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  • Frank Rizzi manages Bos Commercial in West Covina and has been in real estate since 1988. Since then, he has made millions for his investors over the last decade.

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EARTHQUAKE COUNTRY – Do You Know Where You Live?

How many of you think you don’t live in earthquake country? The CEA considers the entire state of California to be “Earthquake Country”.

Well, it is scary to think about “the big one”. But if it happens, you will wish that you had been more prepared. An article in the works about “The Hayward Fault” suggests that it might be “America’s Most Dangerous” [fault]. To see the preview news article, go here: http://www.usgs.gov/newsroom/article.asp?ID=1899. The final article will be released soon at http://www.cat-risk.com.
So is it time to prepare yet? I would say that is a definite yes. If you visit the website address above and read the entire article, you will see what kinds of things need to be done to prepare. And, maybe its time again to think about earthquake insurance(?). You may be the judge of that. On that subject, visit http://www.californiacondoguru.com for many articles on earthquake insurance – and whether to buy or not to buy it.


At What Point Is An HOA Meeting Invalid Because Of Errors?

What do you think happens when a California HOA screws something up in the election process after Civil Code Section 1363.03? That’s a good question. Some assume that the election is void (automatically invalidated). Others believe it’s no big deal, unless someone challenges the election …. and wins, either in court or because the Board thought the better of going forward with outstanding challenges.

Should everything just fall apart? Should everyone panic? My answer is no. What should happen when discrepancies have been discovered is that the complaining parties and the Board should decide what is best for each of them, under the circumstances. Sometimes they need legal advice, and sometimes not, depending on what happened, and how it affects the operations of the association.

The new law for HOAs related to elections says that HOAs “shall” adopt election rules, and specifies what those rules should include. It says that the Board shall select 1 or 3 inspectors of election and specifies who those persons can be. Civil Code Section 1363.03 says alot of things about what “shall” be done. It says that it applies to both incorporated and unincorporated associations. It says:

“(b) Notwithstanding any other law or provision of the governing documents, an election within a CID regarding assessments legally requiring a vote, election and removal of members of the association board of directors, amendments to the governing documents, or the grant of exclusive use of common area property pursuant to Section 1363.07 shall be held by secret ballot in accordance with the procedures set forth in this section.

What the heck does that mean? It means HOAs are supposed to set up procedures per CC 1363.03, and follow those procedures. But what if they don’t? Does the statute say that any election that occurs in which the HOA does not do all of the things it is supposed to do is automatically void?

No, it does not. And wouldn’t it be a mess if it did say that, since probably more than 60-80% of the HOAs in California do not even know about it, and those that do, are getting mixed interpretations about what consitutes a legal election, because the statute is so “messy” and not a “one size fits all.”

So what does that mean?

It means that anytime the Board makes a mistake, or things that occur that are not described in the law itself, a question arises as to whether the election can or should be re-done. It gets dicey because if a board gets complaints about the election, and it requires unraveling an election, and they did more things right than wrong, and the election was fair, a board could be equally charged with inappropriately unraveling an election. For example, There are many possible scenarios for making mistakes. And there are many allegations made that, until explained, sound really bad.

Who Has To Fix The Fence?

Here is a question I recently received on maintenance of fences in a Caliornia HOA.

“I own a SFR and I live next to an easement/common area owned by our HOA. During the winter, a portion of the fence blew down due to heavy winds. I believe the cost of repairing the fence should be shared by us and the HOA.

We live in California and according to California Civil Code 841: adjacent landowners equally contribute to maintain walls and fences between them, unless one of the two landowners chooses to let the remaining sides of his property remain unfenced.

However, the HOA sent us back a letter stating that according to HOA’s CCRs, the HOA is not responsible, but I am responsible for the fence and its maintenance and repairs.

My question is doesn’t California Civil Code supersede any HOA by-laws?”

MY ANSWER: Sometimes the law controls and sometimes governing documents control. If a law says “Notwithstanding the declaration [or governing documents] … the word “notwithstanding” bacially it means it doesn’t matter what the governing documents say – the law controls. If the law says “Unless the declaration provides otherwise,” … the words “unless the declaration provides otherwise,” mean that the declaration would take precedence.

In this case, the law (Civil Code Section 841) says neither. In fact, it is not even in the Davis-Stirling Act. It is in a section of California law that simply codifies some “common law” principles.

In this case, California law relating to property restrictions and equitable servitudes is more specific to the situation and it prevails. (It’s a bunch of legal jargon but what it means is that since there is a more specific law, and an agreement that binds properties and commits owners to property restrictions, it controls – it is more specific to the issue.)

