Until now, commercial and industrial common interest developments (CIDs) have been governed by the Davis-Stirling Common Interest Development Act, just like residential condominiums and planned developments. Starting Jan. 1, 2014, however, non-residential CIDs will look to an entirely new set of statutes. The legislature passed the Commercial and Industrial Common Interest Development Act, SB 752, into law on Sept. 6, and Gov. Brown signed the bill on Oct. 5. This new law creates an entirely new section of the Civil Code, starting with section 6500.
Although the law is new, and the code sections are new, the provisions of this new act mirror the reorganized Davis-Stirling Act. “Old” Davis-Stirling applied to commercial projects, with exceptions specified in “old” Civil Code section 1373. By contrast, the new act repeats much of reorganized Davis-Stirling, but leaves out some provisions designed to protect residential owners. So, the sections governing the formation of common interest developments, along with sections about governing documents, association powers, assessments and construction defect litigation, are essentially the same in reorganized Davis-Stirling and this new act. However, the commercial and industrial act does not include the election provisions or the disclosure requirements imposed on residential developments.
While there was little controversy over the new act, CLAC was able to offer insight from an industry perspective to effect some changes. For example, as drafted, there would have been no provision for owners to send notices to association management. All communications would have gone to the association’s president or secretary. Because commercial associations need not make statutory annual disclosures to owners, there was no mechanism for associations to designate an agent to receive communications. Recognizing the practical problems with such a rule, CLAC was able to assist the CLRC and Senate staff to craft a provision allowing a commercial association to designate an agent, like a manager, to receive information.
California’s commercial and industrial CIDs range from small office condominiums to sprawling developments including retail, industrial and office components. With the enactment of the Commercial and Industrial Common Interest Development Act, these associations will be controlled by their own set of statutes. The new act will also provide a framework for new provisions, addressing the evolving needs of commercial and industrial developments.
John MacDowell is managing shareholder of Fiore, Racobs & Powers’ Orange County office and is a Delegate to the California Legislative Action Committee (CLAC) from the Orange County Regional Chapter of Community Associations Institute (CAI).