INSIDE THIS ISSUE:
        - Dishes, Dishes Everywhere, and Not a Bite to Eat!  By James R. McCormick, Jr.
        - Time for a Change?  Amendment of Your Governing Documents.  By Laurie F. Masotto
        - The New Standard for Common Area Maintenance: Will it Survive Supreme Court Review?
        - Supreme Court Grants Review of the Aas Case.
        - A Little Levity to Lighten Your Load.
        - Announcements

    What's round, less than a meter in diameter, and can be installed by an owner in a variety of places within the project with little or no Association regulation or interference? No, it's not the latest beanie baby, it's a satellite dish, or "covered antenna," and the Federal Communications Commission (FCC) is making it harder and harder for Associations to regulate in this area.

    It began with the Over-The-Air-Reception Devices (OTARD) Rule adopted by the FCC in 1996, and has
culminated in various rulings by the FCC which broaden an owner's right to install a "covered antenna" almost to the point of being limitless. A "covered antenna" has been defined by the FCC as:

    1.  Any antenna designed to receive conventional television broadcast signals;
    2.  Any antenna designed to receive direct broadcast satellite service that is one meter (i.e., 39.37 inches) or less in diameter; and
    3. Any antenna designed to receive video or programming services via multi-point distribution services that are one meter (i.e., 39.37 inches) or less in diameter or diagonal measurement.

    The FCC has provided that any CC&Rs, or rules and regulations which "impair" the installation, maintenance or use of the covered antennas are prohibited. While "impair" is a somewhat subjective term, the FCC has been interpreting the term such that even a slight impairment is precluded. The FCC has provided, however, that regulations "impair" if they:

    1. Unreasonably delay or prevent installation, maintenance or use of a covered antenna;
    2. Unreasonably increase the cost of installation, maintenance or use of a covered antenna; or
    3. Preclude reception of a quality signal by a covered antenna.

    Owners, municipalities or associations are all allowed to petition to the FCC for a ruling on a particular regulation pertaining to a covered antenna. Recently, the FCC provided that if an association files a Petition for Declaratory Ruling against an owner, the association must provide a copy of all of the filings to that owner. Additionally, the FCC also requires that the association notify its members of any petition or court action against an owner by placing notices in member mailboxes, on bulletin boards, in association newsletters, billing statements, etc.

    With OTARD and the above guidelines in mind, the FCC has entertained numerous petitions from individual owners. Up until recently, the FCC had almost always sided with the owner challenging a regulation -- to the detriment of associations. Recently, however, the FCC has clarified that associations may still enforce reasonable antenna rules and restrictions. How the FCC defines "reasonable," remains to be seen. The FCC has discussed and/or issued rulings on the following items:

COMMON AREA

    Under the current regulations, an owner cannot be prohibited from installing an antenna within his or her individually owned property, or any exclusive use common area (i.e., patio or balcony). An issue which is still pending before the FCC is the Association's ability to prohibit installation of covered antennas on common area property. The FCC has not yet issued a ruling or offered any guidelines in this area. Until such time as the FCC issues a ruling or order, an association may maintain a policy restricting installation of antennas on common area property which is not exclusively used by an owner. In a related ruling, the FCC stated that owners may install antennas on exclusive use common area property (including balconies and patios in condominiums and cooperatives), even if the association provides for the maintenance of the exclusive use property.

OUTRIGHT PROHIBITIONS

    The FCC has issued rulings on petitions by owners who have faced outright prohibitions on installation of covered antennas. In every petition, the FCC has determined that the blanket prohibition was invalid. The FCC stated that the OTARD rule offers only two justifications for antenna prohibitions:

    1. Clearly articulated safety reasons; or
    2. Historic preservation reasons.

    In one petition, a city required that "the public health, safety and welfare interests" of the city must be taken into account prior to the issuance of any permit. The FCC determined that this general language was not a "clearly articulated safety reason," and struck down the requirement. The FCC has explained the safety requirement exception by providing that associations must show a "legitimate" safety interest to adopt and enforce safety restrictions, and that a higher "compelling" safety interest need not be shown.

