BILL ANALYSIS �
SB 563
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SENATE THIRD READING
SB 563 (Transportation and Housing Committee)
As Amended July 5, 2011
Majority vote
SENATE VOTE :37-1
HOUSING 6-0 JUDICIARY 9-0
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|Ayes:|Torres, Bradford, |Ayes:|Feuer, Wagner, Atkins, |
| |Cedillo, Hueso, Jeffries, | |Dickinson, Beth Gaines, |
| |Miller | |Huber, Jones, Monning, |
| | | |Wieckowski |
|-----+--------------------------+-----+--------------------------|
| | | | |
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SUMMARY : Requires a homeowners association (HOA) to send notice
to members two days prior to an executive session meeting and
restricts how the board of directors (board) can communicate via
electronic means. Specifically, this bill :
1)Defines an "item of business" as any action within the
authority of the board, except those actions that the board
has delegated to any other person or persons, managing agency,
officer of the association or committee of the board made up
of less than a majority of the directors.
2)Adds the following to the definition of "meeting," a
teleconference in which a majority of the members of the board
are in different locations and are connected by electronic
means through audio or video or both.
3)Requires a teleconference meeting to be conducted in a manner
that protects the rights of the members of the association and
complies with the Common Interest Development Open Meeting
Act.
4)Provides that except for meetings that are only in executive
session, the notice of the meeting of the board must identify
at least one physical location so that the members of the
association may attend and at least one member of the board
must be at the location.
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5)Provides that participation of the board members in a
teleconference meeting constitutes presence at the meeting as
long as all the board members are able to hear one another and
the members of the association.
6)Requires that except for emergency meetings, a HOA must notify
the members of an executive session meeting at least two days
prior to the meeting.
7)Allows notice of a regular meeting or an executive session
meeting to be made by electronic means if the member agrees
with that method of notice.
8)Prohibits a board of directors from taking action on any item
of business outside of a meeting.
9)Prohibits the board from conducting a meeting via a series of
electronic transmissions, including but not limited to email,
except for an emergency meeting if all members of the board
have consented in writing and have filed that consent with the
minutes of the meetings of the board.
10)Allows consent to conduct an emergency meeting by electronic
transmission to be made by electronic transmittal.
FISCAL EFFECT : None
COMMENTS :
There are over 47,000 common interest developments (CID) in the
state that range in size from three to 27,000 units. CIDs make
up over six 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, and 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, as well as
the governing documents of the association including bylaws,
declaration, and operating rules. CIDs are governed by
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volunteer boards of directors who are elected by the members of
the HOA and are responsible for interpreting the governing
documents and state law. Except when CIDs are first developed,
no state agency provides ongoing oversight to these communities.
HOA Meetings: HOAs are governed by volunteer boards of
directors (board), elected by the members. Many CIDs employ a
managing agent to carry out the day-to-day operations of the
HOA. The governing documents of the HOA typically direct how
frequently the board is required to meet. A meeting of the HOA
is defined as a congregation of a majority of the members of the
board at the same time and place to hear, discuss, or deliberate
on any item of business within the board's authority except
matters that may be discussed in executive session. HOAs are
required to provide four-days written notice, including an
agenda, of a meeting of the board.
Executive session: Existing law allows members of the HOA to
attend all meetings except when the board of an HOA meets in
closed-door, executive session to discuss litigation, contracts
with a third party, member discipline, personnel matters or to
meet with a member to discuss delinquent assessments. Executive
session meetings are exempt from the definition of "meeting" and
therefore are not subject to the four-day notice requirement.
Members are not permitted to attend executive session meetings
unless they request the meeting to discuss delinquent
assessments or are subject to a disciplinary matter.
This bill would require the board to notice executive session
meetings of the board two days prior to the meeting, unless the
meeting is for an emergency, in which case no notice is
required. Members cannot attend the executive session meetings,
but the author reasons the notice will create an opportunity to
keep members informed about what is going on in the CID and a
chance to weigh in with board members prior to the meeting.
Electronic communications: CID can be formed as either a
corporation or a non-profit and those that are incorporated are
subject to the Corporations Code. Corporations Code Section
7211 (b) allows a board to take an action, that it is required
or permitted to take without a meeting, if all board members
agree in writing to the action. The written consent is required
to be filed with the minutes and has the same force and effect
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as a unanimous vote of the board. According to the author, this
provision is used to allow boards to make decisions via e-mail
outside of a board meeting; as a result, members are not privy
to the discussion surrounding the decisions and cannot
participate in the decision-making process. This bill prohibits
a board of directors from taking action on any item of business
outside of a meeting and prohibits the board from conducting a
meeting via electronic transmissions except in the case of an
emergency meeting.
Purpose of the bill: According to the author, committee staff
has received a number of complaints that CIDs have used the
provision of the Corporations Code to conduct regular board
meetings via e-mail and without out the participation of member
of the association. In order to ensure open meetings and the
ability for members to participate, this bill clarifies that no
CID, whether incorporated or unincorporated, may conduct a
meeting via e-mail except in emergency situation. The bill also
clarifies that a CID board member may participate in a meeting
by telephone or video conference if at least one board member is
present at a physical location where members may attend and
speak and if the connection allows any participates in the
meeting to hear and be heard.
Analysis Prepared by : Lisa Engel / H. & C.D. / (916) 319-2085
FN: 0001507