August 12, 2014

Governor Signs AB 2430 Into Law; Amends Civil Code Sections 4828 and 4530; Changes Seek to Clarify Community Association Transfer Disclosure Obligations

By Mark Petrie, Paralegal/Marketing Coordinator and David Swedelson, Partner, SwedelsonGottlieb, Community Association Attorneys.

condo_disclosures_-_Google_Search.pngNew legislation amending two of the transfer disclosure sections of the Davis-Stirling Act, Sections 4528 and 4530, will be effective January 1, 2015. Follow this link to review the changes and new language that will be effective next year.

As you may be aware, Section 4530 establishes the responsibility of an association to provide copies of governing documents, certain financial disclosures and other documents to an owner, or any other recipient authorized by the owner, within 10 days of receipt of a written request for same. The requirement to provide documents and information applies to the sale of a unit (in a condominium building), lot (in a planned development) or stock (in a co-op). We would have liked to have seen a change here to delete “any other recipient authorized by owner”, as there are issues raised by the association providing transfer disclosure documents directly to parties other than owners, e.g., the association has no privity of contract with those parties. But for now, the current language will remain.

We regularly advise our association clients to include a disclaimer when directed by an owner to provide transfer disclosure documents directly to a third party: “These documents are being provided to you in the limited scope of complying with a request of the owner of the unit/lot for same in accordance with Civil Code Section 4525, et seq. The delivery of these documents to you shall not constitute establishment of privity between you and the association, and such delivery shall not create any further responsibility for the association with respect to further disclosure of documents to you.”

Continue reading "Governor Signs AB 2430 Into Law; Amends Civil Code Sections 4828 and 4530; Changes Seek to Clarify Community Association Transfer Disclosure Obligations" »

July 24, 2014

Want To Preserve The Right To Restrict The Installation of Radio Antennas At Your HOA? Oppose U.S. House of Representatives Bill 4969

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The National Chapter of Community Associations Institute (CAI) recently sent out the following urgent message, which we are reproducing here in its entirety. If you want to preserve the right for homeowner associations to be able to restrict the installation of radio towers and antennas, you need to read and act on this important information:

Last month, U.S. Rep. Adam Kinzinger (R-IL) introduced H.R. 4969, legislation that may invalidate community association rules and architectural standards that govern the installation and use of amateur radio towers and antennas.

If H.R. 4969 becomes law, homeowners who want to install a radio tower or antenna for amateur radio use would not have to go through the architectural review process or follow existing community guidelines.

We need your help to stop this legislation. Follow this link that will help you email your member of the U.S. House of Representatives.

Thank you for engaging in this important effort to preserve America's community associations' ability to allow elected neighbors to create rules for the benefit of the community as a whole.

June 17, 2014

Please Act Today to Support AB 1360 and Electronic Voting

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Assembly Bill 1360, which provides optional (opt-in) electronic voting in HOAs, will be heard in the Senate Judiciary Committee on June 24th. We are asking you to contact the California State Senators referenced below with a message urging them to vote YES on AB 1360. We previously posted an article about this legislation that will allow electronic voting by members of California community associations. Follow this link to read the bill as currently amended.

While this legislation will not make electronic voting mandatory and will require that owners "opt-in" to vote electronically (because some owners may not have access to a computer to vote electronically), it is important that we support this legislation, as it will undoubtedly encourage owners to vote and may result in a smoother, less expensive voting process for California associations. At least this is the hope.

Your support is appreciated. Here is a suggested message:

"Hello, my name is ____ and I am calling to ask the Senator to vote YES on AB 1360 in the Senate Judiciary Committee. [Be sure to note whether you are a constituent.] The bill provides optional and secure "opt-in" electronic voting to homeowner association members. The bill also preserves the secrecy of the ballot and ensures accurate vote tabulation. Further, electronic voting encourages voter participation, and it will save our nonprofit association members money if we don't need to print and mail election materials. Thank you for relaying my message today."

Not sure who represents you in the state legislature? Find them here. If you are a constituent, you may be able to send them an email message by clicking on their name below and contacting them through their website.


SenatorDistrictPhoneFax
Anderson, Joel36916 651 4036916 651 4936
Corbett, Ellen10916 651 4010916 651 4910
Jackson, Hannah-Beth19916 651 4019916 651 4919
Lara, Ricardo33916 651 4033916 651 4933
Leno, Mark11916 651 4011916 651 4911
Monning, William17916 651 4017916 651 4917
Vidak, Andy16916 651 4016916 651 4916

April 2, 2014

The Impacts of California’s 2020 Water Law on Community Associations

By: W. Alexander Noland, Esq. & Cyrus Koochek, Esq., SwedelsonGottlieb, Community Association Attorneys

water.jpgIn recent years, California has been faced with drought conditions, reduced water supplies and a consistently growing population. One step the California legislature has taken to address these issues was the adoption of Assembly Bill 1881, the Water Conservation in Landscaping Act of 2006 (the “Act”), which establishes goals for the efficiency and reduction of water usage in California. The Act has been codified in the following California statutory provisions: Section 4735 of the Civil Code; Article 10.8 (commencing with Section 65591) of Chapter 3 of Division 1 of Title 7 of the Government Code; Section 25401.9 of the Public Resources Code; and Article 4.5 (commencing with Section 535) to Chapter 8 of Division 1 of the Water Code, relating to water conservation.

Continue reading "The Impacts of California’s 2020 Water Law on Community Associations" »

January 24, 2014

The New Commercial and Industrial Common Interest Development Act

By David Swedelson, SwedelsonGottlieb, Community Association Attorneys

office%20condos.pngIs your condo association exclusively a commercial or industrial development? Surprise -- as of January 1, 2014, the Davis-Stirling Act no longer applies to your association. Your association is now regulated by the new Commercial and Industrial Common Interest Development Act (CICIDA), Civil Code Sections 6500-6876.

Previously, managers and directors of commercial and industrial developments only had to be aware of the provisions of the Davis-Stirling Act that did not apply to commercial and industrial developments. Now, there is an entire new body of law specifically applicable to these kinds of developments. While some requirements remain unchanged, there are some substantive changes that will generally allow for more flexibility when governing a commercial or industrial development. Simply stated, the legislature has not included in the CICIDA many of the requirements of the Davis-Stirling Act that now apply solely to residential associations, including secret elections, budgets, disclosures, and the list goes on. Follow this link to read our comprehensive article.

January 9, 2014

New Davis-Stirling Act Reemphasizes Common Area Reimbursement Assessments

By David Swedelson and Cyrus Koochek, Community Association Attorneys at SwedelsonGottlieb

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Many California condominium and homeowner associations' CC&Rs permit the Board of Directors, on behalf of an association, to impose a reimbursement assessment/monetary charge on a member for the cost of repairing damage caused by a member (or the member’s guest or tenant) to association common areas and facilities. In addition to an association’s authority under the CC&Rs to impose a reimbursement assessment, former California Civil Code Section 1367.1(d) stated that “[a] monetary charge imposed by the association as a means of reimbursing the association for costs incurred by the association in the repair of damage to common areas and facilities…may become a lien against the member’s separate interest enforceable by the sale of the interest…”

Unlike other monetary charges that can be imposed on members, such as monetarily fining a member for a rule violation, reimbursement assessments may be enforced by recording a lien on a member’s property. And effective January 1, 2014, the new Davis-Stirling Act now expressly requires what we have been advising our clients for years, that Boards must hold a hearing before they can impose a fee or penalty on an owner for the cost of repairing damage to the common area.