    The FCC also dealt with a petition which involved the historic preservation exception. In that petition, the Association claimed that a prior approval process was necessary to protect paleo-Indian remains located on or near the association's property. The FCC rejected the association's argument because the association could not demonstrate that the remains were located on the property subject to the rule, or that the association was listed or eligible for listing with the National Register of Historic Places. The FCC provided that such a demonstration was necessary to qualify for the exception.

    Based on these rulings, it is fairly safe to say that most outright prohibitions on covered antennas will be held invalid. Clearly articulated safety reasons and historic preservation reasons, on the other hand, will be carefully scrutinized by the FCC and may never meet the FCC's unstated requirements for clarity.

PRIOR APPROVALS

    The FCC has faced prior approval process in three petitions, and has invalidated the provisions in all three petitions. The FCC sees prior approval processes as constituting an unreasonable delay in the installation process, and hence invalid. The association involved in one petition asked the FCC to allow an expedited two-day prior approval process. The FCC declined to make a formal determination, however, the tone of its ruling made it seem that even a two-day delay would be seen as "unreasonable."

PREFERRED LOCATIONS

In another FCC petition, an owner challenged a policy which required owners to install covered antenna in preferred locations, and if not, to demonstrate that the owner could not receive a quality signal in the preferred location. The FCC determined that this requirement "constitutes an unjustified prior approval process," and invalidated the regulation.

    The FCC has ruled that the only recourse for an association faced with a situation similar to that described above, is for the association to demonstrate -- after the antenna is already installed -- that it can be installed in a preferred location without unreasonable delay, without unreasonably increasing the costs, or without precluding the reception of acceptable quality signals.

APPLICATION FEES

    In connection with prior approval requirements, some associations have attempted to require an application fee. In one petition, the association required a five dollar ($5) application fee. The FCC found that this requirement caused an "unreasonable delay and expense" and invalidated the requirement. The FCC felt that a fee requirement might prove to be a disincentive for potential antenna users, and as a charge on an absolute right of installation is improper.

SCREENING OR CAMOUFLAGING

    The FCC has issued an order in one case involving screening and another petition is still pending. In the first petition, the FCC indicated that screening or camouflaging requirements which cause unreasonable expense or delay installation would be invalidated. The FCC did provide that it would allow screening requirements if the particular rule specifically states that by "reasonable," it means "those requirements that do not impose unreasonable expense or delay or preclude reception of an acceptable quality signal." In its most recent ruling, the FCC made it clear that painting restrictions can still be enforced if they meet these requirements.  Associations should consider integrating this language into their current satellite dish policy as this provides associations with another viable alternative for regulation.

PENALTIES

    The FCC has struck down penalty provisions in two separate petitions. The first penalty provision involved a $500 a day fine for violation of the policy and the second penalty provision included revocation of association privileges and prohibition of access to association facilities. The FCC determined that penalties such as these would deter installation and struck them down. Since the FCC has stated that owners have an absolute right to install an antenna, any penalty provision will most likely be struck down.

    Because the FCC has not yet ruled on the ability of owners to install antennas on common areas, an association may be able to impose a penalty for installation on the common area, or in an area which is not individually owned or is property in which the owner does not have a direct or indirect ownership interest and over which the owner has no exclusive use or control. The actual penalty, however, must be reasonable and no more burdensome than necessary to achieve its stated purpose. On the whole, however, imposing penalties in this area is likely to be risky and may be deemed improper if challenged.

    Recently, the FCC ruled that if an owner loses a case against an association or a petition in front of the FCC, the owner is entitled to a 21 day grace period during which to comply with association restrictions before any fines or penalties may be imposed.

HEIGHT AND SETBACK REQUIREMENTS

    An association may not set absolute height limitations or setback requirements, but they may provide a permit process for masts which would extend more than twelve (12) feet above the roofline. An association can also provide a permit process for setbacks, however, both requirements must be clearly defined and precisely worded.

ALLOWABLE RESTRICTIONS

    In a recent petition, the FCC ruled that associations are allowed to maintain the following requirements:

    1. An Association may require indemnification agreements when installations occur on individually owned or exclusive use area; and
    2. An Association may require that any contractor hired to install antennas possess liability insurance.

