Common interest developments: discipline., the official text

An act to amend Sections 5850 and 5855 of, and to add Section 5851 to, the Civil Code, relating to common interest developments.

LEGISLATIVE COUNSEL'S DIGEST

Existing law, the Davis-Stirling Common Interest Development Act, governs the formation and operation of common interest developments. Existing law requires that a common interest development be managed by an association.
Existing law requires the board of an association, if the association adopts or has adopted a policy imposing any monetary penalty on any association member for a violation of the governing documents, to adopt and distribute to each member a schedule of the monetary penalties that may be assessed for those violations, as provided. Existing law prohibits a monetary penalty for a violation of the governing documents from exceeding the lesser of the amount stated in the schedule that is in effect at the time of the violation or $100 per violation, except if the violation might result in an adverse health or safety impact on the common area or another association member’s property, as specified.
This bill would also except if the violation is contained in a specified list developed and published by the Department of Real Estate. In this regard, the bill would require the department, on or before January 1, 2028, to develop and publish a list of specified violations for which an association may impose a monetary penalty that is greater than $100, as specified. The bill would require the list to be limited to violations that are clearly defined and address significant risks to health, safety, or the integrity of the common interest development.
The bill would require the department, in developing the list, to identify categories of violations that pose heightened risks to health, safety, or the integrity of the common interest development, including violations that create a risk of fire or other life safety hazards, as specified, and before finalizing the list, to conduct a stakeholder engagement process to solicit input from a broad range of interested parties, as specified. The bill would require the department to release a draft list of violations for public comment and to consider comments before finalizing the list of violations, as prescribed. The bill would require the department to publish the final list of violations on the department’s internet website.
Existing law requires the board to notify a member in writing at least 10 days before a meeting to consider or impose discipline or a monetary charge on a member, as specified. Existing law requires the board to give a member the opportunity to cure a violation prior to the meeting, and prohibits the board from imposing discipline if the member cures the violation prior to the meeting or, if curing the violation would take longer than the time between the notice provided and the meeting, the member provides financial commitment to cure the violation.
This bill would specify that a member engaged in habitual, repeated, or continuing violations is not deemed to have cured a violation simply because the violation is not occurring at the time of the hearing.

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

SECTION 1.
Section 5850 of the Civil Code is amended to read:
5850.
(a) If an association adopts or has adopted a policy imposing any monetary penalty, including any fee, on any association member for a violation of the governing documents, including any monetary penalty relating to the activities of a guest or tenant of the member, the board shall adopt and distribute to each member, in the annual policy statement prepared pursuant to Section 5310, a schedule of the monetary penalties that may be assessed for those violations, which shall be in accordance with authorization for member discipline contained in the governing documents. Monetary penalties shall be reasonable.
(b) Any new or revised monetary penalty that is adopted after complying with subdivision (a) may be included in a supplement that is delivered to the members individually, pursuant to Section 4040.
(c) A monetary penalty for a violation of the governing documents shall not exceed the lesser of the following:
(1) The monetary penalty stated in the schedule of monetary penalties or supplement that is in effect at the time of the violation.
(2) One hundred dollars ($100) per violation.
(d) (1) Notwithstanding subdivision (c), the board may impose a penalty stated in the schedule of monetary penalties or supplement that is in effect at the time of the violation that is greater than one hundred dollars ($100) per violation, if either of the following apply to the violation:
(A) The violation may result in an adverse health or safety impact on the common area or another association member’s property.
(B) The violation is contained in the list developed and published by the Department of Real Estate pursuant to Section 5851.
(2) Before imposing a penalty on a violation pursuant to subparagraph (A) of paragraph (1), the board shall make a written finding specifying the adverse health or safety impact in a board meeting open to the members.
(e) A late charge or interest shall not be charged to a member for a monetary penalty.
(f) An association shall provide a copy of the most recently distributed schedule of monetary penalties, along with any applicable supplements to that schedule, to any member upon request.

SEC. 2.
Section 5851 is added to the Civil Code, to read:
5851.
(a) On or before January 1, 2028, the Department of Real Estate shall develop and publish a list of specified violations for which an association may impose a monetary penalty that is greater than one hundred dollars ($100), notwithstanding any other provision of law.
(b) (1) The list shall be limited to violations that are clearly defined and address significant risks to health, safety, or the integrity of the common interest development.
(2) (A) In developing the list, the department shall identify categories of violations that pose heightened risks to health, safety, or the integrity of the common interest development, including, but not limited to, violations that do any of the following:
(i) Create a risk of fire or other life safety hazards.
(ii) Result in environmental hazards.
(iii) Involve unpermitted construction or alterations.
(iv) Relate to animal control and pose a risk to other residents.
(v) Constitute a failure to maintain property in a manner that creates health or safety risks.
(vi) Involve violence or threats of violence.
(vii) Cause damage to the common area or common facilities.
(B) The department shall ensure that each category of violation included in the list is described using clear and objective standards sufficient to provide notice to members of the conduct subject to enhanced penalties.
(c) Before finalizing the list, the department shall conduct a stakeholder engagement process to solicit input from a broad range of interested parties. The department, at a minimum, shall convene a stakeholder group that includes all of the following members:
(1) Members of common interest developments representing diverse geographic regions of the state.
(2) Members of age-restricted communities.
(3) Members of associations on fixed incomes.
(4) Association board members.
(5) Association management professionals.
(d) The department shall release a draft list of violations for public comment and shall consider all timely submitted comments before finalizing the list of violations.
(e) The department shall publish the final list of violations on the department’s internet website.

SEC. 3.
Section 5855 of the Civil Code is amended to read:
5855.
(a) When the board is to meet to consider or impose discipline upon a member, or to impose a monetary charge as a means of reimbursing the association for costs incurred by the association in the repair of damage to the common area and facilities caused by a member or the member’s guest or tenant, the board shall notify the member in writing, by either personal delivery or individual delivery pursuant to Section 4040, at least 10 days prior to the meeting.
(b) The notification shall contain, at a minimum, the date, time, and place of the meeting, the nature of the alleged violation for which a member may be disciplined or the nature of the damage to the common area and facilities for which a monetary charge may be imposed, and a statement that the member has a right to attend and may address the board at the meeting. The board shall meet in executive session if requested by the member.
(c) (1) A member shall have the opportunity to cure the violation prior to the meeting. The board shall not impose discipline in either of the following circumstances:
(A) The member cures the violation prior to the meeting.
(B) If curing the violation would take longer than the time between the notice provided pursuant to subdivision (a) and the meeting, the member provides financial commitment to cure the violation.
(2) A member engaged in habitual, repeated, or continuing violations is not deemed to have cured a violation simply because the violation is not occurring at the time of the hearing.
(d) If the board and the member are not in agreement after the meeting, a member shall have the opportunity to request internal dispute resolution pursuant to Section 5910.
(e) If the board and the member are in agreement after the meeting, the board shall draft a written resolution. The written resolution, signed by the board and the member of the dispute pursuant to procedures not in conflict with the law or governing documents, binds the association and is judicially enforceable.
(f) If the board imposes discipline on a member or imposes a monetary charge on the member for damage to the common area and facilities, the board shall provide the member with a written notification of the decision, by either personal delivery or individual delivery pursuant to Section 4040, within 14 days following the action.
(g) A disciplinary action or the imposition of a monetary charge for damage to the common area shall not be effective against a member unless the board fulfills the requirements of this section.