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CALIFORNIA CODES
CIVIL CODE
SECTION 1350-1378
§ 1350. Citation
This title shall be known and may be cited as the Davis-Stirling Common Interest
Development Act.
§ 1350.5. Scope, meaning and intent of title
Division, part, title, chapter, and section headings do not in any manner affect
the scope, meaning, or intent of this title.
§ 1350.7. Document delivery; approved methods
under the title
(a) This section applies to delivery of a document to the extent the section is
made applicable by another provision of this title.
(b) A document shall be delivered by one or more of the following methods:
(1) Personal delivery.
(2) First-class mail, postage prepaid, addressed to a member at the address last
shown on the books of the association or otherwise provided by the member.
Delivery is deemed to be complete on deposit into the United States mail.
(3) E-mail, facsimile, or other electronic means, if the recipient has agreed to
that method of delivery. If a document is delivered by electronic means,
delivery is complete at the time of transmission.
(4) By publication in a periodical that is circulated primarily to members of
the association.
(5) If the association broadcasts television programming for the purpose of
distributing information on association business to its members, by inclusion in
the programming.
(6) A method of delivery provided in a recorded provision of the governing
documents.
(7) Any other method of delivery, provided that the recipient has agreed to that
method of delivery.
(c) A document may be included in or delivered with a billing statement,
newsletter, or other document that is delivered by one of the methods provided
in subdivision (b).
(d) For the purposes of this section, an unrecorded provision of the governing
documents providing for a particular method of delivery does not constitute
agreement by a member of the association to that method of delivery.
§ 1351. Definitions
As used in this title, the following terms have the following meanings:
(a) “Association” means a nonprofit corporation or unincorporated association
created for the purpose of managing a common interest development.
(b) “Common area” means the entire common interest development except the
separate interests therein. The estate in the common area may be a fee, a life
estate, an estate for years, or any combination of the foregoing. However, the
common area for a planned development specified in paragraph (2) of subdivision
(k) may consist of mutual or reciprocal easement rights appurtenant to the
separate interests.
(c) “Common interest development” means any of the following:
(1) A community apartment project.
(2) A condominium project.
(3) A planned development.
(4) A stock cooperative.
(d) “Community apartment project” means a development in which an undivided
interest in land is coupled with the right of exclusive occupancy of any
apartment located thereon.
(e) “Condominium plan” means a plan consisting of (1) a description or survey
map of a condominium project, which shall refer to or show monumentation on the
ground, (2) a three-dimensional description of a condominium project, one or
more dimensions of which may extend for an indefinite distance upwards or
downwards, in sufficient detail to identify the common areas and each separate
interest, and (3) a certificate consenting to the recordation of the condominium
plan pursuant to this title signed and acknowledged by the following:
(A) The record owner of fee title to that property included in the condominium
project.
(B) In the case of a condominium project which will terminate upon the
termination of an estate for years, the certificate shall be signed and
acknowledged by all lessors and lessees of the estate for years.
(C) In the case of a condominium project subject to a life estate, the
certificate shall be signed and acknowledged by all life tenants and remainder
interests.
(D) The certificate shall also be signed and acknowledged by either the trustee
or the beneficiary of each recorded deed of trust, and the mortgagee of each
recorded mortgage encumbering the property.
Owners of mineral rights, easements, rights-of-way, and other nonpossessory
interests do not need to sign the condominium plan. Further, in the event a
conversion to condominiums of a community apartment project or stock cooperative
has been approved by the required number of owners, trustees, beneficiaries, and
mortgagees pursuant to Section 66452.10 of the
Government Code, the certificate need only be signed by those owners,
trustees, beneficiaries, and mortgagees approving the conversion.
A condominium plan may be amended or revoked by a subsequently acknowledged
recorded instrument executed by all the persons whose signatures would be
required pursuant to this subdivision.
(f) A “condominium project” means a development consisting of condominiums. A
condominium consists of an undivided interest in common in a portion of real
property coupled with a separate interest in space called a unit, the boundaries
of which are described on a recorded final map, parcel map, or condominium plan
in sufficient detail to locate all boundaries thereof. The area within these
boundaries may be filled with air, earth, or water, or any combination thereof,
and need not be physically attached to land except by easements for access and,
if necessary, support. The description of the unit may refer to (1) boundaries
described in the recorded final map, parcel map, or condominium plan, (2)
physical boundaries, either in existence, or to be constructed, such as walls,
floors, and ceilings of a structure or any portion thereof, (3) an entire
structure containing one or more units, or (4) any combination thereof. The
portion or portions of the real property held in undivided interest may be all
of the real property, except for the separate interests, or may include a
particular three-dimensional portion thereof, the boundaries of which are
described on a recorded final map, parcel map, or condominium plan. The area
within these boundaries may be filled with air, earth, or water, or any
combination thereof, and need not be physically attached to land except by
easements for access and, if necessary, support. An individual condominium
within a condominium project may include, in addition, a separate interest in
other portions of the real property.
(g) “Declarant” means the person or group of persons designated in the
declaration as declarant, or if no declarant is designated, the person or group
of persons who sign the original declaration or who succeed to special rights,
preferences, or privileges designated in the declaration as belonging to the
signator of the original declaration.
(h) “Declaration” means the document, however denominated, which contains the
information required by Section 1353.
(i) “Exclusive use common area” means a portion of the common areas designated
by the declaration for the exclusive use of one or more, but fewer than all, of
the owners of the separate interests and which is or will be appurtenant to the
separate interest or interests.
(1) Unless the declaration otherwise provides, any shutters, awnings, window
boxes, doorsteps, stoops, porches, balconies, patios, exterior doors,
doorframes, and hardware incident thereto, screens and windows or other fixtures
designed to serve a single separate interest, but located outside the boundaries
of the separate interest, are exclusive use common areas allocated exclusively
to that separate interest.
(2) Notwithstanding the provisions of the declaration, internal and external
telephone wiring designed to serve a single separate interest, but located
outside the boundaries of the separate interest, are exclusive use common areas
allocated exclusively to that separate interest.
(j) “Governing documents” means the declaration and any other documents, such as
bylaws, operating rules of the association, articles of incorporation, or
articles of association, which govern the operation of the common interest
development or association.
(k) “Planned development” means a development (other than a community apartment
project, a condominium project, or a stock cooperative) having either or both of
the following features:
(1) The common area is owned either by an association or in common by the owners
of the separate interests who possess appurtenant rights to the beneficial use
and enjoyment of the common area.
(2) A power exists in the association to enforce an obligation of an owner of a
separate interest with respect to the beneficial use and enjoyment of the common
area by means of an assessment which may become a lien upon the separate
interests in accordance with Section 1367 or
1367.1.
(l) “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 subdivision (d).
(2) In a condominium project, “separate interest” means an individual unit, as
specified in subdivision (f).
(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 subdivision (m).
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 areas.
The estate in a separate interest may be a fee, a life estate, an estate for
years, or any combination of the foregoing.
(m) “Stock cooperative” means a development in which a corporation is formed or
availed of, primarily for the purpose of holding title to, either in fee simple
or for a term of years, improved real property, and all or substantially all of
the shareholders of the corporation receive a right of exclusive occupancy in a
portion of the real property, title to which is held by the corporation. The
owners' interest in the corporation, whether evidenced by a share of stock, a
certificate of membership, or otherwise, shall be deemed to be an interest in a
common interest development and a real estate development for purposes of
subdivision (f) of Section 25100 of the Corporations
Code.
A “stock cooperative” includes a limited equity housing cooperative which is a
stock cooperative that meets the criteria of
Section 33007.5 of the Health
and Safety Code.
§ 1352. Application of title; creation of common
interest development
This title applies and a common interest development is created whenever a
separate interest coupled with an interest in the common area or membership in
the association is, or has been, conveyed, provided, all of the following are
recorded:
(a) A declaration.
(b) A condominium plan, if any exists.
(c) A final map or parcel map, if Division 2 (commencing with
Section 66410) of Title 7 of the Government Code
requires the recording of either a final map or parcel map for the common
interest development.
§ 1352.5. Restrictive covenants; deletion from
declaration or other governing document
(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.
§ 1353. Declaration; contents; notice of airport
in vicinity
(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.
§ 1353.5. Display of United States flag by owner
on or in owner's separate interest or within exclusive use common area
(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.
§ 1353.6. Prohibition of posting or displaying
noncommercial signs, posters, flags, or banners; permitted placement of posting
or displaying; exceptions
(a) The governing documents, including the operating rules, may not prohibit
posting or displaying of noncommercial signs, posters, flags, or banners on or
in an owner's separate interest, except as required for the protection of public
health or safety or if the posting or display would violate a local, state, or
federal law.
(b) For purposes of this section, a noncommercial sign, poster, flag, or banner
may be made of paper, cardboard, cloth, plastic, or fabric, and may be posted or
displayed from the yard, window, door, balcony, or outside wall of the separate
interest, but may not be made of lights, roofing, siding, paving materials,
flora, or balloons, or any other similar building, landscaping, or decorative
component, or include the painting of architectural surfaces.
(c) An association may prohibit noncommercial signs and posters that are more
than 9 square feet in size and noncommercial flags or banners that are more than
15 square feet in size.
§ 1353.7. Common interest developments; roof
installation and repair; governing documents
(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.
§ 1353.8. Architectural guidelines; use of low
water-using plants as a group
The architectural guidelines of a common interest development shall not prohibit
or include conditions that have the effect of prohibiting the use of low
water-using plants as a group.
§ 1354. Covenants and restrictions in
declaration as equitable servitudes; enforcement; alternative dispute resolution
(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.
§ 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.
§ 1355.5. Amendment of governing documents to
delete construction or marketing provisions after completion by developer;
requirements
(a) Notwithstanding any provision of the governing documents of a common
interest development to the contrary, the board of directors of the association
may, after the developer of the common interest development has completed
construction of the development, has terminated construction activities, and has
terminated his or her 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 (a) completion of construction of the development, and
(b) 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 of directors of the association shall mail to all owners of the separate
interests, by first-class mail, (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 of directors will consider adoption of the
amendments. The board of directors of an association may consider adoption of
amendments to the governing documents pursuant to subdivision (a) only at a
meeting which is open to all owners of the separate interests in the common
interest development, who shall be given opportunity to make comments thereon.
All deliberations of the board of directors on any action proposed under
subdivision (a) shall only be conducted in such an open meeting.
(d) The board of directors of the association may not amend the governing
documents pursuant to this section without the approval of the owners, casting a
majority of the votes at a meeting or election of the association constituting a
quorum and conducted in accordance with Chapter 5 (commencing with
Section 7510) of Part 3 of Division 2 of Title 1 of,
and Section 7613 of, the Corporations Code. For the purposes of this
section, “quorum” means more than 50 percent of the owners who own no more than
two separate interests in the development.
§ 1356. Amendment of declaration; petition;
contents; filing; findings by court; power of court to approve amendment;
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.
§ 1357. Extension of 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.
§ 1357.100. Definitions
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.
§ 1357.110. Requirements for validity and enforceability
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.
§ 1357.120. Approved subject matters; board action
to propose a rule change; special meetings of the members to reverse a rule
change
(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.
§ 1357.130. Proposed rule change by board action;
notice; meeting
(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.
§ 1357.140. Special meeting of members to reverse a rule change; notice;
voting requirements; effect of approved reversal
(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.
§ 1357.150. Applicability of article to changes commenced before and after
January 1, 2004
(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.
§ 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.
§ 1359. Restrictions on partition
(a) Except as provided in this section, the common areas 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 areas. 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 areas 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) The conditions for such a sale, set forth in the declaration, have been met.
§ 1360. Modification of unit by owner; facilitation of access for
handicapped; approval by project association
(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.
§ 1360.5. Pets within common interest developments
(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.
§ 1361. Rights and easements of ingress, egress,
and support
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.
