Amended in Senate April 28, 2014

Amended in Senate March 24, 2014

Senate Bill No. 1026

Introduced by Senator Vidak

February 14, 2014

An act to amend Sections 5705, 5710, and 6822 of the Civil Code, relating to common interest developments.

LEGISLATIVE COUNSEL’S DIGEST

SB 1026, as amended, Vidak. Common interest developments: assessment collection: notice.

The Davis-Stirling Common Interest Development Act governs the management and operation of common interest developments, except for those developments limited to industrial or commercial uses, which are governed by the Commercial and Industrial Common Interest Development Act. Each act requires specified procedures for the collection of delinquent assessments, including, but not limited to, a procedure for giving notice to an owner of a separate interest of collection actions.

This bill begin delete would allow, end delete begin insert would, until January 1, 2019, authorize, end insert under certain circumstances, an association governed by either act to serve an owner or owner’s representative with notice of a foreclosure action to collect delinquent assessments by posting a copy of the notice on the owner’s separate interest in a manner most likely to give actual notice to the party to be served and mailing a copy of the notice, as specified. begin insert The bill would also, until January 1, 2019, authorize, under certain circumstances the notice of foreclosure to be published. end insert

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 5705 of the Civil Code is amended to
read:

5705.  

(a) Notwithstanding any law or any provisions of the
governing documents to the contrary, this section shall apply to
debts for assessments that arise on and after January 1, 2006.

(b) Prior to initiating a foreclosure on an owner’s separate
interest, the association shall offer the owner and, if so requested
by the owner, participate in dispute resolution pursuant to the
association’s “meet and confer” program required in Article 2
(commencing with Section 5900) of Chapter 10 or alternative
dispute resolution as set forth in Article 3 (commencing with
Section 5925) of Chapter 10. The decision to pursue dispute
resolution or a particular type of alternative dispute resolution shall
be the choice of the owner, except that binding arbitration shall
not be available if the association intends to initiate a judicial
foreclosure.

(c) The decision to initiate foreclosure of a lien for delinquent
assessments that has been validly recorded shall be made only by
the board and may not be delegated to an agent of the association.
The board shall approve the decision by a majority vote of the
directors in an executive session. The board shall record the vote
in the minutes of the next meeting of the board open to all
members. The board shall maintain the confidentiality of the owner
or owners of the separate interest by identifying the matter in the
minutes by the parcel number of the property, rather than the name
of the owner or owners. A board vote to approve foreclosure of a
lien shall take place at least 30 days prior to any public sale.

(d) (1) The board shall provide notice by personal service in
accordance with the manner of service of summons in Article 3
(commencing with Section 415.10) of Chapter 4 of Title 5 of Part
2 of the Code of Civil Procedure to an owner of a separate interest
who occupies the separate interest or to the owner’s legal
representative, if the board votes to foreclose upon the separate
interest. The board shall provide written notice to an owner of a
separate interest who does not occupy the separate interest by
first-class mail, postage prepaid, at the most current address shown
on the books of the association. In the absence of written
notification by the owner to the association, the address of the
owner’s separate interest may be treated as the owner’s mailing
address.

(2) If after reasonable diligence the notice is not able to be
served on an owner or owner’s representative in accordance with
the manner of service set forth in paragraph (1), the association
may post a copy of the notice on the owner’s separate interest in
a manner most likely to give actual notice to the party to be served
and mail a copy of the notice by first-class mail to all known
addresses of the owner or owner’s representative. If the association
effects service by posting and mailing in accordance with this
paragraph, the association shall begin delete record end delete begin insert provide to the owner or
owner’s representative end insert a declaration of diligence, specifying in
reasonable detail the efforts made to effect service in accordance
with the manner of service of summons in Article 3 (commencing
with Section 415.10) of Chapter 4 of Title 5 of Part 2 of the Code
of Civil Procedure. The declaration shall contain the name, address,
and telephone number of the association, as well as the legal
description and assessor’s parcel number of the separate interest
subject to the notice. begin insert The declaration shall be sent by first-class
mail to all known addresses of the owner or owner’s representative. end insert

begin insert

(3) If after reasonable diligence the notice is not able to be
served on an owner or owner’s representative in accordance with
the manner of service set forth in paragraph (1), and after posting
and mailing a copy of the notice and providing a declaration as
set forth in paragraph (2), the association may publish the notice
once per week for three consecutive calendar weeks, and except
for the reference to the time period, shall otherwise conform to
the requirements of paragraph (2) of subdivision (b) of Section
2924f.

end insert begin insert

(4) For purposes of this subdivision, “diligence” means an
attempt to effect personal service by a process server who is not
affiliated with the common interest development, the homeowners
association, or its managers, attorneys, or agents, registered
pursuant to Section 22350 of the Business and Professions Code,
on three separate days at three different times of day, including
at least one attempt after normal business hours. At least one
attempt at personal service shall occur on a weekday, and at least
one attempt shall occur on a weekend day.

end insert begin insert

(5) Paragraphs (2) to (4), inclusive, of this subdivision shall
become inoperative on January 1, 2019.

end insert

SEC. 2.  

Section 5710 of the Civil Code is amended to read:

5710.  

(a) Any sale by the trustee shall be conducted in
accordance with Sections 2924, 2924b, and 2924c applicable to
the exercise of powers of sale in mortgages and deeds of trust.

