§5 RIGHTS, RESPONSIBILITIES AND ASSESSMENTS
5.10. Provisions. The operation of the Cooperative will include the provision housing to the Members in exchange for the regular payment of fees and an equitable share of the duties and responsibilities necessary for sustaining buildings and grounds as detailed in the Participation Requirements and the Lease.
5.20. Residency Responsibilities. It is the responsibility of Members to create policies and procedures that further the goals of the Cooperative and to ensure that all Owners, Renters, and any employees of the Cooperative uphold their responsibilities and abide by such policies and procedures.
5.30. Equality. The rights and responsibilities of legal Owners are equal with one exception: Owners who are being considered for expulsion do not have the right to participate in the decision to expel. The rights and responsibilities of Renter Members are equal.
5.40. Personal Obligation of Assessments. Each Owner, by acceptance of a Lease to a Unit and the appurtenant membership, is deemed to covenant and agree to pay to the Cooperative all Annual Assessments for Common Expenses and all applicable Special Assessments and Reimbursement Assessments. The payment of all such Assessments, together with interest, costs and reasonable attorneys’ fees, shall be a separate, distinct and personal obligation of the Person who was the Owner of such Lease and appurtenant membership at the time when the Assessments fell due, and shall bind his or her heirs, personal representatives, successors and assigns.
Upon any voluntary or involuntary conveyance of a Lease and the appurtenant Membership and Certificate, the personal obligation for delinquent Assessments shall not pass to the new Owner (“Purchaser”) unless expressly assumed by the Purchaser. Any Purchaser shall be entitled to a statement from the Board setting forth the amount of the unpaid Assessments against the previous Owner (“Seller”) due to the Cooperative. Neither the lease assigned to the Purchaser, nor the Purchaser’s appurtenant Membership and Certificate shall be liable for any unpaid Assessments levied by the Board against the Seller in excess of the amount set forth in the statement; provided, however, that the Purchaser shall be liable for any such Assessment becoming due after the date of any such statement.
5.41. Maintenance of Utility Systems. The Cooperative shall be solely responsible to maintain in good condition, repair and replace any of the utility systems serving the Project. The Cooperative shall perform such maintenance and make such repairs and replacements to the utility systems that the Cooperative is responsible to maintain, repair and replace as may be necessary or desirable from time to time for the benefit of the Cooperative.
5.42. Maintenance Funds of the Cooperative. The Board shall establish no fewer than two (2) separate accounts (the “Maintenance Funds”), into which shall be deposited all monies paid to the Cooperative, and from which disbursements shall be made, as provided herein, in the performance of functions by the Cooperative under the Articles and these Bylaws. Each of the Maintenance Funds shall be established as trust savings or trust checking accounts at a credit union or other reputable financial institution. The Maintenance Funds shall include: (i) an Operating Fund for current Common Expenses of the Cooperative, and (ii) a Reserve Fund for capital improvements, replacements, painting and repairs of the Project (which is not normally expected to occur more frequently then on an annual basis), and (iii) any other funds which the Board may establish to the extent necessary under the provisions of the Governing Documents. Nothing contained herein shall limit, preclude or impair the establishment of additional Maintenance Funds by the Cooperative, so long as the amounts assessed to, deposited into, and disbursed from any such Fund are earmarked for specified purposes authorized by the Governing Documents.
5.43. Purpose of Assessments. The Assessments levied by the Board on behalf of the Cooperative shall be used exclusively to further purpose of the Cooperative as defined in section 1.12 Purpose and as authorized by these Bylaws, as amended from time to time. Disbursements from the Operating Fund shall be made by the Board for such purposes as may be necessary for the discharge of its responsibilities herein for the common benefit of all current and future Members, other than those purposes for which disbursements from the Reserve Fund are to be used.
5.44. Reserve Funds. The withdrawal of money from the Reserve Fund shall require (i) a duly executed resolution of the Board authorizing the withdrawal from the Reserve Fund, and (ii) the signatures of at least two (2) persons at least one of which must be a current member of the Board of Directors. Reserve Funds may not be expended for any purpose other than repair, restoration, replacement or maintenance of major components that the Cooperative is obligated to repair, restore, replace or maintain.
