BILL NUMBER: AB 805	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Torres

                        FEBRUARY 17, 2011

   An act to add Part 5 (commencing with Section 4000) to Division 4
of, and to repeal Title 6 (commencing with Section 1350) of Part 4 of
Division 2 of, the Civil Code, relating to common interest
developments.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 805, as introduced, Torres. Common interest developments.
   Existing law, the Davis-Stirling Common Interest Development Act
defines and regulates common interest developments.
   This bill, on and after January 1, 2014, would comprehensively
reorganize and recodify the Davis-Stirling Common Interest
Development Act. The bill would also revise and recast provisions
regarding notices and their delivery, standardize terminology,
establish guidelines on the relative authority of governing
documents, and establish a single procedure for amendment of a common
interest declaration. The bill would guarantee the right of an owner
of a separate interest to make changes in that separate interest, as
specified, in a common interest development other than a condominium
project, in which that right currently exists. The bill would
establish an express list of conflicts of interest that may
disqualify members of a board of directors of an association that
manages a common interest development from voting on certain matters.
The bill would also, among other things, revise provisions related
to elections and voting, establish standards for the retention of
records, and broaden the requirement that liens recorded by the
association in error be released.
   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.  Title 6 (commencing with Section 1350) of Part 4 of
Division 2 of the Civil Code is repealed.
  SEC. 2.  Part 5 (commencing with Section 4000) is added to Division
4 of the Civil Code, to read:

      PART 5.  Common Interest Developments


      CHAPTER 1.  GENERAL PROVISIONS



      Article 1.  Preliminary Provisions


   4000.  This part shall be known and may be cited as the
Davis-Stirling Common Interest Development Act. In a provision of
this part, the part may be referred to as the act.
   4005.  Division, part, title, chapter, and article headings do not
in any manner affect the scope, meaning, or intent of this act.
   4010.  Nothing in the act that added this part shall be construed
to invalidate a document prepared or action taken before January 1,
2014, if the document or action was proper under the law governing
common interest developments at the time that the document was
prepared or the action was taken.
   4020.  Unless a contrary intent is clearly expressed, a local
zoning ordinance is construed to treat like structures, lots,
parcels, areas, or spaces in like manner regardless of the form of
the common interest development.
   4035.  (a) If a provision of this act requires that a document be
delivered to an association, the document shall be delivered to the
person designated in the annual policy statement, prepared pursuant
to Section 5310, to receive documents on behalf of the association.
If no person has been designated to receive documents, the document
shall be delivered to the president or secretary of the association.
   (b) A document delivered pursuant to this section may be delivered
by any of the following methods:
   (1) By e-mail, facsimile, or other electronic means, if the
association has assented to that method of delivery.
   (2) By personal delivery, if the association has assented to that
method of delivery. If the association accepts a document by personal
delivery it shall provide a written receipt acknowledging delivery
of the document.
   4040.  (a) If a provision of this act requires that an association
deliver a document by "individual delivery" or "individual notice,"
the document shall be delivered by one of the following methods:
   (1) First-class mail, postage prepaid, registered or certified
mail, express mail, or overnight delivery by an express service
carrier. The document shall be addressed to the recipient at the
address last shown on the books of the association.
   (2) E-mail, facsimile, or other electronic means, if the recipient
has consented, in writing, to that method of delivery. The consent
may be revoked, in writing, by the recipient.
   (b) Upon receipt of a request by a member, pursuant to Section
5260, identifying a secondary address for delivery of notices of the
following types, the association shall deliver an additional copy of
those notices to the secondary address identified in the request:
   (1) The documents to be delivered to the member pursuant to
Article 7 (commencing with Section 5300) of Chapter 6.
   (2) The documents to be delivered to the member pursuant to
Article 2 (commencing with Section 5650) of Chapter 8, and Section
5710.
   (c) For the purposes of this section, an unrecorded provision of
the governing documents providing for a particular method of delivery
does not constitute agreement by a member to that method of
delivery.
   4045.  (a) If a provision of this act requires "general delivery"
or "general notice," the document shall be provided by one or more of
the following methods:
   (1) Any method provided for delivery of an individual notice
pursuant to Section 4040.
   (2) Inclusion in a billing statement, newsletter, or other
document that is delivered by one of the methods provided in this
section.
   (3) Posting the printed document in a prominent location that is
accessible to all members, if the location has been designated for
the posting of general notices by the association in the annual
policy statement, prepared pursuant to Section 5310.
   (4) If the association broadcasts television programming for the
purpose of distributing information on association business to its
members, by inclusion in the programming.
   (b) Notwithstanding subdivision (a), if a member requests to
receive general notices by individual delivery, all general notices
to that member, given under this section, shall be delivered pursuant
to Section 4040. The option provided in this subdivision shall be
described in the annual policy statement, prepared pursuant to
Section 5310.
   4050.  (a) This section governs the delivery of a document
pursuant to this act.
   (b) If a document is delivered by mail, delivery is deemed to be
complete on deposit into the United States mail.
   (c) If a document is delivered by electronic means, delivery is
complete at the time of transmission.
   4065.  If a provision of this act requires that an action be
approved by a majority of all members, the action shall be approved
or ratified by an affirmative vote of a majority of the votes
entitled to be cast.
   4070.  If a provision of this act requires that an action be
approved by a majority of a quorum of the members, the action shall
be approved or ratified by an affirmative vote of a majority of the
votes represented and voting at a duly held meeting at which a quorum
is present, which affirmative votes also constitute a majority of
the required quorum.

      Article 2.  Definitions


   4075.  The definitions in this article govern the construction of
this act.
   4076.  "Annual budget report" means the report described in
Section 5300.
   4078.  "Annual policy statement" means the statement described in
Section 5310.
   4080.  "Association" means a nonprofit corporation or
unincorporated association created for the purpose of managing a
common interest development.
   4085.  "Board" means the board of directors of the association.
   4090.  "Board meeting" means any congregation at the same time and
place, of a sufficient number of directors to establish a quorum of
the board, to hear, discuss, or deliberate upon any item of business
scheduled to be heard by the board, except those matters that may be
discussed in executive session.
   4095.  (a) "Common area" means the entire common interest
development except the separate interests therein. The estate in the
common area may be a fee, a life estate, an estate for years, or any
combination of the foregoing.
   (b) Notwithstanding subdivision (a), in a planned development
described in subdivision (b) of Section 4175, the common area may
consist of mutual or reciprocal easement rights appurtenant to the
separate interests.
   4100.  "Common interest development" means any of the following:
   (a) A community apartment project.
   (b) A condominium project.
   (c) A planned development.
   (d) A stock cooperative.
   4105.  "Community apartment project" means a development in which
an undivided interest in land is coupled with the right of exclusive
occupancy of any apartment located thereon.
   4110.  (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 area or facilities are available to the
public.
   (b) "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.
   4120.  "Condominium plan" means a plan described in Section 4285.
   4125.  (a) A "condominium project" means a real property
development consisting of condominiums.
   (b) A condominium consists of an undivided interest in common in a
portion of real property coupled with a separate interest in space
called a unit, the boundaries of which are described on a recorded
final map, parcel map, or condominium plan in sufficient detail to
locate all boundaries thereof. The area within these boundaries may
be filled with air, earth, water, or fixtures, or any combination
thereof, and need not be physically attached to land except by
easements for access and, if necessary, support. The description of
the unit may refer to (1) boundaries described in the recorded final
map, parcel map, or condominium plan, (2) physical boundaries, either
in existence, or to be constructed, such as walls, floors, and
ceilings of a structure or any portion thereof, (3) an entire
structure containing one or more units, or (4) any combination
thereof.
   (c) The portion or portions of the real property held in undivided
interest may be all of the real property, except for the separate
interests, or may include a particular three-dimensional portion
thereof, the boundaries of which are described on a recorded final
map, parcel map, or condominium plan. The area within these
boundaries may be filled with air, earth, water, or fixtures, or any
combination thereof, and need not be physically attached to land
except by easements for access and, if necessary, support.
   (d) An individual condominium within a condominium project may
include, in addition, a separate interest in other portions of the
real property.
   4130.  "Declarant" means the person or group of persons designated
in the declaration as declarant, or if no declarant is designated,
the person or group of persons who sign the original declaration or
who succeed to special rights, preferences, or privileges designated
in the declaration as belonging to the signator of the original
declaration.
   4135.  "Declaration" means the document, however denominated, that
contains the information required by Sections 4250 and 4255.
   4140.  "Director" means a natural person who serves on the board.
   4145.  (a) "Exclusive use common area" means a portion of the
common area designated by the declaration for the exclusive use of
one or more, but fewer than all, of the owners of the separate
interests and which is or will be appurtenant to the separate
interest or interests.
   (b) Unless the declaration otherwise provides, any shutters,
awnings, window boxes, doorsteps, stoops, porches, balconies, patios,
exterior doors, doorframes, and hardware incident thereto, screens
and windows or other fixtures designed to serve a single separate
interest, but located outside the boundaries of the separate
interest, are exclusive use common area allocated exclusively to that
separate interest.
   (c) Notwithstanding the provisions of the declaration, internal
and external telephone wiring designed to serve a single separate
interest, but located outside the boundaries of the separate
interest, are exclusive use common area allocated exclusively to that
separate interest.
   4148.  "General notice" means the delivery of a document pursuant
to Section 4045.
   4150.  "Governing documents" means the declaration and any other
documents, such as bylaws, operating rules, articles of
incorporation, or articles of association, which govern the operation
of the common interest development or association.
   4153.  "Individual notice" means the delivery of a document
pursuant to Section 4040.
   4155.  (a) A "managing agent" is a person who, for compensation or
in expectation of compensation, exercises control over the assets of
a common interest development.
   (b) A "managing agent" does not include any of the following:
   (1) A regulated financial institution operating within the normal
course of its regulated business practice.
   (2) An attorney at law acting within the scope of the attorney's
license.
   4160.  "Member" means an owner of a separate interest.
   4170.  "Person" means a natural person, corporation, government or
governmental subdivision or agency, business trust, estate, trust,
partnership, limited liability company, association, or other entity.

   4175.  "Planned development" means a real property development
other than a community apartment project, a condominium project, or a
stock cooperative, having either or both of the following features:
   (a) Common area that is owned either by an association or in
common by the owners of the separate interests who possess
appurtenant rights to the beneficial use and enjoyment of the common
area.
   (b) Common area and an association that maintains the common area
with the power to levy assessments that may become a lien upon the
separate interests in accordance with Article 2 (commencing with
Section 5650) of Chapter 8.
   4177.  "Reserve accounts" means both of the following:
   (a) Moneys that the board has identified for use to defray the
future repair or replacement of, or additions to, those major
components that the association is obligated to maintain.
   (b) The funds received, and not yet expended or disposed of, from
either a compensatory damage award or settlement to an association
from any person for injuries to property, real or personal, arising
from any construction or design defects. These funds shall be
separately itemized from funds described in subdivision (a).
   4178.  "Reserve account requirements" means the estimated funds
that the board has determined are required to be available at a
specified point in time to repair, replace, or restore those major
components that the association is obligated to maintain.
   4180.  "Rule change" means the adoption, amendment, or repeal of
an operating rule by the board.
   4185.  (a) "Separate interest" has the following meanings:
   (1) In a community apartment project, "separate interest" means
the exclusive right to occupy an apartment, as specified in Section
4105.
   (2) In a condominium project, "separate interest" means a
separately owned unit, as specified in Section 4125.
   (3) In a planned development, "separate interest" means a
separately owned lot, parcel, area, or space.
   (4) In a stock cooperative, "separate interest" means the
exclusive right to occupy a portion of the real property, as
specified in Section 4190.
   (b) Unless the declaration or condominium plan, if any exists,
otherwise provides, if walls, floors, or ceilings are designated as
boundaries of a separate interest, the interior surfaces of the
perimeter walls, floors, ceilings, windows, doors, and outlets
located within the separate interest are part of the separate
interest and any other portions of the walls, floors, or ceilings are
part of the common area.
   (c) The estate in a separate interest may be a fee, a life estate,
an estate for years, or any combination of the foregoing.
   4190.  (a) "Stock cooperative" means a development in which a
corporation is formed or availed of, primarily for the purpose of
holding title to, either in fee simple or for a term of years,
improved real property, and all or substantially all of the
shareholders of the corporation receive a right of exclusive
occupancy in a portion of the real property, title to which is held
by the corporation. The owners' interest in the corporation, whether
evidenced by a share of stock, a certificate of membership, or
otherwise, shall be deemed to be an interest in a common interest
development and a real estate development for purposes of subdivision
(f) of Section 25100 of the Corporations Code.
   (b) A "stock cooperative" includes a limited equity housing
cooperative which is a stock cooperative that meets the criteria of
Section 817.
      CHAPTER 2.  APPLICATION OF ACT


   4200.  This act applies and a common interest development is
created whenever a separate interest coupled with an interest in the
common area or membership in the association is, or has been,
conveyed, provided all of the following are recorded:
   (a) A declaration.
   (b) A condominium plan, if any exists.
   (c) A final map or parcel map, if Division 2 (commencing with
Section 66410) of Title 7 of the Government Code requires the
recording of either a final map or parcel map for the common interest
development.
   4201.  Nothing in this act may be construed to apply to a real
property development that does not contain common area. This section
is declaratory of existing law.
   4202.  (a) The following provisions do not apply to a common
interest development that is limited to industrial or commercial uses
by zoning or by a declaration of covenants, conditions, and
restrictions that has been recorded in the official records of each
county in which the common interest development is located:
   (1) Section 4275.
   (2) Article 5 (commencing with Section 4340) of Chapter 3.
   (3) Article 2 (commencing with Section 4525), and Article 3
(commencing with Section 4575), of Chapter 4.
   (4) Section 4600.
   (5) Section 4765.
   (6) Sections 5300, 5305, 5565, and 5810, and paragraph (7) of
subdivision (a) of Section 5310.
   (7) Sections 5500 through 5560, inclusive.
   (8) Subdivision (b) of Section 5600.
   (9) Subdivision (b) of Section 5605.
   (b) The Legislature finds that the provisions listed in
subdivision (a) are appropriate to protect purchasers in residential
common interest developments, however, the provisions may not be
necessary to protect purchasers in commercial or industrial
developments since the application of those provisions could result
in unnecessary burdens and costs for these types of developments.
      CHAPTER 3.  GOVERNING DOCUMENTS



      Article 1.  General Provisions


   4205.  (a) The governing documents may not include a provision
that is inconsistent with the law. To the extent of any inconsistency
between the governing documents and the law, the law controls.
   (b) The articles of incorporation may not include a provision that
is inconsistent with the declaration. To the extent of any
inconsistency between the articles of incorporation and the
declaration, the declaration controls.
   (c) The bylaws may not include a provision that is inconsistent
with the declaration or the articles of incorporation. To the extent
of any inconsistency between the bylaws and the articles of
incorporation or declaration, the articles of incorporation or
declaration control.
   (d) The operating rules may not include a provision that is
inconsistent with the declaration, articles of incorporation, or
bylaws. To the extent of any inconsistency between the operating
rules and the bylaws, articles of incorporation, or declaration, the
bylaws, articles of incorporation, or declaration control.
   4210.  In order to facilitate the collection of regular
assessments, special assessments, transfer fees, and similar charges,
the board is authorized to record a statement or amended statement
identifying relevant information for the association. This statement
may include any or all of the following information:
   (a) The name of the association as shown in the declaration or the
current name of the association, if different.
   (b) The name and address of a managing agent or treasurer of the
association or other individual or entity authorized to receive
assessments and fees imposed by the association.
   (c) A daytime telephone number of the authorized party identified
in subdivision (b) if a telephone number is available.
   (d) A list of separate interests subject to assessment by the
association, showing the assessor's parcel number or legal
description, or both, of the separate interests.
   (e) The recording information identifying the declaration
governing the association.
   (f) If an amended statement is being recorded, the recording
information identifying the prior statement or statements which the
amendment is superseding.
   4215.  Any deed, declaration, or condominium plan for a common
interest development shall be liberally construed to facilitate the
operation of the common interest development, and its provisions
shall be presumed to be independent and severable. Nothing in Article
3 (commencing with Section 715) of Chapter 2 of Title 2 of Part 1 of
Division 2 shall operate to invalidate any provisions of the
governing documents.
   4220.  In interpreting deeds and condominium plans, the existing
physical boundaries of a unit in a condominium project, when the
boundaries of the unit are contained within a building, or of a unit
reconstructed in substantial accordance with the original plans
thereof, shall be conclusively presumed to be its boundaries rather
than the metes and bounds expressed in the deed or condominium plan,
if any exists, regardless of settling or lateral movement of the
building and regardless of minor variance between boundaries shown on
the plan or in the deed and those of the building.
   4225.  (a) No declaration or other governing document shall
include a restrictive covenant in violation of Section 12955 of the
Government Code.
   (b) Notwithstanding any other provision of law or provision of the
governing documents, the board, without approval of the members,
shall amend any declaration or other governing document that includes
a restrictive covenant prohibited by this section to delete the
restrictive covenant, and shall restate the declaration or other
governing document without the restrictive covenant but with no other
change to the declaration or governing document.
   (c) If the declaration is amended under this section, the board
shall record the restated declaration in each county in which the
common interest development is located. If the articles of
incorporation are amended under this section, the board shall file a
certificate of amendment with the Secretary of State pursuant to
Section 7814 of the Corporations Code.
   (d) If after providing written notice to an association, pursuant
to Section 4035, requesting that the association delete a restrictive
covenant that violates subdivision (a), and the association fails to
delete the restrictive covenant within 30 days of receiving the
notice, the Department of Fair Employment and Housing, a city or
county in which a common interest development is located, or any
person may bring an action against the association for injunctive
relief to enforce subdivision (a). The court may award attorney's
fees to the prevailing party.
   4230.  (a) Notwithstanding any provision of the governing
documents to the contrary, the board may, after the developer has
completed construction of the development, has terminated
construction activities, and has terminated marketing activities for
the sale, lease, or other disposition of separate interests within
the development, adopt an amendment deleting from any of the
governing documents any provision which is unequivocally designed and
intended, or which by its nature can only have been designed or
intended, to facilitate the developer in completing the construction
or marketing of the development. However, provisions of the governing
documents relative to a particular construction or marketing phase
of the development may not be deleted under the authorization of this
subdivision until that construction or marketing phase has been
completed.
   (b) The provisions which may be deleted by action of the board
shall be limited to those which provide for access by the developer
over or across the common area for the purposes of (1) completion of
construction of the development, and (2) the erection, construction,
or maintenance of structures or other facilities designed to
facilitate the completion of construction or marketing of separate
interests.
   (c) At least 30 days prior to taking action pursuant to
subdivision (a), the board shall deliver to all members, by
individual delivery, pursuant to Section 4040, (1) a copy of all
amendments to the governing documents proposed to be adopted under
subdivision (a), and (2) a notice of the time, date, and place the
board will consider adoption of the amendments. The board may
consider adoption of amendments to the governing documents pursuant
to subdivision (a) only at a meeting that is open to all members, who
shall be given opportunity to make comments thereon. All
deliberations of the board on any action proposed under subdivision
(a) shall only be conducted in an open meeting.
   (d) The board may not amend the governing documents pursuant to
this section without the approval of a majority of a quorum of the
members, pursuant to Section 4070. For the purposes of this section,
"quorum" means more than 50 percent of the members who own no more
than two separate interests in the development.
   4235.  (a) Notwithstanding any other provision of law or provision
of the governing documents, if the governing documents include a
reference to a provision of the Davis Stirling Common Interest
Development Act that was repealed and continued in a new provision by
the act that added this section, the board may amend the governing
documents, solely to correct the cross-reference, by adopting a board
resolution that shows the correction.
   (b) A declaration that is corrected under this section may be
restated in corrected form and recorded, provided that a copy of the
board resolution authorizing the corrections is recorded along with
the restated declaration.