§ 1361.5. Physical access to owner or occupant's
separate interest
Except as otherwise provided in law, an order of the court, or an order pursuant
to a final and binding arbitration decision, an association may not deny an
owner or occupant physical access to his or her separate interest, either by
restricting access through the common areas to the owner's separate interest, or
by restricting access solely to the owner's separate interest.
§ 1362. Ownership of common areas
Unless the declaration otherwise provides, in a condominium project, or in a
planned development in which the common areas are owned by the owners of the
separate interests, the common areas are owned as tenants in common, in equal
shares, one for each unit or lot.
§ 1363. Community association management; schedule
of monetary penalties for violations
(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.
§ 1363.001. On-line education course regarding
role, duties, laws and responsibilities of board members and prospective board
members and nonjudicial foreclosure process
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.
§ 1363.03. Elections; rules and procedures
(a) An association shall adopt rules, in accordance with the procedures
prescribed by Article 4 (commencing with Section
1357.100) of Chapter 2, that do all of the following:
(1) Ensure that if any candidate or member advocating a point of view is
provided access to association media, newsletters, or Internet Web sites during
a campaign, for purposes that are reasonably related to that election, equal
access shall be provided to all candidates and members advocating a point of
view, including those not endorsed by the board, for purposes that are
reasonably related to the election. The association shall not edit or redact any
content from these communications, but may include a statement specifying that
the candidate or member, and not the association, is responsible for that
content.
(2) Ensure access to the common area meeting space, if any exists, during a
campaign, at no cost, to all candidates, including those who are not incumbents,
and to all members advocating a point of view, including those not endorsed by
the board, for purposes reasonably related to the election.
(3) Specify the qualifications for candidates for the board of directors and any
other elected position, and procedures for the nomination of candidates,
consistent with the governing documents. A nomination or election procedure
shall not be deemed reasonable if it disallows any member of the association
from nominating himself or herself for election to the board of directors.
(4) Specify the qualifications for voting, the voting power of each membership,
the authenticity, validity, and effect of proxies, and the voting period for
elections, including the times at which polls will open and close, consistent
with the governing documents.
(5) Specify a method of selecting one or three independent third parties as
inspector, or inspectors, of election utilizing one of the following methods:
(A) Appointment of the inspector or inspectors by the board.
(B) Election of the inspector or inspectors by the members of the association.
(C) Any other method for selecting the inspector or inspectors.
(6) Allow the inspector, or inspectors, to appoint and oversee additional
persons to verify signatures and to count and tabulate votes as the inspector or
inspectors deem appropriate, provided that the persons are independent third
parties.
(b) Notwithstanding any other law or provision of the governing documents,
elections regarding assessments legally requiring a vote, election and removal
of members of the association board of directors, amendments to the governing
documents, or the grant of exclusive use of common area property pursuant to
Section 1363.07
shall be held by secret ballot in accordance with the procedures set forth in
this section. A quorum shall be required only if so stated in the governing
documents of the association or other provisions of law. If a quorum is required
by the governing documents, each ballot received by the inspector of elections
shall be treated as a member present at a meeting for purposes of establishing a
quorum. An association shall allow for cumulative voting using the secret ballot
procedures provided in this section, if cumulative voting is provided for in the
governing documents.
(c)(1) The association shall select an independent third party or parties as an
inspector of election. The number of inspectors of election shall be one or
three.
(2) 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 of the association, but may not be a
member of the board of directors or a candidate for the board of directors or
related to a member of the board of directors or a candidate for the board of
directors. 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).
(3) The inspector or inspectors of election shall do all of the following:
(A) Determine the number of memberships entitled to vote and the voting power of
each.
(B) Determine the authenticity, validity, and effect of proxies, if any.
(C) Receive ballots.
(D) Hear and determine all challenges and questions in any way arising out of or
in connection with the right to vote.
(E) Count and tabulate all votes.
(F) Determine when the polls shall close, consistent with the governing
documents.
(G) Determine the tabulated results of the election.
(H) Perform any acts as may be proper to conduct the election with fairness to
all members in accordance with this section, the Corporations Code, and all
applicable rules of the association regarding the conduct of the election that
are not in conflict with this section.
(4) An inspector of election shall perform his or her duties impartially, in
good faith, to the best of his or her ability, and as expeditiously as is
practical. If there are three inspectors of election, 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 election is prima facie evidence
of the facts stated in the report.
(d)(1) For purposes of this section, the following definitions shall apply:
(A) “Proxy” means a written authorization signed by a member or the authorized
representative of the member that gives another member or members the power to
vote on behalf of that member.
(B) “Signed” means the placing of the member's name on the proxy (whether by
manual signature, typewriting, telegraphic transmission, or otherwise) by the
member or authorized representative of the member.
(2) Proxies shall not be construed or used in lieu of a ballot. An association
may use proxies if permitted or required by the bylaws of the association and if
those proxies meet the requirements of this article, other laws, and the
association's governing documents, but the association shall not be required to
prepare or distribute proxies pursuant to this section.
(3) Any instruction given in a proxy issued for an election that directs the
manner in which the proxyholder is to cast the vote shall be set forth on a
separate page of the proxy that can be detached and given to the proxyholder to
retain. The proxyholder shall cast the member's vote by secret ballot. The proxy
may be revoked by the member prior to the receipt of the ballot by the inspector
of elections as described in Section 7613 of the
Corporations Code.
(e) Ballots and two preaddressed envelopes with instructions on how to return
ballots shall be mailed by first-class mail or delivered by the association to
every member not less than 30 days prior to the deadline for voting. In order to
preserve confidentiality, a voter may not be identified by name, address, or
lot, parcel, or unit number on the ballot. The association shall use as a model
those procedures used by California counties for ensuring confidentiality of
voter absentee ballots, including all of the following:
(1) The ballot itself is not signed by the voter, but is inserted into an
envelope that is sealed. This envelope is inserted into a second envelope that
is sealed. In the upper left hand corner of the second envelope, the voter shall
sign his or her name, indicate his or her name, and indicate the address or
separate interest identifier that entitles him or her to vote.
(2) The second envelope is addressed to the inspector or inspectors of election,
who will be tallying the votes. The envelope may be mailed or delivered by hand
to a location specified by the inspector or inspectors of election. The member
may request a receipt for delivery.
(f) All votes shall be counted and tabulated by the inspector or inspectors of
election or his or her designee in public at a properly noticed open meeting of
the board of directors or members. Any candidate or other member of the
association may witness the counting and tabulation of the votes. No person,
including a member of the association or an employee of the management company,
shall open or otherwise review any ballot prior to the time and place at which
the ballots are counted and tabulated. The inspector of election, or his or her
designee, may verify the member's information and signature on the outer
envelope prior to the meeting at which ballots are tabulated. Once a secret
ballot is received by the inspector of elections, it shall be irrevocable.
(g) The tabulated results of the election shall be promptly reported to the
board of directors of the association and shall be recorded in the minutes of
the next meeting of the board of directors and shall be available for review by
members of the association. Within 15 days of the election, the board shall
publicize the tabulated results of the election in a communication directed to
all members.
(h) The sealed ballots at all times shall be in the custody of the inspector or
inspectors of election or at a location designated by the inspector or
inspectors until after the tabulation of the vote, and until the time allowed by
Section 7527 of the Corporations Code for
challenging the election has expired, at which time custody shall be transferred
to the association. If there is a recount or other challenge to the election
process, the inspector or inspectors of election shall, upon written request,
make the ballots available for inspection and review by an association member or
his or her authorized representative. Any recount shall be conducted in a manner
that preserves the confidentiality of the vote.
(i) After the transfer of the ballots to the association, the ballots shall be
stored by the association in a secure place for no less than one year after the
date of the election.
(j) Notwithstanding any other provision of law, the rules adopted pursuant to
this section may provide for the nomination of candidates from the floor of
membership meetings or nomination by any other manner. Those rules may permit
write-in candidates for ballots.
(k) Except for the meeting to count the votes required in subdivision (f), an
election may be conducted entirely by mail unless otherwise specified in the
governing documents.
(l) The provisions of this section apply to both incorporated and unincorporated
associations, notwithstanding any contrary provision of the governing documents.
(m) The procedures set forth in this section shall apply to votes cast directly
by the membership, but do not apply to votes cast by delegates or other elected
representatives.
(n) In the event of a conflict between this section and the provisions of the
Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with
Section 7110) of Division 2 of Title 1 of the
Corporations Code) relating to elections, the provisions of this section
shall prevail.
(o) The amendments made to this section by the act adding this subdivision [FN1]
shall become operative on July 1, 2006.
§ 1363.04. Campaign funding
(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 and
ballot materials, within 30 days of an election. This is not a campaign purpose
if the communication is one for which subdivision (a)
of Section 1363.03 requires that equal access be provided to another
candidate or advocate.
§ 1363.05. Short title; open meeting; executive
session exception; minutes; notice; emergency meeting; issues not on agenda
(a) This section shall be known and may be cited as the Common Interest
Development Open Meeting Act.
(b) Any member of the association may attend meetings of the board of directors
of the association, except when the board adjourns to executive session to
consider litigation, matters relating to the formation of contracts with third
parties, member discipline, personnel matters, or to meet with a member, upon
the member's request, regarding the member's payment of assessments, as
specified in Section 1367 or
1367.1. The board of directors of the
association shall meet in executive session, if requested by a member who may be
subject to a fine, penalty, or other form of discipline, and the member shall be
entitled to attend the executive session.
(c) Any matter discussed in executive session shall be generally noted in the
minutes of the immediately following meeting that is open to the entire
membership.
(d) The minutes, minutes proposed for adoption that are marked to indicate draft
status, or a summary of the minutes, of any meeting of the board of directors of
an association, other than an executive session, shall be available to members
within 30 days of the meeting. The minutes, proposed minutes, or summary minutes
shall be distributed to any member of the association upon request and upon
reimbursement of the association's costs for making that distribution.
(e) Members of the association shall be notified in writing at the time that the
pro forma budget required in Section 1365 is
distributed, or at the time of any general mailing to the entire membership of
the association, of their right to have copies of the minutes of meetings of the
board of directors, and how and where those minutes may be obtained.
(f) Unless the time and place of meeting is fixed by the bylaws, or unless the
bylaws provide for a longer period of notice, members shall be given notice of
the time and place of a meeting as defined in subdivision (j), except for an
emergency meeting, at least four days prior to the meeting. Notice shall be
given by posting the notice in a prominent place or places within the common
area and by mail to any owner who had requested notification of board meetings
by mail, at the address requested by the owner. Notice may also be given, by
mail or delivery of the notice to each unit in the development or by newsletter
or similar means of communication. The notice shall contain the agenda for the
meeting.
(g) An emergency meeting of the board may be called by the president of the
association, or by any two members of the governing body other than the
president, if there are circumstances that could not have been reasonably
foreseen which require immediate attention and possible action by the board, and
which of necessity make it impracticable to provide notice as required by this
section.
(h) The board of directors of the association shall permit any member of the
association to speak at any meeting of the association or the board of
directors, except for meetings of the board held in executive session. A
reasonable time limit for all members of the association to speak to the board
of directors or before a meeting of the association shall be established by the
board of directors.
(i)(1) Except as described in paragraphs
(2) to (4), inclusive, the board
of directors of the association may not discuss or take action on any item at a
nonemergency meeting unless the item was placed on the agenda included in the
notice that was posted and distributed pursuant to subdivision (f). This
subdivision does not prohibit a resident who is not a member of the board from
speaking on issues not on the agenda.
(2) Notwithstanding paragraph (1), a member of the board of directors, a
managing agent or other agent of the board of directors, or a member of the
staff of the board of directors, may do any of the following:
(A) Briefly respond to statements made or questions posed by a person speaking
at a meeting as described in subdivision (h).
(B) Ask a question for clarification, make a brief announcement, or make a brief
report on his or her own activities, whether in response to questions posed by a
member of the association or based upon his or her own initiative.
