Senior Feels Trapped in Spiral of Escalating Assessments
Question: I am 83 and having trouble understanding what is going on where I live and how I ended up in this situation.
When I bought my townhouse 25 years ago in Culver City, my monthly dues were affordable at $60 a month. There are 35 units here, and $60 from everyone took care of everything.
I thought once I paid my mortgage off 18 years ago that I would be fine to live here until I die, as I have no kin.
I never dreamed of the kinds of problems that plague me today while I struggle to keep my house and survive. I live off Social Security and interest from my savings of $65,000. Today my dues are $200 a month.
Most people my age have moved away, and a younger generation has moved in. Right away they raised the dues. Then they hired management companies. They kept losing lots of money but didn’t seem to mind or explain how the management companies lost our money or why they keep raising the dues. These young owners seem not to have a care in the world, and money seems to be no object.
Yesterday I got a paper in my mailbox that said in big letters, “Notice, your TV was too loud. Pay $50.” Last week I got a notice that said, “Your trash can was out past noon after garbage pickup day. This is unsightly and decreases the property value for all the other homeowners. Pay $75.”
I never heard of fines until this young generation took over the whole complex. This last notice I got said the board is assessing everybody $3,000 for “improvements.” What does this mean, and what will happen to me? I can’t afford to pay this kind of money. What can I do?
Answer: Buyers in common interest developments are rarely told that regular assessments charged to homeowners when they first move in will be raised each year thereafter and almost never remain at the same level as when the unit was purchased.
Two types of assessments are specified in the California Civil Code, “regular” and “special.” Regular assessments involve day-to-day operations. Special assessments, according to the law, are necessary to “repair, replace or restore any major component or to provide adequate reserves therefor.”
Under the law, regular monthly assessments can be raised up to 20% per year by the board without approval by owners. This means regular homeowners association assessments can more than double in five years without a vote.
Unless the special assessment is for an emergency, a majority vote of the owners is necessary before the assessment is approved.
However, if the total of special assessments in any fiscal year is less than 5% of the gross budgeted expenses for that year, no homeowner vote is required before they can be assessed.
Despite the promise of participation in homeowner association affairs as the result of “membership,” assessments can be raised without homeowner approval and must be paid. This predictable raise in regular assessments must be factored into any decision to purchase in a common interest development.
Owners who fail to pay either type of assessment risk having their property foreclosed on by the homeowners association to pay those assessments.
Fines levied by a board for any reason are not assessments, and they cannot be the basis for foreclosure by the board. These penalties can become liens against the individual owner’s property but may not form the basis for a sale of the owner’s property to satisfy those liens.
Requirements set forth in Civil Code Section 1363 regarding creation and assessment of monetary penalties must be followed.
Before any fines can be assessed, board members must give you notice of their intent, inform you of the meeting date to consider the fine and, if you request, hold a hearing. Other notice provisions are required after the meeting. Each requirement must be followed, or the “fine” is invalid and you may pursue damages.
As there are numerous charges and fees that can be imposed against an owner in addition to assessments, homeowners are urged to consult with an attorney who specializes in this type of law before their purchase, or at any time such fees become an issue. Ignoring such items could cost the homeowner his or her property.
Stephen Glassman is a writer and an attorney in private practice specializing in corporate and business law. Donie Vanitzian, J.D., is a writer and arbitrator and manages commercial property. Both live in common interest developments and have served on various association boards. Please send questions to: Common Interest Living, P.O. Box 451278, Los Angeles, CA 90045 or e-mail your queries to cidcommonsense@aol.com.
