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SB-1265 Common interest developments: elections. (2017-2018)

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Date Published: 08/07/2018 09:00 PM
SB1265:v94#DOCUMENT

Amended  IN  Assembly  August 07, 2018
Amended  IN  Assembly  June 26, 2018
Amended  IN  Senate  May 25, 2018
Amended  IN  Senate  May 15, 2018
Amended  IN  Senate  April 02, 2018

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 1265


Introduced by Senator Wieckowski

February 15, 2018


An act to amend Sections 5105, 5110, 5125, 5145, and 5200 of, and to add Section 5910.1 to, the Civil Code, relating to common interest developments.


LEGISLATIVE COUNSEL'S DIGEST


SB 1265, as amended, Wieckowski. Common interest developments: elections.
The Davis-Stirling Common Interest Development Act governs the creation and management of common interest developments. The act requires a homeowner’s association to adopt rules that, among other things, specify the qualifications for candidates for the board of directors of the association and any other elected position, qualifications for voting, the voting power of each membership, the authenticity, validity, and effect of proxies, and the voting period for elections, including the times at which polls will open and close, consistent with the governing documents. The act requires the sealed ballots to be at all times in the custody of the inspector or inspectors of elections or at a designated location until after the tabulation of the vote.
This bill would would, among other things, delete the requirement that the rules specify the qualifications for candidates for the board and any other elected position and the qualifications for voting. The bill would prohibit an association from disqualifying a member from nomination, except for not being a member at the time of nomination and as specified with respect to certain felonies or the failure to pay regular assessments. The bill would require the rules to ensure that the meeting at which ballots are counted is accessible to all members or their representatives who want to witness the tabulation and that it is held on the common area of association property or within a reasonable distance from the property. The bill would also require the rules to require a notice to be provided regarding the return and counting of ballots, nominations, and list of candidates’ names that will appear on the ballot. The bill would require the rules to mandate that the inspector of elections deliver to each member the ballots and a copy of the election operating rules at least 30 days before an election. The bill would specify the grounds on which a nominee for the association board may be disqualified. The bill would require these rules to prohibit the denial of a ballot to a member and to a person with general power of attorney for an owner. This bill would require the signed voter envelopes, voter list, and candidate registration list to be in the custody of the inspector of elections or at a designated location until after vote tabulation and would would, with certain exceptions, require these items and the ballots to be considered association records records, as defined, subject to inspection and copying.
Existing law requires an independent 3rd party to be selected by the association as the inspector of elections and prohibits a person, business entity, or subdivision of a business entity that is employed or under contract to the association for any compensable services from being an independent 3rd party unless otherwise expressly authorized by the rules of the association.
This bill would delete the exception made by rules of the association.
Existing law authorizes a member of an association to bring a civil action for declaratory or equitable relief for a violation of the above described provisions by the association within one year from the date the cause of action accrues and authorizes a court to void the election results, as specified. Existing law also authorizes a cause of action for certain violations of the provisions governing common interest development association elections to be brought in small claims court.
This bill would, among other things, authorize the civil action to be brought in Superior Court or, if the amount of the demand does not exceed the jurisdictional amount of the small claims court, in small claims court, within one year from the date that the inspector of elections notifies the board and membership of the election results, whichever is later. The bill would also require the court to void the elections results, as specified, unless the association establishes that the failure of noncompliance by the association to follow this article or the election operating rules was unintentional and did not affect the results of the election. The bill would also prohibit an association from filing a civil action regarding a dispute in which the member has requested dispute resolution unless the association has complied with the internal dispute resolution procedures governing common interest developments, as specified.
Existing law defines association records to include membership lists, including name, property address, and mailing address, as specified.
This bill would include email addresses among the records that are defined as association records.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

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


SECTION 1.

