Common interest developments: reserve accounts.

Plain English Breakdown

The official source material does not provide details on what happens if an association fails to comply with these new requirements or how this will impact smaller or older developments.

Reserve Accounts for Common Interest Developments

This law requires associations managing common interest developments to include a minimum reserve contribution level in their studies starting January 1, 2032, and fund the reserve account annually at least up to this minimum level.

What This Bill Does

• Requires associations to include a minimum reserve contribution level in their studies starting January 1, 2032.
• Requires associations to fund their reserve account each year at least up to this minimum level.

Who It Names or Affects

• Associations managing common interest developments like condominiums and homeowners' associations.

Terms To Know

Common Interest Development

A type of property where multiple people own individual units but share ownership of common areas, such as a condo complex or planned community.

Reserve Account

An account set aside by an association to save money for future repairs and maintenance of shared spaces.

Limits and Unknowns

• The bill does not specify what happens if associations do not follow these new rules.
• It is unclear how this will affect the financial stability of smaller or older developments.

Official Summary Text

AB 2050, as amended, Caloza.
Common interest developments: reserve accounts.
Existing law, the Davis-Stirling Common Interest Development Act, governs the management and operation of common interest developments, and requires an association to manage a common interest development, including requiring the association to levy regular and special assessments sufficient to perform its obligations, subject to specified limitations on increases in those assessments. The act requires an association to distribute an annual budget report 30 to 90 days before the end of its fiscal year. Under existing law, that budget report includes, among other things, a summary of the association’s reserve accounts. The act requires an association to perform a study of the reserve account requirements, as defined, and, as part of that study, cause to be conducted a visual inspection of the accessible areas of major components that the association is obligated to repair, replace,
restore, or maintain.
This bill would, beginning January 1, 2032, revise the requirement to perform a study of the reserve account requirements to, among other things, include the minimum reserve contribution level to prevent the projected association reserve account balance from falling below zero over the following 30 years. The bill would require an association to fund the reserve account on an annual basis in at least the minimum reserve contribution level. If the association is unable to fund the reserve account in at least the minimum reserve contribution level without exceeding the above-described specified limitations on increases on assessments, then, notwithstanding those specified limitations, the bill would require the association to levy a reserve special assessment in an amount necessary to allow the association to fund to minimum contribution level without a reserve special assessment within
3
9
fiscal years, as provided.

Current Bill Text

Download Bill PDF