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Orange County: How to Buy a Condo or Townhome and Read the HOA Reserve Study Before a Special Assessment Hits (October 2026)

By Dr. Hamid Rowshan, Choice of America

How to buy an Orange County condo or townhome: read the HOA reserve study, board minutes and balcony report, and turn assessment risk into a better price.

In San Clemente, owners at the 198-unit Vilamoura at Rancho San Clemente condominiums learned this year that a monthly HOA fee is not the whole cost of owning a condo. The Los Angeles Times reported on October 2 that each owner was hit with a one-time emergency special assessment of $26,000 to replace the complex's roofs. The project, including fire-suppression repairs, came to $5.2 million. Owner Megan Blanda told the Times she had assumed her monthly dues of more than $500 were keeping up with maintenance. Many residents are paying through a plan that works out to about $2,000 a month on top of their regular dues, the board has sent lien letters warning that missed payments could lead as far as foreclosure, and a group of owners has started a recall election. The complex was built in the 1990s, and three-bedroom units had recently been listed for about $1 million.

The HOA's attorney, James R. McCormick, told the Times that the roof maintenance "should have been planned for and performed in prior years," and that an independent expert found the roofs would keep leaking without replacement. HOA attorney Michael Kushner, who usually represents owners, told the Times that emergency assessments above $20,000 a unit have become more common as condos built in the 1990s and early 2000s age, insurance costs climb, and state-required balcony inspections turn up repairs. HOA document reviewer Jacquie Berry gave buyers and owners the simplest advice: "look at the budget, go to the budget meeting, ask questions."

This is happening while Orange County's attached-home market is the slowest part of a slow fall. In his October 12 Orange County Housing Report, Steven Thomas put the Expected Market Time for condos and townhomes at 139 days, up from 83 days a year earlier, compared with 105 days for detached homes. More condos waiting longer for buyers means more room to negotiate, but only if you know what you are buying into. Here is how to read the HOA's numbers and turn them into a better price.

The market snapshot (September 2026, Realtor.com)

Measure (Orange County)September 2026Change vs. Sep 2025
Median listing price$1,287,500−6.5% (from $1,377,500)
Active listings4,735+3.9%
Median days on market5357 a year ago
Price-cut share (Realtor.com price_reduced_share)21.1%+3.7 points
New listings2,114+1.2%
Pending listings1,655−18.4%
Median listing price per square foot$704−2.8%
Median listing size1,795 sq ft−4.3%

Source: Realtor.com Residential Data, county inventory core metrics, September 2026 (the same data FRED publishes as MEDLISPRI06059, ACTLISCOU06059 and related series). The price-cut share is Realtor.com's own price_reduced_share.

Pending sales were down more than 18% from a year earlier while active listings rose almost 4%, and more than one listing in five had a price cut. Rates eased a little in October: Freddie Mac's survey put the 30-year fixed at 7.24% for the week of October 29, down from 7.32% the week before, but still well above 6.17% a year earlier.

Where Orange County's lower-priced homes are

Condos and townhomes make up much of the inventory in Orange County's lower-priced ZIP codes. These OC ZIPs (with at least 15 active listings) had a September median listing price under $900,000. The medians include houses, condos and townhomes. Laguna Woods (92637, median $484,450) is left out because most of its housing is age-restricted.

ZIP (area)Median listing pricevs. Sep 2025Active listingsMedian days on marketPrice-cut shareMedian size
92701 (Santa Ana)$674,000+27.1%37689.2%1,048 sq ft
90680 (Stanton)*$679,250−5.8%274927.6%1,184 sq ft
92707 (Santa Ana)*$714,857−10.1%38389.8%1,137 sq ft
92831 (Fullerton)$729,000−3.4%364714.4%1,330 sq ft
92704 (Santa Ana)$799,225+15.1%545720.8%1,200 sq ft
92808 (Anaheim Hills)$799,675−4.4%383823.2%1,273 sq ft
92688 (Rancho Santa Margarita)$858,650−3.5%925329.0%1,372 sq ft
92656 (Aliso Viejo)$862,450−3.8%855222.6%1,325 sq ft
92805 (Anaheim)$865,000−1.0%765022.8%1,447 sq ft
90631 (La Habra)$881,900−8.1%895621.1%1,614 sq ft
92780 (Tustin)$899,225−7.7%475120.2%1,387 sq ft

Source: Realtor.com Residential Data, ZIP inventory core metrics, September 2026. *Realtor.com quality flag set for that ZIP (less reliable month to month).

Rancho Santa Margarita and Aliso Viejo, two master-planned South County cities with many HOA communities, both had price cuts on more than 22% of listings. That is where a careful look at the HOA's finances can pay off most at the negotiating table.

