Understanding Special Assessments: What HOA Members Need to Know

When "Special Assessment" is mentioned be prepared, not scared. You can do this!

If you live in a community governed by a homeowners association (HOA), you’ve probably heard the term “special assessment” — and you may have some mixed feelings about it.

At Onyx Capital Management, we believe in transparency and education. Let’s break down why special assessments are necessary, who decides on them, and how you as a homeowner can stay prepared — and even see them as an important investment in your property’s future.

What Is a Special Assessment?

A special assessment is an additional fee charged to homeowners when extra funds are needed for major repairs, emergencies, or capital improvements that aren't fully covered by the HOA’s regular operating budget or reserve funds.

While special assessments are intended to be occasional, an HOA can issue them more than once if necessary — though most associations aim to limit assessments to no more than once per fiscal year unless truly unavoidable.

At Onyx Capital Management, we work closely with boards to anticipate future needs, build strong reserve funds, and plan responsibly — so that special assessments stay rare, fully justified, and clearly communicated to homeowners.

Who Decides on a Special Assessment — and How Much to Collect?

Typically, the HOA Board of Directors, often in collaboration with a professional management company like Onyx Capital Management, will:

• Identify the financial shortfall

• Review cost estimates from contractors

• Determine the amount needed from each homeowner

• Follow the association's governing documents to approve and notify members

In many associations, large assessments require a vote by the membership or at least a formal hearing to explain the need. Every step should be documented and communicated clearly to ensure transparency.

The goal is always to balance immediate financial needs with fairness to homeowners.

Rule of Thumb with Budgets and Rainy Day Funds

Financial experts often recommend that homeowners budget between 1% and 4% of their home's value each year for maintenance and repairs, with higher percentages — up to 10% — for older or more complex properties.

This rule of thumb is just as critical for HOAs, which must maintain shared structures and amenities. If an HOA’s regular dues don’t cover this recommended level of upkeep, the risk of special assessments grows. Homeowners should be wary if an association’s reserve funding falls short, because deferred maintenance often leads not just to unexpected assessments, but also to declines in property value over time.

Focusing on what's important, like safety and hazard corrections, can sometimes force an unexpected expense.

How Homeowners Can Stay Prepared

While no one likes unexpected costs, you can minimize the stress of a special assessment by taking a few proactive steps:

• Build a Personal Reserve: Set aside a small monthly amount into a personal "home maintenance fund" to cover possible assessments or emergency repairs.

• Stay Involved: Attend HOA meetings regularly to stay updated on upcoming projects, reserve studies, and potential budget shortfalls.

• Read Your Governing Documents: Knowing your community’s rules around assessments and major expenditures can help you avoid surprises.

A little preparation can make a huge difference in how financially — and mentally — ready you are if a special assessment arises.

Managing the Resentment Factor: Turning Frustration Into Investment

It's natural to feel frustrated when faced with an unexpected expense.However, understanding the bigger picture can change the way you view special assessments:

• Improvements Increase Property Value: Major repairs and upgrades protect and often raise the market value of your home and community.

• Shared Responsibility = Lower Individual Burden: In an HOA, costs are divided among all members, often making large projects more affordable than if each homeowner had to handle them independently.

• Special Assessments Are a Last Resort: Boards and management companies like Onyx Capital Management prioritize good budgeting and reserve planning. Special assessments are only considered when truly necessary and after all other funding options have been exhausted.

When you reframe a special assessment as a reinvestment into your own property’s future, it becomes easier to see it not as a burden — but as a commitment to a stronger, more valuable community.

Final Thoughts

No homeowner wants a special assessment — but with clear communication, smart planning, and a focus on long-term benefits, they don’t have to be a negative experience.At Onyx Capital Management, we’re here to help boards and homeowners navigate these challenges with expertise, transparency, and care.

If you have questions about your Onyx Capital managed association’s financial planning or want to learn more about how proactive management can minimize special assessments in your community, contact us today.