Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) A "Master Planned Development" is a
development which ordinarily satisfies all of the following criteria:
(1) The development is or will be a planned
development subdivision within the meaning of subdivision (k) of Section
1351 of the Civil
Code.
(2) The development consists of,
will generally consist of, or is proposed to consist of both (a) approximately five
hundred (500) or more separate residential interests, and (b) one or more
subdivisions, including planned developments, community apartment projects,
condominium projects, stock cooperatives, time-share projects, or other residential,
recreational, commercial, or mixed residential/non-residential projects.
(3) The Master Planned Development shall be
managed by a community association ("Master Association") that is responsible for
the maintenance and operation of areas and/or facilities affecting the Master
Planned Development and enforcement of use restrictions pertaining to the Master
Planned Development.
(4) The Master
Planned Development is or will be developed in two or more phases.
Provided, however, the subdivider may demonstrate from specific
facts and circumstances that a development that does not satisfy the criteria set
forth in this subsection (a) should nonetheless be treated as a Master Planned
Development.
(b)
Recognizing that control by the subdivider over the governing body serving a
residential common interest development and over the architectural control committee
serving the development is ordinarily necessary until a reasonable portion of the
project has been completed, in order to fulfill the expectations of the subdivider
and the purchasers, the governing instruments for a Master Association shall
substantially conform to the applicable standards prescribed in subsections (c)
through (g), inclusive, below.
(c)
SUBDIVIDER'S MEMBERSHIP VOTING RIGHTS: The governing instruments for a Master
Association may include provisions for two classes of membership as defined in
Section 2792.18(b). For such a
Master Association, Class B membership shall be automatically converted to Class A
membership and Class B membership shall thereafter cease to exist on the first to
occur of the following:
(1) When seventy-five
percent of the separate residential interests proposed for the overall Master
Planned Development have been conveyed to Class A members;
(2) On the fifth anniversary following the most
recent conveyance to a Class A member of the first separate residential interest in
any phase of the overall Master Planned Development under the authority of a public
report; or
(3) On the twenty-fifth
anniversary of the first conveyance of a separate residential interest to a Class A
member in the overall Master Planned Development under the authority of a public
report.
(d) DELEGATE VOTING:
The governing instruments for a Master Association may include provisions for
establishing a geographical area in the Master Planned Development for one or more
delegates to represent the collective voting power of the members residing in such
residential or mixed residential/non-residential projects within the Master Planned
Development. Arrangements in the governing instruments for the exercise of the
voting power of the Master Association by delegates selected by each delegate
district shall conform to the following criteria:
(1) The governing instruments must establish a
procedure for the selection of delegates, for defining delegate districts, and for
determining the number of votes that may be cast by a delegate.
(2) There shall be at least one delegate and one
alternate for each delegate district.
(3) In any meeting of the members of the Master
Association, the votes of members residing in a delegate district shall be cast by
delegates selected to represent that delegate district.
(4) The duties of the delegates shall be
prescribed in the governing instruments.
(e) QUORUM FOR MEMBERSHIP MEETINGS: The quorum for
an adjourned meeting of the members of the Master Association, as described in
Section 2792.17(e)(2) of these
Regulations, may be set by the governing instruments at a percentage less than that
prescribed for the regular meeting, but it shall not be less than 15 percent of the
total voting power of the Master Association.
(f) GOVERNING BODY MEMBERSHIP:
(1) The governing instruments may include
provision for the election of a majority of the governing body of the Master
Association by the subdivider under a Class C vote or similar device. For such a
Master Association, this arrangement shall irreversibly terminate on the first to
occur of the following:
(A) When seventy-five
percent of the separate residential interest proposed for the overall Master Planned
Development have been conveyed to Class A members;
(B) On the fifth anniversary following the most
recent conveyance to a Class A member of the first separate residential interest in
any phase of the overall Master Planned Development under the authority of a public
report; or
(C) On the twenty-fifth
anniversary of the first conveyance of a separate residential interest to a Class A
member in the overall Master Planned Development under the authority of a public
report.
(2) The governing
instruments may include provision for the election of twenty percent of the members
of the board of directors of the Master Association by the subdivider until the
first to occur of the following:
(A) When ninety
percent of the subdivision interests in the overall development have been conveyed
to Class A members;
(B) On the fifth
anniversary following the most recent conveyance to a Class A member of the first
separate residential interest in any phase of the overall Master Planned Development
under the authority of a public report.
(C) On the twenty-fifth anniversary of the first
conveyance of a separate residential interest to a Class A member in the overall
Master Planned Development under the authority of a public
report.
(g)
ARCHITECTURAL CONTROL: Members appointed to the Architectural Control Committee by
the governing body or by the subdivider need not be members of the Master
Association. The governing instruments may include provision for the election of a
majority of the Architectural Control Committee of the Master Association by the
subdivider. This arrangement shall irreversibly terminate on the first to occur of
the following:
(1) When ninety percent of the
subdivision interests proposed for the overall Master Planned Development have been
conveyed to Class A members; or
(2) On
the fifth anniversary following the most recent conveyance to a Class A member of
the first separate residential interest in any phase of the overall Master Planned
Development under the authority of a public report.
