January 8, 2014

Temporary Relocation: New Davis-Stirling Act Makes It Clear That Owners Pay Their Own Expenses

By David Swedelson and Cyrus Koochek, Community Association Attorneys at SwedelsonGottlieb

Relocation_expenses_-_Google_Search-2.pngSince the old Davis-Stirling Act was made into law in 1985, there has been a small debate over whether an owner or their association is responsible for temporary relocation costs incurred when owners in a common interest development are required to vacate their units or homes for common area repairs. Former California Civil Code Section 1364(c) stated that the “costs of temporary relocation during the repair and maintenance of the areas within the responsibility of the association shall be borne by the owner of the separate interest affected.” On its own, this provision seems clear enough; however, because this language was found in the code section that also dealt with termite fumigation, and because it followed the provision dealing with termite fumigation, some owners were confused and debated the issue with their association’s board and management, claiming that unless the relocation was as a result of a treatment for termites, their association had to pay their relocation costs. They were confused and wrong.

Taking the location of this provision into context, it is easy to understand why confusion arose. Immediately preceding the temporary relocation costs provision was a subsection devoted to explaining whether the association or the individual owners are responsible for repairs and maintenance of areas subject to wood-destroying pests and organisms. This had led to some owners and others to question whether the temporary relocation costs provision was intended to apply only to wood-destroying pests and organisms, or for all circumstances resulting in temporary relocations. There really was no debate, as the section that dealt with temporary relocation was separate from the section dealing with wood destroying pests. But it was apparently confusing.

Continue reading "Temporary Relocation: New Davis-Stirling Act Makes It Clear That Owners Pay Their Own Expenses" »

December 11, 2013

New Davis-Stirling Act & Reserve Funding — Updated Law Amounts to New Set of Civil Code References for Reserve Funding Matters

By Robert Nordlund, Association Reserves and
David Swedelson, SwedelsonGottlieb

Reserve%20article.pngThe body of statutory law (as opposed to case law) governing California Community Associations, known as the Davis-Stirling Common Interest Development Act, went into effect on January 1, 1986. As the industry developed and matured over the last 27 years, approximately 50 changes and amendments were made to the Act. While those adjustments were well-intended, the net effect yielded a disorganized and confusing body of law. To address this problem, a multi-year effort was launched to rewrite the Davis-Stirling Act. This “new” Davis-Stirling Act, signed into law in 2012, becomes the guiding law for California residential community associations on January 1, 2014. So you are probably asking what are the major changes and how does the re-write affect reserve funding issues? The answer is no major changes have been made regarding reserve funding. For the most part, the new updated law amounts to new set of Civil Code references for reserve funding matters. Fortunately, the majority of the changes are just re-organization and renumbering. But there have been changes made to the Act as it applies to reserves.

To read the article prepared by David Swedelson and Robert Nordlund, follow this link.

January 1, 2012

Civil Code § 1373 - Developments Expressly Zoned As Industrial Or Commercial And Limited To Such Purposes.

(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 of Title 6 of Part 4 of Division 2.
(3) Section 1360.2.
(4) Subdivision (b) of Section 1363.
(5) Section 1365.
(6) Section 1365.5.
(7) Subdivision (b) of Section 1366.
(8) Section 1366.1.
(9) Section 1368.
(10) Section 1378.

(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.

January 1, 2012

Civil Code § 1368 - Documents Provided To Prospective Purchaser.

(a) The owner of a separate interest, other than an owner subject to the requirements of Section 11018.6 of the Business and Professions Code, shall, as soon as practicable before transfer of title to the separate interest or execution of a real property sales contract therefor, as defined in Section 2985, provide the following to the prospective purchaser:
(1) A copy of the governing documents of the common interest development, including any operating rules, and including a copy of the association's articles of incorporation, or, if not incorporated, a statement in writing from an authorized representative of the association that the association is not incorporated.
(2) If there is a restriction in the governing documents limiting the occupancy, residency, or use of a separate interest on the basis of age in a manner different from that provided in Section 51.3, a statement that the restriction is only enforceable to the extent permitted by Section 51.3 and a statement specifying the applicable provisions of Section 51.3.
(3) A copy of the most recent documents distributed pursuant to Section 1365.
(4) A true statement in writing obtained from an authorized representative of the association as to the amount of the association's current regular and special assessments and fees, any assessments levied upon the owner's interest in the common interest development that are unpaid on the date of the statement, and any monetary fines or penalties levied upon the owner's interest and unpaid on the date of the statement. The statement obtained from an authorized representative shall also include true information on late charges, interest, and costs of collection which, as of the date of the statement, are or may be made a lien upon the owner's interest in a common interest development pursuant to Section 1367 or 1367.1.
(5) A copy or a summary of any notice previously sent to the owner pursuant to subdivision (h) of Section 1363 that sets forth any alleged violation of the governing documents that remains unresolved at the time of the request. The notice shall not be deemed a waiver of the association's right to enforce the governing documents against the owner or the prospective purchaser of the separate interest with respect to any violation. This paragraph shall not be construed to require an association to inspect an owner's separate interest.
(6) A copy of the preliminary list of defects provided to each member of the association pursuant to Section 1375, unless the association and the builder subsequently enter into a settlement agreement or otherwise resolve the matter and the association complies with Section 1375.1. Disclosure of the preliminary list of defects pursuant to this paragraph does not waive any privilege attached to the document. The preliminary list of defects shall also include a statement that a final determination as to whether the list of defects is accurate and complete has not been made.
(7) A copy of the latest information provided for in Section 1375.1.
(8) Any change in the association's current regular and special assessments and fees which have been approved by the association's board of directors, but have not become due and payable as of the date disclosure is provided pursuant to this subdivision.
(9) If there is a provision in the governing documents that prohibits the rental or leasing of any of the separate interests in the common interest development to a renter, lessee or tenant, a statement describing the prohibition and its applicability.
(10) If requested by the prospective purchaser, a copy of the minutes of the meetings, excluding meetings held in executive session, of the association's board of directors, conducted over the previous 12 months, that were approved by the association's board of directors.

(b) Upon written request, the association shall, within 10 days of the mailing or delivery of the request, provide the owner of a separate interest, or any other recipient authorized by the owner, with a copy of the requested items specified in paragraphs (1) to (10), inclusive, of subdivision (a). Upon receipt of a written request, the association shall provide, on the form described in Section 1368.2, a written or electronic estimate of the fees that will be assessed for providing the requested documents. The documents required to be made available pursuant to this section may be maintained in electronic form, and may be posted on the association's Internet Web site. Requesting parties shall have the option of receiving the documents by electronic transmission if the association maintains the documents in electronic form. The association may collect a reasonable fee based upon the association's actual cost for the procurement, preparation, reproduction, and delivery of the documents requested pursuant to the provisions of this section.
(2) No additional fees may be charged by the association for the electronic delivery of the documents requested.
(3) (A) A cancellation fee for documents specified in subdivision (a) shall not be collected if either of the following applies:
(i) The request was canceled in writing by the same party that placed the order and work had not yet been performed on the order.
(ii) The request was canceled in writing and any work that had been performed on the order was compensated.
(B) The association shall refund all fees collected pursuant to paragraph (1) if the request was canceled in writing and work had not yet been performed on the order.
(C) If the request was canceled in writing, the association shall refund the share of fees collected pursuant to paragraph (1) that represents the portion of the work not performed on the order.
(4) Fees for any documents required by this section shall be distinguished from other fees, fines, or assessments billed as part of the transfer or sales transaction. Delivery of the documents required by this section shall not be withheld for any reason nor subject to any condition except the payment of the fee allowed pursuant to paragraph (1).
(5) An association may contract with any person or entity to facilitate compliance with the requirements of this subdivision on behalf of the association.
(6) The association shall also provide a recipient authorized by the owner of a separate interest with a copy of the completed form specified in Section 1368.2 at the time the required documents are delivered.

(c) (1) Except as provided in paragraph (2), neither an association nor a community service organization or similar entity may impose or collect any assessment, penalty, or fee in connection with a transfer of title or any other interest except for the following:
(A) An amount not to exceed the association's actual costs to change its records.
(B) An amount authorized by subdivision (b).
(2) The prohibition in paragraph (1) does not apply to a community service organization or similar entity, or to a nonprofit entity that provides services to a common interest development under a declaration of trust, that is described in subparagraph (A) or (B):
(A) The community service organization or similar entity satisfies both of the following requirements:
(i) The community service organization or similar entity was established prior to February 20, 2003.
(ii) The community service organization or similar entity exists and operates, in whole or in part, to fund or perform environmental mitigation or to restore or maintain wetlands or native habitat, as required by the state or local government as an express written condition of development.
(B) The community service organization or similar entity, or a nonprofit entity that provides services to a common interest development under a declaration of trust, satisfies all of the following requirements:
(i) The community service organization or similar entity is not an organization or entity described in subparagraph (A).
(ii) The community service organization or similar entity was established and received a transfer fee prior to January 1, 2004.
(iii) On and after January 1, 2006, the organization or entity offers a purchaser the following payment options for the fee or charge it collects at time of transfer:
(I) Paying the fee or charge at the time of transfer.
(II) Paying the fee or charge pursuant to an installment payment plan for a period of not less than seven years. If the purchaser elects to pay the fee or charge in installment payments, the community service organization or similar entity may also collect additional amounts that do not exceed the actual costs for billing and financing on the amount owed. If the purchaser sells the separate interest before the end of the installment payment plan period, he or she shall pay the remaining balance prior to transfer.
(3) For the purposes of this subdivision, a "community service organization or similar entity" means a nonprofit entity, other than an association, that is organized to provide services to residents of the common interest development or to the public in addition to the residents, to the extent community common areas or facilities are available to the public. A "community service organization or similar entity" does not include an entity that has been organized solely to raise moneys and contribute to other nonprofit organizations that are qualified as tax exempt under Section 501(c)(3) of the Internal Revenue Code and that provide housing or housing assistance.

(d) Any person or entity who willfully violates this section is liable to the purchaser of a separate interest that is subject to this section for actual damages occasioned thereby and, in addition, shall pay a civil penalty in an amount not to exceed five hundred dollars ($500). In an action to enforce this liability, the prevailing party shall be awarded reasonable attorneys' fees.

(e) Nothing in this section affects the validity of title to real property transferred in violation of this section.

(f) In addition to the requirements of this section, an owner transferring title to a separate interest shall comply with applicable requirements of Sections 1133 and 1134.

(g) For the purposes of this section, a person who acts as a community association manager is an agent, as defined in Section 2297, of the association.

January 1, 2012

Civil Code § 4210 - Association Information Statement

In order to facilitate the collection of regular assessments, special assessments, transfer fees as authorized by Sections 4530, 4575, and 4580, and similar charges, the board is authorized to record a statement or amended statement identifying relevant information for the association. This statement may include any or all of the following information:
(a) The name of the association as shown in the declaration or the current name of the association, if different.
(b) The name and address of a managing agent or treasurer of the association or other individual or entity authorized to receive assessments and fees imposed by the association.
(c) A daytime telephone number of the authorized party identified in subdivision (b) if a telephone number is available.
(d) A list of separate interests subject to assessment by the association, showing the assessor’s parcel number or legal description, or both, of the separate interests.
(e) The recording information identifying the declaration governing the association.
(f) If an amended statement is being recorded, the recording information identifying the prior statement or statements which the amendment is superseding.

January 1, 2012

Civil Code § 1363.5 - Articles Of Incorporation Disclosure Statement.

(a) The articles of incorporation of a common interest development association filed with the Secretary of State shall include a statement, which shall be in addition to the statement of purposes of the corporation, that does all of the following:
(1) Identifies the corporation as an association formed to manage a common interest development under the Davis-Stirling Common Interest Development Act.
(2) States the business or corporate office of the association, if any, and, if the office is not on the site of the common interest development, states the front street and nearest cross street for the physical location of the common interest development.
(3) States the name and address of the association's managing agent, as defined in Section 1363.1, if any.

(b) The statement filed by an incorporated association with the Secretary of State pursuant to Section 8210 of the Corporations Code shall also contain a statement identifying the corporation as an association formed to manage a common interest development association under the Davis-Stirling Common Interest Development Act.

January 1, 2012

Civil Code § 4600 - Grant of Exclusive Use Common Area

(a) Unless the governing documents specify a different percentage, the affirmative vote of members owning at least 67 percent of the separate interests in the common interest development shall be required before the board may grant exclusive use of any portion of the common area to a member.
(b) Subdivision (a) does not apply to the following actions:
(1) A reconveyance of all or any portion of that common area to the subdivider to enable the continuation of development that is in substantial conformance with a detailed plan of phased development submitted to the Real Estate Commissioner with the application for a public report.
(2) Any grant of exclusive use that is in substantial conformance with a detailed plan of phased development submitted to the Real Estate Commissioner with the application for a public report or in accordance with the governing documents approved by the Real Estate Commissioner.
(3) Any grant of exclusive use that is for any of the following reasons:
(A) To eliminate or correct engineering errors in documents recorded with the county recorder or on file with a public agency or utility company.
(B) To eliminate or correct encroachments due to errors in construction of any improvements.
(C) To permit changes in the plan of development submitted to the Real Estate Commissioner in circumstances where the changes are the result of topography, obstruction, hardship, aesthetic considerations, or environmental conditions.
(D) To fulfill the requirement of a public agency.
(E) To transfer the burden of management and maintenance of any common area that is generally inaccessible and not of general use to the membership at large of the association.
(F) To accommodate a disability.
(G) To assign a parking space, storage unit, or other amenity, that is designated in the declaration for assignment, but is not assigned by the declaration to a specific separate interest.
(H) To install and use an electric vehicle charging station in an owner’s garage or a designated parking space that meets the requirements of Section 4745, where the installation or use of the charging station requires reasonable access through, or across, the common area for utility lines or meters.
(I) To install and use an electric vehicle charging station through a license granted by an association under Section 4745.
(J) To comply with governing law.
(c) Any measure placed before the members requesting that the board grant exclusive use of any portion of the common area shall specify whether the association will receive any monetary consideration for the grant and whether the association or the transferee will be responsible for providing any insurance coverage for exclusive use of the common area.

October 24, 2011

New Law—Independent Contractors: Willful Misclassification SB 459 Corbett

By Sandra Gottlieb, Senior Partner SwedelsonGottlieb; Condo Lawyer and HOA Attorney

We know that there is a tendency to classify some condo and HOA staff as independent contractors rather then employees. Some community association boards want to do this because they think that such a classification will mean that their association will not have to pay for all of fees, charges, taxes, etc. that are normally associated with an employee. They also think that they can avoid vacation pay, payroll taxes, medical insurance, etc.

The staff member may want the independent contractor classification as then they believe that they will not have taxes deducted from their checks, that they can then write off their car and other expenses and benefit in other ways.

Well, the government knows what you are doing and they are not happy about it. There has been an increasing effort by the State and Federal governments to address this “problem". The fact is that in many situations, that staff member is not really an independent contractor, as they work full time at the association, use the equipment, etc. provided by the association and get their direction from the association.

Continue reading "New Law—Independent Contractors: Willful Misclassification SB 459 Corbett" »

July 26, 2011

Not Every Homeowners Association Is Subject to The Davis-Stirling Act

By David Swedelson, Community Association Attorney and Partner at SwedelsonGottlieb

The Davis-Stirling Common Interest Development Act is the common name of the portion of the California Civil Code beginning with section 1350, which governs condominium, cooperative, and planned unit development communities in California. It was enacted in 1985 by the California State Legislature and has been amended over 45 times.

There are many homeowner associations that look like any other and collect fees and assessments, but in fact are not subject to the Davis-Stirling Act based on the holdings in Mount Olympus Property Owners Ass'n v. Shpirt, 59 Cal. App. 4th 885 (Cal. App. 2d Dist. 1997) and Comm. to Save the Beverly Highlands Homes Ass'n v. Beverly Highlands Homes Ass'n, 92 Cal. App. 4th 1247 (Cal. App. 2d Dist. 2001).

In Mount Olympus, the court held that in order for a common interest development to exist and the Davis-Stirling Act to apply, “there must exist a common area owned either by the association or by the owners of the separate interests who possess appurtenant rights to the beneficial use and enjoyment of the common area.” The court did not interpret the Davis-Stirling Act to require that the common area be of a certain size or be used by the association in a particular manner.

In Beverly Highlands, the court used a similar analysis, and because the association did not own any land whatsoever, and because there was no land over which the owners had mutual or reciprocal easement rights appurtenant to their separate interests, it held that a common interest development did not exist and the Davis-Stirling Act therefore did not apply.

The courts in both Mount Olympus and Beverly Highlands held that the statutory common area requirement for a common interest development is met when the association owns a portion of land as common area.

So, if your association does not have nor own any common area, and the areas that the association does maintain are owned exclusively by the owners and no other owner has an easement to use that property, then it is very possible that your association is not subject to nor required to comply with the Davis-Stirling Act. If you are unsure, the board should consider having this issue analyzed by an attorney well versed in this area of the law.

David Swedelson is a California condo and HOA legal expert, and he can be reached via email at: dcs@sghoalaw.com.


December 23, 2000

Do You Have An Internal Dispute Resolution Process

Effective January 1, 2005, Assembly Bill 1836 changes the current requirements and process for Alternative Dispute Resolution,  by amending the existing provisions of the Davis-Stirling Common Interest Development Act (“Act) and adding additional provisions to the Act.  This Bill was introduced to enact recommendations made by the California Law Review Commission (CLRC). This new legislation requires that associations adopt some form of Internal Dispute Resolution process, as discussed below, and it also expands the scope of the disputes to which the Alternative Dispute Resolution processes must or can be applied within community associations.

Existing law requires that certain disputes be submitted to Alternative Dispute Resolution prior to a lawsuit being filed, either by a homeowner or by the association.  This Bill establishes a two-tier process to address disputes prior to enforcement through the court system.  As of 2005, associations are required to implement an informal process by which homeowners and boards "meet and confer" to discuss their disputes.  The CLRC came to the conclusion that some association boards were not talking with homeowners regarding their disputes, and felt that by encouraging personal communication that many disputes would be resolved without court intervention.

If the dispute is not resolved through the informal “meet and confer” process, either the owner/member or the association must still submit the dispute to some form of formal Alternative Dispute Resolution (ADR) prior to filing a lawsuit in the Superior Court.

Assembly Bill 1836 amends Section 1354 of the Davis-Stirling Act to clarify that all governing documents, which include rules and regulations, Articles, Bylaws, as well as CC&Rs, may be enforced by any owner of a separate interest or by the association, or both.  This change reinforces the concept  recognized by the California Court of appeals in Beehan v Lido Isle Community Association that not all association disputes have to be enforced or resolved by the association.

As was the case prior to enactment of Assembly Bill 1836, neither associations nor homeowners are obligated to use the mandatory “meet and confer” and the ADR process for disputes involving a claim for monetary damages in excess of $5,000.00, Small Claims actions, or, except as provided in the Davis-Stirling Act, to assessment disputes.

This Bill also defines ADR as including mediation, arbitration, conciliation, or any other non-judicial procedure involving a neutral party in the decision-making process.

This new legislation also changes the requirements on how a Request for Resolution may be served.  Previously, there was some ambiguity in the law regarding whether a Request for Resolution had to be personally served.  The Court of Appeals addressed this ambiguity in the Cabrini Villas HOA case.  Realizing that it was becoming difficult for associations to comply with the ADR service requirements, the new law states that the Request for Resolution may be made by personal delivery, first class mail, express mail, fax, or any other means that would reasonably be assumed to notify the receiving party.

