Suppose you have decided that your next investment will be a condominium. There are a number of differences that must be taken into account versus a residential home. One of these is the monthly condo fees which are levied by the condo board. These can increase subject to the sole discretion of the board and can be as high as they see deem necessary! In the event that the monthly contributions from all of the owners are insufficient to cover the expenses, then you will hear the two most dreaded words an investor fears on their bottom line: SPECIAL ASSESSMENT.

A special assessment is a one time levy which must be paid to the board which is above and beyond the monthly condo fees. These are non negotiable so please do not hire legal counsel for litigation purposes.

When purchasing a condominium, you will want to avoid this at all cost. The best way to do this is to insert a clause in your offer to purchase that makes the other party legally responsible for assessments which were levied before you bought the property. You may wish to add a clause that states “The Seller is responsible to pay all special assessments levied by the condominium board up to and including the Completion Day, no matter when actually due and payable.”  The seller will then be obligated to pay for any assessments approved by the board regardless of when they are due even if it is after closing.