There is an old saying that there is no such thing as a free lunch—and that’s certainly the case when it comes to living within a community. Regular maintenance and general upkeep, needed repairs and renovations—these are all important, but they all cost money. To have these things done, your HOA board must either hire a vendor, or take up these tasks on a DIY basis, but even then there is the cost of materials, time, and so forth.
In other words, any residential community is going to have costs that arise. Those who have chosen to live in an HOA-governed community have agreed to pay fees for these maintenance and repair project being completed. These fees are called HOA assessments, HOA Dues or just HOA Fees. It is important for members of the HOA board to know what types of assessment there are, and how they can be executed properly.
Here is a rundown of the three basic assessment types:
1. The regular assessment pays for regular, ongoing services rendered to community members. Things like gardening and landscaping, trash removal, and so forth all fit within this category. These basic HOA Assessments are generally collected on a monthly basis, and should be clearly spelled out in your yearly budget.
2. There are also special assessments. These arise when an unexpected but necessary cost comes; an example might be the need to renovate a piece of communal property to bring it up to new, local codes. This is not something that will happen every year, and it might be something you cannot truly budget for, but it must be done to avoid incurring legal fees. These assessments might be broken up into multiple payments, helping homeowners to protect their budgets.
3. Finally, there is an emergency assessment—which is exactly what it sounds like. An emergency assessment comes when there are sudden repairs that must be made immediately. This is basically the same as a special assessment, only a special assessment can sometimes be planned for a month or more in advance, where an emergency assessment is for a need that arises all at once.
In an ideal world, of course, your HOA will have enough of a reserve fund that it can deal with unexpected expenses without levying new HOA assessments—but naturally, this is not always the case. It is important for you to know what your community’s governing documents say about managing these different kinds of assessments, so that your HOA will be prepared no matter what happens.