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GETTING OUT OF
THE DAVIS-STIRLING ACT
QUESTION: We are a small HOA with only 11 homes. We have one common area, a small landscaped park in a cul-de-sac.  We can't sustain the governance requirements imposed by the Davis-Stirling Act. It has been a burden on our homeowners. What is the procedure to exempt us from the Davis-Stirling Act? –Anon
ANSWER: As a general rule, small associations suffer under the Davis-Stirling Act. It is because the legislature in Sacramento has no idea what it is doing when it comes to homeowner associations--especially small ones.
Common Area. From your question, it sounds like you are a planned development. To get out from under the Davis-Stirling Act, you need to eliminate the element that make you a common interest development--common area. A planned development is defined as a real property development having "either or both of the following features:"
(a) common area that is owned either by an association or in common by the owners...and (b) common area and an association that maintains the common area with the power to levy assessments that may become a lien upon the separate interests... (Civ. Code § 4175.)
Assessment District. To get rid of your common area park you can offer it to the city. However, the city may not want it because it would have to maintain it. The city might agree if you created an assessment district to pay for the park's maintenance. The cost would be added to your property tax bill. If your city council authorizes sending a ballot to your eleven property owners, and if your members vote to create an assessment district, you would need to petition the court to partition (separate) the common area from everyone's ownership so you could donate the park to the city. Once that is done, you need to amend your governing documents to eliminate any reference to your association being a planned development.
Lien Rights. The poorly drafted statute defining a planned development has led some in the legal community to interpret it to mean that eliminating lien and foreclosure rights would be sufficient to get an association out from under the Davis-Stirling Act. If true, you could amend your CC&Rs to delete your association's right to lien and foreclose on delinquent assessments. In addition, you might need to amend your articles of incorporation and bylaws to eliminate any references to your association being a planned development. If successful, your ability to collect delinquent assessments would be limited to breach of contract actions in court.
Recommendation: You should seek legal counsel on how best to proceed.
HOW DO WE
STOP RENTALS?
QUESTION:  How can we restrict investors from buying and renting condo units? Can we require owners occupy their unit and not rent it? Can we limit the number of rentals? -Roshan H.
ANSWER: Unfortunately, there is little you can do. Associations used to be able to limit rentals. Doing so was important in preserving property values and the character of the community.
Lenders. A high percentage of rentals creates instability as people move into and out of a community at a higher rate than homeowners. It can lead to higher crime rates, deferred maintenance, and lower market values. The percentage of rentals in an association is one of the criteria lenders use when offering loans insured by Fannie Mae.
Insurance. The insurance industry also recognizes the problems associated with renters. Claims histories have shown that associations with high rental populations have more claims. As a result, associations with excessive rentals may be charged higher premiums.
Rules Enforcement. Rules enforcement also becomes difficult because renters don't have an ownership interest. With the passage of AB 130, fines are now limited to $100, which effectively eliminates rule enforcement for most communities. To learn what can be done with rent restrictions, see "Rent Restrictions, Vacation Rentals, and Room Rentals."
Bad Legislation. Our legislature seems addicted to bad legislation. Legislators decided that forcing associations to allow investors to convert units into rentals somehow helps the housing market. It does not. The way to make more housing available is to allow more to be built. Another solution is to elect business-oriented representatives at all levels in the state. In addition, the legislature should be limited to meeting every other year and only for sixty days. It would slow down the flow of bad legislation.
NEW
MENU STRUCTURE
 Good news--we created a new menu structure for the website. To make it easier to move from subject to subject and find the information you are looking for, we added menu selections to individual pages throughout the website. To see what they look like, go to "Boards of Directors."
MATTHEW T. EISENDRATH
JOINS ADAMS|STIRLING
 We are pleased to announce that attorney Matthew Eisendrath joined our firm. Matthew is a recent graduate of the California Western School of Law. Prior to law school, he earned a Bachelor of Arts in Communication Studies from Humboldt State University, where he was a member of the college speech and debate team.
Before joining our firm, Matthew worked as a law clerk in a firm that provided counsel and advocacy in elder law. He also worked as an associate real estate agent in his family's real estate business. Matthew joins our San Diego team of lawyers. Contact us for more information.
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