Bill Text: CA SB1007 | 2025-2026 | Regular Session | Amended

California Senate Bill 1007

Bill Title: Common interest developments: annual reports: assessments: discipline.

Sponsorship: Partisan Bill (Democrat 3)

Status: (Engrossed) 2026-06-24 - June 24 set for first hearing canceled at the request of author. [SB1007 Detail]

Download: California-2025-SB1007-Amended.html

Amended IN Assembly June 15, 2026

Amended IN Senate May 21, 2026

CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION

Senate Bill

No. 1007

Introduced by Senator Menjivar
(Coauthors: Senators Gonzalez and Grayson)

February 09, 2026

An act to amend Sections 5300, 5320, and 5605 of, and to add Section 5860 to, the Civil Code, relating to common interest developments.

LEGISLATIVE COUNSEL'S DIGEST

SB 1007, as amended, Menjivar. Common interest developments: annual reports: assessments: discipline.

Existing law, the Davis-Stirling Common Interest Development Act, governs the formation and operation of common interest developments. Existing law requires that a common interest development be managed by an association. Existing law requires an association of a common interest development to levy regular and special assessments to perform its obligations under the governing documents and the act, as provided. Existing law requires an association to prepare an annual budget report and a policy statement, as specified. Existing law requires the association to either deliver to all members the full report or a summary of the report that includes specified information, on the first page, whenever the annual budget report or a policy statement is prepared, as provided.

This bill would require the annual budget report to include a comparison breakdown of the anticipated ~~expenditures~~ expenses of the ~~current~~ previous fiscal year versus actual expenditures of the ~~current~~ previous fiscal year and a statement regarding compensation of a management company, as provided. The bill would require a summary of an annual budget to also include the comparison breakdown and the statement regarding compensation of a management company, as specified.

Existing law prohibits increases in regular assessments for any fiscal year, unless the board complies with certain requirements, including certain information in its annual budget report. Existing law prohibits an association from increasing regular assessments by more than 20 percent, without the approval of a majority of a quorum of members.

This bill would prohibit an association from increasing a regular assessment, unless the board includes the above-referenced information pertaining to regular assessments. The bill would, instead, prohibit a board from increasing regular assessments by more than 8%, without the approval of the majority of a quorum of members.

Existing law requires the association to notify a member 10 days before a meeting to consider or impose discipline on a member, or a monetary charge, as a means of reimbursing the association for costs incurred by the association in the repair of damage to the common area and facilities caused by a member, as provided. Existing law requires the notification to include, among other information, the nature of the alleged violation, or nature of the damage to the common area and facilities.

This bill would require the association to make any physical evidence used to determine a violation of the governing documents has occurred available to the member at least 5 business days before the hearing or deadline for the member’s response, if the association seeks to impose a monetary penalty against a member for violation of the governing documents, as provided.

Vote: MAJORITY Appropriation: NO Fiscal Committee: NO Local Program: NO

The people of the State of California do enact as follows:

SECTION 1.

Section 5300 of the Civil Code is amended to read:

5300.

(a) Notwithstanding a contrary provision in the governing documents, an association shall distribute an annual budget report 30 to 90 days before the end of its fiscal year.

(b) Unless the governing documents impose more stringent standards, the annual budget report shall include all of the following information:

(1) A pro forma operating budget, showing the estimated revenue and expenses on an accrual basis.

(2) A summary of the association’s reserves, prepared pursuant to Section 5565.

(3) A summary of the reserve funding plan adopted by the board, as specified in paragraph (5) of subdivision (b) of Section 5550. The summary shall include notice to members that the full reserve study plan is available upon request, and the association shall provide the full reserve plan to any member upon request.

(4) A statement as to whether the board has determined to defer or not undertake repairs or replacement of any major component with a remaining life of 30 years or less, including a justification for the deferral or decision not to undertake the repairs or replacement.

(5) A statement as to whether the board, consistent with the reserve funding plan adopted pursuant to Section 5560, has determined or anticipates that the levy of one or more special assessments will be required to repair, replace, or restore any major component or to provide adequate reserves therefor. If so, the statement shall also set out the estimated amount, commencement date, and duration of the assessment.

(6) A statement as to the mechanism or mechanisms by which the board will fund reserves to repair or replace major components, including assessments, borrowing, use of other assets, deferral of selected replacements or repairs, or alternative mechanisms.

