How Old Are Your CC&Rs? Do your CC&Rs still give your homeowners association the guidance needed to manage your association? Outdated CC&Rs may be in conflict with current laws and practices, forcing boards of directors to constantly seek legal counsel as to whether certain provisions are still valid or enforceable. Such obsolete CC&Rs offer owners and boards very little guidance as to what should be done in a given situation. This newsletter will help you determine if your CC&Rs should be amended or completely revised.
Statute Changes. The California Legislature has enacted many new laws over the last several years which supersede older CC&Rs provisions. These laws directly affect your CC&Rs and homeowners association. The Davis-Stirling Common Interest Development Act (“Act”) was enacted by the legislature in 1984, creating and organizing an entire body of law which directly impacts homeowner associations. Since then, the Legislature has continued to do what we elected them to do—legislate. New laws are added to the books each year.
In addition to the Davis-Stirling Act, there have been significant revisions of other state and federal laws. For instance, the Federal Telecommunications Act of 1996 supersedes all CC&Rs in the area of satellite dishes. Any outdated CC&Rs should be revised to comply with this Federal law, yet allow the association to retain certain control of any satellite dish installation.
Another example is a newer law which changes the way CC&Rs can be enforced. Under this new law, an association and an owner must attempt to resolve certain disputes before a lawsuit is filed. These new statutes supersede outdated CC&Rs, which should be amended or revised to conform to the new laws.
Case Law. Many court cases have reviewed the workings of homeowners associations and have provided guidelines as to what to expect in the future when interpreting certain provisions of your CC&Rs. This court guidance should also be integrated into the CC&Rs.
Practices of the Association. Many of your homeowners association’s practices have likely changed since its inception, such as the handling of insurance deductibles. Insurance deductibles have increased dramatically in order to help reduce the annual insurance premiums. Who pays this ever-increasing deductible? Are your CC&Rs clear on this point? CC&Rs are often silent or unclear on the issue. Do your CC&Rs allow the Association to reduce the number of its insurance claims by providing the option for the association to pay an insurance claim instead of submitting it to the insurance carrier for payment?
Clarify Maintenance Responsibilities. Who is responsible for what? Does the association maintain the balconies, or are they the responsibility of each owner? Is the balcony deck actually a roof that the association must maintain? Is the drywall part of the unit, and therefore the responsibility of the owner, or is it part of the common area? Who is responsible for the mold? Your CC&Rs should address and clarify all of these issues.
Stronger Enforcement. Do your CC&Rs allow the association to suspend an owner’s pool and clubhouse
privileges if the owner fails to pay monthly assessments or is violating other rules? Some communities are
experiencing problems with difficult tenants. Most CC&Rs can be strengthened to have greater enforcement options against non-complying tenants and their owners.
Discriminatory Language. Do your CC&Rs contain language that has now been determined to be illegally discriminatory? Discriminatory language includes not only age, gender, and race but also less-publicized discrimination based upon familial status.
Removing Irrelevant Language. Original CC&Rs often contain language regarding the developer or “declarant” of the project, vesting the right to extra voting power, advertising rights, etc. When the developer is no longer involved, this language becomes obsolete and should be removed. Some original CC&Rs also contain language about adding or “annexing” more land to the project. If no longer applicable, this language can also be removed.
Responsibility for Water Damage. Today, water damage can be the catalyst for very large and contentious disputes. Who is responsible when the upstairs owner’s washing machine hose breaks and floods the downstairs unit? An owner’s own insurance policy will often deny the claim and force the association to fix the damage or submit its own insurance claim. Ambiguous CC&Rs should be revised to clarify who is responsible for water damage.
A Complete Document. CC&Rs should be complete, consistently providing accurate guidance whenever consulted by the association. Reliance on outdated documents will undoubtedly create confusion and lead your association down the wrong path. Ideally, CC&Rs should be reviewed for major revisions every 8 to 10 years or sooner if there are significant changes in the law. The CC&Rs should not be stagnant, but should be a living document which provides flexibility and revitalization to your community.
Security. Courts have found associations liable for harm caused to owners by criminals because of lack of adequate security. Courts have also found that an association will not be liable for such criminal conduct or lack of security if the proper language is in the CC&Rs.
The Amendment Process. Most CC&Rs can be amended by 51%, 67% or 75% approval of the members. For those associations with an approval requirement of 67% or 75% (called “super majority”), the courts can provide assistance in amending the CC&Rs after a failed attempt to do so. Pursuant to Civil Code section 1356, if the association has made a very thorough and diligent effort to amend the CC&Rs without success, then the court may order that the CC&Rs are amended. If the approval percentage is high, the board may consider first amending the CC&Rs to reduce the approval percentage before amending the entire CC&Rs. In some circumstances, it may also be necessary to obtain City or County approval for certain amendments. Your association should seek legal counsel to determine if anyone other than the members must approve amendments to the CC&Rs.
Voting on CC&R amendments is typically best accomplished by secret written mail ballot. The mail ballot must state the number of votes necessary to amend the CC&Rs and the date by which the ballots must be returned in order to be counted. Typically, your association should give owners 30 to 90 days to return ballots. If not enough owners are returning ballots, then your association will have to resend ballots to owners who have not responded.
Amending Other Documents. It may be helpful to amend the bylaws, rules and other governing documents of the association along with the CC&Rs, to ensure these governing documents do not conflict with each other. Legal counsel can advise you in this area.
For information on amending your CC&Rs, please call us at (805) 322-0410, or email us.
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