Current Status: Pending

FindHOALaw Quick Summary:

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 amend Civil Code Section 2295 to 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.

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 amend Business & Professions Code 11500 to 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.

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 amend Business & Professions Code 11500 to 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 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 all the governing documents for the association.

This bill would amend Civil Code Section 4525 to require the owner to provide additional information to a prospective purchaser, including, among other things, a separate disclosure regarding exterior elements and units requiring imminent repairs, if the association employs an association manager or management company.

Existing law prohibits the board of a common interest development from expending reserve funds for other than specified purposes, including repair, replacement, or maintenance of, or litigation involving major components, that the association is obligated to repair, replace, or maintain, and for which the reserve fund was established, subject to certain exceptions.

This bill would amend Civil Code Section 5510 to prohibit the board from expending reserve funds for other litigation, legal services, or to threaten litigation involving any real property owner of record or relative of the real property owner of record that is a member of the homeowner’s association.

The bill would make various other related and conforming changes to Civil Code Sections 5550, 5551, 5560, and 5565 regarding reserve studies and exterior elevated elements.

**SB-1238 was amended on April 16, 2026, to remove the separate disclosure regarding exterior elevated elements and to, instead, direct the purchaser to the location on the first page of the inspector’s report. The bill was further amended to remove the prohibition of expending reserve funds for litigation purposes:

(12)If the association employs an association manager or association management company, when requested by the owner of record or prospective purchaser, the association shall separately disclose the following information:

(A)The number of exterior elements, and the number of units, requiring imminent repairs necessary to protect life that were identified in the inspection conducted pursuant to clauses (i) and (ii) of subparagraph (F) of paragraph (5) of subdivision (e) of Section 5551.

(B)The number of exterior elements, and the number of units, requiring isolated balcony maintenance and repair issues that require preventative maintenance or cosmetic wear that do not constitute critical repairs and do not require immediate attention according to the inspection report pursuant to clauses (iii) and (iv) of subparagraph (F) of paragraph (5) of subdivision (e) of Section 5551.

(13)Any balcony in the report that requires ten thousand dollars ($10,000) or more worth of repairs.

(14)If requested by the owner of record, prospective purchaser, or a residential mortgage lender in connection with an application to refinance an existing loan connected to the transfer or sale of real property, the association manager or association management company shall provide, upon request by an owner of record, a separate disclosure providing a uniform overview of the association or condominium complex in relation to the federal lending rule defining “critical repair” and shall provide information on whether:

(B) The following information, if separately requested by the purchaser:
(i) The location on the first page of the report where the following information may be found:
(I) The number of exterior elevated elements, and the number of units identified pursuant to clause (i) of subparagraph (F) of paragraph (5) of subdivision (e) of Section 5551.
(II) The number of exterior elevated elements identified pursuant to clause (ii) of subparagraph (F) of paragraph (5) of subdivision (e) of Section 5551.
(III) The number of exterior elevated elements identified pursuant to clause (iii) of subparagraph (F) of paragraph (5) of subdivision (e) of Section 5551.
(ii) Any balcony identified in the report as needing repairs that exceed ten thousand dollars ($10,000).

(b) The board shall not expend funds designated as reserve funds for any purpose other than the repair, restoration, replacement, or maintenance of, or litigation involving the repair, restoration, replacement, or maintenance of, major components that the association is obligated to repair, restore, replace, or maintain and for which the reserve fund was established.
(c) The board shall not expend funds designated as reserve funds for other litigation or legal services, or to threaten litigation involving any real property owner of record or relative of the real property owner of record that is a member of the homeowner’s association. services that are not identified in subdivision (b).

View more info on SB 1238
from the California Legislature's website