Notwithstanding the foregoing, the Board may authorize the temporary transfer of money from a Reserve Fund to the Cooperative’s general Operating Fund to meet short term cash-flow requirements or other expenses. The transferred funds shall be restored to the Reserve Fund within three (3) years of the date of the initial transfer, provided that the Board, on the making of a finding supported by documentation that a delay is in the best interest of the Project, may delay the restoration of these funds and in restoring the expended funds to the Reserve Fund, and shall, if necessary, levy a Special Assessment to recover the full amount of the expended funds within the time limits required. This Special Assessment shall not be subject to the Assessment increase restrictions set forth in Section 5.49. and California Civil Code ¤1366(b).
At least once every three (3) years, the Board shall cause a study to be conducted of the Reserve Fund requirements if the current replacement value of the major components that the Cooperative is obligated to repair, replace, restore, or maintain is equal to or greater than one-half of the gross budget of the Cooperative for any fiscal year. The Board shall review this study annually and shall consider and implement necessary adjustments to the Board’s analysis of the Reserve Fund requirements as a result of that review.
The study shall, at a minimum, include: (i) identification of the major components that the Cooperative is obligated to repair, replace, restore, or maintain that, as of the date of the study, have a remaining useful life of less than thirty (30) years; (ii) identification of the probable remaining useful life of the components identified in subparagraph (i) as of the date of the study; (iii) an estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in subparagraph (i) during and at the end of their useful life; and (iv) an estimate of the total annual contribution necessary to defray the cost to repair, replace, restore, or maintain the components identified in subparagraph (i) during and at the end of their useful life after subtracting total Reserve Funds as of the date of the study.
As used herein, “Reserve Funds” means money that the Board has identified for use to defray the future repair or replacement of, or additions to, those major components that the Cooperative is obligated to maintain; and “Reserve Fund requirements” means the estimated funds that the Board has determined are required to be available at a specified time to repair, replace, or restore those major components that the Cooperative is obligated to maintain.
5.45 Commencement of Annual Assessment. The Board shall authorize and levy the amount of the Annual Assessment upon each Lease and the appurtenant Membership and Certificate as provided herein, by majority vote of the Board of Directors. The Initial annual Assessment shall commence as to all Leases and the appurtenant Memberships and Certificates as of the first day of the calendar month following the first Close of Escrow in the Project.
Written notice of the Annual Assessments shall be sent to every Member subject thereto. The Board shall fix the amount of the Annual Assessments against each Owner and his or her respective Membership Share and Certificate at least thirty (30) days in advance of each Annual Assessment period. Each Annual Assessment shall constitute an aggregate of separate assessments for each of the Maintenance Funds, reflecting an itemization of the amounts assessed and attributable to prospective deposits into the Reserve Fund and the Operating Fund.
Each Owner shall pay to the Cooperative his or her Annual Assessment in monthly installments in such amounts as established by the Board. Each Annual Assessment may be paid by the Member to the Cooperative in one check or in separate checks as payments attributable to the deposits under the Operating fund and the Reserve Fund. If any installment of an Annual Assessment payment is less than the amount assessed and the payment does not specify the Maintenance Fund or Funds into which it should be deposited, the receipt by the Cooperative from that Owner shall be credited in order of priority first to the Operating Fund, until that portion of the Annual Assessment has been satisfied, and last to the Reserve Fund.
5.46. Collection of Annual Assessments. Commencing with the first Close of Escrow for the sale of a Lease and its appurtenant Membership and Certificate, the Board shall fix and collect monthly from each member his or her pro rata share of the Annual Assessments. Annual Assessments for fractions of any month involved shall be prorated. At least annually, the Board shall present to the Members a written report reflecting income and expenditures of the Cooperative, as further provided in Section 8.20. The Board of Directors may cause such statement to be distributed to all Members in such greater frequency as deemed appropriate by the Board.
From time to time, the Board may determine whether there are any excess funds in the Operating Funds, which excess funds shall be retained by the Cooperative and may be used to reduce the following year’s Annual Assessments. Upon dissolution of the Cooperative incident to the abandonment or termination of the Project, any amounts remaining in any of the Maintenance Funds shall be distributed proportionately to he Owner Members.
