Posts for : September 2014

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AB 1783: Potential Changes to the Dispute Resolution Process relating to Common Interest Developments

By Jeff Cluett, Esq., Law Offices of Ann Rankin

The California Assembly and California Senate passed AB 1738 unanimously and forwarded it to Governor Edmund G. Brown, Jr. on August 27, 2014. Governor Brown has not yet acted on this bill.

AB 1738 would amend California Civil Code Sections 5910 and 5915, which are part of the Davis-Stirling Common Interest Development Act, by clarifying that resolutions to disputes be in writing and that members shall not be charged for participating in informal dispute resolutions.

Section 5910 currently discusses the minimum requirements for a dispute resolution procedure between an association and an owner. AB 1738 would amend Section 5910 to require that any resolution of a dispute between a homeowner and an association be in writing and signed by both parties.  A verbal agreement would no longer suffice.

Section 5915 currently provides a dispute resolution procedure for associations that do not otherwise provide a “fair, reasonable, and expeditious dispute resolution procedure.”  It does not apply to associations that meet Section 5910’s requirements.  AB 1738 would amend Section 5915 to state that “[t]he parties may be assisted by an attorney or other person at their own cost when conferring.”  AB 1738 would also amend Section 5910 to state that only a written agreement signed by both parties would be judicially enforceable.  Section 5915 currently does not include this requirement.  Further, AB 1738 would amend Section 5915 to state that “[a] member shall not be charged a fee to participate in the process.”  Section 5915 currently states that “[a] member may not be charged a fee to participate in the process.”

How would these changes affect you?

AB 1738 would amend Section 5910 by requiring any resolution to a dispute between the association and a homeowner to be in writing and signed by both parties.  Therefore, a handshake would not be sufficient.  This adds a layer of formality to the process that is not currently present.  If AB 1738 passes, a verbal resolution would not meet Section 5910’s requirements.

AB 1738 would amend Section 5915, first, to state that an attorney could represent an association or owner, at its own cost, during the resolution process.  This would add another layer of complexity, and potentially cost, to a process which is mean to be simple, inexpensive, and efficient.  Second, AB 1738 would amend Section 5915 to require a resolution to be signed by both parties to be judicially enforceable.  Therefore, once again, a verbal agreement would not be judicially enforceable.  Third, AB 1738 would amend Section 5915 by stating that a member shall not be charged for participating in dispute resolution under Section 5915, thus removing any ambiguity created by the word “may.”

In summary, AB 1738 would require resolutions to disputes to be in writing.  Further, for associations without dispute resolution procedures, AB 1738 would clarify that owners may not be charged for participating in Section 5915’s resolution process and that counsel may represent owners and associations.

This article is informational only and is not a substitute for qualified legal advice.  See an attorney who practices in the areas of construction defects litigation and common interest development law if you have a potential legal issue involving the design of your community.