|"We live in a small association, just [2-50] units. We don't know where to go to find out what we should be doing. We found your website and it has been very helpful. We have lots of questions, we don't have much money ... how do we ... and ... we are in a mess because ... and ... we just found out that ....[the questions are endless]... and ... can you help?"|
Small HOAs everywhere, condos and townhomes alike, have been clamoring for help for all eternity. Most management companies won't take them and those that do have a minimum fee that blows many small HOAs out of the water. Because of my website, blogs, and prolific articles, I get the calls and email pleas every month, every week, every day from people who live in the small HOAS. For the past year I have been working on the ultimate guide for small HOA directors and owners. It takes a lot of time to write a useful book. I keep telling the poor callers that it's coming .... It's true that there are a lot of helpful resources on my website but what happens is it gets overwhelmingly complicated in a very short exchange when you are talking to someone who has a real problem that needs solving right this minute but knows nothing about common interest development living or even what that is. The questions often revolve around things like this:
Yes, these things really happen.
- A neighbor complained (to the person who contacted me) because the sale of his unit fell through and he was told the association corporate status was suspended or his realtor or lender couldn't get any information and he has threatened to sue us. or...
- A couple of members tried to form a board and the election erupted into chaos because the other owners revolted and said every decision needed to be approved by all members. or...
- One of the 5 unit owners in a kitchen remodel vented the stove under the building in the crawlspace and the spices his wife cooks with every night are driving us all crazy. or...
- One owner has taken over and is making all the decisions about spending the money collected from owners without any input from the other owners. or ...
- Everyone was supposed to be paying assessments on the honor system by making monthly deposits into the HOA bank account but the "board" recently realized that not all had been paying regularly and they had no way to know who, and its been going on for years.
And here is an example of how the conversation often goes: this one was about an attempt by some owners to establish a board by holding an election. The election was shut down quickly - things erupted into chaos.
Me: "Could you send me the association bylaws so I can see what they say about a board?"
Them: "Where would I find bylaws?"
Me: "What about CC&Rs, the document recorded against your property. There might be something in those about organization."
Them: "What are CC&Rs?"
Me: "It is difficult to work without any structure, is there anyone in your association that has ever done anything to seem like they are in a leadership position?"
Me: "Where did you get the idea to organize the neighbors?"
Them: "My brother-in-law; he lives in a big condo association.
Me: "Well that's a start. Maybe he can explain to you what these documents are - if you look on your deed you should see reference to a recorded "Declaration" of some kind and that would allow you, or me, if you want to hire me, to track down the CC&Rs. There are also lots of election requirements in California in the Davis Stirling Act that regulate homeowners associations."
Them: "What's the Davis Stirlng Act?"
Me: "I may be able to help but you'll need to track down any documents that you can find including the recorded declaration and send them to me."
Them: "That sounds like it would cost a lot of money. We don't have a lot of money."
Me (at a loss of where to go with this, and in desperation - this is actually how the idea of the guide was planted a year ago): "Well, I am in the process of writing a guide for small association boards and owners that will help with all this and it will be a lot less expensive than having me or any lawyer "hold the association's hand while trying to get organized in a legal way."
Them: "When can I get it?"
And so it goes. It took foot surgery to limit my activities enough for a month to get the ultimate survival guide done. I considered calling it a compliance guide but decided that would probably scare off potential leaders in the small associations. And survival is really what it's about anyway. How do you possibly make headway in a world where there are so many complicated laws, when you are a very small fish in a very big sea?
So I am finished with the ultimate survival guide. It's not full of legal references and gobble-de-gook, but just simple explanations of complicated subject matter. And now I just need to get it out there so people who need it can get help.
Here are some excerpts and information about the contributions of some of the contributors. Oh yeah, I should have told you right off that guide this is not just the product of an attorney or all about legal stuff. Besides me, contributors include an HOA manager, an HOA accountant, an HOA insurance broker and an HOA CPA. I will be highlighting these folks in coming blogs because they are generous smart, and informed colleagues who serve small HOAs and their contributions are pure gold.
And one more thing. Although this Guide is written for HOAs that have fewer than 50 units and many fewer than 15, it would help any struggling board or owner gain a basic understanding of what needs to be done in any association. And although it has some emphasis on California because it is written by California providers, it is not a code book and has valuable practical information for small HOAs across the country.
-- A YEAR IN THE MAKING --
THE SMALL HOA SURVIVAL GUIDE IS HERE!!