      Article 2.  Declaration


   4250.  (a) A declaration, recorded on or after January 1, 1986,
shall contain a legal description of the common interest development,
and a statement that the common interest development is a community
apartment project, condominium project, planned development, stock
cooperative, or combination thereof. The declaration shall
additionally set forth the name of the association and the
restrictions on the use or enjoyment of any portion of the common
interest development that are intended to be enforceable equitable
servitudes.
   (b) The declaration may contain any other matters the declarant or
the members consider appropriate.
   4255.  (a) If a common interest development is located within an
airport influence area, a declaration, recorded after January 1,
2004, shall contain the following statement:
   NOTICE OF AIRPORT IN VICINITY
   This property is presently located in the vicinity of an airport,
within what is known as an airport influence area. For that reason,
the property may be subject to some of the annoyances or
inconveniences associated with proximity to airport operations (for
example: noise, vibration, or odors). Individual sensitivities to
those annoyances can vary from person to person. You may wish to
consider what airport annoyances, if any, are associated with the
property before you complete your purchase and determine whether they
are acceptable to you.
   (b) For purposes of this section, an "airport influence area,"
also known as an "airport referral area," is the area in which
current or future airport-related noise, overflight, safety, or
                                           airspace protection
factors may significantly affect land uses or necessitate
restrictions on those uses as determined by an airport land use
commission.
   (c) If a common interest development is within the San Francisco
Bay Conservation and Development Commission jurisdiction, as
described in Section 66610 of the Government Code, a declaration
recorded on or after January 1, 2006, shall contain the following
notice:
   NOTICE OF SAN FRANCISCO BAY CONSERVATION AND DEVELOPMENT
COMMISSION JURISDICTION
   This property is located within the jurisdiction of the San
Francisco Bay Conservation and Development Commission. Use and
development of property within the commission's jurisdiction may be
subject to special regulations, restrictions, and permit
requirements. You may wish to investigate and determine whether they
are acceptable to you and your intended use of the property before
you complete your transaction.
   (d) The statement in a declaration acknowledging that a property
is located in an airport influence area or within the jurisdiction of
the San Francisco Bay Conservation and Development Commission does
not constitute a title defect, lien, or encumbrance.
   4260.  Except to the extent that a declaration provides by its
express terms that it is not amendable, in whole or in part, a
declaration that fails to include provisions permitting its amendment
at all times during its existence may be amended at any time.
   4265.  (a) The Legislature finds that there are common interest
developments that have been created with deed restrictions that do
not provide a means for the members to extend the term of the
declaration. The Legislature further finds that covenants and
restrictions contained in the declaration, are an appropriate method
for protecting the common plan of developments and to provide for a
mechanism for financial support for the upkeep of common area
including, but not limited to, roofs, roads, heating systems, and
recreational facilities. If declarations terminate prematurely,
common interest developments may deteriorate and the housing supply
of affordable units could be impacted adversely. The Legislature
further finds and declares that it is in the public interest to
provide a vehicle for extending the term of the declaration if the
extension is approved by a majority of all members, pursuant to
Section 4065.
   (b) A declaration that specifies a termination date, but that
contains no provision for extension of the termination date, may be
extended, before its termination date, by the approval of members
pursuant to Section 4270.
   (c) No single extension of the terms of the declaration made
pursuant to this section shall exceed the initial term of the
declaration or 20 years, whichever is less. However, more than one
extension may occur pursuant to this section.
   4270.  (a) A declaration may be amended pursuant to the
declaration or this act. Except as provided in Section 4275, an
amendment is effective after all of the following requirements have
been met:
   (1) The amendment has been approved by the percentage of members
required by the declaration and any other person whose approval is
required by the declaration.
   (2) That fact has been certified in a writing executed and
acknowledged by the officer designated in the declaration or by the
association for that purpose, or if no one is designated, by the
president of the association.
   (3) The amendment has been recorded in each county in which a
portion of the common interest development is located.
   (b) If the declaration does not specify the percentage of members
who must approve an amendment of the declaration, an amendment may be
approved by a majority of all members, pursuant to Section 4065.
   4275.  (a) If in order to amend a declaration, the declaration
requires members having more than 50 percent of the votes in the
association, in a single class voting structure, or members having
more than 50 percent of the votes in more than one class in a voting
structure with more than one class, to vote in favor of the
amendment, the association, or any member, may petition the superior
court of the county in which the common interest development is
located for an order reducing the percentage of the affirmative votes
necessary for such an amendment. The petition shall describe the
effort that has been made to solicit approval of the association
members in the manner provided in the declaration, the number of
affirmative and negative votes actually received, the number or
percentage of affirmative votes required to effect the amendment in
accordance with the existing declaration, and other matters the
petitioner considers relevant to the court's determination. The
petition shall also contain, as exhibits thereto, copies of all of
the following:
   (1) The governing documents.
   (2) A complete text of the amendment.
   (3) Copies of any notice and solicitation materials utilized in
the solicitation of member approvals.
   (4) A short explanation of the reason for the amendment.
   (5) Any other documentation relevant to the court's determination.

   (b) Upon filing the petition, the court shall set the matter for
hearing and issue an ex parte order setting forth the manner in which
notice shall be given.
   (c) The court may, but shall not be required to, grant the
petition if it finds all of the following:
   (1) The petitioner has given not less than 15 days written notice
of the court hearing to all members of the association, to any
mortgagee of a mortgage or beneficiary of a deed of trust who is
entitled to notice under the terms of the declaration, and to the
city, county, or city and county in which the common interest
development is located that is entitled to notice under the terms of
the declaration.
   (2) Balloting on the proposed amendment was conducted in
accordance with the governing documents, this act, and any other
applicable law.
   (3) A reasonably diligent effort was made to permit all eligible
members to vote on the proposed amendment.
   (4) Members having more than 50 percent of the votes, in a single
class voting structure, voted in favor of the amendment. In a voting
structure with more than one class, where the declaration requires a
majority of more than one class to vote in favor of the amendment,
members having more than 50 percent of the votes of each class
required by the declaration to vote in favor of the amendment voted
in favor of the amendment.
   (5) The amendment is reasonable.
   (6) Granting the petition is not improper for any reason stated in
subdivision (e).
   (d) If the court makes the findings required by subdivision (c),
any order issued pursuant to this section may confirm the amendment
as being validly approved on the basis of the affirmative votes
actually received during the balloting period or the order may
dispense with any requirement relating to quorums or to the number or
percentage of votes needed for approval of the amendment that would
otherwise exist under the governing documents.
   (e) Subdivisions (a) to (d), inclusive, notwithstanding, the court
shall not be empowered by this section to approve any amendment to
the declaration that:
   (1) Would change provisions in the declaration requiring the
approval of members having more than 50 percent of the votes in more
than one class to vote in favor of an amendment, unless members
having more than 50 percent of the votes in each affected class
approved the amendment.
   (2) Would eliminate any special rights, preferences, or privileges
designated in the declaration as belonging to the declarant, without
the consent of the declarant.
   (3) Would impair the security interest of a mortgagee of a
mortgage or the beneficiary of a deed of trust without the approval
of the percentage of the mortgagees and beneficiaries specified in
the declaration, if the declaration requires the approval of a
specified percentage of the mortgagees and beneficiaries.
   (f) An amendment is not effective pursuant to this section until
the court order and amendment have been recorded in every county in
which a portion of the common interest development is located. The
amendment may be acknowledged by, and the court order and amendment
may be recorded by, any person designated in the declaration or by
the association for that purpose, or if no one is designated for that
purpose, by the president of the association. Upon recordation of
the amendment and court order, the declaration, as amended in
accordance with this section, shall have the same force and effect as
if the amendment were adopted in compliance with every requirement
imposed by the governing documents.
   (g) Within a reasonable time after the amendment is recorded the
association shall deliver to each member, by individual delivery,
pursuant to Section 4040, a copy of the amendment, together with a
statement that the amendment has been recorded.

      Article 3.  Articles of Incorporation


   4280.  (a) The articles of incorporation of an association filed
with the Secretary of State on or after January 1, 1995, shall
include a statement, which shall be in addition to the statement of
purposes of the corporation, that does all of the following:
   (1) Identifies the corporation as an association formed to manage
a common interest development under the Davis-Stirling Common
Interest Development Act.
   (2) States the business or corporate office of the association, if
any, and, if the office is not on the site of the common interest
development, states the nine-digit ZIP Code, front street, and
nearest cross street for the physical location of the common interest
development.
   (3) States the name and address of the association's managing
agent, if any.
   (b) The statement of principal business activity contained in the
annual statement filed by an incorporated association with the
Secretary of State pursuant to Section 1502 of the Corporations Code
shall also contain the statement specified in subdivision (a).

      Article 4.  Condominium Plan


   4285.  A condominium plan shall contain all of the following:
   (a) A description or survey map of a condominium project, which
shall refer to or show monumentation on the ground.
   (b) A three-dimensional description of a condominium project, one
or more dimensions of which may extend for an indefinite distance
upwards or downwards, in sufficient detail to identify the common
area and each separate interest.
   (c) A certificate consenting to the recordation of the condominium
plan pursuant to this act that is signed and acknowledged as
provided in Section 4290.
   4290.  (a) The certificate consenting to the recordation of a
condominium plan that is required by subdivision (c) of Section 4120
shall be signed and acknowledged by all of the following persons:
   (1) The record owner of fee title to that property included in the
condominium project.
   (2) In the case of a condominium project that will terminate upon
the termination of an estate for years, by all lessors and lessees of
the estate for years.
   (3) In the case of a condominium project subject to a life estate,
by all life tenants and remainder interests.
   (4) The trustee or the beneficiary of each recorded deed of trust,
and the mortgagee of each recorded mortgage encumbering the
property.
   (b) Owners of mineral rights, easements, rights-of-way, and other
nonpossessory interests do not need to sign the certificate.
   (c) In the event a conversion to condominiums of a community
apartment project or stock cooperative has been approved by the
required number of owners, trustees, beneficiaries, and mortgagees
pursuant to Section 66452.10 of the Government Code, the certificate
need only be signed by those owners, trustees, beneficiaries, and
mortgagees approving the conversion.
   4295.  A condominium plan may be amended or revoked by a recorded
instrument that is acknowledged and signed by all the persons who, at
the time of amendment or revocation, are persons whose signatures
are required under Section 4290.

      Article 5.  Operating Rules


   4340.  For the purposes of this article, "operating rule" means a
regulation adopted by the board that applies generally to the
management and operation of the common interest development or the
conduct of the business and affairs of the association.
   4350.  An operating rule is valid and enforceable only if all of
the following requirements are satisfied:
   (a) The rule is in writing.
   (b) The rule is within the authority of the board conferred by law
or by the declaration, articles of incorporation or association, or
bylaws of the association.
   (c) The rule is not inconsistent with governing law and the
declaration, articles of incorporation or association, and bylaws of
the association.
   (d) The rule is adopted, amended, or repealed in good faith and in
substantial compliance with the requirements of this article.
   (e) The rule is reasonable.
   4355.  (a) Sections 4360 and 4365 only apply to an operating rule
that relates to one or more of the following subjects:
   (1) Use of the common area or of an exclusive use common area.
   (2) Use of a separate interest, including any aesthetic or
architectural standards that govern alteration of a separate
interest.
   (3) Member discipline, including any schedule of monetary
penalties for violation of the governing documents and any procedure
for the imposition of penalties.
   (4) Any standards for delinquent assessment payment plans.
   (5) Any procedures adopted by the association for resolution of
disputes.
   (6) Any procedures for reviewing and approving or disapproving a
proposed physical change to a member's separate interest or to the
common area.
   (7) Procedures for elections.
   (b) Sections 4360 and 4365 do not apply to the following actions
by the board:
   (1) A decision regarding maintenance of the common area.
   (2) A decision on a specific matter that is not intended to apply
generally.
   (3) A decision setting the amount of a regular or special
assessment.
   (4) A rule change that is required by law, if the board has no
discretion as to the substantive effect of the rule change.
   (5) Issuance of a document that merely repeats existing law or the
governing documents.
   4360.  (a) The board shall provide general notice pursuant to
Section 4045 of a proposed rule change at least 30 days before making
the rule change. The notice shall include the text of the proposed
rule change and a description of the purpose and effect of the
proposed rule change. Notice is not required under this subdivision
if the board determines that an immediate rule change is necessary to
address an imminent threat to public health or safety or imminent
risk of substantial economic loss to the association.
   (b) A decision on a proposed rule change shall be made at a board
meeting, after consideration of any comments made by association
members.
   (c) As soon as possible after making a rule change, but not more
than 15 days after making the rule change, the board shall deliver
general notice pursuant to Section 4045 of the rule change. If the
rule change was an emergency rule change made under subdivision (d),
the notice shall include the text of the rule change, a description
of the purpose and effect of the rule change, and the date that the
rule change expires.
   (d) If the board determines that an immediate rule change is
required to address an imminent threat to public health or safety, or
an imminent risk of substantial economic loss to the association, it
may make an emergency rule change, and no notice is required, as
specified in subdivision (a). An emergency rule change is effective
for 120 days, unless the rule change provides for a shorter effective
period. A rule change made under this subdivision may not be
readopted under this subdivision.
   4365.  (a) Members of an association owning 5 percent or more of
the separate interests may call a special vote of the members to
reverse a rule change.
   (b) A special vote of the members may be called by delivering a
written request to the president or secretary of the board. Not less
than 35 days nor more than 90 days after receipt of a proper request,
the association shall hold a vote of the members on whether to
reverse the rule change, pursuant to Article 4 (commencing with
Section 5100) of Chapter 6. The written request may not be delivered
more than 30 days after the members of the association are notified
of the rule change. Members are deemed to have been notified of a
rule change on delivery of notice of the rule change, or on
enforcement of the resulting rule, whichever is sooner.
   (c) For the purposes of Section 5225 of this code and Section 8330
of the Corporations Code, collection of signatures to call a special
vote under this section is a purpose reasonably related to the
interests of the members of the association. A member request to copy
or inspect the membership list solely for that purpose may not be
denied on the grounds that the purpose is not reasonably related to
the member's interests as a member.
   (d) The rule change may be reversed by the affirmative vote of a
majority of a quorum of the members, pursuant to Section 4070, or if
the declaration or bylaws require a greater percentage, by the
affirmative vote of the percentage required.
   (e) Unless otherwise provided in the declaration or bylaws, for
the purposes of this section, a member may cast one vote per separate
interest owned.
   (f) A rule change reversed under this section may not be readopted
for one year after the date of the vote reversing the rule change.
Nothing in this section precludes the board from adopting a different
rule on the same subject as the rule change that has been reversed.
   (g) As soon as possible after the close of voting, but not more
than 15 days after the close of voting, the board shall provide
general notice pursuant to Section 4045 of the results of the member
vote.
   (h) This section does not apply to an emergency rule change made
under subdivision (d) of Section 4360.
   4370.  (a) This article applies to a rule change commenced on or
after January 1, 2004.
   (b) Nothing in this article affects the validity of a rule change
commenced before January 1, 2004.
   (c) For the purposes of this section, a rule change is commenced
when the board takes its first official action leading to adoption of
the rule change.
      CHAPTER 4.  OWNERSHIP AND TRANSFER OF INTERESTS



      Article 1.  Ownership Rights and Interests


   4500.  Unless the declaration otherwise provides, in a condominium
project, or in a planned development in which the common area is
owned by the owners of the separate interests, the common area is
owned as tenants in common, in equal shares, one for each separate
interest.
   4505.  Unless the declaration otherwise provides:
   (a) In a community apartment project and condominium project, and
in those planned developments with common area owned in common by the
owners of the separate interests, there are appurtenant to each
separate interest nonexclusive rights of ingress, egress, and
support, if necessary, through the common area. The common area is
subject to these rights.
   (b) In a stock cooperative, and in a planned development with
common area owned by the association, there is an easement for
ingress, egress, and support, if necessary, appurtenant to each
separate interest. The common area is subject to these easements.
   4510.  Except as otherwise provided in law, an order of the court,
or an order pursuant to a final and binding arbitration decision, an
association may not deny a member or occupant physical access to the
member's or occupant's separate interest, either by restricting
access through the common area to the separate interest, or by
restricting access solely to the separate interest.

      Article 2.  Transfer Disclosure


   4525.  (a) The owner of a separate interest shall provide the
following documents to a prospective purchaser of the separate
interest, as soon as practicable before the transfer of title or the
execution of a real property sales contract, as defined in Section
2985:
   (1) A copy of all governing documents. If the association is not
incorporated, this shall include 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
Article 7 (commencing with Section 5300) of Chapter 6.
   (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 Article 2 (commencing with
Section 5650) of Chapter 8.
   (5) A copy or a summary of any notice previously sent to the owner
pursuant to Section 5855 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 pursuant to Section 6000, unless the association and the
builder subsequently enter into a settlement agreement or otherwise
resolve the matter and the association complies with Section 6100.
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 6100.

   (8) Any change in the association's current regular and special
assessments and fees which have been approved by the board, but have
not become due and payable as of the date disclosure is provided
pursuant to this subdivision.
   (b) This section does not apply to an owner that is subject to the
requirements of Section 11018.6 of the Business and Professions
Code.
   4530.  (a) 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
Section 4525.
   (b) 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.
   (c) 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.
   4535.  In addition to the requirements of this article, an owner
transferring title to a separate interest shall comply with
applicable requirements of Sections 1133 and 1134.
   4540.  Any person who willfully violates this article 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 attorney's fees.
   4545.  Nothing in this article affects the validity of title to
real property transferred in violation of this article.

      Article 3.  Transfer Fee


   4575.  Except as provided in Section 4580, 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 Section 4530.
   4580.  The prohibition in Section 4575 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, of either of the following types:
   (a) An organization or entity that satisfies both of the following
conditions:
   (1) It was established before February 20, 2003.
   (2) It 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) An organization or entity that satisfies all of the following
conditions:
   (1) It is not an organization or entity described by subdivision
(a).
   (2) It was established and received a transfer fee before January
1, 2004.
   (3) On and after January 1, 2006, it offers a purchaser the
following payment options for the fee or charge it collects at time
of transfer:
   (A) Paying the fee or charge at the time of transfer.
   (B) 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
organization or 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, the purchaser shall pay the
remaining balance before the transfer.

      Article 4.  Restrictions on Transfer


   4600.  (a) Unless the governing documents specify a different
percentage, the affirmative vote of members owning at least 67
percent of the separate interests in the common interest development
shall be required
before the board may grant exclusive use of any portion of the common
area to a member.
   (b) Subdivision (a) does not apply to the following actions:
   (1) A reconveyance of all or any portion of that common area to
the subdivider to enable the continuation of development that is in
substantial conformance with a detailed plan of phased development
submitted to the Real Estate Commissioner with the application for a
public report.
   (2) Any grant of exclusive use that is in substantial conformance
with a detailed plan of phased development submitted to the Real
Estate Commissioner with the application for a public report or in
accordance with the governing documents approved by the Real Estate
Commissioner.
   (3) Any grant of exclusive use that is for any of the following
reasons:
   (A) To eliminate or correct engineering errors in documents
recorded with the county recorder or on file with a public agency or
utility company.
   (B) To eliminate or correct encroachments due to errors in
construction of any improvements.
   (C) To permit changes in the plan of development submitted to the
Real Estate Commissioner in circumstances where the changes are the
result of topography, obstruction, hardship, aesthetic
considerations, or environmental conditions.
   (D) To fulfill the requirement of a public agency.
   (E) To transfer the burden of management and maintenance of any
common area that is generally inaccessible and not of general use to
the membership at large of the association.
   (F) To accommodate a disability.
   (G) To assign a parking space, storage unit, or other amenity,
that is designated in the declaration for assignment, but is not
assigned by the declaration to a specific separate interest.
   (H) To comply with governing law.
   (c) Any measure placed before the members requesting that the
board grant exclusive use of any portion of the common area shall
specify whether the association will receive any monetary
consideration for the grant and whether the association or the
transferee will be responsible for providing any insurance coverage
for exclusive use of the common area.
   4605.  (a) A member of an association may bring a civil action for
declaratory or equitable relief for a violation of Section 4600 by
the association, including, but not limited to, injunctive relief,
restitution, or a combination thereof, within one year of the date
the cause of action accrues.
   (b) A member who prevails in a civil action to enforce the member'
s rights pursuant to Section 4600 shall be entitled to reasonable
attorney's fees and court costs, and the court may impose a civil
penalty of up to five hundred dollars ($500) for each violation,
except that each identical violation shall be subject to only one
penalty if the violation affects each member equally. A prevailing
association shall not recover any costs, unless the court finds the
action to be frivolous, unreasonable, or without foundation.
   4610.  (a) Except as provided in this section, the common area in
a condominium project shall remain undivided, and there shall be no
judicial partition thereof. Nothing in this section shall be deemed
to prohibit partition of a cotenancy in a condominium.
   (b) The owner of a separate interest in a condominium project may
maintain a partition action as to the entire project as if the owners
of all of the separate interests in the project were tenants in
common in the entire project in the same proportion as their
interests in the common area. The court shall order partition under
this subdivision only by sale of the entire condominium project and
only upon a showing of one of the following:
   (1) More than three years before the filing of the action, the
condominium project was damaged or destroyed, so that a material part
was rendered unfit for its prior use, and the condominium project
has not been rebuilt or repaired substantially to its state prior to
the damage or destruction.
   (2) Three-fourths or more of the project is destroyed or
substantially damaged and owners of separate interests holding in the
aggregate more than a 50-percent interest in the common area oppose
repair or restoration of the project.
   (3) The project has been in existence more than 50 years, is
obsolete and uneconomic, and owners of separate interests holding in
the aggregate more than a 50-percent interest in the common area
oppose repair or restoration of the project.
   (4) Any conditions in the declaration for sale under the
circumstances described in this subdivision have been met.
   4615.  (a) In a condominium project, no labor performed or
services or materials furnished with the consent of, or at the
request of, an owner in the condominium project or the owners' agent
or contractor shall be the basis for the filing of a lien against any
other property of any other owner in the condominium project unless
that other owner has expressly consented to or requested the
performance of the labor or furnishing of the materials or services.
However, express consent shall be deemed to have been given by the
owner of any condominium in the case of emergency repairs thereto.
   (b) Labor performed or services or materials furnished for the
common area, if duly authorized by the association, shall be deemed
to be performed or furnished with the express consent of each
condominium owner.
   (c) The owner of any condominium may remove that owner's
condominium from a lien against two or more condominiums or any part
thereof by payment to the holder of the lien of the fraction of the
total sum secured by the lien that is attributable to the owner's
condominium.