I am not providing a legal opinion here because I have not been asked to review the documents or provide one. While it is fair to say that the governing documents will control with regard to fence maintenance, I did not review them to figure out how the allocation on party fences (those shared by two property owners) is made. HOA CC&Rs often have regs on party fences, and then the question has to be answered as to whether the fences between the common area and a separate interest lot are treated as party fences would be (shared expense),as common area maintenance is (HOA expense), or as the sole obligation of the owner of the Lot.

How Does One Determine if Condo Living is for Them?

You are not even in yet, just at the house shopping stage. Would you be a likely candidate for happiness in a condo?

Ask yourselves:

Have you ever experienced apt living? Was it tolerable?

If not, then beware of condo living – it has many of the similar issues that occur when neighbors are living in close quarters, and it is harder to get out of if it becomes intolerable.

Are you someone who considers yourself to be “King of the Castle”, without regard for others who live nearby?

“King of the Castle” is fine … great in fact, if you are “King” of a Castle. In a condo, it can work against you. If you believe you can do anything that you want, and/or claim any areas that you want for your own exclusive use, and believe that the rules are for everyone else, you may end up fighting with everyone around you.

Do you often act out or retaliate when someone does something that makes you mad?

If you respond to difficult situations with anger or retaliation instead of with a calm “take a step back before reacting” and find out what is really happening attitude, you may find that you are unhappy a great deal of the time, perhaps even more so in a close, dense living situation like a condominium.

If you hate hearing people “living” overhead, don’t buy a condo that is underneath another one.

If you have 3 cars, and only two parking spaces are offered for use in the development, don’t buy the condo.

If you want to convert the garage, and the CC&Rs say that garages are for parking, even if you see that others use their garage for storage, don’t assume that it should be “no problem” to ignore the restriction.

On a positive note, are you a really busy person who does not want to be bothered by “house stuff”?

If you appreciate a home where someone else arranges all the maintenance and you just pay a fee, someone else arranges to get the pool cleaned and you just pay a fee, you might be happier in a condo. If you love to travel and want to be able to “lock and go”, and live in a place where the neighbors are close and it is not easily obvious that the home is empty because of people coming and going everyday, condo living may be be just the right thing.

If you like amenities like swimming pools and spas, and cannot afford a home with these benefits, you will probably appreciate a condo, but remember, you have to share, and you have to follow the rules.

Condo living is sold as an affordable product and in many cases condos do cost less than single family homes of the same square footage. However, remember that to qualify to buy a condominium, you have to add in the assessment to the costs that will be factored in the ability to qualify for a loan, so you may qualify for less. And remember, other people make the financial decisions for you, when you own a condominium.

What is a Letter of Intent?

What should you include in a Letter of Intent to purchase an apartment building or commercial real estate? Here are the basics.

What is a Letter of Intent?
A Letter of Intent (LOI) is a preliminary document outlining the price, terms, and other transaction details that a buyer would be be interested in purchasing a piece of real estate.

When should you use a Letter of Intent vs. Purchase Offer?
A Letter of Intent can be a great tool to start negotiations when buying an apartment building. A few cases when it can be beneficial are:
1. When you would like to buy a property for much less than the Seller is asking.
2. If you want more flexible terms than the Seller says they would like.
3. If you are unfamiliar with the property and area, a LOI can be used while you are doing some due diligence in the background.

Remember, most of the time a LOI is not a formal offer but mainly a point of understanding between you and the seller to enter into a Formal Purchase Agreement.

No Candidate for President of the HOA? – What to do

Here’s the question: “Our current president has declined to run for a second term, while another candidate who wants the position is unqualified because he is not an owner (his wife is co-owner of their unit with her father). What options do we have? Our CC&R states that there must be at least three members of the board.At this point, we have candidates for vice president and secretary/treasurer, but neither of them wants ro run for president.”

The Board could propose an amendment to the Bylaws to allow non members to serve. That is one option to open up the pool of possible candidates. Most association elections do not elect by office, the members elect the board members and the board then meets and decides who will fulfill the offices.

Condo Association Financials Question

Another question I have recieved today:

“Is there a place to see budget, minutes of the condo meetings and other info helpful info?  I know they might be missing insurance – and want to find out exactly what is going on and if/how it will be remedied or if there is a possibility going to receivership – and or how many foreclosures in bldg can you please advise if there is a place to look or how to do research?”

 Unfortunately, you can only get a condo association’s financials if someone involved with the association provides them to you.  I would suggest you contact the seller of the condo unit or try to identify members of the condo association board.  There is no easy way to find out if the condo association insurance is paid for.  You can call your country registry of deeds and find out if there are any liens against the condo units in the building by the condo association. 

Generally speaking, if no one wants to provide financials you should walk away for the condo unit, even if you’re emotionally attached.