California · Davis-Stirling Act

The money, and who is allowed to move it.

Six documents the board reviews every month, two signatures on any withdrawal from reserves, and a closed list of what reserve money may pay for. Borrowing against it is permitted — and comes with a clock.

Monthly, not annually

§ 5500 lists six things the board shall review on a monthly basis: reconciliations of the operating and reserve accounts, actual revenue and expenses against budget, the latest statements from the financial institutions, an income and expense statement, and the check register, general ledger and delinquent assessment receivable reports.

That last item is where a collection problem becomes visible before it becomes a lien. And the cadence is monthly even where the board meets quarterly — which is the gap § 5501 was added to close in 2018. The review may happen outside a board meeting, by every individual director or by a subcommittee of the treasurer and at least one other director, so long as it is ratified at the next board meeting and the ratification appears in the minutes. Doing the work is not enough; the minutes have to show it.

Two signatures, and a closed purpose

§ 5510(a): withdrawing money from a reserve account takes two signatures — two directors, or one officer who is not a director together with one who is. A single treasurer cannot move reserve money alone, whatever the bank's signature card says.

Subdivision (b) is narrower than it first reads. Reserve funds may be spent on the repair, restoration, replacement or maintenance of the major components the reserve was established for — or on litigation involving that repair, restoration, replacement or maintenance. The litigation limb is tied to the same components. It is not a general legal budget.

Borrowing from reserves comes with a clock

§ 5515 permits a temporary transfer from reserves to the general operating fund for short-term cashflow — but the intent to consider it must appear in the board meeting notice under § 4920, and the notice must say why the transfer is needed, what the repayment options are, and whether a special assessment may be considered.

If the board goes ahead, it issues a written finding recorded in the minutes. The money returns to the reserve fund within one year — § 5515(d) allows a delay only after the same notice and a finding supported by documentation. And subdivision (e) closes the loop: the board shall levy a special assessment if that is what restoring the full amount takes.

When reserves pay for a lawsuit

§ 5520 requires general notice under § 4045 of the decision itself and of the availability of an accounting — and then an accounting of litigation expenses at least quarterly, available for inspection at the association's office. The disclosure is not a one-off at the start; it repeats for as long as the case runs.