Board of Directors to Eliminate all Davis Stirling Language from CC&Rs

Started by WendyP4 • 28 replies • 1151 views

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WendyP4 (California)
Posts: 9

Posted:

Hello,
I'm new here, from California, and signed up to get perspective on an issue regarding my board of directors, and their attorney.

We are a Planned Unit Development, an age restricted community, in the State of California. The board, and now their new attorney, claims that the Davis Stirling Act, which governs HOAs, doesn't apply to our HOA, because we didn't purchase the club house around 20 years ago. (The HOA never owned it, just opted not to purchase it) They ignore the CC&Rs and the DSA, and "rightly so", according to their new attorney.

Our CC&Rs clearly state that we are a Common Interest Development, subject to Davis Stirling and that our walkways are common interest public areas.

The board has been ignoring the CC&Rs and the DSA for years, failing to provide disclosure at escrow for new homeowners, illegally raising dues, imposing illegal fines and refusing any kind of Due Process. I believe that they are in "Breach of Contract". They argue they can charge us whatever they want, whenever they want, and threaten us regularly with liens and non-judicial foreclosure.

Can the board hire an attorney to rework our CCR&s to eliminate all DSA language from all our governing documents? If the membership votes for their changes, is that vote binding, and we're officially out from under the umbrella of Davis Stirling? If so, how will that affect our UNRUH qualifying resident special senior citizen rules and status?

Thanks for reading
Wendy

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I am not from California but I believe the Davis rules are a state wide requirement. Sure the other Cali posters will respond with much better accuracy.

There was just a few areas wanted to comment on. A HOA doesn't necessarily need to disclose anything at closing/escrow. It's the seller that has to turn over the CC&R's and Articles of Incorporation to the buyer in most states. So the HOA play little role in closings except in cases of FHA type loans. That then is a requirement to fill out a HUD form. Which the seller/buyers do not see.

Enforcement of fines is very difficult in a HOA. They have to have a fining schedule and allowed to enforce them. NOT all HOA's can enforce them. It has to be written in the CC&R's they can. Plus a fining schedule has to be established and known to all members. Fining schedule is if someone leave a garbage can out it's a $25 fine till it is put back up as an example.

I think if this is your and other members idea of getting rid of the Davis Sterling requirement. It is a mistake. Not worth the money or effort.

Others here know California rules more than me. That is just my 2 cents....

Former HOA President

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By WendyP4 on 04/15/2018 12:22 PM
Hello,
I'm new here, from California, and signed up to get perspective on an issue regarding my board of directors, and their attorney.

We are a Planned Unit Development, an age restricted community, in the State of California. The board, and now their new attorney, claims that the Davis Stirling Act, which governs HOAs, doesn't apply to our HOA, because we didn't purchase the club house around 20 years ago. (The HOA never owned it, just opted not to purchase it) They ignore the CC&Rs and the DSA, and "rightly so", according to their new attorney.

Our CC&Rs clearly state that we are a Common Interest Development, subject to Davis Stirling and that our walkways are common interest public areas.

The board has been ignoring the CC&Rs and the DSA for years, failing to provide disclosure at escrow for new homeowners, illegally raising dues, imposing illegal fines and refusing any kind of Due Process. I believe that they are in "Breach of Contract". They argue they can charge us whatever they want, whenever they want, and threaten us regularly with liens and non-judicial foreclosure.

Can the board hire an attorney to rework our CCR&s to eliminate all DSA language from all our governing documents? If the membership votes for their changes, is that vote binding, and we're officially out from under the umbrella of Davis Stirling? If so, how will that affect our UNRUH qualifying resident special senior citizen rules and status?

Thanks for reading
Wendy

Wendy

Shoot me an email and I will point you in the right direction for a remedy. The address is [email protected]

MarkM19 (Texas)
Posts: 1,459

Posted:

Wendy,
I am shocked that any board would try and take on this dumb task. In Ca. the DSA is the Bible for HOAs. Do they really think they can rewrite Documents that can cover all of the many issues that can come up?

Next issue after they do all of the legal work rewriting the CCRs is getting any HOA members to take the time to read and agree that this should be changed. It takes a Super Majority for this to happen. Before I left my board we tried for years to update our CCRs to the new DSA language and make some minimal changes and we could not get near a quorum to pass. It cost us over 30k for legal, printing and mailing cost. It is a big deal and I don't see it happening in your case.

WendyP4 (California)
Posts: 9

Posted:

It was shocking to hear their new attorney address the senior citizens that attended the last open meeting, 35 or so of us, around 10% of the membership, stand their and defend the board's decision to ignore the CC&Rs and the SDA because the CC&Rs are "wrong".

