Associations in California must take certain steps and meet certain requirements outlined by the State of California when electing a Board of Directors. The election process can be found in the Davis-Stirling Act under sections 1363.03, 1363.04, 1363.05, 1363.07 and 1363.09. For the purpose of this blog I will dive into Civil Code 1363.03 (Election Procedures, Secret Ballots, Inspectors of Election), and Civil Code 1363.09 (Civil Action for Violations) to demonstrate the implications of not holding a proper election.
First, let's discuss the steps of selecting an independent third party as an inspector of elections, and dovetail that with proper balloting methods.
Methods for Selecting an Independent Inspector of Elections:
Civil Code 1363.03, paragraph (5) of subdivision (a):
(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.
Balloting Requirements:
Civil Code 1363.03, paragraph (1 and 2) of subdivison (e):
(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 shall sign his or her name, indicate his or her name, and indicate the address or separate interest identifier 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.
The Rule of the Denominator:
Rule of the Denominator defined as it pertains to associations:
Expenses incurred by an association with few members (units) carry a heavier burden than expenses incurred by an association with lots of members (units).
I mostly manage commercial business parks that are governed by an association. The average commercial business park association is much smaller than a residential association. Residential associations are typically hundreds of units and commercial parks are generally less than 30 units. I pulled those numbers out of thin air and are based off personal experience, nothing else. Why is the average number of units important in a conversation about election procedures? Because of the Rule of the Denominator, of course. For example, let's say the cost of an independent inspector of elections is $1,000 per election. That number split between a 5 person business park is $200 per unit, per year. In an association with 200 units, the cost for the election is closer $5 per person, per year.
What I'm getting at is this law creates very strict standards and should be re-looked for commercial associations, associations with small budgets , and/or associations with under 30 units. In fact, these laws are being re-looked by the California Law Revision Commission (CLRC). Check this website for more information: http://www.clrc.ca.gov/H855.html and get involved!
Improper Election Procedure Penalties:
Civil Code §1363.09. Civil Action for Violations:
(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. Read more: Davis-Stirling Act.
My Recommendation:
Follow the law, be ethical, hire the right association manager, and get involved with state legislature.
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