TERMINOLOGY
Statutory Law. Bills (proposed changes to the law) are introduced into the legislature in Sacramento. Once a bill has been approved by both houses of the legislature (the Assembly and Senate) and signed by the Governor, a bill becomes a statute or "statutory law." The Davis-Stirling Act (Civ. Code §§4000-6150) is an example of statutory law. Regulatory laws are adopted by executive agencies based on statutes. Ordinances are passed by counties and cities.
Enrolled. A bill that passes both houses is sent for proofreading for consistency before being sent to the Governor for approval.
Transmitted to Governor. The governor must sign or veto legislation within 10 days after transmittal, or it becomes law without his/her signature. For bills transmitted after session adjournment, the governor must act within 30 days after the end of the session, or the legislation becomes law without being signed.
Chaptered. A bill is "chaptered" once it is signed by the Governor. It becomes law January 1 of the following year unless it contains an urgency clause (takes effect immediately) or specifies an effective date.
2019 BILLS
AB 5. Employee vs Contractor Classification. (Chaptered) This bill codifies the strict "ABC" test for employee versus independent contractor classification adopted by the California Supreme Court in Dynamex Operations West, Inc. v. Superior Court. All workers are presumptively considered employees and may only be classified as independent contractors if the hiring business demonstrates the worker satisfies each of three conditions: (i) the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact, (ii) the worker performs work that is outside the usual course of the hiring entity's business, and (iii) the worker is customarily engaged in an independently established trade, occupation, or business. The hiring entity's failure to prove any one of these three prerequisites will be sufficient in itself to establish that the worker is an employee, rather than independent contractor.
AB 38. Defensible Space Inspections. Beginning July 1, 2021, a seller of real property located in a High or Very High Fire Hazard Severity Zone must provide the buyer with documentation stating the property is in compliance with defensible space requirements. It requires sellers of property in high fire zones to disclose to buyers their home's vulnerability to flying embers.
AB 446. Discrimination: Victims of Domestic Violence. (Died) This bill requires the inclusion of “victim of abuse” disclosure/stamp on the first/cover page of CC&Rs:
If this document contains any restriction based on race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, familial status, marital status, victim of abuse status, disability, genetic information, national origin, source of income as defined in subdivision (p) of Section 12955, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to Section 12956.2 of the Government Code. Lawful restrictions under state and federal law on the age of occupants in senior housing or housing for older persons shall not be construed as restrictions based on familial status.
AB 670. Accessory Dwelling Units. (Chaptered) This bill voids any restrictions that prohibit the construction of accessory dwelling units or junior accessory dwelling units. An “accessory dwelling unit” is a second unit on a lot, either detached or contained within the walls of the house on the lot, up to 1,200 square feet, and including cooking, sleeping, and bathroom facilities. Accessory dwelling units may also have relaxed setback and parking requirements. A “junior accessory dwelling unit” may be up to 500 square feet and must have an outside entrance and cooking facilities, but may share bathroom facilities with the main house on the lot.
ADU companion bills signed by the Governor include:
AB 68 makes major changes to facilitate the development of more ADUs and address barriers to building. The bill reduces barriers to ADU approval and construction, which will increase production of these low-cost, energy-efficient units and add to California’s affordable housing supply.
AB 587 provides a narrow exemption for affordable housing organizations to sell deed-restricted land to eligible low-income homeowners.
AB 671 requires local governments’ housing plans to encourage affordable ADU rentals and requires the state to develop a list of state grants and financial incentives for affordable ADUs.
AB 881 removes impediments to ADU construction by restricting local jurisdictions’ permitting criteria, clarifying that ADUs must receive streamlined approval if constructed in existing garages, and eliminating local agencies’ ability to require owner-occupancy for five years.
SB 13 creates a tiered fee structure which charges ADUs more fairly based on their size and location. The bill also addresses other barriers by lowering the application approval timeframe, creating an avenue to get unpermitted ADUs up to code, and enhancing an enforcement mechanism allowing the state to ensure that localities are following ADU statute.
AB 885. Natural Disaster Property Tax Relief. (Vetoed) Where real property has been damaged or destroyed by misfortune or calamity, excludes from the definition of “newly constructed” and “new construction” any timely reconstruction of the real property, or portion thereof, where the property after reconstruction is substantially equivalent to the property prior to damage or destruction, base year property taxes do not change.
