FLIER, J.

Certified for Partial Publication.

Locke Lord, Christopher J. Bakes and Daniel A. Solitro for Plaintiff and Appellant.

June Babiracki Barlow and Neil Kalin for California Association of Realtors as Amicus Curiae on behalf of Plaintiff and Appellant.

Greenberg Traurig, Scott D. Bertzyk, Adam Siegler and Matthew R. Gershman for Defendant and Appellant and Defendants and Respondents.

FLIER, J. This litigation between plaintiff Marina Pacifica Homeowners Association (the HOA) and defendants William Lansdale and Southern California Financial Corporation (SCFC) concerns the Marina Pacifica condominium project (Marina Pacifica) in Long Beach, California. SCFC appeals, and the HOA cross-appeals, from the judgment after a bench trial. The parties' dispute centers around a monthly fee the residents of Marina Pacifica pay to the developers of the condominiums, or the developers' successor in interest, called the "assignment fee." We affirm in part and reverse in part.

FACTUAL AND PROCEDURAL BACKGROUND

1. Marina Pacifica's Development and Pertinent Transactions

Marina Pacifica is a 570-unit complex on the Long Beach waterfront. At the time of Marina Pacifica's construction in the early 1970's, the McGrath Trust owned the land on which the complex was built. Lansdale obtained an option on a ground lease from the McGrath Trust. He contributed the ground lease option to Marina Pacifica Limited Partnership (the limited partnership). The limited partners in this entity were Lansdale, Abe Reider, and William Dawson. The limited partnership exercised the ground lease option to develop and construct the Marina Pacifica complex.

The ground lease was subdivided into 570 identical leases, one for each condominium unit, entitled "Condominium Common Area and Unit Space Lease" (the unit lease). The McGrath Trust was the lessor and the limited partnership was the lessee under each unit lease. The unit leases were for a term of 68 years and would expire on September 30, 2041. When the limited partnership sold a condominium unit, it and the purchaser executed a standard document assigning the unit lease to the purchaser (the lease assignment). If unit owners sold their units, the seller and the subsequent purchaser executed a standard document assigning the seller's rights, interests, and obligations under the unit lease to the subsequent purchaser (resale assignment).

Thus, unit owners purchased an ownership interest in their condominium units plus an undivided leasehold interest in the land underlying the complex. The unit leases required owners to make two monthly payments: rent payable to the landowner (the McGrath Trust), and an "assignment fee" payable to the developer (the limited partnership). As we explain below, both of these payments were to be nominal from the early 1970's to 2006. In 2006, however, the rent and assignment fee would be recalculated so that together, they would equal 10 percent of the value of the land underlying the units.

Rent : Monthly rent was $15 from June 1973 to September 2006. Under paragraph 3.(b) of the unit lease, from October 2006 to September 2021, monthly rent would become the greater of (1) $25 or (2) 1/12th of 6 percent of the fair market value of the leasehold premises, as of October 1, 2006.

Assignment Fee : "[F]or and in consideration of" the limited partnership's assignment of its interest in the leasehold estate to unit owners, the unit owners and each of their successors and assigns would pay to the limited partnership "a continuing assignment fee" under paragraph 4 of the unit lease. Until September 2006, the assignment fee was $13 to $35 depending on the unit and was subject to cost of living increases every five years. From October 2006 to September 2021, the monthly assignment fee would "be equal to the amount, if any, by which one-twelfth (1/12) of ten percent (10%) of the fair market value of the leasehold premises on October 1, 2006 exceed[ed] the monthly rent payable under part (b) of Paragraph 3" of the unit lease.

The unit lease stated the provisions of the assignment fee paragraph were "intended by the parties hereto to be separate and independent from all remaining provisions" of the unit lease, and would "constitute, and be construed as creating, a separate contractual obligation of the Assignee of [the limited partnership] and all of the successors and assigns of said assignee...."

A copy of the unit lease itself was not recorded. But in May 1973, the limited partnership caused a "Memorandum of Condominium Common Area and Unit Space Leases" to be recorded with the Los Angeles County Recorder's Office. This memorandum was recorded against the entire Marina Pacifica property and incorporated the unit leases by reference. Additionally, each lease assignment or resale assignment was recorded against its respective condominium unit. The lease assignments and resale assignments also incorporated the unit leases by reference.

