The Davis-Stirling Common Interest Development Act is a cornerstone of California HOA laws, providing a comprehensive legal framework for the creation, governance, and operation of many Homeowners Associations (HOAs) in the state. Enacted in 1985 and reorganized in 2014, this Act is intended to promote transparent and fair HOA governance, addressing the rights and responsibilities of homeowners and associations.
Understanding the provisions of the Davis-Stirling Act can help homeowners participate in their communities, understand applicable rights and obligations, and identify processes that may apply to disputes or concerns. Some homeowners also choose to consult with an experienced California HOA attorney for help understanding how these rules may apply in a specific situation.

Overview Of The Davis-Stirling Act

The Davis-Stirling Act was enacted in 1985 to address the growing need for standardized laws governing common interest developments (CIDs) in California. Recognizing the complexities and challenges faced by HOAs, the Act was reorganized in 2014 to enhance clarity and accessibility, now codified under California Civil Code §§ 4000–6150.

Scope and Applicability

This Act applies to many CIDs in California, including condominiums, cooperatives, and planned developments. It generally applies to associations regardless of when they were established, subject to specific statutory definitions and exceptions.

Purpose

The primary objectives of the Davis-Stirling Act are to:​
Standardize the creation and operation of HOAs.
Ensure transparent and fair governance.
Protect the rights and interests of homeowners.
Provide clear guidelines for financial management and dispute resolution.​
By establishing these standards, the Act is intended to promote harmonious community living and reduce potential conflicts within HOAs.​

Formation And Operation Of HOAs

Establishing an HOA

Governing Documents: The foundation of any HOA lies in its governing documents, which include:​
Declaration of Covenants, Conditions, and Restrictions (CC&Rs): Outlines the rights and obligations of homeowners and the association.
Bylaws: Detail the internal governance structure, including board responsibilities and meeting procedures.
Articles of Incorporation: May legally establish the HOA as a corporation under California law.​
These documents help define the operational framework of the HOA and should be consistent with applicable law.​
Developer's Role: In the initial stages of a CID, the developer typically plays a key role in setting up the HOA. This often includes preparing governing documents, appointing an initial board of directors, and transitioning control to the homeowners as required by the governing documents and applicable law. ​

Operational Requirements

Board Responsibilities: The HOA board is entrusted with managing the association's affairs, which can include:​
Conducting regular meetings to make decisions on behalf of the community.
Maintaining accurate records of proceedings and financial transactions.
Working to follow the governing documents and relevant laws.​

Member Participation

Homeowners have the right to:​
Attend and participate in board meetings, except in certain executive sessions.
Access certain association records, including financial records and meeting minutes, subject to statutory requirements and exceptions.
Vote on matters affecting the community, as provided by law and the governing documents.

Governance And Elections

Board Member Duties

Fiduciary Responsibilities: Board members are generally expected to act in the best interests of the HOA, which can include:​
Exercising due diligence in decision-making.
Avoiding conflicts of interest.
Complying with applicable disclosure and transparency requirements.​
Failure to uphold these duties may lead to disputes and, in some situations, potential legal consequences. ​
Conflict of Interest Policies: To maintain integrity, board members should:​
Disclose certain personal or financial interests related to HOA matters, as required by law.
Recuse themselves from decisions where a conflict exists, when appropriate.​
Implementing clear policies can help reduce potential disputes and support fair governance.​

Election Procedures

Nomination and Voting: The Davis-Stirling Act generally requires that HOAs:​
Adopt election rules that promote fairness and transparency.
Use secret balloting for covered elections.
Provide equal access to association media for all candidates, where required.​
These provisions are intended to help ensure that board elections reflect member voting. ​
Recent Legislative Updates: Recent amendments to the Act allow for electronic voting in certain circumstances, if statutory requirements are met and the association adopts compliant election rules. ​

