CHARGING AHEAD......

 

  ELECTRIC VEHICLE CHARGING STATIONS AND

  THEIR IMPACT ON COMMON INTEREST

  By Matthew L. Grode, Esq. and Philip C. Zvonicek, Esq.

 

The California legislature recently enacted Senate Bill No. 209 (codified as Civil Code Section 1353.9) which expressly mandates that those provisions of governing documents that prohibit or unreasonably restrict the installation or use of an electric vehicle charging station (“EVCS”) is void and unenforceable. (Note1)

If an owner intends to place a charging station within the common area or an exclusive use common area, he or she must first obtain Association approval prior to such installation. An Association must, however, approve such application if the owner agrees, in writing, to do all of the following:

 

a. Comply with the associations architectural standards,

b. Engage a licensed contractor to install the station,

 

c. Within 14 days of approval, provide a certificate of insurance which identifies the Association as an additional insured under the homeowner’s insurance policy, and;

 

d. Pay for the electricity usage associated with the station.

The new law also provides that a homeowner, who installs an EVCS, and each of his /her successors, shall be responsible for all of the following:

• Costs for damage to the station, common areas, exclusive common areas, or adjacent units which results from the installation, maintenance, repair, removal or replacement of the station.

 

• Costs for the maintenance, removal, repair and replacement of the EVCS until it has been removed from the common area or exclusive use common area.

 

• The cost of electricity associated with the station.

 

• Disclosure to prospective purchasers of the existence of any EVCS and the related responsibilities of the homeowner, and

 

• Maintenance of an umbrella liability insurance policy in the amount of one million ($1,000,000.00) covering the obligations of the owner and which names the Association as an additional insured with a right to notice of cancellation.

 

Boards should be cautioned that, in most cases, they or the architectural control committee must respond to applications to install EVCS within sixty (60) days or they may be deemed approved. Although the Bill’s author plans to introduce legislation which will protect the rights of common interest developments to establish reasonable rules for any use of common areas for charging stations, it remains unknown whether such protections will be adequate.

Where the installation of individual charging stations is not feasible, a Board may consider installing one or more common EVCS. Some of these potential issues raised by such a course of action include:

 

• Limited Parking: In many complexes, the number of parking spaces is inadequate and therefore, there may not be any available locations to install an EVCS.

 

• Location: The distance between utility meters, parking spaces and unit electrical panels may create logistical issues. Electrical panels are often located far from the parking area. Among other things, this can impose significant cost barriers.

 

• Charging Rates: EVCS may require a new meter and utility service. In some communities meters are clustered in a central location and there may be inadequate space to accommodate another meter.

 

• Building Age: Older buildings may have limited electrical capacity. Upgrading may be very costly and may trigger requirements to bring the property up to today’s building code standards.

 

• Costs: Acquisition, installation and operation. To address the operational and utility costs, use of a charging unit with a billing system may require electric vehicle drivers pay-as-they-go and not place an unreasonable financial burden on non-electric vehicle drivers.

Without question, society must adopt new technologies in order to address environmental, financial and political concerns. While development and use of electric vehicles is a positive step in this direction, the numerous obstacles and issues raised by this new law must be adequately addressed before this alternative can be incorporated into general use.

 

Note1: “Reasonable Restrictions” are those that do not significantly increase the cost of the status or significantly decrease the efficiency or specified performance. This new law authorizes associations to impose reasonable restrictions and requires EVCS’s to meet applicable health and safety standards adopted by State and local permitting authorities.

Questions or Comments? Contact Us at:
Gibbs, Giden, Locher, Turner & Senet, LLP
1880 Century Park East, Suite 1200
E-mail: mgrode@gglts.com or call (310) 552-3400

 

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The content contained herein is published online by Gibbs, Giden, Locher, Turner & Senet LLP ("GGLTS") for informational purposes only, may not reflect the most current legal developments, verdicts or settlements, and does not constitute legal advice. Do not act on the information contained herein without seeking the advice of licensed counsel. For specific questions about any of the content discussed herein or any of the content posted to this website please contact the article attorney author or send an email to info@gglts.com. The transmission of information on this, the GGLTS website, or any transmission or exchange of information over the Internet, or by any of the included links is not intended to create and does not constitute an attorney-client relationship. For a complete description of the terms of use of this website please see the Legal Notices section below.

