the community association handbook

THE COMMUNITY ASSOCIATION

HANDBOOK EGAL REFERENCE MANUAL

2015 EDITION

TOPIC SUMMARIES ∙ DAVIS-STIRLING ACT

SB-800 CONSTRUCTION DEFECT STATUTE SELECTED CA STATUTES ∙ CASE SUMMARIES

BY: HOWARD J. SILLDORF, ESQ.

SHANI O. ZAKAY, ESQ.SILLDORF & LEVINE, LLP

COMMUNITY ASSOCIATION & CONSTRUCTION DEFECT REPRESENTATION (800) 811-5874

silldorf-levine.com

Introduction This is an annual publication that we are pleased to provide to community associations and community managers. This book contains Topic Summaries, the Davis-Stirling Act, SB-800 Requirements for Construction Defect Actions, Selected California Statutes, Case Summaries and an Index. We hope that it will serve as a useful legal reference resource.

While we at Silldorf & Levine, LLP intend this book to provide general information, it is not intended to be used as legal advice for your individual situation or specific legal matters. If you have any questions or need to speak with a lawyer regarding a legal matter, please call us at (800) 811-5874 to arrange for an appointment with us in our office or at your association. This book is intended to provide current and accurate information to help managers and board members maintain their professional competence. This book is distributed with the understanding that Silldorf & Levine, LLP is not rendering any legal, accounting or other professional services by the distribution.

All rights reserved. No part of this book may be reproduced in any form or by any electronic or mechanical means, including information storage and retrieval systems, without written permission from the author, except in the case of a reviewer, who may quote brief passages embodied in critical articles or in a review.

Copyright © 2015 by Howard J. Silldorf and Shani O. Zakay, Silldorf & Levine, LLP

Library of Congress No. ISSN 2164-0785

Silldorf & Levine, LLP is a proud member of CAI & CACM

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TABLE OF CONTENTS

Topic Summaries ........................................................................................... 1

I. Common Interest Subdivision ....................................................... 1

II. Structure of Homeowners’ Associations ....................................... 1 A. Governing Documents .................................................... 1 B. Articles ............................................................................ 2 C. Bylaws ............................................................................ 2 D. CC&Rs ............................................................................ 2 E. Rules and Regulations .................................................... 3

III. Conflicts Between Governing Documents, Statutes & Case Law . 4

IV. Property Rights .............................................................................. 5 A. Separate Interests in a Condominium Development ...... 5 B. Single Family Ownership Interest in a Planned

Development ................................................................... 5 C. Ownership of the Common Area .................................... 6

1. Exclusive Use Common Area ........................... 6 2. Non-Exclusive Use Common Area ................... 6

V. Operation of Homeowners’ Association - The Board of Directors 7

A. Individual Members ........................................................ 8 B. Management ................................................................... 9

VI. Board of Directors Meetings ....................................................... 10 A. Executive Sessions ....................................................... 11 B. Elections of the Board of Directors .............................. 11 C. Notice Requirements for Meetings ............................... 12 D. Record Keeping Requirements and Production of

Documents .................................................................... 12

VII. Maintenance Obligations ............................................................. 14 A. The Individual Owner’s Maintenance Obligations ...... 14 B. The Association’s Maintenance Obligations ................ 14 C. Cost Sharing Agreements............................................. 15

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VIII. Association Management ............................................................ 16 A. Financials ...................................................................... 16 B. Reserves ........................................................................ 16 C. Regular Assessment ...................................................... 17 D. Special Assessment ....................................................... 17 E. Emergency Assessment ................................................ 17 F. Liens and Foreclosures - Policies ................................. 18 G. Aggressive Collection Practices ................................... 19

1. Suspension of Members’ Rights ...................... 20 2. Lien .................................................................. 20 3. Foreclosure ...................................................... 20 4. Small Claims Action ........................................ 21 5. Superior Court Actions .................................... 21 6. Payment Plans ................................................. 21 7. Collecting from a Short Sale ........................... 22 8. Assignment of Debt to a Collection Agency ... 22 9. Collecting in Bankruptcy ................................. 23 10. Enforcing a Judgment ...................................... 23

H. Special Protections for Military Personnel ................... 24 I. Architectural Guidelines – Regulation and Enforcement 24 J. Companion Animals ..................................................... 26

IX. Construction Defect Litigation ..................................................... 27 A. SB-800 and Pre SB-800 ................................................ 27

X. Roberts Rules............................................................................... 28 Davis-Stirling Act – Full Code ................................................................... 31

Table of Contents ..................................................................................... 40

Chapter 1 – General Provisions ........................................................ 51 Article 1 – Preliminary Provisions ...................................... 51 Article 2 – Definitions ......................................................... 53

Chapter 2 – Application of Act ........................................................ 57

Chapter 3 – Governing Documents .................................................. 57 Article 1 – General Provisions ............................................ 57 Article 2 – Declaration ........................................................ 60 Article 3 – Articles of Incorporation ................................... 63 Article 4 – Condominium Plan ........................................... 64

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Article 5 – Operating Rules ................................................. 64

Chapter 4 – Ownership and Transfer of Interests ............................ 67 Article 1 – Ownership Rights and Interests ........................ 67 Article 2 – Transfer Disclosure ........................................... 67

Article 3 – Transfer Fee ...................................................... 71 Article 4 – Restrictions on Transfer .................................... 72 Article 5 – Transfer of Separate Interest ............................. 74

Chapter 5 – Property Use and Maintenance ..................................... 75 Article 1 – Protected Uses ................................................... 75 Article 2 – Modification of Separate Interest ...................... 81 Article 3 – Maintenance ...................................................... 83

Chapter 6 – Association Governance ............................................... 85 Article 1 – Association Existence and Powers .................... 85 Article 2 – Board Meeting ................................................... 85 Article 3 – Member Meeting ............................................... 88 Article 4 – Member Election ............................................... 88 Article 5 – Record Inspection ............................................. 92 Article 6 – Recordkeeping .................................................. 97 Article 7 – Annual Reports ................................................. 97 Article 8 – Conflict of Interest .......................................... 100 Article 9 – Managing Agent .............................................. 100 Article 10 – Government Assistance ................................. 102

Chapter 7 – Finances ...................................................................... 104 Article 1 – Accounting ...................................................... 104 Article 2 – Use of Reserve Funds ..................................... 104 Article 3 – Reserve Planning ............................................. 105

Chapter 8 – Assessments and Assessment Collection ................... 109 Article 1 – Establishment and Imposition of Assessments 109 Article 2 – Assessment Payment and Delinquency ........... 110 Article 3 – Assessment Collection .................................... 114

Chapter 9 – Insurance and Liability ............................................... 119

Chapter 10 – Dispute Resolution and Enforcement ....................... 121 Article 1 – Discipline and Cost Reimbursement ............... 121 Article 2 – Internal Dispute Resolution ............................ 122

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Article 3 – Alternative Dispute Resolution Prerequisite to Civil Action ....................................................................... 123 Article 4 – Civil Action ..................................................... 125

Chapter 11 – Construction Defect Litigation ................................. 126 SB-800 – Requirements for Actions for Construction Defects .............. 141 Table of Contents ................................................................................. 141

Chapter 1 – Definitions .................................................................. 143 Chapter 2 – Actionable Defects ..................................................... 143 Chapter 3 – Obligations ................................................................. 147 Chapter 4 – Prelitigation Procedure ............................................... 149 Chapter 5 – Procedure .................................................................... 158

Corporations Code – Selected Sections ................................................... 161 Table of Contents .................................................................................. 161

General Provisions ......................................................................... 176 Nonprofit Corporations Law - General Provisions ........................ 177

Nonprofit Mutually Benefit Corporations...................................... 186

Organization and Bylaws

Title and Purpose ............................................................... 186 Formation .......................................................................... 187 Articles of Incorporation ................................................... 188 Powers ............................................................................... 190 Bylaws ............................................................................... 191 Location and Inspection .................................................... 193

Directors and Management General Provisions............................................................ 193 Directors ............................................................................ 197 Conduct Standards ............................................................ 201

Members Issuance of Membership ................................................... 208 Membership Transfer ........................................................ 210 Types of Membership ....................................................... 211 Termination of Membership ............................................. 212

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Rights and Obligations ...................................................... 213

Distribution - Limitations ............................................................... 213

Meetings and Voting General Provisions ............................................................ 214 Elections of Directors ........................................................ 220

Voting of Members ........................................................................ 223

Derivative Actions ......................................................................... 227

Amendments to Articles ................................................................. 229

Sale of Assets ................................................................................. 232

Required Filings ............................................................................. 233

Inspection of Records and Reports General Provisions ............................................................ 235 Required Records .............................................................. 236 Inspection Rights ............................................................... 238

Dissolution ..................................................................................... 243

Unincorporated Organizations Liability and Enforcement of Judgments .......................... 244 Nonprofit Associations - Liability .................................... 244

Civil Procedure Code – Small Claims Court .......................................... 247 Case Summaries ........................................................................................ 255 Index ........................................................................................................... 285

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iesCHAPTER ONE: TOPIC SUMMARIES

I. Common Interest Subdivisions

The term “Common Interest Subdivision” or “Common Interest Development” is used to describe four types of developments in which some property is owned exclusively by individual owners, while other property is owned or enjoyed in common by all owners in the community.

“Common Interest Subdivisions” include Condominium Projects, Planned Developments, Stock Cooperatives, and Community Apartment Projects. Regardless of its type, every “Common Interest Subdivision” must be managed by a “Community Association,” also commonly known as “Homeowners’ Association.” The “Homeowners’ Association,” which may be incorporated or unincorporated, has a variety of powers and responsibilities that are often expanded or limited in the Association’s “Governing Documents” (discussed in Part II). For example, “Homeowners’ Associations” always have the authority to collect assessments, manage the Association’s budget, and maintain the common interest area.

While it usually consists of numerous members, the “Homeowners’ Association” is governed by a “Board of Directors.” Initially, the Board includes members appointed by the developer of the subdivision. As more units are sold, and the developer no longer owns a significant number of units in the subdivision, the owners can take control over the Association by taking the developer’s seats on the Board.

In California, Homeowners’ Associations are largely governed by the Davis-Stirling Act; a statutory scheme passed in 1985 to simplify and standardize the laws regarding operations of Common Interest Subdivisions. The Act, however, only applies to Subdivisions where membership in the Association is mandatory. Finally, in addition to the Davis-Stirling Act, some other California and Federal statutes affect Homeowners’ Associations. These statutes are mentioned throughout this guide.

For more information on this topic, please refer to page 31 to review the exact statutory language of the following relevant statutes:

• Civil Code §4075 et seq. Definitions• Civil Code §4200. Application of the Act

For summaries of recent California Court decisions on this topic, please refer to page 255 to review the following cases:

• California Traditions, Inc. v. Claremont Liability Ins. Co., 197 Cal. App. 4th 410 (2011).

• ECC Const., Inc. v. Ganson, 82 Cal. App. 4th 572 (2000).• Golden Rain Foundation v. Franz, 163 Cal. App. 4th 1141 (2008).

II. Structure of Homeowners’ AssociationsA. Governing Documents

Every Common Interest Subdivision establishes its Governing Documents upon its creation. The Governing Documents govern the powers, rights and responsibilities of the owners, the Association and the Board of Directors of the subdivision. Governing Documents include the Articles of Incorporation, the Bylaws, the Declaration of Covenants, Conditions and Restrictions (commonly known as the CC&Rs) and the Association’s Rules and Regulations. Sections B-E discuss each type of Governing

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Document, its main purpose, and the manner by which it is amended. Amendments to the Governing Documents, however, often involve complex procedural and legal issues, and Associations should not attempt to do so without the help of legal counsel.

B. Articles

An incorporated Association must have “Articles of Incorporation” under the California Corporations Code. An unincorporated Association, however, may still have “Articles of Association” if it chooses to. The Articles usually only include a short document that satisfies the requirements of the California Corporations Code. Normally, it does not contain rules or restrictions on the members of the Association. Under the Davis-Stirling Act, the common interest subdivision must file the Articles with the Secretary of State. The filed Articles must include at least the following: (1) a statement of purpose, (2) a statement that the corporation was formed to manage a common interest subdivision, (3) the office of the Association or the zip code and cross streets of the location of the subdivision, and (4) the contact information of the Association’s management company.

Amendments to the Articles require approval by a majority of the Association’s governing body, a majority of the Association’s voting power, and a majority of the Association’s member votes.

C. Bylaws

The Bylaws mainly address the Association’s internal government affairs and the manner by which the Association and its Board conduct business. Accordingly, Bylaws usually include the rules and procedures for Board meetings and member meetings, including the notice requirements for such meetings.

Like the Articles, Bylaws are governed by the California Corporations Code if the Association is incorporated. Both incorporated and unincorporated Associations, however, must comply with the requirements set out by the California Department of Real Estate when drafting their Bylaws.

Finally, unlike the strict majority requirement in amending the Articles, amendments to the Bylaws require only a majority of a quorum of the Association’s membership.

D. Covenants, Conditions & Restrictions (CC&Rs)

CC&Rs are also referred to as “The Declaration,” “The Declaration of Restrictions,” or “The Declaration of Covenants, Conditions and Restrictions.” The CC&Rs are probably the most important Governing Document of all four. It is frequently broad and deep in its scope, and is enforceable by the Association or any of its members.

CC&Rs must include the legal description of the common interest subdivision, as well as the name of the Association and the restrictions on the use and enjoyment of any portion of the subdivision. Finally, the CC&Rs may also address any other matters the drafters feel are necessary.

Every provision in an Association’s CC&Rs is enforceable against the original owner as well as any subsequent owners. CC&Rs provisions may be unenforceable, however, if they are determined to be unreasonable. While the Association has the freedom to include any reasonable (and not otherwise illegal or unconstitutional) provisions in the CC&Rs, some provisions are virtually mandatory, as they are required

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iesby the California Department of Real Estate, local ordinances or other governmental

agencies. Because the person who signs the initial CC&Rs is usually the developer of the

subdivision, the CC&Rs often include provisions strictly targeted to protect the developer’s rights and grant it with special authority. It is therefore advisable that an Association seek to amend the CC&Rs once the developer no longer controls the Association.

Finally, amendments to the CC&Rs can be achieved in a variety of ways. Usually, however, Associations amend their CC&Rs in accordance with rules and procedures set out in the CC&Rs that specifically address the accepted method for amending the provisions of the document.

E. Rules and Regulations

The Association’s Rules and Regulations is an optional document the Association may adopt as a supplement to the provisions of the other Governing Documents. Rules and Regulations usually deal with the Association’s internal affairs and do not need to be recorded.

The regulations and procedures of an Association’s Rules and Regulations are largely governed by the Davis-Stirling Act. The Act also contains statutes that govern the procedure for amending the Rules and Regulations.


• Civil Code §4270. CC&Rs: Procedure for Amendment• Civil Code §4230. Governing Documents: Deletion of Declarant or Developer

Language• Civil Code §4250. CC&Rs: Requirements• Civil Code §4255. Notice of Airport Influence Area• Civil Code §4275. Amendment of CC&Rs: Petition to Court to Reduce

Percentage of Affirmative Votes• Civil Code §4265. Extending Term of CC&Rs Having Deed Restrictions

without Means for Extension• Civil Code §4340. “Operating Rule” and “Rule Change” Defined• Civil Code §4350. Operating Rules: Valid & Enforceable upon Satisfying

Specified Requirements• Civil Code §4355. Application of Rule Change Procedure• Civil Code §4360. Approval of Rule Change by Board• Civil Code §4365. Reversal of Rule Change by Members• Civil Code §4280. Articles of Incorporation: Disclosure Information• Civil Code §4215. Liberal Construction of Governing Documents & Other

Instruments• Civil Code §4020. Construction of Local Zoning Ordinance• Civil Code §4201. Exemption for Development without Common Area


• Arias v. Katella Townhouse Homeowners Ass’n, Inc., 127 Cal. App. 4th 847 (2005).

• Biagini v. Hyde, 3 Cal. App. 3d 877 (1970).• Bowers v. Lucia Companies, 206 Cal. App. 4th 724 (2012).• Cabrini Villas Homeowners Ass’n v. Haghverdian, 111 Cal. App. 4th 683 (2003).

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• Clear Lake Riviera Community Ass’n v. Cramer, 182 Cal. App. 4th 459 (2010).• Cebular v. Cooper Arms Homeowners Ass’n, 142 Cal. App. 4th 106 (2006).• Colony Hill v. Ghamaty, 143 Cal. App. 4th 1156 (2006).• Ekstrom v. Marquesa at Monarch Beach, 168 Cal. App. 4th 1111 (2008).• Farber v. Bay View Terrace Homeowners Ass’n, 141 Cal. App. 4th 1007 (2006).• Fleur du Lac Estates Ass’n v. Mansouri, 205 Cal. App. 4th 249 (2012).• Fourth La Costa Condominium Owners Ass’n v. Seith, 159 Cal. App. 4th 563

(2008).• Franklin v. Marie Antoinette Condominium Owners Ass’n, 19 Cal. App. 4th 824

(1993).• Friars Vill. Homeowners Ass'n v. Hansing, 220 Cal. App. 4th 405 (2013).• Glen Oaks Estates Homeowners Ass’n v. Re/Max Premier Properties, 203 Cal.

App. 4th 913 (2012).• Haley v. Casa Del Rey Homeowners Ass’n, 153 Cal. App. 4th 863 (2007).• La Jolla Mesa Vista Improvement Ass’n v. La Jolla Mesa Vista Homeowners’

Ass’n, 220 Cal. App. 3d 1187 (1990). • Lake Arrowhead Chalets Timeshare Owners Ass’n v. Lake Arrowhead Chalets

Owners Ass’n, 51 Cal. App. 4th 1403 (1996). • Liebler v. Point Loma Tennis Club, 40 Cal. App. 4th 1600 (1995).• Martin v. Bridgeport Community Ass’n, Inc., 173 Cal. App. 4th 1024 (2009).• Mission Shores Ass’n v. Pheil, 166 Cal. App. 4th789 (2008).• Nelson v. Avondale HOA, 172 Cal. App. 4th 857 (2009).• Pacific Hills Homeowners Ass’n v. Prun, 160 Cal. App. 4th 1557 (2008).• Park Place Estates Homeowners Ass’n v. Naber, 29 Cal. App. 4th 427 (1994).• Pinnacle Museum Tower Ass’n v. Pinnacle Market Development (US), LLC, 55

Cal. 4th 223 (2012).• Quail Lakes Owners Ass’n v. Kozina, 204 Cal. App. 4th 1132 (2012).• Tesoro Del Valle Master Homeowners Ass’n v. Griffin, 200 Cal. App. 4th 619

(2011).• Treo @ Kettner Homeowners Ass’n v. Superior Court, 166 Cal. App. 4th 1055

(2008).• Villa De Las Palmas Homeowners Ass’n v. Terifaj, 33 Cal. 4th 73 (2004).• Yan Sui v. Price, 196 Cal. App. 4th 933 (2011).

III. Conflicts Between Governing Documents, Statutes and Case Law

While Associations have the power to enact the Governing Documents, they must also have the authority to enforce the Governing Documents. As the Homeowners’ Association, the Association is almost automatically granted the power to enforce the Governing Documents. Its authority to do so, however, must come from the Governing Documents themselves, a statute, or case law. Thus, enforcement that conflicts with the Governing Documents, a relevant statute, or relevant case law exceeds the Association’s authority, and is therefore invalid.

Determining whether a certain provision the Association wishes to enforce is in conflict with another provision of the Governing Documents, although time consuming, is relatively easy. Determining whether the provision the Association wishes to enforce is in conflict with a statute or case law, however, often requires substantial legal research and evaluation that should be left for your legal counsel. For example, Section 5975 of the Davis-Stirling Act states that unreasonable provisions in the Governing Documents are not enforceable. What is unreasonable, however, can only be determined by professional review and analysis of California’s courts’ interpretation of reasonableness

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iesin different situations. The task is almost always complicated and Associations should

not attempt to do so without the help of legal counsel.


• Civil Code §5975. Enforcement of Governing Documents: Civil Action



• Biagini v. Hyde, 3 Cal. App. 3d 877 (1970).• Farber v. Bay View Terrace Homeowners Ass’n, 141 Cal. App. 4th 1007 (2006).• Fourth La Costa Condominium Owners Ass’n v. Seith, 159 Cal. App. 4th 563

(2008).• Franklin v. Marie Antoinette Condominium Owners Ass’n., 19 Cal. App. 4th 824

(1993).• Haley v. Casa Del Rey Homeowners Ass’n, 153 Cal. App. 4th 863 (2007).• Liebler v. Point Loma Tennis Club, 40 Cal. App. 4th 1600 (1995).• Market Lofts Community Ass’n v. 9th St. Market Lofts, LLC, 222 Cal. App. 4th

924 (2014).• Nahrstedt v. Lakeside Village Condominium Ass’n, 8 Cal. 4th 361 (1994).• Salehi v. Surfside III Condominium Owners’ Ass’n, 200 Cal. App. 4th 1146

(2011).

IV. Property RightsA. Separate Interests in a Condominium Development

Despite the name “Common Interest Subdivision,” owners in common interest subdivisions must own a separate, exclusive interest in the subdivision. The separate interest represents the owner’s individual unit in the condominium project, and includes an interest in the space within the boundaries described in the parcel map or condominium plan.

Under the Davis-Stirling Act, a separate interest includes the interior surfaces of walls, floors, ceilings, windows and doors when those are set as the interest’s boundaries. The external portion of those boundaries, then, is not a separate interest, but rather owned in common by the members of the Association (discussed in Section C). What constitutes a separate interest may, however, be specifically mandated by the Association’s Governing Documents, which supersede the Act in this case.

The importance of this determination is based on the responsibility to maintain the different areas in the subdivision. While owners are solely responsible for the maintenance of their own separate interest, it is the Association that is responsible for the maintenance of all common areas, even if such areas are primarily used by an individual owner.

B. Single Family Ownership Interest in a Planned Development

Single family ownership interest in planned developments is the equivalent of the separate interest in a condominium project. However, in planned developments, the separate interest represents the owner’s lot or parcel on the subdivision map on which the single family home is located.

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C. Ownership of the Common Area

The common area in common interest subdivisions is simply any area that is not a separate interest. The concept of common areas is one of the touchstones of community interest developments, and a recent court decision ruled that a subdivision without common area is simply not a common interest subdivision.

Common areas may be owned by all unit owners together as tenants in common and by the Association. Common interest subdivisions may designate Exclusive Use Common Areas or Non-exclusive Use Common Areas. As discussed above, determining whether an area is a common interest or a separate interest can be important. Accordingly, large Associations with numerous and lengthy Governing Documentsshould seek the help of legal counsel in making this essential determination.

1. Exclusive Use Common Area

The Davis-Stirling Act authorizes common interest subdivisions, through their Governing Documents, to designate some common areas as “Exclusive Use Common Areas.” Although owned in common interest by the Association and all of its members, Exclusive Use Common Areas may be used exclusively by those owners whom the Governing Documents designate. This may include one owner, two owners or even hundreds of owners, so long as some owners are excluded.

Some areas in any common interest subdivision are presumed to be Exclusive Use Common Areas, unless the Governing Documents states otherwise. These include doorsteps, porches, patios, balconies and more. Other areas, although not presumed exclusive, are often designated as exclusive in the subdivision Governing Documents (e.g. parking spaces).

Although owned in common by the Association and all unit owners, the interest in “Exclusive Use Common Areas” transfers when the appurtenant separate interest is transferred. In other words, if a homeowner sells his or her home, his or her interest in the “Exclusive Use Common Areas” is automatically transferred to the buyer.

Generally, to grant an owner the right to use a common area exclusively, the Association must establish a 67% majority among the members, unless specified otherwise in the Governing Documents.

2. Non-Exclusive Use Common Area

Non-Exclusive Use Common Areas are those areas that are truly common, as each owner has an equal right to enjoy them. Those almost always include recreational facilities, open spaces, common parking and storage areas, and even the streets within the subdivision. In condominium projects, apartment projects and stock cooperatives, where units are usually attached, the non-exclusive areas may also include walls, halls, stairways, roofs and foundations.

As with separate interests and common interests, the determination of whether a common area is exclusive or non-exclusive can be important for a variety of reasons. Accordingly, Associations that engage in such a determination should consider seeking the services of legal counsel.

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iesFor more information on this topic, please refer to page 31 to review the exact statutory language of

the following relevant statutes:• Civil Code §4610. Common Areas in Condominium Project: Restrictions of

Partition Actions• Civil Code §4625. Transfer of Separate Interest in Community Apartment

Project• Civil Code §4630. Transfer of Separate Interest in Condominium Project• Civil Code §4635. Transfer of Separate Interest in Planned Development• Civil Code §4640. Transfer of Separate Interest in Stock Cooperative• Civil Code §4645. Transfer of Exclusive Use Common Area• Civil Code §4650. Severability of Interests• Civil Code §4505. Rights or Easements in Common Areas• Civil Code §4510. Denial of Physical Access to Separate Interest of Owner or

Occupant Prohibited• Civil Code §4500. Ownership of Common Area• Civil Code §4600. Grant of Exclusive Use Common Area: Requires Approval

of 67% of Members



• Carolyn v. Orange Park Community Ass’n, 177 Cal. App. 4th 1090 (2009).• Cebular v. Cooper Arms Homeowners Ass’n, 142 Cal. App. 4th 106 (2006).• Martin v. Bridgeport Community Ass’n, Inc., 173 Cal. App. 4th 1024 (2009).• Ostayan v. Nordhoff Townhomes Homeowners Ass’n, 110 Cal. App. 4th 120

(2003).• Ruoff v. Harbor Creek Comm. Ass’n, 10 Cal. App. 4th 1624 (1992).

V. Operation of Homeowners’ Association - The Board of Directors

Like any other corporation, Homeowners’ Associations have a Board of Directors.The Board is a multi-purpose governmental body that makes legislative, executive and even judiciary decisions for the Association and the members. Initially, the bulk of the Board consists of Directors who are related to the developer of the community, as the developer still owns a majority of the homes in the community, and therefore has an undeniable interest in the management and maintenance of the Association. Having this type of control over the Homeowners’ Association allows the developer to better market and sell units in the new community. As more units are sold, and individual owners comprise a majority in the community, non-developer members should replace the developer Directors on the Board and assume control over the Association’s operations. Thus, the Department of Real Estate requires that in the first annual meeting of the Board in which non-developer members take part, the Board must consist of at least 20% non-developer members elected by homeowners’ votes.

The size of the Board of Directors is not regulated by law, and Associations are free to choose their preferred size in the Association’s Governing Documents. Usually, the number of Directors ranges between 4-7, as a lesser number would probably result in excessive power resting with a few owners, while a larger number would be hard to manage and coordinate.

Eligibility to become a director on the Board is similarly unregulated by law, and Associations are free to address the requirements in their Governing Documents.Normally, Associations require that the member be current on his or her assessment

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payments and generally be in good standing. This requirement, however is not presumed, and must be included in the Association’s Bylaws in order to be enforceable. An eligible member may run for elections to the Board of Directors. The elections to the Board of Directors of a community Association is a complicated procedure governed by the Department of Real Estate, the Davis-Stirling Act, case law, and sometimes the California Corporations Code. The procedure (discussed in Part VI) is heavily regulated and is dominated by numerous rules and intricacies. Accordingly, it is highly recommended that the Association utilize professional legal counsel when engaging in this important process.

Once elected, a director is limited to a four-year term by the California Corporations Code (if the Association is incorporated). Unless specifically prohibited in the Governing Documents, however, a director may be reelected and serve consecutive terms. Thus, the limitation on the length of the term does not prohibit members from serving more than four years, so long as those members continue to get elected by the Association. This is not to say, of course, that Directors cannot be removed prematurely. Under the California Corporations Code and the Department of Real Estate, a director can be removed from the Board at any time by a majority vote of the members of the Association. Further, a director may be removed for “good cause” by the Board itself. Grounds constituting “good cause” are narrowly interpreted, and Associations should clearly define what grounds would amount to sufficient “cause” for removal from the Board in their Governing Documents.

A. Individual Members

Membership in an Association is not attributed by the number of owners or the number of residents in the community, but rather by the number of separate interests (or lots) in the community. Thus, if one owner owns multiple units within one community, that owner may hold separate membership rights in the Association for each interest.Similarly, if one interest is owned by multiple owners, the owners would still only possess a single membership right. There are, of course, exceptions to this general rule. For example, while co-owners of one unit possess only one membership interest in voting rights, each co-owner possesses an equal membership interest in the right to use the Association’s amenities (like the pool, gym, etc.). Moreover, the rule is not conclusive, and every individual Association can determine the extent of owners’ membership rights in its Governing Documents. Using the Governing Documents to clarify this issue, in fact, is probably a good idea; such a precautionary measure may prevent future disputes between the Association and its members.

Unlike Board of Directors meetings (discussed in Part VI), which take place relatively often, meetings of the members of the Association usually only take place once a year. So long as the developer controls the Association, the meetings are somewhat regulated by the Department of Real Estate. However, once the Association’s owners gain a majority, they are no longer governed by those regulations, and are free to modify the rules governing the meetings in the Governing Documents. At that point, in fact, under certain circumstances, the Association may decide to eliminate the regular member meetings altogether. Finally, both the Department of Real Estate and the Davis-Stirling Act permit the Board of Directors or 5% of the members to call a “Special Meeting” for a variety of reasons.

Recently, the Davis-Stirling Act has given members of common interest subdivisions a comprehensive set of rights with regard to inspection of documents and

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iesAssociation disclosure requirements. Under the Act, members may request to inspect the

Association’s documents, and the Association must produce those documents within a limited time. Additionally, the Act has created a strict procedure, by which every Association must regularly disclose certain documents to the members of the Associations without their request. Members’ inspection rights and the Association’s disclosure obligation are overwhelmingly controlled by statutory law, and therefore are procedurally and legally complex. Those rules and regulations may cost the Association a fortune if not properly followed, and Associations should seek legal counsel when encountering concerns involving such issues.

B. Management

Community Interest Subdivisions are often professionally managed by a “Managing Agent,” defined as a person or entity (a property management company) that manages the assets of the subdivision for a fee. While the Davis-Stirling Act does not require professional management, Associations occasionally require retention of such companies in their Governing Documents.

Property Management Companies will conduct a range of services for the Association, including assessment collection, record keeping, accounting, budgeting and more. Often, however, the Governing Documents specifically prohibit the delegation of certain functions of the Association, thus, allowing a managing agent to take over these responsibilities may be forbidden. Accordingly, Associations must carefully review their Governing Documents before entering into a contract with a managing agent, a task that will often require legal counsel.

While a property manager does not have to be licensed, the Davis-Stirling Actrequires potential managing agents to disclose certain documents to the Association,including the contact information of its owners and relevant certifications and licenses. For a detailed discussion of the different management aspects normally undertaken by professional management companies, please refer to Part VIII.


• Civil Code §6100. Notice to Members of Settlement or Resolution of Construction Defect Matter

• Civil Code §4225. Deletion of Unlawful Restrictive Covenant• Civil Code §5375. Managing Agent: Written Disclosure to Board• Civil Code §4158. “Managing Agent” Defined• Civil Code §5380. Managing Agent Duties: Disposition of Association Funds• Civil Code §4800. Management by Association• Civil Code §5400. Director Online Education Course• Civil Code §5500. Board Review of Accounting: Default Requirements• Civil Code §5510. Reserve Funds• Civil Code §5515. Temporary Transfer of Reserve Funds to General Operating

Fund• Civil Code §5520. Notice to Members: Use of Reserve Funds for Litigation• Civil Code §5550. Reserve Planning• Civil Code §5560. Reserve Funding Plan

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• Adelman v. Associated Intern. Ins. Co., 90 Cal. App. 4th 352 (2001).• Brown v. Professional Community Management Inc., 127 Cal. App. 4th 532

(2005).• Forest Meadows Owners Ass'n v. State Farm Gen. Ins. Co., 2012 U.S. Dist.

LEXIS 50911 (E.D. Cal. Apr. 10, 2012).• Frances T. v. Village Green Owners Ass’n, 42 Cal. 3d 490 (1986).• Harvey v. Landing Homeowners Ass’n, 162 Cal. App. 4th 809 (2008).• Holmes v. Petrovich Development Company, 191 Cal. App. 4th 1047 (2011).• Lamden v. La Jolla Shores Clubdominium Homeowners Ass’n, 21 Cal. 4th 249

(1999).• Ostayan v. Nordhoff Townhomes Homeowners Ass’n, 110 Cal. App. 4th 120

(2003).• Palm Medical Group, Inc. v. State Compensations Ins. Fund, 161 Cal. App. 4th

206 (2008).• Queen Villas Homeowners Ass’n v. TCB Property Management, 149 Cal. App.

4th 1 (2007).• Smetherham v. Laundry Workers’ Union, Local No. 75, 44 Cal. App. 2d 131

(1941). • Westbrook v. Social Center Hall Ass’n of Stockton, 148 Cal. App. 2d 815 (1957).

VI. Board of Directors Meetings

As discussed above, the Association’s Board of Directors is required to meet regularly. The frequency of the meetings is generally governed by the Department of Real Estate (when a developer’s agent is still a director), the California Corporations Code, the Davis-Stirling Act, and most importantly the Association’s Governing Documents. Normally, however, the Board has the freedom to choose the time and location of each meeting. In addition to the regular Board meetings, unless otherwise prescribed by the Governing Documents, some Directors have the authority to call special or emergency Board meetings to address special issues that require immediate attention.

Except for Executive Session Meetings (discussed in Section A below), Board of Directors Meetings are open to the members of the Association, and allow attending members to voice their opinion even if they are not on the Board. Accordingly, unless a regular meeting is taking place at a time and location specified in the Governing Documents, the Association must provide every member with notice of the upcoming meeting, including the meeting’s agenda, in order to give the member an opportunity to attend the meeting if he or she chooses to.

To hold a meeting, the majority of the Board normally must be in attendance. Directors, however, may “attend” the meeting by telephone or other live electronic device. Once a majority is present, the Board may only discuss items that were placed on the agenda sent with the notice to the members. The general rule prohibiting discussion of non-agenda items, however, has several exceptions, under the Davis-Stirling Act, that allow the Board some flexibility in its meetings.

Finally, the discussions taking place in every Board meeting must be recorded in Board “minutes.” The “minute” must be prepared within 30 days of the meeting and be available for members of the Association upon request.

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iesA. Executive Sessions

Executive Session Board meetings are special meetings of the Board to discuss litigation, contracts with non-owners, member discipline and personnel matters. Unlike regular Board Meetings, members of the Association do not have the right to attend the Executive Sessions of the Board, but do have the right to receive notice.

It is important to note that Executive Sessions will often involve attorney-client privileged issues, private personnel issues and complex employment issues. Because California law does not categorize those sessions as “meetings,” however, the Board does not need to maintain an agenda or provide notice to the membership. Instead, a Board may go into executive session at any time it needs to consider one of the issues discussed above in a confidential and private manner that is not open to the public or members.

As with regular meetings, the Board is required to record the discussions that take place in executive sessions. While the Board is not required to maintain Executive Session Minutes, California Civil Code requires the Board to generally note the matters discussed in Executive Sessions in the minutes of the very next Open Meeting. However, information regarding these discussions should be kept in a separate folder or file, and should not be included in the normal Board packages.

Executive Sessions are confidential, and the specific matters discussed in those sessions must remain private. Therefore, skill must be exercised in describing executive session matters in the minutes, and the drafter must avoid detailed analysis that goes beyond the mere identification of the actions that took place during the meeting. That is because California Civil Code Section 4950 grants homeowners access to the minutes, and inadvertent waiver of privileges (like the attorney-client privilege), or the inadvertent disclosure of private information, may lead to problems under several privacy laws.

A simple discussion with another homeowner about another member’s disciplineduring an executive session, for example, will constitute inadvertent disclosure and trigger potential privacy problems. Similarly, a mere discussion about a confidential issue with a significant other will constitute inadvertent disclosure and may lead to a waiver of a privilege. The attorney-client privilege is a powerful protection tool for Associations, but it can easily be waived by such inadvertent disclosures.

That being said, the Association should not be concerned with the presence of a manager during Executive Sessions, as most management contracts designate the property manager as an agent of the Board. As such, the manager enjoys the same confidentiality privileges and protections the Board does. Other non-members or non-employees, on the other hand, probably do not enjoy the same protection. Thus, a litigation committee meeting, for example, which hosts non-Board members, should only include qualified non-privileged information, as it is doubtful that a court would extend the privilege to such persons.

B. Elections of the Board of Directors

As discussed in Part V, elections to the Board of Directors of a community Association is a complicated procedure, heavily regulated by numerous rules and intricacies. While it should be emphasized that professional advice is essential to this process, the procedure can be broadly summarized as follows.

First, as already discussed, Association members must meet certain qualifications to be eligible for election as Directors of the Board. Next, the members must be nominated for the elections. According to the California Corporations Code, the only requirement

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for the nomination procedure is that it be “reasonable.” Once the candidates are selected, the Davis-Stirling Act requires the Association to adopt rules concerning the election process, including equal access requirements, procedure specifications, and a method to select one or three independent third parties to serve as inspectors of the elections.

Usually, elections will be conducted by a secret ballot, and a quorum will be required to validate the vote. In some circumstances, however, the secret ballot and quorum requirements may be altered by the Governing Documents. Additionally, under certain conditions, cumulative voting and proxies are allowed as part of the elections process.

Once all the votes are collected, the inspector must count them and report the results to the Board, which in turn must record them in the minutes of the next Board meetingand make them available for review by all members of the Association. After the elections, the Association must keep the ballots in record for at least one year. In case the elections are challenged by one of the members, the Association must make the recorded ballots available for inspection.

Finally, once elected, a director can serve for a term of up to four years. No limitation exists, however, on Directors’ ability to be reelected. Thus, Directors who are reelected may serve consecutive terms for as long as they manage to keep their position.

C. Notice Requirements for Meetings

Under California Corporations Code, Section 7211(a), Associations are required to give notice to Board members before a meeting of the Board. This notice requirement is usually also included in most Associations’ Articles of Incorporation or Bylaws.However, if the Articles, Bylaws or a written consensus by the Board mandates that a meeting will be held regularly at a certain time and place, such meeting can be properly held without specific notice.

Special meetings of the Board, that are not regularly held, require a statutory four day notice delivered via first class mail, or alternatively, a 48-hour notice delivered personally, by telephone or by email. Emergency meetings, on the other hand, may be held at any time and place, without proper notice, if the emergency justifies it. Finally, for purposes of the statutory notice requirement, executive sessions are technically not “meetings,” and the Board may adjourn to an executive session during a regular or a special meeting upon a mere notice to the members already in attendance. While a statutory notice to the Directors is not required in those cases, reasonable notice of executive sessions and emergency meetings should be given.

Finally, it is important to note that the notice requirement to the Board members may always be waived if the members choose to do so.

D. Record Keeping Requirements and Production of Documents

The Davis-Stirling Act and the California Corporations Code require Associations to keep a substantial amount of records. In addition, the statutes require that some documents be produced to the homeowners on a regular basis, while other documents must be produced upon an owner’s request. This includes documents concerning the Association’s finances, insurance, membership and more.

Financial documents include the Association’s operating budget, which must be produced to every member with various statements regarding assessments, Board meeting minutes, and dispute resolution procedures. Additionally, the Association must

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iesalso prepare and retain an annual financial report, and in some cases must automatically

provide it to all homeowners. Finally, the Association is required to prepare a “Reserve Study” which describes in detail the major components maintained by the Association (discussed in Part VIII).

In addition to the financial documents, the Association must prepare, maintain, and produce documents concerning its executive activities. These include minutes from member and Board meetings (discussed above), which must be available to homeowners upon request. Further, if an Association decides to discipline a homeowner for a violation of the Governing Documents, it is required to provide the disciplined homeowner with a fee payment schedule. Lastly, the Association must provide several documents to homeowners if it considers bringing a construction defect action against the subdivision’s developer.

Moreover, California statutes contain a few more general requirements for the retention and production of a variety of other documents. For example, the Associationmust retain a list of homeowner names and addresses, which must be provided to owners upon request. When a homeowner decides to sell his or her unit, the Association must provide that owner with the documents necessary to meet California’s disclosurerequirements for sellers. Additionally, the Association must automatically provide every homeowner with a summary of the insurance policies held by the Association. Lastly, every two years, the Association is required to provide the California Secretary of Statewith an information statement that includes general information regarding the development.

Finally, on top of the comprehensive statutory scheme, Associations are often regulated by even stricter document retention and production requirements enumerated in the Association’s Governing Documents.


• Civil Code §5100. Member Elections• Civil Code §5105. Adoption of Election Rules• Civil Code §5110. Inspector of Elections• Civil Code §5115. Election Voting Procedure & Secret Ballot• Civil Code §5120. Counting Ballots; Results of Election• Civil Code §5125. Ballot Retention & Recount• Civil Code §5130. Proxy Voting• Civil Code §5135. Use of Funds for Campaign Purposes• Civil Code §4900 et seq. “Open Meeting Act”• Civil Code §5300. Annual Reports


• Berryman v. Merit Property Management, Inc., 152 Cal. App. 4th 1544 (2007).• Chantiles v. Lake Forest II Master Homeowners Ass’n, 37 Cal. App. 4th 914

(1995).• Cavin Memorial Corp. v. Requa, 5 Cal. App. 3d 345 (1970). • Damon v. Ocean Hills Journalism Club, 85 Cal. App. 4th 468 (2000).• Kaplan v. Fairway Oaks Homeowners’ Ass’n, 98 Cal. App. 4th 715 (2002).• Kovich v. Paseo Del Mar Homeowners Ass’n, 41 Cal. App. 4th 863 (1996).• Moran v. Oso Valley Greenbelt Ass’n, 117 Cal. App. 4th 1029 (2004).

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• Wolf v. CDS Devco, 185 Cal. App. 4th 903 (2010). • Worldmark v. Wyndham Resort Development Corp., 187 Cal. App. 4th 1017

(2010).

VII. Maintenance Obligations

A determination of the maintenance obligations in common interest subdivisions often requires more than a simple determination of which owner owns what property. Frequently, determining whether a property maintenance obligation falls with a particular homeowner or with the Association necessitates a thorough review of the Association’s Governing Documents. Thus, it is recommended that professional legal advice be sought when maintenance obligations become a serious issue.

However, some general rules usually apply, depending on the type of the development.

A. The Individual Owner’s Maintenance Obligations

In condominium projects, homeowners are normally responsible for maintaining anything and everything that is inside the boundaries of their individual unit. This usually includes the glass, screen and frames of windows, as well as the door and door frames (although those are often outside the unit’s boundary). Finally, homeowners in condominium projects are obligated to maintain the walls of any storage space the Association assigns to them as an Exclusive Use Common Area.

In planned developments, homeowners are normally responsible for maintaining every element of their home’s interior. Similar to condominium owners, planned development homeowners are also required to maintain their unit’s windows, doors, and their components. Unlike condominium owners, however, homeowners in planned developments are also responsible for maintaining the plumbing, electrical, heating and air-conditioning systems in their homes, as well as the home’s foundation, patios and decks.

Importantly, any of the generally-accepted maintenance rules mentioned above may be altered by the Association in its Governing Documents.

B. The Association’s Maintenance Obligations

In condominium projects, the Association is usually responsible for maintaining every exterior element of the units. This also includes landscaping, lighting, walkways, and driveways. Additionally, the Association is required to maintain the plumbing, electrical, fire-protection, heating and air-conditioning systems in the units, as well as the foundations and structural elements of the units. Finally, the Association is responsible for the maintenance of the common areas, including the lobby, hallways, recreational facilities, etc.

In planned developments, the Association is usually responsible for maintaining the common areas. Additionally, the Association is normally required to maintain the exterior surfaces of the homes, as well as the exterior non-structural walls and fences. Finally, the Association is usually responsible for the maintenance of the landscape in the common area and on each lot, as well as for the fire protection system in every house.

Importantly, any of the generally-accepted maintenance rules mentioned above may be altered by the Association in its Governing Documents.

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iesFor more information on this topic, please refer to page 31 to review the exact statutory language of

the following relevant statutes:• Civil Code §4775. Maintenance Responsibility• Civil Code §4780. Wood-Destroying Pests or Organisms• Civil Code §4785. Temporary Removal of Occupant & Notice to Treat Wood-

Destroying Pests• Civil Code §4790. Telephone Wiring: Reasonable Access to Common Area


• Affan v. Portofino Cove, 189 Cal. App. 4th 930 (2010).• Arias v. Katella Townhouse Homeowners Ass’n, Inc., 127 Cal. App. 4th 847

(2005).• Country Side Villas Homeowners Ass’n v. Ivie, 193 Cal. App. 4th 1110 (2011).• Dover Village Ass’n v. Jennison, 191 Cal. App. 4th 123 (2010).• Lamden v. La Jolla Shores Condominium Homeowners Ass’n, 21 Cal. 4th 249

(1999).• Ritter & Ritter, Inc. v. The Churchill Condominium Ass’n, 166 Cal. App. 4th 103

(2008).• Ruoff v. Harbor Creek Comm. Ass’n, 10 Cal. App. 4th 1624 (1992).• Starlight Ridge South Homeowners Ass’n v. Hunter-Bloor, 177 Cal. App. 4th

440 (2009).• Tilley v. CZ Master Assn, 131 Cal. App. 4th 464 (2005).• White v. Cox, 17 Cal. App. 3d 824 (1971).

C. Cost Sharing Agreements

Cost-sharing agreements are used when one or more amenities and commonareas are used by multiple common interest developments or entities. Generally, such agreements call for multiple communities to share the costs and benefits of common areafacilities.

Examples of shared recreational amenities include pools, clubhouses, lakes, sporting facilities, golf courses, equestrian facilities, spas, parks and lodging. There also could be shared roads or parking, and shared services such as trash collection landscaping and utilities. Cost-sharing agreements can be titled “reciprocal easement agreements,”“cost-sharing agreements.” or can be part of the covenants, conditions and restrictions for master associations or sub associations. The typical provisions found in the shared use agreement include terms that govern who owns what and who could use what amenity. There normally are easement rights for the parties, and terms regarding how each easement can be used or burdened.

The maintenance obligations should be clearly spelled out. Often conflicts can arise between the sharing associations as to who should be paying for what percentage of the maintenance cost. Liability insurance, water use, and parking are some examples of allocations that can become problematic. Accounting should be done at least annually and all sharing association should have inspection and audit privileges.

Shared use agreements are usually created by the developer’s attorneys and subject to the Bureau of Real Estate’s approval. Often the developers retain rights to use some parts of the building and the rights between the various uses may not always be fair or clear. This problem can lead to claims against the developer for unfair allocation of use and expense. Be careful about short statutes of limitations concerning these claims.

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Consult with counsel to determine if any issues exist with respect to your shared use agreement.

The more amenities you have in shared use agreements the more potential you have for conflicts regarding budgeting, reserves and usage by members. Often the disputes between the parties result from a failure to communicate or to understand what the shared use agreement requires. Disputes regarding cost-sharing agreements usually include the allocation of costs, rules related to use, maintenance, and management of the shared facilities. In order to minimize disputes, it is important to have all parties read the cost-sharing agreement, communicate with one another, exchange detailed budgets,document expenses, and create joint committees or liaisons to deal with problems connected with these types of agreements. Separate bank accounts, separate budgets and separate financials are critical to the success of a shared-use agreement.

VIII. Association Management

As discussed in Part V, Associations usually pay professional Property ManagementCompanies to conduct a range of services for the Association, including assessment collection, record keeping, accounting, budgeting and more. The following sections discuss some of those topics.

A. Financials

One of the most important jobs of the Association is the management of the common interest subdivision’s finances. First, the Association, by using regular and special assessments (discussed below in sections C and D), establishes its “operating funds” to handle normal operating expenses, and its “reserve funds” to handle extraordinary expenses, usually resulting from the need to repair or replace Association-maintained components in the development. In accordance with those funds, the Association must annually prepare an operating budget and distribute it to every member of the Association. Finally, to support the Association’s funds, the Association is responsible for the administration and collection of assessments from the homeowners.

B. Reserves

Every three years, an Association is required to conduct a diligent inspection of all major components that are maintained by the Association and prepare a “Reserve Study.” In the study, a professional preparer will identify the major components in the development with a remaining service life of less than 30 years, and determine the exact remaining life of those components. Additionally, the preparer will estimate the overall cost of maintaining or replacing the components as well as the annual costs necessary to meet the overall cost. Finally, the preparer will indicate how the Association plans to obtain the necessary funds to cover those costs in a special funding plan. The funding plan is later reviewed by the Board, which must approve it in a meeting open to all members of the Association. Additionally, the Board of Directors must also review the entire reserve study every year to determine whether the study should be adjusted to meet new increased, or reduced, costs.

With the reserve study prepared, the Association can determine and collect the necessary assessments from the homeowners. The Association, however, must create a separate account, a reserve account, in which it deposits the reserve funds and keeps them

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iesuntil they become necessary. The reserve funds cannot be used by the Association for

any purpose other than the maintenance and replacement of those components for which the fund was created in the first place. Accordingly, if a component is not on the reserve study, it may not be maintained, repaired or replaced by using the reserve funds. Nonetheless, the Davis-Stirling Act allows for a special exception by which the Association can transfer reserve funds to the regular operating funds. To do that, however, the Association must follow a few strict procedural requirements, and must restore the funds to the reserve account within one year. Finally, a summary of the Association’s reserve must be distributed to all homeowners with the Association’s operating budget every year.

A large number of additional statutes govern reserve studies, reserve funds, and other issues relating to reserves. Accordingly, handling the Association’s reserves may be complicated at times. Because unexpected disasters or construction defects may make reserve funds critical to the subdivision’s financial existence, it is highly recommended to seek professional help when dealing with those issues.

C. Regular Assessment

Regular assessments, commonly known among homeowners as “HOA fees”, are those assessments the Association collects from homeowners on a regular basis. Regular assessments are based on the Association’s needs as determined by the annual budget,and since the budget is adjusted annually to meet changes in the development, so do theregular assessments.

The Association’s Governing Documents may limit the Association’s authority to change the regular assessments. Such restrictions in the Governing Documents, however, are subject to a California statute that allows the Board of Directors to increase the assessments by up to 20% without the owners’ approval. If an increase is approved by a majority of the homeowners, the Association must notify the members about the increase at least 30 days before it becomes effective.

D. Special Assessment

When an Association faces an expense it under-budgeted for, or did not budget for at all, regular assessments will naturally not provide the necessary funds to cover the expense. To handle this type of a situation, the Association may collect a “special assessment,” which may be a one-time fee or multiple installment payments.

Unless the Governing Documents require owner approval, the Association’s Board can administer and collect special assessments. If the special assessment does not exceed 5% of the Association’s gross expenses for the current fiscal year, the Board may impose the special assessment without the approval of the owners, even if the Governing Documents state otherwise. On the other hand, if the special assessment exceeds 5%,owner approval is always required, even if the Governing Documents neglect to require that. Like regular assessments, when an increase is approved, the Association must notify the members about the increase at least 30 days before it becomes effective.

E. Emergency Assessment

In some circumstances, the Association may increase the regular assessments or impose a special assessment without any approval of the homeowners. The unexpected

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increase in regular assessments or the imposition of a special assessment is referred to as an “emergency assessment.” An emergency assessment may be imposed in three different circumstances.

First, if the Association suffers an extraordinary expense as a result of a court order. Second, if the Association suffers an extraordinary expense necessary to repair or maintain part of the common area that currently poses a threat for the personal safety of the owners. And lastly, if the Association suffers an extraordinary expense necessary to repair or maintain part of the common area that, although does not pose a threat to personal safety, was not, and could not have been, foreseen by the Board when it prepared the annual operating budget.

F. Liens and Foreclosures - Policies

When an owner fails to pay regular or special assessments, the Association may subject him or her to fees and penalties, as well as utilize a judicial or non-judicial foreclosure procedure to recover the delinquent assessments. Recently, however, the California legislature has enacted several statutes to protect homeowners from liens and foreclosures, and Associations must follow strict procedures to utilize these methods to collect unpaid assessments.

First, every Association must prepare, and annually distribute, its policy for collecting delinquent assessments to all homeowners. The Davis-Stirling Act specifies exactly what the policy must include, and failure to distribute the policy can result in the Association’s inability to collect its assessments.

If a homeowner is delinquent in his or her assessment payments, the Associationmay record a lien on his or her property. Thirty days prior to recording the lien, however, the Association is required to send a written notice to the delinquent owner by certified mail. The notice must include a description of the Association’s collection and lien procedures; a statement of the charges owed by the homeowner; a statement notifying the homeowner that he or she will not be liable if the assessment was, in fact, paid; a statement reminding the homeowner that he is entitled to meet with the Board to discuss the delinquency; and a statement reminding the homeowner that he is entitled toparticipate in an internal dispute resolution procedure or mediation.

Thirty days after a notice is sent to the homeowner, the Association may record a lien on the owner’s property. Thirty days after the recordation of the lien, the Association may pursue foreclosure of the property. Notably, however, the Association cannot foreclose on the property unless the delinquent payments exceed $1,800 or have been delinquent for more than one year.

The decision to record a lien must be made at an open meeting of the Board of Directors. The decision to proceed with foreclosure once a lien has been recorded, however, must be made during an executive meeting of the Board. Finally, even if a property is successfully sold through foreclosure, the owner may redeem the property within 90 days if he or she pays the delinquent assessments as well as all the costs incurred by the Association in its pursuit of the lien and foreclosure.

The foreclosure process is legally complex, and may subject the Association to stiff penalties if abused. Accordingly, an attorney should be consulted before pursuing this significant procedure.

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iesG. Aggressive Collection Practices

Like almost all businesses, homeowner associations have been affected by the economic recession. The aspect most significantly affected by the recession is assessment collections. Many homeowners are experiencing trouble staying current on their mortgage payments, and are struggling to avoid foreclosure. It is not surprising, therefore, that the same homeowners choose to ignore their obligation to pay the association assessments and give priority to mortgage payments and other financial obligations they deem more urgent.

Delinquencies may seem like a minor issue at first. However, as more homeowners become delinquent for a longer period of time, this “minor” issue often becomes a big deal. Associations that suffer from high delinquency rates often need to impose special assessments on the membership or borrow from reserve funds in order to meet their financial obligations. At times, even extreme measures such as bankruptcy may become necessary. To avoid this situation, associations must be proactive and aggressive in their delinquent assessment collection practices.

Swift, aggressive action by an association can make the difference between prompt, amicable collection and lengthy litigation that results in a debt that is nearly impossible to collect. To ensure effective collection of delinquent assessments, associations must take action as soon as the delinquency arises by engaging in a combination of the following:

Utilizing Affordable Collection Methods

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1. Suspension of Members’ Rights

Associations have the authority to suspend delinquent members’ rights under Corporations Code Section 7341. The suspension must be imposed in good faith and in a fair and reasonable manner. The Corporations Code provides an example of a fair and reasonable procedure for imposing suspensions, which includes (1) a provision allowing the suspension is set out in the Governing Documents, (2) the delinquent member is given at least a 15 day notice prior to the suspension taking effect, and (3) the delinquent member is given an opportunity to be heard orally or in writing in front of the Board no less than five days before the suspension becomes effective.

The Board may suspend a delinquent member’s rights to access the community’s common facilities, such as the swimming pool, the gym, or other recreational facilities. The Board may also suspend the delinquent member’s right to vote in upcoming elections to the Board. With that said, it is important to note that under Civil Code Section5105,the Association may not suspend the delinquent member’s right to run for the Board of Directors.

Suspending a delinquent member’s rights is not, per se, a method of “collection.” However, such a suspension conveys to the delinquent member how serious the Association is about collecting its assessments, and often encourages the member to work with the Association towards a solution. Therefore, this method should be combined with other methods of collection.

2. Lien

A lien gives an association an interest in a delinquent owner’s property that arises because of the assessment debt. The lien restricts the delinquent owner’s ability to sell the property until the debt is paid and the lien is removed. It protects the association from possible sale and makes it a secured creditor in Chapter 13 bankruptcy. Essentially, the lien protects the Association from the delinquent owner selling the property without fulfilling his obligation to pay assessments. Thus, the placement of a lien on a delinquent owner’s property should be combined with other methods of collection.

To place a lien on a delinquent member’s property, the Association must follow certain procedural guidelines set forth in the Civil Code. For a detailed discussion on these procedures, please see Section VIII.

3. Foreclosure

Foreclosure allows the association to obtain a termination of the delinquent owner’s interest in his or her property by a court order or by operation of law. When the association obtains this right, it forecloses the delinquent owner’s right of redemption, and can sell the owner’s property to a third party in order to satisfy the owner’s debt.

More than anything, foreclosure provides associations with leverage, as the threat of losing one’s home is generally serious enough to motivate a delinquent homeowner into payment. However, foreclosure will not provide the association with leverage when the owner has no equity in the property. In fact, with no equity in the property, the owner has little reason or motivation to pay his or her debt. Thus, when deciding whether to proceed with foreclosure, the association must first determine whether the owner has any equity in the property.

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iesForeclosure can be carried out in two ways: judicial, and non-judicial. Judicial

foreclosure occurs when the association brings a claim against the delinquent homeowner in court. Upon a final court order in favor of the association, the property becomes subject to a public auction. In Non-judicial foreclosure, the association mails the delinquent owner a default letter, notifying him or her of the association’s intention to foreclosure.

As with liens, foreclosures involve specific procedural guidelines set forth in the Civil Code. For a detailed discussion of these procedures, please see Section VIII.

4. Small Claims Action

When an association wants to take swift legal action, it may be able to do so in small claims court. Small claims courts resolve disputes quickly and inexpensively. While an attorney cannot represent the association during the small claims trial, consultation with an attorney prior to the trial is encouraged. Additionally, the filing fees for actions filed in small claims court are significantly lower than the ones for a standard legal action. Accordingly, this method keeps the association’s legal expenses at a minimum.

With that said, small claims courts do include some limitations. An association may bring as many actions as it pleases in small claims court, but is limited to $2,500.00 in recovery. Only twice during every 12-month period, the association can recover a larger amount not exceeding $5,000.00. Moreover, after bringing 10 separate actions within 12 months, the association may be subject to an increased filing fee. Finally, it is important to note that the California Code of Civil Procedure allows the association’s community manager to attend the small claims trial on behalf of the association and represent it in court.

To maintain small claims court as a viable option, associations must act quickly and initiate this collection method as soon as a homeowner becomes delinquent. Allowing delinquencies to exceed $2,500.00 seriously jeopardizes the association’s ability to use this efficient tool.

Chapter Five of this book includes select Civil Procedure Sections addressing the filing of an action in Small Claims Court.

5. Superior Court Actions

In the event that small claims court is not an option, an association can file a lawsuit in superior court against the delinquent owner in order to recoup the unpaid debt. This method allows for attorney representation and does not limit the association to a certain amount in recovery. However, as with most legal actions, this method can involve substantial costs in attorneys’ fees and legal costs.

An action in the superior court is time consuming and expensive, and the association may have to wait several months before obtaining a judgment. With that said, the service of a complaint on a delinquent homeowner may sometimes be enough to intimidate the delinquent owner and encourage him or her to attempt to resolve the dispute.

6. Payment Plans

Under Civil Code Section 5665, an owner may submit a written request to meet with the board to discuss a payment plan regarding unpaid debts. A payment plan allows the association to help the member to take control over his or her delinquency by providing

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an opportunity to gradually become current in assessment payments. Payment Plans prevent the owner from incurring additional late fees, interest and collection costs, so long as he or she complies with the terms of the agreement. At the same time, the Payment Plan provides the association with an immediate stream of cash-flow, while not impeding the association’s ability to record a lien to secure full payment of the debt under the agreement. Finally, a Payment Plan can include a stipulation for judgment, which would allow the association to enter judgment against the delinquent owner without any litigation in case of a breach of the agreement by the owner.

Overall, entering into payment plans with delinquent homeowners is a highly recommended course of action. It provides the association with a quick and cheap solution while maintaining an amicable relationship between the association and its members.

7. Collecting from a Short-Sale

In today’s economy, some borrowers are unable to pay the balance owed on their mortgage. A short-sale occurs when the lender decides that selling a property at a loss is a better alternative to pressing the borrower for payment when the borrower has failed to make payments for a continuous amount of time. The seller arranges with the lender to accept a sale price less than what is owed from a new buyer, and in return the lender gets a new buyer who purchases the home and continues paying the mortgage on the property. A short-sale also represents an opportunity for the association to collect some of the delinquent assessments owed by the selling owner.

To collect from a short-sale, the association must prepare a payoff demand. The payoff demand is a written statement setting forth the amounts owed by the owner to fully satisfy all the obligations to the association. By making a payoff demand, the association can collect unpaid debt from the sale proceeds of the short-sale. Often, it is in the association’s best interest to be prepared to compromise if needed in order to facilitate the short-sale, because getting a new, paying owner into the property as quickly as possible is better than obtaining an overvalued property with no paying tenant through foreclosure.

8. Assignment of Debt to a Collection Agency

A collection agency can serve as an agent of the association, hired to collect delinquent debts for an agreed upon fee. When debt is turned over to a collection agency, the burden of debt collection is removed from the shoulders of the association and placed on the agency, which allows the association to shift its focus to other important community issues. The major disadvantage in hiring a collection agency is the cost of employment. Collection agencies generally charge a significant contingency fee to collect a delinquency. Because of this significant cost, associations should utilize collection agencies only as a last resort after all other methods have been exhausted.

It is important to note that this method is only available when collecting delinquent assessments from former homeowners who still have unpaid debts. Under the Civil Code, the association may not assign the debt of a current homeowner to a collection agency.

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iesFor a summary of a recent California Court decision on this topic, please refer to page 255 to

review the following case:• In re Moreno, 479 B.R. 553 (Bankr. E.D. Cal. 2012).

9. Collecting in Bankruptcy

Once notice of bankruptcy is received, all collection activity, including regular letters, should be stopped. Sending a demand for payment to a bankrupt homeowner is a violation of the bankruptcy stay and may result in monetary liability. Once bankruptcy is discharged, the association may resume collection activities.

There are various bankruptcy chapters that an association should be aware of. In a Chapter 7 bankruptcy, all of the debtor’s debts are completely discharged. Often referred to as liquidation, in Chapter 7 the association can only sit and wait for the bankruptcy to be discharged. However, the association should review the debtor’s schedules. If the association was not listed as a creditor, the debt will not be discharged.

Chapters 11 and 13 are very similar to each other as both call for a reorganization of the debtor’s assets and debts. Chapter 11 applies to corporate entities, while Chapter 13 applies to individuals. In these Chapters, the association can immediately move for relief from the stay to pursue the collection of post-petition assets.

It is important to note that a lien may survive bankruptcy. A bankrupt member will often file a bankruptcy motion to avoid the association’s assessment lien. There is some Federal case law that supports the argument that the assessment lien survives the bankruptcy and cannot be avoided. This does not mean that the association can pursue collection of the debt. Instead, it means that the lien remains against the property, not the person. Should the homeowner later sell the house, the lien must still be satisfied –despite the bankruptcy.

10. Enforcing a Judgment

Judgments are good for ten years, at an interest rate of 10% per year. Judgments allow the association to go after all of the owner’s assets, including: money, bank accounts, salaries/wages, real property, personal property, and till tap.

A judgment debtor’s examination is an in-person exam of the debtor under oath. During the exam, the debtor is questioned about where the debtor banks and where he or she works. It is particularly useful when the judgment creditor (the association) cannot locate the assets of the individual debtor. Often, the examination motivates the debtor to engage in good faith settlement discussions.

Wage garnishment can also be useful. The actual garnishment itself is done by a sheriff. It compels the debtor’s employer to remit a part of the debtor’s paycheck to the association. Similar to wage garnishment, is rental income garnishment. If the judgment debtor owns real property, the association may garnish the rents paid by the current tenants. Again, the actual garnishment is done by a sheriff.

If the association holds any information regarding the bank and branch where the judgment debtor (or his or her spouse) has a bank account, it may levy the funds in that account. Called a bank levy, once the sheriff’s department serves the levy, the bank account is frozen and the account holder is notified.

If the judgment debtor owns a business, the association might find a till tap or keeper’s levy helpful. A till tap sends a deputy sheriff into the business to take all cash and checks out of the cash register. A keeper’s levy stations the sheriff at the business from 4-8 hours to collect money as it is paid to the business.

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Finally, a real property levy and writ of sale is another potentially valuable tool for an association. A real property levy causes the debtor’s interest in real property to be levied upon and sold to satisfy a money judgment. A writ of sale is delivered to a levying officer, who compels the sale of real or personal property to satisfy the debtor’s debt. These procedures, in effect, constitute foreclosure on the debtor’s property.

In summary, associations should plan for delinquencies. They should review collection options with the Board, verify that collection policies are up to date, and ensure that the board follows the collection policies in place. Budgeting for debts is also crucialto ensuring the association’s success.

H. Special Protections for Military Personnel

Both federal and California laws protect homeowners who serve in the military. Those laws generally prohibit Associations from (1) obtaining a court default judgment against the homeowner and (2) foreclosing on his or her property. The policy behind providing this temporary suspension of the Association’s rights is to enable homeowners in the military to concentrate on their important duty to defend our nation, and not spend energy defending a legal action. The only exceptions to this general prohibition are either (1) upon a court’s order for foreclosure, or (2) upon the homeowner’s agreement that his or her home be foreclosed. Moreover, Associations are not prohibited from foreclosing on a lien against a homeowner who is in the military when he or she purchased the property after his or her service in the military began.

Notably, homeowners are considered to be in military service when they are on full-time active duty, regardless of whether they have been deployed to a war zone. Often, it may be extremely difficult for an Association to determine whether a homeowner is in the military. Accordingly, it is recommended that when an Association is required to do so, it declare that the homeowner is, or is not, in the military based “upon information and belief.”

Finally, it is important to emphasize the severe penalties involved with violations of these laws. Associations that seek a default judgment, or foreclosure against a member of the military, are exposed to up to $200,000 in penalties. Associations’ representatives (such as the Association’s attorneys) similarly expose themselves to fines of up to $100,000. Accordingly, Board members and managers should take extra caution when seeking default judgments and foreclosure orders, and should definitely seek professional legal advice before doing so.

I. Architectural Guidelines - Regulation and Enforcement

Almost every Association’s Governing Documents include architectural guidelines and rules that restrict the aesthetic and structural alterations a homeowner can make to his or her unit. To be enforceable, the architectural guideline or regulation must meet three general requirements. First, it must be authorized by the Governing Documents. Second, it must not be unreasonable (discussed in Part II). And third, it must be enforced consistently and according to the specified enforcement procedures. If those three requirements are met, an Association may be able to enforce an aesthetic architectural rule even if it is completely subjective. Importantly, however, some restrictions are specifically prohibited by California and Federal statutes, including limitations on noncommercial signs, solar panels and handicapped access.

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iesUsually, the Governing Documents include a provision that requires the

Association’s approval for certain improvements or alternations. In condominium projects, changes that usually require approval include changes to the exterior area or the interior common-area, and changes that impair the structural integrity of the condominium building or interfere with plumbing, electrical, air-conditioning and heating service to other units. In planned developments, changes that usually require approval include changes to the common area, changes to the appearance of exterior elements of structures and existing landscaping, changes that involve construction of new structures or additions, and changes that interfere with water supply, sewage or drainage systems.

Associations’ Governing Documents usually contain the exact procedure for an application and approval of improvements and alternations. If the Governing Documents do not include such a procedure, the Board should develop a procedure and codify it, or else it may be prohibited from enforcing any of its guidelines. In considering an application for an improvement or alteration, the Association has the freedom to make any decision it finds appropriate, so long as such decision is made in writing, consistent with local ordinances, made fairly, reasonably and in good faith, and explains why it was reached.


• Civil Code §4765. Architectural Review & Decision Making• Civil Code §5300. Annual Reports• Civil Code §5375. Managing Agent: Written Disclosure to Board• Civil Code §5380. Managing Agent Duties: Disposition of Association Funds• Civil Code §5730. Annual Policy Statement Notice• Civil Code §5570. Assessment and Reserve Funding Disclosure Summary• Civil Code §5600. Establishment & Imposition of Assessments• Civil Code §5605. Annual Increase in Regular Assessments; Limitation on

Assessment Increase; Quorum for Increase of Assessments• Civil Code §5610. Assessment Increase Necessary for Emergency Situations:

Member Approval Not Required• Civil Code §5615. Notice of Assessment Increase• Civil Code §5620. Exemption of Regular Assessments from Execution by

Judgment Creditor• Civil Code §5650 et seq. Assessment Payment and Delinquency• Civil Code §5705. Application of Section to Assessment Debts Incurred After

January 1, 2006: Pre-Foreclosure Dispute Resolution• Civil Code §5715. Application of Section to Assessment Debts Incurred After

January 1, 2006: Right of Redemption After Trustee Sale• Civil Code §5720. Application of Section to Assessment Debts Incurred After

January 1, 2006: Alternative Assessment Collection for Debts less than $1,800• Civil Code §2924b. Notices of Default and of Sale; Mailing Upon Request for

Copies and to Certain Interested Persons• Civil Code §2924.1. Transfers of Property in Common Interest Developments;

Recording; Validity of Sale Not Affected by Failure


• Affan v. Portofino Cove, 189 Cal. App. 4th 930 (2010).• Bear Creek Master Ass’n v. Edwards, 130 Cal. App. 4th 1470 (2005).• Cebular v. Cooper Arms Homeowners Ass’n, 142 Cal. App. 4th 106 (2006).

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• Brown v. Professional Community Management Inc., 127 Cal. App. 4th 532 (2005).

• Diamond Heights Village Ass’n Inc. v. Financial Freedom Senior Funding Corp., 196 Cal. App. 4th 290 (2011).

• Finley v. Superior Court, 80 Cal. App. 4th 1152 (2000).• Fourth La Costa Condominium Owners Ass’n v. Seith, 159 Cal. App. 4th 563

(2008).• Heiman v. Workers’ Compensation Appeals Board, 149 Cal. App. 4th 724

(2007).• Huntington Cont’l Town Ass’n., Inc. v Miner, 222 Cal. App. 4th Supp. 13

(2014).• In re Antonio Cisneros, 12-10468, 2012 WL 4627833 (Bankr. N.D. Cal. Oct. 1,

2012).• James F. O’Toole Co., Inc. v. LA Kingsbury Ct. Owners Ass’n, 126 Cal. App. 4th

549 (2005).• Park Place Estates Homeowners Ass’n v. Naber, 29 Cal. App. 4th 427 (1994).• People ex rel. Groman v. Sinai Temple, 20 Cal. App. 3d 614 (1971).• Queen Villas Homeowners Ass’n v. TCB Property Management, 149 Cal. App.

4th 1 (2007).• Thaler v. Household Finance Corp., 80 Cal. App. 4th 1093 (2000).

J. Companion Animals

California’s Fair Employment and Housing Act (FEHA) makes it unlawful to refuse “to make reasonable accommodations in rules, policies, practices, or services when these accommodations may be necessary to afford a disabled person equal opportunity to use and enjoy a dwelling.” (Gov. Code § 12927(c)(1)) Both mental and physical disabilities fall within the definition of disability. (Gov. Code § 12955.3) Reasonable accommodations can include allowing a person with a disability to have a companion animal in their home, despite any pet restrictions in CC & R’s.

Unlike service animals, companion animals are not specially trained. The benefit of companion animals comes instead from the innate qualities of the animal, such as their friendliness and ability to interact with people. (Auburn Woods I Homeowners Ass’n v. Fair Employment and Housing Com’n, 121 Cal. App. 4th 1578, 1596 (2004)). Because companion animals are not service animals, individuals do not need to present evidence that an animal is specially trained in order for the animal to be considered a companion. (Id.) Additionally, because they are not considered pets, an association may not charge an individual a pet fee for keeping a companion animal.

The court in Auburn Woods made it clear that allowing a companion animal despite a “no pets” policy can be a reasonable accommodation for individuals with physical or mental disabilities. (Id. at 1599). However, companion animals will not always be considered a reasonable accommodation. (Id. at 1593). Instead, the determination of whether a companion animal should be allowed is to be made on a case-by-case basis, and depends on the facts of each situation. (Id.) In order for an individual to be protected under FEHA, they must show that they have a disability, that a companion animal aids in alleviating the disability and that there is a medical need to keep the animal. (Id. at 1592-93).

Additionally, because only “reasonable” accommodations must be made, an association may deny a request to maintain a companion animal if the animal is unduly burdensome. Considerations in determining if an animal is unduly burdensome can include whether the animal poses a threat to others or whether insurance or finances will

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iesbe affected. Unfortunately, California law currently does not have guidelines as to the

exact type or breed of animal that may constitute a companion. Therefore, associations should not make a determination of whether an animal is unduly burdensome based solely on the breed or size of the animal.

For a summary of a recent California Court decision on this topic, please refer to page 255 to review the following case:

• Auburn Woods I Homeowners Ass’n v. Fair Employment and Housing Com’n,121 Cal. App. 4th 1578 (2004).

IX. Construction Defect Litigation

Faulty design or construction of common interest subdivisions is a relatively common occurrence. When a subdivision suffers from design or construction deficiencies, commonly known as “construction defects,” the Association or the individual homeowners may bring legal action against the developer, the contractor, and even the sub-contractors, to recover damages they suffered as a result. Generally, construction defect cases are litigated according to two models, the SB800 model, which governs homes sold since January 1, 2003, and the pre-SB800 model, which governs homes sold before 2003.

A. SB-800 and Pre-SB-800

In litigation involving homes sold before January 1, 2003, “construction defects” are defined broadly to include any defects in design, specifications, surveying, planning, supervision or observation of the construction. Under this model, any variance from a California building standard automatically constitutes a defect. This broad definition of defects used to allow homeowners to file suit against the developer for any minor deficiency as soon as construction was completed, even if the deficiency did not actually cause damage to the property. In 2000, the California Supreme Court effectively ended this trend by creating a rule that now requires construction defects to actually cause identifiable damage to the property before the homeowner can bring a construction defect action in court. Trying to avoid premature litigation, the Supreme Court essentially prohibited homeowners from pursuing the repair or replacement of certain components in their house until such components caused damage to the property. Naturally, this outcome sparked criticism, as homeowners who, for example, bought a home with a defective electrical wiring system, had to wait until the wiring caused a fire to sue the parties responsible for the defect. With this criticism in mind, the legislature enacted a series of compromising statutes commonly known as SB800.

In litigation involving homes sold since January 1, 2003, “construction defects” are specifically and narrowly defined by statute. The statute contains some 45 standards that every residential unit must comply with. The standards cover deficiencies with window leakage, plumbing problems, electrical malfunctions, landscaping difficulties and more. If an Association discovers that the developer did not comply with one, or a few, of the standards, it may proceed with litigation even if the defect has not caused any property damage yet. On the other hand, while SB800 permits construction defect litigation before any property damage is caused, it also creates a comprehensive procedural scheme that complicates such litigation and encourages dispute resolution without resorting to trial. Probably the most important element of SB800’s procedural scheme is the developer’s “right to repair.” The “right to repair” gives developers, contractors and

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subcontractors the opportunity to repair the defects to meet SB800’s standards and thereby avoid paying monetary damages, which can be more costly.

Litigation under either model is complicated and requires experience and knowledge. If a homeowner or an Association believes a defect exists in one of its homes, it should consult an attorney with experience and knowledge in the area of construction defect litigation.

For more information on this topic, please refer to pages 30 and 139 to review the exact statutory language of the following relevant statutes:

• Civil Code §6000. Actions for Damages Against Common Interest Development Builders, Developers, or General Contractors

• Civil Code §6100. Settlement Agreements Regarding Alleged Defects; Notice of Resolution to Members on Record; Disclosures

• Civil Code §895 et seq. SB800 Construction Defect Litigation


• Anders v. Superior Court, 192 Cal. App. 4th 579 (2011).• Baeza v. Superior Court, 201 Cal. App. 4th 1214 (2011).• Beacon Residential Comty. Ass’n v. Skidmore, Owings & Merrill LLP, 59 Cal.

4th 568 (2014).• Burch v. Superior Court, 223 Cal. App. 4th 1411 (2014).• Carolyn v. Orange Park Community Ass’n, 177 Cal. App. 4th 1090 (2009).• Darling v. Superior Court, 211 Cal. App. 4th 69 (2012).• El Escorial Owners’ Ass’n v. DLC Plastering, 154 Cal. App. 4th 1337 (2007). • Greystone Homes Inc. v. Midtec, Inc., 168 Cal. App. 4th 1194 (2008).• Landale-Cameron Court, Inc. v. Ahonen, 155 Cal. App. 4th 1401 (2007).• Lauriedale Associates, Ltd. v. Wilson, 7 Cal. App. 4th 1439 (1992).• KB Home Greater Los Angeles, Inc. v. Superior Court, 223 Cal. App. 4th 1471

(2014).• Marquez Knolls Property Owners Ass’n v. Executive Risk Indemnity, 153 Cal.

App. 4th 228 (2007).• McCaffrey Group, Inc. v. Superior Court, 224 Cal. App. 4th 1330 (2014).• Pinnacle Museum Tower Ass’n v. Pinnacle Market Development (US), LLC, 55

Cal. 4th 223 (2012).• Siena Court Homeowners Ass’n v. Green Valley Corp., 164 Cal. App. 4th 1416

(2008).• Standard Fire Insurance Comp. v. Spectrum Community Ass’n, 141 Cal. App.

4th 1117 (2006).• Standard Pacific Corp. v. Superior Court, 176 Cal. App. 4th 828 (2009).• Stonegate Homeowners Ass’n v. T.A. Staben, 144 Cal. App. 4th 740 (2006).• Thompson v. Toll Dublin, LLC, 165 Cal. App. 4th 1360 (2008).• Treo @ Kettner Homeowners Ass’n v. Superior Court, 166 Cal. App. 4th 1055

(2008).• Windham at Carmel Mountain Ranch Ass’n v. Superior Court, 109 Cal. App. 4th

1162 (2003).

X. Roberts Rules of Order for Conducting a Meeting

“Roberts Rules of Order” are a set of rules that originated in England in 1876. The rules establish the standard method and procedure for conducting organizational

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iesmeetings, including Association member meetings and executive sessions. The rules are

complex, and only some highlights are included in this summary. According to the rules, every meeting should follow this fixed order: (1) A call to

order; (2) roll call; (3) reading and approval of last meeting’s minutes; (4) reports by officers; (5) reports by committees; (6) special business; (7) unfinished business; (8) new business; (9) announcements; and (10) vote and adjournment.

During meetings, any member may prompt a discussion and a vote on a certain topic by making a “motion.” Some motions are automatically heard, others require that another member “second” the motion, or in other words, join the moving member’s interest in prompting a discussion on that topic. Following a “second,” a debate will begin on the topic, at which point other members may make additional motions to limit or expand the debate. When the debate ends, the members take a vote to decide on the motion. Motions can be voted on in five different ways. By a voice vote, a show of hands, a roll call, a ballot, and general consent.

