BILL NUMBER: SB 1128 AMENDED
AMENDED IN SENATE APRIL 7, 2010
INTRODUCED BY Senator DeSaulnier
FEBRUARY 18, 2010
An act to amend Sections 1365.2 and 1368 of the Civil Code,
relating to common interest developments.
LEGISLATIVE COUNSEL'S DIGEST
SB 1128, as amended, DeSaulnier. Common interest developments:
transfers of title. governance.
The Davis-Stirling Common Interest Development Act, requires that
an owner of a separate interest in a common interest development
provide certain items to a prospective purchaser prior to transfer of
title, and prohibits an association, community service organization,
or similar entity, as defined, from imposing or collecting any
assessment, penalty, or fee in connection with a transfer of title or
any other interest except the association's actual costs to change
its records and a specified charge for providing certain information
upon request. Existing law also requires an association, community
service organization, or similar entity to make 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 provided.
This bill would apply these provisions to a nonprofit entity that
provides services to a common interest development under a
declaration of trust, as provided, except as specified.
The Davis-Stirling Common Interest Development Act defines and
regulates common interest developments and authorizes the association
that manages the development to levy assessments to fulfill its
obligations. The act provides that a regular or special assessment of
the association, late charges, reasonable costs of collection,
attorney's fees, and interest, as specified, are a debt of the owner
of the separate interest at the time the assessment or other sums are
levied, and are a lien on the owner's separate interest when the
association records a notice of delinquent assessment and follows a
specified process. Existing law authorizes a community service
organization or similar entity that performs environmental mitigation
and that was established prior to February 20, 2003, and a community
service organization or similar entity established and collecting
transfer fees prior to January 1, 2004, that institutes specified fee
collection procedures on and after January 1, 2006, to impose or
collect an assessment, penalty, or fee in connection with a transfer
of title or any other interest in an amount not to exceed the actual
costs to change its records.
This bill would provide that the Golden Rain Foundation of Walnut
Creek may apply a fee upon the sale or other transfer of title of a
separate interest within the common interest developments for which
it provides services under a declaration of trust if a fee was
applied to the sale or transfer of separate interests within that
common interest development prior to January 1, 2010, in accordance
with the provisions of existing law that apply to fees imposed and
collected by specified community service organizations or similar
entities that perform environmental mitigation.
This bill would make legislative findings and declarations as to
the necessity of a special statute for the purpose of ensuring the
continuity of services to residents of real property maintained by a
community service organization located in the County of Contra Costa.
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 1365.2 of the Civil
Code is amended to read:
1365.2. (a) For the purposes of this section, the following
definitions shall apply:
(1) "Association records" means all of the following:
(A) Any financial document required to be provided to a member in
(B) Any financial document or statement required to be provided in
(C) Interim financial statements, periodic or as compiled,
containing any of the following:
(i) Balance sheet.
(ii) Income and expense statement.
(iii) Budget comparison.
(iv) General ledger. A "general ledger" is a report that shows all
transactions that occurred in an association account over a
specified period of time.
The records described in this subparagraph shall be prepared in
accordance with an accrual or modified accrual basis of accounting.
(D) Executed contracts not otherwise privileged under law.
(E) Written board approval of vendor or contractor proposals or
(F) State and federal tax returns.
(G) Reserve account balances and records of payments made from
(H) Agendas and minutes of meetings of the members, the board of
directors and any committees appointed by the board of directors
pursuant to Section 7212 of the Corporations Code; excluding,
however, agendas, minutes, and other information from executive
sessions of the board of directors as described in Section 1363.05.
(I) (i) Membership lists, including name, property address, and
mailing address, if the conditions set forth in clause (ii) are met
and except as otherwise provided in clause (iii).
(ii) The member requesting the list shall state the purpose for
which the list is requested which purpose shall be reasonably related
to the requester's interest as a member. If the association
reasonably believes that the information in the list will be used for
another purpose, it may deny the member access to the list. If the
request is denied, in any subsequent action brought by the member
under subdivision (f), the association shall have the burden to prove
that the member would have allowed use of the information for
purposes unrelated to his or her interest as a member.
(iii) A member of the association may opt out of the sharing of
his or her name, property address, and mailing address by notifying
the association in writing that he or she prefers to be contacted via
the alternative process described in subdivision (c) of Section 8330
of the Corporations Code. This opt-out shall remain in effect until
changed by the member.
(J) Check registers.
(2) "Enhanced association records" means invoices, receipts and
canceled checks for payments made by the association, purchase orders
approved by the association, credit card statements for credit cards
issued in the name of the association, statements for services
rendered, and reimbursement requests submitted to the association,
provided that the person submitting the reimbursement request shall
be solely responsible for removing all personal identification
information from the request.
