California Assembly Bill AB771 Amended / Bill

 BILL NUMBER: AB 771AMENDED BILL TEXT AMENDED IN SENATE JUNE 20, 2011 AMENDED IN ASSEMBLY MAY 23, 2011 AMENDED IN ASSEMBLY MAY 10, 2011 AMENDED IN ASSEMBLY APRIL 25, 2011 AMENDED IN ASSEMBLY APRIL 15, 2011 INTRODUCED BY Assembly Member Butler FEBRUARY 17, 2011 An act to amend Section 1368 of, and to add Section 1368.2 to, the Civil Code, relating to common interest developments. LEGISLATIVE COUNSEL'S DIGEST AB 771, as amended, Butler. Common interest developments: requests for documents: fees. The Davis-Stirling Common Interest Development Act requires an owner of a separate interest in a common interest development to provide specified documents to a prospective purchaser of that interest. Existing law requires a homeowners' association to provide these documents to the owner of the separate interest within 10 days of the mailing or delivery of the request, and limits the amount of fees charged for the provision of the documents to the association's actual costs to procure, prepare, and reproduce the requested documents. This bill would require that the seller also provide a copy of specified minutes of the meetings of the association's board of directors  , if requested by the prospective purchaser  . This bill would also require an association to provide to the seller a written or electronic estimate of the fees that will be assessed to provide the specified documents. The bill would permit the association to collect a reasonable fee  based on the association' s actual cost  for procuring, preparing, reproducing, and delivering the requested documents and would prohibit charging additional fees for electronic delivery of documents. The bill would permit the association to contract with any person or entity to provide the documents on behalf of the association  , subject to the same standards required of the association  . The bill would require the owner of a separate interest to also provide a form for billing disclosures, as specified, to a prospective purchaser, and would also require the association to provide this form to a recipient authorized by the owner of the separate interest.  This bill would incorporate additional changes to Section 1368 of the Civil Code proposed by SB 150 that would become operative only if both this bill and SB 150 are chaptered and become effective on or before January 1, 2012, and this bill is chaptered last.  Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 1368 of the Civil Code is amended to read: 1368. (a) The owner of a separate interest, other than an owner subject to the requirements of Section 11018.6 of the Business and Professions Code, shall, as soon as practicable before transfer of title to the separate interest or execution of a real property sales contract therefor, as defined in Section 2985, provide the following to the prospective purchaser: (1) A copy of the governing documents of the common interest development, including any operating rules, and including a copy of the association's articles of incorporation, or, if not incorporated, a statement in writing from an authorized representative of the association that the association is not incorporated. (2) If there is a restriction in the governing documents limiting the occupancy, residency, or use of a separate interest on the basis of age in a manner different from that provided in Section 51.3, a statement that the restriction is only enforceable to the extent permitted by Section 51.3 and a statement specifying the applicable provisions of Section 51.3. (3) A copy of the most recent documents distributed pursuant to Section 1365. (4) A true statement in writing obtained from an authorized representative of the association as to the amount of the association' s current regular and special assessments and fees, any assessments levied upon the owner's interest in the common interest development that are unpaid on the date of the statement, and any monetary fines or penalties levied upon the owner's interest and unpaid on the date of the statement. The statement obtained from an authorized representative shall also include true information on late charges, interest, and costs of collection which, as of the date of the statement, are or may be made a lien upon the owner's interest in a common interest development pursuant to Section 1367 or 1367.1. (5) A copy or a summary of any notice previously sent to the owner pursuant to subdivision (h) of Section 1363 that sets forth any alleged violation of the governing documents that remains unresolved at the time of the request. The notice shall not be deemed a waiver of the association's right to enforce the governing documents against the owner or the prospective purchaser of the separate interest with respect to any violation. This paragraph shall not be construed to require an association to inspect an owner's separate interest. (6) A copy of the preliminary list of defects provided to each member of the association pursuant to Section 1375, unless the association and the builder subsequently enter into a settlement agreement or otherwise resolve the matter and the association complies with Section 1375.1. Disclosure of the preliminary list of defects pursuant to this paragraph does not waive any privilege attached to the document. The preliminary list of defects