1365.2.5. (a) The disclosures required by this article with regard
to an association or a property shall be summarized on the following
form:

Assessment and Reserve Funding Disclosure Summary

(1) The current regular assessment per ownership interest is
$_____ per ____. Note: If assessments vary by the size or type of
ownership interest, the assessment applicable to this ownership
interest may be found on page _____ of the attached summary.
(2) Additional regular or special assessments that have already
been scheduled to be imposed or charged, regardless of the purpose,
if they have been approved by the board and/or members:


+---------------+----------------+-----------------+
| | Amount per | |
| | ownership | |
| | interest per | |
| | month or year | |
| | (If assessments| |
| | are variable, | |
| | see note | |
| Date | | |
| assessment | immediately | Purpose of the |
| will be due: | below): | assessment: |
+---------------+----------------+-----------------+
| | | |
+---------------+----------------+-----------------+
| | | |
+---------------+----------------+-----------------+
| | | |
+---------------+----------------+-----------------+
| |Total: | |
+---------------+----------------+-----------------+

Note: If assessments vary by the size or type of ownership
interest, the assessment applicable to this ownership interest may be
found on page ____ of the attached report.
(3) Based upon the most recent reserve study and other information
available to the board of directors, will currently projected
reserve account balances be sufficient at the end of each year to
meet the association's obligation for repair and/or replacement of
major components during the next 30 years
Yes _____ No _____
(4) If the answer to (3) is no, what additional assessments or
other contributions to reserves would be necessary to ensure that
sufficient reserve funds will be available each year during the next
30 years that have not yet been approved by the board or the members



+------------------+-------------+
| | Amount per |
| Approximate date | ownership |
| assessment | interest |
| | per month or|
| will be due: | year: |
+------------------+-------------+
| | |
+------------------+-------------+
| | |
+------------------+-------------+
| | |
+------------------+-------------+
| | |
+------------------+-------------+
| |Total: |
+------------------+-------------+

(5) All major components are included in the reserve study and
are included in its calculations.
(6) Based on the method of calculation in paragraph (4) of
subdivision (b) of Section 1365.2.5, the estimated amount required in
the reserve fund at the end of the current fiscal year is $____,
based in whole or in part on the last reserve study or update
prepared by ____ as of ____ (month), ____ (year). The projected
reserve fund cash balance at the end of the current fiscal year is
$____, resulting in reserves being ____ percent funded at this date.
If an alternate, but generally accepted, method of calculation is
also used, the required reserve amount is $____. (See attached
explanation)


(7) Based on the method of calculation in
paragraph (4) of
subdivision (b) of Section 1365.2.5 of the
Civil Code, the estimated
amount required in the reserve fund at the
end of each of the next
five budget years is $______, and the
projected reserve fund cash
balance in each of those years, taking into
account only assessments
already approved and other known revenues,
is $______, leaving the
reserve at ______ percent funding. If the
reserve funding plan
approved by the association is implemented,
the projected reserve
fund cash balance in each of those years
will be $______, leaving the
reserve at ______ percent funding.

Note: The financial representations set forth in
this summary are based on the best estimates of
the preparer at that time. The estimates are
subject to change.

(b) For the purposes of preparing a summary pursuant to this
section:
(1) "Estimated remaining useful life" means the time reasonably
calculated to remain before a major component will require
replacement.
(2) "Major component" has the meaning used in Section 1365.5.
Components with an estimated remaining useful life of more than 30
years may be included in a study as a capital asset or disregarded
from the reserve calculation, so long as the decision is revealed in
the reserve study report and reported in the Assessment and Reserve
Funding Disclosure Summary.
(3) The form set out in subdivision (a) shall accompany each pro
forma operating budget or summary thereof that is delivered pursuant
to this article. The form may be supplemented or modified to clarify
the information delivered, so long as the minimum information set out
in subdivision (a) is provided.
(4) For the purpose of the report and summary, the amount of
reserves needed to be accumulated for a component at a given time
shall be computed as the current cost of replacement or repair
multiplied by the number of years the component has been in service
divided by the useful life of the component. This shall not be
construed to require the board to fund reserves in accordance with
this calculation.


1365.3. Unless the governing documents impose more stringent
standards, any community service organization as defined in paragraph
(3) of subdivision (c) of Section 1368 whose funding from the
association or its members exceeds 10 percent of the organization's
annual budget shall prepare and distribute to the association a
report that meets the requirements of Section 5012 of the
Corporations Code, and that describes in detail administrative costs
and identifies the payees of those costs in a manner consistent with
the provisions of Section 1365.2. If the community service
organization does not comply with the standards, the report shall
disclose the noncompliance in detail. If a community service
organization is responsible for the maintenance of major components
for which an association would otherwise be responsible, the
community service organization shall supply to the association the
information regarding those components that the association would use
to complete disclosures and reserve reports required under this
article. An association may rely upon information received from a
community service organization, and shall provide access to the
information pursuant to the provisions of Section 1365.2.