In connection with the purchase of any unit, the HOA gave each purchaser a packet of documents. Among other things, the packet contained sample copies of the unit lease and the lease assignment and an "information sheet" stating the purchaser's monthly rent and assignment fee would be readjusted on October 1, 2006, and October 1, 2021, in accordance with the fair market value of the leasehold premises on those dates. The information sheet also directed purchasers to the relevant paragraphs and page numbers of the unit lease for the rent and assignment fee. The parties to this lawsuit stipulated that each purchaser of a Marina Pacifica unit had notice of the unit lease and its contents, including the specific paragraph setting forth the assignment fee.

Unit owners originally paid the assignment fee to the limited partnership. When the limited partnership completed developing and selling all the units, the partners dissolved the entity. Upon dissolution, the limited partners each received a share of the assignment fee—Lansdale received 43.75 percent, Dawson received 37.75 percent, and Reider received 18.5 percent.

In December 1999, the HOA purchased the land underlying Marina Pacifica from the McGrath Trust for $17 million. Each unit owner then paid the HOA for the owner's pro rata share of the land. As a result of this purchase, the unit owners no longer pay any rent under the unit lease.

From 1995 to 2005, the HOA attempted to negotiate with Lansdale, Dawson, and Reider to buy their interests in the assignment fee. The HOA wanted to eliminate the obligation to pay the assignment fee before the October 2006 adjustment. The HOA successfully negotiated with Dawson and Reider. In 2000, it purchased their interests (collectively, 56.25 percent) for $5 million. It was unable to reach an agreement with Lansdale to buy his 43.75 percent interest in the assignment fee.

2. Appraisal Litigation

As discussed, the adjustments of the rent and assignment fee required the parties to determine the fair market value of the leasehold premises. The unit lease provided that the lessor—originally, the McGrath Trust—and the HOA would each select an appraiser, and their two appraisers would agree on a third appraiser to render an appraisal of the fair market value. After the HOA purchased the land from the McGrath Trust, it took the position that the interests of the lessor and lessee under the unit lease had merged, and it thus had the right to select an appraiser unilaterally for purposes of calculating the assignment fee. Lansdale disagreed and asserted he had a right to participate in the appraisal process by selecting one of the two initial appraisers. In 2005, Lansdale and the HOA filed dueling pleadings seeking declaratory relief to resolve this dispute (appraisal litigation).

The appraisal litigation went to trial. The HOA stipulated for purposes of the trial that Lansdale was the sole remaining assignee of the limited partnership and had "the sole right to collect his portion of the monthly Assignment Fees." Moreover, it stipulated "[t]he Assignment fee owned by Lansdale remains payable and Lansdale is the owner of 43.75% of the Assignment fee" (capitalization omitted).

In the court's statement of decision in the appraisal litigation, the court noted: "The monthly ‘Assignment Fee’ is a separate contractual obligation owed to [Lansdale] over the term of the Lease. The Assignment Fee is binding on the original purchasers and any subsequent purchasers in the Marina Pacifica condominium project."

The court found the interests of the lessor and lessee under the unit lease had merged and "the leasehold interest ha[d] been annihilated and no longer exist[ed]." There was no longer any lessor to appoint an appraiser, and therefore the appraiser-appointment method described in the unit lease could not be followed. The court held it would be inequitable and unconscionable to permit only one party to appoint the appraiser, insofar as the original parties to the unit lease agreed the fair market value of the leasehold premises would be determined by an independent appraiser. The court determined it should appoint an independent appraiser pursuant to Code of Civil Procedure Section 1281.6 (providing a method for appointing an arbitrator, if the agreed method fails or for any reason cannot be followed).

On appeal, Division Two of this court affirmed the judgment in the appraisal litigation. (Lansdale v. Marina Pacifica Homeowners Assn. (Aug. 14, 2007, B192520) [nonpub. opn.].)

Lansdale and the HOA participated in arbitration to implement the terms of the court's judgment. The court entered an order confirming the arbitrator's award, holding that, "[a]s of October 1, 2006, the fair market value of the property used for purpose of calculating the Assignment Fee due under the Lease ... is the sum of $60,615,500."

