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Davis–Stirling Common Interest Development Act

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The Davis–Stirling Common Interest Development Act is the popular name of the portion of the California Civil Code beginning with section 4000,[1] which governs condominium, cooperative, and planned unit development communities in California. It was authored by Assemblyman Lawrence W. "Larry" Stirling and enacted in 1985 by the California State Legislature. In 2012, the Act was comprehensively reorganized and recodified by Assembly Bill 805.[2]

Homeowner association

Under Davis–Stirling, a developer of a common interest development is able to create a homeowner association (HOA) to govern the development. As part of creating the HOA, the developer records a document known as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) against the units or parcels within the HOA with the county recorder.

Even though it is not a governmental entity, the HOA operates like one in some respects. As recognized by the Supreme Court of California, the Declaration of CC&Rs is the constitution of the HOA and is legally binding upon residents to the extent that it does not conflict with state or federal law.[3] CC&Rs, once properly recorded, are presumed valid until proven otherwise.[4] The California Courts of Appeal have explained the quasi-governmental nature of the HOA:

Indeed, the homeowners associations function almost 'as a second municipal government, regulating many aspects of [the homeowners'] daily lives.' [Citation.] " ' "[U]pon analysis of the association's functions, one clearly sees the association as a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government. As a 'mini-government,' the association provides to its members, in almost every case, utility services, road maintenance, street and common area lighting, and refuse removal. In many cases, it also provides security services and various forms of communication within the community. There is, moreover, a clear analogy to the municipal police and public safety functions...." ' [Citation.]" [Citation.] In short, homeowners associations, via their enforcement of the CC&R's, provide many beneficial and desirable services that permit a common interest development to flourish.[5]

The HOA's board may enact rules which are legally binding upon residents as long as they do not conflict with the CC&Rs or state or federal law. Board meetings, like the boards of government agencies, are generally open to HOA members, with some exceptions. As with government agencies, courts generally defer to the broad discretion HOAs enjoy in discharging their duties.[6]

The HOA is also allowed to charge regular fees to homeowners within the development (comparable to taxes). These are used for functions like paying for security guards (including, for gated communities, the operation of a gatehouse) and maintaining common areas like corridors, walkways, parking, landscaping, swimming pools, fitness centers, tennis courts, and so on. The HOA can levy fines or sue homeowners for damages and/or injunctive relief to enforce the HOA's rules and CC&Rs.

Background

The underlying justification for Davis–Stirling is that after the enactment of California Proposition 13 (1978), it became extremely difficult for both state and local government entities in California to raise taxes. With public services rapidly deteriorating by the mid-1980s, and with crime rates soaring throughout California, developers wanted to be able to ensure quality of life in new common interest developments. The obvious problem was that property tax revenue from newly built and sold homes (taxable at market value at time of sale under Proposition 13) might be diverted by cash-strapped governments to pay for providing services elsewhere (that is, for the benefit of homes whose time of sale was long ago and whose taxes could not be raised under Proposition 13). For large planned communities, other possible solutions included forming Mello-Roos community facilities districts or incorporating new cities altogether, but those solutions were neither practical nor cost-effective for small projects consisting of just a few houses or apartment buildings on land already under the jurisdiction of an existing city. Furthermore, developers by the 1980s now had experience with how early suburbs had evolved over the decades (with some residents engaging in activities that decreased neighborhood property values) and wanted to ensure that common interest developments would maintain a common look and lifestyle.[citation needed] Finally, although the state had enacted a Condominium Act in 1963, that act only applied to condominiums. By the mid-1980's, it was now clear that homeowners' associations might be suitable for other types of common interest developments.

Davis–Stirling establishes a unified statutory framework that regulates HOAs for all types of common interest developments. The HOA has the power to impose fees that are cycled back into the community for the community's benefit, and to enforce rules that maintain the "atmosphere" of the community.

Structural summary

  • General Provisions (§4000-§4190)
  • Application of Act(§4200-§4202)
  • Governing Documents(§4205-§4370)
  • Ownership and Transfer of Interests(§4500-§4650)
  • Property Use and Maintenance(§4700-§4790)
  • Association Governance(§4800-§5405)
  • Finances(§5500-§5580)
  • Assessments and Assessment Collection (§5600-§5740)
  • Insurance and Liability(§5800-§5810)
  • Dispute Resolution and Enforcement(§5850-§5985)
  • Construction Defect Litigation (§6000-§6150)

Revisions

As of January 1, 2014, Title 6 (commencing with Section 1350) of Part 4 of Division 2 of the Civil Code is repealed, effectively replaced by newly added Part 5 (commencing with Section 4000) to Division 4 of the Civil Code. The Davis–Stirling Act was completely renumbered and reorganized within the California Civil Code. The reorganization was intended to make the law easier to understand by implementing standardized language, more logical grouping of subjects, and shorter Civil Code sections.[7]

Most notable areas of change

  • Standardized rules of notice and delivery
  • Annual reports and disclosures
  • Conflicts of interest
  • Exclusive use common areas
  • Non-compliance
  • Liens
  • Reimbursement assessments
  • Temporary relocation

References

  1. ^ Cal. Civ. Code, §4000
  2. ^ Assem. Bill No. 805 (2011–2012 Reg. Sess.)
  3. ^ Villa De Las Palmas Homeowners Ass'n v. Terifaj (2004) 33 Cal.4th 73
  4. ^ Nahrstedt v. Lakeside Village Condominium Ass'n (1994) 8 Cal.4th 361
  5. ^ Villa Milano Homeowners Assn. v. Il Davorge (2000) 84 Cal.App.4th 819
  6. ^ Lamden v. La Jolla Clubdominium Homeowners Assn. (1999) 21 Cal.4th 249
  7. ^ Gottlieb, Sandra L Esq.; Noland, Alexander Esq.; Neal, Tracy Esq. "What You Need to Know: The New Davis–Stirling Act."
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