shall also include a statement that a final determination as to whether the list of defects is accurate and complete has not been made. (7) A copy of the latest information provided for in Section 1375.1. (8) Any change in the association's current regular and special assessments and fees which have been approved by the association's board of directors, but have not become due and payable as of the date disclosure is provided pursuant to this subdivision. (9)  A copy of the most recent 12 months of   If requested by the prospective purchaser, a copy of the  minutes of the regular meetings of the association's board of directors  , conducted over the previous 12 months,  that were approved by the association's board of directors. (b) (1) Upon written request, the association shall, within 10 days of the mailing or delivery of the request, provide the owner of a separate interest, or any other recipient authorized by the owner, with a copy of the requested documents specified in paragraphs (1) to (9), inclusive, of subdivision (a). Upon receipt of a written request, the association shall provide a written or electronic estimate of the fees that will be assessed for providing the requested documents. The documents required to be made available pursuant to this section may be maintained in electronic form, and may be posted on the association's Internet Web site. Requesting parties shall have the option of receiving the documents by electronic transmission if the association maintains the documents in electronic form. The association may collect a reasonable fee  based upon the association's actual cost  for the procurement, preparation, reproduction, and delivery of the documents requested pursuant to the provisions of this section. (2) No additional fees may be charged by the association for the electronic delivery of the documents requested. (3) Fees for any documents required by this section shall be distinguished from other fees, fines, or assessments billed as part of the transfer or sales transaction. Delivery of the documents required by this section shall not be  conditioned upon, or required to be combined with, any other documents, items, or services.   withheld for any reason nor subject to any condition except the payment of the fee allowed pursuant to paragraph (1).  (4) An association may contract with any person or entity to facilitate compliance with the requirements of this subdivision on  behalf of the association, subject to the same standards required   behalf  of the association. (5) The association shall also provide a recipient authorized by the owner of a separate interest with a copy of the completed form specified in Section 1368.2 at the time the required documents are delivered. (c) (1) Except as provided in paragraph (2), neither an association nor a community service organization or similar entity may impose or collect any assessment, penalty, or fee in connection with a transfer of title or any other interest except for the following: (A) An amount not to exceed the association's actual costs to change its records. (B) An amount authorized by subdivision (b). (2) The prohibition in paragraph (1) does not apply to a community service organization or similar entity, or to a nonprofit entity that provides services to a common interest development under a declaration of trust, that is described in subparagraph (A) or (B): (A) The community service organization or similar entity satisfies both of the following requirements: (i) The community service organization or similar entity was established prior to February 20, 2003. (ii) The community service organization or similar entity exists and operates, in whole or in part, to fund or perform environmental mitigation or to restore or maintain wetlands or native habitat, as required by the state or local government as an express written condition of development. (B) The community service organization or similar entity, or a nonprofit entity that provides services to a common interest development under a declaration of trust, satisfies all of the following requirements: (i) The organization or entity is not an organization or entity described in subparagraph (A). (ii) The organization or entity was established and received a transfer fee prior to January 1, 2004. (iii) On and after January 1, 2006, the organization or entity offers a purchaser the following payment options for the fee or charge it collects at time of transfer: (I) Paying the fee or charge at the time of transfer. (II) Paying the fee or charge pursuant to an installment payment plan for a period of not less than seven years. If the purchaser elects to pay the fee or charge in installment payments, the organization or entity may also collect additional amounts that do not exceed the actual costs for billing and financing on the amount owed. If the purchaser sells the separate interest before the end of the installment payment plan period, he or she shall pay the remaining balance prior to transfer. (3) For the purposes of this subdivision, a "community service organization or similar entity" means a nonprofit entity, other than an association, that is organized to provide services to residents of the common interest development or to the public in addition to the residents, to the extent community common areas or facilities are