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HOA Homefront: SB 1007, a terrible HOA bill for California

March 13, 2026

Previously, I’ve written about four California bills that would be helpful to HOAs and five I consider to be unhelpful.

However, Senate Bill 1007, authored by state Sen. Caroline Menjivar, would seriously harm HOAs of all sizes.

Budgeting only for inflation

The worst part of the bill would completely remove HOA boards’ ability to reasonably budget for the coming year’s anticipated expenses.

Current law allows HOA boards to increase assessments (if the board believes they are necessary to meet anticipated expenses) by up to 20% per year. This allows boards to deal with escalations in particular expense categories or projected repair costs that might significantly change in a given year.

SB 1007 would bar HOA boards from increasing assessments, except to follow inflation. All other increases would require a membership vote — and good luck getting quorum on that.

Many HOA managers struggle with boards that try to “hold the line” on assessments rather than address reasonably anticipated costs. The challenge is that when boards refuse to increase assessments appropriately, they often make ends meet by shorting their reserve fund contributions and deferring maintenance. Both practices simply kick the financial can down the road, leaving others to deal with the consequences later.

HOAs are bound by CC&Rs, bylaws, and an increasingly cumbersome Davis-Stirling Act. They lack the flexibility enjoyed by individual detached homeowners.

If my home needs a new roof, I might quickly take out a loan or move some personal funds to meet the need. In that case, I pay 100% of the impact to my household budget.

However, HOAs cannot move that swiftly and must be able to budget conservatively with some flexibility to adjust assessments as the need arises. It costs money to run HOAs, just like other homes.

Artificially handcuffing HOA financial planning does not make homes more affordable. Instead, it can make HOAs less desirable and less affordable — when unrealistic budgets simply defer the true costs for future homeowners to handle.

‘Visual aid’ disclosure

SB 1007 would add two more items to the lengthy list of annual disclosures HOAs (no matter how large or small) must include in their Annual Budget Report:

1. A “high-level summary breakdown” visual aid to describe how assessments are spent

2. A statement of the management company’s compensation

Of course, annual budgets already provide members with the exact projected expenses expected for the coming year.

Apparently, the idea is to create a pie chart or graph of some type. However, that could discourage homeowners from reviewing the actual numbers, which tell homeowners far more than visual aid depictions.

Pretrial evidence disclosure

The bill would complicate disciplinary hearings by creating Civil Code 5860, requiring HOAs to provide any “physical evidence,” including photos, videos or audio recordings to homeowners five days before their disciplinary hearing.

Association hearings are not criminal prosecutions, in which the prosecution provides “discovery” to the accused. HOA disciplinary hearings are informal and typically conducted without legal counsel.

Per the amendments from Assembly Bill 130 last year, HOAs can only fine members $100 — in most situations. Some legislators don’t understand that HOAs are usually small to mid-sized neighborhoods — without full-time city managers, city attorneys or prosecutors, and with far less consequential penalties!

The bill’s first committee hearing is March 17, so there is time to alert the author and your own representatives about these problems.

Find all pending bills at leginfo.legislature.ca.gov

Richardson, Esq. is a fellow of the College of Community Association Lawyers and partner of Richardson Ober LLP, a California law firm known for community association advice. Submit column questions to kelly@roattorneys.com.

Orange County Register

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HOA Homefront: SB 1007, a terrible HOA bill for California

Budgeting only for inflation

‘Visual aid’ disclosure

Pretrial evidence disclosure

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