AB 690 (Quirk-Silva). Common interest developments: managers: conflicts of interest.

Competition

Would require specified disclosures regarding any conflicts of interest, referral fees or financial benefits received by a manager or management firm.

Current Status: Chaptered

FindHOALaw Quick Summary:

Existing law requires that a common interest development manager or management firm annually provide specified disclosures to the board of directors, including the manager’s name and address, whether the manager is certified, and whether the manager holds an active real estate license.  This bill would amend Business and Professions Code Section 11504 to require a prospective manager or management firm to disclose to the board of directors whether the manager receives a referral fee or other monetary benefit from a third-party provider for distributing documents pursuant to Civil Code Section 5300.

This bill would also amend Civil Code Section 5300 to require that the Annual Budget Report contain the completed Document Disclosure Form (Civ. Code § 4528), including the costs associated with providing each document listed on the form.  The bill would amend Civil Code Section 4530 to modify the Document Disclosure Form to inform the seller that he or she is not required to purchase all of the documents listed on the form and may purchase some or all of the documents, as desired.

Existing law requires a prospective managing agent to provide a written statement disclosing certain information to the board of directors no more than 90 days before entering into a management agreement. This bill would amend Civil Code Section 5375 to require that the managing agent disclose whether or not the manager or management firm receives a referral fee or monetary benefit from a third-party document provider.

This bill would add Civil Code Section 5375.5 to provide that a manager shall disclose, in writing, any potential conflict of interest when presenting a bid for service.  “Conflict of interest” is defined as a referral fee or other financial benefit that could be derived from a business or company providing products or services to the association or any ownership interests or profit-sharing arrangements with service providers recommended to, or used by, the association.

Finally, this bill would add Civil Code Section 5376 to require the manager, management company, or its third-party agent to facilitate the delivery of escrow documents and disclosures in accordance with Civil Code Section 4530, if the managing agent is contractually responsible for delivering those documents.

**UPDATE: AB 690 was signed by the Governor on July 25, 2017. Its changes to the law will become operative on January 1, 2018. 

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from the California Legislature's website