Dues, Special Assessments, and the 20% Ceiling

The statutory caps🔗

Civil Code § 5605(b) sets two hard limits on what a board can do without a membership vote. In any fiscal year, the board may not:

• impose a regular assessment more than 20 percent greater than the regular assessment for the preceding fiscal year, or
• impose special assessments that in the aggregate exceed 5 percent of the association’s budgeted gross expenses for that fiscal year.

To go beyond either limit, the board must put it to the members and obtain approval of a majority of a quorum, voted by secret ballot.

Notably, § 5605(b) applies “notwithstanding more restrictive limitations placed on the board by the governing documents.” Our CC&Rs contain a 10% cap language, but the statute supersedes it — the operative ceiling is 20%.

There is a condition attached: to use this authority, the board must have complied with Civil Code § 5300, which requires distributing the annual budget report to members 30 to 90 days before the fiscal year ends. The board met that condition. The FY2026 Annual Budget Report is dated November 1, 2025, sixty days before the fiscal year ended — inside the window.

What happened at Jamacha Greens🔗

From the October 23, 2025 regular session minutes:

“The Board reviewed the 2026 draft budget as presented. Upon a motion made, seconded and unanimously carried the Board approved the 2026 draft budget with a 20% increase to the monthly dues amount.”

A 20% increase sits precisely at the statutory ceiling — the largest increase a board can adopt without asking the membership. It appears to be lawful. It is also the maximum available exercise of that authority, adopted at a meeting where two of five directors were absent, and it is a reasonable thing for members to want explained.

Separately, the association imposed a special assessment for insurance premiums during 2025: $329.76 per unit, due between April 1 and October 1, 2025, totalling $63,313.92 across 192 units. It appears on the income statement as account 06330, and in the reserve disclosure as an assessment “already scheduled to be imposed.”

The notice does not leave the basis to inference. It states the assessment “is 5% of the Associations annual budgeted expenses and is in accordance with Civil code Section 5605(b)” — the most a board may assess in a year without a membership vote. Five percent of the $1,266,278.40 budgeted for 2025 is $63,313.92, to the cent. Like the 20% dues increase, it was set at exactly the statutory ceiling.

The notice also gives the cause, with figures: the Board budgeted $350,000 for insurance in 2024-2025 and was billed $544,752 — an increase of nearly $200,000 in a single year. The August 2024 income statement bears that out, showing insurance running $123,450.78 over budget in that month alone.

Source: Special Assessment Notice, Pernicano Realty & Management, February 13, 2025; Income Statement for the month ending August 31, 2024.

Where the money is actually going🔗

The FY2026 Annual Budget Report discloses that the association’s reserves are 28.7% funded. Against a fully funded requirement of $1,896,764, the accumulated balance is $543,587 — a shortfall of $1,353,177, which across 192 units works out to $7,048 per unit.

The report does not leave that figure to interpretation. It prints the scale it is being measured against:

“Industry Standard Measure of Funding Strength: 0% - 30% = WEAK At this level of funding, Special Assessments and deferred maintenance are likely.”

And in the disclosure required by Civil Code § 5300(b)(5), the board confirms it:

“As of the date of this letter, the Board of Directors does anticipate that a special assessment will be required to repair, replace, or restore any major components or to provide adequate reserves. This also covers the heavy increases we have had with HOA insurance coverage as well as making sure the HOA has the funds to properly complete the SB326 balcony [work].”

So a special assessment is anticipated on top of the 20% increase — and the board names what it is for: insurance, and the balcony repairs required by SB 326.

The five-year projection, and what it assumes🔗

The reserve disclosure projects the reserve fund balance over the next five budget years:

End of year	1	2	3	4	5
Projected balance	−$114,430	−$290,428	−$416,232	−$425,502	−$392,124
Percent funded	−8.7%	−23.8%	−35.3%	−33.8%	−28.4%

Source: FY2026 Annual Budget Report, Assessment and Reserve Funding Disclosure Summary dated December 31, 2025, item (7) — the disclosure required by Civil Code § 5570. Prepared by Sonnenberg & Company, CPAs from a Level III reserve study update.

Read the qualifier attached to it. Item (7) projects the balance “taking into account only assessments already approved and other known revenues.” The reserve allocation underlying that projection is the study’s $85,471 — which is the FY2025 allocation of $82,982.40 escalated by the study’s own 3% inflation assumption, and nothing else. It is not the FY2026 budget the board adopted.

The adopted budget allocates considerably more:

Reserve allocation	Per year	Per unit per month
FY2025, actual	$82,982.40	$36
Study Option 2 — current funding +3% (the basis of the projection above)	$85,471	$37
Study Option 3 — recommended	$99,578	$43
Study Option 1 — full annual requirement	$170,882	$74
FY2026 adopted budget, line 09910	$225,058.08	$97.68

Source: FY2026 Annual Budget Report — "2026 Budget – 20% Increase", line 09910 Reserves, and "Reserve Funding Options for the Fiscal Year Ending 2026".

