BILL NUMBER: AB 770 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 26, 2006
AMENDED IN ASSEMBLY JANUARY 23, 2006
AMENDED IN ASSEMBLY APRIL 25, 2005
AMENDED IN ASSEMBLY MARCH 31, 2005
INTRODUCED BY Assembly Member Mullin
FEBRUARY 18, 2005
An act to amend Section 11504 of the Business and Professions
Code, and to amend Sections 1369.510 and
Section 1373 of, to add Section 1363.7 to, and to add Chapter
11 (commencing with Section 1380.010) to Title 6 of Part 4 of
Division 2 of, the Civil Code, relating to common interest
developments.
LEGISLATIVE COUNSEL'S DIGEST
AB 770, as amended, Mullin Common interest developments:
ombudsperson.
(1) Existing law requires a person who either provides or
contemplates providing the services of a common interest development
manager to a community association to annually disclose to the board
of directors of the community association specified information,
including whether or not he or she has met certain requirements to be
called a certified common interest development manager and the
location of his or her primary office.
This bill would require this information to be disclosed in
writing, and would additionally require the person to disclose
whether or not he or she has read the governing documents of the
community association.
(2) The Davis-Stirling Common Interest Development Act defines and
regulates common interest developments, which include condominiums
and planned developments. 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, until January 1, 2012
July 1, 2009 , 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 report annually to the Legislature, and to submit
recommendations to the Legislature on specified topics by January 1,
2009. The bill would require the Ombudsperson, commencing July 1,
2007 , 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 as specified.
This bill would impose a biennial association fee on
common interest development associations to fund the
administration of the provisions of the bill, for deposit
, payable upon filing specified information with the Secretary
of State. The bill would require the Secretary of State to
deposit the fee revenue in a newly created fund, the Fee
Account of the Common Interest Development Ombudsperson Fund ,
for the administration of these provisions upon appropriation by the
Legislature. The bill would require the Secretary of State to develop
a form for an association that is excused from paying the fee to
certify that another association has paid the fee, as specified. The
bill would provide that costs incurred by the Secretary of State
pursuant to these provisions shall be reimbursed from the Common
Interest Development Ombudsperson Fund .
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 11504 of the Business and Professions Code is
amended to read:
11504. (a) On or before September 1, 2003, and on an annual basis
thereafter, a person who either provides or contemplates providing
the services of a common interest development manager to a community
association shall disclose to the board of directors of the community
association the following information in writing:
(1) Whether or not the common interest development manager has met
the requirements of Section 11502 so he or she may be called a
certified common interest development manager.
(2) The name, address, and telephone number of the professional
association that certified the common interest development manager,
the date the manager was certified, and the status of the
certification.
(3) The location of his or her primary office.
(4) Prior to entering into or renewing a contract with a community
association, the common interest development manager shall disclose
to the governing board of the community association whether the
fidelity insurance of the community manager or his or her employer
covers the operating and reserve funds of the community association.
This requirement may not be construed to compel or require a
community association or common interest development manager to
require fidelity insurance.
(5) Possession of an active real estate license, if applicable.
(6) Whether or not the common interest development manager has
read the governing documents of the community association.
(b) This section may not preclude a common interest development
manager from disclosing information as required in Section 1363.1 of
the Civil Code.
SEC. 2. 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. 3. 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 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. 4. 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.
(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.
SEC. 5. SEC. 4. Chapter 11
(commencing with Section 1380.010) is added to Title 6 of Part 4 of
Division 2 of the Civil Code, to read:
CHAPTER 11. Common Interest Development Ombudsperson Pilot
Project
Article 1. Definitions
1380.010. Unless the provision or context otherwise requires, the
definitions in this article govern the construction of this chapter.
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.
Article 2. Administration
1380.100. The Legislature finds and declares all of the
following:
(a) There are more than 36,000 41,000
residential common interest developments in California,
comprising more than 3,000,000 4,300,000
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 Consumer Affairs.
(b) Commencing July 1, 2007, the Director of Consumer Affairs
shall employ , pursuant to the State Civil Service Act (Part 2
(commencing with Section 18500) of Division 5 of Title 2 of the
Government Code), 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) 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, 2010 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.
(4) Whether the Ombudsperson should provide or subsidize mediation
of common interest development disputes.
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 fee . This fee is in addition to
the fee submitted pursuant to Section 1363.6. Failure to submit the
Common Interest Development Ombudsperson Fee
fee is deemed noncompliance with Section 1363.6. Costs
incurred by the Secretary of State pursuant to this section shall be
reimbursed from the Common Interest Development Ombudsperson Fund.
(b) The Common Interest Development Ombudsperson Fee
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) two dollars ($2) .
(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)
(d) Subdivision (b) of 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,
upon appropriation by the Legislature, are 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, 2012 July 1, 2009 , and as
of that date is repealed, unless a later enacted statute that is
enacted before January 1, 2012 July 1, 2009
, 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.
(c) Article 3 (commencing with Section 1380.200) and Article 4
(commencing with Section 1380.300) shall become operative on July 1,
2007.
Article 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, the director shall certify that he or she has read each of
the following:
(1) The declaration, articles of incorporation or association, and
bylaws of the association.
(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.
Article 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 between an
association and an owner that involves 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 fifty dollars ($50) 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. The
Ombudsperson shall not charge a fee for this service.