Common interest developments: managing agent fees., the official text

An act to amend Section 5500 of, and to add Section 5378 to, the Civil Code, relating to common interest developments.

LEGISLATIVE COUNSEL'S DIGEST

Existing law, the Davis-Stirling Common Interest Development Act, governs the formation and operation of common interest developments, and requires a common interest development to be managed by an association, as specified. Existing law, unless otherwise provided by the governing documents, authorizes the board of directors of the association to hire a managing agent, defined as a person who, for compensation or in expectation of compensation, exercises control over the assets of a common interest development. Existing law requires, unless the governing documents impose more stringent requirements, the board of directors of the association to review various financial documents and statements on a monthly basis.
This bill would require the board of directors of the association to review, on an annual basis, fees charged by the managing agent, as specified. The bill would require the association to deliver through electronic means a statement of these fees upon written request by a member.

The people of the State of California do enact as follows:

SECTION 1.
Section 5378 is added to the Civil Code, to read:
5378.
The association shall deliver through electronic means a statement of fees charged by the managing agent as, as described in subdivision (g) of Section 5500, upon written request by a member.

SEC. 2.
Section 5500 of the Civil Code is amended to read:
5500.
Unless the governing documents impose more stringent standards, the board shall do all of the following:
(a) Review, on a monthly basis, a current reconciliation of the association’s operating accounts.
(b) Review, on a monthly basis, a current reconciliation of the association’s reserve accounts.
(c) Review, on a monthly basis, the current year’s actual operating revenues and expenses compared to the current year’s budget.
(d) Review, on a monthly basis, the latest account statements prepared by the financial institutions where the association has its operating and reserve accounts.
(e) Review, on a monthly basis, an income and expense statement for the association’s operating and reserve accounts.
(f) Review, on a monthly basis, the check register, monthly general ledger, and delinquent assessment receivable reports.
(g) Review, on an annual basis, a statement of fees charged by the managing agent, including the following:
(1) The reporting period covered by the disclosure.
(2) The total number of residential units in the association during the reporting period.
(3) The total amount billed and paid by the association to the management company during the reporting period.
(4) The breakdown of the total amount described in paragraph (3) into the following categories:
(A) Base management fees, which include amounts paid pursuant to fixed or recurring compensation specified in the management agreement.
(B) Fee schedule charges, which include amounts paid for additional or optional services provided pursuant to a fee schedule adopted by the board of directors as part of the management agreement.
(C) Reimbursable expenses, which include amounts paid to reimburse the management company for third-party costs or expenses incurred on behalf of the association.