2023 Mid-Session Legislative Update: Pending California Legislation Addressing Community AssociationsMay 02, 2023
As the Community Associations Institute’s California Legislative Action Committee (CAI-CLAC) wraps up a successful Advocacy Week, we take this opportunity to update you on some of the community association legislation making its way through the legislative process in Sacramento.
The following legislative summary provides an overview of proposed new laws that may make their way to the Governor’s desk in some form or another. The deadline to get bills to each house floor is May 5, 2023; the deadline for each house to pass a bill is June 2, 2023.
Below outlines the pending bills currently addressing community associations.
Assembly Bill 1458 (Ta). Association governance; Member elections, quorum.
Assembly Bill (AB) 1458 would amend Civil Code Section 5115 and Corporations Code Section 7512, providing for a reduced quorum of 20% for purposes of association meetings to elect directors.
AB 1458 is a CAI-CLAC supported bill intended to provide much needed relief to community associations that struggle to make quorum necessary to conduct an annual membership meeting and elect directors. The bill would amend Civil Code Section 5115 and Corporations Code Section 7512 to provide a reduced quorum of 20% for an adjourned membership meeting set between 5 and 30 days after the adjourned meeting date, unless the association’s governing documents provide for a lower quorum.
The legislation applies only to membership meetings to elect directors. The reduced quorum would not apply in the case of a special membership meeting to remove directors.
The bill is seen as an important measure to facilitate community association governance and allow an association to conduct annual membership meetings and conduct regular director elections.
Assembly Bill 1033 (Ting). Accessory dwelling units; Separate conveyance.
AB 1033 would allow a local governing agency (i.e. building and safety or code enforcement) to adopt an ordinance allowing a lot owner to separately convey the primary dwelling and the accessory dwelling unit or units (“ADUs”) as condominiums.
Just when you thought we heard the last of ADU legislation for a while, the effort to increase housing density in California community associations continues. AB 1033 would amend Government Code Section 65852.2. Government Code Section 65852.2 informs the local governmental approval agency what it can and cannot do regarding the approval and regulation of ADUs.
The bill seeks to amend Government Code Section 65852.2 to allow for the separate conveyance of a primary dwelling and the ADU. This amendment would authorize a local agency to adopt a local ordinance allowing the separate conveyance as condominiums. The ordinance must include the following requirements:
- The creation of condominiums pursuant to the Davis Stirling Act.
- The creation in compliance with the Subdivision Map Act.
- That a safety inspection be conducted prior to the recordation of the condominium map.
- That at the time of the sale, all liens shall be satisfied.
The bill emphasizes that nothing in the above requirements limits the ability of an accessory dwelling unit to be sold or otherwise conveyed separately from the primary residence pursuant to Section 65852.26.
Needless to say, there are many hoops to jump through with this legislation before it becomes law, if ever, (not the least of which is requiring a municipality to create a condominium plan, and Subdivision Map Act challenges.) There is no question that this bill would have a significant impact on a planned development community and its governing documents.
Assembly Bill 1101 (Flora). Building standards; Exterior elevated elements.
AB 1101 would amend Civil Code Section 5551 and Health & Safety Code Section 17973 to authorize a Branch 3 company registered with the Structural Pest Control Board and with a minimum of 5 years of experience to conduct the required exterior elevated elements inspection.
Likely fueled by the nearing deadline for community associations to complete their exterior elevated elements (aka SB 326) inspections, and the relatively small pool of qualified structural engineers and licensed architects, AB 1101 expands the list of those qualified to conduct SB 326 inspections to include licensed pest control companies. Presently, pest control companies are not authorized to meet an association's obligation to satisfy the requirements of Civil Code 5551 even though they are trained to identify fungus, deterioration, and decay. The bill’s author noted that the 2015 balcony collapse in Berkeley California was the result of decayed wooden joists caused by wood dry rot, which a Branch 3 Structural Pest Control Company is trained to detect.
Assembly Bill 648 (Valencia/Lowenthal). Meetings solely by Teleconference.
AB 648 would amend Civil Code Section 4090 (board meeting defined) and add Civil Code Section 4926 to permit community associations to conduct board or membership meetings solely by video or teleconference, without a physical location, provided the association meets specified safeguards.
The existing definition of teleconference, for purposes of satisfying the “Open Meeting Act,” requires an association to identify a physical location so that members may attend in person and at least one director or designated person to be present at that physical location. The proposed legislation would amend the Civil Code Section 4090 definition of a board meeting to exclude a physical meeting location requirement so long as that board meeting meets the proposed requirements of the new Civil Code Section 4926.
Under this proposed law, the notice for each meeting conducted by telephone or video conference will have to include:
- Clear technical instructions on how to participate by teleconference.
- The telephone number and electronic mail address of a person who can provide technical assistance with the teleconference process, both before and during the meeting.
- A reminder that a member may request individual delivery of meeting notices, with instructions on how to do so.
- That every director and member has the same ability to participate in the meeting that would exist if the meeting were held in a physical location.
- That any vote of the directors must be conducted by roll call vote.
- That any person who is entitled to participate in the meeting shall be given the option of participating by telephone.
Also, any meeting where ballots are counted and tabulated pursuant to Civil Code Section 5120 (secret balloting procedure) could not be held solely by teleconference.
