Is the seller obligated to payoff this HOA special assessment? (contingency, clause)
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A condo unit is up for sale. A few years ago, the condo board/homeowners voted to add a swimming pool and recreational area upgrades (shower area, hot tub, area for yoga). The board obtained a bank loan to pay for the health facilities, rather than spend reserves or bill an upfront special assessment to all owners.
Now the condo owners have two different monthly HOA payments that are combined into one payment. The first HOA amount is composed of the primary expenses (water, garbage, insurance, management expenses, etc). The second HOA is a small monthly payment for the bank loan. That second HOA will continue for five more years, at which time the loan will be paid off.
Is the condo unit seller obligated to payoff this special assessment before selling the unit to a new buyer? If there had been no board loan, then the seller would've been immediately responsible for his entire share of the special assessment.
The seller seems to want to benefit from the new recreation area as a selling point, and he doesn't have to pay for it all.
+ Should an offer contingency require the seller to credit the remaining loan balance to the new owner at escrow closing?
+ Should a lower offer amount be made to deduct the estimated loan balance?
+ Or should the potential buyer not factor the loan into the negotiations and just take over the remaining payments?
Make your offer as uncomplicated as possible and offer what you're comfortable paying. Special clauses relating to the assessments will muddy the water and may alienate the seller right off the bat.
Is the condo unit seller obligated to payoff this special assessment before selling the unit to a new buyer?
It depends upon the terms of any sales contract. I've seen special assessments handled both ways--either paid off by the Seller or future payments simply assumed by the Purchaser. More often, in my experience, if the payments are not yet due they are not paid off early.
It depends upon the terms of any sales contract. I've seen special assessments handled both ways--either paid off by the Seller or future payments simply assumed by the Purchaser. More often, in my experience, if the payments are not yet due they are not paid off early.
This is what I've seen too. If it's a lump sum and it's due, it's paid off by the seller. When it's a temporary increase in monthly fee, that obligation transfers over the way the regular monthly fee does.
A condo unit is up for sale. A few years ago, the condo board/homeowners voted to add a swimming pool and recreational area upgrades (shower area, hot tub, area for yoga). The board obtained a bank loan to pay for the health facilities, rather than spend reserves or bill an upfront special assessment to all owners.
Now the condo owners have two different monthly HOA payments that are combined into one payment. The first HOA amount is composed of the primary expenses (water, garbage, insurance, management expenses, etc). The second HOA is a small monthly payment for the bank loan. That second HOA will continue for five more years, at which time the loan will be paid off.
Is the condo unit seller obligated to payoff this special assessment before selling the unit to a new buyer? If there had been no board loan, then the seller would've been immediately responsible for his entire share of the special assessment.
The seller seems to want to benefit from the new recreation area as a selling point, and he doesn't have to pay for it all.
+ Should an offer contingency require the seller to credit the remaining loan balance to the new owner at escrow closing?
+ Should a lower offer amount be made to deduct the estimated loan balance?
+ Or should the potential buyer not factor the loan into the negotiations and just take over the remaining payments?
'Spinning' the details to make it appear like the seller should be obligated to pay part of the unit's HOA fees, after they sell the unit, is only wishful thinking. HOA fees are the obligation of unit owners of record when fees are due. The fact that part of the HOA fees go toward paying for Condo amenities was established by board action and a likely owner vote - and thus stands as part of the HOA fee.
You stated that the board decided to obtain a bank loan to pay for the health facilities, rather than spend reserves or bill a 'special assessment'. Then you ask if the unit seller is obligated to payoff this 'special assessment'. Which is it?
I'm concerned, though, when you say the condo fee and special assessment are combined now. Perhaps you don't really mean that. Is it one check and somehow the manager directs part one way and part another? Or ...very important to an owner...will this one amount remain the same after the loan is paid off?
I've known that to happen. People forget. New people move in. Some board members have the idea, hey, we did it for...however long, 10 years in this case?...so let's continue it.
It could be a reserve fund was lacking. Another thing to check on.
It could be they wisely wanted to keep the reserve fund for the roof and siding and whatever needed work over time. And for this extra, this pool, they decided if people want this extra amenity then it has to be a special assessment and not mess with our reserve funds.
AND...big and...how will the pool be maintained? What funds are maintaining it now? As amenities are increased, so should the condo fee be increased to cover the extra expense. And increased yet again to cover the reserve fund that takes care of its eventual repairs.
So, look into the wider picture and the future, not just the current contract.
The condo also has a reserve fund he paid into and that portion of reserve fund as a condo owner you get. Even though it was witheld from your maint. That offsets the assessment. Plus you are getting the pool he is not.
My condo I have a six year assessment left on a loan for a new roof and cement work. Why would seller want to pay off the loan. Roofs/cement last 20 years I am getting most of the use.
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