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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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The Cost for Providing HOA Docs to Buyers Must Now be Disclosed in Advance

Governor Jerry Brown signed AB 771 today, a bill that prevents home buyers in a common interest development (CID), such as a condominium or townhome, from being charged excess document fees.

Homeowner associations (HOAs) are required to provide specific documents to prospective purchasers of homes in a CID — a form of real estate ownership in which each homeowner has an exclusive interest in a unit and a shared
interest in the common area property. In addition to the standard residential property disclosures, purchasers of a unit within a CID must receive basic information about the structure, operation and management of the HOA that operates the CID.

Current law requires that this information come from the HOA and prohibits it from charging fees in excess of what is “reasonable,” not to exceed the actual cost of processing and producing these documents. HOAs generally have provided the documents for approximately $75 to $250. Increasingly, HOAs have been delegating document preparations to third party vendors or contractors who, under a 2007 court decision, are exempt from this fee limitation. This delegation of responsibility by HOAs sometimes resulted in home purchasers being forced to pay additional fees, as much as $1,000, for other documents which were “bundled” with the required documents.

Assembly Bill 771 (Betsy Butler, D-Torrance) addresses this situation by specifying that only fees for the required documents may be charged when such documents are provided, effectively prohibiting any “bundling” of fees for other documents with these fees. The bill also creates a new form detailing which documents are required, and requires the provider to disclose the fees that will be charged for the documents before they are provided. The seller of a CID must complete this form and transmit it to the prospective purchaser along with the required documents. This will eliminate any uncertainty for the prospective purchaser as to exactly which documents are being provided and the precise fees being charged for those documents.

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Homeowner Association’s Annual Election Meetings Are Public Forums

The appellate court in the Fourth District Court of Appeal (Santa Ana) has just published a new decision concerning statements made at a Homeowner Association Annual Election Meeting, that were alleged to be defamatory. At the meeting, a candidate running for the Board of Directors accused a former homeowner and board member of
stealing money from the Association. The former homeowner sued the candidate for various causes of action including defamation. (Slander). The candidate filed a SLAPP motion in response to the lawsuit, claiming that the statement made concerning the plaintiff was made in a public forum and constituted protected activity under CCP section 426.16. The trial court denied the motion.

On appeal, the appellate court reversed, and directed the trial court to grant the motion. The court held that a homeowner association annual election is a public forum and that statements made at such a meeting concerning the qualifications of a candidate running for the board, or concerning the qualifications of an opponent, are protected from legal action, even if defamatory, unless the statements are proven to be made with malice. To establish malice, it is necessary to prove that the statements were made with knowledge of their falsehood or reckless disregard of their falsity. Since the plaintiff was unable to demonstrate malice, the court was directed to grant the motion dismissing the defamation cause of action.

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Sewer Pipe is Common Area

In DOVER VILLAGE ASSOC. v. JENNISON, 191 Cal.App.4th 123 (2010), the appellate court in Orange County held that the Association was responsible for maintaining a sewer pipe that was two feet under the slab. Patrick E. Jennison had a leaky sewer pipe two feet beneath the concrete slab underlying his Newport Beach condo. The homeowners association said he was responsible for the repair bill on the theory that the sewer pipe was “exclusive use common area” for which he was responsible. On cross-motions for summary judgment,

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the trial court disagreed, and entered a judgment declaring that the association should bear the expense of the repair cost. The court later awarded Jennison about $17,000 in attorney fees and court costs. The association appealed from the ensuing judgment.

The appellate court affirmed the judgment. Under a natural reading of the CC&R’s (covenants, conditions and restrictions), the sewer pipe was a genuine common area to be maintained and repaired by the association, as distinct from “an exclusive use common area appurtenant” to an individual owner’s separate interest.

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Orange County Appellate Court Upholds Towing of Inoperable Vehicle

The Fourth District Court of Appeal in Orange County has upheld the towing of an inoperable vehicle by a Homeowner Association.  In YAN SUI v. STEPHEN D. PRICE, just published in June, 2011, the court affirmed the dismissal of a lawsuit against an association which towed an inoperable vehicle which was in violation of the CC&Rs.  The court also upheld the towing which was done in compliance with Vehicle Code section 22658.  Vehicle Code section 22658, subdivision (a), permits an association of a common interest development to remove a vehicle parked on the property under a variety of circumstances, including the giving of notice of the parking violation, and the lapse of 96 hours after such notice. Thus it was not inappropriate to enforce a parking rule in the manner authorized by law.