3. 2008 Assignment Fee Billing and Commencement of the Instant Action

Lansdale assigned his 43.75 percent interest in the assignment fee to codefendant SCFC in January 2008. After the court affirmed the arbitrator's award in the appraisal litigation, SCFC began billing the unit owners for its share of the assignment fee in December 2008. To review, the unit lease stated the monthly assignment fee was the difference between 1/12th of 10 percent of the land's fair market value and the monthly rent payable under the unit lease. SCFC's accountants adjusted the assignment fee for the newly appraised fair market value of the land and also to reflect that unit owners no longer paid rent since they had purchased the land. The accountants therefore calculated the total monthly assignment fee owing to SCFC as 43.75 percent of:

We will refer to this method of calculating the assignment fee as the "10 percent formulation."

The HOA sent unit owners a notice instructing them not to pay SCFC's bill and commenced this action three months later. The HOA's first amended complaint (FAC) alleges numerous causes of action for declaratory relief, breach of contract, breach of the covenant of good faith and fair dealing, reformation, and restitution. The gravamen of the FAC is that the assignment fee is invalid or unenforceable for several reasons, or assuming it is valid and enforceable, SCFC's billing vastly overstated the amount owing.

The HOA alleges the unit owners' purchase of the underlying land extinguished the unit lease—that is, the purchase caused a merger of the landlord's and tenants' estates. And, insofar as the unit lease stated that the assignment fee provision was a "separate contractual obligation," the HOA alleges the pertinent provision did not contain any other contractual language and did not recite any consideration flowing to the unit owners for payment of the assignment fee. As such, the assignment fee provision fails as a contract and is not an enforceable obligation.

The HOA also alleges the assignment fee is a "transfer fee" as defined by Civil Code section 1098 , and because defendants did not comply with the requirements of sections 1098 and 1098.5 , SCFC could no longer collect the assignment fee after December 31, 2008. Thus, some of the causes of action for declaratory relief seek a declaration that the assignment fee is invalid after December 31, 2008, as a transfer fee under sections 1098 and 1098.5 . Others seek a declaration that the assignment fee is invalid from an earlier date due to the merger of estates and extinguishment of the unit lease, the failure of consideration, or unconscionability. Still other causes of actions seek a declaration as to the proper calculation of the assignment fee, assuming it is valid for some period. The HOA alleges SCFC is not entitled to an amount based on 10 percent of the underlying land's value because it must deduct the rent the unit owners would have paid under the lease, had they not bought out the landowner. Because the monthly rent payable was 1/12th of 6 percent of the land's value, the HOA alleges SCFC is entitled, at most, to 1/12th of 4 percent of the land's value. In other words, the total monthly assignment fee owing to SCFC was 43.75 percent of:

We will refer to this method of calculating the assignment fee as the "4 percent formulation." The HOA alleges the 4 percent formulation is the correct interpretation of the assignment fee provision.

The HOA's causes of action for breach of contract and breach of the covenant of good faith and fair dealing allege defendants breached the unit lease and the covenant by billing unit owners under the 10 percent formulation, rather than under the "agreed upon" 4 percent formulation.

4. Motions for Summary Adjudication

Defendants filed three motions for summary adjudication. The court denied two and granted one in part based on the statute of limitations. The court granted summary adjudication as to any claims, on any ground, that the assignment fee was void from its inception and that restitution may be had based on these claims. The court also granted the motion as to any claims running from the merger of estates in 1999. Specifically, the court granted summary adjudication as to the ninth, 10th, 11th, 12th, and 14th causes of action, except to the extent the ninth cause of action related to SCFC's calculation of the assignment fee in 2008. The HOA's cross-appeal relates to the court's summary adjudication ruling.

5. Phases One and Two of Trial and Statement of Decision

The court bifurcated the trial into several phases and tried phases one and two first. These phases dealt with (1) the remaining arguments that the assignment fee was invalid and (2) the proper calculation of the assignment fee, if it was valid. The trial court issued a statement of decision on phases one and two setting forth mixed results for the parties. We summarize the pertinent portions of the statement of decision.

a. Application of the Transfer Fee Statutes ( §§ 1098, 1098.5 )

The court held the assignment fee was a transfer fee within the meaning of section 1098 , and none of the statutory exceptions set forth in section 1098 applied. Section 1098.5 states recording requirements the receiver of a transfer fee must meet to collect a fee imposed prior to January 1, 2008. The court held defendants failed to meet these requirements, and consequently, the assignment fee was not collectible at all after December 31, 2008, under the terms of the statute. The court noted the application of the transfer fee statutes to the assignment fee was a "pure question of law," and it therefore was not relying on any of the evidence presented at trial to resolve the issue.

