| As homeowner associations have largely developed without any concern for individual rights of homeowners, the Homeowner Bill of Rights seeks to redress that imbalance. |
The California Senate Housing Subcommittee set up a task force to study revisions to the Davis-Stirling Act, the central legislative framework of homeowner associations in California. The following document, REVISING THE DAVIS STIRLING ACT, was presented on July 24, 1997 to the Senate Housing Committe and the Senate Housing Task Force to Revise the Davis Stirling Act by Elizabeth McMahon. She was the consumer member of the task force and the Executive Director of the American Homeowners Resource Center. The Davis Stirling Act was created by California Assemblymen Gray Davis (currently Governor of California) and Larry Stirling (currently a judge in San Diego Superior Court). They employed Katherine Rosenberry (a litigation industry lobbyist and national director of Community Associations Institute ( CAI) - the trade group of lawyers and vendors for homeowner associations), to write the Davis Stirling Act. |
|
|
As all legislation takes place against a backdrop of values and the desires of special interests, groups fashioning a legal framework for homeowner associations must take these into account and establish the appropriate order of priority. 1. VALUES This country has consistently held up the ideals of freedom, individuality and resourcefulness. Hence, both the physical design and legal framework of planned unit developments should embody these concepts in significant and meaningful ways. One example is that planned unit developments should not even be considered where there are single family homes with no common facilities. These, as they already are being taxed for streets and public areas such as slopes, should be maintained by the local municipalities, especially as slopes are not insurable. Another example is the current, dominant practice of throwing up developments with tasteless, monotonous designs that are an insult to the surrounding environment. These do nothing to promote the values of freedom and individuality. Another example is the current practice of burdening homeowners with oppressive and detailed CCR's. These do not embody the ideals which this country has traditionally espoused. 2. SPECIAL INTERESTS As a home is where the spirit of a nation is forged, the interests of such vendors as lawyers and management companies must give way to the interests of those people for whom homeowner associations are created - the homeowners. The current Davis-Stirling Act was created by special interest groups of lawyers who saw an opportunity to create a whole new arena of business. But homeowners want to buy a home, not a lawsuit, and most CCR's are designed to maximize the creation of a lawsuit. CCR's created by lawyers which are unduly restrictive and detailed guarantee future trouble in homeowner associations. The bromide defense that people are free to choose to live in an association is a myth perpetuated by these special interests. The clear reality is that if all 6 million Californians chose not to live in homeowner associations tomorrow, there are not 2 to 3 million homes lying vacant at the moment to accommodate them. 3. HOMEOWNER BILL OF RIGHTS In light of the above brief comments and extensive discussions with homeowners across the state, I recommend that a HOMEOWNER BILL OF RIGHTS be incorporated as the centerpiece of any and all legislation governing common interest developments. This is an essential and critical feature of any legislative framework for homeowner associations. This HOMEOWNER BILL OF RIGHTS must incorporate a set of provisions ensuring that the rights of individual homeowners are not trampled upon. The history of homeowner associations on a nationwide basis has shown that abuse is rampant - from boards which misuse their power, from the misuse and theft of association money, from repeated violations both of state law and the CCR's by boards, their lawyers and managers. The industry defense that these are isolated incidents belies the reality that the current structure is virtually guaranteed to produce trouble. The fact that lawyers preach to homeowner associations that they cannot do without a lawyer contradicts their minimization of the problem. The fact that they make very good livings out of associations, is proof positive and ends debate on the issue. Where there is trouble, there is money for lawyers. The following specific recommendations are proposed. |
|
1. A statement by the Legislature of the State of California that it is the legislative policy of this State to promote the nation's traditional ideals of freedom, individuality and resourcefulness in the design, construction and operation of homeowner associations.
