HOA Special Assessments in California: How to Pay and How to Finance the Condo

I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. I’m known as a creative mortgage broker: when a bank says no, I find the lender and the loan structure that can say yes. Call (800) 239-1103.

A special assessment creates two problems at once. If you already own the condo, you need to come up with a large bill — often tens of thousands of dollars per unit when the work is structural. If you’re buying or refinancing, the assessment can affect whether a lender will approve the building at all. This guide covers both: how to pay for an assessment, and how to finance a condo in a building that has one.

Why California HOAs Are Levying Special Assessments

• SB 326 balcony and walkway inspections. Civil Code §5551 required HOAs in buildings with three or more attached units to have a licensed structural or civil engineer or architect inspect wood-supported balconies, decks, walkways and stairways more than six feet above ground by January 1, 2025, and every nine years after. Repairs identified in those reports are often funded by special assessment.
• Underfunded reserves. Older buildings with thin reserves have no cushion when roofs, siding, plumbing or elevators come due.
• Insurance. Rising master policy premiums and deductibles squeeze HOA budgets, and a large uninsured loss can be passed to owners.
• Higher construction costs than older reserve studies assumed.

Under Civil Code §5605, a board generally can’t levy special assessments that total more than 5% of the association’s budgeted gross expenses for the year without a vote of the members. Emergency situations, such as a court order or an extraordinary expense needed to repair a threat to personal safety, are an exception under §5610.

How a Special Assessment Affects Your Mortgage

A special assessment does not automatically make a building “non-warrantable.” Under Fannie Mae’s rules, the lender must document each special assessment: its purpose, the date it was approved, the original and remaining amounts, and when the work is expected to be done. The key question is what the money is for:

• Routine or non-structural work (painting, paving, amenity upgrades): usually acceptable once documented.
• Critical repairs that haven’t been completed: the project is ineligible for Fannie Mae. Critical repairs include material deficiencies that could lead to a failure within a year, water intrusion or mold, advanced deterioration, and unfunded repairs costing more than $10,000 per unit that should be done within the next 12 months. Structural balcony or walkway repairs found in an SB 326 inspection often fall here.

Since August 3, 2026, Fannie Mae no longer offers the Limited Review shortcut, so most buildings of 11 or more units get a Full Review where this scrutiny is standard. See what changed with Fannie Mae’s condo rules.

The Three Stages — and What Each Means for Financing

1. Assessment levied, repairs not done. If the work is a critical repair, conventional financing is off the table until it’s remediated. Portfolio and non-QM lenders that set their own building rules are the main options.

2. Assessment collected, repairs underway. Better. Some portfolio lenders will lend with proof the work is fully funded, under contract and on schedule. The closer to completion, the more lenders will look at it.

3. Repairs complete. Once the HOA can document completion — contractor sign-off, updated lender questionnaire, and board minutes — the project can often be reviewed again for conventional financing.

Ways to Pay an HOA Special Assessment

HOA Payment Plan

Ask first. Many HOAs let owners pay a large assessment in installments over months or years. This costs nothing to set up and doesn’t require a loan approval.

HELOC or Home Equity Loan

If you have equity in the condo, a HELOC (variable rate, draw as needed) or a fixed-rate home equity loan can cover the assessment at a lower rate than unsecured borrowing. Some equity lenders review the condo project too, so a building with open critical repairs can limit your choices — I shop lenders that are flexible on condos. See my HELOC guide.

Cash-Out Refinance

Replaces your first mortgage with a larger one. It rarely makes sense if your current rate is well below today’s rates, and a conventional cash-out goes through the same building review — so if the assessment is for critical repairs, it may have to be a portfolio loan. Compare the options in HELOC vs. cash-out refinance.

Equity in Another Property

If you own a house or another property with equity and a cleaner lending profile, a HELOC or cash-out on that property can pay the assessment without touching the condo’s financing.

Personal Loan

Fast and unsecured, but rates are typically much higher than home equity borrowing and loan amounts are limited. Best for smaller assessments or as a short-term bridge.

Reverse Mortgage (Age 62+)

Older owners with substantial equity may be able to use a reverse mortgage, but FHA-insured HECMs require the condo project to meet HUD approval rules (or single-unit approval), so the building matters. See reverse mortgages in California.

Buying a Condo With a Special Assessment

Find out before you’re committed

California requires sellers to provide the HOA documents listed in Civil Code §4525, including notices of assessments. Ask early for the budget, reserve study, SB 326 inspection report, recent board minutes and any correspondence about repairs. I have the HOA questionnaire reviewed at the start so a problem shows up during your contingency period, not the week before closing.

Negotiate who pays

An open assessment is negotiable. Common structures: the seller pays the unit’s full share at closing from sale proceeds, the parties split it, or the price is reduced. A seller paying their share at closing solves the buyer’s cash problem, but it won’t make the building warrantable if the underlying repairs are still open — coordinate the approach with your lender, escrow and the HOA.

Use the smaller buyer pool to your advantage

A building with a structural assessment pending shuts out many conventional buyers. If you can close with portfolio or non-QM financing, that can be leverage on price — run the numbers on the assessment, the higher rate, and your plan to refinance once repairs are finished before you write the offer.

Refinancing When Your Building Has an Assessment

Conventional refinances go through the same project review. Your options are usually a portfolio refinance, a small-project waiver if the building has 10 or fewer units and isn’t part of a master association, or waiting until the repairs are complete and documented. If you’re close to completion, waiting a few months can save you real money over the life of the loan.

What Happens If You Don’t Pay

An unpaid assessment can become a lien on your unit. California limits HOA foreclosure: under Civil Code §5720 an association can’t foreclose on delinquent assessments unless the amount owed (excluding fees and costs) is at least $1,800 or the assessments are more than 12 months delinquent. Talk to the HOA about a payment plan, and call me before the deadline so we can line up financing.

Frequently Asked Questions

Does a special assessment make a condo non-warrantable?

Not by itself. The lender documents the assessment’s purpose, amount and timeline. If it funds a critical repair that hasn’t been completed, such as structural balcony repairs from an SB 326 inspection, the building is ineligible for Fannie Mae until the work is done.

Can the seller pay the special assessment at closing?

Yes. The purchase contract can require the seller to pay the unit’s share at closing, split it with the buyer, or reduce the price. Paying one unit’s share doesn’t fix the building’s eligibility if the repairs are still open, so coordinate the plan with your lender.

What is the fastest way to pay an HOA special assessment?

An HOA payment plan or a personal loan is usually fastest. A HELOC or home equity loan typically takes a few weeks and costs less over time. A cash-out refinance takes longest and only makes sense if the new rate works for you.

How much can a California HOA assess without a member vote?

Under Civil Code §5605, special assessments totaling more than 5% of the association’s budgeted gross expenses for the fiscal year require member approval, except for emergencies defined in §5610.

Can a building become warrantable again after the repairs are done?

Often, yes. Once the HOA documents that critical repairs are complete and the project otherwise meets reserve, insurance and litigation requirements, it can be reviewed again for conventional financing.

Related Resources

• SB 326 Condo Mortgage Guide for California
• Fannie Mae’s August 2026 Condo Rule Change
• Non-Warrantable Condo Mortgages
• HELOC and Home Equity Loans in California
• HELOC vs. Cash-Out Refinance
• Reverse Mortgages in California