Excerpt from Manager: "Developers are creating more and more really small (think 1 - 15 unit) HOAs. In these communities, most often no management firm is in place before the developer transitions control of the HOA to the board. In a smaller HOA it is harder to get volunteers to serve on the board and act as manager simply because the pool is small. Often one person steps forward and assumes the mantel of responsibility however there are no minimum educational requirements to do so. And today, education is key to keeping your HOA out of trouble. Why? In part because of the complexity in the body of laws governing HOAs, in part due to human nature (people don't always get on the board for altruistic reasons), and in part due to the lack of outreach and education available to volunteer board members."
This manager goes on to tell all about what managers do for HOAs and how to organize things, choose vendors, and basically, it's a "how to" guide for those that want to try and self-manage.
Contribution from accountant serving [small] HOAs: A complete HOA Accounting Job Description and a Nuts and Bolts Accounting Manual for Boards of Small HOAs (less than $75,000 in gross income). Yes, I said a whole manual that lays out the accounting steps in detail!
Contribution From HOA Insurance Broker: A Complete COMMUNITY ASSOCIATION INSURANCE CHECKLIST- With one section for the Board of Directors / Manager / Insurance Committee To Complete And one section For The Broker / Agent To Complete. There is no way to forget anything important when using this checklist to purchase insurance.
Contribution from HOA CPA: A laundry list of TAX AND REGULATORY CONSIDERATIONS FOR SMALL COMMON INTEREST DEVELOPMENTS listing the requirements for the small HOAs with every state and federal regulatory agency, as well as tax filings, corporate filings, exempt filings, what's required to revive a suspended corporate HOA, and much more.
There are 11 chapters in this guide which addresses the whys of creating structure, the explanation of documents, where to find resources, all about meetings and the various types, elections, the financial aspects and accounting, management and enforcement, insurance, an Appendix with valuable tools.
And here are a couple of my contributions:
About How People Get Roped Into Service:
Last but certainly not least, I have some very personal experience. My daughter and son-in-law live in a small association, and are much the inspiration for this guide. They moved into a 10 Unit homeowner association about 7 years ago and didn't really get involved in the association. Their neighbor was managing the association and because they were busy working and raising two young children, they thought little more about the fact that they were in an HOA. The front yard got mowed, the rest of all maintenance on their home and Lot was up to them. They paid a small annual fee. All was well. Then, about two years ago the neighbor dropped 4 boxes of association records on their doorstep. He had been "managing" the association for many years, but had gotten ill, and the rest is history. Their "story" plays out more fully in an article I wrote for ECHO which also appears on this website titled "Small Association - The Big Picture Compliance I and II." It is a comprehensive two part article that speaks to the quandary they faced and the path they took to get their small HOA back on track. In their case they focused on getting a board in place, and then getting management in place to perform the day to day functions, which are not considerable in an association where ownership comes in the form of a Lot which is a planned development. If it was a condominium where ownership comes in the form of airspace and an identified percentage share in the buildings and grounds with the other owners there would be a lot more to be done.
Regarding Compensation of a Director: "Here is a rather startling example (well maybe not startling to you, but it was to me): a director in a small HOA (6 units I believe) called me to assist him and the HOA in preparing a defense in a small claims case. The director was sued by a new owner to recover $1700 paid to the director because of a bill sent in with the document transfer in response to an "escrow demand". No one else wanted to do the work and the seller and buyer's realtors and the title company representative seemed pushy, so he worked hard to put the comprehensive package together for the buyer. The buyer objected to the fee but the seller paid so the sale would go through. He prepared an extensive excel spreadsheet to document his time and work on the matter and submitted that too in support of his bill.
There are a number of things wrong with this picture but how would a small HOA board know? In California law, an HOA is required to provide a long laundry list of disclosures including an itemized good faith statement of fees (much like a real estate deal) when an escrow demand is received. If a 10 day time deadline is not satisfied, there are penalties in the law. (See the Davis Stirling Act, Civil Code Sections 4525-4575.) There usually is no compensation authorized by the governing documents for this. He had prepared a big paper package as well as an intricate spreadsheet of all the items provided and all time spent on each task and the bill he presented carefully itemized all of this. The hourly rate charged was commensurate with what he earned as an accountant. It seemed fair to him and the other directors. He deserved to be compensated and someone (the seller or buyer) should pay for that time. The seller sued to recover the $1700. There might have been a viable defense
(1) IF the governing documents provided for compensation to board members OR ..." "If..."
[you'll just have to get the Guide to see the rest of this list.]
