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MaryL20 (California)
Posts: 5
Posted:
California requires wood deck repair. Our Maintenance Matrix says that Home Owners are responsible for Deck and Patio Maintenance and Repair. Three of our four board members have Decks they have decided that Water proofing is not maintenance but repair they do not want to pay for waterproofing. They want the HOA to pay for waterproofing. This will require a special assessment as we do not have money in reserves. We have a total of 40 units 10 have decks. Can the board make this decision to define waterproofing as repair & not maintenance? Should this be up to the community to vote?
AidylP1 (California)
Posts: 108
Posted:
Hope this helps

Balcony Maintenance and Repairs

https://www.davis-stirling.com/HOME/H/HOA-Balcony-Maintenance-Repairs
KerryL1 (California)
Posts: 14,550
Posted:
Good citation by Aidyl that I'd forgotten about!

Otherwise, Mary, please review the discussion of your 2/12 5:50p post. I think posters agreed that the owner are responsible for the decks in air HOA. Unclear to me is who's responsible for any supports--columns, piers, or something else that supports the decks.

A strong indication that the HOA is NOT responsible is that the decks are not in your reserve study.

You're a board member, right? And you're outnumbered by the 3 other board members who all have decks--almost 1/3rd of all decks in your HOA. They have a genuine "conflict of interest." I stick with my thinking on this. Get. Your. HOA. Attorney's. Opinion.

No, I. do not think Owners may vote on this.
DeanJ
Posts: 1,786
Posted:
Quote:
Posted By MaryL20 on 02/15/2024 3:35 PM
California requires wood deck repair. Our Maintenance Matrix says that Home Owners are responsible for Deck and Patio Maintenance and Repair. Three of our four board members have Decks they have decided that Water proofing is not maintenance but repair they do not want to pay for waterproofing. They want the HOA to pay for waterproofing. This will require a special assessment as we do not have money in reserves. We have a total of 40 units 10 have decks. Can the board make this decision to define waterproofing as repair & not maintenance? Should this be up to the community to vote?

You state the owners are responsible for maintenance and repair, then ask if the Board can classify waterproofing as a repair and not maintenance. You also mention a maintenance matrix.

Your declaration should specify the common areas, the limited common areas, and what the HOA is required to maintain. If there is ambiguity in the declaration the board is authorized to interpret the declaration. If there is no ambiguity in the declaration, it is simple theft by the board.

CathyA3 (Ohio)
Posts: 6,299
Posted:
As others noted, see what your CC&Rs say about the decks' classification (unit, common element, or exclusive use common element) and unit owner responsibilities. This should answer the question. Also, the association has to be careful about doing any work on any item that is classified as part of the unit because of liability reasons - although that's probably not the case with decks.

FWIW, if replacement of these items is association responsibility, you could maybe make a case for paying for the waterproofing since it theoretically reduces reserve expenses over time.

IMHO, "repair" implies there has been some damage that must be corrected, and "waterproofing" is preventative maintenance. My community's CC&Rs say that unit owners maintain, repair, and replace their decks and patios. So if someone chose not to waterproof their deck, they'll pay the price down the road, not the association.
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By MaryL20 on 02/15/2024 3:35 PM
California requires wood deck repair. Our Maintenance Matrix says that Home Owners are responsible for Deck and Patio Maintenance and Repair. Three of our four board members have Decks they have decided that Water proofing is not maintenance but repair they do not want to pay for waterproofing. They want the HOA to pay for waterproofing. This will require a special assessment as we do not have money in reserves. We have a total of 40 units 10 have decks. Can the board make this decision to define waterproofing as repair & not maintenance?
No. For these three directors, this is a conflict of interest. California Corporate Code 7233 prohibits counting these three directors' votes on this matter. See https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?secti7233.&lawCode=CORP.

Suggested first steps: Bring Corp Code 7233 this to the attention of the board; put Corp Code 7233 on the agenda; and put all this out there in an open board meeting for owners to see.

I can think of ways for the directors to push back. At which point in front of all the owners, you should ask for the HOA attorney to weigh in.

