1365.2. (a) For the purposes of this section, the following
definitions shall apply:
(1) "Association records" means all of the following:
(A) Any financial document required to be provided to a member in
(B) Any financial document or statement required to be provided in
(C) Interim financial statements, periodic or as compiled,
containing any of the following:
(i) Balance sheet.
(ii) Income and expense statement.
(iii) Budget comparison.
(iv) 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 subparagraph shall be prepared in
accordance with an accrual or modified accrual basis of accounting.
(D) Executed contracts not otherwise privileged under law.
(E) Written board approval of vendor or contractor proposals or
(F) State and federal tax returns.
(G) Reserve account balances and records of payments made from
(H) Agendas and minutes of meetings of the members, the board of
directors and any committees appointed by the board of directors
pursuant to Section 7212 of the Corporations Code; excluding,
however, minutes and other information from executive sessions of the
board of directors as described in Section 1363.05.
(I) (i) Membership lists, including name, property address, and
mailing address, if the conditions set forth in clause (ii) are met
and except as otherwise provided in clause (iii).
(ii) The member requesting the list shall state the purpose for
which the list is requested which purpose shall be reasonably related
to the requester's interest as a member. If the association
reasonably believes that the information in the list will be used for
another purpose, it may deny the member access to the list. If the
request is denied, in any subsequent action brought by the member
under subdivision (f), the association shall have the burden to prove
that the member would have allowed use of the information for
purposes unrelated to his or her interest as a member.
(iii) A member of the association may opt out of the sharing of
his or her name, property address, and mailing address by notifying
the association in writing that he or she prefers to be contacted via
the alternative process described in subdivision (c) of Section 8330
of the Corporations Code. This opt-out shall remain in effect until
changed by the member.
(J) Check registers.
(2) "Enhanced association records" means invoices, receipts and
canceled checks for payments made by the association, purchase orders
approved by the association, credit card statements for credit cards
issued in the name of the association, statements for services
rendered, and reimbursement requests submitted to the association,
provided that the person submitting the reimbursement request shall
be solely responsible for removing all personal identification
information from the request.
(b) (1) The association shall make available association records
and enhanced association records for the time periods and within the
timeframes provided in subdivisions (i) and (j) for inspection and
copying by a member of the association, or the member's designated
representative. The association may bill the requesting member for
the direct and actual cost of copying requested documents. The
association shall inform the member of the amount of the copying
costs before copying the requested documents.
(2) A member of the association may designate another person to
inspect and copy the specified association records on the member's
behalf. The member shall make this designation in writing.
(c) (1) The association shall make the specified association
records available for inspection and copying in the association's
business office within the common interest development.
(2) If the association does not have a business office within the
development, the association shall make the specified association
records available for inspection and copying at a place that the
requesting member and the association agree upon.
(3) If the association and the requesting member cannot agree upon
a place for inspection and copying pursuant to paragraph (2), or if
the requesting member submits a written request directly to the
association for copies of specifically identified records, the
association may satisfy the requirement to make the association
records available for inspection and copying by mailing copies of the
specifically identified records to the member by first-class mail
within the timeframes set forth in subdivision (j).
(4) The association may bill the requesting member for the direct
and actual cost of copying and mailing requested documents. The
association shall inform the member of the amount of the copying and
mailing costs, and the member shall agree to pay those costs, before
copying and sending the requested documents.
(5) In addition to the direct and actual costs of copying and
mailing, the association may bill the requesting member an amount not
in excess of ten dollars ($10) per hour, and not to exceed two
hundred dollars ($200) total per written request, for the time
actually and reasonably involved in redacting the enhanced
association records as provided in paragraph (2) of subdivision (a).
The association shall inform the member of the estimated costs, and
the member shall agree to pay those costs, before retrieving the
(d) (1) Except as provided in paragraph (2), the association may
withhold or redact information from the association records for any
of the following reasons:
(A) The release of the information is reasonably likely to lead to
identity theft. For the purposes of this section, "identity theft"
means the unauthorized use of another person's personal identifying
information to obtain credit, goods, services, money, or property.
Examples of information that may be withheld or redacted pursuant to
this paragraph include bank account numbers of members or vendors,
social security or tax identification numbers, and check, stock, and
credit card numbers.
(B) The release of the information is reasonably likely to lead to
fraud in connection with the association.
(C) The information is privileged under law. Examples include
documents subject to attorney-client privilege or relating to
litigation in which the association is or may become involved, and
confidential settlement agreements.
(D) The release of the information is reasonably likely to
compromise the privacy of an individual member of the association.
