[ ARTICLE I - Recitals and Definitions, ARTICLE II - Location of Principal Office, ARTICLE III -Membership, ARTICLE IV - Membership Voting, ARTICLE V - Membership Meetings and Election of Directors, ARTICLE VI - Membership Rights, ARTICLE VII -Board of Directors, ARTICLE VIII - Board Meetings, ARTICLE IX - Duties and Powers of the Board, ARTICLE X - Committees, ARTICLE XI - Officers, ARTICLE XII - Member Assessment Obligations and Association Finances, ARTICLE XIII - Other Required Reports Notices and Disclosures to Members, ARTICLE XIV - Inspection of Books and Records Section, ARTICLE XV - Miscellaneous, Exhibit A - Definitions (from Declaration/CC&Rs) ]
Section 1.1. Name of Association. The name of this corporation is Chinquapin Homeowners Association and shall be referred to herein as the “Association.”
Section 1.2. Association Is Nonprofit. The Association is a California nonprofit mutual benefit corporation (Corporations Code §§7110-8910) and an association as defined by Civil Code §1351(a).
Section 1.3. Specific Purpose. The specific and primary purposes of this Association shall be to own, repair, maintain, manage, and eventually replace the Common Area and Common Facilities within the Chinquapin real estate common interest development located in the unincorporated area of Tahoe City, County of Placer, State of California, to maintain individual Lots and the Residences located thereon to the extent and in the manner more particularly described in the Second Amended and Restated Declaration of Covenants, Conditions and Restrictions for Chinquapin Homeowners Association, to enforce the Rules and Regulations adopted by the Board of Directors, from time to time, and the terms and conditions of said Declaration, and to otherwise enhance and promote the use and enjoyment of the Common Areas and Common Facilities by the Owners in common.
Section 1.4. Definitions.
(a) Declaration Definitions Incorporated by Reference. All terms defined in the Second Amended and Restated Declaration of Covenants, Conditions and Restrictions for Chinquapin Homeowners Association (hereinafter “Declaration”), are shown with initial capital letters herein, and shall have the same meaning when used herein, unless the context clearly indicates a contrary intention. A true and correct copy of Article I from the Declaration (Definitions) is attached hereto and incorporated as Exhibit A.
The principal office of the Association is located at the Dollar Estate Buildings which are Common Facilities, located in the Chinquapin Development at 3600 North Lake Boulevard, P.O. Box 6001, Tahoe City, California 96145, or such other place within the development as the Board may from time to time designate by resolution.
Section 3.1. Members of the Association. Every Owner of a Residence Lot within the Development is a Member of the Association, as more particularly set forth at Article III of the Declaration (Section 3.01 through 3.03), or as otherwise set forth therein. Membership in the Association is appurtenant to, and may not be separated from, ownership of a Lot.
Section 3.2. Multiple Ownership of Lots. Ownership of a Residence Lot shall give rise to a single membership vote in the Association. Accordingly, if more than one person owns a Lot, all of said persons shall be deemed to be one Member for voting purposes, although all such Owners shall have equal rights as Members to use and enjoy the Project Common Area and Common Facilities. The vote for a Lot with multiple owners shall be exercised as they among themselves determine, but in no event shall more than one vote be cast with respect to any Lot.
Section 3.3. Furnishing Evidence of Membership. A person shall not be entitled to exercise the rights of a Member until such person has advised the Association’s manager, maintenance company, or other authorized agent in writing that he or she is qualified to be a Member under Section 3.1, and, if requested by the secretary, has provided the secretary with evidence of such qualification in the form of a true and correct copy of a recorded deed or a currently effective policy of title insurance.
Section 4.1. Single Class of Membership. The Association shall have one class of voting membership.
Section 4.2. Member Voting Rights. On each matter submitted to a vote of the Members, each Member shall be entitled to cast one vote for each Lot owned by the Member. Single memberships in which two or more persons have an indivisible interest shall be voted as provided in Section 3.2.
Section 4.3. Eligibility to Vote. Only Members in good standing shall be entitled to vote. In order to be in good standing, a Member must be current in the payment of all Assessments levied against the Member’s Lot(s) and not be subject to any suspension of voting privileges as a result of any disciplinary proceeding. A Member’s good standing shall be determined as of the record date established in accordance with Section 5.10.
Section 4.4. Manner of Casting Votes.
(a) Except as provided herein, all membership votes shall be held under the ‘double envelope, secret ballot’ procedures required by Civil Code § 1363.03, as may be more particularly set forth in the Association’s Election Rules.
(i) The only exceptions to the requirement that all membership votes be conducted under the ‘double envelope, secret ballot system’ are for minor matters that may be taken by voice vote at a member meeting where a quorum has been established. These items include voice votes to approve membership meeting minutes, and other minor items that may be brought to the attention of the Members at the meeting and do not require expenditure of more than $250.00 in Association funds. The Board may also solicit non-binding, advisory polls or votes from Members, by electronic communication or otherwise, to assist it in determining Member opinions on various matters.
(b) No Cumulative Voting. Cumulative voting shall not be permitted.
(c) Conduct of Informational Meetings. Use of the written ballot procedures set forth herein shall not preclude the Association from also conducting informational meetings of the Members.
(d) The Board shall set the date for all elections and advise the members of the deadline for returning ballots to cast their votes. The Board may extend the date for returning written ballots for no more than two successive periods of thirty days each. If the Board does extend the voting period, members will be given written notice of such extension(s) and no secret ballots shall be opened until the last extended date for the ballot opening set by the Board.
Section 4.5. Majority Vote of Members Required for Valid Action. The affirmative vote of a Majority of a Quorum of the Members who are entitled to vote and voting on any matter (other than the election of directors) shall be the act of the Members, unless the vote of a greater number is required by California Law or by the Governing Documents. In the case of director elections, the candidates receiving the highest number of votes, up to the number of directors to be elected, shall be elected to the vacant director positions.
Section 5.1. Annual Meeting. There shall be an annual meeting of the Members held on the Saturday before Labor Day of each year at the hour of 4:00 p.m. at the Dollar Estate Buildings, or on such other date, time and location established by the Board and set forth in the notice of meeting sent to the Members in accordance with Section 5.8.
Section 5.2. Quorum. The quorum for any vote or election by the members (other than the election of directors) shall be a majority of the total voting power of the Association, i.e., 87 Lots, if all Lots are eligible to vote. The vote of a majority of a quorum shall generally be effective for Member action as provided at Section 4.5.
(a) Written Ballots. All written ballots that are timely returned count towards a quorum for all items that are included on the written ballots. If a quorum can only be obtained by counting the written ballots that are returned, plus members that are personally in attendance, then a quorum is deemed to be present only as to those matters that were included in the written ballots.
(b) Effect of Departure of Members From Meeting. The Members present in person at a duly called or duly held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough Members to leave less than a quorum, so long as any action taken (other than adjournment) is approved by at least a majority of the Members required to constitute a quorum.
Section 5.3. Directors Elected Effective at Annual Meeting. The election of directors shall be effective as of the Annual Member Meeting, although the ballots shall be opened prior to the Annual Meeting as provided at Section 5.4. The persons thus elected shall be selected from among those persons nominated under Section 5.6; however, if for any reason an annual meeting is not held or the directors are not elected at any annual meeting, the directors may be elected by written ballot only, or at any special meeting held for that purpose.
(a) Determination of Election Results/Succession to Office. The candidates receiving the highest number of votes shall be elected as directors and shall take office at the member meeting immediately following the Ballot Counting Meeting. In the event there is a tie vote between those candidates who receive the lowest number of votes necessary to qualify the candidate for election to a seat on the Board, a runoff election pursuant to the Association’s Election Rules shall be held thereafter, as soon as reasonably practicable, but not later than 60 days after the ballots were opened.
(b) Procedures Consistent with Civil Code § 1363.03 and Election Rules. In all elections that require the ‘double envelope, secret ballot’ system, the appointment of election inspectors, and all other procedures shall be pursuant to the adopted and published Election Rules of the Association, consistent with the requirements of Civil Code § 1363.03.
Section 5.4. Ballot Counting Meeting. A meeting for counting the ballots cast in connection with the Annual Member Meeting shall be held the Saturday preceding the Annual Meeting at 4:00 p.m. at the Dollar Estate Buildings, or such other time and location that may be specified by the Board. That meeting shall be for the purpose of opening, counting, and tabulating the ballots for the annual election of Directors and any other matters being voted on by the members at the Annual Member Meeting. No business other than tabulation of the ballots by the Election Inspector shall be conducted and there shall be no quorum requirement for the Ballot Counting Meeting. All members may attend the meeting and witness the opening of the ballots by the Election Inspector.
Section 5.5. Candidate Qualifications. All Director candidates must be members of the Association, current in the payment of all financial obligations, and not subject to suspension of membership privileges as a result of any disciplinary action that has been initiated by the Association.
