To many homeowners, the assessments they pay to their homeowners or condominium association are just one more bill each month. Too often, owners don’t realize the benefits they get in exchange for these assessments. Some owners even go so far as to stop paying their assessments. A careful review of your association’s budget would show that the benefits for owners that come from their assessment payments far surpass the cost of the assessment. But when an owner chooses not to pay, everyone in the community bears the consequences.
Community associations use dues and assessments to provide a multitude of benefits to their members. The most obvious benefit is providing and maintaining common areas. Association dues pay for common areas such as community pools, roads, and clubhouses. In many communities, dues also provide owners with utilities and services like cable, internet, and sewage. Associations use dues to enforce restrictive covenants, to save for future expenses, and to pay necessary expenses like liability insurance.
All of these services provide direct benefits to owners, and the overwhelming majority of homeowners recognize that they get their money’s worth in return. In a 2009 study, owners were asked to rate the return for what they paid in assessments. Eighty-two percent described the return as great or good, compared to sixteen percent that said it was not so good or bad.
Despite this generally favorable view of the importance of assessments, many homeowners associations are currently under a lot of strain from the economy and foreclosure crisis. The foreclosure crisis has left a larger percentage of homes vacant in communities. Banks are acting slowly to foreclose, leaving associations to pick up the cost of maintaining vacant properties without the assessment revenue that would normally come from the owners of those lots. To make matters worse, delinquency rates in many communities have risen sharply since 2005.
This is bad news for owners. Higher delinquency rates and higher costs mean that HOAs have to decide between raising revenue, usually through higher assessments, or cutting expenses, usually by postponing common area maintenance. Owners who protest by not paying their assessments not only hurt the association, they are also hurting their neighbors. Their failure to pay forces homeowners associations to make up the loss by raising assessments for everyone. In a September, 2010 study of community managers more than forty percent reported that their association had increased assessments to address budget shortfalls. Roughly the same percentage (38.5%) reported that their homeowners association had deferred maintenance of common elements. This impacts everyone in the community. If your association assessments have gone up recently, you might ask yourself, “Who isn’t paying their fair share?”
Fortunately, associations have options when it comes to collecting delinquent assessments. Associations seeking to collect past-due assessments should contact an experienced community association attorney.
Tarley Robinson, PLC, Attorneys and Counsellors at Law
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