Legislative Terminology
Ranking of Laws. 
The three sources of law are constitutional, statutory, and case law. The sources are ranked as follows: first, constitutional; second, statutory; and third, case law.
Laws & Ordinances. 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 the Governor. The governor must sign or veto legislation within ten 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 on January 1 of the following year unless it contains an urgency clause (takes effect immediately) or specifies an effective date.
CAI-CLAC. For more information about bills, see the California Legislative Action Committee's website.
Legislation
AB 739. Managing Agent Fees: Executive Officer Training. This bill would add Civil Code § 5378 to the Davis-Stirling Act, requiring associations to deliver, upon a member's written request, a statement of the fees charged by the managing agent through electronic means. The bill also amends Civil Code § 5500 to require that on an annual basis, boards review a statement of fees charged by the managing agent, including the base fees, fee schedule charges, and reimbursable expenses.
AB 956. Accessory Dwelling Units and Junior Accessory Dwelling Units. This bill proposes to amend Civil Code §§ 714.3 and 4751 to expand the provision that makes void and unenforceable any covenant, restriction, or condition contained in any instrument affecting the transfer or sale of any interest in a planned development to include any covenant, restriction, or condition contained in an instrument affecting the transfer or sale of any interest in a common interest development (the language previously was limited to planned developments). The bill would also revise the provision governing prohibitions or restrictions on the construction or use of an accessory dwelling unit or junior accessory dwelling unit on a lot zoned for single-family residential use to instead apply to the construction or use of an accessory dwelling unit or junior accessory dwelling unit on a lot zoned to allow single-family residential use. The bill further proposes to amend Government Code § 66323 to increase the number of detached, new-construction, accessory dwelling units that a local agency is required to ministerially approve on lots with a proposed or existing single-family dwelling, from 1 to 2.
AB 1184. Homeowner Association Accountability and Transparency Act of 2026. This bill proposes amendments to several sections of the Davis-Stirling Act, covering a variety of topics. The bill proposes requiring general notices of emergency rule changes to include the text of the proposed change, the purpose and effect, and the date the rule change will expire. The bill proposes to prohibit a majority of the directors of the board, outside an authorized meeting, from using a series of communications of any kind, directly or through intermediaries, to discuss, deliberate, or take action on any item of business within the board’s subject matter jurisdiction, except in an emergency. The bill would also exempt from this prohibition certain informational and ministerial communications. The bill further proposes that if the association becomes involved in litigation, it must provide notice of the litigation in its annual budget report. The bill further proposes that if open session board meetings are recorded, the recordings must be considered a record of the association and made available to members on the same basis as written meeting minutes. The bill further proposes to require that board meeting minutes include certain information regarding the date, time and location of the meeting, information about the notice and an agenda provided to the membership, the names of directors present and absent, and whether members and/or guest speakers were present. The bill also clarifies that amending the operating rules is not subject to the election procedures in Civil Code § 5100. The bill will also require that the results of director elections provided to the members include the term for each elected director.
AB 1684. Common Interest Developments: Cooling Systems. This bill proposes to add new Civil Code § 4738 to the Davis-Stirling Act. The bill proposes to void any provision of the governing documents that prohibits or restricts the installation, upgrade, replacement, or use of a cooling system that complies with all applicable state and local building codes. The bill further proposes that HOAs will not be able to charge a member a fee in connection with the installation, upgrade, replacement, or use of a cooling system for their separate interest, require a member to use a specific cooling system or contractor, prohibit a member from claiming a rebate in connection with the installation, upgrade, replacement, or use of a cooling system for their separate interest. However, if the HOA can establish that the installation, upgrade, replacement, or use of a cooling system would violate federal, state, or local law, the HOA may prohibit or restrict the same. If the local permitting authority requires a permit and refuses to grant it, then the HOA can prohibit the cooling system. The bill defines “cooling system” as including: a portable air-conditioning unit, a window air-conditioning unit, a swamp cooler or any evaporative cooler, a cooling fan system, a heat pump, or any other technology that reasonably creates an internal temperature cooling benefit. A cooling system shall meet applicable health and safety standards and requirements imposed by law. The bill further states that the HOA can require the member who is installing, upgrading, replacing, or using a cooling system that affects the common area or an excusive use common area to be responsible for the repair of any damage to the common area, the exclusive use common area, or another member’s separate interest that is caused by the installation, operation, maintenance, or removal of the cooling system. The bill also also requires members to disclose to prospective buyers the existence of the cooling system and the member’s related responsibilities. An HOA that willfully violates this section shall be liable to the member for actual damages occasioned thereby and shall pay a civil penalty to the member in an amount not to exceed two thousand dollars ($2,000). Additionally, a member who prevails in a civil action to enforce this provision shall be entitled to reasonable attorney’s fees and costs.