1365.5. (a) Unless the governing documents impose more stringent
standards, the board of directors of the association shall do all of
the following:
(1) Review a current reconciliation of the association's operating
accounts on at least a quarterly basis.
(2) Review a current reconciliation of the association's reserve
accounts on at least a quarterly basis.
(3) Review, on at least a quarterly basis, the current year's
actual reserve revenues and expenses compared to the current year's
budget.
(4) Review the latest account statements prepared by the financial
institutions where the association has its operating and reserve
accounts.
(5) Review an income and expense statement for the association's
operating and reserve accounts on at least a quarterly basis.
(b) The signatures of at least two persons, who shall be members
of the association's board of directors, or one officer who is not a
member of the board of directors and a member of the board of
directors, shall be required for the withdrawal of moneys from the
association's reserve accounts.
(c) (1) The board of directors shall not expend funds designated
as reserve funds for any purpose other than the repair, restoration,
replacement, or maintenance of, or litigation involving the repair,
restoration, replacement, or maintenance of, major components that
the association is obligated to repair, restore, replace, or maintain
and for which the reserve fund was established.
(2) However, the board may authorize the temporary transfer of
moneys from a reserve fund to the association's general operating
fund to meet short-term cashflow requirements or other expenses, if
the board has provided notice of the intent to consider the transfer
in a notice of meeting, which shall be provided as specified in
Section 1363.05. The notice shall include the reasons the transfer
is needed, some of the options for repayment, and whether a special
assessment may be considered. If the board authorizes the transfer,
the board shall issue a written finding, recorded in the board's
minutes, explaining the reasons that the transfer is needed, and
describing when and how the moneys will be repaid to the reserve
fund. The transferred funds shall be restored to the reserve fund
within one year of the date of the initial transfer, except that the
board may, after giving the same notice required for considering a
transfer, and, upon making a finding supported by documentation that
a temporary delay would be in the best interests of the common
interest development, temporarily delay the restoration. The board
shall exercise prudent fiscal management in maintaining the integrity
of the reserve account, and shall, if necessary, levy a special
assessment to recover the full amount of the expended funds within
the time limits required by this section. This special assessment is
subject to the limitation imposed by Section 1366. The board may, at
its discretion, extend the date the payment on the special assessment
is due. Any extension shall not prevent the board from pursuing any
legal remedy to enforce the collection of an unpaid special
assessment.
(d) When the decision is made to use reserve funds or to
temporarily transfer moneys from the reserve fund to pay for
litigation, the association shall notify the members of the
association of that decision in the next available mailing to all
members pursuant to Section 5016 of the Corporations Code, and of the
availability of an accounting of those expenses. Unless the
governing documents impose more stringent standards, the association
shall make an accounting of expenses related to the litigation on at
least a quarterly basis. The accounting shall be made available for
inspection by members of the association at the association's office.

(e) At least once every three years, the board of directors shall
cause to be conducted a reasonably competent and diligent visual
inspection of the accessible areas of the major components that the
association is obligated to repair, replace, restore, or maintain as
part of a study of the reserve account requirements of the common
interest development, if the current replacement value of the major
components is equal to or greater than one-half of the gross budget
of the association, excluding the association's reserve account for
that period. The board shall review this study, or cause it to be
reviewed, annually and shall consider and implement necessary
adjustments to the board's analysis of the reserve account
requirements as a result of that review.
The study required by this subdivision shall at a minimum include:

(1) Identification of the major components that the association is
obligated to repair, replace, restore, or maintain that, as of the
date of the study, have a remaining useful life of less than 30
years.
(2) Identification of the probable remaining useful life of the
components identified in paragraph (1) as of the date of the study.
(3) An estimate of the cost of repair, replacement, restoration,
or maintenance of the components identified in paragraph (1).
(4) An estimate of the total annual contribution necessary to
defray the cost to repair, replace, restore, or maintain the
components identified in paragraph (1) during and at the end of their
useful life, after subtracting total reserve funds as of the date of
the study.
(5) A reserve funding plan that indicates how the association
plans to fund the contribution identified in paragraph (4) to meet
the association's obligation for the repair and replacement of all
major components with an expected remaining life of 30 years or less,
not including those components that the board has determined will
not be replaced or repaired. The plan shall include a schedule of the
date and amount of any change in regular or special assessments that
would be needed to sufficiently fund the reserve funding plan. The
plan shall be adopted by the board of directors at an open meeting
before the membership of the association as described in Section
1363.05. If the board of directors determines that an assessment
increase is necessary to fund the reserve funding plan, any increase
shall be approved in a separate action of the board that is
consistent with the procedure described in Section 1366.
(f) As used in this section, "reserve accounts" means both of the
following:
(1) Moneys that the association's board of directors has
identified for use to defray the future repair or replacement of, or
additions to, those major components that the association is
obligated to maintain.
(2) The funds received, and not yet expended or disposed of, from
either a compensatory damage award or settlement to an association
from any person or entity for injuries to property, real or personal,
arising from any construction or design defects. These funds shall
be separately itemized from funds described in paragraph (1).
(g) As used in this section, "reserve account requirements" means
the estimated funds that the association's board of directors has
determined are required to be available at a specified point in time
to repair, replace, or restore those major components that the
association is obligated to maintain.
(h) This section does not apply to an association that does not
have a "common area" as defined in Section 1351.



1365.6. Notwithstanding any other law, and regardless of whether an
association is a corporation, as defined in Section 162 of the
Corporations Code, the provisions of Section 310 of the Corporations
Code shall apply to any contract or other transaction authorized,
approved, or ratified by the board or a committee of the board.



