New 2014 Davis Stirling Act (Part 4)
CALIFORNIA CIVIL CODE SECTIONS 4000-6150 (PART 4)
5650.
ARTICLE 2. Assessment Payment and Delinquency
(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 subdivision (b), shall be a debt of the owner of the separate interest at the time the assessment or other sums are levied.
(b) 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.
(c) Associations are hereby exempted from interest-rate limitations imposed by ARTICLE XV of the California
Constitution, subject to the limitations of this section.
5655.
(a) Any payments made by the owner of a separate interest toward a debt described in subdivision (a) of Section
5650 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.
(b) 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.
(c) The association shall provide a mailing address for overnight payment of assessments. The address shall be provided in the annual policy statement.
5658.
(a) If a dispute exists between the owner of a separate interest and the association regarding any disputed charge
or sum levied by the association, including, but not limited to, an assessment, fine, penalty, late fee, collection cost, or monetary penalty imposed as a disciplinary measure, and the amount in dispute does not exceed the jurisdictional limits of the small claims court stated in Sections 116.220 and 116.221 of the Code of Civil Procedure, the owner of the separate interest may, in addition to pursuing dispute resolution pursuant to ARTICLE 3 (commencing with Section 5925) of CHAPTER 10, pay under protest the disputed amount and all other amounts levied, including any fees and reasonable costs of collection, reasonable attorney’s fees, late charges, and interest, if any, pursuant to subdivision (b) of Section
5650, and commence an action in small claims court pursuant to CHAPTER 5.5 (commencing with Section 116.110) of
Title 1 of the Code of Civil Procedure.
(b) Nothing in this section shall impede an association’s ability to collect delinquent assessments as provided in this ARTICLE or ARTICLE 3 (commencing with Section 5700).
5660. 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 Section 5650, the association shall notify the owner of record in writing by certified mail of the following:
(a) 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 5205, 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.”
(b) 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.
(c) 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.
(d) The right to request a meeting with the board as provided in Section 5665.
(e) 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 2 (commencing with Section
5900) of CHAPTER 10.
(f) The right to request alternative dispute resolution with a neutral third party pursuant to ARTICLE 3 (commencing with Section 5925) of CHAPTER 10 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.
5665.
(a) 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 of the Business and Professions Code, may submit a written request to meet with the board to discuss a payment plan for the debt noticed pursuant to Section 5660. The association shall provide the owners the standards for payment plans, if any exists.
(b) 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 directors to meet with the owner.
(c) Payment plans may incorporate any assessments that accrue during the payment plan period. Additional late fees shall not accrue during the payment plan period if the owner is in compliance with the terms of the payment plan.
(d) 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.
(e) 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.
5670. 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 2 (commencing with Section 5900) of CHAPTER 10.
5673. 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 and may not be delegated to an agent of the association. The board shall approve the decision by a majority vote of the directors in an open meeting. The board shall record the vote in the minutes of that meeting.
5675.
(a) The amount of the assessment, plus any costs of collection, late charges, and interest assessed in accordance
with subdivision (b) of Section 5650, 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 subdivision (b) of Section 5650, 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.
(b) The itemized statement of the charges owed by the owner described in subdivision (b) of Section 5660 shall be recorded together with the notice of delinquent assessment.
(c) In order for the lien to be enforced by nonjudicial foreclosure as provided in Sections 5700 to 5710, inclusive, the notice of delinquent assessment shall state the name and address of the trustee authorized by the association to enforce the lien by sale.
(d) 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.
(e) 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.
5680. A lien created pursuant to Section 5675 shall be prior to all other liens recorded subsequent to the notice of delinquent assessment, except that the declaration may provide for the subordination thereof to any other liens and encumbrances.
5685.
(a) 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.
(b) 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.
(c) If it is determined 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 Section 5660, and costs of recordation and release of the lien authorized under subdivision (b) of Section
5720, and pay all costs related to any related dispute resolution or alternative dispute resolution.
5690. An association that fails to comply with the procedures set forth in this ARTICLE shall, prior to recording a lien, recommence the required notice process. Any costs associated with recommencing the notice process shall be borne by the association and not by the owner of a separate interest.
5700.
ARTICLE 3. Assessment Collection
(a) Except as otherwise provided in this ARTICLE, after the expiration of 30 days following the recording of a lien
created pursuant to Section 5675, 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.
(b) Nothing in ARTICLE 2 (commencing with Section 5650) 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 ARTICLE 2 (commencing with Section 5650) or prohibits an association from taking a deed in lieu of foreclosure.
5705.
