California Law May Increase Homeowners Association Fees

California homeowners may face increased homeowners association (HOA) fees due to Assembly Bill 2050, which could be signed into law by Governor Gavin Newsom by the end of September 2026. The bill mandates that HOAs maintain a 30-year reserve fund and conduct a study of the reserve account. If an HOA's reserves are projected to fall below zero at any point during the 30 years, the association must transfer at least 15% of its gross annual budget into reserves each year starting January 2032. If the HOA's budget cannot accommodate this transfer, the bill requires the HOA to implement a special assessment to raise fees on homeowners. The potential increase in monthly fees for homeowners is currently unclear. According to U.S. Census Bureau data, nearly a quarter of California households are affected by HOAs. Newsom has until September 30 to sign or veto the bill. The Consumer Federation of California has criticized the bill, suggesting that it should include capped fee increases. Robert Herrell, the organization's executive director, expressed concerns about the potential for significant assessment increases impacting 14 million Californians. Proponents of the bill argue that it will help HOAs manage building maintenance and costs more effectively. Robert DeNichilo, legislative co-chair at the Community Associations Institute’s California Legislative Action Committee, stated that the bill budgets for the actual cost of ownership. In California, HOAs can increase regular dues by up to 20% per fiscal year without community member approval. The bill may particularly impact condominium associations, as Fannie Mae will require them to allocate 15% of their annual budgets to reserves starting next year, up from the current 10%. Nathan Godin, a doctoral student at UC Berkeley, noted that the bill could lead to fairer HOA fee increases for future homeowners, advocating for consistent monthly payments rather than unexpected future assessments.