From: Linda Richey [mailto:generalmanager@hroa.us]
Sent: Monday, April 23, 2007 1:49 PM
To: Curtis C. Sproul
Subject: Opinion on capital improvements

 

Dear Mr. Sproul: 

As you may know, I am the current General Manager of the Heritage Ranch Owners' Association, located in Paso Robles, California.

I have been following you for many years and have an interest in any legal advice you provide as I believe it has a trickle effect on all homeowners associations in California. 

Recently, I became aware of a website associated with one of the clients you represent, the Hidden Valley Lake Homeowners' Association which I bookmarked on my old computer.  While searching for this site again with my new computer, I stumbled onto a second website, www.hvlcc.com apparently put together by a group of homeowners who are against certain actions of the Hidden Valley Lake Homeowner's Association you represent.  

I was stunned to realize that many of the issues these homeowners seem to be upset about parallel many of the issues that Heritage Ranch has wrestled with in the past and the fact the www.hvlcc.com website even make reference to a lawsuit the Heritage Ranch Owners' Association filed involving the current general manager of Hidden Valley Lake Homeowners' Association peaked my interest further. 

Therefore, I researched both websites in detail to gleam as much information as I could which lead me to read with great interest your opinion letter dated April 2, 2007 published on the hvlcc website regarding the members right to vote on capital improvements.

Frankly, when I read that opinion I was surprised.   Had I been involved with this issue, I would have asked you all of the following:

1) Whether there was any case law involving homeowners associations to back up most of your opinions

2) I would be concerned about an argument regarding how the Reserve Studies have been handled, voted on, disclosed, etc. and the potential legal argument of the definition of "capital improvements" vs. funds accumulated in the reserve fund

3) I would be concerned about the fact a loan is being proposed and question whether the courts might look at this separately from the 5% and 20% cap

4) I would be concerned if the association plans on keeping any of the existing amenities for any purposes vs. complete demolition because if so, would it be possible to justify the association's position on this

5) I would point out that the HVL Bylaws do not say "for any lawful purpose", they say "for any purpose or purposes whatsoever" (Article V, Section 5.03)

6) I would want clarification on the members request to call a Special Membership Meeting (not a Special Meeting)

7) I would be concerned if any of the proposed replacement amenities are either being re-located or being used for any additional or different purposes in whole or in part than what they were established to be used for originally

8) And, most importantly, I would ask you wouldn't it be prudent to have the members vote because the association and board members are supposed to represent the members interests, not their own.

I could not justify in my mind how it would be conceivable to promote the position that members have no rights to decide what method to go about maintaining, restoring, replacing the amenities they pay for on a day-to-day basis that are there for their enjoyment and pleasure to begin with.

In the state of California I could get a petition to place something on a ballot, but not in a homeowners association according to your April 2, 2007 legal opinion, and I cannot completely accept your conclusions that the members right to petition is solely to vote on something that is required for them to vote on in the first place.

This sort of issue is the very thing that drives property owners into recalls and the like, and ultimate divides communities instead of bringing them together.  If the goal is to create a healthy association, I would suggest more time is spent looking at the association's interests as a whole, not the individuals that run them.

Linda Richey
General Manager
805-238-9641

From: Curtis C. Sproul
Date:
4/23/2007 2:30:22 PM
To:
Linda Richey
Subject:
RE: Opinion on capital improvements

Hello Linda,

I want to both thank you for your thoughtful email and for the issues you have raised, and I also want to express some level of disappointment in what I perceive, between the lines, to be an element of hostility towards the positions I took on behalf of the HVLA that have evidently been published on an unofficial HVLA website.  If that perception on my part is misplaced or mistaken, then forget that I even made the comment.

 I actually come to this discussion from a detached and dispassionate perspective, namely as a lawyer who has focused his practice and his academic work almost exclusively on the laws that govern corporations, generally, and, as a sub-set of that broad universe, the laws that govern nonprofit corporations and Davis-Stirling property owner associations.

