Special assessments are a last resort for condo corporations with poor budgeting, deferred maintenance that can no longer be deferred, or unexpected repairs.
A special assessment is never good news. Advance awareness is the best way to prepare so that you can pay the required amount when due. An announced special assessment will appear in the Status Certificate thus making it harder to sell a condo suite. For condo communities, requiring immediate payment of a special assessment can be the best way to protect resale values.
Special assessments can be harder for the unprepared. Fortunately, the need for a special assessment is usually clear long before any formal announcement. This provides observant owners with the early warning they require to plan for it.
- Confirm that a special assessment may be coming prior to an official announcement
- Determine when a special assessment is likely – it may be months or years away
- Estimate the amount likely to be assessed
- Determine if condo fees are likely to increase
Identify indications that a Special Assessment is forthcoming
Determine if recent budgets have been in a surplus or deficit position. Know if reserve fund balances are increasing or decreasing, and what expenditures are anticipate over the next few years. Review condo board minutes for mention or discussion of major building assets such as life safety systems, roof, windows or underground parking. Discussion about a specific system combined with a declining or low reserve fund may indicate a special assessment is to be expected.
Ask the board, in writing, about the reserve fund balance, upcoming major work or repairs, and delayed maintenance. When a reserve fund balance is sufficient, responses are likely limited to providing a timetable.
Condo directors are unlikely to identify the timing or amount of a special assessment prior to a formal announcement. When announced, there may not be much time before the special assessment is due.
Determine the approximate amount of an anticipated Special Assessment
Major system repair costs are often communicated in advance in meeting minutes or information meetings. Take the known total and multiply by the percentage used to calculate your condo fees. This can be obtained in your declaration or through the management office.
If concerned about being able to pay a special assessment, selling prior to its announcement can be a drastic but necessary step to protecting assets.