connect 2012 issue 1

CAI-GRIE’s mission is: To make a positive contribution to the Common Interest Development Community through education and networking.

ISSUE onE 2012

connectA PublicAtion of the GreAter inlAnd emPire chAPter of cAi

BACK TO THE BASICSA FRESH LOOK AT:Board Meetings, Quorums and Issues, Oh My!

Internal Dispute Resolution (IDR): Learn it and Use It

SB563, Open Meeting Act Expands Management Standards

Managing the Right Way

Basic Questions Answered: Contract Formation, Meeting Conduct and Member Apathy

If you are involved in the management of a community association, you know that State and Federal laws that govern associations complicate decision-making and make the conduct of association business challenging. At Epsten Grinnell & Howell, knowing the details of community association law is our only business. Our attorneys constantly review the fine print of the law and client governing documents. This attention to detail ensures that clients receive effective, practical solutions to legal problems. Let our comprehensive understanding of community association law contribute to the success of your association.

San Diego10200 Willow Creek Rd., Suite 100San Diego, California 92131858.527.0111 • fax 858.527.1531

Inland Empire43460 Ridge Park Dr., Suite 200Temecula, California 92590951.461.1181 • fax 858.527.1531

Coachella Valley44-875 Deep Canyon Rd., Suite 3Palm Desert, California 92260760.836.1036 • fax 760.836.1040

800.300.1704 l www.epsten.com

to complex Community Association legal issues. If you are involved in the management of a community association, you know that the State and Federal laws that govern associations complicate decision-making and make the conduct of association business challenging. We can help. At Epsten Grinnell & Howell,solving the complexities of community association law is our only business.

Our attorneys handle a continuing and varied stream of association legal matters. We collaborate and share our ever-expanding knowledge with each other, and with our clients. This can be a real benefit to your association, as our attorneys are not likely to be starting from square one when faced with your difficult issue.

Call us today… We have a lot of common interests.

We provide solutions...In Community Association Law…

the Devil is in the details.

Call us today… We have a lot of common interests.

connectwithgrie•issueone2012|3

www.cai-grie.org

oFFICERS

robertriddick,cMcA............................................................. President

sunnymeadranchPlannedcommunityAssociation

Lanahamadej,LsM,PcAM.............................................President-elect

AvalonManagementgroup,AAMc

KimberlyLilley,cMcA,cirMs........................................ Vice-President

BerginsuranceAgency,inc.

LindaKrebs.............................................................................. secretary

FlowerLighting&electric

ginaroldan............................................................................. treasurer

VistaPaintcorporation

Kencarteron................................................................... Past-President

seacoastcommerceBank

BoARD DIRECToRS

weldonL.Brown....................................... weldonL.Browncompany

Lindacooley............................rosettacanyoncommunityAssociation

DanaMathey,ccAM............................. euclidManagementcompany

MattD.ober,esq.,ccAL.......................richardsonharmanober,Pc

tiffanireynolds...................................... rodentPesttechnologies,inc.

shellyrisbrudt.....................................................BemusLandscape,inc.

Kristierose,cMcA,AMs,PcAM,ccAM..MeritPropertyManagement

Alisatoalson,cMcA,ccAM.....ProfessionalcommunityManagement

gwenwertz......................................................... commercewestBank

ChApTER ExECUTIvE DIRECToR

DJconlon,cMcA

ADmInISTRATIvE ASSISTAnT

MichaelKennedy

EDIToR In ChIEF

Bettyroth,cMcA,AMs,PcAM..AvalonManagementgroup,AAMc

pUBlICATIonS CommITTEE

tomcarrasco...environmental-conceptsLandscapeManagement,inc.

JacquelineDao,esq................................ Fioreracobs&PowersAPLc

Lanahamadej,LsM,PcAM......................AvalonManagementgroup

Janhickenbottom,PcAM,ccAM......................................... FirstBank

Kellyg.richardson,esq..........................richardsonharmanober,Pc

Mahendrasami...................................................................unionBank

nancyi.sidoruk,esq.............................epstengrinnell&howell,APc

Jasminetermaine,esq..................................... Beaumontgitlintashjian

sheebaYaqoot,esq................................ Fioreracobs&PowersAPLc

DESIGn & pRoDUCTIon

Kristinegaitan.................reyAdvertising&Design/thecreativeDept.

AllarticlesandpaidadvertisingrepresenttheopinionsofauthorsandadvertisersandnotnecessarilytheopinionofeitherConnectorthecommunityAssociationsinstitute–greaterinlandempirechapter.informationcontainedwithinshouldnotbeconstruedasarecommen-dationforanycourseofactionregardingfinancial,legal,accountingorotherprofessionalservicesandshouldnotberelieduponwithouttheconsultationofyouraccountantorattorney.

ConnectisanofficialquarterlypublicationofgreaterinlandempirechapterofthecommunityAssociationsinstitute(cAi–grie).thecAi–griechapterencouragessubmissionofnewsandarticlessubjecttospacelimitationandediting.signedletterstotheeditorarewel-come.AllarticlessubmittedforpublicationbecomethepropertyofthecAi–griechapter.reproductionofarticlesorcolumnspublishedpermittedwiththefollowingacknowledgment:“reprintedwithpermissionfromConnectMagazine,apublicationofthecommunityAssociationsinstituteofgreaterinlandempirechapter.”

copyright©1998–2012cAi-greaterinlandempirechapter.

Advertising,articlesorcorrespondenceshouldbesentto:cAi-griechapter5029LaMart,suiteA•riverside,cA92507-5978(951)784-8613/fax(951)848-9268

Table of Contents

The Greater Inland Empire Chapter of CAI hosts educational, business and social events that provide the Chapter’s Business Partners various opportunities to promote their companies’ products and services to Community Association owners and managers serving the Community Association Industry. It is expected that all participants in Chapter events — whether they be educational, business or social — will conduct themselves in a professional manner representative of their business or service organization so as not to detract from the experience of others seeking to benefit from their membership in the Chapter.

connectA PublicAtion of the GreAter inlAnd emPire chAPter of cAi

Features 4 What Role Can an Attorney play in Small Claims? By Robert M. DeNichilo, Esq. 7 Back to the Basics: meetings, Quorums & Issues, oh my! By Jasmine Termain, Esq.

11 occupy the Capitol! By Skip Daum

13 The open meeting Act Expands... and Board Service Will never Be the Same

By Kelly G. Richardson, Esq.

17 The IDR procedure in Assessment Collections: learn It and Use It! By Jacqueline A. Dao, Esq. & Sheba S. Yaqoot, Esq.

20 managing the Right Way (part 1) By Jon H. Epsten, Esq.

24 Six Attorneys, 3 Basic Questions By Jon H. Epsten, Esq.

26 meet the CFpB

Departments 6 president’s message By Robert Riddick, CMCA

8 Editor’s link By Betty Roth, CMCA, AMS, PCAM

10 Business partner Spotlight 16 man on the Street Says.... 19 A Toast to Community Associations: An Evening at the Winery to Support ClAC

22 new, Renewed & Rejoined members 27 Billiards “madness” Tournament hIghlights

4|issueone2012•connectwithgrie

By RoBERT m. DenIChIlo, ESQ.