1365.7. (a) A volunteer officer or volunteer director of an
association, as defined in subdivision (a) of Section 1351, which
manages a common interest development that is exclusively
residential, shall not be personally liable in excess of the coverage
of insurance specified in paragraph (4) to any person who suffers
injury, including, but not limited to, bodily injury, emotional
distress, wrongful death, or property damage or loss as a result of
the tortious act or omission of the volunteer officer or volunteer
director if all of the following criteria are met:
(1) The act or omission was performed within the scope of the
officer's or director's association duties.
(2) The act or omission was performed in good faith.
(3) The act or omission was not willful, wanton, or grossly
negligent.
(4) The association maintained and had in effect at the time the
act or omission occurred and at the time a claim is made one or more
policies of insurance which shall include coverage for (A) general
liability of the association and (B) individual liability of officers
and directors of the association for negligent acts or omissions in
that capacity; provided, that both types of coverage are in the
following minimum amount:
(A) At least five hundred thousand dollars ($500,000) if the
common interest development consists of 100 or fewer separate
interests.
(B) At least one million dollars ($1,000,000) if the common
interest development consists of more than 100 separate interests.
(b) The payment of actual expenses incurred by a director or
officer in the execution of the duties of that position does not
affect the director's or officer's status as a volunteer within the
meaning of this section.
(c) An officer or director who at the time of the act or omission
was a declarant, as defined in subdivision (g) of Section 1351, or
who received either direct or indirect compensation as an employee
from the declarant, or from a financial institution that purchased a
separate interest, as defined in subdivision (l) of Section 1351, at
a judicial or nonjudicial foreclosure of a mortgage or deed of trust
on real property, is not a volunteer for the purposes of this
section.
(d) Nothing in this section shall be construed to limit the
liability of the association for its negligent act or omission or for
any negligent act or omission of an officer or director of the
association.
(e) This section shall only apply to a volunteer officer or
director who is a tenant of a separate interest in the common
interest development or is an owner of no more than two separate
interests in the common interest development.
(f) (1) For purposes of paragraph (1) of subdivision (a), the
scope of the officer's or director's association duties shall
include, but shall not be limited to, both of the following
decisions:
(A) Whether to conduct an investigation of the common interest
development for latent deficiencies prior to the expiration of the
applicable statute of limitations.
(B) Whether to commence a civil action against the builder for
defects in design or construction.
(2) It is the intent of the Legislature that this section clarify
the scope of association duties to which the protections against
personal liability in this section apply. It is not the intent of
the Legislature that these clarifications be construed to expand, or
limit, the fiduciary duties owed by the directors or officers.



1365.9. (a) It is the intent of the Legislature to offer civil
liability protection to owners of the separate interests in a common
interest development that have common areas owned in
tenancy-in-common if the association carries a certain level of
prescribed insurance that covers a cause of action in tort.
(b) Any cause of action in tort against any owner of a separate
interest arising solely by reason of an ownership interest as a
tenant in common in the common area of a common interest development
shall be brought only against the association and not against the
individual owners of the separate interests, as defined in
subdivision (l) of Section 1351, if both of the insurance
requirements in paragraphs (1) and (2) are met:
(1) The association maintained and has in effect for this cause
of action, one or more policies of insurance which include coverage
for general liability of the association.
(2) The coverage described in paragraph (1) is in the following
minimum amounts:
(A) At least two million dollars ($2,000,000) if the common
interest development consists of 100 or fewer separate interests.
(B) At least three million dollars ($3,000,000) if the common
interest development consists of more than 100 separate interests.




