Establishment And Imposition Of Assessments - Assessments And Assessment Collection - Civil Law - CA

Section § 5600

This law section states that a homeowners' association must charge regular and special fees that are enough to cover its responsibilities outlined in its documents and California laws. However, the association can't ask for more money than what's needed to cover these costs. There's an exception mentioned in another section (5605) that might change this rule.

(a) Except as provided in Section 5605, the association shall levy regular and special assessments sufficient to perform its obligations under the governing documents and this act.

(b) An association shall not impose or collect an assessment or fee that exceeds the amount necessary to defray the costs for which it is levied.

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Section § 5605

This section outlines the rules for homeowners associations in California regarding how they can increase regular assessments or impose new ones. First, the board must follow specific procedures or get approval from over half the members. They can't raise regular assessments by more than 20% or special assessments by more than 5% without member approval. From 2025, special rules apply to deed-restricted affordable housing, limiting assessment increases to reflect cost of living changes and potentially allowing lower assessments. However, these rules don’t apply to certain developments with a high percentage of affordable units or small developments.

(a) Annual increases in regular assessments for any fiscal year shall not be imposed unless the board has complied with paragraphs (1), (2), (4), (5), (6), (7), and (8) of subdivision (b) of Section 5300 with respect to that fiscal year, or has obtained the approval of a majority of a quorum of members, pursuant to Section 4070, at a member meeting or election.

(b) Notwithstanding more restrictive limitations placed on the board by the governing documents, the board may not impose a regular assessment that is more than 20 percent greater than the regular assessment for the association’s preceding fiscal year or impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year without the approval of a majority of a quorum of members, pursuant to Section 4070, at a member meeting or election.

(c)

(1) (A) For an association that records its original declaration on or after January 1, 2025, notwithstanding more restrictive limitations placed on the board by the governing documents, except as provided in paragraph (3), the board shall not impose a regular assessment against an owner of a deed-restricted affordable housing unit that is more than 5 percent plus the percentage change in the cost of living, not to exceed 10 percent greater than the preceding regular assessment.

(B) For purposes of this paragraph, “percentage change in the cost of living” means the percentage change from April 1 of the prior year to April 1 of the current year in the regional Consumer Price Index for the region where the residential real property is located, as published by the United States Bureau of Labor Statistics. If a regional index is not available, the California Consumer Price Index for All Urban Consumers for all items, as determined by the Department of Industrial Relations, shall apply.

(2) For an association that records its original declaration on or after January 1, 2025, notwithstanding any other law, except as provided in paragraph (3), the board may impose an assessment against an owner of a deed-restricted affordable housing unit that is lower than the assessment imposed against other owners according to the proportional ownership of total subdivision interests subject to assessments.

(3) This subdivision does not apply to any of the following:

(A) A development where the percentage of the units, exclusive of a manager’s unit or units, that are deed-restricted affordable housing units exceeds the percentage required by an applicable zoning ordinance in effect at the time the development received final approval.

(B) A development that is located within a city, county, or city and county that does not have an applicable zoning ordinance requiring a percentage of deed-restricted affordable housing units and meet either of the following conditions:

(i) The percentage of the units, exclusive of a manager’s unit or units, that are deed-restricted affordable housing exceeds 10 percent of the total number of units in the development at the time the development received final approval.

(ii) If the development met the requirements described in subparagraph (B) of paragraph (1) of subdivision (b) of Section 65912.122 of the Government Code and was approved pursuant to Section 65912.124 of the Government Code, the percentage of the units, exclusive of a manager’s unit or units, that are deed-restricted affordable housing exceeds 15 percent of the total number of units in the development at the time the development received final approval.

(d) For the purposes of this section, all of the following definitions apply:

(1) “Affordable housing unit” means a unit occupied by, or available at affordable housing cost to, lower income and moderate-income households, as defined by Sections 50079.5 and 50052.5, respectively, of the Health and Safety Code.

(2) “Final approval” has the same meaning as defined in clause (ii) of subparagraph (D) of paragraph (2) of subdivision (o) of Section 65589.5 of the Government Code.

(3) “Quorum” means more than 50 percent of the members.

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Section § 5610

This section allows for assessment increases without limits in emergency situations. An emergency can be an unexpected court-ordered expense, a necessary expense to address health or safety threats, or an unforeseen cost for repairs or maintenance of the common areas that the association did not anticipate in their annual budget. If the board needs to impose such an assessment, they must justify it with a written resolution explaining the necessity and the lack of foresight, which must be shared with members.

Section 5605 does not limit assessment increases necessary for emergency situations. For purposes of this section, an emergency situation is any one of the following:

(a) An extraordinary expense required by an order of a court.

(b) An extraordinary expense necessary to operate, repair, or maintain the common interest development or any part of it for which the association is responsible where a threat to personal health or safety or another hazardous condition or circumstance on the property is discovered.

(c) An extraordinary expense necessary to repair or maintain the common interest development or any part of it for which the association is responsible that could not have been reasonably foreseen by the board in preparing and distributing the annual budget report under Section 5300. However, before the imposition or collection of an assessment under this subdivision, the board shall pass a resolution containing written findings as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process, and the resolution shall be distributed to the members with the notice of assessment.

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Section § 5615

The association must give members a written notice about any increase in fees or special assessments between 30 to 60 days before the new fees are due.

The association shall provide individual notice pursuant to Section 4040 to the members of any increase in the regular or special assessments of the association, not less than 30 nor more than 60 days prior to the increased assessment becoming due.

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Section § 5620

This law states that the regular fees collected by a homeowner association (HOA) cannot be taken by a creditor of the HOA if those fees are needed for essential services like utilities and insurance. However, if association members have agreed to certain debts, like those for state taxes or improvements to shared spaces, this protection doesn't apply. Only essential services are meant to be safeguarded from creditors under this rule.

(a) Regular assessments imposed or collected to perform the obligations of an association under the governing documents or this act shall be exempt from execution by a judgment creditor of the association only to the extent necessary for the association to perform essential services, such as paying for utilities and insurance. In determining the appropriateness of an exemption, a court shall ensure that only essential services are protected under this subdivision.

(b) This exemption shall not apply to any consensual pledges, liens, or encumbrances that have been approved by a majority of a quorum of members, pursuant to Section 4070, at a member meeting or election, or to any state tax lien, or to any lien for labor or materials supplied to the common area.

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Section § 5625

This law section states that a homeowners' association (HOA) cannot charge fees to property owners based on the taxable value of their properties unless the HOA was already doing so before the end of 2009. However, if the HOA is responsible for paying taxes on behalf of the property owners, they can include this tax cost in the fees they charge, based on each property's taxable value.

(a) Except as provided in subdivision (b), notwithstanding any provision of this act or the governing documents to the contrary, an association shall not levy assessments on separate interests within the common interest development based on the taxable value of the separate interests unless the association, on or before December 31, 2009, in accordance with its governing documents, levied assessments on those separate interests based on their taxable value, as determined by the tax assessor of the county in which the separate interests are located.

(b) An association that is responsible for paying taxes on the separate interests within the common interest development may levy that portion of assessments on separate interests that is related to the payment of taxes based on the taxable value of the separate interest, as determined by the tax assessor.

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