(h) ADDITIONAL ASSOCIATIONS: If any residential
structure or other major special benefit facility or amenity will be constructed or
provided within the Master Planned Development and commonly maintained or operated
for the use or benefit of some but not all of the homeowners within the Master
Planned Development, ordinarily one or more separate homeowners associations shall
be established under arrangements substantially satisfying the requirements of
Sections 2792.4,
2792.8(a), and
2792.15 to
2792.26, inclusive, of these
Regulations to maintain the residential structure or to maintain and operate the
major special benefit facility or amenity and to enforce any obligation or
commitment, and any bond or other arrangement securing such obligation or
commitment, relating to the residential structure or major special benefit facility
or amenity.
(i) Notwithstanding the
foregoing, the subdivider may present to the Commissioner specific facts an
circumstances relating to a Master Planned Development that demonstrate the need for
alternative arrangements, satisfactory to the Commissioner, from those provisions
set forth in subsections (c) through (h) above.
(j) The subdivider of a Master Planned Development
may enter into an arrangement with the Master Association to sell or to convey under
a lease purchase arrangement common area amenities to the Master Association. The
provisions of this subsection are not available to anyone other than the subdivider
of a Master Planned Development. The sale or lease purchase arrangement shall
include:
(1) All common area amenities subject to
this arrangement shall be specifically identified and defined as "common area" or
"future common areas" in the CC&Rs. The common area amenity must be a part of
the proposed Master Planned Development, accessible to all homeowners who will be
charged an assessment to pay for the amenity and must be located on a separate lot
or parcel. The term common area shall not include any element or amenity within a
separate interest or unit.
(2) All
common area amenities subject to this arrangement that have not been completed shall
be covered by a bond or other arrangement to secure completion of the
amenities.
(3) The Master Association
shall not be obligated to make any payments nor shall any homeowner be required to
pay any assessment for common area amenities subject to this arrangement until those
amenities have been completed and a Notice of Completion as defined in Civil Code
Section
3093 has been
recorded.
(4) The CC&Rs must
obligate the Master Association to maintain and control the common area amenities
subject to this arrangement after the sale or lease purchase and to act on those
amenities, as appropriate, during the term of the sale or lease purchase.
(5) Title to the common area amenities shall be
delivered free and clear of any liens or blanket encumbrances to the Master
Association upon completion of the sale or lease purchase. All encumbrances
affecting the common area amenities shall include assurances that the ownership or
use by the Master Association shall not be adversely affected.
(6) The purchase price of the common area
amenities shall not exceed the cost of construction of those amenities. The master
subdivider shall provide a bond to secure completion of construction. The Bureau
may, in its discretion, determine whether the purchase price of the common area
amenities exceeds the cost of construction of those amenities. In order to make that
determination, the Bureau may review construction bids, records or analyses
submitted by the subdivider and, if deemed necessary, may request an independent
third party evaluation. The costs of any independent third party evaluation shall be
paid by the subdivider.
(7) The term of
the sale or lease purchase arrangement shall not exceed ten (10) years and shall
provide for substantially equal monthly payments by the Master Association
sufficient to fully amortize the sale or lease purchase. The terms of the sale or
lease purchase agreement shall be fair, just and equitable and may not provide for a
prepayment penalty, negative amortization or balloon payments. Payments on the sale
or lease purchase arrangement shall begin not later than three years from the date a
Notice of Completion as defined in Civil Code Section
3093 has been
recorded unless the Bureau has approved a longer time period.
(8) The master subdivider shall submit to the
Bureau, prior to use or execution all sale or lease purchase agreements, covenants
and documents relating to the sale or lease purchase agreement.
(9) The sale or lease purchase arrangement shall
specify who is responsible for maintenance, insurance, reserves and operation of the
common area amenities. In a lease purchase arrangement, the subdivider shall pay the
property taxes attributable to the common area amenities. The subdivider shall post
a bond or other form of acceptable security to insure performance if the master
subdivider is responsible for any task requiring such security.
(10) The sale or lease purchase arrangement shall
provide for the distribution of proceeds and the action to be taken in the event of
condemnation or destruction.
(11) The
Master Association CC&Rs and budget shall provide for: specific language binding
the Association to fund the common area amenities prior to, during and after
acquisition of the amenities; the ability of the Association to address issues
related to the operation of the common area amenities while they are subject to a
sale or lease purchase arrangement; sufficient funds to meet the monthly obligations
of the sale or lease purchase arrangement, including a minimum 5% sinking fund to
cover defaulting individual homeowner payments until such time as the sinking fund
equals the outstanding balance; reserve payments for the common area amenities
commencing upon recordation of a notice of completion; and, the right of the Master
Association to file liens against the interests of homeowners who have failed to pay
their respective portion of the sale or lease purchase costs. Individual homeowner
assessments to create the sinking fund shall begin upon the commencement of payments
by the Master Association under the sale or lease purchase arrangement. The sinking
fund may only be used to cover defaulting individual homeowner payments on the
common area amenities covered by the sale or lease purchase arrangement.
(12) The sale or lease purchase arrangement and
agreements shall not be modified without the assent of a simple majority of the
owners other than a subdivider.
1. New section
filed 5-9-90; operative 6-8-90 (Register 90, No. 25).
2. Repealer and new
section, and amendment of NOTE filed 11-13-96; operative 11-13-96 pursuant to
Government Code section
11343.4(d)
(Register 96, No. 46).
3. New subsections (j)-(j)(12) filed 2-28-2006;
operative 3-30-2006 (Register 2006, No. 9).
4. Change without regulatory
effect amending subsections (j)(6)-(8) filed 6-30-2014 pursuant to section
100, title 1, California Code of
Regulations (Register 2014, No. 27).
Note: Authority cited: Section
11001,
Business and Professions Code. Reference: Section
11018.5,
Business and Professions Code.
