Adams Stirling PLC


Voting Rights. "Except as provided in a corporation’s articles or bylaws or Section 7615 [cumulative voting], each member shall be entitled to one vote on each matter submitted to a vote of the members." (Corp. Code § 7610.) Boards may set a record date for determining voting rights. Voting rights are not determined by residency in the association. Members retain their voting rights whether or not they reside in the development. Member voting rights may not be suspended for any reason. (Civ. Code § 5015(g)(1).)

Class A Membership. Class A members are designated as owners of units and have one vote for each unit/lot owned. One vote per unit (not per person) is normal and legal. Although each person on title has a right to cast that one vote as a member of the association, whoever casts the vote, by ballot or otherwise, is presumed to be voting for all his/her co-owners. (Corp. Code § 7612.) If each person on title casts a ballot, the first envelope received and registered is counted. All others from that same property are marked "Invalid" and set aside. Even if one of the owners objects and wants the person's ballot withdrawn (because they disagree with how the other owner voted), the ballot is not withdrawn. Once received by the Inspector, the ballot is irrevocable. (Civ. Code § 5120(a).

Class B Membership. Class B membership is reserved to the developer, who is given three votes for each unit/lot held by the developer. Class B membership is tied to the developer's ownership of separate interests that are subject to assessments. Class B votes may be used on any issue presented to the membership for a vote. As provided for in 10 Cal Code Regs § 2792.32(c), Class B membership automatically converts to Class A when one of the following occurs (i) when 75% of the authorized residential interests transfer to homebuyers; (ii) on the 5th anniversary of the most recent conveyance of a residential interest to a homebuyer. This deadline can be extended indefinitely as long as a residential unit is transferred once every 5 years; or (iii) on the 25th anniversary of the first conveyance of a residential separate interest in a master planned community.

Class C Membership. Class C membership may only be used in master planned communities. It allows the master developer to extend control of the board of directors by giving him the right to elect directors to the board for an extended period of time. 10 Cal. Code Regs. § 2792.32(f). Class C votes are limited to the election of directors only. These extended rights automatically terminate when any of the following occur (10 Cal. Code Regs. § 2792.32(f)(1)) (i) 75% of the residential interests have been conveyed to homebuyers; (ii) on the 5th anniversary of the first conveyance of a residential interest to a homebuyer; or (iii) on the 25th anniversary of the first conveyance of a residential interest in a master-planned community.

Fractional Voting. The CC&Rs of some associations provide for a system of variable assessments and unequal voting rights tied to the member's ownership interest. For example, the CC&Rs may link each person's assessment and voting power to the square footage of his/her unit. Corporations Code § 5330 provides that "A corporation may issue memberships having different rights, privileges, preferences, restrictions or conditions, as authorized by its articles or bylaws." Such arrangements are legal. (Cebular v. Cooper Arms HOA.)

Multiple Memberships. The Corporations Code provides that no person may hold more than one membership. However, a specific exception is made for associations so owners of more than one lot or unit or lot can hold multiple memberships. (Corp. Code § 7312.) With each membership attaches voting rights.

Family Trusts. A trustee who holds legal title to the property on behalf of a family trust (not the beneficiaries), are deemed members of an association. As members, trustees have the power to vote in membership elections and serve on the board. 

Spouse Not On Title (Community Property).  A spouse not on title does not have the right to vote in elections.

Voting Rights in Bankruptcy. In the event an owner files for Chapter 7 bankruptcy protection, the owner loses his/her voting rights. Immediately upon filing, the owner's unit and voting rights transfer to the federal court. The court then appoints a trustee to oversee the prioritizing and payment of debts. Accordingly, the trustee and not the debtor would have the right to cast votes in any membership election.

Bank-Owned Property. Lending institutions that foreclose on units or lots become members of the association and have the right to vote in elections. 

Renters. Because they are not members, renters do not have voting rights nor the right to attend membership meetings.

No Removal of Voting RightsSection 7813 of the Corporations Code states that documents cannot be amended to adversely affect the voting rights of a class without their permission nor can a new class be created without their permission. Removing the voting rights of members who own multiple units would create a new class of members. Doing so would require their permission.

Votes Are Irrevocable. Once a secret ballot is received by the inspector of elections, it shall be irrevocable. (Civ. Code § 5120(a).)

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

Adams Stirling PLC