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WHAT THE NEW ELECTION LAWS SAY .......

You can go to the California State Website by clicking here: http://www.leginfo.ca.gov/calaw.html and plugging in Civil Code Sections 1363.03, 1363.04, and 1363.09 and pull up the actual statutes and read them. You can get there for free.

Or, you can stay right here and review the excerpt brought to you directly from the pages of

(a publication written by me and updated each year) with commentary, and perhaps begin to understand the new statutes, the nuances, and some of the problems. (By the way, you can purchase the "Davis Stirling Act in Plain English" by clicking here and/or you can find classes on "The Davis Stirling Act in Plain English" by clicking here

1363.03. ELECTIONS; RULES AND PROCEDURES. (Operative July 1, 2006)

Comment: This Section became operative July 1, 2006. The cleanup legislation to the original bill that was signed into on September 22 is also "operative"July 1, 2006 (although that may not make complete sense). It only need concern you if you had an election between July 1 and September 22 and someone is challenging your process. There are some things that associations can do to prepare for this law but it will be hard to conduct a valid election on any matter without the assistance of someone educated on the pitfalls laid by this new law. It sets forth an elections process that combines the public type of absentee and poll voting and corporate type of meetings and proxy use. The two processes do not seamlessly overlap; but rather seem to collide. Perhaps the most critical step is the first one which is drafting good elections rules.

(a) An association shall adopt rules, in accordance with the procedures prescribed by Article 4 (commencing with Section 1357.100) of Chapter 2, that do all of the following:

(1) Ensure that any candidate or member advocating a point of view is provided access to association media, newsletters, or Internet Web sites during a campaign, for purposes that are reasonably related to that election. Equal access shall be provided to all candidates and members advocating a point of view, including those not endorsed by the board, for purposes that are reasonably related to the election. The association shall not edit or redact any content from these communications, but may include a statement specifying that the candidate or member, and not the association, is responsible for that content.

Comment: This and (2) can be a problem if candidates want to make personal attacks and/ or circulate materials criticizing the Board. There is not a lot a Board can do but if materials could incite, it would be wise to seek legal advice.

(2) Ensure access to the common area meeting space, if any exists, during a campaign, at no cost, to all candidates, including those who are not incumbents, and to all members advocating a point of view, including those not endorsed by the board, for purposes reasonably related to the election.

Comment: (1) and (2) will come to be known as the "equal access"sections. The question will be: does it mean access must be provided, or just that if it is, it must be equal. And can reasonable limits be placed, such as frequency of times and manner of use.

(3) Specify the qualifications for candidates for the board of directors and any other elected position, and procedures for the nomination of candidates, consistent with the governing documents. A nomination or election procedure shall not be deemed reasonable if it disallows any member of the association from nominating himself or herself for election to the board of directors.

Comment: It is important to note the qualifications that appear in the Bylaws in the written election rules and through the meeting notice materials note that candidates who are nominated and do not qualify to serve are a problem. A question arises as to whether they can be eliminated at some stage of the election process as a viable candidate or whether it is only proper to have the Board remove them from office per the document requirements if they are elected. It is a dicey subject - there is a conflict with the section that says a member cannot be prohibited from nominating themselves, so you may get legal advice before disqualifying anyone from being nominated. An example of something that might apply here (if reflected in the Bylaws) is "good standing" (which is usually defined as current in assessment payments and not in violation of any governing documents.)

(4) Specify the qualifications for voting, the voting power of each membership, the authenticity, validity, and effect of proxies, and the voting period for elections, including the times at which polls will open and close.

Comment: Most associations do not have "polls" and this is just the sort of example that makes it clear the legislators do not know much about association elections. Sometimes the polls will close before the meeting at which the ballots are counted and others will close during the meeting. Different subject matter will dictate different processes so a clear statement to satisfy this statutory language is difficult.

(5) Specify a method of selecting one or three independent third parties as inspector, or inspectors, of election utilizing one of the following methods: (A) Appointment of the inspector or inspectors by the board. (B) Election of the inspector or inspectors by the members of the association. (C) Any other method for selecting the inspector or inspectors.

