Misrepresenting status of homeowners association can bring penalties

Question: My homeowners association's letterhead states we are "a non-common interest 55-plus senior community." I obtained all the documents pertinent to our development from the Department of Real Estate as well as the county planning department's zoning descriptions and requirements. These documents make it clear that maintenance of common areas and facilities are incumbent on the association, which has a right to lien lot owners in default on assessment payments. Documents state that each lot "shall have a common area consisting of a 20-foot minimum setback along all adjoining boundary streets and a 15-foot side and rear setback along all non-street boundaries of the development."

Still the board insists on writing "non-common interest development" on all its correspondence. All owners pay annual association assessments. We have covenants, conditions and restrictions and a board of directors, and our association is incorporated as a nonprofit mutual benefit corporation. We pay homeowners association insurance and carry directors and officers coverage, but in order to circumvent the Davis-Stirling Act and other laws, our board insists we are a "non-common interest development." By denying we are a common-interest development they say they don't have to follow the law. Now what?

Answer: Grant deeds to property typically identify the land as planned developments or common-interest developments. If that deed grants to you an undivided fractional interest in the common area along with your property, you live in a common-interest development project.

Given the totality of the circumstances, you are a common-interest development. Civil Code section 1351 lists the types of properties that fall under the heading of common-interest development, and Civil Code section 1352 provides conditions that must also be satisfied. That section makes it clear that the Davis-Stirling Act applies "whenever a separate interest coupled with an interest in the common area or membership in the association is, or has been, conveyed," provided a declaration, a plan (if any exists) and a final map or parcel map (if required) are all recorded.

Your project is a common-interest development because you have the mandatory common area for each lot and you have an association in which membership is required. Merely because your project is restricted to homeowners ages 55 and older does not mean it is not a common-interest development.

Additionally, you pay dues or assessments, have a board of directors and are a legitimate 55-plus community. Unless there is a condition allowing exemption contained in the governing documents, by definition that makes yours a common-interest development subject to the statutory terms of the Davis-Stirling Act. Denying it may subject the association to having to pay damages for violations.

Taking money from association members under the pretext of not being a common-interest development in an effort to circumvent the law may constitute a fraud, subjecting the board to liability. Directors who knowingly violate such laws can be held liable for the consequences of their actions.

Send questions to P.O. Box 10490, Marina del Rey, CA 90295 or e-mail noexit@mindspring.com.

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