Regular assessments (aka “dues”) are the assessments which must be paid by the owner of each separate interest to the association every year, often on a monthly basis. The level of regular assessments is determined by the funds required to meet the association’s annual operating expenses. Regular assessments may be increased over time for a variety of reasons (i.e., improving the health of the association’s reserve account, defraying increases in the association’s expenses, etc.). An association’s board of directors may, without membership approval, increase the level of regular assessments each year by up to twenty percent (20%) over the prior year’s level, subject to certain requirements. (Civ. Code § 5605; See also “Limitations on Assessment Increases.”)
Special assessments may be levied by the board to cover unanticipated budget shortfalls or to raise funds needed for unforeseen repairs. The board may, without membership approval, levy a special assessment up to five percent (5%) of the current year’s budgeted gross expenses, subject to certain requirements. (Civ. Code § 5605; See also “Limitations on Assessment Increases.”)
Capital Improvement Assessments
Many sets of association governing documents use the term “capital improvement assessments” to refer to special assessments which are levied to fund the construction of a capital improvement. The limitations on the board’s ability to levy a capital improvement assessment with or without a vote of the membership will be dictated by the terms of the association’s governing documents as well as the general limitations on levying special assessments found under Civil Code Section 5605.
Reimbursement (“Compliance”) Assessments
Under certain circumstances, an association may levy an individual special assessment against a particular member in order to reimburse the association for costs incurred in repairing damage to the common area caused by the member, his family or tenant. (See “Reimbursement & Compliance Assessments.”)