Assessment Increase Limits (California)
California Civil Code Section 5605 places specific limits on an HOA board's authority to increase assessments without a vote of the membership. For regular (monthly or quarterly) assessments, the board may approve an increase of up to 20% above the amount assessed in the prior fiscal year without a member vote. Any regular assessment increase exceeding 20% requires approval by a majority of a quorum of the membership at a duly noticed election conducted under the Davis-Stirling election rules with secret ballots and an Inspector of Elections. For special assessments — one-time charges levied for a specific purpose such as a capital improvement or unexpected repair — the board may impose a special assessment without member approval only if the total amount does not exceed 5% of the association's budgeted gross expenses for the current fiscal year. Special assessments exceeding that 5% threshold require member approval by the same election process. However, the Act provides an important exception for emergency assessments: if the board determines that an immediate expenditure is necessary to address an imminent threat to personal safety, to repair or maintain common area components that will not function without immediate attention, or to address an unanticipated court order, the board may levy the assessment without member approval regardless of amount. Emergency assessments must be documented with detailed findings by the board. These limits are cumulative within a fiscal year — an association cannot circumvent the cap by splitting a large increase into multiple smaller ones. Members should also know that assessment increases require 30 days individual written notice under the Act, giving owners time to plan for the higher payment.
Example in Context
The association's regular monthly assessment was $400. The board needed to raise it to $520 (a 30% increase) to fund rising insurance costs. Because this exceeded the 20% cap, the board conducted a member election with secret ballots and obtained approval from a majority of a quorum before implementing the increase.
Common Misunderstanding
The 5% threshold for special assessments is based on the association's total budgeted gross expenses for the fiscal year, not on the individual unit assessment amount. For an association with a $500,000 annual budget, the board can levy a special assessment of up to $25,000 total (not per unit) without a member vote.
Related Terms
Frequently Asked Questions
Can the HOA board split a large assessment increase into multiple smaller increases to avoid the 20% cap?
No. The 20% cap under Civil Code Section 5605 applies to the total increase above the prior fiscal year's assessment. If the prior year assessment was $500/month, the board can increase it to a maximum of $600/month (20%) without a member vote, regardless of whether the increase is implemented all at once or in increments. Any increase that pushes the total above 20% requires member approval through a secret ballot election.