AB 690 Management Disclosures and Escrow Documents
» Posted August 15, 2017 News
AB 690 includes a few changes to the law that are unrelated to one another.
Management Disclosures to Prospective Clients
Currently a manager must provide certain disclosures to a prospective association client prior to entering into a management contract. With those disclosures, a manager or management company must now disclose whether the manager will receive a referral fee or other monetary benefit from a third-party hired to distribute documents required as part of the association’s annual budget report.
In the disclosures provided to a prospective association client, the manager must provide “an affirmative written acknowledgement” that the annual budget report disclosures and documents and the disclosures and documents provided to a member as part of an escrow or sale “are the property of the association and not its managing agent or the agent’s managing firm.”
Finally, the disclosures must include whether the manager or management company have any ownership interest or receive monetary incentives with any company or business. This includes fees provided by businesses that distribute required documents and disclosures on behalf of the management company, like companies that provide the escrow disclosures. This requirement is intended to make potential clients aware of any conflict of interests or incentives a management company may have to use a particular vendor.
Form for Escrow Documents
A seller is permitted to pick which escrow documents he or she wants to purchase from the association for purposes of making appropriate disclosures to the buyer. The cost for each document is listed on a form. The form used to list the cost for each document must now include the following language:
The seller may, in accordance with Section 4530 of the Civil Code, provide to the prospective purchaser, at no cost, current copies of any documents specified by Section 4525 that are in the possession of the seller.
A seller may request to purchase some or all of these documents, but shall not be required to purchase ALL of the documents listed on this form.
Additionally the form used to itemize the costs for the documents, now officially titled as “Charges For Documents Provided,” must be included in the annual budget report every year. According to the author of the bill, this requirement is intended to “help home owners prepare for costs associated with the transfer of real property by assuring all owners have advanced notice of the costs associated with document production prior to engaging in the escrow process.”