Q: Our association will be remodeling the clubhouse, and there will be a significant assessment. We will have the option to pay off the amount in one lump sum or over 10 years. If I sell while paying off the assessment, am I responsible for paying the balance, or does the new owner take over the payments? —Asher
A: Many communities have aged to a point where significant renovations must be done to ensure residents live with safe and well-maintained buildings and amenities.
As any homeowner can tell you, items need to be repaired and replaced over time, and it is expensive to do so.
While most associations are relatively well funded, many do not have the financial reserves to cover the necessary work. This is where “special assessments” come in.
A special assessment is a one-time charge to each owner in a community association necessary to repair, renovate or replace shared parts of the community. It may be elevator repairs in a high-rise condo, shared roofs on townhouses or other community projects that need to be done.
If the association does not have the money saved up, it will often take out a loan to pay for the work. The bank will collateralize the loan against a special assessment.
Because of the size of the assessments, they are usually paid monthly over several years.
State law and the community’s legal documents dictate how a special assessment is approved and carried out. A vote will be taken by the board or the general membership depending on how the association is structured. In either case, the entire community will be notified and can attend the meeting where the vote occurs.
Most special assessments offer the residents the choice of making monthly payments or paying a lump sum. The majority of monthly payment plans allow someone buying the property to keep making payments. Still, I have seen associations where the seller must pay off the special assessment at closing.
You will need to review the written details of your assessment to learn your options. Your association manager can get you a copy of the paperwork for your review.
This article is written by Gary M. Singer from Sun Sentinel and was legally licensed via the Tribune Content Agency through the Industry Dive publisher network. Please direct all licensing questions to firstname.lastname@example.org.