New Laws Approved for 2022 (Part I): Changes in HOA Elections (Again)

 By Kelly G. Richardson, Esq. CCAL

The 2021 Legislative season in California has ended, and five good HOA bills (a record in recent decades) are becoming law. Assembly Bill (“AB”) 1101, AB 502, Senate Bill (“SB”) 391, SB 392, and SB 432 were signed by the Governor after passing the Legislature. This article addresses AB 502 and SB 432, two bills revising HOA elections, two years after 2019’s SB 323.

AB 502 will have a significant impact on all HOAs. It adds a new Civil Code Section 5103, allowing HOAs to declare board candidates “elected by acclamation” without balloting, if the HOA has followed certain requirements and the number of nominees does not exceed the number of open seats. In the call for nominations, associations must follow the following:

1. Disclose the possibility of an election by acclamation
2. Issue a reminder announcement on the nominations between 7 and 30 days before the close of nominations.
3. Send an acknowledgement to each person submitting a nomination within 7 days of the nomination and send the nominees a statement informing them of their eligibility or ineligibility, within 7 days of the nomination.
4. HOAs can only have elections by acclamation 2 of every 3 years.
5. Term limits are added to the list of allowable board eligibility requirements (unintentionally omitted in 2019’s SB 323 HOA election revisions).

SB 432 makes several further modifications to HOA election procedures. Most importantly, it revises the Corporations Code and corrects a conflict created by 2019’s SB 323 regarding recall elections. Normally, recall elections are called by petition of the members and the HOA must under Corporations Code Section 7511(c) hold the voting meeting no later than 90 days after the petition. However, with the election process revisions that took effect in 2020, a new Civil Code Section 5115 added two new election steps (nomination and announcement of candidates) to the normal 30-day period before ballots could be counted. This meant that there now are three separate phases of HOA board elections, each with its own minimum 30-day requirement. Those three phases could not be completed in exactly 90 days. This meant that if the HOA included in the recall the conditional election of replacement directors (which always should accompany a recall vote, regardless of if petitioned) the HOA could not timely conduct the election of replacement directors within the 90-day Corporations Code requirement. So, HOAs could not comply with the timing of both Corporations Code 7511(c) and Civil Code 5115.

Starting in 2022, SB 432 resolves the statutory conflict by amending Corporations Code Section 7511(c) to extend the time for HOAs to hold a petitioned member meeting from 90 to 150 days of the petition. This will provide for sufficient time to call for nominations, announce candidates, and get out the ballots.

Corporations Code Section 7511(b)(1) is also amended to allow nonprofit mutual benefit corporations (which include HOAs) to meet electronically in an emergency.

HOAs should keep in mind that the Corporations Code applies to unincorporated HOAs also, pursuant to Civil Code Section 4805.

Another minor change requires candidate names and addresses to be included in the announced list of candidates.

Stay tuned for next week’s article, where I will be sharing more on three other new laws and their impact.

Please submit your reader questions to [email protected].