Millions of Californians live in HOA-governed communities, yet the companies hired to manage those communities have long operated with limited accountability. SB 1238, introduced by Senator Wahab, addresses this gap under the Davis-Stirling Common Interest Development Act by expanding the legal definition of “agent” to include any person or company that facilitates management activities for an HOA — and by requiring those agents to owe a fiduciary duty to both the HOA board and its members.
This is a meaningful reform. Right now, management companies can act in ways that serve their own financial interests without clear legal accountability to the homeowners they’re supposed to serve. Codifying a fiduciary duty changes that dynamic entirely.
The bill also prohibits HOA boards from spending reserve funds on litigation or legal threats against their own members — a practice that has been used to bully individual homeowners into compliance at the expense of funds meant for maintenance and repairs.
Additionally, the bill would require sellers to provide prospective buyers with additional disclosures, including information about exterior elements requiring imminent repairs, giving buyers a clearer picture of what they’re purchasing.
Taken together, SB 1238 adds transparency, strengthens consumer protections, and holds HOA management companies to a legal standard long overdue.
This article was written by Paul Herrera, Government Affairs Director.
Leave a Reply