BILL NUMBER: SB 551 AMENDED
BILL TEXT
AMENDED IN SENATE JANUARY 23, 2006
AMENDED IN SENATE JANUARY 9, 2006
AMENDED IN SENATE JANUARY 4, 2006
AMENDED IN SENATE APRIL 18, 2005
AMENDED IN SENATE APRIL 12, 2005
AMENDED IN SENATE MARCH 29, 2005
INTRODUCED BY Senator Lowenthal
FEBRUARY 18, 2005
An act to amend 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 , and making an appropriation therefor
.
LEGISLATIVE COUNSEL'S DIGEST
SB 551, as amended, Lowenthal Common interest developments:
ombudsperson.
Existing law defines and regulates common interest developments,
which include condominiums and planned developments. Existing law
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.
This bill would, 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 to,
among other things, 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 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 , which would be subject to
appropriation by the Legislature . Because the funds
in that account would be continuously appropriated, the bill would
make an appropriation.
Vote: majority. Appropriation: yes no
. Fiscal committee: 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 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. 3. 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 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.
(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) The Director 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) The ombudsperson may convene an advisory committee to make
recommendations on matters within the ombudsperson's jurisdiction. A
member of an advisory committee shall may
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). For the purposes of this section, "separate
interest" has the meaning provided in Section 1351.
(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) An assessment increase necessary to recover the fee imposed by
this section shall not be included in any calculation for purposes
of subdivision (b) of Section 1366.
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 shall be used exclusively for expenditures
necessary for the proper administration of this chapter , upon
appropriation by the Legislature .
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 review 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.
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 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
bylaws 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.