BILL NUMBER: AB 512 AMENDED
BILL TEXT
AMENDED IN SENATE JULY 22, 2003
AMENDED IN SENATE JULY 14, 2003
AMENDED IN SENATE JUNE 23, 2003
AMENDED IN ASSEMBLY APRIL 30, 2003
INTRODUCED BY Assembly Member Bates
(Coauthors: Assembly Members Maze and Pacheco)
FEBRUARY 18, 2003
An act to amend Sections 1363, 1368, and 1373 of, to add Sections
1350.5 and 1350.7 to, to add Article 4 (commencing with Section
1357.100) to, and to add chapter and article headings to Title 6
(commencing with Section 1350) of Part 4 of Division 2 of, the Civil
Code, relating to common interest developments.
LEGISLATIVE COUNSEL'S DIGEST
AB 512, as amended, Bates. Common interest developments.
The Davis-Stirling Common Interest Development Act defines and
regulates common interest developments. The act requires that a
common interest development have a recorded declaration, as
specified, and permits the declaration to be amended according to the
act's provisions or those of the governing documents, as defined.
The act requires that a common interest development be managed by an
association, and that a member of the association may attend meetings
of the board of directors of the association, except when they meet
in executive session to consider specified matters. The act excepts
certain common interest developments expressly zoned as industrial or
commercial developments, as specified, from certain of its
requirements.
This bill would revise the Davis-Stirling Common Interest
Development Act to add chapter and article headings to its
provisions. The bill would specify that these headings do not change
the scope, meaning, or intent of the bill.
This bill would also add provisions concerning procedural fairness
in decisionmaking and rulemaking by associations. The bill would
add requirements regarding operating rules relating to the use of the
common area, the use of a separate interest, member discipline,
and standards for delinquent assessment
collection payment plans, and the resolution
of assessment disputes , as specified. Among other things, the
bill would establish criteria for valid operating rules, require
that members have notice, provide an optional rulemaking procedure
and an optional emergency rulemaking procedure, and establish a
procedure for reversing a rule. The bill would revise the provisions
regarding common interest developments that are zoned as industrial
or commercial developments, as described above, and would except
certain of its provisions from application to these developments. The
bill would further provide general document delivery rules, to be
applicable when specified.
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. A chapter heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1350, to read:
CHAPTER 1. GENERAL PROVISIONS
SEC. 2. An article heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1350, to read:
Article 1. Preliminary Provisions
SEC. 3. Section 1350.5 is added to the Civil Code, to read:
1350.5. Division, part, title, chapter, and section headings do
not in any manner affect the scope, meaning, or intent of this title.
SEC. 4. Section 1350.7 is added to the Civil Code, to read:
1350.7. (a) This section applies to delivery of a document to the
extent the section is made applicable by another provision of this
title.
(b) A document shall be delivered by one or more of the following
methods:
(1) Personal delivery.
(2) First-class mail, postage prepaid, addressed to a member at
the address last shown on the books of the association or otherwise
provided by the member. Delivery is deemed to be complete on
the fifth day after deposit into the United States
Mail.
(3) E-mail, facsimile, or other electronic means, if the recipient
has agreed to that method of delivery. If a document is delivered by
electronic means, delivery is complete at the time of transmission.
(4) By publication in a periodical that is circulated primarily to
members of the association.
(5) If the association broadcasts television programming for the
purpose of distributing information on association business to its
members, by inclusion in the programming.
(6) A method of delivery provided in a recorded provision of the
governing documents.
(7) Any other method of delivery, provided that the recipient has
agreed to that method of delivery.
(c) A document may be included in or delivered with a billing
statement, newsletter, or other document that is delivered by one of
the methods provided in subdivision (b).
(d) For the purposes of this section, an unrecorded provision of
the governing documents providing for a particular method of delivery
does not constitute agreement by a member of the association to that
method of delivery.