Continue reading "New Davis-Stirling Act Reemphasizes Common Area Reimbursement Assessments" »

October 11, 2013

Governor signs Senate Bill 298 Into Law; Unusual Legislation Giving Orange County (California) Community Associations The Ability To Contract For Services With Local Law Enforcement

By David Swedelson, Partner at SwedelsonGottlieb, Community Association Attorneys

vehicle_law_enforcement_-_Google_Search.png SB 298, which adds Section 53069.81 to the Government Code, is an unusual piece of legislation that provides community associations in one county of California with the ability to contract with local law enforcement agencies to provide Vehicle Code enforcement services at the association. We had not heard about this bill until now and do not know why it was limited to Orange County community associations as we know that associations in other parts of the State have a need for help with enforcement of the Vehicle Code on their private streets.

AB 298 authorizes the Board of Supervisors of the County of Orange, or the city council of a city within this county, to contract to provide supplemental law enforcement services to a homeowners’ association on an occasional or ongoing basis to enforce the Vehicle Code on a homeowners’ association’s privately owned and maintained road, as provided by Vehicle Code Section 21107.7.

Word has it that this legislation was proposed by a couple of very large Orange County community associations who want to enforce the vehicle code inside the boundaries of the association and presumably on their private streets. This new law will allow any Orange County community association, gated or not, which has privately owned and maintained roads, and would like to have enhanced services for such things as special occasions or traffic enforcement, to now be able to contract for those services with a law enforcement agency.

Fees for the actual costs of these services will be charged by and paid to the county or city that is providing those services, or as determined by the county auditor or auditor-controller or the city auditor.

If you have an interest in being able to contract with local law enforcement for services related to enforcement of the Vehicle Code in your community that is outside Orange County, let your legislator know and maybe this Bill can be expanded to other counties in California.

David Swedelson is a condo lawyer and HOA Legal Expert. David has served as a Delegate and on the Executive Committee for the California Legislative Action Committee. He can be reached via email: dcs@sghoalaw.com

September 23, 2013

SB 822 Signed Into Law, Confirming Managers Are Not “Contractors” or “Consultants”

By David Swedelson, Partner at SwedelsonGottlieb, Community Association Attorneys

contractors.pngIn 2012, many managers were concerned when the California legislature enacted AB 2237, amending Business and Professions (B&P) Code Section 7026.1 relating to contractors, which became effective at the beginning of this year. The amendments to AB 2237 mandated required “consultants” overseeing some construction projects to be licensed “contractors”. This caused some managers to be concerned as to whether they were considered “consultants” and therefore required to be licensed contractors when performing management services for condo and homeowner associations. Specifically, there was concern that doing typical management functions such as bid solicitation, bid management and/or oversight of common area maintenance projects would require a contractor’s license.

The legislative intent behind AB 2237, which was sponsored by the Contractors State License Board (CSLB), is to serve as a "valuable consumer protection measure," meant to address situations where "people who don't have a state contractor license call themselves construction consultants and encourage property owners to take on home improvement projects as the owner-builder. The so-called consultant collects a fee and many times leaves the homeowners with all of the project responsibility and liability... [AB 2237] will clearly define when someone is a contractor and discourage unscrupulous individuals from working under a fraudulently obtained owner-builder permit." (CSLB Press Release - 12/31/12)

Continue reading "SB 822 Signed Into Law, Confirming Managers Are Not “Contractors” or “Consultants”" »

April 30, 2013

Please Call Today to Support AB 1360 and Electronic Voting

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CAI's California Legislative Action Committee sent out an alert requesting that we all place as many calls as we can today (Tuesday April 30, 2013, before 5:30 PM) to the California Assembly Housing and Community Development Committee Members referenced below to leave a message urging them to vote YES on AB 1360. We previously posted an article about this legislation that will allow electronic voting by members of California Community Associations. Follow this link to read the text of AB 1360.

Continue reading "Please Call Today to Support AB 1360 and Electronic Voting" »

March 5, 2013

California Proposed Assembly Bill Would Ban Smoking in Multi-Unit Housing – Condos, Apartments and Duplexes

By David Swedelson, SwedelsonGottlieb Condo Lawyer and HOA Legal Expert

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no_smoking.pngAccording to an article in the Sacramento Bee, “Californians would not be able to smoke tobacco inside their own homes under new legislation that would raise the bar nationwide for fighting secondhand smoke.

No state ever has ventured into personal bedrooms and living rooms with its smoking restrictions, but California is going even further than that by targeting owner-occupied residences as well as rental units.

Specifically, the measure would prohibit lighting up a cigarette, cigar or pipe in condominiums, duplexes and apartment units.”

"Californians should be able to breathe clean air in their own homes," said Assemblyman Marc Levine, a San Rafael Democrat who introduced the legislation, Assembly Bill 746.

Levine is looking to eliminate the health hazards of secondhand smoke in residences that share walls, ceilings, floors or ventilation systems.

Continue reading "California Proposed Assembly Bill Would Ban Smoking in Multi-Unit Housing – Condos, Apartments and Duplexes" »

November 16, 2012

New Amendment to Civil Code Requires Lenders to Record Their Trustee’s Deed Within 30 Days Of The Foreclosure Sale– Or Else...Nothing! New Legislation That Really Does Not Resolve The Problem

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We have been receiving a number of inquiries regarding Assembly Bill 2273 that was signed into law by the Governor, effective as of January 1, 2013, that amends Civil Code Section 2924b. This new law requires: (1) recordation of a trustee’s deed upon sale within 30 days of the sale; and (2) a copy of a recorded trustee’s deed upon sale to be provided to an association within 15 days of the trustee’s sale, provided that the association has recorded the statutorily required request for notice on the subject property pursuant to Section 2924b(f) prior to the recordation of the trustee’s notice of default. (Currently, the copy of the recorded trustee’s deed must be provided to associations within 15 days of the date the trustee’s deed upon sale is recorded.)

Follow this link to download our full printable article on this matter.

November 9, 2012

Changes To The Davis-Stirling Act Cannot Be Implemented Until 2014

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by Sandra L. Gottlieb, Esq. & Priya Aggarwal, Esq., Community Association Attorneys

As most everyone in the community association industry knows (or should know), on August 17, 2012 California Governor Jerry Brown signed into law Assembly Bill (“AB”) 805 which reorganizes and makes significant changes to the Davis-Stirling Common Interest Development Act (the “Act”). While the date for mandatory compliance is January 1, 2014 (meaning that although the change is now law, the new and revamped Act does not take affect until 2014), we have heard that a rumor has been spreading within the industry that associations have the option to implement the new laws beginning January 1, 2013. This rumor is false and this is simply not true. Could you imagine the chaos that would ensue if some associations followed the new Act and some the old? We can!

