CALIFORNIA HOA FORECAST 2026: THE 5 DISPUTES THAT WILL DOMINATE (AB 130, INSURANCE, SPECIAL ASSESSMENTS, ADUS, RECALLS)
OVERVIEW
California HOAs are heading into 2026 with unresolved 2024–25 shifts colliding with rising homeowner expectations and limited board capacity. For a variety of reasons, therefore, 2026 may very well be an important inflection year.
Indeed, enforcement under AB 130 has already exposed mass confusion over the $100 fine cap and what “per violation” means, as well as a score of other serious questions arising from the fact that AB 130 was rushed through as a last-minute add-on without the normal legislative process. At the same time, insurance costs are spiking while insurers are leaving the California market and coverage narrows, reserves are strained by aging infrastructure and mandated balcony inspections, and the state’s ultra-radical war on local government (and HOAs) and anti-urbanization agenda continues to polarize HOA members. Add the skyrocketing of ADU-related disputes, as well as the e-voting rollout pains, and you have the recipe for more recalls and harder fights across HOA-governed communities.
This article breaks down the five disputes that will very likely dominate 2026: AB 130 enforcement, insurance premiums and coverage gaps, aging infrastructure and special assessments, ADUs and state housing mandates, and recalls fueled by all of those. For each, you will get a homeowner playbook that converts rights into action and a board accountability checklist that minimizes legal exposure while keeping the community compliant.
Preparation wins. If you understand where the pressure points are, from AB 130’s enforcement gaps and shrinking insurance coverage, to special assessments triggered by aging infrastructure, you may very well be in a position to stop surprises from turning into emergencies.
If you’d like to watch an episode of my HOA HELL podcast dedicated to this issue, then watch: “California HOA Enforcement, ADUS & Elections: 5 Disputes to Watch in 2026.”
AB 130’S $100 FINE CAP: WHY 2026 WILL SEE THE HARD CASES
When AB 130 capped HOA fines at $100 per violation and eliminated interest or late fees, lawmakers sold it as a consumer-friendly reform. And while the problem of excessive HOA fines is a serious one in California, and one that needs to be resolved, AB 130 was absolutely the wrong way to go. That’s why the majority of HOA-experienced attorneys on both sides of this issue—homeowner-side and HOA-side—are against AB 130.
Regardless, the Legislature had its own reasons for pushing the law through hastily, as a last-minute add-on, and in so doing, leaving huge ambiguities. [I can assure you that AB 130 had very little to do with the Legislature’s finally hearing the pleas of hapless homeowners begging for relief. This law had little, if anything, to do with actually helping HOA members, and much more to do with servicing the Governor’s and Legislature’s years-long anti-suburb and pro-urbanization agenda. And the only attorneys who still tout AB 130 as an overall good thing for California, and there are very few of them, are those with relatively little to no actual experience in HOA law, or those who’ve found themselves stuck with doubling down on their pro-AB 130 position because of their initial, over-the-top support of the law, and their fear of changing their minds (or in the case of one particular purported industry “pioneer,” his very strong implications that he had something directly to do with the AB 130’s passage.]
Without legislative clarity on the host of massive ambiguities and unintended consequences associated with AB 130, HOAs are already splitting into two camps.
- Track One: More cautious boards issue a single $100 fine, then freeze. Afraid that any follow-up could be attacked as an abusive tactic of stacking, they stop enforcing altogether. The result is neighbors suing boards for failing to enforce the CC&Rs, or in some cases neighbors suing neighbors.
- Track Two: Other boards abandon fines and move straight to ADR or court, asking a judge for injunctive relief. This avoids stacking but shifts costs onto the entire community. They’ll do this because if they guess wrong about what AB 130 allows, HOA boards risk having to pay the attorney’s fees of a homeowner who challenges them. By suing directly for a clear violation of the governing documents, boards can almost always expect to prevail and recover their attorney’s fees. This shifts the risks and costs onto the entire community because insurance will not pick up the tab for hiring the lawyers to prosecute these lawsuits.
Either way, the result will be more conflict in both directions and more lawsuits than ever before. Homeowners are now exposed to either weak enforcement that leaves violations unchecked, which will cause lawsuits, or a dramatic increase in HOA-generated lawsuits filed avoid the law’s ambiguities. And all of that could’ve been avoided with clearer statutory guidance.
For a deeper dive into the specifics of those ambiguities and unintended consequences, you can read my article: “California’s AB 130: Why the $100 Fine Cap Is Already Causing Chaos.”
Homeowners need to take a deliberate approach when boards apply AB 130. A scattered response risks the radical escalation of costs, which translates directly into higher dues for HOA members across the state.
