DAVIS-STIRLING COMMON INTEREST DEVELOPMENT ACT

Transcription

1 DAVIS-STIRLING COMMON INTEREST DEVELOPMENT ACT AND RELATED CALIFORNIA LAWS 2014 EDITION Compliments of Angius & Terry LLP 1990 North California Boulevard, Suite 950 Walnut Creek, CA Phone: Fax: MacArthur Court, 11 th Floor Newport Beach, CA Phone: Fax: Lava Ridge Court, Suite 130 Roseville, CA Phone: Fax: South Main Street, Suite 328 Manteca, CA Phone: For all locations

2 WHAT IS IN THIS BOOK? The Davis-Stirling Common Interest Development Act ( the Davis-Stirling Act ), the body of California law which has governed California homeowner associations for more than twenty-five years, has been repealed as of January 1, 2014 and replaced with a group of statutes which will now be known as the Davis-Stirling Common Interest Development Act. The new Davis-Stirling Act was initially drafted by the California Law Review Commission to improve the existing law by making the Davis-Stirling Act more user friendly. This was accomplished by grouping provisions within the Act together in logical order, attempting to clarify unclear or confusing provisions, dividing long sections into shorter sections and utilizing standardized terminology. Some "noncontroversial" substantive changes were also made to the original Act. The new Davis-Stirling Act was signed into law by the governor on August 17, A correlation table showing where various sections of the old Davis-Stirling Act appear in the new Act is included as part of this book. One significant change incorporated into the new Davis-Stirling Act is that it no longer applies to industrial or commercial common interest developments. (See Section 4202 of the Act.) After January 1, 2014, a separate body of law, to be known as the Commercial and Industrial Common Interest Development Act, will govern such developments. Please see our separate book for the provisions of this law. The new Davis-Stirling Act, like the original law, provides statutory guidance for the management and operation of residential common interest developments in California. In combination with the governing documents of an association, relevant case law and other statutes (see Parts II through XI of this book), the new Davis-Stirling Act provides the legal framework within which all affairs of a residential homeowners association must be conducted. Part I of this book contains the text of the new Davis-Stirling Act in its entirety. Parts II through XI include certain other California and Federal statutes that are either incorporated by reference in the Davis-Stirling Act or which we, at Angius & Terry LLP, have found to be relevant to the management and operation of Community Associations. Following the statutory law, we have included some common forms and worksheets which may prove useful to boards and association managers. We hope this book will prove helpful to managers and their boards when trying to understand and apply this complex body of law. As always we are available to advise on particular legal issues or to assist managers and boards in preparing CC&Rs, Bylaws and other documents which accurately reflect the requirements of the law.

3 WHO IS Angius & Terry LLP? Angius & Terry LLP has over thirty years of experience helping Community Associations and property owners protect their rights. Angius & Terry LLP prides itself on the service and commitment that it offers to its clients. Angius & Terry LLP possesses extensive experience handling the corporate and business affairs of its Community Association clients. This experience includes: Drafting and amending CC&Rs, Bylaws, Articles of Incorporation and other governing documents; Interpretation and enforcement of governing documents; Interpretation of statutes and ordinances as they relate to the management and operation of the Association; Assessment collection and lien procedures; Architectural control committees and compliance; Contract drafting and review; Claims by and against Association vendors, contractors and suppliers. Angius & Terry LLP has raised hundreds of millions of dollars in Community Association construction defect lawsuits. These lawsuits include two of the largest condominium association construction defect settlements in the history of Northern California and the only Community Association construction defect lawsuit that resulted in the demolition and rebuilding of an entire Community Association development. Angius & Terry LLP s objective is to use the knowledge gained during the litigation process to work with our Community Association clients and their management companies after the lawsuit has concluded. This will ensure that the reconstruction process satisfactorily addresses the Community Association s construction problems. Conclusion of a Community Association s lawsuit does not end our commitment to that Community Association. Angius & Terry LLP offers free initial consultations to Community Association Boards of Directors faced with potential construction defects. In many instances, there are alternatives which, when properly used, can resolve construction defect problems short of litigation. Angius & Terry LLP has been awarded an A-V rating by Martindale-Hubbell, the highest rating given to any law firm in the United States. We are active participants and sponsors of California Association of Community Managers (CACM), Community Associations Institute (CAI), Executive Council of Homeowners (ECHO) and other trade organizations. In addition, we are regularly called upon to advise legislative committees and testify before the California Legislature in connection with bills that impact Community Associations throughout the State. We have also been called upon to provide consulting services to the State Bar of California.