AB 1836 also repeals the provisions of Court of Civil Procedure 383, and adds Section 1368.3 to the Civil Code in its place.  Section 1368.3 provides that an association is entitled to institute, defend, settle, or intervene in litigation, arbitration, mediation, or administrative proceedings in its own name as the real party interest without joining the individual owners in certain disputes.

AB 1836 also amends Civil Code Section 1357.120 to reflect that associations are required to adopt an internal procedure for dispute resolution and that any procedures to be adopted by the Board are subject to the notice and rule change requirements of Civil Code Sections 1357.130 and 1357.140.  This Bill also adds two new requirements to Sections 1357.130 and 1357.140 (which are the sections adopted last year which require notice to members before the Board makes a rule change and allow members of an Association to reverse a rule change, respectively.  Essentially, the amendments to Sections 1357.130 and 1357.140 require that the Internal Dispute Resolution process adopted by an association must comply with the requirements of Section 1357.100 et seq, which means that before it becomes the law of an association, it must first be distributed to the members, to allow them an opportunity to oppose the new procedure.

Associations Must Adopt a Procedure for Internal Dispute Resolution

AB 1836 requires that associations either establish their own procedures for Internal Dispute Resolution or use the procedure set forth in new Civil Code Section 1363.840.  The procedures set forth in Section 1363.840 are as follows:

  1. Either the association or a homeowner may request that the other meet and confer in an effort to resolve a dispute involving their rights, duties or liabilities under the Davis-Stirling Common Interest Development Act, the Nonprofit Mutual Benefit Corporation law, or the governing documents of the common interest development.  The request must be in writing.
  2. Either the homeowner receiving such a request from the association may refuse to meet and confer.  However, if the association receives such a request from a homeowner, the association must accept the homeowner’s request to meet and confer.
  3. The association’s board of directors must designate a member of the board to meet and confer with the homeowner.
  4. The designated member of the board of directors and the homeowner shall meet promptly at a mutually convenient time and place; explain their positions to each other and confer in good faith in an effort to resolve this dispute.
  5. Any resolution of the dispute agreed to by the designated member of the board of directors and the homeowner must be memorialized in writing and signed by the designated member of the board of directors and the homeowner.

The association has the option of using the above procedure or may adopt its own process.  If the board of directors chooses to adopt its own process, the process is subject to the following:

  1. The meet and confer process must be “fair and reasonable.”
  2. The process must provide the right for either the association or a homeowner to invoke the process in writing.
  3. The procedure must provide prompt deadlines.
  4. The procedure must allow for the homeowner and the association to explain their positions and provide the right of appeal by the homeowner to the board of the association.

This new requirement of “a meet and confer” process is intended to foster communication, and that communication will not be binding on either the association or the disgruntled or rule-violating homeowner.  Assuming the agreement made through the meet and confer process is in writing, that resolution may be judicially enforceable, as long as the resolution is not in conflict with the law or the governing documents of the community association, and the agreement is either consistent with the authority granted by the Board of Directors to its designated representative or is ratified by the Board of Directors.

In developing an Internal Dispute Resolution process, Civil Code Section 1363.820(b) requires associations to “make maximum, reasonable use of available local Dispute Resolution programs involving a neutral third party, including low-cost mediation programs, such as those listed on the internet web sites of the Department of Consumer Affairs, and the United States Department of Housing and Urban Development.”

Conceivably, the meet and confer process implemented by a Board of Directors could include use of a mediation service.  However, this new law specifically states that no fee can be charged to the member for participating in the Board’s informal meet and confer process.  Should the dispute not be resolved and be subject to the formal ADR process, the cost of the ADR will be shared equally by the association and the homeowner.

AB 1836 requires that associations annually provide the members with a summary that specifically states:

Failure of a member of the association to comply with the alternative dispute resolution requirements of Section 1369.520 of the Civil Code may result in the loss of your right to sue the association or another member of the association regarding enforcement of the governing documents or the applicable law.

The summary must be provided “either at the time the pro forma budget required by Civil Code Section 1365 is distributed, or in the manner prescribed in Section 5016 of the Corporations Code.  The summary shall include a description of the association’s Internal Dispute Resolution process as required by Section 1363.850.”

Any new procedures adopted by the Board of Directors related to the Resolution of Disputes must comply with Civil Code Section 1357.130 and 1357.140, the procedure for enacting new rules (which, among other things, requires that the new rule or procedure be distributed to the members prior to becoming enforceable and allows members to vote to reverse a rule change).

December 8, 2000

REVISED Board of Directors Resolution to Record a Lien

The new laws affecting collection of delinquent assessments now require the Board of Directors of an Association to vote during an open meeting of the Board to make the decision to record a lien. S&G and Association Lien Services has developed a simple Resolution Document that details all of the steps that need to be taken during that Board meeting to ensure compliance with the California Civil Code. Just click on the link below to download the Resolution Document (REVISED January 2006)

Download bod_lien_resolution_final.pdf

November 29, 2000

Podcast/MP3 - SB 137 Teleconference

Missed the recent teleconference but still want to hear what Sandra Gottlieb and David Swedelson had to say about SB 137 and the new assessment collection law and procedures? You are in luck. Download this MP3 file to your IPOD, computer or other device that will allow you to listen to this important seminar. If you want a CD with this MP3, contact jennie@sghoalaw.com.

Download sg_sb_137_teleconference.mp3

November 28, 2000

2006 Sample Delinquent Assessment Collection Policy

Download 2006_sample_collection_policyv2.doc

November 16, 2000

11/17/05 Teleconference Outline

Download teleconference_outline_blog_posting.pdf

November 11, 2000

November 17, 2005 Teleconference

As of January 1, 2006, Senate Bill 137 takes effect and the civil code sections regarding assessment collection drastically alter the collection process. In addition, the new law will prohibit associations from foreclosing on an assessment lien unless the amount of assessments owed (not including costs or interest) is $1,800 or one year of delinquency has passed on any unpaid assessments.

Our attorneys have been diligently researching and deciphering every aspect of this new law. As a courtesy, SwedelsonGottlieb/Association Lien Services will be hosting a teleconference on Thursday, November 17, 2005, at 10:00 a.m., to explain new civil code changes. There will be time at the end of the conference for questions to be answered. Just prior to the audio conference call seminar we will send you, via email, an outline and timetable or you can download a copy at hoalawblog.com. If you cannot call in at the scheduled time, you will have the option of calling in later (within 24 hours from the scheduled call time) and listen to a recording of the conference call, questions asked and answers to questions.

To participate in our teleconference, please contact Jennie Swanson, (310) 207-2207 ext. 210 or jennie@sghoalaw.com, to receive the call-in number and password. An article on the new law is currently accessible on our blog site, hoalawblog.com, we recommend reviewing it prior to the teleconference to help formulate any questions you may want to ask.

November 11, 2000

Legislative Update: 2006 New Laws Affecting Community Associations

Download ca_law_update_article_blog_.pdf

October 25, 2000

2004 Annual Disclosure Checklist

That’s right, it’s budget time again.

Community managers and Board members are hard at work preparing their associations’ budgets and other required disclosure documents. As we do each year, Swedelson & Gottlieb is providing you with our 2004 Annual Disclosure Checklist.

The Checklist is in Adobe Acrobat PDF document format and can be downloaded by clicking on the following link. Download 2004ADC.pdf

Please contact our office at 800.372.2207 if you have any difficulties with the download.

October 2, 2000

What Is The Davis-Stirling Common Interest Development Act

The California State Legislature has passed many code sections or statutory laws that govern the formation and operation of condominium and homeowner associations. The Davis-Stirling Common Interest Development Act (Civil Code §§ 1350-1378) was first made law in 1986 and was intended to bring together in one area of the Civil Code the most important statutory laws regulating California community associations. The Act has been amended more than 45 times since enacted. These important code sections are set out below with explanations and articles.

September 30, 2000

Governor Arnold Schwarzenegger Vetoes AB 2598

We are very pleased to advise you that all of our efforts were successful and the Governor vetoed AB 2598, the assessment collection bill. We agree with the Governor’s reasons for the veto. His letter to the legislators is presented below. His reasons for his veto show he listened to what we had to say. We are willing to work on compromise legislation that may help eliminate some of the problems the proponents of this legislation expressed as their motivations for this legislation while at the same time preserving the non-judicial foreclosure process. We thank all of those who worked to defeat this bill and took the time to express their opposition to the legislature and the Governor.

Letter Sent By Schwarzenegger To California State Assembly

To the Members of the California State Assembly:

I am returning Assembly Bill 2598 without my signature.

This bill makes sweeping changes to the laws that govern Common Interest Developments (CID)
and the foreclosure process for failure to pay delinquent homeowners’ assessments.

While the intent of this legislation is laudable and intended to protect homeowners from being
foreclosed upon for small sums of delinquent assessments, this bill is overly broad and could
negatively impact all homeowners living in CIDs.

This bill could unfairly result in increased assessments for other homeowners who pay their
assessments in a timely manner and may delay the transfer of real property in CIDs due to the
lien procedures set forth in the bill.

Foreclosure should be the last course of action taken against a homeowner. If there were more
open discussion between homeowners and their associations, many conflicts could be resolved.
That is why I recently signed into law AB 1836 (Chapter 754, 2004) and AB 2718 (Chapter 766,
2004). These bills establish methods to encourage more disclosure and better communication
between homeowners and their associations.

I recognize that additional clarification in the foreclosure statutes is necessary. However, this
change should be made incrementally working together with all impacted parties. Therefore, I
am directing the State and Consumer Services and the Business, Transportation and Housing
Agencies to work with all of the interested stakeholders to develop and ensure that the process
for collecting CID homeowners’ assessments is refined so that all homeowners are treated
equitably and foreclosure only occurs after every reasonable alternative is exhausted.

Sincerely,

Arnold Schwarzenegger

September 30, 2000

Civil Code § 1378 - Required Architectural Review Procedures; Exemptions.

(a) This section applies if an association's governing documents require association approval before an owner of a separate interest may make a physical change to the owner's separate interest or to the common area. In reviewing and approving or disapproving a proposed change, the association shall satisfy the following requirements:

(1) The association shall provide a fair, reasonable, and expeditious procedure for making its decision. The procedure shall be included in the association's governing documents. The procedure shall provide for prompt deadlines. The procedure shall state the maximum time for response to an application or a request for reconsideration by the board of directors.
(2) A decision on a proposed change shall be made in good faith and may not be unreasonable, arbitrary, or capricious.
(3) Notwithstanding a contrary provision of the governing documents, a decision on a proposed change may not violate any governing provision of law, including, but not limited to, the Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2 of the Government Code), or a building code or other applicable law governing land use or public safety.
(4) A decision on a proposed change shall be in writing. If a proposed change is disapproved, the written decision shall include both an explanation of why the proposed change is disapproved and a description of the procedure for reconsideration of the decision by the board of directors.
(5) If a proposed change is disapproved, the applicant is entitled to reconsideration by the board of directors of the association that made the decision, at an open meeting of the board. This paragraph does not require reconsideration of a decision that is made by the board of directors or a body that has the same membership as the board of directors, at a meeting that satisfies the requirements of Section 1363.05. Reconsideration by the board does not constitute dispute resolution within the meaning of Section 1363.820.

(b) Nothing in this section authorizes a physical change to the common area in a manner that is inconsistent with an association's governing documents, unless the change is required by law.

(c) An association shall annually provide its members with notice of any requirements for association approval of physical changes to property. The notice shall describe the types of changes that require association approval and shall include a copy of the procedure used to review and approve or disapprove a proposed change.

September 30, 2000

Civil Code § 1376 - Installation Of Video And Television Antenna.

(a) Any covenant, condition, or restriction contained in any deed, contract, security instrument, or other instrument affecting the transfer or sale of, or any interest in, a common interest development that effectively prohibits or restricts the installation or use of a video or television antenna, including a satellite dish, or that effectively prohibits or restricts the attachment of that antenna to a structure within that development where the antenna is not visible from any street or common area, except as otherwise prohibited or restricted by law, is void and unenforceable as to its application to the installation or use of a video or television antenna that has a diameter or diagonal measurement of 36 inches or less.

(b) This section shall not apply to any covenant, condition, or restriction, as described in subdivision (a), that imposes reasonable restrictions on the installation or use of a video or television antenna, including a satellite dish, that has a diameter or diagonal measurement of 36 inches or less. For purposes of this section, "reasonable restrictions" means those restrictions that do not significantly increase the cost of the video or television antenna system, including all related equipment, or significantly decrease its efficiency or performance and include all of the following:

(1) Requirements for application and notice to the association prior to the installation.
(2) Requirement of the owner of a separate interest, as defined in Section 1351, to obtain the approval of the association for the installation of a video or television antenna that has a diameter or diagonal measurement of 36 inches or less on a separate interest owned by another.
(3) Provision for the maintenance, repair, or replacement of roofs or other building components.
(4) Requirements for installers of a video or television antenna to indemnify or reimburse the association or its members for loss or damage caused by the installation, maintenance, or use of a video or television antenna that has a diameter or diagonal measurement of 36 inches or less.

(c) Whenever approval is required for the installation or use of a video or television antenna, including a satellite dish, the application for approval shall be processed by the appropriate approving entity for the common interest development in the same manner as an application for approval of an architectural modification to the property, and the issuance of a decision on the application shall not be willfully delayed.

(d) In any action to enforce compliance with this section, the prevailing party shall be awarded reasonable attorney's fees.

September 30, 2000

Civil Code § 1375.1 - Disclosure To Association Members Of Settlement Agreement Regarding Defects.

(a) As soon as is reasonably practicable after the association and the builder have entered into a settlement agreement or the matter has otherwise been resolved regarding alleged defects in the common areas, alleged defects in the separate interests that the association is obligated to maintain or repair, or alleged defects in the separate interests that arise out of, or are integrally related to, defects in the common areas or separate interests that the association is obligated to maintain or repair, where the defects giving rise to the dispute have not been corrected, the association shall, in writing, inform only the members of the association whose names appear on the records of the association that the matter has been resolved, by settlement agreement or other means, and disclose all of the following:

(1) A general description of the defects that the association reasonably believes, as of the date of the disclosure, will be corrected or replaced.
(2) A good faith estimate, as of the date of the disclosure, of when the association believes that the defects identified in paragraph (1) will be corrected or replaced. The association may state that the estimate may be modified.
(3) The status of the claims for defects in the design or construction of the common interest development that were not identified in paragraph (1) whether expressed in a preliminary list of defects sent to each member of the association or otherwise claimed and disclosed to the members of the association.

(b) Nothing in this section shall preclude an association from amending the disclosures required pursuant to subdivision (a), and any amendments shall supersede any prior conflicting information disclosed to the members of the association and shall retain any privilege attached to the original disclosures.

(c) Disclosure of the information required pursuant to subdivision (a) or authorized by subdivision (b) shall not waive any privilege attached to the information.

(d) For the purposes of the disclosures required pursuant to this section, the term "defects" shall be defined to include any damage resulting from defects.

September 30, 2000

Civil Code § 1375.05 - Construction Defect Litigation; Filing Of Complaint; Inspection Process; Expert Witness Depositions.

(a) Upon the completion of the mandatory prefiling dispute resolution process described in Section 1375, if the parties have not settled the matter, the association or its assignee may file a complaint in the superior court in the county in which the project is located. Those matters shall be given trial priority.

(b) In assigning trial priority, the court shall assign the earliest possible trial date, taking into consideration the pretrial preparation completed pursuant to Section 1375, and shall deem the complaint to have been filed on the date of service of the Notice of Commencement of Legal Proceedings described under Section 1375.

(c) Any respondent, subcontractor, or design professional who received timely prior notice of the inspections and testing conducted under Section 1375 shall be prohibited from engaging in additional inspection or testing, except if all of the following specific conditions are met, upon motion to the court:
(1) There is an insurer for a subcontractor or design professional, that did not have timely notice that legal proceedings were commenced under Section 1375 at least 30 days prior to the commencement of inspections or testing pursuant to paragraph (6) of subdivision (h) of Section 1375.
(2) The insurer's insured did not participate in any inspections or testing conducted under the provisions of paragraph (6) of subdivision (h) of Section 1375.
(3) The insurer has, after receiving notice of a complaint filed in superior court under subdivision (a), retained separate counsel, who did not participate in the Section 1375 dispute resolution process, to defend its insured as to the allegations in the complaint.
(4) It is reasonably likely that the insured would suffer prejudice if additional inspections or testing are not permitted.
(5) The information obtainable through the proposed additional inspections or testing is not available through any reasonable alternative sources.

If the court permits additional inspections or testing upon finding that these requirements are met, any additional inspections or testing shall be limited to the extent reasonably necessary to avoid the likelihood of prejudice and shall be coordinated among all similarly situated parties to ensure that they occur without unnecessary duplication. For purposes of providing notice to an insurer prior to inspections or testing under paragraph (6) of subdivision (h) of Section 1375, if notice of the proceedings was not provided by the insurer's insured, notice may be made via certified mail either by the subcontractor, design professional, association, or respondent to the address specified in the Statement of Insurance provided under paragraph (2) of subdivision (e) of Section 1375. Nothing herein shall affect the rights of an intervenor who files a complaint in intervention. If the association alleges defects that were not specified in the prefiling dispute resolution process under Section 1375, the respondent, subcontractor, and design professionals shall be permitted to engage in testing or inspection necessary to respond to the additional claims. A party who seeks additional inspections or testing based upon the amendment of claims shall apply to the court for leave to conduct those inspections or that testing.

If the court determines that it must review the defect claims alleged by the association in the prefiling dispute resolution process in order to determine whether the association alleges new or additional defects, this review shall be conducted in camera. Upon objection of any party, the court shall refer the matter to a judge other than the assigned trial judge to determine if the claim has been amended in a way that requires additional testing or inspection.

(d) Any subcontractor or design professional who had notice of the facilitated dispute resolution conducted under Section 1375 but failed to attend, or attended without settlement authority, shall be bound by the amount of any settlement reached in the facilitated dispute resolution in any subsequent trial, although the affected party may introduce evidence as to the allocation of the settlement. Any party who failed to participate in the facilitated dispute resolution because the party did not receive timely notice of the mediation shall be relieved of any obligation to participate in the settlement. Notwithstanding any privilege applicable to the prefiling dispute resolution process provided by Section 1375, evidence may be introduced by any party to show whether a subcontractor or design professional failed to attend or attended without settlement authority. The binding effect of this subdivision shall in no way diminish or reduce a nonsettling subcontractor or design professional's right to defend itself or assert all available defenses relevant to its liability in any subsequent trial. For purposes of this subdivision, a subcontractor or design professional shall not be deemed to have attended without settlement authority because it asserted defenses to its potential liability.

(e) Notice of the facilitated dispute resolution conducted under Section 1375 must be mailed by the respondent no later than 20 days prior to the date of the first facilitated dispute resolution session to all parties. Notice shall also be mailed to each of these parties' known insurance carriers. Mailing of this notice shall be by certified mail. Any subsequent facilitated dispute resolution notices shall be served by any means reasonably calculated to provide those parties actual notice.

(f) As to the complaint, the order of discovery shall, at the request of any defendant, except upon a showing of good cause, permit the association's expert witnesses to be deposed prior to any percipient party depositions. The depositions shall, at the request of the association, be followed immediately by the defendant's experts and then by the subcontractors' and design professionals' experts, except on a showing of good cause. For purposes of this section, in determining what constitutes "good cause," the court shall consider, among other things, the goal of early disclosure of defects and whether the expert is prepared to render a final opinion, except that the court may modify the scope of any expert's deposition to address those concerns.