1366. (a) Except as provided in this section, the association shall
levy regular and special assessments sufficient to perform its
obligations under the governing documents and this title. However,
annual increases in regular assessments for any fiscal year, as
authorized by subdivision (b), shall not be imposed unless the board
has complied with subdivision (a) of Section 1365 with respect to
that fiscal year, or has obtained the approval of owners,
constituting a quorum, casting a majority of the votes at a meeting
or election of the association conducted in accordance with Chapter 5
(commencing with Section 7510) of Part 3 of Division 2 of Title 1 of
the Corporations Code and Section 7613 of the Corporations Code.
For the purposes of this section, "quorum" means more than 50 percent
of the owners of an association.
(b) Notwithstanding more restrictive limitations placed on the
board by the governing documents, the board of directors may not
impose a regular assessment that is more than 20 percent greater than
the regular assessment for the association's preceding fiscal year
or impose special assessments which in the aggregate exceed 5 percent
of the budgeted gross expenses of the association for that fiscal
year without the approval of owners, constituting a quorum, casting a
majority of the votes at a meeting or election of the association
conducted in accordance with Chapter 5 (commencing with Section 7510)
of Part 3 of Division 2 of Title 1 of the Corporations Code and
Section 7613 of the Corporations Code. For the purposes of this
section, quorum means more than 50 percent of the owners of an
association. This section does not limit assessment increases
necessary for emergency situations. For purposes of this section, an
emergency situation is any one of the following:
(1) An extraordinary expense required by an order of a court.
(2) An extraordinary expense necessary to repair or maintain the
common interest development or any part of it for which the
association is responsible where a threat to personal safety on the
property is discovered.
(3) An extraordinary expense necessary to repair or maintain the
common interest development or any part of it for which the
association is responsible that could not have been reasonably
foreseen by the board in preparing and distributing the pro forma
operating budget under Section 1365. However, prior to the
imposition or collection of an assessment under this subdivision, the
board shall pass a resolution containing written findings as to the
necessity of the extraordinary expense involved and why the expense
was not or could not have been reasonably foreseen in the budgeting
process, and the resolution shall be distributed to the members with
the notice of assessment.
(c) Regular assessments imposed or collected to perform the
obligations of an association under the governing documents or this
title shall be exempt from execution by a judgment creditor of the
association only to the extent necessary for the association to
perform essential services, such as paying for utilities and
insurance. In determining the appropriateness of an exemption, a
court shall ensure that only essential services are protected under
this subdivision.
This exemption shall not apply to any consensual pledges, liens,
or encumbrances that have been approved by the owners of an
association, constituting a quorum, casting a majority of the votes
at a meeting or election of the association, or to any state tax
lien, or to any lien for labor or materials supplied to the common
area.
(d) The association shall provide notice by first-class mail to
the owners of the separate interests of any increase in the regular
or special assessments of the association, not less than 30 nor more
than 60 days prior to the increased assessment becoming due.
(e) Regular and special assessments levied pursuant to the
governing documents are delinquent 15 days after they become due,
unless the declaration provides a longer time period, in which case
the longer time period shall apply. If an assessment is delinquent
the association may recover all of the following:
(1) Reasonable costs incurred in collecting the delinquent
assessment, including reasonable attorney's fees.
(2) A late charge not exceeding 10 percent of the delinquent
assessment or ten dollars ($10), whichever is greater, unless the
declaration specifies a late charge in a smaller amount, in which
case any late charge imposed shall not exceed the amount specified in
the declaration.
(3) Interest on all sums imposed in accordance with this section,
including the delinquent assessments, reasonable fees and costs of
collection, and reasonable attorney's fees, at an annual interest
rate not to exceed 12 percent, commencing 30 days after the
assessment becomes due, unless the declaration specifies the recovery
of interest at a rate of a lesser amount, in which case the lesser
rate of interest shall apply.
(f) Associations are hereby exempted from interest-rate
limitations imposed by Article XV of the California Constitution,
subject to the limitations of this section.



1366.1. An association shall not impose or collect an assessment or
fee that exceeds the amount necessary to defray the costs for which
it is levied.


1366.2. (a) In order to facilitate the collection of regular
assessments, special assessments, transfer fees, and similar charges,
the board of directors of any association is authorized to record a
statement or amended statement identifying relevant information for
the association. This statement may include any or all of the
following information:
(1) The name of the association as shown in the conditions,
covenants, and restrictions or the current name of the association,
if different.
(2) The name and address of a managing agent or treasurer of the
association or other individual or entity authorized to receive
assessments and fees imposed by the association.
(3) A daytime telephone number of the authorized party identified
in paragraph (2) if a telephone number is available.
(4) A list of separate interests subject to assessment by the
association, showing the assessor's parcel number or legal
description, or both, of the separate interests.
(5) The recording information identifying the declaration or
declarations of covenants, conditions, and restrictions governing the
association.
(6) If an amended statement is being recorded, the recording
information identifying the prior statement or statements which the
amendment is superseding.
(b) The county recorder is authorized to charge a fee for
recording the document described in subdivision (a), which fee shall
be based upon the number of pages in the document and the recorder's
per-page recording fee.


1367. (a) A regular or special assessment and any late charges,
reasonable costs of collection, and interest, as assessed in
accordance with Section 1366, shall be a debt of the owner of the
separate interest at the time the assessment or other sums are
levied. Before an association may place a lien upon the separate
interest of an owner to collect a debt which is past due under this
subdivision, the association shall notify the owner in writing by
certified mail of the fee and penalty procedures of the association,
provide an itemized statement of the charges owed by the owner,
including items on the statement which indicate the assessments owed,
any late charges and the method of calculation, any attorney's fees,
and the collection practices used by the association, including the
right of the association to the reasonable costs of collection. In
addition, any payments toward that debt shall first be applied to the
assessments owed, and only after the principal owed is paid in full
shall the payments be applied to interest or collection expenses.
(b) The amount of the assessment, plus any costs of collection,
late charges, and interest assessed in accordance with Section 1366,
shall be a lien on the owner's interest in the common interest
development from and after the time the association causes to be
recorded with the county recorder of the county in which the separate
interest is located, a notice of delinquent assessment, which shall
state the amount of the assessment and other sums imposed in
accordance with Section 1366, a legal description of the owner's
interest in the common interest development against which the
assessment and other sums are levied, the name of the record owner of
the owner's interest in the common interest development against
which the lien is imposed, and, in order for the lien to be enforced
by nonjudicial foreclosure as provided in subdivision (e) the name
and address of the trustee authorized by the association to enforce
the lien by sale. The notice of delinquent assessment shall be
signed by the person designated in the declaration or by the
association for that purpose, or if no one is designated, by the
president of the association, and mailed in the manner set forth in
Section 2924b, to all record owners of the owner's interest in the
common interest development no later than 10 calendar days after
recordation. Upon payment of the sums specified in the notice of
delinquent assessment, the association shall cause to be recorded a
further notice stating the satisfaction and release of the lien
thereof. A monetary penalty 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 for which the
member or the member's guests or tenants were responsible may become
a lien against the member's separate interest enforceable by the sale
of the interest under Sections 2924, 2924b, and 2924c, provided the
authority to impose a lien is set forth in the governing documents.
It is the intent of the Legislature not to contravene Section 2792.26
of Title 10 of the California Code of Regulations, as that section
appeared on January 1, 1996, for associations of subdivisions that
are being sold under authority of a subdivision public report,
pursuant to Part 2 (commencing with Section 11000) of Division 4 of
the Business and Professions Code.
(c) Except as indicated in subdivision (b), a monetary penalty
imposed by the association as a disciplinary measure for failure of a
member to comply with the governing instruments, except for the late
payments, may not be characterized nor treated in the governing
instruments as an assessment which may become a lien against the
member's subdivision interest enforceable by the sale of the interest
under Sections 2924, 2924b, and 2924c.
(d) A lien created pursuant to subdivision (b) shall be prior to
all other liens recorded subsequent to the notice of assessment,
except that the declaration may provide for the subordination thereof
to any other liens and encumbrances.
(e) After the expiration of 30 days following the recording of a
lien created pursuant to subdivision (b), the lien may be enforced in
any manner permitted by law, including sale by the court, sale by
the trustee designated in the notice of delinquent assessment, or
sale by a trustee substituted pursuant to Section 2934a. Any sale by
the trustee shall be conducted in accordance with the provisions of
Sections 2924, 2924b, and 2924c applicable to the exercise of powers
of sale in mortgages and deeds of trusts.
(f) Nothing in this section or in subdivision (a) of Section 726
of the Code of Civil Procedure prohibits actions against the owner of
a separate interest to recover sums for which a lien is created
pursuant to this section or prohibits an association from taking a
deed in lieu of foreclosure.
(g) This section only applies to liens recorded on or after
January 1, 1986 and prior to January 1, 2003.



