AB 1412: Common interest developments: notices: volunteer officers: liability.
- Session Year: 2017-2018
- House: Assembly
- Latest Version Date: 2017-09-25
The Davis-Stirling Common Interest Development Act defines and regulates residential common interest developments. Existing law requires a common interest development to be managed by an association, which is incorporated or unincorporated. Existing law requires the owner of a separate interest in a common interest development to annually provide the association with specified written information, including an address for the purpose of receiving notices from the association. Existing law authorizes the association to use the property address when the owner fails to provide an address. Existing law also limits the personal liability of a volunteer officer or director of an association that manages a common development that is exclusively residential for tortious acts or omissions, if certain criteria are met, including that the act or omission be made in good faith and within the scope of duty.
This bill would authorize the association, when an owner fails to provide the required notice, to use the last address provided in writing by the owner, except as specified. The bill would also extend the limitation on the personal liability, as described above, to a volunteer officer or director of a development that is mixed use when the volunteer officer or volunteer director is a tenant of a residential separate interest or is an owner of no more than 2 separate interests and whose ownership in the common interest development consists exclusively of residential separate interests.
The Davis-Stirling Common Interest Development Act defines and regulates residential common interest developments. Existing law requires a common interest development to be managed by an association, which is incorporated or unincorporated. Existing law requires the owner of a separate interest in a common interest development to annually provide the association with specified written information, including an address for the purpose of receiving notices from the association. Existing law authorizes the association to use the property address when the owner fails to provide an address. Existing law also limits the personal liability of a volunteer officer or director of an association that manages a common development that is exclusively residential for tortious acts or omissions, if certain criteria are met, including that the act or omission be made in good faith and within the scope of duty.
This bill would authorize the association, when an owner fails to provide the required notice, to use the last address provided in writing by the owner, except as specified. The bill would also extend the limitation on the personal liability, as described above, to a volunteer officer or director of a development that is mixed use when the volunteer officer or volunteer director is a tenant of a residential separate interest or is an owner of no more than 2 separate interests and whose ownership in the common interest development consists exclusively of residential separate interests.
The Davis-Stirling Common Interest Development Act defines and regulates residential common interest developments. Existing law requires a common interest development to be managed by an association, which is incorporated or unincorporated. Existing law requires the owner of a separate interest in a common interest development to annually provide the association with specified written information, including an address for the purpose of receiving notices from the association. Existing law authorizes the association to use the property address when the owner fails to provide an address. Existing law also limits the personal liability of a volunteer officer or director of an association that manages a common development that is exclusively residential for tortious acts or omissions, if certain criteria are met, including that the act or omission be made in good faith and within the scope of duty.
This bill would authorize the association, when an owner fails to provide the required notice, to use the last address provided in writing by the owner, except as specified. The bill would also extend the limitation on the personal liability, as described above, to a volunteer officer or director of a development that is mixed use when the volunteer officer or volunteer director is a tenant of a residential separate interest or is an owner of no more than 2 separate interests and whose ownership in the common interest development consists exclusively of residential separate interests.
The Davis-Stirling Common Interest Development Act defines and regulates residential common interest developments. Existing law requires a common interest development to be managed by an association, which is incorporated or unincorporated. Existing law requires the owner of a separate interest in a common interest development to annually provide the association with specified written information, including an address for the purpose of receiving notices from the association. Existing law authorizes the association to use the property address when the owner fails to provide an address. Existing law also limits the personal liability of a volunteer officer or director of an association that manages a common development that is exclusively residential for tortious acts or omissions, if certain criteria are met, including that the act or omission be made in good faith and within the scope of duty.
This bill would authorize the association, when an owner fails to provide the required notice, to use the last address provided in writing by the owner, except as specified. The bill would also extend the limitation on the personal liability, as described above, to a volunteer officer or director of a development that is mixed use in which a when the volunteer officer or volunteer director does not own more than 2 residential separate interests. is a tenant of a residential separate interest or is an owner of no more than 2 separate interests and whose ownership in the common interest development consists exclusively of residential separate interests.
The Davis-Stirling Common Interest Development Act defines and regulates residential common interest developments. Existing law requires a common interest development to be managed by an association, which is incorporated or unincorporated. Existing law requires the owner of a separate interest in a common interest development to annually provide the association with specified written information, including an address for the purpose of receiving notices from the association. Existing law authorizes the association to use the property address when the owner fails to provide an address. Existing law also limits the personal liability of a volunteer officer or director of an association that manages a common development that is exclusively residential for tortious acts or omissions, if certain criteria are met, including that the act or omission be made in good faith and within the scope of duty.
This bill would authorize the association, when an owner fails to provide the required notice, to use the last address provided in writing by the owner, except as specified. The bill would also extend the limitation on the personal liability, as described above, to a volunteer officer or director of a development that is mixed use in which a volunteer officer or volunteer director does not own more than two 2 residential separate interests.
Existing law defines and regulates common interest developments. Existing law requires a common interest development to be managed by an association, which is incorporated or unincorporated. Existing law limits the personal liability of a volunteer officer or director of an association that manages a common development that is exclusively residential for tortious acts or omissions, if certain criteria are met, including that the act or omission be made in good faith and within the scope of duty.
This bill would extend the limitation on the personal liability, as described above, to a volunteer officer or director of a development that is mixed use in which a volunteer officer or volunteer director does not own more than two residential separate interests.
(a)An owner of a separate interest shall, on an annual basis, provide written notice to the association of all of the following:
(1)The address or addresses to which notices from the association are to be delivered.
(2)An alternate or secondary address to which notices from the association are to be delivered.
(3)The name and address of the owners legal representative, if any, including any person with power of attorney or other person who can be contacted in the event of the owners extended absence from the separate interest.
(4)Whether the separate interest is owner-occupied, is rented out, if the parcel is developed but vacant, or if the parcel is undeveloped land.
(b)The association shall solicit these annual notices of each owner and, at least 30 days prior to making its own required disclosure under Section 5300, shall enter the data into its books and records.
(c)If an owner fails to provide the notices set forth in paragraphs (1) and (2) of subdivision (a), the last address provided in writing by the owner or, if none, the property address shall be deemed to be the address to which notices are to be delivered.
SEC. 2.Section 5800 of the Civil Code is amended to read:5800.(a)A volunteer officer or volunteer director described in subdivision (e) of an association that manages a common interest development that is residential or mixed use shall not be personally liable in excess of the coverage of insurance specified in paragraph (4) to any person who suffers injury, including, but not limited to, bodily injury, emotional distress, wrongful death, or property damage or loss as a result of the tortious act or omission of the volunteer officer or volunteer director if all of the following criteria are met:
(1)The act or omission was performed within the scope of the officers or directors association duties.
(2)The act or omission was performed in good faith.
(3)The act or omission was not willful, wanton, or grossly negligent.
(4)The association maintained and had in effect at the time the act or omission occurred and at the time a claim is made one or more policies of insurance that shall include coverage for (A) general liability of the association and (B) individual liability of officers and directors of the association for negligent acts or omissions in that capacity; provided that both types of coverage are in the following minimum amounts:
(A)At least five hundred thousand dollars ($500,000) if the common interest development consists of 100 or fewer separate interests.
(B)At least one million dollars ($1,000,000) if the common interest development consists of more than 100 separate interests.
(b)The payment of actual expenses incurred by a director or officer in the execution of the duties of that position does not affect the directors or officers status as a volunteer within the meaning of this section.
