Condo Association Special Assessment Guide for Owners

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Continuing the Special Assessment series, today is the Condo Association Special Assessment Guide for Owners.  You’ve just been handed the news that you’re either obligated to pay a big check or there will be vote to hand over a big check.  Your first instinct is most likely going to be to fight and resist.  In some circumstances, you’re justified in fighting and resisting.  But in most cases, your Board will have done their homework and they have truly identified the best path forward.  The bottom line may be that the work must be done or the Condo will be rendered uninhabitable.

Thus, your job is going to be to get educated on the Condo Association Special Assessment.  You need to learn everything you can about the work being done, where your money is going, and how that money will be managed.  If you’ve not been involved in your Association, perhaps now is the time for a tune-up and thinking about getting involved in the future.

Read Everything Your Board Gives You – Twice

If the Board gives you a stack of books - read it all.
If the Board gives you a stack of books – read it all.

Hopefully your Board has provided you with an information packet.  Assuming they did, you need to read it all.  Don’t skim it.  Don’t glance at it.  Thoroughly read it and take copious notes.  If you don’t understand something, email the Board and Management and ask for clarification.  Many Boards fall into the trap of assuming Owners know what they do, so don’t be embarrassed if you don’t understand it all.  Remember – the Board serves the Owners.  You have every right to politely ask for clarification and explanation.  

Understand Consequences of the Work Not Being Done

Hopefully your Board has identified this up front, but what happens if the work proposed under the Special Assessment isn’t completed?  Will it cost more to do in the future?  How much more?  Will it result in life safety issues (like collapsing roofs) or casualty events (like water damage from a leaking roof)?  These are important questions to understand, particularly if your Special Assessment will require a vote.  In nearly every case, you’re going to want to vote “yes” if the cost will go up in the future or if there are safety issues at stake.  

Find Out if the Work was Peer Reviewed

When a Board is looking at a major project or contemplating major repairs, they need to make sure they peer review everything (link).  Peer review makes sure that the building’s condition has been correctly diagnosed and the plan to fix it will in fact do the job.  If the Board did carry out a peer review, information should be available in the packet.  If it is not, find out why it was omitted. If a peer review was not done, find out why.  The lack of a peer review is a major red flag – when you’re dealing with major projects that cost a lot of money, your Board needs to make sure they are being responsible and consulting multiple experts.  

Understand Your Financing Options

Good financing options are always a plus.
Good financing options are always a plus.

A Special Assessment is typically a large amount of money.  With half of all Americans living paycheck to paycheck, financing is a very relevant question for many Owners.  Although Associations do not have to offer financing, many do, because the alternate scenario is delinquency, which is bad.  Is the Association offering financing options?  If so, what are they?  How do the interest rates compare to commercial solutions?   In general, an Association should be able to beat unsecured loan rates but will likely be unable to beat home equity rates.  If they are offering financing options, are they putting liens on units?  Do they have a plan if there is delinquency?  Even if you don’t plan on taking financing options, you need to make sure they have correctly accounted for the financials.  If many Owners take the options and default, will the building be able to pay for the work?  These are important questions to ask.

Identify the Timelines

Make sure you understand the key timelines related to the Special Assessment.  If there is a vote, when will it occur?  Once the Special Assessment is assessed, when are payments due and what are the terms?  When will the work begin?  When will it be complete?  If the Association is also taking a loan, when will the loan be paid off?

The Disclosure Bomb

An important item to understand is that once a Special Assessment is announced, it must be disclosed by the building to any prospective Owners.  This often can have a chilling effect on sales until the Special Assessment is resolved.  Keep this fact in mind.  If you have to sell or try to sell during the period, you can offer to escrow Special Assessment funds for a year to the buyer as a way to move the property.

Make Your Voice Heard – and Don’t be One and Done

The final step of the Condo Association Special Assessment Guide for Owners is to show up to any outreach events your Board holds related to the Special Assessment.  Ask questions you’ve identified if you haven’t asked them in email – and if they’re important enough, ask them again for the Community.  Judge the Board’s body language during the meeting.  Do they have a plan?  Does it seem confident?   How do they answer other people’s questions?  Are they respectful and thoughtful?  Or derisive and short?
Finally, don’t just show up to the one Special Assessment meeting.  If your Association needs a Special Assessment, there’s something up.  Protect your property value by staying involved and engaged throughout the Special Assessment and Major Project process.  Maybe you’ll be inspired to stay involved for even longer after, too.  


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