Many people are not familiar with the HOA assessment and its basics. One might not know why a homeowner pays monthly dues to the association and why they evaluate HOA assessments each year. While many owners might be familiar with the basics, some homeowners are still unsure about the latter.
In such cases, one could consider contacting phoenix hoa management companies to ensure effective management and maintenance. Hiring a management company for assessments can be beneficial in many aspects. However, it would be more helpful if you got familiar with HOA assessments and related terms.
What are HOA assessments?
Budget cuts or shortfalls are a common problem that many homeowners and HOA boards face. Many people use the terms HOA dues and HOA assessments interchangeably out of negligence or ignorance. Such instance is a common misunderstanding in many communities as HOA assessments and dues are entirely different from each other.
For instance, an HOA assessment is known as a special assessment. HOA assessment is a one-time fee that homeowners association charges to cover or compensate for unexpected expenses occurring in a community. HOA assessments are prepared by the HOA board every year. The HOA board might prepare a budget to determine how much charge should be applied to each homeowner in monthly dues.
You should know that sometimes the board fails to make precise projections. These inaccurate predictions likely result in a shortage of funds. The committee chooses to levy special assessments to cover the additional costs. Also, HOA special assessments can be called in case of emergencies or unforeseen expenses.
Understanding HOA dues
HOA dues are a type of fee charged by the homeowner association to its members. The purpose behind charging HOA dues to the members is to maintain the community. Compared to HOA special assessments, typically a one-time payment, HOA dues are recurring payments. Homeowners pay HOA dues on a monthly or yearly basis. HOA dues are also addressed as HOA fees.
The HOA board calculates HOA dues. These dues are calculated every year. The calculation process begins with budget preparation, where the board members evaluate each expense or cost. For example, the board might anticipate vendors, management, fees, utilities, landscaping, etc. You should also know that the board might account for the reserve fund contribution.
As a result, the board will divide the total projected expenses by evaluating the number of homeowners in the community. These factors help the board to decide on a particular amount for each member for the year.