Condo and HOA Elections Laws Are Still Causing a Stir!

The California law on HOA and Condo elections is, let’s face it, responsible for a lot of disputes in homeowner associations today! Why?

1. It’s complicated and although tweaked more than once (the first time within months of taking effect, as an urgency cleanup measure!) it still is poorly written, such that qualified HOA attorneys fight over what the terms really mean.

2. It requires a board of an HOA or condo association, even those that are very small, to either stumble along on their own which can open the association up to legal and political challenges, or spend a fair amount of money getting election rules written by a qualified HOA professional!

3. It apparently confuses small claims court judges no end all over the state because some think they have full authority to order elections to be done over again and assess penalties and others think they have no such authority. (I believe they have quite a bit of authority.)

Here are some of the juicy “tidbits” of wisdom pulled from answers to some recent emails, presentations at some recent meetings, and brainstorming solutions with some of my California colleagues who have also shared some frustration with application of the law:

1. Every HOA or Condo Association is required to have Election Rules.

2. Election Rules written before September 22, 2006 NEED UPDATING because of urgent clean up legislation that CHANGED SOME THINGS.

3. Every set of Election Rules drafted by anyone other than a properly trained/ experienced/ HOA professional familiar with the election laws and how they evolved should be reviewed by such an HOA professional.

The going rate is about $500-$700 for a set of Election rules with substance, meaning the preparer knows the law and will read the association governing documents and pay attention to what they say about proxies, cumulative voting, quorum and adjourned meetings, nominations, qualified candidates and the like – which are the most common areas of battle because the law points to the document language these areas – you may find a boiler plate set cheaper – but you may end up getting burned. In any of these cases, the sum total cost is a lot cheaper than going to superior court over inadequate rules or a troublesome process, fueled by a vehement board and driven owner, as one association found out (see more below)

4. Sometimes owners know more than the board!  This can be embarrassing when a board realizes the owner may be right about the complaints he or she is making, but it need not cost the association more than acknowledging mistakes and correcting them appropriately, the board willing.

5. Trying to do business, chide owners, or craft  ”damage control” via email is futile! And furthermore, doing business via email to settle some dispute is not only dangerous (because all emails are potentially discoverable), it is also in violation of the Davis Stirling Act Open Meetings Act.

6. If the Board does not “tender” a complaint filed in small claims court to it’s insurer (meaning give notice of the claim), and the matter is kicked into Superior Court for any reason, or dismissed and re-filed, an association may lose its coverage for defense of the lawsuit because of insurance policy timing requirements. (This can be bad news for the HOA.)

5.  Sometimes an election “do over” just makes sense, when considering the potential cost of a lawsuit .

The $$ thing, namely the high cost of fighting for “rights”  proved true in a recent real case in superior court, an HOA “won” a lawsuit filed by a disenchanted owner by a judgment upholding the election – but had to spend more than $140,000 on attorney fees in a 4 day trial, and it appears the $$ may be quite difficult to collect from the owner, even though the association got a favorable judgment on reimbursement of attorney fees.

The whole dispute started with a poorly written set of election rules and some election gaffs that had to be corrected along the way, which was fueled then by an owner with too many questions for the board, and progressed to a whole slew of nasty emails being flung in all directions, and which culminated with a 4 day trial at which almost every email was painfully dissected as to each word or line.

And the thing about owners knowing more than boards? It can be embarrassing for sure!

Here is a sample of a sign posted at one HOA by the mailboxes, sent to me by a reader:

“PLEASE DO NOT VOTE UNTIL YOU READ THIS!

Your board has manipulated your voting through their actions:

1.  They closed nomination a day early so XXXXXXXXXXX (current board member and your XXXXXXXXXX) could not be put on the ballot.

2.  They did not put a reminder on the ballot that you have cumulative voting and can vote all your votes for just one person instead of spreading them out over different candidates.

3.  They did not send out candidate statements so that you could familiarize yourselves with the candidates, especially the new ones.

TO PRESERVE BOARD INTEGRITY THE BEST ACTION WOULD BE TO NOT VOTE UNTIL THESE ISSUES ARE CORRECTED.”

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I have no idea whether these allegations are true or not, but if true, but the person who sent this to me (someone either on the board or the manager) for review felt like the board was being slandered, RIGHT BY THE MAILBOXES!

If the allegations are true, then there is a problem with this “defensive position” on the part of board or management because – the truth is a defense to any slander claim. If they are false, the HOA needs to do some damage control, right away, by telling members the facts, and to disregard signs posted with incorrect information.

These parties need legal help!!!! But they may not want to pay for it.

I could say to either side …. “Pay now …. [get some good legal advice ... or pay later and more [if this leads to a lawsuit.]

***

By the way, see more about this lawsuit story and HOA elections problems on my other blog at www.californiacondoguru.com, mainpage, California Condo & HOA Law Blog!

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