Senate Bill 323 took effect in January 2020, creating new procedural requirements for HOAs and also unintentionally creating many problems and unanswered questions. Consequently, California HOAs have many struggles to consider in their elections in 2020 and beyond.
One of the first issues with the law is that it did not create a grace period before it took effect. Since the election process under the new law takes more than 90 days to complete, what do associations do if their election is in the first four months of the year? Are their elections invalid, no matter what they do? Do they follow their bylaws and hold the election as scheduled, or delay their election several months in order to comply with the new timelines?
Another question regards board eligibility. If the law’s single mandatory eligibility standard (membership) and four optional standards are the only standards allowed, then many longstanding eligibility standards in thousands of HOA bylaws across the state are now erased – standards such as candidates cannot be suing the HOA when they run, cannot have longstanding unresolved rule violations, must live in the HOA, or sign a pledge for good conduct and ethics. It is hard to comply with a law which is not clear.
Another consequence of the vagueness of the law regards term limits. Many HOAs amend (through membership vote) term limits into their bylaws. However, that also is an eligibility standard, so if in fact there are only five permitted eligibility requirements, term limits are now outlawed in California HOAs.
Under Corporations Code 7511(c), if 5% of the members petition for vote to recall directors, that vote must be held within 90 days of the petition – except that then the timing of revised Civil Code 5115, with its required 3 consecutive 30 day intervals, cannot be met. So, which statute to violate? Corporations 7511(c) or Civil 5115? HOA boards should not have to decide which law it will follow and which it will violate.
Clearly, associations may not under new Civil 5105(g) for any reason deny a ballot to a member and so cannot suspend member voting rights. However, this overrides many HOA CC&Rs and bylaws permitting suspension of voting rights.
The new Civil Code 5105(e) requires that rejected candidates be given a notice of internal dispute resolution (“IDR”) or they cannot be disqualified from the ballot. However, what if the candidate is not a member but the HOA neglects to invite the candidate to IDR- does that provision apply to non-members (a mandatory disqualification)? Can non-members be candidates simply because they did not receive an invitation to IDR?
How long must the HOA keep election records? For many years, the inspector of elections had to preserve election materials for one year (the time during which someone could challenge the result), but Civil 5200(a)(14) now says that election materials must be made available to requesting homeowners for the current and two prior years. However, why should these records be retained beyond the time period for challenges?
One final unresolved question is whether all the requirements of the new election procedures apply to other votes, such as assessments or governing document amendments – must those votes also take 90 days?
Associations facing these issues should consult their legal counsel.
Written by Kelly G. Richardson
Kelly G. Richardson Esq., CCAL, is a Fellow of the College of Community Association Lawyers and a Partner of Richardson | Ober | DeNichilo LLP, a California law firm known for community association advice. Submit questions to Kelly@rodllp.com. Past columns at www.HOAHomefront.com. All rights reserved®.