M-100 California Edition Handout Packet 2022

PROFESSIONAL MANAGEMENT DEVELOPMENT PROGRAM
M-100
>> California Edition
PARTICIPANT
GUIDE
THE ESSENTIALS OF
community
association
management
ACKNOWLEDGEMENTS
Community Associations Institute would like to acknowledge the following

individuals for their contribution in developing the M-100 California
Edition Handout Packet and the California Common Interest
Development Law course.
Course Authors
Kelly G. Richardson, Esq. CCAL

Richardson | Ober, LLP
Matt D. Ober, Esq. CCAL

Richardson | Ober, LLP
Kelly G. Richardson CCAL is a Partner of Richardson | Ober LLP, based in Pasadena

California. Mr. Richardson has received the Martindale Hubbell “AV” peer review rating, the
highest peer rating for ethics and expertise available. Mr. Richardson is a Fellow of CAI’s College
of Community Association Lawyers, and was CAI’s 2016 national President. He is serving his
seventh and final year as a CAI National Trustee. He is a Past President of the Greater Los
Angeles Chapter of CAI and Past Chair of the California Legislative Action Committee. He is a
syndicated columnist, appearing weekly in 14 newspapers from San Diego to Santa Barbara. In
practice since 1983, Richardson is also a licensed real estate broker and member of the California
Association of Realtors. He is author of that organization’s “Guide to the Common Interest
Development.”
Matt D. Ober CCAL is a Partner of Richardson | Ober LLP. Mr. Ober has received the
Martindale Hubell “AV” peer review rating. He is a Past President of the Greater Inland Empire
Chapter and Greater Los Angeles Chapter of CAI, a CAI National Faculty and CACM Faculty
member. Mr. Ober serves on the CLAC Executive Committee and on the Board of Governors of
CAI’s College of Community Association Lawyers and recently concluded his term as President
of CCAL in 2022.
M-100 California Edition Handout Packet All Rights Reserved

TABLE OF CONTENTS
Page
I. LEGAL FOUNDATIONS – SOURCES OF LAW ............................................................... 1
A. Statutes ................................................................................................................. 1
B. Common Law ........................................................................................................ 2
II. CREATION AND ALTERATION OF THE COMMON INTEREST DEVELOPMENT ......... 3
A. Department of Real Estate (DRE) ......................................................................... 3
B. Governing Documents ........................................................................................... 3
C. Revision of Governing Documents ........................................................................ 4
III. TYPES OF COMMON INTEREST DEVELOPMENTS ..................................................... 5
A. Community Apartment ........................................................................................... 5
B. Condominium ........................................................................................................ 5
C. Planned Development ........................................................................................... 5
D. Stock Cooperative ................................................................................................. 5
E. Property Interests .................................................................................................. 6
IV. POWERS OF COMMON INTEREST DEVELOPMENTS ................................................. 7
A. General .................................................................................................................. 7
B. Corporations Code Authority ................................................................................. 7
C. Authority to Pursue Claims .................................................................................... 7
D. Governing Documents ........................................................................................... 8
E. Ultra Vires .............................................................................................................. 8
F. Suspension of Corporate Rights ............................................................................ 8
G. Methods of Document Delivery ............................................................................. 9
V. GOVERNING DOCUMENTS .......................................................................................... 10
A. Hierarchy of Documents ...................................................................................... 10
B. Articles of Incorporation ....................................................................................... 10
M-100 California Edition Handout Packet i

© Community Associations Institute
C. Condominium Plan or Subdivision Map............................................................... 10
D. Declaration of Covenants, Conditions and Restrictions (“CC&Rs”) ..................... 11
E. Bylaws ................................................................................................................. 12
F. Rules and Regulations ........................................................................................ 13
G. Amendments to the Governing Documents ......................................................... 14
VI. BOARD OF DIRECTORS ............................................................................................... 17
A. Governs the Affairs of the Corporation ................................................................ 17
B. Term of Directors ................................................................................................. 17
C. Duties of Directors ............................................................................................... 17
D. Fiduciary Duties ................................................................................................... 18
E. Director Liability ................................................................................................... 18
F. Court Decisions Involving Business Judgment Rule ........................................... 20
G. Insurance ............................................................................................................. 21
H. Removal of Directors, Resignation ...................................................................... 22
I. Filling Vacancies in Board ................................................................................... 23
VII. MEETINGS ..................................................................................................................... 24
A. Membership Meetings ......................................................................................... 24
B. Elections and Voting ............................................................................................ 26
C. Board Meetings ................................................................................................... 28
D. Open Meeting Act (Civ. Code § 4900-4955) ....................................................... 29
VIII. MANAGEMENT OF THE PROPERTY OF THE CID ...................................................... 33
A. Maintenance and Repair Responsibility .............................................................. 33
B. Case Law on Board and Association Maintenance and Repair Responsibility .... 34
C. Construction Defects ........................................................................................... 35
IX. COMMUNITY ASSOCIATION FINANCES AND RECORDS .......................................... 38
A. Assessment Collection – Judicial or Non-Judicial Methods ................................ 38
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B. Limitation on Increase of Assessments And on Amount of Special Assessments
.......................................................................................................................... 38
C. Excessive Assessments ...................................................................................... 38
D. Assessment Collection Remedies For Failure to Pay ........................................... 38
E. Annual Budget Report/Pro Forma Operating Budget .......................................... 40
F. Reserves ............................................................................................................. 41
G. Right of Directors to Inspect Records .................................................................. 43
H. Right of Members to Inspect Documents............................................................. 43
X. COVENANT ENFORCEMENT AND MEMBER DISCIPLINE ......................................... 48
A. Violation of the Governing Documents ................................................................ 48
B. Architectural Review ............................................................................................ 48
C. Ongoing Infractions- Nuisance ............................................................................ 49
D. Special Situations and Protections ...................................................................... 50
E. Dispute Resolution .............................................................................................. 51
F. Fines .................................................................................................................... 51
XI. AREAS OF RISK AND LIABILITY ................................................................................... 53
A. Association Managers – Disclosures ................................................................... 53
B. Employees/Independent Contractors .................................................................. 53
C. Discrimination ...................................................................................................... 58
D. Premises Liability................................................................................................. 59
E. Cases on Premises Liability ................................................................................ 60
F. Federal Law ......................................................................................................... 60
G. California Law: Unruh Act – Civil Rights .............................................................. 62
H. Sales of Residences ............................................................................................ 62
I. Removal of Vehicles ............................................................................................ 64
J. FCC Rules and Regulations ................................................................................ 66
K. Compliance with Local, State and Federal Law................................................... 68
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L. Hazardous Substances ....................................................................................... 68
M. Environmental Legislation ................................................................................... 70
M-100 California Edition Handout Packet iv

TABLE OF AUTHORITIES
Cases Page
Ann M. v. Pacific Plaza Shopping Ctr., 6 Cal. 4th 666, 678-79, 25 Cal. Rptr. 2d 137, 145 (1993)
.............................................................................................................................................. 58
Beehan v. Lido Island Cmty. Ass’n., 70 Cal. App. 3d 858, 865-67, 137 Cal. Rptr. 528, 531-32
(1977).................................................................................................................................... 20
Chantiles v. Lake Forest II Master HOA, 37 Cal. App. 4th 914; (1995) ...................................... 28
Citizens for Covenant Compliance v. Anderson, 12 Cal. 4th 345, 349, 47 Cal. Rptr. 2d 898, 900-
901 (1995) .............................................................................................................................12
Clark v. Rancho Sante Fe Ass’n., 216 Cal. App. 3d 606, 622, 265 Cal. Rptr. 41, 50 (1989) ...... 47
Cohen v. Kite Hill Community Assn., 142 Cal.App.3d 642 (1983) .............................................. 34
De Rubidoex v. Parks, 48 Cal. 215, 219 (1874) ...................................................................... 18
Fountain Valley Chateau Blanc Homeowner’s Ass’n. v. Dept. of Veterans Affairs, 67 Cal. App.
4th 743, 754-55, 79 Cal. Rptr. 2d. 248, 256 (1998) ................................................................. 48
Frances T. v. Village Green Owners Ass’n., 42 Cal. 3d 490, 503-04, 508-09, 229 Cal. Rptr. 456,
463, 466-67 (1986) ..........................................................................................................21, 58
Franklin v. Marie Antoinette Condominium Owners Ass’n., 19 Cal. App. 4th 824, 834, 23 Cal.
Rptr. 2d 744, 750 (1993) ......................................................................................................... 33
Independent Housing Servs. of San Francisco v. Fillmore Ctr. Assocs., 840 F. Supp. 1328,
1341-42 (N.D. Cal. 1993) ........................................................................................................ 59
Ironwood Owners Ass’n. IX v. Solomon, 178 Cal. App. 3d 766, 772, 224 Cal. Rptr. 18, 21 (1986)
..............................................................................................................................................47
Korich v. Paseo Del Mar Homeowners’ Ass’n., 41 Cal. App. 4th 863, 866, 48 Cal. Rptr. 2d 758,
760 (1996) ............................................................................................................................... 62
Nahrstedt v. Lakeside Village Condo. Ass’n., 8 Cal. 4th 361, 383, 33 Cal. Rptr. 2d 63, 76 (1994)
..................................................................................................................................21, 46, 47
Pamela W. v. Millsom, 25 Cal. App. 4th 950, 958-59, 30 Cal. Rptr. 2d 690, 695 (1994) ............ 58
Peak Investments v. South Peak Homeowners Association, 140 Cal App. 4th 1363 (2006) ...... 16
Ritter & Ritter v. The Churchill Condominium Assoc., 166 Cal.App.4th 103; 82 Cal.Rptr. 3d 389
.............................................................................................................................................. 33
Terri Haley v. Casa Del Rey HOA 153 Cal. App. 4th 863 (2007) ................................................ 20
Timor Title Ins. Co. v. Rancho Santa Fe Ass’n., 177 Cal. App 3d 726, 730, 223 Cal. Rptr. 175,
177 (1986) ............................................................................................................................... 12
United States v. Silk, 331 U.S. 704 (1947), 1947-2 C.B. 167................................................ 53, 54
Villa De Las Palmas v. Paula Terifaj, 33 Cal. 4th 73, 14 Cal. Rptr. 3d, 67 (2004) ...................... 12
Statutes
16 U.S.C. 470 ............................................................................................................................. 65
29 C.F.R. § 1604.11 .................................................................................................................... 57
7527........................................................................................................................................... 2
7610-7616............................................................................................................................. 2, 25
Business and Professions Code §11502 .................................................................................... 10
Business and Professions Code Sections 11000-11200 ...................................................... 1, 3, 4
Civ. Code § 4200 ..................................................................................................................... 1, 3
Civ. Code § 1460 ........................................................................................................................ 11
Civ. Code § 2079 ........................................................................................................................ 62
Civ. Code §§4340-4370 .............................................................................................................. 13
Civil Code § 4270, 4260 ............................................................................................................. 15
M-100 California Edition Handout Packet v

Civil Code § 5800 ........................................................................................................................ 19
Civil Code § 5980 .......................................................................................................................... 8
Civil Code Section 51 .................................................................................................................. 61
Civil Code Sections 895-941.5 .................................................................................................... 34
Corp. Code § 7140........................................................................................................................ 7
Corp. Code § 7231.5 ................................................................................................................... 20
Corp. Code § 7511 ...................................................................................................................... 25
Corp. Code § 7512 ...................................................................................................................... 26
Corp. Code § 7513 ...................................................................................................................... 25
Corp. Code § 7613 ...................................................................................................................... 26
Corp. Code § 8334 ...................................................................................................................... 41
Corp. Code §§ 5016; 5032-5034; 7312, 7341; 7527; 7610-7616............................................ 2, 25
Corp. Code §§ 7110-7160; 7210-7238 ................................................................................... 2, 17
Corp. Code §§ 8210-8338 ............................................................................................................ 2
Corporations Code § 208 .............................................................................................................. 8
Davis-Stirling Act ........................................................................................................... 1, 7, 10, 14
Gov. Code § 66426 ..................................................................................................................... 11
Gov. Code §§ 66410-66499.58 ................................................................................................... 11
Health & Safety Code § 1597...................................................................................................... 48
Internal Revenue Code Section 3121(d) ..................................................................................... 52
Section 12926 of the Government Code ..................................................................................... 60
Section 18007 of the Health and Safety Code ............................................................................ 62
Section 8330 ......................................................................................................................... 43, 44
Uniform Common Interest Ownership Act..................................................................................... 1
United States Bankruptcy Code .................................................................................................. 66
Other Authorities
American with Disabilities Act (ADA) .................................................................................... 59, 66
Fair Debt Collection Practices Act .............................................................................................. 66
Fair Housing Act ............................................................................................................. 59, 60, 66
National Historic Preservation Act of 1966.................................................................................. 65
Regs. of the Real Estate Comm’r § 2792.8(a) .............................................................................. 4
Telecommunications Act ............................................................................................................. 66
M-100 California Edition Handout Packet vi

ADDITIONAL RESOURCES
Websites
California Statutes – https://www.caionline.org/Advocacy/LegalArena/Laws/Pages/CA.aspx

California Legislative Action Committee –
https://www.caionline.org/Advocacy/LAC/CA/Pages/default.aspx
Department of Labor – www.dol.gov
Environmental Protection Agency – www.epa.gov
Federal Communications Commission – www.fcc.gov
Internal Revenue Service – www.irs.gov
Occupational Safety and Health Administration – www.osha.gov
State and Federal Statutes –
https://www.caionline.org/advocacy/Pages/default.aspx
Publications
Mary Avgerinos, Conflict Resolution: How ADR Helps Community Associations

(2004). Item #5869.
Byron R. Hanke & Richard S. Ekimoto, Design Review: How Community Associations
Maintain Peace & Harmony (2004). Item #5877.
Debra H. Lewin, Member Dues: How Community Associations Collect Assessments (2005).
Item #5857.
Marvin J. Nodiff, Creating Community Association Law - Digital Book: True Tales from
Early Pioneers (2021). Item #0192-E.
Loura Sanchez & Melissa M. Garcia, Attorneys: How to Find the Right Community Association
Professional (2012). Item #0598.
Clifford J. Treese, Risk Management: How Community Associations Protect Themselves,

(2d ed. 2013). Item #0703.
Clifford J. Treese, Managing & Governing: How Community Associations Function

(2007). Item #0161.
Lucia Anna Trigiani, Reinventing the Rules (2002). Item #5753.
*All item numbers are taken from the CAI Press Bookstore. For more information, please visit
www.caionline.org/shop.
Community Associations Institute

