B E V E N & B R O C K NEWS AND VIEWS

DAVID BROCK, PCAM Protecting the Association’s Position The Benefits of Judicial

By Veronica R. Pawlowski, Esq. A personal judgment allows the association to pursue enforcement methods such as wage In the current economic climate, collection of garnishments, bank account levies, attachment delinquent assessments is complicated by the of rents, etc. Personal judgments are also fact that many owners are “underwater” on recorded in any county where the owner has THE BOARD: their . Ironically, some owners view so that the owner may not sell any a threat of foreclosure by the association as a other property without satisfying the associa- MEETING THE relief. They think “go ahead and take it – then tion’s judgment. Finally, judgments are valid CHALLENGE you can deal with my bank!” for 10 years (or more) so that even if an owner is without assets in the current economy, there How do board members With these circumstances in mind, associa- is a long-term potential for recovery by the balance their career, family tions must utilize the foreclosure method that association. and personal interests while offers the greatest opportunity to navigate the addressing the demands of hurdles of today’s economy. Judicial fore- As mentioned above, judicial foreclosure their position on the board? closure is the most flexible collection method involves filing a lawsuit in superior court. The answer is that it’s not available to associa- Even if the amount easy. Board member volun- tions. The benefits of demanded is relatively teers are faced with increas- judicial foreclosure An HOA has multiple low, the association ing legislative requirements include the following: options in collecting does not have to file and relevant HOA case law, delinquent assessments in small claims court constant emails that seem An association’s lien because the lawsuit to demand immediate atten- is subordinate to the seeks foreclosure (in tion, the need to be vigilant bank’s mortgage. addition to a money to their fiduciary and good This means that if the bank forecloses, the judgment against the owner). Superior court faith duties to the associa- association’s lien is “wiped out” as part of the does not have jurisdictional limits. We often tion, and the responsibility bank’s foreclosure process. If an association see associations that are owed in excess of to address the assets of the pursues non-judicial foreclosure and the bank $5,000 limit their claim to $5,000 to fall within association both financially forecloses first, the association’s collection the jurisdictional limit of small claims court. and with proper mainte- attempt comes to an abrupt end. Judicial foreclosure allows the association nance. to pursue foreclosure and a money judgment Judicial foreclosure, on the other hand, simultaneously and it allows the association to The following tips may involves filing a lawsuit in superior court for pursue the full amount owed without limiting encourage other homeown- breach of CC&Rs and foreclosure. If the bank its claim to the jurisdictional amounts of small ers to participate in service forecloses halfway through the process, the claims. on the board of directors association loses the option of foreclosure but while combating burnout of can continue its lawsuit without delay and With judicial foreclosure, all remedies are current board members. obtain a personal judgment against the owner pursued concurrently. And, if the judicial fore- See “The Board” on Page Four based on the breach of contract (the CC&Rs). See “Choose” on Page Three