Section 5.6 Nomination of Candidates for Election to the Board of Directors:
(a) Nomination Procedures. Nominations of candidates for election to the Board of Directors may be made by a Nominating Committee or by self-nomination. The Board may appoint a Nominating Committee prior to any election of Directors. If appointed, on or before the deadline for nominations, the Nominating Committee shall nominate as many candidates for election to the Board as it shall in its discretion determine, but not less than the number of positions on the Board that are to be filled in the election. All nominations shall be made from among members who satisfy the qualifications set forth in these Election Rules. Any member who satisfies the qualifications set forth in the Election Rules may place his or her name in nomination for election to the Board by giving written notice to the President or Secretary of the Association. Notice of self-nomination must be received prior to the deadline for nominations.
(b) Deadline for Nominations. The deadline for nominations shall be set by the Board and shall not be less than fifteen (15) and not more than sixty (60) days prior to the date for mailing ballots to the members for the election of Directors. Although write-in candidates may be provided for on the written ballots, nominations from the floor cannot be made at the Ballot Counting Meeting or the Annual Member Meeting.
(c) Publication of Deadline for Nominations. The date and time of the deadline for nominations shall be published at least thirty (30) days in advance of the deadline on the Association’s Internet Website and otherwise Delivered to the members as provided at Section 1.18 of the Declaration.
Section 5.7. Special Meetings.
(a) Persons Entitled to Call Special Meetings. A majority of the Board, the president, or 5 percent or more of the Members may call special meetings of the Members at any time to consider any lawful business of the Association.
(b) Procedures for Calling Special Meetings Requested by Members. If a special meeting is called by Members other than the Board of Directors or the president, the request shall be submitted by such Members in writing, specifying the general nature of the business proposed to be transacted, and shall be Delivered personally or sent by first-class, certified or registered mail or by facsimile or other electronic transmission to the president, any vice president, or the secretary of the Association. The officer receiving the request shall cause notice to be promptly given to the Members entitled to vote, in accordance with the provisions of Section 5.8 that a meeting will be held, and the date, time, and purpose for such meeting, which date shall be not less than 35 nor more than 90 days following the receipt of the request.
If notice of the meeting is not given within the 20 days after receipt of the request, the Members requesting the meeting may give the notice. Nothing contained in this section shall be construed as limiting, fixing, or affecting the time when a meeting of Members may be held when the meeting is called by action of the Board of Directors or the president.
(c) Special Meetings of Members to Vote to Reverse a Rule Change. If five percent (5%) or more of the Members call for a special meeting under Civil Code §1357.140(a) for the purpose of voting to reverse a rule change proposed by the Board of Directors, the Members’ request for the special meeting must be delivered to the Association within 30 days after the Members are notified of the proposed rule change. In the event that a valid petition for such a special meeting is timely tendered to the Association, the rule change may be reversed by the affirmative vote of a Majority of a Quorum of the Members who are represented and voting at the special meeting unless the Governing Documents require a greater percentage approval. In lieu of calling a special meeting for the purposes described in this subparagraph (c), the Board of Directors may distribute a written ballot to every Member of the Association in accordance with the secret ballot voting procedures set forth in Civil Code §1363.03, and the Association’s Election Rules.
Section 5.8. Notice of Members’ Meetings.
(a) Time Requirements for Notice. The notice of membership meetings shall be posted on the Association’s Internet Website and given in the manner specified in subparagraph (c) of this section, not less than 10 nor more than 90 days before the date of the meeting. If notice is given by mail and the notice is not given by first-class, registered, or certified mail, the notice shall be given not less than 20 days (nor more than 90 days) before the meeting. When a meeting of the Members is called in response to a valid Member demand, the Board shall be obligated to send the Members a notice of the special meeting within 20 days following receipt of the Members’ demand and the meeting must be held on a date that is not less than 35 nor more than 90 days following the receipt of the request. If notice of the meeting is not given by the Association’s Board within 20 days after receipt of the request, the Members requesting the meeting may give the notice.
(b) Minimum Requirements Regarding Content of Notice. The notice of any membership meeting shall specify the place, date, and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted, and no other business may in that case be transacted, or (ii) in the case of a regular meeting, those matters that the Board of Directors, at the time of giving the notice, intends to present for action by the Members, but any proper matter may be presented at the meeting for such action so long as a quorum is present. The notice of any meeting at which directors are to be elected shall include the names of all those individuals who are nominees at the time the notice is given to the Members.
(c) Manner of Service. Notice of any meeting of Members shall be posted on the Association’s Internet Website and Delivered by mail or electronic forms of communication as set forth at Section 1.18 and Article XIV (Notices), of the Declaration.
Section 5.9. Waiver of Notice by Attendance at a Meeting. Attendance by a Member at a meeting shall constitute a waiver of any objections such person may have with respect to notice of that meeting, except when the Member attends the meeting for the sole purpose of objecting at the beginning of the meeting to the transaction of any business due to the inadequacy or illegality of the notice. Attendance at a meeting is not a waiver of any right to object to the consideration of matters not included in the notice of the meeting that are required to be described therein under Section 5.9(b), if that objection is expressly made at the meeting.
Section 5.10. Record Dates for Member Notice, Voting, and Giving Consents.
(a) Record Dates Established by the Board of Directors. For the purpose of determining which Members are entitled to receive notice of any meeting, vote, act by written ballot without a meeting or exercise any rights in respect to any other lawful action, the Board of Directors may fix, in advance, a “record date” and only Members of record on the date so fixed are entitled to notice, to vote, or to take action by written ballot or otherwise, as the case may be, notwithstanding any transfer of any membership on the books of the Association after the record date, except as otherwise provided in the Articles of Incorporation, by agreement, or in the California Nonprofit Mutual Benefit Corporation Law. The record dates established by the Board under this section must be in accordance with the requirements of Corporations Code Section 7611.
(b) “Record Date” Means as of Close of Business. A person holding a membership as of the close of business on the “record date” shall be deemed to be the Member of record.
Subject to the provisions hereof and the provisions of the Declaration, the Members shall have the following rights:
Section 6.1. Use and Enjoyment of Common Areas by Members and Family. Each Member and the members of his or her family who also reside in the Member’s Residence shall be entitled to the use and enjoyment of all private roads, the Project Common Area and Common Facilities within the Development.
Section 6.2. Tenants and Lessees.
(a) Assignment of Rights, Generally. Each Member shall have the right to assign his or her rights as a Member (other than voting rights) to a tenant residing within the Member’s Residence. Such assignment shall only be effective so long as said tenant is residing in said Residence and is in compliance with the Governing Documents as the same may exist from time to time. At all times the Owner shall remain responsible for compliance by Owner’s lessee or tenant with all provisions of the Governing Documents. Without limiting the foregoing, reference is specifically made to Article II (Property Rights and Obligations of Owners) of the Declaration and Association Rules as enacted or amended from time to time, for additional tenant and lease restrictions.
(b) Restriction on Lessor’s Use of Certain Common Areas and Facilities. During the period of any lease or rental of a Lot, any Owner not residing within the Development shall not be entitled to use the Project Common Area or Common Facilities, except to the extent reasonably necessary to perform the usual responsibilities of a landlord or to ensure or gain compliance by the tenant with the requirements of these Bylaws and the Declaration, unless the Lessor-Owner is the accompanied guest of another Owner or is contemporaneously residing on another Lot within the Development.
Section 6.3. Invitees and Guests. The invitees and guests of a Member shall have the right to use and enjoy the private roads, Project Common Area and Common Facilities within the Development, although Members remain responsible for the conduct of their invitees and guests at all times. Any such guest or invitee shall be subject to the same obligations imposed on the Owner to observe the rules, restrictions and regulations of the Association as set forth in the Governing Documents.
Section 6.4. Association Rules and Regulations. The right of any person to use and enjoy the Project Common Area and Common Facilities within the Development shall at all times be subject to the limitations and restrictions set forth in these Bylaws, in the Declaration, and in the Association’s published rules and regulations as promulgated by the Board from time to time in accordance with Section 3.07 of the Declaration, Section 13.11 of these Bylaws, and Civil Code §§1357.100-1357.140. With the exception of the right to use that portion of the Association roads that are necessary for ingress and egress to a Member’s separate interest, the Board shall have the right to impose monetary penalties or to temporarily suspend the use and enjoyment of the Project Common Area and any Common Facilities for the failure of a Member to pay any Assessments when due under the Declaration, or to comply with any other rule or regulation imposed on such Member, or his or her tenants or guests, under the Governing Documents, provided, however, that any such suspension shall be imposed only after such person has been afforded the notice and hearing rights more particularly described in Article XII of the Declaration, and any other provisions of the Governing Documents consistent therewith.
Section 7.1. General Association Powers. Subject to the provisions of the California Nonprofit Mutual Benefit Corporation Law, the Davis-Stirling Common Interest Development Act (Civil Code §§1350-1376) and any limitations contained in any of the Governing Documents relating to action required to be approved by the Members, the business and affairs of the Association shall be vested in and exercised by, the Association’s Board of Directors. Subject to the limitations expressed in Section 9.2, the Board may delegate the management of the activities of the Association to any person or persons, management company or committee, provided that notwithstanding any such delegation the activities and affairs of the Association shall continue to be managed and all Association powers shall continue to be exercised under the ultimate direction of the Board.
