Episode 7
New HOA Laws – The Good, The Bad, The OK (Part 2)
In part two of this 2024 legislative update, community management executive Joseph Price weighs in on the balcony bill, the CID repair bill and the electronic voting bill, all which were recently signed into law. What now? How do you start to implement at the association level? It’s not going to be plug and play. Plus, the deadline to comply with the Corporate Transparency Act looms large and association boards have to act sooner rather than later. As it currently stands, there are no exemptions for homeowners’ associations. Take the time to learn about new legislation and the steps you will need to take, host Tom Freeley advises.
SPECIAL GUEST:
Joseph Price, CAMEx, CCAM, Senior Vice President of Management with Powerstone Property Management, ACMC
Joseph Price has worked in the community association industry for over 20 years and is a highly regarded veteran in the field. He has extensive experience in the area of client retention and has developed numerous programs designed to help HOAs become the very best of themselves. He also serves as chair of CACM’s Board of Directors.
Episode Blog
INTRO: On this week’s episode of CACMchat: The HOA life to hear exclusive insights and expert perspectives on community association management from leaders across California. This podcast is about the hard work that managers do to positively impact the lives of more than 15 million residents living in over 50,000 homeowner associations across California.
TOM: Hey, welcome back to all of you out in podcast world to another episode of the CACM chat HOA life podcast, where no HOA topic is off limits. Look here in California every year, managers, management companies and homeowner associations have to deal with changes in common interest development legislation. Folks, it’s a lot. But as we discussed in part one of this episode with our lobbyist, Jennifer Wada, the 2024 legislative session had some pretty positive legislation for everyone.
Today’s topic is part two of the 2024 legislative wrap-up. I’m thrilled to welcome Joe Price, CAMEX, CCAM, who’s the Senior Vice President of Management with PowerStone Property Management, also accredited with the ACMC. Joe has worked in the community association industry for over 20 years and is a highly regarded veteran in the field. He has extensive experience in the area of client retention and has developed numerous programs designed to help HOAs become the very best of themselves.
He also serves as the chair of CACM’s board of directors for what Joe, this is now the second, third year?
JOE: Yes, it is. And it’s been a pleasure of mine to serve.
TOM: Well, it’s been a pleasure working with you. Welcome to the CACM chat podcast. We appreciate you being here today. We’re going to, we’re going to just kind of go over some of the legislation that that’s been passed and some that have failed.
For instance, as you may be aware, here in California, there were seven specific insurance-related legislative bills, a lot of them specific to what California calls the Fair Plan bills, all seven of which have failed, which is intriguing to me because the California insurance industry is horrid and in my opinion, a massive crisis mode. Would you agree with that?
JOE: Yes, I would. It was kind of a shock when I saw that not a single one passed. It was a kind of a wakeup call that, know, we’re struggling so much with insurance here in California, you know, and in other states, but here in California with everything we have going on with fires, potential earthquakes and whatever else is coming about before us, we seem to just, you know, not find the way to help our association to get through this.
TOM: Well, and that’s, you know, That was some of these bills, which I’m on a number of different insurance specific task forces. We all have been lobbying the insurance commissioner’s office, the governor’s office, and all this, and not one of these bills passed, which was shocking. It is positive that the insurance commissioner is coming out with regulations instead of legislation, his preferred, Commissioner Lara’s preferred method of getting his own things under his responsibility, getting his own regulations implemented.
One of them being instead of 20 million, it’s 20 million per occurrence or per community, it’s now 20 million per building, which is a massive change in and of itself. But it’s just intriguing to me that in such a crisis world, seven insurance bills all failed. It’s kind of mind blowing.
And for our members listening, there is a bill tracking report under the members resource section of our website. We encourage you to go check out that bill tracking. It’ll break down all the bills, give you a brief summary of what the bill is, our positions and so CACM’s positions and so on. Another bill that was intriguing, super intriguing to me was SB 1470 from Glazer, which was a construction defect case bill. Now this is a bill, Joe, that you might remember would have rolled back SB 800.
Well, we would have eliminated SB 800 and put the responsibility for everything related to construction defect back onto the homeowner association.
JOE: Yeah.
TOM: When we saw the bill immediately, we were strongly opposed to it. What was interesting to me was they kept pursuing it, they kept pushing it, even after the CBIA, the California Builders Industry Association, even the industry that is in construction opposed that bill and they kept pursuing the bill until finally, I think their legislative staff finally said, “Senator, we need to rethink this.” And so that one also got pulled, but it didn’t fail. It actually got pulled off of the system. So that was a very positive thing.
