Manager Needs Supervision
QUESTION: Our condominium has not had an annual meeting in three years. Most of the officers of the board have moved away so I don’t know whom I should speak to about scheduling the meeting and the annual elections. The manager says that he will take care of everything but nothing happens.
How can the annual meeting take place if the manager doesn’t make the arrangements?
ANSWER: It sounds as if the manager is not being supervised by the board of directors. Scheduling the annual meeting is a board responsibility, but the manager is neglecting his duty to the association if he doesn’t work with the board members to see that the legal documents of the association are obeyed.
If some of the board members are inactive, then the remaining board members should appoint or elect new members according to the procedures in the association’s bylaws. Then an annual meeting should be scheduled at the proper time specified in the documents.
Since your annual meeting is long overdue, a special election could be scheduled to elect directors who will serve only until the next regularly scheduled annual meeting takes place.
Accountant Should Explain Delay of Financial Report
Q: In a recent column (“Law Requires Report to All Owners,” May 12) you stated that all community associations must distribute an annual financial report to the owners within 120 days after the close of the fiscal year. Our homeowners association has not complied with this legal requirement.
Since our annual income exceeds $75,000, the report is being prepared by an accountant. This is the second year that the accountant has not completed the work on time. As a board member, I am concerned about this. The manager says that she has done everything she can to get the accountant to complete the report.
I am frustrated with both the manager and the accountant. What can we do?
A: The board should write to the accountant stating that your association must comply with California Civil Code, Section 1365 (b). Request that the accountant send a letter stating the reasons that the report is not ready for distribution and the estimated date of completion. Then you will be able to distribute the accountant’s letter to your owners to show that you have made an effort to comply with the law.
In the future, I recommend that you contract with a licensed accountant who understands the association’s legal requirements and agrees to complete the work in a timely manner.
How to Get Copies of Laws About Condos
Q: Our condominium board has learned through your column that there are many laws that govern community associations. We have heard about the Davis-Stirling Act and I believe that this is the law that you usually cite in your column as the California Civil Code. Is the California Civil Code included in the Davis-Stirling Act? How can I obtain a copy of the California statutes that govern condominiums?
A: The Davis-Stirling Act was passed in 1985 and took effect Jan. 1, 1986. It consolidated certain existing provisions in the Business and Professional Code and the Civil Code so that most of the laws having to do with common interest developments, or community associations, now appear in Sections 1350 through 1373 of the Civil Code. There have been several changes since 1986 so you need to stay informed about new legislation.
There are provisions in the Corporations Code and the Nonprofit Corporations Code that can be referenced when researching voting procedures, board powers and responsibilities and members’ rights. Most public libraries have a law reference section where you can read these laws and make copies for your use.
A copy of the Davis-Stirling Act and all current amendments is available from Community Assns. Institute. Send $5.00 to cover photocopying and postage costs to: CAI, P.O. Box 84303, Los Angeles, 90073. Allow five weeks for delivery.
State Manual Can Help in Establishing Budget
Q: As the treasurer of my homeowners association, I am responsible for budget preparation. We would like to cut our expenses, particularly landscape maintenance and electrical costs, but we want to adopt a budget that is realistic.
What resources are available to help us determine whether our current expenses are reasonable?
Our association might hire a management company or a bookkeeping service to do the monthly assessment billings and other accounting work. How much should we put in the budget for these management services?
A: The California Department of Real Estate (DRE) publishes a manual that is especially useful to developers in estimating the operating costs of a new development. The data for the most recent revision was compiled early in 1990. Some portions of the manual’s instructions, data and work sheets may not apply to your situation.
The manual provides formulas for estimating landscape costs and electrical costs. By using this data and your financial history from previous months and years, you should be able to formulate a realistic estimate of your operating costs and reserve funding.
The cost of financial services depends upon the scope of services performed. The DRE manual estimates that an association can contract for assessment billing, collection, payment of bills, collection of delinquent accounts and preparation of a financial statement for $10 per unit per month. Small associations should budget a minimum of $600 per month. To ascertain the actual cost, you will have to obtain bids from the companies that perform this type of service.