What Role Can an Attorney Play in Small Claims?

recent issue of Connect contained an article on how associations can use small claims to collect delinquent assessments. The article correctly

noted that attorneys are not allowed to participate in the small claims hearing. But that does not mean that an association’s attorney should have no role in the process. In fact, an attorney can, and should, play an important role throughout the small claims process.

Initially, a board and management should consult with the association’s legal counsel to determine whether a small claims suit is appropriate, or whether more traditional methods of collection, such as foreclosure, are more suited to the situation. Further, the board should discuss with legal counsel what disclosure should be made when the

association is involved in any legal action, even one in small claims court.

Once the board makes the decision to pursue a matter in small claims, the association’s legal counsel can play a role in the following ways: • Legal counsel can play an important role

in answering questions regarding a matter and how the small claims process works.

• Legal counsel can help prepare and submit the forms necessary to start a small claims action.

• Legal counsel can help gather and review the necessary documents to be presented in the small claims hearing.

• Legal counsel can prepare a short brief to be submitted to the small claims judge describing the case and the law regarding the matter.


• Legal counsel will typically be more accustomed to appearing in court and presenting a case to a judge. Therefore, they can work with the manager or board member who will attend the hearing to help prepare their presentation.

There is one additional area which, even in small claims, is more appropriately left to legal counsel than to managers or board members. Most people know that attorneys cannot represent an association at a small claims hearing. And most people know that an attorney can (in fact, must) represent an association in any appeal of a small claims matter to the superior court. However, most people don’t know that under civil code section 116.530(c)(4), attorneys are allowed to appear in small claims in connection with the enforcement of a judgment. So what does that mean to an association?

At the conclusion of the small claims matter, like in any civil matter, the court will issue a judgment. Hopefully, the association’s representative presented a compelling argument and obtained a judgment in favor of the association. But without the ability to hire an attorney to enforce the

judgment, it would be unlikely that the board or management would know what steps to take next. This is where the exception provided in the civil code, to allow attorneys to appear in small claims court in connection with the enforcement of a judgment, comes in to play.

Once an association has obtained a judgment, it should refer the matter to legal counsel to enforce the judgment. Board members should not undertake to attempt to collect a judgment on behalf of the association themselves. Board members, unlike experienced legal counsel, are not generally aware of risks of running afoul of debt collection laws, claims of defamation, or other risks which can arise in the context of debt collection. Needless to say, debt collection is much better left to professionals than individual board members.

Once legal counsel is retained in the small claims matter, they can substitute into the case for the association, and can then take the necessary steps to enforce the judgment, such as preparing and

having an abstract of judgment issued and recorded, and they can set and attend a judgment debtor examination. In a judgment debtor examination the owner will have to appear before the court and answer questions about the existence, location, and amount or value of the judgment debtor’s salary, assets, and anything else that could be used to generate proceeds to pay the judgment. The debtor’s books and records can also be subpoenaed, and the debtor will be required to bring them to the hearing. Experienced legal counsel will be much more skilled in the use of these methods than the average manager or board member, and therefore will be more likely to be able to collect or otherwise enforce a judgment.

Robert M. DeNichilo is a partner in the law firm of DeNichilo & Lindsley, LLP, and practices in the area of CID law. He also serves on the Legislative Support Committee of the GRIE and OC chapters of CAI.


greetingstoallofourinlandempirechaptermembers.And,awarmandsincerethankyouforthewelcomeyouhaveextendedtomeasyourincomingchapterPresident.ishouldalsosaythatirealizei’msteppingintosomemighty“bigshoes”thathavebeenwornbymypredecessors,andihopeicanaccomplish—withyourhelpandsupport—nearlyasmuchaseachofthemdidduringtheirtermsinoffice.

Asmanyofyouarealreadyaware,thethemechosenforthisyear’schaptersloganis“goingBacktotheFuture.”Andbasically,whatitrepresentsisaneffortthisyeartorevisitourbasicgoals(goingBack)thatledtothecreationofourchapter,andthenmovingforward(totheFuture)reaffirmingthosegoals.Aprettysimpleconcept,ofcourse,andonethathassustainedthechapterforovertwodecadesnow.thisyear,however,myhopeisthattherewillbeanaddedemphasisputonidentifyingandthenencouragingmorehomeownerparticipationwithinourchapter.Formypart,iamlookingtoreachouttoasmanyassociationboardmembersthaticanidentify,and‘passtheword’onaboutwhoandwhatcAi-grieis,andwhyit’simportantforthemtoconnectwithus.thoseofyouwhohavecometoknowmewellduringmyinvolvementwithourchapter,alreadyknowthatiwillbeinexhaustibleinmyefforts.Myhope

isthatthoseinapositiontodothesamethingwilldosoaswell.ourcurrentmembership-sizeisrankedasmedium,according

toournationaloffice,whichmeanswehaveplentyofroomforgrowth.weknowthatwealreadyhaveasignificantnumberofBusinessPartnerson-board,andwealsohaveasignificantnumberofManagersandManagementcompaniesinourranks,butit’salsoafactthatweareseverelychallengedwhenitcomestocommunityVolunteermembership.thatcan,andshould,changewithaconcertedeffortonallofourparts.notonlydoesdoingsomakeourchapterthatmuchmorestronger,italsomakesgoodbusiness-sense,andmostimportantly,italsoenhancesthequality-of-lifeforeveryone,andespeciallythecoregroupourchapterwascreatedtosupport,namelyourcommunityVolunteers.

inclosing,andinmyownpersonallookingback,i’mfortunateinbeingabletofollowinthefootstepsofourincrediblepastleaders,andamlookingforwardtobuildingonwhattheyhavealreadyestablishedduringtheirrespectivetenures.iseenothinglessthanvibrantopportunitiesaheadforourchaptertoexceedourownexpectations,andwithallofusjoiningin,thereisnothingthatwecan’taccomplishasachapterduring2012andbeyond.staytuned.oh,anduh,amiexcited?But,ofcourse!

robertriddick,cMcA2012chapterPresident

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hile the start of a new year often brings the promise of better things to come,

with the recent enactment of key pieces of legislation, many community associations are calling for “the good ol’ days.” As it pertains to community associations, the good ol’ days can be a double-edged sword harkening back to out-of-control open forums, endless adjournments to obtain quorum at annual meetings, and similar issues which commonly befall even the most effectively run associations. This article will shed light on these critical issues from some of the industry’s leading managers with tips and recommendations for ensuring your meetings, quorums and issues are effectively addressed.

There is an art and science to running an effective board meeting. It not only requires a President who is assertive enough to keep discussion focused, but is

also respected by owners and fellow board members. Furthermore, a well run board meeting requires the board to be well-informed and ready to make decisions. Managers can play a key role in ensuring smoothly run board meetings by preparing their boards ahead of time, answering questions throughout the month, and strategically setting the meeting agenda. Jim McCarthy, President of Condominium Management Services, finds that having a timed agenda best keeps boards on track and moving through association business. Ida Worth, Vice President and General Manager at Ross Morgan & Company, employs a similar strategy with her boards. A common grievance of board members (remember, who are volunteers) is the amount of time it takes away from their jobs, lives and families to conduct association business. By running efficient board meetings, associations can best position themselves to have a

By JASmInE TERmAIn, ESQ.