(3) Notwithstanding paragraph (1), the board of directors or a member of the
board of directors, subject to rules or procedures of the board of directors,
may do any of the following:
(A) Provide a reference to, or provide other resources for factual information
to, its managing agent or other agents or staff.
(B) Request its managing agent or other agents or staff to report back to the
board of directors at a subsequent meeting concerning any matter, or take action
to direct its managing agent or other agents or staff to place a matter of
business on a future agenda.
(C) Direct its managing agent or other agents or staff to perform administrative
tasks that are necessary to carry out this subdivision.
(4)(A) Notwithstanding paragraph (1), the board of directors may take action on
any item of business not appearing on the agenda posted and distributed pursuant
to subdivision (f) under any of the following conditions:
(i) Upon a determination made by a majority of the board of directors present at
the meeting that an emergency situation exists. An emergency situation exists if
there are circumstances that could not have been reasonably foreseen by the
board, that require immediate attention and possible action by the board, and
that, of necessity, make it impracticable to provide notice.
(ii) Upon a determination made by the board by a vote of two-thirds of the
members present at the meeting, or, if less than two-thirds of total membership
of the board is present at the meeting, by a unanimous vote of the members
present, that there is a need to take immediate action and that the need for
action came to the attention of the board after the agenda was posted and
distributed pursuant to subdivision (f).
(iii) The item appeared on an agenda that was posted and distributed pursuant to
subdivision (f) for a prior meeting of the board of directors that occurred not
more than 30 calendar days before the date that action is taken on the item and,
at the prior meeting, action on the item was continued to the meeting at which
the action is taken.
(B) Before discussing any item pursuant to this paragraph, the board of
directors shall openly identify the item to the members in attendance at the
meeting.
(j) As used in this section, “meeting” includes any congregation of a majority
of the members of the board at the same time and place to hear, discuss, or
deliberate upon any item of business scheduled to be heard by the board, except
those matters that may be discussed in executive session.
§ 1363.07. Exclusive use of common area;
affirmative vote required; exceptions; contents of proposed measure
(a) After an association acquires fee title to, or any easement right over, a
common area, unless the association's 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 of directors may grant exclusive use of any portion of that common
area to any member, except for any of the following:
(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) Any grant in connection with an expressly zoned industrial or commercial
development, or any grant within a subdivision of the type defined
in Section 1373.
(b) Any measure placed before the members requesting that the board of directors
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.
§ 1363.09. Remedies
(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.
§ 1363.1. Prospective managing agent; written
disclosures
(a) A prospective managing agent of a common interest development shall provide
a written statement to the board of directors of the association of a common
interest development as soon as practicable, but in no event more than 90 days,
before entering into a management agreement which shall contain all of the
following information concerning the managing agent:
(1) The names and business addresses of the owners or general partners of the
managing agent. If the managing agent is a corporation, the written statement
shall include the names and business addresses of the directors and officers and
shareholders holding greater than 10 percent of the shares of the corporation.
(2) Whether or not any relevant licenses such as architectural design,
construction, engineering, real estate, or accounting have been issued by this
state and are currently held by the persons specified in paragraph (1). If a
license is currently held by any of those persons, the statement shall contain
the following information:
(A) What license is held.
(B) The dates the license is valid.
(C) The name of the licensee appearing on that license.
(3) Whether or not any relevant professional certifications or designations such
as architectural design, construction, engineering, real property management, or
accounting are currently held by any of the persons specified in paragraph (1),
including, but not limited to, a professional common interest development
manager. If any certification or designation is held, the statement shall
include the following information:
(A) What the certification or designation is and what entity issued it.
(B) The dates the certification or designation is valid.
(C) The names in which the certification or designation is held.
(b) As used in this section, a “managing agent” is a person or entity who, for
compensation or in expectation of compensation, exercises control over the
assets of a common interest development. A “managing agent” does not include
either of the following:
(1) A full-time employee of the association.
(2) Any regulated financial institution operating within the normal course of
its regulated business practice.
§ 1363.2. Managing agent; deposit of funds
received; requirements; separate record; commingling of funds
(a) A managing agent of a common interest development who accepts or receives
funds belonging to the association shall deposit all such funds that are not
placed into an escrow account with a bank, savings association, or credit union
or into an account under the control of the association, into a trust fund
account maintained by the managing agent in a bank, savings association, or
credit union in this state. All funds deposited by the managing agent in the
trust fund account shall be kept in this state in a financial institution, as
defined in
Section 31041 of the Financial
Code, which is insured by the federal government, and shall be
maintained there until disbursed in accordance with written instructions from
the association entitled to the funds.
(b) At the written request of the board of directors of the association, the
funds the managing agent accepts or receives on behalf of the association shall
be deposited into an interest-bearing account in a bank, savings association, or
credit union in this state, provided all of the following requirements are met:
(1) The account is in the name of the managing agent as trustee for the
association or in the name of the association.
(2) All of the funds in the account are covered by insurance provided by an
agency of the federal government.
(3) The funds in the account are kept separate, distinct, and apart from the
funds belonging to the managing agent or to any other person or entity for whom
the managing agent holds funds in trust except that the funds of various
associations may be commingled as permitted pursuant to subdivision (d).
(4) The managing agent discloses to the board of directors of the association
the nature of the account, how interest will be calculated and paid, whether
service charges will be paid to the depository and by whom, and any notice
requirements or penalties for withdrawal of funds from the account.
(5) No interest earned on funds in the account shall inure directly or
indirectly to the benefit of the managing agent or his or her employees.
(c) The managing agent shall maintain a separate record of the receipt and
disposition of all funds described in this section, including any interest
earned on the funds.
(d) The managing agent shall not commingle the funds of the association with his
or her own money or with the money of others that he or she receives or accepts,
unless all of the following requirements are met:
(1) The managing agent commingled the funds of various associations on or before
February 26, 1990, and has obtained a written agreement with the board of
directors of each association that he or she will maintain a fidelity and surety
bond in an amount that provides adequate protection to the associations as
agreed upon by the managing agent and the board of directors of each
association.
(2) The managing agent discloses in the written agreement whether he or she is
deriving benefits from the commingled account or the bank, credit union, or
savings institution where the moneys will be on deposit.
(3) The written agreement provided pursuant to this subdivision includes, but is
not limited to, the name and address of the bonding companies, the amount of the
bonds, and the expiration dates of the bonds.
(4) If there are any changes in the bond coverage or the companies providing the
coverage, the managing agent discloses that fact to the board of directors of
each affected association as soon as practical, but in no event more than 10
days after the change.
(5) The bonds assure the protection of the association and provide the
association at least 10 days' notice prior to cancellation.
(6) Completed payments on the behalf of the association are deposited within 24
hours or the next business day and do not remain commingled for more than 10
calendar days.
(e) The prevailing party in an action to enforce this section shall be entitled
to recover reasonable legal fees and court costs.
(f) As used in this section, a “managing agent” is a person or entity, who for
compensation or, in expectation of compensation, exercises control over the
assets of the association. However, a “managing agent” does not include a
full-time employee of the association or a regulated financial institution
operating within the normal course of business, or an attorney at law acting
within the scope of his or her license.
(g) As used in this section, “completed payment” means funds received which
clearly identify the account to which the funds are to be credited.
§ 1363.5. Association articles of incorporation;
required statement
(a) The articles of incorporation of a common interest development association
filed with the Secretary of State on or after January 1, 1995, 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
nine-digit ZIP Code, 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 of principal business activity contained in the annual
statement filed by an incorporated association with the Secretary of State
pursuant to Section 1502 of the Corporations Code
shall also contain the statement specified in subdivision (a).
§ 1363.6. Assistance with identification of
common interest developments; submission of information by each association;
time; notice of change of address; penalty for violation of filing requirements;
availability of information
(a) To assist with the identification of common interest developments, each
association, whether incorporated or unincorporated, shall submit to the
Secretary of State, on a form and for a fee not to exceed thirty dollars ($30)
that the Secretary of State shall prescribe, the following information
concerning the association and the development that it manages:
(1) A statement that the association is formed to manage a common interest
development under the Davis-Stirling Common Interest Development Act.
(2) The name of the association.
(3) The street address of the association's onsite office, or, if none, of the
responsible officer or managing agent of the association.
(4) The name, address, and either the daytime telephone number or e-mail address
of the president of the association, other than the address, telephone number,
or e-mail address of the association's onsite office or managing agent of the
association.
(5) The name, street address, and daytime telephone number of the association's
managing agent, if any.
(6) The county, and if in an incorporated area, the city in which the
development is physically located. If the boundaries of the development are
physically located in more than one county, each of the counties in which it is
located.
(7) If the development is in an unincorporated area, the city closest in
proximity to the development.
(8) The nine-digit ZIP Code, front street, and nearest cross street of the
physical location of the development.
(9) The type of common interest development, as defined in
subdivision (c) of Section 1351, managed by the
association.
(10) The number of separate interests, as defined in subdivision (l) of Section
1351, in the development.
(b) The association shall submit the information required by this section as
follows:
(1) By incorporated associations, within 90 days after the filing of its
original articles of incorporation, and thereafter at the time the association
files its biennial statement of principal business activity with the Secretary
of State pursuant to Section 8210 of the Corporations
Code.
(2) By unincorporated associations, in July of 2003, and in that same month
biennially thereafter. Upon changing its status to that of a corporation, the
association shall comply with the filing deadlines in paragraph (1).
(c) The association shall notify the Secretary of State of any change in the
street address of the association's onsite office or of the responsible officer
or managing agent of the association in the form and for a fee prescribed by the
Secretary of State, within 60 days of the change.
(d) On and after January 1, 2006, the penalty for an incorporated association's
noncompliance with the initial or biennial filing requirements of this section
shall be suspension of the association's rights, privileges, and powers as a
corporation and monetary penalties, to the same extent and in the same manner as
suspension and monetary penalties imposed pursuant to
Section 8810 of the Corporations Code.
(e) The Secretary of State shall make the information submitted pursuant to
paragraph (4) of subdivision (a) available only for governmental purposes and
only to Members of the Legislature and the Business, Transportation and Housing
Agency, upon written request. All other information submitted pursuant to this
section shall be subject to public inspection pursuant to the California Public
Records Act, Chapter 3.5 (commencing with Section
6250) of Division 7 of Title 1 of the Government Code. The information
submitted pursuant to this section shall be made available for governmental or
public inspection, as the case may be, on or before July 1, 2004, and
thereafter.
§ 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.
§ 1363.820. Fair, reasonable, and expeditious
procedure to resolve disputes; use of local dispute resolution programs
(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 1363.840 applies
and satisfies the requirement of subdivision (a).
§ 1363.830. Requirements of fair, reasonable, and expeditious dispute
resolution program
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.
§ 1363.840. Application of section; use of
procedures; dispute resolution agreements; conditions; fees
(a) This section applies in an association that does not otherwise provide a
fair, reasonable, and expeditious dispute resolution procedure. The procedure
provided in this section is fair, reasonable, and expeditious, within the
meaning of this article.
(b) Either party to a dispute within the scope of this article may invoke the
following procedure:
(1) The party may request the other party to meet and confer in an effort to
resolve the dispute. The request shall be in writing.
(2) A member of an association may refuse a request to meet and confer. The
association may not refuse a request to meet and confer.
(3) The association's board of directors shall designate a member of the board
to meet and confer.
(4) The parties 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 the dispute.
(5) A resolution of the dispute agreed to by the parties shall be memorialized
in writing and signed by the parties, including the board designee on behalf of
the association.
(c) An agreement reached under this section binds the parties and is judicially
enforceable if both of the following conditions are satisfied:
(1) The agreement is not in conflict with law or the governing documents of the
common interest development or association.
(2) The agreement is either consistent with the authority granted by the board
of directors to its designee or the agreement is ratified by the board of
directors.
