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Welcome to the 2013 interactive Peters & Freedman, L.L.P. Legal Guide. We know you will find our Legal Guide a helpful resource throughout the coming year.
Click on any of the Chapter tabs on the left to go directly to a printer and search friendly PDF file for each Chapter. Click on the buttons below to view the Table of Contents or Index. You can also click on the appropriate buttons below to visit our website or to contact us directly by e-mail.
Click on the Legal Guide title on the front cover of the book to open the entire Legal Guide for full search and printing options.
Please feel free to contact our office with any questions or comments you may have about our Legal Guide or our firm’s services. We look forward to helping you resolve any of your legal needs.
PETERS & FREEDMAN, L.L.P.
San Diego Office ph (760) 436-3441 fax (760) 436-3442
Website: www.hoalaw.com Email: [email protected] Area Office ph (760) 773-4463 fax (760) 773-0919
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Legal Guide2013
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C E L E B R AT I NG
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Peters & Freedman, L.L.P. is committed to a preventive approach tolegal issues. Our experience allows us to identify the early warning signs of many issues, and to predict the impact they are likely to have. Our successful representation of hundreds of community associations is a result of this philosophy. We focus on prevention and establish regular contact with our clients, increasing our ability to evaluate the overall environment of each of the associations we represent.
The attorneys at Peters & Freedman, L.L.P. welcome the opportunity to meet with any association for a no charge, no obligation consultation. This gives us an opportunity to better explain our services. It also gives the Board of Directors an opportunity to ask questions to better evaluate our services. Given the opportunity, Peters & Freedman, L.L.P. will implement its philosophy of responsive, cost effective and proactive legal services to help you run your association smoothly and efficiently for the benefit of all the owners. If you have questions regarding any of our legal services, please contact us at (760) 436-3441 in the San Diego area, or at (760) 773-4463 in the Desert area.
Mission Locations
T.O.C. Index Website Contact Us
Partners
Peters
Legal Guide2013
&Freedman, L.L.P.
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Welcome
David M. PetersMr. Peters earned his undergraduate degree from Pepperdine University and received a Master degree in Business Administration from the University of California at Riverside. He then attended Hastings School of Law where he received his Juris Doctorate. Mr. Peters served on the California Department of Real Estate Subdivision Advisory Committee Litigation Task Force. Mr. Peters is a member of the Community Associations Institute where he has served as a Director and Committee Chairman.
James R. McCormick, Jr.Mr. McCormick attended the University of California, Los Angeles, where he received his undergraduate degree in Political Science. He then attended law school at the University of San Diego, where he was a teaching assistant for legal research, writing and oral advocacy and recognized as a Dean’s Outstanding Scholar. Mr. McCormick has been formally trained as a mediator and has mediated disputes for the former San Diego Mediation Center (now National Conflict Resolution Center).
Since starting in the industry in 1996, Mr. McCormick has served on various committees, has presented at numerous CAI and CACM events andhas taught countless Board member orientation classes. Mr. McCormick has published many industry-related articles and serves on the CACM Legislative Affairs Committee and is the current chairperson for the San Diego CAI Legislative Support Committee. Mr. McCormick has created training programs for managers and Board members in San Diego, Coachella Valley, Orange County, Los Angeles and the Inland Empire and currently sits as the board president of his very own homeowners association.
Mr. McCormick also tracks the latest technology advances that can be used by the common interest development industry and led his firm to implement and upgrade the firm’s online collections program which allows managers 24/7 access to status reports for their association’s collectionsaccounts.
Keenan A. Parker Mr. Parker obtained his law degree from Whittier College School of Law where he maintained positions on the Dean’s List and Honor Roll. Prior to joining Peters & Freedman, L.L.P., in 1994, Keenan practiced in general civil litigation, with an emphasis in real property. He now practices real property law, including construction defect litigation and general representation of common interest developments. Mr. Parker heads the Firm’s litigation department and has an outstanding record in trials and appeals, primarily representing common interest developments in both plaintiff and defense cases.
Stephan M. KirklandMr. Kirkland graduated from the University of Canterbury, Christchurch, New Zealand, with a bachelor’s degree in Philosophy. He attended the Thomas Jefferson School of Law, where he graduated cum laude, and was a member of Law Review. Mr. Kirkland received an American Jurisprudence award for contracts, a Witkin award for Academic Excellence in the fields of family law and criminal procedure and a CALI award for civil motion practice. Prior to becoming a member of the State Bar, Mr. Kirkland worked for Peters & Freedman, L.L.P. for eight years as a paralegal, first in the assessment collection department and then in the construction defect department.
Welcome Mission LocationsPartners T.O.C. Index Website Contact Us
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LocationsSAN DIEGO AREA191 Calle MagdalenaSuite 220Encinitas, CA 92024ph (760) 436-3441fax (760) 436-3442
DESERT AREA43100 Cook StreetSuite 202Palm Desert, CA 92211ph (760) 773-4463fax (760) 773-0919
Website: www.hoalaw.comEmail: [email protected]
Mission Locations
T.O.C. Index Website Contact Us
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Peters
Legal Guide2013
&Freedman, L.L.P.
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Welcome
LEGAL GUIDE2013 EDITION
is provided by:PETERS & FREEDMAN, L.L.P.
Attorneys at Law
Peters & Freedman, L.L.P.is proud to be a member of:
Web site: www.hoalaw.comE-mail: [email protected]
San Diego Area191 Calle Magdalena, #220
Encinitas, CA 92024(760) 436-3441
Desert Area43100 Cook Street, #202Palm Desert, CA 92211
(760) 773-4463
The Partners gratefullyacknowledge the contributions of thefollowing people, without whom the
Peters & Freedman, L.L.P.LEGAL GUIDE2013 Edition
would not be possible:
Tracy Fuller Linkowski, Esq.Laurie S. Poole, Esq.
Suzanne McKnight, Office Administrator
© Copyright 2013 by Peters & Freedman, L.L.P.All Rights Reserved
Peters & Freedman, L.L.P.Attorneys at Law
FOREWORD
In 1993, David Peters and Simon Freedman gave life to the LawFirm of Peters & Freedman, L.L.P., starting with four attorneys andsupport staff. Since then, the firm has expanded to four partners,eight attorneys and over 25 paralegals and support staff. Whathas remained constant over the last twenty years is the firm’svision and mission statement. This year’s Legal Guide 2013celebrates twenty years of the firm’s collaboration, cooperationand commitment to the practice of law and representation ofcommunity associations in Southern California. Legal Guide2013 is dedicated to all past, present and future Peters &Freedman, L.L.P. attorneys and support staff who have contributedtheir time, effort and loyalty to Peters & Freedman, L.L.P.’s visionof dedication and excellence. We also gratefully acknowledgeour clients for our continued success.
Peters & Freedman, L.L.P.Attorneys at Law
For twenty years, the attorneys and staff at Peters & Freedman,L.L.P. have established themselves as seasoned professionals inthe field of community association law. With thirteen attorneysand more than twenty paralegals, assessment collection andexpert administrative staff members, Peters & Freedman. L.L.P. iscommitted to providing effective, innovative and comprehensivelegal services to community associations throughout SouthernCalifornia.
Through our experience with community associations we havefound that two key elements of our representation are accessibilityand responsiveness. To enhance this part of our practice we haveimplemented strict internal scheduling controls, follow-upprocedures, and 24/7 online account access for all assessmentcollection matters. We also provide a cost effective, proactivelegal retainer program.
Peters & Freedman, L.L.P. is committed to a preventive approachto legal issues. Our experience allows us to identify the earlywarning signs of many issues, and to predict the impact they arelikely to have. Our successful representation of more than 850community associations is a result of this philosophy. Our focuson prevention and regular contact with our clients increases ourability to evaluate the overall environment of each association werepresent.
The attorneys at Peters & Freedman, L.L.P. welcome theopportunity to meet with any association for a no charge, noobligation consultation. It also gives the association anopportunity to ask questions to better evaluate our services.
Given the opportunity, Peters & Freedman, L.L.P. will implementits philosophy of responsive, cost effective, proactive legalservices to help you run your association smoothly and efficientlyfor the benefit of all owners. If you have any questions about thisbook or our services, call us: in the San Diego area at (760) 436-3441, or in the Desert area at (760) 773-4463.
Please visit our website at www.hoalaw.com for a free,downloadable pdf version of the Legal Guide.
SUMMARY OF CONTENTS
ONE Association Basics ........................................1
TWO New Laws....................................................39
THREE Recent Court Decisions ..............................64
FOUR Davis-Stirling Common Interest DevelopmentAct and Other Association Laws ..................73
FIVE Director's Duties, Meetings, Voting andOther Corporate Activities ........................192
SIX Parking and Towing ..................................244
SEVEN Use Restrictions ........................................260
EIGHT Assessment Collection ..............................281
NINE Residential Care, Senior Housing and FairHousing Laws ............................................307
INDEX
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TABLE OF CONTENTSONEASSOCIATION BASICS ..................................................1
A. GLOSSARY OF TERMS ....................................................................1
B. CHECKLISTS FOR THE BASICS........................................................4
1. Essential Document Checklist ................................................52. Serving on the Board Checklist ..............................................63. Board Meeting Checklist ........................................................74. Association Contracts Checklist ............................................95. Architectural Review Checklist ............................................116. Fine Policy Checklist............................................................147. Annual Meeting Checklist ....................................................178. Annual Disclosures Checklist ..............................................19
C. GUIDELINES..................................................................................23
1. The Community Association Concept ..................................232. The Role and Functions of the Board of Directors ................323. Parliamentary Procedure......................................................34
TWONEW LAWS ..........................................................39
A. Assembly Bill 806/806 – REORGANIZATION OF THEDAVIS-STIRLING COMMON INTEREST DEVELOPMENT ACT......39
Reorganized Chapter Listing ..........................................................44Cross-Reference Chart: Current → New Sections ..........................45Cross-Reference Chart: New → Current Sections ..........................53
B. Senate Bill 880 – ELECTRIC VEHICLE CHARGING STATIONS;GRANTS OF EXCLUSIVE USE OF PART OF COMMON AREA ......60
C. Assembly Bill 2697 – HOUSING OMNIBUS BILL;CLARIFICATIONS TO OPEN MEETING ACT; DISCLOSUREDOCUMENTS ..............................................................................60
D. Assembly Bill 1838 – CANCELLATION FEES FOR DOCUMENTREQUESTS; BILLING DISCLOSURE FORM....................................61
E. Assembly Bill 2273 – REQUIRED DOCUMENTS FROMMORTGAGE HOLDERS AFTER FORECLOSURE ..........................61
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F. Assembly Bill 1720 – SERVICE OF PROCESS: PRIVATEINVESTIGATORS ..........................................................................62
G. Assembly Bill 2114 – SWIMMING POOL SAFETY ........................62
H. FHA POLICY CHANGES EASE CONDOMINIUMPROJECT APPROVAL ....................................................................63
THREERECENT COURT DECISIONS ........................................65
A. MANDATORY ARBITRATION OF CONSTRUCTION DEFECTDISPUTES. ....................................................................................65Pinnacle Museum Tower Assn. v. Pinnacle Market Development(US), LLC
B. GOVERNING DOCUMENTS ........................................................68Quail Lakes Owners Assn. v. Kozina
C. FREE SPEECH ................................................................................69Silk v. Feldman
D. ATTORNEYS’ FEES ........................................................................70That v. Alders Maintenance Assn.Lewow v. Surfside III Condominium Owners’ Assn. Inc.
E. CLASS B VOTING RIGHTS............................................................72PV Little Italy, LLC v. Metrowork Condominium Assn.,(2012) 210 Cal. App. 4th 132
FOURDAVIS-STIRLING COMMON INTEREST DEVELOPMENT ACTAND OTHER ASSOCIATION LAWS................................74
A. DAVIS-STIRLING COMMON INTERESTDEVELOPMENT ACT ....................................................................74
Chapter 1. General Provisions ..............................................................74
Article 1. Preliminary Provisions ......................................74
Civil Code
1350 Citation................................................................................741350.5 Scope, Meaning And Intent Of Title ....................................741350.7 Document Delivery; Approved Methods Under The Title ....74
Article 2. Definitions......................................................75
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Civil Code
1351 Definitions ..........................................................................75
Chapter 2. Governing Documents ........................................................78
Article 1. Creation ........................................................78
1352 Application Of Title; Creation Of Common InterestDevelopment ......................................................................78
1352.5 Restrictive Covenants; Deletion From Declaration OrOther Governing Documents ..............................................78
1353 Declaration; Contents ..........................................................781353.5 Display of United States Flag By Owner On Or In Owner's
Separate Interest Or Within Exclusive Use Common Area....791353.6 Prohibition Of Posting Or Displaying Noncommercial
Signs, Posters, Flags, Or Banners; Permitted Placement OfPosting Or Displaying; Exceptions ......................................80
1353.7 Common Interest Developments; Roof Installation AndRepair; Governing Documents ............................................80
1353.8 Prohibition On Use Of Low Water-Using Plants OrWater-Efficient Landscape Void............................................80
1353.9 Prohibition Or Restriction On Installation Or Use Of ElectricVehicle Charging Station; Standards And Requirements;Application For Approval; Placement In Common Areas;Violations And Penalties; Attorney’s Fees ............................81
Article 2. Enforcement ..................................................83
1354 Enforceability Of Covenants And Restrictions As EquitableServitudes; Alternative Dispute Resolution ..........................83
Article 3. Amendment....................................................83
1355 Amendment Of Declaration ................................................831355.5 Amendment Of Governing Documents To Delete
Construction Or Marketing Provisions After CompletionBy Developer; Requirements................................................84
1356 Amendment Of Declaration; Petition; Contents; Filings;Findings By Court; Power Of Court To ApproveAmendment; Recording Amendment; Mailing ....................85
1357 Extension Of Term Of Declaration ......................................87
Article 4. Operating Rules ............................................87
1357.100 Definitions ..........................................................................871357.110 Requirements For Validity And Enforceability ......................871357.120 Approved Subject Matters; Board Action To Propose A
Rule Change; Special Meetings Of The Members ToReverse A Rule Change ........................................................88
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1357.130 Proposed Rule Change By Board Action; Notice; Meeting ..881357.140 Special Meeting Of Members To Reverse A Rule Change;
Notice; Voting Requirements; Effect Of Approved Reversal..891357.150 Applicability Of Article To Changes Commenced Before
And After January 1, 2004....................................................90
Chapter 3. Ownership Rights and Interests ..........................................90
1358 Interests Included In Conveyance, Judicial Sale OrTransfer Of Separate Interests; Transfers Of Exclusive UseAreas; Restrictions Upon Severability Of ComponentInterests ..............................................................................90
1359 Restrictions On Partition ......................................................911360 Modification Of Unit By Owner; Facilitation Of Access For
Handicapped; Approval By Project Association ..................921360.2 Rental Or Leasing Separate Interests; Requirements ............921360.5 Pets Within Common Interest Developments ......................931361 Rights And Easements Of Ingress, Egress And Support..........941361.5 Physical Access To Owner Or Occupant's Separate Interest ....941362 Ownership Of Common Areas ............................................94
Chapter 4. Governance ........................................................................94
Article 1. Association ......................................................94
1363 Community Association Management; Schedule OfMonetary Penalties For Violations ........................................94
1363.001 On-Line Education Course ..................................................961363.005 Distribution Of Disclosure Documents Index ......................96
Article 2. Elections and Meetings ....................................97
1363.03 Election; Rules And Procedures............................................971363.04 Use Of Funds For Campaign Purposes ..............................1011363.05 Open Meeting; Executive Session Exception; Minutes;
Notice; Emergency Meeting ..............................................1011363.07 Grant Of Exclusive Use Of Part Of Common Area;
When Vote Required..........................................................1041363.09 Civil Action For Violation Of Article ..................................105
Article 3. Managing Agents ..........................................106
1363.1 Prospective Managing Agent; Written Disclosures ..............1061363.2 Managing Agent; Deposit Of Funds Received;
Requirements; Separate Record; Commingling Of Funds ....107
Article 4. Public Information ........................................109
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Civil Code
1363.5 Association Articles Of Incorporation; Required Statement ..1091363.6 Assistance With Identification Of Common Interest
Developments; Submission Of Information By EachAssociation; Time; Notice Of Change Of Address; PenaltyFor Violation Of Filing Requirements; Availability OfInformation ........................................................................109
Article 5. Dispute Resolution Procedure........................111
1363.810 Application Of Article ........................................................1111363.820 Fair, Reasonable, And Expeditious Procedure To Resolve
Disputes; Use Of Local Dispute Resolution Program ..........1111363.830 Requirements Of Fair, Reasonable, And Expeditious
Dispute Resolution Program ..............................................1111363.840 Application Of Section; Use Of Procedures; Dispute
Resolution Agreements; Conditions; Fees ..........................1121363.850 Notice; Description Of Internal Dispute Resolution
Process ..............................................................................112
Chapter 5 Operations ........................................................................113
Article 1. Common Areas ..............................................113
1364 Responsibility For Repair, Replacement, Or Maintenance;Damage By Wood-Destroying Pests Or Organisms; CostAllocation; Notice Of Repair Requirements; Access ForMaintenance Of Telephone Wiring.....................................113
Article 2. Fiscal Matters ................................................114
1365 Documents Prepared And Distributed By Associations ......1141365.1 Notice To Members Of Association Prior To Beginning Of
Fiscal Year..........................................................................1181365.2 Association Records And Enhanced Association Records;
Definitions; Availability For Inspection And Copying;Redaction Of Information; Use; Action For Violation;Effect On Corporations Code § 8330, 8333; Applicability..120
1365.2.5 Form For Summarizing Disclosures; Form To AccompanyPro Forma Operating Budgets Or Summaries;Supplementation Or Modification; Calculating AmountOf Reserves........................................................................125
1365.3 Community Service Organization Reports; InformationOn Components To Complete Disclosures Or ReserveReports; Reliance Upon And Access To Information ..........128
1365.5 Board Of Directors; Duties ................................................128
Article 3. Insurance ......................................................130
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Civil Code
1365.6 Applicability Of Corporations Code § 310 ........................1301365.7 Tortious Act Or Omission Of Volunteer Officer Or
Director Of Association Managing ResidentialDevelopment; Liability; Criteria; Limitations ......................131
1365.9 Tort Actions Against Owner Of A Separate Interest;Tenant In Common In Common Area; AssociationLiability; Insurance Requirements ......................................132
Article 4. Assessments ..................................................132
1366 Levy Of Assessments; Limitation On Increases;Exemption; Delinquent Assessments; Interest ....................134
1366.1 Imposition Or Collection Of Assessments Or Fees;Limit On Amount ..............................................................134
1366.2 Statements For Collection Of Regular And SpecialAssessments, Transfer Fees And Other Charges ..................134
1366.4 Levy Of Assessments On Separate Interest ........................1351367 Assessments; Debt Of Owner; Lien; Notice; Enforcement
Of Lien; Application Of Section ........................................1351367.1 Assessments; Debt Of Owner; Lien; Notice To Owner;
Payments; Disputes As To Debt; Procedure; EnforcementOf Lien; Penalty; Priority Of Lien; Assignment Or PledgeOf Right To Collect Payments; Actions Under Code OfCivil Procedure; Correction Of Errors; ApplicationOf Section ..........................................................................135
1367.4 Collection Of Debts For Assessments Arising On And AfterJanuary 1, 2006; When Judicial Or NonjudicialForeclosure May Be Used ..................................................139
1367.5 Reversal And Release Of Lien Recorded In Error; Costs......1411367.6 Dispute Of Charge Or Sum Levied By Association; Dispute
Resolution; Collection Of Delinquent Assessments ............142
Chapter 6. Transfer of Ownership Interests ........................................142
1368 Sale Or Title Transfer; Provision Of Specified Items ToProspective Purchasers; Copies; Fees; Violations; PenaltyAnd Attorney Fees; Validity Of Title Transferred InViolation; Additional Requirements....................................142
1368.1 Prohibition Against Association Rule Or Regulation ThatArbitrarily Or Unreasonably Restricts Owner's AbilityTo Market His Or Her Interest In A CommonDevelopment; Other Enumerated Restrictions....................146
1368.2 Form For Billing Disclosures Required By § 1368 ..............146
Chapter 7. Civil Actions and Liens ......................................................148
Article 1. Miscellaneous Provisions ..............................148
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Civil Code
1368.3 Associations Established To Manage Common InterestDevelopment; Standing......................................................148
1368.4 Reduction Of Damages Awarded; Comparative FaultOf Association ..................................................................148
1368.5 Written Notice To Members Prior To Filing Civil Action;Contents ............................................................................149
1369 Liens For Labor And Materials............................................149
Article 2. Alternative Dispute Resolution ........................149
1369.510 Definitions ........................................................................1491369.520 Filing Enforcement Actions; Application Of Section ..........1501369.530 Initiation Of Process; Serving A Request For Resolution;
Personal Delivery; Acceptance Or Rejection OfA Request ..........................................................................150
1369.540 Timeline For Completion Of Alternative DisputeResolution..........................................................................151
1369.550 Tolling Of Statute Of Limitations ........................................1511369.560 Certificates Filed With Initial Pleading; Grounds For
Demurrer Or Motion To Strike ..........................................1511369.570 Referral Of Actions To Alternative Dispute Resolution;
Stay Of Referral Actions ....................................................1521369.580 Award Of Fees And Costs ..................................................1521369.590 Annual Summary Of Provisions Of Article; Contents
Of Summary ......................................................................152
Chapter 8. Construction of Instruments and Zoning ..........................152
1370 Liberal Construction Of Instruments ..................................1521371 Boundaries Of Units; Presumption ....................................1521372 Construction Of Zoning Ordinances ..................................1531373 Developments Expressly Zoned As Industrial Or
Commercial And Limited To Such Purposes; Exclusions ....1531374 Developments With No Common Area; Application
Of Title; Standing ..............................................................153
Chapter 9. Construction Defect Litigation ..........................................154
1375 Claim Against Builder For Defects In Design Or Construction(Inoperative July 1, 2017; Repealed January 1, 2018) ........154
1375.1 Settlement Agreements Regarding Alleged Defects; NoticeOf Resolution To Members On Record; Disclosures ..........163
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Civil Code
Chapter 10. Improvements ..................................................................164
1376 Restrictions On Installation Or Use Of Video OrTelevision Antenna; Enforceability Based On Size;Reasonable Restrictions; Application Approval;Attorneys’ Fees ..................................................................164
1378 Application Of Section; Requirements To Approve OrDisapprove Proposed Changes; Notice Of Requirements ..165
B. SELECT CONSTRUCTION DEFECT LAWS ..................................166
43.99 Immunity From Monetary Liability; Building And OtherInspectors; Independent Quality Review Of Plans,Specifications Or Work On Residential Buildings UnderThe State Housing Law; Exceptions ..................................166
895 Definitions ........................................................................167896 Building Standards For Original Construction Intended
To Be Sold As An Individual Dwelling Unit ......................168897 Function Or Component Of A Structure; Scope Of
Standards Within Chapter .................................................173900 Fit And Finish; Limited Warranty .......................................173901 Enhanced Protection Agreement; Length Of Time;
Minimum Standards ..........................................................173902 Enhanced Protection Agreement; Determination Of
Enforceability .....................................................................173903 Enhanced Protection Agreement; Time To Elect Agreement;
Standards Where Provisions Are Unenforceable ...............173904 Enhanced Protection Agreement; Disputed Terms; Notice
Of Claim Against Builder ..................................................174905 Enhanced Protection Agreement; Binding Determination
Of Applicable Building Standards; Waiver; Privity WithNonoriginal Homeowners..................................................174
906 Prelitigation Procedures; Governing Law ...........................174907 Homeowner Maintenance Obligations, Schedules
And Practices ....................................................................174910 Written Notice Of Claim ...................................................175911 "Builder" Defined ..............................................................175912 Document Disclosure By Builder; Designated Agent To
Accept Claims And Act On Builder's Behalf; Notice ToHomeowners And Purchasers ...........................................176
913 Written Acknowledgment Of Claim; Time To Respond;Contents ...........................................................................177
914 Election To Pursue Other Nonadversarial ContractualProcedures; Affect Of Title 7 Upon Existing StatutoryOr Decisional Law ............................................................178
915 Application Of Prelitigation Provisions Upon CertainFailures To Act by Builder ................................................178
916 Builder Election To Inspect.................................................178
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Civil Code
917 Written Offer To Repair ....................................................179918 Homeowner Response To Repair Offer .............................180919 Mediation By Mutual Agreement; Unresolved Disputes;
Repairs ..............................................................................180920 Claimant Right To File Action.............................................180921 Repair Work; Time And Date Scheduled; Completion
Date ..................................................................................181922 Electronic Recordation, Videotaping Or Photographs
During Repair Work...........................................................181923 Documentation Relating To Repair Work; Requests For
Copies ..............................................................................181924 Partial Repair Of Claims; Statement Of Reasons.................181925 Failure To Repair Within Time Allowed ............................181926 Release Or Waiver In Exchange For Repair Work...............182927 Claims For Violation Of Statutory Process Or Inadequate
Repair; Limitation Of Action; Extension Of Time................182928 Mediation After Repair Completion ...................................182929 Cash Offer In Lieu Of Repair; Release ................................182930 Failure To Act Within Mandated Timeframes And Other
Requirements; Right To File Action; Motion To StayProceedings .......................................................................183
931 Causes Of Action Or Damages Exceeding Scope OfActionable Defects; Applicability Of Standards ................183
932 Subsequently Discovered Claims Of Unmet Standards.......183933 Evidence Of Repair Efforts ................................................184934 Evidence Of Conduct During Enforcement Process ...........184935 Construction Of Chapter With Similar Provisions In The
Civil Code ........................................................................184936 Parties Subject To Application Of Title; Determination;
Defenses Available; Joint And Several Liability; StrictLiability .............................................................................184
937 Construction With Professional Negligence Actions ..........185938 Application Of Title 7 To Certain Residences .....................185941 Time Limit For Bringing Action ..........................................185942 Sufficiency Of Claim For Violation Of Chapter 2
Standards ...........................................................................186943 Exclusiveness Of Title; Exceptions ....................................186944 Damages; Determination Of Amount ................................186945 Binding Effect Upon Original Purchasers And Their
Successors-In-Interest.........................................................186945.5 Affirmative Defenses ........................................................187
C. CERTIFIED COMMON INTEREST DEVELOPMENTMANAGER ........................................................................188
Business & Professions Code
11500 Definitions ........................................................................188
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Business & Professions Code
11501 "Common Interest Development Manager" Defined;Construction With Other Statutory And ContractualObligations ......................................................................189
11502 Requirements In Order To Be Called A Certified CommonInterest Development Manager............................................189
11502.5 Standards And Requirements For Development AndAdministration Of The Course Related CompetencyExamination Or Examinations And Education ProvidedTo A Certified Common Interest Development Manager ....191
11503 Management Firms ............................................................19111504 Annual Report To Board Of Directors; Report Contents......19111505 Managers, Management Companies And Parent Companies;
Prohibited Activities ..........................................................19211506 Duration Of Part ................................................................192
FIVEDIRECTOR'S DUTIES, MEETINGS, VOTING ANDOTHER CORPORATE ACTIVITIES ................................193
A. CORPORATIONS ..............................................................193
Corporations Code
20 Electronic Transmission By Corporation ............................19321 Electronic Transmission To Corporation..............................1935008.6 Nonprofit Corporations; Failure To File Statements;
Suspension Of Powers, Rights And Privileges;Notices; Relief ..................................................................194
5010 Majority; Determination Of Quorum ................................1945015 Notice................................................................................1945016 Notices Or Reports Mailed Or Delivered As Part
Of Newsletter Or Magazine ..............................................1955033 Approval By Or Approval Of A Majority Of All Members ..1955034 Approval By Or Approval Of The Members ......................195
B. NONPROFIT MUTUAL BENEFIT CORPORATIONS ..........196
7110 Citation Of Part..................................................................1967111 Corporate Purposes; Exclusion Of Corporations
For Certain Purposes ..........................................................1967120 Number Of Incorporators; Execution And Filing Articles;
Signature And Acknowledgment; Corporate Existence ......1967121 Change Of Status Of Association To Corporation;
Unauthorized Incorporation; Protection ofAssociation's Name ..........................................................196
7122 Name ................................................................................1977122.3 Prohibited Corporate Name ..............................................198
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Corporations Code
7130 Required Provisions ..........................................................1987131 Optional Provisions; Limitation On Purposes And
Powers ..............................................................................1987132 Optional Provisions Generally; Enforceability Of
Agreements........................................................................1987133 Certified Copy As Evidence................................................2007134 Incorporators; Powers Until Election Of Directors..............2007135 Power Of Court..................................................................2007140 Powers ..............................................................................2007141 Restrictions; Methods Of Asserting ....................................2017142 Assets Held In Charitable Trust; Action To Remedy
Breach ..............................................................................2027150 Adoption, Amendment Or Repeal......................................2027151 Provisions ..........................................................................2037152 Delegates ..........................................................................2047153 Voting By Members Or Delegates On Chapter Or
Regional Basis Authorized ................................................2057160 Articles And Bylaws; Location; Inspection;
Furnishing To Members......................................................205
C. DIRECTORS AND MANAGEMENT....................................205
7210 Exercise Of Powers; Delegation Of Management ..............2057211 Meetings ............................................................................2057212 Committees........................................................................2077213 Officers..............................................................................2087214 Officers; Unauthorized Acts; Effect As To Innocent
Parties................................................................................2097215 Documents As Evidence ....................................................209
D. SELECTION, REMOVAL AND RESIGNATION OFDIRECTORS ......................................................................209
7220 Election; Term ....................................................................2097221 Declaration Of Vacancy; Grounds ....................................2107222 Removal Of Directors Without Cause ................................2107223 Removal By Court; Powers Of Attorney General ................2127224 Filling Vacancies; Resignation; Successor To Take
Office At Effective Date Of Resignation..............................2127225 Provisional Directors..........................................................213
E. STANDARDS OF CONDUCT ............................................213
7230 Applicable Duties And Liabilities ......................................2137231 Performance Of Duties; Degree Of Care; Reliance On
Reports, Etc.; Good Faith; Exemption From Liability ..........2137231.5 Liability Of Volunteer Director Or Officer; Failure
To Discharge Duties ..........................................................214
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Corporations Code
7232 Selection Of Directors; Application Of Section 7231 ........2157233 Conflict Of Interest; Disclosure; Common
Directorships; Just And Reasonable Contracts ....................2157234 Quorum; Counting Interested Or Common Directors ........2167235 Loans Or Guarantees Of Obligations Of Director
Or Officer; Advances For Expenses; Exceptions ................2167236 Liability For Illegal Loans And Distributions; Suits; Damages;
Contribution; Subrogation; Cross-Complaint ......................2177237 Indemnification Of Corporate Agents; Grounds; Approval;
Advancement Of Expenses; Liability Insurance ..................2187238 Assets Held In Charitable Trust; Law Governing
Conduct Of Directors ........................................................221
F. TERMINATION OF MEMBERSHIP ....................................221
7341 Expulsion, Suspension Or Termination; FairnessAnd Reasonableness; Procedure ........................................221
G. MEETINGS AND VOTING ................................................222
7510 Place And Time Of Meetings; Regular Meeting; FailureTo Hold Regular Meeting; Voting; Special Meetings;Conduct Of Meetings By Electronic Transmissions OrCommunications................................................................222
7511 Notice Of Meeting ............................................................2237512 Quorum ............................................................................2257513 Acts Without Meeting; Written Ballot; Number Of Ballots
And Approvals; Solicitation; Revocation Of Ballots;Election Of Directors ........................................................226
7514 Form Of Proxy Or Written Ballot........................................2277515 Court Order For Meeting When Prescribed Procedure
Unduly Difficult ................................................................2277516 Action By Written Consent ................................................2287517 Ballot; Consent; Waiver; Proxy Appointment; Names
Signed; Acceptance ..........................................................229
H. ADDITIONAL PROVISIONS RELATING TOELECTION OF DIRECTORS................................................229
7520 Nomination And Election Procedures ................................2297521 Eligibility; Methods Of Nomination....................................2297522 Corporations Of 5,000 Or More Members; Close Of
Nominations; Solicitation Of Votes; UncontestedNominees Declared Elected ..............................................230
7523 Corporate Publication Soliciting Votes ..............................2307524 Mailing Candidate's Election Material; Payment Of Costs ..2317525 Corporate Exemption From Liability For Content
Of Candidate's Material; Liability Of Candidate ................231
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Corporations Code
7526 Use Of Corporate Funds To Support Candidate ..................2317527 Limitation Of Actions; Validity Of Election;
Appointment Or Removal Of Director ..............................231
I. VOTING OF MEMBERSHIPS ............................................232
7610 One Vote For Each Membership; Exceptions......................2327611 Record Date; Right To Vote; Notice; Adjournment ............2327612 Memberships In Names Of Two Or More Persons..............2337613 Proxies ..............................................................................2337614 Inspectors Of Election ........................................................2347615 Cumulative Voting ............................................................2357616 Judicial Determination Of Validity Of Election Or
Appointment......................................................................236
J. RECORDS, REPORTS AND RIGHTS OFINSPECTION ....................................................................236
8310 Records; Availability In Written Form ................................2368311 Inspections; Persons Authorized; Copies ............................2368313 Prohibited Limitation On Rights ........................................236
K. REQUIRED RECORDS, REPORTS TODIRECTORS AND MEMBERS............................................237
8320 Books And Records............................................................2378321 Duty To Notify Each Member Of Right To Receive
Financial Report; Annual Report; Contents;Accompaniments; Inapplicability Of SubdivisionTo Certain Corporations ....................................................237
8322 Annual Statement Of Transaction With OrIndemnification Of Interested Person; CoveredAnd Excluded Transactions; Required Contents..................238
8323 Court Enforcement Of Information And FinancialStatement Requirements; Costs And Attorneys' Fees ..........239
8325 Voting Results In Meetings; Information To MembersUpon Written Request........................................................239
L. RIGHTS OF INSPECTION..................................................239
8330 Demand; Persons Authorized; Reason; AlternativeProposal ............................................................................239
8331 Petition To Set Aside Demand; Petition For ProtectiveOrder; Time; Order; Costs; Mandamus; Damages ..............240
8332 Restrictions To Protect Constitutional Rights OfOther Members..................................................................242
8333 Accounting Books; Minutes; Demand; Purpose..................2428334 Directors' Rights ................................................................242
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Corporations Code
8335 Frustration Of Inspection Rights By Corporate Delay;Court-Ordered Postponement Of Members' Meeting;Remedies ..........................................................................242
8336 Court Enforcement Of Inspection Rights; ContemptOf Court ............................................................................243
8337 Costs, Expenses And Attorney Fees ....................................2438338 Membership List; Authorized And Prohibited Uses; Damages;
Injunction; Costs, Expenses And Attorney Fees ..................243
SIXPARKING AND TOWING ..........................................245
Vehicle Code
22651 Circumstances In Which Removal Permitted......................24522651.05 Trained Volunteers Of State Or Local Law
Enforcement Agencies; Requirements;Circumstances Permitting Removal ....................................250
Vehicle Code
22658 Removal Of Vehicle From Private Property ByProperty Owner; Towing Companies And Charges ............251
22658.1 Damaging Of Fence While Removing Vehicle;Location And Notification Of Property Owner ByTowing Company ..............................................................259
22853 Notice To Department Of Justice And ProprietorOf Storage Garage; Reports; Notice To Owner ..................259
SEVENUSE RESTRICTIONS..................................................261
A. SATELLITE DISHES ............................................................261
47 CFR
1.4000 Restrictions Impairing Reception of Television BroadcastSignals, Direct Broadcast Satellite Services OrMultichannel Multipoint Distribution Services ..................265
Civil Code
1376 Restrictions On Installation Or Use Of Video OrTelevision Antenna; Enforceability Based OnSize; Reasonable Restrictions; ApplicationApproval; Attorney’s Fees ..................................................268
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B. SWIMMING POOLS ..........................................................269
Health & Safety Code
115920 Swimming Pool Safety Act ................................................269115921 Definitions ........................................................................269115922 Construction Permits; Safety Features Required..................270115923 Enclosure; Required Characteristics ..................................271115924 Agreements To Build; Notice Of Provisions........................271115925 Exempt Facilities ................................................................271116048 Public Swimming Pools In Common Interest Developments;
Recordkeeping Requirements ............................................272116049.1 Public Swimming Pools; Underwater Lighting Systems;
Ground-Fault Circuit Interrupters; Inspection AndCertification ......................................................................272
116064.2 Anti-Entrapment Devices Or Systems As Applicable Standard;Deadline For Installation; Alternative Devices Or Systems;New Construction; Retrofitting; Compliance AndDocumentation; Enforcement ............................................273
C. DISPLAY OF SIGNS AND FLAGS ......................................276
Civil Code
711 Conditions In Restraint Of Alienation ................................276712 Conditions Restraining Right To Display Sign
Advertising Property For Sale, Lease Or Exchange..............276713 Local Regulations; Signs Advertising Property For
Sale, Lease or Exchange ....................................................2771353.5 Display Of United States Flag By Owner On Or In
Owner's Separate Interest or Within Exclusive UseCommon Area ..................................................................277
1353.6 Prohibition Of Posting Or Displaying NoncommercialSigns, Posters, Flags Or Banners; PermittedPlacement Of Posting Or Displaying; Exception ................277
Government Code
434.5 Prohibitions Or Restrictions On Legal Right ToDisplay U.S. Flag ................................................................278
D. SOLAR ENERGY SYSTEMS ................................................279
Civil Code
714 Solar Energy Systems; Installation Or Use; Invalidity AndUnenforceability Of Instruments Affecting Real Property;Exceptions; Delay; Penalty; Attorney's Fees ......................279
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714.1 Solar Energy Systems; Common Interest Developments;Approval; Maintenance; Indemnification OrReimbursement..................................................................281
EIGHTASSESSMENT COLLECTION ........................................282
A. SUMMARY OF ACTIVITIES PROHIBITED/RESTRICTEDBY THE FEDERAL FAIR DEBT COLLECTION PRACTICESACT ..................................................................................282
1. COMMUNICATIONS WITH THIRD PARTIES ............2822. COMMUNICATIONS WITH THE OWNER
(OR OWNER'S CURRENT SPOUSE ORLEGAL REPRESENTATIVE/EXECUTOR) ......................282
3. HARASSMENT ........................................................2834. FALSE/MISLEADING STATEMENTS ..........................2835. UNFAIR PRACTICES ................................................2836. VALIDATION NOTICE ............................................2837. MULTIPLE DEBTS ....................................................2848. LIABILITY ................................................................284
B. CHECKLIST FOR DEBT COLLECTION ..............................284
1. WARNING LETTERS ................................................2842. OTHER COMMUNICATIONS..................................2853. LABELS/ENVELOPES ................................................2854. ACCURACY OF AMOUNTS DEMANDED ..............2855. DEBTS OLDER THAN FOUR YEARS........................2866. TITLE OF PERSON SENDING LETTER......................2867. CONFIRMING WHEREABOUTS OF PERSON
OWING DEBT ........................................................2868. RESTRICTIONS ON COMMUNICATION
WITH OWNER ........................................................2869. COMMUNICATION WITH OWNER PROHIBITED
AFTER LEARNING OWNER IS REPRESENTED BYAN ATTORNEY........................................................286
10. COMMUNICATION WITH THIRD PARTIES ............28611. ACCEPTANCE OF CHECKS/PARTIAL PAYMENTS ....28612. HARASSMENT OR ABUSE ......................................28613. FALSE/MISLEADING REPRESENTATION/UNFAIR
PRACTICES ..............................................................28714. STAND FIRM ON COMPLIANCE ............................28715. STATE LAW REGARDING COLLECTION OF DEBT..28716. ANY DOUBTS OR QUESTIONS?
CONSULT LEGAL COUNSEL!..................................287
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C. FEDERAL DEBT COLLECTION PRACTICES ACT................287
15 U.S. Code
1692 Congressional Findings And Declaration Of Purpose ........2871692a Definitions ........................................................................2881692b Acquisition Of Location Information ..................................2891692c Communication In Connection With Debt Collection........2891692d Harassment Or Abuse ........................................................2911692e False Or Misleading Representations..................................2911692f Unfair Practices ................................................................2921692g Validation Of Debts. ..........................................................2931692h Multiple Debts ..................................................................2941692i Legal Actions By Debt Collectors ......................................2941692j Furnishing Certain Deceptive Forms ..................................2951692k Civil Liability ....................................................................2951692n Relation To State Laws ......................................................2961692o Exemption For State Regulation..........................................296
D. STATE DEBT COLLECTION LAWS ....................................296
Civil Code
1788 Title ..................................................................................2961788.1 Legislative Findings; Purpose ............................................2971788.2 Definitions ........................................................................2971788.10 Threats; Unlawful Conduct ................................................2981788.11 Profane Language; Telephone Practices..............................2991788.12 Communication Of Information Regarding Debt................2991788.13 Representations..................................................................3001788.14 Collection Of Fee Or Discharged Debt; Communication
With Debtor Represented By Attorney................................3011788.15 Improper Use Of Judicial Proceedings ..............................3011788.16 Simulation Of Legal Process ..............................................3021788.17 Compliance With Law ......................................................3021788.18 Identity Theft; Debt Collector To Stop Collection Activities
When Certain Information Provided; Written Statement;Penalty For False Information; Recommencement OfCollection Upon Good Faith Determination; NotificationTo Credit Reporting Agencies And Creditors Of SpecifiedInformation; Definition ......................................................302
1788.30 Remedies, Jurisdiction; Defenses........................................3041788.31 Separability Of Provisions ..................................................3051788.32 Remedies Cumulative; Administrative Regulations Saved ..3051788.33 Waiver Of Provision Of Title Void......................................306
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E. BANKRUPTCY - THE AUTOMATIC STAY ..........................306
11 U.S. Code
362 Automatic Stay [in relevant part]........................................306523 Exceptions To Discharge [in relevant part] ........................306
NINERESIDENTIAL CARE, SENIOR HOUSING AND FAIRHOUSING LAWS ....................................................308
I. RESIDENTIAL CARE ....................................................................308
A. Summary ..........................................................................308B. General Provisions ............................................................308
Health & Safety Code
1502 Definitions [in relevant part] ..............................................3081566.3 Ordinances; Residential Facilities Serving Six Or
Fewer Persons Considered Residential Use OfProperty; Residents And Operators ConsideredA Family ............................................................................308
1566.5 Contracts, Deeds Or Covenants For Transfer Of RealProperty; Residential Facilities Serving Six Or FewerPersons Considered Residential Use Of Property AndUse Of Property By A Family ............................................308
C. Residential Care Facilities For The Elderly..........................309
1569.2 Definitions [in relevant part] ..............................................3091569.85 Facility Serving Six Or Fewer Persons; Consideration As
Residential Use; Application Of Local Regulations ............310
II. FAMILY DAY CARE HOMES ........................................................311
A. Summary............................................................................311B. General Provisions ............................................................311
1597.40 Public Policy To Provide Home Environment,Restrictions Governing Real Property ................................311
1597.44 Small Family Day Care Homes; Number Of Children ........3121597.465 Large Family Day Care Homes; Number Of Children ........3131597.531 Liability Insurance Or Bond; Affidavits; Additional
Insured Parties ..................................................................313
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III. SENIOR CITIZEN HOUSING ......................................................314
A. Federal Fair Housing Act....................................................314
1. Origination ....................................................................3142. Fair Housing Amendments Act of 1988..........................3143. Senior Housing Exceptions to “Familial Status” ..............3144. Federal Fair Housing Provisions ....................................315
42 U.S. Code
3601 Declaration Of Policy ........................................................3153602 Definitions ........................................................................3153604 Discrimination In The Sale Or Rental Of Housing
And Other Prohibited Practices..........................................3173607 Religious Organization Or Private Club Exemption............318
B. State Fair Housing Law ......................................................319
1. Unruh Civil Rights Act ..................................................3192. Exemptions For Senior Housing ....................................3193. Housing Requirements ..................................................319
(i) Riverside County............................................319(ii) Other Counties ..............................................319
4. Restricting Occupancy ..................................................3205. Provisions of the Unruh Civil Rights Act ........................321
Civil Code
51 Unruh Civil Rights Act; Equal Rights; BusinessEstablishment; Violation ....................................................321
51.2 Age Discrimination In Housing Prohibited;Exception; Intent. ..............................................................322
51.3 Housing; Age Limitations; Necessity For SeniorCitizen Housing ................................................................324
51.4 Senior Housing, Legislative Findings, DeclarationsAnd Intent; Exceptions From Special DesignRequirements; Application To Civil Rights Actions;Right To Continued Residency, Occupancy Or Use ..........327
51.10 Riverside County - Housing DiscriminationProhibited Based Upon Age ..............................................327
51.11 Riverside Country - Establishing And PreservingAccessible Housing For Senior Citizens ............................328
51.12 Riverside County - Continuing Occupancy OfCertain Exempt Housing ....................................................331
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ONEASSOCIATION BASICS
1
A. GLOSSARY OF TERMS
Alternative Dispute Resolution (ADR)Mediation, arbitration, conciliation, or other nonjudicial procedure that involvesa neutral party in the decisionmaking process. The form of alternative disputeresolution chosen may be binding or nonbinding, with the voluntary consent ofthe parties. ADR is a required pre-litigation process for certain types of disputesbetween homeowners and associations. Each party bears their own costs forparticipating in ADR.
Architectural Review CommitteeThis committee is usually set up by the board of directors to review planssubmitted by an owner requesting to alter some portion of the project. If there isno architectural review committee then the board of directors reviewsarchitectural improvement requests submitted by owners.
AssessmentThis is the monetary contribution made by each owner to help maintain theproject. Assessments are used by the association to preserve the value of theentire project, which in turn protects the value of the individual homes. Theamount of the assessment is set by the board of directors according to a "reservestudy" (defined below).
AssociationThis is the business entity, usually a non-profit corporation, set up to manage theproject. The primary function of the association is to preserve the property valueof the homes and other property in the project. Also, the association is requiredby law to have a process to enforce the governing documents, including collectingassessments.
BallotA ballot is simply a document for owners to cast a vote, in writing. The election ofdirectors is almost always conducted by secret ballot. A ballot is different from aproxy (defined below) in that a vote is actually cast on the ballot -- as opposed to aproxy which allows an owner to designate someone else to cast his or her vote.
Board of DirectorsThe board of directors is the governing body of the association and consists of acommittee of volunteers, usually five people. The board of directors sets thepolicies and procedures for how the project operates, and interprets and enforcesthe governing documents. Board members are elected by the members (owners)of the association.
BylawsFor incorporated associations this is the document that contains the primary setof guidelines that the association is required to follow to conduct business. Itincludes rules about board meetings, meetings of the members, qualifications toserve on the board, voting procedures, etc.
Common AreaThe common area is generally everything in the project except the individualhomes. The association typically has the exclusive responsibility and authority tocontrol and maintain the common area.
CondominiumIn a condominium project the "condominium" refers to each owner's entireinterest in the project. It typically includes the air-space inside the home and theright to use exclusive use common areas that go with the home (such as a balconyor patio, or both), as well as the non-exclusive right to use the general commonareas.
CC&Rs (Declaration of Covenants, Conditions & Restrictions)For most associations this is the document that contains the primary set ofguidelines that governs the project, and which all owners, and the association, arerequired to follow at all times. In some instances the CC&Rs are very specific; inother instances the provisions are general in nature and open to interpretation bythe board of directors and the members.
Common Interest Development ManagerThe common interest development manager acts on behalf of the board ofdirectors to help carry out the day to day activities of the association, includinghelping to enforce the governing documents and maintaining the project. Someassociations have "on-site" managers who are actually employees of theassociation, but most hire an outside management company.
DeclarantThe person or organization that enacted the CC&Rs is the declarant. Usually, thedeveloper of the project is the declarant.
DirectorsEach individual member of the board of directors is a director. Each director hasthe same rights and obligations as the other directors. Also, each director has thesame voting power; however, the law requires the board to act as a single unit,voting on all matters. Therefore, no director has any individual authority.
Exclusive Use Common AreaTypically only found in condominium projects, this is the part of the commonarea that is designated solely for the use of one owner. The fact that it is exclusiveuse common area means that only one owner has the right to use it, but it is still"common area," which means it is within the association's authority.
Governing DocumentsThis is the general term that refers to the group of documents that contain theguidelines for operation of the project. The governing documents include(depending on the type of association) the CC&Rs, bylaws, articles ofincorporation, the condominium plan, the planned unit development permit andrules and regulations enacted by the board. The association is required by lawto enforce the governing documents.
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Chapter ONE
ASSOCIATION BASICS
GuestsAnyone who is in the project but who is not a resident (including owners, if theowner has rented or leased his or her home).
Inspector of Elections (IOE)For elections and membership votes requiring secret balloting pursuant to CivilCode Section 1363.03, an independent inspector of elections (either one or three)must be appointed to tabulate the secret ballots and perform other related duties.
Internal Dispute Resolution (IDR)Associations are required to adopt a fair, reasonable and expeditious disputeresolution procedure which may be invoked by either a homeowner or theassociation to allow the parties to meet and confer in an informal setting to resolvedisputes. Association members do not have to participate if the process is invokedby the association, and members cannot be charged a fee to participate. If amember invokes the process, the association must participate through designatedboard member(s).
Member/OwnerIn a community association these terms almost always mean the same thing; everyowner of a home is a member of the association. The sole qualification to be amember is to own a home in the project. Only owners have the right to vote, andonly owners are obligated to pay assessments.
OfficersThe officers are the president, vice president, treasurer (or chief financial officer)and secretary (and there may be more than one vice president). In a communityassociation the officer positions are usually not hierarchical. Instead, the officerpositions simply designate responsibility. The officers positions are separate anddistinct from the role of a director, but directors can, and usually do, serve in theofficer position as well.
Pro Forma BudgetA planned budget, as opposed to a final budget.
ProjectThis is the general term used to refer to the entire complex, including the commonarea and all of the homes.
ProxyA proxy is a way for an owner to designate another person to cast a vote on hisor her behalf. For example, if a proxy designates another owner to cast an owner'svote at the annual election, the proxyholder can cast the vote in any way theproxyholder deems fit or as instructed by the owner.
QuorumA quorum is the minimum number of members of an organization that must bepresent at a meeting to conduct business; it is usually a simple majority. Forexample, with a five-member board of directors, one or two board memberscannot simply decide to have a meeting and make decisions--there must be aquorum of board members present to make decisions.
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Chapter ONE
ASSOCIATION BASICS
Reserve AccountsNot actually separate "accounts," the reserve accounts are line-item designationsfor each of the common area components and other expenses of the association.A list of reserve accounts may include designations for items such as fences,monument signs, walls, pools, roofs, etc.
Reserve StudyThis is a review of the project to evaluate the remaining useful life of the commonarea components, and to estimate the cost of repair or replacement. For example,the reserve study professional may determine that common area fences must bepainted every five years, and that it will cost $5,000 to do so. The Board wouldthen know to set aside $1,000 per year in the "reserve account" for fences for fiveyears. The reserve study is the basis for the association's budget and, therefore,the amount of the assessments.
ResidentThe people who actually live in the project are the residents, regardless of whetherthey own their home.
Rules and RegulationsThe rules adopted by the association that interpret and supplement the governingdocuments.
TenantResidents of the project who are renting or leasing a home.
B. CHECKLISTS FOR THE BASICS
Eight checklists follow this page. These checklists may be photocopied andreused.
1. Essential Document Checklist2. Serving on the Board Checklist3. Board Meeting Checklist4. Association Contracts Checklist5. Architectural Review Checklist6. Fine Policy Checklist7. Annual Meeting Checklist8. Annual Disclosure Checklist
NOTES
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Chapter ONE
ASSOCIATION BASICS
ESSENTIAL DOCUMENT CHECKLISTASSOCIATION:___________________________________DATE:_________________
I. GOVERNING DOCUMENTS (INCLUDING AMENDMENTS)
A. THE DECLARATION (CC&RS)
B. BYLAWS
C. ARTICLES OF INCORPORATION
D. CONDOMINIUM PLAN, TRACT MAP, OR PRD PERMIT
E. FINAL SUBDIVISION PUBLIC REPORT
II. MINUTES AND NOTICES
A. BOARD AND ANNUAL MEETING MINUTES
B. LEGAL ACTION BY/AGAINST THE ASSOCIATION
III. VENDOR CONTRACTS (TRASH, LANDSCAPE, ETC.)
IV. POLICIES AND PROCEDURES
A. ASSESSMENT COLLECTION
B. VIOLATION ENFORCEMENT
C. ELECTION RULES
V. INSURANCE POLICY DECLARATIONS PAGE(S)
VI. ARCHITECTURAL PROCEDURES/GUIDELINES
VII. RULES AND REGULATIONS/OWNER INFORMATION
VIII. REPORTS (CURRENT)
A. FINANCIAL AUDIT AND BUDGET
B. RESERVE STUDY
C. BUILDING MAINTENANCE REPORT AND MANUAL
D. LANDSCAPE MAINTENANCE MANUAL
5
SERVING ON THE BOARD CHECKLISTASSOCIATION:______________________________TERM EXPIRES:______________
I. YOU ARE AN OWNER TOOBoard members sometimes forget that other owners are their neighbors, andmay be the next directors. While an association must be run like a businessin certain respects, it is first and foremost a community where people live andraise their families.
II. RECOGNIZE THE TRADE-OFFMost people move into a community association because of the protection itoffers, such as regulating architectural changes. However, the same peoplesometimes object when these restrictions are applied to them. Living in anassociation may require owners to sacrifice a degree of individual expression,but your neighbor's house will never be painted fluorescent green.
III. AVOID PERSONAL AGENDAS, YOUR NEIGHBOR'S ANDYOUR OWNThose owners who serve on the Board usually realize quickly that theirpersonal perspective may be different from the needs of the association.Other owners may not realize that even though their particular architecturalimprovements may be quite attractive, for example, the association cannotgrant approval if it would alter the relatively uniform appearance of theproject--which directly affects property values.
IV. COMMUNICATE WITH YOUR NEIGHBORSWhile the directors have little ability to force people to participate in theassociation, one of the most frequent complaints is that the board does notcommunicate. Actively solicit owners to participate through newsletters,posting notices and word-of mouth.
V. USE CONSULTANTSCommunity association management can be complex and frustrating.Fortunately, professionals with expertise in a variety of areas are available.Most associations should use a professional manager, an accountant, areserve study professional, a landscape architect and an attorney, allexperienced with community associations.
VI. EDUCATE YOURSELFTake time to learn the basics of serving on the board of directors of acommunity association. Many professional management companies offertraining programs, as do trade organizations. Also, some consultants willattend a board meeting to educate the directors in a particular area, such aslandscaping or legal issues. Take advantage of the resources available to you.
6
BOARD MEETING CHECKLISTASSOCIATION:______________________________DATE:______________________
I. COME PREPARED
A. CALL FELLOW DIRECTORS ONE DAY BEFORE THEMEETING
B. REVIEW NOTES AND AGENDA FROM PREVIOUSBOARD MEETINGS
C. REVIEW BOARD PACKET/INFORMATION PREPAREDFOR THIS MEETING1. Agenda2. Draft minutes from last board meeting3. Correspondence from owners4. Vendor contracts5. Management report
II. DESIGNATE A CHAIRPERSONAny board member may chair a meeting. While the director who is servingas the president usually acts as the chairperson, it may be a good idea tohave each director chair a board meeting from time to time. The chairpersonmust control the meeting.
A. PROVIDE A COPY OF THE AGENDA TO EVERYONE PRESENT
B. ANNOUNCE THE AGENDA TO EVERYONE PRESENT
C. EXPLAIN WHEN OWNERS CAN PARTICIPATE
D. EXPLAIN DISCUSSIONS AMONG BOARD MEMBERSCANNOT BE OPEN TO THE FLOOR FOR DISCUSSION
E. EXPLAIN EACH AGENDA ITEM WILL BE DISCUSSED FORA NOT-TO-EXCEED PERIOD OF TIME, ONLY
F. BE RESPECTFUL AND COURTEOUS AT ALL TIMES,EVEN IF ANOTHER PERSON IS HOSTILE OR CONTENTIOUS
III. MAKE INTRODUCTIONSBoard meetings are business meetings, but the business of the board is tomanage a community of home and families. People feel much morecomfortable, and are less likely to be confrontational if introductions are made.Board members should indicate where they live in the community to remindother owners that they are their neighbors.
7
IV. FOLLOW THE AGENDAThe main complaint about board meetings is that they take too long! In thevast majority of cases, a board meeting should last no more than one (1) hour(really!). Following the agenda is one of the best ways to ensure that themeeting proceeds efficiently.
V. ALLOW OWNERS TO SPEAK
A. EXPLAIN LENGTH OF MEETING IS LIMITED TO ONEHOUR
B. OFFER ALTERNATIVE WAYS TO COMMUNICATEWITH BOARDAsk owners who feel they need more time to send comments inwriting, and/or to attend the next meeting. Do not give in to therequest to "say just one more thing.” However, do not "cut-off" anowner; always provide another way to communicate with the board.
C. DO NOT ARGUE--BE RESPECTFUL AND FRIENDLYGenerally, do not engage in a test of wills with owners, and neverargue. In most cases the board should listen to the owners'comments, but discuss and decide the issue later.
VI. COMMENT, DISCUSS AND DEBATE--DO NOT ARGUEThe most effective boards are often composed of directors who do notnecessarily agree with one another all of the time. Different perspectivesinvoke thoughtful discussion and decision making. However, this can onlytake place if issues are discussed or debated, not argued. Be respectful andcourteous, and genuinely consider opposing viewpoints!
VII. DECIDE!Many boards err on the side of caution to the extent that decisions arerepeatedly postponed and the board becomes ineffective. While hastydecision making is rarely advisable, it is important to recognize when it is timeto conclude research and discussion, and simply DECIDE!
Photocopy this form and take it to all board meetings!
8
ASSOCIATION CONTRACTS CHECKLISTASSOCIATION:________________________VENDOR:________________________
I. GET BIDS IF THE CONTRACT EXCEEDS $5000 (AT MOST)
A. CREATE BID COMPARISON SHEET1. Contractors license and insurance information2. Term of proposed contract3. Cancellation provisions including time frame4. Specific scope of work5. Price6. Other applicable criteria
B. EVALUATE ALL CRITERIA--NOT JUST PRICE
II. REQUEST BIDS FROM EXPERIENCED CONTRACTORSContractors working for an association should not be learning their trade.Contractors with newly formed businesses may be adequate or even desirable,however, as long as they have prior experience.
III. REQUEST BIDS FROM CONTRACTORS EXPERIENCEDWITH HOASWorking for a community association requires an understanding of the industryand its nuances. Do not underestimate the value of a contractor who workswith community associations regularly, and avoid those who are inexperiencedin the industry.
IV. CHECK REFERENCESDo not assume that a contractor's references will all give glowing reports.Also, ask detailed questions about job performance, responsiveness, andcustomer service.
V. REVIEW CONTRACT PROVISIONS CAREFULLY
A. LOOK FOR TERM AND CANCELLATIONPROVISIONSMost contracts with community associations should be for amaximum of one year, and should be cancelable upon thirty dayswritten notice.
B. IDENTIFY THE SCOPE OF WORK--BE SPECIFICMany disputes are the result of conflicting expectations. Agree withthe contractor ahead of time exactly what is included, and what willcost extra.
VI. LOOK FOR "RED FLAGS"
A. LARGE PRICE VARIATIONSA contractor who offers to perform a service for much less than thecompeting bids will probably provide exactly that--much less.
9
B. FAILURE OR REFUSAL TO INCLUDE SPECIFICSSome contractors simply leave out specific functions and add themlater as an extra charge to the contract.
VII. IDENTIFY THE CHAIN OF COMMAND
A. ASK FOR A DESIGNATED CONTACT PERSON
B. ASK IF ASSOCIATION WILL HAVE ADESIGNATED WORKER OR CREW
VIII. PLAN TO ESTABLISH LONG TERM RELATIONSHIPSWhile it is important to compare prices and services from time to time, themost cost-effective contractors are usually those with whom the association hasestablished a long term relationship. Shopping or going out to bid every yearwill create an atmosphere of distrust. The result will be that the associationmay never get any contractor's best service. The association should reviewexisting contracts with its vendors regularly, however, and look at ways tomake the services better fit the needs of both parties.
NOTES
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ARCHITECTURAL REVIEW CHECKLIST
ASSOCIATION:______________________________DATE:______________________
I. REQUIRE COMPLETE APPLICATIONS
A. DETAILED WRITTEN DESCRIPTION OF THEIMPROVEMENTThe description should include the size (all dimensions), the color,the location, the finish (paint, stain, etc.), the material (wood, metal,etc.), and all other identifying characteristics.
B. DETAILED DRAWINGS OF THE IMPROVEMENT
C. PROPOSED STARTING AND COMPLETION DATES
D. NAME OF CONTRACTOR (UNLESSINSTALLATION BY OWNER)
E. COMPLETED NEIGHBORHOOD AWARENESS FORMS
F. CITY PERMITS OR STATEMENT "NOT REQUIRED"
II. REQUIRE CLEAR APPLICATIONS
A. DO NOT GUESS! PHYSICALLY INSPECTMost controversies result from miscommunication about the nature,size, color, shape or location of an improvement. Thesecontroversies can be easily avoided if one or more board memberssimply makes a physical inspection.
B. DO NOT ACCEPT INCOMPLETE APPLICATIONSOR "TO BE PROVIDED"
III. WRITTEN NOTICE RECEIVED APPLICATION
A. CHECK CC&RS - TIME FRAME FOR REVIEWTake note of the timeframe for review. Most CC&Rs willautomatically approve an application if no response is providedto an owner within 30 to 45 days.
B. DESIGNATE REVIEW COMPLETION DATE
C. PROVIDE WRITTEN NOTICE OF A COMPLETEDAPPLICATIONWhen a completed application is received it triggers responsibilitiesfor the board, and usually a deadline for completion of the review process.
D. PROVIDE WRITTEN NOTICE OF ANINCOMPLETE APPLICATIONReceipt of an incomplete application could trigger deadlines forreview unless the owner submitting the application is notified that itis incomplete.
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E. DENIALSIf an application is disapproved, the decision must be in writing andinclude both an explanation of why the proposed change isdisapproved and a description of the procedure for reconsiderationby the board of directors.
IV. DESIGNATE A CONSULTANT AS APPROPRIATESome requests for architectural improvements simply cannot be thoroughlyreviewed without the help of a qualified professional. For example, installationof irrigation should be reviewed by a qualified landscape architect regardingdrainage. Associations should condition approval on owners' compliance withbuilding, land use and safety codes and regulations, and/or consult withindependent consultants to ensure improvements to owners' property or thecommon area comply with building, land use, and safety codes and regulations.
V. REVIEW ALL GOVERNING DOCUMENTS
A. CHECK CC&RS FOR SPECIFIC CRITERIA
B. CHECK CC&RS FOR MAINTENANCE
C. REVIEW CONDO PLAN OR PUD PERMIT
D. REVIEW RULES AND REGULATIONS
VI. REVIEW PREVIOUS APPROVALS AND DENIALSThe fact that a particular improvement was denied in the past does notnecessarily mean that it must always be denied. By the same token, anapproval does not mean that all similar requests must be approved. However,for the most part, previous decisions should be seriously considered andfollowed unless circumstances are significantly different, such as a differentsize yard, different proximity to common area, etc.
VII. CREATE FOLLOW-UP PROCEDURES
A. DESIGNATE INSPECTION DATES DURINGINSTALLATION
B. SCHEDULE A COMPLETION WALK-THROUGH
C. REQUIRE A WRITTEN NOTICE OF COMPLETION
VIII. CREATE A RE-SUBMITTAL PROCESS
A. EXPLAIN REASONS FOR DENIAL OF REQUEST
B. OFFER ALTERNATIVES AND/OR SUGGESTIONSOften a request needs only a minor change to be approved. Ifpractical, notify owners what changes would be necessary forapproval to be granted.
C. INVITE OWNERS TO A BOARD OR COMMITTEEMEETING
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IX. CREATE AN APPEAL PROCESS
A. ALLOW OWNERS TO MAKE A WRITTEN APPEAL
B. SCHEDULE A HEARING WITH THE BOARD ANDCOMMITTEEIf appropriate, ask the association's consultant to attend the hearingto help explain the reasons for denial of an application.
NOTES
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FINE POLICY CHECKLISTASSOCIATION:______________________________DATE:_______________________
I. THE GOVERNING DOCUMENTS MUST AUTHORIZE FINESCalifornia law specifically states that if the governing documents do notauthorize the imposition of fines, fines cannot be imposed.
CIVIL CODE SECTION 1363(j)Nothing in this section shall be construed to create, expand, orreduce the authority of the board of directors of an association toimpose monetary penalties on an association member for a violationof the governing documents or rules of the association.
II. FINES MUST BE IN ACCORDANCE WITH GOVERNINGDOCUMENTSThe fining policy must be written in accordance with authorization formember discipline contained in the governing documents. This requirement, ifit exists, is usually contained in the CC&Rs.
CIVIL CODE SECTION 1363(g)(in part)If an association adopts or has adopted a policy imposing anymonetary penalty, including any fee, on any association member fora violation of the governing documents or rules of the association,including any monetary penalty relating to the activities of a guestor invitee of a member ... [it] shall be in accordance withauthorization for member discipline contained in the governingdocuments.
III. NOTICE MUST BE PROVIDED BEFORE ADOPTION ORMODIFICATION OF FINE POLICYAdoption or modification of fine policies is considered a rule change. Theboard of directors must provide at least 30 days notice to members beforeadoption/modification of the fine policy at a board meeting. Notice of theadopted/modified fine policy must be delivered to members within 15 daysafter the meeting.
CIVIL CODE SECTION 1357.130 (in part)The board of directors shall provide written notice of a proposed rule changeto the members at least 30 days before making the rule change. The noticeshall include the text of the proposed rule change ... A decision on a proposedrule change shall be made at a meeting of the board of directors afterconsideration of any comments made by association members ... not more than15 days after making the rule change, the board of directors shall deliver noticeof the rule change to every association member ...
IV. FINE POLICY MUST BE DISTRIBUTED TO ALL OWNERSAll owners must receive a written copy of the fine policy that clearly explainsthe entire process.
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CIVIL CODE SECTION 1363(g)(in part)If an association adopts or has adopted a policy imposing anymonetary penalty the board of directors shall adopt and distribute toeach member, by personal delivery or first class mail, a schedule ofthe monetary penalties that may be assessed for those violations
V. CHANGES MUST BE RE-DISTRIBUTED TO ALL OWNERSAny change to an existing fine policy/schedule requires compliance with CivilCode section 1357.130 and must be distributed to all owners in the samemanner as the original policy.
CIVIL CODE SECTION 1363(g)(in part)The board of directors shall not be required to distribute anyadditional schedules of monetary penalties unless there are changesfrom the schedule that were adopted and distributed to the memberspursuant to this subdivision.
VI. FINE POLICY MUST INCLUDE AN ENFORCEMENT PROCESSA process for imposition of fines must be carefully conceived, and followedprecisely. This "due process" requirement is the most problematic area formany associations. A written enforcement policy is essential. Include:
A. AN EXPLANATION OF NOTICES TO BE SENT PRIOR TO FINING
B. OPTIONS UPON NOTICE OF A FINE, INCLUDING CORRECTING
THE VIOLATION, OR CONTACTING THE BOARD IN WRITING.
C. AN INVITATION TO ATTEND A BOARD MEETING TO DISCUSS
THE FINE, IN EXECUTIVE SESSION IF REQUESTED.
CIVIL CODE SECTION 1363(h)(in part)The notification shall contain ... the date, time and place of the meeting, the ...alleged violation ... a statement that the member has a right to attend and mayaddress the board at the meeting. The board of directors ... shall meet inexecutive session if requested by the member being disciplined.
VII. ENACT A SPECIFIC FINE SCHEDULEA. Specify each fine including the type of violation and the
amount of the corresponding fine.
B. Specify how often the fine will be re-imposed. Forexample, if the fine is imposed for an architectural issue,will it repeat weekly, monthly, as long as the violation exists; or willthe fine be imposed only once?
VIII. RESOLVE DISPUTES USING ALTERNATIVE DISPUTERESOLUTIONDisputes over payment of fines must be submitted to alternative disputeresolution in accordance with California law (Civil Code section 1369.520et. seq.). The association cannot proceed to file a lawsuit in small claims court,or any other court, prior to attempting to resolve the issue by mediation or arbitration.
15
IX. NEVER INCLUDE FINES WITH ASSESSMENT ACCOUNTINGAssessments can be the basis for filing a lien against a home. Fines may notbe the basis for a lien. Therefore, do not keep accounting records for finestogether with assessment accounting. Establish a separate accounting systemfor fines.
X. AVOID PERSONAL AGENDASThere is no point to impose a fine except to punish an owner for failing tofollow the association's policies; unlike requesting reimbursement for fees,costs or expenses. Since fines equate to punishment, imposition of fines oftenresults in long term, contentious relationships between the owners serving onthe board and their neighbors. Thus, it is particularly important to be impartialand unemotional regarding fines.
NOTES
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ANNUAL MEETING CHECKLISTASSOCIATION:___________________________DATE/TIME:_____________________
I. ADOPT ELECTION RULESAssociations are required to adopt election rules pursuant to Civil Codesection 1353.03. This should be done approximately 90 days prior to theannual meeting.
II. APPOINT INSPECTOR(S) OF ELECTION
III. DISTRIBUTE BALLOTSBallots must be distributed to owners at least 30 days prior to theannual meeting.
IV. OBTAIN A COPY OF THE AGENDA
V. CHECK WITH INSPECTOR OF ELECTION: IS THERE AQUORUM?If no quorum, announce that the meeting cannot be held due to lack of ownerparticipation. Set date for reconvened meeting. No business may be conducted.
VI. CHAIR OF MEETING CALLS THE MEETING TO ORDER
A. WELCOME: INTRODUCE BOARD ANDCONSULTANTS (IF ANY)
B. EXPLANATION OF ANNUAL MEETING1. Meeting of members; not a board meeting.2. Primary purpose is to elect directors.3. Other business must be of general association interest,
not personal agendas such as individual architecturalissues, rules violations, etc.
C. ASK INSPECTOR OF ELECTION TO ANNOUNCETHAT A QUORUM IS PRESENTExplain that a quorum is the minimum number of owners who mustbe present, in person or by proxy, to conduct business.
VII. ASK FOR MOTION TO APPROVE LAST YEAR'S MINUTESA. Pass out copies or read aloud. Ask for questions and/or corrections.
Explain that minutes are not supposed to record every word; theminutes make a record of time, place, quorum, events and decisionsreached.
B. Ask for a motion/second to approve last year's meeting minutes(Minutes can be approved with corrections pending).
NOTE: If this is included on the ballot, a motion is unnecessary.
VIII. HAVE THE TREASURER/CFO PRESENT FINANCIAL REPORTA. Explain that "reserve accounts" are categories where associations
allocate money to repair and/or replace common area components.
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B. Explain the reserve funding resolution: Permits associations to avoidpaying income tax on excess operating funds by allocating thosefunds back into the association. Call for a motion to approve thisresolution or ask owners to approve it on the ballot.
IX. ELECTION OF DIRECTORSA. CALL FOR NOMINATIONS FROM THE FLOOR
(NOMINEES MUST ACCEPT) IF DESIRED ORREQUIRED
B. ANNOUNCE THE NAMES OF ALL NOMINEES
C. EXPLAIN VOTING INSTRUCTIONS:1. Cumulative voting: each home has the same number of
votes as there are open seats, i.e., three open seats--every home has 3 votes to cast. Votes may be cast forone candidate, or divided among candidates, but nofractional voting.
2. Non-cumulative voting: Each home has one vote tocast for each open seat.
3. Voting by secret ballot: Collect ballots from ownerswho have not sent in a mailed ballot.
D. VOTE COUNTING1. Upon closing of the polls, the inspector(s) count votes.
The number of votes that each candidate receives shouldbe written next to the candidate's name on a blankballot, with the total number of votes cast at the bottomof the list.
2. All inspectors must sign the count.3. During the voting/counting, proceed to item X, for
homeowner inquiries and comments, reports byconsultants, etc.
E. INSPECTOR(S) SHOULD ANNOUNCE NAME OFNEW DIRECTORS
X. OTHER BUSINESS: DISCUSSION OF ASSOCIATION ISSUES
XI. ASK FOR A MOTION AND SECOND TO ADJOURN THEMEETING
XII. MAIL NOTICE OF RESULTS TO OWNERS WITHIN 15 DAYS
NOTES
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18
ANNUAL DISCLOSURES CHECKLISTASSOCIATION:__________________________________________YEAR:___________
INFORMATION PROVIDED TO OWNERS WHEN
I. NOTICE OF THE ANNUAL MEETINGOF MEMBERSVirtually all associations are required to have anannual meeting of members. Depending upon thedate of the annual meeting in relationship to thefiscal year, it is possible to send almost all otherrequired information/notices with the notice ofannual meeting.A. REQUEST TO SERVE
Prior to mailing the ballots, a request to serve letter should be sentto the owners requesting nominations for candidates to the board ofdirectors.
B. NOTICE OF THE MEETINGThe notice of the meeting should include the date and time that themeeting will take place, the location of the meeting, and directionsto the location.
C. AGENDAAn agenda must be included showing all business to be conducted atthe meeting. The election of directors is normally the primaryactivity.
D. DIRECTORS AND OFFICERS LISTSInclude the names of the current directors and officers.
E. CANDIDATE SLATEOwners should be provided with the names of the candidates, as wellas the number of open seats on the board.
F. BALLOTThe ballot should list the names of the nominees, it should includeblank spaces for write-ins, and it should include complete votinginstructions.
G. PROXYOwners who cannot attend the meeting may be given theopportunity to allow someone to cast a vote on their behalf, bycompleting a proxy.
II. MINUTES OF THE ANNUAL MEETINGOF MEMBERSThe minutes of the annual meeting should be sent toall members as soon as possible after the meeting isheld. The minutes should be sent in draft form, sincethey will not be approved until the following year.
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AT LEAST 30DAYS BEFORETHE MEETING
AS SOON ASPOSSIBLE AFTER
THE ANNUALMEETING
III. CIVIL CODE SECTION 1363.005DISCLOSURE DOCUMENTSAt the request of a member, the association shalldistribute the index of disclosure documents set forthin Civil Code section 1363.005.
IV. CIVIL CODE SECTION 1365(c)REVIEWED FINANCIAL STATEMENTSIf your association has an annual income of morethan $75,000, then an annual financial review isrequired and it must be performed by a licensee ofthe California State Board of Accountancy. For largeassociations a full audit is preferable.
V. CIVIL CODE SECTION 1365(a)PRO FORMA BUDGETThe board must prepare a "pro forma," that is, aplanned budget showing anticipated revenue andexpenses, on an accrual basis. A summary of thebudget may be distributed, but the summary mustinclude a notice in 10-point bold type that the entirebudget is available.
VI. CIVIL CODE SECTIONS 1365(a)(2);1365.5(e); 1365.2.5RESERVE STUDY SUMMARYThe board should review the reserve study everyyear, and the study should be completely renewedevery third year. A summary of the reserves must besent to all owners in bold type, and it must includecertain, specific information as set forth in CivilCode section 1365.5, using the "Assessment andReserve Funding Disclosure Summary" form inSection 1365.2.5.
VII. CIVIL CODE SECTIONS 1365(b);1365.5(e)(5)RESERVE FUNDING PLAN SUMMARYThe Reserve Study in Section VI above must include,among other requirements, a Reserve Funding PlanSummary of how the association plans to fundreserve contributions for repair and replacement ofall major components with an expected remaininguseful life of 30 years or less.
VIII. CIVIL CODE SECTION 1365(a)(3)(B)SPECIAL ASSESSMENT STATEMENTIf the board of directors anticipates having to levy aspecial assessment, or has already decided to do so,then a statement must be sent to all ownersdescribing the assessment.
IX. CIVIL CODE SECTION 1365(e)ASSESSMENT COLLECTION POLICYSTATEMENTSince assessment collections can result in a lienagainst a home and having it sold at a foreclosuresale, it is very important for owners to be informedabout assessment collection procedures.
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AT LEAST 30,BUT NOT MORETHAN 90 DAYSBEFORE THEEND OF THEFISCAL YEAR
WITH PROFORMA BUDGET
WITH PROFORMA BUDGET
WITHIN 120DAYS AFTER THEEND OF THEFISCAL YEAR
ANNUALLY ORWHEN MEMBERS
REQUEST
WITH PROFORMABUDGET
AT LEAST 30,BUT NOT MORETHAN 90 DAYSBEFORE THEEND OF THEFISCAL YEAR
X. CIVIL CODE SECTION 1365(f)INSURANCE INFORMATIONAssociations must provide a summary of the generalliability, earthquake, and flood insurance policies toall owners. Specific information is required, which isusually provided by the insurance professional, aswell as a mandatory statement in 10-point, bold type.
XI. CIVIL CODE SECTION 1363.05(e)RIGHT TO OBTAIN MINUTES OF BOARDMEETINGSOwners are entitled to copies of minutes of boardmeetings, just as they are entitled to attend mostboard meetings. The notice must describe how theminutes can be obtained
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XII. CIVIL CODE SECTIONS 1363.850;1369.590INTERNAL DISPUTE/ALTERNATIVEDISPUTE RESOLUTION NOTICEMost disputes between an association and anowner must be submitted to internal disputeand/or alternative dispute resolution prior to filingsuit. Check with your professional manager orlegal counsel for the proper form of the requirednotice, including a mandatory statement.
XIII. CIVIL CODE SECTION 1378(c)ARCHITECTURAL STANDARDSA description of the type of items which requirearchitectural approval as well as the procedure forsubmitting for approval must be provided to theowners.
XIV. CIVIL CODE SECTION 1365.1NOTICE RE: ASSESSMENTS ANDFORECLOSURENotice to owners outlining rights andresponsibilities regarding assessments andnonjudicial foreclosure, payments, and meetingsand payment plans.
XV. CIVIL CODE SECTION 1365.1(C)NOTICE RE: RIGHT TO SUBMITSECONDARY MAILING ADDRESSAssociations must provide notice to owners oftheir right to submit a secondary mailing addressfor collection notices. The notice should adviseowners that such requests must be in writing andmailed in a manner indicating that the associationreceived it, such as certified mail, return receiptrequested.
XVI. CIVIL CODE SECTION 1363(g)MONETARY PENALTIES SCHEDULEIf an association has adopted a policy imposing amonetary penalty upon members for violating thegoverning documents, then a schedule ofmonetary penalties must be adopted by the boardand distributed to the members.
ANNUALLY
WITHIN 60 DAYSOF BEGINNINGOF FISCAL YEAR
ANNUALLY
ANNUALLY ORWHENEVERTHERE ARECHANGES
ANNUALLY
ANNUALLY
ANNUALLY
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UPON REQUEST
XVII. CIVIL CODE SECTION 1368DISCLOSURE DOCUMENTS UPONSALE/TRANSFER OF SEPARATE INTERESTAssociations are required to provide certaindocuments to requesting owners in connection withthe sale or title transfer of the owner’s separateinterest within the association. These documentsinclude (if applicable):(1) Governing Documents(2) Civil Code section 51.3 statement(3) Civil Code section 1365 documents(4) Statement regarding assessments,
applicable to both association and owner’sseparate interest
(5) Pending violation notices(6) Initial list of defects(7) Construction defect settlement disclosures(8) Changes in current regular or special
assessments approved but not yetdue/payable
(9) Statement regarding rental or leasingprohibitions
(10) Copies of approved regular session boardmeeting minutes for prior 12 months, uponrequest
NOTES
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23
Chapter ONE
ASSOCIATION BASICS
C. GUIDELINES
1. THE COMMUNITY ASSOCIATION CONCEPT(Adopted from the California Department of Real Estate)
INTRODUCTION
Prior to the mid 1960s, the typical family home in the United States wasalmost exclusively the single-family detached house located in a neatly arrangedsubdivision. There seemed to be an unlimited supply of land. Each house wasbuilt on a separate lot. Construction costs were moderate and stable. Thesidewalks, streets, lighting, other basic services (the infrastructure), and any parksor recreational facilities in the neighborhood were provided and maintained bythe local government through taxes.
In recent years, land in desirable areas for home building has become muchmore scarce and, consequently, more expensive. Construction costs havecontinued to rise along with everything else. Government can no longer affordto provide the same level of service and variety of amenities to enhance thequality of life as it has in the past.
The Challenge
In order to continue to produce affordable housing and maintain an adequatehousing supply for the population, land use had to become more efficient, andconstruction methods more economical. Ways to relieve local government ofthe burdening costs of infrastructure had to be discovered.
A Response
One response to the challenge came in various forms of group or clusterhousing coupled with shared ownership of the land which, today, are collectivelyreferred to as Common Interest Developments or CIDs. It is estimated that morethan 31 million Americans live in some type of CID. There are tens of thousandsof CIDs in California alone, with new ones being built everyday.
A CID is descriptive not only of a certain type of real estate and form of homeownership, but also of a life-style that is becoming more and more common to theAmerican way-of-life. To understand the concept, it is important to know thatthere is no one structural type, architectural style, or standard size for CIDs. Theycome in a variety of types and styles, such as single-family detached houses, two-story townhouses, garden apartments with shared "party walls," andapartment-like, multi-storied high rises.
While recent studies indicate that the average-size CID in California is madeup of 88 units, CIDs may, in fact, range in size from a simple two-unitdevelopment up to a large complex having thousands of units, many commonlyowned facilities, and multiple associations under the auspices of one overallmaster association. However, despite the wide range of differences that existamong CIDs, all CIDs are similar in that they allow individual owners the use ofcommon property and facilities, and they provide for a system of self-governanceand some degree of service for the benefit of the homeowners.
24
Chapter ONE
ASSOCIATION BASICS
SOMETHING IN COMMON
Legal Characteristics
CIDs have distinct legal characteristics that distinguish them from other formsof home ownership. One important feature is that the ownership in a CIDcombines individual ownership or the right of exclusive occupancy of aresidential unit with the shared ownership of the common area within thedevelopment. Another distinguishing trait is that owners in a CID areautomatically members of a homeowners association that is responsible for theoperation and maintenance of the common area. This association also providesfor a system of self-governance. Finally, to pay the costs of the operation of theassociation, CID owners are assessed dues to cover their equitable share of theassociation's expenses.
Comparing and Contrasting
Four types of CIDs are common in California: condominiums, planneddevelopments, stock cooperatives, and community apartments. Condominiumsand planned developments, two of the most common CIDs, are similar to eachother in that both provide the owner with title (ownership) to a residential unit andthe right to use the common area within the development. The main differencebetween condominium and planned development ownership is the way title tothe common area is held. In a condominium, each homeowner has an undividedinterest in the common area with all the other owners in the development,whereas in a planned development, the homeowners association usually owns thecommon area.
By comparison, in the community apartment form of ownership thehomeowner owns a title interest in the development. In the case of a stockcooperative, the homeowner owns a share of stock or a membership interest inthe corporate entity that owns the structures and land comprising the CID.Coincidental with either of these two forms of ownership, the homeowner hasthe exclusive right to use a specific residential unit within the development.
THE ASSOCIATION
Basic Structure and Early Operation
When a subdivider develops a CID, the subdivider must simultaneouslystructure an association of the CID owners that will be responsible for the ongoingmanagement, operation, and maintenance of the common area. In creating thisassociation, the developer must establish reasonable arrangements for the totaloperation of the association, to include: levying assessments; member andgoverning body meetings; voting and elections; governing body duties; and rightsand responsibilities of the association. Initially, these arrangements must meet therequirements of the Real Estate Commissioner's Regulations administered by theDepartment of Real Estate (DRE).
The DRE's regulations constitute the standards by which DRE evaluates thegoverning instruments for subdivisions, however, they do not constitutesubstantive requirements in and of themselves. DRE's role with regard to CIDs is
25
Chapter ONE
ASSOCIATION BASICS
primarily one of seeing that the initial subdivision offering is made underreasonable arrangements.
The Declaration, Bylaws, and Articles of Incorporation are the documentsused to establish the framework for the operation of the association. They formthe legal basis for the "mini-government" of homeowners that is created. Thesedocuments are generally enforceable in a court of law, if the need ever arises.Once the original subdivider or his or her successor in interest holds title to lessthan 25% of the lots or units in the project, the association is free to change thegoverning instruments as it sees fit as long as the changes are consistent with theCommon Interest Development Act. (See Civil Code Section 1350 et. seq.) Caselaw mandates that the developer operate the association at all times in the bestinterest of the homeowners throughout the marketing phase, up until such timeas the developer is no longer in control and the management and operation of theassociation passes to the homeowners and their elected representatives. Oncethis transition of power is complete, sales by the developer cease and thehomeowners are in charge. The association becomes a totally independent entityanswerable to its membership.
Membership
The homeowners association is unique to CIDs. It exists only to serve aparticular CID. Each owner in a CID automatically becomes a member of theassociation on taking title to a lot or interest in the project. Membershipautomatically terminates on the transfer of title. Only owners are associationmembers and all owners must be members.
With the exception of associations in which the developer is in control, eachmember of the association, generally, has one vote for each subdivision interestowned. When a lot or unit is owned by two or more persons as co-owners, thegoverning documents usually provide for a method of determining how the onevote can be exercised on behalf of the various owners.
Rights and Powers of the Association
The association must be given sufficient authority to effectively manage,operate, and maintain the common area which typically includes the landscaping,recreation facilities, private streets and driveways, outdoor lighting, structures,roofs, fences, and any other components of the common area of the CID. Powersadequate for this purpose are set forth in the association's governing documents.
These powers are usually delegated by the association to a governing bodythat must be elected by the membership at an annual or special meeting. Theprocedures for the election and for the removal of the members of the governingbody are provided in the governing documents.
Although the governing body is given the power and responsibility to act onbehalf of the association, if an action contemplated by the governing body willhave a material effect on the rights of the membership, generally prior approvalby at least a majority of the association is required. Examples of actions requiringsuch a vote are:
26
Chapter ONE
ASSOCIATION BASICS
Levying a regular assessment on each unit or interest that is more than 20%greater than the regular assessment for the preceding fiscal year or specialassessments which in the aggregate exceed 5% of the budgeted gross expenses forthat fiscal year. These limits do not apply to increases necessary for emergencysituations. An emergency situation is defined as an extraordinary expense;required by the court; or, necessary to repair or maintain common areas or otherareas for which the association is responsible, which could not have beenforeseen; or, to remedy a threat to personal safety. In the case of an unforeseenextraordinary expense, the governing body must distribute a resolution as to thenecessity of the extraordinary expense and why the expense could not have beenreasonably foreseen in the budgeting process.
Where necessary, extending the term of the Declaration of Covenants,Conditions and Restrictions.
THE GOVERNING BODY
Powers and Duties
The powers of the association to manage the CID are normally exercised bya board of directors or similar governing body that is elected by the homeowners.The governing body is usually delegated the complete authority to manage theaffairs of the entire project, subject to the control of the homeowners. The specificduties and powers of the governing body, generally set forth in the governingdocuments, normally include, but are not limited to the following:
1. Enforcement of the governing documents and any other instrumentsnecessary for the management of the project;
2. Collection of assessments from association members for the payment oftaxes, insurance, and operational costs related to the common area;
3. Contracting for goods, services, and insurance on behalf of theassociation, subject to some limitations;
4. Delegation of powers to committees, officers, and employees appointedand hired by the governing body to assist in the management and operationof the association;
5. Preparation of budgets and financial statements as called for in thegoverning documents or as prescribed by law;
6. Adoption and enforcement of rules for the operation and control of thecommon area;
7. Ability to take disciplinary action, including fines, interest, and latecharges, against association members who violate the governing instruments;
8. The right to enter a privately owned unit or interest in connection withconstruction, maintenance or emergency repair for the collective benefit ofthe owners;
9. Election of officers of the governing body and filling vacancies, exceptfor one created through a removal by the association membership; and,
10. Repair and maintenance of the common area.
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Chapter ONE
ASSOCIATION BASICS
FUNDING THE ASSOCIATION
Regular Assessments
The sole source of income for most associations is assessments levied on allowners in the project, including the developer, for each interest or unit owned.(In CIDs where some owners may receive greater services or benefits, assessmentsmay be determined by a formula or schedule that is based on the proportionalvalue of common area services provided.) Regular assessments cover the day-to-day costs of running the association, which include the management andoperation of common area recreational amenities such as swimming pools,clubhouses and tennis courts, and services that include landscape maintenance,security guards and scheduled social activities.
Regular assessments for all units or interests, including those owned by thedeveloper, in a single phase CID, or in a phase of a multi-phase project, generallybegin, for each phase, on the first day of the month following the first completedsale. (A single phase project is one completely developed at one point in time; amulti-phase project is developed in increments at different points in time.)
Special Assessments
Additionally, the governing body has the authority to levy special assessmentsagainst all CID interests or units for major repairs, replacements, or newconstruction on the common area or for a one-time, unanticipated expense whichcannot be covered by the regular assessment (for example, insurance premiumsthat unexpectedly "sky rocket").
The special assessment should not be confused with a monetary penaltylevied by the association against an individual homeowner to reimburse theassociation for an expense such as damage to the common area, or imposed asa disciplinary measure for a violation of the rules and regulations.
Other Charges
Some CIDs establish user fees or special charges for uncustomary servicesand activities. Typically, these are imposed on an owner specifically benefittingfrom the service, such as an owner who wants to use the common area pool,clubhouse, or tennis courts to entertain private guests. The fees are usually on apay-as-you-go basis, and generally cannot become a lien on the owner's unit orinterest.
Limitations on Governing Body Authority
Procedures for establishing and collecting regular and special assessments,late charges, interest, and fines are usually set forth in the governing documents.Even if the governing documents are more restrictive, the governing body maynot, except in specific emergency situations or with the vote of a prescribedpercentage of owners, impose a regular assessment that is more than 20% greaterthan the regular assessment for the preceding fiscal year, or special assessmentswhich in the aggregate exceed 5% of the budgeted gross expenses of theassociation for the current fiscal year. The association must give owners notice,by first class mail, of any increase in regular or special assessments.
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Current law states that a late charge may not exceed 10% of the delinquentassessment or $10, whichever is greater. However, the governing instrumentsmay specify a smaller amount. Also, any interest charged may not exceed 12%,commencing 30 days after the assessment is due. (See Civil Code Section 1366.)
Lien Rights
Once levied, the assessments, any late charges, reasonable collection costsand interest assessed according to the law become a debt of the owner of theseparate interest. The amount of the assessment plus the other described chargesbecomes a lien on the owner's interest at the time the association files a notice ofdelinquent assessment with the county recorder of the county where the separateinterest is located. The lien can be enforced in any manner permitted by law,including the sale of the property in order to recover money owed the association.If and when the owner pays the amount for which the lien was filed, theassociation must record a notice releasing the lien within twenty-one (21) days ofreceiving payment in full.
A statement describing the association's policy regarding lien rights and otherlegal remedies must be delivered annually by the governing body to themembership. (See Civil Code Section 1365)
Budgeting for Today and Tomorrow
Prompt payment of assessments by all owners, including the developer, isessential, not only to cover day-to-day operating costs, but also to build a reservefund for future repair and replacement of major components of the common area.The reserves are an important part of the association's annual pro forma operatingbudget. They are generally collected with the regular assessment and set aside ina separate reserve account for the years to come. Ideally, all major repair andreplacement costs will be covered by funds in the reserve account.
As the governing body is charged with the responsibility for maintaining theassociation's property, it is important that the accumulated cash be available whenit is needed. Unlike an independent homeowner who can cause a repair orreplacement to be made and pay for it out of his or her own pocket, the governingbody is dependent on the membership for funding.
An insufficient reserve fund at a time when a major repair or replacement isneeded usually results in the governing body levying a potentially burdensomespecial assessment, borrowing the money in extreme situations, or in some cases,deferring the work. A decision simply not to perform the needed repair orreplacement might also be the response of a governing body afraid of theconsequences of making an unpopular decision or of one operating at the "whim"of the electorate. Such thinking and the failure of the association to adopt a "pay-as-you-go" plan for the future can create an environment of declining propertyvalues due to the increasing deferred maintenance and the association's financialinability to keep up with the normal aging of the common area components. This,in turn, can have a serious negative impact on sellers in the project by making itdifficult or even impossible for potential buyers to obtain financing from aninstitutional lender.
