BILL NUMBER: SB 563	CHAPTERED
	BILL TEXT

	CHAPTER  257
	FILED WITH SECRETARY OF STATE  SEPTEMBER 6, 2011
	APPROVED BY GOVERNOR  SEPTEMBER 6, 2011
	PASSED THE SENATE  AUGUST 15, 2011
	PASSED THE ASSEMBLY  JULY 7, 2011
	AMENDED IN ASSEMBLY  JULY 5, 2011
	AMENDED IN SENATE  MAY 23, 2011
	AMENDED IN SENATE  MARCH 30, 2011

INTRODUCED BY   Committee on Transportation and Housing (Senators
DeSaulnier (Chair), Gaines, Harman, Huff, Kehoe, Lowenthal, Pavley,
Rubio, and Simitian)

                        FEBRUARY 17, 2011

   An act to amend Sections 1363, 1363.05, and 1365.2 of the Civil
Code, relating to common interest developments.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 563, Committee on Transportation and Housing. Common interest
developments: meetings.
   (1) Existing law provides for the creation of common interest
developments and requires that a common interest development be
managed by an association that may or may not be incorporated.
Existing law prescribes requirements for meetings of the board of
directors of the association that manages the development, and
requires notice of the time and place of a meeting of the board of
directors to be given to the members of the association at least 4
days prior to the meeting, except as specified.
   This bill would require notice for a meeting that will be held
solely in executive session to be given to members of the association
at least 2 days prior to the meeting, except as specified. The bill
would provide that, if a member consents, notice may be given to the
member electronically, and would also delete provisions that
generally allow the board of directors to consider any proper matter
at a meeting even if it has not been noticed as an action item for
the meeting.
   This bill would permit meetings of the board of directors of a
common interest development association to be conducted by
teleconference, as specified, by revising the definition of a meeting
for these purposes. The bill would require that a teleconference
meeting be conducted in a manner that protects the rights of members
of the association and otherwise complies with other requirements
governing common interest developments. The bill would also require
that the notice of a teleconference meeting identify at least one
physical location so that members of the association may attend and
would require that at least one member of the board of directors be
present at that location. The bill would prohibit the board of
directors from taking action on any item of business outside of a
meeting. The bill would prohibit the board from conducting a meeting
via a series of electronic transmissions, such as electronic mail,
except to conduct an emergency meeting, as specified. The bill would
establish a definition of an item of business.
   (2) Existing law requires an association to make available
specified association records, but excludes from those requirements
agendas for meetings of the board of directors that are held in
executive session.
   This bill would delete this exclusion, and would therefore require
an association to make available agendas for meetings held in
executive session.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 1363 of the Civil Code is amended to read:
   1363.  (a) A common interest development shall be managed by an
association that may be incorporated or unincorporated. The
association may be referred to as a community association.
   (b) An association, whether incorporated or unincorporated, shall
prepare a budget pursuant to Section 1365 and disclose information,
if requested, in accordance with Section 1368.
   (c) Unless the governing documents provide otherwise, and
regardless of whether the association is incorporated or
unincorporated, the association may exercise the powers granted to a
nonprofit mutual benefit corporation, as enumerated in Section 7140
of the Corporations Code, except that an unincorporated association
may not adopt or use a corporate seal or issue membership
certificates in accordance with Section 7313 of the Corporations
Code.
   The association, whether incorporated or unincorporated, may
exercise the powers granted to an association in this title.
   (d) Meetings of the membership of the association shall be
conducted in accordance with a recognized system of parliamentary
procedure or any parliamentary procedures the association may adopt.
   (e) Members of the association shall have access to association
records, including accounting books and records and membership lists,
in accordance with Article 3 (commencing with Section 8330) of
Chapter 13 of Part 3 of Division 2 of Title 1 of the Corporations
Code. The members of the association shall have the same access to
the operating rules of the association as they have to the accounting
books and records of the association.
   (f) If an association adopts or has adopted a policy imposing any
monetary penalty, including any fee, on any association member for a
violation of the governing documents or rules of the association,
including any monetary penalty relating to the activities of a guest
or invitee of a member, the board of directors shall adopt and
distribute to each member, by personal delivery or first-class mail,
a schedule of the monetary penalties that may be assessed for those
violations, which shall be in accordance with authorization for
member discipline contained in the governing documents. The board of
directors shall not be required to distribute any additional
schedules of monetary penalties unless there are changes from the
schedule that was adopted and distributed to the members pursuant to
this subdivision.
