2009-2010 California legislation

for common interest developments

1.                  Disclosures Documents Index (AB 899):  The Association, upon the request of any member, must provide an index in the form provided in new California Civil Code section 1363.005, which lists a series of disclosures that the association is required to make and where it can be found in the Davis-Stirling Common Interest Development Act.  We recommend that you proactively amend your annual reports to incorporate the index set forth in new California Civil Code Section 1363.005, which is inserted below. 

2.                  Disclosure on Interest Rate Earned (AB 899):  The association must distribute an Assessment and Reserve Funding Disclosure Summary in the form prescribed by California Civil Code Section 1365.2.5, which shall additionally include the following statement regarding the interest rate earned on reserve funds and the inflation rate for major component repair and replacement costs:  “At the time this summary was prepared, the assumed long-term before-tax interest rate earned on reserve funds was ____ percent per year, and the assumed long-term inflation rate to be applied to major component repair and replacement costs was ____ percent per year.” 

3.                  Electronic Transmission (AB 899):  In order to validly deliver documents electronically under amended California Civil Code section 1350.7(b)(3), the association must obtain written consent from the homeowner or buyer (“Consumer”) to receive such information electronically in accordance with California Corporations Code Section 20 (“Section 20”).  Section 20 requires such written consent to comply with the Electronic Signatures in Global and National Commerce Act (15 U.S.C. Sec. 7001(c)(1)), which requires as follows: 

A.                 the Consumer has affirmatively consented and has not withdrawn such consent;   

B.                 the Consumer, prior to consenting, is informed of the (i) right to have the record provided on paper or in nonelectronic form, (ii) the right, procedure and any fees to withdraw the consent; (iii) whether the consent applies only to the particular transaction or categories of records; (iv) procedure to update information to contact the Consumer electronically; and (v) procedure and any fee to obtain a paper copy of an electronic record; 

C.                 the Consumer, (i) prior to consenting, is provided with a statement of the hardware and software requirements for access to and retention of the electronic records; and (ii) consents electronically, or confirms his or her consent electronically, in a manner that reasonably demonstrates that the Consumer can access information in the          electronic form that will be used to provide the information that is the subject of the consent; and           

D.                 after the consent of a Consumer in accordance with subparagraph (A), if a change in the hardware or software requirements needed to access or retain electronic records creates a material risk that the Consumer will not be able to access or retain a subsequent electronic record that was the subject of the consent, the person providing the electronic record (i) provides the Consumer with a statement of the revised hardware and software requirements and the right to withdraw consent without the imposition of any fees and (ii) complies with subparagraph (C).    

4.                  Judgment Lien Extension (AB 121):  The new law under amended California Code of Civil Procedure Section 697.510 helps associations collect money from delinquent owners and others who owe money to the association.  When an association sues a delinquent owner or other person or entity in court and wins, the association will receive a judgment.  Then the association has to collect the judgment.  Prior to this new law, an association could get a lien on certain personal property belonging to the person that the association sued, once the association has recovered a judgment from a court.  In order to get such a lien, the association has always had to file a notice of judgment lien in the office of the Secretary of State.  Unless the money judgment was paid, the judgment lien expired 5 years from the date of filing.  The new law allows creditors such as the association to extend these judgment liens on specified personal property by filing a document called a “continuation statement” in the office of the Secretary of State at least six (6) months before the lien expires.  A “continuation statement” is defined by the new law as an amendment of a notice of judgment lien that identifies, by file number, the initial notice of judgment lien to which it relates and indicates that it is a continuation statement for the identified notice of judgment lien.  If you file a judgment lien, be sure to calendar 4 years from the date of filing to timely file a continuation statement in order to preserve your lien rights. 

5.                  Point-of-Sale Plumbing Fixture Replacement (SB 407):  New California Civil Code Section 1101.1 et seq. requires owners of residential or commercial property built on or before January 1, 1994, to be retrofitted with high-efficiency toilets, shower heads and interior faucets by either 2017 or 2019, depending on the type of property.  Beginning in January 2014, all building alterations or improvements to single-family residential real property must be in compliance as a condition for issuance of a certificate of final completion and occupancy or final permit approval by the local building department.  Beginning in January 2017, owners of single-family residences would have to disclose at the time of sale whether the house is in compliance.  Since compliance can be very expensive for multi-family dwellings, owners of apartment buildings should consider establishing a reserve fund to retrofit the plumbing fixtures within 7 years.  The new law authorizes local governments to enact local ordinances to promote compliance and to charge fees for enforcement. 

