For a lot of older Silicon Valley homeowners, a condo or townhome is the natural next step: single-level living, no gardening, and someone else handling the roof. It can be a wonderful move. It can also come with surprises that a single-family homeowner of 40 years has never had to think about, like a $40,000 special assessment, an HOA that can’t find an insurance carrier, or a building with seriously underfunded reserves. I review HOA documents with my downsizing clients before they commit, and this article is the checklist I use, along with the California laws behind each item. It’s part of my ultimate downsizing guide for Bay Area seniors.
Key Takeaways
Summary: HOA dues alone tell you little about a Santa Clara County condo, so downsizers should read the reserve study, budget, SB 326 balcony inspection report, insurance summary, and board minutes before buying. California law caps how much a board can raise dues without a vote, protects your right to rent the unit later, and lets you make accessibility changes at your own expense, but problems with reserves and insurance show up in the documents long before they show up in your mailbox.
From my practice: On an as-is condo I sold, the complex was in the middle of a complex-wide roof replacement, reserves were only 27% funded, and dues had gone up 20% that year. Then one buyer’s lender said conventional loans weren’t available because of the roof project and an old balcony report. I showed that 4 of the 7 sales in the complex that year had closed with conventional loans, lined up a backup lender, and sent the HOA a fresh lender questionnaire, and the sale closed on schedule at $575,000. If you’re buying in, the percent funded, the recent dues history, and any open repair projects are exactly what I’d want you to see before you write an offer.
The HOA Documents to Review Before You Buy
When you buy a condo or townhome in California, Civil Code section 4525 requires the seller to provide a package of HOA documents as soon as practicable before the transfer of title. These are the ones I read most closely for downsizing clients:
- The annual budget report, including dues, the reserve fund balance, and the percentage funded shown on the Assessment and Reserve Funding Disclosure Summary.
- The reserve study, which projects major repairs and replacements over the next 30 years and what the association should be setting aside for them.
- Board meeting minutes. The seller only has to provide the last 12 months, and only if you ask, so ask. I like to read 12 to 24 months when I can get them.
- The insurance summary for the master policy, including the carrier, the deductible, and whether earthquake coverage is included.
- The CC&Rs, bylaws, and rules, including pet, rental, parking, and renovation rules, and the maintenance chart showing who repairs what.
- Any notices of special assessments, violations, litigation, or construction defects.
- The balcony and elevated element inspection report required under SB 326 for most condo buildings.
Simple Strategy Guide
The Downsizing Guide for Bay Area Seniors
What to keep, what to let go, and how to get your home ready for today's buyers without a costly remodel, so you protect your equity and move on your own timeline.
You're all set. Thanks! The Downsizing Guide is on its way to your inbox. If you don't see it in a few minutes, check your promotions or spam folder.
Red Flags I Look For
| Red flag | Why it matters |
|---|---|
| Reserves funded well below 50 percent | Major repairs may require special assessments or dues increases |
| A reserve study showing big projects soon, such as roofs, siding, or plumbing | You may be buying into a large bill |
| A reserve study more than three years old | The association is out of step with state law, and the numbers may be stale |
| Minutes discussing an upcoming assessment or loan | The cost may not be in the budget yet |
| Master insurance that was canceled, sharply increased, or has large gaps | Higher dues and possible trouble for future buyers getting loans |
| Balcony or walkway repairs identified but not completed | Safety and cost, and lenders may decline the building until repairs are done |
| Pending litigation, especially construction defect claims | Can affect financing and value |
| High delinquency in owners paying dues | Strains the budget, and Fannie Mae limits lending when more than 15 percent of units are 60 or more days behind |
| Frequent turnover of management or board conflict | A sign of deeper problems |
Reserve Studies and Percent Funded
Under Civil Code section 5550, the board has to have a visual inspection of the major components the association maintains and update the reserve study at least once every three years, and review it every year. The percent funded compares what the association actually has in the bank with what it should have, given the age of the roofs, paving, plumbing, and other components. There’s no state minimum, but reserve professionals generally treat anything under about 30 percent as weak and 70 percent or more as strong. Below 50 percent, I want to see a realistic funding plan in the budget, not just a hope that nothing breaks.
