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The above general information is for educational purposes only. If the reader needs further guidance or has specific questions on this issue, please contact your legal counsel. All information contained in this article is subject to copyrights owned by Epsten Grinnell & Howell, APC (EG&H) and other individuals or entities. All rights reserved.

2017 Annual 1 Budget Report and Annual Policy Statement

By: Susan M. Hawks McClintic

1. What are the annual reporting requirements to owners called?

(a) “Annual Budget Report” consisting primarily of the operating budget and reserve information (Civil Code section 5300)

(b) “Annual Policy Statement” consisting primarily of notices and statements of procedures (Civil Code section 5310)

2. What’s new? As of July 1, 2016, there is a new requirement for condominium communities to include statements regarding FHA and VA certification. The changes are underlined in the text in the attached full report.

3. May associations include the request for annual notice of member contact information (Civil Code section 4041) with the annual packet? As January 1, 2017, the association must solicit contact information from each owner and enter the new data into its books and records at least 30 days prior to mailing the annual budget report and annual policy statement. This means that when the association sends this solicitation for the first time in 2017 it must be prior to sending the 2017 annual packet. In 2017 the association may include the notice in the annual packet as the solicitation for the 2018 annual packet. Confused? Here’s an example, for an association with a fiscal year that is the calendar year, the association will need to solicit the member contact information before sending the annual packet in October or November of 2017 but could include the request for contact information in the October or November 2017 annual packet to satisfy the requirement for the October or November 2018 annual packet.

4. May associations provide a summary rather than the full report?

(a) Yes! The summary of the report must include:

(i) “General description of the content of the report”

(ii) Instructions on how to request a full copy at no cost in at least 10-point boldface type on the first page of the summary

(b) If a member requests full report, it must be provided

5. When must the annual packet be sent to the members?

The above general information is for educational purposes only. If the reader needs further guidance or has specific questions on this issue, please contact your legal counsel. All information contained in this article is subject to copyrights owned by Epsten Grinnell & Howell, APC (EG&H) and other individuals or entities.

All rights reserved.

(a) Between 30 and 90 days before the end of the fiscal year - Civil Code section 5300(a)

(b) Timing in code trumps association’s own governing documents

6. How must the annual packet be delivered?

(a) “Individual delivery” per Civil Code section 5320.

(b) Delivery by any one of the following per Civil Code sections 4040:

(i) First class mail, postage prepaid,

(ii) Registered mail,

(iii) Certified mail,

(iv) Overnight delivery by an express service courier, or

(v) E-mail, facsimile or other electronic means only with prior written consent of the member

(c) No hand delivery

7. Attached is a sample letter for the full report as well as two sample summaries. Unless otherwise stated, the forms we suggest are just that -- suggestions -- and you may use your own forms. However, there are several mandatory or verbatim forms or wording that you must include. We have noted such requirements where they exist.

While we believe we have included all the mandatory disclosures in Davis-Stirling, there is no guarantee that we have included everything. There may also be additional disclosures unique to your association. You can include those in Section III. Note that there is no statutory requirement for using any particular format for any of the optional disclosures.

In the samples, the yellow highlighted items are notes and are not intended to be included in the disclosure to the owners.

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Sample Cover Letter for Full ReportDate: _______________, 20__To: Members of _____________ AssociationFrom: The Board of DirectorsRe: Fiscal Year (20__-20__) Annual Budget Report and Annual Policy Statement

Table of Contents

I. Annual Budget Report [Civ. Code §5300]

1. Pro Forma Operating Budget for fiscal year 20__-20__ prepared on an accrual basis (pp. ___ - ___) [Civ. Code §5300(b)-(b)(1) formerly ]

2. Summary of the Association’s Reserves (pp. ___ - ___) [Civ. Code §§5300(b)(2) & 5565)

3. Summary of the Board-adopted Reserve Funding Plan (pp. ___ - ___) [Civ. Code §§5300(b)(3) & 5550(b)(5)]

4. Statement of Deferral/Decision to Not Undertake Repair/Replacement of Major Component(s) (pp. ___ - ___) [Civ. Code §5300(b)(4)]

5. Statement of Anticipated Special Assessment(s) (if any) (pp. ___ - ___) [Civ. Code §5300(b)(5)]

6. Statement of Mechanism for Funding Reserves to Repair or Replace Major Components (pp. ___ - ___) [Civ. Code §5300(b)(6)]

7. Statement Addressing Procedures Used to Calculate and Establish Reserves (pp. ___ - ___) [Civ. Code §5300(b)(7)]

8. Statement of Association(s) Outstanding Loans1 (pp. ___ - ___) [Civ. Code §5300(b)(8)]

9. Summary of the Association’s Insurance Information (pp. ___ - ___) [Civ. Code §5300(b)(9)]

10. Statement Regarding FHA Certification in Condominium Projects (p. ___) [Civ. Code §5300(b)(10)]

11. Statement Regarding VA Certification in Condominium Projects (p. ___) [Civ. Code §5300(b)(11)]

12. Assessment and Reserve Funding Disclosure Summary (pp. ___ - ___) [Civ. Code §5570]

II. Annual Policy Statement [Civ. Code §5310]

1. Statement of Name and Address of Person Designated to Receive Official Communications to Association (pp. ___ - ___) [Civ. Code §4035]

2. Statement of Members’ Ability to Have Notices Sent to up to Two Different Addresses (pp. ___ - ___) [Civ. Code §4040]

3. Statement of the Posting Location for General Notices (pp. ___ - ___) [Civ. Code §4045]

1 NB: This is required regardless of whether Association has outstanding loans or not.

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4. Notice of Member’s Right to Receive General Notices by Individual Delivery (pp. ___ - ___) [Civ. Code §4045]

5. Notice of Members’ Right to Minutes (pp. ___ - ___) [Civ. Code §4950]6. Statement of Assessment Collection Policies under Civil Code section 5730 (pp.

___ - ___) [Civ. Code §5730]7. Statement of Association’s Policies and Practices in Enforcing Lien Rights, etc.

(pp. ___ - ___) [Civ. Code §5730]8. Statement of Association’s Discipline Policy and Schedule of Penalties (pp. ___ -

___) [Civ. Code §5850]9. Summary of Association’s Dispute Resolution Procedures (ADR and IDR) (pp.

___ - ___) [Civ. Code §5920 and 5965]10. Summary of Procedures for Architectural Review (pp. ___ - ___) [Civ. Code

§4765]11. Statement of Address for Overnight Payment of Assessments (pp. ___ - ___)

[Civ. Code §5655]12. Statement Regarding FHA Certification in Condominium Projects (p. ___) [Civ.

Code §5300(b)(10) 13. Statement Regarding VA Certification in Condominium Projects (p. ___) [Civ.

Code §5300(b)(11)] 14. Miscellaneous Disclosures as required by law or governing documents (pp. ___ -

___) [Civ. Code §5310(a)(12)]A. Annual Request for Owner’s Address (p. ___ [Civ. Code §4041]B. Annual Preparation of [Audit / Review] (pp. ___ - ___) [Civ. Code §5305]C. Asbestos Disclosure (pp. ___ - ___) [Health & Safety Code §25915.2]D. Disclosure and Accounting of Reserves Borrowed for Litigation (pp. ___ -

___) [Civ. Code §4045 & 5520]E. Disclosure of Rental Restrictions (pp. ___ - ___) [Civ. Code §4525(a)(9)]F. Disclosure of Senior Community Status (pp. ___ - ___) [Civ. Code

§4525(a)(2) G. Community Service Association Disclosure (pp. ___ - ___) [Civ. Code

§5580]H. Emergency Preparedness and/or Evacuation Plans

III. Optional Disclosures (and use only if applicable)

1. Architectural Modifications for Persons with Disabilities (pp. ___ - ___) 2. Distribution of Mailing List to Owners (pp. ___ - ___) 3. Gated Communities and Associations with Locked Entry Doors or Patrols

(pp. ___ - ___)4. Requirement for Owners to have Smoke and Carbon Monoxide Detectors in their

Units (pp. ___ - ___)5. Location of Main Water Shutoff for Emergencies (pp. ___ - ___)

IV. List of Exhibits [if applicable]

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BODY OF FULL REPORT

I. Required Annual Budget Report Statements

1. Pro Forma Operating Budget for Fiscal Year 20__-20__ Prepared on an Accrual Basis [This section is required by Civil Code section 5300(b)(1).]

[Insert your annual Pro Forma Operating Budget here or attach it as Exhibit ___. Be sure to verify that the budget shows at a minimum estimated revenue and expenses on an accrual basis. While the following paragraph is not required, it is good practice to include it.]

Statement of Increase in Assessments: With the new fiscal year for our Association, our Board of Directors has reviewed the operating budget with the goal of providing efficient operations and funding adequate reserves to meet long-term requirements. Based on this review, the Board has determined that, in order to maintain the financial integrity of our Association and to meet the ongoing maintenance costs which increase with the aging process, a _______ percent (___%) increase in assessments will be effective ____________ 1, 20__. As of __________ 1, 20__, the new assessments will be $______ [Modify as needed, if assessments are not uniform for each separate interest or attach a schedule listing the variable assessments as Exhibit ___.]

2. Summary of the Association’s Reserves [This section is required by Civil Code sections 5300(b)(2) and 5565. Civil Code section 5565, pasted below, contains the requirements.

“5565. The summary of the association’s reserves required by paragraph (2) of subdivision (b) of Section 5300 shall be based on the most recent review or study conducted pursuant to Section 5550, shall be based only on assets held in cash or cash equivalents, shall be printed in boldface type, and shall include all of the following:

(a) The current estimated replacement cost, estimated remaining life, and estimated useful life of each major component.

