HOA special assessments: how to spot one before you buy
A special assessment is a one-time charge on top of your regular dues, usually for a big repair the reserves can't cover. They can run into the thousands per unit, so it pays to know before you sign.
Why associations charge them
Most special assessments pay for a major repair or replacement, like a roof, siding, a parking structure or an elevator, when the reserve fund can't cover it. They can also come from insurance deductibles after a loss, legal costs, or new requirements such as safety inspections.
Where the warning signs show up
- Board minutes. Look for bids, "funding options", loans or "owner contributions". A proposed assessment usually appears here before it's approved.
- The reserve study. Big items due soon, combined with a low percent funded. How to read one.
- The budget. Reserve contributions well below what the study recommends.
- The resale certificate. It usually lists assessments that are already approved, but not ones still being discussed.
- Insurance and lawsuits. A large deductible or an uncovered claim can be passed on to owners.
Approved or proposed makes a big difference
An approved assessment is usually listed in the resale documents, and buyers and sellers often negotiate who pays it. A proposed one can be harder to spot, because it may only appear in the minutes. If it's approved after you close, it's typically yours to pay.
What to ask and negotiate
- Is any assessment approved or being discussed? How much per unit, and when is it due?
- Will the seller pay an approved assessment, or credit it at closing?
- Can it be paid in installments, and does it transfer with the unit?
- What's planned for the reserves, so this doesn't keep happening?
Your agent or attorney can help write any agreement about an assessment into the contract.
This guide is general information, not legal advice. Rules on disclosure and who pays vary by state and by contract.