MENU
CAREERS
LOCATION
Texas
News & Events
Events
Press Releases
Awards
Articles
Electric Cars Part 2: Getting Started in Your Community
Winter Energy Conservation
Case Studies
COA Community Hurricane Harvey Success Story
ActiveLED Success Story
HOA Community Customized Solution Success Story
HOA Community Communication Success Story
Services
Local Services
About Us
Leadership
Testimonials
Homeowners
Find My Community Website
Vendors
Contact Us
Contact Us
Request a Proposal
Vendors
Areas We Serve
Site Search
Make a Payment
Request a Proposal
Order Documents & Certificates
Our Locations
Our Locations
Alabama
Alberta
Arizona
British Columbia
California
Corporate
Delaware
Florida
Georgia
Illinois
Maryland
Massachusetts
Minnesota
Missouri/Kansas
Nevada
New Jersey
New York
North Carolina
Ontario
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Virginia
Washington DC
West Virginia
Cancel
Go
About Us
Who We Are
Background
Corporate Leadership
Partner With Us
Testimonials
Social Responsibility and Sustainability
Our People
Our Communities
Our Environment
Resource Library
What We Do
Property Management
Community Association and HOA
Condominium Association
High-Rise
Active Adult Community
Lifestyle Community
Master-Planned Community
Single-Family Home
Additional Services
Banking and Insurance Programs
Financial Management
Developer Services
Operational Support
Why FirstService Residential
Why We're Different
Client Satisfaction
Customer Care Center
Property Management Software
Ongoing Training
Green and Sustainability
FS Energy
Property Management Resources
Homeowners & Community Living
Property Management
Property Management Careers
HOA Board Members
HOA Committee
Emergency Management
HOA Finance
Property Maintenance Management
Property Management Vendors
Community Amenities
Active Adult Communities
Green & Sustainability
The Elements of Living
Our Social Purpose
Partner With Us
News and Articles
Press Releases
Articles
Frequently Asked Questions
FAQs on Community Association Meetings
Contact Us
Contact Us
Request a Proposal
Career Opportunities
Request a Proposal
Find Your Local Office
GO
Find Careers in
Alabama
Alberta
Arizona
British Columbia
California
Corporate
Delaware
Florida
Georgia
Illinois
Maryland
Massachusetts
Minnesota
Missouri/Kansas
Nevada
New Jersey
New York
North Carolina
Ontario
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Virginia
Washington DC
West Virginia
GO
Join FirstService >
Resource Library
Careers
Join FirstService
Alabama
Alberta
Arizona
British Columbia
California
Corporate
Delaware
Florida
Georgia
Illinois
Maryland
Massachusetts
Minnesota
Missouri/Kansas
Nevada
New Jersey
New York
North Carolina
Ontario
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Virginia
Washington DC
West Virginia
Customer Service
Service Chat
Alabama
Alberta
Arizona
British Columbia
California
Corporate
Delaware
Florida
Georgia
Illinois
Maryland
Massachusetts
Minnesota
Missouri/Kansas
Nevada
New Jersey
New York
North Carolina
Ontario
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Virginia
Washington DC
West Virginia
Connect to Your Portal
Site Search
Find Your Local Office
GO
Menu
Expand Menu
About Us
Who We Are
Background
Corporate Leadership
Partner With Us
Testimonials
Social Responsibility and Sustainability
Our People
Our Communities
Our Environment
Resource Library
What We Do
Property Management
Community Association and HOA
Condominium Association
High-Rise
Active Adult Community
Lifestyle Community
Master-Planned Community
Single-Family Home
Additional Services
Banking and Insurance Programs
Financial Management
Developer Services
Operational Support
Why FirstService Residential
Why We're Different
Client Satisfaction
Customer Care Center
Property Management Software
Ongoing Training
Green and Sustainability
FS Energy
Property Management Resources
Homeowners & Community Living
Property Management
Property Management Careers
HOA Board Members
HOA Committee
Emergency Management
HOA Finance
Property Maintenance Management
Property Management Vendors
Community Amenities
Active Adult Communities
Green & Sustainability
The Elements of Living
Our Social Purpose
Partner With Us
News and Articles
Press Releases
Articles
Frequently Asked Questions
FAQs on Community Association Meetings
Contact Us
Contact Us
Request a Proposal
Career Opportunities
Request a Proposal
Make a Payment
Order Documents & Certificates
Request a Proposal
Connect to Your Portal
Our Locations
Alabama
Alberta
Arizona
British Columbia
California
Corporate
Delaware
Florida
Georgia
Illinois
Maryland
Massachusetts
Minnesota
Missouri/Kansas
Nevada
New Jersey
New York
North Carolina
Ontario
Pennsylvania
Rhode Island
South Carolina
Tennessee
Texas
Virginia
Washington DC
West Virginia
Search!