Meetings, Quorums& Issues, Oh My!

BACK TO THE BASICS

Continued on page 8



larger pool of interested members willing to serve their community.

With respect to agenda strategy, Mr. McCarthy recommends holding open owner forums towards the beginning of board meetings because he finds that most owners who attend meetings come to raise issues and/or concerns. By providing owners an opportunity to state their piece at the front of the meeting owners feel a sense of relief and it also helps boards to more effectively conduct association business afterwards without distractions. Jeri Mupo, Director of Developer Relations at Euclid Management Company, agrees, adding, “If [owners] are made to wait until the end of the meeting, this will increase their frustration.”

Just as there is an art and science to conducting effective board meetings, there is an increasing need for creative ways to establish quorums for annual

member meetings because failure to establish quorum is becoming all too commonplace. While many governing documents provide for a reduced quorum in the event of an adjourned meeting, even with such reductions, quorum can still be difficult to obtain. A failure to obtain quorum not only results in increased costs to an association (e.g. manager’s time for coming to adjourn a meeting and attend a subsequent one; additional notices to increase participation, etc.) it also postpones important business (e.g. holds up capital projects, prevents new boards from being seated, etc.). Ms. Mupo has created election committees who initiate “get out the vote” campaigns, has called owners, and has even offered raffles in order to increase voter turnout. Ms. Worth advises her boards to send notices, email blasts, and newsletters to members alerting them to this fact. She has found that when owners understand their failure to submit a ballot is costing them actual money, they are more likely

to take time and respond. Once you have a new board in

place, holding the first board meeting right after the election is of critical importance. It not only enables the board to appoint officers, but it affords management an opportunity to create a platform for long-term effective communication with the board. Ms. Mupo finds that by setting expectations from the outset, and then delivering on what you say you’ll do, is the best way to create a successful board, which in turn helps create thriving communities. Mr. McCarthy also provides ongoing educational opportunities for board members and weekly communications with his clients so they can be kept abreast of the continued growth and changes of this industry.

With the promise of the New Year, many boards look for strategies to set their community on the path towards success. By following these recommendations from some of the industry’s leading managers, community

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Meetings, Quorums & Issues, Oh My!Continued from page 7


editor’S LinK

MynameisBettyrothandiamthegeneral

Managerforawonderfulcommunity,sunnymead

ranchPcAinMorenoValleythroughthecompanythat

iworkfor,AvalonManagementgroup.inaddition,i

alsohavethepleasureofbeingselectedastheeditorin

chiefforthegreaterinlandempirechapter’sConnect

magazine.iamquiteanewbieinthistypeofposition;however,iam

soveryfortunatetohaveanincrediblecommitteebehindme.theyare

soverycreativeandtheideasreallyflyinourmeetings.thismakesthe

magazinesosuccessful.

thisyearweareworkingtowardseveralnewgoals.wewillbe

postingthethemeoftheupcomingissueinthecurrentmagazine.we

wouldverymuchlikeforanyinterestedmemberstostepforwardand

submitanarticleforthemagazineifyoufindthatupcomingtopicone

thatyouwouldbeinterestedinwritingabout.wewouldalsoliketoinvite

thecommitteesofthechaptertosubmitarticlesontheirupcomingevents

includingwhymembersshouldbedrawntoattend.

thisissuestopicrelatestothethemethatourchapterpresidentis

realizingthisyearwhichisBacktotheBasics.weareincludingarticleson

somebasicworktoolsforassociationsandmanagerssuchasiDr,board

meetings,contractsandsB563tonameafew.throughtheenclosed

articleswehopetobringyousomebasicguidancefortheupcomingyear

inyourcommunities.

thetopicforournextissueismembershipandthebenefitsofbeing

amemberofcAiintheinlandempirechapterforassociations,boards,

managementcompanies,managers,businesspartnersandhomeowners.

thedeadlineforsubmittingarticlesforthenextissueisMay1st.itis

veryrewardingtohaveanarticlepublishedandcanalsoserveasaway

ofaccruingpointsinachievingyouraccreditations.ifyouareinterested

insubmittinganarticle,ourpolicyandguidelinesareavailableonthe

[email protected]

andiwillbehappytosendyouacopy.

Bettyroth,cMcA,AMs,PcAM

Connect Editor

associations can flourish: • Have effectively run board

meetings. Placing owner forums at the beginning of meetings and having timed agendas helps make meetings run smoother.

• Aim to establish quorum the first time in order to hold an annual election. Whether using tricks like raffles or food or forthright communications informing owners of the implications for their failure to vote, the sooner a quorum is established the better.

• Boards and managers need to start off on good footing by outlining their expectations and goals for each other.

Jasmine Termain is an attorney with the law firm of Beaumont Gitlin Tashjian and is a member of Connect’s Editorial Committee.

Betty Roth, CMCA, AMS, PCAM

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Dongarling,ofLifetimeFencesupplyinc.,hasbeenamemberofthegreater

inlandempirechapterofcAiforayearandahalf.LifetimeFencesupplydistributes,customfabricatesandinstallshighquality“DuraMax”uVresistantvinylfencingthroughoutsoutherncaliforniaandhawaii.LifetimeFencesupplyinc.(formerlyLucasenterpriseinc.)hasbeenafamilyownedandoperatedcompanyforover16yearsandunderstandstheimportanceoffriendshipsandreferrals.DonmetJohnBauerofVMcnearlytwoyearsagoandaftertalkingforawhiletheyfoundoutthattheybothgraduatedfromthesamehighschool!JohnaskedifDonandLifetimeFencesupplyweremembersofcAi.whenDonresponded“no,i’mnot,butiamamemberof[otherpropertymanagementassociations]”,JohnmadehimpromisetolookintocAi.JohnhighlightedthebenefitsofthecamaraderieandbusinessconnectionsthatcAioftheinlandempireoffers.

Donexplainedduringourdiscussionsthathisbusinesshasgreatlyimprovedover

thelasttwoyearswhichheattributestohiscAimembershipandhishardworkingstaff.LifetimeFencesupplycontributestomanycharitiessuchaschurchesandschools.cAi-griehasindirectlyhelpedthemdomoreofthis.

“iwasamemberof[anotherorganization]forseveralyearsandwassurprisedafterjoiningcAihowwonderfulthestaffisintheriversideoffice.theyarealwaysreadytoassistyouwithanyproblemwithasmile.eacheventihaveattendedhasbeengreat.thetoPsAwards,theBreakfastsintheParkandtheMinitradeshowswereexcellentandhavebeenagreatwaytomeetwonderfulprofessionals.”AsourfirstBusinessPartnerhighlightedinConnect,itwasgreattohearsomuchpositivefeedbackfromDonaboutcAigreaterinlandempire.