I was the only one at the meeting to stand up and say, "We elected the board to enforce the CC&Rs and follow the law, and until one of those are legally changed, they are valid and need to be followed and respected". I received a mob of personal insults as some people shouted to silence me! The rest looked like deer caught in headlights.

I warned them that if they abandon DSA they may lose and have to re-litigate their senior "Qualified Resident" rules, and may face a discrimination law suits if they deny a family residency without the protection of DSA. Now, I'm thinking that I may be wrong, and that their senior status doesn't have to go federal, that they may be protected under UNRUH alone.

Even so, you're right. Who are they to think that they can rewrite our CC&Rs to protect our interests, authority and our rights better than DSA? CRAZY! (Not that DSA is perfect, mind you)

WendyP4 (California)
Posts: 9

Posted:

Thanks for your input Melissa, in my case the owner was Fanny Mae. They sent a formal request, through the escrow agent, to transfer their "right to a SDA legally compliant list of required disclosure documents" and paid a $200 dollars transfer fee to the HOA. But the HOA responded deceptively, telling the escrow agent that "there is NO contract for the homeowner to acknowledge", "we are not a common interest and we have no governing documents". I had to sign a document to release the escrow company of liability for not being able to provide me with the documents, in order for my escrow to go through.

The HOA clearly violated the DSA "Transfer Fee" law, which is up to a $500 dollar fine, per offence."

KerryL1 (California)
Posts: 14,550

Posted:

I've added the below from davis-stirling.com, Wendy, which seems to show that your PUD is a CID and therefore is subject to the Davis-stirling Act
(To others Davis-Stirling isn't our bible or our rules; it's the law in CA)

"Legal Structure. The court in Mount Olympus POA v. Shpirt (1997) described the basic elements of a common interest development as follows:

For a development to fall within the governance of the [Davis-Stirling] Act, the statutory requirements are clear: (1) there must exist a common area owned either by the association or 'by the owners of the separate interests who possess appurtenant rights to the beneficial use and enjoyment of the common area' (Civ. Code, §§1351, subd. (k)(1), 1374); (2) there must have been recorded "[a] declaration," "[a] condominium plan, if any exists," and "[a] final map or parcel map" (id., §1352); and (3) there must have been conveyed "a separate interest coupled with an interest in the common area or membership in the association."

What kind of attorney did the Board hire? Why does the Board want to eliminate D-S from your docs? What state laws DO the Board and attorney think will protect homeowners??
Given your HOA size, you probably have a Management company, yes? What do they have to say about this very expensive project that would seem to be wrongheaded.

I'm curious about the exact wording in your current CC&Rs re: the Davis Stirling Act. Can you share them with us, Wendy?

I'm sure Richard, a CA Property mgr., will be of good help to you, Wendy.

WendyP4 (California)
Posts: 9

Posted:

In the Recitals, it is stated:
"There currently exists upon the above described real property a Common Interest Subdivision subject to the provisions of the Davis-Stirling Common Interest Subdivision Act. Civil Code 1350 Et Seq"

Also, in the Covenants it is stated:
"Paved walkways have been established throughout the development for the common use and enjoyment of all residents."

The kind of attorney that the board hired is the kind that can be paid to support our crazy dictator BOD's illegal whims! You can hire an attorney to defend almost any claim! The pesky DSA is in the way of their iron fisted tactics of suspending elections and voter rights, illegally raising dues and imposing illegal fines, filing liens and threatening foreclosure on confused and terrified senior citizens, because "DUE PROCESS"! They like to pick and choose what authority and rights offered by the DSA they will recognize, and homeowner rights are not among them. Heaven forbid new homeowners get wind of the rights afforded them in the governing documents! LOL That's why they don't want to disclose at escrow.

KerryL1 (California)
Posts: 14,550

Posted:

Yes, you mentioned your common area above-paved walkways. You might have other common ares too, which would be reflected in your reserves study.

Sorry, by "kind" of attorney, I meant did they hire an HOA attorney?? I doubt any legitimate HOA attorney would take the D-S verbiage out of your CC&Rs. Any CID must a comply with Davis-Stirling statutes so how can "it" be taken out of your documents?

Assuming your HOA has monthly open meetings,

By any chance are any of the protections offered by D-S to owners in your Bylaws??

do you have enough supporters that you can get several of you to chip in and hire yur owwn HOA attorney for a couple of hours for a written opinion on your problem?

I ased about a property manager: got one? If so, it's possible their contract says they aren't obligated to follow any board directives that oppose your governing docs.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I want to clarify something. The HOA isn't responsible for providing the CC&R's or Articles of Incorporation. There is no "contract" to sign with them on these. Most states require the seller to provide these or you have to get them yourself. They are public documents.

