BILL ANALYSIS Ó
SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
Senator Jim Beall, Chair
2015 - 2016 Regular
Bill No: AB 1799 Hearing Date: 6/14/2016
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|Author: |Mayes |
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|Version: |6/6/2016 |
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|Urgency: |No |Fiscal: |No |
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|Consultant|Alison Dinmore |
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SUBJECT: Common interest developments: association governance:
elections
DIGEST: This bill exempts homeowner associations (HOA) in a
common interest development (CID) from election procedure
requirements in uncontested elections.
ANALYSIS:
Existing law:
1) Requires the election and removal of directors, amendments
to governing documents, or the grant of exclusive use of
common areas to be held by secret ballot.
2) Provides that directors shall not be required to be elected
if the governing documents provide that one member from each
separate interest is a director.
3) Requires the HOA to adopt election rules that do the
following:
a) Ensure that if any candidate or member advocating a
point of view is provided access to association media,
newsletters, or web site during a campaign, and that equal
access shall be provided to all candidates and members, for
purposes reasonably related to the election
b) Ensure access to common- area meeting space at no cost
AB 1799 (Mayes) Page 2 of ?
to all candidates
c) Specify the qualifications for candidates for the board
and any other elected position, and procedures for the
nomination of candidates, consistent with the governing
documents. A nomination shall not be deemed reasonable if
it disallows any member from nominating himself or herself
for election to the board
d) Specify the qualifications for voting, the voting power
of each membership, the authenticity, validity, effect of
proxies, and the voting period for elections. This would
include the times at which polls will open and close,
consistent with the governing documents
e) Specify a method for selecting one or three independent
third parties as elections inspector or inspectors of
elections. Inspectors may appoint or oversee additional
independent third-party persons to verify signatures and to
count and tabulate votes as the inspector or inspectors
deem appropriate
4) Requires the inspector of elections to be one or three
individuals who have the following duties:
a) Determine the number of memberships entitled to vote and
the voting power of each
b) Determine the authenticity, validity, and the effect of
proxies;
c) Receive votes and ballots and hear and determine all
challenges and questions
d) Count and tabulate all votes
e) Determine when polls close
f) Determine the results of the election
5) Permits the nomination of candidates from the floor of
membership meetings or nomination by any other manner.
6) Permits a member of an association to bring a cause of
action in small claims court against the HOA if the
association restricts 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, access to, ballots for inspection and review
after the tabulation.
AB 1799 (Mayes) Page 3 of ?
This bill:
1) Provides that directors shall not be required to be elected
if the election is uncontested. An election of directors is
uncontested if 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 the
HOA has declared the election uncontested.
2) Permits an HOA to declare an election to be uncontested only
if all of the following procedures have been satisfied:
a) Required election rules 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 HOA'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 the 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 HOA provides
general notice to all members as set forth by the
following:
i. The intention of the board to vote at a regular board
meeting to declare the election of directors is
uncontested, and giving the 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 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, any objection to the board making
the declaration that the election of directors is
AB 1799 (Mayes) Page 4 of ?
uncontested, and the board vote declaring the election of
the directors is uncontested shall be recorded in the
meeting minutes
3) If the HOA governing documents provide for write-in votes on
the ballot, the HOA shall allow 15 days after the board
meeting declaring an uncontested election for a write-in
candidate to submit his or her name to the inspector of
elections.
a) In the event one or more write-in candidates are timely
submitted and additional candidates result in the total
number of candidates exceeding the number of directors to
be elected at that election, an election shall be held
pursuant to general election rules. If after the 15-day
period the total number of candidates, including the number
of write-in candidates, does not exceed the number of
directors to be elected at that election, the uncontested
election results shall be sealed and become effective
immediately, with any write-in candidates added as members.
The new board shall take place immediately following the
seal of the election.
b) If an HOA's governing documents do not provide for
write-in votes on the ballot, the HOA must provide at least
15 days' general notice of a self-nomination process
following the board determination of an uncontested
election.
4) Requires the HOA to adopt rules that:
a) Ensure that an announcement of an election and
notification of nomination procedures, including
self-nomination, shall be provided to all members by
general notice at least 60 days before an election for
directors.
b) Ensure a member who satisfies the lawful qualifications
specified by the association's rules specifying the
qualifications for candidates for the board and any other
elected position, and the association's governing
documents, shall not be denied the right to be a candidate
for director.
c) Ensure a member who satisfies all lawful qualifications
specified by rules adopted by the association, which
specify the qualifications for voting, and the
association's governing documents, shall not be denied the
AB 1799 (Mayes) Page 5 of ?
right to vote.
