2026 Legislative Update and Case Law Review

The following is a summary of the new legislation impacting community associations that was signed into law this year. Unless otherwise noted, all laws outlined below take effect January 1, 2026. 

2026 LEGISLATIVE UPDATE

ASSEMBLY BILL 130 - NEW LIMITATIONS PLACED ON ASSOCIATION FINES 

CURRENT LAW

Civil Code Sections 5850 and 5855 govern an association’s fine and enforcement procedures. They require due process (notice and a hearing) prior to the Board enforcing fines or other discipline in accordance with the association’s fine schedule or enforcement policy. 

NEW LAW: Limits fines that can be imposed. 

AB 130 amended Civil Code Section 5850 and 5855 limiting an association from imposing fines in excess of $100 per violation, unless the board finds that the violation may result in an adverse health or safety impact on the common area or another association member’s property. The board may impose fines in accordance with the association’s existing fine schedule provided it specifies the adverse health and safety impact in an open board meeting prior to imposing the fines. 

AB 130 also mandates that owners be given an opportunity to cure the violation prior to the hearing, in which event, all enforcement against the owner must cease.  

Finally, AB 130 added to Civil Code section 5850 that “monetary fines must be reasonable.”  

NEW LAW: prevents ADU/JADU Fees in connection with construction.  

AB 130 also prevents associations from adding certain fees in connection with the architectural review and approval of an accessory dwelling unit (ADU), or a junior accessory dwelling unit (JADU). The law still allows associations to impose reasonable restrictions on ADUs and JADUs, however, AB 130 defines "reasonable restrictions" to mean restrictions that do not unreasonably increase the cost to construct, effectively prohibit the construction of, or extinguish the ability to otherwise construct, an accessory dwelling unit or junior accessory dwelling unit.  Therefore, while association fees or deposits related to the construction of an ADU or JADU are prohibited, AB 130 seems to leave open the ability of an association to pass on to an owner fees associated with a consultant’s review of ADU plans and similar charges in connection with the application, review and approval process. Boards are encouraged to consult legal counsel on what ADU/JADU related fees are permissible under AB 130, if any. 

RECOMMENDED ACTION

In response to AB 130, all associations are encouraged to review existing fine and enforcement policies and amend them to comply with amended Civil Code Section 5850, and 5855.  It is also recommended the association’s put in place a policy or procedure for determining in advance of an enforcement hearing whether a particular violation may be an adverse  health or safety impact on the common area or another association member’s property, in order to make a proper record of same and allow the imposition of fines in excess of the $100 limitation.  

Associations are encouraged to work with legal counsel to reconsider how to use fines and enforcement procedures more effectively as an enforcement tool in order to encourage owner compliance with the governing documents. 

ASSEMBLY BILL 752 (ÁVILA FARÍAS) - CHILD DAYCARE FACILITIES 

CURRENT LAW

Currently, the Health and Safety Code provides for the licensing and regulation of daycare centers and family daycare homes by the State Department of Social Services. The law considers daycare as a residential use of property, and prohibits governments from charging certain licensing, zoning, taxes, and other fees that might otherwise apply to these businesses. 

NEW LAW

The amendment to Health and Safety Code Section 1597.22  would extend the ability of daycare providers to operate in multifamily communities. As a result, the licensing of daycare facilities can be either in planned developments or condominium communities. The amendment establishes consistent licensing requirements for day use facilities regardless of the size and style of a multifamily community. 

RECOMMENDED ACTION

This change mostly affects how cities/counties approach licensing for day use facilities. Associations were always required to allow child daycare facilities, as long as the local governments gave appropriate licensing. With this amendment, cities and counties must consider child daycare facilities to be residential in nature and allow facilities to be licensed in multifamily communities. Boards should be prepared to work with management and their legal counsel to ensure that child daycare facilities can operate consistent with these new licensing requirements. 

ASSEMBLY BILL 1154 (CARILLO) - JADU ZONING 

CURRENT LAW

Existing law created an ordinance that established the process for approving a junior accessory dwelling unit (JADU). Part of that language required that owners occupy the single-family residence in which the junior accessory dwelling unit is permitted. 

NEW LAW

The amendment to Government Code Section 66333 removes the owner-occupancy requirement in certain situations. If the JADU shares sanitation facilities with the existing structure, then the single family residence would still need to be owner-occupied. The new law also requires a JADU lease to be longer than 30 days. 

RECOMMENDED ACTION

This amendment will force cities/counties to change the permitting and approval process they use to review JADU applications. Boards will need to understand that cities/counties may increase the number of approved JADU structures, and be prepared to pursue tenants who violate the 30 day minimum lease terms enacted by this amendment.  

SENATE BILL 410 (GRAYSON) – BALCONY INSPECTION COVER PAGE. 

CURRENT LAW

Currently Civil Code Section 4525 requires an association to obtain a visual inspection of the exterior elevated elements of a common interest development at least every 9 years, and to make recommendations for any necessary repair or replacement. Civil Code Section 4528 requires the Association to make the report of the inspection available to Owners upon request.  