In the beginning (and for nonprofits and owner associations in California the true beginning of separate laws for such organizations begins in 1980) there were very few laws specifically addressing the unique needs and qualities of nonprofit organizations of any kind.  With a few minor exceptions the law that applied to nonprofit corporations prior to 1980 was the General Corporation Law of the State.  When the current Nonprofit Corporation Law was adopted in 1980, there was pressure by the Attorney General representatives on the drafting committee to make the fiduciary obligations of nonprofit boards more stringent than the standards that apply to directors of  business corporations, but that point of view did not carry the day and in many respects the two laws are quite similar -- particularly insofar as the fiduciary obligations of directors and officers are concerned. 

HERE is where the applicable corporate law principles diverge from  the vision of those (apparently including yourself) who want to see owner associations managed "from the ground up", with more government and decision-making being vested in  the people and for the people:  corporations, under the current legal structure, are more akin to oligarchies, than democracies.  You may not like that truth, but that is the structure of our State's corporate laws.  Under those laws, all power is vested in the Board of Directors UNLESS the state law or the governing documents give some specific approval or veto authority to the members (see Generally Corporations Code sections 300, 5210, 7210). 

What is the check and balance to rein in those who are elected as directors?  The answer has four elements:  (i)  the power reserved to the members to elect good directors in the first place; (ii) the power to  recall the board or individual directors if they fail to perform properly or if they pursue programs or make decisions that run strongly counter to their constituency; (iii)  the power of members (5% or more) to demand that a special meeting be called by the directors to discuss important events or decisions facing the corporation; and (iv) perhaps most importantly, the obligation imposed by law, on directors to act in good faith, after reasonable inquiry, and in a manner the directors believe to be in the best interests of the members and the corporation as  whole.  Individual members who are pushing individual or group agendas owe no similar duty of loyalty or good faith and they are under no obligation to take into consideration the best interests of everyone.  Golfers can champion solely the interests of fellow golfers;  those who hate the expense of the golf course can push to shut it down or to charge higher greens fees, etc.  

Many HOA activists do not want to hear this, but in my 30+ years of practicing in this field I have found most directors (or at least the majority of those directors who are serving on the board at any given time) to be thoughtful individuals who are truly endeavoring to take actions and to make decisions that are in the best interests of the community they serve -- the interests of the community as a whole.  Conversely, I have seen a handful of instances  in which the virulent critics of the community, who have traditionally been content to serve as "stone throwers" from the side-lines, have managed to get into a majority position on the board and in almost every instance they have run their association into the ground while implementing their slash and burn programs, with costly and protracted litigation (typically over firings of personnel)  often being the outcome.

Many banks will not make loans to an association based on a pledge of future assessment revenues as security unless and until the Association has received a member vote to approve a special assessment to fund the project, with the proceeds of the assessment (sometimes collected over a period of several years) being dedicated to repayment of the loan.  That is a matter of policy that varies from one bank to another, but it is often a requirement in lending to owner associations. 

Thanks again for taking the time to get in touch.

Curt Sproul

 

CURTIS C. SPROUL

Attorney at Law

 

Sproul Trost LLP
2424 Professional Drive

Roseville, CA 95661
(916) 783-7074 direct

(916) 783-6262 main
(916) 783-6252 fax

csproul@sproullaw.com

http://www.sproullaw.com

 

Privileged/Confidential Information may be contained in this message. If you are not the addressee indicated in this message (or responsible for delivery of the message to such person), you may not copy or deliver this message to anyone. In such case, you should destroy this message and kindly notify the sender by reply email. Please advise immediately if you or your employer does not consent to Internet email for messages of this kind. Opinions, conclusions and other information in this message that do not relate to the official business of my firm shall be understood as neither given nor endorsed by it.


-------Original Message------- 

From: Linda Richey [mailto:generalmanager@hroa.us]
Sent: Monday, April 23, 2007 3:51 PM
To: Curtis C. Sproul
Subject: RE: Opinion on capital improvements

 

Curtis: 

I appreciate your response, and as you can imagine live the life every day of misguided agendas that you describe.  

