Understanding Special Assessments in Real Estate

Money in a jar — Special Assessments are an often overlooked cost when buying or selling real estate

When buying or owning property, most people consider mortgage payments, property taxes, and homeowners association (HOA) fees. However, one often-overlooked cost is special assessments—an additional fee that can impact property owners unexpectedly.

What Are Special Assessments?

A special assessment is a charge imposed on property owners to fund specific projects or repairs that benefit the community. These can be levied by a municipality, an HOA, or a condo association to cover costs beyond the regular budget.

Cracks in road — Road Repairs and Infrastructure Improvements

Common Reasons for Special Assessments

Special assessments typically arise when there’s an urgent or large-scale project that exceeds the available funds. Some common examples include:

Road repairs and infrastructure improvements
Sewer and water system upgrades
New community amenities (parks, pools, or clubhouses)
Emergency repairs for condos or HOA properties

Who Pays for Special Assessments?

The responsibility for paying a special assessment depends on the property type and location:

Homeowners in an HOA: If a major repair is needed and the HOA’s reserve funds are insufficient, all homeowners may be required to contribute.
Condo Owners: If a shared component (roof, elevator, foundation) needs repair, condo owners may be assessed based on their ownership percentage.
Property Owners in a City/Town: Local governments can impose special assessments for public improvements, such as new sidewalks or street lighting.

How to Prepare for Special Assessments

Since special assessments can be unexpected, it’s wise to:

Review HOA or condo financials before purchasing a property.
Ask about reserve funds to see if they have enough to cover future repairs.
Budget for potential assessments by setting aside extra savings.

While special assessments can be an added expense, they often improve property value and enhance the community. Being aware of potential assessments helps property owners avoid financial surprises and plan accordingly.