CC&R Due Increase

DerekB,

I’m pretty positive that state statues supersede your CC&R and bylaws. I could be wrong and I’m certain someone with more experience will correct me.

You may consider verify that the 20% can be implemented with/without a community vote. Our governing documents permit the board to increase assessments NO more than 10% as your does, without a community vote. However, anything above 10% is required to be approved by the community before being assessed.

Be sure to use the search box, at the top right of this forum to further assist you with answering any additional questions. More likely than not, any other questions have been discussed. This HOA forum is full of very helpful information, free for the taken.

I hope this is helpful.
Chuck W

gerald is right. the more strict document, when there is no conflict between them, will prevail. Your CC&Rs do not conflict with state law, and thus, must be upheld.

If your CC&Rs said 25%, then the California law would limit the amount to 20%.

But you are stuck at 10%.

Thanks everyone for the Replies. I'm still though unclear on the real answer. If the CC&R states no more than %10 raise per year then anything beyond this would need to be approved by the members, and stay at/or below %20 by law? So my question is if the dues were raised beyond %10 year this would require either
A. Changing the CC&R's
B. Special Assessment per year.
C. Quorum vote of all of the members.

I'm being told by the Property Management company that Civil Code 1366 overrides anything said in the CC&R's and regardless of what it says ANY HOA can raise the dues up to %20 without owners voting? Even though it clearly states in the CC&R's it cannot go above %10 of the previous year. Please read Statute below section (b), the first sentence.. This is the confusing grey area to me.

The statute says:

"(a) Except as provided in this section, the association shall levy regular and special assessments sufficient to perform its obligations under the governing documents and this title. However, annual increases in regular assessments for any fiscal year, as authorized by subdivision (b), shall not be imposed unless the board has complied with subdivision (a) of Section 1365 with respect to that fiscal year, or has obtained the approval of owners, constituting a quorum, casting a majority of the votes at a meeting or election of the association conducted in accordance with Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code and Section 7613 of the Corporations Code. For the purposes of this section, "quorum" means more than 50 percent of the owners of an association.
(b) Notwithstanding more restrictive limitations placed on the board by the governing documents, the board of directors may not impose a regular assessment that is more than 20 percent greater than the regular assessment for the association's preceding fiscal year or impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year without the approval of owners, constituting a quorum, casting a majority of the votes at a meeting or election of the association conducted in accordance with Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of Title 1 of the Corporations Code and Section 7613 of the Corporations Code. For the purposes of this section, quorum means more than 50 percent of the owners of an association. This section does not limit assessment increases necessary for emergency situations. ...[ctd.]"

Derek,

Lets try again.
Sentence b is the statement that you have followed. You raised the dues 10% The statute says that you may "NOT IMPOSE MORE THAN 20%" which you did not.

IMHO, your property manager is not correct in what she told you. The key word in the Statute is """MORE RESTRICTIVE LIMITATIONS PLACED ON THE BOARD BY THE GOVERNING DOCUMENTS, THE BOARD OF DIRECTORS MAY NOT IMPOSE A REGULAR ASSESSMENT THAT IS MORE THAN 20 PERCENT GREATER THAN""" regular assessment for the association's preceding fiscal etc.

This is telling you that you can not impose more than 20% but there are NO limits to a lower number.

To raise the dues limit above 10% would require an amendment to the CC&Rs. You would need a quorum of more than 50% to have a legal vote but you do not say by what percent you need to pass or enact the amendment.

Your State requirement for a quorum is "more than 50% of the owners of an association. That is really very high and I think extremely difficult to obtain.

Whoever wrote this very wordy paragraph must have made their Mother proud of her Son passing Law School. EEE GADS!!!

Who would be liable in this case? The HOA? Or the Property Management company that was hired by the HOA to make sure this doesn't happen? How would someone go about getting monies back if this turns out to be a mistake on the HOA's part?

This possible "overcharge" has been happening for about 5 years now. According to the HOA and Property Management company the CC&R's were never changed or amended and that's also what I was provided 5 years ago when I bought here. When I showed them the CC&R agreement I was given it clearly said a %10 per year (that they read too and didn't deny) and I informed them this is also what my Real Estate agent had told me before I purchased. The response was "That's what you get for listening to a Real Estate agent"? Anyway..

