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Davis-Stirling Act

The following cases discuss establishment of common interest developments and the applicability of the Davis-Stirling Common Interest Development Act.

  • Committee to Save Beverly Highlands Homeowners Ass’n. v. The Beverly Highlands Homeowners Ass’n. (Applicability – Common Area Requirement)

    Committee to Save Beverly Highlands Homeowners Ass’n. v. The Beverly Highlands Homeowners Ass’n. (Applicability – Common Area Requirement)

    Citation

    Committee to Save Beverly Highlands Homeowners Ass’n. v. The Beverly Highlands Homeowners Ass’n. (2001) 92 Cal.App.4th 1247

    Facts

    In 1952, CC&Rs were recorded against lots in a development in Beverly Highlands. An association of the owners of the lots was created. Four of the lots in the development were not buildable, and the CC&Rs restricted their use to open space, and obligated the association to maintain them. The association was suspended in 1972, but revived in 1989. In 1996, there was debate over whether the development was subject to the Davis-Stirling Common Interest Development Act (“Davis-Stirling” or “Davis-Stirling Act”), which arose from the fact that the association owned none of the lots. The association decided not the purchase the lots. Subsequently, some of the members determined to dissolve the association. In the face of their actions, a committee of members who opposed the dissolution (“Committee”) filed legal proceedings. Both sides moved for summary judgment, and the court granted the Committee’s request to stay the dissolution of the association. The court based its ruling on a finding that the community was subject to Davis-Stirling, declared plaintiff the prevailing party and awarded attorney fees. On appeal, defendant association contended the project was not subject to Davis-Stirling.

    Held

    For association (project not subject to Davis-Stirling.) The court first noted that if the association was subject to Davis-Stirling, Corporations Code §8724 would require 100% of the members to consent to dissolution. (A smaller percentage would be required for dissolution if the association was not a Davis-Stirling homeowners association.) However, for a community to be subject to Davis-Stirling, it must have common area. For a planned development, that common area may be either separately owned lots, or easements across other lots for the benefit of members. The CC&Rs did restrict the use of the unbuildable lots, but that was not the equivalent of the easements necessary to bring the project under Davis-Stirling. The court also noted that even if the association were dissolved, individual owners still had the right, pursuant to the CC&Rs, to enforce the CC&Rs.

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  • Golden Rain Foundation v. Franz (Applicability)

    Golden Rain Foundation v. Franz (Applicability)

    Citation

    Golden Rain Foundation v. Franz (2008) 163 Cal.App.4th 1141

    Facts

    Golden Rain Foundation (“Foundation”) was created in 1961, to provide services to 16 projects including condominiums and stock cooperatives, collectively referred to as the “mutuals.” Golden Rain was organized as a trust, and as trustee, it held title to streets used by all mutuals, and was obligated to maintain the “common facilities” owned by the mutuals. Franz et al. were owners within the various mutuals, and sought production of Foundation’s documents pursuant to the Davis-Stirling Act. When Foundation declined, Franz filed a small claims action, which resulted in a judgment against Foundation. Foundation then filed the current action, asking the court to rule that it was not subject to the Davis-Stirling Act.

    Held

    For homeowners. Although the Foundation did not hold fee title to all common areas, it was organized to manage the various mutuals, which were themselves subject to the Davis-Stirling Act.

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  • Mount Olympus Property Owners Assn. v. Shpirt (Applicability – Common Area Requirement, Mandatory Membership, Assessment Authority)

    Mount Olympus Property Owners Assn. v. Shpirt (Applicability – Common Area Requirement, Mandatory Membership, Assessment Authority)

    Citation

    Mount Olympus Property Owners Assn. v. Shpirt (1997) 59 Cal.App.4th 885

    Facts

    A property owners association filed legal action to enforce the CC&Rs against defendant homeowner. After the parties settled mid-trial, the court awarded attorney fees to the defendant homeowner as prevailing party, pursuant to the Davis-Stirling Act. On appeal, the association contested the award of fees arguing that the project was not subject to the Davis-Stirling Act, because it did not own any common area. The sole property owned by the association consisted of two small plots of land on one of which was located the sign for the project. Further, membership in the association was not mandatory, and the association lacked the power under the CC&Rs to impose assessments on owners.

    Held

    For defendant association: When an association has neither common area nor mandatory membership in an association which can assess members, it is not a “Davis-Stirling” common interest development; therefore, homeowner cannot recover his fees under Civil Code §1354 (now Civil Code §5975).

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