BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 752|
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UNFINISHED BUSINESS
Bill No: SB 752
Author: Roth (D)
Amended: 9/3/13
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
SENATE FLOOR : 37-0, 5/16/13 (Consent)
AYES: Anderson, Beall, Berryhill, Block, Calderon, Cannella,
Corbett, Correa, De Le�n, DeSaulnier, Emmerson, Evans, Fuller,
Gaines, Galgiani, Hancock, Hernandez, Hill, Hueso, Huff,
Jackson, Knight, Lara, Leno, Lieu, Liu, Monning, Nielsen,
Padilla, Pavley, Roth, Steinberg, Walters, Wolk, Wright,
Wyland, Yee
NO VOTE RECORDED: Price, Vacancy, Vacancy
ASSEMBLY FLOOR : Not available
SUBJECT : Commercial and industrial common interest
developments
SOURCE : California Law Revision Commission
CONTINUED
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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.
Assembly amendments add double-jointing language with SB 251
(Calderon), revise and recast the section of the bill related to
solar energy systems, add a provision which require the articles
of incorporation of an association filed with the Secretary of
State include a statement as specified, and make numerous
technical and clarifying changes.
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)
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 Common Interest Development Act
inapplicable to commercial and industrial CIDs and creates a
new Commercial and Industrial Common Interest Development
Act.
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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
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.
k. The right of owners in a joint association to
attend meetings and access records of the joint
association.
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l. The requirement for the association to provide a
document disclosure index.
m. Rules related to campaigns, elections, and open
meetings.
n. 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.
o. Disclosure requirements relating to the
qualifications of association managers and
requirements relating to how managers handle
association funds.
p. The requirement for the association to adopt a
fair, reasonable, and expeditious procedure for
resolving disputes.
q. 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.
r. The requirement for the association annually to
disclose its policies and practices in enforcing lien
rights or other legal remedies for assessment
defaults.
s. Requirements relating to how the board reviews
financial statements and makes transfers and payments
out of reserves.
t. Limits on assessment increases without a vote of
the membership.
u. Limits on late charges and interest charges on
delinquent assessments.
v. The prohibition against an association imposing
assessments that exceeds the amount necessary to
defray costs.
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w. The prohibition on levying assessments based on the
taxable value of the separate interests.
x. The right of owners to request dispute resolution
and to request a payment plan for delinquent
assessments.
y. An owner's right to pay delinquent assessments
under protest.
z. 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.
aa. The requirement for the association to send notices
regarding delinquent assessments to a second address
provided by an owner.
bb. 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.
cc. The requirement for a selling owner to provide a
buyer with various association documents and for the
association to provide those documents upon request.
dd. The prohibition on the association charging fees in
connection with a transfer of title.
ee. The requirement that a party engage in alternative
dispute resolution before filing an enforcement action
in court.
ff. Rules relating to association approval of
architectural changes.
gg. The requirement to register with the Secretary of
State and pay a $30 fee.
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3. 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.
4. Allows an association to amend its governing documents
without the approval of owners solely to correct any
cross-references to the Davis Stirling Act.
5. 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.
6. Updates numerous cross-references to the Davis Stirling Act
in other codes.
7. Includes language to avoid chaptering out with SB 251 (Ron
Calderon) of the current legislative session.
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.
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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.
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 9/6/13)
California Law Revision Commission (source)
California Association of Community Managers
California Business Properties Association
Mar West Real Estate
JJA:d 9/6/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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