I recently spoke to the Inland Empire Chapter of CAI regarding the upcoming changes to California’s Common Interest Development Act, or the Davis-Stirling Act, which takes effect on January 1, 2014. In preparation for that presentation, it became clear that despite the numerous resources available regarding the revised Act, many people are still concerned and wonder how the new law will impact their community association. The good news is that there is no reason to panic. The revisions to the Davis-Stirling Act were designed to be non-controversial. As a result, the substantive changes to the law are relative few in number and small in impact. In addition, there are some advantages to revising the Davis-Stirling Act. The current version of the Act has several “issues.” Sections which are logically related to each other are not located near each other in the Act making locating all the relevant sections difficult and confusing. Also, several sections are excessively long and complicated making them hard to read. The revisions to the Act make several changes which address the current version’s short comings. These include changes which group related provisions in a more logical order, long sections are divided into shorter, easier to read sections, more consistent terminology is used throughout the Act, and governance procedures are standardized. That does not mean there aren’t some disadvantages, however. The most significant of which is that those of us who deal with the Davis-Stirling Act will have to learn all over again what code sections contain various provisions due to the complete renumbering of the Act.
While a board may want to consider amending the governing documents, there is no legal requirement to do so. However, the new law (Civil Code section 4235) allows a board to amend the governing documents to update references to various sections of the Davis-Stirling Act by a board vote, allowing boards to avoid a member vote to amend the CC&Rs in this limited circumstance.
The following highlights the changes to the Act which we find to be the most significant. There are some additional changes which are not addressed in this article because few will ever come across them (such as the change in who can sign an amendment to a condo plan), but the changes you are most likely to encounter are covered.
- Notice and Delivery – One of the most significant changes in the Davis-Stirling Act is how an association can give “notice” to its members. New Civil Code section 4045 allows for “general notice” to be given by (1) first class mail; (2) email, facsimile, or other electronic means upon receipt of written consent to receive notice in that fashion; (3) inclusion in a billing statement, newsletter or other document Continued…
One of the most difficult choices a board makes when preparing an association’s annual budget is whether to increase assessments to fund the association’s reserve account, or to keep assessments low and delay funding the reserve account until a later day, if at all. The reasons boards may under fund reserves are varied. It may be as innocent as the reality that association is having difficulty collecting assessments and all the money collected is necessary to meet operating expenses, or it may be a misguided desire by the board to artificially keep assessments low in fear that the members will not support an increase in order to fund the reserve accounts. After all, it can be a so easy to make the choice to keep assessments low. Raising assessments, even if it is necessary to fund reserve accounts, is rarely a popular decision. It is much easier to put off funding the reserve account, keep assessments low and keep the members happy, at least in the short term. However, failing to properly fund reserves is rarely, if ever, a good decision for the board to make. While some boards rely on what is a technically accurate statement that associations in California are not legally required to fund reserve accounts that is a dangerous and often short sided understanding of reserve accounts, and their importance to the financial health of the association. Whatever the cause, failing to fund reserve accounts pursuant to a plan developed in conjunction with the reserve study can place the association’s financial health at risk. So much so, that the California Department of Real Estate recently took the extraordinary step of issuing a 
Of all the various issues boards deal with, one of the issues that comes up time and again are meeting minutes. What are they? What should be in them?