1367.1. (a) A regular or special assessment and any late charges,
reasonable fees and costs of collection, reasonable attorney's fees,
if any, and interest, if any, as determined in accordance with
Section 1366, shall be a debt of the owner of the separate interest
at the time the assessment or other sums are levied. At least 30 days
prior to recording a lien upon the separate interest of the owner of
record to collect a debt that is past due under this subdivision,
the association shall notify the owner of record in writing by
certified mail of the following:
(1) A general description of the collection and lien enforcement
procedures of the association and the method of calculation of the
amount, a statement that the owner of the separate interest has the
right to inspect the association records, pursuant to Section 8333 of
the Corporations Code, and the following statement in 14-point
boldface type, if printed, or in capital letters, if typed:
"IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN FORECLOSURE
BECAUSE YOU ARE BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT
COURT ACTION."
(2) An itemized statement of the charges owed by the owner,
including items on the statement which indicate the amount of any
delinquent assessments, the fees and reasonable costs of collection,
reasonable attorney's fees, any late charges, and interest, if any.
(3) A statement that the owner shall not be liable to pay the
charges, interest, and costs of collection, if it is determined the
assessment was paid on time to the association.
(4) The right to request a meeting with the board as provided by
paragraph (3) of subdivision (c).
(5) The right to dispute the assessment debt by submitting a
written request for dispute resolution to the association pursuant to
the association's "meet and confer" program required in Article 5
(commencing with Section 1363.810) of Chapter 4.
(6) The right to request alternative dispute resolution with a
neutral third party pursuant to Article 2 (commencing with Section
1369.510) of Chapter 7 before the association may initiate
foreclosure against the owner's separate interest, except that
binding arbitration shall not be available if the association intends
to initiate a judicial foreclosure.
(b) Any payments made by the owner of a separate interest toward
the debt set forth, as required in subdivision (a), shall first be
applied to the assessments owed, and, only after the assessments owed
are paid in full shall the payments be applied to the fees and costs
of collection, attorney's fees, late charges, or interest. When an
owner makes a payment, the owner may request a receipt and the
association shall provide it. The receipt shall indicate the date of
payment and the person who received it. The association shall provide
a mailing address for overnight payment of assessments.
(c) (1) (A) Prior to recording a lien for delinquent assessments,
an association shall offer the owner and, if so requested by the
owner, participate in dispute resolution pursuant to the association'
s "meet and confer" program required in Article 5 (commencing with
Section 1363.810) of Chapter 4.
(B) Prior to initiating a foreclosure for delinquent assessments,
an association shall offer the owner and, if so requested by the
owner, shall participate in dispute resolution pursuant to the
association's "meet and confer" program required in Article 5
(commencing with Section 1363.810) of Chapter 4 or alternative
dispute resolution with a neutral third party pursuant to Article 2
(commencing with Section 1369.510) of Chapter 7. The decision to
pursue dispute resolution or a particular type of alternative dispute
resolution shall be the choice of the owner, except that binding
arbitration shall not be available if the association intends to
initiate a judicial foreclosure.
(2) For liens recorded on or after January 1, 2006, the decision
to record a lien for delinquent assessments shall be made only by the
board of directors of the association and may not be delegated to an
agent of the association. The board shall approve the decision by a
majority vote of the board members in an open meeting. The board
shall record the vote in the minutes of that meeting.
(3) An owner, other than an owner of any interest that is
described in Section 11212 of the Business and Professions Code that
is not otherwise exempt from this section pursuant to subdivision (a)
of Section 11211.7, may submit a written request to meet with the
board to discuss a payment plan for the debt noticed pursuant to
subdivision (a). The association shall provide the owners the
standards for payment plans, if any exist. The board shall meet with
the owner in executive session within 45 days of the postmark of the
request, if the request is mailed within 15 days of the date of the
postmark of the notice, unless there is no regularly scheduled board
meeting within that period, in which case the board may designate a
committee of one or more members to meet with the owner. Payment
plans may incorporate any assessments that accrue during the payment
plan period. Payment plans shall not impede an association's ability
to record a lien on the owner's separate interest to secure payment
of delinquent assessments. Additional late fees shall not accrue
during the payment plan period if the owner is in compliance with the
terms of the payment plan. In the event of a default on any payment
plan, the association may resume its efforts to collect the
delinquent assessments from the time prior to entering into the
payment plan.
(d) The amount of the assessment, plus any costs of collection,
late charges, and interest assessed in accordance with Section 1366,
shall be a lien on the owner's separate interest in the common
interest development from and after the time the association causes
to be recorded with the county recorder of the county in which the
separate interest is located, a notice of delinquent assessment,
which shall state the amount of the assessment and other sums imposed
in accordance with Section 1366, a legal description of the owner's
separate interest in the common interest development against which
the assessment and other sums are levied, and the name of the record
owner of the separate interest in the common interest development
against which the lien is imposed. The itemized statement of the
charges owed by the owner described in paragraph (2) of subdivision
(a) shall be recorded together with the notice of delinquent
assessment. In order for the lien to be enforced by nonjudicial
foreclosure as provided in subdivision (g), the notice of delinquent
assessment shall state the name and address of the trustee authorized
