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2015 Legislation - SB 290 - Serving Owners in Foreclosure Proceedings

Now a two-year bill, this legislation would allow the HOA to serve the owner by “substituted service,” a less restrictive process. ECHO supports this bill.

When Can the Board Increase HOA Assessments?

Here is the scenario: a board adopts the annual budget and notifies the owners that assessments will increase from last year by 10%. After the beginning of the association’s fiscal year, and months later, the board realizes that expenses are greater than anticipated and wants to again increase the assessments, this time by another 10% (for a total of a 20% annual increase). Some attorneys, managers and board members believe that the board has this power; others (including this writer) disagree based on the language of the Civil Code, the intent of the legislature, and common sense.

§5655 - Payment and Receipt

  1. Any payments made by the owner of a separate interest toward a debt described in subdivision (a) of Section 5650 shall first be applied to the assessments owed, and, only after the assessments owed are paid in full shall the payments be applied to the fees and costs of collection, attorney's fees, late charges, or interest.

§5650 - Payment Due, Fees and Interest

  1. A regular or special assessment and any late charges, reasonable fees and costs of collection, reasonable attorney's fees, if any, and interest, if any, as determined in accordance with subdivision (b), shall be a debt of the owner of the separate interest at the time the assessment or other sums are levied.

§5620 - Regular Assessment Exempt from Creditors - Limitation

  1. Regular assessments imposed or collected to perform the obligations of an association under the governing documents or this act shall be exempt from execution by a judgment creditor of the association only to the extent necessary for the association to perform essential services, such as paying for utilities and insurance. In determining the appropriateness of an exemption, a court shall ensure that only essential services are protected under this subdivision.

§5615 - Notice of Increase

The association shall provide individual notice pursuant to Section 4040 to the members of any increase in the regular or special assessments of the association, not less than 30 nor more than 60 days prior to the increased assessment becoming due.

§5605 - Annual Increase of Regular Assessment

  1. Annual increases in regular assessments for any fiscal year shall not be imposed unless the board has complied with paragraphs (1), (2), (4), (5), (6), (7), and (8) of subdivision (b) of Section 5300 with respect to that fiscal year, or has obtained the approval of a majority of a quorum of members, pursuant to Section 4070, at a member meeting or election.

§5600 - Assessment Levy Requirement

  1. Except as provided in Section 5605, the association shall levy regular and special assessments sufficient to perform its obligations under the governing documents and this act.
  2. An association shall not impose or collect an assessment or fee that exceeds the amount necessary to defray the costs for which it is levied.
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