CAI and CLAC Celebrate Legislative Successes in 2024

By Amy K. Tinetti, Esq.

The following is a summary of the new laws for 2024 and how they impact community associations.

AB 572: LIMITATION ON REGULAR ASSESSMENT INCREASE FOR AFFORDABLE HOUSING UNITS

This bill amended Civil Code section 5605. The new law prohibits regular assessment increases of more than 5% plus cost of living (capped at 10%) over the previous year for any deed-restricted affordable housing unit. The law only applies to associations with more than 20 units with original declarations recorded on or after January 1, 2025.

Takeaway: Board members, managers, and vendors who serve community associations should be aware of budgeting and funding challenges in post-2025 associations with affordable housing units.

AB 648: VIRTUAL MEETINGS

The law now allows associations to conduct meetings entirely by teleconference (including video conference) without a physical location. The notice of the meeting must contain technical instructions and contact information to assist members to connect remotely. Board votes must be conducted by roll call. Meetings at which secret ballots are opened and tabulated must include a physical location. This bill amended Civil Code section 4090 and adds Civil Code section 4926.

Takeaway: All meetings may now be conducted via video conference, which many boards believe encourages greater participation, is more convenient, and is safer. Associations should consult with legal counsel regarding meetings at which secret ballots are to be opened and tabulated.

To make better laws, legislators need to hear from those of us in the industry (their constituents). CLAC has had an undeniably positive impact in Sacramento, including in 2023. But we need your help. Please consider supporting CLAC. For more information on legislation and to find out how you can support CLAC, visit our website at www.caiclac.com. Check out the CLAC blog and follow us Facebook and Twitter.

CLAC works hard to develop and sponsor new legislation. Submit your ideas for future legislation to CLAC’s Legislative Strategy & Research Committee at [email protected].

THE LATEST LAW ON ADUS

AB 976: ADU OCCUPANCY

This bill amended several Government Code sections and authorizes local agencies to impose minimum rental terms of more than 30 days for ADUs. The new law also prohibits local agencies from imposing owner-occupancy requirements on ADUs, regardless of the date of ADU construction.

AB 1033: SALE OF ADUS

This bill amended Government Code section 65852.2 and allows local agencies to adopt ordinances to permit owners to sell an ADU separately from the primary dwelling, with lender and association approval. The law also requires member approval of such conveyances if stated in the governing documents.

Takeaway: Associations are encouraged to consult with legal counsel regarding ADU rules and whether amendments to CC&Rs to impose specific member approval requirements are recommended.

AB 1458: REDUCED QUORUM FOR DIRECTOR ELECTIONS

This bill amended Civil Code section 5115 and Corporations Code section 7512 and allows associations with quorum requirements higher than 20% of the members for director elections to reduce the quorum requirement to 20% if the quorum requirement in the governing documents is not achieved. This reduced quorum option only applies to the election of directors.

Takeaway: This law should help associations that are unable to elect directors simply because people don’t vote (i.e., owner apathy). Associations are encouraged to work with legal counsel to ensure compliance with the notice requirements in the law to take advantage of reduced quorum.

AB 1572: RESTRICTIONS ON WATERING NONFUNCTIONAL TURF

Beginning January 1, 2029, associations will be prohibited from using potable water (water fit for human consumption) to irrigate nonfunctional turf. "Nonfunctional turf" is defined as turf that is located within street rights-of-way and parking lots (grass-covered parkways, open spaces, and lawns) and is not for recreational purposes, such as sports fields. The bill amended Water Code sections 10608.12 and 10608.14.

Takeaway: Associations should work with their landscapers to create a plan for changing out turf that is "nonfunctional" for other materials, or to use non-potable water to irrigate nonfunctional turf.

AB 1764: DIRECTOR QUALIFICATIONS AND TERM LIMITS

This bill amended Civil Code section 5103 and 5105. This "cleanup" legislation clarifies that sitting directors and candidates for the board are subject to the same qualifications, adds term limits as grounds for disqualification if included in the association’s bylaws, and states that a director who ceases to be a member of the association is disqualified from serving on the board.

Takeaway: Associations should consult with legal counsel if their governing documents contain term limits, or if the board wishes to establish term limits. There may be downsides to term limits, which serve to reduce the pool of qualified candidates. This is an issue when many associations have difficulty finding people to run for the board.

SB 71: SMALL CLAIMS LIMITS

The limit for small claims filed by natural persons increased from $10,000 to $12,500. The limit for associations increased from $5,000 to $6,250. However, the $2,500 limit for multiple claims in a calendar year is unchanged.

Takeaway: If your association is sued in small claims court, consult with the association’s legal counsel for assistance. Although attorneys are not permitted in small claims court, association counsel can prepare the association’s representative.

CORPORATE TRANSPARENCY ACT (FEDERAL LEGISLATION)

Beginning in 2025, all corporations, including associations, are required to file reports regarding "beneficial owners" (directors, officers, and anyone who owns 25% or more separate interests). Penalties for non-reporting range from $500-$10,000 per day.

Takeaway: CAI is actively involved in trying to exempt community associations from the Act and its reporting requirements. Stay tuned for updates.

Takeaway: Recalls are complicated and require some analysis of the Davis-Stirling Act and the Corporations Code. Contact legal counsel as soon as a recall petition is received.

Amy K. Tinetti, Esq., is a shareholder with Hughes Gill Cochrane Tinetti, P.C. and has been exclusively representing community associations in all aspects of their corporate governance since 2004. Tinetti is also a delegate to the California Legislative Action Committee (CLAC) for the Bay Area/Central California Chapter of CAI and a Fellow in the College of Community Association Lawyers.