BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2430|
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THIRD READING
Bill No: AB 2430
Author: Maienschein (R)
Amended: 5/7/14 in Assembly
Vote: 21
SENATE JUDICIARY COMMITTEE : 6-0, 6/17/14
AYES: Jackson, Corbett, Lara, Leno, Monning, Vidak
NO VOTE RECORDED: Anderson
ASSEMBLY FLOOR : 78-0, 5/15/14 (Consent) - See last page for
vote
SUBJECT : Transfer disclosures
SOURCE : California Association of Realtors
DIGEST : This bill specifies that a common interest
development (CID) association may collect a reasonable fee from
the seller for the actual cost of providing these documents,
that the cost for these documents must be separately stated and
billed from other charges, and that these documents may not be
bundled with other documents required to be disclosed as part of
the sale.
ANALYSIS :
Existing law:
1.Establishes, under the Davis-Stirling Common Interest
Development Act (Davis-Stirling Act), the rules and
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regulations governing the operation of a CID and the
respective rights and duties of a homeowners association and
its members.
2.Requires certain transferors of real property, manufactured
homes, mobilehomes, and residential stock cooperatives,
consisting of one to four units, to provide detailed
disclosures to the transferee of the property.
3.Requires the following documents ("required documents") to be
provided to a prospective purchaser of a separate interest in
a CID as soon as practicable before transfer of title to the
separate interest: (a) a copy of the governing documents; (b)
a statement regarding the enforceability of a restriction on
occupancy based on age, as specified; (c) a copy of the
association's most recent financial documents, as specified;
(d) a true written statement regarding the amount of fees and
assessments, any unpaid assessments, and any monetary fines or
penalties levied against the separate interest; (e) a copy or
summary of any prior notice sent to the owner for an alleged
violation of the governing documents that remains unresolved;
(f) a copy of the preliminary list of defects provided to each
member of the association; (g) a copy of the latest
information regarding defects; (h) any change in assessments
which have been approved but not become due and payable as of
the date of disclosure; (i) a statement regarding prohibitions
in the governing documents regarding renting or leasing
separate interests; and (j) if requested, a copy of all
minutes from the association's board meetings conducted during
the previous 12 months.
4.Provides that, within 10 days of the mailing or delivery of
the request, the association shall provide the owner with a
copy of the 10 items described above. Those items may be
maintained in an electronic form and, if so, requesting
parties shall have the option of receiving them
electronically. Existing law authorizes the association to
charge a reasonable fee based upon the association's actual
cost to procure, prepare, and reproduce the requested items.
5.Imposes the following requirements:
A. An association shall provide a written or electronic
estimate of the fees that will be assessed for providing
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the requested documents;
B. Fees assessed for these documents shall be distinguished
from other fees, fines, or assessments billed as part of
the sales transaction;
C. Delivery of the documents shall not be withheld for any
reason nor subject to any condition except payment of the
allowable fee;
D. An association may provide the documents to a recipient
authorized by the owner; and
E. An association must provide the recipient with a copy of
the statutory form disclosing the amount billed for each
document being delivered.
This bill:
1.Modifies the statutory form disclosing the amount billed for
each document being delivered by allowing a seller to indicate
that a required document is being directly provided by the
seller, but only when the seller has confirmed in writing that
the document is a current document.
2.Clarifies that an association may collect a reasonable fee
from the seller based upon the association's actual cost for
the procurement, preparation, reproduction, and delivery of
the required documents. An additional fee shall not be
charged for the electronic delivery of these documents in lieu
of a hard copy. States that it is the responsibility of the
seller to compensate the association, person, or entity that
provides the required documents to the prospective purchaser.
3.Clarifies that the association shall provide a written or
electronic estimate of the fees that will be assessed for
providing the requested documents prior to processing the
request.
