BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Noreen Evans, Chair
2011-2012 Regular Session
AB 805 (Torres)
As Amended June 11, 2012
Hearing Date: June 19, 2012
Fiscal: No
Urgency: No
BCP:rm
SUBJECT
Common Interest Developments
DESCRIPTION
This bill would revise and recast the Davis-Stirling Common
Interest Development Act, and make minor substantive changes
relating to: (1) governing documents; (2) property use,
ownership, and transfer; (3) board of directors; (4) member
elections; (5) records and notices; (6) assessments; and (7)
enforcement and dispute resolution.
BACKGROUND
In California, common interest developments (CIDs) are governed
by the Davis-Stirling Common Interest Development Act
(Davis-Stirling Act). Owners of separate property in CIDs have
an undivided interest in the common property of the development
and are subject to the CIDs covenants, conditions, and
restrictions. CIDs are also governed by a homeowners
association, which is run by volunteer directors that may or may
not have prior experience managing an association. The Court of
Appeal, Fourth Appellate District, previously observed that:
Ýt]he homeowners associations function almost "as a second
municipal government, regulating many aspects of Ýthe
homeowners'] daily lives." "ÝU]pon analysis of the
association's functions, one clearly sees the association as
a quasi-government entity paralleling in almost every case
the powers, duties, and responsibilities of a municipal
government. As a 'mini-government,' the association
provides to its members, in almost every case, utility
(more)
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services, road maintenance, street and common area lighting,
and refuse removal. In many cases, it also provides security
services and various forms of communication within the
community. There is, moreover, a clear analogy to the
municipal police and public safety functions. . . ." In
short, homeowners associations, via their enforcement of the
CC&R's, provide many beneficial and desirable services that
permit a common interest development to flourish. Villa
Milano Homeowners Ass'n v. Il Davorge (2000) 84 Cal.App.4th
819, 836 (citations omitted).
In response to concerns that the Davis-Stirling Act is not well
organized or easy to use, the California Law Revision Commission
(CLRC) recommended that the existing Davis-Stirling Act be
repealed and replaced with a revised version that would continue
the substance of existing law in a more logical and
user-friendly form. CLRC's original recommendation for
recodification was introduced in 2008, but was held in the
Senate Transportation and Housing Committee. The CLRC revisited
the issue and formulated a subsequent recommendation, which was
introduced in this bill and AB 806 (Torres, 2012).
Specifically, this bill would revise and recast the
Davis-Stirling Act and make noncontroversial substantive
improvements to its text.
CHANGES TO EXISTING LAW
Existing law , the Davis-Stirling Common Interest Development
Act, establishes the rules and regulations governing the
operation of a common interest development (CID) and the
respective rights and duties of a homeowners association and its
members. (Civ. Code Sec. 1350 et seq.)
This bill , on and after January 1, 2014, would comprehensively
reorganize and recodify the Davis-Stirling Common Interest
Development Act. That reorganization would group related
provisions together, clarify certain sections without changing
substantive effect, divide longer sections into shorter
sections, and standardize terminology.
This bill would also make substantive changes relating to: (1)
governing documents; (2) property use, ownership, and transfer;
(3) board of directors; (4) member elections; (5) records and
notices; (6) assessments; and (7) enforcement and dispute
resolution. (See Comment 3 for brief summary.)
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COMMENT
1. Stated need for the bill
According to the author:
There are a number of problems with the organization and
drafting of the existing Davis-Stirling Common Interest
Development Act Ý(Davis-Stirling Act)]: (1) Some provisions
on similar topics are not in close proximity to each other,
making it difficult to find all of the law that governs a
particular topic. (2) Some sections are overly long and
complex. (3) Some sections are difficult to understand,
because of their phrasing. (4) Inconsistencies in the
terminology used in the existing statute may lead to
misunderstandings.
The author further notes that this bill would group related
provisions together, revise sections for clarity, divide longer
sections into short sections, standardize terminology, and make
various noncontroversial substantive improvements.
2. History of proposed revision
This bill seeks to revise and recast the Davis-Stirling Act
while making noncontroversial substantive improvements where
appropriate. Staff notes that this bill has been the subject of
extensive public vetting since the California Law Revision
Commission's (CLRC) pre-print recommendation was issued in
December of 2007, and has no known opposition. The original
pre-print recommendation was introduced in the form of AB 1921
(Saldana, 2008) on February 8, 2008, but was held in the Senate
Transportation & Housing Committee. The author notes:
ÝAB 1921 was held] because policy changes were deemed Ýtoo]
substantial by some opponents. The CLRC took this message
back to the Commission and revised the approach to reduce
the number of policy changes made in the recodification. AB
805 and AB 806 are the result of that retooling.
The CLRC issued their final recommendation for the "Statutory
Clarification and Simplification of CID Law" in February of
2011, and, this bill was introduced on February 17, 2011.
Thus, this bill reflects the culmination of over six years of
review by the CLRC, public hearings, and extensive discussions
with stakeholders.