SEC. 5. An article heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1351, to read:
Article 2. Definitions
SEC. 6. A chapter heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1352, to read:
CHAPTER 2. GOVERNING DOCUMENTS
SEC. 7. An article heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1352, to read:
Article 1. Creation
SEC. 8. An article heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1354, to read:
Article 2. Enforcement
SEC. 9. An article heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1355, to read:
Article 3. Amendment
SEC. 10. Article 4 (commencing with Section 1357.100) is added to
Title 6 of Part 4 of Division 2 of the Civil Code, immediately
following Section 1357, to read:
Article 4. Operating Rules
1357.100. As used in this article, "rule
article:
(a) "Operating rule" means a regulation adopted by the board of
directors of the association that applies generally to the management
and operation of the common interest development or the conduct of
the business and affairs of the association.
(b) "Rule change" means the adoption, amendment, or repeal
of an operating rule by the board of directors of the association.
1357.110. An operating rule is valid and enforceable only if all
of the following requirements are satisfied:
(a) The rule is in writing.
(b) The rule is within the authority of the board of directors of
the association conferred by law or by the declaration, articles of
incorporation or association, or bylaws of the association.
(c) The rule is not inconsistent with governing law and the
declaration, articles of incorporation or association, and bylaws of
the association.
(d) The rule is adopted, amended, or repealed in good faith and in
substantial compliance with the requirements of this article.
(e) The rule is reasonable.
1357.120. (a) Sections 1357.130 and 1357.140 only apply to
an operating rule that relates to one or more of the following
subjects:
(1) Use of the common area or of an exclusive use common area.
(2) Use of a separate interest, including any aesthetic or
architectural standards that govern alteration of a separate
interest.
(3) Member discipline, including any schedule of monetary
penalties for violation of the governing documents and any procedure
for the imposition of penalties.
(4) Any standards for delinquent assessment payment plans.
(5) Any procedures adopted by the association for resolution of
assessment disputes.
(b) Sections 1357.130 and 1357.140 do not apply to the following
actions by the board of directors of an association:
(1) A decision regarding maintenance of the common area.
(2) A decision on a specific matter that is not intended to apply
generally.
(3) A decision setting the amount of a regular or special
assessment.
(4) A rule change that is required by law, if the board of
directors has no discretion as to the substantive effect of the rule
change.
(5) Issuance of a document that merely repeats existing law or the
governing documents.
1357.130. (a) The board of directors shall provide
written notice of a proposed rule change to the members
at least 10 25 days before making
the rule change. Notice is not required under this subdivision if
the board of directors determines that an immediate rule change is
necessary to address an imminent threat to public health or safety or
imminent risk of substantial economic loss to the association.
(b) A decision on a proposed rule change shall be made at a
meeting of the board of directors, after consideration of any
comments made by association members.
(c) As soon as possible after making a rule change, but not more
than 15 days after making the rule change, the board of directors
shall deliver notice of the rule change to every association member.
(d) If the board of directors determines that an immediate rule
change is required to address an imminent threat to public health or
safety, or an imminent risk of substantial economic loss to the
association, it may make an emergency rule change; and no notice is
required, as specified in subdivision (a). An emergency rule change
is effective for 120 days, unless the rule change provides for a
shorter effective period. A rule change made under this subdivision
may not be readopted under this subdivision.
(e) A notice required by this section is subject to Section
1350.7.
1357.130.
1357.140. (a) Members of an association owning 5 percent or
more of the separate interests may call a special meeting to reverse
a rule change.
(b) A special meeting of the members may be called by
delivering a written request to the chair
president or secretary of the board of directors , after
which the board shall deliver notice of the meeting to association's
members and hold the meeting in conformity with Section 7511 of the
Corporations Code . The written request may not be delivered
more than 30 days after the members of the association are notified
of the rule change. Members are deemed to have been notified of a
rule change on delivery of notice of the rule change, or on
enforcement of the resulting rule, whichever is sooner. For the
purposes of Section 8330 of the Corporations Code, collection of
signatures to call a special meeting under this section is a purpose
reasonably related to the interests of the members of the
association. A member request to copy or inspect the membership list
solely for that purpose may not be denied on the grounds that the
purpose is not reasonably related to the member's interests as a
member.
