So you’ve decided that it’s time to sell your condominium home because you’ve heard that there might be a Special Assessment in the works. Now, if you can just get it sold before the assessment is due!
Sounds simple enough but there’s more to the process than you might think. Did you know that when you do find a buyer, you are required to provide a Resale Certificate (prepared by the management company) and in most cases, other Homeowner Association documents, like HOA meeting minutes for up to 2 years as well as the current budget, a Reserve Study and other information that will explain what the Special Assessment is for, when it will be implemented and how much your unit will be assessed?
Now imagine that you are the buyer. Would you want to buy a unit at fair market value with a Special Assessment of several thousand dollars or (possibly much more) due after you close? Most buyers would say “no” unless they are getting either a lower price to make up for the future assessment amount or having the seller pay the entire assessment at or before the closing.
As to the Special Assessment amount, there are several stages to the process that may cause a buyer to have a problem being approved for a mortgage – even if the seller agrees to pay it at escrow or before. If the cost of the repairs haven’t been estimated but are just in the planning stage, lenders have no way of knowing if the eventual assessed amount for the buyer will be more than they can qualify to pay for in addition to their monthly mortgage cost or not. The same holds true once the repairs have started since in many cases, other items in need of repair may be found once the work starts, that weren’t originally apparent, which may ultimately add to the assessment amount.
Any way you look at it, unplanned costs aren’t fun but they are a part of home ownership. For a single family home, the furnace may break and need replacing or the roof may start to leak. In that case, the homeowner has to foot the bill alone while in a condominium, the costs are split between all owners based on their percentage of common ownership.
“Condominium Living is a Special Way of Life – Condominium Marketing is My Specialty!”
© Anna Novikoff 2016