DerekB
Posts: 10
Posts: 10
Posted:
California Law states HOA Dues cannot be raised higher than %20 of the previous year. But my CC&R's states it will not be raised more than %10. CC&R's were not changed. Which rate would apply in this situation?
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CC&R Due Increase
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CharlesW1
Posts: 817
Posts: 817
Posted:
DerekB,
Iām pretty positive that state statues supersede your CC&R and bylaws. I could be wrong and Iām 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
Iām pretty positive that state statues supersede your CC&R and bylaws. I could be wrong and Iām 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
GeraldT4
Posts: 1,011
Posts: 1,011
Posted:
DerekB - Ask two people and you'll probably get 2 different answers. You've now asked 10,000 or more. : )
The law permits no more than 20% and your cc&r's comply. I believe the answer is that 10% is the most dues can be raised. It sets the higher standard because it limits the threshold of board spending without owner approval. That's probably a good thing but the community must decide because if the money is needed than a special assessment could be imposed to collect what's necessary. That's not a good thing because dues should be adequate to cover expenses.
The members of your association have the ability to amend the cc&r to raise the dues no more than 10 more percent, by a vote that meets the requirements in your governing documents.
If you haven't done so already do an internet search for Davis Stirling Act for California State Law.
The law permits no more than 20% and your cc&r's comply. I believe the answer is that 10% is the most dues can be raised. It sets the higher standard because it limits the threshold of board spending without owner approval. That's probably a good thing but the community must decide because if the money is needed than a special assessment could be imposed to collect what's necessary. That's not a good thing because dues should be adequate to cover expenses.
The members of your association have the ability to amend the cc&r to raise the dues no more than 10 more percent, by a vote that meets the requirements in your governing documents.
If you haven't done so already do an internet search for Davis Stirling Act for California State Law.
BrianB
Posts: 2,787
Posts: 2,787
Posted:
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%.
If your CC&Rs said 25%, then the California law would limit the amount to 20%.
But you are stuck at 10%.
DonnaS
Posts: 5,596
Posts: 5,596
Posted:
Derek,
Your CC&R states that the limit of increasing dues is 10%.
Californis Davis/Sterling Act states not more than 20%.
Therefore your limit per your CC&Rs is within (under) the State and you are in compliance
DerekB
Posts: 10
Posts: 10
Posted:
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.]"
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.]"
GeraldT4
Posts: 1,011
Posts: 1,011
Posted:
DerekB,
Note the following from the statute: "(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...".
Your governing documents have a more restrictive limitation of 10%. on the regular assessment which is the dues. Doesn't sound like your PM understands.
To raise the more restrictive limitation from 10% to 20% the cc&r would have to be changed, or the Board could fund the matter by a special assessment rather than raise dues and as the statute points out there is no limit on assessment increases for necessary emergency situations. To change the CC&R's the community needs to achieve quorum of 50% to hold the meeting, and a majority of the votes at a meeting or election of the association in accordance with Chapter 5 (commencing with Section 7510) whatever that refers to. You may or may not need more than 50% of the votes entitled to be cast, depends on your docs. and the later referenced sections/chapters. You may need 2/3rds of the votes entitled to be cast to change the cc&r's.
Note the following from the statute: "(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...".
Your governing documents have a more restrictive limitation of 10%. on the regular assessment which is the dues. Doesn't sound like your PM understands.
To raise the more restrictive limitation from 10% to 20% the cc&r would have to be changed, or the Board could fund the matter by a special assessment rather than raise dues and as the statute points out there is no limit on assessment increases for necessary emergency situations. To change the CC&R's the community needs to achieve quorum of 50% to hold the meeting, and a majority of the votes at a meeting or election of the association in accordance with Chapter 5 (commencing with Section 7510) whatever that refers to. You may or may not need more than 50% of the votes entitled to be cast, depends on your docs. and the later referenced sections/chapters. You may need 2/3rds of the votes entitled to be cast to change the cc&r's.
