BILL ANALYSIS Ó
AB 805
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Date of Hearing: April 26, 2011
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 805 (Torres) - As Introduced: February 17, 2011
PROPOSED CONSENT
SUBJECT : Common Interest Developments: Reorganization of
Statute
KEY ISSUE : Should the existing Davis-Stirling Common Interest
Development Act be repealed and replaced with a new statute that
would continue the substance of existing law in A more logical
and user-friendly form?
FISCAL EFFECT : As currently in print this bill is keyed
non-fiscal.
SYNOPSIS
This bill reflects the fruit of four-year's of public input and
extensive study on the part of the California Law Revision
Commission (CLRC) to revise and recast the state's cumbersome
and often confusing statutory provisions relating to the
regulation of a common interest development (CID) and the
respective rights and duties of a home owner's association (HOA)
and its members. Although the Davis-Stirling Act (Civil Code
Sections 1350-1378) is the primary statutory framework for
regulating CIDs, other relevant provisions are scattered in the
Corporations Code and other sections of the Civil Code. The
CLRC found that frequent amendments to these various provisions
created a cumbersome statutory framework that was difficult to
use and, in some cases, internally inconsistent. This bill
reorganizes and regroups existing provisions into a single,
coherent, and more logically structured statute. To the extent
possible, CLRC attempted to accomplish this task by making as
few substantive changes as possible, but, perhaps inevitably in
an undertaking of this size, some of the changes are
substantive, yet seemingly non-controversial. This bill is
double-joined with AB 806 (Torres), a technical companion bill
that makes conforming changes in other codes so that
cross-references to the Davis-Stirling Act correspond to the new
section numbers. Both bills passed unanimously out of the
Assembly Housing and Community Development Committee. There is
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no known opposition to this bill.
SUMMARY : Reorganizes and recodifies the Davis-Stirling Common
Interest Development (CID) Act and makes minor substantive
changes in order to achieve internal consistency.
Specifically, this bill :
1)Regroups related provisions in a logical order within a common
Part of the Civil Code, divides longer sections into shorter,
more readable sections, and replaces outdated references to
other code sections.
2)Standardizes terminology and guidelines relating to notices,
recorded declarations, and governing documents.
3)Makes minor substantive changes, but only to the extent
necessary to bring clarity, consistency, and ease of use in
the following areas:
a) Authority of statutory law over inconsistent
provisions in CID governing documents and the relative
authority of different types of governing documents.
b) Procedures for amending declarations, condominium
plans, and operating rules.
c) Rules relating to access and use of common areas.
d) Rules relating to home owners' association (HOA)
board meetings and elections.
e) Procedures relating to delivery and disclosure of
documents to association members.
1)Creates a new requirement that the board of an HOA provide
members with an "annual policy statement," as defined, within
30 to 90 days before the end of its fiscal year.
2)Provides that the above provisions become operative on January
1, 2014.
EXISTING LAW establishes the rules and regulations governing the
operation of a CID and the respective rights and duties of an
HOA and its members. (Civil Code Sections 1350-1378.)
COMMENTS : Although a "common interest development" (CID) can
take a variety of forms - including condominiums, community
apartment projects, and planned, multi-unit developments - they
are, as legal entities, characterized by three common elements:
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(1) separate ownership of individual residential units coupled
with an undivided interest in common property; (2) covenants,
conditions, and restrictions that limit the use of both common
areas and separate interests; and (3) management of common
property and enforcement of restrictions by a home owners'
association (HOA).
According to the California Law Revision Commission (CLRC),
there are over 49,000 CIDs in California that together comprise
over 4.9 million total housing units, with CIDs ranging in size
from as few as three units to as many as 27,000 units. Since
1985, the rules and regulations governing CIDs have been
embodied in the Davis-Stirling Common Interest Development Act
(Civil Code Sections 1350-1378) and certain provisions of the
Corporations Code. However, since its original enactment, the
Act has been amended numerous times as representatives of
individual home owners, on the one hand, and HOA boards, on the
other, have repeatedly turned to the Legislature to resolve
specific conflicts and problems as they emerged in the course of
daily operations. According to CLRC, however, the accumulation
of isolated amendments has resulted in an often confusing
statutory scheme. "As changes are made to the law," CLRC noted
in its latest report and recommendation, "it is not always clear
where to add new provisions, which perpetuates the poor
organization of the law." (California Law Revision Commission,
Recommendation: Statutory Clarification and Simplification of
CID Law, February 2011, p. 2 fn. 8.) In order to address this
problem, CLRC has spent the past four years doing research,
gathering public input, and developing a comprehensive - and
more user-friendly - CID statutory framework. This bill is the
fruit of that labor.
Because of the variety of stakeholders and the sometimes
contentious relations between them, CLRC's task has not always
been easy. For example, in the 2007-2008 session, AB 1921
(Saldana) represented CLRC's first effort at comprehensive
reform. As with the present bill under consideration, that bill
too sought to reorganize the Davis-Stirling Act without making
substantive changes in existing law. However, some of the
changes - especially those that sought to bring uniformity to
potentially inconsistent provisions - were necessarily
substantive relative to one or the other inconsistent sections.
Although that bill passed out of this Committee and off the
Assembly Floor, it met its Waterloo in the Senate when a number
of attorneys who practiced in this area alleged that the bill
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made substantive changes and had not been adequately subjected
to public debate. Although the CLRC and the author of AB 1921
understandably denied the latter charge, the author decided not
to go forward with the bill and the CLRC went back to the
drawing board and once again sought public input from interested
parties. It appears that concerns raised against AB 1921 have
been resolved in this bill. The CLRC concedes that the present
revision includes a number of "minor substantive improvements,"
but these appear to be noncontroversial changes that mostly
attempt to correct inconsistencies or uncertainties in existing
law. (Id. at 6.)
Although all of the changes in this 107-page bill cannot be
usefully described in a short analysis, the changes can be
grouped into the following categories: (1) moving related
provisions into closer and more logical proximity and placing
all provisions within the same Part of the Civil Code; (2)
standardizing terminology; (3) clarifying the relative authority
statutory law, by-laws, and various governing documents; and (4)
making minor, non-controversial substantive changes when
necessary in order to achieve internal consistency and
procedural efficiency.
This bill is double-joined with AB 806 (Torres), which amends
other code sections and other parts of the Civil Code that
cross-reference the Davis-Stirling Act so that they will match
the section numbers created by this bill. AB 806 will be heard
simultaneously with this bill.
ARGUMENTS IN SUPPORT : According to the author and the CLRC,
this bill brings much needed logical order to the Davis-Stirling
Act, makes it much easier for board members and practitioners to
navigate, and clarifies the relative authority of statutory law
over a CIDs governing documents and the relative authority of
different types of governing documents.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
None on file
AB 805
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Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334