REGULAR ASSESSMENT LIMITATION

Notwithstanding more restrictive limitations placed on the board by the governing documents, the board of directors may raise regular assessments (dues) by up to 20% of the association's preceding fiscal year without membership approval. PROVIDED they publish a budget in compliance with Civil Code §1365. Failure to comply means that any increase requires membership approval. Civil Code §1366(a) 

Membership Approval. Regular assessments over 20% require the approval of a majority of a quorum of owners. Civil Code §1366(b) The statute defines "quorum" to mean more than 50% of the owners of an association. The governing documents of an association cannot increase or decrease the approval requirements for membership approval. Any such changes are voided by Civil Code §1366(b)

QUESTION: I have an association that has variable assessments. Increasing the budget by 20% would cause one group of owners' individual assessments to be 30% over last year's. Is this allowable?

ANSWER: As provided for in Civil Code §1366(b), the board may not increase any owner's dues by more than 20% without membership approval. As a result, the budget increase is limited by the owner with the highest variable assessment. By variable assessments I mean "blended rates" which are assigned using a uniform rate for some budget items and a percentage rate for others. These kinds of assessment formulas make it impossible to simply increase everyone's assessment by a fixed percentage. For example, if the board increases the budget by 20%, some owners would have a 15% to 20% increase in their dues while others receive a 25% to 30% increase. The owner receiving the highest individual increase would be the benchmark for the overall increase. Fortunately, most associations use a uniform rate (everyone pays the same amount) or a pro rata rate based on the square footage of owners' units. In either of these cases, a 20% increase in the annual dues would be the same for all owners.

Updated 6/14/2008