LEGISLATIVE SESSION NEARS END HOA Fine Cap Becomes Law

By Jennifer Wada, Esq.

We are closing in on the end of the legislative session, as both houses rush to pass all remaining bills before the September 12th adjournment. This year has been action packed and has included several early successes, most notably stalling the bill to require community managers to be licensed as real estate brokers. But, in a late-breaking budget maneuver done behind closed doors, we have also recently been impacted by a cap on HOA fines and penalties.

As mentioned in the last legislative update, CACM was strongly opposed to SB 681 (Wahab), which, among other things, capped HOA penalties and fines at the amount in the fine schedule or $100, whichever is less. The HOA fine cap was a small part of this much broader bill, known as the Senate Housing Affordability package. We had been negotiating on SB 681 for months and felt that we were close to getting the cap removed in exchange for more workable provisions.  However, just days before California’s deadline to pass the state budget, the contents of SB 681 were jammed into the housing budget trailer bill (AB 130, Committee on Budget) and signed as part of the larger state budget deal. Because the budget is effective as soon as it is signed, it is currently law.

State law now has a $100 fine cap, as well as prohibiting late charges or interest on penalties. A member has the right to cure the violation prior to the hearing but if curing the violation would take longer than the time between the notice and the meeting, and the member provides a financial commitment to cure, no penalty can be imposed. The law does have an exception to the fee cap: if the violation may result in an adverse health or safety impact on the common area or another member’s property. We will be working with the Legislature in the next legislative session to try to address the problems that this policy has caused. In the meantime, please contact your legislators and relay the real-world impacts that this legislation has on your communities. You can call their district offices and/or request a meeting with your legislator or their staff. We also urge you to collect stories and data that will help us next year as we try to address this ill-conceived policy that ultimately shifts the harm to all other homeowners.

A quick update on other bills of interest:

Sb 410

Grayson: Balcony Inspection Report

This bill is sponsored by the CA Association of Realtors and adds the balcony inspection report to the list of disclosure documents.  One of the reasons cited by the sponsor for this bill was that managers are refusing to conduct inspections and/or provide inspection reports.  Amendments also added the balcony report as an “association record,” as well as requiring the report to include things like the total number of units with exterior elevated elements and the total number of exterior elevated elements inspected. The bill was recently amended to require a schedule of needed repairs out to nine years and beyond.  Because of concerns from engineers about liability stemming from having to certify such a schedule, this portion was removed.   We do know, however, that CAR plans to revisit this issue and is actively looking for a solution to ensure transactions do not fall through due to Fannie and Freddie requirements. We will be engaging in this discussion and will advocate against managers being put in the position of guaranteeing structural soundness.

SB 625 Wahab: Disasters: Housing Reconstruction

This bill is intended to address emergency situations like the LA wildfires and voids any CC&Rs to the extent they prohibit or effectively prohibit substantially similar reconstruction of a residential structure damaged or destroyed in a disaster.  The bill also requires expedited architectural review in these situations. The bill has now been amended to tie the expedited review to disaster situations only.

SB 770 Allen: EV Charging Stations

This bill removes the provision requiring owners, when they install an EV charger in common area, to name the association as an additional insured on their insurance policy. Negotiations are ongoing on this measure and CACM is monitoring it as it moves through the process.

After the Legislature adjourns on September 12th, the Governor will have until October 12th to sign or veto legislation. Apart from the fine cap, we were able to either kill, or significantly improve, almost all the CID bills. That said, 2026 is lining up to be a massive year for the management industry and we will need to harness the power of all your voices to stop policies that impede, or advance policies that enhance, your ability to manage efficiently and effectively.