More details to this question:
We owner a apartment building with 8 units in Cotati CA with a H.O.A.. Last year our fees were 223.55 a month, each year they go up around 20% with no notice. For 2016 they are asking for 479.42, over a 100% increase. I called the H.O.A. contact and was told they made a mistake over the last 10 years and are rising it to the proper amount. Also the H.O.A. is a owner of one of the buildings on the property, which to me is a conflict of interest. What are the rules on a monthly fee increase.
1 ANSWER
The Davis-Stirling Act prohibits any increase in regular assessments greater than 20% of the regular assessments for the previous fiscal year, unless approved by a majority of the owners. Even increases of 20% or less are prohibited, unless either approved by a majority of the owners, or 7 specific financial disclosures are provided, including an explanation of the increase and financial back-up to support the explanation.
It could be that a letter from a lawyer might be enough to get the HOA to comply with the requirements of the Davis-Stirling Act.
Your CC&Rs are supposed to provide for Internal Dispute Resolution and for Mediation. I recommend that you exercise both of these rights. If the CC&Rs do not include such sections, then the Davis-Stirling Act provides default provisions which apply to all HOAs which don't have them.
Don't stop paying your assessments. The HOA can impose late charges and penalties, place a lien on your unit, and then sell your home. Going to court to stop that is very expensive. If it turns out that the HOA somehow got the assessments approved legally, then you would not only lose your home, but you would owe the HOA for all the past due assessments, late charges, penalties, and the HOA's attorney fees and expenses. The attorney fees are likely to be a lot more than the assessment overcharges.
That's why you MUST go through the Internal Dispute Resolution and Mediation process first. If that doesn't work, then the next step is arbitration or a lawsuit. Check your CC&Rs.
Watch out for small claims court. The plaintiff who chooses small claims court cannot appeal that court's decision, but the defendant can appeal and automatically there will be a whole new trial in Superior Court with lawyers.
Maybe the HOA has spent money poorly. Maybe money has been misspent or lost. But maybe there are problems at the property that need fixing. In order to have a safe and pleasant place to live, the owners need to spend that money. Use the procedures described above to find out.
Dana Sack
Answered on Dec 31st, 2015 at 10:37 AM