SB 222: Discrimination: Veteran or Military Status. (Chaptered) Existing law declares that housing discrimination on the basis of race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, or genetic information is against public policy. This bill would declare that housing discrimination on the basis of veteran or military status is against public policy. Existing law requires a county recorder who provides a copy of a declaration, governing document, or deed to any person to place a cover page or stamp on the first page of the previously recorded document stating that if the document contains any restriction based on certain characteristics, that the restriction violates state and federal fair housing laws and is void, and may be removed. This bill would require the specified language in the cover page or stamp to include the characteristic of veteran or military status.
SB 234. Family Daycare Homes. (Chaptered) The bill extends the protection that is already applicable to small family daycare homes (8 children) to large family daycare homes (14 children). A large family daycare home is to be treated as a residential use of property. CC&Rs can’t contain restrictions related to the use or occupancy of the property as a family daycare home. This applies to daycares in condominium units, and townhouses as well as single family detached homes. It also prohibits refusal to sell or rent to a daycare provider. The definition of a “family daycare home” is a facility that regularly provides care, protection, and supervision for 14 or fewer children, in the provider’s own home, for periods of less than 24 hours per day, while the parents or guardians are away, and is either a large family daycare home or a small family daycare home.
SB 323. Elections & Director Qualifications. (Chaptered) A variation of this bill was vetoed last year by Governor Brown. This bill requires extensive changes to election rules dealing with mandatory and permissive candidate qualifications, a longer election cycle, nomination procedures, who may serve as inspectors of election, verification of voter and candidate information, the inclusion of email addresses in the membership list, and the inspection and retention of election materials.
- Must adopt new election rules;
- Create candidate registration list and voter list and allow member verification at least 30 days before ballots are distributed;
- Send nomination procedures at least 30 days before nomination deadline;
- Candidates must be members. OPTIONAL: (i) current assessments, (ii) no co-owners, (iii) member >1 year, (iv) criminal conviction prevents fidelity bond;
- Cannot suspend voting rights;
- Must allow someone with a general power of attorney to vote for a member;
- May not amend election rules less than 90 days before an election;
- Must use independent inspectors of election; and
- Email addresses now part of membership list.
The bill makes members' email addresses part of the membership list available to all members. It requires elections to be held at minimum every four years. It provides that when a court finds that election procedures were not adopted or adhered to, it shall void the election results unless the association established that its noncompliance did not affect the election results. It allows a member to be awarded attorneys' fees for consulting an attorney for small claims court.
SB 326. Balcony Inspections; CC&R Restrictions on Construction Defect Actions. (Chaptered) This bill does the following:
- Starting in 2025, condominium associations must have visual inspections of load-bearing components (six feet above ground, supported entirely or substantially by wood) and associated waterproofing systems every nine years. An inspector must submit a report to the board providing the current physical condition and remaining useful life of the load-bearing components and associated waterproofing systems.
- Inspection obligations apply only to buildings with three or more multifamily dwelling units.
- The declarant or developer of a condominium project must submit a complete set of architectural and structural plans and specifications to an association for any buildings containing exterior elevated elements, as specified.
- Voids developer imposed CC&R provisions requiring a vote of the membership to initiate an action against the developer for construction defects as well as any provision that restricts the board's authority to retain legal counsel or incur expenses to pursue a claim.
SB 434. Managing Agent Production Records upon Termination. (Two-Year Bill) This bill would require a managing agent whose management agreement has been terminated to produce client property and client records within a specified period of time pursuant to a written request by a common interest development association, except as specified. The bill would define “client property” and “client records” for purposes of those provisions.
SB 652. Entry doors: Display of Religious Items. (Chaptered) This bill would, with certain exceptions, prohibit restrictions on the display of religious items on an entry door or entry door frame of a dwelling.
SB 754. Board Members: Election by Acclamation. (Chaptered) This bill amends Section 5100 of the Civil Code and Section 7522 of the Corporations Code to require, for associations including 6,000 or more units, when the number of director nominees at the close of the nomination period is not more than the number of vacant director positions on the board, that the director nominees be considered elected by acclamation, subject to board's satisfaction of specified notice requirements to provide individual notice of the election and the procedure for nominating candidates at least 30 days before the close of nominations. It requires disqualification of non-members from candidacy for the Board, except developers as permitted by DRE and the governing documents. Other candidate disqualification provisions are the same or similar to portions of SB 323.
