California’s 2026 legislative session brought several important changes for community associations. In Part 2 of our legislative recap, we examine three additional bills signed into law that will take effect in 2027.
Assembly Bill 2050: Despite years of warnings and legislative efforts, underfunded reserves remain a serious concern for California HOAs. A 2012 Department of Real Estate consumer advisory on the subject as well as multiple reserve disclosure laws sponsored by the California Association of Realtors have yet to resolve this persistent problem.
The lending industry, namely FHA and FNMA, require HOAs to allocate 10% of their annual budgets to build reserve funds. AB 2050 adds another requirement seeking to compel HOAs to take sound financial measures to offset deterioration of major common area components.
AB 2050 establishes minimum reserve funding requirements for California HOAs. Beginning in 2032, HOAs must contribute enough to their reserve funds to ensure the balance does not fall below zero at any point over the next 30 years. Until that funding level is reached, HOAs must set aside at least 15% of their annual gross budgets for reserves.
This new law gives HOAs five years to prepare, but wise associations will not wait and will adjust their budgets now.
Additionally, Fannie Mae and Freddie Mac require condominium HOAs to allocate at least 10% of their annual budgets to reserve funds. Effective January 2027, that minimum requirement will increase to 15%. Therefore, HOAs that do not adequately offset their deterioration of common assets are going to find that their members are unable to get the best loans in refinancing or purchasing condominiums within the HOA.
Assembly Bill 1892: This bill clarifies Civil Code 4775 regarding HOA and member repair and maintenance responsibility, and states that in the event of a service interruption, HOAs are responsible for repairs to restore utility (gas, heat, water, electrical) service even if the work extends into the separate interest (i.e., unit or lot) of the homeowners.
AB 1892 also makes several helpful changes to the election by acclamation process of Civil Code 5103.
Beginning in 2027, HOAs must send the initial notice of a possible election by acclamation at least 30 days before the nomination deadline, rather than the current 90 days. This change shortens the overall election by acclamation process from approximately 150 days to 90 days.
It also allows HOAs to combine the initial notice with the call for candidates, making the process more efficient.
Also, starting in 2027 the second “reminder notice” to HOA members must be issued at least 10 days before the close of nominations instead of the current “between seven and 30 days.” These changes should make elections by acclamation more achievable.
Assembly Bill 739: This bill primarily adds review and disclosure requirements regarding management charges. The bill adds a new item, statements of management fees charged, to Civil Code 5200’s list of items homeowners are entitled to review.
The bill also adds a new financial reporting requirement under Civil Code 5500. HOA boards must now review an annual summary of management charges and reimbursements. This places a new disclosure responsibility on management, and a further review responsibility on boards, which must remember to ensure management annually provides the information required by the amended statutes.
Review any bill or law at www.leginfo.legislature.ca.gov.
Kelly G. Richardson, Esq. is a Fellow of the College of Community Association Lawyers and Partner of Richardson Ober LLP, a California law firm known for community association advice. Submit questions to Kelly@roattorneys.com.