Davis-Stirling Common Interest Development Act
Encyclopedia
The Davis-Stirling Common Interest Development Act is the common name of the portion of the California Civil Code
beginning with section 1350 which governs condominium
, cooperative
, and planned unit development
communities in California. It was authored by Assemblyman Lawrence W. "Larry" Stirling and enacted in 1985 by the California State Legislature
.
Under Davis-Stirling, a developer of a common interest development is able to create a homeowners' association (a HOA) to govern the development. As part of creating the HOA, the developer records a document known as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) against the units or parcels within the HOA with the county recorder.
Even though it is not a governmental entity, the HOA operates like one in some respects. As recognized by the Supreme Court of California
, the declaration of CC&Rs are the constitution of the HOA and are legally binding upon residents as long as they do not conflict with state or federal law. CC&Rs, once properly recorded, are presumed valid until proven otherwise. The California Courts of Appeal have explained the quasi-governmental nature of the HOA:
The HOA's board may enact rules which are legally binding upon residents as long as they do not conflict with the CC&Rs or state or federal law. Board meetings, like the boards of government agencies, are generally open to HOA members, with some exceptions.
The HOA is also allowed to charge regular fees to homeowners within the development (comparable to taxes). These are used for functions like paying for security guards (including, for gated communities, the operation of a gatehouse) and maintaining common areas like corridors, walkways, parking, landscaping, swimming pools, fitness centers, tennis courts, and so on. The HOA can levy fines or sue homeowners for damages and/or injunctive relief to enforce the HOA's rules and CC&Rs.
The underlying justification for Davis-Stirling is that after the enactment of California Proposition 13 (1978)
, it became extremely difficult for both state and local government entities in California to raise taxes. With public services rapidly deteriorating by the mid-1980s, and with crime rates soaring throughout California, developers wanted to be able to ensure quality of life in new common interest developments; the obvious problem was that property tax revenue from newly-built-and-sold homes (taxable at market value at time of sale under Proposition 13) might be used to pay for services elsewhere (that is, for the benefit of homes whose time of sale was long ago and whose taxes could not be raised under Proposition 13). Furthermore, developers by the 1980s now had experience with how early suburbs had evolved over the decades (with some residents engaging in activities that decreased neighborhood property values) and wanted to ensure that common interest developments would maintain a common look and lifestyle.
Davis-Stirling solves both problems. The HOA has the power to impose fees that are cycled back into the community for the community's benefit, and to enforce rules that maintain the "atmosphere" of the community and therefore the property values of all the units or parcels in the development.
Elections (1363.03)
Members' rights to attend meetings (1363.05)
Managing agent requirements (1363.1)
Open Meeting Act (1363.05)
Dispute Resolution (1363.810 and 1369.510)
Common Repairs (1364)
Budgets, Foreclosure, Reserve Study, similar Fiscal Matters (1365)
Director Liability Protection (1365.7)
Assessments and collection (1366)
Construction Defect Litigation (1375)
California Civil Code
The Civil Code of California is a collection of statutes for the State of California. The code is made up of statutes which govern the general obligations and rights of persons within the jurisdiction of California...
beginning with section 1350 which governs condominium
Condominium
A condominium, or condo, is the form of housing tenure and other real property where a specified part of a piece of real estate is individually owned while use of and access to common facilities in the piece such as hallways, heating system, elevators, exterior areas is executed under legal rights...
, cooperative
Cooperative
A cooperative is a business organization owned and operated by a group of individuals for their mutual benefit...
, and planned unit development
Planned Unit Development
A planned unit development , is both a type of building development as well as a regulatory process. A PUD is a designed grouping of varied and compatible land uses, such as housing, recreation, commercial centers, and industrial parks, all within one contained development or...
communities in California. It was authored by Assemblyman Lawrence W. "Larry" Stirling and enacted in 1985 by the California State Legislature
California State Legislature
The California State Legislature is the state legislature of the U.S. state of California. It is a bicameral body consisting of the lower house, the California State Assembly, with 80 members, and the upper house, the California State Senate, with 40 members...
.
Under Davis-Stirling, a developer of a common interest development is able to create a homeowners' association (a HOA) to govern the development. As part of creating the HOA, the developer records a document known as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) against the units or parcels within the HOA with the county recorder.
Even though it is not a governmental entity, the HOA operates like one in some respects. As recognized by the Supreme Court of California
Supreme Court of California
The Supreme Court of California is the highest state court in California. It is headquartered in San Francisco and regularly holds sessions in Los Angeles and Sacramento. Its decisions are binding on all other California state courts.-Composition:...
, the declaration of CC&Rs are the constitution of the HOA and are legally binding upon residents as long as they do not conflict with state or federal law. CC&Rs, once properly recorded, are presumed valid until proven otherwise. The California Courts of Appeal have explained the quasi-governmental nature of the HOA:
The HOA's board may enact rules which are legally binding upon residents as long as they do not conflict with the CC&Rs or state or federal law. Board meetings, like the boards of government agencies, are generally open to HOA members, with some exceptions.
The HOA is also allowed to charge regular fees to homeowners within the development (comparable to taxes). These are used for functions like paying for security guards (including, for gated communities, the operation of a gatehouse) and maintaining common areas like corridors, walkways, parking, landscaping, swimming pools, fitness centers, tennis courts, and so on. The HOA can levy fines or sue homeowners for damages and/or injunctive relief to enforce the HOA's rules and CC&Rs.
The underlying justification for Davis-Stirling is that after the enactment of California Proposition 13 (1978)
California Proposition 13 (1978)
Proposition 13 was an amendment of the Constitution of California enacted during 1978, by means of the initiative process. It was approved by California voters on June 6, 1978. It was declared constitutional by the United States Supreme Court in the case of Nordlinger v. Hahn,...
, it became extremely difficult for both state and local government entities in California to raise taxes. With public services rapidly deteriorating by the mid-1980s, and with crime rates soaring throughout California, developers wanted to be able to ensure quality of life in new common interest developments; the obvious problem was that property tax revenue from newly-built-and-sold homes (taxable at market value at time of sale under Proposition 13) might be used to pay for services elsewhere (that is, for the benefit of homes whose time of sale was long ago and whose taxes could not be raised under Proposition 13). Furthermore, developers by the 1980s now had experience with how early suburbs had evolved over the decades (with some residents engaging in activities that decreased neighborhood property values) and wanted to ensure that common interest developments would maintain a common look and lifestyle.
Davis-Stirling solves both problems. The HOA has the power to impose fees that are cycled back into the community for the community's benefit, and to enforce rules that maintain the "atmosphere" of the community and therefore the property values of all the units or parcels in the development.
General structural summary
Enactment and Enforcement of rules (1357.100 and 1363)Elections (1363.03)
Members' rights to attend meetings (1363.05)
Managing agent requirements (1363.1)
Open Meeting Act (1363.05)
Dispute Resolution (1363.810 and 1369.510)
Common Repairs (1364)
Budgets, Foreclosure, Reserve Study, similar Fiscal Matters (1365)
Director Liability Protection (1365.7)
Assessments and collection (1366)
Construction Defect Litigation (1375)