BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 752| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- CONSENT Bill No: SB 752 Author: Roth (D) Amended: 4/18/13 Vote: 21 SENATE TRANSPORTATION & HOUSING COMMITTEE : 10-0, 4/16/13 AYES: DeSaulnier, Gaines, Beall, Cannella, Galgiani, Hueso, Lara, Liu, Roth, Wyland NO VOTE RECORDED: Pavley SENATE JUDICIARY COMMITTEE : 6-0, 5/7/13 AYES: Evans, Anderson, Corbett, Jackson, Leno, Monning NO VOTE RECORDED: Walters SUBJECT : Commercial and industrial common interest developments SOURCE : California Law Revision Commission DIGEST : This bill separates the laws governing commercial and industrial common interest developments (CIDs) from the laws governing residential CIDs and generally makes the operational provisions of current law inapplicable to commercial and industrial CIDs. 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) CONTINUED SB 752 Page 2 management of common property and enforcement of restrictions by a community association. Condominiums, planned unit developments, stock cooperatives, community apartments, and many resident-owned mobilehome parks all fall under the CID umbrella. While most CIDs are residential, CIDs can also comprise industrial or commercial properties. The Davis-Stirling Common Interest Development Act is the main body of statutory law that governs CIDs in California. The law includes both foundational provisions that relate to the establishment and definition of the CID property form and operational provisions that regulate the ongoing operation of the managing association. Existing law exempts commercial and industrial CIDs from a few specific provisions of the Act but generally treats commercial and industrial CIDs the same as residential CIDs. This bill separates the laws governing commercial and industrial CIDs from the laws governing residential CIDs and generally makes the operational provisions of current CID law inapplicable to commercial and industrial CIDs. Specifically, the bill: 1. Makes the Davis-Stirling Act inapplicable to industrial and commercial CIDs. 2. Establishes the Commercial and Industrial Common Interest Development Act (Act), provides rules and regulations governing the creation and operation of an industrial or commercial CID, and carries over the foundational provisions of the Davis-Stirling Act, but no longer requires industrial and commercial CIDs to be subject to the operational requirements of residential CIDs. 3. Allows an industrial or commercial CID association to amend its governing documents, without the approval of owners, solely to correct any cross-references to the Davis-Stirling Act. 4. Provides that the new act shall not invalidate a document, other than a governing document, or action taken before January 1, 2014, if the document or action was proper under the law governing CIDs at the time the document was prepared CONTINUED SB 752 Page 3 or the action taken. 5. Updates numerous cross-references to the Davis-Stirling Act in other codes and provides cross-references to the new Act. Comments According to the sponsor, the California Law Revision Commission (CLRC), the available legislative history indicates that the Davis-Stirling Act originally was intended to govern only residential property, with no expectation that it would apply to commercial or industrial property. When it later became apparent that the act also applied to nonresidential developments, AB 2484 (Hauser), Chapter 123, Statutes of 1988, limited that application by generally preserving the foundational provisions of the act (i.e., those that relate to the establishment and definition of the CID property form) while making inapplicable to commercial and industrial CIDs the operational provisions (i.e., those that regulated the ongoing operation of the managing association). Since then, the Davis-Stirling Act has more than tripled in size, mostly through the addition of numerous new operational provisions. Many of those provisions appear to have been designed specifically for homeowners. For the most part, the Legislature does not appear to have considered whether those new provisions were necessary or beneficial to commercial or industrial property owners. Based on the same policy of preserving foundational provisions and exempting commercial and industrial CIDs from operational provisions that guided AB 2484, the CLRC completed an analysis of the Davis-Stirling Act and made three general recommendations: The law governing commercial and industrial CIDs should be separated from the law governing residential CIDs. This will prevent any new laws enacted to benefit residential owners from being inadvertently applied to commercial and industrial developments. CONTINUED SB 752 Page 4 The existing foundational provisions of the Davis-Stirling Act should continue to apply to commercial and industrial CIDs. These provisions are necessary for any CID, regardless of type. Most of the existing operational provisions of the Davis-Stirling Act should be made inapplicable to commercial and industrial CIDs. These provisions are not strictly necessary for all CIDs. They appear to have been added to the Davis-Stirling Act to benefit residential property owners without separate consideration of their effect on commercial or industrial property owners. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 5/9/13) California Law Revision Commission (source) California Association of Community Managers California Business Properties Association Mar West Real Estate JJA:d 5/9/13 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED