BILL ANALYSIS                                                                                                                                                                                                    ”



                                                                      



           ------------------------------------------------------------ 
          |SENATE RULES COMMITTEE            |                   AB 805|
          |Office of Senate Floor Analyses   |                         |
          |1020 N Street, Suite 524          |                         |
          |(916) 651-1520         Fax: (916) |                         |
          |327-4478                          |                         |
           ------------------------------------------------------------ 
           
                                         
                                 THIRD READING


          Bill No:  AB 805
          Author:   Torres (D)
          Amended:  6/11/12 in Senate
          Vote:     21

           
           SENATE TRANSPORTATION & HOUSING COMMITTEE :  9-0, 1/10/12
          AYES:  DeSaulnier, Gaines, Harman, Huff, Kehoe, Lowenthal, 
            Pavley, Rubio, Simitian

           SENATE JUDICIARY COMMITTEE  :  5-0, 6/19/12
          AYES:  Evans, Harman, Blakeslee, Corbett, Leno

           ASSEMBLY FLOOR  :  73-0, 5/2/11 (Consent) - See last page for 
            vote


           SUBJECT  :    Common interest developments

           SOURCE  :     California Law Revision Commission


           DIGEST  :    This bill revises and recasts the Davis-Stirling 
          Common Interest Development Act (Davis-Stirling Act), and 
          makes 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.  

           ANALYSIS  :    Existing law, the Davis-Stirling Act, 
          establishes the rules and regulations governing the 
          operation of a common interest development (CID) and the 
                                                           CONTINUED





                                                                AB 805
                                                                Page 
          2

          respective rights and duties of a homeowners association 
          and its members.  (Civil (CIV) Code Section 1350 et seq.)

          This bill, on and after January 1, 2014, will 
          comprehensively reorganize and recodify the Davis-Stirling 
          Act.  That reorganization will group related provisions 
          together, clarify certain sections without changing 
          substantive effect, divide longer sections into shorter 
          sections, and standardize terminology.

          This bill also makes 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, CIDs are governed by the Davis-Stirling 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:

            ›t]he homeowners associations function almost "as a 
            second municipal government, regulating many aspects of 
            ›the homeowners'] daily lives."  "›U]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 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 

                                                           CONTINUED





                                                                AB 805
                                                                Page 
          3

            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 
          revises and recasts the Davis-Stirling Act and makes 
          noncontroversial substantive improvements to its text.

           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.

           Terminology was standardized, to the extent practical.

          The CLRC notes that the proposed revision would make a 
          number of minor substantive improvements, but that 
          "›b]ecause of the magnitude and mostly technical character 
          of the proposed law, the ›CLRC] adopted a conservative 
          approach in deciding which substantive reforms would be 

                                                           CONTINUED





                                                                AB 805
                                                                Page 
          4

          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 ›CLRC] 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 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.

                                                           CONTINUED





                                                                AB 805
                                                                Page 
          5


           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.

                                                           CONTINUED





                                                                AB 805
                                                                Page 
          6



           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No   
          Local:  No

           SUPPORT  :   (Verified  6/21/12)

          California Law Revision Commission (source)
          Executive Council of Homeowners


           ASSEMBLY FLOOR  :  73-0, 5/2/11
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, 
            Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, 
            Brownley, Buchanan, Butler, Campos, Carter, Cedillo, 
            Chesbro, Conway, Cook, Davis, Dickinson, Donnelly, Eng, 
            Feuer, Fletcher, Fong, Furutani, Garrick, Gatto, Gordon, 
            Grove, Hagman, Halderman, Hall, Harkey, Hayashi, Hill, 
            Huber, Hueso, Huffman, Jeffries, Jones, Knight, Lara, 
            Logue, Bonnie Lowenthal, Ma, Mansoor, Miller, Mitchell, 
            Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan, 
            Perea, V. Manuel Pťrez, Portantino, Silva, Skinner, 
            Smyth, Solorio, Swanson, Torres, Valadao, Wagner, 
            Wieckowski, Williams, Yamada, John A. Pťrez
          NO VOTE RECORDED:  Charles Calderon, Fuentes, Galgiani, 
            Gorell, Roger HernŠndez, Mendoza, Vacancy


          RJG:d  6/21/12   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

                                ****  END  ****
          











                                                           CONTINUED