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August 19, 2007
Assessment Allocation - Is it Equal or Based on Square Footage Or What Mother Thinks It Should Be?
I receive a lot of emails with questions about assessments. This is one area that can always use a refresher. The question:
"I have recently purchased my first condo and am not sure how to research an HOA's Dues concern. I live in a 20 unit building and the HOA dues are the same for everyone (1, 2 or 3 bedroom). The CC&R's state that the dues and assessments are to be shared equally by the owners (1/20th each). The HOA is looking to implement an Emergency Assessment to repipe the plumbing in our building and is imposing a large assessment for each unit. At first I thought to go along with it until my mom asked how much is my portion since I own a 1 bedroom condo. "After all", she said, "you use less of the plumbing than a 3 bedroom condo". In further research, I found out that generally the dues and assessments in condos are not assessed equally, but rather proportion to their unit size. So here I go....the trouble maker, looking to amend the CC&R's that have been in place for over 20 years. Do I have any recourse, mainly with this Emergency Assessment? And where could I get more information on this."
I am afraid (or maybe happy to say - if that simplifies things) that the documents that regulate the association (the currently effective Declaration of Covenants, Conditions and Restrictions - commonly called the CC&Rs) are highest source for determining what the assessment allocation is for units in a condominium. Sometimes they are not clear, but if they are, they are generally the final word on the subject. However, since there is always a "depends", if the validity of the CC&Rs or any amendment addressing this issue is in question, my answer would have to be qualified to say - "It depends."
There are generally at least two places to look for assessment allocation in the CC&Rs, and that would be the Article or Section addressing assessment allocation, and another would be the "Damage and Destruction" clause. Why check both places? Some docs have an equal allocation for operating expenses and a different allocation, such as one based on square footage, for rebuilding or reconstruction. Some have different allocations for exterior maintenance even when the everyday costs are on an equal basis. Some have equal shares of obligation for management, administration, insurance and other categories but a square footage or ownership percentage allocation for water.
Certainly, it makes sense that the smaller units would usually use less water, and have less exterior to maintain, fewer pipes to replace, and less square footage to rebuild in a fire or other casualty loss.
But good sense does not dictate the allocation of expenses - the Declaration does. It is prudent to note here, though, that not all Association Boards follow the documents. Sometimes the books have been carried down through the ages without anyone noticing that the regulatory documents have a different allocation than that being practiced. That is not to say that the practice is legal - it is not. And unraveling such a mess is not easy.
To amend documents for a different allocation of assessments, at the least, owner approval is required - per the requirements stated in the CC&Rs. There are some statutory provisions for CC&Rs that answer the question for CC&Rs that do not have amendment provisions. However, changing the responsibility for a share of assessments often triggers a requirement of approval of the lenders in addition to the owners, and sometimes it even requires City or County approval.
It gets complicated. To do what is contemplated legally, [knowledgeable] attorney assistance is certainly needed.
And a parting thought .... listen to your Mother ... Mothers are often givers of sage advice ... but unless she is an HOA lawyer, don't take her advice on this as the final word!
Posted by Beth Grimm at August 19, 2007 5:57 PM