The community association attorneys at SwedelsonGottlieb have attacked AB 805 head-on, reading every single word and evaluating each component of the new legislation/Act. Section 3 of AB 805 states the following: “This act shall become operative on January 1, 2014.” Nowhere in the legislation does it say that there is an option to make the new Act operative earlier. To confirm our research, we contacted a representative of the Assembly Housing & Community Development Committee, the committee that introduced the legislation. The representative confirmed our findings and stated: “The operative date of the legislation is January 1, 2014, there is nothing in the bill about early implementation.” Accordingly, don’t be misled! Early implementation is not an option and in fact, we recommend associations implement the new legislation on January 1, 2014 - no earlier, and certainly no later.

The commencement date is just one of the nuances of the new legislation. To educate our clients about this new legislation, we have created a free program that will make learning the new laws easy for both Board members and managers alike. Our program incorporates e-books, YouTube videos, quizzes, and other materials to bring you up to speed and to bring your association into compliance with the new legislation. To receive information about this educational opportunity, please email the firm at info@sghoalaw.com, expressing your interest in participating in what will be a revolutionary educational program.

October 24, 2012

New Smoking Law Affects All Santa Monica Condos

Blog post by David Swedelson, Partner SwedelsonGottlieb

nosmoke1.png Santa Monica has passed a law with new smoking rules that affect all multi-unit housing, and that includes condominiums. Follow this link to review the new municipal code. Follow this link to review a related notice from the City of Santa Monica. What follows is a description of the new law as it impacts condominiums.

Condominium associations must complete a smoking survey of current unit residents by 1/21/13, and unit owners will be required to designate their units either "smoking" or "non-smoking". For details about this process, go to smconsumer.org.

Current or existing unit residents can continue to smoke inside their units if they designate the units as "smoking". If an owner or resident (and for the purposes of compliance with this new law, condo associations should survey both owners and tenants) fails to respond to the survey, that unit will be “undesignated” for the purposes of the final results. Not sure what that means. Time will tell.

The new law affects all new owners or residents after 11/22/12. This means that if there is a smoker residing in the unit now (either an owner or tenant), they can continue to smoke in the unit. However, starting November 22, 2012, all newly occupied condominium units in residential community associations located in Santa Monica are declared non-smoking. “So, anyone moving into an apartment or condo after November 22 can't smoke in the unit.”

Continue reading "New Smoking Law Affects All Santa Monica Condos" »

April 26, 2012

AB 2273 Would Provide New Owner Info To California Community Associations

Blog post by David Swedelson

The California Legislative Action Committee reports that the Assembly Housing & Community Development Committee passed AB 2273 on a unanimous bipartisan vote of 7-0. This proposed legislation will require recordation of foreclosure sales within 30 days after sale.


CLAC reports that the author of the bill, Assembly Member Bob Wieckowski, a bankruptcy attorney, “has a complete grasp of the multiple issues that this bill triggers, which greatly assists [California Community Associations] in dealing with the escalating opposition from the lending community, trustees, land-title companies, and others."

CLAC also stated that in a press release that “[i]f passed, the bill would enable HOAs to know who the new owner of a home is that has been foreclosed, in most cases the lender. This information will enable HOAs to immediately begin invoicing for assessments instead of requiring the shortfall in revenue to be borne by the remaining owners, or defer maintenance, etc.”

In the Legislative Counsel’s Digest, it states that this bill would “provide that an acquiring owner of a separate interest shall, within 30 days of receiving title, provide to the association’s board secretary, agent, manager, or designated representative, a copy of the owner’s deed or other document transferring title to the purchaser acquiring owner of the separate interest and a written notice of the acquiring owner’s mailing address, except as specified.”

No indication as to how an association would enforce this new proposed legislation, as the new “acquiring owner” may not know about this requirement and there is no real sanction for failure to comply.

David Swedelson is a condo lawyer and HOA attorney. David was for many years a delegate to the California Legislative Action Committee. He can be contacted at dcs@sghoalaw.com.

March 8, 2012

Governor Brown Signs SB 880 Dealing With Electric Vehicle Charging Stations

By the condo lawyers and HOA attorneys at SwedelsonGottlieb

As reported by the Community Association Institute’s California Legislative Action Committee (CLAC), “Senate Bill 880 leapfrogged ahead of hundreds of other bills and was signed into law on February 29, 2012. Since this bill was passed as an Urgency Bill, it goes into effect immediately.

As you may remember, in late 2011 the California Legislature pushed SB 209 through despite several flaws, and when Governor Brown signed SB 209, he admitted the bill had a number of serious flaws, such as allowing the taking of association common areas for a homeowner's private use in violation of California's Constitution and the Davis-Stirling Act (which generally requires approval of 67% of an association's membership before an owner can exclusively use common areas).

When Governor Brown signed SB 209 into law, he issued the following message:

“To the Members of the California State Senate:

Senate Bill 209 advances the important state interests of lowering vehicle emissions and decreasing dependency on foreign oil. These interests are advanced statutorily by removing unreasonable burdens in common interest developments to the installation of plug-in vehicle charging stations. Charging stations are part of the infrastructure that must be built to integrate electric vehicles into our daily lives by allowing plug-in vehicles to be recharged faster and to minimize impact to the electrical grid. I enthusiastically support this bill.

This bill, unfortunately, contains language that could permit individual homeowners to unreasonably use or occupy common areas. The author has assured me that she will pursue legislation that clearly protects the right of the common interest developments to establish reasonable rules for any use of common areas for charging stations.”

SB 880 is what the legislature calls “clean up” legislation, as it addresses the problems created by SB 209. The bill went through the Legislature on a priority basis, was signed into law on February 29, 2012, and took effect immediately.

What are the changes, you ask? Follow this link for a red-lined copy of the law showing the changes as a result of SB 880 highlighted. The statute, as revised, gives a board of directors authority to grant exclusive use of common areas to an owner to install and maintain utility lines and meters in the common area necessary to service a charging station located in the owner's garage, carport or designated parking space. This change corrects the initial version of the statute which did not clarify that the charging station itself must be in the owner’s deeded, designated or assigned parking space/area. The bill also resolves the unauthorized "taking" of common areas in violation of statute issue, as new statutory language provides that homeowner approval is not required prior to an association permitting the installation of an owner’s utility lines and meters in the common area to service an electric vehicle charging station in the owner’s parking space or area.

The new law authorizes "private" charging stations to be installed in the common area for the exclusive use of an owner, but only if installing a charging station in an owner's exclusive use common area parking area or space is impossible or unreasonably expensive. The new law requires in such case that the association and the owner enter into a license agreement for the exclusive use of the common area where the charging station is installed. It should be noted that owner approval is also specifically not required for this grant of exclusive use common area. The revised statutes can be viewed at Civil Code Section 1353.9 and Civil Code Section 1363.07.

