Bill Full Text
Home
-
Bills
-
Bill
-
Authors
-
Dates
-
Locations
-
Analyses
-
Organizations
<?xml version="1.0" ?>
<ns0:MeasureDoc xmlns:html="http://www.w3.org/1999/xhtml" xmlns:ns0="http://lc.ca.gov/legalservices/schemas/caml.1#" xmlns:ns3="http://www.w3.org/1999/xlink" xmlns:xsi="http://www.w3.org/2001/XMLSchema-instance" version="1.0" xsi:schemaLocation="http://lc.ca.gov/legalservices/schemas/caml.1# xca.1.xsd">
<ns0:Description>
<ns0:Id>20250SB__123899INT</ns0:Id>
<ns0:VersionNum>99</ns0:VersionNum>
<ns0:History>
<ns0:Action>
<ns0:ActionText>INTRODUCED</ns0:ActionText>
<ns0:ActionDate>2026-02-19</ns0:ActionDate>
</ns0:Action>
</ns0:History>
<ns0:LegislativeInfo>
<ns0:SessionYear>2025</ns0:SessionYear>
<ns0:SessionNum>0</ns0:SessionNum>
<ns0:MeasureType>SB</ns0:MeasureType>
<ns0:MeasureNum>1238</ns0:MeasureNum>
<ns0:MeasureState>INT</ns0:MeasureState>
</ns0:LegislativeInfo>
<ns0:AuthorText authorType="LEAD_AUTHOR">Introduced by Senator Wahab</ns0:AuthorText>
<ns0:Authors>
<ns0:Legislator>
<ns0:Contribution>LEAD_AUTHOR</ns0:Contribution>
<ns0:House>SENATE</ns0:House>
<ns0:Name>Wahab</ns0:Name>
</ns0:Legislator>
</ns0:Authors>
<ns0:Title> An act to amend Sections 11500 and 11501 of the Business and Professions Code, and to amend Sections 2295, 4525, 5200, 5510, 5515, 5520, 5550, 5551, 5560, 5565, and 5570 of the Civil Code, relating to common interest developments. </ns0:Title>
<ns0:RelatingClause>common interest developments</ns0:RelatingClause>
<ns0:GeneralSubject>
<ns0:Subject>Common interest developments: management.</ns0:Subject>
</ns0:GeneralSubject>
<ns0:DigestText>
<html:p>
(1)
<html:span class="EnSpace"/>
Existing law, the Davis-Stirling Common Interest Development Act (act), provides for the creation and regulation of common interest developments.
</html:p>
<html:p>Existing civil law defines an agent as one who represents another, called the principal, in dealings with third persons.</html:p>
<html:p>This bill would 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.</html:p>
<html:p>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. </html:p>
<html:p>This bill would 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, as prescribed. </html:p>
<html:p>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.</html:p>
<html:p>This bill would 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. </html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>This bill would 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. </html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>This bill would 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 these provisions.</html:p>
</ns0:DigestText>
<ns0:DigestKey>
<ns0:VoteRequired>MAJORITY</ns0:VoteRequired>
<ns0:Appropriation>NO</ns0:Appropriation>
<ns0:FiscalCommittee>NO</ns0:FiscalCommittee>
<ns0:LocalProgram>NO</ns0:LocalProgram>
</ns0:DigestKey>
<ns0:MeasureIndicators>
<ns0:ImmediateEffect>NO</ns0:ImmediateEffect>
<ns0:ImmediateEffectFlags>
<ns0:Urgency>NO</ns0:Urgency>
<ns0:TaxLevy>NO</ns0:TaxLevy>
<ns0:Election>NO</ns0:Election>
<ns0:UsualCurrentExpenses>NO</ns0:UsualCurrentExpenses>
<ns0:BudgetBill>NO</ns0:BudgetBill>
<ns0:Prop25TrailerBill>NO</ns0:Prop25TrailerBill>
</ns0:ImmediateEffectFlags>
</ns0:MeasureIndicators>
</ns0:Description>
<ns0:Bill id="bill">
<ns0:Preamble>The people of the State of California do enact as follows:</ns0:Preamble>
<ns0:BillSection id="id_DE7BC918-D18E-4B52-85DF-497F03D787BD">
<ns0:Num>SECTION 1.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:BPC:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'11500.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 11500 of the
<ns0:DocName>Business and Professions Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_256EBA3D-4A78-4335-AC59-1089971C0AA9">
<ns0:Num>11500.</ns0:Num>
<ns0:LawSectionVersion id="id_E247BB14-D580-4CD3-AC4B-13CCE6204123">
<ns0:Content>
<html:p>For purposes of this chapter, the following definitions apply:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
“Common interest development” means a residential development identified in Section 4100 of the Civil Code.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
“Association” has the same meaning as defined in Section 4080 of the Civil Code.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
“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.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
“Management services” means acts performed
or offered to be performed by an agent, as defined in Section 2295 of the Civil Code,
in an advisory capacity for an association including, but not limited to, the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Administering or supervising the collection, reporting, and archiving of the financial or common area assets of an association or common interest development, at the direction of the association’s board of directors.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Implementing resolutions and directives of the board of directors of the association elected to oversee the operation of a common interest development.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Implementing provisions of governing documents, as defined in Section 4150 of the Civil Code, that govern the operation of the common interest development.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
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 an association or common interest development.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
“Professional association for common interest development managers” means an organization that employs an agent or agents, as defined in Section 2295 of the Civil Code, and that meets all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Has at least 200 members or certificants who are common interest development managers in California.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Has been in existence for at least five years.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Operates pursuant to Section 501(c) of the Internal Revenue Code.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Certifies that a common interest development manager has met the criteria set forth in Section 11502 without requiring membership in the association.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Requires adherence to a code of professional ethics and standards of practice for certified common interest development managers.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_D82C11BF-210C-4BB5-A0CF-62F7657B9506">
<ns0:Num>SEC. 2.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:BPC:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'11501.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 11501 of the
