Board Extends Their Own Terms, Why are Recalls So Slow, and Does the CTA Apply?

By Kelly G. Richardson, Esq., CCAL, HOA Homefront Column

Mr. Richardson: A director recall petition was just turned in, and the vote for recall is scheduled for over three months from now. Seems like a long time to have to put up with a miserable, bitter human being on the board causing trouble. Isn’t there a quicker way to do it? C.B., Long Beach.

Dear C.B.: Recall elections are slow, because you still must call for conditional candidates and fulfill all the election processes necessary to fill the vacancies if the recall is approved. Never ask for a recall vote without also calling for an election to fill the vacancies if the recall is successful. The election process takes a long time because of the various requirements of Civil Code Sections 5105, 5110, and 5115. This is why in 2022 Corporations Code Section 7511(c) was changed, allowing up to 150 days for petitioned elections (recalls are almost always triggered by member petitions), to allow time for all the steps necessary to fill the vacancies if the recall is successful. Best regards, Kelly

Dear Kelly: Our HOA directors serve two-year terms per the bylaws. The board recently voted to delay the date of the HOA annual members' meeting by 6 months, and to extend their terms an additional 6 months, declining to hold an election after expiration of their terms. There is no provision in our bylaws conferring this power unto our directors. Is this legal? L.M., Rancho Mirage

Dear L.M.: Boards cannot normally amend bylaws without a membership vote, but sometimes HOA boards will slightly postpone an annual meeting because of scheduling concerns. However, six months seems to be more than just a normal scheduling postponement. HOAs often get off track on their annual meeting dates. Is it possible your HOA in past years had scheduled elections on the wrong month? Most original bylaws do not state the specific month for annual meetings, but instead are tired to an event (such as the first meeting), which can create confusion. When I update bylaws, I normally state the specific calendar month for annual meetings. L.M., there might still be a reasonable explanation – before launching any action in your HOA, ask why was the postponement – there may be an acceptable explanation. Sincerely Kelly

Dear Mr. Richardson: Our small HOA filed with Los Angeles County as an unincorporated HOA in 1989. The HOA filed the SI-CID form in 2021 and since then the state shows the HOA as a Unincorporated Common Interest Development. Are we required to file under the Corporate Transparency Act? R.A., Lawndale.

Dear R.A.: As of 1-6-25 there is a nationwide injunction in place against enforcement of the Corporate Transparency Act (CTA). Therefore, the original January 1, 2025 deadline is currently on hold. The Treasury Department has asked the U.S. Supreme Court to step in and overrule the Fifth Circuit Court of Appeals. Per the FinCEN website, all HOA corporations and unincorporated HOAs that have registered with their state must comply. Civil Code Section 5405 requires unincorporated HOAs to file the “SI-CID” form (although there is no penalty for noncompliance). So, unincorporated HOAs filing such statements will fall under the CTA and per FinCEN must file the “Beneficial Owner Information” report. Thanks, Kelly