Are Assessment Manipulations Illegal?

Recently our HOA announced that the previous 2018 budget assessment calculations were performed incorrectly. The one bedroom units significantly under pay their assessments and the three bedrooms significantly over pay. In turn the calculations for the 2019 budget assessment rates were again incorrectly calculated. But this time the one bedroom assessments over paid and the three bedrooms under paid. To justify the 2019 budget calculations was to correct the previous 2018 budget assessment calculations. But that does not seem to make sense because the 2018 budget was a 19% increase and the 2019 budget was only a 4% raise.

My question is “are they breaking the law?”

Background

The California Department of Real Estate (http://dre.ca.gov) publishes the Operating Cost Manual for Homeowner Associations which provides a formal to calculate assessments. The manual defines a process where part of the homeowners assessments are a flat rate divided equally among owners and a variable rate based on square footage of a owner's unit.

For some reason this was manipulated or incorrectly performed when a 19% budget increase was implemented in 2018. One bedroom unit assessments were significantly less as compared three bedrooms than the formula would suggest. For the 2019 budget increase of 4%, this was reversed where the one bedrooms pay more and three bedrooms paid less.

Correcting these issue for 2019 4% overall increase is not a significant amount of money for an adjustment. The three bedrooms go up a little bit and the one bedrooms go down a little. Two bedrooms stay the same. - and the 2019 assessment rates are only into three months of this year. This is not true for the 2018 19% overall increase where the one bedrooms did not pay their fairs share and the three bedroom are entitled to significant amount of money back.

By the way, the new property management company had told the Board the calculations for 2019 were incorrect when they were first proposed. But this was ignored.

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You need to read your own governing documents, probably your CC&Rs, so see what the actual variable rate is. It might be in an addendum or exhibit. In our HOA, it's a sq. ft. variance, not a bedroom count variance.