CAI-CLAC LEGISLATIVE UPDATE

Direct From Sacramento:

New Legislation Impacting Your Communities

BY: A.J. JAHANIAN, ESQ. OF BEAUMONT TASHJIAN AND DANIEL C. HEATON, ESQ., NORDBERG | DENICHILO, LLP

AB 572

(Assessment Limitations for Affordable Housing)

AB 572 creates a new Civil Code § 5605 that applies to new associations where the original CC&Rs were recorded on or after January 1, 2025. The law prohibits boards from imposing a regular assessment against owners of deed-restricted affordable housing units that is more than five percent (5%) plus the percentage change in the cost of living, and not to exceed ten percent (10%). In other words, any new associations formed after the above date may be limited in terms of how much they may increase regular assessments and may end up facing a potential disparity in the amount of assessments imposed against certain sections of their membership that own deed-restricted affordable housing units versus those that do not. Boards will need to keep this in mind when budgeting for the common expenses each year and should consult with legal counsel in advance to evaluate whether the community is comprised of any affordable housing units and, if so, what procedures should be implemented to ensure that assessment levels are properly tracked and kept within the above statutory limitations.

AB 648

(Virtual Meetings) – CAI-CLAC Sponsored

One of the benefits coming out of the pandemic was the development of new tools such as Zoom and Teams that allowed boards and members to more easily communicate with each other. Prior law allowed for virtual board meetings but required a physical location to exist where members were able to attend the meeting and participate, along with designating a representative to be present at the physical location to assist with access. Now, AB 648 will allow board meetings to occur entirely virtually, and no physical location will be required, so long as the board provides owners with: 1) clear technical instructions on how to participate by teleconference; 2) the phone number and email address of a person who can assist with access and participation in the virtual meeting before and during the meeting; and 3) a reminder that they can request individual delivery of notices of the virtual meetings. Additionally, any vote by the directors must be done by roll call vote with the results recorded in the minutes. Note, any meetings involving ballotcounting still require a physical location and present board member. Boards and managers should work with legal counsel to update their governing documents and adopt guidelines for virtual meetings, including notice requirements, conduct and decorum.

AB 1033

(Separate Sale or Conveyance of ADUs)

AB 1033 appears to be the next step in an ongoing legislative push to try to increase affordable housing throughout the State. It permits homeowners to sell their accessory dwelling units (ADUs) separate from their primary residences, effectively resulting in de facto lot splitting and the creation of a mini-condo development. Luckily, AB 1033 does not inhibit an association’s ability to amend its governing documents to require approval of the membership before such a sale will be permitted. Boards and communities should keep in mind that permitting ADUs to be sold separately from the primary residence will likely result in a host of separate legal issues, including questions as to what extent the new owners are part of the association and whether they are subject to assessments, and if so, how will they be re-calculated throughout the community? Additional practical concerns may occur from the creation of new members without developer approval, including excessive parking, increased density and utility usage, and others changes in the character of the community. For these reasons, it is best that common interest developments work quickly to adopt rules and/or amendments to their governing documents geared towards prohibiting ADUs from being separately conveyed from any primary residence.

AB 1458

(Lower Quorum for Adjourned Director Elections) –CAI-CLAC Sponsored

AB 1458 aims to help address a long-standing problem of associations being unable to reach unnecessarily high quorum requirements for director elections by lowering the quorum requirements for adjourned meetings to 20% unless a lower quorum is authorized by the governing documents. The Association must first provide an additional notice to the membership that indicates that the board may call a subsequent meeting at least 20 days after a scheduled election if the required quorum is not reached, at which time the quorum to elect directors will be 20% of the members voting in person, by proxy, or by secret ballot. The association must provide a similar second general notice no less than 15 days prior to the adjourned election date. Any association that has a quorum requirement higher than 20% for an election of directors should work with their legal counsel to update their election forms and timelines so that they include the requirements for providing the above additional notices to the members that permit the meeting to be adjourned and the reduced quorum percentage to be utilized as a result.

AB 1764

(Director Qualifications)

Following a change in the law in 2020, associations were limited in the grounds that could be used to disqualify candidates for election to the board of directors. That change also created some confusion as to whether the grounds for disqualification also applied to sitting directors. AB 1764 cleans up several of those questions by making clear that any grounds that disqualify a candidate for election must also apply to sitting directors. The bill also makes clear that a director who ceases to be a member of the association automatically becomes disqualified to serve on the board. Finally, the bill reinstates term limits as a ground for disqualification if term limits are included in the association’s bylaws.

SB 428

(Workplace Restraining Orders)

SB 428 provides associations with a more expansive tool to protect those that serve community associations, including board members and community managers. Code of Civil Procedure § 527.8 currently allows an employer, including an association, to seek a restraining order on behalf of employees if they have suffered unlawful violence or a credible threat of violence in the workplace. While the term “employee” is broadly defined to include board members, volunteers, and independent contractors who perform services for the employer, the type of misconduct that triggers the right has required an extreme threshold of violence or threats of violence. SB 428 will amend CCP 527.8 beginning January 1, 2025, to authorize an employer to seek a restraining order on behalf of an employee that has suffered “harassment,” meaning “a knowing and willful course of conduct directed at a specific person that seriously alarms, annoys, or harasses the person, and that serves no legitimate purpose.” This addition gives boards a significantly broader tool to be able to protect themselves and their managers, volunteers, and some vendors from a larger range of abusive conduct.

A.J. Jahanian, Esq. is an associate attorney with Beaumont Tashjian who devotes his career to serving common interest developments. He can be reached at ajahanian@ HOAattorneys.com.

Daniel C. Heaton, Esq., is a Senior Associate at Nordberg | DeNichilo, LLP, and exclusively represents community associations throughout California as corporate and litigation counsel. He is a member of CAI-GRIE’s Legislative Support Committee. Daniel can be reached at daniel@ ndhoalaw.com.