Who pays for HOA/Condo special assessments?
One of the services a title company performs is ordering what is known as a “HOA/Condo Estoppel”. This is basically a form letter asking the HOA/Condo Association what the homeowner owes on his Association account. It also asks whether any special assessments are due and if any special assessments are being contemplated. If the answer affirms that a special assessment is in effect (capital improvement to common areas such as roof, pool, other repairs) we then refer to the contract to see where it states WHICH PARTY will pay for this assessment balance at closing. This is where my heart begins to race and I pray to the title god above that the one of the boxes was checked off:
Over 50% of the time, a box is not checked off and we are left with sellers and buyer disputing this issue. When the assessment is a small dollar amount, it is often resolved, but assessments can reach tens and thousands of dollars on older buildings and can be a main deterrent for sellers. Closings have come to a grinding halt over this box left blank. Here are some ways to prevent issues regarding special assessments:
- Check off that special assessment box! It is customary for sellers to pay for a special assessment, but special assessments can be negotiated in advance .
- Have sellers complete a Seller Property Disclosure which asks questions regarding Special Assessments.
- Ask the title company for company of theEstoppel form completed by the HOA/Condo
- Verify whether a special assessments is due or not directly with the HOA/Condo
A few simple steps taken in advance can prevent irritated clients squabbling over who will pay for the new siding on the buildings scheduled for 2015. For more information please contact [email protected] or call 305-271-0100×701
Legal disclaimer: The Closing Company, Inc. and blog post is not a law firm and is not providing legal or tax advice. For legal advice, please consult with a licensed Attorney. For tax advice, consult with a CPA.