The payment math at 7.24%, with HOA dues

Principal and interest (P&I) on a 30-year fixed loan with 20% down, plus an estimate of property tax at California's 1% base rate (local bonds and assessments add more) and $500 a month in HOA dues (the level Vilamoura owners described):

PriceDown payment (20%)LoanMonthly P&ITax at 1% baseP&I + tax + $500 HOA
$1,287,500 (county median listing)$257,500$1,030,000$7,019$1,073$8,592
$1,000,000 (Vilamoura-type 3-bedroom)$200,000$800,000$5,452$833$6,785
$858,650 (92688 median)$171,730$686,920$4,681$716$5,897
$799,675 (92808 median)$159,935$639,740$4,360$666$5,526

Formula: P&I = L × r ÷ (1 − (1 + r)^−360), where L is the loan amount and r is the annual rate divided by 12. Homeowners insurance (an HO-6 policy for a condo), Mello-Roos where it applies, and utilities come on top.

Three numbers from the same math show why HOA homework matters:

  • HOA dues count against your loan approval. Lenders include HOA dues in your housing payment. On a $1,000,000 condo with 20% down, P&I plus base tax is about $6,285 a month. At a 36% housing ratio, that takes a gross income of about $209,500 a year with no HOA; $500 in dues raises it to about $226,200, and $800 in dues to about $236,200.
  • Every $300 a month in dues is worth about $44,000 of loan. At 7.24%, $300 a month would carry roughly a $44,000 loan. A condo with dues $300 higher than its neighbor needs to be priced about that much lower just to cost the same each month.
  • A special assessment is a debt, not a fee. Vilamoura's $5.2 million project divided by 198 units is about $26,263 a unit. Paid over 12 months, $26,000 is about $2,167 a month. By comparison, a $26,000 lower price on a $1,000,000 condo saves only about $142 a month in P&I. If an assessment is coming, a seller credit or price cut has to cover the assessment itself, not just its effect on your payment.

What California law gives you to read

Under California Civil Code Section 4525, the seller of a condo or other HOA home must give the buyer, as soon as practicable before the sale, a package that includes:

  1. The governing documents (CC&Rs, bylaws, rules).
  2. The latest annual budget report, which includes the reserve summary.
  3. A written statement from the HOA of the current regular and special assessments, plus any unpaid assessments, fines or late charges on the unit.
  4. Any change in assessments that the board has approved but that is not yet due.
  5. Any unresolved notices of violation for the unit, and any construction-defect information the HOA must disclose.
  6. Any rental or leasing ban.
  7. On your request, the approved minutes of board meetings from the past 12 months (excluding executive sessions).
  8. The most recent balcony and elevated-walkway inspection report under Section 5551 (added by SB 410, effective January 1, 2026).

Under Section 4530, the HOA must deliver the documents within 10 days of a written request, and the seller pays the HOA's fee.

The reserve study. Section 5550 requires the board to have a visual inspection of the major components the HOA must repair or replace (roofs, paving, pools, plumbing, painting and so on) at least once every three years, and to review the study every year. The study lists each component with less than 30 years of remaining life, its expected remaining life, its estimated replacement cost, and a funding plan.

The one-page summary. Section 5570 requires an "Assessment and Reserve Funding Disclosure Summary" with every annual budget. It answers, yes or no, whether projected reserves will be enough to cover major repairs over the next 30 years; if not, what extra assessments would be needed; and what percent the reserves are funded today.

The balcony report. Section 5551 requires condo associations in buildings with three or more units to have a licensed engineer or architect inspect a statistically significant sample of wood-supported balconies, decks, stairways and walkways more than six feet above ground. The first inspection was due by January 1, 2025, then every nine years.

The assessment rules. Under Section 5605, a board cannot raise regular dues more than 20% in a year, or impose special assessments that add up to more than 5% of the year's budgeted gross expenses, without approval from a majority of a quorum of members. Section 5610 exempts emergencies: a court order, a newly discovered threat to health or safety, or an extraordinary repair that could not reasonably have been foreseen when the budget was prepared (for that last kind, the board must pass a resolution with written findings and send it with the assessment notice). Whether Vilamoura's roofs fit that definition is exactly what its owners are disputing.

How to buy an Orange County condo without a special-assessment surprise: step by step

Step 1: Build your budget around the full monthly cost. Start from P&I, add property tax (at least 1% of the price a year), the HOA dues, an HO-6 insurance quote and any Mello-Roos. Use the formula above. If two condos are $300 a month apart in dues, treat them as about $44,000 apart in price.

