AB21 - Common interest developments: association management and meeting procedures.

Amended IN Assembly March 24, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 21 Introduced by Assembly Member DeMaio December 02, 2024 An act relating to taxation. to amend Sections 4360, 4910, 4920, 4935, 4950, 4955, 5100, 5105, 5120, 5145, 5200, 5205, 5230, and 5235 of, and to add Sections 4921 and 4941 to, the Civil Code, relating to common interest developments. LEGISLATIVE COUNSEL'S DIGEST AB 21, as amended, DeMaio. Taxpayer Protection Act of 2025. Common interest developments: association management and meeting procedures. Existing law, the Davis-Stirling Common Interest Development Act, governs the management and operation of common interest by an association. If a provision of that act requires an association to deliver a document by “individual delivery” or “individual notice,” the act requires the association to deliver that document in accordance with the preferred delivery method specified by the member. Existing law also requires the board of an association to provide general notice of a proposed rule change at least 28 days before making the rule change, in accordance with certain procedures. This bill would revise the above-described rule change provision to require the board to provide individual notice pursuant to the above-described provision governing document delivery. Existing law prohibits the board of a common interest development from taking action on any item of business outside of a board meeting. Existing law also prohibits the board from conducting a meeting via a series of electronic transmissions, except in specified emergency circumstances. This bill would prohibit a majority of the members of the board, outside an authorized meeting, from conducting communications of any kind, directly or through intermediaries, to discuss, deliberate, or take action on any item of business within the board’s subject matter jurisdiction. Existing law requires a common interest development’s association to generally give notice of the time and place of a board meeting at least 4 days before the meeting and requires the notice to contain the agenda for the meeting. This bill would also require the notice containing the agenda to have instructions on how a member may get a copy of the agenda packet for the open session portion of the meeting and would establish procedures for the board to follow in responding to those requests. Existing law authorizes the board to adjourn to, or meet solely in, executive session to consider litigation and other specified matters. Existing law requires any matter discussed in executive session to be generally noted in the minutes of the immediately following meeting that is open to the entire membership. This bill would require the board, if the association becomes involved in litigation, to announce the litigation at its subsequent meeting, including stating the name of the court and case number in the meeting minutes. The bill would also require the board, if the association files an insurance claim or has an insurance policy change, to announce the claim or policy change at its subsequent meeting, as specified. The bill would further require discussions regarding ongoing litigation to have the case name included as part of the executive session meeting minute notes. This bill would require open session meetings of the board to be electronically recorded using audio, or audio and video, and would consider the recordings to be a record of the association and to be available to members on the same basis as written meeting minutes. The bill would require notice to be given at the beginning of every open session of the board that the meeting is being recorded. Existing law requires the minutes, minutes proposed for adoption that are marked to indicate draft status, or a summary of the minutes of a board meeting, other than an executive session, to be available to members within 30 days of the meeting and distributed to a member upon request and upon reimbursement of the association’s cost for making that distribution. This bill would require that there is no charge for minutes distributed electronically. The bill would require the minutes, or proposed minutes, to include specified information, including the date and time of the meeting and whether a quorum of directors was established. Existing law authorizes a member to bring a civil action for declaratory or equitable relief for a violation by the association of specified provisions governing board meetings within one year of the date the cause of action accrues. Existing law entitles a member who prevails in a civil action under these provisions to reasonable attorney’s fees and court costs. This bill would require a court to void any action taken by the board at a meeting shown to be conducted in violation of the above-described provisions. The bill would authorize a cause of action under those provisions to be brought in either superior court or small claims court. The bill would also require a member who prevails in a civil action brought in small claims court to be awarded court costs and reasonable attorney’s fees incurred. Under the act, the operating rules are a part of the governing documents of a common interest development. The act requires an amendment to the governing documents of the development, among other actions, to be held by secret ballot in accordance with specified procedures. This bill would exclude an amendment to the operating rules from the requirement that the amendment be held by secret ballot. The bill would also prohibit a member from being denied a ballot for any reason other than not being a member at the time when the ballots are distributed. The bill would update definitions and would make various other related and conforming changes to the act. The California Constitution requires a state statute that would result in any taxpayer paying a higher tax to be imposed by an act passed by 2 3 vote of the each house of the Legislature. The California Constitution also provides that all taxes imposed by a local government are either general taxes or special taxes, as defined, and requires that taxes imposed, extended, or increased by a local government be submitted to the electorate and approved by a majority vote, in the case of general taxes, or a 2 3 vote, in the case of special taxes. Existing law imposes specified requirements on state and local ballots, including, among other things, on the contents of the ballot label, ballot title, and summary. This bill would declare the intent of the Legislature to enact a constitutional amendment to limit the ability of state and local governments to raise taxes, restore a 2 3 vote requirement on local special tax increases, impose voter approval requirements on specific categories of new taxes, and regulate the titles on state and local ballot measures relating to tax increases. