How to Handle Raising Assessments
While living in a community association has many benefits, it does come with a price tag. And as living expenses increase, so do HOA assessments. Here are some assessment basics and tips to help you communicate the news of an increase to residents with minimal friction.
What Are Assessments?
Assessments are fees all association members are legally required to pay. Depending on your association’s governing documents and procedures, assessments can be collected annually, quarterly, or monthly.
What Do Assessments Pay For?
These fees are the primary source of income for an association and are used to ensure the association can successfully perform the various duties and tasks for which it’s responsible. What your HOA fees cover depends on your association, but typically, this money is used to pay for repairs, maintenance, administration, and reserve funds for future repairs and improvements.
Why Do Boards Increase Assessments?
Some governing documents permit boards to increase assessments without the approval of owners. While reasons vary, as the cost of living increases, association boards may need to raise assessments to cover additional expenses or fund any shortfalls.
Tips for Communicating an Assessment Increase to Homeowners
Raising assessments is one of the most challenging decisions a board can make, but failure to do so can have serious consequences. If you follow these tips, you can help prevent feelings of frustration and alleviate potential issues that may arise if assessments must be raised.
- Notify residents as soon as possible.
Send a letter to all residents to explain the increase right after the board approves it. Most state laws and governing documents require HOAs to inform residents at least 30 days before the effective date.
- Provide resources to justify the increase.
When you inform residents of the assessment increase, offer more information than just the new amount and due date. Be proactive and provide relevant budgets, reserve study results, and charts and graphs from insurance and utility companies to help explain the increase.
- Reassure residents it’s the only option.
Reassure residents that raising assessments was the only option for the association. Remain transparent throughout the process and give homeowners as many details as possible. Provide examples and share the steps that were taken to help cut costs. These measures help show that the board exhausted all avenues and did everything it could to minimize association expenses before raising assessments.
- Offer payment plans.
Increased assessments can be a source of financial strain for many residents. If possible, be flexible and offer payment plans to allow residents to pay their fees over a short period instead of all at once.
- Stay positive.
In the unfortunate event that assessments are raised, know that problems and feelings of anger may arise. As a board member, you should always be positive, proactive, and do your best to help residents understand why this was a necessary action for the association.
Want to learn more about HOA assessments? Check out our blog post, “HOA 101: What are Fees, Fines, & Assessments?”