Board’s lawyer making hollow threats

Question: Our home is in a deed-restricted development in Orange County. My husband is a member of the homeowner association board, and our dues are $200 a month.

The reason he was able to get on the board is that he went door-to-door introducing himself and begging apathetic homeowners for their proxies. This is the first time that someone other than the usual slate has been able to get on this board in more than nine years.

The experience is an eye-opener. The most troubling thing my husband uncovered is that, even though there are five board members, only three, who are close friends, make all the decisions. Somehow these three friends are assured their positions on the board year after year.

My husband is treated as an onlooker, not a board member. He has requested to look at the books and other documents, including the association’s attorney’s bills and correspondences, but the board majority won’t let him.

By accident, he was able to read a letter from the attorney to the board instructing them to denounce homeowners by accusing them of “devaluing” or “diminishing property values” as a reliable threat to get homeowners to do whatever the board wants.

The attorney made it clear that this is an effective tool for compliance that can be used without any serious repercussions from the homeowners.

The board sends these threats of vague legal action to homeowners along with the attorney’s bill for writing the letter.

What is “diminished property value,” and is it permanent or temporary? Can the board arbitrarily accuse homeowners of devaluing property, and does the recipient of the attorney’s bill have to pay?

Answer: The board hired the attorney, the board pays the bill. Neither the term “devaluing” nor “diminished property values” is found in the Davis-Stirling Act, which details the laws as they pertain to boards and associations. Those terms are not listed as part of the board’s duties, and there is no legal basis for the board’s hyperbole.

California Civil Code Section 1363(f) of the Davis-Stirling Act provides that board members are entitled to review the records of the association in accordance with the provisions of, among others, Sections 8333 and 8334 of the Corporations Code.

Section 8333 provides that “The accounting books and records and minutes of proceedings of the members and the board and committees of the board shall be open to inspection upon the written demand on the corporation of any member at any reasonable time, for a purpose reasonably related to such person’s interests as a member.”

Section 8334 states: “Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director.”

A director, who is presumably another homeowner, has an absolute right to review the books and records of the association. Denying a board member that right is a violation of law for which a director can sue the board and association.

Even the sale of your deed-restricted unit or house won’t determine whether there are diminished property values. Like any investment, deed-restricted property purchases and pricing are cyclical. The accusations of “devaluing” property are meaningless.

No matter how much is received when sold, to get the complete picture of gain or loss, common-interest property owners need to subtract all the monthly maintenance fees and any special assessments paid during ownership. It could be argued that escalating fees or overspending by the board have devalued the property.

For example, $200 per month for association dues is $2,400 per year that must be subtracted from any increase in the property’s equity. This is money that must be spent every year to keep possession of the property, yet it is often forgotten when the property is sold.

This is compounded by special assessments. While property values rise, deed-restricted property owners realize less of that increase by virtue of the payment of fees and assessments.

A board sincere about enhancing values will make every effort to return overages and reduce fees and assessments.

Questions and comments for Stephen Glassman and Donie Vanitzian can be sent to P.O. Box 451278, Los Angeles, CA 90045 or e-mail your queries to NoExit@mindspring.com.