HOA Special Assessments Explained: Who Approves, Notice, Payment Plans

Quick Answer

A special assessment is a one-time (or short-term) charge an HOA or condo association levies on owners, on top of regular dues, to pay for a cost the budget and reserves cannot cover. Yes, an association can charge one, but only if the governing documents and state law allow it, and in many places the board must follow notice rules or get an owner vote first. Owners generally owe it like any other assessment, and unpaid special assessments can be collected the same way as unpaid dues.

What a Special Assessment Is and Why Boards Levy Them

Regular assessments fund the annual operating budget and the reserve contribution. A special assessment is the tool a board uses when the money on hand will not cover a specific, known cost. It is usually charged to every owner by the same formula used for regular dues (equal shares, square footage or percentage interest, depending on your documents).

Common triggers

• Underfunded reserves. A roof, paving or elevator project comes due and the reserve account is short. See HOA reserve funds explained.
• Uninsured or underinsured loss. A deductible or an uncovered portion of a claim has to be paid. See the HOA insurance guide.
• Legal or compliance costs. A lawsuit, a required inspection or a code-mandated repair that was not budgeted.
• A budget miss. Costs ran well past the budget, often because the budget was built without current bids. See how to build a realistic budget.

What it is not

A special assessment is not a fine or a late fee. It is a charge for the association's expenses. For the basics of every charge type, read What Is an HOA Assessment? For the condo version of this topic, see condo special assessments explained.

Who Has to Approve a Special Assessment

There is no single national rule. Three layers decide who must approve one, and you should check them in this order.

• State statute. Some states set thresholds or procedures. Others say very little.
• The declaration, CC&Rs or master deed. This is where most associations find the real limit, such as a cap on what the board can levy without a member vote. See governing documents explained.
• The bylaws and board policy. These usually control the meeting and voting mechanics.

The practical question is whether the board can act alone or needs a member vote. The answer depends on the amount, the purpose and your documents. Where state law and the documents conflict, the stricter limit on the board is normally the safer reading, but confirm that with counsel.

Example: California (Civil Code 5605)

California is an example of a state that sets a statutory ceiling. Under Civil Code section 5605(b), and "notwithstanding more restrictive limitations placed on the board by the governing documents," the board may not "impose special assessments which in the aggregate exceed 5 percent of the budgeted gross expenses of the association for that fiscal year" without "the approval of a majority of a quorum of members" at a meeting or election. The same subdivision applies a 20 percent ceiling to year-over-year increases in the regular assessment. The statute defines quorum for this purpose as more than 50 percent of the members. Our reading: the 5 percent test is measured in the aggregate for the fiscal year, so several smaller special assessments can add up to the threshold. Our California special assessment guide covers the details, and the statute has other provisions you should confirm with counsel.

Example: Texas (Property Code 209.0051)

Texas does not set a dollar cap in the section we read, but it does regulate how the board acts. Under section 209.0051(h), the board may not consider or vote on "levying of special assessments" or "increases in assessments" outside an open meeting for which prior notice was given to owners. Texas owners are protected by process, while the amount is governed by the dedicatory instruments.

Example: Florida (Chapters 718 and 720)

For homeowners' associations, section 720.303(2)(c) says an assessment "may not be levied at a board meeting unless the notice of the meeting includes a statement that assessments will be considered and the nature of the assessments," and written notice of a meeting at which special assessments will be considered must go out "not less than 14 days before the meeting." For condominiums, section 718.116(10) requires that the "specific purpose or purposes" of a special assessment be set out in a written notice to each unit owner, and that the funds be used only for those purposes.

Notice Requirements and What a Good Notice Says

Even where state law is quiet, a vague notice is the fastest way to turn a necessary assessment into a dispute. A strong written notice includes:

• The total amount being raised and each owner's share, with the formula shown.
• The specific purpose, in plain words, plus the bids or reports supporting the number.
• The date the board or members approved it, and the authority relied on (document section or statute).
• The due date, any installment option and the consequence of missing a payment.
• Who to contact for a payment plan or questions.

Florida's condominium statute shows why the purpose matters. Under 718.116(10), once the purpose is complete, any excess funds are "common surplus" and may, at the board's discretion, "either be returned to the unit owners or applied as a credit toward future assessments." That is a useful model even where your state does not require it: keep special assessment money in a separate, traceable account.