(E) The information contains any of the following:
(i) Records of a la carte goods or services provided to individual
members of the association for which the association received
monetary consideration other than assessments.
(ii) Records of disciplinary actions, collection activities, or
payment plans of members other than the member requesting the
(iii) Any person's personal identification information, including,
without limitation, social security number, tax identification
number, driver's license number, credit card account numbers, bank
account number, and bank routing number.
(iv) Minutes and other information from executive sessions of the
board of directors as described in Section 1363.05, except for
executed contracts not otherwise privileged. Privileged contracts
shall not include contracts for maintenance, management, or legal
(v) Personnel records other than the payroll records required to
be provided under paragraph (2).
(vi) Interior architectural plans, including security features,
for individual homes.
(2) Except as provided by the attorney-client privilege, the
association may not withhold or redact information concerning the
compensation paid to employees, vendors, or contractors. Compensation
information for individual employees shall be set forth by job
classification or title, not by the employee's name, social security
number, or other personal information.
(3) No association, officer, director, employee, agent or
volunteer of an association shall be liable for damages to a member
of the association or any third party as the result of identity theft
or other breach of privacy because of the failure to withhold or
redact that member's information under this subdivision unless the
failure to withhold or redact the information was intentional,
willful, or negligent.
(4) If requested by the requesting member, an association that
denies or redacts records shall provide a written explanation
specifying the legal basis for withholding or redacting the requested
(e) (1) The association records, and any information from them,
may not be sold, used for a commercial purpose, or used for any other
purpose not reasonably related to a member's interest as a member.
An association may bring an action against any person who violates
this section for injunctive relief and for actual damages to the
association caused by the violation.
(2) This section may not be construed to limit the right of an
association to damages for misuse of information obtained from the
association records pursuant to this section or to limit the right of
an association to injunctive relief to stop the misuse of this
(3) An association shall be entitled to recover reasonable costs
and expenses, including reasonable attorney's fees, in a successful
action to enforce its rights under this section.
(f) A member of an association may bring an action to enforce the
member's right to inspect and copy the association records. If a
court finds that the association unreasonably withheld access to the
association records, the court shall award the member reasonable
costs and expenses, including reasonable attorney's fees, and may
assess a civil penalty of up to five hundred dollars ($500) for the
denial of each separate written request. A cause of action under this
section may be brought in small claims court if the amount of the
demand does not exceed the jurisdiction of that court. A prevailing
association may recover any costs if the court finds the action to be
frivolous, unreasonable, or without foundation.
(g) The provisions of this section apply to any community service
organization or similar entity, as defined in paragraph (3) of
subdivision (c) of Section 1368, that is related to the association,
and to any nonprofit entity that provides services to a common
interest development under a declaration of trust. This section shall
operate to give a member of the organization or entity a right to
inspect and copy the records of that organization or entity
equivalent to that granted to association members by this section.
(h) Requesting parties shall have the option of receiving
specifically identified records by electronic transmission or
machine-readable storage media as long as those records can be
transmitted in a redacted format that does not allow the records to
be altered. The cost of duplication shall be limited to the direct
cost of producing the copy of a record in that electronic format. The
association may deliver specifically identified records by
electronic transmission or machine-readable storage media as long as
those records can be transmitted in a redacted format that prevents
the records from being altered.
(i) The time periods for which specified records shall be provided
is as follows:
(1) Association records shall be made available for the current
fiscal year and for each of the previous two fiscal years.
(2) Minutes of member and board meetings shall be permanently made
available. If a committee has decisionmaking authority, minutes of
the meetings of that committee shall be made available commencing
January 1, 2007, and shall thereafter be permanently made available.
(j) The timeframes in which access to specified records shall be
provided to a requesting member are as follows:
(1) Association records prepared during the current fiscal year,
within 10 business days following the association's receipt of the
(2) Association records prepared during the previous two fiscal
years, within 30 calendar days following the association's receipt of
(3) Any record or statement available pursuant to Section 1365 or
1368, within the timeframe specified therein.
(4) Minutes of member and board meetings, within the timeframe
specified in subdivision (d) of Section 1363.05.
(5) Minutes of meetings of committees with decisionmaking
authority for meetings commencing on or after January 1, 2007, within
15 calendar days following approval.
(6) Membership list, within the timeframe specified in Section
8330 of the Corporations Code.
(k) There shall be no liability pursuant to this section for an
association that fails to retain records for the periods specified in
subdivision (i) that were created prior to January 1, 2006.
