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AB 1360 Proposed Legislation To Allow Electronic Voting for Homeowner Associations

The California Legislative Action Committee (CLAC) has sponsored new legislation which would allow Homeowner Associations to offer electronic voting to Members. The existing CID election procedure is intended to provide secrecy to members and involves an extensive process, including the provision of double stuffed ballots. HOAs are required to secure an inspector of elections to open and tally all ballots received in an election. A problem reported by CIDs, regardless of size, is the challenge of getting enough members of the HOA to participate in an election to achieve a quorum. For an election to be valid, the governing documents of an HOA generally require that a quorum of the members vote.In some cases HOAs are not able to achieve a quorum in the first election and must conduct subsequent elections, which they report is a costly endeavor. Ultimately this cost, like all costs to operate the CID, is borne by the members through their assessments.

Purpose of this bill: This bill would allow members of an HOA to opt in to electronic voting as an alternative to voting by paper ballot. According to the author, this bill seeks to increase voter participation in HOA elections while contributing to reductions in the use of paper and providing cost-saving opportunities for HOAs in the administration of elections. Members would be given the option to vote electronically. If they decided not to, they would receive a paper ballot and would vote according to the existing procedure outlined in law.

Secrecy of ballots: One of the main goals of the existing election procedure for CIDs is to maintain secrecy. The double stuffed ballots and independent third party inspector of elections are intended to insure that members are confident that they can freely vote without reprisal. At the same time, some HOAs contend that the existing process is cumbersome and costly and that apathetic members do not vote in elections, both of which mean HOAs incur extra costs for multiple elections. The challenge to allowing electronic balloting is balancing the desire for secrecy with the goal of greater voter participation.

Role of inspector of elections: This bill still maintains a role for the inspector of elections to receive, count, and tabulate the voting results from the electronic balloting service provider. In the case of paper ballot voting the role of the inspector is clear. With electronic voting, it is not entirely clear what type of record the electronic voting service provider would provide of the votes or how the inspector of elections would count and certify them.

Arguments in support: The board of directors of Laguna Woods Village supports this bill. Laguna Woods Village is made up of 18,000 senior citizens residing in 12,736 homes in three housing non-profit mutual benefit corporations, two condominium associations, and one cooperative housing corporation. The board of directors of Laguna Woods Village writes, “This bill would provide an option for an association such as ours to offer an opt-in electronic voting option that would afford an opportunity for increased convenience thereby increasing voter participation as well as reducing the cost of conducting elections which cost approximately $15,000 annually.”

Arguments in opposition: The Center for California Homeowner Association Law (CCHAL) opposes this bill and raises concerns that the bill could jeopardize the secrecy of the ballots. CCHAL contends the bill does not address several key questions, including how secrecy of the ballots will be maintained, how electronic ballots can be audited, and what the chain of custody is for ballots in electronic balloting. CCHAL maintains that the rationale for the bill is that electronic balloting increases voter participation, but that no research from a neutral third party establishes that this outcome will be achieved.

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Contingency Removal

The CAR® Residential Purchase Contract (Form RPA-CA) allows the buyer 17 days to remove most contingencies. There are many contingencies in the contract, including a Financing Contingency, an Appraisal Contingency, an Inspection Contingency, Title Report Contingency, and Disclosure Contingencies. Contingencies must be removed in writing by using the CAR® Form CR. If the buyer fails to remove all contingencies within the applicable time period, the seller may give the Buyer a Notice to Perform (Form NBP) If the Buyer fails to remove the contingency by the expiration of the time period in the Notice to Perform, the seller may cancel.

Some Realtors believe that the buyer has the absolute right to cancel within the 17 day contingency removal period for any reason, and get their deposit back. However, this is not really true. There is an implied covenant of good faith and fair dealing in every purchase contract which requires the buyer to make a good faith attempt to remove all contingencies, and any refusal to remove a contingency must be in good faith. If the seller can show that the refusal to remove a contingency is not in good faith, the buyer might be in default if he fails to perform and risks loss of the Deposit.

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New Good Neighbor Fence Act of 2013

Adjacent neighbors frequently get in disputes about the responsibility to maintain fences between their properties. Sometimes the neighbors ask the Association to get involved. Although some CC&Rs specify the responsibility for maintaining these fences, Civil Code section 841 applies to the responsibility of adjacent owners to maintain fences that are on the property line. This code section has been completely re-written effective January 1, 2014. The new code section makes it easier to determine who is responsible for the costs of maintenance and provides a remedy if one neighbor feels that he/she is not responsible for half the costs. Here is the text of the new law:

(a) Adjoining landowners shall share equally in the responsibility for maintaining the boundaries and monuments between them.

