Election Overhaul, Again!

By Karen St. Onge, Esq.

WHAT YOU NEED TO KNOW

In 2019, the passage of Senate Bill 323 sent associations scrambling to adopt election rules that complied with the new laws before their next election. Well, get ready to scramble again.

On January 1, 2022, numerous laws go into effect that change how residential common interest development association elections must be noticed and conducted resulting in out-of-date election rules and management procedures. Here is what managers need to know.

New Prerequisites for Uncontested Elections

Effective January 1, 2022, all associations, regardless of size, must comply with detailed prerequisites set forth in Civil Code section 5103 before a board may declare the candidates in an uncontested election elected without holding a regular election with balloting known as “election by acclamation” (Civil Code §5103.). The prerequisites for an election by acclamation are as follows:

1. A regular election for board directors was held by secret ballot within the prior three years. The three-year time period is calculated from the date ballots were due in the last full election to the start of voting for the proposed election (Civil Code § 5103(a).).

2. The association complied with the notice, and nomination procedures set forth in Civil Code section 5103(b) through (d).

3. The Inspector of Elections determined that the number of qualified candidates is not more than the number of vacancies on the board (Civil Code § 5103.).

4. The agenda for the open board meeting at which the board considered declaring the qualified candidates elected by acclamation included the name of each qualified candidate (Civil Code § 5103(e).).

Given the number of prerequisites, it is recommended that associations amend their election rules to incorporate the new laws, so they have a reliable roadmap to follow. Below are some of the key changes to be aware of when planning your next director election if there is a chance it will be uncontested:

INDIVIDUAL DELIVERY

Call-for-Candidates cannot be announced in a newsletter or posted at the property (i.e., by General Notice); rather, those notices must be sent by “individual delivery.” Also, beginning in 2023, a new definition of “individual delivery” goes into effect, which is discussed below (Civil Code § 5103(b).).

FIRST CALL-FOR-CANDIDATES

The first Call-for-Candidates must be delivered 90 days before the nomination deadline and must include specific information set forth in Civil Code section 5103(b)(1)(A)-(D).

Note: Since regular balloted elections are held a minimum of 60 days after the nomination deadline, an association may need to send out the first Call-for- Candidates 5 to 6 months before the scheduled election date.

REMINDER CALL-FOR-CANDIDATES

A reminder Call-for-Candidates must be delivered between 7 and 30 days before the nomination deadline and must include specific information set forth in Civil Code section 5103(b)(2)(A-E).

RESPONSE TO NOMINATION

Within 7 business days of receiving a nomination, the association shall, in writing or email: (1) acknowledge receipt of the nomination; and, (2) advise the nominee whether they are qualified to run. A disqualified nominee must be provided the basis for the disqualification and the procedure for appealing the disqualification (Civil Code § 5103(c)(1)-(3).).

Note: Since the Inspector of Elections must determine if an election is uncontested, an association may want nominations to be sent to the IOE as well as the manager.

Changes to How and When Election Notices Are Sent

INDIVIDUAL DELIVERY

As mentioned above, the definition of “Individual Delivery” has been amended but does not go into effect until January 1, 2023. (Civil Code §4040.) Beginning in 2023, “individual delivery” means the preferred delivery method specified by the member, which can be mail, email or both.

ANNUAL REQUEST FOR PREFERRED DELIVERY METHOD

The association’s annual request for members’ delivery addresses has been amended to require: (1) a request for each member’s preferred delivery method for “individual delivery”; (2) other information listed in Civil Code section 4040; and, (3) specific statements set forth in Civil Code § 4041(b)(2).

(Note: This annual request should be sent out in 2022 in order to obtain the information needed to comply with the new individual delivery requirements effective January 1, 2023.)

GENERAL DELIVERY

Beginning January 1, 2022, Civil Code section 4045’s definition of “general delivery” is amended to include posting notices on the association’s website if it is “designated as a location for posting general notices in the annual policy statement.”

PRE-BALLOT ELECTION NOTICE

Since 2020, associations have been required to give members notice of an upcoming election at least 30 days before ballots were mailed (“Pre-ballot Notice”). This year, that law was amended so the Pre-ballot Notice only applies to director elections or recalls, and not other elections, such as amending the CC&Rs or passing a special assessment (Civil Code § 5115(b).).

TIMING FOR DIRECTOR RECALL ELECTIONS

The amount of time an association has to conduct a special member meeting after receiving a member petition, most commonly to recall a director, has been extended from 90 days to 150 days (Corporations Code § 7511(c).).

NOTICE OF VIRTUAL-ONLY ELECTION

Virtual-only meetings, without a physical location for members to attend, are allowed “if gathering in person is unsafe or impossible” and as permitted by Civil Code section 5450(a). A virtual-only election meeting must be conducted by videoconference with the webcam placed in a location such that members can observe the Inspector of Election counting and tabulating the votes (Civil Code § 5450(d).). The notice of the Virtual-only Election meeting must meet the following requirements:

- It must be delivered by individual delivery, not general delivery, if it is the first such virtual-only meeting notice for the particular emergency (Civil Code § 5450(b)(1).). If mail is impossible due to the emergency, then email is allowed if the member has consented to email. (Civil Code § 5450(c).)

- It must include clear technical instructions on how members can participate by videoconference. (Civil Code § 5450(b)(2)(A).)

- It must include a telephone number and email address for technical support before and during the meeting. (Civil Code § 5450(b)(2)(B).)

Miscellaneous Clarifications

An Inspector of Elections can only appoint another “independent third party” to assist with verifying signatures, counting ballots and tallying votes (e.g., as opposed to the association’s manager) (Civil Code §5105(a)(6).).

A “candidate registration list” now includes the name and address of the candidate (Civil Code §5105(a)(7).).

A nominee who has delinquent assessments must now be in compliance with a payment plan in order to qualify as a candidate, as opposed to just having entered a payment plan (Civil Code § 5105(d)(2).).

The disqualification of a nominee based on their impact on the association’s “fidelity bond coverage” has been amended and replaced with “insurance coverage” instead (Civil Code § 5105(c)(4).).

Election Rules May Need to Be Amended

An association’s elections rules may need to be amended to comply with these recent changes in the law and to have a single reliable document that accurately reflects the election laws the association must follow. Failure to comply with the election laws can subject the election results to a legal challenge.

In addition, budgets may need to be adjusted to reflect the potential additional cost of updating election rules, more frequent balloted elections, mailing election notices, and the expanded role of an Inspector of Elections.

Associations should consult with legal counsel to determine if any amendments to their governing documents are required or recommended in response to this new legislation.

Karen St. Onge, Esq.

Karen St. Onge, Esq., practices community association law with Chapman & Intrieri, LLP in their Alameda, California office.