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Condo Special Assessments: What Do About Unexpected Condo Fees

Posted by Justin Havre Real Estate Team on Tuesday, January 28th, 2025 at 3:57pm.

What to Do When There's a Special Assessment on Your Condo

Despite the numerous advantages of buying a condo, prospective and current owners need to be aware of a potential expense they could be responsible for: special assessments. When a special assessment is levied on a condo community, it often sparks an immediate need for clarity and strategy. Owners typically start by scrutinizing the assessment notice for any discrepancies and understanding the justifications provided by the condo board.

If doubts about the fairness or legality of the assessment linger, seeking legal advice might be their next step. However, what specific rights and options do condo owners have in such situations, and how often do these assessments hint at deeper issues within the condo management?

Special Assessments on Condos at a Glance

  • Review the formal resolution for details on the assessment's purpose and payment terms.
  • Verify the necessity of and calculate the assessment with the condo board.
  • Consult legal advice if the assessment seems excessive or unjustified.
  • Gather support from fellow residents if you’re considering challenging the assessment.
  • Stay informed about future reserve fund studies to anticipate potential assessments.

What is a Special Assessment?

A special assessment is an additional charge levied by a condominium association to address unforeseen expenses or significant repairs that exceed the funds available in the regular budget. This financial burden, shared among the unit owners, often arises from structural issues or emergency maintenance needs. For some homebuyers deciding between buying a house or a condo, the prospect of special assessments is reason enough to lean towards a house. 

All condo owners are legally obligated to pay these assessments, underscoring the importance of a well-managed condominium association that maintains a sufficient reserve fund. Residents’ monthly condo fees contribute to the condo’s reserve fund. However, if the fund falls short, the condo board must levy a special assessment to secure the building's integrity and the owners' investments. 

This decision is typically reached through a majority vote among the board members, reflecting a collective agreement on the necessity of the action.

Why Are Special Assessments Levied?

Condo boards levy special assessments to cover unexpected expenses or significant repairs when reserve funds are insufficient. These financial contributions are essential for maintaining the functionality and safety of condominium common areas. Prospective buyers comparing pre-construction and resale condos may lean toward pre-construction due to the lower probability of special assessments in the first few years of ownership. 

Urgent maintenance needs, such as damage from unforeseen circumstances like severe weather, can prompt the condominium board to impose a special assessment. Additionally, legal complications that aren't covered by insurance might necessitate these unexpected fees.

Capital improvements also lead to special assessments. Projects that enhance the property, such as building systems upgrades or security improvements, require substantial funding. These improvements are beneficial in the long run, and many condos are good investments because of them. Still, they can strain a condo corporation's finances if the reserve funds aren't sufficient.

How Are Special Assessments Calculated?

A Condo Board Determines the Special Assessment Amount

When a condo board determines the need for a special assessment, it must first calculate the total amount required, which is then divided among the owners. As the condominium plan outlines, this division is based on the unit factors assigned to each condo unit. These unit factors represent the proportionate ownership share and dictate what each owner pays.

The process involves a formal resolution by the condo board, which specifies the purpose of the assessment, the total amount required, and the payment deadlines. This ensures that each owner's share is calculated clearly and by the Condominium Property Act.

Transparency is key. Owners must understand why they're paying a special assessment and how the amounts they pay are calculated. This straightforward method helps maintain trust and manage expectations, as each owner can see their specific financial responsibility reflected in the formal documentation provided by the condo board.

Can You Challenge a Special Assessment?

The prospect of a special assessment underscores the importance of knowing your rights as a condo owner. Residents who believe the charges are excessive or unjustified can challenge a special assessment, but they should act quickly. Document review provides insight into the decision-making process and helps verify if the assessment is warranted.

If owners believe the charge is unfair, they can formally challenge a special assessment. This step often involves gathering support from fellow residents, who show that the community shares their concerns.

Understanding the payment terms outlined by the condo association is essential. Failure to pay the assessment can lead to severe penalties, including legal action. Residents should also seek legal advice early in the process. A lawyer specializing in real estate can offer important information on rights and potential strategies for contesting the assessment.

Moreover, direct engagement with the condo board might resolve the issue amicably, avoiding further disputes. Lastly, it is vital to document all communications regarding the special assessment. These records will be invaluable if the challenge escalates to legal proceedings, ensuring residents are well-prepared to defend their stances.

Options for Special Assessments of Condos

Condos are an increasingly popular residential property type, but when you’re faced with a special condo assessment, you should act promptly. Start by reviewing the board's documents to understand the specifics and purpose of the charge. Don't hesitate to talk with other residents and the condo board to voice concerns and seek clarity. Being informed and proactive can significantly influence the outcome of such assessments.

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