This publication may not be reproduced or used in whole or in part without written consent of the firm.

Copyright 2011 Gibbs, Giden, Locher, Turner & Senet LLP

OUT WITH THE OLD (…WELL YOU KNOW THE REST)
By Matthew L. Grode, Esq.

Unquestionably, service on the Board of Directors for common interest community is a thankless position. Verbal abuse, threats of physical violence, long unpaid hours and telephone calls regarding members often insignificant problems in the middle night are the primary benefits received for such efforts. Occasionally, disgruntled owners seek to vent their frustration or further their personal agendas by targeting one or more members of the Board of Directors for removal. Of course, there are bad board members who occasionally deserve to be removed (and in some cases, imprisoned!).

Nevada has established a specific statutory procedure for the removal of persons from Association Boards. Often, this procedure is inconsistent with those written requirements which are set forth in the Association’s governing documents. The statutory procedure however takes precedence and must be utilized (NRS 116.1206). In summary, this procedure is as follows:

1. Ten percent of the Membership must request the commencement of removal proceedings;
2. Secret ballots must be sent to the Membership with a prepaid return envelope;
3. Each unit’s owner must be provided with at least fifteen (15) days after the secret ballot is mailed to return the same to the Association;
4. At least thirty-five percent (35%) of the total number of voting members of the Association must cast and return ballots in favor of removal;
5. At least a majority of all votes cast must be in favor of removal; and
6. The ballots must be opened and counted at a meeting of the Association where a quorum need not be present.

Managers and Board members are often confused with regard to the application of the 35% and majority voting requirements. The following example should provide clarification regarding this concern:

Assuming an Association has 200 units, at least 35% (that is, 70) must be cast in favor of removal. If a total of 180 ballots are returned, at least a majority of those returned ballots (i.e., 91) must also vote in favor of removal. In this case, the removal effort would be unsuccessful.

Due to the complexity of the rules concerning the initiation of the removal process, providing the ballots to the Members and the formula for determining the outcome, I strongly recommend that legal counsel be involved in the process.

The content contained herein is published online by Gibbs, Giden, Locher, Turner & Senet LLP ("GGLTS") for informational purposes only, may not reflect the most current legal developments, verdicts or settlements, and does not constitute legal advice. Do not act on the information contained herein without seeking the advice of licensed counsel. For specific questions about any of the content discussed herein or any of the content posted to this website please contact the article attorney author or send an email to info@gglts.com. The transmission of information on this, the GGLTS website, or any transmission or exchange of information over the Internet, or by any of the included links is not intended to create and does not constitute an attorney-client relationship. For a complete description of the terms of use of this website please see the Legal Notices section below.

This publication may not be reproduced or used in whole or in part without written consent of the firm.

Copyright 2011 Gibbs, Giden, Locher, Turner & Senet LLP

SAVING FOR A RAINY DAY – RESERVE OR ELSE . . .
By Matthew L. Grode, Esq.

There has been much confusion concerning Associations’ legal duty to set aside funds for future repairs and/or for the replacement of major components. Hopefully, this Article will provide some clarity relative to this issue. By law, Associations with common areas are required to prepare a Reserve Study at least once every three (3) years. An exception to this requirement exists where the replacement value of all major components is less than one half of an Association’s gross budget. Generally, this exception only applies to Association’s with extremely limited common area elements. The study is intended to:

• Identify these major common area components which the Association is required to maintain or replace within thirty (30) years;
• Provide an estimate of the remaining useful life of these components;
• Provide an estimate of the costs of maintaining and/or replacing these components over the next thirty (30) years; and
• Suggest a funding plan which will enable the Association to accumulate sufficient funds to perform such maintenance and repair.

