Civil Code Section 5300 requires an association to prepare and distribute to its members an annual budget report. The annual budget report serves as a consolidated disclosure statement which must include all of the following information, as well as any additional requirements imposed by the association’s governing documents: (Civ. Code § 5300(b)(1)-(9).)

1. Operating Budget – a pro forma operating budget, showing the estimated revenue and expenses on an accrual basis.
2. Reserve Summary – a summary of the association’s reserve funds, prepared pursuant to Civil Code Section 5565. (See “Reserve Summary.”)
3. Reserve Funding Plan Summary – a summary of the reserve funding plan adopted by the board, as specified in Civil Code Section 5550(b)(5). The summary must include notice to the members that the full reserve plan is available upon request, and that the association must provide the full reserve plan to any member upon request.
4. Deferred Maintenance Items – a statement as to whether the board has determined to defer or not undertake repairs or replacement of any major component with a remaining life of thirty (30) years or less, including a justification for the deferral or decision to not undertake the repairs or replacement.
5. Anticipated Special Assessments – a statement as to whether the board, consistent with the reserve funding plan adopted pursuant to Civil Code Section 5560, has determined or anticipates that the levy of one or more special assessments will be required to repair, replace, or restore any major component or to provide adequate reserve funds for such repair, replacement or restoration. If so, the statement must also set out the estimated amount, commencement date, and duration of the anticipated special assessment.
6. Reserve Funding Mechanisms – a statement as to the mechanism(s) by which the board will fund reserves to repair or replace major components, including assessments, borrowing, use of other assets, deferral of selected replacements or repairs, or alternative mechanisms.
7. Procedures for Calculation and Establishment of Reserves – a general statement addressing the procedures used for the calculation and establishment of those reserves to defray the future repair, replacements, or additions to those major components that the association is obligated to maintain.  The statement must include, at the least, reserve calculations using the formula described in Civil Code Section 5570(b)(4), and may not assume a rate of return on cash reserves in excess of two percent (2%) above the discount rate published by the Federal Reserve Bank of San Francisco at the time the calculation was made.
8. Outstanding Loans – a statement as to whether the association has any outstanding loans with an original term of more than one year, including the payee, interest rate, amount outstanding, annual payment, and when the loan is scheduled to be retired.
9. Insurance Summary – a summary of the association’s property, general liability, earthquake, flood, and fidelity insurance policies. For each policy, the summary must include the name of the insurer, the type of insurance, the policy limit, and the amount of the deductible, if any. If this information is specified in an insurance policy’s declaration page, the association may satisfy its obligations to disclose that information by including copies of the declaration page with the annual budget report.  Additionally, the insurance summary must contain, in at least 10-point boldface type, the statement provided under Civil Code Section 5300(b)(9). (See also “Insurance Disclosures.”)
10. FHA Status – if the association is a condominium community, a statement as to whether the association is a Federal Housing Administration (FHA)-approved condominium project.  The disclosure must contain, in at least 10-point font on a separate piece of paper, the statement provided under Civil Code Section 5300(b)(10).
11. VA Status – if the association is a condominium community, a statement as to whether the association is a federal Department of Veterans Affairs (VA)-approved condominium project.  The disclosure must contain, in at least 10-point font on a separate piece of paper, the statement provided under Civil Code Section 5300(b)(10).

Additionally, the assessment and reserve funding disclosure summary form, prepared pursuant to Civil Code Section 5570, must accompany each annual budget report or summary of the annual budget report that is distributed to a member. (Civ. Code § 5300(e); See also “Reserve Disclosures.”)

When Distributed
The annual budget report must be distributed to the members within thirty (30) to ninety (90) days before the end of the association’s fiscal year, regardless of any contrary provision contained in an association’s governing documents. (Civ. Code § 5300(a).)

How Distributed
The annual budget report must be distributed to all members by individual delivery. (Civ. Code §§ 5300(c), 5320(a).)  An association is permitted to distribute the annual budget report in one of the following forms: (Civ. Code § 5320(a)(1)-(2).)

1. The full annual budget report; or
2. A summary of the annual budget report. The summary must include a general description of the content of the annual budget report, as well as instructions on how the member may request a complete copy of the annual budget report at no cost to the member. The content description and instructions must be printed in at least 10-point boldface type on the first page of the summary.

Notwithstanding the above, if a member has requested to receive association reports in full, the association must deliver the full annual budget report to that member, rather than the summary referenced above. (Civ. Code § 5320(b).)

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