BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 918|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
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UNFINISHED BUSINESS
Bill No: SB 918
Author: Vidak (R)
Amended: 6/16/16
Vote: 21
SENATE JUDICIARY COMMITTEE: 6-0, 5/3/16
AYES: Jackson, Moorlach, Anderson, Leno, Monning, Wieckowski
NO VOTE RECORDED: Hertzberg
SENATE FLOOR: 37-0, 5/23/16
AYES: Allen, Anderson, Bates, Beall, Berryhill, Block,
Cannella, De León, Fuller, Gaines, Galgiani, Glazer, Hall,
Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson,
Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning,
Moorlach, Morrell, Nguyen, Nielsen, Pan, Roth, Stone, Vidak,
Wieckowski
NO VOTE RECORDED: Pavley, Runner, Wolk
ASSEMBLY FLOOR: 73-5, 8/18/16 - See last page for vote
SUBJECT: Common interest developments
SOURCE: United Trustee Association
DIGEST: This bill requires the owner of a separate interest
and the homeowner association in a common interest development
to annually verify the address or addresses to which notices
from the association are to be delivered.
Assembly Amendments recast the above provision to clarify that
address verification is to be completed at least 30 days prior
to sending certain required disclosures.
SB 918
Page 2
ANALYSIS:
Existing law:
1)Defines and regulates residential common interest developments
(CIDs), including the ability of a CID's homeowner association
to levy regular and special assessments sufficient to perform
its obligations. (Civ. Code Sec. 4000 et seq.) Existing law
provides that an assessment, and any late charges, reasonable
fees and costs of collection, reasonable attorney's fees, if
any, and interest, shall be a debt of the owner of the
separate interest. (Civ. Code Sec. 5650.)
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. (Civ. Code Sec. 5660.)
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. (Civ. Code Sec.
5675.)
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. (Civ. Code Sec. 5720.)
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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. (Civ.
Code Sec. 5710.)
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:
The address or addresses to which notices from the
association are to be delivered;
An alternate or secondary address to which notices from
the association are to be delivered;
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
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 association to solicit annual notices of each
owner and, at least 30 days prior to making certain required
SB 918
Page 4
disclosures, enter the data into its books and records.
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.
Background
In California, CIDs are governed by the Davis-Stirling Common
Interest Development Act (Davis-Stirling Act). Owners of
separate property in CIDs have an undivided interest in the
common property of the development and are subject to the CID's
covenants, conditions, and restrictions. Residential CIDs are
also governed by a homeowner association, which is run by
volunteer directors that may or may not have prior experience
managing an association. The Court of Appeal, Fourth Appellate
District, previously observed that:
[t]he homeowners associations function almost "as a second
municipal government, regulating many aspects of [the
homeowners'] daily lives."
"[U]pon analysis of the association's functions, one clearly
sees the association as a quasi-government entity paralleling
in almost every case the powers, duties, and responsibilities
of a municipal government. As a 'mini-government,' the
association provides to its members, in almost every case,
utility services, road maintenance, street and common area
lighting, and refuse removal. In many cases, it also provides
security services and various forms of communication within
the community. There is, moreover, a clear analogy to the
municipal police and public safety functions. . . ." In
short, homeowners associations, via their enforcement of the
CC&R's, provide many beneficial and desirable services that
permit a common interest development to flourish. (Villa
Milano Homeowners Ass'n v. Il Davorge (2000) 84 Cal.App.4th
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819, 836 [citations omitted].)
The Davis-Stirling Act permits an association to foreclose upon
a separate interest in a CID in certain circumstances if the
owner fails to pay his or her assessments to the association.
Foreclosures in California are generally non-judicial, meaning
that they are accomplished without court involvement. Following
a decision by the homeowner association to foreclose, the
association records a Notice of Default, which generally occurs
after three or more months of delinquency. The foreclosing
entity must then generally wait at least three months before
noticing the sale of the property, which must be posted,
published, and filed with the county recorder.
This bill requires the owner of a separate interest and a
homeowner association to annually verify the address or
addresses to which notices from the association are to be
delivered.
Comments
The author writes:
Although associations have other remedies for collection of
delinquent assessments, such as judicial foreclosures in
superior courts, and court actions to collect assessments
(small claims, limited jurisdiction or general jurisdiction,
depending upon the amount of the delinquency), existing law is
silent on non-judicial foreclosure remedies available to
associations if they are unable to effect personal service of
required documents on unit owners. In a typical civil action,
if service cannot be effected on a defendant after the
exercise of reasonable diligence, a plaintiff may obtain from
a judge an order to publish a summons in a newspaper of
general jurisdiction. In the Davis-Stirling non-judicial
foreclosure context, however, there is no "case" on which to
request an order to publish the notice of default. In
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discussions with advocates for unit owners within common
interest developments, it became clear that current law lacks
provisions clearly requiring unit owners to advise
associations of mailing addresses to receive required
documents, and that other rights and responsibilities as
between owners and associations should be clarified.
Related/Prior Legislation
SB 290 (Vidak, 2015) would have allowed the board of directors
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
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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
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.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:NoLocal: No
SUPPORT: (Verified8/18/16)
United Trustee Association (source)
OPPOSITION: (Verified8/18/16)
Center for California Homeowner Association Law
Community Associations Institute
Congresswoman Jackie Speier
Sun City Palm Desert Community Association
ASSEMBLY FLOOR: 73-5, 8/18/16
AYES: Achadjian, Alejo, Arambula, Atkins, Baker, Bigelow,
Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang,
Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd,
Eggman, Frazier, Beth Gaines, Gallagher, Cristina Garcia,
Eduardo Garcia, Gipson, Gomez, Gonzalez, Gordon, Gray, Grove,
SB 918
Page 8
Hadley, Harper, Holden, Irwin, Jones, Jones-Sawyer, Kim,
Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis,
Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, O'Donnell,
Olsen, Patterson, Quirk, Ridley-Thomas, Rodriguez, Salas,
Santiago, Steinorth, Mark Stone, Thurmond, Ting, Waldron,
Weber, Wilk, Williams, Wood, Rendon
NOES: Brough, Chávez, Gatto, Obernolte, Wagner
NO VOTE RECORDED: Travis Allen, Roger Hernández
Prepared by:Tobias Halvarson / JUD. / (916) 651-4113
8/19/16 19:25:09
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