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Election Reform Laws Effective January 1, 2020!

                    ELECTION REFORM LAWS EFFECTIVE JANUARY 1, 2020

                                                                                                By Robert D. Hillshafer, Esq.

                                                                                            Loewenthal, Hillshafer & Carter, LLP

The California legislature and Governor have once again enacted more onerous and largely unnecessary changes to the election laws governing community associations.  These changes create additional time constraints and formalities in the conduct of elections of directors that will increase the administrative expenses and compliance issues of every Association.  The important changes are listed below:

Candidate Disqualification:  Civil Code Sections 5100 and 5105 now require that election rules include the following qualifications to run for the board: (1) All candidates must be a member of the Association; and (2) owners that are corporations or trusts may be represented by an appointed “natural person.”

Section 5105 also allows the disqualification of a candidate 1) with a prior criminal conviction that prevents the association from acquiring a fidelity bond or would result in the termination of the associations existing fidelity bond; 2) whose election would result in joint owners of a separate interest serving on the board at the same time; or, 3) who has been an owner for less than one (1) year.

Section 5100 does not allow disqualification for failure to pay fines and may not disqualify owners that have paid delinquent assessments under protest, is paying delinquent assessments under a payment plan or hasn’t been given the opportunity to engage in IDR.  The last prohibition means that an owner who has not received a “pre-lien letter” that offers IDR cannot be disqualified.

New Election Notices:  Section 5115 now requires:  (1) notice of the deadlines and nomination procedures be sent at least 30 days prior to nomination deadline; (2) notice of the list of candidates and election rules must be given to all members at least 30 days prior to the ballots being distributed to the members along with date, time and address for ballots to be submitted and date time and location for election meeting; and (3) distribution of ballots at least 30 days prior to election meeting.

Terms:  Notwithstanding provisions in bylaws, Section 5100 now requires elections be held at the end of each director’s expiring term and at least every four years.  This means that failure to meet quorum in an election doesn’t mean automatic carryover terms.

Election Records and Member Access: Section 5105 (a) as amended requires an association maintain election materials including the candidate registration list and a voter list that includes certain required information.  Members also have the right to verify the information on the voter list and registration list at least 30 days before the ballots are mailed.  Inspectors of Election must correct errors identified by members within two business days of notice.

Civil Code Section 5200 adds “Election Materials” to the already long list of “Association Records” which members have access to.  These now include 1) ballots, 2) signed envelopes, 3) list of voter’s names, parcel numbers, and voters to whom ballots were to be sent, 4) proxies and 5) candidate registration list.  Signed envelopes may be inspected but not copied.  All these items must be retained by the Inspectors of Election or a designated location until the expiration of the election challenge period under law.

Membership Rosters now must include Email Address:  A very important change impacting rights of privacy is the fact that the membership roster definition specifically requires members email addresses be listed unless the member has formally opted out under the existing procedure in Section 5220.

Election Inspector Qualifications: Section 5110 previously allowed election rules to provide for vendors under contract with the Association, such as the property manager or even legal counsel, to act as election inspectors.  That allowance has been removed, eliminating management and counsel as inspectors, which will clearly represent an increased expense to the Association.  The one exception here is for an engagement of a vendor specifically for the purpose of serving as election inspector.

Amendment of Election Rules:  Section 5105(h) prohibits amendments of the election rules within 90 days prior to any election.

Challenges to Election Process:  Section 5145 has been expanded to require a Court to void an election when the challenging party establishes by a preponderance of the evidence that election procedures were not followed.  However, the amended law does allow the Association to avoid this voiding if it can show that non-compliance did not impact the election results.

These changes go into effect on January 1, 2020.  For those association’s whose annual meetings and elections take place in January such that ballots would be mailed out prior to January 31, 2020, the only element of this new law that would impact the election would be the appointment of an election inspector that is not a contract vendor of the Association.  If the ballots are mailed out to the members prior to January 1, 2020 it would not be mandatory to adopt a new election policy consistent with these new laws.  However, it would be a very good idea to consider starting the rules amendment process as soon as possible to allow the 28 day notice to the members of the proposed rules amendment.

 

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