(6) Allow the inspector, or inspectors, to appoint and oversee additional persons to verify signatures and to count and tabulate votes as the inspector or inspectors deem appropriate, provided that the persons are independent third parties.

(b) Notwithstanding any other law or provision of the governing documents, an election within a CID regarding assessments, election and removal of members of the association board of directors, amendments to the governing documents, or the grant of exclusive use of common area property pursuant to Section 1363.07 shall be held by secret ballot in accordance with the procedures set forth in this section. A quorum shall be required only if so stated in the governing documents of the association or other provisions of law. If a quorum is required by the governing documents, each ballot received by the inspector of elections shall be treated as a member present at a meeting for purposes of establishing a quorum. An association shall allow for cumulative voting using the secret ballot procedures provided in this section, if cumulative voting is provided for in the governing documents.

Comment: Associations are probably entitled to adopt the same procedures for other elections than those mentioned to avoid confusion over quorum and other matters. The best that came of this language is that returned ballots can be counted toward the quorum so that eliminates the need for proxies for the most part. There are exceptions though, that should probably be discussed with knowledgeable legal counsel. The language regarding cumulative voting suggests to me that if the documents allow for it then the Board needs to make sure it is explained in the ballot materials so owners can use it.

(c)(1) The association shall select an independent third party or parties as an inspector of election. The number of inspectors of election shall be one or three.

(2) For the purposes of this section, an independent third party includes, but is not limited to, a volunteer poll worker with the county registrar of voters, a licensee of the California Board of Accountancy, or a notary public. An independent third party may be a member of the association, but may not be a member of the board of directors or a candidate for the board of directors or related to a member of the board of directors or a candidate for the board of directors. An independent third party may not be a person who is currently employed or under contract to the association for any compensable services unless expressly authorized by rules of the association adopted pursuant to paragraph (5) of subdivision (a).

(3) The inspector or inspectors of election shall do all of the following:

(A) Determine the number of memberships entitled to vote and the voting power of each. (B) Determine the authenticity, validity, and effect of proxies, if any. (C) Receive ballots. (D) Hear and determine all challenges and questions in any way arising out of or in connection with the right to vote. (E) Count and tabulate all votes. (F) Determine when the polls shall close. (G) Determine the result of the election. (H) Perform any acts as may be proper to conduct the election with fairness to all members in accordance with this section and all applicable rules of the association regarding the conduct of the election that are not in conflict with this section.

(4) An inspector of election shall perform his or her duties impartially, in good faith, to the best of his or her ability, and as expeditiously as is practical. If there are three inspectors of election, the decision or act of a majority shall be effective in all respects as the decision or act of all. Any report made by the inspector or inspectors of election is prima facie evidence of the facts stated in the report.

Comment: Associations have always had the option of appointing an inspector or inspectors of election to oversee the Association elections. Now its mandatory for the types of elections described. Persons eligible are described. There are varying opinions in the industry as to whether managers should act as inspectors. The biggest difficulty for inspectors will likely be sorting out questions that arise between the mail in ballot process and the use of proxies and voting rights, cumulative voting and combining nominations from the floor at the meeting. Again, good and legal rules will be a key to assisting with this.

(d) (1) For purposes of this section, the following definitions shall apply: (A) "Proxy" means a written authorization signed by a member or the authorized representative of the member that gives another member or members the power to vote on behalf of that member. (B) "Signed" means the placing of the member's name on the proxy (whether by manual signature, typewriting, telegraphic transmission, or otherwise) by the member or authorized representative of the member.

(2) Proxies shall not be construed or used in lieu of a ballot. An association may use proxies if permitted or required by the bylaws of the association and if those proxies meet the requirements of this article, other laws, and the association's governing documents, but the association shall not be required to prepare or distribute proxies pursuant to this section.