JOE: Definitely. Definitely.
TOM: Some other bills, there was a whole bunch of bills that were bad legislation, but they are what they are. Start with AB 2114. This was a bill for building standards elevated, elevated elements inspection. What in here in California, we affectionately term the balcony bill. This bill now authorizes a licensed civil engineer to conduct inspections of elevated balconies and elevated structures, which was huge because it did not include civil engineers in the past. The governor has signed it. So we are thrilled to be able to have that out there.
But another assembly bill that came out was AB 2579 from Quirk Silva, which also addresses exterior elevated elements. So, there’s a lot of confusion in our industry, specifically here in California, about the two different bills. This bill, however, extends, and it has been chaptered, which means it has been signed by the governor.
Current law requires an inspection deadline by January 1, an initial inspection by January 1, 2025. This bill actually extends the deadline for initial inspection until January 1, 2026. In your professional opinion, as an executive, as a leader of managers and management companies and homeowner associations, do you think that extension is going to be positive to the industry?
JOE: Well, I know that we’re definitely having some confusion on which bill concerns us, you know, as we’re looking at it going, well, we have one that says 2025, one that says 2026, and they seem to be the same type of bill, but they’re not. 326 is definitely different.
TOM: Oh, for sure. I mean-
JOE: So, I’m trying to figure out, now, and, you know, as we talked, you know, there are, are, between the two people are getting the two mixed up and thinking that one has an extension and one does not. So, what are we, what are we supposed to read through?
TOM: Well, and they’re accurate. AB 2114 from Irwin is the one that adds the civil engineer. AB 2579 is the bill that does the extension. It’s beyond me how legislators and their staffs can’t get together and kind of combine some of these things, but that’s California bureaucracy or legislative bureaucracy. But I think, and correct me if I’m wrong, there’s a lot of people freaking out.
I go to, we host a lot of these educational sessions, and we have this as a topic. I hear managers all over California kind of freaking out going, wait, I have to have this done by January 1st, 2025? And I would assume you’re hearing the same thing from your own team.
JOE: We’re getting those questions that are just starting to pop up now because people are starting to become aware. As you know, it was chaptered on the… the 28th of the month. now it’s just starting to hit. You’re starting to see it on social media is where we’re starting to get it. And that’s where the push is coming from. You know, not everybody is aware of it, because it’s so new. But, you know, knowing that it has been, you know, passed and chaptered as stated, there’s going to be some changes and we’ve got to be aware of what’s going on.
TOM: Absolutely.
JOE: You know, we’ll be looking for the experts obviously to aid us through the process, but as you know, as a leader. going to be looking to us to have the answers. And we’re looking, thinking “well, it’s been in place for what three days? Come on, give me a break”.
TOM: Well, its January 1. So, it the extension, think is a is a positive thing.
JOE: Correct.
TOM: It’s like the Corporate Transparency Act for those associations all over wherever you’re listening to all of the United States, the federal government, as in Janet Yellen, is putting through legislation, a federal legislation or has put through federal legislation called the Corporate Transparency Act. Appreciating that that is geared specifically towards terrorism and the purpose behind registering for terrorism. There was a letter sent in late December 2023, because at that point, the legislation was supposed to kick in January 1st, 2024.
That letter was signed by like 50 some odd senators and 40 some odd Congress people that specifically was clear. This legislation has not been told anybody. The process has been told anybody. I fall, CACM falls into this category. We have to do this filing. I have received zero amount of information on exactly how to do it. Now, of course, I’ve done my own research. I’m pretty familiar with what the process is and what to do.
But if for those of them, those of you organizations out there that haven’t done it, the research to understand it, what do you do? I mean, Joe, how are you representing your clients in this?
JOE: We were, you know, we were on the side of CACM and, you know, pushing back because HOAs, you know, Homeowner Associations really aren’t part of, you know, don’t have a whole lot of terrorists serving on our boards and we don’t have a whole lot of money laundering. Well, we all do. But I mean, the reality of it is it’s here and it’s not going away.
So, we started the education process. We have multiple trainings that you can come to for our board members. We’ve educated our managers on it. Some managers were enthusiastic and jumped out right on board with their boards and jumped through. Some of we’ve had to help coach along. But I mean, it is a concern because a lot of boards are hard to fill as it is. And now we’re putting another stipulation in place.
And with that, you know, how do we disclose this to them and potentially any other board member who’s not a board member yet that they’re going to be required to do that. So, you know, there’s some administrative side of it.