<ns0:DocName>Business and Professions Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_68891631-B4C6-4878-A237-49533F386233">
<ns0:Num>11501.</ns0:Num>
<ns0:LawSectionVersion id="id_9F9DF813-73D9-4787-BCD9-917ECDC6DCAA">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
“Common interest development manager” means an individual who for compensation, or in expectation of compensation, provides or contracts to provide management or financial services, as defined in Section 11500, or represents themself to act in the capacity of providing management or financial services to an association. Notwithstanding any other provision of law, an individual may not be required to obtain a real estate or broker’s license in order to perform the services of a common interest development manager
to an association.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
“Common interest development manager” also means any of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
An individual who is a partner in a partnership, a shareholder or officer in a corporation, or who, in any other business entity acts in a capacity to advise, supervise, and direct the activity of a registrant or provisional registrant, or who acts as a principal on behalf of a company that provides the services of a common interest development manager.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
An individual operating under a fictitious business name who provides the services of a common interest development manager.
</html:p>
<html:p>This section may not be construed to require an association to hire for compensation a common interest development manager, unless required to do so by its governing documents. Nothing in this part
shall be construed to supersede any law that requires a license, permit, or any other form of registration, to provide management or financial services. Nothing in this section shall preclude a licensee of the California Board of Accountancy from providing financial services to an association within the scope of their license in addition to the preparation of reviewed and audited financial statements and the preparation of the association’s tax returns.</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_5D4BDB49-DB87-4397-8EFB-B96322619E4C">
<ns0:Num>SEC. 3.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:CIV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'3.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'TITLE'%20and%20caml%3ANum%3D'9.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'1.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'2295.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 2295 of the
<ns0:DocName>Civil Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_AAA1CFF7-4D63-4796-8213-7D238AADDD2E">
<ns0:Num>2295.</ns0:Num>
<ns0:LawSectionVersion id="id_92C3F18D-F7F8-4310-8FF3-EBD0390345CB">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
An agent is one who represents another, called the principal, in dealings with third persons. This representation is called agency.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
An agent includes any person or company that facilitates activities pursuant to Sections 5300, 5310, and 5500, and that is required to provide a fiduciary duty to the board of a homeowner’s association and its members.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_FBAC76B8-A15D-4C5C-98CD-382C05D912D0">
<ns0:Num>SEC. 4.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:CIV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'4525.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 4525 of the
<ns0:DocName>Civil Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_4DE71145-32F2-4927-B11C-D7B6A76030CE">
<ns0:Num>4525.</ns0:Num>
<ns0:LawSectionVersion id="id_9401D134-5094-41FE-BC6E-1911EAFCFE48">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The owner of a separate interest shall provide the following documents to a prospective purchaser of the separate interest, as soon as practicable before the transfer of title or the execution of a real property sales contract, as defined in Section 2985:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
A copy of all governing documents. If the association is not incorporated, this shall include a statement in writing from an authorized representative of the association that the association is not incorporated.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
If there is a restriction in the governing documents limiting the occupancy, residency, or use of a separate interest on the basis of age in a manner different from that provided in Section 51.3, a statement that the restriction is
only enforceable to the extent permitted by Section 51.3 and a statement specifying the applicable provisions of Section 51.3.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
A copy of the most recent documents distributed pursuant to Article 7 (commencing with Section 5300) of Chapter 6.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
A true statement in writing obtained from an authorized representative of the association as to the amount of the association’s current regular and special assessments and fees, any assessments levied upon the owner’s interest in the common interest development that are unpaid on the date of the statement, and any monetary fines or penalties levied upon the owner’s interest and unpaid on the date of the statement. The statement obtained from an authorized representative shall also include true information on late charges, interest, and costs of collection which, as of the date of the statement, are or may be made a lien upon the
owner’s interest in a common interest development pursuant to Article 2 (commencing with Section 5650) of Chapter 8.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
A copy or a summary of any notice previously sent to the owner pursuant to Section 5855 that sets forth any alleged violation of the governing documents that remains unresolved at the time of the request. The notice shall not be deemed a waiver of the association’s right to enforce the governing documents against the owner or the prospective purchaser of the separate interest with respect to any violation. This paragraph shall not be construed to require an association to inspect an owner’s separate interest.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
A copy of the initial list of defects provided to each member pursuant to Section 6000, unless the association and the builder subsequently enter into a settlement agreement or otherwise resolve the matter and the association complies with Section 6100.