For the very reason that I work every day at keeping the inmates from running the asylum, is why I get frustrated when I see the methods others use to perpetuate problems instead of solving them.  That is when "normal" people get unfairly labeled, when in fact they are just people trying to exercise their legitimate points of view, which is exactly what I believe is happening at HVL.

Since I have been on all sides of the fence I think it provides me the unique perspective of seeing the "whole picture": 1) frustrated homeowner; 2) board member; and 3) general manager.  I am NOT proposing the members run the Association, only participate in it, and a petition circulated representing a large number of members is a good measurement as to when the members should have the right to vote (which I believe is the true intent of the way the law is written, in contrast to your opinion).    Had I been the general manager in this situation, I would have invited you as the Association's attorney to come to a meeting and explain your position on a more friendly note to the community directly.  Our attorneys have done this on occasion and it works great.   I would have also advised the Board, what's the harm, let them vote -- that would eliminate the flame that is obviously feeding the fire at HVL.  A vote would give the HVL Board the true point of view of the "majority" of the community and a "YES" vote would bring the support I believe would be necessary to ultimately see these projects through to their successful completion.  I say this because my prediction of what will end up happening at HVL is a recall which will eventually result in new board members coming in; then both the general manager and you will eventually be fired.  The ousted will lash back and threats of more recalls will follow.  In the meantime, nothing will get done.  (The common excuse that the "members will never vote for anything that costs money" doesn't fly with me either.  I believe a no vote most always signifies a lack of confidence in those leaders who represent a community, nothing more.) 

Regarding your legal opinion more specifically, it bothered me so much that I spoke with one of our attorneys, John Linford this morning (whom you know) and even faxed him your opinion to review.  Sorry, he agrees with me on the interpretation of "any lawful purpose" to mean any purpose related to the interests of a homeowners' association, not the narrow scope you have defined.  He agrees the Bylaws for HVL are more restrictive than you are alluding to, and, he also discussed the Bear Valley lawsuit with me at some length (you are familiar with) regarding limitations on use of reserve funds that parallel many of my points to you -- that the appellate court also apparently agreed with also.

If you are playing the odds that the complainers will not put up enough money to challenge you legally that is probably a good bet, but I will take you at your word that is not your intent.

Wouldn't it be better if we could all spend more time working with California legislature to make things more clear by helping them understand "real life" experiences from all perspectives.  That way they can write and adopt laws we can all embrace, respect, and protect, and which will ultimately serve the needs and desires of everyone involved.   The way I believe things are going now, the legislature is simply trying to curtail the amount of lawsuits initiated as a result of homeowner association issues instead of looking more deeply at what's causing all the turmoil to begin with.

Linda

-------Original Message-------
 

From: Curtis C. Sproul
Date:
4/23/2007 9:28:30 PM
To:
Linda Richey
Subject:
RE: Opinion on capital improvements

Hello Linda,

Here are my comments in response to your most recent email:

MEMORANDUM

To: Linda Richey
From: Curt Sproul
Date: April 23, 2007

Re: Responses and thoughts on your latest email to me (below – my comments are in bold).

_______________________________________________________________________

I appreciate your response, and as you can imagine I live the life every day of misguided agendas that you describe.  

