CHANGE IN ANNUAL DISCLOSURES FOR HOAS

CHANGE IN ANNUAL DISCLOSURES

I've been contacted by people nervous about a change in the Davis-Stirling Act's annual disclosures. Disclosures in the existing Act and the Rewrite remain largely the same; they were simply reorganized into a "Budget Report" and an "Annual Policy Statement."

Annual Budget Report. As required by Civil Code §5300(b), the new "Annual Budget Report" contains all financial-related items and must include the following:

1. A budget,
2. A summary of reserves,
3. A reserve funding plan,
4. If reserve repairs will not be undertaken for particular components, a justification for the decision,
5. If special assessments will be required to cover reserve items (with estimated amount, commencement date, and duration of the assessment),
6. How reserves will be funded,
7. Procedures used to calculate reserves,
8. Disclosure of outstanding loans, and
9. A summary of the association's insurance.

Annual Policy Statement. As required by Civil Code §5310(a), the new "Annual Policy Statement" must include the following:

1. The name and address of the person designated to receive official HOA communications,
2. A statement that members may have notices sent to up to two different addresses,
3. The location, if any, for posting a general notice,
4. Notice of a member’s option to receive general notices by individual delivery,
5. Notice of a member’s right to receive copies of meeting minutes,
6. A statement of assessment collection policies,
7. A statement describing policies in enforcing lien rights,
8. A statement describing the association’s discipline policy,
9. A summary of dispute resolution procedures,
10. Architectural approval requirements, and
11. The mailing address for overnight payment of assessments.

January 1, 2014. The new disclosure requirements do not go into effect until January 1, 2014. As long as your association's notice period falls in the 2013 calendar year, you can continue to use your existing disclosure package. What matters is the date the disclosures are mailed out, not the date they are received. Accordingly, anything mailed in 2013, including reserve studies and reserve disclosures, continue to use the existing Davis-Stirling language and Civil Code numbering scheme. Starting January 1, 2014, everyone must switch over to the new Civil Codes and language.

ELECTRONIC BALLOTING

Thanks to your letters and phone calls (over 200), Assembly Bill 1360 passed the Assembly. AB 1360 allows associations to save money by switching from paper to electronic ballots as is now done in 25 other states. I will let everyone know when it's time to start calling state senators.

Adrian Adams, Esq. Adams Kessler PLC