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Legislative Recap: New Laws Affecting Your Community in 2024 & Beyond
By A.J. Jahanian, Esq.
As with many prior years leading up to 2024, California’s latest legislative session was anything but stale. As many of you know, this year’s session ushered in a wave of changes that will impact associations in 2024 and beyond. These newly enacted laws span various facets of association governance, including board election procedures, water conservation, assessments, property sales, and discrimination.
Some of these new laws will immediately affect management and governance, requiring new procedures to be implemented this year. Others may only apply circumstantially. Either way, these bills are the realization of determined efforts by industry leaders, volunteers, and vocal advocates to nudge or curtail the legislative impact on our communities’ operations, management, and character.
ASSEMBLY BILL 1458: Election Quorum and Adjournment
Addressing the persistent challenge of achieving a quorum for director elections, AB 1458 amends Civil Code §4115 to establish a reduced quorum of twenty percent (20%) for adjourned election meetings. This alteration aims to alleviate the hurdles posed by homeowner apathy, fostering more flexibility in election proceedings. Notably, associations with lesser quorum requirements in their governing documents can continue to utilize those provisions.
AB 1458 requires the second election meeting to be at least twenty (20) days after the first. It also requires that the general/ pre-ballot notice includes a statement that the association may call a subsequent meeting where the quorum will reduce to twenty percent (20%) of the membership if it cannot reach a quorum the first time.
Boards, in general, should consider being proactive and amending the governing documents to alleviate burdensome quorum requirements. Nonetheless, AB 1458 is the legislature’s effort to improve the procedure and promote the completion of board elections and director turnover. While this bill is welcome in many communities, utilizing AB 1458 and the lower quorum threshold in an election is optional. A board may choose to stick with higher quorum requirements if desired.
ASSEMBLY BILL 1572: Potable Water/Nonfunctional Turf
Tackling the issue of water conservation, AB 1572 prohibits associations from using potable water to irrigate “nonfunctional turf” in common areas, commencing January 1, 2029. Additionally, associations managing over 5,000 square feet of irrigated common areas must certify compliance with these regulations every three years, starting January 30, 2031, through January 30, 2040.
“Nonfunctional turf” is defined as “any turf that is not functional turf and includes turf that is located within street right-of way and parking lots.” For example, turf used for athletics, playgrounds, pets, etc., is functional and not impacted by this bill. For now, associations are not expected to take immediate action. Nonetheless, AB 1572 shows that water usage will be subject to greater regulation in the future. Community leaders may consider proactive, comprehensive water conservation strategies, including drought-tolerant landscaping and controlled water usage, preparing the community for impending regulations, including those outlined by AB 1572.
ASSEMBLY BILL 1764: Housing Omnibus (Elections, Term Limits)
To date, the law has stated that to be qualified to run for the board of directors, a candidate must be a member of the association (i.e., owner of a separate interest within the community). The association could also adopt additional qualifications, such as being current in the payment of assessments and having not been convicted of a crime that would impact the association’s insurance coverage.
Seeking to refine the qualifications for board members, AB 1764 mandates that current directors meet the same criteria as prospective candidates, per the association’s governing documents. Additionally, it clarifies that term limits are enforceable, such as provisions in the governing documents prohibiting directors and candidates for the board from serving a specified number of sequential terms.
Boards may consider performing a comprehensive review of their association’s election rules, ensuring that they are up to date and include qualifications and term limits that fit the goals and needs of the community.
ASSEMBLY BILL 572: Imposition of Assessments
Under previous iterations of the law, associations may impose regular assessments against the membership per their governing documents and increase those regular assessments by up to twenty percent (20%) without membership approval. AB 572 amends Civil Code §5605, restricting boards from levying regular assessment increases on owners of deed-restricted affordable housing units by more than five percent (5%) plus the percentage change in the cost of living. This assessment increase is capped at ten percent (10%) for communities with affordable housing units and original CC&Rs recorded after January 1, 2025.
Association boards and managers should collaborate closely with legal counsel to identify affordable housing units within the community (if any) and meticulously plan regular assessment increases to avoid conflict with AB 572. For any new associations formed after January 1, 2025, boards must remember this when budgeting for the common area expenses each year.
ASSEMBLY BILL 1033: Accessory Dwelling Unit (“ADU”) Sales
AB 1033 introduces a substantial shift by permitting municipalities to authorize the sale of ADUs separately and apart from the primary residence on the lot. Previously, owners were prohibited from selling an ADU separately from their primary residence. In other words, both the primary residence and the ADU were required to be sold together.
Additionally, under AB 1033, a local ordinance may allow for an ADU to be developed as a separate condominium building with its own condominium plan and restrictions (an association within the association!) if the association authorizes it.
This bill potentially opens the floodgates to owners selling ADUs separately from the primary residence. Constructing “an association within the association” may significantly impact community density, parking availability, and the overall character of the community.
Fortunately, AB 1033 makes clear that any proposed ADU sales or condominium developments within the association must be approved by the powers that be. This means that boards may prohibit the sale of an ADU separate from the primary residence or the development of a separate condominium building within the community. Accordingly, boards may consider developing robust policies, including amendments to their CC&Rs, governing ADU construction and sales, and safeguarding the character and integrity of the association.
ASSEMBLY BILL 403: Discrimination Based on Ancestry
Expanding on existing anti-discrimination laws, AB 403 explicitly prohibits associations from discriminating based on ancestry or perceived social status, such as “caste.” Caste is defined as “an individual’s perceived association in a system of social stratification based on inherited status.”
Fair Housing complaints can significantly burden the association via unbudgeted expenditures on legal fees and a time-consuming administrative process involving the board and management (as well as the association’s legal counsel). Boards should be mindful that any acts or communications perceived as discriminatory, based on an owner’s or resident’s ancestry or perceived “caste,” create exposure to discrimination/Fair Housing claims. Careful communication with owners in the housing context is especially crucial.
Boards should also be proactive in ensuring their governing documents include updated cover pages that include all the protected classes, as required by Government Code §12956.1, and adopt anti-discrimination policies to protect against discrimination claims.
The legislative changes for 2024 underscore the necessity for community leaders to be proactive. Boards and managers should review existing practices, update governing documents where necessary, and seek legal counsel to navigate the evolving regulatory landscape. Although some laws may not demand immediate action, they may signal what changes will impact the association in years to come. By staying informed and proactive, associations can ensure compliance while fostering a thriving community.
