Special Assessment

A special assessment is a charge levied on owners in addition to regular assessments, usually to pay for a project or shortfall that the reserve fund cannot cover.

It can be billed as one lump sum or spread over installments. How it is divided among owners follows the governing documents, commonly an equal share per unit or a share based on each unit's ownership percentage.

Special assessments usually happen for one of three reasons: reserves were underfunded for years, a component failed earlier than expected, or a project cost far more than the study estimated. Emergencies and new legal requirements can also trigger one.

Governing documents and state law often limit a board's power to levy a special assessment. Many require an owner vote above a certain amount, with exceptions for emergencies. Check both before planning one.

The surest way to avoid special assessments is a current reserve study and steady contributions that follow it. A low percent funded figure is an early warning that one is more likely.

Source: this definition follows the National Reserve Study Standards, published by Community Associations Institute (CAI), explained in our own words. State law can define the term differently for its own purposes.