BILL ANALYSIS �
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: ab 1838
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: calderon
VERSION: 5/7/12
Analysis by: Mark Stivers FISCAL: No
Hearing date: June 26, 2012
SUBJECT:
Common interest developments: fees for sale-related documents
DESCRIPTION:
This bill prohibits a common interest development from charging
a cancellation fee related to the provision of sale-related
documents in specified situations.
ANALYSIS:
A common-interest development (CID) is a form of real estate in
which each homeowner has an exclusive interest in a unit or lot
and a shared or undivided interest in common area property.
Condominiums, planned unit developments, stock cooperatives,
community apartments, and many resident-owned mobilehome parks
all fall under the umbrella of common interest developments. A
homeowners' association with an elected board of directors
governs each CID. The Davis-Stirling Common Interest
Development Act provides the legal framework under which common
interest developments are established and operate.
Current law requires the seller of a unit in a CID to provide a
prospective purchaser with various documents related to the CID,
including:
The CID's governing documents.
A statement regarding any age restrictions in the CID.
The CID's most recent budget, financial audit, reserve funding
plan, and insurance summary.
The amount of the CID's current regular and special
assessments and fees, as well as any unpaid assessments, fees,
or fines related to the unit.
Notice of any change in the CID's current regular and special
assessments and fees that the board has approved but which
have not yet become due.
A summary of any pending rule violations related to the unit.
AB 1838 (CALDERON) Page 2
The preliminary list of any construction defects that is the
subject of potential or actual litigation against the
developer and, if applicable, a summary of any settlement.
A statement, if applicable, describing any provision in the
governing documents that prohibits the rental or leasing of a
unit.
If requested by the purchaser, a copy of the minutes of the
association's meetings conducted over the previous 12 months.
Because the CID, rather than the unit owner, maintains these
documents, current law requires the CID to provide the selling
owner with a copy of these documents within ten days of a
request. The CID may collect a reasonable fee based upon its
actual cost to procure, prepare, reproduce, and deliver the
documents. In addition, upon request, the CID must provide on a
specified form a written estimate of fees for the provision of
these documents.
This bill prohibits a CID from charging a cancellation fee
related to the provision of these documents when the requestor
cancels the request in writing and work has not yet been
performed on the order or any work that had been performed was
compensated. The bill also requires that the form estimating
the fees for the provision of these documents to be in at least
10-point type.
COMMENTS:
1.Purpose of the bill . According to the sponsor, CID use of
cancelation fees has become an issue and should be prohibited
when the CID has performed no work. The sponsor also believes
that this bill will ensure that the new statutory disclosure
form relating to the documents the buyer is entitled to
receive is easy to read.
2.What about refunds ? This bill prohibits a CID from charging
an additional fee to cancel an order for sale-related
documents in specified circumstances. The bill is silent,
however, on whether or not a CID must refund any initial fees
paid to provide the documents in the event that a request is
cancelled prior to the CID performing any or all of the work
on the request. While a CID should receive compensation for
work and materials it provides, there is no rationale for a
CID to keep all fees when it performs no or only partial work.
The committee may wish to consider amending the bill to
require a refund of any portion of fees covering work that a
AB 1838 (CALDERON) Page 3
CID has not performed.
3.Integrating this bill with AB 805 (Torres) . Reflecting the
work of the California Law Revision Commission, AB 805
(Torres) moves and reorganizes the Davis-Stirling Act. At
some point, the author will need to add a section to his bill
to incorporate his changes into the new statutory scheme of AB
805, which is currently on the Senate Floor.
4.Chaptering conflict . This bill has a chaptering conflict with
AB 2697 (Housing and Community Development Committee), the
omnibus housing bill, which is also on today's agenda.
Because the items in AB 2697 are non-controversial, the author
of this bill may just want to add the AB 2697 changes to
resolve the conflict.
5.Double referral . The Rules Committee has referred this bill
to both this committee and the Judiciary Committee.
Assembly Votes:
Floor: 74-1
Judic: 10-0
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 20, 2012)
SUPPORT: Associa (sponsor)
California Association of Realtors
Executive Council of Homeowners
OPPOSED: None received.