AB 1458: Common interest developments: association governance: member election.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2023-10-04
Current Status:
Passed
(2023-10-04: Chaptered by Secretary of State - Chapter 303, Statutes of 2023.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
What does this bill do?
The bill lets homeowner associations and nonprofit corporations that run common interest developments adjourn an election that lacks the required quorum and resume it at least 20 days later, where a quorum for the resumed meeting is 20% of voting members present in person, by proxy, or by secret written ballot (quorum = minimum number needed to hold the meeting). It also requires election notices to include the date, time, and place where quorum will be determined and to list all candidates. If the governing documents require a quorum, the notice must state the board may call a later meeting and provide at least 15 days’ general notice before that adjourned election.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
Existing law, the Davis-Stirling Common Interest Development Act, defines and regulates common interest developments, including member elections. Existing law prescribes that a quorum is required only if stated in the governing documents or by law.
In the absence of a quorum, this bill would authorize an association to adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be 20% of the voting members present in person, by proxy, or by secret written ballot received. The bill would require an association to provide general notice of the membership meeting, as specified, no less than 15 days prior to the election of directors.
Under existing law, for elections of directors and for recall elections, an association is required to provide general notice of specified information about the election at least 30 days before the ballots are distributed, including the date, time, and location of the meeting at which ballots will be counted.
This bill would additionally require the general notice to include the date, time, and location of the meeting at which quorum will be determined, if the associations governing documents require a quorum. The bill would require an association whose governing documents require a quorum for election of directors to provide general notice of a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the quorum is not reached, as specified.
Existing law authorizes and regulates the formation and operation of various corporations, including a nonprofit mutual benefit corporation. Existing law sets forth the parameters of a quorum at a meeting of members, as specified. For a corporation that is a common interest development, existing law imposes notice requirements for special meetings.
In the absence of a quorum, this bill would authorize a corporation that is a common interest development to adjourn a membership meeting to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be 20% of the voting members present in person, by proxy, or by secret written ballot received.
Existing law, the Davis-Stirling Common Interest Development Act, defines and regulates common interest developments, including member elections. Existing law prescribes that a quorum is required only if stated in the governing documents or by law.
In the absence of a quorum, this bill would authorize an association to adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be 20% of the voting members present in person, by proxy, or by secret written ballot received. The bill would require an association to provide general notice of the membership meeting, as specified, no less than 15 days prior to the election of directors.
Under existing law, for elections of directors and for recall elections, an association is required to provide general notice of specified information about the election at least 30 days before the ballots are distributed, including the date, time, and location of the meeting at which ballots will be counted.
This bill would additionally require the general notice to include the date, time, and location of the meeting at which quorum will be determined, if the associations governing documents require a quorum. The bill would require an association whose governing documents require a quorum for election of directors to provide general notice of a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the quorum is not reached, as specified.
Existing law authorizes and regulates the formation and operation of various corporations, including a nonprofit mutual benefit corporation. Existing law sets forth the parameters of a quorum at a meeting of members, as specified. For a corporation that is a common interest development, existing law imposes notice requirements for special meetings.
In the absence of a quorum, this bill would authorize a corporation that is a common interest development to adjourn a membership meeting to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be 20% of the voting members present in person, by proxy, or by secret written ballot received.
Existing law, the Davis-Stirling Common Interest Development Act, defines and regulates common interest developments, including member elections. Existing law prescribes that a quorum is required only if stated in the governing documents or by law.
In the absence of a quorum, this bill would authorize an association to adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be 20% of the voting members present in person, by proxy, or by secret written ballot received. The bill would require an association to provide general notice of the membership meeting, as specified, no less than 15 days prior to the election of directors.
Under existing law, for elections of directors and for recall elections, an association is required to provide general notice of specified information about the election at least 30 days before the ballots are distributed, including the date, time, and location of the meeting at which ballots will be counted.
This bill would additionally require the general notice to include the date, time, and location of the meeting at which quorum will be determined, if the associations governing documents require a quorum. The bill would require an association whose governing documents require a quorum for election of directors to provide general notice of a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the quorum is not reached, as specified.
Existing law authorizes and regulates the formation and operation of various corporations, including a nonprofit mutual benefit corporation. Existing law sets forth the parameters of a quorum at a meeting of members, as specified. For a corporation that is a common interest development, existing law imposes notice requirements for special meetings.
In the absence of a quorum, this bill would authorize a corporation that is a common interest development to adjourn a membership meeting to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be 20% of the voting members present in person, by proxy, or by secret written ballot received.
Existing law, the Davis-Stirling Common Interest Development Act, defines and regulates common interest developments, including member elections. Existing law prescribes that a quorum is required only if stated in the governing documents or by law.
In the absence of a quorum, this bill would authorize an association to adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be 20% of the voting members present in person, by proxy, or by secret written ballot received. The bill would require an association to provide general notice of the membership meeting, as specified, no less than 15 days prior to the election of directors.
Under existing law, for elections of directors and for recall elections, an association is required to provide general notice of specified information about the election at least 30 days before the ballots are distributed. distributed, including the date, time, and location of the meeting at which ballots will be counted.
This bill would additionally require the general notice to include the date, time, and location of the meeting at which quorum will be determined, if the associations governing documents require a quorum. The bill would require an association whose governing documents require a quorum for election of directors to provide general notice of a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the quorum is not reached, as specified.
Existing law authorizes and regulates the formation and operation of various corporations, including a nonprofit mutual benefit corporation. Existing law sets forth the parameters of a quorum at a meeting of members, as specified. For a corporation that is a common interest development, existing law imposes notice requirements for special meetings.
In the absence of a quorum, this bill would authorize a corporation that is a common interest development to adjourn a membership meeting to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be 20% of the voting members present in person, by proxy, or by secret written ballot received.
Existing law, the Davis-Stirling Common Interest Development Act, defines and regulates common interest developments, including member elections. Existing law prescribes that a quorum is required only if stated in the governing documents or by law.
In the absence of a quorum, this bill would authorize an association to adjourn the proceeding to a date no less than 5 and no more than 30 at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be 20% of the voting members present in person, by proxy, or by secret written ballot received. The bill would require an association to provide general notice of the membership meeting, as specified, no less than 15 days prior to the election of directors.
Under existing law, for elections of directors and for recall elections, an association is required to provide general notice of specified information about the election at least 30 days before the ballots are distributed.
This bill would require an association whose governing documents require a quorum for election of directors to provide general notice of a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the quorum is not reached, as specified.
Existing law authorizes and regulates the formation and operation of various corporations, including a nonprofit mutual benefit corporation. Existing law sets forth the parameters of a quorum at a meeting of members, as specified. For a corporation that is a common interest development, existing law imposes notice requirements for special meetings.
In the absence of a quorum, this bill would authorize a corporation that is a common interest development to adjourn a membership meeting to a date no less than 5 and no more than 30 at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be 20% of the voting members present in person, by proxy, or by secret written ballot received.
Existing law, the Davis-Stirling Common Interest Development Act, defines and regulates common interest developments, including member elections. Existing law prescribes that a quorum is required only if stated in the governing documents or by law.
In the absence of a quorum, this bill would authorize an association to adjourn the proceeding to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be 10% 20% of the voting members present in person, by proxy, or by secret written ballot received.
Existing law authorizes and regulates the formation and operation of various corporations, including a nonprofit mutual benefit corporation. Existing law sets forth the parameters of a quorum at a meeting of members, as specified. For a corporation that is a common interest development, existing law imposes notice requirements for special meetings.
In the absence of a quorum, this bill would authorize a corporation that is a common interest development to adjourn a membership meeting to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be 10% 20% of the voting members present in person, by proxy, or by secret written ballot received.
Existing law, the Davis-Stirling Common Interest Development Act, defines and regulates common interest developments, including member elections. Existing law prescribes that a quorum is required only if stated in the governing documents or by law.
In the absence of a quorum, this bill would authorize an association to adjourn the proceeding to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be the number of persons 10% of the voting members present in person, by proxy, or by secret written ballot received.
Existing law authorizes and regulates the formation and operation of various corporations, including a nonprofit mutual benefit corporation. Existing law sets forth the parameters of a quorum at a meeting of members, as specified. For a corporation that is a common interest development, existing law imposes notice requirements for special meetings.
In the absence of a quorum, this bill would authorize a corporation that is a common interest development to adjourn a membership meeting to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be the number of persons 10% of the voting members present in person, by proxy, or by secret written ballot received.
Existing law, the Davis-Stirling Common Interest Development Act, defines and regulates common interest developments, including member elections. Existing law prescribes that a quorum is required only if stated in the governing documents or by law.
In the absence of a quorum, this bill would authorize an association to adjourn the proceeding to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be the number of persons present in person, by proxy, or by secret written ballot received.
Existing law authorizes and regulates the formation and operation of various corporations, including a nonprofit mutual benefit corporation. Existing law sets forth the parameters of a quorum at a meeting of members, as specified. For a corporation that is a common interest development, existing law imposes notice requirements for special meetings.
In the absence of a quorum, this bill would authorize a corporation that is a common interest development to adjourn a membership meeting to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be the number of persons present in person, by proxy, or by secret written ballot received.
(a)An association shall provide general notice of the procedure and deadline for submitting a nomination at least 30 days before any deadline for submitting a nomination. Individual notice shall be delivered pursuant to Section 4040 if individual notice is requested by a member. This subdivision shall only apply to elections of directors and to recall elections.
(b)For elections of directors and for recall elections, an association shall provide general notice of all of the following at least 30 days before the ballots are distributed:
(1)The date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections.
(2)The date, time, and location of the meeting at which a quorum will be determined, if the associations governing documents require a quorum, and at which ballots will be counted.
(3)The list of all candidates names that will appear on the ballot.
(4)Individual notice of the above paragraphs shall be delivered pursuant to Section 4040 if individual notice is requested by a member.
(5)If the associations governing documents require a quorum for election of directors, a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the required quorum is not reached, at which time the quorum of the membership to elect directors will be 20 percent of the associations members voting in person, by proxy, or by secret ballot.
(c)Ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member not less than 30 days prior to the deadline for voting. In order to preserve confidentiality, a voter may not be identified by name, address, or lot, parcel, or unit number on the ballot. The association shall use as a model those procedures used by California counties for ensuring confidentiality of vote by mail ballots, including all of the following:
(1)The ballot itself is not signed by the voter, but is inserted into an envelope that is sealed. This envelope is inserted into a second envelope that is sealed. In the upper left-hand corner of the second envelope, the voter shall sign the voters name, indicate the voters name, and indicate the address or separate interest identifier that entitles the voter to vote.
(2)The second envelope is addressed to the inspector or inspectors of elections, who will be tallying the votes. The envelope may be mailed or delivered by hand to a location specified by the inspector or inspectors of elections. The member may request a receipt for delivery.
(d)(1)A quorum shall be required only if so stated in the governing documents or other provisions of law. If a quorum is required by the governing documents, each ballot received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum.
(2)For an election of directors of a corporation that is a common interest development, and in the absence of meeting quorum as required by the associations governing documents or Section 7512 of the Corporations Code, unless a lower quorum is authorized by the associations governing documents, the association may adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 20 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(3)No less than 15 days prior to an election authorized pursuant to paragraph (2), the association shall provide general notice of the membership meeting, which shall include:
(A)The date, time, and location of the meeting.
(B)The list of all candidates.
(C)A statement that 20 percent of the association present or voting by proxy or secret ballot will satisfy the quorum requirements for the election of directors and that the ballots will be counted if a quorum is reached, if the associations governing documents require a quorum.
(e)An association shall allow for cumulative voting using the secret ballot procedures provided in this section, if cumulative voting is provided for in the governing documents.
(f)Except for the meeting to count the votes required in subdivision (a) of Section 5120, an election may be conducted entirely by mail unless otherwise specified in the governing documents.
(g)In an election to approve an amendment of the governing documents, the text of the proposed amendment shall be delivered to the members with the ballot.
SEC. 2.Section 7512 of the Corporations Code is amended to read:7512.(a)One-third of the voting power, represented in person or by proxy, shall constitute a quorum at a meeting of members, but, subject to subdivisions (b) and (c), a bylaw may set a different quorum. Any bylaw amendment to increase the quorum may be adopted only by approval of the members (Section 5034). If a quorum is present, the affirmative vote of the majority of the voting power represented at the meeting, entitled to vote, and voting on any matter shall be the act of the members unless the vote of a greater number or voting by classes is required by this part or the articles or bylaws.
(b)Where a bylaw authorizes a corporation to conduct a meeting with a quorum of less than one-third of the voting power, then the only matters that may be voted upon at any regular meeting actually attended, in person or by proxy, by less than one-third of the voting power are matters notice of the general nature of which was given, pursuant to the first sentence of subdivision (a) of Section 7511.
(c)Subject to subdivision (b), the members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the members required to constitute a quorum or, if required by this division, or by the articles or the bylaws, the vote of the greater number or voting by classes.
(d)In the absence of a quorum, any meeting of members may be adjourned from time to time by the vote of a majority of the votes represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (c).
(e)For an election of directors of a corporation that is a common interest development, and in the absence of meeting quorum as required by the associations governing documents or this section, unless a lower quorum is authorized by an associations governing documents, the corporation may adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 20 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(a)An association shall provide general notice of the procedure and deadline for submitting a nomination at least 30 days before any deadline for submitting a nomination. Individual notice shall be delivered pursuant to Section 4040 if individual notice is requested by a member. This subdivision shall only apply to elections of directors and to recall elections.
(b)For elections of directors and for recall elections, an association shall provide general notice of all of the following at least 30 days before the ballots are distributed:
(1)The date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections.
(2)The date, time, and location of the meeting at which a quorum will be determined, if the associations governing documents require a quorum, and at which ballots will be counted.
(3)The list of all candidates names that will appear on the ballot.
(4)Individual notice of the above paragraphs shall be delivered pursuant to Section 4040 if individual notice is requested by a member.
(5)If the associations governing documents require a quorum for election of directors, a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the required quorum is not reached, at which time the quorum of the membership to elect directors will be 20 percent of the associations members voting in person, by proxy, or by secret ballot.
(c)Ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member not less than 30 days prior to the deadline for voting. In order to preserve confidentiality, a voter may not be identified by name, address, or lot, parcel, or unit number on the ballot. The association shall use as a model those procedures used by California counties for ensuring confidentiality of vote by mail ballots, including all of the following:
(1)The ballot itself is not signed by the voter, but is inserted into an envelope that is sealed. This envelope is inserted into a second envelope that is sealed. In the upper left-hand corner of the second envelope, the voter shall sign the voters name, indicate the voters name, and indicate the address or separate interest identifier that entitles the voter to vote.
(2)The second envelope is addressed to the inspector or inspectors of elections, who will be tallying the votes. The envelope may be mailed or delivered by hand to a location specified by the inspector or inspectors of elections. The member may request a receipt for delivery.
(d)(1)A quorum shall be required only if so stated in the governing documents or other provisions of law. If a quorum is required by the governing documents, each ballot received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum.
(2)For an election of directors of a corporation that is a common interest development, and in the absence of meeting quorum as required by the associations governing documents or Section 7512 of the Corporations Code, unless a lower quorum is authorized by the associations governing documents, the association may adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 20 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(3)No less than 15 days prior to an election authorized pursuant to paragraph (2), the association shall provide general notice of the membership meeting, which shall include:
(A)The date, time, and location of the meeting.
(B)The list of all candidates.
(C)A statement that 20 percent of the association present or voting by proxy or secret ballot will satisfy the quorum requirements for the election of directors and that the ballots will be counted if a quorum is reached, if the associations governing documents require a quorum.
(e)An association shall allow for cumulative voting using the secret ballot procedures provided in this section, if cumulative voting is provided for in the governing documents.
(f)Except for the meeting to count the votes required in subdivision (a) of Section 5120, an election may be conducted entirely by mail unless otherwise specified in the governing documents.
(g)In an election to approve an amendment of the governing documents, the text of the proposed amendment shall be delivered to the members with the ballot.
SEC. 2.Section 7512 of the Corporations Code is amended to read:7512.(a)One-third of the voting power, represented in person or by proxy, shall constitute a quorum at a meeting of members, but, subject to subdivisions (b) and (c), a bylaw may set a different quorum. Any bylaw amendment to increase the quorum may be adopted only by approval of the members (Section 5034). If a quorum is present, the affirmative vote of the majority of the voting power represented at the meeting, entitled to vote, and voting on any matter shall be the act of the members unless the vote of a greater number or voting by classes is required by this part or the articles or bylaws.
