Board Doesn’t Act, And Then Won’t Inform Us When They Do!

By Kelly G. Richardson, Esq., CCAL

Dear Mr. Richardson: We are hopeful you can shed some light on these issues in our HOA:

Board members are elected for 2-year terms.  Our board did not schedule an election for the next term because the management company was unable to schedule an independent election-monitoring service until it was too late by our election deadline.  The manager said they would rather risk challenges on term than risk challenges on not having an independent monitor oversee the election. Is the guidance provided sound and reasonable?

Our Board is comprised of three members elected every two years.  However, a third member of the Board resigned right after the last election.  The two remaining members professed an interest in appointing a third member, but to date they have not done so.  They offer no explanation why they haven’t done so.

The board accepted the manager’s recommendation to increase our monthly association dues.  However, the board also decided there is no need to notify homeowners of the increase since the increase amount is less than 20%.  When questioned, the board referenced new state code that specifies notifications of fee increases are not required unless the increase constitutes a 20% or higher increase.  Are fee increases sheltered by a new 20% guideline?

We would welcome your consideration of providing possible paths forward. Regards, A.L., Escondido.

Dear A.L.: I’ll address your questions in the same order as you asked them.

         A manager should not provide advice about legal risk. Such issues should be addressed by the HOA’s legal counsel. If the HOA continues to delay the election, it could be exposed to a member petition or even a court motion to compel the election to occur. The law requires an Inspector of Election, but it does not require that the Inspector(s) be hired professionals – 1 or 3 volunteers can fulfill that function, so long as they understand the process (or have an experienced manager or HOA lawyer guide them through it). Yes, the election processes under Civil Code 5100-5145 are very cumbersome, but putting off the election doesn’t help the HOA or board.

         The board should fill the vacancy caused by the resigned director. Only having two directors in place puts too much pressure on them, as they must both always show up and always agree. Sometimes two directors simply cannot agree on who should be the “tie-breaker” director and so a seat will remain vacant for many months. If the board is unable or unwilling to fill the vacancy, consider a special membership election to fill the seat unless the next annual election is 3 or fewer months away (since the process takes at least 3 months).

         Your board seriously misunderstands the statute regarding assessment increases. A board may under Civil Code Section 5605(b) increase regular assessments up to 20% per year without a membership vote. However, the increase must be announced to the membership at least 30 (but not more than 60 days) before the assessment increase becomes due, pursuant to Civil Code 5615. Also, any action increasing assessments must happen in an open board meeting, which means that an agenda would need to be posted before the matter could be discussed, and minutes would reflect the decision made.

         Best regards, Kelly.