Assessment Increase Violation?
Dennis,
I attended a board meeting and the subject of the annual budget was on the agenda. Before the board discussion took place, information was given by a resident of the community that the HOA couldn’t raise the assessments by more than 5% and it was written in the CC&R’s
The resident gave some kind of printed statement for the board members which he said was off the CCR’s page.
I went into the documents and found the following and I’m asking for some clarification of what is allowed and not.
Section 7.3 Maximum Annual Assessments. The total Annual Assessment to
be established by the Board may not exceed a certain amount, hereinafter referred to as the “Maximum Annual Assessment” which Maximum Annual Assessment shall be determined and shall vary in accordance with the following provisions:
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This is typical language that I’ve seen in many formats across the state. Most CC&Rs address what they call ” maximum annual assessment. That number increases annually based on a specific formula and is unrelated to the actual annual assessment charged by the association. For example, if your board raised your assessment 2% over the prior year’s assessment, in that year, the maximum annual assessment could have risen by whatever the formula establishes, say 5%. That increase is not based on the prior year’s assessment, but rather on the maximum annual assessment for the preceding year. With these provisions, with time, the maximum yearly assessment could be a 200% increase over any year’s assessment, essentially eliminating any restriction on assessment increase. I’ll be proposing legislation that will allow a maximum 5% increase year over year, but anything over that will require prior homeowner approval. I suspect that your CC&Rs actually do not limit your assessments in any way. But you cut the provision short in your comment.
Dennis
Dennis