BILL ANALYSIS Ó
AB 1838
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1838 (Charles Calderon)
As Amended August 24, 2012
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: |74-1 |(May 17, 2012) |SENATE: |31-0 |(August 29, |
| | | | | |2012) |
-----------------------------------------------------------------
Original Committee Reference: JUD.
SUMMARY : Makes several relatively minor changes to an existing
statute that requires certain documents to be provided to a
prospective purchaser of a separate interest within a Common
Interest Development (CID). Specifically, this bill :
1)Provides that an existing, required disclosure form that
identifies the fees that will be charged for the production of
certain documents relating to a homeowners association (HOA)
must be in at least 10-point font.
2)Prohibits an HOA from charging a cancellation fee for
providing certain documents if: a) the request was cancelled
in writing by the same party that placed the order and the
work has not been performed; or, b) the request was cancelled
in writing and the work that had been performed on the order
was compensated. Requires HOA to refund any documents fees
already paid if the request for the documents was canceled in
writing prior to work having been performed, as specified.
The Senate amendments:
1)Require an HOA to refund all document fees if the request for
documents was canceled in writing and work on the order had
not yet been performed, as specified.
2)Incorporates amendments proposed by Assembly Bill 2697 and
provides that this bill shall become operative if 1) both
bills are enacted and become effective on or before January 1,
2013, and 2) this bill is enacted after Assembly Bill 2697, in
which case Section 1 of this bill shall not become operative.
EXISTING LAW :
AB 1838
Page 2
1)Requires the seller of a separate interest in a CID to provide
specified documents to a prospective purchaser of that
interest.
2)Requires an HOA, upon written request, to provide the above
documents to the owner of a separate interest, or any other
recipient authorized by the owner, within 10 days of the
mailing or delivery of the request. Requires an HOA, also
upon request, to provide the owner or recipient with a
prescribed form that contains a written or electronic estimate
of the fees that will be assessed for providing the requested
documents.
3)Permits the HOA to collect a reasonable fee based upon the
HOA's actual costs for procuring, preparing, reproducing, and
delivering the requested documents. Specifies that no
additional fees may be charged by the HOA for the electronic
delivery of the documents requested.
4)Requires that any fees charged for the above documents shall
be distinguished from other fees, fines, or assessments billed
as part of the transfer or sales transaction. Specifies that
delivery of the required documents shall not be withheld for
any reason or subject to any condition except payment of the
fee.
5)Permits an HOA to contract with any person or entity to
facilitate compliance with the above requirements on behalf of
the HOA.
6)Prescribes a statutory billing disclosure form that lists the
charges for each of the required documents. Requires that
this form be provided, upon receipt of a written request, to
the requester or designated recipient in order to provide an
estimate of the fees that will be assessed for providing the
requested documents. Requires the HOA to also provide a
recipient of the documents with a completed form at the time
the required documents are delivered.
7)Prohibits an HOA from imposing any fee or assessment in
connection with the transfer of title that exceeds the
association's actual costs to change its records or that is
otherwise authorized by law.
8)Holds, pursuant to case law, that the above fee limitations do
AB 1838
Page 3
not constrain the amount that an HOA's managing agent can
charge for the procurement, preparation, or reproduction of
requested documents. (Berryman v. Merit Property Management,
Inc. (2007) 152 Cal. App. 4th 1544, 1552.)
AS PASSED BY THE ASSEMBLY , this bill was substantially similar
to the version approved by the Senate.
FISCAL EFFECT : None
COMMENTS : Under existing law, when an owner of a separate
interest in a CID wishes to sell that interest, he or she must
provide a prospective buyer with several documents (called "1368
documents" for the Civil Code section that requires them).
These documents cover everything from fees and regulations to
the overall governance of the CID. Existing law also requires
the HOA, upon request, to provide these documents to the
separate interest owner, or any other recipient authorized by
the owner (most likely the prospective buyer) within 10 days.
HOAs are permitted to charge a reasonable fee for these
documents based on the actual cost of procuring, preparing,
copying, or delivering the documents. Existing law also
requires that a prescribed disclosure form, setting forth the
charges for each required document, be provided to the
requesting party. Existing law also requires that the HOA
provide this form to the recipient designated by the owner at
the time that the required documents are delivered.
Last year, AB 771 (Butler), Chapter 206, Statutes of 2011,
primarily addressed a problem that is created when an HOA relies
upon a third party management company to provide and deliver the
required documents. Because the boards of HOAs are typically
filled by volunteer homeowners who may have little or no
management experience, HOAs often hire management companies to
handle certain administrative and operational duties, just as
they might hire third party contractors to perform maintenance
or landscaping work in common areas. However, when a third
party management company provides the required 1368 documents,
the question arose as to whether the management company is
subject to the same requirements and restrictions that the law
imposed on the HOA. To address this issue, last year's AB 771
did two things: 1) it expressly authorized an HOA to contract
with a third party to provide the documents; and, 2) it amended
the existing "actual cost" limitation to make it clear that
"actual cost" included the "procurement" and "delivery" of the
AB 1838
Page 4
document. In other words, the HOAs "actual cost" included what
it had to pay to the managing agent to procure and deliver the
documents. "Actual cost" was not limited to what it cost the
HOA to retrieve and photocopy the documents. In addition, to
these changes, AB 771 made a number of other changes that were
designed to make the document fees more transparent: it
required the HOA to provide the seller with a written or
electronic estimate of the fees that would be charged for the
documents, and it created a prescribed disclosure form detailing
the document fees.
This bill makes two minor changes to AB 771. First, as noted
above, that bill created a prescribed disclosure form that
detailed the charges for the required documents. This bill
would require that the document be printed in at least 10-point
font. Second, this bill would prohibit an HOA from charging
cancellation fees where a document request is cancelled if: 1)
the request is cancelled before any work is already performed;
or, 2) if work was performed but otherwise compensated. In
addition, this bill would require an HOA to refund any fees that
have been paid but where the work is not performed.
Analysis Prepared by : Thomas Clark / JUD. / (916) 319-2334
FN:
0005754