(c) The rule change may be reversed by the affirmative vote of a
majority of the votes represented and voting at a duly held meeting
at which a quorum is present (which affirmative votes also constitute
a majority of the required quorum) or by written ballot in
conformity with Section 7513 of the Corporations Code , or
if the declaration or bylaws require a greater proportion, by the
affirmative vote or written ballot of the proportion required.
In lieu of calling the meeting described in this section, the board
may distribute a written ballot to every member of the association in
conformity with the requirements of Section 7513 of the Corporations
Code.
(d) Unless otherwise provided in the declaration or bylaws, for
the purposes of this section, a member may cast one vote per separate
interest owned.
(e) A meeting called under this section is governed by Chapter 5
(commencing with Section 7510) of Part 3 of Division 2 of Title 1 of,
and Sections 7612 and 7613 of, the Corporations Code.
(f) A rule change reversed under this section may not be readopted
for one year after the date of the meeting reversing the rule
change. Nothing in this section precludes the board of
directors from adopting a different rule on the same subject as the
rule change that has been reversed.
(g) The As soon as possible after the
close of voting, but not more than 15 days after the close of voting,
the board of directors shall provide notice of the results of
a member vote held pursuant to this section to every association
member. Delivery of notice under this subdivision is subject to
Section 1350.7.
(h) This section does not apply to an emergency rule change made
under subdivision (d) of section 1357.120.
1357.140. (a) Sections 1357.120 and 1357.130 only apply to an
operating rule that relates to one or more of the following subjects:
(1) Use of the common area or of an exclusive use common area.
(2) Use of a separate interest, including any aesthetic or
architectural standards that govern alteration of a separate
interest.
(3) Member discipline, including any schedule of monetary
penalties for violation of the governing documents and any procedure
for the imposition of penalties.
(4) Assessment collection procedures.
(b) Sections 1357.120 and 1357.130 do not apply to the following
actions by the board of directors of an association:
(1) A decision regarding maintenance of the common area.
(2) A decision in a specific case that is not intended to apply
generally.
(3) A decision setting the amount of a regular or special
assessment.
(4) A rule change that is required by law, if the board of
directors has no discretion as to the substantive effect of the rule
change.
(5) Issuance of a document that merely repeats existing law or the
governing documents.
1357.150. (a) This article applies to a rule change commenced on
or after January 1, 2004.
(b) Nothing in this article affects the validity of a rule change
commenced before January 1, 2004.
(c) For the purposes of this section, a rule change is commenced
when the board of directors of the association takes its first
official action leading to adoption of the rule change.
SEC. 11. A chapter heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1358, to read:
CHAPTER 3. OWNERSHIP RIGHTS AND INTERESTS
SEC. 12. A chapter heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1363, to read:
CHAPTER 4. GOVERNANCE
SEC. 13. An article heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1363, to read:
Article 1. Association
SEC. 14. Section 1363 of the Civil Code is amended to read:
1363. (a) A common interest development shall be managed by an
association which may be incorporated or unincorporated. The
association may be referred to as a community association.
(b) An association, whether incorporated or unincorporated, shall
prepare a budget pursuant to Section 1365 and disclose information,
if requested, in accordance with Section 1368.
(c) Unless the governing documents provide otherwise, and
regardless of whether the association is incorporated or
unincorporated, the association may exercise the powers granted to a
nonprofit mutual benefit corporation, as enumerated in Section 7140
of the Corporations Code, except that an unincorporated association
may not adopt or use a corporate seal or issue membership
certificates in accordance with Section 7313 of the Corporations
Code.
The association, whether incorporated or unincorporated, may
exercise the powers granted to an association by Section 383 of the
Code of Civil Procedure and the powers granted to the association in
this title.
(d) Meetings of the membership of the association shall be
conducted in accordance with a recognized system of parliamentary
procedure or any parliamentary procedures the association may adopt.
(e) Notwithstanding any other provision of law, notice of meetings
of the members shall specify those matters the board intends to
present for action by the members, but, except as otherwise provided
by law, any proper matter may be presented at the meeting for action.
