Newly Signed Laws Impact HOA Elections, Finances, Meetings and More

By Jennifer Wada, Esq.

The governor’s deadline to sign or veto legislation was October 10. Having just won the recall election by a landslide, Governor Newsom seemed emboldened as he acted on bills sent to him by the legislature. In total, lawmakers sent 836 proposals to his desk, and out of those proposals, he signed 770 and vetoed 66.

By this time of year, you are all well aware of the CID bills that have made their way through the legislature. So how did they fare at the hand of Governor Newsom?

AB 502 (Davies) - Signed

This bill – l would apply elections by acclamation to all associations and was a priority bill for CACM. This is a big win for the industry. The author’s office contacted CACM as soon as they learned of the signature to thank the organization for its efforts.

Our own President/CEO, Tom Freeley, was a key witness for this bill as it moved through the legislature. Key provisions have been outlined in previous editions, but they include an additional 90-day notice that must contain, among other things, a “heads up” that if there are fewer candidates than vacancies, the board may use acclamation.

The bill also requires the association to confirm receipt of a candidacy submission and whether the person is qualified to run. We have already discussed the idea of clean-up legislation with the author in the event there are clarifications or improvements that need to be made next year but getting the law on the books is great progress.

AB 1101 (Irwin) – Signed

This is CAI-CLAC’s clean up measure to AB 2912 (Irwin, 2018). It would clarify the types of financial institutions an association may use to hold its funds and modify when board approval is needed for electronic transfers.

Such transfers would be prohibited unless the amount of the transfer is the lesser of $10,000 or 5% of the estimated income in the annual operating budget for associations with 50+ separate interests or the lesser of $5,000 or 5% of the estimated income in the annual operating budget for associations with less than 50 separate interests.

The bill also removed the provision that allowed managing agents to commingle funds if done before February 26, 1990. CACM supported this measure.

AB 1584 (Committee on Housing) – Signed

This is the housing omnibus bill, which contains language that would allow the governing document amendment requirement in AB 3182 (Ting) to be done through a board vote only and would push the compliance date to July 1, 2022.

The bill also continues to contain cleanup to the CID ADU law (AB 670, Friedman, 2019) by clarifying it applies to all CIDs since some associations were construing it as not applying if they did not have undivided interests in common area. CACM supported the proposal to allow AB 3182 governing document amendments to be done by a board vote.

SB 391 (Min) – Signed

Because this bill was an urgency measure, it became law immediately upon signature. SB 391 now allows, during a state of emergency, meetings to be conducted entirely by teleconference (this is defined to include videoconference) without any physical location needed if gathering in person is “unsafe or impossible.” CACM supported this measure.

SB 392 (Archuleta) – Signed

This bill was sponsored by the California Association of Realtors and would require members to provide the association their preferred methods of delivery, which can be both email and mail. Members must provide their email, mailing address, secondary email, and secondary mailing address.

The website requirement was eliminated entirely. A provision was also added that explicitly prohibits a managing agent from selling a member’s personal information to a third party without consent unless required to do so by law. CACM just monitored this bill and provided technical assistance.

SB 432 (Wieckowski) – Signed

This is the cleanup measure to SB 323. It contains numerous noncontroversial provisions, including clarifying that the felony candidate disqualification applies if the felony compromises the association’s ability to get any kind of insurance (not just fidelity as stated in current law).

It also clarifies that board members are subject to the same qualification requirements as candidates and that associations must maintain election materials for one year. It further clarifies that to be a qualified candidate, an individual that is delinquent in assessments must be in compliance with a payment plan, as opposed to the old law requiring an individual just to have entered into one.

The bill also clarifies that any individual appointed by the inspector of elections to count and tabulate votes also meet the same independent third-party requirements as the inspector of elections. The most substantive change made by the bill appears to be the definition of “enhanced associations records” being amended to include bank statements.

SB 9 (Atkins) – Signed

This would allow most homeowners in California to build two houses or a duplex where now only one house is allowed. It would also permit eligible homeowners to split their lot and add two more units on the second parcel as long as it’s at least 1,200 square feet and outside fire hazard zones or historic districts. Owners would have to stay in their homes for at least three years after splitting their lots. CACM monitored this bill.

SB 10 (Wiener) – Signed

This would let a local government rezone single-family parcels to allow as many as 10 units near public transit hubs and within urban areas. CACM worked with CAR and others to oppose provisions that directly impacted CIDs and would have explicitly prevented them from imposing any restrictions. The author has already indicated an interest in revisiting how this law operates in CIDs next year.

What’s Next?

Now that the 2021 session is behind us, legislators and interest groups are busy cooking up proposals for 2022. CACM has already been contacted by one legislator inquiring about potential legislation in response to the Florida condo collapse, so we can expect more to be done in this area.

We have also been contacted about potential changes with respect to earthquake insurance, and we should anticipate wildfire legislation that could impact CIDs. There will surely be more action regarding housing density, possible attempts to ensure HOA restrictions do not interfere with more housing, and of course, the seemingly never-ending CID bills that love to pop up every year.

As we prepare for the year ahead, we encourage your engagement and thank you for your contributions in crafting important policies that impact managers throughout the state.

Jennifer Wada, Esq.

Jennifer Wada, Esq., is an attorney, CACM’s legislative advocate and principal of Wada Government Relations in Sacramento.