Happy New Year - Are You Ready For The
New Davis-Stirling Act?

Knowing that one of your New Year's Resolutions is to learn and understand the new Davis-Stirling Common Interest Development Act (and if you are unsure as to what new Act we are referring to, follow this link for our article "The New Davis-Stirling Act: Get Ready"). We have also prepared a new article that discusses and explains the major changes in the New Act.

Yes, most of the language of the old Act has not changed in the new Act. But some of it has, and those changes are significant. What has really changed are the code sections themselves; longer code sections have been broken up into smaller and shorter code sections, and code sections have been reorganized so they are in a more logical order. And there have been some significant changes in the Act which you should know and understand.

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New Davis-Stirling Act Reemphasizes Common Area Reimbursement Assessments

Many California condominium and homeowner associations' CC&Rs permit the Board of Directors, on behalf of an association, to impose a reimbursement assessment/monetary charge on a member for the cost of repairing damage caused by a member (or the member's guest or tenant) to association common areas and facilities. In addition to an association's authority under the CC&Rs to impose a reimbursement assessment, former California Civil Code Section 1367.1(d) stated that "[a] monetary charge imposed by the association as a means of reimbursing the association for costs incurred by the association in the repair of damage to common areas and facilities...may become a lien against the member's separate interest enforceable by the sale of the interest..."

Unlike other monetary charges that can be imposed on members, such as monetarily fining a member for a rule violation, reimbursement assessments may be enforced by recording a lien on a member's property. And effective January 1, 2014, the new Davis-Stirling Act now expressly requires what we have been advising our clients for years, that Boards must hold a hearing before they can impose a fee or penalty on an owner for the cost of repairing damage to the common area.

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Temporary Relocation: New Davis-Stirling Act Makes It Clear That Owners Pay Their Own Expenses

Since the old Davis-Stirling Act was made into law in 1985, there has been a small debate over whether an owner or their association is responsible for temporary relocation costs incurred when owners in a common interest development are required to vacate their units or homes for common area repairs. Former California Civil Code Section 1364(c) stated that the "costs of temporary relocation during the repair and maintenance of the areas within the responsibility of the association shall be borne by the owner of the separate interest affected." On its own, this provision seems clear enough; however, because this language was found in the code section that also dealt with termite fumigation, and because it followed the provision dealing with termite fumigation, some owners were confused and debated the issue with their association's board and management, claiming that unless the relocation was as a result of a treatment for termites, their association had to pay their relocation costs. They were confused and wrong.

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If San Rafael Can Restrict Smoking In Units, So Can Your Condo Association

San Rafael, a city just north of San Francisco, recently made active a smoking ban which prohibits smoking cigarettes inside any dwelling that shares a wall with another unit and this would include condominiums. It is considered the strictest smoking ban in the country. Follow this link to read the story.

San Rafael made it clear that it is the City's hope to eliminate secondhand smoke from creeping through doors and windows, ventilation systems, floorboards another susceptible openings. Boards and managers for condo associations tell us that they want to do the same thing. What we tell them is that they can, if they are willing to invest the necessary time and effort.

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When Fido Goes Rogue: How Does Your HOA Deal With Dangerous Dogs?

According to an article in the Tuesday, November 5, 2013 edition of the Los Angeles Times (follow this link for the article), Orange County supervisors are debating a proposal to create a website showing where every dangerous offender in the county is located. Not human -- canine. The website would do for dogs what Megan's Law does for sex offenders. County supervisors believe that citizens have the right to know where both are located.

How serious is the problem? In 2012, Orange County Animal Care investigated 264 dangerous dog reports, which led to 66 dogs being euthanized -- fully 25 percent. There were also 2,281 reports of dog bites in the O.C. area. We can only assume that other counties in California have just as serious a problem as OC has reported.

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Delinquent HOA Owner Files A Chapter 13 Bankruptcy That Is Converted To A Chapter 7; In a Converted Bankruptcy, Which Date Controls, the Filing Date or the Conversion Date?

