What are the requirements for an HOA special assessment vote?

Depending on state laws and the association's governing documents, there may be certain requirements for a special assessment vote. These include notice and transparency requirements.

How are HOA special assessments calculated?

The amount of the assessment usually depends on the total cost of the project and the number of homes in the association. Boards divide the cost among owners based on the formula in the governing documents. Most associations use equal division or a percentage based on unit size, ownership share, or property value.

How do HOA special assessments affect the reserve fund?

There is a clear relationship between special assessments and the reserve fund. When the reserve fund runs low and financial needs increase, an association would have to turn to special assessments. A well-managed reserve fund reduces the need for these assessments.

Can the HOA Vote On Special Assessments?

Are homeowners associations required to vote on special assessments? This is a question that many association boards and residents ask. Voting is a way to obtain express agreement from members, but it may not always be necessary. The answer ultimately depends on the community.

Should an HOA Vote on Special Assessments?

Special assessments are a common topic of concern in many communities. Homeowners associations rely on these fees to cover unplanned expenses or major repairs. While regular dues fund day-to-day operations, special assessments cover unexpected costs.

Because special assessments are an additional fee, some might wonder if they require a membership vote. HOA voting on special assessments depends on two things: state laws and the association’s governing documents.

State Laws

Many states have laws that outline when and how an HOA can impose special assessments. These laws can vary widely. Some states require a membership vote on special assessments, regardless of their size. Meanwhile, others give the board the power to impose fees up to a certain limit without a vote.

For example, in California, Civil Code Section 5605 says the board can impose a special assessment up to 5% of the budgeted gross expenses without membership approval. Anything more than that requires a vote.

Governing Documents

The association’s governing documents also play a key role. These include declarations of covenants, conditions, and restrictions (CC&Rs), bylaws, and rules and regulations. These documents may set stricter rules than state law.

There are governing documents that require a membership vote on special assessments even when state law does not. Some documents allow the board to approve special assessments with a simple board vote. Others require approval by a majority or even a supermajority of homeowners.

Board members should always review their documents before making a decision. If the rules require a vote and the board skips that step, homeowners may challenge the assessment.

Is There a Limit to HOA Special Assessments?

As with voting, state laws and the association’s governing documents may set a limit on special assessments. More often than not, there is no hard limit to how much an HOA can impose in special assessments. After all, it is the duty of the board to meet the association’s financial needs, even if it means levying a large special assessment.

That said, some state laws and governing documents require a vote from homeowners if the special assessment exceeds a certain amount or percentage. Both board members and homeowners should check their CC&Rs and bylaws to understand their special assessment limitations.

Methods to Vote on Special Assessments

The manner in which homeowners vote on special assessments, assuming it is required, depends on state laws and the governing documents as well. In general, there are four ways to conduct this vote.

Physical Ballots. This is the more traditional method, but it can be time-consuming and prone to errors.
Electronic Voting. This method is more transparent and efficient, and it encourages higher participation; however, not all associations allow it.
Proxy Voting. This allows homeowners to assign another individual to vote on their behalf.
In-Person Voting. This method sees homeowners voting in person at a meeting.

Requirements for an HOA Special Assessment Vote

Depending on state laws and the association’s governing documents, there may be specific requirements for a special assessment vote. These include notice and transparency requirements.

Notice Requirements

Before any vote, homeowners must receive proper notice of the proposed special assessment. This includes the amount, the purpose, and information about voting. Oftentimes, state laws and the governing documents require 14 or 30 days’ notice.

Transparency and Communication

Good communication is essential. Boards should clearly explain why the HOA needs the special assessment, how it was calculated, and what alternatives the association considered. Afterward, boards should provide a report on how the association spent the special assessment.

What are HOA Special Assessments and What are They For?

A special assessment is a one-time fee that an HOA charges to homeowners. This fee can cover various expenses, including budget shortfalls, unanticipated costs, emergency expenditures, capital improvements, and reserve fund contributions.

Here are some examples where special assessments can be used:

Replacing a roof after storm damage
Repairing a collapsed retaining wall
Upgrading an outdated security system
Covering legal fees for unexpected litigation

It is important to note that associations should rarely impose special assessments. The need for them should only arise once in a blue moon, especially if the board plans and manages its finances correctly.

How HOA Special Assessments are Calculated

The amount of the assessment typically depends on the total project cost and the number of homes in the association. Boards divide the cost among owners according to the formula outlined in the governing documents. Most associations use equal division or a percentage based on unit size, ownership share, or property value.

For example, if a 60-unit association needs a $120,000 roof replacement and the cost is split equally, each owner would have to pay $2,000. Boards should also consider adding a buffer for unexpected expenses. It is better to overestimate slightly than to fall short and require a second special assessment.

HOA Special Assessments and the Reserve Fund

There is a clear relationship between special assessments and the reserve fund. When the reserve fund is depleted and financial needs escalate, an association must resort to special assessments. A well-managed reserve fund reduces the need for these assessments.

Reserve funds are savings that the association sets aside for extensive repairs and future projects. Boards rely on reserve studies to plan how much to save each year. If the reserve fund is underfunded, the association may not have sufficient funds when an unexpected issue arises. This will ultimately lead to a special assessment, which can upset homeowners and lower trust.

Of course, sometimes, the association needs to impose special assessments to meet the proper reserve funding level. This is usually the case if an HOA’s reserves are dangerously low. Another way to reach a healthy reserve level is to increase regular dues.