(b)Where a bylaw authorizes a corporation to conduct a meeting with a quorum of less than one-third of the voting power, then the only matters that may be voted upon at any regular meeting actually attended, in person or by proxy, by less than one-third of the voting power are matters notice of the general nature of which was given, pursuant to the first sentence of subdivision (a) of Section 7511.
(c)Subject to subdivision (b), the members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the members required to constitute a quorum or, if required by this division, or by the articles or the bylaws, the vote of the greater number or voting by classes.
(d)In the absence of a quorum, any meeting of members may be adjourned from time to time by the vote of a majority of the votes represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (c).
(e)For an election of directors of a corporation that is a common interest development, and in the absence of meeting quorum as required by the associations governing documents or this section, unless a lower quorum is authorized by an associations governing documents, the corporation may adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 20 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(a)An association shall provide general notice of the procedure and deadline for submitting a nomination at least 30 days before any deadline for submitting a nomination. Individual notice shall be delivered pursuant to Section 4040 if individual notice is requested by a member. This subdivision shall only apply to elections of directors and to recall elections.
(b)For elections of directors and for recall elections, an association shall provide general notice of all of the following at least 30 days before the ballots are distributed:
(1)The date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections.
(2)The date, time, and location of the meeting at which a quorum will be determined, if the associations governing documents require a quorum, and at which ballots will be counted.
(3)The list of all candidates names that will appear on the ballot.
(4)Individual notice of the above paragraphs shall be delivered pursuant to Section 4040 if individual notice is requested by a member.
(5)If the associations governing documents require a quorum for election of directors, a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the required quorum is not reached, at which time the quorum of the membership to elect directors will be 20 percent of the associations members voting in person, by proxy, or by secret ballot.
(c)Ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member not less than 30 days prior to the deadline for voting. In order to preserve confidentiality, a voter may not be identified by name, address, or lot, parcel, or unit number on the ballot. The association shall use as a model those procedures used by California counties for ensuring confidentiality of vote by mail ballots, including all of the following:
(1)The ballot itself is not signed by the voter, but is inserted into an envelope that is sealed. This envelope is inserted into a second envelope that is sealed. In the upper left-hand corner of the second envelope, the voter shall sign the voters name, indicate the voters name, and indicate the address or separate interest identifier that entitles the voter to vote.
(2)The second envelope is addressed to the inspector or inspectors of elections, who will be tallying the votes. The envelope may be mailed or delivered by hand to a location specified by the inspector or inspectors of elections. The member may request a receipt for delivery.
(d)(1)A quorum shall be required only if so stated in the governing documents or other provisions of law. If a quorum is required by the governing documents, each ballot received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum.
(2)For an election of directors of a corporation that is a common interest development association as defined in Section 4100, development, and in the absence of meeting quorum as required by the associations governing documents or Section 7512 of the Corporations Code, unless a lower quorum is authorized by the associations governing documents, the association may adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 20 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(3)No less than 15 days prior to an election authorized pursuant to paragraph (2), the association shall provide general notice of the membership meeting meeting, which shall include:
(A)The date, time, and location of the meeting.
(B)The list of all candidates.
(C)A statement that 20 percent of the association present or voting by proxy or secret ballot will satisfy the quorum requirements for the election of directors and that the ballots will be counted if a quorum is reached, if the associations governing documents require a quorum.
(e)An association shall allow for cumulative voting using the secret ballot procedures provided in this section, if cumulative voting is provided for in the governing documents.
(f)Except for the meeting to count the votes required in subdivision (a) of Section 5120, an election may be conducted entirely by mail unless otherwise specified in the governing documents.
(g)In an election to approve an amendment of the governing documents, the text of the proposed amendment shall be delivered to the members with the ballot.
SEC. 2.Section 7512 of the Corporations Code is amended to read:7512.(a)One-third of the voting power, represented in person or by proxy, shall constitute a quorum at a meeting of members, but, subject to subdivisions (b) and (c), a bylaw may set a different quorum. Any bylaw amendment to increase the quorum may be adopted only by approval of the members (Section 5034). If a quorum is present, the affirmative vote of the majority of the voting power represented at the meeting, entitled to vote, and voting on any matter shall be the act of the members unless the vote of a greater number or voting by classes is required by this part or the articles or bylaws.
(b)Where a bylaw authorizes a corporation to conduct a meeting with a quorum of less than one-third of the voting power, then the only matters that may be voted upon at any regular meeting actually attended, in person or by proxy, by less than one-third of the voting power are matters notice of the general nature of which was given, pursuant to the first sentence of subdivision (a) of Section 7511.
(c)Subject to subdivision (b), the members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the members required to constitute a quorum or, if required by this division, or by the articles or the bylaws, the vote of the greater number or voting by classes.
(d)In the absence of a quorum, any meeting of members may be adjourned from time to time by the vote of a majority of the votes represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (c).
(e)For an election of directors of a corporation that is a common interest development association as defined in Section 4100 of the Civil Code, development, and in the absence of meeting quorum as required by the associations governing documents or this section, unless a lower quorum is authorized by an associations governing documents, the corporation may adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 20 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(a)An association shall provide general notice of the procedure and deadline for submitting a nomination at least 30 days before any deadline for submitting a nomination. Individual notice shall be delivered pursuant to Section 4040 if individual notice is requested by a member. This subdivision shall only apply to elections of directors and to recall elections.
(b)For elections of directors and for recall elections, an association shall provide general notice of all of the following at least 30 days before the ballots are distributed:
(1)The date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections.
(2)The date, time, and location of the meeting at which a quorum will be determined, if the associations governing documents require a quorum, and at which ballots will be counted.
(3)The list of all candidates names that will appear on the ballot.
(4)Individual notice of the above paragraphs shall be delivered pursuant to Section 4040 if individual notice is requested by a member.
(5)If the associations governing documents require a quorum for election of directors, a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the required quorum is not reached reached, at which time the quorum of the membership to elect directors will be 20 percent of the associations members voting in person, by proxy, or by secret ballot.
(c)Ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member not less than 30 days prior to the deadline for voting. In order to preserve confidentiality, a voter may not be identified by name, address, or lot, parcel, or unit number on the ballot. The association shall use as a model those procedures used by California counties for ensuring confidentiality of vote by mail ballots, including all of the following:
(1)The ballot itself is not signed by the voter, but is inserted into an envelope that is sealed. This envelope is inserted into a second envelope that is sealed. In the upper left-hand corner of the second envelope, the voter shall sign the voters name, indicate the voters name, and indicate the address or separate interest identifier that entitles the voter to vote.
(2)The second envelope is addressed to the inspector or inspectors of elections, who will be tallying the votes. The envelope may be mailed or delivered by hand to a location specified by the inspector or inspectors of elections. The member may request a receipt for delivery.
(d)(1)A quorum shall be required only if so stated in the governing documents or other provisions of law. If a quorum is required by the governing documents, each ballot received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum.
(2)For an election of directors of a corporation that is a common interest development association as defined in Section 4100, and in the absence of meeting quorum as required by the associations governing documents or Section 7512 of the Corporations Code, unless a lower quorum is authorized by the associations governing documents, the association may adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 20 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(3)No less than 15 days prior to an election authorized pursuant to paragraph (2), the association shall provide general notice of the membership meeting which shall include:
(A)The date, time, and location of the meeting.
(B)The list of all candidates.
(C)A statement that 20 percent of the association present or voting by proxy or secret ballot will satisfy the quorum requirements for the election of directors. directors and that the ballots will be counted if a quorum is reached, if the associations governing documents require a quorum.
(e)An association shall allow for cumulative voting using the secret ballot procedures provided in this section, if cumulative voting is provided for in the governing documents.
(f)Except for the meeting to count the votes required in subdivision (a) of Section 5120, an election may be conducted entirely by mail unless otherwise specified in the governing documents.
(g)In an election to approve an amendment of the governing documents, the text of the proposed amendment shall be delivered to the members with the ballot.
SEC. 2.Section 7512 of the Corporations Code is amended to read:7512.(a)One-third of the voting power, represented in person or by proxy, shall constitute a quorum at a meeting of members, but, subject to subdivisions (b) and (c), a bylaw may set a different quorum. Any bylaw amendment to increase the quorum may be adopted only by approval of the members (Section 5034). If a quorum is present, the affirmative vote of the majority of the voting power represented at the meeting, entitled to vote, and voting on any matter shall be the act of the members unless the vote of a greater number or voting by classes is required by this part or the articles or bylaws.
(b)Where a bylaw authorizes a corporation to conduct a meeting with a quorum of less than one-third of the voting power, then the only matters that may be voted upon at any regular meeting actually attended, in person or by proxy, by less than one-third of the voting power are matters notice of the general nature of which was given, pursuant to the first sentence of subdivision (a) of Section 7511.
(c)Subject to subdivision (b), the members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the members required to constitute a quorum or, if required by this division, or by the articles or the bylaws, the vote of the greater number or voting by classes.
(d)In the absence of a quorum, any meeting of members may be adjourned from time to time by the vote of a majority of the votes represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (c).
(e)For an election of directors of a corporation that is a common interest development association as defined in Section 4100 of the Civil Code, and in the absence of meeting quorum as required by the associations governing documents or this section, unless a lower quorum is authorized by an associations governing documents, the corporation may adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 20 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(a)An association shall provide general notice of the procedure and deadline for submitting a nomination at least 30 days before any deadline for submitting a nomination. Individual notice shall be delivered pursuant to Section 4040 if individual notice is requested by a member. This subdivision shall only apply to elections of directors and to recall elections.
(b)For elections of directors and for recall elections, an association shall provide general notice of all of the following at least 30 days before the ballots are distributed:
(1)The date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections.
(2)The date, time, and location of the meeting at which ballots will be counted.
(3)The list of all candidates names that will appear on the ballot.
(4)Individual notice of the above paragraphs shall be delivered pursuant to Section 4040 if individual notice is requested by a member.
(5)If the associations governing documents require a quorum for election of directors, a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the required quorum is not reached at which time the quorum of the membership to elect directors will be 20 percent of the associations members voting in person, by proxy, or by secret ballot.
(c)Ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member not less than 30 days prior to the deadline for voting. In order to preserve confidentiality, a voter may not be identified by name, address, or lot, parcel, or unit number on the ballot. The association shall use as a model those procedures used by California counties for ensuring confidentiality of vote by mail ballots, including all of the following:
(1)The ballot itself is not signed by the voter, but is inserted into an envelope that is sealed. This envelope is inserted into a second envelope that is sealed. In the upper left-hand corner of the second envelope, the voter shall sign the voters name, indicate the voters name, and indicate the address or separate interest identifier that entitles the voter to vote.
(2)The second envelope is addressed to the inspector or inspectors of elections, who will be tallying the votes. The envelope may be mailed or delivered by hand to a location specified by the inspector or inspectors of elections. The member may request a receipt for delivery.
(d)(1)A quorum shall be required only if so stated in the governing documents or other provisions of law. If a quorum is required by the governing documents, each ballot received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum.
(2)For an election of directors of a corporation that is a common interest development association as defined in Section 4100, and in the absence of meeting quorum as required by the associations governing documents or Section 7512 of the Corporations Code, unless a lower quorum is authorized by the associations governing documents, the association may adjourn the proceeding to a date no less than 5 and no more than 30 at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 20 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(3)No less than 15 days prior to an election authorized pursuant to paragraph (2), the association shall provide general notice of the membership meeting which shall include:
(A)The date, time, and location of the meeting.
(B)The list of all candidates.
(C)A statement that 20 percent of the association present or voting by proxy or secret ballot will satisfy the quorum requirements for the election of directors.
(e)An association shall allow for cumulative voting using the secret ballot procedures provided in this section, if cumulative voting is provided for in the governing documents.
(f)Except for the meeting to count the votes required in subdivision (a) of Section 5120, an election may be conducted entirely by mail unless otherwise specified in the governing documents.
(g)In an election to approve an amendment of the governing documents, the text of the proposed amendment shall be delivered to the members with the ballot.
SEC. 2.Section 7512 of the Corporations Code is amended to read:7512.(a)One-third of the voting power, represented in person or by proxy, shall constitute a quorum at a meeting of members, but, subject to subdivisions (b) and (c), a bylaw may set a different quorum. Any bylaw amendment to increase the quorum may be adopted only by approval of the members (Section 5034). If a quorum is present, the affirmative vote of the majority of the voting power represented at the meeting, entitled to vote, and voting on any matter shall be the act of the members unless the vote of a greater number or voting by classes is required by this part or the articles or bylaws.
(b)Where a bylaw authorizes a corporation to conduct a meeting with a quorum of less than one-third of the voting power, then the only matters that may be voted upon at any regular meeting actually attended, in person or by proxy, by less than one-third of the voting power are matters notice of the general nature of which was given, pursuant to the first sentence of subdivision (a) of Section 7511.
(c)Subject to subdivision (b), the members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the members required to constitute a quorum or, if required by this division, or by the articles or the bylaws, the vote of the greater number or voting by classes.
(d)In the absence of a quorum, any meeting of members may be adjourned from time to time by the vote of a majority of the votes represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (c).
(e)For an election of directors of a corporation that is a common interest development association as defined in Section 4100 of the Civil Code, and in the absence of meeting quorum as required by the associations governing documents or this section, unless a lower quorum is authorized by an associations governing documents, the corporation may adjourn the proceeding to a date no less than 5 and no more than 30 at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 20 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(a)An association shall provide general notice of the procedure and deadline for submitting a nomination at least 30 days before any deadline for submitting a nomination. Individual notice shall be delivered pursuant to Section 4040 if individual notice is requested by a member. This subdivision shall only apply to elections of directors and to recall elections.
(b)For elections of directors and for recall elections, an association shall provide general notice of all of the following at least 30 days before the ballots are distributed:
(1)The date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections.
(2)The date, time, and location of the meeting at which ballots will be counted.
(3)The list of all candidates names that will appear on the ballot.
(4)Individual notice of the above paragraphs shall be delivered pursuant to Section 4040 if individual notice is requested by a member.
(c)Ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member not less than 30 days prior to the deadline for voting. In order to preserve confidentiality, a voter may not be identified by name, address, or lot, parcel, or unit number on the ballot. The association shall use as a model those procedures used by California counties for ensuring confidentiality of vote by mail ballots, including all of the following:
(1)The ballot itself is not signed by the voter, but is inserted into an envelope that is sealed. This envelope is inserted into a second envelope that is sealed. In the upper left-hand corner of the second envelope, the voter shall sign the voters name, indicate the voters name, and indicate the address or separate interest identifier that entitles the voter to vote.
(2)The second envelope is addressed to the inspector or inspectors of elections, who will be tallying the votes. The envelope may be mailed or delivered by hand to a location specified by the inspector or inspectors of elections. The member may request a receipt for delivery.
(d)(1)A quorum shall be required only if so stated in the governing documents or other provisions of law. If a quorum is required by the governing documents, each ballot received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum.
(2)For an election of directors of a corporation that is a common interest development association as defined in Section 4100, and in the absence of meeting quorum as required by the associations governing documents or Section 7512 of the Corporations Code, unless a lower quorum is authorized by the associations governing documents, the association may adjourn the proceeding to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 10 20 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(e)An association shall allow for cumulative voting using the secret ballot procedures provided in this section, if cumulative voting is provided for in the governing documents.
(f)Except for the meeting to count the votes required in subdivision (a) of Section 5120, an election may be conducted entirely by mail unless otherwise specified in the governing documents.
(g)In an election to approve an amendment of the governing documents, the text of the proposed amendment shall be delivered to the members with the ballot.
SEC. 2.Section 7512 of the Corporations Code is amended to read:7512.(a)One-third of the voting power, represented in person or by proxy, shall constitute a quorum at a meeting of members, but, subject to subdivisions (b) and (c), a bylaw may set a different quorum. Any bylaw amendment to increase the quorum may be adopted only by approval of the members (Section 5034). If a quorum is present, the affirmative vote of the majority of the voting power represented at the meeting, entitled to vote, and voting on any matter shall be the act of the members unless the vote of a greater number or voting by classes is required by this part or the articles or bylaws.
(b)Where a bylaw authorizes a corporation to conduct a meeting with a quorum of less than one-third of the voting power, then the only matters that may be voted upon at any regular meeting actually attended, in person or by proxy, by less than one-third of the voting power are matters notice of the general nature of which was given, pursuant to the first sentence of subdivision (a) of Section 7511.
(c)Subject to subdivision (b), the members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the members required to constitute a quorum or, if required by this division, or by the articles or the bylaws, the vote of the greater number or voting by classes.