4 DANIEL ANGIUS Mr. Angius has specialized in community association and construction law since His experience over the years in dealing with the legal problems that confront community associations has helped position Angius & Terry LLP as one of the premier firms representing community associations in the western United States. A dynamic and animated speaker, he is frequently asked to lecture with respect to legal issues which relate to common interest developments. He has, likewise, written numerous articles on a wide range of topics pertaining to common interest developments. Among his many professional accomplishments, Mr. Angius was the lead attorney in the landmark Willow Park Marina Homeowners Association suit which resulted in the complete demolition and reconstruction of a common interest development. He was also the lead attorney in a homeowners association construction defect suit which resulted in a recovery approaching $19,000,000 for only 155 condominium units. Mr. Angius graduated from Columbia University in 1974 with a Bachelor of Arts degree and received his law degree in 1977 from the University of the Pacific, McGeorge School of Law. He is a member of the California State Bar Association, Nevada State Bar Association, Bar Association of San Francisco, Clark County Bar Association and the litigation and construction sections of the American Bar Association. He is also a member of the Community Association Institute, Executive Council of Homeowners, and the California Association of Community Managers. PAUL TERRY Mr. Terry specializes in construction, community association and insurance law. In addition to his extensive handling of construction defect cases, he works closely with association management companies and boards of directors in providing both legal and practical advice regarding the day-to-day affairs of their associations, enforcement and revision of governing documents, and delinquent assessment collection. His unique combination of knowledge and experience enabled him to secure the largest condominium construction defect settlement in Northern California history for a firm client. He graduated from the University of California at Irvine in 1980 with degrees in Literature and Economics and received his law degree in 1984 from the University of California, Hastings College of the Law, where he served on the editorial board of the Hastings Constitutional Law Quarterly. He is an active member of the Executive Council of Homeowners (ECHO), where he served on the Legislative Committee; the California Association of Community Managers (CACM), where he served on the Legal Advisory Committee; and the Consumer Attorneys of California, where he served on the Construction Defect Litigation Committee. In addition, he is an active member of the Community Associations Institute (CAI) and the Sacramento Area Condominium Associations (SACA). Mr. Terry served on the California Senate Housing and Land Use Committee s task force studying changes to the Davis-Stirling Common Interest Development Act. Mr. Terry frequently lectures on topics relevant to common interest developments, including new and pending legislation, mediation, effective assessment collection and construction defect litigation.

5 Dear Valued Client, We at Angius & Terry LLP are, once again, privileged to provide you with the 2014 edition of the Davis-Stirling Common Interest Development Act and Related California Laws book. This book provides you with the knowledge and facts needed to be the absolute best Community Manager or Board Member you can be. Please feel free to contact me directly with any questions you may have when referring to this book. Sincerely, Jill Maki Director of Client Services

6 NEW DAVIS-STIRLING ACT - CONVERSION TABLE OLD CODE SECTION NEW CODE SECTION , 4045, (intro) (a) (b) (c) (d) (e)(1) (2) 4120, (e)(3) 4285(c), 4290, (f) (g) (h) (i) (j) (k) (l) (m) (a)(1) 4250(a) 1353(a)(1) (4) (b) 4250(b) (a) 4270(a) 1355(b) (b)(1) 1355(b)(2) 1355(b)(3) 5115(e) 4270(b) (a)(3) 1357 (a) 4265 (a) OLD CODE SECTION NEW CODE SECTION 1357 (b) 4265 (b) 1357 (c) omitted 1357 (d) 4265 (c) (a) (b) 4340(a) 4340(b) (a) (b) (c) (d) , (a) (b) omitted 1363(c) (d) 1363(e) 1363(f) 5000(a) 5240(b) 5850(a) 1363(g) (h) (i) omitted (a) (b) 5105(a) (c) (d) (a), 5115(b) (c)

7 NEW DAVIS-STIRLING ACT - CONVERSION TABLE OLD CODE SECTION (e) (f) (g) NEW CODE SECTION 5115(a) 5120(a) 5120(b) (h) (i) (j) (k) (l) (m) (n) (o) omitted 5105(b) 5115(d) 5100(c) 5100(d) 5100(e) omitted (a) (b) (c) (d) (e) 4925(a); 4935(a) (b) 4935(e) 4950(a) 4950(b) (f) (g) (h) (i) (j) (k)(1) (k)(2) (a)(3)(F) (elections) (a) (b) (exclusive use) (a) (b) (open meetings) 4925(b), 5000(b) 4202(a)(4) (a) (b) (b)(1) (a) (e) 5380(a) (e) (f) 4158, (g) 5380(f) OLD CODE SECTION (a) NEW CODE SECTION 4775(a) 1364(b) (c) 4775(b) 1364(d) (e) (f) (a)(1) 1365(a)(2) (intro) 1365(a)(2)(A) (D) (a)(3)(A) 1365(a)(3)(B) 1365(a)(3)(C) 1365(a)(3)(D) 1365(a)(4)(1st ) 5300(b)(1) 5300(b)(2) 5300(b)(4) 5300(b)(5) 5300(b)(6) 5300(b)(8) 5300(b)(7) 1365(a)(4) (2nd ) 5300(d) 1365(a)(4) (3rd ) 5300(a) 1365(b) 1365(c) (d) 1365(e) 1365(f)(1) 5300(b)(3) 5320 (a) 1365(f)(2) (f)(3) 1365(f)(4) (a) (b) (c) (a)(1) 5310(a)(7) 5300(a), 5300(b)(9) 5300(b)(9) 5300(b)(9) 4040(b) 5200(a) (a)(1)(I)(ii) (a)(1)(I)(iii) (a)(2) (b)(1) 5200(b), 5205(g) 5205(a)