The revised statute also gives California community associations and owners authority to install a charging station in the common area for the use of all members. It grants authority to associations to develop rules for the use of "public" charging stations, and allows associations to create new parking spaces where none previously existed to facilitate their installation. And, associations also have express authority to now create a new parking space in the common area where one did not previously exist to facilitate the installation of an electric vehicle charging station.

While we appreciate this clean up legislation, it still leaves several unanswered questions, and California community associations will undoubtedly have to address the resulting legal and practical issues of this new law. Boards of directors of associations and association managing agents are encouraged to consult with association legal counsel when addressing a request from an owner to install an electric vehicle charging station.

January 13, 2012

Summary Of Important New Legislation Affecting California Homeowner, Condominium And Stock Co-Op Associations/Common Interest Developments In 2012

Prepared by the Community Association Attorneys at SwedelsonGottlieb

As they do almost every year, the California Legislature has yet again changed the Davis-Stirling Act (there have been approximately 50 amendments to the Act since its inception in 1985). We have summarized the most significant changes which impact how boards will hold meetings including executive session meetings, how boards communicate with one another, fees at escrow, electric charging stations, and rental restrictions. We will be preparing additional articles on these changes and posting them to www.hoalawblog.com. Follow this link for our summary of new legislation.

January 3, 2012

Revamping of Davis-Stirling Act Slated for 2013 or 2014

By Sandra L. Gottlieb, Esq., SwedelsonGottlieb Managing Partner; Community Association Legal Counsel

In 2002, the California Law Revision Commission (CLRC) was charged by then-Governor Gray Davis with clarifying ambiguities within the Davis-Stirling Act. (Civil Code Sections 1350-1378) to make it more "user-friendly" for homeowners and board members alike. After working fro many years with stakeholders, including a working group of attorneys, community managers and other industry professionals, the CLRC is behind the introduction of AB 805 (Torres), a two-year bill which must first be passed by both the Senate and Assembly and ultimately signed by the governor into law.

At this point, it is highly likely that AB 805 will make its way through both houses in 2012, with an effective date of either January 2013 or (the more likely date of) January 2014. Attorneys and managers alike will need continuing education to learn the new code provisions, sections and numbering.

Continue reading "Revamping of Davis-Stirling Act Slated for 2013 or 2014" »

November 29, 2011

California Enacts New Employment Laws Impacting Community Associations And Management Companies

By David Swedelson and Sandra Gottlieb, Condo Lawyers and HOA Attorneys, Senior Partners at SwedelsonGottlieb

On October 9, 2011, Governor Brown signed into law several new bills impacting California community associations as well as their managing agents who are employers. These new laws include the imposition of penalties for “willfully misclassifying” workers as independent contractors and the creation of a new definition of “gender” when interpreting California’s anti-discrimination statutes to include gender identity and transvestitism. Follow this link for a summary of some of the new laws that will have the biggest impact on California community associations and their management and vendors.

October 24, 2011

New Law—Independent Contractors: Willful Misclassification SB 459 Corbett

By Sandra Gottlieb, Senior Partner SwedelsonGottlieb; Condo Lawyer and HOA Attorney

We know that there is a tendency to classify some condo and HOA staff as independent contractors rather then employees. Some community association boards want to do this because they think that such a classification will mean that their association will not have to pay for all of fees, charges, taxes, etc. that are normally associated with an employee. They also think that they can avoid vacation pay, payroll taxes, medical insurance, etc.

The staff member may want the independent contractor classification as then they believe that they will not have taxes deducted from their checks, that they can then write off their car and other expenses and benefit in other ways.

Well, the government knows what you are doing and they are not happy about it. There has been an increasing effort by the State and Federal governments to address this “problem". The fact is that in many situations, that staff member is not really an independent contractor, as they work full time at the association, use the equipment, etc. provided by the association and get their direction from the association.

Continue reading "New Law—Independent Contractors: Willful Misclassification SB 459 Corbett" »

September 22, 2011

Governor Signs AB 771 (Butler) Into Law Requiring Associations to Itemize and Disclose Fees Charged For Documents To Be Provided to Buyer in Escrow

Assembly Bill 771 (Betsy Butler), which amends Civil Code Section 1368 regarding documents to be provided the buyer in an escrow, was sponsored by the California Association of Realtors and initially sought to place a cap on fees that may be charged by management companies and others who provide documents upon sale or transfer of a separate interest. This bill was opposed by all industry trade groups and was ultimately revised to remove the cap. As signed by the Governor, the bill sets out the items which are to be provided to a buyer as well as an estimated fee for each.

Continue reading "Governor Signs AB 771 (Butler) Into Law Requiring Associations to Itemize and Disclose Fees Charged For Documents To Be Provided to Buyer in Escrow" »

September 19, 2011

Governor Brown Signs SB 563; Say Good-bye to Actions Without a Meeting

By David Swedelson, Condo lawyer and HOA attorney; Senior Partner SwedelsonGottlieb

Despite significant industry opposition, the Governor has signed into law amendments to the Davis Stirling Act and specifically Civil Code Section 1363.05, also known as the Common Interest Development Open Meeting Act. Here is the story of how this new law came to be:

As most of you know, the Act was amended with the addition of this code section requiring that board meetings at California community associations be open to members except for certain specified executive session meetings when those meetings should be kept confidential or emergency meetings when the required notice to owners is not possible.

Continue reading "Governor Brown Signs SB 563; Say Good-bye to Actions Without a Meeting " »

August 17, 2011

SB 150 Limits Certain Rental Restrictions Recorded On Or After January 1, 2012

By David C. Swedelson, Esq. and W. Alexander Noland, Esq., SwedelsonGottlieb

SwedelsonGottlieb has been responding to a flood of inquiries regarding the recently chaptered California SB 150, a bill which amends Sections 1368 and 1373 of the Davis-Stirling Act and adds a new Civil Code Section to the Act affecting certain rental restriction provisions in CC&Rs that are recorded on or after January 1, 2012. As there seems to be a good deal of confusion about this bill (even among some attorneys in our industry), we thought it would be beneficial for the readers of HOALawBlog to clearly explain the applicability and effect of this new legislation.

The Legislative Counsel's Digest contains a good summary of the purpose of the bill: "This bill would prohibit the owner of a separate interest in a common interest development from being subject to a provision in a governing document, or a provision in an amendment to a governing document, that prohibits the rental or leasing of all or any of the separate interests in that common interest development to a renter, lessee, or tenant unless that governing document, or amendment thereto, was effective prior to the date the owner acquired title to his or her separate interest." As noted above, this bill applies to some, but not all, rental restrictions recorded on or after January 1, 2012.

Following are two pertinent points about the application of SB 150 to California common interest developments:

1. This new legislation does not apply to all rental restrictions. For example, it does not apply to a rental restriction that prohibits an owner from leasing his/her unit/lot for a term less than one year, that the lease be in writing, or a restriction requiring that the lease contain language that the tenant agrees to abide by the association's governing documents. The bill does apply to restrictions recorded on or after January 1, 2012 that prohibit leasing of a unit or lot, such as a restriction that sets a cap on the number or percentage of units that may be leased at any one time, or a restriction requiring a waiting period after purchase before an owner may rent his/her unit or lot.

