A prospective managing agent of a common interest development shall provide a written statement to the board as soon as practicable, but in no event more than 90 days, before entering into a management agreement which shall contain all of the following information concerning the managing agent:
(a) The names and business addresses of the owners or general partners of the managing agent. If the managing agent is a corporation, the written statement shall include the names and business addresses of the directors and officers and shareholders holding greater than 10 percent of the shares of the corporation.
(b) Whether or not any relevant licenses such as architectural design, construction, engineering, real estate, or accounting have been issued by this state and are currently held by the persons specified in subdivision (a). If a license is currently held by any of those persons, the statement shall contain the following information:
(1) What license is held.
(2) The dates the license is valid.
(3) The name of the licensee appearing on that license.
(c) Whether or not any relevant professional certifications or designations such as architectural design, construction, engineering, real property management, or accounting are currently held by any of the persons specified in subdivision (a), including, but not limited to, a professional common interest development manager. If any certification or designation is held, the statement shall include the following information:
(1) What the certification or designation is and what entity issued it.
(2) The dates the certification or designation is valid.
(3) The names in which the certification or designation is held.
Related Links
AB 690 Signed! New Management Disclosures and changes to the Escrow Document Disclosure Form – Published on HOA Lawyer Blog (July, 2017)
Civil Code Section 5350. Directors and Committee Members; Prohibited Actions.
(a) Notwithstanding any other law, and regardless of whether an association is incorporated or unincorporated, the provisions of Sections 7233 and 7234 of the Corporations Code shall apply to any contract or other transaction authorized, approved, or ratified by the board or a committee of the board.
(b) A director or member of a committee shall not vote on any of the following matters:
(1) Discipline of the director or committee member.
(2) An assessment against the director or committee member for damage to the common area or facilities.
(3) A request, by the director or committee member, for a payment plan for overdue assessments.
(4) A decision whether to foreclose on a lien on the separate interest of the director or committee member.
(5) Review of a proposed physical change to the separate interest of the director or committee member.
(6) A grant of exclusive use common area to the director or committee member.
(c) Nothing in this section limits any other provision of law or the governing documents that govern a decision in which a director may have an interest.
Civil Code Section 5320. Delivery of Budget Report to Members.
(a) When a report is prepared pursuant to Section 5300 or 5310, the association shall deliver one of the following documents to all members by individual delivery pursuant to Section 4040:
(1) The full report.
(2) A summary of the report that includes, on the first page, a general description of the content of the report and instructions, printed in at least 10-point boldface type, regarding how to request a complete copy of the report at no cost to the member.
(b) Notwithstanding subdivision (a), if a member has requested to receive all reports in full, the association shall deliver the full report to that member, rather than a summary of the report.
Civil Code Section 5310. Annual Policy Statement.
(a) Within 30 to 90 days before the end of its fiscal year, the board shall distribute an annual policy statement that provides the members with information about association policies. The annual policy statement shall include all of the following information:
(1) The name and address of the person designated to receive official communications to the association, pursuant to Section 4035.
(2) A statement explaining that a member may submit a request to have notices sent to up to two different specified addresses, pursuant to Section 4040.
(3) The location, if any, designated for posting of a general notice, pursuant to Section 4045.
(4) Notice of a member’s option to receive general notices by individual delivery, pursuant to subdivision (b) of Section 4045.
(5) Notice of a member’s right to receive copies of meeting minutes, pursuant to subdivision (b) of Section 4950.
(6) The statement of assessment collection policies required by Section 5730.
(7) A statement describing the association’s policies and practices in enforcing lien rights or other legal remedies for default in the payment of assessments.
(8) A statement describing the association’s discipline policy, if any, including any schedule of penalties for violations of the governing documents pursuant to Section 5850.
(9) A summary of dispute resolution procedures, pursuant to Sections 5920 and 5965.
(10) A summary of any requirements for association approval of a physical change to property, pursuant to Section 4765.
(11) The mailing address for overnight payment of assessments, pursuant to Section 5655.
(12) Any other information that is required by law or the governing documents or that the board determines to be appropriate for inclusion.
(b) The annual policy statement shall be made available to the members pursuant to Section 5320.
Civil Code Section 5305. Review of Financial Statement.
Unless the governing documents impose more stringent standards, a review of the financial statement of the association shall be prepared in accordance with generally accepted accounting principles by a licensee of the California Board of Accountancy for any fiscal year in which the gross income to the association exceeds seventy-five thousand dollars ($75,000). A copy of the review of the financial statement shall be distributed to the members within 120 days after the close of each fiscal year, by individual delivery pursuant to Section 4040.
Civil Code Section 5300. Annual Budget Report.