For the very reason that I work every day at keeping the inmates from running the asylum, is why I get frustrated when I see the methods others use to perpetuate problems instead of solving them.  That is when "normal" people get unfairly labeled, when in fact they are just people trying to exercise their legitimate points of view, which is exactly what I believe is happening at HVL. INSTEAD OF INITIATING A RECALL, THOSE FOLKS SHOULD DECLARE THEIR CANDIDACY (AS THEY NOW HAVE A RIGHT TO DO UNDER CIVIL CODE SECTION 1363.03

Since I have been on all sides of the fence I think it provides me the unique perspective of seeing the "whole picture": 1) frustrated homeowner; 2) board member; and 3) general manager.  I am NOT proposing the members run the Association, only participate in it, and a petition circulated representing a large number of members is a good measurement as to when the members should have the right to vote (which I believe is the true intent of the way the law is written, in contrast to your opinion).    Had I been the general manager in this situation, I would have invited you as the Association's attorney to come to a meeting and explain your position on a more friendly note to the community directly.  Our attorneys have done this on occasion and it works great.   I would have also advised the Board, what's the harm, let them vote -- that would eliminate the flame that is obviously feeding the fire at HVL.

LINDA, WHAT YOU ARE RECOMMENDING IS A VERY SLIPPERY SLOPE, INDEED. ONCE THE BOARD CAPITULATES TO UN-ELECTED FACTIONS AND CALLS FOR A MEMBER VOTE ON AN ISSUE THAT IS CLEARLY WITHIN THE BOARD’S PREROGATIVE, THERE IS, AT THE VERY LEAST, A CAPITULATION OF THE BOARD’S OBLIGATION UNDER THE LAW TO MAKE INFORMED AND REASONED DECISIONS ON BEHALF OF ALL THE MEMBERS. AT THE WORST, THE BOARD IS ABDICATING ITS MORE INFORMED JUDGMENT ON THE MATTER TO MEMBERS WHO ARE LIKELY TO HAVE A WIDE RANGE OF INDIVIDUAL FOCUS AND ATTENTION TO THE ISSUES AT HAND, NOT TO MENTION PERSONAL AGENDAS. I RECOMMEND THAT YOU READ THE CALIFORNIA SUPREME COURT’S DECISION IN THE LAMDEN CASE WHICH I WILL PDF TO YOU. THE BOARD IN THAT CASE WAS FACED WITH A DECISION ON HOW TO BEST DEAL WITH A TERMITE PROBLEM – SPOT TREATMENT OR TENT ALL THE BUILDINGS AND RELOCATE THE RESIDENTS AT GREAT EXPENSE. MRS. LAMDEN (THE PLAINTIFF AND A NON-RESIDENT WHO ACTUALLY LIVED ON THE EAST COAST) WANTED THE ENTIRE DEVELOPMENT TENTED AND THE BOARD DISAGREED. THE CALIFORNIA SUPREME COURT BACKED UP THE BOARD’S JUDGMENT CALL ON THE ISSUE. WHERE DO YOU DRAW THE LINE ON WHAT MATTERS GO TO THE MEMBERS FOR APPROVAL OR A MANDATE? IF THE GOLF COURSE IN A COMMON INTEREST COMMUNITY REQUIRES MAJOR WORK TO RE-SOD AND RE-SEED THE FAIRWAYS AND TO INSTALL NEW IRRIGATION EQUIPMENT AND THE NUMBER OF OWNERS WHO ARE REGULAR GOLFERS HOVERS AROUND 30 % TO 40% OF ALL OWNERS (THAT IS THE TYPICAL STATISTIC IN GOLF COMMUNITIES), SHOULD THE BOARD PUT THE REHABILITATION PROJECT TO A VOTE OF THE MEMBERS AND FOLLOW THE WILL OF THE "MAJORITY"? REMEMBER THAT EVERYONE – GOLFERS AND NON-GOLFERS ALIKE – VOLUNTARILY ELECTED TO BECOME PROPERTY OWNERS AND ASSOCIATION MEMBERS.