Section 7.2. Number and Qualification of Directors. The Board of Directors shall consist of seven (7) persons who shall be Owners of Lots whose memberships are in good standing with all Assessments current and are not subject to any suspension of membership rights. Only one Owner per Lot shall be eligible to serve on the Board at any time.
Section 7.3. Term of Office—Staggered Terms. The directors of this Association shall serve for a term of two (2) years with four (4) directors elected in odd-numbered years and three (3) directors elected in even-numbered years. Each director, including a director elected to fill a vacancy or elected at a special meeting of Members, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified. There shall be no limitation on the number of consecutive terms to which a director may be reelected.
Section 7.4. Vacancies on Board of Directors and Removal of Directors from Office.
(a) Vacancies, Generally. A vacancy or vacancies on the Board of Directors shall be deemed to exist on the occurrence of any of the following: (i) the death, resignation or removal of a director; (ii) an increase of the authorized number of directors; or (iii) the failure of the Members, at any meeting of Members at which any director or directors are to be elected, to elect the number of directors to be elected at such meeting.
(b) Resignation of Directors. Except as provided in this subparagraph, any director may resign, which resignation shall be effective on giving written notice to the president, the secretary, or the Board of Directors, unless the notice specifies a later time for the resignation to become effective. If the resignation of a director is effective at a future time, the Board of Directors may elect a successor to take office when the resignation becomes effective.
(c) Authority of Board to Remove Directors. The Board of Directors shall have the power and authority to remove a director and declare his or her office vacant if he or she (i) has been declared of unsound mind by a final order of court; (ii) has been convicted of a felony; or (iii) fails to attend three consecutive regular meetings of the Board of Directors that have been duly noticed in accordance with California law and these Bylaws. In exercising its discretion to remove a director for his or her failure to attend duly noticed meetings, the Board may consider in mitigation medical hardship, business travel, or other factors. The Board shall also have the authority to declare vacant the seat of any incumbent director who fails to remain in good standing with the Association; provided, however, that if the basis for removal of an incumbent director is the director’s failure to remain current in the payment of assessment obligations to the Association, the Board shall take no action to declare the delinquent director’s seat to be vacated unless and until (i) the director has received the Pre-Lien Delinquency Notice prescribed in Section 4.10(b)(i) of the Declaration, and (ii) a period of at least 30 days has elapsed following delivery of that Notice to the director without payment in full of all delinquent assessments and other duly levied fees, interest, and reasonable costs of collection.
(d) Authority of Members to Remove Directors. Except as otherwise provided in subparagraph (c) hereof, a director may only be removed from office before expiration of his or her term by the affirmative vote of a majority of the Voting Power of the Association.
Any membership action to recall or remove a director shall be conducted in accordance with the ‘double envelope, secret ballot’ voting procedures set forth at Articles IV and V hereof, and the Association’s Election Rules. If the recall vote results in a tie, the removal action will have failed.
(e) Removal by Court Action. The Placer County Superior Court may, in response to a suit filed by any director or the lesser of 20 Members or 5 percent of the Members, remove any director determined to be guilty of fraudulent or dishonest acts or gross abuse of authority or discretion with reference to the Association. The Association shall be made a party to any such action.
(f) Filling of Vacancies. Vacancies on the Board of Directors shall be filled by a majority vote of the remaining directors though less than a quorum, unless the vacancy is created through removal of a director by action of the Members, in which case the vacancy shall be filled by a vote of the Members. Furthermore, the Members may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors by an election at a duly held meeting of the Members or by written ballot.
(g) Reduction in Number of Directors. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires, unless any affected director voluntarily resigns.
Section 8.1. Place of Meetings; Meetings by Conference Telephone.
(a) Permitted Locations for Board Meetings. Regular and special meetings of the Board of Directors may be held at any place within the Development or at such other location designated by the Board and stated in the notice of the meeting.
(b) Meetings Can be Conducted by Conference Telephone or other Electronic Means. A regular, special, emergency, or executive session meeting of the Board may be held by conference telephone call, electronic video screen communications, or other communications equipment. Participation in a meeting through the use of conference telephone equipment, electronic video screen equipment, or other communications equipment, constitutes presence in person at the meeting so long as each director participating in the meeting can communicate with all of the other directors concurrently, and each director is given the means of participating in all matters coming before the Board.
For regular or special Board meetings at which three (3) or more directors attend by conference telephone or other electronic means, arrangements shall be made so that any Association member who desires to listen or participate in the telephone/electronic meeting of the Board can do so. For example, if three or more directors intend to participate in a regular or special directors meeting by telephone conference call, a telephone number shall be included in the notice of the Board meeting so that all Association Members can call into the Board meeting to listen and participate in the meeting, except for executive session matters.
For all meetings conducted by telephone conference call or other electronic means, minutes of such meetings shall be taken and posted for member review as required by Section 8.6(d) below.
Section 8.2. Annual Meeting of Directors. Immediately before or following each annual meeting of Members, the Board of Directors shall hold a meeting for the purpose of organization, election of officers, and the transaction of other business. Notice of this meeting shall be given with the notice of the Annual Member Meeting.
Section 8.3. Other Regular Meetings. Ordinarily, regular meetings shall be conducted at least quarterly, provided, however, that regular meetings can be held as often as necessary, if the Board’s business justifies more frequent meetings. If the Board adopts an annual schedule for the conduct of regular meetings and that schedule is communicated to all directors at least 15 days before the first scheduled meeting, no further notice of a regular meeting shall be required unless the date, time, or location for a particular regular meeting is changed for any reason, in which case, notice shall be provided to all directors in accordance with Section 8.5.
Section 8.4. Special Meetings of the Board. Special meetings of the Board of Directors for any purpose may be called at any time by the president or any two (2) directors.
Section 8.5. Notice of Board Meetings.
(a) Minimum Time Requirements for Giving Notice to Directors. In the case of any special meeting of the Board, and if the Board has not fixed the time and location for regular meetings and provided each director with the schedule for the conduct of regular meetings, notice shall be communicated to each Board member not less than 4 days before the date of the meeting, provided, however, that if the meeting qualifies as an emergency meeting (Section 8.5(d)) or is a special meeting that can be called in executive session (Section 8.6(e)), the time for providing notice is 48 hours before the meeting, unless notice is given by first-class mail, in which case the 4-day notice requirement remains in effect. Notice of a meeting of the Board need not be given to any director who has signed a waiver of notice or a written consent to the conduct of the meeting or an approval of the minutes of the meeting (whether before or after the meeting), as provided in Section 8.8, or who attends the meeting without protesting, either before or at the commencement of the meeting, the lack of notice to that director. All such notices shall be given or sent to the director’s address, telephone number, or e-mail address as shown on the records of the Association.
(b) Members’ Right to Receive Notice of Board Meetings. All Members of the Association shall be given notice of the time and place of all Board meetings (as defined in Section 8.6(a)), except for emergency meetings, or meetings to discuss solely executive session items pursuant to Section 8.06(e) below, at least 4 days before the date of the meeting. This notice to the Members shall be given by posting the notice on the Association’s Internet Website and in a prominent place or places within the Common Area and by mail to any Member who has requested notification of Board meetings by mail (with the notice sent to the address requested by the Member). Notice may also be given by mail or Delivery of the notice to each Lot within the Development, by email or other electronic means to Members who have signed a consent form, or by newsletter or similar means of communication. For purposes of this subparagraph (b), an “emergency meeting” of the Board means a meeting called by the president or by any two (2) members of the Board under circumstances that could not have been reasonably foreseen that require immediate attention and possible action by the Board and that of necessity make it impracticable to provide prior notice to the Members as required by the Open Meeting Act (see Section 8.6).
In addition to the foregoing general notice requirements for Members, if a particular Member or Members are scheduled for possible disciplinary action on the agenda for a Board meeting, the Board must notify the subject Member(s) in writing, by either personal delivery or first-class mail, at least 10 days before the date of the meeting. Any such special notice of possible disciplinary action must contain, at a minimum, the date, time, and location of the meeting, the nature of the alleged violation for which the Member(s) are being considered for disciplinary action, and a statement that the Member(s) have a right to attend the meeting and address the Board concerning the disciplinary matter.
Section 8.6. Attendance by Members. The following provisions reflect the California Common Interest Development Open Meeting Act (Civil Code §1363.05):
(a) Meetings Generally Open to Members; Definition of What Constitutes a “Meeting.” With the exception of executive session meetings of the Board, any Member of the Association may attend meetings of the Board of Directors, provided, however, that nondirector Members may participate in deliberations or discussions of the Board only when expressly authorized by the vote or consent of a majority of the directors present at the meeting at which a quorum has been established or by the Board member chairing the meeting. For purposes of the Open Meeting Act, the term “meeting” includes any congregation of a majority of the members of the Board at the same time and place to hear, discuss, or deliberate on any item of business scheduled to be heard by the Board, except those matters that may be discussed in executive session.
