If you live in a planned community with covenants, you most likely have to pay homeowners' association (HOA) fees and, at times, special assessments.
An HOA has a board of directors. Each year, the board develops a budget for the community and decides how much to charge each unit or household as a monthly (or, in some cases, yearly or quarterly) HOA fee.
But the board's predictions aren't always accurate. Occasionally, the HOA might need to come up with more funds. In that case, the board usually has the authority to impose a special assessment to cover the one-time expense of a major repair or improvement.
Dues and assessments are often collectively referred to as "assessments."
Generally, each unit or household in an HOA must pay a monthly, quarterly, or yearly HOA fee. This fee is often called an "assessment."
The monthly, quarterly, or yearly HOA fee consists of two parts:
So long as the HOA board accurately predicts which repairs will come due and when, the dues should cover the current operating expenses and long-term maintenance.
However, sometimes, the fees might not provide enough to the reserves to cover long-term repairs. For example:
In these instances and others, the HOA can usually charge homeowners a "special assessment."
Most HOAs can place a lien on the homeowner's property when the dues or special assessments go unpaid. Once the HOA has a lien on a homeowner's property, it may foreclose as permitted by the Declaration of Covenants, Conditions, and Restrictions (CC&Rs) and under state law.
If you're facing a foreclosure due to unpaid HOA assessments, consider talking to a foreclosure attorney in your state to discuss all legal options, like working out a payment plan with the HOA, available in your particular circumstances.