Bylaws Condo Association With Low Reserves In Riverside
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FAQ
Every property has its own unique list of common area assets that the HOA is responsible to maintain. On average, HOAs should be setting aside 15% to 40% of their total assessments towards Reserves. This percentage holds true for all types of associations.
So how much should your HOA have on hand to address these inevitable repair and replacement costs? A good rule of thumb is for Reserves to be funded at 70% or higher of the property's calculated deterioration.
No Reserve Fund Equals Higher Dues or Special Assessments An HOA without an adequate reserve fund may have to increase dues significantly right away or levy special assessments. Neither of these options will get you popularity points with the development's homeowners.
Funding Level Unfortunately, most associations have underfunded HOA reserves. This means they have reserves that are below 70 percent funded. The ideal HOA reserve funding percent sits between 70 and 100 percent.
Reserves are like savings accounts – an accumulation of funds for a future purpose. The source of funding for a reserve might be surpluses from operations, or scheduled transfers that have been planned and budgeted.
Except as provided below, all associations are required to prepare a reserve study at least once every three (3) years with a review to be conducted annually to determine if adjustments are necessary to the association's reserve account requirements. (Civ. Code §§ 5300(b), 5550(a).)
Another critical aspect of SB4D focuses on the funding of reserves for the ongoing maintenance and repair of inium and cooperative buildings. The law requires that these associations to conduct a structural integrity reserve study every 10 years for each building three stories or higher in height.
The 2022 state condo law, known as SB-4D, and its 2023 follow-up, SB-154, establish three primary requirements: licensed inspections, reporting and disclosures, and reserve funds. Importantly, these laws are not tax legislation that directly increases housing costs on condo owners.
Starting January 1, 2025, milestone inspections are required for buildings that are: 25 years or older if located within three miles of the coastline. 30 years or older for buildings further inland. After the initial inspection, follow-ups will happen every 10 years.
🔹 Mandatory Reserve Funds – No more waiving reserves! By , condo associations must fully fund reserves for major repairs. 🔹 Structural Integrity Reserve Study (SIRS) – Every 10 years, buildings 3+ stories must undergo a professional inspection to assess repair costs.