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By contrast, a well-funded reserve goes a long way toward maintainingproperty values within a CID. Not only does it help eliminate the need for specialassessments, but it spreads the costs of predictable repairs and replacements overtime. Healthy reserves do away with the inequitable concentration of costs foranticipated major repairs and replacements on the owners in the project at thetime the repair or replacement is required.
The law allows the governing body to borrow from the reserve fund to meetshort-term cash-flow requirements or other expenses. The money must bereturned to the reserve fund within one year unless the governing body candocument that a delay in repayment is necessary. Ultimately, a special assessmentmay be required to repay the money. That special assessment would not besubject to the 5% aggregate limitation discussed above. (See Civil Code Section1365.5.)
Reserve Study
A reserve study prepared by the association or professionals hired by theassociation gives a current estimate of the cost of repairing and replacing majorcommon area components over the long term, commonly thirty years. A reservestudy generally consists of an inventory of all the major component parts of thecommon area, an estimation of the remaining useful life of each component, aswell as the cost of replacing each component at a predicted time in the future. Awell-prepared reserve study allows the association, the owners, and potentialbuyers to compare estimated required reserves with the reserve funds on hand,and thereby serves as a guide to their respective future actions. If the replacementvalue of the major components which the association must maintain is equal toor greater than one-half of the association's gross budget, the association must, atleast once every three years, cause a reserve study to be completed and reviewthat study annually in order to make any necessary adjustments to the analysis ofreserve account requirements.
The DRE has two publications that are useful in preparing a reserve study: the"Operating Cost Manual," for budget preparation; and '"Reserve Study Guidelinesfor Homeowner Association Budgets.” For information on these and other DREpublications, write to: BookOrders, P.O. Box 187006, Sacramento, CA95818-7006,or visit the DRE website: www.dre.ca.gov.
Distribution of Financial Statements
The law requires that the association prepare financial statements fordistribution to its members annually so that the membership will have an accuratepicture of the association's financial position and level of preparedness for thefuture, and so that the membership can participate in the financial decision-making process. These financial statements include:
1. A pro forma operating budget which shall include: estimated revenuesand expenses; a general statement describing procedures used to calculatenecessary reserves; identification of cash reserves; an estimate of currentreplacement costs of and the remaining useful life of the major componentsthe association must maintain; and a comparison, by percentage, of reservefunds accumulated and the current estimate of necessaryreserve funds, with
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a statement as to whether any special assessment(s) will be necessary for anyrepair or replacement or to augment the accumulated reserves.
2. In lieu of the actual budget, the association may choose to distribute toall owners a budget summary with a notice that the complete budget isavailable upon request. An association which does not distribute therequired budget information to all owners may not impose an otherwisepermitted increase in the regular annual assessment without a specified voteof the owners.
3. A copy of a review of the financial statement done in accordance withgenerally accepted accounting principles by a licensed accountant for anyassociation whose annual gross income exceeds $75,000.
4. A statement describing the association's policies and practices inenforcing lien rights or other legal remedies for default in payment ofassessments. (See Civil Code Sections 1365 and 1366.)
DUTIES, RIGHTS AND POWERS OF THE INDIVIDUAL OWNER
Duties and Responsibilities
In order for the association to function successfully for the whole as well asfor the parts, the relationship of the collective rights, duties, and responsibilitiesof the association to those of the individual owner must be recognized. When aperson purchases in a CID, he or she assumes both collective and individualobligations that are set forth in the governing documents, California law, and rulesand regulations adopted by the association. These duties apply not only to thecommon area, but also to the individual unit or interest that the person owns.
While the association is obligated to maintain the common area, sometimesto the extent of maintenance and repair of the exteriors of each owner's unit orinterest, each owner is responsible for the maintenance and upkeep of the interiorof his or her separate interest or unit. Typically, this includes the carpeting anddrapes, interior walls, cabinets, counter tops, and the appliances and fixtures.
The individual owners may also have explicit maintenance responsibility forexclusive use common areas such as private yards, decks, and front doors.Sections 1351 and 1364 of the Civil Code specifically designate internal andexternal telephone wiring to serve a single separate interest as well as an exclusiveuse common area. The owner of a separate interest will be allowed reasonableaccess to the common area for the maintenance of internal and external telephonelines, subject to the consent of the association.
Each owner has the duty to pay assessments in a timely manner. Failure tofulfill this financial obligation not only places the association in financial jeopardyby creating a shortfall of funds necessary to operate the project, but also subjectsthe delinquent owner to potential interest charges, late fees, and costs ofcollection, including reasonable attorney's fees. In addition, each owner mustaccept personal responsibility for his or her actions, as well as the actions of hisor her guests, children, and pets with respect to the common area and/or to theother owners in the project. This personal obligation also extends to each owner's
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role in ensuring maximum property value for all units in the project by adheringto maintenance standards appropriate to the project. This "pride-of-ownership"is reflected in the upkeep of the individual unit or interest by each owner.
Basic Rights
Along with the duties and obligations to the association, owners have specificprotection of their ownership rights under California law, as well as through thegoverning documents. One of the most basic of these rights is the owner's rightto the quiet use and enjoyment of his or her unit or interest, as well as the rightto use and enjoy the common area, subject to the established rules andregulations, and to the rights of others.
While the association generally has the exclusive right to modify or improvethe common area, the individual owner has the right to modify or improve his orher unit (according to the architectural controls and procedures in the governingdocuments and the local building codes and standards, as applicable). However,any such modifications or improvements must not adversely affect the rights ofother owners. The rights of individuals to modify their units include handicappedowners, who also have additional rights under federal and state laws to improvethe accessibility and livability of their units. (See Civil Code Section 1360.)
CID owners have a basic right to be informed and to participate in theoperation of the association. In order that homeowners are given this opportunity,the governing documents include specific provisions for the association's givingnotice of meetings, posting and/or mailing of certain information, anddisseminating required financial statements, and other related information.
Right to Vote and Approve
Many governing documents grant CID owners the right to vote on majorissues affecting the association, such as:
a. Election and/or removal of members of the governing body;
b. Amendment and/or extension of the effective date of the governingdocuments;
c. Approval of some third party contracts entered into by theassociation;
d. Approval of regular and special assessments in excess of annualamounts of increase allowed by law;
e. Approval of various other decisions and expenditures such asimprovement of the common area, annexation of other property to theexisting project, and selling property of the association.
CONCLUSION
A successful and viable CID is generally one in which homeowners assumean active role in the association's function, not only by attending meetings, voting,and paying dues on time, but also by taking an active role in the actualfunctioning of the association by running for the elected offices, serving oncommittees, and generally participating in group activities. It is one where owners
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have developed and fostered a "sense of community." While the framework of theassociation is the governing documents, it can certainly be said that the"backbone" of the association is the active and involved membership.
2. THE ROLE AND FUNCTIONS OF THE BOARD OF DIRECTORS
DIRECTORS
Directors are the members of the association's governing body, the Board ofDirectors. Directors are the persons ultimately responsible for virtually alldecisions made by the association. Each director has one vote in the decisionmaking process. Under California law, directors have a "fiduciary duty" regardingthe management and operation of the association, which duty is sometimesreferred to as the "business judgment rule."
The directors' fiduciary duty may involve seeking advice from accountants,lawyers, architects, insurance professionals, property managers, and otherprofessionals for matters within their respective areas of expertise. The board ofdirectors is not expected to have expertise in all areas of the association'sbusiness. Generally, if the board follows a well-established procedure for themanagement of its business and employs the assistance of professionals in thoseareas that require specific expertise, it will meet the fiduciary duty threshold ofresponsibility, and be in compliance with the business judgment rule.
In exercising its authority, the only decisions the board generally cannotmake are those major decisions that the governing documents explicitly leave tothe owners. Such major decisions typically include amending the governingdocuments, selling or borrowing against association property, adoptingextraordinarily large assessments, and similar decisions that affect the propertyrights of owners, or the mortgage holders.
Corporations Code Section 7231.5 addresses the duties of volunteer directorsor officers and their liability for failure to discharge their duties. The law providesthat, except under certain circumstances, there is no monetary liability on thepart of, or cause of action against any volunteer director or executive officer of anonprofit corporation based upon an alleged failure to discharge the person'sduties as an officer or director if the duties are performed in such a manner thatall of the following criteria are met:
a. The duties are performed in good faith;
b. The duties are performed in a manner that such a director or officerbelieves to be in the best interests of the corporation; and,
c. The duties are performed with such care, including reasonable inquiry,as an ordinarily prudent person in a like position would use under similarcircumstances.
This statute defines "volunteer" as the rendering of services withoutcompensation, and "executive officer" as the president, vice-president, secretaryor treasurer of a corporation or other individual serving in a like capacity whoassists in establishing the policy of the corporation.
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OFFICERS
The officers of the association include the President, Treasurer or ChiefFinancial Officer, Secretary, and one or more Vice Presidents (although a vice-president may not be required). Officers are charged with the responsibility ofconducting association business, according to the decisions of the board ofdirectors. The association's bylaws typically describe the duties of the officersand should be consulted by the directors and officers. If there is any question asto who has responsibility for what, the board should consult with the association'sattorney.
Typically the President is the chief administrative officer who presides at allmeetings of the board and at the annual owners meetings. The President isresponsible for conducting the day-to-day business matters of the association.These duties usually include signing association contracts and carrying out otheradministrative functions as assigned by the Board.
The Chief Financial Officer is typically responsible for the financial affairsand records of the corporation. The Chief Financial Officer will generally sign allassociation checks, review monthly financial statements, and interact with theassociation's accountant and/or tax preparer. Withdrawals from reserve accounts,however, usually require two signatures.
The Secretary is the legal custodian of the books and records of theassociation. This includes the official minutes of the board meetings and theannual owners meetings, as well as other official association records such ascontracts and financial records. The Secretary also frequently co-signs contractswith the President.
While the officers of the association are given the specific titles of President,Chief Financial Officer, etc., they do not necessarily function in the same way asofficers in a traditional business corporation, which may operate under a closelyobserved hierarchy or chain-of-command. Rather, the officers of the associationshould strive to function together, as a cohesive unit. Although certainresponsibilities may be delegated to particular officers, no individual officer hasthe authority to make decisions for the association as a whole.
CHAIN OF COMMAND (BOARD TO COMMITTEES)
Often the Board will be required by the governing documents to establishcertain standing committees (e.g., architectural or nominating). In other casesthe board may establish a committee to review a specific situation (e.g., parking).Regardless of the reason, it is very important that the committee and the boardmaintain good communication regarding the information received and thedecisions reached by the committee. Under no circumstances should thecommittee or its members act without the prior approval of the board. No matterwho is assigned a particular task, the board will ultimately have the finalresponsibility for the acts of everyone to whom they delegate duties.
The primary concern regarding committees is assuring that they strictlycomply with the requirements of the association's governing documents. Forexample, if the governing documents require an architectural committee to be
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established, then the governing documents may also contain a specific procedurethat must be followed by the architectural committee when architecturalimprovement requests are reviewed.
Every committee member should be aware of the specific writtenrequirements, and the time limits that are imposed on the committee. Forexample, the architectural committee often has a limited time to respond to anowner's request to make improvements, or to notify an owner of a violation thatexists on his or her property. If the committee fails to meet a deadline, the boardmay lose its authority regarding these matters.
ESTABLISHING BOARD LIAISONS
It is often difficult for the entire board to be familiar with every issue. Aneffective way to deal with this situation is to appoint individual directors to act asliaisons to interact with third parties with whom the board needs to communicate.Generally, each liaison has a different area of responsibility. The Board may wishto establish liaisons as follows:
• President Liaison with management and attorney
• Chief Financial Officer Liaison with accountant and insuranceprofessionals
• Secretary Liaison with attorney and for administrativematters
• Vice President(s) Liaison for architectural and landscaping
When each liaison position is filled and the liaison representatives havebecome familiar with their specific areas of responsibility they will be able togather and present the information necessary for the board to make decisions,quickly and efficiently.
3. PARLIAMENTARY PROCEDURE
INTRODUCTION
The California Civil Code requires associations to conduct meetings ofmembers according to an established system of "parliamentary" procedure.Although the law does not require use of any particular procedure, the procedurechosen should be applied on a consistent basis.
Parliamentary procedure originated in the English parliament as a way ofdebating public affairs even when matters became heated. The rules wereintroduced to meetings in America with the first settlers from England and, as weknow them today, were established in 1876 by Henry M. Robert when hepublished his first manual on parliamentary law entitled Robert's Rules of Order.
The basic concepts underlying Robert's Rules of Order are important becausethey form the foundation for an effective system of procedure. However, Robert'sRules of Order were designed for a parliament, not for community associationboard meetings. Therefore, while it is useful to draw from Robert's Rules of Orderto establish an effective system of procedure, Robert's Rules of Order have limitedusefulness and are certainly not legally required.
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The following information is a basic format for one system of parliamentaryprocedure that might be used by your association. It is important to rememberthat parliamentary procedure should be applied so that it is flexible enough toprotect the rights of all members. As you will see, there is nothing particularlycomplicated about the process.
ORDER OF BUSINESS
Organizations using parliamentary procedure should follow a fixed order ofbusiness. The following is a typical example:
1. Call To Order: The Chairperson calls the meeting to order by astatement such as, "I'd like to call this meeting to order." The Chairpersonmay also call roll, or announce who is present and/or absent.
2. Reading And Approval of The Minutes : Secretary reads, ordistributes a written copy of the minutes of the last meeting and calls forapproval, modification or addition. Approval and/or modifications areachieved by a motion.
3. Officers' Reports: Any Officer makes a report, either verbally or inwriting.
4. Committee Reports: Permanent, or "standing" committees report first.Temporary or "ad hoc" committees are then given an opportunity to presentreports.
5. Special Business: If there is some unusual and important business, it mayaddressed at this point in the meeting.
6. Unfinished Business: Business that was not or could not be completedat any previous meeting can be discussed.
7. New Business
8. Announcements
9. Adjournment
MOTIONS
Technically, there are four types of motions:
1. Main Motions: Main motions introduce subjects for consideration. Onlyone main motion may be considered at a time. For example, a main motionmight be introduced as follows: "I move that we purchase..."
2. Subsidiary Motions: Subsidiary motions change or affect how the mainmotion is handled, and should be voted on before the main motion.Subsidiary motions include a motion to amend, a motion to refer tocommittee, a motion to postpone, a motion to limit or extend debate, amotion to close debate and a motion to table. A subsidiary motion may beintroduced by saying, "I move the question be amended by striking out ..."
3. Privileged Motions: Privileged motions are those that are most urgent.These motions usually deal with special or important matters not directlyrelated to the pending business. Some examples include a motion to recess,
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a motion to adjourn at a predetermined time, a motion to avoid an impropermatter, etc.
4. Incidental Motions: Incidental motions raise questions of procedure thatrelate to other pending motions, and must be considered before a vote on therelated motion. For example, an incidental motion may involve a request towithdraw a motion, a request for division of the motion into parts orverification of a vote.
Each type of motion has a purpose and falls into a priority in terms of whenit is considered; the order of preference is: privileged motions; subsidiary motions;main motions. Incidental motions are simply decided as soon as they arise.
For the most part, however, the type of motion is not as important as the factthat a motion has been made. That is, the Board can only take certain actions bya duly called, seconded, and voted-upon motion. It is far more important toensure that these actions be taken by motion than it is to worry about the type ofmotion.
PRESENTING A MOTION
For all types of motions, the procedure is the same:
1. The board member who wants to make a motion indicates to theChairperson that he or she has a motion to present to the board.
2. The Board member then says, "I make a motion that... (we adjourn themeeting, or we approve the financial report, etc.). Motions should be statedin the affirmative.
3. A different Board member says, "I second the motion." (If there is nosecond, generally the motion dies.)
4. After it is seconded, the motion can be debated and it can be changed.The person who made the motion is supposed to have the first opportunityto talk. There is often little or no debate at this point because the board hasusually discussed the matter, and is ready to vote.
5. The Chairperson asks, "All in favor?" and "All opposed?" Usually thevote is taken by a voice vote; the alternatives are discussed below.
VOTING ON A MOTION
Generally, there are four methods of voting on a motion:
1. Voice Vote: The Chairperson asks all in favor to say "Aye" and allopposed to say "No."
2. Vote By Show of Hands: Same as a voice vote, but directors raise theirhands rather than respond verbally.
3. Vote By Roll Call: The Chairperson calls each name, and the directorsresponds "yes" or "no." The Secretary records the response of each director.
4. Vote By Ballot: Voting is done by writing the vote on paper,
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anonymously. This is the best method if secrecy is an issue, or if the matteris controversial.
ABSTAINING
Any board member has the option to vote in favor of a motion, against themotion, or to abstain from the voting. Abstaining is the same as "no comment.”It does not indicate approval or disapproval of the motion. The most commonexample of a reason to abstain from voting is the situation where the board isvoting on something in which a director has an individual interest. For example,perhaps the board is voting to approve a landscape policy that prohibits rockgardens, and one of the directors has a rock garden. It would be appropriate forthat director to abstain.
The effect of an abstention is the same as if that director simply was notpresent. There must be a majority vote of the remaining board members to carrythe motion (or more than a majority, if the issue calls for it). It is important tonote that the board member who abstained is still legally responsible for the actionof the board.
MAINTENANCE OF MINUTES, BOOKS, AND RECORDS
Minutes of meetings along with the association books and records providethe documentation for all of the acts of the association/corporation. UnderCalifornia law, all corporations are required to keep "adequate and correct booksand records of account, minutes of the proceedings of its members, board andcommittees of the board, and a record of its members, giving their names andaddresses and the class of membership held by each."
Minutes should be an abstract of the actions taken by the board, not atranscript of everything that was said at the meeting. Reports of officers orcommittees should be attached, or summarized briefly. Motions should be statedclearly. It is often helpful for each person making the motion to write it out. Thiswill avoid confusion and provides a concise statement of what was proposed.
It is generally not required to record who moved or seconded a particularaction. Discussion is typically not recorded, or if it is recorded at all it is onlysummarized. Likewise, on routine matters, actual voters need not be recorded.However, on controversial matters, especially where dissenting directors feelstrongly against the actions of the majority, the names of those voting for andagainst should be recorded. Where a matter of direct personal interest is involved,the interested director should want the minutes to reflect that he or she abstainedfrom voting, and may even wish to leave the meeting during any discussion andhave that fact reflected in the minutes. All directors are obligated to stay informedabout the affairs of the corporation. Thus, all directors should review the minutesfor information and accuracy whether or not they were present at the meeting inquestion. If any changes in the minutes are required, they should be approvedand noted in the official copy of the minutes which the secretary is charged withkeeping. The changes should also be reflected in the text of the minutes of themeeting at which they were approved.
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When an "executive session" is held, this designation should be reflected onexecutive session minutes to maintain confidentiality. Only board members andother necessary personnel (attorneys, management representatives, etc.) shouldparticipate in an executive session meeting. Actions taken in executive sessionshould be generally noted in the minutes of the next regularly scheduled openmeeting.
TWONEW LAWS
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For nearly 30 years, California common interest developments, includinghomeowners associations, have been governed by the Davis-Stirling CommonInterest Development Act (“Act”). The Act, comprised of 23 statutes in 1985,now contains over 90 statutes, at Civil Code §§ 1350 – 1378. Nearly every yearsince 1985, the Act has been amended, resulting in numerous legislative changesthat have made the Act unorganized and difficult to use. The Act also containsprovisions that do not reconcile with other laws affecting homeownersassociations, such as the California Corporations Code.
On August 27, 2012, Governor Brown signed into law Assembly Bill 805 (“AB805”) repealing in its entirety the Act and replacing it with a reorganized version.Once effective, the new Act will encompass California Civil Code §§ 4000 –6150. A companion bill, AB 806, corrects statutory cross-references to the Act inother California laws.
AB 805/806 is the culmination of over four years of review by the California LawRevision Commission (a committee tasked with continuing substantive review ofCalifornia statutes) (“CLRC”). CLRC recast the Act to make it simpler, morelogical and user-friendly. The good news is that AB 805 becomes effective January1, 2014, giving homeowners, managers, boards of directors and legal counselover a year to familiarize themselves with the reorganized Act.
We include cross-reference tables of the current code sections with thereorganized Act in this Chapter to provide you with an additional resource forgetting up to speed with the new Act and its substantive and reorganizationalchanges in the upcoming year.
Other important bills chaptered in 2012 affecting common interest developmentsrange from a clean-up bill addressing electric vehicle charging stations;clarifications to the Open Meeting Act and disclosure documents; cancellationfees for document requests; requirements for mortgage holders after foreclosure;and, access to gated communities by private investigators as process servers. Wealso include information on recent changes to the Federal Housing Administration(“FHA”) guidelines governing condominium project approvals that went intoeffect in September 2012.
The following significant bills were chaptered into California law and go intoeffect on January 1, 2013.
A. Assembly Bill 806/806 – REORGANIZATION OF THE DAVIS-STIRLINGCOMMON INTEREST DEVELOPMENT ACT
Renumbers and amends Civil Code Sections 1350 - 1378[Effective January 1, 2013; Operative January 1, 2014]
Civil Code §§ 1350 – 1378 are repealed and replaced in their entirety with CivilCode §§ 4000 – 6150.
Reorganization
Reorganizational changes to the Davis-Stirling Common Interest DevelopmentAct (“Act”) include:
• Grouping related code sections on similar topics into logical order and inclose proximity to each other
New Chapter 5 – “Property Use and Maintenance” groups together protected uses(display of flags, solar energy systems, modifications to property to accommodatedisability, satellite dishes, etc.) with provisions governing modifications of separateinterests and maintenance. Annual disclosure requirements in various sections ofthe Act are organized in one location (§§ 5300, 5305, 5310 and 5320).
• Breaking up longer code sections that are difficult to read into shorter,separate easier to read code sections
For example, election procedures are currently contained in a single section (CivilCode §1363.03) of over 1,840 words with 41 separate subdivisions andparagraphs. Section 1363.03 is now recast into an article entitled “MemberElection” with shorter sections, each covering a different topic (§§ 5100 – 5145).
• Clarifying unclear or confusing sections
See, Civil Code §§ 4095(b), 4175, 4201, 4255, 4785(c), 5110(b), 5225, 5230,5240(b), 5510, 5515, 5520, 5620, 5658, 5700(a), 5965.
• Standardizing defined terms, adding new definitions for commonly usedterms or concepts
Existing law uses inconsistent terms (“director,” “board member” and “member”)to refer to members of an associations’ board of directors. The new Actstandardizes such terms (i.e., “board” - §4085, “common area” - §4095, “director”- §4140, etc.) and replaces inconsistent variants throughout the Act, expands theAct’s existing definitions section to incorporate defined terms from other sections(“board meeting” from §1363.05(k)(2) - §4090), and adds new definitions (“annualbudget report” - §4076; “annual policy statement” - §4078; “general notice” -§4148; “individual notice” - §4153; “member” - §4160; “person” - §4170;(“approved by majority of all members”- §4065; “approved by majority of quorumof members”- §4070; etc.).
Other Substantive Changes/Improvements
In addition to organizational revisions, AB 805 implements a number of“noncontroversial” substantive changes/improvements:
Delivery Methods - §§ 4035, 4040, 4045, 4050: Civil Code §1350.7 providesmethods of delivery for documents distributed to members pursuant to otherprovisions of the Act. Delivery methods are now categorized as either by“individual delivery” or “individual notice” or by “general delivery” or “generalnotice.” References to delivery, such as “first class mail,” are replaced with theseterms. A new procedure is created for delivery of documents and notice to theassociation from a member.
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Hierarchy of Governing Documents - §4205: This section establishes thesupremacy of California law over an association’s governing documents wherethere is an inconsistency, and the prevailing order of the association’s governingdocuments, i.e., declaration, articles of incorporation, bylaws, operating rules.
Updating Cross-References to New Code Sections in the Declaration - §4235:An association’s board may adopt a board resolution to amend the governingdocuments to update cross-references to renumbered code sections in the newAct. The declaration may be restated and recorded with the corrected codesection numbers, together with a copy of the board resolution. Membershipapproval is not required for amending the declaration pursuant to this section.
Amendment of Declaration – §§ 4270, 4275, 5115(e): Currently, several sectionsof the Act provide similar but slightly different procedures for amending thedeclaration, depending on the purpose of the amendment. These requirementsare harmonized in a general procedure for amendment of the declaration (§4270).The text of the amendment must accompany the ballot presented to the membersfor a vote (§5115(e)). When a court order is sought to approve an amendmentwith a reduced percentage of member approval, courts will now be required tofind that the election was conducted in accordance with the election provisionsof the Act and any other applicable law (§4275(c)(2).
Operating Rules - §4365: Association members may call a meeting to vote onwhether to reverse a recent operating rule change (§1357.140). Section 4365 ismodernized to replace outdated references to the Corporations Code regardingelection procedures with equivalent provisions in the Act (§1363.03).
Grants of Exclusive Use Common Area - §4600: Civil Code §1363.07 providesexceptions to the member vote requirement for grants of exclusive use of commonarea to a member. New §4600 adds exceptions to accommodate a disability,assign parking spaces, storage units or other amenities designated for assignmentin the declaration, and to provide for electrical vehicle charging stations.
Modifications to Separate Interest Property - §4760: Expands application of CivilCode §1360 to allow a member to make modifications necessary toaccommodate a disability to any type of separate interest and not limited to a unitin a condominium project.
Board Meetings/Notice Requirement - §§ 4090, 4920: New §4090 modifies thedefinition of “board meeting” from a “majority of the directors” present, to thepresence of a number of directors sufficient to establish a quorum. Section 4920clarifies that all associations are required to provide advance notice of a boardmeeting (see existing §1363.05), including an agenda, regardless of whether thetime and place of the meeting is fixed in an association’s governing documents.Section 4920 also requires an association to comply with a longer notice periodstated in its governing documents. The requirement to post the meeting noticeand agenda in the common area has been deleted and §4920 now provides for“general delivery” of notices. This provides flexibility, i.e., associations can postin the common area, publish in a newsletter, etc.).
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Elections - §§ 5100, 5105, 5110, 5115, 5120, 5125, 5130, 5135, 5145: The newAct breaks up Civil Code §1363.03 into smaller sections by topic. Section5100(b) allows an association to adopt an operating rule applying standardizedelection procedures to other types of member elections not specified in the Act.The publication of election results is replaced by the general notice requirement(§5120(b)), as defined. Section 5125 resolves an ambiguity in existing law as tohow long ballots should be retained after an election, and requires the ballots toremain in the custody of the inspector of elections for one-year (§§ 5125, 5145),the period of time for judicial challenge. The current restrictions on use ofassociation funds for campaign communications (defined to include anycommunication that features the name or photograph of a candidate) have beenrevised to allow an exception for communications that are required by law, i.e.,meeting minutes (§5135(b)).
Association Records - §5200: Adds categories of records to the definition of“association records” – the governing documents, accountings prepared pursuantto §5520 (re: use of reserve funds for litigation) and “enhanced associationrecords.”
Recordkeeping/Member Requests - §5260: Specifies that certain requests bymembers must be delivered to the association in writing.
Annual Reports - §§ 5300, 5305, 5310 and 5320: Currently, annual disclosureand notice requirements are located in various code sections (§§ 1363.850, 1365,1365.1, 1365.2.5, 1369.490, 1378, etc.). The new Act groups these requirementstogether into a new article - “Annual Reports” commencing at §5300 - organizedinto three annual reports based on subject matter: (1) annual budget reportincluding budget and related financial disclosures (§5300), (2) annual financialstatement review, if required (§5305), and (3) an annual policy statementaggregating other information disclosures required by an association each year(§5310). Section 5320 provides for flexibility in delivery options, i.e. “individualdelivery” by mail or electronic means if a member has consented. Members areentitled receive a copy of the full reports if the association distributes summaries.
Director Conflict of Interest - § 5350: Section 5350 applies equivalent provisionsfrom the Corporations Code concerning self-interested directors to nonprofitcorporations and expressly prohibits a self-interested director or committeemember from voting on specified types of matters.
Assessments - §§ 5605, 5660, 5685: Section 5605 deletes superceded referencesto the Corporations Code regarding membership approval of assessmentincreases, when required. Section 5660 makes clear that the payment priorityrule (payments for assessments first applied to the principal owed then tocollection costs, interest or penalties) applies regardless of whether or when thedelinquent member has received a notice of delinquency. Section 5685 expandsthe application of existing 1367.5 to require a lien release and reversal of costs,etc., to all instances where an assessment lien is recorded in error, and not limitedto if such error is discovered through alternative dispute resolution.
Schedule of Monetary Penalties, Due Process - §§ 5850, 5855: Fine policiesand amendments to fine policies adopted by the board are required to be
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delivered to the members (§1363(f)). New §5850 requires that the fine policy bedelivered annually to the members in the annual policy statement, and limits thepenalty imposed to the penalty in effect at the time of the violation. Prior toimposing discipline on a member, notice and an opportunity to be heard by theboard must be provided (§1363(h)). Section 5855(a) expands the due processrequirement to imposing monetary charges to reimburse the association for costsincurred to repair damage to common area and facilities caused by a member orhis/her guest or tenant.
Alternative Dispute Resolution – 5960: Civil Code §1369.580 allows a court toconsider whether a party’s refusal to accept an offer of Alternative DisputeResolution was reasonable when determining an award in actions in which feesand costs may be awarded. Currently, this rule only applies to actions to enforcean association’s governing documents. Section 5960 expands the rule to applyto any action in which fees and costs may be awarded.
Board and Manager Take Away:
The reorganized Act will take some getting used to for everyone – homeowners,directors, managers and legal counsel. The good news is that the changes areintended to make the Act easier to read and understand, and the legislaturedeferred the operative date for an entire year to allow for getting up to speed.Things to do over the next year: (1) Review the entire text of the new Act tobecome familiar with the reorganization and substantive improvements (accessfull text at www.leginfo.ca.gov or www.clrc.ca.gov); (2) Take advantage ofupcoming seminars and educational events; (3) Review other resources for usefulinformation, including cross-reference charts of the old-to-new code sections (across-reference list is included at the end of this Chapter), materials prepared byyour association’s legal counsel, industry publications, and websites such as theCLRC website (www.clrc.ca.gov/H855.html); and (4) Consult with legal counselto implement changes to your associations’ governing documents, and otherimpacted policies and notices.
Important to note: AB 805 will repeal the entire Act in effect at the time AB 805is enacted, i.e., legislation enacted in the 2011 with an effective date on or beforeJanuary 1, 2012. Provisions of the Act enacted this year that go into effect in2013 will not be included in the reorganized Act in 2014. Look for additionalclean-up legislation to address changes made this year.
With some preparation and planning, boards, managers and their associationsshould be in good shape to implement the new laws January 1, 2014.
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THE REORGANIZEDDAVIS-STIRLING COMMON INTEREST DEVELOPMENT ACT
• Chapter 1 – General Provisions, 4000 – 4190Article 1 – Preliminary ProvisionsArticle 2 – Definitions
• Chapter 2 – Application of Act, 4200 – 4202• Chapter 3 – Governing Documents, 4205 – 4365
Article 1 – General ProvisionsArticle 2 – DeclarationArticle 3 – Articles of IncorporationArticle 4 – Condominium PlanArticle 5 – Operating Rules
• Chapter 4 – Ownership and Transfer of Interests, 4500 – 4650Article 1 – Ownership Rights and InterestsArticle 2 – Transfer DisclosureArticle 3 – Transfer FeeArticle 4 – Restrictions on TransferArticle 5 – Transfer of Separate Interests
• Chapter 5 – Property Use and Maintenance, 4700 – 4790Article 1 – Protected UsesArticle 2 – Modification of Separate InterestArticle 3 – Maintenance
• Chapter 6 – Association Governance, 4800 – 5405Article 1 – Association Existence and PowersArticle 2 – Board MeetingArticle 3 – Member MeetingArticle 4 – Member ElectionArticle 5 – Record InspectionArticle 6 – RecordkeepingArticle 7 – Annual ReportsArticle 8 – Conflict of InterestArticle 9 – Managing AgentArticle 10 – Government Assistance
• Chapter 7 – Finances, 5550 – 5735Article 1 – AccountingArticle 2 – Use of Reserve FundsArticle 3 – Reserve Planning
• Chapter 8 – Assessments and Assessment Collection, 5600 – 5735Article 1 – Establishment and Imposition of AssessmentsArticle 2 – Assessment Payment and DelinquencyArticle 3 – Assessment Collection
• Chapter 9 – Insurance and Liability, 5800 – 5810• Chapter 10 – Dispute Resolution and Enforcement, 5850 – 5985
Article 1 – Discipline and Cost ReimbursementArticle 2 – Internal Dispute ResolutionArticle 3 – Alternative Dispute Resolution Prerequisite to Civil ActionArticle 4 – Civil Action
• Chapter 11 – Construction Defect Litigation, 6000 – 6150
AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartCurrent → New Sections
Old § New § Description/Title
1350 4000 Short title1350.5 4005 Effect of headings1350.7 [omitted] 4040, 4045, Individual notice; General notice; Time and
4050 proof of delivery1351 (intro) 4075 Application of definitions1351(a) 4080 "Association"1351(b) 4095 "Common area"1351(c) 4100 "Common interest development"1351(d) 4105 "Community apartment project"1351(e) 4285 "Condominium plan"1351(e)(3) (except last ¶) 4290 Recordation of condominium plan1351(e)(last ¶) 4295 Amendment or revocation of condominium plan1351(f) 4125 "Condominium project"1351(g) 4130 "Declarant"1351(h) 4135 "Declaration"1351(i) 4145 "Exclusive use common area"1351(j) 4150 "Governing documents"1351(k) 4175 "Planned development"1351(l) 4185 "Separate interest"1351(m) 4190 "Stock cooperative"1352 4200 Application of Act1352.5 4225(a)-(b), (d) Deletion of unlawful restrictive covenants1353(a)(1) (1st/2d sent) 4250(a) Content of declaration1353(a)(1)-(4) 4255 Special disclosures(except 1st/2d sent)1353(b) 4250(b) Content of declaration1353.5 4705 Display of U.S. flag1353.6 4710 Noncommercial sign1353.7 4720 Roofing materials1353.8 4735 Low water-using plants1353.9 4745 Electric vehicle charging station1354 5975 Enforcement of governing documents1355(a) 4270(a) Amendment procedure1355(b) (1st sent) 4260 Amendment authorized1355(b)(1) 5115(e) Voting procedure1355(b)(2) 4270(b) Amendment procedure1353(b)(3) 4270(a)(3) Amendment procedure1355.5 4230 Deletion of declarant provisions in governing
documents1356 4275 Judicial authorization of amendment1357(a) 4265(a) Amendment to extend term of declaration
authorized1357(b) (except part of 1st sent) Omitted
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartCurrent → New Sections
Old § New § Description/Title
1357(b) (part of 1st sent) 4265(b) Amendment to extend term of declarationauthorized
1357(c) Omitted1357(d) 4265(c) Amendment to extend term of declaration
authorized1357.100 4340 "Operating rule"1357.110 4350 Requirements for validity and enforceability1357.120 4355 Application of rulemaking procedures1357.130 4360 Approval of rule change by board1357.140 4365 Reversal of rule change by members1357.150 4370 Applicability of article to changes commenced
before and after January 1, 20041358(a) 4625 Community apartment project1358(b) 4630 Condominium project1358(c) 4635 Planned development1358(d) 4640 Stock cooperative1358 (next to last ¶) 4645 Transfer of exclusive use common area1358 last ¶ 4650 Severability of interests1359 4610 Partition of condominium project1360 4760 Improvements to separate interest1360.2 4740 Rental restriction1360.5 4715 Pets1361 4505 Appurtenant rights and easements1361.5 4510 Access to separate interest property1362 4500 Ownership of common area1363(a) 4800 Association1363(b) Omitted1363(c) 4805 Association powers1363(d) 5000(a) Member meeting1363(e) (1st sent) 5240(b) Application of article (re Record Inspection)1363(e) (2d sent) Omitted1363(f) (1st sent) 5850(a) Schedule of monetary penalties1363(f) (2d sent) Omitted1363(g) 5855 Hearing1363(h) 4820 Joint neighborhood association1363(i) 5865 No effect on authority of board1363.001 5400 Director training course1363.005 Omitted1363.03(a) 5105(a) Election rules1363.03(b) (1st sent) 5100(a) Application of article (re Member Election)1363.03(b) (2d/3rd sent) 5115(b) Voting procedure (re quorum)1363.03(b) (4th sent) 5115(c) Voting procedure (re cumulative voting)1363.03(c) 5110 Inspector of elections1363.03(d) 5130 Proxies1363.03(e) 5115(a) Voting procedure
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartCurrent → New Sections
Old § New § Description/Title
1363.03(f)-(g) 5120(a)-(b) Counting ballots1363.03(h)-(i) 5125 Ballot retention1363.03(j) 5105(b) Election rules1363.03(k) 5115(d) Voting procedure1363.03(l)-(n) 5100(c)-(e) Application of article (re Member Election)1363.03(o) Omitted1363.04 5135 Campaign-related information1363.05(a) 4900 Short title (re Open Meeting Act)1363.05(b) 4925(a) Board meeting open(1st part of 1st sent)1363.05(b) 4935(a) Executive session(2d part of 1st sent)1363.05(b) (2d sent) 4935(b) Executive session1363.05(b) (3rd sent) 4925(a) Board meeting open1363.05(c) 4935(e) Executive session1363.05(d), (e) 4950 Minutes1363.05(f) 4920 Notice of board meeting1363.05(g) 4923 Emergency board meeting1363.05(h) 4925(b), Board meeting open; Member meeting
5000(b)1363.05(i) 4930 Limitation on meeting content1363.05(j) 4910 Board action outside of meeting prohibited1363.05(k)(1) 4155 "Item of business"1363.05(k)(2) 4090 "Board meeting"1363.07 (except (a)(3)(F) 4600 Grant of exclusive use1363.07(a)(3)(F) 4202(a)(4) Commercial and industrial developments1363.09 (re elections) 5145 Judicial enforcement1363.09(a)-(b) 4605 Civil action to enforce Section 4600 (re exclusive
use grant)1363.09(a)-(b) 4955 Civil action to enforce article (re Board Meeting)1363.1(a) 5375 Prospective managing agent disclosure1363.1(b) (except ¶ (1)) 4158 "Managing agent"1363.1(b)(1) 5385 Managing agent1363.2(a)-(e) 5380(a)-(e) Trust fund account1363.2(f) 4158 "Managing agent"(except 1st cl of 2d sent)1363.2(f) 5385 Managing agent(1st cl of 2d sent)1363.2(g) 5380(f) Trust fund account1363.5 4280 Content of articles (of incorporation)1363.6 5405 State registry1363.810 5900 Application of article (re IDR)1363.820 5905 Fair, reasonable, and expeditious dispute resolution
procedure required1363.830 5910 Minimum requirements of association procedure
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartCurrent → New Sections
Old § New § Description/Title
1363.840 5915 Default meet and confer procedure1363.850 5920 Notice in policy statement1364(a), (c) 4775 Maintenance responsibility generally1364(b) 4780 Wood-destroying pests or organisms1364(d)-(e) 4785 Temporary removal of occupant to perform treatment
of wood-destroying pests1364(f) 4790 Exclusive use communication wiring1365 (intro) 5300(b) (intro) Annual budget report1365 (intro) 5305(b) (intro) Review of financial statement1365(a)(1) 5300(b)(1) Annual budget report1365(a)(2) (intro) 5300(b)(2) Annual budget report1365(a)(2)(A)-(D) 5565 Summary of association reserves1365(a)(3)(A)-(D) 5300(b)(4)-(6), Annual budget report
(8)1365(a)(4) (1st¶) 5300(b)(7) Annual budget report1365(a)(4) (2nd¶) 5300(d) Annual budget report1365(a)(4) (3rd¶) 5300(a) Annual budget report1365(b) 5300(b)(3) Annual budget report1365(c) 5305 Review of financial statement1365(d) 5320 Notice of availability1365(e) 5310(a)(7) Annual policy statement1365(f)(1) 5300(b)(9) Annual budget report(except 2d cl of 1st sent) (1st/2d sent)1365(f)(1) 5300(a) Annual budget report(2d cl of 1st sent)1365(f)(2) 5810 Notice of change in coverage1365(f)(3) 5300(b)(9) Annual budget report
(3rd sent)1365(f)(4) 5300(b)(9) Annual budget report
(4th sent/2d ¶)1365.1 4040(b), 5730 Individual notice; Statement of collection procedure1365.2(a)(1) 5200(a) Definitions (re Record Inspection)(except (I)(ii)-(iii)1365.2(a)(1)(I)(ii) 5225 Membership list request1365.2(a)(1)(I)(iii) 5220 Membership list opt out1365.2(a)(2) 5200(b) Definitions (re Record Inspection)(except last clause)1365.2(a)(2) (last clause) 5205(g) Document
(2d sent)1365.2(b) 5205(a)-(b) Document1365.2(c)(1)-(5) 5205(c)-(g) Document1365.2(d) 5215 Withholding and redaction1365.2(e) 5230 Restriction on use of records1365.2(f) 5235 Enforcement
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartCurrent → New Sections
Old § New § Description/Title
1365.2(g) 5240(c) Application of article (re Record Inspection)1365.2(h) 5205(h) Document1365.2(i)-(k) 5210(a)-(c) Time periods1365.2(l) 5240(a) Application of article (re Record Inspection)1365.2(m) 5240(d) Application of article1365.2(n) Omitted1365.2.5 5570 Assessment and reserve funding disclosure summary1365.2.5(b)(3) 5300(e) Annual budget report1365.3 5580 Community service organization report1365.5(a) 5500 Board review1365.5(b) 5510(a) Use of reserve funds1365.5(c)(1) 5510(b) Use of reserve funds1365.5(c)(2) 5515 Temporary transfer of reserve funds1365.5(d) 5520 Use of reserve funds for litigation1365.5(e)(1)-(4), 5550 Visual inspection of major components and reserve(5)(1st sent) study1365.5(e)(5) 5560 Reserve funding plan(except 1st sent)1365.5(f) 4177 "Reserve accounts"1365.5(g) 4178 "Reserve account requirements"1365.5(h) Omitted1365.6 5350(a) Interested director1365.7 5800 Limitation of director and officer liability1365.9 5805 Limitation of member liability1366(a) (1st sent) 5600(a) Levy of assessment1366(a) (2d sent) 5605(a) Assessment approval requirements1366(a) (3d sent) 5605(c) Assessment approval requirements1366(b) (1st sent) 5605(b) Assessment approval requirements1366(b) (2d sent) 5605(c) Assessment approval requirements1366(b) (3d/4th sent) 5610 (intro) Emergency exception to assessment approval
requirements1366(b)(1)-(3) 5610(a)-(c) Emergency exception to assessment approval
requirements1366(c) 5620 Exemption from execution1366(d) 5615 Notice of assessment increase1366(e) 5650(b) Assessment debt and delinquency1366(f) 5650(c) Assessment debt and delinquency1366.1 5600(b) Levy of assessment1366.2(a) 4210 Record notice of agent to receive payments1366.2(b) Omitted1366.4 5625 Property tax value as basis for assessments1367 Omitted, but see 57401367.1(a) (1st sent) 5650(a) Assessment debt and delinquency1367.1(a) (2d sent) 5660 (intro) Pre-lien notice1367.1(a)(1-(6) 5660(a)-(f) Pre-lien notice
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartCurrent → New Sections
Old § New § Description/Title
1367.1(b) 5655 Payments1367.1(c)(1)(A) 5670 Pre-lien dispute resolution1367.1(c)(1)(B) Omitted, but see 5705(b)1367.1(c)(2) 5673 Decision to lien1367.1(c)(3) 5665 Payment plan1367.1(d) (1st-5th sent) 5675 Notice of delinquent assessment1367.1(d) (6th sent) 5685(a) Lien release1367.1(d) (7th-8th sent) 5725(a) Limitations on authority to foreclose liens for
monetary penalties and damage to the common area1367.1(e) 5725(b) Limitations on authority to foreclose liens for
monetary penalties and damage to the common area1367.1(f) 5680 Lien priority1367.1(g) (1st sent) 5735 Assignment or pledge1367.1(g) (2d sent) 5700(a) Collection generally1367.1(g) (3d sent) 5710(a) Foreclosure1367.1(g) (4th sent) 5710(c) (intro) Foreclosure1367.1(g)(1)-(2) 5710(c)(1)-(2) Foreclosure1367.1(h) 5700(b) Collection generally1367.1(i) 5685(b) Lien release1367.1(j) 5710(b) Foreclosure1367.1(k) 4040(b) Individual notice1367.1(l) 5690 Procedural noncompliance1367.1(m) Omitted, but see 57401367.1(n) Omitted1367.4(a) 5705(a), Decision to foreclose; Right of redemption after
5715(a), trustee sale; Limitation on foreclosure5720(a)
1367.4(b) 5720(b) Limitation on foreclosure1367.4(c) (intro) Omitted, but see 5705, 57151367.4(c)(1)-(3) 5705(b)-(d) Decision to foreclose1367.4(c)(4) 5715(b) Right of redemption after trustee sale1367.4(d) 5720(c)(2)-(3) Limitation on foreclosure1367.5 5685(c) Lien release1367.6 5658 Payment under protest1368(a) 4525 Disclosure to prospective purchasers1368(b) 4530 Information to be provided by association1368(c)(1) 4575 Transfer fee1368(c)(2) 4580 Exemption from transfer fee limitations1368(c)(3) 4110 "Community service organization or similar entity"1368(d) 4540 Enforcement of article (re Transfer Disclosure)1368(e) 4545 Validity of title unaffected1368(f) 4535 Related requirements1368(g) Omitted1368.1 4730 Marketing restrictions1368.2 4528 Document disclosure summary form
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartCurrent → New Sections
Old § New § Description/Title
1368.3 5980 Standing1368.4 5985 Comparative fault1368.5 6150 Notice of civil action1369 4615 Lien for work performed in condominium project1369.510 5925 Definitions (re ADR)1369.520 5930 ADR prerequisite to enforcement action1369.530 5935 Request for resolution1369.540 5940 ADR process1369.550 5945 Tolling of statute of limitations1369.560 5950 Certification of efforts to resolve dispute1369.570 5955 Stay of litigation for dispute resolution1369.580 5960 Attorney’s fees1369.590 5965 Notice in annual policy statement1370 4215 Liberal construction of instruments1371 4220 Boundaries of units1372 4020 Construction of zoning ordinance1373 4202 Commercial and industrial developments1374 4201 Exemption of development without common area1375 6000 Actions for damages (re CD)1375.1 6100 Notice of resolution1376 4725 Television antenna or satellite dish1378 4765 Architectural review and decision making
Code Sections Added to the Act:
4010 Application of Act4035 Delivered to an association4040 Individual notice4045 General notice4050 Time and proof of delivery4055 Consent to electronic delivery4065 Approved by majority of all members4070 Approved by majority of quorum of members4076 "Annual Budget Report"4078 "Annual Policy Statement"4085 "Board"4090 "Board meeting"4110 "Community service organization or similar entity"4120 "Condominium plan"4140 "Director"4148 "General notice"4153 "Individual notice"4155 "Item of business"4158 "Managing agent"4160 "Member"
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartCurrent → New Sections
Code Sections Added to the Act:
4170 "Person"4177 "Reserve accounts"4178 "Reserve account requirements"4205 Document authority4700 Application of article4235 Correction of statutory cross-reference5240(b) Access in accordance with Corp Code
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartNew → Current Sections
New § Current § Description/Title
4000 1350 Short title4005 1350.5 Effect of headings4010 Application of Act4020 1372 Construction of zoning ordinance4035 Delivered to an association4040 Individual notice4045 General notice4050 Time and proof of delivery4055 Electronic delivery4065 Approved by majority of all members4070 Approved by majority of quorum of members4075 1351 (intro) Application of definitions4076 "Annual Budget Report"4078 "Annual Policy Statement"4080 1351(a) "Association"4085 "Board"4090 1363.05(k)(2) "Board meeting"4095 1351(b) "Common area"4100 1351(c) "Common interest development"4105 1351(d) "Community apartment project"4110 1368(c)(3) "Community service organization or similar entity"4120 "Condominium plan"4125 1351(f) "Condominium project"4130 1351(g) "Declarant"4135 1351(h) "Declaration"4140 "Director"4145 1351(i) "Exclusive use common area"4148 "General notice"4150 1351(j) "Governing documents"4153 "Individual notice"4155 1363.05(k)(1) "Item of business"4158 1363.1(b) (except ¶ (1)) "Managing agent"
1363.2(f)4160 "Member"4170 "Person"4175 1351(k) "Planned development"4177 1365.5(f) "Reserve accounts"4178 1365.5(g) "Reserve account requirements"4185 1351(l) "Separate interest"4190 1351(m) "Stock cooperative"4200 1352 Application of Act4201 1374 Exemption of development without common area4202 1373; 1363.07(a)(3)(F) Commercial and industrial developments4205 Document authority4210 1366.2(a) Record notice of agent to receive payments
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartNew → Current Sections
New § Current § Description/Title
4215 1370 Liberal construction of instruments4220 1371 Boundaries of units4225(a)-(b), (d) 1352.5 Deletion of unlawful restrictive covenants4230 1355.5 Deletion of declarant provisions in governing
documents4235 Correction of statutory cross-reference4250(a), (b) 1353(a)(1) (1st/2d sent) Content of declaration
1353(b)4255 1353(a)(1)-(4) Special disclosures
(except 1st/2d sent)4260 1355(b) (1st sent) Amendment authorized4265(a) 1357(a) Amendment to extend term of declaration
authorized4265(b) 1357(b) (part of 1st sent) Extension of term of declaration4265(c) 1357(d) Extension of term of declaration4270(a) 1355(a) Amendment procedure4270(a)(3) 1353(b)(3) Amendment procedure4270(b) 1355(b)(2) Amendment procedure4275 1356 Judicial authorization of amendment4280 1363.5 Content of articles (of incorporation)4285 1351(e) "Condominium plan"4290 1351(e)(3) (except last ¶) Recordation of condominium plan4295 1351(e) (last ¶) Amendment or revocation of condominium plan4340 1357.100 "Operating rule"4350 1357.110 Requirements for validity and enforceability4355 1357.120 Application of rulemaking procedures4360 1357.130 Approval of rule change by board4365 1357.140 Reversal of rule change by members4370 1357.150 Applicability of article to Changes commenced
before and after January 1, 20044500 1362 Ownership of common area4505 1361 Appurtenant rights and easements4510 1361.5 Access to separate interest property4525 1368(a) Disclosure to prospective purchaser4528 1368.2 Document disclosure summary form4530 1368(b) Information to be provided by association4535 1368(f) Related requirements4540 1368(d) Enforcement of article4545 1368(e) Validity of title unaffected4575 1368(c)(1) Transfer fee4580 1368(c)(2) Exemption from transfer fee limitations4600 1363.07 (except (a)(3)(F) Grant of exclusive use4605 1363.09(a)-(b) Civil action to enforce Section 46004610 1359 Partition of condominium project4615 1369 Lien for work performed in Condominium project
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartNew → Current Sections
New § Current § Description/Title
4625 1358(a) Community apartment project4630 1358(b) Condominium project4635 1358(c) Planned development4640 1358(d) Stock cooperative4645 1358 (next to last ¶) Transfer of exclusive use common area4650 1358 (last ¶) Severability of interests4700 Application of article4705 1353.5 Display of U.S. flag4710 1353.6 Noncommercial sign4715 1360.5 Pets4720 1353.7 Roofing materials4725 1376 Television antenna or satellite dish4730 1368.1 Marketing restrictions4735 1353.8 Low water-using plants4740 1360.2 Rental restriction4745 1353.9 Electric vehicle charging stations4760 1360 Improvements to separate interest4765 1378 Architectural review and decision making4775 1364(a), (c) Maintenance responsibility generally4780 1364(b) Wood-destroying pests or organisms4785 1364(d)-(e) Temporary removal of occupant to perform treatment
of wood-destroying pests4790 1364(f) Exclusive use communication wiring4800 1363(a) Association4805 1363(c) Association powers4820 1363(h) Joint neighborhood association4900 1363.05(a) Short title - Open Meeting Act4910 1363.05(j) Board action outside of meeting prohibited4920 1363.05(f) Notice of board meeting4923 1363.05(g) Emergency board meeting4925(a) 1363.05(b) Board meeting open4925(b) 1363.05(h) Board meeting open4930 1363.05(i) Limitation on meeting content4935(a) 1363.05(b) Executive session4935(b) 1363.05(b) (2d sent) Executive session4935(e) 1363.05(c) Executive session4950 1363.05(d), (e) Minutes4955 1363.09(a)-(b) Civil action to enforce article (re Board Meeting)5000(a) 1363(d) Member meeting5000(b) 1363.05(h) Member meeting5100(a) 1363.03(b) (1st sent) Application of article (re Member Election)5100(c)-(e) 1363.03(l)-(n) Application of article (re Member Election)5105(a) 1363.03(a) Election rules5105(b) 1363.03(j) Election Rules5110 1363.03(c) Inspector of elections
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartNew → Current Sections
New § Current § Description/Title
5115(a) 1363.03(e) Voting procedure5115(b) 1363.03(b) (2d/3rd sent) Voting procedure (re quorum)5115(c) 1363.03(b) (4th sent) Voting procedure (re cumulative voting)5115(d) 1363.03(k) Voting procedure5115(e) 1355(b)(1) Voting procedure5120(a), (b) 1363.03(f), (g) Counting ballots5125 1363.03(h), (i) Ballot retention5130 1363.03(d) Proxies5135 1363.04 Campaign-related information5145 1363.09 Judicial enforcement (re-elections)5200(a) 1365.2(a)(1) Definitions (re Record
(except (I)(ii)-(iii) Inspection)5200(b) 1365.2(a)(2) Definitions5205(a)-(b) 1365.2(b) Document5205(c)-(g) 1365.2(c)(1)-(5) Document5205(g) 1365.2(a)(2) Document(2d sent)5205(h) 1365.2(h) Document5210(a)-(c) 1365.2(i)-(k) Time periods5215 1365.2(d) Withholding and redaction5220 1365.2(a)(1)(I)(iii) Membership list opt out5225 1365.2(a)(1)(I)(ii) Membership list request5230 1365.2(e) Restriction on use of records5235 1365.2(f) Enforcement5240(a) 1365.2(l) Application of article (re Record Inspection)5240(b) 1363(e) (1st sent) Application of article (re Record Inspection)5240(c) 1365.2(g) Application of article (re Record Inspection)5240(d) 1365.2(m) Application of article (re Record Inspection)5260 Mailing-related requests5300(a) 1365(a)(4)(3rd¶) Annual budget report
1365(f)(1)5300(b) (intro) 1365 (intro) Annual budget report5300(b)(1) 1365(a)(1) Annual budget report5300(b)(2) 1365(a)(2) (intro) Annual budget report5300(b)(3) 1365(b) Annual budget report5300(b)(4)-(6), 1365(a)(3)(A)-(D) Annual budget report(8)5300(b)(7) 1365(a)(4) (1st¶) Annual budget report5300(b)(9) 1365(f)(1) Annual budget report5300(b)(9) 1365(f)(3) Annual budget report5300(b)(9) 1365(f)(4) Annual budget report5300(d) 1365(a)(4) (2nd¶) Annual budget report5300(e) 1365.2.5(b)(3) Annual budget report5305 1365(c) Review of financial statement5305(b) (intro) 1365 (intro) Review of financial statement
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartNew → Current Sections
New § Current § Description/Title
5310(a)(7) 1365(e) Annual policy statement5320 1365(d) Notice of availability5350(a) 1365.6 Interested director5375 1363.1(a) Prospective managing agent Disclosure5380(a)-(e) 1363.2(a)-(e) Trust fund account5380(f) 1363.2(g) Trust fund account5385 1363.1(b)(1); 1363.2(f) Managing agent5400 1363.001 Director training course5405 1363.6 State registry5500 1365.5(a) Board review5510(a) 1365.5(b) Use of reserve funds5510(b) 1365.5(c)(1) Use of reserve funds5515 1365.5(c)(2) Temporary transfer of reserve funds5520 1365.5(d) Use of reserve funds for litigation5550 1365.5(e)(1)-(4), Visual inspection of major components and reserve
(5)(1st sent) study5560 1365.5(e)(5) Reserve funding plan
(except 1st sent)5565 1365(a)(2)(A)-(D) Summary of association reserves5570 1365.2.5 Assessment and reserve funding disclosure summary5580 1365.3 Community service organization report5600(a) 1366(a) (1st sent) Levy of assessment5600(b) 1366.1 Levy of assessment5605(a) 1366(a) (2d sent) Assessment approval requirements5605(b) 1366(b) (1st sent) Assessment approval requirements5605(c) 1366(a) (3d sent) Assessment approval
1366(b) (2d sent) requirements5610 (intro) 1366(b) (3d/4th sent) Emergency exception to assessment approval
requirements5610(a)-(c) 1366(b)(1)-(3) Emergency exception to assessment approval
requirements5615 1366(d) Notice of assessment
increase5620 1366(c) Exemption from execution5625 1366.4 Property tax value as basis for assessments5650(a) 1367.1(a) (1st sent) Assessment debt and delinquency5650(b), (c) 1366(e), (f) Assessment debt and delinquency5655 1367.1(b) Payments5658 1367.6 Payment under protest5660 (intro) 1367.1(a) (2d sent) Pre-lien notice5660(a)-(f) 1367.1(a)(1-(6) Pre-lien notice5665 1367.1(c)(3) Payment plan5670 1367.1(c)(1)(A) Pre-lien dispute resolution5673 1367.1(c)(2) Decision to lien5675 1367.1(d) (1st-5th sent) Notice of delinquent assessment
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartNew → Current Sections
New § Current § Description/Title
5680 1367.1(f) Lien priority5685(a) 1367.1(d) (6th sent) Lien release5685(b) 1367.1(i) Lien release5685(c) 1367.5 Lien release5690 1367.1(l) Procedural noncompliance5700(a) 1367.1(g) (2d sent) Collection generally5700(b) 1367.1(h) Collection generally5705(a) 1367.4(a) Decision to foreclose5705(b)-(d) 1367.4(c)(1)-(3) Decision to foreclose5710(a) 1367.1(g) (3d sent) Foreclosure5710(b) 1367.1(j) Foreclosure5710(c) (intro) 1367.1(g) (4th sent) Foreclosure5710(c)(1)-(2) 1367.1(g)(1)-(2) Foreclosure5715(a) 1367.4(a) Right of redemption after trustee sale5715(b) 1367.4(c)(4) Right of redemption after trustee sale5720(a) 1367.4(a) Limitation on foreclosure5720(b) 1367.4(b) Limitation on foreclosure5720(c)(2)-(3) 1367.4(d) Limitation on foreclosure5725(a) 1367.1(d) (7th-8th sent) Limitations on authority to foreclose liens for
monetary penalties and damage to the common area5725(b) 1367.1(e) Limitations on authority to foreclose liens for
monetary penalties and damage to the common area5730 1365.1 Statement of collection procedure5735 1367.1(g) (1st sent) Assignment or pledge5740 1367; 1367.1(m) Application of article (re Assessment Collection)5800 1365.7 Limitation of director and officer liability5805 1365.9 Limitation of member liability5810 1365(f)(2) Notice of change in coverage5850(a) 1363(f) (1st sent) Schedule of monetary penalties5855 1363(g) Hearing5865 1363(i) No effect on authority of board5900 1363.810 Application of article (re IDR)5905 1363.820 Fair, reasonable, and Expeditious dispute resolution
procedure required5910 1363.830 Minimum requirements of association procedure5915 1363.840 Default meet and confer procedure5920 1363.850 Notice in policy statement5925 1369.510 Definitions (re ADR)5930 1369.520 ADR prerequisite to enforcement action5935 1369.530 Request for resolution5940 1369.540 ADR process5945 1369.550 Tolling of statute of limitations5950 1369.560 Certification of efforts to resolve dispute5955 1369.570 Stay of litigation for dispute resolution5960 1369.580 Attorney's fees
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AB 805/806 - Davis-Stirling Common Interest Development ActCross-Reference ChartNew → Current Sections
New § Current § Description/Title
5965 1369.590 Notice in annual policy statement5975 1354 Enforcement of governing documents5980 1368.3 Standing5985 1368.4 Comparative fault6000 1375 Actions for damages (re CD)6100 1375.1 Notice of resolution6150 1368.5 Notice of civil action
Omitted Sections:
1357(b) (except part of 1st sent)1357(c)1363(b)1363(e) (2d sent)1363(f) (2d sent)1363.0051365.2(n)1365.5(h)1366.2(b)13671367.1(c)(1)(B)1367.1(m)1367.1(n)1367.4(c) (intro)1368(g)
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B. Senate Bill 880 – ELECTRIC VEHICLE CHARGING STATIONS; GRANTS OFEXCLUSIVE USE OF PART OF COMMON AREA
Amends Civil Code §§ 1353.9, 1363.07[Urgency Legislation Effective February 29, 2012]
SB 880 is a clean-up bill addressing problems created by last year’s SB 209 whichenacted Civil Code § 1353.9 regarding electric vehicle charging stations. Thelanguage of § 1353.9 allowed the “taking” of common areas for private use by ahomeowner to install a charging station. SB 880 was enacted as urgencylegislation effective immediately to: (1) limit the applicability of §1353.9 to theinstallation or use of an electric vehicle charging station in an owner’s designatedparking space, and make restrictions that prohibit such stations void andunenforceable; (2) authorize the installation of a charging station in the commonarea for the exclusive use of an owner only if installation in the owner’s designatedparking space is impossible or unreasonably expensive; and (3) authorize anassociation or owners to install a charging station in the common area for use byall members, and require the association to develop rules of use. SB 880 amendsCivil Code § 1363.07 to authorize grants of exclusive use of a portion of thecommon area without the affirmative vote of the association’s members forinstalling and using an electric vehicle charging station in an owner’s garage ordesignated parking space, under specified circumstances, such as whenreasonable access through the common area is required for utility lines or meters.
C. Assembly Bill 2697 – HOUSING OMNIBUS BILL; CLARIFICATIONS TOOPEN MEETING ACT; DISCLOSURE DOCUMENTS
Amends Civil Code §§ 1363.05, 1368[Effective January 1, 2013]
AB 2697 is an omnibus clean-up bill that clarifies two provisions enacted in 2011in the Davis-Stirling Common Interest Development Act.
Civil Code § 1363.05, the “Open Meeting Act,” was amended effective 2012 toprohibit a board of directors from conducting a meeting via a series of electronictransmissions, except in case of an emergency. AB 2697 clarifies that the writtenconsent of all members of the board is only required for the board to take actionsin an electronic emergency meeting, not to hold an emergency meeting generally.The term “meeting” was defined to include a teleconference in which a majorityof the members of the board, in different locations are connected by electronicmeans, as specified, with at least one board member present in a physical locationso that members of the association may attend at that location. AB 2697 willnow allow the board to designate a non-board member to be present at thatlocation.
Civil Code § 1368 requires owners of separate interests to provide various itemsto a prospective purchaser as part of transfer of ownership interest, including,among other things, a statement describing any prohibition, and its applicability,contained in the governing documents against the rental or leasing of any separateinterest in the common interest development to a renter, lessee, or tenant. AB2697 eliminates the requirement to describe the applicability of the prohibition.”
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Board and Manager Take Away:
Boards will now have some flexibility in meeting the “presence” in a physicallocation requirement for conducting board meetings telephonically, bydesignating a non-board member, such as the property manager, to be present atthe physical meeting site. Disclosure statements regarding a rental or leasingprohibition in an association’s governing documents will no longer be requiredto describe the applicability of such provision, making it easier on owners whencomplying with disclosure obligations to prospective purchasers.
D. Assembly Bill 1838 – CANCELLATION FEES FOR DOCUMENT REQUESTS;BILLING DISCLOSURE FORM
Amends Civil Code §§ 1368, 1368.1[Effective January 1, 2013]
AB 1838 amends Civil Code § 1368 to prohibit associations from collecting acancellation fee for documents requested by an owner pursuant to § 1368 if theperson who submitted the request cancels it in writing prior to the associationperforming the work to fulfill the order. Additionally, if the request was canceledin writing, the association must refund the share of fees collected that representsthe portion of the work not performed on the order prior to cancellation. AB 1838amends Civil Code § 1368.2 to require the billing form used for documentrequests to be written in at least 10-point type.
Board and Manager Take Away:
Boards and managers will need to review the billing form used for documentrequests to ensure that the font size is at least 10-point and otherwise complieswith the form set forth in § 1368.2. Boards will need to ensure that the person orentity fulfilling these types of records requests is aware of the new cancellation feeprovision.
E. Assembly Bill 2273 – REQUIRED DOCUMENTS FROM MORTGAGEHOLDERS AFTER FORECLOSURE
Amends Civil Code § 2924b; Adds § 2924.1[Effective January 1, 2013]
Currently, when a mortgage holder/lender exercises its power of sale containedin a deed of trust or mortgage, there is no specified timeframe by which themortgage holder must record a deed upon foreclosing on a residence in acommon interest development. This allows the mortgage holder to avoidownership obligations, i.e., payment of assessments. AB 2273 adds Civil Code §2924.1 to require that after a mortgage holder exercises a foreclosure under apower of sale, that the transfer deed be recorded within 30 days. AB 2273 alsoamends Civil Code § 2924b to require a mortgage holder or other personauthorized to record notices of default on separate interests within an associationto mail a copy of any trustee's deed upon sale concerning a separate interesttherein within 15 business days following the date of the trustee's sale, rather thanfrom the date the trustee's deed is recorded.
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Board and Manager Take Away:
Associations should ensure that a request to receive copies of notices of defaultand foreclosure sales involving the separate interests within the association hasbeen recorded with the County Recorder.
F. Assembly Bill 1720 – SERVICE OF PROCESS: PRIVATE INVESTIGATORS
Amends Code of Civil Procedure § 415.21[Effective January 1, 2013]
AB 1720 corrects an oversight in the law, which currently allows access to gatedcommunities for service of process by a sheriff, marshal or registered processserver, but excludes private investigators to enter gated communities to serveprocess. AB 1720 amends Code of Civil Procedure § 415.21 to also allow alicensed private investigator, who displays evidence of licensure, to be grantedaccess to a gated community for the sole purpose of service of process or asubpoena.
Board and Manager Take Away:
Section 415.21 only applies to gated communities with controlled access to thecommunity, i.e., guard or security personnel. Associations with such controlledaccess should ensure that their guards and/or security personnel/vendors areaware of the new law regarding access to private investigators and review theiraccess policies to implement any required changes.
G. Assembly Bill 2114 – SWIMMING POOL SAFETY
Amends Health and Safety Code §§ 115921, 115928, 115928.5, 116064,and 116064.2[Effective January 1, 2013]
The Swimming Pool Safety Act, at Health and Safety Code § 115921, et seq.,applies to public swimming pools, spas or wading pools, which includes, bydefinition, pools, spas and wading pools in common interest developments. AB2114 requires that where a building permit is issued for the construction of a newswimming pool, spa or wading pool, that the pool or spa must have at least twocirculation suction outlets, as defined, per pump, and be separated by a distanceof at least 3-feet in any dimension between the suction outlets, or be designed touse alternatives to suction outlets, as specified. Circulation systems must have thecapacity to provide a complete turnover of pool water. Where building permitsare issued for a remodel or modification of an existing swimming pool, toddlerpool, or spa, the permit must require all outlets to be upgraded with an anti-entrapment cover meeting ANSI/APSP performance standards, as defined.
AB 2114 also requires every public swimming pool with a single suction outlet,as defined, that is not an unblockable suction outlet to be equipped with at leastone or more safety devices that meet ANSI/APSP performance standards. Allpublic wading pool suction outlets must to be covered with grates, or similarprotective devices, as specified.
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Board and Manager Take Away:
Associations should review the new laws on swimming pool safety with theirmanagers and pool service/maintenance vendors to determine if these changesapply to your community’s pools, spas or wading pools.
H. FHA POLICY CHANGES EASE CONDOMINIUM PROJECT APPROVAL
On September 13, 2012, changes to the Federal Housing Administration (“FHA”)guidelines governing condominium project approval went into effect. Thesechanges were made in response to current housing market conditions, and areexpected to ease the ability of many condominium projects to obtain FHAapproval. The changes are temporarily in effect until August 31, 2014, unlessextended.
The most prominent policy changes involve delinquent assessments, fidelityinsurance, and the certification that is signed by the applicant as part of theapproval process.
Delinquencies
The policy previously provided that no more than 15% of units could be morethan thirty (30) days delinquent. Exceptions could be requested on a case bycase, upon which the FHA would consider a six month history of delinquencies,status of reserves and financial statements in relation to the aggregate delinquency,and efforts by the association taken to collect delinquencies. The amendmentextends the eligibility period to no more than 60 days delinquency. However, theability to request an exception has been eliminated. The extension will allowassociations with owners who are more than 30 but less than 60 days delinquentto be eligible for approval.
Fidelity Insurance
Fidelity insurance covers claims involving loss or theft of association funds byemployees or third parties. The previous FHA guidelines mandated that for anyproject with more than 20 units, management companies must obtain their ownseparate fidelity insurance policy or bond in the sum of at least three months ofassessments plus reserve funds. This requirement was burdensome, in thatmanagement companies were forced to incur the expense of obtaining a separatepolicy for each of its clients. The cost of such coverage was typically passedalong to the association and its members under the management contract. Thecurrent changes provide the following options: (1) the association can name themanagement company as an additional insured under the association’s fidelitypolicy, or (2) the association can obtain an endorsement under its policydesignating management personnel as a covered “employee.” These changes areexpected to reduce the cost and impracticality of the management companyhaving to obtain separate coverage, while still affording the intended protection.
Certification
The prior certification form required the applicant to verify that the projectcomplies with state and locals laws. Laypersons who are not lawyers are oftenthe party submitting the application. Thus, recognizing the inability of a layperson
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to attest to whether a project complies with applicable laws, the applicant is nolonger required to do so.
The prior form also contained a statement that the submitter has no knowledgeof conditions that would cause a “mortgage” to become delinquent (i.e. indefault). This is unreasonable since the submitter is a third party who would haveno specific knowledge as to the contents of a mortgage contract between the unitowner and their lender, including conditions that would trigger a default. Thecurrent form eliminates reference to mortgages.
Further, the form previously obligated the applicant to report in the future if anymaterial information in the application becomes “no longer true and correct.”The form further provides for a penalty of up to a $1,000,000 fine, imprisonment,disbarment and/or civil damages for “knowingly and intentionally” making a falseor fraudulent statement in relation to the application. This is problematic andpresents a risk of significant liability to the person signing, since certaininformation in the application is subject to change without knowledge of theapplicant. This includes, but is not limited to, additional owners deciding to rentout their unit, a unit becoming bank-owned or a unit no longer being owner-occupied.
Pursuant to the new policy, the obligation to report material changes has beeneliminated. The certification is now appropriately limited to current knowledge(“to the best of my knowledge and belief, the information and statements ... aretrue and correct”).
Board and Manager Take Away
These changes are expected to make it easier for associations to obtain FHAapproval, due to the fact that the permitted delinquency period has been extendedto 60 days. Further, the revisions to the certification process reduces potentialliability on the part of the association and its representatives who submitapplications, particularly laypersons, as they are no longer required to attest toitems as to which they would not have personal knowledge, such as thoseaffecting private mortgages between a bank and a homeowner, whether thedocuments meet certain legal requirements, or whether conditions change in thefuture so as to affect the application (such as an owner determining to rent theirunit). In addition, the changes reduce the cost and burden on managementcompanies in connection with obtaining fidelity insurance as management maynow be named as an additional insured or a covered employee under anassociation’s existing policy, in lieu of obtaining separate policies for eachassociation. Boards and managers should consult with legal counsel as to anyquestions regarding the FHA approval process and requirements.
THREERECENT COURT DECISIONS
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In the last 20 years, the California Supreme Court has provided our industry withlandmark opinions regarding common interest developments such as Nahrstedt(1994), Lamden (1999) and Terifaj (2004). This year’s Pinnacle decision is anothersignificant decision and, as discussed below, involves provisions in CC&Rsregarding mandatory arbitration of construction defects. The following is anoverview of the Pinnacle case as well as the California appellate court decisionsinvolving homeowners associations that were decided in 2012.
A. MANDATORY ARBITRATION OF CONSTRUCTION DEFECT DISPUTES.
Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC,(2012) 55 Cal. 4th 223
Pinnacle Market Development (US), LLC, (Pinnacle) drafted and recorded CC&Rsthat contained a number of easements, restrictions and covenants described as“enforceable equitable servitudes” for a mixed use (residential and commercial)condominium project in San Diego. The CC&Rs provided for the creation ofPinnacle Museum Tower Association (HOA) to serve as the owners association forthe project. The CC&Rs were recorded before any unit was purchased and beforethe HOA was formed.
Article XVIII of the CC&Rs provided that by accepting a deed for any portion ofthe project property, the HOA and each owner agreed to waive their constitutionalright to jury trial and have any construction dispute involving Pinnacle resolvedexclusively through binding arbitration in accordance with the Federal ArbitrationAct (FAA) and California Arbitration Act (CAA). The CC&Rs further provided thatno amendment could be made to the arbitration provision without Pinnacle’swritten consent.
The HOA filed a construction defect action against Pinnacle. Pinnacle filed amotion to compel arbitration, based on Article XVIII. The trial court (SuperiorCourt) determined the FAA was applicable and that the arbitration clause was anagreement to arbitrate between Pinnacle and the HOA. However, the SuperiorCourt found that the arbitration provision was “unconscionable,” invalidated theagreement and denied Pinnacle’s motion to compel arbitration.
Pinnacle appealed to the Court of Appeal (Appellate Court) which affirmed theSuperior Court’s ruling. The Appellate Court also determined the FAA wasapplicable, but concluded that the arbitration clause in the CC&Rs did notconstitute an agreement sufficient to waive the HOA’s constitutional right to jurytrial for construction defect claims. The basis for this finding was because Pinnaclewas the only party to the CC&Rs at the time the document was written and,therefore, the HOA could not have agreed to arbitrate or waive its constitutionalright to a jury trial.
Pinnacle then filed a petition for review with the California Supreme Court(Supreme Court). The Supreme Court reviewed the matter to determine thefollowing:
(1) Is the arbitration clause in the CC&Rs binding on the HOA?
(2) If the arbitration clause is binding, must the clause be invalidated asunconscionable?
ARBITRATION CLAUSE IS BINDING ON THE HOA
The Supreme Court recognized that there is a policy in both federal and Californialaw favoring arbitration as a speedy and relatively inexpensive means of disputeresolution. However, a cardinal principle is that binding arbitration is a matter ofconsent, not coercion. In order to determine whether the parties agreed toarbitration, courts will examine state contract laws while favoring the federalpolicy that supports arbitration.
Under California law, arbitration agreements must be in writing. However, asigned agreement is not necessary and a party’s acceptance can be implied.Arbitration provisions may also be binding even if a party to the contract did notactually read the clause.
Utilizing these principals, the Supreme Court analyzed whether the bindingarbitration provisions in Article XVIII constituted an agreement to arbitrate.Relying on other cases that recognized there can be delegated authority to consentto mandatory arbitration provisions, the Supreme Court rejected the AppellateCourt’s reasoning that the HOA was not bound by the arbitration clause becausePinnacle was the only party at the time the arbitration provision was written.
The Supreme Court reasoned that since the individual owners within anassociation are legally deemed to have consented to the provisions of the CC&Rsunder the Davis-Stirling Common Interest Development Act (Act), then themembers have the right to expect the association, in representing their collectiveinterests, to abide by the covenants in the CC&Rs, including binding arbitrationof construction defect disputes, stating:
Indeed, we perceive no legitimate reason to frustrate the expectations ofpurchasers who choose to buy into a development where bindingarbitration is the designated process for resolving such claims.
Several law firms who represent homeowners associations (but not the HOA)submitted briefs to the Supreme Court arguing against overturning the AppellateCourt’s decision. One such assertion was that Civil Code § 1353(a) limits adeveloper's authority to only include in the CC&Rs provisions commonlyunderstood to be equitable servitudes (i.e., restrictions relating to the use ormaintenance of the property). The Supreme Court rejected this claim, noting thatCivil Code § 1353(c) specifies that a declaration "may contain any other mattersthe original signator of the declaration [the developer] or the owners considerappropriate.”
The Supreme Court was also influenced by the fact that other provisions of the Actsupport alternative dispute resolution, including arbitration. The Supreme Courtconcluded that the arbitration provisions that Pinnacle wrote into the CC&Rs werebinding on the HOA, even though the HOA had not been formed at the time thedocument was written:
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In sum, even though the Association did not bargain with Pinnacle overthe terms of the Project CC&R's or participate in their drafting, it issettled under the statutory and decisional law pertaining to commoninterest developments that the covenants and terms in the recordeddeclaration, including those in article XVIII, reflect written promises andagreements that are subject to enforcement against the Association.
UNCONSCIONABILITY
The HOA also argued that even if the arbitration provision was binding, it shouldnot be enforced as it was “unconscionable.” Unconscionability consists of bothprocedural and substantive elements. The procedural element addresses thecircumstances of the contract negotiation and formation, such as whether therewas unequal bargaining power between the parties, causing oppression orsurprise. The substantive element focuses on whether the terms of the contractare unfair, overly harsh or one-sided.
The Appellate Court previously concluded that the arbitration provision wasprocedurally unconscionable because the CC&Rs were drafted and recordedbefore the HOA was formed. Therefore, the HOA had no bargaining power. Inrejecting this argument, the Supreme Court noted that the intent of the Act is toallow landowners to develop and market their properties to purchasers ascommon interest developments operating under certain covenants andrestrictions. The Supreme Court stated:
By providing for Pinnacle's capacity to record a declaration that, whenaccepted by the first purchaser binds all others who accept deeds to itscondominium properties, the Act ensures that the terms reflected in thedeclaration -- i.e., the covenants, conditions, and restrictions governingthe development's character and operation -- will be respected inaccordance with the expectations of all property owners and enforcedunless proven unreasonable.
The Supreme Court then reviewed the substance of the arbitration provision anddetermined that it was not overly harsh or one-sided so that it would “shock theconscience.” After conducting its analysis, the Supreme Court decided thearbitration provision in Article XVIII was enforceable as it was consistent with theAct and not procedurally or substantively unconscionable.
Interestingly, one Supreme Court Justice issued a dissenting opinion, noting thatthe HOA is a separate entity from the individual owners, and, therefore, theowners cannot consent to binding arbitration on behalf of the HOA. He furtherstated that the arbitration provision denied the HOA of its constitutional right toa jury trial without the HOA’s consent since it did not exist when Pinnacle draftedand recorded the CC&Rs.
What Boards And Managers Can Learn From This Case:
If the original CC&Rs require that construction defect disputes are to be decidedby binding arbitration, then that is the procedure that will be used. However, thiscase has the potential for far-reaching impact on all provisions of the originalCC&Rs, not just those pertaining to the developer. Associations should review
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their CC&Rs to determine whether there are any provisions under which they donot wish to be bound and consult with legal counsel to determine the options foramending or deleting such provisions.
B. GOVERNING DOCUMENTS
Quail Lakes Owners Assn. v. Kozina, (2012) 204 Cal. App. 4th 1132
In this case, where our firm was lead appellate court counsel, the Quail LakesOwners Association (Quail Lakes) filed a petition under Civil Code § 1356 seekinga court order to modify the amendment requirements of its CC&Rs, whichrequired a “supermajority” approval of the homeowners. In a 2009 election toamend the CC&Rs, of 1,958 "membership votes," 1,409 votes were cast, of which1,209 voted in favor of the new CC&Rs; however, the “supermajority”requirement was not met.
Kozina was the only homeowner to object to the petition, claiming it should bedenied for lack of evidence. The trial court agreed and denied the initial petition,but allowed Quail Lakes to file an amended petition to address the evidentiaryissues. After the amended petition was filed, Kozina was again the onlyhomeowner to file an objection. His objection focused solely on the amount oftime that the trial court gave owners to submit objections to the amended petition,which was four days after the date the petition notice was mailed to thehomeowners. The trial court granted the petition and Kozina appealed.
One issue was whether the amount of time given the homeowners to fileobjections violated due process rights. First, the Appellate Court noted thatKozina had filed an objection within the specified time period and he failed toassert that he was hampered due to the time constraints. Second, Kozina arguedthat other homeowners may have been prejudiced by the short time frame.However, the Court of Appeal determined that Kozina did not have the legal right(i.e., “standing”) to assert due process rights of other homeowners. Kozinaclaimed he had “associational” standing similar to a derivative shareholderlawsuit (where shareholders file suit against the corporation). In rejecting thisargument, the Appellate Court determined that Quail Lakes was the “de facto”representative of the homeowners and that any homeowner could have assertedtheir own claims and taken steps to set aside the order granting the petition.
The second issue was whether the trial court, in its initial ruling, was required toexplicitly recite the six findings that are required under Civil Code § 1356 to granta petition to reduce the voting requirements. Although the final order of the trialcourt contained these findings, the initial ruling did not. The Appellate Courtdetermined that the trial court was aware of the requirements of exercising itsdiscretion under § 1356 and the statute does not require the court to recite theevidence pertaining to each finding. The Court of Appeal declined to add such arequirement.
What Boards And Managers Can Learn From This Case:
This case is the first to apply the “standing” rule to a homeowner within acommon interest development seeking to assert due process claims of otherowners. It is possible this rule could be applied in other contexts. If there is an
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owner seeking to assert the rights of other owners, associations should be clearthat they will only consider the claims brought directly by the aggrieved owner.
C. FREE SPEECH
Silk v. Feldman, (2012) 208 Cal. App. 4th 547
In this case, Sherrill Silk (Silk), a former director of the Malibu Bay Clubhomeowners association (Club), sued Phillip Feldman (“Feldman”), a currentdirector, for defamation and libel per se. In 1999, the Club settled a lawsuit withthe son of the Club’s developer (Knox) regarding title to certain parking spaces.After the settlement, parking spaces were offered for purchase to both Clubmembers and the public. In 2003, Silk purchased six parking spaces for$19,000.00 each.
On August 16, 2010, Feldman sent a letter to Club members which purported tobe a historical take on the Club’s past, present, and future. Among other things,the letter stated that Silk was on the Board during the prior parking space lawsuitand she and another Board member “cut secret deals” to purchase parking spacesfor themselves. Silk filed the instant complaint for defamation and libel per se.
Feldman challenged Silk’s complaint by filing a motion, pursuant to Code of CivilProcedure § 426.16, commonly referred to as the “anti-SLAPP” statute (SLAPP isan acronym for Strategic Lawsuit Against Public Participation). Under the anti-SLAPP statute, a party to a lawsuit may bring a special motion to strike a cause ofaction arising from any act of that party in furtherance of the person's right ofpetition or free speech under the United States Constitution or the CaliforniaConstitution in connection with a public issue.
There is a two-step process for ruling on an anti-SLAPP motion. First, the courtdecides whether the defendant has made a threshold showing that the challengedcause of action is one arising from protected activity. This means that the movingdefendant has the burden to show that the act of which the plaintiff complains wastaken in furtherance of defendant’s right of petition or free speech in connectionwith a public issue as defined in the statute. Second, if the court finds defendanthas made such a showing, it then determines whether the plaintiff hasdemonstrated a probability of prevailing on his/her/its claim.
Here, the Appellate Court determined that it did not need to determine whetherFeldman's accusations against Silk constituted an exercise of free speech since theevidence produced by Silk sufficiently demonstrated that she met her burden ofshowing a probability of prevailing in the action. Silk showed that she did notcontrol the outcome of the parking space lawsuit, she made no agreement withKnox before or during the litigation; the parking spaces were offered for sale to allassociation members as well as members of the public; she did not purchase theparking spaces until years after the Knox litigation was settled, when she was nolonger a member of the board; and she paid a substantial amount for the parkingspaces.
Feldman argued that he did not have to justify every word of the defamatorycharge, just the “gist” of the charge. The Appellate Court rejected this argument,claiming that the substance of his claim was that Silk used her position as a Club
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official to settle a lawsuit against the Club so that she could obtain free parkingspaces. As indicated above, Silk's evidence demonstrated the accusations werefalse.
What Boards And Managers Can Learn From This Case:
This case is significant because many of the “anti-SLAPP” decisions issued byAppellate Courts in the last few years have been in favor of the defendant, withmany of those decisions finding that the speech in question was made inconnection with a public issue. However, this case found in favor of the plaintiff,mainly because there was no evidence to support the damaging claims containedin the letter that had been written to the association’s members. Perhaps the bestlesson of this case is learned by the first two sentences of this opinion where theAppellate Court stated: “Not all speech is free. Here, speech can be costly.”
D. ATTORNEYS’ FEES
1. That v. Alders Maintenance Assn., (2012) 206 Cal. App. 4th 1419
In this case, homeowner Dinh Ton That did not like how the board governed hisassociation so he decided to participate in a recall of the board. At the recallmeeting a quorum was not obtained and a motion was made by a director toclose the meeting. The motion was seconded and approved. Mr. That wasdispleased that the meeting was closed and not adjourned to allow for a reducedquorum so he filed suit.
He first filed in small claims court, and then filed a writ of mandate, and finally alawsuit in Superior Court. All efforts were unsuccessful. One of Mr. That’s actionsin the Superior Court case was brought under Civil Code § 1363.09 whichgoverns challenges to election proceedings. Under § 1363.09, a member of anassociation may bring a civil action for alleged violations of Article 2 of Chapter4 of the Davis-Stirling Common Interest Development Act (Act) which coverselections and meetings. The statute specifies that any such actions must be filedwithin one year.
The association successfully challenged Mr. That’s complaint since his action wasfiled more than one year after the failed recall election. The Superior Courtawarded the association its attorneys’ fees under § 1363.09(b) which providesthat a prevailing association in a challenge under § 1363.09 is entitled to “costs”if the action is “frivolous, unreasonable, or without foundation.”
In his appeal of the Superior Court decisions, Mr. That attempted to circumventthe one year issue by claiming the association was liable under Business &Professions Code § 17200 (Unfair Competition), which prohibits “unlawful, unfair,or fraudulent business act or practice.” The law protects consumers andcompetitors by promoting fair competition in commercial markets for goods andservices. The Appellate Court rejected this argument indicating that anassociation is not engaged in a competitive business and the Unfair Competitionlaw was not designed to apply to non-business claims.
Another issue on appeal was whether § 1369.09(b) authorizes an award ofattorneys’ fees as “costs” to the association. Although the court agreed thatportions of the lawsuit were frivolous, it determined that the word “costs” was
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not intended to include attorneys’ fees. The court noted that other provisions ofthe Act specifically set forth attorneys’ fees separately from “costs.” Theassociation argued it should be awarded attorneys’ fees under a provision in theCC&Rs that awards attorneys’ fees to the prevailing party in an enforcementaction. Unfortunately, a copy of the CC&Rs was not provided to the court, sothis argument was rejected for lack of evidence.
What Boards And Managers Can Learn From This Case:
Associations should be aware that if an owner challenges an election or meetingpursuant to § 1363.09, even if that action is “frivolous, unreasonable or withoutfoundation,” the association may not be entitled to recover its attorneys’ feesunder that code section. However, there is a chance the association could recoverits attorneys’ fees under the CC&Rs so long as the proper evidence is introducedon that issue.
2. Lewow v. Surfside III Condominium Owners’ Assn. Inc., (2012) 203Cal. App. 4th 128
This case involved an issue regarding an attorneys’ fee award impacted by FederalBankruptcy laws.
Mr. Lewow sued his association because he was unhappy with the way theassociation was governed. Mr. Lewow lost his suit and the court enteredjudgment in February 2010. Almost instantaneously, Mr. Lewow filed for reliefunder Chapter 13 of the U.S. Bankruptcy Code. The bankruptcy case wasdismissed four months later
Due to the filing of the bankruptcy case, the association did not file its motion forattorneys’ fees as it believed it was not entitled to file the motion, due to thebankruptcy automatic stay. The association filed the motion for attorneys’ fees,pursuant to Civil Code § 1354(c), 32 days after notice of the bankruptcy dismissalwas mailed. Mr. Lewow objected to the attorneys’ fee motion, claiming theassociation was two days late in filing the request.
The association claimed that the time to file the motion was suspended during thebankruptcy proceedings. The trial court agreed and awarded the association$292,205.50 for attorneys’ fees. Mr. Lewow then appealed the lower court’sdecision.
The “automatic stay” provision of the bankruptcy code, 11 U.S.C. § 362(a)(1),provides that the filing of a bankruptcy petition operates to immediately stop thecommencement or continuation of a judicial proceeding against the debtor thatwas or could have been commenced before the start of the bankruptcy action.The appellate court noted that the running of a statutory time period to file amotion for attorneys’ fees did not constitute a “commencement or continuationof a judicial proceeding” within the meaning of the automatic stay provision.Rather, the motion is a collateral matter, ancillary to the main cause.
However, the court of appeal determined that federal bankruptcy statute, 11U.S.C. § 108(c)(2), extended the time for filing the attorneys’ fee motion until 30days after notice of the dismissal of bankruptcy proceedings. The associationmissed the 30 deadline by two days. The court then ruled good cause existed to
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relieve the missed deadline due to a mistaken but reasonable decision by thelawyer representing the association. Under California Rules of Court Rule3.1702(b), the court may extend the time for filing a motion for attorneys’ fees forgood cause which existed based upon a mistaken but objectively reasoneddecision by the lawyer. The lower court’s award of $292,205.50 in attorneys’fees was affirmed.
What Boards And Managers Can Learn From This Case:
Be aware that an association has thirty days after a bankruptcy case is over to filea motion for award of attorneys’ fees on a judgment entered prior to thecommencement of the bankruptcy case. While Boards and managers are notresponsible to file the motion, it is helpful to know the time frame so you candouble check with your legal counsel to ensure all appropriate deadlines are met.
E. CLASS B VOTING RIGHTS
PV Little Italy, LLC v. Metrowork Condominium Assn., (2012) 210 Cal. App.4th 132
The issue in this case was whether enhanced "Class B" voting rights contained inthe CC&Rs and reserved to the “declarant” can be separated from ownership ofunits and assigned to third parties.
India Street Venture, LLC (India Street) was the original owner and developer ofa mixed office and retail condominium development in downtown San Diego,known as MetroWork. The centerpiece of MetroWork is retail space thatultimately became a live music and dining venue called "Anthology." For IndiaStreet, Anthology was the most important feature of the development. India Streetdrafted the (CC&Rs) and included enhanced “Class B” voting rights for the“Declarant.”
In order to finance MetroWork, India Street obtained a $21.5 million constructionloan from KeyBank, N.A. (KeyBank). KeyBank obtained a security interest in theentire MetroWork project, including the real and personal property, and IndiaStreet's rights as “Declarant” under the CC&Rs, including the Class B voting rights.
As construction neared completion, India Street was able to repay a portion of theKeyBank loan, by obtaining another loan. In exchange for India Street'ssatisfaction of a portion of its debt, KeyBank executed certain documents,including a partial reconveyance that released KeyBank's security interest in theretail units which housed Anthology. However, by its terms, the reconveyancedeed covered only the retail (Anthology) units, common areas and personalproperty associated with those units. The reconveyance deed did not mention theDeclarant's rights (including Class B voting) associated with the retail (Anthology)units.
India Street later defaulted on the portion of the loan it still had with KeyBank.KeyBank held a foreclosure sale and conveyed the remaining unsold office unitsto an entity that was related to KeyBank. This conveyance specifically includedany and all interest that KeyBank had in the Declarant's rights. The office unitsalong with an assignment of “all of Declarant’s rights, if any,” were subsequentlyconveyed to PV Little Italy, LLC (Little Italy).
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After acquiring the property and rights in the MetroWork office units, Little Italyinformed the association by letter that it was now the Declarant, and as such,held the right to exercise Class B voting rights, including those for the retail(Anthology) units. India Street also claimed to hold Declarant's rights in the retail(Anthology) units by virtue of the reconveyance from KeyBank. At theassociation’s 2010 election of directors, due to the dispute regarding which entitywas entitled to exercise the Class B votes for the retail (Anthology) units, theinspector of elections determined to not count any Class B votes and only acceptClass A votes.