(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) 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 2 (commencing with Section 5900) of CHAPTER 10 or alternative dispute resolution as set forth in ARTICLE 3 (commencing with Section 5925) of CHAPTER 10. 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.
(c) The decision to initiate foreclosure of a lien for delinquent assessments that has been validly recorded shall be made only by the board and may not be delegated to an agent of the association. The board shall approve the decision by a majority vote of the directors 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.
(d) 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.
5710.
(a) 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.
(b) In addition to the requirements of Section 2924, the association shall serve a notice of default on the person named as the owner of the separate interest in the association’s records or, if that person has designated a legal representative pursuant to this subdivision, on that legal representative. Service shall be 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. An owner may designate a legal representative in a writing that is mailed to the association in a manner that indicates that the association has received it.
(c) 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 (b).
(2) The decision of the board to foreclose upon the separate interest of an owner as described in subdivision (d) of
Section 5705.
5715.
(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) 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 section.
5720.
(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 Part 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 CHAPTER 5.5 of Title 1 of Part 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 2 (commencing with Section 5900) of CHAPTER 10.
(3) Any other manner provided by law, except for judicial or nonjudicial foreclosure.
(c) The limitation on foreclosure of assessment liens for amounts under the stated minimum in this section does not apply to any of the following:
(1) Assessments secured by a lien that are more than 12 months delinquent.
(2) Assessments owed by owners of separate interests in time-share estates, as defined in subdivision (x) of
Section 11212 of the Business and Professions Code. (3) Assessments owed by the developer.
5725.
(a) 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 area and facilities caused by a member or the member’s guest or tenant 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.
(b) A monetary penalty imposed by the association as a disciplinary measure for failure of a member to comply with the governing documents, except for the late payments, may not be characterized nor treated in the governing documents as an assessment that may become a lien against the member’s separate interest enforceable by the sale of the interest under Sections 2924, 2924b, and 2924c.
5730.
(a) The annual policy statement, prepared pursuant to Section 5310, shall include the following notice, in at least
12-point type:
“NOTICE ASSESSMENTS AND FORECLOSURE
This notice outlines some of the rights and responsibilities of owners of property in common interest developments and the associations that manage them. Please refer to the sections of the Civil Code indicated for further information. A portion of the information in this notice applies only to liens recorded on or after January 1, 2003. You may wish to consult a lawyer if you dispute an assessment.
ASSESSMENTS AND FORECLOSURE
Assessments become delinquent 15 days after they are due, unless the governing documents provide for a longer time. The failure to pay association assessments may result in the loss of an owner’s property through foreclosure. Foreclosure may occur either as a result of a court action, known as judicial foreclosure, or without court action, often referred to as nonjudicial foreclosure. For liens recorded on and after January 1, 2006, an association may not use judicial or nonjudicial foreclosure to enforce that lien if the amount of the delinquent assessments or dues, exclusive of any accelerated assessments, late charges, fees, attorney’s fees, interest, and costs of collection, is less than one thousand eight hundred dollars ($1,800). For delinquent assessments or dues in excess of one thousand eight hundred dollars ($1,800) or more than 12 months delinquent, an association may use judicial or nonjudicial foreclosure subject to the conditions set forth in ARTICLE 3 (commencing with Section 5700) of CHAPTER 8 of Part 5 of Division 4 of the Civil Code. When using judicial or nonjudicial foreclosure, the association records a lien on the owner’s property. The owner’s property may be sold to satisfy the lien if the amounts secured by the lien are not paid. (Sections 5700 through 5720 of the Civil Code, inclusive)
In a judicial or nonjudicial foreclosure, the association may recover assessments, reasonable costs of collection, reasonable attorney’s fees, late charges, and interest. The association may not use nonjudicial foreclosure to collect fines or penalties, except for costs to repair common area damaged by a member or a member’s guests, if the governing documents provide for this. (Section 5725 of the Civil Code)
The association must comply with the requirements of ARTICLE 2 (commencing with Section 5650) of CHAPTER 8 of Part
5 of Division 4 of the Civil Code when collecting delinquent assessments. If the association fails to follow these requirements, it may not record a lien on the owner’s property until it has satisfied those requirements. Any additional costs that result from satisfying the requirements are the responsibility of the association. (Section 5675 of the Civil Code)
At least 30 days prior to recording a lien on an owner’s separate interest, the association must provide the owner of record with certain documents by certified mail, including a description of its collection and lien enforcement procedures and the method of calculating the amount. It must also provide an itemized statement of the charges owed by the owner. An owner has a right to review the association’s records to verify the debt. (Section 5660 of the Civil Code)
If a lien is recorded against an owner’s property in error, the person who recorded the lien is required to record a lien release within 21 days, and to provide an owner certain documents in this regard. (Section 5685 of the Civil Code)
The collection practices of the association may be governed by state and federal laws regarding fair debt collection. Penalties can be imposed for debt collection practices that violate these laws.
