Board Failed to Heed Budget Law

QUESTION: I am the owner of an apartment in a stock cooperative. The association board has failed to comply with the Davis-Stirling Assembly Bill 314, which requires distribution of the budget 45 to 60 days prior to the end of the fiscal year.

The annual income is in excess of $75,000 and they do not prepare financial statements or have a reserve study. What can be done to make the board comply with this law, as there is no obvious penalty for ignoring it?

ANSWER: You are either a faithful reader or you have done your research. The portion of the Davis-Stirling Act, which you have cited is California Civil Code, Section 1365. I quote it so often but I find there are still many associations that have never heard of it or they choose to ignore it.

Enforcement requires filing a civil complaint. Contact an attorney who is familiar with community association law.

No Formula for How Much Reserve to Keep

Q: We have 27 units in our condominium. Each unit pays assessments of $100 per month. How much reserve should we have on hand?

A: Unfortunately, there is no way to pluck a number out of the air. Years ago, some experts said that the reserves should equal 10% of the annual operating budget. That advice is no longer appropriate.

State law now dictates that the association must distribute to the owners specific financial information, which includes a list of major components of the property, an estimate of the current replacement cost and the remaining useful life of each of the components, and the method of funding that the association is using to pay for the future repair or replacement.

All community associations must abide by this law whether they are large or small, incorporated or unincorporated.

Amendments Legal If Procedures Followed

Q: Our board of directors has banned pets even though the CC&Rs; allow pets. When I inquired, I was told that the CC&Rs; had been amended. I was given a copy of the amendment, recorded by the County Recorder.

Since the original CC&Rs; bear the seal of the State of California, has the board followed the proper procedure? Did this amendment require two-thirds vote signed by the members?

A: The declaration may be amended according to the procedures stated in the governing documents of your association. Very few documents disallow an amendment procedure.

After the amendment has been approved by the percentage of owners required by the governing documents, then the amendment must be recorded by the county. If the amendment procedure is followed properly and the voting is certified by an officer of the association, then the county clerk would accept it for recordation.

All owners must be informed regarding a vote to amend the documents. After an amendment has been approved and recorded, the amendment should be distributed to all owners because it is a part of the governing documents. There should be no reason for an owner being unaware of an amendment.

Board Refuses to Hire Exterminator

Q: What can be done about an association that refuses to do anything about a termite problem? Our condominium unit was examined by a pest control company over a year ago, and it was determined that we had termites.

Every time we contact the board of directors, they refuse to do anything about it. I might want to sell my condo, but I know it will never pass inspection. I have considered withholding my monthly assessment, or contacting an attorney. What do you suggest?

A: First, don’t withhold your assessment payment. I’m sure you’ve heard that two wrongs don’t make a right. Unless the CC&Rs; state otherwise, the association is obligated to take care of this problem.

I would refer them to Section 1364(b) of the Civil Code: “In a community apartment project, condominium project, or stock cooperative . . . unless otherwise provided in the declaration, the association is responsible for repair and maintenance of the common areas occasioned by the presence of wood-destroying pests or organisms.”

I would assume that the termites are within the common walls of the building. Perhaps you can show the board of directors this column and request their cooperation. Otherwise, you may have to pay for an attorney to enlighten your board.

Hickenbottom is past president of the Greater Los Angeles chapter of the Community Associations Institute (CAI), a national nonprofit research and educational organization. She welcomes readers’ questions, but cannot answer them individually. Readers with questions or comments can write to her in care of “Condo Q&A;,” Box 5068, Thousand Oaks, Calif. 91360.