By David Swedelson and Cyrus Koochek, Community Association Attorneys at SwedelsonGottlieb
Many California condominium and homeowner associations’ CC&Rs permit the Board of Directors, on behalf of an association, to impose a reimbursement assessment/monetary charge on a member for the cost of repairing damage caused by a member (or the member’s guest or tenant) to association common areas and facilities. In addition to an association’s authority under the CC&Rs to impose a reimbursement assessment, former California Civil Code Section 1367.1(d) stated that “[a] monetary charge imposed by the association as a means of reimbursing the association for costs incurred by the association in the repair of damage to common areas and facilities…may become a lien against the member’s separate interest enforceable by the sale of the interest…”
Unlike other monetary charges that can be imposed on members, such as monetarily fining a member for a rule violation, reimbursement assessments may be enforced by recording a lien on a member’s property. And effective January 1, 2014, the new Davis-Stirling Act now expressly requires what we have been advising our clients for years, that Boards must hold a hearing before they can impose a fee or penalty on an owner for the cost of repairing damage to the common area.
Effective January 1, 2014, new Civil Code Section 5855 requires that a Board must hold a hearing prior to imposing a monetary charge as a means of reimbursing the association for costs incurred by the association in the repair of damage to common area and facilities caused by a member or the member’s guest or tenant. This hearing requirement previously existed for the imposition of any fee or penalty, but it was not stated in the code section dealing with reimbursement assessments itself. The State Legislature has now specifically included common area reimbursement damages in the text of the code section that has the hearing requirement.
This is important for a couple reasons. First, this addition seems to reemphasize the power that a Board has to levy reimbursement special assessments (that are not imposed on other owners) and ultimately record a lien on a member’s property when the member (or the member’s guest or tenant) has damaged the association’s common area and facilities. Second, the language makes clear that a Board must always provide a disciplinary hearing in the event damage is caused to a common area, and it must provide this hearing prior to levying any reimbursement assessment.
Boards are encouraged to confer with legal counsel regarding the process and procedure of a hearing or imposing a reimbursement special assessment.
SwedelsonGottlieb represents community associations throughout California. The firm can be contacted via email: info@sghoalaw.com. Or telephone: 800-372-2207