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The

Accell Advisor

Save the Date!

Fall Landscape Priorities

By Tierra Verde Landscape, Inc.

Board Member Appreciation Night

October 30, 2013

October is the time to aerate turf areas. At mid-month, fertilize cool season lawns and reseed. Clean out v-ditches to prepare for winter rains. Avoid needless water runoff and remove debris from drainage areas. Summer has gone, and more moisture is in the air. Adjust the irrigation schedules to reflect the current changes in the weather. Be water smart! Remove diseased plant material, and cut back the native landscapes for fire safety. Make sure fuel modification zones have been cut back. Multiply plant material in the landscape. October is the time to propagate clumping perennials and bulbs (e.g. agapanthus, day lilies, and iris). Bait snails in planters to rid them from planter beds. Fall is the best time to plant trees. Trees establish roots during the winter and start their life strong in spring with new growth above ground. Rainy weather can bring new weeds to surface. Remove broadleaf weeds in turf areas and spray with post emergent.

Accell Property Management appreciates the time and energy our volunteer Board members put toward bettering their communities. To say Thank You, we would like to invite you to our third annual Board Member Appreciation Night. Join us on October 30th for hors doeuvres, refreshments, expert advice and prizes.

THE ACCELL ADVISOR

FALL 2013

Who is Entitled to Attend Board Meetings on an Owners Behalf? By Kai MacDonald, The Tinnelly Law Group
Membership rights with regard to the attendance and participation in Board meetings is an important component of the laws governing homeowners associations (HOAs). Civil Code Section 1363.05, known as the Common Interest Development Open Meeting Act, states that any member of the [HOA] may attend meetings of the board of directors This right is central to keeping HOA members apprised of the issues affecting their community and the ways in which the Board is discharging its duties under the HOAs governing documents. However, one issue that surfaces from time to time deals with the extent to which a HOA is required to allow a member to attend a Board meeting with her attorney, or to allow the members attorney or agent to attend the Board meeting on the members behalf. This issue may be complicated further if the owner of a property (the member under the HOAs governing documents) is an entity (i.e., a business organization or family trust). Fortunately, the recent case of SB Liberty, LLC v. Isla Verde Association, Inc. (SB Liberty), will help resolve this issue and will provide valuable guidance for HOAs moving forward In SB Liberty, members of the HOA, the Shorts, held their property in a family trust and eventually in a wholly owned LLC, SB Liberty LLC, which named the owners as a the designation managers and officers of the LLC. In relation to an ongoing architectural dispute between 2 the Shorts and the HOA, the Shorts requested that their attorney attend a scheduled Board meeting on their behalves. Upon being notified by the Shorts attorney of his anticipated attendance at the upcoming Board meeting, the attorney for the HOA informed him that he was not entitled to attend Board meetings, and that his attendance at the same would violate certain ethical rules prohibiting communications with represented parties without the permission of their counsel. Despite the HOAs denial, the attorney for the Shorts reiterated his intent to attend the meeting as the representative of his clients. On the day of the meeting, the Shorts attorney showed up as indicated, and refused to leave, forcing the Board to adjourn the meeting to another location. In response to the Boards denial, the Shorts executed a Specific Power of Attorney granting their attorney the right to attend board meetings on their behalf. Upon the Boards continued refusal to allow the Shorts attorney to attend the Board meetings, the Shorts filed the lawsuit in question, seeking an injunction against the HOAs refusal to grant their attorney repre sentative access to the meeting. The lower court found in favor of the HOA, and Shorts appealed. On appeal, the court found again for the HOA, noting that under Civil Code Section 1363.05, only members of the HOA are granted the right to attend Board
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THE ACCELL ADVISOR