(c)An officer or director who at the time of the act or omission was a declarant, or who received either direct or indirect compensation as an employee from the declarant, or from a financial institution that purchased a separate interest at a judicial or nonjudicial foreclosure of a mortgage or deed of trust on real property, is not a volunteer for the purposes of this section.
(d)Nothing in this section shall be construed to limit the liability of the association for its negligent act or omission or for any negligent act or omission of an officer or director of the association.
(e)This section shall only apply to a volunteer officer or director who is a tenant of a residential separate interest in the common interest development or is an owner of no more than two separate interests and whose ownership in the common interest development consists exclusively of residential separate interests.
(f)(1)For purposes of paragraph (1) of subdivision (a), the scope of the officers or directors association duties shall include, but shall not be limited to, both of the following decisions:
(A)Whether to conduct an investigation of the common interest development for latent deficiencies prior to the expiration of the applicable statute of limitations.
(B)Whether to commence a civil action against the builder for defects in design or construction.
(2)It is the intent of the Legislature that this section clarify the scope of association duties to which the protections against personal liability in this section apply. It is not the intent of the Legislature that these clarifications be construed to expand, or limit, the fiduciary duties owed by the directors or officers.
(a)An owner of a separate interest shall, on an annual basis, provide written notice to the association of all of the following:
(1)The address or addresses to which notices from the association are to be delivered.
(2)An alternate or secondary address to which notices from the association are to be delivered.
(3)The name and address of the owners legal representative, if any, including any person with power of attorney or other person who can be contacted in the event of the owners extended absence from the separate interest.
(4)Whether the separate interest is owner-occupied, is rented out, if the parcel is developed but vacant, or if the parcel is undeveloped land.
(b)The association shall solicit these annual notices of each owner and, at least 30 days prior to making its own required disclosure under Section 5300, shall enter the data into its books and records.
(c)If an owner fails to provide the notices set forth in paragraphs (1) and (2) of subdivision (a), the last address provided in writing by the owner or, if none, the property address shall be deemed to be the address to which notices are to be delivered.
SEC. 2.Section 5800 of the Civil Code is amended to read:5800.(a)A volunteer officer or volunteer director described in subdivision (e) of an association that manages a common interest development that is residential or mixed use shall not be personally liable in excess of the coverage of insurance specified in paragraph (4) to any person who suffers injury, including, but not limited to, bodily injury, emotional distress, wrongful death, or property damage or loss as a result of the tortious act or omission of the volunteer officer or volunteer director if all of the following criteria are met:
(1)The act or omission was performed within the scope of the officers or directors association duties.
(2)The act or omission was performed in good faith.
(3)The act or omission was not willful, wanton, or grossly negligent.
(4)The association maintained and had in effect at the time the act or omission occurred and at the time a claim is made one or more policies of insurance that shall include coverage for (A) general liability of the association and (B) individual liability of officers and directors of the association for negligent acts or omissions in that capacity; provided that both types of coverage are in the following minimum amounts:
(A)At least five hundred thousand dollars ($500,000) if the common interest development consists of 100 or fewer separate interests.
(B)At least one million dollars ($1,000,000) if the common interest development consists of more than 100 separate interests.
(b)The payment of actual expenses incurred by a director or officer in the execution of the duties of that position does not affect the directors or officers status as a volunteer within the meaning of this section.
(c)An officer or director who at the time of the act or omission was a declarant, or who received either direct or indirect compensation as an employee from the declarant, or from a financial institution that purchased a separate interest at a judicial or nonjudicial foreclosure of a mortgage or deed of trust on real property, is not a volunteer for the purposes of this section.
(d)Nothing in this section shall be construed to limit the liability of the association for its negligent act or omission or for any negligent act or omission of an officer or director of the association.
(e)This section shall only apply to a volunteer officer or director who is a tenant of a residential separate interest in the common interest development or is an owner of no more than two separate interests and whose ownership in the common interest development consists exclusively of residential separate interests.
(f)(1)For purposes of paragraph (1) of subdivision (a), the scope of the officers or directors association duties shall include, but shall not be limited to, both of the following decisions:
(A)Whether to conduct an investigation of the common interest development for latent deficiencies prior to the expiration of the applicable statute of limitations.
(B)Whether to commence a civil action against the builder for defects in design or construction.
(2)It is the intent of the Legislature that this section clarify the scope of association duties to which the protections against personal liability in this section apply. It is not the intent of the Legislature that these clarifications be construed to expand, or limit, the fiduciary duties owed by the directors or officers.
(a)An owner of a separate interest shall, on an annual basis, provide written notice to the association of all of the following:
(1)The address or addresses to which notices from the association are to be delivered.
(2)An alternate or secondary address to which notices from the association are to be delivered.
(3)The name and address of his or her the owners legal representative, if any, including any person with power of attorney or other person who can be contacted in the event of the owners extended absence from the separate interest.
(4)Whether the separate interest is owner-occupied, is rented out, if the parcel is developed but vacant, or if the parcel is undeveloped land.
(b)The association shall solicit these annual notices of each owner and, at least 30 days prior to making its own required disclosure under Section 5300, shall enter the data into its books and records.
(c)If an owner fails to provide the notices set forth in paragraphs (1) and (2) of subdivision (a), the last address provided in writing by the owner or, if none, the property address shall be deemed to be the address to which notices are to be delivered.
SEC. 2.Section 5800 of the Civil Code is amended to read:5800.(a)A volunteer officer or volunteer director described in subdivision (e) of an association that manages a common interest development that is residential or mixed use shall not be personally liable in excess of the coverage of insurance specified in paragraph (4) to any person who suffers injury, including, but not limited to, bodily injury, emotional distress, wrongful death, or property damage or loss as a result of the tortious act or omission of the volunteer officer or volunteer director if all of the following criteria are met:
(1)The act or omission was performed within the scope of the officers or directors association duties.
(2)The act or omission was performed in good faith.
(3)The act or omission was not willful, wanton, or grossly negligent.
(4)The association maintained and had in effect at the time the act or omission occurred and at the time a claim is made one or more policies of insurance that shall include coverage for (A) general liability of the association and (B) individual liability of officers and directors of the association for negligent acts or omissions in that capacity; provided that both types of coverage are in the following minimum amounts:
(A)At least five hundred thousand dollars ($500,000) if the common interest development consists of 100 or fewer separate interests.
(B)At least one million dollars ($1,000,000) if the common interest development consists of more than 100 separate interests.
(b)The payment of actual expenses incurred by a director or officer in the execution of the duties of that position does not affect the directors or officers status as a volunteer within the meaning of this section.
(c)An officer or director who at the time of the act or omission was a declarant, or who received either direct or indirect compensation as an employee from the declarant, or from a financial institution that purchased a separate interest at a judicial or nonjudicial foreclosure of a mortgage or deed of trust on real property, is not a volunteer for the purposes of this section.
(d)Nothing in this section shall be construed to limit the liability of the association for its negligent act or omission or for any negligent act or omission of an officer or director of the association.
(e)This section shall only apply to a volunteer officer or director who is a tenant of a residential separate interest in the common interest development or is an owner of no more than two separate interests and whose ownership in the common interest development consists exclusively of residential separate interests.
(f)(1)For purposes of paragraph (1) of subdivision (a), the scope of the officers or directors association duties shall include, but shall not be limited to, both of the following decisions:
(A)Whether to conduct an investigation of the common interest development for latent deficiencies prior to the expiration of the applicable statute of limitations.
(B)Whether to commence a civil action against the builder for defects in design or construction.
