May the Board Transfer Common Area to Members in an HOA or Condo Association? – Article by Beth A Grimm, P.L.C

Article by Beth Grimm, P.L.C. HOA & Condo Attorney

Often in common interest developments like condos, townhomes and  even single family home developments people look around and see areas of land  that are not being fully utilized and think, “I could use an extra 20 feet  of back yard”, or “If I had that space I would create a gazebo,”  or “That rectangle would make a great parking space for my extra  vehicle.”

Here is an actual question from the board’s side of the table:

“In a PUD, how do you go about legally allowing some homeowners to expand patios into common area when some units do not have the space to do so. As our expenses for common area are so high (water and maintenance), we are looking at this as a cost-saving technique for the association as a whole”.

What it takes is this (in California):

  1. A ballot measure sent to owners for voting using the election requirements found in Civil Code Section 1363.03 (a secret double envelope ballot distributed to members and returned to an inspector of elections for counting at an open association meeting, to allow the transfer of property.
  2. 2/3 approval of members (Civil Code Section 1363.07)
  3. A proper legal document that describes the transfer (an easement is generally preferred over an actual property transfer, and a revocable use agreement is another option, allowing the Board to revoke the agreement if the
    owner violates certain conditions of use.

So it seems like a lot of work. If it is one or less than all owners that are asking – and the property in question is not really conducive to use by others in the community, or is too expensive to maintain, or there is a reason to even consider it, the board might want to consider the request. The owner(s) who will benefit could be asked to bear the expense of the balloting and drafting of the agreement. The board is not required to send out a ballot for an owner who would like to have exclusive use of common area, but it could.  An owner could petition the board to take a vote using the California petition process.

In the above question, the board is looking at the situation from a cost savings point of view. The result, however, if approved, would result in a situation where some owners would gain an advantage that others would not. If the transfer was approved by 2/3 of the members it should be legal. I would suggest that it would be easier for those voting (who would not benefit directly but may benefit from a maintenance cost savings) to consider approving the measure if those who were benefiting directly were bearing the expense of the “ transaction”.

– Click here to view original article –

** EXTRAS **

DAVIS-STIRLING ACT
Civil Code§1363.07. Grant of Exclusive Use to Common Areas. 

(a) After an association acquires fee title to or any easement right over a common area, unless the association’s governing documents specify a different percentage, the affirmative vote of members owning at least sixty seven percent of the separate interests in the common interest development shall be required before the board of directors may grant exclusive use of any portion of that common area to any member, except for any of the following:

(1) A reconveyance of all or any portion of that common area to the subdivider to enable the continuation of development that is in substantial conformance with a detailed plan of phased development submitted to the Commissioner of the Department of Real Estate with the application for a public report;(2) Any grant of exclusive use that is in substantial conformance with a detailed plan of phased development submitted to the Commissioner of the Department of Real Estate with the application for a public report or in accordance with the governing documents approved by the Commissioner of the Department of Real Estate.

(3) Any grant of exclusive use that is for any of the following reasons:

(A) To eliminate or correct engineering errors in documents recorded with the county recorder or on file with a public agency or utility company.(B) To eliminate or correct encroachments due to errors in construction of any improvements.

(C) To permit changes in the plan of development submitted to the Commissioner of the Department of Real Estate in circumstances where the changes are the result of topography, obstruction, hardship, aesthetic considerations, or environmental conditions.(D) To fulfill the requirement of a public agency.

(E) To transfer the burden of management and maintenance of any common area that is generally inaccessible and is not of general use to the membership at large of the association.(F) Any grant in connection with an expressly zoned industrial or commercial development, or any grant within a subdivision of the type defined inSection 1373.

(b) Any measure placed before the members requesting that the board of directors grant exclusive use of any portion of the common area shall specify whether the association will receive any monetary consideration for the grant and whether the association or the transferee will be responsible for providing any insurance coverage for exclusive use of the common area.

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