Homeowners Associations (HOAs) play a pivotal role in maintaining many residential communities across California. Understanding their structure, responsibilities, and the rights of homeowners can help support harmonious community living. It is important to know about HOA governance in California, including key aspects such as the Davis-Stirling Act, formation and management of HOAs, dispute resolution, homeowner rights, and legal protections against discrimination.​

The Homeowners Associations (HOAs)

A Homeowners Association (HOA) is a nonprofit corporation or unincorporated association created for the purpose of managing a common interest development (CID). HOAs are generally established to oversee the maintenance of common areas, enforce community rules, and manage association affairs. They are typically governed by a board of directors elected by the homeowners.​

Importance Of HOAs In California

In California, HOAs are integral to the management of CIDs, which include condominiums, planned developments, and stock cooperatives. They help uphold community standards, maintain common area amenities, and provide a framework for making collective decisions that affect the community. HOAs may also offer processes for addressing disputes under their governing documents and applicable law.

Overview Of The Davis-Stirling Act

The Davis-Stirling Common Interest Development Act is the primary body of California law governing common interest developments and many HOA operations. It is codified in the California Civil Code beginning with section 4000 and provides a legal framework for the creation and operation of HOAs.

Key Provisions of the Act

Governing Documents: The Act generally contemplates that HOAs will have governing documents, including the Declaration (CC&Rs), Bylaws, and Operating Rules, which outline the rights and responsibilities of the association and its members.​
Board Meetings and Elections: It includes requirements regarding open board meetings, member participation, and election procedures intended to promote transparency and accountability.​
Financial Management: The Act includes standards for budgeting, financial disclosures, reserve funding, and related financial practices.

Impact on Common Interest Developments

The Davis-Stirling Act generally applies to common interest developments in California and provides consistency in areas such as governance, disclosures, and member rights. Certain provisions may apply differently depending on an association’s governing documents and specific facts.

Formation and Management of HOAs

Articles of Incorporation

If an HOA is formed as a nonprofit corporation, the developer or homeowners may file Articles of Incorporation with the California Secretary of State. These articles generally identify the corporation as an association formed to manage a common interest development (CID) and include information such as the association's name, purpose, and principal office address.

Filing Requirements with the California Secretary of State

If an HOA is incorporated, it is generally required to submit a Statement of Information to the California Secretary of State, providing details about the association's officers, agent for service of process, and principal business address. This filing is updated periodically and when certain changes occur.​

Homeowner Rights And Responsibilities

Understanding Assessments and Fees

Homeowners in HOAs are obligated to pay assessments, which fund the maintenance of common areas and other community expenses. These assessments can include:
Regular Assessments: Ongoing fees for routine maintenance and operations.
Special Assessments: Additional charges levied for unexpected expenses or major projects.
Associations are generally required to provide members with certain annual budget disclosures and financial information as part of the Act’s transparency requirements.​

Legal Protections and Resources Against Discrimination

California and federal law prohibit unlawful housing discrimination. In California, protected characteristics may include (among others) race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, familial status, disability, national origin, ancestry, source of income, and other categories recognized by law. HOAs should ensure that their rules, policies, and enforcement practices comply with applicable anti-discrimination laws. Homeowners who believe they have been subjected to discrimination may file complaints with the California Civil Rights Department or the U.S. Department of Housing and Urban Development (HUD), or consult legal counsel.

Governance And Compliance

Governing documents are the foundation of HOA governance. They include the Declaration of Covenants, Conditions, and Restrictions (CC&Rs), Bylaws, Articles of Incorporation (if any), and Operating Rules. These documents outline the rights and responsibilities of both the association and its members, providing a framework for decision-making and community standards.​

Financial Management Best Practices

Effective financial management is crucial for the sustainability of an HOA. Best practices include:​
Budgeting: Developing an annual budget that accurately projects operational costs, including maintenance, utilities, and administrative expenses.
Reserve Studies: Conducting regular reserve studies as required by law (generally at least once every three years) and reviewing reserve funding annually as part of the budget process.
Reviews and Audits: Depending on an association’s annual gross income, the Act requires either a financial review or an audit (with different thresholds applying).

Adherence to State and Federal Standards

HOAs must comply with various state and federal laws, including:​
Davis-Stirling Act: This Act provides a primary legal framework for common interest developments in California, covering aspects such as governance, financial disclosures, and dispute resolution.
Federal Laws: HOAs may also be subject to federal laws, such as the Fair Housing Act, which prohibits discrimination based on race, color, religion, sex (including sexual harassment), disability, familial status, or national origin.​

Property Usage And Architectural Control

Enforcing Property Usage Rules

HOAs enforce rules to maintain the community's aesthetic and functional standards. These rules, outlined in the CC&Rs and Operating Rules, may cover aspects such as landscaping, noise levels, and property maintenance. If you receive a violation notice from your HOA, it’s important to understand the notice, any hearing procedures, and the applicable governing documents.

Architectural Restrictions and Approvals

Architectural control is typically managed by an Architectural Committee or the Board of Directors. Homeowners are often required to seek approval before making certain changes to their property's exterior to help ensure consistency with the governing documents and adopted standards.

Dispute Resolution Mechanisms

Common Conflicts and Resolution Strategies

Disputes within HOAs can arise over various issues, including rule enforcement, assessments, and property modifications. Resolution strategies can include:​
Internal Dispute Resolution (IDR): A statutory process that associations must make available, intended to provide a fair, reasonable, and expeditious procedure for resolving certain disputes between the association and its members.
Alternative Dispute Resolution (ADR): For certain disputes, the Davis-Stirling Act requires the parties to attempt ADR (such as mediation) before filing a lawsuit, subject to statutory exceptions.

Role of Mediation and Arbitration

Mediation involves a neutral third party facilitating a mutually agreeable solution, while arbitration involves a neutral third party issuing a decision that may be binding, depending on the agreement and applicable law. These methods are often used to resolving disputes in a way that may reduce time and expense compared to litigation.​

HOA Board Operations

Election Procedures

HOA boards are typically elected by the membership. Election procedures must comply with the Davis-Stirling Act and an association’s adopted election rules, which generally require secret ballots and other safeguards for member voting.​

Term Limits and Board Turnover

While the Davis-Stirling Act does not mandate term limits, associations may establish them through their governing documents.

Ensuring Transparency and Communication

Transparency and effective communication are important for building trust within the community. Best practices include:​
Regular Meetings: Holding open board meetings and providing timely notices to members.​
Accessible Records: Making certain financial and operational records available to members upon request, consistent with statutory record-inspection requirements.​
Clear Communication Channels: Utilizing newsletters, websites, and emails to keep members informed.​

Encouraging Homeowner Participation

Active homeowner participation can enhance community engagement and decision-making. Strategies to encourage involvement include:​
Volunteer Opportunities: Creating committees and task forces for specific projects.​
Surveys and Feedback: Soliciting input on community issues and proposed changes.​
Educational Resources: Providing information on HOA governance and homeowner rights.

Connect With LS Carlson Law Today

Navigating the complexities of HOA governance in California requires a clear understanding of the legal framework, homeowner rights, and dispute resolution mechanisms. Whether you're dealing with assessments, architectural approvals, or board elections, staying informed is important.​
This article is for general educational purposes only and is not legal advice. For advice about a specific situation, consider consulting a California attorney.