b. Proper Calculation of the Assignment Fee for the Period of Its Validity

Because the assignment fee was collectible through December 31, 2008, the court determined the proper calculation for the fee for the 2006 escalation. The court held the 4 percent formulation urged by the HOA was correct, not the 10 percent formulation as urged by defendants. It found:

"The parties never contemplated elimination of rent at the inception of the agreement. Defendants['] literal application of the formula results in a windfall. It would be entirely anomalous that by purchasing the property and eliminating the lease, the unit owners would be required to pay even more for an assignment of an interest no longer in existence. The law abhors absurd results. [¶] ... [¶]

"It would be absurd for a party to pay an increased amount after the lease was extinguished. There is nothing in the voluminous record which would suggest such was the mutual intent of the parties. [T]he purchase of the land by the unit owners was never contemplated at the time the documents were drafted. The clear intent of the parties was to adjust the amount of the assignment fee as the value of the leasehold increased or decreased over time."

The court held the "only reasonable and fair result" was to enforce the assignment fee provision as if the monthly rent were still due because "[t]hat was the mutual understanding of the parties when the contract was made—that some monthly rent payable would be due until the year 2041." Thus, the 4 percent formulation, which accounted for a monthly rent payment, was the correct formulation. c. Breach of Contract and the Implied Covenant of Good Faith and Fair Dealing

The court found there was evidence Lansdale had represented during the appraisal litigation that he used the 4 percent formulation to calculate the assignment fee. Yet, when SCFC began billing the unit owners in 2008, it used the 10 percent formulation, and defendants contended in this case that the 10 percent formulation was correct. The court held that although it determined the 4 percent formulation was correct as opposed to the 10 percent formulation, defendants' conduct did not constitute breach of contract or breach of the implied covenant. Further, the instant litigation was part of a continuum of negotiations and actions concerning the assignment fee that went back to the appraisal litigation and earlier. The court held defendants' representations in both the appraisal litigation and the instant litigation were absolutely privileged under section 47, subdivision (b) (the litigation privilege).

d. Lack of Consideration

The court held the escalation provision for the assignment fee (i.e., the fee increase in 2006 and 2021) did not fail for lack of consideration. The original unit owners and their successors "received consideration in the form of a unit within the development. They made that purchase subject not only to a purchase price, but to other conditions and covenants, including the assignment fee." The court further held the covenant to pay the assignment fee was separate from the unit lease itself. Therefore, the extinguishment of the lease through the merger of estates did not create a failure of consideration.

6. Judgment

When the trial court issued its tentative statement of decision, it ordered the parties to meet and confer as to the amount owed to defendants based on the court's findings. The parties did so and submitted competing proposed judgments to the court. The court reviewed the proposed judgments and objections to the proposed judgments and found some payment issues on which the parties disagreed. It appointed a referee, the Honorable Carl J. West (ret.), to resolve the disagreements.

After receiving the report and recommendation of the referee, the court entered judgment on July 23, 2013. The judgment set forth the amount owing under the 4 percent formulation for each unit owner and stated the unit owners collectively owed $2,436,818.03, payable to SCFC, which included prejudgment interest at the rate of 7 percent per annum. SCFC filed a timely notice of appeal. (Lansdale was not a party to this notice.) The HOA filed a timely notice of cross-appeal.

DISCUSSION

1. SCFC's Appeal

SCFC raises two main issues on appeal. First, it contends the court's transfer fee rulings were in error. SCFC argues the assignment fee is not a transfer fee under section 1098 , and even if it were, several statutory exceptions apply such that it could collect the fee after December 31, 2008. Second, it contends the 10 percent formulation, not the 4 percent formulation, represents the correct method for calculating the assignment fee under the unit lease.

a. The Assignment Fee Is a Transfer Fee, but a Statutory Exception Urged by SCFC Applies

