SPECIAL ASSESSMENTS

“If a special assessment is passed by the members for a specific project (deck repairs) and the final costs are less than the special assessment, can the difference be put in reserves or must it be returned to the members?”

Yes, provided that the voting materials said that excess funds would be put into reserves. The voting documents can authorize the board to use excess funds for reserves or other purposes (and, even if they don't, depending on the facts, such a use might be defensible). Refunding excess funds can raise disputes as to whether the monies should go to those who paid (possibly former members) versus those who are then current members and who may not have contributed to the special assessment. Before considering a refund, the association should check with its CPA to see if there are any tax consequences to the association or members and if so to make proper disclosures if the refunding plan is implemented.

“Under what circumstances can my association levy special assessments?”

Special assessments may be levied by the board, without member approval and the members may also approve special assessments. State law requires an association to levy assessments if necessary to meet the association's expenses and he operating budget distributed to members must disclose whether the board of directors has determined or anticipates levying a special assessment. Boards may levy special assessments in amounts which, in the aggregate, do not exceed 5% of the association's gross budgeted expenses for the current fiscal year. Boards may also levy emergency special assessments where warranted. Members may approve special assessments in an amount higher than what the board is authorized to levy per the Civil Code and the governing documents. (Civil Code §§1365(a), 1366(b) and (e))