© Los Angeles Times

Wednesday, July 11, 1984

Board members from many of the state's 2,000 homeowners associations are attending seminars like one that took place a couple of weeks ago for about 50 San Diegans. The object of the meeting was to bone up on accounting skills and techniues used in choosing a property management firm, skills necessary to cope with the problems of fast-growing housing developments.

In the CAMS episode, about 250 associations are missing $2.5 million. They had forwarded the money to the management firm to pay for landscaping, mortgages, utility bills and general maintenance. Not only the money is missing-some top CAMS officials also have disappeared.

But the impact of the CAMS episode extends far beyond CAMS and its clients.

"There's no comprehensive body of law that regulates these new politictical animals," said Gary Aguirre, a San Diego lawyer who specializes in condominium law. Instead, existing condominium law is scattered among the state code on civil procedures, the code on condominiums and business and professional codes.

Many issues critical to condo living are not covered by state law, said Katharine Rosenberry, a professor at California Western School of Law and a member of a state task force formed to review the law on "common-interest subdivisions."

For instance, she said, it's not clear if First Amendment rights to free speech always apply in such living arrangements. Is a condo required to circulate a competing newsletter as well as its own, for instance? Nor is it clear whether a condominium can limit constitutional rights to freedom of religion. Can it prohibit solicitation of its residents by Hare Krishnas when Hare Krishnas are among the homeowners?

Rosenberry calls homeowners associations complex, nearly unregulated "city-states," with their own elected officials, newsletters, streets to be paved, pools to maintain and even, at one giant Orange County subdivision, schools to run.

Few first-time buyers realize they are entereing into such a complex form of governance, housing experts say. New residents are usually impressed with the swimming pools and the "affordable" prices-significantly less than those of single-family homes. Rarely do they understand the responsibilities or the financial concerns of running associations.

They look at the neighborhood and they decide they like it. And they look at an inch and a half of legal documents and decide they 'll read them later," said C. James Dowden, executive director of the Community Assns. Institute in Washington, D.C., which acts as lobby and educational agency for such asociations.

Hard Lessons

"Those are the very people that are going to wind up in court when they realize they own an $80,000 Winnebago and under condo rules they 're not allowed to park it in the driveway, " Dowden said.

That's a lesson many housing associations have learned the hard way. Samuel Dolnick, president of the 506-unit Lake Park Condominiums in La Mesa, said that in 1979, soon after his apartment complex converted to condominiums, the board had to fire its Los Angeles property management firm.

It did so partly because bills were paid late and it was often difficult to contact the company. In addition, the management company had failed to set aside any reserves to handle major problems--for replacing roofs or sewers, for instance.

Dolnick and his six board memebers now preside over a 25-acre project that includes 1,000 residents, 20 employees, five pools, four spas, exercise rooms, tennis courts, a recreation room, a hand-ball court and several ponds. The project is so spacious that it is frequently mistaken for a public park, Dolnick said.

To run Lake Park, Dolnick and his board worked with a budget of $600,000 this year and have reserves of $101,000. A manager handles general maintenance and resident complints, but the board keeps close tabs on his work.

"It's a business. You have to run it as a business," said Dolnick, a retired high school teacher and union leader from Chicago. The board's goals are simply "to keep Lake Park beautiful and watch the money, " he said.

Homeowners association officials like Dolnick say that much of their time is spent on the three P's: pools, pets and parking.

Consider parking. For two weeks last fall, Dolnick's board had tow trucks haul off about 32 residents' cars a week because their owners were using "guest" parking places for their second cars instead of paying $12.50 for an extra parking permit. Eventually, Dolnick said, the owners bought additional parking stickers and the mass-towing stopped.

Meanwhile, the Lake Park board is in litigation with a homeowner whose dog is 15 pounds heavier than the condo's permitted maximum weight for dogs, 20 pounds. Dolnick said he knew of no reason why a 20-pound dog was better behaved than a 35-pound dog. There is not necessarily any logic to the restriction, he said, but since in the the project's legal covenants, codes and restrictions, the board must enforce it until a majority of association members revokes the rule.

Meanwhile, in a 177-unit San Diego project called Costa Viva, board member Wally Driver adds a fourth complaint to condo associations' traditional three P's. "People," he said. "The No. 1 game in condominium living is 'Control Thy Neighbor.' "

Coping With Problems

In the close quarters of shared housing, that has meant problems such as coping with a resident who plays operatic music, reminding residents that the rules prohibit oil dripping from cars in the parking lot, or barring both diving and cannon balling in the pools.

But Costa Viva's most serious problem had nothing to do with the terrible P's, Driver said. Rather, it involved a structural defect in the building and a five-year lawsuit.

Recently, the association won a landmark $6.6-million judgment against its developer and against Manville Corp., the maker of a stucco-type product, because a faulty coating had been applied to all the project's walls. The stuff cracks when wet and "eventually the whole damn exterior just falls off," Driver said. Most of the award will go to replacing the coating on all the project's walls.

A signigicant factor in Costa Viva's legal victory was the professionalism of the board, said Aguirre, the association's attorney. They "kept the same people on the board over a four-year period of time. The people came in and knew it was going to be a long-term fight. They understood the law and they stuck it out."

"People have been sold these properties with the idea that they don't have to worry. . . " noted attorney Packard, who is also a San Diego property manager and consultant.

"They do have to worry. They own part of it. They can't delegate," not even when they hire a property management firm to handle many aspects of management.

A Lesson for Boards

"CAMS wasn't the first time a property management firm is said to have walked away with the money. But it's a lesson boards of directors must be willing to accept . And I think someting people have to be more conscious of in the future."

If the new residential communities are not managed well, he warned, "the projects have the potential to become blighted areas, America's new gehttos. If there aren't sufficient funds, if people don't assess themselves enough to maintain them, they can deteriorate and and there could be an epidemic of a lack of care."

But so far, in the 20-year existence of planned residential developments and condo, urban blight has not come to pass. Dowden, the, the Community Associations Institute executive directortor, said he thinks the "participatory democracy," as he likes to call it, is the reason why.

"You go out to Long Beach, to some post-World War II subdivision, and there's nobody out there to keep it up except a building inspector," he said.

"In a condominium association, that's not true." In a condo, there will be dozens of people who want to maintain the seawall or fix the roof or repair the pump for the swimming pool--people who have a shared interest in protecting their investment. "You don't have that in a single-family home," Dowden said.