(b) As of the end of the fiscal year for which the study is prepared:(1) The current estimate of the amount of cash reserves

necessary to repair, replace, restore, or maintain the major components.(2) The current amount of accumulated cash reserves actually

set aside to repair, replace, restore, or maintain major components.(3) If applicable, the amount of funds received from either a

compensatory damage award or settlement to an association from any person for injuries to property, real or personal, arising out of any construction or design defects, and the expenditure or disposition of funds, including the amounts expended for the direct and indirect costs of repair of construction or design defects. These amounts shall be reported at the end of the fiscal year for which the study is prepared as separate line items under cash reserves pursuant to

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paragraph (2). Instead of complying with the requirements set forth in this paragraph, an association that is obligated to issue a review of its financial statement pursuant to Section 5305 may include in the review a statement containing all of the information required by this paragraph.

(c) The percentage that the amount determined for purposes of paragraph (2) of subdivision (b) equals the amount determined for purposes of paragraph (1) of subdivision (b).

(d) The current deficiency in reserve funding expressed on a per unit basis. The figure shall be calculated by subtracting the amount determined for purposes of paragraph (2) of subdivision (b) from the amount determined for purposes of paragraph (1) of subdivision (b) and then dividing the result by the number of separate interests within the association, except that if assessments vary by the size or type of ownership interest, then the association shall calculate the current deficiency in a manner that reflects the variation.”

The information required by this section contains information that should be in the Reserve Study, but it is still less than the full Reserve Study described in section I(3) below.]

The summary of the Association’s reserves is attached as Exhibit ____. [The information in Exhibit ___ is supposed to be shown in boldface type.] The summary is based on the reserve study described in Section I(3) below (or the latest annual update to it). This information is based only on assets held in cash or cash equivalents. It includes: the current estimated replacement cost, estimated remaining life, and estimated useful life of each major component; the current estimate of the amount of cash reserves necessary to repair, replace, restore, or maintain the major components; and the current amount of accumulated cash reserves actually set aside to repair, replace, restore, or maintain major components. It also shows the ratio, expressed as a percentage, between the current estimated replacement cost of each major component and the current amount of cash reserves set aside, and the current deficiency in reserve funding expressed on a per unit basis. [This deficiency figure is calculated by subtracting the “current amount of accumulated cash reserves” (i.e. the section 5565(b)(2) result) from the “current estimate of cash reserves necessary” (i.e. the section 5565(b)(1) result) and then dividing the result by the number of units in the association. If assessments vary by the size or type of ownership interest, then the association must calculate the current deficiency per unit in a manner that reflects the variation. The statute is not completely clear, but “the current estimated replacement cost of each major component” logically may be the same as the total of the “amount of reserves needed to be accumulated for a component at a given time,” as described in Civil Code section 5570(b)(4). That formula requires dividing the number of years a component has been in service by the total useful life of that component (i.e., computing the fraction or percentage of useful life used up) and multiplying that by the current replacement cost of the component. In other words, you use the three figures required by Civil Code section 5565(a). Then those figures can be used to determine the “current estimate of the amount of cash reserves necessary to …

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replace the major component” under section 5565(b)(1). Then that figure divided by the current cash reserves actually set aside under section 5565(b)(2) can be used to calculate the percentage required by section 5565(c).]

[IF APPLICABLE, this paragraph is required by Civil Code §5565(b)(3). In lieu of including the information below, if you have an annual audit or review prepared, you may include all that information in the annual audit or review.] The funds this Association received from a construction defect award or settlement were $__________. The expenditure or disposition of funds, including the amounts expended for the direct and indirect costs of repair of construction or design defects has been $______________, as of ___________, 20___.

3. Summary of Board Adopted Reserve Funding Plan [This section is required by Civil Code sections 5300(b)(3) and 5550(b)(5). In this section, the Board must include a summary of the Reserve Funding Plan adopted by the Board. A Reserve Funding Plan is described in Civil Code section 5550(b)(5). It should indicate how the Board intends to fund the contributions needed to pay for the long term repairs and replacements of major components, and then the Board must adopt that plan. You may, but are not required to, attach the Reserve Study as an Exhibit, but you must give owners notice that the “full reserve study plan is available upon request,” and the association must provide it to any member upon request. A full Reserve Study with visual inspection must be conducted every three years (and then reviewed and updated annually). It must be based only on assets held in cash or cash equivalents. The Reserve Study must include, but need not be limited to, reserve calculations made using the formula described in Civil Code §5570(b)(4) (discussed in Section I(2) above) and may not assume a rate of return on cash reserves that is more than 2% above the discount rate published by the San Francisco Federal Reserve Bank when the calculation was made. See Civil Code section 5300(b)(7). ]

In conjunction with the budget review and in accordance with California Civil Code section 5550(a), the Board engages a professional reserve study analyst, at least once every three years, to prepare a reserve study, to review our reserve funding program and to make recommendations for future funding. The 3-year reserve study involves a visual inspection of our development. The accompanying replacement funding program reflects assumptions about future events. The replace funding program is based on factors such as manufacturers’ specifications, information from contractors and subcontractors, construction pricing, scheduling manuals and the reserve study preparer’s experience. The analyst then uses this information to calculate and establish the reserve amounts needed to defray the future repairs, replacement or additions to the components that the Association is obligated to maintain. [The next sentence is mandatory.] A copy of the full reserve study is available upon request.

A summary of the reserve funding plan is attached as Exhibit ___.[At a minimum, the association’s reserve funding plan may require something like this paragraph, modified as needed and attached as Exhibit ___ or you can insert

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it here, depending on its size.] Pursuant to Civil Code section 5550(b)(5), the Board adopted a funding plan based upon the reserve study performed in 20__ [add if applicable] [and updated annually since then]. The Board’s plan for funding reserves is to: [modify as applicable] (1) increase regular assessments by __% per year; 2) levy a special assessment in the amount of $______ [specify when], 3) borrow $_____________ from a bank [specify when]; and/or ____________] in order to meet the Association’s obligation for the repair and replacement of all major components with an expected remaining life of 30 years or less, not including those components that the Board has determined will not be replaced or repaired.

4. Statement of Items Deferred for Maintenance, Repair or Replacement [This statement is required by Civil Code section 5300(b)(4).]

In accordance with Civil Code section 5300(b)(4) and as of the date of this letter, the Board [strike one and use the other] [has chosen to defer or not to undertake / has chosen not to defer and will undertake] replacement of any major component with a remaining life of 30 years or less. [If the Board has chosen to defer repairs or replacement, you must state the reasons for each such component. For example, after identifying the components whose repair will be deferred: “The reason or justification for this deferral is based upon inadequate reserve funds and unanticipated expenses during the prior fiscal year(s) of_____________. [Modify the following as necessary to indicate those items the Board is deferring repair on and the accompanying justification.] The reason or justification for this deferral or decision not to undertake the repairs is ______________________.

5. Statement of Anticipated Special Assessments [This statement is required by Civil Code section 5300(b)(5).]

In accordance with Civil Code section 5300(b)(5), and as of the date of this letter, the Board [strike one and use the other] [anticipates / does not anticipate] that [strike one and use the other] [a special assessment / one or more special assessments] will be required to repair, replace or restore any major components or to provide adequate reserves. [This last sentence is needed, preferably with more explanation, if the Board anticipates such a need in the forthcoming fiscal year. If any special assessment is anticipated, you must also set out the estimated amount, commencement date, and duration of the assessment to the extent that you can. Whether you anticipate a special assessment or not, include the following disclaimer.] The foregoing statement is based on the reserve funding plan adopted pursuant to Civil Code section 5560 and the knowledge and information the Board has at the present time. Thus, this statement is not a guarantee, and it is subject to change in the future.

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6. Statement of Mechanisms to Fund Reserves [This statement is required by Civil Code section 5300(b)(6)]

The Board uses the following mechanism or mechanisms to fund reserves to repair or replace major components: [for example, regular assessments, special assessments, borrowing, use of other assets, deferral of selected replacement or repairs, or alternative mechanisms (explain)] _________________________.

7. Statement Addressing Procedures Used to Calculate and Establish Reserves [This statement is required by Civil Code section 5300(b)(7). In this section the Board must include a general statement of the procedures used for calculation of reserves. The first paragraph below describes and explains the statutory formula in Civil Code section 5300(b)(7)that must be used for computing the current cost of repair or replacement for all major components the association is responsible for maintaining, repairing or replacing.]

As provided in Civil Code section 5550, the Board had a reserve study performed in 20__. A complete reserve study must be done at least once every three years and be reviewed and adjusted annually. In determining future needs, Civil Code section 5570(b)(4) does not allow the Association to assume an earnings growth in the reserve fund that is more than two percent above the discount rate published by the Federal Reserve Bank of San Francisco at the time the calculation was made. As also required by Civil Code section 5570(b)(4), the reserve study has calculated the total reserves currently needed by determining the current cost of replacement or repair of each major component multiplied by the number of years the component has been in service and then dividing by the total useful life of the component. In effect, this computes the percentage of each component’s useful life that has been used up as of the date of the reserve study or annual review and converts that to a current dollar cost of repair or replacement. For example, if a component has been in service three years, its total useful life is ten years, and the component would cost $100,000 to replace, then 3/10 or 30% of its useful life has been used up. When 30% is multiplied by the current replacement cost of $100,000, the result is $30,000. In other words, the portion of its useful life that has been consumed would be worth $30,000, thus the current cost of replacement or repair of that component would be $30,000. When these figures are added up for all major components, the result is the current cost of replacement or repair for all major components. Note that Civil Code section 5570 does not require the Association to fund reserves in accordance with the above calculation.