NEW LAW

SB 410 adds a balcony report cover page to the list of association records available to members pursuant to Civil Code 5200.  This law also requires this report to be made available for 2 fiscal years and to be among the records disclosed to prospective purchasers. SB 410 mandates that the inspector’s report contains: (1) the total number of units in project; (2) a certification that the inspector has conducted a visual inspection and evaluated a statistically significant sample. 

RECOMMENDED ACTION

While this law does not require boards to take on additional tasks, it does require that the board know to ask for the new reports from the inspectors, and to keep them for distribution to members upon request. Boards and management should add this inspection report to the Civil Code Section 4528 Document Disclosure Summary Form. 

The obligation to provide this cover page falls to the licensed party who is completing the balcony/elevated elements inspection; however, boards and management should know make sure the cover page is provided and available should a member make a Civil Code 5200 records request for it. 

SENATE BILL 625 (WAHAB) STREAMLINED ARCHITECTURAL PROCEDURES. 

CURRENT LAW

Civil Code Section 4765 requires an association to provide a fair, reasonable, and expeditious procedure for modifications to owners’ separate interest, but allows associations to ensure that construction conforms to CC&R standards.  

NEW LAW

SB 625 adds Sections 4752 and 4766 to the Davis-Stirling Act.  Civil Code Section 4752 prohibits the enforcement of any language in the governing documents that would prevent a substantially similar reconstruction of a residential structure that was destroyed or damaged in a disaster. New Civil Code Section 4766, in turn, requires an association to provide a streamlined architectural review and approval process including a timely response to a member, within 45 days,  either 1) a denial of the application in writing along with comments and a request for revisions; or, 2)  approval of the application.  

Associations are subject to a court award of reasonable attorney’s fees to any owner who prevails in an action against an association for violating this post disaster streamlined architectural review and approval process. 

RECOMMENDED ACTION

This law was a direct result of the impact of the January 2025 Eaton Canyon and Palisades fires. The language voids any CC&Rs restrictions that would effectively prohibit the rebuilding of homes damaged or destroyed from these disasters. The law will require boards to revisit their architectural approval procedures and timelines. The law requires architectural review and a response within 45 days of submission of a complete application and details the areas that an association can use as the basis for denying or requesting modifications of an application.  

This disaster based architectural approval law includes an appeal procedure requiring a final written response within 60 days. 

The law also supplies language that obligates the city and other housing authorities to remove barriers to assist property owners with the rebuilding process. The law will not impact routine architectural requests or modifications. 

SENATE BILL 770 (ALLEN) – EV CHARGING STATION AND INSURANCE. 

CURRENT LAW

Civil Code Section 4745 imposes various requirements for the installation and use of an electric vehicle (EV) charging station placed in a common area or an exclusive use common area. One of the requirements states that the owner must provide a certificate of insurance that names the association as an additional insured party. 

NEW LAW

SB 770 removed language which required owners to name their association as an additional insured for coverage over EV Charging Stations. 

RECOMMENDED ACTION

Boards will have to review and revise their EV application forms and policies. Beginning January 1, 2025, associations can no longer require owners who want to install EV equipment to include the association as an additional insured. The new law will shift the risk of any damage or injury caused by an individual’s Electric Vehicle Charging Station from the Owner of the equipment onto the association.  

Associations may need to increase existing community coverage to reduce the risk of claims that result from injury or damage from Electric Vehicle Charging Stations. Previously, claims resulting from that equipment would have been covered by the “additional insured” language in an Owner policy. Now associations will have to consider whether to cover additional risk from individually owned charging stations.

SENATE BILL 31 (MCNERNEY) – RECYCLED WATERING 

CURRENT LAW

Existing California Water Code sections prohibit the use of potable water by state and local agencies for any non-potable uses, including cemeteries, golf courses, parks, and highway landscaped areas.  

NEW LAW

SB 31 expands the state’s oversight of large-scale watering practices. The amended Water Code Section 13552.4 will add oversight of decorative water features as well as larger common area spaces and require the use of recycled water rather than potable use. Associations will be required to use recycled water to irrigate common area landscape when available. 

RECOMMENDED ACTION

Associations will need to re-examine their water sources for common area spaces. Associations will either need to plan for addressing their water-thirsty elements or work to find sources of water that are non-potable for any landscaping needs. 

CASE LAW UPDATE
Significant community association case law from 2025

The judicial decisions discussed below   listed here as “published” are considered binding and available to use as reliable interpretation of law affecting common interest developments.  

Cases that are noted as “unpublished” are not binding and cannot be cited in court documents. However, unpublished cases do demonstrate a judge’s view on new issues and what associations might expect to see when courts weigh in on community decisions. 

Eric Woolard v. Regent Real Estate Services, et al., Case No. G062897, December 23, 2024)  - Published Appellate Case

The “Neighbor to Neighbor” Case 

The Take Away: Management Companies and Associations have limited duties when it comes to enforcing the association’s governing documents with respect to neighbors. Associations and management should take reasonable steps to alert neighbors about violations and reported complaints, but are not required to intervene and prevent neighbor disputes from escalating. 

