1. Application.

This model statute applies to common-interest communities of single-family detached homes. The provisions protect homeowners with respect to actions by their association or its directors, officers, employees, managers, and other agents, but are not intended to alter the rights of homeowners or associations with respect to lenders, real estate agents, or developers.

2. Definitions

a. “Common-interest community” means a real-estate development or neighborhood in which individually owned lots or units are burdened by a servitude that imposes an obligation that cannot be avoided by nonuse or withdrawal:

i. to pay for the use of, or contribute to the maintenance of, property held or

enjoyed in common by the individual owners, or

ii. to pay dues or assessments to an association that provides services or facilities to the common property or to the individually owned property, or that enforces other servitudes burdening the property in the development or neighborhood.

b. “Homeowner” means the owner of property burdened by a servitude described in ¶ 2a.

c. “Association” means an organization, including homeowners as members, created to manage the property or affairs of a common-interest community.

d. “Common property” means property rights of an identical or a similar kind held by the homeowners as appurtenances to their individually owned lots or units.

e. “Declaration” means the recorded document or documents containing the servitudes that create and govern the common-interest community.

f. “Governing documents” means the declaration and other documents, such as the articles of incorporation or articles of association, bylaws, architectural guidelines, and rules and regulations that determine rights or obligations of homeowners or that otherwise govern the management or operation of an association.

g. “Corporate documents” means the declaration and other governing documents required to be filed or recorded under state law (such as articles of incorporation or articles of association), as well as other governing documents (such as bylaws) that state law requires an association to adopt even if not filed or recorded.

h. “Operating rule” means any rule or regulation not stated in the corporate documents, whether adopted by the directors or by homeowners in a vote, that applies to the management or operation of the association or to the conduct of the business and affairs of the association, including (without limitation) user fees, charges for any violations of the governing documents of the association, and other fees or charges.

i. “Rule change” means adoption, amendment, or repeal of an operating rule.

j. “Directors” means the persons who constitute the association’s senior governing body, in articles of incorporation or articles of association, or in other governing documents.

k. “Ombudsperson” means the chief executive of the state Office of Ombudsperson for Homeowners, or the designated representative.

l. “Notice” means, with respect to any person, sending regular and certified mail (return receipt requested) to the person’s last known address. For homeowners, it means each address where the association sends its annual assessments, written in plain English.

The Application section of this model statute follows the American Law Institute’s Restatement

(3rd) of Property, Chapter 6 on Common-Interest Communities (2000) (“Restatement”) § 6.1, [42] but focuses on single-family detached homes. Provisions of this model statute may be adapted for use by other common-interest communities, such as condominiums and cooperatives, as well as duplexes, row houses, or mixed-type communities.

Relationships with lenders and developers typically receive careful attention under existing state

law, and these relationships are beyond the scope of this model statute. State law also typically

addresses rights with respect to real estate agents separately. This model statute does anticipate that state law will clarify the duties of real estate agents concerning disclosures of association information during negotiation for home sales.

Definitions of “common-interest community,” “common property,” “association,” “declaration,”

and “governing documents” track the American Law Institute’s Restatement § 6.2 (1, 2, 3, 5, and

6). Careful study led to the Restatement formulation and use of common terms may reduce

unintended consequences of definitional changes and facilitate related use for communities other than single-family detached homes. To the extent the Restatement provides guidance to

legislators and the judiciary, use of common terms facilitates development of the law. This

model statute does change one term, but not its meaning, using “homeowner” in place of

“member” as defined in Restatement § 6.2(4).

The term “declaration” typically includes documents called Covenants, Conditions, and Restrictions (CC&Rs) or deed restrictions. These are the most important of the governing

documents, and are always recorded with the deeds. “Governing documents” also include articles of incorporation (and articles of association). These are typically filed with the secretary of state.

Bylaws, often not filed, typically are required by state law to set out the association’s operational

rules. The model statute follows standard practices regarding the relative importance of these

types of documents. See the Right to Stability in Rules & Charges, Section 105 (¶1).

Technical legal definitions should not obscure the main focus. This model statute focuses on

situations where homeowners must join and remain members of an association.

The model statute uses “homeowner” rather than “member” to reflect the common sense that, at

least for single-family detached homes, the primary perception remains homeownership rather

than membership in an association. If an association initiates foreclosure, homeowners retain full rights under this model statute until the foreclosure concludes. After conclusion of foreclosure,

this model statute grants homeowners limited rights, particularly to clarify the right to

redemption. See the Section 101, Right to Security Against Foreclosure.

The model statute also regulates use of operating rules that associations may amend or repeal

with less formality than provisions in corporate documents. Definitions of “operating rule” and

“rule change” derive from California law, [43] to be consistent with that statute’s framework. See

the Section 105, Right to Stability in Rules and Charges.

The definition of “ombudsperson” reflects the right to an ombudsperson for homeowners. The

model statute does not address possible uses of electronic communications to provide notice. [44]

The model statute does not seek to reduce the force of other laws to protect homeowner rights.

These include both federal laws, such as those ensuring fair housing and fair debt collection, and generally applicable state statutes, such as those governing consumer protection and nonprofit corporations generally. [45]

[42] See supra n.38.

[43]  Cal. Civ. Code 1357.100 (a & b).

[44]  See, e.g.., Fla. Stat. Ann. 720.306(5) (allowing “electronic transmission”).

[45]  Federal laws include 42 U.S.C. 3601 et seq. (fair housing) and 15 U.S.C. 802 et seq. (fair debt collection). Many additional state statutes exist. See, e.g., Statutory Clarification and Simplification of CID Law: Member Rights, Memorandum 2005-32 (Calif. L. Rev. Comm’n 9/19/05) at 2–3 & 5 (listing generally applicable statutes that protect homeowner rights on matters such as sign display, solar energy systems, structures assembled in sections or modules, racial restrictions, accommodation of disabilities, home day care, and flags).