(g) (1) The only method of seeking judicial relief for the failure of the association or the respondent to complete the dispute resolution process under Section 1375 shall be the assertion, as provided for in this subdivision, of a procedural deficiency to an action for damages by the association against the respondent after that action has been filed. A verified application asserting a procedural deficiency shall be filed with the court no later than 90 days after the answer to the plaintiff's complaint has been served, unless the court finds that extraordinary conditions exist.
(2) Upon the verified application of the association or the respondent alleging substantial noncompliance with Section 1375, the court shall schedule a hearing within 21 days of the application to determine whether the association or respondent has substantially complied with this section. The issue may be determined upon affidavits or upon oral testimony, in the discretion of the court.
(3) (A) If the court finds that the association or the respondent did not substantially comply with this paragraph, the court shall stay the action for up to 90 days to allow the noncomplying party to establish substantial compliance. The court shall set a hearing within 90 days to determine substantial compliance. At any time, the court may, for good cause shown, extend the period of the stay upon application of the noncomplying party.
(B) If, within the time set by the court pursuant to this paragraph, the association or the respondent has not established that it has substantially complied with this section, the court shall determine if, in the interest of justice, the action should be dismissed without prejudice, or if another remedy should be fashioned. Under no circumstances shall the court dismiss the action with prejudice as a result of the association's failure to substantially comply with this section. In determining the appropriate remedy, the court shall consider the extent to which the respondent has complied with this section.

(h) This section is operative on July 1, 2002, but does not apply to any action or proceeding pending on that date.

(i) This section shall become inoperative on July 1, 2010, and, as of January 1, 2011, is repealed, unless a later enacted statute that is enacted before January 1, 2011, deletes or extends the dates on which it becomes inoperative and is repealed.

September 30, 2000

Civil Code § 1374 - Inapplicability Of Law To Developments Without Common Area.

Nothing in this title may be construed to apply to a development wherein there does not exist a common area as defined in subdivision (b) of Section 1351. This section is declaratory of existing law.

September 30, 2000

Civil Code § 4020 - Local Zoning Ordinances

Unless a contrary intent is clearly expressed, a local zoning ordinance is construed to treat like structures, lots, parcels, areas, or spaces in like manner regardless of the form of the common interest development.

September 30, 2000

Civil Code § 4220 - Existing Physical Boundaries

In interpreting deeds and condominium plans, the existing physical boundaries of a unit in a condominium project, when the boundaries of the unit are contained within a building, or of a unit reconstructed in substantial accordance with the original plans thereof, shall be conclusively presumed to be its boundaries rather than the metes and bounds expressed in the deed or condominium plan, if any exists, regardless of settling or lateral movement of the building and regardless of minor variance between boundaries shown on the plan or in the deed and those of the building.

September 30, 2000

Civil Code § 1370 - Liberal Construction Of Governing Documents.

Any deed, declaration, or condominium plan for a common interest development shall be liberally construed to facilitate the operation of the common interest development, and its provisions shall be presumed to be independent and severable. Nothing in Article 3 (commencing with Section 715) of Chapter 2 of Title 2 of Part 1 of this division shall operate to invalidate any provisions of the governing documents of a common interest development.

September 30, 2000

Civil Code § 1369.590 - Annual Association Distribution Of Alternative Dispute Resolution Procedures Required.

(a) An association shall annually provide its members a summary of the provisions of this article that specifically references this article. The summary shall include the following language:

"Failure of a member of the association to comply with the alternative dispute resolution requirements of Section 1369.520 of the Civil Code may result in the loss of your right to sue the association or another member of the association regarding
enforcement of the governing documents or the applicable law."

(b) The summary shall be provided either at the time the pro forma budget required by Section 1365 is distributed or in the manner prescribed in Section 5016 of the Corporations Code. The summary shall include a description of the association's internal dispute resolution process, as required by Section 1363.850.

September 30, 2000

Civil Code § 1369.580 - Court Discretion In Awarding Fees And Costs Based Upon Participation In Alternative Dispute Resolution.

In an enforcement action in which fees and costs may be awarded pursuant to subdivision (c) of Section 1354, the court, in determining the amount of the award, may consider whether a party's refusal to participate in alternative dispute resolution before commencement of the action was reasonable.

September 30, 2000

Civil Code § 1369.570 - Stipulated Agreement To Pursue Alternative Dispute Resolution After Commencement Of Enforcement Action.

(a) After an enforcement action is commenced, on written stipulation of the parties, the matter may be referred to alternative dispute resolution. The referred action is stayed. During the stay, the action is not subject to the rules implementing subdivision (c) of Section 68603 of the Government Code.

(b) The costs of the alternative dispute resolution shall be borne by the parties.

September 30, 2000

Civil Code § 1369.560 - Filing Certification Of Compliance.

(a) At the time of commencement of an enforcement action, the party commencing the action shall file with the initial pleading a certificate stating that one or more of the following conditions is satisfied:
(1) Alternative dispute resolution has been completed in compliance with this article.
(2) One of the other parties to the dispute did not accept the terms offered for alternative dispute resolution.
(3) Preliminary or temporary injunctive relief is necessary.

(b) Failure to file a certificate pursuant to subdivision (a) is grounds for a demurrer or a motion to strike unless the court finds that dismissal of the action for failure to comply with this article would result in substantial prejudice to one of the parties.

September 30, 2000

Civil Code § 1369.550 - Tolling of Time Limitation For Commencing An Enforcement Action.

If a Request for Resolution is served before the end of the applicable time limitation for commencing an enforcement action, the time limitation is tolled during the following periods:

(a) The period provided in Section 1369.530 for response to a Request for Resolution.

(b) If the Request for Resolution is accepted, the period provided by Section 1369.540 for completion of alternative dispute resolution, including any extension of time stipulated to by the parties pursuant to Section 1369.540.

September 30, 2000

Civil Code § 1369.540 - Completion Of Resolution Process Within 90 Days.

(a) If the party on whom a Request for Resolution is served accepts the request, the parties shall complete the alternative dispute resolution within 90 days after the party initiating the request receives the acceptance, unless this period is extended by written stipulation signed by both parties.

(b) Chapter 2 (commencing with Section 1115) of Division 9 of the Evidence Code applies to any form of alternative dispute resolution initiated by a Request for Resolution under this article, other than arbitration.

(c) The costs of the alternative dispute resolution shall be borne by the parties.

September 30, 2000

Civil Code § 5935 - Service of Request for Resolution

(a) Any party to a dispute may initiate the process required by Section 5930 by serving on all other parties to the dispute a Request for Resolution. The Request for Resolution shall include all of the following:
(1) A brief description of the dispute between the parties.
(2) A request for alternative dispute resolution.
(3) A notice that the party receiving the Request for Resolution is required to respond within 30 days of receipt or the request will be deemed rejected.
(4) If the party on whom the request is served is the member, a copy of this article.
(b) Service of the Request for Resolution shall be by personal delivery, first-class mail, express mail, facsimile transmission, or other means reasonably calculated to provide the party on whom the request is served actual notice of the request.
(c) A party on whom a Request for Resolution is served has 30 days following service to accept or reject the request. If a party does not accept the request within that period, the request is deemed rejected by the party.

September 30, 2000

Civil Code § 1369.520 - ADR Required Prior To Filing An Enforcement Action.

(a) An association or an owner or a member of a common interest development may not file an enforcement action in the superior court unless the parties have endeavored to submit their dispute to alternative dispute resolution pursuant to this article.

(b) This section applies only to an enforcement action that is solely for declaratory, injunctive, or writ relief, or for that relief in conjunction with a claim for monetary damages not in excess of the jurisdictional limits stated in Sections 116.220 and 116.221 of the Code of Civil Procedure.

(c) This section does not apply to a small claims action.

(d) Except as otherwise provided by law, this section does not apply to an assessment dispute.

September 30, 2000

Civil Code § 1369.510 - "Alternative Dispute Resolution" And "Enforcement Action" Defined.

As used in this article:

(a) "Alternative dispute resolution" means mediation, arbitration, conciliation, or other nonjudicial procedure that involves a neutral party in the decision making process. The form of alternative dispute resolution chosen pursuant to this article may be binding or nonbinding, with the voluntary consent of the parties.

(b) "Enforcement action" means a civil action or proceeding, other than a cross-complaint, for any of the following purposes:
(1) Enforcement of this title.
(2) Enforcement of the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code).
(3) Enforcement of the governing documents of a common interest development.

September 30, 2000

Civil Code § 1369 - Liens For Labor And Material.

In a condominium project, no labor performed or services or materials furnished with the consent of, or at the request of, an owner in the condominium project or his or her agent or his or her contractor shall be the basis for the filing of a lien against any other property of any other owner in the condominium project unless that other owner has expressly consented to or requested the performance of the labor or furnishing of the materials or services. However, express consent shall be deemed to have been given by the owner of any condominium in the case of emergency repairs thereto. Labor performed or services or materials furnished for the common areas, if duly authorized by the association, shall be deemed to be performed or furnished with the express consent of each condominium owner. The owner of any condominium may remove his or her condominium from a lien against two or more condominiums or any part thereof by payment to the holder of the lien of the fraction of the total sum secured by the lien which is attributable to his or her condominium.

September 30, 2000

Civil Code § 1368.5 - Civil Action By Association; Notice Prior to Filing.

(a) Not later than 30 days prior to the filing of any civil action by the association against the declarant or other developer of a common interest development for alleged damage to the common areas, alleged damage to the separate interests that the association is obligated to maintain or repair, or alleged damage to the separate interests that arises out of, or is integrally related to, damage to the common areas or separate interests that the association is obligated to maintain or repair, the board of directors of the association shall provide a written notice to each member of the association who appears on the records of the association when the notice is provided. This notice shall specify all of the following:

(1) That a meeting will take place to discuss problems that may lead to the filing of a civil action.
(2) The options, including civil actions, that are available to address the problems.
(3) The time and place of this meeting.

(b) Notwithstanding subdivision (a), if the association has reason to believe that the applicable statute of limitations will expire before the association files the civil action, the association may give the notice, as described above, within 30 days after the filing of the action.

September 30, 2000

Civil Code § 1368.3 - Association Standing As Real Party In Interest.

An association established to manage a common interest development has standing to institute, defend, settle, or intervene in litigation, arbitration, mediation, or administrative proceedings in its own name as the real party in interest and without joining with it the individual owners of the common interest development, in matters pertaining to the following:
(a) Enforcement of the governing documents.
(b) Damage to the common area.
(c) Damage to a separate interest that the association is obligated to maintain or repair.
(d) Damage to a separate interest that arises out of, or is integrally related to, damage to the common area or a separate interest that the association is obligated to maintain or repair.

September 30, 2000

Civil Code § 1368.1 - Arbitrary Or Unreasonable Restriction On Owner's Ability To Market Unit Void.

(a) Any rule or regulation of an association that arbitrarily or unreasonably restricts an owner's ability to market his or her interest in a common interest development is void.

(b) No association may adopt, enforce, or otherwise impose any rule or regulation that does either of the following:
(1) Imposes an assessment or fee in connection with the marketing of an owner's interest in an amount that exceeds the association's actual or direct costs. That assessment or fee shall be deemed to violate the limitation set forth in Section 1366.1.
(2) Establishes an exclusive relationship with a real estate broker through which the sale or marketing of interests in the development is required to occur. The limitation set forth in this paragraph does not apply to the sale or marketing of separate interests owned by the association or to the sale or marketing of common areas by the association.

(c) For purposes of this section, "market" and "marketing" mean listing, advertising, or obtaining or providing access to show the owner's interest in the development.

(d) This section does not apply to rules or regulations made pursuant to Section 712 or 713 regarding real estate signs.

September 30, 2000

Civil Code § 1367.5 - Lien Filed In Error; Reversal Of Costs And Fees.

If it is determined through dispute resolution pursuant to the association's "meet and confer" program required in Article 5 (commencing with Section 1363.810) of Chapter 4 or alternative dispute resolution with a neutral third party pursuant to Article 2 (commencing with Section 1369.510) of Chapter 7 that an association has recorded a lien for a delinquent assessment in error, the association shall promptly reverse all late charges, fees, interest, attorney's fees, costs of collection, costs imposed for the notice prescribed in subdivision (a) of Section 1367.1, and costs of recordation and release of the lien authorized under subdivision (b) of Section 1367.4, and pay all costs related to the dispute resolution or alternative dispute resolution.

September 30, 2000

Civil Code § 1367.4 - Limitations On Collection Of Delinquent Assessments Through Foreclosure; Right Of Redemption.

(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) An association that seeks to collect delinquent regular or special assessments of an amount less than one thousand eight hundred dollars ($1,800), not including any accelerated assessments, late charges, fees and costs of collection, attorney's fees, or interest, may not collect that debt through judicial or nonjudicial foreclosure, but may attempt to collect or secure that debt in any of the following ways:
(1) By a civil action in small claims court, pursuant to Chapter 5.5 (commencing with Section 116.110) of Title 1 of the Code of Civil Procedure. An association that chooses to proceed by an action in small claims court, and prevails, may enforce the judgment as permitted under Article 8 (commencing with Section 116.810) of Title 1 of the Code of Civil Procedure. The amount that may be recovered in small claims court to collect upon a debt for delinquent assessments may not exceed the jurisdictional limits of the small claims court and shall be the sum of the following:
(A) The amount owed as of the date of filing the complaint in the small claims court proceeding.
(B) In the discretion of the court, an additional amount to that described in subparagraph (A) equal to the amount owed for the period from the date the complaint is filed until satisfaction of the judgment, which total amount may include accruing unpaid assessments and any reasonable late charges, fees and costs of collection, attorney's fees, and interest, up to the jurisdictional limits of the small claims court.
(2) By recording a lien on the owner's separate interest upon which the association may not foreclose until the amount of the delinquent assessments secured by the lien, exclusive of any accelerated assessments, late charges, fees and costs of collection, attorney's fees, or interest, equals or exceeds one thousand eight hundred dollars ($1,800) or the assessments secured by the lien are more than 12 months delinquent. An association that chooses to record a lien under these provisions, prior to recording the lien, shall offer the owner and, if so requested by the owner, participate in dispute resolution as set forth in Article 5 (commencing with Section 1363.810) of Chapter 4.
(3) Any other manner provided by law, except for judicial or nonjudicial foreclosure.

(c) An association that seeks to collect delinquent regular or special assessments of an amount of one thousand eight hundred dollars ($1,800) or more, not including any accelerated assessments, late charges, fees and costs of collection, attorney's fees, or interest, or any assessments secured by the lien that are more than 12 months delinquent, may use judicial or nonjudicial foreclosure subject to the following conditions:
(1) 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 5 (commencing with Section 1363.810) of Chapter 4 or alternative dispute resolution as set forth in Article 2 (commencing with Section 1369.510) of Chapter 7. 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.
(2) The decision to initiate foreclosure of a lien for delinquent assessments that has been validly recorded shall be made only by the board of directors of the association and may not be delegated to an agent of the association. The board shall approve the decision by a majority vote of the board members 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.
(3) 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.
(4) A nonjudicial foreclosure by an association to collect upon a debt for delinquent assessments shall be subject to a right of redemption. The redemption period within which the separate interest may be redeemed from a foreclosure sale under this paragraph ends 90 days after the sale. In addition to the requirements of Section 2924f, a notice of sale in connection with an association's foreclosure of a separate interest in a common interest development shall include a statement that the property is being sold subject to the right of redemption created in this paragraph.

(d) The limitation on foreclosure of assessment liens for amounts under the stated minimum in this section does not apply to assessments owed by owners of separate interests in timeshare estates, as defined in subdivision (x) of Section 11112 of the Business and Professions Code, or to assessments owed by developers.

September 30, 2000

Civil Code § 1367.1 - Lien For Delinquent Assessments Recorded After January 1, 2003.

(a) A regular or special assessment and any late charges, reasonable fees and costs of collection, reasonable attorney's fees, if any, and interest, if any, as determined in accordance with Section 1366, shall be a debt of the owner of the separate interest
at the time the assessment or other sums are levied. At least 30 days prior to recording a lien upon the separate interest of the owner of record to collect a debt that is past due under this subdivision, the association shall notify the owner of record in writing by certified mail of the following:
(1) A general description of the collection and lien enforcement procedures of the association and the method of calculation of the amount, a statement that the owner of the separate interest has the right to inspect the association records, pursuant to Section 8333 of the Corporations Code, and the following statement in 14-point boldface type, if printed, or in capital letters, if typed: "IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT COURT ACTION."
(2) An itemized statement of the charges owed by the owner, including items on the statement which indicate the amount of any delinquent assessments, the fees and reasonable costs of collection, reasonable attorney's fees, any late charges, and interest, if any.
(3) A statement that the owner shall not be liable to pay the charges, interest, and costs of collection, if it is determined the assessment was paid on time to the association.
(4) The right to request a meeting with the board as provided by paragraph (3) of subdivision (c).
(5) The right to dispute the assessment debt by submitting a written request for dispute resolution to the association pursuant to the association's "meet and confer" program required in Article 5 (commencing with Section 1363.810) of Chapter 4.
(6) The right to request alternative dispute resolution with a neutral third party pursuant to Article 2 (commencing with Section 1369.510) of Chapter 7 before the association may initiate foreclosure against the owner's separate interest, except that
binding arbitration shall not be available if the association intends to initiate a judicial foreclosure.

(b) Any payments made by the owner of a separate interest toward the debt set forth, as required in subdivision (a), shall first be applied to the assessments owed, and, only after the assessments owed are paid in full shall the payments be applied to the fees and costs of collection, attorney's fees, late charges, or interest. When an owner makes a payment, the owner may request a receipt and the association shall provide it. The receipt shall indicate the date of payment and the person who received it. The association shall provide a mailing address for overnight payment of assessments.

(c) (1) (A) Prior to recording a lien for delinquent assessments, an 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 5 (commencing with Section 1363.810) of Chapter 4.
(B) Prior to initiating a foreclosure for delinquent assessments, an association shall offer the owner and, if so requested by the owner, shall participate in dispute resolution pursuant to the association's "meet and confer" program required in Article 5 (commencing with Section 1363.810) of Chapter 4 or alternative dispute resolution with a neutral third party pursuant to Article 2 (commencing with Section 1369.510) of Chapter 7. 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.
(2) For liens recorded on or after January 1, 2006, the decision to record a lien for delinquent assessments shall be made only by the board of directors of the association and may not be delegated to an agent of the association. The board shall approve the decision by a majority vote of the board members in an open meeting. The board shall record the vote in the minutes of that meeting.
(3) An owner, other than an owner of any interest that is described in Section 11212 of the Business and Professions Code that is not otherwise exempt from this section pursuant to subdivision (a) of Section 11211.7, may submit a written request to meet with the board to discuss a payment plan for the debt noticed pursuant to subdivision (a). The association shall provide the owners the standards for payment plans, if any exist. The board shall meet with the owner in executive session within 45 days of the postmark of the request, if the request is mailed within 15 days of the date of the postmark of the notice, unless there is no regularly scheduled board meeting within that period, in which case the board may designate a committee of one or more members to meet with the owner. Payment plans may incorporate any assessments that accrue during the payment plan period. Payment plans shall not impede an association's ability to record a lien on the owner's separate interest to secure payment of delinquent assessments. Additional late fees shall not accrue during the payment plan period if the owner is in compliance with the terms of the payment plan. In the event of a default on any payment plan, the association may resume its efforts to collect the delinquent assessments from the time prior to entering into the
payment plan.