DonnaS
Posts: 5,596
Posts: 5,596
Posted:
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!!!
BrianB
Posts: 2,787
Posts: 2,787
Posted:
fire your property manager. they are wrong.
DerekB
Posts: 10
Posts: 10
Posted:
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?
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?
DerekB
Posts: 10
Posts: 10
Posted:
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 Stirling 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?
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 Stirling 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?
DonnaS
Posts: 5,596
Posts: 5,596
Posted:
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.
GeraldT4
Posts: 1,011
Posts: 1,011
Posted:
Derek - Davis/Stirling permits 20% or a more restrictive limit, your dues were 10% which is more restrictive. If dues were raised to 20% without a vote of owners that is a NO NO. That said, DonnaS is on target with her response to your thought of liability and retroactive compensation. Try to fix it going forward but recognize that it's better to have dues that adequately cover the budgets than special assessments because of restrictions of board spending. If the dues are really going towards the budget items than the money needs to come from the owners. What may need to occur is a vote of your membership to accept the additional 10% dues increase, or a vote of the membership that more broadly approves your upcoming budget. The later of which will more quickly achieve a more desirable end result.
DerekB
Posts: 10
Posts: 10
Posted:
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,"
"Notwithstanding more restrictive limitations placed on the board by the governing documents,"
DerekB
Posts: 10
Posts: 10
Posted:
Typo in the previous post, sorry.. Most people here are saying the CC&R's override the Davis Act if the CC&R's state less than %20..
GlenL
Posts: 5,429
Posts: 5,429
Posted:
Quote:
Posted By DerekB on 02/14/2008 11:04 AM
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,"
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:
notā¢withā¢standā¢ing (nĀ¼tāwĀ¹th-stĀ²nādĀ¹ng, -wĀ¹th-) 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.
DerekB
Posts: 10
Posts: 10
Posted:
GlenL.. This is what I'm starting to think too..? Very confusing.
DerekB
Posts: 10
Posts: 10
Posted:
So if this allows a %20 increase this would mean everyone's CC&R's regarding dues just means absolutely nothing?
GeraldT4
Posts: 1,011
Posts: 1,011
Posted:
DerekB - Okay, scratch what I said about Davis Sterling limiting a dues increase to only 10% because of the word notwithstanding.
"Notwithstanding" means Despite. So Davis means that despite more restrictive limitations (10% dues increase)the BOD may not impose a regular assessment that is more than 20 percent greater than the regular assessment.
Now, while your docs don't impose anything more than 10%, your BOD and MC has chosen to raise the dues by 20%. Which I now read as being permissible according to (b) from Davis Stirling.
(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.]"
"Notwithstanding" means Despite. So Davis means that despite more restrictive limitations (10% dues increase)the BOD may not impose a regular assessment that is more than 20 percent greater than the regular assessment.
Now, while your docs don't impose anything more than 10%, your BOD and MC has chosen to raise the dues by 20%. Which I now read as being permissible according to (b) from Davis Stirling.
(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.]"
DonnaS
Posts: 5,596
Posts: 5,596
Posted:
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
Posts: 5,596
Posts: 5,596
Posted:
Derek,
There is no such thing as the CC&Rs overriding any State Statute. NONE!!! What they have to understand is that your CC&Rs are within or under the limitations of the Statute and therefore you use the CC&Rs. If they were over or in conflict with the Statute, then the Statute prevails.
DerekB
Posts: 10
Posts: 10
Posted:
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 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.
DonnaS
Posts: 5,596
Posts: 5,596
Posted:
Derek,
PLEASE!!!! do not ask a real estate lawyer. Find someone who specializes in HOA law or even contact the Attorney Generals office in Va. They might offer you an interpretation of that horrid Statute. They are the office responsible for the Statutes and their enforcement.
I still am adament that it is NOT "in reality 20%" as you say. And you said it correct, that the wording is so confusing.
DerekB
Posts: 10
Posts: 10
Posted:
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?
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?
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