Can Board Legally Raise Fee Twice in One Year?

QUESTION: The monthly association fee for our homeowners association was raised 5% in January and another 15% in August, a total of 20% in one year’s time. Is this legal? Can this be done every year?

ANSWER: If the board of directors distributed the budget for the fiscal year to all owners during the 45- to 60-day period prior to the beginning of the fiscal year, the board has the authority to increase the assessment as much as 20% over the prior year’s assessment amount. If your association’s legal documents restrict increases to a smaller percentage, the state law supersedes the restriction in your documents.

If the budget was not distributed according to California law within the time limit, any increase would have to be approved by a majority of the owners in attendance at a meeting called for that purpose. A properly called meeting would require that a quorum be in attendance and then a majority of those members in attendance would have to vote for the assessment increase.

In your case, I would say that the 20% increase, 5% at the beginning of the year and then 15% later in the year, is acceptable if the board distributed the original budget properly. The increase could only be put into effect after a 30-day to 60-day notice.

A revised budget should have been distributed to show where the increased income is being allocated, and the board should state why the additional income is needed. Perhaps a new reserve analysis revealed that the association needs to acquire more funds for future repairs. An emergency may have arisen that the board felt could best be met by raising the monthly assessment rather than calling for a special assessment.

You and the rest of the owners are entitled to know why the mid-year increase was needed. A positive way of handling this situation would have been for the board to send out a communication stating the board’s authority to increase the assessments as well as the reason the increase was necessary.

If the board is not operating in compliance with the state law, this will affect the association’s ability to collect assessments from those members who refuse to pay the increase.

President Can Serve as Long as Elected

Q: Our homeowner association president has served on the board for over 10 years. She often gets proxies for the annual meeting from several of the owners so that her election is assured. Can a board member continue to serve on the board year after year?

A: Unless the association’s declaration of covenants, conditions and restrictions (CC&Rs;) or bylaws restrict the number of years that a person can serve on the board, she can continue to serve as long as she is elected by the members.

Since she is able to obtain proxies from some of the members, they obviously trust her judgment and have faith in her leadership. The inspectors of election should verify proxies at the annual meeting to ensure the proxies are valid. Sometimes it is necessary to contact the owners after the meeting in order to verify the proxies were legal.

If anyone holding a proxy complains about this verification, their protest would make me a bit suspicious. An owner wishing to challenge an election has nine months to do so, though I recommend taking action as soon as possible before the proxies, ballots and other records mysteriously vanish.

Board members who have served for a number of years should voluntarily step down and let others serve if other members are willing. It is good to rotate the responsibility now and then to be sure that one person does not dominate or unduly influence the other directors just because of seniority or length of service.

Guide Contains Laws Board Needs to Know

Q: As a member of the board of directors of my homeowners association, I have found your “Condo Q&A;” column to be most helpful. You have written about several of the laws pertaining to community associations, various sections of the California Civil Code and Corporations Code. Are there any books or other resources that compile all of the laws that we board members need to know?

A: Attorney James P. Lingl has published the “Community Assn. Reference Guide,” the most comprehensive collection of California laws governing community associations. It includes selections from the California Corporations Code, Business and Professions Code, Civil Code, and many others. The book is updated each year to include the latest legislation and amendments.

“Community Assn. Reference Guide” is available for $45.77 ($38.95 plus $2.82 California state tax and $4 for shipping and handling) from CAPCO, P.O. Box 1684, Camarillo, CA 93011.

Hickenbottom is a past president of the Greater Los Angeles chapter of the Community Associations Institute (CAI), a national nonprofit research and educational organization. She welcomes readers’ questions, but cannot answer them individually. Readers with questions or comments can write to her in care of “Condo Q&A;,” Box 5068, Thousand Oaks, Calif. 91360.