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Homeowners associations must comply with statutes

Boards in California burdened by expenditures should look into trimming expenses, not opting out of rules set by the Davis-Stirling Act. Directors can also invite owners to weigh in on cuts.

January 16, 2011|By Stephen Glassman and Donie Vanitzian

Question: I'm an owner and board director for my homeowners association of less than 25 units. For four years our association has been fighting — to the tune of thousands of dollars per month in attorney fees — over ongoing nonsense. Although it's wise to have association documents kept up to date, I didn't intend to spend four years of my life copying documents and meeting with lawyers. I believe that small associations like ours should be able to opt out of complying with California's Davis-Stirling Act. The legislature just seems to keep making these laws more complicated, time-consuming and expensive to comply with. There doesn't appear to be relief from these monetary assaults on boards and owners alike. Why does this type of homeownership have to be so complicated and expensive?

Answer: Common-interest homeownership has become complicated and expensive because of the accumulating legislation. Since first enacted in 1985, the Davis-Stirling Act has been amended about 1,500 times, and lawsuits abound. But opting out is not an answer. Nor is continuing statutory amendments.

Responding to document requests comes with the territory for homeowners associations and is the responsibility of all boards of directors. Being consistently organized helps make the process of compliance easier.

Cutting down expenses may require an extensive examination of the association's business practices, require regular audits and learning better organizational skills. Charging for the requested documents is permitted by the Davis-Stirling Act, including the time it takes to collect and compile the request. Still, the board's directors needs to get to the bottom of the expenditures and figure out a way to cut them — including the attorney and management fees.

If the association is defending itself in a lawsuit, the insurance company should be paying the fees and costs. If the association is paying its own attorney fees and/or defense, the association should reimburse you for those expenses and where applicable the insurance company should reimburse the association. If none of those items are reimbursable and the titleholders are funding all of this through special assessments, another course of action must be considered.

If association expenditures are not litigation-related but the association is having to repeatedly defend itself just the same, a meeting explaining expenditures to the titleholders is needed. Invite owners to comment on cutting expenditures. Mediation should be considered to settle nonlitigation-related expenses that are ongoing but unresolved.

Regardless of size, associations are not allowed to opt out of complying with statutes that are meant to protect not only the association but the titleholders who have invested their money in assets that the association controls.

Send questions to Box 10490, Marina del Rey, CA 90295, or e-mail noexit@mindspring.com.

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