AB 1892. Common Interest Developments: Associations – Clean Up. This bill proposes to amend Civil Code § 4775 to clarify that an association’s obligation for repairs and replacements necessary to restore interrupted gas, heat, water, or electrical services is when the interruption in service begins in the common area. The bill also proposes to amend Civil Code § 5103 regarding election by acclamation to change the time frame in which the initial notice needs to be provided to the members regarding the intent to use voting by acclamation. Instead of providing the initial notice 90 days before the nomination deadline, associations will need to provide the notice 30 days before the deadline. The bill proposes to clarify language in Civil Code § 5105 regarding providing electronic secret ballots to members at least 30 days before the election. Instead of providing the initial notice 90 days before the nomination deadline, associations will need to provide the notice 30 days before the deadline and the reminder notice not less than 10 days before the deadline.
AB 1903. Construction Defects. This bill proposes to amend multiple Civil Code provisions related to construction defect actions, including the Davis-Stirling Act – Civil Code §§ 58000 and 6150. The bill proposes to establish an alternative process for construction defect actions for “certified buildings” which are those that the builder has obtained a private inspection by a private licensed architect, engineer, or general contractor. The builder of a “certified building” may establish its own process for handling postconstruction claims. The bill also proposes to modify the content of a written notice of a construction defect claim to require additional information to be provided to the builder, including a description of the evidence of the violation of the standards of construction, copies of any reasonably available photographs, estimates or reports relating to the damage, and the specific location of the evidence within the residence. The changes will apply to condominium projects or townhouse developments constructed on or after January 1, 2027. For a homeowners association, existing law requires the board of directors of an association, within 30 days before filing a civil action against the developer of a common interest development for certain damages, to provide a written notice to each member of the association pursuant to Civil Code § 6150. This bill would add Civil Code § 945.2 and prohibit the recovery of investigative costs and abrogate the holding in Stearman v. Centex Homes that permits recovery of investigative costs as damages. The bill would further prohibit an action from being filed unless the conditions for filing an action have been met for each claimed violation. Finally, the bill would prohibit a claim for damages based on extrapolation of claims and would limit testing of the components of the structure.
AB 2035. Common Interest Developments: Declarations: Amendments. This bill proposes to amend Civil Code § 4275, which currently allows an association or a member to petition the court to reduce the membership approval requirement to amend the CC&Rs if the CC&Rs require more than 50% of the members to approve amendments (i.e., a supermajority). Under current Civil Code § 4275, the court can grant the petition if members holding more than 50% of the votes approve the amendment. The bill proposes to allow senior housing developments with more than 6000 separate interests to petition the court under Section 4275 if at least 37% of the members voted to approve the CC&R amendment. The bill adds additional requirements to be able to use the lower 37% threshold, including that tenants occupy more than 25% of the separate interests and the CC&Rs have not been amended in at least 35 years.
AB 2050. Common Interest Developments: Reserve Accounts. This bill proposes to repeal Civil Code § 5550 as of January 1, 2032. After that date, the new Civil Code § 5550 will become operative and require that the association review and update the reserve study annually, rather than just review it. The study must also include a statement informing the association that, beginning January 1, 2032, state law will require an association to take certain actions if the association projects the reserve account balance to fall below zero over a 30-year period, including transferring a minimum of 15% of its gross annual budget to the reserve account and, under specified conditions, levying a reserve funding special assessment, as prescribed.The bill also proposes adding new Civil Code § 5552, which would become operative on January 1, 2032, and would require an association to fund the reserve account annually to at least at the minimum reserve contribution level included in the most recent reserve study. If the association is unable to fund the reserve account to at least the minimum level of the most recent study through the gross annual budget, the association will be required to levy a “reserve funding special assessment” subject to the same provisions as a standard special assessment in Civil Code § 5605. However, if the reserve funding special assessment is insufficient to meet the minimum reserve contribution level due to the cap on special assessments without a membership vote, the association mustl have the membership vote on approving an amount exceeding the cap that is necessary to fund the minimum level.The funds collected through the reserve funding special assessment must be deposited into the reserve account as reserve funds. Associations must not levy a reserve-funding special assessment more than once every 9 years.
AB 2439. Common Interest Developments: Governing Documents, Assessments. This bill proposes to add Civil Code § 4755 to the Davis-Stirling Act, which would prohibit governing documents from imposing restrictions on a member’s use of public roads. The bill also proposes to amend Civil Code § 5655 to require associations to notify members by individual notice, by electronic delivery or first-class mail, and by posting on the common area of a change in a person authorized to receive payment of assessments within 60 days of the change. The bill proposes to amend Civil Code § 5690 to state that if an association fails to comply with the procedures in the Davis-Stirling Act article regarding the collection of delinquent assessments, the association shall be liable to the owner for the reconveyance fee and any costs of the owner associated with the association’s failure to comply with the procedures, and a civil penalty of $1,000.00.
AB 2579. Common Interest Developments: Discipline. This bill proposes amending Civil Code §§ 5850 and 5855 and adding a new Section 5851 regarding member discipline. The bill proposes to modify some of the changes to these statutes that was made last year under AB 130. Under the proposed bill, boards will be able to impose fines of more than $100 for certain designated violations listed in a list to be developed and published by the Department of Real Estate (DRE) on or before January 1, 2028. The list shall be limited to violations that are clearly defined and address significant health, safety, or the integrity of the common interest development, including, environmental hazards, unpermitted construction or alterations, relate to animal control and pose a risk to other residents, failure to maintain property in a manner that creates health or safety risks, involve violence or threats of violence, cause damage to the common area or common facilities. Before finalizing the list, the DRE shall conduct a stakeholder engagement process to solicit input from a broad range of interested parties, including members of HOAs representing diverse geographic regions of the state, members of age-restricted communities, members of associations on fixed incomes, HOA board members, and HOA management professionals. The bill also proposes adding language stating that a member who engages in habitual, repeated, or continuing violations is not deemed to have cured a violation simply because the violation is not occurring at the time of the hearing. This will allow boards to impose discipline on such members for the habitual, repeated, or continuing violations.
