CACM End of Session Report

As of October 16, 2017

The Legislature adjourned on September 15th and the Governor had until October 15 to sign or veto legislation. Now that the 2017 legislative year has officially concluded, here is a brief summary of the final disposition of key proposals and bills this year:

  • Embezzlement Proposal

This proposal was intended to respond to the unfortunate embezzlements that have gotten media attention over the last number of years. Promoted by CID watchdog groups, this proposal would have imposed significant, prescriptive requirements on management companies, including how they make bank deposits and report to the board and owners. The proposal created more red tape and potential liability that would have impeded managers’ abilities to do their jobs. CACM and its legislative committee were able to make the case that the proposal was unnecessary and extreme and the proposal was never even introduced as a bill. We can anticipate that this proposal will be attempted again in 2018 but we will stay equally as vigilant.

  • AB 634 (Eggman – Solar Energy Systems)

Originally, the bill simply removed the homeowner vote currently required to approve solar energy systems on the roof of a building in which the homeowner resides. CACM and CAI worked together to expand the language so more reasonable restrictions may be imposed. As a result, in addition to the restrictions available under current law, we negotiated additional provisions that would allow an association to:

  • Require the applicant to notify all owners;
  • Require the owner and each successive owner to maintain a homeowner liability coverage policy at all times and provide the association with a corresponding certificate of insurance within 14 days of approval of the application and annually thereafter;
  • Require an applicant to submit a solar site survey showing the placement of the solar energy system prepared by a licensed contractor or contractor’s registered salesperson knowledgeablein the installation of solar energy systems to determine usable solar roof area. This survey or the costs to determine useable space shall not be deemed as part of the cost of the system as used in Section 714.
  • Require the owner and each successive owner of the solar energy system to be responsible for all of the following:
  • Costs for damage to the common area, exclusive use common area, or separate interests resulting from the installation, maintenance, repair, removal, or replacement of the solar energy system.
  • Costs for the maintenance, repair, and replacement of solar energy system until it has been removed and for the restoration of the common area, exclusive use common area, or separate interests after removal.
  • Disclosing to prospective buyers the existence of any solar energy system of the owner and the related responsibilities of the owner under this section.

While this bill could have been amended further to help associations, it still sets an important precedent in terms of giving associations generous leeway to impose restrictions for the benefit of all homeowners.

This bill was signed by the Governor and becomes effective January 1, 2018.

  • AB 690 (Quirk-Silva – CID Managers: conflicts of interest)

Originally, the California Association of Realtors (CAR) was proposing a bill that would have required a management firm or manager to disclose all fees and amounts during the life of the management contract to the board and all owners. It would have required managers to anticipate and disclose every potential fee that could arise and to disclose to all owners all fees received from every service provider doing business with the association. Because of CACM’s proactive work with CAR, we were able to negotiate a compromise that is not only good policy but also workable for the industry. Specifically, the bill simply requires disclosure (to the board only) of referral fees or monetary incentives from third party document providers or any conflicts of interest. This is either existing law or in CACM’s code of ethics. This was a major victory considering where this bill started.

The Governor signed AB 690 into law July 24th. It becomes effective on January 1, 2018.

  • AB 1412 (Choi – CIDs: notices and officer liability)

This bill contains CACM’s requested clean up to section 4041 of the Civil Code to clarify that the default address for notices is the last address submitted to the association in writing and if none, the property address. Last year, a bill was passed that made the property address the default address. CACM discovered that this would require managers to change, in some cases, hundreds of addresses even if owners had requested specific addresses. This change addresses that problem. The bill also clarifies that volunteer directors of mixed-use structures are also granted immunity from personal liability if residing in the building.

This bill was signed by the Governor and becomes effective January 1, 2018.

  • SB 407 (Wieckowski – CIDs: noncommercial solicitation)

This bill makes it unlawful for an HOA’s governing documents to prohibit a resident or homeowner from:

•Peacefully assembling or meeting in common areas for purposes related to CID living, legislation, election to public office, referendum or recall processes;

•Inviting public officials or candidates to meet with members;

•Canvassing and petitioning members for political/public interest activities;

•Distributing or circulating information about CID living or other political matters.

The bill prevents an association from charging a member a deposit or requiring liability insurance in order to use common areas for political gatherings. The bill also allows small claims actions and allows a civil penalty up to $500 per violation. While CACM expressed practical concerns with the legislation, it also acknowledged the important free speech aspects to this bill and for that reason, did not formally oppose it.

The Governor signed this bill into law on September 11th. It is effective on January 1, 2018.

  • SB 721 (Hill – Decks and Balconies Inspection)

This bill would require, every three years, inspection of decks, balconies and elevated walkways in buildings, including load-bearing components, containing three or more multifamily units by a licensed person (e.g. architect, engineer, building inspector/official). The bill would additionally require emergency repairs to be made immediately and non-emergency repairs to be made within 120 days of receiving a permit. If building owner does not make repairs, there is a civil penalty up to $100 per day until repairs are completed.

CACM agrees with the objective of this bill and encourages safe communities through vigilance inspection of structural members to prevent catastrophic events.However, weare concerned about liability and the cost to homeowners given the invasive nature of the inspections (open up walls, etc.). After months of negotiations, the author made this a 2-year bill. We look forward to continuing productive discussions to ensure the bill does not increase direct manager liability but support enhancing safety in our communities.

  • Summary

CACM had a successful 2017 in the California Legislature. In the midst of some potentially damaging legislation, we were vastly able to improve the proposals or outright stop them in 2017.CACM and the members of the Legislative Committee appreciates the assistance in advancing important policies for the management industry and we look forward to a productive 2018.