(d) The amount of the assessment, plus any costs of collection, late charges, and interest assessed in accordance with Section 1366, shall be a lien on the owner's separate interest in the common interest development from and after the time the association causes to be recorded with the county recorder of the county in which the separate interest is located, a notice of delinquent assessment, which shall state the amount of the assessment and other sums imposed in accordance with Section 1366, a legal description of the owner's separate interest in the common interest development against which the assessment and other sums are levied, and the name of the record owner of the separate interest in the common interest development against which the lien is imposed. The itemized statement of the charges owed by the owner described in paragraph (2) of subdivision (a) shall be recorded together with the notice of delinquent assessment. In order for the lien to be enforced by nonjudicial foreclosure as provided in subdivision (g), the notice of delinquent assessment shall state the name and address of the trustee authorized by the association to enforce the lien by sale. The notice of delinquent assessment shall be signed by the person designated in the declaration or by the association for that purpose, or if no one is designated, by the president of the association. A copy of the recorded notice of delinquent assessment shall be mailed by certified mail to every person whose name is shown as an owner of the separate interest in the association's records, and the notice shall be mailed no later than 10 calendar days after recordation. Within 21 days of the payment of the sums specified in the notice of delinquent assessment, the association shall record or cause to be recorded in the office of the county recorder in which the notice of delinquent assessment is recorded a lien release or notice of rescission and provide the owner of the separate interest a copy of the lien release or notice that the delinquent assessment has been satisfied. A monetary charge imposed by the association as a means of reimbursing the association for costs incurred by the association in the repair of damage to common areas and facilities for which the member or the member's guests or tenants were responsible may become a lien against the member's separate interest enforceable by the sale of the interest under Sections 2924, 2924b, and 2924c, provided the authority to impose a lien is set forth in the governing documents. It is the intent of the Legislature not to contravene Section 2792.26 of Title 10 of the California Code of Regulations, as that section appeared on January 1, 1996, for associations of subdivisions that are being sold under authority of a subdivision public report, pursuant to Part 2 (commencing with Section 11000) of Division 4 of the Business and Professions Code.

(e) Except as indicated in subdivision (d), a monetary penalty imposed by the association as a disciplinary measure for failure of a member to comply with the governing instruments, except for the late payments, may not be characterized nor treated in the governing instruments as an assessment that may become a lien against the member's subdivision separate interest enforceable by the sale of the interest under Sections 2924, 2924b, and 2924c.

(f) A lien created pursuant to subdivision (d) shall be prior to all other liens recorded subsequent to the notice of assessment, except that the declaration may provide for the subordination thereof to any other liens and encumbrances.

(g) An association may not voluntarily assign or pledge the association's right to collect payments or assessments, or to enforce or foreclose a lien to a third party, except when the assignment or pledge is made to a financial institution or lender chartered or licensed under federal or state law, when acting within the scope of that charter or license, as security for a loan obtained by the association; however, the foregoing provision may not restrict the right or ability of an association to assign any unpaid obligations of a former member to a third party for purposes of collection. Subject to the limitations of this subdivision, after the expiration of 30 days following the recording of a lien created pursuant to subdivision (d), the lien may be enforced in any manner permitted by law, including sale by the court, sale by the trustee designated in the notice of delinquent assessment, or sale by a trustee substituted pursuant to Section 2934a. 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. 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 (j) of Section 1367.1.
(2) The decision of the board to foreclose upon the separate interest of an owner as described in paragraph (3) of subdivision (c) of Section 1367.4.

(h) Nothing in this section or in subdivision (a) of Section 726 of the Code of Civil Procedure prohibits actions against the owner of a separate interest to recover sums for which a lien is created pursuant to this section or prohibits an association from taking a deed in lieu of foreclosure.

(i) If it is determined that a lien previously recorded against the separate interest was recorded in error, the party who recorded the lien shall, within 21 calendar days, record or cause to be recorded in the office of the county recorder in which the notice of delinquent assessment is recorded a lien release or notice of rescission and provide the owner of the separate interest with a declaration that the lien filing or recording was in error and a copy of the lien release or notice of rescission.

(j) In addition to the requirements of Section 2924, a notice of default shall be served by the association on the owner's legal representative 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 owner's legal representative shall be the person whose name is shown as the owner of a separate interest in the association's records, unless another person has been previously designated by the owner as his or her legal representative in writing and mailed to the association in a manner that indicates that the association has received it.

(k) Upon receipt of a written request by an owner identifying a secondary address for purposes of collection notices, the association shall send additional copies of any notices required by this section to the secondary address provided. The association shall notify owners of their right to submit secondary addresses to the association, at the time the association issues the pro forma operating budget pursuant to Section 1365. The owner's request shall be in writing and shall be mailed to the association in a manner that shall indicate the association has received it. The owner may identify or change a secondary address at any time, provided that, if a secondary address is identified or changed during the collection
process, the association shall only be required to send notices to the indicated secondary address from the point the association receives the request.

(l) (1) An association that fails to comply with the procedures set forth in this section shall, prior to recording a lien, recommence the required notice process.
(2) Any costs associated with recommencing the notice process shall be borne by the association and not by the owner of a separate interest.

(m) This section only applies to liens recorded on or after January 1, 2003.

(n) This section is subordinate to, and shall be interpreted in
conformity with, Section 1367.4.

September 30, 2000

Civil Code § 1367 - Lien For Delinquent Assessments.

(a) A regular or special assessment and any late charges, reasonable costs of collection, and interest, as assessed in accordance with Section 1366, shall be a debt of the owner of the separate interest at the time the assessment or other sums are levied. Before an association may place a lien upon the separate interest of an owner to collect a debt which is past due under this subdivision, the association shall notify the owner in writing by certified mail of the fee and penalty procedures of the association, provide an itemized statement of the charges owed by the owner, including items on the statement which indicate the assessments owed, any late charges and the method of calculation, any attorney's fees, and the collection practices used by the association, including the right of the association to the reasonable costs of collection. In addition, any payments toward that debt shall first be applied to the assessments owed, and only after the principal owed is paid in full shall the payments be applied to interest or collection expenses.

(b) The amount of the assessment, plus any costs of collection, late charges, and interest assessed in accordance with Section 1366, shall be a lien on the owner's interest in the common interest development from and after the time the association causes to be recorded with the county recorder of the county in which the separate interest is located, a notice of delinquent assessment, which shall state the amount of the assessment and other sums imposed in accordance with Section 1366, a legal description of the owner's interest in the common interest development against which the assessment and other sums are levied, the name of the record owner of the owner's interest in the common interest development against which the lien is imposed, and, in order for the lien to be enforced by nonjudicial foreclosure as provided in subdivision (e) the name and address of the trustee authorized by the association to enforce the lien by sale. The notice of delinquent assessment shall be signed by the person designated in the declaration or by the association for that purpose, or if no one is designated, by the president of the association, and mailed in the manner set forth in Section 2924b, to all record owners of the owner's interest in the common interest development no later than 10 calendar days after recordation. Upon payment of the sums specified in the notice of delinquent assessment, the association shall cause to be recorded a further notice stating the satisfaction and release of the lien thereof. A monetary penalty imposed by the association as a means of reimbursing the association for costs incurred by the association in the repair of damage to common areas and facilities for which the member or the member's guests or tenants were responsible may become a lien against the member's separate interest enforceable by the sale of the interest under Sections 2924, 2924b, and 2924c, provided the authority to impose a lien is set forth in the governing documents. It is the intent of the Legislature not to contravene Section 2792.26 of Title 10 of the California Code of Regulations, as that section appeared on January 1, 1996, for associations of subdivisions that are being sold under authority of a subdivision public report, pursuant to Part 2 (commencing with Section 11000) of Division 4 of the Business and Professions Code.

(c) Except as indicated in subdivision (b), a monetary penalty imposed by the association as a disciplinary measure for failure of a member to comply with the governing instruments, except for the late payments, may not be characterized nor treated in the governing instruments as an assessment which may become a lien against the member's subdivision interest enforceable by the sale of the interest under Sections 2924, 2924b, and 2924c.

(d) A lien created pursuant to subdivision (b) shall be prior to all other liens recorded subsequent to the notice of assessment, except that the declaration may provide for the subordination thereof to any other liens and encumbrances.

(e) After the expiration of 30 days following the recording of a lien created pursuant to subdivision (b), the lien may be enforced in any manner permitted by law, including sale by the court, sale by the trustee designated in the notice of delinquent assessment, or sale by a trustee substituted pursuant to Section 2934a. Any sale by
the trustee shall be conducted in accordance with the provisions of Sections 2924, 2924b, and 2924c applicable to the exercise of powers of sale in mortgages and deeds of trusts.

(f) Nothing in this section or in subdivision (a) of Section 726 of the Code of Civil Procedure prohibits actions against the owner of a separate interest to recover sums for which a lien is created pursuant to this section or prohibits an association from taking a deed in lieu of foreclosure.

(g) This section only applies to liens recorded on or after January 1, 1986 and prior to January 1, 2003.

September 30, 2000

Civil Code § 1366.2 - Collection Of Assessments; Recording Of Identifying Statement.

(a) In order to facilitate the collection of regular assessments, special assessments, transfer fees, and similar charges, the board of directors of any association is authorized to record a statement or amended statement identifying relevant information for the association. This statement may include any or all of the following information:
(1) The name of the association as shown in the conditions, covenants, and restrictions or the current name of the association, if different.
(2) The name and address of a managing agent or treasurer of the association or other individual or entity authorized to receive assessments and fees imposed by the association.
(3) A daytime telephone number of the authorized party identified in paragraph (2) if a telephone number is available.
(4) A list of separate interests subject to assessment by the association, showing the assessor's parcel number or legal description, or both, of the separate interests.
(5) The recording information identifying the declaration or declarations of covenants, conditions, and restrictions governing the association.
(6) If an amended statement is being recorded, the recording information identifying the prior statement or statements which the amendment is superseding.

(b) The county recorder is authorized to charge a fee for recording the document described in subdivision (a), which fee shall be based upon the number of pages in the document and the recorder's per-page recording fee.

September 30, 2000

Civil Code § 1366.1 - Excessive Assessments Or Fees.

An association shall not impose or collect an assessment or fee that exceeds the amount necessary to defray the costs for which it is levied.

September 30, 2000

Civil Code § 1366 - Regular And Special Assessments; Limitation On Increases; Delinquent Assessments; Interest.

(a) Except as provided in this section, the association shall levy regular and special assessments sufficient to perform its obligations under the governing documents and this title. However, annual increases in regular assessments for any fiscal year, as authorized by subdivision (b), shall not be imposed unless the board has complied with subdivision (a) of Section 1365 with respect to that fiscal year, or has obtained the approval of owners, constituting a quorum, casting a majority of the votes at a meeting or election of the association conducted in accordance with Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code and Section 7613 of the Corporations Code. For the purposes of this section, "quorum" means more than 50 percent
of the owners of an association.

(b) Notwithstanding more restrictive limitations placed on the board by the governing documents, the board of directors may not impose a regular assessment that is more than 20 percent greater than the regular assessment for the association's preceding fiscal year or impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year without the approval of owners, constituting a quorum, casting a
majority of the votes at a meeting or election of the association conducted in accordance with Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code and Section 7613 of the Corporations Code. For the purposes of this section, quorum means more than 50 percent of the owners of an
association. This section does not limit assessment increases necessary for emergency situations. For purposes of this section, an emergency situation is any one of the following:
(1) An extraordinary expense required by an order of a court.
(2) An extraordinary expense necessary to repair or maintain the common interest development or any part of it for which the association is responsible where a threat to personal safety on the property is discovered.
(3) An extraordinary expense necessary to repair or maintain the common interest development or any part of it for which the association is responsible that could not have been reasonably foreseen by the board in preparing and distributing the pro forma operating budget under Section 1365. However, prior to the imposition or collection of an assessment under this subdivision, the board shall pass a resolution containing written findings as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process, and the resolution shall be distributed to the members with the notice of assessment.

(c) Regular assessments imposed or collected to perform the obligations of an association under the governing documents or this title shall be exempt from execution by a judgment creditor of the association only to the extent necessary for the association to perform essential services, such as paying for utilities and insurance. In determining the appropriateness of an exemption, a court shall ensure that only essential services are protected under this subdivision.

This exemption shall not apply to any consensual pledges, liens, or encumbrances that have been approved by the owners of an association, constituting a quorum, casting a majority of the votes at a meeting or election of the association, or to any state tax lien, or to any lien for labor or materials supplied to the common area.

(d) The association shall provide notice by first-class mail to the owners of the separate interests of any increase in the regular or special assessments of the association, not less than 30 nor more than 60 days prior to the increased assessment becoming due.

(e) Regular and special assessments levied pursuant to the governing documents are delinquent 15 days after they become due, unless the declaration provides a longer time period, in which case the longer time period shall apply. If an assessment is delinquent the association may recover all of the following:
(1) Reasonable costs incurred in collecting the delinquent assessment, including reasonable attorney's fees.
(2) A late charge not exceeding 10 percent of the delinquent assessment or ten dollars ($10), whichever is greater, unless the declaration specifies a late charge in a smaller amount, in which case any late charge imposed shall not exceed the amount specified in the declaration.
(3) Interest on all sums imposed in accordance with this section, including the delinquent assessments, reasonable fees and costs of collection, and reasonable attorney's fees, at an annual interest rate not to exceed 12 percent, commencing 30 days after the assessment becomes due, unless the declaration specifies the recovery
of interest at a rate of a lesser amount, in which case the lesser rate of interest shall apply.

(f) Associations are hereby exempted from interest-rate limitations imposed by Article XV of the California Constitution, subject to the limitations of this section.

September 30, 2000

Civil Code § 1365.9 - Liability For Common Areas; Action Against Association; Insurance Requirements.

(a) It is the intent of the Legislature to offer civil liability protection to owners of the separate interests in a common interest development that have common areas owned in tenancy-in-common if the association carries a certain level of prescribed insurance that covers a cause of action in tort.

(b) Any cause of action in tort against any owner of a separate interest arising solely by reason of an ownership interest as a tenant in common in the common area of a common interest development shall be brought only against the association and not against the individual owners of the separate interests, as defined in subdivision (l) of Section 1351, if both of the insurance requirements in paragraphs (1) and (2) are met:
(1) The association maintained and has in effect for this cause of action, one or more policies of insurance which include coverage for general liability of the association.
(2) The coverage described in paragraph (1) is in the following minimum amounts:
(A) At least two million dollars ($2,000,000) if the common interest development consists of 100 or fewer separate interests.
(B) At least three million dollars ($3,000,000) if the common interest development consists of more than 100 separate interests.

September 30, 2000

Civil Code § 1365.7 - Liability Of Volunteer Officer Or Director; Criteria; Limitations.

(a) A volunteer officer or volunteer director of an association, as defined in subdivision (a) of Section 1351, which manages a common interest development that is exclusively residential, shall not be personally liable in excess of the coverage of insurance specified in paragraph (4) to any person who suffers injury, including, but not limited to, bodily injury, emotional distress, wrongful death, or property damage or loss as a result of the tortious act or omission of the volunteer officer or volunteer director if all of the following criteria are met:
(1) The act or omission was performed within the scope of the officer's or director's association duties.
(2) The act or omission was performed in good faith.
(3) The act or omission was not willful, wanton, or grossly negligent.
(4) The association maintained and had in effect at the time the act or omission occurred and at the time a claim is made one or more policies of insurance which shall include coverage for (A) general liability of the association and (B) individual liability of officers and directors of the association for negligent acts or omissions in
that capacity; provided, that both types of coverage are in the following minimum amount:
(A) At least five hundred thousand dollars ($500,000) if the common interest development consists of 100 or fewer separate interests.
(B) At least one million dollars ($1,000,000) if the common interest development consists of more than 100 separate interests.

(b) The payment of actual expenses incurred by a director or officer in the execution of the duties of that position does not affect the director's or officer's status as a volunteer within the meaning of this section.

(c) An officer or director who at the time of the act or omission was a declarant, as defined in subdivision (g) of Section 1351, or who received either direct or indirect compensation as an employee from the declarant, or from a financial institution that purchased a separate interest, as defined in subdivision (l) of Section 1351, at a judicial or nonjudicial foreclosure of a mortgage or deed of trust on real property, is not a volunteer for the purposes of this section.

(d) Nothing in this section shall be construed to limit the liability of the association for its negligent act or omission or for any negligent act or omission of an officer or director of the association.

(e) This section shall only apply to a volunteer officer or director who is a tenant of a separate interest in the common interest development or is an owner of no more than two separate interests in the common interest development.

(f) (1) For purposes of paragraph (1) of subdivision (a), the scope of the officer's or director's association duties shall include, but shall not be limited to, both of the following decisions:
(A) Whether to conduct an investigation of the common interest development for latent deficiencies prior to the expiration of the applicable statute of limitations.
(B) Whether to commence a civil action against the builder for defects in design or construction.
(2) It is the intent of the Legislature that this section clarify the scope of association duties to which the protections against personal liability in this section apply. It is not the intent of the Legislature that these clarifications be construed to expand, or
limit, the fiduciary duties owed by the directors or officers.

September 30, 2000

Civil Code § 1365.6 - Application Of Corp. Code § 310

Notwithstanding any other law, and regardless of whether an association is a corporation, as defined in Section 162 of the Corporations Code, the provisions of Section 310 of the Corporations Code shall apply to any contract or other transaction authorized, approved, or ratified by the board or a committee of the board.

September 30, 2000

Civil Code § 4177 - “Reserve Accounts”

“Reserve accounts” means both of the following:
(a) Moneys that the board has identified for use to defray the future repair or replacement of, or additions to, those major components that the association is obligated to maintain.
(b) The funds received, and not yet expended or disposed of, from either a compensatory damage award or settlement to an association from any person for injuries to property, real or personal, arising from any construction or design defects. These funds shall be separately itemized from funds described in subdivision (a).

September 30, 2000

Civil Code § 1365.3 - Association Report Required To Meet Standards Of Corp.

Unless the governing documents impose more stringent standards, any community service organization as defined in paragraph (3) of subdivision (c) of Section 1368 whose funding from the association or its members exceeds 10 percent of the organization's
annual budget shall prepare and distribute to the association a report that meets the requirements of Section 5012 of the Corporations Code, and that describes in detail administrative costs and identifies the payees of those costs in a manner consistent with
the provisions of Section 1365.2. If the community service organization does not comply with the standards, the report shall disclose the noncompliance in detail. If a community service organization is responsible for the maintenance of major components for which an association would otherwise be responsible, the community service organization shall supply to the association the information regarding those components that the association would use to complete disclosures and reserve reports required under this article. An association may rely upon information received from a community service organization, and shall provide access to the information pursuant to the provisions of Section 1365.2.

September 30, 2000

Civil Code § 1364 - Responsibility For Maintenance Of common Area; Damage By WOod-Destroying Pests Or Organisms; Relocation Costs; Notice Of Repair; Access To Telephone Wiring.

(a) Unless otherwise provided in the declaration of a common interest development, the association is responsible for repairing, replacing, or maintaining the common areas, other than exclusive use common areas, and the owner of each separate interest is responsible for maintaining that separate interest and any exclusive use common area appurtenant to the separate interest.

(b) (1) In a community apartment project, condominium project, or stock cooperative, as defined in Section 1351, unless otherwise provided in the declaration, the association is responsible for the repair and maintenance of the common area occasioned by the presence of wood-destroying pests or organisms.
(2) In a planned development as defined in Section 1351, unless a different maintenance scheme is provided in the declaration, each owner of a separate interest is responsible for the repair and maintenance of that separate interest as may be occasioned by the presence of wood-destroying pests or organisms. Upon approval of the majority of all members of the association, the responsibility for such repair and maintenance may be delegated to the association, which shall be entitled to recover the cost thereof as a special assessment.

