Disaster response can be a costly endeavor. An association will likely need to hire contractors (who are probably in high demand during a crisis) to repair damaged association property, clear private roads or remove debris. If flooding is involved, the HOA may need to bring in specialists to quickly dry saturated HOA buildings for the purpose of mitigating damage and preventing mold contamination. Repairs aren’t cheap, but, if they’re necessary, the HOA board will need to find the money somewhere.
The lifeblood of an HOA’s financial health is regular assessment payments from members. Assessment revenue takes on extra importance in an emergency, as the association attempts to continue regular operations while responding to unanticipated difficulties. Unfortunately, disaster situations sometimes threaten the incomes of homeowners, as well. With funding critical to a community’s disaster response, homeowners should make every effort to continue paying their assessments during and after an emergency. If that isn’t possible, homeowners should communicate with the HOA and try to work out a payment plan or temporary deferral. But members should not expect an association to cancel or forgive assessments during an emergency. An HOA may run short on cash for its disaster response, affecting the entire community.
It’s worth noting that the obligation to pay regular assessments arises independently through the deed to a purchased property and is not contingent on the availability of HOA facilities and services. See Spanish Court Two Condo. Assn. v. Carlson, 12 N.E. 3d 1 (Ill. 2014); Blood v. Edgar’s, Inc., 632 N.E. 2d 419 (Mass. App. Ct., 1994). So, homeowners can’t unilaterally choose to withhold some or all of their assessment payments just because, for instance, the community pool is closed down due to a hurricane.
The importance of reserve funds
A reserve account consists of monies saved by an association from regular assessment payments so that, when major irregular repairs or an emergency arises, the HOA has sufficient cash on hand. When available, reserve funds are a good source of initial liquidity to respond to an emergency. However, not all HOAs maintain reserve accounts and, in some jurisdictions, the disbursal of reserve funds requires approval by a majority vote of members, even in an emergency.