8 NEW DAVIS-STIRLING ACT - CONVERSION TABLE OLD CODE SECTION (b)(2) (c)(1) (5) NEW CODE SECTION 5205(b) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) 5205(c) (g) 5240(c) 5205(h) 5210(a) (b) 5210(c) 5240(a) 5240(d) omitted (b)(3) 5300(e) (a) (b) 5510(a) (c)(1) 5510(b) (c)(2) (d) (e)(1) (5) (e)(5) (f) (g) (h) omitted (a) (a) 5600(a), 5605(a), 5605(c) 1366(b) 1366(b)(1) (3) 1366(c) (d) (e) 1366(f) 5605(b)-(c) 5610(a) (c) 5650(b) 5650(c) (b) (a) 4210 OLD CODE SECTION (b) NEW CODE SECTION omitted omitted (see 5740(b)) (a) (1st sentence) (a) (2nd sentence) (a)(1) (6) 5650(a) (b) (c)(1)(A) (c)(1)(B) 5660(a) (f) 5705 (b) (c)(2) (c)(3) (d) (e) 5675, 5685(a), 5725(a) 5725(b) (f) (g) 5700(a), 5710(a), (g)(1) (2) (h) (i) (j) (k) 5710(c)(1) (2) 5700(b) 5685(b) 5710(b) 4040(b) (l) (m) (n) (a) (b) (c)(1) (3) (c)(4) (d) omitted 5705(a), 5715(a), 5720(a) 5720(b) (c) 5705(b) (d) 5715(b) 5720(c)(2) (3) (c) (a) (b) (c)(1) (c)(2) (c)(3) (d) 4540

9 NEW DAVIS-STIRLING ACT - CONVERSION TABLE OLD CODE SECTION 1368(e) (f) (g) NEW CODE SECTION omitted OLD CODE SECTION NEW CODE SECTION

10 TABLE OF CONTENTS I. DAVIS-STIRLING COMMON INTEREST DEVELOPMENT ACT... 1 CHAPTER 1. GENERAL PROVISIONS Article 1. PRELIMINARY PROVISIONS Short Title Effect of Headings Application of Act Construction of Zoning Ordinance Delivered to an Association Individual Notice General Notice Time and Proof of Delivery Electronic Delivery; Requirements Approved by Majority of All Members Approved by Majority of Quorum of Members Article 2. DEFINITIONS Application of Definitions Annual Budget Report Annual Policy Statement Association Board Board Meeting Common Area Common Interest Development Community Apartment Project Community Service Organization or Similar Entity Condominium Plan Condominium Project Declarant Declaration Director Exclusive Use Common Area General Notice Governing Documents Individual Notice Item of Business Managing Agent Member Person Planned Development Reserve Accounts Reserve Account Requirements Separate Interest Stock Cooperative CHAPTER 2. APPLICATION OF ACT Application of Act Exemption of Development without Common Area Commercial and Industrial Developments CHAPTER 3. GOVERNING DOCUMENTS Article 1. GENERAL PROVISIONS Document Authority Record Notice of Agent to Receive Payments Compliments of Angius & Terry, LLP i

11 4215. Liberal Construction of Instruments Boundaries of Units Deletion of Unlawful Restrictive Covenants Deletion of Declarant Provisions in Governing Documents Correction of Statutory Cross-Reference Article 2. DECLARATION Content of Declaration Special Disclosures Amendment Authorized Amendment to Extend Term of Declaration Authorized Amendment Procedure Judicial Authorization of Amendment Article 3. ARTICLES OF INCORPORATION Content of Articles Article 4. CONDOMINIUM PLAN Condominium Plan Recordation of Condominium Plan Amendment or Revocation of Condominium Plan Article 5. OPERATING RULES "Operating rule or Rule change" Requirements for Validity and Enforceability Application of Rulemaking Procedures Approval of Rule Change by Board Reversal of Rule Change by Members Applicability of Article to Changes Commenced Before and After January 1, CHAPTER 4. OWNERSHIP AND TRANSFER OF INTERESTS Article 1. OWNERSHIP RIGHTS AND INTERESTS Ownership Rights and Interests Appurtenant Rights and Easements Access to Separate Interest Property Article 2. TRANSFER DISCLOSURE Disclosure to Prospective Purchaser Document Disclosures Summary Form Information to be Provided by Association Related Requirements Enforcement of Article Validity of Title Unaffected Article 3. TRANSFER FEE Transfer Fee Exemption from Transfer Fee Limitations Article 4. RESTRICTIONS ON TRANSFER Grant of Exclusive Use Civil Action to Enforce Section Partition of Condominium Project Lien for Work Performed in Condominium Project Article 5. TRANSFER OF SEPARATE INTEREST Community Apartments Condominium Project Planned Development Stock Cooperative Transfer of Exclusive use Common Area Severability of Interests ii Compliments of Angius & Terry LLP