(b) (1) In addition to the requirements of Section 2924, the
association shall serve a notice of default on the person named as
the owner of the separate interest in the association’s records or,
if that person has designated a legal representative pursuant to this
subdivision, on that legal representative. Service shall be in
accordance with the manner of service of summons in Article 3
(commencing with Section 415.10) of Chapter 4 of Title 5 of Part
2 of the Code of Civil Procedure. An owner may designate a legal
representative in a writing that is mailed to the association in a
manner that indicates that the association has received it.

(2) If after reasonable diligence the notice is not able to be
served on an owner or owner’s representative in accordance with
the manner of service set forth in paragraph (1), the association
may post a copy of the notice on the owner’s separate interest in
a manner most likely to give actual notice to the party to be served
and mail a copy of the notice by first-class mail to all known
addresses of the owner or owner’s representative. If the association
effects service by posting and mailing in accordance with this
paragraph, the association shall begin delete record end delete begin insert provide to the owner or
owner’s representative end insert a declaration of diligence, specifying in
reasonable detail the efforts made to effect service in accordance
with the manner of service of summons in Article 3 (commencing
with Section 415.10) of Chapter 4 of Title 5 of Part 2 of the Code
of Civil Procedure. The declaration shall contain the name, address,
and telephone number of the association, as well as the legal
description and assessor’s parcel number of the separate interest
subject to the notice. begin insert The declaration shall be sent by first-class
mail to all known addresses of the owner or owner’s representative. end insert

begin insert

(3) If after reasonable diligence the notice is not able to be
served on an owner or owner’s representative in accordance with
the manner of service set forth in paragraph (1), and after posting
and mailing a copy of the notice and providing a declaration as
set forth in paragraph (2), the association may publish the notice
once per week for three consecutive calendar weeks, and except
for the reference to the time period, shall otherwise conform to
the requirements of paragraph (2) of subdivision (b) of Section
2924f.

end insert begin insert

(4) For purposes of this section, “diligence” means an attempt
to effect personal service by a process server who is not affiliated
with the common interest development, the homeowners
association, or its managers, attorneys, or agents, registered
pursuant to Section 22350 of the Business and Professions Code,
on three separate days at three different times of day, including
at least one attempt after normal business hours. At least one
attempt at personal service shall occur on a weekday, and at least
one attempt shall occur on a weekend day.

end insert begin insert

(5) Paragraphs (2) to (4), inclusive, of this subdivision shall
become inoperative on January 1, 2019.

end insert

(c) The fees of a trustee may not exceed the amounts prescribed
in Sections 2924c and 2924d, plus the cost of service for either of
the following:

(1) The notice of default pursuant to subdivision (b).

(2) The decision of the board to foreclose upon the separate
interest of an owner as described in subdivision (d) of Section
5705.

SEC. 3.  

Section 6822 of the Civil Code is amended to read:

6822.  

(a) Any sale by the trustee shall be conducted in
accordance with Sections 2924, 2924b, and 2924c applicable to
the exercise of powers of sale in mortgages and deeds of trust.

(b) (1) In addition to the requirements of Section 2924, the
association shall serve a notice of default on the person named as
the owner of the separate interest in the association’s records or,
if that person has designated a legal representative pursuant to this
subdivision, on that legal representative. Service shall be in
accordance with the manner of service of summons in Article 3
(commencing with Section 415.10) of Chapter 4 of Title 5 of Part
2 of the Code of Civil Procedure. An owner may designate a legal
representative in a writing that is mailed to the association in a
manner that indicates that the association has received it.

(2) If after reasonable diligence the notice is not able to be
served on an owner or owner’s representative in accordance with
the manner of service set forth in paragraph (1), the association
may post a copy of the notice on the owner’s separate interest in
a manner most likely to give actual notice to the party to be served
and mail a copy of the notice by first-class mail to all known
addresses of the owner or owner’s representative. If the association
effects service by posting and mailing in accordance with this
paragraph, the association shall begin delete record end delete begin insert provide to the owner or
owner’s representative end insert a declaration of diligence, specifying in
reasonable detail the efforts made to effect service in accordance
with the manner of service of summons in Article 3 (commencing
with Section 415.10) of Chapter 4 of Title 5 of Part 2 of the Code
of Civil Procedure. The declaration shall contain the name, address,
and telephone number of the association, as well as the legal
description and assessor’s parcel number of the separate interest
subject to the notice. begin insert The declaration shall be sent by first-class
mail to all known addresses of the owner or owner’s representative. end insert

begin insert

(3) If after reasonable diligence the notice is not able to be
served on an owner or owner’s representative in accordance with
the manner of service set forth in paragraph (1), and after posting
and mailing a copy of the notice and providing a declaration as
set forth in paragraph (2), the association may publish the notice
once per week for three consecutive calendar weeks, and except
for the reference to the time period, shall otherwise conform to
the requirements of paragraph (2) of subdivision (b) of Section
2924f.

end insert begin insert

(4) For purposes of this section, “diligence” means an attempt
to effect personal service by a process server who is not affiliated
with the common interest development, the homeowners
association, or its managers, attorneys, or agents, registered
pursuant to Section 22350 of the Business and Professions Code,
on three separate days at three different times of day, including
at least one attempt after normal business hours. At least one
attempt at personal service shall occur on a weekday, and at least
one attempt shall occur on a weekend day.

end insert begin insert

(5) Paragraphs (2) to (4), inclusive, of this subdivision shall
become inoperative on January 1, 2019.

end insert

(c) The fees of a trustee may not exceed the amounts prescribed
in Sections 2924c and 2924d, plus the cost of service for the notice
of default pursuant to subdivision (b).