California Condo Due Diligence Checklist

Where California due diligence deserves the most attention

Legal Framework

Unified CID statute — the Davis-Stirling Act (Cal. Civ. Code §§4000–6150). Authored by Assemblyman Lawrence W. "Larry" Stirling and enacted in 1985, Davis-Stirling governs all common interest developments in California. There is no separate HOA, planned-community, or condominium act; the same code governs condominiums, planned developments (lot-and-association communities, i.e., the "HOA" form), stock cooperatives, and community apartment projects.

Reserve Studies and Reserve Funding

Percent funded under ~50% signals likely future special assessments; under ~30% is a strong red flag, especially for older or coastal buildings.; Reserve study older than 3 years is a statutory violation and a sign of board neglect.; Study that omits SB 326 balcony findings (or predates the balcony inspection) understates capital needs.; "Special assessment anticipated" checked in the §5570 summary is a direct, often-overlooked warning that a levy is coming.

Structural Inspections and Building Safety

California is one of the few states with a statewide periodic structural-inspection mandate for condominiums — a major differentiator.

Insurance Requirements and Insurance-Market Risk

Fidelity bond / crime coverage — REQUIRED (Civ. Code §5806, strengthened by AB 2912 in 2018). Associations must maintain fidelity bond / crime / employee-dishonesty coverage for directors, officers, and employees in an amount ≥ the combined total of the association's reserves plus three months of assessments, and it must include computer fraud and funds-transfer fraud. If a managing agent handles funds, the bond must also cover the agent and its employees. Self-insurance does not satisfy §5806.; Property and liability insurance.

Resale Disclosures and Buyer Cancellation Rights

California has one of the most document-heavy resale disclosure regimes in the country, driven by Civ. Code §4525 (the master list) and §4530 (the seller's right to obtain documents from the association).

Assessments, Special Assessments, and Borrowing

`special_assessment_pending` – Approved or proposed special assessment not yet in current dues.; `regular_increase_gt_20pct` – Regular assessment raised >20% (member vote required — verify).; `special_assessment_gt_5pct_no_vote` – Special >5% imposed without documented member approval.; `emergency_assessment_loophole` – "Emergency" special assessment with thin documentation.