2. The bill does not nullify all limits on leasing that are recorded on or after January 1, 2012. For example, if an association records an amendment to its CC&Rs establishing a 25% limit on leased units/lots on or after January 1, 2012, only new owners that purchase their properties after the effective date of that amendment would be subject to the 25% limit; existing owners would not be subject to the restriction. [This example would likely create a tracking burden for an association, as theoretically all existing owners could lease their units, but only new owners would be subject to the rental cap.]

If an association's board of directors is considering proposing a rental restriction that affects the ability of owners to lease their units, the board should present that proposal for vote and record the corresponding CC&R amendment (assuming it is approved by the owners, and, if applicable, mortgagees) no later than December 31, 2011 to have a rental cap restriction that will be enforceable against all owners.

July 31, 2011

Governor Signs Senate Bill 209 Dealing WIth Electric Charging Stations

Posted by David C. Swedelson,
Partner, SwedelsonGottlieb; Community Association Legal Expert

With the proliferation of electric vehicles comes a new law that limits and restricts California community associations' ability to prohibit an owner from installing their own electric charging station. On July 25, Governor Brown signed Senate Bill 209, which adds new Civil Code Section 1353.9. The new law takes effect January 1, 2012.

New Civil Code Section 1353.9 will prohibit California condominium and other community associations from unreasonably restricting the installation of electric vehicle charging stations. Homeowners who place charging stations in the common areas will be responsible for costs associated with maintaining and repairing the station, as well as costs for damage to common areas and adjacent units resulting from installation and maintenance of the station. The new law will impose other responsibilities on the homeowner, including maintaining a liability insurance coverage of $1,000,000 that names the association as an additional insured.

Unfortunately, the new law allows individual owners to use or occupy common areas, contrary to existing statutes and case law. In his signing message, Governor Brown stated that the author of the bill plans to introduce legislation that protects the right of common interest developments to establish reasonable rules for any use of common areas for charging stations. Governor Brown recognized this issue in his signing message:

Continue reading "Governor Signs Senate Bill 209 Dealing WIth Electric Charging Stations" »

May 19, 2011

What is Wrong with SB 561? Just About Everything

Senate Majority Leader Ellen M. Corbett (D-San Leandro) has introduced SB 561 which will, if signed into law, make some fairly significant changes to the law impacting how California community associations collect delinquent assessments. Senator Corbett has been quoted as saying that "[u]nscrupulous debt collectors are increasing the amount owed based on penalties and fees, and foreclosing on people's homes... It's a terrible practice. The penalties are just way too harsh." Unfortunately, Senator Corbett has failed to provide any examples or proof that delinquent owners are incurring anything more then the reasonable costs and fees of collection. We really have no idea what penalties or fees she is referencing, and based on our more than 20 years of experience, what Senator Corbett is quoted as saying is not accurate.

David Swedelson and Sandra Gottlieb have analyzed SB 561, and based on their many years of experience dealing with assessment collection issues, they believe that this is bad legislation based on incorrect facts and circumstances. They have written an article summarizing their analysis. This bill has been approved by the California State Senate and will soon be taken up by the Assembly. We are hoping that a massive showing of opposition will motivate the assembly to reject SB 561. We will be forwarding additional information soon.

May 2, 2011

SB 563 (DeSaulnier) Would Cripple Boards' Ability to Govern

We were advised that the California Senate Transportation & Housing Committee is prepared to vote on SB 563 (DeSaulnier) that deals with Community Association Board Meetings. We encourage you to contact the members of this Committee and tell them to vote "NO" on SB 563 which will, if made law, prohibit any actions and communications among community association board directors outside of noticed board meetings (excluding emergencies). Both the California Legislative Action Committee of Community Associations Institute (CLAC) and the Cailfornia Association of Community Managers are opposed to this bill in its current form.

Community associations are, for the most part, corporations and are required to comply with the sections of the California Corporations Code and Civil Code that already deal with the requirements for making decisions, taking actions in furtherance of their fiduciary duties, and reporting to the members.

Board members are volunteers, and things are always coming up that require their action. Day-to-day matters need to be acted upon as they arise, and holding off until the next board meeting (which may not be for months) may be impossible or impractical for a variety of reasons.

Nobody has presented any information regarding abuses that would warrant this proposed legislation, which will make it more difficult for boards to carry out their responsibilities.

Please follow this link for a notice from CLAC that provides information as to where to voice your objections to SB 563.

CLAC sets forth the following reasons to OPPOSE SB 563:
1. Prohibits directors from talking about ANY item outside of a noticed meeting.
2. Cripples a board's ability to act on non-emergency but essential items between meetings.
3. Wipes out the ability for directors to agree by written consent between meetings, a long standing right for all other corporations.
4. Requires additional notices, costing HOAs more money.
5. Informs members about Executive Committee meetings that they are not allowed to
attend, causing severe member frustration.
6. Impossible to enforce; even casual conversation at social events could be intentionally unlawful.
7. Will lead to litigation; minor perceived violations will be seized upon.
8. How can directors even talk or email about convening the next meeting?
9. Informal outreach and "walk around" gatherings among members and board directors would be unlawful.

March 8, 2011

State lawmakers are being urged to scale back the number of laws they propose; they should start with those that impact California condominium and homeowner associations

By David C. Swedelson, SwedelsonGottlieb Partner

There was an interesting article on new legislation in the March 6, 2011 edition of the Los Angeles Times about the 2,323 new bills that have been introduced in the California legislature, and this includes several that impact California community associations (more on that below). As reported in the Times:

In addition to addressing the state's $25-billion deficit this year, the Legislature is making time for some other less-pressing matters: Caffeinated beer. Spaceships. How to properly describe a dog pound.

Proposals on those subjects are among the 2,323 bills lawmakers have introduced this year. Others would revise the definition of olive oil and regulate the reflectivity of pavement to help curb global warming. There's a measure to create a "Parks Make Life Better" month.

Continue reading "State lawmakers are being urged to scale back the number of laws they propose; they should start with those that impact California condominium and homeowner associations" »

November 9, 2010

The California Association of Realtors (CAR) Seeks Legislation to Limit Fees Charged By Management

CAR has let it be known that it plans to introduce a bill in 2011 that will effectively restrict or limit the fees that community association management companies now charge for such things as ownership transfers and compliance with Civil Code Section 1368. This is likely going to be a very contentious issue, as these are fees that the owners of the specific property that is making the request should be required to pay directly to management. If CAR's legislation were to become effective, it is likely that owners in escrows would only be required to pay the actual costs of duplication, etc. As a consequence, the associations would themselves end up paying the fees for the manager’s services, which would in turn be paid by all owners. How can community associations budget for these fees when they have no idea how many requests they will get in a fiscal year? Why should all owners pay for a service that benefits only one owner? This proposed legislation will negatively impact management and associations.

