Special Assessments for Your Condo or HOA

I am often asked to help
homeowners associations and condominiums figure out ways to make ends
meet.  For those communities with cash
flow problems it can be challenging. 
Raising dues is never a popular option, but is often necessary.  The governing documents for most condominiums
and homeowners associations allow the board of directors to unilaterally
increase dues by some amount—usually between 10% and 15%—without a vote of the
membership.  That makes sense because an
association should be able to make regular increases to dues to keep up with
the costs of the association, both the expected costs and the unforeseen
costs.  I’ve helped several associations
amend their documents to grant this normal authority. 

Another option to raise the
needed cash for a community is a special assessment.  These are usually reserved for those
circumstances that are either unexpected, or for various reasons the
association is not able to pay for a big-ticket maintenance cost that is in
need of attention.  The most common
example is the replacement of townhome or condominium roofs.  Because it is ideal that roofs be done at the
same time, the costs are usually large and many communities haven’t saved
enough to simply pay for them from reserves. 
That is where the special assessment comes in.

Because special assessments tend
to be infrequent and usually result in owners having to pay large amounts, most
association documents spell out specific directions for how to pass a special assessment.  Whatever the provisions may be to pass a
special assessment it is crucial that the board follow all steps with
exactness.  Otherwise, they may leave the
association open to challenges that the special assessment was improperly
enacted. 

In order to adopt or pass a valid
special assessment, the board of directors should ensure that proper procedure
is followed to make certain owners are given proper notice, that any necessary
quorum is met, and that votes are properly counted.  In addition, there are sometimes inconsistencies
or omissions in the documents themselves that create doubt about an
association’s ability to pass a special assessment.  I have seen documents that simply have no
provision for a special assessment.  I
have also seen documents that do contain special assessment provisions, but
they are so narrowly drawn that it is not clear the association has power to
pass a special assessment and use the money for the intended purpose.

All of these issues are things a
good HOA attorney can address.  If your
homeowners association or condo is having cash flow problems and needs help
raising the revenue to meet the association’s obligations, contact a community
association attorney with one of our Charlotte, Greensboro, Triangle, and
Coastal offices. 

Author: David Wilson
Articles have been Reprinted with permission from Black, Slaughter, Black.

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