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Berding | Weil Community Association ALERT Newsletter
Legal News and Comments for Community Association Boards and Managers Issue #3 • October 2008
Legislative Round-Up
2008 Budget Impasse Impacts CID Legislation
By Sandra M. Bonato, Esq.
Despite the noise over a lot of legislation affecting common interest developments in 2008, once the state's budget impasse was resolved the governor ended up signing only five CID bills. In the tradition of our year-end legislative round-up, this article focuses on the legislation that was signed and that will go into effect on January 1, 2009.
The first two new laws will address solar energy systems installed by owners in CIDs. With the burgeoning interest in both the state and our nation in alternative energy sources, reducing our dependence on foreign oil, and using clean energy sources, these two bills reflect an insistence that community associations come aboard and welcome this technology. While much can still be regulated through well-designed solar policies and rules, the most important aspect of the solar bills will surely be a new CC&R-override by which applications will be "deemed approved" by law if not acted on within 60 days.
AB 1892 (Smyth)
Solar Energy Systems / CC&Rs
Current law (Civil Code $714) provides that any restriction on an interest in real property that effectively prohibits or restricts the installation or use of a solar energy system (as defined) is void and unenforceable.
Effective January 1, 2009, this statute will be expanded to make it clear that existing law applies to "any governing document" as defined in the Davis-Stirling Common Interest Development Act, to which property within common interest developments in California is made subject. This essentially clarifies that unrecorded architectural rules are included among the restrictions on use of separate interests in CIDs in terms of solar energy systems. While there was no dispute that that is what the law already says, AB 1892 will eliminate any confusion, in an effort to promote the use of alternative energy in private communities that have the authority to exercise architectural control.
This particular statute, and the one that immediately follows it (Civil Code $714.1), do continue to allow associations to assert reasonable regulation over such installations, including for aesthetic reasons.
This particular statute, and the one that immediately follows it (Civil Code $714.1), do continue to allow associations to assert reasonable regulation over such installations, including for aesthetic reasons.
AB 2180 (Lieu)
Solar Energy Systems / Architectural Control
AB 2180 is a more specific new law affecting the same statute (Civil Code $714). It beneficially confirms (for every solar installer to see) the principle that owners wishing to install solar energy systems in CIDs must first comply with the architectural application processes in the CC&Rs and architectural rules. However, this new law will also override more liberal approval periods in existing CC&Rs and rules, providing that an owner's application will be deemed approved unless it has been denied in writing within 60 days from the date the association receives the application. Certain exceptions are built into the new law, including where a delay in deciding is the result of a reasonable request for additional information.
Application reviews cannot be willfully avoided or delayed, and associations that willfully violate the section will be liable to the applicant or "other party" (an unknown element) for actual damages that result and for a civil penalty of up to $1,000.
We think in practice there will be few legal claims against associations. Instead, what will happen is prompt installation of not-yet-approved devices if the 60-day deadline is exceeded.
Associations that operate without well-planned solar policies will, under this new law, find themselves scrambling to get competent advice on regulating solar energy systems within the new, required 60-day period. Not only are many associations generally not equipped to turn such sophisticated and often controversial applications around this quickly, the chance for undesired installations are greatly increased when a pro-active policy to guide the board, architectural committee and the owners is not in place.
AB 2846 (Feuer)
Disputed Charges, Fines and Penalties / Payment Under Protest / Small Claims Court Actions
AB 2846 is the only signed bill that will directly amend the Davis-Stirling Act in 2009. Newly added Civil Code section 1367.6 will allow owners (in addition to their existing right to request to meet and confer with their board or a board representative over disputed assessments) to pay disputed assessments, fines and penalties "under protest." If they pay under protest, owners will be entitled to try to recover up to $7,500 of the amount in dispute by filing a complaint in small claims court.
This new section of law, unfortunately, will simply create a new procedural hurdle for owners, who could lose their currently unrestricted right to sue in small claims court if they pay but do not expressly pay "under protest." If there is any benefit to AB 2846, it might be its discussion of paying disputed amounts, including fines which are often ignored.