      Article 5.  Transfer of separate Interest


   4625.  In a community apartment project, any conveyance, judicial
sale, or other voluntary or involuntary transfer of the separate
interest includes the undivided interest in the community apartment
project. Any conveyance, judicial sale, or other voluntary or
involuntary transfer of the owner's entire estate also includes the
owner's membership interest in the association.
   4630.  In a condominium project the common area is not subject to
partition, except as provided in Section 4610. Any conveyance,
judicial sale, or other voluntary or involuntary transfer of the
separate interest includes the undivided interest in the common area.
Any conveyance, judicial sale, or other voluntary or involuntary
transfer of the owner's entire estate also includes the owner's
membership interest in the association.
   4635.  In a planned development, any conveyance, judicial sale, or
other voluntary or involuntary transfer of the separate interest
includes the undivided interest in the common area, if any exists.
Any conveyance, judicial sale, or other voluntary or involuntary
transfer of the owner's entire estate also includes the owner's
membership interest in the association.
   4640.  In a stock cooperative, any conveyance, judicial sale, or
other voluntary or involuntary transfer of the separate interest
includes the ownership interest in the corporation, however
evidenced. Any conveyance, judicial sale, or other voluntary or
involuntary transfer of the owner's entire estate also includes the
owner's membership interest in the association.
   4645.  Nothing in this article prohibits the transfer of exclusive
use areas, independent of any other interest in a common interest
subdivision, if authorization to separately transfer exclusive use
areas is expressly stated in the declaration and the transfer occurs
in accordance with the terms of the declaration.
   4650.  Any restrictions upon the severability of the component
interests in real property which are contained in the declaration
shall not be deemed conditions repugnant to the interest created
within the meaning of Section 711. However, these restrictions shall
not extend beyond the period in which the right to partition a
project is suspended under Section 4610.
      CHAPTER 5.  PROPERTY USE AND MAINTENANCE



      Article 1.  Use of Separate Interest


   4700.  This article includes provisions that limit the authority
of an association or the governing documents to regulate the use of a
member's separate interest. Nothing in this article is intended to
affect the application of any other provision that limits the
authority of an association to regulate the use of a member's
separate interest, including, but not limited to, the following
provisions:
   (a) Sections 712 and 713, relating to the display of signs.
   (b) Sections 714 and 714.1, relating to solar energy systems.
   (c) Section 714.5, relating to structures that are constructed
offsite and moved to the property in sections or modules.
   (d) Sections 782, 782.5, and 6150 of this code and Section 12956.1
of the Government Code, relating to racial restrictions.
   (e) Section 12927 of the Government Code, relating to the
modification of property to accommodate a disability.
   (f) Section 1597.40 of the Health and Safety Code, relating to the
operation of a family day care home.
   4705.  (a) Except as required for the protection of the public
health or safety, no declaration or other governing document shall
limit or prohibit, or be construed to limit or prohibit, the display
of the flag of the United States by a member on or in the member's
separate interest or within the member's exclusive use common area.
   (b) For purposes of this section, "display of the flag of the
United States" means a flag of the United States made of fabric,
cloth, or paper displayed from a staff or pole or in a window, and
does not mean a depiction or emblem of the flag of the United States
made of lights, paint, roofing, siding, paving materials, flora, or
balloons, or any other similar building, landscaping, or decorative
component.
   (c) In any action to enforce this section, the prevailing party
shall be awarded reasonable attorney's fees and costs.
   4710.  (a) The governing documents may not prohibit posting or
displaying of noncommercial signs, posters, flags, or banners on or
in a member's separate interest, except as required for the
protection of public health or safety or if the posting or display
would violate a local, state, or federal law.
   (b) For purposes of this section, a noncommercial sign, poster,
flag, or banner may be made of paper, cardboard, cloth, plastic, or
fabric, and may be posted or displayed from the yard, window, door,
balcony, or outside wall of the separate interest, but may not be
made of lights, roofing, siding, paving materials, flora, or
balloons, or any other similar building, landscaping, or decorative
component, or include the painting of architectural surfaces.
   (c) An association may prohibit noncommercial signs and posters
that are more than nine square feet in size and noncommercial flags
or banners that are more than 15 square feet in size.
   4715.  (a) No governing documents shall prohibit the owner of a
separate interest within a common interest development from keeping
at least one pet within the common interest development, subject to
reasonable rules and regulations of the association. This section may
not be construed to affect any other rights provided by law to an
owner of a separate interest to keep a pet within the development.
   (b) For purposes of this section, "pet" means any domesticated
bird, cat, dog, aquatic animal kept within an aquarium, or other
animal as agreed to between the association and the homeowner.
   (c) If the association implements a rule or regulation restricting
the number of pets an owner may keep, the new rule or regulation
shall not apply to prohibit an owner from continuing to keep any pet
that the owner currently keeps in the owner's separate interest if
the pet otherwise conforms with the previous rules or regulations
relating to pets.
   (d) For the purposes of this section, "governing documents" shall
include, but are not limited to, the conditions, covenants, and
restrictions of the common interest development, and the bylaws,
rules, and regulations of the association.
   (e) This section shall become operative on January 1, 2001, and
shall only apply to governing documents entered into, amended, or
otherwise modified on or after that date.
   4720.  (a) No common interest development may require a homeowner
to install or repair a roof in a manner that is in violation of
Section 13132.7 of the Health and Safety Code.
   (b) Governing documents of a common interest development located
within a very high fire severity zone, as designated by the Director
of Forestry and Fire Protection pursuant to Article 9 (commencing
with Section 4201) of Chapter 1 of Part 2 of Division 4 of the Public
Resources Code or by a local agency pursuant to Chapter 6.8
(commencing with Section 51175) of Part 1 of Division 1 of Title 5 of
the Government Code, shall allow for at least one type of fire
retardant roof covering material that meets the requirements of
Section 13132.7 of the Health and Safety Code.
   4725.  (a) Any covenant, condition, or restriction contained in
any deed, contract, security instrument, or other instrument
affecting the transfer or sale of, or any interest in, a common
interest development that effectively prohibits or restricts the
installation or use of a video or television antenna, including a
satellite dish, or that effectively prohibits or restricts the
attachment of that antenna to a structure within that development
where the antenna is not visible from any street or common area,
except as otherwise prohibited or restricted by law, is void and
unenforceable as to its application to the installation or use of a
video or television antenna that has a diameter or diagonal
measurement of 36 inches or less.
   (b) This section shall not apply to any covenant, condition, or
restriction, as described in subdivision (a), that imposes reasonable
restrictions on the installation or use of a video or television
antenna, including a satellite dish, that has a diameter or diagonal
measurement of 36 inches or less. For purposes of this section,
"reasonable restrictions" means those restrictions that do not
significantly increase the cost of the video or television antenna
system, including all related equipment, or significantly decrease
its efficiency or performance and include all of the following:
   (1) Requirements for application and notice to the association
prior to the installation.
   (2) Requirement of a member to obtain the approval of the
association for the installation of a video or television antenna
that has a diameter or diagonal measurement of 36 inches or less on a
separate interest owned by another.
   (3) Provision for the maintenance, repair, or replacement of roofs
or other building components.
   (4) Requirements for installers of a video or television antenna
to indemnify or reimburse the association or its members for loss or
damage caused by the installation, maintenance, or use of a video or
television antenna that has a diameter or diagonal measurement of 36
inches or less.
   (c) Whenever approval is required for the installation or use of a
video or television antenna, including a satellite dish, the
application for approval shall be processed by the appropriate
approving entity for the common interest development in the same
manner as an application for approval of an architectural
modification to the property, and the issuance of a decision on the
application shall not be willfully delayed.
   (d) In any action to enforce compliance with this section, the
prevailing party shall be awarded reasonable attorney's fees.
   4730.  (a) Any provision of a governing document that arbitrarily
or unreasonably restricts an owner's ability to market the owner's
interest in a common interest development is void.
   (b) No association may adopt, enforce, or otherwise impose any
governing document that does either of the following:
   (1) Imposes an assessment or fee in connection with the marketing
of an owner's interest in an amount that exceeds the association's
actual or direct costs. That assessment or fee shall be deemed to
violate the limitation set forth in subdivision (b) of Section 5600.
   (2) Establishes an exclusive relationship with a real estate
broker through which the sale or marketing of interests in the
development is required to occur. The limitation set forth in this
paragraph does not apply to the sale or marketing of separate
interests owned by the association or to the sale or marketing of
common area by the association.
   (c) For purposes of this section, "market" and "marketing" mean
listing, advertising, or obtaining or providing access to show the
owner's interest in the development.
   (d) This section does not apply to rules or regulations made
pursuant to Section 712 or 713 regarding real estate signs.
   4735.  (a) Notwithstanding any other law, a provision of the
governing documents shall be void and unenforceable if it does any of
the following:
   (1) Prohibits, or includes conditions that have the effect of
prohibiting, the use of low water-using plants as a group.
   (2) Has the effect of prohibiting or restricting compliance with
either of the following:
   (A) A water-efficient landscape ordinance adopted or in effect
pursuant to subdivision (c) of Section 65595 of the Government Code.
   (B) Any regulation or restriction on the use of water adopted
pursuant to Section 353 or 375 of the Water Code.
   (b) This section shall not prohibit an association from applying
landscaping rules established in the governing documents, to the
extent the rules fully conform with the requirements of subdivision
(a).

      Article 2.  Modification of Separate Interest


   4760.  (a) Subject to the governing documents and applicable law,
a member may do the following:
   (1) Make any improvement or alteration within the boundaries of
the member's separate interest that does not impair the structural
integrity or mechanical systems or lessen the support of any portions
of the common interest development.
   (2) Modify the member's separate interest, at the member's
expense, to facilitate access for persons who are blind, visually
handicapped, deaf, or physically disabled, or to alter conditions
which could be hazardous to these persons. These modifications may
also include modifications of the route from the public way to the
door of the separate interest for the purposes of this paragraph if
the separate interest is on the ground floor or already accessible by
an existing ramp or elevator. The right granted by this paragraph is
subject to the following conditions:
   (A) The modifications shall be consistent with applicable building
code requirements.
   (B) The modifications shall be consistent with the intent of
otherwise applicable provisions of the governing documents pertaining
to safety or aesthetics.
   (C) Modifications external to the dwelling shall not prevent
reasonable passage by other residents, and shall be removed by the
member when the separate interest is no longer occupied by persons
requiring those modifications who are blind, visually handicapped,
deaf, or physically disabled.
   (D) Any member who intends to modify a separate interest pursuant
to this paragraph shall submit plans and specifications to the
association for review to determine whether the modifications will
comply with the provisions of this paragraph. The association shall
not deny approval of the proposed modifications under this paragraph
without good cause.
   (b) Any change in the exterior appearance of a separate interest
shall be in accordance with the governing documents and applicable
provisions of law.
   4765.  (a) This section applies if the governing documents require
association approval before a member may make a physical change to
the member's separate interest or to the common area. In reviewing
and approving or disapproving a proposed change, the association
shall satisfy the following requirements:
   (1) The association shall provide a fair, reasonable, and
expeditious procedure for making its decision. The procedure shall be
included in the association's governing documents. The procedure
shall provide for prompt deadlines. The procedure shall state the
maximum time for response to an application or a request for
reconsideration by the board.
   (2) A decision on a proposed change shall be made in good faith
and may not be unreasonable, arbitrary, or capricious.
   (3) Notwithstanding a contrary provision of the governing
documents, a decision on a proposed change may not violate any
governing provision of law, including, but not limited to, the Fair
Employment and Housing Act (Part 2.8 (commencing with Section 12900)
of Division 3 of Title 2 of the Government Code), or a building code
or other applicable law governing land use or public safety.
   (4) A decision on a proposed change shall be in writing. If a
proposed change is disapproved, the written decision shall include
both an explanation of why the proposed change is disapproved and a
description of the procedure for reconsideration of the decision by
the board.
   (5) If a proposed change is disapproved, the applicant is entitled
to reconsideration by the board, at an open meeting of the board.
This paragraph does not require reconsideration of a decision that is
made by the board or a body that has the same membership as the
board, at a meeting that satisfies the requirements of Article 2
(commencing with Section 4900) of Chapter 6. Reconsideration by the
board does not constitute dispute resolution within the meaning of
Section 5905.
   (b) Nothing in this section authorizes a physical change to the
common area in a manner that is inconsistent with an association's
governing documents, unless the change is required by law.
   (c) An association shall annually provide its members with notice
of any requirements for association approval of physical changes to
property. The notice shall describe the types of changes that require
association approval and shall include a copy of the procedure used
to review and approve or disapprove a proposed change.

      Article 3.  Maintenance


   4775.  (a) Unless otherwise provided in the declaration of a
common interest development, the association is responsible for
repairing, replacing, or maintaining the common area, other than
exclusive use common area, and the owner of each separate interest is
responsible for maintaining that separate interest and any exclusive
use common area appurtenant to the separate interest.
   (b) The costs of temporary relocation during the repair and
maintenance of the areas within the responsibility of the association
shall be borne by the owner of the separate interest affected.
   4780.  (a) In a community apartment project, condominium project,
or stock cooperative, unless otherwise provided in the declaration,
the association is responsible for the repair and maintenance of the
common area occasioned by the presence of wood-destroying pests or
organisms.
   (b) In a planned development, unless a different maintenance
scheme is provided in the declaration, each owner of a separate
interest is responsible for the repair and maintenance of that
separate interest as may be occasioned by the presence of
wood-destroying pests or organisms. Upon approval of the majority of
all members of the association, pursuant to Section 4065, that
responsibility may be delegated to the association, which shall be
entitled to recover the cost thereof as a special assessment.
   4785.  (a) The association may cause the temporary, summary
removal of any occupant of a common interest development for such
periods and at such times as may be necessary for prompt, effective
treatment of wood-destroying pests or organisms.
   (b) The association shall give notice of the need to temporarily
vacate a separate interest to the occupants and to the owners, not
less than 15 days nor more than 30 days prior to the date of the
temporary relocation. The notice shall state the reason for the
temporary relocation, the date and time of the beginning of
treatment, the anticipated date and time of termination of treatment,
and that the occupants will be responsible for their own
accommodations during the temporary relocation.
   (c) Notice by the association shall be deemed complete upon
either:
   (1) Personal delivery of a copy of the notice to the occupants,
and if an occupant is not the owner, individual delivery pursuant to
Section 4040, of a copy of the notice to the owner.
   (2) Individual delivery pursuant to Section 4040 to the occupant
at the address of the separate interest, and if the occupant is not
the owner, individual delivery pursuant to Section 4040, of a copy of
the notice to the owner.
   (d) For purposes of this section, "occupant" means an owner,
resident, guest, invitee, tenant, lessee, sublessee, or other person
in possession on the separate interest.
   4790.  Notwithstanding the provisions of the declaration, a member
is entitled to reasonable access to the common area for the purpose
of maintaining the internal and external telephone wiring made part
of the exclusive use common area of the member's separate interest
pursuant to subdivision (c) of Section 4145. The access shall be
subject to the consent of the association, whose approval shall not
be unreasonably withheld, and which may include the association's
approval of telephone wiring upon the exterior of the common area,
and other conditions as the association determines reasonable.
      CHAPTER 6.  ASSOCIATION GOVERNANCE



      Article 1.  Association Existence and Powers


   4800.  A common interest development shall be managed by an
association that may be incorporated or unincorporated. The
association may be referred to as an owners' association or a
community association.
   4805.  (a) Unless the governing documents provide otherwise, and
regardless of whether the association is incorporated or
unincorporated, the association may exercise the powers granted to a
nonprofit mutual benefit corporation, as enumerated in Section 7140
of the Corporations Code, except that an unincorporated association
may not adopt or use a corporate seal or issue membership
certificates in accordance with Section 7313 of the Corporations
Code.
   (b) The association, whether incorporated or unincorporated, may
exercise the powers granted to an association in this act.
   4820.  Whenever two or more associations have consolidated any of
their functions under a joint neighborhood association or similar
organization, members of each participating association shall be (a)
entitled to attend all meetings of the joint association other than
executive sessions, (b) given reasonable opportunity for
participation in those meetings, and (c) entitled to the same access
to the joint
association's records as they are to the participating association's
records.

      Article 2.  Board Meeting


   4900.  This article shall be known and may be cited as the Common
Interest Development Open Meeting Act.
   4920.  Unless the governing documents provide for a longer period
of notice, members shall be given notice of the time and place of a
board meeting, except for an emergency meeting held pursuant to
Section 4923, at least four days prior to the meeting. Notice shall
be given by general delivery pursuant to Section 4045. The notice
shall contain the agenda for the meeting.
   4923.  An emergency board meeting may be called by the president
of the association, or by any two directors other than the president,
if there are circumstances that could not have been reasonably
foreseen which require immediate attention and possible action by the
board, and which of necessity make it impracticable to provide
notice as required by Section 4920.
   4925.  (a) Any member may attend board meetings, except when the
board adjourns to executive session.
   (b) The board shall permit any member to speak at any meeting of
the association or the board, except for meetings of the board held
in executive session. A reasonable time limit for all members of the
association to speak to the board or before a meeting of the
association shall be established by the board.
   4930.  (a) Except as described in subdivisions (b) to (e),
inclusive, the board may not discuss or take action on any item at a
nonemergency meeting unless the item was placed on the agenda
included in the notice that was distributed pursuant to subdivision
(a) of Section 4920. This subdivision does not prohibit a member or
resident who is not a director from speaking on issues not on the
agenda.
   (b) Notwithstanding subdivision (a), a director, a managing agent
or other agent of the board, or a member of the staff of the board,
may do any of the following:
   (1) Briefly respond to statements made or questions posed by a
person speaking at a meeting as described in subdivision (b) of
Section 4925.
   (2) Ask a question for clarification, make a brief announcement,
or make a brief report on the person's own activities, whether in
response to questions posed by a member or based upon the person's
own initiative.
   (c) Notwithstanding subdivision (a), the board or a director,
subject to rules or procedures of the board, may do any of the
following:
   (1) Provide a reference to, or provide other resources for factual
information to, its managing agent or other agents or staff.
   (2) Request its managing agent or other agents or staff to report
back to the board at a subsequent meeting concerning any matter, or
take action to direct its managing agent or other agents or staff to
place a matter of business on a future agenda.
   (3) Direct its managing agent or other agents or staff to perform
administrative tasks that are necessary to carry out this section.
   (d) Notwithstanding subdivision (a), the board may take action on
any item of business not appearing on the agenda distributed pursuant
to subdivision (a) of Section 4920 under any of the following
conditions:
   (1) Upon a determination made by a majority of the board present
at the meeting that an emergency situation exists. An emergency
situation exists if there are circumstances that could not have been
reasonably foreseen by the board, that require immediate attention
and possible action by the board, and that, of necessity, make it
impracticable to provide notice.
   (2) Upon a determination made by the board by a vote of two-thirds
of the directors present at the meeting, or, if less than two-thirds
of total membership of the board is present at the meeting, by a
unanimous vote of the directors present, that there is a need to take
immediate action and that the need for action came to the attention
of the board after the agenda was distributed pursuant to subdivision
(a) of Section 4920.
   (3) The item appeared on an agenda that was distributed pursuant
to subdivision (a) of Section 4920 for a prior meeting of the board
that occurred not more than 30 calendar days before the date that
action is taken on the item and, at the prior meeting, action on the
item was continued to the meeting at which the action is taken.
   (e) Before discussing any item pursuant to subdivision (d), the
board shall openly identify the item to the members in attendance at
the meeting.
   4935.  (a) The board may adjourn to executive session to consider
litigation, matters relating to the formation of contracts with third
parties, member discipline, personnel matters, or to meet with a
member, upon the member's request, regarding the member's payment of
assessments, as specified in Section 5665.
   (b) The board shall meet in executive session to discuss member
discipline, if requested by the member who is the subject of the
discussion. That member shall be entitled to attend the executive
session.
   (c) The board shall meet in executive session to discuss a payment
plan pursuant to Section 5665.
   (d) The board shall meet in executive session to decide whether to
foreclose on a lien pursuant to subdivision (b) of Section 5705.
   (e) Any matter discussed in executive session shall be generally
noted in the minutes of the immediately following meeting that is
open to the entire membership.
   4950.  (a) The minutes, minutes proposed for adoption that are
marked to indicate draft status, or a summary of the minutes, of any
board meeting, other than an executive session, shall be available to
members within 30 days of the meeting. The minutes, proposed
minutes, or summary minutes shall be distributed to any member upon
request and upon reimbursement of the association's costs for making
that distribution.
   (b) The annual policy statement, prepared pursuant to Section
5310, shall inform the members of their right to obtain copies of
board meeting minutes and of how and where to do so.
   4955.  (a) A member of an association may bring a civil action for
declaratory or equitable relief for a violation of this article by
the association, including, but not limited to, injunctive relief,
restitution, or a combination thereof, within one year of the date
the cause of action accrues.
   (b) A member who prevails in a civil action to enforce the member'
s rights pursuant to this article shall be entitled to reasonable
attorney's fees and court costs, and the court may impose a civil
penalty of up to five hundred dollars ($500) for each violation,
except that each identical violation shall be subject to only one
penalty if the violation affects each member equally. A prevailing
association shall not recover any costs, unless the court finds the
action to be frivolous, unreasonable, or without foundation.

