CA HOA Annual Budget Report & Policy Statement

Every California HOA has to send its members two documents a year: the annual budget report and the annual policy statement. Both have a firm deadline and a statutory list of contents. For a self-managed board, missing either one is one of the easiest compliance failures to commit — and one of the easiest to avoid.

Two required annual disclosures, one deadline

Davis-Stirling requires two separate annual distributions to members:

1. The Annual Budget Report (Civil Code §5300)
2. The Annual Policy Statement (Civil Code §5310)

Both must be distributed to the membership 30 to 90 days before the end of the association's fiscal year (Civil Code §5300(a) and §5310(a)).

That shared window is the deadline self-managed boards most often blow. If your fiscal year ends December 31, both reports have to be out the door between roughly early October and the start of December.

What goes in the Annual Budget Report (§5300)

The annual budget report is the financial disclosure. Under Civil Code §5300(b), it must include, among other items:

• A pro forma operating budget — estimated revenue and expenses on an accrual basis for the coming fiscal year
• A summary of the association's reserves — the current reserve account balances and the results of the most recent reserve study
• A statement of the percentage the reserves are funded and the reserve funding plan to repair, replace, or restore major components
• A statement as to whether the board anticipates levying a special assessment to fund reserve or repair obligations (see our guide to Davis-Stirling special assessments)
• The procedures used to calculate and establish reserves
• A statement of deferred maintenance and major component condition
• A summary of the association's insurance policies (or the separate insurance disclosure required by statute)

Free tools: Build a compliant pro forma operating budget with Propty's budget generator, and pressure-test your reserve funding with the reserve study calculator before the report goes out.

The reserve study connection

The reserve numbers in the budget report don't come from nowhere: California associations must, at least once every three years, have a competent, diligent visual inspection of the accessible areas of the major components the association is obligated to maintain, and must review that study annually (Civil Code §5550). The budget report also carries a reserve funding disclosure summary on the statutory form (Civil Code §5565).

What goes in the Annual Policy Statement (§5310)

The annual policy statement is the "how this association operates" disclosure. Under Civil Code §5310(a), it must include, among other items:

• The name and address of the person designated to receive official communications from members (Civil Code §4035)
• A statement explaining the member's right to submit a request to be notified of member meetings by individual delivery, and how general notices are delivered
• The location designated for posting general notices
• A statement of the member's right to receive board meeting minutes and how to request them (see California HOA meeting rules)
• The association's policies for collecting delinquent assessments, including the statutory assessment-and-foreclosure notice (Civil Code §5730)
• The schedule of monetary penalties (fine schedule) the association may impose for violations
• A description of the internal dispute resolution (IDR) procedure (Civil Code §5900 et seq.) and the alternative dispute resolution (ADR) summary (Civil Code §5925 et seq.)
• A description of any mandatory architectural or landscaping approval procedures

You can send a summary — but with a required warning

Both reports can be long. Davis-Stirling lets the association distribute a summary of the budget report or policy statement instead of the full document — but if it does, the summary must include, in at least 10-point boldface type, a notice that the member has the right to request and receive the complete report free of charge, and how to make that request (Civil Code §5320).

Skipping that boldface notice turns a permissible summary into a non-compliant one.

How to deliver — and to whom

Both annual reports are delivered by individual delivery to each member — by the member's preferred method on file, or, absent one, by first-class mail (Civil Code §4040 and §4041). A member may consent to receive documents electronically (email), which is where a self-managed board saves the most time and postage.

The self-managed board's annual-report checklist

1. Know your fiscal year end, and count back 30–90 days to set the distribution window.
2. Refresh the reserve study if it's older than the 3-year cycle (§5550), so the budget report's reserve numbers are current.
3. Assemble the budget report — pro forma budget, reserve summary + funding plan + percent funded, special-assessment statement, deferred maintenance, insurance summary (§5300).
4. Assemble the policy statement — official-communication address, notice policies, minutes rights, collection/foreclosure notice, fine schedule, IDR/ADR, architectural procedures (§5310).
5. If sending a summary, include the §5320 10-point boldface notice of the right to the full report.
6. Distribute by individual delivery (§4040), within the window, and keep proof of delivery.

How Propty handles annual HOA disclosures

Propty tracks each association's fiscal year and flags the 30–90-day distribution window before it opens, so the deadline doesn't sneak up on a volunteer treasurer. It assembles the pro forma operating budget and pulls current reserve balances into the budget report, keeps the fine schedule and dispute-resolution policies in the policy statement, and delivers both to members by their chosen method with a delivery record. For a self-managed board, that turns two annual scrambles into a repeatable, on-time workflow. See how Propty works for self-managed boards.

Frequently asked questions

When does a California HOA have to send the annual budget report? Not less than 30 nor more than 90 days before the end of the association's fiscal year (Civil Code §5300(a)). The annual policy statement is on the same 30–90-day schedule (Civil Code §5310(a)).

What is the difference between the annual budget report and the annual policy statement? The budget report (§5300) is the financial disclosure — the pro forma operating budget, reserve summary and funding plan, deferred maintenance, and insurance summary. The policy statement (§5310) is the operational disclosure — official-communication address, notice and minutes policies, assessment-collection and fine policies, and dispute-resolution procedures.

Does an HOA have to include reserve information in the budget report? Yes. The budget report must include a summary of reserves, the percentage the reserves are funded, and the reserve funding plan (Civil Code §5300(b)), which in turn draws on the reserve study the association must update at least every three years (Civil Code §5550).

Can an HOA send a summary instead of the full budget? Yes, but the summary must include, in at least 10-point boldface type, a notice of the member's right to receive the complete report free of charge and how to request it (Civil Code §5320).

What happens if an HOA doesn't send the annual disclosures? Failing to distribute the required annual reports on time is a Davis-Stirling compliance violation that can expose the board to member complaints and, in disputes over assessments or reserves, weaken the association's position. The fix is a reliable annual calendar, not a scramble each year.

Propty is software for self-managed California HOAs and does not provide legal or financial advice. Consult an attorney or CPA for how the Davis-Stirling Act's annual-disclosure requirements apply to your association.