HOA Law Blog

For those California community associations that have a calendar fiscal year, they are likely in the process of developing their 2009 budget. Pursuant to California Civil Code Section 1365, “[n]otwithstanding a contrary position in the governing documents, a copy of the operating budget shall be annually distributed not less than 30 days and no more than 90 days prior to the beginning of the association’s fiscal year.”

However, it is important to keep in mind that the budget is not the only disclosure California community associations are required to make. Swedelson & Gottlieb’s Annual Disclosure Checklist sets out the additional information and disclosures associations are required to distribute to the owners on an annual basis. Typically, the disclosures are made as part of the budget package.

For those of you that are wondering what happens if you don’t get the budget out timely, Civil Code Section 1366 states that the board loses the ability to increase the amount of assessments without the approval of the homeowners.

There are other required disclosures that if not made could have a negative impact on the association. For example, the failure to distribute the insurance disclosures and to provide for the appropriate level of insurance could impose personal liability on board members and/or homeowners. We encourage all Board members and association managers to review the checklist to make sure that their associations are fully complying with the disclosure requirements under California Law.

Download Swedelson & Gottlieb's 2008-2009 Disclosure Checklist