Reader Questions - Assessment Liens, Cumulative Voting, and Board Discussions

Kelly,

The management company told us at a recent meeting that the HOA was due over $130,000 in past due HOA assessments. Therefore they increased our assessments 18%. WOW!!! This HOA is only two years old! I was told they send notices after 30,60,90 days. When I asked what happens after 90 days, could they turn over the delinquent accounts to collections or put a lien on their property. I was told that management cannot put a lien on until the amount in arrears is $1,800.00!

Is this true?

D.M., Corona

Dear D.M.,

Your experience illustrates why it is so important that all members pay their assessments and why associations should vigorously pursue those who do not, because it affects everyone. However, what you were told is incorrect – the association can place a lien on the delinquent member’s property before the balance reaches $1,800 or one year. That threshold must be met before the association can foreclose upon that lien, meaning before it files a foreclosure lawsuit or commences a non-judicial foreclosure process. Until that threshold is met, the association can sue in small claims court, can lien the property, or can sue for money damages in Superior Court.

Another factor which may be involved is that the model budgets developers typically use, following Bureau of Real Estate guidelines, are overly optimistic and often are significantly lower than the true costs the association experiences. Boards taking over from the developer often must ramp up the budget, resulting in increased assessments and membership consternation, but it is often not their fault (so put away the pitchforks!).

Best,
Kelly

Dear Mr. Richardson,

I really need your help on a few questions. I enjoy your articles and find them informative. Our board wants to change our CC&Rs and eliminate cumulative voting. They would have the community vote on this. What are the pros and cons? How does cumulative voting work? We were told a board can meet and discuss things about the community any time as long as it isn’t a particular item in detail. Is this true?

Thanks, D.G., Valencia

Dear D.G.,

Cumulative voting is often included in the original CC&Rs and Bylaws. When multiple board seats are up for election, it allows a member to stack their votes. So if five seats are being filled by election, one could cast all five votes for one candidate, or three for one and two for another, for example. The idea behind it was to try to allow representation on the board for alternate points of view, but in actuality it encourages gamesmanship in HOA elections. It creates more mischief and confusion than it is worth, and so my clients normally vote to ban cumulative voting.

As to board discussions, the law is clear – unless it is identified on an agenda at least four days before the board meeting (Civil Code 4930(a)), came up after the agenda was posted (Civil Code 4930(d)(2)), or is an emergency (Civil Code 4930(d)(1), the board cannot discuss it. The board may not discuss association business outside of a board meeting (Civil Code 4910). A “board meeting” is any discussion involving a quorum of the board discussing any HOA business (Civil Code 4090). See statutes at www.leginfo.legislature.ca.gov.

Thanks,
Kelly

Written by Kelly G. Richardson

Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to [email protected]. Past columns at www.hoahomefront.com. All rights reserved®.