6402 Arlington Blvd., Suite 500
Falls Church, VA 22042
(888) 224-4321
www.caionline.org
M-100 California Edition Handout Packet vii

ABOUT CAI
Since 1973, Community Associations Institute (CAI) has been the leading provider of
resources and information for homeowners, volunteer board leaders, professional
managers, and business professionals in the more than 355,000 homeowners
associations, condominiums, and housing cooperatives in the United States and millions
of communities worldwide. With more than 43,000 members, CAI works in partnership
with 36 legislative action committees and 64 affiliated chapters within the U.S., Canada,
South Africa, and the United Arab Emirates as well as with housing leaders in several
other countries, including Australia, Spain, and the United Kingdom. A global nonprofit
501(c)(6) organization, CAI is the foremost authority in community association
management, governance, education, and advocacy. Our mission is to inspire
professionalism, effective leadership, and responsible citizenship—ideals reflected in
community associations that are preferred places to call home. Visit www.caionline.org.
The material presented in this publication has been prepared for the general information
of the reader. It is sold with the understanding that the publisher is not engaged in
rendering legal, accounting, or other professional services. If expert assistance is
required, the services of a competent professional should be sought. While the material
presented is believed to be accurate, neither the Community Associations Institute nor its
chapters warrant the publication’s suitability for applications other than as an
informational guide.
Any forms, checklists, or other samples included in this course are done so by way of
example and are not intended to be utilized as a substitute for legal, accounting, or other
professional advice where appropriate. If you use any form, checklist, or other sample in
this manual, it may be necessary to tailor it to your particular community association’s
needs and requirements.
M-100 California Edition Handout Packet viii

CALIFORNIA COMMON INTEREST DEVELOPMENT LAW
I. LEGAL FOUNDATIONS – SOURCES OF LAW
Several branches of the California Government issue legal authority in a

lawmaking capacity. The legislative branch passes statutes, such as the
Davis-Stirling Act, which when signed by the Governor became laws that
govern how common interest developments are operated and managed. In
turn, the executive branch is charged with implementing the statutes and
enforcing the law. Finally, the judicial branch is responsible for interpreting
the law when its meaning is in dispute, and its published rulings became law.
Statutes
1. Business and Professions Code
Business and Professions Code Sections 11000-11200 regulate the sale or

lease of subdivided land.
2. Uniform Common Interest Ownership Act
In 1982, the National Conference of Commissioners on Uniform State Laws

completed the Uniform Common Interest Ownership Act, a draft
comprehensive statutory framework for CIDs. The Act, a model for states to
use, was updated in 1994. However, the California Legislature instead in 1984
passed its own law, enacted in 1985, now known as the Davis-Stirling Act.
3. Davis-Stirling Act
Found in Civil Code1 Sections 4000 through 6150, the law was originally
sponsored by then-Assemblymen Gray Davis and Larry Stirling, and became
law in 1985.
The Act applies to common interest developments, meaning community

apartment projects, condominium projects, planned developments, and
stock cooperatives.
Civ. Code § 4200.
4. Corporations Code
Specific provisions of the Corporations Code apply to California Common

Interest Developments. These provisions and title headings are as follows:
1 All references are to California Statutes, unless otherwise indicated.
M-100 California Edition Handout Packet 1

Corporate Powers: Corp. Code §§ 7110-7160; 7210-7238
Meetings: Corp. Code §§ 5016; 5032-5034; 7312, 7341;
7527;7610-7616
Records: Corp. Code §§ 8210-8338
Common Law
Common law is that body of law developed from judicial decisions rather
than from statutes or constitutions. Common law is derived from the English
legal tradition, and is based upon the doctrine of “stare decisis,” a Latin term
meaning “to abide by, or adhere to, decided cases.”
5. Controlling Authority
Trial court rulings are on occasion brought before higher courts. The Courts
of Appeal and the State Supreme Court, at their option, may publish their
decisions to guide future disputes involving similar questions of facts and
law. Such rulings are considered “controlling authority” and must be
followed by lower courts.
6. Persuasive Authority
Published decisions of courts in other jurisdictions (i.e., other states or in

federal courts discussing California law) are “persuasive authority,”
meaning that lower courts are not required to follow them.

II. CREATION AND ALTERATION OF THE COMMON INTEREST DEVELOPMENT
Common Interest Developments (“CIDs”) are created whenever there is a separate

interest as well as an interest in the common area or membership in the association, If
there is recorded: (1) A declaration; (2) a condominium plan, (if any); and (3) a final map
or parcel map, if required.
Civ. Code § 4200
Department of Real Estate (DRE)
1. The DRE regulates the creation of CIDs.
Bus. & Prof. Code § 11010, et seq.
2. A Public Report from the Real Estate Commissioner is required before one
can sell or lease, or offer to sell or lease, a lot or parcel in a subdivision.
Bus. & Prof. Code § 11018.2
3. Normally, before beginning to market for sale to the public a CID, a

Conditional Public Report (a/k/a “pink paper”) is required from the DRE,
allowing marketing and the receipt of refundable deposits for sales of the
CID to be developed.
Bus. & Prof. Code § 11018.12
4. When the DRE issues final approval, the developer receives a Public
Report (a/k/a “white paper”) authorizing the sale of homes. Escrows cannot
close, and non-refundable deposits cannot be received, until the white
paper issues.
5. The Public Report must be given to prospective purchasers of the new CID.
Governing Documents
DRE regulations mandate that the CID’s governing documents (Articles of

Incorporation, Covenants, Conditions and Restrictions) must, among other
things:
6. Create an organization (the “Association”) of subdivision interest owners;
7. Describe the common interests;
8. Transfer title and/or control of common interests to the owners in common;

9. Set a procedure for calculating and collecting assessments to defray
expenses;
10. Set a procedure for establishing and collecting special assessments;
11. Allow liens for non-payment of assessments and for foreclosure;
12. Set forth discipline policies for members;
13. Create a governing body and set procedures for election and removal of
members of the governing body;
14. Enumerate the powers and duties of the governing body and officers;
15. Allocate voting rights to members;
16. Require preparation of budgets and financial statements;
17. Set procedures for membership meetings and meetings of the governing
body, including quorum requirements and proxy voting procedures at
member meetings;
18. Set policies and procedures for records inspection by members;
19. Provide procedures for amendment of the governing documents;
20. Prohibit or restrict severability of the common from the separate interest;
21. Establish conditions and procedures for partition, condemnation,

destruction, or annexation; and
22. Establish procedures for architectural and/or design control.
Regs. of the Real Estate Comm’r § 2792.8(a), (available at

http://www.dre.ca.gov/files/pdf/relaw/2015/regs.pdf).
See Section VI below for a further discussion of the characteristics of the

governing documents.
Revision of Governing Documents
Prior to member control of the Association, DRE approval is required to

amend the governing documents.

III. TYPES OF COMMON INTEREST DEVELOPMENTS
“Common interest development” means any of the following:
1. A community apartment project
2. A condominium project
3. A planned development
4. A stock cooperative
Civ. Code § 4100
Community Apartment:
A shared interest in the land and buildings, with the right to exclusively
occupy an apartment.
Civ. Code § 4105
Condominium:
A separate interest in space called a “unit,” and an undivided shared interest

in the remainder of the “common area” (i.e. the “non-unit”) property. Defined
by either a recorded subdivision map or a condominium plan.
Civ. Code § 4125
Planned Development:
Any CID development (other than a community apartment project, a

condominium project, or a stock cooperative) in which either or both of the
following apply:
5. Common area is owned either by an association or is shared equally by the

owners of the separate interests who have the right to use and enjoy the
common area.
6. The association can assess the separate interests to support the use and
enjoyment of the common area.
Civ. Code § 4175
Stock Cooperative: A corporation owns the land, and each apartment (or Unit) is
attached to a share of stock in the corporation.
Civ. Code § 4190

Property Interests:
Ownership of a CID includes ownership of a separate interest plus an interest in
the Common Area.
7. Separate Interest:
(a) In a community apartment – an apartment
(b) In a condominium – a unit
(c) In planned development – a lot, parcel or space
(d) In a stock cooperative – a share of stock
Civ. Code § 4185
8. Common Area: The entire property excluding the Separate Interests.
Civ. Code § 4095
9. Exclusive Use Common Area:
Part of the common area for the use of one or more but less than all the
owners. Unless otherwise stated in the governing documents, exclusive
use Common Area includes:
(a) Porches, balconies, patios, stoops, porches.
(b) Exterior doors, doorframes and doorframe hardware.
(c) Shutters, awnings, window boxes, screens, windows.
(d) Other fixtures outside the Separate Interest but serving exclusively
the Separate Interest.
Civ. Code § 4145
Dover Village Association v. Jennison 191 Cal.App.4th 123 (2010) (finding that
contrary to Civil Code Section 4145(c) [formerly CC1351(i)(2)] sewer pipes serving
exclusively a separate interest was not exclusive use common area.) “Under the rule of
"expressio unius est exclusio alterius" …the most natural reading of the CC&R's is that
sewer lines are not "exclusive use common areas appurtenant." By expressly saying patio
and garage areas come within the category, the CC&R's impliedly say that sewer lines do
not.”
Telephone wiring:
Regardless of the governing documents, interior or exterior telephone wiring

serving an individual Separate Interest is Exclusive Use Common Area. Civ.
Code § 4145(c)

IV. POWERS OF COMMON INTEREST DEVELOPMENTS
General
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, and the powers
granted to the association in the Davis-Stirling Act.
Civ. Code § 4805
Corporations Code Authority
As a non-profit mutual benefit corporation, subject to its governing

documents and applicable laws, an association may:
1. Adopt, use, and alter a corporate seal;
2. Adopt, amend, and repeal bylaws;
3. Issue certificates evidencing membership;
4. Levy dues, assessments, and admission and transfer fees;
5. Make donations for the public welfare or for community funds, hospital,
charitable, educational, scientific, civic, religious or similar purposes;
6. Assume obligations;
7. Enter into contracts;
8. Incur liabilities; and
9. Borrow or lend money.
Corp. Code § 7140
Authority to Pursue Claims
The CID has the legal authority to file a lawsuit without naming each of the
CIDs members as plaintiffs when there is an issue involving:
10. Enforcement of the CID governing documents;
11. Damage to common areas;
12. Damage to separate interests which the CID is obligated to maintain or

repair; or

13. Damage to the separate interests which arises out of, or is integrally related
to, damage to common areas or separate interests that the CID is obligated
to maintain or to repair.
Civ. Code § 5980
Governing Documents
The CID’s powers and authority are derived from its governing documents,
specifically its Articles of Incorporation, its CC&Rs, and its Bylaws, so long
as the governing documents do not conflict with state law.
Ultra Vires
Acts outside the Association’s corporate authority may be considered “ultra

vires,” a Latin phrase meaning "beyond powers." A member/shareholder of
a corporation may pursue a court action to stop acts outside an
Association’s corporate authority.
Corporations Code § 208(a)
However, any contract or conveyance made in the name of a corporation which:
14. Is authorized or ratified by the Board, or
15. Is done within the scope of the authority, actual or apparent, conferred by
the Board or within the agency power of the officer executing it, binds the
corporation, whether or not the contract has been fully or partially
performed.
Corporations Code § 208 (b)
Suspension of Corporate Rights
A corporation which has not filed regular statements with the Secretary of
State, Department of Corporations may be suspended by the State. Once
corporate rights are suspended, the corporation cannot appear in court to
bring a suit or to defend against a suit, and its name is no longer reserved.
Revival is accomplished by filing the requisite forms. Filing fees are minimal
- $20 for SI- 100 form, and $15 for SI-CID form. Back taxes and unfiled tax
returns may also be the cause of the suspension. The Franchise Tax Board
should be consulted to make sure tax status is current.
http://bpd.cdn.sos.ca.gov/corp/pdf/so/corp_so100.pdf
http://bpd.cdn.sos.ca.gov/corp/pdf/so/corpua_cid.pdf
Corporate status can be checked at: https://businesssearch.sos.ca.gov/

Methods of Document Delivery
The Civil Code provides a standardized rule for a member’s delivery of required
documents to the association, to the membership and to individual members
16. To the Association:
Documents must be delivered to the person designated in the Annual Policy

Statement or to the Board President or Secretary if no one is designated.
Allowable methods of document delivery are:
(a) Email, fax, or other electronic means, if the association agrees.
(b) Personal delivery with written receipt, if association agrees.
17. To the Individual Membership
Delivery or notice to individual members (as opposed to all members) must be

made by:
(a) first class mail, postage paid,
(b) registered or certified mail, express mail or overnight delivery
(c) email, fax, or other electronic means if member has consented in

writing to such method. The consent may be revoked, in writing or
by email, by the recipient.
(d) Secondary address: if member request delivery to a secondary

address the association also must provide notices to the secondary
address.
18. To the Membership
General notice must be provided by one or more of the following methods:
(a) Any method available for individual delivery (above).
(b) Inclusion in billing statement, newsletter or other document

delivered by one of the above described methods,
(c) Posting in prominent location accessible to all members. Location

must be designated in Annual Policy Statement.
(d) Association television broadcasts.
(e) Supplemental Notice (i.e. Internet website): Permissible provided

method above also is used.
Civil Code §4035, 4040, 4045

V. GOVERNING DOCUMENTS
Hierarchy of Documents
The law controls over inconsistent provisions of the governing documents.
The Articles of Incorporation must be consistent with the Declaration and the
Declaration will control in the event of an inconsistency.
The Bylaws must be consistent with the Declaration and Articles of Incorporation,
either of which would control over the Bylaws in the event of an inconsistency.
Operating rules must be consistent with the Declaration, Bylaws and Articles of
Incorporation.
Civil Code §4025
Articles of Incorporation
Filed with the State, articles of incorporation must include:
1. Identification of the corporation as an association formed to manage a

common interest development under the Davis-Stirling Common Interest
Development Act.
2. Address of the business or corporate office of the association, if the office

is not on the site of the common interest development, the nine-digit zip
code, front street, and nearest cross street for the physical location of the
common interest development, and,
3. Name and address of the association's managing agent, and whether the
association's managing agent is a Certified Common Interest Development
Manager (Business and Professions Code §11502).
4. May also include information as to the number of directors.
Civ. Code § 4280
Condominium Plan or Subdivision Map
5. Condominium Plan:
Contains a diagram of the project, and a certificate by the owner(s)

consenting to its recording. It will also contain and shows the outlines of
Units and Common Areas. The Condominium Plan will also describe the
components and the limits of the Units and the Common Area, and may
describe Exclusive Use Common Areas.
Civ. Code § 4120, 4285