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CHAPTER TWO: DAVIS-STIRLING ACT

Davis-Stirling Act Conversion ChartOn August 17, 2012, the California Secretary of State chaptered Assembly Bill 805. The Bill became operative on January 1, 2014 and reorganized and recodified the Davis-Stirling Act. The following is a conversion chart which indicates the changes that were made:

Prior § Current § Subject1350 4000 Short Title

1350.5 4005 Effect of Headings on Scope, Meaning, or Intent of Act

1350.7 Method of Document Delivery4010 Continuation of Prior Law4035 Delivery of Document to Association4040 Individual Delivery or Individual Notice4045 General Delivery or General Notice4050 Time of Delivery

4055 Electronic Delivery; Satisfaction of Written Information Requirement

4065 Approval by Majority4070 Approval by Majority of Quorum

1351 4075 Construction of Act4076 “Annual Budget Report” Defined4078 “Annual Policy Statement” Defined

1351(a) 4080 “Association” Defined4085 “Board” Defined

1351(b) 4095 “Common Area” Defined1351(c) 4100 “Common Interest Development” Defined1351(d) 4105 “Community Apartment Project” Defined

4120 “Condominium Plan” Defined

1351(e) 4285, 4290, 4295

Condominium Plan Requirements; Recordation;Amendment & Revocation

1351(f) 4125 “Condominium Project” Defined1351(g) 4130 “Declarant” Defined1351(h) 4135 “Declaration” Defined

4140 “Director” Defined1351(i) 4145 “Exclusive Use Common Area” Defined

4148 “General Notice” Defined1351(j) 4150 “Governing Documents” Defined

4153 “Individual Notice” Defined4160 “Member” Defined4170 “Person” Defined

1351(k) 4175 “Planned Development” Defined1351(l) 4185 “Separate Interest” Defined1351(m) 4190 “Stock Cooperative” Defined

1352 4200 Creation of Common Interest Development;

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Application of Act4205 Authority of Documents

1352.5 4225Restrictive Covenants; Deletion from Declaration

or Other Governing Document; Recording or Filing of Amended Document

4235 Correction of Statutory References in Documents1353(a)(1) 4250(a) Contents of Declaration

1353(a)(1)-(4) 4255Notice of Airport in Vicinity; Notice of San

Francisco Bay Conservation and DevelopmentCommission Jurisdiction

1353(b) 4250(b) Contents of Declaration4700 Scope of Article; Related Provisions

1353.5 4705Display of United States Flag by Owner on or in

Owner’s Separate Interest or Within Exclusive Use Common Area

1353.6 4710

Prohibition of Posting or Displaying Noncommercial Signs, Posters, Flags, or Banners;

Permitted Placement of Posting or Displaying; Exceptions

1353.7 4720 Roof Installation or Repair; Roofing Materials

1353.8 4735 Governing Documents; Void and Unenforceable Provisions

4736 Governing Documents; Void and Unenforceable Provisions; Pressure Washing

4750 Personal Agriculture1353.9 4745 Electric Vehicle Charging Stations

1354 5975Covenants and Restrictions in Declaration as

Equitable Servitudes; Enforcement; Alternative Dispute Resolution

1355(a) 4270(a) Amendment of Declaration; Procedure1355(b) 4260 Amendment of Declaration; Authorization

1355(b)(1) 5115(e) Inclusion of Text of Proposed Amendment of Governing Documents

1355(b)(2)-(3) 4270(a)-(b) Amendment of Declaration; Procedure

1355.5 4230Amendment of Governing Documents to Delete

Construction or Marketing Provisions After Completion by Developer; Requirements

1356 4275

Amendment of Declaration; Petition; Contents; Filing; Findings by Court; Power of Court to

Approve Amendment; Recording Amendment; Delivery

1357 4265 Extension of Term of Declaration1357.100(a) 4340(a) “Operating Rules” Defined1357.100(b) 4340(b) “Rule Change” Defined

1357.110 4350 Requirements for Validity and Enforceability

1357.120 4355Approved Subject Matters; Board Action to Propose Rule Change; Special Meetings of

Members to Reverse Rule Change

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1357.130 4360 Proposed Rule Change by Board Action; Notice; Meeting

1357.140 4365Special Meeting of Members to Reverse Rule

Change; Notice; Voting Requirements; Effect of Approved Reversal

1357.150 4370 Applicability of Article to Changes Commenced Before and After January 1, 2004

1358(a) 4625Community Apartment Project; Interests Included

in Conveyance, Judicial Sale or Transfer of Separate Interests

1358(b) 4630Condominium Project; Interests Included in

Conveyance, Judicial Sale or Transfer of Separate Interests

1358(c) 4635Planned Development; Interests Included in


1358(d) 4640Stock Cooperative; Interests Included in


1358 4645, 4650 Transfer of Exclusive Use Areas; Restrictions Upon Severability of Component Interests

1359 4610 Restrictions on Partition

1360 4760Modification of Member’s Separate Interest;

Facilitation of Access for Handicapped; Approval by Project Association

1360.2 4740 Rental or Leasing of Separate Interests; Provisions in Governing Documents

1360.5 4715 Pets Within Common Interest Developments

1361 4505 Rights and Easements of Ingress, Egress, and Support

1361.5 4510 Physical Access to Owner or Occupant’s Separate Interest

1362 4500 Ownership of Common Areas1363(a) 4800 Management by Association1363(b) 5300 Duties of Association: Annual Budget Report1363(c) 4805 Powers of Association1363(d) 5000(a) Use of Parliamentary Procedure1363(e) 5240(b) Construction with Corporations Code

1363(f) 5850(a)-(d) Monetary Penalties; Provision of Information to Members

1363(g) 5855 Board Disciplinary Proceedings; Notice to Member1363(h) 4820 Consolidation of Associations1363(i) 5865 Authority of Board to Impose Monetary Penalties

1363.001 5400 Director Online Education1363.005 Distribution of Disclosure Documents Index

1363.03(a) 5105(a) Election Rules1363.03(b) 5115(a)-(c) Ballots; Quorum; Cumulative Voting1363.03(c) 5110 Inspector of Elections

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1363.03(d) 5130 Proxies; Definitions1363.03(e) 5115(a) Ballots1363.03(f) 5120(a) Counting and Tabulation of Votes1363.03(g) 5120(b) Reporting of Tabulated Results1363.03(h) 5125 Custody of Ballots1363.03(i) Ballot Storage Required for at Least One Year1363.03(j) 5105(b) Election Rules1363.03(k) 5115(d) Election by Mail

1363.03(l)-(n) 5100(c)-(e) Scope of Article1363.03(o) Effective Date of Amendments

1363.04 5135 Campaign Funding1363.05(a) 4900 Open Meeting Act Title

1363.05(b) 4925(a), 4935(a)-(d) Open Meeting; Executive Session

1363.05(c) 4935(e) Executive Session1363.05(d)-(e) 4950(a)-(b) Meeting Minutes

1363.05(f) 4920 Notice of Meeting1363.05(g) 4923 Emergency Board Meetings

1363.05(h) 4925(b), 5000(b)

Executive Session Exception; Use of Parliamentary Procedure

1363.05(i) 4930 Subjects of Meeting; Issues Not on Agenda

1363.05(j) 4910Action on Items Outside of Meeting Prohibited;

Electronic Transmissions as Method of Conducting Meeting

1363.05(k)(1) 4155 “Item of Business” Defined1363.05(k)(2) 4090 “Board Meeting” Defined

1363.07 4600Exclusive Use of Common Area; Affirmative Vote

Required; Exceptions; Contents of Proposed Measure

1363.07(a)(3)(F) 4202(a)(4)Developments Expressly Zoned as Industrial or

Commercial and Limited to Such Purposes; Exclusions

1363.09 5145 Civil Action for Violation of Article; Attorney’s Fees and Costs; Small Claims Court

1363.09(a)-(b) 4605, 4955 Remedies; Civil Action for Violation of Article; Costs and Attorney’s Fees

1363.1(a) 5375 Prospective Managing Agent; Written Disclosures1363.1(b) 4158 “Managing Agent” Defined

1363.1(b)(1) 5385 “Managing Agent” Does Not Include Full-Time Employee of Association

1363.2(a)-(e) 5380(a)-(e)Managing Agent; Deposit of Funds Received;

Requirements; Separate Record; Commingling of Funds

1363.2(f) 4158, 5385“Managing Agent” Defined; “Managing Agent”

Does Not Include Full-Time Employee of Association

1363.2(g) 5380(f) Commingling of Funds1363.5 4280 Association Articles of Incorporation; Required

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Statements

1363.6 5405

Assistance with Identification of Common Interest Developments; Submission of Information by Each Association; Time; Notice of Change of Address;

Penalty for Violation of Filing Requirements; Availability of Information

1363.810 5900 Application of Internal Dispute Resolution Article

1363.820 5905Fair, Reasonable, and Expeditious Procedure to

Resolve Disputes; Use of Local Dispute Resolution Programs

1363.830 5910 Requirements of Fair, Reasonable, and Expeditious Dispute Resolution Program

1363.840 5915 Application of Section; Use of Procedures; Dispute Resolution Agreements; Conditions; Fees

1363.850 5920 Annual Policy Statement; Description of Internal Dispute Resolution Process

1364(a) 4775(a) Responsibility for Repair, Replacement, or Maintenance

1364(b) 4780 Damage by Wood-Destroying Pests or Organisms

1364(c) 4775(b) Responsibility for Repair, Replacement, or Maintenance

1364(d)-(e) 4785 Temporary Removal of Occupant for Treatment of Wood-Destroying Pests or Organisms

1364(f) 4790 Access for Maintenance of Telephone Wiring

1365 5300(b), 5305

Annual Budget Report; Standards for Preparation of Review of Financial Statement of Association

1365(a)(1) 5300(b)(1) Annual Budget Report1365(a)(2) 5300(b)(2) Annual Budget Report: Summary of Reserves

1365(a)(2)(A)-(D) 5565 Summary of Association’s Reserves; Contents

1365(a)(3)(A) 5300(b)(4) Annual Budget Report: Replacement of Major Components

1365(a)(3)(B) 5300(b)(5) Annual Budget Report: Special Assessments

1365(a)(3)(C) 5300(b)(6) Annual Budget Report: Mechanism to Fund Reserves

1365(a)(3)(D) 5300(b)(8) Annual Budget Report: Outstanding Loans

1365(a)(4) 5300(a), (b)(7), (d)

Annual Budget Report: Distribution, Calculation of Reserves, and Reserve Summaries as Inadmissible

Evidence1365(b) 5300(b)(3) Annual Budget Report: Reserve Summary

1365(c) 5305 Standards for Preparation of Review of Financial Statement of Association

5300(c) Annual Budget Report: Available to Members1365(d) 5320(a), (b) Delivery of Reports

5310 Annual Policy Statement; Contents1365(e) 5310(a)(7) Annual Policy Statement

1365(f)(1) 5300(a), (b)(9)

Annual Budget Report: Summary of Insurance Policies

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1365(f)(2) 5810 Individual Notice to Members of Changes in Insurance Coverage

1365(f)(3)-(4) 5300(b)(9) Annual Budget Report: Required Language

1365.1 5730, 4040(b)

Inclusion of Notice in Annual Policy Statement;Individual Delivery or Individual Notice

1365.2(a)(1) 5200(a), 5225, 5220

“Association Records” Defined; Information Sharing; Member Opt Out; Request for

Membership List

1365.2(a)(2) 5200(b), 5205(g)

Record Inspection Definitions; Availability to Members

1365.2(b)-(c) 5205(a)-(g) Availability to Members1365.2(d) 5215 Redaction1365.2(e) 5230 Prohibited Use of List1365.2(f) 5235 Remedies1365.2(g) 5240(c) Construction with Corporations Code1365.2(h) 5205(h) Availability to Members

1365.2(i)-(k) 5210(a)-(c) Time Periods of Required Availability1365.2(l)-(m) 5240(a), (d) Construction with Corporations Code

5260 Requests to be Delivered in Writing1365.2(n) Operative Date of Former §1365.21365.2.5 5570 Form for Disclosure of Fiscal Matters

1365.2.5(b)(3) 5300(e) Annual Budget Report: Assessment and Reserve Funding Disclosure Summary Form

1365.3 5580 Community Service Organization Reports1365.5(a) 5500 Duties of Board1365.5(b) 5510(a) Signatures Required for Withdrawals

1365.5(c) 5510(b), 5515

Purpose of Expenditure; Temporary Transfers to General Operating Fund

1365.5(d) 5520 Notice of Action; Accounting of Expenses

1365.5(e) 5550, 5560 Inspection of Components; Study Minimum Requirements; Reserve Funding Plan

1365.5(f) 4177 “Reserve Accounts” Defined1365.5(g) 4178 “Reserve Account Requirements” Defined

1365.5(h) Inapplicable to Associations without Common Area

1365.6 5350(a) Applicability of Corporations Code Provisions5350(b)-(c) Prohibited Actions

1365.7 5800Tortious Act or Omission of Volunteer Officer or

Director of Association Managing Residential Development; Liability; Criteria; Limitations

1365.9 5805Tort Actions Against Owner of Separate Interest;

Tenant-In-Common in Common Area; Association Liability; Insurance Requirements

1366(a)5600(a), 5605(a). 5605(c)

Levy of Assessments; Limit on Amount; Limitation on Increases

1366(b) 5605(b), 5610

Limitation on Increases; Increases for Emergency Situations

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1366(c) 5620 Exemption from Execution by Judgment Creditor of Association

1366(d) 5615 Individual Notice of Increases

1366(e)-(f) 5650 Debt of Owner of Separate Interest; Time of Delinquency; Interest

1366.1 5600(b) Levy of Assessments; Limit on Amount

1366.2(a) 4210 Statements for Collection of Regular and Special Assessments, Transfer Fees, and Other Charges

1366.2(b) Recordation Fee for Notice of Agent to Receive Payments

1366.4 5625 Levies on Separate Interests

1367 Liens Recorded on or after January 1, 1986 and Prior to January 1, 2003

1367.1(a) 5650(a), 5660

Debt of Owner of Separate Interest; Notice; Contents

1367.1(b) 5655 Application of Payment; Receipt; Mailing Address for Overnight Payment

1367.1(c) 5670, 5673, 5665

Dispute Resolution; Recording Lien; Decision Made by Board; Payment Plans; Request; Meeting;

Contents; Default

1367.1(d)5675,

5685(a), 5725(a)

Lien on Separate Interest; Notice of Delinquent Assessment; Recording of Lien; Monetary Charge

for Repair of Damage to Common Area and Facilities

1367.1(e) 5725(b) Monetary Penalties1367.1(f) 5680 Lien Priority

1367.1(g)5735,

5700(a), 5710(c)

Assignment or Pledge Prohibited; Exception;Enforcement of Lien; Trustee Sale; Procedure;

Notice; Trustee Fees1367.1(h) 5700(b) Enforcement of Lien1367.1(i) 5685(b) Recording of Lien1367.1(j) 5710(b) Trustee Sale; Procedure; Notice; Trustee Fees1367.1(k) 4040(b) Individual Delivery or Individual Notice

1367.1(l) 5690 Recommencement of Notice Process for Failure to Comply with Procedures

1367.1(m) Application of Section to Liens Recorded on or after January 1, 2003

1367.1(n) Interpretation of Former §1367.1

1367.4(a)5705(a), 5715(a), 5720(a)

Debts for Assessments that Arise on and After January 1, 2006; Dispute Resolution; Board to Make Decision to Initiate Foreclosure of Lien; Notice; Nonjudicial Foreclosure; Collection of

Delinquent Assessments; Application of Limitation on Foreclosure of Assessment Liens

1367.4(b) 5720(b)-(c)

Debts for Assessments that Arise on and After January 1, 2006; Collection of Delinquent Assessments; Application of Limitation on

Foreclosure of Assessment Liens

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1367.4(c) 5705(b)-(d), 5715(b)

Debts for Assessments that Arise on and After January 1, 2006; Dispute Resolution; Board to Make Decision to Initiate Foreclosure of Lien;

Notice; Nonjudicial Foreclosure

1367.4(d) 5720(c)(2)-(3)

Debts for Assessments that Arise on and After January 1, 2006; Collection of Delinquent Assessments; Application of Limitation on

Foreclosure of Assessment Liens5740 Application of Article to Liens

1367.5 5685(c) Recording of Lien

1367.6 5658Disputed Charge or Sum Levied by Association; Payment Under Protest; Action in Small Claims

Court

1368(a) 4525 Sale or Title Transfer; Provision of Specified Items to Prospective Purchasers

1368(b) 4530 Copies of Requested Documents; Fees

1368(c) 4575, 4580, 4110

Transfer Fees Prohibited; Exceptions; Application of Transfer Fee Prohibition; “Community Service

Organization” Defined1368(d) 4540 Violations; Penalties; Attorney Fees1368(e) 4545 Validity of Title Transferred in Violation of Article1368(f) 4535 Additional Requirements

1368(g) Property Manager is Agent of Association Under Former §1368

1368.1(a) 4730

Prohibition Against Association Rule or Regulation that Arbitrarily or Unreasonably Restricts Owner’s Ability to Market His or Her Interest in Common

Development; Other Enumerated Restrictions1368.2 4528 Billing Disclosures; Form1368.3 5980 Standing

1368.4 5985 Reduction of Damages Awarded; Comparative Fault of Association

1368.5 6150 Written Notice to Members Prior to Filing Civil Action; Contents

1369 4615 Liens for Labor and Materials1369.510 5925 Alternative Dispute Resolution Definitions1369.520 5930 Filing Enforcement Actions; Application of Section

1369.530 5935Initiation of Process; Serving a Request for

Resolution; Personal Delivery; Acceptance or Rejection of Request

1369.540 5940 Timeline for Completion of Alternative Dispute Resolution; Application of Evidence Code; Costs

1369.550 5945 Tolling of Statute of Limitations

1369.560 5950 Certificates Filed with Initial Pleading; Grounds for Demurrer or Motion to Strike

1369.570 5955 Referral of Actions to Alternative Dispute Resolution; Stay of Referred Action; Costs

1369.580 5960 Award of Fees and Costs

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1369.590 5965Annual Summary of Provisions of Article;

Contents of Summary; Inclusion in Annual Policy Statement

1370 4215 Liberal Construction of Instruments1371 4220 Boundaries of Units; Presumptions1372 4020 Construction of Zoning Ordinances

1373 4202Developments Expressly Zoned as Industrial or

Commercial and Limited to Such Purposes; Exclusions

1374 4201 Development Not Containing Common Area; Application of Act

1375 6000Actions for Damages Against Common Interest Development Builders, Developers, or General

Contractors

1375.1 6100Settlement Agreements Regarding Alleged Defects;

Notice of Resolution to Members on Record; Disclosures

1376 4725

Restrictions on Installation or Use of Video or Television Antenna; Enforceability Based on Size;

Reasonable Restrictions; Application Approval; Attorney’s Fees

1378 4765

Physical Change to Member’s Separate Interest or Common Area; Requirements to Approve or

Disapprove Proposed Changes; Notice of Requirements

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TABLE OF CONTENTS

Chapter 1. General Provisions

Article 1. Preliminary Provisions

Civil Code §4000. Short Title.Civil Code §4005. Effect of Headings on Scope, Meaning, or

Intent of Act.Civil Code §4010. Continuation of Prior Law.Civil Code §4020. Construction of Zoning Ordinances.Civil Code §4035. Delivery of Document to Association.Civil Code §4040. Individual Delivery or Individual Notice.Civil Code §4045. General Delivery or General Notice.Civil Code §4050. Time of Delivery.Civil Code §4055. Electronic Delivery; Satisfaction of Written

Information Requirement.Civil Code §4065. Approval by Majority.Civil Code §4070. Approval by Majority of Quorum.

Article 2. Definitions

Civil Code §4075. Construction of Act.Civil Code §4076. “Annual Budget Report” Defined.Civil Code §4078. “Annual Policy Statement” Defined.Civil Code §4080. “Association” Defined.Civil Code §4085. “Board” Defined.Civil Code §4090. “Board Meeting” Defined.Civil Code §4095. “Common Area” Defined.Civil Code §4100. “Common Interest Development” Defined.Civil Code §4105. “Community Apartment Project” Defined.Civil Code §4110. “Community Service Organization” Defined.Civil Code §4120. “Condominium Plan” Defined.Civil Code §4125. “Condominium Project” Defined.Civil Code §4130. “Declarant” Defined.Civil Code §4135. “Declaration” Defined.Civil Code §4140. “Director” Defined.Civil Code §4145. “Exclusive Use Common Area” Defined.Civil Code §4148. “General Notice” Defined.Civil Code §4150. “Governing Documents” Defined.Civil Code §4153. “Individual Notice” Defined.Civil Code §4155. “Item of Business” Defined.Civil Code §4158. “Managing Agent” Defined.Civil Code §4160. “Member” Defined.Civil Code §4170. “Person” Defined.Civil Code §4175. “Planned Development” Defined.Civil Code §4177. “Reserve Accounts” Defined.Civil Code §4178. “Reserve Account Requirements” Defined.

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Civil Code §4185. “Separate Interest” Defined.Civil Code §4190. “Stock Cooperative” Defined.

Chapter 2. Application of Act

Civil Code §4200. Creation of Common Interest Development; Application of Act.

Civil Code §4201. Development Not Containing Common Area; Application of Act.

Civil Code §4202. Developments Expressly Zoned as Industrial or Commercial and Limited to Such Purposes; Exclusions.

Chapter 3. Governing Documents

Article 1. General Provisions

Civil Code §4205. Authority of Documents.Civil Code §4210. Statements for Collection of Regular and

Special Assessments, Transfer Fees, and Other Charges.

Civil Code §4215. Liberal Construction of Instruments.Civil Code §4220. Boundaries of Units; Presumptions.Civil Code §4225. Restrictive Covenants; Deletion from

Declaration or Other Governing Document; Recording or Filing of Amended Document.

Civil Code §4230. Amendment of Governing Documents to Delete Construction or Marketing ProvisionsAfter Completion by Developer; Requirements.

Civil Code §4235. Correction of Statutory References in Documents.

Article 2. Declaration

Civil Code §4250. Contents of Declaration.Civil Code §4255. Notice of Airport in Vicinity; Notice of San

Francisco Bay Conservation and Development Commission Jurisdiction.

Civil Code §4260. Amendment of Declaration; Authorization.Civil Code §4265. Extension of Term of Declaration.Civil Code §4270. Amendment of Declaration; Procedure.Civil Code §4275. Amendment of Declaration; Petition;

Contents; Filing; Findings by Court; Power of Court to Approve Amendment; Recording Amendment; Delivery.

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Article 3. Articles of Incorporation

Civil Code §4280. Association Articles of Incorporation;Required Statements.

Article 4. Condominium Plan

Civil Code §4285. Contents of Condominium Plan.Civil Code §4290. Certificate Consenting to Recordation of

Condominium Plan; Signatures and Acknowledgements.

Civil Code §4295. Amendment or Revocation of Condominium Plan.

Article 5. Operating Rules

Civil Code §4340. Definitions.Civil Code §4350. Requirements for Validity and Enforceability.Civil Code §4355. Approved Subject Matters; Board Action to

Propose Rule Change; Special Meetings of Members to Reverse Rule Change.

Civil Code §4360. Proposed Rule Change by Board Action; Notice; Meeting.

Civil Code §4365. Special Meeting of Members to Reverse Rule Change; Notice; Voting Requirements; Effect of Approved Reversal.

Civil Code §4370. Applicability of Article to Changes Commenced Before and After January 1, 2004.

Chapter 4. Ownership and Transfer of Interests

Article 1. Ownership Rights and Interests

Civil Code §4500. Ownership of Common Areas.Civil Code §4505. Rights and Easements of Ingress, Egress, and

Support.Civil Code §4510. Physical Access to Owner or Occupant’s

Separate Interest.

Article 2. Transfer Disclosure

Civil Code §4525. Sale or Title Transfer; Provision of Specified Items to Prospective Purchasers.

Civil Code §4528. Billing Disclosures; Form.Civil Code §4530. Copies of Requested Documents; Fees.Civil Code §4535. Additional Requirements.

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Civil Code §4540. Violations; Penalties; Attorney Fees.Civil Code §4545. Validity of Title Transferred in Violation of Article.

Article 3. Transfer Fee

Civil Code §4575. Transfer Fees Prohibited; Exceptions.Civil Code §4580. Application of Transfer Fee Prohibition.

Article 4. Restrictions on Transfer

Civil Code §4600. Exclusive Use of Common Area; Affirmative Vote Required; Exceptions; Contents of Proposed Measure.

Civil Code §4605. Remedies.Civil Code §4610. Restrictions on Partition.Civil Code §4615. Liens for Labor and Materials.

Article 5. Transfer of Separate Interest

Civil Code §4625. Community Apartment Project; Interests Included in Conveyance, Judicial Sale or Transfer of Separate Interests.

Civil Code §4630. Condominium Project; Interests Included in Conveyance, Judicial Sale or Transfer of Separate Interests.

Civil Code §4635. Planned Development; Interests Included in Conveyance, Judicial Sale or Transfer of Separate Interests.

Civil Code §4640. Stock Cooperative; Interests Included in Conveyance, Judicial Sale or Transfer of Separate Interests.

Civil Code §4645. Transfer of Exclusive Use Areas.Civil Code §4650. Restrictions Upon Severability of Component

Interests.

Chapter 5. Property Use and Maintenance

Article 1. Protected Uses

Civil Code §4700. Scope of Article; Related Provisions.Civil Code §4705. Display of United States Flag by Owner on or

in Owner’s Separate Interest or Within Exclusive Use Common Area.

Civil Code §4710. Prohibition of Posting or Displaying Noncommercial Signs, Posters, Flags, or Banners; Permitted Placement of Posting or Displaying; Exceptions.

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Civil Code §4715. Pets Within Common Interest Developments.Civil Code §4720. Roof Installation or Repair; Roofing

Materials.Civil Code §4725. Restrictions on Installation or Use of Video or

Television Antenna; Enforceability Based on Size; Reasonable Restrictions; Application Approval; Attorney’s Fees.

Civil Code §4730. Prohibition Against Association Rule or Regulation that Arbitrarily or Unreasonably Restricts Owner’s Ability to Market His or Her Interest in Common Development; Other Enumerated Restrictions.

Civil Code §4735. Governing Documents; Void and Unenforceable Provisions.

Civil Code §4736. Governing Documents; Void and Unenforceable Provisions, Pressure Washing.

Civil Code §4740. Rental or Leasing of Separate Interests; Provisions in Governing Documents.

Civil Code §4745. Electric Vehicle Charging Stations.Civil Code §4750 Personal Agriculture.

Article 2. Modification of Separate Interest

Civil Code §4760. Modification of Member’s Separate Interest; Facilitation of Access for Handicapped;Approval by Project Association.

Civil Code §4765. Physical Change to Member’s Separate Interest or Common Area; Requirements to Approve or Disapprove Proposed Changes; Notice of Requirements.

Article 3. Maintenance

Civil Code §4775. Responsibility for Repair, Replacement, or Maintenance.

Civil Code §4780. Damage by Wood-Destroying Pests or Organisms.

Civil Code §4785. Temporary Removal of Occupant for Treatment of Wood-Destroying Pests or Organisms.

Civil Code §4790. Access for Maintenance of Telephone Wiring.Civil Code §1940.10 Personal Agriculture Definitions.

Chapter 6. Association Governance

Article 1. Association Existence and Powers

Civil Code §4800. Management by Association.Civil Code §4805. Powers of Association.

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Civil Code §4820. Consolidation of Associations.

Article 2. Board Meeting

Civil Code §4900. Short Title.Civil Code §4910. Action on Items Outside of Meeting

Prohibited; Electronic Transmissions as Method of Conducting Meeting.

Civil Code §4920. Notice.Civil Code §4923. Emergency Board Meetings.Civil Code §4925. Open Meeting; Executive Session Exception.Civil Code §4930. Subjects of Meeting; Issues Not on Agenda.Civil Code §4935. Executive Session.Civil Code §4950. Meeting Minutes.Civil Code §4955. Civil Action for Violation of Article; Costs and

Attorney’s Fees.

Article 3. Member Meeting

Civil Code §5000. Use of Parliamentary Procedure.

Article 4. Member Election

Civil Code §5100. Scope of Article.Civil Code §5105. Rules.Civil Code §5110. Inspector of Elections.Civil Code §5115. Ballots; Quorum; Cumulative Voting; Election

by Mail; Inclusion of Text of Proposed Amendment of Governing Documents.

Civil Code §5120. Counting and Tabulation of Votes; Reporting of Tabulated Results.

Civil Code §5125. Custody of Ballots.Civil Code §5130. Proxies; Definitions.Civil Code §5135. Campaign Funding.Civil Code §5145. Civil Action for Violation of Article;

Attorney’s Fees and Costs; Small ClaimsCourt.

Article 5. Record Inspection

Civil Code §5200. Definitions.Civil Code §5205. Availability to Members.Civil Code §5210. Time Periods of Required Availability.Civil Code §5215. Redaction.Civil Code §5220. Information Sharing; Member Opt Out.Civil Code §5225. Request for Membership List.Civil Code §5230. Prohibited Use of List.Civil Code §5235. Remedies.Civil Code §5240. Construction with Corporations Code.

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Article 6. Recordkeeping

Civil Code §5260. Requests to be Delivered in Writing.

Article 7. Annual Reports

Civil Code §5300. Annual Budget Report.Civil Code §5305. Standards for Preparation of Review of

Financial Statement of Association.Civil Code §5310. Annual Policy Statement; Contents.Civil Code §5320. Delivery of Reports.

Article 8. Conflict of Interest

Civil Code §5350. Applicability of Corporations Code Provisions; Prohibited Actions.

Article 9. Managing Agent

Civil Code §5375. Prospective Managing Agent; Written Disclosures.

Civil Code §5380. Managing Agent; Deposit of Funds Received; Requirements; Separate Record; Commingling of Funds.

Civil Code §5385. “Managing Agent” Does Not Include Full-Time Employee of Association.

Article 10. Government Assistance

Civil Code §5400. Online Education Course Regarding Role, Duties, Laws and Responsibilities of Board Directors and Prospective Board Directors and Nonjudicial Foreclosure Process.

Civil Code §5405. Assistance with Identification of Common Interest Developments; Submission of Information by Each Association; Time; Notice of Change of Address; Penalty for Violation of Filing Requirements; Availability of Information.

Chapter 7. Finances

Article 1. Accounting

Civil Code §5500. Duties of Board.

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Article 2. Use of Reserve Funds

Civil Code §5510. Signatures Required for Withdrawals; Purpose of Expenditure.

Civil Code §5515. Temporary Transfers to General Operating Fund.

Civil Code §5520. Notice of Action; Accounting of Expenses.

Article 3. Reserve Planning

Civil Code §5550. Inspection of Components; Study Minimum Requirements.

Civil Code §5560. Reserve Funding Plan; Inclusion of Schedule of Change in Assessments; Adoption by Board; Separate Approval of Assessment Increase.

Civil Code §5565. Summary of Association’s Reserves; Contents.Civil Code §5570. Form for Disclosure of Fiscal Matters.Civil Code §5580. Community Service Organization Reports;

Information on Components to Complete Disclosures or Reserve Reports; Reliance Upon and Access to Information.

Chapter 8. Assessments and Assessment Collection

Article 1. Establishment and Imposition of Assessments

Civil Code §5600. Levy of Assessments; Limit on Amount.Civil Code §5605. Limitation on Increases.Civil Code §5610. Increases for Emergency Situations.Civil Code §5615. Individual Notice of Increases.Civil Code §5620. Exemption from Execution by Judgment

Creditor of Association.Civil Code §5625. Levies on Separate Interests.

Article 2. Assessment Payment and Delinquency

Civil Code §5650. Debt of Owner of Separate Interest; Time of Delinquency; Interest.

Civil Code §5655. Application of Payment; Receipt; Mailing Address for Overnight Payment.

Civil Code §5658. Disputed Charge or Sum Levied by Association; Payment Under Protest; Action in Small Claims Court.

Civil Code §5660. Notice; Contents.Civil Code §5665. Payment Plans; Request; Meeting; Contents;

Default.Civil Code §5670. Dispute Resolution.

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Civil Code §5673. Recording Lien; Decision Made by Board.Civil Code §5675. Lien on Separate Interest; Notice of

Delinquent Assessment.Civil Code §5680. Priority.Civil Code §5685. Recording of Lien.Civil Code §5690. Recommencement of Notice Process for

Failure to Comply with Procedures.

Article 3. Assessment Collection

Civil Code §5700. Enforcement of Lien.Civil Code §5705. Debts for Assessments that Arise on and After

January 1, 2006; Dispute Resolution; Board to Make Decision to Initiate Foreclosure of Lien; Notice.

Civil Code §5710. Trustee Sale; Procedure; Notice; Trustee Fees.Civil Code §5715. Debts for Assessments that Arise on and After

January 1, 2006; Nonjudicial Foreclosure.Civil Code §5720. Debts for Assessments that Arise on and After

January 1, 2006; Collection of Delinquent Assessments; Application of Limitation on Foreclosure of Assessment Liens.

Civil Code §5725. Monetary Charge for Repair of Damage to Common Area and Facilities; Monetary Penalties.

Civil Code §5730. Inclusion of Notice in Annual Policy Statement.

Civil Code §5735. Assignment or Pledge Prohibited; Exception.Civil Code §5740. Application of Article to Liens.

Chapter 9. Insurance and Liability

Civil Code §5800. Tortious Act or Omission of Volunteer Officer or Director of Association Managing Residential Development; Liability; Criteria; Limitations.

Civil Code §5805. Tort Actions Against Owner of Separate Interest; Tenant-In-Common in Common Area; Association Liability; Insurance Requirements.

Civil Code §5810. Individual Notice to Members of Changes in Insurance Coverage.

Chapter 10. Dispute Resolution and Enforcement

Article 1. Discipline and Cost Reimbursement

Civil Code §5850. Monetary Penalties; Provision of Information to Members.

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Civil Code §5855. Board Disciplinary Proceedings; Notice to Member.

Civil Code §5865. Authority of Board to Impose Monetary Penalties.

Article 2. Internal Dispute Resolution

Civil Code §5900. Application of Article.Civil Code §5905. Fair, Reasonable, and Expeditious Procedure

to Resolve Disputes; Use of Local Dispute Resolution Programs.

Civil Code §5910. Requirements of Fair, Reasonable, and Expeditious Dispute Resolution Program.

Civil Code §5915. Application of Section; Use of Procedures; Dispute Resolution Agreements; Conditions; Fees.

Civil Code §5920. Annual Policy Statement; Description of Internal Dispute Resolution Process.

Article 3. Alternative Dispute Resolution Prerequisite to Civil Action

Civil Code §5925. Definitions.Civil Code §5930. Filing Enforcement Actions; Application of

Section.Civil Code §5935. Initiation of Process; Serving a Request for

Resolution; Personal Delivery; Acceptance or Rejection of Request.

Civil Code §5940. Timeline for Completion of Alternative Dispute Resolution; Application of Evidence Code; Costs.

Civil Code §5945. Tolling of Statute of Limitations.Civil Code §5950. Certificates Filed with Initial Pleading;

Grounds for Demurrer or Motion to Strike.Civil Code §5955. Referral of Actions to Alternative Dispute

Resolution; Stay of Referred Action; Costs.Civil Code §5960. Award of Fees and Costs.Civil Code §5965. Annual Summary of Provisions of Article;

Contents of Summary; Inclusion in Annual Policy Statement.

Article 4. Civil Action

Civil Code §5975. Covenants and Restrictions in Declaration as Equitable Servitudes; Enforcement; Alternative Dispute Resolution.

Civil Code §5980. Standing.Civil Code §5985. Reduction of Damages Awarded; Comparative

Fault of Association.

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Chapter 11. Construction Defect Litigation

Civil Code §6000. Actions for Damages Against Common Interest Development Builders, Developers, or General Contractors.

Civil Code §6100. Settlement Agreements Regarding Alleged Defects; Notice of Resolution to Members on Record; Disclosures.

Civil Code §6150. Written Notice to Members Prior to Filing Civil Action; Contents.

Civil Code §2924b. Notices of Default and of Sale; Mailing Upon Request for Copies and to Certain Interested Persons.

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Chapter 1. General Provisions

Article 1. Preliminary Provisions

Civil Code §4000. Short Title.This part shall be known and may be cited as the Davis-Stirling Common Interest Development Act. In a provision of this part, the part may be referred to as the act.

Civil Code §4005. Effect of Headings on Scope, Meaning, or Intent of Act.Division, part, title, chapter, article, and section headings do not in any manner affect the scope, meaning, or intent of this act.

Civil Code §4010. Continuation of Prior Law.Nothing in the act that added this part shall be construed to invalidate a document prepared or action taken before January 1, 2014, if the document or action was proper under the law governing common interest developments at the time that the document was prepared or the action was taken. For the purposes of this section, “document” does not include a governing document.

Civil Code §4020. Construction of Zoning Ordinances.Unless a contrary intent is clearly expressed, a local zoning ordinance is construed to treat like structures, lots, parcels, areas, or spaces in like manner regardless of the form of the common interest development.

Civil Code §4035. Delivery of Document to Association.(a) If a provision of this act requires that a document be delivered to an association, the document shall be delivered to the person designated in the annual policy statement, prepared pursuant to Section 5310, to receive documents on behalf of the association. If no person has been designated to receive documents, the document shall be delivered to the president or secretary of the association.(b) A document delivered pursuant to this section may be delivered by any of the following methods:

1) By e-mail, facsimile, or other electronic means, if the association has assented to that method of delivery.

2) By personal delivery, if the association has assented to that method of delivery. If the association accepts a document by personal delivery it shall provide a written receipt acknowledging delivery of the document.

3) By first-class mail, postage prepaid, registered or certified mail, express mail, or overnight delivery by an express service center.

Civil Code §4040. Individual Delivery or Individual Notice.(a) If a provision of this act requires that an association deliver a document by “individual delivery” or “individual notice,” the document shall be delivered by one of the following methods:

1) First-class mail, postage prepaid, registered or certified mail, express mail, or overnight delivery by an express service carrier. The document shall be addressed to the recipient at the address last shown on the books of the association.

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2) E-mail, facsimile, or other electronic means, if the recipient has consented, in writing, to that method of delivery. The consent may be revoked, in writing, by the recipient.

(b) Upon receipt of a request by a member, pursuant to Section 5260, identifying a secondary address for delivery of notices of the following types, the association shall deliver an additional copy of those notices to the secondary address identified in the request:

1) The documents to be delivered to the member pursuant to Article 7 (commencing with Section 5300) of Chapter 6.

2) The documents to be delivered to the member pursuant to Article 2 (commencing with Section 5650) of Chapter 8, and Section 5710.

(c) For the purposes of this section, an unrecorded provision of the governing documents providing for a particular method of delivery does not constitute agreement by a member to that method of delivery.

Civil Code §4045. General Delivery or General Notice.(a) If a provision of this act requires “general delivery” or “general notice,” the document shall be provided by one or more of the following methods:

1) Any method provided for delivery of an individual notice pursuant to Section 4040.

2) Inclusion in a billing statement, newsletter, or other document that is delivered by one of the methods provided in this section.

3) Posting the printed document in a prominent location that is accessible to all members, if the location has been designated for the posting of general notices by the association in the annual policy statement, prepared pursuant to Section 5310.

4) If the association broadcasts television programming for the purpose of distributing information on association business to its members, by inclusion in the programming.

(b) Notwithstanding subdivision (a), if a member requests to receive general notices by individual delivery, all general notices to that member, given under this section, shall be delivered pursuant to Section 4040. The option provided in this subdivision shall be described in the annual policy statement, prepared pursuant to Section 5310.

Civil Code §4050. Time of Delivery.(a) This section governs the delivery of a document pursuant to this act.(b) If a document is delivered by mail, delivery is deemed to be complete on deposit into the United States mail.(c) If a document is delivered by electronic means, delivery is complete at the time of transmission.

Civil Code §4055. Electronic Delivery; Satisfaction of Written Information Requirement.If the association or a member has consented to receive information by electronic delivery, and a provision of this act requires that the information be in writing, that requirement is satisfied if the information is provided in an electronic record capable of retention by the recipient at the time of receipt. An electronic record is not capable of retention by the recipient if the sender or its information processing system inhibits the ability of the recipient to print or store the electronic record.

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Civil Code §4065. Approval by Majority.If a provision of this act requires that an action be approved by a majority of all members, the action shall be approved or ratified by an affirmative vote of a majority of the votes entitled to be cast.

Civil Code §4070. Approval by Majority of Quorum.If a provision of this act requires that an action be approved by a majority of a quorum of the members, the action shall be approved or ratified by an affirmative vote of a majority of the votes represented and voting in a duly held election in which a quorum is represented, which affirmative votes also constitute a majority of the required quorum.

Article 2. Definitions

Civil Code §4075. Construction of Act.The definitions in this article govern the construction of this act.

Civil Code §4076. “Annual Budget Report” Defined.“Annual budget report” means the report described in Section 5300.

Civil Code §4078. “Annual Policy Statement” Defined.“Annual policy statement” means the statement described in Section 5310.

Civil Code §4080. “Association” Defined.“Association” means a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development.

Civil Code §4085. “Board” Defined.“Board” means the board of directors of the association.

Civil Code §4090. “Board Meeting” Defined.“Board meeting” means either of the following:(a) A congregation, at the same time and place, of a sufficient number of directors to establish a quorum of the board, to hear, discuss, or deliberate upon any item of business that is within the authority of the board.(b) A teleconference, where a sufficient number of directors to establish a quorum of the board, in different locations, are connected by electronic means, through audio or video, or both. A teleconference meeting shall be conducted in a manner that protects the rights of members of the association and otherwise complies with the requirements of this act. Except for a meeting that will be held solely in executive session, the notice of the teleconference meeting shall identify at least one physical location so that members of the association may attend, and at least one director or a person designated by the board shall be present at that location. Participation by directors in a teleconference meeting constitutes presence at that meeting as long as all directors participating are able to hear one another, as well as members of the association speaking on matters before the board.

Civil Code §4095. “Common Area” Defined.(a) “Common area” means the entire common interest development except the separate interests therein. The estate in the common area may be a fee, a life estate, an estate for years, or any combination of the foregoing.

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(b) Notwithstanding subdivision (a), in a planned development described in subdivision (b) of Section 4175, the common area may consist of mutual or reciprocal easement rights appurtenant to the separate interests.

Civil Code §4100. “Common Interest Development” Defined.“Common interest development” means any of the following:(a) A community apartment project.(b) A condominium project.(c) A planned development.(d) A stock cooperative.

Civil Code §4105. “Community Apartment Project” Defined.“Community apartment project” means a development in which an undivided interest in land is coupled with the right of exclusive occupancy of any apartment located thereon.

Civil Code §4110. “Community Service Organization” Defined.(a) “Community service organization or similar entity” means a nonprofit entity, other than an association, that is organized to provide services to residents of the common interest development or to the public in addition to the residents, to the extent community common area or facilities are available to the public.(b) “Community service organization or similar entity” does not include an entity that has been organized solely to raise moneys and contribute to other nonprofit organizations that are qualified as tax exempt under Section 501(c)(3) of the Internal Revenue Code and that provide housing or housing assistance.

Civil Code §4120. “Condominium Plan” Defined.“Condominium plan” means a plan described in Section 4285.

Civil Code §4125. “Condominium Project” Defined.(a) A “condominium project” means a real property development consisting of condominiums.(b) A condominium consists of an undivided interest in common in a portion of real property coupled with a separate interest in space called a unit, the boundaries of which are described on a recorded final map, parcel map, or condominium plan in sufficient detail to locate all boundaries thereof. The area within these boundaries may be filled with air, earth, water, or fixtures, or any combination thereof, and need not be physically attached to land except by easements for access and, if necessary, support. The description of the unit may refer to

1) Boundaries described in the recorded final map, parcel map, or condominium plan,

2) Physical boundaries, either in existence, or to be constructed, such as walls, floors, and ceilings of a structure or any portion thereof,

3) An entire structure containing one or more units, or4) Any combination thereof.

(c) The portion or portions of the real property held in undivided interest may be all of the real property, except for the separate interests, or may include a particular three-dimensional portion thereof, the boundaries of which are described on a recorded final map, parcel map, or condominium plan. The area within these boundaries may be filled

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with air, earth, water, or fixtures, or any combination thereof, and need not be physically attached to land except by easements for access and, if necessary, support.(d) An individual condominium within a condominium project may include, in addition, a separate interest in other portions of the real property.

Civil Code §4130. “Declarant” Defined.“Declarant” means the person or group of persons designated in the declaration as declarant, or if no declarant is designated, the person or group of persons who sign the original declaration or who succeed to special rights, preferences, or privileges designated in the declaration as belonging to the signator of the original declaration.

Civil Code §4135. “Declaration” Defined.“Declaration” means the document, however denominated, that contains the information required by Sections 4250 and 4255.

Civil Code §4140. “Director” Defined.“Director” means a natural person who serves on the board.

Civil Code §4145. “Exclusive Use Common Area” Defined.(a) “Exclusive use common area” means a portion of the common area designated by the declaration for the exclusive use of one or more, but fewer than all, of the owners of the separate interests and which is or will be appurtenant to the separate interest or interests.(b) Unless the declaration otherwise provides, any shutters, awnings, window boxes, doorsteps, stoops, porches, balconies, patios, exterior doors, doorframes, and hardware incident thereto, screens and windows or other fixtures designed to serve a single separate interest, but located outside the boundaries of the separate interest, are exclusive use common area allocated exclusively to that separate interest.(c) Notwithstanding the provisions of the declaration, internal and external telephone wiring designed to serve a single separate interest, but located outside the boundaries of the separate interest, is exclusive use common area allocated exclusively to that separate interest.

Civil Code §4148. “General Notice” Defined.“General notice” means the delivery of a document pursuant to Section 4045.

Civil Code §4150. “Governing Documents” Defined.“Governing documents” means the declaration and any other documents, such as bylaws, operating rules, articles of incorporation, or articles of association, which govern the operation of the common interest development or association.

Civil Code §4153. “Individual Notice” Defined.“Individual notice” means the delivery of a document pursuant to Section 4040.

Civil Code §4155. “Item of Business” Defined.“Item of business” means any action within the authority of the board, except those actions that the board has validly delegated to any other person or persons, managing agent, officer of the association, or committee of the board comprising less than a quorum of the board.

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Civil Code §4158. “Managing Agent” Defined.(a) A “managing agent” is a person who, for compensation or in expectation of compensation, exercises control over the assets of a common interest development.(b) A “managing agent” does not include any of the following:

1) A regulated financial institution operating within the normal course of its regulated business practice.

2) An attorney at law acting within the scope of the attorney’s license.

Civil Code §4160. “Member” Defined.“Member” means an owner of a separate interest.

Civil Code §4170. “Person” Defined.“Person” means a natural person, corporation, government or governmental subdivision or agency, business trust, estate, trust, partnership, limited liability company, association, or other entity.

Civil Code §4175. “Planned Development” Defined.“Planned development” means a real property development other than a community apartment project, a condominium project, or a stock cooperative, having either or both of the following features:(a) Common area that is owned either by an association or in common by the owners of the separate interests who possess appurtenant rights to the beneficial use and enjoyment of the common area.(b) Common area and an association that maintains the common area with the power to levy assessments that may become a lien upon the separate interests in accordance with Article 2 (commencing with Section 5650) of Chapter 8.

Civil Code §4177. “Reserve Accounts” Defined.“Reserve accounts” means both of the following:(a) Moneys that the board has identified for use to defray the future repair or replacement of, or additions to, those major components that the association is obligated to maintain.(b) The funds received, and not yet expended or disposed of, from either a compensatory damage award or settlement to an association from any person for injuries to property, real or personal, arising from any construction or design defects. These funds shall be separately itemized from funds described in subdivision (a).

Civil Code §4178. “Reserve Account Requirements” Defined.“Reserve account requirements” means the estimated funds that the board has determined are required to be available at a specified point in time to repair, replace, or restore those major components that the association is obligated to maintain.

Civil Code §4185. “Separate Interest” Defined.(a) “Separate interest” has the following meanings:

1) In a community apartment project, “separate interest” means the exclusive right to occupy an apartment, as specified in Section 4105.

2) In a condominium project, “separate interest” means a separately owned unit, as specified in Section 4125.

3) In a planned development, “separate interest” means a separately owned lot, parcel, area, or space.

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4) In a stock cooperative, “separate interest” means the exclusive right to occupy a portion of the real property, as specified in Section 4190.

(b) Unless the declaration or condominium plan, if any exists, otherwise provides, if walls, floors, or ceilings are designated as boundaries of a separate interest, the interior surfaces of the perimeter walls, floors, ceilings, windows, doors, and outlets located within the separate interest are part of the separate interest and any other portions of the walls, floors, or ceilings are part of the common area.(c) The estate in a separate interest may be a fee, a life estate, an estate for years, or any combination of the foregoing.

Civil Code §4190. “Stock Cooperative” Defined.(a) “Stock cooperative” means a development in which a corporation is formed or availed of, primarily for the purpose of holding title to, either in fee simple or for a term of years, improved real property, and all or substantially all of the shareholders of the corporation receive a right of exclusive occupancy in a portion of the real property, title to which is held by the corporation. The owners’ interest in the corporation, whether evidenced by a share of stock, a certificate of membership, or otherwise, shall be deemed to be an interest in a common interest development and a real estate development for purposes of subdivision (f) of Section 25100 of the Corporations Code.(b) A “stock cooperative” includes a limited equity housing cooperative which is a stock cooperative that meets the criteria of Section 817.

Chapter 2. Application of Act

Civil Code §4200. Creation of Common Interest Development; Application of Act.This act applies and a common interest development is created whenever a separate interest coupled with an interest in the common area or membership in the association is, or has been, conveyed, provided all of the following are recorded:(a) A declaration.(b) A condominium plan, if any exists.(c) A final map or parcel map, if Division 2 (commencing with Section 66410) of Title 7 of the Government Code requires the recording of either a final map or parcel map for the common interest development.

Civil Code §4201. Development Not Containing Common Area; Application of Act.Nothing in this act may be construed to apply to a real property development that does not contain common area. This section is declaratory of existing law.

Civil Code §4202. Commercial or Industrial Common Interest DevelopmentsThis part does not apply to a commercial or industrial common interest development, as defined in Section 6531.

Chapter 3. Governing Documents

Article 1. General Provisions

Civil Code §4205. Authority of Documents.(a) To the extent of any conflict between the governing documents and the law, the law shall prevail.

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(b) To the extent of any conflict between the articles of incorporation and the declaration, the declaration shall prevail.(c) To the extent of any conflict between the bylaws and the articles of incorporation or declaration, the articles of incorporation or declaration shall prevail.(d) To the extent of any conflict between the operating rules and the bylaws, articles of incorporation, or declaration, the bylaws, articles of incorporation, or declaration shall prevail.

Civil Code §4210. Statements for Collection of Regular and Special Assessments,Transfer Fees, and Other Charges.In order to facilitate the collection of regular assessments, special assessments, transfer fees as authorized by Sections 4530, 4575, and 4580, and similar charges, the board is authorized to record a statement or amended statement identifying relevant information for the association. This statement may include any or all of the following information:(a) The name of the association as shown in the declaration or the current name of the association, if different.(b) The name and address of a managing agent or treasurer of the association or other individual or entity authorized to receive assessments and fees imposed by the association.(c) A daytime telephone number of the authorized party identified in subdivision (b) if a telephone number is available.(d) A list of separate interests subject to assessment by the association, showing the assessor’s parcel number or legal description, or both, of the separate interests.(e) The recording information identifying the declaration governing the association.(f) If an amended statement is being recorded, the recording information identifying the prior statement or statements which the amendment is superseding.

Civil Code §4215. Liberal Construction of Instruments. Any deed, declaration, or condominium plan for a common interest development shall be liberally construed to facilitate the operation of the common interest development, and its provisions shall be presumed to be independent and severable. Nothing in Article 3 (commencing with Section 715) of Chapter 2 of Title 2 of Part 1 of Division 2 shall operate to invalidate any provisions of the governing documents.

Civil Code §4220. Boundaries of Units; Presumptions.In interpreting deeds and condominium plans, the existing physical boundaries of a unit in a condominium project, when the boundaries of the unit are contained within a building, or of a unit reconstructed in substantial accordance with the original plans thereof, shall be conclusively presumed to be its boundaries rather than the metes and bounds expressed in the deed or condominium plan, if any exists, regardless of settling or lateral movement of the building and regardless of minor variance between boundaries shown on the plan or in the deed and those of the building.

Civil Code §4225. Restrictive Covenants; Deletion from Declaration or Other Governing Document; Recording or Filing of Amended Document.(a) No declaration or other governing document shall include a restrictive covenant in violation of Section 12955 of the Government Code.(b) Notwithstanding any other provision of law or provision of the governing documents, the board, without approval of the members, shall amend any declaration or other

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governing document that includes a restrictive covenant prohibited by this section to delete the restrictive covenant, and shall restate the declaration or other governing document without the restrictive covenant but with no other change to the declaration or governing document.(c) If the declaration is amended under this section, the board shall record the restated declaration in each county in which the common interest development is located. If the articles of incorporation are amended under this section, the board shall file a certificate of amendment with the Secretary of State pursuant to Section 7814 of the Corporations Code.(d) If after providing written notice to an association, pursuant to Section 4035, requesting that the association delete a restrictive covenant that violates subdivision (a), and the association fails to delete the restrictive covenant within 30 days of receiving the notice, the Department of Fair Employment and Housing, a city or county in which a common interest development is located, or any person may bring an action against the association for injunctive relief to enforce subdivision (a). The court may award attorney’s fees to the prevailing party.

Civil Code §4230. Amendment of Governing Documents to Delete Construction or Marketing Provisions After Completion by Developer; Requirements.(a) Notwithstanding any provision of the governing documents to the contrary, the board may, after the developer has completed construction of the development, has terminated construction activities, and has terminated marketing activities for the sale, lease, or other disposition of separate interests within the development, adopt an amendment deleting from any of the governing documents any provision which is unequivocally designed and intended, or which by its nature can only have been designed or intended, to facilitate the developer in completing the construction or marketing of the development. However, provisions of the governing documents relative to a particular construction or marketing phase of the development may not be deleted under the authorization of this subdivision until that construction or marketing phase has been completed.(b) The provisions which may be deleted by action of the board shall be limited to those which provide for access by the developer over or across the common area for the purposes of (1) completion of construction of the development, and (2) the erection, construction, or maintenance of structures or other facilities designed to facilitate the completion of construction or marketing of separate interests.(c) At least 30 days prior to taking action pursuant to subdivision (a), the board shall deliver to all members, by individual delivery, pursuant to Section 4040, (1) a copy of all amendments to the governing documents proposed to be adopted under subdivision (a), and (2) a notice of the time, date, and place the board will consider adoption of the amendments. The board may consider adoption of amendments to the governing documents pursuant to subdivision (a) only at a meeting that is open to all members, who shall be given opportunity to make comments thereon. All deliberations of the board on any action proposed under subdivision (a) shall only be conducted in an open meeting.(d) The board may not amend the governing documents pursuant to this section without the approval of a majority of a quorum of the members, pursuant to Section 4070. For the purposes of this section, “quorum” means more than 50 percent of the members who own no more than two separate interests in the development.

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Civil Code §4235. Correction of Statutory References in Documents.(a) Notwithstanding any other provision of law or provision of the governing documents, if the governing documents include a reference to a provision of the Davis-Stirling Common Interest Development Act that was repealed and continued in a new provision by the act that added this section, the board may amend the governing documents, solely to correct the cross-reference, by adopting a board resolution that shows the correction. Member approval is not required in order to adopt a resolution pursuant to this section.(b) A declaration that is corrected under this section may be restated in corrected form and recorded, provided that a copy of the board resolution authorizing the corrections is recorded along with the restated declaration.

Article 2. Declaration

Civil Code §4250. Contents of Declaration.(a) A declaration, recorded on or after January 1, 1986, shall contain a legal description of the common interest development, and a statement that the common interest development is a community apartment project, condominium project, planned development, stock cooperative, or combination thereof. The declaration shall additionally set forth the name of the association and the restrictions on the use or enjoyment of any portion of the common interest development that are intended to be enforceable equitable servitudes.(b) The declaration may contain any other matters the declarant or the members consider appropriate.

Civil Code §4255. Notice of Airport in Vicinity; Notice of San Francisco Bay Conservation and Development Commission Jurisdiction.(a) If a common interest development is located within an airport influence area, a declaration, recorded after January 1, 2004, shall contain the following statement:

“NOTICE OF AIRPORT IN VICINITYThis property is presently located in the vicinity of an airport, within what is known as an airport influence area. For that reason, the property may be subject to some of the annoyances or inconveniences associated with proximity to airport operations (for example: noise, vibration, or odors). Individual sensitivities to those annoyances can vary from person to person. You may wish to consider what airport annoyances, if any, are associated with the property before you complete your purchase and determine whether they are acceptable to you.”

(b) For purposes of this section, an “airport influence area,” also known as an “airport referral area,” is the area in which current or future airport-related noise, overflight, safety, or airspace protection factors may significantly affect land uses or necessitate restrictions on those uses as determined by an airport land use commission.(c) If a common interest development is within the San Francisco Bay Conservation and Development Commission jurisdiction, as described in Section 66610 of the Government Code, a declaration recorded on or after January 1, 2006, shall contain the following notice:

“NOTICE OF SAN FRANCISCO BAY CONSERVATION AND DEVELOPMENT COMMISSION JURISDICTIONThis property is located within the jurisdiction of the San Francisco Bay Conservation and Development Commission. Use and development of property

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within the commission’s jurisdiction may be subject to special regulations, restrictions, and permit requirements. You may wish to investigate and determine whether they are acceptable to you and your intended use of the property before you complete your transaction.”

(d) The statement in a declaration acknowledging that a property is located in an airport influence area or within the jurisdiction of the San Francisco Bay Conservation and Development Commission does not constitute a title defect, lien, or encumbrance.

Civil Code §4260. Amendment of Declaration; Authorization.Except to the extent that a declaration provides by its express terms that it is not amendable, in whole or in part, a declaration that fails to include provisions permitting itsamendment at all times during its existence may be amended at any time.

Civil Code §4265. Extension of Term of Declaration.(a) The Legislature finds that there are common interest developments that have been created with deed restrictions that do not provide a means for the members to extend the term of the declaration. The Legislature further finds that covenants and restrictions contained in the declaration, are an appropriate method for protecting the common plan of developments and to provide for a mechanism for financial support for the upkeep of common area including, but not limited to, roofs, roads, heating systems, and recreational facilities. If declarations terminate prematurely, common interest developments may deteriorate and the housing supply of affordable units could be impacted adversely. The Legislature further finds and declares that it is in the public interest to provide a vehicle for extending the term of the declaration if the extension is approved by a majority of all members, pursuant to Section 4065.(b) A declaration that specifies a termination date, but that contains no provision for extension of the termination date, may be extended, before its termination date, by the approval of members pursuant to Section 4270.(c) No single extension of the terms of the declaration made pursuant to this section shall exceed the initial term of the declaration or 20 years, whichever is less. However, more than one extension may occur pursuant to this section.

Civil Code §4270. Amendment of Declaration; Procedure.(a) A declaration may be amended pursuant to the declaration or this act. Except as provided in Section 4275, an amendment is effective after all of the following requirements have been met:

1) The amendment has been approved by the percentage of members required by the declaration and any other person whose approval is required by the declaration.

2) That fact has been certified in a writing executed and acknowledged by the officer designated in the declaration or by the association for that purpose, or if no one is designated, by the president of the association.

3) The amendment has been recorded in each county in which a portion of the common interest development is located.

(b) If the declaration does not specify the percentage of members who must approve an amendment of the declaration, an amendment may be approved by a majority of all members, pursuant to Section 4065.

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Civil Code §4275. Amendment of Declaration; Petition; Contents; Filing; Findings by Court; Power of Court to Approve Amendment; Recording Amendment; Delivery.(a) If in order to amend a declaration, the declaration requires members having more than 50 percent of the votes in the association, in a single class voting structure, or members having more than 50 percent of the votes in more than one class in a voting structure with more than one class, to vote in favor of the amendment, the association, or any member, may petition the superior court of the county in which the common interest development is located for an order reducing the percentage of the affirmative votes necessary for such an amendment. The petition shall describe the effort that has been made to solicit approval of the association members in the manner provided in the declaration, thenumber of affirmative and negative votes actually received, the number or percentage of affirmative votes required to effect the amendment in accordance with the existing declaration, and other matters the petitioner considers relevant to the court’s determination. The petition shall also contain, as exhibits thereto, copies of all of the following:

1) The governing documents.2) A complete text of the amendment.3) Copies of any notice and solicitation materials utilized in the solicitation of

member approvals.4) A short explanation of the reason for the amendment.5) Any other documentation relevant to the court’s determination.

(b) Upon filing the petition, the court shall set the matter for hearing and issue an ex parte order setting forth the manner in which notice shall be given.(c) The court may, but shall not be required to, grant the petition if it finds all of the following:

1) The petitioner has given not less than 15 days written notice of the court hearing to all members of the association, to any mortgagee of a mortgage or beneficiary of a deed of trust who is entitled to notice under the terms of the declaration, and to the city, county, or city and county in which the common interest development is located that is entitled to notice under the terms of the declaration.

2) Balloting on the proposed amendment was conducted in accordance with the governing documents, this act, and any other applicable law.

3) A reasonably diligent effort was made to permit all eligible members to vote on the proposed amendment.

4) Members having more than 50 percent of the votes, in a single class voting structure, voted in favor of the amendment. In a voting structure with more than one class, where the declaration requires a majority of more than one class to vote in favor of the amendment, members having more than 50 percent of the votes of each class required by the declaration to vote in favor of the amendment voted in favor of the amendment.

5) The amendment is reasonable.6) Granting the petition is not improper for any reason stated in subdivision (e).

(d) If the court makes the findings required by subdivision (c), any order issued pursuant to this section may confirm the amendment as being validly approved on the basis of the affirmative votes actually received during the balloting period or the order may dispense with any requirement relating to quorums or to the number or percentage of votes needed

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for approval of the amendment that would otherwise exist under the governing documents.(e) Subdivisions (a) to (d), inclusive, notwithstanding, the court shall not be empowered by this section to approve any amendment to the declaration that:

1) Would change provisions in the declaration requiring the approval of members having more than 50 percent of the votes in more than one class to vote in favor of an amendment, unless members having more than 50 percent of the votes in each affected class approved the amendment.

2) Would eliminate any special rights, preferences, or privileges designated in the declaration as belonging to the declarant, without the consent of the declarant.

3) Would impair the security interest of a mortgagee of a mortgage or the beneficiary of a deed of trust without the approval of the percentage of the mortgagees and beneficiaries specified in the declaration, if the declaration requires the approval of a specified percentage of the mortgagees and beneficiaries.

(f) An amendment is not effective pursuant to this section until the court order and amendment have been recorded in every county in which a portion of the commoninterest development is located. The amendment may be acknowledged by, and the court order and amendment may be recorded by, any person designated in the declaration or by the association for that purpose, or if no one is designated for that purpose, by the president of the association. Upon recordation of the amendment and court order, the declaration, as amended in accordance with this section, shall have the same force and effect as if the amendment were adopted in compliance with every requirement imposed by the governing documents.(g) Within a reasonable time after the amendment is recorded the association shall deliver to each member, by individual delivery, pursuant to Section 4040, a copy of the amendment, together with a statement that the amendment has been recorded.

Article 3. Articles of Incorporation

Civil Code §4280. Association Articles of Incorporation; Required Statements.(a) The articles of incorporation of an association filed with the Secretary of State shall include a statement, which shall be in addition to the statement of purposes of the corporation, that does all of the following:

1) Identifies the corporation as an association formed to manage a common interest development under the Davis-Stirling Common Interest Development Act.

2) States the business or corporate office of the association, if any, and, if the office is not on the site of the common interest development, states the front street and nearest cross street for the physical location of the common interest development.

3) States the name and address of the association’s managing agent, if any.(b) The statement filed by an incorporated association with the Secretary of Statepursuant to Section 8210 of the Corporations Code shall also contain a statement identifying the corporation as an association formed to manage a common interest development under the Davis-Stirling Common Interest Development Act.(c) Documents filed prior to January 1, 2014, in compliance with former Section 1363.5, as it read on January 1, 2013, are deemed to be in compliance with this section.

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Article 4. Condominium Plan

Civil Code §4285. Contents of Condominium Plan.A condominium plan shall contain all of the following:(a) A description or survey map of a condominium project, which shall refer to or show monumentation on the ground.(b) A three-dimensional description of a condominium project, one or more dimensions of which may extend for an indefinite distance upwards or downwards, in sufficient detail to identify the common area and each separate interest.(c) A certificate consenting to the recordation of the condominium plan pursuant to this act that is signed and acknowledged as provided in Section 4290.

Civil Code §4290. Certificate Consenting to Recordation of Condominium Plan; Signatures and Acknowledgements.(a) The certificate consenting to the recordation of a condominium plan that is required by subdivision (c) of Section 4285 shall be signed and acknowledged by all of the following persons:

1) The record owner of fee title to that property included in the condominium project.

2) In the case of a condominium project that will terminate upon the termination of an estate for years, by all lessors and lessees of the estate for years.

3) In the case of a condominium project subject to a life estate, by all life tenants and remainder interests.

4) The trustee or the beneficiary of each recorded deed of trust, and the mortgagee of each recorded mortgage encumbering the property.

(b) Owners of mineral rights, easements, rights-of-way, and other nonpossessory interests do not need to sign the certificate.(c) In the event a conversion to condominiums of a community apartment project or stock cooperative has been approved by the required number of owners, trustees, beneficiaries, and mortgagees pursuant to Section 66452.10 of the Government Code, the certificate need only be signed by those owners, trustees, beneficiaries, and mortgagees approving the conversion.

Civil Code §4295. Amendment or Revocation of Condominium Plan.A condominium plan may be amended or revoked by a recorded instrument that isacknowledged and signed by all the persons who, at the time of amendment or revocation, are persons whose signatures are required under Section 4290.

Article 5. Operating Rules

Civil Code §4340. Definitions.For the purposes of this article:(a) “Operating rule” means a regulation adopted by the board that applies generally to the management and operation of the common interest development or the conduct of the business and affairs of the association.(b) “Rule change” means the adoption, amendment, or repeal of an operating rule by the board.

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Civil Code §4350. Requirements for Validity and Enforceability.An operating rule is valid and enforceable only if all of the following requirements are satisfied:(a) The rule is in writing.(b) The rule is within the authority of the board conferred by law or by the declaration, articles of incorporation or association, or bylaws of the association.(c) The rule is not in conflict with governing law and the declaration, articles of incorporation or association, or bylaws of the association.(d) The rule is adopted, amended, or repealed in good faith and in substantial compliance with the requirements of this article.(e) The rule is reasonable.

Civil Code §4355. Approved Subject Matters; Board Action to Propose Rule Change; Special Meetings of Members to Reverse Rule Change.(a) Sections 4360 and 4365 only apply to an operating rule that relates to one or more of the following subjects:

1) Use of the common area or of an exclusive use common area.2) Use of a separate interest, including any aesthetic or architectural standards that

govern alteration of a separate interest.3) Member discipline, including any schedule of monetary penalties for violation

of the governing documents and any procedure for the imposition of penalties.4) Any standards for delinquent assessment payment plans.5) Any procedures adopted by the association for resolution of disputes.6) Any procedures for reviewing and approving or disapproving a proposed

physical change to a member’s separate interest or to the common area.7) Procedures for elections.

(b) Sections 4360 and 4365 do not apply to the following actions by the board:1) A decision regarding maintenance of the common area.2) A decision on a specific matter that is not intended to apply generally.3) A decision setting the amount of a regular or special assessment.4) A rule change that is required by law, if the board has no discretion as to the

substantive effect of the rule change.5) Issuance of a document that merely repeats existing law or the governing

documents.

Civil Code §4360. Proposed Rule Change by Board Action; Notice; Meeting.(a) The board shall provide general notice pursuant to Section 4045 of a proposed rule change at least 30 days before making the rule change. The notice shall include the text of the proposed rule change and a description of the purpose and effect of the proposed rule change. Notice is not required under this subdivision if the board determines that an immediate rule change is necessary to address an imminent threat to public health or safety or imminent risk of substantial economic loss to the association.(b) A decision on a proposed rule change shall be made at a board meeting, after consideration of any comments made by association members.(c) As soon as possible after making a rule change, but not more than 15 days after making the rule change, the board shall deliver general notice pursuant to Section 4045 of the rule change. If the rule change was an emergency rule change made under subdivision (d), the notice shall include the text of the rule change, a description of the purpose and effect of the rule change, and the date that the rule change expires.

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(d) If the board determines that an immediate rule change is required to address an imminent threat to public health or safety, or an imminent risk of substantial economic loss to the association, it may make an emergency rule change, and no notice is required, as specified in subdivision (a). An emergency rule change is effective for 120 days, unless the rule change provides for a shorter effective period. A rule change made under this subdivision may not be readopted under this subdivision.

Civil Code §4365. Special Meeting of Members to Reverse Rule Change; Notice; Voting Requirements; Effect of Approved Reversal.(a) Members of an association owning 5 percent or more of the separate interests may call a special vote of the members to reverse a rule change.(b) A special vote of the members may be called by delivering a written request to the association. Not less than 35 days nor more than 90 days after receipt of a proper request, the association shall hold a vote of the members on whether to reverse the rule change, pursuant to Article 4 (commencing with Section 5100) of Chapter 6. The written request may not be delivered more than 30 days after the association gives general notice of the rule change, pursuant to Section 4045.(c) For the purposes of Section 5225 of this code and Section 8330 of the Corporations Code, collection of signatures to call a special vote under this section is a purpose reasonably related to the interests of the members of the association. A member request to copy or inspect the membership list solely for that purpose may not be denied on the grounds that the purpose is not reasonably related to the member’s interests as a member.(d) The rule change may be reversed by the affirmative vote of a majority of a quorum of the members, pursuant to Section 4070, or if the declaration or bylaws require a greater percentage, by the affirmative vote of the percentage required.(e) Unless otherwise provided in the declaration or bylaws, for the purposes of this section, a member may cast one vote per separate interest owned.(f) A rule change reversed under this section may not be readopted for one year after the date of the vote reversing the rule change. Nothing in this section precludes the board from adopting a different rule on the same subject as the rule change that has been reversed.(g) As soon as possible after the close of voting, but not more than 15 days after the close of voting, the board shall provide general notice pursuant to Section 4045 of the results of the member vote.(h) This section does not apply to an emergency rule change made under subdivision (d) of Section 4360.

Civil Code §4370. Applicability of Article to Changes Commenced Before and After January 1, 2004.(a) This article applies to a rule change commenced on or after January 1, 2004.(b) Nothing in this article affects the validity of a rule change commenced before January 1, 2004.(c) For the purposes of this section, a rule change is commenced when the board takes its first official action leading to adoption of the rule change.

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Chapter 4. Ownership and Transfer of Interests

Article 1. Ownership Rights and InterestsCivil Code §4500. Ownership of Common Areas.Unless the declaration otherwise provides, in a condominium project, or in a planned development in which the common area is owned by the owners of the separate interests, the common area is owned as tenants in common, in equal shares, one for each separate interest.

Civil Code §4505. Rights and Easements of Ingress, Egress, and Support.Unless the declaration otherwise provides:(a) In a community apartment project and condominium project, and in those planned developments with common area owned in common by the owners of the separate interests, there are appurtenant to each separate interest nonexclusive rights of ingress, egress, and support, if necessary, through the common area. The common area is subject to these rights.(b) In a stock cooperative, and in a planned development with common area owned by the association, there is an easement for ingress, egress, and support, if necessary, appurtenant to each separate interest. The common area is subject to these easements.

Civil Code §4510. Physical Access to Owner or Occupant’s Separate Interest.Except as otherwise provided in law, an order of the court, or an order pursuant to a final and binding arbitration decision, an association may not deny a member or occupant physical access to the member’s or occupant’s separate interest, either by restricting access through the common area to the separate interest, or by restricting access solely to the separate interest.

Article 2. Transfer Disclosure

Civil Code §4525. Sale or Title Transfer; Provision of Specified Items to Prospective Purchasers.(a) The owner of a separate interest shall provide the following documents to a prospective purchaser of the separate interest, as soon as practicable before the transfer of title or the execution of a real property sales contract, as defined in Section 2985:

1) A copy of all governing documents. If the association is not incorporated, this shall include a statement in writing from an authorized representative of the association that the association is not incorporated.

2) If there is a restriction in the governing documents limiting the occupancy, residency, or use of a separate interest on the basis of age in a manner different from that provided in Section 51.3, a statement that the restriction is only enforceable to the extent permitted by Section 51.3 and a statement specifying the applicable provisions of Section 51.3.

3) A copy of the most recent documents distributed pursuant to Article 7 (commencing with Section 5300) of Chapter 6.

4) A true statement in writing obtained from an authorized representative of the association as to the amount of the association’s current regular and special assessments and fees, any assessments levied upon the owner’s interest in the common interest development that are unpaid on the date of the statement, and any monetary fines or penalties levied upon the owner’s interest and unpaid on

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the date of the statement. The statement obtained from an authorized representative shall also include true information on late charges, interest, and costs of collection which, as of the date of the statement, are or may be made a lien upon the owner’s interest in a common interest development pursuant to Article 2 (commencing with Section 5650) of Chapter 8.

5) A copy or a summary of any notice previously sent to the owner pursuant to Section 5855 that sets forth any alleged violation of the governing documents that remains unresolved at the time of the request. The notice shall not be deemed a waiver of the association’s right to enforce the governing documents against the owner or the prospective purchaser of the separate interest with respect to any violation. This paragraph shall not be construed to require an association to inspect an owner’s separate interest.

6) A copy of the initial list of defects provided to each member pursuant to Section 6000, unless the association and the builder subsequently enter into a settlement agreement or otherwise resolve the matter and the association complies with Section 6100. Disclosure of the initial list of defects pursuant to this paragraph does not waive any privilege attached to the document. The initial list of defects shall also include a statement that a final determination as to whether the list of defects is accurate and complete has not been made.

7) A copy of the latest information provided for in Section 6100.8) Any change in the association’s current regular and special assessments and

fees which have been approved by the board, but have not become due and payable as of the date disclosure is provided pursuant to this subdivision.

9) If there is a provision in the governing documents that prohibits the rental or leasing of any of the separate interests in the common interest development to a renter, lessee, or tenant, a statement describing the prohibition.

10) If requested by the prospective purchaser, a copy of the minutes of board meetings, excluding meetings held in executive session, conducted over the previous 12 months, that were approved by the board.

(b) This section does not apply to an owner that is subject to the requirements of Section 11018.6 of the Business and Professions Code.

Civil Code §4528. Billing Disclosures; Form.The form for billing disclosures required by Section 4530 shall be in at least 10-point type and substantially the following form:

CHARGES FOR DOCUMENTS PROVIDED AS REQUIRED BY SECTION 4525*

Property Address:Owner of Property:Owner’s Mailing Address (If known or different from property address.):Provider of the Section 4525 Items:Print Name___________ Position or Title ___________ Association or AgentDate Form Completed:Check or Complete Applicable Column or Columns Below:

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Document Civil Code Section Included

Fee for Document

Not Available (N/A), Not Applicable (N/App), or Directly Provided by

Seller and confirmed in writing by Seller as a

current document (DP)Articles of Incorporation or

statement that not incorporatedSection

4525(a)(1)

CC&Rs Section 4525(a)(1)

Bylaws Section 4525(a)(1)

Operating Rules Section 4525(a)(1)

Age restrictions, if any Section 4525(a)(2)

Rental restrictions, if any Section 4525(a)(9)

Annual budget report or summary, including reserve

study

Sections 5300 and 4525(a)(3)

Assessment and reserve funding disclosure summary


Financial statement review Sections 5305 and 4525(a)(3)

Assessment enforcement policy Sections 5310 and 4525(a)(4)

Insurance summary Sections 5300 and 4525(a)(3)

Regular assessment Section 4525(a)(4)

Special assessment Section 4525(a)(4)

Emergency assessment Section 4525(a)(4)

Other unpaid obligations of seller


Approved changes to assessments

Sections 5300 and 4525(a)(4), (8)

Settlement notice regarding common area defects

Sections 4525(a)(6), (7),

and 6100

Preliminary list of defectsSections

4525(a)(6), 6000, and 6100

Notice(s) of violation Sections 5855 and 4525(a)(5)

Required statement of fees Section 4525Minutes of regular board

meetings conducted over the previous 12 months, if

requested

Section 4525(a)(10)

Total fees for these documents:

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* The information provided by this form may not include all fees that may be imposed before the close of escrow. Additional fees that are not related to the requirements of Section 4525 shall be charged separately.

Civil Code §4530. Copies of Requested Documents; Fees.(a)

1) Upon written request, the association shall, within 10 days of the mailing or delivery of the request, provide the owner of a separate interest, or any other recipient authorized by the owner, with a copy of all of the requested documents specified in Section 4525.

2) The documents required to be made available pursuant to this section may be maintained in electronic form, and may be posted on the association’s Internet Web site. Requesting parties shall have the option of receiving the documents by electronic transmission if the association maintains the documents in electronic form.

3) Delivery of the documents required by this section shall not be withheld for any reason nor subject to any condition except the payment of the fee authorized pursuant to subdivision (b).

(b)1) The association may collect a reasonable fee from the seller based upon the

association’s actual cost for the procurement, preparation, reproduction, and delivery of the documents requested pursuant to this section. An additional fee shall not be charged for the electronic delivery in lieu of a hard copy delivery of the documents requested.

2) Upon receipt of a written request, the association shall provide, on the form described in Section 4528, a written or electronic estimate of the fees that will be assessed for providing the requested documents prior to processing the request in paragraph (1) of subdivision (a).

3)(A) A cancellation fee for documents specified in subdivision (a) shall not be

collected if either of the following applies:(i) The request was canceled in writing by the same party that placed the

order and work had not yet been performed on the order.(ii) The request was canceled in writing and any work that had been

performed on the order was compensated.(B) The association shall refund all fees collected pursuant to paragraph (1) if

the request was canceled in writing and work had not yet been performed on the order.

(C) If the request was canceled in writing, the association shall refund the share of fees collected pursuant to paragraph (1) that represents the portion of the work not performed on the order.

4) Fees for any documents required by this section shall be distinguished from,separately stated, and separately billed from, all other fees, fines, or assessments billed as part of the transfer or sales transaction.

5) Any documents not expressly required by Section 4525 to be provided to a prospective purchaser by the seller shall not be included in the document disclosure required by this section. Bundling of documents required to be provided pursuant to this section with other documents relating to the transaction is prohibited.

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6) A seller shall provide to the prospective purchaser, at no cost, current copies of any documents specified by Section 4525 that are in the possession of the seller.

7) The fee for each document provided to the seller for the purpose of transmission to the prospective purchaser shall be individually itemized in the statement required to be provided by the seller to the prospective purchaser.

It is the responsibility of the seller to compensate the association, person, or entity that provides the documents required to be provided by Section 4525 to the prospective purchaser. (c) An association may contract with any person or entity to facilitate compliance with this section on behalf of the association.(d) The association shall also provide a recipient authorized by the owner of a separate interest with a copy of the completed form specified in Section 4528 at the time the required documents are delivered.

Civil Code §4535. Additional Requirements.In addition to the requirements of this article, an owner transferring title to a separate interest shall comply with applicable requirements of Sections 1133 and 1134.

Civil Code §4540. Violations; Penalties; Attorney Fees.Any person who willfully violates this article is liable to the purchaser of a separate interest that is subject to this section for actual damages occasioned thereby and, in addition, shall pay a civil penalty in an amount not to exceed five hundred dollars ($500). In an action to enforce this liability, the prevailing party shall be awarded reasonable attorney’s fees.

Civil Code §4545. Validity of Title Transferred in Violation of Article.Nothing in this article affects the validity of title to real property transferred in violation of this article.

Article 3. Transfer Fee

Civil Code §4575. Transfer Fees Prohibited; Exceptions.Except as provided in Section 4580, neither an association nor a community service organization or similar entity may impose or collect any assessment, penalty, or fee in connection with a transfer of title or any other interest except for the following:(a) An amount not to exceed the association’s actual costs to change its records.(b) An amount authorized by Section 4530.

Civil Code §4580. Application of Transfer Fee Prohibition.The prohibition in Section 4575 does not apply to a community service organization or similar entity, or to a nonprofit entity that provides services to a common interest development under a declaration of trust, of either of the following types:(a) An organization or entity that satisfies both of the following conditions:

1) It was established before February 20, 2003.2) It exists and operates, in whole or in part, to fund or perform environmental

mitigation or to restore or maintain wetlands or native habitat, as required by the state or local government as an express written condition of development.

(b) An organization or entity that satisfies all of the following conditions:

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1) It is not an organization or entity described by subdivision (a).2) It was established and received a transfer fee before January 1, 2004.3) On and after January 1, 2006, it offers a purchaser the following payment

options for the fee or charge it collects at time of transfer:(A) Paying the fee or charge at the time of transfer.(B) Paying the fee or charge pursuant to an installment payment plan for a

period of not less than seven years. If the purchaser elects to pay the fee or charge in installment payments, the organization or entity may also collect additional amounts that do not exceed the actual costs for billing and financing on the amount owed. If the purchaser sells the separate interest before the end of the installment payment plan period, the purchaser shall pay the remaining balance before the transfer.

Article 4. Restrictions on Transfer

Civil Code §4600. Exclusive Use of Common Area; Affirmative Vote Required; Exceptions; Contents of Proposed Measure.(a) Unless the governing documents specify a different percentage, the affirmative vote of members owning at least 67 percent of the separate interests in the common interest development shall be required before the board may grant exclusive use of any portion of the common area to a member.(b) Subdivision (a) does not apply to the following actions:

1) A reconveyance of all or any portion of that common area to the subdivider to enable the continuation of development that is in substantial conformance with a detailed plan of phased development submitted to the Real Estate Commissioner with the application for a public report.

2) Any grant of exclusive use that is in substantial conformance with a detailed plan of phased development submitted to the Real Estate Commissioner with the application for a public report or in accordance with the governing documents approved by the Real Estate Commissioner.

3) Any grant of exclusive use that is for any of the following reasons:(A) To eliminate or correct engineering errors in documents recorded with the

county recorder or on file with a public agency or utility company.(B) To eliminate or correct encroachments due to errors in construction of any

improvements.(C) To permit changes in the plan of development submitted to the Real Estate

Commissioner in circumstances where the changes are the result of topography, obstruction, hardship, aesthetic considerations, or environmental conditions.

(D) To fulfill the requirement of a public agency.(E) To transfer the burden of management and maintenance of any common

area that is generally inaccessible and not of general use to the membership at large of the association.

(F) To accommodate a disability.(G) To assign a parking space, storage unit, or other amenity, that is

designated in the declaration for assignment, but is not assigned by the declaration to a specific separate interest.

(H) To install and use an electric vehicle charging station in an owner’s garage or a designated parking space that meets the requirements of Section 4745,

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where the installation or use of the charging station requires reasonable access through, or across, the common area for utility lines or meters.

(I) To install and use an electric vehicle charging station through a license granted by an association under Section 4745.

(J) To comply with governing law.(c) Any measure placed before the members requesting that the board grant exclusive use of any portion of the common area shall specify whether the association will receive any monetary consideration for the grant and whether the association or the transferee will be responsible for providing any insurance coverage for exclusive use of the common area.