(c) The costs of temporary relocation during the repair and maintenance of the areas within the responsibility of the association shall be borne by the owner of the separate interest affected.

(d) (1) The association may cause the temporary, summary removal of any occupant of a common interest development for such periods and at such times as may be necessary for prompt, effective treatment of wood-destroying pests or organisms.
(2) The association shall give notice of the need to temporarily vacate a separate interest to the occupants and to the owners, not less than 15 days nor more than 30 days prior to the date of the temporary relocation. The notice shall state the reason for the temporary relocation, the date and time of the beginning of treatment, the anticipated date and time of termination of treatment, and that the occupants will be responsible for their own accommodations during the temporary relocation.
(3) Notice by the association shall be deemed complete upon either:
(A) Personal delivery of a copy of the notice to the occupants, and sending a copy of the notice to the owners, if different than the occupants, by first-class mail, postage prepaid at the most current address shown on the books of the association.
(B) By sending a copy of the notice to the occupants at the separate interest address and a copy of the notice to the owners, if different than the occupants, by first-class mail, postage prepaid, at the most current address shown on the books of the association.

(e) For purposes of this section, "occupant" means an owner, resident, guest, invitee, tenant, lessee, sublessee, or other person in possession on the separate interest.

(f) Notwithstanding the provisions of the declaration, the owner of a separate interest is entitled to reasonable access to the common areas for the purpose of maintaining the internal and external telephone wiring made part of the exclusive use common areas of a separate interest pursuant to paragraph (2) of subdivision (i) of Section 1351. The access shall be subject to the consent of the association, whose approval shall not be unreasonably withheld, and which may include the association's approval of telephone wiring upon the exterior of the common areas, and other conditions as the association determines reasonable.

September 30, 2000

Civil Code § 1363.850 - Notice Of Dispute Resolution Procedure.

The notice provided pursuant to Section 1369.590 shall include a description of the internal dispute resolution process provided pursuant to this article.

September 30, 2000

Civil Code § 1363.830 - Dispute Resolution Procedure Minimum Requirements.

A fair, reasonable, and expeditious dispute resolution procedure shall at a minimum satisfy all of the following requirements:

(a) The procedure may be invoked by either party to the dispute. A request invoking the procedure shall be in writing.

(b) The procedure shall provide for prompt deadlines. The procedure shall state the maximum time for the association to act on a request invoking the procedure.

(c) If the procedure is invoked by a member, the association shall participate in the procedure.

(d) If the procedure is invoked by the association, the member may elect not to participate in the procedure. If the member participates but the dispute is resolved other than by agreement of the member, the member shall have a right of appeal to the association's board of directors.

(e) A resolution of a dispute pursuant to the procedure, that is not in conflict with the law or the governing documents, binds the association and is judicially enforceable. An agreement reached pursuant to the procedure, that is not in conflict with the law or the governing documents, binds the parties and is judicially
enforceable.

(f) The procedure shall provide a means by which the member and the association may explain their positions.

(g) A member of the association shall not be charged a fee to participate in the process.

September 30, 2000

Civil Code § 5905 - Dispute Resolution Procedure Required

(a) An association shall provide a fair, reasonable, and expeditious procedure for resolving a dispute within the scope of this article.
(b) In developing a procedure pursuant to this article, an association shall make maximum, reasonable use of available local dispute resolution programs involving a neutral third party, including low-cost mediation programs such as those listed on the Internet Web sites of the Department of Consumer Affairs and the United States Department of Housing and Urban Development.
(c) If an association does not provide a fair, reasonable, and expeditious procedure for resolving a dispute within the scope of this article, the procedure provided in Section 5915 applies and satisfies the requirement of subdivision (a).

September 30, 2000

Civil Code § 1363.810 - Application Of Article.

(a) This article applies to a dispute between an association and a member involving their rights, duties, or liabilities under this title, under the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code), or under the governing documents of the common interest development or association.

(b) This article supplements, and does not replace, Article 2 (commencing with Section 1369.510) of Chapter 7, relating to alternative dispute resolution as a prerequisite to an enforcement action.

September 30, 2000

Civil Code § 4158 - “Managing Agent”

(a) A “managing agent” is a person who, for compensation or in expectation of compensation, exercises control over the assets of a common interest development.
(b) A “managing agent” does not include any of the following:
(1) A regulated financial institution operating within the normal course of its regulated business practice.
(2) An attorney at law acting within the scope of the attorney’s license.

September 30, 2000

Civil Code § 1363.09 - One Year Statute of Limitations-Action For Violation Of ARticle; Penalties; Small Claims Court Option.

(a) A member of an association may bring a civil action for declaratory or equitable relief for a violation of this article by an association of which he or she is a member, including, but not limited to, injunctive relief, restitution, or a combination thereof, within one year of the date the cause of action accrues. Upon a finding that the election procedures of this article, or the adoption of and adherence to rules provided by Article 4 (commencing with Section 1357.100) of Chapter 2, were not followed, a court may void any results of the election.

(b) A member who prevails in a civil action to enforce his or her rights pursuant to this article shall be entitled to reasonable attorney's fees and court costs, and the court may impose a civil penalty of up to five hundred dollars ($500) for each violation, except that each identical violation shall be subject to only one penalty if the violation affects each member of the association equally. A prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation.

(c) A cause of action under Section 1363.03 with respect to access to association resources by a candidate or member advocating a point of view, the receipt of a ballot by a member, or the counting, tabulation, or reporting of, or access to, ballots for inspection and review after tabulation may be brought in small claims court if the amount of the demand does not exceed the jurisdiction of that court.

September 30, 2000

Civil Code § 4900 - Common Interest Development Open Meeting Act

This article shall be known and may be cited as the Common Interest Development Open Meeting Act.

September 30, 2000

Civil Code § 5135 - Use of Association Funds for Campaign Purposes Prohibited

(a) Association funds shall not be used for campaign purposes in connection with any association board election. Funds of the association shall not be used for campaign purposes in connection with any other association election except to the extent necessary to comply with duties of the association imposed by law.
(b) For the purposes of this section, “campaign purposes” includes, but is not limited to, the following:
(1) Expressly advocating the election or defeat of any candidate that is on the association election ballot.
(2) Including the photograph or prominently featuring the name of any candidate on a communication from the association or its board, excepting the ballot, ballot materials, or a communication that is legally required, within 30 days of an election. This is not a campaign purpose if the communication is one for which subdivision (a) of Section 5105 requires that equal access be provided to another candidate or advocate.

September 30, 2000

Civil Code § 5110 - Inspector of Elections

(a) The association shall select an independent third party or parties as an inspector of elections. The number of inspectors of elections shall be one or three.
(b) For the purposes of this section, an independent third party includes, but is not limited to, a volunteer poll worker with the county registrar of voters, a licensee of the California Board of Accountancy, or a notary public. An independent third party may be a member, but may not be a director or a candidate for director or be related to a director or to a candidate for director. An independent third party may not be a person, business entity, or subdivision of a business entity who is currently employed or under contract to the association for any compensable services unless expressly authorized by rules of the association adopted pursuant to paragraph (5) of subdivision (a) of Section 5105.
(c) The inspector or inspectors of elections shall do all of the following:
(1) Determine the number of memberships entitled to vote and the voting power of each.
(2) Determine the authenticity, validity, and effect of proxies, if any.
(3) Receive ballots.
(4) Hear and determine all challenges and questions in any way arising out of or in connection with the right to vote.
(5) Count and tabulate all votes.
(6) Determine when the polls shall close, consistent with the governing documents.
(7) Determine the tabulated results of the election.
(8) Perform any acts as may be proper to conduct the election with fairness to all members in accordance with this article, the Corporations Code, and all applicable rules of the association regarding the conduct of the election that are not in conflict with this article.
(d) An inspector of elections shall perform all duties impartially, in good faith, to the best of the inspector of election’ s ability, and as expeditiously as is practical. If there are three inspectors of elections, the decision or act of a majority shall be effective in all respects as the decision or act of all. Any report made by the inspector or inspectors of elections is prima facie evidence of the facts stated in the report.

September 30, 2000

Civil Code § 1363 - General Powers And Duties Of Association; Meetings; Access To Records; Disciplinary Action.

(a) A common interest development shall be managed by an association that may be incorporated or unincorporated. The association may be referred to as a community association.

(b) An association, whether incorporated or unincorporated, shall prepare a budget pursuant to Section 1365 and disclose information, if requested, in accordance with Section 1368.

(c) Unless the governing documents provide otherwise, and regardless of whether the association is incorporated or unincorporated, the association may exercise the powers granted to a nonprofit mutual benefit corporation, as enumerated in Section 7140 of the Corporations Code, except that an unincorporated association may not adopt or use a corporate seal or issue membership certificates in accordance with Section 7313 of the Corporations Code.

The association, whether incorporated or unincorporated, may exercise the powers granted to an association in this title.

(d) Meetings of the membership of the association shall be conducted in accordance with a recognized system of parliamentary procedure or any parliamentary procedures the association may adopt.

(e) Notwithstanding any other provision of law, notice of meetings of the members shall specify those matters the board intends to present for action by the members, but, except as otherwise provided by law, any proper matter may be presented at the meeting for action.

(f) Members of the association shall have access to association records, including accounting books and records and membership lists, in accordance with Article 3 (commencing with Section 8330) of Chapter 13 of Part 3 of Division 2 of Title 1 of the Corporations Code. The members of the association shall have the same access to the operating rules of the association as they have to the accounting books and records of the association.

(g) If an association adopts or has adopted a policy imposing any monetary penalty, including any fee, on any association member for a violation of the governing documents or rules of the association, including any monetary penalty relating to the activities of a guest or invitee of a member, the board of directors shall adopt and distribute to each member, by personal delivery or first-class mail, a schedule of the monetary penalties that may be assessed for those violations, which shall be in accordance with authorization for member discipline contained in the governing documents. The board of directors shall not be required to distribute any additional schedules of monetary penalties unless there are changes from the schedule that was adopted and distributed to the members pursuant to this subdivision.

(h) When the board of directors is to meet to consider or impose discipline upon a member, the board shall notify the member in writing, by either personal delivery or first-class mail, at least 10 days prior to the meeting. The notification shall contain, at a minimum, the date, time, and place of the meeting, the nature of the alleged violation for which a member may be disciplined, and a statement that the member has a right to attend and may address the board at the meeting. The board of directors of the association shall meet in executive session if requested by the member being disciplined.

If the board imposes discipline on a member, the board shall provide the member a written notification of the disciplinary action, by either personal delivery or first-class mail, within 15 days following the action. A disciplinary action shall not be effective against a member unless the board fulfills the requirements of this subdivision.

(i) Whenever two or more associations have consolidated any of their functions under a joint neighborhood association or similar organization, members of each participating association shall be (1) entitled to attend all meetings of the joint association other than executive sessions, (2) given reasonable opportunity for participation in those meetings, and (3) entitled to the same access to the joint association's records as they are to the participating association's records.

(j) Nothing in this section shall be construed to create, expand, or reduce the authority of the board of directors of an association to impose monetary penalties on an association member for a violation of the governing documents or rules of the association.

September 30, 2000

Civil Code § 1363.001 - On-line Education Course.

To the extent existing funds are available, the Department of Consumer Affairs and the Department of Real Estate shall develop an on-line education course for the board of directors of an association regarding the role, duties, laws, and responsibilities of board members and prospective board members, and the nonjudicial foreclosure process.

September 30, 2000

Civil Code § 4500 - Ownership of Common Area

Unless the declaration otherwise provides, in a condominium project, or in a planned development in which the common area is owned by the owners of the separate interests, the common area is owned as tenants in common, in equal shares, one for each separate interest.

September 30, 2000

Civil Code § 4185 - “Separate Interest”

(a) “Separate interest” has the following meanings:
(1) In a community apartment project, “separate interest” means the exclusive right to occupy an apartment, as specified in Section 4105.
(2) In a condominium project, “separate interest” means a separately owned unit, as specified in Section 4125.
(3) In a planned development, “separate interest” means a separately owned lot, parcel, area, or space.
(4) In a stock cooperative, “separate interest” means the exclusive right to occupy a portion of the real property, as specified in Section 4190.
(b) Unless the declaration or condominium plan, if any exists, otherwise provides, if walls, floors, or ceilings are designated as boundaries of a separate interest, the interior surfaces of the perimeter walls, floors, ceilings, windows, doors, and outlets located within the separate interest are part of the separate interest and any other portions of the walls, floors, or ceilings are part of the common area.
(c) The estate in a separate interest may be a fee, a life estate, an estate for years, or any combination of the foregoing.

September 30, 2000

Civil Code § 1361 - Rights Or Easements In Common Area.

Unless the declaration otherwise provides:

(a) In a community apartment project and condominium project, and in those planned developments with common areas owned in common by the owners of the separate interests, there are appurtenant to each separate interest nonexclusive rights of ingress, egress, and support, if necessary, through the common areas. The common areas are subject to these rights.

(b) In a stock cooperative, and in a planned development with common areas owned by the association, there is an easement for ingress, egress, and support, if necessary, appurtenant to each separate interest. The common areas are subject to these easements.

September 30, 2000

Civil Code § 1360.5 - Pet Provision.

(a) No governing documents shall prohibit the owner of a separate interest within a common interest development from keeping at least one pet within the common interest development, subject to reasonable rules and regulations of the association. This section may not be construed to affect any other rights provided by law to an owner of a separate interest to keep a pet within the development.

(b) For purposes of this section, "pet" means any domesticated bird, cat, dog, aquatic animal kept within an aquarium, or other animal as agreed to between the association and the homeowner.

(c) If the association implements a rule or regulation restricting the number of pets an owner may keep, the new rule or regulation shall not apply to prohibit an owner from continuing to keep any pet that the owner currently keeps in his or her separate interest if the pet otherwise conforms with the previous rules or regulations relating to pets.

(d) For the purposes of this section, "governing documents" shall include, but are not limited to, the conditions, covenants, and restrictions of the common interest development, and the bylaws, rules, and regulations of the association.

(e) This section shall become operative on January 1, 2001, and shall only apply to governing documents entered into, amended, or otherwise modified on or after that date.

September 30, 2000

Civil Code § 1360 - Modification Of Unit By Owner; Facilitation Of Access For Handicapped; Association Approval.

(a) Subject to the provisions of the governing documents and
other applicable provisions of law, if the boundaries of the separate
interest are contained within a building, the owner of the separate
interest may do the following:
(1) Make any improvements or alterations within the boundaries of
his or her separate interest that do not impair the structural
integrity or mechanical systems or lessen the support of any portions
of the common interest development.
(2) Modify a unit in a condominium project, at the owner's
expense, to facilitate access for persons who are blind, visually
handicapped, deaf, or physically disabled, or to alter conditions
which could be hazardous to these persons. These modifications may
also include modifications of the route from the public way to the
door of the unit for the purposes of this paragraph if the unit is on
the ground floor or already accessible by an existing ramp or
elevator. The right granted by this paragraph is subject to the
following conditions:
(A) The modifications shall be consistent with applicable building
code requirements.
(B) The modifications shall be consistent with the intent of
otherwise applicable provisions of the governing documents pertaining
to safety or aesthetics.
(C) Modifications external to the dwelling shall not prevent
reasonable passage by other residents, and shall be removed by the
owner when the unit is no longer occupied by persons requiring those
modifications who are blind, visually handicapped, deaf, or
physically disabled.
(D) Any owner who intends to modify a unit pursuant to this
paragraph shall submit his or her plans and specifications to the
association of the condominium project for review to determine
whether the modifications will comply with the provisions of this
paragraph. The association shall not deny approval of the proposed
modifications under this paragraph without good cause.

(b) Any change in the exterior appearance of a separate interest
shall be in accordance with the governing documents and applicable
provisions of law.

September 30, 2000

Civil Code § 4610 - Restrictions on Partition of Common Areas

(a) Except as provided in this section, the common area in a condominium project shall remain undivided, and there shall be no judicial partition thereof. Nothing in this section shall be deemed to prohibit partition of a cotenancy in a condominium.
(b) The owner of a separate interest in a condominium project may maintain a partition action as to the entire project as if the owners of all of the separate interests in the project were tenants in common in the entire project in the same proportion as their interests in the common area. The court shall order partition under this subdivision only by sale of the entire condominium project and only upon a showing of one of the following:
(1) More than three years before the filing of the action, the condominium project was damaged or destroyed, so that a material part was rendered unfit for its prior use, and the condominium project has not been rebuilt or repaired substantially to its state prior to the damage or destruction.
(2) Three-fourths or more of the project is destroyed or substantially damaged and owners of separate interests holding in the aggregate more than a 50-percent interest in the common area oppose repair or restoration of the project.
(3) The project has been in existence more than 50 years, is obsolete and uneconomic, and owners of separate interests holding in the aggregate more than a 50-percent interest in the common area oppose repair or restoration of the project.
(4) Any conditions in the declaration for sale under the circumstances described in this subdivision have been met.

September 30, 2000

Civil Code § 1358 - Interests Included In Conveyance, Judicial Sale Or Transfer Of Separate Interests; Transfers Of Exclusive Use Areas; Restrictions Upon Severability Of Component Interests.

(a) In a community apartment project, any conveyance,
judicial sale, or other voluntary or involuntary transfer of the
separate interest includes the undivided interest in the community
apartment project. Any conveyance, judicial sale, or other voluntary
or involuntary transfer of the owner's entire estate also includes
the owner's membership interest in the association.

(b) In a condominium project the common areas are not subject to
partition, except as provided in Section 1359. Any conveyance,
judicial sale, or other voluntary or involuntary transfer of the
separate interest includes the undivided interest in the common
areas. Any conveyance, judicial sale, or other voluntary or
involuntary transfer of the owner's entire estate also includes the
owner's membership interest in the association.

(c) In a planned development, any conveyance, judicial sale, or
other voluntary or involuntary transfer of the separate interest
includes the undivided interest in the common areas, if any exist.
Any conveyance, judicial sale, or other voluntary or involuntary
transfer of the owner's entire estate also includes the owner's
membership interest in the association.

(d) In a stock cooperative, any conveyance, judicial sale, or
other voluntary or involuntary transfer of the separate interest
includes the ownership interest in the corporation, however
evidenced. Any conveyance, judicial sale, or other voluntary or
involuntary transfer of the owner's entire estate also includes the
owner's membership interest in the association.

Nothing in this section prohibits the transfer of exclusive use
areas, independent of any other interest in a common interest
subdivision, if authorization to separately transfer exclusive use
areas is expressly stated in the declaration and the transfer occurs
in accordance with the terms of the declaration.

Any restrictions upon the severability of the component interests
in real property which are contained in the declaration shall not be
deemed conditions repugnant to the interest created within the
meaning of Section 711 of the Civil Code. However, these
restrictions shall not extend beyond the period in which the right to
partition a project is suspended under Section 1359.

September 30, 2000

Civil Code § 1357.150 - Effective Date.

(a) This article applies to a rule change commenced on or
after January 1, 2004.

(b) Nothing in this article affects the validity of a rule change
commenced before January 1, 2004.

(c) For the purposes of this section, a rule change is commenced
when the board of directors of the association takes its first
official action leading to adoption of the rule change.

September 30, 2000

Civil Code § 1357.140 - Special Meeting Of Members To Reverse A Rule Change.

