Title 1350
Headings 1350.5
Documents Delivery 1350.7
Definitions used in the Act 1351
When this Article Applies 1352
Deletion of Prohibited Language 1352.5
Airport Influence Area 1353
Display of Flag 1353.5
Signs and Banners 1353.6
Roofs 1353.7
Enforcement of CC&Rs and Rules 1354
Amendment of CC&Rs 1355
Deletion of Developer Language 1355.5
Amendment of CC&Rs 1356
Term of CC&Rs 1357
Definitions. Operating Rules 1357.100
Enforceability of Operating Rules 1357.110
Which Rules must comply 1357.120
Notice of Rule Chanages 1357.130
Members’ Request of Special Meeting 1357.140
When Rules Restriction apply 1357.150
Severance of Membership. Partition 1358
Partition of Common Area. Partition Sale 1359
Modifications to Common Area 1360
Pets 1360.5
Easements 1361
Access to Lot or Unit 1361.5
Tenancy in Common 1362
Elections and Meetings 1363.03
Election Campaign Funds 1363.04
Management of the Common Interest Development 1363
Possible Eduction 1363.001
Management Disclosure/Information 1363.1
Management Funds 1363.2
Articles of Incorporation Statements 1363.5
Identification of CIDs 1363.6
Open Meetings 1363.05
Association Transfer of Title or Easements 1363.07
Civil Action for Elections/Meetings Violations 1363.09
Internal Dispute Resolution 1363.810
Reasonable Procedures 1363.820
Procedure Requirements 1363.830
Failure to Provide Resolution Procedures 1363.840
Notice of Dispute Procedures 1363.850
Repair, Maintenance and Replacement Responsibility 1364
Financial Information and Disclosure 1365
Assessment Collection Disclosures 1365.1
Inspection of Association's Documents and Records 1365.2
Assessment and Reserve Funding Disclosure Summary 1365.2.5
Community Service Organizations 1365.3
Review of Financial Documents by the Board. Reserves 1365.5
Limited Liablity for Volunteers 1365.7
Limited Liability for Owners if Insured 1365.9
Regular and Special Assessments 1366
No Excess Assessments 1366.1
Recorded Statement To Facilitate Collection of Assessments 1366.2
Liens for Delinquent Assessments. Enforcement of Liens 1367
Assessment Collection Procedures. Notice of Lien 1367.1
Limits on Collection of Assessments 1367.4
Assessment Lien Error 1367.5
Documents to Purchaser 1368
Restrictions on Marketability 1368.1
Standing of an Association 1368.3
Recovery of Damages 1368.4
Civil Action against Developer 1368.5
Mechanic’s Lien 1369
Definitions. Alternative Dispute Resolution 1369.510
Alternative Dispute Resolution before filing Suit 1369.520
Service of Request for Resolution 1369.530
Time Limit for Request for Resolution 1369.540
Tolling of Statute of Limitations 1369.550
Certificate of Compliance with Statute 1369.560
Alternative Dispute Resolution after Suit is Filed 1369.570
Award of Attorney Fees and Costs 1369.580
Annual Summary of Alternative Dispute Resolution 1369.590
Liberal Construction of CC&Rs 1370
Boundaries of Condominium Units 1371
Local Zoning 1372
Provisions not applying to Commercial and Industrial developments 1373
Act does not Apply if there is no Common Area 1374
Construction Defect Litigation 1375
Construction Defect—Civil Action 1375.05
. Construction Defect, Settlement with Developer 1375.1
Satellite Antennas 1376
Architectural Rules 1378

The Davis-Stirling Act
1365.5. Review of Financial Documents by the Board. Reserves

(a) Unless the governing documents impose more stringent standards, the board of directors of the association shall do all of the following:

(1) Review a current reconciliation of the association's operating accounts on at least a quarterly basis.

(2) Review a current reconciliation of the association's reserve accounts on at least a quarterly basis.

