J & N REALTY, INC.

1.

Who decides whether a meeting should be adjourned if a quorum has not been reached?

a.

The board

b.

The election inspector

c.

The members at the meeting

The correct answer is: (c)  

Comment: Corporations Code 7512(d) says that in the absence of a quorum, any meeting of members may be adjourned by the vote of a majority of the votes represented in person or by proxy but no other business may be transacted.

2.

Is the right to vote limited to "members in good standing"?

a.

Depends on what the election rules say

b.

Depends on what the bylaws say

c.

Depends on whether there has been a hearing to suspend voting rights

d.

All of the above

The correct answer is: (d) 

Comment: The election rules and bylaws specify voter qualifications (and hopefully are consistent).  Typically, those qualifications will include the requirement that a member be "in good standing.”  Some governing documents will specify that "good standing" means not delinquent in the payment of assessments.  Civil Code §1363(h) permits the board to impose discipline on a member so long as the member is afforded the right to a hearing.

3.

Can directors be "elected" at a board meeting?

a.

Yes

b.

No

The correct answer is: (a) 

Comment: Yes, directors are elected via secret written ballot and the ballots can be counted either at a board or a membership meeting.  The bylaws must be checked to determine applicable "annual meeting" requirements.

4.

The "secret ballot" election law does not apply to:

a.

A vote to remove directors

b.

A vote to "give away" exclusive use common area

c.

A vote to repeal a rule adopted by the board

d.

A vote to approve a large special assessment

The correct answer is: (c) 

Comment: In addition to items (a), (b) and (d), the election law (found in Civil Code §1363.03) requires use of the secret ballot for the election of directors, the amendment of governing documents and for the imposition of increases of more than 20% of the annual assessment.

5.

The manager can be the election inspector

a.

If authorized by the bylaws

b.

If authorized in the election rules

c.

If authorized in the management contract

d.

Yes, unless objected to by a simple majority of members

The correct answer is: (b) 

Comment: The election inspector must be an "independent third party or parties" (one or three).  Neither the manager, the attorney nor anyone else who receives fees for services rendered the Association may be an election inspector unless, under Civil Code §§1363.03(c)(2), expressly authorized by the election rules.

6.

A member has the right to inspect and copy the membership list:

a.

Unless the board provides a "reasonable alternative"

b.

Only if the purpose is "reasonably related" to the Association

c.

Only if the member is in "good standing"

d.

Only if the member plans to write other members based on the list

The correct answer is: (b) 

Comment: Prior to July 1, 2006, an association could retain control over the membership list if it provided the owner with a “reasonable alternative”.  This was generally understood to mean that the association would mail to all owners the information the requesting owner would have mailed had the list been provided.  However, under Civil Code §1365.2, the law now requires that the association provide the list so long as the member requesting the list shall state the purpose of the list and that purpose “shall be reasonably related to the requester's interest as a member.”  The association has a high burden of proof if it withholds the list on the basis that the requester's interest is not “reasonably related”.

7.

To be valid, minutes of board meetings must be:

a.

Approved by an absolute majority of the board

b.

Signed by the secretary

c.

Approved by a quorum of the board

d.

b. and c.

The correct answer is: (d) 

Comment: In order to be “prima facie” evidence of the adoption of resolutions taken at a board meeting, the minutes must be adopted by the board (meaning a majority of a quorum of the board) which is “certified” to be true copy by the secretary or assistant secretary.  Corporations Code §7215.

8.

To be valid, minutes of membership meetings must be:

a.

Approved by the membership

b.

Signed by the secretary

c.

Approved by a quorum of the board

d.

b. and c.

The correct answer is: (d) 

Comment: Nothing requires that the membership approve the minutes of a membership meeting, the members have no obligations to vote “truthfully” in approving minutes.  On the other hand, directors have such a duty and per §7215, minutes of the membership meeting requires the approval of the board and certification by the secretary.

9.

Board meeting agendas are established by:

a.

The manager

b.

The president

c.

The board

d.

Homeowners from the floor

The correct answer is: (c) 

Comment: Unless an item is placed on the agenda, the board cannot take action on that item (with some “emergency” type exceptions) per Civil Code §1363.05(i).  The decision to place something on the agenda is thus very significant and itself constitutes an action of the board.  The board may delegate to the President or manager the ability to augment or delete agenda items.

10.

