An industry update from Inspection.re, premium home inspections across California.
A buyer is under contract on a condominium. The unit gets a home inspection. The buyer also receives an association document package several hundred pages thick.
They read the CC and Rs for the pet rule and the rental rule. They never open the annual budget report. Six months after closing a special assessment arrives, and it was disclosed. Nobody misled anyone.
That is a composite of a pattern we see in condo transactions across California, not one identifiable property or client.
On September 20, 2026 the Governor vetoed two bills that would have changed what an association owes a buyer. The reason given for one of them was that existing law already covers it.
The seller’s disclosure package already contains eleven separate items
Civil Code section 4525 makes the package the seller’s obligation, not a courtesy from the association.
The list starts with all governing documents, plus a written statement from an authorized representative if the association is not incorporated. It includes an age restriction statement where Section 51.3 applies, and a copy of the most recent documents distributed under Article 7, beginning at Section 5300.
It also carries a written statement from the association showing assessments and fees, a copy or summary of any notice previously sent to the owner under Section 5855, the initial list of defects provided to each member under Section 6000, and the latest information provided for in Section 6100. The seller must give notice of any assessment change approved but not yet due, state any rental or leasing prohibition that applies, provide the board meeting minutes from the prior twelve months on request, and include the report from the most recent inspection conducted under Section 5551.
Those eleven items do not all answer the same question. Some tell you what the association permits, some what it charges. Three carry physical information about the building itself, and the one that reaches furthest into its future is item three, the annual budget report.
The annual budget report says whether the board chose not to repair something
Civil Code section 5300 requires that report to state whether the board decided to defer or not undertake repairs or replacement of a major component with a remaining life of 30 years or less, together with the justification.
The board has to write down, in advance, that it decided not to fix something, and why.
The same report must include “a summary of the association’s reserves, prepared pursuant to Section 5565” and “a summary of the reserve funding plan adopted by the board.” It must contain a general statement of the procedures used to calculate and establish reserves, and those procedures may not assume a rate of return on cash reserves in excess of 2 percent, which is a quiet little guardrail against a board projecting its way out of a funding gap.
It must also state whether the board expects to levy a special assessment to repair, replace or restore any major component or to provide adequate reserves. If it does, the report has to give the estimated amount, the commencement date and the duration.
The timing is the part people miss. The report goes out 30 to 90 days before the end of the fiscal year, so it is not written after the assessment lands. It is a forward-looking statement from the board, prepared on a schedule, and a copy sits in the box the buyer already received.
A buyer who reads exactly one document in that box should read this one. Find the deferred repair statement, find the special assessment statement, and treat everything else in the package as context for those two paragraphs.
A reserve study applies inspection language to the shared building
A reserve study is a visual inspection of accessible areas on a three-year cycle, with a remaining useful life attached to every major component. That sentence should sound familiar to anyone who has read what an inspection report actually says about a house.
Civil Code section 5550 requires that “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” the association is obligated to repair, replace, restore or maintain.
The study identifies major components with “a remaining useful life of less than 30 years” as of its date, states “the probable remaining useful life of the components identified,” and includes cost estimates, the annual contribution required and a funding plan for every component in that band. The components reach into gas, water and electrical service to the extent the association is responsible for repair or replacement.
So the shared building gets the same grammar a single house gets: name the component, estimate what is left of it, price the replacement. Roof, elevator, plumbing risers, electrical service, decks, paint, asphalt. A buyer who wants to know what this building will cost over the next decade is holding the document that says so.
There is a firm limit, and we would rather state it than let a buyer over-read the study. A reserve study is a funding document, not a condition report. A component can sit calmly in a funding plan with eleven years of remaining life and be actively failing, and nothing in the study is designed to catch that.
The Section 5551 report is already in the buyer’s package
Item eleven is the report from the most recent inspection conducted under Civil Code section 5551, the exterior elevated element inspection.
Section 5551 applies to buildings with three or more attached multifamily dwelling units and covers load-bearing components together with their associated waterproofing system. The first inspection was due by January 1, 2025, and it repeats at least once every nine years, performed by a licensed structural or civil engineer or architect. The deadlines, the sampling rules and the real differences from the apartment statute are worked through in our guide to the two California balcony inspection laws and which building each one covers.
