PENDING LEGISLATION FOR HOMEOWNER ASSOCIATIONS IN 2025:
AB 739. Common interest developments: managing agents: real estate broker license.
This legislation would require CID managers to hold a real estate broker license. Although common interest developments are managed by an association, current law permits the association to hire a managing agent without a real estate broker’s license. This legislation changes that.
AB 2114. Inspection of Elevated Structures
This legislation would amend current law (SB–326) to that “licensed civil engineers” can be added to the list of professionals authorized to conduct inspections of exterior elevated structures in a condo where an association has maintenance/repair responsibilities.
AB 2159. Elections
This legislation would authorize an association to conduct an election by electronic secret ballot, unless the association’s governing documents specify otherwise. Several requirements include that a member’s identity would need to be authenticated to the online voting system and that a means for members to confirm that their electronic voting device can communicate with the online voting system fourteen days prior to the voting deadline. In addition, a transmitted receipt of the ballot would be delivered to the member.
AB 2460. Elections/Quorum
This legislation would be a follow-up to AB 1458 that the board of directors for an association is required to adjourn to a reduced quorum of 20% if the Association’s governing documents state that a reduced quorum is above 20%.
SB 31. Water quality: recycled water.
This legislation would require associations to use recycled water to irrigate common area landscape if recycled water is available and prohibit the use of potable water.
SB 546. Common interest developments: accounting.
This legislation would repeal the board’s ability to review financial statements between meetings. This legislation would repeal the provisions of Civil Code Section 5501 authorizing the review requirements to be met when individual members or a subcommittee of the board review the documents and statements independent of a board meeting, but ratify the review at the board meeting after the independent review. Bottom Line: Review would occur only at a board meeting.
SB 614. Potable water: nonfunctional turf.
This legislation would prohibit the use of potable water for nonfunctional turf one year earlier starting January 1, 2028. Existing law prohibits the use of potable water, as defined, for nonfunctional turf located on common areas of properties of homeowners’ associations, common interest developments, and community service organizations or similar entities, starting January 1, 2029.
SB 811. Common interest developments: document delivery.
This legislation is intended to clarify when a document is considered delivered in terms of HOA correspondence to members. Section 4050 of the Civil Code would be amended to include:
•If a document is delivered by mail, delivery is deemed to be complete on upon deposit into the United States mail.
•If a document is delivered by electronic means, delivery is complete at the time of transmission.
SB 900. Repair and Maintenance
This legislation would make an association responsible for repairs and replacements in the common area if there is an interruption of gas, heat, water, or electrical services that begin in the common area, even if the matter extends into another area, as specified. The bill would require an association to complete those repairs or replacements within 30 days. Reasonable attorney fees would be required to a prevailing owner who enforces this provision against an association.
SB 1055. Accessory Dwelling Units
This legislation would prohibit a qualifying local agency as defined by the Department of Housing and Community Development from imposing height limitations that would prohibit an attached accessory dwelling unit from attaining a height of 16 feet, as described.
SB 1212. Housing Investments
This legislation would prohibit an investment entity from purchasing or acquiring an interest in a single-family dwelling or other dwelling that consists of one or two residential units within this state. An investment entity would be defined as a real estate investment trust or an entity that manages pooled funds from investors. A release in writing from the buyer would be necessary to protect the seller from liability.
LEGISLATION IMPACTING HOMEOWNER ASSOCIATIONS IN 2025
Corporate Transparency Act
Beginning January 1, 2025, associations with less than $5 million in gross receipts and fewer than 20 full-time employees will need to file the names of their directors, their birth dates, home address, and driver’s license information with the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury. Associations must include the identity of the person with substantial control over the association’s finances. The purpose of this reporting is to track suspicious activity, money laundering, and terrorist financing, none of which community associations are involved with.
The reporting of Beneficial Owner Information includes providing personal details about the association’s beneficial owners/board directors, including their name, address, date of birth, and an identifying number from a government-issued document like a passport or driver’s license. The impact on homeowner associations is that it may prevent homeowners from volunteering to become board directors, a problem facing associations already and that associations will need to refile board director information whenever there is a director election, resignation, death, or removal.
Update: Corporate Transparency Act Enforcement Ends for HOAs
The impact of the Corporate Transparency Act has placed uncertainty amongst homeowners associations throughout California during the past few months with several U.S. district courts providing different opinions. However, on March 2, 2025, the US Treasury Department suspended enforcement of new rules requiring business owners to file beneficial ownership information with the Financial Crimes Enforcement Network. This means that HOA can ignore the Corporate Transparency Act and its requirements of providing personal details about the Association’s beneficial owners/board directors and having to update that information in the future.
AB 2214. Building Standards: Exterior Elevated Elements: Inspection
Existing law requires the board of a condominium association to cause a visual inspection to be conducted of the exterior elevated elements for which the association has maintenance or repair responsibility at least every 9 years. Existing law requires the inspection to be conducted by a licensed structural engineer or architect. AB 2214 amends Civil Code Section 5551 to additionally authorize a licensed civil engineer to conduct the inspection. The bill was signed into law on July 15, 2024, and it took effect immediately as an urgency statute.