The 20% increase raises $253,255.68. Of that, $142,075.68 — 56% — goes to reserves, lifting the allocation to more than twice what the study recommends and above even the full annual requirement. The five-year projection above shows what would have happened without that decision.

What is still worth asking🔗

The gap is real even so. The study’s recommended plan pairs a rising allocation with $570,000 of special assessments across FY2026–2029, at $61.85 per unit per month — and projects that even then reserves reach only 34.1% funded by the end of year five, still short of the “Fair” band.

That plan was calculated against the study’s own $99,578 option, not against the $225,058 the board actually adopted, and the report does not recalculate it. So the honest question is not whether the board is underfunding reserves — on this budget it is not — but what the anticipated special assessment is now expected to be, given an allocation more than double what the study assumed.

An open question about where the reserves are🔗

The reviewed financial statements for December 31, 2025 contain this note about the accumulated replacement funds:

“These funds are held in separate accounts and are generally not available for operating purposes.”

Management’s own balance sheet for the same date shows $330,115.92 of cash in the reserve account, and a further $209,538.20 recorded as owed to the reserve fund by the operating fund.

We do not know how those two statements are reconciled, and we are not assuming they cannot be. Interfund borrowing is lawful. But Civil Code § 5515 requires the board to document the reason for a reserve transfer in open session and to adopt a written plan to repay it, generally within one year — and no such documentation appears in any minutes we hold. We have a letter for that.

One more thing worth knowing: the independent accountant performed a review, which the report itself describes as “substantially less in scope than an audit,” and it expressly declines to express an opinion. Civil Code § 5305 requires only a review at this income level. Bylaws Art. IV § 4 asks for more — “an independent certified audit,” delivered to each member within thirty days.

Emergency assessments are narrow🔗

Boards sometimes label a project an “emergency” to bypass a membership vote. Civil Code § 5610 defines that term narrowly. An emergency assessment requires an extraordinary expense that is one of:

1. required by a court order;
2. necessary to repair or maintain the development where a threat to personal safety is discovered; or
3. necessary to repair or maintain the development that could not reasonably have been foreseen when the budget was prepared.

For category (3), the board must adopt a written finding, in an open meeting, explaining why the expense was not reasonably foreseeable. Deferred maintenance that has been visible in a reserve study for years is a difficult fit for “could not reasonably have been foreseen.”

This has happened here🔗

On September 25, 2023 the association notified owners of an emergency special assessment:

“an emergency special assessment has been put in place for the annual HOA master policy insurance coverage”

The amount was $104,907.13, divided evenly across the 192 units at $546.39 per unit, due November 1, 2023, with an optional six-month grace period before late fees.

Two things follow from the notice itself. First, the stated purpose is the annual master policy premium — an expense that recurs every year and is budgeted every year, which sits awkwardly against a category (3) finding that it “could not reasonably have been foreseen.” A sharp increase in that premium may well have been unforeseeable; the premium itself was not. Second, the notice records no written finding at all, and we hold no minutes containing one. Civil Code § 5610(c) requires the finding to be adopted by the board at an open meeting and distributed to the members with the notice of assessment.

The 2025 assessment is a different animal, and the distinction matters. That one was not an emergency assessment at all — the notice states plainly that it is the 5% permitted by Civil Code § 5605(b), which is ordinary board authority and needs no § 5610 finding. Nothing about it requires explaining.

What that leaves is the 2023 assessment, and the question is narrow: an emergency assessment under § 5610(c) needs a written resolution, and the notice does not include one. There is a letter for that.

Fees cannot exceed cost🔗

Civil Code § 5600(b) prohibits an association from imposing an assessment or fee that exceeds the amount necessary to defray the costs for which it is levied. Move-in fees, key or sticker charges, and administrative fees are all subject to this rule.

Never simply withhold payment🔗

This is the single most important practical point on this page.

Withholding assessments — even assessments you believe are invalid — hands the association the right to send your account to collections, add costs and attorney’s fees, record a lien, and ultimately pursue foreclosure. It is the fastest way to turn a governance dispute into a threat to your home.

Civil Code § 5658 provides the alternative. A member may pay the disputed amount under protest, in full, while reserving the right to contest it. Doing so:

• removes the delinquency, and with it the lien and foreclosure exposure;
• preserves the member’s ability to bring the dispute in small claims court; and
• under our own Election Rules § 2.1.2(a), preserves the member’s eligibility to run for the board.

The payment must be identified as made under protest, in writing, at the time of payment. There is a template letter for this.