2024 Legal Update
New Legislation and Case Law Affecting California Community Associations
The following summary provides an overview of new laws impacting community associations that were signed into law last year. All laws outlined below took effect on January 1, 2024.
AB648 – Virtual Meetings
AB648 makes virtual board and membership meetings a reality, eliminating the need to designate a physical location in most circumstances. AB648 amends Civil Code 4090 and adds Civil Code 4926 to allow an association to conduct a board or membership meeting entirely by video or teleconference, without designating a physical location, so long as the association meets certain requirements stated in Civil Code 4926.
Those requirements are as follows:
- The notice of the meeting must include clear technical instructions on how to participate by teleconference, the telephone number and email address of a person who can provide technical assistance with the teleconference process both before and during the meeting, and a reminder that members may request individual delivery of meeting notices, with instructions on how to do so.
- Every director and member must have the same ability to participate in the meeting as if the meeting were held in a physical location.
- Any vote of the directors must be conducted by roll call vote.
- Any person entitled to participate in the meeting shall be given the option of participating by telephone.
Note, meetings may not be held solely by video or teleconference if ballots are to be counted and tabulated at the meeting.
AB1458 – Elections and Quorum
The inability to achieve quorum regularly prevents community associations from timely electing directors as required in their bylaws. This bill amends Civil Code 5115 and Corporations Code 7512, allowing for a statutory reduced quorum of 20% at any adjourned meeting to elect association directors where quorum could not otherwise be reached.
The 20% reduced quorum applies only if the association’s governing documents require a quorum to elect directors. If a quorum of less than 20% is authorized by the association’s governing documents then that lower quorum requirement prevails.
In order for an association to invoke the reduced quorum provision of Civil Code 5115, the association must have provided the following language in its general notice as required by Civil Code 5115(b):
“The board of directors may call a subsequent meeting at least Twenty (20) days after a scheduled election if the required quorum is not reached, at which time the quorum of the membership to elect directors will be 20 percent of the association’s members voting in person, by proxy, or by secret ballot.”
This new law applies only to membership meetings called for the purpose of electing directors. The reduced quorum does not apply in the case of a special membership meeting to recall or remove directors.
AB1764 – Director Qualifications
This bill amends provisions of the California Civil Code addressing association elections and director qualifications.This bill makes it clear that if an association disqualifies a candidate for any of the reasons stated in Civil Code 5105 then it must also require seated directors to meet the same qualifications.
AB1764 also amends Civil Code 5105(b) to add term limits as a basis for disqualification of a candidate if that candidate has served the maximum number of terms or permitted by the governing documents.
Finally, AB1764 also amended the Civil Code to clarify that “a director who ceases to be a member shall be disqualified from continuing to serve as a director.”
AB1033 – ADUs
AB1033 allows a local government agency to adopt an ordinance allowing a lot owner to separately transfer the primary dwelling on a lot apart from any accessory dwelling unit or units (“ADUs”) on the lot, which can be sold individually as condominiums, provided certain requirements are met.
AB1033 amends Government Code 65852.2 and 65852.26, which is what informs the local governmental approval agency as to its authority regarding the approval and regulation of ADUs. The amendment of Government Code 65852.2 and 65852.26 authorizes a local agency to adopt a local ordinance allowing the separate conveyance of ADUs as condominiums. However, in order to qualify, the owner must satisfy the following requirements:
- The condominiums must be created pursuant to the Davis-Stirling Common Interest Development Act;
- The condominiums must conform to the Subdivision Map Act (requiring a condominium plan among other requirements);
- The ADU must undergo a safety inspection;
- The owner must obtain approval from each lienholder on the property prior to recording the condominium plan;
- The owner must obtain approval by the association; and
- The owner must obtain approval of the membership, if required by the association’s governing documents.
AB572 – Limitations on Assessment Increases
New community associations formed on or after January 1, 2025 will not be permitted to levy regular assessment increases on “deed-restricted affordable housing units” of more than 5% over the preceding year, or more than the percentage change in the cost of living, whichever is greater. This applies to units occupied by lower and moderate-income households and does not apply to associations in existence prior to 2025. The law does not apply to communities with 20 units or less.
AB1572 – Potable Water Irrigation
This Bill prohibits associations from using potable water to irrigate any common area “nonfunctional turf” beginning January 1, 2029. Associations with more than 5,000 square feet of irrigated common area must also certify to the State Water Resources Board every three years, beginning January 30, 2031, that the property is in compliance.
