Summary of New Legislation – 2019
By: Daniel C. Shapiro, Esq. & Michael W. Rabkin, Esq.
We are pleased to provide you with a summary of important legislation which goes into effect on January 1, 2020, which affects all homeowner associations.
- NEW LAW:
Elections (SB 323 – Wieckowski)
This new law imposes significant new burdens on the election process both with regard to the qualifications of candidates and the procedures to be followed when electing directors. As explained below in more detail, the new law has important practical implications for associations that intend to hold their annual elections in the first few months of 2020. This new law may delay the holclingld such elections for several months. This is because the new law requires associations to amend their election rules, but also states that the election rules cannot be amended less than 90 days prior to an election. Therefore, after its revised election rules are approved, an association must wait 90 days to hold its election.
Qualifications to be a Candidate. Many associations have adopted Bylaws or election rules which impose varying qualifications to be a candidate for election. This new law supersedes any existing qualifications and limits the scope of possible qualifications to the following finite list:
- Mandatory — Beginning in January, 2020, by law, all candidates must be owners. If title to a Unit is held by a legal entity that is not a natural person, the governing authority of that legal entity shall have the power to appoint a natural person to be a “Member” for purposes of election to the Board.
- Optional — An association may provide in its election rules that all candidates be owners for at least one year.
- Optional — An association may provide in its election rules that each candidate must not be delinquent (as defined in the association’s collection policy) in the payment of any regular or special assessment levied by the association (but not for nonpayment of monetary penalties, monetary penalties renamed as assessments, collection charges, late charges, or costs levied by a third party). A candidate is not considered delinquent if the candidate has paid the assessments under protest or has entered into a payment plan with the association.
- Optional — An association may provide in its election rules that a person may not be a candidate if the candidate discloses, or if the Association is aware of, or becomes aware of, a past criminal conviction that would either prevent the Association from purchasing the fidelity bond coverage required by Civil Code Section 5806 should the person be elected or terminate the Association’s existing fidelity bond coverage as to that person should the person be elected.
- Optional — An association may provide in its election rules that a person may not be a candidate if such person, if elected, would be serving on the Board at the same time as another person who holds a joint ownership interest in the same Unit as the person, and the other person is either properly nominated for the current election or an incumbent director.
The Association shall not disqualify a person from nomination if the person has not been provided the opportunity to engage in internal dispute resolution pursuant to Civil Code Section 5900 et seq.
New Election Timeline and Mailings. The election timeline for delivering all of the statutorily required documents to members is approximately 105 days (besides adoption of the rules themselves).
Nomination Procedures (New). At least 30 days before the deadline for the return of nominations, the Association shall, by general notice (unless an owner has asked for individual delivery), deliver to all members notice of the procedure and deadline for submitting a nomination.
Candidate Nomination Forms. A candidate nomination form must be delivered to all owners, providing a reasonable deadline for response. We recommend combining the delivery of the nomination procedures with the candidate nomination forms to minimize the number of mailings. This would require that owners be provided at least 30 days to return their candidate nomination form.
Mailing Prior to Secret Ballot Distribution (New). At least sixty (60) days before the election (i.e., at least thirty (30) days before the secret ballots are mailed to owners), the Association shall provide general notice to the members of all of the following: (a) the date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections; (b) the date, time, and location of the meeting at which ballots will be counted; (c) the list of all candidates’ names that will appear on the ballot. Individual notice of the above shall be delivered if individual notice is requested by a member.
Secret Ballot Procedure (New). The inspector(s) of election shall cause the association to deliver to each member not less than thirty (30) days prior to the election: (a) ballots and two (2) preaddressed envelopes with instructions on how to return ballots; and, (b) a copy of the association’s election rules. Delivery of the election operating rules may be accomplished by either of the following methods: posting the election operating rules to an internet website and including the corresponding internet website address on the ballot together with the phrase, in at least 12-point font: “The rules governing this election may be found here: (insert website )” or by individual delivery. If an association does not already have a website, depending upon the size of the association, it may be more cost efficient to establish one rather than distribute a hard-copy of the election rules each year to all of the owners.
Other New Election Rules
- An association’s property manager, attorney or other entity who is currently employed or under contract to the association for any compensable services (other than serving as an inspector of elections) cannot serve as an inspector of election.
- The inspectors of election shall not deny a ballot to a member for any reason other than not being a member at the time when ballots are distributed. Associations can no longer suspend an owner’s voting rights.
