AB 130’S “FINANCIAL COMMITMENT” PROVISION IS A DISASTER
OVERVIEW
AB 130 added new language to Civil Code sections 5850, 5855, etc. that lets homeowners avoid a disciplinary hearing altogether by either curing the violation or by showing, at least seven days prior to the hearing, that they made a “financial commitment” to cure the violation.
Huh? What does that mean?
I’ve been an attorney for almost 30 years, and spent most of those years as a trial attorney. I am considered an expert in HOA law. And I have no idea what “financial commitment” means in the context of the AB 130’s addition to Civil Code sections 5850, 5855, etc.
The statute doesn’t define it. There’s no case law interpreting it. There’s no explanation of whether it means a deposit, a signed contract, a quote from a vendor, or just a homeowner’s promise to act. It’s a procedural black hole and a gift to bad actors, who will absolutely exploit the statute’s lack of clarity.
WHAT COUNTS AS “FINANCIAL COMMITMENT”? NOBODY KNOWS
To understand how easily this can be manipulated, look at just a few examples.
- A homeowner cited for a landscaping violation submits a vague invoice showing that they “intend” to have the work completed. Is that enough? The invoice doesn’t say when the work will be done. Is that a problem? The statute doesn’t say.
- A member facing a hearing for unpermitted construction could flash a contractor quote with no payment attached, just to postpone enforcement. Would that do it? Who knows?
- That same member could fabricate a “financial commitment” knowing that the board will hesitate to challenge it and risk violating the new law. What happens then? Who knows?
This isn’t far-fetched. It’s inevitable. The statute doesn’t say who gets to decide whether the financial commitment is legitimate, nor does it provide any guidance as to how that decision has to be made. It doesn’t require proof of timing, execution, or follow-through, and it doesn’t address what happens to the timeline once the “commitment” comes in, especially if it becomes obvious that the commitment turns out to be an empty one.
NO POWER TO JUDGE OR VERIFY WHAT “FINANCIAL COMMITMENT” MEANS
Meanwhile, the board is now required to cancel the hearing even if it suspects the commitment is meaningless. The statute doesn’t allow the board to proceed and consider whether the cure is legitimate. It forces cancellation with no mechanism for judgment or verification. Or does it? I don’t know. Do you?
This provision also complicates timing and procedural flow. If a member sends in a document claiming to satisfy the “financial commitment” requirement, and the board disagrees, what happens? Does the board reschedule the hearing? Restart the 10-day notice period? There’s no guidance, just a procedural landmine waiting to be triggered.
AB 130 WAS NEVER ABOUT HOMEOWNER RIGHTS
AB 130 had nothing to do with relieving homeowners of the burden causes by excessive fines. The law has much more to do with servicing the governor’s ongoing efforts to urbanize the State of California (i.e., reduce the number of people living in suburbs), which requires wresting local control away from cities (and HOAs) and to the state.
On a cursory and simplistic glance, the law looks like a good thing. But in practice, it’s a bubbling cauldron of unintended consequences, it’s unworkable, and it benefits bad HOAs and bad HOA members and leaves the rest of us to clean up the mess.
CONCLUDING THOUGHT
AB 130 had nothing to do with protecting homeowners from abusive fines. It was rushed through without input from actual HOA practitioners, and now we’re left with statutory language so vague that no one knows what it actually requires. And nowhere is this more evident in that statute as in the “financial commitment” loophole.
This isn’t reform. It’s confusion masquerading as policy. And until this gets fixed, bad actors—on both sides—will use the ambiguity to manipulate the system and drag everyone else down with them.