Homeowners' associations (HOAs) have the right to impose assessments and fees on each member of the association to pay for the HOA's operations and maintenance expenses. Assessments can be regular or special, depending on the purpose for which they are made. Assessments are calculated, collected and enforced in the manner required by law and as provided by the HOA's governing documents.

Regular assessments are made to defray expenses related to the ownership, operation, or furnishing of common interests or to the enjoyment of mutual and reciprocal rights of use. For instance, the revenue generated by regular assessments can be used for the repair and maintenance of common property, such as lobbies, community centers, common roofs, parking lots and garages.

Special assessments are made for capital improvements or for other purposes, such as replenishing a reserve fund that was spent on unexpected maintenance projects.

The governing documents of the development, such as the declaration of covenants, conditions and restrictions (declaration or CC&Rs) and the bylaws, should describe the assessment process, including how much the assessments can be increased and in what circumstances.

Regular Assessments

Regular assessments against the units in a common interest development typically must start on the date of the first transfer of a unit from the property's developer or on the first day of the month following the first conveyance of a unit. Homeowners don't have voting rights until the HOA has levied an assessment against their units.

State laws provide that assessments can't exceed the amount necessary to defray the costs for which they are levied. Regular assessments to pay the expenses of the ownership, operation, and furnishing of common interests by the association must ordinarily be levied against each owner according to the ratio of the number of units owned by the owner assessed to the total number of units subject to assessments. So, if an owner has three units out of a total of 50 units, the owner will be responsible for 3/50 of the total assessment, assuming that all units are the same size. Adjustments in the ratio can be made if an owner gets a greater benefit from the services than other owners.

An HOA may increase the regular assessment up to a certain percentage of the prior year's assessment, provided that the board of directors has distributed an operating budget for that year or a majority of homeowners approves the increase. If the increase exceeds that percentage, approval by a majority of homeowners is required.

Special Assessments

An HOA can't impose or collect a special assessment that exceeds the amount necessary for the purpose or purposes for which it is levied.

In any fiscal year, special assessments can't exceed a certain percent of the budgeted gross expenses of the association for that fiscal year without the approval of the majority of homeowners. There are exceptions to the limits on special assessments in emergency situations.

Collection of Assessments

Assessments are made according to the schedule indicated in the HOA's bylaws or CC&Rs. The HOA must send or deliver notices of each homeowner's assessment amount to the homeowner. The homeowner then has a specified number of days in which to pay the assessment amount.

Enforcement of Assessments

Regular and special assessments are delinquent a specified number of days after they become due. If an assessment is delinquent, the association may recover all of the following:

  • Reasonable costs incurred in collecting the delinquent assessment, including reasonable attorneys' fees
  • A late charge
  • Interest on all sums due

If a homeowner fails to pay the assessment, the HOA has several options:

  • File a civil action in small claims court (if the amount due meets the court's requirements)
  • Record a lien on the homeowner's unit or separate interest and delay foreclosure until the amount due equals a pre-determined amount or the assessments are more than 12 months delinquent
  • Record a lien on the homeowner's separate interest and foreclose on the lien
  • Any other manner provided by law

If the HOA is going to file a lien on the homeowner's unit, at least 30 days before filing the lien, it should send the owner of record a notice including, among other things:

  • A general description of the HOA's collection and lien enforcement procedures
  • The method of calculation of the amount due
  • A statement that if the homeowner's separate interest is placed in foreclosure because the homeowner is behind in his or her assessments, it may be sold without court action
  • An itemized statement of the charges owed by the homeowner
  • The right to dispute the assessment debt by submitting a written request for dispute resolution to the HOA
  • The right to request alternative dispute resolution with a neutral third party before the HOA may initiate foreclosure

To establish the lien, the HOA must record a notice of delinquent assessment in the county where the owner's unit is located. The notice must comply with the requirements of state law. Thirty days after the lien is recorded, it may be enforced in any manner permitted by law, including sale by the court, sale by the trustee named in the notice of delinquent assessment, or sale by a properly substituted trustee.

Restrictions on Transfer Fees

HOAs may be prohibited by state law from imposing any assessment, penalty or fee in connection with a transfer of title or any other interest except for an amount to cover:

  • The HOA's actual costs to change its records and
  • The reasonable cost of furnishing documents and assessment statements required by law

If you have any questions about assessments and fees made by a HOA, contact a Residential Real Estate Lawyer in your area.

Questions for Your Attorney

  • How can I stop the board of directors of my HOA from increasing my regular assessment?
  • Can the HOA make a special assessment to pay for parties at the common house?
  • How can I stop my HOA from conducting a non-judicial foreclosure sale of my property?
  • Can the HOA charge move-in and move-out fees if my move doesn't cause any damage to the common hallway in my condo building?