    While an association can require that a contractor have liability insurance, the association cannot require that an owner use a contractor for the installation, unless necessary for clearly articulated safety reasons, or historic preservation. The FCC opinion left open whether an association can require an indemnification agreement for antennas installed on the common area. This will probably be determined in the petition which is pending before the FCC pertaining to installation on common areas.

COSTS AND FEES

The FCC has ruled that associations may not impose attorneys fees on homeowners while a rule or restriction is under review by either the FCC or a local court. Additionally, to determine whether a cost relating to installation requirements is reasonable, the FCC will compare the cost of the equipment or service to how the association's rules or restrictions treat similar devices such as patio equipment, air conditioners, etc.

CENTRAL ANTENNAS

A recent FCC order provides that an association may prohibit individual antennas only if it makes programming available through a central antenna to any resident desiring services at no greater cost and with equivalent quality as would be available from an individual antenna installation. Furthermore, the owner must be able to receive the specific service desired, and the requirement to use the central antenna must not unreasonably delay the owner's ability to receive video programming.

CONCLUSION

Due to the FCC striking down many of the rules, regulations and requirements which it has faced, an association drafting a satellite dish or antenna policy must carefully tailor any policy in light of the FCC orders described above. Furthermore, the guidelines offered by the FCC are constantly undergoing revisions as the FCC faces more petitions and issues more orders. Please contact our office for further information or assistance in drafting a satellite dish and antenna policy.

  TIME FOR A CHANGE?  AMENDMENT OF YOUR GOVERNING DOCUMENTS
    - By Laurie F. Masotto

Are there provisions in your Association's CC&Rs that are too restrictive, outdated, developer-oriented, or are not detailed or clear so that they are difficult to interpret? Is there a provision regarding leasing, pets, or parking, that would better serve the Association if changed? Is a change needed? If your Association esires to amend its governing documents, the Board should consider the following:

Is an Amendment Needed?     If your CC&Rs are unclear, for example, on what "ingress and egress" means for purposes of allowing garage doors to remain open, this is a question of how the restriction can be interpreted, without the need for an amendment. If the concern is defining what time trash cans can be placed outside, what pool hours are, or whether parking permits can be issued, these types of matters are properly addressed by adopting a rule to supplement the CC&Rs. Except where required by the governing documents, no membership approval is needed to adopt rules. However, if the rule attempts to change the CC&Rs, an amendment is needed, which requires membership approval as mentioned below. The fact that many homeowners, or board members, desire a particular amendment should be viewed secondary to whether the amendment is in the best interest of the project as a whole. The goals of protecting, promoting, preserving and maintaining the value and attractiveness of the project should be the focus. In addition, the nature of any proposed amendment should be reviewed by legal counsel, to ensure it does not violate laws applying to associations, and will be enforceable.

Membership Approval.     Nearly all CC&Rs and Bylaws state a certain percentage of membership approval that is needed to amend those documents. For those that do not, California Civil Code Section 1355(b) permits amendment upon approval of more than 50% of the membership. The Board should consider the type of amendment that is being proposed, and whether it is likely to be passed. The Board can seek approval either by holding a members' meeting (or including voting on this issue as part of the annual
meeting), or by sending out a written ballot. In either case, the notice or cover letter should advocate the amendment, by explaining why the amendment is important, and how the Association will benefit. The ballot and solicitation must contain certain information as provided by the Corporations Code, such as the opportunity on the ballot to specify approval or disapproval, the number and percentage of approval needed, and the time by which to return the ballot. The exact wording of the amendment should be included to clearly inform voters what they are voting on. In some cases, it may be helpful to highlight
or provide a summary of the changes.

Lender Approval.     Some amendments require lender approval, which is typically when the amendment "materially affects" lenders' rights. Your governing documents will usually specify what is considered a "material" amendment, such as changing maintenance responsibilities, changing the pro-rata obligation to pay assessments, and eliminating or changing provisions which benefit lenders. Some documents only require approval from those lenders who have given written notice to the Association. Otherwise, the Association would need to identify each lender, and provide notice. Obtaining this approval can be time
consuming and expensive; these factors should be considered in making the decision to amend your documents.

