Common interest developments: managing agent fees.

In Section 1.5, paragraph (7) of the SB 1238 incorporated amendment, the phrase 'Reserve account balances study pursuant to Section 5550' was corrected to 'Reserve study pursuant to Section 5550.' This is a minor wording fix to align with the standard term used elsewhere in the Davis-Stirling Act.

Enrollment formatting added: passage dates (Assembly August 26, 2026; Senate August 25, 2026), signature blocks for Chief Clerk of the Assembly, Secretary of the Senate, and Private Secretary of the Governor, and a blank approval line for the Governor.

Removed amendment history headers (listing prior amendment dates), line numbers throughout the text, and the original introduction date of February 18, 2025.

Deleted proposed Civil Code Section 5378, which would have required associations to deliver through electronic means a statement of fees charged by the managing agent upon written request by a member. This removed a direct member right to receive fee disclosures electronically.

Added Section 1.5 and Section 3 creating a coordination mechanism with SB 1238. If both bills are enacted, each amends Section 5200, and AB 739 is enacted after SB 1238, then Section 1.5 (the combined version) becomes operative instead of Section 1, preventing conflicting amendments to the same code section.

In Section 5500(g), replaced 'management company' with 'managing agent' throughout, changed 'residential units' to 'separate interests' in paragraph (2), and standardized the phrase 'reporting period' to 'time period covered by the statement of fees' for consistency.

In the Section 1.5 version of Section 5200(a)(7), added 'study pursuant to Section 5550' as an additional category of association records, incorporating changes proposed by SB 1238 regarding reserve studies.

Section 5403 was entirely removed. This section had required the Department of Real Estate to develop a 12-hour education course for executive officers (president, vice president, secretary, treasurer) covering fiduciary duties, management duties, and Davis-Stirling Act provisions, with completion required within two years of appointment or election.

The amendment to Section 5310 was removed. This had required the annual policy statement distributed to members to include a statement of all fees charged by the managing agent as item (12).

New Section 5200 defines 'association records' comprehensively, listing 16 categories including financial documents, interim financial statements, executed contracts, board approvals, tax returns, reserve account records, meeting agendas and minutes, membership lists, check registers, governing documents, enhanced association records, election materials, inspector's reports, and managing agent fee statements. It also defines 'enhanced association records' (invoices, receipts, canceled checks, purchase orders, bank and credit card statements) and 'association election materials' (ballots, voter envelopes, voter lists, proxies, candidate registration, tally sheets).

Section 5500(g) changed 'residential units' to 'separate interests,' broadening the scope beyond residential associations. Changed 'management company' to 'managing agent' throughout for consistency with statutory terminology.

New Section 5500(h) excludes association employees from the definition of 'managing agent,' meaning the annual fee review requirement does not apply to in-house staff who manage the association.

Fiscal committee designation changed from 'yes' to 'no,' reflecting the removal of the training course development obligation that would have required state agency resources.

Removed the requirement that a managing agent of a common interest development must hold a real estate broker license issued by the state (former Section 5378).

Added new Section 5500 requiring boards to perform monthly reviews of operating account reconciliations, reserve account reconciliations, actual revenues and expenses compared to budget, financial institution account statements, income and expense statements, check registers, general ledgers, and delinquent assessment receivable reports.

Added an annual requirement for boards to review a statement of fees charged by the managing agent, broken down into three categories: base management fees (fixed or recurring compensation), fee schedule charges (additional or optional services per board-adopted fee schedule), and reimbursable expenses (third-party costs incurred on behalf of the association).

Added new Section 5378 requiring associations to deliver through electronic means a statement of managing agent fees upon written request by a member.

The bill's overall approach shifted from licensure-based regulation of managing agents to transparency and board oversight of managing agent fees, with the fiscal committee designation changed from yes to no.

Section 5310 of the Civil Code is amended to require that the annual policy statement distributed to members must include a statement of all fees charged by the managing agent, increasing transparency around managing agent compensation.

New Section 5403 requires the Department of Real Estate to develop an education course for executive officers of the association, validated by the Secretary of State, covering review requirements under Section 5500, fiduciary duties, management duties, and all other applicable provisions of the Davis-Stirling Act.

Executive officers must complete 12 hours of the education course within two years. Officers already in office when the course is developed have two years from that date; officers appointed or elected afterward have two years from their appointment or election.

The bill defines 'executive officer' as the president, vice president, secretary, or treasurer of the association for purposes of the training requirement.

The bill's scope expanded from a single new section (5378) to three sections: an amendment to Section 5310 (fee disclosure), a new Section 5403 (executive officer training), and the original new Section 5378 (broker license requirement for managing agents).