Duty to Levy Assessments. The duty to manage the association's budget falls to the board of directors. They are the ones most knowledgeable about the association's financial condition since they pay the bills and review financial reports. By statute, boards are required to levy assessments sufficient to perform their duties. (Civ. Code § 5600.) The legal duty falls on board members, not the membership. That explains why boards sometimes raise dues when they would rather not, and why they don't seek membership approval unless the increase exceeds 20%.
20% Limitation. Notwithstanding more restrictive limitations placed on the board by the governing documents, the board of directors may increase regular assessments (dues) by up to 20% of the association's preceding fiscal year without membership approval. Membership approval is defined as a majority of a quorum of members constituting a quorum, casting a majority of the votes--"quorum" means more than 50 percent of the owners of an association. (Civ. Code § 5605.) The 20% increase is based on the association's regular assessments for the prior year. This includes operations and reserves contributions as defined in the budget.
Special Assessments. The budget requirement described above does not apply to special assessments.
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.