(2)It is the intent of the Legislature that this section clarify the scope of association duties to which the protections against personal liability in this section apply. It is not the intent of the Legislature that these clarifications be construed to expand, or limit, the fiduciary duties owed by the directors or officers.
(a)An owner of a separate interest shall, on an annual basis, provide written notice to the association of all of the following:
(1)The address or addresses to which notices from the association are to be delivered.
(2)An alternate or secondary address to which notices from the association are to be delivered.
(3)The name and address of his or her legal representative, if any, including any person with power of attorney or other person who can be contacted in the event of the owners extended absence from the separate interest.
(4)Whether the separate interest is owner-occupied, is rented out, if the parcel is developed but vacant, or if the parcel is undeveloped land.
(b)The association shall solicit these annual notices of each owner and, at least 30 days prior to making its own required disclosure under Section 5300, shall enter the data into its books and records.
(c)If an owner fails to provide the notices set forth in paragraphs (1) and (2) of subdivision (a), the last address provided in writing by the owner or, if none, the property address shall be deemed to be the address to which notices are to be delivered.
SEC. 2.Section 5800 of the Civil Code is amended to read:5800.(a)A volunteer officer or volunteer director described in subdivision (e) of an association that manages a common interest development that is exclusively residential or, if the development is mixed use, a volunteer officer or volunteer director who does not own more than two residential separate interests, or mixed use shall not be personally liable in excess of the coverage of insurance specified in paragraph (4) to any person who suffers injury, including, but not limited to, bodily injury, emotional distress, wrongful death, or property damage or loss as a result of the tortious act or omission of the volunteer officer or volunteer director if all of the following criteria are met:
(1)The act or omission was performed within the scope of the officers or directors association duties.
(2)The act or omission was performed in good faith.
(3)The act or omission was not willful, wanton, or grossly negligent.
(4)The association maintained and had in effect at the time the act or omission occurred and at the time a claim is made one or more policies of insurance that shall include coverage for (A) general liability of the association and (B) individual liability of officers and directors of the association for negligent acts or omissions in that capacity; provided that both types of coverage are in the following minimum amounts:
(A)At least five hundred thousand dollars ($500,000) if the common interest development consists of 100 or fewer separate interests.
(B)At least one million dollars ($1,000,000) if the common interest development consists of more than 100 separate interests.
(b)The payment of actual expenses incurred by a director or officer in the execution of the duties of that position does not affect the directors or officers status as a volunteer within the meaning of this section.
(c)An officer or director who at the time of the act or omission was a declarant, or who received either direct or indirect compensation as an employee from the declarant, or from a financial institution that purchased a separate interest at a judicial or nonjudicial foreclosure of a mortgage or deed of trust on real property, is not a volunteer for the purposes of this section.
(d)Nothing in this section shall be construed to limit the liability of the association for its negligent act or omission or for any negligent act or omission of an officer or director of the association.
(e)This section shall only apply to a volunteer officer or director who is a tenant of a residential separate interest in the common interest development or is an owner of no more than two separate interests and whose ownership in the common interest development. development consists exclusively of residential separate interests.
(f)(1)For purposes of paragraph (1) of subdivision (a), the scope of the officers or directors association duties shall include, but shall not be limited to, both of the following decisions:
(A)Whether to conduct an investigation of the common interest development for latent deficiencies prior to the expiration of the applicable statute of limitations.
(B)Whether to commence a civil action against the builder for defects in design or construction.
(2)It is the intent of the Legislature that this section clarify the scope of association duties to which the protections against personal liability in this section apply. It is not the intent of the Legislature that these clarifications be construed to expand, or limit, the fiduciary duties owed by the directors or officers.
(a)An owner of a separate interest shall, on an annual basis, provide written notice to the association of all of the following:
(1)The address or addresses to which notices from the association are to be delivered.
(2)An alternate or secondary address to which notices from the association are to be delivered.
(3)The name and address of his or her legal representative, if any, including any person with power of attorney or other person who can be contacted in the event of the owners extended absence from the separate interest.
(4)Whether the separate interest is owner-occupied, is rented out, if the parcel is developed but vacant, or if the parcel is undeveloped land.
(b)The association shall solicit these annual notices of each owner and, at least 30 days prior to making its own required disclosure under Section 5300, shall enter the data into its books and records.
(c)If an owner fails to provide the notices set forth in paragraphs (1) and (2) of subdivision (a), the last address provided in writing by the owner or, if none, the property address shall be deemed to be the address to which notices are to be delivered.
SECTION 1.SEC. 2.Section 5800 of the Civil Code is amended to read:5800.(a)A volunteer officer or volunteer director of an association that manages a common interest development that is exclusively residential or, if the development is mixed use, a volunteer officer or volunteer director who does not own more than two residential separate interests, shall not be personally liable in excess of the coverage of insurance specified in paragraph (4) to any person who suffers injury, including, but not limited to, bodily injury, emotional distress, wrongful death, or property damage or loss as a result of the tortious act or omission of the volunteer officer or volunteer director if all of the following criteria are met:
(1)The act or omission was performed within the scope of the officers or directors association duties.
(2)The act or omission was performed in good faith.
(3)The act or omission was not willful, wanton, or grossly negligent.
(4)The association maintained and had in effect at the time the act or omission occurred and at the time a claim is made one or more policies of insurance that shall include coverage for (A) general liability of the association and (B) individual liability of officers and directors of the association for negligent acts or omissions in that capacity; provided that both types of coverage are in the following minimum amounts:
(A)At least five hundred thousand dollars ($500,000) if the common interest development consists of 100 or fewer separate interests.
(B)At least one million dollars ($1,000,000) if the common interest development consists of more than 100 separate interests.
(b)The payment of actual expenses incurred by a director or officer in the execution of the duties of that position does not affect the directors or officers status as a volunteer within the meaning of this section.
(c)An officer or director who at the time of the act or omission was a declarant, or who received either direct or indirect compensation as an employee from the declarant, or from a financial institution that purchased a separate interest at a judicial or nonjudicial foreclosure of a mortgage or deed of trust on real property, is not a volunteer for the purposes of this section.
(d)Nothing in this section shall be construed to limit the liability of the association for its negligent act or omission or for any negligent act or omission of an officer or director of the association.
(e)This section shall only apply to a volunteer officer or director who is a tenant of a separate interest in the common interest development or is an owner of no more than two separate interests in the common interest development.
(f)(1)For purposes of paragraph (1) of subdivision (a), the scope of the officers or directors association duties shall include, but shall not be limited to, both of the following decisions:
(A)Whether to conduct an investigation of the common interest development for latent deficiencies prior to the expiration of the applicable statute of limitations.
(B)Whether to commence a civil action against the builder for defects in design or construction.
(2)It is the intent of the Legislature that this section clarify the scope of association duties to which the protections against personal liability in this section apply. It is not the intent of the Legislature that these clarifications be construed to expand, or limit, the fiduciary duties owed by the directors or officers.
(a)A volunteer officer or volunteer director of an association that manages a common interest development that is exclusively residential, residential or, if the development is mixed use, a volunteer officer or volunteer director who does not own more than two residential separate interests, shall not be personally liable in excess of the coverage of insurance specified in paragraph (4) to any person who suffers injury, including, but not limited to, bodily injury, emotional distress, wrongful death, or property damage or loss as a result of the tortious act or omission of the volunteer officer or volunteer director if all of the following criteria are met:
(1)The act or omission was performed within the scope of the officers or directors association duties.
(2)The act or omission was performed in good faith.
(3)The act or omission was not willful, wanton, or grossly negligent.
