California Legislative Update: What Your Board Needs to Know

Community association laws are changing all the time, and for both board members and homeowners, keeping up with them is important for achieving their community’s vision while maintaining compliance. To help you keep up with the latest changes in California, Associa Northern California recently hosted a webinar outlining the legislative updates that have taken affect this year. Below is a written version of these new and changed laws for quick reference and for adjusting your governing documents to align with them if necessary. Of course, we always suggest that associations work with their attorney. This article should not be construed as legal advice.

Read on to find out how these new state laws could affect your community.

SB 407: Noncommercial Solicitation (Effective January 1, 2018)

Sometimes, non-solicitation rules in HOAs have been written so broadly that they could be used to prohibit non-commercial free and political speech. This law aims to prevent that from happening by invalidating a variety of governing document rules, restrictions and regulations.

• Governing documents cannot prohibit a member or resident from peacefully meeting with members, guests, or invitees related to and/or distributing information regarding CID living, HOA elections, legislation, election to public office, the initiative, referendum or recall process, or other issues of concern to members and residents.
• Governing documents cannot prohibit a member or resident from inviting public officials, candidates for public office, or representatives of homeowner organizations to meet with members, residents and their invitees or guests or to speak on matters of public interest.
• Governing documents cannot prohibit a member or resident from using the common area for an assembly or meeting when that facility is not otherwise in use. The documents also can’t prohibit using the member’s separate interest (with the member’s consent) for the same purposes.
• Governing documents cannot prohibit a member or resident from canvassing and petitioning the members, board of directors and residents for the above purposes at reasonable hours and in a reasonable manner.
• A member or resident shall not be required to do the following as a condition of using the common area for the above activities: pay a fee, make a deposit, obtain liability insurance or pay the premium or deductible on the HOA’s insurance policy.

Remedies available to a member or resident:

• Civil or small claims action to enjoin the enforcement of governing document that violates these provisions.
• Civil penalty up to $500 per violation.

AB 690: Annual Disclosures, Manager Conflict of Interest (Effective January 1, 2018)

Mandatory Language in Civil Code § 4528 Billing Disclosure Forms

New language, paraphrased below, must be included in Civil Code § 4528 billing disclosure forms.

• Seller may provide Civil Code § 4525 documents in seller’s possession at no cost.
• Seller need not purchase all documents on billing disclosure form.

Additionally, annual budget report must include a copy of completed charges for documents. (The form should identify the fee for each listed document).

New Business and Professions § 11504 Annual Disclosures to Boards

Managers and management firms must disclose the following in writing to boards annually:

• Referral fees or monetary benefits from third party document providers.
• Written acknowledgment that Civil Code § 4528 and 5300 disclosures and documents are HOA property.

New Civil Code § 5375 Disclosures

When presenting a vendor bid to the board, the management firm or manager must disclose in writing potential conflicts of interest, including:

• Any business or company recommended to or used by the HOA in which the manager or management company has ownership interest, profit-sharing or other monetary incentives.
• Whether the manager or management company receives a referral fee or monetary benefit from any third party serving the HOA.

AB 634: Solar Energy Systems (Effective January 1, 2018)

This update allows placement of solar energy systems on common area roofs of buildings in which an owner resides, or exclusive-use garages and carports adjacent to building, without a membership vote. The applicant has to notify unit owners in the building where the system will be installed. AB 634 can also:

• Require owner to carry liability insurance and provide the certificate within 14 days of installation and annually.
• Require solar site survey showing placement of system was prepared by licensed contractor or registered solar salesperson to determine usable solar roof area. The survey should include the determination of equitable allocation of usable solar roof area among all owners sharing same roof, garage, or carport.

AB 534: Mechanics Liens (Effective January 1, 2018)

Associations must notify members of its lien claims.

• HOA deemed to be agent of the owners regarding work done on common area.
• Allows for preliminary notice to HOA only.
• Allows owner to remove lien by fractional payment or release bond.
• HOA must notify owners within 60 days if lien recorded.

AB 1412: Member Address Information and Director Immunity (Effective January 1, 2018)

• Clarifies that HOA may use last address provided by owners when delivering notices per Civil Code § 4041.
• Clarifies that owner of residential unit in mixed-use project who serves on board will enjoy same immunity as directors of purely residential HOAs.

SB2: Recording Fees and Affordable Housing (Effective January 1, 2018)

• Imposes additional fee of $75 to record every real estate instrument, paper or notice (to fund affordable housing). “Real estate instrument, paper or notice” means any document related to real property, e.g., deeds, recorded documents related to collections, easements, CC&Rs.