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January1 Billspassedinthepreviousyeartakeeffect,unlesstheyhavebeendesignatedas“urgency”billswithimmediateimplementation,orabillthatwilltakeextratimetoimplement(oftengivenaJuly1steffectivedate).

January4 Legislaturereconvenesforthesecondhalfofatwo-yearsessionandinadditiontolegislatorsfinishingworkonbillsintroducedin2011theywillintroducemanymore.

January27 LastdaytosubmitnewbilldraftstotheofficeoftheLegislativecounsel.theLegislativecounseltakestheverbiage(sometimesmakesadjustments)andputsitintobillformforthelegislatorstoconsider.

January31 Lastdayforeachhousetopassbillsintroducedinthathousein2011.

February24 Lastdayforbillstobeintroducedforthe2012year.thatmeansabill,intheformcreatedbytheLegislativecounsel,needstohaveanAuthor(alegislator)andanumberassignedtoit(ex:sB123orAB123)inordertobeintroduced.

March29 springrecess.

April9 Legislaturereconvenesfromspringrecess.

June1 Lastdaytopassbillsoutoftheirhouseoforigin.ifthebillisasenateBill(sB123,etc.),thenitneedstopassoutofthesenatebyJune1andbesentovertotheAssemblyforitsaction.thesameistrueofAssemblybillsneedingtopassandbeingsenttothesenate.

July6 summerrecessbeginsprovidingtheBudgethasbeenpassed.

August6 Legislaturereconvenesfromsummerrecess.

August31 Lastdayforanybilltopasstothegovernorinwhatistermedan“enrolled”version.the“enrollment”processincludesthenotationoftheexactdateandtimeeachbillissenttothegovernortosignorveto,orhemayallowittobecomelawwithoutsigning.(thereisno“pocketveto”incalifornia,unlikefederalwhichallowsthePresidenttokillabillsimplybynottakinganyactionwhatsoever.)

september30 LastdayforthegovernortosignorvetobillspassedbytheLegislature.ifbillsaresignedbythegovernor,theyarechAPtereD;inotherwords,filedwiththesecretaryofstateandassignedachapternumberforreferenceandinclusioninthecodes,ofwhichthereare29(civilcode,Vehiclecode,etc.)

november6 generalelection.(halfofthe40senateseatsareupforelection,asareall80Assemblyseats.)

november30 Formaladjournmentofthe2011-2012session…(“sinedie”).

December3 2013-2014sessionbegins.

2012cALiForniALegisLAtiVecALenDAr

You have all heard about the “Occupy” movements happening all over the United States: Occupy Wall Street, Occupy Washington, Occupy San Diego…

Well, on April 16th, 2012, we’re going to “Occupy the Capitol!” That is the date that homeowners, managers and business partners involved with community associations in California get together to let their legislators know what THEY think about the bills that affect our associations. You CAN change the course of history, and influence how our associations are governed by making your voice heard.

You may think that we will never have the numbers at the Capitol that the “Occupy” movements in other areas are able to achieve. But in Sacramento, things are counted differently. For every letter a legislator gets from a constituent, they regard it as representing 38 of their constituents. For every phone call a legislator gets from a constituent, they consider it to be representative of even more. But, if a constituent takes the time to climb on a plane and go all the way to Sacramento to communicate with their legislators about a bill, the legislator weighs that much more heavily that merely picking up a phone, or sending a letter.

If you show up to participate with our “Occupy the Capitol” movement, you won’t just be representing yourself, but dozens of other constituents as well! What a powerful feeling!

That amazing feeling will grow as the legislator or staffer that you are meeting with listens to your suggestions, asks you questions, and begins to consider you as a resource for them when it comes to community associations in California. Indeed, that is

Occupythe Capitol!

Continued on page 12


our goal. We want to be the institution (CAI) that these lawmakers can turn to for practical-application advice when it comes to laws affecting Common Interest Developments in California. We want them to ask us BEFORE the law is voted on so we can spend less time fighting difficult and problematic legislation.

Worried about what to say to your legislator? Don’t be. We have a detailed briefing for you before your legislator appointments, and you will receive fact sheets about each piece of legislation we are addressing that day. You will learn the key points to bring up with your legislators, and you will be equipped with the information you need to back up those points. You can even plan on coming a day early

(April 15th) to attend the education sessions where you will have a “Hot Bills” briefing from me to explain the most important measures. If you are new to the process, you can also request an “old-timer” to go with you to your meetings the next day and give you support.

So let’s “Occupy the Capitol” together this year! We will provide you with the tools you need to have effective meetings with your Senator and your Assembly Member. Your presence in Sacramento will be taken very seriously by them: you will have an impact! Let’s make a difference together.

Skip Daum is our veteran Legislative Advocate for CAI’s California Legislative Action Committee and may be reached at [email protected]. More information on the Legislative Day in the Capitol

can be found at www.caicalif.org.

Occupy the Capitol!Continued from page 11

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The Open Meeting Act (Civil Code Section 1363.05) is an Act within an Act, since it is found in the middle

of the Davis Stirling Act. Passed in 1995, the Open Meeting Act has been amended and expanded several times. However, the changes which took effect in January 2012 from 2011’s SB 563 are by far the most sweeping in their impact upon California common interest developments.

Elimination of action without a meeting. The heart of SB 563 was its ban of board decisions by unanimous

written consent. This method of decision-making was previously permitted by the Corporations Code, but is now not permitted.

Agenda notice of executive session meetings. Although the Act requires agendas and notice to be posted four days before an open board meeting, the law was not clear regarding whether notice was required of a meeting which was solely in executive session. That has now been answered, and if the meeting is to be solely in executive session, two days minimum notice is required.

No decisions by email, except in emergencies. The law now specifically bans boards from making decisions by e-mail, with the exception of emergencies. This is a growing problem in associations, as almost everyone uses e-mail. E-mail communications can be a useful way of exchanging information, but are increasingly used to circumvent the healthy deliberation process of an open board meeting. Pre-deciding issues in e-mail not only now violates the law, but also can harm the board’s credibility with the members.

The Open Meeting Act Expands... and Board Service

Will Never Be the SameBy Kelly G. Richardson, Esq.



Emergency decisions by e-mail. While unanimous written consent is now prohibited on ordinary board decisions, in the event of an emergency a decision can be made by the board using e-mail if the board unanimously agrees on the action. The e-mails must be made part of the minutes.

It is important to remember that the definition of “emergency” is already contained in the Open Meeting Act: “…if there are circumstances that could not have been reasonably foreseen which require immediate attention and possible action…”

Telephonic board meeting participation. The Open Meeting Act now declares a telephone conference between a majority of the directors to be a “board meeting”. A director may participate by telephone, so long as there is a location where members can attend and listen to the deliberation. A mobile phone on “speaker” mode is not

recommended, due to the requirement that all in the room be able to hear and be heard on the speaker phone. Telephonic participation is not new, as the Corporations Code has for many years permitted it, but the procedure is now contained in the Open Meeting Act.

