AB 313 - Prohibits Assessments Based Upon the Taxable Value of Individual Units

Feldsott & Lee
A Law Corporation

Assembly Bill 313 (hereinafter “AB 313”) takes effect on January 1, 2010. It amends Civil Code Section 1351 and adds Civil Code Section 1366.4. AB 313 prohibits a homeowners association from basing assessments on the taxable value of the individual units, unless the association currently bases assessments on taxable value or pays property taxes on behalf of its members.

As provided for in the California Constitution pursuant to Proposition 13, county assessors reassess the taxable value of a property upon sale. As a result, owners who bought years ago generally pay much less in taxes than neighbors who own similar homes. When taxable value is used as a basis for general assessments, longer-term homeowners pay less for common area maintenance and amenities, even though they enjoy the same level of benefits.

With the exception of cooperatives that pay the tax bill for the common interest development as a whole and pass on each member’s share, the use of taxable value as the basis of assessments is probably rare. Those developments that do so are likely to be older and to have adopted this basis prior to the passage of Proposition 13 in 1978 that created large disparities in taxable values. AB 313 ensures that associations that have used taxable values to date may continue to do so, but prohibits all other associations and any newly formed associations from doing so.