BILL ANALYSIS Ó
SENATE JUDICIARY COMMITTEE
Senator Hannah-Beth Jackson, Chair
2015-2016 Regular Session
AB 1799 (Mayes)
Version: June 6, 2016
Hearing Date: June 28, 2016
Fiscal: No
Urgency: No
TH
SUBJECT
Common Interest Developments: Association Governance: Elections
DESCRIPTION
This bill authorizes a homeowner association in a residential
common interest development to declare an election of directors
"uncontested" when the number of candidates for election does
not exceed the number of directors to be elected. This bill
also authorizes an aggrieved party to bring a cause of action
alleging a violation of specified election requirements in small
claims court.
BACKGROUND
In California, common interest developments (CIDs) are governed
by the Davis-Stirling Common Interest Development Act
("Davis-Stirling Act" or "Act"). Owners of separate property in
CIDs have an undivided interest in the common property of the
development and are subject to the CID's covenants, conditions,
and restrictions. CIDs are also governed by a homeowner
association, which is run by volunteer directors that may or may
not have prior experience managing an association. The Court of
Appeal, Fourth Appellate District, previously observed that:
[t]he homeowners associations function almost "as a second
municipal government, regulating many aspects of [the
homeowners'] daily lives." "[U]pon analysis of the
association's functions, one clearly sees the association as
a quasi-government entity paralleling in almost every case
the powers, duties, and responsibilities of a municipal
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government. As a 'mini-government,' the association
provides to its members, in almost every case, utility
services, road maintenance, street and common area lighting,
and refuse removal. In many cases, it also provides
security services and various forms of communication within
the community. There is, moreover, a clear analogy to the
municipal police and public safety functions. . . ." In
short, homeowners associations, via their enforcement of the
CC&R's, provide many beneficial and desirable services that
permit a common interest development to flourish. (Villa
Milano Homeowners Ass'n v. Il Davorge (2000) 84 Cal.App.4th
819, 836 [citations omitted].)
Just as with municipal governments, homeowner associations use
elections to choose members to serve on an association's board
of directors and to levy assessments for particular purposes.
Under existing law, homeowner associations conduct elections
through a paper and mail based balloting system that resembles
California's vote by mail process. While most CIDs in
California have less than 25 units, the expense of conducting
elections in larger associations -particularly those with
several thousand units - can be significant.
This bill would permit the board of directors of an association
to determine that an election for replacement directors is
uncontested when the number of candidates standing for election,
including write-in candidates, does not exceed the number of
open seats on the board.
CHANGES TO EXISTING LAW
Existing law , the Davis-Stirling Common Interest Development
Act, establishes the rules and regulations governing the
operation of a residential common interest development (CID) and
the respective rights and duties of a homeowners association and
its members. (Civ. Code Sec. 4000 et seq.)
Existing law requires association elections regarding
assessments legally requiring a vote, election and removal of
directors, amendments to the governing documents, or the grant
of exclusive use of common area to be held by secret ballot in
accordance with specified procedures. (Civ. Code Sec. 5100.)
Existing law authorizes associations to specify the
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qualifications for candidates for the board and any other
elected position, and procedures for the nomination of
candidates, consistent with the governing documents. (Civ. Code
Sec. 5105(a).)
Existing law authorizes associations to 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, consistent with the governing documents.
(Civ. Code Sec. 5105(a).)
Existing law authorizes associations to specify a method of
selecting one or three independent third parties as inspector or
inspectors of elections. (Civ. Code Sec. 5105(a).)
Existing law requires associations to select an independent
inspector or inspectors of elections to do the following:
determine the number of memberships entitled to vote and the
voting power of each;
determine the authenticity, validity, and effect of proxies,
if any;
receive ballots;
hear and determine all challenges and questions in any way
arising out of or in connection with the right to vote;
count and tabulate all votes;
determine when the polls shall close, consistent with the
governing documents;
determine the tabulated results of the election; and
perform any acts as may be proper to conduct the election with
fairness to all members in accordance with all applicable laws
and rules of the association regarding the conduct of the
election. (Civ. Code Sec. 5110(c).)
Existing law specifies the voting procedure for an association
election as follows:
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, 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 vote by
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mail ballots, including all of the following:
o 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
shall sign the voter's name, indicate the voter's name, and
indicate the address or separate interest identifier that
entitles the voter to vote; and
o the second envelope is addressed to the inspector or
inspectors of elections, 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
elections. The member may request a receipt for delivery.
(Civ. Code Sec. 5115(a).)
Existing law states that a quorum shall be required only if so
stated in the governing documents or other provisions of law.
