When Special Assessments Stall: Why Homeowners Should Beware of HOAs Holding Their Cash

Just before we moved in together, my fiancee got a notice from the owner of the condo she subletted. The building, located just feet from the boardwalk in Brighton Beach, Brooklyn, was going through a special assessment to update the building’s sagging balconies. It was a significant cost and the condo's owner would need to raise the rent to pay for the additional fees.

Instead of renewing her lease, my partner moved out and the owner sold the unit. But for the years since, every time we’ve gone to the beach we’ve walked past her old building to watch as construction began and then stalled, leaving hundreds of now balcony-less doors boarded shut from the outside, exposed and ominous.

Homeowners who go through a special assessment often assume that the repairs will begin and end promptly. But as my fiancee’s former building shows, projects can be significantly delayed, leaving owners out thousands of dollars with little transparency.

Why do HOAs collect cash, then stall?

Repairs paid for by a special assessment are vulnerable to the same setbacks that can happen to any other construction project: contractor delays, permitting snags, and drawn-out negotiations over the scope of work. Add in the potential for board turnover or conflicts among members, and it’s a wonder anything gets done on time.

A less common, but still possible, reason is that associations mismanage or underbudget assessments, leaving projects stuck in limbo. Or emergencies—such as storm damage or burst pipes—can force HOAs to dip into reserves that were supposed to fund long-planned projects.

“The end result is homeowners’ dollars stuck in HOA coffers while roofs continue to leak or roads continue to crumble,” says Joe Ellul-Turner, a real estate professional and founder of Darscover.

The risks to homeowners

When special assessments stall, homeowners are often the ones left holding the bag.

First, there’s the financial drag. Homeowners often have to pay assessments upfront or in installment plans, even while repairs remain unfinished. That leaves cash sitting idle, unable to build interest, be reinvested, or offset other rising expenses. A lagging assessment can even take a chunk out of your equity, in a powerful one-two punch to homeowners.

“The association is still spending their money, but no work is being done. The owner is still on the hook for the full cost, but no progress is visible,” says Shane Lucado, a practicing lawyer for more than 25 years and founder of InPerSuit. “Try explaining that to a prospective buyer: why $18,000 has been prepaid, but the roof looks as if no work has been done.”

Then there’s the reputational risk. Delayed projects can damage an HOA’s standing with lenders, buyers, and existing residents. 

“Any lender going through the underwriting on a condo project is going to notice and then either hold the closing or decline altogether,” Lucado adds.

Then, there’s the invisible threat of inflation. Material and labor costs rise over time, and the longer these projects linger, the more likely it is that HOAs may have to return to residents with a new, higher assessment to finish what was started. 

“What was a good assessment for a project in year one was no longer keeping up with the costs in year three, leading to additional assessments,” Ellul-Turner explains.

It’s a compounding problem: financial purgatory today, more expenses tomorrow.

What can owners do?

Homeowners don’t have to sit quietly and hope for the best, says Lucado. The first step is demanding transparency.

Ask for detailed financial statements. Review board meeting minutes. Understand where the money is and why the project isn’t moving. HOAs are legally required to maintain records, and owners have the right to inspect them.

“Mismanagement does not have to be criminal to be actionable,” Lucado adds. “If your HOA board can’t provide transparent records or at least a specific timetable, you have hit the first red flag. You’re not looking for perfection, only documentation.”

And when boards refuse to cooperate? “If they start stonewalling at that level, you might as well start sniffing around for legal remedies,” Lucado says. 

Regulatory and legal context

Homeowners aren't alone when taking on their HOA for a stalled assessment. They have three types of oversight at their disposal: internal HOA governance, state oversight, and the courts, says Lucado.

“A review of your governing documents may reveal covenant clauses that require strict deadlines for the start of the promised project. If the HOA board fails to comply with the covenants, and they violate the state statutes as well, the homeowners can go to court and request mandamus and injunctive relief or financial restitution,” Lucado explains.

And states are starting to strengthen their oversight, too.

“Several states, such as California, Florida, and Colorado, have made homeowner rights to the HOA financials stronger over the past few years, with penalties imposed against boards who stonewall,” Ellul-Turner says. “HOAs are now required by some jurisdictions to give annual reserve studies and make them available to members, curtailing the ability to hide behind ambiguous planned projects.”

Together, these tools signal a shift: Boards are being held to higher standards, and homeowners have more avenues than ever to demand accountability when projects stall.

Buyer beware: red flags in HOA documents

For buyers, the risks can start before they even close. Ellul-Turner advises prospective homeowners to sift through HOA meeting minutes, budgets, and reserve studies. 

Warning signs include vague timetables, large payments without a clear contract, chronic delay in repairs, or a pattern of special assessments rather than long-term reserve funding.

Leadership instability is another signal. 

“Excessive board turnover [is] usually an indicator of governance failure,” Ellul-Turner says. And, he adds, “the HOA [should] maintain fidelity insurance—a safeguard against potential misappropriation of funds received.”

For would-be buyers, spotting these red flags early can mean the difference between moving into a well-run community or inheriting a costly, drawn-out mess.

It's something I think about every time I go to the beach and see my fiancee’s old building. Sometimes I look up at her old window and wonder what the new owner thinks—more than two years after moving in, still staring out at scaffolding where a balcony should be.