(d) A member of the association may not be charged a fee to participate in the
process.
§ 1363.850. Notice; description of internal dispute resolution process
The notice provided pursuant to Section 1369.590 shall include a
description of the internal dispute resolution process provided pursuant to this
article.
§ 1364. Responsibility for repair, replacement,
or maintenance; damage by wood-destroying pests or organisms; cost allocation;
notice of repair requirements; access for maintenance of 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.
§ 1365. Documents prepared and distributed by
associations
Unless the governing documents impose more stringent standards, the association
shall prepare and distribute to all of its members the following documents:
(a) A pro forma operating budget, which shall include all of the following:
(1) The estimated revenue and expenses on an accrual basis.
(2) A summary of the association's reserves based upon the most recent review or
study conducted pursuant to Section 1365.5,
based only on assets held in cash or cash equivalents, which shall be printed in
boldface type and include all of the following:
(A) The current estimated replacement cost, estimated remaining life, and
estimated useful life of each major component.
(B) As of the end of the fiscal year for which the study is prepared:
(i) The current estimate of the amount of cash reserves necessary to repair,
replace, restore, or maintain the major components.
(ii) The current amount of accumulated cash reserves actually set aside to
repair, replace, restore, or maintain major components.
(iii) If applicable, the amount of funds received from either a compensatory
damage award or settlement to an association from any person or entity for
injuries to property, real or personal, arising out of any construction or
design defects, and the expenditure or disposition of funds, including the
amounts expended for the direct and indirect costs of repair of construction or
design defects. These amounts shall be reported at the end of the fiscal year
for which the study is prepared as separate line items under cash reserves
pursuant to clause (ii). Instead of complying with the requirements set forth in
this clause, an association that is obligated to issue a review of their
financial statement pursuant to subdivision (b) may include in the review a
statement containing all of the information required by this clause.
(C) The percentage that the amount determined for purposes of clause (ii) of
subparagraph (B) equals the amount determined for purposes of clause (i) of
subparagraph (B).
(D) The current deficiency in reserve funding expressed on a per unit basis. The
figure shall be calculated by subtracting the amount determined for purposes of
clause (ii) of subparagraph (B) from the amount determined for purposes of
clause (i) of subparagraph (B) and then dividing the result by the number of
separate interests within the association, except that if assessments vary by
the size or type of ownership interest, then the association shall calculate the
current deficiency in a manner that reflects the variation.
(3) A statement as to all of the following:
(A) Whether the board of directors of the association has determined to defer or
not undertake repairs or replacement of any major component with a remaining
life of 30 years or less, including a justification for the deferral or decision
not to undertake the repairs or replacement.
(B) Whether the board of directors of the association, consistent with the
reserve funding plan adopted pursuant to subdivision (e) of Section 1365. 5, has
determined or anticipates that the levy of one or more special assessments will
be required to repair, replace, or restore any major component or to provide
adequate reserves therefor. If so, the statement shall also set out the
estimated amount, commencement date, and duration of the assessment.
(C) The mechanism or mechanisms by which the board of directors will fund
reserves to repair or replace major components, including assessments,
borrowing, use of other assets, deferral of selected replacements or repairs, or
alternative mechanisms.
(D) Whether the association has any outstanding loans with an original term of
more than one year, including the payee, interest rate, amount outstanding,
annual payment, and when the loan is scheduled to be retired.
(4) A general statement addressing the procedures used for the calculation and
establishment of those reserves to defray the future repair, replacement, or
additions to those major components that the association is obligated to
maintain. The report shall include, but need not be limited to, reserve
calculations made using the formula described in
paragraph (4) of subdivision (b) of Section 1365.2.5, and may not assume
a rate of return on cash reserves in excess of 2 percent above the discount rate
published by the Federal Reserve Bank of San Francisco at the time the
calculation was made.
The summary of the association's reserves disclosed pursuant to paragraph (2)
shall not be admissible in evidence to show improper financial management of an
association, provided that other relevant and competent evidence of the
financial condition of the association is not made inadmissible by this
provision.
Notwithstanding a contrary provision in the governing documents, a copy of the
operating budget shall be annually distributed not less than 30 days nor more
than 90 days prior to the beginning of the association's fiscal year.
(b) Commencing January 1, 2009, a summary of the reserve funding plan adopted by
the board of directors of the association, as specified in
paragraph (4) of subdivision (e) of Section 1365.5.
The summary shall include notice to members that the full reserve study plan is
available upon request, and the association shall provide the full reserve plan
to any member upon request.
(c) A review of the financial statement of the association shall be prepared in
accordance with generally accepted accounting principles by a licensee of the
California Board of Accountancy for any fiscal year in which the gross income to
the association exceeds seventy-five thousand dollars ($75,000). A copy of the
review of the financial statement shall be distributed within 120 days after the
close of each fiscal year.
(d) Instead of the distribution of the pro forma operating budget required by
subdivision (a), the board of directors may elect to distribute a summary of the
pro forma operating budget to all of its members with a written notice that the
pro forma operating budget is available at the business office of the
association or at another suitable location within the boundaries of the
development, and that copies will be provided upon request and at the expense of
the association. If any member requests that a copy of the pro forma operating
budget required by subdivision (a) be mailed to the member, the association
shall provide the copy to the member by first-class United States mail at the
expense of the association and delivered within five days. The written notice
that is distributed to each of the association members shall be in at least
10-point boldface type on the front page of the summary of the budget.
(e) A statement describing the association's policies and practices in enforcing
lien rights or other legal remedies for default in payment of its assessments
against its members shall be annually delivered to the members not less than 30
days nor more than 90 days immediately preceding the beginning of the
association's fiscal year.
(f)(1) A summary of the association's property, general liability, earthquake,
flood, and fidelity insurance policies, which shall be distributed not less than
30 days nor more than 90 days preceding the beginning of the association's
fiscal year, that includes all of the following information about each policy:
(A) The name of the insurer.
(B) The type of insurance.
(C) The policy limits of the insurance.
(D) The amount of deductibles, if any.
(2) The association shall, as soon as reasonably practicable, notify its members
by first-class mail if any of the policies described in paragraph (1) have
lapsed, been canceled, and are not immediately renewed, restored, or replaced,
or if there is a significant change, such as a reduction in coverage or limits
or an increase in the deductible, as to any of those policies. If the
association receives any notice of nonrenewal of a policy described in paragraph
(1), the association shall immediately notify its members if replacement
coverage will not be in effect by the date the existing coverage will lapse.
(3) To the extent that any of the information required to be disclosed pursuant
to paragraph (1) is specified in the insurance policy declaration page, the
association may meet its obligation to disclose that information by making
copies of that page and distributing it to all of its members.
(4) The summary distributed pursuant to paragraph (1) shall contain, in at least
10-point boldface type, the following statement: “This summary of the
association's policies of insurance provides only certain information, as
required by subdivision (f) of Section 1365 of the Civil Code, and should not be
considered a substitute for the complete policy terms and conditions contained
in the actual policies of insurance. Any association member may, upon request
and provision of reasonable notice, review the association's insurance policies
and, upon request and payment of reasonable duplication charges, obtain copies
of those policies. Although the association maintains the policies of insurance
specified in this summary, the association's policies of insurance may not cover
your property, including personal property or, real property improvements to or
around your dwelling, or personal injuries or other losses that occur within or
around your dwelling. Even if a loss is covered, you may nevertheless be
responsible for paying all or a portion of any deductible that applies.
Association members should consult with their individual insurance broker or
agent for appropriate additional coverage.”
§ 1365.1. Notice to members of association prior to
beginning of fiscal year
(a) The association shall distribute the written notice described in subdivision
(b) to each member of the association during the 60-day period immediately
preceding the beginning of the association's fiscal year. The notice shall be
printed in at least 12-point type. An association distributing the notice to an
owner of an 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 delete from
the notice described in subdivision (b) the portion regarding meetings and
payment plans.
(b) The notice required by this section shall read as follows:
“NOTICE ASSESSMENTS AND FORECLOSURE
This notice outlines some of the rights and responsibilities of owners of
property in common interest developments and the associations that manage them.
Please refer to the sections of the Civil Code indicated for further
information. A portion of the information in this notice applies only to liens
recorded on or after January 1, 2003. You may wish to consult a lawyer if you
dispute an assessment.
ASSESSMENTS AND FORECLOSURE
Assessments become delinquent 15 days after they are due, unless the governing
documents provide for a longer time. The failure to pay association assessments
may result in the loss of an owner's property through foreclosure. Foreclosure
may occur either as a result of a court action, known as judicial foreclosure or
without court action, often referred to as nonjudicial foreclosure. For liens
recorded on and after January 1, 2006, an association may not use judicial or
nonjudicial foreclosure to enforce that lien if the amount of the delinquent
assessments or dues, exclusive of any accelerated assessments, late charges,
fees, attorney's fees, interest, and costs of collection, is less than one
thousand eight hundred dollars ($1,800). For delinquent assessments or dues in
excess of one thousand eight hundred dollars ($1,800) or more than 12 months
delinquent, an association may use judicial or
nonjudicial foreclosure subject to the conditions set forth in Section 1367.4 of
the Civil Code. When using judicial or nonjudicial foreclosure, the association
records a lien on the owner's property. The owner's property may be sold to
satisfy the lien if the amounts secured by the lien are not paid. (Sections
1366, 1367.1, and 1367.4 of the Civil Code)
In a judicial or nonjudicial foreclosure, the association may recover
assessments, reasonable costs of collection, reasonable attorney's fees, late
charges, and interest. The association may not use nonjudicial foreclosure to
collect fines or penalties, except for costs to repair common areas damaged by a
member or a member's guests, if the governing documents provide for
this. (Sections 1366 and 1367.1 of the Civil Code)
The association must comply with the requirements of
Section 1367.1 of the Civil Code when collecting delinquent assessments.
If the association fails to follow these requirements, it may not record a lien
on the owner's property until it has satisfied those requirements. Any
additional costs that result from satisfying the requirements are the
responsibility of the association. (Section 1367.1 of
the Civil Code)
At least 30 days prior to recording a lien on an owner's separate interest, the
association must provide the owner of record with certain documents by certified
mail, including a description of its collection and lien enforcement procedures
and the method of calculating the amount. It must also provide an itemized
statement of the charges owed by the owner. An owner has a right to review the
association's records to verify the debt. (Section
1367.1 of the Civil Code)
If a lien is recorded against an owner's property in error, the person who
recorded the lien is required to record a lien release within 21 days, and to
provide an owner certain documents in this regard. (Section
1367.1 of the Civil Code)
The collection practices of the association may be governed by state and federal
laws regarding fair debt collection. Penalties can be imposed for debt
collection practices that violate these laws.
PAYMENTS
When an owner makes a payment, he or she may request a receipt, and the
association is required to provide it. On the receipt, the association must
indicate the date of payment and the person who received it. The association
must inform owners of a mailing address for overnight payments. (Section
1367.1 of the Civil Code)
An owner may, but is not obligated to, pay under protest any disputed charge or
sum levied by the association, including, but not limited to, an assessment,
fine, penalty, late fee, collection cost, or monetary penalty imposed as a
disciplinary measure, and by so doing, specifically reserve the right to contest
the disputed charge or sum in court or otherwise.
An owner may dispute an assessment debt by submitting a written request for
dispute resolution to the association as set forth in Article 5 (commencing with
Section 1368.810) of Chapter 4 of Title 6 of Division 2 of the Civil Code. In
addition, an association may not initiate a foreclosure without participating in
alternative dispute resolution with a neutral third party as set forth in
Article 2 (commencing with Section 1369.510) of
Chapter 7 of Title 6 of Division 2 of the Civil Code, if so requested by the
owner. Binding arbitration shall not be available if the association intends to
initiate a judicial foreclosure.
