1. (a) Regular assessments to defray expenses attributable to the ownership, operation and furnishing of common interests by the Association shall ordinarily be levied against each owner according to the ratio of the number of subdivision interests owned by the owner assessed to the total number of interests subject to assessments.
2. (b) In the case of a subdivision offering in which it is reasonable to anticipate that any owner will derive as much as 10% more than any other owner in the value of common services supplied by the Association, the assessment against each owner may be determined according to a formula or schedule under which the assessments against the various subdivision interests bear a relationship which is equitably proportionate to the value of the common services furnished to the respective interests.

3. (c) The subdivider--and his successor in interest, if any--is an owner subject to the payment of regular and special assessments against subdivision interests which he owns provided, however, that the subdivider and any other owner of a subdivision interest which does not include a structural improvement for human occupancy may be exempted by the governing instruments from the payment of that portion of any assessment which is for the purpose of defraying expenses and reserves directly attributable to the existence and the use of the structural improvement. The exemption may include, but shall not necessarily be limited to:

   1. (1) Any exemption from the payment of assessments attributed to dwelling units shall be in effect only until the earliest of the following events.

      1. (A) A notice of completion of the structural improvements has been recorded.
      2. (B) Occupation or use of the dwelling unit.
      3. (C) Completion of all elements of the residential structures which the Association is obliged to maintain.

   2. (2) The subdivider and any other owner of a subdivision interest may be exempted by the governing instruments from the payment of that portion of any assessment which is for the purpose of defraying expenses and reserves directly attributable to the existence and use of a common facility that is not complete at the time assessments commence. Any exemption from the payment of assessments attributed to common facilities shall be in effect only until the earliest of the following events.

      1. (A) A notice of completion of the common facility has been recorded.
      2. (B) The common facility has been placed into use.

   Roof replacement;

   Exterior maintenance;

   Walkway and carport lighting;

   Refuse disposal;

   Cable television; and

   Domestic water supplied to living units.

4. (d) The governing body of the Association must comply with the provisions of Section 1366 of the Civil Code prior to any increase in assessments.

5. (e) (T)he governing body of the Association may not levy special assessments without complying with the provisions of Section 1366 of the Civil Code.

   1. (2) Except in those subdivision offerings where there is an approved subsidization plan which otherwise provides, voting rights attributable to subdivision interests shall not vest until assessments against those interests have been levied by the Association.

      (g)(1) A lien for regular or special assessments against an owner may be made subordinate by the CC&R's to the lien of any first mortgage or first deed of trust (hereafter collectively first encumbrance) against subdivision interests of the owner.

   2. (2) In the case of a subordination of a lien for assessments to a first encumbrance, the transfer of a subdivision interest as the result of the exercise of a power of sale or a judicial foreclosure involving a default under the first encumbrance shall extinguish the lien of assessments which were due and payable prior to the transfer of the subdivision interest.

   3. (3) No transfer of the subdivision interest as the result of a foreclosure or exercise of a power of sale shall relieve the new owner, whether it be the former beneficiary of the first encumbrance or another person, from liability for any assessments thereafter becoming due or from the lien thereof.

      (h)(1) For the purpose of subdivision (d) and subdivision (e), a quorum means more than 50% of the members of the Association.

   4. (2) Any meeting or election of the Association for purposes of complying with subdivision (d) and subdivision (e) shall be conducted in accordance with Chapter 5 (commencing with Section 7510) of Part 3, Division 2 of Title 1 of the Corporations Code and Section 7613 of the Corporations Code.

   (f)(1) Regular assessments against the subdivision interests in a phase of a multi-phase subdivision or against all subdivision interests in a single-phase subdivision shall commence on the date of the first conveyance of a subdivision interest in that phase under authority of a public report or on the first day of the month following the first conveyance of a subdivision interest in the phase.

6. (i) Notwithstanding any other provision contained in this section, the governing body may increase assessments necessary for emergency situations pursuant to Section 1366 of the Civil Code.
7. (j) The governing body shall not expend funds designated as reserve funds for any purpose other than those purposes set forth in Section 1365.5 of the Civil Code.

Note: Authority cited: Sections 10080, 11001 and 11018.5, Business and Professions Code. Reference: Section 11018.5, Business and Professions Code; and Sections 1365.5 and 1366, Civil Code.

History

1. New subsection (g) filed 1-16-79; effective thirtieth day thereafter (Register 79, No. 3). For prior history, see Register 77, No. 7.

2. Amendment filed 1-17-80; effective thirtieth day thereafter (Register 80, No. 3).

3. Amendment of subsection (e) filed 5-13-82; effective thirtieth day thereafter (Register 82, No. 20).

4. Amendment filed 1-11-84; effective thirtieth day thereafter (Register 84, No. 2).

5. Amendment of subsection (c) filed 12-30-86; effective thirtieth day thereafter (Register 87, No. 1).

6. Amendment of subsections (d) and (e) and new subsections (h) and (i) filed 3-18-88; operative 4-17-88 (Register 88, No. 14).

7. Amendment of subsection (d) and new subsections (e)(5) and (j)(1)-(j)(3)(c)4. filed 4-1-93; operative 5-3-93 (Register 93, No. 14).

8. New subsections (d)-(d)(1)(B), subsection renumbering, and amendment of newly designated subsection (d)(2), subsection (d)(3) and Note filed 11-8-93; operative 12-8-93 (Register 93, No. 46).

9. Editorial correction of printing error in subsection (d)(2) (Register 94, No. 21).

10. Editorial correction restoring inadvertently omitted subsection (g)(1) (Register 95, No. 21).

11. Amendment filed 11-13-96; operative 11-13-96 pursuant to Government Code section 11343.4(d) (Register 96, No. 46).