6. Subdivision Map:
Established under authority of Subdivision Map Act (Gov. Code §§ 66410-

66499.58). A subdivision map is required for all subdivisions creating five
or more Separate Interests.
Gov. Code § 66426
Declaration of Covenants, Conditions and Restrictions (“CC&Rs”)
7. Content
(a) Legal description of the common interest development;
(b) A statement that the common interest development is a community

apartment project, condominium project, planned development,
stock cooperative, or combination thereof;
(c) The name of the association;
(d) The restrictions on the use or enjoyment of any portion of the

common interest development that are intended to be enforceable
equitable servitudes; and
(e) (If recorded after January 1, 2004) a disclosure if project is located

near an airport.
Civ. Code § 4250, 4255
See Part III(B) above for DRE requirements of CC&Rs in new subdivisions
8. Binding Effect
(a) The CC&Rs sets forth the covenants or promises governing the
use, operation and obligations of separate interest ownership in a
CID.
(b) The CC&Rs are recorded (meaning they are filed with the County
Recorder), making it a publicly available document. Once recorded,
the owner is presumed to have knowledge and is bound by the
terms therein, even if the owner has not read them and does not
personally know they exist. Covenants or restrictions “run with the
land” meaning they attach to the property no matter who owns it.
Civ. Code § 1460
9. If a declaration establishing a common plan for the ownership of property

in a subdivision and containing restrictions upon the use of the property as
part of the common plan:

(a) Is recorded before the execution of the contract of sale,
(b) describes the property it is to govern, and
(c) states that it is to bind all purchasers and their successors,

subsequent purchasers who have constructive notice of the
recorded declaration are deemed to intend and agree to be bound
by, and to accept the benefits of, the common plan; the restrictions,
therefore, are not unenforceable merely because they are not
additionally cited in a deed or other document at the time of the
sale.
Citizens for Covenant Compliance v. Anderson, 12 Cal. 4th 345, 349,

47 Cal. Rptr. 2d 898, 900-901 (1995).
10. Case Law Supports Amendment
An association has the right, at any time, to amend the governing

documents and that the owners are bound by such an amendment if the
correct procedure for an amendment was followed. “Amended CC&Rs are
given the same presumption of validity as the original CC&Rs and apply to
all owners and are enforceable against any owner who purchased the unit
prior to or after the effective date of the amendment.
Villa De Las Palmas v. Paula Terifaj, 33 Cal. 4th 73, 14 Cal. Rptr. 3d,
67 (2004).
11. Interpretation of CC&Rs as a Contract
The fundamental canon of interpreting written instruments is the

ascertainment of the intent of the parties. Generally, the language of
an instrument must govern its interpretation if the language is clear
and explicit. When an instrument is susceptible to two interpretations,
the court should give the construction that will make the instrument
lawful, operative, definite, reasonable and capable of being carried
into effect, and avoid an interpretation which will make the instrument
extraordinary, harsh, unjust, and inequitable or which would result in
absurdity.
Under established rules of construction of written instruments, if a

general and a specific provision of the instrument are inconsistent,
the specific provision controls.
Timor Title Ins. Co. v. Rancho Santa Fe Ass’n., 177 Cal. App 3d 726,
730, 223 Cal. Rptr. 175, 177 (1986).
Bylaws
12. Content.

Bylaws govern the administration and operation of the CID.
Generally, the Bylaws address such items as quorum, Board and
membership meetings, elections, director and officer qualifications.
Civil Code § 5100
13. Effect
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, the power to adopt,
amend, and repeal bylaws.
Corp. Code § 7140
14. Not recorded
15. Amendment requires vote of membership
Rules and Regulations
16. Association rules regulate owners/tenants day to day use and enjoyment
of the property (i.e., trash, pools, pets, parking and architectural
compliance.)
17. Civil Code requirements.
18. To be enforceable, operating rules must be
(a) In writing
(b) With Board’s authority
(c) Consistent with governing documents
(d) Adopted in good faith
(e) Reasonable
19. Rule changes must comply with Civil Code §§4340-4370. Before Board
can pass, delete or change a rule, it must give members at least 28 days
advance written notice of meeting, with copy of the actual rule change and
statement as to purpose and effect of change.
20. Board must consider members’ comments at open meeting when rule is to
be adopted.
21. Written notice of adopted rule must be provided within 15 days of Board

approval.
22. Objecting members, if 5% or more of the membership, may, within 30 days

of the notification of the rule change, demand a membership meeting to
vote upon its reversal.
23. If majority of quorum votes to overturn rule change, the rule change cannot
be reinstated by Board for a year.
24. Emergency rules not subject to 28 day comment period. If immediate

action is necessary to avoid imminent threat to health, safety or to
substantial economic loss, the Board may pass an emergency rule for up
to 120 days. Emergency Rules are not renewable.
• Rules included – The above procedure applies to rules regulating use of the
separate interests, common area, or exclusive use common areas, and to rules
regarding member discipline, elections, architectural rules and procedures,
and assessments collection payment plans or assessment dispute resolution
policies.
• Rules excluded – The above procedure does not apply to maintenance

decisions, decisions affecting less than all of the members; the amount of
special or regular assessments; or rules simply restating the law or the
governing documents.
Amendments to the Governing Documents
25. Generally
(a) When amending either the CC&Rs, Bylaws of the Articles of

Incorporation, the document to be amended will contain the
requirements for its amendment.
(b) The Davis-Stirling Act, at Sections 4230, 4260, 4270, and 4275,
sets forth provisions relative to amendment of CC&Rs.
(c) The Board is permitted under Civil Code Section 4235 to amend the
CC&Rs without a membership vote to in order to change outdated
statutory references to current statute numbers.
(d) For any amendment to the Governing Documents, the text of the
amendment shall be provided to the members with the ballot. (Civil
Code Section 5115(e)).
(e) An owner is not subject to a lease restriction unless it was in effect

prior to the date the owner acquired title to his or her separate
interest. (Civil Code Section 4740).
26. CC&Rs

(a) Requirements for amendments:
(i) The CC&Rs may be amended pursuant to the Governing

Documents or this title. An amendment is effective after:
(ii) The proposed amendment has been distributed to all of the

owners of separate interests in the CID;
(iii) The approval of the owners representing more than 50

percent, or any higher percentage required by the
declaration, has been given;
(iv) The amendment vote has been certified in writing by a

corporate officer; and,
(v) The Amendment is recorded.
(vi) Finally, a copy of the amendment must be sent by First-

Class mail to all owners.
Civ. Code §§ 4270, 4260
(b) Deletion of Developer Provisions
Amendment of CC&Rs to delete provisions intended to facilitate

developer’s completion of marketing a development. When
developing a new project, the declarant/developer will often insert
provisions to the CC&Rs which assist in marketing, allow for ingress
and egress or provide additional voting power for a separate class of
owners typically defined as the lots or units still owned by the
declarant. The Civil Code provides that, notwithstanding any other
language in the declarations, the Board of directors may delete such
provisions without any vote of the members.
In order for such an amendment to be effective, at least 30 days prior

to taking action, the Board must mail to all owners by first-class mail:
A copy of all amendments to the governing documents proposed to

be adopted; and,
A notice of the time, date and place the Board of directors will
consider the amendments.
Civ. Code § 4230
(c) Deletion of Discriminatory Provisions
Board may amend covenants to delete language which violates the Unruh
Act.
Civ. Code § 4225

27. Amendment by Court Petition
Civil Code Section 4275 provides a statutory procedure for an association

to petition to court to reduce percentage of affirmative votes required to
amend the CC&Rs.
(a) If a CID fails to obtain the required percentage of votes to pass a

CC&Rs amendment, but has obtained more than fifty percent (50%)
membership approval, the CID may petition the court to reduce the
percentage of votes required to pass the amendment.
(b) Upon receipt of a petition the court “may, but shall not be required
to grant the petition provided certain specified conditions are
satisfied.
(c) Must show a reasonably diligent effort was made to permit all
eligible members to vote on the proposed amendment.
(d) The association must have obtained more than 50% approval from
all members, not just those voting.
Peak Investments v. South Peak Homeowners Association, 140 Cal

App. 4th 1363 (2006).

VI. BOARD OF DIRECTORS
Governs the Affairs of the Corporation
The Board of directors may delegate the management of the affairs of the
corporation, 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.
Corp. Code §§ 7210, 7231
Term of Directors
1. Maximum: Set by governing documents, but not longer than four years.
2. If governing documents do not indicate a term, then the term is one year.
3. Staggering of terms is permitted.
4. Extension of term by amendment: Must be approved by vote of

membership and cannot extend term of a director beyond term for which
director was elected.
Corp. Code § 7220
Duties of Directors
5. Corporations Code § 7231-Duties and Liabilities of Directors.
6. Financial Duties
7. At least quarterly, to review:
(a) Current reconciliation of association’s operating accounts
(b) Current reconciliation of association’s reserve accounts
(c) Current year’s actual reserve revenues and expenses compared to

current year’s budget.
(d) Income and expense statement for the association’s operating and
reserve accounts on at least a quarterly basis.
(e) And to review the latest account statements prepared by the

financial institutions where the association has its operating and
reserve accounts.
Civ. Code § 5500

Fiduciary Duties
8. Directors are fiduciaries of the members and may be personally liable if

they fail to meet their fiduciary duties to the membership.
Raven’s Cove Townhomes, Inc. v. Knuppe Dev. Co., 114 Cal. App. 3d
783, 800-01, 171 Cal. Rptr. 334, 344 (1981)
9. A director shall perform the duties of a director in good faith, in a manner

such director believes to be in the best interests of the corporation and with
the care as an ordinarily prudent person in a like position would use under
similar circumstances. A director may rely on:
(a) Officers or employees of the corporation whom the director believes

to be reliable and competent,
(b) Counsel, independent accountants or other professionals, or
(c) A committee of the Board upon which the director does not serve,
as to matters within its designated authority, which committee the
director believes to merit confidence, so long as, in any such case,
the director acts in good faith, after reasonable inquiry and without
knowledge of a reason not to trust the source.
Corp. Code § 7231(a), (b)
10. Conflicts of Interest
Civil Code Section 5350 identifies and defines conflicts of interest and other
prohibited actions of directors and committee members. As a fiduciary, the
director is an agent of the corporation, and “the law exacts from the agent
the utmost good faith and fairness in all dealings between them relating to
the subject-matter of the agency. It may be regarded as a prevailing
principle of the law that an agent must not put himself, during his agency,
in a position which is adverse to that of his principal. For even if the honesty
of the agent is unquestioned, and if his impartiality between his own interest
and his principal’s might be relied upon yet the principal has, in fact,
bargained for the exercise of all the skill, ability and industry of the agent,
and he is entitled to demand the exercise of all this in his own favor.”
De Rubidoex v. Parks, 48 Cal. 215, 219 (1874).
11. Director Liability

The payment of actual expenses does not affect the director’s or officer’s
volunteer status. A developer or an employee of a developer is not a volunteer.
An association still may be liable for negligence of Director. This protection only
applies to owners of two or less separate interests in the CID.
The decision as to whether to investigate for defects before expiration of statute

of limitations, or to start a lawsuit regarding defects is within the scope of the
director duties.
12. Directors are not personally liable for acts and omissions in excess of
specified insurance coverage provided the following are met:
(a) The act or omission was performed within the scope of the officer’s
or director’s association duties.
(b) The act or omission was performed in good faith.
(c) The act or omission was not willful, wanton, or grossly negligent.
(d) The association had in effect at the time the act or omission
occurred and at the time a claim is made an insurance policy that
covers:
(i) General liability of the association and;
(ii) individual liability of association officers and directors for

negligent acts or omissions in that capacity; if such
coverage is at least:
• $500,000 if 100 or fewer separate interests.
• $1,000,000 if more than 100 separate interests.
Civ. Code § 5800
13. Qualified Immunity.
A director who performs his duties in accordance with Corporations Code

Section 7231(a) and (b) (see Part VII(C)(3) above) is not liable based upon
any alleged failure to discharge the person’s obligations as a director.
Corp. Code § 7231(c)

14. The Business Judgment Rule
The Business Judgment Rule is a longstanding means by which volunteer

Board members of nonprofit corporations can be protected from liability,
and no cause of action shall be brought against them. Any Board
resolutions concerning decisions should include the below requirements.
(a) The director performs his duties in good faith;
(b) The director acts in the best interests of the association as a whole;
and
(c) The director acts with the care, including reasonable inquiry, of an
ordinary prudent person in a like position under similar
circumstances.
Corp. Code § 7231.5
In summary, seek advice from industry professionals, act in the best

interest of the entire association as opposed to a few select
members, document by resolution that you are acting in
good faith, and you will meet the requirements of the
Business Judgment Rule.
Court Decisions Involving Business Judgment Rule
Courts tend not to second-guess decisions by officers and directors whenever it

is determined that they were made in good faith, with the intent of benefiting the
organization as a whole, and after due deliberation.
15. “The power to manage the affairs of a corporation is vested in the Board of
directors. Where a Board of directors, in refusing to commence an action
to redress an alleged wrong against a corporation, acts in good faith within
the scope of its discretionary power and reasonably believes its refusal to
commence the action is good business judgment in the best interest of the
corporation, a stockholder is not authorized to interfere with such discretion
by commencing the action. ‘Every presumption is in favor of the good
faith of the directors. Interference with such discretion is not warranted in
doubtful cases.’”
“A mistake of judgment on the part of a Board of directors does not justify

taking the control of corporate affairs from the Board of directors and
placing it with the stockholders. The Board of directors may make incorrect
decisions, as well as correct ones, so long as it is faithful to the corporation
and uses its best business judgment.”
Beehan v. Lido Island Cmty. Ass’n., 70 Cal. App. 3d 858, 865-67, 137 Cal. Rptr.
528, 531-32 (1977); Terri Haley v. Casa Del Rey HOA, 153 Cal. App. 4th 863
(2007)

