Buying a new home is always an exciting time – it’s a fresh start for you and a chance to grow your net worth. While homeownership is something everyone aspires to, it can have its downsides. One of the downsides is having to cover the costs of repairs and maintenance, many of which can pop up when you’re least prepared for them.
This can be especially true for condo owners, who may be faced with high costs for building repairs after something called a “special assessment.”
If you own a condo, you’ll be familiar with the monthly fees you’re charged for the maintenance of the building. This usually includes common charges, which will cover things like garbage removal, and maintenance fees, which will cover building maintenance and repairs.
“Special assessments” happen when a problem with the condominium building is identified and a professional is brought in to assess the problem and tell the condominium association how much it’s going to cost to put right. (The process may actually include multiple professionals and surveyors.) The costs of these special assessments are then shared amongst the condo owners.
Logically speaking, special assessments make sense. When a single-family home needs a new roof, it’s up to the owner of that property to find the money to replace it, which can be anywhere between $5,000 and $45,000. Therefore, condominium owners must band together to replace the roof on the condo building when it needs doing to protect the structural integrity of the building.
So, what’s the problem?
- Special assessment costs can be high: A quick Google will reveal numerous horror stories of unsuspecting condo owners being subjected to special assessment fees totaling anywhere between $50,000 and $400,000 for repairs, even after the cost has been divided up fairly between the condominium owners. While the costs are divided up fairly amongst owners, the complexity of the building can drive up costs.
- Condo owners are stuck with costs they don’t feel responsible for: If you live in a building with hundreds of condos and there’s a problem on the opposite side of the building that should have seen proper maintenance and will now cost more to put right, you’re likely not going to be all that happy about paying for a problem you didn’t create. Equally, if you buy your condo and then are hit with a large special assessment because the people living in the building haven’t kept on top of building upkeep as they should, you’re not going to be happy about paying for their mistakes.
- Condominium boards and COAs should forecast and keep money in reserve: While most boards have reserve accounts, they are not always managed properly and often fail to keep money in reserve to pay for large repairs that will inevitably need doing.
- It makes budgeting difficult: It’s difficult to budget for fluctuating common charges and maintenance fees, but suddenly receiving a bill in the thousands for something you have no control over and can’t delay (even if they break it into installments) is a very unpleasant experience. While no homeowner can avoid maintenance costs, at least single-family homeowners can do the work on their timetable.
- Selling and buying can be troublesome: In Massachusetts, for example, sellers have no legal obligation to disclose a special assessment provided they’re not involved in trade or commerce. This means that someone selling their home could keep this information from their broker and legally sell their property without advising them of an assessment. There’s no recourse for buyers who haven’t done their due diligence.
While special assessments can only seem like a bad thing, they are extremely important. The tragic collapse of the Champlain Towers South Condominium in Miami in 2021 highlights that importance – 98 people died when the building experienced a major structural failure, making it one of the most destructive building failures in American history.
The building had a long history of maintenance problems and board members have been questioning the quality of its original construction since the early 1980s. Some believe the building collapsed due to a rise in sea levels and saltwater intrusion brought on by climate change. Better assessments may have helped to prevent the tragedy because they’re designed to identify and fix any serious issues.
Generally, special assessments cannot be avoided. They are for the benefit of the community and homeowners associations may have to enforce them to make sure everyone carries their weight. If any homeowners refuse to pay their part, the association may have the legal right to collect the money, depending on where in the country the property is. In extreme cases, a COA may even resort to putting a lien on someone’s property.
Before worrying about huge bills, it’s always worth checking if they add up. Look at the governing documents to ensure that the COA has followed all requirements in initiating this special assessment. If the governing documents cite that the COA needs a majority vote of its members before arranging the special assessment and it didn’t, you can challenge the assessment.
If the COA has followed all the rules to the letter and you’re still worried about fees you can’t afford, don’t just put it off. Depending on the governing documents, your COA might charge you late fees if you pay late, so it’s worth discussing with them sooner rather than later. If you definitely can’t pay it all now, you might be able to speak to them about figuring out a payment plan.
Failing that, your next best option may be to sell your property. With more and more people becoming financially trapped in properties they had no intention of staying in, selling may be the only option to get out from under the pressure of a large special assessment bill.
Selling a property honestly with a large special assessment bill attached (or an upcoming special assessment you’re worried about) can understandably be a hard sell, but you’re not trapped. A cash home buying company like us can offer you a way to get out and move on with your life.
If you’re selling your condo in Massachusetts, we’re here to help. We are a licensed, local, A+ Better Business Bureau-accredited cash home buying company that will quickly evaluate your property and make an offer based on market analysis, with no pressure and no obligations!
We buy homes in any condition and you won’t have to worry about realtor fees, bargaining, or repair costs. To get your no-obligation cash offer or to learn more, click here or call us at 781-309-7085.