SUMMARY OF LEGISLATION EFFECTIVE JANUARY 1, 2012 – Article by The Law Offices of Laura J. Snoke

Article by Laura J. Snoke

New Legislation Affecting Community Associations

 1.    SB 563    Board Meetings

This legislation amends sections of, and adds sections to, the Davis-Stirling Common Interest Development Act (The Act), Civil Code sections 1350 et seq.  The Act governs all common interest developments in California.  Specifically, the legislation amends the following sections of The Act.

A.    Civil Code section 1363.  Civil Code section 1363 concerns members’ access to meetings, general powers and duties of associations, and disciplinary action.  The section has been amended to remove the requirement that notices of meetings of members (not board of directors meetings) specify the matters to be discussed at the meeting. (Section 1363(e)).

Since any appropriate matter can be discussed at a membership meeting, without regard to whether the matter was listed on the notice of meeting, rendering the existing provision superfluous, the Legislature simply removed this provision.

B.    Civil Code section 1363.05.  This section is known as the “Common Interest Development Open Meeting Act,” and was initially enacted to ensure that homeowners have access to and the ability to participate in board meetings.

Civil Code section 1363.05 has been amended to strengthen the rights of homeowners to attend meetings, and to avoid “secret meetings” about which homeowners complained, such as meetings conducted via e-mail.

A new subsection, 1363.05(k), broadens the current definition of a meeting as “any congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business scheduled to be heard by the board” to “any congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business that is within the authority of the board,” and includes, in the definition of meeting, meetings by teleconference in which a majority of the board members, in different locations, are connected by electronic means, either audio, video, or both.   “Item of business” is defined as any action within the authority of the board, except those actions which have been properly delegated to a management agent, committee member, or officer of the board.

If the meeting is to be conducted electronically, notice of the meeting must specify this and must specify at least one  physical location where at least one board member is to be present and requires the location to be accessible so that members can attend.  A new subsection (j) emphasizes that any other meetings conducted electronically, such as those conducted among board members by e-mail, are prohibited, except for emergency meetings, and emergency meetings via e-mail require written consent by all board members which must be filed with the association’s records.

Notices of meetings are still required to be posted, and mailed to members who request it, at least four days before the meeting.  A new requirement has been added.  Associations are now required to post notice of an executive session meeting at least two days before the meeting is to be held.

2.     SB 771    Documents to be Provided to Prospective Purchasers

A.    Civil Code section 1368.  This statute concerns disclosures to prospective purchasers.  The amended statute reiterates that the owner of the unit is required to provide copies of the governing documents, financial documents, a statement from the association concerning unpaid assessments and collection costs, etc.  The amended statute specifically includes the last 12 months’ minutes within the documents.

This statute requires that the association provide copies of the documents to the owner, and provide the owner with a written estimate of the cost of reproducing the documents, which is limited to a “reasonable fee based upon the association’s actual cost for the procurement, preparation, reproduction and delivery of the documents.”  The documents can be provided in electronic form, at the option of the owner, and no fees can be charged for providing the documents in electronic form.  The association can contract with an outside entity to provide the documents to the owner.  For the first time, a community association manager is defined as an agent of the association for purposes of complying with this section.

There is now a form which is to be filled out by the association and provided to the owner, or filled out by the owner and provided to the prospective purchaser, which contains a checklist of the documents required to be provided.

3.    SB 150    Rental Restrictions

A.    Civil Code section 1360.2 is added to The Act to prohibit certain rental restrictions applying to owners.  Specifically, owners cannot be subject to restrictions on leasing or renting any units unless the restrictions were effective before the owner obtained title to the unit.

Under this statute, provisions in the governing documents that prevent rentals at all, restrict how many units that can be rented at any given time, or restrict leasing for the first year of ownership are prohibited.  The statute is silent with respect to restrictions which require leases be for a specified period of time; the California Court of Appeal upheld a restriction which required leases to be for at least 30 days and presumably this type of restriction would remain enforceable.

Associations should consider seeking to amend their CC&Rs to include rental restrictions before this statute becomes effective on January 1, 2011.  In view of the requirements for voting to amend the CC&Rs, such restrictions should be drafted before November 30, 2011.

B.    Civil Code section 1373 is added to exempt commercial and industrial condominiums from certain provisions of The Act.

    4.    SB 209    Electric Vehicle Charging Stations

A.    Civil Code section 1353.9 is added to The Act to protect the right of owners to charge electric vehicles.  The statute makes void any restriction in the governing documents, or in documents affecting the transfer of units, from effectively prohibiting or restricting the installation or use of an electric vehicle charging station.

This statute represents the laudable goal of reducing oil consumption and emissions.  While this statute prevents restrictions on installing electric vehicle charging stations, it allows reasonable restrictions, with the proviso that public policy mandates the promotion and encouragement of, and removal of obstacles to, electric vehicle charging stations.  Reasonable restrictions are defined as restrictions that do not significantly increase the cost of the station or significantly decrease its efficiency or performance.  However, the statute does not designate an area where the stations are to be installed.  The stations are required to meet applicable health and safety standards and to comply with the Building Code requirements.

Associations are required to process applications for approval for the installation of charging stations, if such applications for architectural modification are required by the association’s governing documents, in the same manner as other applications for architectural modifications.  Approval or denial is required to be in writing, and approval cannot be willfully avoided or delayed.

If, as will be typical, the charging station is to be in the common area or exclusive use common area, the homeowner is required to obtain approval from the association, but the association is required to approve it, provided that it will comply with the association’s architectural standards, will be installed by a licensed contractor, provide a certificate of insurance in the amount of at least $1,000,000, under which the association is named as an additional insured, and pay the costs of electricity associated with the station.  In addition, the owner shall be responsible for all damage to the station, common areas, exclusive use common areas or units caused by the station, shall be responsible for all maintenance, removal, repair and replacement of the station, and must disclose the existence of the station to prospective purchasers.

The law requires the owner using the station to be responsible for the electricity associated with the usage.  For associations with common electrical metering, this could be problematic.  A solution could include requiring the owner to obtain the fuel economy standards for the particular vehicle, provide the association with the amount of annual miles the owner provided to his or her insurance company, and apply the average rate of electricity to the amount of miles to assess a fee to the owner.  Other means may be available, depending upon the association, to ensure that the owners who charge their electric vehicles comply with the statute and pay the cost of the electricity used to do so.

The California Public Utilities Commission has removed restrictions on the sale of electricity through these charging stations, which would allow associations to install charging stations throughout the complex, for use by homeowners and guests, without absorbing the cost of the electricity usage.  The cost would be charged to the user, who would be required to use a credit card to purchase the electricity.

– To learn more about The Law Offices of Laura J. Snoke, click here

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