Court voids a 400% HOA dues increase: section 5605 applies whatever the CC&Rs say
Court voids a 400% HOA dues increase: section 5605 applies whatever the CC&Rs say
2026-09-09 · California · Courts
A California appeals court has held that a homeowners association's assessment increase was void — not merely challengeable — because the board neither distributed the annual budget report nor obtained the member approval Civil Code section 5605 requires.
Ruffier v. Volcano Hills Road Maintenance Assn., No. C101551, was filed December 15, 2025 and certified for publication on January 6, 2026. It is reported at 117 Cal.App.5th and is citable authority. Justice Boulware Eurie wrote for the Third District, with Acting Presiding Justice Duarte and Justice Feinberg concurring.1
The facts are small and the holding is not
A 1974 declaration created a common interest development to maintain private roads serving 22 parcels in Amador County. It set assessments at $100 per parcel per year and capped increases at $200 per year per parcel.
At the June 2019 annual meeting, members constituting a bare quorum voted 10–1 to amend the bylaws to eliminate the $200 cap. The board then raised the annual assessment from $200 to $1,000 — a 400 percent increase.
Members sued for declaratory relief. The trial court denied it, reasoning that the $200 cap was unreasonable.
Reversed, and the reasoning is the point
Under Civil Code section 5605(a), an annual increase in regular assessments may not be imposed unless the association either complied with the section 5300 annual budget report requirements or obtained “the approval of a majority of a quorum of members.” Under section 5605(b), an increase greater than 20 percent requires member approval regardless.
The association conceded it had not complied with section 5300. The membership was never asked to approve the increase. The increase was therefore void.
The court rejected each defense in turn:
Whether the cap was unreasonable is beside the point. “[E]ven if the Association's governing documents did not limit the board's ability to increase annual assessments in July 2019, section 5605 did impose limits.”
The governing documents are not the measure. The statute operates independently of what the declaration says or omits.
The section 5610 emergency exception was forfeited, never having been raised below.
Section 5600 does not override. The duty to levy assessments sufficient to perform the association's obligations opens with the words “Except as provided in Section 5605” — so the general funding duty is subject to section 5605's procedural gates, not the other way round.
The court also noted the June 2019 bylaw amendment was itself defective: the bylaws required a majority of all members, not a majority of a quorum.
Disposition: reversed and remanded with directions to enter a declaratory judgment that the increase is void and invalid. Plaintiffs recover costs. The court declined to reach refunds, because the plaintiffs pleaded only declaratory relief and not damages.
What it changes for boards and managers
The annual budget report is not paperwork — it is the precondition to the board's unilateral increase power. This is the practical lesson and it is widely misunderstood. An association that distributes the section 5300 report on time may raise regular assessments up to 20 percent without a member vote. An association that does not distribute it has no unilateral increase power at all, of any size, without member approval.
Boards tend to think of section 5605 as “the 20 percent rule.” Ruffier makes clear it is two rules, and the first one bites at every increase, not just large ones.
“Void” is a stronger word than “improper.” A void increase is not one the association can defend as substantially compliant. It has no effect, which raises the question of what an association may collect and what it must do about amounts already collected. The Ruffier plaintiffs did not seek refunds, so the court did not address them — leaving that question open for the next case.
An unreasonable cap in the governing documents is not a licence to ignore the statute. The trial court's instinct — that a $200 annual cap written in 1974 cannot sensibly govern road maintenance in 2019 — is understandable and was wrong. The remedy for an unworkable cap is an amendment, or a petition under Civil Code section 4275, not a board vote to disregard it.
Small associations are not outside the Act. Twenty-two parcels, private roads, a declaration predating Davis-Stirling by nine years — and the Act applied in full. Associations of this size frequently operate informally, and this decision is a direct warning to them.
Check the bylaw amendment threshold before relying on the amendment. The court's aside about “a majority of all members” versus “a majority of a quorum” is a distinction that decides votes. An amendment adopted on the wrong threshold does not become valid because nobody objected at the time.
The context that makes this urgent
California associations are raising assessments harder than they have in years, driven by insurance renewals, deferred maintenance and exterior elevated element inspection findings. Nearly one in ten California associations levied a special assessment in 2025.
That pressure is precisely the environment in which a board skips a procedural step to get the money in. Ruffier says the step is not skippable.
It is also worth noting what did not happen this year: SB 1007 would have cut the section 5605 cap from 20 percent to 8 percent and conditioned increases on new budget disclosures. It passed the Senate 24–13 and then never received an Assembly committee hearing. The 20 percent figure stands — but Ruffier is a reminder that the figure was never the only constraint.
What to watch next
Two things sit on the Governor's desk that would change the arithmetic around this decision.
AB 2050 would require associations to fund reserves at a level keeping the projected balance above zero for 30 years, with a 15 percent of gross budget floor, operative January 1, 2032. An association obliged to fund at that level, and capped at 20 percent annual increases without a vote, will need several consecutive compliant increases to get there — and Ruffier establishes that a defective one is worth nothing.
SB 1238 would separately bar reserve spending on litigation unrelated to repair of major components. Neither bill is law; the Governor must act by September 30, 2026.
For now, the operational takeaway is unglamorous and complete: distribute the annual budget report on time, every year, and keep proof that you did.
Related California HOA Topics
- Ruffier v. Volcano Hills Road Maintenance Assn., No. C101551 — slip opinion with publication order attached, Court of Appeal, Third Appellate District ↩
- Publication order, Judicial Branch of California (January 6, 2026) ↩
- Civil Code § 5605, California Legislative Information — operative text of the annual increase limits ↩
- SB 1007, California Legislature — bill status showing the measure died without an Assembly committee hearing ↩
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