(b) (1) The association shall make available association records
and enhanced association records for the time periods and within the
timeframes provided in subdivisions (i) and (j) for inspection and
copying by a member of the association, or the member's designated
representative. The association may bill the requesting member for
the direct and actual cost of copying requested documents. The
association shall inform the member of the amount of the copying
costs before copying the requested documents.
(2) A member of the association may designate another person to
inspect and copy the specified association records on the member's
behalf. The member shall make this designation in writing.
(c) (1) The association shall make the specified association
records available for inspection and copying in the association's
business office within the common interest development.
(2) If the association does not have a business office within the
development, the association shall make the specified association
records available for inspection and copying at a place that the
requesting member and the association agree upon.
(3) If the association and the requesting member cannot agree upon
a place for inspection and copying pursuant to paragraph (2), or if
the requesting member submits a written request directly to the
association for copies of specifically identified records, the
association may satisfy the requirement to make the association
records available for inspection and copying by mailing copies of the
specifically identified records to the member by first-class mail
within the timeframes set forth in subdivision (j).
(4) The association may bill the requesting member for the direct
and actual cost of copying and mailing requested documents. The
association shall inform the member of the amount of the copying and
mailing costs, and the member shall agree to pay those costs, before
copying and sending the requested documents.
(5) In addition to the direct and actual costs of copying and
mailing, the association may bill the requesting member an amount not
in excess of ten dollars ($10) per hour, and not to exceed two
hundred dollars ($200) total per written request, for the time
actually and reasonably involved in redacting the enhanced
association records as provided in paragraph (2) of subdivision (a).
The association shall inform the member of the estimated costs, and
the member shall agree to pay those costs, before retrieving the
(d) (1) Except as provided in paragraph (2), the association may
withhold or redact information from the association records for any
of the following reasons:
(A) The release of the information is reasonably likely to lead to
identity theft. For the purposes of this section, "identity theft"
means the unauthorized use of another person's personal identifying
information to obtain credit, goods, services, money, or property.
Examples of information that may be withheld or redacted pursuant to
this paragraph include bank account numbers of members or vendors,
social security or tax identification numbers, and check, stock, and
credit card numbers.
(B) The release of the information is reasonably likely to lead to
fraud in connection with the association.
(C) The information is privileged under law. Examples include
documents subject to attorney-client privilege or relating to
litigation in which the association is or may become involved, and
confidential settlement agreements.
(D) The release of the information is reasonably likely to
compromise the privacy of an individual member of the association.
(E) The information contains any of the following:
(i) Records of a-la-carte goods or services provided to individual
members of the association for which the association received
monetary consideration other than assessments.
(ii) Records of disciplinary actions, collection activities, or
payment plans of members other than the member requesting the
(iii) Any person's personal identification information, including,
without limitation, social security number, tax identification
number, driver's license number, credit card account numbers, bank
account number, and bank routing number.
(iv) Agendas, minutes, and other information from executive
sessions of the board of directors as described in Section 1363.05,
except for executed contracts not otherwise privileged. Privileged
contracts shall not include contracts for maintenance, management, or
(v) Personnel records other than the payroll records required to
be provided under paragraph (2).
(vi) Interior architectural plans, including security features,
for individual homes.
(2) Except as provided by the attorney-client privilege, the
association may not withhold or redact information concerning the
compensation paid to employees, vendors, or contractors. Compensation
information for individual employees shall be set forth by job
classification or title, not by the employee's name, social security
number, or other personal information.
(3) No association, officer, director, employee, agent or
volunteer of an association shall be liable for damages to a member
of the association or any third party as the result of identity theft
or other breach of privacy because of the failure to withhold or
redact that member's information under this subdivision unless the
failure to withhold or redact the information was intentional,
willful, or negligent.
(4) If requested by the requesting member, an association that
denies or redacts records shall provide a written explanation
specifying the legal basis for withholding or redacting the requested
(e) (1) The association records, and any information from them,
may not be sold, used for a commercial purpose, or used for any other
purpose not reasonably related to a member's interest as a member.
An association may bring an action against any person who violates
this section for injunctive relief and for actual damages to the
association caused by the violation.
(2) This section may not be construed to limit the right of an
association to damages for misuse of information obtained from the
association records pursuant to this section or to limit the right of
an association to injunctive relief to stop the misuse of this
(3) An association shall be entitled to recover reasonable costs
and expenses, including reasonable attorney's fees, in a successful
action to enforce its rights under this section.
(f) A member of an association may bring an action to enforce the
member's right to inspect and copy the association records. If a
court finds that the association unreasonably withheld access to the
association records, the court shall award the member reasonable
costs and expenses, including reasonable attorney's fees, and may
assess a civil penalty of up to five hundred dollars ($500) for the
denial of each separate written request. A cause of action under this
section may be brought in small claims court if the amount of the
demand does not exceed the jurisdiction of that court. A prevailing
association may recover any costs if the court finds the action to be
frivolous, unreasonable, or without foundation.