12 CHAPTER 5. PROPERTY USE AND MAINTENANCE Article 1. PROTECTED USES Application of Article Display of United States Flag Noncommercial Sign Pets Roofing Materials Television Antenna or Satellite Dish Marketing Restriction Low Water-Using Plants Rental Restriction Electric Vehicle Charging Station Article 2. MODIFICATION OF SEPARATE INTEREST Improvements to Separate Interest Architectural Review and Decision Making Article 3. MAINTENANCE Maintenance Responsibility Generally Wood-Destroying Pests or Organisms Temporary Removal of Occupant to Perform Treatment of Wood-Destroying Pests Exclusive Use Communication Wiring CHAPTER 6. ASSOCIATION GOVERNANCE Article 1. ASSOCIATION EXISTENCE AND POWERS Association Association Powers Joint Neighborhood Association Article 2. BOARD MEETING Short Title Board Action Outside of Meeting Prohibited Notice of Board Meeting Emergency Board Meeting Board Meeting Open Limitation on Meeting Content Executive Session Minutes Civil Action to Enforce Article Article 3. MEMBER MEETING Member Meeting Article 4. MEMBER ELECTION Application of Article Election Rules Inspector of Elections Voting Procedure Counting Ballots Ballot Retention Proxies Campaign-Related Information Judicial Enforcement Article 5. RECORD INSPECTION Definitions Document Time Periods Withholding and Redaction Compliments of Angius & Terry, LLP iii

13 5220. Membership List Opt Out Membership List Request Restriction on Use of Records Enforcement Application of Article Article 6. RECORDKEEPING Mailing-Related Requests Article 7. ANNUAL REPORTS Annual Budget Report Review of Financial Statement Annual Policy Statement Notice of Availability Article 8. CONFLICT OF INTEREST Interested Director Article 9. MANAGING AGENT Prospective Managing Agent Disclosure Trust Fund Account Managing Agent Article 10. GOVERNMENT ASSISTANCE Director Training Course State Registry CHAPTER 7. FINANCES Article 1. ACCOUNTING Board Review Article 2. USE OF RESERVE FUNDS Use of Reserve Funds Temporary Transfer of Reserve Funds Use of Reserve Funds for Litigation Article 3. RESERVE PLANNING Visual Inspection of Major Components and Reserve Study Reserve Funding Plan Summary of Association Reserves Assessment and Reserve Funding Disclosure Summary Community Service Organization Report CHAPTER 8. ASSESSMENTS AND ASSESSMENT COLLECTION Article 1. ESTABLISHMENT AND IMPOSITION OF ASSESSMENTS Levy of Assessment Assessment Approval Requirements Emergency Exception to Assessment Approval Requirements Notice of Assessment Increase Exemption from Execution Property Tax Value as Basis for Assessments Article 2. ASSESSMENT PAYMENT AND DELINQUENCY Assessment Debt and Delinquency Payments Payment Under Protest Notice Prior to Recoding a Lien Payment Plan Dispute Resolution Decision to Record a Lien Notice of Delinquent Assessment Lien Priority Lien Release iv Compliments of Angius & Terry LLP

14 5690. Procedural Noncompliance Article 3. ASSESSMENT COLLECTION Collection Generally Decision to Foreclose Foreclosure Right of Redemption after Trustee Sale Limitation on Foreclosure Limitations on Authority to Foreclose Liens for Monetary Penalties and Damage to the Common Area Statement of Collection Procedure Assignment or Pledge Application of Article CHAPTER 9. INSURANCE AND LIABILITY Limitation of Director and Officer Liability Limitation of Member Liability Notice of Change in Coverage CHAPTER 10. DISPUTE RESOLUTION AND ENFORCEMENT Article 1. DISCIPLINE AND COST REIMBURSEMENT Schedule of Monetary Penalties Hearing No Effect on Authority of Board Article 2. INTERNAL DISPUTE RESOLUTION Application of Article Fair, Reasonable, and Expeditious Dispute Resolution Procedure Required Minimum Requirements of Association Procedure Default Meet and Confer Procedure Notice in Policy Statement Article 3. ALTERNATIVE DISPUTE RESOLUTION PREREQUISITE TO CIVIL ACTION Definitions ADR Prerequisite to Enforcement Action Request for Resolution ADR Process Tolling of Statute of Limitations Certification of Efforts to Resolve Dispute Stay of Litigation for Dispute Resolution Attorney s Fees Notice in Annual Policy Statement Article 4. CIVIL ACTION Enforcement of Government Documents Standing Comparative Fault CHAPTER 11. CONSTRUCTION DEFECT LITIGATION Actions for Damages Notice of Resolution Notice of Civil Action II. RELATED BUSINESS & PROFESSIONS CODE PROVISIONS Definitions Common Interest Development Manager Qualifications Examination and Education "Certified Common Interest Development Manager" Compliments of Angius & Terry, LLP v

