HOA Special Assessments Maybe More Common Now

3 min read, By May Galan, SVP Association Management

Owners in HOAs (Homeowners Associations) or COAs (Condominium Owners Associations) may see the need more for Special Assessments due to unexpected budget shortfalls, unforeseen repairs, and rising insurance premiums. For example, in Miami-Dade County, condominium owners will see high costs for repairs needed for the required recertifications for condominiums over three stories and for insurance premiums estimated to increase about 30-50% this year.

Your HOA board can adopt special assessments under certain circumstances. For example, they can be levied for unexpected repairs, capital improvements, shortfalls in the budgets, and rising insurance costs when insurance is renewed mid-year and increases are not accounted for in the current budget.

Homeowners in HOAs/COAs are contractually obligated to pay them, and if not paid, late fees can be assessed, and liens can be placed on your property if payment is neglected. Special assessments must be disclosed to prospective buyers and, if stipulated in the adopted special assessment, may need to be paid in full when selling your property. If not specified that they must be paid in full upon transfer of property, the seller and buyer can negotiate the payment of the specials assessment in the contract for sale.

The board of directors has a fiduciary duty to create a budget covering all expenses. Special assessments shouldn't be an excuse for poor budgeting and should only occur when expenses are unexpected. Some HOAs/COAs have waived reserve funding that would typically be used to cover such high-cost repairs. However, when there are no reserve funds or the funds are not earmarked for the repairs needed, the board must collect funds from homeowners through a special assessment. Boards must work closely with their management company and attorney to prepare and adopt the special assessment.

As a homeowner, paying for a special assessment can be stressful for those who need more preparation for them or are on fixed incomes. While they usually can be paid over time, they can be hundreds or thousands of dollars extra per month. There is no limit to how much a special assessment can cost. Consult with a tax professional, as special assessments may be claimed on taxes if used for maintenance and repairs.

For those in South Florida, Miami-Dade County provides Condo Owners assistance for special assessments up to $50,000. The program assists owner-occupied condominium homeowners with limited finances to pay for special assessments associated with repairs due to applicable building integrity recertification requirements. 

Board members should be sensitive to homeowners and recognize that a special assessment may cause financial hardships to some. However, everyone must be treated equally, and the board must follow the community's governing documents when adopting special assessments and providing payment plans. Proper notices and transparency about the association's financial health are necessary so that homeowners have time to react and plan for this cost increase. Having your Community Association Manager and attorneys present can help explain the necessity and reassure the homeowners that a special assessment is in the community's best interest.

Precedent Association Management can assist board members with levying special assessments when needed and works closely with the board to properly budget for expenses and reserve requirements. However, inadequate budgets and reserves lead to deferred maintenance and outdated common areas. While special assessments can help pay for the repairs needed, owners must understand that HOA assessments will increase going forward to properly maintain the community and avoid the necessity of special assessments in the future. 

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