(d)In the absence of a quorum, any meeting of members may be adjourned from time to time by the vote of a majority of the votes represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (c).
(e)For an election of directors of a corporation that is a common interest development association as defined in Section 4100 of the Civil Code, and in the absence of meeting quorum as required by the associations governing documents or this section, unless a lower quorum is authorized by an associations governing documents, the corporation may adjourn the proceeding to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 10 20 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(a)An association shall provide general notice of the procedure and deadline for submitting a nomination at least 30 days before any deadline for submitting a nomination. Individual notice shall be delivered pursuant to Section 4040 if individual notice is requested by a member. This subdivision shall only apply to elections of directors and to recall elections.
(b)For elections of directors and for recall elections, an association shall provide general notice of all of the following at least 30 days before the ballots are distributed:
(1)The date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections.
(2)The date, time, and location of the meeting at which ballots will be counted.
(3)The list of all candidates names that will appear on the ballot.
(4)Individual notice of the above paragraphs shall be delivered pursuant to Section 4040 if individual notice is requested by a member.
(c)Ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member not less than 30 days prior to the deadline for voting. In order to preserve confidentiality, a voter may not be identified by name, address, or lot, parcel, or unit number on the ballot. The association shall use as a model those procedures used by California counties for ensuring confidentiality of vote by mail ballots, including all of the following:
(1)The ballot itself is not signed by the voter, but is inserted into an envelope that is sealed. This envelope is inserted into a second envelope that is sealed. In the upper left-hand corner of the second envelope, the voter shall sign the voters name, indicate the voters name, and indicate the address or separate interest identifier that entitles the voter to vote.
(2)The second envelope is addressed to the inspector or inspectors of elections, who will be tallying the votes. The envelope may be mailed or delivered by hand to a location specified by the inspector or inspectors of elections. The member may request a receipt for delivery.
(d)(1)A quorum shall be required only if so stated in the governing documents or other provisions of law. If a quorum is required by the governing documents, each ballot received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum.
(2)For an election described in this article, of directors of a corporation that is a common interest development association as defined in Section 4100, and in the absence of a quorum, meeting quorum as required by the associations governing documents or Section 7512 of the Corporations Code, unless a lower quorum is authorized by the associations governing documents, the association may adjourn the proceeding to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be the number of persons 10 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(e)An association shall allow for cumulative voting using the secret ballot procedures provided in this section, if cumulative voting is provided for in the governing documents.
(f)Except for the meeting to count the votes required in subdivision (a) of Section 5120, an election may be conducted entirely by mail unless otherwise specified in the governing documents.
(g)In an election to approve an amendment of the governing documents, the text of the proposed amendment shall be delivered to the members with the ballot.
SEC. 2.Section 7512 of the Corporations Code is amended to read:7512.(a)One-third of the voting power, represented in person or by proxy, shall constitute a quorum at a meeting of members, but, subject to subdivisions (b) and (c), a bylaw may set a different quorum. Any bylaw amendment to increase the quorum may be adopted only by approval of the members (Section 5034). If a quorum is present, the affirmative vote of the majority of the voting power represented at the meeting, entitled to vote, and voting on any matter shall be the act of the members unless the vote of a greater number or voting by classes is required by this part or the articles or bylaws.
(b)Where a bylaw authorizes a corporation to conduct a meeting with a quorum of less than one-third of the voting power, then the only matters that may be voted upon at any regular meeting actually attended, in person or by proxy, by less than one-third of the voting power are matters notice of the general nature of which was given, pursuant to the first sentence of subdivision (a) of Section 7511.
(c)Subject to subdivision (b), the members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the members required to constitute a quorum or, if required by this division, or by the articles or the bylaws, the vote of the greater number or voting by classes.
(d)In the absence of a quorum, any meeting of members may be adjourned from time to time by the vote of a majority of the votes represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (c).
(e)(1)For an election described in this chapter, of directors of a corporation that is a common interest development association as defined in Section 4100 of the Civil Code, and in the absence of a quorum, meeting quorum as required by the associations governing documents or this section, unless a lower quorum is authorized by an associations governing documents, the corporation may adjourn the proceeding to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be the number of persons 10 percent of the associations voting members present in person, by proxy, or by secret written ballot received.
(2)Paragraph (1) shall only apply to a corporation that is a common interest development, as defined in Section 4100 of the Civil Code.
(a)An association shall provide general notice of the procedure and deadline for submitting a nomination at least 30 days before any deadline for submitting a nomination. Individual notice shall be delivered pursuant to Section 4040 if individual notice is requested by a member. This subdivision shall only apply to elections of directors and to recall elections.
(b)For elections of directors and for recall elections, an association shall provide general notice of all of the following at least 30 days before the ballots are distributed:
(1)The date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections.
(2)The date, time, and location of the meeting at which ballots will be counted.
(3)The list of all candidates names that will appear on the ballot.
(4)Individual notice of the above paragraphs shall be delivered pursuant to Section 4040 if individual notice is requested by a member.
(c)Ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member not less than 30 days prior to the deadline for voting. In order to preserve confidentiality, a voter may not be identified by name, address, or lot, parcel, or unit number on the ballot. The association shall use as a model those procedures used by California counties for ensuring confidentiality of vote by mail ballots, including all of the following:
(1)The ballot itself is not signed by the voter, but is inserted into an envelope that is sealed. This envelope is inserted into a second envelope that is sealed. In the upper left-hand corner of the second envelope, the voter shall sign the voters name, indicate the voters name, and indicate the address or separate interest identifier that entitles the voter to vote.
(2)The second envelope is addressed to the inspector or inspectors of elections, who will be tallying the votes. The envelope may be mailed or delivered by hand to a location specified by the inspector or inspectors of elections. The member may request a receipt for delivery.
(d)(1)A quorum shall be required only if so stated in the governing documents or other provisions of law. If a quorum is required by the governing documents, each ballot received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum.
(2)For an election described in this article, and in the absence of a quorum, the association may adjourn the proceeding to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be the number of persons present in person, by proxy, or by secret written ballot received.
(e)An association shall allow for cumulative voting using the secret ballot procedures provided in this section, if cumulative voting is provided for in the governing documents.
(f)Except for the meeting to count the votes required in subdivision (a) of Section 5120, an election may be conducted entirely by mail unless otherwise specified in the governing documents.
(g)In an election to approve an amendment of the governing documents, the text of the proposed amendment shall be delivered to the members with the ballot.
SEC. 2.Section 7512 of the Corporations Code is amended to read:7512.(a)One-third of the voting power, represented in person or by proxy, shall constitute a quorum at a meeting of members, but, subject to subdivisions (b) and (c), a bylaw may set a different quorum. Any bylaw amendment to increase the quorum may be adopted only by approval of the members (Section 5034). If a quorum is present, the affirmative vote of the majority of the voting power represented at the meeting, entitled to vote, and voting on any matter shall be the act of the members unless the vote of a greater number or voting by classes is required by this part or the articles or bylaws.
(b)Where a bylaw authorizes a corporation to conduct a meeting with a quorum of less than one-third of the voting power, then the only matters that may be voted upon at any regular meeting actually attended, in person or by proxy, by less than one-third of the voting power are matters notice of the general nature of which was given, pursuant to the first sentence of subdivision (a) of Section 7511.
(c)Subject to subdivision (b), the members present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment notwithstanding the withdrawal of enough members to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the members required to constitute a quorum or, if required by this division, or by the articles or the bylaws, the vote of the greater number or voting by classes.
(d)In the absence of a quorum, any meeting of members may be adjourned from time to time by the vote of a majority of the votes represented either in person or by proxy, but no other business may be transacted, except as provided in subdivision (c).
(e)(1)For an election described in this chapter, and in the absence of a quorum, the corporation may adjourn the proceeding to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be the number of persons present in person, by proxy, or by secret written ballot received.
(2)Paragraph (1) shall only apply to a corporation that is a common interest development, as defined in Section 4100 of the Civil Code.
|
Date
|
Status
|
|---|---|
| Oct 4, 2023 | Chaptered by Secretary of State - Chapter 303, Statutes of 2023. |
| Oct 4, 2023 | Approved by the Governor. |
| Sep 15, 2023 | Enrolled and presented to the Governor at 4 p.m. |
| Sep 11, 2023 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 78. Noes 1. Page 3167.). |
| Sep 5, 2023 | In Assembly. Concurrence in Senate amendments pending. May be considered on or after September 7 pursuant to Assembly Rule 77. |
| Sep 5, 2023 | Read third time. Passed. Ordered to the Assembly. (Ayes 38. Noes 0. Page 2357.). |
| Jul 13, 2023 | Read second time and amended. Ordered to third reading. |
| Jul 12, 2023 | From committee: Amend, and do pass as amended. (Ayes 11. Noes 0.) (July 11). |
| Jul 3, 2023 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on JUD. |
| Jun 29, 2023 | In committee: Set, first hearing. Hearing canceled at the request of author. |
| Jun 23, 2023 | In committee: Hearing postponed by committee. |
| Jun 21, 2023 | From committee: Do pass and re-refer to Com. on JUD. (Ayes 10. Noes 0.) (June 20). Re-referred to Com. on JUD. |
| Jun 14, 2023 | Referred to Coms. on HOUSING and JUD. |
| Jun 1, 2023 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 31, 2023 | Read third time. Passed. Ordered to the Senate. (Ayes 75. Noes 1. Page 1953.) |
| May 4, 2023 | Read second time. Ordered to third reading. |
| May 3, 2023 | Read second time and amended. Ordered returned to second reading. |
| May 2, 2023 | From committee: Amend, and do pass as amended. (Ayes 11. Noes 0.) (May 2). |
| Apr 17, 2023 | Re-referred to Com. on JUD. |
| Apr 13, 2023 | Read second time and amended. |
| Apr 12, 2023 | From committee: Amend, and do pass as amended and re-refer to Com. on JUD. (Ayes 8. Noes 0.) (April 12). |
| Mar 29, 2023 | Re-referred to Com. on H. & C.D. |
| Mar 28, 2023 | From committee chair, with author's amendments: Amend, and re-refer to Com. on H. & C.D. Read second time and amended. |
| Mar 9, 2023 | Referred to Coms. on H. & C.D. and JUD. |
| Feb 18, 2023 | From printer. May be heard in committee March 20. |
| Feb 17, 2023 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Sep 11, 2023 | AB 1458 Ta Concurrence in Senate Amendments | Assembly Floor |
Passed |
|
| Sep 5, 2023 | Assembly 3rd Reading AB1458 Ta By Umberg | Senate Floor |
Passed |
|
| Jul 11, 2023 | Do pass as amended | Senate Standing Committee on Judiciary |
Passed |
|
| Jun 20, 2023 | Do pass, but first be re-referred to the Committee on [Judiciary] | Senate Standing Committee on Housing |
Passed |
|
| May 31, 2023 | AB 1458 Ta Assembly Third Reading | Assembly Floor |
Passed |
|
| May 2, 2023 | Do pass as amended. | Assembly Standing Committee on Judiciary |
Passed |
|
| Apr 12, 2023 | Do pass as amended and be re-referred to the Committee on [Judiciary] | Assembly Standing Committee on Housing and Community Development |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| California Association Of Community Managers | ** Support | |
| California HR Association | * Support | Jul 11, 2023 |
| California Legislative Action Committee | * Support | Jun 20, 2023 |
| Center for California Homeowners Association Law | ** Against | |
| Center For Homeowner Association Law | ** Against | |
| Cities Of Contra Costa County | * Support | Jul 11, 2023 |
| City of Redondo Beach | * Against | Jul 11, 2023 |
| Community Association's Institute | * Support | Jun 20, 2023 |
| Community Associations Institute - California Legislative Action Committee | ** Support | |
| Heritage Lake Master Association | * Support | Apr 12, 2023 |
| Legislative Committee of the Center | * Against | May 2, 2023 |
| OMNI Community Management | * Support | Apr 12, 2023 |
| Schiffer LLC | ** Against |
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 1458
Author:(Ta)
As Amended Ver:July 13, 2023
Majority vote
SUMMARY
Authorizes a lower quorum requirement for common interest development (CID) association elections of directors under specified circumstances.
Senate Amendments make minor technical and clarifying changes.
COMMENTS
Background on Common Interest Developments: CIDs are a type of housing with separate ownership of housing units that also share common areas and amenities. There are a variety of different types of CIDs, including condominium complexes, planned unit developments, and resident-owned mobilehome parks. In recent years CIDs have represented a growing share of California's housing stock. Data from 2019 indicates that there are an estimated 54,065 CIDs in the state made up of 5 million units, or about 35 percent of the state’s total housing stock.
CIDs are regulated under the Davis-Stirling Act (Civil Code Section 4000 et seq.) as well as the governing documents of the homeowners association (HOA), including the bylaws, declaration, and operating rules. CIDs can also have Covenants, Conditions, and Restrictions (CC&Rs) which are filed with the county and recorded at the time they are established. Additionally, HOAs are governed by a board of directors elected by the membership in elections that closely resemble California's vote-by-mail process. In addition, many associations use a managing agent to assist with finances, logistics, and other services provided to homeowners.
HOA boards have a number of duties and powers. The board determines the annual assessments that members must pay in order to cover communal expenses. The board enforces the community rules and can propose as well as make changes to those rules. If members do not pay their assessments in full or on time, or if members violate the community rules, the board has the power to fine the members and, if necessary, the power to foreclose upon the offending member's property. This combination of responsibilities and authority has led multiple courts to observe that HOAs function in many ways almost "as a second municipal government, regulating many aspects of [the homeowners'] daily lives." (Villa Milano Homeowners Ass'n v. Il Davorge (2000) 84 Cal.App.4th 819, 836)
HOA Elections and Issues Related to Quorum: HOAs are required to hold elections for board directors when a seat becomes vacant and at least every four years. The Davis-Stirling Act requires HOA elections to conform to certain procedures, including double-stuffed ballots and the selection of at least one independent third party inspector of elections. Voting for board members is the fundamental way a homeowner in a CID can advocate to have their interests represented in the HOA's governance. Recent legislative actions related to HOA election rules have addressed qualifications for nominees to the board (SB 323 (Wieckowski), Chapter 858, Statutes of 2019) and challenges with finding enough members who are willing to run for the board and procedures for election by acclamation (SB 754 (Moorlach), Chapter 858, Statutes of 2019, and AB 502 (Davies), Chapter 517, Statutes of 2021).
Quorum is the minimum number of members of an association that must be "present" – either in person or via mailed ballots – in order to make the proceedings of a meeting legally valid. As a general rule, the Davis-Stirling Act has no particular quorum requirement. Quorum requirements differ depending on the type of HOA that has been formed and whether or not quorum is required in HOA governing documents. In most instances, if quorum is required by an HOA's governing documents, the quorum is a "50% + 1" threshold of members. If an HOA has chosen to incorporate as a nonprofit mutual benefit corporation, then state law establishes quorum at 33% of membership.
According to the proponents of this bill, a significant amount of HOAs report having trouble meeting quorum requirements for board elections. Regardless of quorum rules, the law provides that the board directors remain in office "until a successor has been elected and qualified," meaning the board stays in place until the election is successful, or unless a director resigns (Corporations Code 7220(b)). There are a variety of ways that current law allows HOAs to try and address this problem. However, it should be noted that while HOAs are in many ways quasi-governmental bodies, the existence of a quorum requirement for board elections is a marked difference from election procedures for municipal, state, or federal government bodies, which do not have any such minimum threshold requirement for election results to be valid. In other words, a quorum requirement for HOA elections goes above and beyond what is required for government elections.
If an HOA has the same number of candidates for board positions as it does vacancies, then the HOA may bypass a full election and perform an election by acclamation. While this acclamation process was initially only open to larger HOAs over 6,000 units, AB 502 (Davies), Chapter 517, Statutes of 2021, expanded the ability to perform acclamation elections to all HOAs in the state, regardless of size. However, an HOA must have had a regular election within the past three years in order to utilize election by acclamation, and if there are more candidates than there are vacancies on the board, then acclamation is not a viable option.
One remedy to not meeting quorum is simply to abolish the quorum requirement from the board's governing documents entirely. If a board is successful at amending the governing documents to eliminate the quorum requirement, then a subsequent board election would be valid without having to meet any threshold of members present. However, like a board election, this action requires the membership of the HOA to vote on an amendment to those governing documents, which may run into the same quorum threshold challenge that caused the need for the amendment in the first place.
Boards may also attempt to hold multiple elections and do more persistent member outreach in the hope that eventually they will receive enough ballots to achieve quorum. However, this can take many attempts, waste time and financial resources for the HOA, and there is no guarantee that any of the subsequent election attempts will actually result in meeting quorum.
