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New Laws For 2015

Update on Legislation Affecting Common Interest Developments and Community Associations

By Sandra M. Bonato, Esq.

Our annual report on new legislation already in effect in 2014 and newly effective as of January 1, 2015 focuses largely on CC&R overrides and physical changes to common area and owners' units and lots in common interest developments. These tick off like a checklist – solar panels, electric vehicle charging stations, landscaping, home produce gardens, and of course, in this serious drought year, water. One other bill is actually not too far removed from these items, and that has to do with who takes care of what in a common interest development when the CC&Rs are unhelpful. And last, one bill creates a lot of problems for associations legally and technically when it comes to how low-level dispute resolution has to be handled.

URGENCY BILLS

Bills whose authors believe their subject matter needs to go into effect immediately upon the governor's signature are required to achieve super-majority approval of both houses of the legislature. This is referred to as “urgency legislation.” Two bills have done so this year, both affecting common interest developments and how CC&Rs and rules can be implemented, and both dealing with the dramatic results of the state's long-standing drought. Both bills went into immediate effect upon being signed; however, the second bill replaced and enlarged up the first. The second bill is currently legally binding and will continue to be.

Water use and conservation were clearly topics of considerable concern in California this year.

EFFECTIVE JULY 21, 2014
THROUGH SEPTEMBER 18, 2014

AB 2100 (Campos)
Yard Maintenance; Fines and Penalties; Drought

For the period it was effective, AB 2100 prohibited an association from imposing a fine or assessment against a unit or lot owner for reducing or eliminating watering of vegetation or lawns during any period for which the governor has declared a state of emergency, or a local agency has declared a local emergency, due to drought.

This so-called “brown lawn law” was actually a legislative enactment of the governor's April 25, 2014 executive order banning the fining or punishment of association members whose landscaping goes brown as a result of the mandatory 20% water use cutback ordered by the governor in January when he declared a statewide state of emergency because of the drought. (See Berding & Weil LLP article re-printed in these materials.)

In other words, associations may not punish owners for their decisions to cut back on landscape watering in complying with the emergency drought orders of the governor. This has been the law in California since April 25, 2014 due to the governor's executive order, which has the force of law, and without doubt since July 21, 2014 when the governor signed Assembly Member Campos' AB 2100 encompassing his order.

EFFECTIVE SEPTEMBER 18, 2014
THROUGH DECEMBER 31, 2014 (AND BEYOND)

SB 992 (Nielsen)
Drought; Fines and Penalties and Recycled Water Exception; Pressure Washing

The second urgency bill to be signed concerning the drought, SB 992 also went immediately into effect, superseding AB 2100 because it amended the same section of law. SB 992 is identical to AB 2100 except for one feature – it makes an exception to the ban on fining or penalizing an owner who fails to water landscaping if the association has access to recycled water for landscaping irrigation.

Additionally, SB 992 also adds a new section to the Davis-Stirling Common Interest Development Act. New Section 4736 voids any provisions in CC&Rs or rules that require pressure washing of the outside of a residence or exclusive use area during a state- or local government-declared emergency due to drought. The new law defines pressure washing to be

the use of a high-pressure sprayer or hose and potable water to remove loose paint, mold, grime, dust, mud, and dirt from surfaces and objects, including buildings, vehicles, and concrete surfaces.

SB 992 does not prohibit the use of high-pressure sprayers or hoses and potable water to clean things, it only prevents an association from enforcing CC&Rs or rules that would require someone to use these devices. For example, if the rules of an association require an owner to clean oil spills from a designated parking space using a pressure washer and if a state of emergency exists due to drought, those rules cannot be enforced, and another method of cleaning would be needed if the owner did not wish to use a pressure washer.

SB 992 was linked with a third drought bill, AB 2104 (Gonzalez), which contains the same language as the portion of SB 992 referring to recycled water but that would not go into effect until January 1, 2015. The governor also signed AB 2104, possibly as a courtesy to its author and possibly to underscore the seriousness of his concern about the drought. The signatures happened on the same day, but AB 2104 was signed before SB 992, which allowed the terms of SB 992 to “chapter out” AB 2104.