(g) The provisions of this section apply to any community service
organization or similar entity, as defined in paragraph (3) of
subdivision (c) of Section 1368, that is related to the association,
and this to any nonprofit entity that
provides services to a common interest development under a
declaration of trust. This section shall operate to give a
member of the community service organization or
similar entity a right to inspect and copy the
records of that organization or entity equivalent to that granted to
association members by this section.
(h) Requesting parties shall have the option of receiving
specifically identified records by electronic transmission or
machine-readable storage media as long as those records can be
transmitted in a redacted format that does not allow the records to
be altered. The cost of duplication shall be limited to the direct
cost of producing the copy of a record in that electronic format. The
association may deliver specifically identified records by
electronic transmission or machine-readable storage media as long as
those records can be transmitted in a redacted format that prevents
the records from being altered.
(i) The time periods for which specified records shall be provided
is as follows:
(1) Association records shall be made available for the current
fiscal year and for each of the previous two fiscal years.
(2) Minutes of member and board meetings shall be permanently made
available. If a committee has decisionmaking authority, minutes of
the meetings of that committee shall be made available commencing
January 1, 2007, and shall thereafter be permanently made available.
(j) The timeframes in which access to specified records shall be
provided to a requesting member are as follows:
(1) Association records prepared during the current fiscal year,
within 10 business days following the association's receipt of the
(2) Association records prepared during the previous two fiscal
years, within 30 calendar days following the association's receipt of
(3) Any record or statement available pursuant to Section 1365 or
1368, within the timeframe specified therein.
(4) Minutes of member and board meetings, within the timeframe
specified in subdivision (d) of Section 1363.05.
(5) Minutes of meetings of committees with decisionmaking
authority for meetings commencing on or after January 1, 2007, within
15 calendar days following approval.
(6) Membership list, within the timeframe specified in Section
8330 of the Corporations Code.
(k) There shall be no liability pursuant to this section for an
association that fails to retain records for the periods specified in
subdivision (i) that were created prior to January 1, 2006.
(l) As applied to an association and its members, the provisions
of this section are intended to supersede the provisions of Sections
8330 and 8333 of the Corporations Code to the extent those sections
(m) The provisions of this section shall not apply to any common
interest development in which separate interests are being offered
for sale by a subdivider under the authority of a public report
issued by the Department of Real Estate so long as the subdivider or
all subdividers offering those separate interests for sale, or any
employees of those subdividers or any other person who receives
direct or indirect compensation from any of those subdividers,
comprise a majority of the members of the board of directors of the
association. Notwithstanding the foregoing, this section shall apply
to that common interest development no later than 10 years after the
close of escrow for the first sale of a separate interest to a member
of the general public pursuant to the public report issued for the
first phase of the development.
(n) This section shall become operative on July 1, 2006.
SEC. 2. Section 1368 of the Civil Code
is amended to read:
1368. (a) The owner of a separate interest, other than an owner
subject to the requirements of Section 11018.6 of the Business and
Professions Code, shall, as soon as practicable before transfer of
title to the separate interest or execution of a real property sales
contract therefor, as defined in Section 2985, provide the following
to the prospective purchaser:
(1) A copy of the governing documents of the common interest
development, including any operating rules, and including a copy of
the association's articles of incorporation, or, if not incorporated,
a statement in writing from an authorized representative of the
association that the association is not incorporated.
(2) If there is a restriction in the governing documents limiting
the occupancy, residency, or use of a separate interest on the basis
of age in a manner different from that provided in Section 51.3, a
statement that the restriction is only enforceable to the extent
permitted by Section 51.3 and a statement specifying the applicable
provisions of Section 51.3.
(3) A copy of the most recent documents distributed pursuant to
(4) A true statement in writing obtained from an authorized
representative of the association as to the amount of the association'
s current regular and special assessments and fees, any assessments
levied upon the owner's interest in the common interest development
that are unpaid on the date of the statement, and any monetary fines
or penalties levied upon the owner's interest and unpaid on the date
of the statement. The statement obtained from an authorized
representative shall also include true information on late charges,
interest, and costs of collection which, as of the date of the
statement, are or may be made a lien upon the owner's interest in a
common interest development pursuant to Section 1367 or 1367.1.
(5) A copy or a summary of any notice previously sent to the owner
pursuant to subdivision (h) of Section 1363 that sets forth any
alleged violation of the governing documents that remains unresolved
at the time of the request. The notice shall not be deemed a waiver
of the association's right to enforce the governing documents against
the owner or the prospective purchaser of the separate interest with
respect to any violation. This paragraph shall not be construed to
require an association to inspect an owner's separate interest.
