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AB-502 Common interest developments: election requirements.(2021-2022)

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Date Published: 05/10/2021 09:00 PM
AB502:v96#DOCUMENT

Amended  IN  Assembly  May 10, 2021
Amended  IN  Assembly  May 04, 2021
Amended  IN  Assembly  March 11, 2021

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 502


Introduced by Assembly Member Davies

February 09, 2021


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


LEGISLATIVE COUNSEL'S DIGEST


AB 502, as amended, Davies. Common interest developments: election requirements.
The Davis-Stirling Common Interest Development Act governs the formation and operation of common interest developments and generally provides for the election and removal of directors of the board by secret ballot. Existing law provides for director nominees to be considered elected by acclamation if the number of director nominees is not more than the number of vacancies to be elected, the association includes 6,000 or more units, the association provides individual notice of the election at least 30 days before the close of the nominations, and the association permits all candidates to run if nominated, except as specified.
This bill would also require the association to have held a regular election for the directors in the last 3 years, as specified. The bill would revise the notice procedures to require the association to provide individual notice of the election and procedures for nominating candidates at least 90 days before the deadline for submitting nominations and a reminder notice at least 30 days before the deadline for submitting nominations. The bill would delete the requirement in the acclamation procedures that the association include 6,000 or more units. The bill would specify that these procedures apply notwithstanding any contrary provision in the governing documents of the common interest development.

Existing law, the Nonprofit Mutual Benefit Corporation Law, generally authorizes a subject corporation with 5,000 or more members, to follow certain general procedures in an election of directors by members of the corporation. Existing law, with respect to a common interest development subject to that law, also sets forth a process for election by acclamation, when 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, and if the association provided individual notice of the election and procedure for nominating candidates at least 30 days before the close of nominations.

This bill would specify that those general election provisions apply to a corporation that is a common interest development subject to that law. The bill would revise the acclamation provisions to specify that they apply notwithstanding any contrary provision in the governing documents of the common interest development, and if the association has satisfied the conditions for acclamation within the Davis-Stirling Common Interest Development Act.

Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YESNO   Local Program: NO  

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


SECTION 1.

 Section 5100 of the Civil Code is amended to read:

5100.
 (a) (1) Notwithstanding any other law or provision of the governing documents, 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.
(2) An association shall hold an election for a seat on the board of directors in accordance with the procedures set forth in this article at the expiration of the corresponding director’s term and at least once every four years.
(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) The provisions of this article apply 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 provisions of 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) Notwithstanding the secret balloting requirement in subdivision (a), or any contrary provision in the governing documents, when, as of the deadline for submitting nominations provided for in subdivision (a) of Section 5115, the number of director nominees is not more than the number of vacancies to be elected, as determined by the inspector or inspectors of the elections, the director nominees shall be considered elected by acclamation if all of the following conditions have been met:
(1) The association has held a regular election for the directors in the last three years. The three-year time period shall be calculated from the date ballots were due in the last full election to the start of voting for the proposed election.
(2) The association provided individual notice of the election and the procedure for nominating candidates as follows:
(A) Initial notice at least 90 days before the deadline for submitting nominations provided for in subdivision (a) of Section 5115.
(B) A reminder notice at least 30 days before the deadline for submitting nominations provided for in subdivision (a) of Section 5115.
(3) The association permits all candidates to run if nominated, except as follows:
(A) An association shall disqualify a person from nomination as a candidate if the person is not a member of the association at the time of the nomination. This subdivision does not restrict a developer from making a nomination of a nonmember candidate consistent with the voting power of the developer, as set forth in the regulations of the Department of Real Estate and the association’s governing documents.
(B) Through its bylaws or election operating rules adopted pursuant to subdivision (a) of Section 5105 only, an association may disqualify a person from nomination as a candidate based on any of the following:
(i) An association may disqualify a nominee if that person discloses, or if the association is aware or becomes aware of, a past criminal conviction that would either prevent the association from purchasing the fidelity bond coverage required by Section 5806 should the person be elected or terminate the association’s existing fidelity bond coverage as to that person should the person be elected.
(ii) Failure to be current in the payment of regular and special assessments, which are consumer debts subject to validation. If an association requires a nominee to be current in the payment of regular and special assessments, it shall also require a director to be current in the payment of regular and special assessments. An association may not disqualify a nominee for nonpayment of fines, fines renamed as assessments, collection charges, late charges, or costs levied by a third party. An association shall not disqualify a nominee for failure to be current in payment of regular and special assessments if any of the following circumstances are true:
(I) The nominee has paid the regular assessment or special assessment under protest pursuant to Section 5658.
(II) The nominee has entered into a payment plan pursuant to Section 5665.
(III) The nominee has not been provided the opportunity to engage in internal dispute resolution pursuant to Article 2 (commencing with Section 5900) of Chapter 10.
(iii) If the person, if elected, would be serving on the board at the same time as another person who holds a joint ownership interest in the same separate interest parcel as the person and the other person is either properly nominated for the current election or an incumbent director.
(iv) If that person has been a member of the association for less than one year.

SEC. 2.Section 7522 of the Corporations Code is amended to read:
7522.

A corporation with 5,000 or more members, or a corporation that is a common interest development subject to this part, 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)(1)Notwithstanding subdivision (d) or any contrary provision in the governing documents, for a common interest development subject to this part, if, after the close of nominations of directors for the board of directors 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 if the association provided individual notice of the election and has satisfied all of the conditions set forth in subdivision (g) of Section 5100 of the Civil Code.

(2)For purposes of this subdivision:

(A)“Common interest development” has the same meaning as that term is defined in Section 4100 of the Civil Code.

(B)“Individual notice” has the same meaning as that term is defined in Section 4153 of the Civil Code.