SB 323 adds new Civil Code section 5105(c), which provides that an association “may disqualify a person from nomination as a candidate pursuant to any of the following,” with “the following” being a list of optional qualifications.
Section 5105(c) does not provide that its list is exclusive or the only set of qualifications which may be imposed, and new Civil Code sections 5105(b) and (d) provide additional mandatory and optional qualifications.
This lack of exclusivity and presence of additional non-(c) qualifications presents an open question as to whether associations may impose additional, non-enumerated qualifications on director candidates, such as residency or diversity, e.g., two directors from the commercial units and three from the residences.
In a related vein, SB 323 is silent as to the continued enforceability of director term limits, which are a common and helpful tool in larger communities in regards to ensuring political diversity.
If SB 323 is interpreted as barring additional director qualifications, this could be a particularly heavy blow for mixed-use associations. Mixed-use communities often rely on complex director qualifications in order to ensure political parity between the typically-majority residential owners and typically-minority business owners, e..g., that a certain number of directors must be elected from the business units. If such provisions are now void, mixed-use business owners and tenants could find their ability to conduct for-profit operations impaired by pro-resident board actions. This would disrupt the careful balance of power provisions of this nature are intended to ensure, and hence the functionality of mixed-use developments per se.
This lack of exclusivity and presence of additional non-(c) qualifications presents an open question as to whether associations may impose additional, non-enumerated qualifications on director candidates, such as residency or diversity, e.g., two directors from the commercial units and three from the residences.
In a related vein, SB 323 is silent as to the continued enforceability of director term limits, which are a common and helpful tool in larger communities in regards to ensuring political diversity.
If SB 323 is interpreted as barring additional director qualifications, this could be a particularly heavy blow for mixed-use associations. Mixed-use communities often rely on complex director qualifications in order to ensure political parity between the typically-majority residential owners and typically-minority business owners, e..g., that a certain number of directors must be elected from the business units. If such provisions are now void, mixed-use business owners and tenants could find their ability to conduct for-profit operations impaired by pro-resident board actions. This would disrupt the careful balance of power provisions of this nature are intended to ensure, and hence the functionality of mixed-use developments per se.
