RESERVES

RESERVE FUNDS
What are the reserve requirements in the state? Are reserve studies mandated? What reporting requirements does an association have with respect to the status of the reserves, the reserve accounts or the funding of the reserves?

A common interest development is not required by law to establish a reserve program unless it is under DRE jurisdiction. However, an association must obtain, and distribute a summary of, a reserve study at least every three years if certain conditions are met. The board must review certain reserve-related information at least quarterly. The annual budget distributed to all members must include a summary of the association's reserves (including the current deficiency in reserve funding) based on the most recent study or review, as well as board statements as to need for special assessments to cover repair costs of major elements, a reserve funding plan, and an explanation of how reserves are calculated. (Civil Code §§1365, 1365.5)