(6) A copy of the preliminary list of defects provided to each
member of the association pursuant to Section 1375, unless the
association and the builder subsequently enter into a settlement
agreement or otherwise resolve the matter and the association
complies with Section 1375.1. Disclosure of the preliminary list of
defects pursuant to this paragraph does not waive any privilege
attached to the document. The preliminary list of defects shall also
include a statement that a final determination as to whether the list
of defects is accurate and complete has not been made.
(7) A copy of the latest information provided for in Section
(8) Any change in the association's current regular and special
assessments and fees which have been approved by the association's
board of directors, but have not become due and payable as of the
date disclosure is provided pursuant to this subdivision.
(b) Upon written request, an association shall, within 10 days of
the mailing or delivery of the request, provide the owner of a
separate interest with a copy of the requested items specified in
paragraphs (1) to (8), inclusive, of subdivision (a). The items
required to be made available pursuant to this section may be
maintained in electronic form and requesting parties shall have the
option of receiving them by electronic transmission or machine
readable storage media if the association maintains these items in
electronic form. The association may charge a reasonable fee for this
service based upon the association's actual cost to procure,
prepare, and reproduce the requested items.
(c) (1) Subject to the provisions of
Except as provided in paragraph (2), neither an association nor
a community service organization or similar entity may impose or
collect any assessment, penalty, or fee in connection with a transfer
of title or any other interest except for the following:
(A) An amount not to exceed the association's actual costs to
change its records.
(B) An amount authorized by subdivision (b).
(2) The amendments made to this subdivision by the act
adding this prohibition in paragraph do
(1) does not apply to a community service
organization or similar entity , or to a nonprofit entity that
provides services to a common interest development under a
declaration of trust, that is described in subparagraph (A) or
(A) The community service organization or similar entity satisfies
both of the following requirements:
(i) The community service organization or similar entity was
established prior to February 20, 2003.
(ii) The community service organization or similar entity exists
and operates, in whole or in part, to fund or perform environmental
mitigation or to restore or maintain wetlands or native habitat, as
required by the state or local government as an express written
condition of development.
(B) The community service organization or similar entity , or
a nonprofit entity that provides services to a common interest
development under a declaration of trust, satisfies all of the
(i) The community service organization or
similar entity is not an organization or entity
described in subparagraph (A).
(ii) The community service organization or
similar entity was established and received a
transfer fee prior to January 1, 2004.
(iii) On and after January 1, 2006, the community service
organization or similar entity offers a
purchaser the following payment options for the fee or charge it
collects at time of transfer:
(I) Paying the fee or charge at the time of transfer.
(II) Paying the fee or charge pursuant to an installment payment
plan for a period of not less than seven years. If the purchaser
elects to pay the fee or charge in installment payments, the
community service organization or similar
entity may also collect additional amounts that do not
exceed the actual costs for billing and financing on the amount owed.
If the purchaser sells the separate interest before the end of the
installment payment plan period, he or she shall pay the remaining
balance prior to transfer.
(3) For the purposes of this subdivision, a "community service
organization or similar entity" means a nonprofit entity, other than
an association, that is organized to provide services to residents of
the common interest development or to the public in addition to the
residents, to the extent community common areas or facilities are
available to the public. A "community service organization or similar
entity" does not include an entity that has been organized solely to
raise moneys and contribute to other nonprofit organizations that
are qualified as tax exempt under Section 501(c)(3) of the Internal
Revenue Code and that provide housing or housing assistance.
(d) Any person or entity who willfully violates this section is
liable to the purchaser of a separate interest that is subject to
this section for actual damages occasioned thereby and, in addition,
shall pay a civil penalty in an amount not to exceed five hundred
dollars ($500). In an action to enforce this liability, the
prevailing party shall be awarded reasonable attorneys' fees.
(e) Nothing in this section affects the validity of title to real
property transferred in violation of this section.
(f) In addition to the requirements of this section, an owner
transferring title to a separate interest shall comply with
applicable requirements of Sections 1133 and 1134.
(g) For the purposes of this section, a person who acts as a
community association manager is an agent, as defined in Section
2297, of the association.
SECTION 1. Notwithstanding any other provision
of law, the Golden Rain Foundation of Walnut Creek may apply a fee
upon the sale or other transfer of title of a separate interest
within the common interest developments for which it provides
services under a declaration of trust if a fee was applied to the
sale or transfer of separate interests within that common interest
development prior to January 1, 2010. The fee shall be applied in
accordance with subdivision (c) of Section 1368 of the Civil Code.
SEC. 2. The Legislature finds and declares that
a special law is necessary and that a general law cannot be made
applicable within the meaning of Section 16 of Article IV of the
California Constitution because of the unique need to ensure the
continuity of services to residents of real property maintained by a
community service organization located within the County of Contra