15 Annual Disclosure; Information Required Prohibited Activities Repeal of Part III. RELATED CIVIL CODE PROVISIONS Liability of Person or Entity under Contract with Residential Building Permit Applicant for Quality Review of Compliance with State Housing Law Age Discrimination in Housing Sale or Rental Senior Citizen Housing Legislative Intent Regarding Senior Housing Conditions Restraining Alienation Void Restrictions on Placing for Sale Sign on Property as Void; Retrospective Operation of Statute Right to Display Sign Advertising Property for Sale, Lease, or Exchange Unenforceability of Restrictions on Use of Solar Energy System; Standards for Solar Energy Systems; Approval Process; Penalty for Willful Violation; Attorneys' Fees; Compliance by Public Entity Seeking Grant or Loan Funds Permitted Restrictions by Common Interest Development... Associations Restriction Solar Easement Definitions Standards for Residential Construction Intent of Standards Warranty covering fit and finish items Enhanced Protection Agreement Effect of Enhanced Protection Agreement Written Copy of Enhanced Protection Agreement Enforcement of Construction Standards In Lieu of Particular Enhanced Protection Agreement Provision Responsive Pleading in Action to Enforce Construction Standards of this Chapter In Lieu of Enhanced Protection Agreement Effect of Election of Enhanced Protection Agreement on Provisions of Prelitigation Procedures Obligation of Homeowner to Follow Reasonable Maintenance Obligations Procedures Required Prior to Filing Action for Violation of Construction Standards Builder Defined Builder s Duties Acknowledgement of Receipt of Notice Nonadversarial procedure established Actions Resulting in Nonapplication of Chapter Inspection of Claimed Unmet Standards by Builder Offer to Repair Authorization to Proceed with Repair Offer to Mediate Dispute Actions Resulting in Filing of an Action by Homeowner; Applicable Standards vi Compliments of Angius & Terry LLP

16 921. Procedure when Resolution Involves Repair by Builder Observation and Electronic Recording, Video Recording, or Photographing of Repair Allowed Availability to Homeowner of Correspondence, Photographs and Other Material Pertaining to Repairs Offer to Repair Some, but not all, of Claimed Unmet Standards Failure to Timely Complete Repairs Release or Waiver in Exchange for Repair Work Prohibited Statute of Limitations Mediation Procedure Cash Offer in Lieu of Repair Strict Construction of Requirements; Failure of Claimant to Conform Claim Combined with Other Causes of Action Subsequently Discovered Claims of Unmet Standards Evidence of Repair Work Evidence of Parties Conduct Similar Requirements of Civil Code Section Applicability of Title to Other Entities Involved in Construction Process Claims and Damages not Covered by this Title Date of Sale for Applicability of Title Time Limit for Bringing Action Showing Required for Claim Other Causes of Action; Claims Involving Detached Single-Family Home Damages Original Purchasers and Successors-in-Interest Affirmative Defenses Disclosures Required in Condominium Transfer b. Request for Copy of Notice of Default or Sale; Recordation; Duty of Mortgagee, Trustee, etc Recordation of Transfer of Property in Common Interest Development IV. RELATED CORPORATIONS CODE PROVISIONS "Electronic Transmission by the Corporation." "Electronic Transmission to the Corporation." Annual Statements; Designation of Agent for Service of Process; Changes in Information; Disposal of Superseded Statements; Public Inspection; Fees; Certification Self-Dealing Transactions by Interested Director; Remedies Powers of Corporation Assertion of Limitations on Corporate Activities or Powers as between Corporation and Third Person; Binding Effect of Contracts Contents; Directors; Meetings; Committees; Members Availability; Place and Time Corporate Activities shall be under Direction of Board; Delegation of Management Activities Meetings of the Board; Notice; Adjournment; Participation via Electronic Means; Quorum; Acts or Decisions of the Compliments of Angius & Terry, LLP vii

17 Board; Action Taken by Board without a Meeting; Applicability of Section Creation of Committees; Appointment of Members; Authority Corporate Officers; Chair of the Board; President; Secretary; Treasurer or Chief Financial Officer; Applicability of Government Code Section 12586; Selection of Officers Bylaws, Minutes, and Resolutions as Prima Facie Evidence; Original or Copy; Forms Allowed Election and Selection of Directors; Term of Office; "Designator"; Entitlement to Designate Directors Grounds for Vacating Office of Director Removal of Directors Without Cause Removal of Director by Court Order; Grounds Means of Filling Vacancies on Board of Directors; Resignation of Director; Notice Requirements Appointment of Provisional Director when Directors cannot Agree as to Management; Deadlock; Equitable relief; Rights and Powers of Provisional Director Director to Perform Duties in Good Faith; Good Faith Reliance on Official Corporate Information, Opinions, and Records; Liability of Directors Conflicts of Interest; Contracts not Void or Voidable if Approved at Meeting in Presence of Interested Director; Conditions; Applicability Counting of Interested or Common Directors in Determining Quorum "Agent;" "Proceeding;" "Expenses;" Power of Corporation to Indemnify Person Threatened to be Made Party to Proceeding; Indemnification of Agent for Expenses Incurred; Authorization to Purchase Liability Insurance on Behalf of Corporate Agent; Applicability of Section Meetings of Members; Orders of Superior Court after Failure to Hold Regular Meeting or Written Ballot; Who may Call Special Meetings; Conducting Meetings by Electronic Transmission Allowed; Requirements Notice of Meeting Where Shareholders are Required or Permitted to Take Action; Requirements for Validity of Notice by Electronic Transmission; Special Meetings; Notice of Adjourned Meeting; Validity Determination of Quorum Actions which May be Taken without Meeting; Approval by Written Ballot; Solicitation and Revocation of Ballots; Election of Directors by Written Ballot Form of Proxy or Written Ballot; Opportunity to Specify Choice between Approval and Disapproval Required; Ballots Marked "Withhold"; Effect of Failure to Comply with Section Direction by Court Order that Meeting be Called; Powers of Court; Validity of Meeting Action without Meeting by Written Consent Name Signed Nomination and Election Procedures viii Compliments of Angius & Terry LLP