(b) Right of Members to Speak at Meetings. The Board of Directors shall permit any Member to speak at any meeting of the Members or of the Board of Directors, except for Board meetings that are held in executive session under subparagraph (e), below. The Board or the chairman of the meeting may impose reasonable time limitations on presentations or statements by Members and, in the case of Board meetings, the agenda for the meeting can designate a specific time for Member statements and comments.
(c) Meeting Agendas; General Restriction of Action to Items on the Agenda. As required by Civil Code §1363.05(f), any notice of Board meetings that is required by law to be distributed or made available to the Members under Section 8.5(b) must include an agenda for the meeting. Except as provided in subparagraphs (i) through (v) of this subparagraph (c) or subparagraph(d), below, the Board of Directors may not discuss or take action on any item at a non-emergency or non-executive session meeting of the Board unless the item was placed on the agenda that was included in the notice given to the Members. Members who are not on the Board may, however, speak on issues that are not on the agenda. Notwithstanding the general rule that Board actions must be restricted to items shown on the meeting agenda, a member of the Board of Directors, a managing agent or other agent of the Board, or a member of the staff of the Board of Directors may do any of the following:
(i) Directors, managing agents, and other agents or staff members of the Board may briefly respond to statements made or questions posed by a person speaking at an open Board meeting;
(ii) Directors, managing agents, and other agents or staff members of the Board may ask a question for clarification, make a brief announcement, or make a brief report on the director’s own activities, whether in response to a question posed by a Member or passed on the director’s own initiative;
(iii) The Board or any director may provide reference to, or provide other resources for factual information to, the Board’s managing agent or other agents or staff;
(iv) The Board or any director may request the managing agent of the Association or other agents or staff to report back to the Board at a subsequent meeting concerning any matter, or take action to direct the managing agent, other agents, or staff to place a matter of business on a future agenda;
(v) The Board or any director may direct the Association’s managing agent or other agents or staff to perform administrative tasks that are necessary to carry out the requirements of Civil Code §1363.05.
(d) Authority to Take Action on Certain Items Not on the Published Agenda. Notwithstanding the general rule that Board actions must be restricted to items shown on the Board meeting agenda, the Board of Directors may take action on any item of business not appearing on the posted meeting agenda under any of the following conditions:
(i) On a determination made by a majority of the Board of Directors present at the meeting that an emergency situation exists. An emergency situation exists if there are circumstances that could not have been reasonably foreseen by the Board, that require immediate attention and possible action by the Board, and that, of necessity, make it impracticable to provide notice.
(ii) On a determination made by the Board by a vote of two-thirds of the members of the Board who are present at the meeting, or, if less than two-thirds of total membership of the Board is present at the meeting, by a unanimous vote of the Board members present, that there is a need to take immediate action and that the need for action came to the attention of the Board after the agenda for the meeting was posted and distributed to the Members; or
(iii) The item appeared on an agenda that was posted and distributed to the Members for a prior meeting of the Board of Directors that occurred not more than 30 calendar days before the date that action is taken on the item and, at the prior meeting, action on the item was continued to the meeting at which the action is taken. Before discussing any item under this subparagraph (d), the Board of Directors shall openly identify the item to the Members in attendance at the meeting.
(e) Executive Sessions. The Board, on the affirmative vote of a majority of the directors present at a meeting at which a quorum has been established, shall be entitled to adjourn at any time for purposes of reconvening in executive session to discuss (i) litigation in which the Association is or may become a party; (ii) matters relating to the formation of contracts with third parties; (iii) Member discipline; or (iv) personnel matters; or (v) to meet with a Member, on the Member’s request, regarding the Member’s payment of Assessments, as specified in Civil Code §1367.1. Alternatively, the Board can meet to discuss only matters that are proper for executive session discussion by telephone conference call or other electronic communication (see Section 8.1(b) above), or otherwise, and without prior notice to Association Members, so long as all directors are given notice of such executive session meeting pursuant to Section 8.5 above. The Board must meet in executive session if requested by a Member who may be subject to a fine, penalty, or other form of discipline and the Member who is the subject of the disciplinary proceeding, must receive prior notice of and shall be entitled to attend any executive session hearing at which discipline may be imposed, as provided in these Bylaws and any rules adopted and published by the Association. Any matter discussed in executive session shall be generally noted in the minutes of the immediately following Board meeting that is open to the entire membership.
(f) Board Meeting Minutes. The minutes, minutes proposed for adoption that are marked to indicate draft status, or a summary of the minutes, of any meeting of the Board of Directors, other than minutes of an executive session, shall be available to the Members within 30 days of the meeting. The minutes, proposed minutes, or summary minutes shall be distributed to any Member on request and on reimbursement of the Association’s costs in making that distribution.
Section 8.7. Quorum Requirements. A majority of the authorized number of directors shall constitute a quorum for the transaction of business. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, subject to the provisions of the California Nonprofit Mutual Benefit Corporation Law, especially those provisions relating to (i) approval of contracts or transactions in which a director has a direct or indirect material financial interest; (ii) appointment of committees; and (iii) indemnification of directors. A meeting at which a quorum is initially present may continue to transact business, notwithstanding the withdrawal of directors below a quorum, if any action taken is approved by at least a majority of the required quorum for that meeting, or such greater number as is required by these Bylaws, the Articles, or by law.
Section 8.8. Waiver of Notice. The transaction of any meeting of the Board of Directors, however called and noticed or wherever held, shall be as valid as though taken at a meeting duly held after regular call and notice, if (a) a quorum is present, and (b) either before or after the meeting, each of the directors not present, individually or collectively, signs a written waiver of notice, a consent to holding the meeting, or an approval of the minutes. The waiver of notice or consent need not specify the purpose of the meeting. All waivers, consents, and approvals shall be filed with the Association records or made a part of the minutes of the meeting and shall have the same force and effect as a unanimous vote of the Board. The requirement of notice of a meeting shall also be deemed to have been waived by any director who attends the meeting without protesting the lack of proper notice either before or at the inception of the meeting.
Section 8.9. Adjournment. A majority of the directors present, whether or not constituting a quorum, may adjourn any meeting to another time and place. If the meeting is adjourned for more than 24 hours, notice of adjournment to any other time or place shall be given before the time of the adjourned meeting to the directors who are not present at the time of the adjournment. Except as provided above, notice of adjournment need not be given.
Section 8.10. Action Without a Meeting. Any action required or permitted to be taken by the Board of Directors may be taken without a meeting, if (i) all members of the Board, individually or collectively, consent in writing to that action, and (ii) the action qualifies as one that is appropriate for action as an emergency or executive session meeting matter. Such action by written consent shall have the same force and effect as an unanimous vote of the Board of Directors.
If the Board of Directors resolves by unanimous written consent to take action, an explanation of the action taken shall be posted on the Association’s Internet Website and at a prominent place or places within the Common Area within five (5) days after the written consents of all Board members have been obtained. If the Association’s Internet Website is unavailable for any reason, and the Common Area is deemed unsuitable for posting the explanation of the action taken, the Board shall communicate the explanation by any means it deems appropriate. Any written consent or consents of the Board shall be filed with the minutes of the proceedings of the Board.
Section 8.11. Compensation. Directors, officers, and members of committees shall not be entitled to compensation for their services as such, although they may be reimbursed for such actual expenses as may be determined by resolution of the Board of Directors to be just and reasonable. Expenses for which reimbursement is sought shall be supported by a proper receipt or invoice.
Section 8.12. Protocol at Board Meetings. At each meeting of the Board, the President, or if he or she is absent, the Vice President, or if he or she is absent, any Director chosen by a majority of the Directors present, shall act as Chairperson and preside over the meeting. The Secretary, or if he or she is absent, the person (who shall be an Assistant Secretary, if any and if present) whom the Chairperson of such meeting shall appoint, shall act as Secretary of such meeting and keep the minutes thereof.
Section 9.1. Specific Powers. Without prejudice to the general powers of the Board of Directors set forth in Section 7.1 of these Bylaws, and Section 3.06 and elsewhere of the Declaration, the directors shall have the power to:
(a) Exercise all powers vested in the Board under the Governing Documents and under the laws of the State of California.
(b) Appoint and remove all officers of the Association, managers (subject to any contractual commitments which may exist), and other Association agents or employees; prescribe any powers and duties for such persons that are consistent with law and the Governing Documents; and fix their compensation.
(c) Appoint agents and employ others, including attorneys and accountants, as it sees fit to assist in the operation of the Association, and to fix their duties and to establish their compensation.
(d) In accordance with Section 6.4 of these Bylaws and Section 3.07 of the Declaration, adopt and establish rules and regulations subject to the provisions of the Declaration, governing the use and maintenance of the Common Areas, the Common Facilities and roads within the Development, and the personal conduct of the Members and their guests thereon, and take such steps as it deems necessary for the enforcement of such rules and regulations, including the imposition of monetary penalties and/or the suspension of voting rights and the right to use any Project Common Area or Common Facility, provided notice and a hearing are provided as more particularly set forth in Section 12.06 of the Declaration and any Association rules consistent therewith. Rules and regulations adopted by the Board may contain reasonable variations and distinctions as between Owners and tenants.
