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Tuesday, October 19, 2021

HOA Homefront: How AB 502 will significantly impact all HOAs

The 2021 legislative session in California has ended, and five good HOA bills are becoming law.

Assembly Bill 1101, 502, Senate Bill 391, 392 432 were signed by Governor Gavin Newsom after passing the legislature. This article addresses AB 502 and SB 432, two bills revising HOA elections, two years after 2019’s SB 323.

AB 502 will have a significant impact on all HOAs. It adds a new Civil Code Section 5103 that, if the HOA has complied with certain requirements and the number of nominees does not exceed the number of open seats, allows the HOA to declare the board’s candidates “elected by greeting” without voting. is permitted. In calling for nominations, associations must observe the following:

-Disclosure of the possibility of elections by Abhinandan

-Issue a reminder announcement on enrollment between 7 to 30 days from the end of enrollment.

– Send an acknowledgment to each person submitting nomination within seven days of enrollment and a statement within seven days of nomination to the nominees informing them of their eligibility or ineligibility.

-HOAs can only hold elections twice every three years.

-Term limits are added to the list of acceptable board eligibility requirements (inadvertently omitted in the 2019 SB 323 HOA election amendment).

SB 432 HOA makes several further amendments to the election procedures. Most importantly, it revises the Corporation Code and corrects the conflict created by SB 323 of 2019 in connection with the recall elections.

Normally, recall elections are called by petition of members and the HOA must hold a voting meeting no later than 90 days after the petition is filed under Corporation Code Section 7511(c). However, with the election procedure amendments to take effect in 2020, a new Civil Code Section 5115 added two new election phases (nomination and declaration of candidates) in the normal 30-day period before the counting of ballots. This means there are now three separate phases of HOA board elections, each with its own minimum 30-day requirement.

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Those three phases could not be completed in exactly 90 days. This meant that if the HOA included the recall of a conditional election of replacement directors (which must always be accompanied by a recall vote, regardless of where the petition was filed) the HOA would have to do so within the 90-day Corporation Code requirement of the replacement directors. Couldn’t make the choice on time. Therefore, HOAs could not comply with the timing of both Corporation Code 7511(c) and Civil Code 5115.

Beginning in 2022, SB 432 resolves the statutory conflict by amending Section 7511(c) of the Corporation Code to extend the time for the HOA to hold the petitioner member meeting from 90 to 150 days after the petition. This will provide enough time to call for nominations, announce candidates and draw ballots.

Corporation Code Section 7511(b)(1) has also been amended to allow nonprofit mutual benefit corporations (which include HOAs) to meet electronically in the event of an emergency.

The HOA should note that as per Section 4805 of the Civil Code, the Corporation Code also applies to unincorporated HOAs.

Another minor change requires the inclusion of the names and addresses of the candidates in the declared list of candidates.

Stay tuned for next week’s article, where I’ll share more on three other new laws and their impact.

Kelly G. Richardson, Esq. A Fellow of the Community Association’s College of Lawyers and a partner in Richardson Ober Denicillo LLP, a law firm known for community association advice. Submit questions at [email protected]

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