Multiple bills have been signed by the Governor resulting in piecemeal changes to portions of the Civil Code and Corporations Code. This article will provide a brief summary of some of the subjects addressed in the various bills. Our website contains a detailed summary of each of the bills along with a complete copy of the legislation. The following is a brief overview.
AB 502 amends Civil Code §5100 to create a process for election of directors by acclamation. In essence, when the number of nominees equals or is less than the number of vacancies on the board, the existing directors may vote to eliminate the balloting process entirely and seat those who have placed their name in nomination. To safeguard against abuses of the process, the legislature has imposed procedural safeguards resulting in a 150-day election cycle along with a burdensome number of notices to the membership throughout the process.
SB 432 is a bill that amends several portions of the Civil Code and Corporations Code with the purpose of cleaning up issues in the election process that resulted from the new election procedures (Civil Code §5115) adopted in 2020. The bill reinstates term limits, when specified in Bylaws. It limits certain notice requirements of Civil Code §5115 to elections of directors and to recall elections. This has the effect of eliminating burdensome election requirements from other types of voting such as document amendments. Civil Code §5200 is amended to expand the rights of members to obtain email addresses of owners when they had been collected by the Association and made part of the membership list. Further, members are now entitled to review bank account statements for accounts in which assessments are deposited or withdrawn. Corporations Code §7511 has been amended to extend the time for scheduling special membership meetings when requested by petition signed by 5% of the owners from not less than 35 nor more than 90 days to not more than 150 days after receipt of the petition. This has the potential to permit a board subject to recall to significantly delay the date for the recall election and to permit an election for potential replacement directors to coincide with the recall.
AB 1101 amends Civil Code §5380 which adds safeguards in the manner in which management handles association funds with regard to deposits and financial institutions. Financial institutions must provide federal deposit insurance for the funds and, further, the funds are prohibited from being invested in stocks or high-risk investment options. Civil Code §5502 has new requirements for written board approval of fund transfers over $5,000 for associations with 50 or less units but maintains the $10,000 threshold for those associations with more than 50 units. This section also amends Civil Code §5806 with respect to insurance requirements for crime and employee dishonesty coverage and fidelity bonds.
SB 9 is intended to address the State's housing crisis by allowing duplexes and lots splits in single-family zones. This law could have a devastating effect on planned development associations resulting in increased density, lack of parking, and overuse of facilities. Senator Atkins, who authored the bill, has indicated that SB 9 would not override association restrictions that otherwise prohibit lots splits or creating duplexes on a single lot.
AB 1584 amends Civil Code §4741 which invalidated certain types of rental restrictions. Boards are now required, without the approval of the members, to amend any provision in their governing documents not later than July 1, 2022 if it includes a rental restriction inconsistent with Civil Code §4741.
SB 391 adds a new Civil Code §5450 which establishes an emergency power to use videoconferencing such as Zoom for both board and member meetings without any physical location for gathering in person when it is unsafe or impossible. Currently, Civil Code §4090 allows for teleconference meetings but requires one physical location were members may attend. This new law eliminates the requirement of the physical location if the situation qualifies as an emergency under the new statute.
