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QUESTION: I am on the board of a retirement community. We have a resident complaining of cigarette smoke. We investigated and could not smell any smoke nor is there anyone around her who smokes. She is threatening to go to Fair Housing if we don’t do something about it. What should we do? Your resident may be suffering from a condition known as phantom smell syndrome. The medical term is phantosmia. She smells things that aren’t there. Medical literature describes a long list of causes for this unfortunate olfactory hallucination–some serious and others benign. Noise Complaints. I had a similar situation with an older woman in a luxury highrise who heard noises in her bedroom that kept her awake at night. Her lawyer daughter threatened to sue the association if the board didn’t stop the “common area” noise. Duty to Investigate. The board’s obligation is the same whether a resident complains of odors or noises–it must investigate. I asked the board to have at least two individuals schedule a time to listen to the noise. Two directors volunteered and invited me to attend. The three of us plus the manager went to the unit and exchanged pleasantries with the resident. She invited us into her living room and pointed out the noise to us. We all strained to listen and heard nothing. She was disappointed and told us it was much louder in the master bathroom and led us to the room. We all stood quiet as mice and listened. Again we heard nothing. She was insistent and informed us the noise made it impossible to sleep. She reminded us her daughter was a lawyer. We thanked her and headed for the door. Decision. The board was more than willing to fix the noise but there was nothing to fix (at least not with the building). The resident was hearing phantom noises–a medical condition known as “musical ear syndrome” where a person suffers from auditory hallucinations. The malady got its name because people often hear music. Paper Trail. I wrote a letter to her lawyer daughter about the investigation and the board’s decision. I offered a renewed investigation if she hired a licensed acoustical engineer who could record the “loud noise” and offer an expert opinion that it was loud enough for a jury to deem it a nuisance. The daughter never filed suit and her mother stopped complaining. Annoyance v. Nuisance. We live with sounds and smells around us every day. They might be an annoyance but that doesn’t mean the association is required to take action. [E]very annoyance or disturbance of a landowner from the use made of property by a neighbor does not constitute a nuisance. The question is not whether the plaintiffs have been annoyed or disturbed … but whether there has been an injury to their legal rights. People who live in organized communities must of necessity suffer some inconvenience and annoyance from their neighbors and must submit to annoyances consequent upon the reasonable use of property by others. (Schild v. Rubin (1991) 232 Cal.App.3d 755, 764.) We have a lot of aging baby boomers living in condominiums. I suspect boards will run into more complaints of noises/odors both real and imagined. When complaints are made, boards should decide if the noise/odor is a mere annoyance or an actionable nuisance. Directors don’t need to personally investigate. Managers, maintenance personnel, or experts can investigate and report their findings. If the board concludes the noise/odor is not a nuisance (or doesn’t exist), the finding should be documented in a letter to the person. If the matter ends up in court, the board’s investigation, deliberation, and decision should satisfy the the Business Judgment Rule and be deferred to by the judge.

QUESTION: With all the changes in banking, are we still required to have two directors sign all checks? Our management company makes an electronic transfer from our reserve account into a bill paying account once bills are approved by the board. Is that legal? ANSWER: There has never been a requirement that all checks be signed by two directors. It has, however, been the practice that all reserve transfers be done by checks signed by two directors. That standard is steadily changing with the advent of electronic banking. Banks no longer offer two-signature accounts nor do they monitor signatures–something I addressed in a newsletter two years ago. Reserve Transfers. Whether by design or not, the Davis-Stirling Act does not require signatures on a check. Rather, the Act requires a more nebulous requirement of two signatures to withdraw funds without specifying where or how the signatures are employed: The signatures of at least two persons, who shall be members of the association’s board of directors, or one officer who is not a member of the board of directors and a member of the board of directors, shall be required for the withdrawal of moneys from the association’s reserve accounts. (Civ. Code §5510(a).) The intent of the statute is to make sure two directors or a director and an officer know about and authorize the withdrawal of reserve funds. If two directors issue written instructions to the association’s management company to make a transfer, it appears the statutory requirement is satisfied. Email Approval. Since electronic signatures are now recognized to be the same as signatures on a piece of paper, they can be used to authorize the transfer of reserve funds. Accordingly, email authorizations from two directors to the management company also satisfy the requirement. Management companies should be careful to preserve those instructions so they have a paper trail showing each transfer was authorized. Otherwise, the management company could find itself in hot water if the transfers were ever challenged. Governing Documents. Despite the above analysis, associations should first review their governing documents before changing how they handle reserve transfers. Their CC&Rs or bylaws may contain more stringent requirements for handling reserve funds. If so, those procedures must be followed. RECOMMENDATION. To protect reserve funds, boards cannot rely on banks to monitor transfers. Instead, boards must adopt internal controls and carefully monitor their reserve accounts for any unusual activity. Boards still have the option of requiring all transfers be done by checks signed by two directors. Boards should consult legal counsel, their CPA, and their management company before adopting a particular policy.