In the ever-evolving landscape of homeowners association (HOA) laws and regulations, staying informed and compliant is crucial for the smooth operation of your community. The signing of Assembly Bill 1764 into law on October 11, 2023, which will take effect on January 1, 2024, brings changes to Civil Code Sections 5103 and 5105. These changes will affect how associations manage the nomination and qualification processes for board members. Here's what these changes mean for your association and why updating your election rules (yet again) may be necessary.
Under this new law, if an association decides to disqualify a nominee for the board, it must now apply the same criteria to directors. Existing laws allow associations to set specific qualifications for board nominees. These include:
1. Nonmember: Nominees shall be disqualified for not being a member of the association.
2. Membership Tenure: Nominees may be disqualified for being a member for less than one year.
3. Joint Ownership Restrictions: Nominees may be disqualified if another joint owner is already serving on the board.
4. Financial Responsibilities: Nominees who are delinquent in regular and special assessments and have not arranged for payment or paid under protest, may be disqualified.
5. Criminal Convictions: Nominees with a past criminal conviction that jeopardizes the association's insurance requirements may be disqualified.
Assembly Bill 1764 adds a new subsection (f) to Civil Code Section 5105 and reiterates the mandate from Civil Code Section 5103 that requires that if a nominee is disqualified based on the criteria mentioned above, the same standards must be applied to directors.
Additionally, the new law moves from Civil Code Section 5103 to Civil Code Section 5105 the language regarding the maximum number of terms a director can serve. Previously, that language provided that an association may disqualify a nominee if the person has served the maximum number of terms or sequential terms allowed by the association. As amended under the new law, that language now provides that a nominee shall be disqualified if that person has served the maximum number of terms or sequential terms allowed by the association (the permissive “may” was changed to a mandatory “shall”). The new law further amends Civil Code Section 5105 to provide that a director who ceases to be a member of the association will also be disqualified from continuing to serve as a director, which clarifies what was already assumed – the criteria to disqualify a nonmember as a “candidate” would also disqualify a director who is no longer a member of the association.
These changes emphasize the importance of revisiting and possibly amending your association's election rules to align with new legal standards. Non-compliance risks legal challenges and could undermine election legitimacy.
Assembly Bill 1764 cleaned up some of the statutory language applicable to director qualifications and also offers a chance to refine your election and governance processes. To navigate these changes smoothly and ensure your association is fully compliant, it's advisable to seek professional assistance.
Our team is well-versed in the intricacies of HOA laws and is ready to assist your association in updating its election rules to comply with Assembly Bill 1764. We are ready to assist and answer any questions regarding these changes and their impact on future elections.