Disclosure of the initial list of defects pursuant to this paragraph does not waive any privilege attached to the document. The initial list of defects shall also include a statement that a final determination as to whether the list of defects is accurate and complete has not been made.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
A copy of the latest information provided for in Section 6100.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
Any change in the association’s current regular and special assessments and fees which have been approved by the board, but have not become due and payable as of the date disclosure is provided pursuant to this subdivision.
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
If there is a provision in the governing documents that prohibits the rental or leasing of any of the separate interests in the common interest development to a renter, lessee, or tenant, a statement describing the prohibition.
</html:p>
<html:p>
(10)
<html:span class="EnSpace"/>
If requested by the prospective purchaser, a copy of the minutes of board meetings, excluding meetings held in executive session, conducted over the previous 12 months, that were approved by the board.
</html:p>
<html:p>
(11)
<html:span class="EnSpace"/>
A copy of the report issued pursuant to the most recent inspection conducted pursuant to Section 5551.
</html:p>
<html:p>
(12)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(13)
<html:span class="EnSpace"/>
Any balcony in the report that requires ten thousand dollars ($10,000) or more worth of repairs.
</html:p>
<html:p>
(14)
<html:span class="EnSpace"/>
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:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The covenants, codes, and restrictions require a unit owner, with the exclusive right to use the exterior element, to individually maintain exterior elevated elements.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The association reserve study includes a minimum annual budgeted replacement reserve allocation of 10 percent for repairs of the exterior structures.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The association reserve study has been updated to include identified repairs contained within the balcony inspection report.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
This section does not apply to an owner that is subject to Section 11018.6 of the Business and Professions Code.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_9B07197D-113F-4A92-8758-976F88AD593F">
<ns0:Num>SEC. 5.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:CIV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'6.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'5200.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 5200 of the
<ns0:DocName>Civil Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_CBF9F06B-E87A-4114-8FEC-BF636E6C5F01">
<ns0:Num>5200.</ns0:Num>
<ns0:LawSectionVersion id="id_EDF5FAAF-01EF-49F8-A1DF-80AF656A2BD2">
<ns0:Content>
<html:p>For the purposes of this article, the following definitions shall apply:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
“Association records” means all of the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Any financial document required to be provided to a member in Article 7 (commencing with Section 5300) or in Sections 5565 and 5810.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Any financial document or statement required to be provided in Article 2 (commencing with Section 4525) of Chapter 4.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
Interim financial statements, periodic or as compiled, containing any of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
Balance sheet.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
Income and expense statement.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
Budget comparison.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
General ledger. A “general ledger” is a report that shows all transactions that occurred in an association account over a specified period of time.
</html:p>
<html:p>The records described in this paragraph shall be prepared in accordance with an accrual or modified accrual basis of accounting.</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Executed contracts not otherwise privileged under law.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
Written board approval of vendor or contractor proposals or invoices.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
State and federal tax returns.
</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
Reserve
study pursuant to Section 5550, reserve account balances, and records of payments made from reserve accounts.
</html:p>
<html:p>
(8)
<html:span class="EnSpace"/>
Agendas and minutes of meetings of the members, the board, and any committees appointed by the board pursuant to Section 7212 of the Corporations Code; excluding, however, minutes and other information from executive sessions of the board as described in Article 2 (commencing with Section 4900).
</html:p>
<html:p>
(9)
<html:span class="EnSpace"/>
Membership lists, including name, property address, mailing address, email address, as collected by the association in accordance with Section 4041 where applicable, but not including information for members who have opted out pursuant to
Section 5220.
</html:p>
<html:p>
(10)
<html:span class="EnSpace"/>
Check registers.
</html:p>
<html:p>
(11)
<html:span class="EnSpace"/>
The governing documents.
</html:p>
<html:p>
(12)
<html:span class="EnSpace"/>
An accounting prepared pursuant to subdivision (b) of Section 5520.
</html:p>
<html:p>
(13)
<html:span class="EnSpace"/>
An “enhanced association record” as defined in subdivision (b).
</html:p>
<html:p>
(14)
<html:span class="EnSpace"/>
“Association election materials” as defined in subdivision (c).