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3. Brief summary of proposed changes
Considering the length of the proposed revision, the following
brief summaries provide an overview of how the CLRC addressed
the issues found during the review of the Davis-Stirling Act.
With respect to general issues found throughout the
Davis-Stirling Act, the CLRC's recommendation notes that the
following organizational and drafting improvements were made:
provisions are grouped by subject matter, in a "coherent and
logical order;"
longer sections were divided into shorter, simpler sections;
provisions were revised to clarify meaning without changing
substantive effect; and
terminology was standardized, to the extent practical.
The CLRC notes that the proposed revision would make a number
of minor substantive improvements, but that "Ýb]ecause of the
magnitude and mostly technical character of the proposed law,
the ÝCLRC] adopted a conservative approach in deciding which
substantive reforms would be included. If a possible
substantive change was found to be significantly
controversial, it was not included. Substantive changes that
were not included in the proposed law were noted by the ÝCLRC]
for possible future study." Accordingly, the substantive
changes made by this bill include the following:
providing guidance on the supremacy of the law over a
CID's governing documents, and the relative authority of
different types of governing documents;
requiring an association to provide members with the
text of a proposed amendment to a governing document when
holding an election to approve that amendment;
permitting a successor-in-interest to the "original
signator" of the CID's recorded declaration to add
material to the declaration;
creating a general procedure for amending the
declaration;
in order for a court to approve an amendment of a
declaration under specified circumstances, require the
court to additionally find that the election was
conducted in accordance with the election provisions of
the Davis-Stirling Act;
clarifying 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
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plan;
clarifying that an association may not prohibit
physical access to an occupant of a separate interest
occupied by that person;
applying the existing provision that guarantees the
right of an owner in a condominium project to make
changes to his or her unit to any type of CID;
removing exception that allows an association to not
give advance notice of a board meeting if the time and
place is fixed in the government documents;
modifying the definition of "board meeting" to require
the presence of a number of directors sufficient to
establish a quorum;
providing greater flexibility in posting board meeting
notices;
prohibiting a self-interested director from voting on
specified types of matters;
requiring the election inspector to retain custody of
ballots for 12 months;
clarifying that governing documents are association
records, thereby, allowing members to inspect those
documents;
reorganizing the budget and other financial
information that a CID must distribute to members into
three annual reports, based on subject matter;
clarifying that the rule concerning application of
payments for assessments applies regardless of whether or
when the member received a notice of delinquency;
requiring an association to release a lien, and
reverse all costs, fees, and interest associated with the
error, whenever the association has recorded an easement
lien in error;
requiring a schedule of monetary penalties to be
included in the policy statement that is delivered to
members annually;
requiring 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; and
broadening a court's ability to weigh a party's
refusal to participate in alternative dispute resolution
when determining awards of fees and costs.
4. Logistics
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Staff notes that the revision of an Davis-Stirling Act that
applies to over 49,000 CIDs in California poses some logistical
hurdles to ensure a smooth transition to the new, simplified,
and arguably improved text. Regarding those challenges, the
CLRC's recommendation observes:
Because the proposed law would comprehensively reorganize
the Davis-Stirling Common Interest Development Act, all of
the existing code section numbers would be changed. Each
provision continued in the proposed law would have a new
number. This will impose some transitional costs on those
who are already familiar with the existing numbering scheme.
It will also require that court decisions and other
documents referencing the former section numbers be
correlated to the new numbers. These transitional costs will
fall most heavily on CID professionals, such as property
managers and attorneys, who have expertise with the current
statuteÝs]. Most homeowners are not experts in the
Davis-Stirling Common Interest Development Act and so will
not be directly affected by these transitional costs.
In order to facilitate the transition to the new Davis-Stirling
Act, the CLRC's recommendation includes several features to
"ease the transition to the reorganized statute." Those
features include a one-year deferred operation date to provide
affected parties with time for adjustment to the new law, and
include a provision to ensure that substantive changes apply
prospectively only so as not to invalidate prior acts.
Furthermore, to provide clarity as to the intent of each
section, CLRC's final recommendation includes a "Comment" for
every section of this bill, and includes a "disposition table"
that shows every provision of the Davis-Stirling Act and the new
provision that would continue it.
Staff also notes that since this bill would sunset the existing
Davis-Stirling Act on January, 1, 2014, the author and sponsor
should continue to work with all pending bills that propose
modifications to the current Davis-Stirling Act to avoid
chaptering issues.
Support : Executive Council of Homeowners
Opposition : None Known
HISTORY
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Source : California Law Revision Commission
Related Pending Legislation : AB 806 (Torres) See Background.
Prior Legislation : AB 1921 (Saldana) See Comment 2.
Prior Vote :
Assembly Housing & Community Development Committee (Ayes 7, Noes
0)
Assembly Judiciary Committee (Ayes 9, Noes 0)
Assembly Floor (Ayes 73, Noes 0)
Senate Transportation & Housing Committee (Ayes 9, Noes 0)
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