BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 918


                                                                    Page  1








          Date of Hearing:  June 29, 2016


               ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT


                                  David Chiu, Chair


          SB  
          918 (Vidak) - As Amended June 16, 2016


          SENATE VOTE:  37-0


          SUBJECT:  Common interest developments


          SUMMARY:  Requires the owner of a separate interest and the  
          homeowner association (HOA) in a common interest development  
          (CID) to annually verify the mailing address or addresses to  
          which notices from the HOA are to be delivered. Specifically,  
          this bill:  




          1)Requires an owner of a separate interest to, on an annual  
            basis, provide written notice to the association of all of the  
            following:


             a)   The mailing address or addresses to which notices from  
               the HOA are to be delivered;









                                                                     SB 918


                                                                    Page  2






             b)   An alternate or secondary address to which notices from  
               the HOA are to be delivered; 


             c)   The name and address of an owner's legal representative,  
               if any, including any person with power of attorney or  
               other person who can be contacted in the event of the  
               owner's extended absence from the separate interest; and


             d)   Whether the separate interest is owner-occupied, is  
               rented out, if the parcel is developed but vacant, or if  
               the parcel is undeveloped land. 


          1)Requires an HOA to solicit these annual disclosures of each  
            owner and enter the data into its books and records at least  
            30 days prior to making its own required annual disclosures to  
            members.


          2)Specifies that if an owner fails to provide the information  
            specified in the above provision, the property address shall  
            be deemed to be the mailing address to which notices are to be  
            delivered.
          


          EXISTING LAW: 




          1)Defines and regulates residential CIDs, including the ability  
            of a CID's HOA to levy regular and special assessments  
            sufficient to perform its obligations.  










                                                                     SB 918


                                                                    Page  3





          2)Requires an association to send the owner of record a notice  
            by certified mail at least 30 days prior to recording a lien  
            to collect the debt.  That notice must include a general  
            description of the collection and lien enforcement procedures,  
            an itemized statement of charges, the right to inspect the  
            association's records, and the right to dispute the debt, as  
            specified.  


          3)Authorizes an association to record a lien against an owner's  
            separate interest in the amount of any delinquent assessment,  
            plus any costs of collection, late charges, and interest  
            assessed, as specified.  Existing law requires a copy of a  
            recorded notice of delinquent assessment to be mailed by  
            certified mail to the owner of the separate interest no later  
            than 10 calendar days after recordation.  


          4)Authorizes an association that seeks to collect delinquent  
            assessments of an amount of $1,800, or more, or assessments  
            that are delinquent by more than 12 months and secured by a  
            lien, to use judicial or non-judicial foreclosure, subject to  
            specified requirements.  


          5)Requires a decision to initiate foreclosure to be made only by  
            the board of directors of the association, and, if the board  
            votes to foreclose on the separate interest, requires the  
            board to provide notice by personal service in accordance with  
            the manner of service of summons.  (Civ. Code Sec. 5705.)   
            Existing law similarly requires any Notice of Default (the  
            first step in the nonjudicial foreclosure process) to be  
            served by the association on the owner's legal representative  
            in accordance with the manner of the service of summons. 


          FISCAL EFFECT:  None










                                                                     SB 918


                                                                    Page  4







          COMMENTS:  
           Background:  There are over 50,220 CIDs in the state that  
          comprise over 4.8 million housing units, or approximately one  
          quarter of the state's housing stock.  CIDs include  
          condominiums, community apartment projects, housing  
          cooperatives, and planned unit developments.  They are  
          characterized by a separate ownership of dwelling space coupled  
          with an undivided interest in a common property, restricted by  
          covenants and conditions that limit the use of the common area  
          and separate ownership interests, and the management of common  
          property and enforcement of restrictions by a HOA. CIDs are  
          governed by the Davis Stirling Act (the Act) as well as the  
          governing documents of the HOA, including bylaws, declaration,  
          and operating rules.  




          This bill requires the owner of a separate interest and a HOA to  
          annually verify the mailing address or addresses to which  
          notices from the association are to be delivered.


           Purpose of this bill  : According to the author, "currently HOA  
          unit owners are supposed to provide the association with the  
          best known mailing address for the association to mail required  
          disclosures and other documents that current law requires to be  
          shared with unit owners.  There may be a situation where mailing  
          address previously provided, if any was ever provided, may not  
          be current and the owner is not receiving any of the required  
          documents."


           Previous Legislation:


           SB 290 (Vidak, 2015) would have allowed the board of directors  








                                                                     SB 918


                                                                    Page  5





          of an association formed under the Davis-Stirling Act to provide  
          notice by personal service or by substitute service to an owner  
          of a separate interest who occupies the separate interest, or to  
          the owner's legal representative, if the board votes to  
          foreclose upon the separate interest.  The bill died in the  
          Senate Judiciary Committee.


          SB 1026 (Vidak, 2014) would have permitted associations subject  
          to the Commercial and Industrial Common Interest Development Act  
          and the Davis-Stirling Act to serve an owner with a Notice of  
          Default, the first step in the non-judicial foreclosure process,  
          for failure to pay required assessments through posting,  
          mailing, and publishing the notices, as specified, when those  
          notices cannot be personally served after reasonable diligence,  
          as specified.  The bill died in the Senate Judiciary Committee.


          SB 1244 (Harman, 2012) would have allowed an owner in a CID to  
          be served certain notices in the non-judicial foreclosure  
          process by both posting and mailing the notices, as specified,  
          when those notices cannot be personally served after reasonable  
          diligence.  The bill died in the Senate Judiciary Committee.


          SB 137 (Ducheny, Chapter 452, Statutes of 2005), among other  
          things, permits an association of a CID seeking to collect  
          delinquent regular or special assessments of $1,800 or more, or  
          any assessments that are more than 12 months delinquent, to use  
          foreclosure subject to specified conditions.  These conditions  
          include requiring the board of directors of an association to  
          make the decision to foreclose upon an assessment lien at an  
          executive meeting of the board, by a majority vote, at least 30  
          days prior to any public sale, to record the results of the  
          vote, and to provide notice of the decision to foreclose.


          AB 1317 (Speier, Chapter 1101, Statutes of 1996) imposed  
          specified requirements with respect to the collection of debts  








                                                                     SB 918


                                                                    Page  6





          based on assessments of owners by a CID, and removed a  
          requirement that an association, prior to a sale by a trustee,  
          make at least one bona fide attempt to serve the owner with a  
          notice of sale by trustee.



          REGISTERED SUPPORT / OPPOSITION:




          Support


          None on file




          Opposition


          None on file




          Analysis Prepared by:Lisa Engel / H. & C.D. / (961) 319-2085  
          

















                                                                     SB 918


                                                                    Page  7