Depending on other things, there is more to say. The above is where I think you should start.
KerryL1 (California)
Posts: 14,550
Posted:
I see that Elle agrees with my above and my previous advice in Mary's previous 2/12 5:50p post.

Also, with Cathy, waterproofing is maintenance because it keeps whatever it's protecting in its original good condition. That's what maintenance is. I may have offered this in the OP's post of 2/12 5:50p.

But, Mary's o.p. states their Matrix says owners are responsible for BOTH maintenance & repair of decks. "...Owners are responsible for Deck and Patio Maintenance and Repair."

Say, Mary, is your Matrix an Exhibit in your CC&Rs? And it's recorded with your CC&Rs?
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By KerryL1 on 02/16/2024 9:53 AM
I see that Elle agrees with my above and my previous advice in Mary's previous 2/12 5:50p post.
I agree with your assertion that there is a conflict of interest. But with the board now declaring that waterproofing is a "repair" (not maintenance), then for me this changes the premise of the 2/12 thread. Consequently, and if there were no conflict of interest, then my advice would change radically. For one: A decision about whether to call xyz a "repair" and not "maintenance" may very well be "discretionary." As a "discretionary" choice, the board might very well have the legal right (absent conflicts of interest) to declare the waterproofing is a "repair."

There is also the issue of whether the aforementioned proposed (actual?) Special Assessment is over the 5% yada threshold and so requires an owners' vote (in California).

Unless the OP asks what I mean, I do not want to go into detail.
KerryL1 (California)
Posts: 14,550
Posted:
To be clear, Mary, you wrote that your Matrix says: "...Owners are responsible for Deck and Patio Maintenance and Repair." This means, no matter what the Board majority (self-servingly) terms "maintenance" or "repair," the owers are responsible. How do you see this otherwise, Elle?

Now a contractor would only apply waterproofing over an already-damage free surface. Therefore, it is maintenance--to protect and MAINTAIN the surface on which it's applied or installed --depending on the product.

IF, by chance, the Board majority is talking about flashing at the "seams" where the wall joins the flooring surface, there MIGHT have a different approach to take.

Now, it's best you provide the exact wording in the Marie, Mary, and also add if, as I asked above, this Matrix is a part of your CC&Rs and is recorded as such with your county.
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By KerryL1 on 02/16/2024 2:58 PM
To be clear, Mary, you wrote that your Matrix says: "...Owners are responsible for Deck and Patio Maintenance and Repair." This means, no matter what the Board majority (self-servingly) terms "maintenance" or "repair," the owers are responsible. How do you see this otherwise, Elle?
If there were no conflict of interest, then I would be operating from the wording of the covenants with an eye on Civ Code 4775. This "Maintenance Matrix" does not have much (if any) bearing in my opinion, for reasons I will continue to resist getting deeply into until and if the OP asks for my elaboration. If you say something that changes my mind, I will post back. Else my opinion stands.
KerryL1 (California)
Posts: 14,550
Posted:
Yes, let's wait for Mary's replies with exact wording in the Matrix, and whether it's a part of the CC&Rs. Ours is CC&Rs "Exhibit B." To the latter question, more and more HOAs in Calif. (and maybe elsewhere) over the past several years, are adding a Maintenance Matrix to their CC&Rs, which are often too vague about who is responsible for exactly what tasks, especially relating to exclusive use common areas like balconies, patios, decks, especially in condo buildings.

I think it's also advised in the Davis-stirling citation above.

We added our MM in '22 when we restated our CC&Rs. There are 17 "items" listed and each is checked O or A (Assoc.). The columns are Clean, Maintain Repair, Replace, Paint, Resurface & Repave. It IS a PART of the CC&Rs so has the same authority. UNLIKE what Mary's apparently say, ours make cleaning & maintaining, balconies, O and repair & replace, A.