- Associations must now maintain a candidate list and a voter list, which shall include the name, voting power, and either the physical address of the voter’s separate interest, the parcel number, or both, and the mailing address if different from the physical address. Associations must permit members to verify the accuracy of their individual information on both lists at least 30 days before the ballots are distributed. The association or member shall report any errors or omissions to either list to the inspector or inspectors who shall make the corrections within two business days.
- An association cannot deny a ballot to a person with general power of attorney for a member.
- Associations must maintain (as election materials subject to inspection by a member) the sealed (or, after tabulation, returned) ballots, signed voter envelopes, voter list, proxies, and candidate registration list.
Problems with New Election Rules
- The new law does not provide a grace period for compliance The new law should have included a provision that made the law apply to elections which occur after July 1, or even December 31, 2020, so that the associations would have the time to implement it properly. In order to adopt new election rules, boards of directors must follow the procedures set forth in Civil Code Section 4360 (including the 28-day review period). Please remember that the election cannot be held until at least 90 days following the adoption of the revised election rules.
- The new law addresses the qualifications to be a candidate for election, but does not address whether if, once elected, a director may be removed for failing to meet such qualifications.
- The new law ignores the statutory process related to a petition signed by 5% of the members to recall some or all of the directors. Such a meeting must be held within 35 to 90 days of receipt of such petition. The new election process takes approximately 105 days (besides adoption of the initial election rules). This means that the board members may be recalled, but the election for new directors must take place at least 15 days later (the actual date will depend on the timeline more fully described above).
- The new law is silent as to whether a person appointed by a board to fill a vacancy has to meet the same qualifications.
New Right to Inspect Owner Email Addresses. In addition to imposing significant revisions to election rules, SB 323 imposes a significant change in the scope of membership information to which a member has a right to obtain access. Under existing law, a member (after giving a reason relating to his or her interest as a member) can inspect and copy a list of owners including, the name, property address, and mailing address, but not including information for members who have opted out pursuant to Section 5220. As of January 1, 2020, a member will also be able to inspect and copy an owner’s email address on file with the association unless the owner “opts-out” of sharing the his or her email address. Associations may want to consider sending an opt-out form to the owners in advance of the new law taking effect. An opt-out form is attached hereto for your use.
This new law is ill-conceived. It creates a “one-size-fits-all” approach to elections, and it imposes additional burdens (in both time and money) on volunteer boards. It could also have the unintended consequence of creating more election challenges as boards, in good faith, attempt to comply with these onerous new requirements. Associations should consult with their attorneys to ensure proper compliance with these new election laws.
Accessory Dwelling Units — Planned Unit Developments (AB 670 – Friedman)
The California Legislature has determined that accessory dwelling units (“ADUs”) can play an important role in mitigating the lack of affordable housing in California. ADUs (also known as mother-in-law units, granny flats, backyard cottages, or secondary units) are additional living spaces that have a separate kitchen, bathroom, and exterior access separate from the primary residence. ADUs can either be attached to, or detached from, the primary residence. In the last few years, state laws have been passed promoting ADUs, but such laws were aimed at regulating local governments; homeowner associations have remained free to prohibit or limit the construction of ADUs based on the restrictions contained in their governing documents. However, as of January 1, 2020, planned unit developments will no longer be immune from ADU laws.
AB 670 adds a new Section 4751 to the Act. The new law makes void and unenforceable any provision of a governing document that effectively prohibits or unreasonably restricts the construction or use of an accessory dwelling unit or junior accessory dwelling unit on a lot zoned for single-family residential use that meets the standards established for ADUs. Planned unit developments will be allowed to impose reasonable restrictions on ADUs that do not unreasonably increase the cost to construct, effectively prohibit the construction of, or extinguish the ability to otherwise construct, an accessory dwelling unit or junior accessory dwelling unit consistent with those aforementioned minimum standards provisions.
From a practical standpoint, ADUs will not be permitted to be installed/constructed in every planned unit development because of design constraints, but many planned unit developments will be directly affected. Such associations will have to grapple with what constitutes an unreasonable restriction on the construction or use of an ADU. A major area of concern is the ability to regulate the rental of the ADU, as this may cause, among other things, an overburdening of an association’s common areas. The new law is prefaced by the following language: “It is the intent of the Legislature in enacting this act to encourage the construction of affordable accessory dwelling units and junior accessory dwelling units that are owner-occupied and that are used for rentals of terms longer than 30 days,” but the text of the new law itself does not reference restrictions on the renting of ADUs. In the absence of specific language related to the rental of ADUs, and until the California Legislature or a California court clarifies this further, we believe that an association can adopt and/or enforce restrictions which require that the primary residence and the ADU be occupied by a common household, i.e. used for a game room, playroom, gym, or separate living quarters for a family member or caregiver of the occupants of the primary residence, but not leased separately from the main residence.