AB 2692. Common Interest Developments: Reinstatement of Terminated Declarations – Los Angeles County. This bill proposes to add Civil Code § 4276 to the Davis-Stirling Act, allowing CC&Rs that have been terminated by operation of the provisions setting forth the initial term of the declaration to be reinstated if approved by the percentage of members required by the CC&Rs for extending the term of the CC&Rs. The new code section would only apply to the County of Los Angeles and will remain in effect only until January 1, 2028. The bill is proposed as urgency legislation in order to prevent displacement and promote the rebuilding of common interest developments that were damaged or destroyed as a result of the 2025 Palisades and Eaton Fires in Los Angeles. If chaptered, it will take effect immediately.
SB 222. Residential Heat Pump Systems; Water Heaters and HVAC: Installations. This bill proposes adding a new section 4737 to the Davis-Stirling Common Interest Development Act that would require any provision of the governing documents, architectural guidelines, or policies to be void and unenforceable if the provision prevents the replacement of a fuel-gas-burning appliance with an electric appliance. The bill would also render void and unenforceable any covenant, restriction, or condition contained in a provision of a governing document that effectively prohibits or restricts the installation or use of a residential heat pump water heater or heat pump HVAC system. The bill further prohibits an association from charging a fee to any member to install, upgrade, replace or use a residential heat pump water heater or heat pump HVAC system, requiring a member to use a specific residential heat pump water heater or heat pump HVAC system, claim to receive any rebate, credit or commission in connection with a member’s installation, upgrade, replacement or use of a residential heat pump water heater or heat pump HVAC system, require a member to remove a a residential heat pump water heater or heat pump HVAC system or prevent the replacement or upgrade of an existing residential heat pump water heater or heat pump HVAC system. However, an association may prohibit a member from installing, upgrading, replacing or using a residential heat pump water heater or heat pump HVAC system if any of those actions would violate federal, state, or local law, or if a permit is required and the governing entity denied the permit. The bill further allows associations to hold members responsible for any damage to the common area, exclusive use common area, or another member’s separate interest that is caused by the installation, operation, maintenance, or removal of that residential heat pump water heater or heat pump HVAC system.
SB 908. Residential Windows: Retrofitting: California Energy Code Compliance. This bill proposes to add Civil Code § 4754 to the Davis-Stirling Act to prevent governing documents from limiting or prohibiting owners of separate interests from replacing existing residential windows with “California Energy Code-compliant windows” or imposing any requirements on California Energy-Code compliant windows in a housing development project. California Energy Code-compliant windows are defined in proposed new Government Code § 65850.73 as “[w]indows that meet or exceed the mandatory requirements for fenestration products and exterior doors, as described in Section 110.6 of the California Energy Code (Part 6 of Title 24 of the California Code of Regulations) or a subsequent code section adopted by the California Building Standards Commission in the most recent triennial building code cycle.”
SB 1007. Common Interest Developments: Annual Reports: Assessments: Discipline. This bill proposes to amend Civil Code § 5300 to require that the annual budget report include a comparison breakdown of the anticipated expenditures of the current fiscal year versus actual expenditures of the current fiscal year.These expenditures shall be organized in major categories at the discretion of the association that shall include, but are not limited to, reserve contributions, a third-party management company, utilities, landscaping, maintenance, and insurance. Associations can comply with this paragraph by including the comparison breakdown in the pro forma operating budget. The bill also requires that the annual budget report include a statement of the compensation of a management company, if any. The bill requires this information to be included in any summary of the annual budget report. The bill also proposes amending Civil Code § 5605. Currently, boards can increase the amount of regular assessments by up to 20% of the prior year’s assessments without a member vote. Instead of the 20% threshold, the bill proposes that boards may increase regular assessments by no more than 8% of the prior year’s amount without a membership vote. The bill also proposes to add new Civil Code § 5860 which will require associations that are attempting to impose a monetary penalty against a member for a violation of the governing documents to make physical evidence used to determine the violation, such as photographs, video or audio recordings, and metadata, available to the member at least five business days before the hearing or the deadline for the member’s response.
SB 1116. Planning and Zoning: Housing Development Projects: Subdivisions. This bill proposes to add Civil Code § 714.9. This bill proposes to make void and unenforceable any covenant, restriction, or condition contained in any deed, contract, security instrument, or other instrument, as described, that either effectively prohibits or unreasonably restricts the construction, use, or sale of new homes on a lot zoned for residential use that meets the requirements of the Government Code §§ 65852.28 and 66499.41 relating to subdivisions and ministerial approval (i.e., lot splitting), except as specified. The bill also indicates that this statute does not apply to property that is part of a common interest development.
