Commercial and Industrial Common Interest Developments ("Commercial CIDs") in California have historically been governed by the same provisions that apply to planned residential developments and condominiums: the Davis-Stirling Common Interest Development Act ("Davis-Stirling"). However, some of those provisions have resulted in unnecessary burdens and requirements for Commercial CIDs that were really tailored to provide consumer protections for homeowners in residential settings (i.e., open meeting, election and disclosure requirements).
In light of this issue, on September 6, 2013, the California Legislature passed SB752: the Commercial and Industrial Common Interest Development Act. SB752 mirrors many of the provisions contained in Davis-Stirling, but omits some of requirements that were geared toward residential homeowners. For example, SB752 contains provisions governing Commercial CID formation, governing documents, assessments and construction defect litigation, but omits certain Davis-Stirling provisions governing association elections and disclosure requirements.
Although Davis-Stirling wouldn’t apply to commercial or industrial associations, the new Commercial and Industrial Common Interest Development Act would incorporate a good deal of reorganized Davis-Stirling. It repeats, almost verbatim, the provisions defining common interest developments, and the limits on use restrictions – like the limits on an association’s right to restrict displaying the flag. The bill also includes basic maintenance and assessment collection provisions.
It does not include the disclosure requirements that Davis-Stirling imposes on residential developments, or the election or open meeting provisions. The CLRC omitted these consumer-oriented provisions because business owners are usually less in need of their protections.
Commercial and industrial associations are an increasingly significant part of the community association industry, and range from small office condos to sprawling projects that include retail, industrial and office use. The new Act, if it becomes law, will simplify management of these projects. It may also provide a platform for new legislation in future years, which could benefit these associations and further distinguish them from residential associations.
If you are an owner of a unit in a Commercial CID or are a property manager or one, it is important that you become familiar with the new law and have your governing documents reviewed to make sure they comport with the new legislation and do not contain burdensome provisions which may have been applicable before January 1 2014. The common interest development attorneys at Schneiders & Associates, L.L.P. can provide you with the assistance you need and are willing to meet with you or your board to discuss the effects of SB 752 on your CID.
SB752 was officially signed into law by Governor Brown on October 5, 2013 and will take effect January 1, 2014.
Schneiders & Associates, L.L.P. is a multi-service law firm located in Oxnard, California with a focus in homeowners’ association matters. For more information on our firm and services, visit our website at www.rstlegal.com.