[In the paragraph below, the Board should state what it actually does with the information revealed by the reserve study. Below is a sample paragraph of what one association might do. You should write only what your Board does.][THIS IS JUST A SAMPLE PARAGRAPH: Once the Board has the information from the reserve study on the current cost of replacement or repair for all major components, it compares that figure with the amount of reserves currently on hand to tell if it has an amount that is more, less or equal to the current cost of replacement. It also looks at the amount on hand in comparison with how much additional money will be added to

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the reserves over the next several years in comparison with the amount of money projected to be expended over the same time period. It then determines if the funding level will be adequate for the next several years, and if not, what actions the Board may need to take to generate the funds that will be required, such as levying special assessments, additional regular assessments, borrowing the necessary funds, evaluating if the work will need to be done when projected, or if it can be delayed, or a combination of these actions. The Board also looks at whether the rate of funding the reserves will keep the Association on pace with the long term cost of repairs and replacements or if it appears that the reserve fund will start falling behind the long term costs of repair and replacement. Depending on that determination, the Board will plan for what long term actions, if any, will be needed to assure that the funds will be available to repair and replace all major components when necessary.]

8. Statement Addressing Association’s Outstanding Loans [This statement is required by Civil Code section 5300(b)(8)]

If the association does not have any outstanding loans:The Association does not have any outstanding loans with an original term of more than one year. [OR]

If the association does have outstanding loans:The Association has the following loan(s) outstanding with an original term longer than one year: The payee is ____________, the annual percentage interest rate is ______% [if the rate can vary, state at least the current rate and how the rate may vary] , the amount outstanding was $______ as of __________, 20___, the annual payment is $___________ [if the amount can vary, state at least the current annual or most recent annual amount and how the amount may vary], and the loan is scheduled to be retired as of _________, 20___.

9. Summary of Association’s Insurance Policies [This statement is required by Civil Code §5300(b)(9). Civil Code section 5300(b)(9) requires the following paragraph to be quoted verbatim and printed in at least 10-point bold type, but you can increase it. Below is in 10-point bold type. In the alternative, these documents can be attached as Exhibit ___]

“This summary of the association's policies of insurance provides only certain information, as required by Section 5300 of the Civil Code, and should not be considered a substitute for the complete policy terms and conditions contained in the actual policies of insurance. Any association member may, upon request and provision of reasonable notice, review the association's insurance policies and, upon request and payment of reasonable duplication charges, obtain copies of those policies. Although the association maintains the policies of insurance specified in this summary, the association's policies of insurance may not cover your property, including personal property or real property improvements to or around your dwelling, or personal injuries or other losses that occur within or around your dwelling. Even if a loss is covered, you may nevertheless be responsible for paying all or a portion of any deductible that applies. Association members should consult with their individual insurance broker or agent for appropriate additional coverage.”

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[Civil Code section 5300(b)(9) requires the association to list a summary of the association's property, general liability, earthquake, flood, and fidelity insurance policies listing the name of the insurer, the type of insurance, the policy limit, and the amount of the deductible, if any. The association can provide this information using the format below or provide the insurance policy declaration page for each policy, if the declaration page contains all of the required information just stated. Note that there is no requirement for listing information about any directors and officers liability policy, but we added a similar section for that information. If the association does not have a particular type of insurance, it does not have to refer to it. As mentioned above, as an alternative to listing it below, it may be attached as Exhibit ___.]

SUMMARY OF ASSOCIATION'S INSURANCE

Below is a summary of the insurance that is currently in force for our Association.

Property Insurance Policy[Either]See Attached Declarations Page(s) [OR]No Coverage Provided [OR]A. Name of Insurance Company: _______________________________________B. The policy limits of the insurance

Blanket amount of property insurance on common area buildings: $______________

Deductible amount: $______________________________________________

Amount of coverage on Association-owned contents or other personal property:$______________ Deductible amount:

$__________________________________

Earthquake Insurance Policy[Either]See Attached Declarations Page(s) [OR]No Coverage Provided [OR]A. Name of Insurance Company: _______________________________________B. The policy limits of the insurance


Deductible amount: $______________________________________________


$__________________________________

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Flood Insurance Policy[Either]See Attached Declarations Page(s) [OR]No Coverage Provided [OR]A. Name of Insurance Company: _______________________________________B. The policy limits of the insurance


Deductible amount: $____________________ Per Building / Per Occurrence [strike one]


$__________________________________

General Liability Policy[Either]See Attached Declarations Page(s) [OR]No Coverage Provided [OR]A. Name of Insurance Company: _______________________________________B. The policy limits of the insurance

Premises and Operations Public Liability limits: $_______________________Deductible amount: $________________________________________Employee Dishonesty coverage limits: $_______________________________

Deductible amount: $________________________________________

Directors and Officers Liability covered in above?Yes __________ No __________ Limits: $________________________

Deductible amount: $________________________________________

Excess Liability Coverage (if any): Not Applicable ____ Same Carrier?: Yes _______ No _______

If No, Carrier Name _____________________________________Coverage limits: $______________________Deductible amount: $_____________________

Directors and Officers Liability Policy[Either]See General Liability Section above [OR]See Attached Declarations Page(s) [OR]No Coverage Provided [OR]A. Name of Insurance Company: _______________________________________B. The policy limits of the insurance

Limits: $______________ Deductible amount: $____________________

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[The following paragraph below is not required to be disclosed, but Civil Code section 5810 does require that you do this, “as soon area reasonably practicable,” if there are any such insurance lapses, cancellations, non-renewals, changes in policy terms, etc.] Please note that the Association will, as soon as reasonably practical, notify you, as members, by first class mail, if any of the above mentioned policies have lapsed, been canceled, been non-renewed, have not been renewed or replaced, or if there has been any significant changes or reductions or limitations on the above mentioned policies. Also, if the Association receives notice of non-renewal of any of the above policies, it shall immediately notify the members of the Association if replacement coverage will not be in effect by the date that the existing coverage will lapse.

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10. Statement Regarding FHA Certification [This statement is required by Civil Code sections 5300(b)(10). The statement must be used verbatim, in 10-point font and on a separate piece of paper. This requirement was effective on July 1, 2016.]

Certification by the Federal Housing Administration may provide benefits to members of an association, including an improvement in an owner’s ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.

This common interest development [is/is not (circle one)] a condominium project. The association of this common interest development [is/is not (circle one)] certified by the Federal Housing Administration.

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11. Statement Regarding VA Certification [This statement is required by Civil Code sections 5300(b)(11). This statement must be used verbatim, in 10-point font and on a separate piece of paper. This requirement was effective on July 1, 2016.]

Certification by the federal Department of Veterans Affairs may provide benefits to members of an association, including an improvement in an owner’s ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.

This common interest development [is/is not (circle one)] a condominium project. The association of this common interest development [is/is not (circle one)] certified by the federal Department of Veterans Affairs.

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12. Assessment and Reserve Funding Disclosure Summary Form [This statement is required by Civil Code sections 5300(e) & 5570 and must be used verbatim.]

Assessment and Reserve Funding Disclosure Summary for the Fiscal Year Ending 20___

(1) The regular assessment per ownership interest is $_____ per ____. (Use the next sentence without brackets, if applicable.) [Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be found on page _____ of the attached report. (See Exhibit ___)]

(2) Additional regular or special assessments that have already been scheduled to be imposed or charged, regardless of the purpose, if they have been approved by the board and/or members:

1Date Assessment will be due:

Amount per ownership interest per month or year

(If assessments are variable, see note

immediately below):

Purpose of the assessment:

Total:[Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be found on page _____ of the attached report. (See Exhibit ___)]

(3) Based upon the most recent reserve study and other information available to the board of directors, will currently projected reserve account balances be sufficient at the end of each year to meet the association’s obligation for repair and/or replacement of major components during the next 30 years? Yes _____No _____

(4) If the answer to (3) is no, what additional assessments or other contributions to reserves would be necessary to ensure that sufficient reserve funds will be available each year during the next 30 years that have not yet been approved by the board or the members?

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1Approximate date assessment will be due:

Amount per ownership interest per month or year:

Total:

(5) All major components are included in the reserve study and are included in its calculations.

(6) Based on the method of calculation in paragraph (4) of subdivision (b) of section 5570, the estimated amount required in the reserve fund at the end of the current fiscal year is $____, based in whole or in part on the last reserve study or update prepared by ____ as of ____ (month), ____ (year). The projected reserve fund cash balance at the end of the current fiscal year is $____, resulting in reserves being ____ percent funded at this date.

If an alternate, but generally accepted, method of calculation is also used, the required reserve amount is $____. (See attached explanation)

[Civil Code section 5570(b)(4) requires the use of the formula below in computing the amount of reserves needed to be accumulated for a component at a given time. That formula is the current cost of replacement or repair multiplied by the number of years the component has been in service divided by the useful life of the component. While that formula must be used to compute the amount of reserves needed, section 5570(b)(4) does not necessarily require the Board to fund reserves in accordance with the calculation. Since the verbatim form left only one blank for each of the five-year periods discussed below, we used tables to make the information easier to read. Please note that the computations in the reserve study may not assume a rate of return on cash reserves that is more than 2% above the discount rate published by the San Francisco Federal Reserve Bank when the calculation was made. See Civil Code section 5300(b)(7).](7) Based on the method of calculation in paragraph (4) of subdivision (b) of section 5570 of the Civil Code, the estimated amount required in the reserve fund at the end of each of the next five budget years is $______ in 20__,$______ in 20__,$______ in 20__,$______ in 20__ and$______ in 20__,

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and the projected reserve fund cash balance in each of those years, taking into account only assessments already approved and other known revenues, is$______ in 20__, leaving the

reserve at______ percent funding in 20__,

$______ in 20__, ______ percent funding in 20__,$______ in 20__, ______ percent funding in 20__,$______ in 20__ and ______ percent funding in 20__ and$______ in 20__, ______ percent funding in 20__,

If the reserve funding plan approved by the association is implemented, the projected reserve fund cash balance in each of those years will be $______ in 20__, leaving the



Note: The financial representations set forth in this summary are based on the best estimates of the preparer at that time. The estimates are subject to change. At the time this summary was prepared, the assumed long-term before-tax interest rate earned on reserve funds was ____ percent per year, and the assumed long-term inflation rate to be applied to major component repair and replacement costs was ____ percent per year.[This ends the verbatim form.]