18 7521. Nomination Procedures; Corporations with 500 or More Members Equal Access to Corporate Publications; Vote Solicitations in Corporate Publications Election Material; Mailings; Requests by Nominees; Payment of Costs Refusal by Corporation to Publish or Mail Material; Prohibitions; Liability of Corporation or Officers for Material Supplied by Nominee; Actions to Relieve Corporation from Publication and Mailing Obligations Use of Corporate Funds to Support Nominees; Prohibitions Statute of Limitations; Action to Challenge Validity of Election One Vote Entitlement Determination of Record Date Voting; Where Membership Stands on Record in Names of Two or More Persons Proxies Authorized Election Inspectors; Appointment; Powers and Duties Cumulative Voting; Notice of Intention to Cumulate Votes; Ballots not Required Actions to Determine Validity of Election or Appointment; Notice to Attorney General; Intervention; Hearing; Findings V. RELATED CODE OF CIVIL PROCEDURE PROVISIONS Periods of Limitation Prescribed Assault and Battery; Personal Injury; Wrongful Death Mesne Profits; Violation of Restriction on Use of Real Property Written Obligation; Four Years Action for Latent Deficiency in Construction or Survey of Real Property or Injury Arising out of Such Deficiency; Ten Years Statutory Liability; Injury to Property; Fraud or Mistake; Bonds of Public Officials and Notaries; Slander of Title; False Advertising; Pollution Violations; Challenge to Tax Levy; Three Years; Specified Recovery of Work of Fine Art to be Commenced within 6 Years Personal Delivery; Completion of Service Leaving and Mailing Copies; Where and with Whom; When Service Deemed Complete Access to Gated Community to Serve Process or Subpoena Construction Defect Action Settlement Foreclosure of Mortgage or Deed of Trust; Proceedings; Action Based on Fraud Deficiency Judgment upon Decree of Foreclosure; Right of Redemption Persons Entitled to Redeem Property Redemption Period Right of Redemption on Sale of Separate Interest in Common Interest Development Arising from Foreclosure Participation by Individuals Other than Plaintiff and Defendant Compliments of Angius & Terry, LLP ix

19 VI. RELATED GOVERNMENT CODE PROVISIONS Right to Display Flag Unlawful Practices Definitions; Cover Page or Stamp Statement Relating to Restrictive Covenant Based on Racial or other Prohibited Grounds; Removal of Racially Restrictive Covenant; Offense of Recording Document to add Racially Restrictive Covenant Restrictive Covenants Based on Discriminatory Grounds; Recording of Modification; Submission to County Counsel, Filing, and Public Access; Unauthorized Modifications VII. RELATED HEALTH AND SAFETY CODE PROVISIONS Buildings or Places Deemed Nuisances Subject to Abatement Action to Abate and Enjoin Nuisance Temporary Restraining Order or Injunction Provisions of Order of Abatement; Damages Approval Procedure for Adoption of Building Standards and Administrative Regulations Citation of Chapter Definitions Standards Task Force to Develop Standards; Membership Feasibility of Adopting Permissible Exposure Limits in Indoor Environments Development of Permissible Exposure Limits that Avoid Adverse Health Effects Electronic Notice that Department is Working on Permissible Exposure Limits Practical Standards to Assess Health Threat Development of Alternative Assessment Standards for Certain Facilities Electronic Notice that Department is Working on Assessment Standards Development of Mold Identification Guidelines Guidelines to Include Scientifically Valid Methods Requirements for Guidelines; Criteria to be Considered; Reporting Form; Report to Legislature Consideration of National Identification Standards Electronic Notice of Preparation of Identification Guidelines Periodic Review of Identification Guidelines Development of Remediation Guidelines Requirements for Remediation Guidelines Electronic Notice of Preparation of Remediation Guidelines Consideration of National Remediation Standards Public Availability of Information about Contracting for Removal of Mold x Compliments of Angius & Terry LLP