(4)The association maintained and had in effect at the time the act or omission occurred and at the time a claim is made one or more policies of insurance that shall include coverage for (A) general liability of the association and (B) individual liability of officers and directors of the association for negligent acts or omissions in that capacity; provided that both types of coverage are in the following minimum amounts:
(A)At least five hundred thousand dollars ($500,000) if the common interest development consists of 100 or fewer separate interests.
(B)At least one million dollars ($1,000,000) if the common interest development consists of more than 100 separate interests.
(b)The payment of actual expenses incurred by a director or officer in the execution of the duties of that position does not affect the directors or officers status as a volunteer within the meaning of this section.
(c)An officer or director who at the time of the act or omission was a declarant, or who received either direct or indirect compensation as an employee from the declarant, or from a financial institution that purchased a separate interest at a judicial or nonjudicial foreclosure of a mortgage or deed of trust on real property, is not a volunteer for the purposes of this section.
(d)Nothing in this section shall be construed to limit the liability of the association for its negligent act or omission or for any negligent act or omission of an officer or director of the association.
(e)This section shall only apply to a volunteer officer or director who is a tenant of a separate interest in the common interest development or is an owner of no more than two separate interests in the common interest development.
(f)(1)For purposes of paragraph (1) of subdivision (a), the scope of the officers or directors association duties shall include, but shall not be limited to, both of the following decisions:
(A)Whether to conduct an investigation of the common interest development for latent deficiencies prior to the expiration of the applicable statute of limitations.
(B)Whether to commence a civil action against the builder for defects in design or construction.
(2)It is the intent of the Legislature that this section clarify the scope of association duties to which the protections against personal liability in this section apply. It is not the intent of the Legislature that these clarifications be construed to expand, or limit, the fiduciary duties owed by the directors or officers.
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Date
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Status
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|---|---|
| Sep 25, 2017 | Chaptered by Secretary of State - Chapter 278, Statutes of 2017. |
| Sep 25, 2017 | Approved by the Governor. |
| Sep 7, 2017 | Enrolled and presented to the Governor at 3 p.m. |
| Aug 31, 2017 | Senate amendments concurred in. To Engrossing and Enrolling. |
| Aug 24, 2017 | In Assembly. Concurrence in Senate amendments pending. May be considered on or after August 26 pursuant to Assembly Rule 77. |
| Aug 24, 2017 | Read third time. Passed. Ordered to the Assembly. |
| Jul 20, 2017 | Read second time. Ordered to Consent Calendar. |
| Jul 19, 2017 | From committee: Do pass. To Consent Calendar. (Ayes 7. Noes 0.) (July 18). |
| Jul 3, 2017 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on JUD. |
| Jun 13, 2017 | From committee: Do pass and re-refer to Com. on JUD. with recommendation: To Consent Calendar. (Ayes 13. Noes 0.) (June 13). Re-referred to Com. on JUD. |
| Jun 1, 2017 | Referred to Coms. on T. & H. and JUD. |
| May 18, 2017 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 18, 2017 | Read third time. Passed. Ordered to the Senate. (Ayes 69. Noes 0. Page 1622.) |
| May 16, 2017 | Read second time. Ordered to Consent Calendar. |
| May 15, 2017 | Read second time and amended. Ordered returned to second reading. |
| May 11, 2017 | From committee: Amend, and do pass as amended. To Consent Calendar. (Ayes 11. Noes 0.) (May 9). |
| Apr 27, 2017 | From committee: Do pass and re-refer to Com. on JUD. (Ayes 7. Noes 0.) (April 26). Re-referred to Com. on JUD. |
| Mar 27, 2017 | Re-referred to Com. on H. & C.D. |
| Mar 23, 2017 | From committee chair, with author's amendments: Amend, and re-refer to Com. on H. & C.D. Read second time and amended. |
| Mar 13, 2017 | Referred to Coms. on H. & C.D. and JUD. |
| Feb 19, 2017 | From printer. May be heard in committee March 21. |
| Feb 17, 2017 | Read first time. To print. |
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Date
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Description
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Location
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Votes
|
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|---|---|---|---|---|
| Aug 31, 2017 | AB 1412 CHOI Concurrence in Senate Amendments | Assembly Floor |
Passed |
|
| Aug 24, 2017 | Consent Calendar 2nd AB1412 | Senate Floor |
Passed |
|
| Jul 18, 2017 | Do pass and be ordered to the Consent Calendar | Senate Standing Committee on Judiciary |
Passed |
|
| Jun 13, 2017 | Do pass, but first be re-referred to the Committee on [Judiciary] with the recommendation: To Consent Calendar | Senate Standing Committee on Transportation and Housing |
Passed |
|
| May 18, 2017 | AB 1412 CHOI Consent Calendar Second Day Regular Session | Assembly Floor |
Passed |
|
| May 9, 2017 | Do pass as amended. To Consent Calendar. | Assembly Standing Committee on Judiciary |
Passed |
|
| Apr 26, 2017 | Do pass and be re-referred to the Committee on [Judiciary] | Assembly Standing Committee on Housing and Community Development |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
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Position
|
Date
|
|---|---|---|
| California Association Of Community Managers | ** Support | May 5, 2017 |
| Community Associations Institute | ** Support | Aug 17, 2017 |
| Community Associations Institute/California Legislative Action Committee | * Support | Apr 26, 2017 |
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 1412
Author:(Choi)
As Amended Ver:July 3, 2017
Majority vote
ASSEMBLY: | 69-0 | (May 18, 2017) | SENATE: | 38-0 | (August 24, 2017) |
Original Committee Reference: H. & C.D.
SUMMARY: Authorizes a homeowners association (HOA) to use the last address provided in writing by the owner of a separate interest in a common interest development (CID) when the owner fails to provide notice of change of address. Limits the liability of a volunteer officer or director who does not own more than two residential separate interests in a development that is mixed use.
The Senate amendments make technical changes.
FISCAL EFFECT: None.
COMMENTS: Mixed use developments combine residential units with other uses, for example commercial, such as retail or restaurant space. Under current law only HOAs in exclusively residential developments grant immunity from personal liability to the volunteer board members. This bill will extend this immunity to volunteer members of HOAs that are part of mixed-use development if the above criteria are met. According to the Foundation for Community Association Research, there are over 42,000 HOAs in California and board members donate over $200 million in time serving their communities. This number is expected to increase. This bill will provide consistency in the law to all volunteer board members in CIDs.
Owners of separate interests in a CID are supposed to annually provide certain information, including an address for which notices from the HOA are supposed to be delivered. Under current law, if the separate interest owner fails to provide the HOA with an address, the HOA is required to use the address of the separate interest. This means that every year a separate interest owner must provide their desired address or the HOA has to switch the address it has on file to the separate interest address. This takes time and may not be what the separate interest owner wants. This bill changes the default address to the last address provided in writing by the owner of the separate interest. If the owner failed to ever give an address, then the default is the address of the separate interest. This change is intended to save time and effort for both the separate interest owner and the HOA.
Analysis Prepared by: Lisa Engel / H. & C.D. / (916) 319-2085 FN: 0001277
Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 1412 |
CONSENT
Bill No: AB 1412
Amended: 7/3/17 in Senate
SENATE TRANS. & HOUSING COMMITTEE: 13-0, 6/13/17
AYES: Beall, Cannella, Allen, Atkins, Bates, Gaines, McGuire, Mendoza, Morrell, Roth, Skinner, Wieckowski, Wiener
SENATE JUDICIARY COMMITTEE: 7-0, 7/18/17
AYES: Jackson, Moorlach, Anderson, Hertzberg, Monning, Stern, Wieckowski
ASSEMBLY FLOOR: 69-0, 5/18/17 (Consent) - See last page for vote
SUBJECT: Common interest developments: notices: volunteer officers: liability
SOURCE: Community Associations Institute
DIGEST:
This bill makes changes to the annual notice requirements in a common interest development (CID) and expands the applicability of the liability protection for a volunteer officer or director of a homeowner’s association (HOA) to one who manages a mixed-use CID.
