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Condo Q & A

Board Member Wants Liability Protection

April 04, 1993|JAN HICKENBOTTOM | SPECIAL TO THE TIMES; Hickenbottom is past president of the Greater Los Angeles chapter of the Community Associations Institute (CAI), a national nonprofit research and educational organization

QUESTION: I was recently elected to serve on the board of directors of our 16-unit condominium association. Our board has made some questionable decisions in the past. I feel it should seek legal advice now and then.

The board president often says we are protected by our insurance policy if anyone questions our procedures. She does not want to pay for legal advice. Perhaps she wants to run things her way whether it is legal or not.

What can I do if I disagree with some decision that a majority of the board members approved?

ANSWER: At a board meeting, you can make a motion to refer the matter to an attorney. If the motion fails because no one seconds it, you have the right to request that your motion be noted in the board meeting minutes. The board secretary should comply with your request.

Any time that the board is voting, you have the right to have your vote noted in the minutes. It should not be necessary to do this for every board vote. However, if you think that a particular vote may have some legal significance at some time in the future, I recommend that you exercise this right. It may protect you from liability if the board's decision proves to be illegal.

Community associations should always have liability insurance and, in addition, a specific policy that covers directors' and officers' liability. However, board members should not assume that they will always be protected by this insurance when a legal question arises. The insurance policy will have several exclusions that the board needs to keep in mind when faced with difficult decisions.

Board members probably do not have expertise in all the issues facing the association. They should be wise enough to seek professional advice when it is needed.

Deal With Late Dues in a Timely Manner

Q: I live in a five-unit townhouse complex. Each unit pays a monthly assessment of $150. We try to keep our assessment collection on a personal, friendly basis.

One of our owners is often two-to-four months late in paying his assessment. Many reminders and phone messages have been unsuccessful in getting full payment. The rest of us are feeling very frustrated with the time and effort that it takes to collect from him.

What action can we take?

A: With a small association, it is especially important for the owners to pay their assessments on time. When one owner fails to pay, the association has to delay paying bills or defer maintenance until the money is received. This can have a detrimental effect on everyone's investment.

In California, a state law, Civil Code Section 1366, allows community associations to charge a late fee if an assessment is more than 15 days late. The monthly assessment is due on the first day of the month and delinquent if unpaid on the 15th day of the month. Unless the association's legal documents specify a smaller amount, you can charge the delinquent owner a late charge of 10% of the unpaid amount or $10, whichever is greater. You are also entitled to collect a reasonable fee for extra bookkeeping or extra notices that are sent.

Many other states have adopted the Uniform Condominium Act or the Uniform Common Interest Ownership Act with similar provisions for collecting assessments.

Read your association's declaration of covenants, conditions and restrictions (CC&Rs) to find the enforcement procedures that you can use to collect delinquent assessments. If the late charge specified in the declaration is less than the state law allows, then you must charge the lesser fee unless you can justify additional collection costs. The association can charge interest at the rate of 12% per annum if the monthly assessment is still unpaid 30 days past the due date.

The association can file a lien for the unpaid assessments and charge the cost of lien filing and other legal expenses to the delinquent owner. If the owner ignores the lien, the association can foreclose and take the unit.

The board should review the association's legal documents and vote on the methods they are going to use to collect unpaid assessments. If the association's board of directors adopts a new delinquency procedure, all of the owners must be informed. The association is obligated to distribute the written delinquency procedures annually to the owners during the 60-day period prior to the beginning of the fiscal year.

Consult a property management company, a lien service or attorneys that specialize in community association matters if you need professional guidance.

Always enforce your delinquency procedures fairly and consistently with all of the owners. When the delinquent owner is informed that your association will enforce its procedures and charge him for any additional costs, he may decide to pay on time in the future.

Janitorial Services Regulated by Board

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