Does your community publish both annual disclosure packages? – Sun of San Bernardino

One of the many improvements made by the Legislature in 2012 to the Davis-Stirling Act was to consolidate a variety of required disclosures into two very important sets of disclosures – the Civil Code Section 5300 “Annual Budget Report” and the “annual policy statement” of article 5310 of the Civil Code. This important information is still often ignored or incomplete.

Until 2014, budgets had to be published no later than 30 days before the new financial year – or the following year the board could not raise dues or impose a special levy without a vote of the membership. However, in 2014, this requirement was significantly expanded. Civil Code Section 5605(a) requires that the budget and six other items of the annual budget report be prepared and sent to members in a timely manner or the board must seek a member vote for new or increased assessments during the year. Next year.

Here is a summary of the elements of the annual budget report:


—Summary of the association’s reservations;

—Summary of council’s plan to catch up funding in reserve study recommendation;

— Disclosure of any council decision to postpone, not repair or replace any major common area features, including an explanation of the reasons;

— Disclosure if the board anticipates the need for a special assessment to replace major components or to fund the reserve account, including the projected amount and the start and end date of the assessment;

—Statement on how the board will fund the reserves;

—General statement describing how reserves are calculated and established;

— Disclosure of all outstanding HOA loans with a term greater than one year, including details of loan terms and status;

— Summary of HOA insurance policies;

—For condominium projects, a statement indicating whether the HOA is approved for FHA or VA loans;

— Current full disclosure of “Fees for Documents Provided” (Civil Code 4528).

—Reserve Valuation and Funding Disclosure Summary Form required by Civil Code 5570.

The annual policy statement, required by article 5310 of the Civil Code, must be sent to members 30 to 90 days before the new fiscal year and must include:

—Name and address of the person designated by the HOA to receive communications;

—Announces that members can request HOA notices sent to up to two different specified addresses;

—The place designated for the posting of general notices;

—Notice that members may request to receive general notices individually;

—Notice of a member’s right to receive copies of the minutes of meetings;

— Statements of review collection policies and describing the association’s policies and practices regarding overdue reviews;

—A statement outlining the association’s disciplinary policy, if any, including any penalty schedule for violations;

—A summary of the HOA’s internal dispute resolution procedures;

—A summary of all requirements for association approval of a physical change of ownership;

—The mailing address for overnight payment of dues; and

Any other information required by law or the governing documents or desired by the Board of Directors to be disclosed.

Under Article 5320 of the Civil Code, complete files or a summary must be sent individually to all members. Any member may request a full copy.

Because of the importance of these disclosure packages, management company contracts should state that the manager not only assists with the budget, but also in assembling the full annual budget report and annual policy statement packages.

To read these laws in their entirety, visit

Kelly G. Richardson, Esq. is a member of the College of Community Association Lawyers and partner of Richardson Ober LLP, a California law firm known for its expertise in community associations. Submit column questions to [email protected]

Comments are closed.