(f) Members of the association shall have access to association
records, including accounting books and records and membership lists,
in accordance with Article 3 (commencing with Section 8330) of
Chapter 13 of Part 3 of Division 2 of Title 1 of the Corporations
Code. The members of the association shall have the same access to
the operating rules of the association as they have to the accounting
books and records of the association.
(g) If an association adopts or has adopted a policy imposing any
monetary penalty, including any fee, on any association member for a
violation of the governing documents or rules of the association,
including any monetary penalty relating to the activities of a guest
or invitee of a member, the board of directors shall adopt and
distribute to each member, by personal delivery or first-class mail,
a schedule of the monetary penalties that may be assessed for those
violations, which shall be in accordance with authorization for
member discipline contained in the governing documents. The board of
directors shall not be required to distribute any additional
schedules of monetary penalties unless there are changes from the
schedule that was adopted and distributed to the members pursuant to
this subdivision.
(h) When the board of directors is to meet to consider or impose
discipline upon a member, the board shall notify the member in
writing, by either personal delivery or first-class mail, at least 10
days prior to the meeting. The notification shall contain, at a
minimum, the date, time, and place of the meeting, the nature of the
alleged violation for which a member may be disciplined, and a
statement that the member has a right to attend and may address the
board at the meeting. The board of directors of the association
shall meet in executive session if requested by the member being
disciplined.
If the board imposes discipline on a member, the board shall
provide the member a written notification of the disciplinary action,
by either personal delivery or first-class mail, within 15 days
following the action. A disciplinary action shall not be effective
against a member unless the board fulfills the requirements of this
subdivision.
(i) Whenever two or more associations have consolidated any of
their functions under a joint neighborhood association or similar
organization, members of each participating association shall be
entitled to attend all meetings of the joint association other than
executive sessions, (1) shall be given reasonable opportunity for
participation in those meetings and (2) shall be entitled to the same
access to the joint association's records as they are to the
participating association's records.
(j) Nothing in this section shall be construed to create, expand,
or reduce the authority of the board of directors of an association
to impose monetary penalties on an association member for a violation
of the governing documents or rules of the association.
SEC. 15. An article heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1363.05, to read:
Article 2. Common Interest Development Open Meeting Act
SEC. 16. An article heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1363.1, to read:
Article 3. Managing Agents
SEC. 17. An article heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1363.5, to read:
Article 4. Public Information
SEC. 18. A chapter heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1364, to read:
CHAPTER 5. OPERATIONS
SEC. 19. An article heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1364, to read:
Article 1. Common Areas
SEC. 20. An article heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1365, to read:
Article 2. Fiscal Matters
SEC. 21. An article heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1365.7, to read:
Article 3. Insurance
SEC. 22. An article heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1366, to read:
Article 4. Assessments
SEC. 23. A chapter heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1368, to read:
CHAPTER 6. TRANSFER OF OWNERSHIP INTERESTS
SEC. 24. Section 1368 of the Civil Code is amended to read:
1368. (a) The owner of a separate interest, other than an owner
subject to the requirements of Section 11018.6 of the Business and
Professions Code, shall, as soon as practicable before transfer of
title to the separate interest or execution of a real property sales
contract therefor, as defined in Section 2985, provide the following
to the prospective purchaser:
(1) A copy of the governing documents of the common interest
development, including any operating rules, and including a copy of
the association's articles of incorporation, or, if not incorporated,
a statement in writing from an authorized representative of the
association that the association is not incorporated.
(2) If there is a restriction in the governing documents limiting
the occupancy, residency, or use of a separate interest on the basis
of age in a manner different from that provided in Section 51.3, a
statement that the restriction is only enforceable to the extent
permitted by Section 51.3 and a statement specifying the applicable
provisions of Section 51.3.
(3) A copy of the most recent documents distributed pursuant to
Section 1365.