SB 778 . Sexual Harassment Training Deadline. In 2018, SB 1343 mandated sexual harassment training for all employers with 5 or more employees. This includes community associations. The deadline for compliance was January 1, 2020. This year’s SB 778 pushed the training deadline back one year, to January 1, 2021, and provided that “an employer who has provided this training and education to an employee in 2019 is not required to provide refresher training and education again until two years thereafter.”
2019 CASE LAW
Case Law Defined. Case law is created by judicial decisions in California's appellate courts and supreme court. Statutory law demands or prohibits certain acts. Case law interprets statutory law. The cases also explain how the justices arrived at their particular conclusions. If published, their rulings serve as precedence for cases that follow.
Black Sky Capital v. Cobb. The California Supreme Court held that the plain wording of Code Civ. Proc. §580(d) barring a deficiency judgment after a nonjudicial foreclosure sale applied only to the lien being foreclosed and no others.
Basave De Guillen v. Highland Greens HOA of Buena Park. Assessment liens do not include amounts assessed after the lien records. In other words, post-lien assessments are unsecured and, therefore, dischargeable (avoidable) in bankruptcy.
Curto v. Country Place. Associations cannot segregate pool swim times based on gender since it amounts to sex discrimination in violation of the Federal Fair Housing Act. [Supreme Court granted review of the appellate decision.]
Eisen v. Tavangarian. Expiration of architectural controls does not end members' ability to remodel their homes. It does however, end view protection restrictions. CC&R language prohibiting the "erection" of a structure does not prohibit "alteration" of an existing structure.
Obduskey v. McCarthy Holthus. A law firm that sends a letter in connection with a nonjudicial foreclosure proceeding is not acting as a "debt collector" under the Fair Debt Collection Practices Act (FDCPA). "... but for §1692f(6), those who engage in only nonjudicial foreclosure proceedings are not debt collectors within the meaning of the [Fair Debt Collection Practices] Act." On judicial foreclosures the Court stated: "And whether those who judicially enforce mortgages fall within the scope of the primary definition is a question we can leave for another day. See 879 F. 3d, at 1221–1222 (noting that the availability of a deficiency judgment is a potentially relevant distinction between judicial and nonjudicial foreclosures)."
Orchard Homes v. Orchard Alliance. Voter apathy is not a requirement for a petition seeking court approval of CC&Rs under Civil Code §4275.
Ranch at the Falls LLC v. O’Neal. The trial court ruled in favor of plaintiff, finding it was entitled to an express easement (or in the alternative a prescriptive easement) and an equitable easement over all private streets in a gated community and express and equitable easements over a homeowners lot in an adjacent community. The appellate court found the trial court erred on several points. One was that the individual homeowners within the gated community who owned the private streets were indispensable parties to the lawsuit. Another was that plaintiff did not establish the requirements for prescriptive easement over the private streets. The trial court also failed to make the necessary findings to support equitable easement.
Sands v. Walnut Gardens. Plaintiffs sued the association for a pipe on the roof that broke causing water damage to their bedroom. The trial court granted a nonsuit in favor of the association. The appellate court reversed. The CC&Rs required the association to keep the project in a “first class condition.” Witnesses testified the association failed to perform preventative maintenance and roof pipes had not been inspected or maintained in years.
UNPUBLISHED OPINIONS
The following cases are unpublished opinions and are not binding precedent. However, they give insight on how future courts might deal with similar issues.
Adams v. Newport Crest. The opinion involves the 5th appeal between the owner, Kristine Adams, and the association regarding an action to enforce a settlement agreement between the owner and association. The only good nugget from this case is the statement that an action to enforce a settlement agreement does not involve breach of fiduciary claims since the relationship between the parties is as two parties in a contract.
Baldwin v. Woodside 05S, LP. Where an arbitration agreement is silent on what can be arbitrated, the court will decide the scope of the agreement. Any conditions precedent and other prerequisites to arbitration are decided by the arbitrator.
Benlloch v. Johnson. The association paid the legal fees to obtain a restraining order to protect a director from a homeowner who was harassing the director. The court issued a restraining order and awarded attorney's fees to the director. The homeowner appealed claiming the association was not legally authorized to cover the cost of the director's litigation. The court of appeals disagreed and upheld the award.
Bertoli v. Dennis. This is a covenant interpretation case. In this case, certain owners argued that the recorded covenants didn’t give voting rights to owners of undeveloped parcels. The court rejected that argument and concluded the recorded covenants the correct interpretation was each owner had one vote for each parcel it owned, regardless of whether the parcel was developed or not.
