Reader Question – Who Watches HOAs?

By Kelly G. Richardson, Esq. CCAL

Kelly: Who has oversight of HOAs in California if someone wants to file a complaint against their HOA or management company?  Thanks, J.H., Lakeside.

Dear Mr. Richardson: I am amazed by the lack of training or basic knowledge that is required of HOA directors before they get elected. You would think just the basic understanding by directors of employee rights, relations  and what creates a hostile work environment are to be expected. In one of your future columns could you include any Civil Codes, Davis-Stirling Act requirements related to employee rights and how a board should interact with employees? G.H., Fallbrook

 

Dear J.H. and G.H.:

There is only one statewide mandatory qualification to serve as a director in one’s HOA – one must be a member. Someone can participate in making HOA Board decisions involving hundreds of thousands of dollars with no training or experience whatsoever. Also, there is no agency supervising compliance by HOAs or their directors with the Davis-Stirling Act. Certain law enforcement agencies enforce crimes or Fair Housing law violations, for example, but no state agency is charged with general oversight of HOA operations or governance.

Some states have at least minimal requirements for board service. Florida since 2013 requires a director to certify within 90 days of starting board service that they have either completed an HOA certification course or have read the entire HOA governing documents. The Community Associations Institute (“CAI”) proposed a bill about 13 years ago to require just 3 hours of low cost HOA orientation for directors, but the bill was watered down during the legislative process so much that it ultimately was vetoed by then-Governor Schwarzenegger. There has been no push since then for requiring a minimum level of education or training for HOA directors.

There are many educational resources for HOA volunteer leaders. CAI in California has many topical seminars offered by its eight Chapters during the year, and a 3-hour Basic Board Education Course, which is presented periodically at a low cost. CAI’s headquarters has low-cost and free on-line courses and materials. The Executive Council of Homeowners (ECHO) also has educational offerings.

California does not license HOA managers and no state agency monitors manager performance or imposes discipline. There are no minimum requirements to become a manager, but there are requirements to call oneself a “certified” manager. Three trade organizations educate and credential managers: CAI, California Association of Community Managers (CACM), and the Institute of Real Estate Management (IREM). A designation from one of these organizations does not guarantee competency or integrity but shows dedication by the individual toward their profession and should be considered by HOA boards to be essential. CAI, CACM, and IREM have disciplinary processes in response to ethics violations but do not monitor competency.

Readers often ask me whether suing the HOA is advisable to force it back on track. The answer is no. By suing the HOA board one often triggers the HOA’s directors and officers insurance, so the HOA’s attorney fees are paid by insurance, while you pay your attorney out of pocket. The relational damage within a community from such a lawsuit can linger for years. Furthermore, even if you win, the same bad directors often remain in place afterward. Instead of filling attorney pockets, elect directors committed to governing the HOA the right way.

Sincerely, Kelly