BILL NUMBER: SB 61 CHAPTERED BILL TEXT CHAPTER 450 FILED WITH SECRETARY OF STATE OCTOBER 3, 2005 APPROVED BY GOVERNOR OCTOBER 3, 2005 PASSED THE SENATE SEPTEMBER 8, 2005 PASSED THE ASSEMBLY SEPTEMBER 6, 2005 AMENDED IN ASSEMBLY SEPTEMBER 2, 2005 AMENDED IN ASSEMBLY AUGUST 31, 2005 AMENDED IN ASSEMBLY JULY 6, 2005 AMENDED IN ASSEMBLY JUNE 23, 2005 AMENDED IN SENATE APRIL 12, 2005 AMENDED IN SENATE MARCH 14, 2005 INTRODUCED BY Senator Battin (Principal coauthor: Assembly Member Jones) JANUARY 14, 2005 An act to amend Section 1357.120 of, to amend the heading of Article 2 (commencing with Section 1363.05) of Chapter 4 of Title 6 of Part 4 of Division 2 of, and to add Sections 1363.03, 1363.04, and 1363.09 to, the Civil Code, relating to common interest developments. LEGISLATIVE COUNSEL'S DIGEST SB 61, Battin Common interest developments: elections. Existing law creates and regulates common interest developments and requires them to have a recorded declaration containing specified information and permits them to levy assessments. Existing law establishes, in certain situations, voting requirements for amendments of the declaration and the levy of assessments. Existing law establishes the Common Interest Development Open Meeting Act. Existing law requires that a common interest development be managed by an association. Existing law regulates a broad range of activities associated with statewide, local, and special elections. This bill would require that an association adopt rules, pursuant to specified procedures, to provide equal access to various association media as part of election campaigns, as specified, and to establish qualifications for candidates and voting, as specified, among other things. The bill would also make a conforming change. The bill would require that elections within a common interest development regarding assessments, selection of members of the association board of directors, amendments to the governing documents, or the grant of exclusive use of common area property be held by secret ballot, as specified. The bill would require that a common interest development select an independent 3rd party, as specified, as an inspector of election, who would be granted specified powers, for these elections. The bill would require that ballots and two preaddressed envelopes with instructions on how to return ballots be mailed to each member at least 30 days prior to the deadline for voting, be handled in a specified manner, and that votes be counted and tabulated by the inspector in public at a noticed meeting. The bill would establish additional procedures for storage and review of election results. The bill would prohibit association funds from being spent for campaign purposes, as specified, in connection with an association board election or in connection with any other association election, except as specified. The bill would permit a member of an association to bring a civil action, as specified, for violations of these provisions, and other provisions regarding open meetings, by his or her association, and would impose a civil penalty of up to $500 per violation. The provisions of this bill would be operative July 1, 2006, and would become operative only if AB 1098 is enacted and becomes effective, as specified. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 1357.120 of the Civil Code is amended to read: 1357.120. (a) Sections 1357.130 and 1357.140 only apply to an operating rule that relates to one or more of the following subjects: (1) Use of the common area or of an exclusive use common area. (2) Use of a separate interest, including any aesthetic or architectural standards that govern alteration of a separate interest. (3) Member discipline, including any schedule of monetary penalties for violation of the governing documents and any procedure for the imposition of penalties. (4) Any standards for delinquent assessment payment plans. (5) Any procedures adopted by the association for resolution of disputes. (6) Any procedures for reviewing and approving or disapproving a proposed physical change to a member's separate interest or to the common area. (7) Procedures for elections. (b) Sections 1357.130 and 1357.140 do not apply to the following actions by the board of directors of an association: (1) A decision regarding maintenance of the common area. (2) A decision on a specific matter that is not intended to apply generally. (3) A decision setting the amount of a regular or special assessment. (4) A rule change that is required by law, if the board of directors has no discretion as to the substantive effect of the rule change. (5) Issuance of a document that merely repeats existing law or the governing documents. SEC. 2. The heading of Article 2 (commencing with Section 1363.05) of Chapter 4 of Title 6 of Part 4 of Division 2 of the Civil Code is amended to read: Article 2. Elections and Meetings SEC. 3. Section 1363.03 is added to Article 2 (commencing with Section 1363.05) of Chapter 4 of Title 6 of Part 4 of Division 2 of the Civil Code, to read: 1363.03. (a) An association shall adopt rules, in accordance with the procedures prescribed by Article 4 (commencing with Section 1357.100) of Chapter 2, that do all of the following: (1) Ensure that if any candidate or member advocating a point of view is provided access to association media, newsletters, or Internet Web sites during a campaign, for purposes that are reasonably related to that election, equal access shall be provided to all candidates and members advocating a point of view, including those not endorsed by the board, for purposes that are reasonably related to the election. The association shall not edit or redact any content from these communications, but may include a statement specifying that the candidate or member, and not the association, is responsible for that content. (2) Ensure access to the common area meeting space, if any exists, during a campaign, at no cost, to all candidates, including those who are not incumbents, and to all members advocating a point of view, including those not endorsed by the board, for purposes reasonably related to the election. (3) Specify the qualifications for candidates for the board of directors and any other elected position, and procedures for the nomination of candidates. A nomination or election procedure shall not be deemed reasonable if it disallows any member of the association from nominating himself or herself for election to the board of directors. (4) Specify the qualifications for voting, the voting power of each membership, the authenticity, validity, and effect of proxies, and the voting period for elections, including the times at which polls will open and close. (5) Specify a method of selecting one or three independent third parties as inspector, or inspectors, of election utilizing one of the following methods: (A) Appointment of the inspector or inspectors by the board. (B) Election of the inspector or inspectors by the members of the association. (C) Any other method for selecting the inspector or inspectors. (b) Notwithstanding any other law or provision of the governing documents, an election within a common interest development regarding assessments, selection of members of the association board of directors, amendments to the governing documents, or the grant of exclusive use of common area property pursuant to Section 1363.07 shall be held by secret ballot in accordance with the procedures