Buyers may be Responsible for Condo/Townhome Special Assemessments (Colorado Springs: sales, HOA)

[Colorado Springs Gal]

With the recent hail storms and crazy weather we’ve had here in Colorado Springs, if you are a buyer and you are currently under contract to purchase a townhome, or condo that has incurred damages from the storm, please make sure to thoroughly read the HOA docs/covenants/ and meeting mins .. if there’s anything in the meeting minutes about a special assessment or claim filed ....inquire with the HOA immediatly and get details.

Quick Tip: when buying insurance it’s typically called an HO6 Policy, because based on the HOA and what they cover through insurance (usually outside stuff), the HO6 will cover inside/etc ...make sure you spend the few extra dollars to add an LOSS ASSESSMENT RIDER and talk to your insurance rep about what it covers and how..

Why?

If there was damage due to some of the storms that the HOA has not yet assessed (they have not submitted a claim to their insurance company, or the insurance company has not returned a response to them for coverage) seller has no idea assessment is coming and HOA can’t really confirm an assessment will be coming until they receive a confirmation of coverage from their insurance company.

Here’s what happens:

date of loss was while under contract to purchase townhome/condo etc - hail storm

HOA has not issued a special assessment to homeowners (seller) for the difference needed to cover what the insurance company won’t (this is because they are waiting on insurance company to see what insurance company is willing to cover) this is also something sellers/current homeowners aren’t even aware of

Hoa gets determination from insurance company sometimes days/weeks later after you close on your new place.

..Hoa applies a special assessment to the each homeowner for the difference needed that isn’t covered by insurance

Date of Hoa assessment - was submitted and sent to all EXISTING homeowners for their part of the special assessment. This can sometimes be thousands of dollars that the homeowner is liable for.

Sellers/ insurance company Won’t cover it, because the transaction has already been closed...they are no longer in ownership as of the date of the HOA’s special assessment....(insurance company does not go by date of loss in this situation)

The NEW homeowner (buyer) now has a special assessment for damages imcurred before ownership occurred
.

Please make sure as a buyer you discuss coverage with your insurance provider and ask them about the loss assessment rider and what it covers ... you may still be able to do this even after purchase...

Long story short...call your insurance company, and agent to get best/next steps ....

[YoYoSpin]

Also, before you buy...ask to see the HOA's latest "Reserve Study" to determine if cash reserves held in the HOA's accounts are reasonably well funded. A good HOA will have sufficient cash in their reserves to cover all long-term expected, and some less-expected expenses, often negating the need for special assessments.

[Colorado Springs Gal]

Originally Posted by YoYoSpin

Also, before you buy...ask to see the HOA's latest "Reserve Study" to determine if cash reserves held in the HOA's accounts are reasonably well funded. A good HOA will have sufficient cash in their reserves to cover all long-term expected, and some less-expected expenses, often negating the need for special assessments.

Yes!!! That !!!👍☝️

[Paige123]

I sold my house 5 months ago. The HOA from my old house just issued a special assessment on November 1st, 2018 for a storm that supposedly happened in May 2018. There have been many storms since May. Who is responsible for the assessment?

[YoYoSpin]

Originally Posted by Paige123

I sold my house 5 months ago...Who is responsible for the assessment?

I'm not a lawyer, but I believe that current homeowners are responsible for special assessments, not previous homeowners...unless:

1) something was written into your sales contract, indemnifying the new owner against undisclosed or unknown pre-sale issues (latent defects).

2) possibly, if you provided the new owner with an unconditional warranty.

3) if the pending special assessment was common knowledge (you and your neighbors knew it was coming) and you/your realtor failed to disclose that info to prospective buyers.

The basic concept is that when you sell your home, whatever you've contributed to the HOA's current reserve fund over the years goes to benefit the new owner, and...the new owner is normally on the hook for paying special assessments if those reserves are insufficient. That is why all new owners should know what's in the HOA's reserve fund before signing a contract.

[phetaroi]

Please be aware that you can have coverage for special assessments on your home owner's insurance. It's ridiculously inexpensive.

[Dreaming of Hawaii]

Totally agree with YoYoSpin. Even though the special assessment was issued November 1 (how did you find that out?), there may have been talk in HOA Board meetings about the need to do repairs. If the storm happened in May, were there HOA meetings prior to your sale? And, if so, then you should have been aware of a possibility of an assessment. The new owner can go back and read those minutes and conclude that you knew about the upcoming assessment.

[COcheesehead]

Originally Posted by Dreaming of Hawaii

Totally agree with YoYoSpin. Even though the special assessment was issued November 1 (how did you find that out?), there may have been talk in HOA Board meetings about the need to do repairs. If the storm happened in May, were there HOA meetings prior to your sale? And, if so, then you should have been aware of a possibility of an assessment. The new owner can go back and read those minutes and conclude that you knew about the upcoming assessment.

Buyers are required to do due diligence including reviewing HOA docs. Meeting minutes are required to be made available. So the buyer would have known just as much as the seller prior to sale.

[Colorado Springs Gal]

Originally Posted by phetaroi

Please be aware that you can have coverage for special assessments on your home owner's insurance. It's ridiculously inexpensive.

Yes, this!! It's called and HO6 rider. Ask your insurance about it with any condo/townhome.