An owner is not liable for charges, interest, and costs of collection, if it is
established that the assessment was paid properly on time. (Section
1367.1 of the Civil Code)
MEETINGS AND PAYMENT PLANS
An owner of a separate interest that is not a timeshare may request the
association to consider a payment plan to satisfy a delinquent assessment. The
association must inform owners of the standards for payment plans, if any exist.
(Section 1367.1 of the Civil Code)
The board of directors must meet with an owner who makes a proper written
request for a meeting to discuss a payment plan when the owner has received a
notice of a delinquent assessment. These payment plans must conform with the
payment plan standards of the association, if they exist. (Section
1367. 1 of the Civil Code)”
(c) A member of an association may provide written notice by facsimile
transmission or United States mail to the association of a secondary address. If
a secondary address is provided, the association shall send any and all
correspondence and legal notices required pursuant to this article to both the
primary and the secondary address.
§ 1365.2. Association records; availability to
member; redactions; use by member; remedies
(a) For the purposes of this section, the following definitions shall apply:
(1) “Association records” means all of the following:
(A) Any financial document required to be provided to a member in
Section 1365.
(B) Any financial document or statement required to be provided in
Section 1368.
(C) Interim financial statements, periodic or as compiled, containing any of the
following:
(i) Balance sheet.
(ii) Income and expense statement.
(iii) Budget comparison.
(iv) General ledger. A “general ledger” is a report that shows all transactions
that occurred in an association account over a specified period of time.
The records described in this subparagraph shall be prepared in accordance with
an accrual or modified accrual basis of accounting.
(D) Executed contracts not otherwise privileged under law.
(E) Written board approval of vendor or contractor proposals or invoices.
(F) State and federal tax returns.
(G) Reserve account balances and records of payments made from reserve accounts.
(H) Agendas and minutes of meetings of the members, the board of directors and
any committees appointed by the board of directors pursuant to
Section 7212 of the Corporations Code;
excluding, however, agendas, minutes, and other information from executive
sessions of the board of directors as described in
Section 1363.05.
(I)(i) Membership lists, including name, property address, and mailing address,
if the conditions set forth in clause (ii) are met and except as otherwise
provided in clause (iii).
(ii) The member requesting the list shall state the purpose for which the list
is requested which purpose shall be reasonably related to the requester's
interest as a member. If the association reasonably believes that the
information in the list will be used for another purpose, it may deny the member
access to the list. If the request is denied, in any subsequent action brought
by the member under subdivision (f), the association shall have the burden to
prove that the member would have allowed use of the information for purposes
unrelated to his or her interest as a member.
(iii) A member of the association may opt out of the sharing of his or her name,
property address, and mailing address by notifying the association in writing
that he or she prefers to be contacted via the alternative process described in
subdivision (c) of Section 8330 of the Corporations
Code. This opt-out shall remain in effect until changed by the member.
(J) Check registers.
(2) “Enhanced association records” means invoices, receipts and canceled checks
for payments made by the association, purchase orders approved by the
association, credit card statements for credit cards issued in the name of the
association, statements for services rendered, and reimbursement requests
submitted to the association, provided that the person submitting the
reimbursement request shall be solely responsible for removing all personal
identification information from the request.
(b)(1) The association shall make available association records and enhanced
association records for the time periods and within the timeframes provided in
subdivisions (i) and (j) for inspection and copying by a member of the
association, or the member's designated representative. The association may bill
the requesting member for the direct and actual cost of copying requested
documents. The association shall inform the member of the amount of the copying
costs before copying the requested documents.
(2) A member of the association may designate another person to inspect and copy
the specified association records on the member's behalf. The member shall make
this designation in writing.
(c)(1) The association shall make the specified association records available
for inspection and copying in the association's business office within the
common interest development.
(2) If the association does not have a business office within the development,
the association shall make the specified association records available for
inspection and copying at a place that the requesting member and the association
agree upon.
(3) If the association and the requesting member cannot agree upon a place for
inspection and copying pursuant to paragraph (2), or if the requesting member
submits a written request directly to the association for copies of specifically
identified records, the association may satisfy the requirement to make the
association records available for inspection and copying by mailing copies of
the specifically identified records to the member by first-class mail within the
timeframes set forth in subdivision (j).
(4) The association may bill the requesting member for the direct and actual
cost of copying and mailing requested documents. The association shall inform
the member of the amount of the copying and mailing costs, and the member shall
agree to pay those costs, before copying and sending the requested documents.
(5) In addition to the direct and actual costs of copying and mailing, the
association may bill the requesting member an amount not in excess of ten
dollars ($10) per hour, and not to exceed two hundred dollars ($200) total per
written request, for the time actually and reasonably involved in redacting the
enhanced association records as provided in paragraph (2) of subdivision (a).
The association shall inform the member of the estimated costs, and the member
shall agree to pay those costs, before retrieving the requested documents.
(d)(1) Except as provided in paragraph (2), the association may withhold or
redact information from the association records for any of the following
reasons:
(A) The release of the information is reasonably likely to lead to identity
theft. For the purposes of this section, “identity theft” means the unauthorized
use of another person's personal identifying information to obtain credit,
goods, services, money, or property. Examples of information that may be
withheld or redacted pursuant to this paragraph include bank account numbers of
members or vendors, social security or tax identification numbers, and check,
stock, and credit card numbers.
(B) The release of the information is reasonably likely to lead to fraud in
connection with the association.
(C) The information is privileged under law. Examples include documents subject
to attorney-client privilege or relating to litigation in which the association
is or may become involved, and confidential settlement agreements.
(D) The release of the information is reasonably likely to compromise the
privacy of an individual member of the association.
(E) The information contains any of the following:
(i) Records of a-la-carte goods or services provided to individual members of
the association for which the association received monetary consideration other
than assessments.
(ii) Records of disciplinary actions, collection activities, or payment plans of
members other than the member requesting the records.
(iii) Any person's personal identification information, including, without
limitation, social security number, tax identification number, driver's license
number, credit card account numbers, bank account number, and bank routing
number.
(iv) Agendas, minutes, and other information from executive sessions of the
board of directors as described in Section 1363.05,
except for executed contracts not otherwise privileged. Privileged contracts
shall not include contracts for maintenance, management, or legal services.
(v) Personnel records other than the payroll records required to be provided
under paragraph (2).
(vi) Interior architectural plans, including security features, for individual
homes.
(2) Except as provided by the attorney-client privilege, the association may not
withhold or redact information concerning the compensation paid to employees,
vendors, or contractors. Compensation information for individual employees shall
be set forth by job classification or title, not by the employee's name, social
security number, or other personal information.
(3) No association, officer, director, employee, agent or volunteer of an
association shall be liable for damages to a member of the association or any
third party as the result of identity theft or other breach of privacy because
of the failure to withhold or redact that member's information under this
subdivision unless the failure to withhold or redact the information was
intentional, willful, or negligent.
(4) If requested by the requesting member, an association that denies or redacts
records shall provide a written explanation specifying the legal basis for
withholding or redacting the requested records.
(e)(1) The association records, and any information from them, may not be sold,
used for a commercial purpose, or used for any other purpose not reasonably
related to a member's interest as a member. An association may bring an action
against any person who violates this section for injunctive relief and for
actual damages to the association caused by the violation.
(2) This section may not be construed to limit the right of an association to
damages for misuse of information obtained from the association records pursuant
to this section or to limit the right of an association to injunctive relief to
stop the misuse of this information.
(3) An association shall be entitled to recover reasonable costs and expenses,
including reasonable attorney's fees, in a successful action to enforce its
rights under this section.
(f) A member of an association may bring an action to enforce the member's right
to inspect and copy the association records. If a court finds that the
association unreasonably withheld access to the association records, the court
shall award the member reasonable costs and expenses, including reasonable
attorney's fees, and may assess a civil penalty of up to five hundred dollars
($500) for the denial of each separate written request. A cause of action under
this section may be brought in small claims court if the amount of the demand
does not exceed the jurisdiction of that court. A prevailing association may
recover any costs if the court finds the action to be frivolous, unreasonable,
or without foundation.
(g) The provisions of this section apply to any community service organization
or similar entity, as defined in paragraph (3) of
subdivision (c) of Section 1368, that is related to the association, and
this section shall operate to give a member of the community service
organization or similar entity a right to inspect and copy the records of that
organization or entity equivalent to that granted to association members by this
section.
(h) Requesting parties shall have the option of receiving specifically
identified records by electronic transmission or machine-readable storage media
as long as those records can be transmitted in a redacted format that does not
allow the records to be altered. The cost of duplication shall be limited to the
direct cost of producing the copy of a record in that electronic format. The
association may deliver specifically identified records by electronic
transmission or machine-readable storage media as long as those records can be
transmitted in a redacted format that prevents the records from being altered.
(i) The time periods for which specified records shall be provided is as
follows:
(1) Association records shall be made available for the current fiscal year and
for each of the previous two fiscal years.
(2) Minutes of member and board meetings shall be permanently made available. If
a committee has decisionmaking authority, minutes of the meetings of that
committee shall be made available commencing January 1, 2007, and shall
thereafter be permanently made available.
(j) The timeframes in which access to specified records shall be provided to a
requesting member are as follows:
(1) Association records prepared during the current fiscal year, within 10
business days following the association's receipt of the request.
(2) Association records prepared during the previous two fiscal years, within 30
calendar days following the association's receipt of the request.
(3) Any record or statement available pursuant to
Section 1365 or 1368, within the
timeframe specified therein.
(4) Minutes of member and board meetings, within the timeframe specified in
subdivision (d) of Section 1363.05.
(5) Minutes of meetings of committees with decisionmaking authority for meetings
commencing on or after January 1, 2007, within 15 calendar days following
approval.
(6) Membership list, within the timeframe specified in
Section 8330 of the Corporations Code.
(k) There shall be no liability pursuant to this section for an
association that fails to retain records for the periods specified in
subdivision (i) that were created prior to January 1, 2006.
(l) As applied to an association and its members, the provisions of this section
are intended to supersede the provisions of Sections
8330 and 8333 of the Corporations Code
to the extent those sections are inconsistent.
(m) The provisions of this section shall not apply to any common interest
development in which separate interests are being offered for sale by a
subdivider under the authority of a public report issued by the Department of
Real Estate so long as the subdivider or all subdividers offering those separate
interests for sale, or any employees of those subdividers or any other person
who receives direct or indirect compensation from any of those subdividers,
comprise a majority of the members of the board of directors of the association.
Notwithstanding the foregoing, this section shall apply to that common interest
development no later than 10 years after the close of escrow for the first sale
of a separate interest to a member of the general public pursuant to the public
report issued for the first phase of the development.
(n) This section shall become operative on July 1, 2006.
§ 1365.2.5. Assessment and Reserve Funding Disclosure Summary Form; contents
(a) The disclosures required by this
article with regard to an association or a property shall be
summarized on the following form:
Assessment and Reserve Funding
Disclosure Summary
(1) The current regular assessment
per ownership interest is $_________ per _______.
Note: If assessments vary by the
size or type of ownership interest, the assessment applicable to
this ownership interest may be found
on page ____ of the attached summary.
(2) Additional regular or special
assessments that have already been scheduled to be
imposed or charged, regardless of
the purpose, if they have been approved by the board and/or
members:
|
Date assessment will be due: |
|
Amount per ownership
interest per month or year (If assessments are variable, see note
immediately below):
|
|
Purpose of the assessment:
|
|
______________ |
|
________________ |
|
____________ |
|
______________ |
|
________________ |
|
____________ |
|
______________ |
|
________________ |
|
____________ |
|
______________ |
|
________________ |
|
____________ |
|
|
|
Total:____________ |
|
|
|
Note: If assessments vary by the
size or type of ownership interest, the assessment applicable to
this ownership interest may be found
on page ____ of the attached summary.