A lawsuit was filed in the Superior Court challenging the election underCorporations Code § 7616. The Superior Court determined that the reconveyancedeed from KeyBank to India Street included the Class B voting rights as to theretail (Anthology) units. The court also determined that Little Italy did not acquireany Declarant rights because it had not acquired any rights by direct assignmentfrom India Street. Little Italy appealed.
The Appellate Court reversed the ruling of the Superior Court. The Appellate Courtdetermined that the plain language of the CC&Rs, the KeyBank deed of trust andreconveyance deed, all indicated that the Class B voting rights associated with theretail (Anthology) units were not reconveyed back to India Street. The AppellateCourt noted that the Superior Court's fundamental error was its conclusion thatthere was a direct relationship between the Declarant's Class B voting rights andownership of the retail (Anthology) units. The Appellate Court noted that unlikethe Class A votes which are related to owning a unit, the Declarant's Class Bvoting rights did not automatically attach to ownership of the units. Therefore, thetwo could be separated.
The Court reasoned that under the CC&Rs, the Class B membership is notdetermined solely by being an owner, but rather, by being a particular owner--i.e.,the Declarant. The unique status and rights of the Declarant do not result fromownership of a condominium, but rather, from specific grants in the CC&Rs tothe Declarant. The Court further noted that the CC&Rs permit the Declarant toassign its rights to another, "in whole or in part, to any number of assignees.”
The Appellate Court also found that the assignment of the Declarant rights fromKeyBank’s related entity to Little Italy after the foreclosure on the India Street loanwas a valid assignment and was supported by the language of the CC&Rs whichallows for a partial assignment of Declarant’s rights.
What Boards And Managers Can Learn From This Case:
The determination of whether a particular owner can exercise Class B voting rightscan be complex and involved. In the event of a dispute between entities regardingthe exercise of Class B votes, consultation with legal counsel is a “must.”
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A. DAVIS-STIRLING COMMON INTEREST DEVELOPMENT ACT
Chapter 1. General Provisions
Article 1. Preliminary Provisions
Civil Code § 1350 Citation.
This title shall be known and may be cited as the Davis-Stirling Common InterestDevelopment Act.
Civil Code § 1350.5 Scope, Meaning And Intent Of Title
Division, part, title, chapter, and section headings do not in any manner affectthe scope, meaning, or intent of this title.
Civil Code § 1350.7 Document Delivery; Approved Methods Under TheTitle
(a) This section applies to delivery of a document listed in Section 1363.005or 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 theaddress last shown on the books of the association or otherwise provided bythe member. Delivery is deemed to be complete on deposit into the UnitedStates mail.
(3) E-mail, facsimile, or other electronic means, if the recipient hasagreed to that method of delivery. The agreement obtained by theassociation shall be consistent with the conditions for obtaining consumerconsent described in Section 20 of the Corporations Code. If a document isdelivered by electronic means, delivery is complete at the time oftransmission.
(4) By publication in a periodical that is circulated primarily tomembers of the association.
(5) If the association broadcasts television programming for thepurpose 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 thegoverning documents.
(7) Any other method of delivery, provided that the recipient hasagreed 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 providedin subdivision (b).
(d) For the purposes of this section, an unrecorded provision of thegoverning documents providing for a particular method of delivery does not
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constitute agreement by a member of the association to that method of delivery.
Article 2. Definitions
Civil Code § 1351 Definitions.
As used in this title, the following terms have the following meanings:
(a) "Association" means a nonprofit corporation or unincorporatedassociation created for the purpose of managing a common interest development.
(b) "Common area" means the entire common interest development exceptthe separate interests therein. The estate in the common area may be a fee, a lifeestate, an estate for years, or any combination of the foregoing. However, thecommon area for a planned development specified in paragraph (2) of subdivision(k) may consist of mutual or reciprocal easement rights appurtenant to the separateinterests.
(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 anundivided interest in land is coupled with the right of exclusive occupancy of anyapartment located thereon.
(e) "Condominium plan" means a plan consisting of (1) a description orsurvey map of a condominium project, which shall refer to or showmonumentation on the ground, (2) a three-dimensional description of acondominium project, one or more dimensions of which may extend for anindefinite distance upwards or downwards, in sufficient detail to identify thecommon areas and each separate interest, and (3) a certificate consenting to therecordation of the condominium plan pursuant to this title signed andacknowledged by the following:
(A) The record owner of fee title to that property included in thecondominium project.
(B) In the case of a condominium project which will terminate uponthe termination of an estate for years, the certificate shall be signed andacknowledged by all lessors and lessees of the estate for years.
(C) In the case of a condominium project subject to a life estate, thecertificate shall be signed and acknowledged by all life tenants andremainder interests.
(D) The certificate shall also be signed and acknowledged by either thetrustee or the beneficiary of each recorded deed of trust, and the mortgageeof each recorded mortgage encumbering the property.
Owners of mineral rights, easements, rights-of-way, and other non-possessory interests do not need to sign the condominium plan. Further, in the
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event a conversion to condominiums of a community apartment project or stockcooperative has been approved by the required number of owners, trustees,beneficiaries, and mortgages pursuant to Section 66452.10 of the GovernmentCode, 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 subsequentlyacknowledged recorded instrument executed by all the persons whose signatureswould be required pursuant to this subdivision.
(f) A "condominium project" means a development consisting ofcondominiums. A condominium consists of an undivided interest in common ina 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, orcondominium plan in sufficient detail to locate all boundaries thereof. The areawithin these boundaries may be filled with air, earth, or water, or any combinationthereof, and need not be physically attached to land except by easements foraccess and, if necessary, support. The description of the unit may refer to (1)boundaries described in the recorded final map, parcel map, or condominiumplan, (2) physical boundaries, either in existence or to be constructed, such aswalls, floors, and ceilings of a structure or any portion thereof, (3) an entirestructure containing one or more units, or (4) any combination thereof. Theportion or portions of the real property held in undivided interest may be all of thereal property, except for the separate interests, or may include a particular three-dimensional portion thereof, the boundaries of which are described on a recordedfinal map, parcel map, or condominium plan. The area within these boundariesmay be filled with air, earth, or water, or any combination thereof, and need notbe physically attached to land except by easements for access and, if necessary,support. An individual condominium within a condominium project mayinclude, in addition, a separate interest in other portions of the real property.
(g) "Declarant" means the person or group of persons designated in thedeclaration as declarant, or if no declarant is designated, the person or group ofpersons who sign the original declaration or who succeed to special rights,preferences, or privileges designated in the declaration as belonging to thesignator of the original declaration.
(h) "Declaration" means the document, however denominated, whichcontains the information required by Section 1353.
(i) "Exclusive use common area" means a portion of the common areasdesignated by the declaration for the exclusive use of one or more, but fewer thanall, of the owners of the separate interests and which is or will be appurtenant tothe 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 otherfixtures designed to serve a single separate interest, but located outside theboundaries of the separate interest, are exclusive use common areasallocated exclusively to that separate interest.
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(2) Notwithstanding the provisions of the declaration, internal andexternal telephone wiring designed to serve a single separate interest, butlocated outside the boundaries of the separate interest, are exclusive usecommon 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, orarticles of association, which govern the operation of the common interestdevelopment or association.
(k) "Planned development" means a development (other than a communityapartment project, a condominium project, or a stock cooperative) having eitheror both of the following features:
(1) The common area is owned either by the association or in commonby the owners of the separate interests who possess appurtenant rights to thebeneficial use and enjoyment of the common area.
(2) A power exists in the association to enforce an obligation of anowner of a separate interest with respect to the beneficial use and enjoymentof the common area by means of an assessment which may become a lienupon 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 theexclusive right to occupy an apartment, as specified in subdivision (d).
(2) In a condominium project, "separate interest" means an individualunit, as specified in subdivision (f).
(3) In a planned development, "separate interest" means a separatelyowned lot, parcel, area, or space.
(4) In a stock cooperative, "separate interest" means the exclusive rightto occupy a portion of the real property, as specified in subdivision (m).
Unless the declaration or condominium plan, if any exists, otherwiseprovides, if walls, floors, or ceilings are designated as boundaries of a separateinterest, the interior surfaces of the perimeter walls, floors, ceilings, windows,doors, and outlets located within the separate interest are part of the separateinterest and any other portions of the walls, floors, or ceilings are part of thecommon areas.
The estate in a separate interest may be a fee, a life estate, an estate foryears, or any combination of the foregoing.
(m) "Stock cooperative" means a development in which a corporation isformed or availed of, primarily for the purpose of holding title to, either in feesimple or for a term of years, improved real property, and all or substantially allof the shareholders of the corporation receive a right of exclusive occupancy ina portion of the real property, title to which is held by the corporation. Theowners' interest in the corporation, whether evidenced by a share of stock, acertificate of membership, or otherwise, shall be deemed to be an interest in acommon interest development and a real estate development for purposes of
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subdivision (f) of Section 25100 of the Corporations Code.
A "stock cooperative" includes a limited equity housing cooperativewhich is a stock cooperative that meets the criteria of Section 817.
Chapter 2. Governing Documents
Article 1. Creation
Civil Code § 1352 Application Of Title; Creation Of Common InterestDevelopment.
This title applies and a common interest development is created whenever aseparate interest coupled with an interest in the common area or membership inthe association is, or has been, conveyed, provided all of the following arerecorded:
(a) A declaration.
(b) A condominium plan, if any exists.
(c) A final map or parcel map, if Division 2 (commencing with Section66410) of Title 7 of the Government Code requires the recording of either a finalmap or parcel map for the common interest development.
Civil Code § 1352.5 Restrictive Covenants; Deletion From Declaration OrOther Governing Documents
(a) No declaration or other governing document shall include a restrictivecovenant in violation of Section 12955 of the Government Code.
(b) Notwithstanding any other provision of law or provision of thegoverning documents, the board of directors of an association, without approvalof the owners, shall amend any declaration or other governing document thatincludes a restrictive covenant prohibited by this section to delete the restrictivecovenant, and shall restate the declaration or other governing document withoutthe restrictive covenant but with no other change to the declaration or governingdocument.
(c) If after providing written notice to an association requesting that theassociation delete a restrictive covenant that violates subdivision (a), and theassociation fails to delete the restrictive covenant within 30 days of receiving thenotice, the Department of Fair Employment and Housing, a city or county inwhich a common interest development is located, or any person may bring anaction against the association for injunctive relief to enforce subdivision (a). Thecourt may award attorneys fees to the prevailing party.
Civil Code § 1353 Declaration; Contents.
(a) (1) A declaration, recorded on or after January 1, 1986, shall containa legal description of the common interest development, and a statement that thecommon interest development is a community apartment project, condominiumproject, planned development, stock cooperative, or combination thereof. Thedeclaration shall additionally set forth the name of the association and therestrictions on the use or enjoyment of any portion of the common interestdevelopment that are intended to be enforceable equitable servitudes. If the
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property is located within an airport influence area, a declaration recorded afterJanuary 1, 2004, shall contain the following statement:
NOTICE OF AIRPORT VICINITY
This property is presently located in the vicinity of an airport,within what is known as an airport influence area. For thatreason, the property may be subject to some of the annoyancesor inconveniences associated with proximity to airportoperations (for example: noise, vibration, or odors). Individualsensitivities to those annoyances can vary from person toperson. You may wish to consider what airport annoyances,if any, are associated with the property before you completeyour purchase and determine whether they are acceptable toyou.
(2) For purposes of this section, an "airport influence area," also knownas an "airport referral area," is the area in which current or future airport-related noise, overflight, safety, or airspace protection factors maysignificantly affect land uses or necessitate restrictions on those uses asdetermined by an airport land use commission.
(3) If the property is within the San Francisco Bay Conservation andDevelopment Commission jurisdiction, as described in Section 66610 of theGovernment Code, a declaration recorded on or after January 1, 2006, shallcontain the following notice: NOTICE OF SAN FRANCISCO BAYCONSERVATION AND DEVELOPMENT COMMISSION JURISDICTION
This property is located within the jurisdiction of the San Francisco BayConservation and Development Commission. Use and development ofproperty within the commission's jurisdiction may be subject to specialregulations, restrictions, and permit requirements. You may wish toinvestigate and determine whether they are acceptable to you and yourintended use of the property before you complete your transaction.
(4) The statement in a declaration acknowledging that a property islocated in an airport influence area or within the jurisdiction of the SanFrancisco Bay Conservation and Development Commission does notconstitute a title defect, lien, or encumbrance.
(b) The declaration may contain any other matters the original signator ofthe declaration or the owners consider appropriate.
Civil Code § 1353.5 Display Of United States Flag By Owner On Or InOwner's Separate Interest Or Within Exclusive Use Common Area
(a) Except as required for the protection of the public health or safety, nodeclaration or other governing document shall limit or prohibit, or be construedto limit or prohibit, the display of the flag of the United States by an owner on orin 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
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a staff or pole or in a window, and does not mean a depiction or emblem of theflag of the United States made of lights, paint, roofing, siding, paving materials,flora, or balloons, or any other similar building, landscaping, or decorativecomponent.
(c) In any action to enforce this section, the prevailing party shall beawarded reasonable attorneys' fees and costs.
Civil Code § 1353.6 Prohibition Of Posting Or Displaying NoncommercialSigns, Posters, Flags, Or Banners; Permitted Placement Of Posting OrDisplaying; Exceptions
(a) The governing documents, including the operating rules, may notprohibit posting or displaying of noncommercial signs, posters, flags, or bannerson or in an owner's separate interest, except as required for the protection ofpublic health or safety or if the posting or display would violate a local, state, orfederal law.
(b) For purposes of this section, a noncommercial sign, poster, flag, orbanner may be made of paper, cardboard, cloth, plastic, or fabric, and may beposted or displayed from the yard, window, door, balcony, or outside wall of theseparate interest, but may not be made of lights, roofing, siding, paving materials,flora, or balloons, or any other similar building, landscaping, or decorativecomponent, or include the painting of architectural surfaces.
(c) An association may prohibit noncommercial signs and posters that aremore than 9 square feet in size and noncommercial flags or banners that are morethan 15 square feet in size.
Civil Code §1353.7 Common Interest Developments; Roof Installation AndRepair; Governing Documents
(a) No common interest development may require a homeowner to installor repair a roof in a manner that is in violation of Section 13132.7 of the Healthand Safety Code.
(b) Governing documents of a common interest development locatedwithin a very high fire severity zone, as designated by the Director of Forestryand Fire Protection pursuant to Article 9 (commencing with Section 4201) ofChapter 1 of Part 2 of Division 4 of the Public Resources Code or by a localagency pursuant to Chapter 6.8 (commencing with Section 51175) of Part 1 ofDivision 1 of Title 5 of the Government Code, shall allow for at least one type offire retardant roof covering material that meets the requirements of Section13132.7 of the Health and Safety Code.
Civil Code § 1353.8 Prohibition On Use Of Low Water - Using Plants OrWater - Efficient Landscape Void
(a) Notwithstanding any other law, a provision of any of the governingdocuments of a common interest development shall be void and unenforceableif it does any of the following:
(1) Prohibits, or includes conditions that have the effect of prohibiting,the use of low water-using plants as a group.
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(2) Has the effect of prohibiting or restricting compliance with either ofthe following:
(A) A water-efficient landscape ordinance adopted or in effectpursuant to subdivision (c) of Section 65595 of the Government Code.
(B) Any regulation or restriction on the use of water adoptedpursuant to Section 353 or 375 of the Water Code.
(b) This section shall not prohibit an association from applying landscapingrules and regulations established in the governing documents, to the extent therules and regulations fully conform with the requirements of subdivision (a).
Civil Code § 1353.9 Prohibition Or Restriction On Installation Or Use OfElectric Vehicle Charging Station; Standards And Requirements;Application For Approval; Placement In Common Areas; Violations AndPenalties; Attorney’s Fees
(a) Any covenant, restriction, or condition contained in any deed, contract,security instrument, or other instrument affecting the transfer or sale of any interestin a common interest development, and any provision of a governing document,as defined in subdivision (j) of Section 1351, that either effectively prohibits orunreasonably restricts the installation or use of an electric vehicle charging stationin an owner's designated parking space, including, but not limited to, a deededparking space, a parking space in an owner's exclusive use common area, or aparking space that is specifically designated for use by a particular owner, or is inconflict with the provisions of this section is void and unenforceable.
(b) (1) This section does not apply to provisions that impose reasonablerestrictions on electric vehicle charging stations. However, it is the policy ofthe state to promote, encourage, and remove obstacles to the use of electricvehicle charging stations.
(2) For purposes of this section, “reasonable restrictions” arerestrictions that do not significantly increase the cost of the station orsignificantly decrease its efficiency or specified performance.
(c) An electric vehicle charging station shall meet applicable health andsafety standards and requirements imposed by state and local authorities as wellas all other applicable zoning, land use or other ordinances, or land use permits.
(d) For purposes of this section, “electric vehicle charging station” means astation that is designed in compliance with the California Building Standards Codeand delivers electricity from a source outside an electric vehicle into one or moreelectric vehicles. An electric vehicle charging station may include several chargepoints simultaneously connecting several electric vehicles to the station and anyrelated equipment needed to facilitate charging plug-in electric vehicles.
(e) If approval is required for the installation or use of an electric vehiclecharging station, the application for approval shall be processed and approved bythe association in the same manner as an application for approval of anarchitectural modification to the property, and shall not be willfully avoided ordelayed. The approval or denial of an application shall be in writing. If an
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application is not denied in writing within 60 days from the date of receipt of theapplication, the application shall be deemed approved, unless that delay is theresult of a reasonable request for additional information.
(f) If the electric vehicle charging station is to be placed in a common areaor an exclusive use common area, as designated in the common interestdevelopment’s declaration, the following provisions apply:
(1) The owner first shall obtain approval from the association to installthe electric vehicle charging station and the association shall approve theinstallation if the owner agrees in writing to do all of the following:
(A) Comply with the association's architectural standards for theinstallation of the charging station.
(B) Engage a licensed contractor to install the charging station.
(C) Within 14 days of approval, provide a certificate of insurancethat names the association as an additional insured under the owner’sinsurance policy in the amount set forth in paragraph (3).
(D) Pay for the electricity usage associated with the chargingstation.
(2) The owner and each successive owner of the charging station shallbe responsible for all of the following:
(A) Costs for damage to the charging station, common area,exclusive use common area, or separate interests resulting from theinstallation, maintenance, repair, removal, or replacement of thecharging station.
(B) Costs for the maintenance, repair, and replacement of thecharging station until it has been removed and for the restoration of thecommon area after removal.
(C) The cost of electricity associated with the charging station.
(D) Disclosing to prospective buyers the existence of any chargingstation of the owner and the related responsibilities of the owner underthis section.
(3) The owner and each successive owner of the charging station, at alltimes, shall maintain a homeowner liability coverage policy in the amountof one million dollars ($1,000,000), and shall name the association as anamed additional insured under the policy with a right to notice of cancellation.
(4) A homeowner shall not be required to maintain a homeownerliability coverage policy for an existing National Electrical ManufacturersAssociation standard alternating current power plug.
(g) Except as provided in subdivision (h), installation of an electric vehiclecharging station for the exclusive use of an owner in a common area, that is notan exclusive use common area, shall be authorized by the association only ifinstallation in the owner's designated parking space is impossible or unreasonablyexpensive. In such cases, the association shall enter into a license agreement with
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the owner for the use of the space in a common area, and the owner shall complywith all of the requirements in subdivision (f).
(h) The association or owners may install an electric vehicle chargingstation in the common area for the use of all members of the association and, inthat case, the association shall develop appropriate terms of use for the chargingstation.
(i) An association may create a new parking space where one did notpreviously exist to facilitate the installation of an electric vehicle charging station.
(j) An association that willfully violates this section shall be liable to theapplicant or other party for actual damages, and shall pay a civil penalty to theapplicant or other party in an amount not to exceed one thousand dollars($1,000).
(k) In any action to enforce compliance with this section, the prevailingplaintiff shall be awarded reasonable attorney’s fees.
Article 2. Enforcement
Civil Code § 1354 Enforceability Of Covenants And Restrictions AsEquitable Servitudes.
(a) The covenants and restrictions in the declaration shall be enforceableequitable servitudes, unless unreasonable, and shall inure to the benefit of andbind all owners of separate interests in the development. Unless the declarationstates otherwise, these servitudes may be enforced by any owner of a separateinterest or by the association, or by both.
(b) A governing document other than the declaration may be enforced bythe association against an owner of a separate interest or by an owner of aseparate interest against the association.
(c) In an action to enforce the governing documents, the prevailing partyshall be awarded reasonable attorney's fees and costs.
Article 3. Amendment
Civil Code § 1355 Amendment Of Declaration.
(a) The declaration may be amended pursuant to the governing documentsor 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 documentshas been given, (2) that fact has been certified in a writing executed andacknowledged by the officer designated in the declaration or by the associationfor 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 thecommon interest development is located.
(b) Except to the extent that a declaration provides by its express terms thatit is not amendable, in whole or in part, a declaration which fails to includeprovisions permitting its amendment at all times during its existence may beamended at any time. For purposes of this subdivision, an amendment is onlyeffective after (1) the proposed amendment has been distributed to all of the
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owners of separate interests in the common interest development by first-classmail postage prepaid or personal delivery not less than 15 days and not morethan 60 days prior to any approval being solicited; (2) the approval of ownersrepresenting more than 50 percent, or any higher percentage required by thedeclaration for the approval of an amendment to the declaration, of the separateinterests in the common interest development has been given, and that fact hasbeen certified in a writing, executed and acknowledged by an officer of theassociation; and (3) the amendment has been recorded in each county in whicha portion of the common interest development is located. A copy of anyamendment adopted pursuant to this subdivision shall be distributed by first-classmail postage prepaid or personal delivery to all of the owners of separate interestsimmediately upon its recordation.
Civil Code § 1355.5 Amendment Of Governing Documents To DeleteConstruction Or Marketing Provisions After Completion By Developer;Requirements.
(a) Notwithstanding any provision of the governing documents of acommon interest development to the contrary, the board of directors of theassociation may, after the developer of the common interest development hascompleted construction of the development, has terminated constructionactivities, and has terminated his or her marketing activities for the sale, lease, orother disposition of separate interests within the development, adopt anamendment deleting from any of the governing documents any provision whichis unequivocally designed and intended, or which by its nature can only havebeen designed or intended, to facilitate the developer in completing theconstruction or marketing of the development. However, provisions of thegoverning documents relative to a particular construction or marketing phase ofthe development may not be deleted under the authorization of this subdivisionuntil that construction or marketing phase has been completed.
(b) The provisions which may be deleted by action of the board shall belimited to those which provide for access by the developer over or across thecommon area for the purposes of (a) completion of construction of thedevelopment, and (b) the erection, construction, or maintenance of structures orother facilities designed to facilitate the completion of construction or marketingof separate interests.
(c) At least 30 days prior to taking action pursuant to subdivision (a), theboard of directors of the association shall mail to all owners of the separateinterests, by first-class mail, (1) a copy of all amendments to the governingdocuments proposed to be adopted under subdivision (a) and (2) a notice of thetime, date, and place the board of directors will consider adoption of theamendments. The board of directors of an association may consider adoption ofamendments to the governing documents pursuant to subdivision (a) only at ameeting which is open to all owners of the separate interests in the commoninterest development, who shall be given opportunity to make comments thereon.All deliberations of the board of directors on any action proposed undersubdivision (a) shall only be conducted in such an open meeting.
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(d) The board of directors of the association may not amend the governingdocuments pursuant to this section without the approval of the owners, casting amajority of the votes at a meeting or election of the association constituting aquorum and conducted in accordance with Chapter 5 (commencing with Section7510) of Part 3 of Division 2 of Title 1 of, and Section 7613 of, the CorporationsCode. For the purposes of this section, "quorum" means more than 50 percent ofthe owners who own no more than two separate interests in the development.
Civil Code § 1356 Amendment Of Declaration; Petition; Contents; Filings;Findings By Court; Power Of Court To Approve Amendment; RecordingAmendment; Mailing.
(a) If in order to amend a declaration, the declaration requires ownershaving more than 50 percent of the votes in the association, in a single classvoting structure, or owners having more than 50 percent of the votes in more thanone class in a voting structure with more than one class, to vote in favor of theamendment, the association, or any owner of a separate interest, may petition thesuperior court of the county in which the common interest development is locatedfor an order reducing the percentage of the affirmative votes necessary for suchan amendment. The petition shall describe the effort that has been made to solicitapproval of the association members in the manner provided in thedeclaration, the number of affirmative and negative votes actuallyreceived, the number or percentage of affirmative votes required to effect theamendment in accordance with the existing declaration, and other matters thepetitioner considers relevant to the court's determination. The petition shall alsocontain, 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 thesolicitation 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 andissue 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 findsall of the following:
(1) The petitioner has given not less than 15 days written notice of thecourt hearing to all members of the association, to any mortgagee of amortgage or beneficiary of a deed of trust who is entitled to notice under theterms of the declaration, and to the city, county, or city and county in whichthe common interest development is located that is entitled to notice underthe terms of the declaration.
(2) Balloting on the proposed amendment was conducted inaccordance with all applicable provisions of the governing documents.
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(3) A reasonably diligent effort was made to permit all eligiblemembers to vote on the proposed amendment.
(4) Owners having more than 50 percent of the votes, in a single classvoting structure, voted in favor of the amendment. In a voting structure withmore than one class, where the declaration requires a majority of more thanone class to vote in favor of the amendment, owners having more than 50percent of the votes of each class required by the declaration to vote in favorof the amendment voted in favor of the amendment.
(5) The amendment is reasonable.
(6) Granting the petition is not improper for any reason stated insubdivision (e).
(d) If the court makes the findings required by subdivision (c), any orderissued pursuant to this section may confirm the amendment as being validlyapproved on the basis of the affirmative votes actually received during theballoting period or the order may dispense with any requirement relating toquorums or to the number or percentage of votes needed for approval of theamendment that would otherwise exist under the governing documents.
(e) Subdivisions (a) to (d), inclusive, notwithstanding, the court shall not beempowered by this section to approve any amendment to the declaration that:
(1) Would change provisions in the declaration requiring the approvalof owners having more than 50 percent of the votes in more than one classto vote in favor of an amendment, unless owners having more than 50percent of the votes in each affected class approved the amendment.
(2) Would eliminate any special rights, preferences, or privilegesdesignated in the declaration as belonging to the declarant, without theconsent of the declarant.
(3) Would impair the security interest of a mortgagee of a mortgage orthe beneficiary of a deed of trust without the approval of the percentage ofthe mortgagees and the beneficiaries specified in the declaration, if thedeclaration requires the approval of a specified percentage of the mortgageesand beneficiaries.
(f) An amendment is not effective pursuant to this section until the courtorder and amendment have been recorded in every county in which a portion ofthe common interest development is located. The amendment may beacknowledged by, and the court order and amendment may be recorded by, anyperson designated in the declaration or by the association for that purpose, or ifno one is designated for that purpose, by the president of the association. Uponrecordation of the amendment and court order, the declaration, as amended inaccordance with this section, shall have the same force and effect as if theamendment were adopted in compliance with every requirement imposed by thegoverning documents.
(g) Within a reasonable time after the amendment is recorded theassociation shall mail a copy of the amendment to each member of the
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association, together with a statement that the amendment has been recorded.
Civil Code § 1357 Extension Of Term Of Declaration.
(a) The Legislature finds that there are common interest developments thathave been created with deed restrictions which do not provide a means for theproperty owners to extend the term of the declaration. The Legislature furtherfinds that covenants and restrictions, contained in the declaration, are anappropriate method for protecting the common plan of developments and toprovide for a mechanism for financial support for the upkeep of common areasincluding, but not limited to, roofs, roads, heating systems, and recreationalfacilities. If declarations terminate prematurely, common interest developmentsmay deteriorate and the housing supply of affordable units could be impactedadversely.
The Legislature further finds and declares that it is in the public interest toprovide a vehicle for extending the term of the declaration if owners having morethan 50 percent of the votes in the association choose to do so.
(b) A declaration which specifies a termination date, but which contains noprovision for extension of the termination date, may be extended by the approvalof owners having more than 50 percent of the votes in the association or anygreater percentage specified in the declaration for an amendment thereto. If theapproval of owners having more than 50 percent of the votes in the associationis required to amend the declaration, the term of the declaration may be extendedin 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 tothis section shall exceed the initial term of the declaration or 20 years, whicheveris less. However, more than one extension may occur pursuant to this section.
Article 4. Operating Rules
Civil Code § 1357.100 Definitions
As used in this article:
(a) "Operating rule" means a regulation adopted by the board of directorsof the association that applies generally to the management and operation of thecommon interest development or the conduct of the business and affairs of theassociation.
(b) "Rule change" means the adoption, amendment, or repeal of anoperating rule by the board of directors of the association.
Civil Code § 1357.110 Requirements For Validity And Enforceability
An operating rule is valid and enforceable only if all of the following requirementsare satisfied:
(a) The rule is in writing.
(b) The rule is within the authority of the board of directors of the
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association conferred by law or by the declaration, articles of incorporation orassociation, 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 substantialcompliance with the requirements of this article.
(e) The rule is reasonable.
Civil Code § 1357.120 Approved Subject Matters; Board Action ToPropose A Rule Change; Special Meetings Of The Members To Reverse ARule Change
(a) Sections 1357.130 and 1357.140 only apply to an operating rule thatrelates 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 architecturalstandards that govern alteration of a separate interest.
(3) Member discipline, including any schedule of monetary penaltiesfor violation of the governing documents and any procedure for theimposition of penalties.
(4) Any standards for delinquent assessment payment plans.
(5) Any procedures adopted by the association for resolution ofdisputes.
(6) Any procedures for reviewing and approving or disapproving aproposed physical change to a member's separate interest or to the commonarea.
(7) Procedures for elections.
(b) Sections 1357.130 and 1357.140 do not apply to the following actionsby 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 applygenerally.
(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 hasno discretion as to the substantive effect of the rule change.
(5) Issuance of a document that merely repeats existing law or thegoverning documents.
Civil Code § 1357.130 Proposed Rule Change By Board Action; Notice;Meeting
(a) The board of directors shall provide written notice of a proposed rulechange to the members at least 30 days before making the rule change. The noticeshall include the text of the proposed rule change and a description of the purpose
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and effect of the proposed rule change. Notice is not required under thissubdivision if the board of directors determines that an immediate rule change isnecessary to address an imminent threat to public health or safety or imminent riskof substantial economic loss to the association.
(b) A decision on a proposed rule change shall be made at a meeting of theboard of directors, after consideration of any comments made by associationmembers.
(c) As soon as possible after making a rule change, but not more than 15days after making the rule change, the board of directors shall deliver notice ofthe rule change to every association member. If the rule change was an emergencyrule change made under subdivision (d), the notice shall include the text of therule change, a description of the purpose and effect of the rule change, and thedate that the rule change expires.
(d) If the board of directors determines that an immediate rule change isrequired to address an imminent threat to public health or safety, or an imminentrisk of substantial economic loss to the association, it may make an emergencyrule change; and no notice is required, as specified in subdivision (a). Anemergency rule change is effective for 120 days, unless the rule change providesfor a shorter effective period. A rule change made under this subdivision may notbe readopted under this subdivision.
(e) A notice required by this section is subject to Section 1350.7.
Civil Code § 1357.140 Special Meeting Of Members To Reverse A RuleChange; Notice; Voting Requirements; Effect Of Approved Reversal
(a) Members of an association owning 5 percent or more of the separateinterests 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 writtenrequest to the president or secretary of the board of directors, after which theboard shall deliver notice of the meeting to the association's members and holdthe meeting in conformity with Section 7511 of the Corporations Code. Thewritten request may not be delivered more than 30 days after the members of theassociation are notified of the rule change. Members are deemed to have beennotified of a rule change on delivery of notice of the rule change, or onenforcement of the resulting rule, whichever is sooner. For the purposes of Section8330 of the Corporations Code, collection of signatures to call a special meetingunder this section is a purpose reasonably related to the interests of the membersof the association. Amember request to copy or inspect the membership list solelyfor that purpose may not be denied on the grounds that the purpose is notreasonably related to the member's interests as a member.
(c) The rule change may be reversed by the affirmative vote of a majorityof the votes represented and voting at a duly held meeting at which a quorum ispresent (which affirmative votes also constitute a majority of the requiredquorum), or if the declaration or bylaws require a greater proportion, by theaffirmative vote or written ballot of the proportion required. In lieu of calling themeeting described in this section, the board may distribute a written ballot to
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every member of the association in conformity with the requirements of Section7513 of the Corporations Code.
(d) Unless otherwise provided in the declaration or bylaws, for the purposesof 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 Sections7612 and 7613 of, the Corporations Code.
(f) A rule change reversed under this section may not be readopted for oneyear after the date of the meeting reversing the rule change. Nothing in this sectionprecludes the board of directors from adopting a different rule on the same subjectas the rule change that has been reversed.
(g) As soon as possible after the close of voting, but not more than 15 daysafter the close of voting, the board of directors shall provide notice of the resultsof 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 undersubdivision (d) of Section 1357.130.
Civil Code 1357.150 Applicability Of Article To Changes Commenced BeforeAnd 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 commencedbefore January 1, 2004.
(c) For the purposes of this section, a rule change is commenced when theboard of directors of the association takes its first official action leading toadoption of the rule change.
Chapter 3. Ownership Rights and Interests
Civil Code § 1358 Interests Included In Conveyance, Judicial Sale OrTransfer Of Separate Interests; Transfers Of Exclusive Use Areas; RestrictionsUpon Severability Of Component Interests.
(a) In a community apartment project, any conveyance, judicial sale, orother voluntary or involuntary transfer of the separate interest includes theundivided interest in the community apartment project. Any conveyance, judicialsale, or other voluntary or involuntary transfer of the owner's entire estate alsoincludes the owner's membership interest in the association.
(b) In a condominium project, the common areas are not subject topartition, except as provided in Section 1359. Any conveyance, judicial sale, orother voluntary or involuntary transfer of the separate interest includes theundivided interest in the common areas. Any conveyance, judicial sale, or othervoluntary or involuntary transfer of the owner's entire estate also includes theowner's membership interest in the association.
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(c) In a planned development, any conveyance, judicial sale, or othervoluntary or involuntary transfer of the separate interest includes the undividedinterest in the common areas, if any exist. Any conveyance, judicial sale, or othervoluntary or involuntary transfer of the owner's entire estate also includes theowner's membership interest in the association.
(d) In a stock cooperative, any conveyance, judicial sale, or other voluntaryor involuntary transfer of the separate interest includes the ownership interest inthe corporation, however evidenced. Any conveyance, judicial sale, or othervoluntary or involuntary transfer of the owner's entire estate also includes theowner's membership interest in the association. Nothing in this section prohibitsthe transfer of exclusive use areas, independent of any other interest in a commoninterest subdivision, if authorization to separately transfer exclusive use areas isexpressly stated in the declaration and the transfer occurs in accordance with theterms of the declaration.
Any restrictions upon the severability of the component interests in real propertywhich are contained in the declaration shall not be deemed conditions repugnantto 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 rightto partition a project is suspended under Section 1359.
Civil Code § 1359 Restrictions On Partition.
(a) Except as provided in this section, the common areas in a condominiumproject 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 acondominium.
(b) The owner of a separate interest in a condominium project maymaintain a partition action as to the entire project as if the owners of all of theseparate interests in the project were tenants in common in the entire project inthe same proportion as their interests in the common areas. The court shall orderpartition under this subdivision only by sale of the entire condominium projectand only upon a showing of one of the following:
(1) More than three years before the filing of the action, thecondominium project was damaged or destroyed, so that a material part wasrendered unfit for its prior use, and the condominium project has not beenrebuilt or repaired substantially to its state prior to the damage or destruction.
(2) Three-fourths or more of the project is destroyed or substantiallydamaged and owners of separate interests holding in the aggregate more thana 50 percent interest in the common areas oppose repair or restoration of theproject.
(3) The project has been in existence more than 50 years, is obsoleteand uneconomic, and owners of separate interests holding in the aggregatemore than a 50 percent interest in the common area oppose repair orrestoration of the project.
(4) The conditions for such a sale, set forth in the declaration, havebeen met.
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Civil Code § 1360 Modification Of Unit By Owner; Facilitation Of AccessFor Handicapped; Approval By Project Association.
(a) Subject to the provisions of the governing documents and otherapplicable provisions of law, if the boundaries of the separate interest arecontained within a building, the owner of the separate interest may do thefollowing:
(1) Make any improvements or alterations within the boundaries of hisor her separate interest that do not impair the structural integrity ormechanical systems or lessen the support of any portions of the commoninterest 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, orphysically disabled, or to alter conditions which could be hazardous to thesepersons. These modifications may also include modifications of the routefrom the public way to the door of the unit for the purposes of this paragraphif the unit is on the ground floor or already accessible by an existing ramp orelevator. The right granted by this paragraph is subject to the followingconditions:
(A) The modifications shall be consistent with applicable buildingcode requirements.
(B) The modifications shall be consistent with the intent ofotherwise applicable provisions of the governing documents pertainingto safety or aesthetics.
(C) Modifications external to the dwelling shall not preventreasonable passage by other residents, and shall be removed by theowner when the unit is no longer occupied by persons requiring thosemodifications who are blind, visually handicapped, deaf, or physicallydisabled.
(D) Any owner who intends to modify a unit pursuant to thisparagraph shall submit his or her plans and specifications to theassociation of the condominium project for review to determine whetherthe modifications will comply with the provisions of this paragraph. Theassociation shall not deny approval of the proposed modifications underthis paragraph without good cause.
(b) Any change in the exterior appearance of a separate interest shall be inaccordance with the governing documents and applicable provisions of law.
Civil Code § 1360.2 Rental Or Leasing Separate Interests; Requirements
(a) An owner of a separate interest in a common interest development shallnot be subject to a provision in a governing document or an amendment to agoverning document that prohibits the rental or leasing of any of the separateinterests in that common interest development to a renter, lessee, or tenant unlessthat governing document, or amendment thereto, was effective prior to the datethe owner acquired title to his or her separate interest.
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(b) Notwithstanding the provisions of this section, an owner of a separateinterest in a common interest development may expressly consent to be subjectto a governing document or an amendment to a governing document thatprohibits the rental or leasing of any of the separate interests in the commoninterest development to a renter, lessee, or tenant.
(c) For purposes of this section, the right to rent or lease the separate interestof an owner shall not be deemed to have terminated if the transfer by the ownerof all or part of the separate interest meets at least one of the following conditions:
(1) Pursuant to Section 62 or 480.3 of the Revenue and Taxation Code,the transfer is exempt, for purposes of reassessment by the county taxassessor.
(2) Pursuant to subdivision (b) of, solely with respect to probatetransfers, or subdivision (e), (f), or (g) of, Section 1102.2, the transfer is exemptfrom the requirements to prepare and deliver a Real Estate Transfer DisclosureStatement, as set forth in Section 1102.6.
(d) Prior to renting or leasing his or her separate interest as provided by thissection, an owner shall provide the association verification of the date the owneracquired title to the separate interest and the name and contact information of theprospective tenant or the prospective tenant's representative.
(e) Nothing in this section shall be deemed to revise, alter, or otherwiseaffect the voting process by which a common interest development adopts oramends its governing documents.
(f) This section shall apply only to a provision in a governing document ora provision in an amendment to a governing document that becomes effectiveon or after January 1, 2012.
Civil Code § 1360.5 Pets Within Common Interest Developments.
(a) No governing documents shall prohibit the owner of a separate interestwithin a common interest development from keeping at least one pet within thecommon interest development, subject to reasonable rules and regulations of theassociation. This section may not be construed to affect any other rights providedby 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 tobetween the association and the homeowner.
(c) If the association implements a rule or regulation restricting the numberof pets an owner may keep, the new rule or regulation shall not apply to prohibitan owner from continuing to keep any pet that the owner currently keeps in hisor her separate interest if the pet otherwise conforms with the previous rules orregulations 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 commoninterest development, and the bylaws, rules, and regulations of the association.
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(e) This section shall become operative on January 1, 2001, and shall onlyapply to governing documents entered into, amended, or otherwise modified onor after that date.
Civil Code § 1361 Rights And Easements Of Ingress, Egress And Support.
Unless the declaration otherwise provides:
(a) In a community apartment project and condominium project, and inthose planned developments with common areas owned in common by theowners of the separate interests, there are appurtenant to each separate interestnonexclusive rights of ingress, egress, and support, if necessary, through thecommon areas. The common areas are subject to these rights.
(b) In a stock cooperative, and in a planned development with commonareas owned by the association, there is an easement for ingress, egress, andsupport, if necessary, appurtenant to each separate interest. The common areasare subject to these easements.
Civil Code § 1361.5 Physical Access To Owner Or Occupant's SeparateInterest
Except as otherwise provided in law, an order of the court, or an order pursuantto a final and binding arbitration decision, an association may not deny an owneror occupant physical access to his or her separate interest, either by restrictingaccess through the common areas to the owner's separate interest, or by restrictingaccess solely to the owner's separate interest.
Civil Code § 1362 Ownership Of Common Areas.
Unless the declaration otherwise provides, in a condominium project, or in aplanned development in which the common areas are owned by the owners ofthe separate interests, the common areas are owned as tenants in common, inequal shares, one for each unit or lot.
Chapter 4. Governance
Article 1. Association
Civil Code § 1363 Community Association Management; Schedule OfMonetary Penalties For Violations.
(a) A common interest development shall be managed by an associationthat may be incorporated or unincorporated. The association may be referred toas a community association.
(b) An association, whether incorporated or unincorporated, shall preparea budget pursuant to Section 1365 and disclose information, if requested, inaccordance with Section 1368.
(c) Unless the governing documents provide otherwise, and regardless ofwhether the association is incorporated or unincorporated, the association mayexercise the powers granted to a nonprofit mutual benefit corporation, asenumerated in Section 7140 of the Corporations Code, except that anunincorporated association may not adopt or use a corporate seal or issuemembership certificates in accordance with Section 7313 of the Corporations
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Code. The association, whether incorporated or unincorporated, may exercise thepowers granted to an association in this title.
(d) Meetings of the membership of the association shall be conducted inaccordance with a recognized system of parliamentary procedure or anyparliamentary procedures the association may adopt.
(e) Members of the association shall have access to association records,including accounting books and records and membership lists, in accordancewith Article 3 (commencing with Section 8330) of Chapter 13 of Part 3 of Division2 of Title 1 of the Corporations Code. The members of the association shall havethe same access to the operating rules of the association as they have to theaccounting books and records of the association.
(f) If an association adopts or has adopted a policy imposing any monetarypenalty, including any fee, on any association member for a violation of thegoverning documents or rules of the association, including any monetary penaltyrelating to the activities of a guest or invitee of a member, the board of directorsshall 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 containedin the governing documents. The board of directors shall not be required todistribute any additional schedules of monetary penalties unless there are changesfrom the schedule that was adopted and distributed to the members pursuant tothis subdivision.
(g) When the board of directors is to meet to consider or impose disciplineupon a member, the board shall notify the member in writing, by either personaldelivery or first-class mail, at least 10 days prior to the meeting. The notificationshall contain, at a minimum, the date, time, and place of the meeting, the natureof the alleged violation for which a member may be disciplined, and a statementthat 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 ifrequested by the member being disciplined.
If the board imposes discipline on a member, the board shall provide themember a written notification of the disciplinary action, by either personaldelivery or first-class mail, within 15 days following the action. A disciplinaryaction shall not be effective against a member unless the board fulfills therequirements of this subdivision.
(h) Whenever two or more associations have consolidated any of theirfunctions under a joint neighborhood association or similar organization,members of each participating association shall be (1) entitled to attend allmeetings of the joint association other than executive sessions, (2) givenreasonable opportunity for participation in those meetings, and (3) entitled to thesame access to the joint association's records as they are to the participatingassociation's records.
(i) Nothing in this section shall be construed to create, expand, or reducethe authority of the board of directors of an association to impose monetarypenalties on an association member for a violation of the governing documents
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or rules of the association.
Civil Code § 1363.001 On-Line Education Course.
To the extent existing funds are available, the Department of Consumer Affairsand the Department of Real Estate shall develop an on-line education course forthe board of directors of an association regarding the role, duties, laws, andresponsibilities of board members and prospective board members, and thenonjudicial foreclosure process.
Civil Code § 1363.005 Distribution Of Disclosure Documents Index
The association shall, at the request of any member, distribute to the member, inthe manner described in Section 1350.7, the following Disclosure DocumentsIndex:
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Disclosure Documents Index
Item Description Reference Code
1 Assessment and Reserve Funding Disclosure Civil Code Sec.Summary (form) 1365.2.5
2 Pro Forma Operating Budget or Pro Forma Civil Code Sec.Operating Budget Summary 1363(a)
3 Assessment Collection Policy Civil Code Sec.1365(e) and 1367.1(a)
4 Notice/Assessments and Foreclosure (form) Civil Code Sec.1365.1
5 Insurance Coverage Summary Civil Code Sec.1365(f)
6 Board Minutes Access Civil Code Sec.1363.05(e)
7 Alternative Dispute Resolution (ADR) Rights Civil Code Sec.(summary) 1369.590
8 Internal Dispute Resolution (IDR) Rights Civil Code Sec.(summary) 1363.850
9 Architectural Changes Notice Civil Code Sec.1378(c)
10 Secondary Address Notification Request Civil Code Sec.1367.1(k)
11 Monetary Penalties Schedule Civil Code Sec.1363(g)
Article 2. Elections and Meetings
Civil Code § 1363.03 Elections; Rules And Procedures
(a) An association shall adopt rules, in accordance with the proceduresprescribed by Article 4 (commencing with Section 1357.100) of Chapter 2, thatdo all of the following:
(1) Ensure that if any candidate or member advocating a point of viewis provided access to association media, newsletters, or Internet Web sitesduring a campaign, for purposes that are reasonably related to that election,equal access shall be provided to all candidates and members advocating apoint of view, including those not endorsed by the board, for purposes thatare reasonably related to the election. The association shall not edit or redactany content from these communications, but may include a statementspecifying that the candidate or member, and not the association, isresponsible 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 notincumbents, and to all members advocating a point of view, including thosenot endorsed by the board, for purposes reasonably related to the election.
(3) Specify the qualifications for candidates for the board of directorsand any other elected position, and procedures for the nomination ofcandidates, consistent with the governing documents. A nomination orelection procedure shall not be deemed reasonable if it disallows anymember of the association from nominating himself or herself for election tothe board of directors.
(4) Specify the qualifications for voting, the voting power of eachmembership, the authenticity, validity, and effect of proxies, and the votingperiod 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 partiesas inspector or inspectors of elections 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 theassociation.
(C) Any other method for selecting the inspector or inspectors.
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12 Reserve Funding Plan (summary) Civil Code Sec.1365(b)
13 Review of Financial Statement Civil Code Sec.1365(c)
14 Annual Update of Reserve Study Civil Code Sec.1365(a)
(6) Allow the inspector or inspectors to appoint and oversee additionalpersons to verify signatures and to count and tabulate votes as the inspectoror inspectors deem appropriate, provided that the persons are independentthird parties.
(b) Notwithstanding any other law or provision of the governing documents,elections regarding assessments legally requiring a vote, election and removal ofmembers of the association board of directors, amendments to the governingdocuments, or the grant of exclusive use of common area property pursuant toSection 1363.07 shall be held by secret ballot in accordance with the proceduresset forth in this section. A quorum shall be required only if so stated in thegoverning documents of the association or other provisions of law. If a quorum isrequired by the governing documents, each ballot received by the inspector ofelections shall be treated as a member present at a meeting for purposes ofestablishing a quorum. An association shall allow for cumulative voting using thesecret ballot procedures provided in this section, if cumulative voting is providedfor in the governing documents.
(c) (1) The association shall select an independent third party or partiesas an inspector of elections. The number of inspectors of elections shall beone or three.
(2) For the purposes of this section, an independent third partyincludes, but is not limited to, a volunteer poll worker with the countyregistrar of voters, a licensee of the California Board of Accountancy, or anotary public. An independent third party may be a member of theassociation, but may not be a member of the board of directors or a candidatefor the board of directors or related to a member of the board of directors ora candidate for the board of directors. An independent third party may notbe a person, business entity, or subdivision of a business entity who iscurrently employed or under contract to the association for any compensableservices unless expressly authorized by rules of the association adoptedpursuant to paragraph (5) of subdivision (a).
(3) The inspector or inspectors of elections shall do all of the following:
(A) Determine the number of memberships entitled to vote andthe voting power of each.
(B) Determine the authenticity, validity, and effect of proxies, ifany.
(C) Receive ballots.
(D) Hear and determine all challenges and questions in any wayarising 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 thegoverning documents.
(G) Determine the tabulated results of the election.
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(H) Perform any acts as may be proper to conduct the electionwith fairness to all members in accordance with this section, theCorporations Code, and all applicable rules of the association regardingthe conduct of the election that are not in conflict with this section.
(4) An inspector of elections shall perform his or her duties impartially,in good faith, to the best of his or her ability, and as expeditiously as ispractical. If there are three inspectors of elections, the decision or act of amajority shall be effective in all respects as the decision or act of all. Anyreport made by the inspector or inspectors of elections is prima facieevidence 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 orthe authorized representative of the member that gives another memberor members the power to vote on behalf of that member.
(B) "Signed" means the placing of the member's name on theproxy (whether by manual signature, typewriting, telegraphictransmission, or otherwise) by the member or authorized representativeof the member.
(2) Proxies shall not be construed or used in lieu of a ballot. Anassociation may use proxies if permitted or required by the bylaws of theassociation and if those proxies meet the requirements of this article, otherlaws, and the association's governing documents, but the association shallnot be required to prepare or distribute proxies pursuant to this section.
(3) Any instruction given in a proxy issued for an election that directsthe manner in which the proxyholder is to cast the vote shall be set forth ona separate page of the proxy that can be detached and given to theproxyholder to retain. The proxyholder shall cast the member's vote by secretballot. The proxy may be revoked by the member prior to the receipt of theballot by the inspector of elections as described in Section 7613 of theCorporations Code.
(e) Ballots and two preaddressed envelopes with instructions on how toreturn ballots shall be mailed by first-class mail or delivered by the association toevery member not less than 30 days prior to the deadline for voting. In order topreserve 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 thoseprocedures used by California counties for ensuring confidentiality of vote bymail ballots, including all of the following:
(1) The ballot itself is not signed by the voter, but is inserted into anenvelope that is sealed. This envelope is inserted into a second envelope thatis sealed. In the upper left-hand corner of the second envelope, the votershall sign his or her name, indicate his or her name, and indicate the addressor separate interest identifier that entitles him or her to vote.
(2) The second envelope is addressed to the inspector or inspectors ofelections, who will be tallying the votes. The envelope may be mailed or
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delivered by hand to a location specified by the inspector or inspectors ofelection. The member may request a receipt for delivery.
(f) All votes shall be counted and tabulated by the inspector or inspectorsof elections or his or her designee in public at a properly noticed open meetingof the board of directors or members. Any candidate or other member of theassociation may witness the counting and tabulation of the votes. No person,including a member of the association or an employee of the managementcompany, shall open or otherwise review any ballot prior to the time and placeat which the ballots are counted and tabulated. The inspector of elections, or hisor her designee, may verify the member's information and signature on the outerenvelope prior to the meeting at which ballots are tabulated. Once a secret ballotis received by the inspector of elections, it shall be irrevocable.
(g) The tabulated results of the election shall be promptly reported to theboard of directors of the association and shall be recorded in the minutes of thenext meeting of the board of directors and shall be available for review bymembers of the association. Within 15 days of the election, the board shallpublicize the tabulated results of the election in a communication directed to allmembers.
(h) The sealed ballots at all times shall be in the custody of the inspector orinspectors of elections or at a location designated by the inspector or inspectorsuntil after the tabulation of the vote, and until the time allowed by Section 7527of the Corporations Code for challenging the election has expired, at which timecustody shall be transferred to the association. If there is a recount or otherchallenge to the election process, the inspector or inspectors of elections shall,upon written request, make the ballots available for inspection and review by anassociation member or his or her authorized representative. Any recount shall beconducted in a manner that preserves the confidentiality of the vote.
(i) After the transfer of the ballots to the association, the ballots shall bestored by the association in a secure place for no less than one year after the dateof the election.
(j) Notwithstanding any other provision of law, the rules adopted pursuantto this section may provide for the nomination of candidates from the floor ofmembership meetings or nomination by any other manner. Those rules maypermit write-in candidates for ballots.
(k) Except for the meeting to count the votes required in subdivision (f), anelection may be conducted entirely by mail unless otherwise specified in thegoverning documents.
(l) The provisions of this section apply to both incorporated andunincorporated associations, notwithstanding any contrary provision of thegoverning documents.
(m) The procedures set forth in this section shall apply to votes cast directlyby the membership, but do not apply to votes cast by delegates or other electedrepresentatives.
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(n) In the event of a conflict between this section and the provisions of theNonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section7110) of Division 2 of Title 1 of the Corporations Code) relating to elections, theprovisions of this section shall prevail.
(o) The amendments made to this section by the act adding this subdivisionshall become operative on July 1, 2006.
Civil Code § 1363.04 Use Of Funds For Campaign Purposes.
(a) Association funds shall not be used for campaign purposes inconnection with any association board election. Funds of the association shall notbe used for campaign purposes in connection with any other association electionexcept to the extent necessary to comply with duties of the association imposedby law.
(b) For the purposes of this section, "campaign purposes" include, but is notlimited to, the following:
(1) Expressly advocating the election or defeat of any candidate that ison the association election ballot.
(2) Including the photograph or prominently featuring the name of anycandidate on a communication from the association or its board, exceptingthe ballot and ballot materials, within 30 days of an election. This is not acampaign purpose if the communication is one for which subdivision (a) ofSection 1363.03 requires that equal access be provided to another candidateor advocate.
Civil Code § 1363.05 Open Meeting; Executive Session Exception; Minutes;Notice; Emergency Meeting.
(a) This section shall be known and may be cited as the Common InterestDevelopment Open Meeting Act.
(b) Any member of the association may attend meetings of the board ofdirectors of the association, except when the board adjourns to, or meets solelyin, executive session to consider litigation, matters relating to the formation ofcontracts with third parties, member discipline, personnel matters, or to meet witha member, upon the member's request, regarding the member's payment ofassessments, as specified in Section 1367 or 1367.1. The board of directors ofthe association shall meet in executive session, if requested by a member whomay be subject to a fine, penalty, or other form of discipline, and the membershall be entitled to attend the executive session. As specified in paragraph (2) ofsubdivision (k), a member of the association shall be entitled to attend ateleconference meeting or the portion of a teleconference meeting that is open tomembers, and that meeting or portion of the meeting shall be audible to themembers in a location specified in the notice of the meeting.
(c) Any matter discussed in executive session shall be generally noted inthe minutes of the immediately following meeting that is open to the entiremembership.
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(d) The minutes, minutes proposed for adoption that are marked to indicatedraft status, or a summary of the minutes, of any meeting of the board of directorsof an association, other than an executive session, shall be available to memberswithin 30 days of the meeting. The minutes, proposed minutes, or summaryminutes shall be distributed to any member of the association upon request andupon reimbursement of the association's costs for making that distribution.
(e) Members of the association shall be notified in writing at the time thatthe pro forma budget required in Section 1365 is distributed, or at the time of anygeneral mailing to the entire membership of the association, of their right to havecopies of the minutes of meetings of the board of directors, and how and wherethose minutes may be obtained.
(f) Unless the bylaws provide for a longer period of notice, members shallbe given notice of the time and place of a meeting as defined in subdivision (k),except for an emergency meeting or a meeting that will be held solely in executivesession, at least four days prior to the meeting. Except for an emergency meeting,members shall be given notice of the time and place of a meeting that will beheld solely in executive session at least two days prior to the meeting. Noticeshall be given by posting the notice in a prominent place or places within thecommon area and by mail to any owner who had requested notification of boardmeetings by mail, at the address requested by the owner. Notice may also begiven by mail, by delivery of the notice to each unit in the development, bynewsletter or similar means of communication, or, with the consent of themember, by electronic means. The notice shall contain the agenda for themeeting.
(g) An emergency meeting of the board may be called by the president ofthe association, or by any two members of the governing body other than thepresident, if there are circumstances that could not have been reasonably foreseenwhich require immediate attention and possible action by the board, and whichof 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 theassociation 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 timelimit for all members of the association to speak to the board of directors or beforea 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 ofdirectors of the association may not discuss or take action on any item at anonemergency meeting unless the item was placed on the agenda includedin the notice that was posted and distributed pursuant to subdivision (f). Thissubdivision does not prohibit a resident who is not a member of the boardfrom 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 thestaff of the board of directors, may do any of the following:
(A) Briefly respond to statements made or questions posed by aperson speaking at a meeting as described in subdivision (h).
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(B) Ask a question for clarification, make a brief announcement,or make a brief report on his or her own activities, whether in responseto questions posed by a member of the association or based upon his orher own initiative.
(3) Notwithstanding paragraph (1), the board of directors or a memberof the board of directors, subject to rules or procedures of the board ofdirectors, may do any of the following:
(A) Provide a reference to, or provide other resources for factualinformation to, its managing agent or other agents or staff.
(B) Request its managing agent or other agents or staff to reportback to the board of directors at a subsequent meeting concerning anymatter, or take action to direct its managing agent or other agents or staffto place a matter of business on a future agenda.
(C) Direct its managing agent or other agents or staff to performadministrative tasks that are necessary to carry out this subdivision.
(4) (A) Notwithstanding paragraph (1), the board of directors may takeaction on any item of business not appearing on the agenda posted anddistributed pursuant to subdivision (f) under any of the followingconditions:
(i) Upon a determination made by a majority of the board ofdirectors present at the meeting that an emergency situation exists.An emergency situation exists if there are circumstances that couldnot have been reasonably foreseen by the board, that requireimmediate attention and possible action by the board, and that, ofnecessity, make it impracticable to provide notice.
(ii) Upon a determination made by the board by a vote oftwo-thirds of the members present at the meeting, or, if less thantwo-thirds of total membership of the board is present at themeeting, by a unanimous vote of the members present, that thereis a need to take immediate action and that the need for actioncame to the attention of the board after the agenda was posted anddistributed pursuant to subdivision (f).
(iii) The item appeared on an agenda that was posted anddistributed pursuant to subdivision (f) for a prior meeting of theboard of directors that occurred not more than 30 calendar daysbefore the date that action is taken on the item and, at the priormeeting, action on the item was continued to the meeting at whichthe action is taken.
(B) Before discussing any item pursuant to this paragraph, theboard of directors shall openly identify the item to the members inattendance at the meeting.
(j) (1) The board of directors shall not take action on any item of businessoutside of a meeting.
(2) (A) Notwithstanding Section 7211 of the Corporations Code, theboard of directors shall not conduct a meeting via a series of electronictransmissions, including, but not limited to, electronic mail, except asspecified in subparagraph (B).
(B) Electronic transmissions may be used as a method ofconducting an emergency meeting if all members of the board,individually or collectively, consent in writing to that action, and if thewritten consent or consents are filed with the minutes of the meeting ofthe board. These written consents may be transmitted electronically.
(k) As used in this section:
(1) "Item of business" means any action within the authority of theboard, except those actions that the board has validly delegated to any otherperson or persons, managing agent, officer of the association, or committeeof the board comprising less than a majority of the directors.
(2) "Meeting" means either of the following:
(A) A congregation of a majority of the members of the board atthe same time and place to hear, discuss, or deliberate upon any item ofbusiness that is within the authority of the board.
(B) A teleconference in which a majority of the members of theboard, in different locations, are connected by electronic means,through audio or video or both. A teleconference meeting shall beconducted in a manner that protects the rights of members of theassociation and otherwise complies with the requirements of this title.Except for a meeting that will be held solely in executive session, thenotice of the teleconference meeting shall identify at least one physicallocation so that members of the association may attend and at least onemember of the board of directors or a person designated by the boardshall be present at that location. Participation by board members in ateleconference meeting constitutes presence at that meeting as long asall board members participating in the meeting are able to hear oneanother and members of the association speaking on matters before theboard.
Civil Code § 1363.07 Grant Of Exclusive Use Of Part Of Common Area;When Vote Required.
(a) After an association acquires fee title to, or any easement right over, acommon area, unless the association’s governing documents specify a differentpercentage, the affirmative vote of members owning at least 67 percent of theseparate interests in the common interest development shall be required beforethe board of directors may grant exclusive use of any portion of that commonarea to any member, except for any of the following:
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(1) A reconveyance of all or any portion of that common area to thesubdivider to enable the continuation of development that is in substantialconformance with a detailed plan of phased development submitted to theReal Estate Commissioner with the application for a public report.
(2) Any grant of exclusive use that is in substantial conformance witha detailed plan of phased development submitted to the Real EstateCommissioner with the application for a public report or in accordance withthe 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 documentsrecorded with the county recorder or on file with a public agency orutility company.
(B) To eliminate or correct encroachments due to errors inconstruction of any improvements.
(C) To permit changes in the plan of development submitted to theReal Estate Commissioner in circumstances where the changes are theresult of topography, obstruction, hardship, aesthetic considerations, orenvironmental conditions.
(D) To fulfill the requirement of a public agency.
(E) To transfer the burden of management and maintenance of anycommon area that is generally inaccessible and not of general use tothe membership at large of the association.
(F) Any grant in connection with an expressly zoned industrial orcommercial development, or any grant within a subdivision of the typedefined in Section 1373.
(G) (i) To install and use an electric vehicle charging station in anowner’s garage or a designated parking space that meets therequirements of Section 1353.9, where the installation or use of thecharging station requires reasonable access through, or across, thecommon area for utility lines or meters.
(ii) To install and use an electric vehicle charging stationthrough a license granted by an association under Section 1353.9.
(b) Any measure placed before the members requesting that the board ofdirectors grant exclusive use of any portion of the common area shall specifywhether the association will receive any monetary consideration for the grant andwhether the association or the transferee will be responsible for providing anyinsurance coverage for exclusive use of the common area.
Civil Code § 1363.09 Civil Action For Violation Of Article.
(a) A member of an association may bring a civil action for declaratory orequitable relief for a violation of this article by an association of which he or sheis a member, including, but not limited to, injunctive relief, restitution, or acombination thereof, within one year of the date the cause of action accrues.
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Upon a finding that the election procedures of this article, or the adoption of andadherence to rules provided by Article 4 (commencing with Section 1357.100) ofChapter 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 rightspursuant to this article shall be entitled to reasonable attorney's fees and courtcosts, 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 toonly one penalty if the violation affects each member of the association equally.A prevailing association shall not recover any costs, unless the court finds theaction to be frivolous, unreasonable, or without foundation.
(c) A cause of action under Section 1363.03 with respect to access toassociation resources by a candidate or member advocating a point of view, thereceipt of a ballot by a member, or the counting, tabulation, or reporting of, oraccess to, ballots for inspection and review after tabulation may be brought insmall claims court if the amount of the demand does not exceed the jurisdictionof that court.
Article 3. Managing Agents
Civil Code § 1363.1 Prospective Managing Agent; Written Disclosures.
(a) A prospective managing agent of a common interest development shallprovide a written statement to the board of directors of the association of acommon interest development as soon as practicable, but in no event more than90 days, before entering into a management agreement which shall contain all ofthe following information concerning the managing agent:
(1) The names and business addresses of the owners or general partnersof the managing agent. If the managing agent is a corporation, the writtenstatement shall include the names and business addresses of the directorsand officers and shareholders holding greater than 10 percent of the sharesof the corporation.
(2) Whether or not any relevant licenses such as architectural design,construction, engineering, real estate, or accounting have been issued by thisstate and are currently held by the persons specified in paragraph (1). If alicense is currently held by any of those persons, the statement shall containthe 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 ordesignations such as architectural design, construction, engineering, realproperty management, or accounting are currently held by any of the personsspecified in paragraph (1), including, but not limited to, a professionalcommon interest development manager. If any certification or designationis held, the statement shall include the following information:
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(A) What the certification or designation is and what entity issuedit.
(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, forcompensation or, in expectation of compensation, exercises control over theassets of a common interest development. A "managing agent" does not includeany of the following:
(1) A full-time employee of the association.
(2) Any regulated financial institution operating within the normalcourse of its regulated business practice.
Civil Code § 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 orreceives funds belonging to the association shall deposit all such funds that arenot placed into an escrow account with a bank, savings association, or creditunion or into an account under the control of the association, into a trust fundaccount maintained by the managing agent in a bank, savings association, orcredit union in this state. All funds deposited by the managing agent in the trustfund account shall be kept in this state in a financial institution, as defined inSection 31041 of the Financial Code, which is insured by the federal government,and shall be maintained there until disbursed in accordance with writteninstructions from the association entitled to the funds.
(b) At the written request of the board of directors of the association, thefunds the managing agent accepts or receives on behalf of the association shallbe deposited into an interest-bearing account in a bank, savings association, orcredit 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 theassociation or in the name of the association.
(2) All of the funds in the account are covered by insurance providedby an agency of the federal government.
(3) The funds in the account are kept separate, distinct, and apart fromthe funds belonging to the managing agent or to any other person or entityfor whom the managing agent holds funds in trust except that the funds ofvarious associations may be commingled as permitted pursuant tosubdivision (d).
(4) The managing agent discloses to the board of directors of theassociation the nature of the account, how interest will be calculated andpaid, whether service charges will be paid to the depository and by whom,and any notice requirements or penalties for withdrawal of funds from theaccount.
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(5) No interest earned on funds in the account shall inure directly orindirectly to the benefit of the managing agent or his or her employees.
(c) The managing agent shall maintain a separate record of the receipt anddisposition of all funds described in this section, including any interest earned onthe funds.
(d) The managing agent shall not commingle the funds of the associationwith his or her own money or with the money of others that he or she receives oraccepts, unless all of the followingrequirements are met:
(1) The managing agent commingled the funds of various associationson or before February 26, 1990, and has obtained a written agreement withthe board of directors of each association that he or she will maintain afidelity and surety bond in an amount that provides adequate protection tothe associations as agreed upon by the managing agent and the board ofdirectors of each association.
(2) The managing agent discloses in the written agreement whether heor she is deriving benefits from the commingled account or the bank, creditunion, or savings institution where the moneys will be on deposit.
(3) The written agreement provided pursuant to this subdivisionincludes, but is not limited to, the name and address of the bondingcompanies, the amount of the bonds, and the expiration dates of the bonds.
(4) If there are any changes in the bond coverage or the companiesproviding the coverage, the managing agent discloses that fact to the boardof directors of each affected association as soon as practical, but in no eventmore than 10 days after the change.
(5) The bonds assure the protection of the association and provide theassociation at least 10 days' notice prior to cancellation.
(6) Completed payments on the behalf of the association are depositedwithin 24 hours or the next business day and do not remain commingled formore than 10 calendar days.
(e) The prevailing party in an action to enforce this section shall be entitledto recover reasonable legal fees and court costs.
(f) As used in this section, a "managing agent" is a person or entity, who forcompensation or, in expectation of compensation, exercises control over theassets of the association. However, a "managing agent" does not include a full-time employee of the association or a regulated financial institution operatingwithin the normal course of business, or an attorney at law acting within the scopeof his or her license.
(g) As used in this section, "completed payment" means funds receivedwhich clearly identify the account to which the funds are to be credited.
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Article 4. Public Information
Civil Code § 1363.5 Association Articles Of Incorporation; RequiredStatement.
(a) The articles of incorporation of a common interest developmentassociation filed with the Secretary of State shall include a statement, which shallbe in addition to the statement of purposes of the corporation, that does all of thefollowing:
(1) Identifies the corporation as an association formed to manage acommon interest development under the Davis-Stirling Common InterestDevelopment 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 thefront street and nearest cross street for the physical location of the commoninterest development.
(3) States the name and address of the association's managing agent,as defined in Section 1363.1, if any.
(b) The statement filed by an incorporated association with the Secretaryof State pursuant to Section 8210 of the Corporations Code shall also contain astatement identifying the corporation as an association formed to manage acommon interest development association under the Davis-Stirling CommonInterest Development Act.
Civil Code § 1363.6 Assistance With Identification Of Common InterestDevelopments; Submission Of Information By Each Association; Time;Notice Of Change Of Address; Penalty For Violation Of FilingRequirements; Availability Of Information
(a) To assist with the identification of common interest developments, eachassociation, whether incorporated or unincorporated, shall submit to the Secretaryof State, on a form and for a fee not to exceed thirty dollars ($30) that the Secretaryof State shall prescribe, the following information concerning the association andthe development that it manages:
(1) A statement that the association is formed to manage a commoninterest development under the Davis-Stirling Common Interest DevelopmentAct.
(2) The name of the association.
(3) The street address of the business or corporate office of theassociation, if any.
(4) The street address of the association's onsite office, if different fromthe street address of the business or corporate office, or if there is no onsiteoffice, the street address of the responsible officer or managing agent of theassociation.
(5) The name, address, and either the daytime telephone number or e-mail address of the president of the association, other than the address,
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telephone number, or e-mail address of the association's onsite office ormanaging agent of the association.
(6) The name, street address, and daytime telephone number of theassociation's managing agent, if any.
(7) The county, and if in an incorporated area, the city in which thedevelopment is physically located. If the boundaries of the development arephysically located in more than one county, each of the counties in which itis located.
(8) If the development is in an unincorporated area, the city closest inproximity to the development.
(9) The front street and nearest cross street of the physical location ofthe development.
(10) The type of common interest development, as defined insubdivision (c) of Section 1351, managed by the association.
(11) The number of separate interests, as defined in subdivision (l) ofSection 1351, in the development.
(b) The association shall submit the information required by this section asfollows:
(1) By incorporated associations, within 90 days after the filing of itsoriginal articles of incorporation, and thereafter at the time the associationfiles its statement of principal business activity with the Secretary of Statepursuant to Section 8210 of the Corporations Code.
(2) By unincorporated associations, in July of 2003, and in that samemonth 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 thestreet address of the association's onsite office or of the responsible officer ormanaging agent of the association in the form and for a fee prescribed by theSecretary of State, within 60 days of the change.
(d) On and after January 1, 2006, the penalty for an incorporatedassociation's noncompliance with the initial or biennial filing requirements of thissection shall be suspension of the association's rights, privileges, and powers asa corporation and monetary penalties, to the same extent and in the same manneras suspension and monetary penalties imposed pursuant to Section 8810 of theCorporations Code.
(e) The statement required by this section may be filed, notwithstandingsuspension of the corporate powers, rights, and privileges under this section orunder provisions of the Revenue and Taxation Code. Upon the filing of astatement under this section by a corporation that has suffered suspension underthis section, the Secretary of State shall certify that fact to the Franchise Tax Boardand the corporation may thereupon be relieved from suspension, unless thecorporation is held in suspension by the Franchise Tax Board by reason of Section23301, 23301.5, or 23775 of the Revenue and Taxation Code.
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(f) The Secretary of State shall make the information submitted pursuant toparagraph (5) of subdivision (a) available only for governmental purposes andonly to Members of the Legislature and the Business, Transportation and HousingAgency, upon written request. All other information submitted pursuant to thissection shall be subject to public inspection pursuant to the California PublicRecords Act, Chapter 3.5 (commencing with Section 6250) of Division 7 of Title1 of the Government Code. The information submitted pursuant to this sectionshall be made available for governmental or public inspection, as the case maybe, on or before July 1, 2004, and thereafter.
(g) Whenever any form is filed pursuant to this section, it supersedes anypreviously filed form.
(h) The Secretary of State may destroy or otherwise dispose of any form filedpursuant to this section after it has been superseded by the filing of a new form.
Article 5. Dispute Resolution Procedure
Civil Code § 1363.810 Application Of Article
(a) This article applies to a dispute between an association and a memberinvolving their rights, duties, or liabilities under this title, under the NonprofitMutual Benefit Corporation Law (Part 3 (commencing with Section 7110) ofDivision 2 of Title 1 of the Corporations Code), or under the governing documentsof the common interest development or association.
(b) This article supplements, and does not replace, Article 2 (commencingwith Section 1369.510) of Chapter 7, relating to alternative dispute resolution asa prerequisite to an enforcement action.
Civil Code § 1363.820 Fair, Reasonable, And Expeditious ProcedureTo Resolve Disputes; Use Of Local Dispute Resolution Program
(a) An association shall provide a fair, reasonable, and expeditiousprocedure for resolving a dispute within the scope of this article.
(b) In developing a procedure pursuant to this article, an association shallmake maximum, reasonable use of available local dispute resolution programsinvolving a neutral third party, including low-cost mediation programs such asthose listed on the Internet Web sites of the Department of Consumer Affairs andthe United States Department of Housing and Urban Development.
(c) If an association does not provide a fair, reasonable, and expeditiousprocedure for resolving a dispute within the scope of this article, the procedureprovided in Section 1363.840 applies and satisfies the requirement of subdivision (a).
Civil Code § 1363.830 Requirements Of Fair, Reasonable, And ExpeditiousDispute Resolution Program
A fair, reasonable, and expeditious dispute resolution procedure shall at aminimum satisfy all of the following requirements:
(a) The procedure may be invoked by either party to the dispute. A requestinvoking the procedure shall be in writing.
(b) The procedure shall provide for prompt deadlines. The procedure shall
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state the maximum time for the association to act on a request invoking theprocedure.
(c) If the procedure is invoked by a member, the association shallparticipate in the procedure.
(d) If the procedure is invoked by the association, the member mayelect not to participate in the procedure. If the member participates but thedispute is resolved other than by agreement of the member, the member shallhave a right of appeal to the association's board of directors.
(e) A resolution of a dispute pursuant to the procedure, that is not inconflict with the law or the governing documents, binds the association andis judicially enforceable. An agreement reached pursuant to the procedure,that is not in conflict with the law or the governing documents, binds theparties and is judicially enforceable.
(f) The procedure shall provide a means by which the member andthe association may explain their positions.
(g) A member of the association shall not be charged a fee toparticipate in the process.
Civil Code § 1363.840 Application Of Section; Use Of Procedures;Dispute Resolution Agreements; Conditions; Fees
(a) This section applies in an association that does not otherwiseprovide a fair, reasonable, and expeditious dispute resolution procedure. Theprocedure provided in this section is fair, reasonable, and expeditious, withinthe meaning of this article.
(b) Either party to a dispute within the scope of this article may invokethe following procedure:
(1) The party may request the other party to meet and confer in aneffort to resolve the dispute. The request shall be in writing.
(2) A member of an association may refuse a request to meet andconfer. The association may not refuse a request to meet and confer.
(3) The association's board of directors shall designate a memberof the board to meet and confer.
(4) The parties shall meet promptly at a mutually convenient timeand place, explain their positions to each other, and confer in good faithin an effort to resolve the dispute.
(5) A resolution of the dispute agreed to by the parties shall bememorialized in writing and signed by the parties, including the boarddesignee on behalf of the association.
(c) An agreement reached under this section binds the parties and isjudicially enforceable if both of the following conditions are satisfied:
(1) The agreement is not in conflict with law or the governingdocuments of the common interest development or association.
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(2) The agreement is either consistent with the authority granted by theboard of directors to its designee or the agreement is ratified by the board ofdirectors.
(d) A member of the association may not be charged a fee to participate inthe process.
Civil Code § 1363.850 Notice; Description Of Internal DisputeResolution Process
The notice provided pursuant to Section 1369.590 shall include a description ofthe internal dispute resolution process provided pursuant to this article.
Chapter 5. Operations
Article 1. Common Areas
Civil Code § 1364 Responsibility For Repair, Replacement, OrMaintenance; Damage By Wood-Destroying Pests Or Organisms; CostAllocation; Notice Of Repair Requirements; Access For MaintenanceOf Telephone Wiring.
(a) Unless otherwise provided in the declaration of a common interestdevelopment, the association is responsible for repairing, replacing, ormaintaining the common areas, other than exclusive use common areas, and theowner of each separate interest is responsible for maintaining that separate interestand any exclusive use common area appurtenant to the separate interest.
(b) (1) In a community apartment project, condominium project, or stockcooperative, as defined in Section 1351, unless otherwise provided in thedeclaration, the association is responsible for the repair and maintenance ofthe common area occasioned by the presence of wood-destroying pests ororganisms.
(2) In a planned development, as defined in Section 1351 , unless adifferent maintenance scheme is provided in the declaration, each owner ofa seperate interest is responsible for the repair and maintenance of thatseparate interest as may be occasioned by the presence of wood-destroyingpests or organisms. Upon approval of the majority of all members of theassociation, the responsibility for such repair and maintenance may bedelegated to the association, which shall be entitled to recover the costthereof as a special assessment.
(c) The costs of temporary relocation during the repair and maintenance ofthe areas within the responsibility of the association shall be borne by the ownerof the separate interest affected.
(d) (1) The association may cause the temporary summary removal of anyoccupant of a common interest development for such periods and at suchtimes as may be necessary for prompt, effective treatment of wood-destroyingpests or organisms.
(2) The association shall give notice of the need to temporarily vacatea separate interest to the occupants and to the owners, not less than 15 daysnor more than 30 days prior to the date of the temporary relocation. The
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notice shall state the reason for the temporary relocation, the date and timeof the beginning of treatment, the anticipated date and time of terminationof treatment, and that the occupants will be responsible for their ownaccommodations 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, andsending a copy of the notice to the owners, if different than theoccupants, by first-class mail, postage prepaid at the most currentaddress shown on the books of the association.
(B) By sending a copy of the notice to the occupants at theseparate interest address and a copy of the notice to the owners, ifdifferent than the occupants, by first-class mail, postage prepaid, at themost 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 [sic] theseparate interest.
(f) Notwithstanding the provisions of the declaration, the owner of aseparate interest is entitled to reasonable access to the common areas for thepurpose of maintaining the internal and external telephone wiring made part ofthe 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 ofthe association, whose approval shall not be unreasonably withheld, and whichmay include the association's approval of telephone wiring upon the exterior ofthe common areas, and other conditions as the association determinesreasonable.
Article 2. Fiscal Matters
Civil Code § 1365 Documents Prepared And Distributed By Associations.
Unless the governing documents impose more stringent standards, the associationshall prepare and distribute to all 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 recentreview or study conducted pursuant to Section 1365.5, based only on assetsheld in cash or cash equivalents, which shall be printed in bold type andinclude all of the following:
(A) The current estimated replacement cost, estimated remaininglife, 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 reservesnecessary to repair, replace, restore, or maintain the majorcomponents.
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(ii) The current amount of accumulated cash reserves actuallyset aside to repair, replace, restore, or maintain major components.
(iii) If applicable, the amount of funds received fromeither a compensatory damage award or settlement to anassociation from any person or entity for injuries to property,real or personal, arising out of any construction or designdefects, and the expenditure or disposition of funds,including the amounts expended for the direct and indirect costs ofrepair of construction or design defects. These amounts shall bereported at the end of the fiscal year for which the study is preparedas 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 financialstatement pursuant to subdivision (b) may include in the review astatement containing all of the information required by this clause.
(C) The percentage that the amount determined for purposes ofclause (ii) of subparagraph (B) equals the amount determined forpurposes of clause (i) of subparagraph (B).
(D) The current deficiency in reserve funding expressed on a perunit basis. The figure shall be calculated by subtracting the amountdetermined for purposes of clause (ii) of subparagraph (B) from theamount determined for purposes of clause (i) of subparagraph (B) andthen dividing the result by the number of separate interests within theassociation, except that if assessments vary by the size or type ofownership interest, then the association shall calculate the currentdeficiency 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 hasdetermined to defer or not undertake repairs or replacement of anymajor component with a remaining life of 30 years or less, including ajustification for the deferral or decision not to undertake the repairs orreplacement.
(B) Whether the board of directors of the association, consistentwith the reserve funding plan adopted pursuant to subdivision (e) ofSection 1365.5, has determined or anticipates that the levy of one ormore special assessments will be required to repair, replace, or restoreany major component or to provide adequate reserves therefor. If so,the statement shall also set out the estimated amount, commencementdate, and duration of the assessment.
(C) The mechanism or mechanisms by which the board ofdirectors will fund reserves to repair or replace major components,including assessments, borrowing, use of other assets, deferral ofselected replacements or repairs, or alternative mechanisms.
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(D) Whether the association has any outstanding loans with anoriginal term of more than one year, including the payee, interest rate,amount outstanding, annual payment, and when the loan is scheduledto be retired.
(4) A general statement addressing the procedures used for thecalculation and establishment of those reserves to defray the future repair,replacement, or additions to those major components that the association isobligated to maintain. The report shall include, but need not be limited to,reserve calculations made using the formula described in paragraph (4) ofsubdivision (b) of Section 1365.2.5, and may not assume a rate of return oncash reserves in excess of 2 percent above the discount rate published bythe Federal Reserve Bank of San Francisco at the time the calculation wasmade.
The summary of the association's reserves disclosed pursuant to paragraph(2) shall not be admissible in evidence to show improper financial management ofan association, provided that other relevant and competent evidence of thefinancial condition of the association is not made inadmissible by this provision.
Notwithstanding a contrary provision in the governing documents, a copy ofthe operating budget shall be annually distributed not less than 30 days nor morethan 90 days prior to the beginning of the association's fiscal year.
(b) Commencing January 1, 2009, a summary of the reserve funding planadopted 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 tomembers that the full reserve study plan is available upon request, and theassociation shall provide the full reserve plan to any member upon request.
(c) A review of the financial statement of the association shall be preparedin accordance with generally accepted accounting principles by a licensee of theCalifornia State Board of Accountancy for any fiscal year in which the grossincome to the association exceeds seventy-five thousand dollars ($75,000.00). Acopy of the review of the financial statement shall be distributed within 120 daysafter the close of each fiscal year.
(d) Instead of the distribution of the pro forma operating budget requiredby subdivision (a), the board of directors may elect to distribute a summary of thepro forma operating budget to all its members with a written notice that the proforma operating budget is available at the business office of the association or atanother suitable location within the boundaries of the development and thatcopies will be provided upon request and at the expense of the association. If anymember requests that a copy of the pro forma operating budget required bysubdivision (a) be mailed to the member, the association shall provide the copyto the member by first-class United States mail at the expense of the associationand delivered within five days. The written notice that is distributed to each ofthe association members shall be in at least 10-point boldface type on the frontpage of the summary of the budget.
(e) A statement describing the association's policies and practices inenforcing lien rights or other legal remedies for default in payment of its
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assessments against its members shall be annually delivered to the members notless than 30 days nor more than 90 days immediately preceding the beginning ofthe association's fiscal year.
(f) (1) A summary of the association's property, general liability,earthquake, flood and fidelity insurance policies, which shall be distributednot less than 30 days nor more than 90 days preceding the beginning of theassociation's fiscal year, that includes all of the following information abouteach 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 practical, notify itsmembers by first-class mail if any of the policies described in paragraph (1)have lapsed, been canceled, and are not immediately renewed, restored, orreplaced or if there is a significant change, such as a reduction in coverageor limits or an increase in the deductible, as to any of those policies. If theassociation receives any notice of non-renewal of a policy described inparagraph (1), the association shall immediately notify its members ifreplacement coverage will not be in effect by the date the existing coveragewill lapse.
(3) To the extent that any of the information required to be disclosedpursuant to paragraph (1) is specified in the insurance policy declarationpage, the association may meet its obligation to disclose that information bymaking copies of that page and distributing it to all of its members.
(4) The summary distributed pursuant to paragraph (1) shall contain, inat least 10-point boldface type, the following statement: "This summary ofthe association's policies of insurance provides only certain information, asrequired by subdivision (f) of Section 1365 of the Civil Code, and should notbe considered a substitute for the complete policy terms and conditionscontained in the actual policies of insurance. Any association member may,upon request and provision of reasonable notice, review the association'sinsurance policies and, upon request and payment of reasonable duplicationcharges, obtain copies of those policies. Although the association maintainsthe policies of insurance specified in this summary, the association's policiesof insurance may not cover your property, including personal property or,real property improvements to or around your dwelling, or personal injuriesor other losses that occur within or around your dwelling. Even if a loss iscovered, you may nevertheless be responsible for paying all or a portion ofany deductible that applies. Association members should consult with theirindividual insurance broker or agent for appropriate additional coverage".
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Civil Code § 1365.1 Notice To Members Of Association Prior ToBeginning Of Fiscal Year
(a) The association shall distribute the written notice described insubdivision (b) to each member of the association during the 60-day periodimmediately preceding the beginning of the association's fiscal year. The noticeshall be printed in at least 12-point type. An association distributing the noticeto an owner of an interest that is described in Section 11212 of the Business andProfessions Code that is not otherwise exempt from this section pursuant tosubdivision (a) of Section 11211.7, may delete from the notice described insubdivision (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 ofowners of property in common interest developments and theassociations that manage them. Please refer to the sections ofthe Civil Code indicated for further information. A portion ofthe information in this notice applies only to liens recorded onor after January 1, 2003. You may wish to consult a lawyer ifyou dispute an assessment.
ASSESSMENTS AND FORECLOSURE
Assessments become delinquent 15 days after they are due,unless the governing documents provide for a longer time. Thefailure to pay association assessments may result in the loss ofan owner's property through foreclosure. Foreclosure mayoccur either as a result of a court action, known as judicialforeclosure or without court action, often referred to asnonjudicial foreclosure. For liens recorded on and afterJanuary 1, 2006, an association may not use judicial ornonjudicial foreclosure to enforce that lien if the amount ofthe delinquent assessments or dues, exclusive of anyaccelerated assessments, late charges, fees, attorney's fees,interest, and costs of collection, is less than one thousand eighthundred dollars ($1,800). For delinquent assessments or duesin excess of one thousand eight hundred dollars ($1,800) ormore than 12 months delinquent, an association may usejudicial or nonjudicial foreclosure subject to the conditions setforth in Section 1367.4 of the Civil Code. When using judicialor nonjudicial foreclosure, the association records a lien onthe owner's property. The owner's property may be sold tosatisfy 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 mayrecover assessments, reasonable costs of collection, reasonableattorney's fees, late charges, and interest. The association may
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not use nonjudicial foreclosure to collect fines or penalties,except for costs to repair common areas damaged by amember or a member's guests, if the governing documentsprovide for this. (Sections 1366 and 1367.1 of the Civil Code)
The association must comply with the requirements of Section1367.1 of the Civil Code when collecting delinquentassessments. If the association fails to follow theserequirements, it may not record a lien on the owner's propertyuntil it has satisfied those requirements. Any additional coststhat result from satisfying the requirements are theresponsibility of the association. (Section 1367.1 of the CivilCode)
At least 30 days prior to recording a lien on an owner'sseparate interest, the association must provide the owner ofrecord with certain documents by certified mail, including adescription of its collection and lien enforcement proceduresand the method of calculating the amount. It must alsoprovide an itemized statement of the charges owed by theowner. An owner has a right to review the association'srecords to verify the debt. (Section 1367.1 of the Civil Code)
If a lien is recorded against an owner's property in error, theperson who recorded the lien is required to record a lienrelease within 21 days, and to provide an owner certaindocuments in this regard. (Section 1367.1 of the Civil Code)
The collection practices of the association may be governed bystate and federal laws regarding fair debt collection. Penaltiescan be imposed for debt collection practices that violate theselaws.
PAYMENTS
When an owner makes a payment, he or she may request areceipt, and the association is required to provide it. On thereceipt, the association must indicate the date of payment andthe person who received it. The association must informowners of a mailing address for overnight payments. (Section1367.1 of the Civil Code)
An owner may, but is not obligated to, pay under protest anydisputed 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 disciplinarymeasure, and by so doing, specifically reserve the right tocontest the disputed charge or sum in court or otherwise.
An owner may dispute an assessment debt by submitting awritten request for dispute resolution to the association as setforth in Article 5 (commencing with Section 1368.810) of
Chapter 4 of Title 6 of Division 2 of the Civil Code. Inaddition, an association may not initiate a foreclosure withoutparticipating in alternative dispute resolution with a neutralthird party as set forth in Article 2 (commencing with Section1369.510) of Chapter 7 of Title 6 of Division 2 of the CivilCode, if so requested by the owner. Binding arbitration shallnot be available if the association intends to initiate a judicialforeclosure.
An owner is not liable for charges, interest, and costs ofcollection, if it is established that the assessment was paidproperly on time. (Section 1367.1 of the Civil Code)
MEETINGS AND PAYMENT PLANS
An owner of a separate interest that is not a timeshare mayrequest the association to consider a payment plan to satisfy adelinquent assessment. The association must inform owners ofthe standards for payment plans, if any exist. (Section 1367.1of the Civil Code)
The board of directors must meet with an owner who makes aproper written request for a meeting to discuss a payment planwhen the owner has received a notice of a delinquentassessment. These payment plans must conform with thepayment 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 facsimiletransmission or United States mail to the association of a secondary address. If asecondary address is provided, the association shall send any and allcorrespondence and legal notices required pursuant to this article to both theprimary and the secondary address.
Civil Code § 1365.2 Association Records And Enhanced Association Records;Definitions; Availability For Inspection And Copying; Redaction OfInformation; Use; Action For Violation; Effect On Corporations Code §8330, 8333; Applicability
(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 memberin Section 1365.
(B) Any financial document or statement required to be providedin Section 1368.
(C) Interim unaudited financial statements, periodic or ascompiled, containing any of the following:
(i) Balance sheet.
(ii) Income and expense statement.
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(iii) Budget comparison.
(iv) General ledger. A "general ledger" is a report that showsall transactions that occurred in an association account over aspecified period of time.
The records described in this subparagraph shall be prepared inaccordance 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 orinvoices.
(F) State and federal tax returns.
(G) Reserve account balances and records of payments made fromreserve accounts.
(H) Agendas and minutes of meetings of the members, the boardof directors and any committees appointed by the board of directorspursuant to Section 7212 of the Corporations Code; excluding, however,minutes and other information from executive sessions of the board ofdirectors as described in Section 1363.05.
(I) (i) Membership lists, including name, property address, andmailing address, if the conditions set forth in clause (ii) are met andexcept as otherwise provided in clause (iii).
(ii) The member requesting the list shall state the purpose forwhich the list is requested which purpose shall be reasonablyrelated to the requester's interest as a member. If the associationreasonably believes that the information in the list will be used foranother purpose, it may deny the member access to the list. If therequest is denied, in any subsequent action brought by the memberunder subdivision (f), the association shall have the burden to provethat the member would have allowed use of the information forpurposes unrelated to his or her interest as a member.
(iii) Amember of the association may opt out of the sharing ofhis or her name, property address, and mailing address by notifyingthe association in writing that he or she prefers to be contacted viathe alternative process described in subdivision (c) of Section 8330of the Corporations Code. This opt-out shall remain in effect untilchanged by the member.
(J) Check registers.
(2) "Enhanced association records" means invoices, receipts andcanceled checks for payments made by the association, purchase ordersapproved by the association, credit card statements for credit cards issued inthe name of the association, statements for services rendered, andreimbursement requests submitted to the association, provided that theperson submitting the reimbursement request shall be solely responsible forremoving all personal identification information from the request.
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(b) (1) The association shall make available association records andenhanced association records for the time periods and within the timeframesprovided in subdivisions (i) and (j) for inspection and copying by a memberof the association, or the member's designated representative. Theassociation may bill the requesting member for the direct and actual cost ofcopying requested documents. The association shall inform the member ofthe amount of the copying costs before copying the requested documents.
(2) A member of the association may designate another person toinspect 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 recordsavailable for inspection and copying in the association's business officewithin the common interest development.
(2) If the association does not have a business office within thedevelopment, the association shall make the specified association recordsavailable for inspection and copying at a place that the requesting memberand the association agree upon.
(3) If the association and the requesting member cannot agree upon aplace for inspection and copying pursuant to paragraph (2), or if therequesting member submits a written request directly to the association forcopies of specifically identified records, the association may satisfy therequirement to make the association records available for inspection andcopying by mailing copies of the specifically identified records to themember by first-class mail within the timeframes set forth in subdivision (j).