These are examples, not a complete list for any state, and statutes change. Confirm the current text with a licensed attorney in your state.

Payment Plans and What Happens If You Cannot Pay

A special assessment is a debt of the owner. If it goes unpaid, the association can usually add interest and late charges as the documents and state law allow, and may use its collection remedies. Our delinquency and collections guide walks through that process.

Payment plans

Some states require boards to offer them. Texas section 209.0062 is one example: an association "composed of more than 14 lots" must adopt guidelines for an alternative payment schedule for delinquent "regular or special assessments." The minimum term is three months, the association is not required to allow a plan that extends past 18 months from the request, and monetary penalties may not accrue under the plan (reasonable administrative costs and interest are not penalties). Other states leave plans to the board. Either way, a written plan is better for both sides than informal promises.

If you are an owner who cannot pay

• Contact the board or manager before the due date, in writing.
• Ask whether the association allows installments, and for the plan terms in writing.
• Ask for the vote, minutes and supporting bids if you doubt the assessment was properly approved.
• Do not ignore collection letters. Our guide to demand and payoff letters explains what they mean and how to respond.
• Talk to a licensed attorney in your state before disputing an assessment, since deadlines can be short.

Alternatives Boards Should Weigh First

A special assessment is not always the only option. Before levying one, boards commonly compare:

• A bank loan to the association. Spreads the cost over years, repaid from assessments. The loan terms and any required owner vote depend on your documents and state law.
• Phasing the project. Splitting work across fiscal years if the condition of the asset allows.
• A higher regular assessment. Smoother than a lump sum, though some states cap annual increases (California's 20 percent limit above is one example).
• Raising reserve contributions. The long-term fix. A current reserve study tells you what is realistic. Michigan, for example, requires condo associations to maintain a reserve fund (MCL 559.205), and the administrator may set minimum standards by rule.
• Insurance. Confirm whether part of the loss is covered before assessing for all of it.

Whatever path you choose, record the discussion and the decision in the minutes. Our capital improvement vs. maintenance guide helps separate which costs can be paid from which fund.

What Boards Should Do

• Read the declaration and bylaws first for any approval threshold, cap or notice rule, then check state law.
• Get at least two written bids and a short board memo explaining why reserves cannot cover the cost.
• Give notice that names the purpose, amount, allocation method and due date.
• Hold the vote at a properly noticed meeting and record the motion and vote in the minutes.
• Offer installment options and publish a written payment plan policy.
• Deposit the funds in a separately tracked account and report back on spending.
• Update the reserve study and next year's budget so the same shortfall does not recur.

Frequently Asked Questions

What is a special assessment in an HOA?

It is a one-time charge levied on owners in addition to regular dues, used to pay for a cost the budget and reserves do not cover, such as a major repair or an uninsured loss.

Can an HOA charge a special assessment?

Generally yes, if the declaration or state law gives the association that authority. Some states and many documents require a member vote or advance notice, so the board should confirm both before levying one.

Does the board need a vote of the owners?

It depends on your documents and state. In California, for example, Civil Code 5605(b) requires member approval when special assessments exceed 5 percent of budgeted gross expenses in a fiscal year. Other states and documents set different tests.

How much notice must owners receive?

It varies. Florida HOA law calls for at least 14 days' notice of a board meeting that will consider special assessments. Texas requires an open, noticed meeting. Always check your own state and documents.

What if I cannot afford a special assessment?

Contact the board early and ask for a written payment plan. Some states, such as Texas for larger associations, require plans to be available. Do not ignore the bill, because late charges, interest and collection steps can follow.

How APM Helps

Association Property Managers provides HOA and condo management from offices in East Lansing, Michigan and Dublin, California, and remote management for associations elsewhere starting at a flat $99/month per community with no per-door fees or long-term contracts. See pricing, remote management or request a free proposal, delivered within three business days. Laws and licensing rules differ by state, and we confirm the requirements for your state when we build your proposal.

Legal disclaimer: This article is general information, not legal advice. Laws change and associations differ. Confirm the current statute text and how it applies to your governing documents with a licensed attorney in your state before acting.