Normally, homeowners would be allowed to 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 CCHAL's bill (SB 323). CCHAL 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).) This has proved particularly harmful to small associations that have difficulty recruiting volunteers to serve on their boards. The requirement excludes spouses who are not on title from serving.
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 an 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. (A legal entity is single legal person, not multiple legal persons; Corp. Code §18.) In addition, associations may want to require the person serving on the board to be a member of the entity. (SB LIiberty v. Isla Verde Association (2013) 217 Cal.App.4th 272, 283.)
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 appropriate 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. Civil Code §5105(c) provides the same authorization.
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. The bill sponsored by the Center for California Homeowner Association Law (Marjorie Murray) greatly complicated the ability of members to recall directors. 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.