Delegates

Delegate systems are found mostly in larger CIDs in which it may be difficult for an association to obtain quorums for annual meetings or the necessary votes to obtain approval of governing document amendments. Delegates typically represent a given geographical area encompassing specified separate interests. When there is a board election or document amendment vote planned, there may be meetings of the members from each delegate district in which the owners cast their votes to direct their delegate how to vote in the board election or on the document amendment. Depending on an association’s governing documents, the delegate will probably get to cast the votes of all the owners who reside in the delegate district. However, under some governing documents, the votes of the entire district are split in proportion to the way the votes were cast by the owners who actually voted. Under other governing documents, all the votes may be cast the way a majority of the owners cast their votes.

Dogs

Domesticated dogs are included within the definition of “pet” in Civil Code section 4715. Associations can adopt reasonable rules or CC&R amendments on the number, breed, behavior, and size of permissible dogs. Insurance companies typically have a list of aggressive dog breeds. Dog owners are liable for the behavior of their dogs and are subject to civil suit for bites and creating a nuisance (e.g., barking).

Derivative Actions

A lawsuit brought by a shareholder of a corporation on behalf of the corporation to enforce or defend a legal right or claim, which the corporation has failed to do. Derivative actions in the context of homeowners associations are lawsuits brought by a member of the association, typically against a member of the board of directors or the entire board of directors, to enforce a legal right of the members of the Association that the board has failed to do or for malfeasance against the board or board member. The person bringing the derivative action cannot allege or recover damages on behalf of him or herself.

Donations

Questions about donations arise in associations mostly in two areas. The first is whether an association may accept a donation from members or anyone else, either during the donor’s lifetime or as a bequest. The second is whether an association can make donations to particular organizations or causes. The answers to both questions are often dependent on what, if anything, the governing documents of the association happen to say the association must, may or may not do. In the first case, there may also be an issue of whether accepting the gift will trigger some obligation on the part of the association to pay taxes on the gift. In the second case, there may also be an effect on the association’s tax exempt status. In both cases, an association should consult both with its accountant about the tax implications and with its legal counsel about whether the action is permissible under its governing documents and the law.

Developer

A Developer is an individual or entity who develops or builds a residential or commercial project. A developer may purchase land and obtain entitlements from government agencies with jurisdiction over the project (including obtaining a map in accordance with the Subdivision Map Act) that will allow a developer to build and/or sell its intended project. A developer may either (i) sell the land to another developer or a builder or (ii) build improvements on the land for sale to the public (e.g., residential housing). Depending on the nature of the project, a developer may be required to obtain a Public Report from the Bureau of Real Estate in accordance with the Subdivided Lands Law.

Doors

The responsibility to paint, maintain, repair or replace an exterior door, the door frame and the door hardware is typically defined in the governing documents. In a typical airspace condominium, the door (except for the interior surface) is usually “common area,” which is normally the association’s responsibility, but the governing documents can modify this assignment.

D&O Insurance

This stands for Directors and Officers Liability Insurance. D&O insurance is intended to defend and indemnify the directors and officers of an association and often the association itself, usually against claims made by other persons arising out of alleged losses or damage other than bodily injury or property damage and possibly other personal (non-bodily) injury losses, such as libel or slander, that are covered under the typical commercial general liability (“CGL”) insurance policy. For directors and officers to obtain the limitations against liability offered by Civil Code section 5800, associations must have D&O insurance in the amounts specified in the statute. See the Article, Insurance for Community Associations, for more information.

Directors

Directors are elected by the members to the board of an association. An association’s bylaws generally dictate the number of required directors, whether directors must be members of the association and other director qualifications. Directors vote on association matters and can only be removed by a recall election or by specified reasons in the governing documents or Corporations Code.

Due Diligence

Due diligence is the reasonable care, investigation, and inquiry expected of a director of an association in making a business decisions on behalf of the association. This may include tasks such as investigating homeowner complaints, consulting with experts, or obtaining multiple bids for services related to the repair and maintenance of the common area.

Davis-Stirling Act

The Davis-Stirling Act was originally passed into law in 1985 with the purpose of creating, governing and guiding homeowners associations. After 28 years of amendments and revisions, the entire Act was re-codified on January 1, 2014. The Act serves as one of the set of laws governing the day-to-day activities of associations. In addition to the Act, the Corporations Code, Civil Code and other miscellaneous statutes provide the framework within which these associations operate.