BALCONIES & BALLOTS

2020 CHANGES ARE ALREADY AFFECTING THE BOTTOM LINE.

By Robert Ward, Esq.

When Governor Newsom signed Senate Bills 326 (the 2019 version of the “balcony bill”) and 323 (the “election” bill), he might not have understood the dramatic effect these two pieces of legislation would have on homeowner association governance. Not only are associations (and by extension their professional managers) now charged with ensuring compliance with these new laws, but the additional maintenance responsibilities for associations with respect to elevated walkways, balconies, and decks and election requirements are already taking their toll on budgets.

Here’s what boards and managers need to know about the new requirements, and the fallout from the inclusion of these requirements in the ever-changing DavisStirling Act.

THE NEW (AND IMPROVED) BALCONY BILL (CAL. CIVIL CODE § 5551)

As of January 1, 2020, condominium associations with “exterior elevated elements” have to undertake a competent and diligent “visual” inspection of the loadbearing components and associated waterproofing systems of these elevated systems at least once every nine years. Exterior elevated elements are any woodframed walking surface improvements located at least six feet above ground. Balconies, decks, walkways, stairways, etc. that are either themselves wood-framed, or attached to wood-framing, all require inspection. These elements need to be inspected by either a duly licensed structural engineer or architectural expert no later than January 1, 2025.

That expert must submit an inspection report to the board that provides required information about the current physical condition of the component, the remaining useful life of the load-bearing components and waterproofing systems, and whether further testing should be done to assess any hazardous conditions suspected by the inspector. This report becomes a permanent part of the reserve study.

Boards need to begin planning for these inspections now in order to get ahead of what will likely be a period of high demand for these inspections. Qualified architects and engineers, already in short supply, will be asked to perform these inspections in addition to their normal business activities. None will put their license on the line for a less than thorough inspection.

Furthermore, these inspections will not come cheap. While the code specifies that these inspections are visual, the truth is that any proper assessment of the load-bearing components and waterproofing membrane of these elevated structures will require a statistically significant sample of exterior elevated elements be destructively tested. This will cost associations thousands of dollars in order to ensure compliance with the inspection requirements, not to mention the actual costs of making the repairs identified in their reports. So, as budgeting season approaches, managers and boards alike should consider setting aside funds now for these inspections and resultant repairs.

THE NEW (AND NOT SO IMPROVED) ELECTION BILL (CAL. CIVIL CODE § 5105)

Speaking of budgeting, the recently passed Election Bill (SB 323) changes the way director elections are run, which in turn is causing thousands of association boards to scramble to amend documents and revise policies. Briefly, the new rules, found in Cal. Civil Code § 5105, require the following:

ELECTION TIMELINE

First of all, realize that no changes to election rules can be made within 90 days prior to an election. They have to be drafted, distributed and adopted, so if boards haven’t amended the election rules to comply yet, do so NOW.

Select an inspector of elections and form a nominating committee if this is permitted in the by-laws. Note that no longer can the inspector be the manager or association’s attorney. Boards need to be educated that this will add some costs to the election process.

Remember that ballots, registration lists, and voting lists all must be retained as records. The voting list must have the name, voting power, and parcel number/address (or both) and voting rights may no longer be suspended for any reason other than being a non-member at the time of the election. If someone challenges the results in court, the association has the burden to show that any non-compliance didn’t affect the results, and the challenger can recover reasonable costs and fees.

QUALIFICATIONS

Here are the “Mays” and “Musts.”

1. Associations may require candidates be paid up on their assessments, but can’t prohibit a candidate from running if fines, interest, or late charges are unpaid.

2. If a payment plan has been worked out, a candidate may not be disqualified.

3. If a candidate has a joint ownership interest with another candidate or current standing director, they may be disqualified.

4. If there are past convictions for crimes that would jeopardize the association’s ability to secure fidelity bond insurance, they may be disqualified.

5. Finally, if a candidate is a member for less than one year, he/she may be disqualified.

A candidate MUST be disqualified if the candidate is not a member of the association at the time of nomination. Also, be aware that the board can’t disqualify unless the candidate has been provided an opportunity to engage in IDR.

Begin early! The process for revising election rules and providing notice takes about four months and must be completed before the next election. Property managers are encouraged to advise their boards of these new requirements so that proper planning for these events can be discussed and calendared in the future.

Robert Ward, Esq. of Riley Pasek Canty LLP specializes in construction defect claims and is based out of the firm’s San Diego office. He’s worked in the industry for 22 years.