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II. Annual Policy Statement

1. Designated Agent for Receipt of Association Mail [This paragraph is required by Civil Code section 4035]

The name and address of the person designated to receive official communications on behalf of the Association is as follows:

Name: ______________________________________

Title: _______________________________________

Company: ___________________________________

Address: ____________________________________

____________________________________

____________________________________

2. Secondary Addresses for Owners [This paragraph is required by Civil Code section 4040]

As provided in Civil Code sections 4040(b) owners have a right to receive (1) annual reports the Association is required to provide to owners and for (2) mailings and notices related to assessment payments, delinquencies and foreclosures at an additional address if they submit a secondary address to the Association. The owner's request must be in writing and must be sent to the Association in the manner provided in Civil Code sections 4035 and 5260.

3. Posting Location for “General Notice.” [This paragraph is required by Civil Code section 5310, if the Association has Designated a Location for the Posting of General Notices] The location designated for posting of a “General Notice” or notice by “General Delivery” is: ________________________.

4. Individual Delivery Notice [This paragraph is required by Civil Code section 4045(b)]

Documents designated by the Civil Code as requiring General Delivery or General Notice will be delivered using one of the methods detailed in Civil Code section 4045(a). If a member of the Association wishes to receive these general notice documents by individual delivery, they must make such a request to the Association, and the Association will comply with the request.

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5. Availability of Minutes [This paragraph is required by Civil Code section 4950]

The minutes or a summary of minutes of a Board meeting, other than an executive session are available to members within 30 days of the meeting. Minutes, proposed minutes, or summary of minutes will be distributed to any member upon request and upon reimbursement of the Association’s costs for making that distribution.

In order to make a request for a copy of minutes, members should contact [Select how and where members should request and obtain copies of minutes] [the property manager / Board member / etcetera] [via e-mail / and/or / in writing / etcetera].

6. Statement of Assessment Collection Policies under Civil Code section 5730 [This entire section is required to be included verbatim in its entirety by Civil Code section 5730.]2

NOTICE ASSESSMENTS AND FORECLOSURE

This notice outlines some of the rights and responsibilities of owners of property in common interest developments and the associations that manage them. Please refer to the sections of the Civil Code indicated for further information. A portion of the information in this notice applies only to liens recorded on or after January 1, 2003. You may wish to consult a lawyer if you dispute an assessment.

ASSESSMENTS AND FORECLOSURE

Assessments become delinquent 15 days after they are due, unless the governing documents provide for a longer time. The failure to pay association assessments may result in the loss of an owner’s property through foreclosure. Foreclosure may occur either as a result of a court action, known as judicial foreclosure, or without court action, often referred to as nonjudicial foreclosure. For liens recorded on and after January 1, 2006, an association may not use judicial or nonjudicial foreclosure to enforce that lien if the amount of the delinquent assessments or dues, exclusive of any accelerated assessments, late charges, fees, attorney’s fees, interest, and costs of collection, is less than one thousand eight hundred dollars ($1,800). For delinquent assessments or dues in excess of one thousand eight hundred dollars ($1,800) or more than 12 months delinquent, an association may use judicial or nonjudicial foreclosure subject to the conditions set forth in Article 3 (commencing with Section 5700) of Chapter 8 of Part 5 of Division 4 of the Civil Code. When using judicial or nonjudicial foreclosure, the association records a lien on the owner’s property. The owner’s property may be sold to satisfy the lien if

2 This section is copied verbatim from the bill text.

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the amounts secured by the lien are not paid. (Sections 5700 through 5720 of the Civil Code, inclusive)

In a judicial or nonjudicial foreclosure, the association may recover assessments, reasonable costs of collection, reasonable attorney’s fees, late charges, and interest. The association may not use nonjudicial foreclosure to collect fines or penalties, except for costs to repair common area damaged by a member or a member’s guests, if the governing documents provide for this. (Section 5725 of the Civil Code)

The association must comply with the requirements of Article 2 (commencing with Section 5650) of Chapter 8 of Part 5 of Division 4 of the Civil Code when collecting delinquent assessments. If the association fails to follow these requirements, it may not record a lien on the owner’s property until it has satisfied those requirements. Any additional costs that result from satisfying the requirements are the responsibility of the association. (Section 5675 of the Civil Code)

At least 30 days prior to recording a lien on an owner’s separate interest, the association must provide the owner of record with certain documents by certified mail, including a description of its collection and lien enforcement procedures and the method of calculating the amount. It must also provide an itemized statement of the charges owed by the owner. An owner has a right to review the association’s records to verify the debt. (Section 5660 of the Civil Code)

If a lien is recorded against an owner’s property in error, the person who recorded the lien is required to record a lien release within 21 days, and to provide an owner certain documents in this regard. (Section 5685 of the Civil Code)

The collection practices of the association may be governed by state and federal laws regarding fair debt collection. Penalties can be imposed for debt collection practices that violate these laws.

PAYMENTS

When an owner makes a payment, the owner may request a receipt, and the association is required to provide it. On the receipt, the association must indicate the date of payment and the person who received it. The association must inform owners of a mailing address for overnight payments. (Section 5655 of the Civil Code)

An owner may, but is not obligated to, pay under protest any disputed charge or sum levied by the association, including, but not limited to, an assessment, fine, penalty, late fee, collection cost, or monetary penalty

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imposed as a disciplinary measure, and by so doing, specifically reserve the right to contest the disputed charge or sum in court or otherwise.

An owner may dispute an assessment debt by submitting a written request for dispute resolution to the association as set forth in Article 2 (commencing with Section 5900) of Chapter 10 of Part 5 of Division 4 of the Civil Code. In addition, an association may not initiate a foreclosure without participating in alternative dispute resolution with a neutral third party as set forth in Article 3 (commencing with Section 5925) of Chapter 10 of Part 5 of Division 4 of the Civil Code, if so requested by the owner. Binding arbitration shall not be available if the association intends to initiate a judicial foreclosure.

An owner is not liable for charges, interest, and costs of collection, if it is established that the assessment was paid properly on time. (Section 5685 of the Civil Code)

MEETINGS AND PAYMENT PLANS

An owner of a separate interest that is not a time-share interest may request the association to consider a payment plan to satisfy a delinquent assessment. The association must inform owners of the standards for payment plans, if any exists. (Section 5665 of the Civil Code)

The board must meet with an owner who makes a proper written request for a meeting to discuss a payment plan when the owner has received a notice of a delinquent assessment. These payment plans must conform with the payment plan standards of the association, if they exist. (Section 5665 of the Civil Code) [This is the end of the mandatory verbatim language.]

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7. Statement of Association’s Policies for Collection of Delinquent Assessments [Civil Code section 5310(a)(7) requires this next section. You must use your own collection policy here if you have one. You need to send something. Attorney Debbie Zumwalt in our San Diego office Assessment Recovery Department (“ARD”) can prepare one for you, if you do not have one. Your HOA's assessment collection policy may be attached as Exhibit __. IMPORTANT: DO NOT impose greater restrictions on your association in a collection policy when the law and your governing documents contain less restrictive requirements. We favor a collection policy that specifies only what the law and your governing documents require and permit you to do. For example, if you are entitled to start the process for filing a lien when a debt is 30 days delinquent, but you normally do not start the process until 60 days, DO NOT state that you will begin the process for filing a lien once a debt is 60 days delinquent. If you impose such self-imposed restrictions in your written policy, you will have tied your own hands, and an owner may use it as a defense against you. You will not be able to start the process, even if a delinquent owner appears ready to close escrow or about to file a bankruptcy.] For the Association’s Collection Policy, see Exhibit ___

8. Discipline Policy and Penalty Schedule [Civil Code section 5310(a)(8) requires this next section if the association has a discipline policy. You must use your own discipline policy here if you have one, including the schedule of penalties for violations of the governing documents pursuant to Civil Code section 5850. Attorney Sue McClintic in our San Diego office can prepare a discipline policy for you, if you do not have one. You may “describe” the discipline policy, but you must include the schedule of penalties for violations of the governing documents pursuant to Civil Code section 5850. As such, we would suggest including the full policy. Your HOA's Discipline Policy and Penalty Schedule should be inserted below or attach it as Exhibit ___.]

_________ ASSOCIATIONDISCIPLINE POLICY AND PENALTY SCHEDULE

(insert schedule here)[OR]

For the Association’s Collection Policy, see Exhibit ___.

9. Summary of Association’s Dispute Resolution Procedures (ADR and IDR)[This entire section is required by Civil Code section 5310(a)(9) for the procedures required by Civil Code sections 5900-5920, inclusive and 5925-5965, inclusive. We suggest including the entire Alternative Dispute Resolution procedure using the statutory language and the Internal Dispute Resolution procedure using your own procedure or using the statutory default language verbatim, rather than trying to summarize them.]