New definition of “meeting.” By far the most significant and problematic amendment to this law is the new, very broad definition of what is considered a meeting. Previous to the new amendments to the Open Meeting Act, a board “meeting” meant a gathering of a majority of directors at the same place to discuss an item “scheduled to be heard” in an upcoming meeting. Now, the definition is infinitely broader: a meeting is “a congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business that is within the authority of the board.”

The impact: This means that three or more of a five-member board cannot: • Walk the property to look at the

landscaping with the manager; • Serve on the same committee; or • At any place say anything about

the association, except in a formal meeting of the board.

Bluntly, many associations are going to have violations almost every day, as many associations without the benefit of legal counsel, top management or CAI education will not know that directors are essentially subject to a state-imposed gag order outside of meetings. While many would agree that it is important boards deliberate in board meetings and not in the hallway, this law has gone too far. However, it is the law, and associations must, in order to comply, make substantial changes in how directors conduct themselves.

Compliance is possible. In order to comply, here are some basic tips. First, make sure no committee has a majority of the board on its roster.

The Open Meeting ActContinued from page 13

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Second, educate directors as to the law and the importance of observing proper corporate process. Third, avoid activities which otherwise might involve a majority of the directors outside the meeting, and consider more delegation to a committee, director, or manager, within specific limits. Finally, if the board has discovered a violation of this law, ratify the decision at the next open board meeting, and explain the circumstances in which the meeting occurred without proper notice.

Kelly G. Richardson, Esq. is Managing Partner of Richardson Harman Ober PC and is a member of the Publications Committee.


robertriddick,chapterpresident,

announcedhisthemefor2012at

theDecemberluncheon:“Backto

theFuture”.heenthusiasticallychallenged

ustobuildonknowledgegainedandthe

successesofthepasttosetthestagefor

a“turbo-charged”(envisionaDeLorean

launching!)futurein2012.robertand

thePublicationscommittee,chairedby

Bettyroth,decidedthatthethemefor

Connect’sfirstissueof2012wouldbe

“BacktotheBasics”.

oneofthebasicgoalsofassociation

operationistoconducteffectiveboard

meetings.Anassociation’ssuccessclearly

dependsuponhavinganeffectiveboard

ofdirectors.Aboardcannotbeeffective

iftheyarenothavingproductive,efficient

boardmeetings.

the“Man(orwoman)onthestreet”

interviewforthisissuefollowsthe“Back

toBasics”theme.Knowingthatmanagers

arealwaysBusYbutwillingtosharetheir

bitsofwisdomwhileontherun,weasked

severalcommunityassociationmanagers

thefollowingquestion:

“inthreewordsorless,whatdoyou

thinkisthekeytohavinganeffective

boardmeeting?”

herearetheresponses:

“Complete accurate proposals.” – KC

Steines, Voit Management

“Read board packet.” – Kat Harrison,

MCF Services

“Follow the agenda.” – Tracie

Blankenship, CMCA, AMS, CCAM, Merit

Property Management

“Three Minute Rule [for owner

input].” – Warren Ball, AMS, Guardian

Preferred Properties

“Manager’s always right!” – George

J. Einfeldt, PCAM, LSM, CCAM,

The Management Trust – Monarch

Management Division

“Use timed agenda.” – Kat Harrison,

MCF Services

“Organization, facts, results-driven.” –

Nancy J. Davis, PCAM

“Prepared board members.” – KC


“Team work.” – Betty Roth, CMCA,

AMS, PCAM, Sunnymead Ranch

“Being prepared.” – Darlene Lamb,

CCAM, Walters Management

“Organized board packet.” – KC


checkoutthenextissuetoseewhat

theManofthestreet”isthinking!

theManonthestreetsays…


What is an association to do when one of its members disputes his obligation to pay assessments?

What if the members’ “dispute” is based solely on his sudden inability to pay due to loss of employment? Does the association have to meet with the member when it knows that the member is simply going to say that he cannot afford the delinquency? California law requires that associations try to resolve disputes with its members by offering an informal procedure called Internal Dispute Resolution (IDR) before recording an assessment lien and before initiating the foreclosure of its lien.

Although the IDR requirement has been around since 2005, and is an informal process, its importance is often overlooked. Yes, it may seem pointless to meet with a member that is requesting the entire delinquency be forgiven, but oftentimes, the member simply wants to be heard and is not

aware of the options available to cure his delinquency. As such, an informal meeting with a designated member of the board may assist the member in understanding the options available to him, such as a payment plan. Moreover, the association can also request to have an IDR meeting with a member to discuss the delinquent account. If the matter is resolved at the IDR meeting, the association will likely save time and costs that would be incurred to collect the delinquent debt through other means.

Association managers and board members often advise that they are unfamiliar with the IDR procedure and they do not know how to conduct an IDR meeting. The Civil Code does not provide strict guidelines for conducting an IDR meeting. Rather, the Civil Code simply states that the association is required to provide a “fair, reasonable, and expeditious procedure” to resolve disputes (Civil Code § 1363.820). Associations are required to send out a

description of its IDR procedure to its members annually. The requirements of the IDR process are set out in Civil Code Sections 1363.810 through 1363.850. If the association does not have an IDR policy in place then Civil Code § 1363.840 sets out the default procedure for the association to follow.

Either the association or member may request, in writing, to meet and confer regarding the dispute. It should be noted that a member can refuse to meet and confer at the association’s request; however, the association cannot refuse a member request to meet and confer and cannot charge the member a fee to participate in the IDR process. If the association has an IDR policy in place, it must provide deadlines for the association to act upon if a member requests to meet and confer. Upon a member’s request, the association should promptly work with the member to choose a mutually agreeable time and place to conduct the IDR. It may

The IDR Procedure in Assessment CollectionsLearn it and Use it! By Jacqueline A. Dao, Esq. and Sheba S. Yaqoot, Esq.



seem easier to conduct the IDR at the property manager or attorney’s office, but oftentimes the member does not feel comfortable meeting at either of those locations or they may not be convenient places for them. There are times when members will suggest that the IDR be conducted in their own home. The board member designated to conduct the IDR should not feel pressured to go to a member’s home if he does not feel comfortable. Simply meeting at a public place, such as the local diner or public library, is sufficient as long as it is convenient for both parties and both the member and the association are given an opportunity to explain each of their positions.

Upon a request, the board of directors should designate one of its board members to attend the IDR meeting. It is a good practice to have a director designated in advance as the one who will conduct the IDR meetings. Should the association

manager attend the IDR with the designated member of the board? The association manager’s presence is helpful in that the manager may have a better understanding of the account and the member. Additionally, if the board member feels threatened by the member, then it would be appropriate for the manager to be present. What about having the association’s attorney present? Since the presence of an attorney will result in the IDR meeting becoming much more formal, and perhaps antagonistic, attorneys should usually not be involved.

The association should note that although IDR is an informal process, the outcome of IDR can have legal implications. The Civil Code provides that if a dispute is resolved or if an agreement is reached at the IDR meeting, such resolution or agreement may be binding and judicially enforceable. It is imperative to provide the director handling the IDR with parameters for settlement prior to the IDR, and train the director so that

he does not reach a resolution that conflicts with the association’s policies.