Chen v. Summitpointe. The issue in this case is largely procedural, whether an interlocutory order granting permanent injunctive relief is appealable. The appellate court recognized the authority is split, but determined the interlocutory orders were appealable and could also be treated as a writ of mandate. The underlying issue was a dispute about the homeowner’s planned landscaping project. At a court ordered settlement, the parties reached an agreement regarding the landscaping of the homeowner’s lot. However, the agreement was based on an incorrect assumption on both parties’ parts as to the location of the property line. When it was subsequently discovered that the property line between the homeowner’s lot and the common area was much closer to the homeowner’s residence, the court granted a non-exclusive, equitable landscaping easement in favor of the homeowners. The easement was limited to ground cover and bushes and prohibited trees and hardscape. The easement was not to run with the land and was personal to the homeowners. The appellate court upheld the order granting the non-exclusive equitable landscaping easement. The opinion has a good discussion of equitable easements.
Club Acacia v. PCM. Contract between Association and management company required disputes to be decided by binding arbitration and the arbitrator could award reasonable attorney's fees to the prevailing party. Litigation was brought in Superior Court against the management company and a contractor relating to the installation of a fire alarm system. Neither the Association or the management company moved to compel arbitration. The Association was deemed the prevailing party and the Superior Court awarded attorney's fees against the management company in the amount of $628,587.50. The appellate court reversed, determining that attorney's fees were only awarded in an arbitration under the terms of the contract. Because the dispute was not decided in arbitration, the Association was not entitled to its attorneys’ fees.
Cootes v. Wyman. Common area repairs affecting only a few homeowners are not matters of public interest for anti-SLAPP purposes. Statements made in homeowners association meetings fall outside the scope of official proceedings” for purposes of the anti-SLAPP statute.
Durant Towers v. Winchester. Appellate court affirmed award of attorney's fees to HOA who filed an action for TRO and injunctive relief to compel defendant to allow entry into her unit for the purpose of assessing and repairing a water leak that affected the downstairs unit. Defendant Winchester evaded the HOA’s attempts to gain entry into her unit to investigate the source of the leak. When the HOA filed a lawsuit, it indicated that ADR was not required because it sought preliminary injunctive relief. The court agreed and upheld the award of attorney's fees. The HOA had obtained the injunction and then dismissed the case stating that the primary purpose of the litigation was achieved by gaining entry into defendant’s unit and assessing/repairing the leak.
Forte v. The Village Green Owners Association. Appellate court upheld HOA’s motion for summary judgment in plaintiff’s slip and fall case because she did not know what caused her fall. After she fell, her right foot slid into a sprinkler but she had no proof the sprinkler caused or contributed to her injuries.
Harbour Island v. Alexander. The court upheld an injunction requiring tenants to install noise mitigating measures in their unit, cease recording or photographing the board president while at the pool, and cease allowing their dog to urinate and defecate in the common area where no pets are allowed. Even though the CC&Rs did not have language to address the dog issues, the court found that the nuisance restriction was broad enough to allow the association to exclude dogs from specified common areas for health and safety reasons. The court also determined that the association was not required to perform a physical inspection of the noise complaints--testimony from the neighboring owners was sufficient. The court also ruled that tenants lack standing to assert the rights of their landlord.
Jongerius v. Sun Lakes Country Club Homeowners Association. Lamden applied to Board’s decision on how to address damage due to slope creep of a common area slope that caused damage to a common area wall. The Board extensively investigated slope creep issue and was entitled to rely on expert (engineer) who said that installing a cassion wall would be unreasonable (due to cost) and recommended repairs to the common area wall.
Kapp v. Katz. The board had discretion to approve all exterior modifications. The Katzes changed the window configuration on the side of their residence that the Policy Manual specified could not be altered. The HOA approved the Katzes’ modifications, including the window configuration (although there was evidence that the proposed new window configuration was not highlighted in the plans and that the HOA may not have been fully aware of the changes). The Appellate Court determined that the Policy Manual’s prohibition on changing the window configuration conflicted with the PC&Rs that gave the Board discretion to approve exterior modifications. Therefore, the summary judgment was reversed. The Appellate Court also found there were triable issues of fact as to whether the HOA breached he governing documents in its handling of the request for approval or enforcement of the governing documents, whether the HOA’s actions were justified and whether the plaintiffs suffered damage as a result of the alleged breach of the governing documents.
