(a) No person who provides association management services under the provisions of sections 20-450 to 20-462, inclusive, shall control, collect, have access to or disburse funds of an association unless, at all times during which the person controls, collects, has access to or disburses such funds, there is in effect, a commercially available insurance policy complying with the provisions of this section that provides protection of such funds belonging to an association from the theft by a community association manager, a community association management company or its employees.

(b) The commercially available insurance policy referred to in subsection (a) of this section shall: (1) Be written by an insurance company authorized to write such policies in this state; (2) except as provided in subsection (c) of this section, cover the maximum funds that will be in the custody of the community association manager at any time while the bond is in force, and in no event be less than the sum of three months' assessments plus reserve funds; (3) name the association as obligee; (4) cover the community association manager and all partners, officers, employees of the manager and may cover other persons controlling, collecting, having access to or disbursing association funds as well; (5) be conditioned upon the persons covered by the policy truly and faithfully accounting for all funds received by them, under their care, custody or control, or to which they have access; (6) provide that the insurance company issuing the policy may not cancel, substantially modify or refuse to renew the policy without giving thirty days' prior written notice to the association and the department, except in the case of a nonpayment of premiums, in which case ten days' prior written notice shall be given; (7) contain such other provisions as the department may, by regulation, require.

(c) The policy of a person who is employed full-time by and provides association management services to an association of a common interest community, or to a master association as defined in section 47-239 exercising the powers on behalf of one or more common interest communities or for the benefit of the unit owners of one or more common interest communities, which community or communities were established prior to July 3, 1991, and have more than two thousand four hundred residential units, shall be in an amount which is not less than one-half the amount specified in subdivision (2) of subsection (b) of this section.

(d) The community association manager shall furnish to the department, upon request, a certificate of each policy required under this section.

(e) Unless otherwise provided for in a written agreement between the community association manager and the association pursuant to subsection (f) of this section, the cost of the policy shall be paid for by the community association manager.

(f) If, as of October 1, 1990, any community association manager is providing association management services, including the handling of funds, or has entered into an agreement to provide association management services including the handling of funds, and has no written agreement, concerning which party shall pay the cost of policy, the cost of the policy shall be paid for in accordance with the declaration and bylaws of the association, and if the declaration and bylaws contain no such provision, the cost of the policy shall be paid one-half by the community association manager and one-half by the association unless the parties otherwise agree in writing.

(g) A separate policy shall be furnished for each association for which a community association manager provides association management services, including the handling of funds.

(P.A. 90-306, S. 12, 15; P.A. 91-341, S. 11, 19; P.A. 18-141, S. 10.)

History: P.A. 91-341 amended Subsec. (b)(1) and (6) to replace “surety” with “insurance company”, amended Subsec. (b)(2) to add “except as provided in subsection (c) of this section”, amended Subsec. (b)(6) and (7) to replace “association management commission” with “department” and inserted a new Subsec. (c) permitting a bond in a lesser amount when the person is employed full-time by and provides association management services to certain associations, relettering the remaining Subsecs. accordingly; P.A. 18-141 amended Subsec. (a) by adding provision re protection of association funds from theft, amended Subsec. (d) by adding provision re furnishing certificate to Department of Consumer Protection upon request, and deleting provision re furnishing certificate on or before commencement of association management services requiring bond or prior to expiration of bond, and replaced references to fidelity bond with references to commercially available insurance policy, effective January 1, 2019.