Get ready for the updates in California HOA laws that will affect your association in 2024. These legislative updates will have a big impact on homeowners' associations throughout the state. They include new statutes and case laws aimed at protecting homeowners' rights and ensuring fair governance. In part one of this two-part series, we'll break down the key aspects of the 2024 California homeowners' association legislation updates, giving you a clear understanding of what to expect and how it will affect you as a homeowner. 

What is the new HOA law in California?

There isn’t just one new HOA law in California. In fact, there are 14 new HOA statutes and case laws that have been passed for 2024. In December, we hosted an education seminar for managers, featuring renowned experts Robert DeNichilo from Nordberg DeNichilo, LLP, and Melissa Ward from Adams Stirling Professional Law Corporation. These seasoned leaders in community association law provided valuable insights on the latest statutes and case law that impact California community associations.  

Here are some of the key legislative and legal developments in California HOA laws which may have implications for your community in 2024:  

1. Assembly Bill 1458 – Lower Quorum Requirement (Effective January 1, 2024)

This statute lowers the quorum requirement to no more than 20% for adjourned member meetings to elect members of the board. If the Association’s Governing Documents allow for a lower quorum requirement (e.g. 15% or 10%) the lower quorum applies. 

For the reduced quorum to apply, associations must provide general notice to members...  

  • At least 30 days before ballots are distributed; 

  • And include a statement that the board of directors may call a subsequent meeting at least 20 days after a scheduled election if the required quorum is not reached, at which time the quorum of the membership to elect directors will be 20 percent of the association’s members voting in person, by proxy, or by secret ballot. 

2. Assembly Bill 648 – Virtual Meetings (Effective January 1, 2024)

This statute allows board and member meetings to be conducted entirely without needing to designate a physical location, and is intended to increase member participation and transparency.  

Exception: Meetings during which ballots are counted and tabulated still must have a physical location designated. 

Fully virtual meetings must provide every director and member with the same ability to participate in the meeting that would exist if it were held in person. Any vote of the directors must be conducted by roll call. 

Additionally, notice requirements for virtual meetings must include... 

  • Clear technical instructions on how to participate; 

  • Contact information of a person who can provide technical assistance before and during the meeting; 

  • And a reminder that a member may request individual delivery of meeting notices, including instructions on how to do so. 

3. Assembly Bill 1764 – Director Qualifications (Effective January 1, 2024)

This statute... 

  • Allows term limits for members of the board of directors; 

  • Provides that associations must disqualify candidates who’ve served the maximum number of terms allowed; 

  • That Election Rules regarding disqualification apply to sitting directors as well as to candidates; 

  • And that directors who cease to be members are disqualified from continuing to serve as directors. 

4. Assembly Bill 1033 – Accessory Dwelling Units (ADUs) (Effective January 1, 2024)

This new law allows homeowners who have constructed an Accessory Dwelling Unit (ADU) – an attached or detached residential dwelling unit that provides complete independent living facilities for one or more persons and is located on a lot with a planned or existing primary residence – on their property to split their lot and sell the ADU separately from their main residence. 

To do so, the member can convert the Accessory Dwelling Unit into a condominium if... 

  • The local municipality passes an ordinance permitting ADUs to be sold separately from the main residence; 

  • All lenders having mortgages on the property approve; and 

  • If the association approves. 

What remains unclear about this new statute is how the condominium would function.  

5. Senate Bill 71 – Small Claims Court (Effective January 1, 2024)

This new law increases small claims limits for entities (associations) from $5,000 to $6,250 and increases small claims limits for natural persons from $10,000 to $12,5000. 

6. Corporate Transparency Act (Filing required by January 1, 2025, for existing entities)

With the implementation of this statute, associations may be required to report to the United States Treasury Department’s Financial Crimes Enforcement Network (FinCEN) under the Corporate Transparency Act (CTA) which was enacted by Congress in 2021 as an expansion of anti-money laundering laws to prevent terrorist financing, corruption, tax fraud, and other illicit activity. This applies to corporations with less than $5 million in assets & fewer than 20 employees.  

