This article first appeared in the CAI GLAC Chapter September/October Issue of Focus Magazine.
Last year twelve bills were enacted that impacted, directly or indirectly, homeowners associations. When the year started, CAI’s California Legislative Action Committee (“CAI-CLAC”) braced itself for a similarly heavy legislative barrage. This year CAI-CLAC monitored seventy-seven bills that potentially impacted homeowners associations. However, when the smoke cleared, only one was left standing.
Let’s go to the scorecards.
AB 1410 – Common Interest Developments
The only enacted bill that expressly regulates common interest developments this year is AB 1410. When introduced in 2021, it euphemistically was known as the “I hate HOAs bill!”
The bill initially sought to: 1) require mandatory education for Board Members and staff; 2) permit personal agriculture in front yards; 3) prohibit associations from enforcing the CC&Rs during times of drought; 4) provide access to association websites; 5) require any physical evidence (including perceived confidential complaints) used in disciplinary hearings to be exchanged with the accused in advance of the hearing; and 6) require photographs used to support disciplinary action contain a visible time and date stamp.
Over the course of this year’s legislative session, each of these onerous provisions was deleted thanks to CAI-CLAC’s advocacy efforts. So what remains in the bill?
Social Media Discussions: Civil Code Section 4515 permits members to canvass and petition other members. AB 1410 clarifies that, “even if the content is critical of the association or its governance,” associations cannot prohibit members from using “social media or other online resources . . . to discuss . . . issues relating to common interest development living, association elections, legislation, election to public office, the initiative, referendum, or recall processes, or other issues of concern to members and residents.” However, the bill expressly provides that the association is not required to provide “social media or other online resources to members.” Also, the bill “does not require an association to allow members to post content on the association’s internet website.”
Roommates/Caregivers: The bill prohibits associations from limiting the right to rent a portion of a “homeowner occupied separate interest” to a roommate or a caregiver. The bill clarifies that such rental must be for more than 30 days, so as to exclude short-term rentals. The bill recognizes the association’s right to govern the boarders’ common area conduct “including, but not limited to, parking restrictions, guest access to common facilities, and voting eligibility requirements.”
Governing Document Enforcement During Emergencies: AB 1410 prohibits associations from pursuing enforcement actions for violation of the governing documents “during a declared state or local emergency if the nature of the emergency . . . makes it unsafe or impossible for the homeowner to either prevent or fix the violation.” (Emphasis added.) However, the bill does not prevent the collection of delinquent assessments during a state of emergency.
SB 1323 – Foreclosure
SB 1323 did not expressly mention common interest developments. However, it sought to modify non-judicial foreclosure procedures used in connection with assessment lien foreclosures. Prior to foreclosing, the trustee would be required to have a licensed real estate agent publicly list the property for sale. By adding to the judicial foreclosure requirements this bill if adopted would have increased association collection costs.
Thanks to lobbying efforts in opposition by multiple groups, the bill was placed on the Assembly Inactive File and not brought up for a vote.
Debt Collection Licensing – (2020 SB 908)
Not all of CAI-CLAC’s victories were on the legislative floor. In September 2020, SB 908 enacted the “California Debt Collection Licensing Act” (“CDCLA”). Beginning January 1, 2022, any person or entity engaged in “debt collection” of a “consumer debt” was required to obtain a license. Because of the broad application of the CDCLA, there was concern as to whether associations, management companies, and law firms engaged in assessment collection were required to obtain a debt collector license.
In response to a request for comments on proposed licensing regulations, CAI-CLACargued that new licensing requirements do not apply to assessment collection. In May of 2022, the Department of Financial Protection & Innovation (“DFPI”) determined that routine assessment collection is not a “consumer credit transaction” as defined under the Debt Collection Licensing Act. Therefore, the DFPI concluded that assessment collection does not constitute “consumer debt.” Since the collection of routine assessments is not considered to be collection of “consumer debt,” it does not require licensure under the Debt Collection Licensing Act. Whew!
Overall, the scorecards reflect a successful legislative year for homeowners associations!
Thomas M. Ware II is a partner in the law firm of Kulik Gottesman Siegel & Ware LLP, and a Fellow of the College of Community Associations Lawyers (CCAL). He currently serves as one of CAI-GLAC’s California Legislative Action Committee Delegates and is CLAC’s Legislative Co-Chair. He can be reached at tware@kgswlaw.com.