Finance Advisory Committee – September 2023

By Robert O. “Bob” Jester
Chair, FAC Subcommittee

As published in The View, September 2023:

Question of the Month: Does California have a set of laws that apply to our Association?

The answer is YES and it is called the Davis-Stirling Common Interest Development Act. You find it at California Civil Code Sec. 4000 et.seq. The Act applies to any form of real estate where each owner holds exclusive rights to a portion of the property, which in our association is your lot, and where there are shared rights in common areas. The Act calls us either “members or owners” in the statutory provisions and we are a part of a “planned development.” The common areas are owned in our Association by the corporative entity that created and forms our Association i.e., the Sun City Shadow Hills Community Association, a California Mutual Benefit Corporation.

It is important to note that, even though the corporate entity has ownership rights; it is a common interest mutual benefit entity, in which all its members have shared rights and responsibilities for the common areas. Therefore, the Association’s powers are limited to those to be normally exercised for the mutual benefit of its members.

But with a member’s mutual benefit comes certain restrictions that “run with the land,” which means that each owner that buys property in this association acquires their property subject to the recorded restrictions. These restrictions include the community plan as recorded and the CC&Rs. If you have ever wondered what CC&R stands for, those letters refer to “Covenants, Conditions, and Restrictions.” In addition, the Davis-Stirling Act grants the association by law the right to create articles, by-laws, and rules which may not be recorded, but by California statute each owner is subject to those articles, by-laws, and rules that are lawfully enacted. All these noted restrictions and rules govern all the property in this association.

A property member/owner must also understand that the Davis-Stirling Act gives one specific rights under the law. The law provides that the statutes are to be liberally construed, which means that they are to be read broadly to accomplish the purpose for which they were written. Also, the Association’s governing documents must not conflict with statutory law. California courts will generally uphold an association’s governing CC&Rs and Rules, unless they are arbitrary or impose burdens on a few residents that substantially outweigh their benefits to other residents or violate fundamental public policy.

While the strength of the powers processed by the Association may seem overwhelming, there are many rights guaranteed to a property owner as well. Some of the many protected rights include: the right to display the American flag, the right to keep pets (although the number can be limited), the right to solar energy systems, the right to have satellite systems on your home, and the right to display religious items, are just a few of the guaranteed rights you have in this Association by-law.

The Davis-Stirling Act also provides for the structure of the Association’s governing Board, its obligations, and its limitations. The election process is also prescribed to assure fairness and accuracy. A member’s right to appeal on issues like fines or unreasonable failures to grant property variances, etc. is protected. Plus, the Association’s collection rights for unpaid assessments are carefully regulated by statute.

The statute also controls what reserve funds are necessary and restricts how they can be used. In addition, communications from the Association are required annually to provide association financial reports, budgets, insurance coverage, reserve study reports, and other items that impact the peaceful enjoyment of your property ownership.

We live in a “Google world” now, so if you have a question about your Association’s actions simply ask for the Davis-Stirling provision that can answer your concern or look at the Rules enacted by the Association.

We should all be very grateful that California has a law that protects our property rights and grants us, as owners, rights when dealing with the Association and its governing powers.

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