Bill to protect low income homeowners from skyrocketing HOA fees heads to the Governor’s desk

Assemblymember Haney’s AB 572 caps annual HOA fees at 5% plus the rate of inflation or 10%, whichever is less for below market rate homeowners

SACRAMENTO – Assemblymember Matt Haney’s (D-San Francisco) AB 572 passed out of the Senate Floor and heads to Governor’s desk awaiting signature. This bill prohibits steep homeowner associations (HOA) fee increases that push low-income homeowners into foreclosure by capping them at 5% plus the rate of inflation or 10%, whichever is less for below market rate owners.

Many cities across the state have created inclusionary housing programs that require developers to provide a percentage of affordable homes to be sold at below market rate value. These homes are available to low-income first-time homebuyers who would only have to spend one third of their monthly income on their mortgage. Although there are income limits on the mortgage of these homes, there are no limits on the HOA fees.

“There is a clear deficiency in our current policy that we have a maximum on how much people have to pay for their mortgage in below-market rate programs, but no limitations on how much their HOA fees can increase by,” said Haney. “This is pushing many families who are owning a home for the first time in generations to foreclose on their home.”

Current California law sets the maximum HOA fee increase at 20% for all homeowners regardless of income level. But after only a few years of large fee increases, BMR homeowners’ HOA fees can be higher than their entire mortgage.

However, the benefits of HOA fees are not enjoyed equally among all homeowners. Market rate homeowners get to recoup the costs of HOA fees through the eventual sale of their unit at a new, appreciated price. Below Market Rate units don’t have the same luxury because their listing price has to stay in the low- or moderate-income threshold.

If signed into law, this bill would only impact developments with governing documents signed after January 1, 2025.

(CA Assemblymember Haney Office Release)

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