BILL ANALYSIS �
AB 1360
Page 1
ASSEMBLY THIRD READING
AB 1360 (Torres)
As Amended May 2, 2013
Majority vote
HOUSING 7-0
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|Ayes:|Torres, Beth Gaines, | | |
| |Atkins, Brown, Chau, | | |
| |Maienschein, Mullin | | |
| | | | |
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SUMMARY : Allows a homeowners' association (HOA) in a common
interest development (CID) to conduct an election via electronic
voting. Specifically, this bill :
1)Makes legislative findings.
2)Requires an HOA to give a member an opportunity to indicate if
he or she wishes to vote electronically.
3)Requires an HOA to provide a ballot and any related material
to a member voting electronically at least 30 days prior to
the voting deadline by electronic transmission.
4)Requires the inspector of elections to receive the voting
results from an electronic balloting services provider and to
count and tabulate the electronic votes.
5)Requires an HOA to provide members who indicated that they
will not be voting electronically a paper ballot pursuant to
Civil Code Section 5115.
6)Defines an "electronic balloting service provider" as a
business that:
a) Is not affiliated with the HOA management or members;
b) Is insured for liability;
c) Protects the secrecy of the ballots;
d) Protects the anonymity of the voter by insuring that
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when the votes are tallied and submitted to the HOA the
members names are not listed;
e) Produces a record verifying the dates and times that the
votes were cast; and
f) Provides members a secure confirmation of their
electronically cast vote.
FISCAL EFFECT : None
COMMENTS : There are over 49,000 CIDs in the state that comprise
over 4.9 million housing units, or approximately one-quarter of
the state's housing stock. CIDs include condominiums, community
apartment projects, housing cooperatives, and planned unit
developments. CIDs range in size from three to 27,000
individual units. They are characterized by a separate
ownership of dwelling space coupled with an undivided interest
in a common property, restricted by covenants and conditions
that limit the use of common area and the separate ownership
interests, and the management of common property and enforcement
of restrictions by an HOA. CIDs are governed by the Davis
Stirling Act (Act) as well as the governing documents of the
association, including bylaws, declaration, and operating rules.
CIDs are run by volunteer boards of directors, the members of
which may have little or no experience managing real property or
governing a nonprofit association and who must interpret the
complex laws regulating CIDs. Boards must not only interpret
the law, but enforce the restrictions and rules imposed by the
governing documents and state law.
In addition to interpreting an HOA's individual governing
documents, boards and homeowners must also follow the state law
governing CIDs. The governing law has two main sources, the
Corporations Code and the Act. If an HOA is incorporated it is
typically governed by the Nonprofit Mutual Benefit Corporation
Law. An unincorporated HOA is subject to both the general law
on unincorporated associations and specific provisions of the
Nonprofit Mutual Benefit Corporations Code. Although the
Department of Real Estate oversees the early stages of the
development of a CID, once a majority of the units are sold
there is no entity that oversees HOA governance. To enforce
state law governing CIDs and the governing documents, members
must pursue remedies in the courts.
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Election procedures in CIDs: The existing CID election
procedure is intended to provide secrecy to members and involves
an extensive process, including the provision of double stuffed
ballots. HOAs are required to secure an inspector of elections
to open and tally all ballots received in an election. A
problem reported by CIDs, regardless of size, is the challenge
of getting enough members of the HOA to participate in an
election to achieve a quorum. For an election to be valid, the
governing documents of an HOA generally require that a quorum of
the members vote. In some cases HOAs are not able to achieve a
quorum in the first election and must conduct subsequent
elections, which they report is a costly endeavor. Ultimately
this cost, like all costs to operate the CID, is borne by the
members through their assessments.
Purpose of this bill: This bill would allow members of an HOA
to opt in to electronic voting as an alternative to voting by
paper ballot. According to the author, this bill seeks to
increase voter participation in HOA elections while contributing
to reductions in the use of paper and providing cost-saving
opportunities for HOAs in the administration of elections.
Members would be given the option to vote electronically. If
they decided not to, they would receive a paper ballot and would
vote according to the existing procedure outlined in law.
Secrecy of ballots: One of the main goals of the existing
election procedure for CIDs is to maintain secrecy. The double
stuffed ballots and independent third party inspector of
elections are intended to insure that members are confident that
they can freely vote without reprisal. At the same time, some
HOAs contend that the existing process is cumbersome and costly
and that apathetic members do not vote in elections, both of
which mean HOAs incur extra costs for multiple elections. The
challenge to allowing electronic balloting is balancing the
desire for secrecy with the goal of greater voter participation.
Role of inspector of elections: This bill still maintains a
role for the inspector of elections to receive, count, and
tabulate the voting results from the electronic balloting
service provider. In the case of paper ballot voting the role
of the inspector is clear. With electronic voting, it is not
entirely clear what type of record the electronic voting service
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provider would provide of the votes or how the inspector of
elections would count and certify them.
Arguments in support: The board of directors of Laguna Woods
Village supports this bill. Laguna Woods Village is made up of
18,000 senior citizens residing in 12,736 homes in three housing
non-profit mutual benefit corporations, two condominium
associations, and one cooperative housing corporation. The
board of directors of Laguna Woods Village writes, "This bill
would provide an option for an association such as ours to offer
an opt-in electronic voting option that would afford an
opportunity for increased convenience thereby increasing voter
participation as well as reducing the cost of conducting
elections which cost approximately $15,000 annually."
Arguments in opposition: The Center for California Homeowner
Association Law (CCHAL) opposes this bill and raises concerns
that the bill could jeopardize the secrecy of the ballots.
CCHAL contends the bill does not address several key questions,
including how secrecy of the ballots will be maintained, how
electronic ballots can be audited, and what the chain of custody
is for ballots in electronic balloting. CCHAL maintains that
the rationale for the bill is that electronic balloting
increases voter participation, but that no research from a
neutral third party establishes that this outcome will be
achieved.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0000326