Legislators are Discussing Many Proposed New HOA Laws – Here are Sacramento’s Good Ideas

By Kelly G. Richardson, Esq. CCAL

In typical years the Legislature considers a handful of bills concerning HOAs, but 2021 is an unusually heavy year. There are at least 20 bills pending that reference or directly affect common interest developments. Many are technical, but a handful of bills propose to make significant changes (some good, and some bad) to California associations. This column addresses five bills in which their current form would help HOAs, and next week’s will cover some unhelpful proposals.

Senate Bill (“SB”) 392 is sponsored by the California Association of Realtors and authored by Senators Archuleta and Hueso. It would help HOAs by amending Civil Code Section 4040(a) so that starting in 2023 HOAs could use email as the default method of sending documents or notices to members. Members could still opt for postal mail, but most presumably would accept electronic mail, thereby saving association time, resources, and cost. The bill also would require HOAs of over 49 members to have websites providing general information to members unless two third of the members voted otherwise.

Assembly Bill (“AB”) 502 by Assembly Member Davies, would modify Civil Code Section 5100 to allow HOAs of any size to forego sending out ballots if at the end of the nominations period the number of eligible candidates matched the number of open seats. In that situation, the bill would allow the HOA to declare the nominees elected to the open seats, saving the HOA the money and time of an election, which is a foregone conclusion. Presently, for reasons this writer does not understand, the current Civil Code Section 5100(a) allows only HOAs of 6,000+ members to use this very sensible approach to uncontested elections. The current draft bill has some overlap between Civil Code Sections 5100 and 5105, but hopefully that will be cleaned up in the committee process.

AB 1101 is authored by Assembly Member Irwin and is sponsored by the Community Associations Institute. The bill would simplify and clear up some important terminology problems regarding the HOA banking and insurance requirements found in Civil Code Sections 5502, 5806, and 5380. The bill would also simplify the board’s oversight of expenditures from the current “$10,000 or 5% of the HOA’s deposits total” to simply $10,000 or greater.

SB 432’s author is Senator Wieckowski, also the author of 2019’s SB 323, the election reforms in law that took effect in 2020. SB 323 narrowed HOA board candidate eligibility standards to five possible requirements and omitted term limits, a common eligibility factor. This bill would correct that omission by creating a new Civil Code Section 5100(g)(3)(B)(v), allowing HOAs to disqualify candidates who have served the maximum consecutive or total allowed terms. So, HOAs may next year again be allowed to have board term limits.

SB 391, authored by Senator Min, would add a new Civil Code 5450(a) allowing HOAs during times of declared emergency to hold meetings entirely by telephone or video conferences. As an urgency statute, if it passes, it would become law immediately upon the approval of the Governor.

Our state legislators have come up with five good legislative ideas for HOAs this year – review these bills, compliment their authors at www.leginfo.legislature.ca.gov, and consider asking your own representatives to support these helpful proposals.