SB 323 adds new Civil Code section 5105(b), which provides that “[a]n association shall disqualify a person from a nomination as a candidate for not being a member of the association at the time of the nomination.”
An exception to this requirement is provided by subsection (b)(2), which provides that “[i]f title to a separate interest parcel is held by a legal entity that is not a natural person, the governing authority of that legal entity shall have the power to appoint a natural person to be a member for purposes of this article.”
The purpose of subsection (b)(2) is to permit board service by representatives of entity-members, such as corporations and LLCs. Provisions of this nature are common in governing documents, and are generally drafted to provide for board service by the representative, with the rights and obligations of membership otherwise being exercised by the entity. Subsection (b)(2), however, goes beyond this simple appointment power to provide that representatives "shall" be members “for purposes of this article.” “This article,” in turn, means the 2006 Election Law, Civil Code sections 5100-5145.
Does subsection(b)(2)’s use of “this article” mean that each entity-member's natural person representative must be afforded the panoply of rights provided to actual members by Civil Code sections 5100-5145, including the right to vote, use common area and association media for political purposes, attend and participate in election meetings, sue for election violations, and inspect association election materials? If so, must such rights also be afforded to the entity-member? Which ship is the member-ship?
The fact that subsection (b)(1) is structured conventionally for developer's nominees - i.e., for the limited purpose of board service only - suggests the above interpretation (or some variant of it) was intended. Fun!
In a related vein, new Civil Code section 5105(c) lists a number of optional qualifications associations may impose on "persons." As the Corporations Code requires directors to be natural persons, the Section's use of the term is in regards to that, people. SB 323 does not address how such qualifications are intended to be applied to natural person representatives who do not hold title, pay assessments, etc.
As if these philosophy-chestnuts aren't prickly enough, Civil Code section 4160 currently defines "member" as “an owner of a separate interest.” SB 323 makes no effort to reconcile the conflict of ascribing membership to non-titleholders, nor does it reconcile the conflicts inherent in creating a quasi-membership for limited purposes. If, for example, such a "member" must be provided a ballot, may - or must - they also vote on matters which require the approval of the membership but are not delineated in Civil Code sections 5100-5145, such as assessment increases controlled by Civil Code section 5605?
Another wrinkle: SB 323 failed to include subsection (b)(2)'s entity-owner board service provision in its new election by acclamation revision to Civil Code section 5100, though it did include subsection (b)(1) regarding developer's nominees. As such, election by acclamation appears barred for natural person representative-candidates of entity-owners in common interest developments with 6,000 or more units. An oversight, or a devious plot to slowly drive common interest attorneys insane?
The Legislature could have avoided these convolutions by simply exempting entity-member representatives from SB 323's new requirement that director candidates be members - as it did with developer's nominees - but simple was clearly not SB 323's goal.
The purpose of subsection (b)(2) is to permit board service by representatives of entity-members, such as corporations and LLCs. Provisions of this nature are common in governing documents, and are generally drafted to provide for board service by the representative, with the rights and obligations of membership otherwise being exercised by the entity. Subsection (b)(2), however, goes beyond this simple appointment power to provide that representatives "shall" be members “for purposes of this article.” “This article,” in turn, means the 2006 Election Law, Civil Code sections 5100-5145.
Does subsection(b)(2)’s use of “this article” mean that each entity-member's natural person representative must be afforded the panoply of rights provided to actual members by Civil Code sections 5100-5145, including the right to vote, use common area and association media for political purposes, attend and participate in election meetings, sue for election violations, and inspect association election materials? If so, must such rights also be afforded to the entity-member? Which ship is the member-ship?
The fact that subsection (b)(1) is structured conventionally for developer's nominees - i.e., for the limited purpose of board service only - suggests the above interpretation (or some variant of it) was intended. Fun!
In a related vein, new Civil Code section 5105(c) lists a number of optional qualifications associations may impose on "persons." As the Corporations Code requires directors to be natural persons, the Section's use of the term is in regards to that, people. SB 323 does not address how such qualifications are intended to be applied to natural person representatives who do not hold title, pay assessments, etc.
As if these philosophy-chestnuts aren't prickly enough, Civil Code section 4160 currently defines "member" as “an owner of a separate interest.” SB 323 makes no effort to reconcile the conflict of ascribing membership to non-titleholders, nor does it reconcile the conflicts inherent in creating a quasi-membership for limited purposes. If, for example, such a "member" must be provided a ballot, may - or must - they also vote on matters which require the approval of the membership but are not delineated in Civil Code sections 5100-5145, such as assessment increases controlled by Civil Code section 5605?
Another wrinkle: SB 323 failed to include subsection (b)(2)'s entity-owner board service provision in its new election by acclamation revision to Civil Code section 5100, though it did include subsection (b)(1) regarding developer's nominees. As such, election by acclamation appears barred for natural person representative-candidates of entity-owners in common interest developments with 6,000 or more units. An oversight, or a devious plot to slowly drive common interest attorneys insane?
The Legislature could have avoided these convolutions by simply exempting entity-member representatives from SB 323's new requirement that director candidates be members - as it did with developer's nominees - but simple was clearly not SB 323's goal.
