BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: ab 805
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: tORRES
VERSION: 1/4/12
Analysis by: Mark Stivers FISCAL: no
Hearing date: January 10, 2012
SUBJECT:
Reorganization of the Davis-Stirling Common Interest Development
Act
DESCRIPTION:
This bill moves, reorganizes, and harmonizes the provisions of
the Davis-Stirling Common Interest Development Act.
ANALYSIS:
A common interest development (CID) is a form of real estate in
which each homeowner has an exclusive interest in a unit or lot
and a shared or undivided interest in common area property.
Condominiums, planned unit developments, stock cooperatives,
community apartments, and many resident-owned mobilehome parks
all fall under the CID umbrella. A homeowner association board
elected by the members governs each CID. The covenants,
conditions, and restrictions (CC&Rs) that are recorded against
each individual unit bind the members of the CID. In addition,
associations adopt articles of incorporation, articles of
association, and bylaws for the governance of the CID as well as
operating rules that govern the behavior of members and their
guests. Collectively, these documents are referred to as the
governing documents of the association.
First enacted in 1985 and amended numerous times since, the
Davis-Stirling Common Interest Development Act governs CIDs.
The act contains provisions that, among other things, regulate
the creation and amendment of CIDs and their governing documents
as well as elections, meetings, assessments, collections, fiscal
matters, and dispute resolution.
This bill , operative January 1, 2014, moves, reorganizes, and
harmonizes the provisions of the Davis-Stirling Common Interest
Development Act. The bill largely keeps the substance and
language of the Davis-Stirling Act intact with only technical
AB 805 (TORRES) Page 2
changes. The bill, however, makes the following substantives
changes to the statute:
Provides guidance on two fundamental aspects of CID governance
that are not clearly addressed in current law: (1) The general
supremacy of the law over a CID's governing documents, and (2)
the relative authority of different types of governing
documents.
Requires that an association provide members with the text of
a proposed amendment of the governing documents when holding
an election to approve the proposed amendment.
Allows a declarant, as opposed to just the original signator
of the declaration, to amend the declaration.
Creates a single procedure for amending the declaration.
In order for a court to amend a declaration that has not
received the required member approval, requires the court to
find that the election was conducted in accordance with the
election provisions of the Davis-Stirling Act.
Clarifies that the persons who currently hold specified
interests in the property, as opposed to those who held such
positions at the creation of the CID, may execute an amendment
or revocation of the condominium plan.
Clarifies that an association may not prohibit access to an
occupant, in addition to the owner, of a separate interest to
his or her interest.
Applies existing law governing the grant of common area to an
individual member as exclusive use common area to situations
in which the common area is owned by the tenants in common,
not the association.
Additionally exempts from the requirement that 67% of members
approve a grant of common area to an individual member as
exclusive use common area the following:
A grant that is necessary to accommodate a disability.
A grant that is required by law.
The assignment of a parking space, storage unit, or
other amenity, if the declaration expressly provides for
its assignment.
Applies the CID open meeting law to any meeting of a quorum of
the board, as opposed to a meeting of a majority of members of
the board.
Allows greater flexibility in how a CID posts meeting notices.
Prohibits a CID board member or committee member from voting
on specified matters directly involving himself or herself.
Requires an inspector of elections to maintain election
AB 805 (TORRES) Page 3
ballots for 12 months, as opposed to nine months and then
turning them over to the association for an additional three
months.
Reorganizes the budget and other financial information that a
CID must distribute to members into three annual reports,
based on subject matter.
Standardizes notice delivery procedures.
Requires a CID that has recorded an assessment lien in error,
under any circumstances as opposed to only when discovered
through alternative dispute resolution, to release the lien
and reverse all costs, fees, and interest associated with the
error.
Requires a CID, when attempting to impose a monetary charge
for damage to common area and facilities caused by a member or
the member's guest or tenant, to provide the member with
notice of the alleged violation and an opportunity to be heard
by the board.
Broadens a court's ability to weigh a party's refusal to
participate in alternative dispute resolution when determining
awards of attorney's fees and costs to all actions in which
fees and costs may be awarded, as opposed just to actions to
enforce the governing documents.
Exempts non-residential CIDs from the board election
procedures of the Davis-Stirling Act and applies the
Corporations Code procedures.
Subjects non-residential CIDs to emergency assessment setting
provisions.
Establishes standards for a member to deliver a document to
the CID and for the CID to deliver documents and notices to
members.
COMMENTS:
1.Purpose of the bill . The author notes that volunteers who
govern CID associations may have little experience managing
real property or running a nonprofit entity. Most
associations are small and do not have the resources for
professional management or counsel. It is therefore important
that the law governing CIDs be as understandable and easy to
use as possible. Unfortunately, the existing Davis-Stirling
Act is not well organized or easy to understand. These
shortcomings can make it difficult for boardmembers and owners
to understand their rights and obligations under the law. The
author believes that this bill will make the law more
user-friendly and, therefore, more effective.
AB 805 (TORRES) Page 4
2.Reflects a Law Revision Commission recommendation . The
California Law Revision Commission, a state entity charged
with examining California law and recommending needed reforms,
is the sponsor of this bill. This particular recommendation
is the culmination of at least six years of review, public
hearings, and exhaustive stakeholder consultation. The
commission recommends that the Legislature repeal the existing
Davis-Stirling Act and replace it with a new statute that
continues the substance of existing law in a more logical and
user-friendly form. The commission believes that the new
statute will provide the following advantages for CID members
who must read, understand, and apply the law:
Related provisions are grouped together in a logical
order. This makes relevant law easier to find and use. It
also provides a clear organization to guide the future
development of the law.
Sections that are unclear or confusing are revised for
clarity, without any change to their substantive effect.
Sections that are excessively long are divided into
shorter sections.
To the extent practical, terminology is standardized.
Various noncontroversial substantive improvements are
made.
1.Legislative intent . The bill expressly states that courts
should consider the bill a restatement of the Davis-Stirling
Act and not a new enactment. This provision will help ensure
continuity in legal decisions interpreting and applying the
act and, as a result, enforcement of the law. In addition,
courts consider the extensive Law Revision Commission
materials leading up to this bill as evidence of legislative
intent and are obligated to give great weight to these
materials in construing statutes, which should further help
practitioners and the courts in implementing the revised law.
2.One year deferral . The bill defers its own operative date by
one year to January 1, 2014 in order to give affected persons
and organizations time to adjust to the new organization of
the law.
3.Double referral . The Rules Committee has referred this bill
to both this committee and the Judiciary Committee.
Assembly Votes:
Floor: 73-0
AB 805 (TORRES) Page 5
Judic: 9-0
H&CD: 7-0
RELATED LEGISLATION:
AB 806 (Torres) is a companion bill that makes cross reference
changes to other statutes to reflect the movement and
reorganization of the Davis-Stirling Act proposed in AB 805.
The committee will also hear AB 806 at the January 10 hearing.
POSITIONS: (Communicated to the committee before noon on
Wednesday, January
4, 2012)
SUPPORT: California Law Revision Commission (sponsor)
Community Association Institute
OPPOSED: None received.