Table of Contents
CHAPTER 1. CONDOMINIUM LAW – AN OVERVIEW 1
- I. COMMON INTEREST DEVELOPMENTS 1
- A. Types of Common Interest Developments 1
- B. Differences Between Condominium Projects, Planned Developments, and Stock Co-ops 2
- II. HOMEOWNERS’ ASSOCIATION STRUCTURE 3
- A. Legal Structure of Homeowners’ Associations 3
- B. Governing Documents and Plans 4
- 1. Subdivision Map or Condominium Plan 4
- 2. Declaration of Covenants, Conditions and Restrictions (often simply called the “Declaration” or the “CC&Rs”) 5
- 3. Articles of Incorporation 5
- 4. Bylaws 6
- 5. Homeowners’ Association or House Rules 6
- C. Law Governing the Governing Documents 6
- 1. Statutory Law 6
- 2. Case Law 7
- 3. California Department of Real Estate Regulations 7
- D. Other Issues Regarding the Governing Documents and the Law 8
- 1. Binding Effect of Governing Documents 8
- 2. Liberal Construction of Governing Documents 8
- 3. Conflicts between the Governing Documents and Statutory Law 8
- 4. Ambiguous or Unclear Governing Document Provisions 9
- 5. Unreasonable or Unfair Governing Document Provisions 9
- 6. Owner’s Right to Inspect and Copy Governing Documents and Homeowners’ Association Books, Records, Minutes and Rules 9
- 7. Amending Governing Documents: Procedural Requirements 11
- a. CC&Rs 12
- (i) Eliminating Developer-Related CC&R Provisions 13
- (ii) Court Ordered Amendment of CC&Rs 13
- (iii) Extending Life of the CC&Rs 14
- (iv) Special Approvals 15
- (v) Ballot Solicitation 16
- b. Bylaws 16
- c. Articles of Incorporation 17
- d. Condominium Plans and Subdivision Maps 18
- a. CC&Rs 12
- 8. Identity of “Declarant” 18
- III. OWNERSHIP, ACCESS AND USAGE 19
- A. Individually Owned Portions of a Condominium Project 19
- B. Individually Owned Portions of a Planned Development 20
- C. Ownership of Common Areas 20
- D. Use of Common Areas 21
- 1. By a Unit or Lot Owner 21
- 2. By a Non-Resident Unit or Lot Owner 21
- 3. By Guests and Tenants 21
- 4. Restrictions on or Fees for Use of Common Area 22
- E. Exclusive Use or Restricted Common Area 22
- F. “Percentage Interest” or “Common Interest” 23
- G. Party Walls 23
- H. Partition 23
- I. Individual Unit or Lot Split Off 24
- J. Sale or Exchange of Portions of Unit or Lot 24
- K. Sale or Exchange of Exclusive Use or Restricted Common Area 25
- L. Combination of Two or More Units or Lots 25
- M. Access 25
- 1. Homeowners’ Association Access to Individually Owned Units or Lots 25
- 2. Unit or Lot Owner Access to Neighboring Unit or Lot 26
- N. Rental Restrictions 26
- O. Transfer of Ownership 27
- IV. HOMEOWNERS’ ASSOCIATION POWERS AND CONTROL 27
- A. Distribution of Powers Between Owners, Board of Directors, HOA Committees, Officers, and Property Manager 27
- B. Ability of an Individual Owner or a Group of Owners to Override or Challenge Decisions of the Board of Directors 29
- C. HOA Decision-Making Process and Standards/Limits on HOA Power 30
- D. Authority to Write Checks or Sign Contracts 31
- E. Officer and Director Compensation for Services 32
- F. Owners Meetings and Decisions 32
- 1. Regular and Special Owners Meetings 32
- 2. Notice Requirements for Owners Meetings 33
- 3. Quorum Requirement 34
- 4. Procedural Rules for Owners Meetings 34
- 5. Proxy Voting 34
- 6. Decision-Making without an Owners Meeting 34
- 7. Owner Voting Power 35
- 8. Super-Majority Voting Requirements 35
- 9. Meeting Minutes Requirement 36
- G. Election and Terms of Homeowners’ Association Directors 36
- 1. Director Requirements and Qualifications 36
- 2. Director Nomination and Election 36
- 3. Cumulative Voting 38
- 4. Proxies 39
- 5. Length of Director Terms/Staggered or Concurrent Terms 40
- 6. Removal of Directors Prior to Expiration of Term 40
- 7. Director Vacancies 41
- H. Director Meetings 41
- 1. Authority to Convene and Frequency of Board Meetings 41
- 2. Definition of Board Meetings 41
- 3. Executive Session Board Meetings 42
- 4. Emergency Board Meetings 42
- 5. Notice Requirements for Board Meetings 42
- 6. Quorum Requirements 43
- 7. Owner Attendance and Participation at Board Meetings 44
- 8. Procedures for Board Meetings 44
- 9. Delegated Action Without Meeting 45
- 10. Standard for Board Decisions: Business Judgment Rule 45