(a) Members of an association owning 5 percent or more of
the separate interests may call a special meeting of the members to
reverse a rule change.

(b) A special meeting of the members may be called by delivering a
written request to the president or secretary of the board of
directors, after which the board shall deliver notice of the meeting
to the association's members and hold the meeting in conformity with
Section 7511 of the Corporations Code. The written request may not
be delivered more than 30 days after the members of the association
are notified of the rule change. Members are deemed to have been
notified of a rule change on delivery of notice of the rule change,
or on enforcement of the resulting rule, whichever is sooner. For
the purposes of Section 8330 of the Corporations Code, collection of
signatures to call a special meeting under this section is a purpose
reasonably related to the interests of the members of the
association. A member request to copy or inspect the membership list
solely for that purpose may not be denied on the grounds that the
purpose is not reasonably related to the member's interests as a
member.

(c) The rule change may be reversed by the affirmative vote of a
majority of the votes represented and voting at a duly held meeting
at which a quorum is present (which affirmative votes also constitute
a majority of the required quorum), or if the declaration or bylaws
require a greater proportion, by the affirmative vote or written
ballot of the proportion required. In lieu of calling the meeting
described in this section, the board may distribute a written ballot
to every member of the association in conformity with the
requirements of Section 7513 of the Corporations Code.

(d) Unless otherwise provided in the declaration or bylaws, for
the purposes of this section, a member may cast one vote per separate
interest owned.

(e) A meeting called under this section is governed by Chapter 5
(commencing with Section 7510) of Part 3 of Division 2 of Title 1 of,
and Sections 7612 and 7613 of, the Corporations Code.

(f) A rule change reversed under this section may not be readopted
for one year after the date of the meeting reversing the rule
change. Nothing in this section precludes the board of directors
from adopting a different rule on the same subject as the rule change
that has been reversed.

(g) As soon as possible after the close of voting, but not more
than 15 days after the close of voting, the board of directors shall
provide notice of the results of a member vote held pursuant to this
section to every association member. Delivery of notice under this
subdivision is subject to Section 1350.7.

(h) This section does not apply to an emergency rule change made
under subdivision (d) of Section 1357.130.

September 30, 2000

Civil Code § 1357.130 - Notice Of Rule Change.

(a) The board of directors shall provide written notice
of a proposed rule change to the members at least 30 days before
making the rule change. The notice shall include the text of the
proposed rule change and a description of the purpose and effect of
the proposed rule change. Notice is not required under this
subdivision if the board of directors determines that an immediate
rule change is necessary to address an imminent threat to public
health or safety or imminent risk of substantial economic loss to the
association.

(b) A decision on a proposed rule change shall be made at a
meeting of the board of directors, after consideration of any
comments made by association members.

(c) As soon as possible after making a rule change, but not more
than 15 days after making the rule change, the board of directors
shall deliver notice of the rule change to every association member.
If the rule change was an emergency rule change made under
subdivision (d), the notice shall include the text of the rule
change, a description of the purpose and effect of the rule change,
and the date that the rule change expires.

(d) If the board of directors determines that an immediate rule
change is required to address an imminent threat to public health or
safety, or an imminent risk of substantial economic loss to the
association, it may make an emergency rule change; and no notice is
required, as specified in subdivision (a). An emergency rule change
is effective for 120 days, unless the rule change provides for a
shorter effective period. A rule change made under this subdivision
may not be readopted under this subdivision.

(e) A notice required by this section is subject to Section 1350.7.

September 30, 2000

Civil Code § 1357.120 - Application.

(a) Sections 1357.130 and 1357.140 only apply to an operating rule
that relates to one or more of the following subjects:

(1) Use of the common area or of an exclusive use common area.
(2) Use of a separate interest, including any aesthetic or
architectural standards that govern alteration of a separate
interest.
(3) Member discipline, including any schedule of monetary
penalties for violation of the governing documents and any procedure
for the imposition of penalties.
(4) Any standards for delinquent assessment payment plans.
(5) Any procedures adopted by the association for resolution of disputes.
(6) Any procedures for reviewing and approving or disapproving a
proposed physical change to a member's separate interest or to the
common area.
(7) Procedures for elections.

(b) Sections 1357.130 and 1357.140 do not apply to the
following actions by the board of directors of an association:
(1) A decision regarding maintenance of the common area.
(2) A decision on a specific matter that is not intended to apply
generally.
(3) A decision setting the amount of a regular or special
assessment.
(4) A rule change that is required by law, if the board of directors has
no discretion as to the substantive effect of the rule change.
(5) Issuance of a document that merely repeats existing law or the
governing documents.

September 30, 2000

Civil Code § 1357.110 - Validity.

An operating rule is valid and enforceable only if all of
the following requirements are satisfied:

(a) The rule is in writing.
(b) The rule is within the authority of the board of directors of
the association conferred by law or by the declaration, articles of
incorporation or association, or bylaws of the association.
(c) The rule is not inconsistent with governing law and the
declaration, articles of incorporation or association, and bylaws of
the association.
(d) The rule is adopted, amended, or repealed in good faith and in
substantial compliance with the requirements of this article.
(e) The rule is reasonable.

September 30, 2000

Civil Code § 1357.100 - "Operating Rule" And "Rule Change" Defined.

As used in this article:

(a) "Operating rule" means a regulation adopted by the board of
directors of the association that applies generally to the management
and operation of the common interest development or the conduct of
the business and affairs of the association.

(b) "Rule change" means the adoption, amendment, or repeal of an
operating rule by the board of directors of the association.

September 30, 2000

Civil Code § 1357 - Extending Term Of Declaration.

(a) The Legislature finds that there are common interest
developments that have been created with deed restrictions which do
not provide a means for the property owners to extend the term of the
declaration. The Legislature further finds that covenants and
restrictions, contained in the declaration, are an appropriate method
for protecting the common plan of developments and to provide for a
mechanism for financial support for the upkeep of common areas
including, but not limited to, roofs, roads, heating systems, and
recreational facilities. If declarations terminate prematurely,
common interest developments may deteriorate and the housing supply
of affordable units could be impacted adversely.

The Legislature further finds and declares that it is in the
public interest to provide a vehicle for extending the term of the
declaration if owners having more than 50 percent of the votes in
the association choose to do so.

(b) A declaration which specifies a termination date, but which
contains no provision for extension of the termination date, may be
extended by the approval of owners having more than 50 percent of the
votes in the association or any greater percentage specified in the
declaration for an amendment thereto. If the approval of owners
having more than 50 percent of the votes in the association is
required to amend the declaration, the term of the declaration may be
extended in accordance with Section 1356.

(c) Any amendment to a declaration made in accordance with
subdivision (b) shall become effective upon recordation in
accordance with Section 1355.

(d) No single extension of the terms of the declaration made
pursuant to this section shall exceed the initial term of the
declaration or 20 years, whichever is less. However, more than one
extension may occur pursuant to this section.

September 30, 2000

Civil Code § 1356 - Petition To Court To Reduce Percentage Of Affirmative Votes To Amend Declaration; Recording Amendment; Mailing.

(a) If in order to amend a declaration, the declaration requires owners having more than 50 percent of the votes in the association, in a single class voting structure, or owners having more than 50 percent of the votes in more than one class in a voting structure with more than one class, to vote in favor of the amendment, the association, or any owner of a separate interest, may petition the superior court of the county in which the common interest development is located for an order reducing the percentage of the affirmative votes necessary for such an amendment. The petition shall describe the effort that has been made to solicit approval of the association members in the manner provided in the declaration, the number of affirmative and negative votes actually received, the number or percentage of affirmative votes required to effect the amendment in accordance with the existing declaration, and other matters the petitioner considers relevant to the court's
determination. The petition shall also contain, as exhibits thereto, copies of all of the following:
(1) The governing documents.
(2) A complete text of the amendment.
(3) Copies of any notice and solicitation materials utilized in the solicitation of owner approvals.
(4) A short explanation of the reason for the amendment.
(5) Any other documentation relevant to the court's determination.

(b) Upon filing the petition, the court shall set the matter for hearing and issue an ex parte order setting forth the manner in which notice shall be given.

(c) The court may, but shall not be required to, grant the petition if it finds all of the following:
(1) The petitioner has given not less than 15 days written notice of the court hearing to all members of the association, to any mortgagee of a mortgage or beneficiary of a deed of trust who is entitled to notice under the terms of the declaration, and to the city, county, or city and county in which the common interest development is located that is entitled to notice under the terms of the declaration.
(2) Balloting on the proposed amendment was conducted in accordance with all applicable provisions of the governing documents.
(3) A reasonably diligent effort was made to permit all eligible members to vote on the proposed amendment.
(4) Owners having more than 50 percent of the votes, in a single class voting structure, voted in favor of the amendment. In a voting structure with more than one class, where the declaration requires a majority of more than one class to vote in favor of the amendment, owners having more than 50 percent of the votes of each class required by the declaration to vote in favor of the amendment voted in favor of the amendment.
(5) The amendment is reasonable.
(6) Granting the petition is not improper for any reason stated in subdivision (e).

(d) If the court makes the findings required by subdivision (c), any order issued pursuant to this section may confirm the amendment as being validly approved on the basis of the affirmative votes actually received during the balloting period or the order may dispense with any requirement relating to quorums or to the number or percentage of votes needed for approval of the amendment that would otherwise exist under the governing documents.

(e) Subdivisions (a) to (d), inclusive, notwithstanding, the court shall not be empowered by this section to approve any amendment to the declaration that:
(1) Would change provisions in the declaration requiring the approval of owners having more than 50 percent of the votes in more than one class to vote in favor of an amendment, unless owners having more than 50 percent of the votes in each affected class approved the amendment.
(2) Would eliminate any special rights, preferences, or privileges designated in the declaration as belonging to the declarant, without the consent of the declarant.
(3) Would impair the security interest of a mortgagee of a mortgage or the beneficiary of a deed of trust without the approval of the percentage of the mortgagees and beneficiaries specified in the declaration, if the declaration requires the approval of a specified percentage of the mortgagees and beneficiaries.

(f) An amendment is not effective pursuant to this section until the court order and amendment have been recorded in every county in which a portion of the common interest development is located. The amendment may be acknowledged by, and the court order and amendment may be recorded by, any person designated in the declaration or by the association for that purpose, or if no one is designated for that purpose, by the president of the association. Upon recordation of the amendment and court order, the declaration, as amended in accordance with this section, shall have the same force and effect as if the amendment were adopted in compliance with every requirement imposed by the governing documents.

(g) Within a reasonable time after the amendment is recorded the association shall mail a copy of the amendment to each member of the association, together with a statement that the amendment has been recorded.

September 30, 2000

Civil Code § 4230 - Amendment to Delete Developer Provisions

(a) Notwithstanding any provision of the governing documents to the contrary, the board may, after the developer has completed construction of the development, has terminated construction activities, and has terminated marketing activities for the sale, lease, or other disposition of separate interests within the development, adopt an amendment deleting from any of the governing documents any provision which is unequivocally designed and intended, or which by its nature can only have been designed or intended, to facilitate the developer in completing the construction or marketing of the development. However, provisions of the governing documents relative to a particular construction or marketing phase of the development may not be deleted under the authorization of this subdivision until that construction or marketing phase has been completed.
(b) The provisions which may be deleted by action of the board shall be limited to those which provide for access by the developer over or across the common area for the purposes of (1) completion of construction of the development, and (2) the erection, construction, or maintenance of structures or other facilities designed to facilitate the completion of construction or marketing of separate interests.
(c) At least 30 days prior to taking action pursuant to subdivision (a), the board shall deliver to all members, by individual delivery, pursuant to Section 4040, (1) a copy of all amendments to the governing documents proposed to be adopted under subdivision (a), and (2) a notice of the time, date, and place the board will consider adoption of the amendments. The board may consider adoption of amendments to the governing documents pursuant to subdivision (a) only at a meeting that is open to all members, who shall be given opportunity to make comments thereon. All deliberations of the board on any action proposed under subdivision (a) shall only be conducted in an open meeting.
(d) The board may not amend the governing documents pursuant to this section without the approval of a majority of a quorum of the members, pursuant to Section 4070. For the purposes of this section, “quorum” means more than 50 percent of the members who own no more than two separate interests in the development.

September 30, 2000

Civil Code § 1355 - Amendment Of Declaration.

(a) The declaration may be amended pursuant to the governing
documents or this title. Except as provided in Section 1356, an
amendment is effective after (1) the approval of the percentage of
owners required by the governing documents has been given, (2) that
fact has been certified in a writing executed and acknowledged by the
officer designated in the declaration or by the association for that
purpose, or if no one is designated, by the president of the
association, and (3) that writing has been recorded in each county in
which a portion of the common interest development is located.

(b) Except to the extent that a declaration provides by its
express terms that it is not amendable, in whole or in part, a
declaration which fails to include provisions permitting its
amendment at all times during its existence may be amended at any
time. For purposes of this subdivision, an amendment is only
effective after (1) the proposed amendment has been distributed to
all of the owners of separate interests in the common interest
development by first-class mail postage prepaid or personal delivery
not less than 15 days and not more than 60 days prior to any approval
being solicited; (2) the approval of owners representing more than
50 percent, or any higher percentage required by the declaration for
the approval of an amendment to the declaration, of the separate
interests in the common interest development has been given, and that
fact has been certified in a writing, executed and acknowledged by
an officer of the association; and (3) the amendment has been
recorded in each county in which a portion of the common interest
development is located. A copy of any amendment adopted pursuant to
this subdivision shall be distributed by first-class mail postage
prepaid or personal delivery to all of the owners of separate
interest immediately upon its recordation.

September 30, 2000

Civil Code § 1354 - Covenants and Restrictions In Declaration Enforcement

(a) The covenants and restrictions in the declaration shall
be enforceable equitable servitudes, unless unreasonable, and shall
inure to the benefit of and bind all owners of separate interests in
the development. Unless the declaration states otherwise, these
servitudes may be enforced by any owner of a separate interest or by
the association, or by both.
(b) A governing document other than the declaration may be
enforced by the association against an owner of a separate interest
or by an owner of a separate interest against the association.
(c) In an action to enforce the governing documents, the
prevailing party shall be awarded reasonable attorney's fees and
costs.

September 30, 2000

Civil Code § 4735 - Use of Low Water-Using Plants

(a) Notwithstanding any other law, a provision of the governing documents shall be void and unenforceable if it does any of the following:
(1) Prohibits, or includes conditions that have the effect of prohibiting, the use of low water-using plants as a group.
(2) Has the effect of prohibiting or restricting compliance with either of the following:
(A) A water-efficient landscape ordinance adopted or in effect pursuant to subdivision (c) of Section 65595 of the Government Code.
(B) Any regulation or restriction on the use of water adopted pursuant to Section 353 or 375 of the Water Code.
(b) This section shall not prohibit an association from applying landscaping rules established in the governing documents, to the extent the rules fully conform with the requirements of subdivision (a).

September 30, 2000

Civil Code § 1353.7 - Fire Retardant Roof Covering Materials.

(a) No common interest development may require a homeowner
to install or repair a roof in a manner that is in violation of
Section 13132.7 of the Health and Safety Code.
(b) Governing documents of a common interest development located
within a very high fire severity zone, as designated by the Director
of Forestry and Fire Protection pursuant to Article 9 (commencing
with Section 4201) of Chapter 1 of Part 2 of Division 4 of the Public
Resources Code or by a local agency pursuant to Chapter 6.8
(commencing with Section 51175) of Part 1 of Division 1 of Title 5 of
the Government Code, shall allow for at least one type of fire
retardant roof covering material that meets the requirements of
Section 13132.7 of the Health and Safety Code.

September 30, 2000

Civil Code § 1353.5 - Right to Display The American Flag.

(a) Except as required for the protection of the public
health or safety, no declaration or other governing document shall
limit or prohibit, or be construed to limit or prohibit, the display
of the flag of the United States by an owner on or in the owner's
separate interest or within the owner's exclusive use common area, as
defined in Section 1351.
(b) For purposes of this section, "display of the flag of the
United States" means a flag of the United States made of fabric,
cloth, or paper displayed from a staff or pole or in a window, and
does not mean a depiction or emblem of the flag of the United States
made of lights, paint, roofing, siding, paving materials, flora, or
balloons, or any other similar building, landscaping, or decorative
component.
(c) In any action to enforce this section, the prevailing party
shall be awarded reasonable attorneys' fees and costs.

September 30, 2000

Civil Code § 1353 - Contents of Declaration.

(a) (1) A declaration, recorded on or after January 1, 1986,
shall contain a legal description of the common interest development,
and a statement that the common interest development is a community
apartment project, condominium project, planned development, stock
cooperative, or combination thereof. The declaration shall
additionally set forth the name of the association and the
restrictions on the use or enjoyment of any portion of the common
interest development that are intended to be enforceable equitable
servitudes. If the property is located within an airport influence
area, a declaration, recorded after January 1, 2004, shall contain
the following statement:


NOTICE OF AIRPORT IN VICINITY

This property is presently located in the vicinity of an
airport, within what is known as an airport influence area.
For that reason, the property may be subject to some of the
annoyances or inconveniences associated with proximity to
airport operations (for example: noise, vibration, or odors).
Individual sensitivities to those annoyances can vary from
person to person. You may wish to consider what airport
annoyances, if any, are associated with the property before
you complete your purchase and determine whether they are
acceptable to you.

(2) For purposes of this section, an "airport influence area,"
also known as an "airport referral area," is the area in which
current or future airport-related noise, overflight, safety, or
airspace protection factors may significantly affect land uses or
necessitate restrictions on those uses as determined by an airport
land use commission.
(3) If the property is within the San Francisco Bay Conservation
and Development Commission jurisdiction, as described in Section
66610 of the Government Code, a declaration recorded on or after
January 1, 2006, shall contain the following notice:

NOTICE OF SAN FRANCISCO BAY CONSERVATION AND DEVELOPMENT
COMMISSION JURISDICTION

This property is located within the jurisdiction of the San
Francisco Bay Conservation and Development Commission. Use and
development of property within the commission's jurisdiction may be
subject to special regulations, restrictions, and permit
requirements. You may wish to investigate and determine whether they
are acceptable to you and your intended use of the property before
you complete your transaction.

(4) The statement in a declaration acknowledging that a property
is located in an airport influence area or within the jurisdiction of
the San Francisco Bay Conservation and Development Commission does
not constitute a title defect, lien, or encumbrance.
(b) The declaration may contain any other matters the original
signator of the declaration or the owners consider appropriate.

September 30, 2000

Civil Code § 1352.5 - Covenants in Violation Of Government Code § 12955; Action for Injunctive Relief

(a) No declaration or other governing document shall
include a restrictive covenant in violation of Section 12955 of the
Government Code.
(b) Notwithstanding any other provision of law or provision of the
governing documents, the board of directors of an association,
without approval of the owners, shall amend any declaration or other
governing document that includes a restrictive covenant prohibited by
this section to delete the restrictive covenant, and shall restate
the declaration or other governing document without the restrictive
covenant but with no other change to the declaration or governing
document.
(c) If after providing written notice to an association requesting
that the association delete a restrictive covenant that violates
subdivision (a), and the association fails to delete the restrictive
covenant within 30 days of receiving the notice, the Department of
Fair Employment and Housing, a city or county in which a common
interest development is located, or any person may bring an action
against the association for injunctive relief to enforce subdivision
(a). The court may award attorney's fees to the prevailing party.