(e) Enforce all applicable provisions of the Governing Documents relating to the control, management, maintenance, and use of the Lots, Common Areas and Common Facilities, and the roads within the Development.
(f) Contract for and pay premiums for fire, casualty, liability, and other insurance and bonds (including indemnity bonds) that may be required from time to time by the Association.
(g) Contract for and pay for maintenance, landscaping, utilities, materials, supplies, labor, and services that may be required from time to time in relation to the Development.
(h) Pay all taxes, Special Assessments, and other Assessments and charges that are or would become a lien on any portion of the Common Areas.
(i) Contract for and pay for construction or reconstruction of any portion or portions of the Development that have been damaged or destroyed and that are to be rebuilt.
(j) Delegate its duties and powers hereunder to the officers of the Association or to committees established by the Board, subject to the limitations expressed in Article X.
(k) Levy and collect Assessments from the Members of the Association in accordance with Article IV of the Declaration, and establish and collect reasonable use charges for any or all of the Common Facilities as the Board may deem necessary or desirable from time to time for the purpose of equitably allocating among the users the cost of maintenance and operation thereof.
(l) Perform all acts required of the Board under the Declaration.
(m) Prepare budgets and maintain a full set of books and records showing the financial condition of the affairs of the Association in a manner consistent with generally accepted accounting principles, and at no greater than annual intervals prepare an annual financial report, a copy of which shall be delivered to each Member as provided in Section 12.5.
(n) Appoint a nominating committee for the nomination of persons to be elected to the Board, and prescribe rules under which said nominating committee is to act, all as more particularly described in Section 5.6.
(o) Appoint such other committees as it deems necessary from time to time in connection with the affairs of the Association in accordance with Article X.
(p) Fill vacancies on the Board of Directors or in any committee, except for a vacancy created by the removal of a Board member by action of the Members.
(q) Open bank accounts and borrow money on behalf of the Association and designate the signatories to such bank accounts.
( r) Bring and defend actions on behalf of the Members in common or the Association to protect the interests of the Members in common or the Association, as such, so long as the action is pertinent to the operations of the Association, and assess the Members for the cost of such litigation.
(s) Enter Lots as necessary, subject to the notice requirements set forth in Section 3.06(b) of the Declaration, in connection with construction, maintenance, or emergency repairs for the benefit of the Common Areas, Common Facilities or the Owners in common.
Section 9.2. Limitations on Powers of the Board.
(a) Prohibited Actions. The Association is prohibited from taking any of the following actions:
(i) Although the Association may, after notice and hearing, suspend a member’s right to use the Association roads (except those that are specifically necessary to provide access to a member’s unit), except as otherwise provided in law, or order of the court, or an order under a final and binding arbitration decision, the Association shall not deny an Owner or occupant physical access to his or her Unit, either by restricting access through the Project Common Area to the Owner’s Unit or by restricting access solely to the Owner’s Unit;
(ii) The Association may not voluntarily assign or pledge the Association’s right to collect payments or Assessments or to enforce or foreclose a lien to a third party except when the assignment or pledge is made to a financial institution or lender chartered or licensed under federal or State law when acting within the scope of that charter or license as security for a loan obtained by the Association; however, the foregoing provision may not restrict the right or ability of the Association to assign any unpaid obligations of a former Member to a third party for purposes of collection; or
(iii) Adopt an Association rule or regulation that arbitrarily or unreasonably restricts an Owner’s ability to market the Owner’s Lot.
(b) Board Actions Requiring Member Approval. The Board shall not take any of the following actions except with the consent, by vote of a Majority of a Quorum of the Members at a meeting of the Members, or by secret written ballot:
(i) Enter into a contract with a third person wherein the third person will furnish goods or services for the Common Area or the Association for a term longer than 5 years.
(ii) Sell during any fiscal year property of the Association having an aggregate fair market value greater than 5 percent of the budgeted gross expenses of the Association for that fiscal year.
(iii) Pay compensation to members of the Board of Directors or the officers of the Association, provided, however, that directors and officers can be reimbursed for reasonable out-of-pocket expenses, verified in writing, incurred in carrying on the business of the Association.
(iv) Enter into a Lot except as described in Section 3.06(b) of the Declaration.
Section 9.3. Indemnification.
(a) Indemnification by Association of Directors, Officers, and Other Agents. To the fullest extent permitted by law, the Association shall indemnify its Directors and officers, committee members, employees, and other agents described in Corporations Code §7237, including persons formerly occupying any such positions, against all expenses, judgments, fines, settlements and other amounts actually and reasonably incurred by them in connection with any “proceeding” as that term is used in that section and including an action by or in the right of the Association, by reason of the fact that such person is or was a director, officer, committee member, or other person described by that section. The term “expenses,” as used in this section, shall have the same meaning as in Corporations Code §7237(a).
(b) Approval of Indemnity by Association. On written request to the Board by any person seeking indemnification hereunder, the Board shall promptly determine in accordance with Corporations Code §7237(e) whether the applicable standard of conduct set forth in §7237(b) or §7237(c) has been met and, if it has, the Board shall authorize indemnification. If the Board cannot authorize indemnification because the number of directors who are parties to the proceeding with respect to which indemnification is sought prevents the formation of a quorum of directors who are not parties to the proceeding, the Board shall promptly call a meeting of Members. At that meeting, the Members shall determine under Corporations Code §7237(e) whether the applicable standard of conduct set forth in §7237(b) or §7237(c) has been met and, if it has, the Members present at the meeting, in person or by secret written ballot, shall authorize indemnification.
(c) Advancement of Expenses. To the fullest extent permitted by law and except as is otherwise determined by the Board in a specific instance, expenses incurred by a person seeking indemnification under subparagraphs (a) and (b) of this section in defending any proceeding covered by those sections shall be advanced by the Association before final disposition of the proceeding, on receipt by the Association of an undertaking by or on behalf of that person that the advance will be repaid unless it is ultimately determined that the person is entitled to be indemnified by the Association for those expenses.
(d) Insurance. The Association shall have the power to purchase and maintain insurance on behalf of its directors and officers, committee members, employees, and other agents, against other liability asserted against or incurred by any director or officer, employee or agent in such capacity or arising out of the director’s or officer’s or employee’s or agent’s status as such.
Section 10.1. Committees
The Board may appoint such committees, composed of Directors and/or non-directors, with such authority as the Board shall deem necessary from time to time. All committees shall serve at the pleasure of the Board. The Board may not delegate to a committee the authority of the Board to approve any of the following actions for which the approval of the Board is required:
(a) Filling a vacancy on the Board or any committee which has the authority of the Board;
(b) The appointment of Executive Committees of Directors or the members thereof; or
(c) Any other non-delegable authority set forth in the Governing Documents or in law.
Further, the Board may not delegate to any committee its authority to adopt rules and regulations or to impose discipline as set forth in Article XII of the Declaration or elsewhere in the Governing Documents.
The Board of Directors may adopt additional rules, not inconsistent with the provisions of these Bylaws, for the governance of any committee.
Section 10.2. Notice and Minutes.
Executive Committees of Directors (Section 10.4), and any committee that may be comprised of a majority of the Board of Directors, are subject to the formal notice to members and/or directors requirements of these Bylaws, must prepare minutes of meetings, and otherwise operate as a full Board of Directors does. All other committees are not subject to the formal notice to members or directors requirements of these Bylaws, but they are encouraged to give notice to members at least 5 days in advance of any meetings, and include an agenda or general description of the subjects to be dealt with at the committee meeting. However, committee meetings (other than of Executive Committees of Directors) can be held entirely by telephone or email exchanges without prior notice, if the committee chairperson deems that necessary or expedient. Executive Committees of Directors must, and all other committees should, keep written minutes of their proceedings, report their proceedings to the Board, and file their minutes with the Secretary.
Section 10.3. Quorum; Voting.
The presence in person of a majority of the authorized number of Committee members at a meeting of the Committee shall constitute a quorum for the transaction of business. The vote of a majority of the Committee members present at a meeting, in person or by electronic means, duly held at which a quorum is present shall constitute the act of the committee, unless a different vote is required by law or expressly provided for in the Governing Documents.
Section 10.4. Executive Committees of Directors. In addition to the committees referenced in Section 10.1, the Board may, pursuant to Corporation Code Section 7212, by resolution adopted by a majority of the directors then in office, designate one or more committees, each consisting of two or more directors, to serve at the pleasure of the Board. Such committees shall have all the authority of the Board with respect to matters within their area of assigned responsibility, except that no committee, regardless of Board resolution, may:
(a) Take any final action on any matter which, under the California Nonprofit Mutual Benefit Corporation Law or the Davis-Stirling Act, requires approval of the Members.
(b) Fill vacancies on the Board of Directors or on any committee which has been delegated any authority of the Board.
