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Feldsott Lee Pagano & Canfield
Orange County Homeowners Association Law Firm

November 2014 Archives

What To Do with That Big Pool of Money (aka Reserve Funds)

All associations have (hopefully) an adequately funded reserve. These funds are primarily used to pay capital improvements. Just like your 401(k) or any other savings fund, a common question becomes, what can we do with this big pool of money? We all know that a board of directors has a fiduciary duty to its membership and must therefore prudently protect the principal of a reserve fund, but the law does not provide an investment plan.


Though you might not believe it, disputes arise between homeowners associations and their members. Yes, it's true. The Davis-Stirling Common Interest Development Act ("the Act") requires associations to provide for an internal dispute resolution process ("IDR") meant to be relatively informal, cost-free and expeditious. The default IDR provided for in Civil Code §5915 requires that if a member makes a written request for IDR to an association, then the association's board must designate a director to promptly meet with the member at a convenient time and place, that each of the parties explain their positions to each other, and that they confer in a good-faith attempt to resolve the dispute. The Code also provides that the association may not charge a fee for participation in the IDR, and that each party must absorb the cost of their own counsel. Civil Code §5900 et seq. contemplates the welcome prospect that a quick and civil conversation between one director and a member will lead to a fair resolution of a dispute without having to incur the expense and adversity of litigation or alternate dispute resolution ("ADR").

Opening Board Meetings With Prayer

I have not been to many meetings where this happens, but sometimes, it does - a board meeting that commences with prayer. In an age of diversity awareness, it just seems unusual to me whenever it happens. Homeowners associations have historically been likened to small municipalities. As such, it would seem to follow that homeowners associations would be run and regulated like a city and that the Establishment Clause of the First Amendment would apply.

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