ABA Family Legal Guide

Home Ownership

Shared Ownership: Condos and Condominiums

The Board of Directors

How does the board handle assessments?

One of the most onerous tasks of an association board is raising the monthly assessment that pays for maintenance and various services, from trash collection to snow removal. Some state statutes mandate certain levels of reserves to guard the community's financial stability and prepare for inevitable capital expenditures. Even without a mandate, a board is wise to build up a substantial reserve to avoid having to require a massive special assessment when the furnace needs to be replaced.

In two states, California and Illinois, associations may not raise the assessment higher than a set amount without membership approval. In Illinois, for example, condominium boards must hold a referendum of unit owners if the budget increase rises above 15 percent. Many condominium declarations set similar dollar caps on increases in assessments without owner approval.