Search Site
GO
CLOSE
TEXAS
News & Events
Events
Press Releases
Awards
Articles
Case Studies
Services
Local Services
About Us
Leadership
Testimonials
Homeowners
Find My Community Website
Vendors
Contact Us
Contact Us
Request a Proposal
Vendors
Areas We Serve
Here Are Important HOA Special Assessment Rules to Know
Sunday October 08, 2017
No homeowners association (HOA) board ever wants to levy a special assessment. However, there may be circumstances when there is no other choice. Imposing a special assessment is a move that your board should not undertake lightly.
Take a natural disaster like Hurricane Harvey. For some Texas associations, the cost of repairing or replacing common structures that were damaged by the storm far exceed available insurance coverage or planned expenses.
Before you go forward with a special assessment, make sure that you have a thorough understanding of when these added fees are appropriate and how to go about collecting them. The following “do’s” and “don’ts” are a good place to start.
DO…check your HOA’s governing documents first.
DON’T…assume that your board has unlimited authority.
Although Texas law allows HOAs to levy special assessments, check your association documents for specific regulations about how and when you can implement them in your association. For example, your board may only be authorized to approve special assessments if they don’t exceed a certain dollar amount. The special assessment could also require homeowner approval.
DO…restrict special assessments to major projects.
DON’T…use special assessments to keep up with rising operating costs.
Special assessments should only be implemented if your HOA or condominium association faces an unplanned capital expenditure – such as a major repair or replacement – or needs to make a significant improvement that you cannot fund any other way.
Examples of appropriate repairs and replacements include:
Poor drainage around a building causing basement leaks and extensive repairs in an aging high-rise building
Repair leaks in a pool due to ground shifting
The unexpected replacement of townhome roofs that have prematurely exceeded their useful life
A large deductible on an unexpected insurance claim
Examples of appropriate property enhancements include:
Replace and upgrade all the front doors in an urban-living community to increase home values
Conversion to xeriscape landscaping to save money over time by reducing maintenance and irrigation requirements and eliminating regular replacement of non-native plants
Some boards believe that they should keep their regular HOA assessment fees low at any cost in order to appease homeowners and attract new buyers. “But this can backfire,” notes Sean Herbold, senior director of client accounting at FirstService Residential in Houston. “It's important to make sure that the association budget is properly funded to take care of items such as maintenance of amenities and landscaping. Homeowners may question the board’s ability to fulfill its fiduciary responsibility if special assessments are a common occurrence for things that are perceived to be basic upkeep of the community.”
DO…communicate with homeowners early and openly.
DON’T…blindside homeowners with an unexpected special assessment.
Herbold emphasizes the importance of being transparent about the need for a special assessment. “Communicating openly can help minimize homeowner resistance,” he says. If time allows, he recommends holding a meeting to explain the reason that the special assessment is necessary. This is also a way to give homeowners an opportunity to ask questions and voice their opinions. Prompt communication is especially important in the case of a needed emergency repair or a catastrophic loss.
DO…offer flexible payment options.
DON’T…ignore the financial burden a special assessment may present.
For some homeowners, even a modest fee can present a financial hardship to some. Providing payment options eases the burden on these residents and increases the chance that they will do everything they can to meet their obligation.
DO…create an annual association budget that addresses all your needs.
DON’T…neglect to include unexpected possibilities in your annual budget.
One reason that boards sometimes end up needing a special assessment is because they fail to budget for unforeseen costs. Creating a contingency line item will help to address this issue.
Boards sometimes fail to allocate enough money to fund their reserves or to cover their insurance needs. According to Herbold, “If the board has planned well, it should be able to take money from its reserves when costly projects come up.”
DO…rely on financial experts.
DON’T…make financial decisions without professional help.
Obtaining a reserve study, and following the preventative maintenance guidelines in the study, is crucial for adequately funding your reserves. “A good community management company can be a great asset in selecting a reserve study specialist who will do the job right,” says Herbold.
Herbold also recommends turning to your management company to help you get legal counsel if necessary, as well as to find the best rates on loans and insurance. “You want to make sure that anyone you’re working with – whether that’s an attorney, an insurance broker or a financial manager – has the specialized knowledge to address the unique requirements of an association,” he explains.
A special assessment can be an important tool for funding needed work. Used wisely, it can preserve the value of your HOA’s property.
Search Articles
search Articles
SUBMIT
Don't miss future articles about HOA financial management and other important topics! Fill out the form below and we'll be sure to send important information right to your inbox.
Signup For News & Resources
×
Fill out the form below for more information on how a property management company can add value to your community.