Planned unit developments should start by contacting their local planning department to determine the minimum building standards for ADUs in their community. There may be certain minimum lot sizes needed to construct a stand-alone ADU or minimum garage size to convert a garage to a habitable living space. With this information, associations can work with their attorneys to craft appropriate restrictions which reasonably regulate the construction and use of ADUs in their community.
Entry doors; Display of Religious Items; Prohibitions (SB 652 – Allen)
Under this new law, an association’s governing documents may not limit or prohibit the display of one or more religious items on the entry door or entry door frame of the member’s separate interest, except if the display or attachment:
- Threatens the public health or safety;
- Hinders the opening or closing of any entry door;
- Violates any federal, state, or local law;
- Contains graphics, language or any display that is obscene or otherwise illegal; or,
- Individually or in combination with any other religious item displayed or affixed on any entry door or door frame that has a total size greater than 36 by 12 square inches, provided it does not exceed the size of the door.
If an association has to cause the removal of the religious item in connection with its maintenance, repair, or replacement of an entry door or door frame, the member may be required to remove the religious item for the duration of the work, but may restore the religious item upon the completion of such work. An association shall provide individual notice to the member regarding the temporary removal of the religious item.
Balconies and Decks (SB 326 — Hill)
This bill establishes a mandatory inspection regime for exterior elevated elements (“EEEs”), defined as the load-bearing components and associated waterproofing systems, in a condominium project to determine whether such EEEs are in a generally safe condition and are performing in compliance with applicable standards. The goal of this bill is to help prevent structural failures like the one that occurred in Berkeley, California, in 2015, where six people died when a fourth floor apartment balcony collapsed. The new law only applies to buildings containing three or more multifamily dwelling units.
Under the new law, at least once every nine (9) years, the board of an association of a condominium project must cause a reasonably competent and diligent visual inspection to be conducted by a licensed structural engineer or architect of a random and statistically significant sample of EEEs for which the association has maintenance or repair responsibility. The first inspection must be completed by January 1, 2025. Every nine years thereafter the board must complete an additional inspection in coordination with the reserve study inspection pursuant to Civil Code Section 5550.
The inspector’s written report must contain certain information including whether the condition of any EEE presents an immediate threat to the health and safety of the residents. The inspector must provide a copy of the report to the association immediately upon completion of the report. Additionally, if the inspector’s report advises that an EEE poses an immediate threat to the safety of the occupants, the inspector has fifteen days to provide a copy of the report to the local code enforcement agency. If health and safety issues are raised by the report, an association is obligated by the new law to take preventive measures immediately, including preventing occupant access to the EEE until repairs have been inspected and approved by the local enforcement agency. Notably, a local enforcement agency can recover its enforcement costs associated with the requirements of the new law from the association.
This new law nullifies any provision in an association’s governing documents that purports to condition or limit the ability of an association to bring construction defect litigation against the developer of the association. This bill applies to all governing documents, irrespective of when they were recorded, and claims initiated before the effective date of this bill, except if those claims have been resolved through an executed settlement, a final arbitration decision, or a final judicial decision on the merits.
A member may request that the Association provide him or her with a copy of the membership list, including the names, property address, mailing address and, as of January 1, 2020, the email address, of each member. The member’s request must be in writing and must set forth the purpose for which the list is requested, which purpose must be reasonably related to the requester’s interests as a member of the Association. The Association will be obligated to provide the member with a copy of such membership list unless it reasonably believes that the member will use the information for another purpose.
Pursuant to Civil Code Section 5220, a member can “opt out” of having his or her name and address(es) included on a membership list which must be distributed to members upon request. If you would like to “opt out” of having your name and/or addresses included on a membership list which may be distributed to another member upon request, please complete the following form and return it to the Association. Please note that your “opt-out” will remain in effect until further written notice from you.
To Whom It May Concern,
Please remove the following information related to me and my unit/lot from the Association’s membership list in accordance with Civil Code Section 5220 until further written notice from me:
(check all that are applicable)
___ Property Address
___ Mailing Address
___ Email Address
Print Name: ____________________________________________
Unit/Lot Address: ________________________________________