“Regular” assessments are “monthly dues” used for day-to-day expenses and reserves for repair/replacement of major components (i.e. roof, parking lot and other common area improvements).
“Special” assessment are for one-time costs to repair/replace major components due to either an unanticipated loss (fire, flood or casualty) or underfunded reserve for a major component.
1. “Regular” Assessment Increases Exceeding 20% Require Homeowner Approval.
Monthly Dues cannot be increased without approval of the Board for the Association. See Civil Code §5605.
The Board cannot increase fees without first complying with requirements of Civil Code §5300, which are as follows:
– provide a statement showing annual estimated revenue and expenses;
– provide a summary of the reserve funding plan adopted by the board;
– provide a statement stating whether they are deferring the repair/replacement of any
major components and justification for the deferral;
– provide a statement stating whether a special assessment is anticipated to restore, replace or repair any major components;
– a general statement showing the procedure used to calculate and establish reserves for future replacement or repair of any major components.
If the Board complies with the requirements of Civil Code §5300, then they can only increase monthly dues by 20% or less. If the Board fails to provide statements and summaries as listed above, then the assessment is improper and can be challenged by the homeowner.

The Board cannot increase monthly dues by more than 20% without (1) approval of a majority of the homeowners and (2) a regular membership meeting. Civil Code §5605(b).
2. “Special” Assessment Exceeding 5% of the Annual Budget Require Homeowner Approval.
The Board can impose “small” special assessments without Homeowner Approval. The Board can impose payment schedules without Homeowner Approval. A “small” assessment is defined as an assessment less than 5% of the total annual budget for the HOA.
The Board cannot assess a special assessment of 5% or more of the total annual budget without (1) approval of a majority of the homeowners and (2) a regular membership meeting. Civil Code §5605(b).
Additionally, the Board must notify each homeowner of a new or increased special assessment (1) by certified mail at least (2) 30 days before the assessment is due.
3. Homeowners can Challenge “Regular” and “Special” Assessments.

Disputes $10,000 or Less.
Go to small claims court for any dispute in the amount of $10,000 or less. Civil Code §5658 allows a homeowner to (1) pay a disputed assessment “under protest” and (2) challenge the disputed assessment in small claims court.
This means that a homeowner can challenge any regular assessment, special assessment, fine, penalty, late fee or collection cost in small claims court. However, remember that you must first pay the disputed amount or the HOA can continue to assess fees, interest and penalties.

Disputes Over $10,000.
Do not rush to file a lawsuit against your HOA because the law allows the HOA to recover all attorney fees and costs from you if you lose. Instead follow the following three step dispute resolution procedure.
1. REQUEST FOR INTERNAL DISPUTE RESOLUTION PROCEDURES. Send a written request to HOA for a copy of the Internal Dispute Resolution (“IDR”) procedures as required by law. Give the HOA a 15 day deadline for response.
2. REQUEST FOR MEET AND CONFER. If no IDR, then send written demand for Meet & Confer to the HOA. The written demand must state the nature of your dispute in reasonable detail. HOA is required to participate in a Meet & Confer by appointing a director to meet with you personally within a “reasonable” time after demand is made. Give the HOA a 30 day deadline for response.
3. REQUEST FOR RESOLUTION. If the dispute is not resolved by Meet & Confer, then send a written Request for Resolution demanding Mediation and/or Arbitration (i.e. Alternative Dispute Resolution also known as “ADR”). HOA is required to respond in writing within 30 days. Each party to ADR is responsible for its own costs. You must have an attorney to participate in ADR.
Neither party is required to participate in ADR, but courts often deny attorney fees to the HOA if ADR is refused (see Civil Code §5960). This is a great strategy to control your potential liability for HOA attorney fees.
It has been my experience that once the HOA receives written notices for IDR, Meet and
Confer and Mediation and/or Arbitration, they are more likely to come to the table and resolve the dispute.
Keep in mind that both the CC&R’s and California law were drafted for the HOA, not the homeowner, and generally favor the HOA at every turn.

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