Request for Consultation

by Beth A. Grimm, Esq.

Common interest developments are continually being built in California. It is a popular form of "affordable" housing and certainly generous in profits for developers. Most are managed by homeowners associations (HOAs), with or without professional help. At present, estimates are that there are more than 40,000 HOAs in this state, housing somewhere near or over 7 million residents. And the demands on HOAs are continuing to grow. Each year the legislature proposes complicated, technical, and service driven regulatory laws and each year compliance costs increase for HOAs.

The "public eye" certainly is on HOAs. They have become a target of many, and a favorite for negative press, public disdain and lawsuits. Ironically enough, newspapers engender a strange dichotomy. While in the Real Estate sales section the news communicator touts the "care-free" living, affordability, various amenities, "no maintenance worries", and benefits of "lock and go", the Homes section may concurrently carry an HOA "horror story". Residents look to Boards to protect them and provide beneficial services, while at the same time, criticizing them for enforcement of a particular rule that affects them individually. This promotion of "bad news sells papers stories" and contradiction in demands engenders quite a bit of negativity. It used to be that everyone had a bad divorce story. Now its - everyone has a bad HOA story. Often, though, the "bad story" turns out to be a power struggle - "My home is castle vs. another layer of "municipal type" of restrictions. Anecdotal incidents promote constituent pressure on legislators, legislators introduce detailed and complicated laws that ignore governing documents like the Declaration of Restrictions, and the cycle continues - resulting in more and more legislation that is extremely difficult and costly (if not impossible) to implement in a practical sense.

And of course ...there is the other thing ...lawsuits are ever popular in this state and HOAs are seen as just another deep pocket to many. Because of legislation that is creating a complicated maze of technical requirements for almost every function of the HOA, the job of (volunteer­ yes, it is true that they are not paid!) board members is getting harder every year. The impact of Megan's Law Internet lists is yet another example of where boards are caught between a rock and a hard place. Lest, you think I think the lists are a bad idea, you are wrong. But take a look at the dilemma board's face and see how comfortable you might be in making decisions that have serious legal ramifications.

The questions: What is an HOA to do when a resident demands that it notify the residents that there is a sex offender living in the neighborhood? What is the Board to do when it discovers a board member is a convicted sex offender?

The advice has to be: be very careful. HOAs are getting a myriad of answers from attorneys. Some attorneys suggest getting aggressive and others are more conservative. The issues are complicated and numerous.

If the problem is that the Board finds a Director is a convicted sex offender (felony), and the Bylaws for the Association state that no convicted felons may serve on the Board, the Board can ask the Director to step down, and if he or she does not, could vacate the position - but only if the Bylaws contain the qualification requirement. Can the Board ask him or her to move? I would say that doing so could lead to liability, especially if the "request" could be perceived as harrassment or a misuse of the information gleaned from Megan's law lists.

As to the other question, residents want action when they find out there is a sex offender in the neighborhood. Some want the person evicted. Some want posters posted or flyers circulated, warning of the danger. Some want organized picketing. Most want protection. If the HOA takes action and makes an announcement about a sex offender living in the neighborhood, the members will then assume unrealistically, and unreasonably, that the HOA is responsible to protect them. They probably do anyway. Boards do have certain responsibilities when it comes to addressing known dangerous and hazardous situations, in most, if not all, cases. But they have to consider the other side.

For example, a public outcry in the Association could devalue the property in the HOA. The members affected (imagine someone trying to sell) may threaten the HOA with liability and losses for misuse of the information.

Those in law enforcement and in tune with both sides advise prudence and regard for the privacy of the individual because they know that if convicted sex offenders are harassed and their civil rights are violated, the laws approving the Internet lists will likely be pulled back, and the violators of the constraints on use of the Internet information are subject to severe punishment. And no less important, anyone who promotes harassment of a convicted sex offender could be sued.

Why? There are statutory penalties in California for misuse of the internet list.

Penal Code Section 290.46(h)(1) signed into law September 24, 2004, provides for some very stiff penalties. It says "Any person who uses information disclosed pursuant to the Internet Web site to commit a misdemeanor shall be subject to, in addition to any other penalty or fine imposed, a fine of not less than ten thousand dollars ($10,000) and not more than fifty thousand dollars ($50,000)." Subsection (2) says "Any person who uses information disclosed pursuant to the Internet Web site to commit a felony shall be punished, by a five-year term of imprisonment in the state prison." Subsection (j)(1) says: "A person is authorized to use information disclosed pursuant to this section only to protect a person at risk." (My emphasis.)

The Attorney General California site on Megan's law contains the following disclaimer which visitors must accept before getting into the web site:

"A person may use the information disclosed on the Attorney General's Web site only to protect a person at risk. It is a crime to use the information disclosed on the Attorney General's Internet Web site to commit a misdemeanor or felony. Unless the information is used to protect a person at risk, it is also prohibited to use any information that is disclosed pursuant to this Internet Web site for a purpose relating to health insurance, insurance, loans, credit, employment, education, scholarships, fellowships, housing, accommodations, or benefits, privileges, or services provided by any business. Misuse of the information may make the user liable for money damages or an injunction against the misuse. Before using the information disclosed on this Web site, you may want to consult with an attorney or merely suggest to others that they view the Web site for themselves."

