What is a Special AssessmentHow do special assessments work?
Neighborhoods With Associations Can Have Special Assessments
When you live where a homeowners association exists to maintain common grounds and other items of common ownership it is possible there could be unexpected expenses. One of the unfortunate drawbacks of living with an HOA is when there are expenses that come up you'll need to contribute towards.
Often these expenses are dealt with by charging all of the owners a special assessment. When looking at condos for the first time many real estate agents will warn their buyers about special assessments. When buying for the first time it will lead to the question of what is a special assessment?
The definition of a special assessment can best be described as a one time fee that goes towards making some kind of improvement or repair within an HOA neighborhood. While a special assessment will be a one time fee for a certain project there is nothing saying there could not be other special assessments in the same calendar year for other needs as they come up.
If you are on a tight budget, a special assessment can be a hardship for many folks. It is one of the reasons why it is so vital to assess the financial strength of the HOA you will be buying into.
It is always advisable for an attorney to look over the financial docs and association rules in order to determine the stability of the neighborhood. Of course you will want a neighborhood that has a strong balance sheet and plenty of money in the reserve fund.
A reserve fund is exactly what it sounds like - an account that will hold money to put towards capital improvements that are needed as they arise. When you don't have sufficient monies in a reserve fund, the owners within a neighborhood will be hit with a special assessment.
In the article at Maximum Real Estate Exposure, you will get a comprehensive understanding of everything you need to consider about special assessments. If you know someone who will be buying their first property pass it on to them.
Lots of first time home buyers get stuck with unexpected bills because they did not do enough due diligence when purchasing their home. It is a mistake you will want to avoid.