(b)(1) Adjoining landowners are presumed to share an equal benefit from any fence dividing their properties and, unless otherwise agreed to by the parties in a written agreement, shall be presumed to be equally responsible for the reasonable costs of construction, maintenance, or necessary replacement of the fence.

(2) Where a landowner intends to incur costs for a fence described in paragraph (1), the landowner shall give 30 days’ prior written notice to each affected adjoining landowner. The notice shall include notification of the presumption of equal responsibility for the reasonable costs of construction, maintenance, or necessary replacement of the fence. The notice shall include a description of the nature of the problem facing the shared fence, the proposed solution for addressing the problem, the estimated construction or maintenance costs involved to address the problem, the proposed cost sharing approach, and the proposed timeline for getting the problem addressed.

(3) The presumption in paragraph (1) may be overcome by a preponderance of the evidence demonstrating that imposing equal responsibility for the reasonable costs of construction, maintenance, or necessary replacement of the fence would be unjust. In determining whether equal responsibility for the reasonable costs would be unjust, the court shall consider all of the following:

(A) Whether the financial burden to one landowner is substantially disproportionate to the benefit conferred upon that landowner by the fence in question.

(B) Whether the cost of the fence would exceed the difference in the value of the real property before and after its installation.

(C) Whether the financial burden to one landowner would impose an undue financial hardship given that party’s financial circumstances as demonstrated by reasonable proof.

(D) The reasonableness of a particular construction or maintenance project, including all of the following:

(i) The extent to which the costs of the project appear to be unnecessary or excessive.

(ii) The extent to which the costs of the project appear to be the result of the landowner’s personal aesthetic, architectural, or other preferences.

(E) Any other equitable factors appropriate under the circumstances.

(4) Where a party rebuts the presumption in paragraph (1) by a preponderance of the evidence, the court shall, in its discretion, consistent with the party’s circumstances, order either a contribution of less than an equal share for the costs of construction, maintenance, or necessary replacement of the fence, or order no contribution.

(c) For the purposes of this section, the following terms have the following meanings:

(1) “Landowner” means a private person or entity that lawfully holds any possessory interest in real property, and does not include a city, county, city and county, district, public corporation, or other political subdivision, public body, or public agency.

(2) “Adjoining” means contiguous to or in contact with.

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Terminating Joint Tenancy Can Trigger Reassessment

In a recent published decision, the appellate court in Marin County held that terminating a family joint tenancy by transferring title into tenancy in common can constitute a “change in ownership” for the purpose of tax reassesment, even though the same family members stay on title. In Benson vs. Marin County Assessment Appeals Board, 219 Cal.App.4th 1445 (Sept. 2013), two brothers inherited a residential property from their mother. One of the brothers was already on title when the mother died, so he put his other brother on title with him < as a joint tenant. For 10 years, the two brothers held title as joint tenants. Then the second brother deeded his own joint tenancy interest to himself as a tenant in common with his brother. He and his brother continued to own the property and retained the same percentage ownership as before. The Marin County tax assessor determined a “change in ownership” occurred as a result of the recording of the deed changing the method of holding title from Joint Tenancy to Tenants in Common. The original assessed value was $100,631 and upon Reassessment, the assessed value increased to $525,323.00, thus resulting in a significant increase in taxes. The Assessment Appeals Board disagreed and found that this was merely a change in the way title was held and therefore did not constitute a “change in ownership”. The Tax Assessor appealed.

 

The appellate court analyzed the complicated statutes dealing with changes in ownership and concluded that the Tax Assessor was correct and that a “change in ownership” occurred when the title was changed between the two brothers from joint tenancy to tenants in common. Generally, the creation of a joint tenancy, where the transferor remains on title as one of the joint tenants, does not constitute a “change in ownership”. However, if the joint tenants later transfer title from the joint tenancy into tenants in common, this does trigger a reassessment for tax purposes.

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Designated Broker for Corporate R.E. Broker May Not Be Sued for Negligence of Agent

In a case against a Corporate Real Estate Broker, and the designated broker for that corporation, the designated officer may not be held vicariously liable under traditional agency principles for the tortious conduct of agents he or she is responsible for supervising. In Sandler vs. Sanchez, the Sandlers made a loan of $600,000.00 to the owners of an eight unit apartment building for the purpose of converting them to condos. Their real estate agent represented to them that after conversion, the project would be worth more than $5 million. The holder of the first deed of trust foreclosed on the project after the borrower defaulted, and the Sandlers then sued the officer and broker of record for a corporate real estate broker, under Business & Professions Code section 10159.2, which requires the designated officer of the corporation to supervise the corporate broker’s employees and agents. However, the court held that this duty of supervision was a duty owed to the corporation, not to third persons who are damaged by the negligence of a salesperson. Therefore, the broker of record for a corporate Real Estate Broker may not be sued by a third party for negligence in failing to supervise the agents working for the
corporate real estate broker.