New Year Brings New Laws for Associations

The state Legislature has enacted several laws covering a broad range of subjects that will affect all community associations.

The California Civil Code contains many state laws that pertain specifically to condominiums’ homeowner associations or planned developments, stock cooperatives and community apartment projects. These sections of the code are identified as the Davis-Stirling Common Interest Development Act. Effective Jan. 1, several provisions in the Davis-Stirling Act were revised or amended.

The changes include new provisions for television antennas and small satellite dishes, even though the associations’ governing documents may restrict their use. New board meeting procedures and notice requirements, restrictions on special assessments to replenish reserve funds used for litigation and new liability protection for individual owners will affect all community associations in a number of ways.

Satellite Dishes

Civil Code Section 1376 states that associations can no longer prohibit the installation of television antennas or satellite dishes with a diameter of 36 inches or less. The association may impose reasonable requirements for architectural control. An owner may be required to submit an application and obtain association approval before the installation.

The association has the right to enact maintenance and liability requirements, including provisions that would require the installing owner to be responsible for maintenance and repair of the structure, as well as reimbursement for any damages that result from the installation or use of the antenna or satellite dish.

Open Meetings

Section 1383.05 requires that all owners be informed of the date, time and location of all board meetings and special board meetings. A meeting is defined as any gathering of a majority of board members “to hear, discuss or deliberate upon any item of business scheduled to be heard by the board, except those matters that may be discussed in executive session.” Boards may meet privately in executive session to discuss matters relating to litigation, personnel, contracts and disciplinary hearings. General information about the executive session should be noted in the board meeting minutes.

This section of the code already required that written meeting minutes be made available to members of the association within 30 days after any board meeting. If the minutes are not completed and approved within 30 days, a draft of the minutes or a summary, except for executive sessions, should be available.

Meeting notices are to be distributed to all owners at least four days before any board meeting, unless the association’s bylaws specify the time and place of meetings. If the bylaws require notice to members of more than four days, then the association must comply with the bylaws. The board meeting notices may be announced in a newsletter, posted in a common area, mailed or hand-delivered.

In case of an emergency that requires an immediate board meeting, the president or two members of the board may call a special meeting without the four-day notice. The board should document in the board minutes the reasons distribution of notice to members was impossible.

Insurance Disclosure

New disclosure requirements in Civil Code Section 1365 provide that all owners are to be informed about the liability insurance an association carries. Lawsuits arising from personal injury claims cannot be filed against individual owners if certain minimum insurance requirements are met. Associations with 100 or fewer units or residences must have $2 million of general liability coverage. If your association has more than 100 units or residences, the general liability coverage must be at least $3 million.

Associations governed by the Davis-Stirling Act must send to all owners a summary of the general liability coverage, including the name of the insurance carrier, policy limits, the amount of deductibles (if any) and the party responsible for paying the deductible, whether the coverage extends to improvements made within individual units (carpets, appliances, window coverings, etc.), and whether the insurance agent or broker made recommendations or assisted in the decision of the amount of insurance coverage or policy limits. Disclosure must also include the amount of the directors’ and officers’ liability insurance and the name of the insurance companies.

If the association carries flood insurance or earthquake insurance, the name of the insurance carrier, the amount of coverage, the amount of deductibles and the person or entity responsible for payment of deductibles must be disclosed.

In addition, if any policy is canceled, the members must be notified by first-class mail as soon as possible. Any changes in coverage or insurance companies must be disclosed.

Builder Lawsuits

New restrictions in Civil Code 1375 create several steps an association must take before a construction-defect lawsuit can be filed against a builder/developer. Any association board considering legal action for design or construction defects should interview several attorneys well-versed in the recent changes in this area of the law.

Section 1365.5 has been amended to require that if a special assessment is needed to replenish reserve funds that were used for construction-defect litigation, the special assessment must be approved by a majority of members present and voting by proxy or written ballot.

Suspension of Corporate Status

Associations incorporated as California nonprofit mutual benefit corporations are required to submit a “Statement of Domestic Nonprofit Corporation” to the secretary of state annually. The statement includes the names and addresses of the officers of the corporation, the address of the association’s office and the address for documents being served on the association for legal purposes. The penalty for failure to file is $50.

California Corporations Code Section 8210 has been amended to provide for suspension of corporate status of nonprofit mutual benefit corporations that fail to file the statement for three consecutive years after being penalized the second year. The secretary of state’s office must send a notification before suspension; the association will have the opportunity to correct the oversight before the suspension takes effect.

Hickenbottom is a past president of the Greater Los Angeles chapter of the Community Associations Institute (CAI), a national nonprofit research and educational organization. She welcomes readers’ questions but cannot answer them individually. Readers with questions or comments can write to her in care of “Condo Q&A;,” P.O. Box 5068, Thousand Oaks, CA 91360.