Assessment

A regular charge levied on each homeowner to fund the operations and maintenance of the common areas and shared facilities of a homeowners association. Assessments are typically collected monthly or quarterly and are calculated by dividing the association's annual operating budget and reserve contributions among all owners, usually based on each unit's percentage interest as defined in the CC&Rs. In California, the board may increase regular assessments up to 20% above the prior year's amount without a membership vote (Civil Code Section 5605(b)). Increases beyond 20% require approval by a majority of the membership. Assessment obligations run with the land, meaning they bind all current and future owners regardless of whether they agreed to the amount. Failure to pay assessments triggers the collection policy and can result in late fees (capped at 10% of the delinquent amount under CC 5650), interest charges (up to 12% annually), recording of a lien against the property, and ultimately foreclosure. Boards have a fiduciary duty to set assessments at levels sufficient to fund both day-to-day operations and long-term reserve needs. Chronically underfunding assessments is one of the most common causes of deferred maintenance, special assessments, and declining property values in community associations.