SB 1238. Common Interest Developments: Management. This bill proposes numerous changes to the Davis-Stirling Act and other California statutes, as follows:
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- Amending Civil Code § 2295 to include in the definition of “agent” any person or company that facilitates activities under the following Davis-Stirling Act sections: 5300, 5310, 5500, and that is required to provide a fiduciary duty to the board of a homeowners association and its members.
- Amending Civil Code § 4525 regarding documents and information that homeowners must provide to prospective purchasers. If the purchaser requests, homeowners will need to disclose certain information from the report of exterior elevated element (EEE) inspections conducted under Civil Code § 5551, including any balcony identified in the report as needing repairs exceeding $10,000.00. Homeowners will need to disclose whether the CC&Rs require the owner to maintain the EEEs, whether the reserve study includes a minimum annual budgeted replacement reserve allocation of 10% for repairs of the exterior structures, and whether the reserve study has been updated to include identified EEE repairs, unless this information is already included in the governing documents or the annual budget report and annual policy statement.
- Amending Civil Code § 5200 to allow members to inspect the reserve study and reserve account balances.
- Adding Civil Code § 5390 to state that any person or entity that facilitates activities pursuant to Sections 5300, 5310, and 5500, or other activities pursuant to this part that are authorized by the board, owes a duty of care that is prudent and provides the highest good faith effort to the association and its members.
- Amending Civil Code § 5510 to prevent boards from expending reserve for other litigation or legal services that do not involve the repair, restoration, replacement, or maintenance of, major components that the association is obligated to repair, restore, replace, or maintain.
- Amending Civil Code § 5520 to prevent boards from transferring money from the reserve fund to pay for other litigation or legal services, or to threaten litigation involving any real property owner of record or relative of the real property owner of record that is a member of the association.
- Amending Civil Code § 5550 to clarify that the inspection of reserve items every three years is to, in part, ensure occupant safety and to make other changes to incorporate the EEE inspection.
- Amending Civil Code § 5551 to require that the first page of the EEE inspection report include information about EEES that are recommended to be included in the next reasonably competent and diligent visual inspection conducted pursuant to Section 5550, recommended for reinspection within the next three years, and EEEs recommended for reinspection in the next Section 5551 inspection.
- Amending Civil Code § 5560 to state that the reserve study must include repairs identified in the EEE inspection.
- Amending Civil Code § 5565 to incorporate into the reserve summary repairs identified in the EEE inspection.
SB 1267. Common Interest Developments: Electric Vehicle Charging Stations. This bill proposes to amend Civil Code § 4745 to require an installer of an electric vehicle charging station (EVCS) on the common area or exclusive use common area to indemnify or reimburse the association or the members for loss or damage caused by the installation of an EVCS in the common area or exclusive use common area. Section 4745 would further state that it is the Legislature’s intent to provide civil liability protection for associations if there are injuries and damages emanating from an EVCS that the association does not own, except in the case of the association’s gross negligence.
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 precedents for cases that follow.
Tulare Medical Center Property Owners Association v. Valdivia. The Tulare Local Hospital District, a public entity, recorded CC&Rs over parcels of land within a common interest development known as the Tulare Medical Center. Plaintiff and cross-defendant Tulare Medical Center Property Owners Association is an unincorporated association appointed in the CC&Rs. Every owner of a parcel subject to assessment under the CC&Rs is a member of the association. The association is authorized by the CC&Rs to seek injunctive relief for any violation or threatened violation of its terms. The CC&Rs expressly prohibited the use of the property for the purposes of running an abortion clinic. The association sought a preliminary injunction against an owner who intended to lease their property within the association for use as a facility providing abortion services. The trial court denied the association’s request for a preliminary injunction. The appellate court affirmed the trial court’s decision. The court used the factors set forth in Nahrdstetd v. Lakeside Village to analyze the abortion clinic prohibition in the CC&Rs and held that the provision was unenforceable for multiple reasons. First, the court focused on whether the provision violated a fundamental public policy and concluded there is a fundamental public policy of California is (1) to protect an individual’s personal choice on the subject of abortion, which includes a pregnant person’s right to choose to continue a pregnancy or have an abortion (see Cal. Const., art. I, § 1.1), and (2) to limit government action that unduly intrudes or impinges that choice. Second, the court determined that the public entity’s acts of approving the CC&Rs and making the property subject to the CC&Rs constitute government action for purposes of identifying the appropriate legal standard for determining whether the prohibition of abortion clinics violates the state constitution. The burden shifted to the association to demonstrate that the governmental interference was justified by a compelling state interest, which the association failed to do. The court also analyzed whether the provision violates the Unruh Civil Rights Act (“Act”) as being discriminatory against women. The court relied on California Civil Code § 53 which states, in pertinent part, " every provision in a written instrument relating to real property that purports to forbid or restrict the conveyance, encumbrance, leasing, or mortgaging of that real property to any person because of any characteristic listed or defined in subdivision (b) or (e) of section 51 is void." Section 51 lists characteristics, including sex, race, color, etc. However, it does not include the decision to have an abortion. To determine whether this characteristic falls within the Act, the court applied a three-part analytic framework that asks (1) whether the claim is based on a personal characteristic similar to those listed in the statute, (2) whether a legitimate business interest justifies the alleged discrimination, and (3) what the potential consequences of recognizing the new claim will be. The court concluded that an individual's decision to have an abortion should be treated as a "characteristic listed or defined" in the Act.
