In addition to HOA fees required when someone purchases a unit in a building with an HOA, there may also be special assessment fees added to their costs. Special assessments are not always necessary, but there may be times when you need to tack on these fees.
What is a Condo Special Assessment?
As part of the HOA fee, owners expect that the money will maintain the property, the common areas, and sometimes even go into reserves for larger projects. In many cases, the estimations made every year do cover the expected costs. However, some circumstances could pop up and cause a need for more money to maintain the property and make repairs. There must be some way to raise money when this happens. This is where special assessments come into the picture. A special assessment will cover a one-time cost for repairs or make up for errors in the yearly calculation. It is a special charge that is usually only added to one month of fees.
What Causes the Need for a Special Assessment
Since a special assessment should not be used as a regular occurrence, it is important to know what typically falls within the expectations of a special assessment. These are just a few of the types of circumstances that could lead to a special assessment for a condo:
- The monthly operating costs are more expensive than normal. For example, there is a strange increase in operating costs because of something you did not expect. In this instance, you may need more money to keep things going. This will not happen very often, but on occasion, it may.
- Homeowners do not pay their HOA fees. This should not be your automatic conclusion. However, if a large number of owners do not pay, you can create a condo special assessment to help recoup some of the necessary funds while you wait for payment.
- There is an unexpected event that is not covered by insurance. Insurance does not cover everything. You still need to fix the problem even if the insurance does not cover it. A special assessment can help you pay for it.
For more information on what a condo special assessment is and when you should use it, be sure to contact Ardent Residential today.