(4) The association may bill the requesting member for the direct andactual cost of copying and mailing requested documents. The associationshall inform the member of the amount of the copying and mailing costs,and the member shall agree to pay those costs, before copying and sendingthe 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 often dollars ($10) per hour, and not to exceed two hundred dollars ($200)total per written request, for the time actually and reasonably involved inredacting the enhanced association records as provided in paragraph (2) ofsubdivision (a). The association shall inform the member of the estimatedcosts, and the member shall agree to pay those costs, before retrieving therequested documents.
(d) (1) Except as provided in paragraph (2), the association may withholdor redact information from the association records for any of the followingreasons:
(A) The release of the information is reasonably likely to lead toidentity theft. For the purposes of this section, "identity theft" means theunauthorized use of another person's personal identifying information toobtain credit, goods, services, money, or property. Examples of
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information that may be withheld or redacted pursuant to this paragraphinclude bank account numbers of members or vendors, social securityor tax identification numbers, and check, stock, and credit cardnumbers.
(B) The release of the information is reasonably likely to lead tofraud in connection with the association.
(C) The information is privileged under law. Examples includedocuments subject to attorney-client privilege or relating to litigation inwhich the association is or may become involved, and confidentialsettlement agreements.
(D) The release of the information is reasonably likely tocompromise 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 toindividual members of the association for which the associationreceived monetary consideration other than assessments.
(ii) Records of disciplinary actions, collection activities, orpayment plans of members other than the member requesting therecords.
(iii) Any person's personal identification information,including, without limitation, social security number, taxidentification number, driver's license number, credit card accountnumbers, bank account number, and bank routing number.
(iv) Minutes and other information from executive sessions ofthe board of directors as described in Section 1363.05, except forexecuted contracts not otherwise privileged. Privileged contractsshall not include contracts for maintenance, management, or legalservices.
(v) Personnel records other than the payroll records requiredto be provided under paragraph (2).
(vi) Interior architectural plans, including security features, forindividual homes.
(2) Except as provided by the attorney-client privilege, the associationmay not withhold or redact information concerning the compensation paidto employees, vendors, or contractors. Compensation information forindividual employees shall be set forth by job classification or title, not by theemployee's name, social security number, or other personal information.
(3) No association, officer, director, employee, agent or volunteer ofan association shall be liable for damages to a member of the association asthe result of identity theft or other breach of privacy because of the failure towithhold or redact that member's information under this subdivision unlessthe failure to withhold or redact the information was intentional, willful, ornegligent.
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(4) If requested by the requesting homeowner, an association thatdenies or redacts records shall provide a written explanation specifying thelegal basis for withholding or redacting the requested records.
(e) (1) The association records, and any information from them, may notbe sold, used for a commercial purpose, or used for any other purpose notreasonably related to a member's interest as a member. An association maybring an action against any person who violates this section for injunctiverelief and for actual damages to the association caused by the violation.
(2) This section may not be construed to limit the right of anassociation to damages for misuse of information obtained from theassociation records pursuant to this section or to limit the right of anassociation to injunctive relief to stop the misuse of this information.
(3) An association shall be entitled to recover reasonable costs andexpenses, including reasonable attorney's fees, in a successful action toenforce its rights under this section.
(f) A member of an association may bring an action to enforce themember's right to inspect and copy the association records. If a court finds thatthe association unreasonably withheld access to the association records, the courtshall award the member reasonable costs and expenses, including reasonableattorney'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 thissection may be brought in small claims court if the amount of the demand doesnot exceed the jurisdiction of that court. A prevailing association may recover anycosts if the court finds the action to be frivolous, unreasonable, or withoutfoundation.
(g) The provisions of this section apply to any community serviceorganization or similar entity, as defined in paragraph (3) of subdivision (c) ofSection 1368, that is related to the association, and to any nonprofit entity thatprovides services to a common interest development under a declaration of trust.This section shall operate to give a member of the organization or entity a rightto inspect and copy the records of that organization or entity equivalent to thatgranted to association members by this section.
(h) Requesting parties shall have the option of receiving specificallyidentified records by electronic transmission or machine-readable storage mediaas long as those records can be transmitted in a redacted format that does notallow the records to be altered. The cost of duplication shall be limited to thedirect cost of producing the copy of a record in that electronic format. Theassociation may deliver specifically identified records by electronic transmissionor machine-readable storage media as long as those records can be transmittedin a redacted format that prevents the records from being altered.
(i) The time periods for which specified records shall be provided is asfollows:
(1) Association records shall be made available for the current fiscalyear and for each of the previous two fiscal years.
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(2) Minutes of member and board meetings shall be permanently madeavailable. If a committee has decisionmaking authority, minutes of themeetings 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 providedto a requesting member is as follows:
(1) Association records prepared during the current fiscal year, within10 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 or1368, within the timeframe specified therein.
(4) Minutes of member and board meetings, within the timeframespecified in subdivision (d) of Section 1363.05.
(5) Minutes of meetings of committees with decisionmaking authorityfor meetings commencing on or after January 1, 2007, within 15 calendardays following approval.
(6) Membership list, within the timeframe specified in Section 8330 ofthe Corporations Code.
(k) There shall be no liability pursuant to this section for an association thatfails to retain records for the periods specified in subdivision (i) that were createdprior to January 1, 2006.
(l) As applied to an association and its members, the provisions of thissection are intended to supersede the provisions of Sections 8330 and 8333 of theCorporations Code to the extent those sections are inconsistent.
(m) The provisions of this section shall not apply to any common interestdevelopment in which separate interests are being offered for sale by a subdividerunder the authority of a public report issued by the Department of Real Estate solong 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 orindirect compensation from any of those subdividers, comprise a majority of themembers of the board of directors of the association. Notwithstanding theforegoing this section shall apply to that common interest development no laterthan 10 years after the close of escrow for the first sale of a separate interest to amember of the general public pursuant to the public report issued for the firstphase of the development.
(n) The section shall become operative on July 1, 2006.
Civil Code §1365.2.5 Forms For Summarizing Disclosures; Form ToAccompany Pro Forma Operating Budgets Or Summaries;Supplementation Or Modification; Calculating Amount of Reserves
(a) The disclosures required by this article with regard to an association ora property shall be summarized on the following form:
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Assessment and Reserve Funding Disclosure Summary For the FiscalYear Ending ______
(1) The current regular assessment per ownership interest is $ _____ per ____.Note: If assessments vary by the size or type of ownership interest, the assessmentapplicable to this ownership interest may be found on page _____ of the attachedsummary.
(2) Additional regular or special assessments that have already been scheduledto be imposed or charged, regardless of the purpose, if they have been approvedby the board and/or members:
Note: If assessments vary by the size or type of ownership interest, the assessmentapplicable to this ownership interest may be found on page ____ of the attachedreport.
(3) Based upon the most recent reserve study and other information available tothe board of directors, will currently projected reserve account balances besufficient at the end of each year to meet the association's obligation for repairand/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 contributionsto reserves would be necessary to ensure that sufficient reserve funds will beavailable each year during the next 30 years that have not yet been approved bythe board or the members?
(5) All major components are included in the reserve study and are included inits calculations.
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Approximate date assessmentwill be due:
Amount per owner-ship interestper month or year:
Total:
Date assessmentwill be due
Amount per ownershipinterest per month or year(If assesments arevariable, see noteimmediately below):
Purpose of the assessment:
Total:
(6) Based on the method of calculation in paragraph (4) of subdivision (b) ofSection 1365.2.5, the estimated amount required in the reserve fund at the endof the current fiscal year is $ ____, based in whole or in part on the last reservestudy or update prepared by ____ as of ____ (month), ____ (year). The projectedreserve fund cash balance at the end of the current fiscal year is $ ____, resultingin reserves being ____ percent funded at this date. If an alternate, but generallyaccepted, 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) ofSection 1365.2.5 of the Civil Code, the estimated amount required in the reservefund at the end of each of the next five budget years is $ ______, and the projectedreserve fund cash balance in each of those years, taking into account onlyassessments already approved and other known revenues, is $ ______, leavingthe reserve at ______ percent funding. If the reserve funding plan approved bythe association is implemented, the projected reserve fund cash balance in eachof those years will be $ ______, leaving the reserve at ______ percent funding.
Note: The financial representations set forth in this summary are based on thebest estimates of the preparer at that time. The estimates are subject to change.At the time this summary was prepared, the assumed long-term before-tax interestrate earned on reserve funds was ____ percent per year, and the assumed long-term inflation rate to be applied to major component repair and replacement costswas ____ percent per year.
(b) For the purposes of preparing a summary pursuant to this section:
(1) "Estimated remaining useful life" means the time reasonablycalculated 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 yearsmay be included in a study as a capital asset or disregarded from the reservecalculation, so long as the decision is revealed in the reserve study reportand reported in the Assessment and Reserve Funding Disclosure Summary.
(3) The form set out in subdivision (a) shall accompany each pro formaoperating budget or summary thereof that is delivered pursuant to this article.The form may be supplemented or modified to clarify the informationdelivered, so long as the minimum information set out in subdivision (a) isprovided.
(4) For the purpose of the report and summary, the amount of reservesneeded to be accumulated for a component at a given time shall becomputed as the current cost of replacement or repair multiplied by thenumber of years the component has been in service divided by the useful lifeof the component. This shall not be construed to require the board to fundreserves in accordance with this calculation.
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Civil Code § 1365.3 Community Service Organization Reports; InformationOn Components To Complete Disclosures Or Reserve Reports; RelianceUpon And Access To Information
Unless the governing documents impose more stringent standards, anycommunity service organization as defined in paragraph (3) of subdivision (c) ofSection 1368 whose funding from the association or its members exceeds 10percent of the organization's annual budget shall prepare and distribute to theassociation a report that meets the requirements of Section 5012 of the CorporationsCode, and that describes in detail administrative costs and identifies the payees ofthose costs in a manner consistent with the provisions of Section 1365.2. If thecommunity service organization does not comply with the standards, the report shalldisclose the noncompliance in detail. If a community service organization isresponsible for the maintenance of major components for which an associationwould otherwise be responsible, the community service organization shall supply tothe association the information regarding those components that the associationwould use to complete disclosures and reserve reports required under this article. Anassociation may rely upon information received from a community serviceorganization, and shall provide access to the information pursuant to the provisionsof Section 1365.2.
Civil Code § 1365.5 Board Of Directors; Duties.
(a) Unless the governing documents impose more stringent standards, theboard of directors of the association shall do all of the following:
(1) Review a current reconciliation of the association's operatingaccounts on at least a quarterly basis.
(2) Review a current reconciliation of the association's reserveaccounts on at least a quarterly basis.
(3) Review, on at least a quarterly basis, the current year's actualreserve revenues and expenses compared to the current year's budget.
(4) Review the latest account statements prepared by the financialinstitutions where the association has its operating and reserve accounts.
(5) Review an income and expense statement for the association'soperating and reserve accounts on at least a quarterly basis.
(b) The signatures of at least two persons, who shall be members of theassociation's board of directors, or one officer who is not a member of the boardof directors and a member of the board of directors, shall be required for thewithdrawal of moneys from the association's reserve accounts.
(c) (1) The board of directors shall not expend funds designated as reservefunds for any purpose other than the repair, restoration, replacement, ormaintenance of, or litigation involving the repair, restoration, replacement,or maintenance of, major components that the association is obligated torepair, restore, replace, or maintain and for which the reserve fund wasestablished.
(2) However, the board may authorize the temporary transfer of
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moneys from a reserve fund to the association's general operating fund tomeet short-term cashflow requirements or other expenses, if the board hasprovided 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 shallinclude the reasons the transfer is needed, some of the options for repayment,and whether a special assessment may be considered. If the board authorizesthe transfer, the board shall issue a written finding, recorded in the board'sminutes, explaining the reasons that the transfer is needed, and describingwhen and how the moneys will be repaid to the reserve fund. The transferredfunds shall be restored to the reserve fund within one year of the date of theinitial transfer, except that the board may, after giving the same noticerequired for considering a transfer, and, upon making a finding supported bydocumentation that a temporary delay would be in the best interests of thecommon interest development, temporarily delay the restoration. The boardshall exercise prudent fiscal management in maintaining the integrity of thereserve account, and shall, if necessary, levy a special assessment to recoverthe full amount of the expended funds within the time limits required by thissection. This special assessment is subject to the limitation imposed bySection 1366. The board may, at its discretion, extend the date the paymenton the special assessment is due. Any extension shall not prevent the boardfrom pursuing any legal remedy to enforce the collection of an unpaid specialassessment.
(d) When the decision is made to use reserve funds or to temporarilytransfer moneys from the reserve fund to pay for litigation, the association shallnotify the members of the association of that decision in the next available mailingto all members pursuant to Section 5016 of the Corporations Code, and of theavailability of an accounting of those expenses. Unless the governing documentsimpose more stringent standards, the association shall make an accounting ofexpenses related to the litigation on at least a quarterly basis. The accountingshall be made available for inspection by members of the association at theassociation's office.
(e) At least once every three years, the board of directors shall cause to beconducted a reasonably competent and diligent visual inspection of the accessibleareas 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 thecommon interest development, if the current replacement value of the majorcomponents is equal to or greater than one-half of the gross budget of theassociation, excluding the association's reserve account for that period. The boardshall review this study, or cause it to be reviewed, annually and shall consider andimplement necessary adjustments to the board's analysis of the reserve accountrequirements 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 isobligated to repair, replace, restore, or maintain that, as of the date of thestudy, have a remaining useful life of less than 30 years.
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(2) Identification of the probable remaining useful life of thecomponents identified in paragraph (1) as of the date of the study.
(3) An estimate of the cost of repair, replacement, restoration, ormaintenance of the components identified in paragraph (1).
(4) An estimate of the total annual contribution necessary to defray thecost to repair, replace, restore, or maintain the components identified inparagraph (1) during and at the end of their useful life, after subtracting totalreserve funds as of the date of the study.
(5) A reserve funding plan that indicates how the association plans tofund the contribution identified in paragraph (4) to meet the association'sobligation for the repair and replacement of all major components with anexpected remaining life of 30 years or less, not including those componentsthat the board has determined will not be replaced or repaired. The planshall include a schedule of the date and amount of any change in regular orspecial assessments that would be needed to sufficiently fund the reservefunding plan. The plan shall be adopted by the board of directors at an openmeeting before the membership of the association as described in Section1363.05. If the board of directors determines that an assessment increase isnecessary to fund the reserve funding plan, any increase shall be approvedin a separate action of the board that is consistent with the proceduredescribed 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 foruse to defray the future repair or replacement of, or additions to, those majorcomponents that the association is obligated to maintain.
(2) The funds received, and not yet expended or disposed of, fromeither a compensatory damage award or settlement to an association fromany person or entity for injuries to property, real or personal, arising fromany construction or design defects. These funds shall be separately itemizedfrom funds described in paragraph (1).
(g) As used in this section, "reserve account requirements" means theestimated funds that the association's board of directors has determined arerequired to be available at a specified point in time to repair, replace, or restorethose 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.
Article 3. Insurance
Civil Code § 1365.6 Applicability of Corporations Code § 310
Notwithstanding any other law, and regardless of whether an association is acorporation, as defined in Section 162 of the Corporations Code, the provisionsof Section 310 of the Corporations Code shall apply to any contract or othertransaction authorized, approved, or ratified by the board or a committee of theboard.
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Civil Code § 1365.7 Tortious Act Or Omission Of Volunteer Officer OrDirector Of Association Managing Residential Development; Liability;Criteria; Limitations.
(a) A volunteer officer or volunteer director of an association, as defined insubdivision (a) of Section 1351, which manages a common interest developmentthat is exclusively residential, shall not be personally liable in excess of thecoverage of insurance specified in paragraph (4) to any person who suffers injury,including, but not limited to, bodily injury, emotional distress, wrongful death, orproperty damage or loss as a result of the tortious act or omission of the volunteerofficer or volunteer director if all of the following criteria are met:
(1) The act or omission was performed within the scope of the officer'sor 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 oromission occurred and at the time a claim is made one or more policies ofinsurancewhich shall include coverage for (A) general liability of the associationand (B) individual liability of officers and directors of the association for negligentacts or omissions in that capacity; provided, that both types of coverage are inthe following minimum amount:
(A) At least five hundred thousand dollars ($500,000) if thecommon interest development consists of 100 or fewer separateinterests.
(B) At least one million dollars ($1,000,000) if the common interestdevelopment consists of more than 100 separate interests.
(b) The payment of actual expenses incurred by a director or officer in theexecution of the duties of that position does not affect the director's or officer'sstatus as a volunteer within the meaning of this section.
(c) An officer or director who at the time of the act or omission was adeclarant, as defined in subdivision (g) of Section 1351, or who received either director indirect compensation as an employee from the declarant, or from a financialinstitution that purchased a separate interest, as defined in subdivision (l) of Section1351, at a judicial or non-judicial foreclosure of a mortgage or deed of trust on realproperty, is not a volunteer for the purposes of this section.
(d) Nothing in this section shall be construed to limit the liability of theassociation for its negligent act or omission or for any negligent act or omissionof an officer or director of the association.
(e) This section shall only apply to a volunteer officer or director who is atenant of a separate interest in the common interest development or is an ownerof no more than two separate interests in the common interest development.
(f) (1) For purposes of paragraph (1) of subdivision (a), the scope of theofficer's or director's association duties shall include, but shall not be limitedto, both of the following decisions:
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(A) Whether to conduct an investigation of the common interestdevelopment for latent deficiencies prior to the expiration of theapplicable statute of limitations.
(B) Whether to commence a civil action against the builder fordefects in design or construction.
(2) It is the intent of the Legislature that this section clarify the scope ofassociation duties to which the protections against personal liability in thissection apply. It is not the intent of the Legislature that these clarifications beconstrued to expand, or limit, the fiduciary duties owed by the directors orofficers.
Civil Code § 1365.9 Tort Actions Against Owner Of A Separate Interest;Tenant In Common In Common Area; Association Liability; InsuranceRequirements.
(a) It is the intent of the Legislature to offer civil liability protection toowners of the separate interests in a common interest development that havecommon areas owned in tenancy-in-common if the association carries a certainlevel of prescribed insurance that covers a cause of action in tort.
(b) Any cause of action in tort against any owner of a separate interestarising solely by reason of an ownership interest as a tenant in common in thecommon area of a common interest development shall be brought only againstthe association, and not against the individual owners of the separate interests, asdefined in subdivision (l) of Section 1351, if both of the insurance requirementsin 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 liabilityof the association.
(2) The coverage described in paragraph (1) is in the followingminimum amounts:
(A) At least two million dollars ($2,000,000) if the commoninterest development consists of 100 or fewer separate interests.
(B) At least three million dollars ($3,000,000) if the commoninterest development consists of more than 100 separate interests.
Article 4. Assessments
Civil Code § 1366 Levy Of Assessments; Limitation On Increases;Exemption; Delinquent Assessments; Interest.
(a) Except as provided in this section, the association shall levy regular andspecial assessments sufficient to perform its obligations under the governingdocuments and this title. However, annual increases in regular assessments forany fiscal year, as authorized by subdivision (b), shall not be imposed unless theboard has complied with subdivision (a) of Section 1365 with respect to that fiscalyear, or has obtained the approval of owners, constituting a quorum, casting amajority of the votes at a meeting or election of the association conducted in
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accordance with Chapter 5 (commencing with Section 7510) of Part 3 of Division2 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 theowners of an association.
(b) Notwithstanding more restrictive limitations placed on the board by thegoverning documents, the board of directors may not impose a regular assessmentthat is more than 20 percent greater than the regular assessment for theassociation's preceding fiscal year or impose special assessments which in theaggregate exceed 5 percent of the budgeted gross expenses of the association forthat fiscal year without the approval of owners, constituting a quorum, casting amajority of the votes at a meeting or election of the association conducted inaccordance with Chapter 5 (commencing with Section 7510) of Part 3 of Division2 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 theowners of an association. This section does not limit assessment increasesnecessary for emergency situations. For purposes of this section, an emergencysituation 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 thecommon interest development or any part of it for which the association isresponsible where a threat to personal safety on the property is discovered.
(3) An extraordinary expense necessary to repair or maintain thecommon interest development or any part of it for which the association isresponsible that could not have been reasonably foreseen by the board inpreparing and distributing the pro forma operating budget under Section1365. However, prior to the imposition or collection of an assessment underthis subdivision, the board shall pass a resolution containing written findingsas to the necessity of the extraordinary expense involved and why theexpense was not or could not have been reasonably foreseen in thebudgeting process, and the resolution shall be distributed to the memberswith the notice of assessment.
(c) Regular assessments imposed or collected to perform the obligations ofan association under the governing documents or this title shall be exempt fromexecution by a judgment creditor of the association only to the extent necessaryfor the association to perform essential services, such as paying for utilities andinsurance. In determining the appropriateness of an exemption, a court shallensure that only essential services are protected under this subdivision.
This exemption shall not apply to any consensual pledges, liens, orencumbrances that have been approved by the owners of an association,constituting a quorum, casting a majority of the votes at a meeting or election ofthe association, or to any state tax lien, or to any lien for labor or materialssupplied to the common area.
(d) The association shall provide notice by first-class mail to the owners ofthe separate interests of any increase in the regular or special assessments of the
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association, not less than 30 nor more than 60 days prior to the increasedassessment becoming due.
(e) Regular and special assessments levied pursuant to the governingdocuments are delinquent 15 days after they become due, unless the declarationprovides 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 delinquentassessment or ten dollars ($10), whichever is greater, unless the declarationspecifies a late charge in a smaller amount, in which case any late chargeimposed 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 attorneys fees, at an annual interest rate not to exceed 12percent, commencing 30 days after the assessment becomes due, unless thedeclaration specifies the recovery of interest at a rate of a lesser amount, inwhich case the lesser rate of interest shall apply.
(f) Associations are hereby exempted from interest-rate limitations imposedby Article XV of the California Constitution, subject to the limitations of thissection.
Civil Code § 1366.1 Imposition Or Collection Of Assessments Or Fees; LimitOn Amount.
An association shall not impose or collect an assessment or fee that exceeds theamount necessary to defray the costs for which it is levied.
Civil Code § 1366.2 Statements For Collection Of Regular And SpecialAssessments, Transfer Fees And Other Charges.
(a) In order to facilitate the collection of regular assessments, specialassessments, transfer fees, and similar charges, the board of directors of anyassociation is authorized to record a statement or amended statement identifyingrelevant information for the association. This statement may include any or all ofthe 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 theassociation or other individual or entity authorized to receive assessmentsand fees imposed by the association.
(3) A daytime telephone number of the authorized party identified inparagraph (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 theseparate interests.
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(5) The recorded information identifying the declarations of covenants,conditions, and restrictions governing the association.
(6) If an amended statement is being recorded, the recordinginformation identifying the prior statement or statements which theamendment is superseding.
(b) The county recorder is authorized to charge a fee for recording thedocument described in subdivision (a), which fee shall be based upon the numberof pages in the document and the recorder's per-page recording fee.
Civil Code § 1366.4 Levy Of Assessments On Separate Interest
(a) Except as provided in subdivision (b), notwithstanding any provision ofthis title or the governing documents to the contrary, an association shall not levyassessments on separate interests within the common interest development basedon the taxable value of the separate interests unless the association, on or beforeDecember 31, 2009, in accordance with its governing documents, leviedassessments on those separate interests based on their taxable value, asdetermined by the tax assessor of the county in which the separate interests arelocated.
(b) An association that is responsible for paying taxes on the separateinterests within the common interest development may levy that portion ofassessments on separate interests that is related to the payment of taxes based onthe taxable value of the separate interest, as determined by the tax assessor.
Civil Code § 1367 Assessments; Debt Of Owner; Lien; Notice;Enforcement Of Lien; Application Of Section [applies only to liensrecorded January 1, 1986 to December 31, 2002]
Civil Code § 1367.1 Assessments; Debt Of Owner; Lien; Notice To Owner;Payments; Disputes As To Debt; Procedure; Enforcement Of Lien; Penalty;Priority Of Lien; Assignment Or Pledge Of Right To Collect Payments;Actions Under Code Of Civil Procedure; Correction Of Errors; ApplicationOf Section
(a) A regular or special assessment and any late charges, reasonable feesand costs of collection, reasonable attorney's fees, if any, and interest, if any, asdetermined in accordance with Section 1366, shall be a debt of the owner of theseparate interest at the time the assessment or other sums are levied. At least 30days prior to recording a lien upon the separate interest of the owner of record tocollect a debt that is past due under this subdivision, the association shall notifythe owner of record in writing by certified mail of the following:
(1) A general description of the collection and lien enforcementprocedures 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 theassociation records, pursuant to Section 8333 of the Corporations Code, andthe following statement in 14-point boldface type, if printed, or in capitalletters, if typed: "IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST ISPLACED IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOURASSESSMENTS, IT MAY BE SOLD WITHOUT COURT ACTION."
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(2) An itemized statement of the charges owed by the owner, includingitems on the statement which indicate the amount of any delinquentassessments, the fees and reasonable costs of collection, reasonableattorney'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 paidon time to the association.
(4) The right to request a meeting with the board as provided byparagraph (3) of subdivision (c).
(5) The right to dispute the assessment debt by submitting a writtenrequest for dispute resolution to the association pursuant to the association's"meet and confer" program required in Article 5 (commencing with Section1363.810) of Chapter 4.
(6) The right to request alternative dispute resolution with a neutralthird party pursuant to Article 2 (commencing with Section 1369.510) ofChapter 7 before the association may initiate foreclosure against the owner'sseparate interest, except that binding arbitration shall not be available if theassociation intends to initiate a judicial foreclosure.
(b) Any payments made by the owner of a separate interest toward the debtset forth, as required in subdivision (a), shall first be applied to the assessmentsowed, and, only after the assessments owed are paid in full shall the payments beapplied 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 theassociation shall provide it. The receipt shall indicate the date of payment andthe person who received it. The association shall provide a mailing address forovernight payment of assessments.
(c) (1) (A) Prior to recording a lien for delinquent assessments, anassociation shall offer the owner and, if so requested by the owner,participate in dispute resolution pursuant to the association's "meet andconfer" program required in Article 5 (commencing with Section1363.810) of Chapter 4.
(B) Prior to initiating a foreclosure for delinquent assessments, anassociation shall offer the owner and, if so requested by the owner, shallparticipate in dispute resolution pursuant to the association's "meet andconfer" program required in Article 5 (commencing with Section1363.810) of Chapter 4 or alternative dispute resolution with a neutralthird party pursuant to Article 2 (commencing with Section 1369.510)of Chapter 7. The decision to pursue dispute resolution or a particulartype of alternative dispute resolution shall be the choice of the owner,except that binding arbitration shall not be available if the associationintends to initiate a judicial foreclosure.
(2) For liens recorded on or after January 1, 2006, the decision torecord a lien for delinquent assessments shall be made only by the board ofdirectors of the association and may not be delegated to an agent of the
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association. The board shall approve the decision by a majority vote of theboard members in an open meeting. The board shall record the vote in theminutes of that meeting.
(3) An owner, other than an owner of any interest that is described inSection 11212 of the Business and Professions Code that is not otherwiseexempt from this section pursuant to subdivision (a) of Section 11211.7, maysubmit a written request to meet with the board to discuss a payment plan forthe debt noticed pursuant to subdivision (a). The association shall providethe owners the standards for payment plans, if any exist. The board shallmeet with the owner in executive session within 45 days of the postmark ofthe request, if the request is mailed within 15 days of the date of the postmarkof the notice, unless there is no regularly scheduled board meeting withinthat period, in which case the board may designate a committee of one ormore members to meet with the owner. Payment plans may incorporate anyassessments that accrue during the payment plan period. Payment plansshall not impede an association's ability to record a lien on the owner'sseparate interest to secure payment of delinquent assessments. Additionallate fees shall not accrue during the payment plan period if the owner is incompliance with the terms of the payment plan. In the event of a default onany payment plan, the association may resume its efforts to collect thedelinquent 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 theowner's separate interest in the common interest development from and after thetime the association causes to be recorded with the county recorder of the countyin which the separate interest is located, a notice of delinquent assessment, whichshall state the amount of the assessment and other sums imposed in accordancewith Section 1366, a legal description of the owner's separate interest in thecommon interest development against which the assessment and other sums arelevied, and the name of the record owner of the separate interest in the commoninterest development against which the lien is imposed. The itemized statementof 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 forthe 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 trusteeauthorized by the association to enforce the lien by sale. The notice of delinquentassessment shall be signed by the person designated in the declaration or by theassociation for that purpose, or if no one is designated, by the president of theassociation. A copy of the recorded notice of delinquent assessment shall bemailed by certified mail to every person whose name is shown as an owner of theseparate interest in the association's records, and the notice shall be mailed nolater than 10 calendar days after recordation. Within 21 days of the payment ofthe sums specified in the notice of delinquent assessment, the association shallrecord or cause to be recorded in the office of the county recorder in which thenotice of delinquent assessment is recorded a lien release or notice of rescissionand provide the owner of the separate interest a copy of the lien release or notice
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that the delinquent assessment has been satisfied. Amonetary charge imposed bythe association as a means of reimbursing the association for costs incurred by theassociation in the repair of damage to common areas and facilities for which themember or the member's guests or tenants were responsible may become a lienagainst the member's separate interest enforceable by the sale of the interest underSections 2924, 2924b, and 2924c, provided the authority to impose a lien is setforth in the governing documents. It is the intent of the Legislature not tocontravene Section 2792.26 of Title 10 of the California Code of Regulations, asthat section appeared on January 1, 1996, for associations of subdivisions thatare being sold under authority of a subdivision public report, pursuant to Part 2(commencing with Section 11000) of Division 4 of the Business and ProfessionsCode.
(e) Except as indicated in subdivision (d), a monetary penalty imposed bythe association as a disciplinary measure for failure of a member to comply withthe governing instruments, except for the late payments, may not be characterizednor treated in the governing instruments as an assessment that may become a lienagainst the member's subdivision separate interest enforceable by the sale of theinterest under Sections 2924, 2924b, and 2924c.
(f) A lien created pursuant to subdivision (d) shall be prior to all other liensrecorded subsequent to the notice of assessment, except that the declaration mayprovide for the subordination thereof to any other liens and encumbrances.
(g) An association may not voluntarily assign or pledge the association'sright to collect payments or assessments, or to enforce or foreclose a lien to athird party, except when the assignment or pledge is made to a financial institutionor lender chartered or licensed under federal or state law, when acting within thescope 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 anassociation to assign any unpaid obligations of a former member to a third partyfor purposes of collection. Subject to the limitations of this subdivision, after theexpiration of 30 days following the recording of a lien created pursuant tosubdivision (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 ofdelinquent 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 anddeeds of trust. The fees of a trustee may not exceed the amounts prescribed inSections 2924c and 2924d, plus the cost of service for either of the following:
(1) The notice of default pursuant to subdivision (j) of Section 1367.1.
(2) The decision of the board to foreclose upon the separate interest ofan 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 Codeof Civil Procedure prohibits actions against the owner of a separate interest torecover sums for which a lien is created pursuant to this section or prohibits anassociation from taking a deed in lieu of foreclosure.
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(i) If it is determined that a lien previously recorded against the separateinterest was recorded in error, the party who recorded the lien shall, within 21calendar days, record or cause to be recorded in the office of the county recorderin which the notice of delinquent assessment is recorded a lien release or noticeof rescission and provide the owner of the separate interest with a declarationthat the lien filing or recording was in error and a copy of the lien release or noticeof rescission.
(j) In addition to the requirements of Section 2924, a notice of default shallbe served by the association on the owner's legal representative in accordancewith the manner of service of summons in Article 3 (commencing with Section415.10) of Chapter 4 of Title 5 of Part 2 of the Code of Civil Procedure. Theowner's legal representative shall be the person whose name is shown as theowner of a separate interest in the association's records, unless another person hasbeen previously designated by the owner as his or her legal representative inwriting and mailed to the association in a manner that indicates that theassociation has received it.
(k) Upon receipt of a written request by an owner identifying a secondaryaddress for purposes of collection notices, the association shall send additionalcopies of any notices required by this section to the secondary address provided.The association shall notify owners of their right to submit secondary addressesto the association, at the time the association issues the pro forma operatingbudget pursuant to Section 1365. The owner's request shall be in writing andshall be mailed to the association in a manner that shall indicate the associationhas received it. The owner may identify or change a secondary address at anytime, provided that, if a secondary address is identified or changed during thecollection process, the association shall only be required to send notices to theindicated secondary address from the point the association receives the request.
(l) (1) An association that fails to comply with the procedures set forth inthis section shall, prior to recording a lien, recommence the required noticeprocess.
(2) Any costs associated with recommencing the notice process shallbe 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 conformitywith, Section 1367.4.
Civil Code § 1367.4 Collection Of Debts For Assessments Arising On AndAfter January 1, 2006; When Judicial Or Nonjudicial Foreclosure May BeUsed
(a) Notwithstanding any law or any provisions of the governing documentsto the contrary, this section shall apply to debts for assessments that arise on andafter January 1, 2006.
(b) An association that seeks to collect delinquent regular or specialassessments of an amount less than one thousand eight hundred dollars ($1,800),not including any accelerated assessments, late charges, fees and costs of
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collection, attorney's fees, or interest, may not collect that debt through judicialor nonjudicial foreclosure, but may attempt to collect or secure that debt in anyof 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 adebt for delinquent assessments may not exceed the jurisdictional limits ofthe small claims court and shall be the sum of the following:
(A) The amount owed as of the date of filing the complaint in thesmall claims court proceeding.
(B) In the discretion of the court, an additional amount to thatdescribed in subparagraph (A) equal to the amount owed for the periodfrom the date the complaint is filed until satisfaction of the judgment,which total amount may include accruing unpaid assessments and anyreasonable late charges, fees and costs of collection, attorney's fees, andinterest, up to the jurisdictional limits of the small claims court.
(2) By recording a lien on the owner's separate interest upon whichthe association may not foreclose until the amount of the delinquentassessments secured by the lien, exclusive of any accelerated assessments,late charges, fees and costs of collection, attorney's fees, or interest, equalsor exceeds one thousand eight hundred dollars ($1,800) or the assessmentssecured by the lien are more than 12 months delinquent. An association thatchooses 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 disputeresolution as set forth in Article 5 (commencing with Section 1363.810) ofChapter 4.
(3) Any other manner provided by law, except for judicial ornonjudicial foreclosure.
(c) An association that seeks to collect delinquent regular or specialassessments of an amount of one thousand eight hundred dollars ($1,800) ormore, not including any accelerated assessments, late charges, fees and costs ofcollection, attorney's fees, or interest, or any assessments secured by the lien thatare more than 12 months delinquent, may use judicial or nonjudicial foreclosuresubject to the following conditions:
(1) Prior to initiating a foreclosure on an owner's separate interest, theassociation shall offer the owner and, if so requested by the owner,participate in dispute resolution pursuant to the association's "meet andconfer" 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 pursuedispute resolution or a particular type of alternative dispute resolution shall
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be the choice of the owner, except that binding arbitration shall not beavailable if the association intends to initiate a judicial foreclosure.
(2) The decision to initiate foreclosure of a lien for delinquentassessments that has been validly recorded shall be made only by the boardof directors of the association and may not be delegated to an agent of theassociation. The board shall approve the decision by a majority vote of theboard members in an executive session. The board shall record the vote inthe minutes of the next meeting of the board open to all members. The boardshall maintain the confidentiality of the owner or owners of the separateinterest by identifying the matter in the minutes by the parcel number of theproperty, rather than the name of the owner or owners. A board vote toapprove foreclosure of a lien shall take place at least 30 days prior to anypublic sale.
(3) The board shall provide notice by personal service in accordancewith the manner of service of summons in Article 3 (commencing withSection 415.10) of Chapter 4 of Title 5 of Part 2 of the Code of CivilProcedure to an owner of a separate interest who occupies the separateinterest or to the owner's legal representative, if the board votes to forecloseupon the separate interest. The board shall provide written notice to anowner of a separate interest who does not occupy the separate interest byfirst-class mail, postage prepaid, at the most current address shown on thebooks of the association. In the absence of written notification by the ownerto the association, the address of the owner's separate interest may be treatedas the owner's mailing address.
(4) A nonjudicial foreclosure by an association to collect upon a debtfor delinquent assessments shall be subject to a right of redemption. Theredemption period within which the separate interest may be redeemed froma foreclosure sale under this paragraph ends 90 days after the sale. In additionto the requirements of Section 2924f, a notice of sale in connection with anassociation's foreclosure of a separate interest in a common interestdevelopment shall include a statement that the property is being sold subjectto the right of redemption created in this paragraph.
(d) The limitation on foreclosure of assessment liens for amounts under thestated minimum in this section does not apply to assessments owed by owners ofseparate interests in timeshare estates, as defined in subdivision (x) of Section11112 of the Business and Professions Code, or to assessments owed bydevelopers.
Civil Code § 1367.5 Reversal And Release Of Lien Recorded In Error; Costs.
If it is determined through dispute resolution pursuant to the association's "meetand confer" program required in Article 5 (commencing with Section 1363.810)of Chapter 4 or alternative dispute resolution with a neutral third party pursuantto Article 2 (commencing with Section 1369.510) of Chapter 7 that an associationhas recorded a lien for a delinquent assessment in error, the association shallpromptly 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
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costs of recordation and release of the lien authorized under subdivision (b) ofSection 1367.4, and pay all costs related to the dispute resolution or alternativedispute resolution.
Civil Code § 1367.6 Dispute Of Charge Or Sum Levied By Association;Dispute Resolution; Collection Of Delinquent Assessments
(a) If a dispute exists between the owner of a separate interest and theassociation 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 indispute does not exceed the jurisdictional limits stated in Sections 116.220 and116.221 of the Code of Civil Procedure, the owner of the separate interest may,in addition to pursuing dispute resolution pursuant to Article 5 (commencing withSection 1363.810) of Chapter 4, pay under protest the disputed amount and allother amounts levied, including any fees and reasonable costs of collection,reasonable attorney's fees, late charges, and interest, if any, pursuant tosubdivision (e) of Section 1366, and commence an action in small claims courtpursuant to Chapter 5.5 (commencing with Section 116.110) of Title 1 of the Codeof Civil Procedure.
(b) Nothing in this section shall impede an association's ability to collectdelinquent assessments as provided in Sections 1367.1 and 1367.4.
Chapter 6. Transfer of Ownership Interests
Civil Code § 1368 Sale Or Title Transfer; Provision Of Specified Items ToProspective Purchasers; Copies; Fees; Violations; Penalty And AttorneyFees; Validity Of Title Transferred In Violation; Additional Requirements.
(a) The owner of a separate interest, other than an owner subject to therequirements of Section 11018.6 of the Business and Professions Code, shall, assoon as practicable before transfer of title to the separate interest or execution ofa real property sales contract therefor, as defined in Section 2985, provide thefollowing to the prospective purchaser:
(1) A copy of the governing documents of the common interestdevelopment, including any operating rules, and including a copy of theassociation's articles of incorporation, or, if not incorporated, a statement inwriting from an authorized representative of the association that theassociation is not incorporated.
(2) If there is a restriction in the governing documents limiting theoccupancy, residency, or use of a separate interest on the basis of age in amanner different from that provided in Section 51.3, a statement that therestriction is only enforceable to the extent permitted by Section 51.3 and astatement specifying the applicable provisions of Section 51.3.
(3) A copy of the most recent documents distributed pursuant toSection 1365.
(4) A true statement in writing obtained from an authorizedrepresentative of the association as to the amount of the association's current
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regular and special assessments and fees, any assessments levied upon theowner's interest in the common interest development that are unpaid on thedate of the statement, and any monetary fines or penalties levied upon theowner's interest and unpaid on the date of the statement. The statementobtained from an authorized representative shall also include trueinformation on late charges, interest, and costs of collection which, as of thedate of the statement, are or may be made a lien upon the owner's interestin a common interest development pursuant to Section 1367 or 1367.1.
(5) A copy or a summary of any notice previously sent to the ownerpursuant to subdivision (g) of Section 1363 that sets forth any allegedviolation of the governing documents that remains unresolved at the time ofthe request. The notice shall not be deemed a waiver of the association'sright to enforce the governing documents against the owner or theprospective purchaser of the separate interest with respect to any violation.This paragraph shall not be construed to require an association to inspect anowner's separate interest.
(6) A copy of the initial list of defects provided to each member of theassociation pursuant to Section 1375, unless the association and the buildersubsequently enter into a settlement agreement or otherwise resolve thematter and the association complies with Section 1375.1. Disclosure of theinitial list of defects pursuant to this paragraph does not waive any privilegeattached to the document. The initial list of defects shall also include astatement that a final determination as to whether the list of defects isaccurate 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 specialassessments and fees which have been approved by the association's boardof directors, but have not become due and payable as of the date disclosureis provided pursuant to this subdivision.
(9) If there is a provision in the governing documents that prohibits therental or leasing of any of the separate interests in the common interestdevelopment to a renter, lessee, or tenant, a statement describing theprohibition.
(10) If requested by the prospective purchaser, a copy of the minutes ofthe meetings, excluding meetings held in executive session, of theassociation's board of directors, conducted over the previous 12 months, thatwere approved by the association's board of directors.
(b) (1) Upon written request, the association shall, within 10 days of themailing or delivery of the request, provide the owner of a separate interest,or any other recipient authorized by the owner, with a copy of the requesteddocuments specified in paragraphs (1) to (10), inclusive, of subdivision (a).Upon receipt of a written request, the association shall provide, on the formdescribed in Section 1368.2, a written or electronic estimate of the fees thatwill be assessed for providing the requested documents. The documentsrequired to be made available pursuant to this section may be maintained in
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electronic form, and may be posted on the association's Internet Web site.Requesting parties shall have the option of receiving the documents byelectronic transmission if the association maintains the documents inelectronic form. The association may collect a reasonable fee based uponthe association's actual cost for the procurement, preparation, reproduction, anddelivery of the documents requested pursuant to the provisions of this section.
(2) No additional fees may be charged by the association for theelectronic delivery of the documents requested.
(3) (A) A cancellation fee for documents specified in subdivision (a)shall not be collected if either of the following applies:
(i) The request was canceled in writing by the same partythat placed the order and work had not yet been performed on theorder.
(ii) The request was canceled in writing and any work thathad been performed on the order was compensated.
(B) The association shall refund all fees collected pursuant toparagraph (1) if the request was canceled in writing and work had notyet been performed on the order.
(C) If the request was canceled in writing, the association shallrefund the share of fees collected pursuant to paragraph (1) thatrepresents the portion of the work not performed on the order.
(4) Fees for any documents required by this section shall bedistinguished from other fees, fines, or assessments billed as part of thetransfer or sales transaction. Delivery of the documents required by thissection shall not be withheld for any reason nor subject to any conditionexcept the payment of the fee allowed pursuant to paragraph (1).
(5) An association may contract with any person or entity to facilitatecompliance with the requirements of this subdivision on behalf of theassociation.
(6) The association shall also provide a recipient authorized by theowner of a separate interest with a copy of the completed form specified inSection 1368.2 at the time the required documents are delivered.
(c) (1) Subject to the provisions of paragraph (2), neither an associationnor a community service organization or similar entity may impose or collectany assessment, penalty, or fee in connection with a transfer of title or anyother interest except for the following:
(A) An amount not to exceed the association's actual costs tochange its records.
(B) An amount authorized by subdivision (b).
(2) The amendments made to this subdivision by the act adding thisparagraph do not apply to a community service organization or similar entitythat is described in subparagraph (A) or (B):
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(A) The community service organization or similar entity satisfiesboth of the following requirements:
(i) The community service organization or similar entity wasestablished prior to February 20, 2003.
(ii) The community service organization or similar entityexists and operates, in whole or in part, to fund or performenvironmental mitigation or to restore or maintain wetlands ornative habitat, as required by the state or local government as anexpress written condition of development.
(B) The community service organization or similar entity satisfies allof the following requirements:
(i) The community service organization or similar entity isnot an organization or entity described in subparagraph (A).
(ii) The community service organization or similar entity wasestablished and received a transfer fee prior to January 1, 2004.
(iii) On and after January 1, 2006, the community serviceorganization or similar entity offers a purchaser the followingpayment options for the fee or charge it collects at the time oftransfer.
(I) Paying the fee or charge at the time of transfer.
(II) Paying the fee or charge pursuant to an installmentpayment plan for a period of not less than seven years. If thepurchaser elects to pay the fee or charge in installmentpayments, the community service organization or similar entitymay also collect additional amounts that do not exceed theactual costs for billing and financing on the amount owed. Ifthe purchaser sells the separate interest before the end of theinstallment payment plan period, he or she shall pay theremaining balance prior to transfer.
(3) For the purposes of this subdivision, a "community serviceorganization or similar entity" means a nonprofit entity, other than anassociation, that is organized to provide services to residents of the commoninterest development or to the public in addition to the residents, to the extentcommunity common areas or facilities are available to the public. A"community service organization or similar entity" does not include an entitythat has been organized solely to raise money and contribute to othernonprofit organizations that are qualified as tax exempt under Section501(c)(3) of the Internal Revenue Code and that provide housing or housingassistance.
(d) Any person or entity who willfully violates this section is liable to thepurchaser of a separate interest that is subject to this section for actual damagesoccasioned thereby and, in addition, shall pay a civil penalty in an amount notto exceed five hundred dollars ($500). In an action to enforce this liability, the
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prevailing party shall be awarded reasonable attorney’s fees.
(e) Nothing in this section affects the validity of title to real propertytransferred in violation of this section.
(f) In addition to the requirements of this section, an owner transferring titleto a separate interest shall comply with applicable requirements of Sections 1133and 1134.
(g) For the purposes of this section, a person who acts as a communityassociation manager is an agent, as defined in Section 2297, of the association.
Civil Code § 1368.1 Prohibition Against Association Rule Or Regulation ThatArbitrarily Or Unreasonably Restricts Owner's Ability To Market His OrHer Interest In A Common Development; Other Enumerated Restrictions
(a) Any rule or regulation of an association that arbitrarily or unreasonablyrestricts an owner's ability to market his or her interest in a common interestdevelopment is void.
(b) No association may adopt, enforce, or otherwise impose any rule orregulation that does either of the following:
(1) Imposes an assessment or fee in connection with the marketing ofan owner's interest in an amount that exceeds the association's actual ordirect costs. That assessment or fee shall be deemed to violate the limitationset forth in Section 1366.1.
(2) Establishes an exclusive relationship with a real estate brokerthrough which the sale or marketing of interests in the development isrequired to occur. The limitation set forth in this paragraph does not applyto the sale or marketing of separate interests owned by the association or tothe 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 thedevelopment.
(d) This section does not apply to rules or regulations made pursuant toSection 712 or 713 regarding real estate signs.
Civil Code § 1368.2 Form For Billing Disclosures Required By § 1368
The form for billing disclosures required by Section 1368 shall be in substantiallythe following form and in at least 10-point type:
CHARGES FOR DOCUMENTS PROVIDED AS REQUIRED BY SECTION 1368*
Property Address _______________________________________________Owner of Property _______________________________________________Owner's Mailing Address _________________________________________
(If known or different from property address)
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Provider of the Section 1368 Items:_____________________________________________________________________Print Name Position or Title Association or Agent Date Form Completed
Check or Complete Applicable Column or Columns Below
Document Civil Code Section Included Not Available(N/A) or NotApplicable(N/App)
Articles of Incorporation Section 1368(a)(1) __________ __________or statement that notincorporatedCC&Rs Section 1368(a)(1) __________ __________Bylaws Section 1368(a)(1) __________ __________Operating Rules Section 1368(a)(1) __________ __________Age restrictions, if any Section 1368(a)(2) __________ __________Pro forma operating budget Sections 1365 and __________ __________or summary, including 1368(a)(3)reserve studyAssessment and reserve Sections 1365 and __________ __________funding disclosure summary 1368(a)(4)Financial statement review Sections 1365 and __________ __________
1368(a)(3)Assessment enforcement Sections 1365 and __________ __________policy 1368(a)(4)Insurance summary Sections 1365 and __________ __________
1368(a)(3)Regular assessment Section 1368(a)(4) __________ __________Special assessment Section 1368(a)(4) __________ __________Emergency assessment Section 1368(a)(4) __________ __________Other unpaid obligations of Sections 1367.1 and __________ __________seller 1368(a)(4)Approved changes to Sections 1365 and __________ __________assessments 1368(a)(4), (8)Settlement notice regarding Sections __________ __________common area defects 1368(a)(6), (7) and
1375.1Preliminary list of defects Sections __________ __________
1368(a)(6), 1375,and 1375.1
Notice(s) of violation Sections 1363 and __________ __________1368(a)(5)
Required statement of fees Section 1368Minutes of regular meetings Section 1368(a)(9) __________ __________of the board of directorsconducted over the previous12 months, if requestedTotal fees for these documents: __________
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* The information provided by this form may not include all fees that may beimposed before the close of escrow. Additional fees that are not related to therequirements of Section 1368 may be charged separately.
Chapter 7. Civil Actions and Liens
Article 1. Miscellaneous Provisions
Civil Code § 1368.3 Associations Established To Manage Common InterestDevelopment; Standing
An association established to manage a common interest development hasstanding to institute, defend, settle, or intervene in litigation, arbitration,mediation, or administrative proceedings in its own name as the real party ininterest and without joining with it the individual owners of the common interestdevelopment, 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 tomaintain or repair.
(d) Damage to a separate interest that arises out of, or is integrally relatedto, damage to the common area or a separate interest that the association isobligated to maintain or repair.
Civil Code § 1368.4 Reduction Of Damages Awarded; Comparative Fault OfAssociation
(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 associationshall be reduced by the amount of damages allocated to the association or itsmanaging agents in direct proportion to their percentage of fault based uponprinciples of comparative fault. The comparative fault of the association or itsmanaging agents may be raised by way of defense, but shall not be the basis fora cross-action or separate action against the association or its managing agents forcontribution or implied indemnity, where the only damage was sustained by theassociation or its members. It is the intent of the Legislature in enacting thissubdivision to require that comparative fault be pleaded as an affirmative defense,rather than a separate cause of action, where the only damage was sustained bythe 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 thecomparative fault of the association or its managing agents as a setoff to theliability of the defendant or cross-defendant even if the association is not a partyto 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 January1, 1993.
(d) Nothing in this section affects a person's liability under Section 1431, or
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the liability of the association or its managing agent for an act or omission whichcauses damages to another.
Civil Code § 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 theassociation against the declarant or other developer of a common interestdevelopment for alleged damage to the common areas, alleged damage to theseparate interests that the association is obligated to maintain or repair, or allegeddamage 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 obligatedto maintain or repair, the board of directors of the association shall provide awritten notice to each member of the association who appears on the records ofthe association when the notice is provided. This notice shall specify all of thefollowing:
(1) That a meeting will take place to discuss problems that may lead tothe filing of a civil action.
(2) The options, including civil actions, that are available to addressthe problems.
(3) The time and place of this meeting.
(b) Notwithstanding subdivision (a), if the association has reason to believethat the applicable statute of limitations will expire before the association filesthe civil action, the association may give the notice, as described above, within30 days after the filing of the action.
Civil Code § 1369 Liens For Labor And Materials.
In a condominium project, no labor performed or services or materials furnishedwith the consent of, or at the request of, an owner in the condominium projector his or her agent or his or her contractor shall be the basis for the filing of a lienagainst any other property of any other owner in the condominium project unlessthat other owner has expressly consented to or requested the performance of thelabor or furnishing of the materials or services. However, express consent shallbe deemed to have been given by the owner of any condominium in the case ofemergency repairs thereto. Labor performed or services or materials furnishedfor the common areas, if duly authorized by the association, shall be deemed tobe performed or furnished with express consent of each condominium owner.The owner of any condominium may remove his or her condominium from a lienagainst two or more condominiums or any part thereof by payment to the holderof the lien of the fraction of the total sum secured by the lien which is attributableto his or her condominium.
Article 2. Alternative Dispute Resolution
Civil Code § 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
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decisionmaking process. The form of alternative dispute resolution chosenpursuant to this article may be binding or nonbinding, with the voluntary consentof the parties.
(b) "Enforcement action" means a civil action or proceeding, other than across-complaint, for any of the following purposes:
(1) Enforcement of this title.
(2) Enforcement of the Nonprofit Mutual Benefit Corporation Law (Part3 (commencing with Section 7110) of Division 2 of Title 1 of the CorporationsCode).
(3) Enforcement of the governing documents of a common interestdevelopment.
Civil Code § 1369.520 Filing Enforcement Actions; Application Of Section
(a) An association or an owner or a member of a common interestdevelopment may not file an enforcement action in the superior court unless theparties have endeavored to submit their dispute to alternative dispute resolutionpursuant to this article.
(b) This section applies only to an enforcement action that is solely fordeclaratory, injunctive, or writ relief, or for that relief in conjunction with a claimfor monetary damages not in excess of the jurisdictional limits stated in Sections116.220 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 anassessment dispute.
Civil Code § 1369.530 Initiation Of Process; Serving A Request ForResolution; Personal Delivery; Acceptance Or Rejection Of A Request
(a) Any party to a dispute may initiate the process required by Section1369.520 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 isrequired to respond within 30 days of receipt or the request will be deemedrejected.
(4) If the party on whom the request is served is the owner of a separateinterest, 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 reasonablycalculated to provide the party on whom the request is served actual notice of therequest.
(c) A party on whom a Request for Resolution is served has 30 daysfollowing service to accept or reject the request. If a party does not accept the
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request within that period, the request is deemed rejected by the party.
Civil Code § 1369.540 Timeline For Completion Of AlternativeDispute Resolution
(a) If the party on whom a Request for Resolution is served accepts therequest, the parties shall complete the alternative dispute resolution within90 days after the party initiating the request receives the acceptance, unlessthis period is extended by written stipulation signed by both parties.
(b) Chapter 2 (commencing with Section 1115) of Division 9 of theEvidence Code applies to any form of alternative dispute resolution initiatedby a Request for Resolution under this article, other than arbitration.
(c) The costs of the alternative dispute resolution shall be borne by theparties.
Civil Code § 1369.550 Tolling Of Statute Of Limitations
If a Request for Resolution is served before the end of the applicable timelimitation for commencing an enforcement action, the time limitation istolled during the following periods:
(a) The period provided in Section 1369.530 for response to a Requestfor Resolution.
(b) If the Request for Resolution is accepted, the period provided bySection 1369.540 for completion of alternative dispute resolution, includingany extension of time stipulated to by the parties pursuant to Section1369.540.
Civil Code § 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 partycommencing the action shall file with the initial pleading a certificate statingthat one or more of the following conditions is satisfied:
(1) Alternative dispute resolution has been completed incompliance with this article.
(2) One of the other parties to the dispute did not accept the termsoffered for alternative dispute resolution.
(3) Preliminary or temporary injunctive relief is necessary.
(b) Failure to file a certificate pursuant to subdivision (a) is grounds fora demurrer or a motion to strike unless the court finds that dismissal of theaction for failure to comply with this article would result in substantialprejudice to one of the parties.
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Civil Code § 1369.570 Referral Of Actions To Alternative DisputeResolution; Stay Of Referral Actions
(a) After an enforcement action is commenced, on written stipulation of theparties, the matter may be referred to alternative dispute resolution. The referredaction is stayed. During the stay, the action is not subject to the rulesimplementing subdivision (c) of Section 68603 of the Government Code.
(b) The costs of the alternative dispute resolution shall be borne by theparties.
Civil Code § 1369.580 Award Of Fees And Costs
In an enforcement action in which fees and costs may be awarded pursuant tosubdivision (c) of Section 1354, the court, in determining the amount of theaward, may consider whether a party's refusal to participate in alternative disputeresolution before commencement of the action was reasonable.
Civil Code § 1369.590 Annual Summary Of Provisions Of Article;Contents Of Summary
(a) An association shall annually provide its members a summary of theprovisions of this article that specifically references this article. The summary shallinclude the following language:
"Failure of a member of the association to comply with the alternativedispute resolution requirements of Section 1369.520 of the Civil Codemay result in the loss of your right to sue the association or anothermember of the association regarding enforcement of the governingdocuments or the applicable law."
(b) The summary shall be provided either at the time the pro forma budgetrequired by Section 1365 is distributed or in the manner prescribed in Section5016 of the Corporations Code. The summary shall include a description of theassociation's internal dispute resolution process, as required by Section 1363.850.
Chapter 8. Construction of Instruments and Zoning
Civil Code § 1370 Liberal Construction Of Instruments.
Any deed, declaration, or condominium plan for a common interest developmentshall be liberally construed to facilitate the operation of the common interestdevelopment, and its provisions shall be presumed to be independent andseverable. Nothing in Article 3 (commencing with Section 715) of Chapter 2 ofTitle 2 of Part 1 of this division shall operate to invalidate any provisions of thegoverning documents of a common interest development.
Civil Code § 1371 Boundaries Of Units; Presumption.
In interpreting deeds and condominium plans, the existing physical boundaries ofa unit in a condominium project, when the boundaries of the unit are containedwithin a building, or of a unit reconstructed in substantial accordance with theoriginal plans thereof, shall be conclusively presumed to be its boundaries ratherthan the metes and bounds expressed in the deed or condominium plan, if anyexists, regardless of settling or lateral movement of the building and regardless of
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minor variance between boundaries shown on the plan or in the deed and thoseof the building.
Civil Code § 1372 Construction Of Zoning Ordinances.
Unless a contrary intent is clearly expressed, local zoning ordinances shall beconstrued to treat like structures, lots, parcels, areas, or spaces in like mannerregardless of whether the common interest development is a communityapartment project, condominium project, planned development, or stockcooperative.
Civil Code § 1373 Developments Expressly Zoned As Industrial OrCommercial And Limited To Such Purposes; Exclusions.
(a) The following provisions do not apply to a common interestdevelopment that is limited to industrial or commercial uses by zoning or by adeclaration of covenants, conditions, and restrictions that has been recorded inthe official records of each county in which the common interest development islocated:
(1) Section 1356.
(2) Article 4 (commencing with Section 1357.100) of Chapter 2 of Title6 of Part 4 of Division 2.
(3) Section 1360.2.
(4) Subdivision (b) of Section 1363.
(5) Section 1365.
(6) Section 1365.5.
(7) Subdivision (b) of Section 1366.
(8) Section 1366.1.
(9) Section 1368.
(10) Section 1378.
(b) The Legislature finds that the provisions listed in subdivision (a) areappropriate to protect purchasers in residential common interest developments,however, the provisions may not be necessary to protect purchasers incommercial or industrial developments since the application of those provisionscould result in unnecessary burdens and costs for these types of developments.
Civil Code § 1374 Developments With No Common Area; Application OfTitle; Standing.
Nothing in this title may be construed to apply to a development wherein theredoes not exist a common area as defined in subdivision (b) of Section 1351.
This section is declaratory of existing law.
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Chapter 9. Construction Defect Litigation
Civil Code § 1375 Claim Against Builder For Defects In Design OrConstruction.
(a) Before an association files a complaint for damages against a builder,developer, or general contractor ("respondent") of a common interest developmentbased upon a claim for defects in the design or construction of the commoninterest development, all of the requirements of this section shall be satisfied withrespect to the builder, developer or general contractor.
(b) The association shall serve upon the respondent a "Notice ofCommencement of Legal Proceedings." The notice shall be served by certifiedmail 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 therespondent, service shall be upon the person or entity otherwise authorized bylaw to receive service of process. Service upon the general contractor shall besufficient to initiate the process set forth in this section with regard to any builderor developer, if the builder or developer is not amenable to service of process bythe foregoing methods. This notice shall toll all applicable statutes of limitationand repose, whether contractual or statutory, by and against all potentiallyresponsible parties, regardless of whether they were named in the notice,including claims for indemnity applicable to the claim for the period set forth insubdivision (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 thegeneral 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 tohomeowners to determine the nature and extent of defects, if a survey hasbeen conducted or a questionnaire has been distributed.
(5) Either a summary of the results of testing conducted to determinethe nature and extent of defects or the actual test results, if that testing hasbeen 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 partiesshall try to resolve the dispute through the processes set forth in this section. This180-day period may be extended for one additional period, not to exceed 180days, only upon the mutual agreement of the association, the respondent, andany parties not deemed peripheral pursuant to paragraph (3) of subdivision (e).Any extensions beyond the first extension shall require the agreement of allparticipating parties. Unless extended, the dispute resolution process prescribedby this section shall be deemed completed. All extensions shall continue thetolling period described in subdivision (b).
(d) Within 25 days of the date the association serves the Notice ofCommencement of Legal Proceedings, the respondent may request in writing to
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meet and confer with the board of directors of the association. Unless therespondent and the association otherwise agree, there shall be not more than onemeeting, which shall take place no later than 10 days from the date of therespondent's written request, at a mutually agreeable time and place. Themeeting shall be subject to subdivision (b) of Section 1363.05. The discussions atthe meeting are privileged communications and are not admissible in evidencein any civil action, unless the association and the respondent consent in writingto their admission.
(e) Upon receipt of the notice, the respondent shall, within 60 days, complywith the following:
(1) The respondent shall provide the association with access to, forinspection and copying, all plans and specifications, subcontracts, and otherconstruction files for the project that are reasonably calculated to lead to thediscovery of admissible evidence regarding the defects claimed. Theassociation shall provide the respondent with access to, for inspection andcopying, all files reasonably calculated to lead to the discovery of admissibleevidence regarding the defects claimed, including all reserve studies,maintenance records and any survey questionnaires, or results of testing todetermine the nature and extent of defects. To the extent any of the abovedocuments are withheld based on privilege, a privilege log shall be preparedand submitted to all other parties. All other potentially responsible partiesshall have the same rights as the respondent regarding the production ofdocuments upon receipt of written notice of the claim, and shall produce allrelevant documents within 60 days of receipt of the notice of the claim.
(2) The respondent shall provide written notice by certified mail to allsubcontractors, design professionals, their insurers, and the insurers of anyadditional insured whose identity is known to the respondent or readilyascertainable by review of the project files or other similar sources and whosepotential responsibility appears on the face of the notice. This notice tosubcontractors, design professionals, and insurers shall include a copy of theNotice of Commencement of Legal Proceedings, and shall specify the dateand manner by which the parties shall meet and confer to select a disputeresolution facilitator pursuant to paragraph (1) of subdivision (f), advise therecipient of its obligation to participate in the meet and confer or serve awritten acknowledgment of receipt regarding this notice, advise the recipientthat it will waive any challenge to selection of the dispute resolutionfacilitator if it elects not to participate in the meet and confer, advise therecipient that it may be bound by any settlement reached pursuant tosubdivision (d) of Section 1375.05, advise the recipient that it may bedeemed to have waived rights to conduct inspection and testing pursuant tosubdivision (c) of Section 1375.05, advise the recipient that it may seek theassistance of an attorney, and advise the recipient that it should contact itsinsurer, if any. Any subcontractor or design professional, or insurer for thatsubcontractor, design professional, or additional insured, who receiveswritten notice from the respondent regarding the meet and confer shall, priorto the meet and confer, serve on the respondent a written acknowledgment
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of receipt. That subcontractor or design professional shall, within 10 days ofservice of the written acknowledgment of receipt, provide to the associationand the respondent a Statement of Insurance that includes both of thefollowing:
(A) The names, addresses, and contact persons, if known, of allinsurance carriers, whether primary or excess and regardless of whethera deductible or self-insured retention applies, whose policies were ineffect from the commencement of construction of the subject project tothe present and potentially cover the subject claims.
(B) The applicable policy numbers for each policy of insuranceprovided.
(3) Any subcontractor or design professional, or insurer for thatsubcontractor, design professional, or additional insured, who so chooses,may, at any time, make a written request to the dispute resolution facilitatorfor designation as a peripheral party. That request shall be servedcontemporaneously on the association and the respondent. If no objectionto that designation is received within 15 days, or upon rejection of thatobjection, the dispute resolution facilitator shall designate that subcontractoror design professional as a peripheral party, and shall thereafter seek to limitthe attendance of that subcontractor or design professional only to thosedispute resolution sessions deemed peripheral party sessions or to thosesessions during which the dispute resolution facilitator believes settlement asto peripheral parties may be finalized. Nothing in this subdivision shallpreclude a party who has been designated a peripheral party from beingreclassified as a nonperipheral party, nor shall this subdivision preclude aparty designated as a nonperipheral party from being reclassified as aperipheral party after notice to all parties and an opportunity to object. Forpurposes of this subdivision, a peripheral party is a party having total claimedexposure of less than twenty-five thousand dollars ($ 25,000).
(f) (1) Within 20 days of sending the notice set forth in paragraph (2) ofsubdivision (e), the association, respondent, subcontractors, designprofessionals, and their insurers who have been sent a notice as described inparagraph (2) of subdivision (e) shall meet and confer in an effort to select adispute resolution facilitator to preside over the mandatory dispute resolutionprocess prescribed by this section. Any subcontractor or design professionalwho has been given timely notice of this meeting but who does notparticipate, waives any challenge he or she may have as to the selection ofthe dispute resolution facilitator. The role of the dispute resolution facilitatoris to attempt to resolve the conflict in a fair manner. The dispute resolutionfacilitator shall be sufficiently knowledgeable in the subject matter and beable to devote sufficient time to the case. The dispute resolution facilitatorshall not be required to reside in or have an office in the county in which theproject is located. The dispute resolution facilitator and the participatingparties shall agree to a date, time, and location to hold a case managementmeeting of all parties and the dispute resolution facilitator, to discuss theclaims being asserted and the scheduling of events under this section. The
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case management meeting with the dispute resolution facilitator shall be heldwithin 100 days of service of the Notice of Commencement of LegalProceedings at a location in the county where the project is located. Writtennotice of the case management meeting with the dispute resolution facilitatorshall be sent by the respondent to the association, subcontractors and designprofessionals, and their insurers who are known to the respondent to be onnotice of the claim, no later than 10 days prior to the case managementmeeting, and shall specify its date, time, and location. The dispute resolutionfacilitator in consultation with the respondent shall maintain a contact list ofthe participating parties.
(2) No later than 10 days prior to the case management meeting, thedispute resolution facilitator shall disclose to the parties all matters that couldcause a person aware of the facts to reasonably entertain a doubt that theproposed dispute resolution facilitator would be able to resolve the conflictin a fair manner. The facilitator's disclosure shall include the existence of anyground specified in Section 170.1 of the Code of Civil Procedure fordisqualification of a judge, any attorney-client relationship the facilitator hasor had with any party or lawyer for a party to the dispute resolution process,and any professional or significant personal relationship the facilitator or hisor her spouse or minor child living in the household has or had with anyparty to the dispute resolution process. The disclosure shall also be providedto any subsequently noticed subcontractor or design professional within 10days of the notice.
(3) A dispute resolution facilitator shall be disqualified by the court ifhe or she fails to comply with this paragraph and any party to the disputeresolution process serves a notice of disqualification prior to the casemanagement meeting. If the dispute resolution facilitator complies with thisparagraph, he or she shall be disqualified by the court on the basis of thedisclosure if any party to the dispute resolution process serves a notice ofdisqualification prior to the case management meeting.
(4) If the parties cannot mutually agree to a dispute resolutionfacilitator, then each party shall submit a list of three dispute resolutionfacilitators. Each party may then strike one nominee from the other parties'list, and petition the court, pursuant to the procedure described insubdivisions (n) and (o), for final selection of the dispute resolution facilitator.The court may issue an order for final selection of the dispute resolutionfacilitator pursuant to this paragraph.
(5) Any subcontractor or design professional who receives notice ofthe association's claim without having previously received timely notice ofthe meet and confer to select the dispute resolution facilitator shall be notifiedby the respondent regarding the name, address, and telephone number ofthe dispute resolution facilitator. Any such subcontractor or designprofessional may serve upon the parties and the dispute resolution facilitatora written objection to the dispute resolution facilitator within 15 days ofreceiving notice of the claim. Within seven days after service of thisobjection, the subcontractor or design professional may petition the superior
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court to replace the dispute resolution facilitator. The court may replace thedispute resolution facilitator only upon a showing of good cause, liberallyconstrued. Failure to satisfy the deadlines set forth in this subdivision shallconstitute a waiver of the right to challenge the dispute resolution facilitator.
(6) The costs of the dispute resolution facilitator shall be apportioned inthe following manner: one-third to be paid by the association; one-third to bepaid by the respondent; and one-third to be paid by the subcontractors and designprofessionals, as allocated among them by the dispute resolution facilitator. Thecosts of the dispute resolution facilitator shall be recoverable by the prevailingparty in any subsequent litigation pursuant to Section 1032 of the Code of CivilProcedure, provided, however, that any nonsettling party may, prior to the filingof the complaint, petition the facilitator to reallocate the costs of the disputeresolution facilitator as they apply to any nonsettling party. The determination ofthe dispute resolution facilitator with respect to the allocation of these costs shallbe binding in any subsequent litigation. The dispute resolution facilitator shalltake into account all relevant factors and equities between all parties in the disputeresolution 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) shallremain in full force and effect.
(8) The dispute resolution facilitator shall be empowered to enforce allprovisions of this section.
(g) (1) No later than the case management meeting, the parties shall beginto generate a data compilation showing the following information regardingthe alleged defects at issue:
(A) The scope of the work performed by each potentiallyresponsible subcontractor.
(B) The tract or phase number in which each subcontractorprovided goods or services.
(C) The units, either by address, unit number, or lot number, atwhich each subcontractor provided goods or services, or both.
(2) This data compilation shall be updated as needed to reflectadditional information. Each party attending the case management meeting,and any subsequent meeting pursuant to this section, shall provide allinformation 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 casemanagement statement, which shall set forth all of the elements set forth inparagraphs (1) to (8), inclusive, except that the parties may dispense with one ormore of these elements if they agree that it is appropriate to do so. The casemanagement statement shall provide that the following elements shall take placein the following order:
(1) Establishment of a document depository, located in the county
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where the project is located, for deposit of documents, defect lists, demands,and other information provided for under this section. All documentsexchanged by the parties and all documents created pursuant to thissubdivision shall be deposited in the document depository, which shall beavailable to all parties throughout the prefiling dispute resolution processand in any subsequent litigation. When any document is deposited in thedocument depository, the party depositing the document shall providewritten notice identifying the document to all other parties. The costs ofmaintaining the document depository shall be apportioned among the partiesin the same manner as the costs of the dispute resolution facilitator.
(2) Provision of a more detailed list of defects by the association to therespondent after the association completes a visual inspection of the project.This list of defects shall provide sufficient detail for the respondent to ensurethat all potentially responsible subcontractors and design professionals areprovided with notice of the dispute resolution process. If not alreadycompleted prior to the case management meeting, the Notice ofCommencement of Legal Proceedings shall be served by the respondent onall additional subcontractors and design professionals whose potentialresponsibility appears on the face of the more detailed list of defects withinseven days of receipt of the more detailed list. The respondent shall serve acopy of the case management statement, including the name, address, andtelephone number of the dispute resolution facilitator, to all the potentiallyresponsible 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, as the associationdeems appropriate. All parties may observe and photograph any testingconducted by the association pursuant to this paragraph, but may not takesamples or direct testing unless, by mutual agreement, costs of testing areshared by the parties.
(5) Provision by the association of a comprehensive demand thatprovides sufficient detail for the parties to engage in meaningful disputeresolution as contemplated under this section.
(6) Invasive testing conducted by the respondent, subcontractors, anddesign professionals, as they deem appropriate.
(7) Allowance for modification of the demand by the association if newissues arise during the testing conducted by the respondent, subcontractor,or design professionals.
(8) Facilitated dispute resolution of the claim, with all parties, includingperipheral parties, as appropriate, and insurers, if any, present and havingsettlement authority. The dispute resolution facilitators shall endeavor to setspecific times for the attendance of specific parties at dispute resolutionsessions. If the dispute resolution facilitator does not set specific times for theattendance of parties at dispute resolution sessions, the dispute resolutionfacilitator shall permit those parties to participate in dispute resolution
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sessions by telephone.
(i) In addition to the foregoing elements of the case management statementdescribed in subdivision (h), upon mutual agreement of the parties, the disputeresolution facilitator may include any or all of the following elements in a casemanagement statement: the exchange of consultant or expert photographs; expertpresentations; expert meetings; or any other mechanism deemed appropriate bythe parties in the interest of resolving the dispute.
(j) The dispute resolution facilitator, with the guidance of the parties, shallat the time the case management statement is established, set deadlines for theoccurrence of each event set forth in the case management statement, taking intoaccount such factors as the size and complexity of the case, and the requirementof this section that this dispute resolution process not exceed 180 days absentagreement 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 writtensettlement offer.
(ii) A written settlement offer, and a concise explanation ofthe reasons for the terms of the offer.
(iii) A statement that the respondent has access to sufficientfunds to satisfy the conditions of the settlement offer.
(iv) A summary of the results of testing conducted for thepurposes of determining the nature and extent of defects, if thistesting has been conducted, unless the association provided therespondent with the actual test results.
(B) If the respondent does not timely submit the items required bythis subdivision, the association shall be relieved of any furtherobligation to satisfy the requirements of this subdivision only.
(C) No less than 10 days after the respondent submits the itemsrequired by this paragraph, the respondent and the board of directors ofthe association shall meet and confer about the respondent's settlementoffer.
(D) If the association's board of directors rejects a settlement offerpresented at the meeting held pursuant to this subdivision, the boardshall hold a meeting no less than 15 days before the associationcommences an action for damages against the respondent.
(E) No less than 15 days before this meeting is held, a written noticeshall be sent to each member of the association specifying all of thefollowing:
(i) That a meeting will take place to discuss problems thatmay lead to the filing of a civil action, and the time and place of thismeeting.
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(ii) The options that are available to address the problems,including the filing of a civil action and a statement of the variousalternatives that are reasonably foreseeable by the association topay for those options and whether these payments are expected tobe made from the use of reserve account funds or the imposition ofregular or special assessments, or emergency assessment increases.
(iii) The complete text of any written settlement offer, and aconcise explanation of the specific reasons for the terms of the offersubmitted 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 sendingthe settlement offer to all members of the association. The respondentshall also pay the expense of holding the meeting, not to exceed threedollars ($ 3) per association member.
(G) The discussions at the meeting and the contents of the noticeand the items required to be specified in the notice pursuant toparagraph (e) are privileged communications and are not admissible inevidence in any civil action, unless the association consents to theiradmission.
(H) No more than one request to meet and discuss a writtensettlement offer may be made by the respondent pursuant to thissubdivision.
(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 disputeresolution process provided by this section shall be inadmissible pursuant toSections 1119 to 1124, inclusive, of the Evidence Code and all applicabledecisional law. This inadmissibility shall not be extended to any other documentsor communications which would not otherwise be deemed inadmissible.
(m) Any subcontractor or design professional may, at any time, petition thedispute resolution facilitator to release that party from the dispute resolutionprocess upon a showing that the subcontractor or design professional is notpotentially responsible for the defect claims at issue. The petition shall be servedcontemporaneously on all other parties, who shall have 15 days from the date ofservice to object. If a subcontractor or design professional is released, and it laterappears to the dispute resolution facilitator that it may be a responsible party inlight of the current defect list or demand, the respondent shall renotice the partyas provided by paragraph (2) of subdivision (e), provide a copy of the currentdefect list or demand, and direct the party to attend a dispute resolution sessionat a stated time and location. A party who subsequently appears after havingbeen released by the dispute resolution facilitator shall not be prejudiced by itsabsence from the dispute resolution process as the result of having beenpreviously released by the dispute resolution facilitator.
(n) Any party may, at any time, petition the superior court in the countywhere the project is located, upon a showing of good cause, and the court may
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issue an order, for any of the following, or for appointment of a referee to resolvea dispute regarding any of the following:
(1) To take a deposition of any party to the process, or subpoena a thirdparty for deposition or production of documents, that is necessary to furtherprelitigation resolution of the dispute.
(2) To resolve any disputes concerning inspection, testing, productionof documents, or exchange of information provided for under this section.
(3) To resolve any disagreements relative to the timing or contents ofthe case management statement.
(4) To authorize internal extensions of timeframes set forth in the casemanagement statement.
(5) To seek a determination that a settlement is a good faith settlementpursuant to Section 877.6 of the Code of Civil Procedure and all relatedauthorities. The page limitations and meet and confer requirements specifiedin this section shall not apply to these motions, which may be made onshortened notice. Instead, these motions shall be subject to other applicablestate law, rules of court, and local rules. A determination made by the courtpursuant to this motion shall have the same force and effect as thedetermination of a postfiling application or motion for good faith settlement.
(6) To ensure compliance, on shortened notice, with the obligation toprovide a statement of insurance pursuant to paragraph (2) of subdivision (e).
(7) For any other relief appropriate to the enforcement of the provisionsof this section, including the ordering of parties, and insurers, if any, to thedispute resolution process with settlement authority.
(o) (1) A petition filed pursuant to subdivision (n) shall be filed in thesuperior court in the county in which the project is located. The court shallhear and decide the petition within 10 days after filing. The petitioning partyshall serve the petition on all parties, including the date, time, and locationof the hearing no later than five business days prior to the hearing. Anyresponsive papers shall be filed and served no later than three business daysprior to the hearing. Any petition or response filed under this section shallbe no more than three pages in length.
(2) All parties shall meet with the dispute resolution facilitator, if onehas been appointed and confer in person or by the telephone prior to thefiling of that petition to attempt to resolve the matter without requiring courtintervention.
(p) As used in this section:
(1) "Association" shall have the same meaning as in subdivision (a) ofSection 1351.
(2) "Builder" means the declarant, as defined in subdivision (g) ofSection 1351.
(3) "Common interest development" shall have the same meaning as in
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subdivision (c) of Section 1351, except that it shall not include developmentsor projects with less than 20 units.
(q) The alternative dispute resolution process and procedures described inthis section shall have no application or legal effect other than as described in thissection.
(r) This section shall become operative on July 1, 2002, however, it shallnot apply to any pending suit or claim for which notice has previously been given.
(s) This section shall become inoperative on July 1, 2017, and, as of January1, 2018, is repealed, unless a later enacted statute, that becomes operative on orbefore January 1, 2018, deletes or extends the dates on which it becomesinoperative and is repealed.
Civil Code § 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 builderhave entered into a settlement agreement or the matter has otherwise beenresolved regarding alleged defects in the common areas, alleged defects in theseparate interests that the association is obligated to maintain or repair, or allegeddefects in the separate interests that arise out of, or are integrally related to, defectsin the common areas or separate interests that the association is obligated tomaintain or repair, where the defects giving rise to the dispute have not beencorrected, the association shall, in writing, inform only the members of theassociation whose names appear on the records of the association that the matterhas been resolved, by settlement agreement or other means, and disclose all ofthe following:
(1) A general description of the defects that the association reasonablybelieves, 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 theassociation believes that the defects identified in paragraph (1) will becorrected or replaced. The association may state that the estimate may bemodified.
(3) The status of the claims for defects in the design or construction ofthe common interest development that were not identified in paragraph (1)whether expressed in a preliminary list of defects sent to each member ofthe association or otherwise claimed and disclosed to the members of theassociation.
(b) Nothing in the section shall preclude an association from amending thedisclosures required pursuant to subdivision (a), and any amendments shallsupersede any prior conflicting information disclosed to the members of theassociation and shall retain any privilege attached to the original disclosures.
(c) Disclosure of the information required pursuant to subdivision (a) orauthorized by subdivision (b) shall not waive any privilege attached to theinformation.
(d) For the purposes of the disclosures required pursuant to this section, the
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term "defects" shall be defined to include any damage resulting from defects.
Chapter 10. Improvements
Civil Code § 1376 Restrictions On Installation Or Use Of Video OrTelevision Antenna; Enforceability Based On Size; Reasonable Restrictions;Application Approval; Attorney'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 anyinterest in, a common interest development that effectively prohibits or restrictsthe 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 structurewithin that development where the antenna is not visible from any street orcommon area, except as otherwise prohibited or restricted by law, is void andunenforceable as to its application to the installation or use of a video or televisionantenna that has a diameter or diagonal measurement of 36 inches or less.
(b) This section shall not apply to any covenant, condition, or restriction, asdescribed in subdivision (a), that imposes reasonable restrictions on theinstallation or use of a video or television antenna, including a satellite dish, thathas a diameter or diagonal measurement of 36 inches or less. For purposes of thissection, "reasonable restrictions" means those restrictions that do not significantlyincrease the cost of the video or television antenna system, including all relatedequipment, or significantly decrease its efficiency or performance and include allof the following:
(1) Requirements for application and notice to the association prior tothe installation.
(2) Requirement of the owner of a separate interest, as defined inSection 1351, to obtain the approval of the association for the installation ofa video or television antenna that has a diameter or diagonal measurementof 36 inches or less on a separate interest owned by another.
(3) Provision for the maintenance, repair, or replacement of roofs orother building components.
(4) Requirements for installers of a video or television antenna toindemnify or reimburse the association or its members for loss or damagecaused by the installation, maintenance, or use of a video or televisionantenna 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 ortelevision antenna, including a satellite dish, the application for approval shallbe processed by the appropriate approving entity for the common interestdevelopment in the same manner as an application for approval of anarchitectural modification to the property, and the issuance of a decision on theapplication shall not be willfully delayed.
(d) In any action to enforce compliance with this section, the prevailingparty shall be awarded reasonable attorney's fees.
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Civil Code § 1378 Application Of Section; Requirements To Approve OrDisapprove Proposed Changes; Notice Of Requirements
(a) This section applies if an association's governing documents requireassociation approval before an owner of a separate interest may make a physicalchange to the owner's separate interest or to the common area. In reviewing andapproving or disapproving a proposed change, the association shall satisfy thefollowing requirements:
(1) The association shall provide a fair, reasonable, and expeditiousprocedure for making its decision. The procedure shall be included in theassociation's governing documents. The procedure shall provide for promptdeadlines. The procedure shall state the maximum time for response to anapplication or a request for reconsideration by the board of directors.
(2) A decision on a proposed change shall be made in good faith andmay 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 oflaw, including, but not limited to, the Fair Employment and Housing Act (Part2.8 (commencing with Section 12900) of Division 3 of Title 2 of theGovernment Code), or a building code or other applicable law governingland use or public safety.
(4) A decision on a proposed change shall be in writing. If a proposedchange is disapproved, the written decision shall include both an explanationof why the proposed change is disapproved and a description of theprocedure for reconsideration of the decision by the board of directors.
(5) If a proposed change is disapproved, the applicant is entitled toreconsideration by the board of directors of the association that made thedecision, at an open meeting of the board. This paragraph does not requirereconsideration of a decision that is made by the board of directors or a bodythat has the same membership as the board of directors, at a meeting thatsatisfies the requirements of Section 1363.05. Reconsideration by the boarddoes not constitute dispute resolution within the meaning of Section1363.820.
(b) Nothing in this section authorizes a physical change to the commonarea 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 anyrequirements for association approval of physical changes to property. The noticeshall describe the types of changes that require association approval and shallinclude a copy of the procedure used to review and approve or disapprove aproposed change.
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B. SELECT CONSTRUCTION DEFECT LAWS
Civil Code § 43.99 Immunity From Monetary Liability; Building And OtherInspectors; Independent Quality Review Of Plans, Specifications Or WorkOn Residential Buildings Under The State Housing Law; Exceptions
(a) There shall be no monetary liability on the part of, and no cause ofaction for damages shall arise against, any person or other legal entity that is undercontract with an applicant for a residential building permit to provide independentquality review of the plans and specifications provided with the application inorder to determine compliance with all applicable requirements imposedpursuant to the State Housing Law (Part 1.5 (commencing with Section 17910) ofDivision 13 of the Health and Safety Code), or any rules or regulations adoptedpursuant to that law, or under contract with that applicant to provide independentquality review of the work of improvement to determine compliance with theseplans and specifications, if the person or other legal entity meets the requirementsof this section and one of the following applies:
(1) The person, or a person employed by any other legal entity,performing the work as described in this subdivision, has completed not lessthan five years of verifiable experience in the appropriate field and hasobtained certification as a building inspector, combination inspector, orcombination dwelling inspector from the International Conference ofBuilding Officials (ICBO) and has successfully passed the technical writtenexamination promulgated by ICBO for those certification categories.
(2) The person, or a person employed by any other legal entity,performing the work as described in this subdivision, has completed not lessthan five years of verifiable experience in the appropriate field and is aregistered professional engineer, licensed general contractor, or a licensedarchitect rendering independent quality review of the work of improvementor plan examination services within the scope of his or her registration orlicensure.
(3) The immunity provided under this section does not apply to anyaction initiated by the applicant who retained the qualified person.
(4) A "qualified person" for purposes of this section means a personholding a valid certification as one of those inspectors.
(b) Except for qualified persons, this section shall not relieve from, excuse,or lessen in any manner, the responsibility or liability of any person, company,contractor, builder, developer, architect, engineer, designer, or other individualor entity who develops, improves, owns, operates, or manages any residentialbuilding for any damages to persons or property caused by construction or designdefects. The fact that an inspection by a qualified person has taken place may notbe introduced as evidence in a construction defect action, including any reportsor other items generated by the qualified person. This subdivision shall not applyin any action initiated by the applicant who retained the qualified person.
(c) Nothing in this section, as it relates to construction inspectors or plansexaminers, shall be construed to alter the requirements for licensure, or the
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jurisdiction, authority, or scope of practice, of architects pursuant to Chapter 3(commencing with Section 5500) of Division 3 of the Business and ProfessionsCode, professional engineers pursuant to Chapter 7 (commencing with Section6700) of Division 3 of the Business and Professions Code, or general contractorspursuant to Chapter 9 (commencing with Section 7000) of Division 3 of theBusiness and Professions Code.
(d) Nothing in this section shall be construed to alter the immunity ofemployees of the Department of Housing and Community Development underthe Government Claims Act (Division 3.6 (commencing with Section 810) of Title1 of the Government Code) when acting pursuant to Section 17965 of the Healthand Safety Code.
(e) The qualifying person shall engage in no other construction, design,planning, supervision, or activities of any kind on the work of improvement, norprovide quality review services for any other party on the work of improvement.
(f) The qualifying person, or other legal entity, shall maintain professionalerrors and omissions insurance coverage in an amount not less than two milliondollars ($2,000,000).
(g) The immunity provided by subdivision (a) does not inure to the benefitof the qualified person for damages caused to the applicant solely by thenegligence or willful misconduct of the qualified person resulting from theprovision of services under the contract with the applicant.
Civil Code § 895 Definitions
(a) "Structure" means any residential dwelling, other building, orimprovement located upon a lot or within a common area.
(b) "Designed moisture barrier" means an installed moisture barrierspecified in the plans and specifications, contract documents, or manufacturer'srecommendations.
(c) "Actual moisture barrier" means any component or material, actuallyinstalled, that serves to any degree as a barrier against moisture, whether or notintended as such.
(d) "Unintended water" means water that passes beyond, around, or througha component or the material that is designed to prevent that passage.
(e) "Close of escrow" means the date of the close of escrow between thebuilder and the original homeowner. With respect to claims by an association, asdefined in subdivision (a) of Section 1351, "close of escrow" means the date ofsubstantial completion, as defined in Section 337.15 of the Code of Civil Procedure,or the date the builder relinquishes control over the association's ability to decidewhether to initiate a claim under this title, whichever is later.
(f) "Claimant" or "homeowner" includes the individual owners of single-family homes, individual unit owners of attached dwellings and, in the case of acommon interest development, any association as defined in subdivision (a) ofSection 1351.
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Civil Code § 896 Building Standards For Original Construction IntendedTo Be Sold As An Individual Dwelling Unit
In any action seeking recovery of damages arising out of, or related todeficiencies in, the residential construction, design, specifications, surveying,planning, supervision, testing, or observation of construction, a builder, and tothe extent set forth in Chapter 4 (commencing with Section 910), a generalcontractor, subcontractor, material supplier, individual product manufacturer, ordesign professional, shall, except as specifically set forth in this title, be liable for,and the claimant's claims or causes of action shall be limited to violation of, thefollowing standards, except as specifically set forth in this title. This title appliesto original construction intended to be sold as an individual dwelling unit. As tocondominium conversions, this title does not apply to or does not supersede anyother statutory or common law.
(a) With respect to water issues:
(1) A door shall not allow unintended water to pass beyond, around,or through the door or its designed or actual moisture barriers, if any.
(2) Windows, patio doors, deck doors, and their systems shall notallow water to pass beyond, around, or through the window, patio door, ordeck door or its designed or actual moisture barriers, including, withoutlimitation, internal barriers within the systems themselves. For purposes ofthis paragraph, "systems" include, without limitation, windows, windowassemblies, framing, substrate, flashings, and trim, if any.
(3) Windows, patio doors, deck doors, and their systems shall notallow excessive condensation to enter the structure and cause damage toanother component. For purposes of this paragraph, "systems" include,without limitation, windows, window assemblies, framing, substrate, flashings,and trim, if any.
(4) Roofs, roofing systems, chimney caps, and ventilation componentsshall not allow water to enter the structure or to pass beyond, around, orthrough the designed or actual moisture barriers, including, withoutlimitation, internal barriers located within the systems themselves. Forpurposes of this paragraph, "systems" include, without limitation, framing,substrate, and sheathing, if any.
(5) Decks, deck systems, balconies, balcony systems, exterior stairs,and stair systems shall not allow water to pass into the adjacent structure. Forpurposes of this paragraph, "systems" include, without limitation, framing,substrate, flashing, and sheathing, if any.
(6) Decks, deck systems, balconies, balcony systems, exterior stairs,and stair systems shall not allow unintended water to pass within the systemsthemselves and cause damage to the systems. For purposes of this paragraph,"systems" include, without limitation, framing, substrate, flashing, andsheathing, if any.
(7) Foundation systems and slabs shall not allow water or vapor toenter into the structure so as to cause damage to another building
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component.
(8) Foundation systems and slabs shall not allow water or vapor toenter into the structure so as to limit the installation of the type of flooringmaterials typically used for the particular application.
(9) Hardscape, including paths and patios, irrigation systems,landscaping systems, and drainage systems, that are installed as part of theoriginal construction, shall not be installed in such a way as to cause wateror soil erosion to enter into or come in contact with the structure so as tocause damage to another building component.
(10) Stucco, exterior siding, exterior walls, including, without limitation,exterior framing, and other exterior wall finishes and fixtures and the systemsof those components and fixtures, including, but not limited to, pot shelves,horizontal surfaces, columns, and plant-ons, shall be installed in such a wayso as not to allow unintended water to pass into the structure or to passbeyond, around, or through the designed or actual moisture barriers of thesystem, including any internal barriers located within the system itself. Forpurposes of this paragraph, "systems" include, without limitation, framing,substrate, flashings, trim, wall assemblies, and internal wall cavities, if any.
(11) Stucco, exterior siding, and exterior walls shall not allow excessivecondensation to enter the structure and cause damage to another component.For purposes of this paragraph, "systems" include, without limitation, framing,substrate, flashings, trim, wall assemblies, and internal wall cavities, if any.
(12) Retaining and site walls and their associated drainage systems shallnot allow unintended water to pass beyond, around, or through its designedor actual moisture barriers including, without limitation, any internal barriers,so as to cause damage. This standard does not apply to those portions of anywall or drainage system that are designed to have water flow beyond, around,or through them.
(13) Retaining walls and site walls, and their associated drainagesystems, shall only allow water to flow beyond, around, or through the areasdesignated by design.
(14) The lines and components of the plumbing system, sewer system,and utility systems shall not leak.
(15) Plumbing lines, sewer lines, and utility lines shall not corrode so asto impede the useful life of the systems.
(16) Sewer systems shall be installed in such a way as to allow thedesignated amount of sewage to flow through the system.
(17) Showers, baths, and related waterproofing systems shall not leakwater into the interior of walls, flooring systems, or the interior of othercomponents.
(18) The waterproofing system behind or under ceramic tile and tilecountertops shall not allow water into the interior of walls, flooring systems,or other components so as to cause damage. Ceramic tile systems shall be
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designed and installed so as to deflect intended water to the waterproofingsystem.
(b) With respect to structural issues:
(1) Foundations, load bearing components, and slabs, shall not containsignificant cracks or significant vertical displacement.
(2) Foundations, load bearing components, and slabs shall not causethe structure, in whole or in part, to be structurally unsafe.
(3) Foundations, load bearing components, and slabs, and underlyingsoils shall be constructed so as to materially comply with the design criteriaset by applicable government building codes, regulations, and ordinances forchemical deterioration or corrosion resistance in effect at the time of originalconstruction.