Paint is A, BUT with the note: "O/A (the Association may paint as part of any building paint project, but in between such project(s) the owners shall paint as
necessary)
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By KerryL1 on 02/16/2024 5:40 PM
Yes, let's wait for Mary's replies with exact wording in the Matrix, and whether it's a part of the CC&Rs.
You wait. I have made no such request of Mary and have no interest in this "Matrix." If per chance MaryL20 wants my elaboration, then she can ask.
KerryL1 (California)
Posts: 14,550
Posted:
Say, Mary, today's Davis-stirling.com newsletter has quite a lot about deck inspections, and here is a sample question to the HOA attorney who writes this newsletter:

Question: "Few Balconies. Only a few units in our building have balconies. Is this still the association's responsibility to inspect and repair the balconies, or would that be the owner's responsibility?”
Response: “If your development is composed of condominiums and at least three the units have balconies, they must be inspected and repaired by the association. (Civ. Code § 5551)"

BUT, Civ. 5551 does not say the Assoc. is responsible for all condo projects:

Civ 5551 “(b) …every nine years, the board of …a condominium project shall cause a …inspection to be conducted by a licensed structural engineer or architect of a…sample of exterior elevated elements for which the association has maintenance or repair responsibility….”

“…(c) Prior to conducting the first visual inspection, the inspector shall generate a random list …of each type of exterior elevated element. The list shall include all exterior elevated elements for which the association has maintenance or repair responsibility….”

“…(j)(2) The continued and ongoing maintenance and repair of the load-bearing components and associated waterproofing systems …. shall be the responsibility of the association as required by the association's governing documents.”

It appears that if you understand your Matrix correctly, and if it IS a part of your CC&Rs, owners are responsible for their exclusive use common area decks. Please, please, Mary, read the entire 5551, which I heavily edited for brevity. Read the d definitions. Also completely read Aidyl's useful citation way above. More important, get your attorney's advice. For one thing among others-- it's not clear to me that IF the HOA is NOT responsible, if the inspection is even required by Civ. 5551

Back to waterproofing for a sec. I'll assume that the decks are already waterproofed and one or more parts of the waterproofing system needs "repair." Still, from what you wrote, the owners are obligated to make the repair.

DeanJ
Posts: 1,786
Posted:
Quote:
Posted By ElleN on 02/16/2024 7:14 AM
Posted By MaryL20 on 02/15/2024 3:35 PM
California requires wood deck repair. Our Maintenance Matrix says that Home Owners are responsible for Deck and Patio Maintenance and Repair. Three of our four board members have Decks they have decided that Water proofing is not maintenance but repair they do not want to pay for waterproofing. They want the HOA to pay for waterproofing. This will require a special assessment as we do not have money in reserves. We have a total of 40 units 10 have decks. Can the board make this decision to define waterproofing as repair & not maintenance?
No. For these three directors, this is a conflict of interest. California Corporate Code 7233 prohibits counting these three directors' votes on this matter. See https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?secti7233.&lawCode=CORP.

Suggested first steps: Bring Corp Code 7233 this to the attention of the board; put Corp Code 7233 on the agenda; and put all this out there in an open board meeting for owners to see.

I can think of ways for the directors to push back. At which point in front of all the owners, you should ask for the HOA attorney to weigh in.

Depending on other things, there is more to say. The above is where I think you should start.

The board members in the given scenario do not violate what you posted. There is not contract or transaction between the association and the board member.
KerryL1 (California)
Posts: 14,550
Posted:
For Mary & interested others: https://www.davis-stirling.com/HOME/E/Elevated-Structure-Balcony-Inspections.

A very detailed discussion of this topic with pics of various kinds of balconies/decks.
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By DeanJ on 02/17/2024 4:59 PM
The board members in the given scenario do not violate what you posted. There is not contract or transaction between the association and the board member.
For one: When either:

(1) the Board is decreeing that the covenants or statutes be read in a way counter to what people believe; or

(2) the Board has discretion to interpret the covenants and the board makes a choice,

such that certain directors benefit directly and do so to the detriment of the bulk of the other owners, in my opinion this most certainly is a "transaction" between the corporation and these certain directors. As a "transaction," the statute requires the directors so benefiting to recuse themselves.