Unpublished Cases
The following cases are unpublished opinions and are not binding precedents. However, they give insight into how future courts might deal with similar issues.
Abella v. Canyon City Found. At the inception of a new development and subsequent HOA, the developer and the City of Azusa created a transfer fee covenant recorded on the properties in the HOA. The covenant required payment of a transfer fee equal to 0.5 percent of the sale price to a foundation to be created by the developer and the City to provide services to the general public of Azusa. That foundation is the defendant in this case. The transfer fee obligation could be amended. However, amendment required agreement from the City, the defendant, and 51 percent of the citizens of Azusa. Plaintiff filed a class action lawsuit alleging the defendant was collecting an unlawful transfer fee under the Davis-Stirling Act’s section 4575. The trial court agreed and found the defendant was a “community service organization or similar entity” and was thus subject to section 4575. The Court of Appeal reversed and held the Defendant was not subject to section 4575. The Davis-Stirling Act defines a “community service organization or similar entity” as “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 area or facilities are available to the public.” Because both parties offered reasonable interpretations of that definition, the Court of Appeal found it ambiguous. The court interpreted it to mean an entity organized to provide services directly benefitting residents of a common interest development. Meaning the types of services a HOA provides. The court looked to legislative intent. The prohibition on transfer fees was enacted in 1987 because HOAs were charging excessive transfer fees to augment association budgets. At first, it applied only to HOAs. Later, independent entities affiliated with associations were formed to get around the prohibition. The Legislature amended the law to close that loophole because transfer fees caused new or departing homeowners to disproportionately shoulder the costs of services that benefited all members of the HOA. In sum, the Legislature was concerned that short-term owners would subsidize long-term owners. It intended monthly assessments, not transfer fees, to fund HOA services. Because the defendant’s activities were aimed at providing services to the general public of Azusa, not directly to Plaintiff’s development, the defendant was not a “community service organization or similar entity” under section 4110 and was not subject to the transfer fee prohibition under section 4575.
Alarcon v. Avalon Mgmt. Group. The Diamond Bar Village condominium complex suffered from decades of deferred maintenance. In 2017, the HOA retained a structural engineer to evaluate the condition of the buildings. The 2017 report identified extensive roof damage caused by termites, dry rot, mold, and long-term wear and tear affecting the structural walls. Although the report warned that the damage should be addressed promptly to avoid future risks, it concluded that the buildings did not pose an immediate life-safety threat at that time. Four years later, the City of Diamond Bar requested an updated inspection. The engineer’s 2021 report stated that all buildings had roof damage from decades of neglected maintenance and designated the second-floor units as “red” tagged, meaning they posed a high risk to the “occupancy/life-safety capacity of each building,” while the first-floor units were “yellow” tagged as medium risk. Based on the 2021 report, the City issued an order requiring residents to vacate the complex. However, the City rescinded the order a few weeks later. The City’s structural engineer determined that, although the buildings suffered from substantial deferred maintenance requiring repair, there was no immediate danger to occupants. Plaintiffs, who owned 63 of the 150 units in the condominium complex, sued the structural engineer, the City and its building official, the HOA, two HOA directors, and Avalon Management Group, Inc., the HOA’s management company. Plaintiffs later settled with the City and the engineer defendants and also dismissed the HOA and directors from the lawsuit, proceeding only against Avalon. They alleged Avalon acted negligently by failing to perform repairs identified in the reports, failing to seal walls after repairs, failing to disclose the reports to owners and buyers, advising the HOA not to disclose the reports, failing to conduct a background check on the engineer, and failing to obtain a second opinion before forwarding the 2021 report to the City. Plaintiffs also sought an accounting. The trial court granted Avalon’s motion for summary judgment on the negligence claim and summary adjudication on the accounting claim. The appellate court affirmed, holding that Avalon, as the HOA’s managing agent, did not owe an independent duty of care to the individual homeowners. Avalon assisted the HOA with property management and maintenance issues, but its authority was limited by the management agreement. The agreement provided that Avalon could only act at the direction of the HOA’s board and could only implement the board’s decisions. The appellate court emphasized that the HOA itself owed fiduciary duties to the homeowners and already had statutory and contractual obligations to disclose material information and maintain the common areas. Because homeowners already had remedies available against the HOA, the court found that imposing a separate tort duty on Avalon was unnecessary. The appellate court also reasoned that Avalon’s role in the events leading to the vacate order was indirect and that imposing potentially massive liability ($1.7 million) on the management company would be disproportionate to its actual level of control and fault. In addition, the appellate court expressed concern that recognizing such a duty would interfere with the HOA and management relationship by pressuring management companies to act contrary to the decisions of HOA boards in order to avoid personal liability. Further, the appellate court held that plaintiffs lacked standing to pursue the accounting claim because any alleged misuse or mismanagement of HOA funds or records constituted an injury to the HOA itself rather than to the individual homeowners directly. Thus, the accounting claim was derivative in nature and plaintiffs failed to comply with the statutory requirements necessary to bring a derivative action on behalf of the HOA.
