Davis-Stirling Common Interest Development Act
The Davis-Stirling Common Interest Development Act is the common name of the portion of the California Civil Code beginning with section 1350 which governs condominium, cooperative, and planned unit development communities in California. It was enacted in 1985 by the California State Legislature.
Under Davis-Stirling, a developer of a common interest development is able to create a homeowners’ association (a HOA) to govern the development. As part of creating the HOA, the developer records a document known as the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) against the units or parcels within the HOA with the county recorder.
Even though it is not a governmental entity, the HOA operates like one in some respects. As recognized by the Supreme Court of California, the declaration of CC&Rs are the constitution of the HOA and are legally binding upon residents as long as they do not conflict with state or federal law. CC&Rs, once properly recorded, are presumed valid until proven otherwise. The California Courts of Appeal have explained the quasi-governmental nature of the HOA:
||Indeed, the homeowners associations function almost ‘as a second municipal government, regulating many aspects of [the homeowners'] daily lives.’ [Citation.] ” ‘ “[U]pon analysis of the association’s functions, one clearly sees the association as a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government. As a ‘mini-government,’ the association provides to its members, in almost every case, utility services, road maintenance, street and common area lighting, and refuse removal. In many cases, it also provides security services and various forms of communication within the community. There is, moreover, a clear analogy to the municipal police and public safety functions….” ‘ [Citation.]” [Citation.] In short, homeowners associations, via their enforcement of the CC&R’s, provide many beneficial and desirable services that permit a common interest development to flourish.
The HOA’s board may enact rules which are legally binding upon residents as long as they do not conflict with the CC&Rs or state or federal law. Board meetings, like the boards of government agencies, are generally open to HOA members, with some exceptions.
The HOA is also allowed to charge regular fees to homeowners within the development (comparable to taxes). These are used for functions like paying for security guards (including, for gated communities, the operation of a gatehouse) and maintaining common areas like corridors, walkways, parking, landscaping, swimming pools, fitness centers, tennis courts, and so on. The HOA can levy fines or sue homeowners for damages and/or injunctive relief to enforce the HOA’s rules and CC&Rs.
The underlying justification for Davis-Stirling is that after the enactment of California Proposition 13 (1978), it became extremely difficult for both state and local government entities in California to raise taxes. With public services rapidly deteriorating by the mid-1980s, and with crime rates soaring throughout California, developers wanted to be able to ensure quality of life in new common interest developments; the obvious problem was that property tax revenue from newly-built-and-sold homes (taxable at market value at time of sale under Proposition 13) might be used to pay for services elsewhere (that is, for the benefit of homes whose time of sale was long ago and whose taxes could not be raised under Proposition 13). Furthermore, developers by the 1980s now had experience with how early suburbs had evolved over the decades (with some residents engaging in activities that decreased neighborhood property values) and wanted to ensure that common interest developments would maintain a common look and lifestyle.
Davis-Stirling solves both problems. The HOA has the power to impose fees that are cycled back into the community for the community’s benefit, and to enforce rules that maintain the “atmosphere” of the community and therefore the property values of all the units or parcels in the development.
1. This Act shall be known as THE CIVIL CODE OF THE STATE OF
CALIFORNIA, and is in Four Divisions, as follows:
I.–THE FIRST RELATING TO PERSONS.
II.–THE SECOND TO PROPERTY.
III.–THE THIRD TO OBLIGATIONS.
IV.–THE FOURTH CONTAINS GENERAL PROVISIONS RELATING TO THE THREE PRECEDING DIVISIONS.