Special assessments are often necessary for covering unexpected or large-scale expenses, such as major repairs, improvements, or emergency costs. However, handling these assessments effectively is critical to ensuring fairness and maintaining financial stability for your association. Here are some key considerations for condominium boards when charging special assessments.
Charge by Ownership Percentage
When issuing a special assessment, it’s important to allocate costs based on ownership percentage, unless the expense is specifically for limited common elements (e.g., balconies, specific hallways, or parking spaces that are reserved for use by certain units). Charging by ownership percentage ensures that each owner contributes proportionately to the association’s costs, following the terms set out in your governing documents.
For example, if the cost of a new roof is $100,000 and a unit represents 2% of the building’s ownership, that owner should contribute $2,000. This method is transparent and consistent, helping to prevent disputes.
Keep Payment Deadlines Simple
One common mistake boards make is offering too many payment options. While it’s important to provide flexibility, having multiple payment schedules can complicate the collection process and create confusion. Instead, consider these two straightforward approaches:
- One-Time Payment: Set a clear deadline by which the entire amount is due. For instance, the full amount could be due within 60 or 90 days of issuing the assessment.
- Monthly Installments: Offer the option to pay the assessment in equal monthly installments over a set period, such as six or twelve months. This allows owners to spread the cost over time while keeping the payment process simple.
Avoid Multiple Payment Plans
Providing owners with several payment options may seem accommodating, but in practice, it can lead to administrative headaches. Collecting on different schedules, following up on missed payments, and maintaining various records can overcomplicate an already challenging process. Instead, stick to one consistent payment method for all owners.
Be Open to Individual Payment Arrangements
While standardizing payments simplifies the process, there may be instances where owners face financial difficulties. Boards should be open to negotiating individual payment arrangements with owners who communicate their needs proactively. This flexibility allows boards to accommodate hardship cases without overhauling the entire assessment structure. However, it's critical that owners reach out to the board before the payment deadline to discuss alternative arrangements.
Charging special assessments is never easy, but with clear guidelines, transparency, and consistent payment structures, your condominium board can manage the process smoothly.
