Self-Managed HOA Boards, A California Compliance Check

Plenty of California HOAs run themselves. Small projects, longtime owners, a treasurer who is good with QuickBooks, and a president who answers the phone. It can work. It also usually leaves the same handful of gaps. Insurance carriers, plaintiffs' lawyers, and the Secretary of State all know which ones.

This page is for volunteer board members at self-managed associations who want a plain-language check of the items the law actually requires. If you can answer yes to all of them, you are in better shape than most managed communities. If you cannot, the fix is usually faster and cheaper than people expect, especially before something forces the issue.

The legal framework, in one paragraph

California common interest developments are governed by the Davis-Stirling Common Interest Development Act (Civil Code §4000 and following) plus the corporation code that fits your entity (almost always the Nonprofit Mutual Benefit Corporation Law). Self-management does not change a single requirement. Whether you hire a manager or run it yourself, the same statutes apply, the same disclosures are due, and the same liability sits on the volunteer directors.

Are your board members properly elected

Most self-run elections are not compliant, and a board elected outside the rules can have its decisions challenged later by any owner.

What the law requires:

• Written election rules adopted by the board with at least a 28-day comment period (Civ §5105). These must address candidate qualifications, access to media, and the inspector of elections.
• An independent inspector of elections (Civ §5110). Not the board president. Not the treasurer. Either a third party or an owner who is not running.
• Secret double-envelope ballots (Civ §5115). Not a show of hands at the annual meeting. Not a sign-up sheet.
• Quorum and notice rules consistent with your bylaws and Civ §5115.

Two helpful provisions for small associations:

• Election by acclamation (Civ §5103). If the number of qualified candidates equals or is less than the number of open seats, the board can seat them without a ballot, provided the association has followed the notice requirements and the membership has been given a fair chance to nominate.
• Inspector of elections services are inexpensive when handled by a vendor. Pricing typically runs a few hundred dollars per election.

If your last election did not use written rules, an inspector, and secret ballots, fix that before the next one.

SB 326 balcony and elevated-element inspections

Civil Code §5551, often called SB 326, applies to condominium associations with three or more units that have wood-framed exterior elevated elements more than six feet above grade. Balconies, decks, walkways, stairways, and railings count.

The deadlines:

• First inspection by January 1, 2025.
• Subsequent inspections every nine years.
• Inspections must be performed by a licensed structural engineer, architect, or, as of SB 410 (2025), a licensed civil engineer.

If you have not done the first inspection, your association is out of compliance and your insurance carrier is unlikely to defend a related claim. There is a common misunderstanding that the deadline was extended to 2026. That extension is in SB 721 and AB 2579, which apply to apartment buildings and explicitly exclude HOAs.

Reserve study and reserve funding

Civil Code §5550 requires a reserve study at least every three years, with an annual update, and a funding plan that the board discloses in the Annual Budget Report. The study must inspect all major components the association is obligated to maintain and project the cost and timing of replacement.

Self-run boards often have one of three problems:

1. 1. No study at all, or one that is more than three years old.
2. 2. A study that exists but is ignored in the annual budget.
3. 3. A funding plan that exists on paper but is not actually funded each year.

The fix is straightforward. A qualified reserve preparer will run a study for a few thousand dollars and provide the funding plan language for your budget. Vendors are listed in the CACM directory and other industry directories.

Required annual disclosures

Two documents must be distributed to every owner each year, 30 to 90 days before the end of the fiscal year:

• Annual Budget Report (Civ §5300). Pro forma budget, reserve study summary, reserve funding plan, insurance summary, assessment and reserve disclosure, and statements about deferred maintenance.
• Annual Policy Statement (Civ §5310). Lien, fining, dispute resolution, collection, and architectural review policies, plus the rosters required by §5200.

Most self-run boards skip both. Owners are entitled to demand them. Lenders ordering documents at resale will catch the absence.

Tax filings and the Secretary of State

Three filings are easy to miss and expensive to fix:

• Federal income tax. Most associations file IRS Form 1120-H each year. Some file the full Form 1120. Either way, a return is due annually.
• California Form 100. California corporate franchise return, due annually. Some associations also qualify for Form 199 treatment under the Franchise Tax Board.
• Statement of Information (SI-100). Filed with the Secretary of State every two years for the nonprofit mutual benefit corporation.
• Statement by Common Interest Development Association (SI-CID). Civ §5405. Filed with the Secretary of State every two years, listing the association's contact information.

