by Samiksha B. Patel
The Board will likely take action to remedy an issue with homeowners per the Internal Dispute Resolution procedures adopted by the Association (also mandated by the California Civil Code). Either homeowner may become angry about the final decision of the Board regarding the complaint and instead of cooperating, hire an attorney. This is the point where the Board’s lack of compliance with the Code can quite literally hold the HOA “hostage” in exchange for fees and completion of outstanding duties.
The subject of the dispute has now accelerated from a simple noise complaint to recovery of attorney fees in enforcement of the California Civil Code and/or CC&Rs. The Civil Code allows any member of a community association who incurs attorney fees in order to enforce the Act and its requirements against the Board to recover legal fees and costs, along with other legal damages. In addition, nearly all CC&Rs have a similar term in enforcement of its provisions. On the other hand, the Board may be entitled to collect attorney fees in enforcing a homeowner’s complaint against another if the CC&Rs contain such a provision (they often do).
Suddenly, the Board of Directors’ legitimate reason for not preparing and incurring the cost of the Annual Reserve Fund Summary pursuant to California Civil Code § 1365.25 in an effort to keep assessments low and make repairs to common areas is the subject of dispute and potential attorney fees against the Board. These costs fall directly back on the Homeowners – all of them. There are various exceptions and defenses a Board of Directors may assert for non-compliance with mandated action required either by the Civil Code or other adopted Rules and Restrictions. It is best for both the Boards and the homeowners to prevent having to rely on these exceptions altogether and properly manage maintenance and compliance with the applicable law.
The best way the Board can minimize their own liability exposure is to maintain professional community management services; familiarize themselves with the Davis Stirling Act and all other California laws governing community associations, CC&Rs, Bylaws, Rules and Regulations; routinely review and audit management services provided to the association; and consult with legal counsel periodically to assure compliance with all legally mandated requirements.
A Homeowner’s best chance at minimizing exposure to liability for failure to comply with CC&Rs, Bylaws, Rules and Regulations is to thoroughly read them. If the contents are unclear or require clarification, inquire to the Board or consult with or retain legal counsel. The potential for legal fees and costs should provide incentive for Homeowners and the Board of Directors to attempt in good faith to resolve all conflicts at the onset informally, if feasible.
Samiksha B. Patel is an associate at Neil Dymott. Her areas of practice include residential and commercial real estate matters, foster parent/county liability and business transaction and litigation matters. Ms. Patel may be reached at (951) 303-3930 or spatel@neildymott.com