East Bay boards facing doubled or tripled master-policy premiums often treat the increase as an automatic emergency. Civil Code section 5605 limits special assessments that, in the aggregate, exceed 5 percent of the association’s budgeted gross expenses for the fiscal year unless a majority of a quorum of members approves them. Section 5610 removes that limit only for three defined emergency situations. An insurance premium increase does not fall into any of those categories by itself. Boards that levy the assessment without a membership vote because “premiums exploded” are relying on an exception the statute does not automatically supply. The practical result is an assessment that owners can challenge and that the association may have to reverse.
Section 5605(b) is the baseline. The board may not impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year without the approval of a majority of a quorum of members. The 5 percent figure is an annual aggregate, not a per-assessment ceiling. An association with $1 million in budgeted gross expenses can levy up to $50,000 in total special assessments during the year without a vote. Anything above that total requires the membership vote. Section 5610 states that section 5605 does not limit assessment increases necessary for emergency situations, then defines an emergency situation as any one of three things: an extraordinary expense required by an order of a court; an extraordinary expense necessary to operate, repair, or maintain the development where a threat to personal health or safety or another hazardous condition is discovered; or an extraordinary expense necessary to repair or maintain the development that could not have been reasonably foreseen by the board in preparing and distributing the annual budget report under section 5300. For the third category the board must pass a resolution containing written findings as to the necessity of the expense and why it was not reasonably foreseeable, and the resolution must be distributed with the notice of assessment.
Why an Insurance Premium Increase Usually Misses All Three Categories
The first category requires an order of a court. A renewal notice from the carrier, a broker’s email, or a board resolution declaring that the premium increase is urgent does not satisfy that requirement. The second category applies when the association discovers a threat to personal health or safety or another hazardous condition on the property and the expense is necessary to operate, repair, or maintain the development. A higher premium is not itself a hazardous condition discovered on the property. The third category is limited to an extraordinary expense necessary to repair or maintain the development that the board could not have reasonably foreseen when it prepared the annual budget report. Paying an insurance premium is not an expense to repair or maintain the physical development in the sense the statute uses those terms. Even if a board argues that the premium increase was unforeseeable, the statute still requires the written findings and the distribution of the resolution with the notice. East Bay associations that have simply labeled the premium increase an “emergency” and levied the assessment without a vote or without the required findings have created a record that owners can challenge on the face of the documents.
Insurance market conditions in California have been known and worsening for several years. Boards that received non-renewal notices, substantial premium quotes, or broker warnings before they adopted the annual budget report have a harder time showing that the expense “could not have been reasonably foreseen.” Associations that budgeted for a modest increase and then received a much larger renewal have a factual argument on foreseeability, but they still must fit the expense into the statutory language of “repair or maintain” and must adopt and distribute the required resolution. Most boards that have consulted counsel on this point have been advised to treat amounts above the 5 percent aggregate as requiring the membership vote under section 5605 rather than relying on section 5610. The safer path is the vote. The riskier path is an assessment that later has to be refunded or re-levied after a challenge.
What the Membership Vote Actually Requires
When the aggregate special assessments for the year will exceed 5 percent of budgeted gross expenses, the board must obtain the approval of a majority of a quorum of members. For purposes of section 5605, a quorum is more than 50 percent of the members. The vote must be conducted by secret ballot under the procedures in section 5100 et seq. Individual notice of the increased assessment must go out not less than 30 nor more than 60 days before the assessment becomes due under section 5615. Associations that skip the vote and later discover that the assessment does not qualify under section 5610 must either refund the amounts collected or re-levy the assessment after a proper vote. Either step consumes time and generates owner distrust. East Bay boards that have run the secret-ballot process for an insurance special assessment have reported that owners will approve the increase when the board explains the actual renewal numbers and the consequences of remaining uninsured or underinsured. The process is slower than a board-only levy, but it produces an assessment that rests on the statute rather than on an argument about whether the premium increase was an emergency.
Boards that stay inside the 5 percent aggregate can still levy a special assessment for insurance without a vote. An association that needs $40,000 for a premium increase and has not yet levied any other special assessments that year can do so under section 5605 if $40,000 is less than 5 percent of its budgeted gross expenses. The assessment still requires the 30-to-60-day individual notice. Associations that need more than the remaining capacity under the 5 percent ceiling have two practical choices: obtain the membership vote or determine whether any portion of the expense truly fits one of the three emergency categories and, if so, document it exactly as section 5610 requires. Coordinated financial management that tracks year-to-date special assessments against the 5 percent aggregate and flags when a vote will be required prevents the board from discovering the problem after the assessment has already been levied.
Documentation That Matters When Owners Challenge the Assessment
Owners who receive a notice that labels an insurance special assessment an “emergency” under section 5610 can request the resolution containing the written findings. If the board did not pass such a resolution, or if the resolution does not explain why the expense was necessary and why it could not have been reasonably foreseen in the budgeting process, the record is incomplete. If the expense does not fit the statutory language of “repair or maintain,” the findings do not cure the mismatch. Associations that have levied the assessment under section 5605 after a proper membership vote have a different record: the ballot materials, the certified election results, and the 30-to-60-day notice. That record is harder to challenge on procedural grounds. East Bay associations that have faced owner challenges to insurance special assessments have spent less time defending the assessment when the board followed section 5605 and more time when the board relied on section 5610 without a clear fit and without the required findings.
The practical steps are ordinary. Confirm the year-to-date special assessments against 5 percent of budgeted gross expenses. If the insurance amount will push the aggregate over the limit, schedule the secret-ballot vote and prepare the disclosure materials that show the renewal premium, the prior premium, and the coverage that will be lost if the assessment fails. If the board believes a portion of the expense truly qualifies under section 5610, adopt the resolution with the written findings in open session and distribute it with the notice. SLPM Association Management Services has coordinated special-assessment calculations, secret-ballot elections, and emergency-assessment documentation for East Bay associations since 1991. If your board is preparing an insurance special assessment and is uncertain whether the amount requires a membership vote, the free proposal process lets you see the numbers against section 5605 and the documentation required under section 5610.
Request your free association management proposal here. We will review your current budget, year-to-date special assessments, and the insurance renewal against the 5 percent aggregate and identify whether a membership vote or a documented emergency resolution is required.