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AB-899 Common interest developments: disclosures.(2009-2010)

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AB899:v93#DOCUMENT

Assembly Bill No. 899
CHAPTER 484

An act to amend Sections 1350.7 and 1365.2.5 of, and to add Section 1363.005 to, the Civil Code, relating to common interest developments.

[ Approved by Governor  October 11, 2009. Filed with Secretary of State  October 11, 2009. ]

LEGISLATIVE COUNSEL'S DIGEST


AB 899, Torres. Common interest developments: disclosures.
The Davis-Stirling Common Interest Development Act provides for the creation and regulation of common interest developments. Under existing law, a common interest development is managed by an association pursuant to the provisions of the governing documents of the development. Existing law requires an association to provide specified disclosure documents to its members. Existing law allows the required disclosure documents to be delivered electronically.
This bill would provide that a document that uses an electronic record to provide or make available the document satisfies the writing requirement, as provided. This bill would also require an association to distribute annually to its members a Disclosure Documents Index, as specified.
Existing law requires an association to distribute to its members a pro forma operating budget for each fiscal year, as specified. Existing law also requires an association to distribute, with the pro forma operating budget, an Assessment and Reserve Funding Disclosure Summary containing specified information regarding the association’s assessments and reserves.
This bill would require that Assessment and Reserve Funding Disclosure Summary to include a specified statement regarding the interest rate earned on reserve funds and the assumed inflation rate applied to major component repair and replacement costs.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 1350.7 of the Civil Code is amended to read:

1350.7.
 (a) This section applies to delivery of a document listed in Section 1363.005 or to the extent the section is made applicable by another provision of this title.
(b) A document shall be delivered by one or more of the following methods:
(1) Personal delivery.
(2) First-class mail, postage prepaid, addressed to a member at the address last shown on the books of the association or otherwise provided by the member. Delivery is deemed to be complete on deposit into the United States mail.
(3) E-mail, facsimile, or other electronic means, if the recipient has agreed to that method of delivery. The agreement obtained by the association shall be consistent with the conditions for obtaining consumer consent described in Section 20 of the Corporations Code. If a document is delivered by electronic means, delivery is complete at the time of transmission.
(4) By publication in a periodical that is circulated primarily to members of the association.
(5) If the association broadcasts television programming for the purpose of distributing information on association business to its members, by inclusion in the programming.
(6) A method of delivery provided in a recorded provision of the governing documents.
(7) Any other method of delivery, provided that the recipient has agreed to that method of delivery.
(c) A document may be included in or delivered with a billing statement, newsletter, or other document that is delivered by one of the methods provided in subdivision (b).
(d) For the purposes of this section, an unrecorded provision of the governing documents providing for a particular method of delivery does not constitute agreement by a member of the association to that method of delivery.

SEC. 2.

 Section 1363.005 is added to the Civil Code, to read:

1363.005.
 The association shall, at the request of any member, distribute to the member, in the manner described in Section 1350.7, the following Disclosure Documents Index:
Disclosure Documents Index
Item
Description
Reference Code
1
Assessment and Reserve Funding Disclosure Summary (form)
CivilCodeSec. 1365.2.5
2
ProFormaOperatingBudget or Pro Forma Operating Budget Summary
CivilCodeSec. 1365(a)
3
Assessment Collection Policy
CivilCodeSec.1365(e)and 1367.1(a)
4
Notice/Assessmentsand Foreclosure (form)
CivilCodeSec. 1365.1
5
Insurance Coverage Summary
CivilCodeSec. 1365(f)
6
Board Minutes Access
CivilCodeSec. 1363.05(e)
7
Alternative Dispute Resolution (ADR) Rights (summary)
CivilCodeSec. 1369.590
8
Internal Dispute Resolution (IDR) Rights (summary)
CivilCodeSec. 1363.850
9
Architectural Changes Notice
CivilCodeSec.1378(c)
10
Secondary Address Notification Request
CivilCodeSec. 1367.1(k)
11
Monetary Penalties Schedule
CivilCodeSec. 1363(g)
12
Reserve Funding Plan (summary)
CivilCodeSec. 1365(b)
13
Review of Financial Statement
Civil Code Sec. 1365(c)
14
Annual Update of Reserve Study
Civil Code Sec. 1365(a)

SEC. 3.

