Today’s blog post comes from a story in The Orange Country Register that deals with some questions around assessments. The columnist Kelly Richardson provides some great answers so we thought we would share them with you. Here are the Q’s and A’s:
- In regards to assessments, is there a law that places a cap on the amount or the time frame when dues can go up?
A. Assessments can be increased by the board by up to 20 percent each year without a vote by members, according to Civil Code Section 5605(b). Associations should make sure assessments track the association’s actual expenses. Boards that “hold the line” on assessments usually are deferring maintenance, not depositing money into the reserves, and hiring the cheapest, not the best, for their neighbors.
- If an association does not have a manager, should the board receive a partial or complete waiver of their assessments for providing management services?
A. According to Richardson: only the very smallest associations can realistically avoid professional management. The workload is too much, current events on vendor resources change, and the laws change so frequently, that associations without a good manager may be in trouble without even knowing it.
In regards to the questions above, giving directors a break on their assessments, even a partial break, is compensation. If a director receives compensation, they are no longer a volunteer under the Business Judgement Rule or under the directors and officers insurance and the immunity under Civil Code 5800 that accompanies it. Paying a director no matter what amount is a bad idea.
To read the rest of Kelly Richardson article visit http://www.ocregister.com/articles/association-722599-assessments-foreclosure.html