      Article 3.  Member Meeting


   5000.  (a) Meetings of the membership of the association shall be
conducted in accordance with a recognized system of parliamentary
procedure or any parliamentary procedures the association may adopt.
   (b) Notwithstanding any other provision of law, notice of meetings
of the members shall specify those matters the board intends to
present for action by the members, but, except as otherwise provided
by law, any proper matter may be presented at the meeting for action.

   (c) The board shall permit any member to speak at any meeting of
the membership of the association. A reasonable time limit for all
members to speak at a meeting of the association shall be established
by the board.

      Article 4.  Member Election


   5100.  (a) Notwithstanding any other law or provision of the
governing documents, elections regarding assessments legally
requiring a vote, election and removal of directors, amendments to
the governing documents, or the grant of exclusive use of common area
pursuant to Section 4600 shall be held by secret ballot in
accordance with the procedures set forth in this article.
   (b) This article also governs an election on any topic that is
expressly identified in the operating rules as being governed by this
article.
   (c) The provisions of this article apply to both incorporated and
unincorporated associations, notwithstanding any contrary provision
of the governing documents.
   (d) The procedures set forth in this article shall apply to votes
cast directly by the membership, but do not apply to votes cast by
delegates or other elected representatives.
   (e) In the event of a conflict between this article and the
provisions of the Nonprofit Mutual Benefit Corporation Law (Part 3
(commencing with Section 7110) of Division 2 of Title 1 of the
Corporations Code) relating to elections, the provisions of this
article shall prevail.
   5105.  (a) An association shall adopt rules, in accordance with
the procedures prescribed by Article 5 (commencing with Section 4340)
of Chapter 3, that do all of the following:
   (1) Ensure that if any candidate or member advocating a point of
view is provided access to association media, newsletters, or
Internet Web sites during a campaign, for purposes that are
reasonably related to that election, equal access shall be provided
to all candidates and members advocating a point of view, including
those not endorsed by the board, for purposes that are reasonably
related to the election. The association shall not edit or redact any
content from these communications, but may include a statement
specifying that the candidate or member, and not the association, is
responsible for that content.
   (2) Ensure access to the common area meeting space, if any exists,
during a campaign, at no cost, to all candidates, including those
who are not incumbents, and to all members advocating a point of
view, including those not endorsed by the board, for purposes
reasonably related to the election.
   (3) Specify the qualifications for candidates for the board and
any other elected position, and procedures for the nomination of
candidates, consistent with the governing documents. A nomination or
election procedure shall not be deemed reasonable if it disallows any
member from nominating himself or herself for election to the board.

   (4) Specify the qualifications for voting, the voting power of
each membership, the authenticity, validity, and effect of proxies,
and the voting period for elections, including the times at which
polls will open and close, consistent with the governing documents.
   (5) Specify a method of selecting one or three independent third
parties as inspector or inspectors of elections utilizing one of the
following methods:
   (A) Appointment of the inspector or inspectors by the board.
   (B) Election of the inspector or inspectors by the members of the
association.
   (C) Any other method for selecting the inspector or inspectors.
   (6) Allow the inspector or inspectors to appoint and oversee
additional persons to verify signatures and to count and tabulate
votes as the inspector or inspectors deem appropriate, provided that
the persons are independent third parties.
   (b) Notwithstanding any other provision of law, the rules adopted
pursuant to this section may provide for the nomination of candidates
from the floor of membership meetings or nomination by any other
manner. Those rules may permit write-in candidates for ballots.
   5110.  (a) The association shall select an independent third party
or parties as an inspector of elections. The number of inspectors of
elections shall be one or three.
   (b) For the purposes of this section, an independent third party
includes, but is not limited to, a volunteer poll worker with the
county registrar of voters, a licensee of the California Board of
Accountancy, or a notary public. An independent third party may be a
member, but may not be a director or a candidate for director or be
related to a director or to a candidate for director. An independent
third party may not be a person, business entity, or subdivision of a
business entity who is currently employed or under contract to the
association for any compensable services unless expressly authorized
by rules of the association adopted pursuant to paragraph (5) of
subdivision (a) of Section 5105.
   (c) The inspector or inspectors of elections shall do all of the
following:
   (1) Determine the number of memberships entitled to vote and the
voting power of each.
   (2) Determine the authenticity, validity, and effect of proxies,
if any.
   (3) Receive ballots.
   (4) Hear and determine all challenges and questions in any way
arising out of or in connection with the right to vote.
   (5) Count and tabulate all votes.
   (6) Determine when the polls shall close, consistent with the
governing documents.
   (7) Determine the tabulated results of the election.
   (8) Perform any acts as may be proper to conduct the election with
fairness to all members in accordance with this article, the
Corporations Code, and all applicable rules of the association
regarding the conduct of the election that are not in conflict with
this article.
   (d) An inspector of elections shall perform all duties
impartially, in good faith, to the best of the inspector of election'
s ability, and as expeditiously as is practical. If there are three
inspectors of elections, the decision or act of a majority shall be
effective in all respects as the decision or act of all. Any report
made by the inspector or inspectors of elections is prima facie
evidence of the facts stated in the report.
   5115.  (a) Ballots and two preaddressed envelopes with
instructions on how to return ballots shall be mailed by first-class
mail or delivered by the association to every member not less than 30
days prior to the deadline for voting. In order to preserve
confidentiality, a voter may not be identified by name, address, or
lot, parcel, or unit number on the ballot. The association shall use
as a model those procedures used by California counties for ensuring
confidentiality of vote by mail ballots, including all of the
following:
   (1) The ballot itself is not signed by the voter, but is inserted
into an envelope that is sealed. This envelope is inserted into a
second envelope that is sealed. In the upper left hand corner of the
second envelope, the voter shall sign the voter's name, indicate the
voter's name, and indicate the address or separate interest
identifier that entitles the voter to vote.
   (2) The second envelope is addressed to the inspector or
inspectors of elections, who will be tallying the votes. The envelope
may be mailed or delivered by hand to a location specified by the
inspector or inspectors of elections. The member may request a
receipt for delivery.
   (b) A quorum shall be required only if so stated in the governing
documents or other provisions of law. If a quorum is required by the
governing documents, each ballot received by the inspector of
elections shall be treated as a member present at a meeting for
purposes of establishing a quorum.
   (c) An association shall allow for cumulative voting using the
secret ballot procedures provided in this section, if cumulative
voting is provided for in the governing documents.
   (d) Except for the meeting to count the votes required in
subdivision (a) of Section 5120, an election may be conducted
entirely by mail unless otherwise specified in the governing
documents.
   (e) In an election to approve an amendment of the governing
documents, the text of the proposed amendment shall be delivered to
the members with the ballot.
   5120.  (a) All votes shall be counted and tabulated by the
inspector or inspectors of elections, or the designee of the
inspector of elections, in public at a properly noticed open meeting
of the board or members. Any candidate or other member of the
association may witness the counting and tabulation of the votes. No
person, including a member of the association or an employee of the
management company, shall open or otherwise review any ballot prior
to the time and place at which the ballots are counted and tabulated.
The inspector of elections, or the designee of the inspector of
elections, may verify the member's information and signature on the
outer envelope prior to the meeting at which ballots are tabulated.
Once a secret ballot is received by the inspector of elections, it
shall be irrevocable.
   (b) The tabulated results of the election shall be promptly
reported to the board and shall be recorded in the minutes of the
next meeting of the board and shall be available for review by
members of the association. Within 15 days of the election, the board
shall give general notice pursuant to Section 4045 of the tabulated
results of the election.
   5125.  (a) The sealed ballots at all times shall be in the custody
of the inspector or inspectors of elections or at a location
designated by the inspector or inspectors until after the tabulation
of the vote, and until the time allowed by Section 5145 for
challenging the election has expired, at which time custody shall be
transferred to the association. If there is a recount or other
challenge to the election process, the inspector or inspectors of
elections shall, upon written request, make the ballots available for
inspection and review by an association member or the member's
authorized representative. Any recount shall be conducted in a manner
that preserves the confidentiality of the vote.
   (b) After the transfer of the ballots to the association, the
ballots shall be stored by the association in a secure place for no
less than one year after the date of the election.
   5130.  (a) For purposes of this article, the following definitions
shall apply:
   (1) "Proxy" means a written authorization signed by a member or
the authorized representative of the member that gives another member
or members the power to vote on behalf of that member.
   (2) "Signed" means the placing of the member's name on the proxy
(whether by manual signature, typewriting, telegraphic transmission,
or otherwise) by the member or authorized representative of the
member.
   (b) Proxies shall not be construed or used in lieu of a ballot. An
association may use proxies if permitted or required by the bylaws
of the association and if those proxies meet the requirements of this
article, other laws, and the governing documents, but the
association shall not be required to prepare or distribute proxies
pursuant to this article.
   (c) Any instruction given in a proxy issued for an election that
directs the manner in which the proxyholder is to cast the vote shall
be set forth on a separate page of the proxy that can be detached
and given to the proxyholder to retain. The proxyholder shall cast
the member's vote by secret ballot. The proxy may be revoked by the
member prior to the receipt of the ballot by the inspector of
elections as described in Section 7613 of the Corporations Code.
   5135.  (a) Association funds shall not be used for campaign
purposes in connection with any association board election. Funds of
the association shall not be used for campaign purposes in connection
with any other association election except to the extent necessary
to comply with duties of the association imposed by law.
   (b) For the purposes of this section, "campaign purposes"
includes, but is not limited to, the following:
   (1) Expressly advocating the election or defeat of any candidate
that is on the association election ballot.
   (2) Including the photograph or prominently featuring the name of
any candidate on a communication from the association or its board,
excepting the ballot, ballot materials, or a communication that is
legally required, within 30 days of an election. This is not a
campaign purpose if the communication is one for which subdivision
(a) of Section 5105 requires that equal access be provided to another
candidate or advocate.
   5145.  (a) A member of an association may bring a civil action for
declaratory or equitable relief for a violation of this article by
the association, including, but not limited to, injunctive relief,
restitution, or a combination thereof, within one year of the date
the cause of action accrues. Upon a finding that the election
procedures of this article, or the adoption of and adherence to rules
provided by Article 5 (commencing with Section 4340) of Chapter 3,
were not followed, a court may void any results of the election.
   (b) A member who prevails in a civil action to enforce the member'
s rights pursuant to this article shall be entitled to reasonable
attorney's fees and court costs, and the court may impose a civil
penalty of up to five hundred dollars ($500) for each violation,
except that each identical violation shall be subject to only one
penalty if the violation affects each member of the association
equally. A prevailing association shall not recover any costs, unless
the court finds the action to be frivolous, unreasonable, or without
foundation.
   (c) A cause of action under Sections 5100 to 5130, inclusive, with
respect to access to association resources by a candidate or member
advocating a point of view, the receipt of a ballot by a member, or
the counting, tabulation, or reporting of, or access to, ballots for
inspection and review after tabulation may be brought in small claims
court if the amount of the demand does not exceed the jurisdiction
of that court.

      Article 5.  Record Inspection


   5200.  For the purposes of this article, the following definitions
shall apply:
   (a) "Association records" means all of the following:
   (1) Any financial document required to be provided to a member in
Article 7 (commencing with Section 5300) or in Sections 5565 and
5810.
   (2) Any financial document or statement required to be provided in
Article 2 (commencing with Section 4525) of Chapter 4.
   (3) Interim financial statements, periodic or as compiled,
containing any of the following:
   (A) Balance sheet.
   (B) Income and expense statement.
   (C) Budget comparison.
   (D) 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 paragraph shall be prepared in
accordance with an accrual or modified accrual basis of accounting.
   (4) Executed contracts not otherwise privileged under law.
   (5) Written board approval of vendor or contractor proposals or
invoices.
   (6) State and federal tax returns.
   (7) Reserve account balances and records of payments made from
reserve accounts.
   (8) Agendas and minutes of meetings of the members, the board and
any committees appointed by the board pursuant to Section 7212 of the
Corporations Code; excluding, however, agendas, minutes, and other
information from executive sessions of the board as described in
Article 2 (commencing with Section 4900).
   (9) Membership lists, including name, property address, and
mailing address, but not including information for members who have
opted out pursuant to Section 5220.
   (10) Check registers.
   (11) The governing documents.
   (12) An accounting prepared pursuant to subdivision (b) of Section
5520.
   (13) An "enhanced association record" as defined in subdivision
(b).
   (b) "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.
   5205.  (a) The association shall make available association
records for the time periods and within the timeframes provided in
Section 5210 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.
   (b) 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) The association shall make the specified association records
available for inspection and copying in the association's business
office within the common interest development.
   (d) 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 agreed to by
the requesting member and the association.
   (e) If the association and the requesting member cannot agree upon
a place for inspection and copying pursuant to subdivision (d) 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 delivering copies of
the specifically identified records to the member by individual
delivery pursuant to Section 4040 within the timeframes set forth in
subdivision (b) of Section 5210.
   (f) 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.
   (g) 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 record. If the enhanced association record includes a
reimbursement request, the person submitting the reimbursement
request shall be solely responsible for removing all personal
identification information from the request. The association shall
inform the member of the estimated costs, and the member shall agree
to pay those costs, before retrieving the requested documents.
   (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.
   5210.  (a) Association records are subject to member inspection
for the following time periods:
   (1) For the current fiscal year and for each of the previous two
fiscal years.
   (2) Notwithstanding paragraph (1), minutes of member and board
meetings are subject to inspection permanently. 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 subject to inspection.
   (b) When a member properly requests access to association records,
access to the requested records shall be granted within the
following time periods:
   (1) Association records prepared during the current fiscal year,
within 10 business days following the association's receipt of the
request.
   (2) Association records prepared during the previous two fiscal
years, within 30 calendar days following the association's receipt of
the request.
   (3) Any record or statement available pursuant to Article 2
(commencing with Section 4525) of Chapter 4, Article 7 (commencing
with Section 5300), Section 5565, or Section 5810, within the
timeframe specified therein.
   (4) Minutes of member and board meetings, within the timeframe
specified in subdivision (a) of Section 4950.
   (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.
   (c) There shall be no liability pursuant to this article for an
association that fails to retain records for the periods specified in
subdivision (a) that were created prior to January 1, 2006.
   5215.  (a) Except as provided in subdivision (b), the association
may withhold or redact information from the association records if
any of the following are true:
   (1) 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.
   (2) The release of the information is reasonably likely to lead to
fraud in connection with the association.
   (3) 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.
   (4) The release of the information is reasonably likely to
compromise the privacy of an individual member of the association.
   (5) The information contains any of the following:
   (A) 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.
   (B) Records of disciplinary actions, collection activities, or
payment plans of members other than the member requesting the
records.
   (C) 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.
   (D) Agendas, minutes, and other information from executive
sessions of the board as described in Article 2 (commencing with
Section 4900), except for executed contracts not otherwise
privileged. Privileged contracts shall not include contracts for
maintenance, management, or legal services.
   (E) Personnel records other than the payroll records required to
be provided under subdivision (b).
   (F) Interior architectural plans, including security features, for
individual homes.
   (b) 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.
   (c) 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 section unless the
failure to withhold or redact the information was intentional,
willful, or negligent.
   (d) 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
records.
   5220.  A member of the association may opt out of the sharing of
that member's name, property address, and mailing address by
notifying the association in writing that the member prefers to be
contacted via the alternative process described in subdivision (c) of
Section 8330 of the Corporations Code. This optout shall remain in
effect until changed by the member.
   5225.  A member requesting the membership 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 Section 5235, the association shall have the burden
to prove that the member would have allowed use of the information
for purposes unrelated to the member's interest as a member.
   5230.  (a) 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 article for injunctive relief and for actual damages to
the association caused by the violation.
   (b) This article 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 article or to limit the right of
an association to injunctive relief to stop the misuse of this
information.
   (c) 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 article.
   5235.  (a) A member may bring an action to enforce that 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.
   (b) 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.
   (c) A prevailing association may recover any costs if the court
finds the action to be frivolous, unreasonable, or without
foundation.
   5240.  (a) As applied to an association and its members, the
provisions of this article are intended to supersede the provisions
of Sections 8330 and 8333 of the Corporations Code to the extent
those sections are inconsistent.
   (b) Except as provided in subdivision (a), members of the
association shall have access to association records, including
accounting books and records and membership lists, in accordance with
Article 3 (commencing with Section 8330) of Chapter 13 of Part 3 of
Division 2 of Title 1 of the Corporations Code.
   (c) The provisions of this article apply to any community service
organization or similar entity that is related to the association,
and to any nonprofit entity that provides services to a common
interest development under a declaration of trust. This article shall
operate to give a member of the organization or entity a right to
inspect and copy the records of that organization or entity
equivalent to that granted to association members by this article.
   (d) The provisions of this article 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 directors. Notwithstanding the foregoing,
this article 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.

      Article 6.  Record Keeping


   5260.  To be effective, any of the following requests shall be
delivered in writing to the association, pursuant to Section 4035:
   (a) A request to change the member's information in the
association membership list.
   (b) A request to add or remove a second address for delivery of
individual notices to the member, pursuant to subdivision (b) of
Section 4040.
   (c) A request for individual delivery of general notices to the
member, pursuant to subdivision (b) of Section 4045, or a request to
cancel a prior request for individual delivery of general notices.
   (d) A request to opt out of the membership list pursuant to
Section 5220, or a request to cancel a prior request to opt out of
the membership list.
   (e) A request to receive a full copy of a specified annual budget
report or annual policy statement pursuant to Section 5320.
   (f) A request to receive all reports in full, pursuant to
subdivision (b) of Section 5320, or a request to cancel a prior
request to receive all reports in full.

      Article 7.  Annual Reports


   5300.  (a) Notwithstanding a contrary provision in the governing
documents, an association shall distribute an annual budget report,
30 to 90 days before the end of its fiscal year.
   (b) Unless the governing documents impose more stringent
standards, the annual budget report shall include all of the
following information:
   (1) A pro forma operating budget, showing the estimated revenue
and expenses on an accrual basis.
   (2) A summary of the association's reserves, prepared pursuant to
Section 5565.
   (3) A summary of the reserve funding plan adopted by the board, as
specified in paragraph (5) of subdivision (b) of Section 5550. The
summary shall include notice to members that the full reserve study
plan is available upon request, and the association shall provide the
full reserve plan to any member upon request.
   (4) A statement as to whether the board has determined to defer or
not undertake repairs or replacement of any major component with a
remaining life of 30 years or less, including a justification for the
deferral or decision not to undertake the repairs or replacement.
   (5) A statement as to whether the board, consistent with the
reserve funding plan adopted pursuant to Section 5560 has determined
or anticipates that the levy of one or more special assessments will
be required to repair, replace, or restore any major component or to
provide adequate reserves therefor. If so, the statement shall also
set out the estimated amount, commencement date, and duration of the
assessment.
   (6) A statement as to the mechanism or mechanisms by which the
board will fund reserves to repair or replace major components,
including assessments, borrowing, use of other assets, deferral of
selected replacements or repairs, or alternative mechanisms.
   (7) A general statement addressing the procedures used for the
calculation and establishment of those reserves to defray the future
repair, replacement, or additions to those major components that the
association is obligated to maintain. The statement shall include,
but need not be limited to, reserve calculations made using the
formula described in paragraph (4) of subdivision (b) of Section
5570, and may not assume a rate of return on cash reserves in excess
of 2 percent above the discount rate published by the Federal Reserve
Bank of San Francisco at the time the calculation was made.
   (8) A statement as to whether the association has any outstanding
loans with an original term of more than one year, including the
payee, interest rate, amount outstanding, annual payment, and when
the loan is scheduled to be retired.
   (9) A summary of the association's property, general liability,
earthquake, flood, and fidelity insurance policies. For each policy,
the summary shall include the name of the insurer, the type of
insurance, the policy limit, and the amount of the deductible, if
any. To the extent that any of the required information is specified
in the insurance policy declaration page, the association may meet
its obligation to disclose that information by making copies of that
page and distributing it with the annual budget report. The summary
distributed pursuant to this paragraph shall contain, in at least
10-point boldface type, the following statement:
   "This summary of the association's policies of insurance provides
only certain information, as required by Section 5300 of the Civil
Code, and should not be considered a substitute for the complete
policy terms and conditions contained in the actual policies of
insurance. Any association member may, upon request and provision of
reasonable notice, review the association's insurance policies and,
upon request and payment of reasonable duplication charges, obtain
copies of those policies. Although the association maintains the
policies of insurance specified in this summary, the association's
policies of insurance may not cover your property, including personal
property or real property improvements to or around your dwelling,
or personal injuries or other losses that occur within or around your
dwelling. Even if a loss is covered, you may nevertheless be
responsible for paying all or a portion of any deductible that
applies. Association members should consult with their individual
insurance broker or agent for appropriate additional coverage."
   (c) The annual budget report shall be made available to the
members pursuant to Section 5320.
   (d) The summary of the association's reserves disclosed pursuant
to paragraph (2) of subdivision (b) shall not be admissible in
evidence to show improper financial management of an association,
provided that other relevant and competent evidence of the financial
condition of the association is not made inadmissible by this
provision.
   (e) The Assessment and Reserve Funding Disclosure Summary form,
prepared pursuant to Section 5570, shall accompany each annual budget
report or summary of the annual budget report that is delivered
pursuant to this article.
   5305.  Unless the governing documents impose more stringent
standards, a review of the financial statement of the association
shall be prepared in accordance with generally accepted accounting
principles by a licensee of the California Board of Accountancy for
any fiscal year in which the gross income to the association exceeds
seventy-five thousand dollars ($75,000). A copy of the review of the
financial statement shall be distributed within 120 days after the
close of each fiscal year, by individual delivery pursuant to Section
4040.
   5310.  (a) Within 30 to 90 days before the end of its fiscal year,
the board shall distribute an annual policy statement that provides
the members with information about association policies. The annual
policy statement shall include all of the following information:
   (1) The name and address of the person designated to receive
official communications to the association, pursuant to Section 4035.