SB71 – Small Claims
This bill increased the amount that an individual can sue for in small claims court from $10,000 to $12,500, but it did not increase the amount a corporate entity (such as an association) can sue for in small claims, which currently is $5,000. SB71 also increases the maximum amount of a dispute in Limited Civil matters from $25,000 to $35,000.
Case Law Review
LNSU #1, LLC v. Alta Del Mar Coastal Collection Community Assn., (2023) 94 Cal.App.5th 1050
The appellate court held that email exchanges do not meet the definition of board meetings under Civil Code 4090 so long as decisions are not being made over email.
The Plaintiffs argued the emails exchanged by the directors about landscaping and other association business violated the Open Meeting Act. The plaintiffs suggested that by communicating through email, the Association had not given notice or posted agendas for the meetings, prevented all members from attending and speaking at the meetings, and failed to provide minutes. The court disagreed that any violations occurred, because it held that the email exchanges among directors were not considered board meetings under the Open Meetings Act.
The appellate court held that “board meeting” as defined by Civil Code 4090(a), is an in-person gathering of a quorum of the directors of an association at the same time and in the same physical location for the purpose of talking about and acting on items of association business. Email exchanges among directors on those items that occur before a board meeting, and in which no action is taken on the items, do not constitute board meetings within the meaning of that definition.
Lake Lindero Homeowners Ass’n, Inc. v. Barone, (2023) 89 Cal.App.5th 834
The appellate court held that Corporations Code 7222 controls when deciding how many votes are needed to recall a board of directors.
In this case the association held a recall election. A majority of the votes cast by a quorum of the homeowners were in favor of the recall consistent with the Corporations Code. However, one of the directors claimed that the association’s Bylaws expressly required a majority vote of all of the owners for a recall to be successful and therefore refused to vacate his seat on the board.
The trial court found that the Corporations Code took precedence over the association’s Bylaws. The appellate court affirmed the trial court’s order, and under Corporations Code 7616, the court can determine the validity of any corporate election. The appellate court agreed that Corporations Code 7222 was the standard for determining the number of votes needed for a recall. As a result, the recall was successful, and the director was wrong to refuse to accept the results and vacate his position.
Lauckhart v. El Macero Homeowners Association, (2023) Cal.App.5th889
An appellate court found that the statute of limitations prevented homeowners from challenging the validity and enforceability of certain amendments to the CC&Rs.
Beginning in 1995, this association recorded several amendments to its original 1964 CC&Rs. The amendments renamed the original development and allowed the association to purchase property for the purpose of creating a common interest development.
After a neighboring parcel was abandoned by the county, the association annexed the parcel and added it to the maintenance obligations of all homeowners. In 2020, several owners refused to pay assessments for the annexed property. Those owners disputed the association’s actions and alleged that the board had violated the CC&Rs by exceeding its authority when annexing the property.
The plaintiffs filed a complaint seeking to invalidate the CC&Rs. According to the owners, the association committed fraud when it recorded the CC&R amendments. The owners alleged that the association falsified the necessary approval required to amend the CC&Rs and therefore the authority granted in the amendments was invalid. As a result, the Plaintiffs claimed that the association could not annex any land, that it was not a common interest development, and that it had no authority to collect assessments.
The trial court ruled against the Plaintiffs and finding that they had waited too long to pursue their claims, and that they were unable to establish the basic elements of fraud. The court of appeal agreed with the trial court. According to the appellate court, the act of recording the 1995 amendments put all owners on notice of the changes in the CC&Rs, including the authority to annex property and levy assessments. Therefore, the owners had missed their 4-year window to challenge the validity of the amendments by several decades. The court also found that the Plaintiffs had failed to show that the association had engaged in any fraudulent conduct and, as a result, the CC&Rs were found to be valid and enforceable against all owners.
Takiguchi v. Venetian Condominiums Maintenance Corp, (2023) 90 Cal.App.5th 880
The appellate court concluded that a board which failed to hold annual membership meetings to elect directors was in violation of the Corporations Code.
Between 2009 to 2021 the association’s board failed to hold annual elections, often due to the absence of a quorum. When the 2021 election failed to achieve quorum, a group of homeowners petitioned the board to try again to hold a meeting and count the ballots. The board refused.
Corporations Code 7510 allows a court to order a membership meeting if the corporation fails to hold regular meetings or count ballots within 60 days of the designated election. The Plaintiff homeowner submitted statements from other owners and from the Inspector of Elections showing that the association would have reached quorum if the meeting had been continued. The appellate court found that the owners had demonstrated that the association had met quorum and was able to meet the requirements needed to count the ballots, but instead the board had used inaccurate records to effectively evade its obligation to hold an election.