ASSOCIATION MANAGEMENT NEWSLETTER A Master Policy May Settle Concerns Don’t Let Shake Your World By Marie Cummings, CCAM structures and common areas are damaged you to consider earthquake insurance, and and the association does not have a master to consult your professional insurance As Southern Californians our hearts have earthquake . agent for details gone out to others as we have watched take their toll on lives and 1. Does the association have enough mon- property in recent months. If you are like ey to rebuild or repair the structures? Or Cummings Earns me, you have sent donations to help the how will the association get the money? victims of the disaster, counted your lucky Will a large special assessment suffice CCAM Certification stars, and asked, “am I prepared?” or be possible? The board will have the Beven & Brock is pleased to announce that fiduciary duty to determine how to rebuild Marie Cummings was recently awarded A master earthquake insurance policy for whether there is earthquake insurance the designation of Certified Community your homeowners’ association can be one coverage or not. Association Manager (CCAM) by the step in your earthquake preparation. As California Association of Community a service to the associations it manages 2. Will the board have liability coverage Managers, Inc. Beven and Brock obtained earthquake protection from homeowners who are insurance quotes for associations that do angry that the association does not have a In order to be certified she successfully not carry a master earthquake insurance master earthquake insurance policy? Not completed an intensive educational cur- policy. The quotes were submitted to likely. Directors and Officers Liability riculum which included instruction and the boards of directors of those associa- coverage may have an exclusion regarding testing in community association law, tions. Additionally, the boards were and the “failure to maintain” earthquake cov- financial management, association opera- continue to be encouraged to survey their erage. So, if there was an earthquake and tions, communications and ethics. In ad- homeowners as to whether or not the the board was sued, the board would likely dition, a standard of practical experience homeowners want the association to carry not be covered under their D&O policy. in the community associations manage- earthquake insurance and whether or not ment industry had to be achieved prior to the homeowners want the association to 3. As a homeowner, will I be able to afford certification. add or cancel earthquake insurance before to walk away from the equity investment any action might be taken. I have in my home? If the association To maintain certification, all certified cannot afford to rebuild the structures, a managers must complete ongoing con- Weighing the expense of earthquake homeowner will not be able to rebuild the tinuing education requirements, belong insurance against the potential financial interior of their home. to a trade organization and subscribe to exposure of a catastrophic property loss is the Code of Ethics. This provides a high difficult. The following are a few items Preparation is the best defense against a degree of protection to homeowner as- for consideration in a “what if” scenario: catastrophic earthquake. As part of your sociations. a severe earthquake hits, the association preparation, Beven and Brock encourages Beven & Brock requires all of its manag- ers to be certified in order to provide the highest level of professional service to its clients. The law requires that property GARDEN VIEW INC. High Quality Gardening Services managers disclose whether or not they are ‘Specializing in HOA Landscape Main- certified although certification itself is not tenance’ (626) 303-4043 a requirement to be a . Of Arcadia and Pasadena North www.garden-view.com email: [email protected] Office:(626) 447-4111 Toll: (888) 600-4411 We congratulate Marie on her accomplish- Fire & Water – Cleanup & Restoration ment. We know she will be successful in

Mold Remediation Painting Inc. FERRIS PAINTING this field as she has already proven to be Soot and Smoke Removal Commercial & Residential Paint- Packout & Storage ing Specializing in HOA’s a great addition to our staff. She is a San Repairs after Damage Greg Lewis (818) 951-3207 Gabriel valley native and has worked in 24 Hour Emergency Live Response www.ferrispainting.com the past for Farmers Insurance and Wash- License #872494 WE SERVICE ALL OF L.A. COUNTY ington Mutual Bank. For HOA Board Members It’s ‘Work Smarter, Not Harder’ By Roman Esparza, CCAM 1. Design a job specification worksheet ing company can show you in full color, when sending out an RFP (Request for what a new color scheme will look like on In community associations the board Proposal). The board can outline the exact the , or how the new pool tile of directors can spend countless hours work needed with any given project in a will match the pool surroundings when researching various HOA projects in order “job spec.” If board members are unsure completed. These renderings can take the to provide their community with the best of the exact specifics needed they should guess work out of projects and make the quality work possible at the best price. consider hiring a construction consultant board’s job easier and help ensure that the to assist them in drawing up a good, com- final product looks like what is expected. Board members can become frustrated by prehensive job specification checklist. working with different vendors, who may 3. Limit the number of companies that be qualified, licensed and insured, but can 2. Ask the vendor for a rendering of what submit proposals. Reviewing bids from offer different ideas and pricing for simple the final job will look like. Vendors such as more than three, or even four, vendors can repairs and/or project improvements. a landscape company, painting company, cause more harm than good. The board pool plastering contractor and others can should review all the vendors’ qualifica- The board of directors can “work smarter, often provide color renderings of what new tions prior to sending an RFP. Only ven- not harder” by following some of these plants or trees will look like when planted. dors who are qualified to perform specific simple ideas: Or, a painting company or pool plaster- projects and repairs should be sent an RFP. Board members can verify contractors qualifications by visiting the Contractors State License Board online at www.cslb. Choose Legal Representative Carefully ca.gov or by calling 800-321-CSLB. This Continued from Page One multiple parties, collection efforts are will help prevent companies that are not closure process is being handled by a full- not as simple as threatening foreclosure. qualified from submitting proposals at service HOA law firm where collection Under these circumstances, an association pricing that may be well below what a work is attorney-supervised, that one law is best served by pursuing foreclosure and well-qualified contractor would charge and firm can handle all aspects of the process, a personal judgment concurrently because could possibly leave the community with including recording the lien, filing the doing so gives the association multiple less than quality work. lawsuit, handling any requested media- chances at collection without having to tions, drafting settlement agreements, and initiate multiple collection methods. By using some of these simple tips, board obtaining a judgment. In the end, this can members can feel more comfortable mak- help keep the association costs down be- Veronica R. Pawlowski, Esq is a Senior ing decisions and ensure that they work cause one service provider is responsible Associate at Pasadena-based law firm smarter, not harder. for the entire process. Richardson & Harman, PC specializing in assessment collection, general HOA ad- Roman Esparza is a Certified Community It’s a tough time for associations. In a vice and litigation. She can be contacted Association Manager (CCAM) at Beven & time where many owners are “underwa- at [email protected] or 626-449- Brock. He has been managing homeowner ter” and may be facing foreclosure from 5577. associations for 21 years.

