LAGUNA HILLS – It's one of those nagging questions in the back of the homebuyer's mind as pen is put to paper: What am I signing up for? For each of the more than 900 homeowners in Laguna Village, the answer is a whopping $9,000 repair bill. The 30-year-old development's homeowners association has threatened to force the residents out of their homes if they don't pay $8.36 million to repair damage caused by water, dry rot and toxic mold. Half the special assessment is due Dec. 1, the rest by June 1. 

The action has angered the residents, who allege that the association board neglected the property and failed to properly plan for the repair costs. The board has known about the problems and has been authorizing repairs for at least the past couple of years, according to board member Dan Brock. But the situation became urgent after experts called in this summer to make an evaluation advised the board to make full repairs as quickly as possible to protect people from injury and the board from lawsuits. Special fees like this are uncommon but not unprecedented – homeowners in a smaller Newport Beach community each face a $10,000 repair bill, and residents in a Laguna Niguel development are being asked to pay $3,000 each. State law allows homeowners associations to charge such fees for "threats to personal safety." These "special assessments" – part of the fine print in the parade of papers that many homebuyers just skim before closing the deal – can be levied by a board without a homeowner vote. And the assessment can be charged immediately. 

The Laguna Village homeowners – concerned about rotting balconies, toxic mold and water damage – want the repairs to be done but contend the board surprised them with the amount of the repair costs and the demand for the money so quickly. "It's ridiculous to just blindly charge people all at once," resident Edward Klarquist said. "I don't have that money." Neighbors in this quiet community on the northern edge of Laguna Hills are scrambling to hire attorneys to fight the fee, but Debbie Evans, vice president of a community management corporation, said such efforts are rarely successful.

Resident Deanna Wolfe thinks she and her neighbors have a case, in part because their association recovered more than $7 million in a 1989 construction-defect lawsuit. Wolfe wonders where that money has gone. The association receives annual payments as part of the lawsuit settlement, but the board has refused to give residents specific information about how the money has been spent. The association's attorney, David Cane, said proceeds from the lawsuit has been used to pay for increased insurance premiums and regular maintenance, but that money can't cover the additional repairs. Wolfe also argues that a 1994 memo to residents in which the board notes "moisture and dampness conditions" in some units indicates the board has known about the problems and could have acted sooner. "They've been putting Band-Aids on problems," Wolfe said this week, pointing to rotting wood along the base of her house. "I've watched this place absolutely deteriorate." Board member Brock said he is sympathetic to his neighbors, but can't think of another way to make the repairs and avoid future lawsuits. "What if we don't fix it and someone gets hurt?" Brock said. Residents have appealed to consumer groups, government agencies and the city, finding sympathy but not solutions. "They can displace 914 families," said Patricia Johnson, who might move out of her condo. "That's something to think about." Even if she pays this fee, Johnson said, she is worried she'll have to come up with more. "What's to say next time it won't be $50,000?" she said.