If an association decides to implement the $400 annual homeowners assessment to avoid complying with all of the details in CCIOA, does it prohibit one-time, or special assessments?
CCIOA states that if a planned community (i.e., single family or townhome community) created in this state after July 1, 1998, provides in its declaration, that the annual average common expense liability of each unit restricted to residential purposes, exclusive of optional user fees and any insurance premiums paid by the association, may not exceed $400, as adjusted per CCIOA, it is only subject to a very limited number of provisions of CCIOA. Such a limitation must be in the declaration.
CCIOA defines common expenses as expenditures made or liabilities incurred by or on behalf of an association, together with any allocations to reserves. This definition is very broad, and would include expenditures for capital improvements or other major expenses which may be funded through a special assessment. Accordingly, the $400 cap would limit the total amount of assessments imposed on owners in any given year, regardless of whether the assessment takes the form of a regular, annual assessment or a one-time special assessment, or both.
If an association is a limited expense community, and it imposes an assessment that exceeds the statutory cap, that does not necessarily mean the association is suddenly subject to all of CCIOA. Rather, any assessments imposed in excess of the cap may be unenforceable and uncollectible.
Also, note, there is a similar exemption for planned communities created on or after July 1, 1992, but before July 1, 1998, if the declaration provides that the annual average common expense liability of each unit restricted to residential purposes, exclusive of optional user fees and insurance premiums, may not exceed $300.
Community Essentials - December 2006
CCIOA defines common expenses as expenditures made or liabilities incurred by or on behalf of an association, together with any allocations to reserves. This definition is very broad, and would include expenditures for capital improvements or other major expenses which may be funded through a special assessment. Accordingly, the $400 cap would limit the total amount of assessments imposed on owners in any given year, regardless of whether the assessment takes the form of a regular, annual assessment or a one-time special assessment, or both.
If an association is a limited expense community, and it imposes an assessment that exceeds the statutory cap, that does not necessarily mean the association is suddenly subject to all of CCIOA. Rather, any assessments imposed in excess of the cap may be unenforceable and uncollectible.
Also, note, there is a similar exemption for planned communities created on or after July 1, 1992, but before July 1, 1998, if the declaration provides that the annual average common expense liability of each unit restricted to residential purposes, exclusive of optional user fees and insurance premiums, may not exceed $300.
Community Essentials - December 2006