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: NO YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. This act shall be known, and may be cited, as the Homeowner Association Accountability and Transparency Act of 2025. SEC. 2. Section 4360 of the Civil Code is amended to read: 4360. (a) The board shall provide general individual notice pursuant to Section 4045 4040 of a proposed rule change at least 28 days before making the rule change. The notice shall include the text of the proposed rule change and a description of the purpose and effect of the proposed rule change. Notice An association’s predecision notice is not required under this subdivision if the board determines that an immediate rule change is necessary to address an imminent threat to public health or safety or imminent risk of substantial economic loss to the association. (b) A decision on a proposed rule change shall be made at a board meeting, after consideration of any comments made by association members. (c) As soon as possible after making a rule change, but not more than 15 days after making the rule change, the board shall deliver general individual notice pursuant to Section 4045 4040 of the rule change. If the rule change was an emergency rule change made under subdivision (d), the notice shall include the text of the rule change, a description of the purpose and effect of the rule change, and the date that the rule change expires. (d) If the board determines that an immediate rule change is required to address an imminent threat to public health or safety, or an imminent risk of substantial economic loss to the association, it may make an emergency rule change, and no association predecision notice is required, as specified in subdivision (a). An emergency rule change is effective for 120 days, unless the rule change provides for a shorter effective period. A rule change made under this subdivision may not be readopted under this subdivision. (e) If an emergency rule change is made under subdivision (d), the individual notice about the rule change shall include the text of the rule change, a description of the purpose and effect of the rule change, and the date when the rule change will expire. SEC. 3. Section 4910 of the Civil Code is amended to read: 4910. (a) The board shall not take action on any item of business outside of a board meeting. (b) (1) Notwithstanding Section 7211 of the Corporations Code, the board shall not conduct a meeting via a series of electronic transmissions, including, but not limited to, electronic mail, except as specified in paragraph (2). (2) Electronic transmissions may be used as a method of conducting an emergency board meeting if all directors, individually or collectively, consent in writing to that action, and if the written consent or consents are filed with the minutes of the board meeting. These written consents may be transmitted electronically. (c) A majority of the members of the board shall not, outside a meeting authorized by this article, conduct communications of any kind, directly or through intermediaries, to discuss, deliberate, or take action on any item of business that is within the subject matter jurisdiction of the board. SEC. 4. Section 4920 of the Civil Code is amended to read: 4920. (a) Except as provided in subdivision (b), the association shall give notice of the time and place of a board meeting at least four days before the meeting. (b) (1) If a board meeting is an emergency meeting held pursuant to Section 4923, the association is not required to give notice of the time and place of the meeting. (2) If a nonemergency board meeting is held solely in executive session, the association shall give notice of the time and place of the meeting at least two days prior to the meeting. (3) If the association’s governing documents require a longer period of notice than is required by this section, the association shall comply with the period stated in its governing documents. For the purposes of this paragraph, a governing document provision does not apply to a notice of an emergency meeting or a meeting held solely in executive session unless it specifically states that it applies to those types of meetings. (c) Notice of a board meeting shall be given by general delivery pursuant to Section 4045. (d) Notice of a board meeting shall contain the agenda for the meeting. meeting, with instructions on how a member may get a copy of the agenda packet for the open session portion of the meeting. (e) The agenda for any open meeting shall include the wording of the proposed motions and resolutions. (f) A member may request in writing that a copy of the documents constituting the agenda packet of the board meetings be mailed either by postal mail or electronically to that member. Upon receipt of the written request, the association shall cause the requested materials to be mailed when the agenda is posted or distributed to all or a majority of the directors, whichever occurs first. The association may not charge more than the actual costs of copying and mailing the documentation. SEC. 5. Section 4921 is added to the Civil Code, to read: 4921. (a) If an association becomes involved in litigation, the board shall announce the litigation at its subsequent meeting. The meeting minutes shall state the name of the court and the case number. (b) If an association files a claim on one of its insurance policies, the board shall announce the claim at its subsequent meeting. The meeting minutes shall state the type of insurance, the insurance carrier, and the policy number. (c) If a change to an insurance policy has occurred, as described in Section 5810, the board shall announce the change at its subsequent meeting. The meeting minutes shall state the type of insurance, the insurance carrier, the policy number, and describe the change. SEC. 6. Section 4935 of the Civil Code is amended to read: 4935. (a) The board may adjourn to, or meet solely in, executive session to consider litigation, matters relating to the formation of contracts with third parties, member discipline, personnel matters, or to meet with a member, upon the member’s request, regarding the member’s payment of assessments, as specified in Section 5665. (b) The board shall adjourn to, or meet solely in, executive session to discuss member discipline, if requested by the member who is the subject of the discussion. That member shall be entitled to attend the executive session. (c) The board shall adjourn to, or meet solely in, executive session to discuss a payment plan pursuant to Section 5665. (d) The board shall adjourn to, or meet solely in, executive session to decide whether to foreclose on a lien pursuant to subdivision (b) of Section 5705. (e) Any matter discussed in executive session shall be generally noted in the minutes of the immediately following meeting that is open to the entire membership. Discussions regarding ongoing litigation shall have the case name included as part of the executive session meeting minutes notes. SEC. 7. Section 4941 is added to the Civil Code, to read: 4941. (a) Open session meetings of the board shall be electronically recorded using audio, or audio and video, and the recordings shall be considered a record of the association, which shall be made available to members on the same basis as written meeting minutes. (b) Notice shall be given at the beginning of every open session of the board that the meeting is being recorded. SEC. 8. Section 4950 of the Civil Code is amended to read: 4950. (a) The minutes, minutes proposed for adoption that are marked to indicate draft status, or a summary of the minutes, of any board meeting, other than an executive session, shall be available to members within 30 days of the meeting. The minutes, proposed minutes, or summary minutes shall be distributed to any member upon request and upon reimbursement of the association’s costs for making that distribution. There shall be no charge for minutes distributed electronically. (b) The minu [Text truncated for display. Full text available on Congress.gov.]