Homeowner’s association (HOA) assessments are a necessary part of community living. However, they are often unpopular with homeowners. HOA Boards must strike a balance between keeping homeowners satisfied and acting in the community's best interests.
At Partners Community Management, we help HOA Boards determine when to increase assessments and how to approach this process thoughtfully and transparently.
What are HOA Assessments?
Before deciding to raise your HOA’s assessments, you need to understand their definition. HOA assessments are mandatory fees paid by homeowners to fund the community's operations and maintenance. HOA Boards typically collect these fees monthly, quarterly, or annually. The HOA sets the fees homeowners must pay in the community’s governing documents and applicable state laws.
Additionally, HOAs may levy special assessments. These are special, one-time fees used to fund a specific project or emergency repair. On the other hand, regular assessments generally cover both day-to-day operating expenses and reserve contributions.
Why Does Your HOA Need Assessments?
An HOA cannot operate effectively with a routine assessment, as it is the primary source of income for a community association. If your Board does not require regular assessment contributions, the association may face the following challenges.
- Complying with state and local regulations.
- Maintaining common areas and amenities.
- Paying vendors and service providers.
- Keeping insurance coverage up to date.
- Addressing safety requirements.
- Preparing financially for future capital projects.
Common Signs It May Be Time to Raise Assessments
A well-planned HOA assessment takes rising costs and inflation into account. Because of the unpopularity of rising assessments, many Boards put off increasing them. However, this can be a major detriment to your community.
If you are experiencing any of the following signs, it may be time to raise your HOA assessment.
- Operating costs are increasing.
- Reserve contributions are insufficient.
- Maintenance is being delayed.
- The HOA is using reserves for operating expenses.
- Financial reports show minimal cash flow.
How to Raise Assessments Responsibly
Once your Board has decided to raise the assessment, you will need to communicate this decision to homeowners. Here are some steps to take to ensure you are improving assessment responsiveness.
- Review governing documents and legal requirements: Always confirm that your Board has the authority to raise the assessments and the notice requirements before raising your community’s assessment.
- Use Financial data to guide your decisions: Budgets, reserve studies, and financial statement project objective support for an assessment increase and can help the Board explain its decision.
- Communicate early and transparently: Clear communication can reduce homeowner frustration and conflict.
- Plan gradual increases when possible: Smaller, incremental increases are often more popular with homeowners and can help them avoid sudden financial strain.
- Work with a professional community association management Partner: A professional management company, such as Partners Community Management, can help your Board analyze the community’s finances, remain compliant, and communicate changes clearly. Let us help you streamline the entire assessment increase process.
Contact Partners Community Management today!
