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A condominium special assessment is a levy against unit owners in a condominium, coop, or HOA, often to fund improvements or repairs to the common elements of the building(s). This can include anything from repainting the exterior of the building to fixing a broken water pipe. Special assessments are not uncommon, and often occur when major repairs need to be carried out and the association does not have enough money in its reserve fund to cover the cost.
The amount of a special assessment is typically calculated by taking into account the estimated cost of the repairs or improvements and the number of units in the condominium. For example, if it is estimated that it will cost $100,000 to repaint the exterior of a building with 100 units, each unit owner would be responsible for paying $1000 towards the cost of the project.
In some cases, assessments may be paid over time, such as in monthly installments. In other cases, an association may offer to help unit owners finance large special assessments. But most often a special assessment is levied and unit owners have a fixed period
of time to pay the amount of the assessment to the association.
Special assessments are not always used for major repairs or improvements. They can also be required when the association is facing other expenses that it does not have money for such as legal fees or even day-to-day expenses like landscaping or snow removal.
Can special assessments be prevented? Not necessarily, but there are a few things that unit owners can do to try and prevent special assessments from being levied. The first is to make sure that the association has enough money in its reserve fund. This fund should be used to cover the cost of major repairs and improvements so that assessments are not necessary.
Another way to prevent special assessments is by paying attention to the association's finances and making sure that money is being spent wisely. If an association is constantly overspending, it may be necessary to raise monthly dues or implement a special assessment.
Of course, even if unit owners take these precautions, there is no guarantee that a special assessment will never be necessary. However, taking these steps can help to minimize the likelihood of this type of unexpected expenditure.
Are you worried that a condo that you have a contract down on may have a special assessment coming up? I can help review the condo documents to see whether there are any clues that one may be necessary. Learn more here!
