BILL ANALYSIS �
AB 1738
Page 1
ASSEMBLY THIRD READING
AB 1738 (Chau)
As Amended May 1, 2014
Majority vote
HOUSING 7-0 JUDICIARY 10-0
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|Ayes:|Chau, Beth Gaines, |Ayes:|Wieckowski, Wagner, |
| |Gordon, Brown, | |Alejo, Chau, Dickinson, |
| |Maienschein, Quirk-Silva, | |Garcia, Gorell, |
| |Yamada | |Maienschein, Muratsuchi, |
| | | |Stone |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Requires the internal dispute resolution (IDR) process
used by a common interest development (CID) to allow a member
and the homeowners association (HOA) to have an attorney present
or another person if either party provides notice as specified.
Specifically, this bill :
1)Clarifies that an agreement reached as part of an IDR is only
judicially enforceable if the agreement is in writing.
2)Requires an IDR process developed by an HOA to allow a member
and the HOA to have an attorney or another person present if
they choose, to explain their respective positions, and to
seek to negotiate a mutually satisfactory resolution to the
dispute.
3)Requires the member or the HOA to give 10 days written notice
to the other party of their intent to bring an attorney or
another person.
4)Provides that, if the notice is not provided by either the
member or HOA, the party that does not receive notice can
elect to postpone the IDR until the notice requirement is met.
5)Specifies that each party must pay the cost of their attorney
fees.
FISCAL EFFECT : None
AB 1738
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COMMENTS :
There are over 50,000 CIDs in the state that range in size from
three to 27,000 units. CIDs make up over 4.9 million housing
units which represents approximately one quarter of the state's
housing stock. CIDs include condominiums, community apartment
projects, housing cooperatives, and planned unit developments.
CIDs are governed by the Davis-Stirling Act as well as the
governing documents of the association including bylaws,
declaration, and operating rules.
Conflicts arise between members of an HOA and the board of
directors regarding interpretation of the governing documents
and operating rules. In 2004, AB 1836 (Harmon), Chapter 754,
Statutes of 2004, required that HOAs provide the members an IDR
process at no cost. Either the member or the HOA can request
IDR, however the HOA cannot compel the member to participate.
Any agreement that is reached in IDR that is not in conflict
with the law or the governing documents is judicially
enforceable. If an HOA does not provide an IDR procedure, then
the bill created a statutory "meet and confer" process that HOAs
must follow. The bill was sponsored by the California Law
Revision Commission to give HOAs a standard, informal process to
try to resolve disputes before they become serious.
Purpose of the bill: The law is silent on whether a member or
the HOA can have legal counsel present at an IDR procedure. In
practice, some HOAs invite a member to bring an attorney to an
IDR procedure. In other cases, an HOA may have their attorney
attend without noticing the member and deny the member's request
to have counsel. The governing documents and the Davis-Stirling
Act can be difficult for a lay person to understand. In an
effort to level the playing field during IDR, this bill allows
both the HOA and the member to bring legal counsel if they have
notified the other party five days before the procedure. If
either party shows up to the IDR procedure with legal counsel
and has not provided the five-day notice then the other party
can choose to postpone the IDR session until the notice is
received.
This bill also allows a member to bring an assistant that is not
legal counsel. The sponsor contends that some members may need
help communicating their concerns to the HOA or resolving the
AB 1738
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dispute. Although there is nothing in existing law that would
prevent a member from bringing along someone to assist them
during the IDR procedure, this bill would make clear that they
can. IDR was intended to be a low-cost option for members and
the HOA to resolve disputes. Although, having attorneys
participate may increase the cost for both sides this bill makes
clear that each side is responsible for paying for their own
attorney fees.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0003344