If a quorum is required by the governing documents, each ballot
received by the inspector of elections shall be treated as a
member present at a meeting for purposes of establishing a
quorum. (Civ. Code Sec. 5115(a).)
Existing law specifies that except for a meeting to count the
votes, an election may be conducted entirely by mail unless
otherwise specified in the governing documents. (Civ. Code Sec.
5115(b).)
Existing law provides that all votes shall be counted and
tabulated by the inspector or inspectors of elections in public
at a properly noticed open meeting of the board 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.
The inspector of elections may verify the member's information
and signature on the outer envelope prior to the meeting at
which the ballots are tabulated. Once a secret ballot is
received by the inspector of elections, it shall be irrevocable.
(Civ. Code Sec. 5120(a).)
Existing law provides that the tabulated results of the election
shall be promptly reported to the board and shall be recorded in
the minutes of the next meeting of the board and shall be
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available for review by members of the association. (Civ. Code
Sec. 5120(b).)
Existing law provides that 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 for
challenging the election has expired, at which time custody
shall be transferred to the association. 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. (Civ. Code Sec. 5125.)
This bill provides that directors shall not be required to be
elected if the election is uncontested, and states that an
election of directors is uncontested if both the number of
candidates for election, including write-in candidates, does not
exceed the number of directors to be elected at that election,
and the association has declared the election is uncontested.
This bill states that an association may declare an election of
directors to be uncontested only if all of the following
procedures have been satisfied:
the association's adopted election rules have been complied
with;
all declared candidates were nominated before the deadline for
nominations and in accordance with the association's governing
documents;
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;
the board votes in open session to declare the election
uncontested after a hearing during an open board meeting where
members are able to make objections to the board making that
declaration; and
at least 20 days before the board meeting for the vote to
declare an election uncontested, the association provides a
specified notice to all members.
This bill states that the notice described above must set forth
the following:
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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;
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; and
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.
This bill states that if the association's governing documents
provide for write-in votes on the ballot, the association shall
allow 15 days after the board meeting described above for a
write-in candidate to submit his or her name to the inspector of
elections. In the event additional write-in candidates result
in the total number of candidates exceeding the number of
directors to be elected, an election shall be held. 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, the uncontested election results shall
be sealed and become effective immediately, with any write-in
candidates added as members.
This bill states that if an association's governing documents do
not provide for write-in votes on the ballot, then the
association must provide at least 15 days' general notice of a
self-nomination process.
This bill requires an association's election rules to do the
following:
ensure that an announcement of an election and notification of
nomination procedures, including self-nomination, shall be
provided to all members at least 60 days before any election
for directors;
ensure a member who satisfies the lawful qualifications
adopted by the association is not denied the right to be a
candidate for director; and
ensure a member who satisfies the lawful qualifications
adopted by the association is not denied the right to vote.
This bill authorizes a cause of action alleging a violation of
these and other specified election requirements to be brought in
small claims court.
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COMMENT
1.Stated need for the bill
The author writes:
Often, homeowner association [HOA] board elections are
uncontested. The number of candidates does not exceed 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. For instance, an
election for [an] HOA with 12,000 units could cost as much as
$20,000. This unnecessarily burdens lower-income communities,
diverting resources from better uses.
AB 1799 exempts homeowner associations 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. Specifically, the bill:
Provides that an HOA board may declare an election
uncontested if the number of candidates does not exceed the
number of seats up for election.
Requires that an HOA board may only declare an election
uncontested in an open meeting, and only if it has complied
with all election rules.
Requires that notice be provided to homeowners before an
election is declared uncontested, which shall include their
right to object to that declaration.
For communities that allow write-in candidacies, allows
a fifteen day period after the election has been declared
uncontested for additional candidates to file. For
communities that do not, the bill requires that they allow
a period for self-nominations.
Ensures that members who satisfy the lawful
qualifications for voting or to serve as director are not
denied that right.
1.Potential cost savings for homeowner associations
The California Association of Community Managers (CACM) and the
Community Associations Institute (CAI), writing in support,
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argue that this bill will potentially allow homeowner
associations to avoid the cost of conducting vote-by-mail
elections when the number of candidates standing for election
does not outnumber the number of open board seats. CACM states:
Elections of board members are an important part of how common
interest developments (CID) come together to build and
maintain healthy communities. In certain instances, the
election of directors may be uncontested, even after strict
adherence to the CID's Bylaws and Voting and Elections 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 productive CID.