Special Assessments and Dues Increases
Civil Code section 5605 lets a board raise regular dues by up to 20 percent over the prior year, and levy special assessments totaling up to 5 percent of the budgeted gross expenses for the year, without a vote of the owners. Anything larger needs owner approval, with an exception for emergencies such as a court order or an immediate threat to safety. For someone on a fixed retirement income, that means a 20 percent jump in dues is legal and can happen with little warning, so I look at the dues history for the last several years and at whether the reserve plan assumes steady increases.
Free 3-minute decision check
Stay, downsize, or move away? Find out which one costs you the least.
For longtime Bay Area owners, the wrong call can cost six figures in taxes, remodeling, or years of higher living costs. Answer a dozen quick questions and see all three paths side by side, with a rough dollar figure for what each one would cost you or free up.
See My Best Path →Rather talk now? Call or text 408.413.3087
SB 326 Balcony Inspections
SB 326, codified as Civil Code section 5551, requires condo associations with three or more units to have a licensed structural engineer or architect inspect balconies, decks, stairways, and walkways that are more than six feet above the ground and supported mainly by wood. The first inspection was due by January 1, 2025, and inspections repeat every nine years. The results feed into the reserve study, and if the inspector finds an immediate safety threat, the association has to restrict access and make emergency repairs. When I review a building, I want to see the report, what it found, and whether the repairs are funded or already done. A 1970s or 1980s wood-framed complex with open repair items is exactly where a surprise assessment comes from.
HOA Insurance in California Right Now
Since 2023, several major insurers have stopped writing new property policies in California or cut back sharply, and condo associations have felt it as much as single-family owners. Some complexes have seen their master policy premiums double, moved to a patchwork of carriers with higher deductibles, or dropped earthquake coverage. Those costs come straight out of the budget and into your dues. Read the insurance summary, ask the manager whether the policy was renewed without a gap, and make sure your own HO-6 policy covers the master policy deductible through loss assessment coverage. The California Department of Insurance consumer guides are a good neutral place to start.
How HOA Health Affects Your Loan, and Your Resale
Even if you’re paying cash from the sale of your house, the next buyer probably won’t be. Fannie Mae’s condo project standards look at whether the association budgets at least 10 percent of its income for reserves (or has a qualifying reserve study), how many owners are behind on dues, and whether the building needs critical repairs affecting safety or structural integrity. A building that fails those tests can be cut off from conventional financing, which shrinks the pool of buyers and can lower values. That’s the same problem my seller faced in the example above, and it’s one more reason a well-run association is worth paying higher dues for.
Free Downsizing Strategy Call
Before you start sorting decades of belongings or call a moving company... let's figure out where you're headed and how to get there.
Most downsizing regrets come from doing things in the wrong order. In 30 minutes, we’ll talk through what your home may be worth, whether to buy or sell first, how Prop 19 could affect your property taxes, what the house actually needs before listing, and a realistic timeline for your move—so the process feels manageable, not overwhelming.
Book My Downsizing Strategy Call →Questions Specific to Older Buyers
- Accessibility. Is there an elevator, and is it reliable? Are there steps from parking to the unit? How far is the walk from the garage? My guide to single-level homes for Silicon Valley downsizers covers what to look for.
- Renovation rules. Under Civil Code section 4760, an owner can make modifications for accessibility at their own expense, and the HOA can’t unreasonably deny them, but you’ll still need architectural approval. Ask how long approvals take before you plan grab bars, a curbless shower, or wider doors. See my article on aging-in-place remodel costs for typical prices.
- Rental rules. If you ever move to assisted living, can your family rent the unit? Since 2021, Civil Code section 4741 bars HOAs from banning long-term rentals outright or capping them below 25 percent of units, though they can still prohibit rentals of 30 days or less. A new rental restriction adopted after you buy generally won’t apply to you unless you vote for it.
- Pets. California law lets you keep at least one pet, but size and number limits in the rules still matter if a companion animal is part of your life.
- Community. Are there other owners at a similar stage of life? Is there a social life, or is it mostly renters?
- Age restrictions. In California, 55-plus communities generally require at least one resident in each unit to be 55 or older, and the CC&Rs spell out who else can live there, which matters if an adult child or caregiver may move in later.
