Bills That Made It in Sacramento and Some Which Didn’t

Bills That Made It in Sacramento and Some Which Didn’t

September 30 was the last day for the Governor to sign or veto bills passed by the Legislature in 2018. Many bills affecting HOAs were signed, and two were vetoed. SB 261 This bill, signed by the Governor on September 27, amends Civil Code 4040 to allow homeowners to use email to request the HOA send communications via email to the homeowner, and amends Civil 4360 to require 28 days (instead of the current 30) notice to homeowners for proposed rule changes. SB 721 HOAs exempted. SB 721 requires multilevel residential properties to conduct inspections of balconies and other elevated elements every six years. Signed into law by the Governor on September 17, the final version of the bill exempts HOAs from its requirements. SB 1016 Time of Usage (“TOU”) Meters. SB 1016, signed by the Governor on September 13, adds a new Section 4745.1 to the Civil Code, protecting the installation of TOU meters for electric vehicle charging stations. HOAs may impose reasonable requirements on the requesting owner. AB 2912 New Association Financial Requirements. AB 2912 requires boards to review the HOA financials monthly instead of the current quarterly requirement. The new law, approved by the Governor on September 14, requires all HOAs to have fidelity (dishonesty) insurance in place. It also requires documentation of board authority for expenditures over $10,000 or 5% of the HOA’s budget, whichever is lower. SB 1128 and 1265 Vetoed. Two of the most troubling bills for California HOAs this year were Senate Bills 1128 and 1265. SB 1265 would have made it much harder for common interest development associations to preserve elections...
Recording Meetings, Secret Budget Talks, and a Dictator President

Recording Meetings, Secret Budget Talks, and a Dictator President

Hello Mr. Richardson, Our board announced that audio recordings of meetings would no longer be allowed. What are your thoughts on this? Does this action by the board violate the Brown Act, the Davis-Stirling or some other statute? Thank you, N.D., Rancho Santa Fe Dear N.D., As private organizations, common interest development associations (aka “HOAs”) are not controlled by the Brown Act (which applies to public bodies). The Davis-Stirling Act contains the “Open Meeting Act,” found at Civil Code 4900-4955. The Open Meeting Act does not require that HOA meetings be recorded electronically, but only that draft minutes of meetings be available no later than 30 days after the meeting. I generally recommend against audio or video recording of board proceedings, except in the rare occasion the association has the proper facilities to record and broadcast meetings (typically only in very large HOAs). Recording meetings often creates two negative problems – it intimidates some, and invites others to grandstand. So long as the policy is clearly stated, association boards can take either policy direction. Best, Kelly To Kelly G. Richardson, We have a question concerning our HOA president. The president is running a construction company that controls all maintenance and repairs throughout the community. She runs the community as a dictatorship and no one on the board is allowed to even speak. We have requested financial records – it won’t work. She told us this could no longer be discussed. M.L., Lake Forest Dear M.L., Some HOA presidents simply let the position get to their head. HOA presidents have very little power in most HOAs, aside from calling and chairing meetings. They have...
Boards Elections [Part 2]

Boards Elections [Part 2]

Dear Mr. Richardson, We cannot get people to volunteer to be on the board. I have been on the board and told the manager I didn’t want to run. She put my name on the ballot, and said I had to stay on the board until someone took my place. What happens if you don’t have people to serve on the board? Thanks, L.W., Encinitas Dear L.W., The usual cause for difficulty in finding volunteers is that homeowners are discouraged from volunteering by seeing directors working long hours for the HOA. The less common reason is HOAs in turmoil often have trouble filling seats with brave souls. A provisional director could be appointed by the court if the board cannot attain quorum, but this is very expensive (the director will charge hourly). You cannot be forced to serve as a director. A director can resign any time, and the board then can in an open meeting vote to fill the vacancy. The manager may be misapplying Corporations Code 7220(b), which says that a director serves until the term expires and a replacement is elected. Corporations Code 7224(c) provides that a director may resign upon giving written notice. I hope your board investigates the reasons why people are unwilling to serve, and things improve. Sincerely,Kelly Mr. Richardson, We have several candidates running for the board and one candidate is the spouse of an owner of record but she is not on title. Our board president announced in an open meeting that the candidate was not eligible to be a candidate based on the president’s interpretation of the Davis-Stirling Act. Your...

Potentially Disastrous Bill Pending in Sacramento [SB 1265]

The California Legislature continues to try to “fix” California common interest developments, yet elected representatives still do not understand the dynamic of volunteer run communities or what they need. Senate Bill 1265 is the latest example. SB 1265, authored by Senator Wieckowski from Fremont, seeks to revamp the HOA election process for the second time in 13 years. This bill would bar any HOA board candidacy eligibility requirements, except that candidates must be members. Many associations ban delinquent members, non-resident members, or members suing the HOA, from serving as directors. Other HOAs ban two co-owners from running. Should this bill pass, all those sensible limitations on eligibility would be illegal. The bill also dramatically increases the technical requirements which must be followed during the election process, and would change Civil 5145(a) to REQUIRE courts to overturn an election if they are shown an error (the current statute says a judge MAY overturn the election). The bill also begins with a declaration that HOAs are quasi-governments, just like cities, functioning like cities “in almost every way.” This is a dangerous and false statement. Try to tell the 24 unit building in Whittier that they are just like a city! HOAs are neighborhoods which have been given via covenants simple tools to enable shared living. They don’t have courts, or large staffs of dozens of full time employees, and their job is not to enforce all applicable laws – just to make sure neighbors are good neighbors and the governing documents are followed, and the community preserved. The bill also would require HOAs to store outer ballot envelopes, which are signed...
11 Sure-Fire Ways to Frustrate HOA Elections

11 Sure-Fire Ways to Frustrate HOA Elections

Most associations have member voting at least annually, and the process required by statute applies to all HOAs, whether 2 units in Redondo Beach or 3,000 units in Oakland. Avoid these mistakes which can doom HOA elections. 1. Ignore the procedure Civil Code Sections 5100-5135 provide a process which must be followed on member votes regarding major assessments, governing document amendments, grants of exclusive use rights, and board elections. Many smaller HOAs either intentionally or ignorantly do not follow the process, leaving their elections open to challenge. 2. Don’t have election rules Civil Code 5105 requires HOAs have written election rules in place. These rules help answer questions in advance, making for more organized and fairer elections. 3. Forget to appoint an inspector of elections When setting an election, associations occasionally fail to appoint or hire an inspector to conduct the process. This appointment must occur in an open board meeting. Inspectors may be paid professional vendors or may be homeowner volunteers. 4. Allow proxies Most developer-supplied original HOA bylaws allow for the use of proxies, by which members give to another member the right to vote on their behalf. California statutes provide little guidance as to what is a valid proxy, and proxy disputes (and sometimes chicanery) are a common problem in HOA elections. Proxies are unnecessary, since on most important HOA votes members receive ballots 30 days ahead of the election. HOAs are better served by, through member vote, amending governing documents to ban proxies except for the narrow purpose of achieving quorum. 5. Skip vote counting in uncontested elections It may make no sense to go...