Governor Newsom recently signed Senate Bill 326, Civil Code Section 5986, effective January 1, 2020. The new law gives the HOA Board of Directors the authority to commence and pursue a claim, civil action, arbitration, or pre-litigation process pursuant to Civil Code Section 6000 (The “Calderon Act”) and Civil Code section 895 et seq. (“Right To Repair Law”) against a declarant, developer or builder for construction defect claims without taking the vote of HOA membership.
Almost all developer-drafted governing documents contain provisions which require the vote of the Association’s membership (typically 50% or more of the Association’s membership, sometimes more) prior to commencing a construction defect claim, or prior to commencing arbitration or a civil action after exhausting the pre-litigation phase of a construction defect claim. Additionally, any provision in the governing documents which restricts the Board’s authority to retain legal counsel or incur costs or expenses to pursue a construction defect claim are unenforceable, null and void.
The new law applies retroactively to all HOA governing documents, effectively nullifying these restrictive provisions. The Board of Directors are still required comply with Civil Code section 6150, which requires the Board to conduct a meeting of the membership at least 30 days before filing a civil action against the declarant/developer by written notice to each member of the Association to discuss: 1) That a meeting will take place to discuss problems that may lead to the filing of a civil action, in addition to the potential impacts to the Association and its members, including financial impacts; 2) The options, including civil actions, that are available to address the problems; and 3) the time and place of the meeting.
McKenzie Rhody LLP focuses exclusively on construction defect litigation. The Firm’s attorneys have successfully represented homeowners associations throughout California, Colorado and Texas. If you have any questions regarding this new law, potential construction defect claims, or questions regarding construction defect law, please contact Daniel Ryan, Esq. at firstname.lastname@example.org or call us for a free consultation at (800) 996-1770.