(3) Any instruction given in a proxy issued for an election that directs the manner in which the proxy holder is to cast the vote shall be set forth on a separate page of the proxy that can be detached and given to the proxy holder to retain. The proxy holder shall cast the member's vote by secret ballot. The proxy may be revoked by the member prior to the receipt of the ballot by the inspector of elections as described in Section 7613 of the Corporations Code.

Comment: Proxy use will confuse people. There are no two ways around that. How they will fit in with these new election processes will depend on how associations integrate them, if at all, and how those reviewing elections that are challenged rule on their impact and use. There are no proxies in public elections, but there is a desperate need for them in some cases, even with this new law, and a right in most sets of documents to "appear" in person or by proxy at meetings. The revocation thing will be confusing too since ballots returned to the inspectors are not revocable, but proxies are.

(e) Ballots and two preaddressed envelopes with instructions on how to return ballots shall be mailed by first-class mail or delivered by the association to every member not less than 30 days prior to the deadline for voting. In order to preserve confidentiality, a voter may not be identified by name, address, or lot, parcel, or unit number on the ballot. The association shall use as a model those procedures used by California counties for ensuring confidentiality of voter absentee ballots, including all of the following: (1) The ballot itself is not signed by the voter, but is inserted into an envelope that is sealed. This envelope is inserted into a second envelope that is sealed. In the upper left hand corner of the second envelope, the voter prints and signs his or her name, address, and lot, or parcel, or unit number that entitles him or her to vote. (2) The second envelope is addressed to the inspector or inspectors of election, who will be tallying the votes. The envelope may be mailed or delivered by hand to a location specified by the inspector or inspectors of election. The member may request a receipt for delivery.

(f) All votes shall be counted and tabulated by the inspector or inspectors of election or his or her designee in public at a properly noticed open meeting of the board of directors or members. Any candidate or other member of the association may witness the counting and tabulation of the votes. No person, including a member of the association or an employee of the management company, shall open or otherwise review any ballot prior to the time and place at which the ballots are counted and tabulated. The inspector of election, or his or her designee, may verify the member's information and signature on the outer envelope prior to the meeting at which ballots are tabulated. Once a secret ballot is received by the inspector of elections, it shall be irrevocable.

Comment: A common question is: what is required to "verify" that signatures on ballot envelopes are the signatures of owners. I do not believe that the signatures have to be compared with existing signatures on file with the Association and I do not know of any associations that keep signatures on file. It would be quite difficult. However, it is clear that the packet has to be signed by the Owner for it to be counted, and that the signature has to match up to an owner's name. If at some point there is a challenge or question that needs to be resolved that requires comparing signatures, arrangements to do that could conceivably be made.

(g) The tabulated results of the election shall be promptly reported to the board of directors of the association and shall be recorded in the minutes of the next meeting of the board of directors and shall be available for review by members of the association. Within 15 days of the election, the board shall publicize the tabulated results of the election in a communication directed to all members.

Comment: This leaves open the question whether an Association can simply post the results on its website, but since it is possible not all members have a computer, it is probably not sufficient as the only means of communicating the results.

(h) The sealed ballots at all times shall be in the custody of the inspector or inspectors of election or at a location designated by the inspector or inspectors until after the tabulation of the vote, and until the time allowed by Section 7527 of the Corporations Code for challenging the election has expired, at which time custody shall be transferred to the association. If there is a recount or other challenge to the election process, the inspector or inspectors of election shall, upon written request, make the ballots available for inspection and review by an association member or his or her authorized representative. Any recount shall be conducted in a manner that preserves the confidentiality of the vote.

(i) After tabulation, election ballots shall be stored by the association in a secure place for no less than one year after the date of the election. In the event of a recount or other challenge to the election process, the association shall, upon written request, make the ballots available for inspection and review by association members or their authorized representatives. Any recount shall be conducted in a manner that shall preserve the confidentiality of the vote.