MERRY PLUMBING HEATING & AIR NICK GERIS & SONS PAINTING, INC. Association Painting Specialists STEVEN G. SEGAL (626) 796-4307 Dial (714) 639-1510 Cell (714) 325-1511 www.merryplumbing.com License # 860445 www.nickgerisandsonspainting.com INSURANCE AGENCY, INC. Lic. #836127 Over 30 Years experience specializing in: • Condominium Associations • Planned Unit Developments TO ADVERTISE HERE JOHN R. SINNER • Earthquake Coverage Contact Roman Esparza at INSURANCE AGENCY INC. • Workers Compensation Beven & Brock 1230 E. Main St. Alhambra, CA 91801 Toll Free: 800-345-8866 Fax: 800-262-0973 Toll Free (800) 516-1078 Email: [email protected] (626) 243-4158 Fax (626) 576-8049 Web: www.farmersagent.com/ssegal email: [email protected] www. johnsinner.com License # 0589670 CA License # OE24660 The Board: Keep Your Perspective – and a Sense of Humor Continued from Page One unless you have the express authority from relying on the counsel of others who have 1. One of the least desirable aspects of the other board members to speak for the credentials in a particular field. board service is the feeling that you are them. No single board member has viewed as the manager and that any more voting power than any other 4. Conflict avoidance doesn’t have to be you are always on duty. Succumbing to member. Working as a team decreases the difficult, and employing a few simple this role should be avoided because not burden for all board members, and it is strategies may help avoid greater conflict only does it rob you of your leisure time, the right thing to do. If your fellow board later. Listen to owners at board meetings. but it sends the wrong message to your members have all resigned, or are inactive, Treat all owners fairly and with respect. fellow homeowners. If other homeowners you can and must appoint replacement As a board, be transparent in making all perceive that being on the board means board members. but emergency decisions during board being the on-site manager, it may discour- meetings only. Be mindful and com- age them from running for board positions 3. Utilize respected, reputable and trusted municative of your fiduciary duty to the in the future. Communicate to your vendors who strive to be the best in their association to avoid personal agendas. fellow homeowners that you are not avail- field. Ask them for their advice and coun- able 24/7 while showing them that you sel and rely on it. There is no expectation On any given day these pointers can be are responsive to them in board meetings. that board members must know everything easier said than done, so keep a sense of This should help you and encourage other there is to know about operating an asso- perspective and a sense of humor. homeowners to respect your time. ciation. The best protection that exists for 2. Never operate alone as a board member a volunteer board in making decisions is

NEWS & VIEWS This Newsletter is circulated for general Free Seminar on Maintenance Issues informational purposes as a public service and Beven & Brock highly values education reservations must be made. To obtain promotion by the Beven & Brock Property for board members of homeowner as- more information about this or similar Management Company. The contents are opinions sociations and has been offering seminars events, contact us at 626-795-3282, ext. of the firm, not intended to constitute legal advice, and should not be relied upon for that purpose. If for board members on a variety of topics 886, or by email at HOASEMINARS@ you have a legal issue related to a subject of this since 2005. Our next seminar will address bevenandbrock.com. newsletter, you should consult the California Civil “Strategies for Addressing Maintenance Code and your attorney. Editing & Layout by PM Issues” and will be held in Pasadena on the Board members of associations managed Enterprises, 626-799-5985. evening of Oct. 18. A local HOA attorney, by Beven & Brock will be offered a three The paid advertising in this newsletter is provided an insurance professional, a representative hour board training seminar beginning in as a courtesy to our readers and does not consti- tute any endorsement by Beven & Brock. The from a bank that makes association loans October. Information on this seminar can advertisers do work with HOAs and have pro- and a roofing consultant will be featured be obtained at boardtraining@bevenand- vided services to Beven & Brock’s HOA clients speakers. The seminars are free, however, brock.com. in the past.