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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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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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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.