AB 818

This bill makes various changes to condominium law and rights related to first

mortgage security interests in condominium units.

Association procedure for raising funds and requiring first mortgagees to

release liens or accept title to units

The bill creates a procedure that a condominium association may use to raise

funds that it intends to use for the repair or replacement of common elements of a

condominium building that are affected by a defect. The association may use the

procedure only if, among other things, 1) the defect is related to the initial

construction of the building or work performed by or for a declarant during the period

of declarant control of the association; and 2) the cost to repair or replace the defective

common elements is 20 percent or more of the value of the affected building.

Under the procedure, the association must estimate the total cost required to

repair or replace the defective common elements and must levy assessments against

the unit owners to raise those funds. Under the procedure, the association must

notify the unit owners that the association is using the procedure and inform the unit

owners of the approximate cost that may be assessed against each unit owner and

the date or dates that the association anticipates that it may levy those assessments.

The association is not required to levy assessments against all unit owners at the

same time or to levy the entire amount a particular unit owner may be assessed all

at once. Rather, the association may choose to levy the assessments in one or more

increments and on one or more dates determined by the association.

After the association levies an assessment against a unit owner, if the unit

owner fails or refuses to pay the assessment, the association may foreclose the

assessment lien on the unit owner's unit or accept a deed in lieu of foreclosure with

respect to the unit. If the association acquires title to a unit using the procedure and

the unit is subject to a first mortgage lien that was executed after the effective date

of the bill, the association may require the first mortgagee to do one of the following

within 60 days after the association notifies the first mortgagee of its options: 1)

release the first mortgagee's security interest in the unit; or 2) accept a quit claim

deed from the association with respect to the unit.

Liability of first mortgagee for condominium assessments

The bill provides that, if a mortgagee becomes the owner of a unit following

foreclosure of a first mortgage, the mortgagee is jointly and severally liable with the

former unit owner for any unpaid assessments coming due during the 12 months

immediately preceding the date on which the foreclosure sale is confirmed.

Approval of first mortgagee to amendment of condominium declaration

Under current law, a condominium declaration may be amended with the

written consent of at least two-thirds of the total number of votes that may be voted

at meetings of the association of unit owners, or a greater percentage if provided in

the declaration. Also under current law, a unit owner's written consent is not