While we recognize that in-person meetings play an important role in community building, the virtual meeting has opened up opportunities for many homeowners to attend meetings and participate that otherwise were unable to. Virtual meetings tend to be more productive and efficient, allow more owners to engage in how their community is governed, and tend to allow boards and management to maintain order and keep things civil while proceeding through an agenda more smoothly.
Assembly Bill 572 (Haney). Assessments; Deed restricted housing.
AB 572 would amend Civil Code Section 5605, which regulates the amount an association can increase regular assessments or levy a special assessment in a given year. Current law permits a maximum regular assessment increase of 20% over the preceding year, or a special assessment of more than 5 % of the annual operating budget, without member approval. AB 572 seeks to carve out an exception for “deed-restricted affordable housing units” limiting regular assessment increases to 5% over the preceding year for such housing units.
The standard method for community association assessments is pro rata, divided equally among all properties in the community, or based on square footage, or a combination of the two. The limit on a community association’s ability to increase regular assessments is 20% over the prior year’s assessment. AB 572 would create an exception for so-called deed-restricted affordable housing units by restricting an association’s ability to increase regular assessments for such units to just 5% over the prior year.
Perhaps intended to protect low-income homeowners, this law would result in unequal and unfair distribution among the members of a community association’s annual financial obligation. It would require some homeowners to pay a greater percentage of the operating budget to fund the annual operating budget resulting from this 5% deed-restricted assessment limitation. The unintended consequence of this law would be 1) the identification of a class of affordable housing or low-income owners which could lead to resentment among other owners; or 2) boards limiting assessment increases to 5% per year for all owners to avoid the impact of disproportionate assessments resulting in artificially low budgets, and/or deferred maintenance or ignored repair obligations. Further, artificially low assessments could eventually require multiple special assessments to fund annual budget shortfalls.
OTHER BILLS TO KEEP ON YOUR RADAR
SB 71 (Umberg). Small claims/superior court limits increased for individuals.
SB 71 seeks to increase from $10,000 to $15,000 the amount an individual can sue for in small claims court. It also seeks to increase to $50,000 the maximum amount in dispute for what is referred to as a limited superior court civil action. Limited Civil Courts currently hear cases up to $25,000. SB 71 will not increase the amount a corporate entity can sue in small claims court, which currently is $5,000.
While the goal of any community association should be to resolve conflict and avoid litigation, there are occasions when a judge is needed to decide a legal issue. Civil matters in California courts are broken up into three separate tiers, the lower 2 being limited civil and small claims. Currently, an individual can pursue a claim against an association up to $10,000 whereas the association is limited to $5,000. Small claims court has long been viewed as a means for parties to quickly and inexpensively bring their disputes to court and many individual homeowners have availed themselves of the small claims option. For an association, however, the relatively low $5,000 jurisdictional limit is often a deterrent to bringing a small claims action This bill would widen this “gap” between what an association and an owner can sue for, perhaps leading to more small claims actions by owners against their associations. Increasing the claim amount for individuals is also likely to increase the number of small claims filings in general, which in the end may slow the wheels of justice.
AB 1572 (Friedman). Potable water; Nonfunctional turf.
This bill would prohibit the use of potable water (water fit for human consumption) on what is defined as nonfunctional turf on all homeowners associations and common interest developments beginning January 1, 2029.
Despite record rainfall this past season, AB 1572 reminds us of the concerns about California drought conditions and the availability of water to meet the needs of a growing population. AB 1572 would prohibit using water suitable for human consumption to irrigate our grass-covered parkways, open spaces, and lawns, areas referred to as “nonfunctional turf.” “Nonfunctional turf” means any turf that is not located in areas designated by a property owner or a government agency for recreational use or public assembly. The law would carve out the use of potable water to the extent necessary to ensure the health of trees and other perennial non-turf plantings, or to the extent necessary to address an immediate health and safety need.
The bill also includes certification requirements to ensure that a community association is in compliance or faces civil penalties.
If AB 1572 becomes law, communities with large turf-covered open spaces or common areas will need to consider identifying the use of such areas as recreational or otherwise, in order to justify continued irrigation with potable water. Alternatively, those communities with the financial resources or ability to specially assess could consider the use of reclaimed water in order to maintain these turf areas.
SB 402 (Wahab). Discrimination; Caste.
This bill seeks to amend Civil Code Section 51 (the Unruh Civil Rights Act) and the Fair Employment and Housing Act (“FEHA”) to add caste as a specifically designated protected class, and thereby prohibit discrimination based on caste.
California prohibits discrimination on the basis of race, ethnicity, color, national origin, ancestry, and a number of other characteristics that have no bearing on a person’s character or individual merit. On occasion the State determines there is a need to expand or clarify its anti-discrimination laws, most recently doing so to address gender identity and expression. This bill seeks to add “caste” as an expressly prohibited basis for discrimination under FEHA and the Unruh Civil Rights Act, in response to increasing reports that caste-based discrimination in housing, businesses, and schools.
Stay In Touch
As the proposed laws above make their way through both houses of the State legislature and ultimately to the Governor’s desk, we will provide you with the status of these bills and any amendments. In the end, we will provide the outcome of whether these bills are stopped in the legislature, passed, or signed into law.