California Assembly Bill AB1726 Amended / Bill

 BILL NUMBER: AB 1726AMENDED BILL TEXT AMENDED IN SENATE JUNE 16, 2010 AMENDED IN ASSEMBLY MAY 3, 2010 AMENDED IN ASSEMBLY APRIL 12, 2010 AMENDED IN ASSEMBLY MARCH 18, 2010 INTRODUCED BY Assembly Member Swanson FEBRUARY 3, 2010 An act to amend  Section 1363.03   Sections 1363.03 and 1363.05  of the Civil Code, relating to common interest developments. LEGISLATIVE COUNSEL'S DIGEST AB 1726, as amended, Swanson. Common interest developments: ballots: quorums. The Davis-Stirling Common Interest Development Act governs the establishment and management of common interest developments. These provisions require that a common interest development be managed by an association and that elections related to the governance or administration of the common interest development conform to specified requirements, including the establishment of a quorum. Existing law provides for votes on specified matters to be held by secret ballot and requires the ballots to be sent, with 2 preaddressed envelopes, to each member of the association, in accordance with the model used by California counties for ensuring confidentiality of "vote by mail" ballots. This bill would clarify that the ballots are mailed in accordance with the model used by California counties for ensuring confidentiality of "voter absentee" ballots, and would specify that each ballot be placed into an inner envelope that is sealed and then placed into an outside mailing envelope addressed to the inspector for the election. This bill would provide that,  notwithstanding governing documents to the contrary and  except for associations whose governing documents provide for a reduced quorum  for 2nd or subsequent elections  , as provided, the quorum required for purposes of a  2nd or  subsequent  members' meeting scheduled for that particular election only or  election of directors would  require a quorum of   be  33% of the  association membership entitled to vote   association's voting power, as specified  . This bill would require that these provisions be disclosed in the members' election materials mailed to the members  , including what the quorum for a 2nd or subsequent election of directors will be if there is a failure to obtain a quorum in the initial election  . This bill would also provide that these provisions do not apply to any  other part of the act   election other than an election of directors  .  The Common Interest Development Open Meeting Act provides that any member of the governing association of a common interest development may attend meetings of the board of directors of the association, except as specified.   This bill would allow the board of directors to participate in a meeting through the use of conference telephone or electronic video screen, if all participating board members are able to hear one another and members of the association speaking before the board.  This bill would also make technical, clarifying changes to that provision. Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 1363.03 of the Civil Code is amended to read: 1363.03. (a) An association shall adopt rules, in accordance with the procedures prescribed by Article 4 (commencing with Section 1357.100) of Chapter 2, that do all of the following: (1) Ensure that if any candidate or member advocating a point of view is provided access to association media, newsletters, or Internet Web sites during a campaign, for purposes that are reasonably related to that election, equal access shall be provided to all candidates and members advocating a point of view, including those not endorsed by the board, for purposes that are reasonably related to the election. The association shall not edit or redact any content from these communications, but may include a statement specifying that the candidate or member, and not the association, is responsible for that content. (2) Ensure access to the common area meeting space, if any exists, during a campaign, at no cost, to all candidates, including those who are not incumbents, and to all members advocating a point of view, including those not endorsed by the board, for purposes reasonably related to the election. (3) Specify the qualifications for candidates for the board of directors and any other elected position, and procedures for the nomination of candidates, consistent with the governing documents. (4) A nomination or election procedure shall not be deemed reasonable if it disallows any member of the association from nominating himself or herself for election to the board of directors. (5) Specify the qualifications for voting, the voting power of each membership, the authenticity, validity, and effect of proxies, and the voting period for elections, including the times at which polls will open and close, consistent with the governing documents. (6) Specify a method of selecting one or three independent third parties as inspector, or inspectors, of election utilizing one of the following methods: (A) Appointment of the inspector or inspectors by the board. (B) Election of the inspector or inspectors by the members of the association. (C) Any other method for selecting the inspector or inspectors. (7) Allow the inspector, or inspectors, to appoint and oversee additional persons to verify signatures and to count and tabulate votes as the inspector or inspectors deem appropriate, provided that the persons are independent third parties. (b) Notwithstanding any other law or provision of the governing documents, elections regarding assessments legally requiring a vote, election and removal of members of the association