If your association has not filed for several years, both the IRS and the FTB charge penalties and interest. The cleanup work is usually one or two CPA engagements and a back-filing.

Open Meeting Act compliance

Civil Code §4900 through §4955 governs how the board makes decisions. The short version:

• Board decisions are made in noticed, open meetings with an agenda posted at least four days in advance.
• Executive sessions are limited to specific topics (litigation, personnel, contracts, hardship requests, disciplinary actions).
• Action by email, text message, or phone tree outside a meeting is generally not valid and is voidable.

Self-run boards drift into email decisions because it is convenient. It is also the most common procedural defect cited in owner challenges.

Fidelity bond

Civil Code §5806 requires the association to carry a fidelity bond, crime policy, or employee dishonesty coverage in an amount equal to or greater than reserves plus three months of assessments. The coverage must also include computer fraud and funds-transfer fraud protection, and if the association uses a manager, it must cover the manager and their employees as well. Self-insurance does not satisfy the statute.

This is a check your insurance broker can complete in an afternoon.

Financial review

If gross income exceeds $75,000 in a fiscal year, Civil Code §5305 requires an independent CPA review of the year-end financial statements. Most associations exceed this threshold. The review is not an audit, it is less expensive, and it gives the board, the owners, and any prospective buyers documented confirmation that the books are reasonable.

Resale documents and records inspection

Two requests will eventually reach a self-run board, and both have statutory deadlines:

• Resale documents (Civ §4525). When a unit goes under contract, the seller requests an HOA document package. The association has ten calendar days to produce it. Lenders will not close without it. A self-run board with no system for this becomes a closing problem.
• Records inspection (Civ §5200). Members can request board minutes, financial records, contracts, and other defined documents. The association has up to 10 business days to provide enhanced records and 15 days for some others. Refusal triggers an attorney-fees provision.

Fining and enforcement

Civil Code §5855 requires written notice of an alleged violation and an opportunity for a hearing before the board can impose a fine. AB 130, passed in the last cycle, caps most fines at $100 each. Communities that maintained “$500 per violation” fine schedules need updates. Health and safety violations may warrant higher amounts with specific findings.

A short self-assessment

Run through these and count your yeses:

1. We held an election in the last 12 to 18 months using written rules, an inspector of elections, and secret ballots.
2. If we have wood balconies or decks over six feet, our SB 326 inspection is complete and filed.
3. Our reserve study is current within three years and is reflected in this year's budget.
4. We distributed the Annual Budget Report and Annual Policy Statement to owners in the last 12 months.
5. We have filed both federal and California tax returns for the most recent year.
6. Our SI-100 and SI-CID filings are current with the Secretary of State.
7. We carry a fidelity bond that meets Civ §5806.
8. Our gross income is under $75,000 or we have a completed CPA review.
9. Our board decisions are made in open meetings with proper agendas. Not by email.
10. Our fine schedule is consistent with AB 130.

Six or fewer yeses and you have a real cleanup ahead. The good news is that none of it is novel. Every item on the list has a vendor or a checklist behind it.

When to bring in help

Self-management works best when the association is small, the components are simple, and at least one board member has the time and disposition for compliance work. When any of the following becomes true, a professional manager pays for itself quickly:

• A pending lawsuit or owner complaint that references board procedure.
• An insurance non-renewal or significant premium jump.
• A failed reserve study or special assessment vote.
• A major capital project (roof, exterior paint, balcony repair, plumbing).
• Board turnover that leaves no one with institutional knowledge.

A manager does not replace the board. A manager runs the process so the board can make decisions instead of doing the work.

Where I fit

I am a CACM-trained community management professional and a California real estate broker. When self-managed boards reach out, the first conversation is usually short and free. We sort what is urgent from what can wait, and then I help connect the right vendors, reserve preparer, CPA, inspector, counsel, insurance, manager, in the right order. If a board decides to evaluate management proposals, I can help with that as a consultant, not a candidate.

Contact Hunter Mason.

The statutes referenced on this page live in the California Civil Code, Davis-Stirling sections, available free on the California Legislative Information site.