Before turning to the transfer fee statutes, we set forth some principles that guide our interpretation of them. The relevant facts here are undisputed. When this is the case, the construction of a statute and its applicability to the undisputed facts are questions of law we review de novo. ( County of San Bernardino v. Calderon (2007) 148 Cal.App.4th 1103, 1106, 56 Cal.Rptr.3d 333.) When we interpret a statute, our goal is to ascertain the Legislature's intent in enacting the statute and effectuate the purpose of the statute. ( Id. at p. 1108, 56 Cal.Rptr.3d 333.) We always begin with the statutory language. ( Ibid. ) We construe the words in context and give them their usual and ordinary meaning. ( Ibid. ) When the language is unambiguous, " ‘we presume the Legislature meant what it said,’ " and the plain meaning of the statute governs. ( Kaufman & Broad Communities, Inc. v. Performance Plastering, Inc. (2005) 133 Cal.App.4th 26, 29, 34 Cal.Rptr.3d 520.) If the statutory language is ambiguous—that is, it permits more than one reasonable interpretation—we may consider extrinsic aids to interpretation. ( Ibid. ) Thus, it is appropriate to resort to legislative history, an extrinsic aid, only when the statutory language is ambiguous. ( Ibid. ) Ultimately, we " ‘must select the construction that comports most closely with the apparent intent of the Legislature, with a view to promoting rather than defeating the general purpose of the statute....’ " ( Wilcox v. Birtwhistle (1999) 21 Cal.4th 973, 977–978, 90 Cal.Rptr.2d 260, 987 P.2d 727.)

Applying these principles, we conclude the assignment fee falls within the general definition of a transfer fee, but a statutory exception applies to exclude the fee from the definition. As a consequence, the transfer fee statutes do not bar SCFC from collecting the assignment fee.

i. Definition of Transfer Fee

The first sentence of section 1098 defines a " ‘transfer fee’ " as "any fee payment requirement imposed within a covenant, restriction, or condition contained in any deed, contract, security instrument, or other document affecting the transfer or sale of, or any interest in, real property that requires a fee be paid upon transfer of the real property."

The parties do not dispute the assignment fee is a "fee payment requirement." ( § 1098 .) Further, it is "imposed within a covenant, restriction, or condition contained in any deed, contract, security instrument, or other document...." (Ibid. .) A covenant is merely a promise to render some performance. ( Dillingham–Ray Wilson v. City of Los Angeles (2010) 182 Cal.App.4th 1396, 1406, fn. 9, 106 Cal.Rptr.3d 691.) The assignment fee is imposed within paragraph 4 of the unit lease, which contains a promise to pay the limited partnership an assignment fee. ("[T]he assignee, and each successor and assign of such assignee, hereby promises and agrees to pay to Marina Pacifica, a California limited partnership, or its order, a continuing assignment fee....") Accordingly, the assignment fee is imposed within a covenant contained in a "contract ... or other document." ( § 1098 .)

Focusing on the language that a transfer fee must be "imposed within a covenant, restriction, or condition" ( § 1098 ) SCFC insists this language refers to what is "more commonly known in the real-estate industry as CC & Rs." SCFC asserts that because the assignment fee is not imposed in the Marina Pacifica CC & R's, the fee does not fall within the statutory definition. We are not persuaded by this argument.

"CC & R's" is a term of art referring to a specific type of document. "The ‘declaration’ or ‘declaration of covenants and restrictions’ is the term used to refer to the recorded legal document that serves as the principal document in the creation of a common interest development, such as a planned development or a condominium.... The declaration is commonly referred to as the ‘declaration of covenants and restrictions,’ or the abbreviated ‘CC & Rs.’ " (Hanna & Van Atta, Cal. Common Interest Developments: Law & Practice (Thomson Reuters 2014) § 2:16, citations omitted; see Smith–Chavez et al., Cal. Civil Practice: Real Property Litigation (Thomson Reuters 2014) § 8:2 ["A condominium project is governed by, among other documents, a Declaration of Covenants, Conditions, and Restrictions (‘declaration’ or ‘CC & R’)."].) While the shorthand term "CC & R's" is used often in practice, the statutes creating the CC & R's requirement for common interest developments (such as condominium projects) do not use this shorthand term. These statutes instead refer simply to the "declaration." (§§ 4135, 4200, 4250, 4255.) SCFC wants us to equate the phrase "a covenant, restriction, or condition" in section 1098 with the required "declaration" described in other sections of the Civil Code relating to common interest developments.

