Understanding Special Assessments in HOAs and COAs: What Homeowners Need to Know
A special assessment is an additional fee charged to Homeowners in a Homeowners’ Association (HOA) or Condominium Owners’ Association (COA) to cover unplanned expenses that aren’t included in the regular budget. These assessments are typically imposed for large-scale projects, significant repairs, or emergency expenses that go beyond the normal scope of day-to-day maintenance.
Common Reasons for Special Assessments
- Unexpected Repairs: If critical infrastructure, such as a roof or plumbing system, requires immediate repair and the association does not have sufficient funds, a special assessment may be necessary. This could also include sudden issues like foundation problems or major water damage.
- Capital Improvements: Occasionally, associations need to invest in major upgrades to community facilities, such as renovating a pool or upgrading a security system. These long-term improvements often go beyond what is planned in the annual budget, necessitating additional funding from residents through a special assessment.
- Natural Disasters or Emergencies: In the event of natural disasters, such as floods, earthquakes, or fires, special assessments might be required to cover repair costs that exceed the coverage of the community’s insurance policy. This could include repairing damaged common areas or addressing safety concerns brought about by the disaster.
How Special Assessments are Decided
The process for issuing a special assessment typically involves the Board of Directors identifying the need, calculating the cost, and determining the amount each Homeowner will be required to contribute. In Washington state, Boards are required to seek approval from Homeowners via a vote before the special assessment is enacted. Unless a majority of the voting power within the association (50%) vote against the special assessment, it will be ratified and go into effect.
Impact on Homeowners
It’s important for the association to communicate openly about the reasons behind the assessment, how the funds will be used, and the benefits of the project or repair. Transparent communication helps mitigate frustrations and allows residents to see the long-term value of the improvements.
Homeowners should also be aware that failure to pay a special assessment could result in penalties, interest, or even legal action, as the funds are critical to the functioning of the community.
How Trestle Supports Communities with Special Assessments
At Trestle Community Management, we work closely with Boards to manage the financial health of the association and plan for large projects or unexpected repairs. We help communities minimize the need for special assessments by guiding Boards in developing solid financial strategies, such as maintaining adequate reserve funds and conducting regular reserve studies. When special assessments are necessary, Trestle provides support by helping Boards of Directors communicate clearly with Homeowners, ensuring transparency and accuracy throughout the process.
From developing clear budgets to organizing Homeowner votes, Trestle ensures that the special assessment process is handled smoothly and effectively. This helps to reduce financial strain on Homeowners while ensuring that the necessary repairs or upgrades are completed promptly.
Final Thoughts
Special assessments are an important financial tool for HOAs and COAs to address major expenses beyond the scope of regular maintenance. Although they can be challenging for Homeowners, they play a vital role in maintaining the safety, function, and value of the community. By working with a professional management company like Trestle, Boards can navigate the complexities of special assessments with confidence, ensuring that both the association’s needs and the interests of the residents are protected.
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