Additionally, one has to click past the following warning to get into the site:

"Legal and Illegal Uses. The information on this web site is made available solely to protect the public. Anyone who uses this information to commit a crime or to harass an offender or his or her family is subject to criminal prosecution and civil liability. Any person who is required to register pursuant to Penal Code section 290 who enters this web site is punishable by a fine not exceeding $1,000, imprisonment in a county jail not exceeding six months, or by both the fine and imprisonment. (Pen. Code, § 290.46, subd. (h)(2).)"

That disclaimer page also says:

"Mistaken Identities. Extreme care must be taken in the use of information because mistaken identification may occur when relying solely upon name, age and address to identify individuals."

It is possible that information provided to the association by any owner or other source could be incorrect and result in a mistaken identity. Even if the information is correct, you can see that information provided on the Attorney General's web site identifying registered sex offenders is for limited use, and that is only to " protect a person at risk." Certainly, one could argue that every child in the association is at risk if there is a sex offender in the neighborhood. But that mindset may lead to liability. And most importantly, perhaps, California law punishes persons who perpetrate harassment of offenders or their family members. If you think for one minute that all residents in an association will act rationally upon a neighborhood notice that there is a sex offender in the neighborhood, think again. If there was harassment as a result, in the eyes of the law, responsibility would likely be found to begin with the republishing of the information from the list.

The California Apartment Association published a 2005 news alert saying that California landlords are "trapped between two conflicting state laws: one prohibiting discrimination against sex offenders, and another exposing them to litigation if they fail to protect tenants from individuals known to be dangerous." The same could be said of homeowner associations. HOAs have been held to the same standard as landlords in some cases examining tort liability and discrimination. In Frances T V. Village Green Owners Association (42 Cal.3d 490, 723 P.2d 573, 229 Cal.Rptr. 456), the Supreme Court of California found that a condominium association could be "held to landlord's standard of care as to common areas under association's control" and that the Board "...had a duty to exercise due care for residents' safety in those areas." This case is still good law.

So what is a Board to do? Some HOAs on the East Coast have amended the property restrictions such that they would prevent sex offenders from living in the development. Sex offenders are not a protected class of citizens, so why not? Living in an HOA has been likened to "living in the same house" as other residents because of shared amenities such as recreation rooms, pool facilities, saunas, and shared showers, etc. However, the jury is not "out yet" on whether these amendments are a good idea, or fraught with civil rights issues (at least there is no appeal case pending that I know of - yet!). Some commentators believe that these HOAs are inviting lawsuits based on a violation of civil rights. And others believe that passage of such a measure would invite a false sense of security since many offenders fail to keep the registry current or even register at all. And obviously, not all molesters are convicted sex offenders and not all convicted sex offenders are molesters. If a Board is trying to enforce such a covenant, how likely is it that any investigation into a resident will lead to a harassment or civil rights violation, or inconsistent treatment claim (which by the way, in California and some other jurisdictions, is the number one cause of Director's and Officer's liability insurance claims). Additionally, these Eastern States may not have the liberal protection in place for offenders that California has in the form of legislatively mandated criminal penalties for misuse of the information on the list.

So what should an HOA Board do when receiving particular information about a convicted sex offender? Clearly, a Board can provide information to the HOA members reminding them that they have the option of taking steps to protect their own children and family members by checking the National Registry of Sex Offenders or the California Megan's Law List, and by searching for other suggestions on the web. Anyone can do an Internet search on "Megan's Law" and find national and state registries. The California site is maintained by the Attorney General's office and is located at www.meganslaw.ca.gov. If an Association uses this approach, I believe it wise to include a disclaimer that says the HOA does not check this registry or publish information from it. Some landlords do this in their leases have a disclosure like this to protect themselves. I would also suggest that an Association, if it sends such a notice, to include verbiage of the warnings using direct quotes from the site. People who have not been to the site tend to assume that the information is there for the taking, and public use, without restrictions or reservations. Thus, if they received information about someone without going through the site, they might charge forward unaware of the consequences.

The other question that often arises is whether the HOA should disclose to an owner that his or her tenant is on the sex offender registry. Landlords that overtly exclude convicted sex offenders subject to registering are liable to be sued. If the HOA notifies the owner that it has received a report that the tenant is a registered sex-offender, the HOA should include information that the owner can check the public list to verify the information for themselves, and in my opinion should also provide a cautionary note that there are potential legal ramifications if the landlord misuses the information against the sex offender. If the HOA gives notice of the offender's presence without the disclaimer, and especially if the HOA encourages or makes a demand that the landlord take action against the tenant, it could lead to liability. If the owner is not aware of the risks a landlord has if they exclude a registered sex offender or tries to evict them on demand of the HOA without other cause, and the landlord is sued, he or she will surely try to pass on any liability to the HOA responsible for the demand.

The most conservative (and perhaps best) approach for an HOA, in my opinion, is to stay out of the owner/tenant relationships and refrain from any action other than sending a periodic reminder (disclosure if you will) that the list is available and that it is not the HOA's responsibility to either follow the list, check it, or take any action if there is a registered sex offender in the neighborhood. Use of wording indicating that the purpose of the list is for individuals to check it, and take whatever precautions the individual feels necessary for personal protection or protection of their children and/or family would help explain the HOA's position.

copyright 2006, Beth Grimm - all rights reserved.

By Beth A. Grimm, Attorney. A "service oriented" attorney and member of ECHO and CAI and various other industry organizations in California and nationally, host of the website www.californiacondoguru.com; two Blogs: California Condominium & HOA Law Blog, and Condolawguru.com Blog, and author of many helpful community association publications which can be found in the webstore on her site.