by the association to enforce the lien by sale. The notice of
delinquent assessment shall be signed by the person designated in the
declaration or by the association for that purpose, or if no one is
designated, by the president of the association. A copy of the
recorded notice of delinquent assessment shall be mailed by certified
mail to every person whose name is shown as an owner of the separate
interest in the association's records, and the notice shall be
mailed no later than 10 calendar days after recordation. Within 21
days of the payment of the sums specified in the notice of delinquent
assessment, the association shall record or cause to be recorded in
the office of the county recorder in which the notice of delinquent
assessment is recorded a lien release or notice of rescission and
provide the owner of the separate interest a copy of the lien release
or notice that the delinquent assessment has been satisfied. 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 for which the member or the
member's guests or tenants were responsible may become a lien against
the member's separate interest enforceable by the sale of the
interest under Sections 2924, 2924b, and 2924c, provided the
authority to impose a lien is set forth in the governing documents.
It is the intent of the Legislature not to contravene Section 2792.26
of Title 10 of the California Code of Regulations, as that section
appeared on January 1, 1996, for associations of subdivisions that
are being sold under authority of a subdivision public report,
pursuant to Part 2 (commencing with Section 11000) of Division 4 of
the Business and Professions Code.
(e) Except as indicated in subdivision (d), a monetary penalty
imposed by the association as a disciplinary measure for failure of a
member to comply with the governing instruments, except for the late
payments, may not be characterized nor treated in the governing
instruments as an assessment that may become a lien against the
member's subdivision separate interest enforceable by the sale of the
interest under Sections 2924, 2924b, and 2924c.
(f) A lien created pursuant to subdivision (d) shall be prior to
all other liens recorded subsequent to the notice of assessment,
except that the declaration may provide for the subordination thereof
to any other liens and encumbrances.
(g) An association may not voluntarily assign or pledge the
association's right to collect payments or assessments, or to enforce
or foreclose a lien to a third party, except when the assignment or
pledge is made to a financial institution or lender chartered or
licensed under federal or state law, when acting within the scope of
that charter or license, as security for a loan obtained by the
association; however, the foregoing provision may not restrict the
right or ability of an association to assign any unpaid obligations
of a former member to a third party for purposes of collection.
Subject to the limitations of this subdivision, after the expiration
of 30 days following the recording of a lien created pursuant to
subdivision (d), the lien may be enforced in any manner permitted by
law, including sale by the court, sale by the trustee designated in
the notice of delinquent assessment, or sale by a trustee substituted
pursuant to Section 2934a. Any sale by the trustee shall be
conducted in accordance with Sections 2924, 2924b, and 2924c
applicable to the exercise of powers of sale in mortgages and deeds
of trust. The fees of a trustee may not exceed the amounts prescribed
in Sections 2924c and 2924d, plus
the cost of service for either of the following:
(1) The notice of default pursuant to subdivision (j) of Section
1367.1.
(2) The decision of the board to foreclose upon the separate
interest of an owner as described in paragraph (3) of subdivision (c)
of Section 1367.4.
(h) Nothing in this section or in subdivision (a) of Section 726
of the Code of Civil Procedure prohibits actions against the owner of
a separate interest to recover sums for which a lien is created
pursuant to this section or prohibits an association from taking a
deed in lieu of foreclosure.
(i) If it is determined that a lien previously recorded against
the separate interest was recorded in error, the party who recorded
the lien shall, within 21 calendar days, record or cause to be
recorded in the office of the county recorder in which the notice of
delinquent assessment is recorded a lien release or notice of
rescission and provide the owner of the separate interest with a
declaration that the lien filing or recording was in error and a copy
of the lien release or notice of rescission.
(j) In addition to the requirements of Section 2924, a notice of
default shall be served by the association on the owner's legal
representative in accordance with the manner of service of summons in
Article 3 (commencing with Section 415.10) of Chapter 4 of Title 5
of Part 2 of the Code of Civil Procedure. The owner's legal
representative shall be the person whose name is shown as the owner
of a separate interest in the association's records, unless another
person has been previously designated by the owner as his or her
legal representative in writing and mailed to the association in a
manner that indicates that the association has received it.
(k) Upon receipt of a written request by an owner identifying a
secondary address for purposes of collection notices, the association
shall send additional copies of any notices required by this section
to the secondary address provided. The association shall notify
owners of their right to submit secondary addresses to the
association, at the time the association issues the pro forma
operating budget pursuant to Section 1365. The owner's request shall
be in writing and shall be mailed to the association in a manner that
shall indicate the association has received it. The owner may
identify or change a secondary address at any time, provided that, if
a secondary address is identified or changed during the collection
process, the association shall only be required to send notices to
the indicated secondary address from the point the association
receives the request.
(l) (1) An association that fails to comply with the procedures
set forth in this section shall, prior to recording a lien,
recommence the required notice process.
(2) Any costs associated with recommencing the notice process
shall be borne by the association and not by the owner of a separate
interest.
(m) This section only applies to liens recorded on or after
January 1, 2003.
(n) This section is subordinate to, and shall be interpreted in
conformity with, Section 1367.4.