Financial Management And Assessments

Budgeting and Assessments

Annual Budget Reports: HOAs are required to prepare and distribute an annual budget report, which includes:​
Estimated revenue and expenses for the upcoming fiscal year.
Details of reserve funding for major repairs and replacements.
Disclosure of any anticipated special assessments.​
This transparency helps homeowners understand how assessments are budgeted and reported. ​
Assessment Increases: The Act places limits on certain assessment increases, stipulating that:​
Regular assessments generally cannot be increased by more than 20% annually without homeowner approval.
Special assessments that exceed 5% of the budgeted gross expenses generally require member approval.​
These provisions are intended to reduce unexpected financial burdens, subject to statutory definitions and exceptions. ​

Financial Transparency

Record Keeping: HOAs must maintain financial and other association records, which may include:​
Accounts of income and expenditures.
Documentation of reserve funds and their usage.
Records of certain contracts and financial obligations.​
Proper record-keeping supports accountability and can facilitate member review. ​
Member Access: Homeowners generally have the right to inspect and copy certain association records, subject to statutory procedures and limitations.

Dispute Resolution Procedures

Internal Resolution Mechanisms

Alternative Dispute Resolution (ADR): The Davis-Stirling Act encourages resolving disputes through Alternative Dispute Resolution (ADR) in many situations before resorting to litigation. ADR can include mediation and arbitration, involving a neutral third party to facilitate a mutually agreeable solution.
Enforcement Actions: When internal resolutions fail, the Act allows either the association or a homeowner to initiate civil proceedings in appropriate circumstances to enforce the governing documents or applicable law. ​

Legal Remedies

Litigation: If ADR does not resolve a covered dispute, parties may proceed to litigation where permitted. For certain claims to enforce the governing documents or the Act, California law generally requires an offer to participate in ADR before filing suit, subject to statutory exceptions. ​

Maintenance And Use Of Common Areas

Common Area Responsibilities

Association Duties: Under California HOA laws, associations are generally responsible for the maintenance, repair, and replacement of common areas, except as otherwise provided in the governing documents. ​
Homeowner Responsibilities: Homeowners are often responsible for maintaining areas designated for their exclusive use, as defined in the CC&Rs and applicable law. ​

Architectural And Landscaping Guidelines

Approval Processes: Many HOAs require homeowners to obtain approval before making certain architectural or landscaping changes. The Davis-Stirling Act sets standards for how architectural review procedures must be handled, including requirements that procedures be fair, reasonable, and followed. ​
Enforcement: HOAs may enforce properly adopted and applied architectural standards and rules, consistent with the governing documents and applicable law. ​

Compliance And Legal Protections

Adherence to Laws

Fair Housing Act: The federal Fair Housing Act prohibits discrimination based on race, color, religion, sex, familial status, national origin, and disability. HOAs should ensure their policies and practices align with these federal protections.
State Regulations: In addition to federal laws, HOAs must comply with California-specific fair housing and civil rights laws, including the Fair Employment and Housing Act (FEHA), which includes additional protected characteristics under California law. ​

Homeowner Rights

Equal Treatment: Homeowners are entitled to equal treatment under applicable law. Alleged discriminatory practices by HOAs may be addressed through available administrative processes and, in some circumstances, through the courts. ​
Legal Recourse: Homeowners who believe their HOA has engaged in discrimination or other legal violations may consider available dispute-resolution options, including appropriate complaints to government agencies or civil claims where applicable. ​

Enforcement Of Governing Documents

Rule Enforcement: HOAs are generally empowered to enforce the community's CC&Rs and bylaws, consistent with the governing documents and applicable law. ​
Penalties and Fines: Associations may impose monetary penalties for violations, but they must follow required notice and hearing procedures and comply with applicable statutory and governing-document requirements. ​
Homeowner Remedies: If an HOA fails to enforce rules or enforces them in a manner that is alleged to be improper, homeowners may have options under the governing documents and California law to address concerns, which can include dispute-resolution processes and, where appropriate, legal action.

Understanding The Davis-Stirling Act And HOA Disputes

Understanding the Davis-Stirling Act can help homeowners involved in California homeowner associations (HOAs) better evaluate formation, governance, financial management, dispute resolution, and compliance issues that may arise in a CID. Homeowners and associations may also wish to review their governing documents alongside the Act when questions come up about rights and responsibilities. ​