A vote would give the HVL Board the true point of view of the "majority" of the community HOW DO YOU KNOW THAT IT WOULD BE A CLEAR MANDATE? MY GUESS IS THAT THOSE WHO OPPOSE THE PROJECT WOULD TURN OUT IN DROVES AND THE REST OF THE COMMUNITY WOULD GO ABOUT THEIR BUSINESS.  ALSO THE ISSUE OR PROJECT THAT IS PUT TO A VOTE MAY HAVE HAD ONLY MINORITY SUPPORT FROM THE INCEPTION OF THE PROJECT -- SUCH AS GOLF, EQUESTRIAN FACILITIES, RESTAURANTS IN THE COMMUNITY LODGE --- AND YET THEY HAVE ALWAYS BEEN PART OF THE VERY FABRIC OF THE COMMUNITY.  IF EVERY PROPOSAL TO FUND PUBLIC LIBRARIES HAD TO BE APPROVED BY THE ELECTORATE, HOW MANY LIBRARIES DO YOU THINK YOU WOULD HAVE IN THE UNITED STATES THESE DAYS?

and a "YES" vote would bring the support I believe would be necessary to ultimately see these projects through to their successful completion.  AT TAHOE DONNER, THERE WAS A MEMBER VOTE THAT DEFEATED A VERY COSTLY COMMON FACILITIES EXPANSION PLAN – THE VOTE WAS REQUIRED BY THE LENDERS WHO WOULD ONLY FINANCE THE MULTI-YEAR FUNDING PLAN WITH A MEMBER VOTE.

I say this because my prediction of what will end up happening at HVL is a recall which will eventually result in new board members coming in; then both the general manager and you will eventually be fired. THAT IS EXACTLY THE SCENARIO THAT I ALSO ANTICIPATE IN MANY INSTANCES. IT IS THE REFORMIST BOARD THAT RIDES INTO OFFICE AND FIRES THE MANAGER THAT GENERATES THE LAW SUITS THAT END UP COSTING THE ASSOCIATION MORE THAN THE PROJECT WOULD HAVE COST. THAT IS WHAT HAPPENED AT PINE MOUNTAIN LAKE AND YOU ARE CORRECT THAT I WAS TERMINATED AS THEIR COUNSEL OF 18 YEARS. THE NEW LAWYERS RAN UP LEGAL FEES OF SEVERAL HUNDRED THOUSAND DOLLARS DEFENDING TERMINATION SUITS, AND I AM ONCE AGAIN COUNSEL TO THE ASSOCIATION.

The ousted will lash back and threats of more recalls will follow.  SO WHY IS THAT A GOOD REASON TO CAPITULATE TO THE MOB? THE BOARD HAS A FIDUCIARY OBLIGATION TO GOVERN

In the meantime, nothing will get done.  (The common excuse that the "members will never vote for anything that costs money" doesn't fly with me either.  I believe a no vote most always signifies a lack of confidence in those leaders who represent a community, nothing more.)

Regarding your legal opinion more specifically, it bothered me so much that I spoke with one of our attorneys, John Linford this morning (whom you know) and even faxed him your opinion to review.  Sorry, he agrees with me on the interpretation of "any lawful purpose" to mean any purpose related to the interests of a homeowners' association, not the narrow scope you have defined.  I AM NOT SURE THAT JOHN AND I DISAGREE AT ALL ON THAT ISSUE. WITH THIS RESPONSE I AM SENDING YOU SOME PAGES FROM THE CHAPTER I WROTE IN THE BOOK ADVISING CALIFORNIA NONPROFIT CORPORATIONS ON THIS VERY ISSUE. BEFORE I WROTE THE TEXT THAT IS IN THE BOOK (THAT I WILL SEND TO YOU) I CONSULTED WITH R. BRADBURY CLARK, WHOM JOHN WILL NO DOUBT RECOGNIZE AS THE DEAN OF THE LIVING EXPERTS ON NONPROFIT CORPORATION LAW IN THIS STATE.

