Canceling an Assessment
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CANCELING AN ASSESSMENT

QUESTION: Can a new board rescind a special assessment?

ANSWER: It depends on who passed the assessment and what it was for.

Board-Approved Assessment. A special assessment levied by a prior board (up to 5% of the budget) can be rescinded by a successor board but they need a good reason for the cancellation since boards have a statutory duty to "levy regular and special assessments sufficient to perform its obligations under the governing documents and this title [Davis-Stirling Act]." (Civ. Code §5600(a).)

If the prior board levied a special assessment to repair deferred maintenance or build stronger reserves, a successor board could be in breach of its fiduciary and statutory duties if it cancels the assessment. If, on the other hand, the prior board's special assessment was to buy a full-sized reproduction of Michelangelo's David to install at the front gate, the assessment can be rescinded.

Member-Approved Assessment. If the special assessment was approved by the membership, the board does not have the authority to rescind it. For example, if the membership voted to assess $50,000 to repaint the buildings, a board cannot refuse to collect the money and refuse to paint the buildings.

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Adams Stirling PLC