BILL NUMBER: AB 770 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 31, 2005
INTRODUCED BY Assembly Member Mullin
FEBRUARY 18, 2005
An act to amend Sections 1369.510 and 1373 of, to add Section
1363.7 to, and to add Chapter 11 (commencing with Section
1380) 1380.010) to Title 6 of Part 4 of
Division 2 of , the Civil Code, relating to common
interest developments , and making an appropriation therefor
.
LEGISLATIVE COUNSEL'S DIGEST
AB 770, as amended, Mullin. Common interest developments:
bureau ombudsperson .
Existing law The Davis‑Stirling
Common Interest Development Act defines and regulates common
interest developments, which include condominiums and planned
developments. Existing law The act
requires that a common interest development be managed by an
association, and establishes requirements for association operating
rules and meetings and for the resolution of specified disputes.
Among other things, the act requires the association that manages a
development to provide a fair, reasonable, and expeditious
procedure for resolving disputes between the association and members
of the association involving their rights, duties, or liabilities
under the act. The act also requires an association or an owner of a
separate interest or a member of an association to endeavor to submit
their dispute to alternative dispute resolution before they file
certain enforcement actions in the superior court.
This bill would add provisions regarding the Common
Interest Development Bureau, that consist of a definition of that
bureau , until January 1, 2011, establish in the
Department of Consumer Affairs, the Office of the Common Interest
Development Ombudsperson. The bill would require the Ombudsperson,
among other things, to offer training materials and courses to common
interest development directors, officers, and owners, in
subjects relevant to the operation of a common interest development
and the rights and duties of an association or owner. The bill would
require the Ombudsperson to maintain a toll‑free telephone
number and Internet Web site for purposes of further providing that
information and assistance, and would require an association director
or agent to meet certain requirements in that regard. The bill would
authorize the Ombudsperson to provide assistance in resolving common
interest development disputes, and would require a specified fee for
that resolution. The bill would impose a biennial association fee on
common interest development associations to fund the administration
of the provisions of the bill, for deposit in a newly created fund,
the Fee Account of the Common Interest Development Ombudsperson Fund.
Because the funds in that account would be continuously
appropriated, the bill would make an appropriation .
Vote: majority. Appropriation: no yes
. Fiscal committee: no yes .
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 1363.7 is added to the Civil
Code , to read:
1363.7. An association shall provide its members with annual
written notice of the Internet Web site address and toll-free
telephone number of the Common Interest Development Ombudsperson
established pursuant to Chapter 11 (commencing with Section
1380.010).
SEC. 2. Section 1369.510 of the Civil Code
is amended to read:
1369.510. As used in this article:
(a) "Alternative dispute resolution" means mediation, arbitration,
conciliation, or other nonjudicial procedure , including
mediation pursuant to Section 1380.300, that involves a neutral
party in the decisionmaking decision making
process. The form of alternative dispute resolution chosen
pursuant to this article may be binding or nonbinding, with the
voluntary consent of the parties.
(b) "Enforcement action" means a civil action or proceeding, other
than a cross-complaint, for any of the following purposes:
(1) Enforcement of this title.
(2) Enforcement of the Nonprofit Mutual Benefit Corporation Law
(Part 3 (commencing with Section 7110) of Division 2 of Title 1 of
the Corporations Code).
(3) Enforcement of the governing documents of a common interest
development.
SEC. 3. 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 a declaration of covenants, conditions, and
restrictions that has been recorded in the official records of each
county in which the common interest development is located:
(1) Section 1356.
(2) Article 4 (commencing with Section 1357.100) of Chapter 2
of Title 6 of Part 4 of Division 2 .
(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.
(9) Section 1378.
(10) Chapter 11 (commencing with Section 1380.010).
(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.
SECTION 1.
SEC. 4. Chapter 11 (commencing with Section
1380) 1380.010) is added to Title 6 of Part 4 of
Division 2 of the Civil Code , to read:
CHAPTER 11. COMMON INTEREST DEVELOPMENT BUREAU
OMBUDSPERSON PILOT PROJECT
Article 1. Definitions
1380.
1380.010. Unless the provision or context otherwise
requires, the definitions in this article govern the construction of
this chapter.
1381. "Bureau" means the Common Interest Development Bureau.
1380.020. "Owner" means the owner of a separate interest.
1380.030. "Person" includes a natural person, firm, association,
organization, partnership, business trust, corporation, limited
liability company, or public entity.
2. Administration
1380.100. The Legislature finds and declares all of the
following:
(a) There are more than 36,000 residential common interest
developments in California, comprising more than 3,000,000 dwellings.
Common interest developments comprise approximately
one‑quarter of the state's housing stock.