16. “[An] officer or director will not be liable for torts in which he does not
personally participate, of which he has no knowledge, or to which he has
not consented. ‘While the corporation itself may be liable for such acts,
the individual officer or director will be immune unless he authorizes,
directs, or in some meaningful sense actively participates in the wrongful
conduct.’”’
“To maintain tort claim against a director in his or her personal capacity, a
plaintiff must first show that the director specifically authorized, directed or
participated in allegedly tortious conduct, or that although they specifically
knew or reasonably should have known that some hazardous condition or
activity under their control could injure plaintiff, they negligently failed to
take or order appropriate action to avoid the harm. The plaintiff must also
allege and prove that an ordinarily prudent person, knowing what the
director knew at that time, would not have acted similarly under the
circumstances. “
Frances T. v. Village Green Owners Ass’n., 42 Cal. 3d 490, 503-04, 508-09, 229
Cal. Rptr. 456, 463, 466-67 (1986) (citations omitted)
17. “[W]hen an association determines that a unit owner has violated a use
restriction, the association must do so in good faith, not in an arbitrary or
capricious manner, and its enforcement procedures must be fair and
applied uniformly.”
Nahrstedt v. Lakeside Village., 8 Cal. 4th 361, 383, 33 Cal. Rptr. 2d 63, 76
(1994)
Insurance
CID members are not personally liable for torts liability against the CID if the CID
has general liability insurance coverage of:
18. At least $2,000,000 if the CID consists of 100 or fewer separate interests.
19. At least $3,000,000 if the CID consists of more than 100 separate interests.
If the required insurance is in place, the plaintiff may sue the CID but may
not collect personally from the members for the tort liability of the
association.
Civ. Code § 5805

Removal of Directors, Resignation
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.
20. Removal of Director by Board
(a) Director declared of unsound mind by a final order of court;
(b) Convicted of a felony;
(c) If the bylaws provide that a director may be removed for missing a
specified number of Board meetings;
(d) If the bylaws provide, a majority of the remaining 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.
Corp. Code § 7221
Civil Code § 5105
21. Removal of Director by Membership:
(a) In a corporation with fewer than 50 members, the removal is

approved by a majority of all members.
(b) In a corporation with 50 or more members, the removal is approved

by the members (majority of a quorum).
(c) In a corporation with no members, the removal is approved by a

majority of the directors then in office.
Corp. Code § 7222(a)
22. Removal of Director by Cumulative Voting
If bylaws provide for election of directors by cumulative voting, no individual

director may be removed when the votes cast against removal would have
been sufficient to elect the director if voted cumulatively at an election at
which the same total number of votes were cast and the entire number of
directors authorized at the time of the director’s most recent election were
then being elected.

Corp. Code § 7222(b)
23. Resignation of Director
Requires written notice to the chairman, president or secretary of the Board

or the entire Board. If the resignation is effective at a future time, a
successor may be elected to take office when the resignation becomes
effective.
Filling Vacancies in Board
24. Vacancy caused by the removal of a director may only be filled by vote of
membership.
25. Vacancies on the Board (other than caused by removal) may be filled by
approval of the Board.
26. If there are not enough directors in office to meet quorum, vacancies can
be filled by:
(a) The unanimous written consent of the directors then in office;
(b) The affirmative vote of a majority of the directors then in office at a

meeting held pursuant to notice or waivers of notice; or
(c) A sole remaining director.
27. The members may elect a director at any time to fill any vacancy not filled
by the directors.
Corp. Code § 7224(a), (b)

VII. MEETINGS
Membership Meetings
1. Frequency.
At least one regular meeting of the membership is held per year, at which
time new members of the Board are elected, and other business may be
transacted, pursuant to the bylaws.
2. Meetings Called By Court. If:
(a) No meeting for a period of 60 days after the date designated;
(b) No meeting in last 15 months (if no date has been designated); or
(c) No written ballot for a period of 60 days after the date designated
therefore, then court may summarily order the meeting to be held
or the ballot to be conducted upon the application of a member,
after notice to the corporation giving it an opportunity to be heard.
3. Special Membership Meetings.
May be called by the Board, the chairman of the Board, the president,
such other persons, if any, as are specified in the bylaws, or by five
percent (5%) or more of the members.
Corp. Code § 7510(e)
4. Place of Membership Meetings.
Meetings of members may be held at a place within or without the

state that is stated in or fixed in accordance with the bylaws. If no
other place is so stated or fixed, meetings of members shall be held
at the principal office of the corporation.

5. Notice of Membership Meetings.
At least 10 days and no more than 90 days. If by other than first class,
certified or registered mail, notice must be at least 20 days. In the case
of a special meeting notice, the notice must include the general nature
of the business to be transacted and no other business can be
transacted at the special meeting. Notice of any meeting must include
any action items and, if directors are to be elected, names of any
nominees for election to Board.
6. Voting at Membership Meetings.
“Approval of the members” means approved 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).
Corp. Code § 5034
7. Membership Decision by Written Ballot in Lieu of Meeting
The membership may make decisions without a meeting, by voting by

written ballot, unless prohibited by the governing documents.
Corp. Code § 7513
8. Record date; Eligibility to Vote.
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.
9. Proxies.
A proxy is a statement in writing given by one member of a CID to

another member of the CID, in which a 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. Proxies not stating expiration expire eleven (11) months from
the date of proxy, unless specifically otherwise provided, maximum
duration three (3) years. Proxies are revocable except in narrow
circumstances. Proxies complying with the statute are presumptively
valid. Amendments limiting or restricting use of proxies must be
approved by membership.
Corp. Code § 7613, Civ. Code § 5130

[Note- there is a difference between “general proxies” and “directed proxies”.
Directed proxies are used when a member is instructing the holder of the proxy
how to vote. The requirements for directed proxies on votes subject to secret ballot
procedures are specific and set forth in Civil Code § 5130(c)]
10. Quorum.
Quorum is generally defined in most CID governing documents. If not

covered by the CC&Rs or bylaws, quorum is one-third of voting
power.
Elections and Voting
11. Association Must Adopt Voting Procedures
Voting Procedures are considered operating rules subject to 28-day notice

and comment period. Not permitted to amend within 90 days of any
election.
Civ. Code § 4340-4370
(a) Equal access shall be provided to all candidates and members

advocating a point of view, including those not endorsed by the Board,
for purpose related to the election.
(b) The Association may not redact any content but may include a
statement specifying that the candidate or member, not the Association
is responsible for that content.
(c) Must ensure access to the common area meeting space at no cost.
(d) Specify the qualifications for candidates for the Board of Directors and
any other elected position and the procedures for the nomination of
candidates.
(e) Members of CID may nominate themselves for election.
(f) Specify the qualifications for voting.
(g) Specify a method of selecting 1 or 3 independent third parties as

inspectors.
(h) Require retention of Election Materials.
12. Inspectors of Election.
(a) Selected by Board, member vote, or other method. Not a person who
is currently employed or under contract to the association for any
compensable services other than serving as an inspector of elections.

(b) Determines the number of memberships entitled to vote and the voting
power of each.
(c) Determine the authenticity, validity, and effect of proxies, if any
(d) Receives Ballots.
(e) Hears and determines all challenges and questions on voting rights.
(f) Counts and tabulates all votes.
(g) Determines when the polls shall close.
(h) Determines the result of the election.
(i) Performs any acts to conduct the election with fairness to all.
(j) Follows all the association rules regarding conduct of elections.
13. Secret Ballot Procedures
(a) Regardless of anything stated differently in the governing

documents, votes regarding the following must be held by this same
procedure of 30-day notice and secret ballot:
(i) Assessments
(ii) Election of members of the Association Board of Directors
(iii) Amendments to the governing documents; and
(iv) The grant of exclusive use of common area property

pursuant to Civil Code § 4600
(b) Ballots must include two (2) preaddressed envelopes with

instructions on how to return ballots. Ballots must be provided not
less than 30 days prior to the deadline for voting. A voter may not
be identified by name, address, or lot, parcel, or unit number on the
ballot. Also must include the Election Rules.
(c) The ballot is placed in an inner envelope sealed and placed in a

second envelope. The second sealed envelope is addressed to the
inspectors of election who will be tallying the votes.
14. Counting and Announcement of the Votes
(a) All votes must be counted and tabulated by the inspectors of

election in public at a properly noticed open meeting of the Board
of Directors or members.
(b) 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.
(c) The results reported to the Board of Directors and recorded in the
minutes of the next Board Meeting. Within 15 days of the election,
the results must be publicized to all members.
15. Ballot retention
The sealed ballots, signed voter envelopes, voter list, proxies, and
candidate registration list shall at all times 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 §5125
16. Voting Privacy
Homeowner association members have a constitutional right to privacy in

their voting decisions and a homeowner association director’s statutory
right to inspect the records of the association must be balanced against this
privacy right.
Chantiles v. Lake Forest II Master HOA, 37 Cal. App. 4th 914; (1995)
Board Meetings
17. Frequency.
May be expressly stated in the bylaws. If not expressly stated, Board

duty of monthly financial review of finances would require at least
quarterly meetings. (Civ. Code §§ 5500, See Part VII(C) above).

18. Scheduling Meetings.
Unless otherwise provided in the articles or in the bylaws, 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.
Corp. Code § 7211(a)(1)
19. Notice of Board Meetings.
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. The
articles or bylaws may not dispense with notice of a special meeting.
Corp. Code § 7211(a)(2)
20. Participation by Means of Conference Call.
A director may participate in a meeting via telephone so long as all

members can hear one another. Participation in a meeting by this
method is same as personal presence.
Civ. Code § 4090; Corp. Code § 7211(a)(6)
21. Action outside a meeting prohibited.
But the Board may conduct an emergency meeting by email if all members
agree to so meet. Written consents to meet may be sent by email and shall
be filled with meeting minutes.
22. Civ. Code § 4910
23. Initial Quorum Lost.
If a meeting begins with a quorum of directors, but directors leave

during meeting, reducing number of directors to less than quorum
requirement, the meeting may continue, but any action must be
approved by a number of votes which would have been a sufficient
majority of the quorum.
Corp. Code § 7211(a)(8)
Open Meeting Act (Civ. Code § 4900-4955)
24. Right to Attend.
Any member of the association may attend meetings of the Board of

directors of the association, except executive session.

25. Executive Session Topics.
(a) Litigation;
(b) Matters relating to the formation of contracts with third parties;
(c) Member discipline;
(d) Personnel matters; or
(e) To meet with a member, upon the member’s request, regarding the
member’s payment of delinquent assessments.
26. Executive Session Procedures.
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.
27. Board Minutes.
Whether proposed or approved, minutes must be made available to

members within thirty (30) days of the meeting. The minutes shall be
distributed to any member of the association upon request and upon
reimbursement of the association’s costs for making that
distribution.
28. Annual Notice of Right to Minutes.
With distribution of annual budget, members must be notified in

writing of their right to have copies of the minutes of meetings of the
Board of directors, and how and where those minutes may be
obtained.
29. Definition of “Meeting.”
“Meeting” includes any congregation of a majority of the members of

the Board at the same time and place to hear, discuss, or deliberate
upon any item of business within the authority of the association,
except those matters that may be discussed in executive session.

30. Notice of Meetings.
Members must be given at least four days advance notice of any

meeting, except for emergency meetings, and at least two days’
notice of an executive session Board meeting. The governing
documents may require longer notice. Notice must be given by
general delivery in accordance with Civil Code § 4045. The agenda
must also be provided with notice.
31. Emergency Board Meetings.
May be called by the president, or by any two Board members, if there

are circumstances that could not have been reasonably foreseen
which require immediate attention and possible action, and which of
necessity make it impracticable to provide the required notice.
32. Right of Members to Speak at Board Meetings.
The Board must permit any member to speak at any meeting of the
membership or the Board, except for executive session meetings. The
Board must establish a reasonable time limit for all members of the
association to speak to the Board of directors.
33. Board Meeting Agenda.
(a) A Board is prohibited from discussing or taking action on a matter

at an open Board meeting unless the matter was placed on the
Board meeting agenda and distributed to the members with the
Board meeting notice, four (4) days prior to the meeting.
(b) Does not prohibit Board or management from responding to

statements made or questions posed; from asking a question for
clarification; or, from reporting on own activities in response to
members questions.
(c) Board members may also request management to report back to

Board on the matter at a subsequent meeting; direct management
to place matter on future agenda; or, direct management to perform
administrative tasks to carry out the above.
34. Action on Other Items
Exceptions are available for those items of business not appearing on the
agenda under any of the following conditions:
(a) Emergencies. An item that could not have been foreseen by the
Board at the time agenda was distributed. Requires approval by
majority of directors present.

(b) Immediate Action Items. An item that arose after the agenda
distributed, needing immediate action. Requires 2/3 vote of
directors present, or unanimous vote if 2/3 directors not present.
(c) Continued Items. Item appeared on an agenda for a meeting held

not more than 30 calendar days prior.
Civ. Code § 4900-4955

VIII. MANAGEMENT OF THE PROPERTY OF THE CID
Maintenance and Repair Responsibility
1. Unless otherwise stated in the governing documents, a CID is responsible

for repairing, replacing or maintaining common areas other than exclusive
use common areas.
2. The owner of each separate interest is responsible for maintaining that

separate interest and any exclusive use common area appurtenant to the
separate interest.
(a) The Association can grant Common Area as exclusive use
(i) Unless the governing documents specify a different

percentage at least sixty-seven (67%) of the members must
vote to grant exclusive use of any portion of the Common
Area to any member
(ii) Allowance of Electronic Vehicle Charging Station is not a

grant and requires no member vote.
(iii) Neither is granting a reasonable accommodation per Civil

Code § 4600
(b) Any proposal requiring the member’s consent to grant exclusive use
must specify whether:
(i) The Association will receive any monetary consideration for

the grant; and,
(ii) Whether the Association or the transferee will be

responsible for providing any insurance coverage for
exclusive use of the Common Area.
(c) An exception is transferring the burden of management and

maintenance of any Common Area that is generally inaccessible
and is not of general use to the membership at large.
3. Owners are responsible for the cost of temporary relocation during

Association maintenance and repair.
Civ. Code § 4775
4. Wood Destroying Pests.
(a) Community apartment, condominium or cooperative: responsibility

is on the CID to repair and maintain.

