How are special assessments from a homeowners association passed onto unit owners?

A special assessment from a Homeowners Association (HOA) is typically passed on to unit owners through a process defined in the community’s governing documents. While the exact rules vary by state and association, the general process works like this:

1. The Need for Extra Funds Is Identified

An Homeowners Association may issue a special assessment when the regular budget or reserve fund cannot cover a large expense, such as:

• Major building repairs (roof, siding, elevators)
• Infrastructure replacement (parking lot, plumbing)
• Insurance shortfalls
• Emergency damage (storms, fires, structural issues)

2. Approval by the Board (or Owners)

Depending on the association’s declaration, bylaws, and state law, the assessment must be approved by:

• HOA Board of Directors only (common for smaller assessments)
• A vote of the unit owners (often required if the amount exceeds a certain percentage of the annual budget)

Some governing documents specify thresholds such as:

• Board can approve up to 5–15% of the annual budget
• Anything higher requires majority or supermajority owner approval

3. Allocation to Each Unit

Once approved, the total assessment is divided among unit owners according to the formula in the HOA declaration. The most common methods are:

1. Percentage Ownership (Most Common)

• Each unit has an ownership percentage in the association.
• Owners pay their share based on that percentage.

Example:

• Total assessment: $100,000
• Unit ownership share: 1.5%
• Owner pays: $1,500

1. Equal Per Unit

• Each unit pays the same amount.

Example:

• $100,000 assessment / 50 units = $2,000 per unit

1. Size-Based or Benefit-Based

• Larger units pay more.
• Units benefiting from the repair may pay a larger share.

4. Billing the Owners

The HOA typically sends a special assessment notice and invoice that includes:

• Total amount owed
• Due date or installment schedule
• Purpose of the assessment
• Payment instructions

Payment structures often include:

• Lump sum due within 30–60 days
• Installments (monthly or quarterly)
• Temporary increase in HOA dues

5. Enforcement if Not Paid

If a unit owner does not pay:

• Late fees may apply
• The HOA can place a lien on the property
• In some states, the HOA may pursue collection or foreclosure

Example Scenario

A condominium building needs a $500,000 roof replacement but only has $200,000 in reserves.