available to the public. A "community service organization or similar entity" does not include an entity that has been organized solely to raise moneys and contribute to other nonprofit organizations that are qualified as tax exempt under Section 501(c)(3) of the Internal Revenue Code and that provide housing or housing assistance. (d) Any person or entity who willfully violates this section is liable to the purchaser of a separate interest that is subject to this section for actual damages occasioned thereby and, in addition, shall pay a civil penalty in an amount not to exceed five hundred dollars ($500). In an action to enforce this liability, the prevailing party shall be awarded reasonable attorneys' fees. (e) Nothing in this section affects the validity of title to real property transferred in violation of this section. (f) In addition to the requirements of this section, an owner transferring title to a separate interest shall comply with applicable requirements of Sections 1133 and 1134. (g) For the purposes of this section, a person who acts as a community association manager is an agent, as defined in Section 2297, of the association.  SEC. 1.5.   Section 1368 of the   Civil Code   is amended to read:  1368. (a) The owner of a separate interest, other than an owner subject to the requirements of Section 11018.6 of the Business and Professions Code, shall, as soon as practicable before transfer of title to the separate interest or execution of a real property sales contract therefor, as defined in Section 2985, provide the following to the prospective purchaser: (1) A copy of the governing documents of the common interest development, including any operating rules, and including a copy of the association's articles of incorporation, or, if not incorporated, a statement in writing from an authorized representative of the association that the association is not incorporated. (2) If there is a restriction in the governing documents limiting the occupancy, residency, or use of a separate interest on the basis of age in a manner different from that provided in Section 51.3, a statement that the restriction is only enforceable to the extent permitted by Section 51.3 and a statement specifying the applicable provisions of Section 51.3. (3) A copy of the most recent documents distributed pursuant to Section 1365. (4) A true statement in writing obtained from an authorized representative of the association as to the amount of the association' s current regular and special assessments and fees, any assessments levied upon the owner's interest in the common interest development that are unpaid on the date of the statement, and any monetary fines or penalties levied upon the owner's interest and unpaid on the date of the statement. The statement obtained from an authorized representative shall also include true information on late charges, interest, and costs of collection which, as of the date of the statement, are or may be made a lien upon the owner's interest in a common interest development pursuant to Section 1367 or 1367.1. (5) A copy or a summary of any notice previously sent to the owner pursuant to subdivision (h) of Section 1363 that sets forth any alleged violation of the governing documents that remains unresolved at the time of the request. The notice shall not be deemed a waiver of the association's right to enforce the governing documents against the owner or the prospective purchaser of the separate interest with respect to any violation. This paragraph shall not be construed to require an association to inspect an owner's separate interest. (6) A copy of the  preliminary   initial  list of defects provided to each member of the association pursuant to Section 1375, unless the association and the builder subsequently enter into a settlement agreement or otherwise resolve the matter and the association complies with Section 1375.1. Disclosure of the  preliminary   initial  list of defects pursuant to this paragraph does not waive any privilege attached to the document. The  preliminary   initial  list of defects shall also include a statement that a final determination as to whether the list of defects is accurate and complete has not been made. (7) A copy of the latest information provided for in Section 1375.1. (8) Any change in the association's current regular and special assessments and fees which have been approved by the association's board of directors, but have not become due and payable as of the date disclosure is provided pursuant to this subdivision.  (9) If there is a provision in the governing documents that prohibits the rental or leasing of any of the separate interests in the common interest development to a renter, lessee, or tenant, a statement describing the prohibition and its applicability.   (10) If requested by the prospective purchaser, a copy of the minutes of the regular meetings of the association's board of directors, conducted over the previous 12 months, that were approved by the association's board of directors.  (b)  (1)    Upon written request,  an   the  association shall, within 10 days of the mailing or delivery of the request, provide the owner of a separate interest  , or any other recipient authorized by the owner,  with a copy of the requested  items   documents  specified in paragraphs (1) to  (8)   (10)  , inclusive, of subdivision (a).  