(b) Planned development: responsibility is on the owner.
Civ. Code § 4780
(c) Association can, after a fifteen (15) to thirty (30) day advance
notice, summarily remove a member in order to accomplish
treatment for wood destroying pests. THIS SHOULD NOT BE
ATTEMPTED WITHOUT COURT ASSISTANCE. Civ. Code §
4785)
Case Law on Board and Association Maintenance and Repair Responsibility
“Where a duly constituted community association Board, upon reasonable

investigation, in good faith and with regard for the best interests of the
community association and its members, exercises discretion within the
scope of its authority under relevant statutes, covenants and restrictions to
select among means for discharging an obligation to maintain and repair a
development’s common areas, courts should defer to the Board’s authority
and presumed expertise.”
Lamden v. La Jolla Shores Club Condo. Homeowners Ass’n., 21 Cal. 4th

249, 252, 87 Cal. Rptr. 2d 237, 238 (1999)
“The rule of judicial deference to individual directors in connection with

association maintenance and repair decisions did not protect an
association from liability for failing to repair common area slab penetrations
between floors of a high rise condominium that presented a fire safety
hazard. Individual directors are protected from liability provided they meet
the requisite standards in making their decisions; however, association
liability depends upon whether it has acted reasonably in accordance with
its obligations under its governing documents and law.”
Ritter & Ritter v. The Churchill Condominium Assoc., 166 Cal.App.4th 103;
82 Cal.Rptr. 3d 389.
“Exculpatory clause in CC&Rs as applied to relieve non-negligent

condominium association of any contractual liability to pay for property
damage to owner’s floors caused by leak in common plumbing system, did
not violate public policy.”
Franklin v. Marie Antoinette Condominium Owners Ass’n., 19 Cal. App. 4th

824, 834, 23 Cal. Rptr. 2d 744, 750 (1993).
5. “Exculpatory provisions in CC&Rs constituted no bar to suit against the

Association for negligence of willful misconduct in the arbitrary approval of
a fence not in conformity with the CC&Rs. The law has traditionally viewed
with disfavor attempts to secure insulation from one’s own negligence or
willful misconduct, and such provisions are strictly construed against the
person relying on them, particularly where such person is their author.”
Cohen v. Kite Hill Community Assn., 142 Cal.App.3d 642 (1983).

Construction Defects
6. Association has standing to pursue defects on behalf of membership. (See

Civil Code Section 5980)
7. Alternative Dispute Resolution. Extremely detailed and lengthy pre-

litigation procedures are now required by Civil Code Sections 895-941.5
(a/k/a “SB 800”), Section 6000 (a/k/a “Calderon process”), and Section
5985.
8. New Civil Code Section 896 provides new definitions of defect and a
completely new set of various statutes of limitation, depending upon the
issue. Time limits run from the sale of the new residence.
(a) One year – Inter-unit noise transmission, irrigation/drainage
(b) Two years – Untreated wood posts, landscaping, dryer ducts
(c) Four years – Electrical, plumbing/sewer, steel fences (untreated)
(d) Five years – Paint/stain
(e) Ten years – All else
(f) Definitions of Defect
(i) Water intrusion
(ii) Structural
(iii) Soils
(iv) Fire protection
(v) Plumbing/Sewer
(vi) Electrical
(vii) Other – Flatwork/hardscape, stucco/siding, manufactured

products, HVAC, noise transmission, irrigation, wood posts
at grade, steel fencing, paint/stain, roofing, landscaping, tile,
dryer ducts
(viii) Others not defined in statute – must be resulting damage to

be actionable.
Civ. Code § 896
9. Mandatory Membership Meeting. 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 damage or defects, the
association shall provide written notice to each member that:
(a) A meeting will take place to discuss problems that may lead to the
filing of a civil action;
(b) The options, including civil actions, available to address the

problems; and
(c) The time and place of this meeting.
Civ. Code § 6150
10. Pre-litigation alternative dispute resolution process. Prior to filing a lawsuit

for construction defects:
(a) CID must serve upon developer a “Notice of Commencement of

Legal Proceedings,” including the following information:
(i) Name and location of the project;
(ii) Initial list of defects;
(iii) Description of the results of the defects;
(iv) Summary of homeowner survey, if any; and
(v) Testing information, if available.
(b) Service of the notice starts a period of up to 180 days for alternative
dispute resolution.
(c) Within twenty-five (25) days of the Notice of Commencement of

Legal Proceedings, the developer may request to meet and confer
with the CID Board. The meeting must take place no later than ten
(10) days after request.
(d) Within sixty (60) days of the Notice, the developer will provide the
association with access to all plans and specifications,
subcontracts, and other construction files. CID must provide
developer with access to all non-privileged files 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.
(e) Developer also must serve notice on all subcontractors, design

professionals and insurance companies of the litigation. Then the
subcontractors must provide insurance information.

(f) The CID, developer and all parties jointly select a dispute resolution
facilitator (DRF). If the parties cannot agree, the court will help
select one. With supervision of DRF, various steps are achieved:
(i) A document depository is established;
(ii) CID is required to provide a more specific list of defects after

visual inspections are complete;
(iii) If CID performs invasive testing, all parties may observe;
(iv) CID provides a comprehensive demand for settlement;
(v) Developer and other parties may perform invasive testing;

and
(vi) Mediation sessions conducted by DRF.
Civ. Code § 6000
NOTE: There are also detailed alterative dispute mechanisms in Civil Code Section 895
et seq., including developer right to repair. Thus, the procedures may overlap.

IX. COMMUNITY ASSOCIATION FINANCES AND RECORDS
Assessment Collection – Judicial or Non-Judicial Methods
Regular or special assessment and late charges, reasonable fees and costs
of collection, reasonable attorney’s fees, and interest, is a debt of the owner
of the separate interest at the time the assessment or other sums are levied.
Civ. Code § 5650(a)
Limitation on Increase of Assessments And on Amount of Special Assessments
Regardless of more restrictive language in the governing documents, the

Board of directors may not increase regular assessments by than 20 percent
or impose special assessments that in the aggregate exceed five percent of
CID gross budget without the approval of owners.
Civ. Code § 5605(b), but see 5610 (a)-(c) regarding emergency assessments.
Excessive Assessments
A CID shall not impose or collect an assessment or fee that exceeds the
amount necessary to defray the costs for which it is levied.
Civ. Code § 5600(b)
Assessment Collection Remedies For Failure to Pay
1. At least thirty (30) days prior to recording a lien, CID must send a notice by
certified mail which contains:
(a) A general description of the CID’s collection and lien enforcement

procedures, a statement that the owner of the separate interest has
the right to inspect the association records, and in 14-point boldface
type: “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, including the amount

of any delinquent assessments, the fees and reasonable costs of
collection, reasonable attorney’s fees, any late charges, and
interest;
(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 to discuss payment
plan. Still can record a lien;

(e) The right to dispute the debt through the Association’s IDR
procedure; and,
(f) The right to request alternative dispute resolution pursuant to Civil

Code Section 5925-5965.
2. Order of Payments To Delinquent Account
(a) Any payments made by the owner of a separate interest toward the
debt set forth must first be applied to the delinquent assessments.
Only after the delinquent assessments are paid in full can payments
be applied to fees and costs of collection, attorney’s fees, late
charges, or interest. The CID must provide a receipt if the owner
requests. The CID must provide a mailing address for overnight
payment of assessments.
(b) Association must now accept partial payments, even if there is no

payment plan in place. Huntington Continental Townhouse
Association, Inc., v. Miner (2014) 230 Cal. App. 4th 590.
3. Disputes Regarding Assessment Delinquency Claim
(a) An owner may dispute debt by submitting written explanation of the

reasons for dispute. The Board must respond in writing to the owner
within fifteen (15) days of the date of the postmark of the
explanation, if the explanation is mailed within fifteen (15) days of
the postmark of the notice.
(b) An owner may submit written request to meet with the Board to
discuss a payment plan, and the Board shall meet with the owner
in executive session within forty-five (45) days of the postmark of
the request, if the request is mailed within fifteen (15) days of the
date of the postmark of the notice. If there is no regularly scheduled
Board meeting within that period Board may designate a committee
of one or more members to meet with the owner.
4. Limits on Association’s ability to initiate foreclosure proceeding (Civ. Code

§ 5720.
(a) May not use judicial or non-judicial foreclosure for amounts less
than $1800 or less than 12 months delinquent.
(b) Can still record lien
(c) Can use small claims for any amount (Agent can represent HOA)
(d) Limitations not applicable to timeshares or assessments owed by

Developers

5. Dispute Resolution Requirements: ADR:
(a) Before lien recorded- IDR Civil Code § 5900.
(b) Before “initiating foreclosure” – IDR or ADR Civil Code §§ 5900 or

5925.
(c) Decision to pursue and choice of ADR/IDR is owners.
(d) Binding Arbitration not available if pursuing judicial foreclosure.
6. Requires Board approval prior to lien & foreclosure
(a) Decision to record lien by Board in open meeting-recorded in

minutes
(b) Decision to pursue foreclosure by Board in executive session at

least 30 days before public sale
(c) Must provide Notice to Owner of foreclosure by personal service if

on site/ first class mail if off-site.
Civ. Code § 5705
Annual Budget Report/Pro Forma Operating Budget
The CID must prepare and distribute to all members an Annual Budget
Report containing a pro forma operating budget.
Items to be included:
7. Budget.
8. Reserve Summary.
9. Statement as to whether the Board has determined to defer or replace

major common area component.
10. Summary of reserve funding plan.
11. Whether a special assessment is anticipated.
12. Statement as to how Board fund reserves.
13. Statement of procedures used to calculate reserves.
14. Statement as to any outstanding loans longer than one year.
15. Summary of Insurance.
16. For condominiums] statement as to the association’s status as a Fair

Housing administration approved condominium project.

17. [For condominiums] statement as to the association’s status a Department
of Veterans Affairs approved condominium project
Civ. Code § 5300-5320
NOTE: If the Board fails to comply with the Annual Budget Report procedures,
the Board cannot increase annual assessments for any fiscal year without the
approval of a majority of a quorum of the members.
Civ. Code § 5605
Reserves
The Board of directors 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 which the association is obligated to
repair, restore, replace, or maintain and for which the reserve fund was
established.
18. Borrowing from Reserves.
The Board may authorize the temporary transfer of money from a

reserve fund to the association’s general operating fund to meet
short-term cash-flow requirements or other expenses, provided the
Board has made a written finding, recorded in the Board’s minutes,
explaining the reasons that the transfer is needed, and describing
when and how the money will be repaid to the reserve fund.
Civ. Code § 5515
19. Withdrawing From Reserves.
At least two signatures are required for withdrawal of funds from CID
reserve accounts.
20. Assessment and Reserve Funding Disclosure Summary.
Along with an association’s annual pro forma operating budget, the

association must disclose the following reserve information:
(a) The current deficiencies in reserve funding expressed on a per unit

basis;
(b) A statement as to whether the Board of directors of the association

has decided to defer or not undertake repairs or replacement of any
major component with a remaining life of 30 years or less of the
areas the association is required to maintain, including any

justification(s) for the deferral or decision not to undertake the
repairs or replacement;
(c) A statement as to whether the association has any outstanding

loans with an original term of more than one (1) year, including the
payee, interest rate, the amount outstanding, annual payment, and
when the loan is scheduled to retire;
(d) A statement as to whether the Board, consistent with the Reserve

Funding Plan adopted pursuant to Civil Code Section 5550 has
determined or anticipates one or more special assessments to
repair or replace any major components or to fund the reserves. If
so, the estimated amount, commencement date and duration of the
assessment must be stated;
(e) The association must distribute to its members a summary of the

reserve funding plan required by Civil Code Section 5300(b)(5),
adopted by the Board, as well as a notice to members that the
complete funding plan is available upon request.
Civ. Code § 5565
21. Reserve Funding Plan
(a) The Board must conduct a reasonably competent and diligent visual
inspection of the accessible areas of the major components that the
association is obligated to repair, replace, or maintain at least once
every three (3) years as part of a study of the reserve account
requirements of the common interest development. At least once
every nine (9) years (starting with 2025) include a reasonably
competent and diligent visual inspection by a licensed structural
engineer or architect of a random and sample of exterior elevated
elements (“EEE”).
Civ. Code § 5550-5551
(b) This study must include a reserve funding plan that indicates how
the association plans to fund the annual contribution necessary to
meet its obligations to repair and/or replace the properties’ major
components. At least once every nine years include a reasonably
competent and diligent visual inspection by a licensed structural
engineer or architect of a random and sample of exterior elevated
elements. The inspector shall issue a written report on the findings
of the EEE, and incorporate into the Reserve Study.
(c) The plan must also 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. Adoption of the
Reserve Funding Plan must be done at an open Board meeting.
Upon receiving the report, the association shall take preventive
measures immediately, including preventing occupant access to

the exterior elevated element until repairs have been inspected and
approved by the local enforcement agency.
Civ. Code §§ 5300(b)(3), 5550(b), 5551(b)
Right of Directors to Inspect Records
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.
Corp. Code § 8334
Right of Members to Inspect Documents
22. “Association Records” are:
(a) Any financial document required to be provided to a member in

Article 7 or in Sections 5565 and 5810
(b) Any financial document or statement required to be provided in

Article 2 (commencing with Section 4525) of Chapter 4
(c) Interim financial statements, periodic or as compiled, containing

any of the following: balance sheet, income and expense statement,
budget comparison, general ledger [GAAP]
(d) Executed contracts not otherwise privileged under law.
(e) Written Board approval of vendor or contractor proposals or

invoices
(f) State and federal tax returns
(g) Reserve account balances and records of payments made from

reserve accounts
(h) Agendas and minutes from meetings of members, committees

appointed by the Board, and the Board; excluding minutes and
other information from executive sessions.
(i) Membership lists
(j) Check Registers
(k) The governing documents
(l) An accounting of expenses related to litigation prepared pursuant

to Civ. Code 5520
(m) Enhanced association records

(n) Association Election Materials
23. “Enhanced Association Records” are:
(a) Invoices
(b) Receipts
(c) Cancelled checks
(d) Approved purchase orders
(e) Credit card statements issued in HOA name
(f) Statements for services rendered
(g) Reimbursement requests (Person submitting is responsible for

redaction)
24. “Association election materials” means returned ballots, signed voter

envelopes, the voter list of names, parcel numbers, and voters to whom
ballots were to be sent, proxies, and the candidate registration list. Signed
voter envelopes may be inspected but may not be copied.
25. What members have a right to inspect:
(a) Association records, minutes, and possibly committee minutes
26. How long must CID keep records:
(a) “Association Records” must be made available for the current fiscal
year and for each of the previous two fiscal years
(b) Minutes of member and Board meetings must be permanently

available
(c) If a committee has decision making authority, minutes of those

committees must be made available starting January 1, 2007 and
permanently thereafter.
27. How much time does CID have to respond to member request:
(a) Association records prepared during the current fiscal year, within
10 business days following the receipt of the request
(b) Association records prepared during the previous 2 fiscal years,

within 30 calendar days from request.
(c) 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 in those statutes (i.e., ten days from
written request). Includes Election Materials.
(d) Minutes of member and Board meetings, within the timeframe

specified in Section 4950(a) (i.e., 30 days from meeting).
(e) Minutes of meetings of committees with decision-making authority

for meetings within 15 calendar days following approval.
(f) Membership list, within the timeframe specified in Section 8330 of

the Corporations Code (i.e., within ten business days).
28. Membership lists
(a) Membership lists must include the name, property address, and
mailing address, including email addresses.
(b) The member requesting the list must state the purpose for which
the list is being requested

