Senate BillVetoedBusiness and Professions
SB 1238: Common interest developments: management.
What SB 1238 does, verified September 21, 2026
<blockquote> <p>The bill amends California's Davis-Stirling Common Interest Development Act by:</p> <ul> <li>Expanding the definition of an agent in common interest developments to include entities that facilitate activities under the act, requiring them to provide a fiduciary duty to homeowner’s associations and their members.</li> <li>Updating the definition of management services to specify acts performed or offered by agents for associations.</li> <li>Revising the definition of professional association for common interest development managers to include organizations that employ agents meeting certain criteria.</li> <li>Mandating owners in common interest developments to provide additional information to prospective purchasers, such as details about exterior elevated elements and impacted units upon request.</li> </ul> </blockquote>
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Last action: In Senate. Consideration of Governor's veto pending. (2026-09-20)Alert me
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| Sep. 20, 2026 | In Senate. Consideration of Governor's veto pending. |
| Sep. 20, 2026 | Vetoed by the Governor. |
| Aug. 31, 2026 | Enrolled and presented to the Governor at 6 p.m. |
| Aug. 27, 2026 | Assembly amendments concurred in. (Ayes 39. Noes 0.) Ordered to engrossing and enrolling. |
| Aug. 26, 2026 | Read third time. Passed. (Ayes 76. Noes 0. Page 6552.) Ordered to the Senate. |
Latest bill textEnrolled version, August 30, 2026 · 6,376 words
| Enrolled August 30, 2026 |
| Passed IN Senate August 27, 2026 |
| Passed IN Assembly August 26, 2026 |
| Amended IN Assembly August 21, 2026 |
| Amended IN Assembly August 19, 2026 |
| Amended IN Assembly July 02, 2026 |
| Amended IN Senate April 23, 2026 |
| Amended IN Senate April 16, 2026 |
CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION
Senate Bill
No. 1238
| Introduced by Senator Wahab |
February 19, 2026 |
An act to amend Sections 11500 and 11501 of the Business and Professions Code, and to amend Sections 4525, 5200, 5510, 5550, 5551, 5560, and 5565 of, and to add Section 5390 to, the Civil Code, relating to common interest developments.
LEGISLATIVE COUNSEL'S DIGEST
SB 1238, Wahab. 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 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, including a managing agent and its employees, 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 managing agent, including its employees, 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 association’s 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 association, upon request, to provide the owner of a separate interest, or their agent, with those documents as soon as practicable. 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.
This bill would incorporate additional changes to Section 5200 of the Civil Code proposed by AB 739 to be operative only if this bill and AB 739 are enacted and this bill is enacted last.
This bill would incorporate additional changes to Section 5550 of the Civil Code proposed by AB 2050 to be operative only if this bill and AB 2050 are enacted and this bill is enacted last.
The people of the State of California do enact as follows:
SECTION 1.
Section 11500 of the Business and Professions Code is amended to read:11500.
For purposes of this chapter, the following definitions apply:(a) “Common interest development” means a residential development identified in Section 4100 of the Civil Code.
(b) “Association” has the same meaning as defined in Section 4080 of the Civil Code.
(c) “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.
(d) “Management services” means acts performed or offered to be performed by an agent, including a managing agent and its employees, in an advisory capacity for an association including, but not limited to, the following:
(1) 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.
(2) Implementing resolutions and directives of the board of directors of the association elected to oversee the operation of a common interest development.
(3) Implementing provisions of governing documents, as defined in Section 4150 of the Civil Code, that govern the operation of the common interest development.
(4) 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.
(5) Implementing or administering activities pursuant to Sections 5300, 5310, and 5500 of the Civil Code.
(e) “Professional association for common interest development managers” means an organization that meets all of the following:
(1) Has at least 200 members or certificants who are common interest development managers in California.
(2) Has been in existence for at least five years.
(3) Operates pursuant to Section 501(c) of the Internal Revenue Code.
(4) Certifies that a common interest development manager has met the criteria set forth in Section 11502 without requiring membership in the association.
(5) Requires adherence to a code of professional ethics and standards of practice for certified common interest development managers.
SEC. 2.
Section 11501 of the Business and Professions Code is amended to read:11501.
(a) “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.(b) “Common interest development manager” also means any of the following:
(1) 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.
(2) An individual operating under a fictitious business name who provides the services of a common interest development manager.
