Seven million Californians living in homeowners associations have Gov. Arnold Schwarzenegger to thank for vetoing legislation that would have jeopardized the financial stability of community associations throughout the state.

Acting on appeals from countless homeowners, community associations and others, the governor vetoed a measure (AB 2598) that would have had the practical effect of legalizing assessment delinquency up to $2,500 and, ultimately, adding to the financial burden of responsible, dues-paying homeowners. "Thousands of Californians urged the governor to find a solution that helps the majority rather than AB 2598, which creates a process that's the wrong answer at the wrong time," said Bob Browning, chair of the California Legislative Action Committee (LAC) for Community Associations Institute (CAI). A reserve specialist, Browning is a member of the CAI Board of Trustees.

"Speaking for millions of Californians, we're gratified that Gov. Schwarzenegger had the strength and foresight to veto this misdirected legislation," said CAI Chief Executive Officer Thomas M. Skiba. "By recognizing the financial havoc this legislation could have created, the governor made the right choice – for homeowners, communities, municipalities, developers and lenders. CAI will work constructively with state officials as this issue undergoes additional legislative review."

Schwarzenegger's veto message directed state agencies to work with interested parties to clarify California foreclosure statues.

Homeowners, associations and municipalities aren’t the only ones who would have been hurt by AB 2598. The legislation would have created business disincentives for builders and lenders, who are central to responding to the state's population growth.

Developers expressed concern that they would not be able to sell units if new buyers could willingly avoid paying the dues needed to maintain the property. Banks and lenders said they would have stopped loaning money to developers and homeowners associations because their loans could be impaired.

In his veto message, Schwarzenegger said, "While the intent of this legislation is laudable and intended to protect homeowners from being foreclosed upon for small sums of delinquent assessments, this bill is overly broad and could negatively impact all homeowners living in common-interest developments."

"We faced an uphill struggle on an issue of critical importance to our members," Skiba said. "We didn't know if we could carry the day given the emotional appeal of the bill and the timeframe, but we knew the facts were on our side. That—along with a lot of hard work—led to this positive outcome. We’re grateful to our LAC and the countless CAI members who stood with us in defense of community associations in California."

After hearing about the veto, homeowner Sam Dolnick of La Mesa, said, "As an 86-year-old retired Californian, I applaud the governor for opposing this bill. By doing so he has protected millions of seniors and folks living on fixed incomes. We thank the governor for finding a better solution." Dolnick is a member of the Board of Directors of the Foundation for Community Association Research.