Civil Code §4605. Remedies.(a) A member of an association may bring a civil action for declaratory or equitable relief for a violation of Section 4600 by the association, including, but not limited to, injunctive relief, restitution, or a combination thereof, within one year of the date the cause of action accrues.(b) A member who prevails in a civil action to enforce the member’s rights pursuant to Section 4600 shall be entitled to reasonable attorney’s fees and court costs, and the court may impose a civil penalty of up to five hundred dollars ($500) for each violation, except that each identical violation shall be subject to only one penalty if the violation affects each member equally. A prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation.

Civil Code §4610. Restrictions on Partition.(a) Except as provided in this section, the common area in a condominium project shall remain undivided, and there shall be no judicial partition thereof. Nothing in this section shall be deemed to prohibit partition of a cotenancy in a condominium.(b) The owner of a separate interest in a condominium project may maintain a partition action as to the entire project as if the owners of all of the separate interests in the project were tenants in common in the entire project in the same proportion as their interests in the common area. The court shall order partition under this subdivision only by sale of the entire condominium project and only upon a showing of one of the following:

1) More than three years before the filing of the action, the condominium project was damaged or destroyed, so that a material part was rendered unfit for its prior use, and the condominium project has not been rebuilt or repaired substantially to its state prior to the damage or destruction.

2) Three-fourths or more of the project is destroyed or substantially damaged and owners of separate interests holding in the aggregate more than a 50-percent interest in the common area oppose repair or restoration of the project.

3) The project has been in existence more than 50 years, is obsolete anduneconomic, and owners of separate interests holding in the aggregate more than a 50-percent interest in the common area oppose repair or restoration of the project.

4) Any conditions in the declaration for sale under the circumstances described in this subdivision have been met.

Civil Code §4615. Liens for Labor and Materials.(a) In a condominium project, no labor performed or services or materials furnished with the consent of, or at the request of, an owner in the condominium project or the owners’ agent or contractor shall be the basis for the filing of a lien against any other property of

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any other owner in the condominium project unless that other owner has expressly consented to or requested the performance of the labor or furnishing of the materials or services. However, express consent shall be deemed to have been given by the owner of any condominium in the case of emergency repairs thereto.(b) Labor performed or services or materials furnished for the common area, if duly authorized by the association, shall be deemed to be performed or furnished with the express consent of each condominium owner.(c) The owner of any condominium may remove that owner’s condominium from a lien against two or more condominiums or any part thereof by payment to the holder of the lien of the fraction of the total sum secured by the lien that is attributable to the owner’s condominium.

Article 5. Transfer of Separate Interest

Civil Code §4625. Community Apartment Project; Interests Included in Conveyance, Judicial Sale or Transfer of Separate Interests.In a community apartment project, any conveyance, judicial sale, or other voluntary or involuntary transfer of the separate interest includes the undivided interest in the community apartment project. Any conveyance, judicial sale, or other voluntary or involuntary transfer of the owner’s entire estate also includes the owner’s membership interest in the association.

Civil Code §4630. Condominium Project; Interests Included in Conveyance, Judicial Sale or Transfer of Separate Interests.In a condominium project the common area is not subject to partition, except as provided in Section 4610. Any conveyance, judicial sale, or other voluntary or involuntary transfer of the separate interest includes the undivided interest in the common area. Any conveyance, judicial sale, or other voluntary or involuntary transfer of the owner’s entire estate also includes the owner’s membership interest in the association.

Civil Code §4635. Planned Development; Interests Included in Conveyance, Judicial Sale or Transfer of Separate Interests.In a planned development, any conveyance, judicial sale, or other voluntary or involuntary transfer of the separate interest includes the undivided interest in the common area, if any exists. Any conveyance, judicial sale, or other voluntary or involuntary transfer of the owner’s entire estate also includes the owner’s membership interest in the association.

Civil Code §4640. Stock Cooperative; Interests Included in Conveyance, Judicial Sale or Transfer of Separate Interests.In a stock cooperative, any conveyance, judicial sale, or other voluntary or involuntary transfer of the separate interest includes the ownership interest in the corporation, however evidenced. Any conveyance, judicial sale, or other voluntary or involuntary transfer of the owner’s entire estate also includes the owner’s membership interest in the association.

Civil Code §4645. Transfer of Exclusive Use Areas.Nothing in this article prohibits the transfer of exclusive use areas, independent of any other interest in a common interest subdivision, if authorization to separately transfer

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exclusive use areas is expressly stated in the declaration and the transfer occurs in accordance with the terms of the declaration.

Civil Code §4650. Restrictions Upon Severability of Component Interests.Any restrictions upon the severability of the component interests in real property which are contained in the declaration shall not be deemed conditions repugnant to the interest created within the meaning of Section 711. However, these restrictions shall not extend beyond the period in which the right to partition a project is suspended under Section 4610.

Chapter 5. Property Use and Maintenance

Article 1. Protected Uses

Civil Code §4700. Scope of Article; Related Provisions.This article includes provisions that limit the authority of an association or the governing documents to regulate the use of a member’s separate interest. Nothing in this article is intended to affect the application of any other provision that limits the authority of an association to regulate the use of a member’s separate interest, including, but not limited to, the following provisions:(a) Sections 712 and 713, relating to the display of signs.(b) Sections 714 and 714.1, relating to solar energy systems.(c) Section 714.5, relating to structures that are constructed offsite and moved to the property in sections or modules.(d) Sections 782, 782.5, and 6150 of this code and Section 12956.1 of the Government Code, relating to racial restrictions.(e) Section 12927 of the Government Code, relating to the modification of property to accommodate a disability.(f) Section 1597.40 of the Health and Safety Code, relating to the operation of a family day care home.

Civil Code §4705. Display of United States Flag by Owner on or in Owner’s Separate Interest or Within Exclusive Use Common Area.(a) Except as required for the protection of the public health or safety, no governing document shall limit or prohibit, or be construed to limit or prohibit, the display of the flag of the United States by a member on or in the member’s separate interest or within the member’s exclusive use common area.(b) For purposes of this section, “display of the flag of the United States” means a flag of the United States made of fabric, cloth, or paper displayed from a staff or pole or in a window, and does not mean a depiction or emblem of the flag of the United States made of lights, paint, roofing, siding, paving materials, flora, or balloons, or any other similar building, landscaping, or decorative component.(c) In any action to enforce this section, the prevailing party shall be awarded reasonable attorney’s fees and costs.

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Civil Code §4710. Prohibition of Posting or Displaying Noncommercial Signs,Posters, Flags, or Banners; Permitted Placement of Posting or Displaying; Exceptions.(a) The governing documents may not prohibit posting or displaying of noncommercial signs, posters, flags, or banners on or in a member’s separate interest, except as required for the protection of public health or safety or if the posting or display would violate a local, state, or federal law.(b) For purposes of this section, a noncommercial sign, poster, flag, or banner may be made of paper, cardboard, cloth, plastic, or fabric, and may be posted or displayed from the yard, window, door, balcony, or outside wall of the separate interest, but may not be made of lights, roofing, siding, paving materials, flora, or balloons, or any other similar building, landscaping, or decorative component, or include the painting of architectural surfaces.(c) An association may prohibit noncommercial signs and posters that are more than nine square feet in size and noncommercial flags or banners that are more than 15 square feet in size.

Civil Code §4715. Pets Within Common Interest Developments.(a) No governing documents shall prohibit the owner of a separate interest within a common interest development from keeping at least one pet within the common interest development, subject to reasonable rules and regulations of the association. This section may not be construed to affect any other rights provided by law to an owner of a separate interest to keep a pet within the development.(b) For purposes of this section, “pet” means any domesticated bird, cat, dog, aquatic animal kept within an aquarium, or other animal as agreed to between the association and the homeowner.(c) If the association implements a rule or regulation restricting the number of pets an owner may keep, the new rule or regulation shall not apply to prohibit an owner from continuing to keep any pet that the owner currently keeps in the owner’s separate interest if the pet otherwise conforms with the previous rules or regulations relating to pets.(d) For the purposes of this section, “governing documents” shall include, but are not limited to, the conditions, covenants, and restrictions of the common interest development, and the bylaws, rules, and regulations of the association.(e) This section shall become operative on January 1, 2001, and shall only apply to governing documents entered into, amended, or otherwise modified on or after that date.

Civil Code §4720. Roof Installation or Repair; Roofing Materials.(a) No association may require a homeowner to install or repair a roof in a manner that is in violation of Section 13132.7 of the Health and Safety Code.(b) Governing documents of a common interest development located within a very high fire severity zone, as designated by the Director of Forestry and Fire Protection pursuant to Article 9 (commencing with Section 4201) of Chapter 1 of Part 2 of Division 4 of the Public Resources Code or by a local agency pursuant to Chapter 6.8 (commencing with Section 51175) of Part 1 of Division 1 of Title 5 of the Government Code, shall allow for at least one type of fire retardant roof covering material that meets the requirements of Section 13132.7 of the Health and Safety Code.

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Civil Code §4725. Restrictions on Installation or Use of Video or Television Antenna; Enforceability Based on Size; Reasonable Restrictions; Application Approval; Attorney’s Fees.(a) Any covenant, condition, or restriction contained in any deed, contract, security instrument, or other instrument affecting the transfer or sale of, or any interest in, a common interest development that effectively prohibits or restricts the installation or use of a video or television antenna, including a satellite dish, or that effectively prohibits or restricts the attachment of that antenna to a structure within that development where the antenna is not visible from any street or common area, except as otherwise prohibited or restricted by law, is void and unenforceable as to its application to the installation or use of a video or television antenna that has a diameter or diagonal measurement of 36 inches or less.(b) This section shall not apply to any covenant, condition, or restriction, as described in subdivision (a), that imposes reasonable restrictions on the installation or use of a video or television antenna, including a satellite dish, that has a diameter or diagonal measurement of 36 inches or less. For purposes of this section, “reasonable restrictions” means those restrictions that do not significantly increase the cost of the video or television antenna system, including all related equipment, or significantly decrease its efficiency or performance and include all of the following:

1) Requirements for application and notice to the association prior to the installation.

2) Requirement of a member to obtain the approval of the association for the installation of a video or television antenna that has a diameter or diagonal measurement of 36 inches or less on a separate interest owned by another.

3) Provision for the maintenance, repair, or replacement of roofs or other building components.

4) Requirements for installers of a video or television antenna to indemnify or reimburse the association or its members for loss or damage caused by the installation, maintenance, or use of a video or television antenna that has a diameter or diagonal measurement of 36 inches or less.

(c) Whenever approval is required for the installation or use of a video or television antenna, including a satellite dish, the application for approval shall be processed by the appropriate approving entity for the common interest development in the same manner as an application for approval of an architectural modification to the property, and the issuance of a decision on the application shall not be willfully delayed.(d) In any action to enforce compliance with this section, the prevailing party shall be awarded reasonable attorney’s fees.

Civil Code §4730. Prohibition Against Association Rule or Regulation that Arbitrarily or Unreasonably Restricts Owner’s Ability to Market His or Her Interest in Common Development; Other Enumerated Restrictions.(a) Any provision of a governing document that arbitrarily or unreasonably restricts an owner’s ability to market the owner’s interest in a common interest development is void.(b) No association may adopt, enforce, or otherwise impose any governing document that does either of the following:

1) Imposes an assessment or fee in connection with the marketing of an owner’s interest in an amount that exceeds the association’s actual or direct costs. That assessment or fee shall be deemed to violate the limitation set forth in subdivision (b) of Section 5600.

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2) Establishes an exclusive relationship with a real estate broker through which the sale or marketing of interests in the development is required to occur. The limitation set forth in this paragraph does not apply to the sale or marketing of separate interests owned by the association or to the sale or marketing of common area by the association.

(c) For purposes of this section, “market” and “marketing” mean listing, advertising, or obtaining or providing access to show the owner’s interest in the development.(d) This section does not apply to rules or regulations made pursuant to Section 712 or 713 regarding real estate signs.

Civil Code §4735. Governing Documents; Void and Unenforceable Provisions.(a) Notwithstanding any other law, a provision of the governing documents or architectural or landscaping guidelines or policies shall be void and unenforceable if it does any of the following:(1) Prohibits, or includes conditions that have the effect of prohibiting, the use of low water-using plants as a group or as a replacement of existing turf.(2) Has the effect of prohibiting or restricting compliance with either of the following:(A) A water-efficient landscape ordinance adopted or in effect pursuant to subdivision (c) of Section 65595 of the Government Code.(B) Any regulation or restriction on the use of water adopted pursuant to Section 353 or 375 of the Water Code.(b) This section shall not prohibit an association from applying landscaping rules established in the governing documents, to the extent the rules fully conform with subdivision (a).(c) Notwithstanding any other provision of this part, an association, except an association that uses recycled water, as defined in Section 13050 of the Water Code, for landscaping irrigation, shall not impose a fine or assessment against an owner of a separate interest for reducing or eliminating the watering of vegetation or lawns during any period for which either of the following have occurred:(1) The Governor has declared a state of emergency due to drought pursuant to subdivision (b) of Section 8558 of the Government Code.(2) A local government has declared a local emergency due to drought pursuant to subdivision (c) of Section 8558 of the Government Code.

Civil Code §4740. Rental or Leasing of Separate Interests; Provisions in Governing Documents.(a) An owner of a separate interest in a common interest development shall not be subject to a provision in a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests in that common interest development to a renter, lessee, or tenant unless that governing document, or amendment thereto, was effective prior to the date the owner acquired title to his or her separate interest.(b) Notwithstanding the provisions of this section, an owner of a separate interest in a common interest development may expressly consent to be subject to a governing document or an amendment to a governing document that prohibits the rental or leasing of any of the separate interests in the common interest development to a renter, lessee, or tenant.

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(c) For purposes of this section, the right to rent or lease the separate interest of an owner shall not be deemed to have terminated if the transfer by the owner of all or part of the separate interest meets at least one of the following conditions:

1) Pursuant to Section 62 or 480.3 of the Revenue and Taxation Code, the transfer is exempt, for purposes of reassessment by the county tax assessor.

2) Pursuant to subdivision (b) of, solely with respect to probate transfers, or subdivision (e), (f), or (g) of, Section 1102.2, the transfer is exempt from the requirements to prepare and deliver a Real Estate Transfer Disclosure Statement, as set forth in Section 1102.6.

(d) Prior to renting or leasing his or her separate interest as provided by this section, an owner shall provide the association verification of the date the owner acquired title to the separate interest and the name and contact information of the prospective tenant or lessee or the prospective tenant’s or lessee’s representative.(e) Nothing in this section shall be deemed to revise, alter, or otherwise affect the voting process by which a common interest development adopts or amends its governing documents.(f) This section shall apply only to a provision in a governing document or a provision in an amendment to a governing document that becomes effective on or after January 1, 2012.

Civil Code §4745. Electric Vehicle Charging Stations.(a) Any covenant, restriction, or condition contained in any deed, contract, security instrument, or other instrument affecting the transfer or sale of any interest in a common interest development, and any provision of a governing document, as defined in Section 4150, that either effectively prohibits or unreasonably restricts the installation or use of an electric vehicle charging station in an owner’s designated parking space, including, but not limited to, a deeded parking space, a parking space in an owner’s exclusive use common area, or a parking space that is specifically designated for use by a particular owner, or is in conflict with the provisions of this section is void and unenforceable.(b)

1) This section does not apply to provisions that impose reasonable restrictions on electric vehicle charging stations. However, it is the policy of the state to promote, encourage, and remove obstacles to the use of electric vehicle charging stations.

2) For purposes of this section, “reasonable restrictions” are restrictions that do not significantly increase the cost of the station or significantly decrease its efficiency or specified performance.

(c) An electric vehicle charging station shall meet applicable health and safety standards and requirements imposed by state and local authorities, and all other applicable zoning, land use, or other ordinances, or land use permits.(d) For purposes of this section, “electric vehicle charging station” means a station that is designed in compliance with the California Building Standards Code and delivers electricity from a source outside an electric vehicle into one or more electric vehicles. An electric vehicle charging station may include several charge points simultaneously connecting several electric vehicles to the station and any related equipment needed to facilitate charging plug-in electric vehicles.(e) If approval is required for the installation or use of an electric vehicle charging station, the application for approval shall be processed and approved by the association in the same manner as an application for approval of an architectural modification to the

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property, and shall not be willfully avoided or delayed. The approval or denial of an application shall be in writing. If an application is not denied in writing within 60 days from the date of receipt of the application, the application shall be deemed approved, unless that delay is the result of a reasonable request for additional information.(f) If the electric vehicle charging station is to be placed in a common area or an exclusive use common area, as designated in the common interest development’s declaration, the following provisions apply:

1) The owner first shall obtain approval from the association to install the electric vehicle charging station and the association shall approve the installation if the owner agrees in writing to do all of the following:(A) Comply with the association’s architectural standards for the installation

of the charging station.(B) Engage a licensed contractor to install the charging station.(C) Within 14 days of approval, provide a certificate of insurance that names

the association as an additional insured under the owner’s insurance policy in the amount set forth in paragraph (3).

(D) Pay for the electricity usage associated with the charging station.2) The owner and each successive owner of the charging station shall be

responsible for all of the following:(A) Costs for damage to the charging station, common area, exclusive use

common area, or separate interests resulting from the installation, maintenance, repair, removal, or replacement of the charging station.

(B) Costs for the maintenance, repair, and replacement of the charging station until it has been removed and for the restoration of the common area after removal.

(C) The cost of electricity associated with the charging station.(D) Disclosing to prospective buyers the existence of any charging station of

the owner and the related responsibilities of the owner under this section.3) The owner and each successive owner of the charging station, at all times, shall

maintain a homeowner liability coverage policy in the amount of one million dollars ($1,000,000) and shall name the association as a named additional insured under the policy with a right to notice of cancellation.

4) A homeowner shall not be required to maintain a homeowner liability coverage policy for an existing National Electrical Manufacturers Association standard alternating current power plug.

(g) Except as provided in subdivision (h), installation of an electric vehicle charging station for the exclusive use of an owner in a common area, that is not an exclusive use common area, shall be authorized by the association only if installation in the owner’s designated parking space is impossible or unreasonably expensive. In such cases, the association shall enter into a license agreement with the owner for the use of the space in a common area, and the owner shall comply with all of the requirements in subdivision (f).(h) The association or owners may install an electric vehicle charging station in the common area for the use of all members of the association and, in that case, the association shall develop appropriate terms of use for the charging station.(i) An association may create a new parking space where one did not previously exist to facilitate the installation of an electric vehicle charging station.

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(j) An association that willfully violates this section shall be liable to the applicant or other party for actual damages, and shall pay a civil penalty to the applicant or other party in an amount not to exceed one thousand dollars ($1,000).(k) In any action to enforce compliance with this section, the prevailing plaintiff shall be awarded reasonable attorney’s fees.

Civil Code §4750. Personal Agriculture.(a) For the purposes of this section, “personal agriculture” has the same definition as in Section 1940.10.(b) Any provision of a governing document, as defined in Section 4150, shall be void and unenforceable.

(c)1) This section does not apply to provisions that impose reasonable restrictions on

the use of a homeowner’s yard for personal agriculture.2) For purposes of this section, “reasonable restrictions” are restrictions that do

not significantly increase the cost of engaging in personal agriculture or significantly decrease its efficiency.

(d) This section applies only to yards that are designated for the exclusive use of the homeowner. (e) This section shall not prohibit a homeowners’ association from applying rules and regulations requiring that dead plant material and weeds, with the exception of straw, mulch, compost, and other organic materials intended to encourage vegetation and retention of moisture in the soil, are regularly cleared from the backyard.

Article 2. Modification of Separate Interest

Civil Code §4760. Modification of Member’s Separate Interest; Facilitation of Access for Handicapped; Approval by Project Association.

1) (a) Subject to the governing documents and applicable law, a member may do the following: Make any improvement or alteration within the boundaries of the member’s separate interest that does not impair the structural integrity or mechanical systems or lessen the support of any portions of the common interest development.

2) Modify the member’s separate interest, at the member’s expense, to facilitate access for persons who are blind, visually handicapped, deaf, or physically disabled, or to alter conditions which could be hazardous to these persons. These modifications may also include modifications of the route from the public way to the door of the separate interest for the purposes of this paragraph if the separate interest is on the ground floor or already accessible by an existing ramp or elevator. The right granted by this paragraph is subject to the following conditions.(A) The modifications shall be consistent with applicable building code

requirements.(B) The modifications shall be consistent with the intent of otherwise

applicable provisions of the governing documents pertaining to safety or aesthetics.

(C) Modifications external to the dwelling shall not prevent reasonable passage by other residents, and shall be removed by the member when the

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separate interest is no longer occupied by persons requiring those modifications who are blind, visually handicapped, deaf, or physically disabled.

(D) Any member who intends to modify a separate interest pursuant to this paragraph shall submit plans and specifications to the association for review to determine whether the modifications will comply with the provisions of this paragraph. The association shall not deny approval of the proposed modifications under this paragraph without good cause.

(b) Any change in the exterior appearance of a separate interest shall be in accordance with the governing documents and applicable provisions of law.

Civil Code §4765. Physical Change to Member’s Separate Interest or Common Area; Requirements to Approve or Disapprove Proposed Changes; Notice of Requirements.(a) This section applies if the governing documents require association approval before a member may make a physical change to the member’s separate interest or to the common area. In reviewing and approving or disapproving a proposed change, the association shall satisfy the following requirements:

1) The association shall provide a fair, reasonable, and expeditious procedure for making its decision. The procedure shall be included in the association’s governing documents. The procedure shall provide for prompt deadlines. The procedure shall state the maximum time for response to an application or a request for reconsideration by the board.

2) A decision on a proposed change shall be made in good faith and may not be unreasonable, arbitrary, or capricious.

3) Notwithstanding a contrary provision of the governing documents, a decision on a proposed change may not violate any governing provision of law, including, but not limited to, the Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2 of the Government Code), or a building code or other applicable law governing land use or public safety.

4) A decision on a proposed change shall be in writing. If a proposed change is disapproved, the written decision shall include both an explanation of why the proposed change is disapproved and a description of the procedure for reconsideration of the decision by the board.

5) If a proposed change is disapproved, the applicant is entitled to reconsideration by the board, at an open meeting of the board. This paragraph does not require reconsideration of a decision that is made by the board or a body that has the same membership as the board, at a meeting that satisfies the requirements of Article 2 (commencing with Section 4900) of Chapter 6. Reconsideration by the board does not constitute dispute resolution within the meaning of Section 5905.

(b) Nothing in this section authorizes a physical change to the common area in a manner that is inconsistent with an association’s governing documents, unless the change is required by law.(c) An association shall annually provide its members with notice of any requirements for association approval of physical changes to property. The notice shall describe the types of changes that require association approval and shall include a copy of the procedure used to review and approve or disapprove a proposed change.

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Article 3. Maintenance

Civil Code §4775. Responsibility for Repair, Replacement, or Maintenance.(a) Unless otherwise provided in the declaration of a common interest development, the association is responsible for repairing, replacing, or maintaining the common area, other than exclusive use common area, and the owner of each separate interest is responsible for maintaining that separate interest and any exclusive use common area appurtenant to the separate interest.(b) The costs of temporary relocation during the repair and maintenance of the areas within the responsibility of the association shall be borne by the owner of the separate interest affected.(c) This section shall be repealed on January 1, 2017.

Civil Code §4780. Damage by Wood-Destroying Pests or Organisms.(a) In a community apartment project, condominium project, or stock cooperative, unless otherwise provided in the declaration, the association is responsible for the repair and maintenance of the common area occasioned by the presence of wood-destroying pests or organisms.(b) In a planned development, unless a different maintenance scheme is provided in the declaration, each owner of a separate interest is responsible for the repair and maintenance of that separate interest as may be occasioned by the presence of wood-destroying pests or organisms. Upon approval of the majority of all members of the association, pursuant to Section 4065, that responsibility may be delegated to the association, which shall be entitled to recover the cost thereof as a special assessment.

Civil Code §4785. Temporary Removal of Occupant for Treatment of Wood-Destroying Pests or Organisms.(a) The association may cause the temporary, summary removal of any occupant of a common interest development for such periods and at such times as may be necessary for prompt, effective treatment of wood-destroying pests or organisms.(b) The association shall give notice of the need to temporarily vacate a separate interest to the occupants and to the owners, not less than 15 days nor more than 30 days prior to the date of the temporary relocation. The notice shall state the reason for the temporary relocation, the date and time of the beginning of treatment, the anticipated date and time of termination of treatment, and that the occupants will be responsible for their own accommodations during the temporary relocation.(c) Notice by the association shall be deemed complete upon either:

1) Personal delivery of a copy of the notice to the occupants, and if an occupant is not the owner, individual delivery pursuant to Section 4040, of a copy of the notice to the owner.

2) Individual delivery pursuant to Section 4040 to the occupant at the address of the separate interest, and if the occupant is not the owner, individual delivery pursuant to Section 4040, of a copy of the notice to the owner.

(d) For purposes of this section, “occupant” means an owner, resident, guest, invitee, tenant, lessee, sublessee, or other person in possession of the separate interest.

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Civil Code §4790. Access for Maintenance of Telephone Wiring.Notwithstanding the provisions of the declaration, a member is entitled to reasonable access to the common area for the purpose of maintaining the internal and external telephone wiring made part of the exclusive use common area of the member’s separate interest pursuant to subdivision (c) of Section 4145. The access shall be subject to the consent of the association, whose approval shall not be unreasonably withheld, and which may include the association’s approval of telephone wiring upon the exterior of the common area, and other conditions as the association determines reasonable.

Civil Code §1940.10. Personal Agriculture Definitions.(a) For the purposes of this section, the following definitions shall apply:

1) “Private area” means an outdoor area that is on the ground level of the rental unit.

2) “Personal agriculture” means use of a land where an individual cultivates edible plant crops for personal use or donation.

3) “Plant crop” means any crop in its raw or natural states, which comes from a plant that will bear edible fruits or vegetables. It shall not include marijuana or any unlawful crops or substances.

(b) A landlord shall permit a tenant to participate in personal agriculture in portable containers approved by the landlord in the tenant’s private area if the following conditions are met:

1) The tenant regularly removes a any dead plant material and weeds, with the exception of straw, mulch, compost, and any other organic materials intended to encourage vegetation and retention of moisture in soil, unless the landlord and tenant have a preexisting or separate agreement regarding garden maintenance where the tenant is not responsible for removing or maintaining plant crop and weeds.

2) The plant crop will not interfere with the maintenance of the rental property.3) The placement of the portable containers foes not interfere with any tenant’s

parking spot. 4) The placement and location of the portable containers may be determined by

the landlord. The portable containers may not create a health and safety hazard, block doorways, or interfere with walkways or utility services or equipment.

(c) The cultivation of plant crops on the rental property other than that which is contained in portable containers shall be subject to approval from the landlord. (d) A landlord may prohibit the use of synthetic chemical herbicides, pesticides, fungicides, rodenticides, insecticides, or any other synthetic chemical product commonly used in the growing of plant crops.(e) A landlord may require the tenant to enter into a written agreement regarding the payment of any excess water and waste collection bills arising from the tenant’s personal agriculture activities. (f) Subject to the notice required by Section 19454, a landlord has a right to periodically inspect any area where the tenant is engaging in personal agriculture to ensure compliance with this section.(g) This section shall only apply to residential real property that in improved with, or consisting of, a building containing not more than two units that are intended for human habitation.

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Chapter 6. Association Governance

Article 1. Association Existence and Powers

Civil Code §4800. Management by Association.A common interest development shall be managed by an association that may be incorporated or unincorporated. The association may be referred to as an owners’ association or a community association.

Civil Code §4805. Powers of Association.(a) Unless the governing documents provide otherwise, and regardless of whether the association is incorporated or unincorporated, the association may exercise the powers granted to a nonprofit mutual benefit corporation, as enumerated in Section 7140 of the Corporations Code, except that an unincorporated association may not adopt or use a corporate seal or issue membership certificates in accordance with Section 7313 of the Corporations Code.(b) The association, whether incorporated or unincorporated, may exercise the powers granted to an association in this act.

Civil Code §4820. Consolidation of Associations.Whenever two or more associations have consolidated any of their functions under a joint neighborhood association or similar organization, members of each participating association shall be (a) entitled to attend all meetings of the joint association other than executive sessions, (b) given reasonable opportunity for participation in those meetings, and (c) entitled to the same access to the joint association’s records as they are to the participating association’s records.

Article 2. Board Meeting

Civil Code §4900. Short Title.This article shall be known and may be cited as the Common Interest Development Open Meeting Act.

Civil Code §4910. Action on Items Outside of Meeting Prohibited; Electronic Transmissions as Method of Conducting Meeting.(a) The board shall not take action on any item of business outside of a board meeting.(b)

1) Notwithstanding Section 7211 of the Corporations Code, the board shall not conduct a meeting via a series of electronic transmissions, including, but not limited to, electronic mail, except as specified in paragraph (2).

2) Electronic transmissions may be used as a method of conducting an emergency board meeting if all directors, individually or collectively, consent in writing to that action, and if the written consent or consents are filed with the minutes of the board meeting. These written consents may be transmitted electronically.

Civil Code §4920. Notice.(a) Except as provided in subdivision (b), the association shall give notice of the time and place of a board meeting at least four days before the meeting.

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(b)1) If a board meeting is an emergency meeting held pursuant to Section 4923, the

association is not required to give notice of the time and place of the meeting.2) If a nonemergency board meeting is held solely in executive session, the

association shall give notice of the time and place of the meeting at least two days prior to the meeting.

3) If the association’s governing documents require a longer period of notice than is required by this section, the association shall comply with the period stated in its governing documents. For the purposes of this paragraph, a governing document provision does not apply to a notice of an emergency meeting or a meeting held solely in executive session unless it specifically states that it applies to those types of meetings.

(c) Notice of a board meeting shall be given by general delivery pursuant to Section 4045.(d) Notice of a board meeting shall contain the agenda for the meeting.

Civil Code §4923. Emergency Board Meeting.An emergency board meeting may be called by the president of the association, or by any two directors other than the president, if there are circumstances that could not have been reasonably foreseen which require immediate attention and possible action by the board, and which of necessity make it impracticable to provide notice as required by Section 4920.

Civil Code §4925. Open Meeting; Executive Session Exception.(a) Any member may attend board meetings, except when the board adjourns to, or meets solely in, executive session. As specified in subdivision (b) of Section 4090, a member of the association shall be entitled to attend a teleconference meeting or the portion of a teleconference meeting that is open to members, and that meeting or portion of the meeting shall be audible to the members in a location specified in the notice of the meeting.(b) The board shall permit any member to speak at any meeting of the association or the board, except for meetings of the board held in executive session. A reasonable time limit for all members of the association to speak to the board or before a meeting of the association shall be established by the board.

Civil Code §4930. Subjects of Meeting; Issues Not on Agenda.(a) Except as described in subdivisions (b) to (e), inclusive, the board may not discuss or take action on any item at a nonemergency meeting unless the item was placed on the agenda included in the notice that was distributed pursuant to subdivision (a) of Section 4920. This subdivision does not prohibit a member or resident who is not a director from speaking on issues not on the agenda.(b) Notwithstanding subdivision (a), a director, a managing agent or other agent of the board, or a member of the staff of the board, may do any of the following:

1) Briefly respond to statements made or questions posed by a person speaking at a meeting as described in subdivision (b) of Section 4925.

2) Ask a question for clarification, make a brief announcement, or make a brief report on the person’s own activities, whether in response to questions posed by a member or based upon the person’s own initiative.

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(c) Notwithstanding subdivision (a), the board or a director, subject to rules or procedures of the board, may do any of the following:

1) Provide a reference to, or provide other resources for factual information to, its managing agent or other agents or staff.

2) Request its managing agent or other agents or staff to report back to the board at a subsequent meeting concerning any matter, or take action to direct its managing agent or other agents or staff to place a matter of business on a future agenda.

3) Direct its managing agent or other agents or staff to perform administrative tasks that are necessary to carry out this section.

(d) Notwithstanding subdivision (a), the board may take action on any item of business not appearing on the agenda distributed pursuant to subdivision (a) of Section 4920 under any of the following conditions:

1) Upon a determination made by a majority of the board present at the meeting that an emergency situation exists. An emergency situation exists if there are circumstances that could not have been reasonably foreseen by the board, that require immediate attention and possible action by the board, and that, of necessity, make it impracticable to provide notice.

2) Upon a determination made by the board by a vote of two-thirds of the directors present at the meeting, or, if less than two-thirds of total membership of the board is present at the meeting, by a unanimous vote of the directors present, that there is a need to take immediate action and that the need for action came to the attention of the board after the agenda was distributed pursuant to subdivision (a) of Section 4920.

3) The item appeared on an agenda that was distributed pursuant to subdivision (a) of Section 4920 for a prior meeting of the board that occurred not more than 30 calendar days before the date that action is taken on the item and, at the prior meeting, action on the item was continued to the meeting at which the action is taken.

(e) Before discussing any item pursuant to subdivision (d), the board shall openly identify the item to the members in attendance at the meeting.

Civil Code §4935. Executive Session.(a) The board may adjourn to, or meet solely in, executive session to consider litigation, matters relating to the formation of contracts with third parties, member discipline,personnel matters, or to meet with a member, upon the member’s request, regarding the member’s payment of assessments, as specified in Section 5665.(b) The board shall adjourn to, or meet solely in, executive session to discuss member discipline, if requested by the member who is the subject of the discussion. That member shall be entitled to attend the executive session.(c) The board shall adjourn to, or meet solely in, executive session to discuss a payment plan pursuant to Section 5665.(d) The board shall adjourn to, or meet solely in, executive session to decide whether to foreclose on a lien pursuant to subdivision (b) of Section 5705.(e) Any matter discussed in executive session shall be generally noted in the minutes of the immediately following meeting that is open to the entire membership.

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Civil Code §4950. Meeting Minutes.(a) The minutes, minutes proposed for adoption that are marked to indicate draft status, or a summary of the minutes, of any board meeting, other than an executive session, shall be available to members within 30 days of the meeting. The minutes, proposed minutes, or summary minutes shall be distributed to any member upon request and upon reimbursement of the association’s costs for making that distribution.(b) The annual policy statement, prepared pursuant to Section 5310, shall inform the members of their right to obtain copies of board meeting minutes and of how and where to do so.

Civil Code §4955. Civil Action for Violation of Article; Costs and Attorney’s Fees.(a) A member of an association may bring a civil action for declaratory or equitable relief for a violation of this article by the association, including, but not limited to, injunctive relief, restitution, or a combination thereof, within one year of the date the cause of action accrues.(b) A member who prevails in a civil action to enforce the member’s rights pursuant to this article shall be entitled to reasonable attorney’s fees and court costs, and the court may impose a civil penalty of up to five hundred dollars ($500) for each violation, except that each identical violation shall be subject to only one penalty if the violation affects each member equally. A prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation.

Article 3. Member Meeting

Civil Code §5000. Use of Parliamentary Procedure.(a) Meetings of the membership of the association shall be conducted in accordance with a recognized system of parliamentary procedure or any parliamentary procedures the association may adopt.(b) The board shall permit any member to speak at any meeting of the membership of the association. A reasonable time limit for all members to speak at a meeting of the association shall be established by the board.

Article 4. Member Election

Civil Code §5100. Scope of Article.(a) Notwithstanding any other law or provision of the governing documents, elections regarding assessments legally requiring a vote, election and removal of directors, amendments to the governing documents, or the grant of exclusive use of common areapursuant to Section 4600 shall be held by secret ballot in accordance with the procedures set forth in this article.(b) This article also governs an election on any topic that is expressly identified in the operating rules as being governed by this article.(c) The provisions of this article apply to both incorporated and unincorporated associations, notwithstanding any contrary provision of the governing documents.(d) The procedures set forth in this article shall apply to votes cast directly by the membership, but do not apply to votes cast by delegates or other elected representatives.(e) In the event of a conflict between this article and the provisions of the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2

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of Title 1 of the Corporations Code) relating to elections, the provisions of this article shall prevail.

Civil Code §5105. Rules.(a) An association shall adopt rules, in accordance with the procedures prescribed by Article 5 (commencing with Section 4340) of Chapter 3, that do all of the following:

1) Ensure that if any candidate or member advocating a point of view is provided access to association media, newsletters, or Internet Web sites during a campaign, for purposes that are reasonably related to that election, equal access shall be provided to all candidates and members advocating a point of view, including those not endorsed by the board, for purposes that are reasonably related to the election. The association shall not edit or redact any content from these communications, but may include a statement specifying that the candidate or member, and not the association, is responsible for that content.

2) Ensure access to the common area meeting space, if any exists, during a campaign, at no cost, to all candidates, including those who are not incumbents, and to all members advocating a point of view, including those not endorsed by the board, for purposes reasonably related to the election.

3) Specify the qualifications for candidates for the board and any other elected position, and procedures for the nomination of candidates, consistent with the governing documents. A nomination or election procedure shall not be deemed reasonable if it disallows any member from nominating himself or herself for election to the board.

4) Specify the qualifications for voting, the voting power of each membership, the authenticity, validity, and effect of proxies, and the voting period for elections, including the times at which polls will open and close, consistent with the governing documents.

5) Specify a method of selecting one or three independent third parties as inspector or inspectors of elections utilizing one of the following methods:(A) Appointment of the inspector or inspectors by the board.(B) Election of the inspector or inspectors by the members of the association.(C) Any other method for selecting the inspector or inspectors.

6) Allow the inspector or inspectors to appoint and oversee additional persons to verify signatures and to count and tabulate votes as the inspector or inspectors deem appropriate, provided that the persons are independent third parties.

(b) Notwithstanding any other provision of law, the rules adopted pursuant to this section may provide for the nomination of candidates from the floor of membership meetings or nomination by any other manner. Those rules may permit write-in candidates for ballots.

Civil Code §5110. Inspector of Elections.(a) The association shall select an independent third party or parties as an inspector of elections. The number of inspectors of elections shall be one or three.(b) For the purposes of this section, an independent third party includes, but is not limited to, a volunteer poll worker with the county registrar of voters, a licensee of the California Board of Accountancy, or a notary public. An independent third party may be a member, but may not be a director or a candidate for director or be related to a director or to a candidate for director. An independent third party may not be a person, business entity, or subdivision of a business entity who is currently employed or under contract to the

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association for any compensable services unless expressly authorized by rules of the association adopted pursuant to paragraph (5) of subdivision (a) of Section 5105.(c) The inspector or inspectors of elections shall do all of the following:

1) Determine the number of memberships entitled to vote and the voting power of each.

2) Determine the authenticity, validity, and effect of proxies, if any.3) Receive ballots.4) Hear and determine all challenges and questions in any way arising out of or in

connection with the right to vote.5) Count and tabulate all votes.6) Determine when the polls shall close, consistent with the governing documents.7) Determine the tabulated results of the election.8) Perform any acts as may be proper to conduct the election with fairness to all

members in accordance with this article, the Corporations Code, and all applicable rules of the association regarding the conduct of the election that are not in conflict with this article.

(d) An inspector of elections shall perform all duties impartially, in good faith, to the best of the inspector of election’s ability, and as expeditiously as is practical. If there are three inspectors of elections, the decision or act of a majority shall be effective in all respects as the decision or act of all. Any report made by the inspector or inspectors of elections is prima facie evidence of the facts stated in the report.

Civil Code §5115. Ballots; Quorum; Cumulative Voting; Election by Mail; Inclusion of Text of Proposed Amendment of Governing Documents.(a) Ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member not less than 30 days prior to the deadline for voting. In order to preserve confidentiality, a voter may not be identified by name, address, or lot, parcel, or unit number on the ballot. The association shall use as a model those procedures used by California counties for ensuring confidentiality of vote by mail ballots, including all of the following:

1) The ballot itself is not signed by the voter, but is inserted into an envelope that is sealed. This envelope is inserted into a second envelope that is sealed. In the upper left hand corner of the second envelope, the voter shall sign the voter’s name, indicate the voter’s name, and indicate the address or separate interestidentifier that entitles the voter to vote.

2) The second envelope is addressed to the inspector or inspectors of elections, who will be tallying the votes. The envelope may be mailed or delivered by hand to a location specified by the inspector or inspectors of elections. The member may request a receipt for delivery.

(b) A quorum shall be required only if so stated in the governing documents or other provisions of law. If a quorum is required by the governing documents, each ballot received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum.(c) An association shall allow for cumulative voting using the secret ballot procedures provided in this section, if cumulative voting is provided for in the governing documents.(d) Except for the meeting to count the votes required in subdivision (a) of Section 5120, an election may be conducted entirely by mail unless otherwise specified in the governing documents.

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(e) In an election to approve an amendment of the governing documents, the text of the proposed amendment shall be delivered to the members with the ballot.

Civil Code §5120. Counting and Tabulation of Votes; Reporting of Tabulated Results.(a) All votes shall be counted and tabulated by the inspector or inspectors of elections, or the designee of the inspector of elections, in public at a properly noticed open meeting of the board or members. Any candidate or other member of the association may witness the counting and tabulation of the votes. No person, including a member of the association or an employee of the management company, shall open or otherwise review any ballot prior to the time and place at which the ballots are counted and tabulated. The inspector of elections, or the designee of the inspector of elections, may verify the member’s information and signature on the outer envelope prior to the meeting at which ballots are tabulated. Once a secret ballot is received by the inspector of elections, it shall be irrevocable.(b) The tabulated results of the election shall be promptly reported to the board and shall be recorded in the minutes of the next meeting of the board and shall be available for review by members of the association. Within 15 days of the election, the board shall give general notice pursuant to Section 4045 of the tabulated results of the election.

Civil Code §5125. Custody of Ballots.The sealed ballots at all times shall be in the custody of the inspector or inspectors of elections or at a location designated by the inspector or inspectors until after the tabulation of the vote, and until the time allowed by Section 5145 for challenging the election has expired, at which time custody shall be transferred to the association. If there is a recount or other challenge to the election process, the inspector or inspectors of elections shall, upon written request, make the ballots available for inspection and review by an association member or the member’s authorized representative. Any recount shall be conducted in a manner that preserves the confidentiality of the vote.

Civil Code §5130. Proxies; Definitions.(a) For purposes of this article, the following definitions shall apply:

1) “Proxy” means a written authorization signed by a member or the authorized representative of the member that gives another member or members the power to vote on behalf of that member.

2) “Signed” means the placing of the member’s name on the proxy (whether by manual signature, typewriting, telegraphic transmission, or otherwise) by the member or authorized representative of the member.

(b) Proxies shall not be construed or used in lieu of a ballot. An association may use proxies if permitted or required by the bylaws of the association and if those proxies meet the requirements of this article, other laws, and the governing documents, but the association shall not be required to prepare or distribute proxies pursuant to this article.(c) Any instruction given in a proxy issued for an election that directs the manner in which the proxyholder is to cast the vote shall be set forth on a separate page of the proxy that can be detached and given to the proxyholder to retain. The proxyholder shall cast the member’s vote by secret ballot. The proxy may be revoked by the member prior to the receipt of the ballot by the inspector of elections as described in Section 7613 of the Corporations Code.

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Civil Code §5135. Campaign Funding.(a) Association funds shall not be used for campaign purposes in connection with any association board election. Funds of the association shall not be used for campaign purposes in connection with any other association election except to the extent necessary to comply with duties of the association imposed by law.(b) For the purposes of this section, “campaign purposes” includes, but is not limited to, the following:

1) Expressly advocating the election or defeat of any candidate that is on the association election ballot.

2) Including the photograph or prominently featuring the name of any candidate on a communication from the association or its board, excepting the ballot, ballot materials, or a communication that is legally required, within 30 days of an election. This is not a campaign purpose if the communication is one for which subdivision (a) of Section 5105 requires that equal access be provided to another candidate or advocate.

Civil Code §5145. Civil Action for Violation of Article; Attorney’s Fees and Costs; Small Claims Court.(a) A member of an association may bring a civil action for declaratory or equitable relief for a violation of this article by the association, including, but not limited to, injunctive relief, restitution, or a combination thereof, within one year of the date the cause of action accrues. Upon a finding that the election procedures of this article, or the adoption of and adherence to rules provided by Article 5 (commencing with Section 4340) of Chapter 3, were not followed, a court may void any results of the election.(b) A member who prevails in a civil action to enforce the member’s rights pursuant to this article shall be entitled to reasonable attorney’s fees and court costs, and the court may impose a civil penalty of up to five hundred dollars ($500) for each violation, except that each identical violation shall be subject to only one penalty if the violation affects each member of the association equally. A prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation.(c) A cause of action under Sections 5100 to 5130, inclusive, with respect to access to association resources by a candidate or member advocating a point of view, the receipt of a ballot by a member, or the counting, tabulation, or reporting of, or access to, ballots for inspection and review after tabulation may be brought in small claims court if the amount of the demand does not exceed the jurisdiction of that court.

Article 5. Record Inspection

Civil Code §5200. Definitions.For the purposes of this article, the following definitions shall apply:(a) “Association records” means all of the following:

1) Any financial document required to be provided to a member in Article 7 (commencing with Section 5300) or in Sections 5565 and 5810.

2) Any financial document or statement required to be provided in Article 2 (commencing with Section 4525) of Chapter 4.

3) Interim financial statements, periodic or as compiled, containing any of the following:(A) Balance sheet.

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(B) Income and expense statement.(C) Budget comparison.(D) General ledger. A “general ledger” is a report that shows all transactions

that occurred in an association account over a specified period of time.The records described in this paragraph shall be prepared in accordance with an accrual or modified accrual basis of accounting.

4) Executed contracts not otherwise privileged under law.5) Written board approval of vendor or contractor proposals or invoices.6) State and federal tax returns.7) Reserve account balances and records of payments made from reserve

accounts.8) Agendas and minutes of meetings of the members, the board, and any

committees appointed by the board pursuant to Section 7212 of the Corporations Code; excluding, however, minutes and other information from executive sessions of the board as described in Article 2 (commencing with Section 4900).

9) Membership lists, including name, property address, and mailing address, but not including information for members who have opted out pursuant to Section 5220.

10) Check registers.11) The governing documents.12) An accounting prepared pursuant to subdivision (b) of Section 5520.13) An “enhanced association record” as defined in subdivision (b).

(b) “Enhanced association records” means invoices, receipts and canceled checks for payments made by the association, purchase orders approved by the association, credit card statements for credit cards issued in the name of the association, statements for services rendered, and reimbursement requests submitted to the association.

Civil Code §5205. Availability to Members.(a) The association shall make available association records for the time periods and within the timeframes provided in Section 5210 for inspection and copying by a member of the association, or the member’s designated representative.(b) A member of the association may designate another person to inspect and copy the specified association records on the member’s behalf. The member shall make this designation in writing.(c) The association shall make the specified association records available for inspection and copying in the association’s business office within the common interest development.(d) If the association does not have a business office within the development, the association shall make the specified association records available for inspection and copying at a place agreed to by the requesting member and the association.(e) If the association and the requesting member cannot agree upon a place for inspection and copying pursuant to subdivision (d) or if the requesting member submits a written request directly to the association for copies of specifically identified records, the association may satisfy the requirement to make the association records available for inspection and copying by delivering copies of the specifically identified records to the member by individual delivery pursuant to Section 4040 within the timeframes set forth in subdivision (b) of Section 5210.(f) The association may bill the requesting member for the direct and actual cost of copying and mailing requested documents. The association shall inform the member of

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the amount of the copying and mailing costs, and the member shall agree to pay those costs, before copying and sending the requested documents.(g) In addition to the direct and actual costs of copying and mailing, the association may bill the requesting member an amount not in excess of ten dollars ($10) per hour, and not to exceed two hundred dollars ($200) total per written request, for the time actually and reasonably involved in redacting an enhanced association record. If the enhanced association record includes a reimbursement request, the person submitting the reimbursement request shall be solely responsible for removing all personal identification information from the request. The association shall inform the member of the estimated costs, and the member shall agree to pay those costs, before retrieving the requested documents.(h) Requesting parties shall have the option of receiving specifically identified records by electronic transmission or machine-readable storage media as long as those records can be transmitted in a redacted format that does not allow the records to be altered. The cost of duplication shall be limited to the direct cost of producing the copy of a record in that electronic format. The association may deliver specifically identified records by electronic transmission or machine-readable storage media as long as those records can be transmitted in a redacted format that prevents the records from being altered.

Civil Code §5210. Time Periods of Required Availability.(a) Association records are subject to member inspection for the following time periods:

1) For the current fiscal year and for each of the previous two fiscal years.2) Notwithstanding paragraph (1), minutes of member and board meetings are

subject to inspection permanently. If a committee has decisionmaking authority, minutes of the meetings of that committee shall be made available commencing January 1, 2007, and shall thereafter be permanently subject to inspection.

(b) When a member properly requests access to association records, access to the requested records shall be granted within the following time periods:

1) Association records prepared during the current fiscal year, within 10 business days following the association’s receipt of the request.

2) Association records prepared during the previous two fiscal years, within 30 calendar days following the association’s receipt of the request.

3) Any record or statement available pursuant to Article 2 (commencing with Section 4525) of Chapter 4, Article 7 (commencing with Section 5300), Section 5565, or Section 5810, within the timeframe specified therein.

4) Minutes of member and board meetings, within the timeframe specified in subdivision (a) of Section 4950.

5) Minutes of meetings of committees with decisionmaking authority for meetings commencing on or after January 1, 2007, within 15 calendar days following approval.

6) Membership list, within the timeframe specified in Section 8330 of the Corporations Code.

(c) There shall be no liability pursuant to this article for an association that fails to retain records for the periods specified in subdivision (a) that were created prior to January 1, 2006.

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Civil Code §5215. Redaction.(a) Except as provided in subdivision (b), the association may withhold or redact information from the association records if any of the following are true:

1) The release of the information is reasonably likely to lead to identity theft. For the purposes of this section, “identity theft” means the unauthorized use of another person’s personal identifying information to obtain credit, goods, services, money, or property. Examples of information that may be withheld or redacted pursuant to this paragraph include bank account numbers of members or vendors, social security or tax identification numbers, and check, stock, and credit card numbers.

2) The release of the information is reasonably likely to lead to fraud in connection with the association.

3) The information is privileged under law. Examples include documents subject to attorney-client privilege or relating to litigation in which the association is or may become involved, and confidential settlement agreements.

4) The release of the information is reasonably likely to compromise the privacy of an individual member of the association.

5) The information contains any of the following:(A) Records of goods or services provided a la carte to individual members of

the association for which the association received monetary consideration other than assessments.

(B) Records of disciplinary actions, collection activities, or payment plans of members other than the member requesting the records.

(C) Any person’s personal identification information, including, without limitation, social security number, tax identification number, driver’s license number, credit card account numbers, bank account number, and bank routing number.

(D) Minutes and other information from executive sessions of the board as described in Article 2 (commencing with Section 4900), except forexecuted contracts not otherwise privileged. Privileged contracts shall not include contracts for maintenance, management, or legal services.

(E) Personnel records other than the payroll records required to be provided under subdivision (b).

(F) Interior architectural plans, including security features, for individual homes.

(b) Except as provided by the attorney-client privilege, the association may not withhold or redact information concerning the compensation paid to employees, vendors, or contractors. Compensation information for individual employees shall be set forth by job classification or title, not by the employee’s name, social security number, or other personal information.(c) No association, officer, director, employee, agent, or volunteer of an association shall be liable for damages to a member of the association or any third party as the result of identity theft or other breach of privacy because of the failure to withhold or redact that member’s information under this section unless the failure to withhold or redact the information was intentional, willful, or negligent.(d) If requested by the requesting member, an association that denies or redacts records shall provide a written explanation specifying the legal basis for withholding or redactingthe requested records.

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Civil Code §5220. Information Sharing; Member Opt Out.A member of the association may opt out of the sharing of that member’s name, property address, and mailing address by notifying the association in writing that the member prefers to be contacted via the alternative process described in subdivision (c) of Section 8330 of the Corporations Code. This opt out shall remain in effect until changed by the member.

Civil Code §5225. Request for Membership List.A member requesting the membership list shall state the purpose for which the list is requested which purpose shall be reasonably related to the requester’s interest as a member. If the association reasonably believes that the information in the list will be used for another purpose, it may deny the member access to the list. If the request is denied, in any subsequent action brought by the member under Section 5235, the association shall have the burden to prove that the member would have allowed use of the information for purposes unrelated to the member’s interest as a member.

Civil Code §5230. Prohibited Use of List.(a) The association records, and any information from them, may not be sold, used for a commercial purpose, or used for any other purpose not reasonably related to a member’sinterest as a member. An association may bring an action against any person who violates this article for injunctive relief and for actual damages to the association caused by the violation.(b) This article may not be construed to limit the right of an association to damages for misuse of information obtained from the association records pursuant to this article or to limit the right of an association to injunctive relief to stop the misuse of this information.(c) An association shall be entitled to recover reasonable costs and expenses, including reasonable attorney’s fees, in a successful action to enforce its rights under this article.

Civil Code §5235. Remedies.(a) A member may bring an action to enforce that member’s right to inspect and copy the association records. If a court finds that the association unreasonably withheld access to the association records, the court shall award the member reasonable costs and expenses, including reasonable attorney’s fees, and may assess a civil penalty of up to five hundred dollars ($500) for the denial of each separate written request.(b) A cause of action under this section may be brought in small claims court if the amount of the demand does not exceed the jurisdiction of that court.(c) A prevailing association may recover any costs if the court finds the action to be frivolous, unreasonable, or without foundation.

Civil Code §5240. Construction with Corporations Code.(a) As applied to an association and its members, the provisions of this article are intended to supersede the provisions of Sections 8330 and 8333 of the Corporations Code to the extent those sections are inconsistent.(b) Except as provided in subdivision (a), members of the association shall have access to association records, including accounting books and records and membership lists, in accordance with Article 3 (commencing with Section 8330) of Chapter 13 of Part 3 of Division 2 of Title 1 of the Corporations Code.(c) The provisions of this article apply to any community service organization or similar entity that is related to the association, and to any nonprofit entity that provides services

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to a common interest development under a declaration of trust. This article shall operate to give a member of the organization or entity a right to inspect and copy the records of that organization or entity equivalent to that granted to association members by this article.(d) The provisions of this article shall not apply to any common interest development in which separate interests are being offered for sale by a subdivider under the authority of a public report issued by the Department of Real Estate so long as the subdivider or all subdividers offering those separate interests for sale, or any employees of those subdividers or any other person who receives direct or indirect compensation from any of those subdividers, comprise a majority of the directors. Notwithstanding the foregoing, this article shall apply to that common interest development no later than 10 years after the close of escrow for the first sale of a separate interest to a member of the general public pursuant to the public report issued for the first phase of the development.

Article 6. Recordkeeping

Civil Code §5260. Requests to be Delivered in Writing.To be effective, any of the following requests shall be delivered in writing to the association, pursuant to Section 4035:(a) A request to change the member’s information in the association membership list.(b) A request to add or remove a second address for delivery of individual notices to the member, pursuant to subdivision (b) of Section 4040.(c) A request for individual delivery of general notices to the member, pursuant to subdivision (b) of Section 4045, or a request to cancel a prior request for individual delivery of general notices.(d) A request to opt out of the membership list pursuant to Section 5220, or a request to cancel a prior request to opt out of the membership list.(e) A request to receive a full copy of a specified annual budget report or annual policy statement pursuant to Section 5320.(f) A request to receive all reports in full, pursuant to subdivision (b) of Section 5320, or a request to cancel a prior request to receive all reports in full.

Article 7. Annual Reports

Civil Code §5300. Annual Budget Report.(a) Notwithstanding a contrary provision in the governing documents, an association shall distribute an annual budget report 30 to 90 days before the end of its fiscal year.(b) Unless the governing documents impose more stringent standards, the annual budgetreport shall include all of the following information:

1) A pro forma operating budget, showing the estimated revenue and expenses on an accrual basis.

2) A summary of the association’s reserves, prepared pursuant to Section 5565.3) A summary of the reserve funding plan adopted by the board, as specified in

paragraph (5) of subdivision (b) of Section 5550. The summary shall include notice to members that the full reserve study plan is available upon request, and the association shall provide the full reserve plan to any member upon request.

4) A statement as to whether the board has determined to defer or not undertake repairs or replacement of any major component with a remaining life of 30

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years or less, including a justification for the deferral or decision not to undertake the repairs or replacement.

5) A statement as to whether the board, consistent with the reserve funding plan adopted pursuant to Section 5560, has determined or anticipates that the levy of one or more special assessments will be required to repair, replace, or restore any major component or to provide adequate reserves therefor. If so, the statement shall also set out the estimated amount, commencement date, and duration of the assessment.

6) A statement as to the mechanism or mechanisms by which the board will fund reserves to repair or replace major components, including assessments, borrowing, use of other assets, deferral of selected replacements or repairs, or alternative mechanisms.

7) A general statement addressing the procedures used for the calculation and establishment of those reserves to defray the future repair, replacement, or additions to those major components that the association is obligated to maintain. The statement shall include, but need not be limited to, reserve calculations made using the formula described in paragraph (4) of subdivision (b) of Section 5570, and may not assume a rate of return on cash reserves in excess of 2 percent above the discount rate published by the Federal Reserve Bank of San Francisco at the time the calculation was made.

8) A statement as to whether the association has any outstanding loans with an original term of more than one year, including the payee, interest rate, amount outstanding, annual payment, and when the loan is scheduled to be retired.

9) A summary of the association’s property, general liability, earthquake, flood, and fidelity insurance policies. For each policy, the summary shall include the name of the insurer, the type of insurance, the policy limit, and the amount of the deductible, if any. To the extent that any of the required information is specified in the insurance policy declaration page, the association may meet its obligation to disclose that information by making copies of that page and distributing it with the annual budget report. The summary distributed pursuant to this paragraph shall contain, in at least 10-point boldface type, the following statement:“This summary of the association’s policies of insurance provides only certain information, as required by Section 5300 of the Civil Code, and should not be considered a substitute for the complete policy terms and conditions contained in the actual policies of insurance. Any association member may, upon request and provision of reasonable notice, review the association’s insurance policies and, upon request and payment of reasonable duplication charges, obtain copies of those policies. Although the association maintains the policies of insurance specified in this summary, the association’s policies of insurance may not cover your property, including personal property or real property improvements to or around your dwelling, or personal injuries or other losses that occur within or around your dwelling. Even if a loss is covered, you may nevertheless be responsible for paying all or a portion of any deductible that applies. Association members should consult with their individual insurance broker or agent for appropriate additional coverage.”

(c) The annual budget report shall be made available to the members pursuant to Section 5320.

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(d) The summary of the association’s reserves disclosed pursuant to paragraph (2) of subdivision (b) shall not be admissible in evidence to show improper financial management of an association, provided that other relevant and competent evidence of the financial condition of the association is not made inadmissible by this provision.(e) The Assessment and Reserve Funding Disclosure Summary form, prepared pursuant to Section 5570, shall accompany each annual budget report or summary of the annual budget report that is delivered pursuant to this article.

Civil Code §5305. Standards for Preparation of Review of Financial Statement of Association.Unless the governing documents impose more stringent standards, a review of the financial statement of the association shall be prepared in accordance with generally accepted accounting principles by a licensee of the California Board of Accountancy for any fiscal year in which the gross income to the association exceeds seventy-five thousand dollars ($75,000). A copy of the review of the financial statement shall be distributed to the members within 120 days after the close of each fiscal year, by individual delivery pursuant to Section 4040.

Civil Code §5310. Annual Policy Statement; Contents.(a) Within 30 to 90 days before the end of its fiscal year, the board shall distribute an annual policy statement that provides the members with information about association policies. The annual policy statement shall include all of the following information:

1) The name and address of the person designated to receive official communications to the association, pursuant to Section 4035.

2) A statement explaining that a member may submit a request to have notices sent to up to two different specified addresses, pursuant to subdivision (b) of Section 4040.

3) The location, if any, designated for posting of a general notice, pursuant to paragraph (3) of subdivision (a) of Section 4045.

4) Notice of a member’s option to receive general notices by individual delivery, pursuant to subdivision (b) of Section 4045.

5) Notice of a member’s right to receive copies of meeting minutes, pursuant to subdivision (b) of Section 4950.

6) The statement of assessment collection policies required by Section 5730.7) A statement describing the association’s policies and practices in enforcing lien

rights or other legal remedies for default in the payment of assessments.8) A statement describing the association’s discipline policy, if any, including any

schedule of penalties for violations of the governing documents pursuant to Section 5850.

9) A summary of dispute resolution procedures, pursuant to Sections 5920 and 5965.

10) A summary of any requirements for association approval of a physical change to property, pursuant to Section 4765.

11) The mailing address for overnight payment of assessments, pursuant to Section 5655.

12) Any other information that is required by law or the governing documents or that the board determines to be appropriate for inclusion.

(b) The annual policy statement shall be made available to the members pursuant to Section 5320.

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Civil Code §5320. Delivery of Reports.(a) When a report is prepared pursuant to Section 5300 or 5310, the association shall deliver one of the following documents to all members, by individual delivery pursuant to Section 4040:

1) The full report.2) A summary of the report. The summary shall include a general description of

the content of the report. Instructions on how to request a complete copy of the report at no cost to the member shall be printed in at least 10-point boldface type on the first page of the summary.

(b) Notwithstanding subdivision (a), if a member has requested to receive all reports in full, the association shall deliver the full report to that member, rather than a summary of the report.

Article 8. Conflict of Interest

Civil Code §5350. Applicability of Corporations Code Provisions; Prohibited Actions.(a) Notwithstanding any other law, and regardless of whether an association is incorporated or unincorporated, the provisions of Sections 7233 and 7234 of the Corporations Code shall apply to any contract or other transaction authorized, approved, or ratified by the board or a committee of the board.(b) A director or member of a committee shall not vote on any of the following matters:

1) Discipline of the director or committee member.2) An assessment against the director or committee member for damage to the

common area or facilities.3) A request, by the director or committee member, for a payment plan for

overdue assessments.4) A decision whether to foreclose on a lien on the separate interest of the director

or committee member.5) Review of a proposed physical change to the separate interest of the director or

committee member.6) A grant of exclusive use common area to the director or committee member.

(c) Nothing in this section limits any other provision of law or the governing documents that govern a decision in which a director may have an interest.

Article 9. Managing Agent

Civil Code §5375. Prospective Managing Agent; Written Disclosures.A prospective managing agent of a common interest development shall provide a written statement to the board as soon as practicable, but in no event more than 90 days, before entering into a management agreement which shall contain all of the following information concerning the managing agent:(a) The names and business addresses of the owners or general partners of the managing agent. If the managing agent is a corporation, the written statement shall include the names and business addresses of the directors and officers and shareholders holding greater than 10 percent of the shares of the corporation.

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(b) Whether or not any relevant licenses such as architectural design, construction, engineering, real estate, or accounting have been issued by this state and are currently held by the persons specified in subdivision (a). If a license is currently held by any of those persons, the statement shall contain the following information:

1) What license is held.2) The dates the license is valid.3) The name of the licensee appearing on that license.

(c) Whether or not any relevant professional certifications or designations such as architectural design, construction, engineering, real property management, or accounting are currently held by any of the persons specified in subdivision (a), including, but not limited to, a professional common interest development manager. If any certification or designation is held, the statement shall include the following information:

1) What the certification or designation is and what entity issued it.2) The dates the certification or designation is valid.3) The names in which the certification or designation is held.

Civil Code §5380. Managing Agent; Deposit of Funds Received; Requirements; Separate Record; Commingling of Funds.(a) A managing agent of a common interest development who accepts or receives funds belonging to the association shall deposit those funds that are not placed into an escrow account with a bank, savings association, or credit union or into an account under the control of the association, into a trust fund account maintained by the managing agent in a bank, savings association, or credit union in this state. All funds deposited by the managing agent in the trust fund account shall be kept in this state in a financial institution, as defined in Section 31041 of the Financial Code, which is insured by the federal government, and shall be maintained there until disbursed in accordance with written instructions from the association entitled to the funds.(b) At the written request of the board, the funds the managing agent accepts or receives on behalf of the association shall be deposited into an interest-bearing account in a bank, savings association, or credit union in this state, provided all of the following requirements are met:

1) The account is in the name of the managing agent as trustee for the association or in the name of the association.

2) All of the funds in the account are covered by insurance provided by an agency of the federal government.

3) The funds in the account are kept separate, distinct, and apart from the funds belonging to the managing agent or to any other person for whom the managing agent holds funds in trust except that the funds of various associations may be commingled as permitted pursuant to subdivision (d).

4) The managing agent discloses to the board the nature of the account, how interest will be calculated and paid, whether service charges will be paid to the depository and by whom, and any notice requirements or penalties for withdrawal of funds from the account.

5) No interest earned on funds in the account shall inure directly or indirectly to the benefit of the managing agent or the managing agent’s employees.

(c) The managing agent shall maintain a separate record of the receipt and disposition of all funds described in this section, including any interest earned on the funds.

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(d) The managing agent shall not commingle the funds of the association with the managing agent’s own money or with the money of others that the managing agent receives or accepts, unless all of the following requirements are met:

1) The managing agent commingled the funds of various associations on or before February 26, 1990, and has obtained a written agreement with the board of each association that the managing agent will maintain a fidelity and surety bond in an amount that provides adequate protection to the associations as agreed upon by the managing agent and the board of each association.

2) The managing agent discloses in the written agreement whether the managing agent is deriving benefits from the commingled account or the bank, credit union, or savings institution where the moneys will be on deposit.

3) The written agreement provided pursuant to this subdivision includes, but is not limited to, the name and address of the bonding companies, the amount of the bonds, and the expiration dates of the bonds.

4) If there are any changes in the bond coverage or the companies providing the coverage, the managing agent discloses that fact to the board of each affected association as soon as practical, but in no event more than 10 days after the change.

5) The bonds assure the protection of the association and provide the association at least 10 days’ notice prior to cancellation.

6) Completed payments on the behalf of the association are deposited within 24 hours or the next business day and do not remain commingled for more than 10 calendar days.

(e) The prevailing party in an action to enforce this section shall be entitled to recover reasonable legal fees and court costs.(f) As used in this section, “completed payment” means funds received that clearly identify the account to which the funds are to be credited.

Civil Code §5385. “Managing Agent” Does Not Include Full-Time Employee of Association.For the purposes of this article, “managing agent” does not include a full-time employee of the association.

Article 10. Government Assistance

Civil Code §5400. Online Education Course Regarding Role, Duties, Laws and Responsibilities of Board Directors and Prospective Board Directors and Nonjudicial Foreclosure Process.To the extent existing funds are available, the Department of Consumer Affairs and the Department of Real Estate shall develop an online education course for the board regarding the role, duties, laws, and responsibilities of directors and prospective directors, and the nonjudicial foreclosure process.

Civil Code §5405. Assistance with Identification of Common Interest Developments; Submission of Information by Each Association; Time; Notice of Change of Address; Penalty for Violation of Filing Requirements; Availability of Information.(a) To assist with the identification of common interest developments, each association, whether incorporated or unincorporated, shall submit to the Secretary of State, on a form and for a fee not to exceed thirty dollars ($30) that the Secretary of State shall prescribe,

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the following information concerning the association and the development that it manages:

1) A statement that the association is formed to manage a common interest development under the Davis-Stirling Common Interest Development Act.

2) The name of the association.3) The street address of the business or corporate office of the association, if any.4) The street address of the association’s onsite office, if different from the street

address of the business or corporate office, or if there is no onsite office, the street address of the responsible officer or managing agent of the association.

5) The name, address, and either the daytime telephone number or e-mail address of the president of the association, other than the address, telephone number, or e-mail address of the association’s onsite office or managing agent.

6) The name, street address, and daytime telephone number of the association’s managing agent, if any.

7) The county, and, if in an incorporated area, the city in which the development is physically located. If the boundaries of the development are physically located in more than one county, each of the counties in which it is located.

8) If the development is in an unincorporated area, the city closest in proximity to the development.

9) The front street and nearest cross street of the physical location of the development.

10) The type of common interest development managed by the association.11) The number of separate interests in the development.

b) The association shall submit the information required by this section as follows:1) By incorporated associations, within 90 days after the filing of its original

articles of incorporation, and thereafter at the time the association files its statement of principal business activity with the Secretary of State pursuant to Section 8210 of the Corporations Code.

2) By unincorporated associations, in July 2003, and in that same month biennially thereafter. Upon changing its status to that of a corporation, the association shall comply with the filing deadlines in paragraph (1).

(c) The association shall notify the Secretary of State of any change in the street address of the association’s onsite office or of the responsible officer or managing agent of the association in the form and for a fee prescribed by the Secretary of State, within 60 days of the change.(d) The penalty for an incorporated association’s noncompliance with the initial or biennial filing requirements of this section shall be suspension of the association’s rights, privileges, and powers as a corporation and monetary penalties, to the same extent and in the same manner as suspension and monetary penalties imposed pursuant to Section 8810 of the Corporations Code.(e) The statement required by this section may be filed, notwithstanding suspension of the corporate powers, rights, and privileges under this section or under provisions of the Revenue and Taxation Code. Upon the filing of a statement under this section by a corporation that has suffered suspension under this section, the Secretary of State shall certify that fact to the Franchise Tax Board and the corporation may thereupon be relieved from suspension, unless the corporation is held in suspension by the Franchise Tax Board by reason of Section 23301, 23301.5, or 23775 of the Revenue and Taxation Code.

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(f) The Secretary of State shall make the information submitted pursuant to paragraph (5) of subdivision (a) available only for governmental purposes and only to Members of the Legislature and the Business, Transportation and Housing Agency, upon written request. All other information submitted pursuant to this section shall be subject to public inspection pursuant to the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code). The information submitted pursuant to this section shall be made available for governmental or public inspection. (g) Whenever any form is filed pursuant to this section, it supersedes any previously filed form.(h) The Secretary of State may destroy or otherwise dispose of any form filed pursuant to this section after it has been superseded by the filing of a new form.

Chapter 7. Finances

Article 1. Accounting

Civil Code §5500. Duties of Board.Unless the governing documents impose more stringent standards, the board shall do all of the following:(a) Review a current reconciliation of the association’s operating accounts on at least a quarterly basis.(b) Review a current reconciliation of the association’s reserve accounts on at least a quarterly basis.(c) Review, on at least a quarterly basis, the current year’s actual reserve revenues and expenses compared to the current year’s budget.(d) Review the latest account statements prepared by the financial institutions where the association has its operating and reserve accounts.(e) Review an income and expense statement for the association’s operating and reserve accounts on at least a quarterly basis.

Article 2. Use of Reserve Funds

Civil Code §5510. Signatures Required for Withdrawals; Purpose of Expenditure.(a) The signatures of at least two persons, who shall be directors, or one officer who is not a director and one who is a director, shall be required for the withdrawal of moneys from the association’s reserve accounts.(b) The board shall not expend funds designated as reserve funds for any purpose other than the repair, restoration, replacement, or maintenance of, or litigation involving the repair, restoration, replacement, or maintenance of, major components that the association is obligated to repair, restore, replace, or maintain and for which the reserve fund was established.

Civil Code §5515. Temporary Transfers to General Operating Fund.(a) Notwithstanding Section 5510, the board may authorize the temporary transfer of moneys from a reserve fund to the association’s general operating fund to meet short-term cashflow requirements or other expenses, if the board has provided notice of the intent to consider the transfer in a board meeting notice provided pursuant to Section 4920.

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(b) The notice shall include the reasons the transfer is needed, some of the options for repayment, and whether a special assessment may be considered.(c) If the board authorizes the transfer, the board shall issue a written finding, recorded in the board’s minutes, explaining the reasons that the transfer is needed, and describing when and how the moneys will be repaid to the reserve fund.(d) The transferred funds shall be restored to the reserve fund within one year of the date of the initial transfer, except that the board may, after giving the same notice required for considering a transfer, and, upon making a finding supported by documentation that a temporary delay would be in the best interests of the common interest development, temporarily delay the restoration.(e) The board shall exercise prudent fiscal management in maintaining the integrity of the reserve account, and shall, if necessary, levy a special assessment to recover the full amount of the expended funds within the time limits required by this section. This special assessment is subject to the limitation imposed by Section 5605. The board may, at its discretion, extend the date the payment on the special assessment is due. Any extension shall not prevent the board from pursuing any legal remedy to enforce the collection of an unpaid special assessment.

Civil Code §5520. Notice of Action; Accounting of Expenses.(a) When the decision is made to use reserve funds or to temporarily transfer moneys from the reserve fund to pay for litigation pursuant to subdivision (b) of Section 5510, the association shall provide general notice pursuant to Section 4045 of that decision, and of the availability of an accounting of those expenses.(b) Unless the governing documents impose more stringent standards, the association shall make an accounting of expenses related to the litigation on at least a quarterly basis. The accounting shall be made available for inspection by members of the association at the association’s office.

Article 3. Reserve Planning

Civil Code §5550. Inspection of Components; Study Minimum Requirements.(a) At least once every three years, the board shall cause to be conducted a reasonably competent and diligent visual inspection of the accessible areas of the major components that the association is obligated to repair, replace, restore, or maintain as part of a study of the reserve account requirements of the common interest development, if the current replacement value of the major components is equal to or greater than one-half of the gross budget of the association, excluding the association’s reserve account for that period. The board shall review this study, or cause it to be reviewed, annually and shall consider and implement necessary adjustments to the board’s analysis of the reserve account requirements as a result of that review.(b) The study required by this section shall at a minimum include:

1) Identification of the major components that the association is obligated to repair, replace, restore, or maintain that, as of the date of the study, have a remaining useful life of less than 30 years.

2) Identification of the probable remaining useful life of the components identified in paragraph (1) as of the date of the study.

3) An estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in paragraph (1).

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4) An estimate of the total annual contribution necessary to defray the cost to repair, replace, restore, or maintain the components identified in paragraph (1) during and at the end of their useful life, after subtracting total reserve funds as of the date of the study.

5) A reserve funding plan that indicates how the association plans to fund the contribution identified in paragraph (4) to meet the association’s obligation for the repair and replacement of all major components with an expected remaining life of 30 years or less, not including those components that the board has determined will not be replaced or repaired.

Civil Code §5560. Reserve Funding Plan; Inclusion of Schedule of Change in Assessments; Adoption by Board; Separate Approval of Assessment Increase.(a) The reserve funding plan required by Section 5550 shall include a schedule of the date and amount of any change in regular or special assessments that would be needed to sufficiently fund the reserve funding plan.(b) The plan shall be adopted by the board at an open meeting before the membership of the association as described in Article 2 (commencing with Section 4900) of Chapter 6.(c) If the board determines that an assessment increase is necessary to fund the reserve funding plan, any increase shall be approved in a separate action of the board that is consistent with the procedure described in Section 5605.

Civil Code §5565. Summary of Association’s Reserves; Contents.The summary of the association’s reserves required by paragraph (2) of subdivision (b) of Section 5300 shall be based on the most recent review or study conducted pursuant to Section 5550, shall be based only on assets held in cash or cash equivalents, shall be printed in boldface type, and shall include all of the following:(a) The current estimated replacement cost, estimated remaining life, and estimated useful life of each major component.(b) As of the end of the fiscal year for which the study is prepared:

1) The current estimate of the amount of cash reserves necessary to repair, replace, restore, or maintain the major components.

2) The current amount of accumulated cash reserves actually set aside to repair, replace, restore, or maintain major components.

3) If applicable, the amount of funds received from either a compensatory damage award or settlement to an association from any person for injuries to property, real or personal, arising out of any construction or design defects, and the expenditure or disposition of funds, including the amounts expended for the direct and indirect costs of repair of construction or design defects. These amounts shall be reported at the end of the fiscal year for which the study is prepared as separate line items under cash reserves pursuant to paragraph (2). Instead of complying with the requirements set forth in this paragraph, an association that is obligated to issue a review of its financial statement pursuant to Section 5305 may include in the review a statement containing all of the information required by this paragraph.

(c) The percentage that the amount determined for purposes of paragraph (2) of subdivision (b) equals the amount determined for purposes of paragraph (1) of subdivision (b).(d) The current deficiency in reserve funding expressed on a per unit basis. The figure shall be calculated by subtracting the amount determined for purposes of paragraph (2) of

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subdivision (b) from the amount determined for purposes of paragraph (1) of subdivision (b) and then dividing the result by the number of separate interests within the association, except that if assessments vary by the size or type of ownership interest, then theassociation shall calculate the current deficiency in a manner that reflects the variation.

Civil Code §5570. Form for Disclosure of Fiscal Matters.(a) The disclosures required by this article with regard to an association or a property shall be summarized on the following form:Assessment and Reserve Funding Disclosure Summary For the Fiscal Year Ending ____

1) The regular assessment per ownership interest is $_____ per ____. Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be found on page _____ of the attached summary.

2) Additional regular or special assessments that have already been scheduled to be imposed or charged, regardless of the purpose, if they have been approved by the board and/or members:

Date assessment will be due:

Amount per ownership interest per month or year (If assessments are variable, see noteimmediately below):

Purpose of the assessment:

Total:

Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be found on page ____ of the attached report.

3) Based upon the most recent reserve study and other information available to the board of directors, will currently projected reserve account balances be sufficient at the end of each year to meet the association's obligation for repair and/or replacement of major components during the next 30 years?Yes _____ No _____

4) If the answer to (3) is no, what additional assessments or other contributions to reserves would be necessary to ensure that sufficient reserve funds will be available each year during the next 30 years that have not yet been approved by the board or the members?

Approximate date assessment will be due: Amount per ownership interest per month or year:

Total:

5) All major components are included in the reserve study and are included in its calculations.

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6) Based on the method of calculation in paragraph (4) of subdivision (b) of Section 5570, the estimated amount required in the reserve fund at the end of the current fiscal year is $____, based in whole or in part on the last reserve study or update prepared by ____ as of ____ (month), ____ (year). The projected reserve fund cash balance at the end of the current fiscal year is $____, resulting in reserves being ____ percent funded at this date.If an alternate, but generally accepted, method of calculation is also used, the required reserve amount is $____. (See attached explanation)

7) Based on the method of calculation in paragraph (4) of subdivision (b) of Section 5570 of the Civil Code, the estimated amount required in the reserve

8) fund at the end of each of the next five budget years is $______, and the projected reserve fund cash balance in each of those years, taking into account only assessments already approved and other known revenues, is $______, leaving the reserve at ______ percent funding. If the reserve funding plan approved by the association is implemented, the projected reserve fund cash balance in each of those years will be $______, leaving the reserve at ______ percent funding.Note: The financial representations set forth in this summary are based on the best estimates of the preparer at that time. The estimates are subject to change. At the time this summary was prepared, the assumed long-term before-tax interest rate earned on reserve funds was ____ percent per year, and the assumed long-term inflation rate to be applied to major component repair and replacement costs was ____ percent per year.

(b) For the purposes of preparing a summary pursuant to this section:1) “Estimated remaining useful life” means the time reasonably calculated to

remain before a major component will require replacement.2) “Major component” has the meaning used in Section 55530. Components with

an estimated remaining useful life of more than 30 years may be included in a study as a capital asset or disregarded from the reserve calculation, so long as the decision is revealed in the reserve study report and reported in the Assessment and Reserve Funding Disclosure Summary.

3) The form set out in subdivision (a) shall accompany each annual budget report or summary thereof that is delivered pursuant to Section 5300. The form may be supplemented or modified to clarify the information delivered, so long as the minimum information set out in subdivision (a) is provided.

4) For the purpose of the report and summary, the amount of reserves needed to be accumulated for a component at a given time shall be computed as the current cost of replacement or repair multiplied by the number of years the component has been in service divided by the useful life of the component. This shall not be construed to require the board to fund reserves in accordance with this calculation.

Civil Code §5580. Community Service Organization Reports; Information on Components to Complete Disclosures or Reserve Reports; Reliance Upon and Access to Information.(a) Unless the governing documents impose more stringent standards, any community service organization whose funding from the association or its members exceeds 10 percent of the organization’s annual budget shall prepare and distribute to the association a report that meets the requirements of Section 5012 of the Corporations Code, and that

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describes in detail administrative costs and identifies the payees of those costs in a manner consistent with the provisions of Article 5 (commencing with Section 5200) of Chapter 6.(b) If the community service organization does not comply with the standards, the report shall disclose the noncompliance in detail. If a community service organization is responsible for the maintenance of major components for which an association would otherwise be responsible, the community service organization shall supply to the association the information regarding those components that the association would use to complete disclosures and reserve reports required under this article and Section 5300. An association may rely upon information received from a community service organization, and shall provide access to the information pursuant to the provisions of Article 5 (commencing with Section 5200) of Chapter 6.

Chapter 8. Assessments and Assessment Collection

Article 1. Establishment and Imposition of Assessments

Civil Code §5600. Levy of Assessments; Limit on Amount.(a) Except as provided in Section 5605, the association shall levy regular and special assessments sufficient to perform its obligations under the governing documents and this act.(b) An association shall not impose or collect an assessment or fee that exceeds the amount necessary to defray the costs for which it is levied.

Civil Code §5605. Limitation on Increases.(a) Annual increases in regular assessments for any fiscal year shall not be imposed unless the board has complied with paragraphs (1), (2), (4), (5), (6), (7), and (8) of subdivision (b) of Section 5300 with respect to that fiscal year, or has obtained the approval of a majority of a quorum of members, pursuant to Section 4070, at a member meeting or election.(b) Notwithstanding more restrictive limitations placed on the board by the governing documents, the board may not impose a regular assessment that is more than 20 percent greater than the regular assessment for the association’s preceding fiscal year or impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year without the approval of a majority of a quorum of members, pursuant to Section 4070, at a member meeting or election.(c) For the purposes of this section, “quorum” means more than 50 percent of the members.

