SB 323 adds new Civil Code section 5105(g), which provides that “[n]otwithstanding any other law,” election rules shall “[p]rohibit the denial of a ballot to a member for any reason other than not being a member at the time when ballots are distributed.”
Most common interest attorneys have interpreted this provision as barring any eligibility qualifications on member voting, such as requirements that members be current in payment of their assessments and not subject to discipline. After all, if associations cannot prohibit the distribution of a ballot to a member for any reason other than than not being a member, presumably they also cannot prohibit its acceptance for any reason other than not being a member. This interpretation is supported by SB 323's deletion of “qualifications for [member] voting” from Civil Code section 5105(a)(3)'s list of those matters which must be set forth in election rules.
Most common interest governing documents include provisions which only permit one vote per separate interest (unit or lot). These provisions are intended to control conflicts in co-owner voting, and typically provide that, if the co-owners of one separate interest cast more than one vote, the ballots are to be disregarded if conflicting, only counted as one if consistent, or only counted for purposes of establishing a quorum.
If SB 323 only permits denial of acceptance on the grounds of not being a member, however, such eligibility qualifications on the basis of co-ownership may be void. If this interpretation stands, this may have a number of possibly-unintended consequences:
- Many governing documents condition member approval on approval by a set number or percentage of separate interests or members. Such provisions can control not only amendments, but assessment allocations, voting power, board representation, and more. How are such provisions to be interpreted if all members must now be permitted to vote?
This change will be particularly serious for communities whose governing documents feature supermajority approval requirements. For example, before SB 323, in a planned development with 100 lots but 130 owners, if an amendment required the approval of at least 75% of the lots, a successful vote would require at least 75 yes-votes. After SB 323, however, the same community will apparently be required to obtain the approval of at least 75% of the members, which would require at least 98 yes-votes. For some communities, this increased hurdle could effectively render updates out of reach absent a costly and time-consuming Civil Code section 4275 petition.
- SB 323 revised Civil Code section 5110(d) to provide that inspectors have a duty to act “in the interest of all members of the association.” If conflicting ballots for one separate interest are cast in a community which predicates approval on a set number of separate interests, how are inspectors to adjudicate such a dispute when they are now required to act in the interest of “all” members?
- Some one-vote provisions provide that co-owners of one separate interest are to be considered one member for voting purposes. Would clauses of this nature preserve the enforceability of a community's one-vote provisions? Under the Davis-Stirling Act's document hierarchy provisions, the answer would be yes, but new Civil Code section 5105(g) provides that its ballot to every actual member provision applies “notwithstanding any other law.”
Ouch.
Most common interest governing documents include provisions which only permit one vote per separate interest (unit or lot). These provisions are intended to control conflicts in co-owner voting, and typically provide that, if the co-owners of one separate interest cast more than one vote, the ballots are to be disregarded if conflicting, only counted as one if consistent, or only counted for purposes of establishing a quorum.
If SB 323 only permits denial of acceptance on the grounds of not being a member, however, such eligibility qualifications on the basis of co-ownership may be void. If this interpretation stands, this may have a number of possibly-unintended consequences:
- Many governing documents condition member approval on approval by a set number or percentage of separate interests or members. Such provisions can control not only amendments, but assessment allocations, voting power, board representation, and more. How are such provisions to be interpreted if all members must now be permitted to vote?
This change will be particularly serious for communities whose governing documents feature supermajority approval requirements. For example, before SB 323, in a planned development with 100 lots but 130 owners, if an amendment required the approval of at least 75% of the lots, a successful vote would require at least 75 yes-votes. After SB 323, however, the same community will apparently be required to obtain the approval of at least 75% of the members, which would require at least 98 yes-votes. For some communities, this increased hurdle could effectively render updates out of reach absent a costly and time-consuming Civil Code section 4275 petition.
- SB 323 revised Civil Code section 5110(d) to provide that inspectors have a duty to act “in the interest of all members of the association.” If conflicting ballots for one separate interest are cast in a community which predicates approval on a set number of separate interests, how are inspectors to adjudicate such a dispute when they are now required to act in the interest of “all” members?
- Some one-vote provisions provide that co-owners of one separate interest are to be considered one member for voting purposes. Would clauses of this nature preserve the enforceability of a community's one-vote provisions? Under the Davis-Stirling Act's document hierarchy provisions, the answer would be yes, but new Civil Code section 5105(g) provides that its ballot to every actual member provision applies “notwithstanding any other law.”
Ouch.