Overview

HOA fees (i.e., dues) move in two directions, and both can signal trouble. Some HOAs raise dues year after year, and homeowners want to know why and whether the increases are even legal. Other HOAs do the opposite, freezing dues for years to look like heroes, while quietly underfunding the reserves and deferring the maintenance that the same homeowners will pay for later in the form of one or more special assessments.

HOAs set the budget, decide how much to collect, and control where the money goes. This leaves homeowners with the same two questions. Why do the fees keep going up, and is the increase even legal? Both questions have real answers, and those answers don’t always favor the HOA. To be sure, some increases are legitimate. Over the last few years, California’s insurance market has driven HOA premiums sharply higher. Over the same time frame, California in particular has seen a sharp increase in vendor, utility, supply, and labor costs, causing some HOAs to finally start funding reserves they neglected for years. Add to that certain required capital improvements, like the Balcony Law’s (SB 326) mandatory inspections and repair orders, and you have the recipe for massive increases in HOA dues.

The Davis-Stirling Act doesn’t just permit your HOA to raise enough money to meet these obligations, it requires your HOA to do it. A fee increase, standing alone, therefore, isn’t proof of wrongdoing. Your HOA’s power over your money isn’t unlimited, though. The Davis-Stirling Act caps how much your HOA board can raise regular assessments in a single year and how large a special assessment it can impose without putting the question to a member vote. The law requires advance written notice before any increase takes effect, and it requires your HOA to assess only what the budget needs. The same legitimate pressures that justify many increases are also the cover that careless or dishonest boards use to push through increases that have nothing to do with real costs or inflationary issues.

This Fact Sheet explains the real reasons California HOA fees have risen so sharply over the last several years, from soaring insurance premiums to the balcony repair wave now coming due. It also explains why suspiciously flat dues can be just as dangerous as steep hikes, and how to recognize when an increase reflects rising costs your HOA can’t avoid rather than mismanagement you should be questioning.

Key Points

California HOAs have seen a dramatic increase in fees for a variety of reasons, and not all of them point to HOA wrongdoing. Some increases reflect real costs your HOA can’t legally ignore, while others mask years of neglect, manipulation, or outright violations of the Davis-Stirling Act. Suspiciously flat dues can be just as dangerous as steeper-than-average hikes because the bill for deferred maintenance and starved reserves always arrives eventually. The points below explain why your HOA fees have risen sharply over the last several years, and how to recognize whether what you’re seeing reflects unavoidable costs or something worth questioning.