In summary, before the association can record an assessment lien or foreclose upon its lien, it must offer to participate in IDR with the member. If the association requests IDR with a member, the member may decline the offer. However, if the member requests IDR in writing, the association must accept the member’s request and designate a member of the board to meet and confer. The association must then provide a fair, reasonable and expeditious IDR procedure to resolve the dispute. If the dispute is resolved or if an agreement is reached at IDR, it may bind the parties and may be judicially enforceable.

Jacqueline A. Dao, Esq. and Sheba S. Yaqoot, Esq. are associate attorneys in the Assessment Collections Department at Fiore, Racobs & Powers, A Professional Law Corporation.

The IDR Procedure...Continued from page 17

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AtoasttocommunityAssociations:“eveningatthewinery”tosupportcLAc

cAi-grie’sLegislativesupportcommittee(Lsc)announcesthethirdannual“eveningatthewinery,”whichwillbeheldatwiensFamilycellarsintemeculaonFriday,May11,2012,from5:00-8:00p.m.Allproceedsfromthisimportanteventwillgodirectlytowardmeetingour

chapter’sannualfundraisinggoalinsupportofcAi’scaliforniaLegislativeActioncommittee(cLAc).thisyear’sspecialguestsareexpectedtoincludenotonlycLAclobbyist,skipDaum,butalsoAssemblyMember

normatorres(61stDistrict,includingchino,Montclair,ontario,Pomona).AssemblyMembertorresintroducedAssemblyBill805(whichwouldreorganize/recodifytheDavis-stirlingciDAct)andchairstheAssemblycommitteeonhousing&communityDevelopment.Althoughguestschedulesaresubjecttochange,wedolookforwardtotheirinvolvementinthisspecialevening.

ourchapter’scLAcfundraisinggoalhasbeensethigherthanitwaslastyear,duetoourmembershipgrowth,soyoursupportofthiseventthroughbothsponsorshipandattendanceiscritical.watchformailedinvitationsinlateMarchorcontactthechapterofficefordetails.Advanceregistrationisrequired.“eveningatthewinery”hasbeenawell-attended,enjoyableeventineachofthepasttwoyears.ifyou’veattendedbefore,pleasecomeagain.Andifyouhaven’t,findoutwhatyou’vebeenmissing!sograbafriend,savorthefood,raiseaglassandmakeatoast—here’stocommunityassociations,andhere’stocLAc!thankyouinadvanceforyoursupport.

Nancy I. Sidoruk, Esq.Chair, CAI-GRIE LSC & CLAC Delegate


ew professional careers are as challenging as being a community association manager. There is an old adage that doctors practice medicine and lawyers practice law. That

same adage applies to community association management. To become a successful manager it is important to stay current on the issues in your field. Remaining up to date on new laws, as well as developing strategies to provide the association with competent and effective service, is critical to developing your success as a manager. It is a continuing process, no different than how a doctor learns about evolving technology developing in his field or how a lawyer remains current in the study of new case law.

There is no magic pill to being a successful professional. Being a professional takes

commitment, education, and endurance. We hope that by sharing some of the thoughts that I have gleamed over the last 28 years, it may help you rethink your approach to community association management.

The Practice of Community Association Management is a Career. Too many association managers are negative about their job. Being an association manager is a tough job – no question about it. But today, what job is not tough? Many professionals work into the evening hours with deadlines, whether it is a doctor returning patients’ calls or visiting the hospital late at night, or a sales manager sending out productivity reports to his sales people – having a profession requires dedication. Professionals are typically not nine to fivers. Not all clients or patients are easy to deal with

Managing the Right Way

The Practice of Community Association

Management (Part I)

By Jon h. EpSTEn, ESQ.


and certainly not all board members or owners are effortless. You need to focus on the positives – the friends you have made during the course of your career, the challenges you have overcome, the goals you have accomplished and the rewards you have received for your hard work.

Management of Information. Good communication and following through on objective tasks are important aspects of management. In the practice of law, we deal with constant deadlines; whether preparing documents for meetings, writing letters to clients or drafting court documents – management of information is critical to ensuring

that the job is done correctly and that your clients remain satisfied with your work. If you are managing five associations, I would estimate that you are dealing with anywhere from 20 to 50 communications a day, including e-mails, texts, telephone calls, and letters. Consider the tips below to assist you in managing this information.

Use a calendaring system such as Microsoft Outlook. Stay organized by calendaring all events with reminders and use recurring reminders on tasks such as annual meetings, annual budgets and insurance renewals.

Set up electronic folders for each project and place all communications in sub-folder branches for a particular association.

For example, you always want to have folders for governing documents, e-mails, contracts, lawyer communications, minutes, annual meetings, etc.

Use action item lists. These action item lists are critical. Following every meeting, using a standardized form, add to and delete from an action list. Share the action list with your client. The action list should be sent to your team and should clearly delineate who is responsible for the tasks and deadlines.

Team Meetings Lead to Better Productivity. Think of your role as a counselor of association management. As counselor of association

management you cannot, and should not, be expected to shoulder the weight of all your team members. So, do what business managers do – hold team meetings. It is important to schedule a team meeting at least two weeks after you send out the action list. Have your office arrange a 30 minute call with all vendors and staff members working on the project at the same time, on the same call, and have them provide you a status of their action items. Think about it – isn’t the manager usually getting blamed at meetings because somebody else did not get the job done? Hold the vendors’ feet to your fire. Hold your vendors accountable and ask them to shoulder the burden of their performance. Many of you have heard the statement “If you want to get something done, ask a busy person to do it.” Successful professionals who practice their profession are busy people.

A successful professional is one who enjoys his or her profession, manages the flow of information and is a positive team leader. Just remember, even doctors, lawyers and accountants have bad days, miss deadlines and deal with disgruntled patients and clients, but as with any professional career, to be successful you need to be able to overcome obstacles and move forward.

To be continued…in the next issue of Connect.

Jon H. Epsten, Esq., is the founding shareholder of Epsten Grinnell & Howell, APC, and a former community association manager. Among his many accomplishments

are service as past-president of CAI-GRIE and membership in CAI’s College of Community Association Lawyers (CCAL).


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The Magazine Committeeis Interested in

What You Have to Say!!!

We are looking for authors to submit articles for our Connect Magazine. The theme for our next issue is membership and the benefits of being a member of CAI in the Inland Empire Chapter for associations, boards, management companies, business partners and homeowners. The deadline for submitting articles for the next issue is May 1st. It is very rewarding to have an article published and can also serve to accumulate points when you are trying to achieve certain accreditations.

We have a new column inviting comments and feedback, both positive as well as a rebuttal on past articles in the magazine. We will select as many articles as we can for this column. The deadline is the same as the articles for the theme.

If you are interested in submitting an article, our policy and guidelines are available on the chapter website, www.cai-grie.org.

