Amended in Senate June 24, 2013

Amended in Assembly May 2, 2013

Amended in Assembly April 25, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1360

Introduced by Assembly Member Torres

(Coauthor: Assembly Member Gordon)

February 22, 2013

An act to amend begin delete Section 5110 end delete begin insert Sections 5110 and 5125 end insert of, and to add Section 5117 to, the Civil Code, relating to common interest developments.

LEGISLATIVE COUNSEL’S DIGEST

AB 1360, as amended, Torres. Common interest developments: electronic voting.

Existing law, the Davis-Stirling Common Interest Development Act, defines and regulates common interest developments, which include community apartment projects, condominium projects, planned developments, and stock cooperatives. These provisions require that a common interest development be managed by an association and that elections related to the governance or administration of the common interest development conform to specified requirements, including, among other things, the requirement that the association adopt rules to allow one or more inspectors to appoint or oversee independent 3rd parties to verify signatures and count and tabulate votes. Existing law authorizes a secret paper ballot to be distributed and voted upon by the membership without a meeting, and imposes other requirements relating to proxies and secret ballots. Existing law authorizes a member of an association to bring a civil action to enforce his or her rights and authorizes a court to impose a civil penalty of up to $500 for a violation of the provisions governing elections. begin insert Existing law requires that the sealed ballots remain in the custody of the inspector or inspectors of elections or at a location designated by the inspector or inspectors until after the tabulation of the vote, and until the time allowed for challenging the election has expired, when custody is required to be transferred to the association. end insert

This bill would authorize an association to conduct elections by electronic voting, as specified, and would enact related provisions. The bill would require an association, if electronic voting is to be conducted, to provide each member with an opportunity to indicate that he or she will be voting electronically and to provide ballots, as specified. begin insert The bill would require the electronic balloting service provider to retain the ballot data until the time allowed for challenging the election has expired. end insert

The bill would also declare the Legislature’s intent in this regard.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

The Legislature finds and declares all of the
following:

(a) Common interest development association elections are
subject to specific procedures which are more restrictive than the
procedures for other nonprofit corporations that may conduct
balloting by electronic means under Section 7510 of the
Corporations Code.

(b) The procedures set forth in the Davis-Stirling Common
Interest Development Act do not permit the use of electronic
voting. The act requires the use of paper ballots and double
envelopes enclosing those ballots.

(c) The statutorily prescribed paper ballot voting procedure
failed to increase voter participation. Therefore, common interest
development membership meetings often fail for lack of quorum.

(d) Election quorums would be more easily achieved using
electronic balloting.

(e) Under existing law, the entire election process must be
repeated until quorum is achieved, which costs the association
significantly more money.

(f) Authority for the use of electronic voting would give
associations and their members an option that could save postage
and paper costs while preserving natural resources.

begin insert

(g) Electronic transactions are already commonly used in
California to conduct state voter registration, vehicle registration
and driver’s license renewals, payment of local real property and
state income taxes, banking transactions, travel reservations, and
corporation elections, because they are technologically secure
and provide users with confirmation of their transaction.

end insert begin insert

(h) Senate Bill 820 (Chapter 428 of the Statutes of 1999) created
the Uniform Electronic Transactions Act (Title 2.5 (commencing
with Section 1633.1) of Part 2 of Division 3 of the Civil Code),
which provides that a record or signature may not be denied legal
effect or enforceability solely because it is in electronic form, that
a contract may not be denied legal effect or enforceability solely
because an electronic record was used in its formation, and that
if a law requires a record to be in writing, or if a law requires a
signature, an electronic record satisfies the law.

end insert

SEC. 2.  

Section 5110 of the Civil Code is amended to read:

5110.  

(a) The association shall select an independent third
party or parties as an inspector of elections. The number of
inspectors of elections shall be one or three.

(b) An independent third party may be a member, but shall not
be a director or a candidate for director or be related to a director
or to a candidate for director. An independent third party shall not
be a person, business entity, or subdivision of a business entity
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) of Section 5105.

(c) The inspector or inspectors of elections shall do all of the
following:

(1) Determine the number of memberships entitled to vote and
the voting power of each.

(2) Determine the authenticity, validity, and effect of proxies,
if any.

(3) Receive ballots, or receive the voting results from an
electronic balloting service provider.

(4) Hear and determine all challenges and questions in any way
arising out of or in connection with the right to vote.

(5) Count and tabulate all votes, including the voting results
received pursuant to paragraph (3).

(6) Determine when the polls shall close, consistent with the
governing documents.

(7) Determine the tabulated results of the election.

(8) Perform any acts as may be proper to conduct the election
with fairness to all members in accordance with this article, the
Corporations Code, and all applicable rules of the association
regarding the conduct of the election that are not in conflict with
this article.

(d) An inspector of elections shall perform all duties impartially,
in good faith, to the best of the inspector of election’s ability, and
as expeditiously as is practical. If there are three inspectors of
elections, 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 elections is prima facie evidence of the
facts stated in the report.

(e) As used in this section:

(1) “Electronic balloting service provider” means a business
that meets all of the following requirements:

(A) Is not affiliated with the association management or
members.

(B) Is insured for liability.

(C) Protects the secrecy of begin delete ballots end delete begin insert the votes end insert .

(D) Protects the anonymity of the voter by ensuring that
members’ names are not begin delete listed end delete begin insert associated with the votes end insert when the
votes are tallied and submitted to the association by the electronic
balloting service provider.

(E) Produces a record verifying dates and times that votes were
cast.

begin insert

(F) Produces a list of members who voted electronically.

end insert begin delete

(F)

end delete

begin insert (G) end insert  Provides to a member a secure confirmation of the member’s
electronically cast vote.

(2) “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.

SEC. 3.  

Section 5117 is added to the Civil Code, to read:

5117.  

Notwithstanding Section 5115, subdivision (a) of Section
5120, or Section 5125, the association may conduct elections by
electronic voting conducted pursuant to subdivision (a) of Section
7510 of the Corporations Code. If electronic voting is to be
conducted in accordance with this section, the association shall
provide each member with an opportunity to indicate that he or
she will be voting electronically. For a member who indicated that
he or she will be voting electronically, not less than 30 days prior
to the voting deadline, the association shall provide to the member
the ballot and any related material by electronic transmission.
Member responses shall be returned to the association by electronic
transmission by the voting deadline. The association, for a member
who did not indicate that he or she would be voting electronically,
shall provide the member with a ballot pursuant to Section 5115.

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 5125 of the end insert begin insert Civil Code end insert begin insert is amended to read: end insert

5125.  

The sealed ballots at all times shall be in the custody of
the inspector or inspectors of elections or at a location designated
by the inspector or inspectors until after the tabulation of the vote,
and until the time allowed by Section 5145 for challenging the
election has expired, at which time custody shall be transferred to
the association. begin insert The electronic balloting service provider, as
defined in Section 5110, shall retain the ballot data until the time
allowed by Section 5145 for challenging the election has expired. end insert
If there is a recount or other challenge to the election process, the
inspector or inspectors of elections shall, upon written request,
make the ballots available for inspection and review by an
association member or the member’s authorized representative.
Any recount shall be conducted in a manner that preserves the
confidentiality of the vote.