(b) Managing a common interest development is a complex
responsibility. Community associations are run by volunteer directors
who may have little or no prior experience in managing real
property, operating a nonprofit association or corporation, complying
with the law governing common interest developments, and
interpreting and enforcing restrictions and rules imposed by the
governing documents of the common interest development. Homeowners
may not fully understand their rights and obligations under the law
and the governing documents. Mistakes and misunderstandings are
inevitable and may lead to serious, costly, and divisive problems.
The Common Interest Development Ombudsperson seeks to educate
community association officers and homeowners as to their legal
rights and obligations. Effective education can prevent or reduce the
severity of problems within a common interest development.
(c) The principal remedy for a violation of common interest
development law is private litigation. Litigation is not an ideal
remedy for many common interest development disputes, where the
disputants are neighbors who must maintain ongoing relationships. The
adversarial nature of litigation can disrupt these relationships,
creating animosity that degrades the quality of life within the
community and makes future disputes more likely to arise. Litigation
imposes costs on a common interest development community as a whole,
costs that must be paid by all members through increased assessments.
Many homeowners cannot afford to bring a lawsuit and are effectively
denied the benefit of laws designed for their protection. The Common
Interest Development Ombudsperson provides a neutral, nonjudicial
forum for resolution of common interest development disputes. Many
disputes can be resolved inexpensively, informally, and amicably
through ombudsperson-facilitated mediation.
(d) Anecdotal accounts of abuses within common interest
developments create continuing public demand for reform of common
interest development law. This results in frequent changes to the
law, making it more difficult to understand and apply and imposing
significant transitional costs on common interest developments
statewide. By collecting empirical data on the nature and incidence
of problems within common interest developments, the Common Interest
Development Ombudsperson provides a sound basis for prioritizing
reform efforts, thereby increasing the stability of common interest
development law.
(e) The costs of the Common Interest Development Ombudsperson
Pilot Project shall be borne entirely by common interest development
homeowners, through imposition of a biennial fee.
1380.110. (a) There is in the Department of Consumer Affairs the
Office of the Common Interest Development Ombudsperson, under the
supervision and control of the director of the Department of Consumer
Affairs.
(b) The director of the Department of Consumer Affairs shall
employ a Common Interest Development Ombudsperson and other officers
and employees as necessary to discharge the requirements of this
chapter. The Common Interest Development Ombudsperson shall have the
powers delegated by the director.
(c) The Ombudsperson shall adopt rules governing practices and
procedures under this chapter. Any rule adopted under this
subdivision is subject to the rulemaking provisions of the
Administrative Procedure Act (Chapter 3.5 (commencing with Section
11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(d) Information and advice provided by the Ombudsperson has no
binding legal effect and is not subject to the rulemaking provisions
of the Administrative Procedure Act (Chapter 3.5 (commencing with
Section 11340) of Part 1 of Division 3 of Title 2 of the Government
Code).
(e) There shall be no liability on the part of, and no cause of
action of any nature shall arise against, the State of California or
any of its employees, agents, or representatives for providing or
failing to provide information or advice pursuant to this chapter.
(f) The Ombudsperson may convene an advisory committee to make
recommendations on matters within the Ombudsperson's jurisdiction. A
member of an advisory committee shall receive per diem and expenses
pursuant to Section 103 of the Business and Professions Code. In
selecting the members of an advisory committee, the Ombudsperson
shall ensure a fair representation of the interests involved.
1380.120. The Common Interest Development Ombudsperson shall
report annually to the Legislature, no later than October 1 of each
year. The report shall include all of the following information:
(a) Annual workload and performance data, including the number of
requests for assistance received, the manner in which a request was
or was not resolved, and the staff time required to resolve the
inquiry. For each category of data, the Ombudsperson shall provide
subtotals based on the type of question or dispute involved in the
request.
(b) Analysis of the most common and serious types of disputes
within common interest developments, along with any recommendations
for statutory reform to reduce the frequency or severity of those
disputes.
(c) On or before January 1, 2009, the Ombudsperson shall submit
recommendations to the Legislature on the following topics:
(1) Whether the Ombudsperson should be authorized to enforce
common interest development law.
(2) Whether the Ombudsperson should be authorized to oversee
association elections.
(3) Whether the scope of application of Section 1380.230 should be
narrowed or broadened.
1380.130. (a) On filing information with the Secretary of State
every two years, pursuant to subdivision (a) of Section 1363.6, an
association shall submit a Common Interest Development Ombudsperson
Fee. This fee is in addition to the fee submitted pursuant to Section
1363.6. Failure to submit the Common Interest Development
Ombudsperson Fee is deemed noncompliance with Section 1363.6.
(b) The Common Interest Development Ombudsperson Fee shall equal
the number of separate interests within the association multiplied by
the biennial fee amount. The initial biennial fee amount is ten
dollars ($10).
