Code §4000–6150), one of the most detailed common-interest frameworks in the country. But the statute's strength is uneven: it requires a reserve study at least every three years yet does not require associations to actually fund reserves to the recommended level. The dominant risks for California buyers are the insurance market — wildfire and earthquake exposure that has pushed many associations onto the FAIR Plan or into carrier non-renewal — and deferred structural work, especially the balcony and elevated-element inspections mandated by SB 326. A California document review is less about confirming statutory compliance and more about reading insurance adequacy, reserve discipline, and inspection status against a regulatory backdrop that mandates disclosure but rarely mandates funding.
Insurance crisis — wildfire, earthquake, and the FAIR Plan
California's master-policy market is under acute stress. Carriers have been non-renewing associations in wildfire-exposed areas, pushing many onto the California FAIR Plan plus a difference-in-conditions wrapper at materially higher cost and narrower coverage. Earthquake is typically excluded from the master policy entirely. Read the carrier, the wildfire and earthquake treatment, deductible structure, and any recent non-renewal or FAIR Plan placement before assuming the building is adequately covered — and check your own HO-6 loss-assessment and earthquake options.
Reserve study required, but funding is not
Davis-Stirling (Civ. Code §5550) requires a reserve study at least every three years with an annual review, and the pro-forma budget must disclose percent funded and any deferred components. But the Act does not require the association to fund reserves to the study's recommended level. Many California HOAs run well below 100% funded by choice, which is legal but means future capital work tends to arrive as special assessments. Percent funded and the funding trend are among the most useful predictors of out-of-pocket exposure here.
SB 326 balcony and elevated-element inspections
After the 2015 Berkeley balcony collapse, SB 326 (Civ. Code §5551) requires inspection of exterior elevated elements — balconies, decks, stairways, walkways with wood framing — at least every nine years, with the first cycle due by January 1, 2025. An overdue or unaddressed inspection, or identified repairs not yet funded, is a leading source of surprise special assessments. Confirm the inspection date, findings, and repair funding.
Construction-defect exposure (Right to Repair Act)
California has an active construction-defect environment governed by the Right to Repair Act (SB 800, Civ. Code §895 et seq.). Newer associations in particular may carry defect claims, investigations, or settlements that drive large assessments and can complicate financing. Disclosed or pending defect litigation deserves close reading of the claim status and any reserves earmarked against it.
The 5% special-assessment rule and dues mechanics
Under Civ. Code §5605, a California board can impose regular assessment increases up to 20% and special assessments up to 5% of the budgeted gross expenses in a fiscal year without a membership vote; anything larger generally requires approval of a majority of a quorum of owners. That means meaningful assessments can arrive without a full owner vote — read the budget, the minutes, and any pending assessment discussion rather than assuming a vote stands between you and a dues increase.