20 Disclosure by Seller or Transferor of Commercial or Industrial Property of Presence of Mold; Application of Disclosure Requirement Disclosure by Commercial or Industrial Landlord of Presence of Mold Industrial or Commercial Tenant to Inform Landlord of Presence of Mold Duty of Commercial or Industrial Landlord to Assess Conditions and Conduct Remedial Action Application to Tenants Responsible for Maintenance of Property Notice of Presence of Mold by Commercial or Industrial Tenant Responsible for Maintenance of Property; Compliance with Terms of Contract Disclosure by Public Entity of Presence of Mold Disclosure by Residential Landlord of Presence of Mold Residential Landlord Required to Provide Written Disclosure of Potential Health Risks from Exposure to Mold Effect of Article on other Statutory Duties, Rights, Remedies or Defenses Affect of Article on Existing Disclosure Obligations of Parties or Transferors to Real Estate Contract or their Agents; Inspection and Disclosure Duties of Real Estate Broker or Salesperson No Limit or Abridgement of Statutory Obligations for Disclosure Enforcement of Items Subject to Disclosure Requirements Liability for Error, Inaccuracy, or Omission of Information Enforcement of Standards Consideration of Need for Standards for Mold Testing Professionals and Remediation Specialists Implementation of Chapter Study on Fungal Contamination Affecting Indoor Environments; Appointment of Review Panel Areas of Review Review Panel Findings Published Findings Development of Recommendations for Minimum Safety Requirements for Playgrounds at Child Care Centers Operative Date Public Swimming Pool Sanitary, Healthful and Safe Operations Facilities and Measures Insuring Sanitation, Healthfulness, and Safety Providing Lifeguard Service or Erecting Signs Public Swimming Pools in Common Interest Developments; Recordkeeping Requirement Light Fixtures Ground Fault for Public Swimming Pools Public Wading Pool Safety Devices Anti-entrapment Devices or Systems as Applicable Standard; Deadline for Installation; Alternative Devices Compliments of Angius & Terry, LLP xi

21 or Systems; New Construction; Retrofitting; Compliance and Documentation; Enforcement VIII. RELATED PENAL CODE PROVISIONS Service through which Public may Inquire regarding whether Individuals are Required to Register as Sex Offenders; Fee; Use of information Abatement Action; Verification of Complaint Temporary Restraining Order or Injunction Order of Abatement Directing Closing of Building or Payment of Damages; Disposition of Damages Collected IX. RELATED VEHICLE CODE PROVISIONS Private Roads Private Roads Open for Public Use Private Roads Not Open to Public Use Removal of Vehicle from Private Property by Property Owner; Requirements; Notice; Recovery for Damages; Liability; Towing Charge; Excessive Charges; Liability; Payment by Cash or Credit Allowed; Written Authorization from Property Owner or Lessee as Prerequisite to Removal; Storage Facility Requirements; Legislative Intent Procedure when Owner Cannot be Ascertained X. RELATED CALIFORNIA CODE OF REGULATIONS PROVISIONS Title 22, Definitions Title 22, Pool Supervision Responsibility Title 22, Operation Records Title 22, Cleanliness of Pool Title 22, Lifesaving, First Aid and Control of Bathers Title 22, Shower, Toilet and Dressing Facilities Title 24, Open-Flame Cooking Devices XI. RELATED FEDERAL CODE OF REGULATIONS PROVISIONS Title 47, Restrictions Impairing Reception of Television Broadcast Signals, Direct Broadcast Satellite Services or Multichannel Multipoint Distribution Services Title 15, Definitions Title 15, Federal Swimming Pool and Spa Drain Cover Standard Title 15, Applicability FORM AND DISCLOSURES 1. Charges for Documents Provided as Required by Civ. Code Sec Documents to be Provided to Owners (Civ. Code Sec et seq.) Assessment and Reserve Funding Disclosure (Civ. Code Sec. 5570) Summary of ADR & IDR (Civ. Code Sec ) Request for Copies of Notice of Default and Sale (Civ. Code Sec. 2924b) Request for Trustee s Deed (Civ. Code Sec. 2924b(f)) Required Statement to Accompany Governing Documents (Gov. Code Sec ) Checklist for Director Elections Sample Document Retention Policy Disclosure Checklist xii Compliments of Angius & Terry LLP

22 DAVIS-STIRLING COMMON INTEREST DEVELOPMENT ACT I. DAVIS-STIRLING COMMON INTEREST DEVELOPMENT ACT Short Title. CHAPTER 1. GENERAL PROVISIONS ARTICLE 1. PRELIMINARY PROVISIONS This part shall be known and may be cited as the Davis-Stirling Common Interest Development Act. In a provision of this part, the part may be referred to as the act Effect of Headings. Division, part, title, chapter, and article headings do not in any manner affect the scope, meaning, or intent of this act Application of Act. Nothing in the act that added this part shall be construed to invalidate a document prepared or action taken before January 1, 2014, if the document or action was proper under the law governing common interest developments at the time that the document was prepared or the action was taken. For the purposes of this section, document does not include a governing document Construction of Zoning Ordinance. Unless a contrary intent is clearly expressed, a local zoning ordinance is construed to treat like structures, lots, parcels, areas, or spaces in like manner regardless of the form of the common interest development Delivered to an Association. (a) If a provision of this act requires that a document be delivered to an association, the document shall be delivered to the person designated in the annual policy statement, prepared pursuant to Section 5310, to receive documents on behalf of the association. If no person has been designated to receive documents, the document shall be delivered to the president or secretary of the association. (b) A document delivered pursuant to this section may be delivered by any of the following methods: (1) By , facsimile, or other electronic means, if the association has assented to that method of delivery. (2) By personal delivery, if the association has assented to that method of delivery. If the association accepts a document by personal delivery it shall provide a written receipt acknowledging delivery of the document Individual Notice. (a) If a provision of this act requires that an association deliver a document by "individual delivery" or "individual notice," the document shall be delivered by one of the following methods: (1) First-class mail, postage prepaid, registered or certified mail, express mail, or overnight delivery by an express service carrier. The document shall be addressed to the recipient at the address last shown on the books of the association. (2) , facsimile, or other electronic means, if the recipient has consented, in writing, to that method of delivery. The consent may be revoked, in writing, by the recipient. Compliments of Angius & Terry, LLP 1