Alternative Dispute Resolution Procedures

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The California Legislature has established a public policy in this state that requires the use of Alternative Dispute Resolution ("ADR") before resorting to litigation to resolve certain conflicts that arise in condominiums, planned developments and other common interest developments. The law requires every association to distribute a summary of California Civil Code sections 5925 through 5965 to its members annually in its Annual Policy Statement prepared pursuant to Civil Code section 5310.

Rather than attempt to summarize the law, which is lengthy, and may result in omissions or misunderstandings of what the law provides, we are providing a copy of law in its entirety below. [This next paragraph must be included verbatim] PLEASE NOTE, Civil Code section 5965 states:

“Failure of a member of the association to comply with the alternative dispute resolution requirements of Section 5930 of the Civil Code may result in the loss of the member’s right to sue the association or another member of the association regarding enforcement of the governing documents or the applicable law.”

Please note that the section headings below are not a part of the law, but are present only to assist you in identifying the contents of each section.

§5925. ADR Definitions As used in this article:(a) “Alternative dispute resolution” means mediation, arbitration, conciliation,

or other nonjudicial procedure that involves a neutral party in the decision-making process. The form of alternative dispute resolution chosen pursuant to this article may be binding or nonbinding, with the voluntary consent of the parties.

(b) “Enforcement action” means a civil action or proceeding, other than a cross-complaint, for any of the following purposes:

(1) Enforcement of this act.(2) Enforcement of the Nonprofit Mutual Benefit Corporation Law (Part

3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code).(3) Enforcement of the governing documents.

§5930. ADR Required Before Filing Certain Actions (a) An association or a member may not file an enforcement action in the

superior court unless the parties have endeavored to submit their dispute to alternative dispute resolution pursuant to this article.

(b) This section applies only to an enforcement action that is solely for declaratory, injunctive, or writ relief, or for that relief in conjunction with a claim for monetary damages not in excess of the jurisdictional limits stated in Sections 116.220 and 116.221 of the Code of Civil Procedure.

(c) This section does not apply to a small claims action.(d) Except as otherwise provided by law, this section does not apply to an

assessment dispute.

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§5935. Initiating ADR by Request for Resolution (a) Any party to a dispute may initiate the process required by Section 5930

by serving on all other parties to the dispute a Request for Resolution. The Request for Resolution shall include all of the following:

(1) A brief description of the dispute between the parties.(2) A request for alternative dispute resolution.(3) A notice that the party receiving the Request for Resolution is

required to respond within 30 days of receipt or the request will be deemed rejected.(4) If the party on whom the request is served is the member, a copy of

this article.(b) Service of the Request for Resolution shall be by personal delivery, first-

class mail, express mail, facsimile transmission, or other means reasonably calculated to provide the party on whom the request is served actual notice of the request.

(c) A party on whom a Request for Resolution is served has 30 days following service to accept or reject the request. If a party does not accept the request within that period, the request is deemed rejected by the party.

§5940. Time for Completing ADR Process and Cost Splitting (a) If the party on whom a Request for Resolution is served accepts the

request, the parties shall complete the alternative dispute resolution within 90 days after the party initiating the request receives the acceptance, unless this period is extended by written stipulation signed by both parties.

(b) Chapter 2 (commencing with Section 1115) of Division 9 of the Evidence Code applies to any form of alternative dispute resolution initiated by a Request for Resolution under this article, other than arbitration.

(c) The costs of the alternative dispute resolution shall be borne by the parties.

§5945. Effect of ADR on Statutes of Limitation If a Request for Resolution is served before the end of the applicable time

limitation for commencing an enforcement action, the time limitation is tolled during the following periods:

(a) The period provided in Section 5935 for response to a Request for Resolution.

(b) If the Request for Resolution is accepted, the period provided by Section 5940 for completion of alternative dispute resolution, including any extension of time stipulated to by the parties pursuant to Section 5940.

§5950. Filing ADR Certificate when Filing Court Action (a) At the time of commencement of an enforcement action, the party

commencing the action shall file with the initial pleading a certificate stating that one or more of the following conditions are satisfied:

(1) Alternative dispute resolution has been completed in compliance with this article.

(2) One of the other parties to the dispute did not accept the terms offered for alternative dispute resolution.

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(3) Preliminary or temporary injunctive relief is necessary.(b) Failure to file a certificate pursuant to subdivision (a) is grounds for a

demurrer or a motion to strike unless the court finds that dismissal of the action for failure to comply with this article would result in substantial prejudice to one of the parties.

§5955. Referral to ADR and Stay of Court Action by Stipulation (a) After an enforcement action is commenced, on written stipulation of the

parties, the matter may be referred to alternative dispute resolution. The referred action is stayed. During the stay, the action is not subject to the rules implementing subdivision (c) of Section 68603 of the Government Code.

(b) The costs of the alternative dispute resolution shall be borne by the parties.

§5960. Refusal to Participate in ADR; Effect on Award of Fees and Costs In an enforcement action in which attorney’s fees and costs may be awarded, the

court, in determining the amount of the award, may consider whether a party’s refusal to participate in alternative dispute resolution before commencement of the action was reasonable.

§5965. Annual Disclosure of ADR Procedures to Members (a) An association shall annually provide its members a summary of the

provisions of this article that specifically references this article. The summary shall include the following language:“Failure of a member of the association to comply with the alternative dispute resolution requirements of Section 5930 of the Civil Code may result in the loss of the member’s right to sue the association or another member of the association regarding enforcement of the governing documents or the applicable law.”

(b) The summary shall be included in the annual policy statement prepared pursuant to Section 5310.

If you have adopted your own informal dispute resolution policy, you need to use that in place of the Internal Dispute Resolution (“IDR”) process below. Do not attempt to modify this without speaking to us about it. Rather than using the statutory default procedure, we suggest that you at least provide for two board members rather than one to participate in ]

Internal Dispute Resolution Process

The Association Board reserves its right to draft and provide its own Internal Dispute Resolution (“IDR”) process, consistent with the requirements set forth in Civil Code §§ 5900-5910. Until such time as the Board adopts a different internal dispute resolution process, the statutory procedure set forth in Civil Code §5915 below shall apply.

§5915. Default IDR Procedure

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(a) This section applies to an association that does not otherwise provide a fair, reasonable, and expeditious dispute resolution procedure. The procedure provided in this section is fair, reasonable, and expeditious, within the meaning of this article.

(b) Either party to a dispute within the scope of this article may invoke the following procedure:

(1) The party may request the other party to meet and confer in an effort to resolve the dispute. The request shall be in writing.

(2) A member of an association may refuse a request to meet and confer. The association shall not refuse a request to meet and confer.

(3) The board shall designate a director3 to meet and confer.(4) The parties shall meet promptly at a mutually convenient time and

place, explain their positions to each other, and confer in good faith in an effort to resolve the dispute. The parties may be assisted by an attorney or another person at their own cost when conferring.

(5) A resolution of the dispute agreed to by the parties shall be memorialized in writing and signed by the parties, including the board designee on behalf of the association.

(c) A written agreement reached under this section binds the parties and is judicially enforceable if it is signed by both parties and both of the following conditions are satisfied:

(1) The agreement is not in conflict with law or the governing documents of the common interest development or association.

(2) The agreement is either consistent with the authority granted by the board to its designee or the agreement is ratified by the board.

(d) A member shall not be charged a fee to participate in the process.

10. Summary of Procedures for Architectural Review

[There is some ambiguity here regarding what should be included in this section. Civil Code section 5310(a)(10) requires the association to issue a summary of any requirements necessary for association approval of a physical change to the property, pursuant to Civil Code section 4765. Civil Code section 4765(c) requires associations to distribute annually a copy of the procedures used to review and approve or disapprove a proposed architectural change, not just a summary, so we suggest including the entire architectural policy. However, if you have extensive Architectural Guidelines, you may be able to provide just the portion of the Architectural Policy that describes the procedures used to review and approve or disapprove a proposed change, including any application forms, information about timing, fees, etc. Presumably you can omit all the specific architectural guidelines.]

The Association requires prior written approval of certain architectural changes that you make to your property. The general types of changes that require Association approval are described as follows: [describe such as] [all exterior additions and modification require written architectural approval, all changes to structural members, all

3 Note: We suggest that the board should adopt a procedure that designates two directors.

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changes to water, sewer, electrical and other utility components, all changes that would require a building permit, and _____________.] You should review [add others that are applicable or delete any that are inapplicable] [the Association's Declaration, Bylaws, Rules, Architectural Guidelines and ______________] for more specific information.

11. Mailing Address for Overnight Payment of Assessments

Association Name: ________________________

℅: _____________________________________

Address: ________________________________

________________________________

________________________________

12. Miscellaneous Disclosures as Required by Law or Governing Documents

A. Annual Request for Owner’s Address (This request for information can be sent separately at any time so long as the information is to be returned to the association and the new information processed at least 30 days prior to sending the next annual packet.)

Name of Owner(s)__________________________________________________________

Address of Lot/Unit within Association__________________________________________________________

The address or addresses to which notices from the Association are to be delivered.____________________________________________________________________________________________________________________

An alternate or secondary address to which notices from the Association are to be delivered. (ALT This may be an e-mail address if you complete an Electronic Communication Consent/Change Form, a copy is enclosed; or already have this form on file with the Association.) ____________________________________________________________________________________________________________________

The name and address of the owner’s legal representative, if any, including any person with power of attorney or other person who can be contacted in the event of the owner’s extended absence from the separate interest.Attorney: _____________________________Person with Power of Attorney _______________________

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(A copy of the power of attorney must be provided.)Other Contact in the Event of Prolonged Absence _______________________

Please mark answers to the questions below: Owner-occupied? ____ Yes ____NoRented or Leased? _____Yes ____ NoIf yes, names of tenants _____________________________________Vacant? ______Undeveloped Land? ___ Yes ____ No

Please note that pursuant to Civil Code section 4041, if you fail to provide your contact information, the property address will be used for delivery of all Association communications.