However as I noted above, I can think of ways a board majority would push back on this argument, just as you are saying. In which case then we go back to the covenants. I am working from what the covenants say, per what MaryL20 said in her first post here: https://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/366874/view/topic/Default.aspx. If one studies the latter post, one can see what a board majority is trying to do here. As I indicated above, I feel the board does have the lawful right to make a discretionary choice here (and so decree that waterproofing is a "repair," but only as long as there are no conflicts of interest.
KerryL1 (California)
Posts: 14,550
Posted:

But, Elle, because Mary states in this thread that the CC&Rs' Matrix requires owners to "repair" their decks, how can a Board majority vote that, instead, the HOA is obligated?? A major job of the Board is to enforce the governing docs. And yes, I keep hoping Mary will clarify the wording and doc much better.

More, how can this Board majority assert with a straight collective face that the entire HOA membership of 40 pay for repairs to 10 decks--3 of which belong to directors-- serves the best interests of the HOA per the Business Judgment Rule?

https://www.davis-stirling.com/HOME/D/Director-Conflicts-of-Interest

"Regardless of whether he has a material financial interest, a director ‘may not make decisions for the association that benefit their own interests at the expense of the association and its members.’ Raven's Cove Townhomes, Inc. v. Knuppe Development Co. (1981) 114 Cal.App.3d 783. A director who breaches the basic fiduciary duties are liable to the Association. (Id.) Where a director finds himself in a position to vote on a matter in which he has a personal interest, he should be recused.”

"3.  Just & Reasonable. Even if the director makes full disclosure and avoids influencing the vote, the transaction must be fair and reasonable as to the association at the time it is authorized, approved or ratified. (Corp. Code § 310; Corp. Code § 5233; Corp. Code § 7233 .)"

I also do not think Corp. 7233 is quite the appropriate citation in Mary's case.
KerryL1 (California)
Posts: 14,550
Posted:
Rereading Mary's previous post, I see she does spell out the exact words in her CC&Rs: "Our CC&R’s clearly state ....The Association shall not be responsible for or obligated to perform those items of maintenance, repair or improvement of those units Restricted Common Area, the maintenance of which is the responsibility of the Unit Owners." I'm sorry I kept nagging, Mary!

ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By KerryL1 on 02/17/2024 6:11 PM
because Mary states in this thread that the CC&Rs' Matrix requires owners to "repair" their decks, how can a Board majority vote that, instead, the HOA is obligated??
My observations:

-- This forum does not know whether this maintenance matrix is in fact in the CC&Rs.

-- If the matrix is in the CC&Rs, then it is not entirely consistent with what MaryL20 posted in the other thread.

-- Either way (either not in the CCRs; or in the CCRs), I figure the board is going to claim that the wording of the covenant is what matters; the board has the lawful discretionary right to deem the waterproofing a "repair"; and so per the covenant (the board declares) the HOA must pay for the "repair."
Quote:
Posted By KerryL1 on 02/17/2024 6:11 PM
A major job of the Board is to enforce the governing docs. And yes, I keep hoping Mary will clarify the wording and doc much better.

More, how can this Board majority assert with a straight collective face that the entire HOA membership of 40 pay for repairs to 10 decks--3 of which belong to directors-- serves the best interests of the HOA per the Business Judgment Rule?
I think the board, being all-powerful at the moment, would say simply that (1) the covenant (not the matrix) says what it says; and (2) absent a conflict of interests, the board has a discretionary right to decide what is "maintenance" and what is a "repair," as long as the board is "reasonable" in the exercise of this discretion.

I actually think it is not unreasonable to deem the waterproofing a repair. I would not say this. I think waterproofing is "maintenance." But I also would not say want to go to court over this particular point.

Quote:
Posted By KerryL1 on 02/17/2024 6:11 PM
https://www.davis-stirling.com/HOME/D/Director-Conflicts-of-Interest

"Regardless of whether he has a material financial interest, a director ‘may not make decisions for the association that benefit their own interests at the expense of the association and its members.’ Raven's Cove Townhomes, Inc. v. Knuppe Development Co. (1981) 114 Cal.App.3d 783. A director who breaches the basic fiduciary duties are liable to the Association. (Id.) Where a director finds himself in a position to vote on a matter in which he has a personal interest, he should be recused.”
All of this is relevant, but I do not think it is dispositive here. Corp Code 7233 aside, whether the directors in the OP's case are violating their fiduciary duty is not something that is clear cut IMO. Why? Because the covenant says what it says, and because IMO the board has some discretion in determining what is maintenance and what is a "repair."
Quote:
Posted By KerryL1 on 02/17/2024 6:11 PM