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.
SEC. 3.
Section 4525 of the Civil Code is amended to read:4525.
(a) Upon request, the association shall provide, and as soon as practicable, to the owner of a separate interest, or their agent, the documents specified paragraphs (1) to (11), inclusive. 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:(1) 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.
(2) 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.
(3) A copy of the most recent documents distributed pursuant to Article 7 (commencing with Section 5300) of Chapter 6 and shall include a copy of the master insurance policy for the association that covers the association’s property, general liability, earthquake, flood, and fidelity coverage upon request of the property owner or prospective purchaser.
(4) 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.
(5) 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.
(6) 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.
(7) A copy of the latest information provided for in Section 6100.
(8) 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.
(9) 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.
(10) 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.
(11) (A) A copy of the report issued pursuant to the most recent inspection conducted pursuant to Section 5551.
(B) The following information, if separately requested by the purchaser:
(i) The location on the first page of the report where the following information may be found:
(I) The number of exterior elevated elements, and the number of units identified pursuant to clause (i) of subparagraph (F) of paragraph (5) of subdivision (e) of Section 5551.
(II) The number of exterior elevated elements identified pursuant to clause (ii) of subparagraph (F) of paragraph (5) of subdivision (e) of Section 5551.
(III) The number of exterior elevated elements identified pursuant to clause (iii) of subparagraph (F) of paragraph (5) of subdivision (e) of Section 5551.
(ii) Any exterior elevated elements identified in the report, written pursuant to subdivision (e) of Section 5551, as needing repairs that exceed ten thousand dollars ($10,000).
(C) (i) The following information indicating whether:
(I) The covenants, restrictions, or conditions require an owner of a separate interest, with an exclusive right to use an exterior elevated element, to individually maintain that exterior elevated element.
(II) The association’s reserve study includes a minimum annual budgeted replacement reserve allocation of 10 percent for repairs of the exterior elevated elements.
(III) The association’s reserve study has been updated to include identified repairs contained within the exterior elevated elements inspection report conducted pursuant to subdivision (e) of Section 5551.
(ii) The requirements of clause (i) of this subparagraph may be satisfied by identifying where this information is addressed in the documents disclosed pursuant to paragraphs (1) and (3) of subdivision (a).
(b) This section does not apply to an owner that is subject to Section 11018.6 of the Business and Professions Code.
SEC. 4.
Section 5200 of the Civil Code is amended to read:5200.
For the purposes of this article, the following definitions shall apply:(a) “Association records” means all of the following:
(1) Any financial document required to be provided to a member in Article 7 (commencing with Section 5300) or in Sections 5565 and 5810.
(2) Any financial document or statement required to be provided in Article 2 (commencing with Section 4525) of Chapter 4.
(3) Interim financial statements, periodic or as compiled, containing any of the following:
(A) Balance sheet.
(B) Income and expense statement.
(C) Budget comparison.
(D) General ledger. A “general ledger” is a report that shows all transactions that occurred in an association account over a specified period of time.
The records described in this paragraph shall be prepared in accordance with an accrual or modified accrual basis of accounting.
(4) Executed contracts not otherwise privileged under law.
(5) Written board approval of vendor or contractor proposals or invoices.
(6) State and federal tax returns.
(7) Reserve study pursuant to Section 5550, reserve account balances, and records of payments made from reserve accounts.
(8) 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).
(9) 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.
(10) Check registers.
(11) The governing documents.
(12) An accounting prepared pursuant to subdivision (b) of Section 5520.
(13) An “enhanced association record” as defined in subdivision (b).
(14) “Association election materials” as defined in subdivision (c).
(15) All inspector’s reports compiled pursuant to Section 5551.
(b) “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.
(c) “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.
SEC. 4.5.
Section 5200 of the Civil Code is amended to read:5200.
For the purposes of this article, the following definitions shall apply:(a) “Association records” means all of the following:
(1) Any financial document required to be provided to a member in Article 7 (commencing with Section 5300) or in Sections 5565 and 5810.
(2) Any financial document or statement required to be provided in Article 2 (commencing with Section 4525) of Chapter 4.
(3) Interim financial statements, periodic or as compiled, containing any of the following:
(A) Balance sheet.
(B) Income and expense statement.
(C) Budget comparison.
