Law and Legislation

Riverside County Courthouse (1904)
Riverside County Courthouse (1904)

Homeowner associations ["common interest development" or CID is the term used in California law] are governed by a web of laws drawn primarily from the Civil Code, the Corporations Code, the Subdivided Lands Act of the Business and Professions Code and by sections of the Government Code, Code of Civil Procedure, and the Vehicle Code.  In 1985 the Legislature consolidated laws governing associations into the Davis-Stirling Common Interest Development Act [beginning with Civil Code 1350.]

As currently structured, California law concentrates decision-making power, rulemaking authority, and control over association resources -- money and assets -- in the association board.  State law assigns homeowners only a minimal role in the political structure of the association. 

However, changes to state law -- creating limited consumer protection for homeowners -- have been occurring slowly over the past decade for several reasons. 

§         Since 1997, the number of California associations has increased from 30,923 to 41,000.  Another 1000 CIDs are built each year.  Now, close to 25% of the state's population lives in an association, and the number of homeowner complaints has increased along with the homeowners.  Complaints arise largely from the legal structure of the association in which all power -- legislative, executive, judicial --- is vested in the board.

§         Homeowner consumer complaints have illuminated for legislators some of the defects of existing state laws governing associations, whether incorporated or not.  For example: California law does not demand true financial accountability by associations.  Consumers hand over more than $200 million in assessments annually to association boards, but they often have a difficult time finding out how boards are spending the money they have entrusted to them.  Some associations are required to have financial records audited, but the auditor is chosen by the board, which controls the money.  This inherent conflict-of-interest does not necessarily result in a true audit for homeowner consumers.  Current state law even allows associations to violate constitutionally guaranteed rights of due process when it forecloses on a CID home.

§         More complaints are reaching the ears of legislators in Sacramento.  Senat

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