Business Real Estate

Board lets attorney take advantage

Question: Our homeowner association board is impetuous and wastes association money. The board members think homeowners have bottomless wallets. In two years, they've spent hundreds of thousands of dollars just on attorney fees and undertaking preposterous projects. The recent spate of bad legal advice includes redoing our covenants, conditions and restrictions. It's been a two-year project that has so far netted the attorney well over $90,000. The attorney advised our association that Davis-Stirling Act statutes should be embedded in our documents. This began to the tune of at least $59,000 and countless months, if not years, spent on rewrite after rewrite. And, of course, it ran over budget. Now, because the laws have changed, the attorney says we have to redo these documents to expunge the Davis-Stirling Act references and fix cross-references that he created and convinced us to insert in the first place! Surely there must be a better way to do this?

Answer: It is important to remember that association attorneys are vendors who must be managed and supervised by the board. The board's fiduciary duties to the titleholders include the oversight of attorneys and the management of budgets and costs. No vendor should be allowed to run over budget without sufficient explanation.

There appears to be a somewhat more cost-effective way for your association to accomplish what you want. Civil Code section 4235, with the heading "Correction of statutory references in documents," sets forth a way to correct statutory references in such documents:

•Notwithstanding any other provision of law or provision of the governing documents, if the governing documents include a reference to a provision of the Davis-Stirling Common Interest Development Act that was repealed and continued in a new provision by the act that added Civil Code section 4235, the board may amend the governing documents, solely to correct the cross-reference, by adopting a board resolution that shows the correction. Homeowner approval is not required in order to merely adopt a resolution pursuant to Civil Code section 4235.

•A declaration that is corrected under Civil Code section 4235 may be restated in corrected form and recorded, provided that a copy of the board resolution authorizing the corrections is recorded along with the restated declaration.

Civil Code section 4235 applies only to cross-references. The board is not at liberty to rewrite or restate the covenants, conditions and restrictions without a vote of all owners.

Any change to the association's documents should be done with as much notice and transparency to the owners as possible. All board action must be taken at a properly noticed meeting and the board should provide all titleholders not only a copy of the resolution but also copies of the most current edition of the covenants, conditions and restrictions. If the board does not provide such documentation, the owners may make their own demand for the same pursuant to Civil Code section 5205, which pertains to "availability to members," and Civil Code section 5210 pertaining to "time periods of required availability."

Zachary Levine, partner at Wolk & Levine, a business and intellectual property law firm, co-wrote this column. Vanitzian is an arbitrator and mediator. Send questions to Donie Vanitzian JD, P.O. Box 10490, Marina del Rey, CA 90295 or noexit@mindspring.com.

Copyright © 2014, Los Angeles Times
Related Content
Comments
Loading