If you live in a community with a homeowners association, or HOA, you'll likely run into special assessments, which have become increasingly common in places like Florida.

Simply put, a special assessment is a fee homeowners pay when their HOA doesn’t have enough money in reserves to cover major repairs, increased insurance costs, or unexpected expenses. This is why in places like Florida or California, or even Texas, all of which have experienced increased changes in weather patterns, special assessments are cropping up more and more.

But what can you do if your HOA hits you up for a major fee increase? Are you powerless to the change or is there a course of action to take?

What is an HOA special assessment?

An HOA special assessment is a one-time fee imposed to resolve a major issue that cash on hand or regular annual or monthly assessments won't cover. The fee is usually split among homeowners.

“Depending on how your HOA operates, they might ask for it all at once, or allow monthly or quarterly installments, “ explains Jeremy Smith, real estate adviser at Engel & Völkers Atlanta.

Note that special assessment taxes are not related to HOA special assessments. A special assessment tax is an additional property tax levied by a government on a specific geographic area or district to pay for certain capital improvements, such as construction or road improvements.

Why HOAs can charge a special assessment

Associations charge special assessments when the regular dues and reserve funds are insufficient to cover specific or unexpected community expenses.

"These assessments are usually approved by the association or through a vote by homeowners, depending on the community’s governing documents. Clear communication and planning are key to minimizing the frequency and impact of special assessments," says Richard Alfonso, director of association banking at U.S. Century Bank in Miami.

For example, they may go toward major projects such as pool repairs or roof replacements. Occasionally, however, they can be used to resolve a large debt such as unpaid utility bills. Poor reserve planning can also lead to special assessments.

Despite the fact that most HOAs employ outside professionals like lawyers, accountants, and third-party managers, almost all of them are run by the homeowners who typically have very active lives of their own and might not have the ability to plan properly.

“Eventually, someone has to foot the bill. Oftentimes, that someone is the homeowner,” says Christopher Naghibi, chief operating officer at First Foundation Bank in Irvine, CA.
How much will the special assessment cost?

Special assessments can range from a few hundred dollars to tens of thousands of dollars and depend on factors such as the scope of the project, the size of the HOA, reserve fund status, and insurance coverage.

“The largest special assessments we have seen relate to major structural or construction issues. Increasingly, large special assessments in condominium buildings are being driven by property insurance companies requiring major projects for a building to remain insurable,” says Eric Teusink, founding partner of Williams Teusink, a real estate law firm in Atlanta.

Smith, who lives in a high-rise condo in Atlanta, was recently hit with a special assessment of $10 per square foot to cover pool repairs, elevator replacements, and some exterior work.

“The building had pushed off some of this maintenance for a few years, and the new board decided it was time to get things back on track. It wasn’t exactly fun to write that check, but it was necessary—and most of the owners understood that,” he explains.

Can homeowners challenge a special assessment?

“Nobody throws a party when they get hit with a special assessment. But, if you’re informed and prepared, it won’t catch you off guard,” says Smith.

While you can try to challenge these fees, it might be difficult to do so, as most HOAs usually have a solid legal backing laid out in the community’s governing documents.

According to Teusink, the best time to fight a special assessment is before the board votes.

“If it passes, you have two options: Bring a lawsuit (as long as you have some legal basis to challenge), or work to get new board members opposed to the special assessment elected,” he says.

Remember that even if you challenge an assessment, you're not excused from paying it while the dispute is ongoing.

"Failure to pay could lead to fines, interest, or even a lien on your property—so it's in your best interest to pay under protest or consult an attorney before withholding payment," explains Alfonso.