WHY HOA INSURANCE COSTS KEEP RISING (AND COVERAGE KEEPS SHRINKING) FOR CALIFORNIA HOAs
Few topics generate more homeowner anxiety than insurance, and for good reason. Premiums for HOA policies are skyrocketing in California, while insurers continue to pull out of the market. Even when boards manage to secure coverage, the fine print increasingly excludes some of the very components most at risk, such as balconies and other exterior elevated elements. The result is that homeowners are paying more for less protection, and boards are scrambling to fill the gaps. Or even worse, boards are deciding that they can’t afford to pay for the coverage mandated by their governing documents, leaving everyone exposed to massive future special assessments if the worst should happen.
Most CC&Rs spell out specific minimums for liability and property coverage. Those numbers are not optional. Yet, as premiums rise, many boards are quietly purchasing less coverage than the governing documents require. That is a breach of their fiduciary duty, and a massive risk to the members of the association. For example:
- An HOA’s CC&Rs might require $2 million in general liability, but the board secures only $1 million because the dues for that coverage are as high as the dues were for double that coverage the prior year.
- Insurers now strip out high-risk items like balconies, leaving associations “compliant” on paper but unprotected in practice.
- Boards justify these moves by citing affordability, but the law gives them no discretion: they must either raise dues, levy special assessments, or amend the CC&Rs lawfully. If they do none of those, you are at substantial economic risk.
This gap between written obligations and purchased coverage is where lawsuits are born.
RESERVES, “PERCENT FUNDED,” AND WHY SPECIAL ASSESSMENTS KEEP SPIKING
Thousands of HOA in California are in the midst of colliding (and even more have already collided) with a harsh financial reality: decades of systemic failures to maintain and repair common areas, coupled with grossly underfunded reserves, are now meeting the true cost of aging infrastructure. Roofs, roads, pools, elevators, balconies, and façades all fall under “major components” that require long-term planning. Yet irresponsible HOA boards treated reserve funding as optional. The result is staggering special assessments that are no longer rare outliers, but rather the new normal.
In the early 2000s, a $30,000 per-unit special assessment was considered massive. By 2025, assessments of $40,000–$60,000 per household have become increasingly common. Boards that neglected to save gradually are now resorting to one-time demands that devastate homeowners financially. Some really badly-managed HOAs have seen massive special assessments come around ever 8-10 years, as if such regular special assessments were the proper way to manage an HOA’s maintenance and repair obligations. [And Civil Code § 5605 restricts annual increases in regular assessments, which means the shortfall is usually plugged through special assessments, loans, or reserve transfers.]
Balcony Inspections and Exterior Elevated Elements
California’s Balcony Law (Civ. Code, § 5551) has added a new layer of urgency. The exterior elevated elements of every residential HOA in California were already supposed to be inspected by January 1 of 2025. Many HOAs are not in compliance. And those inspections are just the beginning, because following those inspections, depending on the results, those exterior elevated elements then must be repaired and certified. [Under Civil Code section 5551, exterior elevated elements means any load-bearing component supported in whole or substantial part by wood or wood-based products (e.g., balconies, decks, porches, stairways, walkways, or entry structures) that extend beyond the exterior walls of a building and are designed for human occupancy or use.]
Insurers are also targeting these structures by either excluding them or charging steep surcharges. Boards that fail to comply not only endanger safety but also create exposure for lawsuits when accidents occur.
Because many associations missed the initial inspection deadline and remain out of compliance, and because even more HOAs have also deferred years of maintenance and repairs, homeowners in California HOAs across the state are facing increased liability and substantial future costs. This has, in turn, already resulted in massive lawsuits filed by homeowners suffering from “sticker” shock when their HOAs demanded special assessments in the tens of thousands of dollars while also seeing the resulting dramatic drop in affected property values.
Special assessments are no longer occasional stopgaps. In 2026, they are set to become one of the central battlefields between homeowners demanding accountability and boards insisting that there is no other choice. The latter, by the way, may actually be true. But it’s only true because of the systemic failures by those same boards to perform one their most basic functions.
If you’re interested in taking a deeper dive into reserve funds and reserve-related abuses, you can read my article: “HOA Reserve Studies in California: How Boards Manipulate the ‘Percent Funded’ Number.”
ADUS ARE HERE TO STAY: CALIFORNIA’S PRO-HOUSING POLICY AND HOA LIMITS
Accessory dwelling units (ADUs), sometimes called granny flats or backyard cottages, are no longer a fringe idea. State lawmakers have made them a centerpiece of California’s housing strategy, guaranteeing owners the right to build ADUs on single-family lots and sharply restricting what HOAs can do to block or control them. The policy push isn’t slowing down, and in 2026, ADU disputes will only grow sharper.
If you’d like to take a deeper dive into the ins and outs of California’s ADU laws, read my article: “California HOA Restrictions on ADU Construction: What’s Legal and What’s Not.”