The items   Upon receipt of a written request, the association shall provide a written or electronic estimate of the fees that will be assessed for providing the requested documents. The documents  required to be made available pursuant to this section may be maintained in electronic form  ,  and  requesting   may be posted on the association's Internet Web site. Requesting  parties shall have the option of receiving  them   the documents  by electronic transmission  or machine readable storage media  if the association maintains  these items   the documents  in electronic form. The association may  charge   collect  a reasonable fee  for this service  based upon the association's actual cost  to procure, prepare, and reproduce   for  the  procurement, preparation, reproduction, and delivery of the documents  requested  items   pursuant to the provisions of this section  .  (2) No additional fees may be charged by the association for the electronic delivery of the documents requested.   (3) Fees for any documents required by this section shall be distinguished from other fees, fines, or assessments billed as part of the transfer or sales transaction. Delivery of the documents required by this section shall not be withheld for any reason nor subject to any condition except the payment of the fee allowed pursuant to paragraph (1).   (4) An association may contract with any person or entity to facilitate compliance with the requirements of this subdivision on behalf of the association.   (5) The association shall also provide a recipient authorized by the owner of a separate interest with a copy of the completed form specified in Section 1368.2 at the time the required documents are delivered.  (c) (1) Except as provided in paragraph (2), neither an association nor a community service organization or similar entity may impose or collect any assessment, penalty, or fee in connection with a transfer of title or any other interest except for the following: (A) An amount not to exceed the association's actual costs to change its records. (B) An amount authorized by subdivision (b). (2) The prohibition in paragraph (1) does not apply to a community service organization or similar entity, or to a nonprofit entity that provides services to a common interest development under a declaration of trust, that is described in subparagraph (A) or (B): (A) The community service organization or similar entity satisfies both of the following requirements: (i) The community service organization or similar entity was established prior to February 20, 2003. (ii) The community service organization or similar entity exists and operates, in whole or in part, to fund or perform environmental mitigation or to restore or maintain wetlands or native habitat, as required by the state or local government as an express written condition of development. (B) The community service organization or similar entity, or a nonprofit entity that provides services to a common interest development under a declaration of trust, satisfies all of the following requirements: (i) The organization or entity is not an organization or entity described in subparagraph (A). (ii) The organization or entity was established and received a transfer fee prior to January 1, 2004. (iii) On and after January 1, 2006, the organization or entity offers a purchaser the following payment options for the fee or charge it collects at time of transfer: (I) Paying the fee or charge at the time of transfer. (II) Paying the fee or charge pursuant to an installment payment plan for a period of not less than seven years. If the purchaser elects to pay the fee or charge in installment payments, the organization or entity may also collect additional amounts that do not exceed the actual costs for billing and financing on the amount owed. If the purchaser sells the separate interest before the end of the installment payment plan period, he or she shall pay the remaining balance prior to transfer. (3) For the purposes of this subdivision, a "community service organization or similar entity" means a nonprofit entity, other than an association, that is organized to provide services to residents of the common interest development or to the public in addition to the residents, to the extent community common areas or facilities are available to the public. A "community service organization or similar entity" does not include an entity that has been organized solely to raise moneys and contribute to other nonprofit organizations that are qualified as tax exempt under Section 501(c)(3) of the Internal Revenue Code and that provide housing or housing assistance. (d) Any person or entity who willfully violates this section is liable to the purchaser of a separate interest that is subject to this section for actual damages occasioned thereby and, in addition, shall pay a civil penalty in an amount not to exceed five hundred dollars ($500). In an action to enforce this liability, the prevailing party shall be awarded reasonable attorneys' fees. (e) Nothing in this section affects the validity of title to real property transferred in violation of this section. (f) In addition to the requirements of this section, an owner transferring title to a separate interest shall comply with applicable requirements of Sections 1133 and 