TOM: There’s so much apathy and getting board members to be on a board and not I’ve worked as well as you. We’ve we have worked, you know, all over the United States. So, we’re somewhat familiar with, you know, how the different practices are when it comes to homeowner associations. I don’t care where you are.
There’s apathy. People don’t want to run. People don’t want to be on the board. And this is just going to make that process harder. And I don’t understand why they would do it.
JOE: Yeah, well definitely. I don’t think this was thought through very well as far as the HOA boards, nonprofits, like the boards that we represent. I mean, less than $5 million, it’s not going to see a whole lot of big-time launderers come through with that kind of money. They’re looking for bigger dollars than that.
TOM: 25, 50 million.
JOE: Yeah. Well, that’s a different story. But the reality of it is filling our boards has been a challenge to start with, getting people to volunteer their own time for really no big accolades for the job that they’re volunteering to do. In fact, going through some tough times here out in California with insurance increasing, water increasing, they’re the ones who are hoping they’re bulletproof because we’re getting challenged on it on a regular basis.
Why didn’t we plan for this? Why didn’t we know? Nobody knew.
TOM: Well, I mean, California is the fifth largest economy in the world. I understand that there’s some need. I understand that there’s going to be regulation and requirements and so on. This bill and in the letter, which is also on our website, CACM.org, the letter that was sent to Janet Yellen in late December 2023 is on our website and that for people that to review and it actually it’s very clear in it that states, you know, intention is great.
I mean, don’t misunderstand me. I’m not trying to belittle the intention, but the letter even specifically states, you’re, you’re trying to include every single small business in America. That’s absurd. I mean, not to mention what does that process look, how are you doing it on behalf of your clients?
Do you have the associations attorneys doing it? Do you have an outside resource, third party resource? Are you doing it in house? What is your process?
JOE: We are actually going to use a third party. We’re, we’re working with our boards and making that being the facilitator to the third party. But yeah, we’re working with the group to help get registered in defense and you know, to make sure that they do hit the deadline, which is January 1st.
TOM: As of now.
JOE: Which is, yes, and we’ve, know it’s been pushed and pushed to try to push it back or even postpone it, period, but that’s not going anywhere. So, it’s time to really call in the troops and make things happen.
TOM: I’ve spoken to my personal Congress, Congresswoman and my personal Senate, you know, the people that I am a constituent of the senators and the Congresswoman. And, you know, they have said that there are still efforts within the federal legislation, legislative bodies to try to get this extended or to remove homeowner associations in general.
I know our sister organization, CAI, has filed a lawsuit to intentionally try to remove homeowner associations, whether that’s going to get even heard or impact this legislation before January 1st, who knows? But there is a strong effort.
to address specifically homeowner associations and create that exemption. From my perspective, if there is something I advise to do globally speaking on behalf of homeowner associations, I fully intend to do it to try to help get them exempt. And we’ll be reaching out to all of our members. So, were you familiar with SB 900, Umberg, the repair and maintenance bill?
JOE: Yes, yes. Obviously being as we are in Southern California were very familiar with the situation that occurred out in Orange. It was a very challenging situation. We talked about it within our own group and knowing that it was a big deal when you have an emergency gas shutdown and all those, the supply of gas is gone. You’re talking about a 51-year-old gas line that has failed.
And all of a sudden, it’s magically, we have to repair it. And finding the resources for these poor people was a challenge as it is. So, this bill was put into effect to help mandate getting a process in place that’ll ensure that the HOAs do move forward in a timely basis.
TOM: So, for those listeners who are not familiar with this, this is SB 900, California SB 900, Senator Umberg is the author. It came out of his district in Orange County, California. And the senator himself was heavily involved in trying to deal, as I understand it, trying to deal with this, as you said, broken gas line. They were busing in portable showers. I mean, this poor community went a very long time. Now, not to belittle the emergency side because that’s an emergency and I think this bill is very appropriate under that basis.
The original intent of the bill, however, was dramatic. The original intent of the bill was to A, make homeowner associations not commence the repair, but complete the repair in 14 days. And for those of you listening who are familiar with homeowner association management processes and how long it takes to get things accomplished, whether it’s an emergency or not, can appreciate that and joke.
Tell me if you understand this as well, that’s just simply not real. I mean, there’s no way you can get these things done in 14 days.
JOE: It was definitely not real. mean, we were really looking at it and going, you know, if you’re replacing a gas line throughout a community and it’s a $1 million repair plus, and all the going out to bid and getting the right people in the place, getting the experts in place, making sure you have your construction manager to handle it because you’re not going to do it.
