Recently, there has been talk and opinions about whether managers are now contractors, or consultants, under Assembly Bill 2237. We say “no”!

The new law as drafted is vague as to whether property management companies are considered to be within the definition of “consultant” under amended California Business and Professions Code Section 7026.1. However, as outlined below, it is our opinion that this law does not create civil and criminal penalties for property management who do not obtain contractor licenses.

The Contractor’s State License Board (CSLB), the sponsor of AB 2237, indicates that the intent of same is not to license consultants or construction managers but to protect the public from persons presenting themselves as “consultants” but acting in the capacity of a contractor by scheduling subcontractors and exercising responsibility for the construction project. For example, one court found that a swimming pool consultant acting in the capacity of a construction manager was not required to be licensed as a contractor, and the purpose of this law is to clarify that an individual performing such construction consulting services, including project coordinators, is required to be licensed as a contractor and comply with the law.

Existing law requires contractors be licensed with the CSLB, and provides for the regulation of contractors.  AB 2237 amends Section 7026.1 to include “consultant” within the definition of “contractor”.  A contractor includes any person, consultant to an owner-builder or business “who or which undertakes, offers to undertake, purports to have the capacity to undertake, or submits a bid to construct any building or home improvement project, or part thereof.”

For purposes of this law, “a consultant is a person, other than a public agency or an owner of privately owned real property to be improved, who meets either of the following criteria as it relates to work performed pursuant to a home improvement contract as defined in Section 7151.2:

(A) Provides or oversees a bid for a construction project.

(B) Arranges for and sets up work schedules for contractors and subcontractors and maintains oversight of a construction project.”

Section 7151.2 defines a “home improvement contract” as an agreement, whether oral or written, or contained in one or more documents, between a contractor and an owner . . . or between a salesperson, whether or not he or she is a home improvement salesperson, and . . . an owner . . . which provides for the sale, installation, or furnishing of home improvement goods or services.”

Based on the foregoing, property management does not “provide or oversee” bids for construction work, and although it requests bids from contractors and provides same to the association, it is essentially the “middle-man”.   Property managers may request certain items be contained in a bid, but it is not essentially involved in creating and pricing the bid.  Rather, property management acts as the representative of the association, or the public which this bill is seeking to protect.

Further, property management may work with contractors to determine dates and time construction workers may be present at the project, and may even require a date by which the project must or should be completed; however, this, in my opinion, does not amount to setting up the work schedules for contractors and subcontractors. Property management typically do not provide contractors with schedules reflecting the scope of work, order and timing in which it is to be performed.

In the event property managers do assume this role, they can protect themselves by becoming licensed, or refrain from doing so and deferring to contractors, which we recommend.

Moreover, property management is often present when contractors are performing work and may provide input regarding same.  However, property management is essentially stepping into the shoes of the association and its owners to provide guidance regarding expectations and satisfaction of the work being performed. Therefore, property managers are not consultants.

Pursuant to the Senate Business, Professions and Economic Development Committee’s analysis of AB 2237, the purpose behind AB 2237 was to regulate and prevent unlicensed contracting work. Further, the Senate noted: “. . . unlicensed contractors lack accountability and have a high rate of involvement in construction scams. They compete unfairly with licensed contractors who operate with bonds, insurance and other responsible business practices.”

Further, it observed the bill defines “person” as an individual, firm, corporation, limited liability company, association or other organization, or any combination thereof, and requires a person to be licensed as a contractor if he/she engages in the business of contracting or acts in the capacity of a contractor. (BPC Section 7025)

Therefore, in our opinion and based upon the above legislative analysis, “consultant” for purposes of this new law does not likely include property management companies. However, to protect itself from liability, property management companies may obtain contractor’s licenses, or ensure their property managers do not give advice or instruction to contractors on the scope and type of work to be performed.

Jeffrey A. Beaumont Admitted to College of Community Association Lawyers

Jeffrey A. Beaumont, senior partner with Beaumont Gitlin Tashjian, has been admitted to the College of Community Association Lawyers (CCAL) – one of fewer than 150 attorneys nationwide to be admitted to the prestigious organization.

