The CID Outsiders

Co-ops, Airspace Condos, Non-DS Elections, Lake Communities, Public Facilities, and More
By John D. Hansen, Esq. & Becky Jolly, CCAM 

This article is about the unusual topics that apply to common interest developments (CIDs), but are not often discussed in articles and presentations. Here we will share our knowledge and experience with those who deal with these "outsider" CIDs as we examine co-ops including mobile home parks, airspace condos, elections that do not use secret ballots, communities with water features that have unique issues, and CIDs that maintain public parks and facilities.

CO-OPS

A cooperative (co-op) is one of four CID types in California. Members and subleases are approved by committee or board through an application process. Primarily mobile home parks, they can also include condo-style developments that are similar to apartments. A member has a membership in the corporation, coupled with a right to occupy a space or residence. Members do not actually own their unit or space, but they have membership interest in the corporation, which does have value. Membership certificates are issued for a price, which can appreciate in value over time, depending on the development. The association owns the entire development, including all spaces or units, so it has the look and feel of a landlord.

A co-op has all of the same functions as a condominium project or planned development as far as elections, meetings, disclosures, etc. Additionally, the mobile home residency law has limited application, depending on the development, such as dealing with eviction rights. Unlike a condominium project, the association can terminate membership and evict residents, which makes enforcement of rules a very different process, with serious repercussions.

Finally, co-ops are often regulated by the state and have government oversight, so many of their actions require approval from the state before they can act.

AIRSPACE CONDOMINIUMS

This is a method of development to create denser housing. It is a condo by name, but a planned development by appearance, and can be townhome-style residences or even single-family homes with yards, driveways, and everything you would expect to see in a planned development. The "common area" is usually up in the air many feet above the residence, and that is what makes it a "condominium." The owners own a condominium, but they maintain everything, or most of it. This arrangement creates confusion for buyers and insurance brokers, so it is important for managers to have a firm grasp on what their communities are and be able to have a response when asked what the development is. If managers are unsure, please reach out to the association’s legal counsel for clarification.

ELECTIONS THAT DO NOT USE SECRET BALLOTS

There are five categories of elections that require secret ballots for CID communities under Civil Code Section 5100: director elections; director recalls; assessments; amendments to governing documents; and granting exclusive use common area. There are other categories that do not require secret ballots. Non-CIDs do not need to use secret ballots at all, but it may make sense, or their documents may require it. Elections for capital improvements, contracts, loans, selling common area, and a few others are among the CID elections that do not require secret ballots. Elections can be done with non-secret ballots that can be opened when received by the manager on a rolling basis. These ballots are addressed in Corporations Code Section 7513. This kind of written ballot can be returned by mail or email, and the manager can serve as the inspector. The timeline for the election process is also shorter. Depending on the governing documents, the election might be accomplished by a signed petition as well.

WATER FEATURES

Many communities were built with lakes that serve as a recreational and aesthetic asset to the development, but also serve as an important drainage and water retention feature for a larger geographic area. These kinds of water features will have critical components, such as a liner, bulkheads, weirs, aerators, and other components that require expensive and unique maintenance.

There may be a cost center for certain components for lots that abut the lake, which is important to account for when setting the budget and establishing reserve funds. There may be certain restrictions for activities on and around the lake, such as restrictions on trees near the bulkhead, or restrictions on what can be done in the lake. For example, only certain owners may be able to use the lake, and only for very limited purposes. Water maintenance will require an expert in water management as water quality and other environmental restrictions may apply, such as limitations on chemicals that can be added, preventing leakage, and water sources, such as ground water. These bodies of water may be part of a navigable waterway, which may invoke jurisdiction by fish and wildlife services, and may impose additional restrictions on what can be put in the water. Products that may limit mosquitos may violate environmental laws since they could impact food supply downstream. As a result of all of this, water features will often require additional reserve funding, unique CC&Rs, and actions that are not common in other CIDs, and may even involve other public agencies that the association will need to work with.

PUBLIC PARKS AND FACILITIES

In order to have a more integrated feel in a community, and to reduce public resource needs, many CIDs are being built with public parks and facilities within them that are maintained by the association. The reason is that this creates public amenities with no fiscal impact on the city or county. Such public facilities may include playgrounds, open spaces, trails, lakes, sport courts, and other expensive amenities. In such situations, the city or county will often control usage, such as hours of use, rules, etc.; however, the association could be responsible to perform maintenance at its expense. These facilities are open to the public, which means they must be ADA compliant, and that adds more expense to the association. The conditions of approval for the development may have extra requirements for maintenance or certain standards for amenities, so it may be necessary to look beyond the CC&Rs to understand what is required for these public amenities. With such amenities, unique issues will arise about access by the public, including transient use, large events, parking impacts, security, and working with local law enforcement. For this reason, it is important to maintain a good working relationship with local public officials, including city councilmembers and county supervisors.

While these CID outsiders are rare, and often overlooked, they are common enough that it is important to be aware of these unusual issues that may arise. It is also important for associations to consult with their legal counsel when dealing with these situations because they are unique and may have unexpected issues.

John D. Hansen is a partner at Baydaline & Jacobsen LLP, which provides general counsel services to community associations in the Bay Area, Northern California, and the Central Valley. He frequently speaks at seminars and conferences regarding community associations and has authored articles on a variety of topics important to community associations.

Becky Jolly works for OMNI Community Management LLC as a portfolio manager and has been in the industry for 20 years in a variety of positions.