On October 14, 2014, the Court of Appeal issued an opinion in the case of Huntington Continental Townhouse Association, Inc. v. Miner (Fourth Appellate District, Division Three Case No. G049624) concerning associations’ duty to accept partial payments from delinquent owners. The opinion has been certified for publication.

The issue considered by the Court was whether an association is required by the Davis-Stirling Act to accept partial payments from an owner who is delinquent in the payment of assessments after a lien has been recorded against the owner’s property. Civil Code §5655(a) provides: “Any payments made by the owner of a separate interest toward a debt described in subdivision (a) of Section 5650 shall first be applied to the assessments owed, and, only after the assessments owed are paid in full shall the payments be applied to the fees and costs of collection, attorney’s fees, late charges, or interest.”

The Court found that the plain language of §5655(a) permits delinquent owners to make partial payments, and requires an association to accept partial payments. The Court held that under the statutory language of §5655(a), if an owner of a separate interest makes any payment, the association cannot reject it, but is required to apply that payment to the debt in the order set out in Section 5650.

The impact of the Huntington decision is that where a partial payment is made which reduces the principal amount of the debt to an amount below the statutory threshold for foreclosure, which is $1800, then foreclosure may no longer be a remedy available to the association. When payment is tendered during litigation, an association could still obtain a money judgment for the amounts due, but it would not be entitled to a judgment for foreclosure if the threshold amount is not met after applying a partial payment. In cases where a lawsuit has not yet been filed, then acceptance of a partial payment may simply result in a delay in initiating foreclosure rather than a bar to using that remedy. The association would have to wait for the debt to reach the statutory threshold after applying the payment before initiating an action for foreclosure.

Release date: October 16, 2014

Permission to reprint is hereby granted, providing proper credit is given as follows: “Reprinted from Fiore Racobs & Powers Legal Update.” All rights reserved. While every effort is made to ensure accuracy, the legal analysis is not intended to be exhaustive and recipients should not act on information contained herein without seeking more specific professional legal advice. The firm is not responsible for any errors which may inadvertently occur during publications.

AB 349 was signed by Governor Brown on Friday, September 4, 2015, as urgency legislation. This Bill amends Civil Code Section 4735 to stop community associations from prohibiting artificial turf and is effective immediately.

The Bill recites the State’s public policy behind encouraging use of artificial turf in community associations. A drought state of emergency was declared by the Governor in January 2014, and in April 2015 the Governor directed the State Water Resources Board to implement a 25% water reduction statewide. Landscaping irrigation represents 43% of urban water use. The installation of artificial turf or synthetic grass can directly reduce outdoor water use and assist in meeting the Governor’s mandated water use reduction.

The history of the Bill indicates that the Legislators purportedly heard stories about some associations that fined or sued owners for installing artificial turf, and which, despite the water shortage crisis, were “not allowing homeowners to make voluntary sacrifices by installing artificial grass…”

Regardless of the validity of such stories, to preserve “the public peace, health and safety,” the Legislature passed and the Governor signed AB 349 to ensure “that all homeowners have the right to better conserve water by voluntarily replacing grass with artificial grass.”

Thus, the Legislature has now passed amendments to Civil Code Section 4735 which provide:

• Association governing documents cannot prohibit, or include conditions that have the effect of prohibiting, use of artificial turf or other synthetic surface that resembles grass, and any such provisions in governing documents are void and unenforceable
• Associations may adopt and apply reasonable landscape rules that do not prohibit artificial turf or synthetic grass
• Associations may not require removal of the artificial turf upon conclusion of the drought state of emergency

The Legislative history and Bill analysis indicate an intent that the existing law regarding an association’s authority to adopt and enforce reasonable regulations and architectural standards will continue. AB 349 does not change an association’s existing authority under Davis-Stirling or its own governing documents, except that associations may not prohibit installation of artificial turf. There is no guidance in the Bill regarding the content of such association rules. The Legislative findings and history indicate that associations have the authority to regulate artificial turf installation based on reasonable design, aesthetic, and drainage standards, as well as quality restrictions about the type of artificial turf a homeowner can use, including for example, the color and replacement requirements, as long as those restrictions do not effectively make it impossible for a homeowner to install artificial turf.

The Sponsor of the Bill, the San Diego Water Authority, believes “that AB 349 represents a responsible approach to balancing the advancement of water use efficiency in communities throughout the state while retaining important design and aesthetic oversight of the homeowners association.”