5) Provides that a member may bring a cause of action in small
claims court for a violation of this act.
COMMENTS:
1) Purpose of this bill. According to the author, CID board
elections are often uncontested, with the number of candidates
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. In one example from the Laguna Woods HOA, a board
election cost as much as $20,000, including ballot printing,
mailing, and inspector of election services. In uncontested
elections, this expense is wholly unnecessary and
unnecessarily burdens CID budgets. This bill exempts HOAs
from the costly election procedure requirements in current law
when the number of candidates does not exceed the number of
open seats. It includes a structured process, notice
requirements, and other safeguards.
2) CIDs background. A CID is a form of real estate in which
each homeowner has an exclusive interest in a unit or lot and
a shared or undivided interest in common-area property.
Condominiums, planned unit developments, stock cooperatives,
community apartments, and many resident-owned mobilehome parks
all fall under the umbrella of common interest developments.
There are over 50,220 CIDs in California that comprise over
4.8 million housing units, or approximately one-quarter of the
state's housing stock. CIDs are governed by an HOA. The
Davis-Stirling Common Interest Development Act provides the
legal framework under which CIDs are established and operate.
In addition to the requirements of the act, each CID is
governed according to the recorded declarations, bylaws, and
operating rules of the association, collectively referred to
as the governing documents.
3) Current CID elections procedures. Under current law, CID
elections must be held by secret ballot and, among other
things, an association must adopt rules around campaigning,
specifying the qualifications for candidates for the board,
specifying the qualifications for voting, and specifying the
method for selecting independent third-party inspectors.
AB 1799 (Mayes) Page 6 of ?
Ballots and two preaddressed envelopes with instructions for
returning the ballot are mailed to every member not less than
30 days prior to the deadline for voting. The ballot is
inserted into an envelope, which is placed in a second
envelope and mailed to the inspectors. The votes are
tabulated by the inspectors in public at a properly noticed
open meeting of the board or members. The tabulated results
shall be promptly reported to the board and shall be recorded
in the minutes of the next meeting. Additionally, within 15
days of the election, the board shall give general notice to
all members of the results of the election.
4) Uncontested elections. This bill would allow the board of
directors of an 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 other
words, the HOA would not have to send out paper ballots
pursuant to comment 3 above. In order to qualify, the
election would have to comply with all property adopted
election rules, all candidates must be nominated before the
deadline and be 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 before declaring the election
uncontested, the HOA would be required to notify the members
that the board is planning to vote on an uncontested election
and the right of the members to object to the board declaring
the election uncontested.
Following an HOA's declaration of an uncontested election at a
board meeting, this bill would permit members 15 days to
write-in a candidate for election. If one or more write in
candidate are received and the number of candidates exceeds
the number of directors to be elected, this bill 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, the election results
will be sealed and the write-in members will be added as
members. It is possible that there will not be enough members
running for the open positions on the board; if additional
candidates' write-in their names, this bill would add them to
the board automatically. If an HOA does not provide a
write-in process, this bill would require an HOA to provide a
process for self-nomination 15 days after declaring an
uncontested election.
AB 1799 (Mayes) Page 7 of ?
4) Opposition. According to the Center for California
Homeowner Association Law, which represents the rights of
homeowners living in California, AB 1799 would void the
essential voting rights of association owners. The
homeowner's right to vote is conferred by ownership in
association property, just as the right to vote in public
elections is conferred by citizenship. This bill would return
legal and political control of elections to incumbent boards
by giving them new powers to decide who is qualified to vote
and run for a board seat. They also challenge the alleged
costs of HOA board elections, stating that current law permits
"volunteer poll workers" to serve as independent inspectors.
Given that more than 50% of HOAs have fewer than 25 units,
it's unclear why some HOAs have elected to hire and pay for
independent inspectors. According to the Educational
Community for Homeowners, the current version of the bill
contains lengthy and complicated procedures to designate an
election as "uncontested," turning the proposed cure into a
real problem.
5) Double-referral. This bill has been double-referred to this
committee and Senate Judiciary Committee.
Assembly Votes:
Floor: 71-4
H&CD: 7-0
FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local:
No
POSITIONS: (Communicated to the committee before noon on
Wednesday,
June 8, 2016.)
SUPPORT:
California Association of Community Managers
Community Association Institute
OPPOSITION:
AB 1799 (Mayes) Page 8 of ?
California Alliance for Retired Americans
Center for California Homeowner Association Law
Educational Community for Homeowners
Rutgers Law School, Constitutional Rights Clinic
3 individuals
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