Monday, February 27, 2006

New Rules for HOA Elections

If you live in a large association these will be of interest. I will post part 2 tomorrow.

Civ. §1363.03

The following concerns new election procedures required by the Davis-Stirling Act. Beginning July 1, 2006, associations must adopt election rules. Unfortunately, the legislature left a number of issues unanswered, which are noted below. So as to ensure fair elections, associations are required to adopt rules that accomplish the following:
Campaign Equal Access. If any candidate or member advocating a point of view is provided access to association media, newsletters, or internet websites during a campaign, for purposes that are reasonably related to that election, the association must provide equal access to all candidates and members advocating a point of view, including those not endorsed by the board, provided the points of view are reasonably related to the election. For example, if an owner or candidate submits a diatribe against the war in Iraq, the board can refuse to publish it. If the person advocates firing all employees, firing the management company, slashing the reserves in half, etc., the board must publish the viewpoint. However, if the person advocates violence against others, the materials should be returned to the person along with a deadline for submitting appropriate material.

Defamation. Boards may not edit or redact content from campaign materials or communications. However, boards may include a statement specifying that the author, and not the association, is responsible for the content. Despite this broad prohibition against redacting, I do not believe boards are required to distribute materials filled with obscenities. Rather than redact the obscenities, which would be contrary to the new statute, the election material should be returned to the person along with a deadline for submitting appropriate material.

Meeting Space. Boards must ensure access to common area meeting space, if any exists, during a campaign, at no cost, to all candidates, including those who are not incumbents, and to all members advocating a point of view, including those not endorsed by the board, for purposes reasonably related to the election. If an association has a large clubhouse and weddings or other events have already been scheduled, is the board required to cancel those events a campaign meeting? At this point, no one knows. Until we get clarification boards should consult legal counsel.

Candidate Qualifications. The election rules must specify the candidate qualifications. Candidate (director) qualifications are generally found in the bylaws. Older bylaws usually have no qualifications, which means that anyone can run for the board including renters. Most associations amend their bylaws to add qualifications that directors be members, current in their dues, not a felon, etc.

Nominations. Nomination procedures are not reasonable if they disallow members from nominating themselves for election to the board. This requirement conflicts with the preceding requirement. Despite the fact that associations can establish qualifications for directors, this provision prohibits associations from preventing owners from nominating themselves. I don't think that is what the legislature intended. I believe boards can prevent unqualified candidates from placing themselves on the ballot.

Voting Issues. Election rules must specify the qualifications for voting, the voting power of each membership, the authenticity, validity, and effect of proxies, and the voting period for elections, including the times at which polls will open and close. I will address these issues in a later newsletter.

Inspectors of Election. Election rules must specify a method of selecting one or three independent third parties as inspectors of election. I will discuss this in a subsequent newsletter. For now, boards should plan on adding a line item to the budget for "Election Expenses." Monies should be allocated for hiring an independent 3rd party to oversee the election and boards should also anticipate higher legal expenses.
Secret Ballots & Counting. For elections regarding assessments, amending the governing documents, granting exclusive use to the common areas, or electing directors, balloting must be secret. However, the counting of the ballots must be done in front of the membership. This will be addressed in a subsequent newsletter. Boards should consider amending their bylaws and/or CC&Rs to eliminate cumulative voting. Cumulative voting encourages proxy wars and only complicates what will become a difficult election process starting July 1.

Reporting Results. Election results must be promptly reported to the board and then recorded in the minutes of the next board meeting and be made available for review by the membership. Within 15 days of the election, the board must publicize the results to all members.

Storing Ballots. Prior to counting, sealed ballots at all times must be in the custody of the inspector or inspectors of election or at a location designated by the inspectors. After tabulation of the vote, custody of the ballots must be transferred to the association and stored in a secure place for no less than one year after the date of the election.
Election Challenge. In the event of a recount or other challenge to the election process, the association must, upon written request, make the ballots available for inspection and review by association members or their authorized representatives. Any recount must be conducted in a manner that preserves the confidentiality of the vote. Who pays for the recount? How many times can a recount be demanded? I will address these issues in a subsequent newsletter.

Procedure for Adopting Election Rules. Any election rules adopted by the board must follow the procedures for adoption required by the Davis-Stirling Act, i.e., before adopting election rules, the board must distribute a draft to the membership for review and comment.
Very truly yours,

Adrian J. Adams, Esq.
Adams & Kessler llp

Adrian Adams can be contacted through

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