If you’ve ever lived in an HOA, you’re most likely familiar with the term ‘special assessment,’ or have at least heard the term in passing. There are two types of assessments associated with homeowners’ associations: regular and special.

Let’s dive deeper into the differentiations between the two, and when they might come in to play:

Differences Between Regular and Special Assessments

Regular assessments, also known as “dues,” are what the homeowner is required to pay each year. These fees are often paid out monthly or quarterly. These assessments, or dues, are predictable and are often increased on a yearly basis.

These dues are evaluated by the HOA board to ensure that the amount of money that’s being paid is sufficient to take care of the amenities and/or public spaces in the complex or neighborhood. If new amenities are constructed, or if the cost of maintenance or repairs increases, there’s a chance the dues will increase, but usually no more than 10% per year.

Special assessments are separate from the monthly dues that are paid by homeowners and are only levied by the board to cover unexpected budget shortfalls, such as unforeseen repairs due to natural disasters or negligence. The board may, without membership consent, impose a special assessment on homeowners up to five percent of the current year’s budgeted gross expenses.

However, many HOAs require a community vote in order to approve the special assessment, especially if the special assessment isn’t considered an emergency. When a special assessment is equally distributed among the community, it is known as a capital improvement assessment.

Not all special assessments are distributed equally amongst members of the community. There are also special assessments known as compliance assessments. These assessments may be issued to an individual or a small group of residents instead of the community as a whole. Compliance assessments are often associated with negligence by an individual or a household. When this happens, the HOA will require reimbursement from person(s) responsible for the damage to cover the cost of repairs. This ensures that only those who are responsible for the damage pay for the repairs.

Why Special Assessments are Necessary

Although special assessments are not popular, they are necessary to keep the community safe and well maintained. Let’s say a hurricane comes through and causes major damage to structural integrity of the community’s entrance and exit gates. The HOA had budged $1,500 that year for general maintenance, but the repairs are going to cost around $12,000. The biggest lure for your neighborhood may be the safety and security those gates provide, which could cause to a major drop in home values if the gates do not function properly. To ensure your property value is not affected, the HOA will spread the cost of the gate repairs equally among residents, which is often much less than the depreciation of home values if the repairs were ignored.

Can Special Assessments be Enforced?

Being a part of a community with an HOA means you are required to pay special assessments that are levied on you. Unexpected costs often cause anger and frustration among community members; however, transparency is key to keeping tempers low.

When an HOA provides financial transparency to members, there’s a greater chance that homeowners will be able to budget for potential special assessments accordingly. For example, when an HOA explains that the roof on the condominium complex has been leaking recently, and there’s a chance a new roof will be needed in the upcoming months, it allows community members to start setting aside small amounts of money now instead of having to scramble last minute to come up with the full amount of the special assessment.

Special assessments are for the benefit of the community and enforcing them is necessary to ensure everyone carries their weight. For those who refuse to pay their portion of a special assessment, the HOA does have legal recourse to collect the funds, depending on the state. It’s not uncommon for an HOA to put a lien on someone’s property or levy additional fees if there is a refusal to pay. HOAs do not enjoy taking these drastic steps, but without them, others in the community would be forced to pay more to cover those who refuse to pay their portion.

Related: Who Pays for HOA Resale Package

If you are in a situation where you are unable to pay the special assessment in the timeframe that’s required, reach out to your HOA board. Your board may provide longer payment periods, short-term deferments, and/or other considerations to ensure the special assessment won’t have a negative impact on you or the community.