• Matthew G. Baratz

Special Assessments: Best Practices

There are several ways to navigate Special Assessments. You need to consider the type of project, costs of project, collection difficulties, cash flow requirements, cost overruns, and more. Then there are the accounting implications on top of it all.


From an accounting perspective, it is always best to segregate Special Assessments from typical Operating funds. Since the Special Assessment is for a specific purpose, you should take steps to ensure that it is accounted for transparently. Special Assessment revenues are deferred until the related expenditure’s performance obligations are met. When setting up Special Assessments in your accounting system, you should make sure that it has its own unique charge code that distinguishes itself from regular maintenance assessments. Balance sheets and income statements may need to be reformatted to present the information clearly.


Always take into consideration how you structure payment plans. You need to follow the cash flow requirements of the project while also thinking about the economic needs of the unit owners and their ability to make the payments. Sometimes a loan is necessary to bridge that gap.


It is always recommended that you speak with your CPA and attorney when planning a special assessment. Sometimes there are governing document rules that must be followed. Sometimes the bookkeeping of the assessment needs to be handled differently.


We have been working with our associations for decades to make the best decisions when implementing a special assessment. Contact us if you have any questions about implementing a Special Assessment.


Disclaimer time... We do our best to provide the most up-to-date and relevant information with our subject matter. It is our opinion, and we are not a government entity nor an authoritative source for professional research. Always hire a professional when you want the most accurate information as it relates to your company/association specifically.


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