Emergency Assessments – What Justifies Them in an HOA??

Our board just passed an emergency assessment. They failed to state a need for this or circumstances explaining it. In fact, they sought approval of owners for some very costly repairs and did not get approval and the next thing we all knew, we were hit with an assessment anyway.  Can they do that?

 

The answer is of course the usual lawyer answer – it depends. Boards cannot impose emergency assessments unless there is an emergency, and that can come in many forms. If a board tries to get a large assessment to do work it feels needs to be done and finds out the membership does not support it and/or does not want the assessment, it often comes as a surprise. I think boards assume the owners will go along because no one has made any noise, or because very few have complained or asked questions. In that line of thinking boards often fail to properly inform owners about the information it has gathered and owners feel they are being asked to approve something serious, without really understanding it.

 

So then a board might be left with a decision to make – if there are items that are creating safety issues they have to do something. If things are falling apart there may be an emergency. Here is what the law says about imposing an “emergency assessment.”

 

Civil Code Section 1366(b) …. “This section does not limit assessment increases necessary for emergency situations.
For purposes of this section, an emergency situation is any one of the following:

 

(1)          An extraordinary court-ordered expense;

(2)          An extraordinary expense necessary to repair or maintain any part of the CID for which the association is responsible where a threat to personal safety is discovered;

(3)          An extraordinary expense necessary to repair or maintain any part of the CID for which the association is responsible which could not have been foreseen by the board in preparing and distributing the pro forma budget under Section 1365 above. Prior to imposition of this emergency assessment, the board must pass a resolution reflecting written findings about the need for the assessment and why the expense could not reasonably be foreseen. The board must distribute the resolution to the owners with the notice of assessment.

(4)          An extraordinary expense in making the first payment of the earthquake insurance surcharge pursuant to Section 5003 of the Insurance Code. [Note:You may see this provision but it is no longer applicable in practice because the insurance fund was repealed and the surcharge dropped.] “

 

Thus, there are some requirements in the law to limit what boards do. If boards break the law the next question is what can an owner do about it. Does anyone want to ask that one??

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