 Section 5105 of the Civil Code is amended to read:

5105.
 (a) An association shall adopt rules, at least 90 days before any election, in accordance with the procedures prescribed by Article 5 (commencing with Section 4340) of Chapter 3, that do all of the following:
(1) Ensure that if any candidate or member advocating a point of view is provided access to association media, newsletters, or Internet Web sites during a campaign, for purposes that are reasonably related to that election, equal access shall be provided to all candidates and members advocating a point of view, including those not endorsed by the board, for purposes that are reasonably related to the election. The association shall not edit or redact any content from these communications, but may include a statement specifying that the candidate or member, and not the association, is responsible for that content.
(2) Ensure access to the common area meeting space, if any exists, during a campaign, at no cost, to all candidates, including those who are not incumbents, and to all members advocating a point of view, including those not endorsed by the board, for purposes reasonably related to the election.
(3) Specify the procedures for the nomination of candidates, consistent with the governing documents.
(4) Specify the voting power of each membership, the authenticity, validity, and effect of proxies, and the voting period for elections, including the times at which polls will open and close, consistent with the governing documents.
(5) Specify a method of selecting one or three independent third parties as inspector or inspectors of elections utilizing one of the following methods:
(A) Appointment of the inspector or inspectors by the board.
(B) Election of the inspector or inspectors by the members of the association.
(C) Any other method for selecting the inspector or inspectors.
(6) Allow the inspector or inspectors to appoint and oversee additional persons to verify signatures and to count and tabulate votes as the inspector or inspectors deem appropriate, provided that the persons are independent third parties.

(7)Ensure that the meeting at which ballots are counted is accessible to all members or their representatives who want to witness the tabulation and is held on association property or, if no common area exists, at a location within a reasonable distance from association property.

(8)Require notice to be provided of all of the following:

(7) Ensure that the meeting at which the ballots are counted meets both of the following criteria:
(A) The meeting is accessible to all members and their representatives who want to witness the tabulation.
(B) The meeting is held on the common area of association property, or if no common area exists, at a location within a reasonable distance from the property.
(8) Unless individual notice has been requested pursuant to Section 4040, require general notice to be provided of all of the following:
(A) The date and time by which, and the physical address where, ballots are to be returned by mail or handed to the inspector or inspectors of elections. elections, which shall be provided at least 30 days before the ballots are distributed.
(B) The date and location of the meeting at which ballots will be counted. counted, which shall be provided at least 30 days before the ballots are distributed.
(C) The procedure and deadline for submitting a nomination, which shall be provided at least 30 days before that deadline. the deadline for submitting a nomination.
(D) The list of all candidates’ names that will appear on the ballot, which shall be provided at least 30 days before the ballots are distributed.
(E) The list of all voters by either name or name and parcel number, and voting power. power, which shall be provided at least 30 days before the ballots are distributed.
(9) Require any errors or omissions to the list of candidates’ names or list of voters to be immediately reported to the inspector or inspectors and require necessary corrections to be made who will make the corrections within two business days.
(b) An association may only disqualify a member from a nomination pursuant to the following:
(1) An association may disqualify a candidate for not being a member at the time of the nomination.
(2) Through its bylaws only, an An association may disqualify a member if, within the past 20 years, the member has been convicted of a felony involving accepting, giving, or offering to give, a bribe, the embezzlement of money, the extortion or theft of money, perjury, or conspiracy to commit any of those crimes. For purposes of this paragraph, “conviction of a felony” includes a conviction of a felony in this state and a conviction under the laws of any other state, the United States, or any foreign government or country of a crime that, if committed in this state, would be a felony, and for which the person has not received a pardon from a person or entity authorized to grant the pardon.
(3) Through its bylaws only, Subject to paragraph (2) of subdivision (c), an association may require a nominee for a board seat, and an incumbent board director during his or her board tenure, to be current in the payment of regular assessments, which are consumer debts subject to validation. If an association requires a nominee to be current in the payment of regular assessments, it shall also require an incumbent board director to be current in the payment of regular assessments.
(4) Through its bylaws only, an association may disqualify a nominee if that person is a joint owner of a separate interest parcel where one or more of the other joint owners is already an incumbent board director, or is already a nominee for a board seat in the current election.
(5) Through its bylaws only, an association may disqualify a nominee if that person has been a member of the association for less than one year.

(A)

(c) Before disqualifying a nominee for alleged nonpayment of regular assessments, the association shall validate the debt using provide the nominee the opportunity to engage in the internal dispute resolution process set forth in Article 2 (commencing with Section 5900) of Chapter 10.

