BILL NUMBER: AB 952 INTRODUCED
BILL TEXT
INTRODUCED BY Assembly Member Mullin
FEBRUARY 22, 2007
An act to amend Section 1366 of the Civil Code, relating to common
interest developments.
LEGISLATIVE COUNSEL'S DIGEST
AB 952, as introduced, Mullin. Common interest developments:
assessments: low- and moderate-income residents.
The Davis-Stirling Common Interest Development Act provides for
the creation and regulation of common interest developments. Existing
law requires an association established pursuant to the act to levy
regular and special assessments sufficient to perform its obligations
under the governing documents and the act. Existing law places
specified limitations on the amount by which the board may increase
regular assessments, and levy special assessments, without a vote
complying with certain procedural requirements. Existing law exempts
assessments for emergency situations, as described, from these
limitations.
This bill would, in addition, prohibit the board of directors from
imposing a special assessment, including an emergency assessment, or
an increase in the regular assessment of more than 2% on units that
are required by law to be provided to low- or moderate-income
purchasers without a vote of the owners of those units in accordance
with specified procedural requirements.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1366 of the Civil Code is amended to read:
1366. (a) Except as provided in this section, the association
shall levy regular and special assessments sufficient to perform its
obligations under the governing documents and this title. However,
annual increases in regular assessments for any fiscal year, as
authorized by subdivision (b) subdivisions
(b) and (c) , shall not be imposed unless the board has complied
with subdivision (a) of Section 1365 with respect to that fiscal
year, or has obtained the approval of owners, as specified in
subdivisions (b) and (c), constituting a quorum, casting a
majority of the votes at a meeting or election of the association
conducted in accordance with Chapter 5 (commencing with Section 7510)
of Part 3 of Division 2 of Title 1 of the Corporations Code and
Section 7613 of the Corporations Code. For the purposes of this
section, "quorum" means more than 50 percent of the owners
of an association has the meaning specified in
paragraph (2) of subdivision (b) or paragraph (2) of subdivision (c)
, as appropriate .
(b) (1) Notwithstanding more restrictive
limitations placed on the board by the governing documents, and
subject to the limitations specified in subdivision (c),
the board of directors may not impose a regular assessment that
is more than 20 percent greater than the regular assessment for the
association's preceding fiscal year or impose special assessments
which that in the aggregate exceed 5
percent of the budgeted gross expenses of the association for that
fiscal year without the approval of owners, constituting a quorum,
casting a majority of the votes at a meeting or election of the
association conducted in accordance with Chapter 5 (commencing with
Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations
Code and Section 7613 of the Corporations Code. For the
purposes of this section, quorum means more than 50 percent of the
owners of an association. This section
subdivision does not limit assessment increases necessary
for emergency situations. For purposes of this section, an emergency
situation is any one of the following:
(1)
(A) An extraordinary expense required by an order of a
court.
(2)
(B ) An extraordinary expense necessary to
repair or maintain the common interest development or any part of it
for which the association is responsible where a threat to personal
safety on the property is discovered.
(3)
(C) An extraordinary expense necessary to repair or
maintain the common interest development or any part of it for which
the association is responsible that could not have been reasonably
foreseen by the board in preparing and distributing the pro forma
operating budget under Section 1365. However, prior to the imposition
or collection of an assessment under this subdivision, 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 assessment.
(2) For the purposes of this subdivision, "quorum" means more than
50 percent of the owners of an association.
(3) For the purposes of this subdivision, "owners" shall not
include the owners of units required by law to be provided to low-
and moderate-income purchasers.
(c) (1) The board of directors may not impose any of the following
assessments on units that are required by law to be provided to low-
or moderate-income purchasers without the approval of owners of
those units, constituting a quorum, casting a majority of the votes
of the owners of those units at a meeting or election of the
association conducted in accordance with Chapter 5 (commencing with
Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations
Code and Section 7613 of the Corporations Code:
(A) A special assessment, including an assessment for emergency
situations.
(B) A regular assessment that is more than 2 percent greater than
the assessment imposed on those units for the association's preceding
fiscal year.
(2) For the purposes of this subdivision, "quorum" means more than
50 percent of the owners of units required by law to be provided to
low- and moderate-income purchasers.
(c)
(d) Regular assessments imposed or collected to perform
the obligations of an association under the governing documents or
this title shall be exempt from execution by a judgment creditor of
the association only to the extent necessary for the association to
perform essential services, such as paying for utilities and
insurance. In determining the appropriateness of an exemption, a
court shall ensure that only essential services are protected under
this subdivision.
This exemption shall not apply to any consensual pledges, liens,
or encumbrances that have been approved by the owners of an
association, constituting a quorum, casting a majority of the votes
at a meeting or election of the association, or to any state tax
lien, or to any lien for labor or materials supplied to the common
area.
(d)
(e) The association shall provide notice by first-class
mail to the owners of the separate interests of any increase in the
regular or special assessments of the association, not less than 30
nor more than 60 days prior to the increased assessment becoming due.
(e)
(f) Regular and special assessments levied pursuant to
the governing documents are delinquent 15 days after they become due,
unless the declaration provides a longer time period, in which case
the longer time period shall apply. If an assessment is delinquent
the association may recover all of the following:
(1) Reasonable costs incurred in collecting the delinquent
assessment, including reasonable attorney's fees.
(2) A late charge not exceeding 10 percent of the delinquent
assessment or ten dollars ($10), whichever is greater, unless the
declaration specifies a late charge in a smaller amount, in which
case any late charge imposed shall not exceed the amount specified in
the declaration.
(3) Interest on all sums imposed in accordance with this section,
including the delinquent assessments, reasonable fees and costs of
collection, and reasonable attorney's fees, at an annual interest
rate not to exceed 12 percent, commencing 30 days after the
assessment becomes due, unless the declaration specifies the recovery
of interest at a rate of a lesser amount, in which case the lesser
rate of interest shall apply.
(f)
(g) Associations are hereby exempted from interest-rate
limitations imposed by Article XV of the California Constitution,
subject to the limitations of this section.