board of directors, amendments to the governing documents, or the grant of exclusive use of common area property pursuant to Section 1363.07 shall be held by secret ballot in accordance with the procedures set forth in this section. A quorum shall be required only if so stated in the governing documents of the association or other provisions of law. If a quorum is required by the governing documents, each outside mailing envelope completed pursuant to subdivision (f) received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum. An association shall allow for cumulative voting using the secret ballot procedures provided in this section, if cumulative voting is provided for in the governing documents. (c) (1) The association shall select an independent third party or parties as an inspector of election. The number of inspectors of election shall be one or three. (2) For the purposes of this section, an independent third party includes, but is not limited to, a volunteer poll worker with the county registrar of voters, a licensee of the California Board of Accountancy, or a notary public. An independent third party may be a member of the association, but may not be a member of the board of directors or a candidate for the board of directors or related to a member of the board of directors or a candidate for the board of directors. An independent third party may not be a person, business entity, or subdivision of a business entity that is currently employed by or under contract with the association for any compensable services unless expressly authorized by rules of the association adopted pursuant to paragraph (6) of subdivision (a). (3) The inspector or inspectors of election shall do all of the following: (A) Determine the number of memberships entitled to vote and the voting power of each. (B) Determine the authenticity, validity, and effect of proxies, if any. (C) Receive ballots. (D) Hear and determine all challenges and questions in any way arising out of or in connection with the right to vote. (E) Count and tabulate all votes. (F) Determine when the polls shall close, consistent with the governing documents. (G) Determine the tabulated results of the election. (H) Perform any acts as may be proper to conduct the election with fairness to all members in accordance with this section, the Corporations Code, and all applicable rules of the association regarding the conduct of the election that are not in conflict with this section. (4) An inspector of election shall perform his or her duties impartially, in good faith, to the best of his or her ability, and as expeditiously as is practical. If there are three inspectors of election, the decision or act of a majority shall be effective in all respects as the decision or act of all. Any report made by the inspector or inspectors of election is prima facie evidence of the facts stated in the report. (d) For purposes of this section, the following definitions shall apply: (1) "Proxy" means a written authorization signed by a member or the authorized representative of the member that gives another member or members the power to vote on behalf of that member. (2) "Sign or signed" means the placing of the member's name on the proxy (whether by manual signature, typewriting, telegraphic transmission, or otherwise) by the member or authorized representative of the member. (e) Proxies shall not be construed or used in lieu of a ballot. An association may use proxies if permitted or required by the bylaws of the association and if those proxies meet the requirements of this article, other laws, and the association's governing documents, but the association shall not be required to prepare or distribute proxies pursuant to this section. Any instruction given in a proxy issued for an election that directs the manner in which the proxy holder is to cast the vote shall be set forth on a separate page of the proxy that can be detached and given to the proxy holder to retain. The proxy holder shall cast the member's vote by secret ballot. The proxy may be revoked by the member prior to the receipt of the ballot by the inspector of elections as described in Section 7613 of the Corporations Code. (f) Ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member not less than 30 days prior to the deadline for voting. In order to preserve confidentiality, a voter may not be identified by name, address, or lot, parcel, or unit number on the ballot. The association shall use as a model those procedures used by California counties for ensuring confidentiality of voter absentee ballots, including all of the following: (1) The ballot itself is not signed by the voter, but is inserted into an inner envelope that is sealed. The envelope is inserted into an outside mailing envelope that is sealed. In the upper left-hand corner of the outside mailing envelope, the voter shall  sign   indicate  his or her name and  indicate  the address or separate interest identifier that entitles him or her to vote. (2) The outside mailing envelope is addressed to the inspector or inspectors of election, who will be tallying the votes. The envelope may be mailed or delivered by hand to a location specified by the inspector or inspectors of election. The member may request a receipt for delivery. (g) All votes shall be counted and tabulated by the inspector or inspectors of election or his or her designee in public at a properly noticed open meeting of the board of directors or members. Any candidate or other member of the association may witness the counting and tabulation of the votes. No person, including a member of the association