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MANAGER CONFLICTS OF INTEREST

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.

Adams Stirling PLC