BILL NUMBER: SB 1329	INTRODUCED
	BILL TEXT


INTRODUCED BY   Senator Wright

                        FEBRUARY 21, 2014

   An act to amend Section 5300 of the Civil Code, relating to common
interest developments.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1329, as introduced, Wright. Common interest developments.
   The Davis-Stirling Common Interest Development Act defines and
regulates common interest developments. The act requires a common
interest development to be managed by an association and requires the
association to distribute an annual budget report 30 to 90 days
before the end of its fiscal year. Existing law requires the annual
budget report to include specified information
   This bill would make nonsubstantive changes to the annual budget
report requirement.
   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 5300 of the Civil Code is amended to read:
   5300.  (a) Notwithstanding a contrary provision in the governing
documents, an association shall distribute an annual budget report 30
to 90 days before the end of its fiscal year.
   (b) Unless the governing documents impose more stringent
standards, the annual budget report shall include all of the
following information:
   (1) A pro forma operating budget, showing the estimated revenue
and expenses on an accrual basis.
   (2) A summary of the association's reserves, prepared pursuant to
Section 5565.
   (3) A summary of the reserve funding plan adopted by the board, as
specified in paragraph (5) of subdivision (b) of Section 5550. The
summary shall include notice to members that the full reserve study
plan is available upon request, and the association shall provide the
full reserve plan to any member upon request.
   (4) A statement as to whether the board has determined to defer or
not undertake repairs or replacement of any major component with a
remaining life of 30 years or less, including a justification for the
deferral or decision not to undertake the repairs or replacement.
   (5) A statement as to whether the board, consistent with the
reserve funding plan adopted pursuant to Section 5560, has determined
or anticipates that the levy of one or more special assessments will
be required to repair, replace, or restore any major component or to
provide adequate reserves therefor. If so, the statement shall also
set out the estimated amount, commencement date, and duration of the
assessment.
   (6) A statement as to the mechanism or mechanisms by which the
board will fund reserves to repair or replace major components,
including assessments, borrowing, use of other assets, deferral of
selected replacements or repairs, or alternative mechanisms.
   (7) A general statement addressing the procedures used for the
calculation and establishment of those reserves to defray the future
repair, replacement, or additions to those major components that the
association is obligated to maintain. The statement shall include,
but  need   is  not  be
limited to, reserve calculations made using the formula described in
paragraph (4) of subdivision (b) of Section 5570, and may not assume
a rate of return on cash reserves in excess of 2 percent above the
discount rate published by the Federal Reserve Bank of San Francisco
at the time the calculation was made.
   (8) A statement as to whether the association has any outstanding
loans with an original term of more than one year, including the
payee, interest rate, amount outstanding, annual payment, and when
the loan is scheduled to be retired.
   (9) A summary of the association's property, general liability,
earthquake, flood, and fidelity insurance policies. For each policy,
the summary shall include the name of the insurer, the type of
insurance, the policy limit, and the amount of the deductible, if
any. To the extent that any of the required information is specified
in the insurance policy declaration page, the association may meet
its obligation to disclose that information by making copies of that
page and distributing it with the annual budget report. The summary
distributed pursuant to this paragraph shall contain, in at least
10-point boldface type, the following statement:
   "This summary of the association's policies of insurance provides
only certain information, as required by Section 5300 of the Civil
Code, and should not be considered a substitute for the complete
policy terms and conditions contained in the actual policies of
insurance. Any association member may, upon request and provision of
reasonable notice, review the association's insurance policies and,
upon request and payment of reasonable duplication charges, obtain
copies of those policies. Although the association maintains the
policies of insurance specified in this summary, the association's
policies of insurance may not cover your property, including personal
property or real property improvements to or around your dwelling,
or personal injuries or other losses that occur within or around your
dwelling. Even if a loss is covered, you may nevertheless be
responsible for paying all or a portion of any deductible that
applies. Association members should consult with their individual
insurance broker or agent for appropriate additional coverage."
   (c) The annual budget report shall be made available to the
members pursuant to Section 5320.
   (d) The summary of the association's reserves disclosed pursuant
to paragraph (2) of subdivision (b) shall not be admissible in
evidence to show improper financial management of an association,
provided that other relevant and competent evidence of the financial
condition of the association is not made inadmissible by this
provision.
   (e) The Assessment and Reserve Funding Disclosure Summary form,
prepared pursuant to Section 5570, shall accompany each annual budget
report or summary of the annual budget report that is delivered
pursuant to this article.