What Legal Steps Must HOAs Take to Comply With the Davis-Stirling Act?

The Davis-Stirling Act governs how homeowners’ associations operate, detailing their function around meetings, finances, and elections. The legal steps HOAs must take to comply with this law include holding open and available meetings, being transparent about expenses, and carefully regulating the voting process.

HOA compliance with Davis-Stirling Act isn’t particularly difficult, but it can be complex, as the law necessitates inspectors of elections in California and many other regulations. This article will explore some of those requirements.

The Goals of the Davis-Stirling Act

As part of the California Civil Code starting with section 4000, the primary goals of the Davis-Stirling Act are the efficient and secure functioning of HOAs in such a way that all members are given proper rights and representation. The law seeks to accomplish this through several means. As such, it establishes a legal framework for multiple aspects of common interest developments (CIDs):

Founding

The Davis-Stirling Act, at its core, provides for the establishment of CIDs in general. This means it dictates some of the parameters of their founding and operation, including the fact that HOAs must be legally established as nonprofit mutual benefit corporations. 

Furthermore, HOAs must file articles of incorporation with the state, and they must establish their own bylaws. There are parts of the Davis-Stirling Act that can be overridden by an HOA’s specific rules–a detail specified in parts of the Act itself–and these details must be correctly documented in order to have legal standing.

Maintenance

HOAs share common spaces and resources, and the Davis-Stirling Act dictates the obligations of the board when it comes to these things. The board is legally required to undertake the repair, upkeep, and maintenance of common areas using funding collected through homeowner fees. The law also specifies areas or resources that fall under the care of individual homeowners.

Meetings

HOAs hold meetings for a number of reasons. Some of these are held regularly and some are scheduled as they become necessary. Legally, HOAs are required to hold meetings that are open to members, and they are required to notify homeowners so they are able to attend should they choose. The Davis-Stirling Act also provides for unique circumstances in which some meetings may be closed or unadvertised.

Records

HOAs must maintain records, and they must allow homeowners access to them. These records include meeting minutes, financial statements, and founding documents. The Davis-Stirling Act also provides parameters and timelines about when these records must be made available.

Finances

In one of the most important sections, legally speaking, the Davis-Stirling Act lays out how HOAs must manage and document their finances. This ranges from preparing annual budgets, planning the collection of homeowner fees, and timelines for audits and reviews. 

These documents must be kept precisely and made available to members. The board is also legally obligated to act in the best financial interest of members.

Elections

Another important section of the Davis-Stirling Act regards elections and votes held by HOAs. Most of the regulations laid out here are designed to protect the representation and anonymity of homeowners, but also to secure the legitimacy of the voting process. This includes the following parameters:

• Members must be notified at least thirty days before an election of the voting deadline, the address where ballots are to be returned, when a quorum will be determined, and each option which will be on the ballot.
• Ballots with instructions on how they are to be returned must reach members at least thirty days before the window for voting ends.
• Ballots must be sent in two sealed envelopes–one which holds the ballot itself and has no distinguishing details, and a second, outer envelope that displays the voter’s information.
• An election inspector must be appointed to oversee the voting process. Their role includes jobs such as sending and collecting ballots, counting votes, and answering any concerns or inquiries about the validity of votes. 

This is why many HOAs use platforms like ElectionBuddy to oversee both their mail-in and electronic elections. Not only is it legally required, but elections can be difficult and time-consuming to manage, and these organizations can save HOAs massive amounts of time and resources.

The Letter of the Law

The Davis-Stirling Act is a relatively short document, but it’s written in legal language that can be convoluted to the average reader. Tools like ElectionBuddy are perfect when HOAs need assistance in meeting legal requirements and understanding how to comply with both local and federal regulations!