ANALYSIS:
Existing law:
- Requires the homeowner of a separate property interest in a CID to provide written notice annually to the HOA of all the following:
- Address or addresses to which notices from the association are to be delivered.
- An alternate or secondary address to which notices from the HOA are to be delivered.
- The name and address of his or her legal representative, if any.
- Whether the separate interest is owner-occupied, rented out, developed but vacant, or undeveloped land.
- Requires the HOA to solicit these annual notices in 1) above from each property owner. If the homeowner fails to provide the information in 1) above, the property address shall be deemed to be the address to which notices are to be delivered.
- Prohibits a volunteer officer or director of an HOA that manages a CID that is exclusively residential from being personally liable to any person who suffers injury as a result of the tortious act or omission of the volunteer officer or director in excess of the liability insurance for the HOA and individual officers, so long as specified criteria are met. Injury shall include bodily injury, emotional distress, wrongful death, or property damage or loss. This only applies to a volunteer officer or director who is a tenant of a separate interest in the CID or owner of two or more separate interests in the CID.
This bill:
- States that if an owner fails to provide the information in the annual notice, the address last provided in writing by the owner, or if none, the property address shall be deemed to be the address to which notices are to be delivered.
- Expands the applicability of the liability protection for a volunteer officer or director of an HOA who manages a CID that is either residential or mixed use.
- Limits the application of liability protection to a volunteer officer or director who is a tenant of a residential separate interest in the CID or an owner of no more than two separate interests and whose ownership in the CID consists exclusively of residential separate interests.
Comments
- Purpose. According to the author, “this bill is needed because it solves the lack of equity that exists for volunteer members of community associations that are part of mixed-use developments.”
- CIDs. A CID is a form of real estate in which each homeowner has an exclusive interest in a unit or lot and a shared or undivided interest in common-area property. Condominiums, planned unit developments, stock cooperatives, community apartments, and many resident-owned mobilehome parks all fall under the umbrella of CIDs. There are over 50,220 CIDs in California that comprise over 4.8 million housing units, or approximately one-quarter of the state’s housing stock. CIDs are governed by an HOA. The Davis-Stirling Common Interest Development Act provides the legal framework under which CIDs are established and operate. In addition to the requirements of the act, each CID is governed according to the recorded declarations, bylaws, and operating rules of the association, collectively referred to as the governing documents.
- Mixed-use developments in HOAs. Mixed-use developments are communities that combine residential units with commercial, cultural, institutional, or industrial uses. In CIDs, the HOAs are needed to maintain the common areas of these developments. Current law only grants immunity from personal liability to volunteer board members of HOAs that are exclusively residential and do not cover mixed-use developments. This bill expands that liability coverage to mixed-use developments. The protection shall only be extended to a volunteer officer or director who is a tenant of a residential separate interest in the CID or an owner of no more than two separate interests and whose ownership in the CID consists exclusively of residential separate interests.
According to the author, the idea came from the sponsor’s legislative committee. They realized that there was a hole in the current law and community associations across the state are having problems finding people to serve on their boards. This liability issue is one more reason not to serve. Further, as the number of mixed-used developments increase to meet the states demands for infill development, the author and sponsor see this becoming a problem in the future.
- Default Addresses. Under current law, if a separate interest owner fails to provide an HOA with an address, the HOA is required to use the address of separate interest. In effect, every year, a separate interest owner must provide their desired address or the HOA must switch the address it has on file. This bill changes the default address to the last address provided in writing by the owner of the separate interest.
FISCAL EFFECT: Appropriation: Fiscal Com.: Local:
SUPPORT: (Verified 7/20/17)
Community Associations Institute (source)
OPPOSITION: (Verified 7/20/17)
None received
ASSEMBLY FLOOR: 69-0, 5/18/17
AYES: Acosta, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bocanegra, Bonta, Brough, Burke, Caballero, Cervantes, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dababneh, Dahle, Daly, Eggman, Flora, Fong, Gallagher, Cristina Garcia, Eduardo Garcia, Gomez, Gonzalez Fletcher, Gray, Grayson, Harper, Irwin, Jones-Sawyer, Kalra, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood
NO VOTE RECORDED: Aguiar-Curry, Calderon, Chau, Frazier, Friedman, Gipson, Gloria, Holden, Mullin, Santiago, Rendon
Prepared by:
8/17/17 11:33:44
**** END ****
Senator Hannah-Beth Jackson, Chair
2017-2018 Regular Session
Bill No: AB 1412 (Author:Choi)
Version: July 3, 2017
Hearing Date: July 18, 2017
Fiscal: No
Urgency: No
Consultant: TSG
SUBJECT
Common interest developments: notices: volunteer officers: liability
DESCRIPTION
This bill would make two minor adjustments to the laws governing common interest developments (CIDs). First, it would direct homeowners’ associations to continue to use the last provided address for each member of the association, rather than reverting to the address of the member’s separate property each year. Second, the bill would extend to the residential, volunteer directors of a mixed-use CID the same limitations on liability that residential, volunteer directors of an exclusively residential CID enjoy.
BACKGROUND
Common interest developments (CIDs) are self-governing groups of dwellings that share common spaces and amenities. They come in a wide variety of physical formats: condominium complexes, apartment buildings, and neighborhoods of detached, single-family residences, for example. The owners of each individual dwelling within the CID are members of it. CID members are entitled to vote for the board of directors of the association that oversees operation of the CID. CID members are also subject to annual assessments that pay for the communal expenses of the CID. In California, CIDs are subject to the Davis-Stirling Act. (Civ. Code Secs. 4000 to 6150.) There are over 50,220 CIDs in the state, comprising over 4.8 million housing units and making up approximately one quarter of the state’s overall housing stock.
This bill would make two changes to the laws governing CID governance and operations. The first relates to the personal liability of CID directors. It would encourage the residential members of CIDs comprised of both commercial and residential properties to volunteer to serve on the board of directors, by limiting their personal liability exposure for doing so. The second change relates to how CID members receive notifications about important CID matters. It would simplify the process by which homeowners’ associations determine to what address they should send official documents. Instead of reverting to using the address of the homeowner’s property within the CID each year, the association would simply continue to send notifications to the last address provided by the homeowner.
This bill passed out of the Senate Committee on Transportation and Housing on a 13 to 0 vote.
CHANGES TO EXISTING LAW
Existing law requires a CID to be managed by an unincorporated or incorporated association. (Civ. Code Sec. 4800.)
Existing law requires the owner of a separate interest in a CID to provide the HOA with specified written information, including an address for the purpose of receiving notices from the HOA, annually. (Civ. Code Sec. 4041.)
Existing law allows the HOA to use the property address when the owner fails to provide an address. (Civ. Code Sec. 4041.)
Existing law limits the personal liability of a volunteer officer or director of a residential HOA if the following criteria are met: (a) the act or omission was performed within the scope of the officer’s or director’s association duties; (b) the act or omission was performed in good faith; (c) the act or omission was not willful, wanton, or grossly negligent; and (d) the HOA maintained and had in effect at the time the act or omission occurred and at the time a claim is made one or more policies of insurance that include coverage for general liability of the association and individual liability of officers and directors of the association for negligent acts or omissions in that capacity. (Civ. Code Sec. 5800.)