THE FACTS                           
Tenants of two Units at the Greenhouse Community Association (“Association”) were engaged in regular and intense harassment of each other. The harassment continued until it finally escalated into a physical confrontation between the tenants of the two Units, and a lawsuit seeking damage. One of the tenants (“Woolard”), filed a cross complaint including both the Owners of the Unit from whom he rented, as well as the management company and the Association.  

As part of the negligence claim against the management and the Association, Woolard cited that some of the behavior cited included intentionally provoking dogs into barking so that one Unit could report noise and nuisance violations against the other Unit. Tenant Woolard argued that because these reports were made to management, and the Board decided to impose penalties, both the Association and management company were involved in the harassment and responsible for the result of the physical altercation. The trial court disagreed. It dismissed the management company and the Association because Woolard failed to cite any duty that was owed to them. Woolard appealed. 

THE RULING           
The Appellate Court agreed with the trial court. It held that the management company and the Association breached no existing duty of care. The court did acknowledge that this case was complicated by the parties being tenants, however, it declined to create a new duty requiring a homeowners association or its management company to involve itself in disputes between homeowners outside the confines of the governing documents. The Appellate Court acknowledged that associations do not have police or subpoena powers, so they have limited ability to compel owners, much less tenants of owners, to sit down and work out or adjudicate their differences. 

11640 Woodbridge Condominium Homeowners’ Association v. Farmers Insurance Exchange, 331 Cal.Rptr.3d 319 (Cal. Ct. App.  2025) - Published Appellate Case

THE “UNFINISHED ROOF” CASE 

The Take Away: This case emphasizes that insurers cannot use overly board exclusions to deny coverage. Insurers must act in good faith to explain coverage decisions, especially when both covered and excluded losses result from the same claim. 

THE FACTS
The Woodbridge Condominium Homeowners’ Association (“Association”) started a roof replacement in 2021. Before the re-roofing project could be completed, two rainstorms penetrated the partially exposed roof, causing extensive interior water damage. When the Association filed a claim under its all-risk condominium insurance policy, Farmers denied the claim citing policy exclusions. The Association sued Farmers for breach of contract and bad faith. 

THE RULING           
The trial court found granted summary judgment in favor of Farmers based on the exclusionary language in the policy. Upon appeal, the Appellate Court reversed the summary judgment. It found that the exclusions raised issues of material fact, that needed to be further explained. Although Farmers relied solely on an exclusion due to faulty workmanship, the Court found that the damage may have resulted from other covered losses that Farmers did not adequately address. Farmers has now appealed, and the case is currently with the California Supreme Court for review. 

While the case remains active, the Appellate Court decision does give insight into how associations should view their existing insurance coverage. Associations contemplating major repairs should review policy language carefully. Courts will not look favorably on insurers who rely on overly broad readings to exclude coverage on all-risk policies.     

Eng et al. v. Opperman et al., Case No. A170737, December 22, 2025  - Published Appellate Case

THE “BUSINESS JUDGMENT RULE ON ADU APPLICATION” CASE   

The Take Away: The Business Judgment Rule is an important protection for associations. Boards of directors can expect courts to defer to their decisions on association matters, provided those decisions are made in the best interests of the Association, in good faith, and based upon reasonable inquiry. 

THE FACTS
This case involved the Portola Valley Ranch Association (“Association”), and two neighboring Owners with a shared driveway. The Oppermans wished to build an Accessory Dwelling Unit (“ADU”) on their lot, and submitted an application to the Association. The Board hired a consultant who reviewed the application, and recommended additional information before approving the ADU. The neighboring owners, the Engs, also objected to the ADU as proposed because they were concerned about the impact to the shared driveway. When the Oppermans refused to provide any further details, the Board denied the ADU on the grounds of traffic and fire safety.   

The Engs sued the Oppermans to protect their use of the shared driveway. The Oppermans then alleged that the Board had wrongfully denied their ADU application, and included the Association in the complaint. According to the Oppermans, the Board breached the governing documents and fiduciary duties owed to the Oppermans. The Association prevailed on a motion for summary judgment against the Oppermans, and the Oppermans appealed. 

THE RULING            
The Appellate Court affirmed the Trial Court’s grant of summary judgment. In discussing the duties owed and the judgment of the trial court, the appellate court relied heavily on the business judgment rule spelled out in the California Supreme Court Lamden case. In Lamden, a homeowner sued because she believed the board made the wrong decision on termite treatment methods. In that case, the Supreme Court held that the association's decisions deserved judicial deference, provided the board followed the business judgment rule: decisions in the best interests of the association, made in good faith, and based upon reasonable inquiry. The Appellate Court found that the Board at Portola met those burdens and were entitled to judicial deference. 

Board decisions are presumed to be in good faith and based upon sound business judgment and that this presumption can be overridden only by showing that the board acted fraudulently, in bad faith, overreaching, or with an unreasonable failure to investigate important facts. The Appellate Court found that the Board acted within the governing documents and the law. 

Stay Informed With R|O

We look forward to providing you with ongoing legislative and case law updates throughout the year, as well as solutions for applying these new laws to the matters facing your community.

Click Here to Download a Copy of the 2026 Legislative Update and Case Law Review.