Question: I'm a director on the board at my homeowner association. An attorney told us that Civil Code section 4360(c) requires a homeowner association to give formal notice to all titleholders within 15 days of voting to approve a proposed rule. But I can't find a provision that requires any notice to be given to owners when the board passes an amendment to the covenants, conditions and restrictions. Is there any law requiring notice be given to all the owners when the association passes such an amendment?
Answer: The board works for the association and the titleholders who fund its operations. For many owners, their property interest in the development is one of their most valuable assets. It is the board's responsibility to assist each owner in protecting that asset and maintaining the common areas.
Although owners have an obligation to request information about the governance of the association and their assets, the board's duty includes sharing all relevant information regarding association operations and governance. Even where there may be no explicit duty to provide notice, a board is advised to freely disseminate any information that may materially affect titleholders' decisions regarding how best to maintain their assets.
Civil Code section 4360 deals with changes in association rules made unilaterally by the board of directors without owner participation. The board is required to give notice of proposed changes to allow owners to voice their opinions. And there's a requirement for the board to give notice after voting to ensure that owners know which version of the rules will be enforced. It is always wise for the board to consider input from titleholders when making these decisions.
Amendments to the covenants, conditions and restrictions cannot be made without direct action by the titleholders. Titleholders must be informed of all proposed amendments and receive adequate notice of timing and voting procedures prior to enactment. As a result, after a vote of owners approves an amendment to covenants, conditions and restrictions, it appears that an otherwise relaxed notice is required to be circulated. The California Legislature could have inserted per se notice safeguards for titleholders in Civil Code sections 4360 and 4270, but it did not do so.
The process for amending an association's covenants, conditions and restrictions should be described in its governing documents. In the event existing governing documents are silent, Civil Code section 4270 provides default procedures. Although these default procedures do not include a general notice requirement, the results of any vote to amend association covenants, conditions and restrictions should be documented in meeting minutes available to all titleholders and reported to owners in annual disclosure documents.
Even utilizing the default procedures noted in Civil Code section 4270, circumventing traditional notice requirements, fairness and due process could end up getting the board sued. How the amendment is approved is just as important as how the board decided on the amendment in the first place and how and when that decision was communicated to all owners.
Because they own assets in that development, titleholders want to believe they are part of the process governing their community. They expect an open discourse. They want to take time to review, have their counsel review and then discuss potential changes the board recommends. The surest way to heat up dissension in an association environment is to bulldoze amendments, rewrites and restatements pertaining to covenants, conditions and restrictions without titleholder participation.
Zachary Levine, a 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 email@example.com.