BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: ab 968
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: gordon
VERSION: 5/27/14
Analysis by: Mark Stivers FISCAL: no
Hearing date: June 17, 2014
SUBJECT:
Common-interest developments: repair and replacement
responsibilities
DESCRIPTION:
This bill establishes the general rule that a common-interest
development association is responsible for repairing and
replacing exclusive-use common area and the individual owners
are responsible for repairing and replacing their separate
interests.
ANALYSIS:
A common-interest development (CID) is a real property
development that includes all of the following: 1) separate
ownership of a lot or unit coupled with an undivided interest in
common property; 2) covenants, conditions, and restrictions that
limit use of both the common area and separate ownership
interests; and 3) management of common property and enforcement
of restrictions by a community association, which a board of
directors, generally elected, governs. Condominiums,
planned-unit developments, stock cooperatives, community
apartments, and many resident-owned mobile home parks all fall
under the CID umbrella.
The property of a CID falls into three categories: 1) common
area owned by all which the association administers; 2) separate
interests that each member owns and controls; and 3)
exclusive-use common area, which is common area designated for
the exclusive-use of one or a few owners (e.g., patios and
decks).
The Davis-Stirling Common Interest Development Act is the
principal law that governs CIDs in California. Among other
things, the Davis-Stirling Act provides that, unless the
governing documents state otherwise, the association is
AB 968 (GORDON) Page 2
responsible for repairing, replacing, and maintaining the common
area, other than exclusive-use common area, and the owner of
each separate interest is responsible for maintaining his or her
separate interest and any exclusive-use common area belonging to
the separate interest.
This bill establishes, unless the governing documents state
otherwise, that the association is responsible for repairing and
replacing exclusive-use common area and the owner is responsible
for repairing and replacing his or her separate interest. The
bill further provides that the association may define which
items or actions constitute maintenance and which constitute
repair and replacement.
COMMENTS:
1.Purpose of the bill . According to the sponsor, existing law
establishes that the owner of a CID unit is responsible for
maintenance of the exclusive-use common area, but does not
specify if the owner or the association is responsible for
repair and replacement of these areas. By establishing a
general rule that repair and replacement of exclusive-use
common areas are the responsibility of the association and not
the owner, this bill will help associations better budget to
address these duties and will provide clarity to associations
whose governing documents do not address the issue.
2.Addressing a gray area . Current law is clear that
associations maintain, repair, and replace common areas. When
it comes to separate interests and exclusive-use common area,
however, current law only assigns maintenance
responsibilities. While the answer may be implied, the text
is silent as to who is required to repair and replace separate
interests and exclusive-use common areas. This bill clearly
assigns responsibility for repairing and replacing separate
interests to the individual owners and responsibility for
repairing and replacing exclusive-use common areas to the
association, unless the governing documents state otherwise.
3.Undefined terms . This bill clearly assigns responsibility for
maintenance, repair, and replacement, but does not define
these terms. Apparently, some of the CID stakeholder
organizations attempted to craft definitions but were unable
AB 968 (GORDON) Page 3
to come to agreement. Given the multitude of CIDs and the
different types of facilities in each, it is surely no easy
task. Instead, the bill provides that associations may define
the terms through their governing documents, which most
presumably do now. As a result, while this bill maintains the
current wide latitude that associations have to address
maintenance and repair issues, it does set some outside
boundaries beyond which a court could overrule an outright
shift of responsibilities. Statutory definitions may add
clarity for associations and their members, but even clear
definitions are unlikely to avert disputes, as it is the
practical application of any general definition that really
matters.
4.Arguments in opposition . Opponents believe that the bill's
lack of definitions for maintenance, repair, and replacement
does a huge disservice to associations and residents by
forcing associations to devise definitions when even the
bill's sponsors cannot. In addition, opponents argue that the
bill imposes significant new financial obligations on
homeowners. First, the bill newly assigns the repair and
replacement of separate interests to homeowners. Second,
having associations define the bill's terms creates an
opportunity to foist new maintenance duties onto homeowners.
These issues are exacerbated by the lack of clarity in some
governing documents over what is considered exclusive-use
common area.
5.Technical amendments .
Add a new section amending the current Section 4775 of
the Civil Code to add "(c) This section shall be repealed
on January 1, 2016."
On page 2, line 1, strike "of the Civil Code is amended"
and insert "is added to the Civil Code"
On page 2, lines 19-20 and on page 3, line 1, strike
"For purposes of this section, the association may amend
the governing documents in accordance with these provisions
to define what" and insert "The governing documents may
define which"
On page 3, after line 5, insert "(c) This section shall
take effect on January 1, 2016."
Assembly Votes:
Previous votes not relevant
AB 968 (GORDON) Page 4
POSITIONS: (Communicated to the committee before noon on
Wednesday, June 11,
2014.)
SUPPORT: Educational Community for Homeowners (sponsor)
California Association of Community Managers
OPPOSED: California Alliance for Retired Americans
Center for California Homeowner Association Law