5.47. Special Assessments. In addition to the Annual Assessment, the Board may, from time to time, levy a Special Assessment against all Leases and the appurtenant Memberships if the Board determines that the Cooperative’s available funds are or will become inadequate to meet the estimated expenses of the Cooperative, including the maintenance of appropriate reserves, for a particular fiscal year for any reason, including, without limitation, unanticipated delinquencies, costs of construction, unexpected repairs or replacements of capital improvements or otherwise. The Board shall determine the amount necessary to meet the estimated expenses, and if the amount is approved by the Board, it shall become a Special Assessment. The Board may levy the entire Assessment immediately or levy it in installments over a period it considers appropriate.
5.48. Revised Assessment. If at any time during the course of any year the Board shall deem the amount of an Assessment to be inadequate or over adequate by reason of a revision of its estimate of either expenses or income, or otherwise, the Board may revise the Assessment for the balance of the fiscal year. The Board of Directors shall provide notice by first-class mail to the Owner Members of any increase in a Regular or Special Assessment not less than thirty (30) nor more than sixty (60) days prior to the increased Assessment becoming due.
5.49. Restrictions on Regular or Special Assessments. Notwithstanding any other provision in these Bylaws, the Board may not (i) impose an Annual Assessment for any fiscal year which is more than twenty percent (20%) greater than the Annual Assessments of the prior fiscal year and (ii) which in the aggregate exceeds five percent (5%) of the budgeted gross expenses of the Cooperative for that fiscal year without the approval of a majority of the votes at a meeting of the Owner Members at which a quorum is present. For purposes of this Section 5.49, a “quorum” means more than fifty percent (50%) of the Owner Members. Any Cooperative meeting to comply with this section shall be conducted in accordance with Chapter 5, commencing with ¤7510 of Part 3, Division 2 of Title 1, and ¤7613 of the California Corporations Code.
Notwithstanding the foregoing, the Board of Directors, without the approval of the Owner Members, may increase Annual Assessments or levy special Assessments necessary for an emergency situation. For the purposes of this section, an emergency situation is one of the following:
(A) An extraordinary expense required by order of court;
(B) An extraordinary expense necessary to repair or maintain the Project or any part of it for which the Cooperative is responsible where a threat to personal safety on the Project is discovered;
(C) An extraordinary expense necessary to repair or maintain the Project or any part of it for which the Cooperative is responsible that could not have been reasonably foreseen by the Board in preparing and distributing the pro forma operating budget; provided, however, that prior to the imposition or collection of any Assessment under this subparagraph, the Board shall pass a resolution containing written findings as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process and the resolution shall be distributed to the Members with the notice of the Assessment; or
(D) An extraordinary expense in making the first payment of the earthquake insurance surcharge pursuant to Section 5003 of the Insurance Code. The foregoing restrictions on Assessment increases shall not apply to any Special Assessment levied to restore Reserve Funds in accordance with California civil Code ¤1365.5(c).
5.50. Reimbursement Assessments. After compliance with the Notice and Hearing requirements in Section 6.20, the Board of Directors may levy a Reimbursement Assessment against any Lease and appurtenant Membership Share and its Owner for the purpose of collecting (i) monetary penalties imposed by the Board or Cooperative for violation of the Governing Documents; (ii) amounts required to reimburse the Cooperative for costs and expenditures incurred in discharging any Owner’s obligation with respect to property taxes in accordance with the governing Documents. Notwithstanding anything to the contrary in these Bylaws, a Reimbursement Assessment levied against a Lease and appurtenant membership and its Owner may not become a lien against such Lease and appurtenant Membership Share that is enforceable by a power of sale under the California Civil Code. This restriction on enforcement is not applicable to late charges, interest, or collection costs, including reasonable attorneys’ fees, assessed in connection with delinquent Annual or Special assessments.