Civil Code §5610. Increases for Emergency Situations.Section 5605 does not limit assessment increases necessary for emergency situations. For purposes of this section, an emergency situation is any one of the following:(a) An extraordinary expense required by an order of a court.(b) An extraordinary expense necessary to repair or maintain the common interest development or any part of it for which the association is responsible where a threat to personal safety on the property is discovered.(c) An extraordinary expense necessary to repair or maintain the common interest development or any part of it for which the association is responsible that could not have been reasonably foreseen by the board in preparing and distributing the annual budget

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report under Section 5300. However, prior to the imposition or collection of an assessment under this subdivision, the board shall pass a resolution containing written findings as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process, and the resolution shall be distributed to the members with the notice of assessment.

Civil Code §5615. Individual Notice of Increases.The association shall provide individual notice pursuant to Section 4040 to the members of any increase in the regular or special assessments of the association, not less than 30 nor more than 60 days prior to the increased assessment becoming due.

Civil Code §5620. Exemption from Execution by Judgment Creditor of Association.(a) Regular assessments imposed or collected to perform the obligations of an association under the governing documents or this act shall be exempt from execution by a judgment creditor of the association only to the extent necessary for the association to perform essential services, such as paying for utilities and insurance. In determining the appropriateness of an exemption, a court shall ensure that only essential services are protected under this subdivision.(b) This exemption shall not apply to any consensual pledges, liens, or encumbrances that have been approved by a majority of a quorum of members, pursuant to Section 4070, at a member meeting or election, or to any state tax lien, or to any lien for labor or materials supplied to the common area.

Civil Code §5625. Levies on Separate Interests.(a) Except as provided in subdivision (b), notwithstanding any provision of this act or the governing documents to the contrary, an association shall not levy assessments on separate interests within the common interest development based on the taxable value of the separate interests unless the association, on or before December 31, 2009, in accordance with its governing documents, levied assessments on those separate interests based on their taxable value, as determined by the tax assessor of the county in which the separate interests are located.(b) An association that is responsible for paying taxes on the separate interests within the common interest development may levy that portion of assessments on separate interests that is related to the payment of taxes based on the taxable value of the separate interest, as determined by the tax assessor.

Article 2. Assessment Payment and Delinquency

Civil Code §5650. Debt of Owner of Separate Interest; Time of Delinquency; Interest.(a) A regular or special assessment and any late charges, reasonable fees and costs of collection, reasonable attorney’s fees, if any, and interest, if any, as determined in accordance with subdivision (b), shall be a debt of the owner of the separate interest at the time the assessment or other sums are levied.(b) Regular and special assessments levied pursuant to the governing documents are delinquent 15 days after they become due, unless the declaration provides a longer time period, in which case the longer time period shall apply. If an assessment is delinquent, the association may recover all of the following:

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1) Reasonable costs incurred in collecting the delinquent assessment, including reasonable attorney’s fees.

2) A late charge not exceeding 10 percent of the delinquent assessment or ten dollars ($10), whichever is greater, unless the declaration specifies a late charge in a smaller amount, in which case any late charge imposed shall not exceed the amount specified in the declaration.

3) Interest on all sums imposed in accordance with this section, including the delinquent assessments, reasonable fees and costs of collection, and reasonable attorney’s fees, at an annual interest rate not to exceed 12 percent, commencing 30 days after the assessment becomes due, unless the declaration specifies the recovery of interest at a rate of a lesser amount, in which case the lesser rate of interest shall apply.

(c) Associations are hereby exempted from interest-rate limitations imposed by Article XV of the California Constitution, subject to the limitations of this section.

Civil Code §5655. Application of Payment; Receipt; Mailing Address for Overnight Payment.(a) Any payments made by the owner of a separate interest toward a debt described in subdivision (a) of Section 5650 shall first be applied to the assessments owed, and, only after the assessments owed are paid in full shall the payments be applied to the fees and costs of collection, attorney’s fees, late charges, or interest.(b) When an owner makes a payment, the owner may request a receipt and the association shall provide it. The receipt shall indicate the date of payment and the person who received it.(c) The association shall provide a mailing address for overnight payment of assessments. The address shall be provided in the annual policy statement.

Civil Code §5658. Disputed Charge or Sum Levied by Association; Payment Under Protest; Action in Small Claims Court.(a) If a dispute exists between the owner of a separate interest and the association regarding any disputed charge or sum levied by the association, including, but not limited to, an assessment, fine, penalty, late fee, collection cost, or monetary penalty imposed as a disciplinary measure, and the amount in dispute does not exceed the jurisdictional limits of the small claims court stated in Sections 116.220 and 116.221 of the Code of Civil Procedure, the owner of the separate interest may, in addition to pursuing dispute resolution pursuant to Article 3 (commencing with Section 5925) of Chapter 10, pay under protest the disputed amount and all other amounts levied, including any fees and reasonable costs of collection, reasonable attorney’s fees, late charges, and interest, if any, pursuant to subdivision (b) of Section 5650, and commence an action in small claims court pursuant to Chapter 5.5 (commencing with Section 116.110) of Title 1 of the Code of Civil Procedure.(b) Nothing in this section shall impede an association’s ability to collect delinquent assessments as provided in this article or Article 3 (commencing with Section 5700).

Civil Code §5660. Notice; Contents.At least 30 days prior to recording a lien upon the separate interest of the owner of record to collect a debt that is past due under Section 5650, the association shall notify the owner of record in writing by certified mail of the following:

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(a) A general description of the collection and lien enforcement procedures of the association and the method of calculation of the amount, a statement that the owner of the separate interest has the right to inspect the association records pursuant to Section 5205, and the following statement in 14-point boldface type, if printed, or in capital letters, if typed:“IMPORTANT NOTICE: IF YOUR SEPARATE INTEREST IS PLACED IN FORECLOSURE BECAUSE YOU ARE BEHIND IN YOUR ASSESSMENTS, IT MAY BE SOLD WITHOUT COURT ACTION.”(b) An itemized statement of the charges owed by the owner, including items on the statement which indicate the amount of any delinquent assessments, the fees and reasonable costs of collection, reasonable attorney’s fees, any late charges, and interest, if any.(c) A statement that the owner shall not be liable to pay the charges, interest, and costs of collection, if it is determined the assessment was paid on time to the association.(d) The right to request a meeting with the board as provided in Section 5665.(e) The right to dispute the assessment debt by submitting a written request for dispute resolution to the association pursuant to the association’s “meet and confer” program required in Article 2 (commencing with Section 5900) of Chapter 10.(f) The right to request alternative dispute resolution with a neutral third party pursuant to Article 3 (commencing with Section 5925) of Chapter 10 before the association may initiate foreclosure against the owner’s separate interest, except that binding arbitration shall not be available if the association intends to initiate a judicial foreclosure.

Civil Code §5665. Payment Plans; Request; Meeting; Contents; Default.(a) An owner, other than an owner of any interest that is described in Section 11212 of the Business and Professions Code that is not otherwise exempt from this section pursuant to subdivision (a) of Section 11211.7 of the Business and Professions Code, may submit a written request to meet with the board to discuss a payment plan for the debt noticed pursuant to Section 5660. The association shall provide the owners the standards for payment plans, if any exists.(b) The board shall meet with the owner in executive session within 45 days of the postmark of the request, if the request is mailed within 15 days of the date of the postmark of the notice, unless there is no regularly scheduled board meeting within that period, in which case the board may designate a committee of one or more directors to meet with the owner.(c) Payment plans may incorporate any assessments that accrue during the payment plan period. Additional late fees shall not accrue during the payment plan period if the owner is in compliance with the terms of the payment plan.(d) Payment plans shall not impede an association’s ability to record a lien on the owner’s separate interest to secure payment of delinquent assessments.(e) In the event of a default on any payment plan, the association may resume its efforts to collect the delinquent assessments from the time prior to entering into the payment plan.

Civil Code §5670. Dispute Resolution.Prior to recording a lien for delinquent assessments, an association shall offer the owner and, if so requested by the owner, participate in dispute resolution pursuant to the association’s “meet and confer” program required in Article 2 (commencing with Section 5900) of Chapter 10.

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Civil Code §5673. Recording Lien; Decision Made by Board.For liens recorded on or after January 1, 2006, the decision to record a lien for delinquent assessments shall be made only by the board and may not be delegated to an agent of the association. The board shall approve the decision by a majority vote of the directors in an open meeting. The board shall record the vote in the minutes of that meeting.

Civil Code §5675. Lien on Separate Interest; Notice of Delinquent Assessment.(a) The amount of the assessment, plus any costs of collection, late charges, and interest assessed in accordance with subdivision (b) of Section 5650, shall be a lien on the owner’s separate interest in the common interest development from and after the time the association causes to be recorded with the county recorder of the county in which the separate interest is located, a notice of delinquent assessment, which shall state the amount of the assessment and other sums imposed in accordance with subdivision (b) of Section 5650, a legal description of the owner’s separate interest in the common interest development against which the assessment and other sums are levied, and the name of the record owner of the separate interest in the common interest development against which the lien is imposed.(b) The itemized statement of the charges owed by the owner described in subdivision (b) of Section 5660 shall be recorded together with the notice of delinquent assessment.(c) In order for the lien to be enforced by nonjudicial foreclosure as provided in Sections 5700 to 5710, inclusive, the notice of delinquent assessment shall state the name and address of the trustee authorized by the association to enforce the lien by sale.(d) The notice of delinquent assessment shall be signed by the person designated in the declaration or by the association for that purpose, or if no one is designated, by thepresident of the association.(e) A copy of the recorded notice of delinquent assessment shall be mailed by certified mail to every person whose name is shown as an owner of the separate interest in the association’s records, and the notice shall be mailed no later than 10 calendar days after recordation.

Civil Code §5680. Priority.A lien created pursuant to Section 5675 shall be prior to all other liens recorded subsequent to the notice of delinquent assessment, except that the declaration may provide for the subordination thereof to any other liens and encumbrances.

Civil Code §5685. Recording of Lien.(a) Within 21 days of the payment of the sums specified in the notice of delinquent assessment, the association shall record or cause to be recorded in the office of the county recorder in which the notice of delinquent assessment is recorded a lien release or notice of rescission and provide the owner of the separate interest a copy of the lien release or notice that the delinquent assessment has been satisfied.(b) If it is determined that a lien previously recorded against the separate interest was recorded in error, the party who recorded the lien shall, within 21 calendar days, record or cause to be recorded in the office of the county recorder in which the notice of delinquent assessment is recorded a lien release or notice of rescission and provide the owner of the separate interest with a declaration that the lien filing or recording was in error and a copy of the lien release or notice of rescission.

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(c) If it is determined that an association has recorded a lien for a delinquent assessment in error, the association shall promptly reverse all late charges, fees, interest, attorney’s fees, costs of collection, costs imposed for the notice prescribed in Section 5660, and costs of recordation and release of the lien authorized under subdivision (b) of Section 5720, and pay all costs related to any related dispute resolution or alternative dispute resolution.

Civil Code §5690. Recommencement of Notice Process for Failure to Comply with Procedures.An association that fails to comply with the procedures set forth in this article shall, prior to recording a lien, recommence the required notice process. Any costs associated with recommencing the notice process shall be borne by the association and not by the owner of a separate interest.

Article 3. Assessment Collection

Civil Code §5700. Enforcement of Lien.(a) Except as otherwise provided in this article, after the expiration of 30 days following the recording of a lien created pursuant to Section 5675, the lien may be enforced in any manner permitted by law, including sale by the court, sale by the trustee designated in the notice of delinquent assessment, or sale by a trustee substituted pursuant to Section 2934a.(b) Nothing in Article 2 (commencing with Section 5650) or in subdivision (a) of Section 726 of the Code of Civil Procedure prohibits actions against the owner of a separate interest to recover sums for which a lien is created pursuant to Article 2 (commencing with Section 5650) or prohibits an association from taking a deed in lieu of foreclosure.

Civil Code §5705. Debts for Assessments that Arise on and After January 1, 2006; Dispute Resolution; Board to Make Decision to Initiate Foreclosure of Lien; Notice.(a) Notwithstanding any law or any provisions of the governing documents to thecontrary, this section shall apply to debts for assessments that arise on and after January 1, 2006.(b) Prior to initiating a foreclosure on an owner’s separate interest, the association shall offer the owner and, if so requested by the owner, participate in dispute resolution pursuant to the association’s “meet and confer” program required in Article 2 (commencing with Section 5900) of Chapter 10 or alternative dispute resolution as set forth in Article 3 (commencing with Section 5925) of Chapter 10. The decision to pursue dispute resolution or a particular type of alternative dispute resolution shall be the choice of the owner, except that binding arbitration shall not be available if the association intends to initiate a judicial foreclosure.(c) The decision to initiate foreclosure of a lien for delinquent assessments that has been validly recorded shall be made only by the board and may not be delegated to an agent of the association. The board shall approve the decision by a majority vote of the directors in an executive session. The board shall record the vote in the minutes of the next meeting of the board open to all members. The board shall maintain the confidentiality of the owner or owners of the separate interest by identifying the matter in the minutes by the parcel number of the property, rather than the name of the owner or owners. A board vote to approve foreclosure of a lien shall take place at least 30 days prior to any public sale.

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(d) The board shall provide notice by personal service in accordance with the manner of service of summons in Article 3 (commencing with Section 415.10) of Chapter 4 of Title 5 of Part 2 of the Code of Civil Procedure to an owner of a separate interest who occupies the separate interest or to the owner’s legal representative, if the board votes to foreclose upon the separate interest. The board shall provide written notice to an owner of a separate interest who does not occupy the separate interest by first-class mail, postage prepaid, at the most current address shown on the books of the association. In the absence of written notification by the owner to the association, the address of the owner’s separate interest may be treated as the owner’s mailing address.

Civil Code §5710. Trustee Sale; Procedure; Notice; Trustee Fees.(a) Any sale by the trustee shall be conducted in accordance with Sections 2924, 2924b, and 2924c applicable to the exercise of powers of sale in mortgages and deeds of trust.(b) In addition to the requirements of Section 2924, the association shall serve a notice of default on the person named as the owner of the separate interest in the association’s records or, if that person has designated a legal representative pursuant to this subdivision, on that legal representative. Service shall be in accordance with the manner of service of summons in Article 3 (commencing with Section 415.10) of Chapter 4 of Title 5 of Part 2 of the Code of Civil Procedure. An owner may designate a legal representative in a writing that is mailed to the association in a manner that indicates that the association has received it.(c) The fees of a trustee may not exceed the amounts prescribed in Sections 2924c and 2924d, plus the cost of service for either of the following:

1) The notice of default pursuant to subdivision (b).2) The decision of the board to foreclose upon the separate interest of an owner as

described in subdivision (d) of Section 5705.

Civil Code §5715. Debts for Assessments that Arise on and After January 1, 2006; Nonjudicial Foreclosure.(a) Notwithstanding any law or any provisions of the governing documents to the contrary, this section shall apply to debts for assessments that arise on and after January 1, 2006.(b) A nonjudicial foreclosure by an association to collect upon a debt for delinquent assessments shall be subject to a right of redemption. The redemption period within which the separate interest may be redeemed from a foreclosure sale under this paragraph ends 90 days after the sale. In addition to the requirements of Section 2924f, a notice of sale in connection with an association’s foreclosure of a separate interest in a common interest development shall include a statement that the property is being sold subject to the right of redemption created in this section.

Civil Code §5720. Debts for Assessments that Arise on and After January 1, 2006; Collection of Delinquent Assessments; Application of Limitation on Foreclosure of Assessment Liens.(a) Notwithstanding any law or any provisions of the governing documents to the contrary, this section shall apply to debts for assessments that arise on and after January 1, 2006.(b) An association that seeks to collect delinquent regular or special assessments of an amount less than one thousand eight hundred dollars ($1,800), not including any accelerated assessments, late charges, fees and costs of collection, attorney’s fees, or

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interest, may not collect that debt through judicial or nonjudicial foreclosure, but may attempt to collect or secure that debt in any of the following ways:

1) By a civil action in small claims court, pursuant to Chapter 5.5 (commencing with Section 116.110) of Title 1 of Part 1 of the Code of Civil Procedure. An association that chooses to proceed by an action in small claims court, and prevails, may enforce the judgment as permitted under Article 8 (commencing with Section 116.810) of Chapter 5.5 of Title 1 of Part 1 of the Code of Civil Procedure. The amount that may be recovered in small claims court to collect upon a debt for delinquent assessments may not exceed the jurisdictional limits of the small claims court and shall be the sum of the following:(A) The amount owed as of the date of filing the complaint in the small claims

court proceeding.(B) In the discretion of the court, an additional amount to that described in

subparagraph (A) equal to the amount owed for the period from the date the complaint is filed until satisfaction of the judgment, which total amount may include accruing unpaid assessments and any reasonable late charges, fees and costs of collection, attorney’s fees, and interest, up to the jurisdictional limits of the small claims court.

2) By recording a lien on the owner’s separate interest upon which the association may not foreclose until the amount of the delinquent assessments secured by the lien, exclusive of any accelerated assessments, late charges, fees and costs of collection, attorney’s fees, or interest, equals or exceeds one thousand eight hundred dollars ($1,800) or the assessments secured by the lien are more than 12 months delinquent. An association that chooses to record a lien under these provisions, prior to recording the lien, shall offer the owner and, if so requested by the owner, participate in dispute resolution as set forth in Article 2 (commencing with Section 5900) of Chapter 10.

3) Any other manner provided by law, except for judicial or nonjudicial foreclosure.

(c) The limitation on foreclosure of assessment liens for amounts under the stated minimum in this section does not apply to any of the following:

1) Assessments secured by a lien that are more than 12 months delinquent.2) Assessments owed by owners of separate interests in time-share estates, as

defined in subdivision (x) of Section 11212 of the Business and Professions Code.

3) Assessments owed by the developer.

Civil Code §5725. Monetary Charge for Repair of Damage to Common Area and Facilities; Monetary Penalties.(a) A monetary charge imposed by the association as a means of reimbursing the association for costs incurred by the association in the repair of damage to common areaand facilities caused by a member or the member’s guest or tenant may become a lien against the member’s separate interest enforceable by the sale of the interest under Sections 2924, 2924b, and 2924c, provided the authority to impose a lien is set forth in the governing documents. It is the intent of the Legislature not to contravene Section 2792.26 of Title 10 of the California Code of Regulations, as that section appeared on January 1, 1996, for associations of subdivisions that are being sold under authority of a subdivision public report, pursuant to Part 2 (commencing with Section 11000) of Division 4 of the Business and Professions Code.

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(b) A monetary penalty imposed by the association as a disciplinary measure for failure of a member to comply with the governing documents, except for the late payments, may not be characterized nor treated in the governing documents as an assessment that may become a lien against the member’s separate interest enforceable by the sale of the interest under Sections 2924, 2924b, and 2924c.

Civil Code §5730. Inclusion of Notice in Annual Policy Statement.(a) The annual policy statement, prepared pursuant to Section 5310, shall include the following notice, in at least 12-point type:“NOTICE ASSESSMENTS AND FORECLOSUREThis notice outlines some of the rights and responsibilities of owners of property in common interest developments and the associations that manage them. Please refer to the sections of the Civil Code indicated for further information. A portion of the information in this notice applies only to liens recorded on or after January 1, 2003. You may wish to consult a lawyer if you dispute an assessment.

ASSESSMENTS AND FORECLOSUREAssessments become delinquent 15 days after they are due, unless the governing documents provide for a longer time. The failure to pay association assessments may result in the loss of an owner’s property through foreclosure. Foreclosure may occureither as a result of a court action, known as judicial foreclosure, or without court action, often referred to as nonjudicial foreclosure. For liens recorded on and after January 1, 2006, an association may not use judicial or nonjudicial foreclosure to enforce that lien if the amount of the delinquent assessments or dues, exclusive of any accelerated assessments, late charges, fees, attorney’s fees, interest, and costs of collection, is less than one thousand eight hundred dollars ($1,800). For delinquent assessments or dues in excess of one thousand eight hundred dollars ($1,800) or more than 12 months delinquent, an association may use judicial or nonjudicial foreclosure subject to the conditions set forth in Article 3 (commencing with Section 5700) of Chapter 8 of Part 5 of Division 4 of the Civil Code. When using judicial or nonjudicial foreclosure, the association records a lien on the owner’s property. The owner’s property may be sold to satisfy the lien if the amounts secured by the lien are not paid. (Sections 5700 through 5720 of the Civil Code, inclusive)In a judicial or nonjudicial foreclosure, the association may recover assessments, reasonable costs of collection, reasonable attorney’s fees, late charges, and interest. The association may not use nonjudicial foreclosure to collect fines or penalties, except for costs to repair common area damaged by a member or a member’s guests, if the governing documents provide for this. (Section 5725 of the Civil Code)The association must comply with the requirements of Article 2 (commencing with Section 5650) of Chapter 8 of Part 5 of Division 4 of the Civil Code when collecting delinquent assessments. If the association fails to follow these requirements, it may not record a lien on the owner’s property until it has satisfied those requirements. Any additional costs that result from satisfying the requirements are the responsibility of the association. (Section 5675 of the Civil Code)At least 30 days prior to recording a lien on an owner’s separate interest, the association must provide the owner of record with certain documents by certified mail, including a description of its collection and lien enforcement procedures and the method of calculating the amount. It must also provide an itemized statement of the charges owed

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by the owner. An owner has a right to review the association’s records to verify the debt. (Section 5660 of the Civil Code)If a lien is recorded against an owner’s property in error, the person who recorded the lien is required to record a lien release within 21 days, and to provide an owner certain documents in this regard. (Section 5685 of the Civil Code)The collection practices of the association may be governed by state and federal laws regarding fair debt collection. Penalties can be imposed for debt collection practices that violate these laws.

PAYMENTSWhen an owner makes a payment, the owner may request a receipt, and the association is required to provide it. On the receipt, the association must indicate the date of payment and the person who received it. The association must inform owners of a mailing address for overnight payments. (Section 5655 of the Civil Code)An owner may, but is not obligated to, pay under protest any disputed charge or sum levied by the association, including, but not limited to, an assessment, fine, penalty, late fee, collection cost, or monetary penalty imposed as a disciplinary measure, and by so doing, specifically reserve the right to contest the disputed charge or sum in court or otherwise.An owner may dispute an assessment debt by submitting a written request for dispute resolution to the association as set forth in Article 2 (commencing with Section 5900) of Chapter 10 of Part 5 of Division 4 of the Civil Code. In addition, an association may not initiate a foreclosure without participating in alternative dispute resolution with a neutral third party as set forth in Article 3 (commencing with Section 5925) of Chapter 10 of Part 5 of Division 4 of the Civil Code, if so requested by the owner. Binding arbitration shall not be available if the association intends to initiate a judicial foreclosure.An owner is not liable for charges, interest, and costs of collection, if it is established that the assessment was paid properly on time. (Section 5685 of the Civil Code)

MEETINGS AND PAYMENT PLANSAn owner of a separate interest that is not a time-share interest may request the association to consider a payment plan to satisfy a delinquent assessment. The association must inform owners of the standards for payment plans, if any exists. (Section 5665 of the Civil Code)The board must meet with an owner who makes a proper written request for a meeting to discuss a payment plan when the owner has received a notice of a delinquent assessment. These payment plans must conform with the payment plan standards of the association, if they exist. (Section 5665 of the Civil Code)”

(b) An association distributing the notice required by this section to an owner of an interest that is described in Section 11212 of the Business and Professions Code that is not otherwise exempt from this section pursuant to subdivision (a) of Section 11211.7 of the Business and Professions Code may delete from the notice described in subdivision (a) the portion regarding meetings and payment plans.

Civil Code §5735. Assignment or Pledge Prohibited; Exception.(a) An association may not voluntarily assign or pledge the association’s right to collect payments or assessments, or to enforce or foreclose a lien to a third party, except when the assignment or pledge is made to a financial institution or lender chartered or licensed

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under federal or state law, when acting within the scope of that charter or license, as security for a loan obtained by the association.(b) Nothing in subdivision (a) restricts the right or ability of an association to assign any unpaid obligations of a former member to a third party for purposes of collection.

Civil Code §5740. Application of Article to Liens.(a) Except as otherwise provided, this article applies to a lien created on or after January 1, 2003.(b) A lien created before January 1, 2003, is governed by the law in existence at the time the lien was created.

Chapter 9. Insurance and Liability

Civil Code §5800. Tortious Act or Omission of Volunteer Officer or Director of Association Managing Residential Development; Liability; Criteria; Limitations.(a) A volunteer officer or volunteer director of an association that manages a common interest development that is exclusively residential, 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 officer’s or director’s 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 director’s or officer’s 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.

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(f)1) For purposes of paragraph (1) of subdivision (a), the scope of the officer’s or

director’s 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.

Civil Code §5805. Tort Actions Against Owner of Separate Interest; Tenant-In-Common in Common Area; Association Liability; Insurance Requirements.(a) It is the intent of the Legislature to offer civil liability protection to owners of the separate interests in a common interest development that have common area owned in tenancy-in-common if the association carries a certain level of prescribed insurance that covers a cause of action in tort.(b) Any cause of action in tort against any owner of a separate interest arising solely by reason of an ownership interest as a tenant-in-common in the common area of a common interest development shall be brought only against the association and not against the individual owners of the separate interests, if both of the insurance requirements in paragraphs (1) and (2) are met:

1) The association maintained and has in effect for this cause of action, one or more policies of insurance that include coverage for general liability of the association.

2) The coverage described in paragraph (1) is in the following minimum amounts:(A) At least two million dollars ($2,000,000) if the common interest

development consists of 100 or fewer separate interests.(B) At least three million dollars ($3,000,000) if the common interest

development consists of more than 100 separate interests.

Civil Code §5810. Individual Notice to Members of Changes in Insurance Coverage.The association shall, as soon as reasonably practicable, provide individual notice pursuant to Section 4040 to all members if any of the policies described in the annual budget report pursuant to Section 5300 have lapsed, been canceled, and are not immediately renewed, restored, or replaced, or if there is a significant change, such as a reduction in coverage or limits or an increase in the deductible, as to any of those policies. If the association receives any notice of nonrenewal of a policy described in the annual budget report pursuant to Section 5300, the association shall immediately notify its members if replacement coverage will not be in effect by the date the existing coverage will lapse.

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Chapter 10. Dispute Resolution and Enforcement

Article 1. Discipline and Cost Reimbursement

Civil Code §5850. Monetary Penalties; Provision of Information to Members.(a) If an association adopts or has adopted a policy imposing any monetary penalty, including any fee, on any association member for a violation of the governing documents, including any monetary penalty relating to the activities of a guest or tenant of the member, the board shall adopt and distribute to each member, in the annual policy statement prepared pursuant to Section 5310, a schedule of the monetary penalties that may be assessed for those violations, which shall be in accordance with authorization for member discipline contained in the governing documents.(b) Any new or revised monetary penalty that is adopted after complying with subdivision (a) may be included in a supplement that is delivered to the members individually, pursuant to Section 4040.(c) A monetary penalty for a violation of the governing documents shall not exceed the monetary penalty stated in the schedule of monetary penalties or supplement that is in effect at the time of the violation.(d) An association shall provide a copy of the most recently distributed schedule of monetary penalties, along with any applicable supplements to that schedule, to any member upon request.

Civil Code §5855. Board Disciplinary Proceedings; Notice to Member.(a) When the board is to meet to consider or impose discipline upon a member, or to impose a monetary charge as a means of reimbursing the association for costs incurred by the association in the repair of damage to common area and facilities caused by a member or the member’s guest or tenant, the board shall notify the member in writing, by either personal delivery or individual delivery pursuant to Section 4040, at least 10 days prior to the meeting.(b) The notification shall contain, at a minimum, the date, time, and place of the meeting, the nature of the alleged violation for which a member may be disciplined or the nature of the damage to the common area and facilities for which a monetary charge may be imposed, and a statement that the member has a right to attend and may address the board at the meeting. The board shall meet in executive session if requested by the member.(c) If the board imposes discipline on a member or imposes a monetary charge on the member for damage to the common area and facilities, the board shall provide the member a written notification of the decision, by either personal delivery or individual delivery pursuant to Section 4040, within 15 days following the action.(d) A disciplinary action or the imposition of a monetary charge for damage to the common area shall not be effective against a member unless the board fulfills the requirements of this section.

Civil Code §5865. Authority of Board to Impose Monetary Penalties.Nothing in Section 5850 or 5855 shall be construed to create, expand, or reduce the authority of the board to impose monetary penalties on a member for a violation of the governing documents.

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Article 2. Internal Dispute Resolution

Civil Code §5900. Application of Article.(a) This article applies to a dispute between an association and a member involving their rights, duties, or liabilities under this act, under the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code), or under the governing documents of the common interest development or association.(b) This article supplements, and does not replace, Article 3 (commencing with Section 5925), relating to alternative dispute resolution as a prerequisite to an enforcement action.

Civil Code §5905. Fair, Reasonable, and Expeditious Procedure to Resolve Disputes; Use of Local Dispute Resolution Programs.(a) An association shall provide a fair, reasonable, and expeditious procedure for resolving a dispute within the scope of this article.(b) In developing a procedure pursuant to this article, an association shall make maximum, reasonable use of available local dispute resolution programs involving a neutral third party, including low-cost mediation programs such as those listed on the Internet Web sites of the Department of Consumer Affairs and the United States Department of Housing and Urban Development.(c) If an association does not provide a fair, reasonable, and expeditious procedure for resolving a dispute within the scope of this article, the procedure provided in Section 5915 applies and satisfies the requirement of subdivision (a).

Civil Code §5910. Requirements of Fair, Reasonable, and Expeditious Dispute Resolution Program.A fair, reasonable, and expeditious dispute resolution procedure shall at a minimum satisfy all of the following requirements:(a) The procedure may be invoked by either party to the dispute. A request invoking the procedure shall be in writing.(b) The procedure shall provide for prompt deadlines. The procedure shall state the maximum time for the association to act on a request invoking the procedure.(c) If the procedure is invoked by a member, the association shall participate in the procedure.(d) If the procedure is invoked by the association, the member may elect not to participate in the procedure. If the member participates but the dispute is resolved other than by agreement of the member, the member shall have a right of appeal to the board.(e) A written resolution, signed by both parties, of a dispute pursuant to the procedure that is not in conflict with the law or the governing documents binds the association and is judicially enforceable. A written agreement, signed by both parties, reached pursuant to the procedure that is not in conflict with the law or the governing documents binds the parties and is judicially enforceable.(f) The procedure shall provide a means by which the member and the association may explain their positions. The member and association may be assisted by an attorney or another person in explaining their positions at their own cost. (g) A member of the association shall not be charged a fee to participate in the process.

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Civil Code §5915. Application of Section; Use of Procedures; Dispute Resolution Agreements; Conditions; Fees.(a) This section applies to an association that does not otherwise provide a fair, reasonable, and expeditious dispute resolution procedure. The procedure provided in this section is fair, reasonable, and expeditious, within the meaning of this article.(b) Either party to a dispute within the scope of this article may invoke the following procedure:

1) The party may request the other party to meet and confer in an effort to resolve the dispute. The request shall be in writing.

2) A member of an association may refuse a request to meet and confer. The association may not refuse a request to meet and confer.

3) The board shall designate a director to meet and confer.4) The parties shall meet promptly at a mutually convenient time and place,

explain their positions to each other, and confer in good faith in an effort to resolve the dispute. The parties may be assisted by an attorney or another person at their own cost when conferring.

5) A resolution of the dispute agreed to by the parties shall be memorialized in writing and signed by the parties, including the board designee on behalf of the association.

(c) A written agreement reached under this section binds the parties and is judicially enforceable if it is signed by both parties and both of the following conditions are satisfied:

1) The agreement is not in conflict with law or the governing documents of the common interest development or association.

2) The agreement is either consistent with the authority granted by the board to its designee or the agreement is ratified by the board.

(d) A member shall not be charged a fee to participate in the process.

Civil Code §5920. Annual Policy Statement; Description of Internal Dispute Resolution Process.The annual policy statement prepared pursuant to Section 5310 shall include a description of the internal dispute resolution process provided pursuant to this article.

Article 3. Alternative Dispute Resolution Prerequisite to Civil Action

Civil Code §5925. Definitions.As used in this article:(a) “Alternative dispute resolution” means mediation, arbitration, conciliation, or other nonjudicial procedure that involves a neutral party in the decisionmaking process. The form of alternative dispute resolution chosen pursuant to this article may be binding or nonbinding, with the voluntary consent of the parties.(b) “Enforcement action” means a civil action or proceeding, other than a cross-complaint, for any of the following purposes:

1) Enforcement of this act.2) Enforcement of the Nonprofit Mutual Benefit Corporation Law (Part 3

(commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code).

3) Enforcement of the governing documents.

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Civil Code §5930. Filing Enforcement Actions; Application of Section.(a) An association or a member may not file an enforcement action in the superior court unless the parties have endeavored to submit their dispute to alternative dispute resolutionpursuant to this article.(b) This section applies only to an enforcement action that is solely for declaratory, injunctive, or writ relief, or for that relief in conjunction with a claim for monetary damages not in excess of the jurisdictional limits stated in Sections 116.220 and 116.221 of the Code of Civil Procedure.(c) This section does not apply to a small claims action.(d) Except as otherwise provided by law, this section does not apply to an assessment dispute.

Civil Code §5935. Initiation of Process; Serving a Request for Resolution; Personal Delivery; Acceptance or Rejection of Request.(a) Any party to a dispute may initiate the process required by Section 5930 by serving on all other parties to the dispute a Request for Resolution. The Request for Resolution shall include all of the following:

1) A brief description of the dispute between the parties.2) A request for alternative dispute resolution.3) A notice that the party receiving the Request for Resolution is required to

respond within 30 days of receipt or the request will be deemed rejected.4) If the party on whom the request is served is the member, a copy of this article.

(b) Service of the Request for Resolution shall be by personal delivery, first-class mail, express mail, facsimile transmission, or other means reasonably calculated to provide the party on whom the request is served actual notice of the request.(c) A party on whom a Request for Resolution is served has 30 days following service to accept or reject the request. If a party does not accept the request within that period, the request is deemed rejected by the party.

Civil Code §5940. Timeline for Completion of Alternative Dispute Resolution; Application of Evidence Code; Costs.(a) If the party on whom a Request for Resolution is served accepts the request, the parties shall complete the alternative dispute resolution within 90 days after the party initiating the request receives the acceptance, unless this period is extended by written stipulation signed by both parties.(b) Chapter 2 (commencing with Section 1115) of Division 9 of the Evidence Code applies to any form of alternative dispute resolution initiated by a Request for Resolution under this article, other than arbitration.(c) The costs of the alternative dispute resolution shall be borne by the parties.

Civil Code §5945. Tolling of Statute of Limitations.If a Request for Resolution is served before the end of the applicable time limitation for commencing an enforcement action, the time limitation is tolled during the following periods:(a) The period provided in Section 5935 for response to a Request for Resolution.(b) If the Request for Resolution is accepted, the period provided by Section 5940 for completion of alternative dispute resolution, including any extension of time stipulated to by the parties pursuant to Section 5940.

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Civil Code §5950. Certificates Filed with Initial Pleading; Grounds for Demurrer or Motion to Strike.(a) At the time of commencement of an enforcement action, the party commencing the action shall file with the initial pleading a certificate stating that one or more of the following conditions are satisfied:

1) Alternative dispute resolution has been completed in compliance with this article.

2) One of the other parties to the dispute did not accept the terms offered for alternative dispute resolution.

3) Preliminary or temporary injunctive relief is necessary.(b) Failure to file a certificate pursuant to subdivision (a) is grounds for a demurrer or a motion to strike unless the court finds that dismissal of the action for failure to comply with this article would result in substantial prejudice to one of the parties.

Civil Code §5955. Referral of Actions to Alternative Dispute Resolution; Stay of Referred Action; Costs.(a) After an enforcement action is commenced, on written stipulation of the parties, the matter may be referred to alternative dispute resolution. The referred action is stayed. During the stay, the action is not subject to the rules implementing subdivision (c) of Section 68603 of the Government Code.(b) The costs of the alternative dispute resolution shall be borne by the parties.

Civil Code §5960. Award of Fees and Costs.In an enforcement action in which attorney’s fees and costs may be awarded, the court, in determining the amount of the award, may consider whether a party’s refusal to participate in alternative dispute resolution before commencement of the action was reasonable.

Civil Code §5965. Annual Summary of Provisions of Article; Contents of Summary; Inclusion in Annual Policy Statement.(a) An association shall annually provide its members a summary of the provisions of this article that specifically references this article. The summary shall include the following language:“Failure of a member of the association to comply with the alternative dispute resolutionrequirements of Section 5930 of the Civil Code may result in the loss of the member’s right to sue the association or another member of the association regarding enforcementof the governing documents or the applicable law.”(b) The summary shall be included in the annual policy statement prepared pursuant to Section 5310.

Article 4. Civil Action

Civil Code §5975. Covenants and Restrictions in Declaration as Equitable Servitudes; Enforcement; Alternative Dispute Resolution.(a) The covenants and restrictions in the declaration shall be enforceable equitable servitudes, unless unreasonable, and shall inure to the benefit of and bind all owners of separate interests in the development. Unless the declaration states otherwise, these

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servitudes may be enforced by any owner of a separate interest or by the association, or by both.(b) A governing document other than the declaration may be enforced by the association against an owner of a separate interest or by an owner of a separate interest against the association.(c) In an action to enforce the governing documents, the prevailing party shall be awarded reasonable attorney’s fees and costs.

Civil Code §5980. Standing.An association has standing to institute, defend, settle, or intervene in litigation, arbitration, mediation, or administrative proceedings in its own name as the real party in interest and without joining with it the members, in matters pertaining to the following:(a) Enforcement of the governing documents.(b) Damage to the common area.(c) Damage to a separate interest that the association is obligated to maintain or repair.(d) Damage to a separate interest that arises out of, or is integrally related to, damage to the common area or a separate interest that the association is obligated to maintain or repair.

Civil Code §5985. Reduction of Damages Awarded; Comparative Fault of Association.(a) In an action maintained by an association pursuant to subdivision (b), (c), or (d) of Section 5980, the amount of damages recovered by the association shall be reduced by the amount of damages allocated to the association or its managing agents in direct proportion to their percentage of fault based upon principles of comparative fault. The comparative fault of the association or its managing agents may be raised by way of defense, but shall not be the basis for a cross-action or separate action against the association or its managing agents for contribution or implied indemnity, where the only damage was sustained by the association or its members. It is the intent of the Legislature in enacting this subdivision to require that comparative fault be pleaded as an affirmative defense, rather than a separate cause of action, where the only damage was sustained by the association or its members.(b) In an action involving damages described in subdivision (b), (c), or (d) of Section 5980, the defendant or cross-defendant may allege and prove the comparative fault of the association or its managing agents as a setoff to the liability of the defendant or cross-defendant even if the association is not a party to the litigation or is no longer a party whether by reason of settlement, dismissal, or otherwise.(c) Subdivisions (a) and (b) apply to actions commenced on or after January 1, 1993.(d) Nothing in this section affects a person’s liability under Section 1431, or the liability of the association or its managing agent for an act or omission that causes damages to another.

Chapter 11. Construction Defect Litigation

Civil Code §6000. Actions for Damages Against Common Interest Development Builders, Developers, or General Contractors.(a) Before an association files a complaint for damages against a builder, developer, or general contractor (respondent) of a common interest development based upon a claim for defects in the design or construction of the common interest development, all of the

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requirements of this section shall be satisfied with respect to the builder, developer, or general contractor.(b) The association shall serve upon the respondent a “Notice of Commencement of Legal Proceedings.” The notice shall be served by certified mail to the registered agent of the respondent, or if there is no registered agent, then to any officer of the respondent. If there are no current officers of the respondent, service shall be upon the person or entity otherwise authorized by law to receive service of process. Service upon the general contractor shall be sufficient to initiate the process set forth in this section with regard to any builder or developer, if the builder or developer is not amenable to service of process by the foregoing methods. This notice shall toll all applicable statutes of limitation and repose, whether contractual or statutory, by and against all potentially responsible parties, regardless of whether they were named in the notice, including claims for indemnity applicable to the claim for the period set forth in subdivision (c). The notice shall include all of the following:

1) The name and location of the project.2) An initial list of defects sufficient to apprise the respondent of the general

nature of the defects at issue.3) A description of the results of the defects, if known.4) A summary of the results of a survey or questionnaire distributed to

homeowners to determine the nature and extent of defects, if a survey has been conducted or a questionnaire has been distributed.

5) Either a summary of the results of testing conducted to determine the nature and extent of defects or the actual test results, if that testing has been conducted.

(c) Service of the notice shall commence a period, not to exceed 180 days, during which the association, the respondent, and all other participating parties shall try to resolve the dispute through the processes set forth in this section. This 180-day period may be extended for one additional period, not to exceed 180 days, only upon the mutual agreement of the association, the respondent, and any parties not deemed peripheral pursuant to paragraph (3) of subdivision (e). Any extensions beyond the first extension shall require the agreement of all participating parties. Unless extended, the dispute resolution process prescribed by this section shall be deemed completed. All extensions shall continue the tolling period described in subdivision (b).(d) Within 25 days of the date the association serves the Notice of Commencement of Legal Proceedings, the respondent may request in writing to meet and confer with the board. Unless the respondent and the association otherwise agree, there shall be not more than one meeting, which shall take place no later than 10 days from the date of the respondent’s written request, at a mutually agreeable time and place. The meeting shall be subject to subdivision (a) of Section 4925 and subdivisions (a) and (b) of Section 4935. The discussions at the meeting are privileged communications and are not admissible in evidence in any civil action, unless the association and the respondent consent in writing to their admission.(e) Upon receipt of the notice, the respondent shall, within 60 days, comply with the following:

1) The respondent shall provide the association with access to, for inspection and copying of, all plans and specifications, subcontracts, and other construction files for the project that are reasonably calculated to lead to the discovery of admissible evidence regarding the defects claimed. The association shall provide the respondent with access to, for inspection and copying of, all files

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reasonably calculated to lead to the discovery of admissible evidence regarding the defects claimed, including all reserve studies, maintenance records and any survey questionnaires, or results of testing to determine the nature and extent of defects. To the extent any of the above documents are withheld based on privilege, a privilege log shall be prepared and submitted to all other parties. All other potentially responsible parties shall have the same rights as the respondent regarding the production of documents upon receipt of written notice of the claim, and shall produce all relevant documents within 60 days of receipt of the notice of the claim.

2) The respondent shall provide written notice by certified mail to all subcontractors, design professionals, their insurers, and the insurers of any additional insured whose identities are known to the respondent or readily ascertainable by review of the project files or other similar sources and whose potential responsibility appears on the face of the notice. This notice to subcontractors, design professionals, and insurers shall include a copy of the Notice of Commencement of Legal Proceedings, and shall specify the date and manner by which the parties shall meet and confer to select a dispute resolution facilitator pursuant to paragraph (1) of subdivision (f), advise the recipient of its obligation to participate in the meet and confer or serve a written acknowledgment of receipt regarding this notice, advise the recipient that it will waive any challenge to selection of the dispute resolution facilitator if it elects not to participate in the meet and confer, advise the recipient that it may seek the assistance of an attorney, and advise the recipient that it should contact its insurer, if any. Any subcontractor or design professional, or insurer for that subcontractor, design professional, or additional insured, who receives written notice from the respondent regarding the meet and confer shall, prior to the meet and confer, serve on the respondent a written acknowledgment of receipt. That subcontractor or design professional shall, within 10 days of service of the written acknowledgment of receipt, provide to the association and the respondent a Statement of Insurance that includes both of the following:(A) The names, addresses, and contact persons, if known, of all insurance

carriers, whether primary or excess and regardless of whether a deductible or self-insured retention applies, whose policies were in effect from the commencement of construction of the subject project to the present and which potentially cover the subject claims.

(B) The applicable policy numbers for each policy of insurance provided.3) Any subcontractor or design professional, or insurer for that subcontractor,

design professional, or additional insured, who so chooses, may, at any time, make a written request to the dispute resolution facilitator for designation as a peripheral party. That request shall be served contemporaneously on the association and the respondent. If no objection to that designation is received within 15 days, or upon rejection of that objection, the dispute resolution facilitator shall designate that subcontractor or design professional as a peripheral party, and shall thereafter seek to limit the attendance of that subcontractor or design professional only to those dispute resolution sessions deemed peripheral party sessions or to those sessions during which the dispute resolution facilitator believes settlement as to peripheral parties may be finalized. Nothing in this subdivision shall preclude a party who has been designated a peripheral party from being reclassified as a nonperipheral party,

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reasonably calculated to lead to the discovery of admissible evidence regarding the defects claimed, including all reserve studies, maintenance records and any survey questionnaires, or results of testing to determine the nature and extent of defects. To the extent any of the above documents are withheld based on privilege, a privilege log shall be prepared and submitted to all other parties. All other potentially responsible parties shall have the same rights as the respondent regarding the production of documents upon receipt of written notice of the claim, and shall produce all relevant documents within 60 days of receipt of the notice of the claim.

2) The respondent shall provide written notice by certified mail to all subcontractors, design professionals, their insurers, and the insurers of any additional insured whose identities are known to the respondent or readily ascertainable by review of the project files or other similar sources and whose potential responsibility appears on the face of the notice. This notice to subcontractors, design professionals, and insurers shall include a copy of the Notice of Commencement of Legal Proceedings, and shall specify the date and manner by which the parties shall meet and confer to select a dispute resolution facilitator pursuant to paragraph (1) of subdivision (f), advise the recipient of its obligation to participate in the meet and confer or serve a written acknowledgment of receipt regarding this notice, advise the recipient that it will waive any challenge to selection of the dispute resolution facilitator if it elects not to participate in the meet and confer, advise the recipient that it may seek the assistance of an attorney, and advise the recipient that it should contact its insurer, if any. Any subcontractor or design professional, or insurer for that subcontractor, design professional, or additional insured, who receives written notice from the respondent regarding the meet and confer shall, prior to the meet and confer, serve on the respondent a written acknowledgment of receipt. That subcontractor or design professional shall, within 10 days of service of the written acknowledgment of receipt, provide to the association and the respondent a Statement of Insurance that includes both of the following:(A) The names, addresses, and contact persons, if known, of all insurance

carriers, whether primary or excess and regardless of whether a deductible or self-insured retention applies, whose policies were in effect from the commencement of construction of the subject project to the present and which potentially cover the subject claims.

(B) The applicable policy numbers for each policy of insurance provided.3) Any subcontractor or design professional, or insurer for that subcontractor,

design professional, or additional insured, who so chooses, may, at any time, make a written request to the dispute resolution facilitator for designation as a peripheral party. That request shall be served contemporaneously on the association and the respondent. If no objection to that designation is received within 15 days, or upon rejection of that objection, the dispute resolution facilitator shall designate that subcontractor or design professional as a peripheral party, and shall thereafter seek to limit the attendance of that subcontractor or design professional only to those dispute resolution sessions deemed peripheral party sessions or to those sessions during which the dispute resolution facilitator believes settlement as to peripheral parties may be finalized. Nothing in this subdivision shall preclude a party who has been designated a peripheral party from being reclassified as a nonperipheral party,

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nor shall this subdivision preclude a party designated as a nonperipheral party from being reclassified as a peripheral party after notice to all parties and an opportunity to object. For purposes of this subdivision, a peripheral party is a party having total claimed exposure of less than twenty-five thousand dollars ($25,000).

(f)1) Within 20 days of sending the notice set forth in paragraph (2) of subdivision

(e), the association, respondent, subcontractors, design professionals, and their insurers who have been sent a notice as described in paragraph (2) of subdivision (e) shall meet and confer in an effort to select a dispute resolution facilitator to preside over the mandatory dispute resolution process prescribed by this section. Any subcontractor or design professional who has been given timely notice of this meeting but who does not participate, waives any challenge he or she may have as to the selection of the dispute resolution facilitator. The role of the dispute resolution facilitator is to attempt to resolve the conflict in a fair manner. The dispute resolution facilitator shall be sufficiently knowledgeable in the subject matter and be able to devote sufficient time to the case. The dispute resolution facilitator shall not be required to reside in or have an office in the county in which the project is located. The dispute resolution facilitator and the participating parties shall agree to a date, time, and location to hold a case management meeting of all parties and the dispute resolution facilitator, to discuss the claims being asserted and the scheduling of events under this section. The case management meeting with the dispute resolution facilitator shall be held within 100 days of service of the Notice of Commencement of Legal Proceedings at a location in the county where the project is located. Written notice of the case management meeting with the dispute resolution facilitator shall be sent by the respondent to the association, subcontractors and design professionals, and their insurers who are known to the respondent to be on notice of the claim, no later than 10 days prior to the case management meeting, and shall specify its date, time, and location. The dispute resolution facilitator in consultation with the respondent shall maintain a contact list of the participating parties.

2) No later than 10 days prior to the case management meeting, the dispute resolution facilitator shall disclose to the parties all matters that could cause a person aware of the facts to reasonably entertain a doubt that the proposed dispute resolution facilitator would be able to resolve the conflict in a fair manner. The facilitator’s disclosure shall include the existence of any ground specified in Section 170.1 of the Code of Civil Procedure for disqualification of a judge, any attorney-client relationship the facilitator has or had with any party or lawyer for a party to the dispute resolution process, and any professional or significant personal relationship the facilitator or his or her spouse or minor child living in the household has or had with any party to the dispute resolution process. The disclosure shall also be provided to any subsequently noticed subcontractor or design professional within 10 days of the notice.

3) A dispute resolution facilitator shall be disqualified by the court if he or she fails to comply with this subdivision and any party to the dispute resolution process serves a notice of disqualification prior to the case management meeting. If the dispute resolution facilitator complies with this subdivision, he or she shall be disqualified by the court on the basis of the disclosure if any

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party to the dispute resolution process serves a notice of disqualification prior to the case management meeting.

4) If the parties cannot mutually agree to a dispute resolution facilitator, then each party shall submit a list of three dispute resolution facilitators. Each party may then strike one nominee from the other parties’ list, and petition the court, pursuant to the procedure described in subdivisions (n) and (o), for final selection of the dispute resolution facilitator. The court may issue an order for final selection of the dispute resolution facilitator pursuant to this paragraph.

5) Any subcontractor or design professional who receives notice of the association’s claim without having previously received timely notice of the meet and confer to select the dispute resolution facilitator shall be notified by the respondent regarding the name, address, and telephone number of the dispute resolution facilitator. Any such subcontractor or design professional may serve upon the parties and the dispute resolution facilitator a written objection to the dispute resolution facilitator within 15 days of receiving notice of the claim. Within seven days after service of this objection, the subcontractor or design professional may petition the superior court to replace the dispute resolution facilitator. The court may replace the dispute resolution facilitator only upon a showing of good cause, liberally construed. Failure to satisfy the deadlines set forth in this subdivision shall constitute a waiver of the right to challenge the dispute resolution facilitator.

6) The costs of the dispute resolution facilitator shall be apportioned in the following manner: one-third to be paid by the association; one-third to be paid by the respondent; and one-third to be paid by the subcontractors and design professionals, as allocated among them by the dispute resolution facilitator. The costs of the dispute resolution facilitator shall be recoverable by the prevailing party in any subsequent litigation pursuant to Section 1032 of the Code of Civil Procedure, provided however that any nonsettling party may, prior to the filing of the complaint, petition the facilitator to reallocate the costs of the dispute resolution facilitator as they apply to any nonsettling party. The determination of the dispute resolution facilitator with respect to the allocation of these costs shall be binding in any subsequent litigation. The dispute resolution facilitator shall take into account all relevant factors and equities between all parties in the dispute resolution process when reallocating costs.

7) In the event the dispute resolution facilitator is replaced at any time, the case management statement created pursuant to subdivision (h) shall remain in full force and effect.

8) The dispute resolution facilitator shall be empowered to enforce all provisions of this section.

(g)1) No later than the case management meeting, the parties shall begin to generate

a data compilation showing the following information regarding the alleged defects at issue:(A) The scope of the work performed by each potentially responsible

subcontractor.(B) The tract or phase number in which each subcontractor provided goods or

services, or both.(C) The units, either by address, unit number, or lot number, at which each

subcontractor provided goods or services, or both.

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2) This data compilation shall be updated as needed to reflect additional information. Each party attending the case management meeting, and any subsequent meeting pursuant to this section, shall provide all information available to that party relevant to this data compilation.

(h) At the case management meeting, the parties shall, with the assistance of the dispute resolution facilitator, reach agreement on a case management statement, which shall set forth all of the elements set forth in paragraphs (1) to (8), inclusive, except that the parties may dispense with one or more of these elements if they agree that it is appropriate to do so. The case management statement shall provide that the following elements shall take place in the following order:

1) Establishment of a document depository, located in the county where the project is located, for deposit of documents, defect lists, demands, and other information provided for under this section. All documents exchanged by the parties and all documents created pursuant to this subdivision shall be deposited in the document depository, which shall be available to all parties throughout the prefiling dispute resolution process and in any subsequent litigation. When any document is deposited in the document depository, the party depositing the document shall provide written notice identifying the document to all other parties. The costs of maintaining the document depository shall be apportioned among the parties in the same manner as the costs of the dispute resolution facilitator.

2) Provision of a more detailed list of defects by the association to the respondent after the association completes a visual inspection of the project. This list of defects shall provide sufficient detail for the respondent to ensure that all potentially responsible subcontractors and design professionals are provided with notice of the dispute resolution process. If not already completed prior to the case management meeting, the Notice of Commencement of Legal Proceedings shall be served by the respondent on all additional subcontractors and design professionals whose potential responsibility appears on the face of the more detailed list of defects within seven days of receipt of the more detailed list. The respondent shall serve a copy of the case management statement, including the name, address, and telephone number of the dispute resolution facilitator, to all the potentially responsible subcontractors and design professionals at the same time.

3) Nonintrusive visual inspection of the project by the respondent, subcontractors, and design professionals.

4) Invasive testing conducted by the association, if the association deems appropriate. All parties may observe and photograph any testing conducted by the association pursuant to this paragraph, but may not take samples or direct testing unless, by mutual agreement, costs of testing are shared by the parties.

5) Provision by the association of a comprehensive demand which provides sufficient detail for the parties to engage in meaningful dispute resolution as contemplated under this section.

6) Invasive testing conducted by the respondent, subcontractors, and design professionals, if they deem appropriate.

7) Allowance for modification of the demand by the association if new issues arise during the testing conducted by the respondent, subcontractor, or design professionals.

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8) Facilitated dispute resolution of the claim, with all parties, including peripheral parties, as appropriate, and insurers, if any, present and having settlement authority. The dispute resolution facilitators shall endeavor to set specific times for the attendance of specific parties at dispute resolution sessions. If the dispute resolution facilitator does not set specific times for the attendance of parties at dispute resolution sessions, the dispute resolution facilitator shall permit those parties to participate in dispute resolution sessions by telephone.

(i) In addition to the foregoing elements of the case management statement described in subdivision (h), upon mutual agreement of the parties, the dispute resolution facilitator may include any or all of the following elements in a case management statement: the exchange of consultant or expert photographs; expert presentations; expert meetings; or any other mechanism deemed appropriate by the parties in the interest of resolving the dispute.(j) The dispute resolution facilitator, with the guidance of the parties, shall at the time the case management statement is established, set deadlines for the occurrence of each event set forth in the case management statement, taking into account such factors as the size and complexity of the case, and the requirement of this section that this dispute resolution process not exceed 180 days absent agreement of the parties to an extension of time.(k)

1)(A) At a time to be determined by the dispute resolution facilitator, the

respondent may submit to the association all of the following:(i) A request to meet with the board to discuss a written settlement offer.(ii) A written settlement offer, and a concise explanation of the reasons

for the terms of the offer.(iii) A statement that the respondent has access to sufficient funds to

satisfy the conditions of the settlement offer.(iv) A summary of the results of testing conducted for the purposes of

determining the nature and extent of defects, if this testing has been conducted, unless the association provided the respondent with actual test results.

(B) If the respondent does not timely submit the items required by this subdivision, the association shall be relieved of any further obligation to satisfy the requirements of this subdivision only.

(C) No less than 10 days after the respondent submits the items required by this paragraph, the respondent and the board shall meet and confer about the respondent’s settlement offer.

(D) If the board rejects a settlement offer presented at the meeting held pursuant to this subdivision, the board shall hold a meeting open to each member of the association. The meeting shall be held no less than 15 days before the association commences an action for damages against the respondent.

(E) No less than 15 days before this meeting is held, a written notice shall be sent to each member of the association specifying all of the following:(i) That a meeting will take place to discuss problems that may lead to

the filing of a civil action, and the time and place of this meeting.(ii) The options that are available to address the problems, including the

filing of a civil action and a statement of the various alternatives that are reasonably foreseeable by the association to pay for those options

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and whether these payments are expected to be made from the use of reserve account funds or the imposition of regular or special assessments, or emergency assessment increases.

(iii) The complete text of any written settlement offer, and a concise explanation of the specific reasons for the terms of the offer submitted to the board at the meeting held pursuant to subdivision (d) that was received from the respondent.

(F) The respondent shall pay all expenses attributable to sending the settlement offer to all members of the association. The respondent shall also pay the expense of holding the meeting, not to exceed three dollars ($3) per association member.

(G) The discussions at the meeting and the contents of the notice and the items required to be specified in the notice pursuant to subparagraph (E) are privileged communications and are not admissible in evidence in any civil action, unless the association consents to their admission.

(H) No more than one request to meet and discuss a written settlement offer may be made by the respondent pursuant to this subdivision.

(l) All defect lists and demands, communications, negotiations, and settlement offers made in the course of the prelitigation dispute resolution process provided by this section shall be inadmissible pursuant to Sections 1119 to 1124, inclusive, of the Evidence Code and all applicable decisional law. This inadmissibility shall not be extended to any other documents or communications which would not otherwise be deemed inadmissible.(m) Any subcontractor or design professional may, at any time, petition the dispute resolution facilitator to release that party from the dispute resolution process upon a showing that the subcontractor or design professional is not potentially responsible for the defect claims at issue. The petition shall be served contemporaneously on all other parties, who shall have 15 days from the date of service to object. If a subcontractor or design professional is released, and it later appears to the dispute resolution facilitator that it may be a responsible party in light of the current defect list or demand, the respondent shall renotice the party as provided by paragraph (2) of subdivision (e), provide a copy of the current defect list or demand, and direct the party to attend a dispute resolution session at a stated time and location. A party who subsequently appears after having been released by the dispute resolution facilitator shall not be prejudiced by its absence from the dispute resolution process as the result of having been previously released by the dispute resolution facilitator.(n) Any party may, at any time, petition the superior court in the county where the project is located, upon a showing of good cause, and the court may issue an order, for any of the following, or for appointment of a referee to resolve a dispute regarding any of the following:

1) To take a deposition of any party to the process, or subpoena a third party for deposition or production of documents, which is necessary to further prelitigation resolution of the dispute.

2) To resolve any disputes concerning inspection, testing, production of documents, or exchange of information provided for under this section.

3) To resolve any disagreements relative to the timing or contents of the case management statement.

4) To authorize internal extensions of timeframes set forth in the case management statement.

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5) To seek a determination that a settlement is a good faith settlement pursuant to Section 877.6 of the Code of Civil Procedure and all related authorities. The page limitations and meet and confer requirements specified in this section shall not apply to these motions, which may be made on shortened notice. Instead, these motions shall be subject to other applicable state law, rules of court, and local rules. A determination made by the court pursuant to this motion shall have the same force and effect as the determination of a postfiling application or motion for good faith settlement.

6) To ensure compliance, on shortened notice, with the obligation to provide a Statement of Insurance pursuant to paragraph (2) of subdivision (e).

7) For any other relief appropriate to the enforcement of the provisions of this section, including the ordering of parties, and insurers, if any, to the dispute resolution process with settlement authority.

(o)1) A petition filed pursuant to subdivision (n) shall be filed in the superior court in

the county in which the project is located. The court shall hear and decide the petition within 10 days after filing. The petitioning party shall serve the petition on all parties, including the date, time, and location of the hearing no later than five business days prior to the hearing. Any responsive papers shall be filed and served no later than three business days prior to the hearing. Any petition or response filed under this section shall be no more than three pages in length.

2) All parties shall meet with the dispute resolution facilitator, if one has been appointed and confer in person or by telephone prior to the filing of that petition to attempt to resolve the matter without requiring court intervention.

(p) As used in this section:1) “Association” shall have the same meaning as defined in Section 4080.2) “Builder” means the declarant, as defined in Section 4130.3) “Common interest development” shall have the same meaning as in Section

4100, except that it shall not include developments or projects with less than 20units.

(q) The alternative dispute resolution process and procedures described in this section shall have no application or legal effect other than as described in this section.(r) This section shall become operative on July 1, 2002, however it shall not apply to any pending suit or claim for which notice has previously been given.(s) This section shall become inoperative on July 1, 2017, and, as of January 1, 2018, is repealed, unless a later enacted statute, that becomes operative on or before January 1, 2018, deletes or extends the dates on which it becomes inoperative and is repealed.

Civil Code §6100. Settlement Agreements Regarding Alleged Defects; Notice of Resolution to Members on Record; Disclosures.(a) As soon as is reasonably practicable after the association and the builder have entered into a settlement agreement or the matter has otherwise been resolved regarding alleged defects in the common areas, alleged defects in the separate interests that the association is obligated to maintain or repair, or alleged defects in the separate interests that arise out of, or are integrally related to, defects in the common areas or separate interests that the association is obligated to maintain or repair, where the defects giving rise to the dispute have not been corrected, the association shall, in writing, inform only the members of the association whose names appear on the records of the association that the matter has been resolved, by settlement agreement or other means, and disclose all of the following:

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1) A general description of the defects that the association reasonably believes, as of the date of the disclosure, will be corrected or replaced.

2) A good faith estimate, as of the date of the disclosure, of when the association believes that the defects identified in paragraph (1) will be corrected or replaced. The association may state that the estimate may be modified.

3) The status of the claims for defects in the design or construction of the common interest development that were not identified in paragraph (1) whether expressed in a preliminary list of defects sent to each member of the association or otherwise claimed and disclosed to the members of the association.

(b) Nothing in this section shall preclude an association from amending the disclosures required pursuant to subdivision (a), and any amendments shall supersede any prior conflicting information disclosed to the members of the association and shall retain any privilege attached to the original disclosures.(c) Disclosure of the information required pursuant to subdivision (a) or authorized by subdivision (b) shall not waive any privilege attached to the information.(d) For the purposes of the disclosures required pursuant to this section, the term “defects” shall be defined to include any damage resulting from defects.

Civil Code §6150. Written Notice to Members Prior to Filing Civil Action; Contents.(a) Not later than 30 days prior to the filing of any civil action by the association against the declarant or other developer of a common interest development for alleged damage to the common areas, alleged damage to the separate interests that the association is obligated to maintain or repair, or alleged damage to the separate interests that arises out of, or is integrally related to, damage to the common areas or separate interests that the association is obligated to maintain or repair, the board shall provide a written notice to each member of the association who appears on the records of the association when the notice is provided. This notice shall specify all of the following:

1) That a meeting will take place to discuss problems that may lead to the filing of a civil action.

2) The options, including civil actions, that are available to address the problems.3) The time and place of this meeting.

(b) Notwithstanding subdivision (a), if the association has reason to believe that the applicable statute of limitations will expire before the association files the civil action, the association may give the notice, as described above, within 30 days after the filing of the action.

Civil Code §2924b. Notices of Default and of Sale; Mailing Upon Request for Copies and to Certain Interested Persons.(a) Any person desiring a copy of any notice of default and of any notice of sale under any deed of trust or mortgage with power of sale upon real property or an estate for years therein, as to which deed of trust or mortgage the power of sale cannot be exercised until these notices are given for the time and in the manner provided in Section 2924 may, at any time subsequent to recordation of the deed of trust or mortgage and prior to recordation of notice of default thereunder, cause to be filed for record in the office of the recorder of any county in which any part or parcel of the real property is situated, a duly acknowledged request for a copy of the notice of default and of sale. This request shall be signed and acknowledged by the person making the request, specifying the name and address of the person to whom the notice is to be mailed, shall identify the deed of trust or mortgage by stating the names of the parties thereto, the date of recordation thereof,

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and the book and page where the deed of trust or mortgage is recorded or the recorder's number, and shall be in substantially the following form:

“In accordance with Section 2924b, Civil Code, request is hereby made that a copy of any notice of default and a copy of any notice of sale under the deed of trust (or mortgage) recorded ________, ____, in Book _____ page _____ records of __________ County, (or filed for record with recorder's serial number ____, ________ County) California, executed by ______ as trustor (or mortgagor) in which ________ is named as beneficiary (or mortgagee) and ________________ as trustee be mailed to ________________ at _____________________.

Name AddressNOTICE: A copy of any notice of default and of any notice of sale will be sent only to the address contained in this recorded request. If your address changes, a new request must be recorded.

Signature ____________________”

Upon the filing for record of the request, the recorder shall index in the general index of grantors the names of the trustors (or mortgagors) recited therein and the names of persons requesting copies.(b) The mortgagee, trustee, or other person authorized to record the notice of default or the notice of sale shall do each of the following:

1) Within 10 business days following recordation of the notice of default, deposit or cause to be deposited in the United States mail an envelope, sent by registered or certified mail with postage prepaid, containing a copy of the notice with the recording date shown thereon, addressed to each person whose name and address are set forth in a duly recorded request therefor, directed to the address designated in the request and to each trustor or mortgagor at his or her last known address if different than the address specified in the deed of trust or mortgage with power of sale.

2) At least 20 days before the date of sale, deposit or cause to be deposited in the United States mail an envelope, sent by registered or certified mail with postage prepaid, containing a copy of the notice of the time and place of sale, addressed to each person whose name and address are set forth in a duly recorded request therefor, directed to the address designated in the request and to each trustor or mortgagor at his or her last known address if different than the address specified in the deed of trust or mortgage with power of sale.

3) As used in paragraphs (1) and (2), the “last known address” of each trustor or mortgagor means the last business or residence physical address actually known by the mortgagee, beneficiary, trustee, or other person authorized to record the notice of default. For the purposes of this subdivision, an address is “actually known” if it is contained in the original deed of trust or mortgage, or in any subsequent written notification of a change of physical address from the trustor or mortgagor pursuant to the deed of trust or mortgage. For the purposes of this subdivision, “physical address” does not include an email or any form of electronic address for a trustor or mortgagor. The beneficiary shall inform the trustee of the trustor’s last address actually known by the beneficiary. However, the trustee shall incur no liability for failing to send any notice to the last address unless the trustee has actual knowledge of it.

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4) A “person authorized to record the notice of default or the notice of sale” shall include an agent for the mortgagee or beneficiary, an agent of the named trustee, any person designated in an executed substitution of trustee, or an agent of that substituted trustee.

1) (c) The mortgagee, trustee, or other person authorized to record the notice of default or the notice of sale shall do the following: Within one month following recordation of the notice of default, deposit or cause to be deposited in the United States mail an envelope, sent by registered or certified mail with postage prepaid, containing a copy of the notice with the recording date shown thereon, addressed to each person set forth in paragraph (2), provided that the estate or interest of any person entitled to receive notice under this subdivision is acquired by an instrument sufficient to impart constructive notice of the estate or interest in the land or portion thereof that is subject to the deed of trust or mortgage being foreclosed, and provided the instrument is recorded in the office of the county recorder so as to impart that constructive notice prior to the recording date of the notice of default and provided the instrument as so recorded sets forth a mailing address that the county recorder shall use, as instructed within the instrument, for the return of the instrument after recording, and which address shall be the address used for the purposes of mailing notices herein.

2) The persons to whom notice shall be mailed under this subdivision are:(A) The successor in interest, as of the recording date of the notice of default,

of the estate or interest or any portion thereof of the trustor or mortgagor of the deed of trust or mortgage being foreclosed.

(B) The beneficiary or mortgagee of any deed of trust or mortgage recorded subsequent to the deed of trust or mortgage being foreclosed, or recorded prior to or concurrently with the deed of trust or mortgage being foreclosed but subject to a recorded agreement or a recorded statement of subordination to the deed of trust or mortgage being foreclosed.

(C) The assignee of any interest of the beneficiary or mortgagee described in subparagraph (B), as of the recording date of the notice of default.

(D) The vendee of any contract of sale, or the lessee of any lease, of the estate or interest being foreclosed that is recorded subsequent to the deed of trust or mortgage being foreclosed, or recorded prior to or concurrently with the deed of trust or mortgage being foreclosed but subject to a recorded agreement or statement of subordination to the deed of trust or mortgage being foreclosed.

(E) The successor in interest to the vendee or lessee described in subparagraph (D), as of the recording date of the notice of default.

(F) The office of the Controller, Sacramento, California, where, as of the recording date of the notice of default, a “Notice of Lien for Postponed Property Taxes” has been recorded against the real property to which the notice of default applies.

3) At least 20 days before the date of sale, deposit or cause to be deposited in the United States mail an envelope, sent by registered or certified mail with postage prepaid, containing a copy of the notice of the time and place of sale addressed to each person to whom a copy of the notice of default is to be mailed as provided in paragraphs (1) and (2), and addressed to the office of any state taxing agency, Sacramento, California, that has recorded, subsequent to

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4) A “person authorized to record the notice of default or the notice of sale” shall include an agent for the mortgagee or beneficiary, an agent of the named trustee, any person designated in an executed substitution of trustee, or an agent of that substituted trustee.

1) (c) The mortgagee, trustee, or other person authorized to record the notice of default or the notice of sale shall do the following: Within one month following recordation of the notice of default, deposit or cause to be deposited in the United States mail an envelope, sent by registered or certified mail with postage prepaid, containing a copy of the notice with the recording date shown thereon, addressed to each person set forth in paragraph (2), provided that the estate or interest of any person entitled to receive notice under this subdivision is acquired by an instrument sufficient to impart constructive notice of the estate or interest in the land or portion thereof that is subject to the deed of trust or mortgage being foreclosed, and provided the instrument is recorded in the office of the county recorder so as to impart that constructive notice prior to the recording date of the notice of default and provided the instrument as so recorded sets forth a mailing address that the county recorder shall use, as instructed within the instrument, for the return of the instrument after recording, and which address shall be the address used for the purposes of mailing notices herein.

2) The persons to whom notice shall be mailed under this subdivision are:(A) The successor in interest, as of the recording date of the notice of default,

of the estate or interest or any portion thereof of the trustor or mortgagor of the deed of trust or mortgage being foreclosed.

(B) The beneficiary or mortgagee of any deed of trust or mortgage recorded subsequent to the deed of trust or mortgage being foreclosed, or recorded prior to or concurrently with the deed of trust or mortgage being foreclosed but subject to a recorded agreement or a recorded statement of subordination to the deed of trust or mortgage being foreclosed.

(C) The assignee of any interest of the beneficiary or mortgagee described in subparagraph (B), as of the recording date of the notice of default.

(D) The vendee of any contract of sale, or the lessee of any lease, of the estate or interest being foreclosed that is recorded subsequent to the deed of trust or mortgage being foreclosed, or recorded prior to or concurrently with the deed of trust or mortgage being foreclosed but subject to a recorded agreement or statement of subordination to the deed of trust or mortgage being foreclosed.

(E) The successor in interest to the vendee or lessee described in subparagraph (D), as of the recording date of the notice of default.

(F) The office of the Controller, Sacramento, California, where, as of the recording date of the notice of default, a “Notice of Lien for Postponed Property Taxes” has been recorded against the real property to which the notice of default applies.

3) At least 20 days before the date of sale, deposit or cause to be deposited in the United States mail an envelope, sent by registered or certified mail with postage prepaid, containing a copy of the notice of the time and place of sale addressed to each person to whom a copy of the notice of default is to be mailed as provided in paragraphs (1) and (2), and addressed to the office of any state taxing agency, Sacramento, California, that has recorded, subsequent to

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the deed of trust or mortgage being foreclosed, a notice of tax lien prior to the recording date of the notice of default against the real property to which thenotice of default applies.

4) Provide a copy of the notice of sale to the Internal Revenue Service, in accordance with Section 7425 of the Internal Revenue Code and any applicable federal regulation, if a “Notice of Federal Tax Lien under Internal Revenue Laws” has been recorded, subsequent to the deed of trust or mortgage being foreclosed, against the real property to which the notice of sale applies. The failure to provide the Internal Revenue Service with a copy of the notice of sale pursuant to this paragraph shall be sufficient cause to rescind the trustee’s sale and invalidate the trustee’s deed, at the option of either the successful bidder at the trustee’s sale or the trustee, and in either case with the consent of the beneficiary. Any option to rescind the trustee’s sale pursuant to this paragraph shall be exercised prior to any transfer of the property by the successful bidder to a bona fide purchaser for value. A rescission of the trustee’s sale pursuant to this paragraph may be recorded in a notice of rescission pursuant to Section 1058.5.

5) The mailing of notices in the manner set forth in paragraph (1) shall not impose upon any licensed attorney, agent, or employee of any person entitled to receive notices as herein set forth any duty to communicate the notice to the entitled person from the fact that the mailing address used by the county recorder is the address of the attorney, agent, or employee.

(d) Any deed of trust or mortgage with power of sale hereafter executed upon real property or an estate for years therein may contain a request that a copy of any notice of default and a copy of any notice of sale thereunder shall be mailed to any person or party thereto at the address of the person given therein, and a copy of any notice of default and of any notice of sale shall be mailed to each of these at the same time and in the same manner required as though a separate request therefor had been filed by each of these persons as herein authorized. If any deed of trust or mortgage with power of sale executed after September 19, 1939, except a deed of trust or mortgage of any of the classes excepted from the provisions of Section 2924, does not contain a mailing address of the trustor or mortgagor therein named, and if no request for special notice by the trustor or mortgagor in substantially the form set forth in this section has subsequently been recorded, a copy of the notice of default shall be published once a week for at least four weeks in a newspaper of general circulation in the county in which the property is situated, the publication to commence within 10 business days after the filing of the notice of default. In lieu of publication, a copy of the notice of default may be delivered personally to the trustor or mortgagor within the 10 business days or at any time before publication is completed, or by posting the notice of default in a conspicuous place on the property and mailing the notice to the last known address of the trustor or mortgagor.(e) Any person required to mail a copy of a notice of default or notice of sale to each trustor or mortgagor pursuant to subdivision (b) or (c) by registered or certified mail shall simultaneously cause to be deposited in the United States mail, with postage prepaid and mailed by first-class mail, an envelope containing an additional copy of the required notice addressed to each trustor or mortgagor at the same address to which the notice is sent by registered or certified mail pursuant to subdivision (b) or (c). The person shall execute and retain an affidavit identifying the notice mailed, showing the name and residence or business address of that person, that he or she is over 18 years of age, the date of deposit in the mail, the name and address of the trustor or mortgagor to whom

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sent, and that the envelope was sealed and deposited in the mail with postage fully prepaid. In the absence of fraud, the affidavit required by this subdivision shall establish a conclusive presumption of mailing.(f)

1) Notwithstanding subdivision (a), with respect to separate interests governed by an association, as defined in Section 4080, the association may cause to be filed in the office of the recorder in the county in which the separate interests are situated a request that a mortgagee, trustee, or other person authorized to record a notice of default regarding any of those separate interests mail to the association a copy of any trustee’s deed upon sale concerning a separate interest. The request shall include a legal description or the assessor’s parcel number of all the separate interests. A request recorded pursuant to this subdivision shall include the name and address of the association and a statement that it is a homeowners’ association. Subsequent requests of an association shall supersede prior requests. A request pursuant to this subdivision shall be recorded before the filing of a notice of default. The mortgagee, trustee, or other authorized person shall mail the requested information to the association within 15 business days following the date of the trustee’s sale. Failure to mail the request, pursuant to this subdivision, shall not affect the title to real property.

2) A request filed pursuant to paragraph (1) does not, for purposes of Section 27288.1 of the Government Code, constitute a document that either effects or evidences a transfer or encumbrance of an interest in real property or that releases or terminates any interest, right, or encumbrance of an interest in real property.

(g) No request for a copy of any notice filed for record pursuant to this section, nostatement or allegation in the request, and no record thereof shall affect the title to real property or be deemed notice to any person that any person requesting copies of notice has or claims any right, title, or interest in, or lien or charge upon the property described in the deed of trust or mortgage referred to therein.(h) “Business day,” as used in this section, has the meaning specified in Section 9.

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CHAPTER THREE:SB-800 – CONSTRUCTION DEFECTS

TABLE OF CONTENTS

Chapter 1. Definitions

Civil Code §895. SB-800 Definitions.

Chapter 2. Actionable Defects

Civil Code §896. SB-800 Building Standards.Civil Code §897. Scope of the Standards under Section 896.

Chapter 3. Obligations

Civil Code §900. Warranty Requirements for Fitting and Finishing.Civil Code §901. Optional Enhanced Protection and Warranty.Civil Code §902. Enforceability of Enhanced Protection and

Warranty.Civil Code §903. Requirements For Enforceable Enhancement

of Protection or Warranty.Civil Code §904. Disputes Over an Enhanced Protection Warranty.Civil Code §905. Procedure for Legal Determination of

Enforceability of Enhanced Protection or Warranty.

Civil Code §906. Effect of Chapter 4 Prelitigation Procedure on Enhanced Protection or Warranty.

Civil Code §907. Homeowner Maintenance Obligations.

Chapter 4. Prelitigation Procedure

Civil Code §910. Requirement to Send Written Notice of Claim to Developer.

Civil Code §911. Builder, Defined.Civil Code §912. Written Request for Documents by

Homeowners. Requirements for Builder’s Compliance.

Civil Code §913. Requirements for Developer to Acknowledge Homeowners’ Written Claim.

Civil Code §914. Purpose of the Prelitigation Procedure and its Effect on Existing Law.

Civil Code §915. Effect of Developer’s Failure to Comply With the Prelitigation Procedure.

Civil Code §916. Rules and Procedures for Developer’s Election to Inspect the Defects.

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Civil Code §917. Procedure for Developer’s Written Offer to Repair Defects.

Civil Code §918. Procedure for Homeowners’ Response to Developer’s Offer to Repair Defects.

Civil Code §919. Rules and Procedures for Mediation.Civil Code §920. Effect of Developer’s Failure to Offer Repair

of Defects.Civil Code §921. Rules and Procedures for Scheduling of

Repair Work and its Completion.Civil Code §922. Rules for Recording the Repair Work.Civil Code §923. Documents Relating to Repair Work.Civil Code §924. Partial Repair and Reasons for Partial Repairs.Civil Code §925. Effect of Developer’s Failure to Repair Work

on Schedule.Civil Code §926. Developer Cannot Obtain Release in Exchange

for Repair Work.Civil Code §927. Application of Statute of Limitations to the

Prelitigation Procedure.Civil Code §928. Rules for Mediation After Repair Work Civil Code §929. Monetary Offer by Developer.Civil Code §930. Application of Timeframes and Other

Requirements of the Prelitigation Procedure.Civil Code §931. Application of Prelitigation Procedure to

Other Causes of Action.Civil Code §932. Defects Discovered Subsequent to the

Prelitigation Procedure.Civil Code §933. Use of Evidence of Repair Work.Civil Code §934. Use of Evidence of Parties’ Conduct During

Prelitigation Procedure.Civil Code §935. Application of SB-800 With Other Sections in

the Civil Code.Civil Code §936. Parties and Entities Subject to SB-800.Civil Code §937. Application of SB-800 With Professional

Negligence Actions.Civil Code §938. SB-800 Applies Only to Residential Units Built

After January 1, 2003.

Chapter 5. Procedure

Civil Code §941. SB-800’s Rules Regarding Statute of Limitations.Civil Code §942. Homeowner’s Burden of Proof Under SB-800Civil Code §943. SB-800’s Exclusivity.Civil Code §944. Rules for Determining Damages Under SB- 800.Civil Code §945. Effect of SB-800 on Original Owners and

Their Successors.Civil Code §945.5. Developer’s Affirmative Defenses.

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Chapter 1. Definitions

Civil Code §895. SB-800 Definitions.(a) "Structure" means any residential dwelling, other building, or improvement located upon a lot or within a common area.(b) "Designed moisture barrier" means an installed moisture barrier specified in the plans and specifications, contract documents, or manufacturer's recommendations.(c) "Actual moisture barrier" means any component or material, actually installed, that serves to any degree as a barrier against moisture, whether or not intended as such.(d) "Unintended water" means water that passes beyond, around, or through a component or the material that is designed to prevent that passage.(e) "Close of escrow" means the date of the close of escrow between the builder and the original homeowner. With respect to claims by an association, as defined in Section 4080, "close of escrow" means the date of substantial completion, as defined in Section 337.15 of the Code of Civil Procedure, or the date the builder relinquishes control over the association's ability to decide whether to initiate a claim under this title, whichever is later. (f) "Claimant" or "homeowner" includes the individual owners of single-family homes, individual unit owners of attached dwellings and, in the case of a common interest development, any association as defined in Section 4080.