• Insurance is the single biggest reason California HOA fees have spiked over the last several years. Wildfire losses and insurers pulling out of the state have driven HOA premiums to levels that simply didn’t exist a few years ago, with many communities seeing their costs for insurance coverage double or worse at a single renewal. As traditional carriers retreat from the market, more HOAs get pushed onto the California FAIR Plan, which costs more and covers less, and often forces HOAs to buy separate wrap policies to fill the gaps, driving total insurance costs higher still. Because insurance is now one of the largest line items in most HOA budgets, a premium that jumps that hard drags member dues up with it almost automatically. This is usually a legitimate increase rather than a sign of mismanagement because most CC&Rs require their respective HOAs to carry various types of insurance, and Civil Code 5600 separately requires the HOA to levy assessments sufficient to meet its obligations, which includes paying for that coverage. [For a deeper dive into what’s happening with insurance in California, read my article “The Impact of Rising Insurance Costs on California HOAs.” You might also want to read my Fact Sheet, “Altadena & Palisades Fires: Why California FAIR Plan Insurance Isn’t Enough to Rebuild.”]
• A second and separate force pushing dues up is the rising cost of funding reserves. Reserves are the HOA’s savings for major future repairs and replacements of large components like roofs, roads, and balconies, and they sit in a different part of the budget from the day-to-day operating costs discussed above. Civil Code 5550 requires the HOA to study those future costs and adopt a funding plan, and two ongoing developments keep driving the required contributions higher and higher. First, the projected price of nearly every future repair rises with inflation, so the funding target climbs even when nothing else changes. Second, too many bad HOAs spent years drastically underfunding reserves and now have to play catch-up, especially in the face legislation like SB 326’s Balcony Law. The clearest measure of where your community stands financially is the “percent funded” figure in your own disclosures, which tells you whether the reserve plan in your HOA is on track or quietly heading toward a shortfall that will eventually fall into your lap in the form of one or more massive special assessments. [For how to read and stress-test that percent-funded number, see my Fact Sheets “California HOA Reserve Study Requirements: How Often They’re Required and What Must Be Included,” “How California HOAs Manipulate Reserve Studies and What Homeowners Can Do to Protect Themselves,” and “HOA Reserve Studies in California: How Boards Manipulate the “Percent Funded” Number.”]
• Suspiciously flat dues are often a warning, not a win. Plenty of HOAs do the opposite of overcharging, freezing dues for years so the sitting directors look like heroes to their neighbors. With costs rising as fast as they are, an HOA that holds dues flat is almost always paying for that restraint somewhere members can’t see. Aside from such conduct being penny wise and pound foolish, it’s also illegal. Civil Code 5600 doesn’t permit running that lean because it requires the HOA to assess enough to meet its obligations on an ongoing basis. Artificially suppressing dues doesn’t help anyone, and in fact, it causes much more serious problems in the form of more expensive replacements later, and sudden and large assessments, which often take people by surprise. Such suppression by bad HOAs commonly comes in three forms:
  • Thin insurance coverage. Some HOAs hold the monthly number down by buying the cheapest policy they can find, slashing coverage limits, or accepting a sky-high deductible, which makes the budget look manageable today while quietly shifting the real disaster risk back onto the members. The trap springs when a fire, flood, or other major loss exceeds that thin coverage because the shortfall doesn’t disappear. Instead, it gets billed straight back to homeowners as a special assessment, and in an amount often far more than the premium “savings” ever amounted to. [You may also recall from my Fact Sheet, “California Condo Declared “Unavailable” by Fannie Mae and How HOAs Can Fix the Problem,” that gaps in insurance coverage or large deductibles can cause an HOA to be deemed “unavailable” by Fannie Mae (or “not eligible” by Freddie Mac), which effectively renders it virtually impossible for you to sell your condo. If you haven’t read that Fact Sheet, I urge you to do so.]
  • Starved reserves. An HOA that underfunds its reserves shows a leaner, healthier-looking budget today, but it’s an illusion, and quite often a fraud. Every dollar the HOA fails to set aside is a dollar the members will owe later when the roof, roads, pool equipment, elevators, or plumbing inevitably wear out and need replacing. Those components fail on their own schedule, not the HOA’s, so the bill always arrives, and when the reserve account can’t cover it, the HOA has only two ways to close the gap, a sudden special assessment or a loan the members repay with interest through higher dues. Either way, the homeowners who thought they were getting a bargain end up paying more than they would have under steady, honest reserve funding, and the owners who happen to be there when the bill lands absorb costs that should have been spread across years.
  • Hidden operating shortfalls. Some HOAs keep dues flat by simply spending less than the community actually needs, deferring routine maintenance, skipping tree trimming and drainage work, putting off small repairs, and letting vendor contracts lapse rather than renewing them at current rates. None of that makes the work unnecessary, it just lets small, cheap problems grow into large, expensive ones, like a minor leak that becomes a major water-intrusion repair or neglected landscaping that turns into a fire-clearance or liability issue. When the deferred work finally can’t be ignored, the HOA has to catch up all at once, and the cost of fixing the accumulated damage almost always dwarfs what steady upkeep would have cost, landing on members as a steep dues hike or a special assessment.
• The Balcony Law is forcing some of the largest special assessments California HOA members have ever seen. After a 2015 balcony collapse in Berkeley killed six people, the Legislature passed what became Civil Code 5551, the Balcony Law (SB 326), which requires your HOA to inspect the load-bearing wood and waterproofing of its balconies, decks, stairways, walkways, and similar elevated structures, and to repair whatever that inspection uncovers. The first inspection deadline for HOAs with more than three units was January 1, 2025, so for the HOAs that met that deadline, the repair bills are landing right now. What homeowners are now seeing in HOAs across California are the consequences of decades of negligence and failures to maintain, where those same HOAs also failed to deposit sufficient money into the reserves to cover the costs of replacing the balconies. This is why balcony-driven special assessments routinely run $30,000, $40,000, $50,000, and more per household. That wave will keep building for years as more HOAs finally confront their reports, and it hits a second time through insurance, because carriers increasingly demand a valid inspection before they’ll write or renew the master policy, and a noncompliant HOA can face nonrenewal, higher premiums, and blocked sales. [For a quick primer on California’s Balcony Law (SB 326), read my Fact Sheet “California HOA Balcony Inspection Law: What SB 326 Requires.”]
• If your fees have jumped in a way that your HOA cannot satisfactorily explain, call the HOA attorneys at MBK Chapman. The surge in California HOA fees over the last several years is real, but part of it reflects rising costs the Davis-Stirling Act requires your HOA to cover, and part of it reflects boards that mismanaged the money and failed in their most fundamental duties, including maintaining, repairing, and replacing common areas. Sorting one from the other takes a close look at the budget, the reserve study, the insurance, and the records behind them. The HOA attorneys at MBK Chapman are experts in making those determinations, so call us if you want us to evaluate your HOA’s role in the dues increases that you’re experiencing.