or an employee of the management company, shall open or otherwise review any ballot prior to the time and place at which the ballots are counted and tabulated. The inspector of election, or his or her designee, may verify the member's information and signature on the outside mailing envelope prior to the meeting at which ballots are tabulated. Once a secret ballot is received by the inspector of elections, it shall be irrevocable. (h) The tabulated results of the election shall be promptly reported to the board of directors of the association and shall be recorded in the minutes of the next meeting of the board of directors and shall be available for review by members of the association. Within 15 days of the election, the board shall publicize the tabulated results of the election in a communication directed to all members. (i) The sealed ballots at all times shall be in the custody of the inspector or inspectors of election or at a location designated by the inspector or inspectors until after the tabulation of the vote, and until the time allowed by Section 7527 of the Corporations Code for challenging the election has expired, at which time custody shall be transferred to the association. If there is a recount or other challenge to the election process, the inspector or inspectors of election shall, upon written request, make the ballots available for inspection and review by an association member or his or her authorized representative. Any recount shall be conducted in a manner that preserves the confidentiality of the vote. (j) After the transfer of the ballots to the association, the ballots shall be stored by the association in a secure place for no less than one year after the date of the election. (k) Notwithstanding any other provision of law, the rules adopted pursuant to this section may provide for the nomination of candidates from the floor of membership meetings or nomination by any other manner. Those rules may permit write-in candidates for ballots. (  l  ) Except for the meeting to count the votes required in subdivision (f), an election may be conducted entirely by mail unless otherwise specified in the governing documents. (m) The provisions of this section apply to both incorporated and unincorporated associations, notwithstanding any contrary provision of the governing documents. (n) The procedures set forth in this section shall apply to votes cast directly by the membership, but do not apply to votes cast by delegates or other elected representatives. (o) In the event of a conflict between this section and the provisions of the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code) relating to elections, the provisions of this section shall prevail. (p) (1)  Except   Notwithstanding governing documents to the contrary and except  for associations whose governing documents provide for a reduced quorum for  an adjourned members' meeting or   second or subsequent elections, if an  election of directors  that  could not be held due to the failure to obtain a quorum, the quorum required for purposes of a  second or  subsequent  members' meeting scheduled for that particular election only or  election of directors shall be 33 percent of the  association membership entitled to vote   association's voting power. In those cases in which the governing documents provide for a reduced quorum for second or subsequent elections, the quorum provisions of the governing documents shall control  . (2) The association shall disclose  the provisions of paragraph (1)  in the members' election materials that are mailed to the members  what   the quorum for a second or subsequent election of dire   ctors will be if the initial election cannot be held due to the failure to obtain a quorum  . (3) The provisions of  paragraph (1) shall only apply to this section and are not applicable to any other provision in this title.   this subdivision shall not apply to any election other than an election of directors.   SEC. 2.   Section 1363.05 of the   Civil Code   is amended to read:  1363.05. (a) This section shall be known and may be cited as the Common Interest Development Open Meeting Act. (b) Any member of the association may attend meetings of the board of directors of the association, except when the board adjourns to executive session to consider litigation, matters relating to the formation of contracts with third parties, member discipline, personnel matters, or to meet with a member, upon the member's request, regarding the member's payment of assessments, as specified in Section 1367 or 1367.1. The board of directors of the association shall meet in executive session, if requested by a member who may be subject to a fine, penalty, or other form of discipline, and the member shall be entitled to attend the executive session. (c) Any matter discussed in executive session shall be generally noted in the minutes of the immediately following meeting that is open to the entire membership. (d) The minutes, minutes proposed for adoption that are marked to indicate draft status, or a summary of the minutes, of any meeting of the board of directors of an association, other than an executive session, shall be available to members within 30 days of the meeting. The minutes, proposed minutes, or summary minutes shall be distributed to any member of the association upon request and upon reimbursement of the association's costs for making that distribution. (e) Members of the association shall be notified in writing at the time that the pro forma budget required in Section 1365 is distributed, or at the time of any general mailing to the entire