Kim v. Kim. Plaintiff claims members represented they would support his run to be president but ended up not supporting him. Plaintiff alleged the association was negligent in failing to exercise reasonable care due to defendant’s alleged misrepresentations about supporting plaintiff’s efforts to become president. He also alleged the association was negligent by publishing defamatory statements in the newsletter. The trial court granted defendants’ demurrers to the complaint and the appellate court affirmed. Association owes no duty to protect candidate's interest in serving as president.
Kuyper v. New Bel-Air Association. An election removed Kuyper and other directors and replaced them with a new board. Kuyper filed an action under Corp Code §7616 seeking to invalidate the election. He dismissed the case after the court issued a tentative ruling, ordering a new election. Kuyper then filed a second action alleging the new board had wrongfully taken possession of the association’s premises and bank accounts. The trial court sustained demurrers to the second lawsuit, without leave to amend when it determined it was barred by res judicata since Kuyper had dismissed the prior 7616 action and the time had passed to challenge the election.
Lemley v. Aliso. Plaintiff sought specific performance to amend an easement. The case was dismissed because the HOA had assumed the rights and obligations of the original easement which negated the need to amend it. The association was deemed the prevailing party.
Lewis v. County of Monterey. The issue was whether fines imposed by the County of Monterey on plaintiff for using his property as a short-term rental were valid. The property is located in the coastal zone. The court acknowledged the Greenfield case but stated that plaintiff’s claims were unripe because he had not applied for a permit to allow short-term rentals and had not requested a formal administrative interpretation of whether short-term rentals are allowed on their property.
Lumetta v. Arborlake. In this case, the 9th Circuit court of appeals determined the bankruptcy court did not abuse its discretion in denying the owner’s motion to impose sanctions against the HOA for violating the bankruptcy discharge order. The Association had resumed its state court collection action against the debtor’s husband for pre-discharge debt. The opinion does not describe how the HOA’s actions violated the discharge injunction but stated it was a technical violation and the bankruptcy court has discretion to not impose sanctions.
Merritt v. Gandhi. The Association changed its parking rules to allow owners with extra vehicles to purchase a parking permit to park in common area spaces. To obtain a permit, the owners had to allow an inspection of their garage to determine if the garage was being used properly. The court awarded over $200,000 in attorneys' fees. On appeal, the issue was whether attorneys’ fees could legally be imposed under Civil Codes 1717 and 5975. The court ruled that Civil Code §1717 applied.
Miriwa v. Miriwa Center COA. This case upheld the Association’s passage of a rule establishing business hours for the commercial condominium owner to attempt to address issues concerning homeless people sleeping. urinating and defecating in the common areas.. The appellate court analyzed statutes in the commercial and industrial CID act pertaining to operating rules (Sections 6630 and 6632). It also cited to Lamden as to the board’s decisionmaking in adopting the rule.
Schuchmacher v. McDermott. The underlying issue had to do with allocating proceeds from insurance due to a fire in plaintiff’s unit. Directors prevailed on a summary judgment motion re civil conspiracy because they were not on the board at the time insurance proceeds were distributed so they could not be parties to civil conspiracy. The court denied their motion for attorneys’ fees under CC Section 5975(c) and the CC&Rs saying that the cause of action for civil conspiracy was not an action to enforce the governing documents.
Violette v. Chapman Townhomes. Plaintiff tenant in an condominium association could not bring a claim for breach of implied warranty of habitability against the HOA. The court sustained the Association’s demurrer to the complaint on the cause of action for breach of implied warranty of habitability. The court noted that while an HOA can indeed be treated like a “landlord” under traditional tort principals where it is expected to exercise due care in the maintenance of common areas under its control, it is not obligated to ensure that a common area is habitable. Further, the HOA is not responsible to ensure the habitability of a separate dwelling unit that it does not own or lease to a tenant.
Windham v. Lacher. Affirmed the trial court’s granting of a preliminary injunction against owners who were obstructing termite tenting of the building (at first refused to sign the form, refusing to give her key, calling the police when the fumigation company showed up). The Association was deemed the prevailing party and received its attorneys’ fees for the trial court and appellate actions.
Yu v. Broadway Hollywood Homeowners Association. A letter sent by HOA attorney to owners reporting litigation between plaintiff owner and the Association was protected under anti-SLAPP. The court also determined Lamden is narrow in its interpretation and upheld judgment for plaintiff’s against the HOA for failing to provide valet parking as a violation of the governing documents.
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