(c) Amend or repeal Bylaws or adopt new Bylaws.
(d) Amend or repeal any resolution of the Board of Directors.
(e) Appoint any other Executive Committees of Directors or designate the members of those committees.
(f) Approve any transaction: (i) to which the Association is a party and one or more directors have a material financial interest, or (ii) between the Association and one or more of its directors or between the Association or any person in which one or more of its directors have a material financial interest.
Section 11.1. Officers. The officers of the Association shall be a president, a vice president, a secretary and a chief financial officer. The Association may also have, at the discretion of the Board, one or more assistant secretaries, one or more assistant treasurers, and such other officers as may be appointed in accordance with the provisions of Section 11.3. Any person may hold two or more offices, except that neither the secretary nor the chief financial officer may serve concurrently as president.
Section 11.2. Election of Officers. The officers of the Association, except such officers as may be appointed in accordance with the provisions of Sections 11.3 and 11.6, shall be chosen annually by majority vote of the Board at a meeting immediately before the Annual Member Meeting or its first meeting following the annual meeting of the Members, and each shall hold his or her office until he or she shall resign or shall be removed or otherwise disqualified to serve, or his or her successor shall be elected and qualified.
Section 11.3. Subordinate Officers. The Board may appoint, and may empower the president to appoint, such other officers as the affairs of the Association may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in the Bylaws and as the Board may from time to time determine.
Section 11.4. Removal of Officers. Any officer may be removed, either with or without cause, by the Board at any regular or special meeting.
Section 11.5. Resignation of Officers. Any officer may resign at any time by giving written notice to the Board or to the president or to the secretary. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the Association under any contract to which the officer is a party.
Section 11.6. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to such office.
Section 11.7. President. The president shall be elected by the Board from among the directors. He or she shall be the chief executive officer of the Association and shall, subject to the control of the Board, have general supervision, direction and control of the affairs and officers of the Association. He or she shall preside at all meetings of the Board, and shall have the general power and duties of management usually vested in the office of president of a corporation, together with such other powers and duties as may be prescribed by the Board or the Bylaws.
Section 11.8. Vice President. The vice president shall be elected by the Board from among the directors. In the absence or disability of the president, the vice president shall perform all the duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. He or she shall have such other powers and perform such other duties as from time to time may be prescribed by the Board or the Bylaws.
Section 11.9. Secretary. The secretary shall be elected by the Board from among the directors. The secretary shall keep or cause to be kept at the principal office or such other place as the Board may order, a book of minutes of all meetings of directors and Members, with the time and place of holding same, whether regular or special, and if special, how authorized, the notice thereof given, the names of those present at directors’ meetings, the number of Members present in person or casting written ballots at Members’ meetings, and the proceedings thereof. The secretary shall keep, or cause to be kept, appropriate current records showing the Members of the Association, together with their addresses. He or she shall give, or cause to be given, notice of all meetings of the Board required by the Bylaws or by law to be given, and he or she shall keep the seal, if any, of the Association in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board or by the Bylaws.
Section 11.10. Chief Financial Officer. The chief financial officer shall be elected by the Board from among the directors. The chief financial officer, who shall be known as the treasurer, shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the Development and business transactions of the Association, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and other matters customarily included in financial statements. The books and records shall at all reasonable times be open to inspection by any director or Member. The treasurer shall deposit or cause to be deposited, all monies and other valuables in the name and to the credit of the Association with such depositories as may be designated by the Board. He or she shall disburse the funds of the Association as may be ordered by the Board, shall render to the president and directors whenever they request it, an account of all of his or her transactions as treasurer and of the financial condition of the Association, and shall have such other powers and perform such other duties as may be prescribed by the Board or the Bylaws. If required by the Board, the treasurer shall give the Association a bond in the amount and with the surety or sureties specified by the Board for faithful performance of the duties of his or her office and for restoration to the Association of all its books, papers, vouchers, money, and other property of every kind in his or her possession or under his or her control on his or her death, resignation, retirement, or removal from office.
Section 12.1. Description of Assessments to Which Owners Are Subject. Owners of Lots within the Development are subject to Regular, Special and Special Individual Assessments as more particularly described in Article IV of the Declaration.
Section 12.2. Reserve Withdrawals. Any withdrawal of funds from Association reserve accounts shall require the signature of two directors.
Section 12.3. Operating Account. There shall be established and maintained a cash deposit account to be known as the “Operating Account” into which shall be deposited the operating portion of all Regular and Special Assessments as fixed and determined for all Members. Disbursements from such account shall be for the general need of the operation including, but not limited to, wages, repairs, betterments, maintenance, and other operating expenses of the Development.
Section 12.4. Other Accounts. The Board shall maintain any other accounts it shall deem necessary to carry out its purposes, including and in accordance with Civil Code §1365.5(f), or its successor statute, reserve account(s) for replacement of capital improvements as more particularly set forth in Section 4.09 of the Declaration. All Association books of account shall be maintained in accordance with generally accepted accounting principles.
Section 12.5. Budgets and Financial Statements. The following financial statements and related information for the Association shall be regularly prepared and copies thereof shall be Delivered to each Member of the Association:
(a) Budget. A pro forma operating budget meeting the requirements of this subparagraph (a) shall be distributed to all Members not less than 30 days nor more than 90 days before the beginning of the fiscal year. The budget shall include at least the following information:
(i) The Association’s estimated revenue and expenses on an accrual basis;
(ii) A summary of the Association’s reserves based on the most recent review or study conducted under Section 12.6, and Civil Code §1365.5, based only on assets held in cash or cash equivalents, which shall be printed in boldface type and include all of the following:
(A) The current estimated replacement cost, estimated remaining life, and estimated useful life of each major component of the Development that the Association is obligated to repair, replace, restore, or maintain (collectively “Association Capital Projects”);
(B) As of the end of the fiscal year for which the reserve study is prepared, the current estimate of the amount of cash reserves necessary for Association Capital Projects and the current amount of accumulated cash reserves actually set aside for the repair, replacement, restoration, or maintenance of Association Capital Projects;
(C) The percentage that the amount of accumulated cash reserves is of the estimated amount of necessary cash reserves calculated under subparagraph (B), above; and
(D) If applicable, the amount of funds received from either a compensatory damage award or settlement to the Association from any person or entity for injuries to real or personal property arising out of construction or design defects and the expenditure or disposition of funds, including the amounts expended for the direct and indirect costs of repair of construction or design defects. Such amounts shall be reported, at the end of the fiscal year for which the study is prepared, as separate line items under cash reserves, under subparagraph (B), above.
(E) The current deficiency in reserve funding (if any) expressed on a per unit basis, calculated in the manner set forth in Civil Code §1365(a)(2)(D).
(iii) A statement as to all of the following:
(A) Whether the Board has decided to defer or not undertake repairs or replacement of any Major Component having a remaining life of 30 years or less, including a justification for the deferral or decision not to undertake the repair or replacement;
(B) Whether the Board, consistent with the reserve funding plan adopted under Civil Code §1365.5(e), has determined or anticipates that the levy of one (1) or more Special Assessments will be required to repair, replace, or restore any major component or to provide adequate reserves therefor. If so, the statement shall also disclose the estimated amount, commencement date, and duration of the assessment;
(C) The mechanism or mechanisms by which the Board will fund reserves to repair or replace major components of the Development for which the Association is responsible, including assessments, borrowing, use of other assets, deferral of selected replacement or repairs, or alternative mechanisms; and
(D) Whether the Association has any outstanding loans with an original term of more than 1 year, including the payee, interest rate, amount outstanding, annual payment, and when the loan is scheduled to be retired.
(iv) A general statement setting forth the procedures used by the Board in calculating and establishing reserves to defray the future costs of repair, replacement, or additions to major components of the Development that the Association is obligated to maintain. This report shall include, but need not be limited to, reserve calculations made using the formula described in Civil Code §1365.2.5(b)(4), and may not assume a rate of return on cash reserves in excess of 2 percent above the rediscount rate published by the Federal Reserve Bank of San Francisco at the time the calculation is made.
(v) A summary of the reserve funding plan adopted by the Board of Directors under Civil Code §1365.5(e)(4). That summary shall include a notice to the Members that the full reserve study plan is available from the Association on request by any Member.
(b) Budget Summary. In lieu of Delivering the complete pro forma operating budget as specified above, the Board may elect to post the complete pro forma operating budget on the Association’s Internet Website, and Deliver a summary of the budget to the Members (within the time limits provided above), together with a notice that the complete budget is available on the Association’s Internet Website and at the Association’s principal office and that copies will be furnished, on request, to any Member at the Association’s expense. This notice shall be presented on the front page of the budget summary in at least 10-point bold type. If a Member requests a copy of the complete budget, the Association shall Deliver the material at the Association’s expense, within 5 days.
