2026-09-09 · California · Legislation · Pending — not yet law

The largest single package of common interest development changes of the 2026 session is on the Governor's desk, and it touches manager duties, escrow disclosures, reserve spending and balcony inspection reports at once. SB 1238 is not law. It was enrolled and presented to Governor Gavin Newsom on August 31, 2026 at 6 p.m., after the Senate concurred in the Assembly's amendments 39–0 on August 27.¹

Authored by Senator Aisha Wahab and introduced on February 19, 2026, the bill amends Business and Professions Code sections 11500 and 11501 and Civil Code sections 4525, 5200, 5510, 5550, 5551, 5560 and 5565, and adds a new Civil Code section 5390.²

A statutory standard of care for managers

New section 5390 would provide that a managing agent, including its employees, facilitating activities under Civil Code sections 5300, 5310 and 5500 “owes a duty of care that is prudent and provides the highest good faith effort to the association and its members.”

California has regulated what a manager must disclose and what certification a manager may claim. It has not, until now, written a standard of care for managers into the Civil Code.

Business and Professions Code section 11500 is separately amended to define “management services” expressly to include administering financial collection and reporting, implementing board directives, enforcing governing documents, administering contracts, and implementing the activities in Civil Code sections 5300, 5310 and 5500. Section 11501 reaffirms that no real estate or broker license is required.

Reserves could not fund unrelated litigation

Section 5510 would be amended so that reserve funds may not be expended for litigation unrelated to the repair or restoration of major components the association is obligated to maintain.

This is the provision that drew organized opposition. It does not bar reserve spending on construction defect or repair-related litigation; it draws a line at litigation with no repair nexus.

Balcony inspections, reformatted

Section 5551 — the exterior elevated element statute — would be restated with its existing architecture intact: inspection at least every nine years by a licensed structural or civil engineer or architect, a statistically significant sample at 95 percent confidence with a ±5 percent margin of error, application to buildings with three or more attached multifamily units, and a first inspection deadline of January 1, 2025.³

What changes is the report. Its first page would have to state the total number of units, the units with exterior elevated elements, the total number of elements, the number inspected, and a categorization of elements by repair urgency. Where an inspection finds an immediate threat to safety, the association must notify local code enforcement within 15 days and prevent occupant access until repairs are approved.

1. SB 1238, California Legislature — bill status and complete history (enrolled and presented to the Governor August 31, 2026) ↩
2. SB 1238, California Legislature — bill text and Legislative Counsel's Digest (adding Civil Code § 5390; amending §§ 4525, 5200, 5510, 5550, 5551, 5560, 5565 and Bus. & Prof. Code §§ 11500, 11501) ↩
3. Civil Code § 5551, California Legislative Information — exterior elevated elements, current operative text ↩
4. 2026 Tentative Legislative Calendar, California State Senate (September 30 last day for the Governor to act) ↩