I'm basically being told by the HOA is at the time I purchased this %20 per year was the "law" in affect and the %10 mentioned in the CC&R's basically means nothing today, or the day I bought and was provided and signed the CC&R agreement..?

So just to be perfectly clear, what everyone here is saying is the Davis Sterling Act simply limits the HOA Dues to %20 per year if it's stated in the CC&R's anything above %20..? And it does not provide HOA's the power to ignore what's outlined in the CC&R's regarding dues increases and affects nothing else mentioned in the CC&R's as long as it's not stating a yearly raise of above %20? Correct?

Derek,
First of all, you don't want to go down the "who is liable" road. Mistakes are made every day in interpreting documents and State Statutes. Now you have found this to be in error. You need to have an attorney write a letter to the Board, explaining where they have not understood the wording in your Statute and your documents. Are you a Board member? The association lawyer should read and correct this.

This possible overcharge occured starting 5 years ago. What Board and what P.M were there then? See what I am getting at? Every Board member and P.M have not caught this error so "who" did it is not relevant. Just get it corrected. Getting monies back? Probably not because it has been spent. To sue for a refund? Guess where the money would come from? You and your other members.!

Davis/Stirling Act limits the raise to a MAXIMUM of 20% and you raised yours 10%. You are in compliance, no questions about it. The State Statute does have precedence over your CC&Rs but your State gives you an option to assess under the limits, which is what you did.

Below appears to be the part of the Davis Sterling Act that is causing all of the confusion.. Even though most people here are saying this law overrides the CC&R's I'm getting conflicting answers from other Attorney's locally here and from the PM owner as well.. What does this line mean exactly? And how does section (a) apply to this situation?

"Notwithstanding more restrictive limitations placed on the board by the governing documents,"

From the American Heritage dictionary:

not•with•stand•ing (n¼t”w¹th-st²n“d¹ng, -w¹th-) prep. 1. In spite of:

Contrary to my learned brethren it looks to me as if they can raise it 20%, does the D-S Act provide for an Ombudsman that you can contact for a more definitive answer? If not you may have to contact an attorney for his/her take on the matter.

So if this allows a %20 increase this would mean everyone's CC&R's regarding dues just means absolutely nothing?

Derek,

When you are referring to any wording in a Statute, you must read and quote the entire sentence because of the use of "therefore, notwithstanding, and all of the terms that they insert just to drive us bonkers.

Meaning of NOTWITHSTANDING---- prep.
In spite of: The teams played on, notwithstanding the rain.

adv.
All the same; nevertheless: We proceeded, notwithstanding.

conj.
In spite of the fact that; although.

(b) Notwithstanding more restrictive limitations placed on the board by the governing documents, the board of directors may not impose a regular assessment that is more than 20 percent greater than the regular assessment for the association's preceding fiscal year or impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year without the approval of owners, constituting a quorum, casting a majority of the votes at a meeting or election of the association conducted in accordance with Chapter 5 (commencing with Section 7510) of Part 3 of Division 2 of Title 1 of

It is saying that DESPITE MORE RESTRICTIVE LIMITS OF YOUR DOCS,YOUR BOD MAY NOT IMPOSE AN ASSESMENT MORE THAN 20%

They are saying that for instance, if the BOD has a 25%(or whatever) limit, they cannot impose that as it is higher than the 20% limit per the Statute.

DonnaS

I understand and tend to agree with what you are saying too. But I had an attorney look at this who is saying this could allow for the HOA to completely ignore the CC&R's even if they stated an increase less than %20. So in my case the CC&R says %10 per year, when in reality it's %20 because of the Davis Sterling Act. I'm getting mixed answers here though. Is anyone a Real Estate lawyer here that knows what the actual factual "Legal" answer is? Appears this could be argued in court forever since it sounds like a double negative the way it's worded.

I just spoke to Beth Grimm who is a Real Estate Attorney. Check www.californiacondoguru.com

She says Yes this law allows HOA's the right to charge %20 regardless of what the CC&R's say. It's starting to look like this Act was "sold" to the public as just a Cap to stop HOA's from overcharging, but the first word in 1366 (b) "Notwithstanding" provides a loop hole in the law that changed everyone's CC&R's to %20 regardless of whether or not it was over %20. State District Attorney should provide an answer?