(3) Based upon the most recent
reserve study and other information available to the board
of directors, will currently
projected reserve account balances be sufficient at the end of each
year to meet the association’s
obligations for repair and/or replacement of major components
during the next 30 years: Yes ____
No ____
(4) If the answer to (3) is no, what
additional assessments or other contributions to
reserves would be necessary to
ensure that sufficient reserve funds will be available each year
during the next 30 years that have
not yet been approved by the board or the members:
|
Approximate date assessment will
be due: |
|
Amount per ownership interest
per month or year:
|
|
________________________ |
|
________________________ |
|
________________________ |
|
________________________ |
|
________________________ |
|
________________________ |
|
|
|
Total: ________________________ |
(5) All major components are
included in the reserve study and are included in its
calculations.
(6) Based on the method of
calculation in paragraph (4) of subdivision (b) of Section
1365.2.5, the estimated amount
required in the reserve fund at the end of the current fiscal year
is $_______, based in whole or in
part on the last reserve study or update prepared by ________
as of ______(month), ______(year).
The projected reserve fund cash balance at the end of the
current fiscal year is $______,
resulting in reserves being _____ percent funded at this date. If
an alternate, but generally
accepted, method of calculation is also used, the required reserve
amount is $______. (See attached
explanation.)
(7) Based on the method of
calculation in paragraph (4) of subdivision (b) of Section
1365.2.5 of the Civil Code, the
estimated amount required in the reserve fund at the end of each
year of the next five budget years
is $_____, and the projected reserve fund cash balance in each
of those years, taking into account
only assessments already approved and other known
revenues, is $__________, leaving
the reserve at _____ percent funding. If the reserve funding
plan approved by the association is
implemented, the projected reserve fund cash balance in each
of those years will be $________,
leaving the reserve at _______ percent funding. Note: The
financial representations set forth
in this summary are based on the best estimates of the preparer
at that time. The estimates are
subject to change.
(b) For the purposes of preparing a
summary pursuant to this section:
(1) "Estimated remaining useful
life" means the time reasonably calculated to remain
before a major component will
require replacement.
(2) "Major component" has the
meaning used in Section 1365.5. Components with an
estimated remaining useful life of
more than 30 years may be included in a study as a capital
asset or disregarded from the
reserve calculation, so long as the decision is revealed in the
reserve study report and reported in
the Assessment and Reserve Funding Disclosure Summary.
(3) The form set out in subdivision
(a) shall accompany each pro forma operating budget
or summary thereof that is delivered
pursuant to this article. The form may be supplemented or
modified to clarify the information
delivered, so long as the minimum information set out in
subdivision (a) is provided.
(4) For the purpose of the report
and summary, the amount of reserves needed to be
accumulated for a component at a
given time shall be computed as the current cost of
replacement or repair multiplied by
the number of years the component has been in service
divided by the useful life of the
component. This shall not be construed to require the board to
fund reserves in accordance with this calculation.
§ 1365.3. Community service organization
reports; information on components to complete disclosures or reserve reports;
reliance upon and access to information
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.
§ 1365.5. Board of directors; duties
(a) Unless the governing documents impose more stringent standards, the board of
directors of the association shall do all of the following:
(1) Review a current reconciliation of the association's operating accounts on
at least a quarterly basis.
(2) Review a current reconciliation of the association's reserve accounts on at
least a quarterly basis.
(3) Review, on at least a quarterly basis, the current year's actual reserve
revenues and expenses compared to the current year's budget.
(4) Review the latest account statements prepared by the financial institutions
where the association has its operating and reserve accounts.
(5) Review an income and expense statement for the association's operating and
reserve accounts on at least a quarterly basis.
(b) The signatures of at least two persons, who shall be members of the
association's board of directors, or one officer who is not a member of the
board of directors and a member of the board of directors, shall be required for
the withdrawal of moneys from the association's reserve accounts.
(c)(1) The board of directors shall not expend funds designated as reserve funds
for any purpose other than the repair, restoration, replacement, or maintenance
of, or litigation involving the repair, restoration, replacement, or maintenance
of, major components that the association is obligated to repair, restore,
replace, or maintain and for which the reserve fund was established.
(2) However, the board may authorize the temporary transfer of moneys from a
reserve fund to the association's general operating fund to meet short-term
cashflow requirements or other expenses, if the board has provided notice of the
intent to consider the transfer in a notice of meeting, which shall be provided
as specified in Section 1363.05. The notice
shall include the reasons the transfer is needed, some of the options for
repayment, and whether a special assessment may be considered. If the board
authorizes the transfer, the board shall issue a written finding, recorded in
the board's minutes, explaining the reasons that the transfer is needed, and
describing when and how the moneys will be repaid to the reserve fund. The
transferred funds shall be restored to the reserve fund within one year of the
date of the initial transfer, except that the board may, after giving the same
notice required for considering a transfer, and, upon making a finding supported
by documentation that a temporary delay would be in the best interests of the
common interest development, temporarily delay the restoration. The board shall
exercise prudent fiscal management in maintaining the integrity of the reserve
account, and shall, if necessary, levy a special assessment to recover the full
amount of the expended funds within the time limits required by this section.
This special assessment is subject to the limitation imposed by
Section 1366. The board may, at its discretion,
extend the date the payment on the special assessment is due. Any extension
shall not prevent the board from pursuing any legal remedy to enforce the
collection of an unpaid special assessment.
(d) When the decision is made to use reserve funds or to temporarily transfer
moneys from the reserve fund to pay for litigation, the association shall notify
the members of the association of that decision in the next available mailing to
all members pursuant to Section 5016 of the
Corporations Code, and of the availability of an accounting of those
expenses. Unless the governing documents impose more stringent standards, the
association shall make an accounting of expenses related to the litigation on at
least a quarterly basis. The accounting shall be made available for inspection
by members of the association at the association's office.
(e) At least once every three years, the board of directors shall cause to be
conducted a reasonably competent and diligent visual inspection of the
accessible areas of the major components that the association is obligated to
repair, replace, restore, or maintain as part of a study of the reserve account
requirements of the common interest development, if the current replacement
value of the major components is equal to or greater than one-half of the gross
budget of the association, excluding the association's reserve account for that
period. The board shall review this study, or cause it to be reviewed, annually
and shall consider and implement necessary adjustments to the board's analysis
of the reserve account requirements as a result of that review.
The study required by this subdivision shall at a minimum include:
(1) Identification of the major components that the association is obligated to
repair, replace, restore, or maintain that, as of the date of the study, have a
remaining useful life of less than 30 years.
(2) Identification of the probable remaining useful life of the components
identified in paragraph (1) as of the date of the study.
(3) An estimate of the cost of repair, replacement, restoration, or maintenance
of the components identified in paragraph (1).
(4) An estimate of the total annual contribution necessary to defray the cost to
repair, replace, restore, or maintain the components identified in paragraph (1)
during and at the end of their useful life, after subtracting total reserve
funds as of the date of the study.
(5) A reserve funding plan that indicates how the association plans to fund the
contribution identified in paragraph (4) to meet the association's obligation
for the repair and replacement of all major components with an expected
remaining life of 30 years or less, not including those components that the
board has determined will not be replaced or repaired. The plan shall include a
schedule of the date and amount of any change in regular or special assessments
that would be needed to sufficiently fund the reserve funding plan. The plan
shall be adopted by the board of directors at an open meeting before the
membership of the association as described in Section
1363.05. If the board of directors determines that an assessment increase
is necessary to fund the reserve funding plan, any increase shall be approved in
a separate action of the board that is consistent with the procedure described
in Section 1366.
(f) As used in this section, “reserve accounts” means both of the following:
(1) Moneys that the association's board of directors 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.
(2) The funds received, and not yet expended or disposed of, from either a
compensatory damage award or settlement to an association from any person or
entity for injuries to property, real or personal, arising from any construction
or design defects. These funds shall be separately itemized from funds described
in paragraph (1).
(g) As used in this section, “reserve account requirements” means the estimated
funds that the association's board of directors has determined are required to
be available at a specified point in time to repair, replace, or restore those
major components that the association is obligated to maintain.
(h) This section does not apply to an association that does not have a “common
area” as defined in Section 1351.
§ 1365.6. Applicability of Corporations 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.
§ 1365.7. Tortious act or omission of volunteer
officer or director of association managing residential development; liability;
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.
§ 1365.9. Tort actions against owner of separate
interest; tenant in common in common area; association liability; 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.
§ 1366. Levy of assessments; limitation on
increases; exemption; 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.
§ 1366.1. Imposition or collection of
assessments or fees; limit on amount
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.
§ 1366.2. Statements for collection of regular and special assessments,
transfer fees, and other charges
(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.
§ 1367. Assessments; debt of owner; lien; notice; enforcement of lien;
application of section
(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.
§ 1367.1. Delinquent assessments and other
costs; debt of owner; lien; notice; enforcement of lien; priority; application
of section after Jan. 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 [FN1]
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.
§ 1367.4. Debts for assessments that arise on and after
Jan. 1, 2006; collection of delinquent assessments; application of limitation
on foreclosure of assessment liens
(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, [FN1] or to assessments owed
by developers.
§ 1367.5. Reversal of late charges, fees,
interest, attorney's fees, costs of collection, costs imposed for notice, and
costs of recordation and release of lien; dispute resolution or alternative
dispute resolution
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.
§ 1367.6. Existing dispute between owner of
separate interest and the association; authority to bring small claims actions;
delinquent assessments
(a) If a dispute exists between the owner of a separate interest and the
association regarding any disputed charge or sum levied by the association,
including, but not limited to, an assessment, fine, penalty, late fee,
collection cost, or monetary penalty imposed as a disciplinary measure, and the
amount in dispute does not exceed the jurisdictional limits stated in Sections
116.220 and 116.221 of the Code of Civil Procedure, the owner of the separate
interest may, in addition to pursuing dispute resolution pursuant to Article 5
(commencing with Section 1363.810) of Chapter 4, pay under protest the disputed
amount and all other amounts levied, including any fees and reasonable costs of
collection, reasonable attorney's fees, late charges, and interest, if any,
pursuant to subdivision (e) of Section 1366, and commence an action in small
claims court pursuant to Chapter 5.5 (commencing with Section 116.110) of Title
1 of the Code of Civil Procedure.
(b) Nothing in this section shall impede an association's ability to collect
delinquent assessments as provided in Sections 1367.1 and 1367.4.
§ 1368. Sale or title transfer; provision of
specified items to prospective purchasers; copies; fees; violations; penalty and
attorney fees; validity of title transferred in violation; additional
requirements
(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.
(b) Upon written request, an association shall, within 10 days of the mailing or
delivery of the request, provide the owner of a separate interest with a copy of
the requested items specified in paragraphs (1) to (8), inclusive, of
subdivision (a). The items required to be made available pursuant to this
section may be maintained in electronic form and requesting parties shall have
the option of receiving them by electronic transmission or machine readable
storage media if the association maintains these items in electronic form. The
association may charge a reasonable fee for this service based upon the
association's actual cost to procure, prepare, and reproduce the requested
items.
(c)(1) Subject to the provisions of 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 amendments made to this subdivision by the act adding this paragraph do
not apply to a community service organization or similar entity 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 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 community service organization or
similar 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.
§ 1368.1. Prohibition against association rule or regulation that
arbitrarily or unreasonably restricts owner's ability to market his or her
interest in a common development; other enumerated restrictions
(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.
§ 1368.3. Associations established to manage common interest development;
standing
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.
§ 1368.4. Reduction of damages awarded; comparative fault of association
(a) In an action maintained by an association pursuant to subdivision (b), (c),
or (d) of Section 1368.3, the amount of damages recovered by the association
shall be reduced by the amount of damages allocated to the association or its
managing agents in direct proportion to their percentage of fault based upon
principles of comparative fault. The comparative fault of the association or its
managing agents may be raised by way of defense, but shall not be the basis for
a cross-action or separate action against the association or its managing agents
for contribution or implied indemnity, where the only damage was sustained by
the association or its members. It is the intent of the Legislature in enacting
this subdivision to require that comparative fault be pleaded as an affirmative
defense, rather than a separate cause of action, where the only damage was
sustained by the association or its members.
