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If a condominium has sudden unexpected repair, then is the special assessment payment due immediately? For example, if the condo's private street suffers a sinkhole and each HOA member owes $2,400 for the special assessment, then do condo boards usually expect full payment right away from the HOA members?
The due date all depends on several factors. For instance, if the contractor is willing to bill periodically it can be spread out but if it has to be paid in full prior to work and there is insufficient reserves the assessment my be due immediately. Check with your condo board.
I don't yet own a condo, but will read the CC&R docs before an making offer. Just wondering when most condo boards expect that special assessment payment.
It is always a good idea to ask what the HOA reserves are prior to buying there. If they are insufficient, you could be subject to periodic assessments or monthly dues increases to pay for unforeseen/underfunded expenses.
It makes sense that I (as a potential condo owner) should pay immediately for needed services. If I owned a SFH and the roof leaked, then the roofing company is going to expect payment right away.
A SFH owner without funds could apply for a bank loan to cover the emergency expense. A condo owner could just as easily do the same.
Follow-up question to special assessment payments:
Condo townhomes can have four home units under a common building roof, with 10 buildings on the grounds (forty owners in the HOA). If only one building needs an emergency roof replacement, do all forty units get charged the special assessment or do just the four owners who get the new roof pay it? I know it depends on the CC&R, but who usually pays the special assessment in a situation like this?
I would also add that I've seen in the past some associations take out debt to cover an assessment and then each owner pays toward that debt. Sometimes, in these situations I've seen owners given the option to pay a lower fee if they pay the whole thing upfront instead of being a part of the debt taken out.
Regardless, any special assessments should be paid by the unit owner at the time the assessment is levied. If it's a monthly payment plan like I mentioned, I would negotiate into the contract a sum of money from the seller's proceeds going to you sufficient enough to cover the remaining payments of the assessment.
Quote:
Originally Posted by Sky-Blue
Follow-up question to special assessment payments:
Condo townhomes can have four home units under a common building roof, with 10 buildings on the grounds (forty owners in the HOA). If only one building needs an emergency roof replacement, do all forty units get charged the special assessment or do just the four owners who get the new roof pay it? I know it depends on the CC&R, but who usually pays the special assessment in a situation like this?
All common expenses are shared equally in a condo association. It's the nature of the beast.
I once lived in townhouse community that was built in two phases. The first phase had wood siding and the second phase was built 10 years later with vinyl siding. The first phase was needing frequent exterior painting and experiencing a lot of wood deterioration for some reason. So, it was decided to vinyl side the first phase. EVERYONE paid. I wasn't too happy about it considering I lived in phase II.
It is always a good idea to ask what the HOA reserves are prior to buying there. If they are insufficient, you could be subject to periodic assessments or monthly dues increases to pay for unforeseen/underfunded expenses.
Always check the reserves. In a well managed HOA there should never be a need for special assessments outside of a catastrophe. Roads need repaired. Roofs need replaced. Siding needs painted. These things should be planned for starting on day 1 of the HOA. I realize that some builders keep the fee low so they can sell the units, but after the builder is out of the picture fees should have been brought up to a proper level.
Capital Reserves is money set aside for anticipated repairs like replace a roof in 20 years. A good rule of thumb is 15% of yearly dues should be set aside into Capital Reserves for down the road use like replacing the roof. Capital Reserves are not used for day to day operation. If less then 15% then they could be in financial trouble down the road.
An association can borrow for Capital Reserves but unless they have a repayment plan, they could get in trouble down the road.
I know one townhouse association ($450K average selling price) where the members voted on an assessment of $25K per unit. Long story short the owners understood, accepted, and 85% voted for it. The BOD setup a loan from a local bank and owners were offered several ways to pay the assessment. They could pay the $25K at once with no interest. There were other plans with the longest one being over 5 years with an interest charge.
Hope this helps.
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