Board members may also resign their seat, which creates a vacancy that a majority of the remaining board may then use to appoint a new director, though the appointed director will assume the remainder of the term of office. While resignations may ultimately lead to the desired outcome – turnover of the board – this practice excludes the membership from being able to vote, and appointed directors may still be serving past when a resigning director's term should otherwise have ended. If an entire board resigns or is left vacant all at once, there may be nobody available to appoint replacements, which can leave the HOA without governance and in a dangerous legal quagmire.
Lastly, Corporations Code Section 7515 provides a legal process by which HOAs or any member may petition a court for an order lowering the quorum threshold for a single election to the number of votes cast. There is a similar process available in the Davis-Stirling Act for amendments to CC&Rs that have supermajority or higher than normal amendment approval requirements – this process is outlined in Civil Code Section 4275. Supporters of the bill note that this petition process can take between 45 and 90 days to complete and can cost an association somewhere between roughly $10,000-$20,000 in legal services and fees, making it an unattractive alternative for many HOAs. Additionally, this begs the question of whether intervention in HOA quorum cases is the best use of court resources and capacity.
This bill proposes a new path to election legitimacy for HOAs who fail to meet quorum in an initial election attempt. Unless a lower quorum is authorized by the HOA's governing documents, this bill would allow an HOA to adjourn the first failed election attempt to a date at least 20 days after the adjourned proceeding, and hold a second election attempt at that subsequent reconvened meeting, at which time the quorum threshold would be 20% of the HOA's voting members present in person, by proxy, or by secret written ballot. So that members are made aware of the reduced quorum authorization, an HOA will have to provide notice to members of the possibility of this lowered quorum threshold being utilized before the first election attempt, and if the first election attempt does fail, must provide a follow-up notice to the members at least 15 days prior to the next attempt at electing directors.
According to the Author
"California is home to more than 55,000 Community Associations, with more than 13 million residents. A community association is governed by its Covenants, Conditions and Restrictions (C,C, and Rs, or governing documents), which are drafted by the developer and generally include a minimum quorum requirement for raising assessments, board of director elections, and changes to the governing documents.
Currently, there is no remedy in the Davis-Stirling Act for an association that is not able to achieve quorum in board members elections, other than repeatedly conducting additional elections in the hope of achieving a quorum. Many associations are not able to achieve the quorum set forth in the governing documents, which then prevents new board members from being seated when they seek to challenge a sitting board member or prohibits vacant seats from being filled when more than one candidate is seeking the position. This legislation would remedy this situation."
Arguments in Support
According to the Community Associations Institute's California Legislative Action Committee, "Governing documents of many CIDs generally requires a quorum of eligible voters for a board of directors' election to be valid. Unfortunately, achieving quorum has proven extremely difficult due to member apathy, regardless of voter mobilization campaigns. This leads to additional elections and increasing costs for potential similar results. These instances lead to prolonged board vacancies, lead to delayed decision making, underrepresentation and potentially undemocratic selection of board members. AB 1458 will remedy this situation by allowing a subsequent election to be valid if at least 20 percent of the membership votes in person, by proxy or by secret ballot."
Arguments in Opposition
According to the Center for California Homeowner Association Law, "Given the extraordinary powers that boards have over the property, the money, and the behavior of owners, the role of quorum is to ensure that there is sufficient participation by owners in the electoral process for choosing who among their neighbors shall be trusted with these powers. If, as the sponsors of AB 1458 assert, reaching quorum has proven to be difficult, then tools already exist in California law to resolve the problem, that is associations can [p]etition the court for a reduction in quorum requirements [or] [a]mend the quorum requirements in their government documents."
FISCAL COMMENTS
None.
VOTES:
ASM HOUSING AND COMMUNITY DEVELOPMENT: 8-0-0
YES: Wicks, Joe Patterson, Wendy Carrillo, Gabriel, Kalra, Quirk-Silva, Sanchez, Ward
ASM JUDICIARY: 11-0-0
YES: Maienschein, Essayli, Connolly, Dixon, Haney, Kalra, Pacheco, Papan, Reyes, Robert Rivas, Sanchez
ASSEMBLY FLOOR: 75-1-4
YES: Addis, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Rendon
NO: Lee
ABS, ABST OR NV: Aguiar-Curry, Bennett, Dixon, Zbur
SENATE FLOOR: 39-0-1
YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk
ABS, ABST OR NV: Padilla
UPDATED
VERSION: July 13, 2023
CONSULTANT: Nicole Restmeyer / H. & C.D. / (916) 319-2085 FN: 0001752
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 1458 |
THIRD READING
Bill No: AB 1458
Author: Ta (R)
Amended: 7/13/23 in Senate
Vote: 21
SENATE HOUSING COMMITTEE: 10-0, 6/20/23
AYES: Wiener, Ochoa Bogh, Blakespear, Caballero, Cortese, McGuire, Padilla, Seyarto, Skinner, Wahab
NO VOTE RECORDED: Umberg
SENATE JUDICIARY COMMITTEE: 11-0, 7/11/23
AYES: Umberg, Wilk, Allen, Ashby, Caballero, Durazo, Laird, Min, Niello, Stern, Wiener
ASSEMBLY FLOOR: 75-1, 5/31/23 - See last page for vote
SUBJECT: Common interest developments: association governance: member election
SOURCE: California Association of Community Managers
Community Associations Institute - California Legislative Action
Committee
DIGEST:
This bill authorizes a lower quorum requirement for common interest development (CID) association elections of directors under specified circumstances.
ANALYSIS:
Existing law:
- Establishes the Davis-Stirling Common Interest Development Act, which provides rules and regulations governing the operation of residential CIDs and the rights and responsibilities of Homeownership Associations (HOAs) and HOA members.
- Requires HOAs, in elections of directors and recall elections, to provide general notice of all of the following at least 30 days before ballots are distributed:
- The date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections;
- The date, time, and location of the meeting at which ballots will be counted;
- The list of all candidates’ names that will appear on the ballot;
- Individual notice of a)-c) must be delivered pursuant to existing law if individual notice is requested by a member.
- Requires ballots and two preaddressed envelopes with instructions on how to return ballots to be mailed by first-class mail or delivered by the association to every member no less than 30 days prior to the deadline for voting. Requires associations to use procedures used by California counties for ensuring confidentiality of vote by mail ballots, as specified.
- Requires a quorum for elections of director and recall elections only if so stated in the governing documents of the association or other provisions of law. If a quorum is required by the governing documents, each ballot received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum.
- Requires, for incorporated associations, a quorum at a meeting of members to be one-third of the voting power, represented in person or by proxy. Authorizes corporation bylaws to set a different quorum subject to specified restrictions.
- Provides that each director of a corporation, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified, unless the director has been removed from office, and except as otherwise provided in the articles or bylaws.
- Authorizes, under specified circumstances, a county superior court to order a meeting or vote of members in a manner the court finds fair and equitable, if for any reason it is impractical or unduly difficult for any corporation to call or conduct a meeting of its members, delegates, or directors, or otherwise obtain their consent, and a director, officer, delegate, or member petitions the court for such authorization.
- Authorizes, in an order issued pursuant to 6), the court to dispense with any requirement related to the holding of and voting at meetings or obtaining votes, including any requirement as to quorums or as to the number of percentage of votes needed for approval, that would otherwise be imposed by the articles, bylaws, or existing law.
This bill:
- Requires for elections of directors and for recall elections, an association to provide general notice at least 30 days before the ballots are distributed if the association’s governing documents require a quorum for election of directors, a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the required quorum is not reached at which time the quorum of the membership to elect directors will be 20% of the association’s members voting in person, by proxy, or by secret ballot.
- Requires no less than 15 days prior to an election for the association to provide general notice of the membership meeting which shall include the date, time, location, list of all candidates, and statement that 20% of the association present or voting by proxy or secret ballot will satisfy the quorum requirements for the election of directors.
Background
Common Interest Developments. CIDs are a type of housing with separate ownership of housing units that also share common areas and amenities. There are a variety of different types of CIDs, including condominium complexes, planned unit developments, and resident-owned mobilehome parks. In recent years CIDs have represented a growing share of California's housing stock. Data from 2019 indicates that there are an estimated 54,065 CIDs in the state made up of 5 million units, or about 35% of the state's total housing stock.
CIDs are regulated under the Davis-Stirling Act as well as the governing documents of the homeowners association (HOA), including the bylaws, declaration, and operating rules. CIDs can also have CCRs which are filed with the county and recorded at the time they are established. Additionally, HOAs are governed by a board of directors elected by the membership in elections that closely resemble California's vote-by-mail process. In addition, many associations use a managing agent to assist with finances, logistics, and other services provided to homeowners.
HOA boards have a number of duties and powers. The board determines the annual assessments that members must pay in order to cover communal expenses. The board enforces the community rules and can propose as well as make changes to those rules. If members do not pay their assessments in full or on time, or if members violate the community rules, the board has the power to fine the members and, if necessary, the power to foreclose upon the offending member's property. This combination of responsibilities and authority has led multiple courts to observe that HOAs function in many ways almost "as a second municipal government, regulating many aspects of [the homeowners'] daily lives." (Villa Milano Homeowners Ass'n v. Il Davorge (2000) 84 Cal.App.4th 819, 836)
Comments
- Author’s statement. “California is home to more than 55,000 Community Associations, with more than 13 million residents. A community association is governed by its Covenants, Conditions, and Restrictions (CCR or governing documents), which are drafted by the developer and generally include a minimum quorum requirement for raising assessments, board of director elections and changes to the governing documents. Currently, there is no remedy in the Davis-Stirling Act for an association not able to achieve quorum in board members elections, other than conducting an additional election. Many associations are not able to achieve the quorum set forth in the governing documents, which then prevents new board members from being seated when they seek to challenge a sitting board member or prohibits vacant seats from being filled when more than one candidate is seeking the position. This legislation would remedy this situation.”
- HOA Elections and Issues Related to Quorum. HOAs are required to hold elections for board directors when a seat becomes vacant and at least every four years. Quorum is the minimum number of members of an association that must be "present" – either in person or via mailed ballots – in order to make the proceedings of a meeting legally valid. Quorum requirements differ depending on the type of HOA that has been formed and whether or not quorum is required in HOA governing documents. In most instances, if quorum is required by an HOA's governing documents, the quorum is a "50 percent + 1" threshold of members. If an HOA has chosen to incorporate as a nonprofit mutual benefit corporation, then state law establishes quorum at 33 percent of membership.
According to the proponents of this bill, a significant amount of HOAs report having trouble meeting quorum requirements for board elections. Regardless of quorum rules, the law provides that the board directors remain in office "until a successor has been elected and qualified," meaning the board stays in place until the election is successful, or unless a director resigns. There are a variety of ways that current law allows HOAs to try and address this problem.
- If an HOA has the same number of candidates for board positions as it does vacancies, then the HOA may bypass a full election and perform an election by acclamation. However, an HOA must have had a regular election within the past three years in order to utilize election by acclamation, and if there are more candidates than there are vacancies on the board, then acclamation is not a viable option.
- One remedy to not meeting quorum is simply to abolish the quorum requirement from the board's governing documents entirely. If a board is successful at amending the governing documents to eliminate the quorum requirement, then a subsequent board election would be valid without having to meet any threshold of members present. However, like a board election, this action requires the membership of the HOA to vote on an amendment to those governing documents, which may run into the same quorum threshold challenge that caused the need for the amendment in the first place.
- Boards may also attempt to hold multiple elections and do more persistent member outreach in the hope that eventually they will receive enough ballots to achieve quorum. However, this can take many attempts, waste time and financial resources for the HOA, and there is no guarantee that any of the subsequent election attempts will actually result in meeting quorum.
- Board members may also resign their seat, which creates a vacancy that a majority of the remaining board may then use to appoint a new director, though the appointed director will assume the remainder of the term of office. If an entire board resigns or is left vacant all at once, there may be nobody available to appoint replacements, which can leave the HOA without governance and in a dangerous legal quagmire.
- Lastly, there is a legal process by which HOAs or any member may petition a court for an order lowering the quorum threshold for a single election to the number of votes cast. Supporters of the bill note that this petition process can take between 45 and 90 days to complete and can cost an association somewhere between roughly $10,000-$20,000 in legal services and fees, making it an unattractive alternative for many HOAs. Additionally, this begs the question of whether intervention in HOA quorum cases is the best use of court resources and capacity.
This bill attempts to find a better solution to the issues outlined above by providing a lower-cost and timelier method to reduce the quorum-threshold.
- Double-referral. This bill was also referred to the Senate Judiciary Committee.
Related/Prior Legislation
AB 502 (Davies, Chapter 517, Statutes of 2021) removed the requirement that a homeowner association (HOA) must have 6,000 or more units in order to use an election by acclamation procedure which allows HOAs to bypass a full election for board of directors if the number of nominees is not more than the number of vacancies to be filled.
SB 323 (Wieckowski, Chapter 848, Statutes of 2019) enacted a series of reforms to the laws governing board of director elections in common interest developments, commonly referred to as homeowners associations or HOAs that seek to increase the regularity, fairness, formality, and transparency associated with such elections.
SB 754 (Moorlach, Chapter 858, Statutes of 2019) provided that if nominees to a homeowner association (HOA) board in a common interest development (CID) shall be considered elected by acclamation if the number of nominees does not exceed the number of vacancies on the board.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
SUPPORT: (Verified 8/2/23)
California Association of Community Managers (co-source)
Community Associations Institute - California Legislative Action Committee (co-source)
OPPOSITION: (Verified 8/2/23)
Center for California Homeowners Association Law
ARGUMENTS IN SUPPORT: According to Community Associations Institute - California Legislative Action Committee, “governing documents of many CIDs generally require a quorum of eligible voters for a board of directors’ election to be valid. Unfortunately, achieving quorum has proven extremely difficult due to member apathy, regardless of voter mobilization campaigns. This leads to additional elections and increasing costs for potential similar results. These instances lead to prolonged board vacancies, lead to delayed decision making, underrepresentation and potentially undemocratic selection of board members. AB 1458 will remedy this situation by allowing a subsequent election to be valid if at least 20 percent of the membership votes in person, by proxy or by secret ballot.”
ARGUMENTS IN OPPOSITION: The Center for California Homeowners Association Law argues that “given the extraordinary powers that boards have over the property, the money, and the behavior of owners, the role of quorum specified in the Corporations Code is to ensure that there is sufficient participation by owners in the electoral process for choosing who among their neighbors shall be entrusted with these powers. If, as the sponsors of AB1458 assert, reaching quorum has proven to be difficult, then tools already exist in California law to resolve the problem [either petitioning the court for a reduction or amending the quorum requirements in their governing documents]. Either tool lets an association retain its sovereignty, that is: to make decisions about quorum for itself.”
ASSEMBLY FLOOR: 75-1, 5/31/23
AYES: Addis, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Cervantes, Chen, Connolly, Megan Dahle, Davies, Essayli, Flora, Mike Fong, Vince Fong, Friedman, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Holden, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Low, Lowenthal, Maienschein, Mathis, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Reyes, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Rendon
NOES: Lee
NO VOTE RECORDED: Aguiar-Curry, Bennett, Dixon, Zbur
Prepared by: Aiyana Cortez / HOUSING / (916) 651-4124
8/7/23 13:32:18
**** END ****
Senator Thomas Umberg, Chair
2023-2024 Regular Session
Bill No: AB 1458 (Author:Ta)
Version: July 3, 2023
Hearing Date: July 11, 2023
Fiscal: No
Urgency: No
Consultant: AM
SUBJECT
Common interest developments: association governance: member election
DIGEST
This bill authorizes a reduced quorum requirement for homeowner association board elections if the first attempt at holding the election failed to establish a quorum and certain procedural requirements are met.
EXECUTIVE SUMMARY
Common interest development (CID) communities are, with rare exceptions, managed by a homeowners association (HOA) which essentially acts as a mini-government. Each property owner within the CID is a member of the HOA and the membership elects the HOA’s board of directors, which is responsible for making key decisions about the CID community on behalf of everyone. Participation in HOA board elections varies greatly. In some CID communities, elections for the HOA board of directors are hotly contested affairs. This bill seeks to address the opposite scenario: where the CID suffers from a lack of interest and participation by members. This bill seeks to address this issue by allowing a reduced quorum of 20 percent of the voting members to be used for a board election if at the initial election the HOA adjourns the meeting and provides for a new election with the reduced quorum requirement at least 20 days after the adjourned proceeding and after certain notice requirements are met.
