By Hanh Pham, Esq., Law Offices of Ann Rankin
This blog summarizes new homeowner association statutes which take effect on January 1, 2014, unless otherwise specified below.
1. Davis-Stirling Restatement (AB 805). Last year, AB 805 repealed California Civil Code Sections 1350-1378 of the Davis-Stirling Common Interest Development Act (“Davis-Stirling”) and restated them in new California Civil Code Sections 4000-6150. In order to give associations, managers and attorneys a year to familiarize themselves with the changes, AB 805 was not going to be effective and operative until January 1, 2014. Key changes are as follows:
(a) Section 4035 provides that documents to an association may be delivered by e-mail, facsimile, or other electronic means, with association consent. If an association assents, personal delivery is permitted with written acknowledgement of receipt. If an association fails to designate to whom document delivery is to be made in its annual policy statement (see Section 5310 below), delivery shall be made to the president or secretary.
(b) Section 4045(a) allows an association to deliver documents to members by “general delivery” or “general notice.” These include first-class mail, postage prepaid, registered or certified mail, or overnight delivery by an express service carrier; e-mail, facsimile, or other electronic means, if consented to; inclusion in billing statements or newsletters; and posting in a prominent location accessible to all members, if the association has designated the location for the posting of general notices in an annual policy statement. Under Section 5120(b), election results can be posted in a prominent location within 15 days of an election rather than by mail if the annual policy statement specified said location.
(c) Section 4235 authorizes a board to amend governing documents to correct a changed cross-reference resulting from this re-codification, without member approval. A corrected governing document may be restated and recorded with a copy of the authorizing board resolution. This statute only authorizes the board to replace the Civil Code provisions, not to change the governing documents’ text.
(d) Section 4600 authorizes the board to grant exclusive use of common areas to an owner without membership approval for circumstances such as granting a disability accommodation, allowing installation of electric vehicle charging stations, assigning parking spaces which the governing documents were to assign, and to comply with the law.
(e) Section 5260 requires certain member requests to be made in writing, including requests to add second addresses for delivery of notices, to receive a full copy of the budget or annual policy statements, and to opt out of a membership list.
(f) Section 5300 requires the board to prepare and distribute, within 30 to 90 days of its fiscal year’s end, an annual budget report. It collects Davis-Stirling’s financial statements and insurance requirements and adds new requirements. The annual budget report must include: (1) a pro forma operating budget; (2) a reserve summary; (3) a reserve funding plan summary; (4) a statement as to whether the board has determined to defer or not undertake repairs or replacement of any major component with a remaining life of 30 years or less, and a justification for that decision; (5) a statement as to whether the board, consistent with the reserve funding plan, has determined or anticipates that (a) special assessment(s) will be required to repair, replace, or restore a major component or to provide adequate reserves therefor; (6) a statement as to the mechanism(s) by which the board will fund reserves to repair or replace major components; (7) a general statement addressing the procedures used for calculating and establishing those reserves to defray the future repair, replacement, or additions to those major components that the association is obligated to maintain; (8) a statement as to whether the association has any outstanding loans with an original term of more than one year; and (9) a summary of the association’s insurance policies and the insurance disclosure set forth therein.
(g) Section 5310 requires the board to prepare and distribute, within 30 to 90 days of its fiscal year’s end, an “annual policy statement.” This collects in one section Davis-Stirling’s various annual disclosure and notification requirements and adds new requirements. The annual policy statement must include: the name and address of the person designated to receive communications to the association; the location of the common area where the association is to post general notices; collection policies; enforcement policies; dispute resolution information; and an address for overnight payment of assessments, among other information. The statement must be delivered to the members by a means of individual delivery described in Section 4040. Individual delivery does not permit delivery by electronic means UNLESS the owner has previously consented, in writing, to such delivery.
(h) Section 5350 lists conflicts of interest as to which a director (or member of a committee of the board) may not vote. Examples include decisions regarding discipline of the director/committee member, collection of assessments owed by the director/committee member, architectural changes sought by the director/committee member, and grants of exclusive use of common areas to the director/committee member. This list is not exclusive and provisions of law relating to so-called “interested transactions” apply to director decisions.
2. Davis-Stirling Restatement (SB 745). This omnibus bill would implement minor clean-up amendments to AB 805. SB 745 would: (a) allow mail delivery of documents to an association; (b) allow a quorum by secret ballot for an election; (c) clarify that the declaration prevails if it conflicts with bylaws or operating rules; (d) allow a board designee to be present at the physical location where members can dial in during a teleconference; (e) clarify that no notice of an emergency or executive session meeting is required if the governing documents do not provide a notice period; (f) disclose a notice of rental restrictions to buyers; and (g) prohibit cancellation fees for a document request if work had not yet been performed, or if work that had been performed had been compensated. In addition, SB 745 requires the retrofitting of existing toilets, urinals, shower fixtures, and faucets with water-conserving plumbing fixtures for multifamily residential buildings on or before January 1, 2019, unless an addition, alteration, or improvements requiring a building permit triggers earlier retrofitting; (2) replaces National Electrical Code standards with the California Electrical Code for inside telephone wiring; and (3) incorporates the State Fire Marshall’s smoke alarm requirements.
3. Commercial and Industrial CIDs (SB 752). SB 752 would establish the Commercial and Industrial Common Interest Development Act, which would provide for the creation and regulation of commercial and industrial common interest developments. Previously, commercial and industrial common interest developments (“CIDs”) were governed by Davis-Stirling, like residential condominiums and planned developments. Starting January 1, 2014, however, non-residential CIDs will look to new statutes starting with California Civil Code Section 6500. The new statutes omit provisions designed to protect residential owners such as election provisions and disclosure requirements imposed on residential developments. A commercial association may designate an agent, like a manager, to receive information.
4. Carbon Monoxide and Smoke Detectors (SB 1394). This bill changes smoke detector and alarm requirements when a building permit is issued on or after January 1, 2014, for alterations, repairs, or additions exceeding $1,000. It deletes the requirement that a smoke detector be installed in apartment complexes and other multiple-dwelling complexes’ common stairwells. It also requires that on or after January 1, 2014, when a building permit for alterations, repairs, or additions exceeding $1,000 is issued, all required smoke alarms shall display the manufacture date, provide a place for the installation date, incorporate a hush feature, and incorporate an end-of-life feature that provides notice that the device needs to be replaced, and, if battery operated, contain a non-replaceable, non-removable battery that is capable of powering the smoke alarm for 10 years. Remember that existing law requires the installation of carbon monoxide devices in each existing single-family dwelling unit by July 1, 2011, and all other dwelling units by January 1, 2013.
I hope that this information is helpful. Please be advised that this letter is intended as an update on pertinent California law and is not intended as legal advice. Should you have any questions or concerns regarding specific matters, please call me.