2792.21. Reasonable Arrangements – Governing Body Powers and Limitations.

2792.21. Reasonable Arrangements – Governing Body Powers and Limitations.
(a) The powers and duties of the governing body of the Association shall normally include, but shall not be limited to,
the following:

(1) Enforcement of applicable provisions of the Covenants, Conditions and Restrictions, Articles, Bylaws and other
instruments for the ownership, management and control of the subdivision.

(2) Payment of taxes and assessments which are, or could become, a lien on the common area or a portion thereof.
(3) Contracting for casualty, liability and other insurance on behalf of the Association.
(4) Contracting for goods and/or services for the common areas, facilities and interests or for the Association subject
to the limitations set forth below.
(5) Delegation of its powers to committees, officers or employees of the Association as expressly authorized by the
governing instruments.
(6) Preparation of budgets and financial statements for the Association as prescribed in the governing instruments.
(7) Formulation of rules of operation of the common areas and facilities owned or controlled by the Association.

(8) Initiation and execution of disciplinary proceedings against members of the Association for violations of
provisions of the governing instruments in accordance with procedures set forth in the governing instruments.

(9) Entering upon any privately-owned subdivision interest as necessary in connection with construction,
maintenance or emergency repair for the benefit of the common area or the owners in common.

(10) Election of officers of the governing body.
(11) Filling of vacancies on the governing body except for a vacancy created by the removal of a governing body
member.
(b) The governing body of the Association shall ordinarily be prohibited from taking any of the following actions,
except with the assent, by vote at a meeting of the Association or by written ballot without a meeting pursuant to



Corporations Code Section 7513, of a simple majority of the members, other than the subdivider, constituting a quorum
consisting of more than 50 percent of the voting power of the Association residing in members other than the subdivider:
(1) Entering into a contract with a third person wherein the third person will furnish goods or services for the
common area or the owners’ Association for a term longer than one year with the following exceptions:
(A) A management contract, the terms of which have been approved by the Federal Housing Administration or
Veterans Administration.

(B) A contract with a public utility company if the rates charged for the materials or services are regulated by
the Public Utilities Commission provided, however, that the term of the contract shall not exceed the shortest
term for which the supplier will contract at the regulated rate.
(C) Prepaid casualty and/or liability insurance policies of not to exceed three years duration provided that the
policy permits short rate cancellation by the insured.
(D) Lease agreements for laundry room fixtures and equipment of not to exceed five years duration provided
that the lessor under the agreement is not an entity in which the subdivider has a direct or indirect ownership
interest of 10 percent or more.

(E) Agreements for cable television services and equipment or satellite dish television services and equipment
of not to exceed five years duration provided that the supplier is not an entity in which the subdivider has a
direct or indirect ownership interest of 10 percent or more.
(F) Agreements for sale or lease of burglar alarm and fire alarm equipment, installation and services of not to
exceed five years duration provided that the supplier or suppliers are not entities in which the subdivider has a
direct or indirect ownership interest of 10 percent or more.

(G) A contract for a term not to exceed three years that is terminable by the Association after no longer than
one year without cause, penalty or other obligation upon ninety (90) days written notice of termination to the
other party.
(2) Incurring aggregate expenditures for capital improvements to the common area in any fiscal year in excess of
5% of the budgeted gross expenses of the Association for that fiscal year.
(3) Selling during any fiscal year property of the Association having an aggregate fair market value greater than 5%
of the budgeted gross expenses of the Association for that fiscal year.
(4) Paying compensation to members of the governing body or to officers of the Association for services performed
in the conduct of the Association’s business provided, however, that the governing body may cause a member or
officer to be reimbursed for expenses incurred in carrying on the business of the Association.
(5) In the case of a limited equity housing cooperative, using the corporate equity for any purpose permitted under
Section 33007.5(d)(1) of the Health and Safety Code without the vote or written consent of a bare majority of the
stock or membership interests of resident owners.