For example, consider the result that occurred when the legislature amended Civil Code Section 1365.2 a few years ago. That code section deals with an association's obligation to provide owners with records. Civil Code Section 1365.2 limits the fees and charges that can be charged to the requesting owner. As a result, the additional fees charged by the manager for finding, compiling and preparing the requested association records for production ends up getting paid by all owners and not the owner that made the request. Management companies are entitled to be paid for these extra services, and the payment for these services should come from the owner requesting the service.

This proposed legislation seeks to overturn the 2007 Court of Appeal decision in Berryman v. Merit Property Management that held that the documentation and transfer fees charged by management are products of market forces and are not subject to statutory control.

For more information, see an informational statement prepared by the California Association of Community Managers (CACM) and a more detailed summary of the Berryman decision.

Posted by SwedelsonGottlieb Partner David C. Swedelson, who is also a member of CACM’s Legislative Affairs Committee

November 3, 2010

Governor Signs Senate Bill 294 Into Law Extending Time For Manager Certification Standards in the Business & Professions Code

Karen Conlon from the California Association of Community Managers (CACM) reports that in this most recent legislative session, Senate Bill 294 was introduced for the purpose of consolidating and downsizing the numerous boards, commissions, etc. that exist in California. To protect the CACM manager certification standards in the Business & Professions Codes, CACM asked that the sunset provision in B&P Section 11506 be extended and NOT eliminated as a result of this bill. By doing so, manager certification standards would be preserved. The Senate B&P Committee agreed to this request. Follow this link to see the portion of the bill that reflects the extension of the sunset provision to January 1, 2015 (the sunset provision was originally due to expire January 2012). SB 294 was signed by the Governor and chaptered into law. Congratulations to CACM.

June 25, 2010

Legislation Alert - AB 1726 (Swanson) In Jeopardy

Earlier this year, California Assemblymember Swanson introduced AB 1726, a bill that would benefit California common interest developments. As amended, the bill has been watered down in some respects but improved in other respects, and it remains a valuable piece of legislation. We have recently been alerted by the California Legislative Action Committee, which supports the bill, that the bill is encountering unexpected opposition in the state senate. Please fax a message to the state senate committee members by Monday, June 28 in support of AB 1726.

Continue reading "Legislation Alert - AB 1726 (Swanson) In Jeopardy" »

June 10, 2010

Are We Really That Opposed to Artificial Turf? Really!

An Editorial by David C. Swedelson, Esq., Senior Partner, SwedelsonGottlieb

Many of you received an urgent request by the California Legislative Action Committee (CLAC) for grassroots letters to be sent to the legislature opposing Assembly Bill 1793 (Saldana). I am not sure that I agree with what CLAC stated, and I really wonder if this is legislation that the CID industry should oppose.

I do not now personally have any artificial turf at my home, but I have considered it. I do have neighbors that have installed it, and my daughter’s school installed it on the athletic field. I do not have an interest in any company that manufactures, sells or installs artificial turf.

Today’s artificial turf looks a lot different than the “Astroturf” we may be familiar with. Esthetically, the newer products I have seen look like real grass. Even if I get on my hands and knees to check, it is hard to tell if it is artificial grass.

Continue reading "Are We Really That Opposed to Artificial Turf? Really!" »

May 26, 2010

Hooray, AB 2502 Is Dead; But What About The Waiver and Partial Payment Issues, and Why Did CLAC Support This Bill?

As we reported in April, Assemblymember Julia Brownley had proposed AB 2502, which would have made assessment collection in California even more difficult than it already is. We have great news. Because of all of the opposition she received (your letters and emails were acknowledged) and because some of those that backed the bill withdrew their support when Brownley amended parts of the bill, Brownley likely realized that compromise was impossible, the bill never made it out of committee and it did not advance to the floor for a vote. This legislation would have imposed new and unwarranted restrictions on the assessment collection process for California community associations.

Brownley had agreed and did amend the bill to eliminate the requirement that associations wait until the delinquent owner owed $3,600 or was 18 months delinquent before foreclosing. But she had left in the proposed prohibition on a waiver of the provisions of Civil Code Section 1367.1 relating to the allocation of payments, as well as the proposed prohibition on not accepting partial payments, and we learned that these issues were not only misunderstood by the legislator, but by others in the community association industry as well.

And why did the Community Association Institute's California Legislative Action Committee (CLAC), which had originally opposed the bill, then decide to support this flawed legislation?

To learn more about why the waiver and partial payment prohibition are important to California community associations, download our full article.

August 11, 2006

Civil Code Section 1363.03 - New Election Law FAQs

As you hopefully know by now, as of July 1, 2006, the way all California community associations conduct elections and membership votes was changed. Among the major changes is the requirement that all elections and certain other membership votes be held by secret ballot pursuant to operating rules. This includes votes for the selection and removal of members of the board, amendments to the governing documents, votes regarding assessments, and the grant of exclusive use common area. In addition, the role of the inspectors of election has grown significantly, and the use of proxies, while still permitted, may not be as prevalent as in the past. This new law affects all community associations, irrespective of their size. Failure to comply with the new law could subject an association to a challenge in small claims court. Because this new law is so complex, we are receiving a lot of questions. In response, we present the following frequently asked questions:

1. Our Association has always had secret ballots; can't we just keep on holding our annual elections as we have been doing for years?

The simple answer is no. The new election law was adopted because Senator Battin from the Coachella Valley somehow came to believe that fraud was rampant within association elections. This was news to us. If an association does not comply with the new law, which includes, among other things, the adoption of election rules and procedures, which specify procedures for voting by secret ballot, designating and detailing the responsibilities of the inspector(s) of election, the voting results can be challenged and a fine imposed on the association. We do not believe that the new election law is required as we certainly do not see rampant fraud at associations, but it is the law and if you do not fully comply, there are potential serious consequences.

2. What is required for the election rules and procedures - do they need to be approved by the members?

New Civil Code Section 1363.03 provides that the new election rules and procedures must provide, among other things, that the association allow for equal access for all candidates or members to advocate their point of view in all association media (via newsletter, websites, etc.); that the association provide access to common area meeting space at no cost to all candidates and members who advocate a point of view during a campaign; set forth the qualifications of candidates for the board; set procedures for the nomination of candidates; set qualifications for voting; establish a method for selecting the inpector(s) of election and who can serve as an inspector of election. This new law specifically provides that these rules must be treated like other "operating" rules and sent out to the members for their comment thirty (30) days before being adopted by the board of directors. However, regardless of member comment, it is the board's decision whether to adopt the rules; the members do not vote on them.

3. What happens if we don't have election rules and procedures?

The failure to adopt election rules and procedures means that actual results of the voting can be contested in small claims court.

4. Do these voting rules and procedures only apply to the election of board members or to voting on other matters as well?

The new law provides a list of different votes that are taken by the members in accordance with the election rules - the election or removal of the board members, voting regarding assessments, amendment of the governing documents, and the grant of exclusive use common area.

