Are you familiar with the laws that govern Homeowner Associations? The Davis-Sterling Act applies to all common interest developments in California.

Common HOA Terms and Definitions:

Articles of Incorporation: the document that creates the association as a corporation under state corporate statute and defines its membership and sets forth the process for creating the board of directors, voting procedures, etc.

Assessment: the fee or dues payable by members of an association, usually monthly. Assessments are determined annually in advance by the board of directors as part of the budgeting process

Board of Directors: the governing body of a corporation such as an association. The board is elected by the members of the association who elect the officers. The directors and officers have a duty to comply with the governing documents of the association and all applicable laws.

Board Meeting: includes any congregation of a majority of the board members at the same time and place to hear, discuss or deliberate upon any item of business scheduled to be heard by the board, except those matters that me be discussed in executive session.

Bylaws: implements, in specific detail, the provisions of the Declaration and the Articles of Incorporation regarding the association operations, including delineation of the meeting process, elections procedures, powers and duties, board meetings, committees, insurance requirements, rule-making and enforcement process.

Common Area(s): the entire common interest development except for the separate interests. California law requires the association to maintain the common areas other than exclusive use common areas unless otherwise provided for in the CC&R’s. Common areas typically include, but are not limited to, landscaped areas, driveways, pools and elevators.

Common Interest Development: means any of the following:

  • A condominium project
  • A planned development
  • A stock cooperative

Covenants, Conditions and Restrictions (CC&R’s): the declaration of CC&R’s is the collection of covenants imposed on all property within the development and provides:

  • For automatic association membership for all owners and the basis for voting rights
  • The obligation of each owner to share in funding the cost of association operations
  • Certain restrictions (architectural control and other rules) on the use of the property and the association’s enforcement powers
  • Sets forth the power and authority of the association to own and maintain the common property and to make and enforce rules

Exclusive Use Common Area(s): a portion of the common area designated in the CC&R’s for the exclusive use of one or more, but fewer than all of the owners of separate interests.

Executive Session: a Board meeting session that is closed to the membership with discussion items that are regulated by the state statutes.

Governing Documents: All documents that regulate the community which may include: Articles of Incorporation; Bylaws; Covenants, Conditions, and Restrictions (CC&R’s); Rules and Regulations

Open Meeting Act: refers to the Civil Code Section that permits any member of an association to attend board meeting, except when the board adjourns to executive session to consider litigation, matters relating to the formation of contracts with third parties, member discipline, personnel matters, or to meet with a member, upon the member’s request, regarding the member’s payment of assessments.

Proxy: the power granted by one person to a representative to vote for the person.

Quorum: the smallest number of people who must be present at a meeting to allow official decisions to be made

Reserve Study: a written report which identifies all of the major components which the association is obligated to repair, replace, restore or maintain having a remaining useful life of more than two year and less than 30 years as of the date of the study. The report estimates the remaining useful life of each component and the amount of reserve funds the association must set aside each month (Reserves) in order to have the cash available to make all necessary repairs and replacements. California law requires most all associations to obtain a reserve study at least every three years.

Rules and Regulations: sets forth the operation powers or provisions and the use restrictions adopted by the association

Separate Interest: includes the following meanings:

  • In a condominium project, “separate interest” means an individual unit or separate interest in space.
  • In a planned development, “separate interest” means a separately owned lot, parcel, area or space.
  • In a stock cooperative, “separate interest” means the exclusive right to occupy a portion of the real property.

Special Assessment: an assessment made usually for a special project or in response to a large, unbudgeted expense.

Undivided Interest: refers to the type of ownership interest that the owner of a separate interest has in the common area. In a condominium or planned development, this undivided interest consists of a tenancy in common which means that each owner having an undivided interest may use all or any portion of the common area, subject to any restrictions set forth in the Declaration or CC&R’s.