(l) As applied to an association and its members, the provisions
of this section are intended to supersede the provisions of Sections
8330 and 8333 of the Corporations Code to the extent those sections
(m) The provisions of this section shall not apply to any common
interest development in which separate interests are being offered
for sale by a subdivider under the authority of a public report
issued by the Department of Real Estate so long as the subdivider or
all subdividers offering those separate interests for sale, or any
employees of those subdividers or any other person who receives
direct or indirect compensation from any of those subdividers,
comprise a majority of the members of the board of directors of the
association. Notwithstanding the foregoing, this section shall apply
to that common interest development no later than 10 years after the
close of escrow for the first sale of a separate interest to a member
of the general public pursuant to the public report issued for the
first phase of the development.
(n) This section shall become operative on July 1, 2006.
1365.2.5. (a) The disclosures required by this article with regard
to an association or a property shall be summarized on the following
Assessment and Reserve Funding Disclosure Summary For the Fiscal
Year Ending _____
(1) The regular assessment per ownership interest is $_____ per
____. Note: If assessments vary by the size or type of ownership
interest, the assessment applicable to this ownership interest may be
found on page _____ of the attached summary.
(2) Additional regular or special assessments that have already
been scheduled to be imposed or charged, regardless of the purpose,
if they have been approved by the board and/or members:
| | Amount per | |
| | ownership | |
| | interest per | |
| | month or year | |
| | (If assessments| |
| | are variable, | |
| Date | see | |
| assessment | note | |
| will be | immediately | Purpose of the |
| due: | below): | assessment: |
| | | |
| | | |
| | | |
| |Total: | |
Note: If assessments vary by the size or type of ownership
interest, the assessment applicable to this ownership interest may be
found on page ____ of the attached report.
(3) Based upon the most recent reserve study and other information
available to the board of directors, will currently projected
reserve account balances be sufficient at the end of each year to
meet the association's obligation for repair and/or replacement of
major components during the next 30 years?
Yes _____ No _____
(4) If the answer to (3) is no, what additional assessments or
other contributions to reserves would be necessary to ensure that
sufficient reserve funds will be available each year during the next
30 years that have not yet been approved by the board or the members?
| | Amount per |
| | ownership |
| Approximate date | interest |
| assessment | per month or|
| will be due: | year: |
| | |
| | |
| | |
| | |
| |Total: |
(5) All major components are included in the reserve study and
are included in its calculations.
(6) Based on the method of calculation in paragraph (4) of
subdivision (b) of Section 1365.2.5, the estimated amount required in
the reserve fund at the end of the current fiscal year is $____,
based in whole or in part on the last reserve study or update
prepared by ____ as of ____ (month), ____ (year). The projected
reserve fund cash balance at the end of the current fiscal year is
$____, resulting in reserves being ____ percent funded at this date.
If an alternate, but generally accepted, method of calculation is
also used, the required reserve amount is $____. (See attached
(7) Based on the method of calculation in
paragraph (4) of
subdivision (b) of Section 1365.2.5 of the
Civil Code, the estimated
amount required in the reserve fund at the
end of each of the next
five budget years is $______, and the
projected reserve fund cash
balance in each of those years, taking into
account only assessments
already approved and other known
revenues, is $______, leaving the
reserve at ______ percent funding. If the
reserve funding plan
approved by the association is implemented,
the projected reserve
fund cash balance in each of those years
will be $______, leaving the
reserve at ______ percent funding.
Note: The financial representations set forth in
this summary are based on the best estimates of
the preparer at that time. The estimates are
subject to change. At the time this summary was
prepared, the assumed long-term before-tax
interest rate earned on reserve funds was ____
percent per year, and the assumed long-term
inflation rate to be applied to major component
repair and replacement costs was ____ percent
(b) For the purposes of preparing a summary pursuant to this
(1) "Estimated remaining useful life" means the time reasonably
calculated to remain before a major component will require
(2) "Major component" has the meaning used in Section 1365.5.
Components with an estimated remaining useful life of more than 30
years may be included in a study as a capital asset or disregarded
from the reserve calculation, so long as the decision is revealed in
the reserve study report and reported in the Assessment and Reserve
Funding Disclosure Summary.
(3) The form set out in subdivision (a) shall accompany each pro
forma operating budget or summary thereof that is delivered pursuant
to this article. The form may be supplemented or modified to clarify
the information delivered, so long as the minimum information set out
in subdivision (a) is provided.
