Happy New Year! As we enter 2014, there have been some significant changes in community association laws in California (Click Here for our 2013 Legislative Update). Not the least of which is the restating of the Davis-Stirling Act. While we have already addressed the most significant changes in the new Davis-Stirling Act (Click Here for our Guide to the New Davis-Stirling Act), now that the revision has taken effect, and we are dealing with the new law on a day-to-day basis, new issues are being discovered which were not anticipated. As these issues pop-up, we will be writing on them to bring them to light, and provide some guidance on how to address these new issues.
Of course we couldn’t get far into the new year without the first of these “unforeseen” issues already coming to our attention. This one courtesy of Cathy Acquazzino of Progressive Community Management. Cathy noticed that under the “old version of the Davis-Stirling Act, when an association used funds from reserves to pay for litigation, the association was required to give notice of that decision to its members in the “next available mailing.” (Old Civil Code section 1365.5(d)). This language set the time period within which the board had to notify its members of the use of reserve funds to pay for litigation.
Under the new Davis-Stirling Act, 1365.5(d) is restated in Civil Code section 5520. One of the changes from the old language in this section is the elimination of the phrase that notice of the board’s decision to use reserve funds to pay for litigation must be given in the “next available mailing.” Instead, section 5520 simply states that the association “shall provide general notice pursuant to Section 4045 of that decision, and of the availability of an accounting of those expenses.”
Continue reading “Are you Giving Proper Notice When Using Reserves to Pay for Litigation?”
2013 Proved to be a relatively quiet year for legislation for community associations. However, that does not mean that 2014 does not bring some drastic changes.
1. AB 805 – Restated Davis-Stirling Act
AB 805 enacted in 2012 reorganized and restated the Davis-Stirling Act and moved it to a new part of the California Civil Code. While there are some changes to the Davis-Stirling act as a result of AB 805, most of the changes are relatively benign as this was designed to be a non-controversial matter. We have already written about the more significant changes coming with the restated Davis-Stirling act, and you can find our detailed article, “Guide to the Davis-Stirling Act Reorganization (AB 805)“, or click here to download a PDF version of that article.
2. SB 745 – Davis-Stirling Restatement Clean-up Legislation
SB 745 is a multi-issue omnibus bill, and as it relates to community associations primarily acts to “clean up” some issues related to the reorganizing of the Davis-Stirling Common Interest Development Act, which becomes effective on Jan. 1, 2014. As enacted in 2012, AB 805 reorganized and rewrote the Davis-Stirling Act in a new part of the California Civil Code. As often happens with such a significant undertaking, items are inadvertently omitted, or changes in the law are not incorporated in time to be included in the bill. SB 745 serves to rectify those types of issues.
Continue reading “2013 Legislative Update for California Community Associations”
Robert M. DeNichilo’s article on on homeowner association board member duties and obligations entitled “Yay! I’m on the Board or OMG, What did I get myself into?” was recently published by CAI’s Greater Inland Empire Chapter’s Connect Magazine. You can read the original article here, or click here to download the version which was published in Connect Magazine.
I recently submitted a guest post on the CAI California Legislative Action Committee (CLAC) blog regarding SB 745, the “clean up legislation for the revised Davis-Stirling Act, which goes into law on January 1, 2014. You can read the post and my analysis of how SB 745 addresses several omissions from the revised Davis-Stirling Act here.
If you would like additional information on the revised Davis-Stirling Act, and what changes will take effect in the new year, please read my post “A Guide to the Revised Davis-Stirling Act (AB 805)“
One of the questions that we are often asked is “What is required to amend the CC&Rs?” Civil Code section 1355 (Civil Code section 4270 starting in 2014) provides that an amendment to CC&Rs is effective after all of the following requirements have been met . . .
One of the questions that we are often asked is “What is required to amend the CC&Rs?” Civil Code section 1355 (Civil Code section 4270 starting in 2014) provides that an amendment to CC&Rs is effective after all of the following requirements have been met:
- The requisite approval of the percentage of owners as required by the governing documents has been obtained,
- Written certification of the approval by an officer of the association, and
- Recordation of the amendment
While the specific approval required must be determined by looking at the specific set of CC&Rs, most such documents require the approval of a super-majority of owners, typically 67% of the total voting power. If the CC&Rs are silent on the required percentage of owner approval necessary to amend the CC&Rs, then Civil Code section 1355 provides that an amendment may be approved by a majority of all members.
If there are multiple classes of membership, it is not uncommon for the CC&Rs to require the approval of a super-majority of each class of members to also be required. In addition, certain types of amendments may require the approval of first mortgagees (the banks who hold the mortgages on the various units or residences in the association), or even the city. The types of amendments which require the approval of the first mortgagees are spelled out in the CC&Rs, and typically are limited to amendments which could adversely impact the security interest of the mortgagee, such as amendments changing the manner in which assessments are imposed or allocated among the various owners.
How Do We Vote?
Once the required approval percentage is determined, the Davis-Stirling Act requires that voting on the proposed amendment must be done by the double envelope secret ballot process set forth in Civil Code section 1363.03(b) (Civil Code section 5115 starting in 2014), with the votes counted at an open meeting so that the vote counting can be observed by the members. The ballot must contain the proposed amendment to be voted on by the members.
Continue reading “What Does it Take to Amend the CC&Rs?”