23 DAVIS-STIRLING COMMON INTEREST DEVELOPMENT ACT (b) Upon receipt of a request by a member, pursuant to Section 5260, identifying a secondary address for delivery of notices of the following types, the association shall deliver an additional copy of those notices to the secondary address identified in the request: (1) The documents to be delivered to the member pursuant to Article 7 (commencing with Section 5300) of Chapter 6. (2) The documents to be delivered to the member pursuant to Article 2 (commencing with Section 5650) of Chapter 8, and Section (c) For the purposes of this section, an unrecorded provision of the governing documents providing for a particular method of delivery does not constitute agreement by a member to that method of delivery General Notice. (a) If a provision of this act requires "general delivery" or "general notice," the document shall be provided by one or more of the following methods: to Section (1) Any method provided for delivery of an individual notice pursuant (2) Inclusion in a billing statement, newsletter, or other document that is delivered by one of the methods provided in this section. (3) Posting the printed document in a prominent location that is accessible to all members, if the location has been designated for the posting of general notices by the association in the annual policy statement, prepared pursuant to Section (4) If the association broadcasts television programming for the purpose of distributing information on association business to its members, by inclusion in the programming. (b) Notwithstanding subdivision (a), if a member requests to receive general notices by individual delivery, all general notices to that member, given under this section, shall be delivered pursuant to Section The option provided in this subdivision shall be described in the annual policy statement, prepared pursuant to Section Time and Proof of Delivery. (a) This section governs the delivery of a document pursuant to this act. (b) If a document is delivered by mail, delivery is deemed to be complete on deposit into the United States mail. (c) If a document is delivered by electronic means, delivery is complete at the time of transmission Electronic Delivery; Requirements. If the association or a member has consented to receive information by electronic delivery, and a provision of this act requires that the information be in writing, that requirement is satisfied if the information is provided in an electronic record capable of retention by the recipient at the time of receipt. An electronic record is not capable of retention by the recipient if the sender or its information processing system inhibits the ability of the recipient to print or store the electronic record Approved by Majority of All Members. If a provision of this act requires that an action be approved by a majority of all members, the action shall be approved or ratified by an affirmative vote of a majority of the votes entitled to be cast. 2 Compliments of Angius & Terry LLP

24 DAVIS-STIRLING COMMON INTEREST DEVELOPMENT ACT Approved by Majority of Quorum of Members. If a provision of this act requires that an action be approved by a majority of a quorum of the members, the action shall be approved or ratified by an affirmative vote of a majority of the votes represented and voting at a duly held meeting at which a quorum is present, which affirmative votes also constitute a majority of the required quorum Application of Definitions. ARTICLE 2. DEFINITIONS The definitions in this article govern the construction of this act Annual Budget Report. "Annual budget report" means the report described in Section Annual Policy Statement. "Annual policy statement" means the statement described in Section Association. "Association" means a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development Board. "Board" means the board of directors of the association Board Meeting. "Board meeting" means either of the following: (a) A congregation, at the same time and place, of a sufficient number of directors to establish a quorum of the board, to hear, discuss, or deliberate upon any item of business that is within the authority of the board. (b) A teleconference, where a sufficient number of directors to establish a quorum of the board, in different locations, are connected by electronic means, through audio or video, or both. A teleconference meeting shall be conducted in a manner that protects the rights of members of the association and otherwise complies with the requirements of this act. Except for a meeting that will be held solely in executive session, the notice of the teleconference meeting shall identify at least one physical location so that members of the association may attend, and at least one director shall be present at that location. Participation by directors in a teleconference meeting constitutes presence at that meeting as long as all directors participating are able to hear one another, as well as members of the association speaking on matters before the board Common Area. (a) "Common area" means the entire common interest development except the separate interests therein. The estate in the common area may be a fee, a life estate, an estate for years, or any combination of the foregoing. (b) Notwithstanding subdivision (a), in a planned development described in subdivision (b) of Section 4175, the common area may consist of mutual or reciprocal easement rights appurtenant to the separate interests Common Interest Development. "Common interest development" means any of the following: (a) A community apartment project. Compliments of Angius & Terry, LLP 3