Rising dues, by themselves, aren’t proof your HOA has done anything wrong, which is why the number on your statement never tells the whole story on its own. Across California, the real engines behind the recent spike are the same ones driving up costs everywhere, soaring insurance premiums, broad inflation in the vendors and services HOAs depend on, reserve contributions climbing to keep pace with tomorrow’s repair costs, and the balcony repair wave now coming due. Those forces are largely outside any single board’s control, and they explain the bulk of what homeowners are seeing on their bills. Understanding which of these drivers is actually moving your dues is the first step toward knowing whether your increase reflects the market your HOA is stuck in or something you should be questioning.

FAQs

About Michael Kushner

Michael Kushner is a California attorney with over 30 years of experience representing homeowners in disputes with their HOAs. He is widely regarded as California’s leading homeowner-side HOA attorney, and has built one of the state’s most prominent law practices dedicated to holding HOAs accountable under the Davis-Stirling Act and California law.

In addition to his law firm’s work, Michael is a recognized lecturer, author, and the host of the hit HOA HELL podcast, where he provides homeowners living in HOA-governed communities with clear, practical strategies for dealing with bad HOAs. He’s also the author of the best-selling book, HOA HELL | California Homeowners’ Definitive Guide to Beating Bad HOAs, which has become a go-to resource for both homeowners seeking real-world solutions to their HOA disputes, as well as those good HOA board members who are interested in doing a good job.

About MBK Chapman Fact Sheets

Homeowners searching for answers online will often come across articles that appear authoritative, but are actually written as search-engine marketing content rather than by an experienced HOA lawyer. These pieces tend to prioritize keyword density over clarity, accuracy, or legal context, which often leaves homeowners more confused than informed.

At MBK Chapman, our Fact Sheets are part of our HOA Law Library and are written by Michael Kushner, an HOA lawyer with decades of hands-on experience representing California homeowners. In fact, Michael Kushner is the HOA lawyer who pioneered the systems and strategies used by some of California’s most successful homeowner-side HOA law firms.

Each Fact Sheet is deliberately concise, statute-based, and designed as a quick-reference guide to help homeowners understand key HOA laws and enforcement rules at a glance.

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