B. Preparation of [Audit / Review]

[Use “audit” or “review” above as required by your documents.] Civil Code section 5305 requires a review if your association’s gross income is $75,000 or more for the year. Be sure to see if any Corporations Code section 8321 information needs to be disclosed. This statement or disclosure is not required, but it should help to alert the Board that you need to get it done at the end of the year.]As provided [choose one] [in Article __, Section __ of the Declaration/Bylaws OR in Civil Code section 5305] the Association will have [choose one] [an audit / a review] prepared by a certified public accountant after the close of the fiscal year. That document and any information required by Corporations Code Section 8321 should be available to you within 120 days after the close of the fiscal year.

C. Asbestos Notification (California Health & Safety Code section 25915.2)

[Use only where applicable, i.e., where asbestos is known to exist. This will need to be modified to fit the specifics unique to your association. The association may post signs on the buildings, otherwise this notice must be mailed at least annually and provided to prospective purchasers.]

“ASBESTOS NOTICE: Certain units in the building have [SPECIFY AS APPLICABLE AND AS DETAILED AS POSSIBLE REGARDING LOCATION - original “popcorn” ceilings, linoleum flooring, insulation, ______, etc.] which are asbestos containing materials (“ACMs”). As required by Health and Safety Code section 29515.2, the Association is giving owners this written notice concerning the presence of ACMs in the building, at least in those units in which the [__________, e.g., popcorn ceiling, linoleum floor, etc.] has not been removed. This is also notice to prospective purchasers that ACMs may be present in the unit you are purchasing. The Association has

29



not made an inspection of all units to test for the location of ACMs. The individual unit owners, not the Association, are responsible for maintenance, repair and replacement of the materials in which asbestos is located.

“California Business and Professions Code section 7058.5 requires that only those contractors who are specially licensed to remove and dispose of ACMs may be used to remove materials containing ACMs. It is unlawful for anyone who is not so licensed to remove ACMs, and the Association will require proof of a contractor's asbestos removal certification along with insurance for automobile liability, general liability and workers compensation insurance from a company authorized to issue insurance in California before any contractor may enter the Association’s building to remove and dispose of any ACMs. The danger from asbestos is that it disintegrates easily into small dust-like fibers that can be circulated through ventilating systems, dragged through carpeting, and stirred up through vacuuming and cleaning until it is ultimately inhaled. The Association will react promptly and vigorously to the actions of any owner who fails to observe the requirements of the law for removal and disposal of ACMs from the building. For additional information regarding ACMs, please refer to California Health & Safety Code section 25915 et seq.”4

D. Disclosure and Accounting of Reserves Borrowed for Litigation

[Follow the requirements of Civil Code section 5520 below, and include this section only if applicable. The statute states:a) When the decision is made to use reserve funds or to temporarily transfer moneys from the reserve fund to pay for litigation pursuant to subdivision (b) of section 5510, the association shall provide general notice pursuant to section 4045 of that decision, and of the availability of an accounting of those expenses.b) Unless the governing documents impose more stringent standards, the association shall make an accounting of expenses related to the litigation on at least a quarterly basis. The accounting shall be made available for inspection by members of the association at the association's office.]

As required by Civil Code section 5520, we are disclosing that the Association has made a decision to transfer funds temporarily from the reserve fund as provided in Civil Code section 5510(b). A quarterly accounting of the expenses of litigation is available for inspection by

4 IMPORTANT! If the Association finds or knows of any ACMs in common areas or in any association-maintained areas, you will need to modify this section accordingly.

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members of the Association at the Association’s office upon reasonable advance notice.

E. Disclosure of Rental Restrictions

[Civil Code section 4525(a)(9) requires the disclosure of any applicable restrictions that prohibit the rental or leasing of any of the separate interests to a renter, lessee, or tenant as part of the documents and disclosures that must be made by an owner to a prospective purchaser. While it is not required as part of the annual budget disclosures, if you include these disclosures in the annual disclosure package, and if a prospective purchase asks the owner to provide a copy of the documents required by Civil Code section 4525, the association is required to provide the documents, including the disclosure of any rental prohibitions. Also, if you have CC&R restrictions against rentals, even if it is not an outright prohibition against the rental or leasing of any separate interests, it is a good idea to provide notice with the annual budget package. Prohibitions adopted after the effective date of Civil Code section 1360.2 (now codified as section 4525(a)(9)) on January 1, 2012 may be applicable only to owners who purchased after that date. The association may wish to verify what separate interests have sold or transferred to a party that is not exempt under section 4740.2. Certain transfers, such as interfamily or through probate may be exempt, even if they transferred after January 1, 2012.]

The following provisions found in Article ___, Section ___ of the Association’s recorded Declaration or CC&Rs impose [select one] [prohibitions / restrictions] on rental or leasing of your property. The following briefly summarizes the nature of those provisions: _______________________________________. However, you should review to the full text for a complete description of the requirements.

F. Disclosure of Senior Community Status

[This section is required by Civil Code section 4525(a)(2), but only if there are differences between the CC&R requirements and the requirements of Civil Code section 51.3. While not specifically required for the annual budget disclosure, this is required if a prospective purchaser requests documents and disclosures for escrow as required by Civil Code section 4525(a)(2), AND if there is any difference between the CC&R provision on senior housing and the senior housing requirements in Civil Code section 51.3. There may be some differences if the association is a mobilehome community (that is subject to the Federal Fair Housing Act) or an association in Riverside County (that is subject to Civil Code section

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51.11). Obviously this disclosure, if applicable, is required only if the association is legitimately a senior (55+) community in the first place. However, by including the disclosure in escrow packages as part of the annual budget package, you help to make sure that you provide this disclosure to escrow as part of the annual disclosures required to be distributed to the prospective purchaser pursuant to Civil Code section 5300 as required by Civil Code section 4525(a)(3) It is probably helpful to have a disclosure that the association is a senior community as part of the budget package that would go to a prospective purchaser who requests the documents, including the annual disclosures, under Civil Code section 4525.]

As provided by Civil Code section 4525, this is your notice that there is a restriction in the governing documents, specifically in Article __, Section __ of the Declaration limiting the occupancy, residency, or use of a separate interest on the basis of age. This is a senior or 55+ community, and all residents must be 55 years of age or older or eligible based on exemptions specifically recognized by statute.

[If there are any differences between the association’s CC&R requirements and Civil Code section 51.3, you need to complete this paragraph. This will apply to all senior associations in Riverside County, because they are subject to Civil Code section 51.11, not 51.3 and it may apply to an association that is a mobilehome community, because it is subject only to the Federal Fair Housing Act and not to Civil Code section 51.3 or 51.11.] This Association’s governing documents comply with the requirements of Civil Code section 51.3. [OR] This Association’s governing documents differ from the requirements of Civil Code section 51.3 as follows: ___________________________________________. The restrictions are enforceable only to the extent permitted by Civil Code section 51.3, and thus the restrictions must be enforced differently, as follows, to comply with Civil Code section 51.3. [OR] This Association’s governing documents differ from the requirements of Civil Code section 51.3, but it is a senior community in Riverside County that is required to comply with the requirements of Civil Code section 51.11 rather than Civil Code section 51.3, and it does comply with the requirements of Civil Code section 51.11. [OR] This Association’s governing documents differ from the requirements of Civil Code section 51.3 as follows: ___________________________________________. However, this Association is a mobilehome community and, as provided in Code section 799.5, it is required to comply only with the Federal Fair Housing Amendments Act of 1988, as amended from time to time, and not with Civil Code section 51.3. It does comply with the requirements of the Federal Fair Housing Amendments Act of 1988, as amended from time to time.

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G. Community Service Association Disclosure

[This section is likely to apply to very few associations. Include this section only if applicable to your association. Then be sure to follow the requirements of Civil Code section 5580 below.]Our Association is subject to the requirements of Civil Code section 5580 because there is a community service organization whose funding from our Association or our members exceeds 10 percent of the community Association’s annual budget.[You do not need to include this statute below with the annual disclosures, but you need to prepare and provide the accounting described in section 5580 when it is required.]

§5580 Community Service Association Disclosure Requirements a) Unless the governing documents impose more stringent standards,

any community service organization whose funding from the association or its members exceeds 10 percent of the organization’s annual budget shall prepare and distribute to the association a report that meets the requirements of Section 5012 of the Corporations Code, and that describes in detail administrative costs and identifies the payees of those costs in a manner consistent with the provisions of Article 5 (commencing with Section 5200) of Chapter 6.

b) If the community service organization does not comply with the standards, the report shall disclose the noncompliance in detail. If a community service organization is responsible for the maintenance of major components for which an association would otherwise be responsible, the community service organization shall supply to the association the information regarding those components that the association would use to complete disclosures and reserve reports required under this article and Section 5300. An association may rely upon information received from a community service organization, and shall provide access to the information pursuant to the provisions of Article 5 (commencing with Section 5200) of Chapter 6.

H. Emergency Preparedness and/or Evacuation Plans

[Some communities, such as mobilehome communities (Health & Safety Code §§18603 & 18871.8) and high rise buildings (Health & Safety Code §§13210-13234), are required to have emergency preparedness and/or evacuation plans. If your community has such a plan or plans, you may also wish

33



to insert them here. You also need to be sure that you have posted these plans in a conspicuous common area or area of a high rise as required by the applicable statute.]

