BILL ANALYSIS
AB 2376
Page 1
Date of Hearing: May 4, 2004
ASSEMBLY COMMITTEE ON JUDICIARY
Ellen M. Corbett, Chair
AB 2376 (Bates) - As Introduced: February 19, 2004
PROPOSED CONSENT (As Proposed to be Amended)
SUBJECT : COMMON INTEREST DEVELOPMENTS: APPROVAL OF PHYSICAL
CHANGE REQUESTS
KEY ISSUE : SHOULD HOMEOWNER ASSOCIATIONS HAVE A FAIR,
REASONABLE AND EXPEDITIOUS PROCESS FOR MAKING DECISIONS IN THOSE
CIRCUMSTANCES WHEN THE ASSOCIATION'S GOVERNING DOCUMENTS REQUIRE
ASSOCIATION APPROVAL BEFORE AN OWNER MAY MAKE A PHYSICAL CHANGE
TO THE OWNER'S SEPARATE PROPERTY OR TO COMMON AREAS WITHIN THE
OWNER'S CONTROL?
SYNOPSIS
As proposed to be amended, this non-controversial bill
implements a recommendation of the California Law Revision
Commission. It requires that homeowner associations in common
interest developments provide a fair, reasonable, and
expeditious procedure for making decisions regarding approval of
homeowner requests to make physical changes to the owner's
property in those circumstances where the governing documents of
the association require approval. The bill further specifies
that a decision on a proposed change shall be made in good faith
and shall not be unreasonable, arbitrary, or capricious, and
requires that any procedures for reviewing and approving or
disapproving these requests be adopted by established rulemaking
procedures and included within the association's operating
rules.
SUMMARY : Regulates common interest developments. Specifically,
this bill :
1)Requires that homeowner associations in common interest
developments provide a fair, reasonable, and expeditious
procedure for making decisions regarding approval of homeowner
requests to make physical changes to the owner's property in
those circumstances where the governing documents of the
association require approval, and specifies certain minimum
standards for the procedure.
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2)Requires that such decisions be made in good faith and not be
unreasonable, arbitrary, or capricious, and requires that any
procedures for reviewing and approving or disapproving these
requests be adopted by established rulemaking procedures and
included within the association's operating rules.
3)Makes other technical and conforming changes to the
Davis-Stirling Act.
EXISTING LAW:
1)Generally regulates various aspects of the creation and
operation of common interest developments. (Civil Code
section 1351 et seq. Further statutory references are to this
code unless otherwise noted.)
2)Recognizes that homeowner associations, as quasi-governmental
entities that owe fiduciary duties to their members, are
required to adhere to due process and equal protection
obligations. (See Cohen v. Kite Hill Community Assn., 142
Cal.App.3d 642, 650-651 (1983) and authorities there cited.
See also Grand Bay of Brecksville Condominium v. Markos, 1999
Ohio App. Lexis 1162 (Ohio App. Ct. 1999).)
3)Requires that a decision regarding a proposed change to a
homeowner's separate interest property be made in good faith,
pursuant to a fair and reasonable procedure. (See Ironwood
Owners Ass'n IX v. Solomon, 178 Cal. App. 3d 766, 772, 224
Cal. Rptr. 18 (1986).)
FISCAL EFFECT : As currently in print, this bill is keyed
non-fiscal.
COMMENTS : According to the author, this bill is designed to
provide statutory guidelines for associations to follow in
acting on requests for approval of physical changes to an
owner's property when the governing documents of the CID require
such approval.
The California Law Revision explains, "The governing documents
of many common interest developments require approval of the
community association before a homeowner can make a physical
change to the homeowner's separate interest property. For
example, a homeowner might be required to obtain association
approval before adding a room, choosing a color of exterior
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paint, or planting flowers in a front yard. There is no
statutory procedure for making such a decision. Existing case
law requires that a decision regarding a proposed change to a
homeowner's separate interest property be made in good faith,
pursuant to a fair and reasonable procedure. The Commission
recommends that this requirement be codified. This will serve to
educate homeowners and association officials of their rights and
duties with respect to the decisionmaking process. The proposed
law would also require that a disapproval decision be in
writing, with an explanation of the association's reason for
disapproving the proposed change. A homeowner whose proposed
change is disapproved would have the right to seek
reconsideration of the disapproval decision at an open meeting
of the board of directors. These requirements would improve the
fairness of the process, without imposing significant costs on
the association."
Under the bill, the procedure must be fair, reasonable and
expeditious in light of all the circumstances, and shall provide
for prompt deadlines. The requirement that the procedure be
reasonable and expeditious takes into account that a fixed
deadline might not be appropriate for every type of dispute.
What is reasonable and expeditious with respect to the timeframe
for decision regarding a flower pot may not be the same as a
decision regarding new construction where proposed financing
must be resolved within a specified period of time prescribed by
a lender. The fundamental principle is that the dispute
resolution procedure should be fair, reasonable and expeditious
in light of all the circumstances.
Pending Related Legislation. AB 1836 (Harman), also before the
Committee today, is another CLRC-sponsored bill. It would
provide for certain internal dispute resolution processes and
reform the mandatory ADR requirement before suit on issues
related to common interest developments.
REGISTERED SUPPORT / OPPOSITION :
Support (if amended)
California Association of Community Managers
Congress of California Seniors
AB 2376
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Opposition
None on file.
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334