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smuki/Adobe Stock September 22, 2022 Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation's leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com. Rebekah Personius is an insurance editor for Bankrate. She coordinates the creation of educational insurance content that helps people make informed insurance decisions. Rebekah has worked in the insurance space for over a year with homeowners dealing with claim resolution after large scale losses in widely affected areas. Although her expertise is primarily centered around Property & Casualty claims, she has worked with compliance and industry experts on auto, life, home and renters insurance content since January 2020. In her down time, Rebekah enjoys staying active, learning about investing, and studying everything related to psychology. She is also currently working to finish her bachelor’s degree in Business Management through Western Governors University. Bankrate logo The Bankrate promise
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There are two types of special assessments — one that is charged by a (HOA) and one that is charged by municipalities. HOA special assessment
In communities managed by HOAs — like — and residential , homeowners pay monthly dues or fees to fund the upkeep of the community. This money is generally used to cover the cost of routine maintenance of community facilities, landscaping and sometimes even water and trash bills. However, an HOA (or co-op board, in the case of co-operative buildings) may periodically levy what’s known as a special assessment that is separate from monthly homeowners dues. Special assessments are typically charged when the community experiences an unexpected or particularly large maintenance expense that cannot be covered by the association’s operating budget or its reserve funds. When special assessments arise, the HOA may require homeowners to pay the fee in one lump sum or it may tack on a little bit extra to the monthly homeowners dues until the special assessment is fully paid off. The authority to levy these assessments is typically outlined in the HOA (CC&Rs) document. Local government special assessment
The other type of special assessment involves the dues that county or city governments may charge homeowners. A municipality may impose a special assessment on residents in a certain area to fund urgently needed repairs, maintenance or to upgrade the area with infrastructure – such as installing pavements, water and sewer lines or repairing roads. The money may also go towards regular services such as street lighting or fire protection. Because the work benefits people who have in specific areas, such special municipal assessments or levies will be restricted to only a limited group of . How does a special assessment work
Special assessments are typically imposed in an emergency situation when something in the community breaks or a large unexpected expense occurs. They may also be charged to cover the costs of more significant or infrequent maintenance projects if an HOA does not maintain an adequate reserve fund to cover such infrastructure or maintenance expenses. Special levies are paid for by the homeowners in the community directly impacted. In some cases the amount may need to be paid all at once, or the HOA may decide to charge extra dues each month until the assessment is paid in full. As a homeowner, you can review the governing documents of your community, which include the Declaration of Covenants, Conditions, Restrictions, and Easements, as well as the articles of incorporation and also the bylaws for the community, to find out what sort of notice the HOA is required to give you regarding special assessments. These documents may also detail how such assessments are to be handled — whether the community is allowed to vote on the assessment and if there are certain specific conditions under which an assessment is allowed to be charged. How much are special assessments
The exact amount of a special assessment varies based on the work being done. In the case of a homeowners association the amount of the repair or special project costs would be divided evenly among the number of homes in the community. Say there are 100 homes in the association and the levy is being used to cover the $25,000 cost associated with installing a new irrigation system because the previous system unexpectedly broke, then that cost might be divided among the 100 homes. In this example, each homeowner would have to pay $250 towards the special assessment. Special assessment vs special assessment tax
Special assessments charged by an HOA are different then a special assessment tax. As a homeowner, you will have to pay standard to the local government. Periodically, your local government may also charge a special assessment tax in addition to your property taxes, in order to pay for neighborhood projects. (See “Local government special assessment,” above.) The money from special assessments is generally used to cover the cost of necessary infrastructure projects or other community improvements that benefit your specific area. Examples that may involve a special assessment include sewer and water system work, upgrading and maintaining roads and sidewalks, installing park drains or other public utility projects. Only residents who will benefit from these upgrades or additions will be taxed. In addition, these projects typically increase the in area, which can benefit the homeowners funding the special assessment. SHARE: Mia Taylor is a contributor to Bankrate and an award-winning journalist who has two decades of experience and worked as a staff reporter or contributor for some of the nation's leading newspapers and websites including The Atlanta Journal-Constitution, the San Diego Union-Tribune, TheStreet, MSN and Credit.com. Rebekah Personius is an insurance editor for Bankrate. She coordinates the creation of educational insurance content that helps people make informed insurance decisions. Rebekah has worked in the insurance space for over a year with homeowners dealing with claim resolution after large scale losses in widely affected areas. Although her expertise is primarily centered around Property & Casualty claims, she has worked with compliance and industry experts on auto, life, home and renters insurance content since January 2020. In her down time, Rebekah enjoys staying active, learning about investing, and studying everything related to psychology. She is also currently working to finish her bachelor’s degree in Business Management through Western Governors University. Related Articles