 Section 1365.2.5 of the Civil Code is amended to read:

1365.2.5.
 (a) The disclosures required by this article with regard to an association or a property shall be summarized on the following form:

Assessment and Reserve Funding Disclosure Summary For the Fiscal Year Ending _____

(1)  The regular assessment per ownership interest is $_____ per ____. Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be found on page _____ of the attached summary.
(2)  Additional regular or special assessments that have already been scheduled to be imposed or charged, regardless of the purpose, if they have been approved by the board and/or members:
Date assessment will be due:

Amount per ownership interest per month or year (If assessments are variable, see note
immediately below):
Purpose of the assessment:


_____
_____
_____
_____
_____
_____
_____
_____
_____
_____
Total:
_____
Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be found on page ____ of the attached report.
(3)  Based upon the most recent reserve study and other information available to the board of directors, will currently projected reserve account balances be sufficient at the end of each year to meet the association’s obligation for repair and/or replacement of major components during the next 30 years?
Yes _____No _____
(4)  If the answer to (3) is no, what additional assessments or other contributions to reserves would be necessary to ensure that sufficient reserve funds will be available each year during the next 30 years that have not yet been approved by the board or the members?
Approximate date assessment
will be due:
Amount per ownership interest
per month or year:
_____
_____
_____
_____
_____
_____
_____
_____
_____
Total:
(5)   All major components are included in the reserve study and are included in its calculations.
(6)  Based on the method of calculation in paragraph (4) of subdivision (b) of Section 1365.2.5, the estimated amount required in the reserve fund at the end of the current fiscal year is $____, based in whole or in part on the last reserve study or update prepared by ____ as of ____ (month), ____ (year). The projected reserve fund cash balance at the end of the current fiscal year is $____, resulting in reserves being ____ percent funded at this date. If an alternate, but generally accepted, method of calculation is also used, the required reserve amount is $____. (See attached explanation)
(7) 
Based on the method of calculation in paragraph (4) of
subdivision (b) of Section 1365.2.5 of the Civil Code, the estimated
amount required in the reserve fund at the end of each of the next
five budget years is $______, and the projected reserve fund cash
balance in each of those years, taking into account only assessments
already approved and other known revenues, is $______, leaving the
reserve at ______ percent funding. If the reserve funding plan
approved by the association is implemented, the projected reserve
fund cash balance in each of those years will be $______, leaving the
reserve at ______ percent funding.
Note: The financial representations set forth in this summary are based on the best estimates of the preparer at that time. The estimates are subject to change. At the time this summary was prepared, the assumed long-term before-tax interest rate earned on reserve funds was ____ percent per year, and the assumed long-term inflation rate to be applied to major component repair and replacement costs was ____ percent per year.
(b) For the purposes of preparing a summary pursuant to this section:
(1) “Estimated remaining useful life” means the time reasonably calculated to remain before a major component will require replacement.
(2) “Major component” has the meaning used in Section 1365.5. Components with an estimated remaining useful life of more than 30 years may be included in a study as a capital asset or disregarded from the reserve calculation, so long as the decision is revealed in the reserve study report and reported in the Assessment and Reserve Funding Disclosure Summary.
(3) The form set out in subdivision (a) shall accompany each pro forma operating budget or summary thereof that is delivered pursuant to this article. The form may be supplemented or modified to clarify the information delivered, so long as the minimum information set out in subdivision (a) is provided.
(4) For the purpose of the report and summary, the amount of reserves needed to be accumulated for a component at a given time shall be computed as the current cost of replacement or repair multiplied by the number of years the component has been in service divided by the useful life of the component. This shall not be construed to require the board to fund reserves in accordance with this calculation.