The bill is author sponsored and supported by the California Association of Community Managers and the Community Associations Institute’s California Legislative Action Committee. The bill is opposed by the Center for California Homeowner Association Law. The bill passed the Senate Housing Committee on a vote of 10 to 1.
PROPOSED CHANGES TO THE LAW
Existing law:
- Establishes, within the Davis-Stirling Common Interest Development Act, rules and regulations governing the operation of a residential common interest development (CID) and the respective rights and duties of an HOA and its members. (Civ. Code § 4000 et seq.)
- Obligates HOAs to hold an election by secret ballot and according to specified procedures, for:
- assessments legally requiring a vote;
- election and removal of directors;
- amendments to the governing documents; or
- the grant of exclusive use of a common area. (Civ. Code § 5100(a).)
- Prohibits an HOA board of directors from taking action on an item of business outside of a board meeting. (Civ. Code § 4910(a).)
- Provides that an HOA must provide general notice of the procedure and deadline for submitting a nomination for board of directors at least 30 days before the nomination deadline. (Civ. Code § 5115(a).)
- Specifies the voting procedure for an HOA election as follows:
- ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member not less than 30 days prior to the deadline for voting. In order to preserve confidentiality, a voter may not be identified by name, address, lot, parcel, or unit number on the ballot. The association shall use as a model those procedures used by California counties for ensuring confidentiality of vote-by-mail ballots, including all of the following:
- the ballot itself is not signed by the voter, but is inserted into an envelope that is sealed. This envelope is inserted into a second envelope that is sealed. In the upper left hand corner of the second envelope, the voter shall sign the voter’s name, indicate the voter’s name, and indicate the address or separate interest identifier that entitles the voter to vote; and
- the second envelope is addressed to the inspector or inspectors of elections, who will be tallying the votes. The envelope may be mailed or delivered by hand to a location specified by the inspector or inspectors of elections. The member may request a receipt for delivery. (Civ. Code § 5115(a).)
- ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member not less than 30 days prior to the deadline for voting. In order to preserve confidentiality, a voter may not be identified by name, address, lot, parcel, or unit number on the ballot. The association shall use as a model those procedures used by California counties for ensuring confidentiality of vote-by-mail ballots, including all of the following:
- Requires that all votes in a board election are to be counted and tabulated by the inspector or inspectors of elections in public at a properly noticed open meeting of the board or members and that any candidate or other member of the association may witness the counting and tabulation of the votes. Further prohibits any person, including a member of the association or an employee of the management company, from opening or otherwise reviewing any ballot prior to the time and place at which the ballots are counted and tabulated. (Civ. Code § 5120(a).)
- Specifies a quorum is required in a board election only if stated in the governing documents or other provisions of law. If a quorum is required by the governing documents, each ballot received by the inspector of elections is to be treated as a member present at a meeting for purposes of establishing a quorum. (Civ. Code § 5115(d).)
- Allows an HOA with 6,000 or more units to seat candidates for the board of directors by acclamation in lieu of balloting if, at the close of nominations for directors, the number of nominees is not more than the number of vacancies to be elected, as determined by the inspector or inspectors of elections, provided that all of the following are true:
- the HOA provided individual notice of the election and the procedure for nominating candidates at least 30 days before the close of nominations;
- the HOA permits all candidates to run if nominated, except that:
- an HOA shall disqualify a person from nomination as a candidate if the person is not a member of the association at the time of the nomination. This does not restrict a developer from making a nomination of a nonmember candidate consistent with the developer’s voting powers;
- an HOA may disqualify a nominee with a prior criminal conviction that would prevent the association from purchasing or maintaining the required fidelity bond coverage;
- an HOA may disqualify a nominee who is not current on their payment of regular and special assessments, which are consumer debts subject to validation. This does not allow disqualification based on failure to pay any third parties and that non-payment of assessments is not disqualifying if payments are made under protest, the nominee has entered into a payment plan, or the nominee has not been given a chance to engage in internal dispute resolution;
- an HOA may disqualify a nominee who, if elected, would be serving on the board at the same time as another person with a joint ownership interest in the same separate interest parcel as the person, and the other person is either properly nominated for the current election or an incumbent director; and
- an HOA may disqualify a nominee who has been a member of the association for less than one year. (Civ. Code § 5100(g).)
7) Permits a non-profit public benefit corporation to declare nominees for the board of directors elected without further action if, at the close of nominations, the number of people nominated for the board is not more than the number of directors to be elected. (Corp. Code § 7522(d).)
This bill:
- Provides that for an election of directors of a corporation that is a common interest development association, as defined, and in the absence of meeting quorum, as specified, the association may adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 20 percent of the association’s voting members present in person, by proxy, or by secret written ballot received, unless a lower quorum is authorized by the association’s governing documents.
- Requires an association whose governing documents require a quorum for election of directors to provide general notice of a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the quorum is not reached at which time the quorum of the membership to elect directors will be 20 percent of the association’s members voting in person, by proxy, or by secret ballot.
- Requires that if a homeowner association opts to utilize the reduced quorum procedure pursuant to 1), above, the association must provide a general notice 15 days prior to the rescheduled election that contains all of the following:
- the date, time, and location of the meeting;
- the list of all candidates; and
- a statement that 20 percent of the association present or voting by proxy or secret ballot will satisfy the quorum requirements for the election of directors and that the ballots will be counted if a quorum is reached, if the association’s governing documents require a quorum.
COMMENTS
- Stated need for the bill
The author writes:
California is home to more than 55,000 homeowners associations (HOAs), housing more than 13 million residents. HOAs are also referred to as Common Interest Developments, or CIDs. An HOA is governed by its Covenants, Conditions, and Restrictions (C,C,&Rs, or “governing documents”), which are often drafted by the developer and generally include a minimum quorum requirement for votes to raise assessments, elect boards of directors, and for making changes to the governing documents.
The Davis-Stirling Act sets forth the guidelines for conducting HOA elections. However, current law has no remedy for an association that is not able to achieve quorum in board members elections, other than conducting an additional election. Many associations are not able to achieve the quorum set forth in the governing documents, which then prevents new board members from being seated when they seek to challenge a sitting board member, or prohibits vacant seats from being filled when more than one candidate is seeking the position. This legislation would remedy this situation.
- Background on HOAs and addressing the issue of low participation in board elections
CIDs are self-governing groups of dwellings that share common spaces and amenities. They come in a wide variety of physical layouts: condominium complexes, apartment buildings, and neighborhoods of detached, single-family residences, for example. Units within common housing developments currently account for approximately a quarter of the state’s overall housing stock, meaning that the laws governing such developments have a large impact on the population. In California, CIDs are governed by the Davis-Stirling Act. (Civ. Code §§ 4000-6150.)
The Davis-Stirling Act sets forth a system for CID self-governance. The owners of the separate properties within the community are the members of the HOA. HOA members vote for the board of directors of the association that oversees operation of the community. An HOA board has a number of duties and powers. The board manages the community, frequently by hiring an individual or entity to do so on its behalf. The board determines the annual assessments – much like taxes – that members must pay in order to cover communal expenses. The board enforces the community rules and can propose as well as make changes to those rules. If members do not pay their assessments in full or on time, or if members violate the community rules, the board has the power to fine the members and, if necessary, the power to foreclose upon the offending member’s property. This combination of responsibilities and authority has led multiple courts to observe that HOAs function in many ways almost “as a second municipal government, regulating many aspects of [the homeowners’] daily lives.” (Villa Milano Homeowners Ass’n v. Il Davorge (2000) 84 Cal.App.4th 819, 836. Internal citations omitted.)
Much like municipal governments, HOAs also use elections to choose members to serve on the association’s board of directors. Under existing law, HOAs conduct these elections through a paper and mail-based balloting system that closely resembles California’s vote-by-mail process. Many associations use quorums for board elections. If a quorum is not reached in an election, there are a few possibilities the CID can pursue. Usually, an association will hold repeated elections until a quorum is achieved. Alternatively, Section 7515 of the Corporations Code provides a legal process where members of the association can petition a court for an order lowering the quorum requirement for a single election to the number of votes cast. This option, however, is generally expensive and time consuming for members to use. Lastly, the HOA can vote to lower the quorum threshold. This option may not be productive if the association already suffers from a lack of participation, as that vote is also subject to quorum requirements. As such, when participation in HOA elections is low, replacing the existing board may become very difficult.
In light of the above, this bill proposes allowing an HOA that held an election where the quorum required in the HOA’s governing documents was not met to call a subsequent meeting at least 20 days after the original election. At the subsequent election the quorum needed to elect board members will be 20 percent of the association’s members voting in person, by proxy, or by secret ballot. As a safeguard, the bill only requires the association to use the lower quorum if the notice for the original election included a statement that the lower quorum may be used. If the board seeks to use the lower quorum, general notice must be provided to the members of the HOA at least 15 days prior to the second election that contains certain information, including a statement that 20 percent of the association present or voting by proxy or secret ballot will satisfy the quorum requirements for the election of directors and that the ballots will be counted if a quorum is reached, if the association’s governing documents require a quorum. Additionally, the second election is prohibited from occurring within 20 days of the initial election where a quorum was not reached. The bill allows for an HOA to authorize a lower quorum requirement in their governing documents.
A similar bill was introduced in 2010 (AB 1726 (Swanson)), but that bill was not heard by this Committee. That bill had a 33 percent requirement for a subsequent election after an initial election failed to receive a quorum. AB 1726 passed the Legislature, but was vetoed by then Governor Schwarzenegger stating that he felt the bill was “unnecessary because existing law allows a HOA to amend its governing documents to establish a lower quorum” and that he felt the bill “bill would interfere with the basic democratic principle of CIDs.” As noted above by the author, HOAs can vote to amend their governing documents, but that generally also requires a quorum.
The sole opposition to this bill is the Center for California Homeowner Association Law which raises several concerns. They want statements to owners regarding a potential reduction in quorum to be placed in the Election Operating Rules formed under Civil Code Section 4340, which they state are required to be given by individual notice not general notice. They want specific language stating that the election material must be in the sole custody of the election Inspector when a quorum is being determined and ballots tabulated. Additionally, they want the meeting at which a quorum is to be determined to be in a physical location readily accessible to the members of the HOA.
- Proposed amendments[1]
The bill in print refers to a “common interest development association as defined in Section 4100 of the Civil Code.” However, Section 4100 of the Civil Code does not define the term “common interest development association” but does define the term “common interest development.” In order to address this discrepancy, the author has agreed to amend the bill to remove “association”.
The specific amendments are as follows:
Amendment 1
On page 4, in line 9, strike out “development association as defined in Section 4100” and insert:
development,
Amendment 2
On page 4, in line 20, strike out “meeting” and insert:
meeting,
Amendment 3
On page 5, in lines 30 and 31, strike out “development association as defined in Section 4100 of the Civil Code,” and insert:
development,
- Statements in support
The California Association of Community Managers writes in support stating:
There are over 54,000 common interest developments ("CIDs") throughout California. CIDs are a valuable part of the state's housing stock, as they are self-sufficient and maintain their own communities under boards made up of volunteer homeowners. The boards are charged with preserving, enhancing, and protecting homeowner units. Unfortunately, the HOA industry has long suffered from lack of member participation. It is estimated that around 80% of associations fail to meet quorum. This means that the process must be repeated over and over until quorum is met, all at compounding costs to homeowners and operational delays.
All costs in an association are typically borne by the homeowners and paid for through homeowner assessments. Costs and time associated with nagging homeowners to send in their ballots and to hold numerous meetings only to have to adjourn for lack of quorum are significant. This inability to achieve quorum also prevents important business from occurring due to prolonged board vacancies and the inability to approve actions that are critical to the community. Municipal, state and federal elections do not require quorums. AB 1458 maintains the requirement to attempt to achieve full quorum. However, association business must occur so it is only after the first attempt fails would a reduced quorum requirement become available.
- Statements in opposition
The Center for California Homeowner Association Law writes in opposition stating:
The authority and duties of associations is such that the California Appellate courts have, in multiple opinions, ruled that associations have all the trappings and powers of government.
Given the extraordinary powers that boards have over the property, the money, and the behavior of owners, the role of quorum is to ensure that there is sufficient participation by owners in the electoral process for choosing who among their neighbors shall be trusted with these powers. […]
If, as the sponsors of AB1458 assert, reaching quorum has proven to be difficult, then tools already exist in California law to help, that is associations can:
- Petition the court for a reduction in quorum requirements
- Amend the quorum requirements in their government documents
Using these tools have the additional advantage of engaging the association’s membership in the process since a petition to the court requires that all interested parties be notified of the petition and changing the governing documents requires a membership vote. Either tool lets an association retain its sovereignty, that is: to make decisions about quorum for itself. (footnotes omitted)
SUPPORT
California Association of Community Managers
Community Associations Institute - California Legislative Action Committee
OPPOSITION
Center for California Homeowner Association Law
RELATED LEGISLATION
Pending Legislation: None known.
Prior Legislation:
SB 323 (Wieckowski, 2019, Ch. 848, Stats. 2019) enacted a series of reforms to the laws governing board of director elections for CIDs.
AB 1726 (Swanson, 2010) see Comment 2, above.
PRIOR VOTES
Senate Housing Committee (Ayes 10, Noes 1)
Assembly Floor (Ayes 75, Noes 1)
Assembly Judiciary Committee (Ayes 11, Noes 0)
Assembly Housing and Community Development Committee (Ayes 8, Noes 0)
**************
The amendments may also include technical, nonsubstantive changes recommended by the Office of Legislative Counsel. ↑
SENATE COMMITTEE ON HOUSING
Senator Scott Wiener, Chair
2023 - 2024 Regular
Bill No: AB 1458 Hearing Date: 6/20/2023
Author: | Ta | ||
Version: | 5/3/2023 | ||
Urgency: | No | Fiscal: | No |
Consultant: | Aiyana Cortez | ||
SUBJECT: Common interest developments: association governance: member election
DIGEST: This bill authorizes a lower quorum requirement for common interest development (CID) association elections of directors under specified circumstances.
ANALYSIS:
Existing law:
- Establishes the Davis-Stirling Common Interest Development Act, which provides rules and regulations governing the operation of residential CIDs and the rights and responsibilities of Homeownership Associations (HOAs) and HOA members.
- Requires HOAs, in elections of directors and recall elections, to provide general notice of all of the following at least 30 days before ballots are distributed:
- The date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections;
- The date, time, and location of the meeting at which ballots will be counted;
- The list of all candidates’ names that will appear on the ballot;
- Individual notice of a)-c) must be delivered pursuant to existing law if individual notice is requested by a member.
- Requires ballots and two preaddressed envelopes with instructions on how to return ballots to be mailed by first-class mail or delivered by the association to every member no less than 30 days prior to the deadline for voting. Requires associations to use procedures used by California counties for ensuring confidentiality of vote by mail ballots, as specified.
- Requires a quorum for elections of director and recall elections only if so stated in the governing documents of the association or other provisions of law. If a quorum is required by the governing documents, each ballot received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum.
- For incorporated associations, requires a quorum at a meeting of members to be one-third of the voting power, represented in person or by proxy. Authorizes corporation bylaws to set a different quorum subject to specified restrictions.
- Provides that each director of a corporation, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified, unless the director has been removed from office, and except as otherwise provided in the articles or bylaws.
- Authorizes, under specified circumstances, a county superior court to order a meeting or vote of members in a manner the court finds fair and equitable, if for any reason it is impractical or unduly difficult for any corporation to call or conduct a meeting of its members, delegates, or directors, or otherwise obtain their consent, and a director, officer, delegate, or member petitions the court for such authorization.
- In an order issued pursuant to 6), authorizes the court to dispense with any requirement related to the holding of and voting at meetings or obtaining votes, including any requirement as to quorums or as to the number of percentage of votes needed for approval, that would otherwise be imposed by the articles, bylaws, or existing law.
This bill:
- Requires for elections of directors and for recall elections, an association to provide general notice at least 30 days before the ballots are distributed if the association’s governing documents require a quorum for election of directors, a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the required quorum is not reached at which time the quorum of the membership to elect directors will be 20% of the association’s members voting in person, by proxy, or by secret ballot.
- Requires no less than 15 days prior to an election for the association to provide general notice of the membership meeting which shall include the date, time, location, list of all candidates, and statement that 20% of the association present or voting by proxy or secret ballot will satisfy the quorum requirements for the election of directors.
