Legal Rights

Understanding Your Rights as a Shareholder in the North Hollywood Co-Op

As a shareholder in the North Hollywood Co-Op, it is essential to be aware of your legal rights and responsibilities under both California law and the governing documents of our co-op. Familiarity with these rights will help ensure a transparent, fair, and harmonious living environment for all members.

1. Right to Access Association Records

California Civil Code (Section 5200-5240) grants all shareholders the right to access specific association records. These records provide insight into the co-op’s operations, financial health, and governance. Shareholders have the right to inspect and copy the following documents:

• Financial Documents: Includes the annual budget report, income and expense statements, balance sheets, and reserve studies.
• Meeting Minutes: Minutes from all board meetings, annual meetings, and special meetings, which should include records of decisions made by the board.
• Governing Documents: Access to the co-op's Bylaws, Articles of Incorporation, Covenants, Conditions, and Restrictions (CC&Rs), and any other rules or regulations that govern the co-op.
• Contracts and Agreements: Copies of all contracts, bids, and agreements that the co-op enters into, such as maintenance contracts, vendor agreements, or service contracts.

Procedure to Request Records:

Shareholders may request access to these documents by submitting a written request to the board. The board is required to make most documents available within ten (10) business days of the request. The co-op may charge a reasonable fee for copying documents, but shareholders may also inspect the records in person by appointment.

2. Right to Financial Transparency

Shareholders are entitled to regular and accurate financial information about the co-op's operations. Under California law, the board must provide:

• Annual Budget Report: A detailed report on the co-op's financial situation, including projected income and expenses, funding for reserves, and any special assessments. This report must be distributed to all members between 30 and 90 days before the start of the fiscal year.
• Annual Financial Statement: A year-end financial statement prepared by an independent certified public accountant (CPA) if the co-op's gross income exceeds $75,000.
• Reserve Study: A study conducted at least every three years to assess the funds required for the repair, replacement, and maintenance of common area components.

Ensuring Financial Accountability: Shareholders have the right to question financial practices, request explanations for expenditures, and, if necessary, request an audit of the co-op's financial records.

3. Right to Participate in Governance

Shareholders have the right to actively participate in the governance of the co-op, including:

• Voting Rights: All shareholders are entitled to vote on important matters, including board elections, amendments to governing documents, and approval of special assessments.
• Access to Board Meetings: Shareholders have the right to attend regular and special board meetings, which must be open to all members, except for executive sessions that are closed to discuss confidential matters (such as litigation or personnel issues). Notice of these meetings must be provided at least four (4) days in advance for regular meetings and two (2) days in advance for special meetings.
• Serving on the Board: Shareholders may run for positions on the board of directors if they meet the eligibility criteria outlined in the governing documents.

Participating Effectively: To participate fully, shareholders are encouraged to attend meetings, stay informed about co-op issues, and consider volunteering for committees or running for a board position.

4. Right to Fair Treatment and Due Process

The co-op must provide fair treatment to all shareholders, particularly regarding:

• Enforcement of Rules: Shareholders have the right to expect consistent and fair enforcement of community rules and regulations.
• Notice and Hearing Before Penalties: Before the board imposes any penalties (such as fines or suspension of privileges) for rule violations, the shareholder must receive written notice of the alleged violation and be given an opportunity to be heard by the board.
• Right to Dispute Resolution: Shareholders have the right to access internal dispute resolution (IDR) and alternative dispute resolution (ADR) processes to resolve conflicts with the board or other shareholders.

Ensuring Fair Treatment: Shareholders should report any instances of perceived unfair treatment or inconsistency in rule enforcement to the board in writing.

5. Right to Safety and Maintenance of Common Areas

Shareholders have the right to expect that the co-op will maintain common areas in a safe and habitable condition:

• Regular Maintenance and Repairs: The board is responsible for maintaining and repairing common areas, such as courtyards, walkways, and shared utilities (e.g., water and gas lines).
• Prompt Response to Safety Hazards: The board must promptly address any hazards that could affect the health or safety of residents, such as gas leaks, structural damage, or other dangers.

Reporting Safety Concerns: If you notice a safety hazard, report it to the board immediately in writing. If the board fails to act, shareholders may seek assistance from local authorities or take further legal action.

6. Right to Privacy

Shareholders have the right to privacy concerning their personal information. The co-op must handle all member information securely and should not disclose personal data without consent, except as required by law.

7. Right to Challenge Board Decisions

Shareholders have the right to challenge board decisions that are believed to be improper, unlawful, or not in the best interests of the community:

• Request a Review: Submit a written request to the board to reconsider any decision.
• Seek Mediation or Legal Action: If the board refuses to reconsider or if the issue is not resolved satisfactorily, shareholders may seek mediation or pursue legal action to protect their rights.

Conclusion

Understanding your legal rights as a shareholder is crucial to ensuring a well-governed and equitable community at the North Hollywood Co-Op. If you have questions or concerns about any of these rights or wish to report a potential issue, please contact the board directly.