Explaining Special Assessments: What Homeowners Need to Know
For many homeowners in condominium and homeowner associations (HOAs), the term special assessment can be a source of stress and confusion. However, understanding why they’re necessary, how they’re approved, and what payment options exist can help homeowners prepare and plan accordingly.
What is a Special Assessment?
A special assessment is a one-time fee charged to homeowners when an association does not have enough funds in its reserves or operating budget to cover a necessary expense. This could be due to:
Major repairs or replacements – If a critical component of the community, such as a roof, siding, or plumbing system, needs replacement and the reserve fund is insufficient, a special assessment may be necessary.
Emergency expenses – Unexpected costs from a natural disaster, insurance deductible, or structural failure may require immediate funding beyond what’s available in reserves.
Reserve fund shortfalls – If a reserve study determines that an HOA’s savings are critically underfunded, a special assessment may be used to replenish reserves to ensure long-term financial stability.
How Are Special Assessments Approved?
Special assessments follow the same ratification process as an annual budget under RCW 64.90, which governs condominium and HOA financial procedures in Washington State. The process includes:
Board Approval – The board of directors determines the need for a special assessment and approves the proposed amount and purpose.
Notice to Homeowners – Homeowners are notified in writing about the special assessment, including the amount, due date(s), and reason for the charge.
Ratification Meeting – A homeowners’ meeting is scheduled to discuss and review the assessment.
Automatic Approval Unless Rejected – Under Washington law, the special assessment is automatically ratified unless a majority of the total association membership (not just those present at the meeting) votes to reject it. Because most communities don’t reach that high of a rejection threshold, special assessments are usually approved by default.
Payment Terms: Lump Sum vs. Installments
When a special assessment is levied, homeowners are typically given payment options, which can include:
Lump Sum Payment – The entire amount is due by a specific date. This option may be required for urgent repairs.
Installment Plans – The amount can be spread over several months or years to lessen the financial burden on homeowners. Payment plans may vary depending on the association’s policies and the project’s urgency.
Homeowners should review the assessment notice carefully and, if necessary, communicate with the board or management company to discuss available payment arrangements.
What Happens If a Homeowner Can’t Pay?
If a homeowner cannot pay the special assessment, they should contact the HOA or property manager as soon as possible. Some associations offer hardship extensions or alternative payment plans. However, if left unpaid, a special assessment can result in:
Because special assessments are legally binding financial obligations, it’s crucial to address payment concerns early.
Preventing the Need for Special Assessments
While special assessments are sometimes unavoidable, HOAs can take proactive steps to minimize their occurrence:
Conduct regular reserve studies – Ensuring that the reserve fund is properly funded helps avoid surprise shortfalls.
Increase dues gradually – Instead of relying on sudden special assessments, small annual increases in dues can help keep reserves healthy over time.
Improve financial planning – HOAs that plan ahead for major expenses and adjust their budgets accordingly are less likely to need special assessments.
Final Thoughts
While special assessments may not be ideal, they are often necessary to maintain a community’s infrastructure and financial health. By understanding why they happen, how they’re ratified, and what payment options are available, homeowners can better navigate these situations. If your association is proposing a special assessment, be sure to attend meetings, ask questions, and review the details carefully.
Would you like to see a breakdown of your community’s financial health? Contact your HOA board or management company to learn more about reserve funding and future financial planning.
