Arizona Practical Questions Archive
If an association knows that it has a big expense coming up or if an association incurs an unexpected expense, the board usually begins to look at what the association can do to generate revenue to pay for the expense. Often, one option is a special assessment. However, there are many factors that affect whether a special assessment will be an available option for a given association in a given situation.
First, the association has to determine whether a special assessment is provided for in the declaration. Because the law does not provide a right or an avenue for charging a special assessment, the power to charge a special assessment must be located in the association’s declaration.
If there is a provision in the declaration for charging special assessments, the association then has to look for the restrictions on the purposes for which a special assessment may be charged. For example, some declarations allow a special assessment for any proper association purpose. This is the best type of clause to have because it allows for the most flexibility. On the other end of the spectrum, many declarations restrict special assessments for the purpose of funding capital improvements. If an association has such a provision, it could not, for example, charge a special assessment to cover a budget deficit due to the non-payment of assessments by owners. Some declarations restrict special assessments to funding costs related to the common area. In such a situation, an association with the responsibility to maintain front yard landscaping or the exteriors of the homes on the lots would not be able to charge a special assessment for this purpose.
Finally, an association will need to determine what, if any, approval is needed from the members before levying a special assessment. Most declarations require the members to approve a special assessment. A typical approval requirement is 2/3 of the members voting at a meeting where quorum is present. The declaration will also often have specific notice and quorum requirements for approving special assessments.
It is a good idea for associations to know their ability to charge a special assessment before the need arises. If your association would like our assistance in reviewing your association’s special assessment options, please contact Lynn Krupnik or Adrianne Speas at 480-922-9292.
The information contained in this Homeowners Association Tip is for informational purposes only and is not specific legal advice or a substitute for specific legal counsel. Readers should not act upon this information without seeking professional counsel.
© Ekmark & Ekmark, L.L.C. 2011 – reprinted at HOA Pulse with permission
