Special Assessment Condo
One of the biggest drawbacks of living in a condo versus a freehold is that common expenses are shared between all owners. While common expenses are normally covered through monthly maintenance fees, many home buyers are unaware of what happens if the condo corporation is running short on funds.
What is a Special Assessment in a Condo
A special assessment is an additional charge that condominium owners are required to pay on top of their regular monthly maintenance fees. While all owners are responsible for paying a special assessment, it’s important to realize that the condo board of directors does not need to get the approval of individual owners to add a special assessment.
Common Reasons Why Special Assessments Happen
The condo board can vote to add a special assessment for a number of reasons, however below are some more common special assessment examples.
- Low Reserve Fund – Whether due to the condo fees being too low, or from an unforeseen expense, the corporation may use the special assessment to increase the reserve fund. By law, condo corporations in Ontario are required to have a reserve fund study conducted every three years.
- Unexpected Expenses – Just like owning a house, sometimes unexpected expenses arise that were not budgeted for. If the condo does not have enough money in the reserve fund then they may choose to raise money through a special assessment to cover the shortfall.
- Lawsuit – If the condo corporation loses a lawsuit and the judgement is not covered by insurance, the board of directors may decide to apply a special assessment in order to raise funds to cover the cost.
What Happens if You Can’t Afford the Special Assessment?
Under Ontario law, there’s very little owners can do if they can’t pay or disagree with a special assessment. If an owner can’t pay, the condominium corporation can put a lean on the property.
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Things You Can Do As a Condo Owner
There’s always the possibility that something unforeseen will happen with the condo that you can’t avoid. Below are some steps you can take as an owner to minimize the chance of a special assessment in your condo.
Or in the case that one is needed, make sure it’s as cost effective as possible.
- Get actively involved with your condo board. As an owner, you have every right to be involved with your condo board. You can also choose to run for election to the board of directors to ensure that you understand and can affect any decisions being made.
- Educate yourself on the budget, and reserve fund. Be sure to questions all budgets and expenses and always get a second opinion on large expenditures.
- Get legal advice – When all else fails, you may want to get legal advice regarding your special assessment. Just be aware that while the special assessment can be challenged in court, it is only on whether proper procedure has been followed. If this is the case, be sure to get a legal opinion.
One Final Word on Special Assessments
At the end of the day, keep in mind that when you buy a condo, you aren’t just buying the unit but also a share of the common expenses. Be aware that condo buildings have big expenses, and that amenities such as pools and elevators are very expensive to maintain. Be sure to closely study the status certificate and historic record of condo fees to ensure the building is properly managed.
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