This bill would direct homeowners’ associations to send notices to the last address provided in writing by the homeowner, or, if the homeowner has not provided such an address, then to the address of the homeowner’s separate property within the CID.
This bill would extend to volunteer directors of mixed use, commercial and residential CIDs the same limitations on personal liability that the volunteer directors of exclusively residential CIDs enjoy, provided that the volunteer director of the mixed use CID is a tenant of a residential unit in the CID or is the owner of no more than two residential units in the CID.
COMMENT
1. Stated need for the bill
According to the author:
This bill is needed because it solves the lack of equity that exists for volunteer members of community associations that are part of mixed-use developments. Mixed-use developments are walkable communities that combine residential units with commercial, cultural, institutional, or industrial uses. As a result, community associations are needed to maintain the common areas of these developments. Current law only grants immunity from personal liability to volunteer board members of community associations that are exclusively residential and does not cover volunteer members of community associations that are a part of mixed-use developments.
Additionally, under current law, if the separate interest owner fails to provide the HOA with an address, the HOA is required to use the address of the separate interest property. This means that every year a separate interest owner must provide their desired address or the HOA has to switch the address it has on file to the property address. This bill changes the default address to the last address provided in writing by the owner of the separate interest.
In support, the Community Associations Institute of California writes:
As California continues to incentivize infill developments to increase housing and expand public transit in urban centers, the number of mixed use developments is expected to increase. Current law fails to provide board members in these developments immunity for the reasonable actions they take as a board. AB 1412 will correct this issue.
AB 1412 also makes a technical clarification […] needed so an association knows where to send notices when a member has failed to provide updated information.
2. Encouraging volunteer directors in the mixed-use CID context
The association board of directors must carry out certain responsibilities on behalf of the entire CID. It can be challenging to get people to step up to serve on a CID board of directors, in part because of the potential that directors can be sued for actions they take. The problem of getting people to serve as directors of the CID is particularly acute in the context of purely residential CIDS, where the role is often completely unpaid. To help encourage people to take on the task, existing law limits the personal liability of volunteer directors in CIDs that consist of residential units only. Directors of CIDs incorporating commercial properties enjoy no such liability protection.
This bill addresses what happens when a CID is mixed-use, meaning that it is composed of both residential and commercial properties. It would give volunteer directors of mixed use CIDS the same protections against personal liability that volunteer directors of exclusively residential CIDs enjoy, provided that the volunteer director in question is truly a tenant of a residential property within the CID or is the owner of not more than two residential properties within the CID. In this way, the bill would encourage residential property owners in mixed use CIDS to volunteer to serve as association directors to the same degree as their volunteer counterparts in exclusively residential CIDS.
3. Avoiding the mailing address runaround
As part of the process of governing a CID, the homeowners’ association and its board of directors must frequently provide legal notices to the members. In order to make sure that members receive those notices, existing law requires that members update their mailing address with the association on an annual basis. Under existing law, if the member does not update the member’s mailing address as required, the association must start mailing notices to the address of the member’s separate property within the CID. In theory, this ensures that CID members continue to get notices even if they move and forget to update their address with the association.
In practice, this system is problematic for two reasons. First, if the association member resides outside the CID and forgets to update the member’s address, then each year notices will start getting sent to the place where the member does not reside, increasing the chances that the member will not actually receive the notice. Second, the system results in a situation in which the association is constantly adjusting member’s addresses.
This bill purports to resolve this problem by directing associations to use the last address given to them by the homeowner in writing. In this way, the association does not need to update its address records constantly, and the homeowner will continue to receive notices even if the homeowner forgets about updating the association every year.
4. Effect of Recent Amendments
The most recent amendments to the bill replace gender specific terms with gender neutral language, in keeping with the effort to draft legislation more inclusively.
Support: None known
Opposition: None known
HISTORY
Source: The Community Associations Institute of California
Related Pending Legislation: None known
Prior Legislation: SB 918 (Vidak, Chapter 780, Statutes of 2016) required the owners of the separate interests in a common interest development to annually provide the association with specified written information for the purpose of receiving notices from the association.
Prior Vote:
Senate Transportation and Housing Committee (Ayes 13, Noes 0)
Assembly Floor (Ayes 69, Noes 0)
Assembly Judiciary Committee (Ayes 11, Noes 0)
Assembly Housing and Community Development Committee (Ayes 7, Noes 0)
**************
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2017 - 2018 Regular
Bill No: Hearing Date: 6/13/17
Author: | Choi | ||
Version: | 5/15/2017 | ||
Urgency: | No | Fiscal: | No |
Consultant: | Alison Hughes | ||
SUBJECT: .
DIGEST: This bill makes changes to the annual notice requirements in a common interest development (CID) and expands the applicability of the liability protection for a volunteer officer or director of a homeowner’s association (HOA) to one who manages a mixed-use CID.
ANALYSIS:
Existing law:
- Requires the homeowner of a separate property interest in a CID to provide written notice annually to the HOA of all the following:
- Address or addresses to which notices from the association are to be delivered.
- An alternate or secondary address to which notices from the HOA are to be delivered.
- The name and address of his or her legal representative, if any.
- Whether the separate interest is owner-occupied, rented out, developed but vacant, or undeveloped land.
- Requires the HOA to solicit these annual notices in (1) above from each property owner. If the homeowner fails to provide the information in (1), the property address shall be deemed to be the address to which notices are to be delivered.
- Prohibits a volunteer officer or director of an HOA that manages an CID that is exclusively residential from being personally liable to any person who suffers injury as a result of the tortious act or omission of the volunteer officer or director in excess of the liability insurance for the HOA and individual officers, so long as specified criteria are met. Injury shall include bodily injury, emotional distress, wrongful death, or property damage or loss. This only applies to a volunteer officer or director who is a tenant of a separate interest in the CID or owner of two or more separate interests in the CID.
This bill:
- States that if an owner fails to provide the information in the annual notice, the address last provided in writing by the owner, or if none, the property address shall be deemed to be the address to which notices are to be delivered.
- Expands the applicability of the liability protection for a volunteer officer or director of an HOA who manages a CID that is either residential or mixed use.
- Limits the application of liability protection to a volunteer officer or director who is a tenant of a residential separate interest in the CID or an owner of no more than two separate interests and whose ownership in the CID consists exclusively of residential separate interests.
COMMENTS:
- Purpose. According to the author, “this bill is needed because it solves the lack of equity that exists for volunteer members of community associations that are part of mixed-use developments.”
- CIDs. A CID is a form of real estate in which each homeowner has an exclusive interest in a unit or lot and a shared or undivided interest in common-area property. Condominiums, planned unit developments, stock cooperatives, community apartments, and many resident-owned mobilehome parks all fall under the umbrella of common interest developments. There are over 50,220 CIDs in California that comprise over 4.8 million housing units, or approximately one-quarter of the state’s housing stock. CIDs are governed by an HOA. The Davis-Stirling Common Interest Development Act provides the legal framework under which CIDs are established and operate. In addition to the requirements of the act, each CID is governed according to the recorded declarations, bylaws, and operating rules of the association, collectively referred to as the governing documents.
- Mixed-use developments in HOAs. Mixed-use developments are communities that combine residential units with commercial, cultural, institutional, or industrial uses. In CIDs, the HOAs are needed to maintain the common areas of these developments. Current law only grants immunity from personal liability to volunteer board members of HOAs that are exclusively residential and do not cover mixed-use developments. This bill would expand that liability coverage to mixed-use developments. The protection shall only be extended to a volunteer officer or director who is a tenant of a residential separate interest in the CID or an owner of no more than two separate interests and whose ownership in the CID consists exclusively of residential separate interests.
