Scott Brady is co-owner and principal of Progressive Association Management, a CACM-member HOA management company serving 228 communities and nearly 15,000 homeowners throughout Southern California. Since founding the association management division in 2020, Scott has grown the company into the fastest organically growing association management firm in California by limiting manager workloads, providing full back-office support, and holding every team member accountable to documented daily service standards. |
The California Association of Realtors (CAR) recently decided to support four separate pieces of legislation in 2027 that impact common interest developments (CIDs), which include homeowner associations.
CAR has given up on both of the main CID interest groups, the Community Associations Institute (CAI, a nationwide lobbying group) and the California Association of Community Managers (CACM, specific to California), creating the legislation it deems critical for the 6 million homeowner association households in the state. The focus is total transparency for owners and buyers in HOAs and greater accountability for boards. This is not the end of CAR’s lobbying efforts, just the first salvo.
The Four Initiatives
1. Management Companies Must Return All Records Within 30 Days of Termination
Some management companies intentionally drag their feet after a board terminates their contract. It is either because they are disorganized and struggle to locate and send over the documentation, or it is intentional, as they prefer to keep the association’s bank account under their control and continue earning valuable bank credits. This delay causes immense problems for the board, which needs a smooth transition to the new company, and for owners, who must set up new accounts and fear they will not be properly credited for their monthly assessments.
Even if this legislation passes, it still does not address one of the biggest issues facing this industry: there is no regulatory body to enforce these statutes. In Florida, the Department of Business and Professional Regulation handles this. Georgia recently assigned the Secretary of State to enforce HOA statutes. If a management company or board does not follow the law in those states, they can have their ability to do business suspended or face reprimand. In California, an owner must hire an attorney at their own expense and pursue civil action against a board or management company, essentially suing themselves. Since the California Department of Real Estate (DRE) has no interest in taking on this responsibility, CAR will explore having the Secretary of State become the authority over CIDs.
2. Rush Fees Will Be Capped at $100 for 10-Day Requests and $200 for 48-Hour Requests
There is a legal definition of a rush, which is 10 days, but there is no definition of what constitutes a “reasonable” fee for that rush. Some companies are charging $500 or more for rush fees even though in reality it takes just a few seconds to update a file. This initiative both defines what qualifies as a rush and caps what a management company can charge for it.
3. Escrow Documentation Fees Will Be Capped
Currently, a management company can charge a “reasonable” fee to provide the documents required by law that a seller must give to a buyer before the close of escrow. Sellers typically pay two sets of fees: one for the governing documents and required disclosures, including the CC&Rs, bylaws, rules and regulations, annual budget, insurance declaration page, balcony inspection if applicable, and the reserve study. This fee can run from $500 to $1,500. The management company can also charge separately for transferring the account from the seller to the buyer, including the demand fee, transfer fee, and escrow initiation, which can add another $500 to $1,500.
What is reasonable for one company seems downright excessive for another. Management companies argue that these fees allow them to keep monthly management fees lower for owners who stay. In effect, owners leaving the community are subsidizing those who remain. Seventeen other states have already capped these fees, ranging from as low as $100 to as high as $400. CAR has not yet set a specific cap and will use that as a negotiating tool with CAI and CACM, but the expectation is it will land around $500.
4. Owners May Access All HOA Documents at Any Time at No Cost
Many management companies are holding association information “hostage” and charging fees, sometimes substantial ones, for owners to access documents that are rightfully theirs. When an owner purchases in an association, they receive the governing documents including the CC&Rs, bylaws, and Articles of Incorporation. These documents rarely change. Every year, they also receive a disclosure package that includes the board-approved annual budget, the annual reserve study, updated rules and regulations, and the insurance declaration page.
If an owner already paid for the governing documents at the time of purchase and pays for the annual documents through their monthly assessments, why should they pay again to access them? There is virtually no cost to provide these documents since they are stored in the cloud as PDFs, yet management companies charge hundreds of dollars for them. Under this initiative, any owner at any time can access these documents and, if they choose, share them with a potential buyer before an offer is even made.
What Comes Next
This is the beginning, not the end, of CAR’s push for real reform in the association management industry. The ultimate goal is a statewide database of every association in California that would allow anyone to access a community’s information and gauge its financial health at a nominal cost. Boards will no longer be able to avoid their legal and fiduciary responsibility to protect the assets of the associations they lead, and management companies will no longer be able to keep critical information hidden from buyers, owners, and real estate agents.
Have questions about how these changes could affect your community? We are here to help.
