Relying on special assessments is never a good plan. They place an unnecessary burden on owners and are unfair to some owners. Following are seven ways to avoid special assessments:

1. Obtain a reserve study from an experienced reserve study provider every three years as required by California law and update it every year in between.
2. Fund your reserves so that you achieve a 70% minimum percent funded calculation.
3. Make certain that your reserve study calculation produces a positive cash flow for 30 years including a contingency factor of at least 5%.
4. Make certain that all replacement costs in your reserve study include a contingency factor of at least 5%.
5. When preparing the association's annual budget, make certain to include a reasonable allowance for bad debts.
6. Keep at least one month of normal operating expenses (cash) available for unforeseen expenses.
7. Establish a realistic operating budget each year and modify it if necessary.