   (g) When the board of directors is to meet to consider or impose
discipline upon a member, the board shall notify the member in
writing, by either personal delivery or first-class mail, at least 10
days prior to the meeting. The notification shall contain, at a
minimum, the date, time, and place of the meeting, the nature of the
alleged violation for which a member may be disciplined, and a
statement that the member has a right to attend and may address the
board at the meeting. The board of directors of the association shall
meet in executive session if requested by the member being
disciplined.
   If the board imposes discipline on a member, the board shall
provide the member a written notification of the disciplinary action,
by either personal delivery or first-class mail, within 15 days
following the action. A disciplinary action shall not be effective
against a member unless the board fulfills the requirements of this
subdivision.
   (h) Whenever two or more associations have consolidated any of
their functions under a joint neighborhood association or similar
organization, members of each participating association shall be (1)
entitled to attend all meetings of the joint association other than
executive sessions, (2) given reasonable opportunity for
participation in those meetings, and (3) entitled to the same access
to the joint association's records as they are to the participating
association's records.
   (i) Nothing in this section shall be construed to create, expand,
or reduce the authority of the board of directors of an association
to impose monetary penalties on an association member for a violation
of the governing documents or rules of the association.
  SEC. 2.  Section 1363.05 of the Civil Code is amended to read:
   1363.05.  (a) This section shall be known and may be cited as the
Common Interest Development Open Meeting Act.
   (b) Any member of the association may attend meetings of the board
of directors of the association, except when the board adjourns to,
or meets solely in, executive session to consider litigation, matters
relating to the formation of contracts with third parties, member
discipline, personnel matters, or to meet with a member, upon the
member's request, regarding the member's payment of assessments, as
specified in Section 1367 or 1367.1. The board of directors of the
association shall meet in executive session, if requested by a member
who may be subject to a fine, penalty, or other form of discipline,
and the member shall be entitled to attend the executive session. As
specified in paragraph (2) of subdivision (k), a member of the
association shall be entitled to attend a teleconference meeting or
the portion of a teleconference meeting that is open to members, and
that meeting or portion of the meeting shall be audible to the
members in a location specified in the notice of the meeting.
   (c) Any matter discussed in executive session shall be generally
noted in the minutes of the immediately following meeting that is
open to the entire membership.
   (d) The minutes, minutes proposed for adoption that are marked to
indicate draft status, or a summary of the minutes, of any meeting of
the board of directors of an association, other than an executive
session, shall be available to members within 30 days of the meeting.
The minutes, proposed minutes, or summary minutes shall be
distributed to any member of the association upon request and upon
reimbursement of the association's costs for making that
distribution.
   (e) Members of the association shall be notified in writing at the
time that the pro forma budget required in Section 1365 is
distributed, or at the time of any general mailing to the entire
membership of the association, of their right to have copies of the
minutes of meetings of the board of directors, and how and where
those minutes may be obtained.
   (f) Unless the bylaws provide for a longer period of notice,
members shall be given notice of the time and place of a meeting as
defined in subdivision (k), except for an emergency meeting or a
meeting that will be held solely in executive session, at least four
days prior to the meeting. Except for an emergency meeting, members
shall be given notice of the time and place of a meeting that will be
held solely in executive session at least two days prior to the
meeting. Notice shall be given by posting the notice in a prominent
place or places within the common area and by mail to any owner who
had requested notification of board meetings by mail, at the address
requested by the owner. Notice may also be given by mail, by delivery
of the notice to each unit in the development, by newsletter or
similar means of communication, or, with the consent of the member,
by electronic means. The notice shall contain the agenda for the
meeting.
   (g) An emergency meeting of the board may be called by the
president of the association, or by any two members of the governing
body other than the president, if there are circumstances that could
not have been reasonably foreseen which require immediate attention
and possible action by the board, and which of necessity make it
impracticable to provide notice as required by this section.
   (h) The board of directors of the association shall permit any
member of the association to speak at any meeting of the association
or the board of directors, except for meetings of the board held in
executive session. A reasonable time limit for all members of the
association to speak to the board of directors or before a meeting of
the association shall be established by the board of directors.
   (i)  (1)  Except as described in paragraphs (2) to (4), inclusive,
the board of directors of the association may not discuss or take
action on any item at a nonemergency meeting unless the item was
placed on the agenda included in the notice that was posted and
distributed pursuant to subdivision (f). This subdivision does not
prohibit a resident who is not a member of the board from speaking on
issues not on the agenda.
   (2) Notwithstanding paragraph (1), a member of the board of
directors, a managing agent or other agent of the board of directors,
or a member of the staff of the board of directors, may do any of
the following:
   (A) Briefly respond to statements made or questions posed by a
person speaking at a meeting as described in subdivision (h).
