Operator: 911. What’s Your Emergency?

Caller: Help! We need an Assessment! It’s an EMERGENCY!

By Zer Iyer, Esq.

This article first appeared in our Communicator Magazine, Summer 2025 Edition.

Unexpected expenses. Unanticipated cost increases. Unforeseen repairs. Unprecedented rate increases. These are examples of all‐too‐common situations affecting homeowner associations in the state and the all‐too‐common response of most boards to levy an emergency assessment. An association needs money, doesn’t have the money and that board is pretty sure the membership won’t approve the assessment on their own, so an emergency assessment makes sense, right? I mean, what could go wrong? Actually, a lot could go wrong and in fact, a lot often does go wrong when boards decide to levy emergency assessments. The purpose of this article is to explain what an emergency assessment is, when it is appropriate to levy and, perhaps most importantly, how to approach an emergency assessment to minimize challenges by homeowners. 

First, a quick reminder about assessment limitations. Civil Code section 5605 provides that association boards may, on an annual basis, increase regular assessments up to 20% from the preceding fiscal year and levy a special assessment of up to 5% of the association’s budgeted gross expenses for the current fiscal year. Boards may levy assessments in these amounts without membership approval. However, any assessment increase in excess of those amounts requires membership vote and approval.

The only exception to this rule is contained at Civil Code section 5610, which discusses emergency assessments. In that section, association boards aren’t limited by the percentage thresholds mentioned above, nor do they need membership approval. However, an “emergency situation” has to exist in order for this additional power to be triggered. An “emergency”, to be clear, isn’t just a project that urgently needs to be addressed. An “emergency situation” under the Civil Code is far more limited in nature and certain criteria must be met in order to utilize this power. An “emergency situation” is any one of the following:

1. An extraordinary expense ordered by a court;
2. An extraordinary expense necessary to operate, repair, or maintain any part of the development for which the Association is responsible where a threat to personal health or safety, or a hazardous condition or circumstance on the property is discovered; or
3. An extraordinary expense necessary to operate, repair or maintain any part of the development for which the Association is responsible which could not have been reasonably foreseen by the board when preparing and distributing the annual budget report.

Now let’s analyze each “emergency situation” under Civil Code section 5610 and what they might look like in the real world. 

EMERGENCY SITUATION A

Levying an emergency assessment when there is a court order is a “slam dunk.” If a court orders an association to take some action for which it doesn’t have money, then a board has no other choice than to generate the income needed to perform that action. Levying an emergency assessment gives the raise the money needed – with‐ out limitation – and without membership approval. Ultimately, if a Judge issues an order to an association, compliance is not optional so boards must have the ability to do what is necessary to meet its obligations under the court order. 

EMERGENCY SITUATION B

Levying an emergency assessment when there is a threat to personal health, safety or the discovery of a hazardous condition on the common area (or any area maintained by the Association) is slightly more complicated to navigate. Although the categories of “personal health”, “safety” and “hazardous condition” seem broad enough to cover many situations that can occur at a development, it is imperative that boards have some objective evidence upon which it can rely when levying an assessment using this option.

Objective evidence can take many forms. For example, if the roof of a condominium building has partially blown off following a storm, the objective evidence could simply be pictures of the damaged roof and evidence of damage to the building or individual units. Pictures of the dam‐ aged components alone may establish that there is a threat to personal safety. In another case, if an association learns about interior, hidden damage to balconies which need immediate repair during a Civil Code 5551 (aka SB 326 Balcony Bill) inspection, pictures might not be feasible. Instead, a board may need the architect to prepare a separate letter documenting the discovery of the hazardous condition of the balcony and the potential threat to personal safety if the repairs are not per‐ formed. In this case, the opinion of experts would provide the basis for a board’s imposition of an emergency assessment.