PAYMENTS
When an owner makes a payment, the owner may request a receipt, and the association is required to provide it. On the receipt, the association must indicate the date of payment and the person who received it. The association must inform owners of a mailing address for overnight payments. (Section 5655 of the Civil Code)
An owner may, but is not obligated to, pay under protest any disputed charge or sum levied by the association, including, but not limited to, an assessment, fine, penalty, late fee, collection cost, or monetary penalty imposed as a disciplinary measure, and by so doing, specifically reserve the right to contest the disputed charge or sum in court or otherwise.
An owner may dispute an assessment debt by submitting a written request for dispute resolution to the association as set forth in ARTICLE 2 (commencing with Section 5900) of CHAPTER 10 of Part 5 of Division 4 of the Civil Code. In addition, an association may not initiate a foreclosure without participating in alternative dispute resolution with a neutral third party as set forth in ARTICLE 3 (commencing with Section 5925) of CHAPTER 10 of Part 5 of Division 4 of the Civil Code, if so requested by the owner. Binding arbitration shall not be available if the association intends to initiate a judicial foreclosure. An owner is not liable for charges, interest, and costs of collection, if it is established that the assessment was paid properly on time. (Section 5685 of the Civil Code)
MEETINGS AND PAYMENT PLANS
An owner of a separate interest that is not a time-share interest may request the association to consider a payment plan to satisfy a delinquent assessment. The association must inform owners of the standards for payment plans, if any exists. (Section 5665 of the Civil Code)
The board must meet with an owner who makes a proper written request for a meeting to discuss a payment plan when the owner has received a notice of a delinquent assessment. These payment plans must conform with the payment plan standards of the association, if they exist. (Section 5665 of the Civil Code)”
(b) An association distributing the notice required by this section to an owner of an 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 of the Business and Professions Code may delete from the notice described in subdivision (a) the portion regarding meetings and payment plans.
5735.
(a) 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.
(b) Nothing in subdivision (a) restricts the right or ability of an association to assign any unpaid obligations of a former member to a third party for purposes of collection.
5740.
(a) Except as otherwise provided, this article applies to a
lien created on or after January 1, 2003.
(b) A lien created before January 1, 2003, is governed by the law
in existence at the time the lien was created.
CHAPTER 9. INSURANCE AND LIABILITY
5800.
(a) A volunteer officer or volunteer director of an association that 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 that 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 amounts:
(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, or who received either direct or indirect compensation as an employee from the declarant, or from a financial institution that purchased a separate interest 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.
5805.
(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 area 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, 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 that 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.
5810. The association shall, as soon as reasonably practicable, provide individual notice pursuant to Section 4040 to all
and are not immediately renewed, restored, or replaced, or if there is a significant change, such as a reduction in coverage or limits or an increase in the deductible, as to any of those policies. If the association receives any notice of nonrenewal of a policy described in the annual budget report pursuant to Section 5300, the association shall immediately notify its members if replacement coverage will not be in effect by the date the existing coverage will lapse.
CHAPTER 10. DISPUTE RESOLUTION AND ENFORCEMENT
5850.
ARTICLE 1. Discipline and Cost Reimbursement
(a) If an association adopts or has adopted a policy imposing any monetary penalty, including any fee, on any
association member for a violation of the governing documents, including any monetary penalty relating to the activities of a guest or tenant of the member, the board shall adopt and distribute to each member, in the annual policy statement prepared pursuant to Section 5310, a schedule of the monetary penalties that may be assessed for those violations, which shall be in accordance with authorization for member discipline contained in the governing documents.
(b) Any new or revised monetary penalty that is adopted after complying with subdivision (a) may be included in a supplement that is delivered to the members individually, pursuant to Section 4040.
(c) A monetary penalty for a violation of the governing documents shall not exceed the monetary penalty stated in the schedule of monetary penalties or supplement that is in effect at the time of the violation.
(d) An association shall provide a copy of the most recently distributed schedule of monetary penalties, along with any applicable supplements to that schedule, to any member upon request.
5855.
(a) When the board is to meet to consider or impose discipline upon a member, or to impose a monetary charge as
a means of reimbursing the association for costs incurred by the association in the repair of damage to common area and facilities caused by a member or the member’s guest or tenant, the board shall notify the member in writing, by either personal delivery or individual delivery pursuant to Section 4040, at least 10 days prior to the meeting.