Chapter 2. Actionable Defects

Civil Code §896. SB-800 Building Standards.In any action seeking recovery of damages arising out of, or related to deficiencies in, the residential construction, design, specifications, surveying, planning, supervision, testing, or observation of construction, a builder, and to the extent set forth in Chapter4 (commencing with Section 910), a general contractor, subcontractor, material supplier, individual product manufacturer, or design professional, shall, except as specifically set forth in this title, be liable for, and the claimant's claims or causes of action shall be limited to violation of, the following standards, except as specifically set forth in this title. This title applies to original construction intended to be sold as an individual dwelling unit. As to condominium conversions, this title does not apply to or does not supersede any other statutory or common law.(a) With respect to water issues:

1) A door shall not allow unintended water to pass beyond, around, or through the door or its designed or actual moisture barriers, if any,

2) Windows, patio doors, deck doors, and their systems shall not allow water to pass beyond, around, or through the window, patio door, or deck door or its designed or actual moisture barriers, including, without limitation, internal barriers within the systems themselves. For purposes of this paragraph, "systems" include, without limitation, windows, window assemblies, framing, substrate, flashings, and trim, if any.

3) Windows, patio doors, deck doors, and their systems shall not allow excessive condensation to enter the structure and cause damage to another component. For purposes of this paragraph, "systems" include, without limitation, windows, window assemblies, framing, substrate, flashings, and trim, if any.

4) Roofs, roofing systems, chimney caps, and ventilation components shall not allow water to enter the structure or to pass beyond, around, or through the

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designed or actual moisture barriers, including, without limitation, internal barriers located within the systems themselves. For purposes of this paragraph, “systems” include, without limitation, framing, substrate, and sheathing, if any.

5) Decks, deck systems, balconies, balcony systems, exterior stairs, and stair systems shall not allow water to pass into the adjacent structure. For purposes of this paragraph, “systems” include, without limitation, framing, substrate, flashing, and sheathing, if any.

6) Decks, deck systems, balconies, balcony systems, exterior stairs, and stair systems shall not allow unintended water to pass within the systems themselves and cause damage to the systems. For purposes of this paragraph, “systems”include, without limitation, framing, substrate, flashing, and sheathing, if any.

7) Foundation systems and slabs shall not allow water or vapor to enter into the structure so as to cause damage to another building component.

8) Foundation systems and slabs shall not allow water or vapor to enter into the structure so as to limit the installation of the type of flooring materials typically used for the particular application.

9) Hardscape, including paths and patios, irrigation systems, landscaping systems, and drainage systems, that are installed as part of the original construction, shall not be installed in such a way as to cause water or soil erosion to enter into or come in contact with the structure so as to cause damage to another building component.

10) Stucco, exterior siding, exterior walls, including, without limitation, exterior framing, and other exterior wall finishes and fixtures and the systems of those components and fixtures, including, but not limited to, pot shelves, horizontal surfaces, columns, and plant-ons, shall be installed in such a way so as not to allow unintended water to pass into the structure or to pass beyond, around, or through the designed or actual moisture barriers of the system, including any internal barriers located within the system itself. For purposes of this paragraph, "systems" include, without limitation, framing, substrate, flashings, trim, wall assemblies, and internal wall cavities, if any.

11) Stucco, exterior siding, and exterior walls shall not allow excessive condensation to enter the structure and cause damage to another component. For purposes of this paragraph, "systems" include, without limitation, framing, substrate, flashings, trim, wall assemblies, and internal wall cavities, if any.

12) Retaining and site walls and their associated drainage systems shall not allow unintended water to pass beyond, around, or through its designed or actual moisture barriers including, without limitation, any internal barriers, so as to cause damage. This standard does not apply to those portions of any wall or drainage system that are designed to have water flow beyond, around, or through them.

13) Retaining walls and site walls, and their associated drainage systems, shall only allow water to flow beyond, around, or through the areas designated by design.

14) The lines and components of the plumbing system, sewer system, and utility systems shall not leak.

15) Plumbing lines, sewer lines, and utility lines shall not corrode so as to impede the useful life of the systems.

16) Sewer systems shall be installed in such a way as to allow the designated amount of sewage to flow through the system.

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designed or actual moisture barriers, including, without limitation, internal barriers located within the systems themselves. For purposes of this paragraph, “systems” include, without limitation, framing, substrate, and sheathing, if any.

5) Decks, deck systems, balconies, balcony systems, exterior stairs, and stair systems shall not allow water to pass into the adjacent structure. For purposes of this paragraph, “systems” include, without limitation, framing, substrate, flashing, and sheathing, if any.

6) Decks, deck systems, balconies, balcony systems, exterior stairs, and stair systems shall not allow unintended water to pass within the systems themselves and cause damage to the systems. For purposes of this paragraph, “systems”include, without limitation, framing, substrate, flashing, and sheathing, if any.

7) Foundation systems and slabs shall not allow water or vapor to enter into the structure so as to cause damage to another building component.

8) Foundation systems and slabs shall not allow water or vapor to enter into the structure so as to limit the installation of the type of flooring materials typically used for the particular application.

9) Hardscape, including paths and patios, irrigation systems, landscaping systems, and drainage systems, that are installed as part of the original construction, shall not be installed in such a way as to cause water or soil erosion to enter into or come in contact with the structure so as to cause damage to another building component.

10) Stucco, exterior siding, exterior walls, including, without limitation, exterior framing, and other exterior wall finishes and fixtures and the systems of those components and fixtures, including, but not limited to, pot shelves, horizontal surfaces, columns, and plant-ons, shall be installed in such a way so as not to allow unintended water to pass into the structure or to pass beyond, around, or through the designed or actual moisture barriers of the system, including any internal barriers located within the system itself. For purposes of this paragraph, "systems" include, without limitation, framing, substrate, flashings, trim, wall assemblies, and internal wall cavities, if any.

11) Stucco, exterior siding, and exterior walls shall not allow excessive condensation to enter the structure and cause damage to another component. For purposes of this paragraph, "systems" include, without limitation, framing, substrate, flashings, trim, wall assemblies, and internal wall cavities, if any.

12) Retaining and site walls and their associated drainage systems shall not allow unintended water to pass beyond, around, or through its designed or actual moisture barriers including, without limitation, any internal barriers, so as to cause damage. This standard does not apply to those portions of any wall or drainage system that are designed to have water flow beyond, around, or through them.

13) Retaining walls and site walls, and their associated drainage systems, shall only allow water to flow beyond, around, or through the areas designated by design.

14) The lines and components of the plumbing system, sewer system, and utility systems shall not leak.

15) Plumbing lines, sewer lines, and utility lines shall not corrode so as to impede the useful life of the systems.

16) Sewer systems shall be installed in such a way as to allow the designated amount of sewage to flow through the system.

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17) Showers, baths, and related waterproofing systems shall not leak water into the interior of walls, flooring systems, or the interior of other components.

18) The waterproofing system behind or under ceramic tile and tile countertops shall not allow water into the interior of walls, flooring systems, or other components so as to cause damage. Ceramic tile systems shall be designed and installed so as to deflect intended water to the waterproofing system.

(b) With respect to structural issues:1) Foundations, load bearing components, and slabs, shall not contain significant

cracks or significant vertical displacement.2) Foundations, load bearing components, and slabs shall not cause the structure,

in whole or in part, to be structurally unsafe.3) Foundations, load bearing components, and slabs, and underlying soils shall be

constructed so as to materially comply with the design criteria set by applicable government building codes, regulations, and ordinances for chemical deterioration or corrosion resistance in effect at the time of original construction.

4) A structure shall be constructed so as to materially comply with the design criteria for earthquake and wind load resistance, as set forth in the applicable government building codes, regulations, and ordinances in effect at the time of original construction.

(c) With respect to soil issues:1) Soils and engineered retaining walls shall not cause, in whole or in part,

damage to the structure built upon the soil or engineered retaining wall.2) Soils and engineered retaining walls shall not cause, in whole or in part, the

structure to be structurally unsafe.3) Soils shall not cause, in whole or in part, the land upon which no structure is

built to become unusable for the purpose represented at the time of original sale by the builder or for the purpose for which that land is commonly used.

(d) With respect to fire protection issues:1) A structure shall be constructed so as to materially comply with the design

criteria of the applicable government building codes, regulations, and ordinances for fire protection of the occupants in effect at the time of the original construction.

2) Fireplaces, chimneys, chimney structures, and chimney termination caps shall be constructed and installed in such a way so as not to cause an unreasonable risk of fire outside the fireplace enclosure or chimney.

3) Electrical and mechanical systems shall be constructed and installed in such a way so as not to cause an unreasonable risk of fire.

(e) With respect to plumbing and sewer issues:Plumbing and sewer systems shall be installed to operate properly and shall not materially impair the use of the structure by its inhabitants. However, no action may be brought for a violation of this subdivision more than four years after close of escrow.(f) With respect to electrical system issues:Electrical systems shall operate properly and shall not materially impair the use of the structure by its inhabitants. However, no action shall be brought pursuant to this subdivision more than four years from close of escrow.(g) With respect to issues regarding other areas of construction:

1) Exterior pathways, driveways, hardscape, sidewalls, sidewalks, and patios installed by the original builder shall not contain cracks that display significant

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vertical displacement or that are excessive. However, no action shall be brought upon a violation of this paragraph more than four years from close of escrow.

2) Stucco, exterior siding, and other exterior wall finishes and fixtures, including, but not limited to, pot shelves, horizontal surfaces, columns, and plant-ons, shall not contain significant cracks or separations.

3)A. To the extent not otherwise covered by these standards, manufactured

products, including, but not limited to, windows, doors, roofs, plumbing products and fixtures, fireplaces, electrical fixtures, HVAC units, countertops, cabinets, paint, and appliances shall be installed so as not to interfere with the products' useful life, if any.

B. For purposes of this paragraph, "useful life" means a representation of how long a product is warranted or represented, through its limited warranty or any written representations, to last by its manufacturer, including recommended or required maintenance. If there is no representation by a manufacturer, a builder shall install manufactured products so as not to interfere with the product's utility.

C. For purposes of this paragraph, “manufactured product” means a product that is completely manufactured offsite.

D. If no useful life representation is made, or if the representation is less thanone year, the period shall be no less than one year. If a manufactured product is damaged as a result of a violation of these standards, damage to the product is a recoverable element of damages. This subparagraph does not limit recovery if there has been damage to another building component caused by a manufactured product during the manufactured product's useful life.

E. This title does not apply in any action seeking recovery solely for a defect in a manufactured product located within or adjacent to a structure.

4) Heating, if any, shall be installed so as to be capable of maintaining a room temperature of 70 degrees Fahrenheit at a point three feet above the floor in any living space.

5) Living space air-conditioning, if any, shall be provided in a manner consistent with the size and efficiency design criteria specified in Title 24 of the California Code of Regulations or its successor.

6) Attached structures shall be constructed to comply with inter unit noise transmission standards set by the applicable government building codes, ordinances, or regulations in effect at the time of the original construction. If there is no applicable code, ordinance, or regulation, this paragraph does not apply. However, no action shall be brought pursuant to this paragraph more than one year from the original occupancy of the adjacent unit.

7) Irrigation systems and drainage shall operate properly so as not to damage landscaping or other external improvements. However, no action shall be brought pursuant to this paragraph more than one year from close of escrow.

8) Untreated wood posts shall not be installed in contact with soil so as to cause unreasonable decay to the wood based upon the finish grade at the time of original construction. However, no action shall be brought pursuant to this paragraph more than two years from close of escrow.

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vertical displacement or that are excessive. However, no action shall be brought upon a violation of this paragraph more than four years from close of escrow.

2) Stucco, exterior siding, and other exterior wall finishes and fixtures, including, but not limited to, pot shelves, horizontal surfaces, columns, and plant-ons, shall not contain significant cracks or separations.

3)A. To the extent not otherwise covered by these standards, manufactured

products, including, but not limited to, windows, doors, roofs, plumbing products and fixtures, fireplaces, electrical fixtures, HVAC units, countertops, cabinets, paint, and appliances shall be installed so as not to interfere with the products' useful life, if any.

B. For purposes of this paragraph, "useful life" means a representation of how long a product is warranted or represented, through its limited warranty or any written representations, to last by its manufacturer, including recommended or required maintenance. If there is no representation by a manufacturer, a builder shall install manufactured products so as not to interfere with the product's utility.

C. For purposes of this paragraph, “manufactured product” means a product that is completely manufactured offsite.

D. If no useful life representation is made, or if the representation is less thanone year, the period shall be no less than one year. If a manufactured product is damaged as a result of a violation of these standards, damage to the product is a recoverable element of damages. This subparagraph does not limit recovery if there has been damage to another building component caused by a manufactured product during the manufactured product's useful life.

E. This title does not apply in any action seeking recovery solely for a defect in a manufactured product located within or adjacent to a structure.

4) Heating, if any, shall be installed so as to be capable of maintaining a room temperature of 70 degrees Fahrenheit at a point three feet above the floor in any living space.

5) Living space air-conditioning, if any, shall be provided in a manner consistent with the size and efficiency design criteria specified in Title 24 of the California Code of Regulations or its successor.

6) Attached structures shall be constructed to comply with inter unit noise transmission standards set by the applicable government building codes, ordinances, or regulations in effect at the time of the original construction. If there is no applicable code, ordinance, or regulation, this paragraph does not apply. However, no action shall be brought pursuant to this paragraph more than one year from the original occupancy of the adjacent unit.

7) Irrigation systems and drainage shall operate properly so as not to damage landscaping or other external improvements. However, no action shall be brought pursuant to this paragraph more than one year from close of escrow.

8) Untreated wood posts shall not be installed in contact with soil so as to cause unreasonable decay to the wood based upon the finish grade at the time of original construction. However, no action shall be brought pursuant to this paragraph more than two years from close of escrow.

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9) Untreated steel fences and adjacent components shall be installed so as to prevent unreasonable corrosion. However, no action shall be brought pursuant to this paragraph more than four years from close of escrow.

10) Paint and stains shall be applied in such a manner so as not to cause deterioration of the building surfaces for the length of time specified by the paint or stain manufacturers' representations, if any. However, no action shall be brought pursuant to this paragraph more than five years from close of escrow.

11) Roofing materials shall be installed so as to avoid materials falling from the roof.

12) The landscaping systems shall be installed in such a manner so as to survive for not less than one year. However, no action shall be brought pursuant to this paragraph more than two years from close of escrow.

13) Ceramic tile and tile backing shall be installed in such a manner that the tile does not detach.

14) Dryer ducts shall be installed and terminated pursuant to manufacturer installation requirements. However, no action shall be brought pursuant to this paragraph more than two years from close of escrow.

15) Structures shall be constructed in such a manner so as not to impair the occupants' safety because they contain public health hazards as determined by a duly authorized public health official, health agency, or governmental entity having jurisdiction. This paragraph does not limit recovery for any damages caused by a violation of any other paragraph of this section on the grounds that the damages do not constitute a health hazard.

Civil Code §897. Scope of the Standards Under Section 896.The standards set forth in this chapter are intended to address every function or component of a structure. To the extent that a function or component of a structure is not addressed by these standards, it shall be actionable if it causes damage.

Chapter 3. Obligations

Civil Code §900. Warranty Requirements for Fitting and Finishing.As to fit and finish items, a builder shall provide a homebuyer with a minimum one-year express written limited warranty covering the fit and finish of the following building components. Except as otherwise provided by the standards specified in Chapter 2 (commencing with Section 896), this warranty shall cover the fit and finish of cabinets, mirrors, flooring, interior and exterior walls, countertops, paint finishes, and trim, but shall not apply to damage to those components caused by defects in other componentsgoverned by the other provisions of this title. Any fit and finish matters covered by this warranty are not subject to the provisions of this title. If a builder fails to provide the express warranty required by this section, the warranty for these items shall be for a period of one year.

Civil Code §901. Optional Enhanced Protection and Warranty.A builder may, but is not required to, offer greater protection or protection for longer time periods in its express contract with the homeowner than that set forth in Chapter 2 (commencing with Section 896). A builder may not limit the application of

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Chapter 2 (commencing with Section 896) or lower its protection through the express contract with the homeowner. This type of express contract constitutes an "enhanced protection agreement."

Civil Code §902. Enforceability of Enhanced Protection and Warranty.If a builder offers an enhanced protection agreement, the builder may choose to be subject to its own express contractual provisions in place of the provisions set forth in Chapter 2 (commencing with Section 896). If an enhanced protection agreement is in place, Chapter 2 (commencing with Section 896) no longer applies other than to set forth minimum provisions by which to judge the enforceability of the particular provisions of the enhanced protection agreement.

Civil Code §903. Requirements for Enforceable Enhancement of Protection or Warranty.If a builder offers an enhanced protection agreement in place of the provisions set forth in Chapter 2 (commencing with Section 896), the election to do so shall be made in writing with the homeowner no later than the close of escrow. The builder shall provide the homeowner with a complete copy of Chapter 2 (commencing with Section 896) and advise the homeowner that the builder has elected not to be subject to its provisions. If any provision of an enhanced protection agreement is later found to be unenforceable as not meeting the minimum standards of Chapter 2 (commencing with Section 896), a builder may use this chapter in lieu of those provisions found to be unenforceable.

Civil Code §904. Disputes Over an Enhanced Protection Warranty.If a builder has elected to use an enhanced protection agreement, and a homeowner disputes that the particular provision or time periods of the enhanced protection agreement are not greater than, or equal to, the provisions of Chapter 2 (commencing with Section 896) as they apply to the particular deficiency alleged by the homeowner, the homeowner may seek to enforce the application of the standards set forth in this chapter as to those claimed deficiencies. If a homeowner seeks to enforce a particular standard in lieu of a provision of the enhanced protection agreement, the homeowner shall give the builder written notice of that intent at the time the homeowner files a notice of claim pursuant to Chapter 4 (commencing with Section 910).

Civil Code §905. Procedure for Legal Determination of Enforceability of Enhanced Protection or Warranty.If a homeowner seeks to enforce Chapter 2 (commencing with Section 896), in lieu of the enhanced protection agreement in a subsequent litigation or other legal action, the builder shall have the right to have the matter bifurcated, and to have an immediately binding determination of his or her responsive pleading within 60 days after the filing of that pleading, but in no event after the commencement of discovery, as to the application of either Chapter 2 (commencing with Section 896) or the enhanced protection agreement as to the deficiencies claimed by the homeowner. If the builder fails to seek that determination in the timeframe specified, the builder waives the right to do so and the standards set forth in this title shall apply. As to any nonoriginal homeowner, that homeowner shall be deemed in privity for purposes of an enhanced protection agreement only to the extent that the builder has recorded the enhanced protection agreement on title or provided actual notice to the nonoriginal homeowner of the enhanced protection agreement. If the enhanced protection agreement is not recorded on title or no actual

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notice has been provided, the standards set forth in this title apply to any nonoriginal homeowners' claims.

Civil Code §906. Effect of Chapter 4 Prelitigation Procedure on Enhanced Protection or Warranty.A builder's election to use an enhanced protection agreement addresses only the issues set forth in Chapter 2 (commencing with Section 896) and does not constitute an election to use or not use the provisions of Chapter 4 (commencing with Section 910).The decision to use or not use Chapter 4 (commencing with Section 910) is governed by the provisions of that chapter.

Civil Code §907. Homeowner Maintenance Obligations.A homeowner is obligated to follow all reasonable maintenance obligations and schedules communicated in writing to the homeowner by the builder and product manufacturers, as well as commonly accepted maintenance practices. A failure by a homeowner to follow these obligations, schedules, and practices may subject the homeowner to the affirmative defenses contained in Section 944.

Chapter 4. Prelitigation Procedure

Civil Code §910. Requirement to Send Written Notice of Claim to Developer.Prior to filing an action against any party alleged to have contributed to a violation of the standards set forth in Chapter 2 (commencing with Section 896), the claimant shall initiate the following prelitigation procedures:(a) The claimant or his or her legal representative shall provide written notice via certified mail, overnight mail, or personal delivery to the builder, in the manner prescribed in this section, of the claimant's claim that the construction of his or her residence violates any of the standards set forth in Chapter 2 (commencing with Section 896). That notice shall provide the claimant's name, address, and preferred method of contact, and shall state that the claimant alleges a violation pursuant to this part against the builder, and shall describe the claim in reasonable detail sufficient to determine the nature and location, to the extent known, of the claimed violation. In the case of a group of homeowners or an association, the notice may identify the claimants solely by address or other description sufficient to apprise the builder of the locations of the subject residences. That document shall have the same force and effect as a notice of commencement of a legal proceeding.(b) The notice requirements of this section do not preclude a homeowner from seeking redress through any applicable normal customer service procedure as set forth in any contractual, warranty, or other builder-generated document; and, if a homeowner seeks to do so, that request shall not satisfy the notice requirements of this section.

Civil Code §911. Builder, Defined.(a) For purposes of this title, except as provided in subdivision (b), “builder” means any entity or individual, including, but not limited to a builder, developer, general contractor, contractor, or original seller, who, at the time of sale, was also in the business of selling residential units to the public for the property that is the subject of the homeowner's claim or was in the business of building, developing, or constructing residential units for public purchase for the property that is the subject of the homeowner's claim.

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(b) For the purposes of this title, “builder” does not include any entity or individual whose involvement with a residential unit that is the subject of the homeowner's claim is limited to his or her capacity as general contractor or contractor and who is not a partner, member of, subsidiary of, or otherwise similarly affiliated with the builder. For purposesof this title, these nonaffiliated general contractors and nonaffiliated contractors shall be treated the same as subcontractors, material suppliers, individual product manufacturers, and design professionals.

Civil Code §912. Written Request for Documents by Homeowners. Requirements for Builder’s Compliance. A builder shall do all of the following:(a) Within 30 days of a written request by a homeowner or his or her legal representative, the builder shall provide copies of all relevant plans, specifications, mass or rough grading plans, final soils reports, Department of Real Estate public reports, and available engineering calculations, that pertain to a homeowner's residence specifically or as part of a larger development tract. The request shall be honored if it states that it is made relative to structural, fire safety, or soils provisions of this title. However, a builder is not obligated to provide a copying service, and reasonable copying costs shall be borne bythe requesting party. A builder may require that the documents be copied onsite by the requesting party, except that the homeowner may, at his or her option, use his or her own copying service, which may include an offsite copy facility that is bonded and insured. If a builder can show that the builder maintained the documents, but that they later became unavailable due to loss or destruction that was not the fault of the builder, the builder may be excused from the requirements of this subdivision, in which case the builder shall act with reasonable diligence to assist the homeowner in obtaining those documents from any applicable government authority or from the source that generated the document. However, in that case, the time limits specified by this section do not apply.(b) At the expense of the homeowner, who may opt to use an offsite copy facility that is bonded and insured, the builder shall provide to the homeowner or his or her legal representative copies of all maintenance and preventative maintenance recommendations that pertain to his or her residence within 30 days of service of a written request for those documents. Those documents shall also be provided to the homeowner in conjunction with the initial sale of the residence.(c) At the expense of the homeowner, who may opt to use an offsite copy facility that is bonded and insured, a builder shall provide to the homeowner or his or her legal representative copies of all manufactured products maintenance, preventive maintenance, and limited warranty information within 30 days of a written request for those documents. These documents shall also be provided to the homeowner in conjunction with the initial sale of the residence.(d) At the expense of the homeowner, who may opt to use an offsite copy facility that is bonded and insured, a builder shall provide to the homeowner or his or her legal representative copies of all of the builder's limited contractual warranties in accordance with this part in effect at the time of the original sale of the residence within 30 days of a written request for those documents. Those documents shall also be provided to the homeowner in conjunction with the initial sale of the residence.(e) A builder shall maintain the name and address of an agent for notice pursuant to this chapter with the Secretary of State or, alternatively, elect to use a third party for that notice if the builder has notified the homeowner in writing of the third party's name and address, to whom claims and requests for information under this section may be mailed.

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The name and address of the agent for notice or third party shall be included with the original sales documentation and shall be initialed and acknowledged by the purchaser and the builder's sales representative. This subdivision applies to instances in which a builder contracts with a third party to accept claims and act on the builder's behalf. A builder shall give actual notice to the homeowner that the builder has made such an election, and shall include the name and address of the third party.(f) A builder shall record on title a notice of the existence of these procedures and a notice that these procedures impact the legal rights of the homeowner. This information shall also be included with the original sales documentation and shall be initialed and acknowledged by the purchaser and the builder's sales representative.(g) A builder shall provide, with the original sales documentation, a written copy of this title, which shall be initialed and acknowledged by the purchaser and the builder's sales representative.(h) As to any documents provided in conjunction with the original sale, the builder shall instruct the original purchaser to provide those documents to any subsequent purchaser.(i) Any builder who fails to comply with any of these requirements within the time specified is not entitled to the protection of this chapter, and the homeowner is released from the requirements of this chapter and may proceed with the filing of an action, in which case the remaining chapters of this part shall continue to apply to the action.

Civil Code §913. Requirements for Developer to Acknowledge Homeowners’ Written Claim.A builder or his or her representative shall acknowledge, in writing, receipt of the notice of the claim within 14 days after receipt of the notice of the claim. If the notice of the claim is served by the claimant's legal representative, or if the builder receives a written representation letter from a homeowner's attorney, the builder shall include the attorney in all subsequent substantive communications, including, without limitation, all written communications occurring pursuant to this chapter, and all substantive and procedural communications, including all written communications, following the commencement of any subsequent complaint or other legal action, except that if the builder has retained or involved legal counsel to assist the builder in this process, all communications by the builder's counsel shall only be with the claimant's legal representative, if any.

Civil Code §914. Purpose of the Prelitigation Procedure and its Effect on Existing Law.(a) This chapter establishes a nonadversarial procedure, including the remedies available under this chapter which, if the procedure does not resolve the dispute between the parties, may result in a subsequent action to enforce the other chapters of this title. A builder may attempt to commence nonadversarial contractual provisions other than the nonadversarial procedures and remedies set forth in this chapter, but may not, in addition to its own nonadversarial contractual provisions, require adherence to the nonadversarial procedures and remedies set forth in this chapter, regardless of whether the builder's own alternative nonadversarial contractual provisions are successful in resolving the dispute or ultimately deemed enforceable. At the time the sales agreement is executed, the builder shall notify the homeowner whether the builder intends to engage in the nonadversarial procedure of this section or attempt to enforce alternative nonadversarial contractual provisions. If the builder elects to use alternative nonadversarial contractual provisions in lieu of this chapter, the election is binding, regardless of whether the builder's alternative

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nonadversarial contractual provisions are successful in resolving the ultimate dispute or are ultimately deemed enforceable.(b) Nothing in this title is intended to affect existing statutory or decisional law pertaining to the applicability, viability, or enforceability of alternative dispute resolution methods, alternative remedies, or contractual arbitration, judicial reference, or similar procedures requiring a binding resolution to enforce the other chapters of this title or any other disputes between homeowners and builders. Nothing in this title is intended to affect the applicability, viability, or enforceability, if any, of contractual arbitration or judicial reference after a nonadversarial procedure or provision has been completed.

Civil Code §915. Effect of Developer’s Failure to Comply with the Prelitigation Procedure.If a builder fails to acknowledge receipt of the notice of a claim within the time specified, elects not to go through the process set forth in this chapter, or fails to request an inspection within the time specified, or at the conclusion or cessation of an alternative nonadversarial proceeding, this chapter does not apply and the homeowner is released from the requirements of this chapter and may proceed with the filing of an action. However, the standards set forth in the other chapters of this title shall continue to apply to the action.

Civil Code §916. Rules and Procedures for Developer’s Election to Inspect the Defects.(a) If a builder elects to inspect the claimed unmet standards, the builder shall complete the initial inspection and testing within 14 days after acknowledgment of receipt of the notice of the claim, at a mutually convenient date and time. If the homeowner has retained legal representation, the inspection shall be scheduled with the legal representative's office at a mutually convenient date and time, unless the legal representative is unavailable during the relevant time periods. All costs of builder inspection and testing, including any damage caused by the builder inspection, shall be borne by the builder. The builder shall also provide written proof that the builder has liability insurance to cover any damages or injuries occurring during inspection and testing. The builder shall restore the property to its pretesting condition within 48 hoursof the testing. The builder shall, upon request, allow the inspections to be observed and electronically recorded, videotaped, or photographed by the claimant or his or her legal representative.(b) Nothing that occurs during a builder's or claimant's inspection or testing may be used or introduced as evidence to support a spoliation defense by any potential party in any subsequent litigation.(c) If a builder deems a second inspection or testing reasonably necessary, and specifies the reasons therefore in writing within three days following the initial inspection, the builder may conduct a second inspection or testing. A second inspection or testing shall be completed within 40 days of the initial inspection or testing. All requirements concerning the initial inspection or testing shall also apply to the second inspection or testing.(d) If the builder fails to inspect or test the property within the time specified, the claimant is released from the requirements of this section and may proceed with the filing of an action. However, the standards set forth in the other chapters of this title shall continue to apply to the action.

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(e) If a builder intends to hold a subcontractor, design professional, individual product manufacturer, or material supplier, including an insurance carrier, warranty company, or service company, responsible for its contribution to the unmet standard, the builder shall provide notice to that person or entity sufficiently in advance to allow them to attend the initial, or if requested, second inspection of any alleged unmet standard and to participate in the repair process. The claimant and his or her legal representative, if any, shall be advised in a reasonable time prior to the inspection as to the identity of all persons or entities invited to attend. This subdivision does not apply to the builder's insurance company. Except with respect to any claims involving a repair actually conducted under this chapter, nothing in this subdivision shall be construed to relieve a subcontractor, design professional, individual product manufacturer, or material supplier of any liability under an action brought by a claimant.

Civil Code §917. Procedure for Developer’s Written Offer to Repair Defects.Within 30 days of the initial or, if requested, second inspection or testing, the builder may offer in writing to repair the violation. The offer to repair shall also compensate the homeowner for all applicable damages recoverable under Section 944, within the time frame for the repair set forth in this chapter. Any such offer shall be accompanied by a detailed, specific, step-by-step statement identifying the particular violation that is being repaired, explaining the nature, scope, and location of the repair, and setting a reasonable completion date for the repair. The offer shall also include the names, addresses, telephone numbers, and license numbers of the contractors whom the builder intends to have perform the repair. Those contractors shall be fully insured for, and shall be responsible for, all damages or injuries that they may cause to occur during the repair, and evidence of that insurance shall be provided to the homeowner upon request. Upon written request by the homeowner or his or her legal representative, and within the timeframes set forth in this chapter, the builder shall also provide any available technical documentation, including, without limitation, plans and specifications, pertaining to the claimed violation within the particular home or development tract. The offer shall also advise the homeowner in writing of his or her right to request up to three additional contractors from which to select to do the repair pursuant to this chapter.

Civil Code §918. Procedure for Homeowners' Response to Developer’s Offer to Repair Defects.Upon receipt of the offer to repair, the homeowner shall have 30 days to authorize the builder to proceed with the repair. The homeowner may alternatively request, at the homeowner's sole option and discretion, that the builder provide the names, addresses, telephone numbers, and license numbers for up to three alternative contractors who are not owned or financially controlled by the builder and who regularly conduct business in the county where the structure is located. If the homeowner so elects, the builder is entitled to an additional noninvasive inspection, to occur at a mutually convenient date and time within 20 days of the election, so as to permit the other proposed contractors to review the proposed site of the repair. Within 35 days after the request of the homeowner for alternative contractors, the builder shall present the homeowner with a choice of contractors. Within 20 days after that presentation, the homeowner shall authorize the builder or one of the alternative contractors to perform the repair.

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Civil Code §919. Rules and Procedures for Mediation.The offer to repair shall also be accompanied by an offer to mediate the dispute if the homeowner so chooses. The mediation shall be limited to a four-hour mediation, except as otherwise mutually agreed before a nonaffiliated mediator selected and paid for by the builder. At the homeowner's sole option, the homeowner may agree to split the cost of the mediator, and if he or she does so, the mediator shall be selected jointly. The mediator shall have sufficient availability such that the mediation occurs within 15 days after therequest to mediate is received and occurs at a mutually convenient location within the county where the action is pending. If a builder has made an offer to repair a violation, and the mediation has failed to resolve the dispute, the homeowner shall allow the repair to be performed either by the builder, its contractor, or the selected contractor.

Civil Code §920. Effect of Developer’s Failure to Offer Repair of Defects.If the builder fails to make an offer to repair or otherwise strictly comply with this chapter within the times specified, the claimant is released from the requirements of this chapter and may proceed with the filing of an action. If the contractor performing the repair does not complete the repair in the time or manner specified, the claimant may file an action. If this occurs, the standards set forth in the other chapters of this part shall continue to apply to the action.

Civil Code §921. Rules and Procedures for Scheduling of Repair Work and its Completion.(a) In the event that a resolution under this chapter involves a repair by the builder, the builder shall make an appointment with the claimant, make all appropriate arrangements to effectuate a repair of the claimed unmet standards, and compensate the homeowner for all damages resulting therefrom free of charge to the claimant. The repair shall be scheduled through the claimant's legal representative, if any, unless he or she is unavailable during the relevant time periods. The repair shall be commenced on a mutually convenient date within 14 days of acceptance or, if an alternative contractor is selected by the homeowner, within 14 days of the selection, or, if a mediation occurs, within seven days of the mediation, or within five days after a permit is obtained if one is required. The builder shall act with reasonable diligence in obtaining any such permit.(b) The builder shall ensure that work done on the repairs is done with the utmost diligence, and that the repairs are completed as soon as reasonably possible, subject to the nature of the repair or some unforeseen event not caused by the builder or the contractor performing the repair. Every effort shall be made to complete the repair within 120 days.

Civil Code §922. Rules for Recording the Repair Work.The builder shall, upon request, allow the repair to be observed and electronically recorded, video recorded, or photographed by the claimant or his or her legal representative. Nothing that occurs during the repair process may be used or introduced as evidence to support a spoliation defense by any potential party in any subsequent litigation.

Civil Code §923. Documents Relating to Repair Work.The builder shall provide the homeowner or his or her legal representative, upon request, with copies of all correspondence, photographs, and other materials pertaining or relating in any manner to the repairs.

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Civil Code §924. Partial Repair and Reasons for Partial Repairs.If the builder elects to repair some, but not all of, the claimed unmet standards, the builder shall, at the same time it makes its offer, set forth with particularity in writing the reasons, and the support for those reasons, for not repairing all claimed unmet standards.

Civil Code §925. Effect of Developer’s Failure to Repair Work on Schedule.If the builder fails to complete the repair within the time specified in the repair plan, the claimant is released from the requirements of this chapter and may proceed with the filing of an action. If this occurs, the standards set forth in the other chapters of this title shall continue to apply to the action.

Civil Code §926. Developer Cannot Obtain Release in Exchange for Repair Work.The builder may not obtain a release or waiver of any kind in exchange for the repair work mandated by this chapter. At the conclusion of the repair, the claimant may proceed with filing an action for violation of the applicable standard or for a claim of inadequate repair, or both, including all applicable damages available under Section944.

Civil Code §927. Statute of Limitations’ Application to the Prelitigation Procedure.If the applicable statute of limitations has otherwise run during this process, the time period for filing a complaint or other legal remedies for violation of any provision of this title, or for a claim of inadequate repair, is extended from the time of the original claim by the claimant to 100 days after the repair is completed, whether or not the particular violation is the one being repaired. If the builder fails to acknowledge the claim within the time specified, elects not to go through this statutory process, or fails to request an inspection within the time specified, the time period for filing a complaint or other legal remedies for violation of any provision of this title is extended from the time of the original claim by the claimant to 45 days after the time for responding to the notice of claim has expired. If the builder elects to attempt to enforce its own nonadversarial procedure in lieu of the procedure set forth in this chapter, the time period for filing a complaint or other legal remedies for violation of any provision of this part is extended from the time of the original claim by the claimant to 100 days after either the completion of the builder's alternative nonadversarial procedure, or 100 days after the builder's alternative nonadversarial procedure is deemed unenforceable, whichever is later.

Civil Code §928. Rules for Mediation After Repair Work.If the builder has invoked this chapter and completed a repair, prior to filing an action, if there has been no previous mediation between the parties, the homeowner or his or her legal representative shall request mediation in writing. The mediation shall be limited to four hours, except as otherwise mutually agreed before a nonaffiliated mediator selected and paid for by the builder. At the homeowner's sole option, the homeowner may agree to split the cost of the mediator and if he or she does so, the mediator shall be selected jointly. The mediator shall have sufficient availability such that the mediation will occur within 15 days after the request for mediation is received and shall occur at a mutually convenient location within the county where the action is pending. In the event that a mediation is used at this point, any applicable statutes of limitations shall be tolled from the date of the request to mediate until the next court day after the mediation is completed, or the 100-day period, whichever is later.

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Civil Code §929. Monetary Offer by Developer.(a) Nothing in this chapter prohibits the builder from making only a cash offer and no repair. In this situation, the homeowner is free to accept the offer, or he or she may reject the offer and proceed with the filing of an action. If the latter occurs, the standards of the other chapters of this title shall continue to apply to the action.(b) The builder may obtain a reasonable release in exchange for the cash payment.The builder may negotiate the terms and conditions of any reasonable release in terms of scope and consideration in conjunction with a cash payment under this chapter.

Civil Code §930. Application of Timeframes and Other Requirements of the Prelitigation Procedure.(a) The time periods and all other requirements in this chapter are to be strictly construed, and, unless extended by the mutual agreement of the parties in accordance with this chapter, shall govern the rights and obligations under this title. If a builder fails to act in accordance with this section within the timeframes mandated, unless extended by the mutual agreement of the parties as evidenced by a postclaim written confirmation by the affected homeowner demonstrating that he or she has knowingly and voluntarily extended the statutory timeframe, the claimant may proceed with filing an action. If this occurs, the standards of the other chapters of this title shall continue to apply to the action. (b) If the claimant does not conform with the requirements of this chapter, the builder may bring a motion to stay any subsequent court action or other proceeding until the requirements of this chapter have been satisfied. The court, in its discretion, may award the prevailing party on such a motion, his or her attorney's fees and costs in bringing or opposing the motion.

Civil Code §931. Application of Prelitigation Procedure to Other Causes of Action.If a claim combines causes of action or damages not covered by this part, including, without limitation, personal injuries, class actions, other statutory remedies, or fraud-based claims, the claimed unmet standards shall be administered according to this part, although evidence of the property in its unrepaired condition may be introduced to support the respective elements of any such cause of action. As to any fraud-based claim, if the fact that the property has been repaired under this chapter is deemed admissible, the trier of fact shall be informed that the repair was not voluntarily accepted by the homeowner. As to any class action claims that address solely the incorporation of a defective component into a residence, the named and unnamed class members need not comply with this chapter.

Civil Code §932. Defects Discovered Subsequent to the Prelitigation Procedure.Subsequently discovered claims of unmet standards shall be administered separately under this chapter, unless otherwise agreed to by the parties. However, in the case of a detached single family residence, in the same home, if the subsequently discovered claim is for a violation of the same standard as that which has already been initiated by the same claimant and the subject of a currently pending action, the claimant need not reinitiate the process as to the same standard. In the case of an attached project, if the subsequently discovered claim is for a violation of the same standard for a connected component system in the same building as has already been initiated by the same claimant, and the subject of a currently pending action, the claimant need not reinitiate this process as to that standard.

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Civil Code §933. Use of Evidence of Repair Work.If any enforcement of these standards is commenced, the fact that a repair effort was made may be introduced to the trier of fact. However, the claimant may use the condition of the property prior to the repair as the basis for contending that the repair work was inappropriate, inadequate, or incomplete, or that the violation still exists.The claimant need not show that the repair work resulted in further damage nor that damage has continued to occur as a result of the violation.

Civil Code §934. Use of Evidence of Parties’ Conduct During Prelitigation Procedure.Evidence of both parties' conduct during this process may be introduced during a subsequent enforcement action, if any, with the exception of any mediation. Any repair efforts undertaken by the builder, shall not be considered settlement communications or offers of settlement and are not inadmissible in evidence on such a basis.

Civil Code §935. Application of SB-800 with Other Sections in the Civil Code.To the extent that provisions of this chapter are enforced and those provisions are substantially similar to provisions in Section 6000, but an action is subsequently commenced under Section 6000, the parties are excused from performing the substantially similar requirements under Section 6000.

Civil Code §936. Parties and Entities Subject to SB-800.Each and every provision of the other chapters of this title apply to general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals to the extent that the general contractors, subcontractors, material suppliers, individual product manufacturers, and design professionals caused, in whole or in part, aviolation of a particular standard as the result of a negligent act or omission or a breach of contract. In addition to the affirmative defenses set forth in Section 945.5, a general contractor, subcontractor, material supplier, design professional, individual product manufacturer, or other entity may also offer common law and contractual defenses as applicable to any claimed violation of a standard. All actions by a claimant or builder to enforce an express contract, or any provision thereof, against a general contractor, subcontractor, material supplier, individual product manufacturer, or design professional is preserved. Nothing in this title modifies the law pertaining to joint and several liability for builders, general contractors, subcontractors, material suppliers, individual product manufacturer, and design professionals that contribute to any specific violation of this title. However, the negligence standard in this section does not apply to any general contractor, subcontractor, material supplier, individual product manufacturer, or design professional with respect to claims for which strict liability would apply.

Civil Code §937. Application of SB-800 with Professional Negligence Actions.Nothing in this title shall be interpreted to eliminate or abrogate the requirement to comply with Section 411.35 of the Code of Civil Procedure or to affect the liability of design professionals, including architects and architectural firms, for claims and damages not covered by this title.

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Civil Code §938. SB-800 Applies only to Residential Units Built after January 1, 2003.This title applies only to new residential units where the purchase agreement with the buyer was signed by the seller on or after January 1, 2003.

Chapter 5. Procedure

Civil Code §941. SB-800’s Rules Regarding Statute of Limitations.(a) Except as specifically set forth in this title, no action may be brought to recover under this title more than 10 years after substantial completion of the improvement but not later than the date of recordation of a valid notice of completion.(b) As used in this section, "action" includes an action for indemnity brought against a person arising out of that person's performance or furnishing of services or materials referred to in this title, except that a cross-complaint for indemnity may be filed pursuant to subdivision (b) of Section 428.10 of the Code of Civil Procedure in an action which has been brought within the time period set forth in subdivision (a).(c) The limitation prescribed by this section may not be asserted by way of defense by any person in actual possession or the control, as owner, tenant or otherwise, of such an improvement, at the time any deficiency in the improvement constitutes the proximate cause for which it is proposed to make a claim or bring an action.(d) Sections 337.15 and 337.1 of the Code of Civil Procedure do not apply to actions under this title.(e) Existing statutory and decisional law regarding tolling of the statute of limitationsshall apply to the time periods for filing an action or making a claim under this title, except that repairs made pursuant to Chapter 4 (commencing with Section 910), with the exception of the tolling provision contained in Section 927, do not extend the period for filing an action, or restart the time limitations contained in subdivision (a) or (b) of Section 7091 of the Business and Professions Code. If a builder arranges for a contractor to perform a repair pursuant to Chapter 4 (commencing with Section 910), as to the builder the time period for calculating the statute of limitation in subdivision (a) or (b) of Section 7091 of the Business and Professions Code shall pertain to the substantial completion of the original construction and not to the date of repairs under this title. The time limitations established by this title do not apply to any action by a claimant for a contract or express contractual provision. Causes of action and damages to which this chapter does not apply are not limited by this section.

Civil Code §942. Homeowner’s Burden of Proof Under SB-800.In order to make a claim for violation of the standards set forth in Chapter 2 (commencing with Section 896), a homeowner need only demonstrate, in accordance with the applicable evidentiary standard, that the home does not meet the applicable standard, subject to the affirmative defenses set forth in Section 945.5. No further showing of causation or damages is required to meet the burden of proof regarding a violation of a standard set forth in Chapter 2 (commencing with Section 896), provided that the violation arises out of, pertains to, or is related to, the original construction.

Civil Code §943. SB-800’s Exclusivity.(a) Except as provided in this title, no other cause of action for a claim covered by this title or for damages recoverable under Section 944 is allowed. In addition to the rights under this title, this title does not apply to any action by a claimant to enforce a contract

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or express contractual provision, or any action for fraud, personal injury, or violation of a statute. Damages awarded for the items set forth in Section 944 in such other cause of action shall be reduced by the amounts recovered pursuant to Section 944 for violation of the standards set forth in this title.(b) As to any claims involving a detached single-family home, the homeowner's right to the reasonable value of repairing any nonconformity is limited to the repair costs, or the diminution in current value of the home caused by the nonconformity, whichever is less, subject to the personal use exception as developed under common law.

Civil Code §944. Rules for Determining Damages Under SB-800.If a claim for damages is made under this title, the homeowner is only entitled to damages for the reasonable value of repairing any violation of the standards set forth in this title, the reasonable cost of repairing any damages caused by the repair efforts, the reasonable cost of repairing and rectifying any damages resulting from the failure of the home to meet the standards, the reasonable cost of removing and replacing any improper repair by the builder, reasonable relocation and storage expenses, lost business income if the home was used as a principal place of a business licensed to be operated from the home, reasonable investigative costs for each established violation, and all other costs or fees recoverable by contract or statute.

Civil Code §945. Effect of SB-800 on Original Owners and Their Successors.The provisions, standards, rights, and obligations set forth in this title are binding upon all original purchasers and their successors-in-interest. For purposes of this title, associations and others having the rights set forth in Sections 4810 and 4815 shall be considered to be original purchasers and shall have standing to enforce the provisions, standards, rights, and obligations set forth in this title.

Civil Code §945.5. Developer’s Affirmative Defenses.A builder, general contractor, subcontractor, material supplier, individual product manufacturer, or design professional, under the principles of comparative fault pertaining to affirmative defenses, may be excused, in whole or in part, from any obligation, damage, loss, or liability if the builder, general contractor, subcontractor, material supplier, individual product manufacturer, or design professional, can demonstrate any of the following affirmative defenses in response to a claimed violation:(a) To the extent it is caused by an unforeseen act of nature which caused the structure not to meet the standard. For purposes of this section an "unforeseen act of nature" means a weather condition, earthquake, or manmade event such as war, terrorism, or vandalism, in excess of the design criteria expressed by the applicable building codes, regulations, and ordinances in effect at the time of original construction.(b) To the extent it is caused by a homeowner's unreasonable failure to minimize or prevent those damages in a timely manner, including the failure of the homeowner to allow reasonable and timely access for inspections and repairs under this title. This includes the failure to give timely notice to the builder after discovery of a violation, but does not include damages due to the untimely or inadequate response of a builder to the homeowner's claim.(c) To the extent it is caused by the homeowner or his or her agent, employee, general contractor, subcontractor, independent contractor, or consultant by virtue of their failure to follow the builder's or manufacturer's recommendations, or commonly accepted homeowner maintenance obligations. In order to rely upon this defense as it relates to a

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builder's recommended maintenance schedule, the builder shall show that the homeowner had written notice of these schedules and recommendations and that the recommendations and schedules were reasonable at the time they were issued.(d) To the extent it is caused by the homeowner or his or her agent's or an independent third party's alterations, ordinary wear and tear, misuse, abuse, or neglect, or by the structure's use for something other than its intended purpose.(e) To the extent that the time period for filing actions bars the claimed violation.(f) As to a particular violation for which the builder has obtained a valid release.(g) To the extent that the builder's repair was successful in correcting the particular violation of the applicable standard.(h) As to any causes of action to which this statute does not apply, all applicable affirmative defenses are preserved.

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CHAPTER FOUR: CORPORATIONS CODE

TABLE OF CONTENTS

General Provisions

California Corporations Code §20 Definition; electronic transmission by the corporation.

California Corporations Code §21 Definition; electronic transmission to the corporation.

Nonprofit Corporation Law – General Provisions

California Corporations Code §5008.6 Nonprofit Corporation that fails to file statement is subject to suspension; rules and procedures for suspension and notice of suspension of nonprofit corporations.

California Corporations Code §5009 Definition; nonprofit corporation; mailing.California Corporations Code §5010 Requirement for majority in voting for

membership on any matter of anonprofit corporation.

California Corporations Code §5012 Definition; nonprofit corporation; financial statements of a corporation.

California Corporations Code §5013 Definition; nonprofit corporation; independent accountant.

California Corporations Code §5014 Unless expressly limited to voting membership, requirement for a vote of each class of members is enforceable despite any restrictions.

California Corporations Code §5015 Definition; nonprofit corporation; the time a notice is given or sent.

California Corporations Code §5016 A nonprofit corporation may mail or deliver notice or report as part of a newsletter, magazine, or other document regularly sent to members.

California Corporations Code §5030 Definition; nonprofit corporation; acknowledged instrument.

California Corporations Code §5032 Definition; nonprofit corporation; approved by the board.

California Corporations Code §5033 Definition; nonprofit corporation; approval by a majority of all members.

California Corporations Code §5034 Definition; nonprofit corporation; approval by the members.

California Corporations Code §5035 Definitions; nonprofit corporation; articles.California Corporations Code §5036 Definition; nonprofit corporation;

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California Corporations Code §5040 Definition; nonprofit corporation; chapter.California Corporations Code §5041 Definition; nonprofit corporation; class.California Corporations Code §5046 Definitions; nonprofit corporation;

corporation.California Corporations Code §5047 Definitions; nonprofit corporation; directors.California Corporations Code §5047.5 Volunteer officers or directors, acting

reasonably, in good faith, and in the interest of the corporation, cannot be liable for damages arising within the scope of their duties.

California Corporations Code §5049 Definitions; nonprofit corporation; distributions, member.

California Corporations Code §5050 Definition; nonprofit corporation; domestic corporation.

California Corporations Code §5051 Definition; nonprofit corporation; filed.California Corporations Code §5056 Definition; nonprofit corporation; member.California Corporations Code §5057 Definition; nonprofit corporation;

membership.California Corporations Code §5058 Definition; nonprofit corporation;

membership certificate.California Corporations Code §5059 Definition; nonprofit mutual benefit

corporation, mutual benefit corporation.

California Corporations Code §5060 Definition; nonprofit corporation; nonprofit public benefit corporation, public benefit corporation.

California Corporations Code §5061 Definition; nonprofit corporation; nonprofit religious corporation, religious corporation.

California Corporations Code §5062 Definition; nonprofit corporation; officers’ certificate.

California Corporations Code §5063.5 Definitions; nonprofit corporation; other business entity, general partnership, business trust, real estate investment trust, unincorporated association.

California Corporations Code §5065 Definition; nonprofit corporation; person.California Corporations Code §5068 Definition; nonprofit corporation;

proper county.California Corporations Code §5069 Definitions; nonprofit corporation;

proxy, signed.California Corporations Code §5070 Definition; nonprofit corporation;

proxyholder.California Corporations Code §5071 Definition; nonprofit corporation;

shareholder.

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California Corporations Code §5072 Definition; nonprofit corporation; shares.California Corporations Code §5075 Definition; nonprofit corporation; vacancy.California Corporations Code §5076 Definition; nonprofit corporation; verified.California Corporations Code §5077 Definition; nonprofit corporation; vote.California Corporations Code §5078 Definition; nonprofit corporation;

voting power.California Corporations Code §5079 Definition; nonprofit corporation;

written or in writing.California Corporations Code §5080 Definition; nonprofit corporation;

written ballot.California Corporations Code §7110 Nonprofit mutual benefit corporation.California Corporations Code §7111 A corporation may be formed under

Part 3 as a nonprofit organization if it is dedicated to charitable, religious, or public purposes.

Nonprofit Mutual Benefit Corporations – Organization and Bylaws – Formation

California Corporations Code §7120 Rules for filing articles of incorporation for a nonprofit corporation.

California Corporations Code §7121 Rules and procedures for changing status of association to status of nonprofit corporation.

Nonprofit Mutual Benefit Corporations – Organization and Bylaws – Articles of Incorporation

California Corporations Code §7130 Requirements for articles of incorporation for a nonprofit corporation.

California Corporations Code §7131 Articles of incorporation for a nonprofit corporation may include additional provisions limiting its purposes or powers.

California Corporations Code §7132 Optional provisions in the articles of incorporation are not effective unless expressed in the articles; optional provisions a nonprofit corporation may include in its articles of incorporation.

California Corporations Code §7133 A certified copy of the articles of a corporation is conclusive evidence of the formation of the corporation.

Nonprofit Mutual Benefit Corporations – Organization and Bylaws – Powers

California Corporations Code §7140 Powers of the nonprofit corporation.

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California Corporations Code §7141 Procedure for asserting a limitation upon the corporation; a contract made in the name of the corporation binds it.

Nonprofit Mutual Benefit Corporations – Organization and Bylaws – Bylaws

California Corporations Code §7150 Rules and procedures for adopting, amending and repealing the bylaws of the nonprofit organization.

California Corporations Code §7151 Bylaws can contain any provision for the management of the nonprofit corporation that is not conflicting with the law or with the articles; optional provision for the bylaws.

California Corporations Code §7152 Nonprofit corporation, in its bylaws, can give some or all of the authority of members to delegates; rules regarding delegates of a nonprofit corporation.

California Corporations Code §7153 Nonprofit corporation, in its bylaws, can provide for voting on the basis of chapter, organizational unit, region, or geographic grouping.

California Corporations Code §7160 Nonprofit corporation must keep a copy of its articles and bylaws open for inspection by its members at its principal office.

Nonprofit Mutual Benefit Corporations – Directors/Management – General Provisions

California Corporations Code §7210 Each nonprofit corporation must have a board of directors that conducts the affairs and activities of the corporation.

California Corporations Code §7211 Rules and Procedures for meetings of the board of directors of nonprofit corporations.

California Corporations Code §7212 Nonprofit corporation board of directors can appoint committees to serve the board; powers and authorities of nonprofit corporation committees.

California Corporations Code §7213 Nonprofit corporation must appoint officers to the board of directors who serve the board of directors; requirement for appointing nonprofit corporate officers.

California Corporations Code §7214 Any instrument in writing entered into between the nonprofit corporation and another party is enforceable if signed by an officer.

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California Corporations Code §7215 Certified originals or copies of bylaws, minutes and resolutions adopted by the board of the nonprofit corporation are evidence of the adoption of such bylaws or resolutions.

Nonprofit Mutual Benefit Corporations – Directors/Management – Directors

California Corporations Code §7220 Rules and procedures for directors’ term of election to the board of directors of a nonprofit corporation.

California Corporations Code §7221 Requirements for declaring vacancy in the board of directors of the nonprofit corporation; requirements for disqualification of directors from the board of a nonprofit corporation.

California Corporations Code §7222 Rules and requirements for removal of directors from the board of directors of a nonprofit corporation without cause.

California Corporations Code §7223 A court can remove director from the board of directors of a nonprofit corporation upon misconduct; rules and procedures for removal of directors from the board of directors of a nonprofit corporation through court order.

California Corporations Code §7224 Rules and procedures for filling vacancies on, and resigning from, the board of directors of a nonprofit corporation.

California Corporations Code §7225 When a nonprofit corporation cannot agree as to the management of the corporation or as to the election of directors to the board, the court can appoint a provisional director to break the deadlock; requirements and procedure for appointing a provisional director.

Nonprofit Mutual Benefit Corporations – Directors/Management – Conduct Standards

California Corporations Code §7230 Duties and liabilities apply to directors whether compensated by the nonprofit corporation or not.

California Corporations Code §7231 Director of a nonprofit corporation must perform his or her duties in the best interests of the corporation, reasonably, and in good faith; information directors of nonprofit

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corporation can rely on in performing their duties; director is not liable for actions or omissions that exceed or defeat the public or charitable purpose of the nonprofit corporation.

California Corporations Code §7231.5 Volunteer officers or directors, acting reasonably, in good faith, and in the interest of the corporation, cannot be liable for damages based on failure to discharge duties as directors or officers.

California Corporations Code §7232 Section 7231 applies to duties related to the election, selection or nomination of directors to the board of directors of a nonprofit organization.

California Corporations Code §7233 Requirements for contracts to be enforceable despite possible conflict of interest of the directors of the board of directors of a nonprofit corporation.

California Corporations Code §7234 Interested or common directors can be counted to reach the presence of the minimum board member number needed on the board of directors of a nonprofit corporation to authorize, approve or ratify a contract or a transaction.

California Corporations Code §7235 Nonprofit corporation can loan or guarantee money or property to a director or an officer on its board of directors; rules and requirements for a corporation making a loan or a guarantee to a director or an officer.

California Corporations Code §7236 Directors of nonprofit corporation are liable to the corporation for illegal loans and distributions; rules and procedures for actions against directors of nonprofit corporation liable for illegal loans and distributions.

California Corporations Code §7237 Nonprofit corporation can indemnify its agent who was a party, is a party, or is threatened to be made a party, to any proceeding, if that person acted reasonably, in good faith, and in the interest of the corporation; rules and procedures for a nonprofit corporation indemnifying its agent who acted reasonably, in good faith, and in the interest of the corporation.

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Nonprofit Mutual Benefit Corporations – Members – Issuance of Membership

California Corporations Code §7310 Nonprofit corporation can admit persons to membership or choose not to have members; rules for nonprofit corporations with no members.

California Corporations Code §7311 Nonprofit corporations can admit members for free or for a fee.

California Corporations Code §7312 One person cannot hold more or less than one membership in a nonprofit corporation; exceptions to the rule that one person cannot hold more or less than one membership in a nonprofit corporation.

California Corporations Code §7313 Nonprofit corporation can issue membership certificates to its members; requirements, rules and procedures for membership certificates.

California Corporations Code §7314 Nonprofit corporation can issue a new membership certificate to a member that claims it was lost, stolen, or destroyed; member can compel nonprofit corporation to issue a new membership certificate to replace a lost, stolen, or destroyed one, through a court order.

California Corporations Code §7315 Nonprofit corporation can submit anyone, but not its subsidiary, to membership.

Nonprofit Mutual Benefit Corporations – Members – Membership Transfer

California Corporations Code §7320 Unless the articles or bylaws of a nonprofit corporation state otherwise, membership is not transferable and ceases upon the member’s death.

Nonprofit Mutual Benefit Corporations – Members – Types of Membership

California Corporations Code §7330 Nonprofit corporation can issue different memberships having different rights, privileges, preferences, restrictions, or conditions, only if authorized by its articles or bylaws.

California Corporations Code §7331 Except as provided in its articles or bylaws, nonprofit corporation cannot issue different memberships having different rights, privileges, preferences, restrictions, or conditions.

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California Corporations Code §7332 Nonprofit corporation can have one or more classes of membership that are redeemable at the option of the corporation or the member subject to some conditions.

California Corporations Code §7333 Nonprofit corporation can benefit, serve, and assist persons who are not members for a fee authorized by the article or the bylaws of the corporation.

Nonprofit Mutual Benefit Corporations – Members – Termination of Membership

California Corporations Code §7340 Member of a nonprofit corporation can resign from membership at any time unless the articles or bylaws of the corporation require advance notice; rules for resignation and expiration of membership in a nonprofit corporation.

California Corporations Code §7341 Rules and procedures for expulsion, suspension, or termination of membership in a nonprofit corporation.

Nonprofit Mutual Benefit Corporations – Members – Rights and Obligations

California Corporations Code §7350 Member of nonprofit corporation is not liable for debts, liabilities and obligations of the corporation.

California Corporations Code §7351 Nonprofit corporation can collect dues and fees from members according to its articles and bylaws; member can avoid liability for dues and fees for nonprofit corporation by resigning from membership.

Nonprofit Mutual Benefit Corporations – Distribution - Limitations

California Corporations Code §7411 Nonprofit corporation cannot distribute profits or dividends to members, except upon dissolution, or subject to the requirements of Sections 7412, 7413 and 7414.

California Corporations Code §7412 Nonprofit corporation cannot distribute profits or dividends to members if the corporation is unable to meet its liabilities.

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Nonprofit Mutual Benefit Corporations – Meetings and Voting – General Provisions

California Corporations Code §7510 Rules, requirements and procedures regarding place and time of regular meetings and special meetings of the members of a nonprofit corporation.

California Corporations Code §7511 Rules, requirements and procedures for notice of a meeting of the members of a nonprofit corporation.

California Corporations Code §7512 At least one-third (1/3) of the members who hold a right to vote is required in a meeting of members of nonprofit corporation in order to vote on any matter, except otherwise provided in the corporation bylaws; rules and requirements for quorum in meetings of members of nonprofit corporations.

California Corporations Code §7513 Any action that a nonprofit corporation can take in a meeting of the members can be taken by distributing a written ballot to every member entitled to vote, except otherwise provided in the articles or bylaws of the corporation; rules and procedures for a written ballot substituting a meeting of the members of a nonprofit corporation.

California Corporations Code §7514 Requirements for a written ballot substituting a meeting of the members of a nonprofit corporation.

California Corporations Code §7515 Rules and procedures for a court order for a meeting of the members of a nonprofit corporation when the corporation is unable to call or conduct a meeting of its members.

California Corporations Code §7516 Nonprofit corporation can act without meeting of its members if the members consent in writing to the action.

California Corporations Code §7517 Name on the ballot or consent must correspond with a name of a member of a nonprofit corporation to be effective; exceptions.

Nonprofit Mutual Benefit Corporations – Meetings and Voting – Elections of Directors

California Corporations Code §7520 Reasonable procedures for nominations and elections of directors of the nonprofit corporation.

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California Corporations Code §7521 Requirements for eligibility for nomination to the board of directors of a nonprofit corporation.

California Corporations Code §7522 Rules and procedures for nomination to the board of directors of nonprofit corporation with more than 5,000 members.

California Corporations Code §7523 Nonprofit corporation with more than 500 members must provide equal opportunity for each nominee to solicitvotes for elections to the board of directors in a corporate publication.

California Corporations Code §7524 At the nominee’s expense and upon his or her written request, a nonprofit corporation can mail to members any material related to the elections that a nominee to the board of directors may furnish.

California Corporations Code §7525 Nonprofit corporation is not liable to damages resulting from mailing or publishing materials supplied by a nominee to the board of directorsaccording to Section 7524.

California Corporations Code §7526 Nonprofit corporation cannot use corporate funds to support a nominee to the board of directors.

California Corporations Code §7527 Challenge to validity of elections to board of directors of nonprofit corporation must be commenced within nine months after the elections.

Nonprofit Mutual Benefit Corporations – Voting of Members

California Corporations Code §7610 Each member in a nonprofit corporation is entitled to one vote on each matter submitted.

California Corporations Code §7611 Rules and procedures for the record date to determine the members of nonprofit corporation entitled to noticeof meetings, voting right, ballot casting rights, or any other rights.

California Corporations Code §7612 If a membership in a nonprofit corporation represents two or more persons, one vote binds all persons in the membership and majority of multiple votes binds all persons in the membership.

California Corporations Code §7613 Member in a nonprofit corporation can authorize another person to act by

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proxy with respect to such membership; rules and procedures for using proxies in a nonprofit corporation.

California Corporations Code §7614 Board of directors of nonprofit corporation can appoint an inspector of elections to oversee meetings and elections; rules for inspector of elections overseeing meeting and elections of the board of directors of a nonprofit corporation.

California Corporations Code §7615 Rules and requirements for cumulative votes in elections of directors to the board of a nonprofit corporation.

California Corporations Code §7616 Member or director, entitled to vote in elections for board of directors of nonprofit corporations, can bring action in court to determine validity of the elections or appointment of a director; rules and procedures for bringing action in court to determine validity of elections or appointment to the board of directors of a nonprofit corporation.

Nonprofit Mutual Benefit Corporations – Derivative Actions

California Corporations Code §7710 Requirements, rules and procedures for bringing derivative actions against a nonprofit corporation.

Nonprofit Mutual Benefit Corporations – Amendments to Articles

California Corporations Code §7810 Nonprofit corporation can lawfully amend its articles from time to time; rules for amending nonprofit corporation articles.

California Corporations Code §7811 Requirements for amending articles of a nonprofit corporation by the incorporators.

California Corporations Code §7812 Requirements for amending articles of a nonprofit corporation by the board of directors or by members.

California Corporations Code §7813 Rules and requirements for amendments to the articles of a nonprofit corporation that must be approved by the members of a class.

California Corporations Code §7814 Nonprofit corporation must file a certificate of amendment upon adoption of an amendment, except for adoptions

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by incorporators; requirements for filing the certificate of amendment by nonprofit corporations.

California Corporations Code §7815 Requirements for filing the certificate of amendment by nonprofit corporation when adopted by incorporators.

California Corporations Code §7816 Rules for writing and wording amendments to articles of a nonprofit corporation.

California Corporations Code §7817 Copy of certificate of amendment is evidence of conditions necessary to the adoption of the amendment to articles of a nonprofit corporation.

California Corporations Code §7818 Nonprofit corporation, formed for a limited period of time, can extend its corporate term of existence by an amendment to its articles.

California Corporations Code §7819 Nonprofit corporation can rewrite the entire text of its articles by amendment and filing of certificate of amendment; rules and requirements for rewriting the entire text of the articles of a nonprofit corporation.

Nonprofit Mutual Benefit Corporations – Sale of Assets

California Corporations Code §7910 Nonprofit corporation can mortgage, deed, or pledge its property to secure payment of a contract obligation without the approval of members, unless otherwise provided by its articles or bylaws.

California Corporations Code §7911 Requirements for sale, lease, conveyance, exchange or transfer of all, or substantially all, of a nonprofit corporation’s assets.

California Corporations Code §7912 Deed or instrument transferring assets of a nonprofit corporation can include acertificate of the secretary approving the transaction, which can be evidence of the authorization of the transfer; requirements for certificate approving an instrument transferring assets of a nonprofit corporation.

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Nonprofit Mutual Benefit Corporations – Required Filings

California Corporations Code §8210 Requirements, rules and procedures for nonprofit corporation’s obligation to file a statement to the secretary of state.

California Corporations Code §8215 Acts of officers, directors, employees, or agents of a nonprofit corporation resulting in liability to damages.

California Corporations Code §8216 Attorney General can bring or take part in action against a nonprofit corporation upon a complaint by a member of that corporation; rules and procedures for action by attorney general against a nonprofit corporation.

Nonprofit Mutual Benefit Corporations – Inspection of Records– General Provisions

California Corporations Code §8310 Nonprofit corporation’s records that are subject to inspection must be maintained in written form.

California Corporations Code §8311 Inspection under Chapter 13 can bemade in person, by agent or by attorney; inspector under Chapter 13 can copy and extract records.

California Corporations Code §8312 Inspectors under Chapter 13 can inspect records of subsidiaries of the nonprofit corporation.

California Corporations Code §8313 Rights of members under Chapter 13 cannot be prohibited by contract or by the articles or bylaws of the nonprofitcorporation.

California Corporations Code §8320 Requirements for keeping books and records in a nonprofit corporation.

California Corporations Code §8321 Nonprofit corporation must annually notify members of their right to receive a financial report; rules and requirements for a nonprofit corporation’s annual financial report.

California Corporations Code §8322 Nonprofit corporation must annually send members and directors a statement of transactions; rules and requirements for a nonprofit corporation’s annual statement of transactions.

California Corporations Code §8323 Court can enforce the nonprofit corporation’s duty to make and deliver information and financial statements required by Article 2 of Chapter 13.

California Corporations Code §8325 Nonprofit corporation, upon written request by a member, must provide the

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member with results of any vote taken at a meeting; rules for providing members of nonprofit corporations with vote results.

Nonprofit Mutual Benefit Corporations – Inspection of Records/Reports – Inspection Rights

California Corporations Code §8330 Member of a nonprofit corporation can inspect the records of other members; rules, requirements and procedures for members’ right to obtain and inspect records of other members of the nonprofit corporation.

California Corporations Code §8331 Nonprofit corporation can petition to court for an order rejecting a member’s demand for inspection of records of other members under Section 8330; rules, requirements and procedures for nonprofit corporation petition to court for an order rejecting a member’s demand for inspection.

California Corporations Code §8332 Nonprofit corporation or member can petition to court for an order restricting a member’s demand for inspection of records of other members under Section 8330 to protect members’ rights under the U.S. and California Constitution; rules and requirements for petition to court for an order restricting a member’s demand for inspection.

California Corporations Code §8333 Members of a nonprofit corporation can inspect accounting books and records upon written demand.

California Corporations Code §8334 Directors of a nonprofit corporation can inspect and copy all books, records and documents of every kind; directors of nonprofit corporation can inspect properties of the corporation.

California Corporations Code §8335 Person properly making a demand to inspect records according to Section 8330, who is frustrated by unreasonable delay by the corporation, can obtain order from court postponing members’ meeting for a time equal to the time of the delay.

California Corporations Code §8336 Court can enforce a proper demand to inspect records according to Section

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8330 or appoint inspector to audit records of nonprofit corporation.

California Corporations Code §8337 Court can award a member with attorney fees and court expenses if it finds that the nonprofit corporation’s failure to comply with a proper demand to inspect records under Section 8330 was without justification.

California Corporations Code §8338 Nonprofit corporation’s membership list cannot be obtained or used by any person without the consent of the board; restrictions on use of membership list of a nonprofit corporation.

Nonprofit Mutual Benefit Corporations – Dissolution

California Corporations Code §8724 Association cannot dissolve without approval of all of the members.

Unincorporated Organizations – Liability and Enforcement of Judgments

California Corporations Code §18250 Unincorporated association is liable for its acts or omissions to the same extent as if the association was a natural person.

California Corporations Code §18260 Money judgment against unincorporated association can be enforced only against its properties.

Unincorporated Organizations – Nonprofit Associations - Liability

California Corporations Code §18605 Member, director or agent of nonprofit association is not liable for the association’s liabilities.

California Corporations Code §18610 Member of nonprofit association is not liable for the association’s contractual obligations unless an exception applies; conditions for member of nonprofit association to assume an association’s contractual obligation.

California Corporations Code §18615 Director, officer or agent of nonprofit association is not liable for the association’s contractual obligations unless an exception applies; conditions for director, officer or agent of nonprofit association to assume an association’s contractual obligations.

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California Corporations Code §18620 Conditions for a member, director, officer or agent of nonprofit association to assume an association’s liability for injury, damage or harm.

California Corporations Code §18630 Member or person in control of a nonprofit association can be liable for debt, obligation or liability of the association under a theory of “alter ego” liability.

California Corporations Code §18640 Uniform Fraudulent Transfer Act applies to nonprofit associations

General Provisions

California Corporations Code §20Definition; electronic transmission by the corporation.“Electronic transmission by the corporation” means a communication (a) delivered by

1) facsimile telecommunication or electronic mail when directed to the facsimile number or electronic mail address, respectively, for that recipient on record with the corporation,

2) posting on an electronic message board or network which the corporation has designated for those communications, together with a separate notice to the recipient of the posting, which transmission shall be validly delivered upon the later of the posting or delivery of the separate notice thereof, or

3) other means of electronic communication, (b) to a recipient who has provided an unrevoked consent to the use of those means oftransmission for communications under or pursuant to this code, and (c) that creates a record that is capable of retention, retrieval, and review, and that maythereafter be rendered into clearly legible tangible form. However, an electronic transmission under this code by a corporation to an individual shareholder or member of the corporation who is a natural person, and if an officer or director of the corporation, only if communicated to the recipient in that person's capacity as a shareholder or member, is not authorized unless, in addition to satisfying the requirements of this section, the consent to the transmission has been preceded by or includes a clear written statement to the recipient as to

(a) any right of the recipient to have the record provided or made available on paper or in nonelectronic form,

(b) whether the consent applies only to that transmission, to specified categories of communications, or to all communications from the corporation, and

(c) the procedures the recipient must use to withdraw consent.

California Corporations Code §21Definition; electronic transmission to the corporation.“Electronic transmission to the corporation” means a communication (a) delivered by

1) facsimile telecommunication or electronic mail when directed to the facsimile number or electronic mail address, respectively, which the

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corporation has provided from time to time to shareholders or members and directors for sending communications to the corporation,

2) posting on an electronic message board or network which the corporation has designated for those communications, and which transmission shall be validly delivered upon the posting, or

3) other means of electronic communication, (b) as to which the corporation has placed in effect reasonable measures to verify that the sender is the shareholder or member (in person or by proxy) or director purporting to send the transmission, and (c) that creates a record that is capable of retention, retrieval, and review, and that may thereafter be rendered into clearly legible tangible form.

Nonprofit Corporation Law – General Provisions

California Corporations Code §5008.6Nonprofit Corporation that fails to file statement is subject to suspension; rules and procedures for suspension and notice of suspension of nonprofit corporations.(a) A corporation that

1) fails to file a statement pursuant to Section 6210, 8210, or 9660 for an applicable filing period,

2) has not filed a statement pursuant to Section 6210, 8210, or 9660 during the preceding 24 months, and

3) was certified for penalty pursuant to Section 6810, 8810, or 9690 for the same filing period, shall be subject to suspension pursuant to this section rather than to penalty under Section 6810 or 8810.

(b) When subdivision (a) is applicable, the Secretary of State shall provide a notice to the corporation informing the corporation that its corporate powers, rights, and privileges will be suspended 60 days from the date of the notice if the corporation does not file the statement required by Section 6210, 8210, or 9660.(c) If the 60-day period expires without the delinquent corporation filing the required statement, the Secretary of State shall notify the Franchise Tax Board of the suspension, and provide a notice of the suspension to the corporation. Thereupon, except for the purpose of filing an application for exempt status or amending the articles of incorporation as necessary either to perfect that application or to set forth a new name,the corporate powers, rights, and privileges of the corporation are suspended.(d) A statement required by Section 6210, 8210, or 9660 may be filed, notwithstanding suspension of the corporate powers, rights, and privileges under this section or under provisions of the Revenue and Taxation Code. Upon the filing of a statement under Section 6210, 8210, or 9660, by a corporation that has suffered suspension under this section, the Secretary of State shall certify that fact to the Franchise Tax Board and the corporation may thereupon be relieved from suspension, unless the corporation is held in suspension by the Franchise Tax Board because of Section 23301, 23301.5, or 23775 of the Revenue and Taxation Code.

California Corporations Code §5009Definition; nonprofit corporation; mailing.Except as otherwise required, any reference in this part, Part 2, Part 3, Part 4 or Part 5 to mailing means first-, second-, or third-class mail, postage prepaid, unless registered mail is specified. Registered mail includes certified mail.

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California Corporations Code §5010Requirement for majority in voting for membership on any matter of a nonprofit corporation.If the articles or bylaws provide for more or less than one vote for any membership onany matter, the references in Sections 5033 and 5034 to a majority or other proportion of memberships mean, as to those matters, a majority or other proportion of the votes entitled to be cast. Whenever in Part 2 (commencing with Section 5110) or Part 3 (commencing with Section 7110) members are disqualified from voting on any matter, their memberships shall not be counted for the determination of a quorum at any meeting to act upon, or the required vote to approve action upon, that matter under any other provision of Part 2 (commencing with Section 5110) or Part 3 (commencing with Section 7110) or the articles or bylaws.

California Corporations Code §5012Definition; nonprofit corporation; financial statements of a corporation.All references in this part, Part 2 (commencing with Section 5110), Part 3 (commencing with Section 7110), or Part 4 (commencing with Section 9110) to financial statements of a corporation mean statements prepared in conformity with generally accepted accounting principles or some other basis of accounting which reasonably sets forth the assets and liabilities and the income and expenses of the corporation and discloses the accounting basis used in their preparation.

California Corporations Code §5013Definition; nonprofit corporation; independent accountant.As used in this part, Part 2 (commencing with Section 5110), Part 3 (commencing with Section 7110), or Part 4 (commencing with Section 9110), “independent accountant” means a certified public accountant or public accountant who is independent of the corporation, as determined in accordance with generally accepted auditing standards, and who is engaged to audit financial statements of the corporation or perform other accounting services.

California Corporations Code §5014Unless expressly limited to voting membership, requirement for a vote of each class of members is enforceable despite any restrictions.Any requirement in Part 3 (commencing with Section 7110) for a vote of each class of members means such a vote regardless of limitations or restrictions upon the voting rights thereof, unless expressly limited to voting memberships.

California Corporations Code §5015Definition; nonprofit corporation; the time a notice is given or sent.Any reference in this part, Part 2 (commencing with Section 5110), Part 3 (commencing with Section 7110), Part 4 (commencing with Section 9110), or Part 5 (commencing with Section 9910) to the time a notice is given or sent means, unless otherwise expressly provided, (a) the time a written notice by mail is deposited in the United States mails, postage prepaid; or (b) the time any other written notice, including facsimile, telegram, or other electronic mail message, is personally delivered to the recipient or is delivered to a common carrier

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for transmission, or actually transmitted by the person giving the notice by electronic means, to the recipient; or (c) the time any oral notice is communicated, in person or by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, or wireless, to the recipient, including the recipient's designated voice mailbox or address on such a system, or to a person at the office of the recipient who the person giving the notice has reason to believe will promptly communicate it to the recipient.

California Corporations Code §5016A nonprofit corporation may mail or deliver notice or report as part of a newsletter, magazine, or other document regularly sent to members.A notice or report mailed or delivered as part of a newsletter, magazine or other organ regularly sent to members shall constitute written notice or report pursuant to this division when addressed and mailed or delivered to the member, or in the case of members who are residents of the same household and who have the same address on the books of the corporation, when addressed and mailed or delivered to one of such members, at the address appearing on the books of the corporation.

California Corporations Code §5030Definition; nonprofit corporation; acknowledged instrument.“Acknowledged” means that an instrument is either:(a) Formally acknowledged as provided in Article 3 (commencing with Section 1180)of Chapter 4 of Title 4 of Part 4 of Division 2 of the Civil Code; or(b) Accompanied by a declaration in writing signed by the persons executing the same that they are such persons and that the instrument is the act and deed of the person or persons executing the same.Any certificate of acknowledgment taken without this state before a notary public or a judge or clerk of a court of record having an official seal need not be further authenticated.

California Corporations Code §5032Definition; nonprofit corporation; approved by the board.“Approved by (or approval of) the board” means approved or ratified by the vote of the board or by the vote of a committee authorized to exercise the powers of the board, except as to matters not within the competence of the committee under Section 5212,Section 7212, or Section 9212.

California Corporations Code §5033Definition; nonprofit corporation; approval by a majority of all members.“Approval by (or approval of) a majority of all members” means approval by an affirmative vote (or written ballot in conformity with Section 5513, Section 7513, orSection 9413) of a majority of the votes entitled to be cast. Such approval shall include the affirmative vote of a majority of the outstanding memberships of each class, unit, or grouping of members entitled, by any provision of the articles or bylaws or of Part 2, Part 3, Part 4 or Part 5 to vote as a class, unit, or grouping of members on the subject matter being voted upon and shall also include the affirmative vote of such greater proportion, including all, of the votes of the memberships of any class, unit, or grouping of members if such greater proportion is required by the bylaws (subdivision (e) of

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Section 5151, subdivision (e) of Section 7151, or subdivision (e) of Section 9151) or Part 2, Part 3, Part 4 or Part 5.

California Corporations Code §5034Definition; nonprofit corporation; approval by the members.“Approval by (or approval of) the members” means approved or ratified by the affirmative vote of a majority of the votes represented and voting at a duly held meeting at which a quorum is present (which affirmative votes also constitute a majority of the required quorum) or written ballot in conformity with Section 5513, 7513, or 9413 or by the affirmative vote or written ballot of such greater proportion, including all of the votes of the memberships of any class, unit, or grouping of members as may be provided in the bylaws (subdivision (e) of Section 5151, subdivision (e) of Section 7151, orsubdivision (e) of Section 9151) or in Part 2, Part 3, Part 4 or Part 5 for all or any specified member action.

California Corporations Code §5035Definitions; nonprofit corporation; articles.“Articles” includes the articles of incorporation, amendments thereto, amended articles, restated articles, and certificates of incorporation.

California Corporations Code §5036Definition; nonprofit corporation; authorized member(a) Except as provided in subdivision (b) or (c), “authorized number” means 5 percent of the voting power.(b) Where (disregarding any provision for cumulative voting which would otherwise apply) the total number of votes entitled to be cast for a director is 1,000 or more, but less than 5,000 the authorized number shall be 2 1/2 percent of the voting power, but not less than 50.(c) Where (disregarding any provision for cumulative voting which would otherwise apply) the total number of votes entitled to be cast for a director is 5,000 or more, the authorized number shall be one-twentieth of 1 percent of the voting power, but not less than 125.(d) Any right under Part 2, Part 3, or Part 4 which may be exercised by the authorized number, or some multiple thereof, may be exercised by a member with written authorizations obtained within any 11-month period from members who, in the aggregate, hold the equivalent voting power. Any such authorization shall specify the right to be exercised thereunder and the duration thereof (which shall not exceed three years).(e) Where any provision of Part 2, Part 3, or Part 4 specifies twice the authorized number, that means two times the number calculated according to subdivision (a), (b) or (c).

California Corporations Code §5040Definition; nonprofit corporation; chapter.“Chapter” refers to a chapter of Part 2 (commencing with Section 5110), Part 3 (commencing with Section 7110), or Part 4 (commencing with Section 9110) unlessotherwise expressly stated.

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California Corporations Code §5041Definition; nonprofit corporation; class.“Class” refers to those memberships which: (a) are identified in the articles or bylaws as being a different type of membership; or (b) have the same rights with respect to voting, dissolution, redemption and transfer. For the purpose of this section, rights shall be considered the same if they are determined by a formula applied uniformly.

