VARIABLE ASSESSMENTS

QUESTION: When an association increases their budget by 20% but the CC&Rs have a variable formula for assessments that results in individual assessments for some to be greater than 20% and for others less than 20%, is a vote required for approval of the assessment?  Is the 20% limitation based on individual assessments or on the aggregate?

ANSWER: That is a difficult question to answer.

. . . 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. Civil Code §1366(b)

The statute says the "regular assessment for the association's preceding fiscal year" which indicates a 20% increase in the association as a whole, i.e., its budget, not on individual owners' assessments. But I don't know how a judge would read it. A judge could easily declare that it applies to individual assessments. If the association wants to avoid a challenge, the board needs to reduce the overall assessment to avoid the anomaly.

Updated by ADAMS KESSLER 5/7/2008