Questions frequently arise about why associations raise dues and what the limitations are. HOA fees are determined by the anticipated expenses the association will incur to ensure a safe and clean environment for the community it governs. Expenses increase with inflation or when unexpected damages occur. Association dues can be raised or adjusted through regular assessments and special assessments. Once the amount to be raised has been determined, all homeowners must be notified in writing of any dues increase at least 30 days, but not more than 60 days, before the increase is in effect.
These assessments must be paid by every member of the community every year (AKA regular dues). The amount requested for regular assessments is determined by the reserve required to meet the association’s annual operating expenses. This may be increased over time for a variety of reasons (usually determined by the expenses accumulated in the association). An HOA’s board of directors may, without membership approval, increase the level of regular assessments each year by up to twenty percent over the prior year’s level.
Special assessments may be imposed by the association board to offset unanticipated budget shortfalls or to raise funds needed for unforeseen repairs. The board may, without membership approval, charge a special assessment up to five percent of the current year’s budgeted gross expenses.
Capital Improvement Assessments
Many of the association's governing documents use the term “capital improvement assessments” to refer to special assessments which are collected to fund the construction of a capital improvement. The limitations on the board’s ability to levy this assessment with or without a vote of the membership will be dictated by the terms of the association’s governing documents as well as the general limitations on levying special assessments.
Reimbursement (“Compliance”) Assessments
Under certain circumstances, HOA boards may charge an individual special assessment against a specific member of the community. This assessment is strictly to recover the association’s costs provoked in repairing damage to the community’s common area caused by the member, his/her family, or tenant.