Misconceptions about HOA dues abound. Even Floridians who have lived in HOA communities for years still hang on to ill-conceived ideas about assessment increases.
Whether you’re addressing long-standing members of the community or new unit owners who just closed on a property in the association, you’re sure to hear some of these myths about assessments. When you do, set the record straight by remaining clear and transparent about how dues are allocated within your annual budget.
Assessment Myth #1: HOAs and/or Board Members Profit from Assessment Hikes
HOAs are non-profit organizations, and board members are owners just like everyone else in the community. The funds collected through dues and assessments are used to maintain common areas, cover operational costs and build reserves. Assessment increases are not a means for the association to make a profit. Rather, they’re essential for the community’s financial stability – and everyone must pay them, even board members.
Assessment Myth #2: Assessments Only Increase When There’s Mismanagement by the Board
It can be easy to blame fiscal mismanagement as the reason for an assessment hike and sometimes that may be the case, but more often than not, assessments need to increase to address rising expenditures related to costs of maintenance, utilities, insurance, and other necessary services.
Assessment Myth #3: Assessments Directly Correlate to Amenities
While amenities like pools, gyms and tennis courts enhance community living, assessment increases are not solely due to these features. Increases are often related to rising costs across the board, including landscaping, insurance, utilities, and general maintenance. Association boards must consider the overall financial health of the HOA when considering the budget, not just specific amenities.
Assessment Myth #4: A Healthy Reserve Fund Means Assessments Should Never Increase
Maintaining an adequate reserve fund is necessary for Florida HOAs, but they may not cover all future expenses, especially for major repairs or improvements. Regular assessment increases ensure reserves are gradually built and allow the community to face unforeseen challenges without imposing sudden, large special assessments.
Dispelling misconceptions about HOA assessments is important for keeping your community informed about the financial management of the association. For help identifying budget best practices for your condo association in South Florida, get in touch with us at Dania Fernandez and Associates, P.A.
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