A real example: I sold a one-bedroom condo in a 62+ community where the HOA had just changed management and wasn’t answering document requests, so I went to the board directly to get the package delivered. Later, the County required grounding repairs to the outlets, and when my electrician traced the fault to wiring inside the walls, the CC&Rs made it the HOA’s responsibility, and the HOA paid for it. For older buyers, read the CC&Rs for who fixes what and ask how responsive management is, because both will affect you every year you live there.
HOA Dues in Context
In my experience, dues for condos and townhomes in Santa Clara County commonly run from a few hundred dollars to over $1,000 a month, depending on age, amenities, elevators, and what is covered. Low dues aren’t automatically good news. A 1970s complex with very low dues and thin reserves is often a bigger financial risk than a newer building with higher dues and strong reserves. I factor the dues and the likelihood of future increases into the total cost, as in how much money downsizing frees up. If the numbers don’t work, renting after you sell is sometimes the better answer.
Timing Your Review
In a competitive market, buyers sometimes feel pressure to shorten or waive contingencies. For a downsizer buying with sale proceeds that must last the rest of their life, I strongly recommend keeping enough time to review the HOA documents carefully, or reviewing what is available before writing an offer. Many listing agents will share key documents in advance if asked. If you need to buy your next home before your current one closes, my article on buying before you sell walks through the options. For the full downsizing picture, see my ultimate downsizing guide for Bay Area seniors.
Sources and Further Reading
- California Civil Code section 4525, documents provided to a prospective purchaser
- California Civil Code section 5550, reserve studies
- California Civil Code section 5551, exterior elevated element inspections (SB 326)
- California Civil Code section 5605, limits on assessment increases
- California Civil Code section 4741, rental restrictions
- California Civil Code section 4760, accessibility modifications
- Fannie Mae Selling Guide B4-2.2-01, condo project full review process
Accurate Home Price Data Is Just a Click Away!
Live MLS Data
What Are Homes Actually Selling For Right Now?
Median price, days on market, and how many homes are selling over asking, pulled straight from current MLS data for your neighborhood.
See the Live Sales Data →Frequently Asked Questions
What HOA documents should I review before buying a condo in California?
The annual budget report with the reserve funding disclosure, the reserve study, 12 to 24 months of board minutes, the insurance summary, the CC&Rs, bylaws, and rules, any notices of assessments, violations, or litigation, and the SB 326 balcony inspection report. Civil Code section 4525 requires the seller to provide most of these.
What is a good reserve funding percentage for an HOA?
California sets no minimum. Reserve professionals generally consider 70 percent or more strong and under 30 percent weak. Reserves well below 50 percent are a warning sign that special assessments or dues increases may be needed.
How much can an HOA raise dues without a vote in California?
Under Civil Code section 5605, a board can raise regular dues up to 20 percent over the prior year and levy special assessments up to 5 percent of budgeted gross expenses without owner approval, except in emergencies.
What is SB 326?
A California law, Civil Code section 5551, requiring condo associations with three or more units to have balconies, decks, stairways, and walkways that are more than six feet off the ground and supported by wood inspected by a licensed structural engineer or architect. The first inspections were due by January 1, 2025, and they repeat every nine years.
Can I make accessibility changes in a condo?
Usually, yes. Civil Code section 4760 lets owners make accessibility modifications at their own expense, and the HOA can’t unreasonably deny them, but you still need architectural approval. Check the CC&Rs and ask how long approvals take.
Can my HOA stop my family from renting my condo if I move to assisted living?
Generally not. Civil Code section 4741 bars outright bans on long-term rentals and rental caps below 25 percent of units, although HOAs can prohibit rentals of 30 days or less. Read the current rules before you buy.
Are low HOA dues a good sign?
Not necessarily. Low dues with thin reserves can mean large special assessments later. A building with higher dues and strong reserves is often the safer purchase.
Thinking about selling?
Just list with me, I'll do the rest.
Minimum hassle, maximum profit, and a sale on your timeline at a price and terms you'll love.
Let's Get Started →Rather talk now? Call or text 408.413.3087
Senior Friendly Homes in Silicon Valley South
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
