Special Assessments Charged by Condo & Homeowners’ Associations
As attorneys who frequently represent homeowners’ associations here in Florida, we often see associations challenged on what are known as special assessments. These assessments are often necessary, still, there are tactics that associations can use in order to mitigate some of the effects and avoid litigation from owners in some circumstances, as we discuss below.
Regular Fees, Reserves, And When/Why Special Assessments Are Needed
Special assessments are fees that are charged in addition to regular fees that are expected; typically to make up for budget shortfalls. While regular dues are charged monthly or quarterly, in order to keep the community running in terms of operating expenses such as electricity, exterior maintenance, insurance, landscaping, management, and others, associations also keep reserves to fund such expenditures such as street repaving and roof replacement. Reserve needs are determined by reserve studies, which determine the schedule for repairs over a 30-year timeline, as well as estimated costs. Florida requires condo associations to have reserves studies performed once every three years, however homeowners’ associations typically only have the studies done as often as what their governing documents require.
When an association does not properly fund the reserves, this is when problems typically arise. From a business and legal perspective, the reality is that operating costs for associations will typically increase over time and if they are not addressed in terms of assessing regular special assessment fees, associations could find that they are grossly underfunded for some major repairs and replacements, which could result in owners owing thousands of dollars in special assessment fees; years later. In addition, sometimes these fees also have nothing to do with associations failing to follow their reserves but instead result from an unexpected disaster that insurance perhaps did not cover and/or resulted in a rapid deterioration in construction, for example. Therefore, from a fiduciary duty perspective, condo and homeowners’ associations must regularly levy special assessment fees.
Mitigating the Effects
It might be easier for owners to deal with these assessments if they are added onto monthly condo fees in small amounts overtime. That being said, sometimes these funds are simply needed for immediate use, in which case associations have no choice but to charge special assessment fees as one-time charges paid by each owner as lump sums. This is why it is important for owners to review the governing documents and financials before purchasing in a community.
Contact Our Florida Homeowners’ Association Attorneys
Associations play an important role in upkeep, maintaining operations, and in ensuring that property values stay at a certain level. In working to ensure that important goals are met, working with the right attorney to protect your association is imperative. At HD Law Partners, our Tampa homeowners’ association attorneys are prepared to work with you to provide that legal advice and representation that you can count on. Contact us today to find out more.