5. We are a small association of only 10 units. My board does not want to have to make rules or follow the new law regarding secret ballots. Can a majority of the homeowners decide that we don't want to follow this new law?

Unfortunately, Senator Battin (and the California legislature) did not believe that there was any need to differentiate between larger and smaller associations; all community associations subject to the Davis-Stirling Act must follow the new election law. Any homeowner that wants to challenge the results of an election may do so by going to small claims court, and a small claims judge not only has the power to invalidate the election results, but also has the power to impose a fine of up to $500 per violation. Although there may not be any homeowners today that even know about these new election laws, it only takes one disgruntled homeowner to file a small claims action involving the results of your election. This does not even take into consideration the question that if the results of the election are invalidated, is there a board of directors in place to make decisions, sign checks, etc.?

6. What exactly has to be provided in the upper left hand corner of the outer secret ballot envelope?

The following must appear in the upper-left hand corner of the outer secret ballot envelope:

• Written or pre-printed voter’s name
• Written or pre-printed voter’s address or separate interest identifier that entitles him or her to vote (such as parcel, unit or lot number - can simply be the voter's full address)
• Voter’s signature

7. What if a homeowner doesn't know their parcel or lot number?

By recent amendments to Civil Code Section 1363.03 (effective 7/1/06), it is no longer necessary that an owner place their parcel or lot number as long as the voter can be identified from the information provided (address and unit number may be sufficient).

8. Does everyone need to fill out a candidacy notice, including existing Board members who are running for reelection?

Some election rules provide for candidacy notices to be sent out to the membership, and the answer would depend on how your election rules are drafted since the code does not address candidacy notices. Candidacy notices are just one way to provide equal access for those persons running for election. It is a good idea to provide in your election rules that all candidates, regardless of whether they are running for reelection, must fill out a candidacy notice.

9. Should the inner envelope say only "SECRET BALLOT" or does it also need to include an address?

The inner envelope should say no more than: "Secret Ballot, to be opened by the Inspector of Election only." It should not be marked with any identifying information by anyone.

10. Do we need to send homeowners a proxy? How do we let homeowners know that they can give a proxy to someone and what needs to be on it?

If the governing documents don’t require the Association to send a proxy, you are not obligated to do so. The requirements for proxies are set forth in the Corporations Code and should be addressed in the election rules. The Inspector(s) of Election validates proxies. All proxies must be exchanged for Secret Ballots because the proxy itself can’t be voted.

11. Is it 1 Inspector under 100 units and 3 for 100 + units?

No, it's one or three at the Board’s discretion. If the Board fails to designate the Inspector(s), the members may vote on the appointment.

12. What if five members are up for election, all five want to run again and no candidacy notices are received by the deadline? What is the use of having nominations from the floor if a member can't change their vote once it has been mailed?

Recently amended Civil Code Section 1363.03 makes clear that nominations may be allowed from the floor if provided for in the rules and not prohibited by the governing documents. This helps in cases where nominations are not received in advance of the meeting. A member may wish to refrain from voting until the meeting itself in order to ensure the member knows all of the choices available. The member shouldn't mail their ballot unless they are sure of their vote. Another option is to write in a candidate that is not yet nominated, mail the ballot, and then nominate that candidate from the floor at the meeting. It is obviously an advantage for a candidate to return the candidacy notice within the time provided so that candidate is on the ballot. Also, elections by acclamation are no longer allowed (a vote must still be taken where the number of candidates is equal to the number of open board positions).

13. Do only members not planning on attending the meeting need to mail in their secret ballots? The members attending can bring them in but they must be in the 2 sealed envelopes...correct?

Yes. But mailing in your ballot does not mean you cannot attend the meeting. Members can complete their secret ballots and seal them at the meeting. We recommend the board, manager or Inspector(s) bring extra blank secret ballots and envelopes to the meeting in case someone lost their voting materials, etc. and needs a replacement.

14. What if quorum is not achieved?

Remember that even secret ballots received by mail count as members present at the meeting for quorum purposes, so be sure to count them towards quorum. Also, the Inspector(s) should not open any envelopes until quorum is satisfied (if quorum is not satisfied, move to adjourn the meeting and check to see if your governing documents have a provision for reduced quorum at an adjourned meeting).



We encourage all associations to comply with the new law. If you would like more information, there are additional articles on this blog and our website, or you may e-mail our office and we will be glad to forward you additional documents.

September 18, 2000

Governor Signs into Law Changes to Civil Code Section 1363.03 Dealing with Election Procedure

Please do not shoot the messenger as we are only reporting the news. On September 18, 2006, the Governor signed S.B. 1560 (the “Amendment”), which modifies recently enacted Civil Code Section 1363.03. This “cleanup bill” clarifies some troublesome issues, which will hopefully allow associations to get through the election process more efficiently.

• §1363.03(e)(1)

One of the provisions in 1363.03 required homeowners, when voting by secret ballot, to write his or her name in their own hand on the exterior envelope sent to the inspector(s) of election and state their unit, lot or tract number. The Amendment allows an owner to sign the exterior envelope and indicate the owner’s name or address or separate interest identifier that entitles that owner to vote. Therefore, the homeowner will no longer have to print their name, unit, lot and tract number in their own hand but may instead utilize a label. However, the member is still required to sign his or her name.

• §1363.03(f)

The changes to Civil Code Section 1363.03 now confirm what we already knew to be the case, that once the inspector receives the ballot, it is not revocable. This change can be found at 1363.03(f). An additional change to 1363.03(f) allows the inspector or the inspector’s third party designee to verify members’ information and signature on the outer envelope of the secret ballot prior to the meeting at which the ballots are tabulated. We had been very concerned that only the inspector(s) of election could perform this job and only perform it at the meeting. Now, the inspector(s) can designate third parties to help perform some of the work and allows for the signature on the outer envelope to be verified (this will help with reaching quorum) prior to the meeting.

• §1363.03(m)

1363.03(m) has been added to confirm that the secret ballot procedure is not required for votes cast by delegates or other elected representatives, but only for votes cast directly by members of the association.

• §1363.03(d)(1)(A)

Another important change defines a proxy (this is a new definition for the code) as “a written authorization signed by a member or the authorized representative of the member that gives another member or members the power to vote on behalf of that member.” (Emphasis added.) In the past, a proxy could be given to any third party whether they were the member, the member’s attorney or a family member unrelated to the association. Now, a proxy can only be given to a member.

• §1363.03(d)(1)(B)

The word “signed” is now defined as “the placing of the member’s name on the proxy, whether by manual signature, typewriting, telegraphic transmission or otherwise by the member or authorized representative of the member.” This is important because it clarifies whether faxed signatures count; they do.

• §1363.03(d)(2)

The cleanup legislation clarifies that proxies may not be construed or used in lieu of a ballot. The modifications to the Civil Code provide that if proxies are permitted or required by an association’s bylaws, and if the proxy meets the statutory requirements, they shall be used. However, associations are not required to prepare or distribute proxies pursuant to Section 1363.03. A member may revoke his or her proxy prior to the receipt of the secret ballot by the inspector(s) of election pursuant to Section 1363.03(d)(3).

