BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 968| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 968 Author: Gordon (D) Amended: 6/23/14 in Senate Vote: 21 SENATE TRANSPORTATION & HOUSING COMMITTEE : 10-0, 6/17/14 AYES: DeSaulnier, Gaines, Beall, Cannella, Galgiani, Hueso, Lara, Liu, Pavley, Wyland NO VOTE RECORDED: Roth ASSEMBLY FLOOR : Not relevant SUBJECT : Common-interest developments: repair and replacement responsibilities SOURCE : Educational Community for Homeowners DIGEST : This bill, beginning January 1, 2016, establishes the general rule that a common-interest development (CID) 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 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 CONTINUED AB 968 Page 2 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 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/her separate interest and any exclusive-use common area belonging to the separate interest. This bill, beginning January 1, 2016, 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/her separate interest. This bill further provides that the governing documents may define which items or actions constitute maintenance and which constitute repair and replacement. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 8/4/14) Educational Community for Homeowners (source) California Association of Community Managers California Association of Realtors Community Associations Institute OPPOSITION : (Verified 8/4/14) California Alliance for Retired Americans CONTINUED AB 968 Page 3 Center for California Homeowner Association Law Consumer Attorneys of California National Housing Law Project Public Interest Law Project ARGUMENTS IN SUPPORT : According to the bill's sponsor, Educational Community for Homeowners, 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. ARGUMENTS IN OPPOSITION : Opponents believe that this 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 this bill's sponsor cannot. In addition, opponents argue that this bill imposes significant new financial obligations on homeowners. First, this bill newly assigns the repair and replacement of separate interests to homeowners. Second, having associations define this 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. JA:k 8/4/14 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED