Cal. Civ. Code §5502
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Reserve account transfers — Board authorization required
Restricts the use of reserve funds. Transfers from the reserve account require board authorization in advance. Reserve funds may only be used to defray the future repair or replacement of, or additions to, those major components that the association is obligated to maintain.
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Statutory Text
Verified May 3, 2026 · CA_LEG_INFO
(a) Notwithstanding any other law, transfers shall not be authorized from the association’s reserve or operating accounts without prior written approval from the board of the association unless the amount of the transfer is less than the following: (1) The lesser of five thousand dollars ($5,000) or 5 percent of the estimated income in the annual operating budget, for associations with 50 or less separate interests. (2) The lesser of ten thousand dollars ($10,000) or 5 percent of the estimated income in the annual operating budget, for associations with 51 or more separate interests. (b) This section applies in addition to any other applicable requirements of this part.
Reserves
| Ref | Requirement |
|---|---|
| (a) | Reserve money is restricted by statute — it can only be spent on the major building components (roof, plumbing, etc.) the HOA is obligated to maintain, not on day-to-day operations. |
| (b) | If the board temporarily borrows from reserves for cash flow, the money must be paid back within a year — or the board must formally document why a delay is in the community's best interest. |
Legal Topics
Legal references last verified May 24, 2026.
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