(c) A member of the Association may opt out of the sharing of his/her
information by informing the Board in writing, but may receive
mailings if “alternative policy” method is used (Corporations Code
Section 8330)
(d) The Board can refuse to give access to the list if it feels the list will
be used for another purpose
(e) Board has burden to prove member would have allowed the use of
the information for purposes unrelated to his or her interests as a
member
29. Redaction
The Association may withhold or redact information from the Association

records under certain circumstances if:
(a) The release of the information is reasonably likely to lead to identity

theft;
(b) The release of the information is reasonably likely to lead to fraud

in connection with the Association;
(c) The information is privileged under law;
(d) The release of information is reasonably likely to compromise the

privacy of an individual; 5) The information relates to disciplinary
actions, collection activities, or payment plans of homeowners, or
any person’s personal identification information; 6) Agendas,
minutes, and other information from executive sessions of the
Board of Directors; 7)
(i) Personnel records other than the payroll records required to

be provided; or 8) Interior architectural plans, including
security features, for individual homes.
(ii) Note: Employee, vendor or contractor compensation is

specifically not eligible for redaction.
30. Liability:
Association officer, director, employee, agent or volunteer not liable

as result of identity theft or breach of privacy… unless failure to
withhold or redact was intentional, willful, or… just negligent.
31. What can a member do to enforce records request:
(a) May bring an action to enforce the member’s right to inspect and
copy the Association Records including Election Materials

(b) The court can award the member reasonable costs and expenses,
including attorney's fees, and can assess civil penalty of up to $500
for the denial of each separate written request
(c) A claim under this section can be brought in small claims court
(d) The prevailing association may recover any costs only if court finds
the action to be frivolous, unreasonable, or without foundation
32. What can CID charge for retrieving/redacting records:
(a) Actual costs of copying and mailing
(b) Up to $10 per hour, and not to exceed $200 total per written request,
for time actually and reasonably involved in redacting the enhanced
association records (not all the records)
(c) The association must inform the member of estimated costs, and
the member must agree to pay those costs, before association
retrieves the requested documents
33. Where must records be made available:
(a) At mutually agreed location, or
(b) At association’s office or,
(c) If no agreement, then can be mailed to requestor
34. Electronic transmission – OK so long as redactions cannot be undone.

[practice pointer – send only in a graphic scanned format, not in editable
Word or Excel formats]

X. COVENANT ENFORCEMENT AND MEMBER DISCIPLINE
Violation of the Governing Documents
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 servitudes may be enforced by any
owner of a separate interest or by the association, or by both.
Architectural Review
Most CID documents provide for architectural review by a committee of any

improvement, addition or other physical change to an owner’s separate interest.
1. Civil Code Section 4765 -- Association Approval procedure.
(a) A fair, reasonable and expeditious procedure shall be included in

the governing documents stating the maximum time for response to
an application or a request for reconsideration by the Board.
(b) A decision on the proposed change shall be made in good faith and
may not be unreasonable, arbitrary or capricious .
(c) A decision on a proposed change shall be consistent with any

governing provision of law, including but not limited to, the Fair
Employment and Housing Act (disability and common areas).
(d) Decisions shall be in writing and, if disapproved, an explanation of

why it was disapproved and a description of the procedure for
reconsideration of the decision by the Board.
(e) When disapproved, the applicant is entitled to reconsideration by

the Board at an open meeting unless the ARC committee is made
up entirely of the Board.
2. Processing the Application
(a) Receipt of application. Determine when submission is complete to

guard against thirty (or forty-five) day waiver mandate. Date stamp
the application when received.
(b) Review of application. It is imperative that the substance of the

application be compared to the factors set forth in the governing
documents for approval or disapproval.
(c) Response to application. To document the decision of the

committee and provide a written response to the applicant as to
approval or disapproval prior to the expiration of the waiver period.

3. Review of Application Must Conform to CC&Rs
Language of subdivision covenant permitted association and its art jury to

utilize objective as well as subjective criteria in making judgments on
application to subdivide or improve lots. Response to architectural
application must conform with the CC&Rs and be in good faith. Refusal to
approve plans must be a reasonable determination made in good faith.
Clark v. Rancho Sante Fe Ass’n., 216 Cal. App. 3d 606, 622, 265 Cal.
Rptr. 41, 50 (1989)
4. Completed Act
HOA seeking to enforce CC&Rs must first follow its own procedures.
Owner’s failure to apply for an architectural modification is not itself
enough to justify legal action. The association must first show that had the
member in fact applied, the application would have been denied.
Ironwood Owners Ass’n. IX v. Solomon, 178 Cal. App. 3d 766, 772,

224 Cal. Rptr. 18, 21 (1986)
5. Personal Agriculture.
Any provision of a governing document, as defined in Section 4150, shall

be void and unenforceable if it effectively prohibits or unreasonably restricts
the use of a homeowner's backyard for personal agriculture.
Civ. Code § 4750
Ongoing Infractions- Nuisance
6. Uniform Application
“When an association determines that a unit owner has violated a use

restriction, the association must do so in good faith, not in an arbitrary or
capricious manner, and its enforcement procedures must be fair and
applied uniformly.”
Nahrstedt v. Lakeside Village Condo. Ass’n., 8 Cal. 4th 361, 383, 33

Cal. Rptr. 2d 63, 76 (1994).

7. Reasonable Enforcement
Finding that homeowner’s association did not act reasonably in attempting

to micromanage homeowner’s personal housekeeping in interior rooms of
house, including which reading materials he could have near his bed and
how to get rid of his old clothes, was supported by evidence that relevant
city departments had found no fire hazard in the house and that applicable
provisions in association’s Covenants, Conditions, and Restrictions
(CC&Rs) could not reasonably be read to allow association to dictate the
amount of clutter in which a person chose to live.
Fountain Valley Chateau Blanc Homeowner’s Ass’n. v. Dept. of

Veterans Affairs, 67 Cal. App. 4th 743, 754-55, 79 Cal. Rptr. 2d. 248,
256 (1998)
Special Situations and Protections
8. Family and Adult Day Care Homes
Every restriction or prohibition, whether by way of covenant, condition upon

use or occupancy, or upon transfer of title to real property, which restricts
or prohibits directly, or indirectly limits, the acquisition, use, or occupancy
of such property for a family day care home for children is void.
Health & Safety Code § 1597.40(c)
9. Solar Energy Systems
Any covenant, restriction, or condition contained in any deed, contract,

security instrument, or other instrument affecting the transfer or sale of, or
any interest in, real property which effectively prohibits or restricts the
installation or use of a solar energy system is void and unenforceable. This
section shall not apply to provisions which impose reasonable restrictions
on solar energy systems. However, it is the policy of the state to promote
and encourage the use of solar energy systems and to remove obstacles
thereto. Accordingly, reasonable restrictions on a solar energy system are
those restrictions that do not significantly increase the cost of the system
or significantly decrease its efficiency or specified performance, or that
allow for an alternative system of comparable cost, efficiency, and energy
conservation benefits. Civil Code mandates that an association respond
to a solar application within forty-five (45) days
Civ. Code § 714(a)-(b)

10. Flags
Governing documents may not limit or prohibit display of the American Flag
in separate interest areas or exclusive use common areas.
Civ. Code § 4705
11. Non-Commercial Signs and Banners
Governing documents may not prohibit non-commercial signs or posters in

separate interest or exclusive use areas of up to 9 square feet in size or
banners of up to 15 square feet in size. There are limitations upon the
material which may be used.
Civ. Code § 4710
12. Over The Air Reception Devices – FCC Regulations – “OTARD Rule”
Federal Regulations limit the ability of CIDs to regulate antennae. [See
below]
13. Electric Vehicle Charging stations may be installed by member subject to

Board or architectural approval and provided statutory conditions to
installation are met.
Civ Code § 4745
Dispute Resolution
14. Internal Dispute Resolution Civil Code Sections 5900-5920
15. Alternative Dispute Resolution Civil Code Sections 5925-5965
16. Mediation: A structured negotiation facilitated by a third party neutral who

has no authority to impose a resolution on the parties.
17. Arbitration: The parties present their cases to a third party neutral who
imposes a resolution on the parties.
Fines
18. Authority: Association must be authorized to impose fines in governing

documents.
19. Procedure: Association must follow appropriate procedures (e.g., notice to

owner and opportunity for a hearing) before imposing fine.
20. Amount: Should be enough to persuade violator to alter conduct, but must
be reasonable.

21. Notice: If the association attempts to levy a fine against an association
member, the person alleged to have violated the rule must have received
notice of the alleged violation at least ten (10) days prior to the meeting at
which discipline is to be imposed. The notice must inform the alleged
offender of his opportunity to request a hearing on the alleged violation.
22. Any fine levied must not exceed the amount stated in the schedule of
monetary fine. Notice of the decision must be sent within fifteen (15) days
after the meeting.
Civ. Code §§ 5850, 5855
G. Annual Policy Statement
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. Name/address of designated person to receive notices.
2. Right to request to have notices sent to 2 different addresses.
3. Posting locations for general notices.
4. Right to receive general notices individually.
5. Right to receive copies of minutes.
6. Assessment collection policies.
7. Policies in enforcing lien rights.
8. Discipline policies including schedule of fines.
9. Summary of dispute resolution procedures.
10. Summary architectural change application procedure.
11. Mailing address for overnight payment of assessments.
12. Any other information required by law or governing

documents or as determined by the Board.
Civil Code Section 5310

XI. AREAS OF RISK AND LIABILITY
Association Managers – Disclosures
A prospective managing agent of a common interest development shall

provide a written statement to the Board of directors of the association
containing the names and business addresses of the owners or general
partners of the managing agent, 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 owners or
general partners of the managing agent.
Civ. Code § 5375
Employees/Independent Contractors
The key risk management issue for personnel exposures to loss is the
question of whether a person is an employee or an independent contractor
for the community association.
The determination of whether someone is an employee or an independent

contractor is often left to the state agency that administers the workers
compensation program or to the courts.
1. Insurance Contract Issues
(a) Every commercial general liability (CGL) policy contains an

exclusion for claims that should otherwise be covered under an
applicable state workers compensation statute.
(b) Volunteers, including directors and officers, can only be insured if

the state statute permits such coverage.
(c) If coverage of volunteers under workers compensation is permitted

and desired, a volunteer will be covered at a salary level the state
agency applies to the person’s activities.
2. Insurance Coverages and Endorsements
(a) Common insurance coverages and endorsements for personnel

exposures to loss include Workers Compensation and Employer
Liability Insurance.
(b) State statutes determine the classes of employees to be insured

and coverage for loss of services due to employment-related
injuries under workers’ compensation insurance. In most states, the
actual insurance is obtained from commercial insurers.

(c) Commercial insurers include employer liability insurance with
workers compensation. Employer liability covers employee liability
and negligence claims excluded under commercial general liability
insurance (CGL). Every community association should consider
obtaining this coverage.
3. Taxation Consequences of Failure to Withhold
The IRS established guidelines in Revenue Ruling 87-41 to determine

if a worker is an employee or an independent contractor. See Rev.
Rul. 87-41, 1987-1 C.B. 296. Internal Revenue Code Section 3121(d)
also helps to define whether or not a worker is an employee. The
section states that any corporate officer who receives compensation
is automatically considered an employee.
Every association should review the classification status of its

workers. Each case must be reviewed individually based on the
existing facts. If an association improperly classifies an employee as
an independent contractor, the IRS will assess back taxes and require
the employer to pay the employee portion of payroll tax, if it has not
already been paid.
The association will then face penalties up to 25 percent of the unpaid

taxes, plus an additional penalty for the period of time the taxes are
unpaid. The association is also responsible for paying interest
assessed on the unpaid balance. The interest is compounded daily.
4. Factors to Consider When Determining Employee or Contractor Status
(a) Instruction
(b) Training
(c) Integration
(d) Services rendered personally
(e) Hiring
(f) Supervising and paying assistants
(g) Continuing relationship
(h) Set hours of work
(i) Full time required
(j) Doing work on employer’s premises
(k) Order or sequence set

(l) Oral or written reports
(m) Payment by hour, week, month
(n) Payment of business and/or traveling expenses
(o) Furnishing of tools and materials
(p) Significant investment
(q) Realization of profit or loss
(r) Working for more than one firm at a time
(s) Making service available to general public
(t) Right to discharge
5. The following guidelines of Revenue Ruling 87-41 will aid the classification
process:
(a) Instructions. An individual who must comply with another person’s

instructions regarding when, where and how he or she works is
usually an employee. See Rev. Rul. 68-598, 1968-2 C.B. 464, and
Rev. Rul. 66-381, 1966-2 C.B. 449.
(b) Training. Requiring an experienced employee to train a worker, and

requiring the worker to attend meetings, etc. indicates that the
employer wants the services performed in a particular method or
manner. In this case, the individual is usually an employee. See
Rev. Rul. 70-630, 1970-2 C.B. 229.
(c) Integration. Integration of the worker’s services into business

operations generally shows that the individual is subject to direction
and control. Because this control affects services performed, and
thus the business itself, workers who perform the services are
employees. See United States v. Silk, 331 U.S. 704 (1947), 1947-2
C.B. 167.
(d) Services rendered personally. If the services must be rendered

personally, the individual for whom the services are performed is
interested in the methods used to accomplish the work as well as
in the results. In this case, the worker is usually an employee. See
Rev. Rul. 55-695, 1955-2 C.B. 410.

