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CALIFORNIA CIVIL CODE
SECTION 1363
Management of funds received by managing agent
Text
(a) A managing agent of a common interest development who
accepts or receives funds belonging to the association shall
deposit all such funds that are not placed into an escrow
account with a bank, savings association, or credit union
or into an account under the control of the association, into
a trust fund account maintained by the managing agent in a
bank, savings association, or credit union in this state.
All funds deposited by the managing agent in the trust fund
account shall be kept in this state in a financial institution,
as defined in Section 31041 of the Financial Code, which is
insured by the federal government, and shall be maintained
there until disbursed in accordance with written instructions
from the association entitled to the funds.
(b) At the written request of the board of directors of the
association, the funds the managing agent accepts or receives
on behalf of the association shall be deposited into an interest-bearing
account in a bank, savings association, or credit union in
this state, provided all of the following requirements are
met:
(1) The account is in the name of the managing agent as trustee
for the association or in the name of the association.
(2) All of the funds in the account are covered by insurance
provided by an agency of the federal government.
(3) The funds in the account are kept separate, distinct,
and apart from the funds belonging to the managing agent or
to any other person or entity for whom the managing agent
holds funds in trust except that the funds of various associations
may be commingled as permitted pursuant to subdivision (d).
(4) The managing agent discloses to the board of directors
of the association the nature of the account, how interest
will be calculated and paid, whether service charges will
be paid to the depository and by whom, and any notice requirements
or penalties for withdrawal of funds from the account.
(5) No interest earned on funds in the account shall inure
directly or indirectly to the benefit of the managing agent
or his or her employees.
(c) The managing agent shall maintain a separate record of
the receipt and disposition of all funds described in this
section, including any interest earned on the funds.
(d) The managing agent shall not commingle the funds of the
association with his or her own money or with the money of
others that he or she receives or accepts, unless all of the
following requirements are met:
(1) The managing agent commingled the funds of various associations
on or before February 26, 1990, and has obtained a written
agreement with the board of directors of each association
that he or she will maintain a fidelity and surety bond in
an amount that provides adequate protection to the associations
as agreed upon by the managing agent and the board of directors
of each association.
(2) The managing agent discloses in the written agreement
whether he or she is deriving benefits from the commingled
account or the bank, credit union, or savings institution
where the moneys will be on deposit.
(3) The written agreement provided pursuant to this subdivision
includes, but is not limited to, the name and address of the
bonding companies, the amount of the bonds, and the expiration
dates of the bonds.
(4) If there are any changes in the bond coverage or the companies
providing the coverage, the managing agent discloses that
fact to the board of directors of each affected association
as soon as practical, but in no event more than 10 days after
the change.
(5) The bonds assure the protection of the association and
provide the association at least 10 days' notice prior to
cancellation.
(6) Completed payments on the behalf of the association are
deposited within 24 hours or the next business day and do
not remain commingled for more than 10 calendar days.
(e) The prevailing party in an action to enforce this section
shall be entitled to recover reasonable legal fees and court
costs.
(f) As used in this section, a "managing agent"
is a person or entity, who for compensation or, in expectation
of compensation, exercises control over the assets of the
association. However, a "managing agent" does not
include a full-time employee of the association or a regulated
financial institution operating within the normal course of
business, or an attorney at law acting within the scope of
his or her license.
(g) As used in this section, "completed payment"
means funds received which clearly identify the account to
which the funds are to be credited.
Added Stats 1990 ch 1483 § 1 (SB 2181). Amended Stats
1993 ch 589 § 21 (AB 2211).
ANNOTATIONS
ANNOTATIONS
Amendments:
1993 Amendment:
Routine code maintenance.
Collateral References:
Law Review Articles:
1990 legislative summary. 9 Cal Real Prop J No. 1 p 1
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