BILL NUMBER: AB 691 CHAPTERED
BILL TEXT
CHAPTER 236
FILED WITH SECRETARY OF STATE SEPTEMBER 26, 2007
APPROVED BY GOVERNOR SEPTEMBER 26, 2007
PASSED THE SENATE SEPTEMBER 4, 2007
PASSED THE ASSEMBLY SEPTEMBER 5, 2007
AMENDED IN SENATE JUNE 19, 2007
AMENDED IN ASSEMBLY MAY 1, 2007
AMENDED IN ASSEMBLY APRIL 9, 2007
INTRODUCED BY Assembly Member Silva
FEBRUARY 21, 2007
An act to amend Sections 11500, 11501, 11502, 11502.5, 11504,
11505, and 11506 of the Business and Professions Code, relating to
common interest developments.
LEGISLATIVE COUNSEL'S DIGEST
AB 691, Silva. Certified common interest development managers.
Existing law, the Davis-Stirling Common Interest Development Act,
establishes a scheme for the regulation of common interest
developments. Existing law requires a person to meet certain
requirements in order to be called a "certified common interest
development manager" and imposes other requirements with regard to
common interest development managers. Existing law makes professional
associations, as defined, responsible for the certification of
common interest development managers, as specified. Existing law
defines various terms for carrying out these provisions. Under
existing law, the provisions regulating certified common interest
development managers will become inoperative and be repealed on
January 1, 2008.
This bill would extend the operation of these provisions until
January 1, 2012. The bill would modify the requirements in order to
be called a "certified common interest development manager" and would
also revise various definitions. The bill would make numerous,
nonsubstantive, and technical changes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) There are approximately 41,000 common interest developments in
this state. California common interest developments contain over 10
million homes that house more than 10 million people.
(b) Homes in common interest developments, like homes that are not
in common interest developments, most often represent the owner's
single largest lifetime investment.
(c) The management and operation of common interest developments
is governed by a complex set of statutes and decisional law. In
addition to possessing an understanding of the law, the successful
professional common interest development management and operation of
common interest developments require fundamental skills in subjects
including, but not limited to, finance, accounting, bookkeeping,
contract administration, human resources, and parliamentary
procedure.
(d) Common interest development managers are often delegated the
authority, by the governing body of a common interest development, to
collect and disburse substantial sums of money annually in homeowner
assessments, which are used for the purpose of operating the
community.
(e) The growth in common interest developments, coupled with the
addition of governing statutes and decisional law, has emphasized the
importance for common interest development managers to have the
necessary skills and technical expertise to manage these
associations.
(f) Individuals managing common interest developments who have
these skills and expertise may identify themselves as "certified," if
they have met the requirements of Section 11502 of the Business and
Professions Code.
(g) Since the enactment of the certification law in 2003,
voluntary certification has tripled, resulting in a significant
increase in the number of educated professional community managers.
(h) Residents of common interest developments in this state who
serve as board members of those developments should be made aware
that those managers who refer to themselves as "certified community
managers" have met specific educational requirements and standards.
SEC. 2. 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 subdivision (c) of Section 1351 of the Civil Code.
(b) "Association" has the same meaning as defined in subdivision
(a) of Section 1351 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 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 1351 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.
(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. 3. 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, or
represents himself or herself 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 his or her license in
addition to the preparation of reviewed and audited financial
statements and the preparation of the association's tax returns.
SEC. 4. Section 11502 of the Business and Professions Code is
amended to read:
11502. In order to be called a "certified common interest
development manager," a person shall meet one of the following
requirements:
(a) Prior to July 1, 2003, has passed a knowledge, skills, and
aptitude examination as specified in Section 11502.5 or has been
granted a certification or a designation by a professional
association for common interest development managers, and who has,
within five years prior to July 1, 2004, received instruction in
California law pursuant to paragraph (1) of subdivision (b).
(b) On or after July 1, 2003, has successfully completed an
educational curriculum that shall be no less than a combined 30 hours
in coursework described in this subdivision and passed an
examination or examinations that test competence in common interest
development management in the following areas:
(1) The law that relates to the management of common interest
developments, including, but not limited to, the following courses of
study:
(A) Topics covered by the Davis-Stirling Common Interest
Development Act, contained in Title 6 (commencing with Section 1350)
of Part 4 of Division 2 of the Civil Code, including, but not limited
to, the types of California common interest developments, disclosure
requirements pertaining to common interest developments, meeting
requirements, financial reporting requirements, and member access to
association records.
(B) Personnel issues, including, but not limited to, general
matters related to independent contractor or employee status, the
laws on harassment, the Unruh Civil Rights Act, the California Fair
Employment and Housing Act, and the Americans with Disabilities Act.
