I need a Lender’s Certificate (sometimes called a HOA Cert or Cond Cert), why can’t I get one?
The Association's legal obligation under the law on any resale is to provide the buyer, through escrow, a demand statement. That statement indicates (by law), what the assessments are, if the homeowner is delinquent, and if there are any known architectural violations against the lot. A Real Estate transaction, whether it is a resale or a refinance, is a private transaction between the owner and the buyer, or the owner and the lender (in the case of a Re-Finance). Short of the demand just mentioned, there is NO OTHER duty the association is to provide under the law. When the association goes beyond those limits, it causes a liability to the rest of the community that it would not have if it had not provided the information in the first place. That is a Breech of Fiduciary for which the association can be sued by the homeowners, and if the information happens to be wrong it is a matter under which the association can be sued by the lender for relying on such information. For that reason, all association attorneys advise their associations to not provide information above that required by law - and that very simply is the demand issued above.
On a resale each OWNER is required to provide the seller with a bunch of information under Section 1368 of the California Civil Code. That includes a copy of the CC&R's, the By-Laws, the Articles of Incorporation, and the budget (your real estate agent as a licensed knows what these are and can help keep you straight on them. Basically, these are the documents given to you when you purchased, or in case of the budgets annually. However, as part of our demand process we do provide a copy of those to you since they are documents which the association has the duty to provide you this saves you having to gather them all up. Please note it is THE SELLER'S responsibility to make sure all those documents are provided to the buyer - not the associations. We do go slightly above the law here, however, and try to assist by including those documents at no cost as part of our demand and transfer fee, and by making them available on line.
Now, back to the matter of the lender's certificate. The lender's certificate is simply a document that some, but not all, lenders require as a business practice. Filling them out causes all types of issues. Each lender has their own questions some of which are real traps. Some ask for an interpretation of law and is not something the association should undertake (Example: Is the common area owned in undivided interest?). Secondly, some lenders do not understand what they are asking. In the previous example a good number of Condominiums, and almost all PDs, the association owns the common area (or much of it) in fee title. If the association answers that question honestly, the loan fails because many lenders do not understand this concept. Of course if the association lies, then there is no defense if there are damages or alleged damages later.
Currently there are two on going lawsuits in California because associations did fill out lenders certificates or otherwise answer questions like these to lenders or buyers. On the other hand, the appellate courts have held up that the association has no duty to provide any information other than that provided by law (a demand). So, there is no liability for not filling them out, and potential liability for filling them out. Again the duty to disclose information on a sale, except for the demand notice, is a legally duty of the seller - NOT a duty of the Association.
All that said, any homeowner has a right to ask questions of the association. To that extent, Management (Bay Area Property Service) will talk to any homeowner and answer those questions which are reasonable and for which the association has the answer. Unfortunately, many of the questions are "trick" questions designed to spread liability, or ask for a legal interpretation. Management will not be able to answer those questions, even verbally in the way a lender would like.
The bottom line - the association has a duty to the membership as a whole. Filling out a form that is not legally required, and which brings every homeowner into what should be a private Real Estate transaction and to the potential liabilities involved is not defendable. Lenders know this, but "low loan" lenders spread their liabilities to others in order to offer low discount rates. Additionally, other lenders with problem loans, which are going to be sold on the secondary market, also want to spread that liability. That liability rightfully belongs with the lender and not with the other homeowners in the association.
This position was upheld by the appellate court in Kovich v. Paseo Del Mar Homeowners Association (1996) 41 Cal. App.4th 863 which said in part:
In purchasing the townhouse, appellant impliedly agreed that the property rights being sold were subordinate to the interest of the homeowners association as a whole. Paseo's fiduciary duties ran to the association members, not prospective purchasers. (Frances T. v. Village Green Owners Assn. (1986) 42 Cal.3d 490, 505 [229 Cal.Rptr. 456, 723 P.2d 573]; see also Heliotis v. Schuman (1986) 181 Cal.App.3d 646, 650-651 [226 Cal.Rptr. 509] [attorney acting as seller's fiduciary has no duty to disclose soil problems to purchaser].) "[N]either a court nor minority shareholders can substitute their business judgment for that of a corporation where its board of directors has acted in good faith and with a view to the best interests of the corporation and all its shareholders. [Citations.]" (Beehan v. Lido Isle Community Assn. (1977) 70 Cal.App.3d 858, 865 [137 Cal.Rptr. 528].)
