The New Davis Sterling Act

January 2014 is now here and Boards, managers and attorneys have already begun preparing for the reorganized and relocated Davis-Stirling Common Interest Development Act. There are some things your HOA can do to be more ready.

•The new law permits associations to give electronic notices to members who agree to accept such method of communication. This allows for savings with respect to cutting down on postage and paper. In order to implement this Boards and Management Company’s will have to encourage their members to sign an “opt in” notification form. Your association can include it in the next assessment mailing, and have them available at the management office and at board meetings. Remind owners that this will not only save them space and clutter, but will help keep the budget (and therefore assessments) under control.

• Board’s should review their disciplinary hearing policies (or create some). The new law requires that when the association imposes a reimbursement claim against a member, that claim must be handled using the same process as for member discipline. The law currently does not provide much guidance to Boards as to how to conduct these hearings and, unfortunately, that is not going to change in the new year. The increase in these hearings in the future means your HOA closed sessions are going to become much longer. Consider adopting policies regarding the conduct of disciplinary and reimbursement hearings, including a reasonable time limit on the homeowner opposing the discipline or reimbursement item.

•Begin reviewing your HOA’s “Annual Budget Report” and “Annual Policy Statement”. These are collections of disclosures that your association is already required to make, with some very small additional items. Instead of waiting 60 days prior to your fiscal year end to use the new format of annual member disclosure, begin reviewing the disclosure now. Check the new Sections 5300 and 5310 for the list of which disclosures go in which packet.

•Get ready to update your CC&Rs and bylaws so that any current CID act sections (1350-1379) are updated to the new Civil Code sections (4000-6150). The new law (at Section 4235) allows boards to amend their CC&Rs and bylaws only to update any references to the CID act to replace the old statute numbers with the new statute numbers. Most of the HOA law firms already have conversion charts, and one is also available at www.hoahomefront.com. A board could use a conversion chart and prepare its own amendments, but consulting your HOA lawyer is a good idea. Amended CC&Rs and bylaws can be prepared by year end, and then adopted by the board at its first open meeting in 2014.

Original article written by Kelly G. Richardson is Managing Partner of Richardson Harman Ober PC, a law firm known for community association advice.