What You Need to Know: The New Davis-Stirling Act

The Davis-Stirling Common Interest Develop Act, or the Davis-Stirling Act, is the primary set of laws that govern common interest developments (CIDs) and homeowners associations (HOAs) in California. Since 1985, the Davis-Stirling Act has been amended many times; however, on January 1, 2014 the Act will be completely renumbered and reorganized, and codified in California Civil Code. This article will address the key substantive changes to the Davis-Stirling Act and advise associations on how best to handle these changes.

Why was it revised?

The Davis-Stirling Act was revised in order to make the law more user-friendly and easy to understand. Some of the organizational changes to the new Davis-Stirling Act include changes to the annual "budget" package, shorter Civil Code sections, a separation and regrouping of subjects, and the inclusion of standardized terminology.

Important Changes

The following list of changes points out some notable departures from current law. This list is not exhaustive, and we will provide more important changes if we identify them.

Standardized Rules of Notice and Delivery

Pursuant to the new Davis-Stirling Act, associations and members must now follow standardized rules of notice and delivery. Read more here

Annual Reports and Disclosures

New Civil Code §5300 and §5310 require an Annual Budget Report and Annual Policy Statement, respectively, to be delivered to all association members on an annual basis, replacing the existing budget and disclosure requirements under the current Davis-Stirling Act. Read more here.

Board Member Conflicts of Interest

Civil Code §5350 outlines new requirements that will help avoid conflict of interest issues when conducting board business. Pursuant to §5350, an association board member may not vote on certain matters that concern him or herself. Read more here.

Granting Members Exclusive Use Common Area

Associations will now be permitted, without member approval, to grant exclusive use of the common area for certain reasons. Read more here

Penalties for Non-Compliance

New penalties have been introduced for associations that do not comply with certain requirements of the new Davis-Stirling Act, such as board meeting requirements. Under the new law, an association can be liable for a penalty of up to $500 for each violation of the Common Interest Development Open Meeting Act. Read more here

Liens Recorded in Error

A member is no longer responsible for any fees and costs incurred by his or her association as the result of a lien recorded in error. Read more here

Levying Reimbursement Assessments

An association is now required to hold a properly noticed hearing before the board of directors before the board can levy a reimbursement assessment against the accused member for repair costs related to common area damage. Read §5855.

Temporary Relocation Costs

An association is not responsible for any temporary relocation costs, including lodging, meals, and transportation incurred by a member during relocation for common area maintenance or repair. Read §4775.

Should your association update its documents now?

Some advisors recommend that if an association’s governing documents are six to eight years old, the association should consider amending now. However, certain association documents, such as an association’s collection policy, will need to be amended before the end of the year and distributed to the members to comply with the new Davis-Stirling Act.

It will likely be necessary for an association to update the association’s late letter, pre-lien (intent to lien) letter, and lien if these documents refer to existing Davis-Stirling Act code sections. Although there is no penalty for not updating these documents, business will run smoother with updated assessment collection documents that will reference the proper Civil Code sections once instated.

The changes discussed in this article are only a few of the important substantive changes in the new Davis-Stirling Act taking effect in 2014. Many of these changes will impact how associations and members interact and how boards conduct business. While the new Davis-Stirling Act makes a concerted effort to bring transparency and fairness to the forefront, it will be incumbent upon association boards of directors to meet the new law halfway and implement and carry out its provisions in a compliant manner.

Click the link below for a printable conversion chart between the old and new Civil Code section numberings: 

Davis-Stirling Act Conversion Chart (PDF)

 


Adapted from the article “The New Davis-Stirling Act: Get Ready!” by Sandra L. Gottlieb, Esq. & W. Alexander Noland, Esq. of SwedelsonGottlieb, and Tracy R. Neal, Esq. of Association Lien Services.