If 23% of California’s 13.8 million households are paying HOA fees, about 3.3 million households could face increases if AB 2050 becomes law
Only days remain before California Gov. Gavin Newsom must make a decision on a bill that is designed to protect homeowners, but that critics say may raise homeowners association (HOA) fees for millions of residents.
The bill in question, Assembly Bill 2050, was proposed in February by Democrat Jessica Caloza and co-authors Republican Diane Dixon and Democrat Richard Chavez Zbur. After several amendments were made to the proposal, it passed last month and is now in the hands of Newsom.
The governor has until Sept. 30 to decide whether to sign the bill into law. With concerns about housing costs at the top of mind for many voters, the decision may be fraught.
HOAs handle the maintenance, repair, and replacement of community communal areas, “including, but not limited to, roofs, paving, mechanical systems, and critical infrastructure,” the bill reads.
In order to protect the safety and property values of their residents, HOAs must “proactively and adequately save for these significant long-term structural and operational obligations.” Associations that don’t properly fund reserve accounts put homeowners at risk of needing to levy steep special assessments, the legislation states.
The legislation follows several cases of large HOA special assessments on California homeowners, such as the condo owners in San Clemente who faced a $26,000 emergency assessment to replace their roofs. Nationwide, nearly 44% of homes for sale carry HOA fees, according to Realtor.com® research.
If signed into law, AB 2050 would require HOAs to maintain a minimum reserve contribution level to ensure that projected reserve balances do not fall below zero over a 30-year period.
If projections show that an association’s reserve balance may fall below zero at any time over the following 30 years, the bill would require that the association transfer 15% of its gross annual operating budget into its reserve each year until properly funded.
“AB 2050 is about affordability, fairness, and protecting homeowners from financial surprises. Today, homeowners are being hit with massive special assessments seemingly overnight because their associations haven’t adequately planned for major repairs, long-term costs or natural disasters,” Caloza said in a statement to Realtor.com.
“For families already struggling with the high cost of housing, an unexpected bill for thousands or even tens of thousands of dollars can be catastrophic. And for many first-time homebuyers, a condo is their first opportunity to own a home and begin building wealth. Unpredictable HOA costs jeopardizes that dream,” she added.
The Assemblymember stated that the lack of predictability and sustainability compound California’s ongoing affordability and housing crisis. The proposed bill gives associations a path to build their emergency reserves and be transparent with residents, rather than leaving homeowners to foot the bill for repairs all at once.
Caloza’s office referenced California SB 326, which requires additional inspections for any balconies, decks, stairways, or walkways more than 6 feet off the ground. While previous safety requirements only included visual checks, this legislature requires the inspection of hidden framing elements, load-bearing wood supports, and waterproofing systems on a regular cycle.
Because the cost of these regular inspections and repairs factor into associations reserves, Caloza and her colleagues wanted to figure out a predictable pathway to building reserves.
Critics of the bill worry that increases could force many Californians out of their homes if HOA fees become unmanageable.
Executive director of the Consumer Federation of California, Robert Herrell, and president of the Center for California Homeowner Association Law, Marjorie Murray, wrote for Capitol Weekly that taking 15% from an HOA’s operating account would still put strain on homeowners amid the affordability crisis.
“AB 2050 doesn’t explain how the operating account, the money used for daily expenses—like paying the property manage and keeping the lights on—is to be replenished. The only logical answer is that the board would have to increase regular monthly assessments. State law lets HOAs raise regular dues 20% a year though few homeowners see their income rise at this rate,” they wrote for Capital Weekly.
Harrell told the San Francisco Chronicle that pushing legislation that placed a cap on fee increases would have been more ideal.
“We’re not against reserving, but it ought to be combined with some reasonable limitations on what could be increased and how rapidly,” he told the Chronicle.
If 23% of California’s 13.8 million households are paying HOA fees, about 3.3 million households could face monthly expense increases if AB 2050 is made law. (stock image) (Orange County Register via Getty Images) Roughly 23% of California households pay HOA fees, according to U.S. Census Bureau data from 2024. During that year, the median monthly HOA fee for the state was $278, over double the national median of $135.
If 23% of California’s 13.8 million households are paying HOA fees, about 3.3 million households could face monthly expense increases if AB 2050 is made law.
Caloza responds to critics by saying the proposed legislation is about responsible, long-term planning and avoiding unexpected assessments for homeowners and associations. The goal is to help homeowners plan ahead, rather than being vulnerable to major bills overnight.
“Predictability is a critical part of affordability, especially for working families and first-time homeowners. No homeowner should be blindsided by a sudden special assessment that can run into the thousands of dollars,” she states.
Realtor.com reached out to Newsom's office by email but did not receive a response at the time of publication.