New Year, and New HOA Laws (in 2017)

2016 was a relatively quiet year for HOAs in Sacramento, with only three bills passing to become law in 2017, and another law taking effect in 2017 from a 2014 bill. Another significant new HOA law actually came from Washington D.C. – the Department of Housing and Urban Development. SB 918 Senate Bill (SB) 918 adds a new Civil Code section 4041(a), and at first glance appears to be innocuous. It requires all common interest development owners to annually and in writing provide the HOA their contact information for sending HOA notices, and to inform the association whether the residence is owner-occupied or rented. Associations are required to solicit these notices at least 30 days prior to the annual association disclosures. If an owner does not annually provide this notification, the association must deem the residence address as the address for notifications. There are at least two major issues here – HOAs and their managers now have an additional annual notification to owners which cannot be lumped in with the Annual Budget Report and Annual Policy Statement; and off-site owners now need to tell the HOA each year of the off site address or their notices will be sent to the tenant’s address. Thousands of future notices to landlords will be sent to the wrong location, because they do not annually notify their association as required. AB 2362 Assembly Bill (AB) 2362 adds a new Civil Code section 4777. Under this new section HOAs intending to have pesticides applied (without using a licensed pest control operator) in common area or a residence must post notice of the impending pesticide...

Myths Regarding the New Acts

The reorganized and relocated Davis Stirling Common Interest Development Act will become law on January 1, 2014 (Civil Code 4000-6150). On the same day, another California Law Revision Commission product, the Commercial and Industrial Common Interest Development Act (SB 752) also will become law (Civil Code 6500-6876). Some myths are already circulating about these Acts and, unfortunately, some of them are being circulated by lawyers. Myth #1 HOAs must immediately prepare completely new documents, the “Annual Budget Report (ABR)” and “Annual Policy Statement (APS)”. The new Act refers to the ABR and APS as new disclosures, which starting next year, HOAs must distribute annually to members. However, the ABR and APS are primarily collections of documents HOAs already distribute. One collection, the ABR, consists of items which likely change each year, while the APS collection consists of items which typically will not change much from one year to the next. If your HOA has not yet distributed its budget package from 2014, would it be a good idea to get a jump on things and prepare the ABR and APS this fall? Sure, but that is very different from saying it is required. Also, you don’t need a lawyer to prepare this! The competent manager should know how to prepare these two items for your association- and, since it is basically what your manager already is doing, it should not cost extra. Myth #2 HOAs must amend their governing documents to update all statutory references. I very recently learned of a lawyer who is saying that the relocation of the Davis Stirling Act “forces” HOAs to update statutory references...

Getting Ready for 2014

While January 2014 seems a long time away, now is the time for prudent boards, managers and attorneys to begin preparing for the reorganized and relocated Davis-Stirling Common Interest Development Act. A previous column summarized the changes in the law. There are some things your HOA can do to be more ready. Begin collecting consents to receive notifications by e-mail. The new law will permit associations to give electronic notices to members who agree to accept such method of communication. In a large association the savings of cutting down on postage and paper could be very substantial, but even small associations will benefit. Encourage your members to sign an “opt in” notification. Your association can include it in the next assessment mailing, and have them available at the management office and at board meetings. Remind owners that this will not only save them space and clutter, but will help keep the budget (and therefore assessments) under control. Review your disciplinary hearing policies (or create some). The new law will require that when the association imposes a reimbursement claim against a member, that claim must be handled using the same process as for member discipline. The law currently does not provide much guidance to boards as to how to conduct these hearings, and unfortunately that is not going to change in the new year. In my experience, boards, having little guidance in the law about how to conduct these hearings, often take far too long. The increase in these hearings in the future means your HOA closed sessions are going to become much longer. Consider adopting policies regarding the conduct...
Get Ready for the “New” Davis-Stirling Act

Get Ready for the “New” Davis-Stirling Act

On January 1, 2014, the Davis-Stirling Act moves to a more spacious new home, thanks to a major reorganization effort by the California Law Revision Commission. For the past 30 years, the Act was squeezed into Civil Code Sections 1350-1379, and as the Act grew in complexity, the individual sections became more lengthy. Next year, the Davis-Stirling Act will be found at Civil Code 4000-6150, leaving much more space and therefore allowing the Act to be much more readable. Even though this takes effect next year, homeowners, boards, managers and attorneys should not wait until December 2013 to learn about it, because there are some important substantive changes coming. Until the Davis-Stirling Act takes effect on January 1, 2014, the new law can be reviewed as 2011’s AB 805, at www.leginfo.ca.gov under “bill information”. Although the Commission’s primary purpose was to reorganize and clarify the law without changing its content, the new law does make some substantive changes. Most of the changes are technical and not controversial. However, here are 9 new sections which in 2014 could affect how your association operates. 4235 Boards can amend CC&Rs without membership vote, to change (any mentions of the outdated Act Section numbers) to the new statute numbers. 4600 A board may grant exclusive use common area rights to a member to: Accommodate a disability, Assign parking or storage, or otherwise comply with the law, without the requirement of a 2/3 membership vote. 4775(b) The association is not required to pay for a homeowner’s temporary housing if a homeowner is dislocated due to common area repair or maintenance. [This eliminates an ambiguity...
Davis-Stirling Act Reorganized, Relocated in 2014

Davis-Stirling Act Reorganized, Relocated in 2014

On Friday, August 17, Governor Brown concluded the long journey of the California Law Revision Commission’s multi-year project to reorganize the Davis-Stirling Common Interest Development Act, when he signed into law Assembly Bills 805 and 806. AB 805 relocates the Act to a different part of the California Civil Code, while AB 806 updates the many references to the Davis-Stirling Act in other California statutes to reflect the new statute numbers. The law does not take effect until January 1, 2014, which gives managers, boards and attorneys one year to familiarize themselves with the reorganized Act. Currently found at Civil Code Sections 1350-1378, the Davis-Stirling Act will then be found at Civil Code Sections 4000-6150. Until the law becomes effective on that date, it will still be found within 2011’s AB 805, which can be found at www.leginfo.ca.gov under “bill information”. The Commission’s primary purpose was to reorganize and clarify the law without making substantive changes. However, the new law does in fact enact approximately 16 substantive changes, none of which are believed to be controversial. One of the comments already circulating is that many associations are reluctant to update or otherwise amend their governing documents, due to the coming new law in 2014. However, associations do not need to avoid amending their governing documents until 2014, because the new law at Civil Code Section 4235 will specifically provide for associations to update their governing documents (CC&Rs and Bylaws) by a board vote to correct the old Civil Code references and insert the new ones. In my view, the non-partisan Commission did a commendable job on this project. The...