BILL ANALYSIS Ó
AB 805
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CONCURRENCE IN SENATE AMENDMENTS
AB 805 (Torres)
As Amended June 11, 2012
Majority vote
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|ASSEMBLY: |73-0 |(May 2, 2011) |SENATE: |38-0 |(July 2, 2012) |
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Original Committee Reference: H. & C.D.
SUMMARY : Revises and recasts the Davis-Stirling Common Interest
Development (CID) Act (Act) which governs common interest
developments.
The Senate amendments :
1)Make technical changes.
2)Incorporate changes to the Act made by bills passed in 2011.
AS PASSED BY THE ASSEMBLY , this bill:
1)Grouped related provisions together in a logical order.
2)Clarified sections that are unclear or confusing.
3)Divided sections that are long into more readable, shorter
sections.
4)Added a requirement that a homeowners association (HOA)
provide members with the text of a proposed amendment to the
governing documents before holding an election to approve the
proposed amendment.
5)Permitted a successor-in-interest, to the original signator of
a recorded declaration, to add material to the declaration as
that person deems appropriate.
6)Harmonized the procedure for amending a declaration to allow
for a person other than a member of the HOA to approve an
amendment (i.e., a community manager) and clarified that a
declaration can only be amended through the procedure provided
by the declaration.
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7)Required in a case in which a court determines the validity of
an election to approve the amendment of a declaration, the
court must find that the election complied with the provisions
of the Act and any other applicable law, in addition to the
governing documents.
8)Clarified that an amendment to a condominium plan may be
executed by the current specified interests in the property at
the time of the amendment.
9)Replaced outdated references to the Corporations Code with
equivalent provisions in the Act.
10)Clarified that a non-owner occupant has the same protections
as an owner to have physical access to their separate
interest.
11)Combined all of the provisions that limit a HOA's ability to
restrict certain specified uses of a separate interest into
one section and added cross references to other similar
protections that are outside of the Act.
12)Generalized the protections provided to owners of
condominiums with disabilities to all types of CIDs.
13)Added some minor exceptions to the law that requires the
approval of at least 67% of the HOA to grant an individual
member a right of exclusive use of the part of the common
area.
14)Required all HOAs to provide an advance notice of a board
meeting, including an agenda, regardless of whether the
governing documents provide for a fixed meeting place and
time.
15)Applied the rules governing board meetings to any meeting in
which there are enough board members to establish a quorum.
16)Deleted the requirement to post a notice of a board meeting
in a prominent area and instead required "general delivery" as
defined, of the notice which would include mailed notice if
requested by a member.
17)Clarified the requirements for board members to disqualify
themselves from decisions in which they may have
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self-interest.
18)Allowed an HOA to extend the standardized procedures for
elections to those for which it is not applied to now.
19)Clarified that election ballots must be retained for 12
months by the HOA in case of a challenge.
20)Added governing documents to the list of HOA records that a
member can request to inspect.
21)Organized all annual reporting requirements of a CID in one
section and required the HOA to distribute the documents in
the form of three annual reports.
22)Standardized delivery requirements for notices.
23)Provided that, where there are inconsistencies in certain
cases, the Act has supremacy over the Corporations Code.
24)Required that an HOA include a schedule of monetary penalties
for the violation of governing documents in the policy
statement that is delivered to members annually.
25)Required an HOA to notify and give a member an opportunity to
respond if it plans to impose a monetary charge to reimburse
the HOA for costs incurred in repairing damage to a common
area or facility caused by the member or the member's guest or
tenant.
26)Allowed the court to determine whether a refusal to
participate in alternative dispute resolution (ADR) was
reasonable in any action in which fees and costs may be
awarded, not just an action to enforce the HOA's governing
documents.
27)Exempted entirely commercial and industrial CIDs from certain
provisions of the Act including elections procedures and
certain assessment setting provisions.
28)Deleted erroneous cross-references.
29)Stated that the bill becomes operative January 1, 2014.
FISCAL EFFECT : None
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COMMENTS :
Background: There are over 49,000 CIDs in the state that range
in size from three to 27,000 units. CIDs make up over 4.9
million housing units which represents approximately one quarter
of the state's housing stock. CIDs include condominiums,
community apartment projects, and housing cooperatives and
planned unit developments. They are characterized by a separate
ownership of dwelling space coupled with an undivided interest
in a common property, restricted by covenants and conditions
that limit the use of common area, and the separate ownership
interests and the management of common property and enforcement
of restrictions by a HOA. CIDs are governed by the Act as well
as the governing documents of the association including bylaws,
declaration, and operating rules. CIDs are run by volunteer
board of directors (boards) who may have little or no experience
managing real property or governing a nonprofit association and
must interpret the complex laws regulating CIDs. Boards must
not only interpret the law but enforce the restrictions and
rules imposed by the governing documents and state law.
In addition to interpreting a HOA's individual governing
documents, boards and homeowners must also follow the state law
governing CIDs found in the Act. The governing law has two main
sources, the Corporations Code and the Act. If a HOA is
incorporated it is typically governed by the Nonprofit Mutual
Benefit Corporation Law. An unincorporated homeowner
association is subject to both the general law and specific
provisions of the Nonprofit Mutual Benefit Corporations Code.
Although some medium and large CIDS employ community managers
who are responsible for handling the day-to-day operations of
the HOA, many smaller CIDs are self-managed. According to the
2005 California Community Associations Statistics Report
prepared by Levy & Company, CPAs more than two-thirds of CIDs
are 50 units or less.
Purpose of the bill: After four years of study and public
input, the California Law Revision Commission (Commission) has
recommended that the Act be repealed and replaced with a new
statute which continues the substance of existing law in a more
user-friendly form. This bill would repeal the Act and replace
it with a new statute that is intended to be more logical,
organized and easier for homeowners and volunteer board members
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to navigate.
According to the Commission, the new statute would provide
guidance on two fundamental aspects of CID governance that are
not clearly addressed in the existing statute: The general
supremacy of the law over a CID's governing documents and the
relative authority of different types of governing documents.
This guidance will help to avoid disputes that might arise if a
HOA's governing documents are inconsistent with the law or with
each other.
The revised version of the Act would be grouped in a logical
order and would make relevant law easier to find and provide a
logical approach to making future changes to law. Additional
benefits include: creating consistent terminology throughout,
restating excessively long and complex sections into simpler and
shorter sections, standardizing some governing procedures and
finally, making some substantive improvements.
Minor substantive changes: Although for the most part, this
bill is technical and nonsubstantive, it does make some minor
substantive changes to CID law. The minor substantive changes
represent areas of existing law where the Commission identified
flaws that with minor changes could make the Act more consistent
and clear.
Companion bill: This bill is double-jointed with AB 806
(Torres). AB 806 deletes the cross-references in existing law
to the existing code sections in the Act and replaces them with
the new code sections in AB 805.
Analysis Prepared by : Lisa Engel /H.&C.D. /(916) 319-2085
FN: 0004360