Real Estate & Property Law

What Happens When Members Vote Down A Proposed Special Assessment?

Here is a question an owner in an HOA sent recently. The Board of the HOA proposed a special assessment, and the owners did not approve it. The owner wanted to know what happens now.

Read on...

"I just found your website today and it is great. I was just wondering if you know of any articles related to what happens when an HOA votes down a special assessment that is needed to pay off debts and reserves are unable to pay due to bankruptcy shortages and other shortfalls. My association is in a current state of depleted reserves while having large debts due. We put out a ballot for a special assessment, but it appears that most owners will be voting against the assessment against the advice of the Board and the HOA lawyer. So what happens next?

I think some articles on similar situations could help the owners realize that this is a dire situation."

I am working on a Primer on the subject of the large special assessment called - To Assess or Not To Assess - That is the Question."

The short answer for owners is that if an important special assessment is proposed by the Board for necessary repairs or association debts that cannot be avoided, and the owners vote it down, there will be ramifications. They might include any or all of the following:

***Failing, depreciating and deteriorating buildings, landscaping or infrastructure (including roads, amenities, etc.)
***Loss of important and/or necessary services
***Loss of amenities
***The possibility of a lawsuit
***Bad credit
***Vendors refusal to offer services
***The necessity of imposing an "emergency" assessment under Civil Code Section 1366
***An exodus of board members

I will write more on this subject. In fact, there is already an article on the website at http://www.californiacondoguru.com called "What Happens When You Pinch A Penny Too Tightly."

Full post as published by California Condo & HOA Law on April 09, 2009 (boomark / email).