HOA and Condo Assessment Woes

HOAs and Condo boards have tough choices when a special assessment is needed. Sometimes they involve owners in the decision, and sometimes they don’t. Here is a question from a reader:

“Homeowners have asked the HOA and Board to structure the proposed Special Assessment in a way that is financially feasible for homeowners.  Instead of working with us on any of our proposed options, they told us that if we don’t pass the Special Assessment, they will increase our dues by 20% in September and by another 20% in January (which really equals about a 45% increase – since it is an increase on top of an increase.) Can they do that?”

Answer:

I do not know all the facts but it is possible to legally have these two increases if it involves two fiscal years, as the limit a Condo or HOA board can raise assessments in any fiscal year is 20% (in the aggregate).  A fiscal year may be the calendar year, or it may be different (check the Articles of Incorporation or Bylaws for this information). Any increase in a fiscal year that exceeds the 20% without approval of a majority of a quorum of members would not be legal. See Civil Code Section 1366 in The Davis Stirling Act accessible from the mainpage of the condoguru website. If the fiscal year ended in December, and there had not been an increase that year, a 20% increase in December and one in the new fiscal year in January would probably be considered legal.
Boards use all kinds of tactics in seeking approval of assessments, including rational arguments, threats, kindness, begging, and the like. When they offer differing proposals it often divides the community as everyone is looking at things from their own perspective and not the neighbors. Boards are supposed to consider what is best for the community as a whole.
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