(7) A general statement addressing the procedures used for the calculation and establishment of those reserves to defray the future repair, replacement, or additions to those major components that the association is obligated to maintain. The statement shall include, but need not be limited to, reserve calculations made using the formula described in paragraph (4) of subdivision (b) of Section 5570, and may not assume a rate of return on cash reserves in excess of 2 percent above the discount rate published by the Federal Reserve Bank of San Francisco at the time the calculation was made.

(8) A statement as to whether the association has any outstanding loans with an original term of more than one year, including the payee, interest rate, amount outstanding, annual payment, and when the loan is scheduled to be retired.

(9) A summary of the association’s property, general liability, earthquake, flood, and fidelity insurance policies. For each policy, the summary shall include the name of the insurer, the type of insurance, the policy limit, and the amount of the deductible, if any. To the extent that any of the required information is specified in the insurance policy declaration page, the association may meet its obligation to disclose that information by making copies of that page and distributing it with the annual budget report. The summary distributed pursuant to this paragraph shall contain, in at least 10-point boldface type, the following statement:

“This summary of the association’s policies of insurance provides only certain information, as required by Section 5300 of the Civil Code, and should not be considered a substitute for the complete policy terms and conditions contained in the actual policies of insurance. Any association member may, upon request and provision of reasonable notice, review the association’s insurance policies and, upon request and payment of reasonable duplication charges, obtain copies of those policies. Although the association maintains the policies of insurance specified in this summary, the association’s policies of insurance may not cover your property, including personal property or real property improvements to or around your dwelling, or personal injuries or other losses that occur within or around your dwelling. Even if a loss is covered, you may nevertheless be responsible for paying all or a portion of any deductible that applies. Association members should consult with their individual insurance broker or agent for appropriate additional coverage.”

(10) When the common interest development is a condominium project, a statement describing the status of the common interest development as a Federal Housing Administration (FHA)-approved condominium project pursuant to FHA guidelines, including whether the common interest development is an FHA-approved condominium project. The statement shall be in at least 10-point font on a separate piece of paper and in the following form:

“Certification by the Federal Housing Administration may provide benefits to members of an association, including an improvement in an owner’s ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.

This common interest development [is/is not (circle one)] a condominium project. The association of this common interest development [is/is not (circle one)] certified by the Federal Housing Administration.”

(11) When the common interest development is a condominium project, a statement describing the status of the common interest development as a federal Department of Veterans Affairs (VA)-approved condominium project pursuant to VA guidelines, including whether the common interest development is a VA-approved condominium project. The statement shall be in at least 10-point font on a separate piece of paper and in the following form:

“Certification by the federal Department of Veterans Affairs may provide benefits to members of an association, including an improvement in an owner’s ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.

(12) A copy of the completed “Charges For Documents Provided” disclosure identified in Section 4528. For purposes of this section, “completed” means that the “Fee for Document” section of the form individually identifies the costs associated with providing each document listed on the form.

(13) A comparison breakdown of the anticipated ~~expenditures~~ expenses of the ~~current~~ previous fiscal year versus actual expenditures of the ~~current~~ previous fiscal year. These expenditures shall be organized in major categories at the discretion of the association that shall include, but are not limited to, reserve contributions, a third-party management company, utilities, landscaping, maintenance, and insurance. The association may comply with this paragraph by including the comparison breakdown in the pro forma operating budget pursuant to paragraph (1).

(14) (A) A statement of the compensation of a management company, if applicable.

(B) The association may comply with subparagraph (A) by including the statement in the pro forma operating budget pursuant to paragraph (1). The statement shall be clearly identified in the pro forma operating budget for compliance with this subparagraph.

(d) The summary of the association’s reserves disclosed pursuant to paragraph (2) of subdivision (b) shall not be admissible in evidence to show improper financial management of an association, provided that other relevant and competent evidence of the financial condition of the association is not made inadmissible by this provision.

(e) The Assessment and Reserve Funding Disclosure Summary form, prepared pursuant to Section 5570, shall accompany each annual budget report or summary of the annual budget report that is delivered pursuant to this article.

SEC. 2.

Section 5320 of the Civil Code is amended to read:

5320.

(a) When a report is prepared pursuant to Section 5300 or 5310, the association shall deliver one of the following documents to all members by individual delivery pursuant to Section 4040:

(1) The full report.

