State Law Supersedes CC&Rs; Budget Limit
QUESTION: I question your statement in your July 29 column that the state law takes precedence over more restrictive controls in the association’s legal documents (regarding the percentage of budget increase that is legal).
The California Civil Code, Section 1366, limits the regular assessment increase to 20% “notwithstanding more restrictive limitations placed on the board by the governing documents.”
Our association’s CC&Rs; limit the annual assessment increase imposed by the board to 10%. Since the CC&Rs; are a contract among the homeowners, I question if Section 1366 can nullify that contract.
Do you have a legal opinion supporting your statement?
ANSWER: Thank you for asking for clarification. You are not the only person who is confused by the wording of this law. The confusion arises because of a misunderstanding of the meaning of the word notwithstanding.
Notwithstanding is a legal term that means “in spite of” or “regardless of.” My dictionary uses the following example: “He bought it notwithstanding the high price.”
James P. Lingl, an attorney in Camarillo, states that even the California Department of Real Estate’s Common Interest Development Brochure errs in its explanation of limitations of the board’s authority in this particular section of the law.
Lingl appeared as an expert witness at the July 31 hearings conducted by the state Legislature’s Assembly Select Committee on Common Interest Subdivisions. He pointed out this error during his testimony at the hearing.
I have attended many legal seminars where this section of the law was thoroughly explained by nationally recognized experts in the field of community association law.
Even though I am not an attorney, I am certain that I can stand by my previous advice, which was: According to California law, the board has the right to impose a 20% increase over the prior year’s regular assessment. The law takes precedence over more restrictive controls in your association’s legal documents.
Owner Must Pay Fee While Claim Unsettled
Q: The board of directors of my 28-unit homeowners association has signed a contract with a company that is owned by the board president.
This is just one example of the questionable decisions that are being made. I have asked to see copies of the minutes to find out if the whole board knows about the work that is being done.
I told the president that until I found out how much money had been spent and received copies of the minutes, I would not pay my monthly assessments. That was over two months ago, so I now owe assessments for three months.
Today I received a letter from the management company that says I have to pay my assessments or the association could place a lien on my unit.
What are my rights? Do I have to pay my assessments even though the board is mismanaging the association’s money?
A: Though there appears to be a conflict of interest here, you must pay your assessments. I am sure that the declaration of your association will not allow you to stop paying just because you are dissatisfied with the board. Do not ignore the letter from the management company.
You have the right to obtain the information that you requested. If your contact with the president was verbal, then write to the association board and send it to the management company along with your check for the unpaid assessments. Request a response by a specified date.
While you are waiting for a response, contact some of the other board members to see what they know about the board president’s company doing association work. It could be that the president is saving the association money. Perhaps there are competitive bids that will show that the president is doing the association a favor.
If you feel that you already have enough information and that you are ready to confront the board, call the management company to find out when the next board meeting is scheduled. Then ask to have the matter placed on the agenda for the next board meeting. This also should be put in writing.
If you are ignored, the only way to force the board or the management company to respond to your requests is to contact an attorney who can explain your options.
Hickenbottom is past president of the Greater Los Angeles chapter of the Community Associations Institute (CAI), a national nonprofit research and educational organization. She welcomes readers’ questions, but cannot answer them individually. Readers with questions or comments can write to her in care of “Condo Q&A;,” Box 5068, Thousand Oaks, Calif. 91360.
