The Davis-Stirling Common Interest Development Act is the primary set of rules that govern California Homeowners’ associations. These rules were created in 1985 and have been updated continuously throughout the years. They provide a general framework for how to set up an HOA, laws governing the management of community associations, and association powers and responsibilities.

Homeowners’ Associations in California need to be set up as a corporation and therefore must also adhere to the California Corporation Codes. These codes state that all community associations must be operated by a board of directors.

Currently, no government agency regulates homeowners’ associations. HOAs out of compliance with the Davis-Stirling Act can be liable for penalties, but it is up to the homeowners to fix the problem or bring it to the attention of the court system. There is no automatic government check or audit of community associations.

 

The Davis-Stirling Common Interest Development Act

Created in the 1980s, the Davis-Stirling Common Interest Development Act was designed to give more power to higher-density housing developments so that they may maintain and improve their neighborhoods without requiring government funding or assistance. It provides guidelines for how to set up and maintain an effective HOA as well as lists the powers and responsibilities of the association such as collecting assessments, paying association bills, managing finances, and preparing and delivering budgets.

 

Setting Up an HOA

All HOAs must have a set of Bylaws that dictate how the association will be operated, and a Declaration of Covenants which outline the conditions and restrictions for homeowners. Typically, these documents are drawn up by attorneys during the early stages of HOA development. According to California state law, all homeowners are legally required to obey all association rules as long as they are consistent with state laws.

 

California HOA Board Rights and Responsibilities

Volunteer board members are protected by California law from any personal liability as long as the board member is acting in good faith and the interest of the community. Board members cannot be sued by homeowners for enacting or enforcing HOA regulations consistent with state law and community bylaws.

 

Dues Increase

Homeowners’ associations may increase dues at their discretion. If there is more than a 20% increase in fees per year, the majority of homeowners must approve the change. The board of directors must notify homeowners of any changes at least 30 days before the change taking effect but no more than 60 days.

Association budgets and policy statements must be reviewed and prepared annually. These documents must be made publicly available at least 45 days before the start of the next fiscal year but not more than 60 days.

 

Compliance With Community Bylaws

Board members have the ability to fine or place liens on homeowners if they are out of compliance with community bylaws or behind on their dues. Notice of a fine must be sent to homeowners 10 days before a board meeting so that the homeowner may come to the meeting and plead their case. If the board decides to follow through with the fine, they must provide written notice within 15 days of the ruling. The Davis-Stirling Act provides standardized rules of notice and delivery.

Dues become delinquent 15 days after the posted due date. Any delinquent accounts are subject to late fees equaling $10 or 10% of the monthly dues; whichever is greater. Homeowner Associations can place liens on the property. In extreme cases, HOAs can foreclose on property and file judgment against the homeowner.

 

For Questions Regarding California HOA Law

Most of the information needed to effectively, and legally, manage an HOA in California can be found within the Davis-Stirling Common Interest Development Act, but it always helps to have a professional on your side. CSM has a team of experienced professionals that have worked with communities in almost every state in the US. Specializing in HOA financial management, we can help your board of directors manage association finances, write and submit documents, and prepare for audits. If you have any questions regarding state HOA laws and regulations, give us a call at (865) 315-7505, contact us online or email us at help@csmhoa.com.