We recently negotiated a settlement with a homeowners association (“HOA”) that had filed a lawsuit against our clients because the HOA didn’t like the color of the clients’ garage door. Before filing the lawsuit, the HOA arbitrarily cited and fined the clients without evidence of an actual violation. After making it clear to the HOA that the lawsuit was frivolous and unsubstantiated, the HOA quickly changed its position, paid the balance of the clients’ attorneys’ fees, and even agreed to provide training courses to the board and property management, on how to fulfill their duties to the HOA.

While satisfied with the outcome for our client, these lawsuits could be avoided with education and transparency. Board members should be educated on how to fairly govern and appropriately exercise their fiduciary duties to the HOA. In keeping with the principals of a quasi-governmental, democratic entity, it is also important for associations to remain transparent. Pending California Assembly Bill (“AB”) 1410 makes significant headway favoring homeowners on both fronts.

Amongst the significant provisions of AB 1410, the bill seeks to add to Civil Code Section 5101 requiring all of California’s more than 200,000 volunteer directors and every HOA employee (including board members, property managers, and even maintenance personnel) to take a course on “fiduciary ethics and harassment prevention.” While there is no set curriculum or required course content, no duration requirement, and no current method of addressing how the costs for the training will be paid, AB 1410 recognizes that those involved with the administration of local community governance should be educated on their fiduciary and ethical responsibilities. Whatever the future courses may be, it is a step ahead of the current model which does not require any HOA board member to obtain any HOA related education.

This bill would also add Civil Code Section 5880 requiring an association to make available any evidence used in determining a violation of the governing documents to the homeowner accused if the HOA seeks to impose a monetary penalty. Currently HOA’s may impose penalties, and thereafter levy fines, without sharing the evidence of an alleged violation with the accused homeowner. This is a monumental step to level the playing field and make homeowner disciplinary hearings a fair adjudicative process by providing an accused homeowner with the chance to review the evidence supporting the allegation(s) against them.

AB 1410 has passed the California State Assembly and was read for the first time in the California Senate on February 1, 2022. While modifications to AB 1410 are expected, homeowners should welcome these advancements and should continue to advocate for further protections of homeowner rights.

If you would like to learn more about AB 1410 or if you are a homeowner who has been wronged by your HOA, please reach out to us to set up a consultation.

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