Community Insider Fall 2017 - Page 38

THE 4-1-1 ON EMERGENCY ASSESSMENTS By Laurie S. Poole, Esq., CCAL W hen is the last time your community needed to impose an emergency assessment? Never? If your community is facing extraordinary expenses that were not anticipated, imposing an emergency assessment may be justified. Before imposing an emergency assessment, in addition to consulting with legal counsel, it is important to understand the specific requirements of the law that governs levying of emergency assessments. Under Civil Code Section 5605, in order to raise regular assessments by more than 20% of the previous year’s assessment or impose a special assessment that is more than 5% of the current fiscal year’s budgeted gross expenses, approval of the membership is required. However Civil Code Section 5610 recognizes that there may be emergency situations where an association needs to increase regular assessments or impose special assessments without membership approval. Section 5610 sets forth three situations that are deemed to constitute an emergency: 1. An extraordinary expense required by an order of a court. 2. An extraordinary expense necessary to repair or maintain the common interest development or any part of it for which the association is responsible where a threat to personal safety on the property is discovered. 3. 38 | An extraordinary expense necessary to repair or maintain the common interest development or any part of it for which the association SAN DIEGO COMMUNITY INSIDER | FALL 2017 is responsible that could not have been reasonably foreseen by the board in preparing and distributing the annual budget report under Section 5300. Common examples of the first situation are money judgments imposed upon an association. The second situation depends on the specific circumstances. For example, the associate may discover that there are structurally unsafe elements (e.g., balconies and stairways) in the project that constitute a threat to personal safety. The third situation will also depend on the specific facts. For example, as a result of this past winter’s rains, water intrusion incidents may have occurred and repairs are needed to be made to common area elements in an attempt to prevent future issues. Under the first and second emergency situations, the board is not required to make any findings or resolutions. However, the decision to impose an emergency assessment must be made in an open board meeting. Be sure to include the imposition of the emergency assessment on the notice/agenda that is provided to the members in advance of the meeting. 1 While the statute does not require specific findings under those two situations, the minutes of the meeting where the emergency assessment was imposed should reflect the reasons why the situation constitutes an emergency under Section 5610(a) and (b). Under the third emergency situation, Section 5610(c) specifically requires that the board pass a resolution containing the following written findings: • The necessity of the extraordinary expense involved; and • Why the expense was not, or could not have been, reasonab