Common interest developments: accounting.

Senator Grayson's proposal to modify financial oversight procedures for common interest developments would eliminate provisions allowing board members to conduct financial reviews outside of formal meetings. The legislation targets Section 5501 of the Civil Code, which currently permits individual board members or subcommittees to review financial documents independently, provided these reviews receive subsequent board ratification.

Under existing law, boards of directors for homeowners' associations and similar entities must conduct monthly reviews of account statements, reconciliations, and ledgers. The current code allows these reviews to occur through two alternative methods: individual board members examining documents independently, or a subcommittee consisting of the treasurer and at least one other member conducting the review. Both approaches require formal ratification at the next board meeting.

The repeal would require all financial document reviews to take place during official board meetings, eliminating the flexibility for independent or subcommittee reviews. This change would affect how nonprofit corporations and unincorporated associations managing common interest developments structure their financial oversight processes, requiring boards to incorporate these reviews into their regular meeting agendas.