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. |
When the Davis-Stirling Common Interest Development Act passed in 1985 and took effect in 1986, some believed the major issues facing homeowner associations had been resolved. That hasn’t been the case. By creating over 54,000 quasi-governments led by volunteers with no requirement to be licensed, certified, or educated, the legislature opened the door to ongoing challenges that have required continuous attention.
Since 1986, hundreds of individual HOA bills have been enacted, and nearly every year brings new laws that affect how associations are managed and, in many cases, supersede existing CC&Rs.
Recent Laws That Have Impacted HOA Decision Making
Below are three of the most significant bills passed in recent years and what they mean for boards and owners.
SB 326: The Balcony Bill
Passed in 2019 and effective in 2020, this bill required every association in the state to have elevated balconies inspected and repaired if necessary. The original four-year deadline was later extended by one year after many associations struggled to comply.
The law was crafted in response to a balcony collapse in Berkeley that killed several exchange students. The cost of the inspection itself wasn’t the main concern. What alarmed board members was the number of balconies that failed and required special or emergency assessments, sometimes exceeding $25,000, to fund repairs. Going forward, every association must inspect these structures every nine years.
AB 130: Fine Cap
Tucked into a broader bill aimed at simplifying new construction, this addition capped the maximum fine that can be levied against a non-compliant owner at $100. Before this law, boards had the authority to set their own fine schedules, and in higher-end communities, fines could reach $500 or even $1,000 per offense.
Now, owners must be given a hearing and a reasonable opportunity to correct the issue before any fine is issued. Regardless of how many times a rule is violated, the maximum fine remains $100.
AB 1572: Landscaping
This law requires all associations with decorative or non-functional grass to replace those areas with drought-tolerant landscaping. Many water districts are currently offering reimbursements of up to 100% of the cost, though funding is limited and already running short in many areas, with some districts capping their rebates at 50%.
What CAR Is Pushing For: A Proposed HOA Owner Bill of Rights
The California Association of Realtors (CAR) has taken a broader look at the state of homeowner associations and identified some concerning trends. HOA property values are lagging behind non-HOA properties, 79% of buyers say they prefer not to buy in an HOA, and the entry-level condo and townhome market is suffering because buyers are hesitant. CAR believes a lack of regulation and transparency within management companies is driving this, and they are now actively working on legislation to protect consumers and owners.
CAR is exploring seven proposed rights for HOA owners:
- The right to governing documents and annual disclosures at no cost. Owners have already paid for these documents at the time of purchase and through their monthly assessments. They should not have to pay a management company to access them.
- The right to a financially healthy association, with reserves at least 50% funded by 2038. An unfunded reserve study is meaningless. Boards have a fiduciary responsibility to protect the association’s common areas, and this requires funds for both expected and unexpected expenses. This proposal gives associations roughly ten years to reach the required funding level.
- The right to be governed by a board director who has completed at least 3 hours of online education within 6 months of being elected or appointed. Many volunteer board directors have never been informed that they carry a fiduciary responsibility and must exercise sound business judgment. By comparison, Realtors are required to complete 45 hours of continuing education every four years to maintain their license. Board members currently have no mandatory education requirement.
- The right to a professionally licensed Community Manager and a management company regulated by the Department of Real Estate. Managers and management companies need to be held accountable, and there must be real recourse when bad actors cause harm to owners or associations.
- The right to a reasonable escrow document fee, capped at $575, with a one-time rush fee of $100 if documents are updated within 48 hours of close. Management companies can charge whatever monthly fee fits their business model, but passing excessive escrow fees on to sellers is not an equitable practice.
- The right to an approved AI-generated summary report with an annual financial health score. Owners deserve a clear, easy-to-read report card on how their board is performing. A higher score would reflect better maintenance and stronger property values.
- The right to have a management company provide all annual documents to a qualified third party at a fee of $40 per HOA upon request. The goal here is a statewide database of every HOA that any person can access to review a community’s financial health and standing.
What This Means for Owners and Boards
There will be plenty of debate and changes before any of these proposed rights become law. But the underlying issue is real: owners don’t feel confident in their boards, and too many management companies are focused on protecting their own business models rather than improving the industry.
Whether you’re a current owner or considering buying in an HOA, understanding how these laws and proposals could affect your community is important. Have questions about how your association is being managed? Progressive AM is here to help.
