California HOA, condo, co-op legislative updates (Elections – April 2018)

By Deborah Goonan, Independent American Communities

 

California Courts regard common interest communities as quasi-governmental entities. And, in many cases, boards of association-governed communities have greater power than elected officials of local government.

For example, boards of association-governed common interest communities tend to have broad authority to decide how to best manage the corporate association, including determining how much to assess members, as well as how to collect and spend assessment dollars. Boards also have powers to enact and enforce rules, as granted by governing documents.

Members of the association often have limited voting rights to prevent a board from imposing extraordinary assessment increases or special assessments. But most associations get around this limitation by spreading out assessment increases or special assessments over several fiscal years. Sometimes the association declares an “emergency” expense, which may or may not be justified, depending upon the circumstances.

Owner-members are sometimes dissatisfied with their board’s leadership. For example, members may believe the association is engaging in wasteful spending, or suspect that actions of one or more members of the board are self-serving.

The only meaningful ways concerned homeowners and residents can reclaim control of their communities are to elect new board members, recall rogue board members, or run for election themselves.

Therefore, it’s critical that association-governed common interest communities function democratically, and that association elections and membership votes are handled with integrity, to ensure a fair process.

However, the California Legislature is currently considering two contradictory bills regarding elections for HOAs for planned communities, condominiums, and housing cooperatives.

One bill, sponsored by Center for California Homeowner Association Law (CCHAL), SB 1265, is intended to strengthen the integrity of the voting process, and to better protect the rights of association members to a fair process for electing board members.

The other bill, promoted by Community Associations Institute – California Legislative Action Committee, CAI-CLAC, SB 1128, would undermine the association members’ rights to vote and to run for election on the board.

Let’s briefly compare the two bills.

SB 1265

SB1265, sponsored by Bob Wieckowski [D-Fremont] proposes several important amendments to strengthen the voting rights of members, as well as their right to run for election to their association’s board.

 

Existing law in California provides the following protections for association members.

Equal access to communication and meeting venues

Each candidate for the board is entitled to use association media, including official association newsletters and websites, as well as common area meeting spaces, in order to campaign for the board and communicate positions on important issues in the community. The incumbent board is prohibited from blocking access to communication venues, even if they do not endorse candidates or agree with their points of view. All members of the association have the opportunity to hear multiple points of view, and make informed voting decisions. CCHAL successfully sponsored these equal access amendments in 2017.

Self-nomination allowed

Regardless of what’s written in governing documents, any member of the association has the right to nominate him- or herself for the board.

Permits third party oversight of election process

Members are to be made aware of the process for selecting an election inspector. Also requires that ballots and proxies remain in custody of an election inspector until the time of the annual meeting.

Association would disclose details of election process

Provides advance notice of date, time, and place of election, as well as dates of valid voting periods.

Members can challenge statutory or election rule violations of  in court

A member can file a civil action, and any party who violates election provisions may be fined $500, and recover attorney’s fees and court costs. A court can void an election if correct procedures are not followed.

SB 1265 would add the following protection of rights for association members:

90-day advance notice of election, and a more accurate candidate list

Election inspector would be required to correct errors and omissions on the candidate list within 2 days of being notified of the inaccuracy.

Accessibility

Meetings are to be accessible to all persons with disabilities.

A valid roster of membership

In addition to date, time, and place of election, as well as voting periods, members would be provided access to a roster of members and their respective voting powers.

Removes unnecessary qualifiers for ballots

The only qualification for the right to vote is membership in the association. There would be no disqualification of ballots for any other reason. The rationale behind this provision is that elections of government official do not disenfranchise voters (remove the right to vote) for being delinquent on property taxes, or having an unpaid traffic ticket. The only criteria for the right to vote are being at least 18 years of age, having residency in the appropriate voting district, and being registered to vote.

Ensures that election inspector is disinterested

Current law allows procedures for using the association’s manager or attorney as election inspector, if permitted by the association’s governing documents. SB 1265 would require associations to select a truly disinterested third party as election inspector, regardless of what’s written in the association’s bylaws.

Allow election disputes to be filed in small claims court

Current law only allows election disputes in civil court, but SB 1265 would give members the option of using small claims court as a less costly alternative.

 

Here’s the link to the bill: http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB1265

And the most recent Legislative Analysis

 

CAI’s version: SB 1128

By contrast, SB1128 (Roth) proposes to allow boards of association-governed common interest communities to cancel an annual election once they identify a sufficient number of candidates to fill upcoming vacancies.
Here’s the offending provision:
(g) When, as of the close of nominations for directors on the board, the number of director nominees is not more than the number of vacancies to be elected, as determined by the inspector or inspectors of elections, the director nominees shall be considered elected by acclamation.
The proposed amendment is subtle. But it provides the association board with a mechanism to prevent conducting an annual election as soon as they have managed to gather the exact number of candidates needed to fill vacancies, potentially ignoring other potential candidates.
The provision is especially troublesome given that current state law allows the association to appoint its own manager or attorney as the election inspector. (Thus the rationale for ensuring impartiality of the election inspector and process, as proposed in SB 1265.)
See and track the SB 1128 here:

 

And read the most recent Legislative Analysis as of the date of this posting.

 

Proponents of SB 1128 – members of CAI-CLAC – portray the amendment as a money-saver for associations. They argue there is precedent for cancelling uncontested elections. They also cite, by example, Laguna Woods Village, a community association of 12,500 units, that would have saved $20,000 by not conducting an election by acclimation last year.

Doing the math, the savings per unit would have been a whopping $1.60.

Critics note that, given the relatively small per unit cost of mailing election notices and tabulating ballots, it makes sense to follow through with an election, in order to provide other candidates with the opportunity to serve on the board.

Ironically, CAI’s own publication on this, an Introduction to Community Association Living, stresses the importance of member participation in a fair election process.

Refer to pages 27-29, Rights and Responsibilities

 

Source: https://www.caionline.org/LearningCenter/Education-for-Homeowners/Documents/Intro_to_CA_Living.pdf

 

IMPORTANT NOTE:

CCHAL is gathering information about lawsuits that owners-members may have brought against their association, with regard to elections and voting. (including small claims court, civil court, or appellate courts) Homeowners and residents of association-governed communities in California are encouraged to share their experiences with CCHAL, regardless of the outcome of your legal action. Readers may contact CCHAL at this E-mail address:

info@calhomelaw.org 

 

 

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