membership of the association, of their right to have copies of the minutes of meetings of the board of directors, and how and where those minutes may be obtained. (f) Unless the time and place of meeting is fixed by the bylaws, or unless the bylaws provide for a longer period of notice, members shall be given notice of the time and place of a meeting as defined in subdivision (j), except for an emergency meeting, at least four days prior to the meeting. Notice shall be given by posting the notice in a prominent place or places within the common area and by mail to any owner who had requested notification of board meetings by mail, at the address requested by the owner. Notice may also be given, by mail or delivery of the notice to each unit in the development or by newsletter or similar means of communication. The notice shall contain the agenda for the meeting. (g) An emergency meeting of the board may be called by the president of the association, or by any two members of the governing body other than the president, if there are circumstances that could not have been reasonably foreseen which require immediate attention and possible action by the board, and which of necessity make it impracticable to provide notice as required by this section. (h) The board of directors of the association shall permit any member of the association to speak at any meeting of the association or the board of directors, except for meetings of the board held in executive session. A reasonable time limit for all members of the association to speak to the board of directors or before a meeting of the association shall be established by the board of directors. (i) (1) Except as described in paragraphs (2) to (4), inclusive, the board of directors of the association may not discuss or take action on any item at a nonemergency meeting unless the item was placed on the agenda included in the notice that was posted and distributed pursuant to subdivision (f). This subdivision does not prohibit a resident who is not a member of the board from speaking on issues not on the agenda. (2) Notwithstanding paragraph (1), a member of the board of directors, a managing agent or other agent of the board of directors, or a member of the staff of the board of directors, may do any of the following: (A) Briefly respond to statements made or questions posed by a person speaking at a meeting as described in subdivision (h). (B) Ask a question for clarification, make a brief announcement, or make a brief report on his or her own activities, whether in response to questions posed by a member of the association or based upon his or her own initiative. (3) Notwithstanding paragraph (1), the board of directors or a member of the board of directors, subject to rules or procedures of the board of directors, may do any of the following: (A) Provide a reference to, or provide other resources for factual information to, its managing agent or other agents or staff. (B) Request its managing agent or other agents or staff to report back to the board of directors at a subsequent meeting concerning any matter, or take action to direct its managing agent or other agents or staff to place a matter of business on a future agenda. (C) Direct its managing agent or other agents or staff to perform administrative tasks that are necessary to carry out this subdivision. (4) (A) Notwithstanding paragraph (1), the board of directors may take action on any item of business not appearing on the agenda posted and distributed pursuant to subdivision (f) under any of the following conditions: (i) Upon a determination made by a majority of the board of directors present at the meeting that an emergency situation exists. An emergency situation exists if there are circumstances that could not have been reasonably foreseen by the board, that require immediate attention and possible action by the board, and that, of necessity, make it impracticable to provide notice. (ii) Upon a determination made by the board by a vote of two-thirds of the members present at the meeting, or, if less than two-thirds of total membership of the board is present at the meeting, by a unanimous vote of the members present, that there is a need to take immediate action and that the need for action came to the attention of the board after the agenda was posted and distributed pursuant to subdivision (f). (iii) The item appeared on an agenda that was posted and distributed pursuant to subdivision (f) for a prior meeting of the board of directors that occurred not more than 30 calendar days before the date that action is taken on the item and, at the prior meeting, action on the item was continued to the meeting at which the action is taken. (B) Before discussing any item pursuant to this paragraph, the board of directors shall openly identify the item to the members in attendance at the meeting.  (5) Members of the board of directors may participate in a meeting through use of a conference telephone or electronic video screen communication. Participation in a meeting through use of a conference telephone or electronic video screen communication constitutes presence in person at that meeting if all board members participating in the meeting are able to hear one another and members of the association speaking on matters before the board.  (j) As used in this section, "meeting"  includes   means  any congregation of a majority of the members of the board at the same time and place to hear, discuss, or deliberate upon any item of business scheduled to be heard by the board  , except those matters that may be discussed in executive session  .