Bill Text: CA AB569 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Real property: divided lands.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2014-09-27 - Chaptered by Secretary of State - Chapter 661, Statutes of 2014. [AB569 Detail]

Download: California-2013-AB569-Amended.html

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BILL NUMBER: AB 569	AMENDED
	BILL TEXT

	AMENDED IN SENATE  JULY 1, 2014
	AMENDED IN SENATE  JUNE 2, 2014
	AMENDED IN ASSEMBLY  SEPTEMBER 12, 2013
	AMENDED IN ASSEMBLY  MARCH 18, 2013

INTRODUCED BY   Assembly Member Chau

                        FEBRUARY 20, 2013

   An act to amend Sections 11003.4 and 11013.1 of, and to add
Section 11013.6 to, the Business and Professions Code, and to amend
Section 5100 of the Civil Code, relating to land use.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 569, as amended, Chau. Real property: divided lands.
   (1) Existing law exempts a limited-equity housing cooperative or a
workforce housing cooperative trust from provisions of existing law
governing subdivided land transactions that are applicable to stock
cooperatives if the limited-equity housing cooperative or workforce
housing cooperative trust complies with specified conditions.
   This bill would revise the conditions for the exemption to, among
other things, require that each party that executes a regulatory
agreement with the cooperative satisfy itself that the rights of the
cooperative members are provided adequate protection, as specified.
By expanding the applicability of a crime, this bill would impose a
state-mandated local program.
   (2) Existing law prohibits the sale or lease of lots or parcels
within a subdivision that is subject to a blanket encumbrance unless
the encumbrance includes a specified release clause or certain
conditions are met.
   This bill would authorize the sale or lease of an individual
interest in a defined stock cooperative or  limited 
   limited   -equity  housing cooperative
that is subject to a blanket encumbrance if specified conditions are
met.
   (3) The Davis-Stirling Common Interest Development Act establishes
procedures for elections.
   This bill would exempt a stock cooperative with bylaws that
provide that all members and shareholders automatically become
directors of the homeowners' association from the procedures
applicable to the election of directors of the homeowners'
association.
   (4) The California Constitution requires the state to reimburse
local agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
   This bill would provide that no reimbursement is required by this
act for a specified reason.
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 11003.4 of the Business and Professions Code is
amended to read:
   11003.4.  (a) A "limited-equity housing cooperative" or a
"workforce housing cooperative trust" is a corporation that meets the
criteria of Section 11003.2 and that also meets the criteria of
Sections 817 and 817.1 of the Civil Code, as applicable. Except as
provided in subdivision (b), a limited-equity housing or workforce
housing cooperative trust shall be subject to all the requirements of
this chapter pertaining to stock cooperatives.
   (b) A limited-equity housing cooperative or a workforce housing
cooperative trust shall be exempt from the requirements of this
chapter if the limited-equity housing cooperative or workforce
housing cooperative trust complies with all the following conditions:

   (1) The United States Department of Housing and Urban Development,
the United States Department of Agriculture, the National Consumers
Cooperative Bank, the California Housing Finance Agency, the Public
Employees' Retirement System (PERS), the State Teachers' Retirement
System (STRS), the Department of Housing and Community Development,
the Federal Home Loan Bank System or any of its member institutions,
a state or federally chartered credit union, a state or federally
certified community development financial institution, or the city,
county, school district, or redevelopment agency in which the
cooperative is located, alone or in any combination with each other,
directly finances or subsidizes at least 50 percent of the total
construction or development cost or one hundred thousand dollars
($100,000), whichever is less; or the real property to be occupied by
the cooperative was sold or leased by the Transportation Agency,
other state agency, a city, a county, or a school district for the
development of the cooperative and has a regulatory agreement
approved by the Department of Housing and Community Development for
the term of the permanent financing, notwithstanding the source of
the permanent subsidy or financing.
   (2) No more than 20 percent of the total development cost of a
limited-equity mobilehome park, and no more than 10 percent of the
total development cost of other limited-equity housing cooperatives,
is provided by purchasers of membership shares.
   (3) A regulatory agreement that covers the cooperative for a term
of at least as long as the duration of the permanent financing or
subsidy, notwithstanding the source of the permanent subsidy or
financing, has been duly executed between the recipient of the
financing and either (A) one of the federal or state agencies
specified in paragraph (1) or (B) a local public agency that is
providing financing for the project under a regulatory agreement
meeting standards of the Department of Housing and Community
Development. The regulatory agreement shall make provision for at
least all of the following:
   (A) Assurances for completion of the common areas and facilities
to be owned or leased by the limited-equity housing cooperative,
unless a construction agreement between the same parties contains
written assurances for completion.
   (B) Governing instruments for the organization and operation of
the housing cooperative by the members.
   (C) The ongoing fiscal management of the project by the
cooperative, including an adequate budget, reserves, and provisions
for maintenance and management.
   (D) Distribution of a membership information report to any
prospective purchaser of a membership share, prior to purchase of
that share. The membership information report shall contain full
disclosure of the financial obligations and responsibilities of
cooperative membership, the resale of shares, the financing of the
cooperative including any arrangements made with any partners,
membership share accounts, occupancy restrictions, management
arrangements, and any other information pertinent to the benefits,
risks, and obligations of cooperative ownership.
   (4) Each party that executes the regulatory agreement shall
satisfy itself that the bylaws, articles of incorporation, occupancy
agreement, subscription agreement, any lease of the regulated
premises, any arrangement with partners, and arrangement for
membership share accounts provide adequate protection of the rights
of cooperative members.
   (5) Each provider of financing or subsidies shall receive from the
attorney for the recipient of the financing or subsidy a legal
opinion that the cooperative meets the requirements of Section 817 of
the Civil Code and the exemption provided by this section.
   (c) Any limited-equity cooperative, or workforce housing
cooperative trust that meets the requirements for exemption pursuant
to subdivision (b) may elect to be subject to all provisions of this
chapter.
   (d) The developer of the cooperative shall notify the Bureau of
Real Estate, on a form provided by the bureau, that an exemption is
claimed under this section. The Bureau of Real Estate shall retain
this form for at least four years for statistical purposes.
  SEC. 2.  Section 11013.1 of the Business and Professions Code is
amended to read:
   11013.1.  It shall be unlawful, except as provided in Section
11013.2 or 11013.6, for the owner, subdivider, or agent to sell or
lease lots or parcels within a subdivision that is subject to a
blanket encumbrance unless there exists in the blanket encumbrance or
other supplementary agreement a provision, hereinafter referred to
as a release clause, which by its terms shall unconditionally provide
that the purchaser or lessee of a lot or parcel can obtain legal
title or other interest contracted for, free and clear of the blanket
encumbrance, upon compliance with the terms and conditions of the
purchase or lease.
  SEC. 3.  Section 11013.6 is added to the Business and Professions
Code, to read:
   11013.6.  Notwithstanding Sections 11013.1 and 11013.2, an
individual interest in a stock cooperative, as defined in Section
4190 of the Civil Code, or a limited equity housing cooperative, as
defined in Section 817 of the Civil Code, may be sold or leased
subject to a blanket encumbrance if all of the following conditions
are met:
   (a) The notice required pursuant to Section 1133 of the Civil Code
is provided to each prospective purchaser and lessee of the interest
and is included in every purchase and lease contract.
   (b) The property subject to the sale or lease has obtained a
public report from the Bureau of Real Estate that accounts for the
blanket encumbrance. 
   (c) The governing documents for the association require the
association to create within one year of the sale of at least 50
percent of the individual interests in the stock cooperative or
limited-equity housing cooperative and maintain during the term of
the blanket encumbrance a financing reserve amount equal to at least
three months of the amount of the debt service payments due on the
blanket encumbrance or a lesser amount acceptable to the
commissioner.  
   (c) The governing documents for the association require the
association to create and maintain during the term of the blanket
encumbrance all of the following:  
   (1) Prior to the sale of any individual interests in the stock
cooperative or limited-equity housing cooperative, a financing
reserve amount equal to at least two months of the amount of the debt
service payments due on the blanket encumbrance.  
   (2) Within one year of the sale of at least 25 percent of the
individual interests in the stock cooperative or limited-equity
housing cooperative, a financing reserve amount equal to at least
three months of the amount of the debt service payments due on the
blanket encumbrance.  
   (3) Within one year of the sale of at least 50 percent of the
individual interests in the stock cooperative or limited-equity
housing cooperative, a financing reserve amount equal to at least
five months of the amount of the debt service payments due on the
blanket encumbrance.  
   (4) Within one year of the sale of at least 75 percent of the
individual interests in the stock cooperative or limited-equity
housing cooperative, a financing reserve amount equal to at least
eight months of the amount of the debt service payments due on the
blanket encumbrance. 
  SEC. 4.  Section 5100 of the Civil Code is amended to read:
   5100.  (a) Notwithstanding any other law or provision of the
governing documents, elections regarding assessments legally
requiring a vote, election and removal of directors, amendments to
the governing documents, or the grant of exclusive use of common area
pursuant to Section 4600 shall be held by secret ballot in
accordance with the procedures set forth in this article.
   (b) This article also governs an election on any topic that is
expressly identified in the operating rules as being governed by this
article.
   (c) The provisions of this article apply to both incorporated and
unincorporated associations, notwithstanding any contrary provision
of the governing documents.
   (d) The procedures set forth in this article shall apply to votes
cast directly by the membership, but do not apply to votes cast by
delegates or other elected representatives.
   (e) In the event of a conflict between this article and the
provisions of the Nonprofit Mutual Benefit Corporation Law (Part 3
(commencing with Section 7110) of Division 2 of Title 1 of the
Corporations Code) relating to elections, the provisions of this
article shall prevail.
   (f) Directors shall not be required to be elected pursuant to this
article if the governing documents provide that one member from each
separate interest is a director.
  SEC. 5.   No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.