Special Assessments

Two of the words most dreaded by community associations are special assessments. When you purchase property governed by a community association, you agree to be subject to the governing documents of the association. The governing documents, usually the declaration or bylaws, give the association the power to levy and collect assessments. In most cases, there are specific provisions that provide for both regular and special assessments.

What is a Special Assessment? The term “special assessment” is not defined in the Oregon Condominium Act (ORS Chapter 100) or the Oregon Planned Community Act (ORS 94.550 to 94.793). Generally, governing documents define or describe a special assessment as an assessment not typically or regularly imposed (e.g., monthly, quarterly, semi-annually, or annually) for expenditures that exceed or are outside the adopted budget.

From time to time, it may be necessary for the association to levy a special assessment for repair and maintenance that needs to be performed by the association. This is more common in condominiums and communities where the association has the responsibility to maintain, repair, and replace the exteriors of the building or buildings. Special assessments for maintenance, repair, or replacement may be necessary for a variety of other reasons, including inadequate reserves, unanticipated damage or failure of a building component, or a shortfall in settlement funds from a construction defect lawsuit.

Carefully Examine Governing Documents. Whatever the circumstances that give rise to the need for a special assessment, it is imperative that the association seeks the help and advice of legal counsel to ensure a thorough examination of the governing documents and relevant statutes. Under some documents, the board has authority to levy the special assessments; however, under other governing documents, there are restrictions on the board’s authority or a requirement of a vote by the owners.

Considerations. In deciding whether or not to levy a special assessment, as well as the manner of the special assessment, the board should consider factors such as:

• The timing of the assessment
• The amount of the assessment
• The owners’ ability to pay the assessment
• Whether the assessment must be paid in a lump sum or over time
• Possible incentives to pay the assessment up front
• If the association has the option of borrowing the necessary funds and repaying the loan from assessments

Follow Procedures. If imposition of a special assessment is challenged, in order for the special assessment to be upheld in court, all of the required procedures in the governing documents and relevant statutes must be followed. It is recommended that the board adopt a resolution that cites the authority of the association to levy the special assessment, along with the relevant procedures that need to be followed.