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HOA Assessment is a “special” [read: “extra”]
allocation of a proportionate individual share of a common expense that will benefit the whole community or the complex -- depending on what the circumstance might be – however this expense is, at the same time, unusual and large. Consequently, it is not funded through the budget covered by the regular maintenance charges.
Besides the routine maintenance, there are occasions on the life of a building that it will need an overhaul. It can be the roof or perhaps external walls painting.
In a subdivision it can be the overhaul of the swimming pool, clubhouse or any other major undertaking not covered under routine maintenance and budgeting.
In a small development it also may have the need to repave the streets.
Nothing repeals a potential buyer than crumbling asphalt in a development.
HOA Assessment: Your wallet is on the line!
These large projects will call for extra funds and they are raised through an “assessment.”
(NOTE: In some areas the “normal” fees are also referred as “monthly assessment.” And the raising of these “additional fees” will then be called “special assessment”)
It is necessary to be clearly understood that:
a) assessments or “special assessments” will be above and beyond the “normal” monthly dues
b) It can be expensive and it can be in place for a long time
So there is enough reason for you participate in the HOA meeting – but if ever hear even rumors about “assessment” jump in and get the scoop because your wallet is being targeted.
In my page “Condominium” I point out in a situation I almost jumped in into a big assessment to the tune of $1,5 million to be paid in 15 years.
I would have instantly increased my cash outlay by $120: in 15 years it would amount to real dough.
It is the law: Assessments must be paid
Once a decision has been established to move forth with the HOA assessment, the homeowners almost never have any other recourse but to pay.
I have seen numerous cases of people who decide to fight their HOA assessments and read about many more of these law suits across the country however the HOAs virtually always win it is so much so that nowadays my recommendation is to go ahead and pay.
I know that are many homeowners out there contemplating to sue – just be aware that in the end, should you loose, you also will be stuck with the HOA’s legal fees as well.
Legal fees are not cheap - they can cost $10s of thousands… And will come out of your pocket as well (because it is almost certain you will loose)
I have said before and I think it is worth repeating: the best approach is to get involved with the association, attend the meetings, participate in the input of what is coming down the pipe.
Get to know the decision makers. Try to talk with them one-on-one level, not in confrontational fashion meeting.
Research your point of view and bring printouts to support it. Offer alternatives. Suggest creating a reserve fund. Offer alternatives. Suggest creating a reserve fund above and beyond the boundaries of the HOA budget.
Keep in mind - It is the law: Assessments must be paid
Again, remember one of Thomas Jefferson’s Ten Commandments - “Take things always by their smooth handle.”
Buyers be aware…
In case you are fresh just looking to buy into a new place, there is no better time to ask questions and request for documentation about the HOA’s budget – you are entitled to it as a prospective buyer that soon will be bound to pay for such expenses – if any is upcoming.
There are some associations that are more forthcoming than others, some times it takes a few attempts to get the information you need – but you owe it to yourself to be darn sure what you getting into before you sign on the dotted line.
That is one sure thing to keep your home buying experience in the exhilarating side.
Please keep it very clear in mind: It’s the Law! Condo assessments must be paid.
“Assessment” equals “bad budgeting.”
My humble take is that “assessment” equals “bad budgeting.”
If you will spend a couple of weeks wondering across a desert, you just cannot carry water for only three days.
Community leaders live there, so there is no excuse “not to see it coming:” It is much better to slowly build a reserve fund that will not be a sudden painful jolt of hundreds of dollar all at once.
HOA officials seem to be naive or incompetent because they keep coming up with assessments time after time. Things would be smoother if they would take a long view of things and budget accordingly – A large community cannot simply manage crises.
As a said consequence, complaints and calls of foul plays are heard all over the map.
The AARP has taken issue with saying that many of their members have been treated not so nicely by HOA assessments. They have put forth a document that they wished would become the basis for legislation across the country for fairness in this level of governance.
It is called AARP Owner’s Bill Of Rights, to read it please click on link.
Unfortunately I do not see it getting much traction
FYI: In GA the law does not authorize the board of directors to impose:
(1) A special assessment fee per unit in excess of an average of $200.00 per fiscal year without the approval of a majority of the unit
(2) A monthly maintenance fee increase in excess of the percentage equal to the annual rate of inflation as measured by the Consumer
Price Index for All Urban Consumers for the immediately preceding 12-month period may be disapproved by unit owners holding a majority of the association vote.
It pays to be aware and ask about what is the law in your neck of the woods.
Wrapping Up Thoughts
As of March 2011 an estimated 62 million Americans make their homes in more than 300,000 homeowners and condominium associations, cooperatives and other planned communities,according to the Community Associations Institute (CAI), a trade group.
So it is almost inevitable that sooner or later either you or someone you know will be living under an HOA spell.
None of the moneys paid for a HOA assessment will count towards the mortgage payment [not of the principal nor the interest] to the bank or any other lender.
I think the best approach is to be proactive in the community and get information about of all is happening – hey, who said home ownership is worry free?
Off course the expenses covered are the special HOA assessment, the normal fees assessment have a separate overview on my page “HOA Dues” please click on this link to visit it
An HOA can make your staying in their community an enjoyable experience …or it can make you to repent of ever having a thought of purchasing that home.
So the more you educate yourself about your future home owners association the better you can hedge yourself against future headaches – here are additional “pages of knowledge” that might prove valuable down the road:
Now it is YOUR turn: Please give us your input!
Do you have some great comments on this topic you would like to share? Any question burning on your head? I would love to publish
Everyone is welcome: Just open your heart!I’d love to hear from you – simply click and follow instructions below
JC Fagundes, Associate Broker
EQUAL SERVICE TO ALL.
Residential. Commercial. Investments.