One last point on use of this specific emergency situation: Just because some‐ thing needs to be repaired doesn’t mean that there is a threat to personal health or safety or that there is a hazardous condition! Although many repair conditions can be very broadly interpreted as being related to safety, boards should avoid exaggerating the condition of a component or its safety when communicating to members. Claims of safety or hazardous conditions at the development can create panic among the members and potentially impact real estate trans‐ actions within the community. For this reason, best practices call for boards to only levy emergency assessments on these grounds when there is objective evidence that supports those findings.

EMERGENCY SITUATION C

Levying an emergency assessment under the third – and most complicated – category of “emergency situations” under Civil Code 5610 requires close consideration and usually advice and/or guidance of association counsel. This emergency situation is used as a catch‐all for when an expense isn’t ordered by a court or doesn’t involve health/safety issues or dangerous conditions at a development. Rather, this subsection allows a board to unilaterally levy an assessment to cover any extraordinary expense which is unanticipated and “which could not have been reasonably foreseen by the board when preparing and distributing the annual budget report.” So, if an association’s insurance premiums double (or triple or more!) in one year, this would likely qualify as an emergency situation allowing a board to levy an emergency assessment on the membership to cover the increased cost of the premium.

However, if that same association was provided with a letter from its insurance company in the prior year warning of potential increased premiums if certain maintenance items were not addressed in the common area and that board failed to complete those repairs, the “unanticipated” nature of this situation might be called into question. Similarly, if insurance premiums increase significantly one year and a board levies an emergency assessment to cover the increased cost, it likely cannot levy an emergency assessment the next year to cover the same (high) insurance premium. Rather, once the insurance premium increased, that board should have integrated the increased insurance cost into for the following year’s budget so the money would be available. Put another way, the same “emergency situation” under this subsection cannot present itself repeatedly.

Boards should also use caution when trying to levy an emergency assessment to pay for unanticipated expenses related to repairs which are the result of delayed maintenance. For example, if an association desperately needs to re‐roof all the buildings at the development because they have exhausted their useful life, an emergency assessment under this provision of the Civil Code is likely inappropriate. When a common area component reaches the end of its useful life, replacement of that component should be identified in the reserve study and funds for the replacement should have been put aside in the reserve account. If an association failed to properly reserve for replacement of a common area component, costs associated with that project can’t be considered unanticipated or unforeseen. Rather, the condition of the roofs should have been known over time and the board should have been saving appropriately in its reserve account to pay for the expenditure when the need arose. The fact that a board disregards the reserve study and does not save appropriately in its Reserve Account doesn’t amount to an emergency situation under this provision of the Civil Code.

Civil Code section 5610 provides association boards with an extremely powerful tool when addressing extraordinary and unanticipated expenses for repairs to the common area or components for which the Association is responsible. However, the unilateral authority granted by the law also means that emergency assessments levied under this section will be subject to intense scrutiny from the membership. For this reason, before an association board announces even the possibility of an emergency assessment, the association’s legal counsel should be provided with a full history of the issue so they can help determine if the facts fall under one of the circumstances discussed above. Without a comprehensive legal analysis of the facts at the beginning of the process, boards may attempt to levy emergency assessments without appropriate legal justification. If homeowners challenge imposition of an emergency assessment in Court and the association cannot provide the appropriate factual circumstances existed, the assessment can be overturned, the association can be forced to return all the money to the member and – potentially – contracts which the association entered into for the underlying repairs could be voided, in addition to the association likely having to pay for the homeowners’ legal fees and costs. Boards should expect significant scrutiny from the community when an emergency assessment is levied, so it is important that they not rush to assess. Rather, boards should immediately integrate their legal counsel into the process to find the best path forward and determine whether an emergency assessment is the legally appropriate method of income generation to help pay for an extraordinary expense. ■

Zer Iyer is a principal at Hughes Gill Cochrane & Tinetti, where she specializes in HOA governance, transactions, and industry education. Iyer has been named to the Northern California Super Lawyers list for the second consecutive year after being named a Super Lawyer Rising Star six times. She has 20 years of experience in the homeowner association industry, focusing primarily on corpo‐ rate and transactional representation.