BILL ANALYSIS Ó
AB 1799
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Date of Hearing: April 27, 2016
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
David Chiu, Chair
AB 1799
(Mayes) - As Amended April 4, 2016
SUBJECT: Common interest developments: association governance:
elections
SUMMARY: Exempts homeowners associations (HOA) in a common
interest development (CID) from election procedure requirements
in uncontested elections. Specifically, this bill:
1)Exempts an election from the election requirements of the
Davis-Stirling Common Interest Development Act if the election
of directors is uncontested.
2)Provides that an election of directors is uncontested if:
a) The number of candidates for election, including
write-in candidates, if applicable, does not exceed the
number of directors to be elected at that election; and
b) The association has declared the election is
uncontested.
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1)Provides that an association may declare an election of
directors is uncontested only if all of the following
procedures have been satisfied:
a) The election rules required by Section 5105 have been
adopted and complied with for the election.
b) All declared candidates were nominated before the
deadline for nominations and in accordance with all lawful
provisions of the association's governing documents.
c) The inspector of elections has informed the board that
the number of candidates does not exceed the number of
directors to be elected at that election.
d) The board votes in open session to declare the election
is uncontested after a hearing during an open board meeting
where members are able to make objections to the board
making that declaration.
e) At least 20 days before the board meeting for the vote
to declare the election is uncontested, the association
provides general notice to all members as set forth in
Section 4045 of all of the following:
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i. The intention of the board to vote at a regular
board meeting to declare the election of directors is
uncontested, and giving date, time, and place of that
board meeting.
ii. A disclosure to members of the names of all
candidates, however nominated, including self-nomination,
who will be declared elected if the board declares the
election is uncontested.
iii. The right of any member to appear at the board
meeting and make an objection to the board declaring the
election is uncontested before the board votes on the
matter.
f) The names of all candidates, however nominated, the
general notice required by subparagraph (E), any objection
to the board making the declaration that the election of
directors is uncontested, and the board vote declaring the
election of directors is uncontested shall be recorded in
the meeting minutes.
1)Requires, in cases where the association's governing documents
provide for write-in votes on the ballot, the association to
allow a write-in candidate to submit his or her name to the
inspector of elections up to 15 days after the board meeting
described in subparagraph (D) of paragraph (1).
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2)Requires a HOA to adopt a rule as part of the election
procedure that do both of the following:
a) Ensure that an announcement of an election and
notification of nomination procedures, including
self-nomination, will be provided to all members by general
notice at least 60 days before any election of the
directors; and
b) Ensure a member in good standing, who satisfies any
lawful requirements specified by the HOAs governing
documents will not be denied the right to vote or the right
to be a candidate for director.
1)Provides that a member may bring a cause of action in small
claims court for a violation of this Act.
EXISTING LAW:
1)Require elections for assessments, amendments to the governing
documents, members of the board of directors, or the granting
of exclusive use of common area must be conducted by secret
ballot.
2)Require the inspector of election may be one or three
individuals who have the following duties:
a) Determine the number of memberships entitled to vote and
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voting power;
b) Establish the authenticity, validity and effect of
proxies;
c) Receive votes and ballots, hear and determine all
challenges and questions;
d) Count and tabulate all votes;
e) Determine when polls close; and
f) Determine the results of the election.
1)Requires a home owners association to select one or 3
independent 3rd parties as an inspector or inspectors of
elections.
2)Requires the association's elections to be conducted by the
inspector or inspectors of elections in accordance with
specified procedures.
FISCAL EFFECT: None
COMMENTS:
Background: There are over 50,220 CIDs in the state that
comprise over 4.8 million housing units, or approximately one
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quarter of the state's housing stock. CIDs include
condominiums, community apartment projects, housing
cooperatives, and planned unit developments. 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 a HOA. CIDs are
governed by the Davis Stirling Act (the Act) as well as the
governing documents of the HOA, including bylaws, declaration,
and operating rules. The Act requires elections to conform to
an extensive process including double stuffed ballots and the
HOA to select one or three independent third parties as an
inspector or inspectors of elections. AB 569, Chau, Chapter
661, Statutes of 2014 exempted HOAs from these procedures in
cases where their bylaws require all of the members to serve on
the board of directors.
This bill would allow the board of directors of a HOA to declare
an election uncontested if the number of candidates running for
election does not exceed the number of directors to be elected
at the election. In order to qualify, the election would have to
comply with all properly adopted election rules, all candidates
must be nominated before the deadline and in compliance with the
governing documents, and the inspector of elections would have
to declare that the number of candidates does not exceed the
number of directors to be elected. Twenty days prior to
declaring the election uncontested, the HOA would be required to
notify the members that the board is planning to vote that the
election is uncontested and the right of the members to object
to the board declaring the election uncontested.
Write-in candidates : In some cases, the governing documents of
a HOA allow for members to write-in candidates for an election.
After the HOA declares that an election is uncontested at a
board meeting, members would have 15 days to write-in a
candidate for election. If one or more write-in candidates are
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received and the number of candidates exceeds the number of
directors to be elected than AB 1799 requires an election to be
held. If after 15 days the number of write-in candidates and
the number of candidates does not exceed the number of open
positions on the board then the election results will be sealed
and the any write-in members will be added as members. It's
possible that there may not be enough members running for the
open positions on the board and if additional candidates write
in their names this bill would add them to the board
automatically.
Purpose of this bill : According to the author, "CID board
elections are often uncontested, with the number of candidates
does not exceeding the number of vacant seats. Current law
requires such uncontested elections to follow the same election
procedures as contested elections, including minimum vote
thresholds and costly third-party verification of results. These
costs are a burden on the budgets of CIDs, particularly
lower-income communities. AB 1799 exempts homeowner associations
from the costly election procedure requirements in current law,
but only in instances where the requirements are unnecessary
because the number of candidates does not exceed the number of
open seats. AB 1799 will return these resources to the budgets
of homeowner associations, allowing for additional improvements
to shared community features."
Arguments in support: According to California Association of
Community Managers, elections of board members are an important
part of how CIDs come together to build and maintain healthy
communities. In certain instances, the election of directs may
be uncontested, even after strict adherence to the CID bylaws
and voting election rules that involve numerous attempts to
solicit nominees. In these instances, AB 1799 allows CIDs the
opportunity to save the costs of a protracted and costly
election process and seat a new board of directors in a timely
manner thereby making for a more production CID."
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Arguments in opposition : According to the Center for California
Homeowner Association Law, "Homeowners who buy a home in an
association have no voice in its creation by local government
and no choice in whether or not to join it: membership is
mandatory and so are assessments. The only instrument for an
owner to express choice is his individual vote: the homeowner's
vote to choose the leadership for the association's governing
board and the homeowner's decision to become a candidate for
seat on the governing board?AB 1799 undermines the basic right
and restores control of elections to incumbents."
Staff comments:
This bill would allow for write-in candidates if the governing
documents provide a process for them. The committee may wish to
allow for a process for write-in candidates regardless of
whether the governing documents specifically allow for them.
REGISTERED SUPPORT / OPPOSITION:
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Support
California Association of Community Managers
Community Associations Institute
Individuals (4)
Opposition
California Alliance for Retired Americans
Center for California Homeowner Association Law
Rutgers School of Law Constitutional Rights Clinic
Individuals (1)
Analysis Prepared by:Ken Spence / H. & C.D. / (916) 319-2085
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