Artus v. Gramercy Towers Condo. Ass'n. The HOA moved to enforce a settlement agreement against the plaintiff homeowner, a long time antagonist to the HOA. The agreement was expressly subject to Board approval, which the Board approved. Plaintiff nevertheless argued the agreement was unenforceable. She took the highly technical position that the Board’s approval was invalid because the notice and meeting allegedly did not comply with the Civil Code. She also claimed she could not participate in the virtual meeting where the settlement was approved in open session. The court rejected those arguments. It described Plaintiff’s position as “tortured” and “unreasonable” and admonished her “lack of candor” in presenting the facts in her brief. California has a well-settled policy favoring settlements, thus the court considered whether the parties entered into an enforceable agreement. The court found substantial evidence that they had. Plaintiff’s attorney approved the nine-page settlement agreement. The agreement itself provided for Board approval. The HOA sent Plaintiff a draft notice of the meeting for review, but neither Plaintiff nor her attorney responded with objections or suggested revisions. The HOA then used the judge-approved notice. Plaintiff received assistance so she could attend the virtual meeting and she did attend before leaving voluntarily. Plaintiff’s attorney also cashed the HOA’s $20,000 settlement check. Thus, the settlement agreement was enforceable.
Brilliant v. Mulholland Estates Homeowners Ass'n. Plaintiff homeowner sued their HOA and downhill neighbors for breach of contract, alleging that overgrown trees obstructed their view in violation of the CC&Rs and landscape guidelines. The trial court dismissed the case by granting a demurrer holding that the plaintiff failed to state facts sufficient to constitute a cause of action because the governing documents did not provide an express right to an unobstructed view. On appeal, the court agreed that a right to an unobstructed view does not exist under the governing documents. However, the appellate court reversed the dismissal because of a provision that landscaping was “not to achieve a shape or density approaching that of a barrier.” The appellate court held that the case should not have been dismissed at the demurrer stage since that contract provision was “reasonably susceptible” to the meaning alleged by the plaintiff. Specifically, the plaintiff interpreted the landscape guidelines as imposing a duty on downhill neighbors to prune or manage trees so that it does not grow into a continuous wall-like obstruction. The appellate court noted that the landscape guidelines also granted the HOA the power to require the pruning or removal of trees and shrubs, suggesting there was a clear recourse if foliage grows to a size or shape that becomes problematic. Thus, the guidelines could be interpreted as a duty to prevent foliage from becoming a barrier. Accordingly, the plaintiff stated a valid cause of action to the extent the trees “achieve a shape or density approaching that of a barrier,” and the case was remanded to the trial court for further proceedings on that issue.
Burnside v. 1545 Broadway Homeowners' Ass'n. A condominium owner sued her HOA for negligence, alleging breaches of the CC&Rs and maintenance obligations. The owner claimed that when she reported a leak in her guest bedroom, the HOA only made minor cosmetic repairs, resulting in further leaks that the HOA failed to repair. The HOA contended that the moisture and condensation found in the owner's unit were due to her use of a steam shower and that the moisture in the roof cavities had no causal link to the roof leaks. After a 25-day trial, the court found in favor of the HOA, holding that the HOA was not negligent and that the damage to the owner’s unit was due to her own actions. Although the court found the management company negligent, it found that the negligence was not a substantial factor in the damage to the owner’s unit. The jury found against the owner on the HOA’s cross-complaint for breach of the governing documents for unauthorized modification of common areas and failure to remediate mold, and awarded $27,688 to the HOA. Subsequently, the HOA moved for attorneys' fees and costs, as the prevailing party, of $341,508.00 for attorneys' fees and $474,752.08 for costs.
Hunsberger v. Bodo-Price. The defendant homeowner made statements accusing a board member of being naked in the community jacuzzi. The homeowner made these statements at an open board meeting, shouted at the board member while in the jacuzzi, saying, "Are you naked again?", and allegedly hung up posters stating that the board member used the jacuzzi naked. The board member filed a defamation suit against the homeowner. The homeowner filed an anti-SLAPP motion, arguing that the speech was protected by the First Amendment. The homeowner contended that the matter was of public interest, as it concerned board members' fitness to hold their positions. The homeowner argued that his statements during a board meeting were protected because the meeting constituted an "official proceeding" and therefore was protected. The court found that because there was no information linking the board member's alleged nakedness in the jacuzzi to his fitness to lead, nor was there any argument reflecting that connection, the matter did not constitute an issue of public interest. Further, the court concluded that the private HOA meeting did not meet the criteria of an official proceeding and therefore the claims could not be protected by anti-SLAPP.