COMMENTS:
- Author’s statement. “California is home to more than 55,000 Community Associations, with more than 13 million residents. A community association is governed by its Covenants, Conditions, and Restrictions (CCR or governing documents), which are drafted by the developer and generally include a minimum quorum requirement for raising assessments, board of director elections and changes to the governing documents. Currently, there is no remedy in the Davis-Stirling Act for an association not able to achieve quorum in board members elections, other than conducting an additional election. Many associations are not able to achieve the quorum set forth in the governing documents, which then prevents new board members from being seated when they seek to challenge a sitting board member or prohibits vacant seats from being filled when more than one candidate is seeking the position. This legislation would remedy this situation.”
- Common Interest Developments. CIDs are a type of housing with separate ownership of housing units that also share common areas and amenities. There are a variety of different types of CIDs, including condominium complexes, planned unit developments, and resident-owned mobilehome parks. In recent years CIDs have represented a growing share of California's housing stock. Data from 2019 indicates that there are an estimated 54,065 CIDs in the state made up of 5 million units, or about 35% of the state's total housing stock.
CIDs are regulated under the Davis-Stirling Act as well as the governing documents of the homeowners association (HOA), including the bylaws, declaration, and operating rules. CIDs can also have CCRs which are filed with the county and recorded at the time they are established. Additionally, HOAs are governed by a board of directors elected by the membership in elections that closely resemble California's vote-by-mail process. In addition, many associations use a managing agent to assist with finances, logistics, and other services provided to homeowners.
HOA boards have a number of duties and powers. The board determines the annual assessments that members must pay in order to cover communal expenses. The board enforces the community rules and can propose as well as make changes to those rules. If members do not pay their assessments in full or on time, or if members violate the community rules, the board has the power to fine the members and, if necessary, the power to foreclose upon the offending member's property. This combination of responsibilities and authority has led multiple courts to observe that HOAs function in many ways almost "as a second municipal government, regulating many aspects of [the homeowners'] daily lives." (Villa Milano Homeowners Ass'n v. Il Davorge (2000) 84 Cal.App.4th 819, 836)
- HOA Elections and Issues Related to Quorum. HOAs are required to hold elections for board directors when a seat becomes vacant and at least every four years. Quorum is the minimum number of members of an association that must be "present" – either in person or via mailed ballots – in order to make the proceedings of a meeting legally valid. Quorum requirements differ depending on the type of HOA that has been formed and whether or not quorum is required in HOA governing documents. In most instances, if quorum is required by an HOA's governing documents, the quorum is a "50 percent + 1" threshold of members. If an HOA has chosen to incorporate as a nonprofit mutual benefit corporation, then state law establishes quorum at 33 percent of membership.
According to the proponents of this bill, a significant amount of HOAs report having trouble meeting quorum requirements for board elections. Regardless of quorum rules, the law provides that the board directors remain in office "until a successor has been elected and qualified," meaning the board stays in place until the election is successful, or unless a director resigns. There are a variety of ways that current law allows HOAs to try and address this problem.
- If an HOA has the same number of candidates for board positions as it does vacancies, then the HOA may bypass a full election and perform an election by acclamation. However, an HOA must have had a regular election within the past three years in order to utilize election by acclamation, and if there are more candidates than there are vacancies on the board, then acclamation is not a viable option.
- One remedy to not meeting quorum is simply to abolish the quorum requirement from the board's governing documents entirely. If a board is successful at amending the governing documents to eliminate the quorum requirement, then a subsequent board election would be valid without having to meet any threshold of members present. However, like a board election, this action requires the membership of the HOA to vote on an amendment to those governing documents, which may run into the same quorum threshold challenge that caused the need for the amendment in the first place.
- Boards may also attempt to hold multiple elections and do more persistent member outreach in the hope that eventually they will receive enough ballots to achieve quorum. However, this can take many attempts, waste time and financial resources for the HOA, and there is no guarantee that any of the subsequent election attempts will actually result in meeting quorum.
- Board members may also resign their seat, which creates a vacancy that a majority of the remaining board may then use to appoint a new director, though the appointed director will assume the remainder of the term of office. If an entire board resigns or is left vacant all at once, there may be nobody available to appoint replacements, which can leave the HOA without governance and in a dangerous legal quagmire.
- Lastly, there is a legal process by which HOAs or any member may petition a court for an order lowering the quorum threshold for a single election to the number of votes cast. Supporters of the bill note that this petition process can take between 45 and 90 days to complete and can cost an association somewhere between roughly $10,000-$20,000 in legal services and fees, making it an unattractive alternative for many HOAs. Additionally, this begs the question of whether intervention in HOA quorum cases is the best use of court resources and capacity.
This bill attempts to find a better solution to the issues outlined above by providing a lower-cost and timelier method to reduce the quorum-threshold.
- Double-referral. This bill has also been referred to the Senate Judiciary Committee.
Related Legislation:
AB 502 (Davies, Chapter 517, Statutes of 2021) — removed the requirement that a homeowner association (HOA) must have 6,000 or more units in order to use an election by acclamation procedure which allows HOAs to bypass a full election for board of directors if the number of nominees is not more than the number of vacancies to be filled.
SB 323 (Wieckowski, Chapter 848, Statutes of 2019) — enacted a series of reforms to the laws governing board of director elections in common interest developments, commonly referred to as homeowners associations or HOAs that seek to increase the regularity, fairness, formality, and transparency associated with such elections.
SB 754 (Moorlach, Chapter 858, Statutes of 2019) — provided that if nominees to a homeowner association (HOA) board in a common interest development (CID) shall be considered elected by acclamation if the number of nominees does not exceed the number of vacancies on the board.
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No
POSITIONS: (Communicated to the committee before noon on Wednesday,
June 14, 2023.)
SUPPORT:
California Association of Community Managers (CACM)
Community Associations Institute - California Legislative Action Committee
OPPOSITION:
None received.
-- END --
ASSEMBLY THIRD READING
ATR Bill Id:AB 1458
Author:(Ta)
As Amended Ver:April 13, 2023
Majority vote
SUMMARY
Authorizes a lower quorum requirement for common interest development (CID) association elections of directors under specified circumstances.
Major Provisions
- Requires an association to include in its general notice to members regarding elections of directors and recall elections a statement that, if the governing documents require a quorum for election of directors, the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the required quorum is not reached, at which time the quorum required for electing directors will be 20% of the association's members voting in person, by proxy, or by secret ballot.
- Authorizes an incorporated or unincorporated association, in the absence of meeting quorum as required by the association's governing documents or existing law when voting for an election of directors, to adjourn an election proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for electing directors is 20% of the association's voting members present in person, by proxy, or of secret written ballots received.
- Requires an association to provide general notice to members of the subsequent meeting under 2), above, at least 15 days prior to the meeting, and requires the general notice to include the date, time, and location of the meeting, the list of all candidates, and a statement that 20% of the association present or voting by proxy or secret ballot will satisfy the quorum requirements for election of directors.
- Provides that this lowered quorum threshold does not apply if a lower quorum is already authorized by the association's governing documents.
COMMENTS
Background on Common Interest Developments: CIDs are a type of housing with separate ownership of housing units that also share common areas and amenities. There are a variety of different types of CIDs, including condominium complexes, planned unit developments, and resident-owned mobilehome parks. In recent years CIDs have represented a growing share of California's housing stock. Data from 2019 indicates that there are an estimated 54,065 CIDs in the state made up of 5 million units, or about 35% of the state's total housing stock.
CIDs are regulated under the Davis-Stirling Act (Civil Code Section 4000 et seq.) as well as the governing documents of the homeowners association (HOA), including the bylaws, declaration, and operating rules. CIDs can also have Covenants, Conditions, and Restrictions (CC&Rs) which are filed with the county and recorded at the time they are established. Additionally, HOAs are governed by a board of directors elected by the membership in elections that closely resemble California's vote-by-mail process. In addition, many associations use a managing agent to assist with finances, logistics, and other services provided to homeowners.
HOA boards have a number of duties and powers. The board determines the annual assessments that members must pay in order to cover communal expenses. The board enforces the community rules and can propose as well as make changes to those rules. If members do not pay their assessments in full or on time, or if members violate the community rules, the board has the power to fine the members and, if necessary, the power to foreclose upon the offending member's property. This combination of responsibilities and authority has led multiple courts to observe that HOAs function in many ways almost "as a second municipal government, regulating many aspects of [the homeowners'] daily lives." (Villa Milano Homeowners Ass'n v. Il Davorge (2000) 84 Cal.App.4th 819, 836)
HOA Elections and Issues Related to Quorum: HOAs are required to hold elections for board directors when a seat becomes vacant and at least every four years. The Davis-Stirling Act requires HOA elections to conform to certain procedures, including double-stuffed ballots and the selection of at least one independent third party inspector of elections. Voting for board members is the fundamental way a homeowner in a CID can advocate to have their interests represented in the HOA's governance. Recent legislative actions related to HOA election rules have addressed qualifications for nominees to the board SB 323 (Wieckowski), Chapter 858, Statutes of 2019 and challenges with finding enough members who are willing to run for the board and procedures for election by acclamation SB 754 (Moorlach), Chapter 858, Statutes of 2019, and AB 502 (Davies), Chapter 517, Statutes of 2021.
Quorum is the minimum number of members of an association that must be "present" – either in person or via mailed ballots – in order to make the proceedings of a meeting legally valid. As a general rule, the Davis-Stirling Act has no particular quorum requirement. Quorum requirements differ depending on the type of HOA that has been formed and whether or not quorum is required in HOA governing documents. In most instances, if quorum is required by an HOA's governing documents, the quorum is a "50 percent + 1" threshold of members. If an HOA has chosen to incorporate as a nonprofit mutual benefit corporation, then state law establishes quorum at 33 percent of membership.
According to the proponents of this bill, a significant amount of HOAs report having trouble meeting quorum requirements for board elections. Regardless of quorum rules, the law provides that the board directors remain in office "until a successor has been elected and qualified," meaning the board stays in place until the election is successful, or unless a director resigns (Corporations Code 7220(b)). There are a variety of ways that current law allows HOAs to try and address this problem. However, it should be noted that while HOAs are in many ways quasi-governmental bodies, the existence of a quorum requirement for board elections is a marked difference from election procedures for municipal, state, or federal government bodies, which do not have any such minimum threshold requirement for election results to be valid. In other words, a quorum requirement for HOA elections goes above and beyond what is required for government elections.
If an HOA has the same number of candidates for board positions as it does vacancies, then the HOA may bypass a full election and perform an election by acclamation. While this acclamation process was initially only open to larger HOAs over 6,000 units, AB 502 (Davies), Chapter 517, Statutes of 2021, expanded the ability to perform acclamation elections to all HOAs in the state, regardless of size. However, an HOA must have had a regular election within the past three years in order to utilize election by acclamation, and if there are more candidates than there are vacancies on the board, then acclamation is not a viable option.
One remedy to not meeting quorum is simply to abolish the quorum requirement from the board's governing documents entirely. If a board is successful at amending the governing documents to eliminate the quorum requirement, then a subsequent board election would be valid without having to meet any threshold of members present. However, like a board election, this action requires the membership of the HOA to vote on an amendment to those governing documents, which may run into the same quorum threshold challenge that caused the need for the amendment in the first place.
Boards may also attempt to hold multiple elections and do more persistent member outreach in the hope that eventually they will receive enough ballots to achieve quorum. However, this can take many attempts, waste time and financial resources for the HOA, and there is no guarantee that any of the subsequent election attempts will actually result in meeting quorum.
Board members may also resign their seat, which creates a vacancy that a majority of the remaining board may then use to appoint a new director, though the appointed director will assume the remainder of the term of office. While resignations may ultimately lead to the desired outcome – turnover of the board – this practice excludes the membership from being able to vote, and appointed directors may still be serving past when a resigning director's term should otherwise have ended. If an entire board resigns or is left vacant all at once, there may be nobody available to appoint replacements, which can leave the HOA without governance and in a dangerous legal quagmire.
Lastly, Corporations Code Section 7515 provides a legal process by which HOAs or any member may petition a court for an order lowering the quorum threshold for a single election to the number of votes cast. There is a similar process available in the Davis-Stirling Act for amendments to CC&Rs that have supermajority or higher than normal amendment approval requirements – this process is outlined in Civil Code Section 4275. Supporters of the bill note that this petition process can take between 45 and 90 days to complete and can cost an association somewhere between roughly $10,000-$20,000 in legal services and fees, making it an unattractive alternative for many HOAs. Additionally, this begs the question of whether intervention in HOA quorum cases is the best use of court resources and capacity.
This bill proposes a new path to election legitimacy for HOAs who fail to meet quorum in an initial election attempt. Unless a lower quorum is authorized by the HOA's governing documents, this bill would allow an HOA to adjourn the first failed election attempt to a date at least 20 days after the adjourned proceeding, and hold a second election attempt at that subsequent reconvened meeting, at which time the quorum threshold would be 20 percent of the HOA's voting members present in person, by proxy, or by secret written ballot. So that members are made aware of the reduced quorum authorization, an HOA will have to provide notice to members of the possibility of this lowered quorum threshold being utilized before the first election attempt, and if the first election attempt does fail, must provide a follow-up notice to the members at least 15 days prior to the next attempt at electing directors.
According to the Author
"California is home to more than 55,000 Community Associations, with more than 13 million residents. A community association is governed by its Covenants, Conditions and Restrictions (C,C, and Rs, or governing documents), which are drafted by the developer and generally include a minimum quorum requirement for raising assessments, board of director elections, and changes to the governing documents.
Currently, there is no remedy in the Davis-Stirling Act for an association that is not able to achieve quorum in board members elections, other than repeatedly conducting additional elections in the hope of achieving a quorum. Many associations are not able to achieve the quorum set forth in the governing documents, which then prevents new board members from being seated when they seek to challenge a sitting board member or prohibits vacant seats from being filled when more than one candidate is seeking the position. This legislation would remedy this situation."
Arguments in Support
According to the Community Associations Institute's California Legislative Action Committee, "Governing documents of many CIDs generally requires a quorum of more than 50% of eligible voters for a board of directors' election to be valid. Unfortunately, achieving quorum has proven extremely difficult due to member apathy regardless of voter mobilization campaigns. This leads to additional elections and increasing costs for potential similar results. These instances lead to prolonged board vacancies, lead to delayed decision making, underrepresentation and potentially undemocratic selection of board members. AB 1458 will remedy this situation by allowing a subsequent election to be valid if at least 20 percent of the membership votes in person, by proxy or by secret ballot."
Arguments in Opposition
According to the Center for California Homeowner Association Law, "Given the extraordinary powers that boards have over the property, the money, and the behavior of owners, the role of quorum is to ensure that there is sufficient participation by owners in the electoral process for choosing who among their neighbors shall be trusted with these powers. What AB1458 would permit is an undemocratic process through which a minimal number of homeowners – without any notice whatever to their neighbors – convene in secret in order to choose the board. Furthermore, the legislation offers no recourse for owners shut out of the process to challenge or overturn the seating of a board done in secret."
FISCAL COMMENTS
None.
VOTES
ASM HOUSING AND COMMUNITY DEVELOPMENT: 8-0-0
YES: Wicks, Joe Patterson, Wendy Carrillo, Gabriel, Kalra, Quirk-Silva, Sanchez, Ward
ASM JUDICIARY: 11-0-0
YES: Maienschein, Essayli, Connolly, Dixon, Haney, Kalra, Pacheco, Papan, Reyes, Robert Rivas, Sanchez
UPDATED
VERSION: April 13, 2023
CONSULTANT: Nicole Restmeyer / H. & C.D. / (916) 319-2085 FN: 0000295
Date of Hearing: May 2, 2023
ASSEMBLY COMMITTEE ON JUDICIARY
Brian Maienschein, Chair
ABPCA Bill Id:AB 1458
Author:(Ta) – As Amended Ver:April 13, 2023
As Proposed to be Amended
SUBJECT: Common interest developments: association governance: member election
KEY ISSUE: should a homeowner association be permitted to hold a board election with a quorum of 20 percent of voting association members if an initially scheduled election fails to reach a quorum?
SYNOPSIS
Homeowner associations, the governing arm of common interest developments, are required to hold elections to name members to the board that govern the day-to-day functions of the association. While many homeowner associations enjoy robust participation from association members, too frequently, homeowner associations suffer from a lack of participation in association affairs by the development’s residents. In these instances, a homeowner association may fail to obtain a quorum of members voting during a board election. In these cases, the association is forced to repeatedly hold elections in the hopes of achieving a quorum and being authorized to replace the board.