   (2) A statement explaining that a member may submit a request to
have notices sent to up to two different specified addresses,
pursuant to subdivision (b) of Section 4040.
   (3) The location, if any, designated for posting of a general
notice, pursuant to paragraph (3) of subdivision (a) of Section 4045.

   (4) Notice of a member's option to receive general notices by
individual delivery, pursuant to subdivision (b) of Section 4045.
   (5) Notice of a member's right to receive copies of meeting
minutes, pursuant to subdivision (b) of Section 4950.
   (6) The statement of assessment collection policies required by
Section 5730.
   (7) A statement describing the association's policies and
practices in enforcing lien rights or other legal remedies for
default in the payment of assessments.
   (8) A statement describing the association's discipline policy, if
any, including any schedule of penalties for violations of the
governing documents pursuant to Section 5850.
   (9) A summary of dispute resolution procedures, pursuant to
Sections 5920 and 5965.
   (10) A summary of any requirements for association approval of a
physical change to property, pursuant to Section 4765.
   (11) The mailing address for overnight payment of assessments,
pursuant to Section 5655.
   (12) Any other information that is required by law or the
governing documents or that the board determines to be appropriate
for inclusion.
   (b) The annual policy statement shall be made available to the
members pursuant to Section 5320.
   5320.  (a) When a report is prepared pursuant to Section 5300 or
5310, the association shall deliver one of the following documents to
all members, by individual delivery pursuant to Section 4040:
   (1) The full report.
   (2) A summary of the report. The summary shall include a general
description of the content of the report. Instructions on how to
request a complete copy of the report at no cost to the member shall
be printed in at least 10-point boldface type on the first page of
the summary.
   (b) Notwithstanding subdivision (a), if a member has requested to
receive all reports in full, the association shall deliver the full
report to that member, rather than a summary of the report.

      Article 8.  Conflict of Interest


   5350.  (a) Notwithstanding any other law, and regardless of
whether an association is incorporated or unincorporated, the
provisions of Sections 7233 and 7234 of the Corporations Code shall
apply to any contract or other transaction authorized, approved, or
ratified by the board or a committee of the board.
   (b) A director or member of a committee shall not vote on any of
the following matters:
   (1) Discipline of the director or committee member.
   (2) An assessment against the director or committee member for
damage to the common area or facilities.
   (3) A request, by the director or committee member, for a payment
plan for overdue assessments.
   (4) A decision whether to foreclose on a lien on the separate
interest of the director or committee member.
   (5) Review of a proposed physical change to the separate interest
of the director or committee member.
   (6) A grant of exclusive use common area to the director or
committee member.
   (c) Nothing in this section limits any other provision of law or
the governing documents that governs a decision in which a director
may have an interest.

      Article 9.  Managing Agent


   5370.  A prospective managing agent of a common interest
development shall provide a written statement to the board as soon as
practicable, but in no event more than 90 days, before entering into
a management agreement which shall contain all of the following
information concerning the managing agent:
   (a) The names and business addresses of the owners or general
partners of the managing agent. If the managing agent is a
corporation, the written statement shall include the names and
business addresses of the directors and officers and shareholders
holding greater than 10 percent of the shares of the corporation.
   (b) Whether or not any relevant licenses such as architectural
design, construction, engineering, real estate, or accounting have
been issued by this state and are currently held by the persons
specified in subdivision (a). If a license is currently held by any
of those persons, the statement shall contain the following
information:
   (1) What license is held.
   (2) The dates the license is valid.
   (3) The name of the licensee appearing on that license.
   (c) Whether or not any relevant professional certifications or
designations such as architectural design, construction, engineering,
real property management, or accounting are currently held by any of
the persons specified in subdivision (a), including, but not limited
to, a professional common interest development manager. If any
certification or designation is held, the statement shall include the
following information:
   (1) What the certification or designation is and what entity
issued it.
   (2) The dates the certification or designation is valid.
   (3) The names in which the certification or designation is held.
   5380.  (a) A managing agent of a common interest development who
accepts or receives funds belonging to the association shall deposit
those funds that are not placed into an escrow account with a bank,
savings association, or credit union or into an account under the
control of the association, into a trust fund account maintained by
the managing agent in a bank, savings association, or credit union in
this state. All funds deposited by the managing agent in the trust
fund account shall be kept in this state in a financial institution,
as defined in Section 31041 of the Financial Code, which is insured
by the federal government, and shall be maintained there until
disbursed in accordance with written instructions from the
association entitled to the funds.
   (b) At the written request of the board, the funds the managing
agent accepts or receives on behalf of the association shall be
deposited into an interest-bearing account in a bank, savings
association, or credit union in this state, provided all of the
following requirements are met:
   (1) The account is in the name of the managing agent as trustee
for the association or in the name of the association.
   (2) All of the funds in the account are covered by insurance
provided by an agency of the federal government.
   (3) The funds in the account are kept separate, distinct, and
apart from the funds belonging to the managing agent or to any other
person for whom the managing agent holds funds in trust except that
the funds of various associations may be commingled as permitted
pursuant to subdivision (d).
   (4) The managing agent discloses to the board the nature of the
account, how interest will be calculated and paid, whether service
charges will be paid to the depository and by whom, and any notice
requirements or penalties for withdrawal of funds from the account.
   (5) No interest earned on funds in the account shall inure
directly or indirectly to the benefit of the managing agent or the
managing agent's employees.
   (c) The managing agent shall maintain a separate record of the
receipt and disposition of all funds described in this section,
including any interest earned on the funds.
   (d) The managing agent shall not commingle the funds of the
association with the managing agent's own money or with the money of
others that the managing agent receives or accepts, unless all of the
following requirements are met:
   (1) The managing agent commingled the funds of various
associations on or before February 26, 1990, and has obtained a
written agreement with the board of each association that the
managing agent will maintain a fidelity and surety bond in an amount
that provides adequate protection to the associations as agreed upon
by the managing agent and the board of each association.
   (2) The managing agent discloses in the written agreement whether
the managing agent is deriving benefits from the commingled account
or the bank, credit union, or savings institution where the moneys
will be on deposit.
   (3) The written agreement provided pursuant to this subdivision
includes, but is not limited to, the name and address of the bonding
companies, the amount of the bonds, and the expiration dates of the
bonds.
   (4) If there are any changes in the bond coverage or the companies
providing the coverage, the managing agent discloses that fact to
the board of each affected association as soon as practical, but in
no event more than 10 days after the change.
   (5) The bonds assure the protection of the association and provide
the association at least 10 days' notice prior to cancellation.
   (6) Completed payments on the behalf of the association are
deposited within 24 hours or the next business day and do not remain
commingled for more than 10 calendar days.
   (e) The prevailing party in an action to enforce this section
shall be entitled to recover reasonable legal fees and court costs.
   (f) As used in this section, "completed payment" means funds
received that clearly identify the account to which the funds are to
be credited.
   5385.  For the purposes of this article, "managing agent" does not
include a full-time employee of the association.

      Article 10.  Government Assistance


   5400.  To the extent existing funds are available, the Department
of Consumer Affairs and the Department of Real Estate shall develop
an online education course for the board regarding the role, duties,
laws, and responsibilities of directors and prospective directors,
and the nonjudicial foreclosure process.
   5405.  (a) To assist with the identification of common interest
developments, each association, whether incorporated or
unincorporated, shall submit to the Secretary of State, on a form and
for a fee not to exceed thirty dollars ($30) that the Secretary of
State shall prescribe, the following information concerning the
association and the development that it manages:
   (1) A statement that the association is formed to manage a common
interest development under the Davis-Stirling Common Interest
Development Act.
   (2) The name of the association.
   (3) The street address of the association's onsite office, or, if
none, of the responsible officer or managing agent of the
association.
   (4) The name, address, and either the daytime telephone number or
e-mail address of the president of the association, other than the
                                        address, telephone number, or
e-mail address of the association's onsite office or managing agent.

   (5) The name, street address, and daytime telephone number of the
association's managing agent, if any.
   (6) The county, and if in an incorporated area, the city in which
the development is physically located. If the boundaries of the
development are physically located in more than one county, each of
the counties in which it is located.
   (7) If the development is in an unincorporated area, the city
closest in proximity to the development.
   (8) The nine-digit ZIP Code, front street, and nearest cross
street of the physical location of the development.
   (9) The type of common interest development managed by the
association.
   (10) The number of separate interests in the development.
   (b) The association shall submit the information required by this
section as follows:
   (1) By incorporated associations, within 90 days after the filing
of its original articles of incorporation, and thereafter at the time
the association files its biennial statement of principal business
activity with the Secretary of State pursuant to Section 8210 of the
Corporations Code.
   (2) By unincorporated associations, in July of 2003, and in that
same month biennially thereafter. Upon changing its status to that of
a corporation, the association shall comply with the filing
deadlines in paragraph (1).
   (c) The association shall notify the Secretary of State of any
change in the street address of the association's onsite office or of
the responsible officer or managing agent of the association in the
form and for a fee prescribed by the Secretary of State, within 60
days of the change.
   (d) The penalty for an incorporated association's noncompliance
with the initial or biennial filing requirements of this section
shall be suspension of the association's rights, privileges, and
powers as a corporation and monetary penalties, to the same extent
and in the same manner as suspension and monetary penalties imposed
pursuant to Section 8810 of the Corporations Code.
   (e) The Secretary of State shall make the information submitted
pursuant to paragraph (4) of subdivision (a) available only for
governmental purposes and only to Members of the Legislature and the
Business, Transportation and Housing Agency, upon written request.
All other information submitted pursuant to this section shall be
subject to public inspection pursuant to the California Public
Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7
of Title 1 of the Government Code). The information submitted
pursuant to this section shall be made available for governmental or
public inspection.
      CHAPTER 7.  FINANCES



      Article 1.  Accounting


   5550.  Unless the governing documents impose more stringent
standards, the board shall do all of the following:
   (a) Review a current reconciliation of the association's operating
accounts on at least a quarterly basis.
   (b) Review a current reconciliation of the association's reserve
accounts on at least a quarterly basis.
   (c) Review, on at least a quarterly basis, the current year's
actual reserve revenues and expenses compared to the current year's
budget.
   (d) Review the latest account statements prepared by the financial
institutions where the association has its operating and reserve
accounts.
   (e) Review an income and expense statement for the association's
operating and reserve accounts on at least a quarterly basis.

      Article 2.  Use of Reserve Funds


   5510.  (a) The signatures of at least two persons, who shall be
directors, or one officer who is not a director and one who is a
director, shall be required for the withdrawal of moneys from the
association's reserve accounts.
   (b) The board shall not expend funds designated as reserve funds
for any purpose other than the repair, restoration, replacement, or
maintenance of, or litigation involving the repair, restoration,
replacement, or maintenance of, major components that the association
is obligated to repair, restore, replace, or maintain and for which
the reserve fund was established.
   5515.  (a) Notwithstanding Section 5510, the board may authorize
the temporary transfer of moneys from a reserve fund to the
association's general operating fund to meet short-term cashflow
requirements or other expenses, if the board has provided notice of
the intent to consider the transfer in a board meeting notice
provided pursuant to Section 4920.
   (b) The notice shall include the reasons the transfer is needed,
some of the options for repayment, and whether a special assessment
may be considered.
   (c) If the board authorizes the transfer, the board shall issue a
written finding, recorded in the board's minutes, explaining the
reasons that the transfer is needed, and describing when and how the
moneys will be repaid to the reserve fund.
   (d) The transferred funds shall be restored to the reserve fund
within one year of the date of the initial transfer, except that the
board may, after giving the same notice required for considering a
transfer, and, upon making a finding supported by documentation that
a temporary delay would be in the best interests of the common
interest development, temporarily delay the restoration.
   (e) The board shall exercise prudent fiscal management in
maintaining the integrity of the reserve account, and shall, if
necessary, levy a special assessment to recover the full amount of
the expended funds within the time limits required by this section.
This special assessment is subject to the limitation imposed by
Section 5605. The board may, at its discretion, extend the date the
payment on the special assessment is due. Any extension shall not
prevent the board from pursuing any legal remedy to enforce the
collection of an unpaid special assessment.
   5520.  (a) When the decision is made to use reserve funds or to
temporarily transfer moneys from the reserve fund to pay for
litigation pursuant to subdivision (b) of Section 5510, the
association shall provide general notice pursuant to Section 4045 of
that decision, and of the availability of an accounting of those
expenses.
   (b) Unless the governing documents impose more stringent
standards, the association shall make an accounting of expenses
related to the litigation on at least a quarterly basis. The
accounting shall be made available for inspection by members of the
association at the association's office.

      Article 3.  Reserve Planning


   5550.  (a) At least once every three years, the board shall cause
to be conducted a reasonably competent and diligent visual inspection
of the accessible areas of the major components that the association
is obligated to repair, replace, restore, or maintain as part of a
study of the reserve account requirements of the common interest
development, if the current replacement value of the major components
is equal to or greater than one-half of the gross budget of the
association, excluding the association's reserve account for that
period. The board shall review this study, or cause it to be
reviewed, annually and shall consider and implement necessary
adjustments to the board's analysis of the reserve account
requirements as a result of that review.
   (b) The study required by this section shall at a minimum include:

   (1) Identification of the major components that the association is
obligated to repair, replace, restore, or maintain that, as of the
date of the study, have a remaining useful life of less than 30
years.
   (2) Identification of the probable remaining useful life of the
components identified in paragraph (1) as of the date of the study.
   (3) An estimate of the cost of repair, replacement, restoration,
or maintenance of the components identified in paragraph (1).
   (4) An estimate of the total annual contribution necessary to
defray the cost to repair, replace, restore, or maintain the
components identified in paragraph (1) during and at the end of their
useful life, after subtracting total reserve funds as of the date of
the study.
   (5) A reserve funding plan that indicates how the association
plans to fund the contribution identified in paragraph (4) to meet
the association's obligation for the repair and replacement of all
major components with an expected remaining life of 30 years or less,
not including those components that the board has determined will
not be replaced or repaired.
   5560.  (a) The reserve funding plan required by Section 5550 shall
include a schedule of the date and amount of any change in regular
or special assessments that would be needed to sufficiently fund the
reserve funding plan.
   (b) The plan shall be adopted by the board at an open meeting
before the membership of the association as described in Article 2
(commencing with Section 4900) of Chapter 6.
   (c) If the board determines that an assessment increase is
necessary to fund the reserve funding plan, any increase shall be
approved in a separate action of the board that is consistent with
the procedure described in Section 5605.
   5565.  The summary of the association's reserves required by
paragraph (2) of subdivision (b) of Section 5300 shall be based on
the most recent review or study conducted pursuant to Section 5550,
shall be based only on assets held in cash or cash equivalents, shall
be printed in boldface type and shall include all of the following:
   (a) The current estimated replacement cost, estimated remaining
life, and estimated useful life of each major component.
   (b) As of the end of the fiscal year for which the study is
prepared:
   (1) The current estimate of the amount of cash reserves necessary
to repair, replace, restore, or maintain the major components.
   (2) The current amount of accumulated cash reserves actually set
aside to repair, replace, restore, or maintain major components.
   (3) If applicable, the amount of funds received from either a
compensatory damage award or settlement to an association from any
person for injuries to property, real or personal, arising out of any
construction or design defects, and the expenditure or disposition
of funds, including the amounts expended for the direct and indirect
costs of repair of construction or design defects. These amounts
shall be reported at the end of the fiscal year for which the study
is prepared as separate line items under cash reserves pursuant to
paragraph (2). Instead of complying with the requirements set forth
in this paragraph, an association that is obligated to issue a review
of its financial statement pursuant to Section 5305 may include in
the review a statement containing all of the information required by
this paragraph.
   (c) The percentage that the amount determined for purposes of
paragraph (2) of subdivision (b) equals the amount determined for
purposes of paragraph (1) of subdivision (b).
   (d) The current deficiency in reserve funding expressed on a per
unit basis. The figure shall be calculated by subtracting the amount
determined for purposes of paragraph (2) of subdivision (b) from the
amount determined for purposes of paragraph (1) of subdivision (b)
and then dividing the result by the number of separate interests
within the association, except that if assessments vary by the size
or type of ownership interest, then the association shall calculate
the current deficiency in a manner that reflects the variation.
   5570.  (a) The disclosures required by this article with regard to
an association or a property shall be summarized on the following
form:


      Assessment and Reserve Funding Disclosure Summary For the
Fiscal Year Ending _____

   (1)  The regular assessment per ownership interest is $_____ per
____. Note: If assessments vary by the size or type of ownership
interest, the assessment applicable to this ownership interest may be
found on page _____ of the attached summary.
   (2)  Additional regular or special assessments that have already
been scheduled to be imposed or charged, regardless of the purpose,
if they have been approved by the board and/or members:
+---------------+----------------+-----------------+
|               |   Amount per   |                 |
|               |    ownership   |                 |
|               |  interest per  |                 |
|               |  month or year |                 |
|               | (If assessments|                 |
|               |  are variable, |                 |
|               |       see      |                 |
|      Date     |      note      |                 |
|   assessment  |   immediately  |  Purpose of the |
|  will be due: |     below):    |   assessment:   |
+---------------+----------------+-----------------+
|               |                |                 |
+---------------+----------------+-----------------+
|               |                |                 |
+---------------+----------------+-----------------+
|               |                |                 |
+---------------+----------------+-----------------+
|               |Total:          |                 |
+---------------+----------------+-----------------+


   Note: If assessments vary by the size or type of ownership
interest, the assessment applicable to this ownership interest may be
found on page ____ of the attached report.
   (3)  Based upon the most recent reserve study and other
information available to the board of directors, will currently
projected reserve account balances be sufficient at the end of each
year to meet the association's obligation for repair and/or
replacement of major components during the next 30 years?
   Yes _____      No _____
   (4)  If the answer to (3) is no, what additional assessments or
other contributions to reserves would be necessary to ensure that
sufficient reserve funds will be available each year during the next
30 years that have not yet been approved by the board or the members?