(4) A structure shall be constructed so as to materially comply with thedesign criteria for earthquake and wind load resistance, as set forth in theapplicable government building codes, regulations, and ordinances in effectat the time of original construction.
(c) With respect to soil issues:
(1) Soils and engineered retaining walls shall not cause, in whole or inpart, damage to the structure built upon the soil or engineered retaining wall.
(2) Soils and engineered retaining walls shall not cause, in whole or inpart, the structure to be structurally unsafe.
(3) Soils shall not cause, in whole or in part, the land upon which nostructure is built to become unusable for the purpose represented at the timeof original sale by the builder or for the purpose for which that land iscommonly used.
(d) With respect to fire protection issues:
(1) A structure shall be constructed so as to materially comply with thedesign criteria of the applicable government building codes, regulations, andordinances for fire protection of the occupants in effect at the time of theoriginal construction.
(2) Fireplaces, chimneys, chimney structures, and chimney terminationcaps shall be constructed and installed in such a way so as not to cause anunreasonable risk of fire outside the fireplace enclosure or chimney.
(3) Electrical and mechanical systems shall be constructed andinstalled in such a way so as not to cause an unreasonable risk of fire.
(e) With respect to plumbing and sewer issues:
Plumbing and sewer systems shall be installed to operate properly and shallnot materially impair the use of the structure by its inhabitants. However, noaction may be brought for a violation of this subdivision more than four yearsafter close of escrow.
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(f) With respect to electrical system issues:
Electrical systems shall operate properly and shall not materially impair theuse of the structure by its inhabitants. However, no action shall be broughtpursuant to this subdivision more than four years from close of escrow.
(g) With respect to issues regarding other areas of construction:
(1) Exterior pathways, driveways, hardscape, sidewalls, sidewalks, andpatios installed by the original builder shall not contain cracks that displaysignificant vertical displacement or that are excessive. However, no actionshall be brought upon a violation of this paragraph more than four years fromclose of escrow.
(2) Stucco, exterior siding, and other exterior wall finishes and fixtures,including, but not limited to, pot shelves, horizontal surfaces, columns, andplant-ons, shall not contain significant cracks or separations.
(3) (A) To the extent not otherwise covered by these standards,manufactured products, including, but not limited to, windows, doors,roofs, plumbing products and fixtures, fireplaces, electrical fixtures,HVAC units, countertops, cabinets, paint, and appliances shall beinstalled so as not to interfere with the products' useful life, if any.
(B) For purposes of this paragraph, "useful life" means arepresentation of how long a product is warranted or represented,through its limited warranty or any written representations, to last by itsmanufacturer, including recommended or required maintenance. If thereis no representation by a manufacturer, a builder shall installmanufactured products so as not to interfere with the product's utility.
(C) For purposes of this paragraph, "manufactured product" meansa product that is completely manufactured offsite.
(D) If no useful life representation is made, or if the representationis less than one year, the period shall be no less than one year. If amanufactured product is damaged as a result of a violation of thesestandards, damage to the product is a recoverable element of damages.This subparagraph does not limit recovery if there has been damage toanother building component caused by a manufactured product duringthe manufactured product's useful life.
(E) This title does not apply in any action seeking recovery solelyfor a defect in a manufactured product located within or adjacent to astructure.
(4) Heating shall be installed so as to be capable of maintaining a roomtemperature of 70 degrees Fahrenheit at a point three feet above the floor inany living space if the heating was installed pursuant to a building permitapplication submitted prior to January 1, 2008, or capable of maintaining aroom temperature of 68 degrees Fahrenheit at a point three feet above thefloor and two feet from exterior walls in all habitable rooms at the designtemperature if the heating was installed pursuant to a building permitapplication submitted on or before January 1, 2008.
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(5) Living space air-conditioning, if any, shall be provided in a mannerconsistent with the size and efficiency design criteria specified in Title 24 ofthe California Code of Regulations or its successor.
(6) Attached structures shall be constructed to comply with interunitnoise transmission standards set by the applicable government buildingcodes, ordinances, or regulations in effect at the time of the originalconstruction. If there is no applicable code, ordinance, or regulation, thisparagraph does not apply. However, no action shall be brought pursuant tothis paragraph more than one year from the original occupancy of theadjacent unit.
(7) Irrigation systems and drainage shall operate properly so as not todamage landscaping or other external improvements. However, no actionshall be brought pursuant to this paragraph more than one year from close ofescrow.
(8) Untreated wood posts shall not be installed in contact with soil soas to cause unreasonable decay to the wood based upon the finish grade atthe time of original construction. However, no action shall be broughtpursuant to this paragraph more than two years from close of escrow.
(9) Untreated steel fences and adjacent components shall be installedso as to prevent unreasonable corrosion. However, no action shall be broughtpursuant to this paragraph more than four years from close of escrow.
(10) Paint and stains shall be applied in such a manner so as not tocause deterioration of the building surfaces for the length of time specifiedby the paint or stain manufacturers' representations, if any. However, noaction shall be brought pursuant to this paragraph more than five years fromclose of escrow.
(11) Roofing materials shall be installed so as to avoid materials fallingfrom the roof.
(12) The landscaping systems shall be installed in such a manner so asto survive for not less than one year. However, no action shall be broughtpursuant to this paragraph more than two years from close of escrow.
(13) Ceramic tile and tile backing shall be installed in such a mannerthat the tile does not detach.
(14) Dryer ducts shall be installed and terminated pursuant tomanufacturer installation requirements. However, no action shall be broughtpursuant to this paragraph more than two years from close of escrow.
(15) Structures shall be constructed in such a manner so as not to impairthe occupants' safety because they contain public health hazards asdetermined by a duly authorized public health official, health agency, orgovernmental entity having jurisdiction. This paragraph does not limitrecovery for any damages caused by a violation of any other paragraph of thissection on the grounds that the damages do not constitute a health hazard.
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Civil Code § 897 Function Or Component Of A Structure; Scope OfStandards Within Chapter
The standards set forth in this chapter are intended to address every function orcomponent of a structure. To the extent that a function or component of astructure is not addressed by these standards, it shall be actionable if it causesdamage.
Civil Code § 900 Fit And Finish; Limited Warranty
As to fit and finish items, a builder shall provide a homebuyer with a minimumone-year express written limited warranty covering the fit and finish of thefollowing building components. Except as otherwise provided by the standardsspecified in Chapter 2 (commencing with Section 896), this warranty shall coverthe fit and finish of cabinets, mirrors, flooring, interior and exterior walls,countertops, paint finishes, and trim, but shall not apply to damage to thosecomponents caused by defects in other components governed by the otherprovisions of this title. Any fit and finish matters covered by this warranty are notsubject to the provisions of this title. If a builder fails to provide the expresswarranty required by this section, the warranty for these items shall be for a periodof one year.
Civil Code § 901 Enhanced Protection Agreement; Length Of Time;Minimum Standards
A builder may, but is not required to, offer greater protection or protection forlonger time periods in its express contract with the homeowner than that set forthin Chapter 2 (commencing with Section 896). A builder may not limit theapplication of Chapter 2 (commencing with Section 896) or lower its protectionthrough the express contract with the homeowner. This type of express contractconstitutes an "enhanced protection agreement."
Civil Code § 902 Enhanced Protection Agreement; Determination OfEnforceability
If a builder offers an enhanced protection agreement, the builder may choose tobe subject to its own express contractual provisions in place of the provisions setforth in Chapter 2 (commencing with Section 896). If an enhanced protectionagreement is in place, Chapter 2 (commencing with Section 896) no longerapplies other than to set forth minimum provisions by which to judge theenforceability of the particular provisions of the enhanced protection agreement.
Civil Code § 903 Enhanced Protection Agreement; Time To ElectAgreement; Standards Where Provisions Are Unenforceable
If a builder offers an enhanced protection agreement in place of the provisions setforth in Chapter 2 (commencing with Section 896), the election to do so shall bemade in writing with the homeowner no later than the close of escrow. Thebuilder shall provide the homeowner with a complete copy of Chapter 2(commencing with Section 896) and advise the homeowner that the builder haselected not to be subject to its provisions. If any provision of an enhancedprotection agreement is later found to be unenforceable as not meeting theminimum standards of Chapter 2 (commencing with Section 896), a builder may
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use this chapter in lieu of those provisions found to be unenforceable.
Civil Code § 904 Enhanced Protection Agreement; Disputed Terms;Notice Of Claim Against Builder
If a builder has elected to use an enhanced protection agreement, and ahomeowner disputes that the particular provision or time periods of the enhancedprotection agreement are not greater than, or equal to, the provisions of Chapter2 (commencing with Section 896) as they apply to the particular deficiencyalleged by the homeowner, the homeowner may seek to enforce the applicationof the standards set forth in this chapter as to those claimed deficiencies. If ahomeowner seeks to enforce a particular standard in lieu of a provision of theenhanced protection agreement, the homeowner shall give the builder writtennotice of that intent at the time the homeowner files a notice of claim pursuant toChapter 4 (commencing with Section 910).
Civil Code § 905 Enhanced Protection Agreement; Binding DeterminationOf Applicable Building Standards; Waiver; Privity With NonoriginalHomeowners
If a homeowner seeks to enforce Chapter 2 (commencing with Section 896), inlieu of the enhanced protection agreement in a subsequent litigation or other legalaction, the builder shall have the right to have the matter bifurcated, and to havean immediately binding determination of his or her responsive pleading within 60days after the filing of that pleading, but in no event after the commencement ofdiscovery, as to the application of either Chapter 2 (commencing with Section896) or the enhanced protection agreement as to the deficiencies claimed by thehomeowner. If the builder fails to seek that determination in the timeframespecified, the builder waives the right to do so and the standards set forth in thistitle shall apply. As to any nonoriginal homeowner, that homeowner shall bedeemed in privity for purposes of an enhanced protection agreement only to theextent that the builder has recorded the enhanced protection agreement on titleor provided actual notice to the nonoriginal homeowner of the enhancedprotection agreement. If the enhanced protection agreement is not recorded ontitle or no actual notice has been provided, the standards set forth in this titleapply to any nonoriginal homeowners' claims.
Civil Code § 906 Prelitigation Procedures; Governing Law
A builder's election to use an enhanced protection agreement addresses only theissues set forth in Chapter 2 (commencing with Section 896) and does notconstitute an election to use or not use the provisions of Chapter 4 (commencingwith Section 910). The decision to use or not use Chapter 4 (commencing withSection 910) is governed by the provisions of that chapter.
Civil Code § 907 Homeowner Maintenance Obligations, Schedules AndPractices
A homeowner is obligated to follow all reasonable maintenance obligations andschedules communicated in writing to the homeowner by the builder and productmanufacturers, as well as commonly accepted maintenance practices. A failureby a homeowner to follow these obligations, schedules, and practices may subject
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the homeowner to the affirmative defenses contained in Section 944.
Civil Code § 910 Written Notice Of Claim
Prior to filing an action against any party alleged to have contributed to a violationof the standards set forth in Chapter 2 (commencing with Section 896), theclaimant shall initiate the following prelitigation procedures:
(a) The claimant or his or her legal representative shall provide writtennotice via certified mail, overnight mail, or personal delivery to the builder, inthe manner prescribed in this section, of the claimant's claim that the constructionof his or her residence violates any of the standards set forth in Chapter 2(commencing with Section 896). That notice shall provide the claimant's name,address, and preferred method of contact, and shall state that the claimant allegesa violation pursuant to this part against the builder, and shall describe the claimin reasonable detail sufficient to determine the nature and location, to the extentknown, of the claimed violation. In the case of a group of homeowners or anassociation, the notice may identify the claimants solely by address or otherdescription sufficient to apprise the builder of the locations of the subjectresidences. That document shall have the same force and effect as a notice ofcommencement of a legal proceeding.
(b) The notice requirements of this section do not preclude a homeownerfrom seeking redress through any applicable normal customer service procedureas set forth in any contractual, warranty, or other builder-generated document;and, if a homeowner seeks to do so, that request shall not satisfy the noticerequirements of this section.
Civil Code § 911 "Builder" Defined
(a) For purposes of this title, except as provided in subdivision (b), "builder"means any entity or individual, including, but not limited to a builder, developer,general contractor, contractor, or original seller, who, at the time of sale, was alsoin the business of selling residential units to the public for the property that is thesubject of the homeowner's claim or was in the business of building, developing,or constructing residential units for public purchase for the property that is thesubject of the homeowner's claim.
(b) For the purposes of this title, "builder" does not include any entity orindividual whose involvement with a residential unit that is the subject of thehomeowner's claim is limited to his or her capacity as general contractor orcontractor and who is not a partner, member of, subsidiary of, or otherwisesimilarly affiliated with the builder. For purposes of this title, these nonaffiliatedgeneral contractors and nonaffiliated contractors shall be treated the same assubcontractors, material suppliers, individual product manufacturers, and designprofessionals.
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Civil Code § 912 Document Disclosure By Builder; Designated Agent ToAccept Claims and Act On Builder's Behalf; Notice To Homeowners AndPurchasers
A builder shall do all of the following:
(a) Within 30 days of a written request by a homeowner or his or her legalrepresentative, the builder shall provide copies of all relevant plans, specifications,mass or rough grading plans, final soils reports, Department of Real Estate publicreports, and available engineering calculations, that pertain to a homeowner'sresidence specifically or as part of a larger development tract. The request shallbe honored if it states that it is made relative to structural, fire safety, or soilsprovisions of this title. However, a builder is not obligated to provide a copyingservice, and reasonable copying costs shall be borne by the requesting party. Abuilder may require that the documents be copied onsite by the requesting party,except that the homeowner may, at his or her option, use his or her own copyingservice, which may include an offsite copy facility that is bonded and insured. Ifa builder can show that the builder maintained the documents, but that they laterbecame unavailable due to loss or destruction that was not the fault of the builder,the builder may be excused from the requirements of this subdivision, in whichcase the builder shall act with reasonable diligence to assist the homeowner inobtaining those documents from any applicable government authority or fromthe source that generated the document. However, in that case, the time limitsspecified by this section do not apply.
(b) At the expense of the homeowner, who may opt to use an offsite copyfacility that is bonded and insured, the builder shall provide to the homeowneror his or her legal representative copies of all maintenance and preventativemaintenance recommendations that pertain to his or her residence within 30 daysof service of a written request for those documents. Those documents shall alsobe provided to the homeowner in conjunction with the initial sale of theresidence.
(c) At the expense of the homeowner, who may opt to use an offsite copyfacility that is bonded and insured, a builder shall provide to the homeowner orhis or her legal representative copies of all manufactured products maintenance,preventive maintenance, and limited warranty information within 30 days of awritten request for those documents. These documents shall also be provided tothe homeowner in conjunction with the initial sale of the residence.
(d) At the expense of the homeowner, who may opt to use an offsite copyfacility that is bonded and insured, a builder shall provide to the homeowner orhis or her legal representative copies of all of the builder's limited contractualwarranties in accordance with this part in effect at the time of the original sale ofthe residence within 30 days of a written request for those documents. Thosedocuments shall also be provided to the homeowner in conjunction with theinitial sale of the residence.
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(e) A builder shall maintain the name and address of an agent for noticepursuant to this chapter with the Secretary of State or, alternatively, elect to use athird party for that notice if the builder has notified the homeowner in writing ofthe third party's name and address, to whom claims and requests for informationunder this section may be mailed. The name and address of the agent for noticeor third party shall be included with the original sales documentation and shallbe initialed and acknowledged by the purchaser and the builder's salesrepresentative.
This subdivision applies to instances in which a builder contracts witha third party to accept claims and act on the builder's behalf.
A builder shall give actual notice to the homeowner that the builder hasmade such an election, and shall include the name and address of the third party.
(f) A builder shall record on title a notice of the existence of theseprocedures and a notice that these procedures impact the legal rights of thehomeowner. This information shall also be included with the original salesdocumentation and shall be initialed and acknowledged by the purchaser andthe builder's sales representative.
(g) A builder shall provide, with the original sales documentation, a writtencopy of this title, which shall be initialed and acknowledged by the purchaserand the builder's sales representative.
(h) As to any documents provided in conjunction with the original sale, thebuilder shall instruct the original purchaser to provide those documents to anysubsequent purchaser.
(i) Any builder who fails to comply with any of these requirements withinthe time specified is not entitled to the protection of this chapter, and thehomeowner is released from the requirements of this chapter and may proceedwith the filing of an action, in which case the remaining chapters of this part shallcontinue to apply to the action.
Civil Code § 913 Written Acknowledgment Of Claim; Time To Respond;Contents
A builder or his or her representative shall acknowledge, in writing, receipt of thenotice of the claim within 14 days after receipt of the notice of the claim. If thenotice of the claim is served by the claimant's legal representative, or if the builderreceives a written representation letter from a homeowner's attorney, the buildershall include the attorney in all subsequent substantive communications,including, without limitation, all written communications occurring pursuant tothis chapter, and all substantive and procedural communications, including allwritten communications, following the commencement of any subsequentcomplaint or other legal action, except that if the builder has retained or involvedlegal counsel to assist the builder in this process, all communications by thebuilder's counsel shall only be with the claimant's legal representative, if any.
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Civil Code § 914 Election To Pursue Other Nonadversarial ContractualProcedures; Affect Of Title 7 Upon Existing Statutory Or Decisional Law
(a) This chapter establishes a nonadversarial procedure, including theremedies available under this chapter which, if the procedure does not resolve thedispute between the parties, may result in a subsequent action to enforce the otherchapters of this title. A builder may attempt to commence nonadversarialcontractual provisions other than the nonadversarial procedures and remedies setforth in this chapter, but may not, in addition to its own nonadversarial contractualprovisions, require adherence to the nonadversarial procedures and remedies setforth in this chapter, regardless of whether the builder's own alternativenonadversarial contractual provisions are successful in resolving the dispute orultimately deemed enforceable.
At the time the sales agreement is executed, the builder shall notify thehomeowner whether the builder intends to engage in the nonadversarialprocedure of this section or attempt to enforce alternative nonadversarialcontractual provisions. If the builder elects to use alternative nonadversarialcontractual provisions in lieu of this chapter, the election is binding, regardless ofwhether the builder's alternative nonadversarial contractual provisions aresuccessful in resolving the ultimate dispute or are ultimately deemed enforceable.
(b) Nothing in this title is intended to affect existing statutory or decisionallaw pertaining to the applicability, viability, or enforceability of alternative disputeresolution methods, alternative remedies, or contractual arbitration, judicialreference, or similar procedures requiring a binding resolution to enforce the otherchapters of this title or any other disputes between homeowners and builders.Nothing in this title is intended to affect the applicability, viability, orenforceability, if any, of contractual arbitration or judicial reference after anonadversarial procedure or provision has been completed.
Civil Code § 915 Application Of Prelitigation Provisions Upon CertainFailures To Act By Builder
If a builder fails to acknowledge receipt of the notice of a claim within the timespecified, elects not to go through the process set forth in this chapter, or fails torequest an inspection within the time specified, or at the conclusion or cessationof an alternative nonadversarial proceeding, this chapter does not apply and thehomeowner is released from the requirements of this chapter and may proceedwith the filing of an action. However, the standards set forth in the other chaptersof this title shall continue to apply to the action.
Civil Code § 916 Builder Election To Inspect
(a) If a builder elects to inspect the claimed unmet standards, the buildershall complete the initial inspection and testing within 14 days afteracknowledgment of receipt of the notice of the claim, at a mutually convenientdate and time. If the homeowner has retained legal representation, the inspectionshall be scheduled with the legal representative's office at a mutually convenientdate and time, unless the legal representative is unavailable during the relevanttime periods. All costs of builder inspection and testing, including any damagecaused by the builder inspection, shall be borne by the builder. The builder shall
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also provide written proof that the builder has liability insurance to cover anydamages or injuries occurring during inspection and testing. The builder shallrestore the property to its pretesting condition within 48 hours of the testing. Thebuilder shall, upon request, allow the inspections to be observed andelectronically recorded, video recorded, or photographed by the claimant or hisor her legal representative.
(b) Nothing that occurs during a builder's or claimant's inspection or testingmay be used or introduced as evidence to support a spoliation defense by anypotential party in any subsequent litigation.
(c) If a builder deems a second inspection or testing reasonably necessary,and specifies the reasons therefor in writing within three days following the initialinspection, the builder may conduct a second inspection or testing. A secondinspection or testing shall be completed within 40 days of the initial inspectionor testing. All requirements concerning the initial inspection or testing shall alsoapply to the second inspection or testing.
(d) If the builder fails to inspect or test the property within the time specified,the claimant is released from the requirements of this section and may proceedwith the filing of an action. However, the standards set forth in the other chaptersof this title shall continue to apply to the action.
(e) If a builder intends to hold a subcontractor, design professional,individual product manufacturer, or material supplier, including an insurancecarrier, warranty company, or service company, responsible for its contribution tothe unmet standard, the builder shall provide notice to that person or entitysufficiently in advance to allow them to attend the initial, or if requested, secondinspection of any alleged unmet standard and to participate in the repair process.The claimant and his or her legal representative, if any, shall be advised in areasonable time prior to the inspection as to the identity of all persons or entitiesinvited to attend. This subdivision does not apply to the builder's insurancecompany. Except with respect to any claims involving a repair actually conductedunder this chapter, nothing in this subdivision shall be construed to relieve asubcontractor, design professional, individual product manufacturer, or materialsupplier of any liability under an action brought by a claimant.
Civil Code § 917 Written Offer To Repair
Within 30 days of the initial or, if requested, second inspection or testing, thebuilder may offer in writing to repair the violation. The offer to repair shall alsocompensate the homeowner for all applicable damages recoverable underSection 944, within the timeframe for the repair set forth in this chapter. Any suchoffer shall be accompanied by a detailed, specific, step-by-step statementidentifying the particular violation that is being repaired, explaining the nature,scope, and location of the repair, and setting a reasonable completion date for therepair. The offer shall also include the names, addresses, telephone numbers,and license numbers of the contractors whom the builder intends to have performthe repair. Those contractors shall be fully insured for, and shall be responsiblefor, all damages or injuries that they may cause to occur during the repair, andevidence of that insurance shall be provided to the homeowner upon request.
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Upon written request by the homeowner or his or her legal representative, andwithin the timeframes set forth in this chapter, the builder shall also provide anyavailable technical documentation, including, without limitation, plans andspecifications, pertaining to the claimed violation within the particular home ordevelopment tract. The offer shall also advise the homeowner in writing of his orher right to request up to three additional contractors from which to select to dothe repair pursuant to this chapter.
Civil Code § 918 Homeowner Response To Repair Offer
Upon receipt of the offer to repair, the homeowner shall have 30 days to authorizethe builder to proceed with the repair. The homeowner may alternatively request,at the homeowner's sole option and discretion, that the builder provide thenames, addresses, telephone numbers, and license numbers for up to threealternative contractors who are not owned or financially controlled by the builderand who regularly conduct business in the county where the structure is located.If the homeowner so elects, the builder is entitled to an additional noninvasiveinspection, to occur at a mutually convenient date and time within 20 days ofthe election, so as to permit the other proposed contractors to review the proposedsite of the repair. Within 35 days after the request of the homeowner foralternative contractors, the builder shall present the homeowner with a choice ofcontractors. Within 20 days after that presentation, the homeowner shallauthorize the builder or one of the alternative contractors to perform the repair.
Civil Code § 919 Mediation By Mutual Agreement; Unresolved Disputes;Repairs
The offer to repair shall also be accompanied by an offer to mediate the disputeif the homeowner so chooses. The mediation shall be limited to a four-hourmediation, except as otherwise mutually agreed before a nonaffiliated mediatorselected and paid for by the builder. At the homeowner's sole option, thehomeowner may agree to split the cost of the mediator, and if he or she does so,the mediator shall be selected jointly. The mediator shall have sufficientavailability such that the mediation occurs within 15 days after the request tomediate is received and occurs at a mutually convenient location within thecounty where the action is pending. If a builder has made an offer to repair aviolation, and the mediation has failed to resolve the dispute, the homeownershall allow the repair to be performed either by the builder, its contractor, or theselected contractor.
Civil Code § 920 Claimant Right To File Action
If the builder fails to make an offer to repair or otherwise strictly comply with thischapter within the times specified, the claimant is released from the requirementsof this chapter and may proceed with the filing of an action. If the contractorperforming the repair does not complete the repair in the time or mannerspecified, the claimant may file an action. If this occurs, the standards set forthin the other chapters of this part shall continue to apply to the action.
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Civil Code § 921 Repair Work; Time And Date Scheduled; CompletionDate
(a) In the event that a resolution under this chapter involves a repair by thebuilder, the builder shall make an appointment with the claimant, make allappropriate arrangements to effectuate a repair of the claimed unmet standards,and compensate the homeowner for all damages resulting therefrom free ofcharge to the claimant. The repair shall be scheduled through the claimant's legalrepresentative, if any, unless he or she is unavailable during the relevant timeperiods. The repair shall be commenced on a mutually convenient date within14 days of acceptance or, if an alternative contractor is selected by thehomeowner, within 14 days of the selection, or, if a mediation occurs, withinseven days of the mediation, or within five days after a permit is obtained if oneis required. The builder shall act with reasonable diligence in obtaining any suchpermit.
(b) The builder shall ensure that work done on the repairs is done with theutmost diligence, and that the repairs are completed as soon as reasonablypossible, subject to the nature of the repair or some unforeseen event not causedby the builder or the contractor performing the repair. Every effort shall be madeto complete the repair within 120 days.
Civil Code § 922 Electronic Recordation, Videotaping Or PhotographsDuring Repair Work
The builder shall, upon request, allow the repair to be observed and electronicallyrecorded, video recorded, or photographed by the claimant or his or her legalrepresentative. Nothing that occurs during the repair process may be used orintroduced as evidence to support a spoliation defense by any potential party inany subsequent litigation.
Civil Code § 923 Documentation Relating To Repair Work; Requests ForCopies
The builder shall provide the homeowner or his or her legal representative, uponrequest, with copies of all correspondence, photographs, and other materialspertaining or relating in any manner to the repairs.
Civil Code § 924 Partial Repair Of Claims; Statement Of Reasons
If the builder elects to repair some, but not all of, the claimed unmet standards,the builder shall, at the same time it makes its offer, set forth with particularity inwriting the reasons, and the support for those reasons, for not repairing all claimedunmet standards.
Civil Code § 925 Failure To Repair Within Time Allowed
If the builder fails to complete the repair within the time specified in the repairplan, the claimant is released from the requirements of this chapter and mayproceed with the filing of an action. If this occurs, the standards set forth in theother chapters of this title shall continue to apply to the action.
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Civil Code § 926 Release Or Waiver In Exchange For Repair Work
The builder may not obtain a release or waiver of any kind in exchange for therepair work mandated by this chapter. At the conclusion of the repair, theclaimant may proceed with filing an action for violation of the applicable standardor for a claim of inadequate repair, or both, including all applicable damagesavailable under Section 944.
Civil Code § 927 Claims For Violation Of Statutory Process Or InadequateRepair; Limitation Of Action; Extension Of Time
If the applicable statute of limitations has otherwise run during this process, thetime period for filing a complaint or other legal remedies for violation of anyprovision of this title, or for a claim of inadequate repair, is extended from thetime of the original claim by the claimant to 100 days after the repair iscompleted, whether or not the particular violation is the one being repaired. Ifthe builder fails to acknowledge the claim within the time specified, elects not togo through this statutory process, or fails to request an inspection within the timespecified, the time period for filing a complaint or other legal remedies forviolation of any provision of this title is extended from the time of the originalclaim by the claimant to 45 days after the time for responding to the notice ofclaim has expired. If the builder elects to attempt to enforce its ownnonadversarial procedure in lieu of the procedure set forth in this chapter, thetime period for filing a complaint or other legal remedies for violation of anyprovision of this part is extended from the time of the original claim by theclaimant to 100 days after either the completion of the builder's alternativenonadversarial procedure, or 100 days after the builder's alternativenonadversarial procedure is deemed unenforceable, whichever is later.
Civil Code § 928 Mediation After Repair Completion
If the builder has invoked this chapter and completed a repair, prior to filing anaction, if there has been no previous mediation between the parties, thehomeowner or his or her legal representative shall request mediation in writing.The mediation shall be limited to four hours, except as otherwise mutually agreedbefore a nonaffiliated mediator selected and paid for by the builder. At thehomeowner's sole option, the homeowner may agree to split the cost of themediator and if he or she does so, the mediator shall be selected jointly. Themediator shall have sufficient availability such that the mediation will occurwithin 15 days after the request for mediation is received and shall occur at amutually convenient location within the county where the action is pending. Inthe event that a mediation is used at this point, any applicable statutes oflimitations shall be tolled from the date of the request to mediate until the nextcourt day after the mediation is completed, or the 100-day period, whichever islater.
Civil Code § 929 Cash Offer In Lieu Of Repair; Release
(a) Nothing in this chapter prohibits the builder from making only a cashoffer and no repair. In this situation, the homeowner is free to accept the offer, orhe or she may reject the offer and proceed with the filing of an action. If the latteroccurs, the standards of the other chapters of this title shall continue to apply to
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the action.
(b) The builder may obtain a reasonable release in exchange for the cashpayment. The builder may negotiate the terms and conditions of any reasonablerelease in terms of scope and consideration in conjunction with a cash paymentunder this chapter.
Civil Code § 930 Failure To Act Within Mandated Timeframes And OtherRequirements; Right To File Action; Motion To Stay Proceedings
(a) The time periods and all other requirements in this chapter are to bestrictly construed, and, unless extended by the mutual agreement of the parties inaccordance with this chapter, shall govern the rights and obligations under thistitle. If a builder fails to act in accordance with this section within the timeframesmandated, unless extended by the mutual agreement of the parties as evidencedby a postclaim written confirmation by the affected homeowner demonstratingthat he or she has knowingly and voluntarily extended the statutory timeframe, theclaimant may proceed with filing an action. If this occurs, the standards of theother chapters of this title shall continue to apply to the action.
(b) If the claimant does not conform with the requirements of this chapter,the builder may bring a motion to stay any subsequent court action or otherproceeding until the requirements of this chapter have been satisfied. The court,in its discretion, may award the prevailing party on such a motion, his or herattorney's fees and costs in bringing or opposing the motion.
Civil Code § 931 Causes Of Action Or Damages Exceeding Scope OfActionable Defects; Applicability Of Standards
If a claim combines causes of action or damages not covered by this part,including, without limitation, personal injuries, class actions, other statutoryremedies, or fraud-based claims, the claimed unmet standards shall beadministered according to this part, although evidence of the property in itsunrepaired condition may be introduced to support the respective elements ofany such cause of action. As to any fraud-based claim, if the fact that the propertyhas been repaired under this chapter is deemed admissible, the trier of fact shallbe informed that the repair was not voluntarily accepted by the homeowner. Asto any class action claims that address solely the incorporation of a defectivecomponent into a residence, the named and unnamed class members need notcomply with this chapter.
Civil Code § 932 Subsequently Discovered Claims Of Unmet Standards
Subsequently discovered claims of unmet standards shall be administeredseparately under this chapter, unless otherwise agreed to by the parties. However,in the case of a detached single family residence, in the same home, if thesubsequently discovered claim is for a violation of the same standard as thatwhich has already been initiated by the same claimant and the subject of acurrently pending action, the claimant need not reinitiate the process as to thesame standard. In the case of an attached project, if the subsequently discoveredclaim is for a violation of the same standard for a connected component systemin the same building as has already been initiated by the same claimant, and the
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subject of a currently pending action, the claimant need not reinitiate this processas to that standard.
Civil Code § 933 Evidence Of Repair Efforts
If any enforcement of these standards is commenced, the fact that a repair effortwas made may be introduced to the trier of fact. However, the claimant may usethe condition of the property prior to the repair as the basis for contending thatthe repair work was inappropriate, inadequate, or incomplete, or that the violationstill exists. The claimant need not show that the repair work resulted in furtherdamage nor that damage has continued to occur as a result of the violation.
Civil Code § 934 Evidence Of Conduct During Enforcement Process
Evidence of both parties' conduct during this process may be introduced during asubsequent enforcement action, if any, with the exception of any mediation. Anyrepair efforts undertaken by the builder, shall not be considered settlementcommunications or offers of settlement and are not inadmissible in evidence onsuch a basis.
Civil Code § 935 Construction Of Chapter With Similar Provisions In TheCivil Code
To the extent that provisions of this chapter are enforced and those provisions aresubstantially similar to provisions in Section 1375 of the Civil Code, but an actionis subsequently commenced under Section 1375 of the Civil Code, the partiesare excused from performing the substantially similar requirements under Section1375 of the Civil Code.
Civil Code § 936 Parties Subject To Application Of Title; Determination;Defenses Available; Joint And Several Liability; Strict Liability
Each and every provision of the other chapters of this title apply to generalcontractors, subcontractors, material suppliers, individual product manufacturers,and design professionals to the extent that the general contractors, subcontractors,material suppliers, individual product manufacturers, and design professionalscaused, in whole or in part, a violation of a particular standard as the result of anegligent act or omission or a breach of contract. In addition to the affirmativedefenses set forth in Section 945.5, a general contractor, subcontractor, materialsupplier, design professional, individual product manufacturer, or other entity mayalso offer common law and contractual defenses as applicable to any claimedviolation of a standard. All actions by a claimant or builder to enforce an expresscontract, or any provision thereof, against a general contractor, subcontractor,material supplier, individual product manufacturer, or design professional ispreserved.
Nothing in this title modifies the law pertaining to joint and several liability forbuilders, general contractors, subcontractors, material suppliers, individualproduct manufacturer, and design professionals that contribute to any specificviolation of this title. However, the negligence standard in this section does notapply to any general contractor, subcontractor, material supplier, individualproduct manufacturer, or design professional with respect to claims for which strictliability would apply.
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Civil Code § 937 Construction With Professional Negligence Actions
Nothing in this title shall be interpreted toeliminateor abrogate the requirement to complywith Section 411.35 of the Code of Civil Procedure or to affect the liability of designprofessionals, including architects and architectural firms, for claims and damages notcovered by this title.
Civil Code § 938 Application Of Title 7 To Certain Residences
This title applies only to new residential units where the purchase agreement withthe buyer was signed by the seller on or after January 1, 2003.
Civil Code § 941 Time Limit For Bringing Action
(a) Except as specifically set forth in this title, no action may be brought torecover under this title more than 10 years after substantial completion of theimprovement but not later than the date of recordation of a valid notice ofcompletion.
(b) As used in this section, "action" includes an action for indemnity broughtagainst a person arising out of that person's performance or furnishing of servicesor materials referred to in this title, except that a cross-complaint for indemnitymay be filed pursuant to subdivision (b) of Section 428.10 of the Code of CivilProcedure in an action which has been brought within the time period set forthin subdivision (a).
(c) The limitation prescribed by this section may not be asserted by way ofdefense by any person in actual possession or the control, as owner, tenant orotherwise, of such an improvement, at the time any deficiency in theimprovement constitutes the proximate cause for which it is proposed to make aclaim or bring an action.
(d) Sections 337.15 and 337.1 of the Code of Civil Procedure do not applyto actions under this title.
(e) Existing statutory and decisional law regarding tolling of the statute oflimitations shall apply to the time periods for filing an action or making a claimunder this title, except that repairs made pursuant to Chapter 4 (commencing withSection 910), with the exception of the tolling provision contained in Section 927,do not extend the period for filing an action, or restart the time limitationscontained in subdivision (a) or (b) of Section 7091 of the Business and ProfessionsCode. If a builder arranges for a contractor to perform a repair pursuant to Chapter4 (commencing with Section 910), as to the builder the time period for calculatingthe statute of limitation in subdivision (a) or (b) of Section 7091 of the Businessand Professions Code shall pertain to the substantial completion of the originalconstruction and not to the date of repairs under this title. The time limitationsestablished by this title do not apply to any action by a claimant for a contract orexpress contractual provision. Causes of action and damages to which this chapterdoes not apply are not limited by this section.
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Civil Code § 942 Sufficiency Of Claim For Violation Of Chapter 2Standards
In order to make a claim for violation of the standards set forth in Chapter 2(commencing with Section 896), a homeowner need only demonstrate, inaccordance with the applicable evidentiary standard, that the home does not meetthe applicable standard, subject to the affirmative defenses set forth in Section945.5. No further showing of causation or damages is required to meet the burdenof proof regarding a violation of a standard set forth in Chapter 2 (commencingwith Section 896), provided that the violation arises out of, pertains to, or is relatedto, the original construction.
Civil Code § 943 Exclusiveness Of Title; Exceptions
(a) Except as provided in this title, no other cause of action for a claimcovered by this title or for damages recoverable under Section 944 is allowed. Inaddition to the rights under this title, this title does not apply to any action by aclaimant to enforce a contract or express contractual provision, or any action forfraud, personal injury, or violation of a statute. Damages awarded for the itemsset forth in Section 944 in such other cause of action shall be reduced by theamounts recovered pursuant to Section 944 for violation of the standards set forthin this title.
(b) As to any claims involving a detached single-family home, thehomeowner's right to the reasonable value of repairing any nonconformity islimited to the repair costs, or the diminution in current value of the home causedby the nonconformity, whichever is less, subject to the personal use exception asdeveloped under common law.
Civil Code § 944 Damages; Determination Of Amount
If a claim for damages is made under this title, the homeowner is only entitled todamages for the reasonable value of repairing any violation of the standards setforth in this title, the reasonable cost of repairing any damages caused by therepair efforts, the reasonable cost of repairing and rectifying any damages resultingfrom the failure of the home to meet the standards, the reasonable cost ofremoving and replacing any improper repair by the builder, reasonable relocationand storage expenses, lost business income if the home was used as a principalplace of a business licensed to be operated from the home, reasonableinvestigative costs for each established violation, and all other costs or feesrecoverable by contract or statute.
Civil Code § 945 Binding Effect Upon Original Purchasers And TheirSuccessors-In-Interest
The provisions, standards, rights, and obligations set forth in this title are bindingupon all original purchasers and their successors-in-interest. For purposes of thistitle, associations and others having the rights set forth in Sections 1368.3 and1368.4 shall be considered to be original purchasers and shall have standing toenforce the provisions, standards, rights, and obligations set forth in this title.
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Civil Code § 945.5 Affirmative Defenses
A builder, general contractor, subcontractor, material supplier, individual productmanufacturer, or design professional, under the principles of comparative faultpertaining to affirmative defenses, may be excused, in whole or in part, from anyobligation, damage, loss, or liability if the builder, general contractor,subcontractor, material supplier, individual product manufacturer, or designprofessional, can demonstrate any of the following affirmative defenses inresponse to a claimed violation:
(a) To the extent it is caused by an unforeseen act of nature which causedthe structure not to meet the standard. For purposes of this section an "unforeseenact of nature" means a weather condition, earthquake, or manmade event suchas war, terrorism, or vandalism, in excess of the design criteria expressed by theapplicable building codes, regulations, and ordinances in effect at the time oforiginal construction.
(b) To the extent it is caused by a homeowner's unreasonable failure tominimize or prevent those damages in a timely manner, including the failure ofthe homeowner to allow reasonable and timely access for inspections and repairsunder this title. This includes the failure to give timely notice to the builder afterdiscovery of a violation, but does not include damages due to the untimely orinadequate response of a builder to the homeowner's claim.
(c) To the extent it is caused by the homeowner or his or her agent,employee, general contractor, subcontractor, independent contractor, or consultantby virtue of their failure to follow the builder's or manufacturer's recommendations,or commonly accepted homeowner maintenance obligations. In order to relyupon this defense as it relates to a builder's recommended maintenance schedule,the builder shall show that the homeowner had written notice of these schedulesand recommendations and that the recommendations and schedules werereasonable at the time they were issued.
(d) To the extent it is caused by the homeowner or his or her agent's or anindependent third party's alterations, ordinary wear and tear, misuse, abuse, orneglect, or by the structure's use for something other than its intended purpose.
(e) To the extent that the time period for filing actions bars the claimedviolation.
(f) As to a particular violation for which the builder has obtained a validrelease.
(g) To the extent that the builder's repair was successful in correcting theparticular violation of the applicable standard.
(h) As to any causes of action to which this statute does not apply, allapplicable affirmative defenses are preserved.
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C. CERTIFIED COMMON INTEREST DEVELOPMENT MANAGER
Business & Professions Code § 11500Definitions
For purposes of this chapter, the following definitions apply:
(a) "Common interest development" means a residential developmentidentified in subdivision (c) of Section 1351 of the Civil Code.
(b) "Association" has the same meaning as defined in subdivision (a) ofSection 1351 of the Civil Code.
(c) "Financial services" means acts performed or offered to be performed, forcompensation, for an association, including, but not limited to, the preparation ofinternal unaudited financial statements, internal accounting and bookkeepingfunctions, billing of assessments, and related services.
(d) "Management services" means acts performed or offered to be performedin an advisory capacity for an association including, but not limited to, thefollowing:
(1) Administering or supervising the collection, reporting, andarchiving of the financial or common area assets of an association orcommon interest development, at the direction of the association's board ofdirectors.
(2) Implementing resolutions and directives of the board of directors ofthe association elected to oversee the operation of a common interestdevelopment.
(3) Implementing provisions of governing documents, as defined inSection 1351 of the Civil Code, that govern the operation of the commoninterest development.
(4) Administering association contracts, including insurance contracts,within the scope of the association's duties or with other common interestdevelopment managers, vendors, contractors, and other third-party providersof goods and services to an association or common interest development.
(e) "Professional association for common interest development managers"means an organization that meets all of the following:
(1) Has at least 200 members or certificants who are common interestdevelopment managers in California.
(2) Has been in existence for at least five years.
(3) Operates pursuant to Section 501(c) of the Internal Revenue Code.
(4) Certifies that a common interest development manager has met thecriteria set forth in Section 11502 without requiring membership in theassociation.
(5) Requires adherence to a code of professional ethics and standardsof practice for certified common interest development managers.
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Business & Professions Code § 11501"Common Interest Development Manager" Defined; ConstructionWith Other Statutory And Contractual Obligations
(a) "Common interest development manager" means an individual who forcompensation, or in expectation of compensation, provides or contracts toprovide management or financial services, or represents himself or herself to actin the capacity of providing management or financial services to an association.Notwithstanding any other provision of law, an individual may not be required toobtain a real estate or broker's license in order to perform the services of acommon interest development manager to an association.
(b) "Common interest development manager" also means any of thefollowing:
(1) An individual who is a partner in a partnership, a shareholder orofficer in a corporation, or who, in any other business entity acts in a capacityto advise, supervise, and direct the activity of a registrant or provisionalregistrant, or who acts as a principal on behalf of a company that providesthe services of a common interest development manager.
(2) An individual operating under a fictitious business name whoprovides the services of a common interest development manager. Thissection may not be construed to require an association to hire forcompensation a common interest development manager, unless required todo so by its governing documents. Nothing in this part shall be construed tosupersede any law that requires a license, permit, or any other form ofregistration, to provide management or financial services. Nothing in thissection shall preclude a licensee of the California Board of Accountancy fromproviding financial services to an association within the scope of his or herlicense in addition to the preparation of reviewed and audited financialstatements and the preparation of the association's tax returns.
Business & Professions Code § 11502Requirements In Order To Be Called A Certified Common InterestDevelopment Manager
In order to be called a "certified common interest development manager," a personshall meet one of the following requirements:
(a) Prior to July 1, 2003, has passed a knowledge, skills, and aptitudeexamination as specified in Section 11502.5 or has been granted a certificationor a designation by a professional association for common interest developmentmanagers, and who has, within five years prior to July 1, 2004, receivedinstruction in California law pursuant to paragraph (1) of subdivision (b).
(b) On or after July 1, 2003, has successfully completed an educationalcurriculum that shall be no less than a combined 30 hours in courseworkdescribed in this subdivision and passed an examination or examinations that testcompetence in common interest development management in the followingareas:
(1) The law that relates to the management of common interestdevelopments, including, but not limited to, the following courses of study:
(A) Topics covered by the Davis-Stirling Common InterestDevelopment Act, contained in Title 6 (commencing with Section 1350)of Part 4 of Division 2 of the Civil Code, including, but not limited to,the types of California common interest developments, disclosurerequirements pertaining to common interest developments, meetingrequirements, financial reporting requirements, and member access toassociation records.
(B) Personnel issues, including, but not limited to, general mattersrelated to independent contractor or employee status, the laws onharassment, the Unruh Civil Rights Act, the California Fair Employmentand Housing Act, and the Americans with Disabilities Act.
(C) Risk management, including, but not limited to, insurancecoverage, maintenance, operations and emergency preparedness.
(D) Property protection for associations, including, but not limitedto, pertinent matters relating to environmental hazards such as asbestos,radon gas, and lead-based paint, the Vehicle Code, local and municipalregulations, family day care facilities, energy conservation, FederalCommunications Commission rules and regulations, and solar energysystems.
(E) Business affairs of associations, including, but not limited to,necessary compliance with federal, state, and local law.
(F) Basic understanding of governing documents, codes, andregulations relating to the activities and affairs of associations andcommon interest developments.
(2) Instruction in general management that is related to the managerialand business skills needed for management of a common interestdevelopment, including, but not limited to, the following:
(A) Finance issues, including, but not limited to, budgetpreparation; management; administration or supervision of thecollection, reporting, and archiving of the financial or common areaassets of an association or common interest development; bankruptcylaws; and assessment collection.
(B) Contract negotiation and administration.
(C) Supervision of employees and staff.
(D) Management of maintenance programs.
(E) Management and administration of rules, regulations, andparliamentary procedures.
(F) Management and administration of architectural standards.
(G) Management and administration of the association’srecreational programs and facilities.
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(H) Management and administration of owner and residentcommunications.
(I) Training and strategic planning for the association's board ofdirectors and its committees.
(J) Implementation of association policies and procedures.
(K) Ethics, professional conduct, and standards of practice forcommon interest development managers.
(L) Current issues relating to common interest developments.
(M) Conflict avoidance and resolution mechanisms.
Business & Professions Code § 11502.5Standards And Requirements For Development And Administration Of TheCourse Related Competency Examination Or Examinations And EducationProvided To A Certified Common Interest Development Manager
The course related competency examination or examinations and educationprovided to a certified common interest development manager pursuant toSection 11502 by any professional association for common interest developmentmanagers, or any postsecondary educational institution, shall be developed andadministered in a manner consistent with standards and requirements set forthby the American Educational Research Association's "Standards for Educationaland Psychological Testing," and the Equal Employment Opportunity Commission's"Uniform Guidelines for Employee Selection Procedures," the Unruh Civil RightsAct, the California Fair Employment and Housing Act, and the Americans withDisabilities Act of 1990, or the course or courses that have been approved as acontinuing education course or an equivalent course of study pursuant to theregulations of the Real Estate Commissioner.
Business & Professions Code § 11503Management Firms
A "certified common interest development manager" does not include a commoninterest development management firm.
Business & Professions Code § 11504Annual Report To Board Of Directors; Report Contents
On or before September 1, 2003, and annually thereafter, a person who eitherprovides or contemplates providing the services of a common interestdevelopment manager to an association shall disclose to the board of directors ofthe association the following information:
(a) Whether or not the common interest development manager has met therequirements of Section 11502 so he or she may be called a certified commoninterest development manager.
(b) The name, address, and telephone number of the professionalassociation that certified the common interest development manager, the date themanager was certified, and the status of the certification.
(c) The location of his or her primary office.
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(d) Prior to entering into or renewing a contract with an association, thecommon interest development manager shall disclose to the board of directors ofthe association or common interest development whether the fidelity insuranceof the common interest development manager or his or her employer covers thecurrent year’s operating and reserve funds of the association. This requirementshall not be construed to compel an association to require a common interestdevelopment manager to obtain or maintain fidelity insurance.
(e) Whether the common interest development manager possesses an activereal estate license.
This section may not preclude a common interest development manager fromdisclosing information as required in Section 1363.1 of the Civil Code.
Business & Professions Code § 11505Managers, Management Companies And Parent Companies; ProhibitedActivities
It is an unfair business practice for a common interest development manager, acompany that employs the common interest development manager, or a companythat is controlled by a company that also has a financial interest in a companyemploying that manager, to do any of the following:
(a) On or after July 1, 2003, to hold oneself out or use the title of "certifiedcommon interest development manager" or any other term that implies or suggeststhat the person is certified as a common interest development manager withoutmeeting the requirements of Section 11502.
(b) To state or advertise that he or she is certified, registered, or licensed bya governmental agency to perform the functions of a certified common interestdevelopment manager.
(c) To state or advertise a registration or license number, unless the licenseor registration is specified by a statute, regulation, or ordinance.
(d) To fail to comply with any item to be disclosed in Section 11504 of thiscode, or Section 1363.1 of the Civil Code.
Business & Professions Code § 11506Duration Of Part
This part shall be subject to the review required by Division 1.2 (commencingwith Section 473). This part shall remain in effect only until January 1, 2015, andas of that date is repealed, unless a later enacted statute, that is enacted beforeJanuary 1, 2015, deletes or extends that date.
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FIVEDIRECTOR’S DUTIES, MEETINGS, VOTING AND OTHER
CORPORATE ACTIVITIES
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CALIFORNIA CORPORATIONS CODE
A. CORPORATIONS
Corp. Code § 20 Electronic Transmission By The Corporation
"Electronic transmission by the corporation" means a communication (a) deliveredby (1) facsimile telecommunication or electronic mail when directed to thefacsimile number or electronic mail address, respectively, for that recipient onrecord with the corporation, (2) posting on an electronic message board ornetwork which the corporation has designated for those communications,together with a separate notice to the recipient of the posting, which transmissionshall be validly delivered upon the later of the posting or delivery of the separatenotice thereof, or (3) other means of electronic communication, (b) to a recipientwho has provided an unrevoked consent to the use of those means of transmissionfor communications under or pursuant to this code, and (c) that creates a recordthat is capable of retention, retrieval, and review, and that may thereafter berendered into clearly legible tangible form. However, an electronic transmissionunder this code by a corporation to an individual shareholder or member of thecorporation who is a natural person, and if an officer or director of thecorporation, only if communicated to the recipient in that person's capacity as ashareholder or member, is not authorized unless, in addition to satisfying therequirements of this section, the consent to the transmission has been precededby or includes a clear written statement to the recipient as to (a) any right of therecipient to have the record provided or made available on paper or innonelectronic form, (b) whether the consent applies only to that transmission, tospecified categories of communications, or to all communications from thecorporation, and (c) the procedures the recipient must use to withdraw consent.
Corp. Code § 21 Electronic Transmission To Corporation
"Electronic transmission to the corporation" means a communication (a) deliveredby (1) facsimile telecommunication or electronic mail when directed to thefacsimile number or electronic mail address, respectively, which the corporationhas provided from time to time to shareholders or members and directors forsending communications to the corporation, (2) posting on an electronic messageboard or network which the corporation has designated for thosecommunications, and which transmission shall be validly delivered upon theposting, or (3) other means of electronic communication, (b) as to which thecorporation has placed in effect reasonable measures to verify that the sender isthe shareholder or member (in person or by proxy) or director purporting to sendthe transmission, and (c) that creates a record that is capable of retention, retrieval,and review, and that may thereafter be rendered into clearly legible tangible form.
All references in Part 3 (commencing with Section 7110) to the voting ofmemberships include the voting of securities given voting rights in the articlespursuant to paragraph (3) of subdivision (a) of Section 7132.
Corp. Code § 5008.6 Nonprofit Corporations; Failure To File Statements;Suspension Of Powers, Rights And Privileges; Notices; Relief.
(a) A corporation that (1) fails to file a statement pursuant to Section 6210,8210, or 9660 for an applicable filing period, (2) has not filed a statement pursuantto Section 6210, 8210, or 9660 during the preceding 24 months, and (3) wascertified for penalty pursuant to Section 6810, 8810, or 9690 for the same filingperiod, shall be subject to suspension pursuant to this section rather than topenalty under Section 6810 or 8810.
(b) When subdivision (a) is applicable, the Secretary of State shall providea notice to the corporation informing the corporation that its corporate powers,rights, and privileges will be suspended 60 days from the date of the notice if thecorporation does not file the statement required by Section 6210, 8210, or 9660.
(c) If the 60-day period expires without the delinquent corporation filingthe required statement, the Secretary of State shall notify the Franchise Tax Boardof the suspension, and provide a notice of the suspension to the corporation.Thereupon, except for the purpose of filing an application for exempt status oramending the articles of incorporation as necessary either to perfect thatapplication or to set forth a new name, the corporate powers, rights, and privilegesof the corporation are suspended.
(d) A statement required by Section 6210, 8210, or 9660 may be filed,notwithstanding suspension of the corporate powers, rights, and privileges underthis section or under provisions of the Revenue and Taxation Code. Upon thefiling of a statement under Section 6210, 8210, or 9660, by a corporation that hassuffered suspension under this section, the Secretary of State shall certify that factto the Franchise Tax Board and the corporation may thereupon be relieved fromsuspension, unless the corporation is held in suspension by the Franchise TaxBoard because of Section 23301, 23301.5, or 23775 of the Revenue and TaxationCode.
Corp. Code § 5010 Majority; Determination Of Quorum.
If the articles or bylaws provide for more or less than one vote for any membershipon any matter, the references in Sections 5033 and 5034 to a majority or otherproportion of memberships mean, as to those matters, a majority or otherproportion of the votes entitled to be cast. Whenever in Part 2 (commencing withSection 5110) or Part 3 (commencing with Section 7110) members are disqualifiedfrom voting on any matter, their memberships shall not be counted for thedetermination of a quorum at any meeting to act upon, or the required vote toapprove action upon, that matter under any other provision of Part 2(commencing with Section 5110) or Part 3 (commencing with Section 7110) or thearticles or bylaws.
Corp. Code § 5015 Notice.
Any reference in this part, Part 2 (commencing with Section 5110), Part 3(commencing with Section 7110), Part 4 (commencing with Section 9110), or Part5 (commencing with Section 9910) to the time a notice is given or sent means,unless otherwise expressly provided, (a) the time a written notice by mail is
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deposited in the United States mails, postage prepaid; or (b) the time any otherwritten notice, including facsimile, telegram, or other electronic mail message, ispersonally delivered to the recipient or is delivered to a common carrier fortransmission, or actually transmitted by the person giving the notice by electronicmeans, to the recipient; or (c) the time any oral notice is communicated, in personor by telephone, including a voice messaging system or other system ortechnology designed to record and communicate messages, or wireless, to therecipient, including the recipient's designated voice mailbox or address on sucha system, or to a person at the office of the recipient who the person giving thenotice has reason to believe will promptly communicate it to the recipient.
Corp. Code § 5016 Notices Or Reports Mailed Or Delivered As Part OfNewsletter Or Magazine.
A notice or report mailed or delivered as part of a newsletter, magazine or otherorgan regularly sent to members shall constitute written notice or report pursuantto this division when addressed and mailed or delivered to the member, or in thecase of members who are residents of the same household and who have thesame address on the books of the corporation, when addressed or mailed ordelivered to one of such members, at the address appearing on the books of thecorporation.
Corp. Code § 5033 Approval By Or Approval Of A Majority Of AllMembers.
"Approval by (or approval of) a majority of all members" means approval by anaffirmative vote (or written ballot in conformity with Section 5513, Section 7513,or Section 9413) of a majority of the votes entitled to be cast. Such approval shallinclude the affirmative vote of a majority of the outstanding memberships of eachclass, unit, or grouping of members entitled, by any provision of the articles orbylaws or of Part 2, Part 3, Part 4 or Part 5 to vote as a class, unit, or grouping ofmembers on the subject matter being voted upon and shall also include theaffirmative vote of such greater proportion, including all of the votes of thememberships of any class, unit, or grouping of members if such greater proportionis required by the bylaws (subdivision (e) of Section 5151, subdivision (e) ofSection 7151, or subdivision (e) of Section 9151) or Part 2, Part 3, Part 4 or Part5.
Corp. Code § 5034 Approval By Or Approval Of The Members.
"Approval by (or approval of) the members" means approved or ratified by theaffirmative vote of a majority of the votes represented and voting at a duly heldmeeting at which a quorum is present (which affirmative votes also constitute amajority of the required quorum) or written ballot in conformity with Section5513, 7513, or 9413 or by the affirmative vote or written ballot of such greaterproportion, including all of the votes of the memberships of any class, unit, orgrouping of members as may be provided in the bylaws (subdivision (e) of Section5151, subdivision (e) of Section 7151, or subdivision (e) of Section 9151) or in Part2, Part 3, Part 4 or Part 5 for all or any specified member action.
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B. NONPROFIT MUTUAL BENEFIT CORPORATIONS
Corp. Code § 7110 Citation Of Part.
This part shall be known and may be cited as the Nonprofit Mutual BenefitCorporation Law.
Corp. Code § 7111 Corporate Purposes; Exclusion Of Corporations ForCertain Purposes.
Subject to any other provision of law of this state applying to the particular classof corporation or line of activity, a corporation may be formed under this part forany lawful purpose; provided that a corporation all of the assets of which areirrevocably dedicated to charitable, religious, or public purposes and which as amatter of law or according to its articles or bylaws must, upon dissolution,distribute its assets to a person or persons carrying on a charitable, religious, orpublic purpose or purposes may not be formed under this part.
Corp. Code § 7120 Number Of Incorporators; Execution And Filing Articles;Signature And Acknowledgment; Corporate Existence.
(a) One or more persons may form a corporation under this part byexecuting and filing articles of incorporation.
(b) If initial directors are named in the articles, each director named in thearticles shall sign and acknowledge the articles; if initial directors are not namedin the articles, the articles shall be signed by one or more persons who thereuponare the incorporators of the corporation.
(c) The corporate existence begins upon the filing of the articles andcontinues perpetually, unless otherwise expressly provided by law or in thearticles.
Corp. Code § 7121 Change Of Status Of Association To Corporation;Unauthorized Incorporation; Protection Of Association's Name.
(a) In the case of an existing unincorporated association, the associationmay change its status to that of a corporation upon a proper authorization forsuch by the association in accordance with its rules and procedures.
(b) In addition to the matters required to be set forth in the articles pursuantto Section 7130, the articles in the case of an incorporation authorized bysubdivision (a) shall set forth that an existing unincorporated association, statingits name, is being incorporated by the filing of the articles.
(c) The articles filed pursuant to this section shall be accompanied by averified statement of any two officers or governing board members of theassociation stating that the incorporation of the association by means of thearticles to which the verified statement is attached has been approved by theassociation in accordance with its rules and procedures.
(d) Upon the change of status of an unincorporated association to acorporation pursuant to subdivision (a), the property of the association becomesthe property of the corporation and the members of the association who had anyvoting rights of the type referred to in Section 5056 become members of thecorporation.
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(e) The filing for record in the office of the county recorder of any countyin this state in which any of the real property of the association is located, of acopy of the articles of incorporation filed pursuant to this section, certified by theSecretary of State, shall evidence record ownership in the corporation of allinterests of the association in and to the real property located in that county.
(f) All rights of creditors and all liens upon the property of the associationshall be preserved unimpaired. Any action or proceeding pending by or againstthe unincorporated association may be prosecuted to judgment, which shall bindthe corporation, or the corporation may be proceeded against or substituted in itsplace.
(g) If a corporation is organized by a person who is or was an officer,director or member of an unincorporated association and such corporation is notorganized pursuant to subdivision (a), the unincorporated association maycontinue to use its name and the corporation may not use a name which is thesame as or similar to the name of the unincorporated association.
Corp. Code § 7122 Name.
(a) The Secretary of State shall not file articles setting forth a name in which"bank," "trust," "trustee" or related words appear, unless the certificate of approvalof the Commissioner of Financial Institutions is attached thereto.
(b) The Secretary of State shall not file articles pursuant to this part settingforth a name which may create the impression that the purpose of the corporationis public, charitable or religious or that it is a charitable foundation.
(c) The Secretary of State shall not file articles which set forth a name whichis likely to mislead the public or which is the same as, or resembles so closely asto tend to deceive, the name of a domestic corporation, the name of a foreigncorporation which is authorized to transact intrastate business or has registered itsname pursuant to Section 2101, a name which a foreign corporation has assumedunder subdivision (b) of Section 2106, a name which will become the recordname of a domestic or foreign corporation upon the effective date of a filedcorporate instrument where there is a delayed effective date pursuant tosubdivision (c) of Section 110, or subdivision (c) of Section 5008, or a name whichis under reservation pursuant to this title, except that a corporation may adopt aname that is substantially the same as an existing domestic or foreign corporationwhich is authorized to transact intrastate business or has registered its namepursuant to Section 2101, upon proof of consent by such corporation and afinding by the Secretary of State that under the circumstances the public is notlikely to be misled. The use by a corporation of a name in violation of this sectionmay be enjoined notwithstanding the filing of its articles by the Secretary of State.
(d) Any applicant may, upon payment of the fee prescribed therefor in theGovernment Code, obtain from the Secretary of State a certificate of reservationof any name not prohibited by subdivision (c), and upon the issuance of thecertificate the name stated therein shall be reserved for a period of 60 days. TheSecretary of State shall not, however, issue certificates reserving the same namefor two or more consecutive 60-day periods to the same applicant or for the useor benefit of the same person; nor shall consecutive reservations be made by or
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for the use or benefit of the same person of names so similar as to fall within theprohibitions of subdivision (c).
Corp. Code § 7122.3 Prohibited Corporate Name
The Secretary of State shall not file articles for a corporation the name of whichwould fall within the prohibitions of Section 18104 of the Financial Code. Thissection shall not apply to articles filed for a corporation organized in accordancewith Section 18100 of the Financial Code.
Corp. Code § 7130 Required Provisions.
The articles of incorporation of a corporation formed under this part shall set forththe following:
(a) The name of the corporation.
(b) (1) Except as provided in paragraph (2), the following statement: "Thiscorporation is a nonprofit mutual benefit corporation organized under theNonprofit Mutual Benefit Corporation Law. The purpose of this corporationis to engage in any lawful act or activity for which a corporation may beorganized under such law."
(2) In the case of a corporation formed under this part that is subject tothe California Credit Union Law (Chapter 1 (commencing with Section14000) of Division 5 of the Financial Code), the articles shall set forth astatement of purpose that is prescribed in the applicable provisions of theCalifornia Credit Union Law.
(3) The articles may include a further description of the corporation'spurposes.
(c) The name and street address in this state of the corporation's initial agentfor service of process in accordance with subdivision (b) of Section 8210.
(d) The initial street address of the corporation.
(e) The initial mailing address of the corporation, if different from the initialstreet address.
Corp. Code § 7131 Optional Provisions; Limitation On Purposes AndPowers.
The articles of incorporation may set forth a further statement limiting thepurposes or powers of the corporation.
Corp. Code § 7132 Optional Provisions Generally; Enforceability OfAgreements.
(a) The articles of incorporation may set forth any or all of the followingprovisions, which shall not be effective unless expressly provided in the articles:
(1) A provision limiting the duration of the corporation's existence toa specified date.
(2) A provision conferring upon the holders of any evidences ofindebtedness, issued or to be issued by a corporation the right to vote in theelection of directors and on any other matters on which members may vote
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under this part even if the corporation does not have members.
(3) A provision conferring upon members the right to determine theconsideration for which memberships shall be issued.
(4) In the case of a subordinate corporation instituted or created underthe authority of a head organization, a provision setting forth either or bothof the following:
(A) That the subordinate corporation shall dissolve whenever itscharter is surrendered to, taken away by, or revoked by the headorganization granting it.
(B) That in the event of its dissolution pursuant to an articleprovision allowed by subparagraph (A) or in the event of its dissolutionfor any reason, any assets of the corporation after compliance with theapplicable provisions of Chapters 15 (commencing with Section 8510),16 (commencing with Section 8610), and 17 (commencing with Section8710) shall be distributed to the head organization.
(b) Nothing contained in subdivision (a) shall affect the enforceability, asbetween the parties thereto, of any lawful agreement not otherwise contrary topublic policy.
(c) The articles of incorporation may set forth any or all of the followingprovisions:
(1) The names and addresses of the persons appointed to act as initialdirectors.
(2) Provisions concerning the transfer of memberships, in accordancewith Section 7320.
(3) The classes of members, if any, and if there are two or more classes,the rights, privileges, preferences, restrictions and conditions attaching toeach class.
(4) A provision which would allow any member to have more or lessthan one vote in any election or other matter presented to the members fora vote.
(5) A provision that requires an amendment to the articles, as providedin subdivision (a) of Section 7812, or to the bylaws, and any amendment orrepeal of that amendment, to be approved in writing by a specified personor persons other than the board or the members. However, this approvalrequirement, unless the articles specify otherwise, shall not apply if any of thefollowing circumstances exist:
(A) The specified person or persons have died or ceased to exist.
(B) If the right of the specified person or persons to approve is inthe capacity of an officer, trustee, or other status and the office, trust, orstatus has ceased to exist.
(C) If the corporation has a specific proposal for amendment orrepeal, and the corporation has provided written notice of that proposal,
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including a copy of the proposal, to the specified person or persons atthe most recent address for each of them, based on the corporation'srecords, and the corporation has not received written approval ornonapproval within the period specified in the notice, which shall notbe less than 10 nor more than 30 days commencing at least 20 daysafter the notice has been provided.
(6) Any other provision, not in conflict with the law, for themanagement of the activities and for the conduct of the affairs of thecorporation, including any provision which is required or permitted by thispart to be stated in the bylaws.
Corp. Code § 7133 Certified Copy As Evidence.
For all purposes other than an action in the nature of quo warranto, a copy of thearticles of a corporation duly certified by the Secretary of State is conclusiveevidence of the formation of the corporation and prima facie evidence of itscorporate existence.
Corp. Code § 7134 Incorporators; Powers Until Election Of Directors.
If initial directors have not been named in the articles, the incorporator orincorporators, until the directors are elected, may do whatever is necessary andproper to perfect the organization of the corporation, including the adoption andamendment of bylaws of the corporation and the election of directors and officers.
Corp. Code § 7135 Power Of Court.
Nothing in Section 7130 or 7131 or in any provision of the articles of a mutualbenefit corporation shall be construed to limit the equitable power of a court toimpress a charitable trust upon any or all of the assets of a mutual benefitcorporation or otherwise treat it as a public benefit corporation.
Corp. Code § 7140 Powers.
Subject to any limitations contained in the articles or bylaws and to compliancewith other provisions of this division and any other applicable laws, a corporation,in carrying out its activities, shall have all of the powers of a natural person,including, without limitation, the power to:
(a) Adopt, use, and at will alter a corporate seal, but failure to affix a sealdoes not affect the validity of any instrument.
(b) Adopt, amend, and repeal bylaws.
(c) Qualify to conduct its activities in any other state, territory, dependencyor foreign country.
(d) Issue, purchase, redeem, receive, take or otherwise acquire, own, sell,lend, exchange, transfer or otherwise dispose of, pledge, use and otherwise dealin and with its own memberships, bonds, debentures, notes and debt securities.
(e) Pay pensions, and establish and carry out pension, deferredcompensation, saving, thrift and other retirement, incentive and benefit plans,trusts and provisions for any or all of its directors, officers, employees, and personsproviding services to it or any of its subsidiary or related or associated
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corporations, and to indemnify and purchase and maintain insurance on behalfof any fiduciary of such plans, trusts, or provisions.
(f) Issue certificates evidencing membership in accordance with theprovisions of Section 7313 and issue identity cards.
(g) Levy dues, assessments, and admission and transfer fees.
(h) Make donations for the public welfare or for community funds, hospital,charitable, educational, scientific, civic, religious or similar purposes.
(i) Assume obligations, enter into contracts, including contracts ofguarantee or suretyship, incur liabilities, borrow or lend money or otherwise useits credit, and secure any of its obligations, contracts or liabilities by mortgage,pledge or other encumbrance of all or any part of its property and income.
(j) Participate with others in any partnership, joint venture or otherassociation, transaction or arrangement of any kind whether or not suchparticipation involves sharing or delegation of control with or to others.
(k) Act as trustee under any trust incidental to the principal objects of thecorporation, and receive, hold, administer, exchange, and expend funds andproperty subject to such trust.
(l) Carry on a business at a profit and apply any profit that results from thebusiness activity to any activity in which it may lawfully engage.
Corp. Code § 7141 Restrictions; Methods Of Asserting.
Subject to Section 7142:
(a) No limitation upon the activities, purposes, or powers of the corporationor upon the powers of the members, officers, or directors, or the manner ofexercise of such powers, contained in or implied by the articles or by Chapters 15(commencing with Section 8510), 16 (commencing with Section 8610), and 17(commencing with Section 8710) shall be asserted as between the corporation ormember, officer or director and any third person, except in a proceeding: (1) bya member or the state to enjoin the doing or continuation of unauthorizedactivities by the corporation or its officers, or both, in cases where third partieshave not acquired rights thereby, (2) to dissolve the corporation, or (3) by thecorporation or by a member suing in a representative suit against the officers ordirectors of the corporation for violation of their authority.
(b) Any contract or conveyance made in the name of a corporation whichis authorized or ratified by the board, or is done within the scope of authority,actual or apparent, conferred by the board or within the agency power of theofficer executing it, except as the board's authority is limited by law other than thispart, binds the corporation, and the corporation acquires rights thereunderwhether the contract is executed or wholly or in part executory.
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Corp. Code § 7142 Assets Held In Charitable Trust; Action To RemedyBreach.
(a) Notwithstanding Section 7141, in the case of a corporation holdingassets in charitable trust, any of the following may bring an action to enjoin,correct, obtain damages for or to otherwise remedy a breach of the charitabletrust:
(1) The corporation, or a member in the name of the corporationpursuant to Section 7710.
(2) An officer of the corporation.
(3) A director of the corporation.
(4) A person with a reversionary, contractual, or property interest inthe assets subject to such charitable trust.
(5) The Attorney General, or any person granted relator status by theAttorney General. The Attorney General shall be given notice of any actionbrought by the persons specified in paragraphs (1) through (4), and mayintervene.
(b) In an action under this section, the court may not rescind or enjoin theperformance of a contract unless:
(1) All of the parties to the contract are parties to the action; or
(2) No party to the contract has, in good faith, and without actualnotice of the trust restriction, parted with value, under the contract or inreliance upon it; and
(3) It is equitable to do so.
Corp. Code § 7150 Adoption, Amendment Or Repeal.
(a) Except as provided in subdivision (c) and Sections 7151, 7220, 7224,7512, 7613, and 7615, bylaws may be adopted, amended or repealed by theboard unless the action would:
(1) Materially and adversely affect the rights of members as to voting,dissolution, redemption, or transfer;
(2) Increase or decrease the number of members authorized in total orfor any class;
(3) Effect an exchange, reclassification or cancellation of all or part ofthe memberships; or
(4) Authorize a new class of membership.
(b) Bylaws may be adopted, amended or repealed by approval of themembers (Section 5034); provided, however, that such adoption, amendment orrepeal also requires approval by the members of a class if such action would:
(1) Materially and adversely affect the rights, privileges, preferences,restrictions or conditions of that class as to voting, dissolution, redemption,or transfer in a manner different than such action affects another class;
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(2) Materially and adversely affect such class as to voting, dissolution,redemption, or transfer by changing the rights, privileges, preferences,restrictions or conditions of another class;
(3) Increase or decrease the number of memberships authorized forsuch class;
(4) Increase the number of memberships authorized for another class;
(5) Effect an exchange, reclassification or cancellation of all or part ofthe memberships of such class; or
(6) Authorize a new class of memberships.
(c) The articles or bylaws may restrict or eliminate the power of the boardto adopt, amend or repeal any or all bylaws, subject to subdivision (e) of Section7151.
(d) Bylaws may also provide that the repeal or amendment of those bylaws,or the repeal or amendment of specified portions of those bylaws, may occur onlywith the approval in writing of a specified person or persons other than the boardor members. However, this approval requirement, unless the bylaws specifyotherwise, shall not apply if any of the following circumstances exist:
(1) The specified person or persons have died or ceased to exist.
(2) If the right of the specified person or persons to approve is in thecapacity of an officer, trustee, or other status and the office, trust, or status hasceased to exist.
(3) If the corporation has a specific proposal for amendment or repeal,and the corporation has provided written notice of that proposal, includinga copy of the proposal, to the specified person or persons at the most recentaddress for each of them, based on the corporation's records, and thecorporation has not received written approval or nonapproval within theperiod specified in the notice, which shall not be less than 10 nor more than30 days commencing at least 20 days after the notice has been provided.
Corp. Code § 7151 Provisions.
(a) The bylaws shall set forth (unless such provision is contained in thearticles, in which case it may only be changed by an amendment of the articles)the number of directors of the corporation, or the method of determining thenumber of directors of the corporation, or that the number of directors shall be notless than a stated minimum nor more than a stated maximum with the exactnumber of directors to be fixed, within the limits specified, by approval of theboard or the members (Section 5034), in the manner provided in the bylaws,subject to subdivision (e). The number or minimum number of directors may beone or more.
(b) Once members have been admitted, a bylaw specifying or changing afixed number of directors or the maximum or minimum number or changing froma fixed to a variable board or vice versa may only be adopted by approval of themembers (Section 5034).
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(c) The bylaws may contain any provision, not in conflict with law or thearticles, for the management of the activities and for the conduct of the affairs ofthe corporation, including but not limited to:
(1) Any provision referred to in subdivision (c) of Section 7132.
(2) The time, place and manner of calling, conducting and givingnotice of members', directors' and committee meetings, or of conductingmail ballots.
(3) The qualifications, duties and compensation of directors; the timeof their election; and the requirements of a quorum for directors' andcommittee meetings.
(4) The appointment of committees, composed of directors or non-directors or both, by the board or any officer and the authority of any suchcommittees.
(5) The appointment, duties, compensation and tenure of officers.
(6) The mode of determination of members of record.
(7) The making of reports and financial statements to members.
(8) Setting, imposing and collecting dues, assessments, and admissionand transfer fees.
(d) The bylaws may provide for the manner of admission, withdrawal,suspension, and expulsion of members, consistent with the requirements ofSection 7341.
(e) The bylaws may require, for any or all corporate actions (except asprovided in paragraphs (1) and (2) of subdivision (a) of Section 7222, subdivision(c) of Section 7615, and Section 8610) the vote of a larger proportion of, or all of,the members or the members of any class, unit, or grouping of members or thevote of a larger proportion of, or all of, the directors, than is otherwise requiredby this part. Such a provision in the bylaws requiring such greater vote shall notbe altered, amended or repealed except by such greater vote, unless otherwiseprovided in the bylaws.
(f) The bylaws may contain a provision limiting the number of members,in total or of any class, which the corporation is authorized to admit.
Corp. Code § 7152 Delegates.
A corporation may provide in its bylaws for delegates having some or all of theauthority of members. Where delegates are provided for, the bylaws shall setforth delegates' terms of office, any reasonable method for delegates' selectionand removal, and any reasonable method for calling, noticing and holdingmeetings of delegates and may set forth the manner in which delegates may actby written ballot similar to Section 7513 for written ballot of members. Delegatesmay only act personally at a meeting or by written ballot and may not act byproxy. Delegates may be given a name other than "delegates."
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Corp. Code § 7153 Voting By Members Or Delegates On Chapter OrRegional Basis Authorized.
A corporation may provide in its bylaws for voting by its members or delegateson the basis of chapter or other organizational unit, or by region or othergeographic grouping.
Corp. Code § 7160 Articles And Bylaws; Location; Inspection; Furnishing ToMembers.
Every corporation shall keep at its principal office in this state the original or acopy of its articles and bylaws as amended to date, which shall be open toinspection by the members at all reasonable times during office hours. If thecorporation has no office in this state, it shall upon the written request of anymember furnish to such member a copy of the articles or bylaws as amended todate.
C. DIRECTORS AND MANAGEMENT
Corp. Code § 7210 Exercise Of Powers; Delegation Of Management.
Each corporation shall have a board of directors. Subject to the provisions of thispart and any limitations in the articles or bylaws relating to action required to beapproved by the members (Section 5034), or by a majority of all members (Section5033), the activities and affairs of a corporation shall be conducted and allcorporate powers shall be exercised by or under the direction of the board. Theboard may delegate the management of the activities of the corporation to anyperson or persons, management company, or committee however composed,provided that the activities and affairs of the corporation shall be managed andall corporate powers shall be exercised under the ultimate direction of the board.
Corp. Code § 7211 Meetings.
(a) Unless otherwise provided in the articles or in the bylaws, all of thefollowing apply:
(1) Meetings of the board may be called by the chair of the board orthe president or any vice president or the secretary or any two directors.
(2) Regular meetings of the board may be held without notice if thetime and place of the meetings are fixed by the bylaws or the board. Specialmeetings of the board shall be held upon four days' notice by first-class mailor 48 hours' notice delivered personally or by telephone, including a voicemessaging system or by electronic transmission by the corporation (Section20). The articles or bylaws may not dispense with notice of a special meeting.A notice, or waiver of notice, need not specify the purpose of any regular orspecial meeting of the board.
(3) Notice of a meeting need not be given to a director who provideda waiver of notice or consent to holding the meeting or an approval of theminutes thereof in writing, whether before or after the meeting, or whoattends the meeting without protesting, prior thereto or at its commencement,the lack of notice to that director. These waivers, consents and approvalsshall be filed with the corporate records or made a part of the minutes of the
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meetings.
(4) A majority of the directors present, whether or not a quorum ispresent, may adjourn any meeting to another time and place. If the meetingis adjourned for more than 24 hours, notice of an adjournment to anothertime or place shall be given prior to the time of the adjourned meeting to thedirectors who were not present at the time of the adjournment.
(5) Meetings of the board may be held at a place within or without thestate that has been designated in the notice of the meeting or, if not stated inthe notice or if there is no notice, designated in the bylaws or by resolutionof the board.
(6) Directors may participate in a meeting through use of conferencetelephone, electronic video screen communication, or electronictransmission by and to the corporation (Sections 20 and 21). Participation ina meeting through use of conference telephone or electronic video screencommunication pursuant to this subdivision constitutes presence in personat that meeting as long as all directors participating in the meeting are ableto hear one another. Participation in a meeting through use of electronictransmission by and to the corporation, other than conference telephone andelectronic video screen communication, pursuant to this subdivisionconstitutes presence in person at that meeting if both of the following apply:
(A) Each director participating in the meeting can communicatewith all of the other directors concurrently.
(B) Each director is provided the means of participating in allmatters before the board, including, without limitation, the capacity topropose, or to interpose an objection to, a specific action to be taken bythe corporation.
(7) A majority of the number of directors authorized in or pursuant tothe articles or bylaws constitutes a quorum of the board for the transactionof business. The articles or bylaws may require the presence of one or morespecified directors in order to constitute a quorum of the board to transactbusiness, as long as the death or nonexistence of a specified director or thedeath or nonexistence of the person or persons otherwise authorized toappoint or designate that director does not prevent the corporation fromtransacting business in the normal course of events. The articles or bylawsmay not provide that a quorum shall be less than one-fifth the number ofdirectors authorized in or pursuant to the articles or bylaws, or less than two,whichever is larger, unless the number of directors authorized in or pursuantto the articles or bylaws is one, in which case one director constitutes aquorum.
(8) Subject to the provisions of Sections 7212, 7233, 7234, andsubdivision (e) of Section 7237 and Section 5233, insofar as it is madeapplicable pursuant to Section 7238, an act or decision done or made by amajority of the directors present at a meeting duly held at which a quorumis present is the act of the board. The articles or bylaws may not provide thata lesser vote than a majority of the directors present at a meeting is the act
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of the board. A meeting at which a quorum is initially present may continueto transact business notwithstanding the withdrawal of directors, if any actiontaken is approved by at least a majority of the required quorum for thatmeeting, or a greater number required by this division, the articles or thebylaws.
(b) An action required or permitted to be taken by the board may be takenwithout a meeting if all directors individually or collectively consent in writing tothat action and if, subject to subdivision (a) of Section 7224, the number ofdirectors then in office constitutes a quorum. The written consent or consentsshall be filed with the minutes of the proceedings of the board. The action bywritten consent shall have the same force and effect as a unanimous vote of thedirectors. For purposes of this subdivision only, "all directors" does not include an"interested director" as defined in subdivision (a) of Section 5233, insofar as it ismade applicable pursuant to Section 7238 or described in subdivision (a) ofSection 7233, or a "common director" as described in subdivision (b) of Section7233 who abstains in writing from providing consent, where (1) the factsdescribed in paragraph (2) or (3) of subdivision (d) of Section 5233 are establishedor the provisions of paragraph (1) or (2) of subdivision (a) of Section 7233 or inparagraph (1) or (2) of subdivision (b) of Section 7233 are satisfied, as appropriate,at or prior to execution of the written consent or consents; (2) the establishmentof those facts or satisfaction of those provisions, as applicable, is included in thewritten consent or consents executed by the noninterested directors ornoncommon directors or in other records of the corporation; and (3) thenoninterested directors or noncommon directors, as applicable, approve theaction by a vote that is sufficient without counting the votes of the interesteddirectors or common directors.
(c) Each director shall have one vote on each matter presented to the boardof directors for action. No director may vote by proxy.
(d) This section applies also to incorporators, to committees of the board,and to action by those incorporators or committees mutatis mutandis.
Corp. Code § 7212 Committees.
(a) The board may, by resolution adopted by a majority of the number ofdirectors then in office, provided that a quorum is present, create one or morecommittees, each consisting of two or more directors, to serve at the pleasure ofthe board. Appointments to such committees shall be by a majority vote of thedirectors then in office, unless the articles or bylaws require a majority vote of thenumber of directors authorized in or pursuant to the articles or bylaws. Thebylaws may authorize one or more such committees, each consisting of two ormore directors, and may provide that a specified officer or officers who are alsodirectors of the corporation shall be a member or members of such committee orcommittees. The board may appoint one or more directors as alternate membersof such committee, who may replace any absent member at any meeting of thecommittee. Such committee, to the extent provided in the resolution of the boardor in the bylaws, shall have all the authority of the board, except with respect to:
(1) The approval of any action for which this part also requires
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approval of the members (Section 5034) or approval of a majority of allmembers (Section 5033), regardless of whether the corporation has members.
(2) The filling of vacancies on the board or in any committee which hasthe authority of the board.
(3) The fixing of compensation of the directors for serving on the boardor on any committee.
(4) The amendment or repeal of bylaws or the adoption of new bylaws.
(5) The amendment or repeal of any resolution of the board which byits express terms is not so amendable or repealable.
(6) The appointment of committees of the board or the membersthereof.
(7) The expenditure of corporate funds to support a nominee fordirector after there are more people nominated for director than can beelected.
(8) With respect to any assets held in charitable trust, the approval ofany self-dealing transaction except as provided in paragraph (3) ofsubdivision (d) of Section 5233.
(b) A committee exercising the authority of the board shall not include asmembers persons who are not directors. However, the board may create othercommittees that do not exercise the authority of the board and these othercommittees may include persons who are not directors.
(c) Unless the bylaws otherwise provide, the board may delegate to anycommittee, appointed pursuant to paragraph (4) of subdivision (c) of Section 7151or otherwise, powers as authorized by Section 7210, but may not delegate thepowers set forth in paragraphs (1) to (8), inclusive, of subdivision (a).
Corp. Code § 7213 Officers.
(a) A corporation shall have a chair of its board, who may be given the titlechair of the board, chairperson of the board, chairman of the board, orchairwoman of the board, or a president or both, a secretary, a treasurer or a chieffinancial officer and any other officers with any titles and duties as shall be statedin the bylaws or determined by the board and as may be necessary to enable itto sign instruments. The president, or if there is no president the chair of the board,is the general manager and chief executive officer of the corporation, unlessotherwise provided in the articles or bylaws. Unless otherwise specified in thearticles or the bylaws, if there is no chief financial officer, the treasurer is the chieffinancial officer of the corporation. Any number of offices may be held by thesame person unless the articles or bylaws provide otherwise.
(b) Except as otherwise provided by the articles or bylaws, officers shall bechosen by the board and serve at the pleasure of the board, subject to the rights,if any, of an officer under any contract of employment. Any officer may resign atany time upon written notice to the corporation without prejudice to the rights,if any, of the corporation under any contract to which the officer is a party.
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Corp. Code § 7214 Officers; Unauthorized Acts; Effect As To InnocentParties.
Subject to the provisions of subdivision (a) of Section 7141 and Section 7142,any note, mortgage, evidence of indebtedness, contract, conveyance or otherinstrument in writing, and any assignment or endorsement thereof, executed orentered into between any corporation and any other person, when signed by anyone of the chairman of the board, the president or any vice president, and by anyone of the secretary, any assistant secretary, the chief financial officer or anyassistant treasurer of such corporation, is not invalidated as to the corporation byany lack of authority of the signing officers in the absence of actual knowledge onthe part of the other person that the signing officers had no authority to executethe same.
Corp. Code § 7215 Documents As Evidence.
The original or a copy in writing or in any other form capable of being convertedinto clearly legible tangible form of the bylaws or of the minutes of anyincorporators', members', directors', committee or other meeting or of anyresolution adopted by the board or a committee thereof, or members, certified tobe a true copy by a person purporting to be the secretary or an assistant secretaryof the corporation, is prima facie evidence of the adoption of such bylaws orresolution or of the due holding of such meeting and of the matters stated therein.
D. SELECTION, REMOVAL AND RESIGNATION OF DIRECTORS
Corp. Code § 7220 Election; Term.
(a) Except as provided in subdivision (d), directors shall be elected for suchterms, not longer than four years, as are fixed in the articles or bylaws. However,the terms of directors of a corporation without members may be up to six years.In the absence of any provision in the articles or bylaws, the term shall be oneyear. The articles or bylaws may provide for staggering the terms of directors bydividing the total number of directors into groups of one or more directors. Theterms of office of the several groups and the number of directors in each groupneed not be uniform. No amendment of the articles or bylaws may extend theterm of a director beyond that for which the director was elected, nor may anybylaw provision increasing the terms of directors be adopted without approval ofthe members (Section 5034).
(b) Unless the articles or bylaws otherwise provide, each director, includinga director elected to fill a vacancy, shall hold office until the expiration of theterm for which elected and until a successor has been elected and qualified,unless the director has been removed from office.
(c) The articles or bylaws may provide for the election of one or moredirectors by the members of any class voting as a class.
(d) For the purposes of this subdivision, "designator" means one or moredesignators. Subdivisions (a) through (c) notwithstanding, all or any portion of thedirectors authorized in the articles or bylaws of a corporation may hold office byvirtue of designation or selection by a specified designator as provided by thearticles or bylaws rather than by election. Such directors shall continue in office
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for the term prescribed by the governing article or bylaw provision, or, if there isno term prescribed, until the governing article or bylaw provision is duly amendedor repealed, except as provided in subdivision (e) of Section 7222. A bylawprovision authorized by this subdivision may be adopted, amended, or repealedonly by approval of the members (Section 5034), except as provided insubdivision (d) of Section 7150. Unless otherwise provided in the articles orbylaws, the entitlement to designate or select a director or directors shall cease ifany of the following circumstances exist:
(1) The specified designator of that director or directors has died orceased to exist.
(2) If the entitlement of the specified designator of that director ordirectors to designate is in the capacity of an officer, trustee, or other statusand the office, trust, or status has ceased to exist.
Corp. Code § 7221 Declaration Of Vacancy; Grounds.
(a) The board may declare vacant the office of a director who has beendeclared of unsound mind by a final order of court, or convicted of a felony, or,in the case of a corporation holding assets in charitable trust, has been found bya final order or judgment of any court to have breached any duty arising as aresult of Section 7238, or, if at the time a director is elected, the bylaws providethat a director may be removed for missing a specified number of board meetings,fails to attend the specified number of meetings.
(b) As provided in paragraph (3) of subdivision (c) of Section 7151, thearticles or bylaws may prescribe the qualifications of the directors. The board, bya majority vote of the directors who meet all of the required qualifications to bea director, may declare vacant the office of any director who fails or ceases tomeet any required qualification that was in effect at the beginning of that director'scurrent term of office.
Corp. Code § 7222 Removal Of Directors Without Cause.
(a) Subject to subdivisions (b) and (f) of this section, any or all directors maybe removed without cause if:
(1) In a corporation with fewer than 50 members, the removal isapproved by a majority of all members (Section 5033).
(2) In a corporation with 50 or more members, the removal is approvedby the members (Section 5034).
(3) In a corporation with no members, the removal is approved by amajority of the directors then in office.
(b) Except for a corporation having no members, pursuant to Section 7310:
(1) In a corporation in which the articles or bylaws authorize membersto cumulate their votes pursuant to subdivision (a) of Section 7615, nodirector may be removed (unless the entire board is removed) when the votescast against removal, or not consenting in writing to the removal, would besufficient to elect the director if voted cumulatively at an election at whichthe same total number of votes were cast (or, if the action is taken by written
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ballot, all memberships entitled to vote were voted) and the entire numberof directors authorized at the time of the director's most recent election werethen being elected.
(2) When by the provisions of the articles or bylaws the members ofany class, voting as a class, are entitled to elect one or more directors, anydirector so elected may be removed only by the applicable vote of themembers of that class.
(3) When by the provisions of the articles or bylaws the memberswithin a chapter or such other organizational unit, or region or othergeographic grouping, voting as such, are entitled to elect one or moredirectors, any director so elected may be removed only by the applicablevote of the members, within the organizational unit or geographic grouping.
(c) Any reduction of the authorized number of directors or any amendmentreducing the number of classes of directors does not remove any director prior tothe expiration of the director's term of office unless the reduction or amendmentalso provides for the removal of one or more specified directors.
(d) Except as provided in this section and Sections 7221 and 7223, adirector may not be removed prior to the expiration of the director's term of office.
(e) Where a director removed under this section or Sections 7221 or 7223was chosen by designation pursuant to subdivision (d) of Section 7220, then:
(1) Where a different person may be designated pursuant to thegoverning article or bylaw provision, the new designation shall be made.
(2) Where the governing article or bylaw provision contains noprovision under which a different person may be designated, the governingarticle or bylaw provision shall be deemed repealed.
(f) For the purposes of this subdivision, "designator" means one or moredesignators. If by the provisions of the articles or bylaws a designator is entitledto designate one or more directors, then:
(1) Unless otherwise provided in the articles or bylaws at the time ofdesignation, any director so designated may be removed without cause bythe designator of that director.
(2) Any director so designated may only be removed under subdivision(a) with the written consent of the designator of that director.
(3) Unless otherwise provided in the articles or bylaws, the right toremove shall not apply if any of the following circumstances exist:
(A) The designator entitled to that right has died or ceased to exist.
(B) If that right is in the capacity of an officer, trustee, or otherstatus, and the office, trust, or status has ceased to exist.
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Corp. Code § 7223 Removal By Court; Powers Of Attorney General.
(a) The superior court of the proper county may, at the suit of one of theparties specified in subdivision (b), remove from office any director in case offraudulent or dishonest acts or gross abuse of authority or discretion withreference to the corporation or breach of any duty arising as a result of Section7238 and may bar from reelection any director so removed for a period prescribedby the court. The corporation shall be made a party to such action.
(b) An action under subdivision (a) may be instituted by any of thefollowing:
(1) A director.
(2) In the case of a corporation where the total number of votes entitledto be cast for a director is less than 5,000, twice the authorized number(Section 5036) of members, or 20 members, whichever is less.
(3) In the case of a corporation where the total number of votes entitledto be cast for a director is 5,000 or more, twice the authorized number(Section 5036) of members, or 100 members, whichever is less.
(c) In the case of a corporation holding assets in charitable trust, theAttorney General may bring an action under subdivision (a), may intervene insuch an action brought by any other party and shall be given notice of any suchaction brought by any other party.
Corp. Code § 7224 Filling Vacancies; Resignation; Successor To Take OfficeAt Effective Date Of Resignation.
(a) Unless otherwise provided in the articles or bylaws and except for avacancy created by the removal of a director, vacancies on the board may befilled by approval of the board (Section 5032) or, if the number of directors thenin office is less than a quorum, by (1) the unanimous written consent of thedirectors then in office, (2) the affirmative vote of a majority of the directors thenin office at a meeting held pursuant to notice or waivers of notice complying withSection 7211, or (3) a sole remaining director. Unless the articles or a bylawapproved by the members (Section 5034) provide that the board may fillvacancies occurring in the board by reason of the removal of directors, or unlessthe corporation has no members pursuant to Section 7310, such vacancies maybe filled only by approval of the members (Section 5034).
