BILL ANALYSIS Ó
AB 1720
Page 1
Date of Hearing: April 27, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 1720
(Wagner) - As Introduced April 4, 2016
SUBJECT: Common interest developments: meetings
SUMMARY: Requires a homeowners association (HOA) in a common
interest development (CID) to permit a person that represents a
member to attend board meetings. Specifically, this bill:
1)Requires a HOA to permit a person who represents a member to
attend any board meeting that the member is permitted to
attend, regardless of whether the member attends.
2)Requires the member to give the board at least forty-eight
hours advance written notice that a person representing the
member will attend the board meeting.
3)Makes other technical amendments.
EXISTING LAW:
1)Provides that a HOA member may attend board meetings, except
when the board adjourns to, or meets solely in, executive
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session.
2)Requires a HOA board of directors to permit any member to
speak at any meeting of the association or the board, except
for meetings of the board of directors held in executive
session.
3)Requires a HOA to provide a fair, reasonable, and expeditions
internal dispute resolution (IDR) procedure that at a minimum
must include the following procedures:
a) May be invoked by either party to the dispute
b) A request to invoke IDR must be in writing;
c) Requires a HOA to participate if a member requests IDR;
d) Allows a member to elect not to participate if IDR is
invoked by the HOA;
e) If a member participates but the dispute is resolved
other than by the agreement of the member then the member
has the right to appeal to the board of directors;
f) A written resolution or agreement that is signed by both
parties of a dispute and is not in conflict with the law or
governing documents binds the HOA and is judicially
enforceable; and
g) Allows a member or the HOA to be assisted by an attorney
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or another person in explain their position at their own
costs.
1)Defines "alternative dispute resolution" (ADR) to mean
mediation, arbitration, conciliation, or other nonjudicial
procedure that involves a neutral third party in the decision
making process. ADR may be binding or nonbinding with the
voluntary consent of either party.
2)Requires a HOA or a member, prior to finalizing an enforcement
action in the superior court to endeavor to submit their
dispute to ADR.
3)Provides that either a HOA or a member may initiate ADR by
serving the other party with a Request for Resolution that
must include the following:
a) A brief description of the dispute between the parties;
b) A request for ADR;
c) A notice that the party receiving the Request for
Resolution is required to respond within 30 days of receipt
or the request will be deemed rejected; and
d) If the party to whom the request is served is member a
copy of the article.
1)Requires service of the Request for Resolution to be made by
personal delivery, first-class mail, express mail, facsimile
transmission, or other means reasonably calculated to provide
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a party to whom the request is served actual notice of the
request.
2)Provides that a HOA or member has 30 days to respond to a
request for ADR and if the party served with the Request for
Resolution does not accept the request within that period that
the request is deemed rejected.
3)Provides that if both a HOA and member agree to ADR, the ADR
must be completed within 90 days after the party that
initiated receives acceptance from the other party unless both
parties agree to an extension.
FISCAL EFFECT: None.
COMMENTS:
There are over 50,000 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) (2004) 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
is reached in IDR that is not in conflict with the law or the
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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. The bill was
sponsored by the California Law Revision Commission to give HOAs
a standard, informal process to try to resolve disputes before
they become serious. In addition to IDR, a HOA or a member may
request ADR to resolve a dispute. Before filing an enforcement
action, a HOA and a member are required to request ADR in
writing. ADR must be completed within 90 days of either party's
request and the results can be binding or nonbinding.
In 2014, AB 1738 (Chau) Chapter 411, Statutes of 2014 revised
the IDR process to allow a HOA or a member to bring an attorney
or another person to participate in informal dispute resolution
(IDR) at their own cost. The bill also made it clear that an
agreement reached as part of an IDR must be in writing. The
sponsor of AB 1738 is sponsoring this measure to require a HOA
to allow any person representing a member to attend a board
meeting regardless of whether the member is in attendance. A
member would be required to provide the board of director's
forty-eight hours written notice that a person representing a
member will attend the board meeting.
