unequal enforcement of the statutes at worst. This also means that a board should always consult its own legal counsel when it has questions to ensure business judgment rule protection for its actions and decisions.
We are already seeing that AB 130 seriously hinders an association’s ability to deter high-risk, high-reward type violations, such as short-term rentals (e.g., Airbnb, Vrbo, etc.), and construction of architectural improvements without prior architectural approval (often without prior permitting, using unlicensed contractors, and in contrast with the community aesthetic). There have been reports from some associations that owners are using HOA parking areas as “storage” for RVs and boats, and owners are simply paying the $100 fine instead of paying higher storage fees elsewhere. The risk is that members may now view the minimal fine as simply a cost of doing business, which could strip fines of any deterrent effect and undermine an association’s ability to effectively enforce its governing documents.
The industry is also debating how this statutory cap can be effectively enforced, especially for continuing violations. There is an argument that an association’s rules may be written to define a particular violation to consist of a specific time period, and thus, a violation letter and fine can be imposed after each time period that the violation occurs, for example, each day or each week. Others in the industry interpret the new law to limit enforcement to just $100 per violation, regardless of how the violation is defined.
Not all hope is lost for associations, as AB 130’s $100 fine cap includes an exception for violations that “may” be considered to have an adverse health or safety impact on the common area or another member’s separate interest. (Civil Code § 5850(d) (1).) However, this statutory language raises the question of what violations are considered adverse to health and safety. It seems that certain vehicular restrictions, such as parking in fire zones, speeding, or blocking entrances/exits, as well as rules like keeping dogs on a leash in common areas, could fall under the exception. Perhaps even unapproved architectural violations affecting structural elements, plumbing, or other portions of the common area could qualify.
Regardless, this adds further procedural requirements on the association: some believe the new law requires that the board investigate each complaint and prepare written findings (i.e., a resolution) of the potential adverse health or safety impact to be adopted during an open board meeting. (Civil Code § 5850(d) (2).) This requires that the board evaluate each violation on a case-by-case basis to determine its impact. Others have recommended that the association review its current rules and determine which violations may be considered to have
a potential impact on health or safety. Then, the association can adopt a prospective “Adverse Health & Safety Violations” resolution that lists all such potential violations.
What’s more, the new law requires that the board adopt the resolution during an open board meeting (Civil Code § 5850(d)(2)), which may implicate or violate an owner’s right to confidentiality during the disciplinary process. If a member subject to a disciplinary matter requests an executive session, the board is required to comply and allow the member to attend. (Civil Code § 4935.) Due to this, it is common practice for associations to hold all disciplinary hearings during executive sessions. The update requires the board to adopt the resolution aloud during the open session while potentially withholding details, such as the violating members’ names, addresses, or APNs, to protect confidentiality.
Questions also remain about what is considered a “curable” or a “non-curable” violation. Under the new law, a member may cure the violation prior to the hearing or provide a “financial commitment to cure the violation.” (Civil Code § 5855(c).) For example, violations such as landscaping issues or use of a unapproved paint color are typically curable. If corrected before the hearing, the association may not levy the fine.
Another repercussion of the new law is that, due to the handcuffing of the association’s ability to enforce fines, it appears likely that associations will need to escalate enforcement procedures earlier. This often involves engaging the association’s attorney to send cease-and-desist letters, participate in alternative dispute resolution (ADR), and/or file lawsuits to ensure owner compliance.
Overall, there appears to be a consensus in the industry that the new law will not reduce housing costs as intended and will likely increase association expenses due to an upsurge in attorney involvement in the enforcement process. The new laws also mean that most, if not all, associations will need to work with legal counsel to update their current enforcement policy and fine schedules for compliance. This is recommended before the association’s annual disclosures are distributed to its membership since there is a requirement to include an association’s current disciplinary policy and fine schedule with the annual policy statement. (Civil Code § 5310(a)(8).)
The views expressed in this article are those of the author. As noted, AB 130 is open to multiple interpretations, and associations should contact legal counsel for specific guidance.
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