CCAL was established in 1993 by the Community Associations Institute (CAI), with membership consisting of attorneys who have distinguished themselves through contributions to the evolution or practice of community association law. CCAL members are also recognized for their commitment to high standards of professional and ethical conduct in the practice of community association law.

“I am honored to join this group of respected attorneys,” said Mr. Beaumont.  “I look forward to continuing to contribute to the growth and success of the community association industry”.

Well-versed in general counsel, dispute resolution, risk management, collections and litigation matters, Mr. Beaumont specializes in representing common interest developments throughout Southern California and the Central Coast.  He currently serves as the 2012 President of the Greater Los Angeles Chapter of CAI and is on the faculty of CAI National.

CCAL provides a forum for the exchange of information among experienced legal professionals working for the advancement of the community association field. Its goals include promoting high standards of professional and ethical responsibility, improving and advancing community association law and practice, and facilitating the development of educational materials and programming pertaining to legal issues.

CAI is a national membership organization dedicated to helping homeowner and community associations meet the expectations of their residents.  The organization accomplishes this mission by providing information, tools and resources to homeowners and professionals who govern and manage common interest development communities.

By helping its members learn, excel and achieve, CAI strengthens the governance and management of community associations throughout the country, making them better places to live.

More than 60 million Americans live in close to 300,000 homeowners associations, including condominium, cooperative and other planned communities.

Beaumont Gitlin Tashjian represents common interest developments throughout California in all aspects of community association and real estate law. 　The firm counsels condominium, planned-unit, cooperative, commercial and mixed-use development associations through all aspects of community association law in the most timely and cost-effective manner.

AB 2273: HOA Solvency Bill

As you may have heard, Assembly Bill 2273 seeks to help associations collect assessments from foreclosing parties in an expedient and prompt manner.  This bill has been dubbed the “HOA Solvency Bill” and, if passed, will tremendously assist associations in identifying foreclosing parties so that monthly assessment can be timely invoiced and collected.

Associations have been hit hard by the recent housing and financial market crisis.  Foreclosures, which are becoming increasingly common, negatively affect the financial status of associations.  Oftentimes, associations cannot contact a bank that has foreclosed on a property due to significant delays in the recordation of a “trustee’s deed upon sale” and the bank’s provision of a copy of such deed to associations, even if recorded.  These delays prevent associations from collecting assessments from banks.

In attempting to resolve these issues, this bill will require the recordation of foreclosure sales within 30 days of the sale to help an association identify new owners; this will increase associations’ ability to collect assessments and provide them with a responsible party to pay assessments and address the disrepair of vacant properties. In addition, this bill will require foreclosing parties to notify the association of its ownership and mailing address within 15 days of the sale, only if, however, the association has recorded a blanket recordation pursuant to SB1511, which went into effect on January 1, 2009.

Please recall, SB1511 requires banks to provide associations with a copy of the trustee’s deed upon sale (“Trustee’s Deed”) within fifteen (15) business days of its recordation.  The Trustee’s Deed provides the name and address of the new owner of the foreclosed property.  If AB2273 is passed, and an association has recorded the blanket recordation, it will not only receive the trustees deed of sale upon 15 days of recordation but the association will also receive the contact information of the foreclosing party within 15 days from the date of the sale.

AB2273 is just one more reason why an association should record a blanket recordation if it has not already done so.  In case you were not aware, Beaumont Gitlin Tashjian (“BGT”) can draft the written request for trustee’s deeds and record same with the County Recorder’s Office for a minimal fixed fee.  If you would like additional information about this service, please do not hesitate to contact our office.

Service Animals: Providing Reasonable Accommodations for Man’s Best Friend

According to the Humane Society of the United States, thirty-nine percent of households own at least one dog, and thirty-percent of households own a cat.  With so many families owning an animal, pet restrictions have become prevalent within homeowners’ associations.  Although pet restrictions are common, and often considered a positive instrument to keep property values up, associations may have a legal duty to allow an owner to keep a Service Animal or comfort animal, even if in violation of the CC&Rs.