(a) Notwithstanding a contrary provision in the governing documents, an association shall distribute an annual budget report 30 to 90 days before the end of its fiscal year.
(b) Unless the governing documents impose more stringent standards, the annual budget report shall include all of the following information:
(1) A pro forma operating budget, showing the estimated revenue and expenses on an accrual basis.
(2) A summary of the association’s reserves, prepared pursuant to Section 5565.
(3) A summary of the reserve funding plan adopted by the board, as specified in paragraph (5) of subdivision (b) of Section 5550. The summary shall include notice to members that the full reserve study plan is available upon request, and the association shall provide the full reserve plan to any member upon request.
(4) A statement as to whether the board has determined to defer or not undertake repairs or replacement of any major component with a remaining life of 30 years or less, including a justification for the deferral or decision not to undertake the repairs or replacement.
(5) A statement as to whether the board, consistent with the reserve funding plan adopted pursuant to Section 5560, has determined or anticipates that the levy of one or more special assessments will be required to repair, replace, or restore any major component or to provide adequate reserves therefor. If so, the statement shall also set out the estimated amount, commencement date, and duration of the assessment.
(6) A statement as to the mechanism or mechanisms by which the board will fund reserves to repair or replace major components, including assessments, borrowing, use of other assets, deferral of selected replacements or repairs, or alternative mechanisms.
(7) A general statement addressing the procedures used for the calculation and establishment of those reserves to defray the future repair, replacement, or additions to those major components that the association is obligated to maintain. The statement shall include, but need not be limited to, reserve calculations made using the formula described in paragraph (4) of subdivision (b) of Section 5570, and may not assume a rate of return on cash reserves in excess of 2 percent above the discount rate published by the Federal Reserve Bank of San Francisco at the time the calculation was made.
(8) A statement as to whether the association has any outstanding loans with an original term of more than one year, including the payee, interest rate, amount outstanding, annual payment, and when the loan is scheduled to be retired.
(9) A summary of the association’s property, general liability, earthquake, flood, and fidelity insurance policies. For each policy, the summary shall include the name of the insurer, the type of insurance, the policy limit, and the amount of the deductible, if any. To the extent that any of the required information is specified in the insurance policy declaration page, the association may meet its obligation to disclose that information by making copies of that page and distributing it with the annual budget report. The summary distributed pursuant to this paragraph shall contain, in at least 10-point boldface type, the following statement:
“This summary of the association’s policies of insurance provides only certain information, as required by Section 5300 of the Civil Code, and should not be considered a substitute for the complete policy terms and conditions contained in the actual policies of insurance. Any association member may, upon request and provision of reasonable notice, review the association’s insurance policies and, upon request and payment of reasonable duplication charges, obtain copies of those policies. Although the association maintains the policies of insurance specified in this summary, the association’s policies of insurance may not cover your property, including personal property or real property improvements to or around your dwelling, or personal injuries or other losses that occur within or around your dwelling. Even if a loss is covered, you may nevertheless be responsible for paying all or a portion of any deductible that applies. Association members should consult with their individual insurance broker or agent for appropriate additional coverage.”
(10) When the common interest development is a condominium project, a statement describing the status of the common interest development as a Federal Housing Administration (FHA)-approved condominium project pursuant to FHA guidelines, including whether the common interest development is an FHA-approved condominium project. The statement shall be in at least 10-point font on a separate piece of paper and in the following form:
“Certification by the Federal Housing Administration may provide benefits to members of an association, including an improvement in an owner’s ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.
This common interest development [is/is not (circle one)] a condominium project. The association of this common interest development [is/is not (circle one)] certified by the Federal Housing Administration.”
(11) When the common interest development is a condominium project, a statement describing the status of the common interest development as a federal Department of Veterans Affairs (VA)-approved condominium project pursuant to VA guidelines, including whether the common interest development is a VA-approved condominium project. The statement shall be in at least 10-point font on a separate piece of paper and in the following form:
Certification by the federal Department of Veterans Affairs may provide benefits to members of an association, including an improvement in an owner’s ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.
This common interest development [is/is not (circle one)] a condominium project. The association of this common interest development [is/is not (circle one)] certified by the federal Department of Veterans Affairs.
(12) A copy of the completed “Charges For Documents Provided” disclosure identified in Section 4528. For purposes of this section, “completed” means that the “Fee for Document” section of the form individually identifies the costs associated with providing each document listed on the form.
(c) The annual budget report shall be made available to the members pursuant to Section 5320.
(d) The summary of the association’s reserves disclosed pursuant to paragraph (2) of subdivision (b) shall not be admissible in evidence to show improper financial management of an association, provided that other relevant and competent evidence of the financial condition of the association is not made inadmissible by this provision.
