Special assessments can be charged by your condominium corporation on top of regular monthly fees and the board of directors can charge a special assessment without getting permission from condo owners. By-laws of the corporation may have rules about special assessments and may include provisions for owner input. In addition, the decision to levy a special assessment can be challenged in court if proper procedures are not followed.
Your board may need to levy a special assessment for various reasons. Here are some of the most common:
You must pay your portion of any special assessments. If you don’t, you risk the same consequences you would suffer if you neglected to pay your common element fees.
The board will tell you how much you have to pay. Your portion is calculated using the same percentage used to calculate your common element fees.
The ability to predict expenses helps people stay in control of their financial situations. You can better budget for regular condominium fees than you can for unforeseen special assessments. Those of modest means may not be able to pay the assessment, so the condominium may place a lien on their units.
Prospective buyers are legally entitled to a status certificate, which includes information about special assessments. Savvy buyers make the transaction conditional upon review of the status certificate. News of a special assessment can cause prospective buyers to back out of a purchase. They could also demand a lower price for your unit.
The best way to avoid special assessments is to ensure there is enough money in the reserve fund. Everyone likes low common element fees, but if fees are too low, a special assessment is more likely. The board needs to set fees high enough to cover expenses. As an owner, you need to understand that higher fees mean special assessments are less likely.
An alternative to a special assessment is for the condominium to borrow money. The borrowed money is paid back over several years. This lessens the immediate impact of the expenditure. You can do this if your corporation has a borrowing bylaw.
You can ask to review relevant documents to better understand the reasons for the special assessment. You can also requisition an owners’ meeting about the issue.