"3.  Just & Reasonable. Even if the director makes full disclosure and avoids influencing the vote, the transaction must be fair and reasonable as to the association at the time it is authorized, approved or ratified. (Corp. Code § 310; Corp. Code § 5233; Corp. Code § 7233 .)"
The "just (or fair) and reasonable" part of the above was very much on my mind when I responded to DeanJ a little while ago. But per 7233, and by my reading, it does not kick in until certain conditions are met.
Quote:
Posted By KerryL1 on 02/17/2024 6:11 PM
I also do not think Corp. 7233 is quite the appropriate citation in Mary's case.
Then quote what you think is.

I saw Civ Code 5350 and do not believe it applies.

This is just my opinion. If you post something to change my mind, I will say so. Else my opinion stands.

Obviously I am pretty sick of several of you repeatedly characterizing statements of mine (carefully qualified with "IMO" and the like) as my asserting a fact.

I feel Corp Code 7233 applies, but as I posted earlier and as I wrote Dean, I believe the board could push back. (Plus Dean or anyone is certainly entitled to their opinion that a "transaction" is not taking place.) If the board pushes back on a claim the board is violating Corp Code 7233, then other steps are needed.

All I am saying is Corp Code 7233 is where I would start, as far as violations of statutes and covenants are concerned.
KerryL1 (California)
Posts: 14,550
Posted:
But, Elle, because Mary states that there CC&Rs REQUIRE owners to "repair" their decks, how can a Board majority vote that, instead, the HOA is obligated??

Mary wrote: "Our CC&R’s clearly state ....The Association shall not be responsible for or obligated to perform those items of maintenance, repair or improvement of those units Restricted Common Area, the maintenance of which is the responsibility of the Unit Owners." This IS what the covenants say. Are you & I disagreeing on the definition of the word "repair?"

Elle wrote: -"Either way (either not in the CCRs; or in the CCRs), I figure the board is going to claim that the wording of the covenant is what matters; the board has the lawful discretionary right to deem the waterproofing a "repair"; and so per the covenant (the board declares) the HOA must pay for the "repair." But, again, see Mary's quote directly above.

Case law DOES matter to add to Ravens Cove as noted above: "We note that the duty of undivided loyalty [from the Business Judgement Rule] applies when the board of directors ...considers maintenance and repair contracts, the operating budget, creation of reserve and operating accounts, etc. Thus, . . . [directors] may NOT make decisions for the association that benefit their own interests at the expense of the association and its members." (Raven's Cove v. Knuppe.)[my emph.]

I agree Civil 5350 does not apply. But, to my eye, Civil ‘5233 does: “(a) Except as provided in subdivision (b), for the purpose of this section, a self-dealing transaction means a transaction to which the corporation is a party and in which one or more of its directors has a material financial interest…”

https://www.davis-stirling.com/HOME/F/Fiduciary-Duties-of-California-HOA-Directors#:~:text=includes the following:

"B.  DUTY OF LOYALTY. [from the BJR] In addition to the duty of care, directors and officers owe the association a fiduciary duty of loyalty. (Bancroft-Whitney Co. v. Glen (1966) 64 Cal. 2d 327, 345.) That means protecting the interests of the association and refraining from doing anything that would injure it. (Bancroft-Whitney, supra. at 345.) This includes the following:

1. No Self-Dealing. Directors cannot use their position of trust and confidence to further their private interests. They must act in the best interests of the association even if at the expense of their own interests. This.... includes ... taking actions that result in personal benefits to the director at the expense of the association. Violation could result in (i) liability for all profits received, (ii) all damages caused by the breach, and (iii) punitive damages...."