2. CCR's are to be designed from the perspective of the homeowner, and must respect the central role which a home plays in the life of its citizens. 3. All CID's should be under the Brown Act or the Open Meetings Act. 4. CCR's must be easy to read and devoid of obfuscatory technical jargon. 5. CCR's must mandate the right to equal services and treatment for all, and specify significant penalties against board members, managers and lawyers who violate this right. 6. CCR's must mandate the right of all homeowners to complete access to the books and records of the association with significant personal penalties against board members for violations. 7. A very clear statement of the restrictive provisions in CCR's and penalties for their violation must be presented to prospective new buyers at the start of escrow. In addition, there should be very clear disclosure of all lawsuits, construction defects and liabilities that affect homes and common property in the association. 8. All association elections are to be conducted according to the California Election Code, without the involvement of vendors like association lawyers and managers. 9. There will be a right to cumulative voting in elections - to ensure that minority perspectives have a chance to be heard. 10. An efficient, speedy, cost-effective and non judicial procedure to address violations of the CCR's by board members, lawyers and managers, and a meaningful penalty structure. Where fraud and concealment of information has taken place in homeowner associations, there should be no statute of limitations. 11. Term limits for board members. 12. Dues and assessments are to be used only for the purposes for which they were collected - and an adequate accounting and full disclosure to all owners to substantiate this. Owners, upon request, should be given monthly income and disbursement journals and minutes of association meetings. 13. There should be public bids for all jobs, and board members and any others in the decision-making process should give a complete disclosure of any and all personal financial interest. All confirmed vendor contracts should be available for inspection and copy to all owners. There should be significant penalties for violations of the above by board members, lawyers and managers. 14. If management companies are used, they must be licensed. Courses to obtain this license should be held at a public educational institution ( e.g. a community college). Courses taken in a private institution may be vendor-biased, and involve conflict of interest. Management companies should be prohibited from accepting kickbacks and bribes from any and all vendors, including but not limited to lawyers, banks, insurance companies and landscape companies. 15. Management companies should be bonded in favor of the homeowners. 16. Management companies should only manage. They should not be involved with the accounting - collecting homeowner fees, controlling bank accounts, signing checks or giving legal advice. Managers should not be allowed to charge any legal costs or insurance costs to homeowners. ( Homeowner dues should not be used to pay for managers liability insurance - the current CHUBB Insurance D&O board policies also covering managers for nominal is illegal, a conflict of interest and should be investigated.) 17. Audits should be rigorous and in depth. Current audits are generally perfunctory and meaningless. 18. Homeowners should have the right to vote on whether the association may file a lawsuit other than a Small Claims action. There should be limits set on lawyers fees for collections and suits against homeowners. 19. Small Claims court should be used instead of non-judicial foreclosure to collect delinquent assessments. 20. Reserves and all other association resources should not be used for legal fees and without an express vote of the homeowners. 21. The provision which allows the winner in a suit to claim legal fees should be abolished. This provision encourages suits by boards. If the board sues and loses, board members do not suffer personally. They simply pay the legal fees and costs from the dues of the members.If a member sues the board and wins, the insurance company pays all the legal fees and costs, and charges the homeowners higher premiums. The homeowner, not only is exposed to significant financial risk, but also funds the suit against him/herself. If the member sues and loses, the insurance company sues the member to collect inflated legal fees and takes away member's equity and home. 22. All association lawsuits (not individual homeowner suits), along with expenditures and settlements should be recorded in the county records along with the CCR's. A record of construction defect corrections made to association common areas should be given to each owner and recorded with the county. 23. Directors for Master Associations must be elected by vote of all the homeowners - not, as currently, by vote of the directors of the sub-associations. 24. The control of boards of directors should be limited to common areas only. 25. Board oversight of associations which contain single family homes should be confined to the common area only. 26. Homeowners living in association should be relieved of the double taxation burden to which they are currently subjected. 27. As buying a home in an association today is really buying a share in a corporation, those involved in selling these homes as a business should be required to have a stockbroker's license, and be subject to all the stockbroker disclosure laws. 28. There should be government oversight of CID's - an agency to address homeowner concerns and complaints. This should be an elected position funded by homeowners who live in associations. Appointed positions have become political paybacks by politicians. CAI trial lawyers who create havoc suing homeowners, bankrupting homeowner associations and snatching homes have been vying for this position for decades. 29. As the Davis Stirling Act is critical to the life of homeowner associations, each homeowner should be provided with a copy along with their CCR's and provided with updated versions on an annual basis if there have been changes in the prior year. 30. As public utilities are required to notify their customers of upcoming changes in the rates and regulations, so homeowners should be notified of similar upcoming changes in the Davis Stirling Act. |
| The above list is not intended to be exhaustive. As other homeowners across the State submit proposals, I will bring them to the attention of the California Senate Housing and Land Use Advisory Group. It would be very helpful if all members of this committee requested associations to notify the homeowners of the existence of this advisory group and solicit their suggestions. |
|
|
| In order to to ensure that the integrity of the American home is enhanced and strengthened, your comments and suggestions are vital. Please email your suggestions to: Homeowner Bill of Rights. Thank you for your contribution. |
|
American Homeowners Resource Center P.O. Box 97 * San Juan Capistrano, California 92693 Phone: (949) 366-2125 * E-mail:ahrc@ahrc.com Website:http://www.ahrc.com © 1990-200 1, AHRC News Services |