Comment: Corporations Code 7527 allows 9 months to challenge an election. But Section 1363.09 allows a year. It is clear ballots must be kept for a year, in any event, and made available if there is a challenge. The inspectors could designate the association's business office as the location where the ballot materials should be kept.

(j) Notwithstanding any other provision of law, the rules adopted pursuant to this section 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.

(k) Except for the meeting to count the votes required in subdivision (f), an election may be conducted entirely by mail unless otherwise specified in the governing documents.

(l) The provisions of this section apply to both incorporated and unincorporated associations, notwithstanding any contrary provision of the governing documents.

(m) The procedures set forth in this section shall apply to votes cast directly by the membership, but do not apply to votes cast by delegates or other elected representatives.

Comment: Sections (d)-(m) were added or changed substantially after the first bill (SB 61) was signed into law and there were many unanswered questions and confusion abounded. Many of the changes were for clarification but others were to try and straighten out confusion as to proxy use, nominations, and timing issues. Improvements were made, but not all problems have been resolved. Many expect additional cleanup legislation next year.

(n) In the event of a conflict between this section and the provisions of the Nonprofit Mutual Benefit Corporation Law (Part 3 (commencing with Section 7110) of Division 2 of Title 1 of the Corporations Code) relating to elections, the provisions of this section shall prevail.

(o) The amendments made to this section by the act adding this subdivision shall become operative on July 1, 2006.

1363.04. CAMPAIGN FUNDING. (Section operative July 1, 2006)

(a) Association funds shall not be used for campaign purposes in connection with any association board election. Funds of the association shall not be used for campaign purposes in connection with any other association election except to the extent necessary to comply with duties of the association imposed by law. (b) For the purposes of this section "campaign purposes" include, but are not limited to, the following: (1) Expressly advocating the election or defeat or any candidate that is on the association election ballot. (2) Including the photograph or prominently featuring the name of any candidate on a communication from the association or its board, excepting the ballot and ballot materials, within 30 days of an election, provided that this is not a campaign purpose if the communication is one for which subdivision (a) of Section 1363.03 requires that equal access be provided to another candidate or advocate.

1363.09. REMEDIES. (Operative July 1, 2006.)

(a) A member of an association may bring a civil action for declaratory or equitable relief for a violation of this article by an association of which he or she is a member, including, but not limited to, injunctive relief, restitution, or a combination thereof, within one year of the date the cause of action accrues. Upon a finding that the election procedures of this article, or the adoption of and adherence to rules provided by Article 4 (commencing with Section 1357.100) of Chapter 2, were not followed, a court may void any results of the election.

(b) A member who prevails in a civil action to enforce his or her rights pursuant to this article shall be entitled to reasonable attorney's fees and court costs, and the court may impose a civil penalty of up to five hundred dollars ($500) for each violation, except that each identical violation shall be subject to only one penalty if the violation affects each member of the association equally. A prevailing association shall not recover any costs, unless the court finds the action to be frivolous, unreasonable, or without foundation.

(c) A cause of action under Section 1363.03 with respect to access to association resources by a candidate or member advocating a point of view, the receipt of a ballot by a member, or the counting, tabulation, or reporting of, or access to, ballots for inspection and review after tabulation may be brought in small claims court if the amount of the demand does not exceed the jurisdiction of that court.

Comment: The remedies are potentially quite severe for failure of an Association to comply with these new rules related to elections. Recovery of damages is available a well as court orders to void the election. And as you can see, owners will have access to resolve some of the issues in small claims court. The latitude and attitude of the small claims hearing officers is yet to be determined, and it is not crystal clear what remedies and what errors can be addressed there. It is more likely that an owner would be seeking a recount or new election than dollar damages, which is the remedy of small claims court. But what is clear is that there are new penalties that can be imposed on the Association by the court for failure to comply. This is a turn of events. Note the effective date of July 1, 2006. Again, expect cleanup legislation because at this time, problems could arise in trying in good faith to comply with the statute while also trying to comply with the Corporations Code and the governing documents of an Association.

copyright 2006, Beth Grimm, all rights reserved

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