Condo Association Management Blog

Generally for big projects (especially the unexpected ones) a supplemental assessment is the only way to go. If you are looking to build reserves over time then an increase in the monthly fee is go. Is your budget balanced and are your reserves healthy?

I think special assessments should only be used for expenses that cannot be planned for: for example if your state or local govt. decided that your condo must have a sprinker system and before it was grandfathered in that it did not need one because it was built before they were manadated that may justify a special assessment. However, for normal items like a new cooling and heating system every 25 years or a new roof every 25 years, then the association should have been preparing its reserves. To me, a special assessment on planned items means the condo doesn't budget properly and it makes it less competative in the market.

First, it depends on the state in which you reside, what the statues or your governing docs say in regards to how much you can increase. 
 
 
 
For instance, in California, you are only allowed to increase the annual assessment no more than 20% and a special assessment no more than 5% of the current fiscal year's budge, without the vote of the members, generally 51%.  
 
 
 
What are the large expeditures for?

 
 
By any chance do you know Minnesota's state statute pertaining to how much special assestments can be or how much dues can be raise? 
 
 
 
Thanks!

I concur with Robert and Will, with one additional point: special assessments are very difficult for people to afford. As such, they should only be used for extreme measures that cannot be foreseen in the budgetary process.

You first may want to check your governing documents and state laws to find out what are the legal requirements to raise assessments and/or to pass a special assessment. Your governing documents may allow say, a 10% increase per year without a 2/3 affirmative vote of the membership. Your gov docs most likely require a vote of the membership for special assessments. You may come to the conclusion that an assessment increase even if it's only 10% from the previous year is far better than convincing the majority of homeowners to sign up for a special assessment or, a higher increase in assessments. Now, if you are talking about a major capital improvement and there is no Reserve Fund for this project, then you may find that you will need a lot more money and that a special assessment is in order.

Replacement reserves are the key.... your HOA should have an updated reserve account to eliminate assessments.

When the HOA does not have sufficient funds to cover a major project there are several options. May I suggest that you prepare a list of options and present them to the community and let the homeowners decide how they will pay for the job. A combination of increased fees, assessment or a bank loan are examples of the options that are available to the community. The community might appreciate being involved in the decision making process. 
 
 
 
Marty Morris

Unfortunately, our association only has 13 units, we only have about $13,000 in our "reserve" fund and we only pay $160/month for our dues. The dues have not been raised since 2004. and at that time it was only raised $10. The majority of the residents are retired and do not want to raise the dues in order to build a healthy reserve for roof replacement, siding replacement, new driveway etc. because their argument is that why should they pay more money/month in dues when they are not going to be in the assciation in 10,15 or 20 years and they would rather keep their money in their accounts and earn interest instead of paying more a month in dues. Historically, the association has not planned for the future needs/repairs, has no realistic/sufficient reserve fund and all residents pay ENORMOUS assestments anytime we need a majore repair or replacement. A few years ago, every unit paid $5,000 in order to pay for the new siding and a few years before that $10,000 per unit for a new roof. My fear is that as the retired unit owners sell off and new residents move in, not everyone is going to have that much liquid cash readily accessible to pay for necessary repairs or replacements to keep up our common area or exterior surfaces on the units. Does anyone have any advice for me to share with all of the older retired unit owners who do not want to raise our dues? I am young and do plan on staying for at leat 10 - 15 more years and fear that the place will fall apart because historically and currently the asscociation is not budgeting currectly to plan for the furture.

Think of this possibility if you do not establish a well planned reserve fund. A major mechanical system breaks down. If not very npromptly replaced (assuming it's not repairable) you will have to move to hotel until the service is restored. Waiting to haver a Board Meeting and voting on an assessment and then collecting the assessment will cost far more than any interest unit owners may have accrued -especuially at todays very lows interest rates.

We successfully offer HOAs programs like a PBX or WI FI Campus to create savings or sustainable funding mechanisms to help keep them from having to do special assessments. We do this nationwide. 
 
 
 
Owners like it and often the savings can be had from day 1 with no capital to outlay via a lease for the initial equipment.  
 
 
 
Not sure if I can post my various addresses or contact info so let me know via this blog and comment post.  
 
 
 
As a property owner and board member of an HOA, I am not too keen on special assessments. These days they can really hurt people who are just hanging on each month.

If it is possible , I would like to know what is PBX and wifi campus ,how do you implement them?

PNX=private branch exchajnge i.e. your own internal telephone system 
 
WiFi=wireless voice,internet and TV.For a condo of your size just not economically feasible.

I sell commercial pool supplies to HOA, condo's, lodging facilities, athletic clubs etc. I think most HOA do a very poor job when it comes to pool expenditures. Once they are with a pool company, they seem to stay with that company. The longer they are with the company, the easier it is for the company to pass on increases in products and services. It doesn't hurt to shop around every couple/few years to compare prices and service.

Never extend a service contract. Always get competative bids.

Is there a maximum dues or special assessments on condo owners in Oregon. Does it reqire majority owner approval?

There is another aspect that has not yet been mentioned. There is a federal regulation which will not allow for FHA backed mortgage if the reserve is below their standard. Yes-you might not be around 10 years from now but when your heirs try to sell your unit they may have quite some difficuklty because the potenial buyer will not be able to secure a gov't backed mortgage. In such a case the seller might have to discount his asking price to make the sale.

Thanks so much Charles Adler for your comments! Wish me luck in April for our annual meeting!

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I purchased my condo approximately 1 1/2 yrs ago. I understood that we had a special assessment & had no problem with that. But, here's my problem. I have contacted the management co & board members as I have a leak coming in, from outside, due to the flashing was not done properly and the rain comes in from under the siding. They have done nothing as yet. I went so far as to call the city inspector and told them about all the problems we have in the community. We have one building where the rain comes in that a tenant in the building actually went outside & caulked around his unit. Why do I have to pay for outside damages when I pay dues? Also, why are unit owners allowed to put Section 8 in when we pay dues? I live in Charlotte, NC and I am disabled & live on social security.

Assessments should not occur if the HOA is performing a reserve study on a regular schedule and performing the actions required, which often includes raising dues. Obviously, there are items that Reserve Study professional may not include if not specifically informed like replacement of polybutylene pipe or cutting down old Bradford pears. 
 
Assessments are unfair to the current residents, since past residents have not paid their fair share.

Are they any guidelines or restrictions with regards to special assessments in New York?