Will Trilogy HOA Dues Go Up? Read the Reserve Study

Almost every Trilogy buyer asks me some version of the same question before they write an offer: are the dues going to jump? It's a fair question, and most of what you'll find online is a guess. The association has to answer it in writing every year, on a one-page form that almost nobody opens.

Find item 3 on the Assessment and Reserve Funding Disclosure Summary. It asks whether the reserves will cover major repairs over the next 30 years, yes or no. Without a member vote, a California HOA board can raise regular dues up to 20% a year, or about $20 more a month for every $100 you pay now.

What California HOA law sets

• Reserve study inspection: at least once every three years, reviewed by the board every year
• The disclosure summary: goes out with the annual budget report
• Dues increase without a member vote: up to 20% over the prior year
• Special assessments without a member vote: combined, up to 5% of that year's budgeted gross expenses

What a reserve study is

A reserve study is the association's long-range repair budget. It lists the big shared things that wear out on a schedule, like pool equipment, roofs on shared buildings, and irrigation, and asks two questions. How much life is left, and what will it cost to replace?

California's HOA law, the Davis-Stirling Act, says the study has to cover the major components with less than 30 years of useful life left. It then works out how much the association should set aside each year and lays out a plan for paying for it all.

At least once every three years, someone has to walk the property and do a visual inspection of those components. In between, the board reviews the study every year and adjusts. If the inspection behind the study you're handed is older than that, ask why.

The one page that answers the question

Once a year the association sends owners an annual budget report, and a standard form has to go with it: the Assessment and Reserve Funding Disclosure Summary.

Three parts of it matter most to a buyer:

• Item 2 lists assessments that have already been scheduled but aren't due yet, with the date, the amount, and the purpose.
• Item 3 asks whether, based on the latest reserve study, the reserves will be enough each year to cover major repairs over the next 30 years. Two boxes: yes or no.
• Item 4 applies if item 3 is no. It says roughly what extra assessments it would take, when, and how much per home.

The budget report around it also has to say in writing whether the board has decided to put off any major repairs, and whether it expects a special assessment. Read those two statements alongside the form.

If you're buying, you'll usually see all of this in the seller's resale packet. I cover what else is in that packet in my Trilogy HOA resale disclosure guide.

How much can dues go up without a vote?

Under Civil Code § 5605, the board can't raise the regular assessment more than 20 percent over the prior fiscal year without approval from a majority of a quorum of members at a meeting or election. On every $100 a month you pay now, that's up to $20 a month more in a single year.

Special assessments have their own cap. Combined, they can't exceed 5 percent of the association's budgeted gross expenses for that year without the same member vote.

So "they can't just raise it" isn't quite right. Twenty percent is real headroom. But a board also can't hand owners a large special assessment on its own say-so, outside of narrow emergencies the law carves out. If a notice for an emergency assessment ever shows up, ask what it's based on.

What I do with these documents

Sellers, the same documents go to your buyer in the resale packet anyway. Read them before the buyer's agent does.

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Looking at a Trilogy home? Send me the address and I'll go through its disclosure summary with you before you write the offer, item 3 first. Call or text (925) 200-0717. It's my own phone.

This post is general information, not legal or tax advice. Your association's governing documents can add their own rules, so for a question about a specific home or assessment, talk with a California real estate attorney, your CPA, or the association's management company.

Margie Lupo, Broker Associate, SRES® · eXp Realty of Northern California, Inc. · DRE #01193496 · Brokerage DRE #02188495 · Equal Housing Opportunity

Sources

• California Civil Code § 5550 — what a reserve study covers and how often
• California Civil Code § 5570 — the disclosure summary form
• California Civil Code § 5605 — limits on dues increases and special assessments