California Corporations Code §5046Definitions; nonprofit corporation; corporation.(a) “Corporation” as used in this part and Part 5 (commencing with Section 9910), refers to corporations defined in subdivisions (b), (c), and (d).(b) “Corporation,” as used in Part 2 (commencing with Section 5110), means a nonprofit public benefit corporation as defined in Section 5060.(c) “Corporation,” as used in Part 3 (commencing with Section 7110) means a nonprofit mutual benefit corporation as defined in Section 5059.(d) “Corporation,” as used in Part 4 (commencing with Section 9110), including those provisions of Part 2 (commencing with Section 5110) made applicable pursuant to Chapter 6 (commencing with Section 9610) of Part 4, means a nonprofit religious corporation as defined in Section 5061.

California Corporations Code §5047Definitions; nonprofit corporation; directors.Except where otherwise expressly provided, “directors” means natural persons, designated in the articles or bylaws or elected by the incorporators, and their successors and natural persons designated, elected or appointed by any other name or title to act as members of the governing body of the corporation. If the articles or bylaws designate that a natural person is a director or a member of the governing body of the corporation by reason of occupying a specified position within the corporation or outside the corporation, without limiting that person’s right to vote as a member of the governing body, that person shall be a director for all purposes and shall have the same rights and obligations, including voting rights, as the other directors. A person who does not have authority to vote as a member of the governing body of the corporation, is not a director as that term is used in this division regardless of title.

California Corporations Code §5047.5Volunteer officers or directors, acting reasonably, in good faith, and in the interest of the corporation, cannot be liable for damages arising within the scope of their duties.(a) The Legislature finds and declares that the services of directors and officers of nonprofit corporations who serve without compensation are critical to the efficient conduct and management of the public service and charitable affairs of the people of California. The willingness of volunteers to offer their services has been deterred by aperception that their personal assets are at risk for these activities. The unavailability and unaffordability of appropriate liability insurance makes it difficult for these corporations to protect the personal assets of their volunteer decision makers with adequate insurance. It is the public policy of this state to provide incentive and protection to the individuals who perform these important functions.

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(b) Except as provided in this section, no cause of action for monetary damages shall arise against any person serving without compensation as a director or officer of a nonprofit corporation subject to Part 2 (commencing with Section 5110), Part 3 (commencing with Section 7110), or Part 4 (commencing with Section 9110) of this division on account of any negligent act or omission occurring 1) within the scope of that person's duties as a director acting as a board member, or within the scope of that person's duties as an officer acting in an official capacity; 2) in good faith; 3) in a manner that the person believes to be in the best interest of the corporation; and 4) is in the exercise of his or her policymaking judgment.(c) This section shall not limit the liability of a director or officer for any of the following:

1) Self-dealing transaction, as described in Sections 5233 and 92432) Conflicts of interest, as described in Section 7233.3) Actions described in Sections 5237, 7236, and 9245.4) In the case of a charitable trust, an action or proceeding against a trustee

brought by a beneficiary of that trust.5) Any action or proceeding brought by the Attorney General.6) Intentional, wanton, or reckless acts, gross negligence, or an action based on

fraud, oppression, or malice.7) Any action brought under Chapter 2 (commencing with Section 16700) of Part

2 of Division 7 of the Business and Professions Code.(d) This section only applies to nonprofit corporations organized to provide religious, charitable, literary, educational, scientific, social, or other forms of public service that are exempt from federal income taxation under Section 501(c)(3) or 501(c)(6) of the Internal Revenue Code.(e) This section applies only if the nonprofit corporation maintains a liability insurancepolicy with an amount of coverage of at least the following amounts:

1) If the corporation's annual budget is less than fifty thousand dollars ($50,000), the minimum required amount is five hundred thousand dollars ($500,000).

2) If the corporation's annual budget equals or exceeds fifty thousand dollars ($50,000), the minimum required amount is one million dollars ($1,000,000).

This section applies only if the claim against the director or officer can also be made directly against the corporation and a liability insurance policy is applicable to the claim. If that policy is found to cover the damages caused by the director or officer, no cause of action as provided in this section shall be maintained against the director or officer.(f) For the purposes of this section, the payment of actual expenses incurred in attending meetings or otherwise in the execution of the duties of a director or officer shall not constitute compensation.(g) Nothing in this section shall be construed to limit the liability of a nonprofit corporation for any negligent act or omission of a director, officer, employee, agent, or servant occurring within the scope of his or her duties.(h) This section does not apply to any corporation that unlawfully restricts membership,services, or benefits conferred on the basis of political affiliation, age, or any characteristic listed or defined in subdivision (b) or (e) of Section 51 of the Civil Code.(i) This section does not apply to any volunteer director or officer who receives compensation from the corporation in any other capacity, including, but not limited to, as an employee.

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California Corporations Code §5049Definitions; nonprofit corporation; distributions, member.“Distribution” means the distribution of any gains, profits or dividends to any member as such. As used in this section, “member” means any person who is a member as defined in Section 5056 and any person who is referred to as a member as authorized by subdivision (a) of Sections 5332, 7333 and 9332.

California Corporations Code §5050Definition; nonprofit corporation; domestic corporation.“Domestic corporation” means a corporation formed under the laws of this state.

California Corporations Code §5051Definition; nonprofit corporation; filed.“Filed,” unless otherwise expressly provided, means filed in the office of the Secretaryof State.

California Corporations Code §5056Definition; nonprofit corporation; member.(a) “Member” means any person who, pursuant to a specific provision of a corporation's articles or bylaws, has the right to vote for the election of a director or directors or on a disposition of all or substantially all of the assets of a corporation or on a merger or on a dissolution unless the provision granting such right to vote is only effective as a result of paragraph (2) of subdivision (a) of Section 7132. “Member” also means any person who is designated in the articles or bylaws as a member and, pursuant to a specific provision of a corporation's articles or bylaws, has the right to vote on changes to the articles or bylaws.(b) The articles or bylaws may confer some or all of the rights of a member, set forth in this part and in Parts 2 through 5 of this division, upon any person or persons who do not have any of the voting rights referred to in subdivision (a).(c) Where a member of a corporation is not a natural person, such member may authorize in writing one or more natural persons to vote on its behalf on any or all matters which may require a vote of the members.(d) A person is not a member by virtue of any of the following:

1) Any rights such person has as a delegate.2) Any rights such person has to designate or select a director or directors.3) Any rights such person has as a director.

California Corporations Code §5057Definition; nonprofit corporation; membership.A “membership” refers to the rights a member has pursuant to a corporation's articles, bylaws and this division.

California Corporations Code §5058Definition; nonprofit corporation; membership certificate.“Membership certificate,” as used in Part 3 (commencing with Section 7110), means a document evidencing a transferable property interest in a corporation.

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California Corporations Code §5059Definition; nonprofit mutual benefit corporation, mutual benefit corporation.“Nonprofit mutual benefit corporation” or “mutual benefit corporation” means a corporation which is organized under Part 3 (commencing with Section 7110), or subject to Part 3 under the provisions of subdivision (a) of Section 5003.

California Corporations Code §5060Definition; nonprofit corporation; nonprofit public benefit corporation, public benefit corporation.“Nonprofit public benefit corporation” or “public benefit corporation” means a corporation which is organized under Part 2 (commencing with Section 5110) or subject to Part 2 under the provisions of subdivision (a) of Section 5003.

California Corporations Code §5061Definition; nonprofit corporation; nonprofit religious corporation, religious corporation.“Nonprofit religious corporation” or “religious corporation” means a corporation which is organized under Part 4 (commencing with Section 9110) or subject to Part 4 pursuant to subdivision (a) of Section 5003.

California Corporations Code §5062Definition; nonprofit corporation; officers’ certificate.“Officers' certificate” means a certificate signed and verified by the chairman of the board, the president or any vice president and by the secretary, the chief financial officer, the treasurer or any assistant secretary or assistant treasurer.

California Corporations Code §5063.5Definitions; nonprofit corporation; other business entity, general partnership, business trust, real estate investment trust, unincorporated association.“Other business entity” means a domestic or foreign limited liability company, limited partnership, general partnership, business trust, real estate investment trust, unincorporated association, or a domestic reciprocal insurer organized after 1974 to provide medical malpractice insurance as set forth in Article 16 (commencing with Section 1550) of Chapter 3 of Part 2 of Division 1 of the Insurance Code. As used herein, “general partnership” means a “partnership” as defined in subdivision (9) of Section 16101; “business trust” means a business organization formed as a trust; “real estate investment trust” means a “real estate investment trust” as defined in subsection (a) of Section 856 of the Internal Revenue Code of 1986, as amended; and “unincorporated association” has the meaning set forth in Section 18035.

California Corporations Code §5065Definition; nonprofit corporation; person.“Person,” in addition to those entities specified in Section 18 and unless otherwise expressly provided, includes any association, business corporation, company, corporation, corporation sole, domestic corporation, estate, foreign corporation, foreign business corporation, individual, joint stock company, joint venture, mutual benefit corporation, public benefit corporation, religious corporation, partnership, government or political subdivision, agency or instrumentality of a government.

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California Corporations Code §5068Definition; nonprofit corporation; proper county.“Proper county” means the county where the corporation's principal office in this state is located or, if the corporation has no such office, the County of Sacramento.

California Corporations Code §5069Definitions; nonprofit corporation; proxy, signed.“Proxy” means a written authorization signed by a member or the member's attorney in fact giving another person or persons power to vote on behalf of such member. “Signed” for the purpose of this section means the placing of the member's name on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the member or such member's attorney in fact.

California Corporations Code §5070Definition; nonprofit corporation; proxyholder.“Proxyholder” means the person or persons to whom a proxy is given.

California Corporations Code §5071Definition; nonprofit corporation; shareholder.“Shareholder,” as used in Part 3 (commencing with Section 7110), means one who is a holder of record of shares.

California Corporations Code §5072Definition; nonprofit corporation; shares.“Shares,” as used in Part 3 (commencing with Section 7110), means the units into which the proprietary interests in a business corporation or foreign business corporation are divided in the articles.

California Corporations Code §5075Definition; nonprofit corporation; vacancy.“Vacancy” when used with respect to the board means any authorized position of director which is not then filled, whether the vacancy is caused by death, resignation, removal, change in the number of directors authorized in the articles or bylaws (by the board or the members) or otherwise.

California Corporations Code §5076Definition; nonprofit corporation; verified.“Verified” means that the statements contained in a certificate or other document are declared to be true of the own knowledge of the persons executing the same in either:(a) An affidavit signed by them under oath before an officer authorized by the laws of this state or of the place where it is executed to administer oaths; or(b) A declaration in writing executed by them under penalty of perjury and stating the date and place (whether within or without this state) of execution.Any affidavit sworn to without this state before a notary public or a judge or clerk of a court of record having an official seal need not be further authenticated.

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California Corporations Code §5077Definition; nonprofit corporation; vote.“Vote” includes, but is not limited to, authorization by written consent pursuant to subdivision (b) of Section 5211, subdivision (b) of Section 7211, or subdivision (b) of Section 9211 and authorization by written ballot pursuant to Section 5513, Section 7513, or Section 9413.

California Corporations Code §5078Definition; nonprofit corporation; voting power.“Voting power” means the power to vote for the election of directors at the time any determination of voting power is made and does not include the right to vote upon the happening of some condition or event which has not yet occurred. In any case where different classes of memberships are entitled to vote as separate classes for different members of the board, the determination of percentage of voting power shall be made on the basis of the percentage of the total number of authorized directors which the memberships in question (whether of one or more classes) have the power to elect in an election at which all memberships then entitled to vote for the election of any directors are voted.

California Corporations Code §5079Definition; nonprofit corporation; written or in writing.“Written” or “in writing” includes facsimile, telegraphic, and other electronic communication as authorized by this code, including an electronic transmission by a corporation that satisfies the requirements of Section 20.

California Corporations Code §5080Definition; nonprofit corporation; written ballot.“Written ballot” does not include a ballot distributed at a special or regular meeting of members.

Nonprofit Mutual Benefit Corporations – Organization and Bylaws – Title and Purpose

California Corporations Code §7110Nonprofit mutual benefit corporation.This part shall be known and may be cited as the Nonprofit Mutual Benefit CorporationLaw.

California Corporations Code §7111A corporation may be formed under Part 3 as a nonprofit organization if it is dedicated to charitable, religious, or public purposes.Subject to any other provision of law of this state applying to the particular class of corporation or line of activity, a corporation may be formed under this part for any lawful purpose; provided that a corporation all of the assets of which are irrevocably dedicated to charitable, religious, or public purposes and which as a matter of law or according to its articles or bylaws must, upon dissolution, distribute its assets to a person or persons carrying on a charitable, religious, or public purpose or purposes may not be formed under this part.

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Nonprofit Mutual Benefit Corporations – Organization and Bylaws – Formation

California Corporations Code §7120Rules for filing articles of incorporation for a nonprofit corporation.(a) One or more persons may form a corporation under this part by executing and filing articles of incorporation.(b) If initial directors are named in the articles, each director named in the articles shall sign and acknowledge the articles; if initial directors are not named in the articles, the articles shall be signed by one or more persons who thereupon are the incorporators of the corporation.(c) The corporate existence begins upon the filing of the articles and continues perpetually, unless otherwise expressly provided by law or in the articles.

California Corporations Code §7121Rules and procedures for changing status of association to status of nonprofit corporation.(a) In the case of an existing unincorporated association, the association may change its

status to that of a corporation upon a proper authorization for such by the association in accordance with its rules and procedures.(b) In addition to the matters required to be set forth in the articles pursuant to Section 7130, the articles in the case of an incorporation authorized by subdivision (a) shall set forth that an existing unincorporated association, stating its name, is being incorporated by the filing of the articles.(c) The articles filed pursuant to this section shall be accompanied by a verified statement of any two officers or governing board members of the association stating that the incorporation of the association by means of the articles to which the verified statement is attached has been approved by the association in accordance with its rules and procedures.(d) Upon the change of status of an unincorporated association to a corporation pursuant to subdivision (a), the property of the association becomes the property of thecorporation and the members of the association who had any voting rights of the type referred to in Section 5056 become members of the corporation.(e) The filing for record in the office of the county recorder of any county in this state in which any of the real property of the association is located, of a copy of the articles of incorporation filed pursuant to this section, certified by the Secretary of State, shall evidence record ownership in the corporation of all interests of the association in and to the real property located in that county.(f) All rights of creditors and all liens upon the property of the association shall be preserved unimpaired. Any action or proceeding pending by or against the unincorporated association may be prosecuted to judgment, which shall bind the corporation, or the corporation may be proceeded against or substituted in its place.(g) If a corporation is organized by a person who is or was an officer, director or member of an unincorporated association and such corporation is not organized pursuant to subdivision (a), the unincorporated association may continue to use its name and the corporation may not use a name which is the same as or similar to the name of the unincorporated association.

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Nonprofit Mutual Benefit Corporations – Organization and Bylaws – Articles of Incorporation

California Corporations Code §7130Requirements for articles of incorporation for a nonprofit corporation.The articles of incorporation of a corporation formed under this part shall set forth the following:(a) The name of the corporation.(b)

1) Except as provided in paragraph (2), the following statement:“This corporation is a nonprofit mutual benefit corporation organized underthe Nonprofit Mutual Benefit Corporation Law. The purpose of thiscorporation is to engage in any lawful act or activity, other than credit unionbusiness, for which a corporation may be organized under such law.”

2) In the case of a corporation formed under this part that is subject to the California Credit Union Law (Chapter 1 (commencing with Section 14000) of Division 5 of the Financial Code), the articles shall set forth a statement of purpose that is prescribed in the applicable provisions of the California Credit Union Law.

3) The articles may include a further definition of the corporation's purposes.(c) The name and street address in this state of the corporation's initial agent for service of process in accordance with subdivision (b) of Section 8210.(d) The initial street address of the corporation. (e) The initial mailing address of the corporation, if different from the initial street address.

California Corporations Code §7131Articles of incorporation for a nonprofit corporation may include additional provisions limiting its purposes or powers.The articles of incorporation may set forth a further statement limiting the purposes or powers of the corporation.

California Corporations Code §7132Optional provisions in the articles of incorporation are not effective unless expressed in the articles; optional provisions a nonprofit corporation may include in its articles of incorporation.(a) The articles of incorporation may set forth any or all of the following provisions, which shall not be effective unless expressly provided in the articles:

1) A provision limiting the duration of the corporations existence to a specified date.

2) A provision conferring upon the holders of any evidences of indebtedness, issued or to be issued by a corporation the right to vote in the election of directors and on any other matters on which members may vote under this part even if the corporation does not have members.

3) A provision conferring upon members the right to determine the consideration for which memberships shall be issued.

4) In the case of a subordinate corporation instituted or created under the authority of a head organization, a provision setting forth either or both of the following:

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A. That the subordinate corporation shall dissolve whenever its charter is surrendered to, taken away by, or revoked by the head organization granting it.

B. That in the event of its dissolution pursuant to an article provision allowed by subparagraph (A) or in the event of its dissolution for any reason, any assets of the corporation after compliance with the applicable provisions of Chapters 15 (commencing with Section 8510), 16 (commencing with Section 8610), and 17 (commencing with Section 8710) shall be distributed to the head organization.

(b) Nothing contained in subdivision (a) shall affect the enforceability, as between the parties thereto, of any lawful agreement not otherwise contrary to public policy.(c) The articles of incorporation may set forth any or all of the following provisions:

1) The names and addresses of the persons appointed to act as initial directors.2) Provisions concerning the transfer of memberships, in accordance with Section

7320.3) The classes of members, if any, and if there are two or more classes, the rights,

privileges, preferences, restrictions and conditions attaching to each class.4) A provision which would allow any member to have more or less than one vote

in any election or other matter presented to the members for a vote.5) A provision that requires an amendment to the articles, as provided in

subdivision (a) of Section 7812, or to the bylaws, and any amendment or repeal of that amendment, to be approved in writing by a specified person or persons other than the board or the members. However, this approval requirement, unless the articles specify otherwise, shall not apply if any of the following circumstances exist:

A. The specified person or persons have died or ceased to exist.B. If the right of the specified person or persons to approve is in the

capacity of an officer, trustee, or other status and the office, trust, or status has ceased to exist.

C. If the corporation has a specific proposal for amendment or repeal, and the corporation has provided written notice of that proposal, including a copy of the proposal, to the specified person or persons at the most recent address for each of them, based on the corporation's records, and the corporation has not received written approval or nonapproval within the period specified in the notice, which shall not be less than 10 nor more than 30 days commencing at least 20 daysafter the notice has been provided.

6) Any other provision, not in conflict with law, for the management of the activities and for the conduct of the affairs of the corporation, including any provision which is required or permitted by this part to be stated in the bylaws.

California Corporations Code §7133A certified copy of the articles of a corporation is conclusive evidence of the formation of the corporation.For all purposes other than an action in the nature of quo warranto, a copy of the articles of a corporation duly certified by the Secretary of State is conclusive evidence of the formation of the corporation and prima facie evidence of its corporate existence.

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Nonprofit Mutual Benefit Corporations – Organization and Bylaws – Powers

California Corporations Code §7140Powers of the nonprofit corporation.Subject to any limitations contained in the articles or bylaws and to compliance with other provisions of this division and any other applicable laws, a corporation, in carrying out its activities, shall have all of the powers of a natural person, including, without limitation, the power to:(a) Adopt, use, and at will alter a corporate seal, but failure to affix a seal does not affect the validity of any instrument.(b) Adopt, amend, and repeal bylaws.(c) Qualify to conduct its activities in any other state, territory, dependency or foreign country.(d) Issue, purchase, redeem, receive, take or otherwise acquire, own, sell, lend, exchange, transfer or otherwise dispose of, pledge, use and otherwise deal in and with its own memberships, bonds, debentures, notes and debt securities.(e) Pay pensions, and establish and carry out pension, deferred compensation, saving, thrift and other retirement, incentive and benefit plans, trusts and provisions for any or all of its directors, officers, employees, and persons providing services to it or any of its subsidiary or related or associated corporations, and to indemnify and purchase and maintain insurance on behalf of any fiduciary of such plans, trusts, or provisions.(f) Issue certificates evidencing membership in accordance with the provisions of Section 7313 and issue identity cards.(g) Levy dues, assessments, and admission and transfer fees.(h) Make donations for the public welfare or for community funds, hospital, charitable, educational, scientific, civic, religious or similar purposes.(i) Assume obligations, enter into contracts, including contracts of guarantee or suretyship, incur liabilities, borrow or lend money or otherwise use its credit, and secure any of its obligations, contracts or liabilities by mortgage, pledge or other encumbrance of all or any part of its property and income.(j) Participate with others in any partnership, joint venture or other association, transaction or arrangement of any kind whether or not such participation involves sharing or delegation of control with or to others.(k) Act as trustee under any trust incidental to the principal objects of the corporation, and receive, hold, administer, exchange, and expend funds and property subject to such trust.(l) Carry on a business at a profit and apply any profit that results from the business activity to any activity in which it may lawfully engage.

California Corporations Code §7141Procedure for asserting a limitation upon the corporation; a contract made in the name of the corporation binds it.Subject to Section 7142:(a) No limitation upon the activities, purposes, or powers of the corporation or upon the powers of the members, officers, or directors, or the manner of exercise of such powers, contained in or implied by the articles or by Chapters 15 (commencing with Section 8510), 16 (commencing with Section 8610), and 17 (commencing with Section 8710)shall be asserted as between the corporation or member, officer or director and any third person, except in a proceeding:

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1) by a member or the state to enjoin the doing or continuation of unauthorized activities by the corporation or its officers, or both, in cases where third parties have not acquired rights thereby,

2) to dissolve the corporation, or 3) by the corporation or by a member suing in a representative suit against the

officers or directors of the corporation for violation of their authority.(b) Any contract or conveyance made in the name of a corporation which is authorized or ratified by the board, or is done within the scope of authority, actual or apparent, conferred by the board or within the agency power of the officer executing it, except as the board's authority is limited by law other than this part, binds the corporation, and the corporation acquires rights thereunder whether the contract is executed or wholly or in part executory.

Nonprofit Mutual Benefit Corporations – Organization and Bylaws – Bylaws

California Corporations Code §7150Rules and procedures for adopting, amending and repealing the bylaws of the nonprofit organization.(a) Except as provided in subdivision (c) and Sections 7151, 7220, 7224, 7512, 7613, and 7615, bylaws may be adopted, amended or repealed by the board unless the action would:

1) Materially and adversely affect the rights of members as to voting, dissolution,redemption, or transfer;

2) Increase or decrease the number of members authorized in total or for any class;

3) Effect an exchange, reclassification or cancellation of all or part of the memberships; or

4) Authorize a new class of membership.(b) Bylaws may be adopted, amended or repealed by approval of the members (Section 5034); provided, however, that such adoption, amendment or repeal also requires approval by the members of a class if such action would:

1) Materially and adversely affect the rights, privileges, preferences, restrictions or conditions of that class as to voting, dissolution, redemption, or transfer in a manner different than such action affects another class.

2) Materially and adversely affect such class as to voting, dissolution, redemption, or transfer by changing the rights, privileges, preferences, restrictions or conditions of another class;

3) Increase or decrease the number of memberships authorized for such class;4) Increase the number of memberships authorized for another class;5) Effect an exchange, reclassification or cancellation of all or part of the

memberships of such class; or6) Authorize a new class of memberships.

(c) The articles or bylaws may restrict or eliminate the power of the board to adopt, amend or repeal any or all bylaws, subject to subdivision (e) of Section 7151.(d) Bylaws may also provide that the repeal or amendment of those bylaws, or the repeal or amendment of specified portions of those bylaws, may occur only with the approval in writing of a specified person or persons other than the board or members. However, this approval requirement, unless the bylaws specify otherwise, shall not apply if any of the following circumstances exist:

1) The specified person or persons have died or ceased to exist.

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2) If the right of the specified person or persons to approve is in the capacity of an officer, trustee, or other status and the office, trust, or status has ceased to exist.

3) If the corporation has a specific proposal for amendment or repeal, and the corporation has provided written notice of that proposal, including a copy of the proposal, to the specified person or persons at the most recent address for each of them, based on the corporation's records, and the corporation has not received written approval or nonapproval within the period specified in the notice, which shall not be less than 10 nor more than 30 days commencing at least 20 days after the notice has been provided.

California Corporations Code §7151Bylaws can contain any provision for the management of the nonprofit corporation that is not conflicting with the law or with the articles; optional provision for the bylaws.(a) The bylaws shall set forth (unless such provision is contained in the articles, in which case it may only be changed by an amendment of the articles) the number of directors of the corporation, or the method of determining the number of directors of the corporation, or that the number of directors shall be not less than a stated minimum nor more than a stated maximum with the exact number of directors to be fixed, within the limits specified, by approval of the board or the members (Section 5034), in the mannerprovided in the bylaws, subject to subdivision (e). The number or minimum number of directors may be one or more.(b) Once members have been admitted, a bylaw specifying or changing a fixed number of directors or the maximum or minimum number or changing from a fixed to a variable board or vice versa may only be adopted by approval of the members (Section 5034).(c) The bylaws may contain any provision, not in conflict with law or the articles, for the management of the activities and for the conduct of the affairs of the corporation, including but not limited to:

(1) Any provision referred to in subdivision (c) of Section 7132.(2) The time, place and manner of calling, conducting and giving notice of

members', directors' and committee meetings, or of conducting mail ballots.(3) The qualifications, duties and compensation of directors; the time of their

election; and the requirements of a quorum for directors' and committee meetings.

(4) The appointment of committees, composed of directors or nondirectors or both, by the board or any officer and the authority of any such committees.

(5) The appointment, duties, compensation and tenure of officers.(6) The mode of determination of members of record.(7) The making of reports and financial statements to members.(8) Setting, imposing and collecting dues, assessments, and admission and

transfer fees.(d) The bylaws may provide for the manner of admission, withdrawal, suspension, and expulsion of members, consistent with the requirements of Section 7341.(e) The bylaws may require, for any or all corporate actions (except as provided in paragraphs (1) and (2) of subdivision (a) of Section 7222, subdivision (c) of Section 7615, and Section 8610) the vote of a larger proportion of, or all of, the members or the members of any class, unit, or grouping of members or the vote of a larger proportion of, or all of, the directors, than is otherwise required by this part. Such a provision in the

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bylaws requiring such greater vote shall not be altered, amended or repealed except by such greater vote, unless otherwise provided in the bylaws.(f) The bylaws may contain a provision limiting the number of members, in total or of any class, which the corporation is authorized to admit.

California Corporations Code §7152Nonprofit corporation, in its bylaws, can give some or all of the authority of members to delegates; rules regarding delegates of a nonprofit corporation.A corporation may provide in its bylaws for delegates having some or all of the authority of members. Where delegates are provided for, the bylaws shall set forth delegates' terms of office, any reasonable method for delegates' selection and removal, and any reasonable method for calling, noticing and holding meetings of delegates and may set forth the manner in which delegates may act by written ballot similar to Section 7513 for written ballot of members. Delegates may only act personally at a meeting or by written ballot and may not act by proxy. Delegates may be given a name other than “delegates.”

California Corporations Code §7153Nonprofit corporation, in its bylaws, can provide for voting on the basis of chapter, organizational unit, region, or geographic grouping.A corporation may provide in its bylaws for voting by its members or delegates on the basis of chapter or other organizational unit, or by region or other geographic grouping.

Nonprofit Mutual Benefit Corporations – Organization and Bylaws – Location and Inspection

California Corporations Code §7160Nonprofit corporation must keep a copy of its articles and bylaws open for inspection by its members at its principal office.Every corporation shall keep at its principal office in this state the original or a copy of its articles and bylaws as amended to date, which shall be open to inspection by the members at all reasonable times during office hours. If the corporation has no office in this state, it shall upon the written request of any member furnish to such member a copy of the articles or bylaws as amended to date.

Nonprofit Mutual Benefit Corporations – Directors/Management – General Provisions

California Corporations Code §7210Each nonprofit corporation must have a board of directors that conducts the affairs and activities of the corporation.Each corporation shall have a board of directors. Subject to the provisions of this part and any limitations in the articles or bylaws relating to action required to be approved by the members (Section 5034), or by a majority of all members (Section 5033), the activities and affairs of a corporation shall be conducted and all corporate powers shall be exercised by or under the direction of the board. The board may delegate the management of the activities of the corporation to any person or persons, management company, or committee however composed, provided that the activities and affairs of the corporation shall be managed and all corporate powers shall be exercised under the ultimate direction of the board.

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California Corporations Code §7211Rules and Procedures for meetings of the board of directors of nonprofit corporations.(a) Unless otherwise provided in the articles or in the bylaws, all of the following apply:

1) Meetings of the board may be called by the chair of the board or the president or any vice president or the secretary or any two directors.

2) Regular meetings of the board may be held without notice if the time and place of the meetings are fixed by the bylaws or the board. Special meetings of the board shall be held upon four days' notice by first-class mail or 48 hours' notice delivered personally or by telephone, including a voice messaging system or by electronic transmission by the corporation (Section 20). The articles or bylaws may not dispense with notice of a special meeting. A notice, or waiver of notice, need not specify the purpose of any regular or special meeting of the board.

3) Notice of a meeting need not be given to a director who provided a waiver of notice or consent to holding the meeting or an approval of the minutes thereof in writing, whether before or after the meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to that director. These waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meetings.

4) A majority of the directors present, whether or not a quorum is present, may adjourn any meeting to another time and place. If the meeting is adjourned for more than 24 hours, notice of an adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of the adjournment.

5) Meetings of the board may be held at a place within or without the state that has been designated in the notice of the meeting or, if not stated in the notice or if there is no notice, designated in the bylaws or by resolution of the board.

6) Directors may participate in a meeting through use of conference telephone, electronic video screen communication, or electronic transmission by and to the corporation (Sections 20 and 21). Participation in a meeting through use of conference telephone or electronic video screen communication pursuant to this subdivision constitutes presence in person at that meeting as long as all members participating in the meeting are able to hear one another. Participation in a meeting through use of electronic transmission by and to the corporation, other than conference telephone and electronic video screen communication, pursuant to this subdivision constitutes presence in person at that meeting if both of the following apply:A. Each director participating in the meeting can communicate with all of the

other directors concurrently.B. Each director is provided the means of participating in all matters before

the board, including, without limitation, the capacity to propose, or to interpose an objection to, a specific action to be taken by the corporation.

7) A majority of the number of directors authorized in or pursuant to the articles or bylaws constitutes a quorum of the board for the transaction of business. The articles or bylaws may require the presence of one or more specified directors in order to constitute a quorum of the board to transact business, as long as the death of a director or the death or nonexistence of the person or persons otherwise authorized to appoint or designate that director does not prevent the

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corporation from transacting business in the normal course of events. The articles or bylaws may not provide that a quorum shall be less than one-fifth the number of directors authorized in or pursuant to the articles or bylaws, or less than two, whichever is larger, unless the number of directors authorized in or pursuant to the articles or bylaws is one, in which case one director constitutes a quorum.

8) Subject to the provisions of Sections 7212, 7233, 7234, and subdivision (e) of Section 7237 and Section 5233, insofar as it is made applicable pursuant to Section 7238, an act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the board. The articles or bylaws may not provide that a lesser vote than a majority of the directors present at a meeting is the act of the board. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting, or a greater number required by this division, the articles or the bylaws.

(b) An action required or permitted to be taken by the board may be taken without a meeting if all directors individually or collectively consent in writing to that action and if, subject to subdivision (a) of Section 7224, the number of directors then in office constitutes a quorum. The written consent or consents shall be filed with the minutes of the proceedings of the board. The action by written consent shall have the same force and effect as a unanimous vote of the directors. For purposes of this subdivision only, “all members of the board” does not include an “interested director” as defined in subdivision (a) of Section 5233, insofar as it is made applicable pursuant to Section 7238 or described in subdivision (a) of Section 7233, or a “common director” as described in subdivision (b) of Section 7233 who abstains in writing from providing consent, where (1) the facts described in paragraph (2) or (3) of subdivision (d) of Section 5233 are established or the provisions of paragraph (1) or (2) of subdivision (a) of Section 7233 or in paragraph (1) or (2) of subdivision (b) of Section 7233 are satisfied, as appropriate, at or prior to execution of the written consent or consents; (2) the establishment of those facts or satisfaction of those provisions, as applicable, is included in the written consent or consents executed by the noninterested directors or noncommon directors or in other records of the corporation; and (3) the noninterested directors or noncommon directors, as applicable, approve the action by a vote that is sufficient without counting the votes of the interested directors or common directors..(c) Each director shall have one vote on each matter presented to the board of directorsfor action. No director may vote by proxy.(d) This section applies also to incorporators, to committees of the board, and to action by those incorporators or committees mutatis mutandis.

California Corporations Code §7212Nonprofit corporation board of directors can appoint committees to serve the board; powers and authorities of nonprofit corporation committees.(a) The board may, by resolution adopted by a majority of the number of directors then in office, provided that a quorum is present, create one or more committees, each consisting of two or more directors, to serve at the pleasure of the board. Appointments to such committees shall be by a majority vote of the directors then in office, unless the articles or bylaws require a majority vote of the number of directors authorized in or pursuant to the articles or bylaws. The bylaws may authorize one or more such committees, each

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consisting of two or more directors, and may provide that a specified officer or officers who are also directors of the corporation shall be a member or members of such committee or committees. The board may appoint one or more directors as alternate members of such committee, who may replace any absent member at any meeting of the committee. Such committee, to the extent provided in the resolution of the board or in the bylaws, shall have all the authority of the board, except with respect to:

1) The approval of any action for which this part also requires approval of the members (Section 5034) or approval of a majority of all members (Section 5033), regardless of whether the corporation has members.

2) The filling of vacancies on the board or in any committee which has the authority of the board.

3) The fixing of compensation of the directors for serving on the board or on any committee.

4) The amendment or repeal of bylaws or the adoption of new bylaws.5) The amendment or repeal of any resolution of the board which by its express

terms is not so amendable or repealable.6) The appointment of committees of the board or the members thereof.7) The expenditure of corporate funds to support a nominee for director after there

are more people nominated for director than can be elected.8) With respect to any assets held in charitable trust, the approval of any self-

dealing transaction except as provided in paragraph (3) of subdivision (d) of Section 5233.

(b) A committee exercising the authority of the board shall not include as members persons who are not directors. However, the board may create other committees that do not exercise the authority of the board and these other committees may include persons regardless of whether they are directors.(c) Unless the bylaws otherwise provide, the board may delegate to any committee, appointed pursuant to paragraph (4) of subdivision (c) of Section 7151 or otherwise, powers as authorized by Section 7210, but may not delegate the powers set forth in paragraphs (1) to (8), inclusive, of subdivision (a).

California Corporations Code §7213Nonprofit corporation must appoint officers to the board of directors who serve the board of directors; requirement for appointing nonprofit corporate officers.(a) A corporation shall have a chair of the board, who may be given the title chair of the board, chairperson of the board, chairman of the board, or chairwoman of the board, or a president or both, a secretary, a treasurer or a chief financial officer or both, and any other officers with any titles and duties as shall be stated in the bylaws or determined by the board and as may be necessary to enable it to sign instruments. The president, or if there is no president the chair of the board, is the general manager and chief executive officer of the corporation, unless otherwise provided in the articles or bylaws. Unless otherwise specified in the articles or the bylaws, if there is no chief financial officer, the treasurer is the chief financial officer of the corporation. Any number of offices may be held by the same person unless the articles or bylaws provide otherwise. Where a corporation holds assets in charitable trust, any compensation of the president or chief executive officer and the chief financial officer or treasurer shall be determined in accordance with subdivision (g) of Section 12586 of the Government Code, if applicable.(b) Except as otherwise provided by the articles or bylaws, officers shall be chosen by the board and serve at the pleasure of the board, subject to the rights, if any, of an officer

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under any contract of employment. Any officer may resign at any time upon written notice to the corporation without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.

California Corporations Code §7214Any instrument in writing entered into between the nonprofit corporation and another party is enforceable if signed by an officer.Subject to the provisions of subdivision (a) of Section 7141 and Section 7142, any note, mortgage, evidence of indebtedness, contract, conveyance or other instrument in writing, and any assignment or endorsement thereof, executed or entered into between any corporation and any other person, when signed by any one of the chairman of the board, the president or any vice president and by any one of the secretary, any assistant secretary, the chief financial officer or any assistant treasurer of such corporation, is not invalidated as to the corporation by any lack of authority of the signing officers in the absence of actual knowledge on the part of the other person that the signing officers had no authority to execute the same.

California Corporations Code §7215Certified originals or copies of bylaws, minutes and resolutions adopted by the board of the nonprofit corporation are evidence of the adoption of such bylaws or resolutions.The original or a copy in writing or in any other form capable of being converted into clearly legible tangible form of the bylaws or of the minutes of any incorporators', members', directors', committee or other meeting or of any resolution adopted by the board or a committee thereof, or members, certified to be a true copy by a person purporting to be the secretary or an assistant secretary of the corporation, is prima facie evidence of the adoption of such bylaws or resolution or of the due holding of such meeting and of the matters stated therein.

Nonprofit Mutual Benefit Corporations – Directors/Management – Directors

California Corporations Code §7220Rules and procedures for directors’ term of election to the board of directors of a nonprofit corporation.(a) Except as provided in subdivision (d), directors shall be elected for such terms, not longer than four years, as are fixed in the articles or bylaws. However, the terms of directors of a corporation without members may be up to six years. In the absence of any provision in the articles or bylaws, the term shall be one year. The articles or bylaws may provide for staggering the terms of directors by dividing the total number of directors into groups of one or more directors. The terms of office of the several groups and the number of directors in each group need not be uniform. No amendment of the articles or bylaws may extend the term of a director beyond that for which the director was elected, nor may any bylaw provision increasing the terms of directors be adopted without approval of the members (Section 5034).(b) Unless the articles or bylaws otherwise provide, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified, unless the director has been removed from office.

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(c) The articles or bylaws may provide for the election of one or more directors by the members of any class voting as a class.(d) For the purposes of this subdivision, “designator” means one or more designators. Subdivisions (a) through (c) notwithstanding, all or any portion of the directors authorized in the articles or bylaws of a corporation may hold office by virtue of designation or selection by a specified designator as provided by the articles or bylaws rather than by election. Such directors shall continue in office for the term prescribed by the governing article or bylaw provision, or, if there is no term prescribed, until the governing article or bylaw provision is duly amended or repealed, except as provided in subdivision (e) of Section 7222. A bylaw provision authorized by this subdivision may be adopted, amended, or repealed only by approval of the members (Section 5034), except as provided in subdivision (d) of Section 7150. Unless otherwise provided in the articles or bylaws, the entitlement to designate or select a director or directors shall cease if any of the following circumstances exist:

1) The specified designator of that director or directors has died or ceased to exist.2) If the entitlement of the specified designator of that director or directors to

designate is in the capacity of an officer, trustee, or other status and the office, trust, or status has ceased to exist.

(e) If a corporation has not issued memberships and (1) all the directors resign, die, or become incompetent, or (2) a corporation's initial directors have not been named in the articles and all incorporators resign, die, or become incompetent before the election of the initial directors, the superior court of any county may appoint directors of the corporation upon application by any party in interest.

California Corporations Code §7221Requirements for declaring vacancy in the board of directors of the nonprofit corporation; requirements for disqualification of directors from the board of a nonprofit corporation.(a) The board may declare vacant the office of a director who has been declared ofunsound mind by a final order of court, or convicted of a felony, or, in the case of a corporation holding assets in charitable trust, has been found by a final order or judgment of any court to have breached any duty arising as a result of Section 7238, or, if at the time a director is elected, the bylaws provide that a director may be removed for missing a specified number of board meetings, fails to attend the specified number of meetings.(b) As provided in paragraph (3) of subdivision (c) of Section 7151, the articles or bylaws may prescribe the qualifications of the directors. The board, by a majority vote of the directors who meet all of the required qualifications to be a director, may declare vacant the office of any director who fails or ceases to meet any required qualification that was in effect at the beginning of that director's current term of office.

California Corporations Code §7222Rules and requirements for removal of directors from the board of directors of a nonprofit corporation without cause.(a) Subject to subdivisions (b) and (f), any or all directors may be removed without cause if:

1) In a corporation with fewer than 50 members, the removal is approved by a majority of all members (Section 5033).

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2) In a corporation with 50 or more members, the removal is approved by the members (Section 5034).

3) In a corporation with no members, the removal is approved by a majority of the directors then in office.

(b) Except for a corporation having no members, pursuant to Section 7310:1) In a corporation in which the articles or bylaws authorize members to cumulate

their votes pursuant to subdivision (a) of Section 7615, no director may be removed (unless the entire board is removed) when the votes cast against removal, or not consenting in writing to the removal, would be sufficient to elect the director if voted cumulatively at an election at which the same total number of votes were cast (or, if the action is taken by written ballot, all memberships entitled to vote were voted) and the entire number of directors authorized at the time of the director's most recent election were then being elected.

2) When by the provisions of the articles or bylaws the members of any class, voting as a class, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the members of that class.

3) When by the provisions of the articles or bylaws the members within a chapter or other organizational unit, or region or other geographic grouping, voting as such, are entitled to elect one or more directors, any director so elected may be removed only by the applicable vote of the members within the organizational unit or geographic grouping.

(c) Any reduction of the authorized number of directors or any amendment reducing the number of classes of directors does not remove any director prior to the expiration of the director's term of office unless the reduction or amendment also provides for the removal of one or more specified directors.(d) Except as provided in this section and Sections 7221 and 7223, a director may not be removed prior to the expiration of the director's term of office.(e) Where a director removed under this section or Section 7221 or 7223 was chosen by designation pursuant to subdivision (d) of Section 7220, then:

1) Where a different person may be designated pursuant to the governing article or bylaw provision, the new designation shall be made.

2) Where the governing article or bylaw provision contains no provision under which a different person may be designated, the governing article or bylaw provision shall be deemed repealed.

(f) For the purposes of this subdivision, “designator” means one or more designators. If by the provisions of the articles or bylaws a designator is entitled to designate one or more directors, then:

1) Unless otherwise provided in the articles or bylaws at the time of designation, any director so designated may be removed without cause by the designator of that director.

2) Any director so designated may only be removed under subdivision (a) with the written consent of the designator of that director.

3) Unless otherwise provided in the articles or bylaws, the right to remove shall not apply if any of the following circumstances exist:A. The designator entitled to that right has died or ceased to exist.B. If that right is in the capacity of an officer, trustee, or other status, and the

office, trust, or status has ceased to exist.

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California Corporations Code §7223A court can remove director from the board of directors of a nonprofit corporation upon misconduct; rules and procedures for removal of directors from the board of directors of a nonprofit corporation through court order.(a) The superior court of the proper county may, at the suit of one of the parties specified in subdivision (b), remove from office any director in case of fraudulent or dishonest acts or gross abuse of authority or discretion with reference to the corporation or breach of any duty arising as a result of Section 7238 and may bar from reelection any director so removed for a period prescribed by the court. The corporation shall be made a party to such action.(b) An action under subdivision (a) may be instituted by any of the following:

1) A director.2) In the case of a corporation where the total number of votes entitled to be

cast for a director is less than 5,000, twice the authorized number (Section 5036) of members, or 20 members, whichever is less.

3) In the case of a corporation where the total number of votes entitled to becast for a director is 5,000 or more, twice the authorized number (Section 5036) of members, or 100 members, whichever is less.

(c) In the case of a corporation holding assets in charitable trust, the Attorney General may bring an action under subdivision (a), may intervene in such an action brought by any other party and shall be given notice of any such action brought by any other party.

California Corporations Code §7224Rules and procedures for filling vacancies on, and resigning from, the board of directors of a nonprofit corporation.(a) Unless otherwise provided in the articles or bylaws and except for a vacancy created by the removal of a director, vacancies on the board may be filled by approval of the board (Section 5032) or, if the number of directors then in office is less than a quorum, by

1) the unanimous written consent of the directors then in office, 2) the affirmative vote of a majority of the directors then in office at a meeting

held pursuant to notice or waivers of notice complying with Section 7211, or 3) a sole remaining director.

Unless the articles or a bylaw approved by the members (Section 5034) provide that the board may fill vacancies occurring in the board by reason of the removal of directors, or unless the corporation has no members pursuant to Section 7310, such vacancies may be filled only by approval of the members (Section 5034).(b) The members may elect a director at any time to fill any vacancy not filled by the directors.(c) Any director may resign effective upon giving written notice to the chairman of the board, the president, the secretary or the board of directors of the corporation, unless the notice specifies a later time for the effectiveness of such resignation. If the resignation is effective at a future time, a successor may be elected to take office when the resignation becomes effective.

California Corporations Code §7225When a nonprofit corporation cannot agree as to the management of the corporation or as to the election of directors to the board, the court can appoint a

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provisional director to break the deadlock; requirements and procedure for appointing a provisional director.(a) If a corporation has an even number of directors who are equally divided and cannot agree as to the management of its affairs, so that its activities can no longer be conducted to advantage or so that there is danger that its property, activities, or business will be impaired or lost, the superior court of the proper county may, notwithstanding any provisions of the articles or bylaws and whether or not an action is pending for an involuntary winding up or dissolution of the corporation, appoint a provisional director pursuant to this section. Action for such appointment may be brought by any director or by members holding not less than 33 1/3 percent of the voting power.(b) If the members of a corporation are deadlocked so that they cannot elect the directors to be elected at the time prescribed therefore, the superior court of the proper county may, notwithstanding any provisions of the articles or bylaws, upon petition of members holding 50 percent of the voting power, appoint a provisional director or directors pursuant to this section or order such other equitable relief as the court deems appropriate.(c) In the case of a corporation holding assets in charitable trust:

1) Any person bringing an action under subdivision (a) or (b) shall give notice to the Attorney General, who may intervene; and

2) The Attorney General may bring an action under subdivision (a) or (b).(d) A provisional director shall be an impartial person, who is neither a member nor a creditor of the corporation, nor related by consanguinity or affinity within the third degree according to the common law to any of the other directors of the corporation or to any judge of the court by which such provisional director is appointed. A provisional director shall have all the rights and powers of a director until the deadlock in the board or among members is broken or until such provisional director is removed by order of the court or by approval of a majority of all members (Section 5033). Such person shall be entitled to such compensation as shall be fixed by the court unless otherwise agreed with the corporation.

Nonprofit Mutual Benefit Corporations – Directors/Management – Conduct Standards

California Corporations Code §7230Duties and liabilities apply to directors whether compensated by the nonprofit corporation or not.(a) Any duties and liabilities set forth in this article shall apply without regard to whether a director is compensated by the corporation.(b) Part 4 (commencing with Section 16000) of Division 9 of the Probate Code does not apply to the directors of any corporation.

California Corporations Code §7231Director of a nonprofit corporation must perform his or her duties in the best interests of the corporation, reasonably, and in good faith; information directors of nonprofit corporation can rely on in performing their duties; director is not liable for actions or omissions that exceed or defeat the public or charitable purpose of the nonprofit corporation.(a) A director shall perform the duties of a director, including duties as a member of any committee of the board upon which the director may serve, in good faith, in a manner such director believes to be in the best interests of the corporation and with such care,

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including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.(b) In performing the duties of a director, a director shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by:

1) One or more officers or employees of the corporation whom the director believes to be reliable and competent in the matters presented;

2) Counsel, independent accountants or other persons as to matters which the director believes to be within such person's professional or expert competence; or

3) A committee upon which the director does not serve that is composed exclusively of any or any combination of directors, persons described in paragraph (1), or persons described in paragraph (2), as to matters within the committee's designated authority, which committee the director believes to merit confidence, so long as, in any case, the director acts in good faith, after reasonable inquiry when the need therefore is indicated by the circumstances and without knowledge that would cause such reliance to be unwarranted.

(c) A person who performs the duties of a director in accordance with subdivisions (a) and (b) shall have no liability based upon any alleged failure to discharge the person's obligations as a director, including, without limiting the generality of the foregoing, any actions or omissions which exceed or defeat a public or charitable purpose to which assets held by a corporation are dedicated.

California Corporations Code §7231.5Volunteer officers or directors, acting reasonably, in good faith, and in the interest of the corporation, cannot be liable for damages based on failure to discharge duties as directors or officers.(a) Except as provided in Section 7233 or 7236, there is no monetary liability on the part of, and no cause of action for damages shall arise against, any volunteer director or volunteer executive officer of a nonprofit corporation subject to this part based upon any alleged failure to discharge the person's duties as a director or officer if the duties are performed in a manner that meets all of the following criteria:

1) The duties are performed in good faith.2) The duties are performed in a manner such director or officer believes to be

in the best interests of the corporation.3) The duties are performed with such care, including reasonable inquiry, as an

ordinarily prudent person in a like position would use under similar circumstances.

(b) “Volunteer” means the rendering of services without compensation. “Compensation” means remuneration whether by way of salary, fee, or other consideration for services rendered. However, the payment of per diem, mileage, or other reimbursement expenses to a director or executive officer does not affect that person's status as a volunteer within the meaning of this section.(c) “Executive officer” means the president, vice president, secretary, or treasurer of a corporation or other individual serving in like capacity who assists in establishing the policy of the corporation.(d) This section shall apply only to trade, professional, and labor organizations incorporated pursuant to this part which operate exclusively for fraternal, educational,

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and other nonprofit purposes, and under the provisions of Section 501(c) of the United States Internal Revenue Code.(e) This section shall not be construed to limit the provisions of Section 7231.

California Corporations Code §7232Section 7231 applies to duties related to the election, selection or nomination of directors to the board of directors of a nonprofit organization.(a) Section 7231 governs the duties of directors as to any acts or omissions in connection with the election, selection, or nomination of directors.(b) This section shall not be construed to limit the generality of Section 7231.

California Corporations Code §7233Requirements for contracts to be enforceable despite possible conflict of interest of the directors of the board of directors of a nonprofit corporation.(a) No contract or other transaction between a corporation and one or more of its directors, or between a corporation and any domestic or foreign corporation, firm or association in which one or more of its directors has a material financial interest, is either void or voidable because such director or directors or such other corporation, business corporation, firm or association are parties or because such director or directors are present at the meeting of the board or a committee thereof which authorizes, approves or ratifies the contract or transaction, if:

1) The material facts as to the transaction and as to such director's interest are fully disclosed or known to the members and such contract or transaction is approved by the members (Section 5034) in good faith, with any membership owned by any interested director not being entitled to vote thereon;

2) The material facts as to the transaction and as to such director's interest are fully disclosed or known to the board or committee, and the board or committee authorizes, approves or ratifies the contract or transaction in good faith by a vote sufficient without counting the vote of the interested director or directors and the contract or transaction is just and reasonable as to the corporation at the time it is authorized, approved or ratified; or

3) As to contracts or transactions not approved as provided in paragraph (1) or(2) of this subdivision, the person asserting the validity of the contract or transaction sustains the burden of proving that the contract or transaction was just and reasonable as to the corporation at the time it was authorized, approved or ratified.

A mere common directorship does not constitute a material financial interest within the meaning of this subdivision. A director is not interested within the meaning of this subdivision in a resolution fixing the compensation of another director as a director, officer or employee of the corporation, notwithstanding the fact that the first director is also receiving compensation from the corporation.(b) No contract or other transaction between a corporation and any corporation, business corporation or association of which one or more of its directors are directors is either void or voidable because such director or directors are present at the meeting of the board or a committee thereof which authorizes, approves or ratifies the contract or transaction, if:

1) The material facts as to the transaction and as to such director's other directorship are fully disclosed or known to the board or committee, and the

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board or committee authorizes, approves or ratifies the contract or transaction in good faith by a vote sufficient without counting the vote of the common director or directors or the contract or transaction is approved by the members (Section 5034) in good faith; or

2) As to contracts or transactions not approved as provided in paragraph (1) of this subdivision, the contract or transaction is just and reasonable as to the corporation at the time it is authorized, approved or ratified.

This subdivision does not apply to contracts or transactions covered by subdivision (a).

California Corporations Code §7234Interested or common directors can be counted to reach the presence of the minimum board member number needed on the board of directors of a nonprofit corporation to authorize, approve or ratify a contract or a transaction.Interested or common directors may be counted in determining the presence of a quorum at a meeting of the board or a committee thereof which authorizes, approves or ratifies a contract or transaction as provided in Section 7233.

California Corporations Code §7235Nonprofit corporation can loan or guarantee money or property to a director or an officer on its board of directors; rules and requirements for a corporation making a loan or a guarantee to a director or an officer.(a) Unless prohibited by the articles or bylaws, a corporation may loan money or property to, or guarantee the obligation of, any director or officer of the corporation or of its parent, affiliate or subsidiary, provided:

1) The board determines the loan or guaranty may reasonably be expected to benefit the corporation.

2) Prior to consummating the transaction or any part thereof, the loan or guaranty is either:

A. Approved by the members (Section 5034), without counting the vote of the director or officer, if a member, or

B. Approved by the vote of a majority of the directors then in office, without counting the vote of the director who is to receive the loan or the benefit of the guaranty.

(b) Notwithstanding subdivision (a), a corporation may advance money to a director or officer of the corporation or of its parent, affiliate or subsidiary, for any expenses reasonably anticipated to be incurred in the performance of the duties of the director or officer of the corporation or of its parent, affiliate or subsidiary, provided that in the absence of such an advance the director or officer would be entitled to be reimbursed for these expenses by the corporation, its parent, affiliate, or subsidiary.(c) The provisions of subdivisions (a) and (b) do not apply to credit unions, or to the payment of premiums in whole or in part by a corporation on a life insurance policy on the life of a director or officer so long as repayment to the corporation of the amount paid by it is secured by the proceeds of the policy and its cash surrender value, or toloans permitted under any statute regulating any special class of corporations.

California Corporations Code §7236Directors of nonprofit corporation are liable to the corporation for illegal loans and distributions; rules and procedures for actions against directors of nonprofit corporation liable for illegal loans and distributions.

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(a) Subject to the provisions of Section 7231, directors of a corporation who approve any of the following corporate actions shall be jointly and severally liable to the corporation for the benefit of all of the creditors entitled to institute an action under paragraph (1) or (2) of subdivision (c) or to the corporation in an action by the head organization or members under paragraph (1) or (3) of subdivision (c):

1) The making of any distribution contrary to Chapter 4 (commencing with Section 7410).

2) The distribution of assets after institution of dissolution proceedings of the corporation, without paying or adequately providing for all known liabilities of the corporation, excluding any claims not filed by creditors within the time limit set by the court in a notice given to creditors under Chapter 15 (commencing with Section 8510), Chapter 16 (commencing with Section 8610), and Chapter 17 (commencing with Section 8710).

3) The making of any loan or guaranty contrary to Section 7235.(b) A director who is present at a meeting of the board, or any committee thereof, at which an action specified in subdivision (a) is taken and who abstains from voting shall be considered to have approved the action.(c) Suit may be brought in the name of the corporation to enforce the liability:

1) Under paragraph (1) of subdivision (a), against any or all directors liable by the persons entitled to sue under subdivision (c) of Section 7420.

2) Under paragraph (2) or (3) of subdivision (a), against any or all directors liable by any one or more creditors of the corporation whose debts or claims arose prior to the time of the corporate action who have not consented to the corporate action, whether or not they have reduced their claims to judgment.

3) Under paragraph (3) of subdivision (a), against any or all directors liable by any one or more members at the time of any corporate action specified in paragraph (3) of subdivision (a) who have not consented to the corporate action, without regard to the provisions of Section 7710.

(d) The damages recoverable from a director under this section shall be the amount of the illegal distribution, or if the illegal distribution consists of property, the fair market value of that property at the time of the illegal distribution, plus interest thereon from the date of the distribution at the legal rate on judgments until paid, together with all reasonably incurred costs of appraisal or other valuation, if any, of that property, or the loss suffered by the corporation as a result of the illegal loan or guaranty, but not exceeding, in the case of an action for the benefit of creditors, the liabilities of the corporation owed to nonconsenting creditors at the time of the violation.(e) Any director sued under this section may implead all other directors liable and may compel contribution, either in that action or in an independent action against directors not joined in that action.(f) Directors liable under this section shall also be entitled to be subrogated to the rights of the corporation:

1) With respect to paragraph (1) of subdivision (a), against the persons who received the distribution.

2) With respect to paragraph (2) of subdivision (a), against the persons who received the distribution.

3) With respect to paragraph (3) of subdivision (a), against the person who received the loan or guaranty.

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Any director sued under this section may file a cross-complaint against the person or persons who are liable to the director as a result of the subrogation provided for in this subdivision or may proceed against them in an independent action.

California Corporations Code §7237Nonprofit corporation can indemnify its agent who was a party, is a party, or is threatened to be made a party, to any proceeding, if that person acted reasonably, in good faith, and in the interest of the corporation; rules and procedures for a nonprofit corporation indemnifying its agent who acted reasonably, in good faith, and in the interest of the corporation.(a) For the purposes of this section, “agent” means any person who is or was a director, officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee or agent of a foreign or domestic corporation that was a predecessor corporation of the corporation or of another enterprise at the request of the predecessor corporation; “proceeding” means any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative; and “expenses” includes without limitation attorneys' fees and any expenses of establishing a right to indemnification under subdivision (d) or paragraph (3) of subdivision (e).(b) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any proceeding (other than an action by or in the right of the corporation to procure a judgment in its favor, an action brought under Section 5233 of Part 2 (commencing with Section 5110) made applicable pursuant to Section 7238, or an action brought by the Attorney General or a person granted relator status by the Attorney General for any breach of duty relating to assets held in charitable trust) by reason of the fact that the person is or was an agent of the corporation, against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with the proceeding if the person acted in good faith and in a manner theperson reasonably believed to be in the best interests of the corporation and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of the person was unlawful. The termination of any proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the person did not act in good faith and in a manner which the person reasonably believed to be in the best interests of the corporation or that the person had reasonable cause to believe that the person's conduct was unlawful.(c) A corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action by or in the right of the corporation, or brought under Section 5233 of Part 2 (commencing with Section 5110) made applicable pursuant to Section 7238, or brought by the Attorney General or a person granted relator status by the Attorney General for breach of duty relating to assets held in charitable trust, to procure a judgment in its favor by reason of the fact that the person is or was an agent of the corporation, against expenses actually and reasonably incurred by the person in connection with the defense or settlement ofthe action if the person acted in good faith, in a manner the person believed to be in the best interests of the corporation and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. No indemnification shall be made under this subdivision:

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1) In respect of any claim, issue or matter as to which the person shall have been adjudged to be liable to the corporation in the performance of theperson's duty to the corporation, unless and only to the extent that the court in which the proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for the expenses which the court shall determine;

2) Of amounts paid in settling or otherwise disposing of a threatened or pending action, with or without court approval; or

3) Of expenses incurred in defending a threatened or pending action that is settled or otherwise disposed of without court approval unless the action concerns assets held in charitable trust and is settled with the approval of the Attorney General.

(d) To the extent that an agent of a corporation has been successful on the merits in defense of any proceeding referred to in subdivision (b) or (c) or in defense of any claim, issue or matter therein, the agent shall be indemnified against expenses actually and reasonably incurred by the agent in connection therewith.(e) Except as provided in subdivision (d), any indemnification under this section shall be made by the corporation only if authorized in the specific case, upon a determination that indemnification of the agent is proper in the circumstances because the agent has met the applicable standard of conduct set forth in subdivision (b) or (c), by:

1) A majority vote of a quorum consisting of directors who are not parties to theproceeding;

2) Approval of the members (Section 5034), with the persons to be indemnified not being entitled to vote thereon; or

3) The court in which the proceeding is or was pending upon application made by the corporation or the agent or the attorney or other person rendering services in connection with the defense, whether or not the application by the agent, attorney or other person is opposed by the corporation.

(f) Expenses incurred in defending any proceeding may be advanced by the corporation prior to the final disposition of the proceeding upon receipt of an undertaking by or on behalf of the agent to repay the amount unless it shall be determined ultimately that the agent is entitled to be indemnified as authorized in this section. The provisions of subdivision (a) of Section 7235 do not apply to advances made pursuant to this subdivision.(g) No provision made by a corporation to indemnify its or its subsidiary's directors or officers for the defense of any proceeding, whether contained in the articles, bylaws, a resolution of members or directors, an agreement or otherwise, shall be valid unless consistent with this section. Nothing contained in this section shall affect any right to indemnification to which persons other than the directors and officers may be entitled by contract or otherwise.(h) No indemnification or advance shall be made under this section, except as provided in subdivision (d) or paragraph (3) of subdivision (e), in any circumstance where it appears:

1) That it would be inconsistent with a provision of the articles, bylaws, a resolution of the members or an agreement in effect at the time of the accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or

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2) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement.

(i) A corporation shall have power to purchase and maintain insurance on behalf of any agent of the corporation against any liability asserted against or incurred by the agent in that capacity or arising out of the agent's status as such whether or not the corporation would have the power to indemnify the agent against that liability under the provisions of this section.(j) This section does not apply to any proceeding against any trustee, investment manager, or other fiduciary of a pension, deferred compensation, saving, thrift, or other retirement, incentive, or benefit plan, trust, or provision for any or all of the corporation’s directors, officers, employees, and persons providing services to the corporation or any of its subsidiary or related or affiliated corporation, in that person's capacity as such, even though the person may also be an agent as defined in subdivision (a) of the employer corporation. A corporation shall have power to indemnify thetrustee, investment manager or other fiduciary to the extent permitted by subdivision (e)of Section 7140.

Nonprofit Mutual Benefit Corporations – Members – Issuance of Membership

California Corporations Code §7310Nonprofit corporation can admit persons to membership or choose not to have members; rules for nonprofit corporations with no members.(a) A corporation may admit persons to membership, as provided in its articles or bylaws, or may provide in its articles or bylaws that it shall have no members. In the absence of any provision in its articles or bylaws providing for members, a corporation shall have no members.(b) In the case of a corporation which has no members:

1) Any action for which there is no specific provision of this part applicable to a corporation which has no members and which would otherwise require approval by a majority of all members (Section 5033) or approval by the members (Section 5034) shall require only approval of the board, any provision of this part or the articles or bylaws to the contrary notwithstanding.

2) All rights which would otherwise vest in the members to share in a distribution upon dissolution shall vest in the directors.

(c) Reference in this part to a corporation which has no members includes a corporation in which the directors are the only members.

California Corporations Code §7311Nonprofit corporations can admit members for free or for a fee.Subject to the articles or bylaws, memberships may be issued by a corporation for no consideration or for such consideration as is determined by the board.

California Corporations Code §7312One person cannot hold more or less than one membership in a nonprofit corporation; exceptions to the rule that one person cannot hold more or less than one membership in a nonprofit corporation.No person may hold more than one membership, and no fractional memberships may be held, except as follows:

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(a) Two or more persons may have an indivisible interest in a single membership when authorized by, and in a manner or under the circumstances prescribed by, the articles or bylaws subject to Section 7612.(b) If the articles or bylaws provide for classes of membership and if the articles or bylaws permit a person to be a member of more than one class, a person may hold a membership in one or more classes.(c) Any branch, division, or office of any person, which is not formed primarily to be a member, may hold a separate membership.(d) In the case of membership in an owners' association, created in connection with any of the forms of development referred to in Section 11004.5 of the Business and Professions Code, the articles or bylaws may permit a person who owns an interest, or who has a right of exclusive occupancy, in more than one lot, parcel, area, apartment, or unit to hold a separate membership in the owners' association for each lot, parcel, area, apartment, or unit.(e) In the case of membership in a mutual water company, as defined in Section 14300,the articles or bylaws may permit a person entitled to membership by reason of the ownership, lease, or right of occupancy of more than one lot, parcel, or other service unit to hold a separate membership in the mutual water company for each lot, parcel, or other service unit.(f) In the case of membership in a mobile home park acquisition corporation, as described in Section 11010.8 of the Business and Professions Code, a bona fide secured party who has, pursuant to a security interest in a membership, taken title to the membership by way of foreclosure, repossession, or voluntary repossession, and who is actively attempting to resell the membership to a prospective homeowner or resident of the mobile home park, may own more than one membership.

California Corporations Code §7313Nonprofit corporation can issue membership certificates to its members; requirements, rules and procedures for membership certificates.(a) A corporation may, but is not required to, issue membership certificates. Nothing in this section shall restrict a corporation from issuing identity cards or similar devices to members which serve to identify members qualifying to use facilities or services of the corporation.(b) Membership certificates issued by corporations shall state the following on the certificate:

1) The corporation is a nonprofit mutual benefit corporation which may not make distributions to its members except upon dissolution, or, if the articles or bylaws so provide, that it may not make distributions to its members during its life or upon dissolution.

2) If there are restrictions upon the transferability, a statement that a copy of the restrictions are on file with the secretary of the corporation and are open for inspection by a member on the same basis as the records of the corporation.

(c) If the membership certificates are transferable only with consent of the corporation, or if there are no membership certificates, then instead of complying with paragraph (2) of subdivision (b) the corporation may, or if there are no membership certificates, shall, give notice to the transferee, within a reasonable time after the corporation is first notified of the proposed transfer, and before the membership is transferred on the books and records of the corporation, of the information that would otherwise be provided by the legends required by paragraph (2) of subdivision (b).

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(d) If the articles or bylaws are amended so that any statement required by subdivision (b) upon outstanding membership certificates is no longer accurate, then the board may cancel the outstanding certificates and issue in their place new certificates conforming to the articles or bylaw amendments.(e) Where new membership certificates are issued in accordance with subdivision (d), the board may order holders of outstanding certificates to surrender and exchange them for new certificates within a reasonable time fixed by the board. The board may further provide that the holder of a certificate so ordered to be surrendered shall not be entitled to exercise any of the rights of membership until the certificate is surrendered and exchanged, but rights shall be suspended only after notice of such order is given to the holder of the certificate and only until the certificate is exchanged. The duty of surrender of any outstanding certificates may also be enforced by civil action.

California Corporations Code §7314Nonprofit corporation can issue a new membership certificate to a member that claims it was lost, stolen, or destroyed; member can compel nonprofit corporation to issue a new membership certificate to replace a lost, stolen, or destroyed one, through a court order.(a) A corporation may issue a new membership certificate or a new certificate for any security in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate or the owner's legal representative to give the corporation a bond (or other adequate security) sufficient to indemnify it against any claim that may be made against it (including any expense or liability) on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate.(b) If a corporation refuses to issue a new membership certificate or other certificate in place of one theretofore issued by it, or by any corporation of which it is the lawful successor, alleged to have been lost, stolen or destroyed, the owner of the lost, stolen or destroyed certificate or the owner's legal representative may bring an action in the superior court of the proper county for an order requiring the corporation to issue a new certificate in place of the one lost, stolen or destroyed.

California Corporations Code §7315Nonprofit corporation can submit anyone, but not its subsidiary, to membership.(a) Except as provided in subdivision (b), or in its articles or bylaws, a corporation may admit any person to membership.(b) A corporation may not admit its subsidiary (Section 5073) to membership.

Nonprofit Mutual Benefit Corporations – Members – Membership Transfer

California Corporations Code §7320Unless the articles or bylaws of a nonprofit corporation state otherwise, membership is not transferable and ceases upon the member’s death.Subject to Section 7613:(a) Unless the articles or bylaws otherwise provide:

1) No member may transfer a membership or any right arising therefrom; and2) Subject to the provisions of subdivision (b), all rights as a member of the

corporation cease upon the member's death or dissolution.

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(b) The articles or bylaws may provide for, or may authorize the board to provide for, the transfer of memberships, or of memberships within any class or classes, with or without restriction or limitation, including transfer upon the death, dissolution, merger, or reorganization of a member.(c) Where transfer rights have been provided, no restriction of them shall be binding with respect to memberships issued prior to the adoption of the restriction, unless the holders of such memberships voted in favor of the restriction.

Nonprofit Mutual Benefit Corporations – Members – Types of Membership

California Corporations Code §7330Nonprofit corporation can issue different memberships having different rights, privileges, preferences, restrictions, or conditions, only if authorized by its articles or bylaws.A corporation may issue memberships having different rights, privileges, preferences, restrictions, or conditions, as authorized by its articles or bylaws.

California Corporations Code §7331Except as provided in its articles or bylaws, nonprofit corporation cannot issue different memberships having different rights, privileges, preferences, restrictions, or conditions.Except as provided in or authorized by the articles or bylaws, all memberships shallhave the same rights, privileges, preferences, restrictions and conditions.

California Corporations Code §7332Nonprofit corporation can have one or more classes of membership that are redeemable at the option of the corporation or the member subject to some conditions.(a) A corporation may provide in its articles for one or more classes of memberships which are redeemable, in whole or in part, at the option of the corporation, or the member for such consideration within such time or upon the happening of one or more specified events and upon such terms and conditions as are stated in the articles. However, no membership shall actually be redeemed if prohibited by Chapter 4 (commencing with Section 7410).(b) Nothing in this section shall prevent a corporation from creating a sinking fund or similar provision for, or entering into an agreement for, the redemption or purchase of its memberships to the extent permitted by Chapter 4 (commencing with Section 7410).

California Corporations Code §7333Nonprofit corporation can benefit, serve, and assist persons who are not members for a fee authorized by the article or the bylaws of the corporation.(a) A corporation may refer to persons associated with it as “members” even though such persons are not members within the meaning of Section 5056; but references to members in this part mean members as defined in Section 5056.(b) A corporation may benefit, serve, or assist persons who are not members within the meaning of Section 5056 for such consideration, if any, as the board may determine or as is authorized or provided for in the articles or bylaws.

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Nonprofit Mutual Benefit Corporations – Members – Termination of Membership

California Corporations Code §7340Member of a nonprofit corporation can resign from membership at any time unless the articles or bylaws of the corporation require advance notice; rules for resignation and expiration of membership in a nonprofit corporation.(a) A member may resign from membership at any time, although the articles or bylaws may require reasonable notice before the resignation is effective.(b) This section shall not relieve the resigning member from any obligation for charges incurred, services or benefits actually rendered, dues, assessments or fees, or arising from contract, a condition to ownership of land, an obligation arising out of the ownership of land, or otherwise, and this section shall not diminish any right of the corporation to enforce any such obligation or obtain damages for its breach.(c) A membership issued for a period of time shall expire when such period of time has elapsed unless the membership is renewed.

California Corporations Code §7341Rules and procedures for expulsion, suspension, or termination of membership in a nonprofit corporation.(a) No member may be expelled or suspended, and no membership or memberships may be terminated or suspended, except according to procedures satisfying the requirements of this section. An expulsion, termination or suspension not in accord with this section shall be void and without effect.(b) Any expulsion, suspension, or termination must be done in good faith and in a fair and reasonable manner. Any procedure which conforms to the requirements of subdivision (c) is fair and reasonable, but a court may also find other procedures to be fair and reasonable when the full circumstances of the suspension, termination, or expulsion are considered.(c) A procedure is fair and reasonable when:

1) The provisions of the procedure have been set forth in the articles or bylaws, or copies of such provisions are sent annually to all the members as required by the articles or bylaws;

2) It provides the giving of 15 days' prior notice of the expulsion, suspension or termination and the reasons therefore; and

3) It provides an opportunity for the member to be heard, orally or in writing, not less than five days before the effective date of the expulsion, suspension or termination by a person or body authorized to decide that the proposed expulsion, termination or suspension not take place.

(d) Any notice required under this section may be given by any method reasonably calculated to provide actual notice. Any notice given by mail must be given by first-class or registered mail sent to the last address of the members shown on the corporation's records.(e) Any action challenging an expulsion, suspension or termination of membership, including any claim alleging defective notice, must be commenced within one year after the date of the expulsion, suspension or termination. In the event such an action is successful the court may order any relief, including reinstatement, it finds equitable under the circumstances, but no vote of the members or of the board may be set aside solely because a person was at the time of the vote wrongfully excluded by virtue of the

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challenged expulsion, suspension or termination, unless the court finds further that the wrongful expulsion, suspension or termination was in bad faith and for the purpose, and with the effect, of wrongfully excluding the member from the vote or from the meeting at which the vote took place, so as to affect the outcome of the vote.(f) This section governs only the procedures for expulsion, suspension or termination and not the substantive grounds therefor. An expulsion, suspension or termination based upon substantive grounds which violate contractual or other rights of the member or are otherwise unlawful is not made valid by compliance with this section.(g) A member who is expelled or suspended or whose membership is terminated shall be liable for any charges incurred, services or benefits actually rendered, dues, assessments or fees incurred before the expulsion, suspension or termination or arising from contract or otherwise.

Nonprofit Mutual Benefit Corporations – Members – Rights and Obligations

California Corporations Code §7350Member of nonprofit corporation is not liable for debts, liabilities and obligations of the corporation.(a) A member of a corporation is not, as such, personally liable for the debts, liabilities, or obligations of the corporation.(b) No person is liable for any obligation arising from membership unless the person was admitted to membership upon the person's application or with the person's consent.(c) The ownership of an interest in real property, when a condition of its ownership is membership in a corporation, shall be considered consent to such membership for the purpose of this section.

California Corporations Code §7351Nonprofit corporation can collect dues and fees from members according to its articles and bylaws; member can avoid liability for dues and fees for nonprofit corporation by resigning from membership.A corporation may levy dues, assessments, or fees upon its members pursuant to its articles or bylaws, but a member upon learning of them may avoid liability for them by promptly resigning from membership, except where the member is liable for them by contract, as a condition to ownership of an interest in real property, as an obligation arising out of the ownership of an interest in real property, or otherwise. Article or bylaw provisions authorizing such dues, assessments or fees do not, of themselves, create such liability.

Nonprofit Mutual Benefit Corporations – Distribution - Limitations

California Corporations Code §7411Nonprofit corporation cannot distribute profits or dividends to members, except upon dissolution, or subject to the requirements of Sections 7412, 7413 and 7414.(a) Except as provided in subdivision (b), no corporation shall make any distribution except upon dissolution.(b) A corporation may, subject to meeting the requirements of Sections 7412 and 7413and any additional restrictions authorized by Section 7414, purchase or redeemmemberships.

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California Corporations Code §7412Nonprofit corporation cannot distribute profits or dividends to members if the corporation is unable to meet its liabilities.Neither a corporation nor any of its subsidiaries shall make a distribution if the corporation or the subsidiary making the distribution is, or as a result thereof would be, likely to be unable to meet its liabilities (except those whose payment is otherwise adequately provided for) as they mature.

Nonprofit Mutual Benefit Corporations – Meetings and Voting – General Provisions

California Corporations Code §7510Rules, requirements and procedures regarding place and time of regular meetings and special meetings of the members of a nonprofit corporation.(a) Meetings of members may be held at a place within or without this state as may be stated in or fixed in accordance with the bylaws. If no other place is stated or so fixed, meetings of members shall be held at the principal executive office of the corporation. Unless prohibited by the bylaws of the corporation, if authorized by the board of directors in its sole discretion, and subject to the requirement of consent in clause (b) of Section 20 and those guidelines and procedures as the board of directors may adopt, members not physically present in person (or, if proxies are allowed, by proxy) at a meeting of members may, by electronic transmission by and to the corporation (Sections 20 and 21) or by electronic video screen communication, participate in a meeting of members, be deemed present in person (or, if proxies are allowed, by proxy), and vote at a meeting of members whether that meeting is to be held at a designated place or in whole or in part by means of electronic transmission by and to the corporation or by electronic video screen communication, in accordance with subdivision (f).(b) A regular meeting of members shall be held on a date and time, and with the frequency stated in or fixed in accordance with the bylaws, but in any event in each year in which directors are to be elected at that meeting for the purpose of conducting suchelection, and to transact any other proper business which may be brought before the meeting.(c) If a corporation with members is required by subdivision (b) to hold a regular meeting and fails to hold the regular meeting for a period of 60 days after the date designated therefor or, if no date has been designated, for a period of 15 months after the formation of the corporation or after its last regular meeting, or if the corporation fails to hold a written ballot for a period of 60 days after the date designated therefor, then the superior court of the proper county may summarily order the meeting to be held or the ballot to be conducted upon the application of a member or the Attorney General, after notice to the corporation giving it an opportunity to be heard.(d) The votes represented, either in person (or, if proxies are allowed, by proxy), at a meeting called or by written ballot ordered pursuant to subdivision (c), and entitled to be cast on the business to be transacted shall constitute a quorum, notwithstanding any provision of the articles or bylaws or in this part to the contrary. The court may issue such orders as may be appropriate including, without limitation, orders designating the time and place of the meeting, the record date for determination of members entitled to vote, and the form of notice of the meeting.

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(e) Special meetings of members for any lawful purpose may be called by the board, the chairman of the board, the president, or such other persons, if any, as are specified in the bylaws. In addition, special meetings of members for any lawful purpose may be called by 5 percent or more of the members.(f) A meeting of the members may be conducted, in whole or in part, by electronic transmission by and to the corporation or by electronic video screen communication

1) if the corporation implements reasonable measures to provide members in person (or, if proxies are allowed, by proxy) a reasonable opportunity toparticipate in the meeting and to vote on matters submitted to the members, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with those proceedings, and

2) if any member votes or takes other action at the meeting by means of electronic transmission to the corporation or electronic video screen communication, a record of that vote or action is maintained by the corporation. Any request by a corporation to a member pursuant to clause (b) of Section 20 for consent to conduct a meeting of members by electronic transmission by and to the corporation, shall include a notice that absent consent of the member pursuant to clause (b) of Section 20, the meeting shall be held at a physical location in accordance with subdivision (a).

California Corporations Code §7511Rules, requirements and procedures for notice of a meeting of the members of a nonprofit corporation.(a) Whenever members are required or permitted to take any action at a meeting, a written notice of the meeting shall be given not less than 10 nor more than 90 daysbefore the date of the meeting to each member who, on the record date for notice of the meeting, is entitled to vote thereat; provided, however, that if notice is given by mail, and the notice is not mailed by first-class, registered, or certified mail, that notice shall be given not less than 20 days before the meeting. Subject to subdivision (f), and subdivision (b) of Section 7512, the notice shall state the place, date and time of the meeting, the means of electronic transmission by and to the corporation (Sections 20and 21) or electronic video screen communication, if any, by which members may participate in that meeting, and (1) in the case of a special meeting, the general nature of the business to be transacted, and no other business may be transacted, or (2) in the case of the regular meeting, those matters which the board, at the time the notice is given, intends to present for action by the members, but, except as provided in subdivision (b) of Section 7512, any proper matter may be presented at the meeting for the action. The notice of any meeting at which directors are to be elected shall include the names of all those who are nominees at the time the notice is given to members.(b) Notice of a members' meeting or any report shall be given personally, by electronic transmission by a corporation, or by mail or other means of written communication, addressed to a member at the address of the member appearing on the books of the corporation or given by the member to the corporation for purpose of notice; or if no such address appears or is given, at the place where the principal office of the corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal office is located. An affidavit of giving of any notice or report in accordance with the provisions of this part, executed by the secretary, assistant secretary or any transfer agent, shall be prima facie evidence of the giving of the notice or report.

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If any notice or report addressed to the member at the address of the member appearing on the books of the corporation is returned to the corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice or report to the member at the address, all future notices or reports shall be deemed to have been duly given without further mailing if the same shall be available for the member upon written demand of the member at the principal office of the corporation for a period of one year from the date of the giving of the notice or report to all other members.Notice given by electronic transmission by the corporation under this subdivision shall be valid only if it complies with Section 20. Notwithstanding the foregoing, notice shall not be given by electronic transmission by the corporation under this subdivision after either of the following:

1) The corporation is unable to deliver two consecutive notices to the member by that means.

2) The inability to so deliver the notices to the member becomes known to the secretary, any assistant secretary, the transfer agent, or other person responsible for the giving of the notice.

(c) Upon request in writing to the corporation addressed to the attention of the chairman of the board, president, vice president, or secretary by any person (other than the board) entitled to call a special meeting of members, the officer forthwith shall cause notice to be given to the members entitled to vote that a meeting will be held at a time fixed by the board not less than 35 nor more than 90 days after the receipt of the request. If the notice is not given within 20 days after receipt of the request, the persons entitled to call the meeting may give the notice or the superior court of the proper county shall summarily order the giving of the notice, after notice to the corporation giving it an opportunity to be heard. The court may issue such orders as may be appropriate, including, without limitation, orders designating the time and place of the meeting, the record date for determination of members entitled to vote, and the form of notice.(d) When a members' meeting is adjourned to another time or place, unless the bylaws otherwise require and except as provided in this subdivision, notice need not be given of the adjourned meeting if the time and place thereof (or the means of electronic transmission by and to the corporation or electronic video screen communication, if any, by which members may participate) are announced at the meeting at which the adjournment is taken. No meeting may be adjourned for more than 45 days. At theadjourned meeting the corporation may transact any business which might have been transacted at the original meeting. If after the adjournment a new record date is fixed for notice or voting, a notice of the adjourned meeting shall be given to each member who, on the record date for notice of the meeting, is entitled to vote at the meeting.(e) The transactions of any meeting of members however called and noticed, and wherever held, are as valid as though had at a meeting duly held after regular call and notice, if a quorum is present either in person or by proxy, and if, either before or after the meeting, each of the persons entitled to vote, not present in person (or, if proxies are allowed, by proxy), provides a waiver of notice or consent to the holding of the meeting or an approval of the minutes thereof in writing. All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance of a person at a meeting shall constitute a waiver of notice of and presence at the meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened and except that attendance at a meeting is not a waiver of any right to object

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to the consideration of matters required by this part to be included in the notice but not so included, if the objection is expressly made at the meeting. Neither the business to be transacted at nor the purpose of any regular or special meeting of members need be specified in any written waiver of notice, consent to the holding of the meeting or approval of the minutes thereof, unless otherwise provided in the articles or bylaws, except as provided in subdivision (f).(f) Any approval of the members required under Section 7222, 7224, 7233, 7812, 8610,or 8719, other than unanimous approval by those entitled to vote, shall be valid only if the general nature of the proposal so approved was stated in the notice of meeting or in any written waiver of notice.(g) A court may find that notice not given in conformity with this section is still valid, if it was given in a fair and reasonable manner.