Board Members should not attempt to prepare the reserve study themselves. Instead, this function should be delegated to qualified and experienced reserve study specialists, a number of whom are members of this CAI Chapter. By establishing a funding plan, the Reserve Study essentially provides a road map for the long term financial health of an Association. Boards are required to review the study annually and to determine whether any adjustments to the study plan are required.

In order to ensure the transparency of the Board’s operations, the Davis-Stirling Act mandates that Associations distribute a summary of the reserves with the pro forma operating budget. In addition, Civil Code §1365.2.5 mandates use of a statutory form for the Reserve Assessment and Funding Disclosure. This form must:

1. Identify current assessments per unit;
2. Disclose any additional assessments that are to be imposed;
3. State whether current reserve balances are sufficient to meet the funding goals;
4. Disclose a plan to meet requirements of the current funding goals;
5. Identify the major components included in the Reserve Study but which may not be included in the reserve funding program; and
6. Disclose the current balance of the Reserve Funds on deposit.

Associations must establish reserve accounts which are separate from their operating funds. Two (2) Directors must sign any check which transfers funds from the reserve account. Community managers may not be signers. Except for temporary transfers, reserve funds may not be utilized for any purpose other than the repair, replacement and maintenance of the Association’s major components. While funds can be “borrowed,” Boards must first notify the membership of their intent to transfer such funds at a noticed meeting. In addition, Boards must disclose the reason for the transfer and the means that the debt will be repaid, including whether or not a special assessment is contemplated. If a transfer is authorized, the Board must prepare written findings and include the same in its meeting minutes. Generally, borrowed funds must be returned to the Reserve Account within one (1) year except that repayment may be delayed if it is reasonably necessary to do so.

While the law requires the preparation of a Reserve Study, it does not expressly require funding of this account. However, as fiduciaries, Boards of Directors are required to act in the best interest of the Association and its members, in accordance with the Business Judgment Rule. The failure to reasonably fund the reserves may therefore result in liability for mismanagement and breach of duty. Also, Boards must exercise prudent fiscal management in maintaining the integrity of the reserve account. In other words, there is a duty to preserve these sums against losses. Consequently, the reserves should only be placed in secure investment vehicles such as insured, laddered, Certificates of Deposits and Treasury Bills. While Boards should strive to maintain reasonable returns, they should not do so by placing the reserve funds in risky investments.

Southern California living is certainly not without risk. Earthquakes, floods, pests and wildfires can all contribute to need for unplanned repairs/replacement of major components. When combined with deterioration due to age and the all too common failure to properly maintain common components, is without question that Association’s should strive to adequately fund their reserve accounts. Fully funded reserves can also enhance property values, or, at a minimum, make a community more attractive to potential buyers. Accordingly, my words of advice are fund, fund and fund.

Matthew L. Grode, Esq. is an equity partner with the law firm of Gibbs, Giden, Locher, Turner & Senet LLP in Los Angeles, California. Mr. Grode’s practice is dedicated to the representation of common interest communities, real estate and construction matters. Mr. Grode can be reached at (310) 552-3400 or by email at mgrode@gglts.com.

The content contained herein is published online by Gibbs, Giden, Locher, Turner & Senet LLP ("GGLTS") for informational purposes only, may not reflect the most current legal developments, verdicts or settlements, and does not constitute legal advice. Do not act on the information contained herein without seeking the advice of licensed counsel. For specific questions about any of the content discussed herein or any of the content posted to this website please contact the article attorney author or send an email to info@gglts.com. The transmission of information on this, the GGLTS website, or any transmission or exchange of information over the Internet, or by any of the included links is not intended to create and does not constitute an attorney-client relationship. For a complete description of the terms of use of this website please see the Legal Notices section below.

This publication may not be reproduced or used in whole or in part without written consent of the firm.

Copyright 2011 Gibbs, Giden, Locher, Turner & Senet LLP