III. Optional Disclosures [use only if applicable]

1. Architectural Modifications for Persons with Disabilities.

[This is not a mandatory disclosure, but it is helpful in most associations. It is advisable to have a disclosure like this is you have allowed some architectural change or other accommodation to one or more persons with disabilities. Even if you have not made any reasonable accommodations for a resident’s disability, it could happen at any time.]

Apparent Architectural Violations or other Alleged Violations of our Governing Documents May Not Be Violations Due to Compliance with the Federal Fair Housing Act and/or the California Fair Employment and Housing Act.

Occasionally residents may see something that appears to be a violation of our governing documents and rules. Appearances can be deceiving! Sometimes what seem to be "violations" are, in fact, "accommodations" required by law to be given to disabled residents. This is necessary to give disabled residents an equal opportunity to use and enjoy the premises. Please recognize that some disabilities may not be apparent just by looking at the person who has a disability. Also, the type of architectural change made may seem as if it is unrelated to any form of disability, but that is because there are so many different types of disabilities that require many different types of accommodations. These accommodations should not be interpreted as meaning the Association is not serious about enforcing community standards and rules, only that the Association is mindful of its legal duty to comply with disability protection laws.

You probably already know from your dealings with doctors and pharmacies that they are required to be very protective of each patient’s medical information. Article I, Section 1 of the California Constitution also includes a personal right to privacy. Thus, even if you ask about an apparent architectural or other violation, we may not be able to tell you very much, if anything, about it. About all we can say is that we are aware of it, and the Association authorized it to make an accommodation required by law. We trust you will understand. If you have questions about this issue, please contact management.

2. Distribution of Owner Mailing List to Members

[Civil Code section 5200(a) does not require this disclosure, but it may be useful for owners who choose to opt out. If owners opt out, it probably requires the association to disclose to the requesting party that X owners opted out, and if

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they want to distribute information to them, they will need to provide X number of sealed and stamped envelopes with the return address of the sender, and the association will add mailing labels to mail out that information.]

The Association is required by Civil Code section 5200(a), under the circumstances covered by the statute, to provide members with the name, property address, and mailing address of all members. Association members may opt out of sharing his or her name, property address, and mailing address by notifying the Association in writing that the member prefers to be contacted via the alternative process described in Corporations Code section 8330(c). The alternative method may require the member wanting the list to provide the materials to the Association for the Association to mail it to the members who have opted out without revealing the mailing list information to the requesting member. Any opt-out remains in effect until changed by the member.

3. Gated Communities and Associations with Locked Entry Doors or Patrols

[These are not mandatory disclosures, but you may wish to consider using something here to state explicitly that owners are responsible for their own security, and the fact that there may be gated entryways, periodic patrols, staffed entry gates, the use of TV cameras, etc. do not provide a guarantee of security on which any residents may rely.]

While the Association may have [list any that apply: gated entryways, staffed entrances, locked exterior doors, periodic patrols, Neighborhood Watch Programs, TV cameras and recording equipment, etc.], these features cannot be relied upon to guarantee your personal safety and security. Some are merely deterrents, and others may help to identify a criminal after the fact, but even that is not certain. Thus, each owner is responsible for his or her own personal safety and security on the property. Owners must communicate these facts to their respective tenants and guests.

4. Requirement for Owners to have Smoke and Carbon Monoxide Detectors in their Units

[Owners have been required to install an approved and operable carbon monoxide detector by July 1, 2011 in any single-family dwelling unit intended for human occupancy that has a fossil fuel burning heater or fireplace. For all other existing dwelling units intended for human occupancy, the deadline was January 1, 2013. (H&S Code §§17926-17926.2) Operable smoke alarms have been required as far back as January 1, 1986. (H&S Code §13113.8). These are not mandatory disclosures, but it is important to remind owners about smoke detectors and carbon monoxide detector requirements, and some HOA insurance companies are also requiring the associations they insure to provide written notice to owners about these obligations.]

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Owners are required by law to have operational smoke detectors and carbon monoxide detectors. [Health and Safety Code §§13113.8, 17926-17926.2] Please note that it is common for many detectors to last no longer than 10 years, so please test your detectors regularly, follow the manufacturer’s instructions about replacement and replace them whenever their useful life ends. If you have tenants, there are battery-operated detectors that have tamper-resistant features to prevent removal of batteries. Some hard-wired detectors have batteries designed to last for the life of the detectors.

5. Location of Main Water Shutoff for Emergencies.

[This is not a statutory requirement, but it may be wise to include it. If you have multi-family structures, and especially multi-story buildings, where a pressurized water line failure may damage multiple units, and if association personnel are not on site 24 hours a day, it is a good idea to make sure that owners know each location where water can be turned off in an emergency. This is also something you could include in your rules and periodically in newsletters, just to be sure people know how to stop water leaks quickly. We have seen multiple cases of serious damage where it took time to locate the shut off.] To reduce damage due to an unexpected leak that may damage your property and the property of others, please take time to familiarize yourself with where the main water shutoff valves are. [They are located in the following locations: [OR] Please refer to the map attached as Exhibit ___.]

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List of Exhibits

[This is a list of possible exhibits from the attachments mentioned above. If you wish, you could attach some of the other exhibits that were inserted into the text and attach them here as Exhibits.]

Exhibit __ Copy of the Annual Budget from Sec I(1)Exhibit __ List of variable assessments from Sec I(1)(a)Exhibit __ Summary of the Association’s Reserves from Sec. I(a)(2)Exhibit __ Reserve study or annual update from Sec I(3) (optional but must be

available on request)Exhibit __ Insurance Declaration Pages from Sec I(9), or the sample summary in Sec I(9)Exhibit __ Association Collection Policy from Sec II(7)Exhibit __ Summary of Association’s Insurance Information from Sec. I(9)Exhibit __ Discipline Policy from Sec. II (8)Exhibit __ Map of Location of Water Shutoff ValvesExhibit __ Emergency Preparedness / Evacuation Plan(s)

[Add others below that you chose to add here rather than in Sections I, II or III above]Exhibit __Exhibit __Exhibit __Exhibit __Exhibit __

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Summaries of Annual 1 Budget Report and Annual Policy Statement Davis-Stirling 2014

The method of delivery of these disclosures is governed by Civil Code section 5320. This section requires the association to individually deliver any report prepared pursuant to Civil Code sections 5300 and 5310. The association may deliver either 1) the full report or 2) a summary of the report. However, if a member requests the full report, it must be provided.

The sample summary of the Annual Budget Disclosure and Annual Policy Disclosure is found below. The code is vague on the contents of a summary, so use discretion where you think more information might serve.

You will note that there are two sample summaries below. The first summary is a bare bones approach and contains nothing but the topic headings for each section. The second summary is a more balanced approach and contains some information.

In theory, if an association can strike a balance between the full report and summary, it should be able to save the costs of distributing the full report. Please note that we have not included our comments from above in the summary below. For more information on each topic, see the root section above.

Using one of these summaries may be better suited in an association that has a website on which owners can view and print the full disclosures.

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Summary Option #1 – Bare Bones Approach

Date: _______________, 20___To: Members of _____________ AssociationFrom: The Board of DirectorsRe: Fiscal Year (20__-20__) Annual Budget Report and Annual Policy

Statement Summaries

Dear Members,

Pursuant to Civil Code section 5320, the Association is providing you with the following summary of the Annual Budget Report and Annual Policy Statement. If you prefer a full copy of the Annual Budget and Policy Reports, please contact your Association Manager, [Insert Name ___________], [by telephone at ____________] or [by e-mail at _______________] with your request. The full report will then be provided to you at no cost.5 [This must be in at least 10-pt boldface type.]

The following summary of the Annual Budget Report and Annual policy statement contains the names of all of the reports, statements and summaries the Association is required to provide pursuant to law and/or the governing documents.

Summary of the Annual Budget Report and Annual Policy Statement

I. Annual Budget Report 1. Pro Forma Operating Budget for fiscal year 20__-20__ prepared on an

accrual basis 2. Summary of the Association’s Reserves 3. Summary of the Board Adopted Reserve Funding Plan 4. Statement of Deferral/Decision to Not Undertake Repair/Replacement of

Major Component(s) 5. Statement of Anticipated Special Assessment(s)6. Statement of Mechanism of Funding Reserves to Repair or Replace Major

Components 7. Statement Addressing Procedures Used to Calculate and Establish

Reserves8. Statement of Association(s) Outstanding Loans 9. Insurance Disclosure Information 10. Assessment and Reserve Funding Disclosure Summary Form [This

statement is required by Civil Code sections 5300(e) & 5570 and must be used verbatim.]


5 Civil Code §5320 requires that instructions on how to request a complete copy of the report must be on the first page of the summary in at least 10-point boldface type.

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immediately below):





40





Total:




[Civil Code section 5570(b)(4) requires the use of the formula below in computing the amount of reserves needed to be accumulated for a component at a given time. That formula is the current cost of replacement or repair multiplied by the number of years the component has been in service divided by the useful life of the component. While that formula must be used to compute the amount of reserves needed, section 5570(b)(4) does not necessarily require the Board to fund reserves in accordance with the calculation. Since the verbatim form left only one blank for each of the five-year periods discussed below, we used tables to make the information easier to read. Please note that the computations in the reserve study may not assume a rate of return on cash reserves that is more than 2% above the discount rate published by the San Francisco Federal Reserve Bank when the calculation was made. See Civil Code section 5300(b)(7).]