(b) The members may elect a director at any time to fill any vacancy notfilled by the directors.
(c) Any director may resign effective upon giving written notice to thechairman of the board, the president, the secretary or the board of directors of thecorporation, unless the notice specifies a later time for the effectiveness of suchresignation. If the resignation is effective at a future time, a successor may beelected to take office when the resignation becomes effective.
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Corp. Code § 7225 Provisional Directors.
(a) If a corporation has an even number of directors who are equallydivided and cannot agree as to the management of its affairs, so that its activitiescan no longer be conducted to advantage or so that there is danger that itsproperty, activities, or business will be impaired or lost, the superior court of theproper county may, notwithstanding any provisions of the articles or bylaws andwhether or not an action is pending for an involuntary winding up or dissolutionof the corporation, appoint a provisional director pursuant to this section. Actionfor such appointment may be brought by any director or by members holding notless than 33 1/3 percent of the voting power.
(b) If the members of a corporation are deadlocked so that they cannot electthe directors to be elected at the time prescribed therefor, the superior court of theproper county may, notwithstanding any provisions of the articles or bylaws, uponpetition of members holding 50 percent of the voting power, appoint a provisionaldirector or directors pursuant to this section or order such other equitable reliefas the court deems appropriate.
(c) In the case of a corporation holding assets in charitable trust:
(1) Any person bringing an action under subdivision (a) or (b) shall givenotice to the Attorney General, who may intervene; and
(2) The Attorney General may bring an action under subdivision (a) or(b).
(d) A provisional director shall be an impartial person, who is neither amember nor a creditor of the corporation, nor related by consanguinity or affinitywithin the third degree according to the common law to any of the other directorsof the corporation or to any judge of the court by which such provisional directoris appointed. A provisional director shall have all the rights and powers of adirector until the deadlock in the board or among members is broken or untilsuch provisional director is removed by order of the court or by approval of amajority of all members (Section 5033). Such person shall be entitled to suchcompensation as shall be fixed by the court unless otherwise agreed with thecorporation.
E. STANDARDS OF CONDUCT
Corp. Code § 7230 Applicable Duties And Liabilities.
(a) Any duties and liabilities set forth in this article shall apply withoutregard to whether a director is compensated by the corporation.
(b) Part 4 (commencing with Section 16000) of Division 9 of the ProbateCode does not apply to the directors of any corporation.
Corp. Code § 7231 Performance Of Duties; Degree Of Care; Reliance OnReports, Etc.; Good Faith; Exemption From Liability.
(a) A director shall perform the duties of a director, including duties as amember of any committee of the board upon which the director may serve, ingood faith, in a manner such director believes to be in the best interests of thecorporation and with such care, including reasonable inquiry, as an ordinarily
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prudent person in a like position would use under similar circumstances.
(b) In performing the duties of a director, a director shall be entitled to relyon information, opinions, reports or statements, including financial statementsand other financial data, in each case prepared or presented by:
(1) One or more officers or employees of the corporation whom thedirector believes to be reliable and competent in the matters presented;
(2) Counsel, independent accountants or other persons as to matterswhich the director believes to be within such person's professional or expertcompetence; or
(3) A committee upon which the director does not serve that iscomposed exclusively of any or any combination of directors, personsdescribed in paragraph (1), or persons described in paragraph (2), as tomatters within the committee's designated authority, which committee thedirector believes to merit confidence, so long as, in any case, the director actsin good faith, after reasonable inquiry when the need therefor is indicated bythe circumstances and without knowledge that would cause such reliance tobe unwarranted.
(c) A person who performs the duties of a director in accordance withsubdivisions (a) and (b) shall have no liability based upon any alleged failure todischarge the person's obligations as a director, including, without limiting thegenerality of the foregoing, any actions or omissions which exceed or defeat apublic or charitable purpose to which assets held by a corporation are dedicated.
Corp. Code § 7231.5 Liability Of Volunteer Director Or Officer; Failure ToDischarge Duties.
(a) Except as provided in Section 7233 or 7236, there is no monetaryliability on the part of, and no cause of action for damages shall arise against, anyvolunteer director or volunteer executive officer of a nonprofit corporation subjectto this part based upon any alleged failure to discharge the person's duties as adirector or officer if the duties are performed in a manner that meets all of thefollowing criteria:
(1) The duties are performed in good faith.
(2) The duties are performed in a manner such director or officerbelieves to be in the best interests of the corporation.
(3) The duties are performed with such care, including reasonableinquiry, as an ordinarily prudent person in a like position would use undersimilar circumstances.
(b) "Volunteer" means the rendering of services without compensation."Compensation" means remuneration whether by way of salary, fee, or otherconsideration for services rendered. However, the payment of per diem, mileage,or other reimbursement expenses to a director or executive officer does not affectthat person's status as a volunteer within the meaning of this section.
(c) "Executive officer" means the president, vice president, secretary, ortreasurer of a corporation or other individual serving in like capacity who assists
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in establishing the policy of the corporation.
(d) This section shall apply only to trade, professional, and labororganizations incorporated pursuant to this part which operate exclusively forfraternal, educational, and other nonprofit purposes, and under the provisions ofSection 501(c) of the United States Internal Revenue Code.
(e) This section shall not be construed to limit the provisions of Section7231.
Corp. Code § 7232 Selection Of Directors; Application Of Section 7231.
(a) Section 7231 governs the duties of directors as to any acts or omissionsin connection with the election, selection, or nomination of directors.
(b) This section shall not be construed to limit the generality of Section7231.
Corp. Code § 7233 Conflict Of Interest; Disclosure; Common Directorships;Just And Reasonable Contracts.
(a) No contract or other transaction between a corporation and one or moreof its directors, or between a corporation and any domestic or foreign corporation,firm or association in which one or more of its directors has a material financialinterest, is either void or voidable because such director or directors or such othercorporation, business corporation, firm or association are parties or because suchdirector or directors are present at the meeting of the board or a committee thereofwhich authorizes, approves or ratifies the contract or transaction, if:
(1) The material facts as to the transaction and as to such director'sinterest are fully disclosed or known to the members and such contract ortransaction is approved by the members (Section 5034) in good faith, withany membership owned by any interested director not being entitled to votethereon;
(2) The material facts as to the transaction and as to such director'sinterest are fully disclosed or known to the board or committee, and theboard or committee authorizes, approves or ratifies the contract ortransaction in good faith by a vote sufficient without counting the vote of theinterested director or directors and the contract or transaction is just andreasonable as to the corporation at the time it is authorized, approved orratified; or
(3) As to contracts or transactions not approved as provided inparagraph (1) or (2) of this subdivision, the person asserting the validity of thecontract or transaction sustains the burden of proving that the contract ortransaction was just and reasonable as to the corporation at the time it wasauthorized, approved or ratified.
Amere common directorship does not constitute a material financial interestwithin the meaning of this subdivision. A director is not interested within themeaning of this subdivision in a resolution fixing the compensation of anotherdirector as a director, officer or employee of the corporation, notwithstanding thefact that the first director is also receiving compensation from the corporation.
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(b) No contract or other transaction between a corporation and anycorporation, business corporation or association of which one or more of itsdirectors are directors is either void or voidable because such director or directorsare present at the meeting of the board or a committee thereof which authorizes,approves or ratifies the contract or transaction, if:
(1) The material facts as to the transaction and as to such director'sother directorship are fully disclosed or known to the board or committee,and the board or committee authorizes, approves or ratifies the contract ortransaction in good faith by a vote sufficient without counting the vote of thecommon director or directors or the contract or transaction is approved bythe members (Section 5034) in good faith; or
(2) As to contracts or transactions not approved as provided inparagraph (1) of this subdivision, the contract or transaction is just andreasonable as to the corporation at the time it is authorized, approved orratified.
This subdivision does not apply to contracts or transactions covered bysubdivision (a).
Corp. Code § 7234 Quorum; Counting Interested Or Common Directors.
Interested or common directors may be counted in determining the presence ofa quorum at a meeting of the board or a committee thereof which authorizes,approves or ratifies a contract or transaction as provided in Section 7233.
Corp. Code § 7235 Loans Or Guarantees Of Obligations Of Director OrOfficer; Advances For Expenses; Exceptions.
(a) Unless prohibited by the articles or bylaws, a corporation may loanmoney or property to, or guarantee the obligation of, any director or officer ofthe corporation or of its parent, affiliate or subsidiary, provided:
(1) The board determines the loan or guaranty may reasonably beexpected to benefit the corporation.
(2) Prior to consummating the transaction or any part thereof, the loanor guaranty is either:
(A) Approved by the members (Section 5034), without countingthe vote of the director or officer, if a member, or
(B) Approved by the vote of a majority of the directors then inoffice, without counting the vote of the director who is to receive theloan or the benefit of the guaranty.
(b) Notwithstanding subdivision (a), a corporation may advance money toa director or officer of the corporation or of its parent, affiliate or subsidiary, forany expenses reasonably anticipated to be incurred in the performance of theduties of the director or officer of the corporation or of its parent, affiliate orsubsidiary, provided that in the absence of such an advance the director or officerwould be entitled to be reimbursed for these expenses by the corporation, itsparent, affiliate or subsidiary.
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(c) The provisions of subdivisions (a) and (b) do not apply to credit unions,or to the payment of premiums in whole or in part by a corporation on a lifeinsurance policy on the life of a director or officer so long as repayment to thecorporation of the amount paid by it is secured by the proceeds of the policy andits cash surrender value, or to loans permitted under any statute regulating anyspecial class of corporations.
Corp. Code § 7236 Liability For Illegal Loans And Distributions; Suits;Damages; Contribution; Subrogation; Cross-Complaint.
(a) Subject to the provisions of Section 7231, directors of a corporation whoapprove any of the following corporate actions shall be jointly and severally liableto the corporation for the benefit of all of the creditors entitled to institute anaction under paragraph (1) or (2) of subdivision (c) or to the corporation in anaction by the head organization or members under paragraph (1) or (3) ofsubdivision (c):
(1) The making of any distribution contrary to Chapter 4 (commencingwith Section 7410).
(2) The distribution of assets after institution of dissolution proceedingsof the corporation, without paying or adequately providing for all knownliabilities of the corporation, excluding any claims not filed by creditorswithin the time limit set by the court in a notice given to creditors underChapter 15 (commencing with Section 8510), Chapter 16 (commencing withSection 8610), and Chapter 17 (commencing with Section 8710).
(3) The making of any loan or guaranty contrary to Section 7235.
(b) A director who is present at a meeting of the board, or any committeethereof, at which action specified in subdivision (a) is taken and who abstainsfrom voting shall be considered to have approved the action.
(c) Suit may be brought in the name of the corporation to enforce theliability:
(1) Under paragraph (1) of subdivision (a) against any or all directorsliable by the persons entitled to sue under subdivision (c) of Section 7420.
(2) Under paragraph (2) or (3) of subdivision (a) against any or alldirectors liable by any one or more creditors of the corporation whose debtsor claims arose prior to the time of the corporate action who have notconsented to the corporate action, whether or not they have reduced theirclaims to judgment.
(3) Under paragraph (3) of subdivision (a) against any or all directorsliable by any one or more members at the time of any corporate actionspecified in paragraph (3) of subdivision (a) who have not consented to thecorporate action, without regard to the provisions of Section 7710.
(d) The damages recoverable from a director under this section shall be theamount of the illegal distribution, or if the illegal distribution consists of property,the fair market value of the property at the time of the illegal distribution, plusinterest thereon from the date of the distribution at the legal rate on judgments
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until paid, together with all reasonably incurred costs of appraisal or othervaluation, if any, of that property, or the loss suffered by the corporation as a resultof the illegal loan or guaranty, but not exceeding, in the case of an action for thebenefit of creditors, the liabilities of the corporation owed to nonconsentingcreditors at the time of the violation.
(e) Any director sued under this section may implead all other directorsliable and may compel contribution, either in that action or in an independentaction against directors not joined in that action.
(f) Directors liable under this section shall also be entitled to be subrogatedto the rights of the corporation:
(1) With respect to paragraph (1) of subdivision (a), against the personswho received the distribution.
(2) With respect to paragraph (2) of subdivision (a), against the personswho received the distribution.
(3) With respect to paragraph (3) of subdivision (a), against the personwho received the loan or guaranty.
Any director sued under this section may file a cross-complaint against the personor persons who are liable to the director as a result of the subrogation providedfor in this subdivision or may proceed against them in an independent action.
Corp. Code § 7237 Indemnification Of Corporate Agents; Grounds;Approval; Advancement Of Expenses; Liability Insurance.
(a) For the purposes of this section, "agent" means any person who is orwas a director, officer, employee or other agent of the corporation, or is or wasserving at the request of the corporation as a director, officer, employee or agentof another foreign or domestic corporation, partnership, joint venture, trust orother enterprise, or was a director, officer, employee or agent of a foreign ordomestic corporation which was a predecessor corporation of the corporation orof another enterprise at the request of such predecessor corporation; "proceeding"means any threatened, pending or completed action or proceeding, whether civil,criminal, administrative or investigative; and "expenses" includes withoutlimitation attorneys' fees and any expenses of establishing a right toindemnification under subdivision (d) or paragraph (3) of subdivision (e).
(b) A corporation shall have power to indemnify any person who was or isa party or is threatened to be made a party to any proceeding (other than an actionby or in the right of the corporation to procure a judgment in its favor, an actionbrought under Section 5233 of Part 2 (commencing with Section 5110) madeapplicable pursuant to Section 7238, or an action brought by the Attorney Generalor a person granted relator status by the Attorney General for any breach of dutyrelating to assets held in charitable trust) by reason of the fact that such person isor was an agent of the corporation, against expenses, judgments, fines, settlementsand other amounts actually and reasonably incurred in connection with suchproceeding if such person acted in good faith and in a manner such personreasonably believed to be in the best interests of the corporation and, in the case
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of a criminal proceeding, had no reasonable cause to believe the conduct of suchperson was unlawful. The termination of any proceeding by judgment, order,settlement, conviction or upon a plea of nolo contendere or its equivalent shallnot, of itself, create a presumption that the person did not act in good faith andin a manner which the person reasonably believed to be in the best interests ofthe corporation or that the person had reasonable cause to believe that theperson's conduct was unlawful.
(c) A corporation shall have power to indemnify any person who was or isa party or is threatened to be made a party to any threatened, pending orcompleted action by or in the right of the corporation, or brought under Section5233 of Part 2 (commencing with Section 5110) made applicable pursuant toSection 7238, or brought by the Attorney General or a person granted relatorstatus by the Attorney General for breach of duty relating to assets held incharitable trust, to procure a judgment in its favor by reason of the fact that suchperson is or was an agent of the corporation, against expenses actually andreasonably incurred by such person in connection with the defense or settlementof such action if such person acted in good faith, in a manner such personbelieved to be in the best interests of the corporation and with such care,including reasonable inquiry, as an ordinarily prudent person in a like positionwould use under similar circumstances. No indemnification shall be made underthis subdivision:
(1) In respect of any claim, issue or matter as to which such personshall have been adjudged to be liable to the corporation in the performanceof such person's duty to the corporation, unless and only to the extent thatthe court in which such proceeding is or was pending shall determine uponapplication that, in view of all the circumstances of the case, such person isfairly and reasonably entitled to indemnity for the expenses which such courtshall determine;
(2) Of amounts paid in settling or otherwise disposing of a threatenedor pending action, with or without court approval; or
(3) Of expenses incurred in defending a threatened or pending actionwhich is settled or otherwise disposed of without court approval unless suchaction concerns assets held in charitable trust and is settled with the approvalof the Attorney General.
(d) To the extent that an agent of a corporation has been successful on themerits in defense of any proceeding referred to in subdivision (b) or (c) or indefense of any claim, issue or matter therein, the agent shall be indemnifiedagainst expenses actually and reasonably incurred by the agent in connectiontherewith.
(e) Except as provided in subdivision (d), any indemnification under thissection shall be made by the corporation only if authorized in the specific case,upon a determination that indemnification of the agent is proper in thecircumstances because the agent has met the applicable standard of conduct setforth in subdivision (b) or (c) by:
(1) A majority vote of a quorum consisting of directors who are not
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parties to such proceeding;
(2) Approval of the members (Section 5034), with the persons to beindemnified not being entitled to vote thereon; or
(3) The court in which such proceeding is or was pending uponapplication made by the corporation or the agent or the attorney or otherperson rendering services in connection with the defense, whether or notsuch application by the agent, attorney or other person is opposed by thecorporation.
(f) Expenses incurred in defending any proceeding may be advanced bythe corporation prior to the final disposition of such proceeding upon receipt ofan undertaking by or on behalf of the agent to repay such amount unless it shallbe determined ultimately that the agent is entitled to be indemnified as authorizedin this section. The provisions of subdivision (a) of Section 7235 do not apply toadvances made pursuant to this subdivision.
(g) No provision made by a corporation to indemnify its or its subsidiary'sdirectors or officers for the defense of any proceeding, whether contained in thearticles, bylaws, a resolution of members or directors, an agreement or otherwise,shall be valid unless consistent with this section. Nothing contained in thissection shall affect any right to indemnification to which persons other than suchdirectors and officers may be entitled by contract or otherwise.
(h) No indemnification or advance shall be made under this section, exceptas provided in subdivision (d) or paragraph (3) of subdivision (e), in anycircumstance where it appears:
(1) That it would be inconsistent with a provision of the articles,bylaws, a resolution of the members or an agreement in effect at the time ofthe accrual of the alleged cause of action asserted in the proceeding in whichthe expenses were incurred or other amounts were paid, which prohibits orotherwise limits indemnification; or
(2) That it would be inconsistent with any condition expressly imposedby a court in approving a settlement.
(i) A corporation shall have power to purchase and maintain insurance onbehalf of any agent of the corporation against any liability asserted against orincurred by the agent in such capacity or arising out of the agent's status as suchwhether or not the corporation would have the power to indemnify the agentagainst such liability under the provisions of this section.
(j) This section does not apply to any proceeding against any trustee,investment manager or other fiduciary of an employee benefit plan in suchperson's capacity as such, even though such person may also be an agent asdefined in subdivision (a) of the employer corporation. A corporation shall havepower to indemnify such trustee, investment manager or other fiduciary to theextent permitted by subdivision (f) of Section 207.
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Corp. Code § 7238 Assets Held In Charitable Trust; Law Governing ConductOf Directors.
Where a corporation holds assets in charitable trust, the conduct of its directorsor of any person performing functions similar to those performed by a director,shall, in respect to the assets held in charitable trust, be governed by the standardsof conduct set forth in Article 3 (commencing with Section 5230) of Chapter 2 ofPart 2 for directors of nonprofit public benefit corporations. This does not limitany additional requirements which may be specifically set forth in this partregarding corporations holding assets in charitable trust.
F. TERMINATION OF MEMBERSHIP
Corp. Code § 7341 Expulsion, Suspension Or Termination; Fairness AndReasonableness; Procedure.
(a) No member may be expelled or suspended, and no membership ormemberships may be terminated or suspended, except according to proceduressatisfying the requirements of this section. An expulsion, termination orsuspension not in accord with this section shall be void and without effect.
(b) Any expulsion, suspension, or termination must be done in good faithand in a fair and reasonable manner. Any procedure which conforms to therequirements of subdivision (c) is fair and reasonable, but a court may also findother procedures to be fair and reasonable when the full circumstances of thesuspension, termination, or expulsion are considered.
(c) A procedure is fair and reasonable when:
(1) The provisions of the procedure have been set forth in the articlesor bylaws, or copies of such provisions are sent annually to all the membersas required by the articles or bylaws;
(2) It provides the giving of 15 days' prior notice of the expulsion,suspension or termination and the reasons therefor; and
(3) It provides an opportunity for the member to be heard, orally or inwriting, not less than five days before the effective date of the expulsion,suspension or termination by a person or body authorized to decide that theproposed expulsion, termination or suspension not take place.
(d) Any notice required under this section may be given by any methodreasonably calculated to provide actual notice. Any notice given by mail must begiven by first-class or registered mail sent to the last address of the membersshown on the corporation's records.
(e) Any action challenging an expulsion, suspension or termination ofmembership, including any claim alleging defective notice, must be commencedwithin one year after the date of the expulsion, suspension or termination. In theevent such an action is successful the court may order any relief, includingreinstatement, it finds equitable under the circumstances, but no vote of themembers or of the board may be set aside solely because a person was at thetime of the vote wrongfully excluded by virtue of the challenged expulsion,suspension or termination, unless the court finds further that the wrongful
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expulsion, suspension or termination was in bad faith and for the purpose, andwith the effect, of wrongfully excluding the member from the vote or from themeeting at which the vote took place, so as to affect the outcome of the vote.
(f) This section governs only the procedures for expulsion, suspension ortermination and not the substantive grounds therefor. An expulsion, suspensionor termination based upon substantive grounds which violate contractual or otherrights of the member or are otherwise unlawful is not made valid by compliancewith this section.
(g) A member who is expelled or suspended or whose membership isterminated shall be liable for any charges incurred, services or benefits actuallyrendered, dues, assessments or fees incurred before the expulsion, suspension ortermination or arising from contract or otherwise.
G. MEETINGS AND VOTING
Corp. Code § 7510 Place And Time Of Meetings; Regular Meeting; FailureTo Hold Regular Meeting; Voting; Special Meetings; Conduct Of MeetingsBy Electronic Transmissions Or Communications.
(a) Meetings of members may be held at a place within or without this stateas may be stated in or fixed in accordance with the bylaws. If no other place isstated or so fixed, meetings of members shall be held at the principal executiveoffice of the corporation. Unless prohibited by the bylaws of the corporation, ifauthorized by the board of directors in its sole discretion, and subject to therequirement of consent in clause (b) of Section 20 and those guidelines andprocedures as the board of directors may adopt, members not physically presentin person (or, if proxies are allowed, by proxy) at a meeting of members may, byelectronic transmission by and to the corporation (Sections 20 and 21) or byelectronic video screen communication, participate in a meeting of members, bedeemed present in person (or, if proxies are allowed, by proxy), and vote at ameeting of members whether that meeting is to be held at a designated place orin whole or in part by means of electronic transmission by and to the corporationor by electronic video screen communication, in accordance with subdivision(f).
(b) A regular meeting of members shall be held on a date and time, andwith the frequency stated in or fixed in accordance with the bylaws, but in anyevent in each year in which directors are to be elected at that meeting for thepurpose of conducting such election, and to transact any other proper businesswhich may be brought before the meeting.
(c) If a corporation with members is required by subdivision (b) to hold aregular meeting and fails to hold the regular meeting for a period of 60 days afterthe date designated therefor or, if no date has been designated, for a period of 15months after the formation of the corporation or after its last regular meeting, orif the corporation fails to hold a written ballot for a period of 60 days after the datedesignated therefor, then the superior court of the proper county may summarilyorder the meeting to be held or the ballot to be conducted upon the applicationof a member or the Attorney General, after notice to the corporation giving it anopportunity to be heard.
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(d) The votes represented, either in person (or, if proxies are allowed, byproxy), at a meeting called or by written ballot ordered pursuant to subdivision(c), and entitled to be cast on the business to be transacted shall constitute aquorum, notwithstanding any provision of the articles or bylaws or in this part tothe contrary. The court may issue such orders as may be appropriate including,without limitation, orders designating the time and place of the meeting, therecord date for determination of members entitled to vote, and the form of noticeof the meeting.
(e) Special meetings of members for any lawful purpose may be called bythe board, the chairman of the board, the president, or such other persons, if any,as are specified in the bylaws. In addition, special meetings of members for anylawful purpose may be called by 5 percent or more of the members.
(f) A meeting of the members may be conducted, in whole or in part, byelectronic transmission by and to the corporation or by electronic video screencommunication (1) if the corporation implements reasonable measures to providemembers in person (or, if proxies are allowed, by proxy) a reasonable opportunityto participate in the meeting and to vote on matters submitted to the members,including an opportunity to read or hear the proceedings of the meetingsubstantially concurrently with those proceedings, and (2) if any member votes ortakes other action at the meeting by means of electronic transmission to thecorporation or electronic video screen communication, a record of that vote oraction is maintained by the corporation. Any request by a corporation to amember pursuant to clause (b) of Section 20 for consent to conduct a meeting ofmembers by electronic transmission by and to the corporation, shall include anotice that absent consent of the member pursuant to clause (b) of Section 20, themeeting shall be held at a physical location in accordance with subdivision (a).
Corp. Code § 7511 Notice Of Meeting.
(a) Whenever members are required or permitted to take any action at ameeting, a written notice of the meeting shall be given not less than 10 nor morethan 90 days before the date of the meeting to each member who, on the recorddate for notice of the meeting, is entitled to vote thereat; provided, however, thatif notice is given by mail, and the notice is not mailed by first-class, registered, orcertified mail, that notice shall be given not less than 20 days before the meeting.Subject to subdivision (f), and subdivision (b) of Section 7512, the notice shallstate the place, date and time of the meeting, the means of electronic transmissionby and to the corporation (Sections 20 and 21) or electronic video screencommunication, if any, by which members may participate in that meeting, and(1) in the case of a special meeting, the general nature of the business to betransacted, and no other business may be transacted, or (2) in the case of theregular meeting, those matters which the board, at the time the notice is given,intends to present for action by the members, but, except as provided insubdivision (b) of Section 7512, any proper matter may be presented at themeeting for the action. The notice of any meeting at which directors are to beelected shall include the names of all those who are nominees at the time thenotice is given to members.
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(b) Notice of a members' meeting or any report shall be given personally,by electronic transmission by a corporation, or by mail or other means of writtencommunication, addressed to a member at the address of the member appearingon the books of the corporation or given by the member to the corporation forpurpose of notice; or if no such address appears or is given, at the place wherethe principal office of the corporation is located or by publication at least oncein a newspaper of general circulation in the county in which the principal officeis located. An affidavit of giving any notice or report in accordance with theprovisions of this part, executed by the secretary, assistant secretary or any transferagent, shall be prima facie evidence of the giving of the notice or report.
If any notice or report addressed to the member at the address of the memberappearing on the books of the corporation is returned to the corporation by theUnited States Postal Service marked to indicate that the United States PostalService is unable to deliver the notice or report to the member at the address, allfuture notices or reports shall be deemed to have been duly given without furthermailing if the same shall be available for the member upon written demand of themember at the principal office of the corporation for a period of one year from thedate of the giving of the notice or report to all other members.
Notice given by electronic transmission by the corporation under this subdivisionshall be valid only if it complies with Section 20. Notwithstanding the foregoing,notice shall not be given by electronic transmission by the corporation under thissubdivision after either of the following:
(1) The corporation is unable to deliver two consecutive notices to themember by that means.
(2) The inability to so deliver the notices to the member becomesknown to the secretary, any assistant secretary, the transfer agent, or otherperson responsible for the giving of the notice.
(c) Upon request in writing to the corporation addressed to the attention ofthe chairman of the board, president, vice president, or secretary by any person(other than the board) entitled to call a special meeting of members, the officerforthwith shall cause notice to be given to the members entitled to vote that ameeting will be held at a time fixed by the board not less than 35 nor more than90 days after the receipt of the request. If the notice is not given within 20 daysafter receipt of the request, the persons entitled to call the meeting may give thenotice or the superior court of the proper county shall summarily order the givingof the notice, after notice to the corporation giving it an opportunity to be heard.The court may issue such orders as may be appropriate, including, withoutlimitation, orders designating the time and place of the meeting, the record datefor determination of members entitled to vote, and the form of notice.
(d) When a members' meeting is adjourned to another time or place, unlessthe bylaws otherwise require and except as provided in this subdivision, noticeneed not be given of the adjourned meeting if the time and place thereof (or themeans of electronic transmission by and to the corporation or electronic videoscreen communication, if any, by which members may participate) areannounced at the meeting at which the adjournment is taken. No meeting may
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be adjourned for more than 45 days. At the adjourned meeting the corporationmay transact any business which might have been transacted at the originalmeeting. If after the adjournment a new record date is fixed for notice or voting,a notice of the adjourned meeting shall be given to each member who, on therecord date for notice of the meeting, is entitled to vote at the meeting.
(e) The transactions of any meeting of members however called andnoticed, and wherever held, are as valid as though had at a meeting duly heldafter regular call and notice, if a quorum is present either in person or by proxy,and if, either before or after the meeting, each of the persons entitled to vote, notpresent in person (or, if proxies are allowed, by proxy), provides a waiver of noticeor consent to the holding of the meeting or an approval of the minutes thereof inwriting. All such waivers, consents and approvals shall be filed with the corporaterecords or made a part of the minutes of the meeting. Attendance of a person ata meeting shall constitute a waiver of notice of and presence at the meeting,except when the person objects, at the beginning of the meeting, to thetransaction of any business because the meeting is not lawfully called orconvened and except that attendance at a meeting is not a waiver of any right toobject to the consideration of matters required by this part to be included in thenotice but not so included, if the objection is expressly made at the meeting.Neither the business to be transacted at nor the purpose of any regular or specialmeeting of members need be specified in any written waiver of notice, consentto the holding of the meeting or approval of the minutes thereof, unless otherwiseprovided in the articles or bylaws, except as provided in subdivision (f).
(f) Any approval of the members required under Sections 7222, 7224,7233, 7812, 8610, or 8719, other than unanimous approval by those entitled tovote, shall be valid only if the general nature of the proposal so approved wasstated in the notice of meeting or in any written waiver of notice.
(g) A court may find that notice not given in conformity with this section isstill valid, if it was given in a fair and reasonable manner.
Corp. Code § 7512 Quorum.
(a) One-third of the voting power, represented in person or by proxy, shallconstitute a quorum at a meeting of members, but, subject to subdivisions (b) and(c), a bylaw may set a different quorum. Any bylaw amendment to increase thequorum may be adopted only by approval of the members (Section 5034). If aquorum is present, the affirmative vote of the majority of the voting powerrepresented at the meeting, entitled to vote, and voting on any matter shall be theact of the members unless the vote of a greater number or voting by classes isrequired by this part or the articles or bylaws.
(b) Where a bylaw authorizes a corporation to conduct a meeting with aquorum of less than one-third of the voting power, then the only matters that maybe voted upon at any regular meeting actually attended, in person or by proxy, byless than one-third of the voting power are matters notice of the general nature ofwhich was given, pursuant to the first sentence of subdivision (a) of Section 7511.
(c) Subject to subdivision (b), the members present at a duly called or heldmeeting at which a quorum is present may continue to transact business until
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adjournment notwithstanding the withdrawal of enough members to leave lessthan a quorum, if any action taken (other than adjournment) is approved by atleast a majority of the members required to constitute a quorum.
(d) In the absence of a quorum, any meeting of members may be adjournedfrom time to time by the vote of a majority of the votes represented either inperson or by proxy, but no other business may be transacted, except as providedin subdivision (c).
Corp. Code § 7513 Acts Without Meeting; Written Ballot; Number OfBallots And Approvals; Solicitation; Revocation Of Ballots; Election OfDirectors.
(a) Subject to subdivision (e), and unless prohibited in the articles or bylaws,any action which may be taken at any regular or special meeting of membersmay be taken without a meeting if the corporation distributes a written ballot toevery member entitled to vote on the matter. Unless otherwise provided by thearticles or bylaws and if approved by the board of directors, that ballot and anyrelated material may be sent by electronic transmission by the corporation(Section 20) and responses may be returned to the corporation by electronictransmission to the corporation (Section 21). That ballot shall set forth theproposed action, provide an opportunity to specify approval or disapproval ofany proposal, and provide a reasonable time within which to return the ballot tothe corporation.
(b) Approval by written ballot pursuant to this section shall be valid onlywhen the number of votes cast by ballot within the time period specified equalsor exceeds the quorum required to be present at a meeting authorizing the action,and the number of approvals equals or exceeds the number of votes that wouldbe required to approve at a meeting at which the total number of votes cast wasthe same as the number of votes cast by ballot.
(c) Ballots shall be solicited in a manner consistent with the requirementsof subdivision (b) of Section 7511 and Section 7514. All such solicitations shallindicate the number of responses needed to meet the quorum requirement and,with respect to ballots other than for the election of directors, shall state thepercentage of approvals necessary to pass the measure submitted. The solicitationmust specify the time by which the ballot must be received in order to be counted.
(d) Unless otherwise provided in the articles or bylaws, a written ballot maynot be revoked.
(e) Directors may be elected by written ballot under this section, whereauthorized by the articles or bylaws, except that election by written ballot may notbe authorized where the directors are elected by cumulative voting pursuant toSection 7615.
(f) When directors are to be elected by written ballot and the articles orbylaws prescribe a nomination procedure, the procedure may provide for a datefor the close of nominations prior to the printing and distributing of the writtenballots.
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Corp. Code § 7514 Form Of Proxy Or Written Ballot.
(a) Any form of proxy or written ballot distributed to 10 or more membersof a corporation with 100 or more members shall afford an opportunity on theproxy or form of written ballot to specify a choice between approval anddisapproval of each matter or group of related matters intended, at the time thewritten ballot or proxy is distributed, to be acted upon at the meeting for whichthe proxy is solicited or by such written ballot, and shall provide, subject toreasonable specified conditions, that where the person solicited specifies a choicewith respect to any such matter the vote shall be cast in accordance therewith.
(b) In any election of directors, any form of proxy or written ballot in whichthe directors to be voted upon are named therein as candidates and which ismarked by a member "withhold" or otherwise marked in a manner indicating thatthe authority to vote for the election of directors is withheld shall not be votedeither for or against the election of a director.
(c) Failure to comply with this section shall not invalidate any corporateaction taken, but may be the basis for challenging any proxy at a meeting orwritten ballot and the superior court may compel compliance therewith at thesuit of any member.
Corp. Code § 7515 Court Order For Meeting When Prescribed ProcedureUnduly Difficult.
(a) If for any reason it is impractical or unduly difficult for any corporationto call or conduct a meeting of its members, delegates or directors, or otherwiseobtain their consent, in the manner prescribed by its articles or bylaws, or thispart, then the superior court of the proper county, upon petition of a director,officer, delegate or member, may order that such a meeting be called or that awritten ballot or other form of obtaining the vote of members, delegates ordirectors be authorized, in such a manner as the court finds fair and equitableunder the circumstances.
(b) The court shall, in an order issued pursuant to this section, provide fora method of notice reasonably designed to give actual notice to all parties whowould be entitled to notice of a meeting held pursuant to the articles, bylaws andthis part, whether or not the method results in actual notice to every such person,or conforms to the notice requirements that would otherwise apply. In aproceeding under this section the court may determine who the members ordirectors are.
(c) The order issued pursuant to this section may dispense with anyrequirement relating to the holding of and voting at meetings or obtaining of votes,including any requirement as to quorums or as to the number or percentage ofvotes needed for approval, that would otherwise be imposed by the articles,bylaws, or this part.
(d) Wherever practical any order issued pursuant to this section shall limitthe subject matter of the meetings or other forms of consent authorized to items,including amendments to the articles or bylaws, the resolution of which will ormay enable the corporation to continue managing its affairs without further resort
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to this section; provided, however, that an order under this section may alsoauthorize the obtaining of whatever votes and approvals are necessary for thedissolution, merger, sale of assets or reorganization of the corporation.
(e) Any meeting or other method of obtaining the vote of members,delegates or directors conducted pursuant to an order issued under this section,and which complies with all the provisions of such order, is for all purposes avalid meeting or vote, as the case may be, and shall have the same force andeffect as if it complied with every requirement imposed by the articles, bylaws,and this part.
Corp. Code § 7516 Action By Written Consent.
Any action required or permitted to be taken by the members may be takenwithout a meeting, if all members shall individually or collectively consent inwriting to the action. The written consent or consents shall be filed with theminutes of the proceedings of the members. The action by written consent shallhave the same force and effect as the unanimous vote of the members.
Corp. Code § 7517 Ballot; Consent; Waiver; Proxy Appointment; NamesSigned; Acceptance.
(a) If the name signed on a ballot, consent, waiver, or proxy appointmentcorresponds to the name of a member, the corporation if acting in good faith isentitled to accept the ballot, consent, waiver or proxy appointment and give iteffect as the act of the member.
(b) If the name signed on a ballot, consent, waiver, or proxy appointmentdoes not correspond to the record name of a member, the corporation if acting ingood faith is nevertheless entitled to accept the ballot, consent, waiver, or proxyappointment and give it effect as the act of the member if any of the followingoccur:
(1) The member is an entity and the name signed purports to be that ofan officer or agent of the entity.
(2) The name signed purports to be that of an attorney-in-fact of themember and if the corporation requests, evidence acceptable to thecorporation of the signatory's authority to sign for the member has beenpresented with the respect to the ballot, consent, waiver, or proxyappointment.
(3) Two or more persons hold the membership as cotenants orfiduciaries and the name signed purports to be the name of at least one of theco-holders and the person signing appears to be acting on behalf of all theco-holders.
(4) The name signed purports to be that of an administrator, executor,guardian, or conservator representing the member and, if the corporationrequests, evidence of fiduciary status acceptable to the corporation has beenpresented with respect to the ballot, consent, waiver, or proxy appointment.
(5) The name signed purports to be that of a receiver or trustee inbankruptcy of the member, and, if the corporation requests, evidence of this
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status acceptable to the corporation has been presented with respect to theballot, consent, waiver, or proxy appointment.
(c) The corporation is entitled to reject a ballot, consent, waiver, or proxyappointment if the secretary or other officer or agent authorized to tabulate votes,acting in good faith, has a reasonable basis for doubt concerning the validity ofthe signature or the signatory's authority to sign for the member.
(d) The corporation and any officer or agent thereof who accepts or rejectsa ballot, consent, waiver, or proxy appointment in good faith and in accordancewith the standards of this section shall not be liable in damages to the member forthe consequences of the acceptance or rejection.
(e) Corporate action based on the acceptance or rejection of a ballot,consent, waiver, or proxy appointment under this section is valid unless a courtof competent jurisdiction determines otherwise.
H. ADDITIONAL PROVISIONS RELATING TO ELECTION OF DIRECTORS
Corp. Code § 7520 Nomination And Election Procedures.
(a) As to directors elected by members, there shall be available to themembers reasonable nomination and election procedures given the nature, sizeand operations of the corporation.
(b) If a corporation complies with all of the provisions of Section 7521,7522, 7523, and 7524 applicable to a corporation with the same number ofmembers, the nomination and election procedures of that corporation, shall bedeemed reasonable. However, those sections do not prescribe the exclusivemeans of making available to the members reasonable procedures for nominationand election of directors. A corporation may make available to the membersother reasonable nomination and election procedures given the nature, size, andoperations of the corporation.
(c) Subject to the provisions of subdivisions (a), (b), and (d) of Section 7616,the superior court of the proper county shall enforce the provisions of this section.
Corp. Code § 7521 Eligibility; Methods Of Nomination.
A corporation with 500 or more members may provide that, except for directorswho are elected as authorized by Section 7152 or 7153, and except as providedin Section 7522, any person who is qualified to be elected to the board ofdirectors of a corporation may be nominated:
(a) By any method authorized by the bylaws, or if no method is set forth inthe bylaws by any method authorized by the board;
(b) By petition delivered to an officer of the corporation, signed within 11months preceding the next time directors will be elected, by membersrepresenting the following number of votes:
Number of Votes Eligible Number of Votesto be Cast for DirectorDisregarding any Provisionfor Cumulative Voting
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Under 5,000 ..............................2 percent of voting power5,000 or more............................one-twentieth of 1 percent of voting power
but not less than 100.
This subdivision does not apply to a corporation described in subdivision (c).
(c) In corporations with one million or more members engaged primarily inthe business of retail merchandising of consumer goods, by petition delivered toan officer of the corporation, signed within 11 months preceding the next timedirectors will be elected, by such reasonable number of members as is set forthin the bylaws, or if no number is set forth in the bylaws, by such reasonablenumber of members as is determined by the directors.
(d) If there is a meeting to elect directors, by any member present at themeeting in person or by proxy if proxies are permitted.
Corp. Code § 7522 Corporations Of 5,000 Or More Members; Close OfNominations; Solicitation Of Votes; Uncontested Nominees DeclaredElected.
A corporation with 5,000 or more members may provide that, in any election ofa director or directors by members of the corporation except for an electionauthorized by Section 7152 or 7153:
(a) The corporation's articles or bylaws shall set a date for the close ofnominations for the board. The date shall not be less than 50 nor more than 120days before the day directors are to be elected. No nominations for the board canbe made after the date set for the close of nominations.
(b) If more people are nominated for the board than can be elected, theelection shall take place by means of a procedure which allows all nominees areasonable opportunity to solicit votes and all members a reasonable opportunityto choose among the nominees.
(c) A nominee shall have a reasonable opportunity to communicate to themembers the nominee's qualifications and the reasons for the nominee'scandidacy.
(d) If after the close of nominations the number of people nominated forthe board is not more than the number of directors to be elected, the corporationmay without further action declare that those nominated and qualified to beelected have been elected.
Corp. Code § 7523 Corporate Publication Soliciting Votes.
Where a corporation with 500 or more members publishes any material solicitinga vote for any nominee for director in any publication owned or controlled by thecorporation, the corporation may provide that it shall make available to all othernominees, in the same issue of the publication, an equal amount of space, withequal prominence, to be used by the nominee for a purpose reasonably relatedto the election.
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Corp. Code § 7524 Mailing Candidate's Election Material; Payment OfCosts.
A corporation with 500 or more members may provide that upon written requestby any nominee for election to the board and the payment of the reasonable costsof mailing (including postage), the corporation shall within 10 business days aftersuch request (provided payment has been made) mail to all members, or suchportion of them as the nominee may reasonably specify, any material, which thenominee may furnish and which is reasonably related to the election, unless thecorporation within five business days after the request allows the nominee, at thecorporation's option, the rights set forth in either paragraph (1) or (2) of subdivision(a) of Section 8330.
Corp. Code § 7525 Corporate Exemption From Liability For Content OfCandidate's Material; Liability Of Candidate.
(a) This section shall apply to corporations publishing or mailing materialson behalf of any nominee in connection with procedures for the nomination andelection of directors.
(b) Neither the corporation, nor its agents, officers, directors, or employees,may be held criminally liable, liable for any negligence (active or passive) orotherwise liable for damages to any person on account of any material which issupplied by a nominee for director and which it mails or publishes in proceduresintended to comply with Section 7520 pursuant to Section 7523 or 7524 but thenominee on whose behalf such material was published or mailed shall be liableand shall indemnify and hold the corporation, its agents, officers, directors, andemployees and each of them harmless from all demands, costs, includingreasonable legal fees and expenses, claims, damages and causes of action arisingout of such material or any such mailing or publication.
(c) Nothing in this section shall prevent a corporation or any of its agents,officers, directors, or employees from seeking a court order providing that thecorporation need not mail or publish material tendered by or on behalf of anominee under this article on the ground the material will expose the movingparty to liability.
Corp. Code § 7526 Use Of Corporate Funds To Support Candidate.
Without authorization of the board, no corporation funds may be expended tosupport a nominee for director after there are more people nominated for directorthan can be elected.
Corp. Code § 7527 Limitation Of Actions; Validity Of Election;Appointment Or Removal Of Director.
An action challenging the validity of any election, appointment or removal of adirector or directors must be commenced within nine months after the election,appointment or removal. If no such action is commenced, in the absence offraud, any election, appointment or removal of a director is conclusivelypresumed valid nine months thereafter.
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I. VOTING OF MEMBERSHIPS
Corp. Code § 7610 One Vote For Each Membership; Exceptions.
Except as provided in a corporation's articles or bylaws or Section 7615, eachmember shall be entitled to one vote on each matter submitted to a vote of themembers. Single memberships in which two or more persons have an indivisibleinterest shall be voted as provided in Section 7612.
Corp. Code § 7611 Record Date; Right To Vote; Notice; Adjournment.
(a) The bylaws may provide or, in the absence of such provision, the boardmay fix, in advance, a date as the record date for the purpose of determining themembers entitled to notice of any meeting of members. Such record date shallnot be more than 90 nor less than 10 days before the date of the meeting. If norecord date is fixed, members at the close of business on the business daypreceding the day on which notice is given or, if notice is waived, at the close ofbusiness on the business day preceding the day on which the meeting is held areentitled to notice of a meeting of members. A determination of members entitledto notice of a meeting of members shall apply to any adjournment of the meetingunless the board fixes a new record date for the adjourned meeting.
(b) The bylaws may provide or, in the absence of such provision, the boardmay fix, in advance, a date as the record date for the purpose of determining themembers entitled to vote at a meeting of members. Such record date shall not bemore than 60 days before the date of the meeting. Such record date shall alsoapply in the case of an adjournment of the meeting unless the board fixes a newrecord date for the adjourned meeting. If no record date is fixed, members on thedate of the meeting who are otherwise eligible to vote are entitled to vote at themeeting of members or, in the case of an adjourned meeting, members on thedate of the adjourned meeting who are otherwise eligible to vote are entitled tovote at the adjourned meeting of members.
(c) The bylaws may provide or, in the absence of such provision, the boardmay fix, in advance, a date as the record date for the purpose of determining themembers entitled to cast written ballots (Section 7513). Such record date shall notbe more than 60 days before the day on which the first written ballot is mailed orsolicited. If no record date is fixed, members on the day the first written ballot ismailed or solicited who are otherwise eligible to vote are entitled to cast writtenballots.
(d) The bylaws may provide or, in the absence of such provision, the boardmay fix, in advance, a date as the record date for the purpose of determining themembers entitled to exercise any rights in respect of any other lawful action. Suchrecord date shall not be more than 60 days prior to such other action. If no recorddate is fixed, members at the close of business on the day on which the boardadopts the resolution relating thereto, or the 60th day prior to the date of suchother action, whichever is later, are entitled to exercise such rights.
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Corp. Code § 7612 Memberships In Names Of Two Or More Persons.
If a membership stands of record in the names of two or more persons, whetherfiduciaries, members of a partnership, joint tenants, tenants in common, husbandand wife as community property, tenants by the entirety, persons entitled to voteunder a voting agreement or otherwise, or if two or more persons (includingproxyholders) have the same fiduciary relationship respecting the samemembership, unless the secretary of the corporation is given written notice to thecontrary and is furnished with a copy of the instrument or order appointing themor creating the relationship wherein it is so provided, their acts with respect tovoting shall have the following effect:
(a) If only one votes, such act binds all; or
(b) If more than one vote, the act of the majority so voting binds all.
Corp. Code § 7613 Proxies.
(a) Any member may authorize another person or persons to act by proxywith respect to such membership except that this right may be limited orwithdrawn by the articles or bylaws, subject to subdivision (f). Any proxypurported to be executed in accordance with the provisions of this part shall bepresumptively valid.
(b) No proxy shall be valid after the expiration of 11 months from the datethereof unless otherwise provided in the proxy, except that the maximum term ofany proxy shall be three years from the date of execution. Every proxy continuesin full force and effect until revoked by the person executing it prior to the votepursuant thereto, except as otherwise provided in this section. Such revocationmay be effected by a writing delivered to the corporation stating that the proxy isrevoked or by a subsequent proxy executed by the person executing the priorproxy and presented to the meeting, or as to any meeting by attendance at suchmeeting and voting in person by the person executing the proxy. The datescontained on the forms of proxy presumptively determine the order of execution,regardless of the postmark dates on the envelopes in which they are mailed.
(c) A proxy is not revoked by the death or incapacity of the maker or thetermination of a membership as a result thereof unless, before the vote is counted,written notice of such death or incapacity is received by the corporation.
(d) Unless otherwise provided in the articles or bylaws, the proxy of amember which states that it is irrevocable is irrevocable for the period specifiedtherein (notwithstanding subdivisions (b) and (c)) when it is held by any of thefollowing or a nominee of any of the following:
(1) A person who has purchased or who has agreed to purchase themembership;
(2) A creditor or creditors of the corporation or the member whoextended or continued credit to the corporation or the member inconsideration of the proxy if the proxy states that it was given inconsideration of such extension or continuation of credit and the name of theperson extending or continuing the credit; or
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(3) A person who has contracted to perform services as an employeeof the corporation, if the proxy is required by the contract of employment andif the proxy states that it was given in consideration of such contract oremployment, the name of the employee and the period of employmentcontracted for.
Notwithstanding the period of irrevocability specified, the proxy becomesrevocable when the agreement to purchase is terminated; the debt of thecorporation or the member is paid; or the period of employment provided for inthe contract of employment has terminated. In addition to the foregoingparagraphs (1) through (3), a proxy of a member may be made irrevocable(notwithstanding subdivision (c) if it is given to secure the performance of a dutyor to protect a title, either legal or equitable, until the happening of events which,by its terms, discharge the obligations secured by it.
(e) A proxy may be revoked, notwithstanding a provision making itirrevocable, by a transferee of a membership without knowledge of the existenceof the provision unless the existence of the proxy and its irrevocability appears onthe certificate representing the membership.
(f) Subdivision (a) notwithstanding:
(1) No amendment of the articles or bylaws repealing, restricting,creating or expanding proxy rights may be adopted without approval by themembers (Section 5034); and
(2) No amendment of the articles or bylaws restricting or limiting theuse of proxies may affect the validity of a previously issued irrevocable proxyduring the term of its irrevocability, so long as it complied with applicableprovisions, if any, of the articles or bylaws at the time of its issuance, and isotherwise valid under this section.
(g) Anything to the contrary notwithstanding, any revocable proxy coveringmatters requiring a vote of the members pursuant to Section 7222; Section 7224;Section 7233; paragraph (1) of subdivision (f) of this section; Section 7812;paragraph (2) of subdivision (a) of Section 7911; Section 8012; subdivision (a) ofSection 8015; Section 8610; or subdivision (a) of Section 8719 is not valid as tosuch matters unless it sets forth the general nature of the matter to be voted on.
Corp. Code § 7614 Inspectors Of Election.
(a) In advance of any meeting of members, the board may appointinspectors of election to act at the meeting and any adjournment thereof. Ifinspectors of election are not so appointed, or if any persons so appointed fail toappear or refuse to act, the chairman of any meeting of members may, and on therequest of any member or a member's proxy shall, appoint inspectors of election(or persons to replace those who so fail or refuse) at the meeting. The number ofinspectors shall be either one or three. If appointed at a meeting on the requestof one or more members or proxies, the majority of members represented inperson or by proxy shall determine whether one or three inspectors are to beappointed. In the case of any action by written ballot (Section 7513), the boardmay similarly appoint inspectors of election to act with powers and duties as set
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forth in this section.
(b) The inspectors of election shall determine the number of membershipsoutstanding and the voting power of each, the number represented at the meeting,the existence of a quorum, and the authenticity, validity and effect of proxies,receive votes, ballots or consents, hear and determine all challenges andquestions in any way arising in connection with the right to vote, count andtabulate all votes or consents, determine when the polls shall close, determine theresult and do such acts as may be proper to conduct the election or vote withfairness to all members.
(c) The inspectors of election shall perform their duties impartially, in goodfaith, to the best of their ability and as expeditiously as is practical. If there arethree inspectors of election, the decision, act or certificate of a majority is effectivein all respects as the decision, act or certificate of all. Any report or certificatemade by the inspectors of election is prima facie evidence of the facts statedtherein.
Corp. Code § 7615 Cumulative Voting.
(a) If the articles or bylaws authorize cumulative voting, but not otherwise,every member entitled to vote at any election of directors may cumulate themember's votes and give one candidate a number of votes equal to the numberof directors to be elected multiplied by the number of votes to which the memberis entitled, or distribute the member's votes on the same principle among as manycandidates as the member thinks fit. An article or bylaw provision authorizingcumulative voting may be repealed or amended only by approval of the members(Section 5034), except that the governing article or bylaw provision may requirethe vote of a greater proportion of the members, or of the members of any class,for its repeal.
(b) No member shall be entitled to cumulate votes for a candidate orcandidates unless the candidate's name or candidates' names have been placedin nomination prior to the voting and the member has given notice at the meetingprior to the voting of the member's intention to cumulate votes. If any onemember has given this notice, all members may cumulate their votes forcandidates in nomination.
(c) In any election of directors by cumulative voting, the candidatesreceiving the highest number of votes are elected, subject to any lawful provisionspecifying election by classes.
(d) In any election of directors not governed by subdivision (c), unlessotherwise provided in the articles or bylaws, the candidates receiving the highestnumber of votes are elected.
(e) Elections for directors need not be by ballot unless a member demandselection by ballot at the meeting and before the voting begins or unless the bylawsso require.
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Corp. Code § 7616 Judicial Determination Of Validity Of Election OrAppointment.
(a) Upon the filing of an action therefor by any director or member or byany person who had the right to vote in the election at issue, the superior courtof the proper county shall determine the validity of any election or appointmentof any director of any corporation.
(b) In the case of a corporation holding assets in charitable trust, any personbringing an action under this section shall give notice of the action to the AttorneyGeneral, who may intervene.
(c) Upon the filing of the complaint, and before any further proceedingsare had, the court shall enter an order fixing a date for the hearing, which shallbe within five days unless for good cause shown a later date is fixed, and requiringnotice of the date for the hearing and a copy of complaint to be served upon thecorporation and upon the person whose purported election or appointment isquestioned and upon any person (other than the plaintiff) whom the plaintiffalleges to have been elected or appointed, in the manner in which a summons isrequired to be served, or, if the court so directs, by registered mail; and the courtmay make such further requirements as to notice as appear to be proper under thecircumstances.
(d) The court, consistent with the provisions of this part and in conformitywith the articles and bylaws to the extent feasible, may determine the personentitled to the office of director or may order a new election to be held orappointment to be made, may determine the validity, effectiveness andconstruction of voting agreements and voting trusts, the validity of the issuanceof memberships and the right of persons to vote and may direct such other reliefas may be just and proper.
J. RECORDS, REPORTS AND RIGHTS OF INSPECTION
Corp. Code § 8310 Records; Availability In Written Form.
If any record subject to inspection pursuant to this chapter is not maintained inwritten form, a request for inspection is not complied with unless and until thecorporation at its expense makes such record available in written form. For thepurposes of this chapter "written" or "in writing" also includes cathode ray tubeand similar electronic communications methods.
Corp. Code § 8311 Inspections; Persons Authorized; Copies.
Any inspection under this chapter may be made in person or by agent or attorneyand the right of inspection includes the right to copy and make extracts.
Corp. Code § 8313 Prohibited Limitation On Rights.
The rights of members provided in this chapter may not be limited by contract orthe articles or bylaws.
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K. REQUIRED RECORDS, REPORTS TO DIRECTORS AND MEMBERS
Corp. Code § 8320 Books And Records.
(a) Each corporation shall keep:
(1) Adequate and correct books and records of account;
(2) Minutes of the proceedings of its members, board and committeesof the board; and
(3) A record of its members giving their names and addresses and theclass of membership held by each.
(b) Those minutes and other books and records shall be kept either inwritten form or in any other form capable of being converted into clearly legibletangible form or in any combination of the foregoing. When minutes and otherbooks and records are kept in a form capable of being converted into clearlylegible paper form, the clearly legible paper form into which those minutes andother books and records are converted shall be admissible in evidence, andaccepted for all other purposes, to the same extent as an original paper record ofthe same information would have been, provided that the paper form accuratelyportrays the record.
Corp. Code § 8321 Duty To Notify Each Member Of Right To ReceiveFinancial Report; Annual Report; Contents; Accompaniments;Inapplicability Of Subdivision To Certain Corporations.
(a) A corporation shall notify each member yearly of the member's right toreceive a financial report pursuant to this subdivision. Except as provided insubdivision (c), upon written request of a member, the board shall promptly causethe most recent annual report to be sent to the requesting member. An annualreport shall be prepared not later than 120 days after the close of the corporation'sfiscal year. Unless otherwise provided by the articles or bylaws and if approvedby the board of directors, that report and any accompanying material may be sentby electronic transmission by the corporation (Section 20). That report shallcontain in appropriate detail the following:
(1) A balance sheet as of the end of that fiscal year and an incomestatement and a statement of cashflows for that fiscal year.
(2) A statement of the place where the names and addresses of thecurrent members are located.
(3) Any information required by Section 8322.
(b) The report required by subdivision (a) shall be accompanied by anyreport thereon of independent accountants, or, if there is no report, the certificateof an authorized officer of the corporation that the statements were preparedwithout audit from the books and records of the corporation.
(c) Subdivision (a) does not apply to any corporation that receives less thanten thousand dollars ($10,000) in gross revenues or receipts during the fiscal year.
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Corp. Code § 8322 Annual Statement Of Transaction With OrIndemnification Of Interested Person; Covered And Excluded Transactions;Required Contents.
(a) Any provision of the articles or bylaws notwithstanding, everycorporation shall furnish annually to its members and directors a statement of anytransaction or indemnification of a kind described in subdivision (d) or (e), if anysuch transaction or indemnification took place. If the corporation issues an annualreport to all members, this subdivision shall be satisfied by including the requiredinformation in the annual report. A corporation which does not issue an annualreport to all members, pursuant to subdivision (c) of Section 8321, shall satisfy thissection by mailing or delivering to its members the required statement within 120days after the close of the corporation's fiscal year. Unless otherwise provided bythe articles or bylaws and if approved by the board of directors, that statementmay be sent by electronic transmission by the corporation (Section 20).
(b) Except as provided in subdivision (c), a covered transaction under thissection is a transaction in which the corporation, its parent, or its subsidiary wasa party, and in which either of the following had a direct or indirect materialfinancial interest:
(1) Any director or officer of the corporation, or its parent or subsidiary.
(2) Any holder of more than 10 percent of the voting power of thecorporation, its parent or its subsidiary.
For the purpose of subdivision (d), an "interested person" is any person describedin paragraph (1) or (2) of this subdivision.
(c) Transactions approved by the members of a corporation (Section 5034),under subdivision (a) of Section 7233, are not covered transactions. For thepurpose of subdivision (b), a mere common directorship is not a material financialinterest.
(d) The statement required by subdivision (a) shall describe briefly:
(1) Any covered transaction (excluding compensation of officers anddirectors) during the previous fiscal year involving more than fifty thousanddollars ($50,000), or which was one of a number of covered transactions inwhich the same interested person had a direct or indirect material financialinterest, and which transactions in the aggregate involved more than fiftythousand dollars ($50,000).
(2) The names of the interested persons involved in such transactions,stating such person's relationship to the corporation, the nature of suchperson's interest in the transaction and, where practicable, the amount ofsuch interest; provided, that in the case of a transaction with a partnership ofwhich such person is a partner, only the interest of the partnership need bestated.
(e) The statement required by subdivision (a) shall describe briefly theamount and circumstances of any loans, guaranties, indemnifications oradvances aggregating more than ten thousand dollars ($10,000) paid or madeduring the fiscal year to any officer or director of the corporation pursuant to
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Section 7237; provided that no such report need be made in the case of aloan, guaranty, or indemnification approved by the members (Section 5034)or a loan or guaranty not subject to the provisions of subdivision (a) of Section7235.
Corp. Code § 8323 Court Enforcement Of Information And FinancialStatement Requirements; Costs And Attorneys' Fees.
(a) The superior court of the proper county shall enforce the duty of makingand mailing or delivering the information and financial statements required bythis article and, for good cause shown, may extend the time therefor.
(b) In any action or proceeding under this section, if the court finds thefailure of the corporation to comply with the requirements of this article to havebeen without justification, the court may award the member reasonable expenses,including attorneys' fees, in connection with such action or proceeding.
Corp. Code § 8325 Voting Results In Meetings; Information To MembersUpon Written Request.
For a period of 60 days following the conclusion of an annual, regular, or specialmeeting of members, a corporation shall, upon written request from a member,forthwith inform the member of the result of any particular vote of members takenat the meeting, including the number of memberships voting for, the number ofmemberships voting against, and the number of memberships abstaining orwithheld from voting. If the matter voted on was the election of directors, thecorporation shall report the number of memberships or votes if votedcumulatively, cast for each nominee for director. If more than one class or seriesof memberships voted, the report shall state the appropriate numbers by class andseries of memberships.
L. RIGHTS OF INSPECTION
Corp. Code § 8330 Demand; Persons; Authorized; Reason; AlternativeProposal.
(a) Subject to Sections 8331 and 8332, and unless the corporation providesa reasonable alternative pursuant to subdivision (c), a member may do either orboth of the following as permitted by subdivision (b):
(1) Inspect and copy the record of all members’ names, addresses andvoting rights, at reasonable times, upon five business days' prior writtendemand upon the corporation which demand shall state the purpose forwhich the inspection rights are requested; or
(2) Obtain from the secretary of the corporation, upon written demandand tender of a reasonable charge, a list of the names, addresses and votingrights of those members entitled to vote for the election of directors, as ofthe most recent record date for which it has been compiled or as of a datespecified by the member subsequent to the date of demand. The demandshall state the purpose for which the list is requested. The membership listshall be made available on or before the later of ten business days after thedemand is received or after the date specified therein as the date as of whichthe list is to be compiled.
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(b) The rights set forth in subdivision (a) may be exercised by:
(1) Any member, for a purpose reasonably related to such person'sinterest as a member. Where the corporation reasonably believes that theinformation will be used for another purpose, or where it provides areasonable alternative pursuant to subdivision (c), it may deny the memberaccess to the list. In any subsequent action brought by the member underSection 8336, the court shall enforce the rights set forth in subdivision (a)unless the corporation proves that the member will allow use of theinformation for purposes unrelated to the person's interest as a member orthat the alternative method offered reasonably achieves the proper purposeset forth in the demand.
(2) The authorized number of members for a purpose reasonablyrelated to the members' interest as members.
(c) The corporation may, within ten business days after receiving a demandunder subdivision (a), deliver to the person or persons making the demand awritten offer of an alternative method of achieving the purpose identified in saiddemand without providing access to or a copy of the membership list. Analternative method which reasonably and in a timely manner accomplishes theproper purpose set forth in a demand made under subdivision (a) shall be deemeda reasonable alternative, unless within a reasonable time after acceptance of theoffer the corporation fails to do those things which it offered to do. Any rejectionof the offer shall be in writing and shall indicate the reasons the alternativeproposed by the corporation does not meet the proper purpose of the demandmade pursuant to subdivision (a).
Corp. Code § 8331 Petition To Set Aside Demand; Petition For ProtectiveOrder; Time; Order; Costs; Mandamus; Damages.
(a) Where the corporation, in good faith, and with a substantial basis,believes that the membership list, demanded under Section 8330 by theauthorized number (Section 5036), will be used for a purpose not reasonablyrelated to the interests as members of the person or persons making the demand(hereinafter called the requesting parties) as members or provides a reasonablealternative pursuant to subdivision (c) of Section 8330, it may petition the superiorcourt of the proper county for an order setting aside the demand.
(b) Except as provided in subdivision (c), a petition for an order to showcause why a protective order pursuant to subdivision (d) should not issue shall befiled within 10 business days after the demand by the authorized number underSection 8330 or receipt of a written rejection by the authorized number of anoffer made pursuant subdivision (c) of Section 8330, whichever is later. Thepetition shall be accompanied by an application for a hearing on the petition.Upon the filing of the petition, the court shall issue a protective order stayingproduction of the list demanded until the hearing on the order to show cause.The court shall set the hearing on the order to show cause not more than 20 daysfrom the date of the filing of the petition. The order to show cause shall be grantedunless the court finds that there is no reasonable probability that the corporationwill make the showing required under subdivision (f).
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(c) A corporation may file a petition under this section more than 10business days after the demand or rejection under Section 8330, but only upon ashowing the delay was caused by excusable neglect. In no event, however, mayany petition under this section be considered if filed more than 30 days after therequesting parties' demand or rejection, whichever is later.
(d) Upon the return day of the order to show cause, the court may issue aprotective order staying production of the list demanded until final adjudicationof the petition filed pursuant to this section. No protective order shall issue underthis subdivision unless the court finds that the rights of the requesting parties canreasonably be preserved and that the corporation is likely to make the showingrequired by subdivision (f) or the court is likely to issue a protective order pursuantto subdivision (g).
(e) If the corporation fails to file a petition within the time allowed bysubdivision (b) or (c), whichever is applicable, or fails to obtain a protective orderunder subdivision (d), then the corporation shall comply with the demand, andno further action may be brought by the corporation under this section.
(f) The court shall issue the final order setting aside the demand only if thecorporation proves:
(1) That there is a reasonable probability that the requesting parties willpermit use of the membership list for a purpose unrelated to their interests asmembers; or
(2) That the method offered by the corporation is a reasonablealternative in that it reasonably achieves the proper purpose set forth in therequesting parties' demand and that the corporation intends and is able toeffectuate the reasonable alternative.
(g) In the final order, the court may, in its discretion, order an alternatemechanism for achieving the proper purposes of the requesting parties, or imposejust and proper conditions upon the use of the membership list which reasonablyassures compliance with Section 8330 and Section 8338.
(h) The court shall award reasonable costs and expenses includingreasonable attorneys' fees, to requesting parties who successfully oppose anypetition or application filed pursuant to this section.
(i) Where the corporation has neither, within the time allowed, compliedwith a demand by the authorized number (Section 5036) under Section 8330,nor obtained a protective order staying production of the list, or a final ordersetting aside the demand, which is then in effect, the requesting parties maypetition the superior court of the proper county for a writ of mandamus pursuantto Section 1085 of the Code of Civil Procedure compelling the corporation tocomply with the demand. At the hearing, the court shall hear the partiessummarily, by affidavit or otherwise, and shall issue a peremptory writ ofmandamus unless it appears that the demand was not made by an authorizednumber (Section 5036), that the demand has been complied with, that thecorporation, pursuant to subdivision (c) of Section 8330, made an offer whichwas not rejected in writing within a reasonable time, or that a protective or final
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order properly issued under subdivision (d), (f), or (g) is then in effect. No inquirymay be made in such proceeding into the use for which the authorized numberseek the list. The court shall award reasonable costs and expenses, includingreasonable attorneys' fees, to persons granted an order under this subdivision.
(j) Nothing in this section shall be construed to limit the right of thecorporation to obtain damages for any misuse of a membership list obtainedunder Section 8330, or otherwise, or to obtain injunctive relief necessary torestrain misuse of a member list. A corporation shall be entitled to recoverreasonable costs and expenses, including reasonable attorneys' fees, incurred insuccessfully bringing any such action.
Corp. Code § 8332 Restrictions To Protect Constitutional Rights Of OtherMembers.
(a) Upon petition of the corporation or any member, the superior court ofthe proper county may limit or restrict the rights set forth in Section 8330 where,and only where, such limitation or restriction is necessary to protect the rights ofany member under the Constitution of the United States or the Constitution of theState of California. An order issued pursuant to this subdivision shall provide,insofar as possible, for alternative mechanisms by which the persons seeking toexercise rights under Section 8330 may communicate with members for purposesreasonably related to their interests as members.
(b) Upon the filing of a petition under subdivision (a), the court may, ifrequested by the person making the petition, issue a temporary order suspendingthe running of any time limit specified in Section 8330 for compliance with thatsection. Such an order may be extended, after notice and hearing, until finaladjudication of the petition, wherever it appears that the petitioner may prevailon the merits, and it is otherwise equitable to do so.
Corp. Code § 8333 Accounting Books; Minutes; Demand; Purpose.
The accounting books and records and minutes of proceedings of the membersand the board and committees of the board shall be open to inspection upon thewritten demand on the corporation of any member at any reasonable time, for apurpose reasonably related to such person's interests as a member.
Corp. Code § 8334 Directors' Rights.
Every director shall have the absolute right at any reasonable time to inspect andcopy all books, records and documents of every kind and to inspect the physicalproperties of the corporation of which such person is a director.
Corp. Code § 8335 Frustration Of Inspection Rights By Corporate Delay;Court-Ordered Postponement Of Members' Meeting; Remedies.
Where the proper purpose of the person or persons making a demand pursuantto Section 8330 is frustrated by (1) any delay by the corporation in complyingwith a demand under Section 8330 beyond the time limits specified therein, or(2) any delay caused by the filing of a petition under Section 8331 or Section8332, or (3) any delay caused by the alternative proposed under subdivision (c)of Section 8330, the person or persons properly making the demand shall have,in the discretion of the court, a right to obtain from the superior court an order
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postponing any members' meeting previously noticed for a period equal to theperiod of such delay. The members may obtain such an order in a proceedingbrought pursuant to Section 8331 upon the filing of a verified complaint in theproper county and after a hearing, notice of which shall be given to such personsand in such manner as the court may direct. Such right shall be in addition to anyother legal or equitable remedies to which the member may be entitled.
Corp. Code § 8336 Court Enforcement Of Inspection Rights; Contempt OfCourt.
(a) Upon refusal of a lawful demand for inspection under this chapter, or alawful demand pursuant to Section 8330 or Section 8333, the superior court ofthe proper county, or the county where the books or records in question are kept,may enforce the demand or right of inspection with just and proper conditions ormay, for good cause shown, appoint one or more competent inspectors orindependent accountants to audit the financial statements kept in this state andinvestigate the property, funds and affairs of any corporation and of any subsidiarycorporation thereof, domestic or foreign, keeping records in this state and to reportthereon in such manner as the court may direct.
(b) All officers and agents of the corporation shall produce to the inspectorsor accountants so appointed all books and documents in their custody or power,under penalty of punishment for contempt of court.
(c) All expenses of the investigation or audit shall be defrayed by theapplicant unless the court orders them to be paid or shared by the corporation.
Corp. Code § 8337 Costs, Expenses And Attorney Fees.
In any action or proceeding under this article, and except as required by Section8331, if the court finds the failure of the corporation to comply with a properdemand thereunder was without justification, the court may award the memberreasonable costs and expenses, including reasonable attorneys' fees, inconnection with such action or proceeding.
Corp. Code § 8338 Membership List; Authorized And Prohibited Uses;Damages; Injunction; Costs, Expenses And Attorney Fees.
(a) A membership list is a corporate asset. Without consent of the board amembership list or any part thereof may not be obtained or used by any personfor any purpose not reasonably related to a member's interest as a member.Without limiting the generality of the foregoing, without the consent of the boarda membership list or any part thereof may not be:
(1) Used to solicit money or property unless such money or propertywill be used solely to solicit the vote of the members in an election to beheld by their corporation.
(2) Used for any purpose which the user does not reasonably and ingood faith believe will benefit the corporation.
(3) Used for any commercial purpose or purpose in competition withthe corporation.
(4) Sold to or purchased by any person.
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(b) Any person who violates the provisions of subdivision (a) shall be liablefor any damage such violation causes the corporation and shall account for andpay to the corporation any profit derived as a result of said violation. In addition,a court in its discretion may award exemplary damages for a fraudulent ormalicious violation of subdivision (a).
(c) Nothing in this article shall be construed to limit the right of acorporation to obtain injunctive relief necessary to restrain misuse of amembership list or any part thereof.
(d) In any action or proceeding under this section, a court may award thecorporation reasonable costs and expenses, including reasonable attorneys' fees,in connection with such action or proceeding.
(e) As used in this section, the term "membership list" means the record ofthe members' names and addresses.
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SIXPARKING AND TOWING
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Vehicle Code § 22651 Circumstances In Which Removal Permitted
A peace officer, as defined in Chapter 4.5 (commencing with Section 830) of Title3 of Part 2 of the Penal Code, or a regularly employed and salaried employee,who is engaged in directing traffic or enforcing parking laws and regulations, ofa city, county, or jurisdiction of a state agency in which a vehicle is located, mayremove a vehicle located within the territorial limits in which the officer oremployee may act, under the following circumstances:
(a) When a vehicle is left unattended upon a bridge, viaduct, or causewayor in a tube or tunnel where the vehicle constitutes an obstruction to traffic.
(b) When a vehicle is parked or left standing upon a highway in a positionso as to obstruct the normal movement of traffic or in a condition so as to createa hazard to other traffic upon the highway.
(c) When a vehicle is found upon a highway or public land and a report haspreviously been made that the vehicle is stolen or a complaint has been filed anda warrant thereon is issued charging that the vehicle was embezzled.
(d) When a vehicle is illegally parked so as to block the entrance to aprivate driveway and it is impractical to move the vehicle from in front of thedriveway to another point on the highway.
(e) When a vehicle is illegally parked so as to prevent access by firefightingequipment to a fire hydrant and it is impracticable to move the vehicle from infront of the fire hydrant to another point on the highway.
(f) When a vehicle, except highway maintenance or constructionequipment, is stopped, parked, or left standing for more than four hours upon theright-of-way of a freeway that has full control of access and no crossings at gradeand the driver, if present, cannot move the vehicle under its own power.
(g) When the person in charge of a vehicle upon a highway or public landis, by reason of physical injuries or illness, incapacitated to an extent so as to beunable to provide for its custody or removal.
(h) (1) When an officer arrests a person driving or in control of a vehiclefor an alleged offense and the officer is, by this code or other law, requiredor permitted to take, and does take, the person into custody.
(2) When an officer serves a notice of an order of suspension orrevocation pursuant to Section 13388 or 13389.
(i) (1) When a vehicle, other than a rented vehicle, is found upon ahighway or public land, or is removed pursuant to this code, and it is knownthat the vehicle has been issued five or more notices of parking violations towhich the owner or person in control of the vehicle has not responded within21 calendar days of notice of citation issuance or citation issuance or 14calendar days of the mailing of a notice of delinquent parking violation to theagency responsible for processing notices of parking violations, or theregistered owner of the vehicle is known to have been issued five or more
notices for failure to pay or failure to appear in court for traffic violations forwhich a certificate has not been issued by the magistrate or clerk of the courthearing the case showing that the case has been adjudicated or concerningwhich the registered owner's record has not been cleared pursuant toChapter 6 (commencing with Section 41500) of Division 17, the vehicle maybe impounded until that person furnishes to the impounding lawenforcement agency all of the following:
(A) Evidence of his or her identity.
(B) An address within this state at which he or she can be located.
(C) Satisfactory evidence that all parking penalties due for thevehicle and all other vehicles registered to the registered owner of theimpounded vehicle, and all traffic violations of the registered owner,have been cleared.
(2) The requirements in subparagraph (C) of paragraph (1) shall be fullyenforced by the impounding law enforcement agency on and after the timethat the Department of Motor Vehicles is able to provide access to thenecessary records.
(3) A notice of parking violation issued for an unlawfully parkedvehicle shall be accompanied by a warning that repeated violations mayresult in the impounding of the vehicle. In lieu of furnishing satisfactoryevidence that the full amount of parking penalties or bail has been deposited,that person may demand to be taken without unnecessary delay before amagistrate, for traffic offenses, or a hearing examiner, for parking offenses,within the county in which the offenses charged are alleged to have beencommitted and who has jurisdiction of the offenses and is nearest or mostaccessible with reference to the place where the vehicle is impounded.Evidence of current registration shall be produced after a vehicle has beenimpounded, or, at the discretion of the impounding law enforcement agency,a notice to appear for violation of subdivision (a) of Section 4000 shall beissued to that person.
(4) A vehicle shall be released to the legal owner, as defined in Section370, if the legal owner does all of the following:
(A) Pays the cost of towing and storing the vehicle.
(B) Submits evidence of payment of fees as provided in Section9561.
(C) Completes an affidavit in a form acceptable to the impoundinglaw enforcement agency stating that the vehicle was not in possessionof the legal owner at the time of occurrence of the offenses relating tostanding or parking. A vehicle released to a legal owner under thissubdivision is a repossessed vehicle for purposes of disposition or sale.The impounding agency shall have a lien on any surplus that remainsupon sale of the vehicle to which the registered owner is or may beentitled, as security for the full amount of the parking penalties for allnotices of parking violations issued for the vehicle and for all local
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administrative charges imposed pursuant to Section 22850.5. The legalowner shall promptly remit to, and deposit with, the agency responsiblefor processing notices of parking violations from that surplus, on receiptof that surplus, the full amount of the parking penalties for all notices ofparking violations issued for the vehicle and for all local administrativecharges imposed pursuant to Section 22850.5.
(5) The impounding agency that has a lien on the surplus that remainsupon the sale of a vehicle to which a registered owner is entitled pursuant toparagraph (4) has a deficiency claim against the registered owner for the fullamount of the parking penalties for all notices of parking violations issued forthe vehicle and for all local administrative charges imposed pursuant toSection 22850.5, less the amount received from the sale of the vehicle.
(j) When a vehicle is found illegally parked and there are no license platesor other evidence of registration displayed, the vehicle may be impounded untilthe owner or person in control of the vehicle furnishes the impounding lawenforcement agency evidence of his or her identity and an address within thisstate at which he or she can be located.
(k) When a vehicle is parked or left standing upon a highway for 72 or moreconsecutive hours in violation of a local ordinance authorizing removal.
(l) When a vehicle is illegally parked on a highway in violation of a localordinance forbidding standing or parking and the use of a highway, or a portionthereof, is necessary for the cleaning, repair, or construction of the highway, or forthe installation of underground utilities, and signs giving notice that the vehiclemay be removed are erected or placed at least 24 hours prior to the removal bya local authority pursuant to the ordinance.
(m) When the use of the highway, or a portion of the highway, is authorizedby a local authority for a purpose other than the normal flow of traffic or for themovement of equipment, articles, or structures of unusual size, and the parkingof a vehicle would prohibit or interfere with that use or movement, and signsgiving notice that the vehicle may be removed are erected or placed at least 24hours prior to the removal by a local authority pursuant to the ordinance.
(n) Whenever a vehicle is parked or left standing where local authorities, byresolution or ordinance, have prohibited parking and have authorized the removalof vehicles. Except as provided in subdivisions (v) and (w), a vehicle shall not beremoved unless signs are posted giving notice of the removal.
(o) (1) When a vehicle is found or operated upon a highway, public land,or an offstreet parking facility under the following circumstances:
(A) With a registration expiration date in excess of six monthsbefore the date it is found or operated on the highway, public lands, orthe offstreet parking facility.
(B) Displaying in, or upon, the vehicle, a registration card,identification card, temporary receipt, license plate, special plate,registration sticker, device issued pursuant to Section 4853, or permitthat was not issued for that vehicle, or is not otherwise lawfully used on
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that vehicle under this code.
(C) Displaying in, or upon, the vehicle, an altered, forged,counterfeit, or falsified registration card, identification card, temporaryreceipt, license plate, special plate, registration sticker, device issuedpursuant to Section 4853, or permit.
(2) When a vehicle described in paragraph (1) is occupied, only apeace officer, as defined in Chapter 4.5 (commencing with Section 830) ofTitle 3 of Part 2 of the Penal Code, may remove the vehicle.
(3) For the purposes of this subdivision, the vehicle shall be releasedunder either of the following circumstances:
(A) To the registered owner or person in control of the vehicle onlyafter the owner or person furnishes the storing law enforcement agencywith proof of current registration and a currently valid driver's license tooperate the vehicle.
(B) To the legal owner or the legal owner's agency, withoutpayment of any fees, fines, or penalties for parking tickets or registrationand without proof of current registration, if the vehicle will only betransported pursuant to the exemption specified in Section 4022 and ifthe legal owner does all of the following:
(i) Pays the cost of towing and storing the vehicle.
(ii) Completes an affidavit in a form acceptable to theimpounding law enforcement agency stating that the vehicle wasnot in possession of the legal owner at the time of occurrence of anoffense relating to standing or parking. A vehicle released to a legalowner under this subdivision is a repossessed vehicle for purposesof disposition or sale. The impounding agency has a lien on anysurplus that remains upon sale of the vehicle to which the registeredowner is or may be entitled, as security for the full amount ofparking penalties for any notices of parking violations issued for thevehicle and for all local administrative charges imposed pursuant toSection 22850.5. Upon receipt of any surplus, the legal owner shallpromptly remit to, and deposit with, the agency responsible forprocessing notices of parking violations from that surplus, the fullamount of the parking penalties for all notices of parking violationsissued for the vehicle and for all local administrative chargesimposed pursuant to Section 22850.5.
(4) The impounding agency that has a lien on the surplus that remainsupon the sale of a vehicle to which a registered owner is entitled has adeficiency claim against the registered owner for the full amount of parkingpenalties for any notices of parking violations issued for the vehicle and forall local administrative charges imposed pursuant to Section 22850.5, lessthe amount received from the sale of the vehicle.
(5) As used in this subdivision, "offstreet parking facility" means anoffstreet facility held open for use by the public for parking vehicles and
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includes a publicly owned facility for offstreet parking, and a privately ownedfacility for offstreet parking if a fee is not charged for the privilege to parkand it is held open for the common public use of retail customers.
(p) When the peace officer issues the driver of a vehicle a notice to appearfor a violation of Section 12500, 14601, 14601.1, 14601.2, 14601.3, 14601.4,14601.5, or 14604 and the vehicle is not impounded pursuant to Section22655.5. A vehicle so removed from the highway or public land, or from privateproperty after having been on a highway or public land, shall not be released tothe registered owner or his or her agent, except upon presentation of the registeredowner's or his or her agent's currently valid driver's license to operate the vehicleand proof of current vehicle registration, or upon order of a court.
(q) When a vehicle is parked for more than 24 hours on a portion ofhighway that is located within the boundaries of a common interest development,as defined in subdivision (c) of Section 1351 of the Civil Code, and signs, asrequired by paragraph (1) of subdivision (a) of Section 22658 of this code, havebeen posted on that portion of highway providing notice to drivers that vehiclesparked thereon for more than 24 hours will be removed at the owner's expense,pursuant to a resolution or ordinance adopted by the local authority.
(r) When a vehicle is illegally parked and blocks the movement of a legallyparked vehicle.
(s) (1) When a vehicle, except highway maintenance or constructionequipment, an authorized emergency vehicle, or a vehicle that is properlypermitted or otherwise authorized by the Department of Transportation, isstopped, parked, or left standing for more than eight hours within a roadsiderest area or viewpoint.
(2) Notwithstanding paragraph (1), when a commercial motor vehicle,as defined in paragraph (1) of subdivision (b) of Section 15210, is stopped,parked, or left standing for more than 10 hours within a roadside rest area orviewpoint.
(3) For purposes of this subdivision, a roadside rest area or viewpointis a publicly maintained vehicle parking area, adjacent to a highway, utilizedfor the convenient, safe stopping of a vehicle to enable motorists to rest or toview the scenery. If two or more roadside rest areas are located on oppositesides of the highway, or upon the center divider, within seven miles of eachother, then that combination of rest areas is considered to be the same restarea.
(t) When a peace officer issues a notice to appear for a violation of Section25279.
(u) When a peace officer issues a citation for a violation of Section 11700and the vehicle is being offered for sale.
(v) (1) When a vehicle is a mobile billboard advertising display, as definedin Section 395.5, and is parked or left standing in violation of a localresolution or ordinance adopted pursuant to subdivision (m) of Section21100, if the registered owner of the vehicle was previously issued a warning
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citation for the same offense, pursuant to paragraph (2).
(2) Notwithstanding subdivision (a) of Section 22507, a city or county,in lieu of posting signs noticing a local ordinance prohibiting mobilebillboard advertising displays adopted pursuant to subdivision (m) of Section21100, may provide notice by issuing a warning citation advising theregistered owner of the vehicle that he or she may be subject to penaltiesupon a subsequent violation of the ordinance, that may include the removalof the vehicle as provided in paragraph (1). A city or county is not requiredto provide further notice for a subsequent violation prior to the enforcementof penalties for a violation of the ordinance.
(w) (1) When a vehicle is parked or left standing in violation of a localordinance or resolution adopted pursuant to subdivision (p) of Section 21100,if the registered owner of the vehicle was previously issued a warning citationfor the same offense, pursuant to paragraph (2).
(2) Notwithstanding subdivision (a) of Section 22507, a city or county,in lieu of posting signs noticing a local ordinance regulating advertising signsadopted pursuant to subdivision (p) of Section 21100, may provide noticeby issuing a warning citation advising the registered owner of the vehiclethat he or she may be subject to penalties upon a subsequent violation ofthe ordinance that may include the removal of the vehicle as provided inparagraph (1). A city or county is not required to provide further notice for asubsequent violation prior to the enforcement of penalties for a violation ofthe ordinance.
Vehicle Code § 22651.05 Trained Volunteers Of State Or Local LawEnforcement Agencies; Requirements; Circumstances Permitting Removal
(a) A trained volunteer of a state or local law enforcement agency, who isengaged in directing traffic or enforcing parking laws and regulations, of a city,county, or jurisdiction of a state agency in which a vehicle is located, may removeor authorize the removal of a vehicle located within the territorial limits in whichan officer or employee of that agency may act, under any of the followingcircumstances:
(1) When a vehicle is parked or left standing upon a highway for 72 ormore consecutive hours in violation of a local ordinance authorizing theremoval.
(2) When a vehicle is illegally parked or left standing on a highway inviolation of a local ordinance forbidding standing or parking and the use ofa highway, or a portion thereof, is necessary for the cleaning, repair, orconstruction of the highway, or for the installation of underground utilities,and signs giving notice that the vehicle may be removed are erected orplaced at least 24 hours prior to the removal by local authorities pursuant tothe ordinance.
(3) Wherever the use of the highway, or a portion thereof, is authorizedby local authorities for a purpose other than the normal flow of traffic or forthe movement of equipment, articles, or structures of unusual size, and the
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parking of a vehicle would prohibit or interfere with that use or movement,and signs giving notice that the vehicle may be removed are erected orplaced at least 24 hours prior to the removal by local authorities pursuant tothe ordinance.
(4) Whenever a vehicle is parked or left standing where localauthorities, by resolution or ordinance, have prohibited parking and haveauthorized the removal of vehicles. A vehicle may not be removed unlesssigns are posted giving notice of the removal.
(5) Whenever a vehicle is parked for more than 24 hours on a portionof highway that is located within the boundaries of a common interestdevelopment, as defined in subdivision (c) of Section 1351 of the Civil Code,and signs, as required by Section 22658.2, have been posted on that portionof highway providing notice to drivers that vehicles parked thereon for morethan 24 hours will be removed at the owner's expense, pursuant to aresolution or ordinance adopted by the local authority.
(b) The provisions of this chapter that apply to a vehicle removed pursuantto Section 22651 apply to a vehicle removed pursuant to subdivision (a).
(c) For purposes of subdivision (a), a "trained volunteer" is a person who, ofhis or her own free will, provides services, without any financial gain, to a localor state law enforcement agency, and who is duly trained and certified to removea vehicle by a local or state law enforcement agency.
Vehicle Code § 22658 Removal Of Vehicle From Private Property ByProperty Owner; Towing Companies And Charges
(a) The owner or person in lawful possession of private property, includingan association of a common interest development as defined in Section 1351 ofthe Civil Code, may cause the removal of a vehicle parked on the property to astorage facility that meets the requirements of subdivision (n) under any of thefollowing circumstances:
(1) There is displayed, in plain view at all entrances to the property, asign not less than 17 inches by 22 inches in size, with lettering not less thanone inch in height, prohibiting public parking and indicating that vehicleswill be removed at the owner's expense, and containing the telephonenumber of the local traffic law enforcement agency and the name andtelephone number of each towing company that is a party to a writtengeneral towing authorization agreement with the owner or person in lawfulpossession of the property. The sign may also indicate that a citation mayalso be issued for the violation.
(2) The vehicle has been issued a notice of parking violation, and 96hours have elapsed since the issuance of that notice.
(3) The vehicle is on private property and lacks an engine,transmission, wheels, tires, doors, windshield, or any other major part orequipment necessary to operate safely on the highways, the owner or personin lawful possession of the private property has notified the local traffic lawenforcement agency, and 24 hours have elapsed since that notification.
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(4) The lot or parcel upon which the vehicle is parked is improved witha single-family dwelling.
(b) The tow truck operator removing the vehicle, if the operator knows oris able to ascertain from the property owner, person in lawful possession of theproperty, or the registration records of the Department of Motor Vehicles the nameand address of the registered and legal owner of the vehicle, shall immediatelygive, or cause to be given, notice in writing to the registered and legal owner ofthe fact of the removal, the grounds for the removal, and indicate the place towhich the vehicle has been removed. If the vehicle is stored in a storage facility,a copy of the notice shall be given to the proprietor of the storage facility. Thenotice provided for in this section shall include the amount of mileage on thevehicle at the time of removal and the time of the removal from the property. Ifthe tow truck operator does not know and is not able to ascertain the name of theowner or for any other reason is unable to give the notice to the owner asprovided in this section, the tow truck operator shall comply with therequirements of subdivision (c) of Section 22853 relating to notice in the samemanner as applicable to an officer removing a vehicle from private property.
(c) This section does not limit or affect any right or remedy that the owneror person in lawful possession of private property may have by virtue of otherprovisions of law authorizing the removal of a vehicle parked upon privateproperty.
(d) The owner of a vehicle removed from private property pursuant tosubdivision (a) may recover for any damage to the vehicle resulting from anyintentional or negligent act of a person causing the removal of, or removing, thevehicle.
(e) (1) An owner or person in lawful possession of private property, or anassociation of a common interest development, causing the removal of avehicle parked on that property is liable for double the storage or towingcharges whenever there has been a failure to comply with paragraph (1), (2),or (3) of subdivision (a) or to state the grounds for the removal of the vehicleif requested by the legal or registered owner of the vehicle as required bysubdivision (f).
(2) A property owner or owner's agent or lessee who causes theremoval of a vehicle parked on that property pursuant to the exemption setforth in subparagraph (A) of paragraph (1) of subdivision (l) and fails tocomply with that subdivision is guilty of an infraction, punishable by a fineof one thousand dollars ($ 1,000).
(f) An owner or person in lawful possession of private property, or anassociation of a common interest development, causing the removal of a vehicleparked on that property shall notify by telephone or, if impractical, by the mostexpeditious means available, the local traffic law enforcement agency within onehour after authorizing the tow. An owner or person in lawful possession of privateproperty, an association of a common interest development, causing the removalof a vehicle parked on that property, or the tow truck operator who removes thevehicle, shall state the grounds for the removal of the vehicle if requested by the
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legal or registered owner of that vehicle. A towing company that removes avehicle from private property in compliance with subdivision (l) is not responsiblein a situation relating to the validity of the removal. A towing company thatremoves the vehicle under this section shall be responsible for the following:
(1) Damage to the vehicle in the transit and subsequent storage of thevehicle.
(2) The removal of a vehicle other than the vehicle specified by theowner or other person in lawful possession of the private property.
(g) (1) (A) Possession of a vehicle under this section shall be deemed toarise when a vehicle is removed from private property and is in transit.
(B) Upon the request of the owner of the vehicle or that owner'sagent, the towing company or its driver shall immediately andunconditionally release a vehicle that is not yet removed from theprivate property and in transit.
(C) A person failing to comply with subparagraph (B) is guilty of amisdemeanor.
(2) If a vehicle is released to a person in compliance with subparagraph(B) of paragraph (1), the vehicle owner or authorized agent shall immediatelymove that vehicle to a lawful location.
(h) A towing company may impose a charge of not more than one-half ofthe regular towing charge for the towing of a vehicle at the request of the owner,the owner's agent, or the person in lawful possession of the private propertypursuant to this section if the owner of the vehicle or the vehicle owner's agentreturns to the vehicle after the vehicle is coupled to the tow truck by means of aregular hitch, coupling device, drawbar, portable dolly, or is lifted off the groundby means of a conventional trailer, and before it is removed from the privateproperty. The regular towing charge may only be imposed after the vehicle hasbeen removed from the property and is in transit.
(i) (1) (A) A charge for towing or storage, or both, of a vehicle under thissection is excessive if the charge exceeds the greater of the following:
(i) That which would have been charged for that towing orstorage, or both, made at the request of a law enforcement agencyunder an agreement between a towing company and the lawenforcement agency that exercises primary jurisdiction in the cityin which is located the private property from which the vehiclewas, or was attempted to be, removed, or if the private property isnot located within a city, then the law enforcement agency thatexercises primary jurisdiction in the county in which the privateproperty is located.
(ii) That which would have been charged for that towing orstorage, or both, under the rate approved for that towing operatorby the California Highway Patrol for the jurisdiction in which theprivate property is located and from which the vehicle was, or wasattempted to be, removed.
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(B) A towing operator shall make available for inspection andcopying his or her rate approved by the California Highway Patrol, ifany, within 24 hours of a request without a warrant to law enforcement,the Attorney General, district attorney, or city attorney.
