Common interest developments: funds: insurance.

Existing law, the Davis-Stirling Common Interest Development Act, regulates common interest developments and requires a managing agent, at the written request of the board of directors of the association, to deposit funds the managing agent receives on behalf of the association into a bank, savings association, or credit union in the state if specified requirements are met. This bill would require the bank, savings association, or credit union to be insured by the Federal Deposit Insurance Corporation, National Credit Union Administration Insurance Fund, or the Securities Investor Protection Corporation. Existing law prohibits transfers of greater than $10,000 or 5% of an association's total combined reserve and operating account deposits, whichever is lower, without written approval from the board. This bill would instead prohibit transfers of $10,000 or greater without prior written approval from the board. Existing law requires the association to maintain fidelity bond coverage for its directors, officers, and employees, and requires the fidelity bond coverage to also include computer fraud and funds transfer fraud and, if the association uses a managing agent or management company, coverage for dishonest acts by that person or entity and its employees. This bill would specifically require the association to maintain crime insurance, employee dishonesty coverage, and fidelity bond coverage, or their equivalent, for the association and the association's managing agent or management company and would require the protection against computer and funds transfer fraud to be in an equal amount.