New year, new law for California commercial and industrial common interest developments (CIDs). CIDs used to be governed by the Davis-Stirling Common Interest Development Act, just like residential condominiums and planned developments. But since January 1, 2014, nonresidential CIDs look to an entirely new set of statutes.

The Commercial and Industrial Common Interest Development Act creates a new Part 5.3 of Division 4 of the California Civil Code, starting with §6500. The Act defines a “commercial or industrial common interest development” as one that is limited to industrial or commercial uses by zoning law or by a declaration of covenants, conditions, and restrictions that has been recorded in the official records of each county in which the CID is located. CC §6531.

Although the Act is new, its provisions mirror the reorganized Davis-Stirling Act insofar as basic concepts of common interest formation, operation, and management are concerned. What’s missing are the layers of member (i.e., property owner) disclosure obligations and member due process rights that have become part of the Davis-Stirling Act over the years.

The new Act makes a sensible separation of the basic legal principles underlying common interest developments as a form and structure for real property ownership in a business context and those features of Davis-Stirling that seem more aligned with the consumer disclosure principles that have long been a part of residential real estate transactions.

For a look at the specific differences between Davis-Stirling and the new Act, check out Curtis C. Sproul’s featured article in the November issue of CEB’s Real Property Law Reporter. And for everything you need to know about creating CIDs in California, turn to CEB’s Forming California Common Interest Developments (updated February 2014 to include the new law).

Check out our other blog posts on Real Property Topics.

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[The original article can be found on CEB’s web site.]

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