As discussed in another blog post, the Davis-Stirling Act provides a clear legal hierarchy for governing documents: law, then CC&Rs, then articles, then bylaws, with election rules at the bottom of the heap. While SB 323 has - apparently - partially upended this hierarchy, that upend is far from complete. As such, elections are not "governed" by election rules, they are "governed" by the law, then CC&Rs, then articles, then bylaws, with election rules - as with all operating rules - acting to clarify and supplement. The above-quoted ballot text suggests the opposite, which will undoubtably lead to confusion and conflict.
2) You can write in but you can't. SB 323 continues Civil Code section 5105(f) (was (b)) in slightly revised form, which provides "[n]otwithstanding any other law, [election rules] may provide for the nomination of candidates from the floor of membership meetings or nomination by any other manner. Those rules may permit write-in candidates for ballots.”
SB 323's continuance of floor nominations and write-ins, however, apparently conflicts with its new Civil Code section 5115(b)(3), which provides that associations "shall provide general notice .... at least 30 days before the ballots are distributed ... [of] the list of all candidates' names that will appear on the ballot."
By one reading, Section 5115(b)(3)'s "all candidates' names" appears to preclude write-ins and floor candidates, as the association is not providing general notice of that person's name. By another, Section 5105(f)'s "notwithstanding any other law" trumps, and permits blank spaces on the ballot for such candidates.
I would tend to favor the latter interpretation. However, as with eliminating cumulative voting and the use of proxies, I typically bar candidacies advanced other than through the formal nomination process, as this renders association governance simpler and thus more efficient. Doing so also has the ancillary benefit of resolving this apparent conflict. Nevertheless, this represents yet another minefield for associations to navigate after January 1st.
3) Record dates, record times, whatever. SB 323 adds new Civil Code section 5105(g)(1), which provides that 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."
As discussed in another blog post, Section 5105(g)(1) apparently acts to create a single new record date for member voting, the date the ballots are distributed. Upon closer examination, however, this interpretation is unclear. First, as provided in Corporations Code section 7611, record dates are dates, not times. Second, "the time when ballots are distributed" is ambiguous. If, for example, the first ballot is distributed on a Friday, but the mailing is not completed until the following Thursday, what "time" is the "record date"? It is the start of that "time," or its end? Previously, the interpretation was typically the first date, Friday; now, it must apparently be the entire period, which apparently starts and stops at times, not on days.
This interpretative issue may seem fussy, but if a new owner takes title during this ambiguous period and is impermissibly denied a ballot, that alone could provide sufficient grounds for a successful election challenge. A challenge could also conceivably be asserted by a member whose membership terminated during such period as well, though this seems less likely. Regardless, member voting record dates must now apparently be the entire "time" during which ballots are being distributed.
4) Power of attorney = magic ring? As discussed in another blog post, SB 323 appears to imbue ballots cast by persons with general power of attorney for members with mystical force. These fell powers, however, may extend beyond mere casting; let me spell it out.
As discussed above, SB 323 adds new Civil Code section 5105(g)(1), which appears to provide an opaque new standard for member voting record dates. The enthralled reader will note, however, that SB 323 separately adds new Civil Code section 5105(g)(2), which provides that election rules shall "[p]rohibit the denial of a ballot to a person with general power of attorney for a member."
This blanket prohibition on distribution of ballots to persons with general power of attorney for members is not qualified as to the "time" of ballot distribution. Read literally, then, Section 5105(g)(2) appears to require distribution of ballots to persons with general power of attorney for members regardless of the record date for voting. I may be Sau wrong, but if not, it's a precious problem for associations to navigate.
5) Envelopes schlenvelopes. SB 323 adds new Civil Code section 5105(g)(4), which provides that inspector(s) must "deliver, or cause to be delivered, at least 30 days before an election, to each member both of the following documents:" the ballot, and the election rules.
I discuss SB 323's inexplicable reassignment of distribution duties to inspectors in this blog post. That head-scratcher aside, Section 5105(g)(4)'s use of "both documents" is problematic in that it suggests inspectors are not required to distribute the additional documents which, by law, must be distributed along with the ballot. These include the two envelopes, the ballot instructions, if not set forth on the ballot, and the solicitation, with quorum and approval requirements, for votes on matters other than director elections. It also fails to capture the legal requirement of including the full text of amendments or updates to governing documents as part of the voting packet for votes on such matters.
But that's OK, those of us who practice common interest law weren't using our sanity anyway.
6) Tainted love. As discussed in this blog post, SB 323 revised Civil Code section 5110(d) to provide that inspectors must perform their duties "in a manner that protects the interest of all members of the association." Previous, inspectors were held to a fairness, impartiality, and good faith standard. Fine and good. Now, however, inspectors must additionally act in a manner that protects the interest of all members and, thus, apparently, each member.
One wonders how this duty is to be discharged in the event of political divisions in a community. Consider an association which conducts a secret ballot vote to approve a special assessment for discretionary repairs or a capital improvement. The matter is hotly contested, and feelings run high. How is the inspector to "perform any acts as may be proper to conduct the election" if he or she is required to protect divergent and irreconcilable interests, especially if the act is discretionary and thus no membership-interest can be claimed?
This risk of breach claims is only heightened by SB 323's many pitfalls and ambiguities, which will increase the number of discretionary acts inspectors are required to perform.