(3) Review, on at least a quarterly basis, the current year's actual reserve revenues and expenses compared to the current year's budget.

(4) Review the latest account statements prepared by the financial institutions where the association has its operating and reserve accounts.

(5) Review an income and expense statement for the association's operating and reserve accounts on at least a quarterly basis.

(b) The signatures of at least two persons, who shall be members of the association's board of directors, or one officer who is not a member of the board of directors and a member of the board of directors, shall be required for the withdrawal of moneys from the association's reserve accounts.

(c) (1) The board of directors shall not expend funds designated as reserve funds for any purpose other than the repair, restoration, replacement, or maintenance of, or litigation involving the repair, restoration, replacement, or maintenance of, major components which the association is obligated to repair, restore, replace, or maintain and for which the reserve fund was established.

(2) However, the board may authorize the temporary transfer of moneys from a reserve fund to the association's general operating fund to meet short-term cashflow requirements or other expenses, if the board has provided notice of the intent to consider the transfer in a notice of meeting, which shall be provided as specified in Section 1363.05. The notice shall include the reasons the transfer is needed, some of the options for repayment,and whether a special assessment may be considered. If the board authorizes the transfer, the board shall issue a written finding, recorded in the board's minutes, explaining the reasons that the transfer is needed, and describing when and how the moneys will be repaid to the reserve fund. The transferred funds shall be restored to the reserve fund within one year of the date of the initial transfer, except that the board may, after giving the same notice required for considering a transfer, and, upon making a finding supported by documentation that a temporary delay would be in the best interests of the common interest development, temporarily delay the restoration. The board shall exercise prudent fiscal management in maintaining the integrity of the reserve account, and shall, if necessary, levy a special assessment to recover the full amount of the expended funds within the time limits required by this section. This special assessment is subject to the limitation imposed by Section 1366. The board may, at its discretion, extend the date the payment on the special assessment is due. Any extension shall not prevent the board from pursuing any legal remedy to enforce the collection of an unpaid special assessment.

(d) When the decision is made to use reserve funds or to temporarily transfer moneys from the reserve fund to pay for litigation, the association shall notify the members of the association of that decision in the next available mailing to all members pursuant to Section 5016 of the Corporations Code, and of the availability of an accounting of those expenses. 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.

(e) At least once every three years, the board of directors shall cause to be conducted a reasonably competent and diligent visual inspection of the accessible areas of the major components which the association is obligated to repair, replace, restore, or maintain as part of a study of the reserve account requirements of the common interest development, if the current replacement value of the major components is equal to or greater than one-half of the gross budget of the association which excludes the association's reserve account for that period. The board shall review this study, or cause it to be reviewed, annually and shall consider and implement necessary adjustments to the board's analysis of the reserve account requirements as a result of that review.

The study required by this subdivision shall at a minimum include:

(1) Identification of the major components which the association is obligated to repair, replace, restore, or maintain which, as of the date of the study, have a remaining useful life of less than 30 years.

(2) Identification of the probable remaining useful life of the components identified in paragraph (1) as of the date of the study.

(3) An estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in paragraph (1).

(4) An estimate of the total annual contribution necessary to defray the cost to repair, replace, restore, or maintain the components identified in paragraph (1) during and at the end of their useful life, after subtracting total reserve funds as of the date of the study.

(f) As used in this section, "reserve accounts" means both of the

following:

(1) Moneys that the association's board of directors has identified for use to defray the future repair or replacement of, or additions to, those major components which the association is obligated to maintain.

(2) The funds received and not yet expended or disposed from either a compensatory damage award or settlement to an association from any person or entity for injuries to property, real or personal, arising from any construction or design defects. These funds shall be separately itemized from funds described in paragraph (1).

(g) As used in this section, "reserve account requirements" means the estimated funds which the association's board of directors has determined are required to be available at a specified point in time to repair, replace, or restore those major components which the association is obligated to maintain.

(h) This section does not apply to an association that does not have a "common area" as defined in Section 1351.
 
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