(2) If a vehicle is released within 24 hours from the time the vehicle isbrought into the storage facility, regardless of the calendar date, the storagecharge shall be for only one day. Not more than one day's storage chargemay be required for a vehicle released the same day that it is stored.
(3) If a request to release a vehicle is made and the appropriate fees aretendered and documentation establishing that the person requesting releaseis entitled to possession of the vehicle, or is the owner's insurancerepresentative, is presented within the initial 24 hours of storage, and thestorage facility fails to comply with the request to release the vehicle or is notopen for business during normal business hours, then only one day's storagecharge may be required to be paid until after the first business day. A businessday is any day in which the lienholder is open for business to the public forat least eight hours. If a request is made more than 24 hours after the vehicleis placed in storage, charges may be imposed on a full calendar day basis foreach day, or part thereof, that the vehicle is in storage.
(j) (1) A person who charges a vehicle owner a towing, service, or storagecharge at an excessive rate, as described in subdivision (h) or (i), is civillyliable to the vehicle owner for four times the amount charged.
(2) A person who knowingly charges a vehicle owner a towing,service, or storage charge at an excessive rate, as described in subdivision (h)or (i), or who fails to make available his or her rate as required insubparagraph (B) of paragraph (1) of subdivision (i), is guilty of amisdemeanor, punishable by a fine of not more than two thousand fivehundred dollars ($ 2,500), or by imprisonment in the county jail for not morethan three months, or by both that fine and imprisonment.
(k) (1) A person operating or in charge of a storage facility where vehiclesare stored pursuant to this section shall accept a valid bank credit card orcash for payment of towing and storage by a registered owner, the legalowner, or the owner's agent claiming the vehicle. A credit card shall be in thename of the person presenting the card. "Credit card" means "credit card" asdefined in subdivision (a) of Section 1747.02 of the Civil Code, except, forthe purposes of this section, credit card does not include a credit card issuedby a retail seller.
(2) A person described in paragraph (1) shall conspicuously display, inthat portion of the storage facility office where business is conducted with thepublic, a notice advising that all valid credit cards and cash are acceptablemeans of payment.
(3) A person operating or in charge of a storage facility who refuses toaccept a valid credit card or who fails to post the required notice underparagraph (2) is guilty of a misdemeanor, punishable by a fine of not morethan two thousand five hundred dollars ($ 2,500), or by imprisonment in the
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county jail for not more than three months, or by both that fine andimprisonment.
(4) A person described in paragraph (1) who violates paragraph (1) or(2) is civilly liable to the registered owner of the vehicle or the person whotendered the fees for four times the amount of the towing and storage charges.
(5) A person operating or in charge of the storage facility shall havesufficient moneys on the premises of the primary storage facility duringnormal business hours to accommodate, and make change in, a reasonablemonetary transaction.
(6) Credit charges for towing and storage services shall comply withSection 1748.1 of the Civil Code. Law enforcement agencies may include thecosts of providing for payment by credit when making agreements withtowing companies as described in subdivision (i).
(l) (1) (A) A towing company shall not remove or commence theremoval of a vehicle from private property without first obtaining thewritten authorization from the property owner or lessee, including anassociation of a common interest development, or an employee or agentthereof, who shall be present at the time of removal and verify thealleged violation, except that presence and verification is not requiredif the person authorizing the tow is the property owner, or the owner'sagent who is not a tow operator, of a residential rental property of 15 orfewer units that does not have an onsite owner, owner's agent oremployee, and the tenant has verified the violation, requested the towfrom that tenant's assigned parking space, and provided a signed requestor electronic mail, or has called and provides a signed request orelectronic mail within 24 hours, to the property owner or owner's agent,which the owner or agent shall provide to the towing company within48 hours of authorizing the tow. The signed request or electronic mailshall contain the name and address of the tenant, and the date and timethe tenant requested the tow. A towing company shall obtain within 48hours of receiving the written authorization to tow a copy of a tenantrequest required pursuant to this subparagraph. For the purpose of thissubparagraph, a person providing the written authorization who isrequired to be present on the private property at the time of the tow doesnot have to be physically present at the specified location of where thevehicle to be removed is located on the private property.
(B) The written authorization under subparagraph (A) shall includeall of the following:
(i) The make, model, vehicle identification number, andlicense plate number of the removed vehicle.
(ii) The name, signature, job title, residential or businessaddress and working telephone number of the person, described insubparagraph (A), authorizing the removal of the vehicle.
(iii) The grounds for the removal of the vehicle.
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(iv) The time when the vehicle was first observed parked atthe private property.
(v) The time that authorization to tow the vehicle was given.
(C) (i) When the vehicle owner or his or her agent claims thevehicle, the towing company prior to payment of a towing orstorage charge shall provide a photocopy of the writtenauthorization to the vehicle owner or the agent.
(ii) If the vehicle was towed from a residential property, thetowing company shall redact the information specified in clause(ii) of subparagraph (B) in the photocopy of the writtenauthorization provided to the vehicle owner or the agent pursuantto clause (i).
(iii) The towing company shall also provide to the vehicleowner or the agent a separate notice that provides the telephonenumber of the appropriate local law enforcement or prosecutingagency by stating "If you believe that you have been wrongfullytowed, please contact the local law enforcement or prosecutingagency at [insert appropriate telephone number]." The notice shallbe in English and in the most populous language, other thanEnglish, that is spoken in the jurisdiction.
(D) A towing company shall not remove or commence theremoval of a vehicle from private property described in subdivision (a)of Section 22953 unless the towing company has made a good faithinquiry to determine that the owner or the property owner's agentcomplied with Section 22953.
(E) (i) General authorization to remove or commence removalof a vehicle at the towing company's discretion shall not bedelegated to a towing company or its affiliates except in the case ofa vehicle unlawfully parked within 15 feet of a fire hydrant or in afire lane, or in a manner which interferes with an entrance to, orexit from, the private property.
(ii) In those cases in which general authorization is granted toa towing company or its affiliate to undertake the removal orcommence the removal of a vehicle that is unlawfully parkedwithin 15 feet of a fire hydrant or in a fire lane, or that interfereswith an entrance to, or exit from, private property, the towingcompany and the property owner, or owner's agent, or person inlawful possession of the private property shall have a writtenagreement granting that general authorization.
(2) If a towing company removes a vehicle under a generalauthorization described in subparagraph (E) of paragraph (1) and that vehicleis unlawfully parked within 15 feet of a fire hydrant or in a fire lane, or in amanner that interferes with an entrance to, or exit from, the private property,the towing company shall take, prior to the removal of that vehicle, a
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photograph of the vehicle that clearly indicates that parking violation. Priorto accepting payment, the towing company shall keep one copy of thephotograph taken pursuant to this paragraph, and shall present thatphotograph and provide, without charge, a photocopy to the owner or anagent of the owner, when that person claims the vehicle.
(3) A towing company shall maintain the original written authorization,or the general authorization described in subparagraph (E) of paragraph (1)and the photograph of the violation, required pursuant to this section, andany written requests from a tenant to the property owner or owner's agentrequired by subparagraph (A) of paragraph (1), for a period of three yearsand shall make them available for inspection and copying within 24 hoursof a request without a warrant to law enforcement, the Attorney General,district attorney, or city attorney.
(4) A person who violates this subdivision is guilty of a misdemeanor,punishable by a fine of not more than two thousand five hundred dollars ($2,500), or by imprisonment in the county jail for not more than three months,or by both that fine and imprisonment.
(5) A person who violates this subdivision is civilly liable to the ownerof the vehicle or his or her agent for four times the amount of the towing andstorage charges.
(m) (1) A towing company that removes a vehicle from private propertyunder this section shall notify the local law enforcement agency of that towafter the vehicle is removed from the private property and is in transit.
(2) A towing company is guilty of a misdemeanor if the towingcompany fails to provide the notification required under paragraph (1) within60 minutes after the vehicle is removed from the private property and is intransit or 15 minutes after arriving at the storage facility, whichever time isless.
(3) A towing company that does not provide the notification underparagraph (1) within 30 minutes after the vehicle is removed from the privateproperty and is in transit is civilly liable to the registered owner of the vehicle,or the person who tenders the fees, for three times the amount of the towingand storage charges.
(4) If notification is impracticable, the times for notification, as requiredpursuant to paragraphs (2) and (3), shall be tolled for the time period thatnotification is impracticable. This paragraph is an affirmative defense.
(n) A vehicle removed from private property pursuant to this section shallbe stored in a facility that meets all of the following requirements:
(1) (A) Is located within a 10-mile radius of the property from wherethe vehicle was removed.
(B) The 10-mile radius requirement of subparagraph (A) does notapply if a towing company has prior general written approval from thelaw enforcement agency that exercises primary jurisdiction in the city inwhich is located the private property from which the vehicle was
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removed, or if the private property is not located within a city, then thelaw enforcement agency that exercises primary jurisdiction in the countyin which is located the private property.
(2) (A) Remains open during normal business hours and releasesvehicles after normal business hours.
(B) A gate fee may be charged for releasing a vehicle after normalbusiness hours, weekends, and state holidays. However, the maximumhourly charge for releasing a vehicle after normal business hours shallbe one-half of the hourly tow rate charged for initially towing thevehicle, or less.
(C) Notwithstanding any other provision of law and for purposesof this paragraph, "normal business hours" are Monday to Friday,inclusive, from 8 a.m. to 5 p.m., inclusive, except state holidays.
(3) Has a public pay telephone in the office area that is open andaccessible to the public.
(o) (1) It is the intent of the Legislature in the adoption of subdivision (k)to assist vehicle owners or their agents by, among other things, allowingpayment by credit cards for towing and storage services, thereby expeditingthe recovery of towed vehicles and concurrently promoting the safety andwelfare of the public.
(2) It is the intent of the Legislature in the adoption of subdivision (l) tofurther the safety of the general public by ensuring that a private propertyowner or lessee has provided his or her authorization for the removal of avehicle from his or her property, thereby promoting the safety of thosepersons involved in ordering the removal of the vehicle as well as thosepersons removing, towing, and storing the vehicle.
(3) It is the intent of the Legislature in the adoption of subdivision (g)to promote the safety of the general public by requiring towing companiesto unconditionally release a vehicle that is not lawfully in their possession,thereby avoiding the likelihood of dangerous and violent confrontation andphysical injury to vehicle owners and towing operators, the stranding ofvehicle owners and their passengers at a dangerous time and location, andimpeding expedited vehicle recovery, without wasting law enforcement'slimited resources.
(p) The remedies, sanctions, restrictions, and procedures provided in thissection are not exclusive and are in addition to other remedies, sanctions,restrictions, or procedures that may be provided in other provisions of law,including, but not limited to, those that are provided in Sections 12110 and34660.
(q) A vehicle removed and stored pursuant to this section shall be releasedby the law enforcement agency, impounding agency, or person in possession ofthe vehicle, or any person acting on behalf of them, to the legal owner or thelegal owner's agent upon presentation of the assignment, as defined in subdivision(b) of Section 7500.1 of the Business and Professions Code; a release from the
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one responsible governmental agency, only if required by the agency; agovernment-issued photographic identification card; and any one of the followingas determined by the legal owner or the legal owner's agent: a certificate ofrepossession for the vehicle, a security agreement for the vehicle, or title, whetherpaper or electronic, showing proof of legal ownership for the vehicle. Anydocuments presented may be originals, photocopies, or facsimile copies, or maybe transmitted electronically. The storage facility shall not require any documentsto be notarized. The storage facility may require the agent of the legal owner toproduce a photocopy or facsimile copy of its repossession agency license orregistration issued pursuant to Chapter 11 (commencing with Section 7500) ofDivision 3 of the Business and Professions Code, or to demonstrate, to thesatisfaction of the storage facility, that the agent is exempt from licensure pursuantto Section 7500.2 or 7500.3 of the Business and Professions Code.
Vehicle Code § 22658.1 Damaging Of Fence While Removing Vehicle;Location And Notification Of Property Owner By Towing Company.
(a) Any towing company that, in removing a vehicle, cuts, removes,otherwise damages, or leaves open a fence without the prior approval of theproperty owner or the person in charge of the property shall then and there doeither of the following:
(1) Locate and notify the owner or person in charge of the property ofthe damage or open condition of the fence, the name and address of thetowing company, and the license, registration, or identification number ofthe vehicle being removed.
(2) Leave in a conspicuous place on the property the name and addressof the towing company, and the license, registration, or identification numberof the vehicle being removed, and shall without unnecessary delay, notify thepolice department of the city in which the property is located, or if theproperty is located in unincorporated territory, either the sheriff or the localheadquarters of the Department of the California Highway Patrol, of thatinformation and the location of the damaged or opened fence.
(b) Any person failing to comply with all the requirements of this section isguilty of an infraction.
Vehicle Code § 22853 Notice To Department Of Justice And ProprietorOf Storage Garage; Reports; Notice To Owner.
(a) Whenever an officer or an employee removing a California registeredvehicle from a highway or from public property for storage under this chapterdoes not know and is not able to ascertain the name of the owner or for any otherreason is unable to give notice to the owner as required by Section 22852, theofficer or employee shall immediately notify, or cause to be notified, theDepartment of Justice, Stolen Vehicle System, of its removal. The officer oremployee shall file a notice with the proprietor of any public garage in which thevehicle may be stored. The notice shall include a complete description of thevehicle, the date, time, and place from which removed, the amount of mileageon the vehicle at the time of removal, and the name of the garage or place wherethe vehicle is stored.
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(b) Whenever an officer or an employee removing a vehicle not registeredin California from a highway or from public property for storage under this chapterdoes not know and is not able to ascertain the owner or for any other reason isunable to give the notice to the owner as required by Section 22852, the officeror employee shall immediately notify, or cause to be notified, the Department ofJustice, Stolen Vehicle System. If the vehicle is not returned to the owner within120 hours, the officer or employee shall immediately send, or cause to be sent, awritten report of the removal by mail to the Department of Justice at Sacramentoand shall file a copy of the notice with the proprietor of any public garage inwhich the vehicle may be stored. The report shall be made on a form furnishedby that department and shall include a complete description of the vehicle, thedate, time, and place from which the vehicle was removed, the amount of mileageon the vehicle at the time of the removal, the grounds for the removal, and thename of the garage or place where the vehicle is stored.
(c) Whenever an officer or employee or private party removing a vehiclefrom private property for storage under this chapter does not know and is not ableto ascertain the name of the owner or for any other reason is unable to give thenotice to the owner as required by Section 22852 and if the vehicle is not returnedto the owner within a period of 120 hours, the officer or employee or private partyshall immediately send, or cause to be sent, a written report of the removal bymail to the Department of Justice at Sacramento and shall file a copy of the noticewith the proprietor of any public garage in which the vehicle may be stored. Thereport shall be made on a form furnished by that department and shall include acomplete description of the vehicle, the date, time, and place from which thevehicle was removed, the amount of mileage on the vehicle at the time ofremoval, the grounds for removal, and the name of the garage or place where thevehicle is stored.
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A. SATELLITE DISHES
GUIDELINES FOR SATELLITE DISH AND ANTENNA INSTALLATION POLICIES
The Over-The-Air Receptions Devices (OTARD) Rule was adopted by the FederalCommunications Commission ("FCC") in 1996, and amended in 1999 and 2000.Based on this OTARD Rule, the FCC has entertained numerous petitions fromowners claiming that their association's or city's regulations of satellite dishinstallations are improper. In almost every petition, the FCC has issued an orderstriking down the regulations. To date, the FCC has offered the followingguidelines:
(a) "Covered Antennas" – The OTARD Rule applies to the following typesof antennas: (a) an antenna designed to receive conventional television broadcastsignals; (b) a “dish” antenna that is one meter (i.e., 39.37 inches) or less indiameter and is designed to receive direct broadcast satellite service or to receiveor transmit fixed wireless signals via satellite;, and (c) an antenna that is one meteror less in diameter or diagonal measurement and is designed to receive videoprogramming services via multi-point distribution services or to receive or transmitfixed wireless signals other than via satellite.
(b) Antenna Masts – Antennas may be mounted on “masts” to reach theheight needed to receive or transmit an acceptable quality signal, but masts higherthan 12 feet above the roofline may be subject to local permitting requirementsfor safety purposes. See Height and Setback Requirements, below, for furtherguidance.
(c) Impairments – The FCC has determined that a rule "impairs" if it (a)unreasonably delays or prevents installation, maintenance or use of an antenna,or (b) unreasonably increases the cost of installation, maintenance or use of theantenna, or (c) prevents the antenna from receiving an acceptable quality signal.To date, the FCC has interpreted these prohibitions such that even a slight increasein cost or delay is an impairment. The burden is on the party seeking to imposethe restriction. Recently, however, the FCC has clarified that associations maystill enforce reasonable antenna rules and restrictions. Yet, how the FCC defines"reasonable" remains to be seen.
(d) Common Area – The FCC has ruled that owners may install antennas onexclusive use property (including balconies, patios, porches and roofs incondominiums and cooperatives) even if the association provides themaintenance of the exclusive use property. The FCC finally issued rulings,however, and determined that an association may not be forced to allowinstallation of satellite dishes on common areas, even where an owner does nothave an area within his exclusive use or control that he can use for antennainstallation. In determining whether an area is within the owner’s exclusive useor control, the FCC relies upon the property description set forth in the lease orother controlling document for the property (e.g., the deed and the Declaration).According to FCC guidance, the OTARD Rule does not apply to a condominiumunless the antenna is installed wholly within the area of exclusive use or control,
such as a balcony or patio; nor does it apply to drilling through a commonelement, such as a wall to run cable from the patio into the unit.
(e) Outright Prohibitions – Complete bans on covered antennas have beenstruck down by the FCC in numerous petitions. The FCC has stated that theOTARD Rule only offers two justifications for a complete ban on antennas: (a)clearly articulated, legitimate safety reasons, or (b) restrictions designed topreserve designated or eligible historic or prehistoric properties, provided therestriction is no more burdensome than necessary to accomplish the safety orpreservation purpose. While the FCC sees these as two exceptions, in petitionsinvolving each of the exceptions, the FCC has ruled against the entity trying toenforce the restriction.
The FCC has determined that safety reasons must be explicit and very clearlyarticulated, and historic preservation reasons must be demonstrated withspecificity. The FCC has explained the safety requirement exception by providingthat associations must show a "legitimate" safety interest to adopt and enforcesafety restrictions, but that a higher "compelling" safety interest need not beshown. Examples of valid safety restrictions include fire codes preventing peoplefrom installing antennas on fire escapes; restrictions requiring that a person notplace an antenna within a certain distance from a power line; and installationrequirements that describe the proper method to secure an antenna.
(f) Prior Approvals – The FCC has addressed prior approval processes inseveral petitions, and has been consistent in its approach to invalidate priorapproval requirements. The FCC sees prior approval processes as constituting anunreasonable delay in the installation process, and hence invalid. The associationinvolved in one petition asked the FCC to allow an expedited two-day priorapproval process. The FCC declined to make a formal determination, however,the tone of its ruling made it seem that even a two-day delay would be seen as"unreasonable." Prior approval necessary to serve a clearly articulated, writtenbona fide safety or historic preservation objective may be permissible providedthe requirement is no more burdensome than necessary to accomplish theobjective and is applied in a non-discriminatory manner. However, anAssociation may not use this exception to legitimize otherwise impermissibleaesthetic restrictions. For the safety exception to apply, the restriction must clearlydefine the safety objective in either (1) the text, preamble or legislative history ofthe restriction or (2) a separate document readily available to antenna users.
(g) Notification Process – A notification process is not per se invalid underOTARD, provided it constitutes a simple notification by an owner to theassociation that he has installed or is about to install an antenna. However, wherethe association attempts to use the notification process as a prior approvalrequirement or implements the process so as to delay installation in any way, itwill be considered to be a prior approval requirement and invalid under OTARD.
(h) Preferred Locations – To be enforceable placement preferences must beclearly articulated in writing, made available to all residents of the association, notpreclude reception of an acceptable quality signal, not impose unreasonableexpense or delay, and be applied in a non-discriminator manner. The burden of
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establishing compliance with the OTARD Rule is on the party seekingenforcement of the placement restriction. In determining whether the burdenwas met, the FCC has considered whether any technical information, such as asignal measurement test, was offered to demonstrate that an antenna installed inthe preferred location would receive an acceptable quality signal. The FCC hasruled that the standard used for evaluating costs associated with central antennaproposals applies equally to proposals to provide designated common area forinstallation of individual antennas while restricting the installation of antennas inexclusive use areas.
(i) Application Fees – These will not be allowed. The FCC determined thateven $5 was too much. The FCC feels that such required fees might be adisincentive for potential antenna users and, as a charge on an absolute right ofinstallation, would be improper. The FCC noted in one ruling that where asatellite provider offers a homeowner free installation, “we would be hard pressedto conclude that any fee [imposed by the association] would be reasonablebecause that fee effectively would negate the incentive of free installation.”
(j) Code Compliance – A restriction requiring compliance with a specificelectric code provision must be necessary to achieve a clearly articulated bonafide safety objective and e no more burdensome than necessary to achieve thatobjective. The FCC has noted in prior rulings that antenna users should not haveto collect all possible requirements, including those vaguely described as“industry standards” and guess at those that might be enforced by their associationin connection with antenna installation.
(k) Screening or Camouflaging – The FCC will allow reasonable screeningrequirements if the rule at issue expressly provides that by "reasonable," it means"those requirements that do not impose unreasonable expense or delay orpreclude reception of an acceptable quality signal." The FCC has stated that arequirement to paint an antenna to blend into the background against which it ismounted might be acceptable, provided it does not interfere with reception orimpose unreasonable costs.
(l) Penalties – Penalties are not allowed for installation of covered antennason areas of individually owned property or property in which the owner has adirect or indirect ownership interest and over which the owner has exclusive useor control. While an association may consider issuing a penalty for installation inother than these areas, it is a risky undertaking and may be deemed improper ifchallenged. Furthermore, if an owner loses a case against an association or apetition in front of the FCC, the owner is entitled to a 21 day grace period inwhich to comply with association restrictions before any fines or penalties maybe imposed.
(m) Height and Setback Requirements – An association may not set absoluteheight limitations or setback requirements, but it may require the owner to applyfor a permit for safety reasons for masts which would extend more than twelve(12) feet above the roofline. A blanket restriction on antenna that rise more than12 feet above the roofline is prohibited as a per se bar to antennas over 12 feetwhere it does not articulate a legitimate safety concern nor is tailored to be no
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more burdensome than necessary to achieve a legitimate safety purpose.However, per FCC guidance an antenna installed on a mast that extends beyondthe owner’s exclusive use/control area would generally be outside the scope andprotection of the OTARD Rule. An association can also provide a permit processfor setbacks, however, both requirements must be clearly defined and preciselyworded.
(n) Size and Number Restrictions – An association may not differentiate andimpose greater regulation on antennas over 18 inches but under 40 inches. Anassociation may not impose an arbitrary limit on the number of antennas a viewermay install, provided that they are necessary to receive the programming availablefor reception in the viewer’s viewing area. The FCC has ruled that OTARDprotects all antennas necessary to obtain the desired service, thus, where morethan one antenna was required, an association rule limiting the number ofantennas to one antenna failed to comply with OTARD.
(o) Indemnification – Associations may require indemnification agreementswhen an owner installs a satellite on individually owned property or exclusive useareas. The FCC has ruled that it would be unreasonable for an association torequire owners to install antennas in a designated common area and then holdthose owners liable for any damage to that area as a result of the installation.However, the FCC has left open the question of whether indemnificationagreements can be required if an owner voluntarily installs an antenna oncommon area.
(p) Contractors – Associations can require that any contractor used to installan antenna possess liability insurance, however, associations cannot require thatan owner hire a contractor to install the antenna.
(q) Tenants – In a past ruling, the FCC indicated that a tenant stands in thesame shoes as an owner. Whether an area of the property is within the tenant’sexclusive use and control may depend on the lease or other controlling documentfor the property in question.
(r) Policy Language – Any regulation of a covered antenna must explicitlyprovide exceptions for unreasonable delays, unreasonable increases in costs, orpreclusion of acceptable quality signals.
(s) Challenges – Any owner may petition the FCC for review of a policy orregulation. The FCC has determined owner's rights very broadly in the opinionsit has published to date. The FCC has made it clear that in any petition, the burdenof proving that a restriction is in line with the OTARD Rule and the FCC's rulings,is on the association. Thus, even if an owner's petition seems unfounded, theassociation will be forced to justify its policies. The FCC recently ruled that if anassociation files a Petition for Declaratory Ruling against an owner, the associationmust provide a copy of all of the filings to that owner. Additionally, the FCC alsorequires that the association notify its members of any Petition or court actionagainst an owner by placing notices in member mailboxes, on bulletin boards, inassociation newsletters, billing statements, etc.
(t) Costs and Fees – The FCC has ruled that associations may not imposeattorneys’ fees on homeowners while a rule or restriction is under review by either
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the FCC or a local court. To determine whether a cost relating to installationrequirements is reasonable, the FCC will compare the cost of the equipment orservice to how the association's rules or restrictions treat similar devices such aspatio equipment, air conditioners, etc. The FCC has also ruled that charging anowner attorney’s fees incurred in connection with identifying an antenna locationacceptable to the association and fees incurred in relocating an existing antennaunreasonably increased the cost of installation.
(u) Central Antennas – A recent FCC order provides that an association mayprohibit individual antennas as long as it makes programming available througha central antenna to any resident at no greater cost and with equivalent quality aswould be available from an individual antenna installation. Additionally, theowner must be able to receive the specific service desired and the requirementto use the central antenna must not unreasonably delay the owner's ability toreceive video programming.
(v) Waiver – An owner may petition the FCC for a waiver of the applicationof the size limitation for antennas installed in a community where “particularfacts” would make strict compliance inconsistent with the public interest. TheFCC has ruled that absent any unique or unusual circumstances warranting adeviation from the general rule, a waiver is not warranted. In one petition, theFCC ruled that the fact that subscribers of a particular satellite provider neededlarger antennas in the state does not qualify as an unusual circumstance justifyinga waiver for residents of the community.
47 C.F.R. § 1.4000 Restrictions Impairing Reception Of TelevisionBroadcast Signals, Direct Broadcast Satellite Services Or MultichannelMultipoint Distribution Services.
(a) (1) Any restriction, including but not limited to any state or local lawor regulation, including zoning, land-use, or building regulations, or anyprivate covenant, contract provision, lease provision, homeowners'association rule or similar restriction, on property within the exclusive use orcontrol of the antenna user where the user has a direct or indirect ownershipor leasehold interest in the property that impairs the installation, maintenance,or use of:
(i) An antenna that is:
(A) Used to receive direct broadcast satellite service, includingdirect-to-home satellite service, or to receive or transmit fixedwireless signals via satellite, and
(B) One meter or less in diameter or is located in Alaska;
(ii) An antenna that is:
(A) Used to receive video programming services viamultipoint distribution services, including multichannel multipointdistribution services, instructional television fixed services, andlocal multipoint distribution services, or to receive or transmit fixedwireless signals other than via satellite, and
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(B) That is one meter or less in diameter or diagonalmeasurement;
(iii) An antenna that is used to receive television broadcast signals;or
(iv) A mast supporting an antenna described in paragraphs (a)(1)(i),(a)(1)(ii), or (a)(1)(iii) of this section; is prohibited to the extent it soimpairs, subject to paragraph (b) of this section.
(2) For purposes of this section, "fixed wireless signals" means anycommercial non-broadcast communications signals transmitted via wirelesstechnology to and/or from a fixed customer location. Fixed wireless signalsdo not include, among other things, AM radio, FM radio, amateur ("HAM")radio, Citizen's Band (CB) radio, and Digital Audio Radio Service (DARS)signals.
(3) For purposes of this section, a law, regulation, or restriction impairsinstallation, maintenance, or use of an antenna if it:
(i) Unreasonably delays or prevents installation, maintenance, oruse;
(ii) Unreasonably increases the cost of installation, maintenance,or use; or
(iii) Precludes reception or transmission of an acceptable qualitysignal.
(4) Any fee or cost imposed on a user by a rule, law, regulation orrestriction must be reasonable in light of the cost of the equipment or servicesand the rule, law, regulation or restriction's treatment of comparable devices.No civil, criminal, administrative, or other legal action of any kind shall betaken to enforce any restriction or regulation prohibited by this section exceptpursuant to paragraph (d) or (e) of this section. In addition, except withrespect to restrictions pertaining to safety and historic preservation asdescribed in paragraph (b) of this section, if a proceeding is initiated pursuantto paragraph (d) or (e) of this section, the entity seeking to enforce the antennarestrictions in question must suspend all enforcement efforts pendingcompletion of review. No attorney's fees shall be collected or assessed andno fine or other penalties shall accrue against an antenna user while aproceeding is pending to determine the validity of any restriction. If a rulingis issued adverse to a user, the user shall be granted at least a 21-day graceperiod in which to comply with the adverse ruling; and neither a fine nor apenalty may be collected from the user if the user complies with the adverseruling during this grace period, unless the proponent of the restrictiondemonstrates, in the same proceeding which resulted in the adverse ruling,that the user's claim in the proceeding was frivolous.
(b) Any restriction otherwise prohibited by paragraph (a) of this section ispermitted if:
(1) It is necessary to accomplish a clearly defined, legitimate safety
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objective that is either stated in the text, preamble, or legislative history of therestriction or described as applying to that restriction in a document that isreadily available to antenna users, and would be applied to the extentpracticable in a non-discriminatory manner to other appurtenances, devices,or fixtures that are comparable in size and weight and pose a similar orgreater safety risk as these antennas and to which local regulation wouldnormally apply; or
(2) It is necessary to preserve a prehistoric or historic district, site,building, structure or object included in, or eligible for inclusion on, theNational Register of Historic Places, as set forth in the National HistoricPreservation Act of 1966, as amended, 16 U.S.C. 470, and imposes nogreater restrictions on antennas covered by this rule than are imposed on theinstallation, maintenance, or use of other modern appurtenances, devices, orfixtures that are comparable in size, weight, and appearance to theseantennas; and
(3) It is no more burdensome to affected antenna users than isnecessary to achieve the objectives described in paragraphs (b)(1) or (b)(2) ofthis section.
(c) In the case of an antenna that is used to transmit fixed wireless signals,the provisions of this section shall apply only if a label is affixed to the antennathat:
(1) Provides adequate notice regarding potential radiofrequency safetyhazards, e.g., information regarding the safe minimum separation distancerequired between users and transceiver antennas; and
(2) References the applicable FCC-adopted limits for radiofrequencyexposure specified in § 1.1310 of this chapter.
(d) Local governments or associations may apply to the Commission for awaiver of this section under § 1.3 of this chapter. Waiver requests must complywith the procedures in paragraphs (f) and (h) of this section and will be put onpublic notice. The Commission may grant a waiver upon a showing by theapplicant of local concerns of a highly specialized or unusual nature. No petitionfor waiver shall be considered unless it specifies the restriction at issue. Waiversgranted in accordance with this section shall not apply to restrictions amended orenacted after the waiver is granted. Any responsive pleadings must be served onall parties and filed within 30 days after release of a public notice that suchpetition has been filed. Any replies must be filed within 15 days thereafter.
(e) Parties may petition the Commission for a declaratory ruling under § 1.2of this chapter, or a court of competent jurisdiction, to determine whether aparticular restriction is permissible or prohibited under this section. Petitions to theCommission must comply with the procedures in paragraphs (f) and (h) of thissection and will be put on public notice. Any responsive pleadings in aCommission proceeding must be served on all parties and filed within 30 daysafter release of a public notice that such petition has been filed. Any replies in aCommission proceeding must be served on all parties and filed within 15 daysthereafter.
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(f) Copies of petitions for declaratory rulings and waivers must be served oninterested parties, including parties against whom the petitioner seeks to enforcethe restriction or parties whose restrictions the petitioner seeks to prohibit. Acertificate of service stating on whom the petition was served must be filed withthe petition. In addition, in a Commission proceeding brought by an associationor a local government, constructive notice of the proceeding must be given tomembers of the association or to the citizens under the local government'sjurisdiction. In a court proceeding brought by an association, an association mustgive constructive notice of the proceeding to its members. Where constructivenotice is required, the petitioner or plaintiff must file with the Commission or thecourt overseeing the proceeding a copy of the constructive notice with a statementexplaining where the notice was placed and why such placement was reasonable.
(g) In any proceeding regarding the scope or interpretation of any provisionof this section, the burden of demonstrating that a particular governmental ornongovernmental restriction complies with this section and does not impair theinstallation, maintenance, or use of devices used for over-the-air reception ofvideo programming services or devices used to receive or transmit fixed wirelesssignals shall be on the party that seeks to impose or maintain the restriction.
(h) All allegations of fact contained in petitions and related pleadings beforethe Commission must be supported by affidavit of a person or persons with actualknowledge thereof. An original and two copies of all petitions and pleadingsshould be addressed to the Secretary, Federal Communications Commission, 44512th Street, SW, Washington, DC 20554. Copies of the petitions and relatedpleadings will be available for public inspection in the Reference InformationCenter, Consumer and Governmental Affairs Bureau, Federal CommunicationsCommission, 445 12th Street, SW, Washington, DC 20554. Copies will beavailable for purchase from the Commission's contract copy center, and theCommission decisions will be available on the Internet.
Civil Code § 1376 Restrictions On Installation Or Use Of Video OrTelevision Antenna; Enforceability Based On Size; Reasonable Restrictions;Application Approval; Attorney’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 anyinterest in, a common interest development that effectively prohibits or restrictsthe 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 structurewithin that development where the antenna is not visible from any street orcommon area, except as otherwise prohibited or restricted by law, is void andunenforceable as to its application to the installation or use of a video or televisionantenna that has a diameter or diagonal measurement of 36 inches or less.
(b) This section shall not apply to any covenant, condition, or restriction, asdescribed in subdivision (a), that imposes reasonable restrictions on theinstallation or use of a video or television antenna, including a satellite dish, thathas a diameter or diagonal measurement of 36 inches or less. For purposes of thissection, "reasonable restrictions" means those restrictions that do not significantly
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increase the cost of the video or television antenna system, including all relatedequipment, or significantly decrease its efficiency or performance and include allof the following:
(1) Requirements for application and notice to the association prior tothe installation.
(2) Requirement of the owner of a separate interest, as defined inSection 1351, to obtain the approval of the association for the installation ofa video or television antenna that has a diameter or diagonal measurementof 36 inches or less on a separate interest owned by another.
(3) Provision for the maintenance, repair, or replacement of roofs orother building components.
(4) Requirements for installers of a video or television antenna toindemnify or reimburse the association or its members for loss or damagecaused by the installation, maintenance, or use of a video or televisionantenna 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 ortelevision antenna, including a satellite dish, the application for approval shallbe processed by the appropriate approving entity for the common interestdevelopment in the same manner as an application for approval of anarchitectural modification to the property, and the issuance of a decision on theapplication shall not be willfully delayed.
(d) In any action to enforce compliance with this section, the prevailingparty shall be awarded reasonable attorney's fees.
B. SWIMMING POOLS
Health and Safety Code § 115920Swimming Pool Safety Act
This act shall be known and may be cited as the Swimming Pool Safety Act.
Health and Safety Code § 115921Definitions
(a) "Swimming pool" or "pool" means any structure intended for swimmingor recreational bathing that contains water over 18 inches deep. "Swimmingpool" includes in-ground and above-ground structures and includes, but is notlimited to, hot tubs, spas, portable spas, and nonportable wading pools.
(b) "Public swimming pool" means a swimming pool operated for the useof the general public with or without charge, or for the use of the members andguests of a private club. Public swimming pool does not include a swimmingpool located on the grounds of a private single-family home.
(c) "Enclosure" means a fence, wall, or other barrier that isolates aswimming pool from access to the home.
(d) "Approved safety pool cover" means a manually or power-operatedsafety pool cover that meets all of the performance standards of the AmericanSociety for Testing and Materials (ASTM), in compliance with standard F1346-91.
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(e) "Exit alarms" means devices that make audible, continuous alarmsounds when any door or window, that permits access from the residence to thepool area that is without any intervening enclosure, is opened or is left ajar. Exitalarms may be battery operated or may be connected to the electrical wiring ofthe building.
(f) "ANSI/APSP performance standard" means a standard that is accreditedby the American National Standards Institute (ANSI) and published by theAssociation of Pool and Spa Professionals (APSP).
(g) "Suction outlet" means a fitting or fixture typically located at the bottomor on the sides of a swimming pool that conducts water to a recirculating pump.
Health and Safety Code § 115922Construction Permits; Safety Features Required
(a) Commencing January 1, 2007, except as provided in Section 115925,whenever a building permit is issued for construction of a new swimming pool orspa, or any building permit is issued for remodeling of an existing pool or spa, ata private, single-family home, it shall be equipped with at least one of thefollowing seven drowning prevention safety features:
(1) The pool shall be isolated from access to a home by an enclosurethat meets the requirements of Section 115923.
(2) The pool shall incorporate removable mesh pool fencing that meetsAmerican Society for Testing and Materials (ASTM) Specifications F 2286standards in conjunction with a gate that is self-closing and self-latching andcan accommodate a key lockable device.
(3) The pool shall be equipped with an approved safety pool cover thatmeets all requirements of the ASTM Specifications F 1346.
(4) The residence shall be equipped with exit alarms on those doorsproviding direct access to the pool.
(5) All doors providing direct access from the home to the swimmingpool shall be equipped with a self-closing, self-latching device with a releasemechanism placed no lower than 54 inches above the floor.
(6) Swimming pool alarms that, when placed in pools, will sound upondetection of accidental or unauthorized entrance into the water. These poolalarms shall meet and be independently certified to the ASTM Standard F2208 "Standards Specification for Pool Alarms" which includes surfacemotion, pressure, sonar, laser, and infrared type alarms. For purposes of thisarticle, "swimming pool alarms" shall not include swimming protection alarmdevices designed for individual use, such as an alarm attached to a child thatsounds when the child exceeds a certain distance or becomes submerged inwater.
(7) Other means of protection, if the degree of protection afforded isequal to or greater than that afforded by any of the devices set forth above,and have been independently verified by an approved testing laboratory asmeeting standards for those devices established by the ASTM or the American
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Society of Mechanical Engineers (ASME).
(b) Prior to the issuance of any final approval for the completion ofpermitted construction or remodeling work, the local building code official shallinspect the drowning safety prevention devices required by this act and if noviolations are found, shall give final approval.
Health and Safety Code § 115923Enclosure; Required Characteristics
(a) Any access gates through the enclosure open away from the swimmingpool, and are self-closing with a self-latching device placed no lower than 60inches above the ground.
(b) A minimum height of 60 inches.
(c) A maximum vertical clearance from the ground to the bottom of theenclosure of two inches.
(d) Gaps or voids, if any, do not allow passage of a sphere equal to orgreater than four inches in diameter.
(e) An outside surface free of protrusions, cavities, or other physicalcharacteristics that would serve as handholds or footholds that could enable achild below the age of five years to climb over.
Health and Safety Code § 115924Agreements To Build; Notice Of Provisions
(a) Any person entering into an agreement to build a swimming pool orspa, or to engage in permitted work on a pool or spa covered by this article, shallgive the consumer notice of the requirements of this article.
(b) Pursuant to existing law, the Department of Health Services shall haveavailable on the department's Web site, commencing January 1, 2007, approvedpool safety information available for consumers to download. Pool contractors areencouraged to share this information with consumers regarding the potentialdangers a pool or spa poses to toddlers. Additionally, pool contractors mayprovide the consumer with swimming pool safety materials produced fromorganizations such as the United States Consumer Product Safety Commission,Drowning Prevention Foundation, California Coalition for Children's Safety &Health, Safe Kids Worldwide, Association of Pool and Spa Professionals, or theAmerican Academy of Pediatrics.
Health and Safety Code § 115925Exempt Facilities
The requirements of this article shall not apply to any of the following:
(a) Public swimming pools.
(b) Hot tubs or spas with locking safety covers that comply with theAmerican Society for Testing Materials-Emergency Performance Specification(ASTM-ES 13-89).
(c) Any pool within the jurisdiction of any political subdivision that adoptsan ordinance for swimming pool safety that includes requirements that are at
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least as stringent as this article.
(d) An apartment complex, or any residential setting other than a single-family home.
Health & Safety Code § 116048Public Swimming Pools In Common Interest Developments; RecordkeepingRequirements
(a) On or after January 1, 1987, for public swimming pools in any commoninterest development, as defined in Section 1351 of the Civil Code, that consistsof fewer than 25 separate interests, as defined in subdivision ( l ) of Section 1351of the Civil Code, the person operating each such pool open for use shall berequired to keep a record of the information required by subdivision (a) of Section65523 of Title 22 of the California Administrative Code, except that theinformation shall be recorded at least two times per week and at intervals nogreater than four days apart.
(b) On or after January 1, 1987, any rule or regulation of the department thatis in conflict with subdivision (a) is invalid.
Health and Safety Code § 116049.1Public Swimming Pools; Underwater Lighting Systems; Ground-FaultCircuit Interrupters; Inspection And Certification
(a) "Public swimming pool," as used in this section, means any swimmingpool operated for the use of the general public with or without charge, or for theuse of the members and guests of a private club, including any swimming poollocated on the grounds of a hotel, motel, inn, an apartment complex, or anyresidential setting other than a single-family home. For purposes of this section,public swimming pool shall not include a swimming pool located on the groundsof a private single-family home.
(b) The design and installation of all underwater lighting systems, operatingat more than 15 volts supplied from a branch circuit either directly or by way ofa transformer, shall be installed in a public swimming pool, as defined in thissection, so that there is no shock hazard with any likely combination of faultconditions during normal use, and shall comply with both of the followingrequirements:
(1) An approval ground-fault circuit interrupter shall be installed in thebranch circuit that supplies all fixtures operating at more than 15 volts.
(2) Only approved underwater lighting fixtures shall be used and nolighting fixtures shall be installed for operations at more than 150 voltsbetween conductors.
(c) Any public swimming pool that does not meet the requirementsspecified in subdivision (b), shall be retrofitted to comply with these requirementsby May 1, 1999.
(d) The ground-fault circuit interrupter required pursuant to this section shallcomply with standards acceptable to the authority having jurisdiction.
(e) The owner or operator of a public swimming pool shall, on or before
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May 1, 1999, comply with both of the following:
(1) Obtain an inspection of its public swimming pool by the localhealth officer or a qualified contractor as set forth in subdivision (f).
(2) Certify to the local health officer as set forth in Section 116053 thatthe public swimming pool facility is in compliance with this section.
(f) All electrical work required for compliance with this section shall beperformed by a person licensed to perform electrical work within his or hergeneral, specialty, or limited specialty contractor's licensed scope of practicepursuant to Section 7059 of the Business and Professions Code.
(g) This section shall be known and may be cited as the Yasmi Paleso'oMemorial Swimming Pool Safety Law.
Health and Safety Code § 116064.2Anti-Entrapment Devices Or Systems As Applicable Standard; DeadlineFor Installation; Alternative Devices Or Systems; New Construction;Retrofitting; Compliance And Documentation; Enforcement
(a) As used in this section, the following words have the followingmeanings:
(1) "ASME/ANSI performance standard" means a standard that isaccredited by the American National Standards Institute and published by theAmerican Society of Mechanical Engineers.
(2) "ASTM performance standard" means a standard that is developedand published by ASTM International.
(3) "Main drain" means a submerged suction outlet typically locatedat the bottom of a swimming pool that conducts water to a recirculatingpump.
(4) "Public swimming pool" means an outdoor or indoor structure,whether in-ground or above-ground, intended for swimming or recreationalbathing, including a swimming pool, hot tub, spa, or nonportable wadingpool, that is any of the following:
(A) Open to the public generally, whether for a fee or free of charge.
(B) Open exclusively to members of an organization and their guests,residents of a multiunit apartment building, apartment complex,residential real estate development, or other multifamily residential area,or patrons of a hotel or other public accommodations facility.
(C) Located on the premises of an athletic club, or public or privateschool.
(5) "Qualified individual" means a contractor who holds a current validlicense issued by the State of California or a professional engineer licensed in theState of California who has experience working on public swimming pools.
(6) "Safety vacuum release system" means a vacuum release system thatceases operation of the pump, reverses the circulation flow, or otherwise providesa vacuum release at a suction outlet when a blockage is detected.
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(7) "Skimmer equalizer line" means a suction outlet located below thewaterline and connected to the body of a skimmer that prevents air from beingdrawn into the pump if the water level drops below the skimmer weir. However,a skimmer equalizer line is not a main drain.
(8) "Unblockable drain" means a drain of any size and shape that a humanbody cannot sufficiently block to create a suction entrapment hazard.
(b) Subject to subdivision (e), every public swimming pool shall beequipped with antientrapment devices or systems that comply with theANSI/APSP-16 2011 standard as in effect on December 31, 2011.
(c) Subject to subdivisions (d) and (e), every public swimming pool with asingle main drain that is not an unblockable drain shall be equipped with at leastone or more of the following devices or systems that are designed to preventphysical entrapment by pool drains:
(1) A safety vacuum release system that has been tested by a nationallyrecognized testing laboratory and found to conform to ASME/ANSIperformance standard A112.19.17, as in effect on December 31, 2009, orASTM performance standard F2387, as in effect on December 31, 2009.
(2) A suction-limiting vent system with a tamper-resistant atmosphericopening, provided that it conforms to any applicable ASME/ANSI or ASTMperformance standard.
(3) A gravity drainage system that utilizes a collector tank, providedthat it conforms to any applicable ASME/ANSI or ASTM performancestandard.
(4) An automatic pump shut-off system tested by a department-approved independent third party and found to conform to any applicableASME/ANSI or ASTM performance standard.
(5) Any other system that is deemed, in accordance with federal law,to be equally effective as, or more effective than, the systems described inparagraph (1) at preventing or eliminating the risk of injury or deathassociated with pool drainage systems.
(d) Every public swimming pool constructed on or after January 1, 2010,shall have at least two main drains per pump that are hydraulically balanced andsymmetrically plumbed through one or more "T" fittings, and that are separatedby a distance of at least three feet in any dimension between the drains. A publicswimming pool constructed on or after January 1, 2010, that meets therequirements of this subdivision, shall be exempt from the requirements ofsubdivision (c).
(e) A public swimming pool constructed prior to January 1, 2010, shall beretrofitted to comply with subdivisions (b) and (c) by no later than July 1, 2010,except that no further retrofitting is required for a public swimming pool thatcompleted a retrofit between December 19, 2007, and January 1, 2010, thatcomplied with the Virginia Graeme Baker Pool and Spa Safety Act (15 U.S.C. Sec.8001 et seq.) as in effect on the date of issue of the construction permit, or for a
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nonportable wading pool that completed a retrofit prior to January 1, 2010, thatcomplied with state law on the date of issue of the construction permit. A publicswimming pool owner who meets the exception described in this subdivisionshall do one of the following prior to September 30, 2010:
(1) File the form issued by the department pursuant to subdivision (f),as otherwise provided in subdivision (h).
(2) (A) File a signed statement attesting that the required work hasbeen completed.
(B) Provide a document containing the name and license numberof the qualified individual who completed the required work.
(C) Provide either a copy of the final building permit, if requiredby the local agency, or a copy of one of the following documents if nopermit was required:
(i) A document that describes the modification in a mannerthat provides sufficient information to document the work that wasdone to comply with federal law.
(ii) A copy of the final paid invoice. The amount paid for theservices may be omitted or redacted from the final invoice prior tosubmission.
(f) Prior to March 31, 2010, the department shall issue a form for use by anowner of a public swimming pool to indicate compliance with this section. Thedepartment shall consult with county health officers and directors of departmentsof environmental health in developing the form and shall post the form on thedepartment's Internet Web site. The form shall be completed by the owner of apublic swimming pool prior to filing the form with the appropriate city, county,or city and county department of environmental health. The form shall include,but not be limited to, the following information:
(1) A statement of whether the pool operates with a single or split maindrain.
(2) Identification of the type of antientrapment devices or systems thathave been installed pursuant to subdivision (b) and the date or dates ofinstallation.
(3) Identification of the type of devices or systems designed to preventphysical entrapment that have been installed pursuant to subdivision (c) in apublic swimming pool with a single main drain that is not an unblockabledrain and the date or dates of installation or the reason why the requirementis not applicable.
(4) A signature and license number of a qualified individual whocertifies that the factual information provided on the form in response toparagraphs (1) to (3), inclusive, is true to the best of his or her knowledge.
(g) A qualified individual who improperly certifies information pursuant toparagraph (4) of subdivision (f) shall be subject to potential disciplinary action atthe discretion of the licensing authority.
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(h) Except as provided in subdivision (e), each public swimming pool ownershall file a completed copy of the form issued by the department pursuant to thissection with the city, county, or city and county department of environmentalhealth in the city, county, or city and county in which the swimming pool islocated. The form shall be filed within 30 days following the completion of theswimming pool construction or installation required pursuant to this section or, ifthe construction or installation is completed prior to the date that the departmentissues the form pursuant to this section, within 30 days of the date that thedepartment issues the form. The public swimming pool owner or operator shallnot make a false statement, representation, certification, record, report, orotherwise falsify information that he or she is required to file or maintain pursuantto this section.
(i) In enforcing this section, health officers and directors of city, county, orcity and county departments of environmental health shall considerdocumentation filed on or with the form issued pursuant to this section by theowner of a public swimming pool as evidence of compliance with this section.A city, county, or city and county department of environmental health may verifythe accuracy of the information filed on or with the form.
(j) To the extent that the requirements for public wading pools imposed bySection 116064 conflict with this section, the requirements of this section shallprevail.
(k) The department shall have no authority to take any enforcement actionagainst any person for violation of this section and has no responsibility toadminister or enforce the provisions of this section.
C. DISPLAY OF SIGNS AND FLAGS
Civil Code § 711 Conditions In Restraint Of Alienation.
Conditions restraining alienation, when repugnant to the interest created, are void.
Civil Code § 712 Conditions Restraining Right To Display SignAdvertising Property For Sale, Lease Or Exchange.
(a) Every provision contained in or otherwise affecting a grant of a feeinterest in, or purchase money security instrument upon, real property in this stateheretofore or hereafter made, which purports to prohibit or restrict the right ofthe property owner or his or her agent to display or have displayed on the realproperty, or on real property owned by others with their consent, or both, signswhich are reasonably located, in plain view of the public, are of reasonabledimensions and design, and do not adversely affect public safety, including trafficsafety, and which advertise the property for sale, lease, or exchange, or advertisedirections to the property, by the property owner or his or her agent is void as anunreasonable restraint upon the power of alienation.
(b) This section shall operate retrospectively, as well as prospectively, to thefull extent that it may constitutionally operate retrospectively.
(c) A sign which conforms to the ordinance adopted in conformity withSection 713 shall be deemed to be of reasonable dimension and design pursuantto this section.
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Civil Code § 713 Local Regulations; Signs Advertising Property For Sale,Lease Or Exchange.
(a) Notwithstanding any provision of any ordinance, an owner of realproperty or his or her agent may display or have displayed on the owner's realproperty, and on real property owned by others with their consent, signs whichare reasonably located, in plain view of the public, are of reasonable dimensionsand design, and do not adversely affect public safety, including traffic safety, asdetermined by the city, county or city and county, advertising the following:
(1) That the property is for sale, lease or exchange by the owner or hisor her agent.
(2) Directions to the property.
(3) The owner's or agent's name.
(4) The owner's or agent's address and telephone number.
(b) Nothing in this section limits any authority which a person or localgovernmental entity may have to limit or regulate the display or placement of asign on a private or public right-of-way.
Civil Code § 1353.5 Display Of United States Flag By Owner On Or InOwner's Separate Interest Or Within Exclusive Use Common Area
(a) Except as required for the protection of the public health or safety, nodeclaration or other governing document shall limit or prohibit, or be construedto limit or prohibit, the display of the flag of the United States by an owner on orin 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 froma staff or pole or in a window, and does not mean a depiction or emblem of theflag of the United States made of lights, paint, roofing, siding, paving materials,flora, or balloons, or any other similar building, landscaping, or decorativecomponent.
(c) In any action to enforce this section, the prevailing party shall beawarded reasonable attorneys' fees and costs.
Civil Code § 1353.6 Prohibition Of Posting Or Displaying NoncommercialSigns, Posters, Flags, Or Banners; Permitted Placement Of Posting OrDisplaying; Exceptions
(a) The governing documents, including the operating rules, may notprohibit posting or displaying of noncommercial signs, posters, flags, or bannerson or in an owner's separate interest, except as required for the protection ofpublic health or safety or if the posting or display would violate a local, state, orfederal law.
(b) For purposes of this section, a noncommercial sign, poster, flag, orbanner may be made of paper, cardboard, cloth, plastic, or fabric, and may beposted or displayed from the yard, window, door, balcony, or outside wall of the
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separate interest, but may not be made of lights, roofing, siding, paving materials,flora, or balloons, or any other similar building, landscaping, or decorativecomponent, or include the painting of architectural surfaces.
(c) An association may prohibit noncommercial signs and posters that aremore than 9 square feet in size and noncommercial flags or banners that are morethan 15 square feet in size.
Govt. Code § 434.5 Prohibitions Or Restrictions On Legal Right To DisplayU.S. Flag.
(a) As used in this section, the following terms have the following meaning:
(1) “Legal right” means the freedom of use and enjoyment generallyexercised by owners and occupiers of land.
(2) “Local government agency” means a county, city, whether generallaw or chartered, city and county, town, municipal corporation, schooldistrict or other district, political subdivision, or any board, commission, oragency thereof, or other local agency.
(b) (1) No person, private entity, or governmental agency shall adopt anyrule, regulation, or ordinance, or enter into any agreement or covenant, thatprevents any person or private entity that would otherwise have the legalright to display a Flag of the United States on private property from exercisingthat right, unless it is used as, or in conjunction with, an advertising display.
(2) Nothing in this subdivision shall be construed to prevent a city,county, or city and county from imposing reasonable restrictions as to thetime, place, and manner of placement or display of a Flag of the United Stateswhen necessary for the preservation of the public's health, safety, or order.
(c) (1) A local government agency may not adopt any policy or regulationthat prohibits or restricts an employee of that agency from displaying a Flagof the United States, or a pin of that flag, on his or her person, in his or herworkplace, or on a local government agency vehicle operated by thatemployee.
(2) Nothing in this subdivision shall be construed to prevent a localgovernment agency from imposing reasonable restrictions as to the time,place, and manner of placement or display of a Flag of the United Stateswhen necessary for the preservation of the order or discipline of theworkplace.
(d) No restrictions solely to promote aesthetic considerations shall beimposed pursuant to paragraph (2) of subdivision (b) or paragraph (2) ofsubdivision (c).
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D. SOLAR ENERGY SYSTEMS
The trend toward solar energy system installations is increasing and encouragedas a matter of public policy of California. Homeowners associations may imposereasonable restrictions on the installation of solar energy systems, within theparameters of Civil Code § 714; however, what is reasonable will be balancedagainst the strong public policy to promote the use of these, and other, alternativeenergy systems.
The recent case of Tesoro Del Valle Master Homeowners Assn. v. Griffin, (2011)200 Cal. App. 4th 619, provides guidance to homeowners associations as toreasonable restrictions, including aesthetics, which may meet the parameters ofCivil Code § 714. In Tesoro, the court found that the homeowners association’sdesign guidelines regarding installation of solar energy systems, which mirroredthe language of Civil Code § 714, did not violate the statute. The court alsodetermined that nothing in § 714 prohibited the association from considering theaesthetic impact of a solar energy system in evaluating an architecturalapplication. The court further determined that the association’s CC&Rs anddesign guidelines did not require the association’s architectural control committeeto redesign a solar energy system that, as submitted, would not garner approval.
Civil Code § 714 Solar Energy Systems; Installation Or Use; InvalidityAnd Unenforceability Of Instruments Affecting Real Property; Exceptions;Delay; Penalty; Attorney's Fees.
(a) Any covenant, restriction, or condition contained in any deed, contract,security instrument, or other instrument affecting the transfer or sale of, or anyinterest in, real property, and any provision of a governing document, as definedin subdivision (j) of Section 1351, that effectively prohibits or restricts theinstallation or use of a solar energy system is void and unenforceable.
(b) This section does not apply to provisions that impose reasonablerestrictions on solar energy systems. However, it is the policy of the state topromote and encourage the use of solar energy systems and to remove obstaclesthereto. Accordingly, reasonable restrictions on a solar energy system are thoserestrictions that do not significantly increase the cost of the system or significantlydecrease its efficiency or specified performance, or that allow for an alternativesystem of comparable cost, efficiency, and energy conservation benefits.
(c) (1) A solar energy system shall meet applicable health and safetystandards and requirements imposed by state and local permitting authorities.
(2) A solar energy system for heating water shall be certified by theSolar Rating Certification Corporation (SRCC) or other nationally recognizedcertification agencies. SRCC is a nonprofit third party supported by theUnited States Department of Energy. The certification shall be for the entiresolar energy system and installation.
(3) A solar energy system for producing electricity shall also meet allapplicable safety and performance standards established by the NationalElectrical Code, the Institute of Electrical and Electronics Engineers, andaccredited testing laboratories such as Underwriters Laboratories and, where
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applicable, rules of the Public Utilities Commission regarding safety andreliability.
(d) For the purposes of this section:
(1) (A) For solar domestic water heating systems or solar swimmingpool heating systems that comply with state and federal law,"significantly" means an amount exceeding 20 percent of the cost of thesystem or decreasing the efficiency of the solar energy system by anamount exceeding 20 percent, as originally specified and proposed.
(B) For photovoltaic systems that comply with state and federallaw, "significantly" means an amount not to exceed two thousand dollars($ 2,000) over the system cost as originally specified and proposed, ora decrease in system efficiency of an amount exceeding 20 percent asoriginally specified and proposed.
(2) "Solar energy system" has the same meaning as defined inparagraphs (1) and (2) of subdivision (a) of Section 801.5.
(e) (1) Whenever approval is required for the installation or use of a solarenergy system, the application for approval shall be processed and approvedby the appropriate approving entity in the same manner as an applicationfor approval of an architectural modification to the property, and shall not bewillfully avoided or delayed.
(2) For an approving entity that is a homeowners' association, asdefined in subdivision (a) of Section 1351, and that is not a public entity,both of the following shall apply:
(A) The approval or denial of an application shall be in writing.
(B) If an application is not denied in writing within 60 days fromthe date of receipt of the application, the application shall be deemedapproved, unless that delay is the result of a reasonable request foradditional information.
(f) Any entity, other than a public entity, that willfully violates this sectionshall be liable to the applicant or other party for actual damages occasionedthereby, and shall pay a civil penalty to the applicant or other party in an amountnot to exceed one thousand dollars ($1,000).
(g) In any action to enforce compliance with this section, the prevailing partyshall be awarded reasonable attorney's fees.
(h) (1) A public entity that fails to comply with this section may not receivefunds from a state-sponsored grant or loan program for solar energy. A publicentity shall certify its compliance with the requirements of this section whenapplying for funds from a state-sponsored grant or loan program.
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Civil Code § 714.1 Solar Energy Systems; Common Interest Developments;Approval; Maintenance; Indemnification Or Reimbursement.
Notwithstanding Section 714, any association, as defined in Section 1351, mayimpose reasonable provisions which:
(a) Restrict the installation of solar energy systems installed in commonareas, as defined in Section 1351, to those systems approved by the association.
(b) Require the owner of a separate interest, as defined in Section 1351, toobtain the approval of the association for the installation of a solar energy systemin a separate interest owned by another.
(c) Provide for the maintenance, repair, or replacement of roofs or otherbuilding components.
(d) Require installers of solar energy systems to indemnify or reimburse theassociation or its members for loss or damage caused by the installation,maintenance, or use of the solar energy system.
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EIGHTASSESSMENT COLLECTION
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In the case of Thies v. The Law Offices of William A. Wyman, decided in July,1997, a Federal Court determined that the collection of homeowner associationassessments are subject to the Federal Fair Debt Collections Practices Act ("theAct").
The Act does not apply to association officers and directors but does apply tothird parties hired by associations to collect assessments such as propertymanagers and attorneys. It is important for everyone to be aware of the Act'sprovisions.
The following is a summary of activities that are prohibited or restricted by the Act.Following the summary is a checklist for associations to utilize to ensurecompliance with the Act. Although the Thies case did not indicate whether theCalifornia Fair Debt Collections Practices Act would apply to collection ofhomeowner association assessments, this checklist is designed to ensurecompliance with both Acts. Finally, we have included pertinent portions of theFederal Fair Debt Collections Practices Act and the California Fair DebtCollections Practices Act.
A. SUMMARY OF ACTIVITIES PROHIBITED/RESTRICTED BY THE FEDERALFAIR DEBT COLLECTION PRACTICES ACT
The Act prohibits or restricts the following activities:
1. COMMUNICATIONS WITH THIRD PARTIES
Communications with third parties (a person other than the owner or his orher spouse, or executor/administrator of the estate) are limited to:
(a) Confirming or correcting the owner's location, after the collectoridentifying himself/herself, and not making any reference in telephone calls or onenvelopes that a debt is owed, and only if expressly requested, identifying thecollector's employer. Only one communication may be made for this purpose,unless the person being contacted requests the collector to call back or write forfurther information. No communication by post card or use of any language orsymbols on envelopes indicating a debt is being collected is permitted. If thecollector learns the owner is represented by an attorney, he/she must notcommunicate with any person other than the attorney, unless the attorney fails torespond.
(b) Except as in Section (a), or without the consent of the owner, or to effecta post-judgment judicial remedy (i.e. bank account garnishment), or with expresspermission of a court, the collector's communications are limited to the owner,his/her attorney, a consumer credit reporting agency if permitted by law, thecreditor, attorney of the creditor or attorney for the collector.
2. COMMUNICATIONS WITH THE OWNER (OR OWNER'S CURRENTSPOUSE OR LEGAL REPRESENTATIVE/EXECUTOR)
(a) Unless the owner consents, the owner can only be contacted between8:00 a.m. and 9:00 p.m. The owner may not be contacted at work if the collectorknows the employer prohibits him/her from receiving such calls.
(b) Upon the owner notifying the collector he/she refuses to pay, or to ceasefurther communication with him/her, the collector may only communicate toadvise collection has been terminated or to notify that the collector may invokespecified remedies to collect the debt (i.e. non-judicial foreclosure/lawsuit).
3. HARASSMENT
The collector may not harass, be oppressive or abusive, such as threatenviolence or criminal means to harm the person or his reputation or property, useobscene or profane language, make repeated or continuous telephone calls, orpublish names of owners refusing to pay debts.
4. FALSE/MISLEADING STATEMENTS
The collector may not make false or misleading statements, such as theamount of the debt, compensation to be received by the collector, falserepresentation or implication that one is an attorney, or threaten to take actionwhich cannot legally be taken. Representing or implying that nonpayment of thedebt will result in arrest/imprisonment, or garnishment or sale of any property orwages of any person is also prohibited, unless such action is lawful and thecollector intends to take such action.
5. UNFAIR PRACTICES
The collector may not use unfair or unconscionable means to collect, suchas: failing to disclose in the initial communication (oral or written) that thecollector is attempting to collect a debt and that any information obtained willused for such purpose, and the failure to disclose in subsequent communicationsthat the communication is from a debt collector; collecting amounts notauthorized by the CC&Rs or statute; communicating by post card, using symbolsother than the collector's address on envelopes.
With respect to checks, unfair practices also include:
(a) Acceptance of a check postdated by more than five days, unless thecheck writer is notified in writing of the collector's intent to deposit the check notmore than 10 nor less than 3 business days prior to such deposit, or
(b) Soliciting any postdated check for the purpose of threatening criminalprosecution, or
(c) Depositing or threatening to deposit any postdated check prior to thedate on such check.
6. VALIDATION NOTICE
Within 5 days after an initial communication with an owner regardingcollection of the debt, unless the following information is contained in the initialcommunication or the owner has paid the debt, the collector shall send the ownerwritten notice that includes:
(a) The amount of the debt;
(b) The name of the association to whom assessments are owed; and
(c) A statement that unless the owner within 30 days disputes the validityof the debt, the debt will be considered valid, and that if the owner notifies the
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collector within the 30 day period that he/she disputes the debt, the collector willobtain verification of the debt (i.e. an account history) and mail the same to theowner.
7. MULTIPLE DEBTS
If an owner owes multiple debts and makes single payments to the collector,the payment may not be applied to any debt which the owner has indicatedhe/she disputes, and where applicable, shall be applied in accordance with theowner's directions.
8. LIABILITY
Civil liability for violations is: actual damages, penalty of up to $1,000,attorneys fees and costs. Under the Act, the standard by which collectors will bejudged when determining the amount of liability will be the frequency andpersistency of non-compliance, and the extent to which the conduct wasintentional.
B. CHECKLIST FOR DEBT COLLECTION
1. WARNING LETTERS
Under Civil Code Section 1367, a pre-lien letter is required to be sent bycertified mail, and contain an itemized statement of the amounts owed. Thefollowing statement should be included in a pre-lien/warning letter to thedelinquent owner (please note that the paragraph which begins with“IMPORTANT NOTICE” must be in 14 point, bold type):
IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST ISPLACED IN FORECLOSURE BECAUSE YOU ARE BEHIND INYOUR ASSESSMENT, IT MAY BE SOLD WITH OUT COURTACTION.
1) As the record owner of the subject property upon which theobligation to pay the above-referenced delinquent amount isbased, you have the right to inspect the Association's recordspursuant to California Corporations Code § 8333.
2) As the record owner of the subject property upon which theobligation to pay the above-referenced delinquent amount isbased, you have the right to request a meeting with theAssociation's Board of Directors to discuss curing yourdelinquent account through a payment plan consistent withthe payment plan parameters delineated in the Association'sCollection Policy attached hereto.
3) If it is determined the above-referenced delinquent amountwas paid to the Association in a timely fashion, you will not beresponsible for the late fees, interest and reasonable collectionfees and costs delineated above.
NOTICE REQUIRED BY LAW:
Please be advised, this communication is being made by this
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office as a debt collector on behalf of the Association tocollect the debt described above. Any information obtainedwill be used for that purpose.
If you dispute the validity of this debt, you may requestvalidation of the debt in writing within thirty (30) days fromthe date of this letter. If you do not provide such notice,within such time, the debt will be assumed to be valid.
Please note that the information contained in this letter doesnot include assessments or other charges that may becomedue after the date of this letter.
The state Rosenthal Fair Debt Collection Practices Act andthe federal Fair Debt Collection Practices Act require that,except under unusual circumstances, collectors may notcontact you before 8 a.m. or after 9:00 p.m. They may notharass you by using threats of violence or arrest or by usingobscene language. Collectors may not use false or misleadingstatements or call you at work if they know or have reason toknow that you may not receive personal calls at work. Forthe most part, collectors may not tell another person, otherthan your attorney or spouse, about your debt. Collectorsmay contact another person to confirm your location orenforce a judgment. For more information about debtcollection activities, you may contact the Federal TradeCommission at 1-877-FTC-HELP or www.ftc.gov.
If an owner requests verification, an association can comply by sending acopy of the account history or other document reflecting the delinquent sums.Associations must not take any further collection action until such "verification"is sent.
Associations should amend their Collection Policy to include notification ofowners' right to request verification of the debt.
2. OTHER COMMUNICATIONS
In all other letters sent, be sure to identify yourself or your company as actingas debt collector for the association, such as by including this statement: "Thisoffice is acting as debt collector for the Association.”
3. LABELS/ENVELOPES
All communications should be sent in sealed envelopes, with no indicationby label or on the return address that refers to the debt. No postcards should besent which refer to collections.
4. ACCURACY OF AMOUNTS DEMANDED
Use reasonable diligence to ensure the amount demanded is accurate (as ofthe date of the demand), including the assessments, late charges, interest if any, andany costs (attorneys’ fees to be added by attorney.)
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5. DEBTS OLDER THAN FOUR YEARS
With respect to any debt older than four years, please consult legal counselbefore requesting payment of any such amounts.
6. TITLE OF PERSON SENDING LETTER
If the letterhead does not make clear the capacity in which you are acting,indicate your title after your name.
7. CONFIRMING WHEREABOUTS OF PERSON OWING DEBT
If you have to communicate to a third party to verify the location of theperson owing assessments, identify your name only and state that you areconfirming or correcting an address or location of the owner. Only identify youremployer if you are expressly requested to do so. Do not make any reference tothe fact that the owner owes or that you are attempting to collect assessments.Only communicate with the person to confirm location once, unless that personrequests you call again or write for further information.
8. RESTRICTIONS ON COMMUNICATION WITH OWNER
If telephone calls are necessary, they should be made between business hoursonly, not earlier than 8:00 a.m. or later than 9:00 p.m. If the owner refuses to paythe debt or states that he/she wishes you to cease any further communication withhim or her, additional communication should be limited to that required by theassociation's normal collection process.
9. COMMUNICATION WITH OWNER PROHIBITED AFTER LEARNINGOWNER IS REPRESENTED BY AN ATTORNEY
Do not communicate with the owner after he or she indicates he/she isrepresented by an attorney. If an owner's attorney contacts you, please refer himor her to your legal counsel, or direct them to communicate in writing, and senda copy of the attorney's communication to legal counsel for review/response.
10. COMMUNICATION WITH THIRD PARTIES
Do not communicate with any person other than the owner(s), current spouseor his or her attorney. Third parties include relatives, employer's office, ex-spouses, etc. No communication with banks, employers, etc. should occur unlessconnected with collecting a judgment.
11. ACCEPTANCE OF CHECKS/PARTIAL PAYMENTS
If any checks received are postdated by more than five days, or upon ahomeowner giving specific directions on a check or otherwise, particularly wherethe owner owns and is delinquent on one or more residences, we recommendyou consult with legal counsel as to how to proceed.
12. HARASSMENT OR ABUSE
Do not threaten violence, use obscene language, profanity or racial/religiousslurs, continuous telephone ringing, etc. Do not publish or post names oraddresses of delinquent owners in any newsletter or bulletin board.
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13. FALSE/MISLEADING REPRESENTATION/UNFAIRPRACTICES
Do not imply or represent any false consequences for not paying the debt (i.e.the owner will be arrested, etc.).
14. STAND FIRM ON COMPLIANCE
Do not let owners or anyone else mislead you into providing informationwhich you know you are prohibited from giving pursuant to the Act. Politely say"I'm sorry, the law prohibits me from answering your questions,” etc.
15. STATE LAW REGARDING COLLECTION OF DEBT
Since the Federal Act is deemed to apply to associations, the State FairCollection Practices Act will likely also be found to apply.
The above suggestions comply with both Acts.
Under both Acts civil liability for violations is: actual damages, penalty ofup to $1,000, attorneys fees and costs. However, under state law, NO LIABILITYcan be found for unintentional violations, and if within fifteen (15) days ofdiscovering a violation of the Act which can be cured, or if you receive writtennotice of such violation, the person collecting notifies the owner of the mistake,and makes whatever adjustments/corrections are necessary.
16. ANY DOUBTS OR QUESTIONS? CONSULT LEGAL COUNSEL!
If you have any doubts or questions as to complying with the Act(s), pleaseconsult legal counsel.
C. FEDERAL DEBT COLLECTION PRACTICES ACT
15 U.S. Code § 1692 Congressional Findings And Declaration OfPurpose.
(a) Abusive practices. There is abundant evidence of the use of abusive,deceptive, and unfair debt collection practices by many debt collectors. Abusivedebt collection practices contribute to the number of personal bankruptcies, tomarital instability, to the loss of jobs, and to invasions of individual privacy.
(b) Inadequacy of laws. Existing laws and procedures for redressing theseinjuries are inadequate to protect consumers.
(c) Available non-abusive collection methods. Means other thanmisrepresentation or other abusive debt collection practices are available for theeffective collection of debts.
(d) Interstate commerce. Abusive debt collection practices are carried onto a substantial extent in interstate commerce and through means andinstrumentalities of such commerce. Even where abusive debt collectionpractices are purely intrastate in character, they nevertheless directly affectinterstate commerce.
(e) Purposes. It is the purpose of this subchapter to eliminate abusive debtcollection practices by debt collectors, to insure that those debt collectors whorefrain from using abusive debt collection practices are not competitively
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disadvantaged, and to promote consistent State action to protect consumersagainst debt collection abuses.
15 U.S. Code § 1692a Definitions.
As used in this subchapter -
(1) The term "Commission" means the Federal Trade Commission.
(2) The term "communication" means the conveying of informationregarding a debt directly or indirectly to any person through any medium.
(3) The term "consumer" means any natural person obligated orallegedly obligated to pay any debt.
(4) The term "creditor" means any person who offers or extends creditcreating a debt or to whom a debt is owed, but such term does not includeany person to the extent that he receives an assignment or transfer of a debtin default solely for the purpose of facilitating collection of such debt foranother.
(5) The term "debt" means any obligation or alleged obligation of aconsumer to pay money arising out of a transaction in which the money,property, insurance, or services which are the subject of the transaction areprimarily for personal, family, or household purposes, whether or not suchobligation has been reduced to judgment.
(6) The term "debt collector" means any person who uses anyinstrumentality of interstate commerce or the mails in any business theprincipal purpose of which is the collection of any debts, or who regularlycollects or attempts to collect, directly or indirectly, debts owed or due orasserted to be owed or due another. Notwithstanding the exclusion providedby clause (F) of the last sentence of this paragraph, the term includes anycreditor who, in the process of collecting his own debts, uses any name otherthan his own which would indicate that a third person is collecting orattempting to collect such debts. For the purpose of Section 1692f(6) of thistitle, such term also includes any person who uses any instrumentality ofinterstate commerce or the mails in any business the principal purpose ofwhich is the enforcement of security interests. The term does not include -
(A) any officer or employee of a creditor while, in the name of thecreditor, collecting debts for such creditor;
(B) any person while acting as a debt collector for another person,both of whom are related by common ownership or affiliated bycorporate control, if the person acting as a debt collector does so onlyfor persons to whom it is so related or affiliated and if the principalbusiness of such person is not the collection of debts;
(C) any officer or employee of the United States or any State to theextent that collecting or attempting to collect any debt is in theperformance of his official duties;
(D) any person while serving or attempting to serve legal process on
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any other person in connection with the judicial enforcement of anydebt;
(E) any nonprofit organization which, at the request of consumers,performs bonafide consumer credit counseling and assists consumers inthe liquidation of their debts by receiving payments from suchconsumers and distributing such amount to creditors; and
(F) any person collecting or attempting to collect any debt owedor due or asserted to be owed or due another to the extent such activity(i) is incidental to a bona fide fiduciary obligation or a bona fide escrowarrangement; (ii) concerns a debt which was originated by such person;(iii) concerns a debt which was not in default at the time it was obtainedby such person; or (iv) concerns a debt obtained by such person as asecured party in a commercial credit transaction involving the creditor.
(7) The term "location information" means a consumer's place of abodeand his telephone number at such place, or his place of employment.
(8) The term "State" means any State, territory, or possession of theUnited States, the District of Columbia, the Commonwealth of Puerto Rico,or any political subdivision of any of the foregoing.
15 U.S. Code § 1692b Acquisition Of Location Information.
Any debt collector communicating with any person other than the consumer forthe purpose of acquiring location information about the consumer shall -
(1) identify himself, state that he is confirming or correcting locationinformation concerning the consumer, and, only if expressly requested,identify his employer;
(2) not state that such consumer owes any debt;
(3) not communicate with any such person more than once unlessrequested to do so by such person or unless the debt collector reasonablybelieves that the earlier response of such person is erroneous or incompleteand that such person now has correct or complete location information;
(4) not communicate by post card;
(5) not use any language or symbol on any envelope or in the contentsof any communication effected by the mails or telegram that indicates thatthe debt collector is in the debt collection business or that thecommunication relates to the collection of a debt; and
(6) after the debt collector knows the consumer is represented by anattorney with regard to the subject debt and has knowledge of, or can readilyascertain, such attorney's name and address, not communicate with anyperson other than that attorney, unless the attorney fails to respond within areasonable period of time to communication from the debt collector.
15 U.S. Code § 1692c Communication In Connection With DebtCollection.
(a) Communication with the consumer generally. Without the prior consent
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of the consumer given directly to the debt collector or the express permission ofa court of competent jurisdiction, a debt collector may not communicate with aconsumer in connection with the collection of any debt -
(1) at any unusual time or place or a time or place known or whichshould be known to be inconvenient to the consumer. In the absence ofknowledge of circumstances to the contrary, a debt collector shall assumethat the convenient time for communicating with a consumer is after 8o'clock antemeridian and before 9 o'clock postmeridian, local time at theconsumer's location;
(2) if the debt collector knows the consumer is represented by anattorney with respect to such debt and has knowledge, or can readilyascertain, such attorney's name and address, unless the attorney fails torespond within a reasonable period of time to a communication from thedebt collector or unless the attorney consents to direct communication fromthe consumer; or
(3) at the consumer's place of employment if the debt collector knowsor has reason to know that the consumer's employer prohibits the consumerfrom receiving such communication.
(b) Communication with third parties. Except as provided in Section 1692bof this title, without the prior consent of the consumer given directly to the debtcollector, or the express permission of a court of competent jurisdiction, or asreasonably necessary to effectuate a postjudgment judicial remedy, a debt collectormay not communicate, in connection with the collection of any debt, with anyperson other than the consumer, his attorney, a consumer reporting agency ifotherwise permitted by law, the creditor, the attorney of the creditor, or the attorneyof the debt collector.
(c) Ceasing communication. If a consumer notifies a debt collector inwriting that the consumer refuses to pay a debt or that the consumer wishes thedebt collector to cease further communication with the consumer, the debtcollector shall not communicate further with the consumer with respect to suchdebt, except -
(1) to advise the consumer that the debt collector's further efforts arebeing terminated;
(2) to notify the consumer that the debt collector or creditor mayinvoke specified remedies which are ordinarily invoked by such debtcollector or creditor; or
(3) where applicable, to notify the consumer that the debt collector orcreditor intends to invoke a specified remedy.
If such notice from the consumer is made by mail, notification shall becomplete upon receipt.
(d) "Consumer" defined. For the purpose of this section, the term"consumer" includes the consumer's spouse, parent (if the consumer is a minor),guardian, executor, or administrator.
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15 U.S. Code § 1692d Harassment Or Abuse.
A debt collector may not engage in any conduct the natural consequence ofwhich is to harass, oppress, or abuse any person in connection with the collectionof a debt. Without limiting the general application of the foregoing, the followingconduct is a violation of this section:
(1) The use or threat of use of violence or other criminal means to harmthe physical person, reputation, or property of any person.
(2) The use of obscene or profane language or language the naturalconsequence of which is to abuse the hearer or reader.
(3) The publication of a list of consumers who allegedly refuse to paydebts, except to a consumer reporting agency or to persons meeting therequirements of Sections 1681a(f) or 1681b(a)(3) of this title.
(4) The advertisement for sale of any debt to coerce payment of thedebt.
(5) Causing a telephone to ring or engaging any person in telephoneconversation repeatedly or continuously with the intent to annoy, abuse, orharass any person at the called number.
(6) Except as provided in Section 1692b of this title, the placement oftelephone calls without meaningful disclosure of the caller's identity.
15 U.S. Code § 1692e False Or Misleading Representations.
A debt collector may not use any false, deceptive, or misleading representationor means in connection with the collection of any debt. Without limiting thegeneral application of the foregoing, the following conduct is a violation of thissection:
(1) The false representation or implication that the debt collector isvouched for, bonded by, or affiliated with the United States or any State,including the use of any badge, uniform, or facsimile thereof.
(2) The false representation of -
(A) the character, amount, or legal status of any debt; or
(B) any services rendered or compensation which may be lawfullyreceived by any debt collector for the collection of a debt.
(3) The false representation or implication that any individual is anattorney or that any communication is from an attorney.
(4) The representation or implication that nonpayment of any debt willresult in the arrest or imprisonment of any person or the seizure, garnishment,attachment, or sale of any property or wages of any person unless such actionis lawful and the debt collector or creditor intends to take such action.
(5) The threat to take any action that cannot legally be taken or that isnot intended to be taken.
(6) The false representation or implication that a sale, referral, or othertransfer of any interest in a debt shall cause the consumer to -
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(A) lose any claim or defense to payment of the debt; or
(B) become subject to any practice prohibited by this subchapter.
(7) The false representations or implication that the consumercommitted any crime or other conduct in order to disgrace the consumer.
(8) Communicating or threatening to communicate to any personcredit information which is known or which should be known to be false,including the failure to communicate that a disputed debt is disputed.
(9) The use or distribution of any written communication whichsimulates or is falsely represented to be a document authorized, issued, orapproved by any court, official, or agency of the United States or any State,or which creates a false impression as to its source, authorization, orapproval.
(10) The use of any false representation or deceptive means to collect orattempt to collect any debt or to obtain information concerning a consumer.
(11) The failure to disclose in the initial written communication with theconsumer and, in addition, if the initial communication with the consumeris oral, in that initial oral communication, that the debt collector is attemptingto collect a debt and that any information obtained will be used for thatpurpose, and the failure to disclose in subsequent communications that thecommunication is from a debt collector, except that this paragraph shall notapply to a formal pleading made in connection with a legal action.
(12) The false representation or implication that accounts have beenturned over to innocent purchasers for value.
(13) The false representation or implication that documents are legalprocess.
(14) The use of any business, company, or organization name other thanthe true name of the debt collector's business, company, or organization.
(15) The false representation or implication that documents are not legalprocess forms or do not require action by the consumer.
(16) The false representations or implication that a debt collectoroperates or is employed by a consumer reporting agency as defined bySection 1681a(f) of this title.
15 U.S. Code § 1692f Unfair Practices.
A debt collector may not use unfair or unconscionable means to collect or attemptto collect any debt. Without limiting the general application of the foregoing, thefollowing conduct is a violation of this section:
(1) The collection of any amount (including any interest, fee, charge,or expense incidental to the principal obligation) unless such amount isexpressly authorized by the agreement creating the debt or permitted by law.
(2) The acceptance by a debt collector from any person of a check orother payment instrument postdated by more than five days unless such
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person is notified in writing of the debt collector's intent to deposit suchcheck or instrument not more than ten nor less than three business days priorto such deposit.
(3) The solicitation by a debt collector of any postdated check or otherpostdated payment instrument for the purpose of threatening or institutingcriminal prosecution.
(4) Depositing or threatening to deposit any postdated check or otherpostdated payment instrument prior to the date on such check or instrument.
(5) Causing charges to be made to any person for communications byconcealment of the true purpose of the communication. Such chargesinclude, but are not limited to, collect telephone calls and telegram fees.
(6) Taking or threatening to take any nonjudicial action to effectdispossession or disablement of property if -
(A) there is no present right to possession of the property claimedas collateral through an enforceable security interest;
(B) there is no present intention to take possession of the property;or
(C) the property is exempt by law from such dispossession ordisablement.
(7) Communicating with a consumer regarding a debt by post card.
(8) Using any language or symbol, other than the debt collector'saddress, on any envelope when communicating with a consumer by use ofthe mails or by telegram, except that a debt collector may use his businessname if such name does not indicate that he is in the debt collectionbusiness.
15 U.S. Code § 1692g Validation Of Debts.
(a) Notice of debt; contents
Within five days after the initial communication with a consumer in connectionwith the collection of any debt, a debt collector shall, unless the followinginformation is contained in the initial communication or the consumer has paidthe debt, send the consumer a written notice containing -
(1) the amount of the debt;
(2) the name of the creditor to whom the debt is owed;
(3) a statement that unless the consumer, within thirty days after receiptof the notice, disputes the validity of the debt, or any portion thereof, thedebt will be assumed to be valid by the debt collector;
(4) a statement that if the consumer notifies the debt collector in writingwithin the thirty-day period that the debt, or any portion thereof, is disputed,the debt collector will obtain verification of the debt or a copy of a judgmentagainst the consumer and a copy of such verification or judgment will bemailed to the consumer by the debt collector; and
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(5) a statement that, upon the consumer's written request within thethirty-day period, the debt collector will provide the consumer with the nameand address of the original creditor, if different from the current creditor.
(b) Disputed Debts
If the consumer notifies the debt collector in writing within the thirty-day perioddescribed in subsection (a) of this section that the debt, or any portion thereof, isdisputed, or that the consumer requests the name and address of the originalcreditor, the debt collector shall cease collection of the debt, or any disputedportion thereof, until the debt collector obtains verification of the debt or a copyof a judgment, or the name and address of the original creditor, and a copy of suchverification or judgment, or name and address of the original creditor, is mailed tothe consumer by the debt collector. Collection activities and communicationsthat do not otherwise violate this subchapter may continue during the 30-dayperiod referred to in subsection (a) of this section unless the consumer has notifiedthe debt collector in writing that the debt, or any portion of the debt, is disputedor that the consumer requests the name and address of the original creditor. Anycollection activities and communication during the 30-day period may notovershadow or be inconsistent with the disclosure of the consumer's right todispute the debt or request the name and address of the original creditor.
(c) Admission of Liability
The failure of a consumer to dispute the validity of a debt under this section maynot be construed by any court as an admission of liability by the consumer.
(d) Legal pleadings
A communication in the form of a formal pleading in a civil action shall not betreated as an initial communication for purposes of subsection (a).
(e) Notice provisions
The sending or delivery of any form or notice which does not relate to thecollection of a debt and is expressly required by title 26, title V of Gramm-Leach-Bliley Act (15 U.S.C. 6801 et seq.), or any provision of Federal or State law relatingto notice of data security breach or privacy, or any regulation prescribed underany such provision of law, shall not be treated as an initial communication inconnection with debt collection for purposes of this section.
15 U.S. Code § 1692h Multiple Debts.
If any consumer owes multiple debts and makes any single payment to any debtcollector with respect to such debts, such debt collector may not apply suchpayment to any debt which is disputed by the consumer and, where applicable,shall apply such payment in accordance with the consumer's directions.
15 U.S. Code § 1692i Legal Actions By Debt Collectors.
(a) Venue. Any debt collector who brings any legal action on a debt againstany consumer shall -
(1) in the case of an action to enforce an interest in real propertysecuring the consumer's obligation, bring such action only in a judicial
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district or similar legal entity in which such real property is located; or
(2) in the case of an action not described in paragraph (1), bring such actiononly in the judicial district or similar legal entity -
(A) in which such consumer signed the contract sued upon; or
(B) in which such consumer resides at the commencement of theaction.
(b) Authorization of actions. Nothing in this subchapter shall be construedto authorize the bringing of legal actions by debt collectors.
15 U.S. Code § 1692j Furnishing Certain Deceptive Forms.
(a) It is unlawful to design, compile, and furnish any form knowing thatsuch form would be used to created the false belief in a consumer that a personother than the creditor of such consumer is participating in the collection of or inan attempt to collect a debt such consumer allegedly owes such creditor, whenin fact such person is not so participating.
(b) Any person who violates this section shall be liable to the same extentand in the same manner as a debt collector is liable under Section 1692k of thistitle for failure to comply with a provision of this subchapter.
15 U.S. Code § 1692k Civil Liability.
(a) Amount of damages
Except as otherwise provided by this section, any debt collector who fails tocomply with any provision of this subchapter with respect to any person is liableto such person in an amount equal to the sum of -
(1) any actual damage sustained by such person as a result of suchfailure;
(2) (A) in the case of any action by an individual, such additionaldamages as the court may allow, but not exceeding $1,000; or
(B) in the case of a class action, (i) such amount for each namedplaintiff as could be recovered under subparagraph (A), and (ii) suchamount as the court may allow for all other class members, withoutregard to a minimum individual recovery, not to exceed the lesser of$500,000 or 1 per centum of the net worth of the debt collector; and
(3) in the case of any successful action to enforce the foregoing liability,the costs of the action, together with a reasonable attorney's fee asdetermined by the court. On a finding by the court that an action under thissection was brought in bad faith and for the purpose of harassment, the courtmay award to the defendant attorney's fees reasonable in relation to the workexpended and costs.
(b) Factors considered by court
In determining the amount of liability in any action under subsection (a) of thissection, the court shall consider, among other relevant factors -
(1) in any individual action under subsection (a)(2)(A) of this section,
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the frequency and persistence of noncompliance by the debt collector, thenature of such noncompliance, and the extent to which such noncompliancewas intentional; or
(2) in any class action under subsection (a)(2)(B) of this section, thefrequency and persistence of noncompliance by the debt collector, the natureof such noncompliance, the resources of the debt collector, the number ofpersons adversely affected, and the extent to which the debt collector'snoncompliance was intentional.
(c) Intent
A debt collector may not be held liable in any action brought under thissubchapter if the debt collector shows by a preponderance of evidence that theviolation was not intentional and resulted from a bona fide error notwithstandingthe maintenance of procedures reasonably adapted to avoid any such error.
(d) Jurisdiction
An action to enforce any liability created by this subchapter may be brought inany appropriate United States district court without regard to the amount incontroversy, or in any other court of competent jurisdiction, within one year fromthe date on which the violation occurs.
(e) Advisory opinions of commission
No provision of this section imposing any liability shall apply to any act done oromitted in good faith in conformity with any advisory opinion of the Commission,notwithstanding that after such act or omission has occurred, such opinion isamended, rescinded, or determined by judicial or other authority to be invalid forany reason.
15 U.S. Code § 1692n Relation To State Laws.
This subchapter does not annul, alter, or affect, or exempt any person subject tothe provisions of this subchapter from complying with the laws of any State withrespect to debt collection practices, except to the extent that those laws areinconsistent with any provision of this subchapter, and then only to the extent ofthe inconsistency. For purposes of this section, a State law is not inconsistent withthis subchapter if the protection such law affords any consumer is greater than theprotection provided by this subchapter.
15 U.S. Code § 1692o Exemption For State Regulation.
The Commission shall by regulation exempt from the requirements of thissubchapter any class of debt collection practices within any State if theCommission determines that under the law of that State that class of debtcollection practices is subject to requirements substantially similar to thoseimposed by this subchapter, and that there is adequate provision for enforcement.
D. STATE DEBT COLLECTION LAWS
Civil Code § 1788 Title.
This title may be cited as the Rosenthal Fair Debt Collection Practices Act.
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Civil Code § 1788.1 Legislative Findings; Purpose.
(a) The Legislature makes the following findings:
(1) The banking and credit system and grantors of credit to consumersare dependent upon the collection of just and owing debts. Unfair ordeceptive collection practices undermine the public confidence which isessential to the continued functioning of the banking and credit system andsound extensions of credit to consumers.
(2) There is need to ensure that debt collectors and debtors exercisetheir responsibilities to one another with fairness, honesty and due regardfor the rights of the other.
(b) It is the purpose of this title to prohibit debt collectors from engaging inunfair or deceptive acts or practices in the collection of consumer debts and torequire debtors to act fairly in entering into and honoring such debts, as specifiedin this title.
Civil Code § 1788.2 Definitions.
(a) Definitions and rules of construction set forth in this section areapplicable for the purpose of this title.
(b) The term “debt collection” means any act or practice in connection withthe collection of consumer debts.
(c) The term “debt collector” means any person who, in the ordinary courseof business, regularly, on behalf of himself or herself or others, engages in debtcollection. The term includes any person who composes and sells, or offers tocompose and sell, forms, letters, and other collection media used or intended tobe used for debt collection, but does not include an attorney or counselor at law.
(d) The term “debt” means money, property or their equivalent, which isdue or owing or alleged to be due or owing from a natural person to anotherperson.
(e) The term “consumer credit transaction” means a transaction between anatural person and another person in which property, services or money isacquired on credit by that natural person from such other person primarily forpersonal, family or household purposes.
(f) The terms “consumer debt” and “consumer credit” mean money,property or their equivalent, due or owing or alleged to be due or owing from anatural person by reason of a consumer credit transaction.
(g) The term “person” means a natural person, partnership, corporation,limited liability company, trust, estate, cooperative, association or other similarentity.
(h) Except as provided in Section 1788.18, the term "debtor" means anatural person from whom a debt collector seeks to collect a consumer debtwhich is due and owing or alleged to be due and owing from such person.
(i) The term “creditor” means a person who extends consumer credit to adebtor.
