In September 2024, California's Senate Bill 900 was signed into law, introducing significant amendments to California Civil Code Sections 4775 and 5610. These changes redefine the repair and maintenance obligations of homeowners associations (HOAs), emphasizing the timely restoration of essential utilities and expanding the scope of emergency funding mechanisms. Here's what HOA boards and managers need to know about the new requirements.

Under the amended Section 4775, unless otherwise specified in an HOA's declaration, associations are now responsible for restoring interrupted gas, heat, water, or electrical services originating in the common area—even if the issue extends beyond the common area.

This broader obligation ensures that residents maintain access to essential utilities, regardless of where the repair is needed. Key exceptions to this requirement include cases where:

• A utility provider is responsible for maintaining the service; or
• The association's governing documents clearly assign the responsibility elsewhere.

To comply, associations must begin repairs within 14 days of the interruption of gas, heat, water, or electrical services. This timeline underscores the importance of swift action to restore essential services to residents. However, these requirements come with substantial financial implications for HOAs.

The financial implications of these expanded duties are addressed by new emergency funding mechanisms. If an HOA's reserve funds are insufficient to cover repair costs, the board is authorized to:

1. Secure a Loan: Obtain competitive financing in compliance with Section 5735 to start repairs without requiring member approval.
2. Levy Emergency Assessments: Impose an emergency assessment on members to repay the loan, provided certain legal conditions are met.

Before securing financing, the board must adopt a resolution with written findings that detail the nature of the association's expenses and explain why the reserves are insufficient to cover the necessary costs.

To facilitate timely decision-making, the bill introduces a reduced quorum requirement if the board cannot meet quorum within the 14-day timeframe. At the next properly noticed board meeting, the quorum requirement is reduced so that the directors present at that meeting constitute a quorum. Additionally, board members are authorized to vote electronically to expedite the initiation of repairs.

The amendments to Section 5610 also broaden the definition of emergencies for which HOAs can levy emergency assessments. Previously limited to extraordinary expenses for safety threats or infrastructure repairs, the updated definition now includes situations where there is a threat to personal health or safety or other hazardous conditions. This expanded authority ensures that HOAs can act swiftly and responsibly to address a variety of urgent safety concerns, thereby protecting residents, maintaining common areas, and preserving property values.

Consistent with the new obligations, the law requires HOAs to include gas, water, and electrical services in reserve studies if the association is obligated to maintain them. The annual budget report, distributed 30 to 90 days before the fiscal year-end, must also account for these expanded reserve obligations.

Recognizing that emergencies may limit an HOA's ability to fulfill its repair obligations, the new law exempts HOAs from Section 4775 under the following conditions, provided these circumstances significantly impair the HOA's ability to fulfill its responsibilities:

1. A disaster or emergency declared by the federal government.
2. A state of emergency proclaimed by the Governor under Section 8625 of the Government Code.
3. A local emergency declared by a local governing body or official pursuant to Section 8630 of the Government Code.

These exemptions provides flexibility for HOAs operating under extraordinary circumstances, ensuring they are not penalized for challenges beyond their control.

Senate Bill 900 represents a pivotal shift in how HOAs manage maintenance and repairs. The ability to secure emergency funding, levy assessments for a broader range of issues, and act quickly to restore essential services reflects the state's commitment to protecting the safety and well-being of residents.

For guidance on how SB 900 affects your HOA, consult with your HOA's legal counsel.