The Civil Code requirements for reserve studies include but are not limited to the following:
Unless the governing documents impose more stringent standards, the association shall prepare and distribute to all of its members the following documents:
(A) The current estimated replacement cost, estimated remaining life, and estimated useful life of each major component.
(B) As of the end of the fiscal year for which the study is prepared:
(i) The current estimate of the amount of cash reserves necessary to repair, replace, restore, or maintain the major components.
(ii) The current amount of accumulated cash reserves actually set aside to repair, replace, restore, or maintain major components. ***
(C) The percentage that the amount determined for purposes of clause (ii) of subparagraph (B) equals of the amount determined for purposes of clause (i) of subparagraph (B).
(3) A statement as to whether the board of directors of the association 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 therefore. ***
4) 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. ***
(a) Unless the governing documents impose more stringent standards, the board of directors of the association shall do all of the following:
(1) Review a current reconciliation of the association’s operating accounts on at least a quarterly basis.
(2) Review a current reconciliation of the association’s reserve accounts on at least a quarterly basis.
(3) Review, on at least a quarterly basis, the current year’s actual reserve revenues and expenses compared to the current year’s budget.
(4) Review the latest account statements prepared by the financial institutions where the association has its operating and reserve accounts.
(5) Review an income and expense statement for the association’s operating and reserve accounts on a quarterly basis. ***
(1) The board of directors shall not expend funds designated as reserve funds for any purpose other than the repair, restoration, replacement, or maintenance of, or litigation involving the repair, restoration, replacement, or maintenance of, major components which the association is obligated to repair, restore, replace, or maintain for which the reserve fund was established.
(2) However, the board may authorize the temporary transfer of moneys from a reserve fund to the association’s general operating fund to meet short-term cash-flow requirements or other expenses, if the board has provided notice of the intent to consider the transfer in a notice of meeting, which shall be provided as specified in Section 1363.05. The notice shall include the reasons the transfer is needed, some of the options for repayment, and whether a special assessment may be considered. If the board authorizes the transfer, the board shall issue a written finding, recorded in the board’s minutes, explaining the reasons that the transfer is needed and describing when and how the moneys will be repaid to the reserve fund. The transferred funds shall be restored to the reserve fund within one year of the date of the initial transfer, except that the board may, after giving the same notice required for considering a transfer, and, upon making a finding supported by documentation that a temporary delay would be in the best interests of the common interest development, temporarily delay the restoration. The board shall exercise prudent fiscal management in maintaining the integrity of the reserve account, and shall, if necessary, levy a special assessment to recover the full amount of the expended funds within the time limits required by this section. This special assessment is subject to the limitation imposed by Section 1366. The board may, at its discretion, extend the date the payment on the special assessment is due. Any extension shall not prevent the board from pursuing any legal remedy to enforce the collection of an unpaid special assessment.***
When the decision is made to use reserve funds or to temporarily transfer moneys from the reserve fund to pay for litigation, the association shall notify the members of the association of that decision in the next available mailing to all members pursuant to Section 5016 of the Corporations Code, and of the availability of an accounting of those expenses. Unless the governing documents impose more stringent standards, the association shall make an accounting of expenses related to the litigation on at least a quarterly basis. The accounting shall be made available for inspection by members of the association at the association’s office.***
At least once every three years the board of directors shall cause to be conducted a reasonable competent and diligent visual inspection of the accessible areas of the major components which the association is obligated to repair, replace, restore, or maintain as part of a study of the reserve account requirements of the common interest development, if the current replacement value of the major components is equal to or greater than one-half of the gross budget of the association, excluding the association’s reserve account for that period.
The board shall review this study annually, or cause it to be reviewed annually and shall consider and implement necessary adjustments to the board’s analysis of the reserve account requirements as a result of that review.
The study required by this subdivision shall at a minimum include:
(1) Identification of the major components which the association is obligated to repair, replace, restore, or maintain which, as of the date of the study, have a remaining useful life of less than 30 years.
(2) Identification of the probable remaining useful life of the components identified in paragraph (1) as of the date of the study.
(3) An estimate of the cost of repair, replacement, restoration, or maintenance of the components identified in paragraph (1) during and at the end of their useful life.
(4) An estimate of the total annual contribution necessary to defray the cost to repair, replace, restore, or maintain the components identified in paragraph (1) during and at the end of their useful life, after subtracting total reserve funds as of the date of the study.***
(5)(f) As used in this section, “reserve accounts” means moneys that the association’s board of directors has identified for use to defray the future repair or replacement of, or additions to, those major components that the association is obligated to maintain.
(5)(g) As used in this section, “reserve account requirements” means the estimated funds which the association’s board of directors has determined are required to be available at a specified point in time to repair, replace, or restore those major components which the association is obligated to maintain. ***