It is important to note that AB 349 does not address the architectural or landscape application process, or whether owners must obtain association approval prior to installation of the artificial turf or other forms of drought tolerant landscaping. However, the stated intent behind the Bill is not to change the existing law, which allows an association to adopt reasonable rules and regulations, including procedures for owners to apply for association approval of modifications. AB 349 does not address prior architectural approval, so it is still an open question. The Legislature did not include an exception in AB 349 for owners to bypass the association approval process prior to installation of artificial turf or other drought tolerant landscape.

Under the language of the Bill, an association may not require an owner to remove or reverse the water-efficient landscaping measures upon the conclusion of the state of drought emergency. It is unclear whether an association can require an owner to remove unapproved installations during or after the state of drought emergency ends. However, if an owner does not receive association approval for an artificial turf installation, absent language in the Bill to the contrary, an association may have a reasonable basis to require the owner to remove the artificial turf at any time, since it does not meet the association’s rules and standards.

In summary, care should be taken to ensure that the association’s rules are reasonable and focus on design, aesthetic and drainage concerns and oversight, including color and replacement requirements, but do not prohibit, or have the effect of prohibiting, artificial turf installation. Specifically, the rules may require that the artificial turf be green, look like real grass, be properly maintained, and be installed in locations where grass would otherwise be installed. Also, an association may require that owners apply for association approval prior to installation of artificial turf or other drought tolerant landscape.

The entire Davis-Stirling Common Development Act is available on our website at www.FioreLaw.com/Resources.

Release date: September 14, 2015

Permission to reprint is hereby granted, providing proper credit is given as follows: “Reprinted from Fiore Racobs & Powers Legal Update.” All rights reserved. While every effort is made to ensure accuracy, the legal analysis is not intended to be exhaustive and recipients should not act on information contained herein without seeking more specific professional legal advice. The firm is not responsible for any errors which may inadvertently occur during publications.

On January 1, 2017, the Davis-Stirling Common Interest Development Act maintenance presumptions change. Right now, Civil Code section 4775 states that, unless an association’s CC&Rs provide otherwise, the association is presumed responsible for repairing, replacing and maintaining the common area and each owner is presumed responsible for maintaining the owner’s exclusive use common area. Many associations assumed the terms “repair,” “replace,” and “maintain” were interchangeable.

Section 4775 is slated to change on January 1, 2017, to provide that, unless an association’s CC&Rs provide otherwise, the association will be presumed responsible for repairing, replacing and maintaining the common area, the owner will be presumed responsible for maintaining the owner’s exclusive use common area and the association will be presumed responsible for repairing and replacing the owner’s exclusive use common area.

If your association’s CC&Rs do not assign responsibility for repairing and replacing exclusive use common area components to the owner served by those components, and the association’s operating budget does not include anticipated repair costs for those components or the reserves do not include funds for the eventual replacement of those components, this statutory change could have a big financial impact on your association. Potential exclusive use common area components include private yards and patios, drains, sprinklers, fences and walls, doors, garage doors, garage door opening systems and water supply lines.

The owner of the appurtenant separate interest will “maintain” the exclusive use common area while the association will be responsible for “repair” and “replacement.” The difference between maintaining and repairing an exclusive use common area component will be unclear. For example, Black’s Law Dictionary defines “maintain” as to “care for (property) . . . to engage in general repair and upkeep.” (8th ed. 2009, at p. 1039.) Confusion will result regarding where a homeowner’s duty to maintain ends and an association’s duty to repair begins. In addition, lack of proper maintenance often leads to increased repair costs.

We don’t know if there will be any further revisions to the statute prior to January 1, 2017. But, if there are no further revisions, many associations will find themselves responsible for repairing and replacing exclusive use common area components that were previously thought to be the owners’ obligation.

Some associations may be able to amend their CC&Rs prior to January 1, 2017, to lessen the financial impact of and the confusion created by the statutory change. But it can be difficult and time consuming to attempt to amend CC&Rs. Associations with exclusive use common area components that the association is not currently set up financially to repair and replace might want to commence an inquiry in 2015 on how the statutory change might apply, so as to leave time to attempt to amend the CC&Rs (or raise assessments) if needed prior to January 1, 2017. Such associations should also consider possible rule changes to specify what constitutes “maintenance” of exclusive use common areas, so members will know what is expected of them.

Release date: February 17, 2015

Permission to reprint is hereby granted, providing proper credit is given as follows: “Reprinted from Fiore Racobs & Powers Legal Update.” All rights reserved. While every effort is made to ensure accuracy, the legal analysis is not intended to be exhaustive and recipients should not act on information contained herein without seeking more specific professional legal advice. The firm is not responsible for any errors which may inadvertently occur during publications.