Amended in Assembly April 22, 2014

California Legislature—2013–14 Regular Session

Assembly BillNo. 1738


Introduced by Assembly Member Chau

February 14, 2014


An act to amend Sections 5910 and 5915 of the Civil Code, relating to common interest developments.

LEGISLATIVE COUNSEL’S DIGEST

AB 1738, as amended, Chau. Common interest developments: dispute resolution.

The Davis-Stirling Common Interest Development Act defines a common interest development and requires it to be managed by an association. The act requires an association to provide a fair, reasonable, and expeditious procedure for resolving a dispute between an association and a member involving their rights, duties, or liabilities under the act, the Nonprofit Mutual Benefit Corporation Law, or the association’s governing documents. The act authorizes an association to develop its own procedure for these purposes and requires this procedure to satisfy specified minimum standards, including, among others, providing a means by which the member and the association may explain their positions.

This bill would additionally require that an association’s dispute resolution procedure include a means by which thebegin insert legalend insert counsel for a member or an association may explain their positionbegin insert if advance written notice is provided, as specifiedend insertbegin insert. The bill would require this procedure to allow another person who is not legal counsel to assist the member or the association without prior notice. The bill would require the parties to bear their own costs for legal counselend insert.

The act also establishes an alternative procedure applicable to an association that does not otherwise provide a fair, reasonable, and expeditious dispute resolution procedure as described above. Under these provisions a procedure that, among other things, authorizes either party to request, in writing, the other party to meet and confer, prohibits the association from refusing a request to meet and confer, and requires the parties to meet and confer in good faith in an effort to resolve the dispute is deemed a fair, reasonable, and expeditious dispute resolution procedure.

This bill would additionally require thebegin insert alternativeend insert procedure to provide either party the right tobegin delete be represented byend deletebegin insert have legalend insert counselbegin insert presentend insert when meeting and conferringbegin insert if advance written notice is provided, as specified. The bill would allow another person who is not legal counsel to assist the member or the association without prior notice. The bill would require the parties to bear their own costs for legal counselend insert.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 5910 of the Civil Code is amended to
2read:

3

5910.  

A fair, reasonable, and expeditious dispute resolution
4procedure shall at a minimum satisfy all of the following
5requirements:

6(a) The procedure may be invoked by either party to the dispute.
7A request invoking the procedure shall be in writing.

8(b) The procedure shall provide for prompt deadlines. The
9procedure shall state the maximum time for the association to act
10on a request invoking the procedure.

11(c) If the procedure is invoked by a member, the association
12shall participate in the procedure.

13(d) If the procedure is invoked by the association, the member
14may elect not to participate in the procedure. If the member
15participates but the dispute is resolved other than by agreement of
16the member, the member shall have a right of appeal to the board.

17(e) A resolution of a dispute pursuant to the procedure, which
18is not in conflict with the law or the governing documents, binds
19the association and is judicially enforceable. An agreement reached
P3    1pursuant to the procedure, which is not in conflict with the law or
2the governing documents, binds the parties and is judicially
3enforceablebegin insert if the agreement is in writingend insert.

4(f) begin insert(1)end insertbegin insertend insert The procedure shall provide a means by which the
5member and the begin delete association, or their counsel, may explain their
6positions.end delete
begin insert association, with the assistance of legal counsel, if they
7so choose, may explain their respective positions and seek to
8negotiate a mutually satisfactory resolution. If either or both
9parties intend to have legal counsel participate in the procedure,
10the procedure shall require at least five days written notice of this
11intent to be given to the other party. If this notice is not provided,
12the party not receiving the required notice shall have the election
13of postponing the procedure until the notice requirement is met.end insert

begin insert

14(2) The procedure shall allow another person who is not legal
15counsel to assist the member or the association in the procedure
16without prior notice.

end insert

17(g) A member of the association shall not be charged a fee to
18participate in the process.begin insert Each party shall bear the party’s own
19costs, if any, for legal counsel.end insert

20

SEC. 2.  

Section 5915 of the Civil Code is amended to read:

21

5915.  

(a) This section applies to an association that does not
22otherwise provide a fair, reasonable, and expeditious dispute
23resolution procedure. The procedure provided in this section is
24fair, reasonable, and expeditious, within the meaning of this article.

25(b) Either party to a dispute within the scope of this article may
26invoke the following procedure:

27(1) The party may request the other party to meet and confer in
28an effort to resolve the dispute. The request shall be in writing.

29(2) A member of an association may refuse a request to meet
30and confer. The association may not refuse a request to meet and
31confer.

32(3) The board shall designate a director to meet and confer.

33(4) begin insert(A)end insertbegin insertend insert The parties shall meet promptly at a mutually
34convenient time and place, explain their positions to each other,
35and confer in good faith in an effort to resolve the dispute.begin delete The
36partiesend delete
begin insert Each partyend insert shall have the rightbegin delete to be represented by counsel
37when meeting and conferring.end delete
begin insert to have legal counsel present when
38meeting and conferring to explain their respective positions and
39seek to negotiate a mutually satisfactory resolution. A party wishing
40to have counsel present when meeting and conferring must provide
P4    1written notice to the other party of its intent to be represented. If
2this notice is not provided, the party not receiving the required
3notice shall have the election of postponing the meeting until the
4notice requirement is met.end insert

begin insert

5(B)  A member or association may have another person who
6is not legal counsel present to assist the member or the association
7in the procedure without prior notice.

end insert

8(5) A resolution of the dispute agreed to by the parties shall be
9memorialized in writing and signed by the parties, including the
10board designee on behalf of the association.

11(c) An agreement reached under this section binds the parties
12and is judicially enforceable if both of the following conditions
13are satisfied:

14(1) The agreement is not in conflict with law or the governing
15documents of the common interest development or association.

16(2) The agreement is either consistent with the authority granted
17by the board to its designee or the agreement is ratified by the
18board.

19(d) A memberbegin delete mayend deletebegin insert shallend insert not be charged a fee to participate in
20the process.begin insert Each party shall bear the party’s own costs, if any,
21for legal counsel.end insert



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