(b) In an action involving damages described in subdivision (b), (c), or (d) of
Section 1368.3, the defendant or cross-defendant may allege and prove the
comparative fault of the association or its managing agents as a setoff to the
liability of the defendant or cross-defendant even if the association is not a
party to the litigation or is no longer a party whether by reason of settlement,
dismissal, or otherwise.
(c) Subdivisions (a) and (b) apply to actions commenced on or after January 1,
1993.
(d) Nothing in this section affects a person's liability under Section 1431, or
the liability of the association or its managing agent for an act or omission
which causes damages to another.
§ 1368.5. Written notice to members prior to filing civil action; contents
(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.
§ 1369. Liens for labor and materials
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.
§ 1369.510. Definitions
As used in this article:
(a) “Alternative dispute resolution” means mediation, arbitration, conciliation,
or other nonjudicial procedure that involves a neutral party in the
decisionmaking 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.
§ 1369.520. Filing enforcement actions; application of section
(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.
§ 1369.530. Initiation of process; serving a Request for Resolution;
personal delivery; acceptance or rejection of request
(a) Any party to a dispute may initiate the process required by Section 1369.520
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 owner of a separate
interest, 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.
§ 1369.540. Timeline for completion of
alternative dispute resolution
(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.
§ 1369.550. Tolling of statute of limitations
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.
§ 1369.560. Certificates filed with initial pleading; grounds for demurrer
or motion to strike
(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.
§ 1369.570. Referral of actions to alternative
dispute resolution; stay of referral 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.
§ 1369.580. Award of fees and costs
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.
§ 1369.590. Annual summary of provisions of
article; contents of summary
(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.
§ 1370. Liberal construction of instruments
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.
§ 1371. Boundaries of units; presumption
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.
§ 1372. Construction of zoning ordinances
Unless a contrary intent is clearly expressed, local zoning ordinances shall be
construed to treat like structures, lots, parcels, areas, or spaces in like
manner regardless of whether the common interest development is a community
apartment project, condominium project, planned development, or stock
cooperative.
§ 1373. Developments expressly zoned as industrial or commercial and
limited to such purposes; exclusions
(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) Subdivision (b) of Section 1363.
(4) Section 1365.
(5) Section 1365.5.
(6) Subdivision (b) of Section 1366.
(7) Section 1366.1.
(8) Section 1368.
(9) 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.
§ 1374. Developments with no common area; application of title
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.
§ 1375. Actions for damages against common
interest development builders, developers, or general contractors
(a) Before an association files a complaint for damages against a builder,
developer, or general contractor (“respondent”) of a common interest development
based upon a claim for defects in the design or construction of the common
interest development, all of the requirements of this section shall be satisfied
with respect to the builder, developer, or general contractor.
(b) The association shall serve upon the respondent a “Notice of Commencement of
Legal Proceedings.” The notice shall be served by certified mail to the
registered agent of the respondent, or if there is no registered agent, then to
any officer of the respondent. If there are no current officers of the
respondent, service shall be upon the person or entity otherwise authorized by
law to receive service of process. Service upon the general contractor shall be
sufficient to initiate the process set forth in this section with regard to any
builder or developer, if the builder or developer is not amenable to service of
process by the foregoing methods. This notice shall toll all applicable statutes
of limitation and repose, whether contractual or statutory, by and against all
potentially responsible parties, regardless of whether they were named in the
notice, including claims for indemnity applicable to the claim for the period
set forth in subdivision (c). The notice shall include all of the following:
(1) The name and location of the project.
(2) An initial list of defects sufficient to apprise the respondent of the
general nature of the defects at issue.
(3) A description of the results of the defects, if known.
(4) A summary of the results of a survey or questionnaire distributed to
homeowners to determine the nature and extent of defects, if a survey has been
conducted or a questionnaire has been distributed.
(5) Either a summary of the results of testing conducted to determine the nature
and extent of defects or the actual test results, if that testing has been
conducted.
(c) Service of the notice shall commence a period, not to exceed 180 days,
during which the association, the respondent, and all other participating
parties shall try to resolve the dispute through the processes set forth in this
section. This 180-day period may be extended for one additional period, not to
exceed 180 days, only upon the mutual agreement of the association, the
respondent, and any parties not deemed peripheral pursuant to paragraph (3) of
subdivision (e). Any extensions beyond the first extension shall require the
agreement of all participating parties. Unless extended, the dispute resolution
process prescribed by this section shall be deemed completed. All extensions
shall continue the tolling period described in subdivision (b).
(d) Within 25 days of the date the association serves the Notice of Commencement
of Legal Proceedings, the respondent may request in writing to meet and confer
with the board of directors of the association. Unless the respondent and the
association otherwise agree, there shall be not more than one meeting, which
shall take place no later than 10 days from the date of the respondent's written
request, at a mutually agreeable time and place. The meeting shall be subject to
subdivision (b) of Section 1363.05. The discussions at the meeting are
privileged communications and are not admissible in evidence in any civil
action, unless the association and the respondent consent in writing to their
admission.
(e) Upon receipt of the notice, the respondent shall, within 60 days, comply
with the following:
(1) The respondent shall provide the association with access to, for inspection
and copying of, all plans and specifications, subcontracts, and other
construction files for the project that are reasonably calculated to lead to the
discovery of admissible evidence regarding the defects claimed. The association
shall provide the respondent with access to, for inspection and copying of, all
files reasonably calculated to lead to the discovery of admissible evidence
regarding the defects claimed, including all reserve studies, maintenance
records and any survey questionnaires, or results of testing to determine the
nature and extent of defects. To the extent any of the above documents are
withheld based on privilege, a privilege log shall be prepared and submitted to
all other parties. All other potentially responsible parties shall have the same
rights as the respondent regarding the production of documents upon receipt of
written notice of the claim, and shall produce all relevant documents within 60
days of receipt of the notice of the claim.
(2) The respondent shall provide written notice by certified mail to all
subcontractors, design professionals, their insurers, and the insurers of any
additional insured whose identities are known to the respondent or readily
ascertainable by review of the project files or other similar sources and whose
potential responsibility appears on the face of the notice. This notice to
subcontractors, design professionals, and insurers shall include a copy of the
Notice of Commencement of Legal Proceedings, and shall specify the date and
manner by which the parties shall meet and confer to select a dispute resolution
facilitator pursuant to paragraph (1) of subdivision (f), advise the recipient
of its obligation to participate in the meet and confer or serve a written
acknowledgment of receipt regarding this notice, advise the recipient that it
will waive any challenge to selection of the dispute resolution facilitator if
it elects not to participate in the meet and confer, advise the recipient that
it may be bound by any settlement reached pursuant to subdivision (d) of Section
1375.05, advise the recipient that it may be deemed to have waived rights to
conduct inspection and testing pursuant to subdivision (c) of Section 1375.05,
advise the recipient that it may seek the assistance of an attorney, and advise
the recipient that it should contact its insurer, if any. Any subcontractor or
design professional, or insurer for that subcontractor, design professional, or
additional insured, who receives written notice from the respondent regarding
the meet and confer shall, prior to the meet and confer, serve on the respondent
a written acknowledgment of receipt. That subcontractor or design professional
shall, within 10 days of service of the written acknowledgment of receipt,
provide to the association and the respondent a Statement of Insurance that
includes both of the following:
(A) The names, addresses, and contact persons, if known, of all insurance
carriers, whether primary or excess and regardless of whether a deductible or
self-insured retention applies, whose policies were in effect from the
commencement of construction of the subject project to the present and which
potentially cover the subject claims.
(B) The applicable policy numbers for each policy of insurance provided.
(3) Any subcontractor or design professional, or insurer for that subcontractor,
design professional, or additional insured, who so chooses, may, at any time,
make a written request to the dispute resolution facilitator for designation as
a peripheral party. That request shall be served contemporaneously on the
association and the respondent. If no objection to that designation is received
within 15 days, or upon rejection of that objection, the dispute resolution
facilitator shall designate that subcontractor or design professional as a
peripheral party, and shall thereafter seek to limit the attendance of that
subcontractor or design professional only to those dispute resolution sessions
deemed peripheral party sessions or to those sessions during which the dispute
resolution facilitator believes settlement as to peripheral parties may be
finalized. Nothing in this subdivision shall preclude a party who has been
designated a peripheral party from being reclassified as a nonperipheral party,
nor shall this subdivision preclude a party designated as a nonperipheral party
from being reclassified as a peripheral party after notice to all parties and an
opportunity to object. For purposes of this subdivision, a peripheral party is a
party having total claimed exposure of less than twenty-five thousand dollars
($25,000).
(f)(1) Within 20 days of sending the notice set forth in paragraph (2) of
subdivision (e), the association, respondent, subcontractors, design
professionals, and their insurers who have been sent a notice as described in
paragraph (2) of subdivision (e) shall meet and confer in an effort to select a
dispute resolution facilitator to preside over the mandatory dispute resolution
process prescribed by this section. Any subcontractor or design professional who
has been given timely notice of this meeting but who does not participate,
waives any challenge he or she may have as to the selection of the dispute
resolution facilitator. The role of the dispute resolution facilitator is to
attempt to resolve the conflict in a fair manner. The dispute resolution
facilitator shall be sufficiently knowledgeable in the subject matter and be
able to devote sufficient time to the case. The dispute resolution facilitator
shall not be required to reside in or have an office in the county in which the
project is located. The dispute resolution facilitator and the participating
parties shall agree to a date, time, and location to hold a case management
meeting of all parties and the dispute resolution facilitator, to discuss the
claims being asserted and the scheduling of events under this section. The case
management meeting with the dispute resolution facilitator shall be held within
100 days of service of the Notice of Commencement of Legal Proceedings at a
location in the county where the project is located. Written notice of the case
management meeting with the dispute resolution facilitator shall be sent by the
respondent to the association, subcontractors and design professionals, and
their insurers who are known to the respondent to be on notice of the claim, no
later than 10 days prior to the case management meeting, and shall specify its
date, time, and location. The dispute resolution facilitator in consultation
with the respondent shall maintain a contact list of the participating parties.
(2) No later than 10 days prior to the case management meeting, the dispute
resolution facilitator shall disclose to the parties all matters that could
cause a person aware of the facts to reasonably entertain a doubt that the
proposed dispute resolution facilitator would be able to resolve the conflict in
a fair manner. The facilitator's disclosure shall include the existence of any
ground specified in Section 170.1 of the Code of Civil Procedure for
disqualification of a judge, any attorney-client relationship the facilitator
has or had with any party or lawyer for a party to the dispute resolution
process, and any professional or significant personal relationship the
facilitator or his or her spouse or minor child living in the household has or
had with any party to the dispute resolution process. The disclosure shall also
be provided to any subsequently noticed subcontractor or design professional
within 10 days of the notice.
(3) A dispute resolution facilitator shall be disqualified by the court if he or
she fails to comply with this paragraph and any party to the dispute resolution
process serves a notice of disqualification prior to the case management
meeting. If the dispute resolution facilitator complies with this paragraph, he
or she shall be disqualified by the court on the basis of the disclosure if any
party to the dispute resolution process serves a notice of disqualification
prior to the case management meeting.
(4) If the parties cannot mutually agree to a dispute resolution facilitator,
then each party shall submit a list of three dispute resolution facilitators.
Each party may then strike one nominee from the other parties' list, and
petition the court, pursuant to the procedure described in subdivisions (n) and
(o), for final selection of the dispute resolution facilitator. The court may
issue an order for final selection of the dispute resolution facilitator
pursuant to this paragraph.