NEWAccurate Termite & Pest ControlMr. Isaac Camacho

Bridle CreekMr. Mark GlaserMr. Robert IrwinMr. Sergio OntiverosMr. Mike TapocikMs. Denise Walker

Draeger Construction, Roofing & PaintingMr. Bill Mann

Duramax Building ProductsMr. Viken Ohanesian

Euclid Management CompanyMr. Kevin Lehman

FenceworksMr. Jay Brimmer

First Citizens BankMs. Michelle Allaye Chan

Gardner AirMr. Dirk Gardner

Guard-Systems, Inc.Mr. Michael J. Bowles

Hidden Hills HOAMartin JenningsMr. Patrick O'Neil

Keystone Pacific Property ManagementMs. Donna DePledge

Lancaster EstatesMs. Joanna Weber

Merit Property ManagementMr. John Anthony Rivera, Jr.

Pacific Western BankMs. Karen Bouslog

Restoration Management CompanyMs. Courtney Dawn Hutcherson

Sun Park IIMs. Joan Faux

Victoria Gardens Homeowners AssociationMr. William Borngrebe

Ward Construction, Inc.Mr. Rodger Ward

new,renewed&rejoinedMembers

noVeMBer1,2011throughJAnuArY31,2012


RENEWEDMs. Nancy J. Davis, PCAM

Adams Landscaping, Inc. Mr. Ron Thomas Krause

AlliedBarton Security Services, Inc. Ms. Debbie Lange

AWS Consultants, Inc. Mr. Paul Vanni

Beacon Property Management, Inc. Mr. James Notley

California Gate & Entry Systems Mr. Kevin Squire

Cal-Swim Aquatic Services, Inc. Mr. Dave Maynard

CID Property Management, Inc Mr. David May, CMCA, AMS, PCAM

Clayton Ranch HOAMr. Chris BromleyMs. Sharron LambethMr. Sinclain LanglandMr. John RobertsMs. Kathy Szubota

Common Interest Community Management Ms. Maureen McCormick

Community Development Services and Management Mr. John Bobbitt, CMCAMs. Leann Bobbitt, CMCA

Distinctive Landscape Mr. Michael Batista

Elias Bros. Contractors, Inc. Mr. Jerry C. Elias

Empire Management Group, LLC Ms. Darlene Medlin

Empire Management Group, LLC Ms. Vanessa Wuestewald, CMCA, AMS, PCAM

Encore Property Management Ms. Susan Beaver, CMCA

Equity Management Ms. Leticia Kendrick, CMCA

Fiore, Racobs & Powers Mr. Peter E. Racobs, Esq.

GateKey, Inc Mrs. Liz A. Jones

La Costa Resort Villas HOAMr. Rusty BatesMr. Brian McGinnisMr. Jim Waples

Lighthouse Property Management Mr. Kevin Lewis, AMS, PCAM

Lincoln Harris CSG Ms. Dorothy Ann Kolisar, CMCA

Lugonia HOAMs. Chandra KesavanMs. Teresa MitchellMs. Nellie Snyder

Management Resource Center Ms. Sabine Liedel, CMCA

Menifee Master Association Board Members

Morgan Hill HOAMr. Fred BartzMrs. Terry Lindsley

Nelson Paving/Goldstar Asphalt Ms. Kari Nelson-Bryson

Nigro and Nigro, PC Mr. Jeff Nigro

Optimum Professional Property Management, Inc. (ACMF) Ms. Cynthia Hunter

Palm Lane Estates HOADr. Barbara Pflanz

Palmilla HOAMr. Norman AlexanderMr. Bill DavisMr. Nick GaglianoMr. Russell GattermeyerMr. Manuel Wallace

Popular Association Banking Ms. Molly Hime

Precise Management Ms. Nancy Martin

Professional Community Management Ms. Charlie Magnan, CMCA, AMS

R & D Pest Services, Inc. Mr. Dave Fox

Roy Palacios Insurance Agency, Inc. Mr. Roy Palacios

Silver Lakes Association Ms. Susan A. Bellani, CMCA, AMSMs. Sandra Wojecki, CMCA, AMS

Spring Valley Lake Association Mr. Jon D. Sabo, CMCA, AMS, PCAM

Summerfield Temecula HOAMs. Terrie BakerMs. Anna McCoyMr. Oridio PichelliMs. Vivian PotterMr. Chris Warren

Sunnymead Ranch PCAMr. Isaiah ElmoreMr. George Gallanes, CMCAMr. Robert Riddick, CMCAMs. Marie RiveraJ.S. RossTuscany Hills Landscape and Rec. Corp.Ms. Lesa Miller, CMCA

Union Bank Ms. Pamela Hazard, CMCA

Vintage Management Consultants Mr. John Bauer CCAM, PCAM

Walters Management Company Mrs. Jenny BonnarMs. Sherry Neal, PCAMMs. Lisa Weber

Weldon L. Brown Company Mr. Weldon L. BrownMs. Ramona L. BryantMs. Jennifer CarrollMs. Terri Cawthon

REJOINEDAce Pelizon Plumbing & ElectricMr. Nick Bravo

Andalusia Community AssociationMr. Richard GowardMr. Fred KunkleMr. Bill NelsonMs. Peggy RayMr. Robert Rozell

Automated Access SystemsMr. Carl Whited

Avalon Management Group, Inc.Ms. Norma Zermeno, AMS, PCAM

Berg Insurance AgencyMr. Michael Berg, CMCA, CIRMS

Equity ManagementMs. Jacqueline Bill, CMCAMiss. Katie Gelormino

Global Disposal Reduction Services, Inc.Mr. Greg Tolver

HOA Elections of California, Inc.Mrs. Danielle Hallman

HomeTeam Pest DefenseMr. Ian Pak

Kasdan, Simonds, Weber & Vaughan, LLPMr. Kenneth S. Kasdan, Esq.

MeterNetMr. Moquey K'Seal Marquross

Patio GuysMr. Jan Vanderlinden

Terminix Termite and Pest ControlMr. John Cook

The ClubMr. Robert H. Thomas


Six of the Chapter’s attorney members respond to three quick, but essential, back-to-basics questions on contract formation, meeting conduct and member apathy. So, set your egg timers…and get ready for some rapid-fire Q&As!

Contract FormationQ: Formation of contracts with third parties is

a matter which may be considered in executive session (Civil Code Section 1363.05(b)). What does “formation of contracts” mean in this context?

A: “Formation of a contract” is not the process of deciding to hire, fire or change vendors. “Formation” is not identifying the party with which the association would like to form a contract. In this context, “formation” means the process of negotiating the contract terms, including the counter-offer strategy. That process needs to be confidential. Hiding the rest of the vendor hiring process in closed session is unnecessary and undermines community confidence in the board’s governance.

Kelly G. Richardson, Esq., Richardson Harman Ober PC

A: I agree that it is unnecessary and can lead to dissension in the community to handle many aspects of the contracting process to executive session. But the question is not what the board should do; the question is what they can lawfully do. Since there are no cases that define what “formation of a contract” means, one has to look at the plain meaning of the phrase to learn the scope of what the Board can do. “Formation” means “an

act of giving form or shape to something” or “something that is formed.” That language seems to allow the board to build the contractual relationship from conception to completion – discussing the specifications, bidding the project, reviewing the bids, selecting the contractor and negotiating contract terms. What can be truly sensitive and appropriate for executive session may be only the bid review; i.e., considering the strengths and weaknesses of each bid and bidder, but the statutory language does not limit the board to only that single item.