I ASKED BRAD (WHO, ALONG WITH ME, SERVED ON THE COMMITTEE OF THE STATE BAR THAT WROTE THE LAW): "WHY WASN’T THE SPECIAL MEETING PROVISION WRITTEN TO SAY THAT FIVE PERCENT OF THE MEMBERS COULD CALL A MEETING TO DEMAND A VOTE ON MATTERS THAT ARE SUBJECT TO APPROVAL OR ACTION BY THE MEMBERS UNDER THE CORPORATIONS CODE OR THE BYLAWS OF THE ORGANIZATION?" BRAD’S REPLY WAS THAT THE SECTION WAS WRITTEN MORE BROADLY TO PERMIT FIVE PERCENT OF THE MEMBERS TO DEMAND THAT A SPECIAL MEETING BE HELD "FOR ANY LAWFUL PURPOSE" BECAUSE THE MEMBERS HAVE A RIGHT TO COMPEL THEIR DIRECTORS TO ATTEND A MEETING CALLED TO DISCUSS OTHER MATTERS OF INTEREST OR IMPORTANCE TO THE CORPORATION THAT MAY NOT INVOLVE OR REQUIRE MEMBER ACTION. THAT SCENARIO IS NOT UNLIKE WHAT IS HAPPENING TODAY ON THE RADIO AND TELEVISION IN THE HEARINGS AND QUESTIONING OF ATTORNEY GENERAL ALBERTO GONZALEZ: THE "PEOPLE OF THE UNTIED STATES" HAVE NO RIGHT TO RECALL OR REMOVE MR. GONZALEZ, BUT THEY HAVE A RIGHT, THROUGH THEIR ELECTED REPRESENTATIVES IN CONGRESS, TO DEMAND THAT HE EXPLAIN HIS ACTIONS.

He agrees the Bylaws for HVL are more restrictive than you are alluding to, and, he also discussed the Bear Valley lawsuit with me at some length (you are familiar with) regarding limitations on use of reserve funds that parallel many of my points to you -- that the appellate court also apparently agreed with also. I THOUGHT THAT THE BEAR VALLEY SUIT WAS VERY POORLY DECIDED AND ACTUALLY GOES AGAINST THE SUPREME COURT’S RULING IN LAMDEN. HOW CAN IT POSSIBLY BE THAT A BOARD OF DIRECTORS, FACED WITH A FACILITY THAT WAS UNDERSIZED TO BEGIN WITH, POORLY DESIGNED, AND AT THE END OF ITS USEFUL LIFE, ONLY HAS THE DISCRETION AND AUTHORITY TO REPLACE THAT FACILITY WITH SUBSTANTIALLY THE SAME FACILITY? THAT MAKES ABSOLUTELY NO SENSE TO ME. IF YOU WERE RE-MODELING YOUR OWN KITCHEN AND IT WAS 40 YEARS OLD AND SOME JUDGE SAID YOU COULD ONLY REPLACE THE KITCHEN IN EXACTLY THE WAY IT WAS ORIGINALLY CONSTRUCTED, YOU WOULD PROBABLY MOVE TO AFGHANISTAN. THE BEAR VALLEY CASE ALSO HAD SOME UNIQUE FACTS, SUCH AS THE FACT THAT THE RESTAURANT FACILITY IN QUESTION WAS NOT IN A COMMON FACILITY PROPERTY OWNED BY THE ASSOCIATION.

If you are playing the odds that the complainers will not put up enough money to challenge you legally that is probably a good bet, but I will take you at your word that is not your intent.

Wouldn't it be better if we could all spend more time working with California legislature to make things more clear by helping them understand "real life" experiences from all perspectives.  That way they can write and adopt laws we can all embrace, respect, and protect, and which will ultimately serve the needs and desires of everyone involved.  LINDA – ON THIS WE AGREE WHOLEHEARTEDLY. BUT I BET I COME TO THIS DISCUSSION WITH A DIFFERENT PERSPECTIVE THAN YOU DO. MANY OF THE PROVISIONS THAT HAVE BEEN ADDED TO DAVIS-STIRLING SINCE ITS ORIGINAL PASSAGE IN 1985 HAVE BEEN WELL-INTENTIONED, BUT WRONG HEADED OR VERY POORLY DRAFTED, IN MY OPINION. THE NEW ELECTION RULES (1363.03) FOR EXAMPLE ARE VERY BURDENSOME FOR SMALLER ASSOCIATIONS AND TOTALLY UNNECESSARY FOR MOST COMMERCIAL CIDs (WHO ARE NOT EXEMPT FROM THOSE ELECTION RULES).

