How to Petition a California Judge/Court for No HOA Board?

I just obtained a property where the HOA has not had a Board of Directors for over 4 years. Our CC&Rs have no mention of process in this instance and we cannot simply come together to vote a new board because one of the members (who has stopped paying dues) is an attorney and is threatening to sue if we do. I researched Davis-Sterling in California and if a Board has not been in existence for more than 15 motnhs (we're at 4 years now) then a judge/court has to be petitioned to set a date and procedure for nominations/elections. Does anyone know how I can do this, and is it Civil court or small claims? I think small claims is only for damages but can anyone PLEASE help? If I do not get this resolved soon no lender will give us a loan for property and we will lose it. Thank you in advance!

I was trying to avoid that by seeing if small claims was an option but if Civil court is only option then yes we will need an attorney.

Tim. First thank you so much for your response, you have no idea how much I appreciate it.

Everything you're saying is exactly what I read as well however I was wondering what happens if all the last Board members retired? Does it defer to the previous years board members?

Also are you an attorney that would be available to hire?

Why are you bowing down to a lawyer threatening to sue? He's not a very good lawyer if he is... Suing your HOA is suing yourself and your neighbors. So I wouldn't let his empty threats discourage me from finding out how to re-establish your HOA.

First I would read your CC&R's and Articles of Incorporation. Find out where the money is. Maybe your HOA has a management company? Your checks have to be going somewhere.

It's best to start with the basics and gather as much information on the situation you can before starting. You may find some of the groundwork is already laid. No use in re-invented the wheel if there is something in existence.

Do NOT expect overnight results. It takes time and ALOT of head slamming. I tell people that it takes about 2 years to change your HOA around and get it's footing. It is around the 3rd year your HOA is going to sink or swim. My HOA had a crooked President and a huge no participation issues. When I left 3 years later, the president was out of office and people were fighting over board positions...

PS. No one here is a lawyer. Mostly just seasoned HOA members who are here to help.

As Tim suggested, visit davis-stirling.com for those HOA attorneys' opinions on many CA topics. Scroll down their main Index to Board of Directors and start by reading "Board Required."

That assumes you're a corporation, which most HOAs are. You didn't mention your bylaws, but check those. Also check Calif. Corporations Code.

As Melissa says, don't worry about the attorney deadbeat in this HOA. But... are you saying you're closing (or have closed) escrow without getting your bank loan?

*the root of the problem...

This is from http://www.davis-stirling.com/tabid/1365/Default.aspx

"Board Required. Corporations are required to have a board of directors:
Each corporation shall have a board of directors. . . . the activities and affairs of a corporation shall be conducted and all corporate powers shall be exercised by or under the direction of the board. . . . the activities and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the board. (Corp. Code §7210; §300.)

"Without a board, a corporation cannot conduct business, which means insurance coverage will lapse, maintenance ceases, rules enforcement ends, the association's corporate status lapses and lawsuits cannot be answered. This exposes each owner to potential liability. Resignations by all directors without appointing replacements may also be a breach of the resigning directors' fiduciary duties."

Josh, it would help immensely if you could cite the section of code that requires going to court when the board has been dormant for more than 15 months.

Upon reading the portion of the bylaws you cited about the board nominating candidates, I would recommend going to court anyway to strike that provision as it creates both an impossibility, as in this case, and an unfair requirement that restricts candidacy to those favored by the board. Hire an attorney and file an action against the association and your mortgage lender (to put the foreclosure on hold until the HOA issues can be resolved.)

You should also read up on Civil Code §5105(a)(3). Davis-Stirling indicates that this section of the Civil Code renders nominating committees, such as the one you cited, moot.

"Rendered Moot. Although most association bylaws provide for nominating committees to screen people to serve on boards, such committees were made moot by Civil Code §5105(a)(3). Nominating committees can still be appointed by boards and can still solicit candidates but they can no longer reject qualified candidates."
http://www.davis-stirling.com/tabid/1903/Default.aspx

Let that bar-stool lawyer suck on that one.

Again, Josh, what do your bylaws say?

The bylaws say that a Board member has to appoint a nominating committee chair to organize the election.

Just how are the taxes and the insurance on the common areas paid?

I am confused. Why do you need this HOA board formed? Is it because you are denied a loan? Why is the loan denied because the HOA board is non-existent? I am not sure how the two correlate?

I have read the documents multiple times and now I am trying to get through Davis-Sterling to establish anything that states that in the absence of a Board that the members can elect a nomination committee chair/Board Members, and I believe I have found it: Civil Code §5105. Election Rules

The language used is :

"An association shall adopt rules, in accordance with the procedures prescribed by Article 5 (commencing with Section 4340) of Chapter 3, that do all of the following:
*Scrolling down to part B*
(b) Notwithstanding any other provision of law (*I'm not an attorney but I believe this means that despite what your CC&Rs or Declaration say abide by this:*), the rules adopted pursuant to this section may provide for the nomination of candidates from the floor of MEMBERSHIP meetings or nomination by any other manner. Those rules may permit write-in candidates for ballots.
This statement overrides what our CC&Rs from 1980 say which is that only a Board member can select a nomination committee official/other Board members, correct?

As for the finances, it is handled by the other neighbor who was one of the last official members of the Board 4 years ago, we have financial records from our accountant that were combing through now but everything seems to be in order with finances in the sense that the bank records match what the accountant is writing on the statements. Now when we get a reserve study done (assuming this all works out) what that shows will be another story.

