Would allow for board term limits and would require that persons assisting Inspector(s) of Elections satisfy the criteria of an independent third party.
Current Status: Chaptered
FindHOALaw Quick Summary:
Existing law provides for nomination by acclamation in an election of members of the board of directors of the association if certain conditions are satisfied, including that the association permits all candidates to run if nominated. However, an association is authorized to disqualify a person from nomination under certain circumstances, including if the person has been a member of the association for less than one year.
This bill would amend Civil Code Section 5100 to include among the permissible reasons for disqualifying a person from nomination if the person has served the maximum number of terms or sequential terms allowed by the association.
Existing law requires an association to adopt operating rules for appointing one or 3 independent third parties as inspectors of elections and that allow the inspectors to appoint and oversee additional persons to verify signatures and to count and tabulate votes, provided that the persons are independent third parties. Existing law specifies criteria for who an independent third party may be.
This bill would amend Civil Code Section 5105 to require the additional persons to be appointed and overseen by the inspectors of election to also satisfy the criteria of who may be an independent third party.
**UPDATE: SB 432 was signed by the Governor on October 7, 2021. Its changes to the law take effect January 1, 2022.
Qualifications for persons wishing to serve on a HOA’s board of directors (aka “candidate qualifications”) are governed by Civil Code § 5105. Persons who do not satisfy the candidate qualifications in effect at the time of nomination are disqualified from nomination. (See “Candidate Nomination”.) The types of candidate qualifications that may or must be adopted under Civil Code § 5105 are discussed below:
Mandatory Candidate Qualification: Must be a Member An association must disqualify a person from a nomination as a candidate if that person is not a member of the association at the time of nomination. (Civ. Code § 5105(b).) “Member” in this context means the person must be an owner of a separate interest (e.g., an owner of a Lot or Unit) within the association at the time of nomination, regardless of any contrary definition of “member” contained in the association’s governing documents. (Civ. Code § 4160.)
Directors Must Retain Membership Status in order to Serve – A sitting director who ceases to be a member must be disqualified from continuing to serve as a director. (Civ. Code § 5105(b).)
Mandatory Disqualification of “Termed-out” Directors
An association must disqualify a nominee if that person has served the maximum number of terms or sequential terms allowed by the association. (Civ. Code § 5105(b).) (*Note – this is effective as of January 1, 2024.)
Discretionary Candidate Qualifications Through its election rules or bylaws, an association may adopt the following candidate qualifications: (Civ. Code § 5105(c))
Current in Assessments. An association may require a candidate, and a director during their board tenure, to be current in the payment of regular and special assessments, subject to the following:
Joint Ownership Interest. An association may disqualify a person from nomination as a candidate if the person, if elected, would be serving on the board at the same time as another person who holds a joint ownership interest in the same separate interest (same Lot or Unit) as the person, and the other person is either a candidate for the current election or is an incumbent director. (Civ. Code § 5105(c)(2).)
Member for Less than One (1) Year.An association may disqualify a person from nomination as a candidate if that person has been a member of the association for less than one (1) year. (Civ. Code § 5105(c)(3).)
Past Criminal Conviction. An association may disqualify a person from nomination if that person discloses, or if the association is aware or becomes aware of, a past criminal conviction that would, if the person was elected, either prevent the association from purchasing fidelity bond coverage required by Civil Code § 5806 or terminate the association’s existing fidelity bond coverage. (Civ. Code § 5105(c)(4); See also “Fidelity Bond Coverage.”)
Candidate Qualifications Must Apply to Sitting Directors
Candidate qualifications govern who is qualified to run for and be elected to the HOA’s board of directors in a director election. Director qualifications, by contrast, govern who remains qualified to continue to serve on a HOA’s board of directors. However, Civil Code Section 5105 requires that any basis used by an association for disqualifying a candidate must also apply equally to sitting directors of the association:
“If an association disqualifies a nominee pursuant to this section, an association in its election rules shall also require a director to comply with the same requirements.” (Civ. Code § 5105(f).)
