Civil Code Finances & Reserves
Reserve Study Requirements
Chapter 7 · Finances · Reserve Planning
Text current as of 2026-07-07 · Last amended by SB 900, eff. 2025-01-01
The code says CIV §5550
(a) At least once every three years, the board shall cause to be conducted a reasonably competent and diligent visual inspection of the accessible areas of the major components that the association is obligated to repair, replace, restore, or maintain as part of a study of the reserve account requirements of the common interest development, if the current replacement value of the major components is equal to or greater than one-half of the gross budget of the association, excluding the association’s reserve account for that period. The board shall review this study, or cause it to be reviewed, annually and shall consider and implement necessary adjustments to the board’s analysis of the reserve account requirements as a result of that review.
(b) The study required by this section shall at a minimum include:
(1) Identification of the major components that the association is obligated to repair, replace, restore, or maintain that, as of the date of the study, have a remaining useful life of less than 30 years.
(2) Identification of the probable remaining useful life of the components identified in paragraph (1) as of the date of the study.
(3) An estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in paragraph (1).
(4) An estimate of the total annual contribution necessary to defray the cost to repair, replace, restore, or maintain the components identified in paragraph (1) during and at the end of their useful life, after subtracting total reserve funds as of the date of the study.
(5) A reserve funding plan that indicates how the association plans to fund the contribution identified in paragraph (4) to meet the association’s obligation for the repair and replacement of all major components with an expected remaining life of 30 years or less, not including those components that the board has determined will not be replaced or repaired.
(c) For purposes of this section, “major components” includes gas, water, and electrical service to the extent that the association is responsible for repair or replacement of those lines pursuant to Section 4775.
(Amended by Stats. 2024, Ch. 288, Sec. 2. (SB 900) Effective January 1, 2025.)
In plain English
Editorial summary — not the statute’s text.
At least every three years the association must conduct a diligent visual inspection and reserve study of the major components it maintains, and review it annually — identifying components with under 30 years of useful life, their replacement cost, and a funding plan to pay for them.
What this means for you
Editorial summary — not the statute’s text.
- Three-year full study, annual review and adjustment — calendar both.
- The study feeds the annual budget report’s reserve disclosures nearly line for line.
- Since 2025, utility lines the association must repair under §4775 count as major components.
How courts have read this
No case law is mapped to this section yet. As decisions are added, they’ll appear here.