Legal Question in Business Law in California
Applicability of Davis-Stirling Act
Can a Nonprofit Assoc. knowlingly ignore CA State Law by not having updated its governing docs to reflect this Davis-Stirling Act?
Does such action invalidate any decisions/votes?
Is a vote on a Special Assessment, at a Special Meeting called for that purpose valid, without first providing Members a written evaluation of the following:
1)Estimated revenues and expenses on an accrual basis
2)A general statement addressing the procedures used for the calculation and establishment of those reserves
3)A summary of the Association's reserves
4)A statement as to whether the Board has determined or anticipates that the levy of one or more special assessments will be required to repair, replace, or restore any major component or to provide adequate reserves therefore.
Thank you very much
1 Answer from Attorneys
Re: Applicability of Davis-Stirling Act
Many of the provisions of the Davis-Stirling Act are self executing in that they automatically override conflicting provisions of an association's governing documents. Other provisions of Davis-Stirling are meant to supplement an association's governing documents or simply apply if the governing documents are silent on a subject. Failure to adopt changes to the CC&Rs isn't necesarily a violation of the law and most changes would require approval of a majority of the membership anyway.
Civil Code Section 1366(a) limits the board's authority to raise assessments if they do not comply with the annual disclosure requirements of Section 1365. However, deficiencies in Section 1365 can be overcome by a membership vote (majority of quorum). See for example Sectino 1365(b). The notice of the meeting needs to describe in general terms the issues to be discussed and voted on (i.e. Wherther to passes a special assessment of $500 for roof repairs).
If done properly, membership approval CAN overcome any deficiencies in the association's annual disclosure requirements.
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