Existing law requires a managing agent, at the written request of the board of directors, to deposit funds the managing agent receives on behalf of the association into a bank, savings association, or credit union in the state if specified requirements are met.

This bill would amend Civil Code Section 5380 to require the bank, savings association, or credit union to be insured by the Federal Deposit Insurance Corporation, National Credit Union Administration Insurance Fund, or the Securities Investor Protection Corporation.

Existing law prohibits transfers of greater than $10,000 or 5% of an association’s total combined reserve and operating account deposits, whichever is lower, without written approval from the board.

This bill would amend Civil Code Sections 5380 and 5502 to instead prohibit transfers of $10,000 or greater without prior written approval from the board.

Existing law requires the association to maintain fidelity bond coverage for its directors, officers, and employees, and requires the fidelity bond coverage to also include computer fraud and funds transfer fraud and, if the association uses a managing agent or management company, coverage for dishonest acts by that person or entity and its employees.

This bill would amend Civil Code Section 5806 to specifically require the association to maintain crime insurance, employee dishonesty coverage, and fidelity bond coverage, or their equivalent, for the association and the association’s managing agent or management company and would require the protection against computer and funds transfer fraud to be in an equal amount.