   (B) Ask a question for clarification, make a brief announcement,
or make a brief report on his or her own activities, whether in
response to questions posed by a member of the association or based
upon his or her own initiative.
   (3) Notwithstanding paragraph (1), the board of directors or a
member of the board of directors, subject to rules or procedures of
the board of directors, may do any of the following:
   (A) Provide a reference to, or provide other resources for factual
information to, its managing agent or other agents or staff.
   (B) Request its managing agent or other agents or staff to report
back to the board of directors at a subsequent meeting concerning any
matter, or take action to direct its managing agent or other agents
or staff to place a matter of business on a future agenda.
   (C) Direct its managing agent or other agents or staff to perform
administrative tasks that are necessary to carry out this
subdivision.
   (4) (A) Notwithstanding paragraph (1), the board of directors may
take action on any item of business not appearing on the agenda
posted and distributed pursuant to subdivision (f) under any of the
following conditions:
   (i) Upon a determination made by a majority of the board of
directors present at the meeting that an emergency situation exists.
An emergency situation exists if there are circumstances that could
not have been reasonably foreseen by the board, that require
immediate attention and possible action by the board, and that, of
necessity, make it impracticable to provide notice.
   (ii) Upon a determination made by the board by a vote of
two-thirds of the members present at the meeting, or, if less than
two-thirds of total membership of the board is present at the
meeting, by a unanimous vote of the members present, that there is a
need to take immediate action and that the need for action came to
the attention of the board after the agenda was posted and
distributed pursuant to subdivision (f).
   (iii) The item appeared on an agenda that was posted and
distributed pursuant to subdivision (f) for a prior meeting of the
board of directors that occurred not more than 30 calendar days
before the date that action is taken on the item and, at the prior
meeting, action on the item was continued to the meeting at which the
action is taken.
   (B) Before discussing any item pursuant to this paragraph, the
board of directors shall openly identify the item to the members in
attendance at the meeting.
   (j) (1) The board of directors shall not take action on any item
of business outside of a meeting.
   (2) (A) Notwithstanding Section 7211 of the Corporations Code, the
board of directors shall not conduct a meeting via a series of
electronic transmissions, including, but not limited to, electronic
mail, except as specified in subparagraph (B).
   (B) Electronic transmissions may be used as a method of conducting
an emergency meeting if all members of the board, individually or
collectively, consent in writing to that action, and if the written
consent or consents are filed with the minutes of the meeting of the
board. Written consent to conduct an emergency meeting may be
transmitted electronically.
   (k) As used in this section:
   (1) "Item of business" means any action within the authority of
the board, except those actions that the board has validly delegated
to any other person or persons, managing agent, officer of the
association, or committee of the board comprising less than a
majority of the directors.
   (2) "Meeting" means either of the following:
   (A) A congregation of a majority of the members of the board at
the same time and place to hear, discuss, or deliberate upon any item
of business that is within the authority of the board.
   (B) A teleconference in which a majority of the members of the
board, in different locations, are connected by electronic means,
through audio or video or both. A teleconference meeting shall be
conducted in a manner that protects the rights of members of the
association and otherwise complies with the requirements of this
title. Except for a meeting that will be held solely in executive
session, the notice of the teleconference meeting shall identify at
least one physical location so that members of the association may
attend and at least one member of the board of directors shall be
present at that location. Participation by board members in a
teleconference meeting constitutes presence at that meeting as long
as all board members participating in the meeting are able to hear
one another and members of the association speaking on matters before
the board.
  SEC. 3.  Section 1365.2 of the Civil Code is amended to read:
   1365.2.  (a) For the purposes of this section, the following
definitions shall apply:
   (1) "Association records" means all of the following:
   (A) Any financial document required to be provided to a member in
Section 1365.
   (B) Any financial document or statement required to be provided in
Section 1368.
   (C) Interim financial statements, periodic or as compiled,
containing any of the following:
   (i) Balance sheet.
   (ii) Income and expense statement.
   (iii) Budget comparison.
   (iv) General ledger. A "general ledger" is a report that shows all
transactions that occurred in an association account over a
specified period of time.
   The records described in this subparagraph shall be prepared in
accordance with an accrual or modified accrual basis of accounting.
   (D) Executed contracts not otherwise privileged under law.
   (E) Written board approval of vendor or contractor proposals or
invoices.
   (F) State and federal tax returns.
   (G) Reserve account balances and records of payments made from
reserve accounts.
   (H) Agendas and minutes of meetings of the members, the board of
directors and any committees appointed by the board of directors
pursuant to Section 7212 of the Corporations Code; excluding,
however, minutes and other information from executive sessions of the
board of directors as described in Section 1363.05.