So I can't say the HOA misspoke when they said they have no contract to sign. There isn't one in that context. Now for the transfer fee charges, that is something some HOA's do for other items. Ours did not. If you got a Fannie Mae or other government backed loan, they may charge for filling out the HUD form. It's a 25 questionnaire that the HOA fills out at closing. Most people don't even know it exist. It's really between the mortgage company and the HOA. It's basically an "assessment" of the HOA. Of which it provides the lender an idea of how risky it is to loan money to buyers/refinancers.

Some HOA may charge money to fill out this form. As it does require someone to go to their office to fill it out or provide it. So you may want to find out what is meant by the "transfer" fee they charge. It may be related to the expense of paperwork that has to be done to add/change information to the HOA records.

Former HOA President

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Transfer fees are quite common. I have seen some as high as 1% of sales price going to the association, not the MC. Most MC's also have a transfer fee. Bottom line is, like it or not, there could be several transfer fees in one sale.

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By JohnC46 on 04/16/2018 5:30 PM
Transfer fees are quite common. I have seen some as high as 1% of sales price going to the association, not the MC. Most MC's also have a transfer fee. Bottom line is, like it or not, there could be several transfer fees in one sale.

The 1% transfer fee you cite would go to the city/county. In California, HOA's on their own can't collect transfer fees. MC's will generally charge $100.00 to $300.00 per escrow.

WendyP4 (California)
Posts: 9

Posted:

Here's some information on California transfer fee law: https://www.echo-ca.org/article/hoa-transfer-fee-laws-selling-or-transferring-property

The fact that the HOA answered the demand letter (for documents) and took the cash, but turned over no documents is problematic. Also, they wrote there is "no contract for the homeowner to acknowledge", not "sign". They DO have governing documents which according to their attorney serves as my contract with the HOA, but the HOA misrepresented that fact. That's their bad. My escrow company alerted me to the wonkiness.

The attorney told me that their "bad" doesn't change the law or my obligation to the CC&R's contract.

I'm not upset about the transfer fee. I don't have a problem with the CC&Rs, I have a problem with board refusing to honor them. They don't regularly honor the "open meeting" laws either.

Also, there is no "reserve fund" because the board refuses to acknowledge our "Common Interest" status.

KerryL1 (California)
Posts: 14,550

Posted:

Thank you, Richard. If you have anything you offered that would be useful for other CA HOAs, please share them. We have a few who post fairly often and maybe u others who read these posts.

(The OP said nothing about "transfer fees" anyway so a discussion of them doesn't help her.)

Where Melissa Is on base is that the Seller must provide the docs and many, many other prior to the close of escrow. The Seller gets these from the HOA, in our case for our Property Manager. Davis-Stirling requires numerous disclosures go to the buyer, not just the governing documents. Actually CA requires lots of disclosures to buyers whether in HOAs or not.

RichardP13 (California)
Posts: 3,868

Posted:

Posted By KerryL1 on 04/16/2018 6:12 PM
(The OP said nothing about "transfer fees" anyway so a discussion of them doesn't help her.)

Do you even read what people post or don't you have time for that? Please re-read comments before making condescending remarks!

RichardP13 (California)
Posts: 3,868

Posted:

The attorney the HOA hired improperly filled out the SI-100 form and filed with the Secretary of State. The President filed a SI-CID which acknowledges they are a common interest development (CID).

The attorney's office has a page stating they have experience in HOA's, but from what the OP is saying, that may not be true. There page citing experience in handling HOA resolutions is garbage and full of inconsistencies with how HOA actually work.

KerryL1 (California)
Posts: 14,550

Posted:

Sorry, Richard, my "transfer fee" remark was forMelissa & JohnC. don't know why they brought it up.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

We brought it up because the OP did. They mentioned them paying a $200 transfer fee and the HOA response was "We have not contract to sign". Which I think is confusing to the OP. As there is no actual "Contract" or "Agreement" signed directly with your HOA. It's the CC&R's that are binding to the property and the HOA is formed to enforce/manage them.

So if you think there is an actual piece of paper you sign with your HOA to say your a member, it doesn't necessarily exist. It's basically you buy the land that has restrictions on it. Once purchased you agree to those restrictions. I think the OP was looking for something more like a contract that "I attest I am a member of said HOA/common interest group". The HOA doesn't provide this information as it's not their responsibility. It's either seller or your own responsibility per whatever state you live in.

The transfer fee is something varies HOA's may charge. One of the reasons is for filling out paperwork or other reasons. It's not illegal. It's just a processing fee the HOA may charge for a variety of reasons.

Former HOA President

WendyP4 (California)
Posts: 9

Posted:

Melissa,
The operative word here is not "sign" but "acknowledge". Every homeowner MUST acknowledge the CC&Rs. According to their new attorney, the CC&Rs are a contract between the homeowners and the HOA.
The owner of the home, in this case Fanny Mae, filed the appropriate paper work to assign the HOA the task of transferring the disclosure documents, and the HOA set and accepted the fee. But, the HOA didn't fulfil their end of the contract with Fanny Mae, and misled me, the prospective buyer about the nature of their HOA.

