Legal Issues During a Pandemic
As we all adjust to the new “normal” of living with a global pandemic and a response that requires the vast majority of people reading this doing so from the confinement of their homes, Roseman Law applauds the dedication of the thousands of community managers, volunteer board members and their business partners who continue to serve the tens of thousands of common interest development communities throughout California. As some of you know, Roseman Law has been presenting weekly video conferences during which our partners respond to your questions in real time regarding the day-to-day issues you are dealing with in your communities. This is the second article in what we hope will be a short series discussing some of the questions presented during those forums. Please note, this is the best advice available to us as of the time this article was written. Please check with one of our attorneys or your own independent legal counsel before implementing any new policies or procedures.
Keep in Mind: As of the time this article is being written, all the requirements of the California Civil Code sections collectively referred to as the “Davis-Stirling Act” remain in full force and effect. Likewise, the duties, obligations and responsibilities imposed on associations and the members and occupants of the same remain in full force and effect.
“Although our Board generally meets monthly, we sometimes go every other month depending on agenda items. How long can we reasonably go without attempting to substitute a virtual meeting for a regular in-person with social distancing Board meeting?”
The restrictions imposed by various governmental agencies in an effort to stop the spread of COVID-19 have, by necessity, been something of a “moving goal line.” While we are certainly not medical experts, it appears that social distancing is effective in slowing the spread of the virus and it seems likely those guidelines will be in place for at least the short to intermediate term. While we cannot tell you how long it will be, we advise our clients to continue to adhere to social distancing restrictions for as long as they are in place. Doing so means not holding “a regular in-person with social distancing Board meeting.” That is not to say Boards cannot meet but if it is necessary to do so, we recommend continuing to hold virtual meetings as authorized by Civil Code §4090(b). The problem with doing so is that this statute requires, in pertinent part: “Except for a meeting that will be held solely in executive session, the notice of the teleconference meeting shall identify at least one physical location so that members of the association may attend, and at least one director or a person designated by the board shall be present at that location. …” As such, an association cannot concurrently comply with both the Civil Code and the “stay home” Order.
We are therefore advising our clients that if it is necessary to hold a board meeting, they should do so via a “teleconference” without designating a physical location at which members may attend. We recommend that the association should do everything it is capable of doing to provide the members with the ability to “attend” the meeting remotely e.g. include a teleconference call in number and a video conference link on the Notice of the meeting so the members may “attend” by phone or video conference services such as Zoom. Other than not designating a physical location, these meetings should fully comply with all other requirements of the Open Meeting Act including providing a member forum. To this end, we are recommending that boards formally adopt resolutions temporarily suspending all in-person meetings and adopt a policy on teleconference and video conference meetings. Please do not hesitate to contact Roseman Law if you would like this office to draft a resolution and policy regarding the suspension of in-person meetings.
“We have postponed our annual meeting scheduled for 4/18, the primary purpose of which is election of Board Directors. The candidate info was posted. However, the ballots were not sent out. We have 3 open positions and only 2 candidates. Is there any way we can do a proclamation or <whatever> to get the new Board in place?”
Unfortunately, no. Some of the veteran community managers and board members reading this will recall a time when the membership of an association could vote to accept the “slate by acclamation.” This meant that where the number of candidates for election to the board was equal to or less than the number of seats being filled, those candidates were elected by acclamation without tabulating the ballots. Elections of directors could be held in seconds through a motion, a second and a show of hands. That is no longer the case. Pursuant to Civil Code §5120: “(a) All votes shall be counted and tabulated by the inspector or inspectors of elections, or the designee of the inspector of elections, in public at a properly noticed open meeting of the board or members….” This statute requires the actual tabulation of the members’ ballots even though the outcome of the election is a foregone conclusion. In this regard it is interesting to note that the amendments to the Davis-Stirling Act required by Senate Bill 323 now provide that a board may be elected by acclamation provided the specified requirements are met, the first one being that “the association includes 6,000 or more units.” While we would hardly call this the comeback of slate by acclamation, it is at least on the legislators’ “radar,” at least with respect to large communities.
“In these difficult times, with a five-member Board, can three or more Board members communicate directly without violating meeting without notice rules?”
As with the response to the question above, unfortunately not unless it is a true emergency. While the author of the question does not define what he or she means by “communicate directly,” how they do so is irrelevant for the purposes of this analysis. Three (3) of five (5) board members i.e. a quorum “meeting at the same time and place … to hear, discuss, or deliberate upon any item of business that is within the authority of the board” is, by definition, a “board meeting.” [Civil Code §4090(a)]
Under the circumstances, we assume the author of the question is asking if the three (3) board members can communicate directly via email, teleconference, or video conference. Again, the answer is they may not unless the meeting is necessary to address a true emergency. Pursuant to Civil Code §4910: “(a) The board shall not take action on any item of business outside of a board meeting…. [T]he board shall not conduct a meeting via a series of electronic transmissions, including, but not limited to, electronic mail, except as specified in paragraph (2).” “(2) Electronic transmissions may be used as a method of conducting an emergency board meeting ….” An emergency board meeting may be called “if there are circumstances that could not have been reasonably foreseen which require immediate attention and possible action by the board, and which of necessity make it impracticable to provide notice…” While it may be tempting to characterize every issue that comes before the board during a global pandemic and quarantine lock-down as reasonably unforeseen, we caution boards against doing so.
“What allowances, if any, should board make to Owners who are unable to pay their dues due to Covid 19 either because they are ill, or are out of work? Any other reasons? Is it ok to continue late fees or should they be deferred? How then should we handle other Owners who are just late in payment without a Covid 19 excuse?”
Not surprisingly, questions regarding collection of assessments have dominated the inquiries Roseman Law has received from community managers and board members since the economic reality of the COVID-19 response began to take hold. The data and statistics associated with unemployment alone are shocking. As of the date of writing this article, nearly one out of ten people who were employed before the pandemic are no longer employed. We are not economic experts, but you do not have to be to realize that the economic aftermath of COVID-19 will include chronic delinquencies and associations should plan accordingly.
At the risk of seeming tone deaf, your board of directors has a legal obligation to collect regular and special assessments sufficient to perform its obligations. Likewise, the members of your communities have a legal obligation to pay those assessments. COVID-19 has not changed the fact that assessments are the only revenue source for the association or the fact that the association has ongoing duties and obligations imposed by law and their governing documents. For example, if an association’s failure to collect assessments means there are insufficient funds to pay the insurance premium, the insurance policy will be cancelled. It is vital that association’s continue to collect assessments but it is equally as important that associations do so with compassion and understanding. While boards cannot suspend the obligation to pay assessments either legally or in the best interests of the association, boards can work with their members towards crafting a solution on a case-by-case basis to assist the member while continuing to preserve and protect the ongoing viability of the association. An obvious example is providing members with payment plans and while we do not recommend that associations declare a moratorium on charging late fees and interest charges, those amounts, which do not affect the association’s bottom line, can be forgiven to facilitate a resolution of the matter. With that said, we do recommend that associations ensure that a delinquent assessment debt is secured by recording a Notice of Delinquent Assessment Lien (“Lien”) against the member’s separate interest pursuant to the association’s collection policy, and members who request a payment plan should be advised that recording a Lien will be a condition of the payment plan. Again, this action is simply to secure the association’s interest in the monies owed and is not punitive. We also note that as of the date of writing this article, an association may be precluded from foreclosing on any such Lien.