818-676-0848
dsheppard@sheppard-law.com


NEW STATUTORY LAWS & CASE LAW AFFECTING HOMEOWNERS ASSOCIATIONS - 2008

The legislature passed only a few new laws which might affect community associations. The
change in the law concerning Agenda for Board Meetings will be onerous for associations and their
managers and may impede the ability to get things done in a timely, efficient manner. All laws take
effect on January 1, 2008, unless otherwise noted.

NEW STATUTORY LAWS

1. BOARD MEETINGS -SB 528
A. Agenda
California Civil Code Section 1363.05 was amended to require that the Notice of every Board
Meeting contain the Agenda for the meeting. It prohibits Board Members from discussing or taking
action on any item not on the Agenda for that meeting. The only exception is for emergency items.
Emergency items may only be acted upon if they are not on the Agenda if one of the following
situations exists:

(1) A majority of the Board determines that an emergency exists that could not have
been foreseen by the Board that require immediate and possible action by the Board,
and make it impractical to provide notice; or
(2) Two-thirds of the Board Members present at the meeting or, if less than two-
thirds are present, all Board Members present unanimously decide that there is a need
to take immediate action and the need for action came to the attention of the Board
after the agenda was posted and distributed for the Board Meeting; or

(3) The items appeared on an Agenda posted and distributed for a previous Board
Meeting held not more than 30 days before the date the action is taken on the item
and the item was continued from the previous meeting.
The emergency item must be openly identified to the Members before discussion by the Board.

B. Discussions at Board Meeting.
“Residents” may discuss items not on the Agenda for the meeting. The Board may not
discuss items not on the Agenda, unless they are an emergency item. The Board may:

(1) Respond to statements made or questions posed by members of the Association;

(2) Ask a question for clarification, make a brief announcement, or make a brief
report on his/her activities;

(3) Provide reference to or resources for factual information to its managing agent or
staff;

(4) Request its managing agent or staff to report back to the Board at a subsequent
meeting or to place items on a future agenda;

(5) Direct its managing agent or staff to perform administrative tasks necessary to
carry out the law pursuant to this law.

2. MANAGER CERTIFICATION- AB 691
The current Manager Certification statutes in Section 11500 of the Business and Professions
Code were due to be repealed effective January 1, 2008, unless extended by the legislature. The
legislature has extended the statutes until January 1, 2012.

The modifications to the law add to the topics to be covered in the mandatory 30 hours of
educational requirements and areas to be tested the following areas: (1) management and
administration of architectural standards and (2) conflict avoidance and resolutions mechanisms.

3. REAL ESTATE TRANSFER FEE DISCLOSURES-AB 980
This bill adds Sections 1098 and 1098.5 to the Civil Code and provides that certain
disclosures be made in a recorded document by receivers of transfer fees relating to the amount,
purpose, to whom the fee will be paid and to where the fee should be sent. Homeowner associations’
assessments, charges, penalties, or fees authorized by the David-Stirling Common Interest
Development Act are excluded from the definition of “transfer fees”. The definition of “transfer
fees” includes a fee payment required by a covenant, restriction, or condition contained in any deed,
contract, security instrument, or other document affecting the transfer or sale of real property. Since
fees charged by management companies to handle the transfer of records and providing
documents and information to potential buyers are not controlled by either the CC&Rs or the
Davis-Stirling Act, these fees are not subject to these statutes. Recent case law, including the
decision in William J. Berryman v. Merit Property Management, Inc., (2007) 152 CA4th 1544, has made it clear that transfer fees imposed by management companies to provide documents
and change their records are not subject to the limitations on associations contained in Civil
Code Section 1368 of the Davis-Stirling Act that the fees be reasonable and related to the
actual cost to the association to procure, prepare and reproduce requested documents.

NEW CASE LAW
(The following is not an exhaustive list of new case law. It is a selective list of cases of interest.)

1. QUEEN VILLAS HOMEOWNERS ASSOCIATION V. TCB PROPERTY
MANAGEMENT (2007) 149 CA4th 1, 56 CR3d 528. The Court of Appeals held that an
indemnity provision in a management contract does not require an association to indemnify
management in a lawsuit filed by a homeowner for embezzlement based upon the management
company’s failure to obtain two signatures on checks, as required by their contract. In other words,
if a management company breaches its agreement with the association and fails to perform duties
as specified by the contract, the association is not required to indemnify management in a lawsuit
filed by a homeowner against management.

2. ROBERT P. HEIMAN V. WORKERS COMPENSATION APPEALS BOARD (2007)
Robert Heiman dba Pegasus Properties hired an unlicensed and uninsured rain gutter installer to
install new gutters on the Montana Villas Homeowners Association buildings. The rain gutter
installer hired another person (Aguilar) to do some of the work. Aguilar was injured when the rain
gutter contacted a high voltage wire. The Workers’ Compensation judge ruled that Aguilar was the
employee of the rain gutter installer and ordered benefits be paid by Pegasus to Aguilar. The
Workers’ Compensation Appeals Board ruled that the Association and Pegasus were joint employers
of the rain gutter installer and Aguilar. Based upon this case, an association and manager are jointly
liable as employers for Workers’ Compensation insurance benefits to be paid to an employee of an
unlicensed and uninsured contractor hired to perform work at the association.

3. CITY OF SANTA BARBARA V. SUPERIOR COURT (JANEWAY) (2007) 41 Cal.4th 7
Katie Janeway was a participant in a summer camp program offered by the City of Santa Barbara for
developmentally disabled children. The application form contained a release of all claims against
the City and its employees, including liability based upon negligence. The City was made aware of
Katie’s propensity toward seizures while in water and asked to supervise Katie while swimming.
Katie drowned in the pool and in a wrongful death lawsuit filed by her parents, the City of Santa
Barbara attempted to use the release as a defense. The Supreme Court of California held that the
release violated public policy and was not enforceable by the City to protect it from gross negligence.

This newsletter is published by Debra L. Sheppard & Associates, APLC as a service to board
members, property managers, and others with an interest in community association law and related
matters. All information provided is of a general nature and not intended nor represented to replace
professional, specialized, legal advice. Copyright 2007 by Debra L. Sheppard & Associates, A PLC.
All rights reserved. Reproduction in any other publication is forbidden without express written
permission of the copyright owner.

ARCHIVED NEWSLETTERS

Home  l  Services l  Firm Profile l  Newsletters l Archives l Contact Us  

 

 


Debra L. Sheppard & Associates

21243 Ventura Boulevard, Suite 123
Woodland Hills, CA  91364

818-676-0848
dsheppard@sheppard-law.com


Debra L. Sheppard & Associates, Attorney-At-Law, Los Angeles