According to the author, the idea came from the sponsor’s legislative committee. They realized that there was a hole in the current law and community associations across the state are having problems finding people to serve on their boards. This liability issue is one more reason not to serve. Further, as the number of mixed-used developments increase to meet the states demands for infill development, the author and sponsor see this becoming a problem in the future.
- Default Addresses. Under current law, if a separate interest owner fails to provide an HOA with an address, the HOA is required to use the address of separate interest. In effect, every year, a separate interest owner must provide their desired address or the HOA must switch the address it has on file. This bill changes the default address to the last address provided in writing by the owner of the separate interest.
- Double-referral. This bill is double-referred to the Senate Judiciary Committee.
RELATED LEGISLATION:
SB 918 (Vidak, Chapter 780, Statues of 2016) — required the owner of a separate interest and the homeowner association in a common interest development to annually verify the address or addresses to which notices from the association are to be delivered.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
POSITIONS: (Communicated to the committee before noon on Wednesday,
June 7, 2017.)
SUPPORT:
Community Associations Institute (sponsor)
OPPOSITION:
None received.
Date of Hearing: May 9, 2017
ASSEMBLY COMMITTEE ON JUDICIARY
Mark Stone, Chair
ABPCA Bill Id:AB 1412
Author:(Choi) – As Amended Ver:March 23, 2017
PROPOSED CONSENT (As Proposed to be Amended)
SUBJECT: COMMON INTEREST DEVELOPMENTS: NOTICES: VOLUNTEER OFFICERS: LIABILITY
KEY ISSUE: should volunteer directors of a mixed use common interest development—if their ownership is exclusively residential-be extended the same immunity from liability that is currently provided to their counterparts who are volunteer directors in a common interest development that is exclusively residential?
SYNOPSIS
This non-controversial bill, sponsored by the Community Associations Institute (CAI), seeks to take provisions that currently shield volunteer directors in exclusively residential common interest developments (CIDs) from personal liability, under specific conditions, and extend them, in an identical fashion, to also protect volunteer directors in mixed-use developments from personal liability for acts or omission performed within the scope of their association duties. CAI, which represents homeowner associations and management professionals, contends it is appropriate to also extend these liability protections to the volunteer directors residing in mixed-used CIDs, because an increasing number of such developments are mixed-use in nature, including both business and residential owners, and not exclusively residential.
Current law limits liability for volunteer directors in exclusively residential CIDs because, among other reasons, their participation is uncompensated and they presumably have no external commercial interests at stake as they carry out their duties in governing the association, other than representing residential interests shared by all other resident owners. Because a grant of limited liability is arguably less necessary and less appropriate for a director who has a commercial ownership interest in the CID, proposed author's amendments clarify that immunity from personal liability shall apply only to a volunteer officer or director whose ownership in the common interest development is exclusively residential in nature. As proposed to be amended, the limited liability provisions apply, in either a residential or mixed-use CID, to a volunteer officer or director who is: (1) a tenant of a residential separate interest in the CID; or (2) an owner of no more than two separate interests whose ownership in the CID is exclusively residential. Finally, this bill clarifies the procedure for an association to send notices when a member has failed to provide updated address information. This bill previously was approved by the Assembly Housing and Community Development Committee by a 7-0 vote, and there is no known opposition.
SUMMARY: Provides immunity from personal liability, if certain conditions are met, to volunteer directors or officers of mixed-use common interest developments if their ownership stake in the CID is exclusively residential. Specifically, this bill:
- Authorizes a homeowners association (HOA) to use the last address provided in writing by the owner of a separate interest when the owner fails to provide notice of the address or addresses to which notices from the association are to be delivered.
- Extends immunity from personal liability for injury or other torts, as currently provided to volunteer directors or volunteer officers of an exclusively residential CID, to also include volunteer directors or volunteer officers of a mixed use CID, as long as identical specified criteria are met in both cases.
- Clarifies that the immunity from liability shall apply only to a volunteer officer or director who is a tenant of a residential separate interest in the common interest development, or is an owner of no more than two separate interests whose ownership in the common interest development is exclusively residential.
EXISTING LAW:
- Requires the owner of a separate interest in a CID to annually provide written notice to the HOA of all of the following information:
- The address or addresses to which notices from the association are to be delivered.
- An alternate or secondary address to which notices from the association are to be delivered.
- The name and address of his or her legal representative, if any, including any person with power of attorney or other person who can be contacted in the event of the owner’s extended absence from the separate interest.
- Whether the separate interest is owner-occupied, is rented out, if the parcel is developed but vacant, or if the parcel is undeveloped land. (Civil Code Section 4041 (a). All further references are to this code unless otherwise stated.)
- Specifies that the HOA shall deliver notices to the property address when the owner fails to provide an address under 1a) and 1b), above. (Section 4041 (c).)
- Provides that a volunteer officer or volunteer director of a CID that is exclusively residential shall not be personally liable, in excess of specified insurance coverage limits, to any person who suffers injury, including, but not limited to, bodily injury, emotional distress, wrongful death, or property damage or loss as a result of the tortious act or omission if all of the following criteria are met:
- The act or omission was performed within the scope of the officer’s or director’s association duties;
- The act or omission was performed in good faith;
- The act or omission was not willful, wanton, or grossly negligent; and
- The HOA maintained and had in effect at the time of the act or omission occurred, and at the time of a claim is made, one or more policies of insurance that include coverage for general liability of the association and individual liability of officers and directors of the association for negligent acts or omissions in that capacity, provided that certain minimum insurance requirements are maintained. (Section 5800 (a).)
- Provides that nothing in 3), above, shall be construed to limit the liability of the association for its negligent act or omission or for any negligent act or omission of an officer or director of the association. (Section 5800 (d).)
- Provides that the limited liability provisions in 3), above, only apply to a volunteer officer or director who is a tenant of a separate interest in the common interest development or is an owner of no more than two separate interests in the common interest development. (Section 5800 (e).)
- For the purpose of these provisions, clarifies the scope of a director's or officer's duties to the HOA, and clarifies the volunteer status of the director or officer with respect to repayment of actual expenses incurred in executing such duties. (Section 5800 (b) and (f).)
FISCAL EFFECT: As currently in print this bill is keyed non-fiscal.
COMMENTS: This bill, sponsored by the Community Associations Institute (CAI), seeks to take provisions that currently shield volunteer directors in exclusively residential CIDs from personal liability, under specific conditions, and extend them, in an identical fashion, to also protect volunteer directors in mixed-use developments from personal liability for acts or omission performed within the scope of their association duties. According to CAI:
Community associations are non-profit organizations that manage community facilities and enact policies to maximize the property values of the homeowner in their development. Each year residents elect a board of directors that has a fiduciary duty to make decisions that protect their residents' investment and maintain the common areas. As California continues to incentivize infill development to increase housing and expand public transit in urban centers, the number of mixed-use developments is expected to increase.
Current law fails to provide board members in these developments immunity for the reasonable actions they take as a board. AB 1412 will correct this issue . . . (and) extend personal immunity to volunteers who serve on the boards of community associations that are located in mixed-use developments.