(b) The notification shall contain, at a minimum, the date, time, and place of the meeting, the nature of the alleged
violation for which a member may be disciplined or the nature of the damage to the common area and facilities for which a monetary charge may be imposed, and a statement that the member has a right to attend and may address the board at the meeting. The board shall meet in executive session if requested by the member.
(c) If the board imposes discipline on a member or imposes a monetary charge on the member for damage to the common area and facilities, the board shall provide the member a written notification of the decision, by either personal delivery or individual delivery pursuant to Section 4040, within 15 days following the action.
(d) A disciplinary action or the imposition of a monetary charge for damage to the common area shall not be effective against a member unless the board fulfills the requirements of this section.
5865. Nothing in Section 5850 or 5855 shall be construed to create, expand, or reduce the authority of the board to impose monetary penalties on a member for a violation of the governing documents.
5900.
ARTICLE 2. Internal Dispute Resolution
(a) This ARTICLE applies to a dispute between an association and a member involving their rights, duties, or
liabilities under this act, under the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code), or under the governing documents of the common interest development or association.
(b) This ARTICLE supplements, and does not replace, ARTICLE 3 (commencing with Section 5925), relating to alternative dispute resolution as a prerequisite to an enforcement action.
5905.
(a) An association shall provide a fair, reasonable, and expeditious procedure for resolving a dispute within the
scope of this ARTICLE.
(b) In developing a procedure pursuant to this ARTICLE, an association shall make maximum, reasonable use of available local dispute resolution programs involving a neutral third party, including low-cost mediation programs such as those listed on the Internet Web sites of the Department of Consumer Affairs and the United States Department of Housing and Urban Development.
(c) If an association does not provide a fair, reasonable, and expeditious procedure for resolving a dispute within the scope of this ARTICLE, the procedure provided in Section 5915 applies and satisfies the requirement of subdivision (a).
5910. A fair, reasonable, and expeditious dispute resolution procedure shall at a minimum satisfy all of the following requirements:
(a) The procedure may be invoked by either party to the dispute. A request invoking the procedure shall be in
writing.
association to act on a request invoking the procedure.
(c) If the procedure is invoked by a member, the association shall participate in the procedure.
(d) If the procedure is invoked by the association, the member may elect not to participate in the procedure. If the member participates but the dispute is resolved other than by agreement of the member, the member shall have a right of appeal to the board.
(e) A resolution of a dispute pursuant to the procedure, which is not in conflict with the law or the governing documents, binds the association and is judicially enforceable. An agreement reached pursuant to the procedure, which is not in conflict with the law or the governing documents, binds the parties and is judicially enforceable.
(f) The procedure shall provide a means by which the member and the association may explain their positions. (g) A member of the association shall not be charged a fee to participate in the process.
5915.
(a) This section applies to an association that does not otherwise provide a fair, reasonable, and expeditious
dispute resolution procedure. The procedure provided in this section is fair, reasonable, and expeditious, within the meaning of this ARTICLE.
(b) Either party to a dispute within the scope of this ARTICLE may invoke the following procedure:
(1) The party may request the other party to meet and confer in an effort to resolve the dispute. The request shall be in writing.
(2) A member of an association may refuse a request to meet and confer. The association may not refuse a request to meet and confer.
(3) The board shall designate a director to meet and confer.
(4) The parties shall meet promptly at a mutually convenient time and place, explain their positions to each other, and confer in good faith in an effort to resolve the dispute.
(5) A resolution of the dispute agreed to by the parties shall be memorialized in writing and signed by the parties, including the board designee on behalf of the association.
(c) An agreement reached under this section binds the parties and is judicially enforceable if both of the following conditions are satisfied:
(1) The agreement is not in conflict with law or the governing documents of the common interest development or
association.
(2) The agreement is either consistent with the authority granted by the board to its designee or the agreement is ratified by the board.
(d) A member may not be charged a fee to participate in the process.
5920. The annual policy statement prepared pursuant to Section 5310 shall include a description of the internal dispute resolution process provided pursuant to this ARTICLE.
ARTICLE 3. Alternative Dispute Resolution Prerequisite to Civil Action
5925. As used in this ARTICLE:
(a) “Alternative dispute resolution” means mediation, arbitration, conciliation, or other nonjudicial procedure that involves a neutral party in the decisionmaking process. The form of alternative dispute resolution chosen pursuant to this ARTICLE may be binding or nonbinding, with the voluntary consent of the parties.
(b) “Enforcement action” means a civil action or proceeding, other than a cross-complaint, for any of the following purposes:
(1) Enforcement of this act.
