know-how for those interested in setting up the future of financial stability for a transitioning project.

OPERATING

Pursuant to the Department of Real Esta...

Why Do People and the Media (Even John Oliver) Pick on HOAs?

By Nathan McGuire, Esq., CCAL 

HOAs are incredibly popular. And statistics show that the vast majority of people living in HOAs are happy with their HOA. But if that’s true, why does it seem we are constantly hearing that people hate their HOAs? It is simple: the few who don’t like them are incredibly vocal. And who loves a good negative story? The media. Even comedians are getting in on the fun.

John Oliver’s popular weekly late night HBO quasi news show, Last Week Tonight, devoted an entire 30-minute episode to badmouthing HOAs. The show aired on April 9, 2023. If you haven’t seen it, I highly recommend you watch it. You can easily find it online without a subscription to HBO. The episode is undeniably hilarious, likely even more so for those who live in an HOA or work in the HOA industry. I watched it the day after it aired. And I laughed. But after it was over, I felt another emotion – anger. Why was I feeling so angry...

By Ellen Schuster, Esq.

We talk a lot about the fines and other penalties associations can impose on members who violate the governing documents. What about the fines and penalties that can be imposed on associations? Associations that violate certain Civil Code sections may have to pay monetary penalties or fines (typically called "civil penalties") in addition to paying for actual damages, attorneys’ fees, and court costs.

At a time when members are increasingly challenging associations and associations are under increased scrutiny, it is important to understand the common violations that can subject associations to significant fines and penalties.

Open Meeting Act (Civil Code section 4900, et seq.)

Associations that violate this act may have to pay attorneys’ fees, court costs, and civil penalties of up to $500 per violation. (Civil Code section 4955(b).) Common violations include failure to provide the required four days’ or two days’ notice of an open board meeting or executiv...

By Melissa Bauman Ward, Esq., CCAL 

(Second in a two-part series)

In Part 1 of this article, we examined different kinds of bias and considered ways that we could recognize implicit and explicit bias in our communities generally and in the way we interact with each other. In Part 2, we consider specific areas of our written documents and governance procedures where bias may be found and look at ways to eliminate or avoid negative bias in these contexts.

OVERT RACISM: UNLAWFUL LANGUAGE IN CC&RS

Unfortunately, there are still many documents in use which contain explicitly racist restrictive covenants. These outdated, offensive restrictions often take the form of identifying racial groups that are prohibited from owning property, or even residing in a community. Obviously, such overt racism is a violation of federal and state law. Despite some progress being made around fair housing laws and practice, the issue of what to do with these odious documents remains.¹ Encouragingly, in Cali...

By Karen St. Onge, Esq.

This article first appeared in our Fall 2022 Communicator Magazine.

Although attorneys advise homeowner associations and community managers in preparation for appearing in small claims court and assist with appeals, more often community managers and board members go it alone since the amount in controversy does not seem to warrant the expense. (CCP §116.530, 116.540, Civil Code §4100). Here is what senior community managers in the Bay Area and Central Valley had to say about their experiences in small claims court.

FIRST SIGNS YOU ARE HEADING TO SMALL CLAIMS COURT

According to a manager who has appeared hundreds of times in small claims court, the first sign that the association is going to get sued by a member of the association is a request for association records. The first thing she does is open a file and starts tracking everything that is requested and produced, in detail, and document every interaction with that member.

SHOULD YOU FILE IN SMALL CLAI...

Bias is a buzzword we hear often in today’s world, but for many it is difficult to understand or accept. Many approach the topic as though the goal is to "empty our minds" of bias (as if that were possible). However, the less we focus on and are aware of bias, the harder it is to recognize, identify, and control our biases so that they do not result in unintentional harm to others through unexamined discriminatory and prejudicial actions.

Here we will define bias and look at the way unintentional bias affects our behavior as individuals, community members, HOA members, directors, managers, and attorneys. We’ll consider the ways in which bias affects our communities in the form of laws, rules, policies, and documents and the way that we enforce these community covenants. We’ll consider the role of bias in our community interactions and how unlawful prejudice and discrimination resulting from bias exposes our communities to considerable legal risk. Finally, we’ll look at several ways th...

By Trent Nelson

As An Aquatic specialist with more than a decade of experience, I’ve assisted hundreds of property managers with their lake and stormwater pond management needs over the years. Despite the diverse types of lakes and ponds they oversee, I’ve noticed that many clients have the same set of concerns or misconceptions about their waterbodies. These often come to light as we work together to design a freshwater management program. Let’s take an in-depth look at some of these common assumptions. 

1. LAKES AND PONDS ARE PERMANENT FIXTURES IN THE LANDSCAPE

While lakes and ponds can be long-lasting features in our communities, they are not permanent. They fill with sediment that erodes from the shoreline or flows in during rainstorms. Weed growth and decomposition may lead to the development of muck. And trash, tree branches, and other pollutants can build up over time.

The aging of a lake or pond is a natural phenomenon, but can be highly accelerated through human activity a...

Common, Costly and Concerning
By Steven Fielding

THE GOVERNING BOARDS of condominium associations worry about many things. Reserves, rules enforcement, insurance costs, maintenance, pets, parking, and COVID are on a long list of things that keep trustees and association managers up at night. Water heaters probably are not, but they should be. Here are a few hard – or soggy – facts:

• Water damage is one of the two leading property damage risks faced by homeowners, representing nearly one-third of all homeowner claims filed annually, exceeded only by wind and hail damage.
• One in every 50 insured homeowners files a water damage claim every year; the average claim cost is about $7,000, adding up to more than $2.5 billion in insured losses annually, according to the Insurance Information Institute.
• There are no statistics on how many of those claims are attributable to water heaters, but 75 percent of all water heaters will fail – usually without warning – within 12 years of their purch
...

By Melissa Bauman Ward, Esq. 

When it comes to surveillance cameras – both for associations and members – policy considerations should be examined carefully.

SURVEILLANCE CAMERA SYSTEMS FOR ASSOCIATIONS

The presence of surveillance cameras in homeowners associations is not uncommon. Cameras are used for everything from crime deterrence to creating evidence of crimes (particularly theft and destruction of property) to figuring out who is leaving furniture by the dumpsters or not cleaning up after their dog. The predominant issue revolves around a member/resident’s right to privacy.

COMMON AREA PLACEMENT

Surveillance cameras typically point toward the common area, including the sidewalks, parking areas, driveway areas, landscaped areas, trash enclosures, and other recreational areas. Because anyone walking on the common area past the cameras will be caught on tape, so to speak, and will have their likenesses recorded, there is concern that their privacy will be violated as a result....