- 11. Meeting Minutes Requirements 46
- 12. Procedures for Adopting and Changing Homeowners’ Association Rules 46
- I. Homeowners’ Association Officers and Committees 47
- 1. Officer Requirements 47
- 2. Differences between Directors and Officers 48
- 3. Election and Removal of Officers 48
- 4. Officer Decision-Making Authority 48
- 5. Committees 48
- J. HOA Record Keeping and Reporting Requirements 49
- 1. Financial Information 49
- 2. Decisions 50
- 3. Membership 51
- 4. Information Statement Submitted to Secretary of State 51
- 5. Insurance 52
- 6. Disclosures to Prospective Unit or Lot Purchasers 52
- 7. Reporting Requirements for Mixed-Use Developments 52
- K. Public Information 52
- V. MANAGING AGENTS/PROFESSIONAL MANAGERS 53
- A. Definition 53
- B. Requirements for Professional Manager 54
- C. Services Typically Provided by Professional Managers 54
- D. Selection of Professional Manager and Management Contract 55
- E. Disclosure Requirements 55
- F. Restrictions on Manager’s Handling of Funds 55
- VI. FINANCIAL MANAGEMENT 56
- A. Budgeting and Regular Assessments 56
- 1. Definition of Operating Funds and Reserve Funds 56
- 2. Homeowners’ Association Budget: Definition, Creation and Review 56
- 3. Reserve Funds: Limitations on Use and Review Study Requirement 56
- 4. Determination and Adjustment of Regular Assessment Amounts 57
- 5. Determination of Each Owner’s Share of Assessments 58
- B. Other Assessments 58
- 1. Definition and Creation of Special Assessments 58
- 2. Definition and Creation of Emergency Assessments 59
- 3. Definition and Creation of Personal Reimbursement Assessments 59
- C. Limitations on Usage or Services Fees 60
- D. Assessment Disputes and Collection 60
- 1. Owner Challenges to Assessments 60
- 2. Delinquent Assessments: Consequences for Unit or Lot Owners and Requirements for Homeowners’ Association to Collect Delinquent Assessments 61
- 3. Lien and Foreclosure Procedures to Collect Delinquent Assessments 61
- E. HOA Accounting Procedures and Financial Reporting Requirements 63
- F. Reserve Studies 64
- G. Income Tax Requirements 69
- A. Budgeting and Regular Assessments 56
- VII. MAINTENANCE OBLIGATIONS 71
- A. Individual Owner’s Maintenance Obligations 71
- 1. Determining Responsibility for Maintenance 71
- 2. Property that Owner Must Maintain 71
- 3. Standards for Owner Required Maintenance 72
- 4. Maintaining Items that Border Two or More Lots in a Planned Development 72
- B. Association Maintenance Obligations 73
- 1. Property that Homeowners’ Association Must Maintain 73
- 2. Homeowners’ Association Inspection Requirement 74
- C. Maintenance Obligation for Damage Caused by Negligent or Intentional Action or Inaction 74
- D. “No Fault” Damage and “Point of Origin” Allocation of Maintenance Obligations 74
- A. Individual Owner’s Maintenance Obligations 71
- VIII. IMPROVEMENTS AND ALTERATIONS 75
- A. HOA Approval Required for Certain Improvements/ Alterations 75
- B. Procedure When Homeowners’ Association Approval Required 76
- C. Association Standards for Considering Improvement/Alteration Requests 77
- D. Penalties When Owner Makes Improvement/Alteration Without HOA Approval 78
- IX. DEFECTS AND DISCLOSURES 79
- A. Construction Defects 79
- B. HOA Responsibilities When Construction Defects Are Discovered 80
- C. Disclosures to Prospective Purchasers 80
- X. INSURANCE 81
- A. Association Property/Casualty Insurance 81
- 1. Property/Casualty Insurance 81
- 2. Earthquake Insurance 82
- 3. When Repairs Exceed Insurance Coverage 82
- B. Association Liability Insurance 82
- 1. General Liability Coverage 82
- 2. Directors’ and Officers’ Liability Insurance 83
- 3. Managing Agent and Fidelity Bonds 84
- C. Disclosure of Insurance Coverage to Owners 84
- D. Owner Liability for Personal Injuries/Property Damage in the Common Area and HOA Debts 84
- E. Owner Required Insurance and Minimum Coverage 85
- XI. USE RESTRICTIONS 85
- A. Impermissible Use Restrictions 85
- B. Signs and the United States Flag 86
- C. Pets 86
- D. Parking 87
- E. Television Antennnas and Satellite Dishes 88
- F. Rental Restrictions 89
- G. Architectural Controls and Restrictions 91
- H. Other Common Use Restrictions 91