Lapay v. Fairways Homeowner’s Ass’n. This lawsuit arose after a fire in a neighboring condo unit caused smoke and other damage to the Plaintiff’s condo unit. The HOA entered Plaintiff’s unit to complete the interior repairs using its “walls-in” insurance coverage after it could not locate the owner despite sending notice. Plaintiff, as successor trustee, sued the HOA for breach of the governing documents and related torts. Plaintiff claimed the HOA violated the CC&Rs by entering the unit, making interior fire-related repairs, not providing reasonable notice, and entering for reasons unrelated to the board’s duties, powers and responsibilities. Summary judgment was affirmed because the undisputed facts showed the HOA’s conduct was within CC&R authority and complied with the CC&Rs process. The CC&Rs allowed the HOA to carry a “walls-in” policy, to submit and manage an insurance claim, and to apply insurance proceeds to interior repairs. The CC&Rs also authorized the HOA, on reasonable notice, to enter the unit and complete interior repairs when the owner failed to do so. Here, the HOA could not locate the owner, sent notice to the owner’s last address of record, waited through the notice period, and then had contractors perform the repairs. The HOA secured the unit afterward and provided access through management via a lockbox on the unit’s front door (the front door lock was broken by the firefighter’s forced entry.) The courts concluded the HOA did not violate the CC&Rs, and Plaintiff did not present evidence to show otherwise. With no CC&R violation or other wrongful conduct shown, Plaintiff’s tort claims (trespass, nuisance, negligence, breach of fiduciary duty, and conversion) also failed because each depended on proving a CC&R violation. Thus, summary judgment for the HOA was affirmed because the facts showed authorized, properly noticed entry and repairs, and Plaintiff offered no evidence in dispute.
MacHowski v. Ogden Unit Owners Ass'n. Plaintiff member sued defendant HOA in a Nevada federal district court seeking declaratory judgment that (1) the HOA qualifies as a state actor when passing and enforcing rules and punishing violations, and (2) its Anti-Bullying Policy violates the U.S. and Nevada Constitutions. Plaintiff argued that the HOA was a state actor because it was serving a public function. However, plaintiff failed to make the required showing that the function, passing rules and punishing violations, is both traditionally and exclusively delegated by the state. Passing rules and punishing violations is not the type of power traditionally exclusively reserved to the state. Private entities, like the National Basketball Association, also make rules, conduct hearings, issue decisions, and impose fines, but are not state actors. Thus, the case was dismissed, reinforcing that HOA rulemaking and enforcement do not constitute state action under the public function doctrine.
Sadorra v. Starlight Dunes Homeowners Ass’n. Plaintiff homeowner was declared a vexatious litigant following a series of frivolous and harassing filings arising from a single HOA enforcement action (the “HOA Dispute”). After the HOA secured summary judgment in the initial case, the Plaintiff initiated or maintained nine additional pro se proceedings across five forums, including the California Court of Appeal, the California Supreme Court, the Central District of California, the Ninth Circuit, and the United States Supreme Court, all of which were resolved adversely to the Plaintiff. This included a federal RICO action targeting the HOA, its counsel, and the presiding state court judge. In granting the HOA’s motion, here the Federal Court applied the four De Long factors. First, notice and opportunity were satisfied by the HOA’s noticed motion and the Plaintiff’s written opposition. Second, an adequate record was established by the nine unsuccessful proceedings, one of which was dismissed with prejudice as frivolous. Third, the Court made substantive findings of harassment, noting that the Plaintiff attempted to stall trial by filing for removal on the eve of trial and by filing a RICO case accusing the presiding state court judge from the initial case of corruption and criminal conduct without factual support. Tactics indicative of intimidation rather than a search for relief from unsuccessful litigation. Finally, the order was narrowly tailored, as it was limited to the specific parties involved and to causes of action arising from the HOA Dispute. Thus, the Federal Court found all factors satisfied and Plaintiff was declared a vexatious litigant.
Sentinel Strategic Servs. v. Solera at Apple Valley Cmty. Ass'n. Plaintiff security company contracted with Defendant HOA to provide 24/7 security services to its 3,000-resident senior community beginning July 1, 2023. In a few months relations deteriorated and a payment dispute arose. Plaintiff sent a letter demanding payment "in order not to disrupt/halt security services.” The HOA, citing various performance concerns, issued a 60-day written termination notice. Plaintiff then stopped services and claimed it was the HOA that had breached by failing to pay in full. The HOA posted a notice to its community email list and Facebook page stating it had provided proper contractual notice and that Plaintiff had abandoned operations without notice. The post was published because the sudden departure left residents without security. This was particularly concerning given the sheriff department's lengthy response times. Plaintiff sued for defamation and other causes of action and the HOA moved to dismiss them with an anti-SLAPP motion. The purpose of the anti-SLAPP statute is to dismiss meritless lawsuits designed to chill a defendant's free speech rights, and courts evaluate such motions under a two-prong test. Under the first prong, the moving defendant bears the burden of showing that the specific causes of action it seeks to dismiss arise from protected activity connected to a public issue or issue of public interest. If met, the burden shifts under the second prong to the plaintiff to demonstrate that each of those targeted causes of action is legally sufficient and factually substantiated. The trial court granted the HOA's anti-SLAPP motion as to six of eight claims, leaving only breach of contract and breach of the implied covenant of good faith and fair dealing, and the appellate court affirmed. As to the first prong, the court found the post concerned a public issue, namely the abrupt loss of onsite security directly affecting 3,000 residents in an area with slow law enforcement response. As to the second prong, Plaintiff failed to show minimal merit on its defamation claims because the HOA's statements about termination requirements reflected a reasonable contract interpretation over which minds could differ, rendering them nonactionable opinion, and its statements that Plaintiff left without notice were substantially true given that Plaintiff indisputably stopped services in early January.