TOM: Well, I’m not even sure you can get a proposal in 14 days, let alone.
JOE: No, we struggle, you know, rightfully so. You want to have the right bid, you want an accurate bid, you want to ensure that it’s what the community needs. Getting that alone, I mean, four months is what it took. And that’s a long time for people to be out of their home.
TOM: I couldn’t even imagine how that would impact.
JOE: But you think of the magnitude of the repair, you can understand why it took that long.
TOM: Oh, sure.
JOE: You know, and that’s why you know, now we have the bill says 14 days to get it started.
TOM: And that’s the kicker. We argued that we explained the whole process. I and Jennifer were heavily, heavily involved in the negotiations in this bill. And we tried to explain to the senator and his staff that there’s no possible way. They finally understood that.
But then they threw a twist and said, OK, so the board has to do to approve moving forward with the repair. And if the board doesn’t, then the management company has to. And we just kind of went, “no, that doesn’t work that way.” The manager and or the management company are agents. They have zero authority. They have no way that you can do this. So, I was flabbergasted that this bill potentially was going in that direction. So, I’m very happy that the Senator and his staff understood that concept.
Now, the bill in my view, and I’m going to ask you your opinion as well. I think this bill has some very positive reflection into the industry. One, as you very well said, is that it now requires the process to start. You have to commence the repair in 14 days. Literally, that means you start getting proposals. You get the board together and start approving things and so on. The bill actually reads the bill would require, or the summary, I should say.
The bill would require an associations board to commence the process to make those repairs within 14 days. And it is very specific to utilities, not just a random emergency. This is very specific to utilities as provided. If there are insufficient funds, which we worked really hard to get in, and I’m so happy that they agreed to this.
If there are insufficient funds and reserves to cover the cost of repairs, the bill would authorize an association to obtain competitive financing to commence repairs or replacements without a vote of the membership and to levy an emergency assessment to repay the loan if certain conditions are met. That in and of itself is a massive success and very positive for associations. Would you agree? And how do you anticipate to be able to implement that for an association that’s under this emergency condition?
JOE: Yeah, I see that as probably, you know, I understand that, you know, the concern about the timeline, but I think that’s the most important part of this bill was really gives it the teeth that it needs to move forward in a timely basis. You know, not waiting to take it. As you know, getting anything to pass a vote is an act of Congress and on itself. So, we have to make sure that we have the ability. Now we can start planning that right in from the get-go.
Knowing that we may have to get loan and how we’re going to assess and just communicate that right up front. The money’s not there. The money’s not there. We’re going to find a way to get it. And that’s with our valued partners. Some of our banks will be able to help us through that understanding that this is an emergency. We need to help us get this fast-tracked along. So, I’m really thrilled about that part of the bill.
TOM: And it’s also, if the board doesn’t meet or can’t get quorum to make these decisions, the quorum drops, quorum requirement drops. I mean, the bill, the final bill was so positive in comparison, I should say, to the original bill. I mean, this is like a completely brand-new different bill.
And I’d like to thank the Senator publicly for putting it out there because I think this has a very positive impact, not only in his constituents, but literally in all of California. I think this has some very positive impacts.
JOE: Definitely helps the associations, management company, as well as the boards.
TOM: So the last bill, I think is the most popular, if I could put it that way, is assembly bill or AB 2159 from Maienschein. This is the member election bill, more affectionately known as the electronic voting bill. This bill would require the rule to permit a member to opt out of voting by electronic secret ballot.
First of all, it allows electronic balloting. Currently in California, for those listeners who may not be in California, there’s a multi-envelope, multi-signature process that needs to go through. Joe, why don’t you explain the current process and then we’ll get into the future potential process.
JOE: I think you’ve already kind of given the nightmare already. Going through the different colored envelopes and everything else has been the challenge in getting people to understand it has been a challenge alone, even though we’ve been doing it forever. It has been an ongoing challenge.
For me, this is an exciting bill, but I also look at there are going to be some hurdles that have to go through before we can execute this bill. This is just not a start on January 1, even though it’s what it says. You’re going to start the process now to even be close to the end of 2025 to be able to use this in an election. Just hearing some of the things that you’re going to have to do.
You have to verify which email address people want to use. Well, that’ll be interesting. Then we’re going to have to have that email address match the code that they’re going to have to have so they’ll have the code in place to verify that that’s correct. So, are we going to have multiple checks through the process, like we have multiple envelopes, or what is that going to look like? Thank goodness as the management company, we’re not going to figure that out. We’re going to rely on our partners out there who will have the California specific tracking.