(c) An association is excused from paying the fee for a separate
interest if another association has paid the fee for that separate
interest. An association that is excused from paying the fee for a
separate interest shall certify, on a form developed by the Secretary
of State for that purpose, that another association has paid the fee
for that separate interest. The Ombudsperson may adopt, by
regulation, a rule governing which association is required to pay the
fee for a separate interest that is part of more than one
association.
(d) The Common Interest Development Ombudsperson shall increase or
decrease the biennial fee amount every two years to provide only the
revenue that it estimates will be necessary for its operation during
the next two‑year period. The biennial fee amount shall not
exceed twenty dollars ($20).
(e) Section 1366 does not limit an assessment increase necessary
to recover the fee imposed by this section.
1380.140. Common Interest Development Ombudsperson fee revenue
received by the Secretary of State and fee revenue received by the
Common Interest Development Ombudsperson shall be transferred to the
State Treasurer and placed in the Fee Account of the Common Interest
Development Ombudsperson Fund, which is hereby created. All funds in
the Fee Account of the Common Interest Development Ombudsperson Fund
are continuously appropriated to the Ombudsperson, to be used
exclusively for expenditures necessary for the proper administration
of this chapter.
1380.150. (a) This chapter shall remain in effect only until
January 1, 2011, and as of that date is repealed, unless a later
enacted statute that is enacted before January 1, 2011, deletes or
extends that date.
(b) The Common Interest Development Ombudsperson Pilot Project is
subject to the sunset review process conducted by the Joint Committee
on Boards, Commissions, and Consumer Protection pursuant to Division
1.2 (commencing with Section 473) of the Business and Professions
Code.
3. Education
1380.200. (a) The Common Interest Development Ombudsperson shall
offer training materials and courses to common interest development
directors, officers, and owners, in subjects relevant to the
operation of a common interest development and the rights and duties
of an association or owner.
(b) The Ombudsperson may charge a fee for training materials or
courses, not to exceed their actual cost.
1380.210. The Common Interest Development Ombudsperson shall
maintain a toll‑free telephone number to provide information or
assistance on matters relating to common interest developments.
1380.220. (a) The Common Interest Development Ombudsperson shall
maintain an Internet Web site, which shall provide all of the
following information:
(1) The text of this title, the Nonprofit Mutual Benefit
Corporation Law (Part 3 (commencing with Section 7110) of Division 2
of Title 1 of the Corporations Code), and any other statute or
regulation that the Ombudsperson determines would be relevant to the
operation of a common interest development or the rights and duties
of an association or owner.
(2) Information concerning nonjudicial resolution of disputes that
may arise within a common interest development, including contacts
for locally available dispute resolution programs organized pursuant
to Chapter 8 (commencing with Section 465) of Division 1 of the
Business and Professions Code.
(3) A description of the services provided by the Ombudsperson and
information on how to contact the Ombudsperson for assistance.
(4) An analysis, prepared each year, of legislative changes to
common interest development law.
(5) Any other information that the Ombudsperson determines would
be useful to an association or owner.
(b) Information provided on the Ombudsperson's Internet Web site
shall also be made available in printed form. The Ombudsperson may
charge a fee for the purchase of printed material, not to exceed the
actual cost of printing and delivery.
1380.230. (a) Within 60 days of assuming office as an association
director or providing services as a managing agent, an association
director or managing agent shall certify that the director or
managing agent has read each of the following:
(1) The declaration, articles of incorporation or association, and
by-laws of the association that the director or managing agent
serves.
(2) This title or, if the Common Interest Development Ombudsperson
prepares a detailed summary of the requirements of this title, that
summary.
(b) A director shall file the certification required by this
section with the Ombudsperson. A managing agent shall file the
certification required by this section with the association served by
that managing agent.
(c) For the purposes of this section, "managing agent" means a
person or entity who, for compensation or in expectation of
compensation, exercises control over the assets of a common interest
development. "Managing agent" does not include a regulated financial
institution operating within the normal course of its regulated
business practice.
4. Informal Dispute Resolution
1380.300. (a) Any interested person may request that the office
of the Common Interest Development Ombudsperson provide assistance in
resolving a dispute involving the law governing common interest
developments or the governing documents of a common interest
development.
(b) On receipt of a request for assistance the Ombudsperson shall,
within the limits of the available resources, confer with the
interested parties and assist in efforts to resolve the dispute by
mutual agreement of the parties. If a dispute cannot be resolved
through informal conference, the Ombudsperson may offer to mediate
the dispute.
(c) The Ombudsperson may, by regulation, adopt a fee for mediation
services of not more than twenty‑five dollars ($25) per
mediation.
(d) The Ombudsperson may contract with private parties to provide
mediation services pursuant to this section.
(e) Chapter 2 (commencing with Section 1115) of Division 9 of the
Evidence Code applies to mediation initiated under this section.