Before you buy:
read the HOA reserve study.
The monthly HOA fee is only part of the picture. Before you commit, look at the money set aside for the community’s future repairs.
A beautiful model home or a tidy community entrance cannot tell you whether an association is prepared for a roof replacement, repaving project or other major expense. The reserve study helps you ask a more useful question: does the HOA’s plan match the repairs it expects to face?
That is the point of the first episode in my HOA series: check the reserve documents before buying, rather than judging the association by its monthly dues alone.
What is an HOA reserve study?
A reserve study connects the major components an association is responsible for maintaining with estimated replacement or repair costs, remaining useful life and a funding plan. Which components belong to the HOA depends on that community’s responsibilities and governing documents.
Think of it as a planning document, not a promise about the future. Cost estimates, component condition and timing can change. Reading the study alongside the funding disclosures helps you understand where to ask follow-up questions.
Check 1: What does “percent funded” actually mean?
Percent funded compares the reserve balance with an estimated funding benchmark at a particular point in time. It does not mean the HOA has that percentage of every future repair bill covered, and it does not measure the physical condition of the buildings.
A rule of thumb—not a legal test
In the episode, I use these screening bands: 70% or more as a stronger starting point, 30% to below 70% as a middle range, and below 30% as a reason to investigate further.
These are a heuristic, not California legal thresholds, a lender’s approval standard, or a guarantee against special assessments. The label alone cannot establish whether an HOA is financially sound.
Ask how the percentage was calculated, which date it describes, and whether the board is actually making the contributions in its plan. A headline percentage is much less useful without those details.
Check 2: What repairs are coming in the next five years?
Look for large items expected soon: roofs, paving, painting or other components the association must maintain. Compare their estimated costs and timing with the projected reserve cash balances and planned contributions.
The practical question is whether enough cash is expected to be available when each project is due. A reserve balance that sounds substantial may be less reassuring if several expensive projects arrive together.
- Which major projects are scheduled in the next five years?
- Have estimates or repair dates changed since the last update?
- Does the plan rely on higher regular dues, a special assessment or other funding?
- Which assessments have already been approved, and which remain assumptions?
A potential shortfall deserves attention, but it is not proof that a particular assessment will happen. Read the actual plan and ask the board or manager to explain how any gap is expected to be addressed.
Check 3: How current is the study?
California Civil Code §5550 calls for a visual inspection of accessible major components at least every three years as part of the reserve study when their current replacement value reaches at least half the association’s gross budget, excluding reserves. The board must review the study annually and make necessary adjustments. [1]
Ask for both the last inspection-based study and the latest annual review. An older date is a prompt to investigate currency and applicability—not, by itself, proof that every number is wrong or that the association has violated the law.
Ask for the reserve funding disclosure summary
The Assessment and Reserve Funding Disclosure Summary under Civil Code §5570 brings together reserve balances, funding percentages, approved assessments and projected funding needs. It accompanies the annual budget report or summary and may be supplemented. Use it as a starting point alongside the full study and funding plan. [1]
The sample pages shown in the episode are labeled SAMPLE. They illustrate how to read a document; their dates, dollar amounts and community details are not the finances of a real HOA. Do not treat a sample as evidence about a property you are considering.
Before your review deadline
Request the documents early enough to read them, raise questions and discuss unresolved issues with your agent and, where appropriate, an HOA attorney or reserve professional. Confirm the review deadlines and rights in your own purchase agreement; do not assume every buyer can cancel at any point.
Start with three things: the funding percentage, the projects coming due, and the study’s date and updates. Together, they give you a more useful conversation than the monthly fee alone.
Sources & editorial notes
[1] California Department of Real Estate, 2026 Real Estate Law—Pertinent Excerpts, Civil Code §§5550, 5565 and 5570 (PDF pages 280–284). Reviewed October 27, 2026. The current Legislature pages could not be retrieved during preparation; the statutory references here were checked against DRE’s official 2026 compilation.
Adapted from Armin’s supplied HOA Series Episode 1 video and its matching original production script. The funding bands are the episode’s rule of thumb. No sample reserve document or third-party property image is reproduced here.
General homebuyer education. A reserve study is based on estimates; this article does not establish the financial condition of any association or provide a legal opinion.