by Evan Bradley, CFO, Campbell Property Management
Many condo and homeowners associations do a great job of keeping up with replacement costs within the community. They also do a great job of planning ahead to fix or upgrade capital items before they become a major problem. However, not all expenses can be foreseen and sometimes the real world does not cooperate with our projections. As Florida association residents, many of us have had to deal with condo or HOA special assessment costs at one time or another, due to weather, infrastructure repairs or in some cases to cover budget short falls resulting from members not paying their maintenance.
Approaching the community about a special assessment can be difficult. Sometimes, residents may not understand why they are being charged – it is important to explain to residents in a timely manner why a special assessment is necessary. When dealing with special assessment fees and residents, consider these vital points to prevent uproar:
•Experts – Let the experts take the reins and have them explain, from a professional standpoint, why the special assessment needs to be done. For example, if your community has a lake that needs restoring, have an engineer attend an open meeting for a Q&A session. By leveraging their expertise, residents will get a better understanding of why the repair needs to be done. If residents don’t understand why the issue needs to be fixed, they will question why they have to pay for the repair.
•Transparency – It is vital that residents trust the association. Don’t just tell residents to trust the association – give them all of the details about the special assessment needed. Whatever question the resident has should be answered, no matter what it is.
•Notice – Give the resident as much notice as possible. The more advance notice residents receive, the better. Residents may feel “blind-sided” by the assessment if they are notified at the last minute. It is smart to advise residents of special assessments as soon as possible. Giving residents several months to prepare for a special assessment is better than letting them know a few weeks or a month in advance.
•Payment Options – Stretching the payments out over time can cut back on collections. But, be wary of how many payment options you offer – offering too many can be a nightmare for your HOA’s bookkeeper. It is best to give residents 2-3 different payment options with varying lengths of time to pay, but once a resident selects an option they need to stick to it.
•Special Assessment Examples – A few examples of when an association might need a special assessment are: After an emergency (such as cleaning up after a hurricane), to cover a budget shortfall (if homeowners are not paying their bills), or to repair or replace a major infrastructure item in the community.
•Help! We Need Money! – Consider using bank financing to alleviate the need to collect a lot of money up front in a special assessment. If your community has an expensive repair that needs to be completed ASAP and it is too costly to pay upfront, secure a bank loan to get the work done in a timely fashion. Securing a bank loan gives the HOA more time to pay back the money and makes for smaller special assessment payments for the residents that can be paid over a longer period of time.
The next time your HOA is dealing with special assessment fees, refer to the checklist above to make sure you are handling the matter in the best way possible. Want to learn more about special assessments and how to handle them? Click here for more information.
Have you ever had to pay a special assessment fee? If so, what was it for and how did your HOA go about notifying you of the fee? We want to know in the comment section below.