BILL ANALYSIS Ó
AB 968
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 968 (Gordon)
As Amended August 22, 2014
Majority vote
----------------------------------------------------------------------
|ASSEMBLY: | |(May 9, 2014) |SENATE: | |(August 27, 2014) |
----------------------------------------------------------------------
(vote not relevant) (vote not relevant )
------------------------------------------------------------------------
|COMMITTEE VOTE: |6-0 |(August 28, 2014) |RECOMMENDATION: |concur |
|(H. & C.D.) | | | | |
------------------------------------------------------------------------
Original Committee Reference: H. & C.D.
SUMMARY: 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.
Specifically, this bill :
1)Provides that except where otherwise provided in the declaration
of a CID, the following apply:
a) An owner of a separate interest in a CID is responsible for
repairing and replacing their separate interest; and
b) A homeowner association (HOA) is responsible for repairing
and replacing the exclusive use common area.
1)Takes effect on January 1, 2017.
FISCAL EFFECT : None
COMMENTS : 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, housing cooperatives, and planned unit
developments. They are characterized by 1) a separate ownership of
dwelling space coupled with an undivided interest in a common
property, 2) covenants and conditions that limit the use of common
AB 968
Page 2
area, 3) the management of common property, and 4) enforcement of
restrictions by an HOA. CIDs are governed by the Davis-Stirling
Act as well as the governing documents of the HOA including bylaws,
declaration, and operating rules.
Under existing law an HOA is responsible for repairing, replacing,
and maintaining the common area of a CID. An owner is responsible
for maintaining their separate interest and any exclusive use
common area attached to the separate interest. To some extent, it
is unclear whether the HOA or the owner is responsible for
replacing and repairing the exclusive use common area. This bill
would make it the HOA's responsibility to repair and replace the
exclusive use common area. This bill goes into effect on January
1, 2017.
The Davis-Stirling Act does not define the terms repairing,
replacing, or maintaining. According to the sponsor these terms
are defined in the declaration and because of the diversity of size
and structure of CIDs creating a universal definition is
impossible. The lack of a definition in state law leaves it to
HOAs to define these terms. Existing law requires homeowners to
vote on amendments to the declaration of a CID and this rule would
apply to modifications or the addition of definitions for
repairing, replacing, or maintaining.
Purpose of this 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 HOA is responsible for repair or replacement of
these areas. By establishing a general rule that repair and
replacement of the exclusive use common areas are the
responsibility of the HOA and no the owner, the bill will help HOAs
better budget to address these duties and will provide clarity to
the HOAs whose governing documents do not address the issue.
Arguments in opposition: Opponents argue that under this bill,
obligations for repair and replacement could be shifted from the
HOA to the homeowners potentially burdening lower-income households
with additional costs not contemplated when they purchased their
home. According to the opponents, these changes can be made
without amending the declaration, which leaves homeowners
vulnerable to unilateral shifting of cost and liabilities.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
AB 968
Page 3
FN: 0005550