</html:p>
<html:p>
(15)
<html:span class="EnSpace"/>
All inspector’s reports compiled pursuant to Section 5551.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
“Enhanced association records” means invoices, receipts, and canceled checks for payments made by the association, purchase orders approved by the association, bank account statements for bank accounts in which assessments
are deposited or withdrawn, credit card statements for credit cards issued in the name of the association, statements for services rendered, and reimbursement requests submitted to the association.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
“Association election materials” means returned ballots, signed voter envelopes, the voter list of names, parcel numbers, and voters to whom ballots were to be sent, proxies, the candidate registration list, and the tally sheet of votes cast by electronic secret ballot. Signed voter envelopes may be inspected but may not be copied. An association shall maintain association election materials for one year after the date of the election.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_188BC269-CFA2-4287-984B-AA6E7BB62624">
<ns0:Num>SEC. 6.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:CIV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'7.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'5510.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 5510 of the
<ns0:DocName>Civil Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_09BBA2A7-38CD-42AB-8A8B-E227479CC39C">
<ns0:Num>5510.</ns0:Num>
<ns0:LawSectionVersion id="id_9E7CBFE8-3E49-4C98-81F6-77F6D7226784">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The signatures of at least two persons, who shall be directors, or one officer who is not a director and one who is a director, shall be required for the withdrawal of moneys from the association’s reserve accounts.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
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.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
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.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_BB409590-DBA8-453E-89F7-39184D1C645C">
<ns0:Num>SEC. 7.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:CIV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'7.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'5515.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 5515 of the
<ns0:DocName>Civil Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_86295D6C-4790-4D88-A23B-44B07DB6121A">
<ns0:Num>5515.</ns0:Num>
<ns0:LawSectionVersion id="id_CB02963D-BCBC-4B11-B0E8-BD399A4D60F5">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
Notwithstanding Section 5510, the board may authorize the temporary transfer of moneys from a reserve fund to the association’s general operating fund to meet short-term cashflow requirements or other expenses, if the board has provided notice of the intent to consider the transfer in a board meeting notice provided pursuant to Section 4920.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The notice shall include the reasons the transfer is needed, some of the options for repayment, and whether a special assessment may be considered.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
If the board authorizes the transfer, the board shall issue a written finding, recorded in the board’s minutes, explaining the reasons that the transfer is needed, and describing when and how the moneys will
be repaid to the reserve fund.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The transferred funds shall be restored to the reserve fund within one year of the date of the initial transfer, except that the board may, after giving the same notice required for considering a transfer, and, upon making a finding supported by documentation that a temporary delay would be in the best interests of the common interest development, temporarily delay the restoration.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
The board shall exercise prudent fiscal management in maintaining the integrity of the reserve account, and shall, if necessary, levy a special assessment to recover the full amount of the expended funds within the time limits required by this section. This special assessment is subject to the limitation imposed by Section 5605. The board may, at its discretion, extend the date the payment on the special assessment is due. Any extension shall not prevent the board
from pursuing any legal remedy to enforce the collection of an unpaid special assessment.
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The board shall not transfer funds from the association’s reserve account to fund 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, in accordance with subdivisions (b) and (c) of Section 5510.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_E32F5547-4EBB-4D77-A18B-13474DAF25AF">
<ns0:Num>SEC. 8.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:CIV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'7.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'2.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'5520.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 5520 of the
<ns0:DocName>Civil Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_3EAA591E-6961-4B55-8E75-6BD03C45AD94">
<ns0:Num>5520.</ns0:Num>
<ns0:LawSectionVersion id="id_F593FA47-5D44-4CA4-BCF4-79B4D3A8191B">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
When the decision is made to use reserve funds or to temporarily transfer moneys from the reserve fund to pay for litigation pursuant to subdivision (b) of Section 5510, the association shall provide general notice pursuant to Section 4045 of that decision, and of the availability of an accounting of those expenses.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The board shall not transfer moneys from the reserve fund to pay 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, in accordance with subdivisions (b) and (c) of Section 5510.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Unless the governing documents impose more stringent standards, the association shall make an accounting of expenses related to the litigation on at least a quarterly basis. The accounting shall be made available for inspection by members of the association at the association’s office.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_DF35C22F-FAF6-4C12-9D1A-6BCAD9C15096">
<ns0:Num>SEC. 9.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:CIV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'7.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'3.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'5550.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 5550 of the
<ns0:DocName>Civil Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_E15045C4-BD0A-46A5-BF33-DD01FDA06326">
<ns0:Num>5550.</ns0:Num>
<ns0:LawSectionVersion id="id_648A2318-E701-402E-BF73-77A0A7D0FFD9">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
In addition to the inspection mandated pursuant to Section 5551 every nine years, the board shall cause to be conducted a reasonably competent and diligent visual inspection once every three years of the accessible areas of the major components that the association is obligated to repair, replace, restore, or maintain to ensure occupant safety as part of a study of the reserve account
requirements of the common interest development, if the current replacement value of the major components is equal to or greater than one-half of the gross budget of the association, excluding the association’s reserve account for that period. The board shall review this study, or cause it to be reviewed, annually and shall consider and implement necessary adjustments to the board’s analysis of the reserve account requirements as a result of that review to ensure the maintenance of components under the association’s control.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The study required by this section shall at a minimum include:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
Identification of the major components that the association is obligated to repair,
replace, restore, or
maintain, including those identified pursuant to Section 5551, that, as of the date of the study, have a remaining useful life of less than 30 years.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Identification of the probable remaining useful life of the components identified in paragraph (1) as of the date of the study.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
An estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in paragraph (1).