+------------------+-------------+
|                  |  Amount per |
|                  |  ownership  |
| Approximate date |   interest  |
|    assessment    | per month or|
|   will be due:   |    year:    |
+------------------+-------------+
|                  |             |
+------------------+-------------+
|                  |             |
+------------------+-------------+
|                  |             |
+------------------+-------------+
|                  |             |
+------------------+-------------+
|                  |Total:       |
+------------------+-------------+


   (5)   All major components are included in the reserve study and
are included in its calculations.
   (6)  Based on the method of calculation in paragraph (4) of
subdivision (b) of Section 5570, the estimated amount required in the
reserve fund at the end of the current fiscal year is $____, based
in whole or in part on the last reserve study or update prepared by
____ as of ____ (month), ____ (year). The projected reserve fund cash
balance at the end of the current fiscal year is $____, resulting in
reserves being ____ percent funded at this date.
   If an alternate, but generally accepted, method of calculation is
also used, the required reserve amount is $____. (See attached
explanation)
   (7) Based on the method of calculation in paragraph (4) of
subdivision (b) of Section 5570 of the Civil Code, the estimated
amount required in the reserve fund at the end of each of the next
five budget years is $______, and the projected reserve fund cash
balance in each of those years, taking into account only assessments
already approved and other known revenues, is $______, leaving the
reserve at ______ percent funding. If the reserve funding plan
approved by the association is implemented, the projected reserve
fund cash balance in each of those years will be $______, leaving the
reserve at ______ percent funding.
   Note: The financial representations set forth in this summary are
based on the best estimates of the preparer at that time. The
estimates are subject to change. At the time this summary was
prepared, the assumed long-term before-tax interest rate earned on
reserve funds was ____ percent per year, and the assumed long-term
inflation rate to be applied to major component repair and
replacement costs was ____ percent per year.
   (b) For the purposes of preparing a summary pursuant to this
section:
   (1) "Estimated remaining useful life" means the time reasonably
calculated to remain before a major component will require
replacement.
   (2) "Major component" has the meaning used in Section 55530.
Components with an estimated remaining useful life of more than 30
years may be included in a study as a capital asset or disregarded
from the reserve calculation, so long as the decision is revealed in
the reserve study report and reported in the Assessment and Reserve
Funding Disclosure Summary.
   (3) The form set out in subdivision (a) shall accompany each pro
forma operating budget or summary thereof that is delivered pursuant
to this article. The form may be supplemented or modified to clarify
the information delivered, so long as the minimum information set out
in subdivision (a) is provided.
   (4) For the purpose of the report and summary, the amount of
reserves needed to be accumulated for a component at a given time
shall be computed as the current cost of replacement or repair
multiplied by the number of years the component has been in service
divided by the useful life of the component. This shall not be
construed to require the board to fund reserves in accordance with
this calculation.
   5580.  (a) Unless the governing documents impose more stringent
standards, any community service organization whose funding from the
association or its members exceeds 10 percent of the organization's
annual budget shall prepare and distribute to the association a
report that meets the requirements of Section 5012 of the
Corporations Code, and that describes in detail administrative costs
and identifies the payees of those costs in a manner consistent with
the provisions of Article 5 (commencing with Section 5200) of Chapter
6.
   (b) If the community service organization does not comply with the
standards, the report shall disclose the noncompliance in detail. If
a community service organization is responsible for the maintenance
of major components for which an association would otherwise be
responsible, the community service organization shall supply to the
association the information regarding those components that the
association would use to complete disclosures and reserve reports
required under this article and Section 5300. An association may rely
upon information received from a community service organization, and
shall provide access to the information pursuant to the provisions
of Article 5 (commencing with Section 5200) of Chapter 6.
      CHAPTER 8.  ASSESSMENTS AND ASSESSMENT COLLECTION



      Article 1.  Establishment and Imposition of Assessments


   5600.  (a) Except as provided in Section 5605, the association
shall levy regular and special assessments sufficient to perform its
obligations under the governing documents and this act.
   (b) An association shall not impose or collect an assessment or
fee that exceeds the amount necessary to defray the costs for which
it is levied.
   5605.  (a) Annual increases in regular assessments for any fiscal
year shall not be imposed unless the board has complied with
paragraphs (1), (2), (4), (5), (6), (7), and (8) of subdivision (b)
of Section 5300 with respect to that fiscal year, or has obtained the
approval of a majority of a quorum of members, pursuant to Section
4070, at a member meeting or election.
   (b) Notwithstanding more restrictive limitations placed on the
board by the governing documents, the board 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 in the aggregate exceed 5 percent of the
budgeted gross expenses of the association for that fiscal year
without the approval of a majority of a quorum of members, pursuant
to Section 4070, at a member meeting or election.
   (c) For the purposes of this section, "quorum" means more than 50
percent of the members.
   5610.  Section 5605 does not limit assessment increases necessary
for emergency situations. For purposes of this section, an emergency
situation is any one of the following:
   (a) An extraordinary expense required by an order of a court.
   (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.
   (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 annual budget
report under Section 5300. 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.
   5615.  The association shall provide individual notice pursuant to
Section 4040 to the members 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.
   5620.  (a) Regular assessments imposed or collected to perform the
obligations of an association under the governing documents or this
act 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.
   (b) This exemption shall not apply to any consensual pledges,
liens, or encumbrances that have been approved by a majority of a
quorum of members, pursuant to Section 4070, at a member meeting or
election, or to any state tax lien, or to any lien for labor or
materials supplied to the common area.
   5625.  (a) Except as provided in subdivision (b), notwithstanding
any provision of this act or the governing documents to the contrary,
an association shall not levy assessments on separate interests
within the common interest development based on the taxable value of
the separate interests unless the association, on or before December
31, 2009, in accordance with its governing documents, levied
assessments on those separate interests based on their taxable value,
as determined by the tax assessor of the county in which the
separate interests are located.
   (b) An association that is responsible for paying taxes on the
separate interests within the common interest development may levy
that portion of assessments on separate interests that is related to
the payment of taxes based on the taxable value of the separate
interest, as determined by the tax assessor.

      Article 2.  Assessment Payment and Delinquency


   5650.  (a) A regular or special assessment and any late charges,
reasonable fees and costs of collection, reasonable attorney's fees,
if any, and interest, if any, as determined in accordance with
subdivision (b), shall be a debt of the owner of the separate
interest at the time the assessment or other sums are levied.
   (b) 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.
   (c) Associations are hereby exempted from interest-rate
limitations imposed by Article XV of the California Constitution,
subject to the limitations of this section.
   5655.  (a) Any payments made by the owner of a separate interest
toward assessments shall first be applied to the assessments owed,
and, only after the assessments owed are paid in full shall the
payments be applied to the fees and costs of collection, attorney's
fees, late charges, or interest.
   (b) When an owner makes a payment, the owner may request a receipt
and the association shall provide it. The receipt shall indicate the
date of payment and the person who received it.
   (c) The association shall provide a mailing address for overnight
payment of assessments. The address shall be provided in the annual
policy statement.
   5658.  (a) If a dispute exists between the owner of a separate
interest and the association regarding any disputed charge or sum
levied by the association, including, but not limited to, an
assessment, fine, penalty, late fee, collection cost, or monetary
penalty imposed as a disciplinary measure, and the amount in dispute
does not exceed the jurisdictional limits of the small claims court
stated in Sections 116.220 and 116.221 of the Code of Civil
Procedure, the owner of the separate interest may, in addition to
pursuing dispute resolution pursuant to Article 3 (commencing with
Section 5925) of Chapter 10, pay under protest the disputed amount
and all other amounts levied, including any fees and reasonable costs
of collection, reasonable attorney's fees, late charges, and
interest, if any, pursuant to subdivision (b) of Section 5650, and
commence an action in small claims court pursuant to Chapter 5.5
(commencing with Section 116.110) of Title 1 of the Code of Civil
Procedure.
   (b) Nothing in this section shall impede an association's ability
to collect delinquent assessments as provided in this article or
Article 3 (commencing with
      Section 5700).
   5560.  At least 30 days prior to recording a lien upon the
separate interest of the owner of record to collect a debt that is
past due under Section 5650, the association shall notify the owner
of record in writing by certified mail of the following:
   (a) A general description of the collection and lien enforcement
procedures of the association and the method of calculation of the
amount, a statement that the owner of the separate interest has the
right to inspect the association records pursuant to Section 5205,
and the following statement in 14-point boldface type, if printed, or
in capital letters, if typed:
   "IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN
FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR ASSESSMENTS, IT MAY BE
SOLD WITHOUT COURT ACTION."
   (b) An itemized statement of the charges owed by the owner,
including items on the statement which indicate the amount of any
delinquent assessments, the fees and reasonable costs of collection,
reasonable attorney's fees, any late charges, and interest, if any.
   (c) A statement that the owner shall not be liable to pay the
charges, interest, and costs of collection, if it is determined the
assessment was paid on time to the association.
   (d) The right to request a meeting with the board as provided by
Section 5665.
   (e) The right to dispute the assessment debt by submitting a
written request for dispute resolution to the association pursuant to
the association's "meet and confer" program required in Article 2
(commencing with Section 5900) of Chapter 10.
   (f) The right to request alternative dispute resolution with a
neutral third party pursuant to Article 3 (commencing with Section
5925) of Chapter 10 before the association may initiate foreclosure
against the owner's separate interest, except that binding
arbitration shall not be available if the association intends to
initiate a judicial foreclosure.
   5665.  (a) An owner, other than an owner of any interest that is
described in Section 11212 of the Business and Professions Code that
is not otherwise exempt from this section pursuant to subdivision (a)
of Section 11211.7 of the Business and Professions Code, may submit
a written request to meet with the board to discuss a payment plan
for the debt noticed pursuant to Section 5660. The association shall
provide the owners the standards for payment plans, if any exist.
   (b) The board shall meet with the owner in executive session
within 45 days of the postmark of the request, if the request is
mailed within 15 days of the date of the postmark of the notice,
unless there is no regularly scheduled board meeting within that
period, in which case the board may designate a committee of one or
more directors to meet with the owner.
   (c) Payment plans may incorporate any assessments that accrue
during the payment plan period. Additional late fees shall not accrue
during the payment plan period if the owner is in compliance with
the terms of the payment plan.
   (d) Payment plans shall not impede an association's ability to
record a lien on the owner's separate interest to secure payment of
delinquent assessments.
   (e) In the event of a default on any payment plan, the association
may resume its efforts to collect the delinquent assessments from
the time prior to entering into the payment plan.
   5670.  Prior to recording a lien for delinquent assessments, an
association shall offer the owner and, if so requested by the owner,
participate in dispute resolution pursuant to the association's "meet
and confer" program required in Article 2 (commencing with Section
5900) of Chapter 10.
   5673.  For liens recorded on or after January 1, 2006, the
decision to record a lien for delinquent assessments shall be made
only by the board and may not be delegated to an agent of the
association. The board shall approve the decision by a majority vote
of the directors in an open meeting. The board shall record the vote
in the minutes of that meeting.
   5675.  (a) The amount of the assessment, plus any costs of
collection, late charges, and interest assessed in accordance with
subdivision (b) of Section 5650, shall be a lien on the owner's
separate interest in the common interest development from and after
the time the association causes to be recorded with the county
recorder of the county in which the separate interest is located, a
notice of delinquent assessment, which shall state the amount of the
assessment and other sums imposed in accordance with subdivision (b)
of Section 5650, a legal description of the owner's separate interest
in the common interest development against which the assessment and
other sums are levied, and the name of the record owner of the
separate interest in the common interest development against which
the lien is imposed.
   (b) The itemized statement of the charges owed by the owner
described in subdivision (b) of Section 5660 shall be recorded
together with the notice of delinquent assessment.
   (c) In order for the lien to be enforced by nonjudicial
foreclosure as provided in Sections 5700 to 5710, inclusive, the
notice of delinquent assessment shall state the name and address of
the trustee authorized by the association to enforce the lien by
sale.
   (d) The notice of delinquent assessment shall be signed by the
person designated in the declaration or by the association for that
purpose, or if no one is designated, by the president of the
association.
   (e) A copy of the recorded notice of delinquent assessment shall
be mailed by certified mail to every person whose name is shown as an
owner of the separate interest in the association's records, and the
notice shall be mailed no later than 10 calendar days after
recordation.
   5680.  A lien created pursuant to Section 5675 shall be prior to
all other liens recorded subsequent to the notice of delinquent
assessment, except that the declaration may provide for the
subordination thereof to any other liens and encumbrances.
   5685.  (a) Within 21 days of the payment of the sums specified in
the notice of delinquent assessment, the association shall record or
cause to be recorded in the office of the county recorder in which
the notice of delinquent assessment is recorded a lien release or
notice of rescission and provide the owner of the separate interest a
copy of the lien release or notice that the delinquent assessment
has been satisfied.
   (b) If it is determined that a lien previously recorded against
the separate interest was recorded in error, the party who recorded
the lien shall, within 21 calendar days, record or cause to be
recorded in the office of the county recorder in which the notice of
delinquent assessment is recorded a lien release or notice of
rescission and provide the owner of the separate interest with a
declaration that the lien filing or recording was in error and a copy
of the lien release or notice of rescission.
   (c) If it is determined that an association has recorded a lien
for a delinquent assessment in error, the association shall promptly
reverse all late charges, fees, interest, attorney's fees, costs of
collection, costs imposed for the notice prescribed in Section 5660,
and costs of recordation and release of the lien authorized under
subdivision (b) of Section 5720, and pay all costs related to any
related dispute resolution or alternative dispute resolution.
   5690.  An association that fails to comply with the procedures set
forth in this article shall, prior to recording a lien, recommence
the required notice process. Any costs associated with recommencing
the notice process shall be borne by the association and not by the
owner of a separate interest.

      Article 3.  Assessment Collection


   5700.  (a) Except as otherwise provided in this article, after the
expiration of 30 days following the recording of a lien created
pursuant to Section 5675, the lien may be enforced in any manner
permitted by law, including sale by the court, sale by the trustee
designated in the notice of delinquent assessment, or sale by a
trustee substituted pursuant to Section 2934a.
   (b) Nothing in Article 2 (commencing with Section 5650) or in
subdivision (a) of Section 726 of the Code of Civil Procedure
prohibits actions against the owner of a separate interest to recover
sums for which a lien is created pursuant to Article 2 (commencing
with Section 5650) or prohibits an association from taking a deed in
lieu of foreclosure.
   5705.  (a) Notwithstanding any law or any provisions of the
governing documents to the contrary, this section shall apply to
debts for assessments that arise on and after January 1, 2006.
   (b) Prior to initiating a foreclosure on an owner's separate
interest, the association shall offer the owner and, if so requested
by the owner, participate in dispute resolution pursuant to the
association's "meet and confer" program required in Article 2
(commencing with Section 5900) of Chapter 10 or alternative dispute
resolution as set forth in Article 3 (commencing with Section 5925)
of Chapter 10. The decision to pursue dispute resolution or a
particular type of alternative dispute resolution shall be the choice
of the owner, except that binding arbitration shall not be available
if the association intends to initiate a judicial foreclosure.
   (c) The decision to initiate foreclosure of a lien for delinquent
assessments that has been validly recorded shall be made only by the
board and may not be delegated to an agent of the association. The
board shall approve the decision by a majority vote of the directors
in an executive session. The board shall record the vote in the
minutes of the next meeting of the board open to all members. The
board shall maintain the confidentiality of the owner or owners of
the separate interest by identifying the matter in the minutes by the
parcel number of the property, rather than the name of the owner or
owners. A board vote to approve foreclosure of a lien shall take
place at least 30 days prior to any public sale.
   (d) The board shall provide notice by personal service in
accordance with the manner of service of summons in Article 3
(commencing with Section 415.10) of Chapter 4 of Title 5 of Part 2 of
the Code of Civil Procedure to an owner of a separate interest who
occupies the separate interest or to the owner's legal
representative, if the board votes to foreclose upon the separate
interest. The board shall provide written notice to an owner of a
separate interest who does not occupy the separate interest by
first-class mail, postage prepaid, at the most current address shown
on the books of the association. In the absence of written
notification by the owner to the association, the address of the
owner's separate interest may be treated as the owner's mailing
address.
   5710.  (a) Any sale by the trustee shall be conducted in
accordance with Sections 2924, 2924b, and 2924c applicable to the
exercise of powers of sale in mortgages and deeds of trust.
   (b) In addition to the requirements of Section 2924, the
association shall serve a notice of default on the person named as
the owner of the separate interest in the association's records or,
if that person has designated a legal representative pursuant to this
subdivision, on that legal representative. Service shall be in
accordance with the manner of service of summons in Article 3
(commencing with Section 415.10) of Chapter 4 of Title 5 of Part 2 of
the Code of Civil Procedure. An owner may designate a legal
representative in a writing that is mailed to the association in a
manner that indicates that the association has received it.
   (c) The fees of a trustee may not exceed the amounts prescribed in
Sections 2924c and 2924d, plus the cost of service for either of the
following:
   (1) The notice of default pursuant to subdivision (b).
   (2) The decision of the board to foreclose upon the separate
interest of an owner as described in subdivision (d) of Section 5705.

   5715.  (a) Notwithstanding any law or any provisions of the
governing documents to the contrary, this section shall apply to
debts for assessments that arise on and after January 1, 2006.
   (b) A nonjudicial foreclosure by an association to collect upon a
debt for delinquent assessments shall be subject to a right of
redemption. The redemption period within which the separate interest
may be redeemed from a foreclosure sale under this paragraph ends 90
days after the sale. In addition to the requirements of Section
2924f, a notice of sale in connection with an association's
foreclosure of a separate interest in a common interest development
shall include a statement that the property is being sold subject to
the right of redemption created in this section.
   5720.  (a) Notwithstanding any law or any provisions of the
governing documents to the contrary, this section shall apply to
debts for assessments that arise on and after January 1, 2006.
   (b) An association that seeks to collect delinquent regular or
special assessments of an amount less than one thousand eight hundred
dollars ($1,800), not including any accelerated assessments, late
charges, fees and costs of collection, attorney's fees, or interest,
may not collect that debt through judicial or nonjudicial
foreclosure, but may attempt to collect or secure that debt in any of
the following ways:
   (1) By a civil action in small claims court, pursuant to Chapter
5.5 (commencing with Section 116.110) of Title 1 of Part 1 of the
Code of Civil Procedure. An association that chooses to proceed by an
action in small claims court, and prevails, may enforce the judgment
as permitted under Article 8 (commencing with Section 116.810) of
Chapter 5.5 of Title 1 of Part 1 of the Code of Civil Procedure. The
amount that may be recovered in small claims court to collect upon a
debt for delinquent assessments may not exceed the jurisdictional
limits of the small claims court and shall be the sum of the
following:
   (A) The amount owed as of the date of filing the complaint in the
small claims court proceeding.
   (B) In the discretion of the court, an additional amount to that
described in subparagraph (A) equal to the amount owed for the period
from the date the complaint is filed until satisfaction of the
judgment, which total amount may include accruing unpaid assessments
and any reasonable late charges, fees and costs of collection,
attorney's fees, and interest, up to the jurisdictional limits of the
small claims court.
   (2) By recording a lien on the owner's separate interest upon
which the association may not foreclose until the amount of the
delinquent assessments secured by the lien, exclusive of any
accelerated assessments, late charges, fees and costs of collection,
attorney's fees, or interest, equals or exceeds one thousand eight
hundred dollars ($1,800) or the assessments secured by the lien are
more than 12 months delinquent. An association that chooses to record
a lien under these provisions, prior to recording the lien, shall
offer the owner and, if so requested by the owner, participate in
dispute resolution as set forth in Article 2 (commencing with Section
5900) of Chapter 10.
   (3) Any other manner provided by law, except for judicial or
nonjudicial foreclosure.
   (c) The limitation on foreclosure of assessment liens for amounts
under the stated minimum in this section does not apply to any of the
following:
   (1) Assessments secured by a lien that are more than 12 months
delinquent.
   (2) Assessments owed by owners of separate interests in timeshare
estates, as defined in subdivision (x) of Section 11212 of the
Business and Professions Code.
   (3) Assessments owed by the developer.
   5725.  (a) A monetary charge imposed by the association as a means
of reimbursing the association for costs incurred by the association
in the repair of damage to common area and facilities caused by a
member or the member's guest or tenant may become a lien against the
member's separate interest enforceable by the sale of the interest
under Sections 2924, 2924b, and 2924c, provided the authority to
impose a lien is set forth in the governing documents. It is the
intent of the Legislature not to contravene Section 2792.26 of Title
10 of the California Code of Regulations, as that section appeared on
January 1, 1996, for associations of subdivisions that are being
sold under authority of a subdivision public report, pursuant to Part
2 (commencing with Section 11000) of Division 4 of the Business and
Professions Code.
   (b) A monetary penalty imposed by the association as a
disciplinary measure for failure of a member to comply with the
governing documents, except for the late payments, may not be
characterized nor treated in the governing documents as an assessment
that may become a lien against the member's separate interest
enforceable by the sale of the interest under Sections 2924, 2924b,
and 2924c.
   5730.  (a) The annual policy statement, prepared pursuant to
Section 5310, shall include the following notice, in at least
12-point type:
   "NOTICE ASSESSMENTS AND FORECLOSURE
   This notice outlines some of the rights and responsibilities of
owners of property in common interest developments and the
associations that manage them. Please refer to the sections of the
Civil Code indicated for further information. A portion of the
information in this notice applies only to liens recorded on or after
January 1, 2003. You may wish to consult a lawyer if you dispute an
assessment.
   ASSESSMENTS AND FORECLOSURE
   Assessments become delinquent 15 days after they are due, unless
the governing documents provide for a longer time. The failure to pay
association assessments may result in the loss of an owner's
property through foreclosure. Foreclosure may occur either as a
result of a court action, known as judicial foreclosure or without
court action, often referred to as nonjudicial foreclosure. For liens
recorded on and after January 1, 2006, an association may not use
judicial or nonjudicial foreclosure to enforce that lien if the
amount of the delinquent assessments or dues, exclusive of any
accelerated assessments, late charges, fees, attorney's fees,
interest, and costs of collection, is less than one thousand eight
hundred dollars ($1,800). For delinquent assessments or dues in
excess of one thousand eight hundred dollars ($1,800) or more than 12
months delinquent, an association may use judicial or nonjudicial
foreclosure subject to the conditions set forth in Article 3
(commencing with Section 5700) of Chapter 8 of Part 5 of Division 4
of the Civil Code. When using judicial or nonjudicial foreclosure,
the association records a lien on the owner's property. The owner's
property may be sold to satisfy the lien if the amounts secured by
the lien are not paid. (Sections 5700 through 5720 of the Civil Code,
inclusive)
   In a judicial or nonjudicial foreclosure, the association may
recover assessments, reasonable costs of collection, reasonable
attorney's fees, late charges, and interest. The association may not
use nonjudicial foreclosure to collect fines or penalties, except for
costs to repair common area damaged by a member or a member's
guests, if the governing documents provide for this. (Section 5725 of
the Civil Code)
   The association must comply with the requirements of Article 2
(commencing with Section 5650) of Chapter 8 of Part 5 of Division 4
of the Civil Code when collecting delinquent assessments. If the
association fails to follow these requirements, it may not record a
lien on the owner's property until it has satisfied those
requirements. Any additional costs that result from satisfying the
requirements are the responsibility of the association. (Section 5675
of the Civil Code)
   At least 30 days prior to recording a lien on an owner's separate
interest, the association must provide the owner of record with
certain documents by certified mail, including a description of its
collection and lien enforcement procedures and the method of
calculating the amount. It must also provide an itemized statement of
the charges owed by the owner. An owner has a right to review the
association's records to verify the debt. (Section 5660 of the Civil
Code)
   If a lien is recorded against an owner's property in error, the
person who recorded the lien is required to record a lien release
within 21 days, and to provide an owner certain documents in this
regard. (Section 5685 of the Civil Code)
   The collection practices of the association may be governed by
state and federal laws regarding fair debt collection. Penalties can
be imposed for debt collection practices that violate these laws.
   PAYMENTS
   When an owner makes a payment, the owner may request a receipt,
and the association is required to provide it. On the receipt, the
association must indicate the date of payment and the person who
received it. The association must inform owners of a mailing address
for overnight payments. (Section 5655 of the Civil Code)
   An owner may, but is not obligated to, pay under protest any
disputed charge or sum levied by the association, including, but not
limited to, an assessment, fine, penalty, late fee, collection cost,
or monetary penalty imposed as a disciplinary measure, and by so
doing, specifically reserve the right to contest the disputed charge
or sum in court or otherwise.
   An owner may dispute an assessment debt by submitting a written
request for dispute resolution to the association as set forth in
Article 2 (commencing with Section 5900) of Chapter 10 of Part 5 of
Division 4 of the Civil Code. In addition, an association may not
initiate a foreclosure without participating in alternative dispute
resolution with a neutral third party as set forth in Article 3
(commencing with Section 5925) of Chapter 10 of Part 5 of Division 4
of the Civil Code, if so requested by the owner. Binding arbitration
shall not be available if the association intends to initiate a
judicial foreclosure.
   An owner is not liable for charges, interest, and costs of
collection, if it is established that the assessment was paid
properly on time. (Section 5685 of the Civil Code)
   MEETINGS AND PAYMENT PLANS
   An owner of a separate interest that is not a timeshare may
request the association to consider a payment plan to satisfy a
delinquent assessment. The association must inform owners of the
standards for payment plans, if any exist. (Section 5665 of the Civil
Code)
   The board must meet with an owner who makes a proper written
request for a meeting to discuss a payment plan when the owner has
received a notice of a delinquent assessment. These payment plans
must conform with the payment plan standards of the association, if
they exist. (Section 5665 of the Civil Code)"
   (b) An association distributing the notice required by this
section to an owner of an interest that is described in Section 11212
of the Business and Professions Code that is not otherwise exempt
from this section pursuant to subdivision (a) of Section 11211.7 of
the Business and Professions Code may delete from the notice
described in subdivision (a) the portion regarding meetings and
payment plans.
   5735.  (a) An association may not voluntarily assign or pledge the
association's right to collect payments or assessments, or to
enforce or foreclose a lien to a third party, except when the
assignment or pledge is made to a financial institution or lender
chartered or licensed under federal or state law, when acting within
the scope of that charter or license, as security for a loan obtained
by the association.
   (b) Nothing in subdivision (a) restricts the right or ability of
an association to assign any unpaid obligations of a former member to
a third party for purposes of collection.
   5740.  (a) Except as otherwise provided, this article applies to a
lien created on or after January 1, 2003.
   (b) A lien created before January 1, 2003, is governed by the law
in existence at the time the lien was created.
      CHAPTER 9.  INSURANCE AND LIABILITY