Seeking to make board elections easier in associations with low-member participation in elections, this bill would establish a process whereby an association can hold an election with a 20 percent quorum requirement if the association properly noticed an initial election, failed to reach a quorum, and then provided a minimum of 15-day notice of the subsequent election. Proposed amendments enhance the notice requirements and lengthen the timelines between elections to boost voter participation. These amendments are reflected in the SUMMARY and detailed in the analysis.
This bill is supported by the California Association of Community Managers and the Community Associations Institute’s California Legislative Action Committee who contend that the need to maintain new and diverse boards makes the lower quorum threshold necessary. This bill is opposed by the Center for California Homeowner Association Law and the law firm of Schiffer, LLC who rightfully note that homeowner associations act like quasi-local governments, and therefore, require sufficient voter protections for all association members, especially given that association boards do not have an executive branch to function as a check on their power. Accordingly, the proposed amendments seek to strike a balance between protecting association voters’ rights and ensuring that homeowner association boards do not become entrenched and unrepresentative of the association. As it does not appear that the amendments fully address the concerns of the opposition, should the bill advance, all stakeholders are encouraged to continue discussions to reach an amenable compromise regarding what quorum level is best for homeowner association elections. This bill was previously heard and approved by the Committee on Housing and Community Development by a unanimous 8-0 vote.
SUMMARY: Provides for a reduced quorum requirement for homeowner association board elections if the first attempt at holding election failed to establish a quorum. Specifically, this bill:
- Provides that an election of directors of a corporation that is a common interest development association, as specified, in the absence of meeting quorum as required by the association’s governing documents unless a lower quorum is authorized by the association’s governing documents, the association may adjourn the proceeding to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 20 percent of the association’s voting members present in person, by proxy, or by secret written ballot received.
- Provides that if the association’s governing documents require a quorum for election of directors, as a part of the general notice provided regarding the setting of an election date, a statement that the Board of Directors may call a subsequent meeting 20 days after a scheduled election if the required quorum is not reached at which time the quorum of the membership to elect directors will be 20 percent of the association’s members voting, in person, by proxy, or by secret ballot must be included.
- Requires that if a homeowner association opts to utilize the reduced quorum procedure pursuant to 1), the association must provide a general notice 15 days prior to the rescheduled election that contains the following:
- The date, time, and location of the meeting;
- The list of all candidates; and
- A statement that 20 percent of the association present or voting by proxy or secret ballot will satisfy the quorum requirements for the election of directors.
EXISTING LAW:
- Establishes the Davis-Stirling Common Interest Development Act and provides for the rules and regulations governing the operation of a residential common interest development and the respective rights and duties of the homeowner association and its members. (Civil Code Section 4000 et seq.)
- Prohibits the home association’s board of directors from taking action on an item of business outside of a board meeting. (Civil Code Section 4910 (a).)
- Requires the homeowner association to provide general notice of the time and place of a board meeting at least four days before a meeting, except as follows:
- Only two days’ notice is required for a non-emergency board meeting that is held solely in executive session; and
- No notice is required for an emergency meeting, as defined. (Civil Code Section 4920.)
- States that if a homeowner association is required to provide “general notice” of a meeting, it may deliver the notice by any of the following means:
- Any method constituting individual notice;
- Including the notice in a billing statement, newsletter, or other document;
- Posting the notice in a prominent location that is accessible to all members, as specified; or
- Television broadcast, if the association broadcasts television programming. (Civil Code Section 4045 (a).)
- Provides that if the homeowner association must provide “individual notice” of a meeting, it must deliver the notice by mail or overnight delivery unless the recipient has consented to delivery by email, facsimile, or other electronic means. (Civil Code Section 4040 (a).)
- Requires, annually, an owner of a separate interest within a homeowner association, to provide written notice to the association of all of the following:
- The address or addresses to which notices from the association are to be delivered;
- An alternate or secondary address to which notices from the association are to be delivered;
- The name and address of the owner’s legal representative, if any, including any person with power of attorney or other person who can be contacted in the event of the owner’s extended absence from the separate interest; and
- Whether the separate interest is owner-occupied, is rented out, if the parcel is developed but vacant, or if the parcel is undeveloped land. (Civil Code Section 4041.)
- Requires that all votes in a board election are to be counted and tabulated by the inspector or inspectors of elections in public at a properly noticed open meeting of the board or members and that any candidate or other member of the association may witness the counting and tabulation of the votes. Further prohibits any person, including a member of the association or an employee of the management company, from opening or otherwise reviewing any ballot prior to the time and place at which the ballots are counted and tabulated. (Civil Code Section 5120 (a).)
- Authorizes the president of the board of the homeowner association or any two directors, to call an emergency board meeting without notice if there are circumstances that could not reasonably have been foreseen which require immediate attention and possible action by the board and which of necessity make it impracticable to provide notice. (Civil Code Section 4923.)
- Permits any member of an association to bring a civil action against the homeowner association seeking declaratory or equitable relief for a violation of the laws governing homeowner association meetings, including meetings in which ballots are counted, within one year of the date the cause of action accrues. (Civil Code Section 4955 (a).)
- Requires homeowner association records to be retained and available for inspection as follows:
- For most records, including ballots, for the current fiscal year and for each of the previous two fiscal years; and
- For minutes of member and board meetings these records must be retained and available for inspection permanently. (Civil Code Section 5210 (a).)
- Requires homeowners associations, in elections of directors and recall elections, to provide general notice of all of the following at least 30 days before ballots are distributed:
- The date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections;
- The date, time, and location of the meeting at which ballots will be counted;
- The list of all candidates’ names that will appear on the ballot;
- Individual notice of a) through c) must be delivered pursuant to existing law if individual notice is requested by a member. (Civil Code Section 5115 (b).)
- Requires ballots and two preaddressed envelopes with instructions on how to return ballots to be mailed by first-class mail or delivered by the association to every member no less than 30 days prior to the deadline for voting, and requires associations to use procedures used by California counties for ensuring confidentiality of vote by mail ballots, as specified. (Civil Code 5115 (c).)
- For incorporated associations, requires a quorum at a meeting of members to be one-third of the voting power, represented in person or by proxy. Authorizes corporation bylaws to set a different quorum subject to specified restrictions. (Corporations Code 7512.)
- Provides that each director of a corporation, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified, unless the director has been removed from office, and except as otherwise provided in the articles or bylaws. (Corporations Code 7220 (b).)
- Authorizes, under specified circumstances, a county superior court to order a meeting or vote of members in a manner the court finds fair and equitable, if for any reason it is impractical or unduly difficult for any corporation to call or conduct a meeting of its members, delegates, or directors, or otherwise obtain their consent, and a director, officer, delegate, or member petitions the court for such authorization. (Corporations Code 7515 (a).)
- In an order issued pursuant to 15), authorizes the court to dispense with any requirement related to the holding of and voting at meetings or obtaining votes, including any requirement as to quorums or as to the number of percentage of votes needed for approval, that would otherwise be imposed by the articles, bylaws, or existing law. (Corporations Code 7515 (c).)
FISCAL EFFECT: As currently in print this bill is keyed non-fiscal.
COMMENTS: Homeowner associations are corporate entities that are designed to provide governance for units built within a common interest development. An association is governed by a board elected among the homeowners within the development. Pursuant to existing law, in order for an election for new board members to take place, a quorum must be reached. The quorum requirement is typically established in the association’s founding documents. Although homeowner associations function like quasi-local governments, the author and sponsors of this measure note that local governments can hold elections no matter how few people participate. In the event a homeowner association election cannot reach a quorum, the old board remains in place. These zombie-boards undermine participation and representation in the association. This measure would install a process whereby a homeowner association could lower its quorum for board elections to twenty percent of the association in the event that a voting quorum cannot be reached. In support of this bill, the author states:
California is home to more than 55,000 Community Associations, with more than 13 million residents. A community association is governed by its Covenants, Conditions and Restrictions (C, C, and Rs, or governing documents), which are drafted by the developer and generally include a minimum quorum requirement for raising assessments, board of director elections, and changes to the governing documents.
Currently, there is no remedy in the Davis-Stirling Act for an association that is not able to achieve quorum in board members elections, other than repeatedly conducting additional elections in the hope of achieving a quorum. Many associations are not able to achieve the quorum set forth in the governing documents, which then prevents new board members from being seated when they seek to challenge a sitting board member or prohibits vacant seats from being filled when more than one candidate is seeking the position. This legislation would remedy this situation.
While public elections do not have a quorum requirement, AB 1458 seeks balance by ensuring that a minimum of 20% of the members participate in an election.
Background on homeowner association governance. There are approximately 50,000 common interest developments in California. They vary in size and structure, but generally are characterized by the following: (1) separate ownership of individual residential units coupled with an undivided interest in common property; (2) covenants, conditions, and restrictions that limit the use of both separate interests and common property; and (3) management of common property and enforcement of restrictions by a homeowner association.
Governance of these developments and the homeowner associations that make up their governing bodies is regulated under the Davis-Stirling Act (Civil Code Section 1350 et seq.), which sets forth general rules governing common interest developments. Beyond the overarching state law, each individual association is also subject to specific rules and regulations set forth by the association’s “governing documents." These governing documents include the recorded declaration and any other documents, such as bylaws, operating rules of the association, or articles of incorporation that govern the operation of the association. Homeowner associations are governed by volunteer boards of directors who are elected by the members of the association and who are responsible for interpreting the governing documents and state law. The procedures for conducting association board elections are typically left to the governing documents of the association, outside of some basic parameters set in state law. To assist in managing the affairs of the association, many boards contract out the day-to-day operations of the association to professional managers or management companies who handle everything from community maintenance to the financial affairs of the association, as well as providing logistical assistance to association elections.
Existing statutory procedures are designed to ensure that homeowner association members are aware of the business of the association. Existing law requires homeowner associations to communicate with its membership on a variety of topics, including general issues impacting the entire association. These general notices include information regarding future board meetings, potential construction in common areas, and other topics that broadly concern the entire membership of the association. Additionally, associations are required to provide members with individual notice for issues related to their specific separate interests within the development. Individual notices include notices related to non or late-payment of associations dues and fees, notices of violations of association policies, and notices of potential legal action that the association might take against an individual member.
In order to facilitate the transmission of both general and individual notices, existing law requires the association to annually update contact information for all association members. In order to ensure that notices reach members at the proper location, existing law requires all association members to update contact information with the association including the address or addresses to which notices from the association are to be delivered, an alternate or secondary address to which notices from the association are to be delivered, the name and address of the owner’s legal representative, if any, including any person with power of attorney or other person who can be contacted in the event of the owner’s extended absence from the separate interest, and whether the separate interest is owner-occupied, is rented out, if the parcel is developed but vacant, or if the parcel is undeveloped land. Additionally, if an association member has consented to electronic delivery of notices, then the members must also provide a valid e-mail address to the association to facilitate the proper delivery of critical association-related information to the homeowner.
For some homeowner associations getting sufficient participation in association business can be difficult. Existing law requires a homeowner association’s governing documents, its Covenants, Conditions and Restrictions, to establish quorums for various actions by the association’s governing body. In order to ensure that the association’s governing body truly reflects the will of the association members, many associations use quorums for board elections. By law, these elections must occur whenever there is a vacancy on a board, or at minimum, every four years. In the event a quorum is not reached, several options exist. First, and most typical, an association simply holds repeated elections until a quorum is achieved. Second, Corporations Code Section 7515 provides a legal process where members of the association may petition a court for an order lowering the quorum threshold for a single election to the number of votes cast, however, this can be an expensive and time consuming endeavor. Finally, the association can vote to lower the quorum threshold, however, if the association suffers from a lack of participation this too can be difficult, as that vote is also subject to quorum requirements. Accordingly, when participation in homeowner association elections is low, the existing board can become entrenched.
This bill. Seeking to assist homeowner associations that suffer from low participation, this bill would permit an association to utilize a voting quorum of 20 percent of the membership if the first regularly schedule election fails to meet a quorum. As proposed to be amended, the lower quorum can only be utilized if the notice for the original election provided that the lower quorum may be used, and if the board seeks to use the lower quorum a second notice is provided to the members of the association at least 15 days prior to the second election. The second election is also prohibited from occurring within 20 days of the election in which a quorum was not reached.
Opposition concerns regarding voting rights have merit. This measure is opposed by the Center for California Homeowner Association Law. In opposition they note, “given the extraordinary powers that boards have over the property, the money, and the behavior of owners, the role of quorum is to ensure that there is sufficient participation by owners in the electoral process for choosing who among their neighbors shall be trusted with these powers.” The opposition notes that because associations function like quasi-local governments adequate participation in elections is critical. This point is meritorious, so much so that Governor Schwarzenegger vetoed a similar bill in 2010. (AB 1726 (Swanson, 2010).) In vetoing that bill, the Governor contended it would interfere with the “basic democratic principle” of homeowner associations.
Despite the merits of the opposition’s claims, it is not as if local government elections are a beacon of public participation. During the 2022 primary, only 14.45 percent of registered voters in Los Angeles County (822,545 participating voters out of an estimated 5,690,637 registered voters) took part in that election. (Los Angeles County reports low voter turnout in Primary Election, KCAL-9 News, available at: https://www.cbsnews.com/losangeles/news/los-angeles-county-reports-low-voter-turnout-in-primary-election/.) Unlike homeowner associations, those elected in municipal elections are permitted to serve no matter how low the turnout is. Indeed, should this measure be enacted, a homeowner’s association would be required to meet a participation threshold six percent higher than the participation rate in Los Angeles County in 2022. Nonetheless, the author and supporters of this bill are encouraged to continue working with the opposition to determine if there is an appropriate threshold for quorum requirements for homeowner association elections.
Proposed amendments seek to balance the need to ensure that homeowner association boards can function with new and diverse membership while protecting the voting interest of all members. The author and proponents of this measure contend that the highest level of participation in association elections is the goal. To that end, and in light of the proposal to lower quorum levels for rescheduled elections, the author is proposing to enhance the notices provided to homeowners regarding the forthcoming general board election and the potential for a subsequent election with a lower quorum. Accordingly, in order to utilize a lower quorum the initial election notice must disclose that a lower quorum could be subsequently used. This the following will be added to Civil Code Section 5115 (a):
(5) If the association’s governing documents require a quorum for election of directors, a statement that the Board of Directors may call a subsequent meeting at least 20 days after a scheduled election if the required quorum is not reached at which time the quorum of the membership to elect directors will be 20 percent of the association’s members voting, in person, by proxy, or by secret ballot.
Additionally, the timeline for rescheduled elections is being modified so that a subsequent election can occur. Additional amendments specify the content of the second notice. Thus subdivision (d) of Section 5115 will be amended to read as follows:
(2) For an election of directors of a corporation that is a common interest development association as defined in Section 4100, and in the absence of meeting quorum as required by the association’s governing documents or Section 7512 of the Corporations Code, unless a lower quorum is authorized by the association’s governing documents, the association may adjourn the proceeding to a date no less than 5 and no more than 30 days at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 20 percent of the association’s voting members present in person, by proxy, or by secret written ballot received.
(3) No less than 15 days prior to an election authorized pursuant to paragraph (2), the association shall provide general notice of the membership meeting which shall include:
(A) The date, time, and location of the meeting.
(B) The list of all candidates.
(C) A statement that 20 percent of the association present or voting by proxy or secret ballot will satisfy the quorum requirements for the election of directors.
Finally, a conforming change regarding the 20-day delay will be adopted in Corporations Code Section 7512.
Ongoing debate regarding the type of notice provided to homeowners. As noted above, residents within a homeowner association receive two forms of communication from the association, general and individual notices. This bill would make the election procedures adopted pursuant to this bill subject to two general notices. This change does not appear to be sufficient to ameliorate the concerns of the opposition. The opposition, again, raises a legitimate point for discussion. Given the heightened importance of a board election, an individual notice may be appropriate, especially for the second notice provided after an initial quorum has failed. However, the proponents of this measure note that the individual notice may not be necessary. First, they contend that any association member who wishes to receive all notices as an individual notice may register to do so. Second, given the time constraints they argue that individual notices may be too expensive and time consuming. Given the importance of maximizing the level of voter participation in homeowner association elections, the author may wish to consider making the second notice an individual notice.
ARGUMENTS IN SUPPORT: This measure is sponsored by the California Association of Community Managers and the Community Associations Institute’s California Legislative Action Committee. In support of the bill the Community Association’s Institute writes:
The Davis-Stirling Act requires that a common interest development (CID) be managed by an association and that elections related to the governance or administration of the CID follow specified standards, including the establishment of quorum.
