Asking homeowners to unexpectedly pay more out of pocket is the last thing the HOA board wants to do, but it happens. Special assessments are not always able to be anticipated. An adequately funded reserve can help cover a lot of expenses, but these are for planned repairs or replacements. If there is a natural disaster that destroys the clubhouse roof 10 years before it was anticipated to need replacing, the HOA may not have saved up enough money yet. While insurance can help offset costs as well, it all comes down to coverage and what is included.
Here are a few other important things to note about special assessments:
They can occur when there is too little funding.
If the HOA has focused on keeping annual dues low, it may not be allotting enough money toward regular upkeep of amenities or savings for the reserve. That means that when repair or replacement is necessary, the HOA may levy a special assessment to cover excess expenses. It is important for the board to work with a professional in order to effectively manage its budget, set appropriate dues, and review reserve studies.
They can happen even with good planning.
As previously mentioned, even when the HOA has done everything right, sometimes emergencies happen. There is no way to anticipate the damage caused by a natural disaster. Sometimes pipes burst or the ground shifts without warning and impacts HOA amenities. But by having the right insurance coverage in place and a strong budget and reserves, the board can help minimize the financial impact.
They are required for all homeowners.
Even if you never put a toe in the pool or only live in your home six months out of the year, you are still responsible for your portion of the special assessment. The cost is divided equally among all homeowners. Depending on the amount levied, the HOA may offer payment plans to help homeowners manage costs. However, if you don’t pay, you may be subject to more fines or legal action. Work with your association to create a feasible plan.
They can have limitations.
There may be certain processes or requirements laid out by the HOA’s governing documents in regard to special assessments. For instance, many associations require a vote if the assessment exceeds a certain dollar amount. Depending on what the board wants to use the money for, homeowner approval may be needed as well. It comes down to what your particular HOA’s documents say and why a special assessment is being administered.
If your HOA could benefit from help navigating finances, reserve funds, insurance coverage, maintenance, and other factors that impact operations – and special assessments – contact Kuester today. We work with HOAs throughout the Carolinas providing high quality service and support.