In short, a homeowner’s right to construct an ADU on their property is actually protected by clear public policy. And yet, despite those clear statutory limits, many boards are already trying to invent new ways to obstruct ADUs, including:
- Demanding ADU-only fees or bonds that don’t apply to other construction.
- Imposing setbacks larger than those required by city or county codes.
- Requiring neighbor approval or “impact studies” that have no basis in law.
- Rejecting ADUs outright on the grounds of density, character, or aesthetics.
These tactics may look official, but none of them withstand legal scrutiny. When boards try them, they set themselves up for disputes that they are bound to lose.
Although HOAs have precious few options when it comes to standing in the way of a homeowner’s ADU, state law does allow HOAs to enforce certain reasonable conditions, like:
- Owners must comply with state and local building, zoning, and fire codes.
- ADUs must be consistent with community aesthetics, such as roof materials, exterior colors, and architectural style.
- Boards can require licensed contractors and complete applications, just as they would for any other major project.
- Boards may charge application or oversight fees provided that such fees apply to all forms of construction, and not just ADUs.
These limited powers give boards a narrow channel for oversight, but nothing close to a veto. Used properly, they help maintain consistency and safety; abused, they become another flashpoint for legal challenges.
ADUs represent one of the clearest examples of state power overriding HOA authority. While boards may dislike them, their options are limited to aesthetics, legal compliance, and safety. The bigger picture is that ADUs will continue to expand in California, and associations that fight them with unlawful restrictions will invite conflict, legal exposure, and political backlash.
HOA RECALL ELECTIONS WILL RISE IN 2026
Election law changes (such as the new e-voting law) may attract attention, but the real driver of HOA political turmoil in 2026 will be recall elections. As homeowners experience the fallout from AB 130 enforcement battles, spiking insurance costs, mounting special assessments, and bitter ADU fights, patience with boards will escalate. Members who feel trapped by financial mismanagement or neglected responsibilities are increasingly turning to recalls as the quickest way to reset leadership.
The recall process isn’t complicated on paper, but in practice it often produces friction:
- Petitions must meet signature thresholds and be delivered properly to trigger action.
- Special meeting deadlines and notice requirements can create timing disputes.
- Replacement elections must run simultaneously with the recall vote.
- New electronic voting systems may create rollout glitches, contested ballots, and transparency concerns.
Each of these steps is manageable, but mistakes by either side can quickly escalate into disputes that undermine trust in the process.
The prediction for 2026 is not just more recalls, but a significant increase. Based on the data that I’ve reviewed, I estimate at least a 30% rise from recent levels. Boards that delayed inspections, mishandled finances, or leaned on vague enforcement threats are the ones most likely to face petitions.
Any way you look at it, recalls are emerging as one of the most accessible and powerful homeowner tools for accountability. When used effectively, they can replace ineffective boards and reset the trajectory of an HOA. But they also guarantee conflict, and communities should expect recalls to become a central battleground in in California in 2026.
For a deeper dive into the mechanics of a recall petition and election, you can read my article: “HOA Recalls in California: The Power to Remove Your HOA Board.”
WHAT CA HOA MEMBERS CAN DO TO PREPARE FOR 2026
Forecasts only matter if they prepare you for action. With AB 130, insurance gaps, special assessments, ADUs, and recalls all looming in 2026, homeowners should focus on the following:
- Demand records. Use your Civil Code section 5200 rights to review financials, insurance policies, and board correspondence. Transparency is your first line of defense.
- Track assessments. When special assessments are proposed, ask for the engineering reports and financial basis that justify the numbers.
- Scrutinize enforcement. Insist that boards cite the statutory authority for fines or demands, and document your responses.
- Vet insurance coverage. Compare CC&R requirements with actual policy declarations and endorsements. Flag any missing coverage.
- Stay recall-ready. Know the petition thresholds, timing rules, and ballot procedures so you can act quickly if board accountability breaks down.
Homeowners who apply these tools consistently will be far better positioned to manage the battles ahead. The year 2026 will test a lot of California homeowners, but preparation, persistence, and vigilance will determine who will be successful at navigating the storm and who will be overwhelmed by it.
CONCLUDING THOUGHT
California’s HOA landscape in 2026 will be defined by five pressure points: AB 130 enforcement, rising insurance costs, aging infrastructure and special assessments, the spread of ADUs, and the surge in recalls. Each carries its own risks, but together they mark an inflection year where long-ignored problems collide with new laws and political agendas.
For homeowners, the lesson is clear: know where the disputes are headed, insist on transparency, and prepare early. For communities, the choice is whether to stumble through crisis after crisis, or to confront these issues head-on before they explode into litigation.
Those who understand the battlefield will be in the best position to protect their property, preserve their rights, and demand accountability in the year ahead.