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To: The Rancho Murieta Board of Directors
Date: July 21, 2009
RE: Upcoming Vote on Maintenance and Operations of a Common Area

From: Scott Adams

Dear Directors,

It has come to my attention that you will soon vote on whether Rancho Murieta Association ("RMA") should continue to collect funds to maintain, manage and operate our cable facility via the Regular Assessment as required by the RMA Governing Documents. Unfortunately, it appears several Directors are actually considering voting against that course of action, which RMA has followed since RMA gained ownership of the facility.

In order for you to determine RMA's obligations with regard to Rancho Murieta Cable, it is important for each Director to understand how the cable facility is defined and characterized in our CC&Rs and other Governing Documents.1  You should be aware that the cable facility is defined in the CC&Rs as "Association Common Area." Specifically, CC&R Article 1, section 6 defines an "Association Common Area" as:

"(A)II real property owned by the Association for the common use and enjoyment of all resident Members, their guests and invitees, and the lessees of nonresident Members." (Emphasis added.)

Real Property: Many people believe that "real property" is made up only of land. That common misperception is cleared up by California Civil Code 658, which defines "real property" as:

"Land" or "that which is affixed to land."2

Therefore, real property is not land only. It also includes fixtures and or improvements that are affixed to the land. California Civil Code 660 defines the term "affixed" as:

"A thing is deemed to be affixed to land when it is ... permanently resting upon it, as in the case of buildings; or permanently attached to what is thus permanent, as by means of cement, plaster, nails, bolts, or screws..."

For over half a century, California courts have repeatedly held that structures affixed to land, such as the cable facility, are considered "real property." In A. S. Schulman Electric Co. v. State Bd. of Equalization, 49 Cal.App.3d 180, (1975), the court held that electrical transmission and distribution lines, because of their relatively permanent nature and their either being bolted to concrete foundations or imbedded in the land, constituted real property rather than personal property. In Krouser v. San Bernardino Coun1y, 29 Cal.2d 766, (1947), the court held that under California law, real property is all-inclusive and contemplates both land and improvements.3 Our cable facility falls squarely within the California statutory framework of "real property."

Ownership: In 1989, Rancho Murieta Properties Inc. (RMPI) transferred the "Cable Facility and associated property rights to RMA",4 by virtue of the 1989 Cable Television Agreement ("Cable Agreement") and the transfer explicitly included "all rights, title, and interest" and "all equipment and personal property" associated with the cable facility.5  Additionally, the Cable Agreement gives RMA the right to transfer our cable facility to another non-profit.6 It is clear that RMA owns the cable facility.

Member Enjoyment: The cable facility is used for the enjoyment of all Members, guests and lessees because it provides cable and internet services to the membership. The recently enacted "opt out" option for programming, which inherently violates the bylaw amendment, does not vitiate our cable facility's characterization as a "Common Area." Such a notion would be akin to believing that an Association park cannot be characterized as an "Association Common Area" if it is not used and enjoyed by each and every Member of the Association. Furthermore, even given the flawed language of the bylaw amendment, cable must be available to every member of the Association.7

Given the definitions set forth in CC&R Article 1, section 6 and in the California Civil Code, it is imperative that each of you recognize that the Association's cable facility is an "Association Common Area" because the cable facility is "real property" which is "owned" by the Association, and used for the enjoyment of all Members. Your understanding of this straightforward fact is the foundation upon which you should determine how revenue is collected by the Association for the routine day-to-daymaintenance and operations of the cable facility.8

I am in the process of preparing a lengthy analysis of how the cable facility fits in to the Governing Documents and the revenue stream upon which the cable facility must be properly maintained, operated and managed. I anticipate that it will take me another month or so to complete that task. When I have completed the letter, I will send it to each of you. You will see that my interpretation of Association Governing Documents and California law including Davis Sterling fit perfectly like a puzzle. No one part is inconsistent with another. My interpretation is also consistent with the advice repeatedly provided to you by your own Association counsel, and consistent with prior performance of the Association.

Despite the misguided recommendations from any partisan RMA committees, you should treat this Common Area in exactly the same manner you treat all other Association Common Areas.9 The routine maintenance and operations of our cable facility must come from our Regular Assessment as required by our Governing Documents and California law, and your vote should be consistent with that directive. To do otherwise would violate the Governing Documents you as Directors are obligated to abide by.

Please call me at 365-3501 if you have any questions. Thank you for your time and attention to this letter.

Sincerely,

Scott Adams

1 The Declaration of Covenants, Conditions & Restrictions, otherwise known as the "Declaration" or the "CC&Rs", describes the rights and obligations of the membership to the association, and the association to the membership. This includes maintenance responsibilities and restrictions on the use of property. (CA Civil Code 1355(a).)

2 See CA Civil Code 658(2).9 Note that the cable facility is also an "Association Common Facility" as defined in our CC&Rs, That subject will be discussed in my forthcoming letter.

3 "Property is either 1. Real or immovable; or, 2. Personal or movable."(CA Civil Code 657.)

4 See the 1989 Cable Television Agreement, Clause I (g).

5 Cable Television Agreement, Clause 3.

6 Cable Television Agreement, Clause 9, et seq.

7 The "made available" language is taken from the 1989 Cable Television Agreement.

8 The most vocal proponent of the bylaw amendment, Wilbur Haines has said that RMA should "get back to what we're supposed to be doing, enforcing CC&Rs and maintaining common areas."(RanchoMurieta.com, August 7, 2007.) That is exactly what I am advocating in this letter.

9 Note that the cable facility is also an "Association Common Facility" as defined in our CC&Rs. That subject will be discussed in my forthcoming letter.

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