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HOA Special Assessment: What It Is And How To Handle It

May 31, 2024



Facing an HOA (homeowners association) special assessment can be frustrating, especially if you weren’t expecting the extra expense. While special assessments don’t happen all that often, it can be helpful to understand what they are and how they work if you end up getting hit with a special assessment in addition to your regular HOA fees.

Let’s walk through the key facts you need to know about HOA special assessments.

What Is An HOA Special Assessment?

HOA special assessments are extra, “unusual” fees that your HOA board may charge you under certain conditions. The board usually levies these costs only in emergencies, such as unexpected large-scale damages.

Special assessments can be charged in most neighborhoods under HOA restrictive covenants. You’re subject to a special assessment if you’re a homeowner living in an HOA-governed community – not just if you’re a condominium owner.

Other HOA Expenses

HOA special assessments are usually only charged in the case of unforeseen emergencies where the community needs major repairs. They’re separate from typical HOA costs such as regular dues and planned assessments. Unlike other costs, special assessments usually fall outside the HOA’s yearly budget – potentially by a lot. 

If you’re part of an HOA community, you’ll likely be required to pay for special assessments if they arise, even though they weren’t planned.

Special Assessment Tax

“Special assessment” can also refer to a term associated with property taxes, which aren’t to be confused with HOA special assessments. A special tax assessment is levied on taxpayers to fund a local project – usually road construction or maintenance – unrelated to HOAs.

This is similar to how HOA special assessments are conducted, but remember: HOA special assessments and special tax assessments aren’t the same.

Why HOAs Charge Special Assessments

HOAs will typically only charge special assessments when an emergency requires immediate action and exceeds the original budget for the year. Even then, community homeowners must usually vote on the evaluation before the special assessment can be charged.

While HOA special assessments may be called on to pay for unexpected damages due to natural disasters or other accidents, they also might crop up if your HOA fails to properly budget for the year’s expenses and must exceed the expected costs.

Necessary Community Projects

As mentioned, HOA special assessments often cover repairs that must be made after natural disasters and other emergencies. If there’s widespread flood damage or a hurricane or tornado, it may require repairs that the HOA didn’t plan for in advance. These repairs could be to roofs, fences and other community structures.

There’s no actual limit to how much these repairs might cost individual homeowners, and that can be frustrating. Getting surprise-charged with a bill that will cost you potentially hundreds of dollars (if not thousands) is never fun – and that’s one of the main reasons why special assessments are so rare.

Inadequate Reserve Funds

When HOAs create budgets for the year, they decide how much homeowners will pay in HOA dues. The HOAs charge fees for planned maintenance, projects, operating expenses and other relevant community ventures. Some of the fees that homeowners pay go toward the HOA’s reserve fund – a pool of money used to fund emergency repairs and other unforeseen expenses.

However, unanticipated projects or situations sometimes drain the HOA’s reserve fund, causing special assessments to be charged to cover the remaining cost. This money may fund anything from repairs to a new community pool that ended up costing more than the HOA planned for.

HOA Loans Vs. Special Assessments

Paying for special assessments out of pocket may make sense for homeowners who have an expense that isn’t going to break the bank.

However, a standard HOA loan may be the best option for more significant expenses or homeowners in communities where ownership costs frequently fluctuate.

What To Expect As A Homeowner

Paying for a special assessment – especially a large one – can be stressful for homeowners who aren’t prepared.

Here are a few items you should be aware of in order to be best equipped to handle a surprise special assessment.

Paying Back Your Special Assessment Charge

Once an HOA board chooses to charge a special assessment, homeowners must pay it. But, the board members will decide the amount of time that homeowners have to pay based on various factors, including the amount of money due and how quickly the project that requires the funding must be completed.

If the special assessment doesn’t require an enormous contribution from each homeowner, it might need to be paid upfront and all at once. If the cost is going to be several hundred (or thousand) dollars per household, however, the board may allow for multiple payments and collect them over the course of a year or even longer.

HOA Special Assessment Limit

There’s no limit to how much a special assessment can cost, so what you may owe will depend on the project itself or the circumstances surrounding it.

Challenging An HOA Special Assessment

Special assessments are legal, and you’re likely contractually obligated to pay them according to your HOA covenants, conditions and restrictions (CC&Rs), which are essentially the HOA’s governing documents. You can technically challenge a special assessment if you absolutely can’t or don’t want to pay it, but doing so can be risky.

It could end up going to court, and if the special assessment is found to be reasonable and within the expectations of your HOA’s CC&Rs, you may end up paying even more in legal costs. Before challenging an HOA special assessment, you should always review CC&Rs first.

If you refuse to pay a special assessment and don’t formally challenge it, you could face additional consequences. Your HOA can charge you late fees, take you to court, bar you from using community resources and common areas, and even put a lien on your property if you continue to neglect to pay.

Planning For Future Special Assessments

There isn’t much you can do to plan for special assessments, since they’ll likely be sudden and of varying costs. It can help, however, to prioritize saving some extra cash just in case you’re charged in the future. You can also raise your level of community awareness by attending board meetings and reading newsletters, where notices of upcoming special assessments are discussed.

How HOA Special Assessments Affect Home Buying And Selling

Paying special assessments can be frustrating, but dealing with a neighborhood special assessment while buying or selling a house can be confusing as well. Since the cost of the assessment can move around depending on when you’re buying or selling a house, it’s important to be prepared as both a home buyer and seller in an HOA-governed community.

Real Estate Agents Must Disclose Special Assessments

If there is currently a special assessment in effect in a HOA neighborhood where you are looking at a house, your real estate agent must disclose that information. Depending on when the special assessment is officially decided and when you as a buyer officially come into possession of a property, you could wind up having to pay for it – which is important information to be aware of.

Existing Special Assessments Pass From Seller To Buyer

Regardless of the payment due date, if a special assessment is decided and issued after the point where the buyer officially owns a home, they now have to pay for the special assessment, whatever it is. In this way, an upcoming special assessment can pass from seller to buyer.

If a special assessment was already decided before the buyer officially became the owner of the home, however, the seller usually will have to pay that fee themselves rather than pass it to the buyer – even if they’ve sold the home.

Special Assessments Can Reflect Badly On An HOA

If there’s a special assessment in an HOA-governed community where you’re looking to buy a home, it might scare you away from the property – and for good reason. It’s hard to know whether an HOA treats special assessments as an absolute last resort or a common charge. It makes sense to fear that it’s the latter – if an HOA is mismanaging its funds and needing to call for special assessments often, that might not be a place you want to live.

The Bottom Line: Research HOA Homes And Condos Before Buying

When purchasing a home that’s part of an HOA community, it’s important to consider special assessments and understand how they might work and how they reflect the governing HOA.

If you’re thinking of moving into an HOA community, do your research and check out our guide to the costs involved in buying a home.

And, if you’re ready to embark on the exciting journey to homeownership, you can get started by filling out an application with Rocket Mortgage®.

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Headshot of Patrick Chism, section editor for Rocket Central

Sidney Richardson

Sidney Richardson is a professional writer for Rocket Companies in Detroit, Michigan who specializes in real estate, homeownership and personal finance content. She holds a bachelor's degree in journalism with a minor in advertising from Oakland University.