SB 1238: Common interest developments: management.

(1)Existing law, 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 revise the above-described definition of agent to include a person or company that facilitates activities pursuant to specified provisions of the act.

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 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.

Existing law imposes certain fiduciary duties on managers and agents of common interest developments.

This bill would provide that a person or entity that facilitates specified activities, including reviewing association operating accounts, owes a duty of care that is prudent and provides the highest good faith effort to the association and its members.

(2)Existing law requires a common interest development to be managed by an association and requires the association to distribute to its members an annual budget that includes, among other things, a summary of the associations property, general liability, earthquake, flood, and fidelity insurance policies, a review of the financial statement of the association, and an annual policy statement, as provided. 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 the most recent distributed annual budget, review of the financial statement, and annual policy statement and a report issued pursuant to the most recent inspection conducted.

This bill would require the owner to be able to obtain the above-specified documents. The bill would require the owner to include with the most recent distributed annual budget, financial statement of the association, and annual policy statement a copy of the master insurance policy for the association, as specified, upon request of the property owner or prospective purchaser. The bill would require the owner to provide additional information, including, among other things, if separately requested by the purchaser, the location on the first page of the report where certain facts about the exterior elevated elements and the number of units impacted may be found. The bill would make various other related and conforming changes to those provisions.