California AB 2050: What New HOA Reserve Requirements Could Mean for Homeowners and Condo Buyers

For California condo owners, the monthly mortgage payment is only one part of the true cost of owning a home.

HOA dues, insurance, maintenance and special assessments can have a significant impact on affordability — and a new California bill could change how homeowners associations prepare for those future expenses.

Assembly Bill 2050 (AB 2050) has passed the California Legislature and, as of September 25, 2026, is awaiting action by Governor Gavin Newsom. The legislation focuses on something that rarely makes headlines until there is a problem: HOA reserve funding.

What is AB 2050?

California already requires homeowners associations to conduct reserve studies and plan for the repair and replacement of major community components.

AB 2050 would strengthen those requirements by focusing more heavily on whether an association is actually accumulating enough money to meet its long-term obligations.

The legislation looks at expenses over a 30-year horizon. Beginning in 2032, associations projected to have insufficient reserves would generally be required to contribute at least 15% of their annual budget toward reserves, subject to the final requirements of the law.

Why do HOA reserves matter?

Think of an HOA reserve fund as the community's long-term savings account.

It may eventually be needed for major projects such as:

• Roof replacement
• Exterior painting
• Balconies and decks
• Elevators
• Plumbing systems
• Roads and parking areas
• Pools and common amenities
• Structural repairs
• Major mechanical systems

When an association hasn't saved enough money, those projects don't disappear.

Instead, owners may face a special assessment, sometimes totaling thousands or even tens of thousands of dollars per unit.

Could AB 2050 increase HOA dues?

Potentially.

If an HOA is significantly underfunded, increasing reserve contributions could require the association to raise regular assessments or make other budget adjustments.

That's the tradeoff at the center of the debate.

Homeowners may pay more today to reduce the chance of facing a much larger financial surprise later.

Supporters view stronger reserves as responsible long-term planning. Critics have raised concerns about affordability and the possibility that owners already dealing with rising insurance, utilities and maintenance costs could face another increase in monthly housing expenses.

Why does this matter to Orange County condo owners?

This issue is particularly relevant in coastal Orange County.

Many communities in Newport Beach, Irvine, Corona del Mar and surrounding areas have significant shared infrastructure and increasingly expensive insurance and maintenance obligations.

Older communities may also be approaching major replacement cycles for roofs, balconies, plumbing and other components.

A beautiful unit in a desirable neighborhood can still become an expensive ownership proposition if the HOA is financially unprepared.

What should condo buyers review before purchasing?

Before buying into an HOA, I recommend looking beyond the current monthly dues.

Ask for:

• The most recent reserve study
• Current reserve balances
• The percentage of reserves funded
• Planned capital projects
• Recent and upcoming special assessments
• HOA insurance information
• Recent increases in insurance premiums
• The association's annual budget
• Meeting minutes discussing major repairs
• Pending litigation

A community with slightly higher monthly dues but healthy reserves may sometimes represent a more predictable financial situation than one advertising unusually low dues but facing millions of dollars in deferred maintenance.

Could stronger reserves affect condo financing?

Potentially.

Mortgage investors and lenders increasingly scrutinize the financial and physical condition of condominium projects. Reserve funding, insurance coverage, deferred maintenance and structural issues can all affect whether a project qualifies for conventional financing.

That means HOA financial health isn't simply an issue for current owners.

It can also influence the pool of future buyers when you eventually sell.

What happens next with AB 2050?

As of September 25, AB 2050 has passed the Legislature and is awaiting the governor's decision. It was presented to the governor on September 3.

Until that process is complete, homeowners should treat the proposal as pending legislation rather than a requirement already in effect.

The bottom line

AB 2050 highlights a larger change occurring in California condominium ownership.

The question is increasingly not simply, "What are the HOA dues?"

A better question is:

"Is this HOA financially prepared for the next 10, 20 and 30 years?"

For both buyers and existing owners, understanding the answer can be an important part of protecting the long-term value and affordability of the property.