   5800.  (a) A volunteer officer or volunteer director of an
association that manages a common interest development that is
exclusively residential, shall not be personally liable in excess of
the coverage of insurance specified in paragraph (4) to any person
who suffers injury, including, but not limited to, bodily injury,
emotional distress, wrongful death, or property damage or loss as a
result of the tortious act or omission of the volunteer officer or
volunteer director if all of the following criteria are met:
   (1) The act or omission was performed within the scope of the
officer's or director's association duties.
   (2) The act or omission was performed in good faith.
   (3) The act or omission was not willful, wanton, or grossly
negligent.
   (4) The association maintained and had in effect at the time the
act or omission occurred and at the time a claim is made one or more
policies of insurance that shall include coverage for (A) general
liability of the association and (B) individual liability of officers
and directors of the association for negligent acts or omissions in
that capacity; provided, that both types of coverage are in the
following minimum amount:
   (A) At least five hundred thousand dollars ($500,000) if the
common interest development consists of 100 or fewer separate
interests.
   (B) At least one million dollars ($1,000,000) if the common
interest development consists of more than 100 separate interests.
   (b) The payment of actual expenses incurred by a director or
officer in the execution of the duties of that position does not
affect the director's or officer's status as a volunteer within the
meaning of this section.
   (c) An officer or director who at the time of the act or omission
was a declarant, or who received either direct or indirect
compensation as an employee from the declarant, or from a financial
institution that purchased a separate interest at a judicial or
nonjudicial foreclosure of a mortgage or deed of trust on real
property, is not a volunteer for the purposes of this section.
   (d) Nothing in this section shall be construed to limit the
liability of the association for its negligent act or omission or for
any negligent act or omission of an officer or director of the
association.
   (e) This section shall only apply to a volunteer officer or
director who is a tenant of a separate interest in the common
interest development or is an owner of no more than two separate
interests in the common interest development.
   (f) (1) For purposes of paragraph (1) of subdivision (a), the
scope of the officer's or director's association duties shall
include, but shall not be limited to, both of the following
decisions:
                                                       (A) Whether to
conduct an investigation of the common interest development for
latent deficiencies prior to the expiration of the applicable statute
of limitations.
   (B) Whether to commence a civil action against the builder for
defects in design or construction.
   (2) It is the intent of the Legislature that this section clarify
the scope of association duties to which the protections against
personal liability in this section apply. It is not the intent of the
Legislature that these clarifications be construed to expand, or
limit, the fiduciary duties owed by the directors or officers.
   5805.  (a) It is the intent of the Legislature to offer civil
liability protection to owners of the separate interests in a common
interest development that have common area owned in tenancy-in-common
if the association carries a certain level of prescribed insurance
that covers a cause of action in tort.
   (b) Any cause of action in tort against any owner of a separate
interest arising solely by reason of an ownership interest as a
tenant in common in the common area of a common interest development
shall be brought only against the association and not against the
individual owners of the separate interests, if both of the insurance
requirements in paragraphs (1) and (2) are met:
   (1) The association maintained and has in effect for this cause of
action, one or more policies of insurance that include coverage for
general liability of the association.
   (2) The coverage described in paragraph (1) is in the following
minimum amounts:
   (A) At least two million dollars ($2,000,000) if the common
interest development consists of 100 or fewer separate interests.
   (B) At least three million dollars ($3,000,000) if the common
interest development consists of more than 100 separate interests.
   5810.  The association shall, as soon as reasonably practicable,
provide individual notice pursuant to Section 4040 to all members if
any of the policies described in the annual budget report pursuant to
Section 5300 have lapsed, been canceled, and are not immediately
renewed, restored, or replaced, or if there is a significant change,
such as a reduction in coverage or limits or an increase in the
deductible, as to any of those policies. If the association receives
any notice of nonrenewal of a policy described in the annual budget
report pursuant to Section 5300, the association shall immediately
notify its members if replacement coverage will not be in effect by
the date the existing coverage will lapse.
      CHAPTER 10.  DISPUTE RESOLUTION AND ENFORCEMENT



      Article 1.  Discipline and Cost Reimbursement


   5850.  (a) If an association adopts or has adopted a policy
imposing any monetary penalty, including any fee, on any association
member for a violation of the governing documents, including any
monetary penalty relating to the activities of a guest or tenant of
the member, the board shall adopt and distribute to each member, in
the annual policy statement prepared pursuant to Section 5310, a
schedule of the monetary penalties that may be assessed for those
violations, which shall be in accordance with authorization for
member discipline contained in the governing documents.
   (b) Any new or revised monetary penalty that is adopted after
complying with subdivision (a) may be included in a supplement that
is delivered to the members individually, pursuant to Section 4040.
   (c) A monetary penalty for a violation of the governing documents
shall not exceed the monetary penalty stated in the schedule of
monetary penalties or supplement that is in effect at the time of the
violation.
   (d) An association shall provide a copy of the most recently
distributed schedule of monetary penalties, along with any applicable
supplements to that schedule, to any member on request.
   5855.  (a) When the board is to meet to consider or impose
discipline upon a member, or to impose a monetary charge as a means
of reimbursing the association for costs incurred by the association
in the repair of damage to common area and facilities caused by a
member or the member's guest or tenant, the board shall notify the
member in writing, by either personal delivery or individual delivery
pursuant to Section 4040, at least 10 days prior to the meeting.
   (b) The notification shall contain, at a minimum, the date, time,
and place of the meeting, the nature of the alleged violation for
which a member may be disciplined or the nature of the damage to the
common area and facilities for which a monetary charge may be
imposed, and a statement that the member has a right to attend and
may address the board at the meeting. The board shall meet in
executive session if requested by the member.
   (c) If the board imposes discipline on a member or imposes a
monetary charge on the member for damage to the common area and
facilities, the board shall provide the member a written notification
of the decision, by either personal delivery or individual delivery
pursuant to Section 4040, within 15 days following the action.
   (d) A disciplinary action or the imposition of a monetary charge
for damage to the common area shall not be effective against a member
unless the board fulfills the requirements of this section.
   5865.  Nothing in Section 5850 or 5855 shall be construed to
create, expand, or reduce the authority of the board to impose
monetary penalties on a member for a violation of the governing
documents.

      Article 2.  Internal Dispute Resolution


   5900.  (a) This article applies to a dispute between an
association and a member involving their rights, duties, or
liabilities under this act, under the Nonprofit Mutual Benefit
Corporation Law (Part 3 (commencing with Section 7110) of Division 2
of Title 1 of the Corporations Code), or under the governing
documents of the common interest development or association.
   (b) This article supplements, and does not replace, Article 3
(commencing with Section 5925), relating to alternative dispute
resolution as a prerequisite to an enforcement action.
   5905.  (a) An association shall provide a fair, reasonable, and
expeditious procedure for resolving a dispute within the scope of
this article.
   (b) In developing a procedure pursuant to this article, an
association shall make maximum, reasonable use of available local
dispute resolution programs involving a neutral third party,
including low-cost mediation programs such as those listed on the
Internet Web sites of the Department of Consumer Affairs and the
United States Department of Housing and Urban Development.
   (c) If an association does not provide a fair, reasonable, and
expeditious procedure for resolving a dispute within the scope of
this article, the procedure provided in Section 5915 applies and
satisfies the requirement of subdivision (a).
   5910.  A fair, reasonable, and expeditious dispute resolution
procedure shall at a minimum satisfy all of the following
requirements:
   (a) The procedure may be invoked by either party to the dispute. A
request invoking the procedure shall be in writing.
   (b) The procedure shall provide for prompt deadlines. The
procedure shall state the maximum time for the association to act on
a request invoking the procedure.
   (c) If the procedure is invoked by a member, the association shall
participate in the procedure.
   (d) If the procedure is invoked by the association, the member may
elect not to participate in the procedure. If the member
participates but the dispute is resolved other than by agreement of
the member, the member shall have a right of appeal to the board.
   (e) A resolution of a dispute pursuant to the procedure, which is
not in conflict with the law or the governing documents, binds the
association and is judicially enforceable. An agreement reached
pursuant to the procedure, which is not in conflict with the law or
the governing documents, binds the parties and is judicially
enforceable.
   (f) The procedure shall provide a means by which the member and
the association may explain their positions.
   (g) A member of the association shall not be charged a fee to
participate in the process.
   5915.  (a) This section applies to an association that does not
otherwise provide a fair, reasonable, and expeditious dispute
resolution procedure. The procedure provided in this section is fair,
reasonable, and expeditious, within the meaning of this article.
   (b) Either party to a dispute within the scope of this article may
invoke the following procedure:
   (1) The party may request the other party to meet and confer in an
effort to resolve the dispute. The request shall be in writing.
   (2) A member of an association may refuse a request to meet and
confer. The association may not refuse a request to meet and confer.
   (3) The board shall designate a director to meet and confer.
   (4) The parties shall meet promptly at a mutually convenient time
and place, explain their positions to each other, and confer in good
faith in an effort to resolve the dispute.
   (5) A resolution of the dispute agreed to by the parties shall be
memorialized in writing and signed by the parties, including the
board designee on behalf of the association.
   (c) An agreement reached under this section binds the parties and
is judicially enforceable if both of the following conditions are
satisfied:
   (1) The agreement is not in conflict with law or the governing
documents of the common interest development or association.
   (2) The agreement is either consistent with the authority granted
by the board to its designee or the agreement is ratified by the
board.
   (d) A member may not be charged a fee to participate in the
process.
   5920.  The annual policy statement prepared pursuant to Section
5310 shall include a description of the internal dispute resolution
process provided pursuant to this article.

      Article 3.  Alternative Dispute Resolution Prerequisite to
Civil Action


   5925.  As used in this article:
   (a) "Alternative dispute resolution" means mediation, arbitration,
conciliation, or other nonjudicial procedure that involves a neutral
party in the decisionmaking process. The form of alternative dispute
resolution chosen pursuant to this article may be binding or
nonbinding, with the voluntary consent of the parties.
   (b) "Enforcement action" means a civil action or proceeding, other
than a cross-complaint, for any of the following purposes:
   (1) Enforcement of this act.
   (2) Enforcement of the Nonprofit Mutual Benefit Corporation Law
(Part 3 (commencing with Section 7110) of Division 2 of Title 1 of
the Corporations Code).
   (3) Enforcement of the governing documents.
   5930.  (a) An association or a member may not file an enforcement
action in the superior court unless the parties have endeavored to
submit their dispute to alternative dispute resolution pursuant to
this article.
   (b) This section applies only to an enforcement action that is
solely for declaratory, injunctive, or writ relief, or for that
relief in conjunction with a claim for monetary damages not in excess
of the jurisdictional limits stated in Sections 116.220 and 116.221
of the Code of Civil Procedure.
   (c) This section does not apply to a small claims action.
   (d) Except as otherwise provided by law, this section does not
apply to an assessment dispute.
   5935.  (a) Any party to a dispute may initiate the process
required by Section 5930 by serving on all other parties to the
dispute a Request for Resolution. The Request for Resolution shall
include all of the following:
   (1) A brief description of the dispute between the parties.
   (2) A request for alternative dispute resolution.
   (3) A notice that the party receiving the Request for Resolution
is required to respond within 30 days of receipt or the request will
be deemed rejected.
   (4) If the party on whom the request is served is the member, a
copy of this article.
   (b) Service of the Request for Resolution shall be by personal
delivery, first-class mail, express mail, facsimile transmission, or
other means reasonably calculated to provide the party on whom the
request is served actual notice of the request.
   (c) A party on whom a Request for Resolution is served has 30 days
following service to accept or reject the request. If a party does
not accept the request within that period, the request is deemed
rejected by the party.
   5940.  (a) If the party on whom a Request for Resolution is served
accepts the request, the parties shall complete the alternative
dispute resolution within 90 days after the party initiating the
request receives the acceptance, unless this period is extended by
written stipulation signed by both parties.
   (b) Chapter 2 (commencing with Section 1115) of Division 9 of the
Evidence Code applies to any form of alternative dispute resolution
initiated by a Request for Resolution under this article, other than
arbitration.
   (c) The costs of the alternative dispute resolution shall be borne
by the parties.
   5945.  If a Request for Resolution is served before the end of the
applicable time limitation for commencing an enforcement action, the
time limitation is tolled during the following periods:
   (a) The period provided in Section 5935 for response to a Request
for Resolution.
   (b) If the Request for Resolution is accepted, the period provided
by Section 5940 for completion of alternative dispute resolution,
including any extension of time stipulated to by the parties pursuant
to Section 5940.
   5950.  (a) At the time of commencement of an enforcement action,
the party commencing the action shall file with the initial pleading
a certificate stating that one or more of the following conditions is
satisfied:
   (1) Alternative dispute resolution has been completed in
compliance with this article.
   (2) One of the other parties to the dispute did not accept the
terms offered for alternative dispute resolution.
   (3) Preliminary or temporary injunctive relief is necessary.
   (b) Failure to file a certificate pursuant to subdivision (a) is
grounds for a demurrer or a motion to strike unless the court finds
that dismissal of the action for failure to comply with this article
would result in substantial prejudice to one of the parties.
   5955.  (a) After an enforcement action is commenced, on written
stipulation of the parties, the matter may be referred to alternative
dispute resolution. The referred action is stayed. During the stay,
the action is not subject to the rules implementing subdivision (c)
of Section 68603 of the Government Code.
   (b) The costs of the alternative dispute resolution shall be borne
by the parties.
   5960.  In an enforcement action in which fees and costs may be
awarded, the court, in determining the amount of the award, may
consider whether a party's refusal to participate in alternative
dispute resolution before commencement of the action was reasonable.
   5965.  (a) An association shall annually provide its members a
summary of the provisions of this article that specifically
references this article. The summary shall include the following
language:
   "Failure of a member of the association to comply with the
alternative dispute resolution requirements of Section 5930 of the
Civil Code may result in the loss of the member's right to sue the
association or another member of the association regarding
enforcement of the governing documents or the applicable law."
   (b) The summary shall be included in the annual policy statement
prepared pursuant to Section 5310.

      Article 4.  Civil Action


   5975.  (a) The covenants and restrictions in the declaration shall
be enforceable equitable servitudes, unless unreasonable, and shall
inure to the benefit of and bind all owners of separate interests in
the development. Unless the declaration states otherwise, these
servitudes may be enforced by any owner of a separate interest or by
the association, or by both.
   (b) A governing document other than the declaration may be
enforced by the association against an owner of a separate interest
or by an owner of a separate interest against the association.
   (c) In an action to enforce the governing documents, the
prevailing party shall be awarded reasonable attorney's fees and
costs.
   5980.  An association has standing to institute, defend, settle,
or intervene in litigation, arbitration, mediation, or administrative
proceedings in its own name as the real party in interest and
without joining with it the members, in matters pertaining to the
following:
   (a) Enforcement of the governing documents.
   (b) Damage to the common area.
   (c) Damage to a separate interest that the association is
obligated to maintain or repair.
   (d) Damage to a separate interest that arises out of, or is
integrally related to, damage to the common area or a separate
interest that the association is obligated to maintain or repair.
   5985.  (a) In an action maintained by an association pursuant to
subdivision (b), (c), or (d) of Section 5980, the amount of damages
recovered by the association shall be reduced by the amount of
damages allocated to the association or its managing agents in direct
proportion to their percentage of fault based upon principles of
comparative fault. The comparative fault of the association or its
managing agents may be raised by way of defense, but shall not be the
basis for a cross-action or separate action against the association
or its managing agents for contribution or implied indemnity, where
the only damage was sustained by the association or its members. It
is the intent of the Legislature in enacting this subdivision to
require that comparative fault be pleaded as an affirmative defense,
rather than a separate cause of action, where the only damage was
sustained by the association or its members.
   (b) In an action involving damages described in subdivision (b),
(c), or (d) of Section 5980, the defendant or cross-defendant may
allege and prove the comparative fault of the association or its
managing agents as a setoff to the liability of the defendant or
cross-defendant even if the association is not a party to the
litigation or is no longer a party whether by reason of settlement,
dismissal, or otherwise.
   (c) Subdivisions (a) and (b) apply to actions commenced on or
after January 1, 1993.
   (d) Nothing in this section affects a person's liability under
Section 1431, or the liability of the association or its managing
agent for an act or omission that causes damages to another.
      CHAPTER 11.  CONSTRUCTION DEFECT LITIGATION