California Corporations Code §7512At least one-third (1/3) of the members who hold a right to vote is required in a meeting of members of nonprofit corporation in order to vote on any matter, except otherwise provided in the corporation bylaws; rules and requirements for quorum in meetings of members of nonprofit corporations.(a) One-third of the voting power, represented in person or by proxy, shall constitute a quorum at a meeting of members, but, subject to subdivisions (b) and (c), a bylaw may set a different quorum. Any bylaw amendment to increase the quorum may be adopted only by approval of the members (Section 5034). If a quorum is present, the affirmative vote of the majority of the voting power represented at the meeting, entitled to vote, and voting on any matter shall be the act of the members unless the vote of a greater number or voting by classes is required by this part or the articles or bylaws.(b) Where a bylaw authorizes a corporation to conduct a meeting with a quorum of less than one-third of the voting power, then the only matters that may be voted upon at any regular meeting actually attended, in person or by proxy, by less than one-third of the voting power are matters notice of the general nature of which was given, pursuant to the first sentence of subdivision (a) of Section 7511.(c) Subject to subdivision (b), the members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the members required to constitute a quorum or, if required by this division, or by the articles or the bylaws, the vote of the greater number or voting by classes.(d) In the absence of a quorum, any meeting of members may be adjourned from time to time by the vote of a majority of the votes represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (c).

California Corporations Code §7513Any action that a nonprofit corporation can take in a meeting of the members can be taken by distributing a written ballot to every member entitled to vote, except otherwise provided in the articles or bylaws of the corporation; rules and procedures for a written ballot substituting a meeting of the members of a nonprofit corporation.(a) Subject to subdivision (e), and unless prohibited in the articles or bylaws, any action which may be taken at any regular or special meeting of members may be taken without a meeting if the corporation distributes a written ballot to every member entitled to vote

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on the matter. Unless otherwise provided by the articles or bylaws and if approved by the board of directors, that ballot and any related material may be sent by electronic transmission by the corporation (Section 20) and responses may be returned to the corporation by electronic transmission to the corporation (Section 21). That ballot shall set forth the proposed action, provide an opportunity to specify approval or disapproval of any proposal, and provide a reasonable time within which to return the ballot to the corporation.(b) Approval by written ballot pursuant to this section shall be valid only when the number of votes cast by ballot within the time period specified equals or exceeds the quorum required to be present at a meeting authorizing the action, and the number of approvals equals or exceeds the number of votes that would be required to approve at a meeting at which the total number of votes cast was the same as the number of votes cast by ballot.(c) Ballots shall be solicited in a manner consistent with the requirements of subdivision (b) of Section 7511 and Section 7514. All such solicitations shall indicate the number of responses needed to meet the quorum requirement and, with respect to ballots other than for the election of directors, shall state the percentage of approvals necessary to pass the measure submitted. The solicitation must specify the time by which the ballot must bereceived in order to be counted.(d) Unless otherwise provided in the articles or bylaws, a written ballot may not be revoked.(e) Directors may be elected by written ballot under this section, where authorized by the articles or bylaws, except that election by written ballot may not be authorized where the directors are elected by cumulative voting pursuant to Section 7615.(f) When directors are to be elected by written ballot and the articles or bylaws prescribe a nomination procedure, the procedure may provide for a date for the close of nominations prior to the printing and distributing of the written ballots.

California Corporations Code §7514Requirements for a written ballot substituting a meeting of the members of a nonprofit corporation.(a) Any form of proxy or written ballot distributed to 10 or more members of a corporation with 100 or more members shall afford an opportunity on the proxy or form of written ballot to specify a choice between approval and disapproval of each matter or group of related matters intended, at the time the written ballot or proxy is distributed, to be acted upon at the meeting for which the proxy is solicited or by such written ballot, and shall provide, subject to reasonable specified conditions, that where the person solicited specifies a choice with respect to any such matter the vote shall be cast in accordance therewith.(b) In any election of directors, any form of proxy or written ballot in which the directors to be voted upon are named therein as candidates and which is marked by a member “withhold” or otherwise marked in a manner indicating that the authority to vote for the election of directors is withheld shall not be voted either for or against the election of a director.(c) Failure to comply with this section shall not invalidate any corporate action taken, but may be the basis for challenging any proxy at a meeting or written ballot and the superior court may compel compliance therewith at the suit of any member.

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California Corporations Code §7515Rules and procedures for a court order for a meeting of the members of a nonprofit corporation when the corporation is unable to call or conduct a meeting of its members.(a) If for any reason it is impractical or unduly difficult for any corporation to call or conduct a meeting of its members, delegates or directors, or otherwise obtain their consent, in the manner prescribed by its articles or bylaws, or this part, then the superior court of the proper county, upon petition of a director, officer, delegate or member, may order that such a meeting be called or that a written ballot or other form of obtaining the vote of members, delegates or directors be authorized, in such a manner as the court finds fair and equitable under the circumstances.(b) The court shall, in an order issued pursuant to this section, provide for a method of notice reasonably designed to give actual notice to all parties who would be entitled to notice of a meeting held pursuant to the articles, bylaws and this part, whether or not the method results in actual notice to every such person, or conforms to the notice requirements that would otherwise apply. In a proceeding under this section the court may determine who the members or directors are.(c) The order issued pursuant to this section may dispense with any requirement relating to the holding of and voting at meetings or obtaining of votes, including any requirement as to quorums or as to the number or percentage of votes needed for approval, that would otherwise be imposed by the articles, bylaws, or this part.(d) Wherever practical any order issued pursuant to this section shall limit the subject matter of the meetings or other forms of consent authorized to items, including amendments to the articles or bylaws, the resolution of which will or may enable the corporation to continue managing its affairs without further resort to this section; provided, however, that an order under this section may also authorize the obtaining of whatever votes and approvals are necessary for the dissolution, merger, sale of assets or reorganization of the corporation.(e) Any meeting or other method of obtaining the vote of members, delegates or directors conducted pursuant to an order issued under this section, and which complies with all the provisions of such order, is for all purposes a valid meeting or vote, as the case may be, and shall have the same force and effect as if it complied with every requirement imposed by the articles, bylaws, and this part.

California Corporations Code §7516Nonprofit corporation can act without meeting of its members if the members consent in writing to the action.Any action required or permitted to be taken by the members may be taken without a meeting, if all members shall individually or collectively consent in writing to the action. The written consent or consents shall be filed with the minutes of the proceedings of the members. The action by written consent shall have the same force and effect as the unanimous vote of the members.

California Corporations Code §7517Name on the ballot or consent must correspond with a name of a member of a nonprofit corporation to be effective; exceptions.(a) If the name signed on a ballot, consent, waiver, or proxy appointment corresponds to the name of a member, the corporation if acting in good faith is entitled to accept the ballot, consent, waiver or proxy appointment and give it effect as the act of the member.

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(b) If the name signed on a ballot, consent, waiver, or proxy appointment does not correspond to the record name of a member, the corporation if acting in good faith is nevertheless entitled to accept the ballot, consent, waiver, or proxy appointment and give it effect as the act of the member if any of the following occur:

1) The member is an entity and the name signed purports to be that of an officer or agent of the entity.

2) The name signed purports to be that of an attorney-in-fact of the member and if the corporation requests, evidence acceptable to the corporation of the signatory's authority to sign for the member has been presented with respect to the ballot, consent, waiver, or proxy appointment.

3) Two or more persons hold the membership as cotenants or fiduciaries and the name signed purports to be the name of at least one of the coholders and the person signing appears to be acting on behalf of all the coholders.

4) The name signed purports to be that of an administrator, executor, guardian, or conservator representing the member and, if the corporation requests, evidence of fiduciary status acceptable to the corporation has been presented with respect to the ballot, consent, waiver, or proxy appointment.

5) The name signed purports to be that of a receiver or trustee in bankruptcy of the member, and, if the corporation requests, evidence of this status acceptable to the corporation has been presented with respect to the ballot, consent, waiver, or proxy appointment.

(c) The corporation is entitled to reject a ballot, consent, waiver, or proxy appointment if the secretary or other officer or agent authorized to tabulate votes, acting in good faith, has a reasonable basis for doubt concerning the validity of the signature or the signatory's authority to sign for the member.(d) The corporation and any officer or agent thereof who accepts or rejects a ballot, consent, waiver, or proxy appointment in good faith and in accordance with the standards of this section shall not be liable in damages to the member for the consequences of the acceptance or rejection.(e) Corporate action based on the acceptance or rejection of a ballot, consent, waiver, or proxy appointment under this section is valid unless a court of competent jurisdiction determines otherwise.

Nonprofit Mutual Benefit Corporations – Meetings and Voting – Elections of Directors

California Corporations Code §7520Reasonable procedures for nominations and elections of directors of the nonprofit corporation.(a) As to directors elected by members, there shall be available to the members reasonable nomination and election procedures given the nature, size and operations of the corporation.(b) If a corporation complies with all of the provisions of Sections 7521, 7522, 7523,and 7524 applicable to a corporation with the same number of members, the nomination and election procedures of that corporation, shall be deemed reasonable. However, those sections do not prescribe the exclusive means of making available to the members reasonable procedures for nomination and election of directors. A corporation may make available to the members other reasonable nomination and election procedures given the nature, size, and operations of the corporation.

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(c) Subject to the provisions of subdivisions (a), (b), and (d) of Section 7616, the superior court of the proper county shall enforce the provisions of this section.

California Corporations Code §7521Requirements for eligibility for nomination to the board of directors of a nonprofit corporation.A corporation with 500 or more members may provide that, except for directors who are elected as authorized by Section 7152 or 7153, and except as provided in Section 7522,any person who is qualified to be elected to the board of directors of the corporation may be nominated:(a) By any method authorized by the bylaws, or if no method is set forth in the bylaws by any method authorized by the board.(b) By petition delivered to an officer of the corporation, signed within 11 months preceding the next time directors will be elected, by members representing the following number of votes:

Number of Votes Eligible to be Cast for Director Disregarding any Provision for Cumulative Voting

Number of Votes

Under 5,000 2 percent of voting power

5,000 or more One-twentieth of 1 percent of voting power but not less than 100.

This subdivision does not apply to a corporation described in subdivision (c).(c) In corporations with one million or more members engaged primarily in the business of retail merchandising of consumer goods, by petition delivered to an officer of the corporation, signed within 11 months preceding the next time directors will be elected, by such reasonable number of members as is set forth in the bylaws, or if no number is set forth in the bylaws, by such reasonable number of members as is determined by the directors.(d) If there is a meeting to elect directors, by any member present at the meeting in person or by proxy if proxies are permitted.

California Corporations Code §7522Rules and procedures for nomination to the board of directors of nonprofit corporation with more than 5,000 members.A corporation with 5,000 or more members may provide that, in any election of a director or directors by members of the corporation except for an election authorized by Section 7152 or 7153:(a) The corporation's articles or bylaws shall set a date for the close of nominations for the board. The date shall not be less than 50 nor more than 120 days before the day directors are to be elected. No nominations for the board can be made after the date set for the close of nominations.(b) If more people are nominated for the board than can be elected, the election shall take place by means of a procedure which allows all nominees a reasonable opportunity to solicit votes and all members a reasonable opportunity to choose among the nominees.(c) A nominee shall have a reasonable opportunity to communicate to the members the nominee's qualifications and the reasons for the nominee's candidacy.

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(d) If after the close of nominations the number of people nominated for the board is notmore than the number of directors to be elected, the corporation may without further action declare that those nominated and qualified to be elected have been elected.

California Corporations Code §7523Nonprofit corporation with more than 500 members must provide equal opportunity for each nominee to solicit votes for elections to the board of directorsin a corporate publication.Where a corporation with 500 or more members publishes any material soliciting a vote for any nominee for director in any publication owned or controlled by the corporation, the corporation may provide that it shall make available to all other nominees, in the same issue of the publication, an equal amount of space, with equal prominence, to be used by the nominee for a purpose reasonably related to the election.

California Corporations Code §7524At the nominee’s expense and upon his or her written request, a nonprofit corporation can mail to members any material related to the elections that a nominee to the board of directors may furnish.A corporation with 500 or more members may provide that upon written request by any nominee for election to the board and the payment of the reasonable costs of mailing (including postage), the corporation shall within 10 business days after such request (provided payment has been made) mail to all members, or such portion of them as the nominee may reasonably specify, any material, which the nominee may furnish and which is reasonably related to the election, unless the corporation within five business days after the request allows the nominee, at the corporation's option, the rights set forth in either paragraph (1) or (2) of subdivision (a) of Section 8330.

California Corporations Code §7525Nonprofit corporation is not liable to damages resulting from mailing or publishing materials supplied by a nominee to the board of directors according to Section 7524.(a) This section shall apply to corporations publishing or mailing materials on behalf of any nominee in connection with procedures for the nomination and election of directors.(b) Neither the corporation, nor its agents, officers, directors, or employees, may be held criminally liable, liable for any negligence (active or passive) or otherwise liable for damages to any person on account of any material which is supplied by a nominee for director and which it mails or publishes in procedures intended to comply with Section 7520 or pursuant to Section 7523 or 7524 but the nominee on whose behalf such material was published or mailed shall be liable and shall indemnify and hold the corporation, its agents, officers, directors, and employees and each of them harmless from all demands, costs, including reasonable legal fees and expenses, claims, damages and causes of action arising out of such material or any such mailing or publication.(c) Nothing in this section shall prevent a corporation or any of its agents, officers, directors, or employees from seeking a court order providing that the corporation need not mail or publish material tendered by or on behalf of a nominee under this article on the ground the material will expose the moving party to liability.

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California Corporations Code §7526Nonprofit corporation cannot use corporate funds to support a nominee to the board of directors.Without authorization of the board, no corporation funds may be expended to support a nominee for director after there are more people nominated for director than can be elected.

California Corporations Code §7527Challenge to validity of elections to board of directors of nonprofit corporation must be commenced within nine months after the elections.An action challenging the validity of any election, appointment or removal of a director or directors must be commenced within nine months after the election, appointment or removal. If no such action is commenced, in the absence of fraud, any election, appointment or removal of a director is conclusively presumed valid nine months thereafter.

Nonprofit Mutual Benefit Corporations – Voting of Members

California Corporations Code §7610Each member in a nonprofit corporation is entitled to one vote on each matter submitted.Except as provided in a corporation's articles or bylaws or Section 7615, each member shall be entitled to one vote on each matter submitted to a vote of the members. Single memberships in which two or more persons have an indivisible interest shall be voted as provided in Section 7612.

California Corporations Code §7611Rules and procedures for the record date to determine the members of nonprofit corporation entitled to notice of meetings, voting right, ballot casting rights, or any other rights.(a) The bylaws may provide or, in the absence of such provision, the board may fix, in advance, a date as the record date for the purpose of determining the members entitled to notice of any meeting of members. Such record date shall not be more than 90 norless than 10 days before the date of the meeting. If no record date is fixed, members at the close of business on the business day preceding the day on which notice is given or, if notice is waived, at the close of business on the business day preceding the day on which the meeting is held are entitled to notice of a meeting of members. A determination of members entitled to notice of a meeting of members shall apply to any adjournment of the meeting unless the board fixes a new record date for the adjourned meeting.(b) The bylaws may provide or, in the absence of such provision, the board may fix, in advance, a date as the record date for the purpose of determining the members entitled to vote at a meeting of members. Such record date shall not be more than 60 days before the date of the meeting. Such record date shall also apply in the case of an adjournment of the meeting unless the board fixes a new record date for the adjourned meeting. If no record date is fixed, members on the day of the meeting who are otherwise eligible to vote are entitled to vote at the meeting of members or, in the case of an adjourned meeting, members on the day of the adjourned meeting who are otherwise eligible to vote are entitled to vote at the adjourned meeting of members.

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(c) The bylaws may provide or, in the absence of such provision, the board may fix, in advance, a date as the record date for the purpose of determining the members entitled to cast written ballots (Section 7513). Such record date shall not be more than 60 daysbefore the day on which the first written ballot is mailed or solicited. If no record date is fixed, members on the day the first written ballot is mailed or solicited who are otherwise eligible to vote are entitled to cast written ballots.(d) The bylaws may provide or, in the absence of such provision, the board may fix, in advance, a date as the record date for the purpose of determining the members entitled to exercise any rights in respect of any other lawful action. Such record date shall not be more than 60 days prior to such other action. If no record date is fixed, members at the close of business on the day on which the board adopts the resolution relating thereto, or the 60th day prior to the date of such other action, whichever is later, are entitled to exercise such rights.

California Corporations Code §7612If a membership in a nonprofit corporation represents two or more persons, one vote binds all persons in the membership and majority of multiple votes binds all persons in the membership.If a membership stands of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, husband and wife as community property, tenants by the entirety, persons entitled to vote under a voting agreement or otherwise, or if two or more persons (including proxyholders) have the same fiduciary relationship respecting the same membership, unless the secretary of the corporation is given written notice to the contrary and is furnished with a copy of theinstrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect:(a) If only one votes, such act binds all; or(b) If more than one vote, the act of the majority so voting binds all.

California Corporations Code §7613Member in a nonprofit corporation can authorize another person to act by proxy with respect to such membership; rules and procedures for using proxies in a nonprofit corporation.(a) Any member may authorize another person or persons to act by proxy with respect to such membership except that this right may be limited or withdrawn by the articles or bylaws, subject to subdivision (f). Any proxy purported to be executed in accordance with the provisions of this part shall be presumptively valid.(b) No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy, except that the maximum term of any proxy shall be three years from the date of execution. Every proxy continues in full force and effect until revoked by the person executing it prior to the vote pursuant thereto, except as otherwise provided in this section. Such revocation may be effected by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by the person executing the prior proxy and presented to the meeting, or as to any meeting by attendance at such meeting and voting in person by the person executing the proxy. The dates contained on the forms of proxy presumptively determine the order of execution, regardless of the postmark dates on the envelopes in which they are mailed.

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(c) A proxy is not revoked by the death or incapacity of the maker or the termination of a membership as a result thereof unless, before the vote is counted, written notice of such death or incapacity is received by the corporation.(d) Unless otherwise provided in the articles or bylaws, the proxy of a member which states that it is irrevocable is irrevocable for the period specified therein (notwithstanding subdivisions (b) and (c) ) when it is held by any of the following or a nominee of any of the following:

1) A person who has purchased or who has agreed to purchase the membership;2) A creditor or creditors of the corporation or the member who extended or

continued credit to the corporation or the member in consideration of the proxy if the proxy states that it was given in consideration of such extension or continuation of credit and the name of the person extending or continuing the credit; or

3) A person who has contracted to perform services as an employee of the corporation, if the proxy is required by the contract of employment and if the proxy states that it was given in consideration of such contract of employment, the name of the employee and the period of employment contracted for.

Notwithstanding the period of irrevocability specified, the proxy becomes revocable when the agreement to purchase is terminated; the debt of the corporation or the member is paid; or the period of employment provided for in the contract of employment has terminated. In addition to the foregoing paragraphs (1) through (3), a proxy of a member may be made irrevocable (notwithstanding subdivision (c)) if it is given to secure the performance of a duty or to protect a title, either legal or equitable, until the happening of events which, by its terms, discharge the obligations secured by it.(e) A proxy may be revoked, notwithstanding a provision making it irrevocable, by a transferee of a membership without knowledge of the existence of the provision unless the existence of the proxy and its irrevocability appears on the certificate representing the membership.(f) Subdivision (a) notwithstanding:

1) No amendment of the articles or bylaws repealing, restricting, creating or expanding proxy rights may be adopted without approval by the members (Section 5034); and

2) No amendment of the articles or bylaws restricting or limiting the use of proxies may affect the validity of a previously issued irrevocable proxy during the term of its irrevocability, so long as it complied with applicable provisions, if any, of the articles or bylaws at the time of its issuance, and is otherwise valid under this section.

(g) Anything to the contrary notwithstanding, any revocable proxy covering matters requiring a vote of the members pursuant to Section 7222; Section 7224; Section 7233;paragraph (1) of subdivision (f) of this section; Section 7812; paragraph (2) of subdivision (a) of Section 7911; Section 8012; subdivision (a) of Section 8015; Section 8610; or subdivision (a) of Section 8719 is not valid as to such matters unless it sets forth the general nature of the matter to be voted on.

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California Corporations Code §7614Board of directors of nonprofit corporation can appoint an inspector of elections to oversee meetings and elections; rules for inspector of elections overseeing meeting and elections of the board of directors of a nonprofit corporation.(a) In advance of any meeting of members, the board may appoint inspectors of election to act at the meeting and any adjournment thereof. If inspectors of election are not so appointed, or if any persons so appointed fail to appear or refuse to act, the chairman of any meeting of members may, and on the request of any member or a member's proxy shall, appoint inspectors of election (or persons to replace those who so fail or refuse) at the meeting. The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more members or proxies, the majority of members represented in person or by proxy shall determine whether one or three inspectors are to be appointed. In the case of any action by written ballot (Section 7513), the board may similarly appoint inspectors of election to act with powers and duties as set forth in this section.(b) The inspectors of election shall determine the number of memberships outstanding and the voting power of each, the number represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies, receive votes, ballots or consents, hear and determine all challenges and questions in any way arising in connection with the right to vote, count and tabulate all votes or consents, determine when the polls shall close, determine the result and do such acts as may be proper to conduct the election or vote with fairness to all members.(c) The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

California Corporations Code §7615Rules and requirements for cumulative votes in elections of directors to the board of a nonprofit corporation.(a) If the articles or bylaws authorize cumulative voting, but not otherwise, every member entitled to vote at any election of directors may cumulate the member's votes and give one candidate a number of votes equal to the number of directors to be elected multiplied by the number of votes to which the member is entitled, or distribute the member's votes on the same principle among as many candidates as the member thinks fit. An article or bylaw provision authorizing cumulative voting may be repealed or amended only by approval of the members (Section 5034), except that the governing article or bylaw provision may require the vote of a greater proportion of the members, or of the members of any class, for its repeal.(b) No member shall be entitled to cumulate votes for a candidate or candidates unless the candidate's name or candidates' names have been placed in nomination prior to the voting and the member has given notice at the meeting prior to the voting of the member's intention to cumulate votes. If any one member has given this notice, all members may cumulate their votes for candidates in nomination.(c) In any election of directors by cumulative voting, the candidates receiving the highest number of votes are elected, subject to any lawful provision specifying election by classes.

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(d) In any election of directors not governed by subdivision (c), unless otherwise provided in the articles or bylaws, the candidates receiving the highest number of votes are elected.(e) Elections for directors need not be by ballot unless a member demands election by ballot at the meeting and before the voting begins or unless the bylaws so require.

California Corporations Code §7616Member or director, entitled to vote in elections for board of directors of nonprofit corporations, can bring action in court to determine validity of the elections or appointment of a director; rules and procedures for bringing action in court to determine validity of elections or appointment to the board of directors of a nonprofit corporation.(a) Upon the filing of an action therefor by any director or member or by any person who had the right to vote in the election at issue, the superior court of the proper county shall determine the validity of any election or appointment of any director of any corporation.(b) In the case of a corporation holding assets in charitable trust, any person bringing an action under this section shall give notice of the action to the Attorney General, who may intervene.(c) Upon the filing of the complaint, and before any further proceedings are had, the court shall enter an order fixing a date for the hearing, which shall be within five daysunless for good cause shown a later date is fixed, and requiring notice of the date for the hearing and a copy of the complaint to be served upon the corporation and upon the person whose purported election or appointment is questioned and upon any person (other than the plaintiff) whom the plaintiff alleges to have been elected or appointed, in the manner in which a summons is required to be served, or, if the court so directs, by registered mail; and the court may make such further requirements as to notice as appear to be proper under the circumstances.(d) The court, consistent with the provisions of this part and in conformity with the articles and bylaws to the extent feasible, may determine the person entitled to the office of director or may order a new election to be held or appointment to be made, may determine the validity, effectiveness and construction of voting agreements and voting trusts, the validity of the issuance of memberships and the right of persons to vote and may direct such other relief as may be just and proper.

Nonprofit Mutual Benefit Corporations – Derivative Actions

California Corporations Code §7710Requirements, rules and procedures for bringing derivative actions against a nonprofit corporation.(a) Subdivisions (c) through (f) notwithstanding, no motion to require a bond shall be granted in an action brought by 100 members or the authorized number (Section 5036), whichever is less.(b) No action may be instituted or maintained in the right of any corporation by any member of such corporation unless both of the following conditions exist:

1) The plaintiff alleges in the complaint that plaintiff was a member at the time of the transaction or any part thereof of which plaintiff complains, or that plaintiff's membership thereafter devolved upon plaintiff by operation of law

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from a holder who was a holder at the time of transaction or any part thereof complained of; and

2) The plaintiff alleges in the complaint with particularity plaintiff's efforts to secure from the board such action as plaintiff desires, or the reasons for not making such effort, and alleges further that plaintiff has either informed the corporation or the board in writing of the ultimate facts of each cause of action against each defendant or delivered to the corporation or the board a true copy of the complaint which plaintiff proposes to file.

(c) Subject to subdivision (a), in any action referred to in subdivision (b), at any time within 30 days after service of summons upon the corporation or upon any defendant who is an officer or director of the corporation, or held such office at the time of the acts complained of, the corporation or such defendant may move the court for an order, upon notice and hearing, requiring the plaintiff to furnish a bond as hereinafter provided. The motion shall be based upon one or both of the following grounds:

1) That there is no reasonable possibility that the prosecution of the cause of action alleged in the complaint against the moving party will benefit the corporation or its members economically or otherwise.

2) That the moving party, if other than the corporation, did not participate in the transaction complained of in any capacity.

The court on application of the corporation or any defendant may, for good cause shown, extend the 30-day period for an additional period or periods not exceeding 60 days.(d) At the hearing upon any motion pursuant to subdivision (c), the court shall consider such evidence, written or oral, by witnesses or affidavit, as may be material (1) to the ground or grounds upon which the motion is based, or (2) to a determination of the probable reasonable expenses, including attorneys' fees, of the corporation and the moving party which will be incurred in the defense of the action. If the court determines, after hearing the evidence adduced by the parties, that the moving party has established a probability in support of any of the grounds upon which the motion is based, the court shall fix the amount of the bond, not to exceed fifty thousand dollars ($50,000), to be furnished by the plaintiff for reasonable expenses, including attorneys' fees, which may be incurred by the moving party and the corporation in connection with the action, including expenses for which the corporation may become liable pursuant to Section 7237. A ruling by the court on the motion shall not be a determination of any issue in the action or of the merits thereof. If the court, upon any such motion, makes a determination that a bond shall be furnished by the plaintiff as to any one or more defendants, the action shall be dismissed as to such defendant or defendants, unless the bond required by the court has been furnished within such reasonable time as may be fixed by the court. (e) If the plaintiff shall, either before or after a motion is made pursuant to subdivision (c), or any order or determination pursuant to such motion, furnish a bond or bonds in the aggregate amount of fifty thousand dollars ($50,000) to secure the reasonable expenses of the parties entitled to make the motion, the plaintiff has complied with the requirements of this section and with any order for a bond theretofore made, and any such motion then pending shall be dismissed and no further or additional bond shall be required.(f) If a motion is filed pursuant to subdivision (c), no pleadings need be filed by the corporation or any other defendant and the prosecution of the action shall be stayed until 10 days after the motion has been disposed of.

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Nonprofit Mutual Benefit Corporations – Amendments to Articles

California Corporations Code §7810Nonprofit corporation can lawfully amend its articles from time to time; rules for amending nonprofit corporation articles.(a) By complying with the provisions of this chapter, a corporation may amend its articles from time to time, in any and as many respects as may be desired, so long as its articles as amended contain only such provisions as it would be lawful to insert in original articles filed at the time of the filing of the amendment or as authorized by Section 7813.5 and, if a change in the rights of members or an exchange, reclassification or cancellation of memberships is to be made, such provisions as may be necessary to effect such change, exchange, reclassification or cancellation. It is the intent of the Legislature in adopting this section to exercise to the fullest extent the reserve power of the state over corporations and to authorize any amendment of the articles covered by the preceding sentence regardless of whether any provision contained in the amendment was permissible at the time of the original incorporation of the corporation.(b) A corporation shall not amend its articles to add any statement or to alter any statement which may appear in the original articles of the initial street address and initial mailing address of the corporation, the names and addresses of the first directors, or the name and address of the initial agent, except to correct an error in the statement or to delete the information after the corporation has filed a statement under Section 8210.

California Corporations Code §7811Requirements for amending articles of a nonprofit corporation by the incorporators.Any amendment of the articles may be adopted by a writing signed by a majority of the incorporators, so long as:(a) No directors were named in the original articles;(b) No directors have been elected; and(c) The corporation has no members.

California Corporations Code §7812Requirements for amending articles of a nonprofit corporation by the board of directors or by members.(a) Except as provided in this section or Section 7813, amendments may be adopted if approved by the board and approved by the members (Section 5034) and approved by such other person or persons, if any, as required by the articles. The approval by the members or other person or persons may be before or after the approval by the board.(b) Notwithstanding subdivision (a), the following amendments may be adopted by approval of the board alone:

1) An amendment extending the corporate existence or making the corporate existence perpetual, if the corporation was organized prior to August 14, 1929.

2) An amendment deleting the initial street address and initial mailing address of the corporation, the names and addresses of the first directors, or the name and address of the initial agent.

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3) Any amendment, at a time the corporation has no members; provided,however, that if the articles require approval by any person for an amendment, an amendment may not be adopted without such approval.

4) An amendment adopted pursuant to Section 9913.(c) Whenever the articles require for corporate action the approval of a particular class of members or of a larger proportion of, or all of, the votes of any class, or of a larger proportion of, or all of, the directors, than is otherwise required by this part, the provision in the articles requiring such greater vote shall not be altered, amended or repealed except by such class or such greater vote, unless otherwise provided in the articles.

California Corporations Code §7813Rules and requirements for amendments to the articles of a nonprofit corporation that must be approved by the members of a class.An amendment must also be approved by the members (Section 5034) of a class, whether or not such class is entitled to vote thereon by the provisions of the articles or bylaws, if the amendment would:(a) Materially and adversely affect the rights, privileges, preferences, restrictions or conditions of that class as to voting, dissolution, redemption or transfer in a manner different than such action affects another class;(b) Materially and adversely affect such class as to voting, dissolution, redemption or transfer by changing the rights, privileges, preferences, restrictions or conditions of another class;(c) Increase or decrease the number of memberships authorized for such class;(d) Increase the number of memberships authorized for another class;(e) Effect an exchange, reclassification or cancellation of all or part of the memberships of such class; or(f) Authorize a new class of memberships.

California Corporations Code §7814Nonprofit corporation must file a certificate of amendment upon adoption of an amendment, except for adoptions by incorporators; requirements for filing the certificate of amendment by nonprofit corporations.(a) Except for amendments adopted by the incorporators pursuant to Section 7811, upon adoption of an amendment, the corporation shall file a certificate of amendment, which shall consist of an officers' certificate stating:

1) The wording of the amendment or amended articles in accordance with Section 7816;

2) That the amendment has been approved by the board;3) If the amendment is one for which the approval of the members (Section

5034) or the approval of 100 percent of the voting power is required, that the amendment was approved by the required vote of members; and

4) If the amendment is one which may be adopted with approval by the board alone, a statement of the facts entitling the board alone to adopt the amendment.

5) If the amendment is one for which the approval of a person or persons other than the incorporators, directors or members is required, that the approval of such person or persons has been obtained.

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(b) In the event of an amendment of the articles pursuant to a merger, the filing of the officers' certificate and agreement pursuant to Section 8014 shall be in lieu of any filing required under this chapter.

California Corporations Code §7815Requirements for filing the certificate of amendment by nonprofit corporation when adopted by incorporators.In the case of amendments adopted by the incorporators under Section 7811, the corporation shall file a certificate of amendment signed and verified by a majority of the incorporators which shall state that the signers thereof constitute at least a majority of the incorporators, that directors were not named in the original articles and have not been elected, that the corporation has no members and that they adopt the amendment or amendments therein set forth.

California Corporations Code §7816Rules for writing and wording amendments to articles of a nonprofit corporation.The certificate of amendment shall establish the wording of the amendment or amended articles by one or more of the following means:

(a) By stating that the articles shall be amended to read as therein set forth in full.(b) By stating that any provision of the articles, which shall be identified by the numerical or other designation given it in the articles or by stating the wording thereof, shall be stricken from the articles or shall be amended to read as set forth in the certificate.(c) By stating that the provisions set forth therein shall be added to the articles.If the purpose of the amendment is to reclassify, cancel, exchange, or otherwise change outstanding memberships the amended articles shall state the effect thereof on outstanding memberships.

California Corporations Code §7817Copy of certificate of amendment is evidence of conditions necessary to the adoption of the amendment to articles of a nonprofit corporation.Upon the filing of the certificate of amendment, the articles shall be amended in accordance with the certificate and any change, reclassification or cancellation of memberships shall be effected, and a copy of the certificate, certified by the Secretary of State, is prima facie evidence of the performance of the conditions necessary to the adoption of the amendment.

California Corporations Code §7818Nonprofit corporation, formed for a limited period of time, can extend its corporate term of existence by an amendment to its articles.A corporation formed for a limited period may at any time subsequent to the expiration of the term of its corporate existence, extend the term of its existence by an amendment to its articles removing any provision limiting the term of its existence and providing for perpetual existence. If the filing of the certificate of amendment providing for perpetual existence would be prohibited if it were original articles by the provisions of Section 7122, the Secretary of State shall not file such certificate unless, by the same or a concurrently filed certificate of amendment, the articles of such corporation are amended to adopt a new available name. For the purpose of the adoption of any such amendment, persons who have been functioning as directors of such corporation shall be

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considered to have been validly elected even though their election may have occurred after the expiration of the original term of the corporate existence.

California Corporations Code §7819Nonprofit corporation can rewrite the entire text of its articles by amendment and filing of certificate of amendment; rules and requirements for rewriting the entire text of the articles of a nonprofit corporation.(a) A corporation may restate in a single certificate the entire text of its articles as amended by filing an officers' certificate or, in circumstances where incorporators or the board may amend a corporation's articles pursuant to Sections 7811 and 7815, a certificate signed and verified by a majority of the incorporators or the board, as applicable, entitled “Restated Articles of Incorporation of (insert name of corporation)” which shall set forth the articles as amended to the date of filing of the certificate, except that the signatures and acknowledgments of the articles by the incorporators and any statements regarding the effect of any prior amendment upon memberships and any provisions of agreements of merger (other than amendments to the articles of the surviving corporation), and the initial street address and initial mailing address of the corporation, and the names and addresses of the first directors and of the initial agent for service of process shall be omitted (except that the initial street address and initial mailing address of the corporation and the names and addresses of the initial agent for service of process and, if previously set forth in the articles, the initial directors, shall not be omitted prior to the time that the corporation has filed a statement under Section 8210). Such omissions are not alterations or amendments of the articles. The certificate may also itself alter or amend the articles in any respect, in which case the certificate must comply with Section 7814 or 7815, as the case may be, and Section 7816.(b) If the certificate does not itself alter or amend the articles in any respect, it shall be approved by the board or, prior to the issuance of any memberships and the naming and election of directors, by a majority of the incorporators, and shall be subject to the provisions of this chapter relating to an amendment of the articles not requiring approval of the members (Section 5034). If the certificate does itself alter or amend the articles, it shall be subject to the provisions of this chapter relating to the amendment or amendments so made.(c) Restated articles of incorporation filed pursuant to this section shall supersede for all purposes the original articles and all amendments filed prior thereto.

Nonprofit Mutual Benefit Corporations – Sale of Assets

California Corporations Code §7910Nonprofit corporation can mortgage, deed, or pledge its property to secure payment of a contract obligation without the approval of members, unless otherwise provided by its articles or bylaws.Any mortgage, deed of trust, pledge or other hypothecation of all or any part of the corporation's property, real or personal, for the purpose of securing the payment or performance of any contract or obligation may be approved by the board. Unless the articles or bylaws otherwise provide, no approval of the members (Section 5034) shall be necessary for such action.

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California Corporations Code §7911Requirements for sale, lease, conveyance, exchange or transfer of all, or substantially all, of a nonprofit corporation’s assets.(a) Subject to the provisions of Section 7142, a corporation may sell, lease, convey, exchange, transfer or otherwise dispose of all or substantially all of its assets when the principal terms are:

1) Approved by the board; and2) Unless the transaction is in the usual and regular course of its activities,

approved by the members (Section 5034), either before or after approval by the board and before or after the transaction.

(b) Notwithstanding approval by the members (Section 5034), the board may abandon the proposed transaction without further action by the members, subject to the contractual rights, if any, of third parties.(c) Subject to the provisions of Section 7142, such sale, lease, conveyance, exchange, transfer or other disposition may be made upon such terms and conditions and for such consideration as the board may deem in the best interests of the corporation. The consideration may be money, property, or securities of any domestic corporation, foreign corporation, or foreign business corporation or any of them.

California Corporations Code §7912Deed or instrument transferring assets of a nonprofit corporation can include a certificate of the secretary approving the transaction, which can be evidence of the authorization of the transfer; requirements for certificate approving an instrument transferring assets of a nonprofit corporation.Any deed or instrument conveying or otherwise transferring any assets of a corporation may have annexed to it the certificate of the secretary or an assistant secretary of the corporation, setting forth that the transaction has been validly approved by the board and (a) stating that the property described in such deed or instrument is less than substantially all of the assets of the corporation or that the transfer is in the usual and regular course of the business of the corporation, if such be the case, or (b) if such property constitutes all or substantially all of the assets of the corporation and the transfer is not in the usual and regular course of the business of the corporation, stating the fact of approval thereof by the members (Section 5034) or all the members pursuant to this chapter. Such certificate is prima facie evidence of the existence of the facts authorizing such conveyance or other transfer of the assets and conclusive evidence in favor of any purchaser or encumbrancer for value who, without notice of any trust restriction applicable to the property or any failure to comply therewith, in good faith parted with value.

Nonprofit Mutual Benefit Corporations – Required Filings

California Corporations Code §8210Requirements, rules and procedures for nonprofit corporation’s obligation to file a statement to the secretary of state.(a) Every corporation shall, within 90 days after the filing of its original articles and biennially thereafter during the applicable filing period, file, on a form prescribed by the Secretary of State, a statement containing:

1) the name of the corporation and the Secretary of State’s file number;

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2) the names and complete business or residence addresses of its chief executive officer, secretary, and chief financial officer;

3) the street address of its principal office in this state, if any; 4) the mailing address of the corporation, if different from the street address of

its principal executive office or if the corporation has no principal office address in this state; and

5) if the corporation chooses to receive renewal notices and any other notifications from the Secretary of State by electronic mail instead of by United States mail, a valid electronic mail address for the corporation or for the corporation’s designee to receive those notices.

(b) The statement required by subdivision (a) shall also designate, as the agent of the corporation for the purpose of service of process, a natural person residing in this state or any domestic or foreign or foreign business corporation that has complied with Section 1505 and whose capacity to act as an agent has not terminated. If a natural person is designated, the statement shall set forth the person's complete business or residence street address. If a corporate agent is designated, no address for it shall be set forth.(c) For the purposes of this section, the applicable filing period for a corporation shall be the calendar month during which its original articles were filed and the immediately preceding five calendar months. The Secretary of State shall provide a notice to each corporation to comply with this section approximately three months prior to the close of the applicable filing period. The notice shall state the due date for compliance and shall be sent to the last address of the corporation according to the records of the Secretary of State or to the last electronic mail address according to the records of the Secretary of State if the corporation has elected to receive notices from the Secretary of State by electronic mail. Neither the failure of the Secretary of State to send the notice nor the failure of the corporation to receive it is an excuse for failure to comply with this section.(d) Whenever any of the information required by subdivision (a) is changed, the corporation may file a current statement containing all the information required by subdivisions (a) and (b). In order to change its agent for service of process or the address of the agent, the corporation must file a current statement containing all the information required by subdivisions (a) and (b). Whenever any statement is filed pursuant to this section, it supersedes any previously filed statement and the statement in the articles as to the agent for service of process and the address of the agent.(e) The Secretary of State may destroy or otherwise dispose of any statement filed pursuant to this section after it has been superseded by the filing of a new statement.(f) This section shall not be construed to place any person dealing with the corporation on notice of, or under any duty to inquire about, the existence or content of a statement filed pursuant to this section.

California Corporations Code §8215Acts of officers, directors, employees, or agents of a nonprofit corporation resulting in liability to damages.Any officers, directors, employees or agents of a corporation who do any of the following are liable jointly and severally for all the damages resulting therefrom to the corporation or any person injured thereby who relied thereupon or to both:(a) Make, issue, deliver or publish any prospectus, report, circular, certificate, financial statement, balance sheet, public notice or document respecting the corporation or its

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memberships, assets, liabilities, capital, dividends, business, earnings or accounts which is false in any material respect, knowing it to be false, or participate in the making, issuance, delivery or publication thereof with knowledge that the same is false in a material respect.(b) Make or cause to be made in the books, minutes, records or accounts of a corporation any entry which is false in any material particular knowing such entry is false.(c) Remove, erase, alter or cancel any entry in any books or records of the corporation, with intent to deceive.

California Corporations Code §8216Attorney General can bring or take part in action against a nonprofit corporation upon a complaint by a member of that corporation; rules and procedures for action by attorney general against a nonprofit corporation.(a) The Attorney General, upon complaint of a member, director or officer, that a corporation is failing to comply with the provisions of this chapter, Chapter 5 (commencing with Section 7510), Chapter 6 (commencing with Section 7610) or Chapter 13 (commencing with Section 8310), may, in the name of the people of the State of California, send to the principal office of such corporation, (or, if there is no such office, to the office or residence of the chief executive officer or secretary, of the corporation, as set forth in the most recent statement filed pursuant to Section 8210)notice of the complaint. If the answer is not satisfactory, or if there is no answer within 30 days, the Attorney General may institute, maintain or intervene in such suits, actions, or proceedings of any type in any court or tribunal of competent jurisdiction or before any administrative agency for such relief by way of injunction, the dissolution of entities, the appointment of receivers or any other temporary, preliminary, provisional or final remedies as may be appropriate to protect the rights of members or to undo the consequences of failure to comply with such requirements. In any such action, suit or proceeding there may be joined as parties all persons and entities responsible for or affected by such activity.(b) In the case of a corporation where the action concerns assets held in charitable trust, the Attorney General may bring an action under subdivision (a) without having received a complaint, and without first giving notice of a complaint.

Nonprofit Mutual Benefit Corporations – Inspection of Records/Reports – General Provisions

California Corporations Code §8310Nonprofit corporation’s records that are subject to inspection must be maintained in written form.If any record subject to inspection pursuant to this chapter is not maintained in written form, a request for inspection is not complied with unless and until the corporation at its expense makes such record available in written form. For the purposes of this chapter “written” or “in writing” also includes cathode ray tube and similar electronic communications methods.

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California Corporations Code §8311Inspection under Chapter 13 can be made in person, by agent or by attorney; inspector under Chapter 13 can copy and extract records.Any inspection under this chapter may be made in person or by agent or attorney and the right of inspection includes the right to copy and make extracts.

California Corporations Code §8312Inspectors under Chapter 13 can inspect records of subsidiaries of the nonprofit corporation.Any right of inspection created by this chapter extends to the records of each subsidiary of a corporation.

California Corporations Code §8313Rights of members under Chapter 13 cannot be prohibited by contract or by the articles or bylaws of the nonprofit corporation.The rights of members provided in this chapter may not be limited by contract or the articles or bylaws.

Nonprofit Mutual Benefit Corporations – Inspection of Records/Reports – Required Records

California Corporations Code §8320Requirements for keeping books and records in a nonprofit corporation.(a) Each corporation shall keep:

1) Adequate and correct books and records of account:2) Minutes of the proceedings of its members, board and committees of the

board; and3) A record of its members giving their names and addresses and the class of

membership held by each.(b) Those minutes and other books and records shall be kept either in written form or in any other form capable of being converted into clearly legible tangible form or in any combination of the foregoing. When minutes and other books and records are kept in a form capable of being converted into clearly legible paper form, the clearly legible paper form into which those minutes and other books and records are converted shall be admissible in evidence, and accepted for all other purposes, to the same extent as an original paper record of the same information would have been, provided that the paper form accurately portrays the record.

California Corporations Code §8321Nonprofit corporation must annually notify members of their right to receive a financial report; rules and requirements for a nonprofit corporation’s annual financial report.(a) A corporation shall notify each member yearly of the member's right to receive a financial report pursuant to this subdivision. Except as provided in subdivision (c), upon written request of a member, the board shall promptly cause the most recent annual report to be sent to the requesting member. An annual report shall be prepared not later than 120 days after the close of the corporation's fiscal year. Unless otherwise provided by the articles or bylaws and if approved by the board of directors, that report and any

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accompanying material may be sent by electronic transmission by the corporation (Section 20). That report shall contain in appropriate detail the following:

1) A balance sheet as of the end of that fiscal year and an income statement and a statement of cash flows for that fiscal year.

2) A statement of the place where the names and addresses of the current members are located.

3) Any information required by Section 8322.(b) The report required by subdivision (a) shall be accompanied by any report thereon of independent accountants, or, if there is no report, the certificate of an authorized officer of the corporation that the statements were prepared without audit from the books and records of the corporation.(c) Subdivision (a) does not apply to any corporation that receives less than ten thousand dollars ($10,000) in gross revenues or receipts during the fiscal year.

California Corporations Code §8322Nonprofit corporation must annually send members and directors a statement of transactions; rules and requirements for a nonprofit corporation’s annual statement of transactions.(a) Any provision of the articles or bylaws notwithstanding, every corporation shall furnish annually to its members and directors a statement of any transaction or indemnification of a kind described in subdivision (d) or (e), if any such transaction or indemnification took place. If the corporation issues an annual report to all members, this subdivision shall be satisfied by including the required information in the annual report. A corporation which does not issue an annual report to all members, pursuant to subdivision (c) of Section 8321, shall satisfy this section by mailing or delivering to its members the required statement within 120 days after the close of the corporation's fiscal year. Unless otherwise provided by the articles or bylaws and if approved by the board of directors, that statement may be sent by electronic transmission by the corporation (Section 20).(b) Except as provided in subdivision (c), a covered transaction under this section is a transaction in which the corporation, its parent, or its subsidiary was a party, and in which either of the following had a direct or indirect material financial interest:

1) Any director or officer of the corporation, or its parent or subsidiary.2) Any holder of more than 10 percent of the voting power of the corporation,

its parent or its subsidiary.For the purpose of subdivision (d), an “interested person” is any person described in paragraph (1) or (2) of this subdivision.(c) Transactions approved by the members of a corporation (Section 5034), under subdivision (a) of Section 7233, are not covered transactions. For the purpose of subdivision (b), a mere common directorship is not a material financial interest.(d) The statement required by subdivision (a) shall describe briefly:

1) Any covered transaction (excluding compensation of officers and directors) during the previous fiscal year involving more than fifty thousand dollars ($50,000), or which was one of a number of covered transactions in which the same interested person had a direct or indirect material financial interest, and which transactions in the aggregate involved more than fifty thousand dollars ($50,000).

2) The names of the interested persons involved in such transactions, stating such person's relationship to the corporation, the nature of such person's

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interest in the transaction and, where practicable, the amount of such interest; provided, that in the case of a transaction with a partnership of which such person is a partner, only the interest of the partnership need be stated.

(e) The statement required by subdivision (a) shall describe briefly the amount and circumstances of any loans, guaranties, indemnifications or advances aggregating more than ten thousand dollars ($10,000) paid or made during the fiscal year to any officer or director of the corporation pursuant to Section 7237; provided that no such report need be made in the case of a loan, guaranty, or indemnification approved by the members (Section 5034) or a loan or guaranty not subject to the provisions of subdivision (a) ofSection 7235.

California Corporations Code §8323Court can enforce the nonprofit corporation’s duty to make and deliver information and financial statements required by Article 2 of Chapter 13.(a) The superior court of the proper county shall enforce the duty of making and mailing or delivering the information and financial statements required by this article and, for good cause shown, may extend the time therefor.(b) In any action or proceeding under this section, if the court finds the failure of the corporation to comply with the requirements of this article to have been without justification, the court may award the member reasonable expenses, including attorneys' fees, in connection with such action or proceeding.

California Corporations Code §8325Nonprofit corporation, upon written request by a member, must provide the member with results of any vote taken at a meeting; rules for providing members of nonprofit corporations with vote results.For a period of 60 days following the conclusion of an annual, regular, or special meeting of members, a corporation shall, upon written request from a member, forthwith inform the member of the result of any particular vote of members taken at the meeting, including the number of memberships voting for, the number of memberships voting against, and the number of memberships abstaining or withheld from voting. If the matter voted on was the election of directors, the corporation shall report the number of memberships, or votes if voted cumulatively, cast for each nominee for director. If more than one class or series of memberships voted, the report shall state the appropriate numbers by class and series of memberships.

Nonprofit Mutual Benefit Corporations – Inspection of Records/Reports – Inspection Rights

California Corporations Code §8330Member of a nonprofit corporation can inspect the records of other members; rules, requirements and procedures for members’ right to obtain and inspect records of other members of the nonprofit corporation.(a) Subject to Sections 8331 and 8332, and unless the corporation provides a reasonable alternative pursuant to subdivision (c), a member may do either or both of the following as permitted by subdivision (b):

1) Inspect and copy the record of all the members' names, addresses and voting rights, at reasonable times, upon five business days' prior written demand

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upon the corporation which demand shall state the purpose for which the inspection rights are requested; or

2) Obtain from the secretary of the corporation, upon written demand and tender of a reasonable charge, a list of the names, addresses and voting rights of those members entitled to vote for the election of directors, as of the most recent record date for which it has been compiled or as of a date specified by the member subsequent to the date of demand. The demand shall state the purpose for which the list is requested. The membership list shall be made available on or before the later of ten business days after the demand is received or after the date specified therein as the date as of which the list is to be compiled.

(b) The rights set forth in subdivision (a) may be exercised by:1) Any member, for a purpose reasonably related to such person's interest as a

member. Where the corporation reasonably believes that the information will be used for another purpose, or where it provides a reasonable alternative pursuant to subdivision (c), it may deny the member access to the list. In any subsequent action brought by the member under Section 8336, the court shall enforce the rights set forth in subdivision (a) unless the corporation proves that the member will allow use of the information for purposes unrelated to the person's interest as a member or that the alternative method offered reasonably achieves the proper purpose set forth in the demand.

2) The authorized number of members for a purpose reasonably related to the members' interest as members.

(c) The corporation may, within ten business days after receiving a demand under subdivision (a), deliver to the person or persons making the demand a written offer of an alternative method of achieving the purpose identified in said demand without providing access to or a copy of the membership list. An alternative method which reasonably and in a timely manner accomplishes the proper purpose set forth in a demand made under subdivision (a) shall be deemed a reasonable alternative, unless within a reasonable time after acceptance of the offer the corporation fails to do those things which it offered to do. Any rejection of the offer shall be in writing and shall indicate the reasons the alternative proposed by the corporation does not meet the proper purpose of the demand made pursuant to subdivision (a).

California Corporations Code §8331Nonprofit corporation can petition to court for an order rejecting a member’s demand for inspection of records of other members under Section 8330; rules, requirements and procedures for nonprofit corporation petition to court for an order rejecting a member’s demand for inspection.(a) Where the corporation, in good faith, and with a substantial basis, believes that the membership list, demanded under Section 8330 by the authorized number (Section 5036), will be used for a purpose not reasonably related to the interests as members of the person or persons making the demand (hereinafter called the requesting parties) as members or provides a reasonable alternative pursuant to subdivision (c) of Section 8330, it may petition the superior court of the proper county for an order setting aside the demand.(b) Except as provided in subdivision (c), a petition for an order to show cause why a protective order pursuant to subdivision (d) should not issue shall be filed within 10business days after the demand by the authorized number under Section 8330 or receipt

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of a written rejection by the authorized number of an offer made pursuant to subdivision (c) of Section 8330, whichever is later. The petition shall be accompanied by an application for a hearing on the petition. Upon the filing of the petition, the court shall issue a protective order staying production of the list demanded until the hearing on the order to show cause. The court shall set the hearing on the order to show cause not more than 20 days from the date of the filing of the petition. The order to show cause shall be granted unless the court finds that there is no reasonable probability that the corporation will make the showing required under subdivision (f).(c) A corporation may file a petition under this section more than 10 business days after the demand or rejection under Section 8330, but only upon a showing the delay was caused by excusable neglect. In no event, however, may any petition under this section be considered if filed more than 30 days after the requesting parties' demand or rejection, whichever is later.(d) Upon the return day of the order to show cause, the court may issue a protective order staying production of the list demanded until final adjudication of the petition filed pursuant to this section. No protective order shall issue under this subdivision unless the court finds that the rights of the requesting parties can reasonably be preserved and that the corporation is likely to make the showing required by subdivision (f) or the court is likely to issue a protective order pursuant to subdivision (g).(e) If the corporation fails to file a petition within the time allowed by subdivision (b) or (c), whichever is applicable, or fails to obtain a protective order under subdivision (d), then the corporation shall comply with the demand, and no further action may be brought by the corporation under this section.(f) The court shall issue the final order setting aside the demand only if the corporation proves:

1) That there is a reasonable probability that requesting parties will permit use of the membership list for a purpose unrelated to their interests as members; or

2) That the method offered by the corporation is a reasonable alternative in that it reasonably achieves the proper purpose set forth in the requesting parties' demand and that the corporation intends and is able to effectuate the reasonable alternative.

(g) In the final order, the court may, in its discretion, order an alternate mechanism for achieving the proper purposes of the requesting parties, or impose just and proper conditions upon the use of the membership list which reasonably assures compliance with Section 8330 and Section 8338.(h) The court shall award reasonable costs and expenses including reasonable attorneys' fees, to requesting parties who successfully oppose any petition or application filed pursuant to this section.(i) Where the corporation has neither, within the time allowed, complied with a demand by the authorized number (Section 5036) under Section 8330, nor obtained a protective order staying production of the list, or a final order setting aside the demand, which is then in effect, the requesting parties may petition the superior court of the proper county for a writ of mandamus pursuant to Section 1085 of the Code of Civil Procedurecompelling the corporation to comply with the demand. At the hearing, the court shall hear the parties summarily, by affidavit or otherwise, and shall issue a peremptory writ of mandamus unless it appears that the demand was not made by an authorized number (Section 5036), that the demand has been complied with, that the corporation, pursuant to subdivision (c) of Section 8330, made an offer which was not rejected in writing

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within a reasonable time, or that a protective or final order properly issued under subdivision (d), (f) or (g) is then in effect. No inquiry may be made in such proceeding into the use for which the authorized number seek the list. The court shall award reasonable costs and expenses, including reasonable attorneys' fees, to persons granted an order under this subdivision.(j) Nothing in this section shall be construed to limit the right of the corporation to obtain damages for any misuse of a membership list obtained under Section 8330, or otherwise, or to obtain injunctive relief necessary to restrain misuse of a member list. A corporation shall be entitled to recover reasonable costs and expenses, including reasonable attorneys' fees, incurred in successfully bringing any such action.

California Corporations Code §8332Nonprofit corporation or member can petition to court for an order restricting a member’s demand for inspection of records of other members under Section 8330 to protect members’ rights under the U.S. and California Constitution; rules and requirements for petition to court for an order restricting a member’s demand for inspection.(a) Upon petition of the corporation or any member, the superior court of the proper county may limit or restrict the rights set forth in Section 8330 where, and only where,such limitation or restriction is necessary to protect the rights of any member under the Constitution of the United States or the Constitution of the State of California. An order issued pursuant to this subdivision shall provide, insofar as possible, for alternative mechanisms by which the persons seeking to exercise rights under Section 8330 may communicate with members for purposes reasonably related to their interests as members.(b) Upon the filing of a petition under subdivision (a), the court may, if requested by the person making the petition, issue a temporary order suspending the running of any time limit specified in Section 8330 for compliance with that section. Such an order may be extended, after notice and hearing, until final adjudication of the petition, wherever it appears that the petitioner may prevail on the merits, and it is otherwise equitable to do so.

California Corporations Code §8333Members of a nonprofit corporation can inspect accounting books and records upon written demand.The accounting books and records and minutes of proceedings of the members and the board and committees of the board shall be open to inspection upon the written demand on the corporation of any member at any reasonable time, for a purpose reasonably related to such person's interests as a member.

California Corporations Code §8334Directors of a nonprofit corporation can inspect and copy all books, records and documents of every kind; directors of nonprofit corporation can inspect properties of the corporation.Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the corporation of which such person is a director.

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California Corporations Code §8335Person properly making a demand to inspect records according to Section 8330, who is frustrated by unreasonable delay by the corporation, can obtain order from court postponing members’ meeting for a time equal to the time of the delay.Where the proper purpose of the person or persons making a demand pursuant to Section 8330 is frustrated by (1) any delay by the corporation in complying with a demand under Section 8330 beyond the time limits specified therein, or (2) any delay caused by the filing of a petition under Section 8331 or Section 8332, or (3) any delay caused by the alternative proposed under subdivision (c) of Section 8330, the person or persons properly making the demand shall have, in the discretion of the court, a right to obtain from the superior court an order postponing any members' meeting previously noticed for a period equal to the period of such delay. The members may obtain such an order in a proceeding brought pursuant to Section 8331 upon the filing of a verified complaint in the proper county and after a hearing, notice of which shall be given to such persons and in such manner as the court may direct. Such right shall be in addition to any other legal or equitable remedies to which the member may be entitled.

California Corporations Code §8336Court can enforce a proper demand to inspect records according to Section 8330 or appoint inspector to audit records of nonprofit corporation.(a) Upon refusal of a lawful demand for inspection under this chapter, or a lawful demand pursuant to Section 8330 or Section 8333, the superior court of the proper county, or the county where the books or records in question are kept, may enforce the demand or right of inspection with just and proper conditions or may, for good cause shown, appoint one or more competent inspectors or independent accountants to audit the financial statements kept in this state and investigate the property, funds and affairs of any corporation and of any subsidiary corporation thereof, domestic or foreign, keeping records in this state and to report thereon in such manner as the court may direct.(b) All officers and agents of the corporation shall produce to the inspectors or accountants so appointed all books and documents in their custody or power, under penalty of punishment for contempt of court.(c) All expenses of the investigation or audit shall be defrayed by the applicant unless the court orders them to be paid or shared by the corporation.

California Corporations Code §8337Court can award a member with attorney fees and court expenses if it finds that the nonprofit corporation’s failure to comply with a proper demand to inspect records under Section 8330 was without justification.In any action or proceeding under this article, and except as required by Section 8331, if the court finds the failure of the corporation to comply with a proper demand thereunder was without justification, the court may award the member reasonable costs and expenses, including reasonable attorneys' fees, in connection with such action or proceeding.

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California Corporations Code §8338Nonprofit corporation’s membership list cannot be obtained or used by any person without the consent of the board; restrictions on use of membership list of a nonprofit corporation.(a) A membership list is a corporate asset. Without consent of the board a membership list or any part thereof may not be obtained or used by any person for any purpose not reasonably related to a member's interest as a member. Without limiting the generality of the foregoing, without the consent of the board a membership list or any part thereof may not be:

1) Used to solicit money or property unless such money or property will be used solely to solicit the vote of the members in an election to be held by their corporation.

2) Used for any purpose which the user does not reasonably and in good faith believe will benefit the corporation.

3) Used for any commercial purpose or purpose in competition with the corporation.

4) Sold to or purchased by any person.(b) Any person who violates the provisions of subdivision (a) shall be liable for any damage such violation causes the corporation and shall account for and pay to the corporation any profit derived as a result of said violation. In addition, a court in its discretion may award exemplary damages for a fraudulent or malicious violation of subdivision (a).(c) Nothing in this article shall be construed to limit the right of a corporation to obtain injunctive relief necessary to restrain misuse of a membership list or any part thereof.(d) In any action or proceeding under this section, a court may award the corporation reasonable costs and expenses, including reasonable attorneys' fees, in connection with such action or proceeding.(e) As used in this section, the term “membership list” means the record of the members' names and addresses.

Nonprofit Mutual Benefit Corporations – Dissolution

California Corporations Code §8724Association cannot dissolve without approval of all of the members.Without the approval of 100 percent of the members, any contrary provision in this part or the articles or bylaws notwithstanding, so long as there is any lot, parcel, area, apartment, or unit for which an owners' association, created in connection with any of the forms of development referred to in Section 11004.5 of the Business andProfessions Code, is obligated to provide management, maintenance, preservation, or control, the following shall apply:(a) The owners' association or any person acting on its behalf shall not do either of the following:

1) Transfer all or substantially all of its assets.2) File a certificate of dissolution.

(b) No court shall enter an order declaring the owners' association duly wound up and dissolved.

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Unincorporated Organizations – Liability and Enforcement of Judgments

California Corporations Code §18250Unincorporated association is liable for its acts or omissions to the same extent as if the association was a natural person.Except as otherwise provided by law, an unincorporated association is liable for its act or omission and for the act or omission of its director, officer, agent, or employee, acting within the scope of the office, agency, or employment, to the same extent as if the association were a natural person.

California Corporations Code §18260Money judgment against unincorporated association can be enforced only against its properties.A money judgment against an unincorporated association, whether organized for profit or not, may be enforced only against the property of the association.

Unincorporated Organizations – Nonprofit Associations - Liability

California Corporations Code §18605Member, director or agent of nonprofit association is not liable for the association’s liabilities.A member, director, or agent of a nonprofit association is not liable for a debt, obligation, or liability of the association solely by reason of being a member, director, officer, or agent.

California Corporations Code §18610Member of nonprofit association is not liable for the association’s contractual obligations unless an exception applies; conditions for member of nonprofit association to assume an association’s contractual obligation.A member of a nonprofit association is not liable for a contractual obligation of the association unless one of the following conditions is satisfied:(a) The member expressly assumes personal responsibility for the obligation in a signed writing that specifically identifies the obligation assumed.(b) The member expressly authorizes or ratifies the specific contract, as evidenced by a writing. This subdivision does not apply if the member authorizes or ratifies a contract solely in the member's capacity as a director, officer, or agent of the association.(c) With notice of the contract, the member receives a benefit under the contract.Liability under this subdivision is limited to the value of the benefit received.(d) The member executes the contract without disclosing that the member is acting on behalf of the association.(e) The member executes the contract without authority to execute the contract.

California Corporations Code §18615Director, officer or agent of nonprofit association is not liable for the association’s contractual obligations unless an exception applies; conditions for director, officer or agent of nonprofit association to assume an association’s contractual obligations.A director, officer, or agent of a nonprofit association is not liable for a contractual obligation of the association unless one of the following conditions is satisfied:

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(a) The director, officer, or agent expressly assumes responsibility for the obligation in a signed writing that specifically identifies the obligation assumed.(b) The director, officer, or agent executes the contract without disclosing that the director, officer, or agent is acting on behalf of the association.(c) The director, officer, or agent executes the contract without authority to execute the contract.

California Corporations Code §18620Conditions for a member, director, officer or agent of nonprofit association to assume an association’s liability for injury, damage or harm.(a) A member, director, officer, or agent of a nonprofit association shall be liable for injury, damage, or harm caused by an act or omission of the association or an act or omission of a director, officer, or agent of the association, if any of the following conditions is satisfied:

1) The member, director, officer, or agent expressly assumes liability for injury, damage, or harm caused by particular conduct and that conduct causes the injury, damage, or harm.

2) The member, director, officer, or agent engages in tortious conduct that causes the injury, damage, or harm.

3) The member, director, officer, or agent is otherwise liable under any other statute.

(b) This section provides a nonexclusive list of existing grounds for liability, and does not foreclose any common law grounds for liability.

California Corporations Code §18630Member or person in control of a nonprofit association can be liable for debt, obligation or liability of the association under a theory of “alter ego” liability.Notwithstanding any other provision of this chapter, a member or person in control of a nonprofit association may be subject to liability for a debt, obligation, or liability of the association under common law principles governing alter ego liability of shareholders of a corporation, taking into account the differences between a nonprofit association and a corporation.

California Corporations Code §18640Uniform Fraudulent Transfer Act applies to nonprofit associations.Nothing in this chapter limits application of the Uniform Fraudulent Transfer Act (Chapter 1 (commencing with Section 3439) of Title 2 of Part 2 of Division 4 of the Civil Code).

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CHAPTER FIVE: CIVIL PROCEDURE CODE –SMALL CLAIMS COURT

Code Civ. Proc., §116.120 Legislative findings and declarationThe Legislature hereby finds and declares as follows:(a) Individual minor civil disputes are of special importance to the parties and of significant social and economic consequence collectively.(b) In order to resolve minor civil disputes expeditiously, inexpensively, and fairly, it is essential to provide a judicial forum accessible to all parties directly involved in resolving these disputes.(c) The small claims divisions have been established to provide a forum to resolve minor civil disputes, and for that reason constitute a fundamental element in the administration of justice and the protection of the rights and property of individuals.(d) The small claims divisions, the provisions of this chapter, and the rules of the Judicial Council regarding small claims actions shall operate to ensure that the convenience of parties and witnesses who are individuals shall prevail, to the extent possible, over the convenience of any other parties or witnesses.

Code Civ. Proc., §116.130 DefinitionsIn this chapter, unless the context indicates otherwise:(a) “Plaintiff” means the party who has filed a small claims action. The term includes a defendant who has filed a claim against a plaintiff.(b) “Defendant” means the party against whom the plaintiff has filed a small claims action. The term includes a plaintiff against whom a defendant has filed a claim.(c) “Judgment creditor” means the party, whether plaintiff or defendant, in whose favor a money judgment has been rendered.(d) “Judgment debtor” means the party, whether plaintiff or defendant, against whom a money judgment has been rendered.(e) “Person” means an individual, corporation, partnership, limited liability partnership, limited liability company, firm, association, or other entity.(f) “Individual” means a natural person.(g) “Party” means a plaintiff or defendant.(h) “Motion” means a party's written request to the court for an order or other action. The term includes an informal written request to the court, such as a letter.(i) “Declaration” means a written statement signed by an individual which includes the date and place of signing, and a statement under penalty of perjury under the laws of this state that its contents are true and correct.(j) “Good cause” means circumstances sufficient to justify the requested order or other action, as determined by the judge.(k) “Mail” means first-class mail with postage fully prepaid, unless stated otherwise.

Code Civ. Proc., §116.220 Jurisdiction(a) The small claims court has jurisdiction in the following actions:

1) Except as provided in subdivisions (c), (e), and (f), for recovery of money, if the amount of the demand does not exceed five thousand dollars ($5,000).

2) Except as provided in subdivisions (c), (e), and (f), to enforce payment of delinquent unsecured personal property taxes in an amount not to exceed five

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thousand dollars ($5,000), if the legality of the tax is not contested by the defendant.

3) To issue the writ of possession authorized by Sections 1861.5 and 1861.10 of the Civil Code if the amount of the demand does not exceed five thousand dollars ($5,000).

4) To confirm, correct, or vacate a fee arbitration award not exceeding five thousand dollars ($5,000) between an attorney and client that is binding or has become binding, or to conduct a hearing de novo between an attorney and client after nonbinding arbitration of a fee dispute involving no more than five thousand dollars ($5,000) in controversy, pursuant to Article 13 (commencing with Section 6200) of Chapter 4 of Division 3 of the Business and Professions Code.

5) For an injunction or other equitable relief only when a statute expressly authorizes a small claims court to award that relief.

(b) In any action seeking relief authorized by paragraphs (1) to (4), inclusive, of subdivision (a), the court may grant equitable relief in the form of rescission, restitution, reformation, and specific performance, in lieu of, or in addition to, money damages. The court may issue a conditional judgment. The court shall retain jurisdiction until full payment and performance of any judgment or order.(c) Notwithstanding subdivision (a), the small claims court has jurisdiction over a defendant guarantor as follows:

1) For any action brought by a natural person against the Registrar of the Contractors' State License Board as the defendant guarantor, the small claims jurisdictional limit stated in Section 116.221 shall apply.

2) For any action against a defendant guarantor that does not charge a fee for its guarantor or surety services, if the amount of the demand does not exceed two thousand five hundred dollars ($2,500).

3) For any action brought by a natural person against a defendant guarantor that charges a fee for its guarantor or surety services, if the amount of the demand does not exceed six thousand five hundred dollars ($6,500).

4) For any action brought by an entity other than a natural person against a defendant guarantor that charges a fee for its guarantor or surety services or against the Registrar of the Contractors' State License Board as the defendant guarantor, if the amount of the demand does not exceed four thousand dollars ($4,000).

(d) In any case in which the lack of jurisdiction is due solely to an excess in the amount of the demand, the excess may be waived, but any waiver is not operative until judgment.(e) Notwithstanding subdivision (a), in any action filed by a plaintiff incarcerated in a Department of Corrections and Rehabilitation facility, the small claims court hasjurisdiction over a defendant only if the plaintiff has alleged in the complaint that he or she has exhausted his or her administrative remedies against that department, including compliance with Sections 905.2 and 905.4 of the Government Code. The final administrative adjudication or determination of the plaintiff's administrative claim by the department may be attached to the complaint at the time of filing in lieu of that allegation.(f) In any action governed by subdivision (e), if the plaintiff fails to provide proof of compliance with the requirements of subdivision (e) at the time of trial, the judicial

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officer shall, at his or her discretion, either dismiss the action or continue the action to give the plaintiff an opportunity to provide that proof.(g) For purposes of this section, “department” includes an employee of a department against whom a claim has been filed under this chapter arising out of his or her duties as an employee of that department.

Code Civ. Proc., §116.222 Actions to enforce payment of debt; statement of calculation of liability; required content If the action is to enforce the payment of a debt, the statement of calculation of liability shall separately state the original debt, each payment credited to the debt, each fee and charge added to the debt, each payment credited against those fees and charges, all other debits or charges to the account, and an explanation of the nature of those fees, charges, debits, and all other credits to the debt, by source and amount.

Code Civ. Proc., §116.231 Limitation on number of actions filed each year; demand amount; exceptions(a) Except as provided in subdivision (d), no person may file more than two small claims actions in which the amount demanded exceeds two thousand five hundred dollars ($2,500), anywhere in the state in any calendar year.(b) Except as provided in subdivision (d), if the amount demanded in any small claims action exceeds two thousand five hundred dollars ($2,500), the party making the demand shall file a declaration under penalty of perjury attesting to the fact that not more than two small claims actions in which the amount of the demand exceeded two thousand five hundred dollars ($2,500) have been filed by that party in this state within the calendar year.(c) The Legislature finds and declares that the pilot project conducted under the authority of Chapter 1196 of the Statutes of 1991 demonstrated the efficacy of the removal of the limitation on the number of actions public entities may file in the small claims courts on claims exceeding two thousand five hundred dollars ($2,500).(d) The limitation on the number of filings exceeding two thousand five hundred dollars ($2,500) does not apply to filings where the claim does not exceed five thousand dollars ($5,000) that are filed by a city, county, city and county, school district, county office of education, community college district, local district, or any other local public entity. If any small claims action is filed by a city, county, city and county, school district, county office of education, community college district, local district, or any other local public entity pursuant to this section, and the defendant informs the court either in advance of the hearing by written notice or at the time of the hearing, that he or she is represented in the action by legal counsel, the action shall be transferred out of the small claims division. A city, county, city and county, school district, county office of education, community college district, local district, or any other local public entity may not file a claim within the small claims division if the amount of the demand exceeds five thousand dollars ($5,000).

Code Civ. Proc., §116.310 Pleadings; discovery(a) No formal pleading, other than the claim described in Section 116.320 or 116.360, is necessary to initiate a small claims action.(b) The pretrial discovery procedures described in Section 2019.010 are not permitted in small claims actions.

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Code Civ. Proc., §116.320 Commencement of action; claim form; necessary information(a) A plaintiff may commence an action in the small claims court by filing a claim under oath with the clerk of the small claims court in person, by mail, by facsimile transmission if authorized pursuant to Section 1010.5, or by electronic means as authorized by Section 1010.6.(b) The claim form shall be a simple nontechnical form approved or adopted by the Judicial Council. The claim form shall set forth a place for (1) the name and address of the defendant, if known; (2) the amount and the basis of the claim; (3) that the plaintiff, where possible, has demanded payment and, in applicable cases, possession of the property; (4) that the defendant has failed or refused to pay, and, where applicable, has refused to surrender the property; and (5) that the plaintiff understands that the judgment on his or her claim will be conclusive and without a right of appeal.(c) The form or accompanying instructions shall include information that the plaintiff(1) may not be represented by an attorney, (2) has no right of appeal, and (3) may ask the court to waive fees for filing and serving the claim on the ground that the plaintiff is unable to pay them, using the forms approved by the Judicial Council for that purpose.

Code Civ. Proc., §116.330 Schedule of hearing on case; order directing parties to appear(a) When a claim is filed, the clerk shall schedule the case for hearing and shall issue an order directing the parties to appear at the time set for the hearing with witnesses and documents to prove their claim or defense. The case shall be scheduled for hearing no earlier than 20 days but not more than 70 days from the date of the order.(b) In lieu of the method of setting the case for hearing described in subdivision (a), at the time a claim is filed the clerk may do all of the following:

1) Cause a copy of the claim to be mailed to the defendant by any form of mail providing for a return receipt.

2) On receipt of proof that the claim was served as provided in paragraph (1), issue an order scheduling the case for hearing in accordance with subdivision (a) and directing the parties to appear at the time set for the hearing with witnesses and documents to prove their claim or defense.

3) Cause a copy of the order setting the case for hearing and directing the parties to appear, to be served upon the parties by any form of mail providing for a return receipt.

Code Civ. Proc., §116.340 Service of claim and order on defendant(a) Service of the claim and order on the defendant may be made by any one of the following methods:

1) The clerk may cause a copy of the claim and order to be mailed to the defendant by any form of mail providing for a return receipt.

2) The plaintiff may cause a copy of the claim and order to be delivered to the defendant in person.

3) The plaintiff may cause service of a copy of the claim and order to be made by substituted service as provided in subdivision (a) or (b) of Section 415.20 without the need to attempt personal service on the defendant. For these purposes, substituted service as provided in subdivision (b) of Section 415.20 may be made at the office of the sheriff or marshal who shall deliver a copy of the claim and order to any person authorized by the defendant to receive

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service, as provided in Section 416.90, who is at least 18 years of age, and thereafter mailing a copy of the claim and order to the defendant's usual mailing address.

4) The clerk may cause a copy of the claim to be mailed, the order to be issued, and a copy of the order to be mailed as provided in subdivision (b) of Section 116.330.

(b) Service of the claim and order on the defendant shall be completed at least 15 days before the hearing date if the defendant resides within the county in which the action is filed, or at least 20 days before the hearing date if the defendant resides outside the county in which the action is filed.(c) Proof of service of the claim and order shall be filed with the small claims court at least five days before the hearing.(d) Service by the methods described in subdivision (a) shall be deemed complete on the date that the defendant signs the mail return receipt, on the date of the personal service, as provided in Section 415.20, or as established by other competent evidence, whichever applies to the method of service used.(e) Service shall be made within this state, except as provided in subdivisions (f) and (g).(f) The owner of record of real property in California who resides in another state and who has no lawfully designated agent in California for service of process may be served by any of the methods described in this section if the claim relates to that property.(g) A nonresident owner or operator of a motor vehicle involved in an accident within this state may be served pursuant to the provisions on constructive service in Sections 17450 to 17461, inclusive, of the Vehicle Code without regard to whether the defendant was a nonresident at the time of the accident or when the claim was filed. Service shall be made by serving both the Director of the California Department of Motor Vehicles and the defendant, and may be made by any of the methods authorized by this chapter or by registered mail as authorized by Section 17454 or 17455 of the Vehicle Code.(h) If an action is filed against a principal and his or her guaranty or surety pursuant to a guarantor or suretyship agreement, a reasonable attempt shall be made to complete service on the principal. If service is not completed on the principal, the action shall be transferred to the court of appropriate jurisdiction.

Code Civ. Proc., §116.510 Informal hearingThe hearing and disposition of the small claims action shall be informal, the object being to dispense justice promptly, fairly, and inexpensively.

Code Civ. Proc., §116.520 Evidence; witnesses(a) The parties have the right to offer evidence by witnesses at the hearing or, with the permission of the court, at another time.(b) If the defendant fails to appear, the court shall still require the plaintiff to present evidence to prove his or her claim.(c) The court may consult witnesses informally and otherwise investigate the controversy with or without notice to the parties.

Code Civ. Proc., §116.530 Appearance by attorney; restrictions (a) Except as permitted by this section, no attorney may take part in the conduct or defense of a small claims action.

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(b) Subdivision (a) does not apply if the attorney is appearing to maintain or defend an action in any of the following capacities:

1) By or against himself or herself.2) By or against a partnership in which he or she is a general partner and in which

all the partners are attorneys.3) By or against a professional corporation of which he or she is an officer or

director and of which all other officers and directors are attorneys.(c) Nothing in this section shall prevent an attorney from doing any of the following:

1) Providing advice to a party to a small claims action, either before or after the commencement of the action.

2) Testifying to facts of which he or she has personal knowledge and about which he or she is competent to testify.

3) Representing a party in an appeal to the superior court.4) Representing a party in connection with the enforcement of a judgment.

Code Civ. Proc., §116.540 Appearance by person other than plaintiff or defendant; personal appearance by plaintiff(a) Except as permitted by this section, no individual other than the plaintiff and the defendant may take part in the conduct or defense of a small claims action.(b) Except as additionally provided in subdivision (i), a corporation may appear and participate in a small claims action only through a regular employee, or a duly appointed or elected officer or director, who is employed, appointed, or elected for purposes other than solely representing the corporation in small claims court.(c) A party who is not a corporation or a natural person may appear and participate in a small claims action only through a regular employee, or a duly appointed or elected officer or director, or in the case of a partnership, a partner, engaged for purposes other than solely representing the party in small claims court.(d) If a party is an individual doing business as a sole proprietorship, the party may appear and participate in a small claims action by a representative and without personally appearing if both of the following conditions are met:

1) The claim can be proved or disputed by evidence of an account that constitutes a business record as defined in Section 1271 of the Evidence Code, and there is no other issue of fact in the case.

2) The representative is a regular employee of the party for purposes other than solely representing the party in small claims actions and is qualified to testify to the identity and mode of preparation of the business record.

(e) A plaintiff is not required to personally appear, and may submit declarations to serve as evidence supporting his or her claim or allow another individual to appear and participate on his or her behalf, if (1) the plaintiff is serving on active duty in the United States Armed Forces outside this state, (2) the plaintiff was assigned to his or her duty station after his or her claim arose, (3) the assignment is for more than six months, (4) the representative is serving without compensation, and (5) the representative has appeared in small claims actions on behalf of others no more than four times during the calendar year. The defendant may file a claim in the same action in an amount not to exceed the jurisdictional limits stated in Sections 116.220, 116.221, and 116.231.(f) A party incarcerated in a county jail, a Department of Corrections and Rehabilitation facility, or a Division of Juvenile Facilities facility is not required to personally appear, and may submit declarations to serve as evidence supporting his or her claim, or may authorize another individual to appear and participate on his or her behalf if that

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individual is serving without compensation and has appeared in small claims actions on behalf of others no more than four times during the calendar year.(g) A defendant who is a nonresident owner of real property may defend against a claim relating to that property without personally appearing by (1) submitting written declarations to serve as evidence supporting his or her defense, (2) allowing another individual to appear and participate on his or her behalf if that individual is serving without compensation and has appeared in small claims actions on behalf of others no more than four times during the calendar year, or (3) taking the action described in both (1) and (2).(h) A party who is an owner of rental real property may appear and participate in a small claims action through a property agent under contract with the owner to manage the rental of that property, if (1) the owner has retained the property agent principally to manage the rental of that property and not principally to represent the owner in small claims court, and (2) the claim relates to the rental property.(i) A party that is an association created to manage a common interest development, as defined in Section 4100 or in Sections 6528 and 6534 of the Civil Code, may appear and participate in a small claims action through an agent, a management company representative, or bookkeeper who appears on behalf of that association.(j) At the hearing of a small claims action, the court shall require any individual who is appearing as a representative of a party under subdivisions (b) to (i), inclusive, to file a declaration stating (1) that the individual is authorized to appear for the party, and (2) the basis for that authorization. If the representative is appearing under subdivision (b), (c), (d), (h), or (i), the declaration also shall state that the individual is not employed solely to represent the party in small claims court. If the representative is appearing under subdivision (e), (f), or (g), the declaration also shall state that the representative is serving without compensation, and has appeared in small claims actions on behalf of others no more than four times during the calendar year.(k) A husband or wife who sues or who is sued with his or her spouse may appear and participate on behalf of his or her spouse if (1) the claim is a joint claim, (2) the represented spouse has given his or her consent, and (3) the court determines that the interests of justice would be served.(l) If the court determines that a party cannot properly present his or her claim or defense and needs assistance, the court may in its discretion allow another individual to assist that party.(m) Nothing in this section shall operate or be construed to authorize an attorney to participate in a small claims action except as expressly provided in Section 116.530.