SB 1511 (Ducheny)
Right to Notice of New Owner Following Lender Foreclosures
Considered an extremely beneficial new law, SB 1511 will amend the state's non judicial foreclosure statutes to allow an association to record a formal request for notice from a foreclosing lender or its trustee of the name and address of the property owner following the lender's foreclosure sale.
Beginning January 1, 2009, associations will be allowed to record a standing request for notice involving all property within the development. Such request for notice would have to be recorded at least 5 days before a foreclosure sale in order to be effective as to that sale and would need to be updated periodically to reflect changes in contact information for a board or management company.
If such a request for notice is of record, lenders or their trustees will be obligated by law to send information about the name and address of the new owner within 15 days following recordation of the trustee's deed upon sale.
Such requests affect title and, for that reason, should be prepared very carefully and, we believe, using knowledgeable legal professionals experienced in preparing legal descriptions for separate interests in a community. The recorded request for notice will be required to contain that information in order for a lender to find it in pulling title information about a property to be foreclosed.
SB 1137 (Perata)
Foreclosure Relief / HUD-Certified Housing Counseling Agencies / Maintenance of Foreclosed Property
Not specifically a CID-related bill, we think SB 1137 (Perata) might help associations indirectly cope with rampant lender foreclosures. By possibly helping owners stay in their homes, SB 1137 might encourage assessment payments and help the incredible numbers of associations currently reeling under assessment bad debt to again generate the funds to operate.
Effective immediately when the governor signed this legislation on July 8, 2008, AB 1137 responds in some measure to the foreclosure distress hitting the state. The Perata legislation requires foreclosing lenders of loans made during a specified time to make additional efforts to contact owners of residential properties to discuss options for borrowers to avoid foreclosure. It requires lenders to provide borrowers with information about HUD-certified housing counseling agencies that can advise owners and who work with both lenders and borrowers to help owners keep their homes.
While finding solutions is voluntary, the dialogue is hopefully opening up chances that might not otherwise have existed. If more owners can keep their homes, the number of lender foreclosures will decrease, in turn helping associations stay afloat when otherwise their own ability to collect assessments is severely impacted by owners walking away from their homes and obligations.
Until January 1, 2013, SB 1137 requires the legal owner to maintain vacant residential property purchased at a lender's foreclosure sale or retained by the lender through a foreclosure under a mortgage or deed of trust. The new law authorizes local government to impose civil fines and penalties of up to $1,000 per day for the owner's/lender's failure to maintain that property. This part of the new law is intended to address property blight and resulting vandalism and criminal activity being experienced in communities worst-hit by the foreclosure crisis. Homes in CIDs are certainly not immune to this phenomenon.
While the new law unfortunately does not contain as much enforcement authority as local governments are saying they need (many are instead deploying code enforcement officers and using penalty assessments on the tax bill as the collection means, with increasing success), the publicity given to the Perata bill throughout the lending community has raised consciousness about the post-foreclosure obligations of lenders when property reverts. Much more vigorous re-sales activity and retention of local property management services by nationwide lenders post-foreclosure seem to be on the rise.
FOR FURTHER STUDY
VETOED BY THE GOVERNOR

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The Berding | Weil 18th Annual Community Association Law Seminar
November 21, 2008.
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People are losing their homes to foreclosure at a rate not seen in decades, if ever.
Many if not most, of those homes were lost by people who could not afford them in the first place…»
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Ok, the Feds just approved $700 billion to "bail out" struggling financial institutions.
Great news for struggling financial institutions but what about other struggling institutions, say like cities, counties, and yes, community associations?
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Sergei Lemberg, an attorney specializing in lemon law, is sitting in the guest blogger's chair today.
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I don't know anyone who doesn't feel at least a little bit of trepidation when they buy a used car.
Always lurking in the back of your mind is the thought that you might just be buying someone else's troubles.
Unfortunately, although every state in the nation has a new car lemon law, few states have lemon laws covering defective used cars…»
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