This was important because SB 992, again, was an urgency measure and went into immediate effect on September 18, 2014 and because it contains the extra pressure washing language that the governor wished to retain.

SIGNED INTO LAW

EFFECTIVE JANUARY 1, 2015

AB 2188 (Muratsuchi)
Solar Energy Systems

Current law regulates the application and approval processes for owners who ask to install solar energy systems on their residences (i.e., on areas of their property that they exclusively own or control). Current law overrides CC&Rs and architectural processes and standards that have the effect of “significantly” increasing the cost of applied-for systems or significantly decreasing the efficiency of an applied-for system. Depending on the type of system (heating by sunlight or photovoltaic), the term “significantly” has meant generally that an association could not insist on modifications, different locations, or alternatives to an applicant's desired system if it increased the cost by 20% (or $2,000 for photovoltaic systems) or reduced efficiency by 20%.

As of January 1, 2015, those parameters will be further restricted, to 10%, not to exceed $1,000, and to 10% reduction in efficiency. The current $2,000 permitted for photovoltaic systems will be reduced to $1,000.

Current law requires an association to notify the applicant within 60 days after receiving the application if it is denied. AB 2188 reduces that decision period to 45 days after an application is received. Pursuant to existing law, applications for solar energy systems that are not timely responded to are deemed approved.

AB 2188 also provides that a local permitting agency cannot condition the issuance of a permit for an applicant's system on the approval of the applicant's association.

AB 2561 (Bradford)
Personal Agriculture

There are so many questions surrounding this bill, it is hard to know where to start. The policy concept behind it is to allow owners of property within a CID to be able to grow food in areas within the owners' exclusive use, notwithstanding differing CC&R and architectural standards, because according to the preamble to the bill, there simply is not enough food. Californians, according to the bill, live in the “bread basket” of the United States, and they should be “able to feed themselves.”

Ironically, we note that this bill stands in stark contrast to the several bills concerned about water usage during a declared emergency due to drought.

Effective January 1, 2015, AB 2561 will void any provision of the CC&Rs or rules that effectively prohibits or unreasonably restricts the use of a “backyard” (undefined) for personal agriculture. Some of the positive features of the bill are that it will allow residents to grow food for themselves and to donate to others, both laudable goals, and it supports important societal values that come with working in the earth and teaching our families about growing food. It goes without saying that persons who live in densely-populated condominium projects too often do not have room to make that opportunity. At the same time, we think there are significant questions whether this bill is constitutional in its effort, at least for the purposes stated, to override privately-agreed upon land use restrictions and respected aesthetic considerations.

AB 2561's provisions will not apply to provisions of CC&Rs or rules that “do not significantly increase the cost of engaging in personal agriculture or significantly decrease its efficiency.” Unfortunately this provision, borrowed from solar energy system, EVCS and satellite dish statutes where it makes some sense, is simply unknowable with respect to how it might apply to landscape guidelines. We think it potentially allows for some sensible regulation of plant types, heights, impacts, and possibly on water-saving irrigation systems if water costs are shared in a particular community.

Unfortunately for boards that are charged with managing their communities and understanding and properly applying the law, AB 2561 heavily cross-references to laws outside of the Davis-Stirling Act, making it the antithesis of the recent simplification and consolidation of the Act. Worse, it is simply terribly written.

The bill does make it clear that marijuana will not be a permitted crop, a provision that could prove (in far different contexts) to be very helpful.

AB 2565 (Muratsuchi)
Electric Vehicle Charging Stations

Effective January 1, 2015, AB 2565 will require a landlord to approve the request of a tenant to install an electric vehicle charging station in the tenant's designated parking space and to provide the tenant with an exclusive space (for additional rent) if no space is specifically designated.