About Failure to Fulfill the Regulatory Agency Requirements and Failure to Honor the Governing Documents:
"Small HOA board members sorely need information about operations, management, administration, enforcement and also regulatory compliance and it's all in this Guide. Why this great need? Because failure to comply with the state laws, agency ordinances and requirements, taxing agency requirements, and governing documents of your own HOA can lead to lawsuits. And who wants to get into one of those?
Litigation is much like a cow with bad breath, no matter which end you're at, it can be uncomfortable."
This guide is simple, straightforward, informative and in some places - humorous. The prevailing theme is: a lack of structure leads to chaos. I hope you will tell all your friends and colleagues about it. The further out it gets the more people it will help.
HOW TO GET "THE SMALL HOA SURVIVAL GUIDE"
The Guide/Booklet will be available in PDF format for emailing by this weekend. I am doing the finishing touches. You can order it today and I will send it when it is ready - maybe even before the weekend! There are two ways to order and even an E-News Initial Offering Special.
INITIAL OFFERING SPECIAL from this E-news: Two valuable books with a $50 savings! You can get the Survival Guide and the Companion 2016 DAVIS STIRLING ACT IN PLAIN ENGLISH Book TOGETHER FOR LESS.
PAYPAL DIRECT: If you have a Paypal account you can send the payment directly to me using email@example.com as the recipient. The cost of the guide is $75.00. If you use Paypal you may order the companion code book called The Davis Stirling Act in Plain English (the one that is $95 for the PDF version) and get both for a total of $125.00 saving $50.00.
So if you just want the Survival Guide, send $75.00 and say SMHOA GUIDE for the code/description.
If you want both say BOTH in the description and send $125.00.
ORDERING FROM THE WEBSITE: This is more tricky because I have not learned to link two items together for a special in the webstore (sorry).
If you just want the Survival Guide it is available under the Guides tab in the webstore and you can order it for $75.00.
The link is:
If you want both, order THE DAVIS STIRLING ACT IN PLAIN ENGLISH -SNAIL MAIL under the books tab because it is the same price ($125). But so I do not take that as an order for the snail mail DAVIS STIRLING ACT book, you will need to email me at firstname.lastname@example.org (Note the shortened calif) and tell me you want the PDF SURVIVAL GUIDE AND PDF DAVIS STIRLING ACT book for the $125.00 you paid.
The link for this option is
Or you can go to the store by visiting Webstore There is lots more to offer here on the website.
The current Davis-Stirling Act is available now along with the Primers in the Webstore, in PDF or snail mail format - at Publications. Don't be confused about the law!
Lots of resources are available including articles, blogs, E-news archives, Primers and Guides, and other publication like books, on all subjects here on the website.
Check out the SPECIAL link to the 2014 Reorganized Davis Stirling Act at
You will find lots of resources when you click on it.
Be sure also to visit the website and sign up for the next free E-News now! It's never too late. And watch the blogs for the hottest topics! If you want to unsubscribe, please do so when you get the newsletter. Sending an email doesn't always work because I don't keep the list, Constant Contact does.
I am an attorney who serves homeowner associations and homeowners alike (not inthe same association of course). I am a frequent contributor to the Echo Journal
and other similar publications in the State of California and also contribute articles
on a national level. There are several publications written in plain English onmy website written specifically to help people who need information about California
law as it relates to homeowner associations. There is a wealth of information here on
the website. I like to do service and have been lucky enough to be named Author of the Year
by CAI after my first book, and was named 2011 Volunteer of the Year by the Executive
Council of Homeowners.
Check out the Main and Resource Pages at www.californiacondoguru.com
Check out the popular book called "THE CONDO OWNER'S ANSWER BOOK" and both blogs developed, one for everyone and one especially for homeowner questions: www.Condolawguru.com
Check out the webstore for helpful and affordable publications on various topics, including 3 books, 28 primers and 2 guides. Most popular subjects are THE DAVIS STIRLING ACT IN PLAIN ENGLISH (book), ENFORCEMENT, BOARD BASICS, ARCHITECTURAL AND LEASE LIMITATIONS series (primers) and the RECALL and INSPECTORS OF ELECTION guides.
I have a private law practice in Pleasant Hill, but serve homeowners association and homeowners throughout the State of California. My practice is in large part now web based and telephone consultations are available. I have clients all over the state and am a real "road warrior".
Copyright © Beth A. Grimm, All Rights Reserved
Note - the credit card issue with the website is RESOLVED!! The merchant is friends
again with the server. Check out the Primers, Guides and Publications.
Let me know if you have any questions or problems.
Sign up for the next free E-News here:
Insert your Email address below to receive
the free monthly E-News!
Copyright © Beth A. Grimm, All Rights Reserved