(e) The Assessment and Reserve Funding Disclosure Summary form, prepared pursuant to Section 5570, shall accompany each annual budget report or summary of the annual budget report that is delivered pursuant to this article.
Related Links
AB 596 Signed! New FHA and VA Disclosures Required Beginning July 1, 2016 – Published on HOA Lawyer Blog, August 24, 2015.
Civil Code Section 5260. Member Requests That Must be in Writing.
To be effective, any of the following requests shall be delivered in writing to the association, pursuant to Section 4035:
(a) A request to change the member’s information in the association membership list.
(b) A request to add or remove a second email or mailing address for delivery of individual notices to the member, pursuant to Section 4040.
(c) A request for individual delivery of general notices to the member, pursuant to subdivision (b) of Section 4045, or a request to cancel a prior request for individual delivery of general notices.
(d) A request to opt out of the membership list pursuant to Section 5220, or a request to cancel a prior request to opt out of the membership list.
(e) A request to receive a full copy of a specified annual budget report or annual policy statement pursuant to Section 5320.
(f) A request to receive all reports in full, pursuant to subdivision (b) of Section 5320, or a request to cancel a prior request to receive all reports in full.
(g) A request to opt out of or opt into electronically voting by electronic secret ballot, pursuant to Section 5105.
Civil Code Section 5240. Article Supersedes Corporations Code.
(a) As applied to an association and its members, the provisions of this article are intended to supersede the provisions of Sections 8330 and 8333 of the Corporations Code to the extent those sections are inconsistent.
(b) Except as provided in subdivision (a), members of the association shall have access to association records, including accounting books and records and membership lists, in accordance with Article 3 (commencing with Section 8330) of Chapter 13 of Part 3 of Division 2 of Title 1 of the Corporations Code.
(c) The provisions of this article apply to any community service organization or similar entity that is related to the association, and to any nonprofit entity that provides services to a common interest development under a declaration of trust. This article shall operate to give a member of the organization or entity a right to inspect and copy the records of that organization or entity equivalent to that granted to association members by this article.
(d) The provisions of this article shall not apply to any common interest development in which separate interests are being offered for sale by a subdivider under the authority of a public report issued by the Department of Real Estate so long as the subdivider or all subdividers offering those separate interests for sale, or any employees of those subdividers or any other person who receives direct or indirect compensation from any of those subdividers, comprise a majority of the directors. Notwithstanding the foregoing, this article shall apply to that common interest development no later than 10 years after the close of escrow for the first sale of a separate interest to a member of the general public pursuant to the public report issued for the first phase of the development.
Civil Code Section 5235. Enforcement of Records Inspection Rights.
(a) A member may bring an action to enforce that member’s right to inspect and copy the association records. If a court finds that the association unreasonably withheld access to the association records, the court shall award the member reasonable costs and expenses, including reasonable attorney’s fees, and may assess a civil penalty of up to five hundred dollars ($500) for the denial of each separate written request.
(b) A cause of action under this section may be brought in small claims court if the amount of the demand does not exceed the jurisdiction of that court.
(c) A prevailing association may recover any costs if the court finds the action to be frivolous, unreasonable, or without foundation.
Related Links
Access to HOA Membership List Must be for a Proper Purpose – Published on HOA Lawyer Blog (April, 2017)
Civil Code Section 5230. Misuse of Association Records.
(a) The association records, and any information from them, may not be sold, used for a commercial purpose, or used for any other purpose not reasonably related to a member’s interest as a member. An association may bring an action against any person who violates this article for injunctive relief and for actual damages to the association caused by the violation.
(b) This article may not be construed to limit the right of an association to damages for misuse of information obtained from the association records pursuant to this article or to limit the right of an association to injunctive relief to stop the misuse of this information.
(c)
(1) An association or its managing agent shall not do either of the following:
(A) Sell a member’s personal information for any purpose without the consent of the member.
(B) Transmit a member’s personal information to a third party without the consent of the member unless required to do so by law, including, but not limited to, Article 5 (commencing with Section 5200).
(2) A member may bring an action against an association that violates this subdivision for injunctive relief and actual damages caused by the violation. A member shall be entitled to recover reasonable costs and expenses, including reasonable attorney’s fees, in a successful action to enforce the member’s rights under this subdivision.
(d) An association shall be entitled to recover reasonable costs and expenses, including reasonable attorney’s fees, in a successful action to enforce its rights under this article.
Related Links
Access to HOA Membership List Must be for a Proper Purpose – Published on HOA Lawyer Blog (April, 2017)