A California HOA fee increase isn’t something board members or homeowners usually look forward to. But when handled with clarity and care, these decisions can strengthen a community rather than stir frustration.

How California Law Governs HOA Fee Increases

Running a homeowners association isn’t cheap. Insurance premiums rise, utilities fluctuate, and contractors revise their rates. To keep pace, boards may need to consider increasing regular dues from time to time. However, in California, strict rules are in place.

The Davis-Stirling Common Interest Development Act sets the legal foundation. You’ll find the specifics in Civil Code Section 5605. It limits how much an HOA can raise fees each year without member approval.

Here’s the gist of it: a California HOA fee increase cannot exceed 20% of the regular assessment for the prior fiscal year, unless a majority of members vote to approve a larger jump. This ensures boards can’t make unchecked financial demands on owners.

Also, associations must follow proper notice procedures. Boards are required to give homeowners at least 30 days’ advance written notice of any fee increase or new special assessment. And notice must be delivered by first-class mail or, if the owner has agreed, by email.

So, can a California HOA fee increase happen quietly, behind closed doors? The answer is “no.” The law calls for transparency, and rightly so.

Why Boards Raise Regular Fees

Of course, no board raises fees simply because it can. The goal is always to cover necessary expenses and maintain the community’s financial stability. But it’s not always apparent to homeowners why their dues may be rising.

Regular assessment increases generally involves:

• Inflation adjustments: A gallon of gas or a truckload of mulch doesn’t cost what it did five years ago. Maintenance and operational costs steadily climb.
• Reserve funding: California law (specifically, Civil Code Section 5550) requires HOAs to maintain adequate reserves for major repairs and replacements. If prior funding has lagged, fees may need to catch up.
• Vendor cost increases: Landscaping services, janitorial work, pool maintenance—vendors often adjust their pricing annually.
• Regulatory changes: New local or state mandates (like seismic retrofitting, ADA improvements, or fire mitigation requirements) can drive up expenses.

A California HOA fee increase is the primary tool for boards to maintain consistent, reliable funding for these ongoing needs. But what if there’s a sudden, big-ticket expense the budget can’t cover? That’s where special assessments come in.

HOA Fee Increase vs Special Assessment: The Key Difference

It’s easy to think of a fee increase and a special assessment as two versions of the same thing. But they serve very different purposes.

A HOA fee increase is intended to cover ongoing operational costs, which are the predictable, recurring expenses that keep the lights on and the gates operational. Meanwhile, a special assessment covers unexpected or extraordinary costs.

Sometimes it helps to see things side by side. Here’s a simple table that sums up how a HOA fee increase differs from a special assessment:

Aspect	California HOA Fee Increase	Special Assessment
Purpose	Covers ongoing operational and maintenance costs	Required if the assessment exceeds 5% of budget
Frequency	Typically annual (part of regular budget cycle)	Occasional, as specific needs arise
Legal Limit (without vote)	Emergency repairs, legal settlements, and regulatory mandates	Up to 5% of current year’s gross budgeted expenses
Requires Membership Vote?	Up to 20% of the prior year’s regular assessment	Only if the increase exceeds 20%
Notification Requirement	At least 30 days written notice to homeowners	At least 30 days written notice to homeowners
Common Uses	Inflation adjustments, reserve funding, vendor increases	Increases monthly dues in the future
Impact on Homeowners	Increases monthly dues going forward	One-time payment (can sometimes be broken into installments)
Predictability	Planned and anticipated	Typically unplanned or due to unforeseen needs

How Much is Acceptable for an Increase?

No one enjoys telling neighbors that dues are going up. But when boards stay within legal guidelines and communicate transparently, fee increases are not only acceptable—they’re necessary.

In California, without a member vote, the maximum annual increase is 20% of the prior year’s regular assessment amount.

Now, just because the law allows up to 20% doesn’t mean every board should automatically reach for that limit. Financial stewardship means raising fees only as much as necessary to maintain services and reserves.

When is a Vote Needed?

If the community needs a larger increase, the board can propose a higher rate. However, this requires a majority approval of the membership (often 50% + 1 of those voting).

Getting homeowners to approve such increases takes skillful communication and clear evidence of need. Boards should prepare detailed breakdowns of projected costs and how they’ll benefit the community.

When to Use a Special Assessment Instead

Even the best-planned budgets can’t anticipate every challenge. Sometimes, a special assessment is the right move.

You might lean toward a special assessment when:

• The required funding is large and nonrecurring
• The need arises mid-year, when annual fee changes aren’t practical.
• The expense is tied to damage recovery or legal order.s
• Reserves are insufficient, and tapping them would be unwise

The Davis-Stirling Act also governs special assessments. If the proposed special assessment exceeds 5% of the current year’s gross budgeted expenses, a majority of members must approve it.

Smaller special assessments can be imposed by the board without a member vote, provided notice requirements are met.

Communicating Fee Increases And Assessments

Boards often underestimate the importance of tone and timing when rolling out fee increases or special assessments. It’s not just about sending a legal notice—it’s about shaping how that notice is received.

A few essentials:

• Provide context: Don’t just announce the number. Explain the why—link it to specific needs or future benefits.
• Acknowledge impact: Recognize that any increase affects household budgets. This human element builds trust.
• Offer contact points: Encourage members to reach out with questions or concerns. Silence breeds suspicion.
• Hold open forums: Give homeowners a chance to discuss and understand the decision, even if they can’t vote on it.

A California HOA fee increase framed with openness and clarity lands much better than one announced by a dry legal notice alone.

Tips for Smoother Increases and Happier Communities

No one is thrilled when fees rise or a new assessment hits. But thoughtful leadership makes a difference. Here are a few tips:

• Plan ahead: Predictable, modest annual increases are better than large, infrequent jumps.
• Keep reserves healthy: Well-funded reserves can help reduce reliance on special assessments.
• Educate homeowners: Many owners don’t realize that HOA fees fund critical services they value daily.
• Use clear, jargon-free language: Legal notices are required, but supplement them with newsletters or friendly FAQs.
• Demonstrate fiscal discipline: Share past successes in cost control or savings when announcing a needed increase.

Common Mistakes Boards Make

Even well-meaning boards can stumble. Watch for these pitfalls:

• Underestimating the need: Holding fees too low for too long can cause financial strain later. Small annual increases are healthier.
• Ignoring member sentiment: Gauge how owners may react. Sometimes, a town hall ahead of a big vote makes all the difference.
• Failing to document: Any board decision about a California HOA fee increase or special assessment should be fully documented in meeting minutes, with the rationale explained.
• Skipping communication: No one likes surprise expenses. Keeping members informed helps maintain goodwill.
• Not seeking expert input: Lean on your management company, CPA, or reserve study provider when evaluating funding needs.

Smart Increases, Stronger Communities

At some point, every board will need to weigh a California HOA fee increase or special assessment. The key is handling it with foresight, transparency, and a genuine respect for how these decisions affect neighbors’ lives.

Need professional support in budgeting for your HOA community? Personalized Property Management offers HOA management services around Southern California. Call us at 760-325-9500 or email us at info@ppminternet.com for more information!

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