Will the Association talk to my agent, buyer, lender or appraiser?
The association's duty is to you, the homeowner. A Real Estate transaction is a private transaction between the seller and the buyer. When the association starts to provide disclosures to a buyer or any other third party, it begins to bring the community as a whole into that transaction.
Simply stated, any information concerning the transaction, except for a demand statement, is information that has to be provided by the seller. Management is always willing to talk to the seller and answer any of the questions we can that they may have trouble understanding. That said, there might be some questions we cannot answer because we may not know the answer (nor should we). There may be some questions we cannot answer because they call for a legal interpretation and you should get that answer from your attorney or other professional. There may also be some questions that are simply not reasonable in the way they are worded that are designed to entrap the person answering and take liability that should be the buyers and/or lenders to determine from the legally required documents you must provide them, but rather than read them they want you to answer and assume the liability itself.
Basically, the association has a duty to assist you in answering those questions that are appropriate for the association to answer. The way management does that is by talking to you, and answering your questions if we are able. However, when the association starts to go beyond that and talk to others - the association is now picking up responsibilities that belong to you, the owner.
I need to answer questions on the Lenders Certificate, whom do I need to talk to?
Each of the following questions came directly from a lender's certificate (keep in mind that every lender has their own set of questions). In the FAQ's above we have explained in detail why the association can pick up liabilities that should not be theirs by answering these questions. In addition, some of these questions you also pick up liabilities for if you answer. The following questions coming directly from actual lender's certificates are provided in a way to give real world examples:
Are there any multi-dwelling units in the project, which are secured by a single deed and mortgage?
Problem: There is no way any homeowners association would normally know the answer to this question. It is possible to know if there is more than a single deed on a "multi-dwelling" unit (whatever that is - we can only guess). However how many mortgages may secure that "multi-dwelling unit" is not information the association would have. If it did have it, it is private information, which the association could not release without the owner of that "multi-dwelling" unit giving permission - and why would they. If you have not picked up on it already - we have no clue what a "multi-dwelling unit" is anyway - nor does anyone else. WE RECOMMEND YOU DO NOT ANSWER THIS QUESTION WITHOUT ADVICE OF YOUR ATTORNEY.
How is title to this unit held - fee simple or leasehold?
Problem: The lender does not know what type of property they are giving a loan on? Stay WAY away from this one. Of course they know, it is in the grant deed. If they know, why do they need you to tell them?
What are the assessments?
Problem: If it is resale, the association has to provide this information in the demand notice. If the association is still under development, the minimum disclosure required by the State of California is about 3/4 of a page of paper. The assessment when: Now? When the unit closes? With subsidy? Without subsidy? At built-out? Between now and built-out (because it can go up in between)? We recommend if an active sales program by the developer is going on you do not answer this question without legal counsel.
Does any owner own more than one unit? If yes, identify owner entity and indicate the total number owned by each.
Problem - There is no way we are going to release this information without the owner’s consent - so there is no way you could possibly answer this question.
Is the HOA currently a party in any type of litigation or public administrative action?
Problem: Sounds innocent, doesn't it? Under California Law if the association is involved in any litigation that is required to be disclosed, it will already have been disclosed to you. If not, you do not need to disclose it. This question does not answer that question - it is much broader. It is exactly this type of question that caused the California Courts to rule that this information specifically does NOT need to be provided by the association to the lender. If the association has disclosed litigation to you, you should disclose it to the buyer. If not, you should not answer this question without talking to your attorney. We will NOT answer this question for pretty obvious reasons. It is NOT an innocent question as worded. Do not attempt to answer it without advice of an attorney.
Are all the homes in the Shadow Lakes area covered by the Homeowners Association?
No, some homes, primarily as you enter the development from East Country Club Drive, are not part of the Association. There is a map of the Shadow Lakes development which shows the lots that are not in the HOA, as well as those lots that are included.
I recently received a notice about my basketball hoop not being in compliance with the CC&R’s and needing to be stored behind the fence. The basketball hoop is heavy and hard to move...what exactly is the rule regarding basketball hoops?