(2) Enforcement of the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of
Division 2 of Title 1 of the Corporations Code).
(3) Enforcement of the governing documents.
5930.
(a) An association or a member may not file an enforcement action in the superior court unless the parties have
endeavored to submit their dispute to alternative dispute resolution pursuant to this ARTICLE.
(b) This section applies only to an enforcement action that is solely for declaratory, injunctive, or writ relief, or for that relief in conjunction with a claim for monetary damages not in excess of the jurisdictional limits stated in Sections
116.220 and 116.221 of the Code of Civil Procedure.
(c) This section does not apply to a small claims action.
(d) Except as otherwise provided by law, this section does not apply to an assessment dispute.
5935.
(a) Any party to a dispute may initiate the process required by Section 5930 by serving on all other parties to the
dispute a Request for Resolution. The Request for Resolution shall include all of the following: (1) A brief description of the dispute between the parties.
(2) A request for alternative dispute resolution.
(3) A notice that the party receiving the Request for Resolution is required to respond within 30 days of receipt or the request will be deemed rejected.
(4) If the party on whom the request is served is the member, a copy of this ARTICLE.
(b) Service of the Request for Resolution shall be by personal delivery, first-class mail, express mail, facsimile transmission, or other means reasonably calculated to provide the party on whom the request is served actual notice of the request.
(c) A party on whom a Request for Resolution is served has 30 days following service to accept or reject the request. If a party does not accept the request within that period, the request is deemed rejected by the party.
5940.
(a) If the party on whom a Request for Resolution is served accepts the request, the parties shall complete the
alternative dispute resolution within 90 days after the party initiating the request receives the acceptance, unless this period is extended by written stipulation signed by both parties.
(b) CHAPTER 2 (commencing with Section 1115) of Division 9 of the Evidence Code applies to any form of alternative dispute resolution initiated by a Request for Resolution under this ARTICLE, other than arbitration.
(c) The costs of the alternative dispute resolution shall be borne by the parties.
5945. If a Request for Resolution is served before the end of the applicable time limitation for commencing an enforcement action, the time limitation is tolled during the following periods:
(a) The period provided in Section 5935 for response to a Request for Resolution.
(b) If the Request for Resolution is accepted, the period provided by Section 5940 for completion of alternative dispute resolution, including any extension of time stipulated to by the parties pursuant to Section 5940.
5950.
(a) At the time of commencement of an enforcement action, the party commencing the action shall file with the
initial pleading a certificate stating that one or more of the following conditions are satisfied:
(1) Alternative dispute resolution has been completed in compliance with this ARTICLE.
(2) One of the other parties to the dispute did not accept the terms offered for alternative dispute resolution. (3) Preliminary or temporary injunctive relief is necessary.
(b) Failure to file a certificate pursuant to subdivision (a) is grounds for a demurrer or a motion to strike unless the court finds that dismissal of the action for failure to comply with this ARTICLE would result in substantial prejudice to one of the parties.
5955.
(a) After an enforcement action is commenced, on written stipulation of the parties, the matter may be referred to
alternative dispute resolution. The referred action is stayed. During the stay, the action is not subject to the rules implementing subdivision (c) of Section 68603 of the Government Code.
(b) The costs of the alternative dispute resolution shall be borne by the parties.
5960. In an enforcement action in which attorney’s fees and costs may be awarded, the court, in determining the amount of the award, may consider whether a party’s refusal to participate in alternative dispute resolution before commencement of the action was reasonable.
5965.
(a) An association shall annually provide its members a summary of the provisions of this ARTICLE that
specifically references this ARTICLE. The summary shall include the following language:
“Failure of a member of the association to comply with the alternative dispute resolution requirements of Section 5930 of the Civil Code may result in the loss of the member’s right to sue the association or another member of the association regarding enforcement of the governing documents or the applicable law.”
(b) The summary shall be included in the annual policy statement prepared pursuant to Section 5310.
5975.
ARTICLE 4. Civil Action
(a) The covenants and restrictions in the declaration shall be enforceable equitable servitudes, unless
unreasonable, and shall inure to the benefit of and bind all owners of separate interests in the development. Unless the declaration states otherwise, these servitudes may be enforced by any owner of a separate interest or by the association, or by both.
(b) A governing document other than the declaration may be enforced by the association against an owner of a separate interest or by an owner of a separate interest against the association.
(c) In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.
5980. An association 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 members, 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.
5985.
(a) In an action maintained by an association pursuant to subdivision (b), (c), or (d) of Section 5980, 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 5980, 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 that causes damages to another.