SB 900. Common interest developments: repair and maintenance.
This Bill was signed into law on September 19, 2024, and amends Civil Code Section 4775 to make an association responsible for any repairs and replacements relating to the interruption of gas, heat, water, or electrical services that begin in the common area, even if the matter extends into a separate interest or exclusive use common area.
Existing law imposes specified duties on an association with respect to managing a common interest development, including levying regular and special assessments sufficient to perform its obligations. Existing law imposes limits on increases in those assessments, except those increases necessary for specified emergency situations, including an extraordinary expense necessary to repair or maintain the common interest development for which the association is responsible where a threat to personal safety on the property is discovered. The bill requires an association’s board to commence the process to make those repairs within 14 days, as provided. If there are insufficient funds in reserve to cover the cost of repairs, the bill authorizes an association to obtain competitive financing to commence repairs or replacements without a vote and to levy an emergency assessment to repay the loan if certain conditions are met. If the board is unable to reach a quorum during the 14-day period, the bill requires a limited reduced quorum at the next duly noticed board meeting, only for the vote to commence the process to make repairs. The bill also authorizes directors of an association to vote by electronic means for purposes of initiating repairs or replacements pursuant to the bill’s provisions.
This bill amends Civil Code Section 5610 to expand that emergency to include an extraordinary expense necessary to operate, repair or maintain the common interest development for which the association is responsible where a threat to personal health or safety or another hazardous condition or circumstance on the property is discovered. Further this bill amends Civil Code 5550 (concerning reserve studies) and provides that with respect to a visual inspection, the term “major components” includes gas, water, and electrical service to the extent the association is required to repair or replace those parts.
Boards should be attentive to the strict time limitations for the repair of gas, heat, water, and electrical services in the common area and that any new major components are included in the reserve study inspections and reports.
LEGISLATION IMPACTING HOMEOWNER ASSOCIATIONS IN 2024
AB 648. Virtual Meetings.
This bill amends Civil Code §4090 and adds a new Section 4926 to the Civil Code. Beginning January 1, 2024, new Civil Code Section 4926 goes into effect which permits an association to conduct its open board meetings entirely by teleconference or videoconference (without a physical location), provided that all the following requirements are satisfied: a) the notice for each meeting conducted virtually under Section 4926 must include, in addition to other required content for meeting notices, all the following: i) Clear technical instructions on how to participate by teleconference or videoconference; ii) the telephone number and e-mail address of a person who can provide technical assistance with the teleconference or videoconference process, both before and during the meeting; and iii) a reminder that a member may request individual delivery of meeting notices, with instructions how to do so; b) every director and member must have the same ability to participate in the meeting that would exist if the meeting were held in person; and c) any vote of the directors at a virtual meeting must be conducted by a roll call vote. However, AB 648 did not have any impact on existing law governing association meetings at which ballots are counted and tabulated pursuant to Civil Code section 5120 as a physical location must still be designated.
AB 1033. ADUs Into Condos.
This bill amends Government Code sections 65852.2 and 65852.26. Local agencies can adopt ordinances to allow owners to convert their ADUs into condominiums (with association approval), which can then be sold separately from the main dwelling.
AB 1458. Adjourned Meeting Quorum.
This bill amends Civil Code section 5115 and Corporations Code section 7512. If an association cannot meet quorum to elect directors, this bill amends Corporations Code 7512 to authorize a corporation that is a common interest development to adjourn a membership meeting to a date at least 20 days after the adjourned proceeding, at which time the quorum required for purposes of a membership meeting shall be 20% of the voting members present in person, by proxy, or by secret written ballot received.
AB 1572. Potable Water.
This bill amends Water Code sections 10608.12 and 10608.14. Beginning January 1, 2029, associations cannot use potable water to irrigate nonfunctional turf, which is defined as turf enclosed to permanently preclude human access for recreation, and turf in street rights-of-way and parking lots. Functional turf is defined to include turf located in a recreational use area, community space, or pet exercise areas.
AB 1764. Election Term Limits.
This bill amends Civil Code sections 5103 and 5105. If term limits are in place, an incumbent director must step down when termed out. If a nominee for the board is disqualified, existing directors must comply with the same requirements when the directors are up for election.
SB 71. Small Claims Court.
Starting January 1, 2024, small claims limits will be raised for individuals from $10,000 to $12,500. For companies or corporations, like associations, the limit is increased from $5,000 to $6,250. This bill also increases the limit on the amount in controversy for limited civil actions in Superior Court (which used to be called Municipal Court actions) from $25,000 to $35,000.
Lender Guidelines. Fannie Mae and Freddie Mac issued new
lender guidelines that impact most condominium developments in California. They require more documentation regarding insurance, building inspections, deferred maintenance, and structural safety issues. Boards must make their best efforts to comply otherwise, associations will be listed as “ineligible,” thereby making it difficult for owners to sell their units.