SIMILARLY, THE DISPUTE RESOLUTION MAZE THAT ASSOCIATIONS MUST NOW NAVIGATE IN ORDER TO RESOLVE EVEN THE MOST MINOR OF ASSOCIATION/OWNER DISPUTES ARE ALMOST IMPOSSIBLE TO RECONCILE, ONE TO ANOTHER: READ CIVIL CODE SECTIONS 1363(h), 1363.810 THROUGH 13463.850, 1365.2(f), 1367.1(c) (1)(b), 1369.510 THROUGH 1369.590, AND TELL ME IF YOU KNOW WITH ASSURANCE WHICH OF THOSE SECTIONS APPLY TO THE EXCLUSION OF THE OTHER SECTIONS?

The way I believe things are going now, the legislature is simply trying to curtail the amount of lawsuits initiated as a result of homeowner association issues instead of looking more deeply at what's causing all the turmoil to begin with. IF HOAs HAD NEVER COME ON THE LANDSCAPE, MOST LEGISLATORS WOULD BE VERY HAPPY, INDEED. BUT CHANGES IN COMMUNITIES AND OUR SOCIETY HAPPEN FOR A REASON AND ONE REASON WHY CIDs AND THEIR OWNER ASSOCIATIONS DOT THE CALIFORNIA LANDSCAPE IS THE STATE’S ADOPTION, THROUGH A VOTER INITIATIVE, OF THE VERY POPULAR LIMITS ON REAL PROPERTY TAXATION (PROPOSITION 13). WITH NO PUBLIC MONEY AVAILABLE TO FUND PARKS, RECREATION FACILITIES AND NEW SUBDIVISION INFRASTRUCTURE, PROPOSITION 13 GAVE BIRTH, IN A VERY REAL SENSE, TO MELLO-ROSS FEES (WHICH BULLET THE COST OF NEW DEVELOPMENT SOLELY ON THE HOMES AND NEW OWNERS IN THE DEVELOPMENT) AND PRIVATE COMMUNITIES WHERE THE FACILITIES ARE NO LONGER PUBLIC AND MUST BE MAINTAINED BY THE PROPERTY OWNERS. THE "NO NEW TAXES" ADVOCATES SEE PROPOSITION 13 AS THE HOLEY GRAIL AND HOWARD JARVIS AS THE GREATEST AVENGER OF BIG GOVERNMENT, BUT MOST OF THESE SAME CONSERVATIVES HATE HOMEOWNER ASSOCIATIONS IN SPITE OF THE FACT THAT THE INITIATIVE THEY CHAMPION GAVE BIRTH TO THE RENAISSANCE OF PRIVATE COMMUNITIES.

TODAY ON NATIONAL PUBLIC RADIO THERE WERE SEVERAL REPORTS ON THE EFFORT INITIATED BY OUR ARMED FORCES TO CONSTRUCT A TWELVE FOOT HIGH WALL THREE MILES LONG AROUND A PARTICULAR COMMUNITY OF BAGHDAD WHERE THERE HAS BEEN A LOT OF VIOLENCE . THE PROJECT PROMPTED CONSIDERABLE LOCAL PROTEST AND RESISTANCE AND, AS A RESULT, THE PRIME MINISTER CALLED FOR THE PROJECT TO COME TO A HALT. ONE U.S. PRESS RELEASE ACTUALLY SAID THAT THE PRINCIPAL IMPETUS FOR THE WALL CONSTRUCTION PROJECT WAS TO CREATE GATED COMMUNITIES IN IRAQ’S CAPITAL TO REDUCE THE AMOUNTS OF SECTARIAN VIOLENCE – WE ARE NOW TRYING TO USE THE COMMON INTEREST MODEL IN THE MIDDLE EAST AS PART OF THE BAGHDAD "CALMING PROJECT". Go figure.

