The Davis-Stirling Act, also known as ‘California Civil Code,’ beginning with section 4000, is the basis of legal structure and requirements around HOAs. The primary goal of this legislation is to outline how HOAs are established and to delineate practices that protect homeowners’ rights. It does this by requiring transparent, secure elections, financial disclosures, and parameters around meetings and notification of HOA members.
This law necessitates inspectors of elections in California and several other provisions, which should stand as an indication as to its specificity. In this post, we’ll unpack what this section of the civil code hopes to accomplish, the regulations it dictates, and what legal steps HOAs must take to comply with the Davis-Stirling act.
Established in 1985, the Davis-Stirling Common Interest Development Act was created out of increasing challenges around housing in California. In the 1970s, residential developments faced difficulties finding sufficient space and increasing complications around taxation.
When, in response to these issues, HOAs became more popular, it was necessary that there be regulation overseeing the formation and operation of these organizations.
The Davis-Stirling Act addresses a number of variables present in the founding and structure of HOAs, including:
The law applies to all common interest developments (CIDs) and requires that they form an HOA to oversee the shared property and services. It also stipulates that the HOA must be structured as a nonprofit.
At its most basic level, this section of the California Civil Code says that HOAs must document their formation and the legal framework through which it works, and the Davis-Stirling Act makes these documents enforceable by law.
The Davis-Stirling Act is slightly more prescriptive when it comes to boards of directors. First, board meetings must be open to all members and must give proper notice of meetings at which members are present. Second, the board has a legal obligation to act in the best interests of the HOA.
Finally, they are empowered to oversee and enforce the founding documents, the state of the property and HOA resources, and ensure the organization’s compliance with state and federal laws.
Just as the Davis-Stirling Act necessitates that board meetings be open to all members, it provides that homeowners have access to documents relevant to the organization. This includes things like founding documents, meeting minutes, and financial statements.
The law also grants homeowners a version of the right of due process already protected on a federal level. Because of this section, homeowners must be notified of fees or penalties they incur, and in most cases must be provided a hearing before the application of those fees or penalties.
This section also details specific homeowner rights around subjects such as pets, the display of religious symbols, landscaping, and clotheslines.
This section is the most intuitive, stating that the HOA is responsible for maintaining shared spaces and facilities, such as parks and landscaped areas. This section also details in which cases a homeowner as an individual is responsible for a space.
One of the most important sections to many homeowners, this part details how HOAs are able to collect funds from members. This includes how the fees are established, how they are collected, and the legal consequences for failure to pay.
With a view towards the rights of members, the language here also details how fees can be increased, when homeowners must be notified of changes, and under what circumstances an HOA can collect emergency funds.
Voting is an important part of HOAs, and the Davis-Stirling act accounts for that. There are a series of stipulations around these processes.
First, it requires secret ballots so members don’t fear repercussions for voting a certain way. Second, elections must be overseen by appointed inspectors that ensure the process is fair and accurate. Third, the law requires that a certain number of members must participate for a vote to be binding. Recent amendments also allow for electronic voting, and stipulate rules around that.
The legal requirement of election oversight means that many HOAs use tools like ElectionBuddy to carry out the election and manage its security and transparency. Companies like this manage the voting process, be it electronic or mail-in, ensuring the HOA is strictly adhering to the regulations of the Davis-Stirling Act and any other state and federal laws.
Only recently has California allowed HOA proxy voting, a practice that means that, under certain circumstances, HOA members can have someone vote in their stead.
In any organization as complex as an HOA, it’s important that there are regulations to ensure consistent operation and the protection of individuals. The Davis-Stirling Act aims to do exactly that.
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