set forth in this section. (c) (1) The association shall select an independent third party or parties as an inspector of election. The number of inspectors of election shall be one or three. (2) For the purposes of this section, an independent third party includes, but is not limited to, a volunteer poll worker with the county registrar of voters, a licensee of the California Board of Accountancy, or a notary public. An independent third party may be a member of the association, but may not be a member of the board of directors or a candidate for the board of directors or related to a member of the board of directors or a candidate for the board of directors. An independent third party may not be a person who is currently employed or under contract to the association for any compensable services unless expressly authorized by rules of the association adopted pursuant to paragraph (5) of subdivision (a). (3) The inspector or inspectors of election shall do all of the following: (A) Determine the number of memberships entitled to vote and the voting power of each. (B) Determine the authenticity, validity, and effect of proxies, if any. (C) Receive ballots. (D) Hear and determine all challenges and questions in any way arising out of or in connection with the right to vote. (E) Count and tabulate all votes. (F) Determine when the polls shall close. (G) Determine the result of the election. (H) Perform any acts as may be proper to conduct the election with fairness to all members in accordance with this section and all applicable rules of the association regarding the conduct of the election that are not in conflict with this section. (4) An inspector of election shall perform his or her duties impartially, in good faith, to the best of his or her ability, and as expeditiously as is practical. If there are three inspectors of election, the decision or act of a majority shall be effective in all respects as the decision or act of all. Any report made by the inspector or inspectors of election is prima facie evidence of the facts stated in the report. (d) Any instruction given in a proxy issued for an election that directs the manner in which the proxy holder is to cast the vote shall be set forth on a separate page of the proxy that can be detached and given to the proxy holder to retain. The proxy holder shall cast the member's vote by secret ballot. (e) 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 voter absentee 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 prints and signs his or her name, address, and lot, or parcel, or unit number that entitles him or her to vote. (2) The second envelope is addressed to the inspector or inspectors of election, 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 election. The member may request a receipt for delivery. (f) All votes shall be counted and tabulated by the inspector or inspectors of election in public at a properly noticed open meeting of the board of directors or members. Any candidate or other member of the association may witness the counting and tabulation of the votes. No person, including a member of the association or an employee of the management company, shall open or otherwise review any ballot prior to the time and place at which the ballots are counted and tabulated. (g) The results of the election shall be promptly reported to the board of directors of the association and shall be recorded in the minutes of the next meeting of the board of directors and shall be available for review by members of the association. Within 15 days of the election, the board shall publicize the results of the election in a communication directed to all members. (h) The sealed ballots at all times shall be in the custody of the inspector or inspectors of election or at a location designated by the inspector or inspectors until after the tabulation of the vote, at which time custody shall be transferred to the association. (i) After tabulation, election ballots shall be stored by the association in a secure place for no less than one year after the date of the election. In the event of a recount or other challenge to the election process, the association shall, upon written request, make the ballots available for inspection and review by association members or their authorized representatives. Any recount shall be conducted in a manner that shall preserve the confidentiality of the vote. (j) The provisions of this section apply to both incorporated and unincorporated associations, notwithstanding any contrary provision of the governing documents. SEC. 4. Section 1363.04 is added to Article 2 (commencing with Section 1363.05 of Chapter 4 of Title 6 of Part 4 of Division 2 of the Civil Code, to read: 1363.04. (a) Association funds shall not be used for campaign purposes in connection with any association board election. Funds of the association shall not be used for campaign purposes in connection with any other association election except to the extent necessary to comply with duties of the association imposed by law. (b) For the purposes of this section "campaign purposes" include, but are not limited to, the following: (1) Expressly advocating the election or defeat or any candidate that is on the association election ballot. (2) Including the photograph or prominently featuring the name of any candidate on a communication from the association or its board, excepting the ballot and ballot materials, within 30 days of an election, provided that this is not a campaign purpose if the communication is one for which subdivision (a) of Section 1363.03 requires that equal access be provided to another candidate or advocate. SEC. 5. Section 1363.09 is added to Article 2 (commencing with Section 1363.05) of Chapter 4 of Title 6 of Part 4 of Division 2 of the Civil Code, to read: 1363.09. (a) A member of an association may bring a civil action for declaratory or equitable relief for a violation of this article by an association of which he or she is a member, including, but not limited to, injunctive relief, restitution, or a combination thereof, within one year of the date the cause of action accrues. Upon a finding that the election procedures of this article, or the adoption of and adherence to rules provided by Article 4 (commencing with Section 1357.100) of Chapter 2, were not followed, a court may void any results of the election. (b) A member who prevails in a civil action to enforce his or her rights pursuant to this article shall be entitled to reasonable attorney's fees and court costs, and the court may impose a civil penalty of up to five hundred dollars ($500) for each violation, except that each identical violation shall be subject to only one penalty if the violation affects each member of the association equally. A prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation. (c) A cause of action under Section 1363.03 with respect to access to association resources by a candidate or member advocating a point of view, the receipt of a ballot by a member, or the counting, tabulation, or reporting of, or access to, ballots for inspection and review after tabulation may be brought in small claims court if the amount of the demand does not exceed the jurisdiction of that court. SEC. 6. This act shall become operative only if Assembly Bill 1098 of the 2005-06 Regular Session is enacted and becomes effective on or before January 1, 2006. SEC. 7. This act shall become operative on July 1, 2006.