My opinion is that the Business Judgment Rule is the first place to look when there are questions about directors' conduct. To me, directors can never go wrong if they embrace it. (And some version is in every state so far as I know)
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By KerryL1 on 02/21/2024 7:40 PM
Mary wrote: "Our CC&R’s clearly state ....The Association shall not be responsible for or obligated to perform those items of maintenance, repair or improvement of those units Restricted Common Area, the maintenance of which is the responsibility of the Unit Owners." This IS what the covenants say. Are you & I disagreeing on the definition of the word "repair?"
I think I misread the covenant at some point after MaryL20's first thread on this. The wording of this covenant suffers from some ambiguity, in my opinion. The board might be saying: 'Why would the covenant state twice in one sentence that owners are responsible for maintenance? Doesn't the last part of the wording above imply that the HOA is responsible for repairs and improvement? Because of the ambiguity, this board feels Civ Code 4775 controls. And the Board is king.'

I know this is all speculation on what the board is up to. Speculation in general is pretty useless, IMO. For whatever reason, the board feels it is important to call this waterproofing a "repair," whencethe Board appears to be invoking Civ Code 4775.

Should owners argue with the board about this? IMO, sure. But it is somewhat messy, because the covenant as quoted above is somewhat messy.
Quote:
Posted By KerryL1 on 02/21/2024 7:40 PM
I agree Civil 5350 does not apply. But, to my eye, Civil ‘5233 does:
You mean Corp Code 5233. You appear to have misread it, because it applies to nonprofit public benefit Corporations. A HOA/CIC/CID/COA is rarely, if ever, going to be a nonprofit public benefit corporation.

My opinion remains that the first objections to raise are violations of Corp Code 7233.
KerryL1 (California)
Posts: 14,550
Posted:
There is no "ambiguity" simply because the word "maintenance" is used twice. “Maintenance” often is used as a catch-all phrase in (CA?) CC&Rs and by CA HOA attorneys. Unless Mary misquoted her CC&Rs, owners are responsible for their own decks' maintenance AND Repair.

RE "maintenance," for instance, https://www.davis-stirling.com/HOME/H/HOA-Balcony-Maintenance-Repairs. “Recommendation": “To avoid legal problems, associations should: 1. Adopt maintenance guidelines and clearly define an owner's duties… Those duties must harmonize with their CC&Rs. 2. Create a Maintenance Chart that clearly defines duties.” My HOA’s Sect. 8.1 is “Maintenance Obligations of Owners.” As with 1 & 2 cited above, “maintenance” covers cleaning, repair, replacement, improvement.

Mary's Board may not invoke Civ 4775(c) because Mary’s covenants DO state that the Owners of the balconies (the restricted use common area) ARE responsible for their maintenance AND repair. I do wonder, as I expressed maybe above somewhere or in Mary’a previous post, to what extent, if any, the HOA is responsible for replacing and the support structures of the decks.

I did not “misread” Corp. Code 5233 (tho’ I mistyped it as Civ). Since the D-S.com legal folks cited it, did these experts in CA HOA law make a mistake? Does Corps. 5233 solely apply to CA nonprofit public bennie corps? No it does not. It also applies to mutual benefit corps like HOAs. See Corp. Code 5300 Cal. Corp. (Applicability) "The provisions of this part apply to: (1) Corporations organized under Part 2, Part 3 [Mut. Ben. Nonprofits], and Part 4 of this division…”

So I still believe that Corp. 5233 is most germane to Mary's situation because all know that the 3 deck-owning directors WILL benefit at the expense of the rest of the membership IF the HOA pays -- in violation of their CC&Rs--for the waterproofing work. In e exploring this topic, I see in many places, too, that the courts (if it goes that far) would look at the the BJR first.

To repeat: "...(b), for the purpose of this section, a self-dealing transaction means a transaction to which the corporation is a party and in which one or more of its directors has a material financial interest…" Self-dealing opposes the BJR and its embedded duty of loyalty.
ElleN (Idaho)
Posts: 4,420
Posted:
Quote:
Posted By KerryL1 on 02/22/2024 7:35 PM
I did not “misread” Corp. Code 5233 (tho’ I mistyped it as Civ). Since the D-S.com legal folks cited it, did these experts in CA HOA law make a mistake?
Nope. The misunderstanding is entirely on your side. But I am not interested in explaining it to you.
KerryL1 (California)
Posts: 14,550
Posted:
I believe you're wrong, Elle. If anyone else cares to explain how I misunderstand Corps. Code 5233, where applicability is in 5300, please do.I happy to correct my error if I know what the heck they are.

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