Our association depleted reserves to pay the cost of repairing dry rot that was discovered last year. Can we levy an assessment to replenish the reserve fund?
A. This may sound like an easy question. However, if you look at Civil Code Section 1366.1, it provides that “an association shall not impose or collect an assessment or fee that exceeds the amount necessary to defray the costs for which it is levied.” In Foothills Townhome Association v. Christiansen (1998), a court held that the replenishment of the association’s reserve fund was a valid basis for a special assessment, finding that “costs” under Section 1366.1 could include efforts to replenish depleted reserves.
