There are tens of thousands of common interest developments in California, ranging from 2-unit buildings to large condominium towers and planned unit developments. The Davis-Stirling Common Interest Development Act (“Davis-Stirling Act”) is the primary body of law governing condo projects and homeowners associations (“HOAs”) in the state.
This update summarizes a few recent changes to the Davis-Stirling Act. The first, Assembly Bill No. 968 (“AB 968”), clears up some confusion regarding condo owner versus HOA responsibility for repair or replacement of exclusive use of common area. The second, Assembly Bill No. 1963 (“AB 1963”), extends a requirement for HOAs of more than 20 units to follow certain pre-litigation alternative dispute resolution procedures.
Clarification of Maintenance, Repair and Replacement Responsibilities
There has been long-standing uncertainty concerning who has the responsibility to maintain, repair and replace exclusive use common area appurtenant to an owner’s unit – the unit owner or the HOA? Exclusive use common area generally refers to private decks, patios and balconies appurtenant to an owner’s unit, and can also include other improvements that exclusively serve an owner’s unit. While a unit owner must maintain such exclusive use common area, it was less certain who must repair and replace such exclusive use common area. California Civil Code Section 4775 provided a default rule to address this issue, but the wording of the statute was unclear.
AB 968, effective January 1, 2017, amended Civil Code Section 4775 to address the uncertainty of who bears the responsibility for repair and replacement of exclusive use common area. In a nutshell, unless otherwise provided in the condo declaration (CC&Rs), the HOA is responsible for repairing and replacing exclusive use common area, and the unit owner is responsible for maintaining exclusive use common area appurtenant to that owner’s unit. While this is the default rule, CC&Rs may be drafted to provide an alternative approach for repair and replacement of such areas. HOAs whose CC&Rs are not clear on the allocation of such responsibility may consider whether some action should be taken to address any uncertainty.
Extension of Requirement for Larger HOAs to Follow Alternative Dispute Resolution Procedures
California Civil Code Section 6000, known as the Calderon Act, establishes dispute resolution procedures that an HOA for a condo project with 20 or more units must satisfy before it can sue a developer for construction defects. These procedures are known as the “Calderon Process.” The Calderon Process is separate from the Right to Repair Law (aka “SB 800”), which is another body of law that governs construction defects and required procedures for claims an HOA may have against a developer.
The Calderon Act is generally designed to provide a fair way to resolve construction defect claims in an expeditious and cost effective manner in order to avoid litigation. It requires the parties to follow a process in an attempt to resolve such disputes before litigation may be commenced. Much of the Calderon Act was set to expire on July 1, 2017. AB 1963 amends California Civil Code Section 6000 to extend the Calderon Act to July 1, 2024. This continued requirement to follow the Calderon Process should help avoid lengthy and costly litigation for construction defect claims.
Special thanks to Antonia Toomey for her assistance with this update.
The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.