Limitations on Assessment Increases

An association’s duty to levy assessments sufficient to perform its obligations may require the association’s board to increase the level of regular assessments or to levy one or more special assessments. Notwithstanding more restrictive limitations placed on the board’s ability to do so by the governing documents, the board may take the following actions without membership approval (Civ. Code § 5605(b).):

  • Increase Regular Assessments up to 20% – Impose a regular assessment up to twenty percent (20%) greater than the regular assessment for the association’s preceding fiscal year; and/or
  • Impose a Special Assessment up to 5% – Impose special assessments up to five percent (5%) (aggregate) of the budgeted gross expenses of the association for that fiscal year.

Exception: Emergency Assessments
These limitations do not serve to limit “assessment increases necessary for emergency situations.” (Civ. Code § 5610; See also “Emergency Assessments.”)

Notice Requirement
An association is required to provide its members with individual notice of any increase in the regular or special assessments not less than thirty (30) days nor more than sixty (60) days prior to the increased assessment becoming due. (Civ. Code § 5615.) When an emergency assessment is levied for an unforeseen extraordinary expense pursuant to Civil Code Section 5610(c), the notice of assessment must also include a copy of the resolution passed by the board explaining the justification for levying the emergency assessment. (Civ. Code § 5610(c); See also “Emergency Assessments.”)

Annual Budget Report Requirements
The board may not increase the level of regular assessments unless it has complied with various requirements under Civil Code Section 5300 pertaining to the association’s annual budget report:

“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.” (Civ. Code § 5605(a).)

Membership Approval Requirements; Quorum Set by Statute
Membership approval may be required in connection with a proposed assessment increase (i.e., where a proposed special assessment is in excess of five percent (5%) of the association’s budgeted gross expenses for that fiscal year). In such cases, Civil Code Section 5605(c) sets the applicable quorum requirement as more than fifty percent (50%) of the members, regardless of anything to the contrary in an association’s governing documents. The proposed assessment increase may be approved by a majority of the members voting at an election where such a quorum has been established. (Civ. Code § 5605; Civ. Code § 4070.) The election must be held by secret ballot. (Civ. Code § 5100.)