(e) Hiring, supervising, and paying assistants. Workers are “controlled”
if the individual for whom the services are performed hires,
supervises, and pays them. These individuals are usually
employees. However, if one worker hires, supervises, and pays
other assistants to do the work, then the worker is usually an
independent contractor. Compare Rev. Rul. 63-115, 1963-1 C.B.
178, with Rev. Rul. 55-593, 1955-2 C.B. 610.
(f) Continuing relationship. An employer-employee relationship exists

when there is a continuing relationship between the involved
parties. A continuing relationship exists when work is performed at
frequently recurring intervals. See United States v. Silk, 331 U.S.
704 (1947).
(g) Set hours of work. The establishment of set hours of work by the
individual for whom the services are performed is a factor indicating
control. See Rev. Rul. 73-591, 1973-2 C.B. 337.
(h) Full time required. If an individual works for a business full time, the
employer has control over the amount of time the worker spends
with the business. In this case, the individual is restricted from doing
other gainful work and is considered an employee. An independent
contractor is free to work when and for whom he or she chooses.
See Rev. Rul. 56-694, 1956-2 C.B. 694.
(i) Doing work on employer’s premises. An individual is “controlled” by

the employer if work is done on business premises, especially if it
could be done elsewhere. See Rev. Rul. 56-660, 1956-2 C.B. 693.
Though off-site work indicates some freedom from control, the
importance of this factor depends on nature of the service involved
and the extent to which an employer requires employees to work
on the business’ premises. An employer controls the place a person
works when he or she has the right to compel the worker to travel a
designated route or to canvass a territory within a certain time. See
Rev. Rul. 56-694.
(j) Order or sequence set. If the employer controls the sequence in

which the worker performs his or her duties, the employer controls
the worker and that individual is an employee. See Rev. Rul. 56-
694.
(k) Oral or written reports. A requirement that the worker submit regular
or written reports to the person for whom the services are performed
indicates a degree of control. In this instance, the worker is usually
an employee. See Rev. Rul. 70-309, 1970-1 C.B. 199, and Rev.
Rul. 68-248, 1968-1 C.B. 431.

(l) Payment by hour, week, month. Payment by the hour, week, or
month generally points to an employer-employee relationship.
Payment made by the job or on a straight commission generally
indicates that the worker is an independent contractor. See Rev.
Rul. 74-389, 1974-2 C.B. 330.
(m) Payment of business and/or traveling expenses. If the individual for

whom the services are performed pays the worker’s business
and/or traveling expenses, the worker is usually an employee. An
employer--to control expenses--generally retains the right to direct
the worker’s business activities. See Rev. Rul. 55-144, 1955-1 C.B.
483.
(n) Furnishing of tools and materials. If an employer furnishes an

individual with significant tools, materials, and other equipment, that
individual is usually an employee. See Rev. Rul. 71-524, 1971-2
C.B. 346.
(o) Significant investment. Workers who invest in work-related facilities

are usually an independent contractor. Individuals classified as an
employee are dependent upon the employer for work-related
facilities. Home offices require special scrutiny. See Rev. Rul. 71-
524.
(p) Realization of profit or loss. A worker who can realize a profit or

suffer a loss is generally an independent contractor. See Rev. Rul.
70-309, 1970-1 C.B. 199. For example, if the worker is subject to a
real risk of economic loss due to investments or a bona fide liability
for expenses, the worker is an independent contractor. However,
the risk that a worker will not receive payment for his or her services
is common to both independent contractors and employees and
does not constitute a sufficient economic risk to support treatment
as an independent contractor.
(q) Working for more than one firm at a time. If a worker performs more
than de minimis services for more than one firm at a time, the
worker is an independent contractor. See Rev. Rul. 70-572, 1970-
2 C.B. 221. However, a worker who performs services for more than
one person may be an employee of each person. This instance is
often seen when the individual is part of the same service
arrangement.
(r) Making service available to general public. If a worker makes his or

her services available to the general public on a regular basis, that
individual is an independent contractor. See Rev. Rul. 56-660.

(s) Right to discharge. If a worker can be fired by the employer, that
person is an employee. An employer exercises control through the
threat of dismissal, which causes the worker to obey his or her
instructions. An independent contractor cannot be fired as long as
he or she meets the terms of the contract. See Rev. Rul. 75-41,
1975-1 C.B. 323.
(t) Right to terminate. If the worker has the right to stop working for the
employer without incurring liability, that individual is an employee.
See Rev. Rul. 70-309, 1970-1 C.B. 199.
(u) Rev. Rul. 87-41, 1987-1 C.B. 296
Discrimination
State and local governments vary in terms of the characteristics which they
recognize in their anti-discrimination statutes and regulations. A new trend is for
a growing number of states and localities to prohibit discrimination based on
sexual preference.
6. The Federal government prohibits discrimination against otherwise

qualified people based on the list below. The State of California adds to
the list below discrimination in employment or housing based upon sexual
orientation or gender identity.
(a) Race and ethnicity
(b) Color
(c) National origin
(d) Age
(e) Gender
(f) Religion
(g) Pregnancy
(h) Disability
7. The best way to avoid employee claims of alleged discrimination is to:
(a) Avoid any kind of preferential treatment of employees.
(b) Make all employment decisions based on bona fide job

requirements.
(c) Document the basis for each employment decision.

8. Sexual Harassment
Sexual harassment is considered a form of gender discrimination

under Federal law and is prohibited by all three levels of government.
“Unwelcome sexual advances, requests for sexual favors, and other

verbal or physical conduct of a sexual nature constitute sexual
harassment when
(a) Submission to such conduct is either explicitly or implicitly a term or

condition of an individual’s employment,
(b) Submission to or rejection of such conduct by an individual is used

as the basis for employment decisions affecting the individual, or
(c) Such conduct has the purpose or effect of unreasonably interfering

with an individual’s work performance or creating an intimidating,
hostile or offensive working environment.”
29 C.F.R. § 1604.11
Premises Liability
9. Whether or not a CID can be held liable for criminal acts which occur in the
association’s common area will depend on the specific facts. Generally, an
association is not liable for criminal acts which are not foreseeable. If,
however, there has been a history of criminal activity in or around the
association property, the association may have a duty to take reasonable
steps to increase security and awareness.
10. Directors are jointly liable with the corporation and may be joined as
defendants if they personally directed or participated in the tortious act.
11. A director will not be liable for torts in which he does not personally
participate, of which he has no knowledge, or to which he has not
consented. (No vicarious liability)
12. Directors owe a duty of care, independent of the association’s duties to

refrain from acting in a manner that creates an unreasonable risk of
personal injury to third parties.
13. Foreseeability = Duty = Liability
14. No Foreseeability = No Duty = No Liability

Cases on Premises Liability
15. To maintain tort claim against a director in his personal capacity, the
plaintiff must first show that the director specifically authorized, directed or
participated in the allegedly tortious conduct, or that although directors
specifically knew or reasonably should have known that some hazardous
condition or activity under their control could injure plaintiff, they negligently
failed to take or order appropriate action to avoid harm, and that an
ordinarily prudent person, knowing what director knew at that time, would
not have acted similarly under the circumstances.
“[An] officer or director will not be liable for torts in which he

does not personally participate, of which he has no
knowledge, or to which he has not consented. While
the corporation itself may be liable for such acts, the
individual officer or director will be immune unless he
authorizes, directs, or in some meaningful sense actively
participates in the wrongful conduct.”
Frances T. v. Village Green Owners Ass’n., 42 Cal. 3d 490, 503-04,

508-09, 229 Cal. Rptr. 456, 463, 466-67 (1986) (citations omitted)
“[A] high degree of foreseeability is required in order to find

that the scope of a landlord’s duty of care includes adequate
measures to prevent the harm. We further conclude that the
requisite degree of foreseeability rarely, if ever, can be
proven in the absence of prior similar incidents of violent
crime on the landowner’s premises.”
Pamela W. v. Millsom, 25 Cal. App. 4th 950, 958-59, 30 Cal. Rptr. 2d

690, 695 (1994) (citations omitted)
“In cases where the burden of preventing future harm is

great, a high degree of foreseeability may be required. On
the other hand, in cases where there are strong policy
reasons for preventing the harm, or the harm can be
prevented by simple means, a lesser degree of
foreseeability may be required.’ Or, as one appellate court
has accurately explained, duty in such circumstances is
determined by a balancing of ‘foreseeability’ of the criminal
acts against the ‘burdensomeness, vagueness, and
efficacy’ of the proposed security measures.”
Ann M. v. Pacific Plaza Shopping Ctr., 6 Cal. 4th 666, 678-79, 25 Cal.
Rptr. 2d 137, 145 (1993) (citations omitted)
Federal Law
16. American with Disabilities Act (ADA)
Americans with Disabilities Act (ADA) does not apply to condominium

associations. Title III of the ADA, which governs private entities, applies
only to commercial facilities which are non-residential.
Independent Housing Servs. of San Francisco v. Fillmore Ctr.

Assocs., 840 F. Supp. 1328, 1341-42 (N.D. Cal. 1993)
17. Fair Housing Act
Often confused with ADA, the Fair Housing Act does apply to condominium
associations. The broad objective of the Fair Housing Act is to prohibit
discrimination in housing because of a person’s race, color, national origin,
religion, sex, familial status, or disability. To ensure that persons with
disabilities will have full use and enjoyment of their dwellings, the Fair
Housing Act includes two basic requirements.
(a) The owner of the property must allow handicapped persons to make
reasonable alterations to the property, at their own expense, to
facilitate access and usage of the premises.
(b) The association must, upon request, make reasonable

accommodations in its services, policies and rules to permit a
handicapped person to utilize the property.
(c) The physical alteration or modification in services, policies, or rules

must be reasonable. “Reasonableness” is measured by the
financial or other hardship imposed upon the association in meeting
the need. Each case must be judged on its own, with the costs
involved in meeting the request being the prime issue. Handicap
ramps and automatic door openers will, in most cases, be deemed
reasonable requests. However, the installation of closed circuit
entrance monitors or elevators may not.
(d) When a resident wishes to modify a dwelling unit under the

reasonable modification provisions of the Fair Housing Act, the
resident must be allowed to do so. The association may require that
the modification be completed in a professional manner in
compliance with applicable building codes.
(e) Residents may also make modifications to the common areas. For
example, in an existing development, it would be considered
reasonable for a resident who uses a wheelchair to have a ramp
built to gain access to the association’s mailbox area. If a resident
cannot afford such modification, the homeowner may ask a friend
to get his or her mail, and the association must waive any rule that
prohibits non-residents from gaining access to the mailroom.
(f) Under the Fair Housing Act, it is unlawful for an association’s Board
to refuse to make reasonable accommodations in rules, policies,
practices, or services when such accommodations may be
necessary to afford a person with a disability equal opportunity to
use and enjoy the dwelling. For example, in an association with a

“no pets” rule, that rule must be waived for a person with a visual
impairment who uses a service dog, or for other persons who use
service animals. In associations that provide parking spaces for
residents on a first come, first serve basis, reserved parking spaces
must be provided if requested by a resident with a disability who
may need such a parking space.
California Law: Unruh Act – Civil Rights
18. All persons within the jurisdiction of this state are free and equal, and no
matter what their sex, race, color, religion, ancestry, national origin,
disability, medical condition, genetic information, marital status, or sexual
orientation or medical condition are entitled to the full and equal
accommodations, advantages, facilities, privileges, or services in all
business establishments of every kind whatsoever.
19. This section shall not be construed to confer any right or privilege on a
person that is conditioned or limited by law or that is applicable alike to
persons of every sex, color, race, religion, ancestry, national origin,
disability, medical condition, marital status, sexual orientation or persons
regardless of their genetic information.
20. Nothing in this section shall be construed to require any construction,

alteration, repair, structural or otherwise, or modification of any sort
whatsoever, beyond that construction, alteration, repair, or modification
that is otherwise required by other provisions of law, to any new or existing
establishment, facility, building, improvement, or any other structure, nor
shall anything in this section be construed to augment, restrict, or alter in
any way the authority of the State Architect to require construction,
alteration, repair, or modifications that the State Architect otherwise
possesses pursuant to other laws.
21. For purposes of this section: (1) “Disability” means any mental or physical
disability as defined in Section 12926 and 12926.1 of the Government
Code. (2) “Medical condition” has the same meaning as defined in
subdivision (h) of Section 12926 of the Government Code.
22. A violation of the right of any individual under the Americans with
Disabilities Act of 1990 (Public Law 101-336) shall also constitute a
violation of this section.
Civ. Code § 51
Sales of Residences
23. The owner of a separate interest, shall, as soon as practicable before

transfer of title to the separate interest or execution of a real property sales
contract therefore, provide the following to the prospective purchaser:
(a) A copy of the governing documents.

(b) If the property is a Senior Citizen Housing Development, a
statement that is consistent with applicable provisions of Civil Code
Section 51.3.
(c) A copy of the most recent:
(i) Budget
(ii) Summary of reserves and reserve study
(iii) Copy of latest accountant’s review
(iv) Association’s assessments collection policies
(v) Summary of Association’s insurance
(d) Statement of the amount of current regular and special

assessments and fees, any unpaid assessments levied upon the
owner’s interest in the common interest development, and any
monetary fines or penalties levied upon the owner’s interest and
unpaid on the date of the statement.
(e) A copy or a summary of any notice previously sent to the owner

regarding unresolved violations.
(f) A copy of the preliminary list of construction defects previously

provided to the builder, unless the matter has been resolved.
(g) If a defect suit has been resolved, a copy of the post-litigation

disclosure.
(h) Any change in the regular and special assessments and fees which
have been approved, but have not become due and payable.
Civ. Code § 4525

(i) Division 4 (commencing with Section 10000) of the Business and
Professions Code, to a prospective purchaser of residential real
property comprising one to four dwelling units, or a manufactured
home as defined in Section 18007 of the Health and Safety Code,
to conduct a reasonably competent and diligent visual inspection of
the property offered for sale and to disclose to that prospective
purchaser all facts materially affecting the value or desirability of the
property that an investigation would reveal, if that broker has a
written contract with the seller to find or obtain a buyer or is a broker
who acts in cooperation with that broker to find and obtain a buyer.
However, the real estate broker or salesperson is not required

in a condominium project or planned development to inspect
more than the unit or lot, and is not required to inspect
common areas or to research public records.
Civ. Code § 2079
(j) There is no statutory provision setting forth a duty on the part of a

homeowner’s association to voluntarily disclose to its members or
to third parties the existence of construction defects or litigation
involving construction defects.
Kovich v. Paseo Del Mar Homeowners’ Ass’n., 41 Cal. App.