(D) General ledger. A “general ledger” is a report that shows all transactions that occurred in an association account over a specified period of time.
The records described in this paragraph shall be prepared in accordance with an accrual or modified accrual basis of accounting.
(4) Executed contracts not otherwise privileged under law.
(5) Written board approval of vendor or contractor proposals or invoices.
(6) State and federal tax returns.
(7) Reserve study pursuant to Section 5550, reserve account balances, and records of payments made from reserve accounts.
(8) 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).
(9) 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.
(10) Check registers.
(11) The governing documents.
(12) An accounting prepared pursuant to subdivision (b) of Section 5520.
(13) An “enhanced association record” as defined in subdivision (b).
(14) “Association election materials” as defined in subdivision (c).
(15) All inspector’s reports compiled pursuant to Section 5551.
(16) Statements of fees charged by the managing agent pursuant to subdivision (g) of Section 5500.
(b) “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.
(c) “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.
SEC. 5.
Section 5390 is added to the Civil Code, to read:5390.
Any managing agent, including its employees, that facilitates activities pursuant to Sections 5300, 5310, and 5500, or other activities pursuant to this part that are authorized by the board, owes a duty of care that is prudent and provides the highest good faith effort to the association and its members.SEC. 6.
Section 5510 of the Civil Code is amended to read:5510.
(a) 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.(b) 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.
(c) The board shall not expend funds designated as reserve funds for other litigation or legal services that are not identified in subdivision (b).
SEC. 7.
Section 5550 of the Civil Code is amended to read:5550.
(a) At least once every three years, the board shall cause to be conducted a reasonably competent and diligent visual inspection of the accessible areas of the major components that the association is obligated to repair, replace, restore, or maintain 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.(b) The study required by this section shall at a minimum include:
(1) Identification of the major components that the association is obligated to repair, replace, restore, or maintain that, as of the date of the study, have a remaining useful life of less than 30 years.
(2) Identification of the probable remaining useful life of the components identified in paragraph (1) as of the date of the study.
(3) An estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in paragraph (1).
(4) Cost of repair, replacement, restoration or maintenance of the components identified in the report required in Section 5551.
(5) 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.
(6) A reserve funding plan that indicates how the association plans to fund the contribution identified in paragraph (5) 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.
(c) For purposes of this section, “major components” includes, but is not limited to, exterior elevated elements 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.
SEC. 7.1.
Section 5550 of the Civil Code is amended to read:5550.
(a) At least once every three years, the board shall cause to be conducted a reasonably competent and diligent visual inspection of the accessible areas of the major components that the association is obligated to repair, replace, restore, or maintain 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.(b) The study required by this section shall at a minimum include:
(1) Identification of the major components that the association is obligated to repair, replace, restore, or maintain that, as of the date of the study, have a remaining useful life of less than 30 years.
(2) Identification of the probable remaining useful life of the components identified in paragraph (1) as of the date of the study.
(3) An estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in paragraph (1).
(4) Cost of repair, replacement, restoration or maintenance of the components identified in the report required in Section 5551.
(5) 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.
(6) A reserve funding plan that indicates how the association plans to fund the contribution identified in paragraph (5) 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.
(c) For purposes of this section, “major components” includes, but is not limited to, exterior elevated elements 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.
(d) This section shall remain in effect only until January 1, 2032, and as of that date is repealed.
SEC. 7.2.
Section 5550 is added to the Civil Code, to read:5550.
(a) At least once every three years, the association shall cause to be conducted a reasonably competent and diligent visual inspection of the accessible areas of the major components that the association is obligated to repair, replace, restore, or maintain 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. The association shall review and update this study annually and shall consider and implement necessary adjustments to the association’s funding of the reserve account as a result of that review.(b) The study required by this section shall at a minimum include:
(1) Identification of the major components that the association is obligated to repair, replace, restore, or maintain that, as of the date of the study, have a remaining useful life of less than 30 years.
(2) Identification of the probable remaining useful life of the components identified in paragraph (1) as of the date of the study.
(3) An estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in paragraph (1).
(4) Cost of repair, replacement, restoration or maintenance of the components identified in the report required in Section 5551.
(5) An estimate of the total annual reserve account transfer 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.
(6) A reserve funding plan that indicates how the association plans to fund the reserve account transfer identified in paragraph (5) 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.
