Condo living is often the perfect situation for those who are looking for a low maintenance place to call home with no worries about excessive repairs and the expense that comes along with them. And while some tasks like pool maintenance, snow shoveling and lawn maintenance, known as common area expenses, are covered by the condo association, and paid from the collected condo fees for the operating budget; some are not. In this blog, we will explain what condominium association special assessment fees are and highlight some of the pros and cons.
Condominium Association Special Assessment Fees Versus Regular Condominium Fees
Since condo association fees and coverage vary across Canada, it is important to understand exactly what is covered by the condo association and what is considered to be a condominium association special assessment fee. This is especially important for condo board members so they can strategically account for extra expenses when issues arise.
To understand the difference between condominium association special assessment fees and regular condominium fees, it is important to know the definition of each.
Regular Condominium Fees
Every year, the Condominium Board of Directors must prepare a budget outlining all the corporation’s expenses such as maintenance, repairs, administration, and insurance. The total anticipated expenses are covered by condominium fees paid monthly by unit owners based on a percentage of ownership.
Each month, a portion of condo owners’ fees are deposited into a designated savings account known as a Reserve Fund. These funds are for use by the condominium association for larger planned repairs to common areas such as swimming pools, roofs, elevators, building repairs, and other expenses related to shared amenities of the property. Regular condo fees are planned and collected for the Condo Corporation’s (also known as the Home Owner Association’s or HOA) annual budget.
But, when the cost of repairs or other unexpected expenses exceeds what was budgeted for or the balance in the special reserve account, condominium association special assessment fees become necessary.
Condominium Association Special Assessment Fees
A special assessment is a one-time fee required when there are necessary repairs that were not included in the HOA annual budget or planned reserve fund. Special assessment fees may be a result of unforeseen emergency expenses, poor budgeting, or even unplanned legal costs. This could be anything from major roof repairs to the replacement of the HVAC system that was not anticipated or planned for in the Reserve Assessment.
These special assessment fees are calculated much like the regular condo fees, which are determined by the amount of each owner’s interest in the common area. The HOA decides how payment for the assessment is required and can allow installments or be requested immediately from each owner.
Pros & Cons of Condominium Association Special Assessment Fees
Pros of Condominium Association Special Assessment Fees
- Enables the timely completion of emergency repairs and ensures the building and common area are maintained and in good condition.
- Avoids depleting the Reserve Fund so funds remain available for planned larger expenses.
- Allows the corporation to maintain the zero-based budget required by law
Cons of Condominium Association Special Assessment Fees
- Unexpected sums of money are due with minimal notice.
- Rarely covered by condo insurance.
- Outstanding balances for special assessments can result in a lien against the unit.
Trust Larlyn Property Management to Manage Your Condo
Condominium association special assessment fees may become necessary for keeping the condos in the best condition for the investment and safety of condo owners. But the best way to avoid special assessments is sound financial management and proper budgeting. At Larlyn Property Management, our goal is to understand the roles and challenges of condominium board members across Canada so that we can support you in a variety of ways including avoiding unnecessary special assessments. Our unique approach, innovative property management technology solutions, and proactive customer service allows us to offer client-oriented solutions that helps condo board members succeed. Contact our team to learn about our professional condo management services.