Plain English Breakdown
The official source does not provide information on enforcement mechanisms or consequences for non-compliance.
HOAs Must Have Fidelity Bonds
This bill requires homeowners' associations (HOAs) collecting assessments for common expenses 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 the HOA's officers, directors, employees, or any managing agent and their employees.
- Sets minimum coverage requirements based on reserve balances plus 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 financial losses due to theft or dishonesty by its employees.
- Homeowners' Association (HOA)
- An association of homeowners in a residential subdivision who manage and regulate the community's common areas and enforce rules.
Limits and Unknowns
- The bill does not specify what happens if an HOA fails to obtain or maintain the required fidelity bond.
- It is unclear how this legislation will be enforced or monitored by state authorities.