Smarter Hoa Sols. Inc. v. Peña. Defendant Peña sold her 50 percent ownership interest in the plaintiff HOA management company, entered into a non-competition and non-disclosure agreement, and later remained on as an employee. Plaintiff HOA management company sued to enforce that agreement after her employment ended alleging a breach of the non-compete agreement. The court held that the agreement’s non-compete provision constituted substantial restraints on defendant’s ability to pursue her occupation because it created a significant restraining effect on employee mobility and open competition. Thus, the non-compete agreement was void and unenforceable under Business and Professions Code section 16600 unless an exception applied. Section 16601 provides a limited exception for non-compete restraints made in connection with the sale or dissolution of a business. The court found that exception was implicated because the agreement was made in connection with the sale of defendant’s entire ownership interest in the company. However, the court concluded the agreement did not satisfy the intent and purpose of section 16601 because its restrictions were broader than necessary to protect the goodwill acquired in the sale and instead targeted the defendant’s fundamental right to pursue her profession. The court therefore held the agreement void and unenforceable.
Song v. Jennings. The Court of Appeal affirmed the trial court’s order declaring the defendant homeowner a vexatious litigant under California Code of Civil Procedure section 391. Although the defendant argued that the statute applies only to plaintiffs and the court lacked evidentiary support, the Appellate Court clarified that section 391(b)(3) covers any litigant who repeatedly files unmeritorious papers or engages in frivolous, delaying tactics. Also, substantial evidence supported this designation, as the defendant failed to appear at noticed depositions for nearly two years which forced the Association to file multiple motions to compel. His misconduct included dismissing his complaint the day before a rescheduled deposition to falsely claim mootness, defying a court order to appear for a third time, and filing an improper appeal of a non-appealable sanctions order. Thus, the order declaring him a vexatious litigant was affirmed.
Third Laguna Hills Mut. v. Joslin. A problematic homeowner and his tenants were violating the CC&Rs by maintaining under-55 occupancy and creating noise and nuisance conditions. The HOA began enforcement efforts and, during a hearing, the person believed to be the member told the Board that defendant Joslin was actually the owner on title. The HOA then discovered that Joslin had taken title to the unit through a deed in lieu of foreclosure or what the court described as a “slow-sale.” Joslin loaned nearly $185,000 secured by a deed of trust on the unit. Joslin was experienced in loans of this nature and knew it was likely to be satisfied through a deed in lieu of foreclosure. Once the HOA confirmed Joslin was the record owner and therefore a member, it called him to a hearing to address the former owner (now tenant) who was continuing to violate the CC&Rs. Joslin claimed he was working to remove the tenants. In a show of good faith, the Board agreed to abate the fines and penalties if he provided proof that he was moving forward with their removal. The tenants eventually vacated, but Joslin never paid the unpaid assessments, penalties, late charges, and attorney’s fees. The HOA therefore filed suit for breach of the governing documents and to recover those amounts. The HOA later dismissed its complaint. However, Joslin had filed a cross-complaint alleging various tort claims, including intentional infliction of emotional distress and other meritless claims. The matter proceeded to a jury trial. The jury found the Board acted in good faith and that the business judgment rule applied as a defense. Joslin appealed. The Appellate Court stated that courts looks for adequacy, completeness, and good faith, not perfection. Substantial evidence showed the Board met that standard when it investigated, responded to, and resolved the violations. Thus, the Court of Appeal affirmed the judgment.
Varsity Park Estates Homeowners Ass’n v. Anglin. The HOA sued to enforce a CC&R restriction prohibiting recreational vehicles in the community after the homeowners began parking a camper trailer on their lot following an HOA-approved project to re-landscape their front and back yards and install backyard gates. Although a fax cover sheet attached to their architectural submission referenced the gates being for parking a camping trailer, the application itself did not request permission to store a trailer, and the HOA’s approval letter approved only the landscaping and gates. After the trial court entered judgment for the HOA, the homeowners appealed, arguing the HOA had the burden to prove its enforcement was fair, uniform, and non-arbitrary (citing a camper stored briefly in 2005 and a boat stored intermittently in 2006) and that the HOA was estopped from enforcing the restriction because it approved the architectural application while allegedly knowing the improvements were intended to facilitate trailer parking. The Court of Appeal affirmed, holding courts defer to an HOA’s discretionary enforcement decisions unless the challenging party shows arbitrary or bad-faith enforcement (or an unreasonable restriction under Civil Code § 5975). The challenging homeowners in this case did not meet that burden. The 2005 trailer incident was too remote in time, the 2006 boat involved one owner out of 93 and ended after the HOA requested compliance, and testimony from the community manager and a board member supported that the board did not grant exceptions and would not without a CC&R amendment. The homeowners also lacked evidence that the HOA knew of and ignored other violations. The court also rejected estoppel because it was not shown that the HOA knew the homeowners sought permission to store a trailer (the application did not say so), the approval letter did not approve trailer parking, and the board lacked authority under the CC&Rs to waive the RV restriction without a CC&R amendment.
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