BILL ANALYSIS �
SB 752
Page 1
SENATE THIRD READING
SB 752 (Roth)
As Amended September 3, 2013
Majority vote
SENATE VOTE :37-0
HOUSING 7-0 JUDICIARY 10-0
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|Ayes:|Chau, Beth Gaines, |Ayes:|Wieckowski, Wagner, |
| |Atkins, Brown, | |Alejo, Chau, Dickinson, |
| |Maienschein, Quirk-Silva, | |Garcia, Gorell, |
| |Mullin | |Maienschein, Muratsuchi, |
| | | |Stone |
| | | | |
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APPROPRIATIONS 17-0
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|Ayes:|Gatto, Harkey, Bigelow, | | |
| |Bocanegra, Bradford, Ian | | |
| |Calderon, Campos, | | |
| |Donnelly, Eggman, Gomez, | | |
| |Hall, Holden, Linder, | | |
| |Pan, Quirk, Wagner, Weber | | |
| | | | |
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SUMMARY : Establishes the Commercial and Industrial Common
Interest Development (CID) Act to govern the regulation of
commercial and industrial CIDs within the Davis Stirling Common
Interest Development Act. Specifically, this bill :
1)Makes the Davis Stirling Common Interest Development Act
inapplicable to commercial and industrial CIDs and creates a
new Commercial and Industrial Common Interest Development Act.
2)Carries over the provisions of the Davis Stirling Act to the
Commercial and Industrial Common Interest Development Act
except for the following provisions from which the bill
exempts commercial and industrial CIDs:
a) Declaration requirements related to location of the
property in an airport influence area or in the
jurisdiction of the San Francisco Bay Conservation and
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Development Commission.
b) The requirement that the association allow for at least
one type of fire retardant roof covering material that
meets legal requirements in a very high fire severity zone.
c) Award of reasonable attorney's fees and costs to the
prevailing party in an action to enforce the governing
documents.
d) The authority for the association to petition the court
for an order reducing the percentage of the affirmative
votes necessary for an amendment of the declaration.
e) Provisions regulating changes to the association's
operating rules.
f) Owner protections against association policies
prohibiting rental of units.
g) The requirement for the association to prepare and
disclose a budget.
h) The requirement to conduct association meetings with a
recognized parliamentary procedure.
i) Member rights of access to association records.
j) Rules regarding member discipline.
aa) The right of owners in a joint association to
attend meetings and access records of the joint
association.
bb) The requirement for the association to provide
a document disclosure index.
cc) Rules related to campaigns, elections, and
open meetings.
dd) The requirement that members owning at least
67% of the separate interests approve granting exclusive
use of any portion of the common area to an individual
owner.
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ee) Disclosure requirements relating to the
qualifications of association managers and requirements
relating to how managers handle association funds.
ff) The requirement for the association to adopt a
fair, reasonable, and expeditious procedure for resolving
disputes.
gg) The requirements that the association provide
budgets and insurance coverage information, disclose
reserves and reserve deficits, and conduct reserve studies
that account for future repair needs.
hh) The requirement for the association annually
to disclose its policies and practices in enforcing lien
rights or other legal remedies for assessment defaults.
ii) Requirements relating to how the board reviews
financial statements and makes transfers and payments out
of reserves.
jj) Limits on assessment increases without a vote
of the membership.
aaa) Limits on late charges and interest charges on
delinquent assessments.
bbb) The prohibition against an association
imposing assessments that exceeds the amount necessary to
defray costs.
ccc) The prohibition on levying assessments based
on the taxable value of the separate interests.
ddd) The right of owners to request dispute
resolution and to request a payment plan for delinquent
assessments.
eee) An owner's right to pay delinquent assessments
under protest.
fff) The requirement for the association to credit any
payments first towards delinquent assessments and only
thereafter to the fees and costs of collection, attorney's
fees, late charges, or interest.
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ggg) The requirement for the association to send
notices regarding delinquent assessments to a second
address provided by an owner.
hhh) Prohibitions on the use of foreclosure for
delinquent assessments that are less than 12 months
delinquent and less than $1,800, as well as the conditions
on the use of foreclosure for greater or older delinquent
assessments, including an owner's right of redemption.
iii) The requirement for a selling owner to provide a
buyer with various association documents and for the
association to provide those documents upon request.
jjj) The prohibition on the association charging fees
in connection with a transfer of title.
aaaa) The requirement that a party engage in alternative
dispute resolution before filing an enforcement action in
court.
bbbb) Rules relating to association approval of
architectural changes.
cccc) The requirement to register with the Secretary of
State and pay a $30 fee.
1)Prohibits new owners in commercial and industrial CIDs from
keeping at least one pet subject to reasonable rules and
regulations but grandfather's those owners who had pet's prior
to January 1, 2014.
2)Allows an association to amend its governing documents without
the approval of owners solely to correct any cross-references
to the Davis Stirling Act.
3)States 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 or the
action taken.
4)Updates numerous cross-references to the Davis Stirling Act in
other codes.
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5)Includes language to avoid chaptering out with SB 251 (Ron
Calderon) of the current legislative session.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, minor and absorbable costs for the Secretary of
State. The costs, however, will depend on the volume of
filings. If there is an unexpected increase in filings, the
Secretary of State is authorized to charge a $30 fee for filings
and those proceeds could be used to defray the costs.
COMMENTS : CIDs are characterized by a separate ownership of
dwelling space coupled with shared interest in a common area.
They are restricted by covenants and conditions that limit the
use of common area and the separate ownership interests and the
management of common property and enforcement of restrictions by
a homeowners association. The Davis Stirling Act is the state
law that authorizes the creation of CIDs and defines and
regulates their activities. CIDs can be residential,
commercial, or industrial. This bill would create a separate
statutory framework for commercial and industrial CIDs and
largely apply only the foundational provisions of the Davis
Stirling Act with a limited application of key operational
provisions.
The sponsor of this bill, the California Law Revision Commission
(CLRC), reviewed the legislative history of the Davis Stirling
Act and determined that the intent of the legislature was to
apply only certain provisions of the Davis Stirling Act to
commercial and industrial CIDs. The history of the Davis
Stirling Act supports the view that the Legislature viewed
commercial and industrial CID owners as more sophisticated and
better able to protect their interests than residential owners.
Two years after the Davis Stirling Act was adopted Civil Code
Section 1373 was created to exempt commercial and industrial
CIDs from provisions of the Davis Stirling Act that were seen as
unnecessarily burdensome and costly. However, as the Davis
Stirling Act was amended over the years and expanded to triple
its original size, the distinction between residential and
commercial and industrial CIDs was not maintained.
The CLRC is tasked with studying CIDS and recommending reforms
to improve their governance. Based on the legislative history
of commercial and industrial CIDs the CLRC made the following
three recommendations which are embodied in SB 752:
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1)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.
2)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.
3)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.
This bill would create a separate act governing commercial and
industrial CIDs, known as the Commercial and Industrial Common
Interest Development Act. The proposed Act would apply only to
commercial or industrial CIDs and would have no effect on
residential or mixed use CIDs which would continue to be
governed by the existing Davis Stirling Act. The new Act would
continue all of the foundational provisions of the Davis
Stirling Act or those provisions that authorized and define the
property ownership form of CIDs. Those provisions are needed
by all CIDS regardless of type. For the most part the new Act
would not continue the operation provision of the Davis Stirling
Act or those regulatory provisions that impose mandates or
restrictions relating to CID governance.
As part of the process of preparing their recommendation, the
CLRC held public meetings and received comments which they
responded to via amendments. As a result, there is no
opposition to this measure.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0002241