The Board adopted revisions to the rules after first receiving homeowner feedback in October 2005. Previously, the CC&R’s did not allow basketball standards to be out in front of homes at any time. The revised rule now states:
“Basketball Backboard: Backboards may not be permanently attached to any portion of the residence or garage without approval of the Architectural Committee. Portable Basketball apparatus are allowed in front of the residence only when in use. When not in use the Portable Basketball apparatus shall be either in the garage or behind the fence so as not to be seen from the street.”
Where can I obtain a current copy of the Shadow Lakes CC&R’s and what is it?
The backbone of Shadow Lakes community association operations is found within the declaration of covenants, conditions and restrictions which sets forth the following:
Covenants: Promises on the part of all members.
Conditions: Conditions to membership in good standing.
Restrictions: Restrictions on use of property.
A copy of the document can be found under the Documents section of the website.
When do I need to remove the Holiday Decorations outside the house?
The Holiday Decorations need to be removed by January 15th per the CC&R’s in order to avoid receiving one of those “pesky” non-compliance letters.
The tree in the parkway is dead; am I responsible and can I replace it with another tree?
Trees, even in the parkway, are the Homeowner’s responsibility. The dead tree needs to be removed and can be replaced with the same type of tree without Design Committee approval. Another type of tree can be planted if it is on the HOA's approved tree list. The list is available in the Documents section of the website. Note: Check to make sure the tree is on the City of Brentwood’s approved list.
I understand the City of Brentwood’s ordinances regarding Garbage Containers and RV/Boat Storage are very similar to the Shadow Lakes CC&R’s. What are they and how do I report a problem?
Garbage containers must be stored out of public view behind a fence. Containers should only be placed on the street 24 hours prior to collection and must be stored out of view within 24 hours after collection.
RV’s and Boats cannot be kept in the driveway or on the public street. To report a problem regarding Garbage containers or RV’s/ Boats on Private property, call Code Enforcement at (925) 516-5405. For RV’s or Boats on the street, call Brentwood Police Department at (925) 778-2441
I thought there were lights at the fountain (E. Country Club entrance) but they don’t seem to come on at night. Who do I contact about the problem?
Management (Bay Area Property Services) is not on site at night and they need Homeowner’s help when noticing items such as the lights not being on. Please call or email Melissa Hajostek at email@example.com regarding the lights and be specific with details such as the day and time you noticed the problem with the lights. The Board contracts with Bay Area Property Services to manage the Shadow Lakes Association including the upkeep and maintenance of the common area...they need to know about a problem in order to have it repaired
I received a warning letter in the mail that there was no application on file for my landscape changes. I submitted the application and received approval over a year ago. How do I get the information corrected on my record and the violation removed?
Management (Bay Area Property Services) apologizes for any confusion or mistakes that may arise due to transferring the Association’s file information from Massingham & Associates to Bay Area Property Services. Some homeowners have made changes or improvements that might have been approved prior to the Association being turned over to the membership. If you believe the notice is in error, please work with the Management to get the issue resolved by calling, writing or sending an email to Melissa Hajostek or Brenda Schmalenbach at Bay Area Property Services as soon as you receive the letter. Please work with Management to resolve the error which is not intentional. Management does thank all the homeowners that do work with them when a violation letter is received...it is a pleasure dealing with homeowners that are cooperative.
I’d plan to rent my home for a few months while I am gone, will I be responsible for the actions of my tenants?
If you plan to rent your home, you, as the owner are responsible to ensure your tenants abide by the CC&R’s and as the owner, you will be financially responsible for any violations. Please make sure you are familiar with section 1.23 requirements which includes a 12-month written lease for the entire premises as no portion can be sub-leased and the lease must expressly provide that the terms are subject to the provisions of the governing documents of the association and that the breach of any provision of the governing documents constitutes a default under the lease.
Ron Parish, past General Manager of Shadow Lakes Golf, responded to a number of questions from homeowners at the January 2006 meeting. The following are a few questions and answers from the meeting:
What is being done to improve the appearance of the heavy rough areas and keep weeds at a minimum height?
Ron: We've purchased equipment that cuts the weeds down to 18" in height to make the foliage a uniform height to improve esthetics while maintaining a necessary canopy. This allows the seeds to fall onto the soil and multiply to eventually choke out the weeds. We've also done repeated seeding as the first round didn't take.
Will there be any Shadow Lakes homeowner discounts given other than the promotions currently offered?
Ron: The owners of the golf course believe the annual pass is a tremendous discount and encourage the homeowners to take advantage of this.