(a) At least once every three years, the board shall cause to be conducted a reasonably competent and diligent visual inspection of the accessible areas of the major components that the association is obligated to repair, replace, restore, or maintain as part of a study of the reserve account requirements of the common interest development, if the current replacement value of the major components is equal to or greater than one-half of the gross budget of the association, excluding the association’s reserve account for that period. The board shall review this study, or cause it to be reviewed, annually and shall consider and implement necessary adjustments to the board’s analysis of the reserve account requirements as a result of that review.
(b) The study required by this section shall at a minimum include:
(1) Identification of the major components that the association is obligated to repair, replace, restore, or maintain that, as of the date of the study, have a remaining useful life of less than 30 years.
(2) Identification of the probable remaining useful life of the components identified in paragraph (1) as of the date of the study.
(3) An estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in paragraph (1).
(4) An estimate of the total annual contribution necessary to defray the cost to repair, replace, restore, or maintain the components identified in paragraph (1) during and at the end of their useful life, after subtracting total reserve funds as of the date of the study.
(5) A reserve funding plan that indicates how the association plans to fund the contribution identified in paragraph (4) to meet the association’s obligation for the repair and replacement of all major components with an expected remaining life of 30 years or less, not including those components that the board has determined will not be replaced or repaired.
(c) For purposes of this section, “major components” includes gas, water, and electrical service to the extent that the association is responsible for repair or replacement of those lines pursuant to Section 4775.
Related Topics
Related Statutes
- SB-546 (Grayson) Common interest developments: accounting.
- Civil Code Section 5570. Reserve Funding Disclosure Form.
- Civil Code Section 5565. Summary of Association Reserves.
- Civil Code Section 5560. Reserve Funding Plan.
- Civil Code Section 5510. Use of Reserve Funds; Withdrawal Requirements.
- Civil Code Section 5500. Board Review of Association Finances.
- Civil Code Section 4178. “Reserve Account Requirements” Defined.
- Civil Code Section 4177. “Reserve Accounts” Defined.
Related Case Law
- Raven’s Cove Townhomes, Inc. v. Knuppe Development Co.
(1981) 114 Cal.App.3d 783
[Fiduciary Duties; Reserve Account] A HOA board’s failure to properly fund a reserve account constituted a breach of their fiduciary duties to the HOA and its members.