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SB-1128 Common interest developments: governance.(2017-2018)

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Date Published: 05/15/2018 09:00 PM
SB1128:v96#DOCUMENT

Amended  IN  Senate  May 15, 2018
Amended  IN  Senate  April 05, 2018
Amended  IN  Senate  March 22, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 1128


Introduced by Senator Roth

February 13, 2018


An act to amend Sections 4040, 4360, and 5100 of the Civil Code, and to amend Section 7522 of the Corporations Code, relating to common interest developments.


LEGISLATIVE COUNSEL'S DIGEST


SB 1128, as amended, Roth. Common interest developments: governance.
Existing law, the Davis-Stirling Common Interest Development Act, governs the management and operation of common interest developments by an association. Under existing law, an association that is required to deliver a document by “individual delivery” or “individual notice” is authorized to deliver the document by email facsimile, or other electronic means, if the recipient has consented in writing, unless the consent is revoked in writing.
This bill would authorize the recipient to consent to that delivery and revoke that consent by email.
Existing law requires the board of an association to provide general notice of a proposed rule change at least 30 days before making the rule change.
This bill would instead require at least 28 days general notice before making the rule change.
Existing law requires the election of directors who serve on the association board, except if the governing documents provide that one member from each separate interest is a director. Existing law requires the association to adopt rules regarding qualifications for candidates for the board and any other elected position, and procedures for the nomination of candidates, consistent with the governing documents. Existing law requires these rules to specify a method for selecting independent 3rd parties as inspectors of elections and authorizes the rules to provide for the nomination of candidates from the floor of membership meetings or nomination by any other manner.
This bill would require, when the number of director nominees at the close of the nomination period is not more than the number of vacant director positions on the board, as determined by an inspector or inspectors of elections, the director nominees to be considered elected by acclamation. The bill would also prohibit the election by acclamation unless the association provided individual notice of the election and the procedure for nominating candidates, as specified.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 4040 of the Civil Code is amended to read:

4040.
 (a) If a provision of this act requires that an association deliver a document by “individual delivery” or “individual notice,” the document shall be delivered by one of the following methods:
(1) First-class mail, postage prepaid, registered or certified mail, express mail, or overnight delivery by an express service carrier. The document shall be addressed to the recipient at the address last shown on the books of the association.
(2) E-mail, facsimile, or other electronic means, if the recipient has consented, in writing or by e-mail, to that method of delivery. The consent may be revoked, in writing or by e-mail, by the recipient.
(b) Upon receipt of a request by a member, pursuant to Section 5260, identifying a secondary address for delivery of notices of the following types, the association shall deliver an additional copy of those notices to the secondary address identified in the request:
(1) The documents to be delivered to the member pursuant to Article 7 (commencing with Section 5300) of Chapter 6.
(2) The documents to be delivered to the member pursuant to Article 2 (commencing with Section 5650) of Chapter 8, and Section 5710.
(c) For the purposes of this section, an unrecorded provision of the governing documents providing for a particular method of delivery does not constitute agreement by a member to that method of delivery.

SEC. 2.

 Section 4360 of the Civil Code is amended to read:

4360.
 (a) The board shall provide general notice pursuant to Section 4045 of a proposed rule change at least 28 days before making the rule change. The notice shall include the text of the proposed rule change and a description of the purpose and effect of the proposed rule change. Notice is not required under this subdivision if the board determines that an immediate rule change is necessary to address an imminent threat to public health or safety or imminent risk of substantial economic loss to the association.
(b) A decision on a proposed rule change shall be made at a board meeting, after consideration of any comments made by association members.
(c) As soon as possible after making a rule change, but not more than 15 days after making the rule change, the board shall deliver general notice pursuant to Section 4045 of the rule change. If the rule change was an emergency rule change made under subdivision (d), the notice shall include the text of the rule change, a description of the purpose and effect of the rule change, and the date that the rule change expires.
(d) If the board determines that an immediate rule change is required to address an imminent threat to public health or safety, or an imminent risk of substantial economic loss to the association, it may make an emergency rule change, and no notice is required, as specified in subdivision (a). An emergency rule change is effective for 120 days, unless the rule change provides for a shorter effective period. A rule change made under this subdivision may not be readopted under this subdivision.

SEC. 3.

 Section 5100 of the Civil Code is amended to read:

5100.
 (a) Notwithstanding any other law or provision of the governing documents, except as provided in this section, elections regarding assessments legally requiring a vote, election and removal of directors, amendments to the governing documents, or the grant of exclusive use of common area pursuant to Section 4600 shall be held by secret ballot in accordance with the procedures set forth in this article.
(b) This article also governs an election on any topic that is expressly identified in the operating rules as being governed by this article.
(c) This article applies to both incorporated and unincorporated associations, notwithstanding any contrary provision of the governing documents.
(d) The procedures set forth in this article shall apply to votes cast directly by the membership, but do not apply to votes cast by delegates or other elected representatives.
(e) In the event of a conflict between this article and the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code) relating to elections, the provisions of this article shall prevail.
(f) Directors shall not be required to be elected pursuant to this article if the governing documents provide that one member from each separate interest is a director.
(g) When, as of the close of nominations for directors on the board, the number of director nominees is not more than the number of vacancies to be elected, as determined by the inspector or inspectors of elections, the director nominees shall be considered elected by acclamation. Director nominees shall not be considered elected by acclamation unless the association provided individual notice of the election and the procedure for nominating candidates at least 30 days prior to the close of nominations.

SEC. 4.

 Section 7522 of the Corporations Code is amended to read:

7522.
 A corporation with 5,000 or more members may provide that, in any election of a director or directors by members of the corporation except for an election authorized by Section 7152 or 7153:
(a) The corporation’s articles or bylaws shall set a date for the close of nominations for the board. The date shall not be less than 50 nor more than 120 days before the day directors are to be elected. No nominations for the board can be made after the date set for the close of nominations.
(b) If more people are nominated for the board than can be elected, the election shall take place by means of a procedure which allows all nominees a reasonable opportunity to solicit votes and all members a reasonable opportunity to choose among the nominees.
(c) A nominee shall have a reasonable opportunity to communicate to the members the nominee’s qualifications and the reasons for the nominee’s candidacy.
(d) If after the close of nominations the number of people nominated for the board is not more than the number of directors to be elected, the corporation may without further action declare that those nominated and qualified to be elected have been elected.
(e) Notwithstanding subdivision (d), if a common interest development, as defined in Section 4100 of the Civil Code, is subject to this part and after the close of nominations for the directors on the board of the association of the common interest development the number of director nominees is not more than the number of vacancies to be elected, as determined by the inspector or inspectors of elections selected pursuant to Section 5110 of the Civil Code, the director nominees shall be considered elected by acclamation. Director nominees shall not be considered elected by acclamation unless the association provided individual notice of the election and the procedure for nominating candidates at least 30 days prior to the close of nominations.