A Service Animal is defined under California state law as “any dog (or miniature horse) individually trained to the requirements of the individual with a disability, including, but not limited to, minimal protection work, rescue work, pulling a wheelchair, or fetching dropped items.”[1]   Under federal law, specifically the Americans with Disabilities Act (“ADA”), a Service Animal is not considered a “pet.”

Federal Law

The Fair Housing Act of 1988 (“FHA”) prohibits housing discrimination on the basis of disability and requires associations to make reasonable exceptions in their policies and regulations to afford people with disabilities equal opportunities.  For example, an association with a “no pet” policy may be required to grant an exception to this rule, and allow an individual who is hearing impaired to keep and maintain a Service Animal.  To be classified as a Service Animal, federal law requires the animal: (1) Be individually trained, and (2) Work for the benefit of a disabled individual. Federal courts further require a relationship to be established between the animal and the disability.  Currently, under federal law, there is no clear or specific requirement as to the amount or type of training of the animal.

California Law

Like the federal FHA, the California Fair Employment and Housing Act (“FEHA”) requires homeowners’ associations to make reasonable accommodations for people with disabilities.  Although pet restrictions recorded in your CC&Rs may control the number of animals kept, housed, and maintained within the Association, exceptions, within reason, must be made for disabled persons.

Although California Courts have held that training is not required where an animal is necessary for mental health purposes,[2] the dog must perform a service that mitigates the disability and helps compensate for the tasks the disabled person cannot perform alone.   These types of animals have been referred to as comfort or support animals.

As a result, an animal otherwise prohibited by an Association’s CC&Rs may be kept by a resident with a disability, provided:

(1) The animal is properly trained for the service it provides, and proof of training can be produced (for Services Animals only, not comfort animals);

(2) The animal provides a service related to the person’s disability; and,

(3) The resident submits appropriate documentation to the Board verifying the existence of a legally defined disability (i.e. a valid letter from the resident’s physician).

When the Service Animal is not within the boundaries of its home, California law provides that the owner must ensure the dog is on a leash, and is identified by a tag issued by the county clerk, animal control, or other agency.  Additionally, the person shall be liable for any provable damage done to the premises or facilities by the service dog.

Pet Restrictions in Your CC&Rs

Many Associations either prohibit or restrict the keeping and maintaining of animals.  Disability law allows a disabled person to keep a Service/comfort Animal in addition to the number of pets allowed, provided the owner meet the requirements as set forth above.  The following is an example of a CC&R provision properly regulating the number of animals and accommodating disabled persons in need of a Service Animal:

“An animal otherwise prohibited by these CC&Rs which is kept by a resident for the purpose of servicing the resident’s disability may be kept by such resident provided (i) the resident submits appropriate documentation to the Board verifying the existence of a legally defined disability, (ii) the service animal is properly cared for by the resident (i.e., healthy, clean and properly groomed, and waste material is properly disposed of), and (iii) the animal is not unruly or disruptive (e.g., barking, growling, running loose, displaying aggressive behavior, etc.). All applicable pet rules shall apply to service animals.”

By including such a provision in your CC&Rs, you can help to eliminate future liability, confusion, or conflicts with an owner.

Conclusion

To ensure compliance with federal and state law, associations should always remain sensitive to the rights of a disabled person.  Pet restrictions in your CC&Rs may be enforced to the extent that the rights of a disabled person are not infringed upon.  Whenever reasonable accommodations are made (i.e. by allowing residents to keep a Service Animal in violation of CC&Rs) associations have the right to ask for reasonable documentation regarding the existence of a disability, the training, and the nexus between the animal’s skill and the resident’s disability.

[1] California Civil Code § 54.1

[2] Auburn Woods I Homeowner’s Ass’n v. Fair Employment and Housing Com’n, 121 Cal. App. 4th 1578 (2004) (finding that the innate qualities of the dog helped alleviate the symptoms of depression, a legally defined mental disability).

What HOAs Need to Know About New ADA Pool Accessibility Standards

A recent item in the Community Associations Institute’s news bulletin reports that the U.S. Justice Department has extended the deadline requiring public pools and spas to provide handicapped access in compliance with the Americans with Disabilities Act (ADA). Modifications must now be in place by January 31, 2013.