1134. (g) For the purposes of this section, a person who acts as a community association manager is an agent, as defined in Section 2297, of the association. SEC. 2. Section 1368.2 is added to the Civil Code, to read: 1368.2. The form for billing disclosures required by Section 1368 shall be in substantially the following form: CHARGES FOR DOCUMENTS PROVIDED AS REQUIRED BY SECTION 1368* Property Address __________________________________ Owner of Property _________________________________ Owner's Mailing Address ______________________ (If known or different _______________________ from property address.) Provider of the Section 1368 Items: _________________________________________________ Print Name Position or Title Association or Agent ___________________ Date Form Completed Check or Complete Applicable Column or Columns Below  Not   Available   Document Civil Code Included (N/A) or Fees   Section Not   Applicable   (N/App)   Articles of   Incorporation Section   or statement 1368(a)(1) ________ __________ ____   that not   incorporated   CC&Rs Section ________ __________ ____   1368(a)(1)   Bylaws Section ________ __________ ____   1368(a)(1)   Operating Section ________ __________ ____   Rules 1368(a)(1)   Age Section   restrictions, 1368(a)(2) ________ __________ ____   if any   Pro forma   operating Sections   budget or 1365 and ________ __________ ____   summary, 1368(a)(3)   including   reserve study   Assessment   and reserve Sections   funding 1365 and ________ __________ ____   disclosure 1368(a)(4)   summary   Financial Sections   statement 1365 and ________ __________ ____   review 1368(a)(3)   Assessment Sections   enforcement 1365 and ________ __________ ____   policy 1368(a)(4)   Insurance Sections   summary 1365 and ________ __________ ____   1368(a)(3)  Regular Section ________ __________ ____   assessment 1368(a)(4)   Special Section ________ __________ ____   assessment 1368(a)(4)   Emergency Section ________ __________ ____   assessment 1368(a)(4)   Other unpaid Sections   obligations 1367.1 and ________ __________ ____   of seller 1368(a)(4)   Approved Section   changes to 1365 and ________ __________ ____   assessments 1368(a)(4),   (8)   Settlement Sections  notice 1368(a)(6),   regarding (7) and ________ __________ ____   common area 1375.1   defects   Preliminary Sections   list of 1368(a)(6), ________ __________ ____   defects 1375, and   1375.1   Notice(s) of Sections   violation 1363 and ________ __________ ____   1368(a)(5)   Required Section   statement of 1368 ________ __________ ____   fees   Most recent Section   12 months of 1368(a)(9) ________ __________ ____   minutes   Total fees   for these ________   documents:   * The information provided by this form may not   include all fees that may be imposed before the   close of escrow. Additional fees that are not   related to the requirements of Section 1368 may be   charged separately.   Not  Available   Document Civil Code Included (N/A) or   Section Not   Applicable   (N/App)   Articles of   Incorporation Section   or statement 1368(a)(1) _________ ___________   that not   incorporated  CC&Rs Section _________ ___________   1368(a)(1)   Bylaws Section _________ ___________   1368(a)(1)   Operating Rules Section _________ ___________   1368(a)(1)   Age Section   restrictions, 1368(a)(2) _________ ___________   if any   Pro forma   operating Sections   budget or 1365 and _________ ___________   summary, 1368(a)(3)   including   reserve study   Assessment and Sections  reserve funding 1365 and _________ ___________   disclosure 1368(a)(4)   summary   Financial Sections   statement review 1365 and _________ ___________   1368(a)(3)   Assessment Sections   enforcement 1365 and _________ ___________   policy 1368(a)(4)   Insurance Sections   summary 1365 and _________ ___________   1368(a)(3)   Regular Section _________ ___________   assessment 1368(a)(4)   Special Section _________ ___________   assessment 1368(a)(4)   Emergency Section _________ ___________   assessment 1368(a)(4)   Other unpaid Sections   obligations of 1367.1 and _________ ___________   seller 1368(a)(4)   Approved Section   changes to 1365 and _________ ___________   assessments 1368(a)(4),   (8)   Settlement Sections   notice 1368(a)(6),   regarding (7) and _________ ___________   common area 1375.1   defects   Sections   Preliminary 1368(a)(6), _________ ___________   list of defects 1375, and   1375.1   Notice(s) of Sections   violation 1363 and _________ ___________   1368(a)(5)   Required   statement of Section 1368 _________ ___________   fees   Minutes of   regular   meetings of the   board of Section   directors 1368(a)(9) _________ ___________   conducted over   the previous 12   months, if   requested   Total fees for _________   these documents:   * The information provided by this form may not   include all fees that may be imposed before the   close of escrow. Additional fees that are not   related to the requirements of Section 1368 may be   charged separately.   SEC. 3.   Section 1.5 of this bill incorporates amendments to Section 1368 of the Civil Code proposed by both this bill and SB 150. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2012, (2) each bill amends Section 1368 of the Civil Code, and (3) this bill is enacted after SB 150, in which case Section 1 of this bill shall not become operative.