According to a Community Associations Institute (CAI) article dated October 12, 2023, the consensus by community association lawyers is that most community associations will be impacted by this new law and will have a responsibility to file information with FinCEN through its Beneficial Ownership Information (BOI) reporting requirements. If the law applies, associations created before January 1, 2024, have one year to file their initial reports, so the deadline is January 1, 2025. Changes, corrections, and additions to the filing (such as changes in board members) must be reported within 30 days. 

Failure to comply with the reporting requirements can result in civil penalties of $500 per day (not to exceed $10,000) and imprisonment for up to two years. Reporting requires disclosing board members’ legal names, birthdates, home addresses, and an identifying number from a driver’s license, state ID or passport. 

The Community Associations Institute (CAI) doesn’t believe the statute is intended to apply to community associations, and is pursuing an exemption for HOAs, among other actions. 

Operational takeaways: FirstService recommends that boards consult with counsel to learn whether the statute applies to the association and, if so, to plan for compliance. 

7. Assembly Bill 572 – Limitation on Assessment Increases on Affordable Housing Units (Effective January 1, 2024)

Assembly Bill 572 is aimed at addressing the need for more affordable housing in California and only applies to associations formed after January 1, 2025. It prohibits such associations from imposing an increase of regular assessments on the owner of a deed-restricted affordable housing unit that is more than 5% plus CPI – with the total not to exceed 10% greater than the association’s preceding regular assessment. 

Operational takeaways: Since the statute allows assessments for owners of affordable housing units to differ from those of other owners, the budget process will become more complex. Records indicating which units are designated as affordable housing units will need to be created and reviewed regularly for any expirations. 

Conclusion

As California enters the new year, homeowners' associations across the state must prepare for the significant changes that lie ahead. The updates to California HOA laws in 2024 are poised to reshape the landscape of association governance and homeowner rights. By staying informed and understanding the key aspects of these legislative updates, homeowners can navigate the evolving landscape with confidence and ensure their interests are protected. From enhanced transparency requirements to new statutes that promote fair governance, these changes are designed to create a more equitable and harmonious environment within HOAs.  

In part 2, we will be taking an in-depth look at the final 7 new statutes and case laws including: 

  • Senate Bill 428 – Workplace Restraining Orders 

  • Assembly Bill 1572 – Potable Water 

  • Fairly-Haze v. Whitesails Community Association 

  • Lake Lindero Homeowners Association, Inc. v. Barone 

  • Manrodt v. Albelo 

  • LNSU #1, LLC, et al v. Alta Del Mar Coastal Collection Community Association 

  • Takiguchi v. Venetian Condominiums 

So, as we move forward into 2024, let's embrace the opportunities that these updates present and work together to build stronger, more vibrant communities for all homeowners in California. 

Bibliography 

  1. California Legislative Information. 2023. “AB-1458 Common interest developments: association governance: member election.” https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB1458  

  1. California Legislative Information. 2023. “AB-648 Common interest developments: procedures: meetings by teleconference.” https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB648  

  1. California Legislative Information. 2023. “AB-1764 Housing omnibus.” https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB1764  

  1. California Legislative Information. 2023. “AB-1033 Accessory dwelling units: local ordinances: separate sale or conveyance.” https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB1033  

  1. California Legislative Information. 2023. “SB-71 Jurisdiction: small claims and limited civil case.” https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240SB71  

  1. Community Association Institute. 2023. “How the Corporate Transparency Act Applies to Community Associations.” https://advocacy.caionline.org/how-the-corporate-transparency-act-applies-to-community-associations/  

  1. California Legislative Information. 2023. “AB-572 Common interest developments: imposition of assessments.” https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202320240AB572  

Disclaimer: This article is provided for information purposes only and does not constitute legal advice. 
**While unpublished cases can’t be relied upon as judicially approved interpretation, they can be helpful to show trends in how courts are thinking about disputes. 
Tuesday January 23, 2024