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MANAGER ETHICS REQUIREMENTS

Managers and management companies are governed by codes of ethics established by two different organizations, the California Association of Community Managers ("CACM"), a statewide professional organization that certifies managers in California, and the Community Associations Institute ("CAI"), a nationwide organization dedicated to the community association industry.

CACM has a Code of Professional Ethics for the managers it certifies. For more information about CACM, visit their website at www.cacm.org.

CAI has its own Manager Code of Ethics posted on their national website: www.caionline.org.

Prior to Signing Management Agreement. As required by the Davis-Stirling Act, managing agents are required to disclose conflicts of interest. Section 5375 of the Civil Code requires a prospective managing agent of a common interest development to provide a written statement to the board as soon as practicable of the following:

(d) Disclose any business or company in which the common interest development manager or common interest development management firm has any ownership interests, profit-sharing arrangements, or other monetary incentives provided to the management firm or managing agent.

(e) Whether or not the common interest development manager or common interest development management firm receives a referral fee or other monetary benefit from a third-party provider distributing documents pursuant to Sections 4528 and 4530.

When Presenting Vendor Bids. Disclosing conflicts of interest continues after a management agent is hired. Section 5375.5 of the Civil Code requires:

A common interest development manager or common interest development management firm shall disclose, in writing, any potential conflict of interest when presenting a bid for service to an association’s board of directors. “Conflict of interest,” for purposes of this section, means:

(a) Any referral fee or other monetary benefit that could be derived from a business or company providing products or services to the association.

(b) Any ownership interests or profit-sharing arrangements with service providers recommended to, or used by, the association.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

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