Navigating HOA Fee’s and Assessments

Have you ever wondered what assessments are and what they cover? Or have you wondered how they’re calculated? Homeowner’s associations are known for coming along with fees. These fees, known as assessments are the largest form of revenue for an association, and for better or worse, are crucial to keeping an association functioning. While different associations may have varying assessments based on the services they provide, here are a few of the most prominent ones.

Regular Assessments

Does your association provide landscape maintenance or have a pool that you and your family can use? These services are called common expenses. With the help of the manager, the Board will determine what the expected expenses are for the upcoming year and prorate it out to each owner. Regular assessments cover these prorated expenses and are an owner’s financial obligation to the association in exchange for these services.

Special Assessments

Occasionally, there’s a large expense that either was not included in the budget or replacement reserve. An association may levy a one-time charge called a ‘special assessment’ to cover that cost. These happen infrequently and can often be required to be approved by a vote of the owners. Not all special assessments are created equal, however! An association may decide to build an amenity that wasn’t previously there and rather than raising the regular assessment one year and decreasing it the next, they’ll use a special assessment.

Specific Assessments

The name for this assessment varies from one set of governing documents to the next, but the purpose is all the same. When an owner intentionally or unintentionally causes damage to the association’s property or incurs other costs on behalf of the association due to their conduct, the association can charge that owner directly. This avoids the situation where other owners are covering unnecessary expenses. Specific assessments are used in very limited situations as defined in the governing documents.

Use Fees

I know, I know – these aren’t technically assessments, but we’re talking about them anyway. In some instances, associations offer an a la carte menu of additional services to owners. For example; parking space rentals, guest passes, facility rentals, etc. Enhanced landscape services may be offered in 55+ communities. Owners typically have to opt in to receive these benefits and in exchange pay an additional fee. This can be beneficial because service providers offer a bulk discount.

Regardless of what your association may call them, all assessments are outlined in the governing documents for your community. Included in the governing documents is the obligation that the association has to perform services in exchange for these funds. While varying levels of assessment costs come along with varying levels of service, the overall intent is to maintain the appearance and neighborly feel.