Governing documents of many CIDs generally requires a quorum of more than 50% of eligible voters for a board of directors’ election to be valid. Unfortunately, achieving quorum has proven extremely difficult due to member apathy regardless of voter mobilization campaigns. This leads to additional elections and increasing costs for potential similar results. These instances lead to prolonged board vacancies, lead to delayed decision making, underrepresentation and potentially undemocratic selection of board members.
AB 1458 will remedy this situation by allowing a subsequent election to be valid if at least 20 percent of the membership votes in person, by proxy or by secret ballot.
ARGUMENTS IN OPPOSITION: This bill is opposed by the Center for California Homeowner Association Law and the law firm of Schiffer, LLC. In opposition to this measure, the Center for California Homeowner Association Law writes:
Board members are homeowners elected by their neighbors. The role of quorum is to ensure broad participation by owners when deciding who among their neighbors will be
• making the rules for the community,
• enforcing the rules,
• setting assessments and spending the millions they collect annually from owners1
• disciplining members.
We stress these functions, because, unlike other forms of government – the State of California, for example --associations have no separation of powers: legislative, executive, and judicial powers are fused in a single governing body: the board.
The State of California has endowed association boards with extraordinary powers, e. g. police powers to regulate behavior and discipline members, to set and enforce property standards, and even to foreclose on someone’s home if they fall behind on paying assessments. The authority and duties of associations is such that the California Appellate courts have, in multiple opinions, ruled that associations have all the trappings and powers of government.
If, as the sponsors of AB1458 assert, reaching quorum has proven to be difficult, then tools already exist in California law to help that is associations can:
• Petition the court for a reduction in quorum requirements
• Amend the quorum requirements in their government documents
Using these tools have the additional advantage of engaging the association’s membership in the process since a petition to the court requires that all interested parties be notified of the petition and changing the governing documents requires a membership vote. Either tool lets an association retain its sovereignty, that is: to make decisions about quorum for itself.
REGISTERED SUPPORT / OPPOSITION:
Support
California Association of Community Managers
Community Associations Institute - California Legislative Action Committee
Opposition
Center for Homeowner Association Law
Schiffer LLC
Analysis Prepared by: Nicholas Liedtke / JUD. / (916) 319-2334
Date of Hearing: April 12, 2023
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Buffy Wicks, Chair
ABPCA Bill Id:AB 1458 (
Author:Ta) – As Amended Ver:March 28, 2023
SUBJECT: Common interest developments: association governance: member election
SUMMARY: Authorizes a lower quorum requirement for common interest development (CID) association elections of directors under specified circumstances. Specifically, this bill:
- Authorizes an incorporated or unincorporated association, in the absence of meeting quorum as required by the association’s governing documents or existing law when voting for an election of directors, to adjourn an election proceeding to a date no less than 5 days and no more than 30 days after the adjourned proceeding, at which time the quorum required for electing directors is 10 percent of the association’s voting members present in person, by proxy, or of secret written ballots received.
- Provides that this lowered quorum threshold does not apply if a lower quorum is already authorized by the association’s governing documents.
EXISTING LAW:
- Establishes the Davis-Stirling Common Interest Development Act, which provides rules and regulations governing the operation of residential CIDs and the rights and responsibilities of Homeownership Associations (HOAs) and HOA members. (Civil Code (CC) Section 4000 et seq.)
- Requires HOAs, in elections of directors and recall elections, to provide general notice of all of the following at least 30 days before ballots are distributed:
- The date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections;
- The date, time, and location of the meeting at which ballots will be counted;
- The list of all candidates’ names that will appear on the ballot;
- Individual notice of a)-c) must be delivered pursuant to existing law if individual notice is requested by a member. (CC Section 5115(b))
- Requires ballots and two preaddressed envelopes with instructions on how to return ballots to be mailed by first-class mail or delivered by the association to every member no less than 30 days prior to the deadline for voting. Requires associations to use procedures used by California counties for ensuring confidentiality of vote by mail ballots, as specified. (CC 5115(c))
- Requires a quorum for elections of director and recall elections only if so stated in the governing documents of the association or other provisions of law. If a quorum is required by the governing documents, requires the inspector of elections to treat each ballot received as a member present at a meeting for purposes of establishing a quorum. (CC 5115(d))
- For incorporated associations, requires a quorum at a meeting of members to be one-third of the voting power, represented in person or by proxy. Authorizes corporation bylaws to set a different quorum subject to specified restrictions. (Corporations Code 7512)
- Provides that each director of a corporation, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified, unless the director has been removed from office, and except as otherwise provided in the articles or bylaws. (Corporations Code 7220(b))
- Authorizes, under specified circumstances, a county superior court to order a meeting or vote of members in a manner the court finds fair and equitable, if for any reason it is impractical or unduly difficult for any corporation to call or conduct a meeting of its members, delegates, or directors, or otherwise obtain their consent, and a director, officer, delegate, or member petitions the court for such authorization. (Corporations Code 7515(a))
- In an order issued pursuant to 6), authorizes the court to dispense with any requirement related to the holding of and voting at meetings or obtaining votes, including any requirement as to quorums or as to the number of percentage of votes needed for approval, that would otherwise be imposed by the articles, bylaws, or existing law. (Corporations Code 7515(c))
FISCAL EFFECT: None.
COMMENTS:
Author’s Statement: According to the author, “California is home to more than 55,000 Community Associations, with more than 13 million residents. A community association is governed by its Covenants, Conditions and Restrictions (C,C, and Rs, or governing documents), which are drafted by the developer and generally include a minimum quorum requirement for raising assessments, board of director elections, and changes to the governing documents.
Currently, there is no remedy in the Davis-Stirling Act for an association that is not able to achieve quorum in board members elections, other than repeatedly conducting additional elections in the hope of achieving a quorum. Many associations are not able to achieve the quorum set forth in the governing documents, which then prevents new board members from being seated when they seek to challenge a sitting board member or prohibits vacant seats from being filled when more than one candidate is seeking the position. This legislation would remedy this situation.
While public elections do not have a quorum requirement, AB 1458 seeks balance by ensuring that a minimum of 10% of the members participate in an election.”
Background on Common Interest Developments (CIDs): CIDs are a type of housing with separate ownership of housing units that also share common areas and amenities. There are a variety of different types of CIDs, including condominium complexes, planned unit developments, and resident-owned mobilehome parks. In recent years CIDs have represented a growing share of California’s housing stock. Data from 2019 indicates that there are an estimated 54,065 CIDs in the state that are made up of 5 million housing units, or about 35 percent of the state’s total housing stock.
CIDs are regulated under the Davis-Stirling Act (Civil Code Section 4000 et seq.) as well as the governing documents of the homeowners association (HOA), including the bylaws, declaration, and operating rules. CIDs can also have Covenants, Conditions, and Restrictions (CC&Rs) which are filed with the county and recorded at the time they are established. Owners in a CID are contractually obligated to abide by the CC&Rs and the governing documents of a CID, which specify rules such as parking policies, allowable modifications to homes, and rental restrictions. Additionally, HOAs are governed by a board of directors elected by the membership in elections that closely resemble California’s vote-by-mail process. In addition, many associations use a managing agent to assist with finances, logistics, and other services provided to homeowners.
HOA boards have a number of duties and powers. The board determines the annual assessments that members must pay in order to cover communal expenses. The board enforces the community rules and can propose as well as make changes to those rules. If members do not pay their assessments in full or on time, or if members violate the community rules, the board has the power to fine the members and, if necessary, the power to foreclose upon the offending member’s property. This combination of responsibilities and authority has led multiple courts to observe that HOAs function in many ways almost “as a second municipal government, regulating many aspects of [the homeowners’] daily lives.” (Villa Milano Homeowners Ass’n v. Il Davorge (2000) 84 Cal.App.4th 819, 836)
HOA Elections and Issues Related to Quorum: HOAs are required to hold elections for board directors when a seat becomes vacant and at least every four years. The Davis-Stirling Act requires HOA elections to conform to certain procedures, including double-stuffed ballots and the selection of at least one independent third party inspector of elections. Voting for board members is the fundamental way a homeowner in a CID can advocate to have their interests represented in the HOA’s governance. Recent legislative actions related to HOA election rules have addressed qualifications for nominees to the board (SB 323 (Wieckowski), Chapter 858, Statutes of 2019) and challenges with finding enough members who are willing to run for the board and procedures for election by acclamation (SB 754 (Moorlach), Chapter 858, Statutes of 2019, and AB 502 (Davies), Chapter 517, Statutes of 2021).
Quorum is the minimum number of members of an association that must be “present” – either in person or via mailed ballots – in order to make the proceedings of a meeting legally valid. As a general rule, the Davis-Stirling Act has no particular quorum requirement. Quorum requirements differ depending on the type of HOA that has been formed and whether or not quorum is required in HOA governing documents. In most instances, if quorum is required by an HOA’s governing documents, the quorum is a “50 percent + 1” threshold of members. If an HOA has chosen to incorporate as a nonprofit mutual benefit corporation, then state law establishes quorum at 33 percent of membership.
According to the proponents of this bill, a significant amount of HOAs report having trouble meeting quorum requirements for board elections. Regardless of quorum rules, the law provides that the board directors remain in office “until a successor has been elected and qualified,” meaning the board stays in place until the election is successful, or unless a director resigns (Corporations Code 7220(b)). There are a variety of ways that current law allows HOAs to try and address this problem. However, it should be noted that while HOAs are in many ways quasi-governmental bodies, the existence of a quorum requirement for board elections is a marked difference from election procedures for municipal, state, or federal government bodies, which do not have any such minimum threshold requirement for election results to be valid. In other words, a quorum requirement for association elections goes above and beyond what is required for government elections.
If an HOA has the same number of candidates for board positions as it does vacancies, then the HOA may bypass a full election and perform an election by acclamation. While this acclamation process was initially only open to larger HOAs over 6,000 units, AB 502 (Davies, Chapter 517, Statutes of 2021) expanded the ability to perform acclamation elections to all HOAs in the state, regardless of size. However, an HOA must have had a regular election within the past three years in order to utilize election by acclamation, and if there are more candidates than there are vacancies on the board, then acclamation is not a viable option.
One remedy to not meeting quorum is simply to abolish the quorum requirement from the board’s governing documents entirely. If a board is successful at amending the governing documents to eliminate the quorum requirement, then a subsequent board election would be valid without having to meet any threshold of members present. However, like a board election, this action requires the membership of the HOA to vote on an amendment to those governing documents, which may run into the same quorum threshold challenge that caused the need for the amendment in the first place.
Boards may also attempt to hold multiple elections and do more persistent member outreach in the hope that eventually they will receive enough ballots to achieve quorum. However, this can take many attempts, waste time and financial resources for the HOA, and there is no guarantee that any of the subsequent election attempts will actually result in meeting quorum. Smaller associations may have more success with persistent member outreach than large associations, some of which run into the hundreds or even thousands of members.
Individual board members may also resign their seat on the board, which creates a vacancy that a majority of the remaining board may then use to appoint a new director, though in most instances the appointed director will assume the remainder of the term of office for the resigning director. While in effect resignations may ultimately lead to the desired outcome – turnover of the board – this practice excludes the membership from being able to vote on who should serve on the board, and appointed directors may still be serving past when a resigning director’s term should otherwise have ended. If an entire board resigns or is left vacant all at once, there may be nobody available to appoint replacements, which can leave the HOA without governance and in a dangerous legal quagmire.
Lastly, Corporations Code Section 7515 provides a legal process by which HOAs or any member may petition a court for an order lowering the quorum threshold for a single election to the number of votes cast. There is a similar process available in the Davis-Stirling Act for amendments to CC&Rs that have supermajority or higher than normal amendment approval requirements – this process is outlined in Civil Code Section 4275. Supporters of the bill note that this petition process can take between 45 and 90 days to complete and can cost an association somewhere between roughly $10,000-$20,000 in legal services and fees, making it an unattractive alternative for many associations, particularly smaller ones that have only nominal legal services budgets. Additionally, this begs the question of whether intervention in HOA quorum cases is the best use of county superior court resources and capacity.
This bill proposes a new path to election legitimacy for HOAs who fail to meet quorum in an initial election attempt. Unless a lower quorum is authorized by the HOA’s governing documents, this bill would allow an HOA to adjourn the first failed election attempt to a date between five and 30 days after the adjourned proceeding, and hold a second election attempt at that subsequent reconvened meeting, at which time the quorum threshold would be 10 percent of the HOA’s voting members present in person, by proxy, or by secret written ballot received.
Arguments in Support: According to the Community Associations Institute’s California Legislative Action Committee, “Governing documents of many CIDs generally requires a quorum of more than 50% of eligible voters for a board of directors’ election to be valid. Unfortunately, achieving quorum has proven extremely difficult due to member apathy regardless of voter mobilization campaigns. This leads to additional elections and increasing costs for potential similar results. These instances lead to prolonged board vacancies, lead to delayed decision making, underrepresentation and potentially undemocratic selection of board members. AB 1458 will remedy this situation by allowing a subsequent election to be valid if at least 10 percent of the membership votes in person, by proxy or by secret ballot.”
Arguments in Opposition: According to the Center for California Homeowner Association Law, “Given the extraordinary powers that boards have over the property, the money, and the behavior of owners, the role of quorum is to ensure that there is sufficient participation by owners in the electoral process for choosing who among their neighbors shall be trusted with these powers. What AB1458 would permit is an undemocratic process through which a minimal number of homeowners – without any notice whatever to their neighbors – convene in secret in order to choose the board. Furthermore, the legislation offers no recourse for owners shut out of the process to challenge or overturn the seating of a board done in secret.”
Committee Amendments: In very small HOAs – for example, HOAs of 10 members or less – a 10 percent threshold would allow for one single member or a very small number of members to elect an entire board. Staff recommends that this bill be amended to increase the secondary quorum threshold from 10 percent of membership to 20 percent of membership, as follows:
- In Section 1 of the bill, amend Civil Code Section 5115(d)(2) as follows:
5115(d)(2). For an election of directors of a corporation that is a common interest development association as defined in Section 4100, and in the absence of meeting quorum as required by the association’s governing documents or Section 7512 of the Corporations Code, unless a lower quorum is authorized by the association’s governing documents, the association may adjourn the proceeding to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 10 20 percent of the association’s voting members present in person, by proxy, or by secret written ballot received.
- In Section 2 of the bill, amend Corporations Code Section 7512(e) as follows:
7512(e). For an election of directors of a corporation that is a common interest development association as defined in Section 4100 of the Civil Code, and in the absence of meeting quorum as required by the association’s governing documents or this section, unless a lower quorum is authorized by an association’s governing documents, the corporation may adjourn the proceeding to a date no less than 5 and no more than 30 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting to elect directors shall be 10 20 percent of the association’s voting members present in person, by proxy, or by secret written ballot received.
Related Legislation:
AB 502 (Davies), Chapter 517, Statutes of 2021 expanded the ability to perform acclamation elections to all HOAs in the state, regardless of size, and made other changes to the acclamation process.
AB 1726 (Swanson) of the 2009-2010 Session would have created a two-tiered reduced quorum threshold for HOAs who were unable to meet quorum requirements for board of directors elections. The bill would have set a statewide quorum standard for a second election attempt at 40 percent of the HOA’s voting power, and 33 percent for third or subsequent election attempts. This bill was vetoed by the Governor:
To the Members of the California State Assembly:
I am returning Assembly Bill 1726 without my signature.
This bill would allow a homeowners association (HOA) of a common interest development (CID) unable to achieve a quorum for a member meeting or an election of directors to lower the quorum requirement for the second election to 40% and for the third or additional elections to 33%, unless otherwise specified in the CID's governing documents.
I believe that this bill is unnecessary because existing law allows a HOA to amend its governing documents to establish a lower quorum. I am also concerned that this bill would interfere with the basic democratic principle of CIDs.
For these reasons I cannot sign this bill.
Sincerely,
Arnold Schwarzenegger
Double Referred: This bill was also referred to the Assembly Judiciary Committee, where it will be heard should it pass out of this committee.
REGISTERED SUPPORT / OPPOSITION:
Support
Community Associations Institute - California Legislative Action Committee (Sponsor)
California Association of Community Managers
Opposition
Center for Homeowner Association Law
Analysis Prepared by: Nicole Restmeyer / H. & C.D. / (916) 319-2085
Discussed in Hearing
59SEC
Assembly Floor
33SEC
Senate Floor
22MIN
Senate Standing Committee on Judiciary
9MIN
Senate Standing Committee on Housing
2MIN
Assembly Floor
15MIN
Assembly Standing Committee on Judiciary
14MIN
Assembly Standing Committee on Housing and Community Development
Bill Author
Bill Co-Author(s):