New Law Defines Owners’ Rights, Fees

QUESTION: Our homeowner’s association has a graduated schedule of monetary penalties that are charged against owners or tenants who violate the declaration of covenants, conditions and restrictions (CC&Rs;) or rules and regulations.

We were told that a recent change in the law created limits on the amount of penalties that can be charged per year to an individual owner. Are you familiar with this new law and the limits for penalties?

ANSWER: The new law is California Civil Code, Section 1363 (i): “If an association adopts or has adopted a policy imposing any monetary penalty, including any fee, on any association member for a violation of the governing documents or rules of the association, including any monetary penalty relating to the activities of a guest or invitee of the member, the board of directors shall adopt and distribute to each member, by personal delivery or first class mail, a schedule of the monetary penalties that may be assessed for those violations, which shall be in accordance with authorization for member discipline contained in the governing documents.

“The board of directors of the association shall not be required to distribute any additional schedules of monetary penalties unless there are changes from the schedule that was adopted and distributed to the members pursuant to this subdivision. The board of directors of the association shall meet in executive session if requested by the member being disciplined and the member shall be entitled to attend the executive session.”

The law does not limit the amount of penalties. However, the association’s legal documents may include limits. As the law states, the association’s penalty procedures must comply with the member discipline procedures that are specified in the CC&Rs; or bylaws.

Many associations have requirements in the legal documents for notification of the violator and other due process provisions that promote fairness and reasonableness in the discipline process. Due process requirements might include that the violator receive notice of the specific restriction or rule that was violated, the opportunity for the violator to attend a hearing to answer the accusations and the opportunity to correct the violation.

This new section of the Civil Code has several other provisions regarding owners’ rights, including:

1--The meeting notice that is distributed prior to a general membership meeting must specify the agenda items that will be presented for members’ vote.

2--Membership meetings are to be conducted under some form of parliamentary procedure.

3--Members of the association are entitled to access to association records as described in California Corporations Code, Sections 8330 through 8338.

4--Any member of the association may attend any board meeting except when the board adjourns to executive session to discuss litigation, matters that relate to contract formation or negotiation or personnel matters. Members may attend the board meetings as spectators only. They should not expect to participate in the decision-making process.

5--If two or more associations are performing or managing the functions of the membership, such as a master association and sub-association, members may attend meetings of the joint or master association.

6--The minutes or any meeting of the board of directors or a draft copy of the minutes, or a summary of the minutes, must be available to the members within 30 days after the meeting. The minutes, draft copy or summary must be distributed to any requesting owner upon receipt of reimbursement of the association’s costs for copying and distributing them.

7--The board of directors should notify all members that meeting minutes will be distributed upon request. The notice should specify how and where copies of the minutes can be obtained.

What Is Procedure If Board Member Quits?

Q: One of the board members of our condominium association resigned just two months after we held the annual meeting to elect the board of directors. The board has not scheduled another election. There are rumors that the board has appointed someone who wasn’t even nominated at the annual meeting. Shouldn’t the association members be allowed to vote on the person who will replace the board member who resigned? If the board has the authority to appoint a new director, shouldn’t they appoint the person among the losing nominees who had the highest number of votes?

A: The answer to both of your questions is probably “no.” The board is usually responsible for filling any board vacancies that occur between annual meetings.

You can find out about your association’s procedure for dealing with vacancies on the board by reading your bylaws. Sometimes the declaration (CC&Rs;) will contain this information but it is usually in the bylaws.

Most associations have legal documents that give the remaining board members the authority to appoint a new director when a vacancy occurs. The remaining board members do not have an obligation to appoint someone who was nominated at the annual meeting. The board should select a person who will serve the association in the best interests of all the members.