Amended in Senate June 16, 2014

Amended in Assembly May 1, 2014

Amended in Assembly April 22, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 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, begin delete providing end delete begin insert that a resolution of a dispute, pursuant to the procedure, binds the association and is judicially enforceable, and that an agreement, pursuant to the procedure, binds the parties and is judicially enforceable, as specified. The act also requires that the procedure provide end insert a means by which the member and the association may explain their positions.

This bill would additionally require begin delete that an association’s dispute resolution procedure include a means by which the attorney for a member or an association or another person may explain their position if advance written notice is provided, as specified. The bill would require the parties to bear their own costs for an attorney. end delete begin insert the resolution or agreement under an association’s procedure for resolving these disputes between an association and a member to be in writing. The bill would authorize a member and an association to be assisted by an attorney or another person in explaining their positions at their own cost end insert begin insert . end 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 begin delete dispute end delete begin insert dispute, end insert is deemed a fair, reasonable, and expeditious dispute resolution procedure. begin insert The act provides that an agreement reached under this procedure binds the parties and is judicially enforceable if specified conditions are satisfied. end insert

This bill would additionally require the alternative procedure to provide either party the right to have an attorney or another person participate when meeting and conferring begin delete if advance written notice is provided, as specified. The bill would require the parties to bear end delete begin insert provided at end insert their own begin delete costs for an attorney. end delete begin insert cost. This bill would require an agreement reached under the alternative procedure that binds the parties and is judicially enforceable to be in writing, as specified. end insert

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

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

SECTION 1.  

Section 5910 of the Civil Code is amended to
read:

5910.  

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

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

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

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

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

begin delete

(e) A resolution of a dispute pursuant to the procedure, which
is not in conflict with the law or the governing documents, binds
the association and is judicially enforceable. An agreement reached
pursuant to the procedure, which is not in conflict with the law or
the governing documents, binds the parties and is judicially
enforceable if the agreement is in writing.

(f) (1) The procedure shall provide a means by which the
member and the association, with the assistance of an attorney or
another person, if they so choose, may explain their respective
positions and seek to negotiate a mutually satisfactory resolution.

(2) If either a member, an association, or both, intends to have
an attorney or another person participate in the procedure, the
procedure shall require the member, the association, or both, to
provide 10 days’ written notice of this intent to be given to the
other party pursuant to the methods identified in subdivision (b)
of Section 4035 and subdivision (a) of Section 4040. If notice is
not provided, the party not receiving the required notice shall have
the election of postponing the procedure until the notice
requirement is met.

end delete begin insert

(e) A written resolution of a dispute pursuant to the procedure
that is not in conflict with the law or the governing documents
binds the association and is judicially enforceable. A written
agreement reached pursuant to the procedure that is not in conflict
with the law or the governing documents binds the parties and is
judicially enforceable.

end insert begin insert

(f) The procedure shall provide a means by which the member
and the association may explain their positions. The member and
association may be assisted by an attorney or another person in
explaining their positions at their own cost.

end insert

(g) A member of the association shall not be charged a fee to
participate in the process. begin delete Each party shall bear the cost of the
party’s own attorney fees, if any. end delete

SEC. 2.  

Section 5915 of the Civil Code is amended to read:

5915.  

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

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

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

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

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

begin delete

(4) (A) The parties shall meet promptly at a mutually convenient
time and place, explain their positions to each other, and confer
in good faith in an effort to resolve the dispute. Each party shall
have the right to have an attorney or another person participate
when meeting and conferring to explain their respective positions
and seek to negotiate a mutually satisfactory resolution.

(B) If either a member, an association, or both, intends to have
an attorney or another person participate in the procedure, the
procedure shall require the member, the association, or both, to
provide 10 days’ written notice of this intent to be given to the
other party pursuant to the methods identified in subdivision (b)
of Section 4035 and subdivision (a) of Section 4040. If notice is
not provided, the party not receiving the required notice shall have
the election of postponing the procedure until the notice
requirement is met.

end delete begin insert

(4) The parties shall meet promptly at a mutually convenient
time and place, explain their positions to each other, and confer
in good faith in an effort to resolve the dispute. The parties may
be assisted by an attorney or another person at their own cost
when conferring.

end insert

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

(c)  begin delete An end delete begin insert A written end insert begin insert end insert agreement reached under this section binds the
parties and is judicially enforceable if both of the following
conditions are satisfied:

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

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

(d) A member shall not be charged a fee to participate in the
process. begin delete Each party shall bear the cost of the party’s own attorney
fees, if any. end delete