Alert

New California Laws of “Interest” to Common Interest Developments

January 3, 2025

In addition to the Corporate Transparency Act, the California State Legislature passed new laws that will impact common interest developments. Key highlights include:

AB 2159: Amends sections 5105, 5110, 5115, 5120, 5125, 5200, and 5260 of the Davis-Stirling Act (Civil Code) with regard to elections. The bill allows homeowners associations (HOAs) to conduct elections electronically (welcome to the 20^th Century!), which will undoubtedly make it easier for owners to participate and much less costly for the HOAs to administer. It is very difficult to get enough owners to participate in elections, and this measure will hopefully allow HOAs to hold and have elections with a sufficient number of owners participating. The notorious ennui of owners has often led to HOAs failing to meet quorum, causing the HOAs to postpone and reschedule the election (often multiple times) in order to attain quorum. Oftentimes, HOAs forego this step, if allowed by their governing documents, when the turnout is so low and the hopes of attaining quorum are little to none. Notably, more than two dozen states provide for electronic voting.

AB 2114: Amends section 5551 of the Davis-Stirling Act to allow the exterior elevated elements (mainly balconies) to be inspected by a licensed civil engineer. Existing law required an inspection by a licensed structural engineer or architect. Thus, HOAs have another professional option to conduct inspections in order to comply with this code section.

AB 2460: Amends section 5115 of the Davis-Stirling Act and section 7512 of the Corporations Code and was tied to AB 2159. This bill allows HOAs to reschedule adjourned meetings and lowers the quorum requirements at the rescheduled adjourned meeting.

SB 900: Amends sections 4775, 5550, and 5610 of the Davis-Stirling Act. The bill requires HOAs to begin the process of repairs to gas, water, or heat services in the common areas. The bill further allows HOAs who lack the funds for such repairs to obtain a loan without a vote of the members and levy an assessment for repayment of the loan. It also adds gas, water, or electrical services to the list of “major components” that HOAs are responsible for repairing, which should be included in the reserve study. However, this law does not apply to HOAs impacted by a state of disaster or emergency. Lots of issues will likely arise with this new law, and further refinements will undoubtedly need to be made to it.