BILL ANALYSIS
AB 1098
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1098 (Jones)
As Amended September 2, 2005
Majority vote
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|ASSEMBLY: |70-3 |(May 26, 2005) |SENATE: |35-0 |(September 6, |
| | | | | |2005) |
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Original Committee Reference: JUD.
SUMMARY : Establishes rules for association records in common
interest developments and for action by the association to grant
exclusive use of the common area of the development to
individual members, as specified. Specifically, this bill:
1)Requires homeowner associations to make specified association
records, such as the accounting books and records and the
minutes of proceedings of the association, available for
inspection and copying by a member of the association, or the
member's designated representative, as specified.
2)Regulates the manner by which the board of directors may grant
exclusive use of any portion of the common area to any member,
except as specified, after an association acquires fee title
to or any easement right over a common area, including an
affirmative vote of members owning at least sixty seven
percent of the separate interests in the common interest
development.
The Senate amendments :
1)Add the provisions regulating the manner by which the board of
directors may grant exclusive use of any portion of the common
area to any member, except as specified, after an association
acquires fee title to or any easement right over a common
area, including an affirmative vote of members owning at least
sixty seven percent of the separate interests in the common
interest development.
2)Revise the types of records required to be disclosed, the
manner of disclosure and redaction, the relevant time periods
regarding disclosure, and the manner by which the association
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may recover the cost of providing requested records.
3)Delay the operative date of the bill until July 1, 2006.
4)Provide that the bill is contingent upon enactment of SB 61.
EXISTING LAW provides, pursuant to the Davis-Stirling Common
Interest Development Act, for the creation and regulation of
common interest developments, requires them to have a recorded
declaration containing specified information, permits them to
levy assessments, establishes, in certain situations, voting
requirements for amendment of the declaration and the levy of
assessments, and requires that a common interest development be
managed by an association.
AS PASSED BY THE ASSEMBLY , this bill regulated the disclosure of
association financial records.
FISCAL EFFECT : None
COMMENTS : The author identifies the purpose of the bill as
preserving common interest developments as affordable housing by
detailing the financial records that are subject to homeowner
inspection.
The author states that the bill will promote the affordability
of homes in common interest developments by defining in detail
the "financial records" of the association, and of its community
service organization, and provide that homeowners shall have the
right to inspect and copy the financial records of both.
Supporters contend that this provision will promote greater
transparency in association operations. According to the
California Association of Retired Americans (CARA), "Every year,
California's 35,000 homeowner associations collect an estimated
$200 million in homeowner assessments. Right now they control
an estimated $6-7 billion in cash." CARA comments, "In its
study of the state's 36,000 common interest developments, the
California Research Bureau reported that associations either do
not disclose to homeowners how their money is being spent or
else they report it inaccurately. Homeowner testimony to the
California Law Revision Commission confirms the Research
Bureau's report. The report also states that between 14-20
percent of all lawsuits filed by shareholders against
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associations are for financial mismanagement. AB 1098 corrects
this lack of disclosure by association boards and lack of
knowledge by homeowners. It assures that association
shareholders (i.e., homeowners) have access to the association
financial records to find out how boards are spending the
billions under their control. It makes good fiscal sense that
homeowners, who have the biggest financial stake, should be
watching the books.
Analysis Prepared by : Kevin G. Baker / JUD. / (916)
319-2334
FN: 0013214