DISADVANTAGE OF ARBITRATION CLAUSE
Q.
When I purchased my home several months ago, I agreed to an arbitration
clause in the purchase agreement. I now have a major dispute with
the seller and have been advised that I cannot obtain the seller’s
records through discovery. Can this be possible?
A.
Yes. Signing an arbitration clause has many disadvantages, including
limits on discovery. You should have an attorney review the arbitration
provision and advise you accordingly. Top
ONE YEAR
LIMIT ON CONTRACTS
Q.
I was recently elected to the board of directors of our townhome
association in Ventura. After
becoming a member of the board, I reviewed several contracts that
the prior board had signed.
Notwithstanding the fact that our CC&Rs limit association
contracts to one year, the prior board signed a contract for master
satellite dish services for a period of five years.
Our current board is not unhappy with the contract other
than the fact that it violates our CC&Rs.
What are your comments?
A.
There are statutory exceptions to the one-year limitation on contracts
commonly found in association CC&Rs. Entering into a contract
with a third party to furnish goods or services to the association
or its members for a term longer than one year is permitted as
follows:
1) Agreements for cable television
services and equipment or satellite dish television services and
equipment are permitted so long as they do not exceed five years.
2) Lease agreements for laundry room
fixtures and equipment are permitted so long as they do not exceed
five years.
3) Agreements for the purchase or
lease of burglar alarm and/or fire alarm equipment, installation
and services are permitted so long as they do not exceed five
years.
One stipulation is that
contracts exceeding one year may not be entered into with an entity
in which the developer has a direct or indirect ownership interest
of ten percent or more. Also, other contracts for
a term not to exceed three years that may be terminated by the
association, after not more than one year, without cause, penalty
or other obligation, upon 90 days written notice of termination
are also permitted. Top
SUSPENDED CORPORATIONS
Q.
Our Association’s management company recently informed the board that the corporate status of the association had been suspended. How does a homeowner association become suspended and what are the consequences?
A.
Possible reasons for suspension are:
| • |
Failure to pay taxes, |
| • |
Failure to file taxes, |
| • |
Failure to file a Statement by
Domestic Nonprofit Corporation, or |
| • |
Failure to file a Statement by
Common Interest Development |
The consequences include the loss of:
| • |
The right to bring and defend lawsuits, |
| • |
The right to collect
assessments, |
| • |
The right to enforce contracts with contractors and
vendors, and |
| • |
The right to enter into contracts. |
A suspended corporation
(association) can be revived. When this occurs, a Notice of
Revivor is provided by the Secretary of State. Top
