Are Unexplained Assessment Increases and Vague Agendas OK?

By Kelly G. Richardson, Esq. CCAL, HOA Homefront Column

Hi Kelly, we just received a notice two days ago that our HOA assessments will increase 10%. The new increase takes effect in 3 weeks. We did not receive any prior notice of such a large increase and numbers for the 2024 budget seem off. In my opinion this is poor money management to give homeowners an increase notice with only 3 weeks’ notice. Shouldn’t an HOA know that they need this big of an increase MONTHS in advance? J.S., Aliso Viejo.

Dear J.S.: HOA boards may increase regular assessments up to 20% per fiscal year without a vote of the homeowners, per Civil Code Section 5605(b). However, HOA boards, when increasing the budget, should explain to the members why increases are necessary. Communicating to homeowners above and beyond the bare legal requirements helps build trust in the HOA board.

You have mentioned that the notice of the assessment increase was not received by you until about three weeks before coming due. There are two possible issues here. First, Civil Code Section 5605 requires the new year’s budget be announced at least 30 days before the end of the fiscal year. Second, any assessment increase must be announced individually to each member at least 30 days before the increased assessment becomes due, per Civil Code Section 5615. Please note that these two deadlines are “sending” deadlines, not receiving deadlines, so your HOA may have been timely on these two points.

Thanks for your question, Kelly

Dear Mr. Richardson: The board agenda has few details about agenda items so homeowners do not know the information or details about agenda items, making it difficult to ask questions or get clarification prior to the board taking action.  What are the rules about making the board packet, excluding executive session items, available to homeowners?  L.O., Nipomo

Dear L.O.: Boards are required to notify members of the items to be discussed in the upcoming board meeting in the posted agenda. However, the statute requiring this, Civil Code Section 4930(a), does not define “item.” Some boards post deliberately vague agendas to give themselves “wiggle room” as to what they can discuss. As you can attest, this frustrates the members who would like to know what the board is working on. Boards would do well to consider not just providing the bare minimum disclosure, to build trust and confidence in their neighbors in the community.

L.O., boards are not required to share the packets of information they receive from management. Also, this is not necessary since homeowners have the right to watch the board’s deliberations but do not have the right to participate in those deliberations.

HOA boards can do several things to make their constituent neighbors more confident in their governance. First, provide more information in the posted agenda and not a vague almost meaningless couple of words. Second, during the meeting, take a moment to describe the issue at hand. Lastly, on major decisions consider opening the floor to a brief open forum.

As to executive session information, the allowable topics for executive session must be kept confidential to protect homeowners, HOA employees, or the HOA itself, so that information cannot be distributed outside the board. So, no, that information should not be shared.

Best, Kelly