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Wednesday, December 8, 2021

HOA Homefront: Are there term limits for community boards under newly passed law?

Question: Can you elaborate on the newly signed law on “term limits” (Senate Bill 432)? We have a five-member board and three members have served for many years. If they are dropped, we will have a two-member board because no one has volunteered to attend and serve on the board. We are on our second “greeting”. – JL, Placentia.

Q: Can you expand on your recent article where you discuss duration limits? I’m a member of the board and I’ve been around longer than I’d like. But will we be limited on how long we can stay on board? What if you can’t tell people to run, like in my case? — MF, Placentia

A: The term limit is not required by law. So, some associations have them and some don’t. The term limit is usually found in the bylaws.

The most common term limit is the requirement that a director leaves the board after completing two terms. If your union has bylaws imposing term limits, an unintentional glitch in Senate Bill 323 of 2019 declared them illegal. However, this will be introduced in 2022, as the term limit will be a “new” fifth optional eligibility standard found in section 5103(d)(2) of a new civil code.

For HOAs of 6,000 or more households, SB 432 adds a new 5100(g)(3)(b)(v) to the list of acceptable eligibility requirements. It is not clear why the much larger HOA was chosen and why Section 5100(g) of the Civil Code remains in place.

Therefore, HOA bylaws containing term limit provisions were temporarily invalidated in 2020 and 2021, but will recover again in 2022.

There are arguments in favor and against term limits. When talking to clients about the topic, I usually leave it up to the client’s choice.

The primary argument against term limits is that it makes it difficult for the board to find candidates. Also, tenure limits can reduce the number of experienced directors, as a director may be less willing to return to service after the required year of leave after being “fired”.

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The primary argument for the tenure limit is that it ends the board “lineage” by forcing the directors to take some time off before seeking election or reappointment. Of course, such dynasties are sometimes the unintentional result of a member’s indifference.

While one can argue for or against HOA board term limits, adding or removing this requirement generally requires a membership vote to amend the bylaws.

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