Advance Notice, Leaked Assessment Payments, and Must Our Board Reduce Assessments?

By Kelly G. Richardson, Esq.

Dear Mr. Richardson: How much notice is an association supposed to give a homeowner before a special assessment is due? C.A., Orange 

Dear C.A.: Civil Code Section 5615 mandates HOAs to provide no less than 30 or more than 60 days advance notice before assessment increases can become due. This can become a problem in at least 2 ways. First, even in an emergency assessment situation, the HOA cannot require payment sooner than 30 days from the announcement of the assessment. On the other end of the spectrum, sometimes an association passes a special assessment for a project in which most of the funds are not immediately needed, and so the board wishes to give many months advance notice of the upcoming payment. That HOA may have to send yet another notice within the 30-60 window the statute establishes. Thanks, Kelly

Kelly, is there a rule of law that governs the issue of confidentiality of homeowner paid assessments? A board member leaked the advance payments (paid for the year) made by a homeowner to a non-board member, who published that to all the HOA members. Is this action correct? P.G., Riverside

Dear P.G.: The Davis-Stirling Act does not specifically declare a member’s paying ahead on their assessments to be confidential, but on the other hand it certainly does not require that the HOA disclose to homeowners if someone has paid ahead on their assessments. Civil Code Section 5200, which lists the financial records HOA members can inspect, does not include assessment payment ledgers (delinquent or paid ahead). Furthermore, Section 5665 gives members the right to speak with the board in closed session to discuss a payment plan to catch up on their delinquency. All of this indicates to me that assessment account balances, whether positive or negative, are not something which should be shared with the neighbors. Sincerely, Kelly

Dear Kelly: Our board had our owners vote on a special assessment to fund roof repairs. The owners voted to reject the assessment. So, our board increased our monthly dues to get the funds to pay for the repairs. Once that money has been accumulated to pay for the roof repairs, must board reduce our monthly dues back to what they were prior to the increase? Thank you. L.L., San Diego

Dear L.L.: Civil Code Section 5600(b) only allows HOAs to assess for actually anticipated costs in the new year. If after completing the roof project the HOA has no other new or increased expenses, the budget would be expected to drop- the board is not allowed to collect money that is not connected to defraying an actual cost. So, yes, indirectly, the board may have to recalibrate its budget after the roof project because if the total expenses of the HOA decrease, so should the assessments also decrease. Best regards, Kelly

Readers: Senate Bill 1007 would prohibit boards from increasing budgets by no more than 8%, unless they obtain a membership vote. This would prevent boards from prudently managing association finances. It’s a bad bill and would harm HOA ability to keep properties in good maintenance and repair. Read it at leginfo.legislature.ca.gov. 

Urge your representatives to oppose it.