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A GUIDE TO EMERGENCY SPECIAL ASSESSMENTS
By Shelby D. Bennett, Esq.
What is an emergency special assessment?
An emergency special assessment is an assessment imposed pursuant to Civil Code Section 5610 to address particular short-term cash flow requirements. An emergency special assessment does not require a vote of the membership, even if it exceeds the 5% threshold set forth in Civil Code Section 5605.
What are the requirements for an emergency special assessment?
The assessment must be necessary to address an “emergency” as defined in Civil Code Section 5610. For the purposes of this provision, an emergency is:
- An extraordinary expense required by an order of a court.
- An extraordinary expense necessary to operate, repair, or maintain the common interest development (CID) or any part of it for which the association is responsible where a threat to personal health or safety or another hazardous condition or circumstance on the property is discovered.
- An extraordinary expense necessary to repair or maintain the CID or any part of it for which the association is responsible that could not have been reasonably foreseen by the board in preparing and distributing the annual budget report under Section 5300.
- However, before the imposition or collection of an assessment under this subdivision, the board shall pass a resolution containing written findings as to the necessity of the extraordinary expense involved and why the expense was not or could not have been reasonably foreseen in the budgeting process, and the resolution shall be distributed to the members with the notice of assessment.
If the emergency falls into the third category above, the board must prepare a board resolution outlining its findings and the reason for the expense. This resolution must then be distributed to the membership along with the notice of assessment.
When do associations use emergency special assessments?
Emergency special assessments have been used in recent years to address issues related to:
- Unprecedented rains which exposed or caused leaks in aging buildings;
- Increased insurance premiums;
- Repairs related to wildfires; and
- Repairs related to balcony inspections.
What to do if you think an association needs to impose an emergency special assessment?
- Determine which of the 3 categories the assessment would fall into;
- Contact legal counsel to confirm that the situation constitutes an “emergency” as defined by the Civil Code;
- If a board resolution is required, have legal counsel prepare the board resolution;
- Hold a board meeting to impose the special assessment, and if necessary, sign the board resolution;
- Distribute the notice of assessment.
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