   (I) (i) Membership lists, including name, property address, and
mailing address, if the conditions set forth in clause (ii) are met
and except as otherwise provided in clause (iii).
   (ii) The member requesting the list shall state the purpose for
which the list is requested which purpose shall be reasonably related
to the requester's interest as a member. If the association
reasonably believes that the information in the list will be used for
another purpose, it may deny the member access to the list. If the
request is denied, in any subsequent action brought by the member
under subdivision (f), the association shall have the burden to prove
that the member would have allowed use of the information for
purposes unrelated to his or her interest as a member.
   (iii) A member of the association may opt out of the sharing of
his or her name, property address, and mailing address by notifying
the association in writing that he or she prefers to be contacted via
the alternative process described in subdivision (c) of Section 8330
of the Corporations Code. This opt-out shall remain in effect until
changed by the member.
   (J) Check registers.
   (2) "Enhanced association records" means invoices, receipts and
canceled checks for payments made by the association, purchase orders
approved by the association, credit card statements for credit cards
issued in the name of the association, statements for services
rendered, and reimbursement requests submitted to the association,
provided that the person submitting the reimbursement request shall
be solely responsible for removing all personal identification
information from the request.
   (b) (1) The association shall make available association records
and enhanced association records for the time periods and within the
timeframes provided in subdivisions (i) and (j) for inspection and
copying by a member of the association, or the member's designated
representative. The association may bill the requesting member for
the direct and actual cost of copying requested documents. The
association shall inform the member of the amount of the copying
costs before copying the requested documents.
   (2) A member of the association may designate another person to
inspect and copy the specified association records on the member's
behalf. The member shall make this designation in writing.
   (c) (1) The association shall make the specified association
records available for inspection and copying in the association's
business office within the common interest development.
   (2) If the association does not have a business office within the
development, the association shall make the specified association
records available for inspection and copying at a place that the
requesting member and the association agree upon.
   (3) If the association and the requesting member cannot agree upon
a place for inspection and copying pursuant to paragraph (2), or if
the requesting member submits a written request directly to the
association for copies of specifically identified records, the
association may satisfy the requirement to make the association
records available for inspection and copying by mailing copies of the
specifically identified records to the member by first-class mail
within the timeframes set forth in subdivision (j).
   (4) The association may bill the requesting member for the direct
and actual cost of copying and mailing requested documents. The
association shall inform the member of the amount of the copying and
mailing costs, and the member shall agree to pay those costs, before
copying and sending the requested documents.
   (5) In addition to the direct and actual costs of copying and
mailing, the association may bill the requesting member an amount not
in excess of ten dollars ($10) per hour, and not to exceed two
hundred dollars ($200) total per written request, for the time
actually and reasonably involved in redacting the enhanced
association records as provided in paragraph (2) of subdivision (a).
The association shall inform the member of the estimated costs, and
the member shall agree to pay those costs, before retrieving the
requested documents.
   (d) (1) Except as provided in paragraph (2), the association may
withhold or redact information from the association records for any
of the following reasons:
   (A) The release of the information is reasonably likely to lead to
identity theft. For the purposes of this section, "identity theft"
means the unauthorized use of another person's personal identifying
information to obtain credit, goods, services, money, or property.
Examples of information that may be withheld or redacted pursuant to
this paragraph include bank account numbers of members or vendors,
social security or tax identification numbers, and check, stock, and
credit card numbers.
   (B) The release of the information is reasonably likely to lead to
fraud in connection with the association.
   (C) The information is privileged under law. Examples include
documents subject to attorney-client privilege or relating to
litigation in which the association is or may become involved, and
confidential settlement agreements.
   (D) The release of the information is reasonably likely to
compromise the privacy of an individual member of the association.
   (E) The information contains any of the following:
   (i) Records of a la carte goods or services provided to individual
members of the association for which the association received
monetary consideration other than assessments.
   (ii) Records of disciplinary actions, collection activities, or
payment plans of members other than the member requesting the
records.
   (iii) Any person's personal identification information, including,
without limitation, social security number, tax identification
number, driver's license number, credit card account numbers, bank
account number, and bank routing number.
   (iv) Minutes and other information from executive sessions of the
board of directors as described in Section 1363.05, except for
executed contracts not otherwise privileged. Privileged contracts
shall not include contracts for maintenance, management, or legal
services.
   (v) Personnel records other than the payroll records required to
be provided under paragraph (2).
   (vi) Interior architectural plans, including security features,
for individual homes.
