What are Special Assessments and Understanding Them
Special assessments are distinct from regular homeowner association dues in that they are not part of the annual operating budget and are typically levied to cover unforeseen expenses or projects that the association has not saved for in its reserve fund.
Steps for Levying a Special Assessment
- Review Governing Documents: The first step is always to review the HOA’s governing documents to determine the specific procedures and voting requirements for passing a special assessment. These documents dictate how much notice must be given to homeowners, the percentage of votes needed for approval, and any caps on the amount that can be assessed. The right of the HOA to request a Special Assessment are found within the CC&R’s of the association. The procedure to implement the Special Assessment are found in the Bylaws of the Association.
- Board Decision: Generally, the process begins with the HOA board determining the need for a special assessment. This usually involves identifying the specific project or expense, estimating costs, and deciding on the amount needed from each homeowner. This is not always the case, a special assessment may be authorized by a percentage of the members of the association if their call a special meeting an vote for such assessment.
- Notice to Homeowners: Homeowners should be given notice of the proposed special assessment. Texas law and the association’s governing documents will specify how much advance notice must be given before the vote. This notice period allows homeowners to review the proposal, ask questions, and express any concerns before voting takes place. There are certain exceptions that the CC&R’s may allow, such as a minor special assessment increase to maintain an annual budget, but these increases are usually quite limited to a certain percentage per Anum.
- Meeting and Vote: A special meeting of the homeowners is typically called for the purpose of discussing and voting on the proposed assessment. The governing documents will specify whether this vote can happen in person, by proxy, electronically, or by mail-in ballot.
- Voting Threshold: The necessary threshold for approval of a special assessment varies. Some associations require a simple majority of votes, while others may need a supermajority. The specific requirements will be outlined in the HOA’s governing documents.
- Collection of the Special Assessment: If the special assessment is approved, the HOA will notify homeowners of the amount they owe, the due date(s), and the method for making payments. The association must also provide information on how the funds will be used.
Legal Actions Pertaining to Special Assessment
- HOA Foreclosures: an HOA may not foreclose on a home residence solely for fines and attorney’s fees, though an HOA may foreclose on a residence for non-payment of annual or special assessments. This may be done pursuant to judicial or non judicial foreclosure depending on the dedicatory instruments of the HOA.
Challenges and Disputes
Disputes over special assessments are not uncommon. Homeowners who disagree with the assessment may challenge the process by which it was passed or the necessity of the assessment itself. Homeowners likely have to seek remedy in a District Court requesting either a temporary restraining order or a temporary injunction to stay such assessment until the Court can determine its validity. If the Management company and HOA Board held an improper meeting, tendered an improper notice, did not conduct a proper ballot for voting, or did comply with the technical requirements then all these requirements may be attacked in a District Court on behalf of the community.
Julian Nacol
Nacol Law Firm P.C.
Dallas Texas HOA Attorney
(972) 690-3333
Make My HOA Pay for My Attorney!
Attorney’s fees and costs in litigation can get high quickly, especially when the other party is a Homeowner’s Association. People are often scared by the potential costs of litigating a claim against their Homeowner’s Association, which invariably leaves them wondering if they can achieve a result where their Homeowner’s Association must pay for their attorney’s fees. The answer is YES … maybe.
Pursuant to Section 38.001(b) of the Texas Civil Practice and Remedies Code, “A person may recover reasonable attorney’s fees from an individual or organization … if the claim is for:
(1) rendered services;
(2) performed labor;
(3) furnished material;
(4) freight or express overcharges;
(5) lost or damaged freight or express;
(6) killed or injured stock;
(7) a sworn account; or
(8) an oral or written contract.”
For our purposes, number 8 applies primary, as it is highly likely any claims related to a Homeowner’s Association will not relate to the other items on the list. This section of the Civil Practice and Remedies Code tells us that if we can prove as a matter of law that our Homeowner’s Association breached a contract they had with us, we are entitled to recover the amount of our attorney’s fees from them.
Each Homeowner’s Association has a contract with its residents in the form of their governing documents, namely, the Bylaws and the Covenants, Conditions, & Restrictions. In layman’s terms, as an owner of property within the Homeowner’s Association, a homeowner agrees to be bound by the rules and restrictions set forth in these documents. Similarly, the Homeowner’s Association agrees to be bound by a similar set of rules and restrictions. This acts as an enforceable contract between a homeowner and the Association, and if such contract is breached by either party, pursuant to Section 38.001(b) of the Texas Civil Practice and Remedies Code, one party is entitled to recovering attorney’s fees against the party that breached the contract.
Additionally, pursuant to Section 5.006 of the Texas Property Code, “an action based on breach of a restrictive covenant pertaining to real property, the court shall allow to a prevailing party who asserted the action reasonable attorney’s fees in addition to the party’s costs and claim.
(b) To determine reasonable attorney’s fees, the court shall consider:
(1) the time and labor required;
(2) the novelty and difficulty of the questions;
(3) the expertise, reputation, and ability of the attorney; and
(4) any other factor.”
As implied by the name, a Homeowner’s Association’s Covenants, Conditions, & Restrictions are a list of restrictive covenants (or rules) that govern the conduct of both the homeowners and the Association. According to the above Section 5.006 of the Texas Property Code, a breach of one of those restrictive covenants by either a homeowner or Association entitles the other party to recovery of attorney’s fees, similar to that of the breach of contract statute described above.
None of the above statutes imply a guarantee that attorney’s fees and costs will indeed be awarded or that if they are awarded that one necessarily receives the full amount they have paid in attorneys fees. Rather, the above statutes imply that if one can establish either a breach of contract or a breach of restrictive covenant occurred, a party is allowed to recover attorney’s fees against the breaching party. That does not mean they must recover such fees. Ultimately, the determination of the amount of attorney’s fees that a party recovers comes down to a decision of a judge or a jury at trial.
NACOL LAW FIRM P.C.
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Suite 1190
Dallas, Texas 75231
972-690-3333
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Attorney Mark A. Nacol is board certified in Civil Trial Law by the Texas Board of Legal Specialization