(C) Risk management, including, but not limited to, insurance
coverage, maintenance, operations, and emergency preparedness.
(D) Property protection for associations, including, but not
limited to, pertinent matters relating to environmental hazards such
as asbestos, radon gas, and lead-based paint, the Vehicle Code, local
and municipal regulations, family day care facilities, energy
conservation, Federal Communications Commission rules and
regulations, and solar energy systems.
(E) Business affairs of associations, including, but not limited
to, necessary compliance with federal, state, and local law.
(F) Basic understanding of governing documents, codes, and
regulations relating to the activities and affairs of associations
and common interest developments.
(2) Instruction in general management that is related to the
managerial and business skills needed for management of a common
interest development, including, but not limited to, the following:
(A) Finance issues, including, but not limited to, budget
preparation; management; administration or supervision of the
collection, reporting, and archiving of the financial or common area
assets of an association or common interest development; bankruptcy
laws; and assessment collection.
(B) Contract negotiation and administration.
(C) Supervision of employees and staff.
(D) Management of maintenance programs.
(E) Management and administration of rules, regulations, and
parliamentary procedures.
(F) Management and administration of architectural standards.
(G) Management and administration of the association's
recreational programs and facilities.
(H) Management and administration of owner and resident
communications.
(I) Training and strategic planning for the association's board of
directors and its committees.
(J) Implementation of association policies and procedures.
(K) Ethics, professional conduct, and standards of practice for
common interest development managers.
(L) Current issues relating to common interest developments.
(M) Conflict avoidance and resolution mechanisms.
SEC. 5. Section 11502.5 of the Business and Professions Code is
amended to read:
11502.5. The course related competency examination or
examinations and education provided to a certified common interest
development manager pursuant to Section 11502 by any professional
association for common interest development managers, or any
postsecondary educational institution, shall be developed and
administered in a manner consistent with standards and requirements
set forth by the American Educational Research Association's
"Standards for Educational and Psychological Testing," and the Equal
Employment Opportunity Commission's "Uniform Guidelines for Employee
Selection Procedures," the Unruh Civil Rights Act, the California
Fair Employment and Housing Act, and the Americans with Disabilities
Act of 1990, or the course or courses that have been approved as a
continuing education course or an equivalent course of study pursuant
to the regulations of the Real Estate Commissioner.
SEC. 6. Section 11504 of the Business and Professions Code is
amended to read:
11504. On or before September 1, 2003, and annually thereafter, a
person who either provides or contemplates providing the services of
a common interest development manager to an association shall
disclose to the board of directors of the association the following
information:
(a) Whether or not the common interest development manager has met
the requirements of Section 11502 so he or she may be called a
certified common interest development manager.
(b) The name, address, and telephone number of the professional
association that certified the common interest development manager,
the date the manager was certified, and the status of the
certification.
(c) The location of his or her primary office.
(d) Prior to entering into or renewing a contract with an
association, the common interest development manager shall disclose
to the board of directors of the association or common interest
development whether the fidelity insurance of the common interest
development manager or his or her employer covers the current year's
operating and reserve funds of the association. This requirement
shall not be construed to compel an association to require a common
interest development manager to obtain or maintain fidelity
insurance.
(e) Whether the common interest development manager possesses an
active real estate license.
This section may not preclude a common interest development
manager from disclosing information as required in Section 1363.1 of
the Civil Code.
SEC. 7. Section 11505 of the Business and Professions Code is
amended to read:
11505. It is an unfair business practice for a common interest
development manager, a company that employs the common interest
development manager, or a company that is controlled by a company
that also has a financial interest in a company employing that
manager, to do any of the following:
(a) On or after July 1, 2003, to hold oneself out or use the title
of "certified common interest development manager" or any other term
that implies or suggests that the person is certified as a common
interest development manager without meeting the requirements of
Section 11502.
(b) To state or advertise that he or she is certified, registered,
or licensed by a governmental agency to perform the functions of a
certified common interest development manager.
(c) To state or advertise a registration or license number, unless
the license or registration is specified by a statute, regulation,
or ordinance.
(d) To fail to comply with any item to be disclosed in Section
11504 of this code, or Section 1363.1 of the Civil Code.
SEC. 8. Section 11506 of the Business and Professions Code is
amended to read:
11506. This part shall be subject to the review required by
Division 1.2 (commencing with Section 473). This part shall remain in
effect only until January 1, 2012, and as of that date is repealed,
unless a later enacted statute, that is enacted before January 1,
2012, deletes or extends that date.