CAI similarly states:
AB 1799 allows these nonprofit HOAs to avoid the unnecessary
expense and effort of conducting elections when there are more
open seats for the board than candidates willing to fill them.
The bill also allows ample time for owners to self-nominate
or become write-in candidates. On average, each [ballot]
packet costs more than $1.00. In very large communities that
costs tens of thousands of dollars annually. AB 1799 will
provide efficiency by avoiding spending funds unnecessarily
which can otherwise be redirected to neighborhood maintenance
and operational needs.
As noted in the Background above, though most CIDs in California
are made up of 25 units or less, and therefore do not incur
large costs when conducting elections, this bill could help
defray costs for large associations. However, it is unclear
whether, or how often, these larger associations would be in a
position to take advantage of this bill's cost savings
potential, given the larger candidate pool from which members
interested in standing for election are likely to emerge.
2.Potential for candidate disenfranchisement
The Center for California Homeowner Association Law (CCHAL),
joined by other groups in opposition, argues that this bill
could have the effect of insulating incumbent board members from
electoral pressure. They argue that because the incumbent
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members of a homeowner association board are in a position to
set voter and candidate qualifications under existing law, they
can use this power to disqualify opposing candidates and then
cancel elections for lack of sufficient candidates. As stated
by CCHAL:
AB 1799 gives boards a lethal combination of powers: it lets
incumbent boards cancel elections after they decide there are
enough candidates who meet the "qualification" rules created
by the board. Homeowners also have to meet the board's
"qualifications" for voting. This combination of powers
dis-enfranchises voters and violates homeowners' right to
self-governance, that is: to vote and to choose their own
leaders.
CCHAL argues that a lack of specificity in existing law
pertaining to establishing qualifications for voting and for
candidacy in association elections has "led to extraordinary
abuses of power by boards in the ten years since the statutes
governing association elections were enacted." They state:
Boards have routinely established "qualifications" that have
nothing to do with a candidate's ability to perform as a board
director but whose real purpose is to prevent homeowners who
question board policies or decisions from running for a board
seat. . . . A Los Angeles County lawsuit brought by homeowners
illustrates the point vividly: Griffing v. Village Palos
Verdes Homeowners Association. In this case, the board
amended its bylaws to state that any homeowner who had sued
the board, its property manager, or another homeowner in the
last six years was not "qualified" to run for the board in the
upcoming election. This "qualification" targeted a group of
homeowners, who sought association records detailing the
board's spending plan for a multi-million dollar special
assessment of $75,000 per unit. The board ignored their
repeated written requests for the financial records. [When]
the homeowners sued in small claims court to obtain the
board's spending [plan, the] board, in turn, amended its
bylaws to state that "any plaintiff?whether they prevail of
not in their suit may not, for a period of six years, declare
themselves a candidate for the board." [The] 25 homeowners,
who had been seeking the records, sought an injunction in Los
Angeles Superior Court to stop the upcoming board election,
because the ballot did not contain the names of the
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homeowners, who had sued in small claims court and who now
wanted to run for a board seat. The court issued the
injunction. It also ordered new elections with revised
ballots that that included the names of the dissenting
homeowners.
CCHAL and other stakeholders opposed to this bill cite many
other examples of what they consider to be abusive homeowner
association actions to limit voter and candidate qualifications
in order to disenfranchise opponents. Given the apparent lack
of clear standards prohibiting homeowner associations from
enacting election rules for the purpose of disenfranchising
others, the additional tool of being able to cancel supposedly
uncontested elections could further insulate incumbent board
members from electoral pressure. As such, the policy question
presented by this bill is whether the Legislature ought to
empower homeowner associations to cancel elections in order to
reduce costs without simultaneously enacting appropriate
safeguards to ensure that qualification rules are not used to
inappropriately bar others from voting or running for elected
office.
Support : California Association of Community Managers;
Community Associations Institute
Opposition : California Alliance for Retired Americans;
California Commission on Aging; Center for California Homeowner
Association Law; Rutgers School of Law Constitutional Rights
Clinic; Five Individuals
HISTORY
Source : Author
Related Pending Legislation : None Known
Prior Legislation : AB 1360 (Torres, 2014) would have amended
the Davis-Stirling Common Interest Development Act to authorize
associations to conduct elections using electronic voting
systems, provided participating voters opt into using the
electronic voting system and other required conditions are met.
This bill failed passage in the Senate Judiciary Committee.
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Prior Vote :
Senate Transportation and Housing Committee (Ayes 6, Noes 2)
Assembly Floor (Ayes 71, Noes 4)
Assembly Housing and Community Development Committee (Ayes 7,
Noes 0)
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