1367.4. (a) Notwithstanding any law or any provisions of the
governing documents to the contrary, this section shall apply to
debts for assessments that arise on and after January 1, 2006.
(b) An association that seeks to collect delinquent regular or
special assessments of an amount less than one thousand eight hundred
dollars ($1,800), not including any accelerated assessments, late
charges, fees and costs of collection, attorney's fees, or interest,
may not collect that debt through judicial or nonjudicial
foreclosure, but may attempt to collect or secure that debt in any of
the following ways:
(1) By a civil action in small claims court, pursuant to Chapter
5.5 (commencing with Section 116.110) of Title 1 of the Code of Civil
Procedure. An association that chooses to proceed by an action in
small claims court, and prevails, may enforce the judgment as
permitted under Article 8 (commencing with Section 116.810) of Title
1 of the Code of Civil Procedure. The amount that may be recovered in
small claims court to collect upon a debt for delinquent assessments
may not exceed the jurisdictional limits of the small claims court
and shall be the sum of the following:
(A) The amount owed as of the date of filing the complaint in the
small claims court proceeding.
(B) In the discretion of the court, an additional amount to that
described in subparagraph (A) equal to the amount owed for the period
from the date the complaint is filed until satisfaction of the
judgment, which total amount may include accruing unpaid assessments
and any reasonable late charges, fees and costs of collection,
attorney's fees, and interest, up to the jurisdictional limits of the
small claims court.
(2) By recording a lien on the owner's separate interest upon
which the association may not foreclose until the amount of the
delinquent assessments secured by the lien, exclusive of any
accelerated assessments, late charges, fees and costs of collection,
attorney's fees, or interest, equals or exceeds one thousand eight
hundred dollars ($1,800) or the assessments secured by the lien are
more than 12 months delinquent. An association that chooses to record
a lien under these provisions, prior to recording the lien, shall
offer the owner and, if so requested by the owner, participate in
dispute resolution as set forth in Article 5 (commencing with Section
1363.810) of Chapter 4.
(3) Any other manner provided by law, except for judicial or
nonjudicial foreclosure.
(c) An association that seeks to collect delinquent regular or
special assessments of an amount of one thousand eight hundred
dollars ($1,800) or more, not including any accelerated assessments,
late charges, fees and costs of collection, attorney's fees, or
interest, or any assessments secured by the lien that are more than
12 months delinquent, may use judicial or nonjudicial foreclosure
subject to the following conditions:
(1) Prior to initiating a foreclosure on an owner's separate
interest, the association shall offer the owner and, if so requested
by the owner, participate in dispute resolution pursuant to the
association's "meet and confer" program required in Article 5
(commencing with Section 1363.810) of Chapter 4 or alternative
dispute resolution as set forth in Article 2 (commencing with Section
1369.510) of Chapter 7. The decision to pursue dispute resolution or
a particular type of alternative dispute resolution shall be the
choice of the owner, except that binding arbitration shall not be
available if the association intends to initiate a judicial
foreclosure.
(2) The decision to initiate foreclosure of a lien for delinquent
assessments that has been validly recorded shall be made only by the
board of directors of the association and may not be delegated to an
agent of the association. The board shall approve the decision by a
majority vote of the board members in an executive session. The board
shall record the vote in the minutes of the next meeting of the
board open to all members. The board shall maintain the
confidentiality of the owner or owners of the separate interest by
identifying the matter in the minutes by the parcel number of the
property, rather than the name of the owner or owners. A board vote
to approve foreclosure of a lien shall take place at least 30 days
prior to any public sale.
(3) The board shall provide notice by personal service in
accordance with the manner of service of summons in Article 3
(commencing with Section 415.10) of Chapter 4 of Title 5 of Part 2 of
the Code of Civil Procedure to an owner of a separate interest who
occupies the separate interest or to the owner's legal
representative, if the board votes to foreclose upon the separate
interest. The board shall provide written notice to an owner of a
separate interest who does not occupy the separate interest by
first-class mail, postage prepaid, at the most current address shown
on the books of the association. In the absence of written
notification by the owner to the association, the address of the
owner's separate interest may be treated as the owner's mailing
address.
(4) A nonjudicial foreclosure by an association to collect upon a
debt for delinquent assessments shall be subject to a right of
redemption. The redemption period within which the separate interest
may be redeemed from a foreclosure sale under this paragraph ends 90
days after the sale. In addition to the requirements of Section
2924f, a notice of sale in connection with an association's
foreclosure of a separate interest in a common interest development
shall include a statement that the property is being sold subject to
the right of redemption created in this paragraph.
(d) The limitation on foreclosure of assessment liens for amounts
under the stated minimum in this section does not apply to
assessments owed by owners of separate interests in timeshare
estates, as defined in subdivision (x) of Section 11112 of the
Business and Professions Code, or to assessments owed by developers.



