BILL ANALYSIS
AB 1836
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1836 (Harman)
As Amended July 6, 2004
Majority vote
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|ASSEMBLY: |76-0 |(May 20, 2004) |SENATE: |37-0 |(August 12, |
| | | | | |2004) |
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Original Committee Reference: H. & C.D.
SUMMARY : Enacts recommendations by the California Law Revision
Commission (CLRC) revising the requirements and process for
alternative dispute resolution used by homeowner associations
and homeowners.
The Senate amendments :
1)Make minor technical non-substantive changes.
2)Add double joining language to avoid a conflict with AB 2376
(Bates), pending in the Senate.
AS PASSED BY THE ASSEMBLY , this bill:
1)Required a fair and reasonable process be provided internally
by an association for members and the board to resolve
disputes through a meet and confer mechanism not requiring a
neutral third party.
2)Required that in order for a meet and confer process to be
deemed fair and reasonable it include the following:
a) The right for either an association or a homeowner to
invoke the process in writing. However, a homeowner may
refuse a request to meet and confer but an association may
not refuse;
b) The procedure must provide prompt deadlines;
c) A resolution that is not in conflict with the law or
governing documents is binding on the association;
d) Allow for the homeowner and the association to explain
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their positions;
e) The right of appeal by the homeowner to the board of the
association; and,
f) No fee shall be charged to the member.
3)Required a party attempt to submit their dispute to
alternative dispute resolution prior to filing suit if they
are seeking declaratory, injunctive or writ relief or for that
relief in conjunction with a claim of damages less than
$5,000.
4)Defined alternative dispute resolution as mediation,
arbitration, conciliation or other nonjudicial procedure
involving a neutral third party. The form may be binding or
nonbinding at the choice of the parties involved.
5)Required alternative dispute resolution prior to filing suit
for any action to enforce the Davis- Stirling Common Interest
Development Act (Davis-Stirling Act), Nonprofit Mutual Benefit
Corporation Law (NMBCL), or the governing documents of the
association.
6)Required that in order to initiate the process of alternative
dispute resolution any party may serve all other parties with
a Request for Resolution that includes:
a) A brief description of the dispute and a request for
alternative dispute resolution;
b) A notice that the receiving party is required to respond
within 30 days or the request will be deemed denied; and,
c) A copy of the articles enacted by this bill establishing
the process for alternative dispute resolution.
7)Required a Request for Resolution to be by personal delivery,
first class mail, express mail, fax, or other means that would
reasonably be assumed to notify the receiving party.
8)Provided that a court may take into account a party's prior
refusal for requested alternative dispute resolution when
determining the amount of an award in a subsequent suit.
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9)Required homeowner associations to provide annual notice that
includes a summary of the association's internal dispute
resolution process.
FISCAL EFFECT : None
COMMENTS : This bill reorganizes the alternative dispute
resolution processes and procedures contained in the
Davis-Stirling Act and expands the scope of the disputes to
which alternative dispute resolution processes and procedures
must or can be applied within common interest developments. The
author's office states that this bill was introduced to enact
recommendations made by CLRC.
A common interest housing development is characterized by: 1)
separate ownership of dwelling space coupled with an undivided
interest in the common area; 2) covenants, conditions, and
restrictions that limit use of both the common area and separate
ownership interests; and, 3) administration of common property
by a homeowners association.
Two tiers prior to court action: This bill establishes a
two-tier process to address disputes prior to a party pursuing
enforcement through the courts. The first step is an informal
meet and confer process that seeks to encourage personal
communication between a homeowner and their board. In most
cases disputes have gone beyond this step but CLRC argues that
some associations need these basic ground rules. The meet and
confer process encourages communication and does not bind any
party to a decision merely by the fact that they agree to meet
and confer. This procedure is designed to be a no cost process
that does not call for a third party.
The second step reforms and strengthens the existing process for
alternative dispute resolution. Specifically, alternative
dispute resolution is expanded to those actions seeking to
enforce the Davis-Stirling Act or NMBCL. This means that any of
the provisions of law in dispute ranging from requirements that
financial documents be made public, as required by AB 104
(Lowenthal), Chapter 375, Statutes of 2003, or restrictions on
pets (Civil Code Section 1360.5), shall endeavor to submit the
issue to alternative dispute resolution prior to pursuing court
action.
AB 1836
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Analysis Prepared by : Jay Barkman & Hugh Bower / H. & C.D. /
(916) 319-2085
FN: 0006873