Governor Newsom Signs Into Law Three Pieces of Legislation Impacting Community Associations
Sep 23, 2024
Matt Ober, Esq., CCAL, CAI-CLAC Delegate Emeritus; Elections Task Force Chair
ELECTION RULE CHANGES
Electronic Voting Is a Reality
The Community Associations Institute's California Legislative Action Committee (“CAI-CLAC”) has closed out a banner legislative session. Coming off the passage of Assembly Bill 2114 ( the urgency law that added Civil Engineers to the eligible inspectors who can assist community associations with SB 326 balcony inspection compliance), CAI-CLAC has ended the year with the Governor’s signing into law AB 2159, making Electronic Voting a reality for California Community Associations.
AB 2159 enables community associations to conduct electronically director elections, governing document votes, and votes to approve exclusive use of common area transfers. Special assessment votes must still be conducted by written ballot.
This law amends several existing elections Civil Code sections 5105, 5110, 5115, 5120, 5125, 5200, and 5260, which were adopted with only written ballot elections in mind.
AB 2159 will not require membership approval for electronic voting. Instead, AB 2159 adds subsection (i) to Civil Code Section 5105 permitting an association to adopt election rules to allow for an inspector of elections to conduct elections electronically. The new law does allow members to opt out of electronic voting and vote by traditional written ballot. To ensure transparency, the bill imposes additional notice requirements with instructions for voting electronically, the process for opting out of electronic voting, and key deadlines leading up to the vote.
The law imposes additional administrative details that will take time to implement such as amending elections rules to include electronic voting, providing notices specific to electronic voting, and handling a two-track voting process for communities with members who prefer to vote by written ballot. But in the end, allowing associations to vote electronically should improve voter turn-out, increase the likelihood of achieving quorum, and perhaps save a few trees along the way.
Reduced Quorum Changes
Assembly Bill 2460 was so called “clean up” legislation to address ambiguity left from last year's adoption of AB 1428, CAI-CLAC’s successful reduced quorum law.
AB 2460 amends Civil Code Section 5115 and Corporations Code Section 7512. To clarify, the quorum is 20% of the members, as opposed to 20% of members present in person, by proxy, or by secret ballot. This bill clarifies that the quorum is determined by those members “voting” as opposed to those members “present in person, by proxy or by secret ballot, “ to make clear that the reduced quorum is 20% of the membership. The modifying phrase “voting in person, by proxy, or by secret ballot” simply describes how this 20% of the membership would be voting.
AB 2460 also resolves the confusion over the process of “adjourning” a meeting for lack of quorum only to convene an “adjourned,” meeting with a reduced quorum of 20%. To clear up this confusion, Civil Code 5115, and Corporations Code section 7512 have been amended to replace “adjourned” meeting with “reconvened,” at which time a reduced quorum of 20% would be needed.
COMMON AREA REPAIR AND MAINTENANCE
Finally, the Governor signed into law Senate Bill 900. SB 900 amends Civil Code 4775, 5550, and 5610 to clarify an association’s common area maintenance and repair responsibility for restoring interrupted utility services that originate in the common area.
The law seeks to ensure the prompt restoration of the failed utility through measures that facilitate a board’s ability to meet and make the decision to proceed. SB 900 authorizes an association to obtain financing to make the required repairs, without a membership vote, and to levy an emergency assessment to fund the repayment. In this regard, the bill amends Civil Code Section 5610 (b) adding to the conditions for an emergency special assessment to include situations where “another hazardous condition or circumstance on the property is discovered.”
Amendments to Civil Code Section 4775 include (1) requiring the board to “commence the process” and to make the necessary repairs within 14 days of service interruption; 2) allowing the board to vote on the repairs electronically; 3) providing for a reduced quorum of the board on decisions to commence the repair process; and, 4) in the case of insufficient reserves, to fund the utility service repairs, to obtain financing and impose an emergency special assessment to fund the repayment. No definition of what constitutes “commence the process” is provided. If a board cannot meet within 14 days due to a lack of quorum, the number of directors at a board meeting following the 14th day shall constitute the quorum. In effect, a single director would be able to make the required decision.
Finally, SB 900 amends the reserve requirements of 5550 to expand the definition of “major components” to include “gas, water, and electrical service to the extent the association is required to repair or replace these components.
Overall, this law will free up an association’s ability to respond quickly to essential utility service line failures by streamlining membership approval, financing requirements, and emergency special assessment provision necessary to restore these services in a timely manner.
EFFECTIVE DATES
All three bills will go into effect January 1, 2025.
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