At some point, just about every community association will have a delinquent owner who files for bankruptcy. And while a bankruptcy filing is often interpreted as meaning that the debt has become uncollectable, it does not necessarily mean the end of the road for creditors, especially homeowners associations. There are special provisions for homeowners associations in the Bankruptcy Code that may help an association, assuming the association has recorded a lien, and collection of the delinquent assessments may still be possible. Having an attorney who is familiar with bankruptcy law involved at the outset of the case can drastically improve an association's chances of recovering the money it is owed. Some bankruptcies are quick and easy. Some are not. Some start out looking like they will be quick and easy, and then things change. This article is about the ones that change when a delinquent homeowner's bankruptcy is converted from one type of bankruptcy to another.

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Alex Noland Elected To The Board and Mary Peterson Receives An Award

During the Annual Awards and Holiday Party for the Community Association Institute's Bay/Central Chapter on December 6th, attorney Alex Noland of SwedelsonGottlieb was elected to the chapter's Board of Directors for the 2014-2015 term. Alex has been very active with the Bay/Central chapter ever since the opening of SwedelsonGottlieb's San Francisco office. This year, Alex co-chaired the Education Committee and has spoken at several CAI events. Alex is excited to begin his new position as a CAI Bay/Central Board member.

Additionally, Mary Peterson, Client Relations Manager for SwedelsonGottlieb and its affiliate, Association Lien Services, received the chapter's Executive Director's Award for her contributions as a volunteer with the chapter, as well as for the Co-Chair work she did for the Education Committee for the Santa Cruz/Monterey Bay area. Kelvin Nanney, Executive Director of the chapter, had this to say about Mary: "This award is being given to the individual that has been instrumental in supporting the chapter, served on numerous committees for a number of years, Co-Chair of the South Bay Education Committee, Past Co-Chair of the Membership Committee - I would expect that every manager here has gotten at least one call from her urging you to attend an education forum throughout the year. Her response when called upon to help is, 'You got it.' If she has never done what you are asking, her response is, 'I'll give it my best.'" And Mary does give it her best when doing her work for SwedelsonGottlieb, ALS and CAI.

Congrats to Alex and Mary from all of us at SwedelsonGottlieb and ALS.

The New American Dream: Condos Replace Single-Family Home Ownership

In the last year, prices for detached single-family dwellings have skyrocketed in Los Angeles. "A single-family house with a backyard is . . . a luxury," mourned a 34-year-old financial analyst. No wonder "Southland Buyers Shift to Condos," as an article in the Los Angeles Times put it. Follow this link to go to the article.

As prices for detached single-family homes rose, so did condo sales. Attached home sales rose 3.3%, while detached home sales dropped 7.2%. As the Times points out, condo sales have accounted for 18% of home sales for the last 25 years, but in just the first 10 months of 2013, that number jumped to 22%. The reason: median condo cost is about $75K less than median home price.

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Hawaii Couple To Receive $1.2M Condo Settlement In Lawsuit Against The Board For Retaliation

In March of 2012, we reported on a lawsuit in Hawaii where the jury awarded $3.87 Million to a couple of condo owners In Molokai. Follow this link to read our March 27, 2012 blog post.

As we reported in 2012, a jury awarded the two Molokai residents and condo owners $3.87 million in general and punitive damages against their condominium association based on their allegations that they were targets of threats, harassment and intimidation by an unlicensed contractor (who was alleged to have had a criminal record and was hired to do various tasks around the Ke Nani Kai Condominium in West Molokai) and the resident manager.

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New Davis-Stirling Act & Reserve Funding - Updated Law Amounts to New Set of Civil Code References for Reserve Funding Matters

By Robert Nordlund, Association Reserves and David Swedelson, SwedelsonGottlieb

The body of statutory law (as opposed to case law) governing California Community Associations, known as the Davis-Stirling Common Interest Development Act, went into effect on January 1, 1986. As the industry developed and matured over the last 27 years, approximately 50 changes and amendments were made to the Act. While those adjustments were well-intended, the net effect yielded a disorganized and confusing body of law. To address this problem, a multi-year effort was launched to rewrite the Davis-Stirling Act. This "new" Davis-Stirling Act, signed into law in 2012, becomes the guiding law for California residential community associations on January 1, 2014. So you are probably asking what are the major changes and how does the re-write affect reserve funding issues? The answer is no major changes have been made regarding reserve funding. For the most part, the new updated law amounts to new set of Civil Code references for reserve funding matters. Fortunately, the majority of the changes are just re-organization and renumbering. But there have been changes made to the Act as it applies to reserves.

To read the article prepared by David Swedelson and Robert Nordlund, follow this link.