With 2018 less than two weeks away, you’ve probably started thinking about changes you’re going to make in the new year. In addition to your own personal New Year’s resolutions, it’s important to make sure that you know of any changes on the horizon that could potentially affect your business, and assess how you can improve your business model for the coming year.
This year, the California Legislature created numerous laws and measures affecting homeowners associations and their functions, and six bills will be entering into effect in 2018. Here is a brief explanation of what these new measures are, how they will affect your HOA, and how you can be ready for the coming changes.
- Senate Bill 2 – This bill, also referred to as the “Building Homes and Jobs Act”, is an urgency statute that was signed and entered into effect in September with the goal of increasing housing supply, reducing homelessness, and creating the Building Homes and Jobs Trust Fund. According to the new statutes Government Code Section 27388.1 and Health and Safety Code Sections 50470 and 50470.5, the new fund will be the recipient of proceeds from a new tax of $75 per document recorded with county recorders (documents recorded due to a transfer of property ownership will not be affected). Many HOA documents will be subject to this $75 fee in the future, including amendments to CC&Rs, common area alteration agreements, liens, and lien releases. Delinquencies will be subject to an additional $150 fee in addition to the cost of recording an assessment lien and a lien removal.
- Assembly Bill 534 – AB 534’s civil codes will broaden the scope of when contractors can record a mechanics lien. Previously, contractors could not record one against a condominium project unless they were hired by the HOA to work on the association’s common area and if the homeowner does not pay for the work, but the code will broaden to apply to planned development, community apartments, and stock cooperative projects, and another civil code will require the HOA to notify condo owners of mechanics liens filed on the common area.
- Assembly Bill 1412 – AB 1412 amends Civil Code 4041 to allow HOAs to use an owner’s last known mailing address if said owner does not respond to the annual request for mailing address updates. In addition, the protection for volunteer directors in HOAs for residential associations will expand to include volunteer directors in mixed-used associations (though it will not cover commercial owners acting as volunteer directors, only residential owners and residents).
- Senate Bill 407 – SB 407’s Civil Code 4515 protects HOA members and residents’ right to “peacefully assemble and freely communicate” for HOA-related purposes or unrelated purposes. This entails protecting members and residents’ right to hold meetings, invite public officials or representatives, canvass or petition, and distribute information for HOA or political matters. In addition, if members or residents wish to use common areas for these purposes, they will not be charged.
- Assembly Bill 634 – AB 634 encourages the use of solar energy through a civil code expansion and the creation of a new section. Homeowners are now permitted to install solar systems on common area roofs over their dwelling or garage (with some HOA limitations), though residents may be required to insure their system and take responsibility for damages or costs incurred by the system. Because the bill is making the way for solar systems on communal roofs, your HOA may need to regulate roof space or designate a method for residents to show that they are not taking up an excessive amount of space.
- Assembly Bill 690 – AB 690 increases the required disclosures for HOA managers. No more than 90 days after being hired, the manager or company must disclose in writing to the HOA any businesses that have given them a referral fee or financial benefit, or those that are partly owned by management. In addition, managers and management companies must disclose in writing any potential conflicts of interest when proposing the use of vendor services for the association.
About Scott Litman Insurance Agency
At Scott Litman Insurance Agency, we are dedicated to protecting HOA’s like yours. We have a unique understanding of the industry and the common risk exposures that you face in your daily operations. In fact, we find that 90% of the policies we review are missing coverages that violate the Covenants, Conditions and Restrictions (CC&R), exposing the board, HOA and management to lawsuits– which is why our comprehensive policies are tailored to meet your specific needs at competitive prices. For more information about our products, contact our experts today at (818) 879-5980 ext. 201, or fill out our online form.