September 29, 2000

Civil Code § 4100 - “Common Interest Development”

“Common interest development” means any of the following:
(a) A community apartment project.
(b) A condominium project.
(c) A planned development.
(d) A stock cooperative.

September 29, 2000

Civil Code § 4075 - Application of Definitions

The definitions in this article govern the construction of this act.

September 29, 2000

Civil Code § 4035 - Delivery of Documents to Association

(a) If a provision of this act requires that a document be delivered to an association, the document shall be delivered to the person designated in the annual policy statement, prepared pursuant to S ection 5310, to receive documents on behalf of the association. If no person has been designated to receive documents, the document shall be delivered to the president or secretary of the association.
(b) A document delivered pursuant to this section may be delivered by any of the following methods:
(1) By email, facsimile, or other electronic means, if the association has assented to that method of delivery.
(2) By personal delivery, if the association has assented to that method of delivery. If the association accepts a document by personal delivery it shall provide a written receipt acknowledging delivery of the document.
(3) By first-class mail, postage prepaid, registered or certified mail, express mail, or overnight delivery by an express service center.

September 29, 2000

Civil Code § 4005 - Headings

Division, part, title, chapter, article and section headings do not in any manner affect the scope, meaning, or intent of this act.

September 29, 2000

Civil Code § 4000 - Short Title

This part shall be known and may be cited as the Davis-Stirling Common Interest Development Act. In a provision of this part, the part may be referred to as the act.

September 15, 2000

A Soon To Be State Law May Do More Harm Than Good

A Soon To Be State Law May Do More Harm Than Good
Steven Shuey, PCAM, CCAM

Homeowner Associations exist in common interest developments to manage the community.  This management includes providing for the maintenance of the common areas as well as administration.  In many communities, this can mean thousands of dollars per month in regular monthly costs.

Associations pay their monthly bills with funds collected from owners through maintenance assessments, also known as a maintenance fee or dues.  Without this regular recurring income, funds would not be available to meet the association’s obligations.

Occasionally, there are owners who, for whatever reason, cannot or will not pay their maintenance fee on time.  This, of course, can present a problem for the association if it happens very much.  Associations must take measures to prevent this.  If a few owners are allowed to withhold their maintenance fee for any length of time, the remaining owners will need to carry the load.  This can mean increasing the fees for everyone in the association so that enough money will be on hand to pay the association’s bills when they come due.

Associations have policies regarding payment of the maintenance assessment.  In most cases the fee is monthly and in other cases it can be quarterly or annually.  The collection policy, adopted by most associations calls for the payment to be due on the first of the month and late if not paid within 15 days.

In order that pressure can be applied to a late paying owner, a late penalty is applied if the payment is not received on time.  This is usually 10% or $10, which ever is greater.  This means that for an association with a maintenance fee of $300, the late penalty could be $30; if the regular fee is $600, the late penalty could be $60.  This is a pretty good incentive to pay on time, but actually, it is not enough.

Typically, if a maintenance fee goes unpaid for three months, a recorded lien is placed on the property.  If the fee still remains unpaid, the property could be foreclosed upon.  There are in place comprehensive protections for the consumer relative to maintenance assessment collections including extensive notification, payment plans and wait periods.  Rarely does a property go all the way to foreclosure, but having the ability to do so puts enough pressure on the owner to keep the maintenance fees paid current. 

In recently proposed legislation, specifically, AB2598, some of these protections will be altered or taken away to such a degree that some associations will have financial hardship if the legislation goes into law.  These maintenance assessments are the lifeline of homeowners associations.  If the strength to enforce on time payment is taken away, it stands to reason that the maintenance fees will go up for everyone.  Let’s hope the governor does not sign the bill into law.  Action on this bill is expected shortly.

Homeowners in communities are encouraged to be involved in the governance of the community.  It is important to take an active role if we want our communities to continue to thrive and survive.  For more information check out www.ResponsibleNeighbors.com.

Steven Shuey is a Certified Community Association Manager (PCAM, CCAM), General Manager of the Desert Island Condominium Community and past president of the Coachella Valley Chapter of the CAI.

September 15, 2000

SAMPLE LETTER TO GOVERNOR SCHWARZENEGGER

Veto AB 2598 (Steinberg)

This is a sample letter that you can use as a template for your own letter to the Governor Schwarzenegger letting him know that this legislation protects delinquent owners at the expense of those owners who timely pay their assessments.

WRITE TODAY—DO THIS AS SOON AS POSSIBLE

Re: Veto AB 2598 (Steinberg)

To: Governor Arnold Schwarzenegger
State Capitol Building
Sacramento, CA 95814
Phone: 916-445-2841
Fax: 916-445-4633

To send an Electronic Mail please visit:
http://www.govmail.ca.gov


RE: Veto AB 2598 (Steinberg)

Dear Governor Schwarzenegger,

Paragraph 1

In the first paragraph, introduce yourself to the Governor.
Please include:

1. Your name and whether you are a senior, a homeowner residing in a community association, a manager, or a professional or service provider who works with community associations, or are on a fixed income.

2. State where you live and how many homeowners reside in the community association you live in or manage.

Sample Paragraph 1

My name is Jane Doe and I am a resident of Camelot Homeowners Association (HOA) that is located in Sacramento. 625 residents live in the HOA, which is made of up 300 units.

Paragraph 2

In the second paragraph, tell the Governor why you are writing.

Please include:

1. Ask the governor to veto AB2598.

2. Tell the governor why you want him to veto the legislation. Please use the following message points and put them in your own words:

(Insert Message Points from this list):

• I can't afford to nor is it fair that I carry the financial obligations of other owners who do not timely pay their association assessments.

• Responsible owners will be punished with higher assessments (dues).

• We already have the nation's best owner protection laws when someone can't pay their assessments.

• The bills will increase litigation and attorneys' fees, clog the courts and cost the associations and their members more money.

• California needs less regulation of, and intrusion into, private contracts (CC&Rs)

Sample Paragraph 2

I am writing to ask that you veto this bill. Since some homeowners in my HOA will not pay the assessments (dues) they contractually agreed to pay when they bought their home, if this bill becomes law, the board of the HOA will have to increase my assessments and the dues of the other homeowners who take our obligations seriously. [(If applicable): As a senior citizen living on a fixed-income, I cannot afford to have my dues increase.]

Paragraph 3

In the last paragraph, thank the Governor for considering your request.

Sample Paragraph 3

Thank you very much for considering my request. Your veto will help to ensure that every homeowner in my association continues to follow through on their obligation to pay assessments and that the assessments of every homeowner will not increase.

Very Truly Yours,

(Insert Your Signature)

Insert Your Name

September 13, 2000

As The Condo Market Sours, Buyers Turn To Courts Seeking Exit Deals

Interesting article recently appeared in the Wall Street Journal (and was also reported in the Los Angeles Daily Journal). Apparently there are "tens of thousands of empty or unfinished condominiums" in Florida. While we have not heard of this type of inventory in California, there are many condominium buildings under construction or recently completed, and many if not most of those units have not been sold. Many owners or individuals who've contracted to buy some of these uncompleted units may be seeking some sort of exit strategy and that may include lawsuits.

The Wall Street Journal article states that recent legal decisions in Florida courts indicate that won't be that easy for buyers to get out of those deals. "the bottom line: unless it's a bona fide contract dispute, and investors chance of winning appear to be slim."

September 11, 2000

Homeowner Legislation Poised to Hurt More Than Help—CAI/CLAC‘s Press Release

Homeowner Legislation Poised to Hurt More Than Help—CAI/CLAC‘s Press Release on AB 2598 The seven million Californians who live in homeowners associations will have to pay higher monthly dues, thanks to legislation passed in the last hours of the legislative session. Assembly Bill 2598 (Steinberg) again takes up the use of foreclosure to compel payment of delinquent assessments – a practice used in less than 0.007 of collections processes. Just last year California implemented a law (Kehoe, AB 2289) that provides comprehensive protections specific to dues collections, including extensive notification, payment plans and wait periods. These protections rank as the strongest nationwide. That’s why members of homeowners associations oppose AB 2598. Senior Sam Dolnick of La Mesa, CA, said the legislation will do more harm than good. “Many seniors in our association live on fixed incomes and they cannot afford to pay more. When placed in a squeeze, they will have to pay higher assessments to make up for those who may purposely not pay their assessments until they reach the $2,500 threshold.” Homeowner association resident and president of the Wildwood Association in Sacramento Lisa Lindsey said, “Assessments are the lifeline of homeowners associations. For smaller communities like mine, we would be crippled if 20 of our 137 residents were late on assessment dues. Our insurance alone costs more than $85,000.” Homeowners aren’t the only ones hurt by AB 2598. The legislation brings business disincentives for builders and lenders, who are central to responding to the state’s population growth. • Developers will not sell units if new buyers can willingly avoid paying the dues needed to maintain the property. • Banks and lenders will stop loaning money to developers and homeowner associations because their loan security is impaired. “We have thousands of community associations in California as clients. This law will have a negative impact on the ability of associations to secure financing for needed renovations and repairs,” said John Smith, Senior Vice President, U.S. Bank Homeowner Division. For More Information: www.responsibleneighbors.com

September 11, 2000

What’s Wrong With Assembly Bill AB 2598?—EVERYTHING.

We have been asked for more information on why Steinberg’s AB2598 is bad law. AB 2598 is one of two pieces of legislation proposed following the foreclosure earlier this year on a senior citizen couple in Calaveras County. Proponents of this legislation, which would make it more difficult for associations to collect assessments, suggest that what happened in Calaveras County is only an example of a rampant problem. They have not referenced any other similar problems; assessment foreclosure abuses are not rampant; there is no problem with the current system other than the fact that it compels homeowners who are delinquent to pay their assessments.

This legislation is a poor response and overreaction to a situation which is not a rampant problem. We say overreaction because of the following:

1. Currently, if a homeowner is delinquent in the payment of assessments, the association has the ability to record a lien securing that obligation. Of course, the association must follow the proper procedures, send out the appropriate notices, and wait the appropriate time. However, if that lien is not recorded, the homeowner can transfer title to the unit without paying their assessment obligation. It is the lien with the possibility of foreclosure that compels homeowners to timely pay their assessments.

2. AB 2598 restricts associations assessment collection options to either recording a lien but not taking action on the lien until the amount owed is $2,500 or going to small claims court. What good is a lien if you cannot proceed to collect the assessments? The legislature refuses to consider the fact that the payment of assessments is a community association’s sole income. If owners do not pay their assessments, where is the money to pay for the associations utility, insurance and other expenses to come from.

3. Proponents of AB2598 argue that a community association should not be given any special powers and they should collect their delinquent assessments much like a credit card company collects from a borrower who does not pay. This argument misses an important point. Many associations have less than 100 members, and some have as few as five (or less). Credit card companies can spread the loss of revenue among the millions of their borrowers, and charge fees and other costs which may up the deficit. Associations are not given that luxury. If homeowners do not timely pay their assessments, the associations will have problems paying important bills such as those for insurance, utilities, maintenance and repair, etc. In addition, if this legislation passes, there is no doubt that associations will not be as successful in collection assessments as they have been. Associations will have no choice but to increase assessments to supplement for when homeowners do not pay their assessments.

You ask why assessments will be more difficult to collect. If an association waits until there is $2,500 owed, they can utilize non-judicial foreclosure, which has proven to be the most successful method of collection assessments. However, for many associations (including the one in Calaveras County that apparently had a $120 per year assessment) waiting until $2,500 is owed is not practical. Those associations have no choice but to proceed to small claims court. Unfortunately, history has shown that small claims court is a hit or miss proposition. Most managers indicate that an association has a 50/50 chance of prevailing in small claims court. If it prevails at the original trial, the delinquent homeowner can appeal to the superior court, requiring a second hearing. Even after the second hearing and providing that the association is successful, it still has to collect the judgment. A judgment lien recorded against an owner’s property, at that point, cannot easily be foreclosed on and there may not be any other assets available to the association for collection.

Even if the amount of assessments owed is $2,500 and the association opts for non-judicial foreclosure, this legislation has made that process even more difficult. AB2598 now requires that before the foreclosure, the association must have a "driveby" appraisal conducted and if the opening bid at the foreclosure sale cannot be less than 65% of the appraised value of the property. Not only does this increase the time and cost of the foreclosure process, the 65% of value requirement is an impossible roadblock. There is no way to get a bidder at a foreclosure sale to bid 65% of the value of the property when they are foreclosing on a lien which may have a value of less than $5,000.

Unfortunately, the legislators did not work with community association industry experts to develop a legislation which is workable. AB 2598 only demonstrates that they do not understand community associations. Again, this poorly drafted piece of legislation is an overreaction to a problem that does not exist. It is important that you, your colleagues, all Board members and homeowners that you know write letters to Governor Schwartznegger letting him know that AB2598 is a poorly drafted piece of legislation that is not necessary and should be vetoed.

September 10, 2000

LEGISLATURE PASSES ONE FORECLOSURE BILL

They did it. The legislature passed one of the two foreclosure bills we warned you about previously. Senator Denise Ducheney’s (Democrat - San Diego) SB1682 did not move forward but Assemblyman Darrell Steinberg’s (Democrat - Sacramento) AB2598 passed the Senate although we are told that there was some confusion during the voting on this bill.

We are advised that an hour later Steinberg’s AB 2598 was passed on a split vote in the Assembly after a "robust debate" which addressed the negative impact this litigation would have on responsible homeowners who do timely pay their assessments. We are advised that 27 out of 80 assembly members voted "no" or abstained from voting on the first round, further indicating that there was (and remains) serious concerns with the bill.

AB2598 has gone to Governor Schwartznegger for his action. Governor Schwartznegger until the end of September decide whether to sign the bill into law or veto it. AB 2598 is bad law and we want it vetoed. The Governor needs to hear from all of us as soon as possible.

Now is the time for all of us to share this information with our colleagues, Board members, and responsible homeowners. Everyone of them needs to write letters to the governor letting him know that this is just bad law. Please forward this newletter on to everyone you know that is a board member, manager or is otherwise involved in the community association industry and get them to write letters as well. The more letters, the more we will be able to convince the Governor to veto AB 2598

August 2, 2000

Sample Annual Meeting Forms

Wondering where you can find sample annual meeting and secret ballot forms? Look no further. Click on the links below to find some handy reference.

These forms are provided as reference only and do not constitute legal advice. Swedelson and Gottlieb makes no representations as to whether these forms are suitable for any purpose. Consult an attorney before using any of these forms.

Download Secret Ballot Form

Download Secret Ballot Instructions

Download Candidacy Notice

Download Notice of Annual Meeting

June 20, 2000

Lake Forest Woman Injured Owes Her Association Court Costs

A Lake Forest condominium owner was injured when her neighbors' 15-year-old son bumped the family car into a block wall that divided one unit from another. As reported in the Orange County Register, the injured owner had a friend who is an attorney with a well-known Orange County law firm. Certain that the condominium association was responsible for the owner's injuries, they filed a lawsuit. They claimed that the wall was defective; the association claimed that the wall had been built to code. Perhaps more importantly, the wall did not fall on the owner because of the association's failure to maintain or repair the wall; and but for the neighboring kid bumping the family car into the wall, it would not have collapsed (and as we attorneys like to say, the condominium association was not the "proximate cause" of the owner's injuries).

The jury deliberated for only a few hours and found in favor of the condominium association (the neighbors whose son caused the wall to collapse settled just prior to trial).

Now the injured condominium owner will be ordered to pay the associations or costs of $30,000 or more. Perhaps her attorneys should have consulted with a condominium association expert before filing this lawsuit!

June 20, 2000

Clothing Optional Condo Association?

The Tampa Tribune newspaper reports (the headline reads: Condo Company Unwraps Plan For Clothing Optional Pool) that with home prices plummeting and sales stagnant, a Florida developer has come up with an interesting concept for condominiums; clothing optional! The condominium conversion has two pools. The developer, who currently owns more than a majority of the units, is seeking to amend the governing documents so that they allow for one pool to be clothing optional for residents 18 years of age or older. There may be some fair housing issues here. We will have to keep an eye on this one (no pun intended).

Want more info; check out this video.

May 26, 2000

Who Pays The Bills When Some Owners Don't Pay Their Assessments?

The Wall Street Journal recently reported on the effect the sub-prime crisis is having on many community associations. While the crisis is not a problem in some areas of the country, in California it is a affecting many associations budgets, as many boards did not anticipate or address the potential for bad debt when they adopted their budgets. In an article entitled "When Dues Dry Up, the Neighbors Pay", the WSJ reports that the other owners are having to make up the deficit that results from the fact that some owners are losing their units or homes to foreclosure because they cannot afford the increased payments to their lenders. The article points out that at some associations, the boards are cutting back on services. Some associations are delaying projects such as painting or new roofs. We are also seeing some associations that are paying out money to deal with stagnant water in pools and brown lawns and dying landscaping at abandoned homes. How is the sub-prime crisis affecting your association? Let us know. And to learn more about collecting unpaid assessments from defaulting owners, see our recent blog entry: To Foreclose or Not to Foreclose.

May 9, 2000

Owner of Record - What Does That Mean?

It comes up all the time. A resident wants to attend and participate at a board meeting or wants to serve on the board of directors. That resident may be a tenant or the significant other of an actual owner of that property, or perhaps the beneficiary of a trust or shareholder of a corporation that owns the property. Often, governing documents state that only an "owner of record" can serve on the board, and the Open Meeting Act states that "any member of the association may attend a meeting of the board of directors of the association." Electing a non-owner to the board of directors, when the governing documents require ownership as a qualification, could jeopardize the legality of the board's decisions, and perhaps even insurance coverage.

Black’s Law Dictionary defines an "owner" of real property as a person who is vested with title to property and has a right to enjoy that property and do with it as he or she pleases. The "Record Owner" is usually defined in the CC&Rs as the "owner of the Title" at the time of notice. But does this mean that the association is required to go out and check Title? Not necessarily. Typically, the owner of record at a community association is the owner on the association's records based on the information that was provided, perhaps through escrow, when the unit was sold. Some management company agreements obligate the manager to a higher level of record keeping by requiring that the manager keep not only a list of the homeowners, but rather a "current list." This rather innocuous phrase could actually place an ongoing obligation on the manager to verify correct ownership. If that's your intention, great; if not, contracts should be rephrased. The association is entitled to rely on its records, unless it is provided proof by way of a recorded deed, that ownership (in whole or in part) has been transferred to someone new. A resident may present the association with a copy of a quit claim deed, showing that he or she may own all or a portion of the property, but that deed may not have been recorded. Then that person would not necessarily be the "owner of record," at least not recognized by the County Recorder's Office as the owner, and thus should not be considered by the association to be an owner.

Record Owner

It is important to determine who the owner of the property is because many activities (read most) at common interest developments require the owner to be the Record Owner of the property. Only a Record Owner can make decisions on behalf of a unit/lot as it relates to association matters. Association disputes over ownership generally arise over the issue of "legal ownership" and are usually easily resolved by determining identity of the property owner as listed on the recorded grant deed.

Prior planning and organization should allow a board or manager to ascertain who the true Record Owner of the property is prior to mailing ballots or holding official meetings of the members. Most CC&Rs require homeowners to provide the association with the names and addresses of the Record Owners. In fact, Corporation Code Section 8320 places the obligation on the corporation or unincorporated non-profit association to maintain a list of all homeowners and their addresses. It is the association's obligation, even prior to an annual meeting, to ascertain who is the record owner for the purpose of collecting assessments and enforcing the governing documents. Because state statute provides that the levy of assessments is a debt of the owner at the time the assessment was levied, going after the correct owner for payment is important, not only to the association's financial health, but also to limit the association's liability for proceeding against the wrong person or entity for a debt.