1367.5. If it is determined through dispute resolution pursuant to
the association's "meet and confer" program required in Article 5
(commencing with Section 1363.810) of Chapter 4 or alternative
dispute resolution with a neutral third party pursuant to Article 2
(commencing with Section 1369.510) of Chapter 7 that an association
has recorded a lien for a delinquent assessment in error, the
association shall promptly reverse all late charges, fees, interest,
attorney's fees, costs of collection, costs imposed for the notice
prescribed in subdivision (a) of Section 1367.1, and costs of
recordation and release of the lien authorized under subdivision (b)
of Section 1367.4, and pay all costs related to the dispute
resolution or alternative dispute resolution.


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.
(b) Upon written request, an association shall, within 10 days of
the mailing or delivery of the request, provide the owner of a
separate interest with a copy of the requested items specified in
paragraphs (1) to (8), inclusive, of subdivision (a). The items
required to be made available pursuant to this section may be
maintained in electronic form and requesting parties shall have the
option of receiving them by electronic transmission or machine
readable storage media if the association maintains these items in
electronic form. The association may charge a reasonable fee for
this service based upon the association's actual cost to procure,
prepare, and reproduce the requested items.
(c) (1) Subject to the provisions of 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 amendments made to this subdivision by the act adding this
paragraph do not apply to a community service organization or
similar entity 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 satisfies
all of the following requirements:
(i) The community service organization or similar entity is not an
organization or entity described in subparagraph (A).
(ii) The community service organization or similar entity was
established and received a transfer fee prior to January 1, 2004.
(iii) On and after January 1, 2006, the community service
organization or similar 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
community service organization or similar 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.


1368.1. (a) Any rule or regulation of an association that
arbitrarily or unreasonably restricts an owner's ability to market
his or her interest in a common interest development is void.
(b) No association may adopt, enforce, or otherwise impose any
rule or regulation that does either of the following:
(1) Imposes an assessment or fee in connection with the marketing
of an owner's interest in an amount that exceeds the association's
actual or direct costs. That assessment or fee shall be deemed to
violate the limitation set forth in Section 1366.1.
(2) Establishes an exclusive relationship with a real estate
broker through which the sale or marketing of interests in the
development is required to occur. The limitation set forth in this
paragraph does not apply to the sale or marketing of separate
interests owned by the association or to the sale or marketing of
common areas by the association.
(c) For purposes of this section, "market" and "marketing" mean
listing, advertising, or obtaining or providing access to show the
owner's interest in the development.
(d) This section does not apply to rules or regulations made
pursuant to Section 712 or 713 regarding real estate signs.



1368.3. An association established to manage a common interest
development has standing to institute, defend, settle, or intervene
in litigation, arbitration, mediation, or administrative proceedings
in its own name as the real party in interest and without joining
with it the individual owners of the common interest development, in
matters pertaining to the following:
(a) Enforcement of the governing documents.
(b) Damage to the common area.
(c) Damage to a separate interest that the association is
obligated to maintain or repair.
(d) Damage to a separate interest that arises out of, or is
integrally related to, damage to the common area or a separate
interest that the association is obligated to maintain or repair.



1368.4. (a) In an action maintained by an association pursuant to
subdivision (b), (c), or (d) of Section 1368.3, the amount of damages
recovered by the association shall be reduced by the amount of
damages allocated to the association or its managing agents in direct
proportion to their percentage of fault based upon principles of
comparative fault. The comparative fault of the association or its
managing agents may be raised by way of defense, but shall not be the
basis for a cross-action or separate action against the association
or its managing agents for contribution or implied indemnity, where
the only damage was sustained by the association or its members. It
is the intent of the Legislature in enacting this subdivision to
require that comparative fault be pleaded as an affirmative defense,
rather than a separate cause of action, where the only damage was
sustained by the association or its members.
(b) In an action involving damages described in subdivision (b),
(c), or (d) of Section 1368.3, the defendant or cross-defendant may
allege and prove the comparative fault of the association or its
managing agents as a setoff to the liability of the defendant or
cross-defendant even if the association is not a party to the
litigation or is no longer a party whether by reason of settlement,
dismissal, or otherwise.
(c) Subdivisions (a) and (b) apply to actions commenced on or
after January 1, 1993.
(d) Nothing in this section affects a person's liability under
Section 1431, or the liability of the association or its managing
agent for an act or omission which causes damages to another.


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