The Truth About Assessments

Not All Assessments Are Created Equal (Oregon Law)
September 15, 2009 | By: Michael D. Montag

“Assessments” may be the most commonly used word in homeowners association vernacular, but what does it mean? Both the Oregon Planned Community Act and the Oregon Condominium Act define the term to include any charge levied against an owner by an association. Annual or monthly dues? Assessment. Fine for parking your R.V. out front? Assessment. Late charges, interest, and attorney fees for the Association having to sue you to get you to pay your fine? Assessments. All of these assessments, when past-due, automatically become a lien on the delinquent owner’s property. However, while all these types of charges may ultimately bear the same name, associations must be sure they know exactly what type of assessment they’re dealing with and act accordingly.

Annual or monthly dues to cover the operating costs and reserves of the association are the most common and straightforward type of assessment. Dues are based on an annually adopted budget, and once-levied owners have few defenses available to absolve them if they fail to pay. Associations forced to pursue legal action to collect delinquent dues have a high success rate and generally have no difficulty recovering attorney fees and other costs associated with the collection.

Fines present a slightly more complicated scenario. In general, an association may levy a fine against an owner for violating the governing documents. Although it seems straightforward enough, fines are not as bullet-proof as dues. In order to fine an owner, the association must give the owner notice and an opportunity to be heard. To ensure the enforceability of its fines, the board should adopt an enforcement resolution setting out the procedures for levying a fine, as well as a schedule of fines setting forth specific violations and the amount fined for each. Before levying a fine, boards should ensure they can prove that the violation occurred. If the violation is a recurring violation (such as a daily fine for an illegally parked car), proof will be necessary for each day the fine is imposed. Covering your bases on fines cases is particularly important because, if the matter ends up in court, the prevailing party can collect its attorney fees and costs from the loser. This means if the association fails to prove its case, it not only doesn’t collect the fine, it also loses the right to receive payment for its costs and must pay the owner’s costs.

Another type of assessment occurs when the association charges an owner for a repair it had to perform on the owner’s behalf. Examples of this scenario include cases where an owner’s failure to maintain the plumbing in their unit causes damage to a common element of a condominium, or where an owner fails to maintain their yard in a reasonable condition so the association must go in and clean it up. In these situations, the board needs to be particularly careful to proceed according to the governing documents. Most documents spell out precisely which expenses are common expenses, and which can be assessed against an owner. In addition, association and owner insurance policies often come into play, requiring careful attention to the provisions in your documents regarding insurance proceeds and responsibility for paying deductibles. Again, it is crucial for the board to make sure that it dots its I’s and crosses its T’s in order to ensure it can collect the assessment and recover its collection costs if necessary.

There are plenty of other types of assessments, but the common theme is that boards must always be mindful of which type they are dealing with. If you lose track and fail to follow all the necessary procedures before levying the assessment, you risk forfeiting the right to collect the assessment; in addition, there will also be the possibility of having to pay an owner’s costs of defending against you.