Every year new legislation is passed that affects community association governance. The burden is on the HOA board and their management team to ensure their community association adapts the new articles into their governing documents and conducts the association’s business accordingly.
Wading through legalese can often feel like a complex and overwhelming process. However, as part of our commitment to our board member clients, Keystone offers educational opportunities and resources to help navigate the changing legislation to ensure compliance, minimize legal risk to the association, and help keep things running smoothly.
To highlight legislation that may require revisions to HOA bylaws, as well as compliance deadlines, we’ve outlined four key bills taking effect in 2022.
1. SB 391 – Virtual Meetings in Times of Emergency
During the past two years of the pandemic, virtual meetings have become a vital lifeline for connecting with others, whether for business or pleasure. For many of us, teleconferencing has become our ‘new normal’ as we go about our daily lives. While nothing can replace the synergy that can come from a face-to-face meeting, teleconferencing has definitely provided benefits to many including convenience, more accessibility, and greater engagement.
SB 391 specifically outlines the criteria required to hold virtual board meetings. Although the State of California no longer has stay-at-home orders and groups of people can now gather once again, this law allows board meetings to continue to be held virtually without a physical location being provided, but only under limited circumstances.
The absence of a physical location being provided for board meetings is only allowed if a gathering in person is deemed unsafe or impossible due to a state of emergency declared by the federal, state, and/or local government. In all other circumstances, teleconferencing may still be used but must also include a physical location where members can watch, listen, or attend the meeting.
It’s also important to note, notices must be mailed to the membership upon the first teleconference-only meeting. Subsequent notices can be sent via general notice (posting) and email with clear, technical instructions on how to access the meeting, along with a phone number and email address of a person the membership can contact regarding any technical difficulties before and during the virtual meeting. Directors and members alike must have the ability to participate in the forum in the manner which they choose.
Board members should identify a central meeting location equipped with teleconferencing capabilities to comply with this legislation and adhere to what is agreed upon as a board. Other stipulations of this legislation apply to how voting should take place if meeting strictly via teleconferencing. If your board meetings have been conducted exclusively via teleconferernce, it’s important to understand the full scope of the legislation before determining how your board may proceed with future meetings.
2. SB 392 – Document Delivery
New legislation now allows posting general notices on an association’s website as long as it’s accessible to all members and if designated by the association as the location of posting of general notice on its annual policy statement. This may save time for board members by not requiring a hard copy notice to be posted in a generally accessible, designated location within the community. If there is a community website and the notice or meeting agenda can be placed in a prominent location for all members to easily access, the board now has an online option to replace the traditional method of posting.
Another provision covered by SB 392 requires members to provide their association with their primary and secondary preferred methods of contact, whether via postal service or email, as well as the name, mailing address, and valid email address of the owner’s legal representative on an annual basis.
The association must send out this contact method request at least 30 days prior to sending out its annual budget report and must include a desired return date of the information. If a preferred method of document delivery is not provided, correspondence should be sent by traditional mail. Keeping this information up to date will help with communication and ensure time-sensitive notifications are received.
Furthermore, SB 392 prohibits an association or its managing agent from selling or transmitting a member’s personal information to a third party without the consent of the membership unless where required by law.
3. AB 502 – Election by Acclamation
Essentially, election by acclamation offers convenient protocols for uncontested elections. AB 502 states boards of any size with the same or fewer number of candidates than open seats, with a pre-established election outcome, are no longer are required to mail out ballots to individual community members and incur the costs of printing and mailing.
Instead, the association can proceed via election by acclamation when it has complied with the requirements and there are the same or fewer candidates running for election as there are open seats. For example, if your community has three director seats up for election and there are only three (or fewer) candidates running to fill those seats, then the board can declare them elected without going through the balloting process since the outcome is inevitable.
Regular election requirements
Though this allowance results in significant cost savings, there are certain requirements. Associations are still required to hold regular elections (with mailed ballots) at least once every three years. Most association governing documents will have language that will require the double envelope secret ballot. However, the law supersedes this language. If requirements are met as indicated for an uncontested election, the board doesn’t need to send out ballots as long as the set process is followed.
Additionally, to take advantage of this new legislation, associations are required to provide individual notices to each member about the potential use of the acclamation procedure at least 90 days before the deadline to submit nominations. They must also send a reminder notice 7-30 days prior to the deadline to submit nominations.
Lastly, the legislation clarifies specific rules for responding to, confirming, or disqualifying nominations for candidates and directors, as well as addresses appeals and board term limits. Associations will want to obtain legal guidance to update their election rules to ensure consistency and reflect the qualifications allowed by the Civil Code Section 5100.
4. AB 1584 – Housing Omnibus
The Housing Omnibus legislation is one large bill that includes multiple, non-controversial laws the assembly can vote on all at once. The 2022 Housing Omnibus bill is an amendment to zoning laws and governing documents regarding rental restrictions in community associations. In January 2021, AB 3182 legislature imposed a ban on CC&R prohibitions on rentals and restrictions.
However, the enforcement of the 2021 law required amending the language of the governing documents, which in turn required a vote of the membership. This made it difficult for boards to obtain approval by the membership to amend CC&Rs and bylaws. AB 1584 amends the previous requirement of needing a membership vote in order to revise the governing documents to remove language which prohibits or unreasonably restricts rentals. Boards must now amend governing docs containing any rental restriction language by July 1, 2022 to conform to the code section. If these revisions aren’t present, then they can be fined.
Revising governing document language
The process of amending documents is similar to a rule change, which requires proposed amendments to be posted for 28-day member notification and comment. Any amendment considerations are then discussed in an open board meeting before being implemented.
It’s best to seek legal counsel to review governing documents, determine if there is any language that may violate the law, and know how to proceed when removing that language to eliminate any risk of exposure. Debates about how the laws affect current homeowners as opposed to homeowners that purchase after the law took effect, as well as addressing how this may apply to Airbnb and room rentals, can also be discussed with an attorney that specializes in community association law.
Keeping Current in 2022
To assist board members in learning more about the newest California Community Association legislation, Keystone recently partnered with Robert DeNichilo, Esq. CCAL, Managing Partner of Richardson | Ober | DeNichilo, who specializes in community association law. To learn more about these legal updates as well as other legislation affecting HOAs, watch our legislative update session.
In addition, all board members are encouraged to attend April’s virtual town hall addressing legal concerns affecting HOAS. Keep an eye out for registration details closer to the event date.
At Keystone, our community association management teams are here to help and provide resources for board members in updating governing docs and protocols in accordance with new legislation. Have questions about what’s new in 2022? Contact us today to get the conversation started.