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
An estimate of the total annual contribution necessary to defray the cost to repair, replace, restore, or maintain the components identified in paragraph (1) during and at the end of their useful life, after subtracting total reserve funds as of the date of the study.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
A reserve funding plan that indicates
how the association plans to fund the contribution identified in paragraph (4) to meet the association’s obligation for the repair and replacement of all major components with an expected remaining life of 30 years or less, not including those components that the board has determined will not be replaced or repaired.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
For purposes of this section, “major components” includes associated waterproofing systems, exterior elevated elements and load-bearing components defined and inspected pursuant to Section 5551, and gas, water, and electrical service to the extent that the association is responsible for repair or replacement of those lines pursuant to Section 4775.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_BE1016FA-EC7C-4DAA-B88F-D793D13A09BD">
<ns0:Num>SEC. 10.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:CIV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'7.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'3.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'5551.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 5551 of the
<ns0:DocName>Civil Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_DA716FA0-D753-4195-AE9A-9BBE388F933E">
<ns0:Num>5551.</ns0:Num>
<ns0:LawSectionVersion id="id_8A0A030F-AD16-410D-BD01-E8E7E1865F36">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
For purposes of this section, the following definitions apply:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Associated waterproofing systems” include flashings, membranes, coatings, and sealants that protect the load-bearing components of exterior elevated elements from exposure to water.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Exterior elevated elements” mean the load-bearing components together with their associated waterproofing system.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
“Load-bearing components” means those components that extend beyond the exterior walls of the building to deliver structural loads to the building from decks, balconies, stairways, walkways, and their railings, that have a walking surface elevated more than six feet
above ground level, that are designed for human occupancy or use, and that are supported in whole or in substantial part by wood or wood-based products.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
“Statistically significant sample” means a sufficient number of units inspected to provide 95 percent confidence that the results from the sample are reflective of the whole, with a margin of error of no greater than plus or minus 5 percent.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
“Visual inspection” means inspection through the least intrusive method necessary to inspect load-bearing components, including visual observation only or visual observation in conjunction with, for example, the use of moisture meters, borescopes, or infrared technology.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
At least once every nine years, the board of an association of a condominium project shall cause a reasonably competent and
diligent visual inspection to be conducted by a licensed structural or civil engineer or architect of a random and statistically significant sample of exterior elevated elements for which the association has maintenance or repair responsibility.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The inspection shall determine whether the exterior elevated elements are in a generally safe condition and performing in accordance with applicable standards.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
Prior to conducting the first visual inspection, the inspector shall generate a random list of the locations of each type of exterior elevated element. The list shall include all exterior elevated elements for which the association has maintenance or repair responsibility. The list shall be provided to the association for future use.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The inspector shall perform the visual inspections in accordance with the
random list generated pursuant to subdivision (c). If during the visual inspection the inspector observes building conditions indicating that unintended water or water vapor has passed into the associated waterproofing system, thereby creating the potential for damage to the load-bearing components, then the inspector may conduct a further inspection. The inspector shall exercise their best professional judgment in determining the necessity, scope, and breadth of any further inspection.
</html:p>
<html:p>
(e)
<html:span class="EnSpace"/>
Based upon the inspector’s visual inspections, further inspection, and construction and materials expertise, the inspector shall issue a written report containing the following:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The identification of the building components comprising the load-bearing components and associated waterproofing system.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The current physical
condition of the load-bearing components and associated waterproofing system, including whether the condition presents an immediate threat to the health and safety of the residents.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The expected future performance and remaining useful life of the load-bearing components and associated waterproofing system.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
Recommendations for any necessary repair or replacement of the load-bearing components and associated waterproofing system.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
On the first page of the report, all of the following:
</html:p>
<html:p>
(A)
<html:span class="EnSpace"/>
The date of inspection.
</html:p>
<html:p>
(B)
<html:span class="EnSpace"/>
The total number of units in the condominium project.
</html:p>
<html:p>
(C)
<html:span class="EnSpace"/>
The total number of units in the condominium
project with exterior elevated elements.
</html:p>
<html:p>
(D)
<html:span class="EnSpace"/>
The total number of exterior elevated elements in the condominium project.
</html:p>
<html:p>
(E)
<html:span class="EnSpace"/>
The total number of exterior elevated elements inspected pursuant to subdivision (b).
</html:p>
<html:p>
(F)
<html:span class="EnSpace"/>
As of the date of inspection in subparagraph (A), the total number of inspected exterior elevated elements identified in the inspector’s written report and the number of units impacted in each of the following repair urgency categories:
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The total number of inspected exterior elevated elements identified as posing an immediate threat to the safety of the occupants, pursuant to subdivision (g), and the number of units impacted.
</html:p>
<html:p>
(ii)
<html:span class="EnSpace"/>
Exterior elevated elements requiring repair within the first year, or 365 days, following the inspection.
</html:p>
<html:p>
(iii)
<html:span class="EnSpace"/>
Exterior elevated elements requiring repair more than one year but fewer than four years following the inspection years but fewer than nine years following the inspection.
</html:p>
<html:p>
(iv)
<html:span class="EnSpace"/>
Exterior elevated elements demonstrating no need for repair at the time of inspection.
