THE CALIFORNIA LAW REVISION COMMISSION DECIDES TO BEGIN A COMPREHENSIVE REVIEW OF COMMON INTEREST DEVELOPMENT LAW IN CALIFORNIA, AND TO SEEK NON-JUDICIAL MECHANISMS FOR DISPUTES IN HOMEOWNER ASSOCIATIONS


The California Law Revision Commission (CLRC)met in Room 437 at the State Capitol, Sacramento, on Friday, February 2, 2001 to discuss Common Interest Development (CID) Law.

Commissioners David Huebner (Chair - a Los Angeles lawyer), Joyce Cook (Vice Chair - a Los Angeles lawyer) and Howard Wayne (California Legislator -Assembly Representative and member/lobbyist on the National Conferece of Commissioners on Uniform State Laws-NCCUSL ) presided over the public meeting.

Also present, were Nathaniel Sterling, (Administraor-Lawyer- Executive Secretary of the California Law Revision Commission -CLRC. Sterling is also a member/lobbyist on the National Conference of Commissioners on Uniform State Laws -NCCUSL ) and other staff members.

There were approximately 30 homeowners and trade lobbyists present also.

The meeting took place against a surreal background.

On the outside, the stately trees framed the Capitol dome against an unusual February blue sky. But on the inside, telltale signs were silent reminders of a harsher reality.

Elevators would not go to the basement, and barriers and signs declared that it was off limits.

Only a little more than a week before, a desperate trucker deliberately crashed his big wheeler rig into the side of the Capitol building, igniting a huge inferno that engulfed both the trucker and the Capitol basement. Numerous whirling fans attested to the water damage incurred in the effort to extinguish the fire.

The lights burned brightly in the Capitol building, but Commission member, Bill Morrow – the State Senate Representative – was absent because he was working on an energy committee trying to keep the lights on in California after he and fellow politicians created the deregulation fiasco that saddled Californians with astronomical utility bills and gave utility brokers exorbitant profits.

Ironically, Morrow's district in South Orange County is one of the most contentious in the state when it comes to homeowner association issues. Many homeowners criticize him for doing nothing in face of a litigation flood initiated by homeowner association lawyers and claim that his support for the regulatory scheme which governs homeowners associations is also a fiasco.

Nathaniel Sterling briefly outlined how the CID issue had come before the Commission. He stated the original request had arisen from Quentin Kopp, a state senator, and funding had been approved by the state legislature.

Susan French, the author of a background report requested by the Commission and a member of the law faculty at UCLA, stated that the current Davis Stirling Act governing CIDs in California was unsatisfactory due to its vagueness, complexity and lack of organization. She suggested that the Commission consider adopting the Uniform Common Interest Ownership Act (UCIOA).

UCIOA is a product of the National Conference of Commissioners on State Laws, a non-profit , unicorporated group of lawyers who are required to be members of their trade association.

The chair of the commission then asked Arnold McMahon to present his views on the topic.

Arnold McMahon has been active for over 11 years on the issues of CIDs. As a member of the American Homeowners Resource Center (AHRC) – a nationwide association of homeowners dedicated to preserving the American home - he has lectured and written extensively on the issue.

He briefly outlined the history of CIDs and some of the central forces that created and shaped them:

• pent-up demand for homes after World War 2
  
• desire of developers for the greater profits to be earned from mass-producing homes
• recognition by service personnel such as lawyers and management companies that homeowner associations could be very profitable
  
• desire of cities to shed their tax obligations.
  

He pointed out to the Commission that the home was vital to the life of a free citizenry and that nothing be done to undermine that. In an eleven page report to the Commission, he noted that homeowners had never asked for CIDs.

Katherine Rosenberry, a member of the law faculty at Western State in San Diego, and an author of the Davis Stirling Act, stated that Davis Stirling was not working. She also said that when she was preparing the Davis Stirling Act, she was told to keep the key lobby groups happy, and that this had resulted in an undesirable document.

Curtis Sproul, an attorney specializing in CIDs and a member of the trade industry group CAI (Community Associations Institute) concurred with Rosenberry that Davis Stirling was deeply flawed, even though he was one of the authors of it.

Karen Cave, a homeowner, related how she had become homeless and saddled with $35,000 in fines by her homeowners association (HOA) because she cleared the snow in front of her home when the HOA refused to clear the snow on the association road in front of her home so that snow boarders could use it.

Karen Rosch from American Association of Retired Persons (AARP) and Joan Lay from the Grey Panthers both expressed deep concern about the negative impact which CIDs were having on senior citizens.

Robert Lewin, an Orange County homeowner read an extensive paper that sharply criticized many aspects of homeowner associations as presently constituted. He criticized especially the role of CAI attorneys in oppressing homeowners. Furthermore, he stated that he was forced to live in an HOA in order to send his daughter to the school of his choice- as that was the only type of housing available.

The afternoon session started out with the only expression of support for the Davis Stirling Act. Mr. Guthrie, an attorney for a number of road maintenance associations, wanted them to be converted into Davis Stirling CIDs so that assessments could be increased. (In the morning session, Arnold McMahon had argued that the retroactive application of laws to property owners was a serious mistake because it not only upset the settled expectations of property owners, but because it might well be unconstitutional.)

Marjorie Murray, a homeowner from Snoshoe Springs Homeowners Association , presented the case of David Donnell. He owned a small cabin that his parents had built. His association was seeking to foreclose on it because he had fallen behind in his association assessments due to serious medical problems – he had required 32 pints of blood in the last 2 months alone. The foreclosure would have rendered him homeless. Curtis Sproul, attorney for the association, and co-author of the Davis Stirling Act had been pushing for the foreclosure until public pressure had recently forced him to suspend it. Marjorie Murray stated that board members were seeking to foreclose on David Donnell because they "wanted to get practice at foreclosing".

Mylos Sonka described how he and other owners were being assessed 14 times more than other homeowners – and how the latter were on the board.

A retired judge, Charles Goff, attributed many of the problems in associations to tyranny by the board – and asserted that this was due to their role of being judge, jury and executioner.

Skip Daum, lobbyist for the trade organizations, CAI and CLAC (the California Legislative Action Committee) came under rigorous questioning by Commission member, Howard Wayne, who asked him if CAI would support a limit to regulations in CIDs. Daum eventually conceded that CAI would support a Bill of Rights for homeowners – but would want to know what was included.

Tyler Berding, lobbyist for the Executive Council of Homeowners (ECHO) – a group primarily consisting of trade vendors such as lawyers and management companies – focused primarily on the need to ensure that aging condominium projects be financially able to keep themselves maintained. He wanted associations to be able to raise assessments even though the required majority of the homeowners voted against such increases.

Karen Conlon, lobbyist and president of California Association of of Community Managers(CACM) who runs a school offering classes to association managers, wanted a bill to mandate the taking of classes by association managers.

The 2 final speakers were homeowners Beth Armstrong and Fred Eichenhoffer who described how her parents’ association had levied a $30,000 assessment against her parents’ home without any authority to do so. Mr. Eichenhoffer estimated that so far, they had spent about $140,000 in legal fees on the issue.

The Commission then, after discussion, decided on 2 course of action.

1. They would begin a comprehensive review of legislation covering CIDs.

2. As there were numerous disputes in homeowner associations which were costing homeowners massive legal fees, the Commission decided to put on a fast track, an investigation into non-judicial mechanisms to solve those disputes.

The Commission ended its meetings on CIDs at 3.50p.m.