Plain English Breakdown
The bill summary does not provide specific details about how existing HOAs will transition to meet the new requirements by January 1, 2027.
HOAs Must Have Fidelity Bonds
This bill requires homeowners' associations (HOAs) to obtain fidelity bonds to protect against losses from theft or dishonest acts by officers, directors, employees, and managing agents.
What This Bill Does
- Requires HOAs collecting assessments for common expenses to obtain a blanket fidelity bond.
- The bond must cover losses resulting from theft or dishonesty committed by association officials, employees, or the managing agent's staff.
- Sets minimum coverage requirements based on reserve balances and one-fourth of annual assessment income, with a $10,000 minimum limit.
- Allows the board of directors or managing agent to obtain this bond on behalf of the HOA.
Who It Names or Affects
- Homeowners' associations (HOAs) that collect assessments for common expenses
- Officers, directors, and employees of HOAs
- Managing agents and their employees
Terms To Know
- Fidelity bond
- An insurance policy that protects an organization from losses due to theft or dishonesty by its employees.
- Homeowners' association (HOA)
- An organization made up of property owners who manage and regulate a residential subdivision.
Limits and Unknowns
- The bill's effective date was changed from July 1, 2026, to January 1, 2027.
- It is not clear how existing HOAs will transition to meet the new requirements by the new deadline.