(B)The association’s validation of the debt shall be completed before the association’s deadline for submitting a nomination.

(C)

(1) A disqualifying debt includes regular assessments and interest owed the association. Fines, fines renamed as assessments, collection charges, late charges, or other costs levied by a third party are not disqualifying debts.

(D)If an association fails to convene a timely session under Article 2 (commencing with Section 5900) of Chapter 10 or fails to validate the debt in the session, the nominee shall be named a candidate for election to the board.

(2) The nominee shall not be disqualified as a candidate for an election to the board pursuant to this subdivision if any of the following circumstances are true:
(A) The nominee has paid the regular assessment under protest pursuant to Section 5658.
(B) The nominee has entered into a payment plan pursuant to Section 5665.
(C) Upon request by the nominee to engage in the internal dispute resolution process, the association fails to convene a timely session of the process, or the nominee and the association are engaged in the process at the time of the deadline for nominations.
(D) It is determined, at the conclusion of the internal dispute resolution process, that the nominee does not owe a disqualifying debt.
(E) The nominee is determined not to owe a disqualifying debt at the conclusion of the internal dispute resolution process.

(c)

(d) Notwithstanding any other law, the rules adopted pursuant to this section may provide for the nomination of candidates from the floor of membership meetings or nomination by any other manner. Those rules may permit write-in candidates for ballots.

(d)

(e) Notwithstanding any other law, the rules adopted pursuant to this section shall do all of the following:
(1) Prohibit the denial of a ballot to a member for any reason other than not being a member at the time when ballots are distributed.
(2) Prohibit the denial of a ballot to a person with general power of attorney for a member.
(3) Require the ballot of a person with general power of attorney for a member to be counted if returned in a timely manner.
(4) Require the inspector or inspectors of elections to deliver, or cause to be delivered, at least 30 days before an election, to each member both of the following documents:
(A) The ballot or ballots.
(B) A copy of the election operating rules. Delivery of the election operating rules may be accomplished by either of the following methods:
(i) Posting the election operating rules to an Internet Web site and including the corresponding Internet Web site address on the ballot together with the phrase, in at least 12-point font: “The rules governing this election may be found here:”
(ii) Individual delivery.

SEC. 2.

 Section 5110 of the Civil Code is amended to read:

5110.
 (a) The association shall select an independent third party or parties as an inspector of elections. The number of inspectors of elections shall be one or three.
(b) For the purposes of this section, an independent third party includes, but is not limited to, a volunteer poll worker with the county registrar of voters, a licensee of the California Board of Accountancy, or a notary public. An independent third party may be a member, but may not be a director or a candidate for director or be related to a director or to a candidate for director. An independent third party may not be a person, business entity, or subdivision of a business entity who is currently employed or under contract to the association for any compensable services other than serving as an inspector of elections.
(c) The inspector or inspectors of elections shall do all of the following:
(1) Determine the number of memberships entitled to vote and the voting power of each.
(2) Determine the authenticity, validity, and effect of proxies, if any.
(3) Receive ballots.
(4) Hear and determine all challenges and questions in any way arising out of or in connection with the right to vote.
(5) Count and tabulate all votes.
(6) Determine when the polls shall close, consistent with the governing documents.
(7) Determine the tabulated results of the election.
(8) Perform any acts as may be proper to conduct the election with fairness to all members in accordance with this article, the Corporations Code, and all applicable rules of the association regarding the conduct of the election that are not in conflict with this article.
(d) An inspector of elections shall perform all duties impartially, in good faith, to the best of the inspector of election’s ability, and as expeditiously as is practical. If there are three inspectors of elections, the decision or act of a majority shall be effective in all respects as the decision or act of all. Any report made by the inspector or inspectors of elections is prima facie evidence of the facts stated in the report.

SEC. 3.

