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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







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