Normally, homeowners would be allowed to establish candidate qualifications for those who represent them. (Corp. Code § 7151(c)(3).) Beginning January 1, 2020, a bill sponsored by Marjorie Murray's Center for California Homeowner Association Law (CCHAL) voided all community association candidate qualifications except for those allowed by her organization's bill. It imposed one mandatory qualification and gave associations permission to adopt only four other qualifications as set forth below.
Mandatory Qualification. Associations are required to disqualify nominees as candidates for election as delegates and board members who are not members of the association at the time of the nomination. (Civ. Code § 5105(b).) The requirement excludes spouses who are not on title from serving on the board. This has proved particularly harmful to small associations that have difficulty recruiting volunteers to serve as directors.
Corporations and Companies. Entities such as corporations and companies can designate a non-member person to serve on the board. (Civ. Code § 5105(b)(2).) To verify the authority of the designating party, boards can review a company's governing documents or the minutes of a corporation's board meeting designating their representative. For family trusts, the trustee on title to the property can serve on the board.
Recommendation: Associations should amend their bylaws and election rules to limit entities that own multiple units from holding multiple seats on the board of directors.
Permissive Qualifications. Beginning January 1, 2020, there are only four candidate qualifications associations are allowed to adopt. A person can be disqualified from serving on the board if:
Qualifications No Longer Allowed. Marjorie Murray's organization voided all other candidate qualifications. Following are some of the qualifications which are no longer allowed:
- The person must be in good standing. Now, a person can have significant architectural and rules violations and unpaid fines and still serve on the board.
- The person must not be in litigation with the association. Even though this creates conflicts of interest and confidentiality problems, persons suing the association can simultaneously serve on the board.
- The person has been convicted of a felony in the past ten years. As long as the association's fidelity bond is not affected, felons can now serve on the board.
- The person is a second or third-tier registered sex offender. They cannot be excluded unless it affects the fidelity bond.
- The person meets minimum age and residency criteria. This affects 55+ communities. It means an 18-year old who owns a unit through inheritance can serve on 55+ boards.
IDR Before Disqualification. Before disqualifying a nominee, the association must provide the person an opportunity to participate in internal dispute resolution. (Civ. Code § 5105(e).) The election timeline is so complicated that boards need an election timeline calculator to avoid making errors in setting dates for their election cycle.
Qualifications Via Rule Change. Even though the bylaws may be silent on director qualifications or contain invalid qualifications, the court of appeals in Friars Village v. Hansing ruled that boards can adopt director qualifications in their election rules without amending their bylaws. This same authorization can be found in Civil Code § 5105(c)
Director No Longer Qualified. Once a director is no longer qualified to serve on the board, e.g., he/she ceases to be an owner, the person's seat can be vacated by the board and a new director appointed to fill the seat (unless the bylaws require seats be filled by vote of the membership). NOTE: There is a split in legal opinions on whether vacating the seat is required. Some belive it is legitimate for the director to complete his/her term on the board but not be eligible thereafter to run for or be appointed to the board.
Removing Directors. Directors can be removed by disqualification via the governing documents, by action of the courts, or by the membership.
- By the Governing Documents. In addition to qualifications for election to the board, many associations include conditions for removing a director from the board. For example, bylaws can authorize the board to vacate a director's seat if the director misses three regularly scheduled meetings in a row or four in a twelve-month period. For more information, see Director Removal.
- By the Membership. See Recall of Directors.
- By the Courts. A legal proceeding to remove a director from the board may be brought by the board. See Removal by the Court.
ASSISTANCE: For assistance establishing director qualifications for your association, contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.