Would you like a Hawaiian vacation giveaway? How about a common area giveaway? Associations often try to give away part of the common area to a homeowner. Such common areas include extensions of the existing balcony decks, patios, yards, driveways, etc. into the common area. Any time your association allows a member to extend part of their unit or lot into the common area, a big red warning flag should go up. The common area the member is extending into is most likely owned by either all of the members or by the association itself.
Some areas may be “common area” but are designed for the use of a specific owner, such as the respective balconies, patios, yards, etc. These areas are known as “exclusive use common area.” However, the rest of the common area (as opposed to “exclusive use common area”) is for the use and enjoyment of all of the members. Before a board allows an extension into the common area, the board must determine whether or not it is authorized to give away common area without the approval of the members. Most CC&Rs state that the common area is for the benefit and enjoyment of all owners and requires the approval of the members, not the board, to give away common area for the purpose of extension into the common area.
Dangers of Giving Away Common Area. In the case, Posey v. Leavitt (1991) 229 Cal.App.3d 1236, a member extended his balcony into the common area airspace owned by all the members. The board (without approval from the members) approved the extension into that common area airspace. However, the CC&Rs of that association required 100% approval of all of the members to allow the extension into the common area. The association did not enforce this provision of the CC&Rs and did not require the encroaching member to remove the encroaching balcony. Another member then filed a lawsuit against both the encroaching member and the association. The court found that the association failed to fulfill its duty to enforce the CC&Rs and awarded the complaining member $30,000.00 against the association.
Make sure your association does not act hastily when giving away common area. Legal fees and costs for defending an association can quickly add up. Moreover, if your association is found to be at fault, then it is usually required to pay the other side’s attorney fees and costs.
New Civil Code 1363.07. New Civil Code section 1363.07 clarifies some of the issues in giving away common area. This section generally requires that 67% of the members must agree to give away part of the common area to another member. When this approval is obtained, that part of the common area becomes “exclusive use common area” for the use and benefit of the particular member or members to whom it is given.
Exception To Member Approval. There are some exceptions to the requirement of 67% member approval. A notable exception is when the common area in question is “generally inaccessible and is not of general use to the membership at large.” Some boards have approved the giving away of common areas beneath a condominium. These areas are generally inaccessible and not of use to other members. Therefore, only board approval is necessary. Other common areas might be considered by some to be “inaccessible or not of use to the general membership.” However, caution should be exercised when only board approval is used. Looking back to Posey v. Leavitt, some might argue that the balcony extension extends into common area airspace that is both inaccessible and not of use to the general membership. However, a strong argument can be made that members’ view is a “general use” area, which is protected by this section, thereby requiring 67% member approval to give away that common area. The conservative approach would be to obtain approval of at least 67% of the members whenever there is reasonable doubt whether the common area is actually “inaccessible or not of general use.” To do otherwise may invite lawsuits.
Approval of 67% of Members. If your association decides to let the membership decide the issue, then the board must specify whether your association will receive any monetary payment for that part of the common area and the board must also state who will be responsible for insurance coverage for that part of the common area.
Document the Transaction. Your association should make sure the terms of the agreement for giving away the common area are clearly spelled out and provide liability protection for your association. The agreement should also be recorded against the member’s property. Our office is available to assist your association in this regard.
Election Rules Update
By Scott A. Hunter, J.D.
SB 1560 was unanimously approved by both the California Senate and the Assembly recently. It is expected to become law shortly. This new law clarifies some areas of the election law which went into effect on July 1 2006. This law clarifies that:
- If your bylaws require a quorum for a meeting of the election of directors, then a quorum is still required by this law. As a side note, almost all bylaws require a quorum to be present to conduct an election of directors.
- Returned ballots are counted toward a quorum.
- Nominees have the right to have their name placed on the official ballot.
- Generally, a proxy cannot be used as a ballot.
By Scott A. Hunter, J.D.
Our May 2006 newsletter addressed the issue of towing vehicles within an association. It is clear that the required towing signs must be in place in order to tow a vehicle of the general public. In addition, and to eliminate any argument from members that such signs are required to tow a member’s vehicle (although such an argument would be weak), your association should also install the towing signs (discussed in our May 2006 newsletter) before towing any vehicle of a member and provide for towing in its governing documents.
Most of the laws in this newsletter apply only to common interest developments (“CID”). If your association is not a CID, then the laws discussed herein may not apply to your association.