Tighter Protection of HOA Funds in 2019

Tighter Protection of HOA Funds in 2019

Assembly Bill 2912 The most important new legislation changing how HOAs will operate is Assembly Bill 2912. AB 2912 began with the statement that its purpose is to “take important steps to protect [HOA members] from fraudulent activity by those entrusted with the management of the association’s finances.” Sponsored by the Community Associations Institute and the California Association of Community Managers, the bill received no credible opposition and passed both houses of the Legislature on unanimous votes. Civil Code 5380(b)(6) and 5502 One very significant change is the new Civil Code 5380(b)(6) and 5502. These new statutes are identical in substance and so appear to be redundant. They require that before any transfer of $10,000 or 5% of total association combined reserve and operating deposits (whichever is smaller), there must be prior written approval from the association board. This slows down the overly active board officer or lazy manager who would pay bills or transfer funds without bothering to obtain explicit board approval. One question is whether a manager could obtain permission in advance to pay certain larger recurring bills, but the intent of the statute seems to argue against this and require express permission for each individual transfer. Association boards should already be preparing for this additional step and talking to their managers about how compliance will occur. This statute does not only reference payments, but controls any “transfer” of association funds. So, advance written authorization is required not only for payments and withdrawals but also deposits and transfers between association accounts. Civil Code 5500 Civil Code 5500 has for years required boards to at least quarterly review...
Kelly G. Richardson, Esq. CCAL quoted in CAI National Magazine, Common Ground

Kelly G. Richardson, Esq. CCAL quoted in CAI National Magazine, Common Ground

In the most recent issue of Common Ground, Kelly Richardson weighs in on the issues surrounding community associations and the risk of injury from wild animals in common areas. “The key is to respond reasonably to known issues.” He also recommends “contacting an appropriate service provider” to recommend expert solutions to the problems, looking at the association’s rules and having “ample liability insurance.” Community Association Institute publishes a bimonthly magazine titled Common Ground and provides education for community association homeowners, managers and those affiliated with HOAs....

Homeowner Education

Dear Mr. Richardson, We are new to HOA and would like to attend a class on how HOA’s work. Thank you for your column, P.G., Hermosa Beach Dear P.G., There are many sources to learn more about how California common interest developments (the legal term for “HOA”) should operate. The only source of HOA member education nationwide is the Community Associations Institute. Formed over 30 years ago, CAI now has 59 Chapters in the U.S. and a few in other countries. California has eight chapters. In the areas served by this column, those chapters are the Greater Los Angeles Chapter (www.cai-glac.org); the Orange County Regional Chapter (www.caioc.org); Channel Islands Chapter (Ventura and Santa Barbara Counties, www.cai-channelislands.org) and the Greater Inland Empire Chapter (Riverside and San Bernardino counties, www.cai-grie.org). The Orange County Chapter periodically provides a homeowner educational course Community Leadership Training Program (“CLTP”) consisting of five sessions, each two and one half hours long. The Channel Islands, Greater Inland Empire and Los Angeles Chapters offer a seven hour class, called “Essentials of Community Leadership, typically offered on Saturdays. All four Chapters periodically offer CAI’s “California Basic Board Education Course”, a three hour survey course of foundational issues pertinent to board service. On the other hand, if you are interested in a deeper exploration of the law regarding HOAs, you may want to take CAI’s California Law Course for Common Interest Development Managers, an 8 hour course accredited by the Department of Real Estate. All California Chapters of CAI offer that course from time to time. Contact your local Chapter to find out when these courses are next being offered. If you...