   6000.  (a) Before an association files a complaint for damages
against a builder, developer, or general contractor ("respondent") of
a common interest development based upon a claim for defects in the
design or construction of the common interest development, all of the
requirements of this section shall be satisfied with respect to the
builder, developer, or general contractor.
   (b) The association shall serve upon the respondent a "Notice of
Commencement of Legal Proceedings." The notice shall be served by
certified mail to the registered agent of the respondent, or if there
is no registered agent, then to any officer of the respondent. If
there are no current officers of the respondent, service shall be
upon the person or entity otherwise authorized by law to receive
service of process. Service upon the general contractor shall be
sufficient to initiate the process set forth in this section with
regard to any builder or developer, if the builder or developer is
not amenable to service of process by the foregoing methods. This
notice shall toll all applicable statutes of limitation and repose,
whether contractual or statutory, by and against all potentially
responsible parties, regardless of whether they were named in the
notice, including claims for indemnity applicable to the claim for
the period set forth in subdivision (c). The notice shall include all
of the following:
   (1) The name and location of the project.
   (2) An initial list of defects sufficient to apprise the
respondent of the general nature of the defects at issue.
   (3) A description of the results of the defects, if known.
   (4) A summary of the results of a survey or questionnaire
distributed to homeowners to determine the nature and extent of
defects, if a survey has been conducted or a questionnaire has been
distributed.
   (5) Either a summary of the results of testing conducted to
determine the nature and extent of defects or the actual test
results, if that testing has been conducted.
   (c) Service of the notice shall commence a period, not to exceed
180 days, during which the association, the respondent, and all other
participating parties shall try to resolve the dispute through the
processes set forth in this section. This 180-day period may be
extended for one additional period, not to exceed 180 days, only upon
the mutual agreement of the association, the respondent, and any
parties not deemed peripheral pursuant to paragraph (3) of
subdivision (e). Any extensions beyond the first extension shall
require the agreement of all participating parties. Unless extended,
the dispute resolution process prescribed by this section shall be
deemed completed. All extensions shall continue the tolling period
described in subdivision (b).
   (d) Within 25 days of the date the association serves the Notice
of Commencement of Legal Proceedings, the respondent may request in
writing to meet and confer with the board. Unless the respondent and
the association otherwise agree, there shall be not more than one
meeting, which shall take place no later than 10 days from the date
of the respondent's written request, at a mutually agreeable time and
place. The meeting shall be subject to subdivision (a) of Section
4925 and subdivisions (a) and (b) of Section 4935. The discussions at
the meeting are privileged communications and are not admissible in
evidence in any civil action, unless the association and the
respondent consent in writing to their admission.
   (e) Upon receipt of the notice, the respondent shall, within 60
days, comply with the following:
   (1) The respondent shall provide the association with access to,
for inspection and copying of, all plans and specifications,
subcontracts, and other construction files for the project that are
reasonably calculated to lead to the discovery of admissible evidence
regarding the defects claimed. The association shall provide the
respondent with access to, for inspection and copying of, all files
reasonably calculated to lead to the discovery of admissible evidence
regarding the defects claimed, including all reserve studies,
maintenance records and any survey questionnaires, or results of
testing to determine the nature and extent of defects. To the extent
any of the above documents are withheld based on privilege, a
privilege log shall be prepared and submitted to all other parties.
All other potentially responsible parties shall have the same rights
as the respondent regarding the production of documents upon receipt
of written notice of the claim, and shall produce all relevant
documents within 60 days of receipt of the notice of the claim.
   (2) The respondent shall provide written notice by certified mail
to all subcontractors, design professionals, their insurers, and the
insurers of any additional insured whose identities are known to the
respondent or readily ascertainable by review of the project files or
other similar sources and whose potential responsibility appears on
the face of the notice. This notice to subcontractors, design
professionals, and insurers shall include a copy of the Notice of
Commencement of Legal Proceedings, and shall specify the date and
manner by which the parties shall meet and confer to select a dispute
resolution facilitator pursuant to paragraph (1) of subdivision (f),
advise the recipient of its obligation to participate in the meet
and confer or serve a written acknowledgment of receipt regarding
this notice, advise the recipient that it will waive any challenge to
selection of the dispute resolution facilitator if it elects not to
participate in the meet and confer, advise the recipient that it may
seek the assistance of an attorney, and advise the recipient that it
should contact its insurer, if any. Any subcontractor or design
professional, or insurer for that subcontractor, design professional,
or additional insured, who receives written notice from the
respondent regarding the meet and confer shall, prior to the meet and
confer, serve on the respondent a written acknowledgment of receipt.
That subcontractor or design professional shall, within 10 days of
service of the written acknowledgment of receipt, provide to the
association and the respondent a Statement of Insurance that includes
both of the following:
   (A) The names, addresses, and contact persons, if known, of all
insurance carriers, whether primary or excess and regardless of
whether a deductible or self-insured retention applies, whose
policies were in effect from the commencement of construction of the
subject project to the present and which potentially cover the
subject claims.
   (B) The applicable policy numbers for each policy of insurance
provided.
   (3) Any subcontractor or design professional, or insurer for that
subcontractor, design professional, or additional insured, who so
chooses, may, at any time, make a written request to the dispute
resolution facilitator for designation as a peripheral party. That
request shall be served contemporaneously on the association and the
respondent. If no objection to that designation is received within 15
days, or upon rejection of that objection, the dispute resolution
facilitator shall designate that subcontractor or design professional
as a peripheral party, and shall thereafter seek to limit the
attendance of that subcontractor or design professional only to those
dispute resolution sessions deemed peripheral party sessions or to
those sessions during which the dispute resolution facilitator
believes settlement as to peripheral parties may be finalized.
Nothing in this subdivision shall preclude a party who has been
designated a peripheral party from being reclassified as a
nonperipheral party, nor shall this subdivision preclude a party
designated as a nonperipheral party from being reclassified as a
peripheral party after notice to all parties and an opportunity to
object. For purposes of this subdivision, a peripheral party is a
party having total claimed exposure of less than twenty-five thousand
dollars ($25,000).
   (f) (1) Within 20 days of sending the notice set forth in
paragraph (2) of subdivision (e), the association, respondent,
subcontractors, design professionals, and their insurers who
                                    have been sent a notice as
described in paragraph (2) of subdivision (e) shall meet and confer
in an effort to select a dispute resolution facilitator to preside
over the mandatory dispute resolution process prescribed by this
section. Any subcontractor or design professional who has been given
timely notice of this meeting but who does not participate, waives
any challenge he or she may have as to the selection of the dispute
resolution facilitator. The role of the dispute resolution
facilitator is to attempt to resolve the conflict in a fair manner.
The dispute resolution facilitator shall be sufficiently
knowledgeable in the subject matter and be able to devote sufficient
time to the case. The dispute resolution facilitator shall not be
required to reside in or have an office in the county in which the
project is located. The dispute resolution facilitator and the
participating parties shall agree to a date, time, and location to
hold a case management meeting of all parties and the dispute
resolution facilitator, to discuss the claims being asserted and the
scheduling of events under this section. The case management meeting
with the dispute resolution facilitator shall be held within 100 days
of service of the Notice of Commencement of Legal Proceedings at a
location in the county where the project is located. Written notice
of the case management meeting with the dispute resolution
facilitator shall be sent by the respondent to the association,
subcontractors and design professionals, and their insurers who are
known to the respondent to be on notice of the claim, no later than
10 days prior to the case management meeting, and shall specify its
date, time, and location. The dispute resolution facilitator in
consultation with the respondent shall maintain a contact list of the
participating parties.
   (2) No later than 10 days prior to the case management meeting,
the dispute resolution facilitator shall disclose to the parties all
matters that could cause a person aware of the facts to reasonably
entertain a doubt that the proposed dispute resolution facilitator
would be able to resolve the conflict in a fair manner. The
facilitator's disclosure shall include the existence of any ground
specified in Section 170.1 of the Code of Civil Procedure for
disqualification of a judge, any attorney-client relationship the
facilitator has or had with any party or lawyer for a party to the
dispute resolution process, and any professional or significant
personal relationship the facilitator or his or her spouse or minor
child living in the household has or had with any party to the
dispute resolution process. The disclosure shall also be provided to
any subsequently noticed subcontractor or design professional within
10 days of the notice.
   (3) A dispute resolution facilitator shall be disqualified by the
court if he or she fails to comply with this subdivision and any
party to the dispute resolution process serves a notice of
disqualification prior to the case management meeting. If the dispute
resolution facilitator complies with this subdivision, he or she
shall be disqualified by the court on the basis of the disclosure if
any party to the dispute resolution process serves a notice of
disqualification prior to the case management meeting.
   (4) If the parties cannot mutually agree to a dispute resolution
facilitator, then each party shall submit a list of three dispute
resolution facilitators. Each party may then strike one nominee from
the other parties' list, and petition the court, pursuant to the
procedure described in subdivisions (n) and (o), for final selection
of the dispute resolution facilitator. The court may issue an order
for final selection of the dispute resolution facilitator pursuant to
this paragraph.
   (5) Any subcontractor or design professional who receives notice
of the association's claim without having previously received timely
notice of the meet and confer to select the dispute resolution
facilitator shall be notified by the respondent regarding the name,
address, and telephone number of the dispute resolution facilitator.
Any such subcontractor or design professional may serve upon the
parties and the dispute resolution facilitator a written objection to
the dispute resolution facilitator within 15 days of receiving
notice of the claim. Within seven days after service of this
objection, the subcontractor or design professional may petition the
superior court to replace the dispute resolution facilitator. The
court may replace the dispute resolution facilitator only upon a
showing of good cause, liberally construed. Failure to satisfy the
deadlines set forth in this subdivision shall constitute a waiver of
the right to challenge the dispute resolution facilitator.
   (6) The costs of the dispute resolution facilitator shall be
apportioned in the following manner: one-third to be paid by the
association; one-third to be paid by the respondent; and one-third to
be paid by the subcontractors and design professionals, as allocated
among them by the dispute resolution facilitator. The costs of the
dispute resolution facilitator shall be recoverable by the prevailing
party in any subsequent litigation pursuant to Section 1032 of the
Code of Civil Procedure, provided however that any nonsettling party
may, prior to the filing of the complaint, petition the facilitator
to reallocate the costs of the dispute resolution facilitator as they
apply to any nonsettling party. The determination of the dispute
resolution facilitator with respect to the allocation of these costs
shall be binding in any subsequent litigation. The dispute resolution
facilitator shall take into account all relevant factors and
equities between all parties in the dispute resolution process when
reallocating costs.
   (7) In the event the dispute resolution facilitator is replaced at
any time, the case management statement created pursuant to
subdivision (h) shall remain in full force and effect.
   (8) The dispute resolution facilitator shall be empowered to
enforce all provisions of this section.
   (g) (1) No later than the case management meeting, the parties
shall begin to generate a data compilation showing the following
information regarding the alleged defects at issue:
   (A) The scope of the work performed by each potentially
responsible subcontractor.
   (B) The tract or phase number in which each subcontractor provided
goods or services, or both.
   (C) The units, either by address, unit number, or lot number, at
which each subcontractor provided goods or services, or both.
   (2) This data compilation shall be updated as needed to reflect
additional information. Each party attending the case management
meeting, and any subsequent meeting pursuant to this section, shall
provide all information available to that party relevant to this data
compilation.
   (h) At the case management meeting, the parties shall, with the
assistance of the dispute resolution facilitator, reach agreement on
a case management statement, which shall set forth all of the
elements set forth in paragraphs (1) to (8), inclusive, except that
the parties may dispense with one or more of these elements if they
agree that it is appropriate to do so. The case management statement
shall provide that the following elements shall take place in the
following order:
   (1) Establishment of a document depository, located in the county
where the project is located, for deposit of documents, defect lists,
demands, and other information provided for under this section. All
documents exchanged by the parties and all documents created pursuant
to this subdivision shall be deposited in the document depository,
which shall be available to all parties throughout the prefiling
dispute resolution process and in any subsequent litigation. When any
document is deposited in the document depository, the party
depositing the document shall provide written notice identifying the
document to all other parties. The costs of maintaining the document
depository shall be apportioned among the parties in the same manner
as the costs of the dispute resolution facilitator.
   (2) Provision of a more detailed list of defects by the
association to the respondent after the association completes a
visual inspection of the project. This list of defects shall provide
sufficient detail for the respondent to ensure that all potentially
responsible subcontractors and design professionals are provided with
notice of the dispute resolution process. If not already completed
prior to the case management meeting, the Notice of Commencement of
Legal Proceedings shall be served by the respondent on all additional
subcontractors and design professionals whose potential
responsibility appears on the face of the more detailed list of
defects within seven days of receipt of the more detailed list. The
respondent shall serve a copy of the case management statement,
including the name, address, and telephone number of the dispute
resolution facilitator, to all the potentially responsible
subcontractors and design professionals at the same time.
   (3) Nonintrusive visual inspection of the project by the
respondent, subcontractors, and design professionals.
   (4) Invasive testing conducted by the association, if the
association deems appropriate. All parties may observe and photograph
any testing conducted by the association pursuant to this paragraph,
but may not take samples or direct testing unless, by mutual
agreement, costs of testing are shared by the parties.
   (5) Provision by the association of a comprehensive demand which
provides sufficient detail for the parties to engage in meaningful
dispute resolution as contemplated under this section.
   (6) Invasive testing conducted by the respondent, subcontractors,
and design professionals, if they deem appropriate.
   (7) Allowance for modification of the demand by the association if
new issues arise during the testing conducted by the respondent,
subcontractor, or design professionals.
   (8) Facilitated dispute resolution of the claim, with all parties,
including peripheral parties, as appropriate, and insurers, if any,
present and having settlement authority. The dispute resolution
facilitators shall endeavor to set specific times for the attendance
of specific parties at dispute resolution sessions. If the dispute
resolution facilitator does not set specific times for the attendance
of parties at dispute resolution sessions, the dispute resolution
facilitator shall permit those parties to participate in dispute
resolution sessions by telephone.
   (i) In addition to the foregoing elements of the case management
statement described in subdivision (h), upon mutual agreement of the
parties, the dispute resolution facilitator may include any or all of
the following elements in a case management statement: the exchange
of consultant or expert photographs; expert presentations; expert
meetings; or any other mechanism deemed appropriate by the parties in
the interest of resolving the dispute.
   (j) The dispute resolution facilitator, with the guidance of the
parties, shall at the time the case management statement is
established, set deadlines for the occurrence of each event set forth
in the case management statement, taking into account such factors
as the size and complexity of the case, and the requirement of this
section that this dispute resolution process not exceed 180 days
absent agreement of the parties to an extension of time.
   (k) (1) (A) At a time to be determined by the dispute resolution
facilitator, the respondent may submit to the association all of the
following:
   (i) A request to meet with the board to discuss a written
settlement offer.
   (ii) A written settlement offer, and a concise explanation of the
reasons for the terms of the offer.
   (iii) A statement that the respondent has access to sufficient
funds to satisfy the conditions of the settlement offer.
   (iv) A summary of the results of testing conducted for the
purposes of determining the nature and extent of defects, if this
testing has been conducted, unless the association provided the
respondent with actual test results.
   (B) If the respondent does not timely submit the items required by
this subdivision, the association shall be relieved of any further
obligation to satisfy the requirements of this subdivision only.
   (C) No less than 10 days after the respondent submits the items
required by this paragraph, the respondent and the board shall meet
and confer about the respondent's settlement offer.
   (D) If the board rejects a settlement offer presented at the
meeting held pursuant to this subdivision, the board shall hold a
meeting open to each member of the association. The meeting shall be
held no less than 15 days before the association commences an action
for damages against the respondent.
   (E) No less than 15 days before this meeting is held, a written
notice shall be sent to each member of the association specifying all
of the following:
   (i) That a meeting will take place to discuss problems that may
lead to the filing of a civil action, and the time and place of this
meeting.
   (ii) The options that are available to address the problems,
including the filing of a civil action and a statement of the various
alternatives that are reasonably foreseeable by the association to
pay for those options and whether these payments are expected to be
made from the use of reserve account funds or the imposition of
regular or special assessments, or emergency assessment increases.
   (iii) The complete text of any written settlement offer, and a
concise explanation of the specific reasons for the terms of the
offer submitted to the board at the meeting held pursuant to
subdivision (d) that was received from the respondent.
   (F) The respondent shall pay all expenses attributable to sending
the settlement offer to all members of the association. The
respondent shall also pay the expense of holding the meeting, not to
exceed three dollars ($3) per association member.
   (G) The discussions at the meeting and the contents of the notice
and the items required to be specified in the notice pursuant to
paragraph (E) are privileged communications and are not admissible in
evidence in any civil action, unless the association consents to
their admission.
   (H) No more than one request to meet and discuss a written
settlement offer may be made by the respondent pursuant to this
subdivision.
   (l) All defect lists and demands, communications, negotiations,
and settlement offers made in the course of the prelitigation dispute
resolution process provided by this section shall be inadmissible
pursuant to Sections 1119 to 1124, inclusive, of the Evidence Code
and all applicable decisional law. This inadmissibility shall not be
extended to any other documents or communications which would not
otherwise be deemed inadmissible.
   (m) Any subcontractor or design professional may, at any time,
petition the dispute resolution facilitator to release that party
from the dispute resolution process upon a showing that the
subcontractor or design professional is not potentially responsible
for the defect claims at issue. The petition shall be served
contemporaneously on all other parties, who shall have 15 days from
the date of service to object. If a subcontractor or design
professional is released, and it later appears to the dispute
resolution facilitator that it may be a responsible party in light of
the current defect list or demand, the respondent shall renotice the
party as provided by paragraph (2) of subdivision (e), provide a
copy of the current defect list or demand, and direct the party to
attend a dispute resolution session at a stated time and location. A
party who subsequently appears after having been released by the
dispute resolution facilitator shall not be prejudiced by its absence
from the dispute resolution process as the result of having been
previously released by the dispute resolution facilitator.
   (n) Any party may, at any time, petition the superior court in the
county where the project is located, upon a showing of good cause,
and the court may issue an order, for any of the following, or for
appointment of a referee to resolve a dispute regarding any of the
following:
   (1) To take a deposition of any party to the process, or subpoena
a third party for deposition or production of documents, which is
necessary to further prelitigation resolution of the dispute.
   (2) To resolve any disputes concerning inspection, testing,
production of documents, or exchange of information provided for
under this section.
   (3) To resolve any disagreements relative to the timing or
contents of the case management statement.
   (4) To authorize internal extensions of timeframes set forth in
the case management statement.
   (5) To seek a determination that a settlement is a good faith
settlement pursuant to Section 877.6 of the Code of Civil Procedure
and all related authorities. The page limitations and meet and confer
requirements specified in this section shall not apply to these
motions, which may be made on shortened notice. Instead, these
motions shall be subject to other applicable state law, rules of
court, and local rules. A determination made by the court pursuant to
this motion shall have the same force and effect as the
determination of a postfiling application or motion for good faith
settlement.
   (6) To ensure compliance, on shortened notice, with the obligation
to provide a Statement of Insurance pursuant to paragraph (2) of
subdivision (e).
   (7) For any other relief appropriate to the enforcement of the
provisions of this section, including the ordering of parties, and
insurers, if any, to the dispute resolution process with settlement
authority.
   (o) (1) A petition filed pursuant to subdivision (n) shall be
filed in the superior court in the county in which the project is
located. The court shall hear and decide the petition within 10 days
after filing. The petitioning party shall serve the petition on all
parties, including the date, time, and location of the hearing no
later than five business days prior to the hearing. Any responsive
papers shall be filed and served no later than three business days
prior to the hearing. Any petition or response filed under this
section shall be no more than three pages in length.
   (2) All parties shall meet with the dispute resolution
facilitator, if one has been appointed and confer in person or by the
telephone prior to the filing of that petition to attempt to resolve
the matter without requiring court intervention.
   (p) As used in this section:
   (1) "Association" shall have the same meaning as defined in
Section 4080.
   (2) "Builder" means the declarant, as defined in Section 4130.
   (3) "Common interest development" shall have the same meaning as
in Section 4100, except that it shall not include developments or
projects with less than 20 units.
   (q) The alternative dispute resolution process and procedures
described in this section shall have no application or legal effect
other than as described in this section.
   (r) This section shall become operative on July 1, 2002, however
it shall not apply to any pending suit or claim for which notice has
previously been given.
   (s) This section shall become inoperative on July 1, 2017, and, as
of January 1, 2018, is repealed, unless a later enacted statute,
that becomes operative on or before January 1, 2018, deletes or
extends the dates on which it becomes inoperative and is repealed.
   6100.  (a) As soon as is reasonably practicable after the
association and the builder have entered into a settlement agreement
or the matter has otherwise been resolved regarding alleged defects
in the common areas, alleged defects in the separate interests that
the association is obligated to maintain or repair, or alleged
defects in the separate interests that arise out of, or are
integrally related to, defects in the common areas or separate
interests that the association is obligated to maintain or repair,
where the defects giving rise to the dispute have not been corrected,
the association shall, in writing, inform only the members of the
association whose names appear on the records of the association that
the matter has been resolved, by settlement agreement or other
means, and disclose all of the following:
   (1) A general description of the defects that the association
reasonably believes, as of the date of the disclosure, will be
corrected or replaced.
   (2) A good faith estimate, as of the date of the disclosure, of
when the association believes that the defects identified in
paragraph (1) will be corrected or replaced. The association may
state that the estimate may be modified.
   (3) The status of the claims for defects in the design or
construction of the common interest development that were not
identified in paragraph (1) whether expressed in a preliminary list
of defects sent to each member of the association or otherwise
claimed and disclosed to the members of the association.
   (b) Nothing in this section shall preclude an association from
amending the disclosures required pursuant to subdivision (a), and
any amendments shall supersede any prior conflicting information
disclosed to the members of the association and shall retain any
privilege attached to the original disclosures.
   (c) Disclosure of the information required pursuant to subdivision
(a) or authorized by subdivision (b) shall not waive any privilege
attached to the information.
   (d) For the purposes of the disclosures required pursuant to this
section, the term "defects" shall be defined to include any damage
resulting from defects.
   6150.  (a) Not later than 30 days prior to the filing of any civil
action by the association against the declarant or other developer
of a common interest development for alleged damage to the common
areas, alleged damage to the separate interests that the association
is obligated to maintain or repair, or alleged damage to the separate
interests that arises out of, or is integrally related to, damage to
the common areas or separate interests that the association is
obligated to maintain or repair, the board shall provide a written
notice to each member of the association who appears on the records
of the association when the notice is provided. This notice shall
specify all of the following:
   (1) That a meeting will take place to discuss problems that may
lead to the filing of a civil action.
   (2) The options, including civil actions, that are available to
address the problems.
   (3) The time and place of this meeting.
   (b) Notwithstanding subdivision (a), if the association has reason
to believe that the applicable statute of limitations will expire
before the association files the civil action, the association may
give the notice, as described above, within 30 days after the filing
of the action.
  SEC. 3.  This act shall become operative on January 1, 2014.