In addition to the meet and confer process, IDR, and ADR, a
member of an HOA can pursue a claim against a HOA in small
claims or civil court
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Arguments in support : According to the sponsor of this bill, "AB
1720 would reaffirm in the law that a member of a common
interest development (homeowner) may be accompanied by legal
counsel at any meeting of the homeowners' association (HOA)
board the member is permitted to attend, and may also designate
counsel to speak on the member's behalf, whether or not the
member is present at the meeting. It also provides that where
possible, the member shall give the board at least 48 hours
advance written notice that his or her attorney will attend the
board meeting. For years, case law strongly inferred that,
because HOA boards are quasi-public entities akin to local
governmental bodies, homeowners appearing before the boards had
a right to be represented by counsel and the member's own
expense (See Cohen v. Kite Hill Community Association (1983)142
Cal. App. 3d 642; Damon v. Ocean Hills Journalism Club (2000)85
Cal. App.4th 468; and Cabrera v. Alam (2011)197 Cal. App.
4th1077). This changed in 2013, however, with the decision in
SB Liberty, LLC v. Isla Verde Association, Inc. (2013) 217
Cal.App.4th 272, which held that the statutory provision
permitting members of an HOA to attend open board meetings
applied to the owners only, and that a community association may
bar attorneys representing those homeowners from attending any
and all meetings - even when the association is represented by
its own attorney. The decision in SB Liberty denies homeowners
in need - who may be elderly, ill, disabled, unsophisticated or
otherwise unable to fully defend their interests - to have the
benefit of counsel at a time when critical decisions affecting
their legal rights are being made. AB 1720 will correct this
injustice, ensuring that homeowners are not denied the presence
of or representation by counsel at what could be a very
intimidating and critical time."
Arguments in opposition : According to the California Association
of Community Managers, "in addition to the IDR process, there
are other mechanisms that serve to ensure homeowners have the
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ability to obtain counsel prior to board decisions. For
instance, for significant assessments increases, laws are in
place that requires member approval through a secret ballot
process. For changes to Rules and Regulations, there must be a
30-day comment period, adoption at an open meeting and notice of
adoption and implementation. In all of these scenarios, a
member already has the ability to have an attorney or other
person review proposals and provide input to the Board within
the already established Open Meeting Act for Common Interest
Developments. AB 1790 would almost certainly force HOA boards
to have attorneys present at all HOA meetings. This would
dramatically increase HOA budget costs and, as a result, would
likely force HOA's to increase member assessments to make up for
these unanticipated increased costs. The bill is of particular
concern to small-to-mid size HOAs who typically cannot affordab
to have attorneys present at all meetings. All the HOA members
would, in the end bare the weight of increases costs that result
from individual members' desires to have his or her attorney
present."
Staff comments:
Existing law provides several different avenues for resolving
disputes between a member and a HOA including: a meet and confer
process, IDR, and ADR, and the courts. Under this bill, anyone
that a member selected could attend a board meeting on their
behalf, including their attorney. The IDR process was amended
last year to allow an attorney or any other person to attend on
behalf of either a member of the HOA. The committee may wish to
consider if disputes between an HOA and member would better be
handled through the existing dispute resolution options.
Double referred: If AB 1720 passes this committee, the bill will
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be referred to the Committee on Judiciary.
REGISTERED SUPPORT / OPPOSITION:
Support
Conference of California Bar Associations (Sponsor)
Center for California Homeowner Association Law
Opposition
California Association of Community Managers
Community Associations Institute
Larry Stirling
Iger Wankel & Bonkowski, LLP
Lake Forest II Master Homeowners Association
Sun City Roseville Community Association, Inc.
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Management Professionals, Inc.
Packard Management Group
Individuals (565)
Analysis Prepared by:Lisa Engel, H. & C.D. / (916) 319-2085