HOA Assessment Increases — California Civil Code §§ 5600–5625

Most California condominium and planned-development associations are governed by the Davis-Stirling Common Interest Development Act (Civil Code §§ 4000–6150). Its assessment article sets a basic rule — the association levies regular and special assessments sufficient to meet its obligations (§ 5600(a)) — and then limits how fast the board may raise them on its own. The central limit is § 5605.

In short, the board may not impose a regular assessment more than 20 percent above the preceding fiscal year's, or special assessments that in total exceed 5 percent of the association's budgeted gross expenses for the year, unless a majority of a quorum of members approves (§ 5605(b)). More restrictive limits in the governing documents still apply to the board (§ 5605(b)).

An "association" under the Act is a nonprofit corporation or unincorporated association created to manage a common interest development (§ 4080). Except as provided in § 5605, the association must levy regular and special assessments sufficient to perform its obligations under the governing documents and the Act (§ 5600(a)).

The same article sets an outer limit: an association may not impose or collect an assessment or fee that exceeds the amount necessary to defray the costs for which it is levied (§ 5600(b)).

Notwithstanding more restrictive limits in the governing documents, the board may not, without member approval, (1) impose a regular assessment that is more than 20 percent greater than the regular assessment for the preceding fiscal year, or (2) impose special assessments that in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year (§ 5605(b)). The approval needed is that of a majority of a quorum of members, under § 4070, at a member meeting or election (§ 5605(b)).

Separately, any annual increase in regular assessments — even one under the 20 percent cap — may not be imposed unless the board has complied with the annual budget-report requirements described below for that fiscal year, or has obtained the same majority-of-a-quorum approval (§ 5605(a)).

Read the limits as a floor on member protection, not as permission: if the governing documents set a lower cap or require a vote at a lower threshold, those more restrictive limits still bind the board (§ 5605(b)).

Where the Act requires an action to be approved by a majority of a quorum of the members, the action must be approved by an affirmative vote of a majority of the votes represented and voting in a duly held election in which a quorum is represented, and those affirmative votes must also make up a majority of the required quorum (§ 4070).

For purposes of § 5605, "quorum" means more than 50 percent of the members (§ 5605(d)(3)).

Section 5605 does not limit assessment increases necessary for emergency situations (§ 5610). The statute defines an emergency as any one of three things: an extraordinary expense required by a court order (§ 5610(a)); an extraordinary expense needed to operate, repair or maintain the development, or a part the association is responsible for, where a threat to personal health or safety or another hazardous condition is discovered (§ 5610(b)); or an extraordinary expense to repair or maintain the development that could not reasonably have been foreseen when the board prepared and distributed the annual budget report (§ 5610(c)).

The third category carries a procedure. Before imposing or collecting an assessment under it, the board must pass a resolution with written findings on why the expense is necessary and why it was not or could not have been reasonably foreseen in the budgeting process, and the resolution must be distributed to the members with the notice of assessment (§ 5610(c)).

An association must distribute an annual budget report 30 to 90 days before the end of its fiscal year (§ 5300(a)). To impose an annual regular-assessment increase without a member vote, the board must have complied with the parts of that report covering the pro forma operating budget, the summary of reserves, the statement on deferred repairs or replacements, the statement on anticipated special assessments, the statement on how reserves will be funded, the statement on the procedures used to calculate reserves, and the statement on outstanding loans (§ 5605(a); § 5300(b)(1), (2), (4)–(8)).

The association must also give individual notice of any increase in regular or special assessments to the members, not less than 30 nor more than 60 days before the increased assessment becomes due (§ 5615).

Deed-restricted affordable units. For an association that records its original declaration on or after January 1, 2025, the board may not impose a regular assessment on an owner of a deed-restricted affordable housing unit that is more than 5 percent plus the percentage change in the cost of living, not to exceed 10 percent greater than the preceding regular assessment (§ 5605(c)(1)(A)). The subdivision has exceptions, including developments of 20 units or fewer and developments where the share of deed-restricted affordable units exceeds the levels the statute describes (§ 5605(c)(3)).

Judgment creditors. Regular assessments are exempt from execution by a judgment creditor of the association only to the extent necessary to perform essential services such as paying for utilities and insurance (§ 5620(a)). The exemption does not apply to consensual pledges, liens or encumbrances approved by a majority of a quorum of members, to a state tax lien, or to a lien for labor or materials supplied to the common area (§ 5620(b)).

Taxable-value assessments. An association may not levy assessments on separate interests based on their taxable value unless it did so on or before December 31, 2009, in accordance with its governing documents; an association responsible for paying taxes on the separate interests may base that portion of assessments on taxable value (§ 5625(a), (b)).

This page is general information, not legal advice. Read the enacted text linked below and your association's own governing documents, and talk to a lawyer about a specific assessment.