BILL ANALYSIS
AB 1726
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1726 (Swanson)
As Amended August 4, 2010
Majority vote
-----------------------------------------------------------------
|ASSEMBLY: |62-3 |(May 10, 2010) |SENATE: |28-2 |(August 11, |
| | | | | |2010) |
-----------------------------------------------------------------
Original Committee Reference: H. & C.D.
SUMMARY : Allow for a reduction in the quorum requirement needed
to approve an election for the board of directors in a common
interest development (CID), subject to referendum by the members
of a CID.
The Senate amendments :
1)Provide that for elections of the board of directors in CID if
a homeowners association (HOA) cannot achieve a quorum, the
quorum required in the first subsequent election is 40% of the
HOA membership entitled to vote.
2)Provide that for elections of the board of directors in a CID,
if quorum of 40% of the members entitled to vote cannot be
reached, then the quorum requirement drops to 33% for
subsequent elections.
3)Allow a CID to continue using the quorum requirements of the
governing documents through either of the following actions:
a)Provide that if 5% of the membership petitions to maintain the
quorum requirements in the governing documents, the board of
directors must place a referendum on the ballot to that
effect. If a majority of the membership approves the
referendum, then the quorum requirements will remain at the
level required by the governing documents, until the governing
documents are amended to change the quorum requirement.
b)Provide that the board of directors can vote to maintain the
quorum requirements in the governing documents.
4)Add a sunset date of January 1, 2014.
AB 1726
Page 2
AS PASSED BY THE ASSEMBLY , this bill provided that for elections
of the board of directors in CIDs if a HOA cannot achieve a
quorum, the quorum required in the subsequent meeting is 33% of
the HOA membership entitled to vote. Specifically, this bill :
1)Required the HOA to disclose to the membership in the election
materials, that if the quorum required is not achieved to
qualify the election, in the subsequent election the quorum
will be 33%.
2)Provided this provision does not apply to HOAs whose governing
documents require a quorum of less than 33% for a subsequent
election.
3)Made technical changes to the election procedures required in
a CID.
FISCAL EFFECT : None
COMMENTS : There are over 41,000 CIDs in the state that range in
size from three to 27,000 units. CIDs make up over four million
total housing units, which represents approximately one quarter
of the state's housing stock. In the 1990s, over 60% of all
residential construction starts in the state were CIDs. 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 an association.
CIDs are governed by the Davis-Stirling Act (Civil Code Section
1350 et al.), as well as the governing documents of the
association including the bylaws, declaration, and operating
rules. Except when CIDs are first developed, no state agency
provides ongoing oversight to these communities.
HOAs are run by volunteer board who are elected by the owners
within the CID. In some cases, CIDs have community managers
that run the day-to-day operations required to maintain the
community.
The governing documents of a CID generally include a quorum or
the minimum amount of voting power required for an election. If
the governing documents fail to set a quorum requirement, state
AB 1726
Page 3
law requires, for incorporated CIDs, the quorum to be at least
one-third of the members.
SB 61 (Dutton) Chaptered 450, Statute of 2005, established
extensive standards for conducting elections in CIDs. Elections
are required to be conducted by secret mailed ballot. The
ballots must be counted by an inspector of election who cannot
be a HOA member or manager of the HOA.
Purpose of the bill : According to the sponsor, garnering more
than half of all members' vote has proven to be extremely
difficult largely due to member apathy or inconvenience,
particularly in large vacation communities. In additional,
certain terminology and definitions in the law have lead to
confusion, invalid ballots, and inconclusive elections. HOAs
must then repeat the entire process until the quorum of all
members is met, this includes mailing notices and ballots again,
attempting to convene a meeting with a majority of members
represented, and also incurring extra cots to their zero based
budgets. This bill allows for a reduced quorum percentage in
order to conduct business. The reduced quorum would only take
effect when the initial meeting or vote failed to achieve a
majority quorum and would only apply to the second attempt to
convene the election.
The Senate amendments make the quorum requirement for an
election of the board of directors in a CID 40% of the members
entitled to vote, following the first election attempt of the
CID. If the CID cannot reach a 40% quorum on the second
election then the quorum is reduced to 33% for subsequent
elections. The Assembly version of the bill required all
subsequent elections following the first failed attempt to reach
the quorum required by the governing documents to reduce the
quorum requirement to 33%. The Senate amendments also the
membership of the HOA or the board of directors to vote to
maintain the quorum requirement provided for in the governing
documents and add a four year sunset to the bill.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0005706