(c) Year-End Report. Within 120 days after the close of the fiscal year, a copy of the Association’s year-end report consisting of at least the following shall be distributed to Members:
(i) A balance sheet as of the end of the fiscal year;
(ii) An operating (income) statement for the fiscal year;
(iii) A statement of cash flows for the fiscal year;
(iv) A statement advising Members of the place where the names and addresses of the current Members are located; and
(v) Any information required to be reported under Corporations Code §8322 requiring the disclosure of certain transactions in excess of $50,000 per year between the Association and any director or officer of the Association and indemnifications and advances to officers or directors in excess of $10,000 per year.
The annual report shall be prepared in accordance with generally accepted accounting principles by a licensee of the State Board of Accountancy for any fiscal year in which the gross income of the Association exceeds $75,000. If the annual report is not prepared by such a licensee, it shall be accompanied by the certificate of an authorized officer of the Association that the statement was prepared without an audit from the books and records of the Association.
(d) Review of Accounts. On no less than a quarterly basis, the Board shall:
(i) Review a current reconciliation of the Association’s operating accounts;
(ii) Review a current reconciliation of the Association’s reserve accounts;
(iii) Review the current year’s actual reserve revenues and expenses compared to the current year’s budget;
(iv) Review the Association’s latest account statements prepared by the financial institution(s) with whom the operating and reserve accounts are lodged; and
(v) Review the Association’s income and expense statement for the operating and reserve accounts.
Section 12.6. Required Reserve Studies. At least once every 3 years, the Board shall cause a study of the reserve account requirements of the Development to be conducted if the current replacement value of the major components that the Association is obligated to repair, replace, restore, or maintain is equal to or greater than one-half of the gross budget of the Association for any fiscal year. The Board shall also review any reserve study required hereunder on an annual basis and shall consider and implement necessary adjustments to the Board’s analysis of the reserve account requirements as a result of that review. The reserve study required hereunder shall include the minimum requirements specified in Civil Code §1365.5 or comparable successor statute.
Section 12.7. Required Statutory Assessment and Reserve Funding Disclosure Summary. The disclosures required by the Association under this Article XII shall also be presented to the Members in summary form using the form that is set forth in Civil Code §1365.2.5.
In addition to the documents that the Association is required to distribute to the Members under Article XII, various statutes applicable to common interest developments and owner associations require that the following disclosures and information be provided to the Members of the Association on an annual or other periodic basis or in response for a request for the information by a Member:
Section 13.1 Annual Statement Regarding Association Assessments; Collection of Delinquent Assessments; Assessment Payments; and Payment Plans. The Board shall annually distribute during the 60-day period immediately preceding the beginning of the Association’s fiscal year a statement, in 12-point type, presenting the information required by Civil Code §1365.1(b). That notice discusses the obligations of Owners to pay assessments, the consequences of failing to make a timely payment of assessments, and the right of owners to request that their Association consider a payment plan for the satisfaction of delinquent assessment obligations.
Section 13.2. Annual Disclosure of Association Collection Policies. In addition, not less than 30 or more than 90 days immediately preceding the beginning of the Association’s fiscal year, the Association shall provide its Members with a statement describing the Association’s policies and practices in enforcing lien rights or other legal remedies for default in the payment of assessments.
Section 13.3. Notification to Members Regarding Insurance Coverage Maintained by the Association.
(a) Scope of Required Summary Disclosures. In accordance with California Civil Code §1365(f), within 60 days preceding the beginning of the Association’s fiscal year, the Association shall distribute to its Members a summary of the Association’s property, general liability, earthquake, and flood insurance (if any) and fidelity insurance containing the information described in the statute.
(b) Notification of Cancellation or Material Change in Policies. The Association shall, as soon as reasonably practicable, Deliver notice to its Members if any of the policies described in subparagraph (a) have lapsed, been canceled and are not immediately renewed, restored, or replaced, or if there is a significant change, such as a reduction in coverage or limits or an increase in the deductible as to any of those policies. If the Association receives any notice of nonrenewal of a policy described in subparagraph (a), the Association shall immediately notify its Members if replacement coverage will not be in effect by the date the existing coverage will lapse.
Section 13.4. Informal Dispute Resolution (IDR) and Alternative Dispute Resolution (ADR) Disclosure. At the time the budget required by Section 12.5 is distributed to the Members, the Board shall provide each Member with a summary of the provisions of California Civil Code §§1363.810-1363.840 which deals with the Informal Dispute Resolution (IDR) rights of Members that apply to most disputes between Members and the Association. At the same time, Members shall be given a summary of the provisions of Civil Code §§1369.510-1369.580, which require common interest owners’ associations and their Members to attempt to resolve most disputes involving the enforcement or interpretation of the Governing Documents through the use of Alternative Dispute Resolution (ADR), rather than civil litigation.
Section 13.5. Disclosure of Schedule of Fines or Other Monetary Penalties. If the Association adopts a schedule of fines for violations of the Governing Documents, or any other policy imposing a monetary penalty or a fee on any Member for violation of any Governing Document or the Association Rules, including any monetary penalty relating to the activities of a guest or invitee of a Member, the Board shall Deliver the schedule or policy to the Members by any means set forth at Section 1.18 of the Declaration. This distribution obligation shall arise whenever such a schedule or policy is adopted or subsequently amended.
Section 13.6. Disclosure of Right to Receive Board Meeting Minutes. Members of the Association shall be notified in writing, at the time the pro forma budget is distributed under Section 12.5(a) or at the time of any general mailing to the entire membership, of the Members’ right to have copies of the minutes of any Board meeting and how and where those minutes may be obtained.
Section 13.7. Required Statutory Assessment and Reserve Funding Disclosure Summary. The financial disclosures required under Article XII shall also be Delivered to the Members, at the time the annual budget is presented, in summary form using the form that is set forth in Civil Code §1365.2.5 entitled “Assessment and Reserve Funding Disclosure Summary.” The form required by the Civil Code may be supplemented so long as the minimum information set out in the statute is provided. For the purpose of the report and summary of the Association’s assessment and reserve disclosure, the amount of reserves needed to be accumulated for a component at a given time shall be computed as the current cost of replacement or repair multiplied by the number of years the component has been in service divided by the useful life of the component. Nevertheless, this disclosure, which is mandated by law, shall not be construed to require the Board to fund reserves in accordance with the calculation that is required to be disclosed under Civil Code §1365.2.5(b)(4).
Section 13.8. Annual Notice of Architectural Review and Approval Procedures. The Association shall annually provide its Members with notice of any requirements for Association approval of physical changes to the Member’s Lots or Residences under Article V of the Declaration. The notice shall describe the types of changes that require Association approval and shall include a copy of the procedures used to review and approve or disapprove proposed Improvement projects. Furnishing the Members with a summary of any Architectural Rules that references Article V of the Declaration, and advises the Members how they may obtain a complete copy of the Architectural Rules and Article V of the Declaration from the Association’s Internet Website or otherwise, shall constitute compliance with this disclosure requirement.
Section 13.9. Statement of Outstanding Charges. Within 10 days following receipt of a written request by an Owner, the Association shall Deliver to the Owner a written statement setting forth the following information as of the date of the statement: (a) the amount of the Association’s current Regular Assessments and Special Assessments (if any), and fees; (b) the amount and nature of any assessments levied on the Owner’s Lot that are unpaid on the date of the statement; (c) the amount of any monetary fines or penalties levied on the Owner’s Lot that are unpaid as of the date of the statement; and (d) any change in the Association’s current Common and/or Special Assessments and fees that have been approved by the Board, but have not become due and payable as of the date of the statement. The statement shall also include true and correct information regarding late charges, interest, and costs of collection that, as of the date of the statement, are or may be made a lien on the Owner’s Lot or that may be made a lien on that Lot in accordance with Civil Code §1367.1.
Section 13.10. Notice of Significant Legal Proceedings. Except as set forth in this section, the Board shall not institute any significant legal proceeding, including any arbitration or judicial reference proceeding, against any person without providing the Members of the Association with at least 30 days’ prior written notice of the Association’s intention to institute legal proceedings. The notice required by this Section 13.10 shall describe the purpose of the proceeding, the parties to the proceeding, the anticipated cost to the Association (including estimated attorney fees) in prosecuting the proceeding, the source of funds to process the proceeding (reserve or Special or Regular Assessments), and suggested information that should be disclosed to third parties, such as prospective purchasers and lenders, while the proceeding is being prosecuted. For purposes of this Section 13.10, “significant legal proceeding” means any legal proceeding in which it reasonably could be anticipated that any of the following events could occur:
(a) the levy of a special assessment to fund all or any portion of the proceedings;
(b) the expenditure of funds from the Association’s reserves in connection with the proceeding in an amount in excess of 5 percent of the Association’s then current reserves;
(c) the amount of the claim is in excess of $50,000; or
(d) the action could have a material adverse effect on the ability to sell and/or refinance Lots within the Development during the period the proceeding is being prosecuted.