- I. Owner Responsibility for Tenant’s Compliance With Use Restrictions 91
- XII. MORTGAGES AND LIENS 92
- A. Owner Default 92
- B. “Mortage Protection” Provisions in Governing Documents 92
- C. Mechanics’ Liens 93
- XIII. DISPUTES BETWEEN AN OWNER OVER DISCIPLINARY ACTION 93
- A. Owner Violation of Governing Documents 93
- B. Owner’s Notice and Hearing Rights When HOA Considers Disciplinary Action 93
- C. Types of Discipline That May Be Imposed 94
- D. Confidentiality Requirements 95
- E. Alternative Dispute Resolution 96
- F. Award of Attorney’s Fees to Prevailing Litigant 97
- G. HOA Appearance in Court 97
- H. Settlement 97
- XIV. DISPUTES BETWEEN INDIVIDUAL OWNERS 98
- A. HOA’S Obligation to Enforce Governing Documents 98
- B. Owner Authority to Enforce Governing Documents Against Another Owner 98
- C. Alternative Dispute Resolution 99
- XV. REMOVAL OF VEHICLES 99
CHAPTER 2. DAVIS-STIRLING COMMON INTEREST
- DEVELOPMENT ACT & OTHER RESTRICTIONS 101
- General Provisions 101
- Preliminary Provisions 101
- Definitions 102
- Governing Documents 106
- Creation 106
- Enforcement 111
- Amendment 111
- Operating Rules 116
- Ownership Rights and Interests 120
- Governance 124
- Association 124
- Elections and Meetings 127
- Managing Agents 138
- Public Information 141
- Dispute Resolution Procedure 143
- Operations 145
- Common Areas 145
- Fiscal Matters 147
- Insurance 165
- Assessments 167
- Transfer of Ownership Rights 180
- Civil Actions and Liens 187
- Miscellaneous Provisions 187
- Alternative Dispute Resolution 189
- Construction of Instruments and Zoning 192
- Construction Defect Litigation 193
- Improvements 209
CHAPTER 3. ORGANIZATION AND MANAGEMENT OF NONPROFIT MUTUAL BENEFIT CORPORATIONS 219
CHAPTER 4. MEMBERSHIP IN NONPROFIT MUTUAL BENEFIT CORPORATIONS & ELECTRONIC TRANSMISSION 249
CHAPTER 5. NONPROFIT MUTUAL BENEFIT CORPORATION GOVERNING DOCUMENTS 273
CHAPTER 6. TAXATION OF COMMON INTEREST DEVELOPMENTS 293
CHAPTER 7. FILING CIVIL ACTIONS 301
- Statutes Of Limitation 301
- Service Of Summons 308
- Claims Against Volunteer Director 309
CHAPTER 8. CONSTRUCTION DEFECT LITIGATION 313
- Definitions 313
- Actionable Defects 314
- Obligations 319
- Prelitigation Procedure 322
- Procedure 334
CHAPTER 9. CIVIL RIGHTS & DISCRIMINATION 341
CHAPTER 10. VEHICLE CODE REGULATIONS 379
CHAPTER 11. MANAGER CERTIFICATION 391
CHAPTER 12. SIGNIFICANT JUDICIAL DECISIONS AFFECTING COMMON INTEREST DEVELOPMENTS 397
CHAPTER 13. CALIFORNIA ASSOCIATION OF COMMUNITY MANAGERS (CACM) SAMPLE MANAGEMENT RETAINER AGREEMENT, CODES OF ETHICS, AND BOARD MEMBER COMMITMENT PLEDGE 431
CHAPTER 14. PARLIAMENTARY PROCEDURE 481
- 1. GENERAL 481
- 2. ORDER OF BUSINESS 481
- 3. TYPES OF MOTIONS 482
- 4. CONSIDERATION OF MOTIONS 483
- 5. PRESENTING A MOTION 484
- 6. VOTING ON A MOTION 485
- 7. TWENTY TIPS FOR A SUCCESSFUL MEETING 486
CHAPTER 15. FORMS AND CHECKLISTS 489
- Form No. 1 Board Resolution 490
- Form No. 2 Notice of Annual Membership Meeting 491
- Form No. 3 Notice of Special Membership Meeting 492
- Form No. 4 Notice of Regular Board Meeting 493
- Form No. 5 Notice of Special Board Meeting 494
- Form No. 6 Consent to Emergency Action Without Board Meeting 495
- Form No. 7 Notice of Executive Session Board Meeting 496
- Form No. 8 Proxy Form for Annual Meeting 497
- Form No. 9 Proxy Revocation Form 498
- Form No. 10 IRS Revenue Ruling 70-604 Election Resolution (1) 499
- Form No. 11 IRS Revenue Ruling 70-604 Election Resolution (2) 500
- Form No. 12 Solicitation Materials & Ballot 501
- Form No. 13 Sample Secret Ballot and Instructions 502
- Form No. 14 Alternative Dispute Resolution Requirements 503
- Form No. 15 Request for Alternative Dispure Resolution 505
- From No. 16 Response to Request for Alternative Dispute Resolution 506
- Form No. 17 Request to Meet and Confer (IDR) 507
- Form No. 18 Pre-Lien Notice (Notice of Delinquent Assessment) 508
- Checklist 1 Transition From Developer Control 510
- Checklist 2 Board of Directors Meeting Standard Agenda 512
- Checklist 3 Association Duties 513
- Checklist 4 Quarterly Financial Review 515
- Checklist 5 Annual Financial Review 515
- Checklist 6 Rule Enforcement 517
- Checklist 7 Construction Contract Review 518
