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April 30, 2007
Assessment Increases - Are There Limits?
A common question comes to me at least a few times a month:
"Is there a California rule or law that regulates the amount an HOA can raise monthly fees? The fees when I purchased my condo were $162.00 a month. They went up to $189.00 in 2005. As of January 1, 2007 the fees went up to $310.00 a month.That calculates to an approximate 16% increase then a 64% increase. I realize they were low to begin with but isn’t that excessive?"
I cannot say whether the increases are excessive or not because I do not know what the expenses of the association are. However, California law does have some limits on the amount that the board can raise the assessments without a vote of the members. Regular assessments cannot be increased more than 20% in a fiscal year without approval of a majority of a quorum of owners. A quorum is more than half of the members, so if more than half vote, and more than half of those approve, the increase would be valid. The Board would also have the right to impose a special assessment that does not exceed 5% of the budgeted gross expenses for the fiscal year, without approval of the members and sometimes special assessments are imposed and made payable monthly over a specified period of time.
There are situations, however, where the limits may be exceeded without a vote - and that would be in an emergency situation, which is defined by the statute (Civil Code Section 1366).
Posted by Beth Grimm at April 30, 2007 9:22 PM