AB 596 Annual Budget Report

Reminder: Civil Code section 5300 is amended beginning July 1, 2016.

The annual budget report of a condominium project must include a separate statement describing the status of the common interest development as a Federal Housing Administration (FHA)-approved condominium project and as a federal Department of Veterans Affairs (VA)-approved condominium project.

Two statements are required to be added to the annual budget report and must be on a separate piece of paper in at least 10-point font in the following form:

FHA: “Certification by the Federal Housing Administration may provide benefits to members of an association, including an improvement in an owner’s ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.

This common interest development [is/is not (circle one)] a condominium project. The association of this common interest development [is/is not (circle one)] certified by the Federal Housing Administration.”

VA: “Certification by the federal Department of Veterans Affairs may provide benefits to members of an association, including an improvement in an owner’s ability to refinance a mortgage or obtain secondary financing and an increase in the pool of potential buyers of the separate interest.

This common interest development [is/is not (circle one)] a condominium project. The association of this common interest development [is/is not (circle one)] certified by the federal Department of Veterans Affairs.”

PRACTICE TIP:
For condominium projects, update your annual budget reports. There is no requirement to monitor status or report changes during the year. The association may want to add other information to the required wording, directing owners to FHA and VA websites which are updated during the year. The statute specifies that condominium projects must include the above statements, but the wording of the required statements asking projects to circle whether or not they are a condominium, has caused some people to think that all associations should include these disclosures.