“An agent is one who represents another, called the principal, in dealings with third persons. Such representation is called agency.” (Civ. Code § 2295.) The Davis-Stirling Act and the Business & Professions Code contain provisions addressing persons whom provide management services to associations and common interest developments under an agency relationship:
Davis-Stirling Act: “Managing Agent”
A “managing agent” is defined under the Davis-Stirling Act as “a person who, for compensation or in expectation of compensation, exercises control over the assets of a common interest development.” (Civ. Code § 4158(a).) The term managing agent does not include a regulated financial institution or an attorney acting within the scope of the attorney’s license. (Civ. Code § 4158(b).)
Business & Professions Code: “Common Interest Development Manager”
A “common interest development manager” (“CID Manager”) is defined under the Business & Professions Code as “an individual who for compensation, or in expectation of compensation, provides or contracts to provide management or financial services, or represents himself or herself to act in the capacity of providing management or financial services to a community association.” (Bus. & Prof. Code § 11501(a).) A CID Manager also includes the following:
- A person in a partnership, a corporation, or any other business entity who advises, supervises, and directs the activity of an association. (Bus. & Prof. Code § 11501(b)(1).)
- A person operating under a fictitious business name who provides the services of a manager. (Bus. & Prof. Code § 11501(b)(2).)
“Certified” CID Manager – A CID Manager may become and be referred to as a “certified common interest development manager” upon satisfying the educational requirements set forth in Business & Professions Code Section 11502. The term “certified common interest development manager” does not include a common interest development management firm. (Bus. & Prof. Code § 11503.)
Services Performed by Managing Agent
An association’s board of directors has the authority to delegate much of its duties and responsibilities to the association’s managing agent. (See “Delegating Duties & Authority.”) The association’s managing agent often administers the bulk of the association’s day-to-day operations. The services which may be performed by a managing agent are generally categorized into “financial services” and “management services”:
Financial Services – Financial services means “acts performed or offered to be performed, for compensation, for an association, including, but not limited to, the preparation of internal unaudited financial statements, internal accounting and bookkeeping functions, billing of assessments, and related services.” (Bus. & Prof. Code § 11500(c).) A licensed CPA may provide financial services to an association within the scope of his/her license, in addition to the preparation of reviewed and audited financial statements and the preparation of the association’s tax returns. (Bus. & Prof. Code § 11501(b).)
Management Services – Management services means “acts performed or offered to be performed in an advisory capacity for an association including, but not limited to, the following”: (Bus. & Prof. Code § 11500(d).)
- Administering or supervising the collection, reporting, and archiving of the financial or common area assets of the association, at the direction of the board. (Bus. & Prof. Code § 11500(d)(1); Civ. Code § 5380; See also “Deposit of Association Funds by Manager.”)
- Implementing resolutions and directives of the board. (Bus. & Prof. Code § 11500(d)(2).)
- Implementing provisions of governing documents. (Bus. & Prof. Code § 11500(d)(3).)
- Administering association contracts, including insurance contracts, within the scope of the association’s duties or with other common interest development managers, vendors, contractors, and other third-party providers of goods and services to the association. (Bus. & Prof. Code § 11500(d)(4).)
- Business & Professions Code Section 11500. CID Manager Services.
- Business & Professions Code Section 11501. “CID Manager” Defined.
- Business & Professions Code Section 11503. Management Firm Not “CID Manager.”
- Civil Code Sections 2295-2300. Agency Relationships.
- Civil Code Section 5385. Employee not “Managing Agent”.
- Civil Code Section 5375. Prospective Managing Agent Disclosure.
- Civil Code Section 4158. “Managing Agent” Defined.
Related Case Law
- Berryman v. Merit Property Management, Inc.
(2007) 152 Cal.App.4th 1544
[Association Records; Transfer Document Fees] An association’s managing agent is permitted to earn a profit on the fees it charges for providing property transfer documents.
- Brown v. Professional Community Management, Inc.
(2005) 127 Cal.App.4th 532
[Assessments & Collection; Collection Fees] An association’s vendors are permitted to earn a profit on the fees it charges in connection with collecting delinquent assessments owed to the association.