 Section 5125 of the Civil Code is amended to read:

5125.
 (a)The sealed ballots, signed voter envelopes, voter list, and candidate registration list shall at all times be in the custody of the inspector or inspectors of elections or at a location designated by the inspector or inspectors until after the tabulation of the vote, and until the time allowed by Section 5145 for challenging the election has expired, at which time custody shall be transferred to the association. If there is a recount or other challenge to the election process, the inspector or inspectors of elections shall, upon written request, make the ballots available for inspection and review by an association member or the member’s authorized representative. Any recount shall be conducted in a manner that preserves the confidentiality of the vote.

(b)Notwithstanding Section 5200, ballots, signed voter envelopes, voter list, and candidate registration list shall be association records subject to inspection and copying by a member.

SEC. 4.

 Section 5145 of the Civil Code is amended to read:

5145.
 (a) A member of an association may bring a civil action for declaratory or equitable relief for a violation of this article by the association, including, but not limited to, injunctive relief, restitution, or a combination thereof, within one year of the date that the inspector or inspectors of elections notifies the board and membership of the election results or the cause of action accrues, whichever is later. Upon a finding that the election procedures of this article, or the adoption of and the adherence to rules provided by Article 5 (commencing with Section 4340) of Chapter 3, were not followed, a court shall void the results of the election, unless the association establishes, by a preponderance of the evidence, that the failure of the association to follow its noncompliance with this article or the election operating rules was unintentional and did not affect the results of the election. The findings of the court shall be stated in writing as part of the record.
(b) A member who prevails in a civil action to enforce the member’s rights pursuant to this article shall be entitled to reasonable attorney’s fees and court costs, and the court may impose a civil penalty of up to five hundred dollars ($500) for each violation, except that each identical violation shall be subject to only one penalty if the violation affects each member of the association equally. A prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation. If a member prevails in a civil action brought in small claims court, the member shall be awarded court costs and reasonable attorney’s fees incurred for consulting an attorney in connection with this civil action.
(c) A cause of action under subdivision (a) may be brought in either the Superior Court or, if the amount of the demand does not exceed the jurisdictional amount of the small claims court, in small claims court.

SEC. 5.

 Section 5200 of the Civil Code is amended to read:

5200.
 For the purposes of this article, the following definitions shall apply:
(a) “Association records” means all of the following:
(1) Any financial document required to be provided to a member in Article 7 (commencing with Section 5300) or in Sections 5565 and 5810.
(2) Any financial document or statement required to be provided in Article 2 (commencing with Section 4525) of Chapter 4.
(3) Interim financial statements, periodic or as compiled, containing any of the following:
(A) Balance sheet.
(B) Income and expense statement.
(C) Budget comparison.
(D) General ledger. A “general ledger” is a report that shows all transactions that occurred in an association account over a specified period of time.
The records described in this paragraph shall be prepared in accordance with an accrual or modified accrual basis of accounting.
(4) Executed contracts not otherwise privileged under law.
(5) Written board approval of vendor or contractor proposals or invoices.
(6) State and federal tax returns.
(7) Reserve account balances and records of payments made from reserve accounts.
(8) Agendas and minutes of meetings of the members, the board, and any committees appointed by the board pursuant to Section 7212 of the Corporations Code; excluding, however, minutes and other information from executive sessions of the board as described in Article 2 (commencing with Section 4900).
(9) Membership lists, including name, property address, mailing address, and email address, but not including information for members who have opted out pursuant to Section 5220.
(10) Check registers.
(11) The governing documents.
(12) An accounting prepared pursuant to subdivision (b) of Section 5520.
(13) An “enhanced association record” as defined in subdivision (b).
(14) Association election materials as defined in subdivision (c).
(b) “Enhanced association records” means invoices, receipts and canceled checks for payments made by the association, purchase orders approved by the association, credit card statements for credit cards issued in the name of the association, statements for services rendered, and reimbursement requests submitted to the association.
(c) “Association election materials” means returned ballots, signed voter envelopes, a list of parcel numbers and voters to whom ballots were to be sent, and the candidate registration list. Except for the purposes of this article, signed voter envelopes shall not be copied.

SEC. 6.

 Section 5910.1 is added to the Civil Code, to read:

5910.1.
 An association may not file a civil action regarding a dispute in which the member has requested dispute resolution unless the association has complied with Section 5910 by engaging in good faith in the internal dispute resolution procedures after a member invokes those procedures.