Dues Assessments
Questions frequently arise about why associations raise dues and what the limitations are. HOA fees are determined by the anticipated expenses the association will incur to ensure a safe and clean environment for the community it governs. Expenses increase with inflation or when unexpected damages occur. Association dues can be raised or adjusted through regular assessments and special assessments. Once the amount to be raised has been determined, all homeowners must be notified in writing of any dues increase at least 30 days, but not more than 60 days, before the increase is in effect. Regular Assessments These assessments must be paid by every member of the community every year (AKA regular dues). The amount requested for regular assessments is determined by the reserve required to meet the association’s annual operating expenses. This may be increased over time for a variety of reasons (usually determined by the expenses accumulated in the association). An HOA’s board of directors may, without membership approval, increase the level of regular assessments each year by up to twenty percent over the prior year’s level. Special Assessments Special assessments may be imposed by the association board to offset unanticipated budget shortfalls or to raise funds needed for unforeseen repairs. The board may, without membership approval, charge a special assessment up to five percent of the current year’s budgeted gross expenses. Capital Improvement Assessments Many of the association’s governing documents use the term “capital improvement assessments” to refer to special assessments which are collected to fund the construction of a capital improvement. The limitations on the board’s ability to levy this 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. Reimbursement (“Compliance”) Assessments Under certain circumstances, HOA boards may charge an individual special assessment against a specific member of the community. This assessment is strictly to recover the association’s costs provoked in repairing damage to the community’s common area caused by the member, his/her family, or tenant.
Are you up to date on the new HOA Revisions?
As we continuously see changes within the California HOA laws, it can be difficult to keep up with the constant legal revisions. Our team is here to help you keep track of these updates and ensure the corrections in a timely manner to avoid any issues within your association. Below, we have summarized a few necessary updates to be made by your HOA. The Rental Restriction Act The Rental Restriction Act requires documents to be reformed. According to the new law, HOAs must remove illegal rental restrictions from governing documents, which may be done through the board without a membership vote by July 1, 2022. This action also requires a declaration of the changes to be published no less than 28 days prior to the board vote to approve the amendment. As most HOA CC&Rs usually do not carry such unreasonable rental restrictions that may now be illegal, it shouldn’t be a big change for many of the communities. For your protection, you may seek legal counsel to review the CC&Rs for any updates the new laws may require. Electronic Deliveries As of January 1, 2022, associations are required to request their members to specify their preferred delivery method (email, mail, or both) for all notices and disclosures. Additionally, on an annual basis, all associations are obliged to give notice which states that members are not required to provide their email address to the HOA. There must be written consent in possession of the HOA prior to electronically distributing any documents or notices to the members. There is no specified form created for the associations particularly to this matter. The only requirement is to have the consent written, which an email also qualifies. If the association would like to further create a form instead, they are allowed to do so. The statement collected must be clearly written to the association specifying: • Any rights of the recipient to have the record provided or made available on paper in non-electric form. • Whether the consent applies only to that transaction, to specified categories of communication, or to all communication from the corporation. • The procedure the recipient must use to withdraw consent. For further information or assistance with updates on laws and codes, contact Atlantic & Pacific Management at (858) 672-3100 or visit aphoamgmt.com/sandbox/.
Is your HOA prepared for the new balcony inspection law?
Now is the time to begin inspections of balconies and other external structural elements to ensure they are up to the new codes. As of January 1 2020, associations with buildings that have three or more units must inspect load-bearing structures. All first inspections must be completed by January 1, 2025. Going forward, elevated structures must be examined at least once every nine years following the first inspection. A licensed structural engineer or architect must conduct the inspections while using the least intrusive methods necessary. Inspectors must provide 95 percent confidence that the results from a sample are reflective of the whole, with a margin of error of no greater than plus or minus 5 percent. The objective is to check for any potential structural issues or repairs that will need to be fixed in the future, followed by a submission of a full report to the board providing the physical condition and remaining useful life of the structures. The report must also be submitted to the local code enforcement agency within 15 days of completion. The statute does not change who is responsible to maintain, repair, or replace load-bearing configurations. It imposes further inspection and repair obligations on HOAs in addition to the existing responsibilities. Repairs will be needed for damage caused by various types of dry rot. These sources of impairment, such as termites and fungi, spread throughout a structure as they feed on wood. To stop the destruction, all decayed wood and fungi must be removed. The longer it goes untreated, the greater the liability and possibility of collapse. If an immediate threat to the safety of the occupants is found by the inspector, the association must take direct measures to rectify the issue(s) upon receiving the report. For further information or assistance with updates on codes, contact Atlantic & Pacific Management at (858) 672-3100 or visit aphoamgmt.com/sandbox/.