Reserve Funding Disclosure Law 2009
Civil Code §1365(b) – Reserve Funding Disclosures
Feldsott & Lee
A Law Corporation
Civil Code §1365(b) requires that, commencing January 1, 2009, a summary of the reserve funding plan required pursuant to Civil Code §1365.5(e)(5) must be sent to the members and prospective buyers. The summary shall include notice that the full reserve study plan is available upon request. Civil Code §1365.5(e)(5) provides that the reserve funding plan must include how the association plans to fund its reserves to meet its obligation for the repair and replacement of all major components with an expected remaining life of 30 years or less, not including those components that the board has determined will not be replaced or repaired, a schedule of the date and amount of any change in regular or special assessments that would be needed to sufficiently fund the reserve funding plan, and future draws on the reserve fund. The board must factor in the impact of inflation when preparing the reserve funding plan. A summary of the plan must be provided annually to members and prospective buyers.
It is recommended that boards consult with their reserve study specialists to assist in adopting a reserve funding plan and preparing the summary.