Key takeaways
AB 2050 is a California law signed September 29, 2026 that requires every HOA, starting January 1, 2032, to update its reserve study each year and fund at least the minimum contribution that keeps its reserve balance above zero for the next 30 years. Associations projected to go below zero must move at least 15 percent of their gross yearly budget into reserves each year until they no longer do.
- AB 2050 covers every California common interest development under the Davis-Stirling Act, including planned developments, with no small-association or hardship exemption.
- Today California law requires boards to review the reserve study every year; from 2032 the study must be updated every year.
- If the budget cannot cover the minimum, the association levies a reserve funding special assessment under the normal Civil Code 5605 limits, no more than once every nine years.
- The law as signed names no penalty and no enforcing agency.
Written for: HOA & condo board members, Community association managers
The short answer: for decades, California law has told HOA boards to plan for reserves. Starting January 1, 2032, AB 2050 tells them to fund them. Every year, your reserve study will show the minimum contribution that keeps your reserve balance above zero for the next 30 years, and your board must put in at least that much.
AB 2050 (Caloza, Chapter 796, Statutes of 2026) was signed on September 29, 2026. It amends Civil Code 5550 and adds a new Civil Code 5552. This post explains it in plain language. For the full legal detail, see our California reserve requirements guide.
What changes on January 1, 2032
| The rule | Today | Starting January 1, 2032 |
|---|---|---|
| The study | The board reviews it every year | The study is updated every year |
| What it shows | Each component, its remaining life, its cost, the yearly amount needed and a funding plan | Adds the minimum contribution that keeps the reserve balance above zero for 30 years |
| Funding | Not required. The law says so (Civil Code 5570) | Required: at least the minimum, every year |
| If you fall short | Nothing in the statute | A reserve funding special assessment |
The five rules
- Your reserve study shows the minimum yearly amount that keeps your reserve balance above zero for the next 30 years.
- The board updates the study every year and makes the funding adjustments it needs.
- You must put in at least that minimum every year.
- If your 30-year projection drops below zero, move at least 15 percent of your gross yearly budget into reserves each year until it no longer does.
- If the budget can't cover it, levy a reserve funding special assessment. The normal limits apply, and above them owners vote. No more than once every nine years.
Questions boards ask
When does it start?
The funding rules and the new reserve study rules both start January 1, 2032. Until then, today's rules apply. That leaves five budget cycles, 2027 through 2031, to close any gap in small steps.
Does it apply to planned developments, or only condos?
Both. AB 2050 covers every common interest development under the Davis-Stirling Act. This is a key difference from the Fannie Mae reserve test, which applies only to condos and co-ops.
Is our small association exempt?
No. There is no small-association or hardship exemption. The reserve study requirement turns on whether your major components cost at least half your yearly budget. From 2032, the reserve account is no longer left out of that budget math, so more associations will be covered.
Do we have to put 15 percent of our budget into reserves every year?
Only if your 30-year projection drops below zero, and only until it doesn't. An association whose plan stays above zero only has to fund the minimum shown in its study.
Is this the same 15 percent as the Fannie Mae rule?
No. The lender rule, starting January 4, 2027, asks condos and co-ops to send at least 15 percent of assessment income to reserves so buyers can get normal loans. AB 2050's 15 percent is of the gross yearly budget, and it applies only when the projection goes negative. A condo can be caught by both. A planned development only by AB 2050.
Will the state fine us?
The law as signed names no penalty, no agency that enforces it, and no written right to sue. Boards still owe a duty to their owners, and a board that ignores the law takes on risk. Ask your association's attorney how it applies to you.
Do we need a brand-new reserve study every year?
Today the law says the board must review the study every year and have the property inspected at least every three years. From 2032, the study must be updated every year. Ask your reserve study provider what an annual update includes.
Can we borrow instead of levying a special assessment?
The law names two tools: transfers to reserves and a reserve funding special assessment. Whether a loan fits your situation is a question for your attorney and your banker. Check your CC&Rs too, since many require an owner vote to borrow.
What about percent funded?
AB 2050 doesn't use it. Percent funded compares your cash to the value of what has already worn out. AB 2050 asks a different question: will your reserve account stay above zero every year for the next 30 years? Percent funded still appears in the disclosure owners receive each year. Our guide to percent funded and contribution rates explains how it is calculated.
What should our board do now?
Ask your reserve study provider one question: do our current contributions keep our reserve balance above zero for 30 years, and if not, how big is the gap? Then close that gap a little in each budget between now and 2032.
Score your association
Our free Reserve Readiness Checklist has 12 yes-or-no questions your board can answer in a few minutes, plus a one-page reference with the key dates and rules. Download the checklist (PDF).
Not legal advice. Check the specifics with your association's attorney and your governing documents.