FALL 2013

Governor Brown Signs Clean Up Legislation for Revised Davis-Stirling Act

By Robert M. DeNichilo of DeNichilo & Lindsley, LLP for CAI-CLAC

California Governor Jerry Brown recently signed SB 745 into law. The bill is a multi-issue omnibus bill, and as to community associations primarily acts to clean up some issues related to the reorganizing of the DavisStirling Common Interest Development Act, which becomes effective on Jan. 1, 2014. As enacted in 2012, AB 805 reorganized and rewrote the Davis-Stirling Act in a new part of the California Civil Code. As often happens with such a significant undertaking, items are inadvertently omitted, or changes in the law are not incorporated in time to be included in the bill. SB 745 serves to rectify those types of issues. One of the inadvertent omissions in AB 805 dealt with how a document could be delivered to an association. As enacted by AB 805, new Civil Code section 4035 allowed for documents to be delivered to an association in a wide variety of ways, including email, fax or other electronic means, or personal delivery if the association had agreed to such methods of delivery. However, mail was omitted as an acceptable way to deliver documents to an association. SB 745 amends section 4035 to also allow for delivery of documents to an association via first-class mail, postage prepaid, registered or certified mail, express mail, or overnight delivery by an express service center. In addition, two bills were enacted in 2012, which amended three provisions of the former Davis-Stirling Act (which is still current until the end of 2013). As both bills were enacted after AB 805, the provisions of those bills were not included in the new Davis-Stirling Act. SB 745 corrects this problem. One of the issues addressed by this correction is the requirement to have a person present at a physical location where members of an association can listen to the board transact business if a board meeting is held telephonically. As enacted, AB 805 required that at least one director be present at such a location. SB 745 amends Civil Code section 4090 to restore the option of allowing the person required to be present to be a 3

director or a person designated by the board. This gives boards some flexibility with respect to telephonic meetings, and allows for the board to designate someone, such as the associations manager, to be present at a physical location for members to listen to the board meeting rather than requiring that at least one director be present at the location. SB 745 also clarifies several of the new provisions in the new Davis Stirling Act. New Civil Code section 4205 provides guidance as to which of an associations governing documents controls if there is a conflict among the documents. As enacted in AB 805, there is some ambiguity as to whether section 4205 also defines when a conflict exists. As that was not the intention of the legislature when it enacted AB 805, SB 745 amends the language of section 4205 to avoid any misunderstanding regarding the purpose and intention of the statute. New Civil Code section 4070 is also amended by SB 745 to authorize an action that is required to be approved by a majority of a quorum of the members at a duly held meeting at which a quorum is present to, instead, be approved by a majority in a duly held election in which a quorum is represented, thereby also applying the statute to elections conducted by written ballot. Lastly, SB 745 amends the form for billing disclosures, and prohibits cancellation fees for requests for documents, as specified.

THE ACCELL ADVISOR

FALL 2013

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meetings. In relevant part, Section 1363.05 states that, any member of the association may attend meetings of the board of directors. Utilizing a combined analysis of 1363.05 and the definition of member set forth in the HOAs governing documents, the court determined that the right to attend and participate in Board meetings does not extend to attorneys, designated representatives, or any other party, other than the owner of the property. The court then clarified who may attend Board meetings where an entity, such as SB Liberty, owns property within a HOA. Per the terms of the Corporations Code, the court noted that the business affairs of such entities (LLCs) are managed by either (1) the members, or (2) the manager set forth in the articles of organization. As such, the court concluded that only those individuals are entitled to represent the interests of the LLC during Board meetings. As the Shorts attorney was not an authorized manager or member of SB Liberty, LLC, the court determined that there was no basis, either under California statute or the HOAs governing documents, which supported his right to attend the Board meetings.

In closing, the court noted that in light of their finding that only members have a right to attend Board meetings, it logically followed that the Board had the authority to determine how to conduct its meetings and, thus, the power to prevent a non-member from attending and participating in those meetings. Although the courts ruling in SB Liberty provided much needed clarification with respect to the issue of whom is entitled to attend Board meeting, it is important to note that governing documents vary from HOA to HOA, and may therefore contain language granting additional rights or imposing further limitations. As such, prior to denying a non-owner, such as an owners attorney, access to a meeting, the Board should perform a thorough review of the language contained in the governing documents, and if necessary, seek the guidance of the HOAs legal counsel.