Assuming for the sake of argument that we were to follow SCFC's reasoning, and limit the language's meaning to CC & R's, the assignment fee nevertheless can be said to be "imposed within" ( § 1098 ) Marina Pacifica's CC & R's. Marina Pacifica recorded a "Declaration of Restrictions" that it referred to as its "CC & R's." Among the obligations of unit owners set forth in the CC & R's is "compl[iance] in all respects with all of the provisions" of the unit lease and lease assignment—which would, of course, include the provisions for payment of the assignment fee. By incorporating the owners' obligations under these other documents, Marina Pacifica's CC & R's imposed the obligation to pay the assignment fee just as surely as the unit lease and lease assignment did.

Moving to the remaining pertinent clause in the definition of transfer fee, the definition "requires a fee be paid upon transfer of the real property." ( § 1098 .) Section 1039, in the same statutory scheme as section 1098, defines "transfer" as "an act of the parties, or of the law, by which the title to property is conveyed from one living person to another." (§ 1039 .) SCFC contends that, construing sections 1098 and 1039 together, section 1098 means a fee paid upon the passing of title to real property. Because an assignment of a leasehold estate does not pass title to real property, SCFC argues the assignment fee cannot qualify as a transfer fee.

This argument is unconvincing. It takes a too narrow view of the assignment fee without considering the reality of the whole transaction by which unit owners became "owners." It is true that, according to the unit lease, the assignment fee became operative when the limited partnership assigned the unit lease. The lease assignments between the limited partnership and the original unit owners therefore triggered the assignment fee. The lease assignments accomplished more than a simple assignment of the leasehold estate, however. The full title of the documents was "Assignment of Condominium Common Area and Unit Space Lease and Grant Deed to Improvements on Leased Premises. " (Italics added.) The lease assignments granted the unit owners, as tenants in common, an undivided interest in all the improvements on the leased land. These improvements, consisting of the condominium buildings among other things, were real property. (§§ 658, 660; Krouser v. County of San Bernardino (1947) 29 Cal.2d 766, 769, 178 P.2d 441.) Consequently, the transaction did involve the passing of title to real property. This transfer of title to the improvements and the transfer of the leasehold estate were two necessary parts of the single transaction. There would have been no transfer of the leasehold estate unless a purchaser was buying title to the real property at the same time.

Attorney Dennis Hill represented the limited partnership when it developed Marina Pacifica. He created the legal structure for the project and drafted the relevant documents (e.g., the unit lease and lease assignment). As he described it: "I developed the concept of individual condominiums to be sold with a mixture of fee and leasehold interests.... [¶] ... [¶] ... The ground and the air space were leased. All the structural components, that's the house, the foundation and roof and all that, would be sold in fee." Hill described the assignment fee as "part of the overall consideration for transfer of the unit." The package of documents provided to each unit purchaser described the transaction in much the same way. The package began with the sentence: "Each Marina Pacifica residential condominium consists of a leasehold interest in land and air space and title to the residential buildings and other structural improvements situated upon and within said land and air space." Thus, the transaction both transferred title to real property and triggered the assignment fee.

As the trial court characterized it in the statement of decision, "[t]he original purchaser became obligated to pay the assignment fee upon the initial transfer of the unit from the developers to the purchaser." Lansdale's testimony was consistent with this idea that the assignment fee was triggered when the unit owners purchased their units. When asked whether "the purpose of the assignment fee in [his] mind was to compensate [him] for the opportunity to purchase the units at Marina Pacifica," he replied with an unqualified "[y]es." The undisputed evidence brought the assignment fee within the definition of a transfer fee under section 1098 .

We do not think the language of the statute is ambiguous such that we must resort to legislative history to interpret it. Nevertheless, we note the assignment fee is so similar to an example in the legislative history that there can be little doubt the Legislature intended section 1098 to apply to a case like this. The only published decision to interpret section 1098 is Fowler v. M & C Assn. Management Services, Inc. (2013) 220 Cal.App.4th 1152, 163 Cal.Rptr.3d 717 ( Fowler ). Examining the legislative history, the Fowler court explained that examples of transfer fees included a "fee of one-half of 1 percent of the sales price of homes going to a private land trust to buy other land to be held as open space, a transfer fee to fund community projects, open space and habitat preservation, and a transfer fee to fund homeless shelters. The bill analysis also targeted some transfer fees that ‘have also been used as a mechanism for the owner of a parcel of property to receive a steady stream of income from their property after it had been sold.’ " ( Id. at p. 1158, 163 Cal.Rptr.3d 717.) The assignment fee is just like this last example, a fee intended to provide a future, steady stream of income for the owner of property. The unit lease made the fee "a continuing assignment fee" scheduled for monthly payment until the expiration date of the unit lease in 2041. Reider, who owned 18.5 percent of the assignment fee income at one time, credited himself with the idea for the assignment fee and said that he conceived of the fee as "a nice, easy way to create a cash flow stream" for the limited partnership and its partners.