(5) Any subcontractor or design professional who receives notice of the
association's claim without having previously received timely notice of the meet
and confer to select the dispute resolution facilitator shall be notified by the
respondent regarding the name, address, and telephone number of the dispute
resolution facilitator. Any such subcontractor or design professional may serve
upon the parties and the dispute resolution facilitator a written objection to
the dispute resolution facilitator within 15 days of receiving notice of the
claim. Within seven days after service of this objection, the subcontractor or
design professional may petition the superior court to replace the dispute
resolution facilitator. The court may replace the dispute resolution facilitator
only upon a showing of good cause, liberally construed. Failure to satisfy the
deadlines set forth in this subdivision shall constitute a waiver of the right
to challenge the dispute resolution facilitator.
(6) The costs of the dispute resolution facilitator shall be apportioned in the
following manner: one-third to be paid by the association; one-third to be paid
by the respondent; and one-third to be paid by the subcontractors and design
professionals, as allocated among them by the dispute resolution facilitator.
The costs of the dispute resolution facilitator shall be recoverable by the
prevailing party in any subsequent litigation pursuant to Section 1032 of the
Code of Civil Procedure, provided however that any nonsettling party may, prior
to the filing of the complaint, petition the facilitator to reallocate the costs
of the dispute resolution facilitator as they apply to any nonsettling party.
The determination of the dispute resolution facilitator with respect to the
allocation of these costs shall be binding in any subsequent litigation. The
dispute resolution facilitator shall take into account all relevant factors and
equities between all parties in the dispute resolution process when reallocating
costs.
(7) In the event the dispute resolution facilitator is replaced at any time, the
case management statement created pursuant to subdivision (h) shall remain in
full force and effect.
(8) The dispute resolution facilitator shall be empowered to enforce all
provisions of this section.
(g)(1) No later than the case management meeting, the parties shall begin to
generate a data compilation showing the following information regarding the
alleged defects at issue:
(A) The scope of the work performed by each potentially responsible
subcontractor.
(B) The tract or phase number in which each subcontractor provided goods or
services, or both.
(C) The units, either by address, unit number, or lot number, at which each
subcontractor provided goods or services, or both.
(2) This data compilation shall be updated as needed to reflect additional
information. Each party attending the case management meeting, and any
subsequent meeting pursuant to this section, shall provide all information
available to that party relevant to this data compilation.
(h) At the case management meeting, the parties shall, with the assistance of
the dispute resolution facilitator, reach agreement on a case management
statement, which shall set forth all of the elements set forth in paragraphs (1)
to (8), inclusive, except that the parties may dispense with one or more of
these elements if they agree that it is appropriate to do so. The case
management statement shall provide that the following elements shall take place
in the following order:
(1) Establishment of a document depository, located in the county where the
project is located, for deposit of documents, defect lists, demands, and other
information provided for under this section. All documents exchanged by the
parties and all documents created pursuant to this subdivision shall be
deposited in the document depository, which shall be available to all parties
throughout the prefiling dispute resolution process and in any subsequent
litigation. When any document is deposited in the document depository, the party
depositing the document shall provide written notice identifying the document to
all other parties. The costs of maintaining the document depository shall be
apportioned among the parties in the same manner as the costs of the dispute
resolution facilitator.
(2) Provision of a more detailed list of defects by the association to the
respondent after the association completes a visual inspection of the project.
This list of defects shall provide sufficient detail for the respondent to
ensure that all potentially responsible subcontractors and design professionals
are provided with notice of the dispute resolution process. If not already
completed prior to the case management meeting, the Notice of Commencement of
Legal Proceedings shall be served by the respondent on all additional
subcontractors and design professionals whose potential responsibility appears
on the face of the more detailed list of defects within seven days of receipt of
the more detailed list. The respondent shall serve a copy of the case management
statement, including the name, address, and telephone number of the dispute
resolution facilitator, to all the potentially responsible subcontractors and
design professionals at the same time.
(3) Nonintrusive visual inspection of the project by the respondent,
subcontractors, and design professionals.
(4) Invasive testing conducted by the association, if the association deems
appropriate. All parties may observe and photograph any testing conducted by the
association pursuant to this paragraph, but may not take samples or direct
testing unless, by mutual agreement, costs of testing are shared by the parties.
(5) Provision by the association of a comprehensive demand which provides
sufficient detail for the parties to engage in meaningful dispute resolution as
contemplated under this section.
(6) Invasive testing conducted by the respondent, subcontractors, and design
professionals, if they deem appropriate.
(7) Allowance for modification of the demand by the association if new issues
arise during the testing conducted by the respondent, subcontractor, or design
professionals.
(8) Facilitated dispute resolution of the claim, with all parties, including
peripheral parties, as appropriate, and insurers, if any, present and having
settlement authority. The dispute resolution facilitators shall endeavor to set
specific times for the attendance of specific parties at dispute resolution
sessions. If the dispute resolution facilitator does not set specific times for
the attendance of parties at dispute resolution sessions, the dispute resolution
facilitator shall permit those parties to participate in dispute resolution
sessions by telephone.
(i) In addition to the foregoing elements of the case management statement
described in subdivision (h), upon mutual agreement of the parties, the dispute
resolution facilitator may include any or all of the following elements in a
case management statement: the exchange of consultant or expert photographs;
expert presentations; expert meetings; or any other mechanism deemed appropriate
by the parties in the interest of resolving the dispute.
(j) The dispute resolution facilitator, with the guidance of the parties, shall
at the time the case management statement is established, set deadlines for the
occurrence of each event set forth in the case management statement, taking into
account such factors as the size and complexity of the case, and the requirement
of this section that this dispute resolution process not exceed 180 days absent
agreement of the parties to an extension of time.
(k)(1)(A) At a time to be determined by the dispute resolution facilitator, the
respondent may submit to the association all of the following:
(i) A request to meet with the board to discuss a written settlement offer.
(ii) A written settlement offer, and a concise explanation of the reasons for
the terms of the offer.
(iii) A statement that the respondent has access to sufficient funds to satisfy
the conditions of the settlement offer.
(iv) A summary of the results of testing conducted for the purposes of
determining the nature and extent of defects, if this testing has been
conducted, unless the association provided the respondent with actual test
results.
(B) If the respondent does not timely submit the items required by this
subdivision, the association shall be relieved of any further obligation to
satisfy the requirements of this subdivision only.
(C) No less than 10 days after the respondent submits the items required by this
paragraph, the respondent and the board of directors of the association shall
meet and confer about the respondent's settlement offer.
(D) If the association's board of directors rejects a settlement offer presented
at the meeting held pursuant to this subdivision, the board shall hold a meeting
open to each member of the association. The meeting shall be held no less than
15 days before the association commences an action for damages against the
respondent.
(E) No less than 15 days before this meeting is held, a written notice shall be
sent to each member of the association specifying all of the following:
(i) That a meeting will take place to discuss problems that may lead to the
filing of a civil action, and the time and place of this meeting.
(ii) The options that are available to address the problems, including the
filing of a civil action and a statement of the various alternatives that are
reasonably foreseeable by the association to pay for those options and whether
these payments are expected to be made from the use of reserve account funds or
the imposition of regular or special assessments, or emergency assessment
increases.
(iii) The complete text of any written settlement offer, and a concise
explanation of the specific reasons for the terms of the offer submitted to the
board at the meeting held pursuant to subdivision (d) that was received from the
respondent.
(F) The respondent shall pay all expenses attributable to sending the settlement
offer to all members of the association. The respondent shall also pay the
expense of holding the meeting, not to exceed three dollars ($3) per association
member.
(G) The discussions at the meeting and the contents of the notice and the items
required to be specified in the notice pursuant to paragraph (E) are privileged
communications and are not admissible in evidence in any civil action, unless
the association consents to their admission.
(H) No more than one request to meet and discuss a written settlement offer may
be made by the respondent pursuant to this subdivision.
(l) Except for the purpose of in camera review as provided in subdivision (c) of
Section 1375.05, all defect lists and demands, communications, negotiations, and
settlement offers made in the course of the prelitigation dispute resolution
process provided by this section shall be inadmissible pursuant to Sections 1119
to 1124, inclusive, of the Evidence Code and all applicable decisional law. This
inadmissibility shall not be extended to any other documents or communications
which would not otherwise be deemed inadmissible.
(m) Any subcontractor or design professional may, at any time, petition the
dispute resolution facilitator to release that party from the dispute resolution
process upon a showing that the subcontractor or design professional is not
potentially responsible for the defect claims at issue. The petition shall be
served contemporaneously on all other parties, who shall have 15 days from the
date of service to object. If a subcontractor or design professional is
released, and it later appears to the dispute resolution facilitator that it may
be a responsible party in light of the current defect list or demand, the
respondent shall renotice the party as provided by paragraph (2) of subdivision
(e), provide a copy of the current defect list or demand, and direct the party
to attend a dispute resolution session at a stated time and location. A party
who subsequently appears after having been released by the dispute resolution
facilitator shall not be prejudiced by its absence from the dispute resolution
process as the result of having been previously released by the dispute
resolution facilitator.
(n) Any party may, at any time, petition the superior court in the county where
the project is located, upon a showing of good cause, and the court may issue an
order, for any of the following, or for appointment of a referee to resolve a
dispute regarding any of the following:
(1) To take a deposition of any party to the process, or subpoena a third party
for deposition or production of documents, which is necessary to further
prelitigation resolution of the dispute.
(2) To resolve any disputes concerning inspection, testing, production of
documents, or exchange of information provided for under this section.
(3) To resolve any disagreements relative to the timing or contents of the case
management statement.
(4) To authorize internal extensions of timeframes set forth in the case
management statement.
(5) To seek a determination that a settlement is a good faith settlement
pursuant to Section 877.6 of the Code of Civil Procedure and all related
authorities. The page limitations and meet and confer requirements specified in
this section shall not apply to these motions, which may be made on shortened
notice. Instead, these motions shall be subject to other applicable state law,
rules of court, and local rules. A determination made by the court pursuant to
this motion shall have the same force and effect as the determination of a
postfiling application or motion for good faith settlement.
(6) To ensure compliance, on shortened notice, with the obligation to provide a
Statement of Insurance pursuant to paragraph (2) of subdivision (e).
(7) For any other relief appropriate to the enforcement of the provisions of
this section, including the ordering of parties, and insurers, if any, to the
dispute resolution process with settlement authority.
(o)(1) A petition filed pursuant to subdivision (n) shall be filed in the
superior court in the county in which the project is located. The court shall
hear and decide the petition within 10 days after filing. The petitioning party
shall serve the petition on all parties, including the date, time, and location
of the hearing no later than five business days prior to the hearing. Any
responsive papers shall be filed and served no later than three business days
prior to the hearing. Any petition or response filed under this section shall be
no more than three pages in length.
(2) All parties shall meet with the dispute resolution facilitator, if one has
been appointed and confer in person or by the telephone prior to the filing of
that petition to attempt to resolve the matter without requiring court
intervention.
(p) As used in this section:
(1) “Association” shall have the same meaning as defined in subdivision (a) of
Section 1351.
(2) “Builder” means the declarant, as defined in subdivision (g) of Section
1351.
(3) “Common interest development” shall have the same meaning as in subdivision
(c) of Section 1351, except that it shall not include developments or projects
with less than 20 units.
(q) The alternative dispute resolution process and procedures described in this
section shall have no application or legal effect other than as described in
this section.
(r) This section shall become operative on July 1, 2002, however it shall not
apply to any pending suit or claim for which notice has previously been given.
(s) 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.
§ 1375.05. Complaint; trial priority;
additional inspection or testing; facilitated dispute resolution; procedural
deficiencies
(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.
§ 1375.1. Settlement agreements regarding alleged defects; notice of
resolution to members on record; disclosures
(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.
§ 1376. Restrictions on installation or use of video or television
antenna; enforceability based on size; reasonable restrictions; application
approval; attorneys's fees
(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.
§ 1378. Application of section; requirements to approve or disapprove
proposed changes; notice of requirements
(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.
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