The only point that belongs here is narrower. That report is a statutory item in the buyer’s package, not something a buyer has to go hunting for, and a seller who does not produce it has not completed the list.
SB 1238 died on the ground that existing law already requires it
Senate Bill 1238 would have changed association management and added disclosure provisions. The Governor vetoed it on September 20, 2026.
Senator Aisha Wahab authored the bill, titled “Common interest developments: management.” It was introduced February 19, 2026, passed the Assembly on August 26, passed the Senate on August 27, was enrolled on August 30, and was returned without signature on September 20.
It would have revised the definition of management services, established that a managing agent owes a duty of prudent care and a highest good faith effort, modified the disclosure requirements for an owner selling a separate interest by requiring associations to provide certain documents on request and adding specific information about exterior elevated elements, and expanded what counts as association records.
The veto message dealt with the duty of care first. “A managing agent acts on behalf of the association, while the association owes duties to its members,” the Governor wrote. “Establishing a duty owed to both the association and its individual members could create conflicting obligations when a member’s interests diverge from those of the community as a whole. The resulting uncertainty could invite litigation, the costs of which homeowners would ultimately bear.”
Then, on the disclosure half: “Several of the bill’s remaining provisions overlap with existing requirements governing reserve planning and homeowners’ access to association records, limiting their added benefit.”
That is the sentence to sit with. The stated reason the disclosure provisions were unnecessary is that California already requires the information. None of it was removed on September 20, and none of it works if nobody asks.
AB 2439 changed nothing about where the assessment goes
Assembly Bill 2439 was vetoed the same day, and the assessment questions it addressed are exactly where they were.
Assemblymembers Blanca Rubio and Lowenthal introduced it, with Kalra and Pacheco as coauthors, under the title “Common Interest Developments: governing documents: assessments.” Introduced February 20, 2026, passed the Senate on August 27, passed the Assembly on August 28, enrolled September 2, vetoed September 20.
It would have prohibited governing documents from restricting a member’s use of public streets apart from health and safety and local authority requirements, required an association to notify members within 60 days when the recipient of assessment payments changes, required certified mail notice after two missed payments, made associations liable for procedural failures including reconveyance fees and owner costs, and triggered a $1,000 civil penalty with mandatory member notification on a third violation within five years.
The Governor’s objection was to the breadth rather than the intent. “I support protecting homeowners from improper collection practices and ensuring they know where to make their assessment payments,” he wrote. “However, this bill would make an association liable for ‘any costs’ a homeowner incurs because the association failed to follow assessment-collection procedures. The bill neither defines nor limits those costs.” He raised a second problem with the penalty, writing that the bill “does not explain how liability against ‘the board’ would operate or how it would apply when board membership changes between violations.”
For an agent, the practical residue is two questions every condo purchase still has to answer on its own. Where does the assessment payment go, and what happens when one is missed. Both are still answered by the association’s written statement of assessments and fees, the notice of approved changes not yet due, and the annual budget report, all of which are already in the 4525 package.
A condo inspection describes the unit, not the association’s reserves
A California home inspection is “a noninvasive, physical examination, performed for a fee in connection with a transfer” of real property, reporting on a material defect, meaning “a condition that significantly affects the value, desirability, habitability, or safety.”
On a condominium the boundary between the unit and the common area is set by the governing documents, not by the inspector. We read that boundary and we say where we stopped, which is the same discipline we apply to every scope question that lands between our work and a specialist’s.
Inside the unit we report the electrical panel or subpanel and whether the receptacles are actually grounded rather than merely three-pronged, the water heater with its connections and seismic strapping, the heating and cooling equipment, plumbing fixtures and visible supply and drain lines, evidence of past water intrusion at ceilings and shared walls, window and slider condition, and the interior side of any deck or balcony door.