The ADA’s new accessibility standards apply to all pools, wading pools and spas that are defined as places of “public accommodation” and require that most standard pools have at least two accessible means of entrance, such as lifts and/or sloped entries, to better accommodate people with disabilities. While these requirements will not apply to private pools, some homeowners associations (HOA) who make their community pools available to the public may be liable for completing modifications in accordance with the new deadline.

Modifications in compliance with ADA standards are required if HOAs make their pools available to the general public, such as through the hosting of swim meets, public lessons, or special events for the general public. If HOAs make their pools available for community events without requiring a rental fee or receiving any monetary gain, it is unclear whether there is an obligation to modify the pool, and the guidance of legal counsel is suggested. Professional legal guidance on a case-by-case basis is also recommended to determine whether the ADA standards apply to related facilities, such as restrooms, fitness centers, saunas, club houses, media rooms and the like.

According to ADA guidelines, there is no requirement to modify pools that are open only to residents of the association and their guests.

To read more about the ADA pool accessibility standards, click here.

Help Us Pass AB 2273: HOA Solvency and Full Disclosure in Real Estate Transactions Act

The California Legislative Action Committee (CLAC) needs your help to pass Assembly Bill 2273 in the Senate Judiciary Committee.  AB 2273 requires the recordation of foreclosure sales within 30 days after a sale and identifies the foreclosing party.  This enables HOAs to immediately begin invoicing for assessments.

The failure to record a sale transfer results in:

  • Unpaid HOA assessments.
  • Deferred and crippled property upkeep.
  • Higher assessments forced upon remaining homeowners.

This Bill faces extreme opposition from the lending and title industries who do not want the burden of recording deeds or suffering the consequences of not doing so.

AB 2273 is the solution and a necessity!

To support AB 2273:

Please sign this suggested letter TODAY and fax it to CLAC’s office at (916) 772-3781 or email it to caiclac@aol.com.  Make sure to sign the letter and include your home address.
Don’t hesitate to contact us if you have any questions about AB 2273.  (866) 788-9998 or info@bgtlawyers.com

Thank you in advance for your support.

Legal Issues to Consider When Planning Large-Scale Repair Projects

As summer nears and repair projects are on the rise, it’s imperative for homeowners association (HOA) Boards to consult with their legal counsel before planning large-scale construction projects.  Obtaining legal input in the beginning stages of the project can save the HOA time and money by avoiding – or at least navigating – legal problems throughout the project.

Boards should not enter into a contract to retain a construction manager, before ensuring that the project can be properly funded.  The funding process can be time consuming, but must be completed before any contracts are signed.  For example, a Board may find itself in a legal predicament if it enters into a legally binding contract for a project prior to the loan being finalized.  If the loan is not approved, the HOA may find itself in a lawsuit with the contractor.

When pledging the HOA’s assessment income as collateral for a loan, many CC&Rs require membership approval.  If such a vote is needed, the Board must plan and schedule for this process long before any contracts can be signed.  This can potentially affect the scheduling of the entire project and may invalidate some of the bids.

If the HOA has no reserves and must take out a sizeable loan, the bank may require a legal opinion from the HOA’s legal counsel confirming that the Board has legal authority to enter into the proposed loan and construction project, and also that the Board will be able to fund the loan repayment in the future.  The bank also requires that any legal or financial obstacles be disclosed at this time along with a plan for navigating them before the transaction can be finalized.

Finally, it is vital to have legal counsel review construction contracts in detail before being signed.  Many contractors employ “form” contracts with little or no protection for the customer in the event of a breach.  Contracts frequently do not describe what happens in the case of damage, e.g., indemnity or problems with obtaining permits, and unfortunately, may not provide any clear rules for holding the contractor accountable for shoddy work or slow progress.  If the legal counsel’s first experience with the contract is only after the contractor has been terminated, your HOA could be in for serious legal issues.

For these reasons, it is absolutely necessary to involve legal counsel in the beginning stages of project planning to ensure the HOA is protected from financial and legal risks.