   (2) Except as provided by the attorney-client privilege, the
association may not withhold or redact information concerning the
compensation paid to employees, vendors, or contractors. Compensation
information for individual employees shall be set forth by job
classification or title, not by the employee's name, social security
number, or other personal information.
   (3) No association, officer, director, employee, agent or
volunteer of an association shall be liable for damages to a member
of the association or any third party as the result of identity theft
or other breach of privacy because of the failure to withhold or
redact that member's information under this subdivision unless the
failure to withhold or redact the information was intentional,
willful, or negligent.
   (4) If requested by the requesting member, an association that
denies or redacts records shall provide a written explanation
specifying the legal basis for withholding or redacting the requested
records.
   (e) (1) The association records, and any information from them,
may not be sold, used for a commercial purpose, or used for any other
purpose not reasonably related to a member's interest as a member.
An association may bring an action against any person who violates
this section for injunctive relief and for actual damages to the
association caused by the violation.
   (2) This section may not be construed to limit the right of an
association to damages for misuse of information obtained from the
association records pursuant to this section or to limit the right of
an association to injunctive relief to stop the misuse of this
information.
   (3) An association shall be entitled to recover reasonable costs
and expenses, including reasonable attorney's fees, in a successful
action to enforce its rights under this section.
   (f) A member of an association may bring an action to enforce the
member's right to inspect and copy the association records. If a
court finds that the association unreasonably withheld access to the
association records, the court shall award the member reasonable
costs and expenses, including reasonable attorney's fees, and may
assess a civil penalty of up to five hundred dollars ($500) for the
denial of each separate written request. A cause of action under this
section may be brought in small claims court if the amount of the
demand does not exceed the jurisdiction of that court. A prevailing
association may recover any costs if the court finds the action to be
frivolous, unreasonable, or without foundation.
   (g) The provisions of this section apply to any community service
organization or similar entity, as defined in paragraph (3) of
subdivision (c) of Section 1368, that is related to the association,
and to any nonprofit entity that provides services to a common
interest development under a declaration of trust. This section shall
operate to give a member of the organization or entity a right to
inspect and copy the records of that organization or entity
equivalent to that granted to association members by this section.
   (h) Requesting parties shall have the option of receiving
specifically identified records by electronic transmission or
machine-readable storage media as long as those records can be
transmitted in a redacted format that does not allow the records to
be altered. The cost of duplication shall be limited to the direct
cost of producing the copy of a record in that electronic format. The
association may deliver specifically identified records by
electronic transmission or machine-readable storage media as long as
those records can be transmitted in a redacted format that prevents
the records from being altered.
   (i) The time periods for which specified records shall be provided
is as follows:
   (1) Association records shall be made available for the current
fiscal year and for each of the previous two fiscal years.
   (2) Minutes of member and board meetings shall be permanently made
available. If a committee has decisionmaking authority, minutes of
the meetings of that committee shall be made available commencing
January 1, 2007, and shall thereafter be permanently made available.
   (j) The timeframes in which access to specified records shall be
provided to a requesting member are as follows:
   (1) Association records prepared during the current fiscal year,
within 10 business days following the association's receipt of the
request.
   (2) Association records prepared during the previous two fiscal
years, within 30 calendar days following the association's receipt of
the request.
   (3) Any record or statement available pursuant to Section 1365 or
1368, within the timeframe specified therein.
   (4) Minutes of member and board meetings, within the timeframe
specified in subdivision (d) of Section 1363.05.
   (5) Minutes of meetings of committees with decisionmaking
authority for meetings commencing on or after January 1, 2007, within
15 calendar days following approval.
   (6) Membership list, within the timeframe specified in Section
8330 of the Corporations Code.
   (k) There shall be no liability pursuant to this section for an
association that fails to retain records for the periods specified in
subdivision (i) that were created prior to January 1, 2006.
   (l) As applied to an association and its members, the provisions
of this section are intended to supersede the provisions of Sections
8330 and 8333 of the Corporations Code to the extent those sections
are inconsistent.
                             (m) The provisions of this section shall
not apply to any common interest development in which separate
interests are being offered for sale by a subdivider under the
authority of a public report issued by the Department of Real Estate
so long as the subdivider or all subdividers offering those separate
interests for sale, or any employees of those subdividers or any
other person who receives direct or indirect compensation from any of
those subdividers, comprise a majority of the members of the board
of directors of the association. Notwithstanding the foregoing, this
section shall apply to that common interest development no later than
10 years after the close of escrow for the first sale of a separate
interest to a member of the general public pursuant to the public
report issued for the first phase of the development.
   (n) This section shall become operative on July 1, 2006.