Q: What is a special assessment and how can I avoid buying a condo that has one?
A: Sometimes a condominium has improvements that need to made to it, the windows need to be replaced, the siding needs to be replaced, and they don’t have enough money in reserves to pay for that. Or, if they use all of the money in reserves, then they won’t have anything left over. So, they need to issue a special assessment.
If you are buying a condominium, you will want to be very careful about these special assessments because you may get an added cost of $10,000, $20,000, $30,000, $40,000 after you move in. So, what you want to do is carefully review the resale certificate, look at the meeting minutes, look to see if they are considering a special assessment, and look at the reserve study, if they have one. If the reserve study states that the condominium is only 10% funded for the future repairs and improvements that are needed, then you might want to be a little careful about that because that’s telling you right upfront that they don’t have enough money to pay for these things that are going to need to be repaired in the future.