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AB 1412 made two unrelated changes. Both of them make a lot of sense.

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FHA certification is not mandatory for condominium associations. Associations tend to go through the certification process so that there is a larger pool of potential homebuyers, which theoretically increases the value and marketability of units. Further, FHA will only insure mortgages used to purchase a primary residence. As a result, a board can potentially increase the number of owner-occupied homes by certifying the association. In theory, being FHA certified is a signal to all potential buyers that the association is in good financial health, even if the buyer will not be using an FHA-insured loan.

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AB 690 includes a few changes to the law that are unrelated to one another.

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.

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Existing law allows various required fees to be included in the price of a residential real estate transfer. These include public fees, such as transfer taxes and document recording fees as well as private fees, such as those charged by a homeowner association. Private transfer fees (PTFs) are fees required by the developer and are paid by each homebuyer as part of each sale. The money generated from each sale is usually earmarked for some specific cause, like environmental mitigation or the development of affordable housing in the locality. In some cases, the homeowners association is the recipient of the money.

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