BILL ANALYSIS                                                                                                                                                                                                    



                                                                  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          Development Act be repealed and replaced with a new statute that 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








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          Analysis Prepared by  :    Thomas Clark / JUD. / (916) 319-2334