This is just one example of many violations of the DSA that this board is guilty of.

KerryL1 (California)
Posts: 14,550

Posted:

Thanks for clarifying, Wendy. In any case, though it is one example, it's those teeny tiny potatoes compered with the much more serious issues of due process, failure to disclose before the close of escrow, etc., etc.

So, Wendy, Does your HOA have an MC? And how t do they fit into this snenario?

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By MelissaP1 on 04/17/2018 5:15 AM
We brought it up because the OP did. They mentioned them paying a $200 transfer fee and the HOA response was "We have not contract to sign". Which I think is confusing to the OP. As there is no actual "Contract" or "Agreement" signed directly with your HOA. It's the CC&R's that are binding to the property and the HOA is formed to enforce/manage them.

So if you think there is an actual piece of paper you sign with your HOA to say your a member, it doesn't necessarily exist. It's basically you buy the land that has restrictions on it. Once purchased you agree to those restrictions. I think the OP was looking for something more like a contract that "I attest I am a member of said HOA/common interest group". The HOA doesn't provide this information as it's not their responsibility. It's either seller or your own responsibility per whatever state you live in.

The transfer fee is something varies HOA's may charge. One of the reasons is for filling out paperwork or other reasons. It's not illegal. It's just a processing fee the HOA may charge for a variety of reasons.

I don't know what Alabama does and really don't care. This is a California matter and your interpretations DON'T apply here.

The escrow process especially when there is a lender is as comprehensive as any state in this country. I use a online company to do escrows, as many smart management companies do.

I provide each new seller/buyer and long list of documents, some required and some to help us and the HOA get to know the new owners.

Here are the documents we prepare and provide.

Complete governing documents ( CCRs, Bylaws, Rules and Regulations, Articles of Incorporation, Architectural guidelines)
Minutes
Annual Budget Package
Annual Financial Review
Financials
Master Insurance Declaration
Welcome Package and New Owner forms
Document to Acknowledge and SIGN that they received the checked off documents.

Melissa, the HOA is RESPONSIBLE for the documents that ultimately get passed on to the buyers.

Transfer fees deal with updating records, changing from the old owner to the new owner. Many companies charge this type of fee, the YMCA I joined charged a "setup" fee. That is what the transfer fee really is, not the transfer of documents.

WendyP4 (California)
Posts: 9

Posted:

Kerry,
No, our HOA doesn't have a management company.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Quote:

Posted By RichardP13 on 04/15/2018 2:19 PM

Wendy

Shoot me an email and I will point you in the right direction for a remedy.
The address is [email protected]

I would defer to Richard regarding this question.

RichardP13 (California)
Posts: 3,868

Posted:

Based on filings with the Secretary of State, the HOA was listed as a Common Interest Development. You can't change now unless ALL documents are changed and that would require 100% written approval of ALL mortgage companies, not just FHA, which is twice as hard as IMPOSSIBLE.

RichardP13 (California)
Posts: 3,868

Posted:

I have read the OP's CCRs. They definitely fall under a Common Interest Development and under the governing arm of the Davis Stirling Act. The argument that the CCRs are wrong could be a problem. They would have to be compared to the original set of CCRs. If there is the same reference to CID. Being the Davis-Stirling Act didn't come into existence until 1985 and the HOA was incorporated in 1979 there wouldn't be any reference to the D-S Act.

While it is the responsibility of each seller to provide to a respective buyer the governing documents, there are documents and disclosures that only the Association will have access to. If a seller has lost their set of documents, the Association can charge a 'reasonable" fee for reproducing the docs. Failure to produce required disclosures have legal consequences with fines starting at $500.00 plus attorney costs.

WendyP4 (California)
Posts: 9

Posted:

Richard,
The restated CC&Rs were filed in 1998. Do you think the previous CC&Rs will be on file at the County Recorders office?

DouglasK1 (Florida)
Posts: 2,046

Posted:

Quote:

Posted By WendyP4 on 04/18/2018 12:59 PM
Richard,
The restated CC&Rs were filed in 1998. Do you think the previous CC&Rs will be on file at the County Recorders office?

I would expect so. In my area at least records are kept permanently. All of the old records have been scanned, I can search deeds and such going back to the 1800s.

Escaped former treasurer and director of a self managed association.

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By WendyP4 on 04/18/2018 12:59 PM
Richard,
The restated CC&Rs were filed in 1998. Do you think the previous CC&Rs will be on file at the County Recorders office?

Yes, they would be document 92-234316

WendyP4 (California)
Posts: 9

Posted:

Thanks Douglas and Richard,
Good to know. I will go there tomorrow and pull them.

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