Real Estate & Property Law

Assessment Increases - Aggregate Limits

The question of the day, this day, is:

"Is there a clear basis for applying the '20%' increase-limit (stipulated in CC 1366[b]) to the Association's budget (assessment income) as a WHOLE, rather than to any INDIVIDUAL's assessment?"

In other words, is the 20% limit on increases a limit on the total assessment for everyone, or each individual assessment.

Civil Code Section 1366 says

"(b) Notwithstanding more restrictive limitations placed on the board by the governing documents, the board of directors may not impose a regular assessment that is more than 20 percent greater than the regular assessment for the association's preceding fiscal year or impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year, without the approval of owners, constituting a quorum, casting a majority of the votes at a meeting or election (by written mail ballot). For the purposes of this section, quorum means more than 50 percent of the owners of an association."

I have highlighted and italicized the key words and it sounds like it is stated in terms of the assessment of "the association" so that could be interpreted to mean the regular assessment for the collective body. However, the statute is not clear enough to avoid varied interpretations as it refers to "a regular assessment". What a surprise. Besides being written in the double negative, it does not really clarify whether it is talking about the regular assessment in the aggregate or for each individual.

Thus, it is possible that in California (where these laws apply) any owner who receives a regular assessment increase of more than 20% without any membership vote - unless there is some error being corrected - may have a case for a challenge to the increase.

I have to say though, that attorneys may disagree with each other on this. The statute is not very clear.

Full post as published by California Condo & HOA Law on February 06, 2009 (boomark / email).