Under California law, a recorded interest has priority over an unrecorded interest. That means if two owners claim a right of ownership to a piece of property, the association should treat the Record Owner, the person listed on the recorded grant deed, as the true owner. The same holds true even where a homeowner acquires title to their unit/lot by a quit claim deed, provided, of course, that the deed is recorded. When an unrecorded grant deed is involved or if more than one person claims a right of ownership under a separate recorded grant deed or a representative of a trust claims the ownership, the issue can become murky. If no recorded deed exists or more than one recorded deed is discovered. Management should, based on the Davis-Stirling Common Interest Development Act, refer to recorded interests only. Other statutes, not specific to homeowner associations, provide that a grant deed is valid and enforceable even if not recorded as long as the grant deed gives notice to all. However, what is more commonly found is that the notice of ownership has not been given to all prospective buyers and does not provide legal notice as required by law.

First In Time, First In Right

If there is an ownership dispute between record owners and management does not know who to allow to vote (who gets the ballot), management should rely on Civil Code Sections 1213 through 1220, which provide, when more than one grant deed exists, the "Record Owner" will be the person(s) whose grant deed was recorded first. For example, if a homeowner were to record her or his deed to a unit/lot in 2002 and a subsequent grant deed for that same unit/lot was recorded by another person in 2003, without there being a chain of title that satisfies the transfer of property, the Record Owner would be the homeowner who recorded first.

Trust Ownership

A problem occurring more and more frequently arises when property is owned in trust. When conducting check in at an official meeting or sending out a written ballot, if a trust ownership is presented, the association should require official verification that the person who wants to vote on behalf of the trust is authorized to do so. The individual is usually the trustee of the trust. Interestingly, although the trustee does not own the property, the trustee has the same legal rights to act on behalf of the property as those that would be afforded any other ownership rights of the association. It is incumbent upon associations to advise homeowners that, if they are a trustee of a trust, they need to provide trust documentation to establish that they have the authority as referenced above.

Most times it seems the ownership issue is a problem only in contested elections or when certain members of the association have an agenda. Management's agenda is to make sure the right owners are representing the memberships in the association. Following the above guidelines will guarantee your success.

April 29, 2000

To Foreclose or Not to Foreclose; That Seems To Be The Question

To foreclose or not foreclose, that seems to be the question that many association board members and managers are asking themselves these days. There is no question that the sub-prime meltdown/crisis has increased the number of delinquent homeowners. Data Quick Information Services reports that in the first three months of 2008, 47,171 homes were lost to foreclosure, more than four times as many as a year earlier. In that same period, 110,000 California homeowners received default notices which is a 143% increase from the same period in 2007. Data Quick estimates that only 32% of the properties in default will avoid foreclosure, which is down from 52% a year ago. It is therefore no surprise that Association Lien Services has seen a steep rise in the number of delinquent matters that are being turned over for collection. With the potential lack of equity and the fact that these delinquent homeowners may not have any assets to collect on, making the decision as to how to proceed to collect and whether or not to foreclose are questions that many associations are having to face. Attorneys David Swedelson and Tracy Neal (supervising attorney at Association Lien Services) have written an article that will help board members and managers answer these questions. Download a PDF copy of the article To Foreclose or Not Foreclose.

April 16, 2000

Satellite Dish Installation Law At Center Of Dispute

Although the FCC regulations which allow a owner to install a satelite dish on their property has been the law for several years now, it is still widely misunderstood. The attached PDF story from the Ventura County Star shows just how misunderstood this law is. A owner at a condo association cannot, without the associations approval, place a satellite dish on the common area and that is exactly where this disgruntled owner placed his. What do you think?Download ventura_county_star__ventura_010505.pdf

April 14, 2000

Copperopolis Couple Get Their House Back

Calaveras Enterprise  - April 13, 2005 

Copperopolis couple get their house back

By Vanessa Turner

Tom and Anita Radcliff got the deed to their house back and the Copper Cove couple is ready to get on with their lives.

The Radcliffs get to keep their home and have received money from the Copper Cove Lake Tulloch Homeowners Association and Coast Assessment Services of Garden Grove as part of a lawsuit settlement reached Friday.

Back in December 2003, the Radcliff's home was foreclosed on and auctioned off for $70,000 after they failed to pay a $120 association bill.

The Radcliffs continued to live in their home while they sued the association, Coast and Robert Vardanega of Oakland, the man who bought their home.

The association and Coast settled out of the lawsuit two months ago, the Radcliff's attorney Michael Macomber of Sonora said.

"They paid money damages," Macomber said. "It was a cash payment."

During a case settlement conference Friday, Macomber announced he and Vardanega's attorney agreed on a settlement at 10:30 a.m. that morning.

Macomber wouldn't say what the Radcliffs would pay Vardanega to get their home back.

"He's entitled to get his initial payment plus 10 percent," he said.

The paperwork still needs to be drawn up between the two parties and a case settlement conference is set for July 11.

If dismissal papers are filed before that, that date will be vacated, Judge Dwayne Martin said.

Martin told Macomber he did, "Good work. I'm sure you saved their home."

"It's all we can expect," Anita Radcliff said about the settlements. "I just want to put it behind us now."

The Radcliff's ordeal sparked an attempt to get legislation passed that would prevent homeowners' associations from foreclosing for trivial delinquent fees.

One such bill, co-authored by former Sen. Rico Oller, R-San Andreas and Sen. Denise Ducheny, D-San Diego, was vetoed by the Governor in September 2004.

This year Ducheny renewed her attempt by introducing very similar legislation and vowing to work with the governor to get the bill passed.

April 3, 2000

Owner of Record

Download owner_of_recordarticlefnl.pdf

April 1, 2000

DUCHENY’S SENATE BILL 137 “BANNING FORECLOSURES ON “SMALL” DEBTS ADVANCES OUT OF COMMITTEE

BILL BANNING FORECLOSURES ON SMALL DEBTS ADVANCES

By JIM WASSERMAN
Associated Press


SACRAMENTO - A bill proposing to ban home foreclosures as a tool to collect small debts in private communities easily cleared a key Senate hurdle Tuesday, beginning a journey that could eventually collide with the veto pen of Gov. Arnold Schwarzenegger.


The Senate Judiciary Committee voted 4-1 to send the bill affecting more than one-fourth of California's households to a full Senate vote later this spring. Lawmakers passed a near identical bill last year making California's 37,000 homeowner associations use small claims court to collect unpaid sums below $2,500, but Schwarzenegger vetoed it.


Schwarzenegger said it could force dues-paying homeowners to make up for lost money caused by those who don't pay.


The new version, by Sen. Denise Ducheny, D-San Diego, would end the long-standing power of homeowner associations to auction off a member's home for failing to pay assessments that average about $200 a month in California.


"Often for less than $200 people are losing their homes and being evicted without the due process rights given to tenants," Ducheny told the committee. "We understand the need for everyone to pay their agreed-upon debts, but we also want to protect both the equity of homeowners and their due process rights."


Nearly a dozen homeowners across the United States have lost their homes over small unpaid sums since 2001, triggering widespread negative publicity for one of the nation's fastest growing residential lifestyles.


Ducheny's bill would continue to allow foreclosures for amounts over $2,500 without a court's review. It would also significantly toughen foreclosure practices, giving homeowners 90 days to get back their homes and make buyers at auctions pay a minimum of 65 percent of the home's value.


Attempts to reach compromises that would meet Schwarzenegger's favor haven't worked, Ducheny said, adding that meetings haven't led to any specific proposals.


Several retirees groups backed the bill Tuesday, saying it protects home equity that takes a lifetime to build.


"Homeowners need to pay assessments and homeowners associations need legal tools to collect them," said Marjorie Murray, lobbyist for the California Alliance for Retired Americans. "But it is our strong belief that foreclosure should be the last procedure used and only used reasonably."


While no definitive figures exist of how many foreclosure actions associations initiate in California, an unofficial survey of state association lawyers last summer indicated nearly 20,000 filings during the last five years. Most homeowners quickly paid their debts.


Lobbyists representing association managers and boards of directors tried unsuccessfully to reduce the amount qualifying for small claims court collection procedures to $1,000 or six months worth of late payments. They also failed to win changes to make the bill effective for only two years.


Though the bill moved forward, significant disagreements still loom over its future.


Especially large is the idea of a $2,500 grace period before foreclosure can begin.


''We feel by placing the threshold it requires us to increase assessments on all other innocent homeowners who do try to pay their assessment on time,'' said Jennifer Wada, lobbyist for the California Association of Community Managers.


California associations collect dues for a range of needs that including lawn mowing, pool maintenance and private security.


Ducheny's original bill surfaced last year after a pair of Calaveras County retirees lost their home for missing a $120 payment to their association. The couple still live in the residence pending the outcome of a lawsuit against the association and collection agency.

March 25, 2000

OC HOA HAS RABBITS IN ITS (GUN) SIGHTS

This may be the Easter season, but it's hardly the best of times for bunny rabbits at one south Orange County homeowners association.

The Mission Viejo City Council has given permission for one gated community to have rabbits shot on sight.

Many residents in the Casta del Sol HOA retirement community, frustrated for years by the abundance of rabbits gnawing on native shrubs and plants and doing their bunny business on their lawns, want to thin the ranks. They want an exterminator with a pellet gun to take aim at the unwanted wildlife in the wee hours of the morning.

"It's a quality-of-life issue," said one City Councilman. "They're a pest. We really weren't left with a whole lot of options. We have tried trapping, so we've kind of gone to our last resort." The association reported that in a recent informal poll, nearly 90% of residents were in favor of shooting bunnies to protect their landscaped lawns. The timing of Casta del Sol's victory, so close to Easter, was coincidental.

To read more on this story from the Los Angeles Times, see the attached PDF article.Download oc_hoa_has_rabbits_in_its_sights.pdf

March 19, 2000

CALIFORNIA SENATOR DUCHENY RE-INTRODUCES LEGISLATION TO LIMIT FORECLOSURE

California Senator Denise Moreno Ducheny (who represents parts of San Diego and Riverside Counties and all of Imperial County) recently unveiled a proposal, similar to one she offered last year, the veru same one that was vetoed by the Governor as being overly broad, claiming that it is “aimed at protecting homeowners in common interest developments from unfair foreclosures by their homeowners association“. Unfortunately, what she has proposed is almost identical to her prior bill. While Senator Ducheny may believe that the bill protects homeowners, it actually will hurt the very owners the bill seeks to protect. What she apparently does not recognize is the fact that the vast majority of homeowners in community associations timely pay their assessments and they will end up having to pay the deficit created by those owners that do not pay timely their assessments and will be protected by her proposed legislation.

SB 137 seeks to prohibit a homeowners association from using judicial or non-judicial foreclosure for the collection of delinquent assessments of less than $2,500. It provides that homeowners‚ associations may collect such debts only through a judgment in small claims courts or by placing a lien without foreclosing on the property until the amount owed is $2,500. What SB 137 will really do is delay associations from being able to collect delinquent assessments. The reason that community associations were given the ability to lien and foreclose on the property of those that do not timely pay their assessments is the historical recognition by the legislature and the courts that community associations have no other source of income. How are associations supposed to pay for insurance, utilities, and other costs if they are delayed in collection by going through the small claims court and then trying to collect on the judgment (assuming that they get such an award)?

Senator Ducheny claims that her proposed legislation responds to complaints from homeowners who have had their homes foreclosed upon for a small amount of delinquent dues. What complaints? Unfortunately, she has not provided anyone with that information, the number of complaints, or if she has even investigated to see if the complaints are justified. She relies on one case that involved the Radcliffs of Copperopolis who lost their home when their community association foreclosed the lein placed on their home when they failed to pay over $120 in assessments and fees. What she fails to mention is the extraordinary efforts the association went through in an effort to collect the assessments before they actually foreclosed.


When confronted with the fact that there is no widespread problem to justify her legislation, her staff stated that not one person should lose their home for unpaid association assessments or fees. She ignores the fact that foreclosure is part of the contract (CC&Rs) the owner agreed to be bound to when they bought their home in the association.

"It is simply wrong for a homeowners‚ association to take someone‘s home over a $120 debt said Senator Ducheny. While we might not disagree with the Senator, her bill seeks to limit foreclosure unless the amount owed is $2,500. This is just too high a threshold and will affect the budgets of many associations.

Senator Ducheny is quoted as saying that despite the 2004 veto, she is confident that the governor will work with her in this new session to “protect California homeowners”. We hope she will work also work with those that work with, manage and serve on the boards of the thousands of community associations throughout California, in an effort to produce legislation that is balanced and fair to all California homeowners.

SB 137 is supported by a variety of consumer groups including the Congress of California Seniors, the California Alliance of Retired Americans, Gray Panthers and the Older Women‘s League (OWL). We hope that these groups will keep informed and that they will likewise work with Senator Ducheny, the Govenor’s office and the California Legislative Action Committee as we all work towards creating a balanced bill that protects the interests of ALL community association homeowners and not just the few that fail to timely pay their assessments.

By: David C. Swedelson

February 28, 2000

FCC Bans Exclusivity Contracts


Prepared by Sandra L. Gottlieb, Esq.
SwedelsonGottlieb

In the mid-90’s, The Federal Communications Commission (“FCC”) established rules known as the Over the Air Reception Devices, known by the acronym OTARD, which preempts provisions in many governing documents that require an owner to obtain approval before installing a satellite dish. The public policy part of the Telecommunications Act of 1996 (the “Act”) was the vehicle by which the FCC guaranteed that homeowners had reasonable access to new communication technology available to American consumers and provided that such access takes priority over private restrictions based on aesthetics. That said, however, the Act did not require associations to allow access to association common areas, but rather left the decisions concerning associations’ common areas, subject to statutory and governing document requirements, to the boards of directors of those associations. The common area at a condominium association is likely any area outside of the airspace of an owner’s unit or their exclusive use patio or balcony.

Community association boards usually have the discretion to enter into an exclusive cable service contract with a particular telecommunications provider in order to provide that programming to the residents at a volume discount price. Cable providers often insist on exclusivity (meaning that no other providers are permitted to offer programming to residents) prior to committing to make upgrades at an association.

On November 13, 2007, the FCC issued an order banning exclusivity contracts between cable operators (and other multi-channel video programming distributors) and multiple dwelling unit developments.
The definition of multiple dwelling units developments includes condominiums, cooperatives, and communities of single family homes. The order from the FCC has not become a published federal regulation as it is still being considered whether it should apply to direct broadcast satellite services and private cable operators, not using local rights of way. This action by the FCC is consistent with its belief that communication providers (internet, wireless and cable) should be subject to the greatest possible competition in providing their services, and that consumers generally benefit from that competition.

943483_satellite_antenna_dish.jpg

If you have an exclusivity clause in your cable or video programming distribution contract, this ban will not necessarily terminate the contract, but it may make certain (exclusivity) provisions of that agreement unenforceable. The impact of this ban on community associations is not certain at this point. The benefit of an exclusivity provision in the contract is that it sometimes enabled the association to obtain a better rate for the cable/video programming services, installation of fiber optics, cabling, free receivers, etc. Without an exclusivity clause, however, it is likely that any discounts will expire with contract renewals.

We will keep you advised of any new developments about this new FCC order. If your association is under contract with a video programming provider or distributor, you should review the provisions of the contract to determine if there is an exclusivity clause and, if so, what the effect on the contract will be once the FCC order becomes an effective federal rule published in the Code of Federal Regulations. If you require our assistance, please contact our office. In addition, for more information please see CAI's political information web site.

February 18, 2000

Association and Owners Battle Over Easement

I noticed this article in a local paper. Casa Gateway had been a client several years ago. Does not appear that they are working with an attorney. Not often that such a dispute ends up in the newspaper. David Swedelson

Casa Gateway Residents Organize to Halt Sale of Valuable Easement

February 09, 2006

Some residents of Casa Gateway at the base of the Palisades Highlands are circulating a petition this week to stop a ballot measure initiated by the board of directors of Casa Gateway Homeowners Association in January.

The petition is a demand that the association immediately stop spending any more time or money on the ballot, which could potentially grant an easement to a Palisades developer. Apparently, the petition arose from a raucous meeting last Saturday when a straw vote overwhelmingly opposed granting the easement to Kaya Tuncer, who owns the land on the hillside above the affordable housing complex.

While those in favor of the plan saw it as a 'win-win' situation for the homeowners, who stand to gain financially from the deal (a minimum of $350,000 to the association), those opposed argued that no amount of money could compensate for the potential fallout from such an agreement. They worry about the liability ('Who's responsible if there's a landslide?') to the eventual possible threat to Casa Gateway's low-cost housing status.

The straw vote came after considerable disagreement over exactly what was being asked on the ballot, which was sent to all 100 Casa Gateway residents and is due tomorrow. To pass, the ballot requires 51 percent of the vote.

'It is not clear whether we are being asked to actually grant the easement or whether we are being asked to simply enter into negotiations to grant the easement,' complained one resident who contacted the Palisadian-Post last week. 'Also, the attorney's letter we received with the ballot refers to Tuncer 'purchasing' the easement, which is quite different from us simply 'granting' him access.'

The January 20 letter also states that the board of directors has the right to accept Tuncer's proposal without the membership's approval, which is apparently not the case, according to the association's CC&R's (4.2).

'The reason the board is coming to us now is because they don't want the liability down the road,' the disgruntled resident continued. 'I do believe that if we agree to this easement, it will affect our affordable housing status. Once we give up our right to part of that land, what's next? The attorney said he has the city's verbal permission to grant this easement, but we haven't seen anything in writing.'

Casa Gateway, located at the corner of Palisades Drive and Sunset, was built in 1987 as HUD (U.S. Department of Housing and Urban Development) low-cost housing.

While there are 100 units in the complex, 68 are reserved exclusively for seniors (62 and older). These senior apartments'all one-bedroom, one-bath in approximately 500 sq. ft.'rarely come on the market. When they do, they are often sold through word-of-mouth to family and/or friends of existing owners. The remaining 32 units are reserved for families who qualify for affordable housing. The three-bedroom, two-bath condos sell for approximately $200,000 to qualified buyers'well below market value for comparable condos in the Palisades. All sales are subject to approval by the Los Angeles Housing Department.

Residents at Casa Gateway, which has several landscaped common areas for recreation and socializing, pay a monthly fee of $215 to the CGHA to cover dues and general maintenance.

Tuncer has been negotiating with the association on-and-off for the last five years to allow access to his property. In a meeting with residents last year, the developer indicated that he intended to built either two large single-family homes on his property, or if he can get the land re-zoned, he would build up to 30 multi-family units. While Tuncer had originally offered to buy the easement, but the association's CC&R's prohibit such a sale.

What Tuncer is now asking for is an easement 'in perpetuity' which would give him permission to build a roadway in an approximately 8,000 sq. ft. rectangular plot of land between Casa Gateway and Calvary Church. The easement would not only provide vehicle access to his property but would also allow for the installation of any utilities. What the residents would get in return would be an initial $350,000 payment, plus more if the multi-family units are built. The residents are also being promised indemnity from any ensuing litigation.

The board of directors, made up of six residents, initiated the ballot measure in January to finally prompt some action on the Tuncer proposal. Whether the funds would go to the individual homeowners or into the association's general fund is not clear.

The developer has let it be known that if the association does not allow the easement, he will develop Via Lucia in Paseo Miramar, currently an abandoned city road to the west of the rectangular area, which he said would provide the access he needs (but with greater topography challenges).

How much such a road would cost to develop is not known.