</html:p>
<html:p>
(G)
<html:span class="EnSpace"/>
A
certification that the inspector has conducted a visual inspection and evaluated a statistically significant sample of the exterior elevated elements within the condominium project, as required by subdivision (b).
</html:p>
<html:p>
(f)
<html:span class="EnSpace"/>
The report issued pursuant to subdivision (e) shall be stamped or signed by the inspector, presented to the board, and incorporated into the study required by Section 5550.
</html:p>
<html:p>
(g)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
If, after inspection of any exterior elevated element, the inspector advises that the exterior elevated element poses an immediate threat to the safety of the occupants, the inspector shall provide a copy of the inspection report to the association immediately upon completion of the report, and to the local code enforcement agency within 15 days of completion of the report. Upon receiving the report, the association shall take preventive measures immediately,
including preventing occupant access to the exterior elevated element until repairs have been inspected and approved by the local enforcement agency.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
Local enforcement agencies shall have the ability to recover enforcement costs associated with the requirements of this section from the association.
</html:p>
<html:p>
(h)
<html:span class="EnSpace"/>
Each subsequent visual inspection conducted under this section shall commence with the next exterior elevated element identified on the random list and shall proceed in order through the list.
</html:p>
<html:p>
(i)
<html:span class="EnSpace"/>
The first inspection shall be completed by January 1, 2025, and then every nine years thereafter in coordination with the reserve study inspection pursuant to Section 5550. All written reports shall be maintained for two inspection cycles as records of the association.
</html:p>
<html:p>
(j)
<html:span class="EnSpace"/>
(1)
<html:span class="EnSpace"/>
The association shall be responsible for complying with the requirements of this section.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The continued and ongoing maintenance and repair of the load-bearing components and associated waterproofing systems in a safe, functional, and sanitary condition shall be the responsibility of the association as required by the association’s governing documents.
</html:p>
<html:p>
(k)
<html:span class="EnSpace"/>
The inspection of buildings for which a building permit application has been submitted on or after January 1, 2020, shall occur no later than six years following the issuance of a certificate of occupancy. The inspection shall otherwise comply with the provisions of this section.
</html:p>
<html:p>
(l)
<html:span class="EnSpace"/>
This section shall only apply to buildings containing three or more attached multifamily dwelling units.
</html:p>
<html:p>
(m)
<html:span class="EnSpace"/>
The association board may enact rules or bylaws imposing requirements greater than those imposed by this section.
</html:p>
<html:p>
(n)
<html:span class="EnSpace"/>
A local government or local enforcement agency may enact an ordinance or other rule imposing requirements greater than those imposed by this section.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_DAF4BFD2-2873-426C-AA95-F65DF92922CE">
<ns0:Num>SEC. 11.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:CIV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'7.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'3.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'5560.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 5560 of the
<ns0:DocName>Civil Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_7260FCA1-2C5D-403B-AAF2-B82A2798EA45">
<ns0:Num>5560.</ns0:Num>
<ns0:LawSectionVersion id="id_9CD404CA-7C61-4BCD-9149-3B8BEC965A1D">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The reserve funding plan required by Section 5550 shall include a schedule of the date and amount of any change in regular or special assessments that would be needed to sufficiently fund the reserve funding plan.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
The plan shall be adopted by the board at an open meeting before the membership of the association as described in Article 2 (commencing with Section 4900) of Chapter 6.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The plan shall include repairs identified in the inspection required pursuant to Section 5551.
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
If the board determines that an assessment increase is necessary to fund the reserve funding plan, any increase shall be approved in a separate action of the board that is consistent with the procedure described in Section 5605.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_CF600BE1-F925-48FF-BF1B-B3E8D337F40B">
<ns0:Num>SEC. 12.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:CIV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'7.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'3.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'5565.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 5565 of the
<ns0:DocName>Civil Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_AA8E50FF-30A0-4062-A91C-AAAB00E2A877">
<ns0:Num>5565.</ns0:Num>
<ns0:LawSectionVersion id="id_B972FEE8-5E29-43AE-97D9-EB0C4F9812C4">
<ns0:Content>
<html:p>The summary of the association’s reserves required by paragraph (2) of subdivision (b) of Section 5300 shall be based on the most recent review or study conducted pursuant to Section 5550, shall be based only on assets held in cash or cash equivalents, shall be printed in boldface type, and shall include all of the following:</html:p>
<html:p>
(a)
<html:span class="EnSpace"/>
The current estimated replacement cost, estimated remaining life, and estimated useful life of each major component and shall include repairs identified in the inspection required pursuant to Section 5551.
</html:p>
<html:p>
(b)
<html:span class="EnSpace"/>
As of the end of the fiscal year for which the study is prepared:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
The current estimate of the amount of cash reserves necessary to repair, replace, restore, or maintain the major components.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
The current amount of accumulated cash reserves actually set aside to repair, replace, restore, or maintain major components.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
If applicable, the amount of funds received from either a compensatory damage award or settlement to an association from any person for injuries to property, real or personal, arising out of any construction or design defects, and the expenditure or disposition of funds, including the amounts expended for the direct and indirect costs of repair of construction or design defects. These amounts shall be reported at the end of the fiscal year for which the study is prepared as
separate line items under cash reserves pursuant to paragraph (2). Instead of complying with the requirements set forth in this paragraph, an association that is obligated to issue a review of its financial statement pursuant to Section 5305 may include in the review a statement containing all of the information required by this paragraph.
