BILL ANALYSIS Ó
AB 1738
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1738 (Chau)
As Amended July 3, 2014
Majority vote
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|ASSEMBLY: |77-0 |(May 15, 2014) |SENATE: |34-0 |(August 14, |
| | | | | |2014) |
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Original Committee Reference: H. & C.D.
SUMMARY : Allows a homeowners association (HOA) or an owner of a
separate interest to bring an attorney or another person to
participate in informal dispute resolution (IDR) at their own
cost. Makes clear that an agreement reached as part of an IDR
must be in writing.
The Senate amendments :
1)Delete the requirement that an HOA and/or a member provide
notice if they plan to bring an attorney or another
representative to IDR.
2)Require that an agreement reached in IDR must be in writing
and signed by both parties to be binding.
FISCAL EFFECT : None
COMMENTS : There are over 50,000 Common Interest Developments
(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. CIDs are
governed by the Davis-Stirling Act as well as the governing
documents of the association including bylaws, declaration, and
operating rules.
Conflicts arise between members of an HOA and the board of
directors regarding interpretation of the governing documents
and operating rules. In 2004, AB 1836 (Harmon), Chapter 754,
required that HOAs provide the members an IDR process at no
cost. Either the member or the HOA can request IDR, however the
HOA cannot compel the member to participate. Any agreement that
AB 1738
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is reached in IDR that is not in conflict with the law or the
governing documents is judicially enforceable. If an HOA does
not provide an IDR procedure, then the bill created a statutory
"meet and confer" process that HOAs must follow. AB 1836 was
sponsored by the California Law Revision Commission to give HOAs
a standard, informal process to try to resolve disputes before
they become serious.
Purpose of the bill: The law is silent on whether a member or
the HOA can have legal counsel present at an IDR procedure. In
practice, some HOAs invite a member to bring an attorney to an
IDR procedure. In other cases, an HOA may have their attorney
attend without noticing the member and deny the member's request
to have counsel. The governing documents and the Davis-Stirling
Act can be difficult for a lay person to understand. In an
effort to level the playing field during IDR, this bill allows
both the HOA and the member to bring legal counsel if they have
notified the other party five days before the procedure. If
either party shows up to the IDR procedure with legal counsel
and has not provided the five-day notice then the other party
can choose to postpone the IDR session until the notice is
received.
This bill also allows a member to bring an assistant that is not
legal counsel. The sponsor contends that some members may need
help communicating their concerns to the HOA or resolving the
dispute. Although there is nothing in existing law that would
prevent a member from bringing along someone to assist them
during the IDR procedure, this bill would make clear that they
can. IDR was intended to be a low-cost option for members and
the HOA to resolve disputes. Although, having attorneys
participate may increase the cost for both sides this bill makes
clear that each side is responsible for paying for their own
attorney fees.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0004832