Step 2: Get pre-approved for the right loan, and ask about the project. A condo loan depends on the building as well as on you. For a conventional loan, the lender will usually send the HOA a condo questionnaire. Under Fannie Mae's Full Review standards, the HOA budget must set aside at least 10% of assessment income for replacement reserves, special assessments cannot substitute for that, and no more than 15% of units can be 60 days or more behind on dues or on each special assessment. FHA and VA loans require an approved project (check HUD's condo search). Ask your lender up front whether the project you like is likely to qualify.

Step 3: Write the offer with time to review documents. In your offer, give yourself a review period for the HOA documents (often handled as a separate contingency), and make sure it ends after you will realistically have the full Section 4525 package, including the board minutes you must request.

Step 4: Read the one-page reserve summary first. Look at three lines: the percent funded, the yes-or-no answer about the next 30 years, and any assessments already scheduled. A low percent funded or a "No" answer is not a reason to walk away by itself, but it means the dues will probably rise or an assessment is likely, and the price should reflect that.

Step 5: Find the big-ticket items in the reserve study. Look for roofs, exterior paint, balconies and walkways, plumbing, paving and pool equipment with fewer than five years of remaining life. Compare the cost of those items to the reserve balance. If the roofs are due in two years at $5 million and the reserve has $1 million, someone will pay the difference, and that someone is the owners.

Step 6: Read 12 months of board minutes. Minutes are where problems show up before they become assessments: leak complaints, bids for roof or balcony work, insurance renewal problems, lawsuits, delinquent owners. Search for the words "assessment," "loan," "bid," "leak," "insurance" and "reserve."

Step 7: Check the balcony report and insurance. Read the Section 5551 inspection report and whether any element was flagged as an immediate threat. Ask the HOA (or check the budget) what the master insurance policy costs this year versus last, what it covers, and the deductible you might share after a loss. Then get your own HO-6 quote.

Step 8: Turn what you find into price. If the documents show an approved but unpaid assessment, ask the seller to pay it in full at closing or to credit you the full remaining amount. If they show underfunded reserves or big repairs coming, ask for a price reduction or a seller credit sized to your share of the likely cost. With condos taking about 139 days to sell countywide and 21.1% of all listings already cut, sellers have reason to listen. A credit toward closing costs or a rate buydown can also help, but remember a buydown lowers your payment, not a future assessment.

Step 9: Keep a cash cushion after closing. Even in a well-run HOA, keep at least two to three months of your full housing payment, plus a separate fund for your share of a possible assessment. Go to the annual budget meeting. As Berry told the Times, that is where owners have the most say.

Mistakes to avoid

  • Comparing condos by list price instead of total monthly cost including dues.
  • Skimming the CC&Rs and skipping the reserve summary and board minutes.
  • Assuming low dues mean a bargain; low dues can mean thin reserves.
  • Letting the document review period expire before the full HOA package arrives.
  • Accepting a small credit for an assessment that is already approved and still unpaid.
  • Finding out after you are in escrow that the project does not meet your loan program's rules.

Quick checklist

  1. Full monthly cost calculated, including dues, tax, HO-6 insurance and Mello-Roos.
  2. Pre-approval in hand, and the lender has confirmed the project can be financed.
  3. HOA document review period written into the offer.
  4. Complete Section 4525 package received, including 12 months of minutes.
  5. Reserve summary read: percent funded, 30-year answer, scheduled assessments.
  6. Reserve study checked for big components due within five years.
  7. Balcony/elevated-element report and master insurance policy reviewed.
  8. Any assessment turned into a price cut or seller credit.
  9. Cash reserve and assessment fund set aside after closing.

What this means day to day

A condo or townhome is still the most common way into Orange County ownership below the county's $1.29 million median listing price. But what Vilamoura owners are going through shows that the HOA's finances are part of what you are buying. A unit with healthy reserves and slightly higher dues can cost less over five years than a cheaper-looking unit with a roof bill on the way. In a fall market where condos are sitting longer and one listing in five has been cut, the buyer who reads the budget, the reserve study and the minutes before committing has the best information and the most leverage.

If you are thinking about buying a condo or townhome in Orange County, call Choice of America at 833-THIS-BROKER (833-842-7465), visit https://choiceofamerica.com/, or see our Orange County page at https://choiceofamerica.com/orange-county-real-estate.html. We will go through the HOA documents and run the numbers with you for the communities you are considering.

Dr. Hamid Rowshan, Choice of America. DRE #02004794, company DRE #02240008.

This article is general information, not legal, tax or lending advice. Read your HOA documents with a qualified professional, and confirm loan terms and project eligibility with your lender. Figures are from the sources below as of the dates shown.

Sources:

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Dr. Hamid Rowshan · DRE #02004794 · Company DRE #02240008 · Orange, LA, Riverside, San Bernardino & San Diego counties.

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