TOM: So, there’s 27 states in the United States that have electronic voting on their legislative records. It’s a law. You’re allowed to do it in 27 different states. We’ve done, CACM did the research on here a couple of years ago, which is why I know specifically. And we were going to put through a bill. So, I’m glad this is a bill that came out of CAI-CLAC.
I want to thank CLAC publicly because I think this was, we worked very closely with them to get this bill modified. The similar bill, if you remember, Joe, came through in 2013, if I remember correctly, and failed in the Senate Judiciary Committee for security purposes.
JOE: Right, correct. I remember that.
TOM: It was interesting to me that the governor signed this bill because I did not believe the governor was going to sign it. I thought it was a great bill. I just didn’t believe the governor was going to sign it for two main reasons.
One, the secretary of state came out with a very strong and very detailed opposition letter to specifically this bill because they were referencing it as public voting. That changed and we tried to work with the secretary of state’s office to, it’s not a pub, these are private organizations, private corporations, but they kept referencing. There was even a letter, the second reason I was concerned.
There’s a letter from a voting company in Pennsylvania that also referenced public voting and said, this would be horrid. The security behind it is terrible. So on and so on and so on. So, I was really surprised that the governor signed it, but I think it has very, very positive long-term impacts in our industry. Would you agree?
JOE: I agree. think the long-term is it’s going to be a great bill for us. I think currently people who are thinking it’s going to be a plug and play are fooling themselves.
TOM: Yeah, please. For those listeners in California, please read the bill. Please talk to your legal counsel. Always follow your legal counsel guidance, both in the Corporate Transparency Act especially, but also well, pretty much on everything but as it relates to the Corporate Transparency Act and this AB 2159 electronic voting bill, please check with your legal counsel because they were the ones you know, they get paid to defend you, they don’t get paid to tell you what to do.
They get paid to defend you and they will tell you don’t do this or do this or else you’re going to have a problem, or you know to avoid this problem. So please take their guidance as well. Very very cool bill. So again publicly thanks CAI-CLAC. I think I think it’s very positive and I’m so happy that we’re able to partner with them. Joe, legislation is not a sexy topic so I want to thank you for taking a couple of minutes to just have a conversation about the really, in my opinion, the really key bills.
Was there anything else, any other bills in here or anything legislative that you or regulatory that you want to address before we sign off?
JOE: No, I think you hit the main bills that were important, you know, that are really impacting us today. I’m glad that you brought them up and helping people understand where we are and what’s going on. Hopefully, you know, this will help educate people additionally. But as you said, partnering with your counsel on all the processes, especially 2159.
I think there’s a lot of steps that you’re going to have to do that if you don’t really follow a timeline, you’re going to be stepping at it. So, I think that’s going to be key for the future.
TOM: Again, for the listeners out there, if you have an interest in California specific legislation, these bill tracks, tracking report is on our website. There are links that you can then take it right to the California legislation and see and read the actual bill.
But I think it’s very important for, especially for the California managers and homeowner association members that are listening. I think it’s really, really important that you take the extra time to learn this legislation, learn what’s going on in the industry. Because as I said, from the very start of this episode, the legislation is constant. It’s always changing in Calvary. Every year we’re dealing with changes in the legislation. So please take the time to review it. Joe, thank you so much for joining us. Please stick around for just a couple of minutes. Do you have any parting thoughts you want to pass on?
JOE: I just want to thank CACM for the opportunity to be part of this podcast and help educate our communities.
TOM: Thank you so much for that. Shameless plug for CACM. Appreciate that, Joe, very much. But listen, we appreciate your time. I know how busy you are. I know as an executive of management company; you’re being pushed and torn and pulled into 18 different directions at the exact same time.
And that might be a little underestimating the different directions. You might be like 50 different directions, but I do greatly appreciate your time. For the listeners, if you have comments, questions, fun stories, horror stories, whatever you want to address specifically, as I said from the start, this HOA podcast, there is no HOA topic off limits. So please feel free to shoot something to us on podcast@cacm.org. Joe, once again, thank you so much. Please stay with me for just a second. For the listeners, I’ll see you next time. Thanks.
OUTRO: And that concludes this week’s episode of CACMChat HOA Life. Have questions you want answered? Send them to podcasts@cacm.org and we’ll address them in an upcoming episode. Make sure to regularly check out our website at cacm.org. And don’t forget to join our rapidly expanding social media community. Just follow @CACMChat on LinkedIn, Facebook, Instagram, and X. Thanks for joining.