</html:p>
<html:p>
(c)
<html:span class="EnSpace"/>
The percentage that the amount determined for purposes of paragraph (2) of subdivision (b) equals the amount determined for purposes of paragraph (1) of subdivision (b).
</html:p>
<html:p>
(d)
<html:span class="EnSpace"/>
The current deficiency in reserve funding expressed on a per unit basis. The figure shall be calculated by subtracting the amount determined for purposes of paragraph (2) of subdivision (b) from the amount determined for purposes of paragraph (1) of subdivision (b) and then dividing the result by the number of separate interests within the association, except that if
assessments vary by the size or type of ownership interest, then the association shall calculate the current deficiency in a manner that reflects the variation.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
<ns0:BillSection id="id_E70B069C-E5D0-42F4-AF09-41294AD0D999">
<ns0:Num>SEC. 13.</ns0:Num>
<ns0:ActionLine action="IS_AMENDED" ns3:href="urn:caml:codes:CIV:caml#xpointer(%2Fcaml%3ALawDoc%2Fcaml%3ACode%2Fcaml%3ALawHeading%5B%40type%3D'DIVISION'%20and%20caml%3ANum%3D'4.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'PART'%20and%20caml%3ANum%3D'5.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'CHAPTER'%20and%20caml%3ANum%3D'7.'%5D%2Fcaml%3ALawHeading%5B%40type%3D'ARTICLE'%20and%20caml%3ANum%3D'3.'%5D%2Fcaml%3ALawSection%5Bcaml%3ANum%3D'5570.'%5D)" ns3:label="fractionType: LAW_SECTION" ns3:type="locator">
Section 5570 of the
<ns0:DocName>Civil Code</ns0:DocName>
is amended to read:
</ns0:ActionLine>
<ns0:Fragment>
<ns0:LawSection id="id_30C69960-344E-40A3-83EC-3A15925D4350">
<ns0:Num>5570.</ns0:Num>
<ns0:LawSectionVersion id="id_FDB60046-4EC8-4D1F-9B8F-06A276DB7E55">
<ns0:Content>
<html:p>
(a)
<html:span class="EnSpace"/>
The disclosures required by this article with regard to an association or a property shall be summarized on the following form:
</html:p>
<html:p>
<html:br/>
<html:h1>Assessment and Reserve Funding Disclosure Summary For the Fiscal Year Ending _____</html:h1>
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
<html:span class="ThinSpace"/>
The regular assessment per ownership interest is $_____ per ____. Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be found on page _____ of the attached summary.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
<html:span class="ThinSpace"/>
Additional regular or special assessments that have already been scheduled to be imposed or charged, regardless of the purpose, if they have
been approved by the board and/or members:
</html:p>
<html:table frame="box" id="id_CAFD8F34-0BBD-4455-8B20-AB4AD989E674" rules="all">
<html:colgroup>
<html:col width="130.0"/>
<html:col width="138.0"/>
<html:col width="146.0"/>
</html:colgroup>
<html:tbody>
<html:tr style="page-break-before: avoid; page-break-inside: avoid; page-break-after: avoid;">
<html:td valign="bottom">
<html:p class="HeaderCentered" style="font-size:9pt; text-align:center; text-indent:0pt;">
Date assessment will be due:
<html:br/>
<html:br/>
</html:p>
</html:td>
<html:td valign="bottom">
<html:p class="HeaderCentered" style="font-size:9pt; text-align:center; text-indent:0pt; hyphenation: yes;">
Amount per ownership interest per month or year (If assessments are variable, see note
<html:br/>
immediately below):
</html:p>
</html:td>
<html:td valign="bottom">
<html:p class="HeaderCentered" style="font-size:9pt; text-align:center; text-indent:0pt;">
Purpose of the assessment:
<html:br/>
<html:br/>
<html:br/>
</html:p>
</html:td>
</html:tr>
<html:tr style="page-break-before: avoid; page-break-inside: avoid; page-break-after: avoid;">
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
</html:tr>
<html:tr style="page-break-before: avoid; page-break-inside: avoid; page-break-after: avoid;">
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
</html:tr>
<html:tr style="page-break-before: avoid; page-break-inside: avoid; page-break-after: avoid;">
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
</html:tr>
<html:tr style="page-break-before: avoid; page-break-inside: avoid; page-break-after: avoid;">
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">Total:</html:p>
</html:td>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
</html:tr>
</html:tbody>
</html:table>
<html:p>Note: If assessments vary by the size or type of ownership interest, the assessment applicable to this ownership interest may be found on page ____ of the attached
report.</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
<html:span class="ThinSpace"/>
Based upon the most recent reserve study and other information available to the board of directors, will currently projected reserve account balances be sufficient at the end of each year to meet the association’s obligation for repair and/or replacement of major components during the next 30 years?