(2) A summary of the report that includes, on the first page, a general description of the content of the report, and instructions, printed in at least 10-point boldface type, regarding how to request a complete copy of the report at no cost to the member. For the summary of the report prepared pursuant to Section 5300, the association shall include the comparison breakdown pursuant to paragraph (13) of subdivision (b) of Section 5300 and the statement pursuant to paragraph (14) of subdivision (b) of Section 5300.

(b) Notwithstanding subdivision (a), if a member has requested to receive all reports in full, the association shall deliver the full report to that member, rather than a summary of the report.

SEC. 3.

Section 5605 of the Civil Code is amended to read:

5605.

(a) Annual increases in regular assessments for any fiscal year shall not be imposed unless the board has complied with paragraphs (1), (2), (4), (5), (6), (7), (8), and (13) of subdivision (b) of Section 5300 with respect to that fiscal year, or has obtained the approval of a majority of a quorum of members, pursuant to Section 4070, at a member meeting or election.

(b) Notwithstanding more restrictive limitations placed on the board by the governing documents, the board may not impose a regular assessment that is more than 8 percent greater than the regular assessment for the association’s preceding fiscal year, or impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year without the approval of a majority of a quorum of members, pursuant to Section 4070, at a member meeting or election.

(c) (1) (A) For an association that records its original declaration on or after January 1, 2025, notwithstanding more restrictive limitations placed on the board by the governing documents, except as provided in paragraph (3), the board shall not impose a regular assessment against an owner of a deed-restricted affordable housing unit that is more than 5 percent plus the percentage change in the cost of living, not to exceed 10 percent greater than the preceding regular assessment.

(B) For purposes of this paragraph, “percentage change in the cost of living” means the percentage change from April 1 of the prior year to April 1 of the current year in the regional Consumer Price Index for the region where the residential real property is located, as published by the United States Bureau of Labor Statistics. If a regional index is not available, the California Consumer Price Index for All Urban Consumers for all items, as determined by the Department of Industrial Relations, shall apply.

(2) For an association that records its original declaration on or after January 1, 2025, notwithstanding any other law, except as provided in paragraph (3), the board may impose an assessment against an owner of a deed-restricted affordable housing unit that is lower than the assessment imposed against other owners according to the proportional ownership of total subdivision interests subject to assessments.

(3) This subdivision does not apply to any of the following:

(A) A development where the percentage of the units, exclusive of a manager’s unit or units, that are deed-restricted affordable housing units exceeds the percentage required by an applicable zoning ordinance in effect at the time the development received final approval.

(B) A development that is located within a city, county, or city and county that does not have an applicable zoning ordinance requiring a percentage of deed-restricted affordable housing units and meet either of the following conditions:

(i) The percentage of the units, exclusive of a manager’s unit or units, that are deed-restricted affordable housing exceeds 10 percent of the total number of units in the development at the time the development received final approval.

(ii) If the development met the requirements described in subparagraph (B) of paragraph (1) of subdivision (b) of Section 65912.122 of the Government Code and was approved pursuant to Section 65912.124 of the Government Code, the percentage of the units, exclusive of a manager’s unit or units, that are deed-restricted affordable housing exceeds 15 percent of the total number of units in the development at the time the development received final approval.

(d) For the purposes of this section, all of the following definitions apply:

(1) “Affordable housing unit” means a unit occupied by, or available at affordable housing cost to, lower income and moderate-income households, as defined by Sections 50079.5 and 50052.5, respectively, of the Health and Safety Code.

(2) “Final approval” has the same meaning as defined in clause (ii) of subparagraph (D) of paragraph (2) of subdivision (o) of Section 65589.5 of the Government Code.

(3) “Quorum” means more than 50 percent of the members.

SEC. 4.

Section 5860 is added to the Civil Code, to read:

5860.

(a) If an association seeks to impose a monetary penalty against a member for a violation of the governing documents, the association shall make any physical evidence used to determine a violation of the governing documents has occurred, including, but not limited to, photographs or video or audio recordings, available to the member at least five business days before the hearing or the deadline for the member’s response.

(b) (1) If any digital materials, including photographs or video or audio recordings, are used in determining a violation of the governing documents has occurred, then the association shall make any digital metadata associated with the digital material available to the member together with the digital material.

(2) For purposes of this subdivision, “metadata” means data bearing the record of, and not the content of, a digital photograph, including, but not limited to, the time, date, and location of the image.