An important function of a homeowners associations board of directors is to impose assessments on the association members in order to generate funds that are required for the maintenance, repair, and replacement of common areas and the conducting of association business. The power to impose necessary assessments is provided for in state statutes and the HOA CC&Rs and the types of assessments that are commonly imposed by an association are typically referred to as either regular or special. Regular assessments are a fixed amount that is generally paid monthly or quarterly by the associations members to cover the associations budgeted expenses. Special assessments are imposed only when additional funds are needed to cover various expenses that are not provided for in the associations budget or when there are insufficient funds available for necessary expenses. An important third type of assessment that is frequently not specifically provided for in state statutes or HOA CC&Rs is a reimbursement assessment that can be imposed upon individual members.
A reimbursement assessment is a special assessment that is imposed by an associations board of directors against individual members for the purpose of reimbursing the association for expenses that it incurred in connection with actions that the association was required to take as a result of conduct on the part of the association member or his or her tenants and guests. The types of conduct that typically give rise to the imposition of special assessments against individual members are: (i) damage caused to association common area and/or facilities by the member or the members tenant or guest; and (ii) failure to comply with the associations governing documents.
Procedurally, before an associations directors take action to impose a special reimbursement assessment lien against an individual member, the member must be provided with written notice of the intended action and an opportunity to be heard and to present evidence that supports the members position. To satisfy this requirement, the state statutes and/or HOA CC&Rs/governing documents should contain specific provisions regarding providing the member with notice of a hearing at which the imposition of the assessment against the member will be considered and information that details the expenses the association is seeking to recover from the member along with supporting documentation of those expenses. Like regular and other special assessments that are imposed on all members, the HOA CC&Rs should empower the association, acting through its directors, to impose late fees and interest, and to record liens against the individual members separate interest property and to foreclose on such liens when the reimbursement assessments are not paid by the member.
The following is an example of a provision that has been drafted for inclusion in HOA CC&Rs to provide for the imposition of special reimbursement assessments against individual members:
Section ____. Special Individual Assessments.
(a) Circumstances Giving Rise to Special Individual Assessments. In addition to the Special Assessments levied against all Owners in accordance with Section ____, the Board of Directors may impose Special Individual Assessments against an Owner in any of the circumstances described in subparagraphs (i) through (iii), provided, however, that no Special Individual Assessments may be imposed against an Owner under this section until the Owner has been afforded the notice and hearing rights to which the Owner is entitled under Section ____ and, if appropriate, has been given a reasonable opportunity to comply voluntarily with the Governing Documents. Subject to the foregoing, the acts and circumstances giving rise to liability for Special Individual Assessments include the following:
(i) Damage to Common Areas or Common Facilities. In the event that any damage to, or destruction of, any portion of the Common Areas or the Common Facilities is caused by the willful misconduct or negligent act or omission of any Owner, any member of his or her family, or any of his or her tenants, guests, servants, employees, licensees or invitees, the Board shall cause the same to be repaired or replaced, and all costs and expenses incurred by the Association in connection therewith (to the extent not compensated by insurance proceeds) shall be assessed and charged solely to and against such Owner as a Special Individual Assessment.
(ii) Expenses Incurred in Gaining Member Compliance. In the event that the Association incurs any costs or expenses to (A) accomplish the payment of delinquent Assessments; (B) perform any repair, maintenance, or replacement to any portion of the Development that the Owner is responsible to maintain under the Governing Documents but has failed to undertake or complete in a timely fashion; or (C) otherwise bring the Owner, his or her tenants, and/or his or her Lot into compliance with any provision of the Governing Documents, the amount incurred by the Association (including reasonable fines and penalties duly imposed hereunder, title company fees, accounting fees, court costs and reasonable attorney fees) shall be assessed and charged solely to and against such Owner as a Special Individual Assessment.
(iii) Required Maintenance of Lots and Residences. If any Lot or Residence is maintained so as to become a nuisance, fire, or safety hazard for any reason, including, without limitation, the accumulation of trash, inoperable automobiles, improper weed or vegetation control, the Association shall have the right to enter the Lot or Residence, correct the offensive or hazardous condition, and recover the cost of such action through imposition of a Special Individual Assessment against the offending Owner. Any entry on the property of any Owner by the Association shall be effected in accordance with Section ____ .
(b) Levy of Special Individual Assessment and Payment. Once a Special Individual Assessment has been levied against an Owner for any reason described, and subject to the conditions imposed in subparagraph (a), such Special Individual Assessment shall be recorded on the Association’s Assessment roll, and notice thereof shall be mailed to the affected Owner. The Special Individual Assessment shall thereafter be due as a separate debt of the Owner payable in full to the Association within 30 days after the mailing of notice of the Assessment.
(c) Limitation on Right to Lien Lots for Special Individual Assessments. The right of the Association to collect delinquent Special Individual Assessments through the use of lien and foreclosure remedies is subject to the limitations set forth in Section ______. However, Special Individual Assessments may be collected by the Association through the use of other legal processes, including, without limitation, an action in small claims court.
While it can be argued that the power of association directors to impose a special reimbursement assessment against an individual member is implied from other general powers that are granted to the directors by state statutes and/or governing documents, associations should have specific provisions in the HOA CC&Rs that provide for same. Thus, associations that do not currently have provisions that provide for the imposition of special reimbursement assessments against members should take appropriate action to amend the HOA CC&Rs to add such provisions. Such action should always be taken with the guidance and assistance of experienced legal counsel for the association.
Statutes, Forms, or Guides related to this Article:
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