(7) Based on the method of calculation in paragraph (4) of subdivision (b) of section 5570 of the Civil Code, the estimated amount required in the reserve fund at the end of each of the next five budget years is $______ in 20__,$______ in 20__,$______ in 20__,$______ in 20__ and$______ in 20__,

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Note: The financial representations set forth in this summary are based on the best estimates of the preparer at that time. The estimates are subject to change. At the time this summary was prepared, the assumed long-term before-tax interest rate earned on reserve funds was ____ percent per year, and the assumed long-term inflation rate to be applied to major component repair and replacement costs was ____ percent per year.

[This ends the verbatim form.]

II. Annual Policy Statement 1. Statement of Name and Address of Person Designated to Receive Official

Communications on behalf of the Association2. Statement of Members’ Ability to Have Notices Sent to up to Two Different

Addresses 3. Statement of the Posting Location for General Notices 4. Notice of Members’ Rights to Receive General Notices by Individual

Delivery 5. Notice of Members’ Right to Minutes 6. Statement of Assessment Collection Policies under Civil Code section

5730 7. Statement of Policy for Collection of Delinquent Accounts 8. Statement of Association’s Discipline Policy and Schedule of Penalties 9. Summary of Association’s Dispute Resolution Procedures (ADR and IDR)10. Summary of Procedures for Architectural Review

[Note: Civil Code section 4765(c) requires associations to distribute the entire Architectural Policy annually not just to provide an annual summary, so we suggest including the entire architectural policy, if you use this summary. You may be able to provide just the portion of the Architectural Policy that describes the procedure used to

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review and approve or disapprove a proposed change, including any application forms, information about timing, fees, etc. Presumably you can omit all the specific architectural guidelines.]

11. Statement of Address for Overnight Payment of Assessments12. Miscellaneous Disclosures as required by law or governing documents

A. Preparation of [select one Audit / Review ] B. Disclosure of Senior Community StatusC. Asbestos DisclosureD. Disclosure and Accounting of Reserves Borrowed for LitigationE. Disclosure of Rental RestrictionsF. Community Service Association Disclosure G. Emergency Preparedness and/or Evacuation Plans.

III. Optional Disclosures (and use only if applicable)1. Architectural Modifications for Persons with Disabilities2. Distribution of Mailing List to Owners3. Gated Communities and Associations with Locked Entry Doors or Patrols 4. Requirement for Owners to have Smoke and Carbon Monoxide Detectors

in their Units5. Location of Main Water Shutoff for Emergencies

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Summary Option #2 – Fleshed Out Approach

Date: _______________, 20___To: Members of _____________ AssociationFrom: The Board of DirectorsRe: Fiscal Year (20__-20__) Annual Budget Report and Annual Policy

Statement Summaries

Dear Members,

Pursuant to Civil Code section 5320, the Association is providing you with the following summary of the Annual Budget Report and Annual Policy Statement. If you prefer a full copy of the Annual Budget and Policy Reports, please contact your Association Manager, [Insert Name ___________], [by telephone at ____________] or [by e-mail at _______________] with your request. The full report will then be provided to you at no cost.6 [This must be in at least 10-pt boldface type.]

The following summary of the Annual Budget Report and Annual policy statement contains the names of all of the reports, statements and summaries the Association is required to provide pursuant to law and/or the governing documents.

Summary of the Annual Budget Report and Annual Policy Statement

I. Annual Budget Report 1. Pro Forma Operating Budget for fiscal year 20__-20__ prepared on an

accrual basis In order to maintain the financial integrity of our Association and to meet the ongoing maintenance costs which increase with the aging process, a _______ percent (___%) increase in assessments will be effective _________ 1, 2____. As of ______ 1, 20__, the new assessments will be $______. [If your assessments are not uniform for everyone, you may need to attach a schedule of the new assessment levels.]

2. Summary of the Association’s Reserves Based the Reserve Study conducted pursuant to Civil Code section 5550(a), the Association’s reserves are XX% funded.

3. Summary of the Board Adopted Reserve Funding Plan The Board’s plan to fund the reserves is to: [1) increase regular assessments by ___% per year; 2) levy a special assessment in the amount of $____________; 3) Borrow $_________ from a Bank; and/or ___________] in order to meet the Association’s obligation for the repair and replacement of all major components with an expected remaining life of 30 years or less, not including

6 Civil Code §5320 requires that instructions on how to request a complete copy of the report must be on the first page of the summary in at least 10-point boldface type.

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those components that the Board has determined will not be replaced or repaired.

4. Statement of Deferral/Decision to Not Undertake Repair/Replacement of Major Component(s)

In accordance with Civil Code section 5300(b)(4) and as of the date of this letter, the Board of Directors plans to [defer / not defer ] repairs or replacement of the following major components: [prepare list - Roofs, Decks, etc.]

5. Statement of Anticipated Special Assessment(s)As of the date of this letter, the Board of Directors [choose one and delete the other] [anticipates / does not anticipate] that [a special assessment / one or more special assessments] will be required to repair, replace or restore any major components or to provide adequate reserves.

6. Statement of Mechanism of Funding Reserves to Repair or Replace Major Components

The Board of Directors uses the following mechanism or mechanism to fund reserves to repair or replace major components: [either add the full statement, or prepare an abbreviated statement, or state: “Please refer to the full Annual Budget Report.”]

7. Statement Addressing Procedures Used to Calculate and Establish Reserves

Reserves are calculated pursuant to Civil Code section 5550(a) and the Board had a reserve study last conducted on __/__/20__.

8. Statement of Association(s) Outstanding Loans The Association has a total outstanding indebtedness of $______ and all debt will be retired by on __/__/20__.

9. Insurance Disclosure Information The Association currently meets the minimum Civil Code requirements for insurance to provide the statutory limitations from liability for officers and directors [include the next bracketed language, if the association is a condominium or a planned development in which the common area is owned by the members as tenants-in-common rather than by the association itself] [and for the members if persons are injured on the common area].

10. Assessment and Reserve Funding Disclosure Summary Form [This statement is required by Civil Code sections 5300(e) & 5570 and must be used verbatim.]


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immediately below):





46





Total:




[Civil Code section 5570(b)(4) requires the use of the formula below in computing the amount of reserves needed to be accumulated for a component at a given time. That formula is the current cost of replacement or repair multiplied by the number of years the component has been in service divided by the useful life of the component. While that formula must be used to compute the amount of reserves needed, section 5570(b)(4) does not necessarily require the Board to fund reserves in accordance with the calculation. Since the verbatim form left only one blank for each of the five-year periods discussed below, we used tables to make the information easier to read. Please note that the computations in the reserve study may not assume a rate of return on cash reserves that is more than 2% above the discount rate published by the San Francisco Federal Reserve Bank when the calculation was made. See Civil Code section 5300(b)(7).]

(7) Based on the method of calculation in paragraph (4) of subdivision (b) of section 5570 of the Civil Code, the estimated amount required in the reserve fund at the end of each of the next five budget years is $______ in 20__,$______ in 20__,$______ in 20__,$______ in 20__ and$______ in 20__,

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Note: The financial representations set forth in this summary are based on the best estimates of the preparer at that time. The estimates are subject to change. At the time this summary was prepared, the assumed long-term before-tax interest rate earned on reserve funds was ____ percent per year, and the assumed long-term inflation rate to be applied to major component repair and replacement costs was ____ percent per year.[This ends the verbatim form.]

II. Annual Policy Statement 1. Statement of Name and Address of Person Designated to Receive Official

Communications on behalf of the Association.Name: ______________________________________

Title: _______________________________________

Company: ___________________________________

Address: ____________________________________

____________________________________

____________________________________

2. Statement of Members’ Ability to Have Notices Sent to an Additional Address

Owners have a right to submit a secondary address to the association for the purpose of receiving (1) annual reports the Association is required to provide to owners and for (2) mailings and notices related to assessment payments, delinquencies and foreclosures at an additional address.

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3. Statement of the Posting Location for General Notices The location designated for posting of a General Notice is:

________________________4. Notice of Members’ Rights to Receive General Notices by Individual

Delivery a. Upon request, Members may receive general notices by individual

delivery.5. Notice of Members’ Right to Minutes

a. The minutes or a summary of minutes of a Board meeting, other than an executive session, shall be available to members within 30 days of the meeting.

6. Statement of Assessment Collection Policies under Civil Code section 5730

7. Statement of Policy for Collection of Delinquent Accounts 8. Statement of Association’s Discipline Policy and Schedule of Penalties 9. Summary of Association’s Dispute Resolution Procedures (ADR and IDR)10. Summary of Procedures for Architectural Review

[Note: Civil Code section 4765(c) requires associations to distribute the entire Architectural Policy annually not just to provide an annual summary, so we suggest including the entire architectural policy, if you use this summary. You may be able to provide just the portion of the Architectural Policy that describes the procedure used to review and approve or disapprove a proposed change, including any application forms, information about timing, fees, etc. Presumably you can omit all the specific architectural guidelines.]

11. Statement of Address for Overnight Payment of Assessments12. Miscellaneous Disclosures as required by law or governing documents

A. Preparation of [select one Audit / Review ]B. Disclosure of Senior Community StatusC. Asbestos DisclosureD. Disclosure and Accounting of Reserves Borrowed for LitigationE. Disclosure of Rental RestrictionsF. Community Service Association DisclosureG. Emergency Preparedness and/or Evacuation Plans

III. Optional Disclosures (and use only if applicable)1. Architectural Modifications for Persons with Disabilities2. Distribution of Mailing List to Owners3. Gated Communities and Associations with Locked Entry Doors or Patrols 4. Requirement for Owners to have Smoke and Carbon Monoxide Detectors

in their Units5. Location of Main Water Shutoff for Emergencies

49