If you are a homeowner in a planned community, there is a good chance that you will have to pay special assessments at some point. Special assessments are an extra fee that homeowners pay to the association in addition to the regular assessments. Generally, the board of directors will only impose special assessments in the case of unexpected expenses or insufficient reserve funds In this blog post, we will discuss what special assessments are, how they are calculated, and when they are due. We will also provide some tips for dealing with them if they come up in your community.
Special assessments may be levied during an emergency or disaster for various reasons, including unplanned repairs or the replacement of facilities or fixtures. Sometimes, when the board of directors cannot anticipate the correct monthly expenses for various possible reasons, the need for additional income arises. Below are some common reasons for special assessments.
The association analyzes the monthly expenses required to maintain all of its responsibilities per the governing document and the amount paid by each homeowner. This budget will help the board of directors craft a community plan by analyzing the operating expenditures of the current year. In general, the budget mainly focuses on the maintenance cost of the community.
Additionally, reserve funds cover the cost of long-term maintenance costs. Unforeseen expenses can fall into the category of reserves. If the reserve amount falls short of the payments, the association may charge a special assessment.
Associations try to anticipate and plan for all expenses, so a special assessment is rare. Proper planning to cover extra costs can help avoid a thorough review. An HOA management team can help the board prepare a budget that avoids special assessments.
In short, yes. If approved appropriately, the association can collect the special assessment legally, with some limitations. You can find the steps to support a thorough review in the governing documents. Often, a community vote is mandatory before billing for a special assessment.
Many times, homeowners feel surprised by the extra fees. They may consider refusing to make payments for special assessments in such times. However, they might experience legal consequences if they do not make the required payment. The HOA's governing documents outline the legal steps that the HOA can take. Some of the consequences for homeowners who refuse to pay assessments include:
Even though special assessments are legal, they can be complicated and boards should avoid them if at all possible. This is why a board struggling with its budget should seek help from a management company.
With a wealth of experience and knowledge, RealManage is ready to help you. We assist with complex issues and work directly with the board of directors to run a successful community association. Contact us today to get a free community needs analysis.