Thomas Gatlin, Esq., Epsten Grinnell & Howell APC

Meeting ConductQ: What legal or procedural tools can

help maintain efficiency and civility of open board meetings, in a manner respectful of both homeowner input and the desire to effectively conduct association business?

A: The key to running an efficient and civil open board meeting is to get all participants on the same page at the outset. At the beginning of each term, directors should commit to being prepared for all meetings. The board should establish and publish policies that will be followed for each meeting, including time limits for members to speak during open forums, and a limit on the number of times a member may speak at each meeting. Those policies should be mailed to each member, and posted at meetings. The chairperson should begin each meeting by welcoming homeowners in attendance, and explaining that the members are

6 Attorneys3 Basic Questions

Contract Formation, Meeting Conduct & Member Apathy


there to observe the board’s meeting, but not to participate in voting or discussion. Members should only be allowed to speak during open forum. When participants know what to expect at a meeting, the meeting will likely be calmer, and more productive.

Erin A. Maloney, Esq., Fiore Racobs & Powers, A Professional Law Corporation

A: I like to include “Open Forum Rules” in every board and membership meeting agenda. It lets everyone know from the outset the rules for proper conduct and avoids complaints of arbitrariness. I also recommend that boards use a timer with a loud “ding” for timing Open Forum comments. If a board member watches a clock and interrupts with “Your time is up” it tends to trigger negative reactions from speakers. If the signal is done by a mechanical device, speakers are less likely to complain. If members see that board meetings are conducted in a business-like fashion with reasonableness and fairness, they are less likely to be disruptive.

Adrian J. Adams, Esq., Adams Kessler PLC

Member ApathyQ: Member apathy can make

it hard for an association to reach quorum for the annual meeting. A lack of candidates can make it difficult to fill the seats on the board. What are some tips on generating voter and candidate interest?

A: We often hear that a home is

the single biggest investment most of us will ever make. That is true. So, the key, I think, lies in communicating with the members about what is happening in their community and how this impacts their “investment.” Let them know regularly what steps the board is taking to preserve the community value. Are there renovations or upgrades being

planned, new landscaping being considered, pool repairs or street maintenance planned? Also, take the time in these communications to solicit owner feedback. Regular communications of this kind, explaining what the board is working on, and how important a role the board plays in managing the community helps build owner “buy-in” and interest in the community. This will in turn increase interest in votes and candidate interest as owners who are regularly informed of what decisions are being made, are more likely to want a say in those decisions.

Robert M. DeNichilo, Esq., DeNichilo & Lindsley, LLP

A: The best way to reach quorum at your annual meeting and obtain volunteers for candidates is to raise your assessments right before the annual meeting! Alright, I’m joking. Ultimately, apathy is typically caused

by two reasons: (1) board members are doing a great job, or (2) no one knows or cares about what is going on. The best way to combat this apathy is to communicate often with the members and to do everything you can to create a real sense and feeling of community. Host social events – encourage owners to meet each other and to get involved with the community. The more involved you ask the members to be, the more involved they will be. As a director, don’t cut the owners out! Don’t create an “us vs. them” mentality! Create and foster a strong sense of community and your association will be rewarded with strong owner involvement.

James R. McCormick, Jr., Esq., Peters & Freedman, L.L.P.

Questions posed and responses compiled by CAI-GRIE publications committee member Nancy I. Sidoruk, Esq., Epsten Grinnell & Howell APC.


In 2010, Congress created the Consumer Financial Protection Bureau (CFPB) to serve as the nation’s “cop on the beat” to protect consumers from harmful

financial products. Officially opened for business on July 22, 2011, the CFPB is now responsible for enforcing most federal financial consumer protection laws.

CAI’s members have a keen interest in the development of CFPB’s rules and regulations that could affect community associations. As a new federal agency, the CFPB is still working to define its approach to protecting consumers from abusive financial products and helping to ensure consumers have the right information to choose the financial products and services that will best meet their needs. While the CFPB’s authority extends from checking accounts to credit cards to payday loans, it also has significant authority over federal housing policy, mortgage lending standards and the home buying process.

CAI is following CFPB’s actions on: the definition of qualified mortgage, the regulation of transfer fees, association assessments, the definition of real estate settlement fees, foreclosure prevention and mortgage servicing standards. As such, the CFPB has the potential to impact community associations and the companies that serve them.

As noted, the CFPB has special authority over mortgage lending standards and real estate closings. The Dodd Frank Act gave the CFPB the responsibility of enforcing the federal Truth in Lending Act (TILA), a powerful consumer protection law. As the federal enforcer of TILA, the CFPB will establish and enforce mortgage lending standards that all lenders and housing market participants must follow.

Congress also transferred rulemaking and enforcement authority under the Real Estate Settlement Procedures Act from the Department of Housing and Urban Development to the CFPB. The bureau is in the process of updating real estate closing disclosures and real estate closing forms.

This combination of authorities means the CFPB sets the standards that govern almost every aspect of the mortgage lending and closing process.

CFPB is unique in that Congress granted the bureau the authority to expand firms under its supervision by regulation. Given the role of community associations in our nation’s housing markets and the authority of associations to foreclose as a remedy to perfect a lien, it is reasonable to expect the CFPB to examine community associations at some point in its review of the housing market.

The CFPB has three ongoing initiatives that can affect how community associations function.

Ability-to-RepayThe first initiative is the CFPB’s work on how

association assessments factor into a borrower’s mortgage payment. Under the Dodd Frank Act, all lenders must verify a borrower can afford all payments associated with a mortgage loan, including association assessments. It is the CFPB’s job to write the rules to govern this process, which could include requiring associations to forecast assessment increases and the likelihood of future special assessments.

Transfer FeesThe second initiative CAI is monitoring is the CFPB’s

review of transfer fees in community associations. While the bureau has not signaled that it intends to restrict mortgages in associations with a transfer fee, it is studying the use of transfer fees.

Mortgage Complaint PortalAn important new consumer protection developed

by the CFPB is an easy-to-use website for homeowners to report mortgage fraud, abusive lending practices and housing discrimination. This will significantly improve consumer protection for homeowners and allow the CFPB to keep track of new mortgage products or any new market abuses. The website will also be a means for disgruntled residents to air complaints against associations. As the CFPB has announced its future rulemakings will be influenced by the nature of complaints it receives through this system, associations should be prepared to respond to CFPB inquiries and work cooperatively with the bureau in resolving legitimate consumer and homeowner complaints.

Because of its potential impact on community associations, CAI has added the CFPB to our Mortgage Matters program. CAI is working to protect homeowners in community associations and to ensure access to fair and affordable mortgage products for all current and potential community association residents.

You can follow our work and share your thoughts at www.caimortgagematters.org.

Meet the CFPB


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Saturday, June 9, 2012

connect 2012 issue 1

Documents

development community

meeting conduct

lot of common interests

management standardsmanaging

legal problems

federal laws

epsten grinnell howell

practical solutions