One more question, what is the difference between a HOA and COA legally? I ask becuase he is now stating that "these rules apply to an HOA but we are condos so we are a COA... "

Just to be clear, I am moving forward with this regardless, any risk we take on will not override the benefits of obtaining this property for family. I just would like to present as much legal justification/information to him as possible to deter him from thinking I wont do my due diligence and be pressured like he has successfully done to the other 4 members up to this point. We just walked into this property officially and are trying to cultivate an open voting environment while being firm (not abbraisive) with him as he makes it difficult. I have no problem being a board member and getting the board in order.

The accountant, if they are doing their job correctly, will know who were the last Board members. In addition, who is making decisions on behalf of the association. The accountant can't.

That being said, with just 5 units, your situation is very common. With just the 5 units, one person needs to file a petition to hold an election and two need to step up to the plate and serve.

Then how are things like pools, clubhouses and the like taxed?

He inherited the condo, but can't assume the loan. So now he can't get a new lion because of the board issues. I assume that the board has to issue a statement regarding taxes, insurance dues and loans. And if they don't exist then they can't issue any statement.

So glad to hear your grabbing the HOA by it's legal horns and are confident in doing so! It's just not rocket science anymore in figuring this stuff out. Good luck and the best piece of advice I ever got was to have a separate email for all board activity. I doubt I have to explain the why of it given the recent political scandal(s).

excellent advice Larry!

Josh,

I assumed that the association is incorporated. If it is incorporated I believe you can check the status on the secretary of state's website. Most states require corporations to file some sort of annual report on a form they supply and pay a fee. Failure to file and/or failure to pay normally results in administrative dissolution. Reinstatement to good standing is normally as simple as filing the delinquent reports and paying all the fees and past-due charges. You will also need to see whether there are any outstanding income taxes. Others on this forum are better versed in this than I am but my understanding is that all corporations in CA have a minimum tax of $800 per year. (A good reason for a small association to be unincorporated.)

If your association is not incorporated, then none of that applies. Once you have a new board you should be good to go.

In most associations, a person who is delinquent in paying his assessments is not eligible to vote. Your attorney/owner has deprived himself of his own voice in association affairs. Tough.

Regarding that jerk, common law holds that a person who is receiving the benefits of owning or using property in common with others has a legally-enforceable duty to contribute to maintaining the property. Your neighbor is trying to get a free ride at everyone else's expense.

Is this true? It literally has to say "Election RUles" in our CC&Rs/Declaration. Our says "Procedures for nominations and elections" or something like that but are you saying because its not those exact words that the Ca Civ. Code doesn't apply?

"An association shall adopt rules, in accordance with the procedures prescribed by Article 5 (commencing with Section 4340) of Chapter 3, that do all of the following:..."

This was instituted in CA Civil in 2006. And all HOAs are supposed to have Election Rules as a separate document from CC&Rs & bylaws. What I'm saying is that you can't refer to your Election Rules to support, say, nominations from the floor, because your HOA never adopted any Election Rules. Richard can point out that many HOAs never bothered to craft them.

Look, I think you four owners can each chip in enough to hire an HOA attorney for an hour or two to help you. But I still like Larry's idea. Act together to amend th bylaws following CA procedures as Larry suggests.

Thank you Kerry, Larry and Richard. We are NOT incorporated. We don't have articles, and were not on the Sec. State website. Other owner said they tried previously but lawyer threatened to sue again.

Last thing Richard: I understand everything now except one clarification... Both our CC&Rs AND Declaration (Both from 1980) have "Procedures for Elections" in them but we do not have any Separate stand-alone document titled "Election Rules" or anything else stand-alone even close to that. So to best of your ability with your experience does that mean Civil Code §5105 governs what's in our CC&Rs/Declaration or CC&Rs/Declaration govern?

Richard, I’m sorry please allow me to clarify better. I have already compared our compared our CC&Rs/Declaration from 1980 with Davis-Sterling, Ca Civ. Codes and to me it is clear (or until your response it was) that the law governs in our situation. I am also familiar with the hierarchy established by Civ. Code 4205 as well as familiar with the language “Shall,” Not withstanding other documents,” and “Unless the governing documents specify otherwise..” etc. With all these things considered I have (at least I thought) established that the Ca Civ. Code 5105 (a)(3) & (b) prevents ONLY a Board Member being able to establish a nominating committee/nominations and overrides our governing documents with Ca authority/hierarchy established by Ca Civ. Code 4225 “Deletion of unlawful or restrictive covenants.”

So again please allow me to restate and re-ask. I thought using the above argument I established that this attorney cannot prevent us from holding a Member Meeting and nominating ourselves for office, however now there is mention of a document “Election Rules” which if I understand governs if they exist outside of CC&Rs/Declaration instead of Ca Civic code 5105. So my question is:

All things considered, even though we do have Procedures for selecting nominations ONLY by a Board Member and procedures for electing a Board WITHIN our CC&Rs/Declaration, do these procedures override Ca Civic Code 5105 -OR- is it because of a new statute (since 1980) that a SEPARATE document called “Election Rules” (or similar), outside of our 1980 CC&Rs/Declaration, has to be established and/or recorded with the County in order to override Ca Civic Code 5105?

Richard

With your experience in CA, what do you think of Larry's suggestion to Josh about make each owner (5) a permanent member of the BOD? This assumes they are a member in good standing otherwise they are suspended for the BOD until they are such.

Only thing they might have to do is hold an election of Officers each year and if some stepped forward and all are happy this does not mean they even have to have an election.