Discriminatory Fees Are Unenforceable
QUESTION: I have questions about some of the rules and regulations of our 30-unit condominium complex. We have a “non-servers fee” of $20 a month. We also charge a non-resident owner fee of $50 a month, for owners who rent out their units. Our move-in and move-out fee is $50 for owners and $120 when a renter moves in or out. The cost of the common area key that opens both exterior and interior common area doors is $50. The penalty for late payment of assessments is double the amount owed. We pay board members an honorarium of $20 a month.
Are these procedures and fees legal? Are they fair?
ANSWER: Many of the fees that you have described are either illegal or discriminatory and, therefore, probably unenforceable.
A “non-servers fee” is a new one. I have never heard of this so I need further explanation from you to be able to tell you whether it is acceptable.
Charging a higher assessment or additional fee from non-resident owners is probably illegal unless the legal documents specifically grant the association the authority to do so. The fee for renters’ move-ins and move-outs is considerably higher than the fee for owners and, therefore, is discriminatory. What move-in service is the association providing to the renter that specifically makes the renter’s move-in more expensive? California Civil Code, Section 1366.1 states, “An association shall not impose or collect an assessment, penalty, or fee that exceeds the amount necessary for the purpose or purposes for which it is levied.”
The $50 fee for the common area key may be proper since it is an expensive type that is impossible to duplicate. Again, I would refer you to the law stated above. Many associations charge a high fee for common area keys to discourage owners from having several keys made. Some people feel that if one has a lot of keys, one will tend to be more careless with them. This is an unproven theory, in my opinion.
Your association’s penalty for owners who pay late is way out of line. The lawful penalty for late payment of assessments is 10% or $10, whichever is greater. Charging a higher amount is contrary to the California Civil Code. If your association’s documents specify a lesser amount, then the association must charge the lesser amount.
The “honorarium” of $20 a month for board members is unwise. The California Corporations Code, Section 7231.5, provides protection from personal liability to volunteer board members of nonprofit corporations. Paying the board members deprives them of the protection that the law affords since they are no longer volunteers.
I urge you to consult an attorney who is well-versed in community association law to get a legal opinion on all of your association’s fees and procedures.
Can Association Board Add Another Member?
Q: We live in a homeowners association that consists of 102 lots with single-family homes. Our association’s five-member board of directors decided to increase the size of the board. They appointed a sixth board member without changing the bylaws and without a vote of the general membership.
When questioned, the board members said that they needed the expertise of an architect to advise the architectural control committee and they wanted him the have the “status” of board member. Is this legal?
A: Boards should not make decisions like this without consulting legal counsel. Every association should select an attorney that they can rely on when legal questions arise. If the attorney has the association’s legal documents on file, a quick answer may keep the cost down. Legal consultation is usually well worth the expense and should be a budgeted item for every association.
I am not an attorney but in my opinion your board’s appointment of an additional member is questionable. The association’s declaration and bylaws will usually specify the number of people who serve as the board of directors. If these documents state a specific number of directors, then the only legal way to add another director would be to go through the amendment process to change the wording of the documents. The amendment procedure and the amount of votes required will be stated.
If the board wants to expand their number, I would suggest changing to a seven-member board. An even number of directors can result in deadlocks when tie votes occur.
Now I can hear some of you out there saying, “What harm does it cause if the board just increases the number of board members? Why go through the expense and hassle of amending the documents?”
My response is that the board is elected to uphold and enforce the legal documents. The board members should operate the association accordingly. The owners have a right to expect nothing less. If the board members choose to ignore the mechanics of the way the board is supposed to be constituted, I wonder what other portion of the documents they will decide to ignore in the future.
