Updated Disclosure Checklist for 2014-2015

It's that time of year again - time to get the community association's budget together and ensure you're making all the proper disclosures under the Annual Budget Report and Annual Policy Statement, as required by the California Civil Code. In order to assist you with this process and other required notices and disclosures, we have again updated our disclosure checklist reference.

Download the new 2014-2015 disclosure checklist here.

Not much has changed in the most recent legislative session with regard to community association disclosures, other than some clarifying language that was added regarding property transfer disclosures. To review our prior blog post regarding that legislation, follow this link.

San Francisco's "Airbnb Law" Does NOT Control Over A Condo/HOA Association's Governing Documents

On October 7, 2014, the San Francisco Board of Supervisors voted to legalize the use of residences in San Francisco for short-term vacation rentals, by passing what has been dubbed as the San Francisco "Airbnb law". Follow this link to a news article. This new law has been more than two years in the making, and removes San Francisco's long-standing ban on residential rentals of less than 30 days. The new legislation, integrated into the San Francisco Administrative Code, now allows short-term rentals of homes, imposes certain restrictions and requirements on that controversial and unregulated practice, and will take effect in February of 2015.

The stated goal of the legislation is to balance the preservation of affordable housing (by making sure landlords can't convert permanent units to more lucrative vacation rentals) with allowing residents to earn extra income by renting to travelers for short-term vacation and business purposes. The Airbnb law allows only permanent residents to offer their homes for short-term rentals, establishes a new city registry for hosts, mandates the collection of hotel tax, limits entire-home rentals to 90 days per year, requires each short-term rental listing to carry $500,000 in liability insurance, and establishes guidelines for enforcement by the San Francisco Planning Department.

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Does your condominium, cooperative or HOA board know if and when it is appropriate to grant a hardship exemption, a variance from the restrictions in the CC&Rs?

In a blog post by Donna DiMaggio Berger, a Florida Community Association Attorney, she discuses exceptions or variances granted to owners. Apparently in Florida they deal with some of the same issues we do. As Donna states, many boards want the leeway to grant exceptions when it comes to certain restrictions in their association's CC&Rs, such as leasing or altering units or exclusive use common area, performing maintenance and allowing certain types of architectural changes or improvements. We see the same thing here in California.

But often boards grant exemptions or variances without thinking about all of the ramifications. As Donna states, what many boards fail to understand is that any time an exemption or exception is granted, they are creating a precedent which may render their restrictions unenforceable in the future.

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Successfully Maneuvering Through Post Foreclosure Evictions and Rentals

Many California condominium and homeowner associations end up with units and homes after foreclosing on assessment liens with no third-party bidders at the foreclosure sales. With increased equity, we are seeing more third-party bidders at sales. But that still leaves a lot of associations in the position of being landlords. And many boards do not know the first thing about being a landlord.

This summer, firm partner Sandra Gottlieb and associate Cyrus Koochek wrote an article that was published in CACM's Law Journal entitled "Successfully Maneuvering Through Post Foreclosure Evictions and Rentals". Their article provides guidelines for dealing with issues such as compliance with legal requirements, preparing for tenants, lease terms and rent skimming laws. Follow this link to read their informative article, especially if your association owns or may be in the process of taking ownership of any unit or home.

Does Your Condo/HOA Board Undertake "Due Diligence"?

We community association attorneys are fond of telling boards of directors that they need to "do their due diligence" before making important decisions, especially those that may have a lasting impact on their associations. That being said, just how many board members actually understand what steps are needed to fulfill that directive? That was the question posed in an article on this issue by Florida community association attorney Donna DiMaggio Berger. Follow this link to her blog post.

Donna states a definition of "Due diligence" as an investigation of a business or person prior to signing a contract, or an act with a certain standard of care. But as Donna goes on to state, that definition is not likely going to be enough for some boards or managers to map out a plan. The steps required for a board to perform the required due diligence will vary depending on the circumstances. Donna lays out some examples; I use them with modifications and add some suggestions...

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Nevada Supreme Court Rules that Super Priority Lien Extinguishes First Deed of Trust; Too Bad California Does NOT Have Super Liens

The Nevada Supreme Court recently ruled that a super priority lien held by a Nevada homeowners association can extinguish a first deed of trust on a property. The Court stated: "With limited exceptions, this lien is 'prior to all - other liens and encumbrances' on the homeowner's property, even a first deed of trust recorded before the dues became delinquent"

The Las Vegas Review-Journal reports that this decision will create a windfall for some real estate investors in Las Vegas who picked up properties for pennies on the dollar.

I have previously written an article that addressed assessment super priority liens. 19 states have them. Unfortunately, we do not have super liens in California.

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