(4) A true statement in writing obtained from an authorized
representative of the association as to the amount of the association'
s current regular and special assessments and fees, any assessments
levied upon the owner's interest in the common interest development
that are unpaid on the date of the statement, and any monetary fines
or penalties levied upon the owner's interest and unpaid on the date
of the statement. The statement obtained from an authorized
representative shall also include true information on late charges,
interest, and costs of collection which, as of the date of the
statement, are or may be made a lien upon the owner's interest in a
common interest development pursuant to Section 1367 or 1367.1.
(5) A copy or a summary of any notice previously sent to the owner
pursuant to subdivision (h) of Section 1363 that sets forth any
alleged violation of the governing documents that remains unresolved
at the time of the request. The notice shall not be deemed a waiver
of the association's right to enforce the governing documents against
the owner or the prospective purchaser of the separate interest with
respect to any violation. This paragraph shall not be construed to
require an association to inspect an owner's separate interest.
(6) A copy of the preliminary list of defects provided to each
member of the association pursuant to Section 1375, unless the
association and the builder subsequently enter into a settlement
agreement or otherwise resolve the matter and the association
complies with Section 1375.1. Disclosure of the preliminary list of
defects pursuant to this paragraph shall not waive any privilege
attached to the document. The preliminary list of defects shall also
include a statement that a final determination as to whether the
list of defects is accurate and complete has not been made.
(7) A copy of the latest information provided for in Section
1375.1.
(8) Any change in the association's current regular and special
assessments and fees which have been approved by the association's
board of directors, but have not become due and payable as of the
date disclosure is provided pursuant to this subdivision.
(b) Upon written request, an association shall, within 10 days of
the mailing or delivery of the request, provide the owner of a
separate interest with a copy of the requested items specified in
paragraphs (1) to (8), inclusive, of subdivision (a). The
association may charge a fee for this service, which shall not exceed
the association's reasonable cost to prepare and reproduce the
requested items.
(c) An association shall not impose or collect any assessment,
penalty, or fee in connection with a transfer of title or any other
interest except the association's actual costs to change its records
and that authorized by subdivision (b).
(d) Any person or entity who willfully violates this section shall
be liable to the purchaser of a separate interest which is subject
to this section for actual damages occasioned thereby and, in
addition, shall pay a civil penalty in an amount not to exceed five
hundred dollars ($500). In an action to enforce this liability, the
prevailing party shall be awarded reasonable attorneys' fees.
(e) Nothing in this section affects the validity of title to real
property transferred in violation of this section.
(f) In addition to the requirements of this section, an owner
transferring title to a separate interest shall comply with
applicable requirements of Sections 1133 and 1134.
SEC. 25. A chapter heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1368.4, to read:
CHAPTER 7. CIVIL ACTIONS AND LIENS
SEC. 26. A chapter heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1370, to read:
CHAPTER 8. CONSTRUCTION OF INSTRUMENTS AND ZONING
SEC. 27. A chapter heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1375, to read:
CHAPTER 9. CONSTRUCTION DEFECT LITIGATION
SEC. 28. A chapter heading is added to Title 6 (commencing with
Section 1350) of Part 4 of Division 2 of the Civil Code, immediately
preceding Section 1376, to read:
CHAPTER 10. IMPROVEMENTS
SEC. 29. Section 1373 of the Civil Code is amended to read:
1373.
(a) The following provisions do not apply to a common interest
development that is limited to industrial or commercial uses by
zoning or by its declaration:
(1) Section 1356.
(2) Article 4 (commencing with Section 1357.100) of Chapter 2 of
Title 6 of Part 4 of Division 2 of the Civil Code.
(3) Subdivision (b) of Section 1363.
(4) Section 1365.
(5) Section 1365.5.
(6) Subdivision (b) of Section 1366.
(7) Section 1366.1.
(8) Section 1368.
(b) The Legislature finds that the provisions listed in
subdivision (a) are appropriate to protect purchasers in residential
common interest developments, however, the provisions may not be
necessary to protect purchasers in commercial or industrial
developments since the application of those provisions could result
in unnecessary burdens and costs for these types of developments.