BILL ANALYSIS Ó
AB 806
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 806 (Torres)
As Amended January 4, 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 : Makes conforming changes to AB 805 (Torres) to delete
the cross-references in existing law to the existing code
sections in the Davis-Stirling Common Interest Development Act
(the Act) and replace them with the new code sections in AB 805.
The Senate amendments make technical changes.
AS PASSED BY THE ASSEMBLY , this bill:
1)Made conforming changes to AB 805 (Torres) and deleted the
cross-references in existing law to the existing code sections
in the Act and replaced them with the new code sections in AB
805.
2)Specified that this bill is contingent upon enactment of AB
805 (Torres).
3)Stated that the bill became operative January 1, 2014.
FISCAL EFFECT : None
COMMENTS : AB 805 is the companion bill to AB 806 (Torres). AB
805 revises and recasts the Act which governs common interest
developments (CIDs) to make it more organized and user-friendly
for CID homeowners. AB 806 deletes all of the existing
cross-references to the Act in other code sections and replaces
them with the new code sections created by AB 805.
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
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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 homeowners association (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.
Under the current scheme, a CID homeowner must read both sources
of law together and resolve any inconsistencies to determine
what law applies in a particular situation.
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. AB 805 would repeal the Davis-Stirling Act
and replace it with a new statute that is intended to be more
logical, organized and easier for homeowners and volunteer board
members to navigate. This bill is the clean-up bill for AB 805
(Torres) and is contingent upon its enactment.
According to the Commission, the new statute would provide
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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.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0004359