In sum, we think the assignment fee falls within the general definition of a transfer fee set forth in the first sentence of section 1098. The remainder of section 1098, however, excludes certain fees from the definition. We turn now to these exceptions.

ii. Substantial Compliance Exception to Definition of Transfer Fee

Section 1098 exempts nine categories of fees from the definition of a transfer fee. ( § 1098, subds. (a)-(i).) SCFC contends several of the exceptions apply in this case, including one we refer to as the substantial compliance exception. We agree the substantial compliance exception applies and thus do not consider the remaining exceptions urged by SCFC.

Section 1098.5, subdivision (a) , deals with the notice required to collect transfer fees after a certain date. For fees imposed prior to January 1, 2008, the receiver of the fee had until December 31, 2008, to record against the real property "a separate document that meets all of the following requirements:"

"(1) The title of the document shall be ‘Payment of Transfer Fee Required’ in at least 14-point boldface type.

"(2) The document shall include all of the following information:

"(A) The names of all current owners of the real property subject to the transfer fee, and the legal description and assessor's parcel number for the affected real property.

"(B) The amount, if the fee is a flat amount, or the percentage of the sales price constituting the cost of the fee.

"(C) If the real property is residential property, actual dollar-cost examples of the fee for a home priced at two hundred fifty thousand dollars ($250,000), five hundred thousand dollars ($500,000), and seven hundred fifty thousand dollars ($750,000).

"(D) The date or circumstances under which the transfer fee payment requirement expires, if any.

"(E) The purpose for which the funds from the fee will be used. "(F) The entity to which funds from the fee will be paid and specific contact information regarding where the funds are to be sent.

"(G) The signature of the authorized representative of the entity to which funds from the fee will be paid." ( § 1098.5, subd. (a) .)

If the receiver of the transfer fee failed to record the required document by December 31, 2008, the receiver could not collect the fee on or after January 1, 2009. ( § 1098.5, subd. (a) .) None of the entities or individuals entitled to collect the assignment fee recorded the required document before December 31, 2008.

SCFC asserts it could still collect the fee after December 31, 2008, because the substantial compliance exception applies. Pursuant to this exception, a transfer fee does not include "[a]ny fee reflected in a document recorded against the property on or before December 31, 2007, that is separate from any covenants, conditions, and restrictions, and that substantially complies with subdivision (a) of Section 1098.5 by providing a prospective transferee notice of the following:" "(1) Payment of a transfer fee is required.

"(2) The amount or method of calculation of the fee.

"(3) The date or circumstances under which the transfer fee payment requirement expires, if any.

"(4) The entity to which the fee will be paid.

"(5) The general purposes for which the fee will be used." ( § 1098, subd. (i) .)

In this case, the unit lease contains all of the above information in paragraph 4 of the document. That paragraph sets forth the obligation to pay the assignment fee, the method for calculating the fee (1/12th of 10 percent of the fair market value of the land, minus the monthly rent payable), the fee's expiration date (the expiration of the leasehold term, or Sept. 30, 2041), the entity to which the fee will be paid (the limited partnership, "or its order"), and the general purpose of the fee ("for and in consideration of" the limited partnership's assignment of its interest in the leasehold estate).

The unit lease itself was not recorded against the property, but numerous documents recorded against the property incorporated the unit lease by reference, including the "Memorandum of Condominium Common Area and Unit Space Leases," the lease assignments, and the resale assignments. The lease assignments or resale assignments were recorded against the respective units to which they related each time a unit changed hands. The lease assignments and resale assignments contained provisions in which the unit owners promised to pay the assignment fee set forth in paragraph 4 of the unit lease. Thus, the assignment fee was "reflected" in these documents recorded against the property on or before December 31, 2007. ( § 1098, subd. (i) .)