(4) For the purpose of the report and summary, the amount of
reserves needed to be accumulated for a component at a given time
shall be computed as the current cost of replacement or repair
multiplied by the number of years the component has been in service
divided by the useful life of the component. This shall not be
construed to require the board to fund reserves in accordance with
1365.3. Unless the governing documents impose more stringent
standards, any community service organization as defined in paragraph
(3) of subdivision (c) of Section 1368 whose funding from the
association or its members exceeds 10 percent of the organization's
annual budget shall prepare and distribute to the association a
report that meets the requirements of Section 5012 of the
Corporations Code, and that describes in detail administrative costs
and identifies the payees of those costs in a manner consistent with
the provisions of Section 1365.2. If the community service
organization does not comply with the standards, the report shall
disclose the noncompliance in detail. If a community service
organization is responsible for the maintenance of major components
for which an association would otherwise be responsible, the
community service organization shall supply to the association the
information regarding those components that the association would use
to complete disclosures and reserve reports required under this
article. An association may rely upon information received from a
community service organization, and shall provide access to the
information pursuant to the provisions of Section 1365.2.
1365.5. (a) Unless the governing documents impose more stringent
standards, the board of directors of the association shall do all of
(1) Review a current reconciliation of the association's operating
accounts on at least a quarterly basis.
(2) Review a current reconciliation of the association's reserve
accounts on at least a quarterly basis.
(3) Review, on at least a quarterly basis, the current year's
actual reserve revenues and expenses compared to the current year's
(4) Review the latest account statements prepared by the financial
institutions where the association has its operating and reserve
(5) Review an income and expense statement for the association's
operating and reserve accounts on at least a quarterly basis.
(b) The signatures of at least two persons, who shall be members
of the association's board of directors, or one officer who is not a
member of the board of directors and a member of the board of
directors, shall be required for the withdrawal of moneys from the
association's reserve accounts.
(c) (1) The board of directors 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.
(2) However, the board may authorize the temporary transfer of
moneys from a reserve fund to the association's general operating
fund to meet short-term cashflow requirements or other expenses, if
the board has provided notice of the intent to consider the transfer
in a notice of meeting, which shall be provided as specified in
Section 1363.05. The notice shall include the reasons the transfer is
needed, some of the options for repayment, and whether a special
assessment may be considered. If the board authorizes the transfer,
the board shall issue a written finding, recorded in the board's
minutes, explaining the reasons that the transfer is needed, and
describing when and how the moneys will be repaid to the reserve
fund. The transferred funds shall be restored to the reserve fund
within one year of the date of the initial transfer, except that the
board may, after giving the same notice required for considering a
transfer, and, upon making a finding supported by documentation that
a temporary delay would be in the best interests of the common
interest development, temporarily delay the restoration. The board
shall exercise prudent fiscal management in maintaining the integrity
of the reserve account, and shall, if necessary, levy a special
assessment to recover the full amount of the expended funds within
the time limits required by this section. This special assessment is
subject to the limitation imposed by Section 1366. The board may, at
its discretion, extend the date the payment on the special assessment
is due. Any extension shall not prevent the board from pursuing any
legal remedy to enforce the collection of an unpaid special
(d) When the decision is made to use reserve funds or to
temporarily transfer moneys from the reserve fund to pay for
litigation, the association shall notify the members of the
association of that decision in the next available mailing to all
members pursuant to Section 5016 of the Corporations Code, and of the
availability of an accounting of those expenses. Unless the
governing documents impose more stringent standards, the association
shall make an accounting of expenses related to the litigation on at
least a quarterly basis. The accounting shall be made available for
inspection by members of the association at the association's office.
(e) At least once every three years, the board of directors 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.
The study required by this subdivision 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
(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) 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
(5) A reserve funding plan that indicates how the association
plans to fund the contribution identified in paragraph (4) 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. The plan 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. The
plan shall be adopted by the board of directors at an open meeting
before the membership of the association as described in Section
1363.05. If the board of directors 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 1366.
(f) As used in this section, "reserve accounts" means both of the
(1) Moneys that the association's board of directors has
identified for use to defray the future repair or replacement of, or
additions to, those major components that the association is
obligated to maintain.
(2) The funds received, and not yet expended or disposed of, from
either a compensatory damage award or settlement to an association
from any person or entity for injuries to property, real or personal,
arising from any construction or design defects. These funds shall
be separately itemized from funds described in paragraph (1).
(g) As used in this section, "reserve account requirements" means
the estimated funds that the association's board of directors has
determined are required to be available at a specified point in time
to repair, replace, or restore those major components that the
association is obligated to maintain.
(h) This section does not apply to an association that does not
have a "common area" as defined in Section 1351.
1365.6. Notwithstanding any other law, and regardless of whether an
association is a corporation, as defined in Section 162 of the
Corporations Code, the provisions of Section 310 of the Corporations
Code shall apply to any contract or other transaction authorized,
approved, or ratified by the board or a committee of the board.