Article 8Conflict of Interest

Section § 5350

Explanation

This law says that the rules in two other sections of the Corporations Code apply to any contracts or deals approved by a board or committee, no matter if an association is incorporated or not. Directors and committee members can't vote on issues like their own discipline, fines for damaging common areas, requests for payment plans for overdue fees, foreclosures on their property, changes to their own property, or granting exclusive use of common areas to themselves. However, this law doesn't stop other rules that might apply if directors have a personal interest in a decision.

(a)CA Civil Law Code § 5350(a) Notwithstanding any other law, and regardless of whether an association is incorporated or unincorporated, the provisions of Sections 7233 and 7234 of the Corporations Code shall apply to any contract or other transaction authorized, approved, or ratified by the board or a committee of the board.
(b)CA Civil Law Code § 5350(b) A director or member of a committee shall not vote on any of the following matters:
(1)CA Civil Law Code § 5350(b)(1) Discipline of the director or committee member.
(2)CA Civil Law Code § 5350(b)(2) An assessment against the director or committee member for damage to the common area or facilities.
(3)CA Civil Law Code § 5350(b)(3) A request, by the director or committee member, for a payment plan for overdue assessments.
(4)CA Civil Law Code § 5350(b)(4) A decision whether to foreclose on a lien on the separate interest of the director or committee member.
(5)CA Civil Law Code § 5350(b)(5) Review of a proposed physical change to the separate interest of the director or committee member.
(6)CA Civil Law Code § 5350(b)(6) A grant of exclusive use common area to the director or committee member.
(c)CA Civil Law Code § 5350(c) Nothing in this section limits any other provision of law or the governing documents that govern a decision in which a director may have an interest.
director voting restrictions committee member voting conflict of interest board contracts unincorporated association common area damage assessment overdue assessments payment plan lien foreclosure decision property changes approval exclusive use common area
(Added by Stats. 2012, Ch. 180, Sec. 2. (AB 805) Effective January 1, 2013. Operative January 1, 2014, by Sec. 3 of Ch. 180.)