We believe AB 2565 is intended to apply only to apartment complexes and to the relationship between the complex's owner and that owner's tenants, but we must warn you that CID industry groups were singularly unable to obtain clarification on this issue. We have to look to the legislative history and the various policy committee analyses for the little assurance that is available that this bill will not place indirect requirements on associations when tenants of owners want to install EVCS and that the provisions for EVCS in the Davis-Stirling Act will control. If a tenant or landlord owner argues otherwise, the association will have to determine which body of law is in fact applicable.

As written, AB 2565 only expressly exempts residential property where there are already EVCS installed in at least 10% of designated parking spaces, where parking is not part of the lease, where the property contains less than five parking spaces, or where rent control is in effect. We do see that AB 2565 will require a tenant to comply with all “covenants, conditions and restrictions,” though what that means is quite unclear.

Commercial property, troublingly, is clearer (which actually makes it less clear whether the first part of AB 2565 is expected to apply in the residential CID context). A revealing part for commercial landlords and tenants provides that “[a]ny installation by a lessor or a lessee of an electrical vehicle charging station in a common interest development is also subject to all of the requirements of subdivision (f) of Section 4745 of the Civil Code.” Section 4745 is the portion of Davis-Stirling applicable to the installation of EVCS in residential or mixed use CIDs. The Commercial and Industrial CID Act's EVCS provisions are at Section 6552 and should instead have been used. Moreover, no such cross-reference exists at all for residential rental property.

This new law could be very problematic in its interpretation and application.

AB 1738 (Chau)
Meet-and-Confer (IDR) Practices; Attorneys and Representatives Permitted

AB 1738 will, effective January 1, 2015, provide that an association and a member may be assisted by an attorney or another person when meeting and conferring informally to try to resolve a dispute. It is widely believed that AB 1738 will increase owners and associations' legal costs exponentially and, because it affords no mediation privilege to protect associations from things their designated directors might say, result in highly constrained conversations, thus in far less communication between parties rather than more.

The new law will authorize owners to bring or send attorneys or another person to a meet-and-confer (or internal dispute resolution; IDR), without notice to the association. The Senate removed a requirement that at least five days' notice be given if an attorney was to attend, meaning that the only choice a prudent association will have if an attorney does appear with or for an owner is to postpone the session until it can schedule its own legal counsel to be there or to give consent to the other attorney to address the association client without counsel in the room.

The meet-and-confer process, which was originally a simple concept of the California Law Revision Commission to encourage expeditious, inexpensive and easy communications between an association and a member who disagree, has now grown into a formal process of high cost and risk, where anything a participating party says can and will be held against them by the other, even in what was intended to be an informal process of “explaining their positions to each other,” because the bill lacks legal protections. Sadly, association representatives will be reduced to listening but not commenting on or responding to anything owners say, hardly a healthy forum to resolve a difference. The lack of notice of counsel's presence will result in rescheduling delays, hardly an expeditious process.

We believe every association's meet-and-confer policy will need to be rewritten by the association's attorneys and reissued before or early in 2015. We further believe that new policies can include reasonable notification provisions to facilitate scheduling and keep the process on track. Unfortunately, legal budgets will inevitably feel the force of this new process.

EFFECTIVE JANUARY 1, 2017

AB 968 (Gordon)
Exclusive Use Common Area Repair and Replacement

In an attempt to address what some attorneys believe is a gap in the Davis-Stirling Act, AB 968 as of January 1, 2017 will expressly state that, unless the CC&Rs state otherwise, an owner is responsible to maintain the exclusive use common area that is assigned to the owner's unit or lot, and the association will be responsible to repair and replace that exclusive use common area.

This bill had a long and tortuous journey through the legislature, with many interest groups working its language. It had become very out of shape and exceedingly troubling until the last two or three weeks of the legislative session, when sensible minds insisted on correcting and simplifying the bill to be nothing more than as described. Whether this bill was or was not necessary remains debatable. It could, however, on its legislative way, have become a disaster. Thankfully, it did not.

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