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July 16, 2007

Assessments - What is Legal?

Basic board education in California is needed so badly. I get several emails every week that tell me about a board that has raised the assessments more than what I have outlined as the legal limits without a vote of the membership.

I cannot give advice on any given situation that is called out in an email to me; however, I will reiterate the law in very simple terms.

**An HOA board may raise regular assessments (in the aggregate) up to 20% in any fiscal
year without a vote of the members.
**An HOA board may impose a special assessment or special assessments (in the aggregate)
of up to 5% of the budgeted gross expenses in any fiscal year.
**The above limits do not apply in the case of an emergency assessment (however, this
requires findings, certain notices of owners, and an expense that came up after the budgeting
process was completed, in other words, an unanticipated expense, and there are specific acceptable categories).

In any case, if the Board is considering an assessment, or assessments in the aggregate that exceed the above limits (yes, including one, two or three percent more than the stated limit), member approval is needed.

The percentage of member approval is this (and it is my belief the statute pre-empts any higher or lower percentage requirement in the governing documents in California) - a majority of a quorum. A quorum for these purposes is more than half of the owners, not what is in the bylaws of the association if different. That means if more than half of the owners vote, and a majority of those voting approve the increase, the measure passes. Conceivably, that could be as little as 26% of the owners because if a mere majority votes, and a mere majority of those vote yes, that would be 26%.

The statute that outlines these limitations (in language that is somewhat difficult to understand), is Civil Code Section 1366.

Basic Board education would clue in boards that are "clueless". Watch for free HOA chats and class offerings at http://www.californiacondoguru.com. Also, you can go there and sign up for my e-newsletter starting soon. Adding your name to the list will assure that you receive the notices of all classes.

Posted by Beth Grimm at July 16, 2007 10:45 PM