Some common area conditions are visible from accessible locations, and we report those as observations rather than as a common area assessment: roof condition where it is visible, exterior wall and stair conditions, drainage at the building perimeter, and the surface of any deck or balcony serving the unit. Our reports carry 3D Matterport tours, FLIR infrared and same-day turnaround, and infrared earns its place here specifically at shared walls and ceilings, where a neighbor’s failed shower pan announces itself long before a stain does.
What we do not do is evaluate the association’s reserves, audit a reserve study or perform a Section 5551 inspection. Those are separate scopes with separate licenses, and blurring them would be doing a buyer a disservice at the exact moment they need the line drawn clearly.
Read the package in this order, before the contingency closes
Ask for the full 4525 package in writing on day one, and name the twelve months of board minutes specifically. The minutes are only required on request. Most buyers never make the request, so the minutes never arrive, and a thick box is not evidence they are in there.
Read the annual budget report first, before the CC and Rs. Go to the deferred repair statement and the special assessment statement. If the board deferred a major component, the justification is printed right underneath.
Read the reserve summary next and pull out every component with a remaining useful life under ten years. That is the near term bill, and it should inform what you offer. Then read the minutes with the reserve study open beside them, because a component the study gives eight years, discussed in three consecutive board meetings, is a different fact than either document produces alone.
Order the unit inspection regardless. The package describes the building the board intends to maintain. The inspection describes the unit you are buying this month, and the two documents answer different questions. The contingency calendar is unforgiving about this, as we set out in the guide to how a California inspection contingency actually runs, and skipping the unit inspection to save time is the trade we would argue hardest against, for the reasons in what waiving the contingency really gives up.
Legal questions about what the association owes, what a disclosure failure means, or what a governing document permits belong with a California real estate attorney rather than with an inspector.
The honest summary
Two bills that would have added to the condo package died on September 20, 2026, and one of the stated reasons was that California already requires the information. That is only good news for a buyer who asks for the package and opens it.
The problem here is the opposite of the disclosure gaps elsewhere in California law. A condo buyer is handed too much and reads too little. A buyer near a landfill is handed nothing at all, because the statutory hazard form has no line for one, even after the Governor signed a landfill temperature statute the same week.
The statute is a state statute, so the mechanics are identical whether you sell condominiums in San Francisco, Oakland, Emeryville or Long Beach. Our what’s included page sets out what a condo inspection covers, and the frequently asked questions page explains the referrals we make when a question belongs to the association rather than the unit.
Request the full 4525 package and the twelve months of minutes in writing on day one. Open the annual budget report first. Read the deferred repair and special assessment statements, compare the reserve study against the minutes, and book the unit inspection before the contingency closes.
Quick answers
Does the seller or the association owe me these documents? Civil Code section 4525 puts the duty on the owner selling the property. The association supplies several of the items, and it may charge for preparing them, but the obligation to deliver the package to the prospective purchaser sits with the seller.
Are the board minutes automatic? No. The prior twelve months of board meeting minutes are the one item on the list that arrives only if the buyer asks for it. Ask in writing, early.
What does “remaining useful life” actually mean in a reserve study? It is a planning estimate of how long a major component has left before replacement, stated as of the date of the study and based on a visual inspection of accessible areas. It is not a statement that the component is currently in good condition.
Can a home inspector tell me whether the HOA is underfunded? No, and anyone who offers to is working outside their scope. Reserve adequacy is a question for the reserve study, the annual budget report and, where the numbers are large, an accountant or an attorney. We inspect the unit and report the common area conditions we can actually see.
One more document worth requesting in a condo purchase: under SB 908, from January 1, 2027, an owner who replaces windows in common or exclusive-use common area must sign a written agreement taking on their maintenance and liability. Our guide to SB 908 and HOA window rules covers what that means for a buyer.
Another HOA rule signed September 30, 2026 changes what a buyer should request: under AB 1684, an association cannot ban a code-compliant cooling system, but it can make the owner, and the next owner, responsible for damage the unit causes.
The reserve study in that package carries more weight from 2032. Under AB 2050, an association must fund its reserves to the study’s minimum level, and move at least 15 percent of its budget into reserves when the 30-year projection goes negative.
Another line item to look for in the HOA package: a member-owned charger in the garage. SB 1267 spells out who pays for it.