5.51. Delinquency. Any installment of an assessment provided for in these Bylaws shall become delinquent if not paid within Five (5) days of the due date as established by the Board of Directors. The Board shall be authorized to adopt a system pursuant to which any installment of Annual Assessments, Special Assessments or Reimbursement Assessments not paid within thirty (30) days after the due date, plus all reasonable costs of collection (including attorneys’ fees) and late charges as provided herein, shall bear interest commencing thirty (30) days from the due date until paid at the rate of not more than twelve percent (12%) per annum, but in no event more than the maximum rate permitted by law. The Board may also require the delinquent Member to pay a late charge in accordance with California Civil Code Section 1366(d)(2). The Cooperative need not accept any tender of a partial payment of an installment of an Assessment and all costs and attorneys’ fees attributable thereto, and any acceptance of any such tender shall not be deemed to be a waiver of the Cooperative’s right to demand and receive full payments thereafter.
5.52. Creation and Release of Lien. All sums other than Reimbursement Assessments assessed in accordance with the provisions of these Bylaws shall constitute a lien on the respective Member’s Lease and appurtenant Membership Share and Certificate prior to and superior to all other liens, except all taxes, bonds, and other levies which, by law, would be superior thereto made in good faith and for value and recorded prior to the date the Assessment lien became effective. The lien shall become effective upon recordation by the Board or its authorized agent of a notice of Assessment (“Notice of Lien”) securing the payment of any Annual or Special Assessment or installment thereof, levied by the Cooperative against any Owner Member as provided in Section 1367 of the California Civil Code. Such Notice of Lien shall state (i) the amount of such delinquent assessment or installment, as the case may be, and other authorized charges and interest, including without limitation the cost of preparing and recording such Notice of Lien, (ii) the expenses of collection in connection with any delinquent Assessments, including without limitation reasonable attorneys’ fees, (iii) a description of the Certificate and Lease against which the same has been assessed, (iv) the name of the Owner thereof, (v) the name and address of the Cooperative and (vi) in order for the lien to be enforced by nonjudicial foreclosure, the name and address of the trustee authorized by the Cooperative to enforce the lien by sale. Such Notice of Lien shall be signed by the president or vice president and the secretary of the Cooperative, and a copy shall be delivered to the delinquent Member. The lien shall relate only to the individual Certificate and Lease against which the assessment is levied and not to the Property as a whole. Upon payment to the Cooperative of the full amount claimed in the Notice of Lien, or other satisfaction thereof, the Board shall cause to be prepared and Recorded a Notice of Satisfaction and Release of Lien (“Notice of Release”) stating the satisfaction and release of such amount claimed. The Board of Directors may demand and receive from the applicable Member a reasonable charge for the preparation of such Notice of Release before recording such Notice of Release.
5.53. Foreclosure Under Assessment Lien. The Board of Directors may enforce any Assessment lien established under Section 5.42 in any manner permitted by law, including, without limitation, by judicial foreclosure or, if the notice of delinquent Assessment contained the name and address of the trustee authorized by the Cooperative to enforce the lien, by nonjudicial foreclosure. Any nonjudicial foreclosure shall be conducted in accordance with the requirements of Civil Code §§2924, 2924b, 2924c, 2924f, 2924g, 2924h, and 2924j that apply to nonjudicial foreclosures of mortgages or deeds of trust, as the same may be amended from time to time. The sale shall be conducted by the trustee named in the notice of delinquent Assessment or by a trustee substituted in accordance with the provisions of Civil Code §2934a. The Cooperative may bid on the Lease and appurtenant Membership Share at the sale, and may hold, lease, mortgage, or convey the acquired Lease and appurtenant Membership Share. If the default is cured before the sale, or before completing a judicial foreclosure, including payment of all costs and expenses incurred by the Cooperative, the Cooperative shall record a Notice of Satisfaction and Release of Lien, and, on receipt of a written request by the delinquent Member, a Notice of Rescission of the declaration of default and demand for sale. 5.54. Priority of Assessment Lien. Sale or transfer of any Lease and appurtenant Membership Share and Certificate shall not affect the lien of the Assessments, including interest and costs of collection (including attorneys' fees). 5.55. Waiver of Homestead Protections. Each Member, to the extent permitted by law, waives the protections of any declared homestead or homestead exemption under the laws of California as applied to any action to enforce the Assessments levied by the Cooperative.