Notify City About Problem With Parking Area

QUESTION: We live in a townhouse complex in Cerritos. The parking area was recently resurfaced. After the area was resurfaced, the association repainted the parking area striping. They created new reserved parking spaces, one of which is only six feet from my living room window.

We were not informed of the proposed revision of the parking spaces, so I did not have an opportunity to express my concerns before the change. I have written to the board of directors and the management company and attended a board meeting to ask them to remove the parking space, but they have not responded to my complaints. What is my next step?

ANSWER: It seems that there are never enough parking spaces in any community association. However, the association should not rearrange or revise parking areas without checking with the city codes and ordinances. Your city has restrictions regarding the placement and measurement of parking spaces.

If your association continues to ignore your concerns, contact the city Planning Department to determine whether the parking spaces were approved by the city. If the city was not involved in the changes, your complaint will be investigated. The Planning Department staff will check the original development plan and send an inspector to determine if the revisions are acceptable.

The association should have communicated with the homeowners and obtained city approval before making the changes.

Unlicensed Labor Can Become Costly

Q: The roof of my townhouse unit recently leaked. The roofs are the responsibility of the homeowner association. The roofs were recently re-roofed by an unlicensed contractor who did not comply with minimum city building codes. The roofing contracts lacked specifications and warranties and did not require a city inspection.

The director who is in charge of maintenance is paid as an independent contractor, but he is not licensed or insured. The association does not pay unemployment insurance and makes no payroll tax deductions. The association has never required a certificate of insurance or liability policy from any contractor.

Who is responsible for my rain damage resulting from an illegally installed roof?

A: There are a few laws that are being violated. The association is left holding the bag, but that really means that all the owners will probably share in the cost of paying for the damage.

The board of directors is not operating the association in a businesslike manner, and that creates liability for all of the owners in the association. The directors may ignore your complaints because they do not want to admit that they made some bad decisions. It is time for you to put your complaint in writing. If you have to resort to legal action, you will need to have records of your correspondence and the association’s response.

The member of the board of directors who is accepting payment as an independent contractor could be personally liable for damages.

The other members of the board should read the association’s legal documents regarding compensation of board members.

A misguided board may think it is saving the association’s money by dealing with cheap, unlicensed labor, but the result can be very costly. The association should comply with labor laws, contractor licensing laws, workers’ compensation laws, city building codes and many other legal requirements.

Some boards believe that their directors’ and officers’ insurance will always protect them if they make bad decisions. However, if they continue to put the association at risk, even after their errors are brought to their attention, their insurance policy might not defend them.

Is Developer Obliged to Replace Reserves?

Q: Our board of directors recently took over control of our community association from the developer. We are a planned development of 114 single-family homes.

We have found that some of the expenses, such as the landscaping, trash removal, electricity and management contract, far exceed the amount budgeted. It appears that reserve money has been used to pay some of the operating expenses.

The developer refuses to take responsibility for the faulty budget because he hired a professional budget preparer to submit the budget data to the Department of Real Estate. He believes that the budget was created according to Department of Real Estate guidelines.

The developer and his staff controlled the association and its board of directors for four years. Shouldn’t they have revised the budget? Is the developer obligated to replenish the reserve funds that were used for operating expenses?

How can we find out what assumptions were used to formulate the original budget? Can we obtain a copy of the information?

A: Annual budgets should be revised when “real world” expense history shows that the original budget is inadequate. Developers like to have the monthly assessments as low as possible, but the developer who serves on the board of directors has a fiduciary responsibility to make good decisions on behalf of the association and its owners.

If reserve funds were used for operating expenses, the funds should be replaced. Your association’s attorney can advise you about the developer’s obligations. The attorney will probably advise the association to increase the current budget to adequately cover the operating expenses and the reserve funds. A certified public accountant who specializes in community association audits can assist the association by determining the amount of the reserve deficit. Then with the attorney’s and the accountant’s help, the new board of directors can consider how to make up the deficit in the reserves.

The original budget information is available. If you bought your home from the developer during the original marketing of the project, you should have received a copy of the final Subdivision Public Report issued by the Department of Real Estate.

The budget guidelines for new common interest developments are contained in a booklet that the developer’s budget preparer uses to formulate the original budget. You can obtain a copy of the Department of Real Estate’s “Operating Cost Manual for Homeowner Associations” by sending a check or money order for $10.77 to: Department of Real Estate, Attn: Book Orders, P.O. Box 187006, Sacramento, CA 95818-7006.

Hickenbottom is a past president of the Greater Los Angeles chapter of the Community Associations Institute, 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, CA 91360.