California's Reserve Study Law: A Quick Guide

For board members of California HOAs, the Davis-Stirling Act is the primary law governing your financial responsibilities. A key part of this act is the legal requirement to maintain a reserve study, which is a long-term financial plan for the repair and replacement of your community's major assets.

Understanding your obligations is essential for compliance and effective governance. Here’s a quick breakdown of what the law requires.

Your Key Legal Requirements

• 3-Year Site Inspection: A physical inspection of all common area components must be conducted at least once every three years. This is done to create or update your component list and assess the condition and lifespan of your assets.

• Annual Review: Your board must review the study and its funding plan every year. This is to make necessary adjustments for completed projects, changing costs, and to ensure the plan remains fiscally sound.

• Annual Disclosures: You must provide all members with an annual summary of the reserve study. This report must include the current reserve balance, the projected needs, and the board's funding plan.

Compliance with the Davis-Stirling Act is more than a legal task—it's the foundation of responsible governance that protects property values and prevents sudden special assessments.

If you have questions about your community's compliance or the health of your reserve fund, contact Apex Reserve Group for a complimentary 30-minute consultation.