Moreover, these recorded documents provided notice of the necessary information in that they provided constructive notice of the contents of the unit lease. Under the Civil Code, notice may be "actual" or "constructive." (§ 18.) Section 1098, subdivision (i), does not restrict the type of notice the recorded document must provide, but simply uses the unqualified term "notice." We presume the Legislature was aware of existing related laws and intended to sustain a consistent body of laws when enacting a statute. ( Stone Street Capital, LLC v. California State Lottery Com. (2008) 165 Cal.App.4th 109, 118, 80 Cal.Rptr.3d 326.) Because the Legislature did not limit the type of notice required by section 1098 , either actual or constructive notice was sufficient under the plain language of the statute.

Actual notice consists of "express information of a fact," while constructive notice "is imputed by law." (§ 18.) One type of constructive notice is inquiry notice. That is, a person has constructive notice of a particular fact when the person has actual knowledge of circumstances sufficient to put a prudent person on inquiry as to the particular fact. (§ 19; In re Marriage of Cloney (2001) 91 Cal.App.4th 429, 436–437, 110 Cal.Rptr.2d 615 [" ‘A person generally has "notice" of a particular fact if that person has knowledge of circumstances which, upon reasonable inquiry, would lead to that particular fact.’ "].) Accordingly, when a recorded document refers to an unrecorded document, the recorded document provides constructive notice of the contents of the unrecorded document if a prudent inquiry would lead to the unrecorded document. ( Pacific Trust Co. Ttee v. Fidelity Fed. Sav. & Loan Assn. (1986) 184 Cal.App.3d 817, 825, 229 Cal.Rptr. 269 ; American Medical International, Inc. v. Feller (1976) 59 Cal.App.3d 1008, 1020, 131 Cal.Rptr. 270.) A prudent person reading the lease assignment or resale assignment, and seeing that a purchaser was promising to pay an assignment fee as set forth in the unit lease, would inquire into the terms of the assignment fee obligation in the unit lease. Further, the HOA cannot seriously contend prospective purchasers did not have access to the unit lease. The parties stipulated at trial that each purchaser of a unit received a copy of the unit lease. Each purchaser also received the "information sheet" clearly stating the purchaser would owe a monthly assignment fee in addition to rent. The one-page information sheet stated the assignment fee would be readjusted on October 1, 2006, and October 1, 2021, in accordance with the fair market value of the leasehold premises on those dates, and directed the purchaser to the relevant paragraphs and page numbers of the unit lease. When the purchasers signed the lease assignment or resale assignment, they acknowledged they had received and reviewed the unit lease. The undisputed evidence shows the recorded documents provided constructive notice of the information required by the substantial compliance exception.

The circumstances here comply with the letter of the law, but they likewise conform to the spirit of the law. The Legislature enacted sections 1098 and 1098.5 to provide for "advance notification to buyers and sellers of ‘a new type of transfer fee.’ " ( Fowler, supra, 220 Cal.App.4th at p. 1158, 163 Cal.Rptr.3d 717.) One legislative analysis of the bill prior to enactment explained "that ‘[i]n light of the novel transfer fees being created and the general lack of knowledge regarding those fees’ [citation], the recording requirement was imposed to assure disclosure of such fees prior to home purchases." ( Ibid. ) The evidence we discuss in the foregoing paragraph shows that, far from being hidden, the assignment fee was clearly disclosed to purchasers. While the recorded documents provided constructive notice of the terms of the fee, the purchasers also had actual notice of the assignment fee based on the package of documents presented to them.

The substantial compliance exception takes the assignment fee outside the definition of a transfer fee. Hence, there is no bar under sections 1098 and 1098.5 to SCFC collecting the assignment fee after December 31, 2008. We shall reverse the portion of the judgment holding the assignment fee may not be assessed or enforced from and after January 1, 2009.

b. The Trial Court Did Not Err in Determining the 4 Percent Formulation Applied

2. The HOA's Cross-appeal ^**

DISPOSITION

The judgment is affirmed in part and reversed in part. We reverse the judgment to the extent it holds the assignment fee is an uncollectible transfer fee after December 31, 2008, under sections 1098 and 1098.5 . We also reverse the judgment for SCFC, but not Lansdale, on the breach of contract cause of action, and direct the court to enter judgment for the HOA against SCFC on this cause of action. The matter is remanded to the trial court for it to conduct further proceedings as necessary to enter an amended judgment consistent with this opinion, which judgment may include amended amounts due and owing for the assignment fee. In all other respects, the judgment is affirmed. Each party is to bear its own costs on appeal. WE CONCUR:

BIGELOW, P.J.

GRIMES, J.