How do you check an HOA reserve study before buying a condo in Los Angeles?
Ask for the reserve study, the annual budget, and the last twelve months of board minutes during your contingency period. California's Davis-Stirling Act (Civil Code 5550) requires most associations to complete a reserve study at least every three years, and it reports a "percent funded" figure. Anything under roughly 70 percent is a warning sign, and a building well below that can hit you with a special assessment of tens of thousands of dollars per unit for roofs, plumbing, or the balcony repairs now mandated under SB 326. A poorly funded association can also make the unit harder to finance and resell.
Here's the number that matters most on a condo you're about to buy, and it isn't the list price. It's the reserve study's percent-funded figure, buried in a PDF most buyers skim and forget.
That one number tells you whether the building has been quietly saving for its next roof, its aging plumbing, and its balcony repairs, or whether it plans to send you the bill after you move in. In Los Angeles, where a lot of the condo stock in West Hollywood, the Fairfax District, and along the mid-Wilshire corridor was built decades ago, the gap between a well-funded building and a broke one can be the difference between a smart buy and a five-figure surprise.
WHAT A RESERVE STUDY ACTUALLY IS
A reserve study is the association's long-range savings plan for big-ticket repairs. A professional walks the property, inventories the components that wear out (roof, elevators, boilers, paint, decks, waterproofing), estimates what's left of each one's life, and calculates what the HOA should be setting aside every month to pay for them.
California's Davis-Stirling Act (Civil Code 5550) requires most associations to complete that study at least once every three years, based on a physical inspection, and to review it annually. So the document exists. The question is what it says.
The headline output is a percent-funded figure: how much cash the association actually has versus what it should have on hand at this point in the buildings' life.
- 70 percent funded or higher is generally considered strong. Special assessments are less likely.
- 30 to 70 percent is the wide middle. Manageable, but read the details.
- Under 30 percent is a red flag. The building is running on fumes, and the shortfall lands on owners eventually.
A low percentage doesn't automatically kill the deal. But it changes what you're really paying, because a special assessment is just a delayed part of the purchase price.
WHY THE BILL LANDS ON YOU
When reserves fall short and a major repair comes due, the association has two options: raise monthly dues or levy a special assessment, a one-time charge split across every unit. In an LA building, a roof replacement, a re-pipe, or a seismic retrofit can run well into six or seven figures for the whole property, which translates to anywhere from a few thousand to $50,000 or more per unit.
And here's the part that catches buyers: the assessment is owed by whoever owns the unit when it's levied. Close in August, get hit with a $28,000 assessment vote in November, and it's your check, not the seller's.
This is exactly the kind of thing we walk our clients through before they remove contingencies, because the reserve study usually tells you it's coming.
THE SB 326 BALCONY FACTOR
If the building has wood-framed balconies, decks, or exterior walkways, there's a specific law you need to know about. California's SB 326 requires condo associations to have those elevated elements inspected by a licensed architect or structural engineer, and the first inspections were due by January 1, 2025, on a repeating nine-year cycle after that.
Two things matter for you as a buyer. First, the inspection findings have to be folded into the reserve study, so a building that just discovered dry rot behind its balconies may be staring at repairs it hasn't fully funded. Second, an association that ignored the deadline is out of compliance, which can trigger insurance premium increases and board liability. Ask directly whether the SB 326 inspection has been done and what it found.
THE FINANCING TRAP MOST BUYERS MISS
A weak reserve balance isn't just your problem. It's the next buyer's problem too, which is why it affects resale value.
Starting August 3, 2026, Fannie Mae eliminated its "limited review" shortcut, so nearly every condo loan now goes through a full project review. Lenders are looking harder at reserves, deferred maintenance, and special assessments, and for loan applications dated on or after January 4, 2027, the reserve funding standard rises to 15 percent of the budget. A building that can't clear those bars can become difficult to finance, which shrinks your future buyer pool and drags on the price when you sell.
So the reserve study isn't just about avoiding a surprise bill. It's a read on how liquid and lendable the whole building will be for years.
WHAT TO PULL, AND WHEN
In California, the seller and the HOA owe you a disclosure packet once you're in escrow (Civil Code 4525). Don't let it sit. During your contingency period, get:
- The most recent reserve study, and check the percent-funded figure and the funding plan.
- The current annual budget and the reserve funding line.
- The last twelve months of board meeting minutes, where special assessments and big repairs get discussed before they're official.
- Any history of past special assessments and, more important, any that are pending or under discussion.
- The SB 326 balcony inspection report, if the building has qualifying structures.
Read the minutes especially. That's where you find the sentence that never makes it into the listing, the one about the board getting bids for a new roof next spring.
Your specific risk depends on the building's age, its systems, and how the board has managed money, and that's the kind of read a local agent who has been through dozens of these can give you fast.
FREQUENTLY ASKED QUESTIONS
What percent funded should an HOA reserve be?
Around 70 percent or higher is generally considered a healthy, well-funded reserve, and special assessments become less likely at that level. Between 30 and 70 percent is a broad middle range where you need to read the funding plan and recent minutes, and under 30 percent is a warning sign that owners will likely face assessments or steep dues increases.
Who pays a special assessment, the buyer or the seller?
Whoever owns the unit when the assessment is levied is responsible for it. If an assessment is voted in after you close, it's your obligation, which is why reviewing the reserve study and board minutes before removing contingencies matters so much. In some cases you can negotiate for the seller to credit a known or pending assessment.
Can a low reserve balance affect my mortgage?
Yes. Lenders review a condo project's reserves, deferred maintenance, and special assessments, and as of August 3, 2026, Fannie Mae requires a full project review on nearly all condo loans. A building with weak reserves or significant deferred maintenance can be harder to finance, which also affects who can buy it from you later.
Does an HOA in California have to give me the reserve study?
Yes. Under the Davis-Stirling Act (Civil Code 4525), the seller must provide a disclosure packet that includes reserve and budget information once you're under contract. Request it early so you have time to review it within your contingency period rather than at the last minute.
Is a high monthly HOA due a bad sign?
Not necessarily. A higher due can mean the board is funding reserves responsibly, which lowers your special-assessment risk. A suspiciously low due in an older building is often the bigger warning, because it can signal the association is underfunding the repairs it will eventually have to make.
A reserve study won't tell you whether you'll love the condo, but it will tell you what owning it is likely to cost over the next several years, and that's a number worth knowing before you sign. If you'd like the same kind of market read we share with our clients every month, sign up for Real Brief, our monthly insights into the LA luxury real estate market, delivered straight to your inbox.
Alexis Ramos and Luke Abbott are the founders of Ramos & Abbott Homes, a luxury real estate team with Sotheby's International Realty in Beverly Hills. Together they specialize in architectural and historic homes, new construction, and income properties across West Hollywood, Sunset Strip, Hancock Park, Hollywood Hills, Beverly Hills, Melrose District, Fairfax District, Sunset Square, and Spaulding Square.
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