Overview
Most California HOAs are governed by the Davis–Stirling Common Interest Development Act. At the same time, most, but not all, HOAs governed by the Davis-Stirling Act have chosen to incorporate as nonprofit mutual benefit corporations. Those HOAs are therefore governed by both the Davis-Stirling Act and California’s Nonprofit Mutual Benefit Corporation Law, which means the California Corporations Code also applies to those HOAs. Whether and how the Nonprofit Mutual Benefit Corporation Law is relevant depends on whether the association qualifies as a common interest development (CID) under Davis–Stirling. [A CID is a type of residential community in California where each owner holds title to their individual unit or lot, while also sharing ownership or usage rights in common areas. CIDs include condominiums, planned developments, stock cooperatives, and community apartment projects.]
Key Points
Understanding the overlap between the Davis–Stirling Act and the Nonprofit Mutual Benefit Corporation Law is useful for homeowners so that they can understand why their HOAs often cite provisions of both the Corporations Code and the Davis-Stirling Act when dealing with the members. While the Davis–Stirling Act is always the controlling statute in the event of a conflict, the Nonprofit Mutual Benefit Corporation Law can still matter in areas where the Davis–Stirling Act is silent.
The following points summarize how the two bodies of law interact.
- The Davis–Stirling Act is primary. If a development qualifies as a CID under Civil Code § 4100, the Davis–Stirling Act governs and takes precedence over conflicting corporate law provisions.
- Corporate law fills the gaps. For incorporated HOAs, the Nonprofit Mutual Benefit Corporation Law (Corp. Code §§ 7110–8910) applies in areas the Davis–Stirling Act does not cover, such as:
- Formation and dissolution of the corporation.
- Member inspection of certain corporate records not addressed by Civil Code §§ 5200–5240.
- Indemnification of directors and officers.
- Amending articles of incorporation.
- Director standards of care. The Corporations Code also supplies the standard of care for directors. HOA board members must act in good faith, in the best interests of the association, and with the diligence of an ordinarily prudent person. These duties complement, but do not override, obligations set forth in the Davis-Stirling Act.
- Outside the Davis–Stirling Act, but incorporated. Some associations (e.g., certain co-ops, voluntary associations, or developments not meeting the CID definition) fall outside the Davis–Stirling Act. In those cases, provided that those associations are incorporated, the Nonprofit Mutual Benefit Corporation Law will be the main governing statutory framework.
- Outside the Davis-Stirling Act, but unincorporated. If an association is not incorporated and does not qualify as a CID under the Davis–Stirling Act, it is treated more like a voluntary unincorporated association. Contract law, property law, and limited statutory rules govern their operations.
Together, these rules show that while the Davis–Stirling Act is the controlling statute for most HOAs, corporate law continues to play a supporting role. In practice, that means the Corporations Code may be incorporated by reference or applied where Davis–Stirling is silent, such as in rules for corporate formation, amendment of articles, or director indemnification.
The following table summarizes how the Davis–Stirling Act, the Nonprofit Mutual Benefit Corporation Law, and other statutes apply to different types of HOAs and associations in California.
| Type of HOA / Community | Davis–Stirling Act | Nonprofit Mutual Benefit Corporation Law | Other Governing Rules |
|---|---|---|---|
| Common Interest Development (CID) incorporated as nonprofit mutual benefit corporation | ✅ Primary governing statute (Civil Code §§ 4000–6150). Controls assessments, elections, records, due process, enforcement, etc. | ✅ Applies secondarily to fill corporate law gaps (Corp. Code §§ 7110–8910). Examples: corporate formation, dissolution, indemnification, member voting rules not addressed by Davis–Stirling. | HOA’s own governing documents (CC&Rs, bylaws, articles). |
| CID not incorporated (unincorporated association) | ✅ Still applies fully (Davis–Stirling doesn’t require incorporation). | ❌ Not applicable, because not incorporated. | Unincorporated Associations Law (Corp. Code §§ 18000–18420) + governing documents. |
| Non-CID association (e.g., voluntary neighborhood association, certain co-ops, recreational clubs) | ❌ Not a “common interest development” → Davis–Stirling does not apply. | ✅ If incorporated as nonprofit mutual benefit corp, then this law governs. | If unincorporated, falls under Unincorporated Associations Law or general contract/property law. |
| Unincorporated, non-CID group (e.g., purely voluntary association with no common property or binding CC&Rs) | ❌ Not applicable. | ❌ Not applicable. | Governed by contract principles + Unincorporated Associations Law, if applicable. |
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