If the proposed legal proceeding is against a builder or developer for alleged damage to the Project or Condominium Common Areas, alleged damage to the Lots that the Association is obligated to maintain or repair, or alleged damage to the portions of the Lots that arises out of, or is integrally related to, damage to the Project or Condominium Common Areas or the portion of the Lots that the Association is obligated to maintain or repair, the notice also shall specify all of the following: (i) that a meeting of the Members will take place to discuss problems that may lead to the filing of a civil action and the time and place of the meeting, and (ii) the options, including civil actions that are available to address the problems, including the filing of a civil action, and a statement of the various alternatives that are reasonably foreseeable by the Association to pay for those options and whether these payments are expected to be made from the use of reserve account funds or the imposition of Regular or Special Assessments, or emergency assessment increases.
Notwithstanding the foregoing, the above-described notice shall not be required to commence and pursue any action for the collection of delinquent assessments from any Member in accordance with the collection procedures set forth in Section 4.10 of the Declaration (and any published collection policy of the Association). Furthermore, if the Board in good faith determines that there is insufficient time to provide prior notice to the Members before the expiration of any applicable statute of limitations, or before any other significant right of the Association is lost or put in significant jeopardy, including but not limited to the need, in the discretion of the Board, to file a lawsuit to obtain a temporary restraining order and/or injunction to enforce the Governing Documents, the Board may take the necessary steps to commence the proceeding to preserve the rights of the Association, provided that as soon as is reasonably practical thereafter, and not later than 30 days after the commencement of the proceeding, the Board shall provide the Members with notice as required herein.
Section 13.11. Notification to Members of Rule Changes.
(a) Rule Changes Requiring Notification to Members (Civil Code § 1357.100 - 150). For purposes of this Section 13.11, a “rule change” is defined as any proposed action by the Board to adopt, amend, or repeal an operating rule (i.e., any rule of general application) that pertains to any of the following subjects: (i) use of the Association Common Areas of the Development; (ii) use of a Lot (including, without limitation, the adoption or amendment of any ARC Rule or Design Guideline); (iii) rule changes relating to Member discipline, including any action to adopt or amend a fine schedule or procedures for the imposition of penalties; (iv) any standards for delinquent assessment payment plans; (v) any procedures adopted by the Association for resolution of assessment disputes; or (vi) any procedures for reviewing and approving or disapproving a proposed physical change to a member’s Lot or to the Project Common Area under Article V of the Declaration.
Specifically excluded from the definition of a rule change are the following: (i) a decision regarding maintenance of the Project or Condominium Common Areas; (ii) decisions on specific matters that are not intended to apply generally; (iii) decisions setting the amount of a Regular or Special Assessment; (iv) rule changes that are required by law if the Board has no discretion with respect to the substantive effect of the rule change; and (v) issuance of a document that merely repeats existing law or the governing documents.
(b) Required Notice to Members. The Board must provide written notice of a proposed rule change (as defined in subparagraph (a), above) to the Members at least 30 days before making any rule change. The notice must include the text of the proposed rule change and a description of the purpose and effect of the proposed rule change. Notice is not required under this subparagraph (b) if the Board determines that an immediate rule change is necessary to address an imminent threat to public health or safety or an imminent risk of substantial economic loss to the Association. The decision on any rule change that is subject to these notice requirements shall be made by the Board at a duly noticed meeting that is open to the Members, after consideration of any comments made by the Members. As soon as possible after making a rule change (but in no event later than 15 days thereafter), the Board shall deliver notice of the rule change to every Member. If the rule change was an emergency rule change, the notice shall include the text of the rule change, a description of the purpose and effect of the rule change, and the date that the rule change expires (emergency rules cannot remain in effect for more than 120 days). The notices required by this Section 13.9 may be given to the Members by any means permitted by Civil Code §1350.7 and Section 1.18 of the Declaration. The Member notification requirements for proposed rule changes are intended to afford Members the right to review and comment on proposed rule changes, and to demand that the Board conduct a special meeting or a written ballot vote to rescind the proposed rule change in accordance with Civil Code §1357.140 (which sets forth procedures for a Member-initiated plebiscite to challenge the proposed rule change).
Section 13.12. Avoidance of Duplication in Reporting Requirements. To the extent that one document distributed to the Members under Article XII or this Article XIII provides the information required in more than one of the foregoing sections of this Article, any such requirements listed above may be satisfied by sending the Members the same document.
Section 14.1. Member Inspection Rights. All accounting books and records, minutes of proceedings of the Members, the Board, and committees of the Board, and the membership list of the Association shall at all times, during reasonable business hours, be subject to the inspection of any Member in accordance with the requirements and restrictions set forth in Civil Code §1365.2. The Member who desires to inspect those documents must submit a written request for inspection to the Association and that request must state a reason for the requested inspection that is reasonably related to the Member’s interests in the Association. The accounting books and records and the minutes of proceedings of an Association, and any information contained in those records, may not be used or sold for a commercial purpose or used for any other purpose that is not reasonably related to a Member’s interests as a Member. Any inspection by a Member that is permitted by this Section may be conducted by the Member, personally, or by his or her duly appointed representative. If a Member designates another person to inspect and/or copy Association records that are open to Member inspection, that designation must be in writing.
Section 14.2. Director Inspection Rights. Every director shall have an absolute right at any reasonable time to inspect all books, records, documents, and minutes of the Association and the physical properties owned by the Association. The right of inspection by a director includes the right to make extracts and copies of documents. All directors should consider their fiduciary obligations to act in good faith and in a manner they believe to be in the best interests of the Association in deciding how to use or disseminate information obtained through exercise of their inspection rights.
Section 14.3. Adoption of Reasonable Inspection Rules. The Board may establish reasonable rules with respect to (i) notice of inspection; (ii) hours and days of the week when inspection may be made; and (iii) payment of the cost of reproducing copies of documents requested by the Member.
Section 15.1. General Manager and/or Property Manager. The Board may, from time to time, employ the services of one or more managers to manage the affairs of the Association and, to the extent not inconsistent with the laws of the State of California, and on such conditions as are otherwise deemed advisable by the Board, the Board may delegate to the manager any of its day-to-day management and maintenance duties and powers under these Bylaws and the Declaration, provided that the manager shall at all times remain subject to the general control of the Board.
Section 15.2. Robert’s Rules of Order. In the event of a question or dispute concerning the procedural aspects of any meetings that cannot be resolved by reference to these Bylaws or applicable law, the matter shall be resolved by reference to Robert’s Rules of Order.
Section 15.3. References to State Statutes; Amendments to Conform to Law. All references in these Bylaws to Statutes shall be to the referenced California State statute as in effect on the date that these Bylaws are adopted. In the event that any referenced statute is subsequently amended or superseded, all such references shall thereupon mean and refer to the referenced statute as so amended, modified or superseded, so long as the amended statute continues to regulate or pertain to the same subject matter. The Board may, on advice of counsel, and by a majority vote of the Board, without the requirement of a member vote to approve the amendments, make changes or amendments to the provisions of these Bylaws that result from, and are consistent with, changes or amendments to any statutes that are referenced in these Bylaws or are otherwise applicable to the Association by operation of law. The Board shall, within 30 days after any such amendment(s), Deliver notice of them to the Members, and may, in its discretion, restate these Bylaws in their entirety, pursuant to the procedures for restatement of the Declaration at Section 16.01 thereof. The Board may also use this procedure to correct typographical or other minor errors in spelling, grammar or numbering.
Section 15.4. Amendment or Repeal of Bylaws. Except as otherwise expressly provided herein, these Bylaws may only be amended or repealed, and new Bylaws adopted by the affirmative vote or assent by written ballot of the holders of not less than sixty-six and two-thirds percent (66 2/3rds %) of the Voting Power of the Association, provided that if any provision of these Bylaws requires the vote of a larger proportion or all of the Members, such provisions may not be altered, amended, or repealed except by such greater vote, unless otherwise specifically provided herein. Any amendment to these Bylaws shall become effective immediately on approval by the Members. The secretary of the Association shall certify adoption of any duly approved amendment to the Bylaws and a copy of said certificate and the amendment shall be included in the Association’s corporate records.
Section 15.5. Notice Requirements. Any notice or other document permitted or required to be Delivered herein may be Delivered as set forth at Section 1.18 and Article XIV of the Declaration.
Section 15.6. Construction and Definitions. Unless the context requires otherwise or a term is specifically defined herein, the general provisions, rules of construction, and definitions in the California Davis-Stirling Act, and the California Nonprofit Mutual Benefit Corporation Law shall govern the construction of these Bylaws. Without limiting the generality of the above, the masculine gender includes the feminine and neuter, and singular number includes the plural and the plural number includes the singular. All captions and titles used in these Bylaws are intended solely for the reader’s convenience of reference and shall not affect the interpretation or application of any of the terms or provisions contained herein.
The undersigned, secretary of the corporation known as Chinquapin Homeowners Association, hereby certifies that the above and foregoing Second Amended and Restated Bylaws, consisting of 41 pages, were duly adopted by secret written ballot of the Members of the Association on September 29, 2010, and that they now constitute the Bylaws of the Chinquapin Homeowners Association.
CHINQUAPIN HOMEOWNERS ASSOCIATION,
a California nonprofit mutual benefit corporation
___________________________________________
By: Penelope V. Bauche, Secretary