</html:p>
<html:p>
Yes _____
<html:span class="EmSpace"/>
<html:span class="EmSpace"/>
<html:span class="EmSpace"/>
No _____
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
<html:span class="ThinSpace"/>
If the answer to (3) is no, what additional assessments or other contributions to reserves would be necessary to ensure that sufficient reserve funds will be available each year during the next 30 years that have not yet been approved by the board or the members?
</html:p>
<html:table frame="box" id="id_55B7D3E0-FCBF-4183-82DA-51D762DF6C48" rules="all">
<html:colgroup>
<html:col width="162.0"/>
<html:col width="106.0"/>
</html:colgroup>
<html:tbody>
<html:tr>
<html:td valign="bottom">
<html:p class="HeaderCentered" style="font-size:9pt; text-align:center; text-indent:0pt; hyphenation: yes;">
Approximate date assessment
<html:br/>
will be due:
</html:p>
</html:td>
<html:td valign="bottom">
<html:p class="HeaderCentered" style="font-size:9pt; text-align:center; text-indent:0pt;">
Amount per ownership interest
<html:br/>
per month or year:
</html:p>
</html:td>
</html:tr>
<html:tr>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
</html:tr>
<html:tr>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
</html:tr>
<html:tr>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
</html:tr>
<html:tr>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
</html:tr>
<html:tr>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">
<html:span class="SpacedLeaders"/>
</html:p>
</html:td>
<html:td>
<html:p class="Left10Point" style="font-size:10pt; text-align:left; ; text-indent:0pt;">Total:</html:p>
</html:td>
</html:tr>
</html:tbody>
</html:table>
<html:p>
(5)
<html:span class="EnSpace"/>
All major components are included in the reserve study and are included in its calculations.
</html:p>
<html:p>
(6)
<html:span class="EnSpace"/>
Based on the method of calculation in paragraph (4) of subdivision (b) of Section 5570, the estimated amount required in
the reserve fund at the end of the current fiscal year is $____, based in whole or in part on the last reserve study or update prepared by ____ as of ____ (month), ____ (year). The projected reserve fund cash balance at the end of the current fiscal year is $____, resulting in reserves being ____ percent funded at this date.
</html:p>
<html:p>If an alternate, but generally accepted, method of calculation is also used, the required reserve amount is $____. (See attached explanation)</html:p>
<html:p>
(7)
<html:span class="EnSpace"/>
Based on the method of calculation in paragraph (4) of subdivision (b) of Section 5570 of the Civil Code, the estimated amount required in the reserve fund at the end of each of the next five budget years is $______, and the projected reserve fund cash balance in each of those years, taking into account only assessments already approved and other known revenues, is $______, leaving the reserve at ______ percent funded. If the reserve
funding plan approved by the association is implemented, the projected reserve fund cash balance in each of those years will be $______, leaving the reserve at ______ percent funded.
</html:p>
<html:br/>
<html:p>Note: The financial representations set forth in this summary are based on the best estimates of the preparer at that time. The estimates are subject to change. At the time this summary was prepared, the assumed long-term before-tax interest rate earned on reserve funds was ____ percent per year, and the assumed long-term inflation rate to be applied to major component repair and replacement costs was ____ percent per year.</html:p>
<html:br/>
<html:p>
(b)
<html:span class="EnSpace"/>
For the purposes of preparing a summary pursuant to this section:
</html:p>
<html:p>
(1)
<html:span class="EnSpace"/>
“Estimated remaining useful life” means the time reasonably calculated to remain
before a major component will require replacement.
</html:p>
<html:p>
(2)
<html:span class="EnSpace"/>
“Major component” has the meaning used in Section 5550. Components with an estimated remaining useful life of more than 30 years may be included in a study as a capital asset or disregarded from the reserve calculation, so long as the decision is revealed in the reserve study report and reported in the Assessment and Reserve Funding Disclosure Summary.
</html:p>
<html:p>
(3)
<html:span class="EnSpace"/>
The form set out in subdivision (a) shall accompany each annual budget report or summary thereof that is delivered pursuant to Section 5300. The form may be supplemented or modified to clarify the information delivered, so long as the minimum information set out in subdivision (a) is provided.
</html:p>
<html:p>
(4)
<html:span class="EnSpace"/>
For the purpose of the report and summary, the amount of reserves needed to be accumulated for a component at a
given time shall be computed as the current cost of replacement or repair multiplied by the number of years the component has been in service divided by the useful life of the component. This shall not be construed to require the board to fund reserves in accordance with this calculation.
</html:p>
<html:p>
(5)
<html:span class="EnSpace"/>
The board shall not transfer funds from the association’s reserve account to fund 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, in accordance with subdivisions (b) and (c) of Section 5510.
</html:p>
</ns0:Content>
</ns0:LawSectionVersion>
</ns0:LawSection>
</ns0:Fragment>
</ns0:BillSection>
</ns0:Bill>
</ns0:MeasureDoc>