Must the Association accept an owner's request to mediate or arbitrate disputes?

a.

Yes, if the request is to "mediate" in a meet and confer program

b.

Yes, if the dispute concerns CC&R enforcement

c.

Yes, if the dispute concerns the validity of a vote

d.

Yes, if the statute of limitations is about to expire

The correct answer is: (a) 

Comment: The law does not require the parties to engage in mediation or arbitration except in limited circumstances.  One form of mediation is the “meet and confer” process contained in Civil Code §1363.810 et seq.  An owner has the right to meet with at least one director to discuss a dispute arising under the governing documents, the Civil Code (mostly meaning the Davis-Stirling Common Interest Development Act) and the non-profit mutual benefit provisions of the Corporations Code).  An owner can force the board to “meet and confer” before initiation of a foreclosure (generally understood to mean prior to recordation of a notice of default) and also has the right to meet with the board to discuss a payment plan.  Civil Code 1367.1((a)(4).  Otherwise, however, while one party must offer the other the opportunity to engage in “ADR” (Alternative Dispute Resolution which basically refers to mediation and arbitration), there is no requirement that the offer be accepted.

11.

The "statute of limitations" for bringing a construction

 defect lawsuit is always:

a.

10 years from recording of the Notice of Completion

b.

3 years from discovery of the defect

c.

Depends on the kind of claim

d.

1 year based on the warranty

The correct answer is: (c) 

Comment: The limits on bringing a lawsuit for construction defects (including “statutes of limitations” and “statutes of repose”) depend on many factors.  Some time limits are as short as one year from “close of escrow” while others may be as long as 10 years from recordation or a Notice of Completion.  In the past, it could be said that the applicable periods were 3 years from “discovery” or 10 years from substantial completion but this is no longer true.  Calculation of the statutes of limitations or repose requires excellent legal advice.

12.

The Association is responsible for interior damage caused by a roof leak:

a.

Depends on the CC&Rs

b.

Depends on whether the Association was "negligent"

c.

Never

d.

a. and b.

The correct answer is: (d) 

Comment: Some CC&Rs require the association to maintain building exteriors in “first class condition” which might be inconsistent with a leaking roof; other CC&Rs simply require the association to “maintain” without any level of care stated.  Typically, the “negligence” standard applies: if the association knows, or, in the exercise of reasonable care, should have known of leaks or the potential for leaks, it must take prudent steps to address the problem.  The failure to do so can result in liability for resulting damage, which could mean the cost to replace wet sheetrock, carpeting, or even mold problems.  The association can, at least to some degree, limit its liability by adoption of appropriate CC&R amendments.

13.

If damage to an owner's unit results from a "construction defect," the Association isn't liable:

a.

Ever

b.

Unless the defect is a violation of the Uniform Building Code

c.

Unless the Association ignored the problem

d.

Depends on whether an owner purchased their unit "as is"

The correct answer is: (c) 

Comment: The fact that the defect was “original” or “inherited” is not usually relevant to whether the association has a duty to address known defects; the manner of addressing them, however, will depend on the cost and other factors.

14.

Must the Association indemnify the manager from an owner's claim if the insurance company refuses to do so?

a.

No, the duty to protect the manager only applies if there is insurance

b.

Yes, so long as the management contract required indemnification

c.

Only if it involves CC&R enforcement or an assessment dispute

d.

Depends on the wording of the insurance policy

The correct answer is: (b) 

Comment: “Indemnification” means one party has agreed to protect another from claims and lawsuits.  Most management contracts require the association to indemnify (and defend) the manager when it acts pursuant to the management contract or board instructions.  While most of the time the association's indemnification obligation is handled through insurance, the duty to indemnify typically exists even if the insurer refuses the claim.

15.

Does the "ADA" apply to all homeowner associations?

a.

Yes because the ADA is a federal law applicable to housing

b.

Usually not because most associations are "private"

c.

Yes, if an owner requests a modification based on a disability

d.

Yes, but only with regard to "paths of travel"

The correct answer is: (b) 

Comment: The Americans with Disabilities Act applies to places of public accommodation.  Most associations are private and thus are not subject to the ADA (there are exceptions, including for those with many employees or whose activities are open to the public).  Associations are subject to a similar law, the Fair Housing Amendments Act of 1988 that prohibits discrimination based on race, color, religion, sex, national origin, disability, and familial status.