4.Requires that fees assessed by an association for these
documents shall be distinguished from, separately stated, and
separately billed from, all other fees, fines, or assessments
billed as part of the transfer or sales transaction. Requires
that fees assessed for each document provided to the seller
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for the purpose of transmission to the prospective purchaser
shall be individually itemized in the statement required to be
provided by the seller to the prospective purchaser.
5.Provides that a seller shall provide to the prospective
purchaser, at no cost, current copies of any of the required
documents that are in the possession of the seller.
6.Specifies that any documents not expressly required by this
section of the Davis-Stirling Act shall not be included in the
document disclosure, and that the bundling of documents
required to be provided with other documents relating to the
transaction is prohibited.
Background
In California, CIDs are governed by the Davis-Stirling Act. A
common interest development is a form of real estate where each
homeowner has an exclusive interest in a unit or lot and a
shared or undivided interest in common area property. Owners of
separate property in CIDs are subject to the CID's covenants,
conditions, and restrictions (CC&R's), as well as the bylaws and
operating rules of the development. These documents are
referred to collectively as the governing documents. CIDs are
also governed by a homeowners association, which is run by
volunteer directors that may or may not have prior experience
managing an association. The Court of Appeal, Fourth Appellate
District, previously observed that:
The homeowners associations function almost "as a second
municipal government, regulating many aspects of the homeowners'
daily lives." "Upon analysis of the association's functions,
one clearly sees the association as a quasi-government entity
paralleling in almost every case the powers, duties, and
responsibilities of a municipal government. As a
'mini-government,' the association provides to its members, in
almost every case, utility services, road maintenance, street
and common area lighting, and refuse removal. In many cases, it
also provides security services and various forms of
communication within the community. There is, moreover, a clear
analogy to the municipal police and public safety functions. . .
." In short, homeowners associations, via their enforcement of
the CC&R's, provide many beneficial and desirable services that
permit a common interest development to flourish. (Villa Milano
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Homeowners Ass'n v. Il Davorge (2000) 84 Cal.App.4th 819, 836
[citations omitted].)
In addition to the standard residential property disclosures
required when property is sold, purchasers of separate interests
within a CID must receive copies of the governing documents,
certain financial reports, disclosures regarding the
association's current regular and special assessments and fees,
unresolved notices of violation pertaining to the property, and
related information. Since those documents are generally in the
association's possession, existing law allows the seller of the
property to request copies of those documents and requires the
association to provide them within 10 days. Existing law
requires those disclosures to be delivered to the purchaser as
soon as practicable before transfer of title, or the execution
of a real property sales contract.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 6/19/14)
California Association of Realtors
ARGUMENTS IN SUPPORT : The author writes:
Civil Code Section 4530 was enacted by AB 771 in 2011 to
eliminate the practice of "document bundling" in transactions
involving the sale of units in CIDs. It was intended to
prohibit document bundling in CID transactions and clarify the
seller responsibilities in a transaction involving the sale of a
unit in a CID. Notwithstanding the current prohibitions in
Section 4530, bundling of escrow documents with the
Davis-Stirling Act required documents continues to be exercised
by the third party agents retained by CIDs to provide the
required documents to prospective purchasers. Additionally,
third-party agents are requiring prospective purchasers to pay
the fees for acquiring the Davis-Stirling documents before they
are provided, when the law calls for this compensation to be
paid by the seller.
AB 2430 proposes to make it "perfectly clear" that
non-Davis-Stirling documents cannot be bundled with the
Davis-Stirling documents that are required to be provided by the
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seller or seller's agent within 10 days of a request from the
prospective purchaser. AB 2430 also proposes to make it
"perfectly clear" that it is the seller who is required to pay
the document provider for provision of the documents to the
prospective purchaser, not the prospective purchaser.
ASSEMBLY FLOOR : 78-0, 5/15/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez,
Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, John A. P�rez, V.
Manuel P�rez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas,
Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron,
Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Mansoor, Vacancy
JA:e 6/19/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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