4th 863, 866, 48 Cal. Rptr. 2d 758, 760 (1996)
Removal of Vehicles
24. A vehicle may be removed from the association property under the
following four (4) circumstances:
(a) A sign is displayed in plain view at all entrances to the property not
less than 17 x 22 inches in size, with lettering not less than 1 inch
high, prohibiting public parking and stating that vehicles will be
removed at owner’s expense, containing the telephone number of
local law enforcement the name and telephone number of each
towing company with which the association has a written towing
authorization agreement. May also advise that a citation may be
issued for the violation.
(b) The vehicle has been issued a notice of parking violation and 96
hours have elapsed since the violation notice was issued.
(c) The vehicle lacks an engine, transmission, wheels, tires, doors,

windshield, or any other major part or equipment necessary to
operate safely on the highways, the association has notified local
law enforcement and, 24 hours has passed since law enforcement
was notified.

(d) The vehicle is parked within 15 feet of a fire hydrant, in a fire lane,
or in a manner that interferes with an entrance to, or exit from the
property.
25. The association must provide towing company, if available, the name and
address of vehicle owner and the grounds for removal.
26. The association must notify local traffic law enforcement within one hour of
the tow.
27. Specific Authorization Needed: Association agent or manager must be

physically on the property at time of tow and verify the violation, and provide
written authorization to tow company. Written authorization must include:
(a) Make, model, license plate number and VIN of removed vehicle;
(b) Name, signature, job title, residential or business address and

working telephone number of person authorizing the removal;
(c) Grounds for removal;
(d) Time when the vehicle was first observed on the property; and,
(e) Time when the authorization to tow was given.
(f) Towing company must provide the above information to vehicle

owner at the time vehicle is redeemed from storage yard but must
delete information about the association agent who authorized the
tow.
28. General Authorization:
An association may have a general written agreement with a towing

company which would allow a vehicle to be removed from a fire lane, within
15 feet of a fire hydrant, or when blocking an entrance to or exit from private
property. The towing company name and phone number with whom the
Association has such a written agreement must be posted on the signs
posted at property entrances. Under these circumstances, specific
authorization is required.
29. Storage Facility:
(a) Located within 10 mile radius of the property from where vehicle
removed or prior general written approval from local law
enforcement agency.
(b) Must remain open during normal business hours and release
vehicles after business hours with a fee no more than ½ the hourly
tow rate for charge for initially towing the vehicle.
(c) Must have a public pay telephone in the office open and accessible.

(d) Must accept credit cards and must conspicuously display a notice
that all valid credit cards and cash are accepted.
FCC Rules and Regulations
30. Over-The-Air Reception Devices Rule (“OTARD”)
(a) Any restriction, including but not limited to any state or local law or
regulation, including zoning, land-use, or building regulation, or any
private covenant, contract provision, lease provision, homeowners’
association rule or similar restriction, on property within the
exclusive use or control of the antenna user where the user has a
direct or indirect ownership or leasehold interest in the property that
impairs the installation, maintenance, or use of:
An antenna that is:
(i) Used to receive direct broadcast satellite service, including

direct-to-home satellite service, or to receive or transmit
fixed wireless signals via satellite, and
(ii) One meter or less in diameter or is located in Alaska;
(iii) Used to receive video programming services via multipoint

distribution services, including multichannel multipoint
distribution services, instructional television fixed services,
and local multipoint distribution services, or to receive or
transmit fixed wireless signals other than via satellite, and
(iv) That is one meter or less in diameter or diagonal

measurement;
(v) An antenna that is designed to receive television broadcast

signals; or
(vi) A mast supporting an antenna described in paragraphs

(a)(1)(i), (a)(1)(ii), or (a)(1)(iii) of this section; is prohibited to
the extent it so impairs, subject to paragraph (b) of this
section.

(b) Any restriction otherwise prohibited by paragraph (a) is permitted if:
(1) It is necessary to accomplish a clearly defined, legitimate safety
objective that is either stated in the text, preamble, or legislative
history of the restriction or described as applying to that restriction
in a document that is readily available to antenna users, and would
be applied to the extent practicable in a non-discriminatory manner
to other appurtenances, devices, or fixtures that are comparable in
size and weight and pose a similar or greater safety risk as these
antennas and to which local regulation would normally apply; or (2)
It is necessary to preserve a prehistoric or historic district, site,
building, structure or object included in, or eligible for inclusion on,
the National Register of Historic Places, as set forth in the National
Historic Preservation Act of 1966, as amended, 16 U.S.C. 470, and
imposes no greater restrictions on antennas covered by this rule
than are imposed on the installation, maintenance or use of other
modern appurtenances, devices, or fixtures that are comparable in
size, weight, and appearance to these antennas; and (3) It is no
more burdensome to affected antenna users than is necessary to
achieve the objectives described in paragraphs (b)(1) or (b)(2) of
this section.
(c) In the case of an antenna that is used to transmit fixed wireless

signals, the provisions of this section shall apply only if a label is
affixed to the antenna that: (1) Provides adequate notice regarding
potential radiofrequency safety hazards, e.g., information regarding
the safe minimum separation distance required between users and
transceiver antennas; and (2) References the applicable FCC-
adopted limits for radiofrequency exposure specified in § 1.1310 of
this chapter.
(d) Local governments or associations may apply to the Commission

for a waiver of this rule under § 1.3 of this chapter. Waiver requests
must comply with the procedures in paragraphs (f) and (h) of this
section and will be put on public notice. The Commission may grant
a waiver upon a showing by the applicant of local concerns of a
highly specialized or unusual nature. No petition for waiver shall be
considered unless it specifies the restriction at issue. Waivers
granted in accordance with this section shall not apply to restrictions
amended or enacted after the waiver is granted. Any responsive
pleadings must be served on all parties and filed within 30 days
after release of a public notice that such petition has been filed. Any
replies must be filed within 15 days thereafter.

Compliance with Local, State and Federal Law
Community associations are governed by local, state and federal law. Local
laws which affect associations include towing and zoning ordinances. State
statutes regulate association governance and procedures.
Community associations are also affected by a variety of federal laws

including the Fair Housing Act, the Americans with Disabilities Act, the
Telecommunications Act, the United States Bankruptcy Code, the Internal
Revenue Code, the Fair Debt Collection Practices Act, and employment
discrimination and job safety laws.
Federal agencies responsible for administering and enforcing these laws

include the Department of Justice, Department of Housing and Urban
Development, Department of Labor, Internal Revenue Service, Equal
Employment Opportunity Commission, and Federal Communications
Commission.
Hazardous Substances
31. Asbestos
(a) Odorless, colorless, inert, natural mineral.
(b) Used in many building materials, particularly in older homes.
(c) Dangerous when fibers are inhaled
(d) Contractors are required to pass an asbestos recognition test to

retain their licenses
(e) Specialized training and licensing required for abatement of

asbestos
32. Radon
(a) Odorless, colorless, naturally occurring radioactive gas
(b) Per EPA, second leading cause of lung cancer in U.S. (After
cigarette smoking)
(c) Economical home test kits can rule out high levels of exposure.
(d) Various literature items available from state and federal sources
33. Lead
(a) Found in high levels to contribute to brain damage;
(b) Interior and exterior paints in homes built before 1949 are almost
certain to have a high lead content;

(c) Paints manufactured up to the mid-1970s may contain toxic levels
of lead;
(d) Peeling and flaking paint is particularly dangerous.
Sellers (and lessors) of units in pre-1978 multifamily structures must

provide a buyer (or lessee) with any available records or reports
pertaining to lead-based paint and/or lead-based paint hazards in
areas used by all the residents (stairwells, lobbies, recreation rooms,
laundry rooms, etc.). If there has been an evaluation or reduction of
lead-based paint and/or lead-based paint hazards in the entire
structure, the disclosure requirement extends to any available
records or reports regarding the other dwelling units.
34. Indoor Mold Exposure
(a) Naturally occurring, mold colonies build up due to prolonged

moisture in contact with certain building materials, typically drywall
(b) No state standards for remediation yet, legislature still studying
(c) Proven respiratory irritant, more serious alleged effects of “toxic

mold” not yet generally established (per EPA and Center for
Disease Control)
(d) Remediation generally not covered by property/casualty insurance
35. Disclosure – Transfer Disclosure Statement
A seller (with a few exceptions) of residential real property comprising one-

to-four dwelling units must give the buyer a Real Estate Transfer Disclosure
Statement. The statement must specify environmental hazards (e.g.,
asbestos, radon gas, lead-based paint, formaldehyde, fuel or chemical
storage tanks, contaminated soil or water, etc.) and any other condition of
which the seller is aware and which might materially affect a buyer’s
decision to buy. The seller or seller’s agent can give the buyer (of any real
property) a pamphlet titled “Environmental Hazards: A Guide for
Homeowners, Buyers, Landlords, and Tenants.” If the buyer receives the
pamphlet, neither the seller nor any agent in the transaction is required to
furnish more information concerning such hazards unless the seller or
agent has actual knowledge of the existence of an environmental hazard
on or affecting the property.

Environmental Legislation
Certain California legislation was passed in response to environmental

concerns impacting the state. The following are a few of the more significant
laws.
36. No Fines for reducing/eliminating water use. (Civil Code 4735). Civil Code
Section 4735 was amended as an emergency measure to prohibit an
association from imposing a fine or assessment on separate interest
owners for reducing or eliminating watering of vegetation or lawns during
any period for which the Governor has declared a state of emergency or
the local government has declared a local emergency due to drought. This
law also renders void any rule require exterior pressure washing; makes
an exception if the owner receives but fails to use recycled water.
37. Personal gardens in rear yards. Legislation adding Civil Code Section
4730 to the Davis-Stirling Act was passed allowing personal gardens in
exclusive use common area rear yards. Reasonable restrictions are
permitted and an association to regulate removal of dead plant material
and weeds, other than compost, and other organic materials intended to
encourage vegetation and retention of moisture in the soil.
38. Clotheslines and Drying Racks. Civil Code Section 4750.10 was added to
the Davis-Stirling Act allowing clotheslines and drying racks in an owner’s
exclusive use common area backyard only. Balconies, railings or any part
of the building shall not be used for these devices; nor shall clothes be hung
on balconies. Reasonable restrictions on clotheslines and drying racks are
permitted.
39. Artificial Turf. An association can no longer prohibit artificial turf. Civil Code
Section 4735 was amended to make void and unenforceable any provision
of an association’s governing documents or policies that prohibit, or include
conditions that have the effect of prohibiting, the use of artificial turf or any
other synthetic surface that resembles grass. Although this law was
enacted as an urgency statute to address severe state-wide drought
conditions, Civil Code Section 4735 adds language that allows an owner’s
water-efficient landscaping modifications to remain, after the drought
related state of emergency has ended.
-END-

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Community Associations Institute
6402 Arlington Blvd., Suite 500
Falls Church, VA 22042
(888) 224-4321
www.caionline.org
Copyright © CAI—Community Associations Institute. All rights reserved.

Reproduction in whole or in part is not permitted without the expressed, written
consent of CAI.

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PROFESSIONAL MANAGEMENT DEVELOPMENT PROGRAM

Community Associations Institute would like to acknowledge the following

Kelly G. Richardson, Esq. CCAL

Matt D. Ober, Esq. CCAL

Kelly G. Richardson CCAL is a Partner of Richardson | Ober LLP, based in Pasadena

M-100 California Edition Handout Packet All Rights Reserved

I. LEGAL FOUNDATIONS – SOURCES OF LAW ............................................................... 1

B. Common Law ........................................................................................................ 2

II. CREATION AND ALTERATION OF THE COMMON INTEREST DEVELOPMENT ......... 3

A. Department of Real Estate (DRE) ......................................................................... 3

B. Governing Documents ........................................................................................... 3

C. Revision of Governing Documents ........................................................................ 4

III. TYPES OF COMMON INTEREST DEVELOPMENTS ..................................................... 5

A. Community Apartment ........................................................................................... 5

C. Planned Development ........................................................................................... 5

D. Stock Cooperative ................................................................................................. 5

E. Property Interests .................................................................................................. 6

IV. POWERS OF COMMON INTEREST DEVELOPMENTS ................................................. 7

B. Corporations Code Authority ................................................................................. 7

C. Authority to Pursue Claims .................................................................................... 7

D. Governing Documents ........................................................................................... 8

E. Ultra Vires .............................................................................................................. 8

F. Suspension of Corporate Rights ............................................................................ 8

G. Methods of Document Delivery ............................................................................. 9

V. GOVERNING DOCUMENTS .......................................................................................... 10

A. Hierarchy of Documents ...................................................................................... 10

B. Articles of Incorporation ....................................................................................... 10

M-100 California Edition Handout Packet i

D. Declaration of Covenants, Conditions and Restrictions (“CC&Rs”) ..................... 11

F. Rules and Regulations ........................................................................................ 13

G. Amendments to the Governing Documents ......................................................... 14

VI. BOARD OF DIRECTORS ............................................................................................... 17

A. Governs the Affairs of the Corporation ................................................................ 17

B. Term of Directors ................................................................................................. 17

C. Duties of Directors ............................................................................................... 17

D. Fiduciary Duties ................................................................................................... 18

E. Director Liability ................................................................................................... 18

F. Court Decisions Involving Business Judgment Rule ........................................... 20

H. Removal of Directors, Resignation ...................................................................... 22

I. Filling Vacancies in Board ................................................................................... 23

VII. MEETINGS ..................................................................................................................... 24

A. Membership Meetings ......................................................................................... 24

B. Elections and Voting ............................................................................................ 26

C. Board Meetings ................................................................................................... 28

D. Open Meeting Act (Civ. Code § 4900-4955) ....................................................... 29

VIII. MANAGEMENT OF THE PROPERTY OF THE CID ...................................................... 33

A. Maintenance and Repair Responsibility .............................................................. 33

C. Construction Defects ........................................................................................... 35

IX. COMMUNITY ASSOCIATION FINANCES AND RECORDS .......................................... 38

A. Assessment Collection – Judicial or Non-Judicial Methods ................................ 38

M-100 California Edition Handout Packet ii

C. Excessive Assessments ...................................................................................... 38

D. Assessment Collection Remedies For Failure to Pay ........................................... 38

E. Annual Budget Report/Pro Forma Operating Budget .......................................... 40

G. Right of Directors to Inspect Records .................................................................. 43

H. Right of Members to Inspect Documents............................................................. 43

X. COVENANT ENFORCEMENT AND MEMBER DISCIPLINE ......................................... 48

A. Violation of the Governing Documents ................................................................ 48

B. Architectural Review ............................................................................................ 48

C. Ongoing Infractions- Nuisance ............................................................................ 49

D. Special Situations and Protections ...................................................................... 50

E. Dispute Resolution .............................................................................................. 51

XI. AREAS OF RISK AND LIABILITY ................................................................................... 53

A. Association Managers – Disclosures ................................................................... 53