Background on common interest developments. CIDs are multi-unit communities characterized by the following: (1) separate ownership of individual residential units coupled with an undivided interest in common property; (2) covenants, conditions, and restrictions (CC&Rs) that limit the use of both separate interests and common property; and (3) management of common property and enforcement of restrictions by a homeowner's association (HOA). An increasing proportion of Californians now live in CID's—by some accounts between one-fourth and one-third of all Californians—and it is likely CIDs represent the majority of new housing being built in the state. CIDs are governed by volunteer boards of directors who are elected by the members of the HOA and who are responsible for interpreting the governing documents and state law. According to the author, citing data by the Foundation for Community Association Research, there are over 42,000 HOAs in California, and it is estimated that board members donate over $200 million of their time serving their communities.
Existing protections from personal liability for volunteer directors. Existing law, Civil Code Section 5800, specifies certain criteria and limitations that govern the statutory grant of immunity from liability afforded to volunteer directors of associations that manage residential community interest developments for their tortious acts or omissions. Section 5800 only applies to CIDs that are "exclusively residential," and under subdivision (e), applies only to a volunteer officer or director "who is a tenant of a separate interest in the common interest development or is an owner of no more than two separate interests in the common interest development." As a preliminary matter, for immunity to apply, the act or omission must have been performed in good faith, within the scope of the officer’s or director’s association duties, and must not have been acted in a willful, wanton, or grossly negligent manner. In addition, the association must have maintained minimum insurance coverage, as specified, for the general liability and individual liability of directors for negligence.
If those conditions are met, then the law provides the volunteer director immunity from personal liability, in excess of the specified insurance coverage, to any person who suffers injury (including but not limited to bodily injury, emotional distress, wrongful death, or property damage) as a result of the tortious act or omission. This bill would extend this grant of immunity from liability, with identical criteria and limitations, to volunteer directors of mixed-use CIDs—covering them in an equivalent manner as volunteer directors of exclusively residential CIDs.
As proposed to be amended, this bill limits liability only for volunteer directors of a mixed-use CID whose ownership in the development is exclusively residential. As currently in print, subdivision (a) of the bill limits personal liability for "a volunteer officer or volunteer director of an association that manages a common interest development that is exclusively residential or, if the development is mixed use, a volunteer officer or volunteer director who does not own more than two residential separate interests." Confusingly, subdivision (e) of the bill states that these provisions "shall only apply to a volunteer officer or director who is a tenant of a separate interest in the common interest development or is an owner of no more than two separate interests in the common interest development." These create two simultaneous sets of rules about who is granted limited liability: one set which requires ownership of a residential separate interest (but not more than two of them), and another set which draws no distinction between residential ownership and commercial ownership in the CID.
Mixed-use developments typically combine residential units with commercial spaces within a single developed property, and the directors of a mixed-use development may be expected to include members from both the residential and commercial owners of the CID. Current law limits liability for volunteer directors in exclusively residential CIDs because, among other reasons, their participation is uncompensated and they presumably have no external commercial interests at stake as they carry out their duties in governing the association, other than representing residential interests shared by all other resident owners. Existing law does not extend limited liability to a director who is an owner of more than two separate interests in an exclusively residential CID because such a person is more likely to have commercial interests in mind if that person is in fact a landlord renting out those extra units. Limited liability is arguably less necessary and less appropriate for a director who has a commercial ownership interest in the CID and who is likely being compensated by a business that is housed in the mixed-use development.
Accordingly, the author proposes to amend the bill to clarify that immunity from personal liability shall apply only to a volunteer officer or director whose ownership in the common interest development is exclusively residential in nature. As proposed to be amended, the limited liability provisions apply, in either a residential or mixed-use CID, to a volunteer officer or director who is: (1) a tenant of a residential separate interest in the CID; or (2) an owner of no more than two separate interests whose ownership in the CID is exclusively residential.
This bill clarifies the procedure for an association to send notices when a member has failed to provide updated address information. Owners of separate interests in a CID are required to annually provide certain information, including an address to which notices from the HOA are supposed to be delivered. Under current law, if the separate interest owner fails to provide the HOA with an address, the HOA is required to use the address of the separate interest property. This means that every year a separate interest owner must provide their desired address or the HOA has to switch the address it has on file to the property address. According to the author, this takes time and may not be what the separate interest owner wants. This bill changes the default address to the last address provided in writing by the owner of the separate interest. If the owner failed to ever give an address, then the default is the address of the property. This technical clarification in the law is intended to save time and effort for both the separate interest owner and the HOA.
REGISTERED SUPPORT / OPPOSITION:
Support
Community Associations Institute (sponsor)
California Association of Community Managers (CACM)
Opposition
None on file
Analysis Prepared by: Anthony Lew / JUD. / (916) 319-2334
Date of Hearing: April 26, 2017
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
ABPCA Bill Id:AB 1412 (
Author:Choi) – As Amended Ver:March 23, 2017
SUBJECT: Common interest developments: notices: volunteer officers: liability
SUMMARY: Authorizes a homeowners association (HOA) to use the last address provided in writing by the owner of a separate interest in a common interest development (CID) when the owner fails to provide notice of change of address. Limits the liability of a volunteer officer or director who does not own more than two residential separate interests in a development that is mixed use.
EXISTING LAW:
- Requires a CID to be managed by an unincorporated or incorporated association. (Civil Code Section 4800)
- Requires the owner of a separate interest in a CID to annually provide the HOA with specified written information, including an address for the purpose of receiving notices from the HOA. (Civil Code Section 4041)
- Allows the HOA to use the property address when the owner fails to provide an address. (Civil Code Section 4041)
- Limits the personal liability of a volunteer officer or director of an a residential HOA if the following criteria are met:
- The act or omission was performed within the scope of the officer’s or director’s association duties;
- The act or omission was performed in good faith;
- The act or omission was not willful, wanton, or grossly negligent; and
- The HOA maintained and had in effect at the time of the act or omission occurred and at the time of a claim is made one or more policies of insurance that include coverage for general liability of the association and individual liability of officers and directors of the association for negligent acts or omissions in that capacity. (Civil Code Section 5800)
FISCAL EFFECT: Unknown
COMMENTS: Mixed use developments combine residential units with other uses, for example commercial, such as retail or restaurant space. Under current law only HOAs in exclusively residential developments grant immunity from personal liability to the volunteer board members. This bill will extend this immunity to volunteer members of HOAs that are part of mixed-use development if the above criteria are met. According to the Foundation for Community Association Research, there are over 42,000 HOAs in California and board members donate over $200 million in time serving their communities. This number is expected to increase. This bill will provide consistency in the law to all volunteer board members in CIDs.
Owners of separate interests in a CID are supposed to annually provide certain information, including an address for which notices from the HOA are supposed to be delivered. Under current law, if the separate interest owner fails to provide the HOA with an address, the HOA is required to use the address of the separate interest. This means that every year a separate interest owner must provide their desired address or the HOA has to switch the address it has on file to the separate interest address. This takes time and may not be what the separate interest owner wants. This bill changes the default address to the last address provided in writing by the owner of the separate interest. If the owner failed to ever give an address, then the default is the address of the separate interest. This change is intended to save time and effort for both the separate interest owner and the HOA.
Double referral: If AB 1412 passes out of this committee, the bill will be referred to the Committee on Judiciary.
REGISTERED SUPPORT / OPPOSITION:
Support
Community Association Institute (Sponsor)
California Association of Community Managers
Opposition
None on file
Analysis Prepared by: Peter Stevens and Lisa Engel / H. & C.D. / (916) 319-2085
Discussed in Hearing
1MIN
Assembly Floor
5MIN
Assembly Standing Committee on Housing and Community Development
Bill Author
Bill Co-Author(s):