Common interest developments: management.

Plain English Breakdown

The official summary and digest do not provide specific details on how professional associations must employ agents to meet new criteria.

Homeowner Associations: Management Rules

This law updates rules for managing homeowner associations by changing the definition of an agent, specifying management services provided by agents, and requiring professional organizations to employ qualified agents. It also mandates additional information from home sellers about exterior elevated elements.

What This Bill Does

• Revises the definition of an agent in a homeowner association to include someone who facilitates activities under specified provisions of the Davis-Stirling Common Interest Development Act and must provide a fiduciary duty to the board and members.
• Updates the definition of 'management services' for common interest developments to mean acts performed or offered by agents, as defined above, in an advisory capacity for associations based on governing documents.
• Modifies the definition of professional organizations managing common interest developments to require these groups to employ agents who meet certain criteria and are part of a specified organization.
• Adds a duty of care for individuals or entities that facilitate specific activities like reviewing association finances, requiring them to act prudently and in good faith towards the association and its members.
• Requires home sellers to provide additional information about exterior elevated elements if requested by potential buyers.

Who It Names or Affects

• Managers and agents who work for homeowner associations
• Professional organizations that manage common interest developments
• Homeowners selling their properties in common interest developments

Terms To Know

Agent

A person or company representing another party, such as a homeowner association, and must act in the best interests of the board and members.

Management Services

Advice given by agents to associations based on governing documents for running common interest developments.

Limits and Unknowns

• The bill does not specify how these changes will be enforced or what penalties might apply.
• It is unclear if the additional information required from home sellers will significantly impact real estate transactions.
• There are no details on how professional associations must employ agents to meet new criteria.

Official Summary Text

SB 1238, as amended, Wahab.
Common interest developments: management.
(1) Existing law, the Davis-Stirling Common Interest Development Act (act), provides for the creation and regulation of common interest developments.
Existing civil law defines an agent as one who represents another, called the principal, in dealings with third persons.
This bill would revise the above-described definition of agent to include a person or company that facilitates activities pursuant to specified provisions of the
act and that is required to provide a fiduciary duty to the board of a homeowner’s association and its members.
act.
Existing law defines “management services” for purposes of a common interest development to mean specified acts performed or offered to be performed in an advisory capacity for an association, including implementing provisions of governing documents for the operation of the common interest development.
This bill would revise the above definition to specify that it means acts performed or offered to be performed by an agent, as defined above, in an advisory capacity for an association, as prescribed.
Existing law defines “professional association for common interest development managers” to mean an organization that meets all of specified criteria, including having at least 200 members or certificants who are common interest development managers in California.
This bill would revise that definition to specify that it means an organization that employees an agent or agents, as defined, and that meets the above mentioned criteria.
Existing law imposes certain fiduciary duties on managers and agents of common interest developments.
This bill would provide that a person or entity that facilitates specified activities, including reviewing association operating accounts, owes a duty of care that is prudent and provides the highest good faith effort to the association and its members.
(2) Existing law requires the owner of a separate interest in a common interest development to provide specified documents to a prospective purchaser as soon as practicable before the transfer of title or execution of a real property sales contract, including a copy of the report issued pursuant to the most recent inspection conducted.
This
bill would require the owner to provide additional information, including, among other things, if separately requested by the purchaser, the location on the first page of the report where certain facts about the exterior elevated elements and the number of units impacted may be found. The bill would make various other related and conforming changes to those provisions.

Current Bill Text

Download Bill PDF