6.                  Public Swimming Pools (AB 1020):   New California Health and Safety Code Section 116064.2 makes state law consistent with federal law by requiring a "public swimming pool" to be equipped with an anti-entrapment device or system that meets the performance standards published by the American Society for Testing and Materials (ASTM) International.  Anti-entrapment devices are drain covers of swimming pools, spas, hot tubs, or whirlpools that prevent hair from becoming entangled in the drain cover or grating.  The anti-entrapment device is designed to prevent people from getting sucked down by a pool drain which can cause death.  The retrofit costs $15,000 to $25,000 and the pool may have to be drained to install it.  We recommend that you install an anti-entrapment device if you own or operate a pool or spa that is open to the public or a pool in an apartment complex, residential real estate development or multi-family apartment building.   

7.                  Notice of Mechanic’s Liens (AB 457):  The mechanic’s lien law under California Civil Code Sections 3084 and 3146 has been amended to give property owners more effective notice when a lienholder, typically a subcontractor or material supplier, records a mechanic’s lien against the owner’s property.  Subcontractors and suppliers can record a lien like that even when the association or owner who hired the general contractor has paid the general contractor in full.  If the general contractor keeps the money and doesn’t pay the subs and suppliers, those subs and suppliers can lien the property.  The new law requires the lien claimant, as a condition of recording a mechanic’s lien, to serve the property owner with a Notice of Mechanic’s Lien, which must contain information on the legal effect of the lien and steps the owner may wish to take to get rid of the lien.  The law also requires the lien clamant (sub or supplier) filing an action to foreclose upon a mechanic’s lien to also record a  document called a notice of pendency of an action with the country recorder within 20 days of the recordation of the mechanic’s lien foreclosure action.  Be sure to work with qualified legal counsel if you are planning a construction project.  It’s much better to draft the contract and the payment procedures so as to avoid mechanic’s liens than to have to try to get rid of them once they are recorded.  When a mechanic’s lien is recorded, it usually prevents owners from selling or refinancing their properties. 

8.                  Unlicensed Contractors (AB 370):  Amended California Business and Professions Code Sections 7028 and 7028.16 increase the maximum penalty for a first-time conviction of contracting without a license from $1,000 to $5,000 and provide more stringent enhanced penalties.  Before hiring a contractor, you should confirm that the contractor has an active license by checking the California Contractors State License Board’s website at http://www.cslb.ca.gov/.  If you already hired the contractor and later discovered that the contractor was unlicensed, you should check the new fines and penalties imposed under these amended statutes. 

9.                  Unlawful Detainer and Unlawful Weapons on Rental Properties (AB 530): New law under amended California Civil Code Sections 3485 and 3486, Code of Civil Procedure Section 1161, and Health and Safety Code Section 11571.1 allow landlords and property managers to serve tenants in certain counties (Alameda, Los Angeles, Sacramento and San Diego) with an unlawful detainer notice for creating a nuisance on the premises if the tenant illegally possesses weapons or ammunition.  Although a common interest development association may not evict owners’ tenants, this law gives the association a tool to utilize with the owner of a property whose tenants possess illegal weapons or ammunition. 

10.              Water-Efficient Landscapes (AB 1061):  Amended California Civil Code Section 1353.8 makes any provision of the governing documents of a common interest development void and unenforceable if it prohibits or includes conditions that have the effect of prohibiting the use of low water-using plants as a group or if it prohibits or restricts compliance with a local water-efficient landscape ordinance or water conservation measure.  We recommend that you amend your CC&Rs or operating rules if they contain any prohibition against the use of water-efficient landscaping. 

11.              Assessments Based on Taxable Value (AB 313):  New California Civil Code Section 1366.4 prohibits any association that does not already use the assessed taxable value of a home to determine the owner’s assessments from doing so after December 31, 2009.  The purpose of the law is to help to help fixed-income seniors avoid being priced out of their homes by increased assessments.  This law probably does not affect most newly formed homeowners associations which conform to DRE’s regulation which generally requires that assessments be levied against each owner equally and/or by square footage. 

12.              Calderon Construction Defect Claims (AB 927):  Any associations in which separate interests were sold prior to January 1, 2003 are still subject to the pre-litigation procedures for construction defect claims against the developer under California Civil Code Section 1375, which has been amended to extend the expiration date of those procedures from July 1, 2010 to July 1, 2017.  This amendment does not affect the SB 800 provisions codified in California Civil Code Sections 895, et seq., which govern associations in which separate interests were sold on or after January 1, 2003. 

13.              Mobile Home Safety Plan (SB 23):   Amended California Health and Safety Code Sections 18603 and 18871.8 require all owners or operators of mobile home or manufactured home parks to adopt and post an emergency preparedness plan on or before September 1, 2010. 

          This is a summary only.  It is not a substitute for qualified legal advice.  Please contact a qualified attorney if you have a specific question on any of these laws.