Already an Active Legislative Year For HOAs

By Kelly G. Richardson, Esq. CCAL

After a few quiet years for HOAs in Sacramento, California’s legislature is quite active this year with at least eight bills proposing to affect HOAs in 2024. Four are helpful and four are not. Today’s column will address the first four that are helpful, and the other four will follow next week.

A perennial problem for HOAs is a lack of membership participation and frustrating board elections. Many associations have elections canceled year after year due to the failure to have the minimum number of members participating (“quorum”). A recurring and incorrect urban legend is that an obscure Corporations Code statute allowed HOAs to reduce their quorum to a lower number if the first attempt failed. Some HOAs try to amend their bylaws to establish a lower quorum, but even that amendment vote requires a minimum quorum to pass.

Assembly Bill 1458, authored by Assemblyperson Ta of Westminster, would make a simple but important change, allowing HOAs to use a quorum of 20% for the next attempted election if the first board election meeting failed for insufficient participation. This reduction in quorum only would apply to board elections and no other membership vote decisions. 

Assembly Bill 648 would, if passed, allow HOAs to have purely virtual or telephonic meetings without having a physical location announced for any who did not wish to participate virtually or telephonically. The bill, authored by Assemblyperson Valencia of Anaheim, would require that any board votes would need to be by roll call vote and that clear instruction for participation be provided. Only board meetings could be purely virtual or telephonic. This expands the current law, which currently allows purely virtual board or membership meetings only when a declared emergency makes a physical meeting unsafe or impossible.

California law allows a property owner to execute a revocable transfer on a death deed to allow someone to transfer a residence upon death without a trust or probate proceeding. Stock cooperatives were excluded from this law because their members have shares of stock, not deeds. Assembly Bill 288 is authored by Assemblyperson Maienschein of North San Diego County, and adopts California Law Revision Commission recommendations. The bill would allow owners of stock cooperative homes to also execute a revocable transfer on death “deeds” to transfer that share of stock (and therefore the home) to someone without a trust or probate proceeding.

Civil Code Section 5551, enacted in 2020, requires all HOAs to have visual inspections of exterior elevated elements within the HOA’s maintenance or repair responsibility. The inspection must be by a licensed structural engineer or architect, and the first inspection must occur by the end of 2024. Assembly Bill 1101, authored by Assemblyperson Flora of the San Joaquin Valley, would add a third allowable inspector as an option, a Branch 3 registered pest control company. “Branch 3” licenses are regarding destruction of wood by pests or organisms and require 100 training hours training (80 which is field work) and a test to obtain, per California Regulations Title 16 Section 1937. This would make Civil Code 5551 inspections easier and less expensive for HOAs to obtain.

June 2, 2023 is the deadline for bills to pass their initial house of origin, so there is time to contact your representative and voice your opinions. Visit www.leginfo.legislature.ca.gov to read the bills.