Homeowner association (HOA) laws have been evolving to keep up with societal and technological changes. It’s essential that HOAs know how to stay compliant and keep governing documents up to date.
Lindsay J. Anderson, Attorney at Law at Epsten, APC, helps us break down recent regulatory changes and how they may impact HOA management in California.
Allowing Electronic Voting
California’s Assembly Bill (AB) 2159 lets HOAs use electronic voting in most membership elections, except an election to increase assessments. While this change may make it easier for members to vote, it will also make elections more complex. Associations must still allow members to use double-envelope secret paper ballots even if the association’s preferred voting method is electronic secret balloting. Associations must still use double-envelope secret paper ballots for elections that would increase assessments.
“It’s exciting in concept, but the California Legislature’s version of electronic voting seems incredibly complicated,” said Anderson. “So, we are not sure how it will work in practice, since it’s brand new. Many of our clients have started to amend their election rules to allow for it, but so far, only a small percentage of our clients have adopted electronic voting as their preferred voting method and even fewer have attempted an election with electronic voting.”
If your HOA is interested in permitting electronic voting, the first step is to ask your association’s legal counsel to update its election rules. Be sure to start this process early! Not only do election rule amendments require a 28-day member comment period prior to adoption, election rules may not be amended less than 90 days before an election, and several notices related specifically to electronic voting are required so, your HOA should consult with legal counsel several months before its next election cycle if it wants to have electronic voting as an option.
Details in the law include prohibiting nominations from the floor when there is electronic voting. Write-ins are allowed, if noted in the association’s governing documents.
Associations can choose whether to default to electronic ballot or to written ballot. Your legal counsel can help clarify that, as well as other steps like the notice of voting method, the deadline to change voting methods, and the voting list.
“My key advice is that HOAs should consult with legal counsel early in the process, as there are several additional steps in the timeline, and there are changes that need to be made to your election rules,” explained Anderson. “The second tip is associations should work closely with their inspector of elections because electronic voting is so technical. There are so many things that need to be considered. It’s not as simple as sending out emails to everybody.”
Determining Responsibility for Utility Interruptions
Another important law is California Senate Bill (SB) 900, which makes HOAs responsible for addressing utility interruptions. It requires the association to begin the process to restore gas, water, heat, or electricity services within 14 days of the interruption.
Unless a utility company is responsible, or your covenants, conditions, and restrictions (CC&Rs) state that another party is responsible, the association will be in charge of repairs and replacements to restore interrupted utilities when the services begin in the common area, even if they extend into another area.
Lawmakers wanted to ensure that residents aren’t without essential utilities for too long, but they also made sure that HOAs had tools to help them with financing repairs to or replacement of utility services. If an association lacks sufficient reserve funds, the association may obtain a loan without a member vote and levy an emergency assessment to repay the loan. As currently required for an emergency assessment, before obtaining the loan, the board has to first pass a resolution including details of the expenses and noting that the association doesn’t have the reserves to pay for them. The resolution must be distributed to the members with the notice of emergency assessment, if an emergency assessment is levied, and with notices otherwise required by law or the governing documents, if any.
Additionally, if an association board is unable to meet because of a lack of quorum within 14 days for the interruption of utility service, then at the next duly noticed board meeting, the quorum requirements shall be reduced so that the total number of directors at that board meeting shall constitute a quorum. However, this reduced quorum shall only apply for the vote to commence the repair/replacement process. The homeowner notice shall contain a provision indicating the decision was made using a reduced quorum.
Furthermore, if board members are required to vote to initiate any repairs or replacements voting may be performed by electronic means, including email. All records of the vote shall be deemed association records and subject to statutory inspection and retention rules.
Finally, SB 900 amended the definition of the term “major components” to include gas/water/electrical service to the extent an association is responsible for repair or replacement of those lines.
“While the Legislature imposed some additional burdens on associations to restore interrupted utility services, it has simultaneously built in a process to help associations accomplish those tasks,” Anderson said.
SB 900 also helps protect HOA directors from personal liability, but this does not mean that directors should not be proactive to handle maintenance, repair, and replacement obligations. It also exempts HOAs from responsibility if they’re in an area affected by a federal, state, or local state of disaster or emergency which make it impossible to fulfill these obligations.
If your HOA is dealing with interrupted utility services, Anderson recommends consulting with the Association’s legal counsel as soon as possible because 14 days is a short timeframe to get things moving.
Reducing Quorum Requirements
The state passed AB 2460 to clarify reduced quorum requirements under certain circumstances. The law makes it easier for associations to elect directors and ensure the board has the ability to carry out its responsibilities.
In an election of directors, if the quorum isn’t met, the association’s members may adjourn the meeting and reconvene at least 20 days later. At the reconvened meeting, the quorum requirement will be reduced to 20% of members, even if the governing documents require a higher percentage. If the HOA’s documents already allow for a quorum of less than 20%, then the lower percentage is what is required.
Requiring Balcony Inspections
California’s AB 2114 helps ensure HOAs can comply with the inspection requirements in SB 326, the previously enacted “Balcony Bill.” That law requires the inspection of exterior elevated elements, like balconies, elevated walkways, and some staircases, but many associations had trouble finding a qualified inspector, which had been limited to architects and structural engineers.
The new amendment adds civil engineers to the list of professionals allowed to conduct the inspections, which should make it easier for HOAs to meet the requirement.
Improving Protections Against Workplace Violence
California’s SB 428 was passed in 2023 and became effective January 1, 2025. This bill broadened the scope of workplace violence restraining orders to include harassment. Harassment is defined in the law as “a knowing and willful course of conduct directed at a specific person that seriously alarms, annoys, or harasses the person, and that serves no legitimate purpose. The course of conduct must be that which would cause a reasonable person to suffer substantial emotional distress and must actually cause substantial emotional distress.”
Unfortunately, many HOA management and staff members have faced harassment, so SB 428 can serve to increase protections for HOA management and staff. Associations can now request temporary restraining orders and injunctions for employees and volunteers, including directors, independent contractors, and others working for the association who have been threatened with violence or experienced harassment or violence.
Anderson explained, “Restraining orders were limited to threats and acts of violence, but by opening it up to harassment as well, the Legislature is giving HOAs another potential way to protect the people that work with them and for them.”
Removal of Corporate Transparency Act Reporting
The federal Corporate Transparency Act was created to combat tax fraud, money laundering, and other financial crimes. Reporting companies, including HOAs, were initially required to report beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN), but the rule currently no longer impacts domestic HOAs because the federal government is not enforcing the reporting requirements for U.S. companies and individuals.
It’s important to work with your HOA’s legal counsel to make sure your association is knowledgeable and compliant. Keystone HOA management can also help you navigate the industry’s maze of rules and regulations. Talk to one of our experts in community association management.