New California HOA Laws
Estate Planning Attorney Joseph Hudack says that California HOAs had their best legislative year in years in 2021. An already-enacted California statute is summarized in this column. Senate Bill 391 became an emergency law after Gov. Gavin Newsom signed it on September 23. It enables HOAs to convene virtual meetings in an emergency (without the normal requirement of a physical location where members can choose to observe). The initial virtual meeting must be mailed to all members, along with contact information for someone who can assist with log-in issues.
The Community Associations Institute sponsored AB 1101
It alters the way HOA finances are stored. The necessity of board permission for fund transfers (including payments) currently differs dependent on HOA size. Board approval is required for transfers of $5,000 or 5% of the HOA’s expected annual income (whichever is less), and rises to start at $10,000 or 5% of the HOA’s estimated annual income (whichever is less). Prior exceptions to the law against commingling HOA funds have been removed, and the demand for dishonesty insurance has been clarified.
The California Association of Realtors Backed SB 392
To promote internet communication. Starting in 2023, owners can choose to receive individual HOA notices via postal or electronic mail. If they don’t choose, postal mail is the default method. The rest takes effect in 2022. A new 4045(a)(5) allows HOAs to post general notices on their websites. Section 5230 (c) and (d) prohibit the HOA or its administration from selling member information to a third party without member approval (some management companies have been doing this under their contracts, without full disclosure to the membership).
Associations and their management companies should encourage members to use email. Mailing can be expensive in terms of materials and time for larger HOAs. Email should be the major form of HOA communication since everyone has email and accesses it through a smartphone.
ADVERTISING AB 1584
Corrects a problem with illegal rental limitations. Last year’s SB 3182 added Civil Code Section 4741, prohibiting “unreasonable” HOA rental restrictions and requiring HOAs to alter their governing rules by 2022.
Many lawyers misinformed their clients that HOAs had to update their CC&Rs, even though rules are “governing documents”. This is difficult and costly owing to member disinterest. AB 1584 allows HOA boards to alter CC&Rs without a membership vote for a six-month period starting January 1, 2023, and ending July 1, 2023. Attempt this only with appropriate legal advice.
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