California HOA reserve bill could impact homeowner fees

California Assembly Bill 2050, which awaits action from Governor Gavin Newsom, proposes new reserve requirements for homeowners associations (HOAs). The legislation would require associations with inadequate reserves to eventually allocate at least 15% of their annual budgets toward reserve funding, a requirement set to begin in 2032.

Supporters, including representatives from the Community Associations Institute, argue that the mandate will help prevent sudden, costly special assessments by forcing associations to prepare for major repairs to common property, such as plumbing and roofing.

However, the Consumer Federation of California has urged a veto, warning that the mandatory contributions could lead to a massive increase in monthly assessments for the approximately 14 million Californians living in HOAs.