Code Civ. Proc., §116.610 Damages; equitable relief; several judgment; costs; entry of judgment(a) The small claims court shall give judgment for damages, or equitable relief, or both damages and equitable relief, within the jurisdictional limits stated in Sections 116.220, 116.221, and 116.231, and may make any orders as to time of payment or otherwise as the court deems just and equitable for the resolution of the dispute.(b) The court may, at its discretion or on request of any party, continue the matter to a later date in order to permit and encourage the parties to attempt resolution by informal or alternative means.(c) The judgment shall include a determination whether the judgment resulted from a motor vehicle accident on a California highway caused by the defendant's operation of a

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motor vehicle, or by the operation by some other individual, of a motor vehicle registered in the defendant's name.(d) If the defendant has filed a claim against the plaintiff, or if the judgment is against two or more defendants, the judgment, and the statement of decision if one is rendered, shall specify the basis for and the character and amount of the liability of each of the parties, including, in the case of multiple judgment debtors, whether the liability of each is joint or several.(e) If specific property is referred to in the judgment, whether it be personal or real, tangible or intangible, the property shall be identified with sufficient detail to permit efficient implementation or enforcement of the judgment.(f) In an action against several defendants, the court may, in its discretion, render judgment against one or more of them, leaving the action to proceed against the others, whenever a several judgment is proper.(g)

1) The prevailing party is entitled to the costs of the action, including the costs of serving the order for the appearance of the defendant.

2) Notwithstanding paragraph (1) of this subdivision and subdivision (b) of Section 1032, the amount of the small claims court fee paid by a party pursuant to subdivision (c) of Section 116.230 that exceeds the amount that would have been paid if the party had paid the fee pursuant to subdivision (b) of Section 116.230 shall not be recoverable as costs.

(h) When the court renders judgment, the clerk shall promptly deliver or mail notice ofentry of the judgment to the parties, and shall execute a certificate of personal delivery or mailing and place it in the file.(i) The notice of entry of judgment shall be on a form approved or adopted by the Judicial Council.

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CHAPTER SIX: CASE SUMMARIES

14859 Moorpark Homeowner’s Ass’n v. VRT Corp., 63 Cal. App. 4th 1396 (1998).Condominium development was damaged in an earthquake. As a result, association agreed to sell the complex to a third party developer. It then filed a petition for partition. The mortgage company brought cross complaints against both the association and the third party developer challenging the validity of the deed based on the partition. The court agreed with the mortgagor holding that under Civil Code Section 1359 (now Section 4610), judicial petition was the only way to obtain partition, and accordingly, the association could not convey good title to a developer without obtaining a judicial partition first.

A

Adelman v. Associated Intern. Ins. Co., 90 Cal. App. 4th 352 (2001).Owners sued insurance company for delaying indemnification under the policy, thereby causing injury by delaying necessary repairs to their units. The insurance policy was under the name of the homeowners association and not the owners. The court sided with the insurance company, holding that under Civil Code Sections 1362 (now Section 4500), an insurer owes no duty to individual owners who were not parties to the insurance policy agreement between the insurer and the owners’ association.

Affan v. Portofino Cove, 189 Cal. App. 4th 930 (2010).Owner sued their homeowner’s association and the association’s managing agent for damages to owner’s unit resulting from four years of chronic sewage overflow. Owner had routinely notified association of the overflows as they occurred, and association only provided temporary corrective measures and did not attempt to permanently remedy the issue. The court held that the association failed to conduct a reasonable investigation, in good faith, and in a manner the association believed was in the best interests of its members. Acourt will defer to an association's decisions regarding ordinary maintenance only if the following elements are met:

i. the association exercised discretion clearly within its authority;

ii. the association acted upon reasonable investigation;iii. the association acted in good faith;iv. and the association acted in a manner that it believed

was in the best interests of its members.

Anders v. Superior Court, 192 Cal. App. 4th 579 (2011). A group of homeowners brought a construction defect action against the association’s developer. The builder petitioned the court to compel the homeowners to follow a pre-litigation procedure he included in the CC&R’s. The court, however, found the pre-litigation procedure to be unconscionable and therefore unenforceable. Subsequently, the developer demanded that the statutory pre-litigation procedure enumerated under SB800 be used instead.

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The homeowners objected and filed a lawsuit. The Court of Appeals held that the developer’s attempt to enforce the pre-litigation set forth in the CC&R’s, although unsuccessful, precluded its ability to resort to SB800’s pre-litigation procedure, and that the homeowners were released from the SB800 pre-litigation procedure and could file a lawsuit.

Arias v. Katella Townhouse Homeowners Ass’n, Inc., 127 Cal. App. 4th 847 (2005).A homeowner prevailed in an action against the association under a breach of CC&R’s theory for its failure to maintain the common areas and repair damage to his unit. The homeowner sought to recover attorneys’ fees under Civil Code Section 1354 (now Section 5975) and under the CC&R’s. The court held for the homeowner, finding that an action against the association for its failure to maintain the common areas in accordance with the CC&R’s constitutes an action to enforce the Governing Documents, and therefore entitles the prevailing party to attorneys’ fees under the statute and the CC&R’s.

Auburn Woods I Homeowners Ass’n v. Fair Employment and Housing Com’n, 121 Cal. App. 4th 1578 (2004).

Homeowner brought a terrier into their home in order to aid with disabilities suffered as a result of a car accident, claiming that the dog was a companion animal. The association initiated the removal of the dog based on a provision in the CC&R’s which provided that dogs were not allowed. Homeowners filed a complaint, and the Fair Employment and Housing Commission (FEHC) found that because the dog would have been a reasonable accommodation under the Fair Employment and Housing Act (FEHA), the association’s denial of the companion animal constituted unlawful discrimination. The court upheld the FEHC’s findings, concluding that disallowance of a physically or mentally disabled individual’s companion animal could constitute a violation of FEHA’s reasonable accommodation requirement.

B

Baeza v. Superior Court, 201 Cal. App. 4th 1214 (2011).Homeowner sued developer for alleged construction defects. Developer moved to compel certain homeowners to comply with contractual provisions for nonadversarial prelitigation procedures, and wanted other homeowners to comply with statutory nonadversarial prelitigation procedures. Homeowners claimed the prelitigation procedures were not enforceable because the developer did not comply with certain statutory requirements. Finding for the developer, the court held that the Right to Repair Act disclosure provisions are an element of the statutory nonadversarial prelitigation procedures and do not apply to a builder who opts out of the statutory prelitigation procedures. A builder who opts of the Right to Repair Act’s prelitigation procedures in favor of its own contractual procedures opts out of the entire nonadversarial prelitigation chapter of the Act and the provisions of that chapter to do not apply to such a builder.

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Beacon Residential Comty. Ass’n v. Skidmore, Owings & Merrill LLP, 59 Cal. 4th 568 (2014).

Association brought a lawsuit on behalf of homeowners against two architectural firms alleging that the architects negligently designed defective condominium buildings. The designs failed to meet regulation standards causing solar heat gain that made the buildings uninhabitable for portions of the year. The defendants argued that because they only made design decisions early on in the building process and did not decide how the homes would be built, they owed no duty of care to the consumer homeowners. The court disagreed, holding that under the Right to Repair act, architects owe a common law duty of care to future homeowners.

Bear Creek Master Ass’n v. Edwards, 130 Cal. App. 4th 1470 (2005).Homeowner bought an undeveloped parcel of land in a common interest development community on which eight units were to be built. The homeowner failed to pay regular assessments, arguing that he was not required to do so under the Davis-Stirling Act because there were no structures on the property. The owner also argued that recovery should be limited to the amount initially indicated in the Lien notice. The court disagreed and held for the association. It found that the owner was required to pay assessments even though no structures had been built on the land yet. Additionally, the court held that assessments owed are not limited to the amounts initially specified in the notice.

Berryman v. Merit Property Management, Inc., 152 Cal. App. 4th 1544 (2007).Homeowners sued association’s managing agent for wrongfully charging fees for documents and transfers in violation of Civil Code Section 1368 (now Section 4575). The court dismissed the claim. It held that while Civil Code Section 1368 (now Section 4575) restricts the amount an association can charge for documents, it does not restrict the amount that an agent can charge for those services.

Biagini v. Hyde, 3 Cal. App. 3d 877 (1970).Owner operated a beauty salon in a development restricted to residential use only under the CC&Rs. Other owners sued the salon operator to enforce the restriction. Defendant argued, among other things, that the operation of the salon did not cause any injury to the plaintiffs. The court disregarded that argument holding that an action to enforce CC&Rs under Civil Code Section 1354 (now Section 5975) does not require showing of actual physical or economic harm to the plaintiff.

Bowers v. Lucia Companies, 206 Cal. App. 4th 724 (2012).In an attempt to settle a business dispute, plaintiff and defendant agreed to participate in a full day of mediation. If the parties failed to reach an agreement by the end of the day, the parties agreed to allow the mediator to determine the amount of a binding judgment (Baseball “Binding Mediation”). When the mediator entered a judgment in favor of the plaintiff, defendants argued the judgment was a mediation award, not an arbitration award, and was therefore, not binding. The court determined the Parties agreed to a binding mediation,

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rather than a two part mediation and binding arbitration process. Accordingly, an agreement to allow a mediator to make a binding decision when settlement is not reached is enforceable against the parties.

Brown v. Professional Community Management Inc., 127 Cal. App. 4th 532 (2005).Homeowner sued the property manager alleging that she charged and collected assessments exceeding the necessary amount to cover its costs in violation of Civil Code Section 1366.1 (now Section 5600(b)). The court dismissed the claim, holding that Civil Code Section 1366 (now Section 5600(b)) does not apply to property managers, only to associations.

Burch v. Superior Court, 223 Cal. App. 4th 1411 (2014). A purchaser of a new home brought tort and contract claims against general contractor, developer, and their owners for defects resulting in property damage. Defendants argued that the Right to Repair Act (Section 896) precludes pursuit of other remedies for construction defect and that they owed no duty of care to the purchaser since they had no contractual relationship with her. The court ruled in favor of the purchaser, holding that the Right to Repair Act does not prevent a plaintiff from pursuing common law claims for defects causing property damage, and a general contractor owes a duty of care to future home purchasers.

C

Cabrini Villas Homeowners Ass’n v. Haghverdian, 111 Cal. App. 4th 683 (2003).Homeowner installed an air conditioning unit in an exterior wall of her condominium without prior approval from the association. Association contended the air conditioner violated the CC&Rs and sent homeowner a letter by certified mail, return receipt requested, advising homeowner of the violation and requesting participation in ADR under Civil Code Section 1354 (now Section 5975). Association brought action seeking injunction to force removal of the air conditioning unit after homeowner failed to respond to the association’s letter. The injunction was granted. Homeowner argued the association did not serve her with a “Request for Resolution,” a condition precedent to bringing an action for injunction pursuant to Civil Code Section 1354 (now Section 5975). In affirming the injunction, the court held a party’s action to enforce CC&Rs under Civil Code Section 1354 (now Section 5975) is satisfied by service via any form of mail that requires a return receipt as prescribed in Code of Civil Procedure Section 116.340.

California Traditions, Inc. v. Claremont Liability Ins. Co., 197 Cal. App. 4th 410 (2011).

Defective construction action in a condominium complex, contractor hadcomprehensive general liability policy excluding coverage for injury and bodily damage “incorporated into a condominium or townhouse project.” Developer claimed indemnity arising out of the action. The court found that the unit was part of a “condominium project,” and that the contractor knew the policy did not cover its work on condominium projects. Concluding that the contract exclusion clearly excluded the work, the court held that there was no triable

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issue of material fact, that the action sought recovery for acts and omissions arising from the work on the condominium project, and that the developer was precluded from indemnity in the claim arising out of defective construction.

Carolyn v. Orange Park Community Ass’n, 177 Cal. App. 4th 1090 (2009).A homeowners association’s common area included horseback riding trails which the association neither forbid nor encouraged the public to use. Adisabled equine enthusiast seeking to use the association’s trails by means of a horse drawn carriage sued the association under the Americans with Disabilities Act (ADA) for erecting posts at the trails’ access points which prevented vehicles from accessing the trails. The court held that an association’s solely recreational common area space, including the trails, are not “public accommodations” within the meaning of the ADA, the California Disabled Persons Act, the Unruh Act, Gov. Code Section 4450, or Safety Code Section 19955. Accordingly, the association could restrict access to these areas in ways which had a negatively disparate impact on disabled persons.

Cavin Memorial Corp. v. Requa, 5 Cal. App. 3d 345 (1970). In a case that consolidated four different actions, residents of common interest developments sought title in lots conveyed to the corporation as participating members. In determining the rights of one of the residents, the court held that unless specifically provided for in the corporation’s articles or bylaws, a deed from one director to another does not constitute an appointment to act as a “proxy.”

Cebular v. Cooper Arms Homeowners Ass’n, 142 Cal. App. 4th 106 (2006).1. Unit owner challenged a CC&R provision granting unequal

allocation of assessments for maintenance of common areas based on unequal shares of voting rights. The court found the provision to be enforceable. It held that nothing in Civil Code Section 1362 (now Section 4500) prohibits unequal voting rights or unequal common area expense allocation.

2. Unit owner challenged a CC&R provision granting unequal allocation of assessments for maintenance of common areas based on unequal shares of voting rights. The court found the provision to be enforceable. It held that CC&Rs are enforceable unless the challenging party can show that they are arbitrary, violate public policy, unduly burdensome, or illegal (all combine to define “unreasonable” under Villa De Las Palmas Homeowners Ass’n v. Terifaj).

3. Owner sued homeowners association, arguing that a provision in the association CC&Rs which provides for unequal allocation of fees and assessments, violates Corporations Code Section 7312. The association argued that the provision is enforceable despite Section 7312 because it is based on a long time provision granting unequal voting rights. The court agreed. It held that an unequal allocation of assessments is enforceable and does not violate Section 7312

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when, under the circumstances, the provision falls within the exceptions to the statute.

Chantiles v. Lake Forest II Master Homeowners Ass’n, 37 Cal. App. 4th 914 (1995).Director of homeowners association sued the association to compel it to provide the director with, among other documents, copies of association members’ voting ballots for the board of directors. The director argued that he was entitled to those documents under Corporations Code Section 8334. The court limited the director’s access to the voting ballots, holding that the statutory right granted under Section 8334 must be balanced against the members’ right to privacy.

Chee v. Amanda Goldt Property Management, 143 Cal. App. 4th 1360 (2006).Condominium owner, who was injured when dog of tenant from neighboring condominium jumped on her, brought action against landlord of neighboring condominium. Condominium owner argued that the rule, stating a commerciallandlord who leases property for the admission of the public has a duty to inspect the premises for safety, should be extended to condominium landlords. The court declined to extend this principle and held that in the absence of actual knowledge of dangerous conditions and the ability to control or prevent the harm, a landlord does not owe a duty of care to third parties in regards to their tenants’ animals.

Clear Lake Riviera Community Ass’n v. Cramer, 182 Cal. App. 4th 459 (2010).Community association sued a homeowner for injunction forcing the homeowner to comply with height restrictions contained in the CC&Rs. The homeowner knowingly built a home nine feet above the height restriction. The height restriction was proven to exist through circumstantial evidence only.The homeowner argued that the height restriction was invalid because it was not enacted pursuant to the procedural requirements for the adoption of operating rules of a common interest development association found in Civil Code Sections 1357.110 (now Section 4350), 1357.130 (now Section 4360),1357.140 (now Section 4365). Alternatively, the homeowner argued that an injunction forcing the house to be brought into compliance with the height restriction is an improper remedy, and that monetary damages should be rewarded instead. In affirming the injunction, the appellate court found that the procedural requirements in Sections 1357.110 (now Section 4350),1357.130 (now Section 4360), 1357.140 (now Section 4365) do not affect the validity of a rule change commenced before January 1, 2004, as articulated in Section 1357.150 (now Section 4370). Additionally, the denial of an injunction requires the enjoined party to be innocent.

Colony Hill v. Ghamaty, 143 Cal. App. 4th 1156 (2006).An association brought action against a homeowner for breach of the CC&R’s for his violation of a provision prohibiting the use of the property for anything other than a single-family dwelling purpose. The homeowner, among other things, argued that the provision was unreasonable under Civil Code Section 1354 (now Section 5975) and therefore unenforceable. The Court concluded that the restriction was not arbitrary, it was not substantially more burdensome

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than beneficial, and does not violate public policy. Accordingly, the court held for the association, finding that the restriction was reasonable and enforceable.

Country Side Villas Homeowners Ass’n v. Ivie, 193 Cal. App. 4th 1110 (2011). A dispute arose between a homeowners association and several of the homeowners as to the responsibility for repair and replacement of balconies and shingle siding on certain units. The association assumed liability for this obligation, while homeowners who did not have balconies in their units contested that the individual unit owners were the responsible parties. The association filed an action with the court for declaratory relief, asking it to officially declare that it was the association’s duty to maintain the balconies and shingles. The contesting homeowners filed an anti-SLAPP motion (strategic lawsuit against public participation), arguing that the association’s action was essentially filed to silence their complaints. The court sided with the homeowners, holding that the claims against the homeowners for declaratory relief as to a maintenance obligation arose from a protected activity in criticizing the actions of the association’s board.

Creekridge Townhome Owners Ass’n v. C. Scott Whitten, Inc., 177 Cal. App. 4th 251 (2009).

Homeowners association sued roofers for construction defects seven years after completion when numerous owners reported roof leaks. Several months after completion, a single owner advised the association of window moisture and several cracked roofing tiles in her unit. The trial court granted the roofers’ summary judgment because the association’s claim was brought after the four year statute of limitations expired for patent defects. The appellate court reversed the lower court’s grant of summary judgment holding that the defects were not patent, but rather latent and accordingly the four year statute of limitations in Code of Civil Procedure Section 337.1 did not apply. It concluded that defects are patent when they would be discoverable through reasonable inspection by the average consumer. Defects are latent when they are not apparent by reasonable inspection. Accordingly, a moisture problem and several cracked roofing tiles in one out of sixty-one units constituted a latent defect to which the ten year statute of limitations in Section 337.15 applies.

Cutujian v. Benedict Hills Estates Ass’n, 41 Cal. App. 4th 1379 (1996).Homeowner sued association for breach of covenant and continuing nuisance in order to recover costs to repair a surface slump on the homeowner’s property.The association argued that the statute of limitations had expired on homeowner’s claim. The court held that the statute of limitations for enforcing the association’s landscaping repair duties under the CC&Rsstarted to run when the homeowner demanded repair of the surface slope, and therefore, landowner’s action was filed within the proper four-year period.

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D

Damon v. Ocean Hills Journalism Club, 85 Cal. App. 4th 468 (2000).Former association manager sued association for defamatory statements made against him on the community newsletter and during board meetings. While the court dismissed the action according to other laws, it held that a board meeting and a community newsletter constitute a public forum for purposes of defamation action.

Darling v. Superior Court, 211 Cal. App. 4th 69 (2012).Construction defect action against builders. Homeowners served builders with a request for documents pursuant to the requirements of Civil Code Section 912(a). Builders’ counsel responded with a letter acknowledging receipt of the request, but refused to comply with it, claiming that the request was premature. Homeowners considered this response to be the builders’ refusal to comply with prelitigation obligations and filed suit. Builders sought to stay the action and the homeowners opposed, arguing that their request for documents was not premature because Section 912 does not require that such requests be served only after the party is first served with a notice of claim. Disagreeing with the homeowners, the court held that the builders were not under any obligation to respond to the document request because the homeowners had not yet served the developer with a notice of claim, pursuant to Section 910.

Diamond v. Superior Court, 217 Cal. App. 4th 1172 (2013). An association brought suit against a homeowner for judicial foreclosure.Homeowner moved to set aside the lien, claiming the association failed to comply with pre-lien and pre-foreclosure notice requirements. The court held that substantial compliance with the notices required under Civil Code Sections 1367.1 (now Section 5675) and 1367.4 (now Section 5705) is not enough. Associations must strictly comply with all mandatory notice requirements in order for a lien and foreclosure to be valid.

Diamond Heights Village Ass’n Inc. v. Financial Freedom Senior Funding Corp., 196 Cal. App. 4th 290 (2011).

A homeowner failed to pay assessments. The association recorded a lien against the owner’s property. Subsequently, the association brought an action against the homeowner for foreclosure and obtained a judgment. The association, however, failed to record an abstract of judgment. The court held that the recorded lien was merged with the foreclosure judgment and was therefore superseded by it. As a result, because an abstract of judgment was not filed, the judgment did not take priority to other recorded liens,even though the original lien was recorded first.

Dinh Ton That v. Alders Maintenance Ass’n, 206 Cal. App. 4th 1419 (2012).Homeowner brought suit against association under the Unfair Competition Law, seeking declaratory and injunctive relief in connection with a recall election of the Board of Directors. The association prevailed, and sought attorney’s fees, citing Civil Code Section 1363.09 (now Section 5145), whichprovides that “a prevailing association shall not recover any costs, unless the

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court finds the action to be frivolous, unreasonable, or without foundation.”However, the court held that the statute did not allow the association to recover attorney’s fees, even if the action against the association was frivolous, and explained that statutory attorney fee awards must be specifically authorized by a statute.

Dolan-King v. Rancho Santa Fe Ass’n, 81 Cal. App. 4th 965 (2000).Homeowner brought suit against association after it rejected the homeowner’s plans for home additions and a perimeter fence. The trial court found the association’s rejection of the proposed plans to be arbitrary and an abuse of power. After the association appealed, the court held that decisions of the board and the board’s art jury were entitled to conditional judicial deference and that they acted within the scope of their authority in rejecting the homeowner’s plans.

Dover Village Ass’n v. Jennison, 191 Cal. App. 4th 123 (2010).Condo association brought claim against unit owners who refused to pay costs of repair for leaking sewer pipe below their unit. Association argued that the sewer pipe was a “fixture” under the definition of “exclusive use common area” as defined in Civil Code Section 1351(i) (now Section 4145) and therefore, liability should be transferred from the association to the unit owner under Civil Code Section 1364 (now Section 4775(a)). The court found the sewer pipe was not a fixture for the purpose of an exclusive use common area and held that sewer piping below unit owner’s condo was a “common area”.Association was therefore liable for repair costs.

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ECC Const., Inc. v. Ganson, 82 Cal. App. 4th 572 (2000).1. Homeowner nonprofit association contracted with a building contractor to

repair damages caused to the common interest development by earthquake. Building contractor sued the nonprofit association and individual owners for unpaid fees for the repair. Individual owners argued that the association, and not them, entered the contract and that, therefore, they were not responsible for any obligations under it. The court agreed. It held that under Corporations Code Section 7140, a nonprofit corporation has the power to enter contracts individually. It further held that, accordingly, homeowners are not liable to the nonprofit corporation’s obligations under such a contract.

2. Nonprofit association hired a building contractor to repair damage caused to the common interest development by an earthquake. The building contractor sued the association, as well as individual members, for monies he was owed under the contract. Homeowners argued that they are not liable under Corporations Code Section 7350. The court agreed. It held that under Section 7350, homeowners are not personally liable to debts incurred by a nonprofit association under a contract it entered.

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court finds the action to be frivolous, unreasonable, or without foundation.”However, the court held that the statute did not allow the association to recover attorney’s fees, even if the action against the association was frivolous, and explained that statutory attorney fee awards must be specifically authorized by a statute.

Dolan-King v. Rancho Santa Fe Ass’n, 81 Cal. App. 4th 965 (2000).Homeowner brought suit against association after it rejected the homeowner’s plans for home additions and a perimeter fence. The trial court found the association’s rejection of the proposed plans to be arbitrary and an abuse of power. After the association appealed, the court held that decisions of the board and the board’s art jury were entitled to conditional judicial deference and that they acted within the scope of their authority in rejecting the homeowner’s plans.

Dover Village Ass’n v. Jennison, 191 Cal. App. 4th 123 (2010).Condo association brought claim against unit owners who refused to pay costs of repair for leaking sewer pipe below their unit. Association argued that the sewer pipe was a “fixture” under the definition of “exclusive use common area” as defined in Civil Code Section 1351(i) (now Section 4145) and therefore, liability should be transferred from the association to the unit owner under Civil Code Section 1364 (now Section 4775(a)). The court found the sewer pipe was not a fixture for the purpose of an exclusive use common area and held that sewer piping below unit owner’s condo was a “common area”.Association was therefore liable for repair costs.

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ECC Const., Inc. v. Ganson, 82 Cal. App. 4th 572 (2000).1. Homeowner nonprofit association contracted with a building contractor to

repair damages caused to the common interest development by earthquake. Building contractor sued the nonprofit association and individual owners for unpaid fees for the repair. Individual owners argued that the association, and not them, entered the contract and that, therefore, they were not responsible for any obligations under it. The court agreed. It held that under Corporations Code Section 7140, a nonprofit corporation has the power to enter contracts individually. It further held that, accordingly, homeowners are not liable to the nonprofit corporation’s obligations under such a contract.

2. Nonprofit association hired a building contractor to repair damage caused to the common interest development by an earthquake. The building contractor sued the association, as well as individual members, for monies he was owed under the contract. Homeowners argued that they are not liable under Corporations Code Section 7350. The court agreed. It held that under Section 7350, homeowners are not personally liable to debts incurred by a nonprofit association under a contract it entered.

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Ekstrom v. Marquesa at Monarch Beach, 168 Cal. App. 4th 1111 (2008).Condominium owners sued their homeowners association to compel the association to comply with its CC&Rs requiring the trimming or removal of any trees obstructing any condominium owner’s view of the ocean. Condominium owners had unobstructed ocean views at the time of purchase. Subsequently, palm trees on other owners’ lots began obstructing condominium owners’ ocean view. After the homeowners association failed to amend the CC&Rs to exempt palm trees from the trimming or removal requirement, its board promulgated rules to that effect. The court held that association promulgated rules which are inconsistent with the CC&Rs are not entitled to judicial deference under Lamden, and that the association must enforce the CC&Rs requiring that any trees obstructing any owner’s view of the ocean must be trimmed or removed.

El Escorial Owners’ Ass’n v. DLC Plastering, 154 Cal. App. 4th 1337 (2007). Association brought construction defect action against numerous contractors and subcontractors. Prior to trial, most of the defendants settled, however, two subcontractors, DLC and Alderman did not. The trial court found the two subcontractors negligent and held them liable for substantial damages. The court however, reduced the amount of damages by awarding credits to DLC and Alderman because of the prior good faith settlements between the association and other contractors.

1. The association argued the court erred in reducing subcontractors’ financial liability because their work was separate and distinct. The court held that where some of the defendants settle with the plaintiff, the non-settling defendant is entitled to reduce their liability by deducting the amount of the settlement for those indivisible damages.2. DLC and Alderman challenged the association’s tolling of the statute of limitations under the Calderon Act. The court found that a builder and an association can toll the statute of limitations in accordance with the Calderon Act by agreeing in writing to assign indemnity claims against non-settled subcontractors.

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Farber v. Bay View Terrace Homeowners Ass’n, 141 Cal. App. 4th 1007 (2006).Buyer of property sued seller for failure to disclose roof leakage. Seller sued the association contending that under the CC&Rs, the association had the duty to disclose any defects to the potential buyer. The court refused to hear the seller’s action, holding that an ex-owner, with no present property interest in the common interest development, lacks standing to bring action to enforce CC&Rs.

Finley v. Superior Court, 80 Cal. App. 4th 1152 (2000).Members of homeowners association sued the association to recover assessments used to help a committee in its opposition to the establishment of a commercial airport nearby. The association asked the court to dismiss the action because it was acting in the best interest of its members. The court

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agreed. It held that under Corporations Code Sections 7210 and 7212, directors of a nonprofit corporation cannot be liable for actions reasonably, and in good faith, believed to be in the best interest of the corporation and its members.

Fleur du Lac Estates Ass’n v. Mansouri, 205 Cal. App. 4th 249 (2012).An association had a dispute with a homeowner over the remodeling of her condo’s patio. The association filed a petition to the court requesting that the court compel the homeowner to attend arbitration pursuant to Civil Code Section 1369.520 (now Section 5930). The trial court refused to compel arbitration, holding that before an association can file a motion to compel arbitration under Section 1369.520 (now Section 5930), it must first show that it requested the homeowner to participate in arbitration and that the homeowner refused. Even so, the court’s order did not have the effect of a final judgment. The court later granted the association’s petition to compel arbitration of the same dispute when the association showed the homeowner refused to participate in arbitration.

Forest Meadows Owners Ass'n v. State Farm Gen. Ins. Co., 2012 WL 1205204 (E.D. Cal. 2012).

The President of an association fired a security guard without consulting with the other board members. The security board then sued the association for wrongful termination. When the association tendered a defense to their Insurance Policy, their claim was denied. The security guard alleged intentional termination and the association’s insurance coverage provider only covered for negligent, “wrongful acts.” After interpreting the insurance contract between the parties, the court held the insurance company did not have a duty to defend the lawsuit – a “wrongful act” does not include wrongful termination.

Fourth La Costa Condominium Owners Ass’n v. Seith, 159 Cal. App. 4th 563 (2008).1. Association enacted a statute effective for a term of 40 years with an

automatic extension of 10 years upon expiration. Owner argued, among other things, that the provision in the CC&Rs violated Civil Code Section 1357 (now Section 4265) because it provided for an extension beyond what the statute allows. The court found the CC&Rs to be enforceable. It held that Section 1357 (now Section 4265) does not apply to CC&Rs that include an automatic renewal provision.

2. During a petition by an association to the court, an owner argued that the association violated Civil Code Section 1353.6 (now Section 4710) because it restricted the maintenance of advertisements in the development. The association limited commercial signage to one sign per unit that is up to 18 by 24 inches, professionally printed and placed on the unit’s window. The court held that under Section 1353.6 (now Section 4710), signs advertising property constitute commercial speech, which is not protected by the law prohibiting associations from restricting signage.

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agreed. It held that under Corporations Code Sections 7210 and 7212, directors of a nonprofit corporation cannot be liable for actions reasonably, and in good faith, believed to be in the best interest of the corporation and its members.

Fleur du Lac Estates Ass’n v. Mansouri, 205 Cal. App. 4th 249 (2012).An association had a dispute with a homeowner over the remodeling of her condo’s patio. The association filed a petition to the court requesting that the court compel the homeowner to attend arbitration pursuant to Civil Code Section 1369.520 (now Section 5930). The trial court refused to compel arbitration, holding that before an association can file a motion to compel arbitration under Section 1369.520 (now Section 5930), it must first show that it requested the homeowner to participate in arbitration and that the homeowner refused. Even so, the court’s order did not have the effect of a final judgment. The court later granted the association’s petition to compel arbitration of the same dispute when the association showed the homeowner refused to participate in arbitration.

Forest Meadows Owners Ass'n v. State Farm Gen. Ins. Co., 2012 WL 1205204 (E.D. Cal. 2012).

The President of an association fired a security guard without consulting with the other board members. The security board then sued the association for wrongful termination. When the association tendered a defense to their Insurance Policy, their claim was denied. The security guard alleged intentional termination and the association’s insurance coverage provider only covered for negligent, “wrongful acts.” After interpreting the insurance contract between the parties, the court held the insurance company did not have a duty to defend the lawsuit – a “wrongful act” does not include wrongful termination.

Fourth La Costa Condominium Owners Ass’n v. Seith, 159 Cal. App. 4th 563 (2008).1. Association enacted a statute effective for a term of 40 years with an

automatic extension of 10 years upon expiration. Owner argued, among other things, that the provision in the CC&Rs violated Civil Code Section 1357 (now Section 4265) because it provided for an extension beyond what the statute allows. The court found the CC&Rs to be enforceable. It held that Section 1357 (now Section 4265) does not apply to CC&Rs that include an automatic renewal provision.

2. During a petition by an association to the court, an owner argued that the association violated Civil Code Section 1353.6 (now Section 4710) because it restricted the maintenance of advertisements in the development. The association limited commercial signage to one sign per unit that is up to 18 by 24 inches, professionally printed and placed on the unit’s window. The court held that under Section 1353.6 (now Section 4710), signs advertising property constitute commercial speech, which is not protected by the law prohibiting associations from restricting signage.

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3. Association petitioned to the court to reduce the percentage of votes necessary to amend its bylaws and CC&Rs. The court approved the association’s request for reduction. Owner argued, among other things, that the court exceeded its authority and applied an improper standard in its decision. The court held that an association can petition for the court to reduce the percentage of votes necessary to pass amendments.

4. Homeowner challenged the validity of a provision in an association’s CC&Rs, arguing, among other things, that because the governing documents did not expressly allow mail ballots to replace actual voting, the provision was invalid. The court, however, held that under Corporations Code Section 7513, mail balloting is permitted unless it is expressly prohibited by the governing documents, and therefore will be enforceable even when not mentioned in the documents at all.

See also Mission Shores Ass’n v. Pheil, 166 Cal. App. 4th 789 (2008) (holding that petition for the court to reduce percentage of votes necessary to pass amendment limiting leases to a minimum of 30 days is reasonable).

Frances T. v. Village Green Owners Ass’n, 42 Cal. 3d 490 (1986).Directors of an association knew of a crime wave in the condominium complex and knew that one of the causes of crimes was the poor lighting in the complex. Despite owner’s complaint that a burglary occurred at her unit because of the poor lighting, the association, and the directors, did nothing to mitigate the problem. Owner personally installed lights in the interior of her unit but was forced to remove them by the association. She was subsequently attacked in her unit. Accordingly, she sued the association and the directors for negligence. The court held that the directors may, under special circumstances, be personally liable for owner’s injuries suffered by a third party.

Franklin v. Marie Antoinette Condominium Owners Ass’n, 19 Cal. App. 4th 824 (1993).

Condominium owner sued association alleging that its failure to repair the plumbing in the development had caused water damage to her hardwood floors. Association invoked a provision in the CC&Rs that limited its liability for non-negligent damage. Owner argued that such provision was invalid as against public policy. The court found the provision to apply. It held that exculpatory clauses, which limit association liability, in the CC&Rs do not violate public policy as applied to these circumstances.

Friars Vill. Homeowners Ass'n v. Hansing, 220 Cal. App. 4th 405 (2013).A homeowner challenged association’s rule prohibiting a person from obtaining a position on the Board if that person is related by blood or marriage to any current Board member or candidate. Homeowner argued that the relationship rule violated Civil Code Section 1357.100 (now Section 4340) because it exceeded the Board’s authority and was inconsistent with the Board’s governing policies. The court held that the relationship rule was

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consistent with governing policies and was within the association’s authority as a legitimate response to business concerns.

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Glen Oaks Estates Homeowners Ass’n v. Re/Max Premier Properties, 203 Cal. App.4th 913 (2012).

An association brought action against developer’s real estate agents, after a landslide damaged common areas of the association. The association argued they would not have purchased their home if the realtors had given them correct information regarding the soil. Realtors argued association lacked standing and any claims belonged to individual homeowners who purchased the lots. The court held the association has standing, under Civil Code Section1368.3 (now Section 5980), to bring suit in all matters pertaining to damage to the common area.

Golden Rain Foundation v. Franz, 163 Cal. App. 4th 1141 (2008).Owners in a common interest development demanded that the association produce certain documents as required by the Davis-Stirling Act. Associationrefused, arguing, among other things, that since it was established prior to the enactment of the Act, it is not bound by it. The court disagreed. It held that The Davis-Stirling Act controls common interest developments established before the Act’s enactment.

Greystone Homes Inc. v. Midtec, Inc., 168 Cal. App. 4th 1194 (2008).Homeowners made claims against homebuilder, under Civil Code Section 895 et seq. (the Right to Repair Act), for damages caused by defective plumbing fittings. Homebuilder replaced the fittings and sued the fittings’ manufacturer for negligence and indemnification for the costs it incurred in replacing the fittings. Manufacturer argued that (1) under Section 895, only homeowners have a cause of action for construction defects, and (2) the standards outlined in Section 896 refer only to the installation of plumbing products, and therefore the liability created by Section 896 is to the builder who installs the system, rather than actual product manufacturer. The court concluded that (1) under Section 895, while homebuilder cannot sue manufacturer directly, it can sue manufacturer for indemnification when the action is based on a joint obligation to a third party (the homeowner). The court also concluded that (2) under Section 896, the standards for bringing action are not limited to claims based on installation of plumbing products.

Grossman v. Park Fort Washington Ass’n, 212 Cal. App. 4th 1128 (2012).Homeowners who renovated their backyard brought action against association after association improperly fined homeowners for alleged violations of the governing documents. The trial court found in favor of the homeowners and awarded them attorney fees and costs pursuant to Civil Code Section 1354(c) (now Section 5975). The court affirmed the award, interpreting Section 1354(c) (now Section 5975) to include attorney fees and costs incurred in pre-litigation alternative dispute resolution.

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Haley v. Casa Del Rey Homeowners Ass’n, 153 Cal. App. 4th 863 (2007).Owners sued the association, as well as board members and other owners, for multiple causes of action. The owners argued that the association engaged in discriminatory enforcement of the CC&Rs by allowing patio extensions that encroach into the common area. The association allowed such patios according to an amendment it passed. The court held that such amendment was not unreasonable. It ultimately held that an association does not have to litigate every violation of the CC&Rs, but rather has the discretion to choose how to remedy the violation without resorting to litigation.

Harvey v. Landing Homeowners Ass’n, 162 Cal. App. 4th 809 (2008).Condominium owner brought action against homeowners association after association granted access to common area attic space accessible only through fourth floor units. Homeowner argued that the association acted outside the scope of its authority in granting access to the space. The court applied the “rule of judicial deference” which mandates a degree of deference to the association’s business judgments. In applying this rule, the court deferred to the association’s authority and presumed expertise regarding its sole and exclusive right to maintain, control and manage the common areas of the property.

Heiman v. Workers’ Compensation Appeals Board, 149 Cal. App. 4th 724 (2007).With HOA approval, a property management company hired contractor to install rain gutters. The contractor was unlicensed and uninsured. On the first day of the job, contractor’s “employee” was severely injured. In a challenge over liability and workers’ compensation, the court held the property management company, and the contractor, were dual employers jointly and severally liable for workers’ compensation. The property management company also imputed its liability to the homeowners association,consistent with the Davis-Stirling Common Interest Development Act. No liability was imputed to the individual homeowners.

Holmes v. Petrovich Development Company, 191 Cal. App. 4th 1047 (2011).An employee sued their employer for discrimination. In the course of litigation, employee used her work computer to email her attorney, despite work policies prohibiting the use of email for personal business. The employer sought to present these emails, from employee to attorney, during trial and the employee refused, asserting attorney-client privilege. The court held theemails did not constitute attorney-client privilege because the employee sent the email knowing her employer had access to her computer, knowing her employer had authority to review emails sent from her computer, and knowing her email account was not private.

Huntington Cont’l Town Ass’n., Inc. v Miner, 222 Cal. App. 4th Supp. 13 (2014).After owners failed to pay association fees, association sought to foreclose on an assessment lien against owners, and brought an action for damages of payments not received. After the lawsuit commenced, the owners tendered

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partial payments of their overdue assessments, but the homeowners association rejected some of their payments. The court denied the lien foreclosure, holding that Section 1367.4 (now Section 5705) of the Davis-Stirling Act requires anassociation to accept partial payments of delinquent assessments even after litigation has commenced.

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In re Antonio Cisneros, 12-10468, 2012 WL 4627833 (Bankr. N.D. Cal. Oct. 1, 2012).Debtor homeowner filed bankruptcy and objected to claims filed on behalf of the association for the payment of collection fees incurred by a third company collection agency hired by the association to recover delinquent payments. Pursuant to the contract between the association and the collection agency, the fees in question were not for unpaid HOA dues and would not be paid by the association should the agency be unable to collect them. Agreeing with the homeowner, the court held that the homeowner was not liable for the fees because they were not costs actually incurred by the association, and therefore were not allowable under Civil Code Section 1366.1 (now Section 5600(b)).

In re Moreno, 479 B.R. 553 (Bankr. E.D. Cal. 2012).Association obtained default judgment against homeowner after homeowner was discharged from bankruptcy. The homeowner had made payments to the association post-petition and objected to the judgment, arguing that the association had applied some of her post-petition payments to her pre-petition debt (in violation of the bankruptcy discharge injunction). The court found for the homeowner, holding that while the homeowner did owe assessments and other charges associated with the assessments that were levied post-petition, the default judgment obtained by the association is unenforceable to the extent it includes interest and attorney’s fees that were discharged in the bankruptcy case. Essentially, this meant the association could not collect interest or attorney’s fees post-petition, to the extent they were related to dues that had been assessed pre-petition. Furthermore, it was not relevant whether the association thought they were honoring the discharge, the association’s intended actions and the fact that they knew the discharge injunction was applicable were enough to subject the association to sanctions.

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James F. O’Toole Co., Inc. v. LA Kingsbury Ct. Owners Ass’n, 126 Cal. App. 4th 549 (2005).

Civil court rendered judgment ordering homeowners association to pay fees to an insurance adjuster who performed work for the association. Associationfailed to pay and adjuster obtained court order to force the association to collect emergency assessment from owners. The association argued that Civil Code Section 1366 (now Sections 5605, 5610, and 5620) does not give the association such power. The court held that Section 1366 (now Section 5610)permits special increase in assessments for emergency situations, including a court order to pay.

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Kaplan v. Fairway Oaks Homeowners’ Ass’n, 98 Cal. App. 4th 715 (2002). Member of a nonprofit association petitioned the court to determine the validity of elections under Corporations Code Section 7616 but without any substantive cause. Court ruled against him and ordered him to pay attorney fees to the association. He argued that under Section 7616, he has a right to challenge the election and should not be required to pay association’s attorney fees. The court held that while Section 7616 provides a voting member with a procedural method to challenge the elections, the section does not create any substantive rights, and the challenger can be liable for attorney fees if found to be without cause.

KB Home Greater Los Angeles, Inc. v. Superior Court, 223 Cal. App. 4th 1471 (2014).Insurance company sought subrogation from builders after a pipe burst,resulting in a water leak in one of its insured homes. The insurance company fixed the leak before notifying builder or affording builder an opportunity to repair the damage. The court held that Section 910 of the Right to Repair Act requires notice of damage to builders before repairs are made, even if the damage is catastrophic.

Kovich v. Paseo Del Mar Homeowners Ass’n, 41 Cal. App. 4th 863 (1996).Buyer sued the association for failure to disclose construction defects in his new townhouse. The court dismissed the case. It held that even under Civil Code Section 1368 (now Section 4525), the association is not required to disclose construction defects to the potential buyer, but it is rather the seller who has such duty.

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La Jolla Mesa Vista Improvement Ass’n v. La Jolla Mesa Vista Homeowners’ Ass’n,220 Cal. App. 3d 1187 (1990).

Homeowners association obtained a majority vote from members of the development to modify the CC&Rs governing the development. A second homeowners association sought to stop the modifications and obtained 7 signatures from owners who agreed to revoke their vote. The second association then sued the first association to stop the application of the new CC&Rs. The court held that under Corporations Code Section 7513, unless expressly permitted by the governing documents, homeowners’ written consents to changes in the CC&Rs are binding and cannot be revoked.

Lake Arrowhead Chalets Timeshare Owners Ass’n v. Lake Arrowhead Chalets Owners Ass’n, 51 Cal. App. 4th 1403 (1996).

Association amended its bylaws to restrict the voting power of a certain class of directors on the board of the association. The restricted class of directors sued the association seeking to invalidate the new bylaws claiming they violate Corporations Code Section 5041. The court held that under Sections 5041

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and 7150, amendments to association’s bylaws are invalid when they adversely affect the voting rights of certain minority classes.

Lamden v. La Jolla Shores Clubdominium Homeowners Ass’n, 21 Cal. 4th 249 (1999).Condominium building suffered from termites. The association decided to “spot-treat” rather than fumigate. As a result, an owner sued the association for damages, arguing that the association violated Civil Code Section 1364 (now Section 4775(a)) by failing to adequately repair the problem. The court found for the association. It held that the association’s decision to use a “spot-treatment” to resolve the termite problem will be upheld so long as the association acted in good faith effort to promote the interests of the development.

Landale-Cameron Court, Inc. v. Ahonen, 155 Cal. App. 4th 1401 (2007).Homeowners association brought construction defect litigation against decking and flooring company, asserting negligence and breach of contract claims. Companies moved for summary judgment arguing the applicable three year statute of limitations had run. Association argued the statute of limitations had been tolled, thereby allowing the association to pursue its negligence cause of action. Applying Civil Code Sections 1350 et seq. (now Sections 4000 et seq.), which states notice to the builder of defects tolls all statutes of limitations “against all parties who may be responsible for the defects claimed, whether named in the notice of defects or not … for a period of 150 days or a longer period agreed to in writing by the association and the builder;” the court held the letter between association and builder notifying builder of defective conditions was sufficient notice to toll the statute of limitations.

Lauriedale Associates, Ltd. v. Wilson, 7 Cal. App. 4th 1439 (1992).Owners sued developer for construction defects. Developer cross-complained, suing owners for misusing the property, thereby contributing to the damages. The court dismissed the cross-complaint. It held that under Civil Code Section 1365.9 (now Section 5805), a developer cannot sue owners for construction defects damages they partially caused by misusing the property. The statute does allow, however, the developer to use this theory as a defense to an owner’s suit.

Liberty Mutual Ins. Co. v. Brookfield Crystal Cove LLC, 2013 WL 5377124 (2013).After association repaired water damage in a member’s home, the member’s homeowners insurance provider sued the association to recover the member’s relocation expenses during the repair period. The trial court dismissed the claim, stating that the insurance company was time-barred under the Right to Repair Act. The dismissal was reversed on appeal. The court held that the Right to Repair Act is not the exclusive remedy in construction defect cases where actual damage has occurred. Common law claims for actual property damage are not limited by the Act.

Liebler v. Point Loma Tennis Club, 40 Cal. App. 4th 1600 (1995).Association enacted a provision in its CC&Rs excluding nonresident from the common area tennis courts. Nonresident owner challenged the provision as

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unreasonable towards him. The court found that the provision was reasonable and enforceable. It held that reasonableness under Civil Code Section 1354(now Section 5975) is examined as it applies to the common development interest as a whole, and not an individual owner. But see Major v. Miraverde Homeowners Ass’n, 7 Cal. App. 4th 618 (1992) (holding that when a resident is an 82-year old woman who does not use the recreational facilities in the development, restriction prohibiting her family members from using the facilities instead is unenforceable).

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Market Lofts Community Ass’n v. 9th Street Market Lofts, LLC, 222 Cal. App. 4th 924 (2014).

After building a condominium complex but before an association was formed, developers entered into a parking license agreement to provide parking to the association, homeowners, and occupants of the residential units. A developer-dominated board of directors created a sub-license agreement in which association was required to pay a monthly fee and imposed time limits and late fees. Association brought suit against developers for self-dealing through their sub-license of parking spaces to homeowners that imposed financial obligations not in the original agreement. Developers argued that since homeowners were paying monthly parking fees, the association was on constructive notice of the covenant, and that the sub-license fees were reasonable. The court rejected this argument, holding that under Section 1350 (now Section 5975) of the Davis-Stirling Act, the association had standing on its own and on behalf of the homeowners to sue the developers for profiting from their contractual parking rights and that the developer’s self-dealing of parking fees was against public policy.

Marquez Knolls Property Owners Ass’n v. Executive Risk Indemnity, 153 Cal. App. 4th 228 (2007).

Property owners association brought an action against its liability insurer for failure to provide defense for association against homeowner’s fraud and breach of duties action against the association. Insurer argued “exclusionary clause” in insurance policy excluded coverage under the policy because the action brought by homeowner against association dealt with development/construction which was explicitly excluded in the insurance policy. In making a determination, the court examined three contractual legal principles: (1) exclusionary clauses are construed narrowly against the insurer; (2) if contractual language is clear and explicit, it governs; and (3) the term “arising out of” is broadly interpreted in exclusionary clauses. The court held that the exclusionary clause applied only to the insured’s development/construction actions and did not extend to third party actions regarding the same.

Martin v. Bridgeport Community Ass’n, Inc., 173 Cal. App. 4th 1024 (2009).Non-owner residents sued homeowner association for violation of the governing documents and the Davis-Stirling Act due to its failure to adjust a lot line. The court, however, found that the residents could not bring this action.

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It held that, even under Civil Code Section 1358 (now Sections 4625 et seq.),non-owner residents do not have standing in court to bring actions against the association, only owners do.

McCaffrey Group, Inc. v. Superior Court, 224 Cal. App. 4th 1330 (2014).Homeowners brought construction defect claims against builders. The parties had signed a home purchase contract requiring notice of defect to the builder, the builder’s right to inspect and remedy the defect, and non-binding mediationbefore litigation. Builders argued that the contract was binding in lieu of Chapter 4 of the Right to Repair Act, which sets out prelitigation procedures for construction defect claims. The court determined that the contractual provisions were enforceable, and that contractual agreements for prelitigation procedures that are not unconscionable override the procedures set forth in the Right to Repair Act.

Mission Shores Ass’n v. Pheil, 166 Cal. App. 4th 789 (2008).Association proposed amendment to CC&Rs that required the rental and lease of homes to be at least 30 days. After amendment failed to gain the required homeowner support, Association petitioned the trial court for an order reducing the percentage of affirmative votes required for passage of the amendment. The trial court granted the petition. Homeowner challenged the order arguing the trial court erred in applying Civil Code Section 1356 (now Section 4275)of the Davis-Stirling Act. On appeal, the court held the association’s petition to reduce the percentage of votes required for amendment passage was reasonable under Section 1356 (now Section 4275).

Moran v. Oso Valley Greenbelt Ass’n, 117 Cal. App. 4th 1029 (2004).Member of a homeowners association requested to review minutes from board meetings. The association, without justification, withheld those documents from the member. It delayed, as well as aborted, meetings and demanded a large fee payment before producing the minutes. The court found these circumstances satisfied Corporations Code Section 8337 and held that award of attorney fees was proper.

Multani v. Witkin & Neal, 215 Cal. App. 4th 1428 (2013).After an association commenced a nonjudicial foreclosure sale of a condominium unit for delinquent assessments, the unit owners brought suit to set aside the sale. The owners claimed that the association and its agents did not give the requisite notice under Code of Civil Procedure Section 729.050 of the owners’ right of redemption. The court found that the association and its agents failed to provide any evidence that they complied with both Section 729.050 and Civil Code Section 1367.4 (now Section 5715(b)). Under those code sections, the association and the trustee conducting the sale must “promptly” serve notice of the right of redemption and indicate the exact dates of the redemption period.

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N

Nahrstedt v. Lakeside Village Condominium Ass’n, 8 Cal. 4th 361 (1994).Owner sued the association contending that a pet restriction in the condominium was unreasonable and invalid. The court disagreed. It held that restrictions against pets, as well as any other restriction, can be enforceable against owners, unless an owner can show that enforcement of the restriction is arbitrary, imposes burdens that substantially outweighs its benefits, or violates public policy, as applied to all the owners and not just the complaining owner. (But see Cal Civ. Code §1360.5 (now §4715),Limitations on Pet Restrictions).

Nelson v. Avondale HOA, 172 Cal. App. 4th 857 (2009).After relocating his medical and religious counseling business to his home due to disability, a homeowner sought a preliminary injunction against the homeowners association to stop the association from preventing customers from reaching his home. Running a home business violated the association’s rules and regulations. The court denied the homeowner’s preliminary injunction to stop the association from preventing homeowner’s customers from reaching his home because he was unlikely to prevail on the merits at trial. Particularly, the court noted that the homeowner failed to demonstrate that the association was covered under the Fair Employment and Housing Act.

O

Ostayan v. Nordhoff Townhomes Homeowners Ass’n, 110 Cal. App. 4th 120 (2003).Former owner sued association for violating Civil Code Section 1368.5 (now Section 6150) by failing to inform him of insurance litigation it engaged in. The court dismissed the action. It held that under Section 1368.5 (now Section 6150), the association does not have to inform members about actions it plans to file against an insurance company.

P

Pacific Hills Homeowners Ass’n v. Prun, 160 Cal. App. 4th 1557 (2008).Association brought action against homeowner who built fence and gate in violation of existing CC&Rs. Homeowner contended the action was not subject to the five-year statute of limitations in Code of Civil Procedure Section336(b); arguing 336(b) only governed recorded restrictions. The court concluded that a restriction, as defined in Civil Code Section 784 and applied in Section 336(b), applied to recorded restrictions and any “other form of restriction,” including non-recorded restrictions. Thus, the court found for the association and held 336(b) applied to recorded restrictions as well as non-recorded restrictions.

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Palm Medical Group, Inc. v. State Compensation Ins. Fund, 161 Cal. App. 4th 206 (2008).

Medical clinic sued a nonprofit association for excluding it from membership. The plaintiff argued that it was excluded unfairly, in bad faith, and without a fair opportunity to be heard, in violation of the “procedural fairness doctrine.” The court agreed. It held that the “procedural fairness doctrine” applies to Corporations Code Section 7341, and membership exclusion in violation of the doctrine constituted a cause of action.

Park Place Estates Homeowners Ass’n v. Naber, 29 Cal. App. 4th 427 (1994).Homeowners association sued owner seeking to foreclose on a lien based on unpaid assessments that owner owed. Owner counter claimed against the association seeking to recover damages based on the association’s failure to perform some of its obligations under the CC&Rs. The court held that the owner could not introduce evidence of association’s violation of CC&Rs to defend an action by the association to foreclose on a lien based on unpaid assessments.

Peak Investments v. South Peak Homeowners Ass’n, Inc., 140 Cal. App. 4th 1363 (2006).

Homeowner filed a petition against association in order to reduce the percentage of homeowner votes required to amend the CC&Rs. The trial court granted the petition, stating that more than 50 percent of those who voted did so in favor of the amendment. On appeal, the court held that Civil Code Section 1356 (now Section 4275) requires amendments to the CC&Rs to be approved by at least a simple majority of the total votes in the association.

People ex rel. Groman v. Sinai Temple, 20 Cal. App. 3d 614 (1971).People, through the attorney general, sued a nonprofit corporation operating a cemetery that allegedly collected profit in violation of Section 9200 of the Corporations Code. The cemetery argued that while the corporation was profitable, members did not collect profits but rather used it to fund the costs and expenses of the cemetery. The cemetery further argued that profits were incidental and were not “distributed” to members as prohibited by the statute. The court held that under Section 9200 and Section 7111, nonprofit corporations can realize incidental profits so long as such business is not the main purpose of the corporation.

Pinnacle Museum Tower Ass’n v. Pinnacle Market Development (US), LLC, 55 Cal. 4th 223 (2012).

Association brought suit against developer for damage allegedly caused by construction defects. The CC&Rs contained an arbitration provision, and the developer sought to compel arbitration based on this provision. Finding for the developer, the California Supreme Court held that the arbitration provision contained in the CC&Rs was enforceable against the association, and explained that recorded declarations, or CC&Rs, are considered to be a contract between the developer and the association.

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Posey v. Leavitt, 229 Cal. App. 3d 1236 (1991).Condominium owner brought suit against his neighbor and against the association after the association approved the neighbor’s deck extension.Owner claimed that his neighbor’s deck extension was encroaching on the common area and obstructing his view. A jury awarded owner damages against the association, but also found in favor of the neighbor and denied owner injunctive relief. On appeal, the court remanded the case noting that the owner did not need to prove ownership of the common area in order to make a claim for trespass. The court also stated that under the CC&Rs, the neighborneeded the consent of the other owners in order to build the deck extension.

PV Little Italy, LLC v. Metrowork Condominium Ass’n, 210 Cal. App. 4th 132 (2012).Developer of a mixed use condominium project sued the association to enforce its enhanced Class B voting rights. The developer had previously assigned its rights as the declarant of the CC&Rs pursuant to a foreclosure. The court held that when the foreclosure sale occurred, the assignee had acquired all of the developer’s rights, including the developer’s Class B voting rights.

Q

Quail Lakes Owners Ass’n v. Kozina, 204 Cal. App. 4th 1132 (2012).Association petitioned for an order modifying its CC&Rs to reduce a supermajority voting restriction. One homeowner objected, alleging, among other things, that other homeowners also objected because the manner of notice was insufficient to satisfy due process. Granting the HOA’s petition, the court held that the homeowner lacked standing to assert due process rights of other homeowners in adequate notice and that the trial court was not required to consider letters purportedly submitted by other homeowners where the homeowner who submitted the letters failed to move to vacate the order granting the petition.

Queen Villas Homeowners Ass’n v. TCB Property Management, 149 Cal. App. 4th 1 (2007).

An association board member paid herself for “special services” out of the association’s checking account. The association brought a breach of contract action against its property management company for failing to require signature of two board members on all expense checks and for failing to furnish monthly financial reports to the board. The property management company claimed an indemnity clause, in their contract with the association, precluded it from liability. The court held that the clause related only to third party claims, concluding that the management company can be liable.

R

Raven’s Cove Townhomes, Inc. v. Knuppe Development Co., Inc., 114 Cal. App. 3d 783 (1981).

Association filed suit against developer for both common area and individual unit defects. Additionally, the association brought a breach of fiduciary duty claim against the individual developers and their employees for failing to

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adequately perform their managerial and supervisory responsibilities as initial directors of the association. The trial court found in favor of developer, stating that the association did not have standing to sue for individual unit defects. On appeal, the court reversed the trial court’s decision. The court held that the association had standing to sue in a representative capacity for individual unit damage under Code of Civil Procedure Section 382, and that the developer and its employees were strictly liable for breaching their fiduciary duties. The court also held that the proper measure of damages under Civil Code Section 3333 is the cost of repair.

Ritter & Ritter, Inc. v. The Churchill Condominium Ass’n, 166 Cal. App. 4th 103 (2008).

Condominium owners sued their association under various causes of action, including negligence and breach of fiduciary duty, for damages resulting from odors entering condominium owners’ units through holes between floors of the complex. City permit requirements required the holes to be filled during construction in 1962. Despite the holes not being filled, the complex was issued its Certification of Occupancy after construction and existing city building codes allowed the holes to remain unfilled as “existing, non-conforming conditions.” The owners contended that the condominium association bears the duty to fill the holes, while the association asserted that the condominium owners’ renovation of their units in 1999 triggered an obligation, on their part, to fill the holes adjacent to their units. The court found that Lamden’s rule of judicial deference to associations’ decisions applies only to ordinary repair and maintenance decisions, not to extraordinary situations like those found in the current case. Additionally, while the business judgment rule in California Corporations Code Section 7231 creates a presumption that directors’ decisions are based on sound business judgment, rebuttable by bad faith, it does not create a presumption that the directors acted in good faith in the first instance. The court held that according to traditional tort principles and California case law, a homeowners association:

i. has a duty to exercise due care for the residents’ safety in those areas under its control, such as spaces between floors of the complex; and

ii. is liable to a member who suffers injury resulting from the association’s failure to maintain such areas adequately.

Ruoff v. Harbor Creek Comm. Ass’n, 10 Cal. App. 4th 1624 (1992).A woman slipped and fell on a stairway in the common area of a condominium complex and sustained injury. She sued multiple homeowners to recover damages. The homeowners argued that as owners of the common areas, Civil Code Section 1365.7 (now Section 5800) protects them from liability. Plaintiff argued that the immunity of Section 1365.7 (now Section 5800) is expressly reserved to volunteer association officers and directors. The court agreed with the plaintiff and held that Section 1365.7 (now Section 5800) does not apply to the homeowners, and accordingly they may be liable for injuries

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sustained in common areas, even if the association has the duty to manage those areas.

S

Salawy v. Ocean Towers Housing Corp., 121 Cal. App. 4th 664 (2004).Residents filed suit against their housing cooperative after relying on cooperative’s statements regarding repairs of earthquake damage. The trial court found in favor of the cooperative and awarded it attorney fees under Civil Code Section 1354(f) (now Section 5975). On appeal, the court held thatunder Section 1354(f) (now Section 5975), attorney fees are applicable only when the purpose of the action is to enforce the association’s governing documents.

Salehi v. Surfside III Condominium Owners’ Ass’n, 200 Cal. App. 4th 1146 (2011).Unit owner brought action against association, alleging 10 causes of action,including misrepresentation and fraud. Owner voluntarily dismissed eight causes of action based on faulty reasoning that because an expert witness was sick, and therefore unavailable, that the unavailability did not constitute good cause for a continuance. Court held that the association was the “prevailing party,” for purposes of awarding attorney’s fees on dismissed causes of action.

SB Liberty, LLC v. Isla Verde Ass’n Inc., 217 Cal. App. 4th 272 (2013).Homeowners sought to enjoin association from interfering with their attorney’s ability to attend and participate in association board meetings. The court held that neither the First Amendment nor the Open Meeting Act required the association to allow the homeowners’ attorney to attend board meetings.Under Civil Code Section 1363.05 (now Section 4900 et seq.), the association is only required to allow members to attend meetings.Members cannot transfer their rights arising from membership.

Schmidt v. Bank of America, N.A., 223 Cal. App. 4th 1489 (2014). Landowners brought an action against association and Bank of America as owners of adjacent land with a dominant easement over the landowners’ property. Landowners sued for trespass and nuisance for structures built on and around the easement that was reserved as a right of ingress and egress.Bank of America and the association argued that the gate and structures built under the easement fell within the scope of the easement “for public road purposes.” The court sided with landowners, holding that under Section 1365.9 (now Section 5805), both the association and Bank of America were liable for the tort cause of action.

Siena Court Homeowners Ass’n v. Green Valley Corp., 164 Cal. App. 4th 1416 (2008).A condominium association brought a construction defect action against its developer. The association shared some common area facilities with a neighboring community, which in exchange shared 48% of the maintenance costs of the facilities. The neighboring community association sought to join the action as an indispensable party. The court refused to allow the

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neighboring association to join, holding that the disposition of the construction defect action would not affect the interests of the neighboring community, because its maintenance obligation would remain unchanged and it would still be able to protect its interests in the facilities. Therefore, the neighboring association was not an indispensable party, and was not entitled to join in the action.

Smetherham v. Laundry Workers’ Union, Local No. 75, 44 Cal. App. 2d 131 (1941). Expelled nonprofit association member sued the corporation to compel reinstatement of his membership, arguing that he was wrongfully and illegally expelled. The nonprofit association argued, among other things, that the courtmust not interfere with the association’s decision. The court disagreed. It held that while courts should generally refrain from interfering with an association’s decision to expel a member, courts can properly review those decisions under Corporations Code Section 7341, if such decisions were made in bad-faith or were not authorized by the association’s bylaws.

Standard Fire Insurance Co. v. Spectrum Community Ass’n, 141 Cal. App. 4th 1117 (2006).

A homeowners association brought an action against its developer for construction defects. The developer insurer argued that the association could not bring a construction defect action because it did not exist at the time the defect arose. The court disagreed. It held that a condominium association can sue developer for construction defects in the community even though the association did not exist when the defect occurred, because the association was the first entity capable of bringing such a legal claim, and therefore must be able to hold such a cause of action.

Standard Pacific Corp. v. Superior Court, 176 Cal. App. 4th 828 (2009).A class of homeowners brought a construction defect action against the developer. The complaint, however, did not allege that the homeowners complied with SB800 pre-litigation procedure and gave the developer an opportunity to repair. The developer filed a motion to stay the proceedings to allow compliance with SB800. However, the homeowner objected, arguing that the developer waived his entitlement to be governed by the SB800 pre-litigation procedure because it failed to produce documents under Civil Code Section 912. The homeowners did not, however, provide any affirmative evidence to show that the developer failed to produce documents. The Court of Appeals held that it was the homeowners’ (the plaintiff) burden to show that the developer failed to comply with SB800 so as to fall out of its protection.

Starlight Ridge South Homeowners Ass’n v. Hunter-Bloor, 177 Cal. App. 4th 440 (2009).

Homeowners association sued a homeowner to compel repair of a drainage ditch which was located both within homeowner’s lot, and within the landscape maintenance area. The CC&Rs assigned general responsibility for landscape maintenance areas to the association and assigned specific responsibility to owners for maintenance of drainage facilities located on owners’ lots. The

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neighboring association to join, holding that the disposition of the construction defect action would not affect the interests of the neighboring community, because its maintenance obligation would remain unchanged and it would still be able to protect its interests in the facilities. Therefore, the neighboring association was not an indispensable party, and was not entitled to join in the action.

Smetherham v. Laundry Workers’ Union, Local No. 75, 44 Cal. App. 2d 131 (1941). Expelled nonprofit association member sued the corporation to compel reinstatement of his membership, arguing that he was wrongfully and illegally expelled. The nonprofit association argued, among other things, that the courtmust not interfere with the association’s decision. The court disagreed. It held that while courts should generally refrain from interfering with an association’s decision to expel a member, courts can properly review those decisions under Corporations Code Section 7341, if such decisions were made in bad-faith or were not authorized by the association’s bylaws.

Standard Fire Insurance Co. v. Spectrum Community Ass’n, 141 Cal. App. 4th 1117 (2006).

A homeowners association brought an action against its developer for construction defects. The developer insurer argued that the association could not bring a construction defect action because it did not exist at the time the defect arose. The court disagreed. It held that a condominium association can sue developer for construction defects in the community even though the association did not exist when the defect occurred, because the association was the first entity capable of bringing such a legal claim, and therefore must be able to hold such a cause of action.

Standard Pacific Corp. v. Superior Court, 176 Cal. App. 4th 828 (2009).A class of homeowners brought a construction defect action against the developer. The complaint, however, did not allege that the homeowners complied with SB800 pre-litigation procedure and gave the developer an opportunity to repair. The developer filed a motion to stay the proceedings to allow compliance with SB800. However, the homeowner objected, arguing that the developer waived his entitlement to be governed by the SB800 pre-litigation procedure because it failed to produce documents under Civil Code Section 912. The homeowners did not, however, provide any affirmative evidence to show that the developer failed to produce documents. The Court of Appeals held that it was the homeowners’ (the plaintiff) burden to show that the developer failed to comply with SB800 so as to fall out of its protection.

Starlight Ridge South Homeowners Ass’n v. Hunter-Bloor, 177 Cal. App. 4th 440 (2009).

Homeowners association sued a homeowner to compel repair of a drainage ditch which was located both within homeowner’s lot, and within the landscape maintenance area. The CC&Rs assigned general responsibility for landscape maintenance areas to the association and assigned specific responsibility to owners for maintenance of drainage facilities located on owners’ lots. The

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court found that according to California Code of Civil Procedure Section 1859, where two inconsistent provisions appear to govern the same matter, the more specific provision controls over the general provision. Accordingly, the owner has the duty to repair the drainage ditch on his lot.

Stonegate Homeowners Ass’n v. T.A. Staben, 144 Cal. App. 4th 740 (2006).Association hired a contractor who hired a subcontractor to waterproof retaining walls and install back drains. After discovering seepage and drainage problems, the association sued the contractor and subcontractor for negligence.The association did not introduce expert testimony with respect to the alleged construction defects. Instead, the association only introduced the testimony of laymen who observed and experienced the defects. The Court of Appeal held that the standard of care of a contracted party and its breach in the construction defect context must usually be established through expert testimony, though lay testimony may suffice where construction defects “are of such common knowledge that men of ordinary education could easily recognize them.”

T

Tesoro Del Valle Master Homeowners Ass’n v. Griffin, 200 Cal. App. 4th 619 (2011).Homeowners installed solar energy system in violation of CC&Rs and after an executive session, but without a full vote of the membership, the associationbrought suit alleging breach of contract and negligence. Homeowners cross-claimed for breach of contract and breach of the California Solar Rights Act. The court held that the evidence was sufficient to support finding that HOA complied with CC&Rs when bringing action against homeowners without a full vote of its membership.

Thaler v. Household Finance Corp., 80 Cal. App. 4th 1093 (2000).Buyer of a condominium, who bought the property at a foreclosure sale resulting from an assessment lien under Civil Code Section 1367 (now Section 5680), sued a holder of a second deed to the property, recorded before the assessment lien. The court dismissed the case. It held that under Section 1367(now Section 5680), a deed, recorded before an assessment lien, has priority over the lien despite any contradicting rule in the CC&Rs.

Thompson v. Toll Dublin, LLC, 165 Cal. App. 4th 1360 (2008).Owners brought action against developer for multiple causes of action, including non-construction defect claims. Developer moved to compel the plaintiffs to arbitrate the claims, as required by the construction contract and SB-800. The court held that under SB-800 and Civil Code Section 943, dispute resolution provisions only apply to construction defect claims.

Tilley v. CZ Master Ass’n, 131 Cal. App. 4th 464 (2005).An association hired BonaFide to handle its security. Tilley, an employee of BonaFide, was injured while trying to break up a party on the association’s premises. Tilley brought suit against the association for injuries suffered, arguing the association owed him a duty to provide safe premises to guard and acted negligently for failing to do so. Under the “peculiar risk doctrine,” a

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person who hires an independent contractor to perform work that is inherently dangerous can be held liable for tort damages when the contractor’s negligent performance of the work causes injuries to others. Here, the court held that there was no evidence the association’s retained authority over the premises in any way affirmatively contributed to Tilley’s injuries and found no liability on the part of the association.

Treo @ Kettner Homeowners Ass’n v. Superior Court, 166 Cal. App. 4th 1055 (2008).An association brought action against developer alleging construction defects.Developer petitioned for general judicial reference under the terms of declaration in CC&Rs, noting that the association has waived its right to a jury trial. The association argued the CC&Rs were not a contract within the meaning of Code of Civil Procedure Section 638, and therefore the waiver of a jury trial, as required by the CC&Rs, was not entered into knowingly and voluntarily and therefore invalid. The court held that treating CC&Rs as a contract such that they are sufficient to waive the right to trial by jury does not comport with the importance of the right waived, and found the CC&Rs were not a valid contract in the context of Section 638.

V

Villa De Las Palmas Homeowners Ass’n v. Terifaj, 33 Cal. 4th 73 (2004).Homeowner association sued unit owner to enforce a restriction prohibiting pets in the units. Unit owner argued that the covenant should not apply because it was added after she had bought the unit. The court held that valid restrictions apply to an owner even when added after the owner had bought the property.

W

Westbrook v. Social Center Hall Ass’n of Stockton, 148 Cal. App. 2d 815 (1957).A group of members in a nonprofit corporation initiated proceedings to dissolve the corporation. Such proceedings require that at least one third of the members bring the action. Other members, opposing the dissolution,demanded inquiry into the validity of the plaintiffs’ membership, arguing that some of the memberships have been terminated, thereby taking away their power to be part of the proceedings and eliminating the action all together due to failure to have one third of the members be part of the action. The court held that such inquiry is necessary because membership can be terminated according to the rules in the articles or bylaws of the corporation or by the death of the member.

White v. Cox, 17 Cal. App. 3d 824 (1971).Homeowner tripped on a negligently maintained sprinkler in a common interest development and sued the association for negligence. The association argued that the plaintiff, as a member of the association, is an agent of the association, and therefore cannot sue the association for damages it sustains as a result of the association’s negligence. The court disagreed. It held that a member of an unincorporated nonprofit association can bring action for personal injury

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against the association when caused by the negligent maintenance of the common area.

Windham at Carmel Mountain Ranch Ass’n v. Superior Court, 109 Cal. App. 4th 1162 (2003).

Condominium association sued developer for damages based on, among other causes, construction defects and breach of implied warranties. Developerargued that even under California Code of Civil Procedure Section 383, since an individual homeowner had already sued the developer, the association lost its right to represent homeowners in bringing action against the developer on their behalf. Alternatively, the developer argued that Section 383 limits the association in actions representing the homeowners to tort actions. The court held that Section 383 entitles the association to bring action against a developer on behalf of homeowners, even if some individual homeowners have already sued the developer personally. Additionally, Section 383 does not limit such actions to tort actions but rather permits actions in breach of contracts and warranties.

Wittenberg v. Beachwalk Homeowners Ass’n, 217 Cal. App. 4th 654 (2013).Association members filed suit in order to invalidate the results of the association’s election to amend the CC&Rs. The petitioning members claimed that the board had engaged in advocacy for the amendment when the board used “association media” to promote the amendment without giving equal access to the opposing viewpoint. In addition, the board denied members’ request to use a common area for election activities. The court held that suchadvocacy violated Civil Code Sections 1363.03(a)(1) and 1363.03(a)(2) (now Section 5105).

Wolf v. CDS Devco, 185 Cal. App. 4th 903 (2010). A corporate director brought action against a corporation to seek enforcementof the absolute rights of a director to inspect the corporation’s records under California Corporations Code Section 1602. During the proceedings, the corporate director’s term expired and, consequently, the action was dismissed because the now former corporate director lacked standing to continue the lawsuit. The court of appeals held that Section 1602 gives only current corporate directors an absolute right to inspect corporate records, and this right is inapplicable to any former director even if the director was currently serving at the time the action to enforce Section 1602 was commenced.

Worldmark v. Wyndham Resort Development Corp., 187 Cal. App. 4th 1017 (2010).A non-profit mutual benefit corporation filed a petition under California Corporations Code Section 8331 to set aside one of its member’s demand to inspect and copy the list of all members’ email addresses pursuant to California Corporations Code Section 8330. The member made numerous demands to the corporation to produce the email addresses of the other 260,000 members for the purpose of proposing an amendment to the corporation’s bylaws. The corporation denied all requests claiming that Section 8330 only granted the member the right to access other members’ physical addresses and did not grant

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the member the right to access other members’ email addresses. The court ordered the corporation to provide members’ email addresses to the member and held that Section 8330 is broad enough to encompass email addresses when the corporation maintains this information and the bylaws do not state otherwise.

Y

Yan Sui v. Price, 196 Cal. App. 4th 933 (2011). An association amended its rules to prohibit inoperable vehicles from parking in inside the development. After the rule was enacted, a notice was placed on a homeowner’s car that it will be towed away if not removed because it is in violation of the rule. Subsequently the car was towed by the association. The homeowner contested the association action, bringing action for multiple causes of action against it. The homeowner argued that the rule was unreasonable under Civil Code Section 1354 (now Section 5975), and therefore unenforceable. Additionally, the homeowner argued that the rule was unenforceable because it was not recorded. The court held for the association. It concluded that a rule prohibiting inoperable and disabled vehicles from parking spaces was reasonable and not discriminatory, and therefore enforceable. It also concluded that the failure to record the rule with the county did not render it void.

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A

Alternative Dispute Resolution,111, 113, 117, 121-124, 133, 151, 266

Amending, 2, 3, 134, 163, 170, 176, 190, 228

Amending the CC&Rs, 3Amendments, 2, 170, 228Americans with Disabilities Act,

258Animals, 26Antenna, 38, 43, 76Architectural Guidelines, 24Articles, 1, 2, 12, 24, 162, 170,

179, 187, 228, 231Articles of Incorporation, 1-3, 12,

33, 41, 62, 68, 162, 187, 231Assessments, 25, 34-37, 40, 44, 46,

47, 57, 68, 69, 105, 108, 113-116

B

Ballots, 13, 32, 33, 44, 89, 90, 217Budget, 1, 12, 16, 17, 18, 52, 68, 96-98, 103, 104, 107, 108, 119, 181Bylaws, 1, 2, 8, 12, 68, 162, 163,

180, 185, 186, 187, 189-192

C

Calderon, 263Campaign Funding, 13, 33, 44, 91CC&Rs, 1, 2, 3, 68, 256-260, 263-

281Civil Action, 33, 37, 44, 48, 49, 87,

91, 122, 124, 134Commercial, 56, 259Common Area, 6, 14, 15, 18, 25,

52-60, 63, 64, 66, 71-83, 87, 88, 99, 109, 115, 116, 119, 120, 125, 142, 258, 262, 266, 267, 270, 275-277, 281

Community Service, 35, 37, 39, 46, 53, 107

Comparative Fault, 37, 48, 125Condominium, 1, 4, 5, 15, 26, 254,

259, 263, 264, 265, 267, 270, 273, 276, 281

Construction Defect, 9, 27, 28, 49, 125

Corporations Code, 2, 8, 10-12, 160-244

Covenants, 1, 2, 9, 31, 40, 48, 57, 124

Creation of a Common Interest Development, 40

Cumulative Voting, 32, 44, 89, 220

D

Damages, 141, 158Davis-Stirling Act, 1-12, 17, 18,

266, 271, 272Defects, 17, 27, 55, 67, 68, 105,

119, 125, 126, 129, 130, 131, 133, 134, 146, 255, 257, 260, 263, 266, 269, 270, 274, 275, 278, 279, 280, 281

Defects, 140, 141, 142, 151, 152, 153, 155, 260

Department of Real Estate, 2, 3, 7, 8, 10, 96, 101, 149

Developer, 140, 141, 148, 150, 151, 152, 153, 154, 155, 158, 270, 279, 280, 281

Discipline, 11, 13, 64, 86, 98, 120Disclosure, 9, 11, 13, 67, 68, 69,

128, 134, 255Dissolution, 167, 180, 182, 185,

188, 190, 200, 204, 207, 208, 209, 210, 212, 218, 229, 234, 242, 280

E

Egress, 66, 277Election Procedure, 88

285

Emergency Assessment, 18, 132, 268

Enforcement, 4, 24, 68, 111, 116, 121, 123, 124, 133, 156, 251, 253, 267, 273, 281

Exclusive Use Common Area, 64, 79, 82, 83, 262

Executive Session, 11, 12, 52, 67, 85, 86, 87, 111, 113, 120, 279

F

Fees, 5Fiscal year, 17, 93, 96, 98, 105,

107, 108, 235, 236, 237Flags, 31, 42, 75Foreclosure, 20, 21, 25, 36, 37, 45,

47, 101, 113, 114, 116

G

Governing Documents, 1-14, 17, 24, 25, 40, 56

H

Handicapped, 32, 43, 80

I

Ingress, 32, 41, 66Inspectors, 12, 88, 89, 90, 225, 241Insurance, 12, 13, 15, 26, 72, 79,

97, 100, 109, 118, 119, 127, 151, 152, 180-183, 189, 203, 207, 254, 264, 268-273

Insurance, 44, 82, 183Internal Dispute Resolution, 73,

121

L

Liability, 174, 243Liens, 18, 21, 109, 112, 115, 116,

186, 261Liens, 18, 46, 103Litigation, 28, 46, 84, 91, 101, 103

M

Maintenance Obligations, 14, 140, 148

Managing Agent, 9, 54, 55, 57, 62, 85, 86, 99, 100, 101, 102, 125, 254, 256

Marketing Provisions, 31, 40, 58Mediation, 18, 121, 122, 125, 153,

154, 156, 256, 272Members, 8, 9, 166, 167, 169, 173,

207, 209-212, 222, 240, 263Membership, 8, 166, 167, 182, 207-

211Minutes, 10-13, 29, 67, 84, 86, 87,

90, 92, 93, 98, 104, 112, 113, 164, 193-196, 215, 218, 234, 235, 240, 272

Modifications, 80, 81, 269

N

Negligence, 156, 181, 221, 265, 266, 270, 276, 279, 280

Negligence, 141, 156Non-Exclusive Use Common Area,

6Notice, 12, 140, 148, 193, 214, 215Notice of Meeting, 33Notice of Proposed Rule Change, 3

O

Officers, 183Online Education, 9, 32, 45, 101Open Meeting Act, 13, 33, 84, 277Owner, 14, 254, 256, 258, 264,

265, 273, 274Ownership, 5, 6, 41

P

Parliamentary Procedure, 32, 33, 44, 87

Partition, 7, 32, 42, 72Planned Development, 1, 5

286

Property Rights, 5Proxy, 13, 90, 184Public Information, 71

R

Real Estate, 8Record Keeping Requirements, 12Records, 172, 173, 234, 235, 237Regular Assessment, 17Relocation, 82, 158, 270Repairs, 73, 96, 97, 153, 157, 158,

254, 269, 277Reserve Funding, 68, 96, 97, 105,

107Reserve Study, 16, 68, 96, 106, 107Right to Repair, 255, 256, 257,

266, 269, 270, 272Roberts Rules, 28Roofs, 6, 60, 76, 142, 145

S

Satellite, 76SB800, 27, 28, 254, 278Secondary Address, 51Secret Ballot, 12, 87, 89, 90Secretary of State, 2, 13, 30, 58, 62,

101, 102, 103, 149, 176, 182, 186, 188, 230, 232, 233

Settlement, 28

Small Claims, 21, 33, 37, 44, 46, 91, 110

Special Assessments, 16, 17, 18, 19, 57, 66, 67, 97, 105, 106, 108, 109, 114, 132

Special Meetings, 11, 168, 213, 214

Statute of Limitations, 119, 134, 154, 157, 260, 263, 270, 273

Successors, 141, 158Suspension of Members’ Rights, 20

T

Taxation, 78, 102, 176Timeshare, 4, 269Transfer of Membership, 188, 210

V

Vacancy, 162, 164, 184, 196, 197, 199

Volunteer, 161, 165, 180, 201Voting, 168, 169, 185, 213, 219,

222

W

Warranty, 140, 146, 147, 148

Z

Zoning, 3

287

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