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(j) The term "consumer credit report" means any written, oral or othercommunication of any information by a consumer reporting agency bearingon a consumer's creditworthiness, credit standing, credit capacity, character,general reputation, personal characteristics or mode of living which is usedor expected to be used or collected in whole or in part for the purpose ofserving as a factor in establishing the consumer's eligibility for (1) credit orinsurance to be used primarily for person, family, or household purposes, or(2) employment purposes, or (3) other purposes authorized under anyapplicable federal or state law or regulation. The term does not include (a)any report containing information solely as to transactions or experiencesbetween the consumer and the person making the report; (b) anyauthorization or approval of a specific extension of credit directly orindirectly by the issuer of a credit card or similar device; or (c) any report inwhich a person who has been requested by a third party to make a specificextension of credit directly or indirectly to a consumer conveys his or herdecision with respect to that request, if the third party advises the consumerof the name and address of the person to whom the request was made andsuch person makes the disclosures to the consumer required under anyapplicable federal or state law or regulation.
(k) The term “consumer reporting agency” means any person which, formonetary fees, dues, or on a cooperative nonprofit basis, regularly engages, inwhole or in part, in the practice of assembling or evaluating consumer creditinformation or other information on consumers for the purpose of furnishingconsumer credit reports to third parties, and which uses any means or facility forthe purpose of preparing or furnishing consumer credit reports.
Civil Code § 1788.10 Threats; Unlawful Conduct.
No debt collector shall collect or attempt to collect a consumer debt by means ofthe following conduct:
(a) The use, or threat of use, of physical force or violence or any criminalmeans to cause harm to the person, or the reputation, or the property of anyperson;
(b) The threat that the failure to pay a consumer debt will result in anaccusation that the debtor has committed a crime where such accusation, if made,would be false;
(c) The communication of, or threat to communicate to any person the factthat a debtor has engaged in conduct, other than the failure to pay a consumerdebt, which the debt collector knows or has reason to believe will defame thedebtor;
(d) The threat to the debtor to sell or assign to another person the obligationof the debtor to pay a consumer debt, with an accompanying false representationthat the result of such sale or assignment would be that the debtor would loseany defense to the consumer debt;
(e) The threat to any person that nonpayment of the consumer debt mayresult in the arrest of the debtor or the seizure, garnishment, attachment or sale
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of any property or the garnishment or attachment of wages of the debtor, unlesssuch action is in fact contemplated by the debt collector and permitted by thelaw; or
(f) The threat to take any action against the debtor which is prohibited bythis title.
Civil Code § 1788.11 Profane Language; Telephone Practices.
No debt collector shall collect or attempt to collect a consumer debt by means ofthe following practices:
(a) Using obscene or profane language;
(b) Placing telephone calls without disclosure of the caller's identity,provided that an employee of a licensed collection agency may identify himselfby using his registered alias name as long as he correctly identifies the agency herepresents;
(c) Causing expense to any person for long distance telephone calls,telegram fees or charges for other similar communications, by misrepresenting tosuch person the purpose of such telephone call, telegram or similarcommunication;
(d) Causing a telephone to ring repeatedly or continuously to annoy theperson called; or
(e) Communicating, by telephone or in person, with the debtor with suchfrequency as to be unreasonable and to constitute an harassment to the debtorunder the circumstances.
Civil Code § 1788.12 Communication Of Information Regarding Debt.
No debt collector shall collect or attempt to collect a consumer debt by means ofthe following practices:
(a) Communicating with the debtor's employer regarding the debtor' sconsumer debt unless such a communication is necessary to the collection of thedebt, or unless the debtor or his attorney has consented in writing to suchcommunication. A communication is necessary to the collection of the debt onlyif it is made for the purposes of verifying the debtor's employment, locating thedebtor, or effecting garnishment, after judgment, of the debtor's wages, or in thecase of a medical debt for the purpose of discovering the existence of medicalinsurance. Any such communication, other than a communication in the case ofa medical debt by a health care provider or its agent for the purpose of discoveringthe existence of medical insurance, shall be in writing unless such writtencommunication receives no response within 15 days and shall be made only asmany times as is necessary to the collection of the debt. Communications to adebtor's employer regarding a debt shall not contain language that would beimproper if the communication were made to the debtor. One communicationsolely for the purpose of verifying the debtor's employment may be oral withoutprior written contact.
(b) Communicating information regarding a consumer debt to any memberof the debtor's family, other than the debtor's spouse or the parents or guardians
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of the debtor who is either a minor or who resides in the same household withsuch parent or guardian, prior to obtaining a judgment against the debtor, exceptwhere the purpose of the communication is to locate the debtor, or where thedebtor or his attorney has consented in writing to such communication;
(c) Communicating to any person any list of debtors which discloses thenature or existence of a consumer debt, commonly known as "deadbeat lists," oradvertising any consumer debt for sale, by naming the debtor; or
(d) Communicating with the debtor by means of a written communicationthat displays or conveys any information about the consumer debt or the debtorother than the name, address and telephone number of the debtor and the debtcollector and which is intended both to be seen by any other person and also toembarrass the debtor.
(e) Notwithstanding the foregoing provisions of this section, the disclosure,publication or communication by a debt collector of information relating to aconsumer debt or the debtor to a consumer reporting agency or to any otherperson reasonably believed to have a legitimate business need for suchinformation shall not be deemed to violate this title.
Civil Code § 1788.13 Representations.
No debt collector shall collect or attempt to collect a consumer debt by means ofthe following practices:
(a) Any communication with the debtor other than in the name either ofthe debt collector or the person on whose behalf the debt collector is acting;
(b) Any false representation that any person is an attorney or counselor atlaw;
(c) Any communication with a debtor in the name of an attorney orcounselor at law or upon stationery or like written instruments bearing the nameof the attorney or counselor at law, unless such communication is by an attorneyor counselor at law or shall have been approved or authorized by such attorneyor counselor at law;
(d) The representation that any debt collector is vouched for, bonded by,affiliated with, or is an instrumentality, agent or official of any federal, state orlocal government or any agency of federal, state or local government, unless thecollector is actually employed by the particular governmental agency in questionand is acting on behalf of such agency in the debt collection matter;
(e) The false representation that the consumer debt may be increased bythe addition of attorney's fees, investigation fees, service fees, finance charges, orother charges if, in fact, such fees or charges may not legally be added to theexisting obligation;
(f) The false representation that information concerning a debtor' s failureor alleged failure to pay a consumer debt has been or is about to be referred to aconsumer reporting agency;
(g) The false representation that a debt collector is a consumer reportingagency;
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(h) The false representation that collection letters, notices or other printedforms are being sent by or on behalf of a claim, credit, audit or legal department;
(i) The false representation of the true nature of the business or servicesbeing rendered by the debt collector;
(j) The false representation that a legal proceeding has been, is about tobe, or will be instituted unless payment of a consumer debt is made;
(k) The false representation that a consumer debt has been, is about to be,or will be sold, assigned, or referred to a debt collector for collection; or
(l) Any communication by a licensed collection agency to a debtordemanding money unless the claim is actually assigned to the collection agency.
Civil Code § 1788.14 Collection Of Fee Or Discharged Debt;Communication With Debtor Represented By Attorney
No debt collector shall collect or attempt to collect a consumer debt by means ofthe following practices:
(a) Obtaining an affirmation from a debtor of a consumer debt which hasbeen discharged in bankruptcy, without clearly and conspicuously disclosing tothe debtor, in writing, at the time such affirmation is sought, the fact that the debtoris not legally obligated to make such affirmation;
(b) Collecting or attempting to collect from the debtor the whole or any partof the debt collector's fee or charge for services rendered, or other expenseincurred by the debt collector in the collection of the consumer debt, except aspermitted by law; or
(c) Initiating communications, other than statements of account, with thedebtor with regard to the consumer debt, when the debt collector has beenpreviously notified in writing by the debtor's attorney that the debtor isrepresented by such attorney with respect to the consumer debt and such noticeincludes the attorney's name and address and a request by such attorney that allcommunications regarding the consumer debt be addressed to such attorney,unless the attorney fails to answer correspondence, return telephone calls, ordiscuss the obligation in question. This subdivision shall not apply where priorapproval has been obtained from the debtor's attorney, or where thecommunication is a response in the ordinary course of business to a debtor'sinquiry.
Civil Code § 1788.15 Improper Use Of Judicial Proceedings.
(a) No debt collector shall collect or attempt to collect a consumer debt bymeans of judicial proceedings when the debt collector knows that service ofprocess, where essential to jurisdiction over the debtor or his property, has notbeen legally effected.
(b) No debt collector shall collect or attempt to collect a consumer debt,other than one reduced to judgment, by means of judicial proceedings in a countyother than the county in which the debtor has incurred the consumer debt or thecounty in which the debtor resides at the time such proceedings are instituted, orresided at the time the debt was incurred.
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Civil Code § 1788.16 Simulation Of Legal Process.
It is unlawful, with respect to attempted collection of a consumer debt, for a debtcollector, creditor, or an attorney, to send a communication which simulates legalor judicial process or which gives the appearance of being authorized, issued, orapproved by a governmental agency or attorney when it is not. Any violation ofthe provisions of this section is a misdemeanor punishable by imprisonment in thecounty jail not exceeding six months, or by a fine not exceeding two thousand fivehundred dollars ($2,500) or by both.
Civil Code §1788.17 Compliance With Federal Law.
Notwithstanding any other provision of this title, every debt collector collectingor attempting to collect a consumer debt shall comply with the provisions ofSections 1692b to 1692j, inclusive, of, and shall be subject to the remedies inSection 1692k of, Title 15 of the United States Code. However, subsection (11)of Section 1692e and Section 1692g shall not apply to any person specified inparagraph (A) and (B) of subsection (6) of Section 1692a of Title 15 of the UnitedStates Code or that person's principal. The references to federal codes in thissection refer to those codes as they read January 1, 2000.
Civil Code §1788.18 Identity Theft; Debt Collector To Stop CollectionActivities When Certain Information Provided; Written Statement; PenaltyFor False Information; Recommencement Of Collection Upon Good FaithDetermination; Notification To Credit Reporting Agencies And CreditorsOf Specified Information; Definition.
(a) Upon receipt from a debtor of all of the following, a debt collector shallcease collection activities until completion of the review provided in subdivision(d):
(1) A copy of a police report filed by the debtor alleging that the debtoris the victim of an identity theft crime, including, but not limited to, aviolation of Section 530.5 of the Penal Code, for the specific debt beingcollected by the debt collector.
(2) The debtor's written statement that the debtor claims to be thevictim of identity theft with respect to the specific debt being collected by thedebt collector.
(b) The written statement described in paragraph (2) of subdivision (a) shallconsist of any of the following:
(1) A Federal Trade Commission's Affidavit of Identity Theft.
(2) A written statement that contains the content of the Identity TheftVictim's Fraudulent Account Information Request offered to the public bythe California Office of Privacy Protection.
(3) A written statement that certifies that the representations are true,correct, and contain no material omissions of fact to the best knowledge andbelief of the person submitting the certification. A person submitting thecertification who declares as true any material matter pursuant to thissubdivision that he or she knows to be false is guilty of a misdemeanor. The
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statement shall contain or be accompanied by the following, to the extentthat an item listed below is relevant to the debtor's allegation of identity theftwith respect to the debt in question:
(A) A statement that the debtor is a victim of identity theft.
(B) A copy of the debtor's driver's license or identification card, asissued by the state.
(C) Any other identification document that supports the statementof identity theft.
(D) Specific facts supporting the claim of identity theft, if available.
(E) Any explanation showing that the debtor did not incur thedebt.
(F) Any available correspondence disputing the debt aftertransaction information has been provided to the debtor.
(G) Documentation of the residence of the debtor at the time ofthe alleged debt. This may include copies of bills and statements, suchas utility bills, tax statements, or other statements from businesses sentto the debtor, showing that the debtor lived at another residence at thetime the debt was incurred.
(H) A telephone number for contacting the debtor concerning anyadditional information or questions, or direction that furthercommunications to the debtor be in writing only, with the mailingaddress specified in the statement.
(I) To the extent the debtor has information concerning who mayhave incurred the debt, the identification of any person whom the debtorbelieves is responsible.
(J) An express statement that the debtor did not authorize the useof the debtor's name or personal information for incurring the debt.
(K) The certification required pursuant to this paragraph shall besufficient if it is in substantially the following form:
“I certify the representations made are true, correct, and contain nomaterial omissions of fact.
____________________ ___________________________________(Date and Place) (Signature)”
(c) If a debtor notifies a debt collector orally that he or she is a victim ofidentity theft, the debt collector shall notify the debtor, orally or in writing, thatthe debtor's claim must be in writing. If a debtor notifies a debt collector in writingthat he or she is a victim of identity theft, but omits information required pursuantto subdivision (a) or, if applicable, the certification required pursuant to paragraph(3) of subdivision (b), if the debt collector does not cease collection activities, thedebt collector shall provide written notice to the debtor of the additionalinformation that is required, or the certification required pursuant to paragraph (3)of subdivision (b), as applicable, or send the debtor a copy of the Federal Trade
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Commission's Affidavit of Identity Theft form.
(d) Upon receipt of the complete statement and information described insubdivision (a), the debt collector shall review and consider all of the informationprovided by the debtor and other information available to the debt collector in itsfile or from the creditor. The debt collector may recommence debt collectionactivities only upon making a good faith determination that the information doesnot establish that the debtor is not responsible for the specific debt in question.The debt collector's determination shall be made in a manner consistent with theprovisions of subsection (1) of Section 1692 of Title 15 of the United States Code,as incorporated by Section 1788.17 of this code. The debt collector shall notifythe debtor in writing of that determination and the basis for that determinationbefore proceeding with any further collection activities. The debt collector'sdetermination shall be based on all of the information provided by the debtor andother information available to the debt collector in its file or from the creditor.
(e) No inference or presumption that the debt is valid or invalid, or that thedebtor is liable or not liable for the debt, shall arise if the debt collector decidesafter the review described in subdivision (d) to cease or recommence the debtcollection activities. The exercise or nonexercise of rights under this section isnot a waiver of any other right or defense of the debtor or debt collector.
(f) The statement and supporting documents that comply with subdivision(a) may also satisfy, to the extent those documents meet the requirements of, thenotice requirement of paragraph (5) of subdivision (c) of Section 1798.93.
(g) A debt collector who ceases collection activities under this section anddoes not recommence those collection activities shall do all of the following:
(1) If the debt collector has furnished adverse information to aconsumer credit reporting agency, notify the agency to delete thatinformation.
(2) Notify the creditor that debt collection activities have beenterminated based upon the debtor's claim of identity theft.
(h) A debt collector who has possession of documents that the debtor isentitled to request from a creditor pursuant to Section 530.8 of the Penal Code isauthorized to provide those documents to the debtor.
(i) Notwithstanding subdivision (h) of Section 1788.2, for the purposes ofthis section, "debtor" means a natural person, firm, association, organization,partnership, business trust, company, corporation, or limited liability companyfrom which a debt collector seeks to collect a debt that is due and owing oralleged to be due and owing from the person or entity. The remedies provided bythis title shall apply equally to violations of this section.
Civil Code § 1788.30 Remedies, Jurisdiction; Defenses.
(a) Any debt collector who violates this title with respect to any debtor shallbe liable to that debtor only in an individual action, and his liability therein to thatdebtor shall be in an amount equal to the sum of any actual damages sustainedby the debtor as a result of the violation.
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(b) Any debt collector who willfully and knowingly violates this title withrespect to any debtor shall, in addition to actual damages sustained by the debtoras a result of the violation, also be liable to the debtor only in an individual action,and his additional liability therein to that debtor shall be for a penalty in suchamount as the court may allow, which shall not be less than one hundred dollars($100) nor greater than one thousand dollars ($1,000).
(c) In the case of any action to enforce any liability under this title, theprevailing party shall be entitled to costs of the action. Reasonable attorney's fees,which shall be based on time necessarily expended to enforce the liability, shallbe awarded to a prevailing debtor; reasonable attorney's fees may be awarded toa prevailing creditor upon a finding by the court that the debtor's prosecution ordefense of the action was not in good faith.
(d) A debt collector shall have no civil liability under this title if, within 15days either after discovering a violation which is able to be cured, or after thereceipt of a written notice of such violation, the debt collector notifies the debtorof the violation, and makes whatever adjustments or corrections are necessary tocure the violation with respect to the debtor.
(e) A debt collector shall have no civil liability to which such debt collectormight otherwise be subject for a violation of this title, if the debt collector showsby a preponderance of evidence that the violation was not intentional and resultednotwithstanding the maintenance of procedures reasonably adapted to avoid anysuch violation.
(f) Any action under this section may be brought in any appropriate courtof competent jurisdiction in an individual capacity only, within one year from thedate of the occurrence of the violation.
(g) Any intentional violation of the provisions of this title by the debtor maybe raised as a defense by the debt collector, if such violation is pertinent orrelevant to any claim or action brought against the debt collector by or on behalfof the debtor.
Civil Code § 1788.31 Separability Of Provisions.
If any provision of this title, or the application thereof to any person orcircumstances, is held invalid, the remaining provisions of this title, or theapplication of such provisions to other persons or circumstances, shall not beaffected thereby.
Civil Code § 1788.32 Remedies Cumulative; Administrative RegulationsSaved.
The remedies provided herein are intended to be cumulative and are in additionto any other procedures, rights, or remedies under any other provision of law.The enactment of this title shall not supersede existing administrative regulationsof the Director of Consumer Affairs except to the extent that those regulations areinconsistent with the provisions of this title.
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Civil Code § 1788.33 Waiver Of Provisions Of Title Void
Any waiver of the provisions of this title is contrary to public policy, and is voidand unenforceable.
E. BANKRUPTCY - THE AUTOMATIC STAY
11 U.S. Code § 362 Automatic Stay [in relevant part].
(a) Except as provided in subsection (b) of this section, a petition filed underSection 301, 302, or 303 of this title, or an application filed under Section 5(a)(3)of the Securities Investor Protection Act of 1970, operates as a stay, applicable toall entities, of -
(1) the commencement or continuation, including the issuance oremployment of process, of a judicial, administrative, or other action orproceeding against the debtor that was or could have been commencedbefore the commencement of the case under this title, or to recover a claimagainst the debtor that arose before the commencement of the case under thistitle;
(2) the enforcement, against the debtor or against property of the estate,of a judgment obtained before the commencement of the case under thistitle;
(3) any act to obtain possession of property of the estate or of propertyfrom the estate or to exercise control over property of the estate;
(4) any act to create, perfect, or enforce any lien against property ofthe estate;
(5) any act to create, perfect, or enforce against any property of thedebtor any lien to the extent that such lien secures a claim that arose beforethe commencement of the case under this title;
(6) any act to collect, assess, or recover a claim against the debtor thatarose before the commencement of the case under this title;
(7) the setoff of any debt owing to the debtor that arose before thecommencement of the case under this title against any claim against thedebtor; and
(8) the commencement or continuation of a proceeding before theUnited States Tax Court concerning a corporate debtor's tax liability for ataxable period the bankruptcy court may determine or concerning the taxliability of a debtor who is an individual for a taxable period ending beforethe date of the order for relief under this title.
11 U.S. Code § 523 Exceptions To Discharge [in relevant part].
(a) A discharge under Section 727, 1141, 1228(a), 1228(b), or 1328(b) ofthis title does not discharge an individual debtor from any debt...
(16) for a fee or assessment that becomes due and payable after theorder for relief to a membership association with respect to the debtor'sinterest in a unit that has condominium ownership, in a share of acooperative corporation, or a lot in a homeowners association, for as long as
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the debtor or the trustee has a legal, equitable, or possessory ownershipinterest in such unit, such corporation, or such lot, but nothing in thisparagraph shall except from discharge the debt of a debtor for a membershipassociation fee or assessment for a period arising before entry of the order forrelief in a pending or subsequent bankruptcy case;
[Remainder omitted]
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NINERESIDENTIAL CARE, SENIOR HOUSING AND
FAIR HOUSING LAWS
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I. RESIDENTIAL CARE
A. Summary
Many association’s CC&Rs restrict use of residences to “single family use” or“residential use,” and prohibit “business use.” California law considers certainresidential facilities having six or fewer persons who are being provided non-medical services, supervision or assistance necessary for daily living or for theirprotection, to constitute “residential use.” Examples include homes forhandicapped or mentally impaired persons. Facilities for the elderly are alsopermitted under additional statutes.
B. General Provisions
Health and Safety Code § 1502Definitions [in relevant part]
As used in this chapter: . . .
(a) “Community care facility” means any facility, place, or building that ismaintained and operated to provide nonmedical residential care, day treatment,adult day care, or foster family agency services for children, adults, or childrenand adults, including, but not limited to, the physically handicapped, mentallyimpaired, incompetent persons, and abused or neglected children, and includesthe following:
(1) “Residential facility” means any family home, group care facility, orsimilar facility determined by the director, for 24-hour nonmedical care ofpersons in need of personal services, supervision, or assistance essential forsustaining the activities of daily living or for the protection of the individual.
Health and Safety Code § 1566.3Ordinances; Residential Facilities Serving Six Or Fewer Persons ConsideredResidential Use Of Property; Residents And Operators Considered A Family
(a) Whether or not unrelated persons are living together, a residential facilitythat serves six or fewer persons shall be considered a residential use of propertyfor the purposes of this article. In addition, the residents and operators of such afacility shall be considered a family for the purposes of any law or zoningordinance which relates to the residential use of property pursuant to this article.
(b) For the purpose of all local ordinances, a residential facility that servessix or fewer persons shall not be included within the definition of a boardinghouse, rooming house, institution or home for the care of minors, the aged, or thementally infirm, foster care home, guest home, rest home, sanitarium, mentalhygiene home, or other similar term which implies that the residential facility isa business run for profit or differs in any other way from a family dwelling.
(c) This section shall not be construed to prohibit any city, county, or otherlocal public entity from placing restrictions on building heights, setback, lotdimensions, or placement of signs of a residential facility which serves six or fewer
persons as long as such restrictions are identical to those applied to other familydwellings of the same type in the same zone.
(d) This section shall not be construed to prohibit the application to aresidential care facility of any local ordinance that deals with health and safety,building standards, environmental impact standards, or any other matter withinthe jurisdiction of a local public entity if the ordinance does not distinguishresidential care facilities which serve six or fewer persons from other familydwellings of the same type in the same zone and if the ordinance does notdistinguish residents of the residential care facilities from persons who reside inother family dwellings of the same type in the same zone. Nothing in this sectionshall be construed to limit the ability of a local public entity to fully enforce alocal ordinance, including, but not limited to, the imposition of fines and otherpenalties associated with violations of local ordinances covered by this section.
(e) No conditional use permit, zoning variance, or other zoning clearanceshall be required of a residential facility which serves six or fewer persons whichis not required of a family dwelling of the same type in the same zone.
(f) Use of a family dwelling for purposes of a residential facility serving sixor fewer persons shall not constitute a change of occupancy for purposes of Part1.5 (commencing with Section 17910) of Division 13 or local building codes.However, nothing in this section is intended to supersede Section 13143 or13143.6, to the extent such sections are applicable to residential facilitiesproviding care for six or fewer residents.
(g) For the purposes of this section, “family dwelling,” includes, but is notlimited to, single-family dwellings, units in multifamily dwellings, including unitsin duplexes and units in apartment dwellings, mobilehomes, includingmobilehomes located in mobilehome parks, units in cooperatives, units incondominiums, units in townhouses, and units in planned unit developments.
Health and Safety Code § 1566.5Contracts, Deeds Or Covenants For Transfer Of Real Property; ResidentialFacilities Serving Six Or Fewer Persons Considered Residential Use OfProperty And Use Of Property By A Family
For the purposes of any contract, deed, or covenant for the transfer of real propertyexecuted on or after January 1, 1979, a residential facility which serves six orfewer persons shall be considered a residential use of property and use of propertyby a single family, notwithstanding any disclaimers to the contrary.
C. Residential Care Facilities For The Elderly
Health and Safety Code § 1569.2Definitions [in relevant part]
As used in this chapter:
(k) “Residential care facility for the elderly” means a housing arrangementchosen voluntarily by persons 60 years of age or over, or their authorizedrepresentative, where varying levels and intensities of care and supervision,protective supervision, or personal care are provided, based upon their varying
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needs, as determined in order to be admitted and to remain in the facility. Personsunder 60 years of age with compatible needs may be allowed to be admitted orretained in a residential care facility for the elderly as specified in Section1569.316.
This subdivision shall be operative only until the enactment of legislationimplementing the three levels of care in residential care facilities for the elderlypursuant to Section 1569.70.
(l) “Residential care facility for the elderly” means a housing arrangementchosen voluntarily by persons 60 years of age or over, or their authorizedrepresentative, where varying levels and intensities of care and supervision,protective supervision, personal care, or health-related services are provided,based upon their varying needs, as determined in order to be admitted and toremain in the facility. Persons under 60 years of age with compatible needs maybe allowed to be admitted or retained in a residential care facility for the elderlyas specified in Section 1569.316.
This subdivision shall become operative upon the enactment of legislationimplementing the three levels of care in residential care facilities for the elderlypursuant to Section 1569.70.
Health and Safety Code § 1569.85Facility Serving Six Or Fewer Persons; Consideration As Residential Use;Application Of Local Regulations
Whether or not unrelated persons are living together, a residential care facilityfor the elderly which serves six or fewer persons shall be considered a residentialuse of property for the purposes of this article. In addition, the residents andoperators of the facility shall be considered a family for the purposes of any lawor zoning ordinance which relates to the residential use of property pursuant tothis article.
For the purpose of all local ordinances, a residential care facility for the elderlywhich serves six or fewer persons shall not be included within the definition of aboarding house, rooming house, institution or home for the care of the aged, guesthome, rest home, sanitarium, mental hygiene home, or other similar term whichimplies that the residential care facility for the elderly is a business run for profitor differs in any other way from a family dwelling.
This section shall not be construed to forbid any city, county, or other local publicentity from placing restrictions on building heights, setback, lot dimensions, orplacements of signs of a residential care facility for the elderly which serves sixor fewer persons as long as the restrictions are identical to those applied to otherfamily dwellings of the same type in the same zone.
This section shall not be construed to forbid the application to a residential carefacility for the elderly of any local ordinance which deals with health and safety,building standards, environmental impact standards, or any other matter withinthe jurisdiction of a local public entity if the ordinance does not distinguishresidential care facilities for the elderly which serve six or fewer persons fromother family dwellings of the same type in the same zone; and if the ordinance
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does not distinguish residents of the residential care facilities for the elderly frompersons who reside in other family dwellings of the same type in the same zone.
No conditional use permit, zoning variance, or other zoning clearance shall berequired of a residential care facility for the elderly which serves six or fewerpersons which is not required of a family dwelling of the same type in the samezone.
Use of a family dwelling for purposes of a residential care facility for the elderlyserving six or fewer persons shall not constitute a change of occupancy forpurposes of Part 1.5 (commencing with Section 17910) of Division 13 or localbuilding codes. However, nothing in this section is intended to supersede Section13143 or 13143.6, to the extent these sections are applicable to residential carefacilities for the elderly providing care for six or fewer residents.
For the purposes of this section, “family dwelling,” includes, but is not limited to,single-family dwelling, units in multifamily dwellings, including units in duplexesand units in apartment dwellings, mobile homes, including mobile homes locatedin mobile home parks, units in cooperatives, units in condominiums, units intownhouses, and units in planned unit developments.
II. FAMILY DAY CARE HOMES
A. SummaryThe legislature determined that public policy favors that children be cared for innormal residential settings. The provision of day care services is deemed to beconsistent with “residential use” and cannot be prohibited by a restrictivecovenant. The law allows “small” (up to eight children) and “large” (12-14children) day care operations subject to the conditions set forth in applicablestatutes. In certain circumstances, a person providing day care services at aresidence in an association is required to provide disclosures to parents as to thefact that the association’s insurance may not provide coverage related to day careand the association may request to be named as an additional insured on the daycare provider’s insurance policy.
B. General Provisions
Health and Safety Code § 1597.40Public Policy To Provide Home Environment, Restrictions Governing RealProperty.
(a) It is the intent of the Legislature that family day care homes for childrenshould be situated in normal residential surroundings so as to give children thehome environment which is conducive to healthy and safe development. It is thepublic policy of this state to provide children in a family day care home the samehome environment as provided in a traditional home setting.
The Legislature declares this policy to be of statewide concern with the purposeof occupying the field to the exclusion of municipal zoning, building and firecodes and regulations governing the use or occupancy of family day care homesfor children, except as specifically provided for in this chapter, and to prohibitany restrictions relating to the use of single-family residences for family day carehomes for children except as provided by this chapter.
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(b) Every provision in a written instrument entered into relating to realproperty which purports to forbid or restrict the conveyance, encumbrance,leasing or mortgaging of such real property for use or occupancy as a family daycare home for children, is void and every restriction or prohibition in any suchwritten instrument as to the use or occupancy of the property as a family day carehome for children is void.
(c) Except as provided in subdivision (d), every restriction or prohibitionentered into, whether by way of covenant, condition upon use or occupancy, orupon transfer of title to real property, which restricts or prohibits directly, orindirectly limits, the acquisition, use, or occupancy of such property for a familyday care home for children is void.
(d) (1) A prospective family day care home provider, who resides in arental property, shall provide 30 days’ written notice to the landlord or ownerof the rental property prior to the commencement of operation of the familyday care home.
(2) For family day care home providers who have relocated an existinglicensed family day care home program to a rental property on or afterJanuary 1, 1997, less than 30 days’ written notice may be provided in caseswhere the department approves the operation of the new location of thefamily day care home in less than 30 days, or the home is licensed in lessthan 30 days, in order that service to the children served in the formerlocation not be interrupted.
(3) A family day care home provider in operation on rental or leasedproperty as of January 1, 1997, shall notify the landlord or property ownerin writing at the time of the annual license fee renewal, or by March 31,1997, whichever occurs later.
(4) Notwithstanding any other provision of law, upon commencementof, or knowledge of the operation of a family day care home on his or herproperty, the landlord or property owner may require the family day carehome provider to pay an increased security deposit for operation of thefamily day care home. The increase in deposit may be requirednotwithstanding that a lesser amount is required of tenants who do notoperate family day care homes. In no event, however, shall the total securitydeposit charged exceed the maximum allowable under existing law.
(5) Section 1596.890 shall not apply to this subdivision.
Health and Safety Code § 1597.44Small Family Day Care Homes; Number of Children
A small family day care home may provide care for more than six and up to eightchildren, without an additional adult attendant, if all of the following conditionsare met:
(a) At least one child is enrolled in and attending kindergarten orelementary school and a second child is at least six years of age.
(b) No more than two infants are cared for during any time when more than
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six children are cared for.
(c) The licensee notifies each parent that the facility is caring for twoadditional schoolage children and that there may be up to seven or eight childrenin the home at one time.
(d) The licensee obtains the written consent of the property owner whenthe family day care home is operated on property that is leased or rented.
Health and Safety Code § 1597.465Large Family Day Care Homes; Number of Children
A large family day care home may provide care for more than 12 children and upto and including 14 children, if all of the following conditions are met:
(a) At least one child is enrolled in and attending kindergarten orelementary school and a second child is at least six years of age.
(b) No more than three infants are cared for during any time when morethan 12 children are being cared for.
(c) The licensee notifies a parent that the facility is caring for two additionalschoolage children and that there may be up to 13 or 14 children in the home atone time.
(d) The licensee obtains the written consent of the property owner whenthe family day care home is operated on property that is leased or rented.
Health and Safety Code § 1597.531Liability Insurance Or Bond; Affidavits; Additional Insured Parties
(a) All family day care homes for children shall maintain in force eitherliability insurance covering injury to clients and guests in the amount of at leastone hundred thousand dollars ($100,000) per occurrence and three hundredthousand dollars ($300,000) in the total annual aggregate, sustained on accountof the negligence of the licensee or its employees, or a bond in the aggregateamount of three hundred thousand dollars ($300,000). In lieu of the liabilityinsurance or the bond, the family day care home may maintain a file of affidavitssigned by each parent with a child enrolled in the home which meets therequirements of this subdivision. The affidavit shall state that the parent has beeninformed that the family day care home does not carry liability insurance or abond according to standards established by the state. If the provider does not ownthe premises used as the family day care home, the affidavit shall also state thatthe parent has been informed that the liability insurance, if any, of the owner ofthe property or the homeowners’ association, as appropriate, may not providecoverage for losses arising out of, or in connection with, the operation of thefamily day care home, except to the extent that the losses are caused by, or resultfrom, an action or omission by the owner of the property or the homeowners’association, for which the owner of the property or the homeowners’ associationwould otherwise be liable under the law. These affidavits shall be on a formprovided by the department and shall be reviewed at each licensing inspection.
(b) A family day care home that maintains liability insurance or a bondpursuant to this section, and that provides care in premises that are rented or
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leased or uses premises which share common space governed by a homeowners’association, shall name the owner of the property or the homeowners’ association,as appropriate, as an additional insured party on the liability insurance policy orbond if all of the following conditions are met:
(1) The owner of the property or governing body of the homeowners’association makes a written request to be added as an additional insuredparty.
(2) The addition of the owner of the property or the homeowners’association does not result in cancellation or nonrenewal of the insurancepolicy or bond carried by the family day care home.
(3) Any additional premium assessed for this coverage is paid by theowner of the property or the homeowners’ association.
(c) As used in this section, “homeowners’ association” means an associationof a common interest development, as defined in Section 1351 of the Civil Code.
III. SENIOR CITIZEN HOUSING
Associations’ enforcement of restrictions or rules regarding occupancy, based onage or familial status is governed by the Federal Fair Housing Act, as amended bythe Fair Housing Amendments Act of 1988 (42 U.S.C. 3601-3619), the State ofCalifornia’s Fair Housing Act (Government Code Sections 12900-12996) andCalifornia’s Unruh Civil Rights Act (Civil Code Sections 51, et. seq.)
A. Federal Fair Housing Act
1. Origination
It is the policy of the United States to provide for, within constitutional limitations,fair housing. See 42 U.S.C. § 3601. In furtherance of that policy, federal lawprovides that it is unlawful to discriminate against persons in the sale or rental ofhousing, or in the provision of services or facilities in connection with housing,based on various factors, including but not limited to race, color, religion, sex, andnational origin.
2. Fair Housing Amendments Act of 1988
The Fair Housing Amendments Act of 1988 extended the original act to make itunlawful to discriminate as to housing on the basis of “familial status.”
3. Senior Housing Exceptions to “Familial Status”
An exception to the law prohibiting discrimination based on familial status wasmade for “housing for older persons.” This allows certain communities toexclude/disallow occupants based on their age, if the community meets therequirements for senior housing. Under Federal law, the three ways a communitycan qualify as “housing for older persons” is where the housing is:
(A) Provided under any state or federal program that the Secretary determines isspecifically designed and operated to assist elderly persons (as defined in thestate or federal program); or
(B) Intended for, and solely occupied by, persons of 62 years of age or older; or
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(C) Intended and operated for occupancy by persons 55 years of age or older;and
(i) At least 80% of the occupied units are occupied by at least one personwho is 55 years of age or older;
(ii) The housing facility or community publishes and adheres to policiesand procedures that demonstrate the intent required under thissubparagraph; and
(iii) The housing facility or community complies with rules issued by theSecretary for verification of occupancy which shall -
(I) Provide for verification by reliable surveys and affidavits; and
(II) Include examples of the types of policies and procedures relevantto a determination of compliance with the requirement of clause(ii). ...
Under current law, an association must perform verification every two (2) yearsthat the age requirements are being met (24 Code of Federal Regulations §100.307c), which is typically achieved by having residents submit forms ofidentification verifying their age.
4. Federal Fair Housing Act Provisions
42 U.S. Code § 3601 Declaration Of Policy
It is the policy of the United States to provide, within constitutional limitations,for fair housing throughout the United States.
42 U.S. Code § 3602 Definitions
As used in the subchapter -
(a) “Secretary” means the Secretary of Housing and Urban Development.
(b) “Dwelling” means any building, structure, or portion thereof which isoccupied as, or designed or intended for occupancy as, a residence by one ormore families, and any vacant land which is offered for sale or lease for theconstruction or location thereon of any such building, structure, or portionthereof.
(c) “Family” includes a single individual.
(d) “Person” includes one or more individuals, corporations, partnerships,associations, labor organizations, legal representatives, mutual companies,jointstock companies, trusts, unincorporated organizations, trustees, trustees incases under Title 11, receivers, and fiduciaries.
(e) “To rent” includes to lease, to sublease, to let and otherwise to grant fora consideration the right to occupy premises not owned by the occupant.
(f) “Discriminatory housing practice” means an act that is unlawful underSection 3604, 3605, 3606, or 3617 of this title.
(g) “State” means any of the several States, the District of Columbia, theCommonwealth of Puerto Rico, or any of the territories and possessions of the
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United States.
(h) “Handicap” means, with respect to a person –
(1) a physical or mental impairment which substantially limits one ormore of such person’s major life activities,
(2) a record of having such an impairment, or
(3) being regarded as having such an impairment, but such term doesnot include current, illegal use of or addiction to a controlled substance (asdefined in section 802 of Title 21).
(i) “Aggrieved person” includes any person who –
(1) claims to have been injured by a discriminatory housing practice;or
(2) believes that such person will be injured by a discriminatoryhousing practice that is about to occur.
(j) “Complainant” means the person (including the Secretary) who files acomplaint under Section 3610 of this title.
(k) “Familial status” means one or more individuals (who have not attainedthe age of 18 years) being domiciled with –
(1) a parent or another person having legal custody of such individualor individuals; or
(2) the designee of such parent or other person having such custody,with the written permission of such parent or other person.
The protections afforded against discrimination on the basis of familial status shallapply to any person who is pregnant or is in the process of securing legal custodyof any individual who has not attained the age of 18 years.
(l) “Conciliation” means the attempted resolution of issues raised by acomplaint, or by the investigation of such complaint, through informalnegotiations involving the aggrieved person, the respondent, and the Secretary.
(m) “Conciliation agreement” means a written agreement setting forth theresolution of the issues in conciliation.
(n) “Respondent” means –
(1) the person or other entity accused in a complaint of an unfairhousing practice; and
(2) any other person or entity identified in the course of investigationand notified as required with respect to respondents so identified undersection 3610(a) of this title.
(o) “Prevailing party” has the same meaning as such term has in Section1988 of this title.
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42 U.S. Code § 3604 Discrimination In The Sale Or Rental Of Housing AndOther Prohibited Practices.
As made applicable by Section 3603 of this title and except as exempted bySections 3603(b) and 3607 of this title, it shall be unlawful –
(a) To refuse to sell or rent after the making of a bona fide offer, or to refuseto negotiate for the sale or rental of, or otherwise make unavailable or deny, adwelling to any person because of race, color, religion, sex, familial status, ornational origin.
(b) To discriminate against any person in the terms, conditions, or privilegesof sale or rental of a dwelling, or in the provision of services or facilities inconnection therewith, because of race, color, religion, sex, familial status, ornational origin.
(c) To make, print, or publish, or cause to be made, printed, or publishedany notice, statement, or advertisement, with respect to the sale or rental of adwelling that indicates any preference, limitation, or discrimination based onrace, color, religion, sex, handicap, familial status, or national origin, or anintention to make any such preference, limitation, or discrimination.
(d) To represent to any person because of race, color, religion, sex,handicap, familial status, or national origin that any dwelling is not available forinspection, sale, or rental when such dwelling is in fact so available.
(e) For profit, to induce or attempt to induce any person to sell or rent anydwelling by representations regarding the entry or prospective entry into theneighborhood of a person or persons of a particular race, color, religion, sex,handicap, familial status, or national origin.
(f) (1) To discriminate in the sale or rental, or to otherwise makeunavailable or deny, a dwelling to any buyer or renter because of a handicapof -
(A) that buyer or renter,
(B) a person residing in or intending to reside in that dwelling afterit is so sold, rented, or made available; or
(C) any person associated with that buyer or renter.
(2) To discriminate against any person in the terms, conditions, orprivileges of sale or rental of a dwelling, or in the provision of services orfacilities in connection with such dwelling, because of a handicap of –
(A) that person; or
(B) a person residing in or intending to reside in that dwelling afterit is so sold, rented, or made available; or
(C) any person associated with that person.
(3) For purposes of this subsection, discrimination includes –
(A) a refusal to permit, at the expense of the handicapped person,reasonable modifications of existing premises occupied or to be
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occupied by such person if such modifications may be necessary toafford such person full enjoyment of the premises except that, in thecase of a rental, the landlord may where it is reasonable to do socondition permission for a modification on the renter agreeing to restorethe interior of the premises to the condition that existed before themodifications, reasonable wear and tear excepted.
(B) a refusal to make reasonable accommodations in rules,policies, practices, or services, when such accommodations may benecessary to afford such person equal opportunity to use and enjoy adwelling . . . [Remainder omitted.]
42 U.S. Code § 3607 Religious Organization Or Private Club Exemption
(a) Nothing in this subchapter shall prohibit a religious organization,association, or society, or any nonprofit institution or organization operated,supervised or controlled by or in conjunction with a religious organization,association, or society, from limiting the sale, rental or occupancy of dwellingswhich it owns or operates for other than a commercial purpose to persons of thesame religion, or from giving preference to such persons, unless membership insuch religion is restricted on account of race, color, or national origin. Nor shallanything in this subchapter prohibit a private club not in fact open to the public,which as an incident to its primary purpose or purposes provides lodgings whichit owns or operates for other than a commercial purpose, from limiting the rentalor occupancy of such lodgings to its members or from giving preference to itsmembers.
(b) (1) Nothing in this subchapter limits the applicability of anyreasonable local, State, or Federal restrictions regarding the maximumnumber of occupants permitted to occupy a dwelling. Nor does anyprovision in this subchapter regarding familial status apply with respect tohousing for older persons.
(2) As used in this section, “housing for older persons” meanshousing—
(A) provided under any State or Federal program that the Secretarydetermines is specifically designed and operated to assist elderly persons(as defined in the State or Federal program); or
(B) intended for, and solely occupied by, persons 62 years of ageor older; or
(C) intended and operated for occupancy by persons 55 years ofage or older, and—
(i) at least 80 percent of the occupied units are occupied byat least one person who is 55 years of age or older;
(ii) the housing facility or community publishes and adheresto policies and procedures that demonstrate the intent requiredunder this subparagraph; and
(iii) the housing facility or community complies with rules
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issued by the Secretary for verification of occupancy, which shall—
(I) provide for verification by reliable surveys andaffidavits; and
(II) include examples of the types of policies andprocedures relevant to a determination of compliance with therequirement of clause (ii). Such surveys and affidavits shall beadmissible in administrative and judicial proceedings for thepurposes of such verification.
(3) Housing shall not fail to meet the requirements for housing for olderpersons by reason of:
(A) persons residing in such housing as of September 13, 1988,who do not meet the age requirements of subsections (1),(2)(B) or (C):Provided, that new occupants of such housing meet the agerequirements of subsections (1), (2)(B) or (C); or
(B) unoccupied units: Provided, that such units are reserved foroccupancy by persons who meet the age requirements of subsections(1), (2)(B) or (C).
(4) Nothing in this subchapter prohibits conduct against a personbecause such person has been convicted by any court of competentjurisdiction of the illegal manufacture or distribution of a controlledsubstance as defined in section 802 of title 21.
(5) (A) A person shall not be held personally liable for monetarydamages for a violation of this subchapter if such person reasonablyrelied, in good faith, on the application of the exemption under thissubsection relating to housing for older persons.
(B) For the purposes of this paragraph, a person may only showgood faith reliance on the application of the exemption by showingthat—
(i) such person has no actual knowledge that the facility orcommunity is not, or will not be, eligible for such exemption; and
(ii) the facility or community has stated formally, in writing,that the facility or community complies with the requirements forsuch exemption.
B. State Fair Housing Law
1. Unruh Civil Rights Act
California law prohibits discrimination based on similar factors set forth underFederal law. See Civil Code § 51, known as the “Unruh Civil Rights Act.”Homeowners associations are subject to this law.
In the case of Marina Point Ltd. v. Wolfson (1982) 30 Cal. 3d 721, the CaliforniaSupreme Court ruled that an apartment complex could not, under the Unruh Act,prohibit families with children, which violated the prohibition on discriminationas to familial status. The court stated, however, “age qualifications can operate
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as a reasonable and permissible means of establishing and preserving specializedfacilities for those parties in need of such services or environment.” (Id. at 742-743.)
2. Exemptions for Senior Housing
After the Marina case, in 1984, the California legislature adopted Civil Code §§51.2 and 51.3 which provide exemptions for senior housing. Under Civil Code§51.3(d), the “anchor” or “qualifying resident” must be one of the following:
• 62 years of age, or;• 55 and older living in a “senior citizen housing development”
3. Housing Requirements
In any California county, it is unlawful to discriminate in the sale or rental ofhousing based upon age, except where a business establishment or housingdevelopment is established and preserves housing for senior citizens. Californiastatutes, however, have established different definitions for housing developmentsin Riverside County, and those that are not. See, Civil Code § 51.11, which wasadded solely to apply to the County of Riverside.
(i) Riverside County
In Riverside County, a development that meets the following criteria will be a“senior citizen housing development”:
1. It contains more than 20 units and was developed as a seniorcommunity by its developer; zoned as a senior community by a localgovernmental entity, or characterized as a senior community in its governingdocuments; or
2. It qualifies as a “senior housing development” under the Federal FairHousing Amendment Act.
(ii) Other Counties
In all other California counties, in order to be defined as “senior citizen housing,”a residential development must have accommodations designed to meet thephysical and social needs of senior citizens and also contain a certain number ofdwelling units, depending on the size of the surrounding population.
One California statute provides an exception to the requirement thatdevelopments must have special accommodations for senior citizens if thedevelopment was constructed prior to February 8, 1982. Effective January 1,2001, this is now a permanent exemption.
4. Restricting Occupancy
In developments that qualify as senior citizen housing, the declaration of CC&Rsmay limit occupancy, residency or use on the basis of age by requiring that oneperson in each dwelling be a “senior citizen” and that each other resident in thesame dwelling unit be a “qualified permanent resident” or “permitted health careresident,” as those terms are defined. The California housing laws define “seniorcitizen” as a person 62 years or older or 55 years of age and living in a seniorcitizen housing development. “Qualified permanent residents” may include
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individuals who are under 55 years of age, but they must meet both of thefollowing requirements:
1. Was residing with the senior citizen prior to death, hospitalization orother prolonged absence of, or the dissolution of marriage with, the senior citizen.
2. Was 45 years of age or older or was a spouse, co-habitant, or personproviding primary physical or economic support to the senior citizen.
In addition, upon the death or dissolution of marriage, or upon hospitalization, orother prolonged absence of the senior citizen, the “qualified permanent resident”shall be entitled to continue his or her occupancy, residency or use of the dwellingunit as a permitted resident.
A “qualified permanent resident” also includes a physically or mentally impairedperson who is a dependent child or grandchild of the qualifying resident.
A “permitted health care resident” is generally a person hired to provide live-in,long term or terminal health care to a “senior citizen.” Under current law, thatperson may no longer continue to reside in the home in the absence of the seniorcitizen.
Additionally, a guest of a senior citizen of any age must be permitted temporarily,defined as, for at least 60 days per year.
5. Provisions of the Unruh Civil Rights Act
Civil Code § 51 Unruh Civil Rights Act; Equal Rights; Business Establishment;Violation
(a) This section shall be known, and may be cited, as the Unruh Civil RightsAct.
(b) All persons within the jurisdiction of this state are free and equal, andno matter what their sex, race, color, religion, ancestry, national origin, disability,medical condition, genetic information, marital status, or sexual orientation areentitled to the full and equal accommodations, advantages, facilities, privileges,or services in all business establishments of every kind whatsoever.
(c) This section shall not be construed to confer any right or privilege on aperson that is conditioned or limited by law or that is applicable alike to personsof every sex, color, race, religion, ancestry, national origin, disability, medicalcondition, marital status, or sexual orientation to persons regardless of theirgenetic information.
(d) Nothing in this section shall be construed to require any construction,alteration, repair, structural or otherwise, or modification of any sort whatsoever,beyond that construction, alteration, repair, or modification that is otherwiserequired by other provisions of law, to any new or existing establishment, facility,building, improvement, or any other structure, nor shall anything in this sectionbe construed to augment, restrict, or alter in any way the authority of the StateArchitect to require construction, alteration, repair, or modifications that the StateArchitect otherwise possesses pursuant to other laws.
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(e) For purposes of this section:
(1) “Disability” means any mental or physical disability as defined inSections 12926 and 12926.1 of the Government Code.
(2) (A) “Genetic information” means, with respect to any individual,information about any of the following:
(i) The individual’s genetic tests.
(ii) The genetic tests of family members of the individual.
(iii) The manifestation of a disease or disorder in familymembers of the individual.
(B) “Genetic information” includes any request for, or receipt of,genetic services, or participation in clinical research that includesgenetic services, by an individual or any family member of theindividual.
(C) “Genetic information” does not include information about thesex or age of any individual.
(3) “Medical condition” has the same meaning as defined insubdivision (h) of Section 12926 of the Government Code.
(4) “Religion” includes all aspects of religious belief, observance, andpractice.
(5) “Sex” includes, but is not limited to, pregnancy, childbirth, ormedical conditions related to pregnancy or childbirth. “Sex” also includes,but is not limited to, a person’s gender. “Gender” means sex, and includes aperson’s gender identity and gender expression. “Gender expression” meansa person’s gender-related appearance and behavior whether or notstereotypically associated with the person’s assigned sex at birth.
(6) “Sex, race, color, religion, ancestry, national origin, disability,medical condition, genetic information, marital status, or sexual orientation”includes a perception that the person has any particular characteristic orcharacteristics within the listed categories or that the person is associatedwith a person who has, or is perceived to have, any particular characteristicor characteristics within the listed categories.
(7) “Sexual orientation” has the same meaning as defined insubdivision (r) of Section 12926 of the Government Code.
(f) A violation of the right of any individual under the federal Americanswith Disabilities Act of 1990 (P.L. 101-336) shall also constitute a violation of thissection.
Civil Code § 51.2 Age Discrimination In Housing Prohibited; Exception; Intent
(a) Section 51 shall be construed to prohibit a business establishment fromdiscriminating in the sale or rental of housing based upon age. Whereaccommodations are designed to meet the physical and social needs of seniorcitizens, a business establishment may establish and preserve that housing forsenior citizens, pursuant to Section 51.3, except housing as to which Section 51.3
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is preempted by the prohibition in the federal Fair Housing Amendments Act of1988 (Public Law 100-430) and implementing regulations against discriminationon the basis of familial status. For accommodations constructed before February8, 1982, that meet all the criteria for senior citizen housing specified in Section51.3, a business establishment may establish and preserve that housingdevelopment for senior citizens without the housing development being designedto meet physical and social needs of senior citizens.
(b) This section is intended to clarify the holdings in Marina Point, Ltd. v.Wolfson (1982) 30 Cal. 3d 72 and O’Connor v. Village Green Owners Association(1983) 33 Cal. 3d 790.
(c) This section shall not apply to the County of Riverside.
(d) A housing development for senior citizens constructed on or afterJanuary 1, 2001, shall be presumed to be designed to meet the physical and socialneeds of senior citizens if it includes all of the following elements:
(1) Entryways, walkways, and hallways in the common areas of thedevelopment, and doorways and paths of access to and within the housingunits, shall be as wide as required by current laws applicable to newmultifamily housing construction for provision of access to persons using astandard-width wheelchair.
(2) Walkways and hallways in the common areas of the developmentshall be equipped with standard height railings or grab bars to assist personswho have difficulty with walking.
(3) Walkways and hallways in the common areas shall have lightingconditions which are of sufficient brightness to assist persons who havedifficulty seeing.
(4) Access to all common areas and housing units within thedevelopment shall be provided without use of stairs, either by means of anelevator or sloped walking ramps.
(5) The development shall be designed to encourage social contact byproviding at least one common room and at least some common open space.
(6) Refuse collection shall be provided in a manner that requires aminimum of physical exertion by residents.
(7) The development shall comply with all other applicablerequirements for access and design imposed by law, including, but notlimited to, the Fair Housing Act (42 U.S.C. Sec. 3601 et seq.), the Americanswith Disabilities Act (42 U.S.C. Sec. 12101 et seq.), and the regulationspromulgated at Title 24 of the California Code of Regulations that relate toaccess for persons with disabilities or handicaps. Nothing in this section shallbe construed to limit or reduce any right or obligation applicable under thoselaws.
(e) Selection preferences based on age, imposed in connection with afederally approved housing program, do not constitute age discrimination inhousing.
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Civil Code § 51.3 Housing; Age Limitations; Necessity For Senior CitizenHousing.
(a) The Legislature finds and declares that this section is essential toestablish and preserve specially designed accessible housing for senior citizens.There are senior citizens who need special living environments and services, andfind that there is an inadequate supply of this type of housing in the state.
(b) For the purposes of this section, the following definitions apply:
(1) “Qualifying resident” or “senior citizen” means a person 62 yearsof age or older, or 55 years of age or older in a senior citizen housingdevelopment.
(2) “Qualified permanent resident” means person who meets both ofthe following requirements:
(A) Was residing with the qualifying resident or senior citizen priorto the death, hospitalization, or other prolonged absence of, or thedissolution of marriage with, the qualifying resident or senior citizen.
(B) Was 45 years of age or older, or was a spouse, cohabitant, orperson providing primary physical or economic support to the qualifyingresident or senior citizen.
(3) “Qualified permanent resident” also means a disabled person orperson with a disabling illness or injury who is a child or grandchild of thesenior citizen or a qualified permanent resident as defined in paragraph (2),who needs to live with the senior citizen or qualified permanent residentbecause of the disabling condition, illness, or injury. For purposes of thissection, “disabled” means a person who has a disability as defined insubdivision (b) of Section 54. A “disabling injury or illness” means an illnessor injury which results in a condition meeting the definition of disability setforth in subdivision (b) of Section 54.
(A) For any person who is a qualified permanent resident underthis paragraph whose disabling condition ends, the owner, board ofdirectors, or other governing body may require the formerly disabledresident to cease residing in the development upon receipt of six months’written notice; provided, however, that the owner, board of directors,or other governing body may allow the person to remain a resident forup to one year after the disabling condition ends.
(B) The owner, board of directors, or other governing body of thesenior citizen housing development may take action to prohibit orterminate occupancy by a person who is a qualified permanent residentunder this paragraph if the owner, board of directors, or other governingbody finds, based on credible and objective evidence, that the personis likely to pose a significant threat to the health or safety of others thatcannot be ameliorated by means of a reasonable accommodation;provided, however, that the action to prohibit or terminate theoccupancy may be taken only after doing both of the following:
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(i) Providing reasonable notice to and an opportunity to beheard for the disabled person whose occupancy is beingchallenged, and reasonable notice to the coresident parent orgrandparent of that person.
(ii) Giving consideration to the relevant, credible, andobjective information provided in the hearing. The evidence shallbe taken and held in a confidential manner, pursuant to a closedsession, by the owner, board of directors, or other governing bodyin order to preserve the privacy of the affected persons. The affectedpersons shall been titled to have present at the hearing an attorneyor any other person authorized by them to speak on their behalf orto assist them in the matter.
(4) “Senior citizen housing development” means a residentialdevelopment developed, substantially rehabilitated, or substantiallyrenovated for, senior citizens that has at least 35 dwelling units. Any seniorhousing development which is required to obtain a public report underSection 11010 of the Business and Professions Code and which submits itsapplication for a public report after July 1, 2001, shall be required to havebeen issued a public report as a senior citizen housing development underSection 11010.05 of the Business and Professions Code. No housingdevelopment constructed prior to January 1, 1985, shall fail to qualify as asenior citizen housing development because it was not originally developedor put to use for occupancy by senior citizens.
(5) “Dwelling unit” or “housing” means any residentialaccommodation other than a mobilehome.
(6) “Cohabitant” refers to persons who live together as husband andwife, or persons who are domestic partners within the meaning of Section297 of the Family Code.
(7) “Permitted health care resident” means a person hired to providelive-in, long-term, or terminal health care to a qualifying resident or a familymember of the qualifying resident providing that care. For the purposes of thissection, the care provided by a permitted health care resident must besubstantial in nature and must provide either assistance with necessary dailyactivities or medical treatment, or both. A permitted health care residentshall be entitled to continue his or her occupancy, residency, or use of thedwelling unit as a permitted resident in the absence of the senior citizen fromthe dwelling unit only if both of the following are applicable:
(A) The senior citizen became absent from the dwelling due tohospitalization or other necessary medical treatment and expects toreturn to his or her residence within 90 days from the date the absencebegan.
(B) The absent senior citizen or an authorized person acting forthe senior citizen submits a written request to the owner, board ofdirectors, or governing board stating that the senior citizen desires thatthe permitted health care resident be allowed to remain in order to be
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present when the senior citizen returns to reside in the development.Upon written request by the senior citizen or an authorized personacting for the senior citizen, the owner, board of directors, or governingboard shall have the discretion to allow a permitted health care residentto remain for a time period longer than 90 days from the date that thesenior citizen’s absence began, if it appears that the senior citizen willreturn within a period of time not to exceed an additional 90 days.
(c) The covenants, conditions, and restrictions and other documents orwritten policy shall set forth the limitations on occupancy, residency, or use on thebasis of age. Any such limitation shall not be more exclusive than to require thatone person in residence in each dwelling unit may be required to be a seniorcitizen and that each other resident in the same dwelling unit may be required tobe a qualified permanent resident, a permitted health care resident, or a personunder 55 years of age whose occupancy is permitted under subdivision (h) of thissection or under subdivision (b) of Section 51.4. That limitation may be lessexclusive, but shall at least require that the persons commencing any occupancyof a dwelling unit include a senior citizen who intends to reside in the unit as hisor her primary residence on a permanent basis. The application of the rules setforth in this subdivision regarding limitations on occupancy may result in lessthan all of the dwellings being actually occupied by a senior citizen.
(d) The covenants, conditions, and restrictions or other documents orwritten policy shall permit temporary residency, as a guest of a senior citizen orqualified permanent resident, by a person of less than 55 years of age for periodsof time, not less than 60 days in any year, that are specified in the covenants,conditions, and restrictions or other documents or written policy.
(e) Upon the death or dissolution of marriage, or upon hospitalization, orother prolonged absence of the qualifying resident, any qualified permanentresident shall be entitled to continue his or her occupancy, residency, or use ofthe dwelling unit as a permitted resident. This subdivision shall not apply to apermitted health care resident.
(f) The condominium, stock cooperative, limited-equity housingcooperative, planned development, or multiple-family residential rental propertyshall have been developed for, and initially been put to use as, housing for seniorcitizens, or shall have been substantially rehabilitated or renovated for, andimmediately afterward put to use as, housing for senior citizens, as provided inthis section; provided, however, that no housing development constructed priorto January 1, 1985, shall fail to qualify as a senior citizen housing developmentbecause it was not originally developed for or originally put to use for occupancyby senior citizens.
(g) The covenants, conditions, and restrictions or other documents orwritten policies applicable to any condominium, stock cooperative, limited-equityhousing cooperative, planned development, or multiple-family residentialproperty that contained age restrictions on January 1, 1984, shall be enforceableonly to the extent permitted by this section, notwithstanding lower age restrictionscontained in those documents or policies.
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(h) Any person who has the right to reside in, occupy, or use the housing oran unimproved lot subject to this section on January 1,1985, shall not be deprivedof the right to continue that residency, occupancy, or use as the result of theenactment of this section.
(i) The covenants, conditions, and restrictions or other documents orwritten policy of the senior citizen housing development shall permit theoccupancy of a dwelling unit by a permitted health care resident during anyperiod that the person is actually providing live-in, long-term, or hospice healthcare to a qualifying resident for compensation. For purposes of this subdivision,the term “for compensation” shall include provisions of lodging and food inexchange for care.
(j) Notwithstanding any other provision of this section, this section shallnot apply to the County of Riverside.
Civil Code § 51.4 Senior Housing, Legislative Findings, Declarations AndIntent; Exceptions From Special Design Requirements; Application To CivilRights Actions; Right To Continued Residency, Occupancy Or Use
(a) The Legislature finds and declares that the requirements for seniorhousing under Sections 51.2 and 51.3 are more stringent than the requirementsfor that housing under the federal Fair Housing Amendments Act of 1988 (P.L.100-430) in recognition of the acute shortage of housing for families with children inCalifornia. The Legislature further finds and declares that the special designrequirements for senior housing under Sections 51.2 and 51.3 may pose ahardship to some housing developments that were constructed before the decisionin Marina Point, Ltd. v. Wolfson (1982), 30 Cal.3d 721. The Legislature furtherfinds and declares that the requirement for specially designed accommodationsin senior housing under Section 51.2 and 51.3 provides important benefits tosenior citizens and also ensures that housing exempt from the prohibition of agediscrimination is carefully tailored to meet the compelling societal interest inproviding senior housing.
(b) Any person who resided in, occupied, or used prior to January 1, 1990,a dwelling in a senior citizen housing development which relied upon theexemption to the special design requirement provided by this section prior toJanuary 1, 2001, shall not be deprived of the right to continue that residency,occupancy, or use as the result of the changes made to this section by theenactment of Senate Bill 1382 or Senate Bill 2011 at the 1999-2000 RegularSession of the Legislature.
(c) This section shall not apply to the County of Riverside.
Civil Code § 51.10 Riverside County - Housing Discrimination ProhibitedBased Upon Age
(a) Section 51 shall be construed to prohibit a business establishment fromdiscriminating in the sale or rental of housing based upon age. A businessestablishment may establish and preserve housing for senior citizens, pursuant toSection 51.11, except housing as to which Section 51.11 is preempted by theprohibition in the federal Fair Housing Amendments Act of 1988 (Public Law
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100-430) and implementing regulations against discrimination on the basis offamilial status.
(b) This section is intended to clarify the holdings in Marina Point, Ltd. v.Wolfson (1982) 30 Cal. 3d 721, and O’Connor v. Village Green OwnersAssociation (1983) 33 Cal. 3d 790.
(c) Selection preferences based on age, imposed in connection with afederally approved housing program, do not constitute age discrimination inhousing.
(d) This section shall only apply to the County of Riverside.
Civil Code § 51.11 Riverside County - Establishing And PreservingAccessible Housing For Senior Citizens
(a) The Legislature finds and declares that this section is essential toestablish and preserve housing for senior citizens. There are senior citizens whoneed special living environments, and find that there is an inadequate supply ofthis type of housing in the state.
(b) For the purposes of this section, the following definitions apply:
(1) “Qualifying resident” or “senior citizen” means a person 62 yearsof age or older, or 55 years of age or older in a senior citizen housingdevelopment.
(2) “Qualified permanent resident” means a person who meets both ofthe following requirements:
(A) Was residing with the qualifying resident or senior citizen priorto the death, hospitalization, or other prolonged absence of, or thedissolution of marriage with, the qualifying resident or senior citizen.
(B) Was 45 years of age or older, or was a spouse, cohabitant, orperson providing primary physical or economic support to the qualifyingresident or senior citizen.
(3) “Qualified permanent resident” also means a disabled person orperson with a disabling illness or injury who is a child or grandchild of thesenior citizen or a qualified permanent resident as defined in paragraph (2)who needs to live with the senior citizen or qualified permanent residentbecause of the disabling condition, illness or injury. For purposes of thissection, “disabled” means a person who has a disability as defined insubdivision (b) of Section 54. A “disabling injury or illness” means an illnessor injury which results in a condition meeting the definition of disability setforth in subdivision (b) of Section 54.
(A) For any person who is a qualified permanent resident underparagraph (3) whose disabling condition ends, the owner, board ofdirectors, or other governing body may require the formerly disabledresident to cease residing in the development upon receipt of six months’written notice; provided, however, that the owner, board of directors,or other governing body may allow the person to remain a resident forup to one year, after the disabling condition ends.
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(B) The owner, board of directors or other governing body of thesenior citizen housing development may take action to prohibit orterminate occupancy by a person who is a qualified permanent residentunder paragraph (3) if the owner, board of directors, or other governingbody finds, based on credible and objective evidence, that the personis likely to pose a significant threat to the health or safety of others thatcannot be ameliorated by means of a reasonable accommodation;provided, however, that action to prohibit or terminate the occupancymay be taken only after doing both of the following:
(i) Providing reasonable notice to and an opportunity to beheard for the disabled person whose occupancy is beingchallenged, and reasonable notice to the coresident parent orgrandparent of that person.
(ii) Giving consideration to the relevant, credible, andobjective information provided in that hearing. The evidence shallbe taken and held in a confidential manner, pursuant to a closedsession, by the owner, board of directors, or other governing bodyin order to preserve the privacy of the affected persons. The affectedpersons shall be entitled to have present at the hearing an attorneyor any other person authorized by them to speak on their behalf orto assist them in the matter.
(4) “Senior citizen housing development” means a residentialdevelopment developed with more than 20 units as a senior community byits developer and zoned as a senior community by a local governmentalentity, or characterized as a senior community in its governing documents,as these are defined in Section 1351, or qualified as a senior communityunder the federal Fair Housing Amendment Act of 1988, as amended. Anysenior citizen housing development which is required to obtain a publicreport under Section 11010 of the Business and Professions Code and whichsubmits its application for a public report after July 1, 2001, shall be requiredto have been issued a public report as a senior citizen housing developmentunder Section 11010.05 of the Business and Professions Code.
(5) “Dwelling unit” or “housing” means any residentialaccommodation other than a mobilehome.
(6) “Cohabitant” refers to persons who live together as husband andwife, or persons who are domestic partners within the meaning of Section297 of the Family Code.
(7) “Permitted health care resident” means a person hired to providelive-in, long-term, or terminal health care to a qualifying resident, or a familymember of the qualifying resident providing that care. For the purposes of thissection, the care provided by a permitted health care resident must besubstantial in nature and must provide either assistance with necessary dailyactivities or medical treatment or both. A permitted health care resident shallbe entitled to continue his or her occupancy, residency, or use of the dwelling
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unit as a permitted residence in the absence of the senior citizen from thedwelling unit only if both of the following are applicable:
(A) The senior citizen became absent from the dwelling due tohospitalization or other necessary medical treatment and expects toreturn to his or her residence within 90 days from the date the absencebegan.
(B) The absent senior citizen or an authorized person acting forthe senior citizen submits a written request to the owner, board ofdirectors, or governing board stating that the senior citizen desires thatthe permitted health care resident be allowed to remain in order to bepresent when the senior citizen returns to reside in the development.Upon written request by the senior citizen or an authorized personacting for the senior citizen, the owner, board of directors, or governingboard shall have the discretion to allow a permitted health care residentto remain for a time period longer than 90 days from the date that thesenior citizen’s absence began, if it appears that the senior citizen willreturn within a period of time not to exceed an additional 90 days.
(c) The covenants, conditions, and restrictions and other documents orwritten policy shall set forth limitations on occupancy, residency, or use on thebasis of age. Any such limitation shall not be more exclusive than to require thatone person in residence in each dwelling unit may be required to be a seniorcitizen and that each other resident in the same dwelling unit may be required tobe a qualified permanent resident a permitted health care resident, or a personunder 55 years of age whose occupancy is permitted under subdivision (g) of thissection or subdivision (b) of Section 51.12. That limitation may be less exclusive,but shall at least require that the persons commencing any occupancy of adwelling unit include a senior citizen who intends to reside in the unit as his orher primary residence on a permanent basis. The application of the rules set forthin this subdivision regarding limitations on occupancy may result in less than allof the dwellings being actually occupied by a senior citizen.
(d) The covenants, conditions, and restrictions or other documents orwritten policy shall permit temporary residency, as a guest of a senior citizen orqualified permanent resident, by a person of less than 55 years of age for periodsof time, not more than 60 days in any year, that are specified in the covenants,conditions, and restrictions or other documents or written policy.
(e) Upon the death or dissolution of marriage, or upon hospitalization, orother prolonged absence of the qualifying resident, any qualified permanentresident shall be entitled to continue his or her occupancy, residency, or use ofthe dwelling unit as a permitted resident. This subdivision shall not apply to apermitted health care resident.
(f) The covenants, conditions, and restrictions or other documents orwritten policies applicable to any condominium, stock cooperative, limited-equityhousing cooperative, planned development, or multiple-family residentialproperty that contained age restrictions on January 1, 1984, shall be enforceableonly to the extent permitted by this section, notwithstanding lower age restrictions
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contained in those documents or policies.
(g) Any person who has the right to reside in, occupy, or use the housing oran unimproved lot subject to this section on or after January 1, 1985, shall not bedeprived of the right to continue that residency, occupancy, or use as the resultof the enactment of this section by Chapter 1147 of the Statues of 1996.
(h) A housing development may qualify as a senior citizen housingdevelopment under this section even though, as of January 1, 1997, it does notmeet the definition of a senior citizen housing development specified insubdivision (b), if the development complies with that definition for every unitthat becomes occupied after January 1, 1997, and if the development was oncewithin that definition, and then became noncompliant with the definition as theresult of any one of the following:
(1) The development was ordered by a court or a local, state, or federalenforcement agency to allow persons other than qualifying residents,qualified permanent residents, or permitted health care residents to reside inthe development.
(2) The development received a notice of a pending or proposed actionin, or by, a court, or a local, state, or federal enforcement agency, whichaction could have resulted in the development being ordered by a court ora state or federal enforcement agency to allow persons other than qualifyingresidents, qualified permanent residents, or permitted health care residentsto reside in the development.
(3) The development agreed to allow persons other than qualifyingresidents, qualified permanent residents, or permitted health care residentsto reside in the development by entering into a stipulation, conciliationagreement, or settlement agreement with a local, state, or federalenforcement agency or with a private party who had filed, or indicated anintent to file, a complaint against the development with a local, state, orfederal enforcement agency, or file an action in a court.
(4) The development allowed persons other than qualifying residents,qualified permanent residents, or permitted health care residents to reside inthe development on the advice of counsel in order to prevent the possibilityof an action being filed by a private party or by a local, state, or federalenforcement agency.
(i) The covenants, conditions, and restrictions or other documents orwritten policy of the senior citizen housing development shall permit theoccupancy of a dwelling unit by a permitted health care resident during anyperiod that the person is actually providing live-in, long-term, or hospice healthcare to a qualifying resident for compensation.
(j) This section shall only apply to the County of Riverside.
Civil Code § 51.12 Riverside County - Continuing Occupancy Of CertainExempt Housing
(a) The Legislature finds and declares that the requirements for senior
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housing under Sections 51.10 and 51.11 are more stringent than the requirementsfor that housing under the federal Fair Housing Amendments Act of 1988 (PublicLaw 100-430).
(b) Any person who resided in, occupied, or used prior to January 1, 1990,a dwelling unit in a senior citizen housing development which relied on theexemption to the special design requirement provided by Section 51.4 as thatsection read prior to January 1, 2001, shall not be deprived of the right to continuethat residency, or occupancy, or use as the result of the changes made to thissection by the enactment of Senate Bill 1382 or Senate Bill 2011 at the 1999-2000 Regular Session of the Legislature.
(c) This section shall only apply to the County of Riverside.
IV. HANDICAPPED PERSONS
Federal law also prohibits discrimination based on a person’s handicapped status.Under the law, associations required to make “reasonable accommodations” asto the association’s rules, practices, policies or services to provide such person anequal opportunity to use and enjoy their dwelling. See, 42 U.S.C. § 3604. Caseswhich have been decided involving accommodations include, for example,providing accessible parking spaces or permitting particular pets in connectionwith an emotional or medical need.
Please refer to 42 U.S.C. §§ 3601 through 3604 cited above.
If you have any questions regarding the applicability of the fair housing laws setforth herein and how these laws apply to your community, please consult withlegal counsel.
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AADR (See, Alternative Dispute Resolution)AGE RESTRICTIONS
CC&Rs ........................................326, 330Discrimination ....................................322Federal Fair Housing Act ....................314Restrictive Covenants............................78Senior Citizen Housing ......................314State Fair Housing Law ......................319
AGENDAAction on Items Placed on..................102Board Meeting Checklist ........................7Board Meetings ..................................102Executive Session................................102
AGENTAuthorization to Inspect Records..........235Defined ..............................................217Managing, Defined ............................106Managing, Disclosure Requirements..106Managing, Identified in Articles ofIncorporation ......................................109Service of Process ..............................198
AIRPORT INFLUENCE AREADefinition..............................................79Notice of ..............................................79
ALTERNATIVE DISPUTE RESOLUTIONAnnual Summary................................149Award of Fees and Costs ....................152Certificate of Compliance ..................151Costs of ..............................................152Definition............................................149Enforcement of Governing Documents............................................................150Initiation of..........................................150Prefiling Requirement to EnforcementAction ................................................150Rejection of ........................................150Request for Resolution........................150Timeline for Completion ....................151Tolling of Statute of Limitations ..........151
AMENDMENTApproval of Owners ............................83Effective ................................................83Of Bylaws ..........................................202Of Declaration......................................83Petition to Lower Affirmative VotesNecessary..............................................85To Delete Developer Provision ............84To Extend Termination Date ofCC&Rs ..................................................87
ARCHITECTURAL CONTROLModification of Unit by Owner............92Requirements to Approve/Disapprove............................................................165Review Process ..................................165
ARTICLESCertified Copy ....................................200
Location of..........................................205Of Incorporation ................................109Of Incorporation, Changing Status,Requirements......................................196Of Incorporation, Corporate Purpose............................................................196Of Incorporation, Optional Provisions............................................................198Of Incorporation, Required Provisions............................................................198
ASSESSMENTSAssessment and Reserve FundingDisclosure Summary ..........................125Based on Taxable Value......................135As a Debt of the Owner......................135Collection Methods for Debts Less than$1,800 ................................................139Collection Methods for Debts Greaterthan $1,800 ........................................139Dispute Resolution re: ........................142Emergency ..........................................134Federal Fair Debt CollectionPractices Act........................282, 287-296Imposition of Fees in Collecting ........134Increases, Regular and Special ..........134Levy of ................................................134Lien for, Recorded in Error..................141Lien Requirements ......................135-141Notice - Assessments and Foreclosure............................................................118Rosenthal Fair Debt CollectionPractices Act................................296-306Protest of Disputed Sums....................142
ASSOCIATIONApproval for Unit Modifications ..........92Definition..............................................75Exercise of Powers ................................94Interest in, Included in Sale ..................90Management of Development by ........94Responsibility for Maintaining theCommon Area ....................................113Right of Easement in ............................94Statement Submitted to Secretary of State............................................................109
BBALLOT
Acceptance of ....................................229Act of Member....................................226Approval of Actions by Written Ballot............................................................226Delegates ............................................204Directors Elected by Ballot ..................97Form of Ballot ....................................227Secret Ballot Requirements ..................99Solicitation of Ballots ..........................226
INDEX
BOARDAbility to Loan ....................................216Actions Without Meetings..........102, 226Creation of Committees......................207Declaration of Vacancy ......................210Delegation of Management................205Duties..................................................128Emergency Meeting ............................103Executive Sessions ..............................101Exercise of Powers ..............................205Meeting of, Defined............................104Meetings ....................................104, 205Notice of Meetings ....................102, 205Officers of ..........................................208Quorum..............................................216Vacancies............................................212
BUDGETAnnual Distribution of ........................114Preparation of................................94, 114
BYLAWSAdoption, Amendment or Repeal ......202Location of..........................................205Provisions Required in........................202
CCC&Rs (Declaration)
Amendment of ......................................83Contents of Declaration........................78Definition..............................................76Enforceable as Equitable Servitude ..78, 83Extension of Term of..............................87Liberal Construction of ......................152Petition to Lower Voting Percentageto Amend ..............................................85Restrictive Covenants, Deletion of........78
CHECKLISTSAnnual Meeting ....................................17Annual Disclosures ..............................19Architectural Review ............................11Board Meeting ........................................7Contracts ................................................9Essential Documents ..............................5Fine Policy ............................................14Serving on the Board ..............................6
COMMERCIAL DEVELOPMENTSProvisions not Applicable to ..............153
COMMINGLINGOf Funds ............................................107
COMMITTEEDelegation of Management................205In General ..........................................207Minutes of Meetings of ......120, 237, 242
COMMON AREACivil Suit, For Damages To ................149Definition of..........................................75Identified in Condominium Plan ..........75Grant of Exclusive Use Over Portion..104Maintenance of ..................................113Not Subject to Partition ........................91Ownership of ........................................94
Settlement For Defects In....................163Where None Exists ............................153
COMMON INTEREST DEVELOPMENTAction against Developer of ..............154Creation of ............................................78Definition..............................................75Managed by Association ......................94Managing Agent of ............................106Pets Within............................................93Removal of Occupants Within ..........113Removal of Vehicles From..................251
COMMUNICATIONSDisclosure Documents................114, 118Document Delivery ..............................74Electronic Transmission ................74, 193Index of Disclosure Documents ..........96
CONDOMINIUMBoundaries of......................................152Modification of for Handicapped Access..............................................................92Plan, Definition of ................................75Project, Definition of ............................76
CONDOMINIUM PLANDefinition of..........................................75Interpretation of ..................................152
CONDOMINIUM PROJECTDefinition of..........................................76Modification of a Unit Within ..............92Rights of Ingress, Egress ........................94
CONSTRUCTION DEFECTSActionable Defects ............................168Definitions ..........................................167Disclosures to Members ............149, 163Inspector Immunity ............................166Limitation of Action; Tolling ......154, 185Limited Warranty ................................173Litigation ....................................154, 185Offer to Repair ....................................179Pre-filing Requirements ..............154, 174Repair Work........................................181Settlement Agreements re: ..................163Standards ............................................168
CONTRACTSBinding Nature ..................................200Enter into ............................................200Formation of ......................................101
CORPORATIONAbility to Advance Money..................216Ability to Bring Suit in the Name of....216Ability to Contract ..............................200Ability to Loan Money or Property ....200Acts of ................................................205Agent of ..............................................216Board of Directors of ..........................205Books and Records of ................237, 239Change of Status to ............................196Conflict of Interest With......................215Delegates ............................................204Exercise of Powers........................94, 205Items Required at Principal Office......205
Nonprofit ............................................196Officers of ..........................................208Powers ................................................200Purpose of ..........................................196Restrictions on ....................................201
COVENANTSEnforceability of ....................................83
CUMULATIVE VOTINGDirectors Elected By ..........................235In General ..........................................235
DDAMAGES
Comparative Fault ..............................148Enforcement Action by Association ..........150
For Misuse of Membership List ..........243None Available Against VolunteerDirector ..............................................214Re: Solar Energy Systems ....................281Recoverable from Director ................216While Towing ....................................251
DECLARANTCivil Action Against............149, 154, 180Definition..............................................76
DECLARATION (See, CC&Rs)DEFECTS (See, Construction Defects)DELEGATES
In General ..........................................204DEVELOPER
Deletion of Provisions in CC&Rs..........84DIRECTOR
Advancing Money To ........................216Conflict With ......................................215Election of ............................97, 209, 229Executive Session Meetings ................101General Duties ..........................128, 213Liability of ..........................132, 213-214Notice of Meeting ......................102, 205Number Set in Bylaws ........................203Performance of Duties ........................213Provisional ..........................................213Removal By Court Order....................212Removal Without Cause ....................210Resignation of ....................................213Restrictions On ..................................201Rights of ..............................................242Terms of ..............................................209Tortious Act or Omission ....................131Vacancies, Filling................................210Vacancy ..............................................212Volunteer ............................................214
DISABLEDModifying Unit to Accommodate ........92
DISCIPLINE OF MEMBERDispute of Fine, etc.............................142Executive Session................................101Fines, Monetary Penalties ............94, 135Procedures ............94, 111-112, 149-152
DISCLOSUREAnnual Requirements ....19, 96, 114, 118
Billing Disclosure Form ......................146By Association ................19, 96, 114, 118By Manager........................106, 107, 191By Owner, Upon Sale ........................142Defects ..............................142, 149, 163Financial Information..................114, 118Index of Documents ............................96
DISPUTE RESOLUTION PROCEDUREApplication of......................................111Description ..................................111-112Generally ............................................111Procedure ....................................111-112Requirements ......................................112
DOCUMENTSDelivery Methods ................................74Electronic Transmission ................74, 193Index of Disclosure Documents ..........96
EEASEMENT
Of Ingress, Egress and Support..............94ELECTION
Adoption of Rules re: ............................97Campaign Funds ................................101Challenging Validity ..........101, 231, 236Cumulative Voting in....................98, 235Inspectors of..................................98, 234Mailing of Material ............................231Nomination and Election Procedures..............................................97, 209, 229Proxies in..............................99, 227, 233Recount ..............................................100Requirements for Secret Ballot ......99-100Tabulation of Votes ............................100Validity................................................231Votes Requiring Secret Ballot................97
ENFORCEMENTEnforcement Action, Award of Fees andCosts ............................................83, 152Enforcement Action, Defined ............149Enforcement Action, PrefilingRequirement ......................................150Initiation of Process ............................150Of Lien for Assessments......................135Request for Resolution........................150Stay of Enforcement Action ................152
EQUITABLE SERVITUDEAs Set in CC&Rs ............................78, 83Enforcement..........................................83
EXCLUSIVE USE COMMON AREADefined ................................................76Grant of Exclusive Use of Portion ......104Maintenance ......................................113
EXECUTIVE SESSIONAdjournment to ..................................101Matters Heard In ................................101Meetings in ........................................101Minutes of ..........................................102Notice and Agenda ............................102Unavailability of Minutes ..................102
FFAMILY DAY CARE HOME
Generally ............................................311Insurance for ......................................313Large ..................................................313Small ..................................................312Summary ............................................311
FINANCIAL STATEMENTPreparation of......................................116
FINESAuthority of Board to Impose................94Disciplinary Penalties ..................94, 138Monetary Penalties ......................94, 138Notice of Imposition of Monetary Penalty..............................................................94Policy Imposing Monetary Penalty ......94
FLAGDisplay of Flag..............................79, 277Restrictions..........................................277Right to Display ............................79, 277
FORECLOSUREAvailability of Foreclosure/Non-JudicialForeclosure ........................................139Foreclosure/Non-Judicial Foreclosure notAvailable ............................................139Notice of ............................................118Pre-Initiation Dispute Resolution ........139
GGOVERNING DOCUMENTS
Defined ................................................77
IIDR (See, Dispute Resolution Procedure)INCORPORATION
Articles of....................................109, 196Change of Status ................................196Filing of ..............................................196Incorporators ......................................196
INDUSTRIAL DEVELOPMENTZoned as ............................................153
INJUNCTIONAgainst Misuse of Association Records............................................................124Against Misuse of Member List ..........243Enforcement Actions ..........................150
INSPECTIONDirector's Rights..................................242Of Accounting Books ........................242Of Articles, Bylaws ............................205Of Records..................120-125, 237, 239Of Major Components........................129Of Membership List....................120, 239
INSPECTORS OF ELECTIONAppointment ................................98, 234Duties ..............................................98-99Independent Third Party ......................98In General ..........................................234Sealed Ballots in Custody of ..............100Tabulation by ......................................100
INSURANCEInsurance Requirements ............131, 132Notice of Change in Coverage............117Of Day Care Homes ..........................313Summary of ........................................117Volunteer Officers/Directors ..............131
INTERESTAs a Debt of Owner............................135Conflict of ..........................................215On Delinquent Assessments ..............135
INTERNAL DISPUTE RESOLUTION (See,Dispute Resolution Procedure)
JJUDICIAL SALE
Interests Included in..............................90
LLATE CHARGE
Annual Notice re:................................118As Debt ..............................................135Assessments ........................................135
LEASINGProhibitions ..........................................92
LIENAnnual Statement of............................118Assessments................................135, 137Charges Included in....................135, 137For Labor and Materials......................149Notification ................................118, 135Priority of ....................................135, 138Release of ..................................137, 141
LITIGATIONConsidered in Executive Session ........101Construction Defect ..................154, 180Prefiling Process Against Developer..................................154, 174, 180, 183
Reserve Funds Spent on......................128Prefiling Requirements for EnforcementAction..........................................149-152
MMANAGING AGENT
Acceptance of Association Funds ......107Certified Common Interest DevelopmentManager ......................................188-192Defined ..............................107, 108, 189Disclosure Required ..................107, 191Management Services, Defined..........188Of Common Interest Development ....189Requirements of Certification ............189Unfair Business Practice of ................192
MEETINGActions Taken Without ......102, 205, 226Adjournment of..........101, 205, 224, 232Agenda ..............................102, 103, 120Court Order For..........................227, 242Emergency ..........................................102Notice of ............................102, 205, 223Of Board ....................................101, 205
Of Delegates ......................................204Of Membership ............................94, 222Open Meeting ....................................101Quorum..98, 194, 195, 206, 207, 216, 225Regular ..............................101, 206, 222Special..........................89, 205, 223, 224
MEMBER (See also, Owner)Ability to Attend Board Meetings........101Access to Association Records....................................94, 120, 239, 242
Acts of, Without Meetings ..................228Approval by ........................................195Constitutional Rights of ......................242Documents Provided to........96, 114, 142Furnishing of Articles and Bylaws to ..205Imposition of Monetary Penalty on......................................94, 95, 138, 142
Interest in Association Upon Conveyance..............................................................90Meetings of, Generally ......................222Voting of........................97-101, 222, 232Voting of, Cumulative ........................235
MEMBERSHIP LISTAccess to......................94, 120, 239, 242Accounting Books and Records ..239, 242Association Records ....................94, 120Corporate Asset ..................................243Defined ..............................................244Demand for ........................................239In General ..................................120, 239Members Right to Opt Out of ............121Petition for Protective Order ..............240Purpose for Request, Demand....120, 239
MINUTESAssociation Record ............................120Available to Members ........101, 120-125Books and Records ............................242Inspection of ......................120-125, 244Of Executive Session of Board....101, 120Of Meetings ................101, 120-125, 242
NNEWSLETTER
Document Delivery ..............................74Notice of Reports Provided in ............195Time and Place of Meeting Stated in ..102
NONPROFIT CORPORATIONSAs an Association..................................75In General ..........................................196
NOTICEAgenda, Contained in ........................102Airport Vicinity......................................79Amendments to Governing Documents..............................................................83Annual Notice to Members ................................................................114-117,118-120Assessments, Delinquent ....................135Assessments, Increase in ....................134Budget ........................................101, 114Dispute Resolution Process ........112, 152
Foreclosure ........................118, 135, 139Insurance Policies, Lapse, Cancel,Reduction, Non-Renewal ..................117Lien Enforcement Procedures ....135, 139Meetings, Board ........................101, 206Meetings, Members ............................222Proposed Rule Change ........................89Secondary Address for Member ........120To Vacate ............................................113
OOFFICER
As Agent..............................................218Executive, Defined..............................214Failure to Discharge Duties ................213In General ..........................................208Indemnification of ..............................218Liability of ..................................131, 214Unauthorized Acts..............................208Volunteer, Defined..............................214
OPEN MEETING ACTOpen Meeting Act ..............................101
OWNER (See also, Member)Approval of Amendment ......................83Assessments as Debt of ......................135CC&Rs Enforceable Against..................83Distribution of Amendment to..............83Enforcement of CC&Rs by ....................83Limitation of Liability ..........................132Maintenance Responsibilities of ........113Modification of Unit by ........................92Partition Action by ................................91Transfer to Title by ..............................142
OWNERSHIPOf Common Areas................................94
PPARLIAMENTARY PROCEDURE
Meetings Conducted in ........................94PARTITION
Of Common Areas................................91Restrictions on ......................................91
PETITIONBankruptcy..........................................306The Court, Amendment ........................85The Court, if Deadlocked ..................213To Protect Constitutional Rights ofMembers ............................................242To Set Aside Demand for MembershipList ......................................................240
PLANNED DEVELOPMENTCommon Area of ..................................77Conveyance of......................................90Definition..............................................77Easements Rights in ..............................94Maintenance Within ..........................113
POOLAnti-Entrapment Safety Standards ......273Enclosures ..........................................271Safety Features ....................................270
Swimming Pool Safety Act..................269PROXY
Appointment ......................................229As Counting Towards Quorum ..........225Definition..............................................99Determine Authenticity, Validity, Effect of..............................................................98Form of ........................................99, 227In General ..................................227, 233Instructions Given in ............................99Revocation of................................99, 233
QQUORUM
Adjournment if Not Present........205, 225In General ..........................................225Interested Directors Counted Towards............................................................225Number of Directors Constituting............................................................205Proxies Counted Towards ..................225Transaction of Business ......................205
RRECORDS
Accounting Books ..............................242Association Records, Defined ............120Availability of ................120-125, 236, 239Enhanced Association Records, Defined............................................................121In General ..................................120-125Inspection of ..............120-125, 236, 239Member’s Action to Enforce Right toInspect ................................................124Membership List ................121, 239, 242Required Records ..............................237
REMOVALCommencement of Action Challenging............................................................231Filling Vacancies Created by ..............212Of Directors, By Court........................212Of Directors, By Members..................210Of Occupant ......................................113Of Vehicles, Association ....................251Of Vehicles, Private Property..............251
RENTALS (See, LEASING)RESERVE
Accounts, Defined..............................130Board Review of ................................129Funding Disclosure Summary Form ..125Reserve Funding Plan ................116, 129Reserve Study Plan..............................116Summary of, Provided to Members ....116Two Signatures Required to WithdrawFrom....................................................128Use of Funds, Generally ....................128Use of Funds, Litigation ......................128
RESTRICTIONSEnforceable Equitable Servitudes..........83Included in CC&Rs ........................78, 83
RULESAs Governing Document......................77Operating Rules ..............................87-90Posting or Displaying Signs, Posters, Flags................................................79, 80, 277Proposed Rule Change Procedures ..87-90Reversal of Rule Change ......................89
SSALE
Advertising..........................................276Advertising, Local Regulations ..........277
SATELLITE DISHESGuidelines ..................................261-268OTARD Rule ......................................265Restrictions ..................................261-269
SECRETARY OF STATEFiling Articles With ....................109, 197Statement Submitted by Association....................................................109, 197
SEPARATE INTERESTAssessment as Debts of ......................135Boundaries............................................77Common Area, Easement ....................94Defects in............................................154Definition..............................................77Denial of Access to ..............................94Foreclosure on ....................................135Maintenance of ..................................113Modification of ....................................92Partition Action by Owner....................91Transfer of..............................................90
SERVICEAgent for Process ................................198Notice of Commencement of LegalProceedings ........................................154Request For Resolution ......................150
SIGNSFor Sale of Property ..............79, 276, 277Noncommercial Signs ..................79, 276Prohibiting Public Parking ..................251Right to Display ..................................276
SOLAR ENERGY SYSTEMSIn General ..........................................279Restrictions on ............................279-281
SPECIAL ASSESSMENTApproval of Owners ..........................134As Debt of Owner ..............................135For Maintenance Costs ......................113Levy of ................................................134Statement of........................115, 134, 142
STATUTE OF LIMITATIONSFiling Civil Action Against Developer....................................................149, 154Relating to Construction Defect Actions..........................................149, 154, 185
Time Limit for Bringing Action............185Tolling of Enforcement Action ............151
STOCK COOPERATIVEAs Common Interest Development ......77
Conveyance of Separate Interest ..........90Defined ................................................77Maintenance in ..................................113Right of Ingress, Egress ..........................94
TTELEPHONE
Telephonic Meetings ..................104, 205Wiring, As Exclusive Use Common Area..............................................................77Wiring, Maintenance of ......................114
TOWINGNotice, Reports ..................................259Removal From Common InterestDevelopment......................................251Removal From Private Property..........251Removal, Damaging Fence While ....259Sign Requirements ..............................251Written Authorization ........................251
UUNINCORPORATED ASSOCIATION
Change of Status ................................196Considered an Association ..................75
VVACANCY
Declaration of, Director......................210Director Elected to Fill ........................212Filling ..................................................212
VEHICLESElectric Vehicle Charging Stations ........81Towing ................................................251
VOTEBy Proxy ......................................99, 233Cumulative ........................................235If Membership in Two Names ............233If Quorum Present ..............................225Interested Directors ............................216Membership, Generally ................97-100Record Date........................................232Required to Amend GoverningDocuments ..........................................83
WWATER
Landscaping..........................................80WOOD DESTROYING PESTS
Damage by..........................................113WRITTEN CONSENT
Action by ....................................102, 207Emergency Meeting ............................104Filed With Minutes ............................207