Petition In Superior Court If Amendment Fails to Pass.     Many associations have difficulty getting members to participate in meetings or other association matters. Amendments are no exception. Where the CC&Rs require a high percentage of approval to amend, such as 75%, it sometimes seems nearly impossible to obtain approval. Such a high percentage can be excused, if the Association is able to get approval of at least a majority. A petition must be filed in the Superior Court under Civil Code Section 1356, to request approval. That section lists the criteria the court will use to review the amendment, such as whether the amendment is reasonable.

    Please contact our office to discuss the appropriateness and requirements as to the change the Board has in mind.

  THE NEW STANDARD FOR COMMON AREA MAINTENANCE: WILL IT SURVIVE SUPREME COURT REVIEW?

    Earlier this year, a California Appellate Court decided that an "objective test of reasonableness" should be used to decide whether a homeowners association has properly maintained the common areas, in the case of Lamden v. La Jolla Shores Clubdominium Homeowners Association. Before this case, the "Business Judgment Rule" was the standard for performing the Association's obligations. That case has now been accepted for review by the California Supreme Court. Until that court makes its ruling, the case cannot
be used as authority by persons challenging whether the association properly maintained the areas for which it is responsible.

    Although that case may not be cited as "good law", Boards should nevertheless consider and evaluate, with assistance of legal counsel, whether its decisions regarding maintenance of the common area meet the objective test of reasonableness and whether the decision will unduly shift risk or burden to the homeowners. This does not prevent the board from performing a cost-benefit analysis to find the most cost-effective method to repair or maintain the common area. However, the board should include an extra step, by looking at whether the most fiscally prudent alternative is also the least likely to expose the owners to unreasonable risk.

    Look for updates in future newsletters as to whether the Lamden decision will survive the California Supreme Court's review.

  THE CALIFORNIA SUPREME COURT GRANTS REVIEW OF THE AAS DECISION.

    The recent Aas decision has been construed by many defense attorneys as precluding associations from obtaining judgments against developers absent a showing of "resultant damage." For example, the argument is that if a fire stop is not present in a unit, the association cannot recover from the developer for lack of that fire stop unless a fire breaks out and destroys the unit because of the lack of fire stop.

    The Aas decision directly contradicts prior cases involving construction defects. Because of this contradiction, the matter was appealed to the California Supreme Court for review. On September 16, 1998, the California Supreme Court Agreed to grant review of the Aas decision. Because the California Supreme Court granted review, the Aas decision is effectively depublished and may not be relied upon as precedent.

  A LITTLE LEVITY TO LIGHTEN YOUR LOAD.

Here's the reason most lawyers did not go to medical school. Below are actual questions asked of witnesses by attorneys during trials, taken from the Massachusetts Bar Association Lawyer Journal.

1.      "Now Doctor, isn't it true that when a person dies in his sleep, he doesn't know about it until
the next morning?"

2.      "Did he kill you?"

3.      "How many times have you committed suicide?"

4.     Q:      "So the date of conception (of the baby) was August 9th?"
        A.      "Yes."
        Q:      "And what were you doing at the time?"

5.     Q:      "How was your first marriage terminated?"
        A:      "By death."
        Q:      "And by who's death was it terminated?"

6.     Q:      "Doctor, how many autopsies have you performed on dead people?"
        A:      "All my autopsies are performed on dead people."

7.     Q:      "Do you recall the time that you examined the body?"
        A:      "The autopsy started around 8:30 PM."
        Q:      "And Mr. Dennington was dead at the time?"
        A:      "No, he was sitting on the table wondering why I was doing an autopsy."

8.     Q:      "Are you qualified to give a urine sample?"
        A:      "I have been since early childhood."

  ANNOUNCEMENTS

    Lauire S. Poole, Esq., gave birth to a baby boy, Adam, on August 1, 1998.  Congratulations to Laurie and her family.