• §1363.03(b)

An important concern has been the quorum requirement. The Amendment provides that if quorum is required for elections in the governing documents or other provisions of law, each secret ballot received by the inspector(s) shall be treated as a member present at a meeting for purposes of establishing a quorum (1363.03(b)). We believe that since the ballot is contained within the first and second envelope referenced above, when the envelope is received, it can be used for establishing quorum. Since quorum is determined by ballots, if an envelope is received without a ballot enclosed, then the empty envelope would not count toward quorum.

Additionally, this same subparagraph adds to the already designated four issues for which secret ballots must be utilized to include the removal (recall) of directors.


Unfortunately, these changes did not go as far as we would have liked. However, the changes are significant and clarify many unanswered questions that followed the enactment of Civil Code Section 1363.03.

May 17, 2000

New Law Requiring Secret Ballots, Election Rules and Regulations Goes Into Effect July 1, 2006—Are You Ready?

On July 1st, 2006, the way community associations have traditionally conducted annual meetings and/or taken votes will be history. This new law, set out in new Civil Code Section 1363.03, will affect how all homeowners associations in California will conduct most of their voting and elections, including the election of directors, a vote by the membership for assessment increases, amendments to the governing documents, and grant of exclusive use common area (subject to the limitations of Civil Code Section 1363.07). This new law was premised on what we believe is the mistaken opinion that association elections and balloting are “fraught with fraud.” The big change is that all voting will be by secret ballot. There is cleanup legislation that has been proposed, which expands the secret ballot process to all association votes. Failure to comply with these new rules could, by court order, set aside the results of an election or vote taken by an association and/or could subject an association to a penalty of five hundred dollars ($500.00) for each violation.

The newly required Election Rules and Regulations (Rules) are considered “operating” rules under the Civil Code, which will require that they first be sent out to the owners for comment. The Rules should set forth the process by which membership meetings are to be conducted, how voting is to occur and who is in charge. No longer may the association’s managing agent (unless your Rules provide otherwise) be in charge of the registration process nor may they assist the inspector(s) of election (“inspector(s)”) with the vote tally. While the number of inspector(s) has not changed (either one (1) or three (3)), the new law requires associations to specify how they are going to select the inspector(s), requires the inspector(s) to be independent third parties which include, but are not limited to, volunteer poll workers with the county registrar of voters, a licensed CPA, or a notary public. Although inspector(s) may be a member of the association, that member cannot be related to a board member, nor a candidate for election to the board of directors, a member related to the candidate, or be a person that is currently employed by or under contract to the association unless expressly authorized by the Rules. The inspector(s) must be selected prior to the vote or election as the inspector(s)’ role and responsibilities have been expanded.

If an association’s governing documents require an annual meeting to elect the board of directors (“board”), you will still be required to follow the Civil Code-mandated process. Cumulative voting and quorum requirements set forth in the governing documents remain controlling. The association or its managing agent will be obligated to provide information to the inspector(s) so that the inspector(s) can determine which members are in good standing and have a right to vote, notify members that they have a right to run for the board, the right to submit a candidacy statement, the right to utilize the association’s media in the same manner that any other candidate is utilizing an association’s media, which includes (by way of example) the association’s website or newsletter, if applicable. The board must be consistent with the procedures as they are to be applied to all members. Further, associations must provide access for all members to the association’s common area meeting space (or spaces) so that the member/candidate can have a forum to discuss their candidacy or anything reasonably related to the election.

The code provides a comprehensive list of inspectors' obligations, which include the designation of a location for the homeowners to mail their secret ballots, determination of the good standing status of the member as referenced above, the counting of the secret ballots (more on that in a moment), the designation of mailing address (referenced above), notification to the homeowners of when the voting will commence and when it will conclude (referred in the code as a polling place, which would make that consistent with municipal elections), request for candidacy statements, etc. Because the legislature apparently believed that community associations were not allowing for secret voting, the underlying process is to secure confidentiality in all votes by homeowners for the elections referenced above.

The Rules must provide procedures that the inspector(s) can utilize at the annual meeting, if applicable. This is important because the association’s managing agent (unless authorized in the Rules) will not be able to provide information and direction to the inspector(s) as to how they should handle any issues or problems that arise.

The secret ballot referenced above requires that associations send to the homeowners (and for the homeowner to return) two (2) envelopes, one that will fit inside the other. The “secret” ballot will go inside the smaller inner envelope. The secret ballot, which requires the homeowner’s vote, may not be signed by the homeowner or have any other documentation on the ballot that would identify the homeowner. That ballot will be placed into the inner envelope, which will be, on its face, designated as the envelope for the secret ballot. That envelope will be placed into another envelope that will be pre-addressed to a location specified by the inspector(s). On the exterior envelope the homeowner, must in their own hand, print and sign his or her name, address, and lot or parcel or unit number that entitles him or her to vote. Owners will likely need some help with this as they likely will not know their parcel number. The homeowner is required to, where referenced, sign their name on that envelope. Although the cleanup legislation referenced above would allow for that information, other than the signature, to be provided not in the homeowner’s own hand, currently that is not the law. Managing agents and boards of directors are rightfully concerned that homeowners will have difficulty understanding that if they do not fill out all of the information, the ballot inside the envelopes will not count towards the election. Not only is the board obligated to prepare the Rules, they should carefully set forth instructions to the homeowner as to how to fill out the envelope.

Counting of the ballots is also going to be an issue. How long will it take to register the members and then count the secret ballots? Will this interfere with the inspector(s) noticing when the polls will close? Members of the association are entitled to watch the counting of the votes. However, no one except the inspector(s), including members of the association, the board of directors or the association’s managing agent, may review or open any secret ballot prior to the time and place where the secret ballots are counted and tabulated. When completed, the inspector(s) are required to provide the board with the results of the election and the association is required to advise the homeowners, in writing, within fifteen (15) days of the election by publicizing the results.

If a member requests a recount and challenges the election results, the association shall make the ballots available for inspection and review by the members or their representatives. The association has an ongoing obligation to preserve the confidentiality of the vote and that includes the recount. Any member may bring a lawsuit against the association in small claims court (within a one-year period from the date of the election or vote) contesting the results. The small claims judge now has the power to void the results of the election upon finding that the election procedures required by law or the rules were not followed. If the member prevails in a lawsuit contesting the vote, under the new law they will be entitled to reasonable attorneys’ fees and costs and the Court may impose a penalty of up to $500 for each violation. On the other hand, if the association prevails in that lawsuit, assuming the small claims court judge’s decision to void the results of an election or vote has been appealed to the Superior Court, it shall not be entitled to its attorneys’ fees and costs unless the Court finds that the homeowner’s action was frivolous, unreasonable, or without foundation.

While the voting and elections procedures have changed, boards of directors still have an obligation to enforce the governing documents while complying with civil code obligations. The State Legislature has enacted a very complicated new law designed to ensure elections and voting are secret. It remains to be seen how well this new law will work. Good Luck! And if you need help, contact our office!

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