Civil Code section 5380 contains restrictions and requirements aimed at protecting the integrity of an HOA’s financial accounts. Included among those restrictions and requirements is a prohibition on transfers of certain amounts from an association’s reserve and operating account deposits without prior written approval of the association’s board of directors, as discussed below.

Transfers of Funds Requiring Written Board Approval
“Transfers of funds out of the association’s reserve or operating accounts shall not be authorized without prior written approval from the board of directors…” (Civ. Code § 5380(b)(6).)

Exceptions to Board Approval Requirement
Written approval from the board is not required where the amount of the transfer is less than the following:

• Associations with 50 or less separate interests: written board approval is not required if the amount of the transfer is less than five thousand dollars ($5,000) or five percent (5%) of the estimated income in the annual operating budget, whichever is lower. (Civ. Code § 5380(b)(6)(A).)
• Associations with 51 or more separate interests: written board approval is not required if the amount of the transfer is less than ten thousand dollars ($10,000) or five percent (5%) of the estimated income in the annual operating budget, whichever is lower. (Civ. Code § 5380(b)(6)(B).)

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