(7) The minimum reserve contribution level to prevent the projected association reserve account balance from falling below zero over the following 30 years.
(8) A statement informing the association that, beginning January 1, 2032, state law will require an association to take certain actions if the association projects the reserve account balance to fall below zero over a 30-year period, including transferring a minimum of 15 percent of its gross annual budget to the reserve account and, under specified conditions, levying a reserve funding special assessment, as prescribed.
(c) For purposes of this section, “major components” includes, but is not limited to, exterior elevated elements 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.
(d) This section shall become operative on January 1, 2032.
SEC. 8.
Section 5551 of the Civil Code is amended to read:5551.
(a) For purposes of this section, the following definitions apply:(1) “Associated waterproofing systems” include flashings, membranes, coatings, and sealants that protect the load-bearing components of exterior elevated elements from exposure to water.
(2) “Exterior elevated elements” mean the load-bearing components together with their associated waterproofing system.
(3) “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.
(4) “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.
(5) “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.
(b) (1) 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.
(2) The inspection shall determine whether the exterior elevated elements are in a generally safe condition and performing in accordance with applicable standards.
(c) 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.
(d) 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.
(e) Based upon the inspector’s visual inspections, further inspection, and construction and materials expertise, the inspector shall issue a written report containing the following:
(1) The identification of the building components comprising the load-bearing components and associated waterproofing system.
(2) 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.
(3) The expected future performance and remaining useful life of the load-bearing components and associated waterproofing system.
(4) Recommendations for any necessary repair or replacement of the load-bearing components and associated waterproofing system.
(5) On the first page of the report, all of the following:
(A) The date of inspection.
(B) The total number of units in the condominium project.
(C) The total number of units in the condominium project with exterior elevated elements.
(D) The total number of exterior elevated elements in the condominium project.
(E) The total number of exterior elevated elements inspected pursuant to subdivision (b).
(F) 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:
(i) 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.
(ii) Exterior elevated elements recommended to be included in the next reasonably competent and diligent visual inspection conducted pursuant to Section 5550 or recommended for reinspection within the next three years.
(iii) Exterior elevated elements recommended for reinspection in the next inspection conducted pursuant to this section.
(iv) Exterior elevated elements demonstrating no need for repair at the time of inspection.
(G) 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).
(f) 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.
(g) (1) 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.
(2) Local enforcement agencies shall have the ability to recover enforcement costs associated with the requirements of this section from the association.
(h) 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.
(i) 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.
(j) (1) The association shall be responsible for complying with the requirements of this section.
(2) 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.
(k) 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.
(l) This section shall only apply to buildings containing three or more attached multifamily dwelling units.
(m) The association board may enact rules or bylaws imposing requirements greater than those imposed by this section.
(n) A local government or local enforcement agency may enact an ordinance or other rule imposing requirements greater than those imposed by this section.
SEC. 9.
Section 5560 of the Civil Code is amended to read:5560.
(a) 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.(b) 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.
(c) The plan shall include the costs necessary to account for the repairs identified in the inspection required pursuant to Section 5551.
(d) 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.
SEC. 10.
Section 5565 of the Civil Code is amended to read:5565.
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:(a) 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.
(b) As of the end of the fiscal year for which the study is prepared:
(1) The current estimate of the amount of cash reserves necessary to repair, replace, restore, or maintain the major components.
(2) The current amount of accumulated cash reserves actually set aside to repair, replace, restore, or maintain major components.
(3) 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.
(c) 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).
(d) 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.
SEC. 11.
Section 4.5 of this bill incorporates amendments to Section 5200 of the Civil Code proposed by both this bill and Assembly Bill 739. That section of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2027, (2) each bill amends Section 5200 of the Civil Code, and (3) this bill is enacted after Assembly Bill 739, in which case Section 4 of this bill shall not become operative.SEC. 12.
Sections 7.1 and 7.2 of this bill incorporate amendments to Section 5550 of the Civil Code proposed by both this bill and Assembly Bill 2050. Those sections of this bill shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2027, (2) this bill amends Section 5550 of the Civil Code and Assembly Bill 2050 amends, repeals, and adds Section 5550 of the Civil Code, and (3) this bill is enacted after Assembly Bill 2050, in which case Section 7 of this bill shall not become operativeText of SB 1238 as enrolled, from the official record. Connect Plus keeps every version and highlights what changed.Compare versions