Linda

 

CURTIS C. SPROUL

Attorney at Law

 

Sproul Trost LLP
2424 Professional Drive

Roseville, CA 95661
(916) 783-7074 direct

(916) 783-6262 main
(916) 783-6252 fax

csproul@sproullaw.com

http://www.sproullaw.com

 

Privileged/Confidential Information may be contained in this message. If you are not the addressee indicated in this message (or responsible for delivery of the message to such person), you may not copy or deliver this message to anyone. In such case, you should destroy this message and kindly notify the sender by reply email. Please advise immediately if you or your employer does not consent to Internet email for messages of this kind. Opinions, conclusions and other information in this message that do not relate to the official business of my firm shall be understood as neither given nor endorsed by it.


From: Linda Richey
Date:
4/24/2007 2:18:32 PM
To:
Curtis C. Sproul
Subject:
RE: Opinion on capital improvements

Curtis: 

Thank you for everything you have sent me.  I do have your book and read it from cover to cover. 

Before I sign off from wasting any more of your time, one last shot at this...

I believe you are thinking that I have an extreme point of view on issues related to reserves.  I do not.

I do believe the Board of Directors has a lot of authority and power, but I also believe in regards to capital improvement projects of the size described at HVL, that BEGINS with open discussions and planning before it is funded for.  The process does NOT begin by fiddling around with the numbers on a Reserve Study in a back-room office.  (Planning can affect both existing and new amenities.)

I also want to be clear that I have no problem with Boards deciding how to repair, restore or replace existing amenities with all the whistles and bells of modern conveniences, including the right to even make the same bigger and more functional.  BUT, I believe the threshold for when a decision crosses the line,  is: 1) when the amenity is moved from its original location, 2) when the amenity is used in whole or in part for more than it was originally built for; and/or 3) when the original amenity is also kept to be used for another purpose.  

I don't think you would deny that the Board has the right to let the membership vote if they want to.  This isn't about the members taking over the whole association by simply allowing them to vote and if you are representing an election of this nature as being unfair, how is it any more fair to elect these oligarchies who usually never tell you what their real goals are to begin with.  They usually publish their own newspapers, run their own elections, set up their own in-house judicial systems, hide under the "business judgment rule" which seems to tolerate almost anything, and get the added benefit of free legal advice on nearly any issue -- advice which many times crosses the line between representation of the association's interests vs. representation of the desires of the majority of the Board in office.

Now, I am not going to disagree with you that most Board Members have the interests of their community at heart, or at least that's what they always tell their lawyers...  But I have rarely met a Board Member who DOESN'T have an ulterior motive.  After all, what "fool" is going to sit on a Board and take all this abuse for free, just because they care so much.   It's almost always about power or money just like everything else in life.

 Regarding your interpretation of legal intent, I am particularly struck by the recent addition of Civil Code 1357.140 and the wording used in this as it clearly parallels my thinking: "Members of an association owning 5 percent or more of the separate interests may call a special meeting of the members to reverse a rule change... and hold the meeting in conformity with Section 7511 of the Corporations Code...  For the purposes of Section 8330 of the Corporations Code, collection of signatures to call a special meeting under this section is a purpose reasonably related to the interests of the members of the association..."  

Lastly, let me say that the day I move to Afghanistan is the day I believe someone can come into my kitchen and rip my whole kitchen apart, move it to some other part of my house and add a green house I don't even want, and do all this using my money, putting me in debt for 30 years and tell me I have no say in what they are doing.  (Conversely, I do not mind having a maintenance agreement with someone where I pay them to keep up my property and make reasonable decisions on my behalf accordingly.)

Thanks a lot, it was fun.  If you are ever in Paso Robles come by for a visit.  You would be surprised to see how much Heritage Ranch has improved.  Under my watch, we practice "democracy" here every day, and it works!

Linda