AB 1101
AB 1101, signed into law in 2017 and codified primarily in Business and Professions Code Sections 11500-11516, established comprehensive regulatory requirements for community association managers and management companies operating in California. The law was enacted in response to high-profile cases of financial fraud and mismanagement by third-party managers who embezzled HOA funds. Under AB 1101, any person or entity that manages the financial affairs of a common interest development — including collecting assessments, managing operating accounts, or overseeing reserve funds — must hold a valid certification from a recognized credentialing organization, maintain a fidelity bond or insurance policy, and comply with specific trust account handling procedures. Managers must deposit association funds into accounts held in the association's name and may not commingle funds from multiple associations or with the manager's own business accounts. The law also requires managers to provide written disclosures to the association board regarding any conflicts of interest, including financial relationships with vendors recommended to the association. AB 1101 works alongside the Davis-Stirling Act's financial transparency requirements (Civil Code Sections 5500-5520) to create layered protections for association funds. Associations should verify that their management company and individual manager meet AB 1101's certification and bonding requirements, and should include compliance with the law as a standard provision in management contracts. The law also interacts with AB 2159, which authorized electronic voting — managers who administer electronic elections must ensure the voting platform complies with Davis-Stirling election requirements, though this is governed by the Civil Code rather than AB 1101 directly.
Example in Context
During the annual management contract review, the board requested updated copies of the management company's AB 1101 certification, fidelity bond, and written conflict-of-interest disclosures, and confirmed that all association accounts were held in the HOA's name at a federally insured financial institution.
State-Specific Notes
Related Terms
Frequently Asked Questions
How can our HOA board verify that our management company complies with AB 1101?
Ask your management company for proof of current certification from a recognized credentialing organization (such as CACM or CAI), a copy of their fidelity bond or insurance policy, and confirmation that all association funds are held in accounts in the association's name. These should be reviewed annually and included as requirements in your management contract. The board should also verify that the manager provides written conflict-of-interest disclosures as required by the law.